Item 2. Managements Discussion and Analysis of Financial Condition and
Results of Operations
In addition to historical information, the following Managements Discussion and Analysis of Financial
Condition and Results of Operations contains forward-looking statements as defined under Section 21E of the 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: plans and expectations regarding clinical trials; plans and expectations regarding regulatory approvals; our strategy and expectations for clinical development and commercialization of our products; potential strategic partnerships;
expectations regarding the effectiveness of our products; plans for research and development and related costs; statements about accounting assumptions and estimates; expectations regarding liquidity and the sufficiency of cash to fund currently
planned operations through at least June 30, 2019; 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 managements 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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our early stage of development,
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we have incurred significant operating losses since our inception and cannot assure you that we will generate revenue or profit,
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our dependence on additional outside capital,
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we may be unable to enter into strategic partnerships for the development, commercialization, manufacturing and distribution of our proposed product candidates,
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uncertainties related to any litigation,
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uncertainties related to our technology and clinical trials, including expected dates of availability of clinical data,
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we may be unable to demonstrate the efficacy and safety of our developmental product candidates in human trials,
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we may be unable to improve upon, protect and/or enforce our intellectual property,
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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,
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competition and stock price volatility in the biotechnology industry,
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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
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The following discussion should be read in conjunction with the accompanying consolidated financial statements and notes thereto of Galectin
Therapeutics appearing elsewhere herein.
Overview
We are a clinical stage biopharmaceutical company engaged in drug research and development to create new therapies for fibrotic disease,
severe skin disease, and cancer. 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 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 galectins have a demonstrated role in the pathogenesis of a given disease. We focus on diseases with serious, life-threatening consequences to patients and those where current treatment options are limited. 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 a program becomes advanced and requires significant additional resources.
Our lead
galectin-3
inhibitor is
GR-MD-02,
which has been demonstrated in preclinical models to reverse liver fibrosis and cirrhosis.
GR-MD-02
has the potential to treat many diseases due to
galectin-3s
involvement in multiple key biological pathways such
as immune cell function and immunity, cell differentiation, cell growth, and apoptosis (cell death). Galectin Therapeutics Inc. is using this inhibitor to treat advanced liver fibrosis and liver cirrhosis in NASH
(non-alcoholic
steatohepatitis) patients. We have
10
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 well compensated cirrhosis. We announced, in December 2017 top line results from our Phase 2b study in NASH patients with cirrhosis
(NASH-CX).
NASH cirrhosis is a progressive disease,
currently not treatable and ultimately may result in liver failure that has poor prognosis and no effective, approved medical therapies other than liver transplant.
Galectin-3
expression is highly increased in
the liver of patients with liver fibrosis and liver cirrhosis. We believe that our
galectin-3
inhibitor, by reducing
galectin-3
at the cellular level, ultimately showing
a strong anti-fibrotic potential may provide a novel treatment for various forms of liver fibrosis.
We endeavor to leverage our
scientific and product development expertise as well as established relationships with outside sources to achieve cost-effective and efficient drug development. These outside sources, amongst others, provide us with expertise in preclinical models,
pharmaceutical development, toxicology, clinical trial operations, pharmaceutical manufacturing, sophisticated physical and chemical characterization, and commercial development. We also have established several collaborative scientific discovery
programs with leading experts in carbohydrate chemistry and characterization. These discovery programs are generally aimed at the targeted development of new carbohydrate molecules that bind galectin proteins and offer alternative options to larger
market segments in our primary disease indications. We also have established through Galectin Sciences LLC, a discovery program aimed at the targeted development of small molecules (generally,
non-carbohydrate)
that bind galectin proteins and may afford options for alternative means of drug delivery (e.g., oral) and as a result expand the potential uses of our
galectin-3
inhibitor compounds. We are also pursuing a development pathway to clinical enhancement and commercialization for our lead compounds in immuno-oncology for cancer therapy and severe skin disease
including moderate to severe plaque psoriasis and severe atopic dermatitis. However, our clinical development efforts are focused on both liver fibrosis and fatty liver disease as represented by a Phase 2 clinical trial in NASH-cirrhosis which
reported top line data in December 2017. All of our proposed products are presently in development, including
pre-clinical
and clinical trials.
