Business Overview and History

Galera Therapeutics, Inc. (GRTX) is a biopharmaceutical company that has historically focused on developing a pipeline of novel, proprietary therapeutics with the potential to transform radiotherapy in cancer. The company’s tumultuous journey over the past few years has been marked by a series of setbacks and strategic pivots, as it navigates the complex landscape of drug development and regulatory challenges.

Galera was founded in 2012 with the goal of identifying and developing innovative small molecule therapeutics that could enhance the efficacy of radiotherapy. The company’s lead product candidate, avasopasem manganese (avasopasem), was being developed for the reduction of severe oral mucositis (SOM) in patients with head and neck cancer (HNC), the reduction of esophagitis in patients with lung cancer, and the reduction of cisplatin-induced kidney damage in patients with cancer. Galera’s second product candidate, rucosopasem manganese (rucosopasem), was in development to augment the anti-cancer efficacy of stereotactic body radiation therapy (SBRT) in patients with non-small cell lung cancer (NSCLC) and locally advanced pancreatic cancer (LAPC).

In August 2023, Galera announced that it had received a Complete Response Letter (CRL) from the U.S. Food and Drug Administration (FDA) regarding its New Drug Application (NDA) for avasopasem for radiotherapy-induced SOM in patients with HNC. The FDA communicated that results from an additional clinical trial would be required for resubmission. During a subsequent Type A meeting and in the meeting minutes, the FDA reiterated the need for a second Phase 3 trial to support resubmission of the NDA. With the company’s current resources, it was not feasible to conduct this additional trial.

In connection with the avasopasem CRL, Galera wound down its commercial readiness efforts, reduced headcount across several departments, and began to pursue strategic alternatives. The reduction in force, approved by the Board of Directors, resulted in a 70% reduction in the company’s workforce as of August 9, 2023.

In October 2023, Galera halted its Phase 2b GRECO-2 trial of rucosopasem in patients with LAPC, following a futility analysis indicating the trial was unlikely to succeed as designed. At the same time, the company also halted its Phase 1/2 GRECO-1 trial of rucosopasem in patients with NSCLC. Galera subsequently announced that it had engaged Stifel, Nicolaus & Company, Inc. as its financial advisor to assist in reviewing strategic alternatives with the goal of maximizing value for its stockholders.

After an extensive review of strategic alternatives, Galera’s board of directors approved the company’s dissolution and liquidation (Dissolution) on August 8, 2024, pursuant to a plan of complete liquidation and dissolution (Plan of Dissolution), subject to stockholder approval. This decision came after an extensive review process during which Galera was unable to identify and enter into a viable transaction with a merger partner or purchaser of the company or its assets. If the Plan of Dissolution is approved, Galera intends to file a certificate of dissolution with the Delaware Secretary of State, satisfy or resolve its remaining liabilities and obligations, and attempt to convert its remaining assets into cash or cash equivalents for distribution to stockholders, subject to applicable legal requirements.

Financials

Galera has incurred recurring losses and negative cash flows from operations since its inception in 2012. For the year ended December 31, 2023, the company reported a net loss of $59.1 million and had an accumulated deficit of $437.4 million as of that date. The company’s cash and cash equivalents as of June 30, 2024, were $10.7 million, which it expects will enable it to fund its operating expenses, including in relation to the Dissolution, for at least twelve months from the date of the filing of its latest Quarterly Report on Form 10-Q.

Quarterly Financial Highlights

In the second quarter of 2024, Galera reported a net loss of $4.1 million, a significant improvement from the $20.7 million net loss reported in the same period of the prior year. This reduction in net loss was primarily due to a $6.1 million decrease in research and development expenses and a $6.5 million decrease in general and administrative expenses, reflecting the company’s cost-cutting measures and the winding down of its operations.

For the six months ended June 30, 2024, Galera reported a net loss of $8.4 million, compared to a net loss of $38.4 million in the same period of the prior year. The decrease in net loss was largely attributable to the aforementioned reductions in research and development and general and administrative expenses.

Annual Financial Overview

For the fiscal year 2023, Galera reported no revenue, consistent with its pre-commercial stage. The company’s net loss for the year was $59,082,000. Operating cash flow (OCF) was negative $44,848,000, while free cash flow (FCF) stood at negative $44,907,000.

Quarterly Performance

In the most recent quarter (Q2 2024), Galera again reported no revenue. The net loss for the quarter was $4,064,000, with operating cash flow and free cash flow both at negative $2,717,000. The significant reduction in net loss and cash burn compared to previous periods reflects the company’s suspension of clinical development activities and ongoing cost-cutting measures.

Liquidity

Galera’s cash and cash equivalents as of June 30, 2024, stood at $10.75 million, down from $18.3 million as of December 31, 2023. The company’s free cash flow for the six months ended June 30, 2024, was negative $7.5 million, compared to negative $22.4 million in the same period of the prior year, reflecting the company’s ongoing efforts to preserve its remaining cash resources.

As of June 30, 2024, Galera had no debt, resulting in a debt-to-equity ratio of 0. The company’s current ratio and quick ratio were both 5.63, indicating a strong short-term liquidity position. However, it’s important to note that Galera has no available credit lines or other financing facilities, and its future operations are contingent on the outcome of the proposed dissolution and liquidation process.

Geographic Performance

Galera’s operations have been exclusively focused in the United States, with no international market presence.

Risks and Uncertainties

Galera’s journey has been marked by significant challenges, including the FDA’s rejection of its NDA for avasopasem and the subsequent decision to discontinue the development of its product candidates. The company’s ability to maximize value for its stockholders through the proposed Dissolution remains subject to various risks and uncertainties, including the timing and amount of any distributions to stockholders, the company’s ability to satisfy or resolve its remaining liabilities and obligations, and the potential for unforeseen liabilities or claims that could reduce the amount available for distribution.

Conclusion

Galera Therapeutics has faced a series of setbacks in its pursuit of transforming radiotherapy in cancer. The company’s decision to seek Dissolution, if approved by its stockholders, represents a difficult but necessary step as it navigates the complex and uncertain landscape of drug development. The suspension of clinical trials, significant reduction in workforce, and the focus on liquidation have dramatically altered Galera’s financial profile, with sharply reduced operating expenses and cash burn. Investors in Galera must exercise caution and carefully consider the risks and potential outcomes associated with the company’s current strategic direction, particularly as it relates to the potential for any future distributions of remaining assets to stockholders.

Disclaimer: This article is for informational purposes only. It does not constitute financial, legal, or other types of advice. While every effort has been made to ensure the accuracy of the information presented here, the author and the publisher do not make any guarantees about the completeness, reliability, and accuracy of this information.