Galera Therapeutics, Inc. (NASDAQ: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 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 the company's New Drug Application (NDA) for avasopasem for radiotherapy-induced SOM in patients with HNC undergoing standard-of-care treatment. The FDA communicated that results from an additional clinical trial will 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. Given the company's current resources, it is not feasible to conduct this additional trial.

In connection with the avasopasem CRL, Galera wound down its commercial readiness efforts for avasopasem, reduced headcount across several departments, and began to pursue strategic alternatives. The reduction in force, approved by the company's Board of Directors, reduced the workforce by 22 employees, or approximately 70%, as of August 9, 2023. This decision was based on cost-reduction initiatives intended to reduce operating expenses.

In October 2023, Galera halted its Phase 2b GRECO-2 trial of rucosopasem in patients with LAPC, following a futility analysis of the trial, which indicated that 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.

Financials

Galera's financial performance has been challenging, with an annual net loss of $59,082,000, no annual revenue, an annual operating cash flow of -$44,848,000, and an annual free cash flow of -$44,907,000 in the most recent fiscal year. In the first quarter of 2024, the company reported a net loss of $4,381,000, no revenue, and used $4,791,000 in operating cash flow.

Liquidity

As of March 31, 2024, Galera had $13,466,000 in cash and cash equivalents and an accumulated deficit of $441,787,000. The company expects its existing cash and cash equivalents will enable it to fund its operating expenses and capital expenditure requirements into the third quarter of 2025.

Nasdaq Listing Notification

In September 2023, Galera received notices from The Nasdaq Stock Market LLC (Nasdaq) indicating that the company was no longer in compliance with the minimum Market Value of Listed Securities (MVLS), Minimum Bid Price, and Market Value of Publicly Held Shares (MVPHS) requirements for continued listing on the Nasdaq Global Market. The company requested a hearing before a Nasdaq Hearings Panel to appeal the delisting determinations, and its common stock remains listed on the Nasdaq Global Market pending the conclusion of the hearing process.

Strategic Alternatives

In October 2023, Galera 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. Such alternatives may include a merger, sale of the company, acquisition or other business combination, a strategic partnership, or the licensing, sale or divestiture of some of the company's proprietary technologies.

There can be no assurance that this process will result in Galera pursuing a transaction or that any transaction, if pursued, will be completed on attractive terms. Should a strategic alternative be implemented, the company anticipates using available net proceeds to discharge its liabilities and outstanding obligations, distribute the remainder, if any, to stockholders, and wind down its operations. Should Galera be unable to identify and implement a meaningful strategic alternative in a timely manner, its board of directors is likely to consider dissolution and liquidation of the company.

Business Overview

Galera Therapeutics was founded in 2012 and is headquartered in Malvern, Pennsylvania. The company's lead product candidate, avasopasem, was being developed for the reduction of SOM in patients with HNC, the reduction of esophagitis in patients with lung cancer, and the reduction of cisplatin-induced kidney damage in patients with cancer. The FDA had granted Fast Track and Breakthrough Therapy designations to avasopasem for the reduction of SOM induced by radiotherapy.

Galera's second product candidate, rucosopasem, was in development to augment the anti-cancer efficacy of SBRT in patients with NSCLC and LAPC. The FDA and European Medicines Agency (EMA) had granted orphan drug designation and orphan medicinal product designation, respectively, to rucosopasem for the treatment of pancreatic cancer.

Risks and Challenges

Galera's decision to discontinue the development of its product candidates and its focus on exploring strategic alternatives present significant risks and challenges for the company. The inability to conduct an additional Phase 3 trial for avasopasem due to resource constraints, the halting of the rucosopasem trials, and the uncertainty surrounding the strategic review process all contribute to the company's uncertain future.

The potential delisting of Galera's common stock from the Nasdaq Global Market also poses a risk, as it could make trading the stock more difficult for investors and potentially lead to declines in the share price and liquidity. The company's limited operating history, history of losses, and need for substantial funding to continue operations further compound the challenges it faces.

Outlook

Galera has not provided any formal guidance or outlook for its future performance. The company's focus is currently on the strategic review process and exploring alternatives that may maximize value for its stockholders. Given the significant uncertainties surrounding the company's future, it is difficult to predict the outcome of this process or the company's long-term prospects.

Financial Analysis

Galera's financial performance has been challenging, with an annual net loss of $59,082,000, no annual revenue, an annual operating cash flow of -$44,848,000, and an annual free cash flow of -$44,907,000 in the most recent fiscal year. In the first quarter of 2024, the company reported a net loss of $4,381,000, no revenue, and used $4,791,000 in operating cash flow.

The company's liquidity position is also a concern, with $13,466,000 in cash and cash equivalents as of March 31, 2024. Galera expects its existing cash and cash equivalents will enable it to fund its operating expenses and capital expenditure requirements into the third quarter of 2025, but the company's long-term viability is uncertain without a successful strategic alternative or a significant infusion of capital.

Conclusion

Galera Therapeutics is facing significant challenges as it navigates the aftermath of the FDA's CRL for avasopasem and the halting of its rucosopasem trials. The company's focus on exploring strategic alternatives, including a potential merger, sale, or other transaction, is a critical step in determining its future. However, the outcome of this process is uncertain, and Galera's long-term prospects remain unclear. Investors should closely monitor the company's progress and any updates regarding the strategic review, as the decisions made in the coming months will likely have a significant impact on the company's future.