Our Drug Development Programs
Galectins
are a class of proteins that are made by many cells in the body, but predominantly in cells of the immune system. As a group, these proteins are able to bind to sugar molecules that are part of other proteins, glycoproteins, in and on the cells of
our body. Galectin proteins act as a kind of molecular glue, bringing together molecules that have sugars on them. Galectin proteins, in particular
galectin-3,
are known to be markedly increased in a number of
important diseases including inflammatory diseases, scarring of organs (e.g. liver, lung, kidney, and heart) and cancers of many kinds. The increase in galectin protein promotes the disease and is detrimental to the patient. Published data
substantiating the importance of
galectin-3
in the fibrotic process arises from gene knockout experiments in animal studies. Mice genetically altered to eliminate the
galectin-3
gene, and thus unable to produce
galectin-3,
are incapable of developing liver fibrosis in response to toxic insult to the liver and in fatty liver disease as
well as development of fibrosis in other tissues.
We have one new proprietary chemical entity (NCE) in development,
GR-MD-02,
which has shown promise in preclinical and early clinical studies in treatment of fibrosis, severe skin disease, and in cancer therapy. Currently we are focusing on
development of
GR-MD-02
intended to be used in the treatment of liver fibrosis associated with fatty liver disease (NASH) and more specifically in NASH cirrhosis. We
have also leveraged our relationships with well-known investigators to demonstrate clinical effects of
GR-MD-02
in treating moderate to severe plaque psoriasis, severe
atopic dermatitis, and in cancer therapy in combination with immune-system modifying agent(s).
GR-MD-02
is a proprietary, patented compound derived from natural, readily
available, plant-based starting materials, which, following chemical processing, exhibits the properties of binding to and inhibiting
galectin-3
proteins. A second NCE,
GM-CT-01
is a proprietary, patented compound that is made from a completely different starting source plant material and also binds and inhibits galectin proteins.
11
Our product pipeline is shown below:
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Indication
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Drug
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Status
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Fibrosis
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NASH with Advanced Fibrosis:
NASH-CX
trial and
NASH-FX
trial
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GR-MD-02
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IND submitted January 2013. Results from the Phase 1 clinical trial were reported in 2014, with final results reported in January 2015.
End of Phase 1 meeting held with FDA in 2014. Two Phase 2 clinical trials were designed.
The NASH FX trial was designed for patients with
advanced fibrosis but not cirrhosis. The NASH FX trial top line data was reported in September 2016
The NASH CX trial was designed for patients
with well compensated cirrhosis. The NASH CX trial top line data was reported in December 2017 and additional results derived from the study were presented subsequently.
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Indication
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Drug
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Status
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Lung Fibrosis
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GR-MD-02
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In
pre-clinical
development
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Kidney Fibrosis
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GR-MD-02
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In
pre-clinical
development
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Cardiac and Vascular Fibrosis
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GR-MD-02
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In
pre-clinical
development
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GM-CT-01
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Not in active development
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Cancer Immunotherapy
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Melanoma, Head, Neck Squamous Cell
Carcinoma
(HNSCC)
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GR-MD-02
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Investigator IND submitted in December 2013. Phase 1B study in process. A second Phase 1B study began in
Q-1
2016. Investigator IND for that study submitted in September 2015. Early
data was reported in February 2017 and studies with the 3
rd
cohort are ongoing.
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Psoriasis
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Moderate to Severe Plaque Psoriasis
Severe
Atopic Dermatitis
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GR-MD-02
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IND submitted March 2015. A phase 2a trial in moderate to severe plaque psoriasis patients began in January 2016. Interim data on the first four patients were positive and were reported in May 2016. Further positive data was
reported in September 2016. Investigator initiated IND submitted for treatment of three patients with severe atopic dermatitis, with positive preliminary data presented in February 2017.
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Fibrosis.
