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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark one)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2022

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                      

Commission File Number 001-36177

GlycoMimetics, Inc.

(Exact name of registrant as specified in its charter)

Delaware

06-1686563

(State or Other Jurisdiction of

Incorporation or Organization)

(I.R.S. Employer

Identification No.)

9708 Medical Center Drive

Rockville, Maryland

20850

(Address of principal executive offices)

(Zip Code)

(240243-1201

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading symbol(s)

Name of each exchange on which registered

Common Stock, $0.001 par value

GLYC

The Nasdaq Stock Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer            Accelerated Filer Smaller Reporting Company

Non-accelerated Filer        Emerging Growth Company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934).    Yes      No  

The number of outstanding shares of the registrant’s common stock, par value $0.001 per share, as of the close of business on August 1, 2022 was 52,423,944.

GLYCOMIMETICS, INC.

INDEX TO FORM 10-Q

PAGE

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

3

Balance Sheets as of June 30, 2022 (unaudited) and December 31, 2021

3

Unaudited Statements of Operations and Comprehensive Loss for the three and six months ended June 30, 2022 and 2021

4

Unaudited Statements of Stockholders’ Equity for the three and six months ended June 30, 2022 and 2021

5

Unaudited Statements of Cash Flows for the six months ended June 30, 2022 and 2021

6

Notes to Unaudited Financial Statements

7

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

19

Item 3. Quantitative and Qualitative Disclosures about Market Risk

28

Item 4. Controls and Procedures

28

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

29

Item 1A. Risk Factors

29

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

29

Item 6. Exhibits

30

Signatures

31

Table of Contents

Part I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

GLYCOMIMETICS, INC.

Balance Sheets

June 30, 

December 31, 

 

2022

2021

 

Assets

    

(Unaudited)

    

Current assets:

Cash and cash equivalents

$

60,244,377

$

90,254,890

Prepaid expenses and other current assets

 

1,019,240

 

533,804

Total current assets

 

61,263,617

 

90,788,694

Property and equipment, net

 

332,971

 

368,842

Prepaid research and development expenses

 

2,221,407

 

1,560,607

Deposits

52,320

52,320

Operating lease right-of-use asset

1,173,706

1,576,185

Total assets

$

65,044,021

$

94,346,648

Liabilities & stockholders’ equity

Current liabilities:

Accounts payable

$

1,270,945

$

2,107,615

Accrued expenses

 

6,610,665

 

8,715,368

Lease liabilities

 

1,056,176

 

1,001,407

Total current liabilities

 

8,937,786

 

11,824,390

Lease liabilities, net of current portion

378,792

918,607

Total liabilities

 

9,316,578

 

12,742,997

Stockholders’ equity:

Preferred stock; $0.001 par value; 5,000,000 shares authorized, no shares issued and outstanding at June 30, 2022 and December 31, 2021

 

 

Common stock; $0.001 par value; 100,000,000 shares authorized; 52,423,944 shares issued and outstanding at June 30, 2022; 52,313,894 shares issued and outstanding at December 31, 2021

 

52,424

 

52,314

Additional paid-in capital

 

456,492,617

 

454,448,327

Accumulated deficit

 

(400,817,598)

 

(372,896,990)

Total stockholders’ equity

 

55,727,443

 

81,603,651

Total liabilities and stockholders’ equity

$

65,044,021

$

94,346,648

The accompanying notes are an integral part of the unaudited financial statements.

3

Table of Contents

 

GLYCOMIMETICS, INC.

Unaudited Statements of Operations and Comprehensive Loss

Three Months Ended June 30, 

Six Months Ended June 30, 

2022

2021

2022

2021

Revenue from collaboration and license agreements

    

$

75,000

    

$

142

    

$

75,000

    

$

1,055,582

    

Costs and expenses:

Research and development expense

 

7,973,278

 

10,167,282

 

17,577,200

 

21,314,517

General and administrative expense

 

5,454,877

 

4,237,342

 

10,511,065

 

8,425,452

Total costs and expenses

 

13,428,155

 

14,404,624

 

28,088,265

 

29,739,969

Loss from operations

 

(13,353,155)

 

(14,404,482)

 

(28,013,265)

 

(28,684,387)

Interest income

 

85,588

 

5,221

 

92,657

 

11,067

Net loss and comprehensive loss

$

(13,267,567)

$

(14,399,261)

$

(27,920,608)

$

(28,673,320)

Basic and diluted net loss per common share

$

(0.25)

$

(0.28)

$

(0.53)

$

(0.56)

Basic and diluted weighted-average number of common shares outstanding

 

52,407,347

 

51,539,010

 

52,369,369

 

51,118,096

The accompanying notes are an integral part of the unaudited financial statements.