GR-MD-02
is our lead product candidate for treatment of fibrotic disease. Our preclinical data show that
GR-MD-02
has a significant therapeutic effect on liver fibrosis as shown
in several relevant animal models. In addition, in NASH animal models,
GR-MD-02
has been shown to reduce liver fat, inflammation, and ballooning degeneration or death of
liver cells. Therefore, we chose
GR-MD-02
as the lead candidate in a development program targeted initially at fibrotic liver disease associated with
non-alcoholic
steatohepatitis (NASH, or fatty liver disease). In January 2013, an Investigational New Drug (IND) was submitted to the U.S. Food and Drug Administration (FDA) with the goal of
initiating a Phase 1 study in patients with NASH and advanced liver fibrosis to evaluate the human safety of
GR-MD-02
and pharmacodynamics biomarkers of disease. On
March 1, 2013, the FDA indicated we could proceed with a US Phase 1 clinical trial for
GR-MD-02
with a development program aimed at obtaining support for a
proposed indication of
GR-MD-02
for treatment of NASH with advanced fibrosis. The Phase 1 trial was completed and demonstrated that
GR-MD-02
up to 8 mg/kg, i.v. was safe and well tolerated. The human pharmacokinetic data defined a drug dose for use in the planned Phase 2 trials based on extrapolation from efficacy data in NASH animal
models of liver fibrosis and/or cirrhosis. Additionally, there was evidence of a pharmacodynamic effect of
GR-MD-02
at the 8 mg/kg dose with a decrease in alpha 2
macroglobulin, a serum marker of fibrotic activity, and a reduction in liver stiffness as determined by FibroScan
®
. An End of Phase 1 Meeting was held with FDA which, amongst
other items, provided guidance on the primary endpoint for the Phase 2 clinical trial, the
NASH-CX
trial.
Additionally, an open label drug-drug interaction study was completed in healthy volunteers during the second quarter of 2015 with
GR-MD-02,
and it showed that with 8 mg/kg dose of
GR-MD-02
and 2 mg/kg dose of midazolam there
was no drug-drug interaction and no serious adverse events or drug-related adverse events were observed. This study was required by the FDA, and the primary objective was to determine if single or multiple intravenous (IV) doses of
GR-MD-02
affect the pharmacokinetics (PK) of midazolam. The secondary objective was to assess the safety and tolerability of
GR-MD-02
when administered concomitantly with midazolam. The lack of a drug interaction in this study enabled the Company to expand the number of patients eligible for its Phase 2 clinical trial. In addition,
should
GR-MD-02
be approved for marketing, the success of this study supports a broader patient population for the drug label.
Our Phase 2 program in fibrotic disease consists of two separate human clinical trials. The primary clinical trial is the Phase 2b
NASH-CX
study for one year for patients with NASH with well compensated cirrhosis, which began enrolling in June, 2015. This study is the primary focus of our program and is a randomized, placebo-controlled,
double-blind, parallel-group Phase 2b trial to evaluate the safety and efficacy of
GR-MD-02
for treatment of liver fibrosis and resultant portal hypertension in NASH
patients with well compensated cirrhosis. A smaller, exploratory
NASH-FX
trial was conducted to explore potential use of various
non-invasive
imaging techniques in NASH
patients with advanced fibrosis but not cirrhosis.
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NASH-FX
Trial:
The
NASH-FX
trial, a Phase 2a pilot trial
NASH-FX
for patients with NASH advanced fibrosis that explored use of three
non-invasive
imaging technologies, is now complete. It was a short, single site, four-month trial in 30 NASH patients with advanced fibrosis, but not cirrhosis, randomized 1:1 to either
9 bi-weekly
doses of 8 mg/kg of
GR-MD-02
or placebo. The trial did not meet its primary biomarker endpoint as measured using multi-parametric magnetic resonance imaging (LiverMultiScan
(R)
, Perspectum Diagnostics). The trial also did not meet secondary endpoints that measure liver stiffness as a surrogate for fibrosis using, magnetic resonance-elastography and FibroScan
®
score. We, and many experts in the field, now believe that a four-month treatment period may not be sufficient to show efficacy results in established liver fibrosis. This small study was not
powered for the secondary endpoints and thus, not surprisingly did not meet the secondary endpoints. In the trial,
GR-MD-02
was found to be safe and well tolerated among
the patient population with no serious adverse events. Although there was no apparent improvement in the three
non-invasive
tests for assessment of liver fibrosis in the four-month
NASH-FX
trial, the principal investigator of the
NASH-FX
trial has stated that the inhibition of
galectin-3
with
GR-MD-02
remains promising for the treatment of NASH fibrosis. Of note is that
GR-MD-02
has
demonstrated an improved clinical effect in
moderate-to-severe
psoriasis, suggesting the compound has activity in humans in an immune-mediated inflammatory human disease
that can occur in association with NASH. We believe our drug candidate provides a promising new approach for the therapy of fibrotic diseases, and liver fibrosis in particular. Fibrosis is the formation of excess connective tissue (collagen and
other proteins plus cellular elements such as myofibroblasts) in response to damage, inflammation or repair. When the fibrotic tissue becomes confluent, it obliterates the cellular architecture, leading to scarring and dysfunction of the underlying
organ. Given
galectin-3s
broad biological functionality, it has been demonstrated to be involved in cancer, inflammation and fibrosis, heart disease, and renal disease. We have further demonstrated the
broad applicability of the actions of our
galectin-3
inhibitors biological effect in ameliorating fibrosis involving lung, kidney, blood vessels, and cardiac tissues in a wide variety of animal models.
NASH-CX
Trial:
The
NASH-CX
trial was a larger
well-designed multi-center clinical trial which explored use of
GR-MD-02
for the treatment of liver fibrosis and resultant portal hypertension in patients with
well-compensated NASH cirrhosis. Enrollment in this trial was completed in September, 2016, and a total of 162 patients at 36 sites in the United States were randomized to receive either 2 mg/kg of
GR-MD-02,
8 mg/kg of
GR-MD-02
or placebo, with approximately 54 patients in each group. The primary endpoint is a reduction in
change in hepatic venous pressure gradient (HVPG). Patients received an infusion every other week for one year, total of 26 infusions, and were evaluated to determine the change in HVPG as compared with placebo. HVPG was also correlated with
secondary endpoints of fibrosis on liver biopsy as well as with measurement of liver stiffness (FibroScan
(R)
) and assessment of liver metabolism
(
13
C-methacetin
breath test, Exalenz), which are
non-invasive
measures of the liver that may be used in future
studies. Top line data readout was reported in December 2017 demonstrating positive efficacy data and safety and clinically meaningful results in the NASH patients with well compensated cirrhosis without esophageal varices (stage 1 cirrhosis).
In the total patient population, the primary endpoint HVPG showed a trend toward benefit with
GR-MD-02
treatment, but the difference from placebo was not statistically significant. The mean change in HVPG of placebo from baseline to week 54 was 0.3 mm Hg. The mean change in HVPG from baseline was
-0.37
and
-0.42
for the 2 mg/kg dose and 8 mg/kg dose of
GR-MD-02,
respectively.
Further analysis showed that the drug effect was significantly dependent on dose varices in the total group of patients
(p<0.02). In those NASH cirrhosis patients without varices at baseline (about 50% of the total population), there was a statistically significant effect of the 2 mg/kg dose of
GR-MD-02
on the absolute change in HVPG
(-1.08
mm Hg, p<0.01). The effect of the 8 mg/kg dose of
GR-MD-02
on absolute or percent change in HVPG from baseline to week 54 was not significant. The population of patients without varices at baseline were further subdivided
into those with mild portal hypertension (HVPG greater or equal to 6 mm Hg and less than 10 mm Hg). In patients with mild portal hypertension (MPH), both doses of
GR-MD-02
demonstrated a statistically significant effect on change in HVPG. The mean change in HVPG in the MPH group were +1.8 mm Hg for placebo and
-0.3
and
-0.4
mm Hg in the 2 mg/kg and 8 mg/kg dose groups, respectively. In patients with clinically significant portal hypertension (HVPG greater than 10 Mm Hg) with no
varices at baseline, there was a statistically significant effect of 2 mg/kg of
GR-MD-02
on the change in HVPG.
A responder analysis was performed on those patients without varices at baseline. Analysis was performed looking at two groups: those with an
equal to or greater than 2 mm Hg decrease in HVPG from baseline or those with an equal to or greater than 2 mm Hg and greater than or equal to 20% decrease in HVPG from baseline. In both cases, the change observed in the
GR-MD-02
2 mg/kg group was statistically significant (p<0.01) while that of the 8 mg/kg group was not.
Additional
ad hoc
analysis examining the
PK-PD
correlation between human data and the mouse
NASH model showed that the apparent lack of a dose response in the 8 mg/kg dose group (GR8) may be due to fact that a large number of patients in the GR8 group had very high levels of
GR-MD-02.
When the GR8 group patients were divided into groups with serum drug levels greater than 12,000 ug*hr/mL and those below 12,000 ug*hr/mL, there was a
statistically significant difference in the change in HVPG in the GR8
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group with lower serum levels of
GR-MD-02
of approximately
-8%.