4

Table of Contents

GLYCOMIMETICS, INC.

Unaudited Statements of Stockholders’ Equity

Additional

Total

Common Stock

Paid-In

Accumulated

Stockholders’

Shares  

Amount  

Capital

Deficit

Equity

Balance at December 31, 2021

 

52,313,894

$

52,314

$

454,448,327

$

(372,896,990)

$

81,603,651

Vesting of restricted stock units

 

78,550

 

78

 

(78)

 

 

Stock-based compensation

 

 

 

1,080,642

 

 

1,080,642

Net loss

 

 

 

 

(14,653,041)

 

(14,653,041)

Balance at March 31, 2022

 

52,392,444

52,392

455,528,891

(387,550,031)

68,031,252

Vesting of restricted stock units

 

31,500

 

32

 

(32)

 

 

Stock-based compensation

 

 

 

963,758

 

 

963,758

Net loss

 

 

 

 

(13,267,567)

 

(13,267,567)

Balance at June 30, 2022

 

52,423,944

$

52,424

$

456,492,617

$

(400,817,598)

$

55,727,443

Additional

Total

Common Stock

Paid-In

Accumulated

Stockholders’

Shares  

Amount  

Capital

Deficit

Equity

Balance at December 31, 2020

 

49,017,622

$

49,018

$

437,639,991

$

(309,469,553)

$

128,219,456

Issuance of common stock, net of issuance costs

2,517,603

2,517

9,557,182

9,559,699

Exercise of options

 

3,785

 

4

 

4,235

 

 

4,239

Stock-based compensation

 

 

 

1,614,185

 

 

1,614,185

Net loss

 

 

 

 

(14,274,059)

 

(14,274,059)

Balance at March 31, 2021

 

51,539,010

51,539

448,815,593

(323,743,612)

125,123,520

Stock-based compensation

 

 

 

1,562,161

 

 

1,562,161

Net loss

 

 

 

 

(14,399,261)

 

(14,399,261)

Balance at June 30, 2021

 

51,539,010

$

51,539

$

450,377,754

$

(338,142,873)

$

112,286,420

The accompanying notes are an integral part of the unaudited financial statements.

5

Table of Contents

GLYCOMIMETICS, INC.

Unaudited Statements of Cash Flows

Six Months Ended June 30, 

    

2022

    

2021

Operating activities

Net loss

$

(27,920,608)

$

(28,673,320)

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation

 

114,080

 

135,573

Loss on disposal of assets

3,498

2,174

Non-cash lease expense

402,479

365,521

Stock-based compensation

 

2,044,400

 

3,176,346

Changes in assets and liabilities:

Prepaid expenses and other current assets

 

(485,436)

 

(222,539)

Prepaid research and development expenses

(660,800)

Accounts payable

 

(836,670)

 

(915,351)

Accrued expenses

 

(2,104,703)

 

(1,170,346)

Lease liabilities

(485,046)

(434,757)

Net cash used in operating activities

 

(29,928,806)

 

(27,736,699)

Investing activities

Purchases of property and equipment

 

(81,707)

 

(8,162)

Net cash used in investing activities

 

(81,707)

 

(8,162)

Financing activities

Proceeds from issuance of common stock, net of issuance costs

 

 

9,559,699

Proceeds from exercise of stock options

 

 

4,239

Net cash provided by financing activities

 

 

9,563,938

Net change in cash and cash equivalents

 

(30,010,513)

 

(18,180,923)

Cash and cash equivalents, beginning of period

 

90,254,890

 

137,035,017

Cash and cash equivalents, end of period

$

60,244,377

$

118,854,094

The accompanying notes are an integral part of the unaudited financial statements.

6

Table of Contents

GLYCOMIMETICS, INC.

Notes to Unaudited Financial Statements

1. Description of the Business

GlycoMimetics, Inc. (the Company), a Delaware corporation headquartered in Rockville, Maryland, was incorporated in 2003. The Company is a clinical stage biotechnology company focused on the discovery and development of novel glycomimetic drugs to address unmet medical needs resulting from diseases in which carbohydrate biology plays a key role. Glycomimetics are molecules that mimic the structure of carbohydrates involved in important biological processes. Using its expertise in carbohydrate chemistry and knowledge of carbohydrate biology, the Company is developing a pipeline of proprietary glycomimetics that inhibit disease-related functions of carbohydrates, such as the roles they play in inflammation, cancer and infection.