Thus, the
apparent less pronounced effects of GR8 may be explained, at least in part, by the variable pharmacokinetics observed in the patients which received GR8. This mirrors the effects seen in the NASH mouse model experiments in which the
anti-inflammatory effects of
GR-MD-02
were significantly reduced at doses between 60 mg/kg and 120 mg/kg.
In terms of cirrhosis complications over the
54-week
treatment period, in patients without varices
there were statistically significantly fewer new varices that developed in the treatment groups vs placebo. We believe this may represent a useful measure of clinical outcome.
The major conclusions, to date from the
NASH-CX
trial results are that: i)
GR-MD-02
had a statistically significant and clinically meaningful effect in improving HVPG vs placebo in patients with NASH cirrhosis who did not have esophageal varices at
baseline; this effect was seen regardless of the patients baseline portal hypertension. Furthermore, we believe that patients with esophageal varices may have masked benefits in the total patient population; ii) there was an important drug
effect of
GR-MD-02
in the total patient population on liver biopsy with a statistically significant improvement in hepatocyte ballooning (ie cell death);
(iii) there was a statistically significant reduction (p=0.02) in the development of new esophageal varices in drug-treated patients compared to placebo; we believe that this is a clinically relevant endpoint related to patient outcomes;
(iv) while there was a drug effect in both the 2 mg/kg and 8 mg/kg dosage groups on liver biopsy and in the mild portal hypertension group, there was a consistently greater and statistically significant effect of the 2 mg/kg dose of
GR-MD-02;
(v) the apparent lack of a dose response in the GR8 group may be explained by variable pharmacokinetics in the high dose group, and this suggests use of an
additional and intermediate dose between 2 and 8 mg/Kg in subsequent trials;
(vi) GR-MD-02
appears to be safe and well tolerated in this one year clinical trial;
and (vii) we believe this is the first large, randomized clinical trial of any drug to demonstrate a clinically meaningful improvement in portal hypertension or liver biopsy in patients with compensated NASH cirrhosis without esophageal
varices.
The Company met with FDA on May 08, 2018. Following which it announced that it is proceeding with plans for a Phase 3 clinical
trial program with its
galectin-3
inhibitor
GR-MD-02
in NASH cirrhosis, incorporating advice and guidance obtained in the meeting
with the FDA.
The target population of the Phase 3 clinical trial will be patients with NASH cirrhosis without esophageal varices. The
primary endpoint will be chosen from two endpoints that the FDA agreed may be acceptable: The change in hepatic venous pressure gradient (HVPG), which is a measure of liver blood pressure, or the progression to esophageal varices. Both primary
endpoints may be considered surrogate endpoints for clinical outcomes in the target population with NASH cirrhosis.
The basis for
advancing to Phase 3 is the positive effects of
GR-MD-02
on HVPG and the possible prevention or postponement of development of esophageal varices observed in the
post-hoc
analysis of the Phase 2
NASH-CX
trial, which we believe is the first large, randomized clinical trial of any drug to demonstrate a clinically meaningful improvement
in these patients. The potential choice between two primary endpoints for Phase 3 trials provides enhanced flexibility in designing the strongest trial to replicate the efficacy demonstrated in the Phase 2
NASH-CX
trial. However, there can be no assurance that a larger trial will replicate the results of the
NASH-CX
trial. The choice of which primary endpoint to use is a
complex and important decision for the design of the Phase 3 trial and may require additional input from external advisors and the FDA. Additionally, the clinical trial design discussed with the FDA provides for interim
analysis which may provide confirmation of Phase 2 results and enhanced confidence for the ultimate results of the Phase 3 trial.
As
disclosed in May 2018, the FDA has not granted breakthrough designation at this time based on the Agencys current assessment that additional confirmatory data are needed to identify the level of change in HVPG that is reasonably likely to
predict clinical outcomes. Although we disagree with FDAs decision not to grant Breakthrough Therapy designation, we understand their position because while the
NASH-CX
trial missed on the primary
endpoint in the total population, the additional analysis of
NASH-CX
trial is, to our knowledge, the first randomized clinical trial of any drug to demonstrate a clinically meaningful improvement in HVPG in
NASH cirrhosis patients. While Breakthrough Designation was not granted at this time, the program continues to benefit from Fast Track designation which provides many of the same advantages as Breakthrough Therapy designation, including potential
for accelerated approval and priority review.
Details of the Phase 3 clinical trial design, including projected timings and costs, will
be announced once the planning phase has been completed. These planning activities, include amongst other items and activities, completion of a detailed final clinical trial protocol that the company believes meets regulatory expectations, and
estimates for pricing and timing are derived from a Request for Proposal process involving Clinical Research Organizations. Various other activities, amongst others include, manufacturing of clinical supplies in support of a Phase 3 program and
certain antecedent advanced reproductive toxicology studies as defined by FDA in accordance with guidelines of the International Committee on Harmonization, assessing the need for foreign regulatory filings to permit inclusion of additional clinical
sites into the Phase 3 trial program to accelerate enrollment of patients and meet ICH expectations on minimum patient exposure requirements. The focus and goal of the therapeutic program is to stop the progression of and reverse the fibrosis in the
liver and, thereby improve liver function and prevent the development of complications of fibrosis/cirrhosis and liver-related mortality in patients. The results of the
NASH-CX
trial suggest that, subject to
confirmation in additional or later stage clinical trials, this goal is achievable in a significant portion of the NASH cirrhosis patient population i.e. those NASH cirrhosis patients without esophageal varices.
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Cancer Immunotherapy.
We believe there is potential for galectin inhibition to play a key
role in the burgeoning area of cancer immunotherapy. For example, there have been several recent approvals of drugs that enhance a patients immune system to fight cancer. It is our goal to use a galectin inhibitor to enhance the immune system
function to fight cancer in a way that complements other approaches to this type of therapy. This hypothesis is supported by the fact that
galectin-3
is expressed at high levels in multiple types of tumors,
adds to the malignant nature of the tumors, and protects the tumors from immune system attack. Our drug candidates provide a promising new therapeutic approach to enhance the activity of the immune system against cancer cells. Preclinical studies
have indicated that
GR-MD-02
enhances the immune response to cancer cells, increased tumor shrinkage and enhanced survival in immune competent mice with prostate,
breast, melanoma and sarcoma cancers when combined with one of the immune checkpoint inhibitors,
anti-CTLA-4
or
anti-PD-1,
and
with the immune cell activator anti-OX40. These preclinical data led to the filing of two Investigator-sponsored INDs and the initiation of studies of
GR-MD-02
in
combination with Yervoy
®
(ipilimumab) and KEYTRUDA (pembrolizumab) in Phase 1B studies of patients with metastatic melanoma. The KEYTRUDA trial has also been expanded to include patients
with
non-small
cell lung cancer and head and neck squamous cell carcinoma. These studies are being conducted under the sponsorship of Providence Portland Medical Centers Earle A. Chiles Research
Institute (EACRI).
Data on this combination immunotherapy program was presented on February 7, 2017 at the 9th GTCBio
Immunotherapeutics & Immunomonitoring Conference in San Diego, CA by Dr. William L. Redmond, Providence Cancer Center. Preclinical results in mouse models of multiple types of cancers showed important anti-tumor and increased
survival effects of combining
GR-MD-02
with different types of immune modulators, providing a case for progressing studies into human patients with cancer. Seven
patients were treated in the
GR-MD-02
in combination with Yervoy trial, with no safety concerns in these low dose cohorts. Due to changes in the standard of care for
metastatic melanoma (i.e., approval of
anti-PD-1),
recruitment has been slowed significantly in this trial. Promising results were reported in the Phase 1b trial
combining
GR-MD-02
with pembrolizumab (KEYTRUDA). Cohort 1 was completed (n=6, 5 with melanoma, one head and neck) with one partial response and one mixed response in 5
melanoma patients. There was a rapid and marked tumor response after 3 doses of combined
GR-MD-02
and pembrolizumab in the one partial response patient who had failed
high-dose
IL-2
and oncolytic virus + ipilimumab. The study is ongoing and progression to further development will be based on response rate as compared to historical response rates to pembrolizumab alone.
Results from third cohort of patients is expected in Summer, 2018.
Severe skin diseases.
During our Phase 1 NASH fibrosis trial
with
GR-MD-02,
a clinical effect on plaque psoriasis was observed in a NASH patient who also had this disease. This patient had marked improvement in her psoriasis, with
improvement beginning after the third infusion. She reported that her psoriasis was completely gone and her skin was normal after the fourth infusion. Her skin remained normal for 17 months after the final infusion of
study drug. The patient is convinced that the improvement in her psoriasis is related to the study drug.