2. Going Concern

The accompanying unaudited financial statements have been prepared assuming that the Company will continue as a going concern within one year after the date that the financial statements are issued. During 2021, the Company incurred a net loss of $63.4 million and had net cash flows used in operating activities of $57.5 million. At June 30, 2022, the Company had $60.2 million in cash and cash equivalents and had no committed source of additional funding from either debt or equity financings, although the Company may, in its discretion, sell equity securities under the terms of its existing at-the-market sales agreement (see Note 8), subject to certain conditions and limitations. Management believes that given the Company’s current cash position and forecasted negative cash flows from operating activities over the next twelve months, including the completion of its planned Phase 3 clinical trial of uproleselan, there is substantial doubt about its ability to continue as a going concern after the date that is one year from the date that these unaudited financial statements are issued, without obtaining additional financing.

The Company’s ability to fund its operations is dependent upon management’s plans, which include raising additional capital in the near term primarily through a combination of equity and debt financings, collaborations, strategic alliances and marketing, distribution or licensing arrangements and in the longer term, from revenue related to product sales, to the extent its product candidates receive marketing approval and can be commercialized. There can be no assurances that new financings or other transactions will be available to the Company on commercially acceptable terms, or at all. Also, any collaborations, strategic alliances and marketing, distribution or licensing arrangements may require the Company to give up some or all of its rights to a product or technology, which in some cases may be at less than the full potential value of such rights. If the Company is unable to obtain additional capital, the Company will assess its capital resources and may be required to delay, reduce the scope of or eliminate some or all of its operations, which may have a material adverse effect on the Company’s business, financial condition, results of operations and ability to operate as a going concern.

The accompanying unaudited financial statements do not include any adjustments that might be necessary if the Company is not able to continue as a going concern.

3. Significant Accounting Policies

There have been no material changes to the significant accounting policies previously disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, filed with the United States Securities and Exchange Commission (the SEC) on March 3, 2022 (the Form 10-K).

Basis of Accounting

The accompanying unaudited financial statements were prepared based on the accrual method of accounting in accordance with U.S. generally accepted accounting principles (GAAP).

Unaudited Financial Statements

The accompanying balance sheet as of June 30, 2022, statements of operations and comprehensive loss and stockholders’ equity for the three and six months ended June 30, 2022 and 2021 and statements of cash flows for the six

7

Table of Contents

months ended June 30, 2022 and 2021 are unaudited. These unaudited financial statements have been prepared in accordance with the rules and regulations of the SEC for interim financial information. Accordingly, they do not include all of the information and footnotes required by GAAP for complete annual financial statements. These unaudited financial statements should be read in conjunction with the audited financial statements and the accompanying notes for the year ended December 31, 2021 contained in the Form 10-K. The unaudited interim financial statements have been prepared on the same basis as the annual financial statements and in the opinion of management reflect all adjustments (consisting of normal recurring adjustments) necessary to state fairly the Company’s financial position as of June 30, 2022 and its results of operations and changes in its stockholders’ equity for the three and six months ended June 30, 2022 and 2021 and its cash flows for the six months ended June 30, 2022 and 2021. The December 31, 2021 balance sheet included herein was derived from audited financial statements, but does not include all disclosures including notes required by GAAP for complete annual financial statements. The financial data and other information disclosed in these notes to the financial statements related to the three and six months ended June 30, 2022 and 2021 are unaudited. Interim results are not necessarily indicative of results for an entire year or for any future period.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Although actual results could differ from those estimates, management does not believe that such differences would be material.

Fair Value Measurements

The Company had no assets or liabilities that were measured using quoted prices for similar assets and liabilities or significant unobservable inputs (Level 2 and Level 3 assets and liabilities, respectively) as of June 30, 2022 and December 31, 2021. The carrying value of cash held in money market funds of $58.2 million and $88.3 million as of June 30, 2022 and December 31, 2021, respectively, is included in cash and cash equivalents and approximates market values based on quoted market prices (Level 1 inputs). The Company did not transfer any assets measured at fair value on a recurring basis between levels during the three and six months ended June 30, 2022 and 2021.