This serendipitous finding,
combined with
galectin-3
protein being markedly upregulated in the capillary epithelia (small blood vessels) of the psoriatic dermis (plaque lesions), led to a phase 2a trial in patients with moderate to
severe plaque psoriasis.
GR-MD-02
inhibition of
galectin-3
may attenuate capillary changes in the psoriatic dermis and
inflammatory recruitment, perhaps explaining the improvements observed in the NASH fibrosis trial patient. In this open-label, unblinded trial (no placebo, all patients knowingly receive active drug), 5 patients with moderate to severe plaque
psoriasis were administered
GR-MD-02
every two weeks for 24 weeks. In May 2016, we reported positive results on the first four patients after 12 weeks of
therapy. Based on these results, we modified the trial to include 24 weeks of therapy. In August 2016, we reported on four patients after 24 weeks of therapy and one patient after 12 weeks of therapy. The four patients who received
24 weeks of therapy experienced an average of 48% improvement in their plaque psoriasis. At this time, the average response in all five patients remains at 50% with one patient having an 82% improvement. However, there are existing drugs on the
market in this disease that produce 75% and higher improvements in
60-90%
of patients. While we are encouraged that this study has demonstrated clinically meaningful results in a human disease with
GR-MD-02,
the next steps would entail a controlled, does-ranging clinical trial which we do not expect to conduct absent a strategic partnership.
We believe the mechanism of action for
GR-MD-02
is based upon
interaction with, and inhibition of, galectin proteins, particularly
galectin-3,
which are expressed at high levels in certain pathological states including inflammation, fibrosis and cancer. While
GR-MD-02
is capable of binding to multiple galectin proteins, we believe that it has the greatest affinity for
galectin-3,
the most
prominent galectin implicated in pathological processes. Blocking galectin in cancer and liver fibrosis has specific salutary effects on the disease process, as discussed below.
15
Results of Operations
Three and Six Months Ended June 30, 2018 Compared to Three and Six Months Ended June 30, 2017
Research and Development Expense.
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Six Months Ended
|
|
|
2018 as Compared to 2017
|
|
|
|
June 30,
|
|
|
June 30,
|
|
|
Three Months
|
|
|
Six Months
|
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
|
$ Change
|
|
|
% Change
|
|
|
$ Change
|
|
|
% Change
|
|
|
|
(In thousands, except %)
|
|
Research and development
|
|
$
|
1,476
|
|
|
$
|
3,444
|
|
|
$
|
3,774
|
|
|
$
|
7,216
|
|
|
$
|
(1,968
|
)
|
|
|
(57
|
%)
|
|
$
|
(3,442
|
)
|
|
|
(48
|
%)
|
We generally categorize research and development expenses as either direct external expenses, comprised of
amounts paid to third party vendors for services, or all other research and development expenses, comprised of employee payroll and general overhead allocable to research and development. We consider a clinical program to have begun upon acceptance
by the FDA, or similar agency outside of the United States, to commence a clinical trial in humans, at 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, 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.
Our research and
development expenses were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
|
Six Months Ended
June 30,
|
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
|
|
(in thousands)
|
|
Direct external expenses:
|
|
|
|
|
Clinical programs
|
|
$
|
331
|
|
|
$
|
2,865
|
|
|
$
|
1,617
|
|
|
$
|
6,027
|
|
Pre-clinical
activities
|
|
|
50
|
|
|
|
35
|
|
|
|
116
|
|
|
|
66
|
|
All other research and development expenses
|
|
|
1,095
|
|
|
|
544
|
|
|
|
2,041
|
|
|
|
1,123
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,476
|
|
|
$
|
3,444
|
|
|
$
|
3,774
|
|
|
$
|
7,216
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Clinical programs expenses decreased primarily due to costs related to our Phase 2 clinical trials winding
down late in 2017. Other research and development expense increased primarily due to increases in
non-cash
stock-based compensation expense of approximately $495,000 and $863,000 in the three and six months
ended June 30, 2018 compared to the same periods in 2017.