Concentration of Credit Risk

Credit risk represents the risk that the Company would incur a loss if counterparties failed to perform pursuant to the terms of their agreements. Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash and cash equivalents. Cash and cash equivalents consist of money market funds with major financial institutions in the United States. These funds may be redeemed upon demand and, therefore, bear minimal risk. The Company does not anticipate any losses on such balances.

Revenue Recognition

The Company applies Accounting Standards Codification, or ASC, Topic 606, Revenue from Contracts with Customers (Topic 606), to all contracts with customers, except for contracts that are within the scope of other standards, such as leases, insurance, collaboration arrangements and financial instruments. Under Topic 606, an entity recognizes revenue when its customer obtains control of promised goods or services in an amount that reflects the consideration which the entity expects to receive in exchange for those goods and services. To determine revenue recognition for arrangements that an entity determines are within the scope of Topic 606, the entity performs the following five steps: (i) identify the contract(s) with the customer(s); (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods and services it transfers to the customer. At contract inception, the Company assesses the goods or services promised within each contract that falls under the scope of Topic 606, determines those that are performance obligations and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the

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transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.

The Company enters into licensing agreements which are within the scope of Topic 606, under which it licenses certain of its drug candidates’ rights to third parties. The terms of these arrangements typically include payment of one or more of the following: non-refundable, up-front license fees; development, regulatory and commercial milestone payments; and royalties on net sales of the licensed product, if and when earned. See Note 10 for additional information regarding the Company’s license agreements.

In determining the appropriate amount of revenue to be recognized as it fulfills its obligation under each of its agreements, the Company performs the five steps under Topic 606 described above. As part of the accounting for these arrangements, the Company must develop assumptions that require judgment to determine the stand-alone selling price, which may include forecasted revenues, development timelines, reimbursement of personnel costs, discount rates and probabilities of technical and regulatory success.

Licensing of Intellectual Property: If the license to the Company’s intellectual property is determined to be distinct from the other performance obligations identified in the arrangement, the Company recognizes revenue from non-refundable, up-front fees allocated to the license when the license is transferred to the licensee and the licensee is able to use and benefit from the license. For licenses that are bundled with other promises, the Company utilizes judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress for purposes of recognizing revenue from non-refundable, up-front fees. The Company evaluates the measure of progress each reporting period, and, if necessary, adjusts the measure of performance and related revenue recognition.

Milestone Payments: At the inception of each arrangement that includes development milestone payments, the Company evaluates whether the milestones are considered probable of being reached and estimates the amount to be included in the transaction price using the most likely amount method. If it is probable that a significant revenue reversal will not occur, the associated milestone value is included in the transaction price. Milestone payments that are not within the control of the Company or the licensee, such as regulatory approvals, are not considered probable of being achieved until those approvals are received. The transaction price is then allocated to each performance obligation on a relative stand-alone selling price basis, for which the Company recognizes revenue as or when the performance obligations under the contract are satisfied. At the end of each subsequent reporting period, the Company re-evaluates the probability of achievement of such development milestones and any related constraint and, if necessary, adjusts its estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect license, collaboration and other revenues and earnings in their period of adjustment.

Royalties: For arrangements that include sales-based royalties, including milestone payments based on the level of sales, and for which the license is deemed to be the predominant item to which royalties relate, the Company recognizes revenue at the later of (i) when the related sales occur or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied). To date, the Company has not recognized any royalty revenue from its license agreements.

Manufacturing and Supply: The obligations under the Company’s agreements may include clinical and/or commercial manufacturing products to be provided by the Company to the counterparty. The services are generally determined to be distinct from the other promises or performance obligations identified in the arrangement. The Company recognizes the transaction price allocated to these services as revenue at a point in time when transfer of control of the related products to the customer occurs.

Accruals for Clinical Trial Expenses

Clinical trial costs primarily consist of expenses incurred under agreements with contract research organizations (CROs), investigative sites, laboratory testing expenses, data management and consultants that conduct the Company's clinical trials. Clinical trial expenses are a significant component of research and development expenses, and the Company outsources a significant portion of these clinical trial activities to third parties. The accrual for site and patient costs includes inputs such as estimates of patient enrollment, patient cycles incurred, clinical site activations, estimated project duration and other pass-through costs. These inputs are required to be estimated due to a lag in receiving the actual clinical information from third parties. Payments for these activities are based on the terms of the individual

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arrangements, which may differ from the pattern of costs incurred, and are reflected on the balance sheets as a prepaid asset or accrued expenses. These third-party agreements are generally cancellable, and related costs are recorded as research and development expenses as incurred. Except for payments made in advance of services, clinical trial costs are expensed as incurred. Non-refundable advance clinical payments for goods or services that will be used or rendered for future research and development activities are recorded as a prepaid asset and recognized as expense as the related goods are delivered or the related services are performed. When evaluating the adequacy of the accrued expenses, management assessments include: (i) an evaluation by the project manager of the work that has been completed during the period; (ii) measurement of progress prepared internally and/or provided by the third-party service provider; (iii) analyses of data that justify the progress; and (iv) the Company’s judgment. Significant judgments and estimates may be made in determining the accrued balances at the end of any reporting period. Actual results could differ from the estimates made. The Company’s historical clinical accrual estimates have not been materially different from the actual costs. Clinical trial accruals that are due longer than one year are classified as noncurrent accrued expenses.

Stock-Based Compensation

Stock-based payments are accounted for in accordance with the provisions of ASC 718, Compensation—Stock Compensation. The fair value of stock-based payments is estimated, on the date of grant, using the Black-Scholes-Merton model. The resulting fair value is recognized ratably over the requisite service period, which is generally the vesting period of the option. The Company accounts for forfeitures as they occur.

The Company has elected to use the Black-Scholes-Merton option pricing model to value any options granted. The Company will reconsider use of the Black-Scholes-Merton model if additional information becomes available in the future that indicates another model would be more appropriate or if grants issued in future periods have characteristics that prevent their value from being reasonably estimated using this model.

A discussion of management’s methodology for developing some of the assumptions used in the valuation model follows:

Expected Dividend Yield—The Company has never declared or paid dividends and has no plans to do so in the foreseeable future.

Expected Volatility—Volatility is a measure of the amount by which a financial variable such as share price has fluctuated (historical volatility) or is expected to fluctuate (expected volatility) during a period. The Company bases the expected volatility on the historical volatility of the Company’s publicly traded common stock.

Risk-Free Interest Rate—This is the U.S. Treasury rate for the week of each option grant during the year, having a term that most closely resembles the expected life of the option.

Expected Term—This is a period of time that the options granted are expected to remain unexercised. Options granted have a maximum term of 10 years. The Company estimates the expected life of the option term to be 6.25 years. The Company uses a simplified method to calculate the average expected term.

Net Loss Per Common Share

Basic net loss per common share is determined by dividing net loss by the weighted-average number of common shares outstanding during the period, without consideration of common stock equivalents. Diluted net loss per share is computed by dividing net loss by the weighted-average number of common stock equivalents outstanding for the period. The treasury stock method is used to determine the dilutive effect of the Company’s stock options and restricted stock units (RSUs).

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The following potentially dilutive securities outstanding have been excluded from the computation of diluted weighted-average common shares outstanding, as they would be anti-dilutive:

Six Months Ended June 30, 

    

    

2022

    

2021

    

Stock options and RSUs

 

 

9,627,891

 

6,596,390

 

Comprehensive Loss

Comprehensive loss comprises net loss and other changes in equity that are excluded from net loss. For the three and six months ended June 30, 2022 and 2021, the Company’s net loss equaled comprehensive net loss and, accordingly, no additional disclosure is presented.

Recently Issued Accounting Standards

Accounting Standards Not Yet Adopted

There have been no new accounting pronouncements that have significance, or potential significance, to the Company’s unaudited financial statements as of and for the six months ended June 30, 2022.

4. Prepaid Expenses and Other Current Assets

The following is a summary of the Company’s prepaid expenses and other current assets:

June 30, 

December 31, 

2022

    

2021

Prepaid research and development expenses

$

292,812

$

273,396

Other prepaid expenses

605,562

259,061

Other receivables

 

120,866

 

1,347

Prepaid expenses and other current assets

$

1,019,240

$

533,804

5. Property and Equipment

Property and equipment, net consists of the following:

June 30, 

December 31, 

    

2022

    

2021

Furniture and fixtures

$

342,203

$

345,712

Laboratory equipment

 

1,347,635

 

1,406,346

Office equipment

 

17,762

 

17,762

Computer equipment

 

307,343

 

305,784

Leasehold improvements

616,133

616,133

Property and equipment

 

2,631,076

 

2,691,737

Less accumulated depreciation

 

(2,298,105)

 

(2,322,895)

Property and equipment, net

$

332,971

$

368,842

Depreciation expense was $54,773 and $67,485 for the three months ended June 30, 2022 and 2021, respectively, and $114,080 and $135,573 for the six months ended June 30, 2022 and 2021, respectively.