Both the time required and costs we may incur in order to commercialize a
drug candidate that would result in material net cash inflow are subject to numerous variables, and therefore we are unable at this stage of our development to forecast useful estimates. Variables that make estimates difficult include the number of
clinical trials we may undertake, the number of patients needed to participate in the clinical trial, patient recruitment uncertainties, trial results as to the safety and efficacy of our product, and uncertainties as to the regulatory agency
response to our trial data prior to receipt of marketing approval. Moreover, the FDA or other regulatory agencies may suspend clinical trials if we or an agency believes patients in the trial are subject to unacceptable risks or find deficiencies in
the conduct of the clinical trial. Delays or rejections may also occur if governmental regulation or policy changes during our clinical trials or in the course of review of our clinical data. Due to these uncertainties, accurate and meaningful
estimates of the ultimate cost to bring a product to market, the timing of costs and completion of our program and the period during which material net cash inflows will commence are unavailable at this time.
General and Administrative Expense.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2018 as Compared to 2017
|
|
|
|
Three Months
Ended June 30,
|
|
|
Six Months
Ended June 30,
|
|
|
Three Months
|
|
|
Six Months
|
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
|
$ Change
|
|
|
% Change
|
|
|
$ Change
|
|
|
% Change
|
|
|
|
(In thousands, except %)
|
|
General and administrative
|
|
$
|
2,283
|
|
|
$
|
1,070
|
|
|
$
|
4,163
|
|
|
$
|
2,244
|
|
|
$
|
1,213
|
|
|
|
113
|
%
|
|
$
|
1,919
|
|
|
|
86
|
%
|
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 in general and administrative expenses for the three-months ended June 30, 2018 as compared to the
same period in 2017 is due to an
16
increase
non-cash,
stock-based compensation expense of $679,000 and as increase in business development/investor relations expenses of approximately
$191,000. The primary reasons for the increase in general and administrative expenses for the
six-months
ended June 30, 2018 as compared to the same period in 2017 is due to an increase
non-cash,
stock-based compensation expense of $1,168,000 and as increase in business development/investor relations expenses of approximately $333,000.
Liquidity and Capital Resources
Since
our inception on July 10, 2000, we have financed our operations from proceeds of public and private offerings of debt and equity. As of June 30, 2018, we raised a net total of $146.1 million from these offerings. We have operated at a
loss since our inception and have had no significant revenues. We anticipate that losses will continue for the foreseeable future. At June 30, 2018, the Company had $10.5 million of unrestricted cash and cash equivalents available to fund
future operations. The Company believes there is sufficient cash, including availability of the line of credit, to fund currently planned operations at least through June 30, 2019. Our ability to fund operations after our current cash resources
are exhausted depends on our ability to obtain additional financing or achieve profitable operations, as to which no assurances can be given. Accordingly, based on the forecasts and estimates underlying our current operating plan, the financial
statements do not currently include any adjustments that might be necessary if we are unable to continue as a going concern.
Net cash
used in operations decreased by $2,270,000 to $6,595,000 for the six months ended June 30, 2018, as compared to $8,865,000 for the six months ended June 30, 2017. Cash operating expenses decreased principally due to the winding down of
Phase 2 research and development activities related to our clinical trial activity with
GR-MD-02.
Net cash provided by financing activities the six months ended June 30, 2018, of $14,039,000 represents proceeds from the exercise of
common stock warrants and options and sale of common stock. Net cash provided by financing activities the three months ended June 30, 2017, of $2,630,000 represents net proceeds from the sale of common stock and warrants.
Other.
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.
17
Off-Balance
Sheet Arrangements
We have not created, and are not a party to, any special-purpose or
off-balance
sheet entities for the
purpose of raising capital, incurring debt or operating parts of our business that are not consolidated into our financial statements. We do not have any arrangements or relationships with entities that are not consolidated into our financial
statements that are reasonably likely to materially affect our liquidity or the availability of capital resources.
Application of Critical Accounting
Policies and Estimates
The preparation of condensed consolidated financial statements requires us to make estimates and judgments that
affect the reported amounts of assets, liabilities, expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to intangible assets, accrued expenses, stock-based
compensation, contingencies and litigation. We base our estimates on historical experience, terms of existing contracts, our observance of trends in the industry, information available from other outside sources and on various other factors that we
believe to be appropriate under the circumstances. Actual results may differ from these estimates under different assumptions or conditions.
Critical accounting policies are those policies that affect our more significant judgments and estimates used in preparation of our
consolidated financial statements. We believe our critical accounting policies include our policies regarding stock-based compensation, accrued expenses and income taxes. For a more detailed discussion of our critical accounting policies, please
refer to our 2017 Annual Report on Form
10-K.