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6. Accrued Expenses

The following is a summary of the Company’s accrued expenses:

    

June 30, 

December 31, 

2022

2021

Accrued research and development expenses

$

3,716,195

$

5,824,365

Accrued bonuses

1,925,479

2,152,302

Accrued consulting and other professional fees

 

415,890

 

299,607

Accrued employee benefits

 

470,675

 

348,752

Other accrued expenses

 

82,426

 

90,342

Accrued expenses

$

6,610,665

$

8,715,368

7. Leases

At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on the circumstances present. The Company determines a lease exists if the contract conveys the right to control an identified asset for a period of time in exchange for consideration. Control is considered to exist when the lessee has the right to obtain substantially all of the economic benefits from the use of an identified asset as well as direct the right to use of that asset. Leases with a term greater than one year are recognized on the balance sheet as right-of-use assets, lease liabilities and, if applicable, long-term lease liabilities. The Company has elected not to recognize on the balance sheet leases with terms of one year or less on the lease commencement date. If a contract is considered to be a lease, the Company recognizes a lease liability based on the present value of the future lease payments over the expected lease term, with an offsetting entry to recognize a right-of-use asset.

The interest rate implicit in lease contracts is typically not readily determinable. As such, the Company utilizes the appropriate incremental borrowing rate, which is the rate incurred to borrow on a collateralized basis over a term similar to the term of the lease for which the rate is estimated. Certain adjustments to the right-of-use asset may be required for items such as initial direct costs paid or incentives received.

The Company leases office and research space in Rockville, Maryland under an operating lease with a term from June 15, 2015 through October 31, 2023 (the Lease) that is subject to annual rent increases. In connection with the Lease, the Company received rent abatement as a lease incentive in the initial year of the Lease. In March 2016, the Company amended the Lease (the Lease Amendment) to lease additional space as of June 1, 2016. In May 2016, the Company also paid a security deposit of $52,320 to be held until the expiration or termination of the Company’s obligations under the Lease. The term of the Lease Amendment for the additional space continues through October 31, 2023, the same date as for the premises originally leased under the Lease, subject to the Company’s renewal option set forth in the Lease.

The Company identified and applied the following significant assumptions in recognizing the right-of-use asset and corresponding liability for the Lease and Lease Amendment:

Lease term – The lease term includes both the noncancelable period and, when applicable, cancelable option periods where failure to exercise such option would result in an economic penalty. The Company’s renewal option to extend was not reasonably certain of being exercised as of June 30, 2022.

Incremental borrowing rate – As the Company’s lease does not provide an implicit rate, the Company used an incremental borrowing rate, or IBR, which is the rate incurred to borrow on a collateralized basis over a term similar to the term of the lease for which the rate is estimated. The Company determined the IBR to be 8.0% based on an estimated rate that considered the Company’s credit risk in the United States for a collateralized borrowing and term similar to the Lease.

As of June 30, 2022, the weighted-average remaining lease term was 1.3 years. There were no additional operating leases entered into during the six months ended June 30, 2022.

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The components of lease expense and related cash flows were as follows:

Three Months Ended June 30, 

Six Months Ended June 30, 

2022

   

2021

   

2022

   

2021

Operating lease cost

$

231,989

$

231,989

$

463,979

$

463,979

Variable lease cost

153,753

51,608

304,885

198,029

Total operating lease cost

$

385,742

$

283,597

$

768,864

$

662,008

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash outflows for operating leases

$

273,676

$

267,001

$

546,547

$

533,216

Maturities of lease liability due under these lease agreements as of June 30, 2022 were as follows:

Operating Lease

    

Obligation

July 1, 2022 - December 31, 2022

$

557,862

2023

940,840

Thereafter

Total

1,498,702

Present value adjustment

(63,734)

Present value of lease payments

$

1,434,968

8. Stockholders’ Equity

At-The-Market Sales Facility

In October 2020, the Company entered into an at-the-market sales agreement (the 2020 Sales Agreement) with Cowen and Company, LLC (Cowen). The 2020 Sales Agreement was terminated in April 2022. There were no shares sold under the 2020 Sales Agreement during the three or six months ended June 30, 2022. During the six months ended June 30, 2021, the Company issued and sold 2,517,603 shares of common stock under the 2020 Sales Agreement at a weighted average price per share of $3.92, for aggregate net proceeds of $9.6 million, after deducting commissions and offering expenses.

In March 2022, the Company filed a shelf registration statement with the SEC, which was declared effective on April 22, 2022. On April 28, 2022, the Company entered into a new at-the-market sales agreement (the 2022 Sales Agreement) with Cowen. Under the 2022 Sales Agreement, the Company may sell up to $100.0 million of its common stock. There have been no sales under the 2022 Sales Agreement through the date these financial statements were issued.

2003 Stock Incentive Plan

The 2003 Stock Incentive Plan (the 2003 Plan) provided for the grant of incentives and nonqualified stock options and restricted stock awards. The exercise price for incentive stock options must be at least equal to the fair value of the common stock on the grant date. Unless otherwise stated in a stock option agreement, 25% of the shares subject to an option grant will vest upon the first anniversary of the vesting start date and thereafter at the rate of one forty-eighth of the option shares per month as of the first day of each month after the first anniversary. Upon termination of employment by reasons other than death, cause, or disability, any vested options shall terminate 60 days after the termination date. Stock options terminate 10 years from the date of grant. The 2003 Plan expired on May 21, 2013.

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A summary of the Company’s stock option activity under the 2003 Plan for the six months ended June 30, 2022 is as follows:

 

WEIGHTED-

AGGREGATE

 

WEIGHTED-

AVERAGE

INTRINSIC

 

AVERAGE

REMAINING

VALUE

 

OUTSTANDING

EXERCISE

CONTRACTUAL

(IN

OPTIONS

    

PRICE

    

TERM (YEARS) 

    

THOUSANDS)

Outstanding as of December 31, 2021

93,465

$

2.00

 

0.3

Options exercised

 

Options forfeited

(73,859)

 

1.98

Outstanding, Vested and Exercisable as of June 30, 2022

19,606

 

2.07

 

0.1

$

As of June 30, 2022, outstanding options under the 2003 Plan were fully expensed and all shares underlying outstanding options were fully vested. There were no options exercised during the six months ended June 30, 2022. Total intrinsic value for the 3,785 options exercised during the six months ended June 30, 2021 was $8,668 and total cash received for options exercised was $4,239.

2013 Equity Incentive Plan

The Company’s board of directors adopted, and its stockholders approved, its 2013 Equity Incentive Plan effective on January 9, 2014, and the 2013 Equity Incentive Plan was amended and restated in May 2022 (as amended and restated, the 2013 Plan). The 2013 Plan provides for the grant of incentive stock options within the meaning of Section 422 of the Internal Revenue Code to the Company’s employees and its parent and subsidiary corporations’ employees, and for the grant of nonstatutory stock options, restricted stock awards, RSU awards, stock appreciation rights, performance stock awards and other forms of stock compensation to its employees, including officers, consultants and directors. The 2013 Plan also provides for the grant of performance cash awards to the Company’s employees, consultants and directors. Unless otherwise stated in a stock option agreement, 25% of the shares subject to an option grant will typically vest upon the first anniversary of the vesting start date, with the balance of the shares vesting in a series of thirty-six successive equal monthly installments as of the first day of each month measured from the first anniversary of the vesting start date. Upon termination of employment by reasons other than death, cause, or disability, any vested options will terminate 90 days after the termination date, unless otherwise set forth in a stock option agreement. Stock options generally terminate 10 years from the date of grant.

Authorized Shares

The maximum number of shares of common stock that initially could be issued under the 2013 Plan was 1,000,000 shares, plus any shares subject to stock options or similar awards granted under the 2003 Plan that expire or terminate without having been exercised in full or are forfeited or repurchased by the Company. In May 2022, the 2013 Plan was amended to increase the existing share reserve by 2,619,622 shares, and provide that, beginning on January 1, 2023 and ending on (and including) January 1, 2029, the maximum number of shares of common stock that may be issued under the 2013 Plan will cumulatively be increased by 4% of the number of shares of common stock issued and outstanding on the immediately preceding December 31, or such lesser number of shares as determined by the board of directors or the compensation committee thereof. The maximum number of shares that may be issued pursuant to exercise of incentive stock options under the 2013 Plan is 20,000,000 shares. As of June 30, 2022, the total number of shares reserved for issuance under the 2013 Plan was 9,506,767 shares, of which 1,469,324 shares were available for future grants.

Shares issued under the 2013 Plan may be authorized but unissued or reacquired shares of common stock. Shares subject to stock awards granted under the 2013 Plan that expire or terminate without being exercised in full, or that are paid out in cash rather than in shares, will not reduce the number of shares available for issuance under the 2013 Plan. Additionally, shares issued pursuant to stock awards under the 2013 Plan that the Company repurchases or that are forfeited, as well as shares reacquired by the Company as consideration for the exercise or purchase price of a stock

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award or to satisfy tax withholding obligations related to a stock award, will become available for future grant under the 2013 Plan.

A summary of the Company’s stock option activity under the 2013 Plan for the six months ended June 30, 2022 is as follows:

WEIGHTED-

AGGREGATE

 

WEIGHTED-

AVERAGE

INTRINSIC

 

AVERAGE

REMAINING

VALUE

 

OUTSTANDING

EXERCISE

CONTRACTUAL

(IN

 

OPTIONS

    

PRICE

    

TERM (YEARS) 

    

THOUSANDS)

Outstanding as of December 31, 2021

5,655,457

$

8.30

6.0

Options granted

1,980,800

1.07

Options exercised

Options forfeited

(385,434)

5.43

Outstanding as of June 30, 2022

7,250,823

6.47

6.4

$

Vested or expected to vest as of June 30, 2022

7,048,223

6.63

6.3

Exercisable as of June 30, 2022

4,585,123

8.93

4.8

As of June 30, 2022, there was $4,197,865 of total unrecognized compensation expense related to unvested options under the 2013 Plan that will be recognized over a weighted-average period of approximately 2.1 years. There were no options exercised under the 2013 Plan during the six months ended June 30, 2022 and 2021. The total fair value of shares underlying options which vested in the six months ended June 30, 2022 and 2021 was $2,060,622 and $3,745,954, respectively.

In January 2022, the Company granted stock options to purchase an aggregate of 202,600 shares to certain employees under the 2013 Plan which were subject to performance vesting conditions. The shares will vest upon achievement of milestones as follows: (i) one-half of the shares will vest upon FDA approval of uproleselan for patients with relapsed/refractory acute myeloid leukemia and (ii) one-half of the shares will vest upon the first commercial sale of uproleselan in the United States or abroad. The maximum fair value of $162,080 associated with the performance-based options granted in January 2022 is excluded from the unrecognized compensation expense under the 2013 Plan as the completion of the performance milestones was not probable as of June 30, 2022. The Company will reevaluate at the end of each reporting period the probability that the performance conditions will be achieved and will record any adjustments to the compensation cost at that time.

An RSU is a stock award that entitles the holder to receive shares of the Company’s common stock as the award vests. The fair value of each RSU is based on the closing price of the Company’s common stock on the date of grant. In January 2021, the Company awarded RSUs under the 2013 Plan to its employees. The RSUs granted vest over four years in equal installments on each anniversary of the grant date, provided that the employee remains employed by the Company at the applicable vesting date. Compensation expense is recognized on a straight-line basis. As of June 30, 2022, there was $701,466 of total unrecognized compensation expense associated with outstanding RSU grants that will be recognized over a weighted-average period of approximately 2.6 years.

The following is a summary of RSU activity under the 2013 Plan for the six months ended June 30, 2022:

 

Weighted-Average

 

Number of Shares

Grant Date

 

Underlying RSUs

    

Fair Value

 

Unvested at December 31, 2021

345,600

$

3.70

Granted

 

Forfeited

(19,572)

 

3.81

Vested

(110,050)

 

3.45

Unvested at June 30, 2022

215,978

 

3.81

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Inducement Plan

In January 2020, the Company’s board of directors adopted the GlycoMimetics, Inc. Inducement Plan (the Inducement Plan). The Inducement Plan provides for the grant of nonstatutory stock options, restricted stock awards, RSU awards, stock appreciation rights and other forms of stock awards to individuals not previously an employee or director of the Company as an inducement for such individuals to join the Company. Unless otherwise stated in an applicable stock option agreement, one-fourth of the shares subject to an option grant under the Inducement Plan will typically vest upon the first anniversary of the vesting start date, with the balance of the shares vesting in a series of thirty-six successive equal monthly installments as of the first day of each month measured from the first anniversary of the vesting start date, subject to the new employee’s continued service with the Company through the applicable vesting dates. Upon termination of employment by reasons other than death, cause or disability, any vested options will terminate 90 days after the termination date, unless otherwise set forth in a stock option agreement. Stock options generally terminate 10 years from the date of grant. There were 500,000 shares of common stock reserved under the Inducement Plan at its adoption date. In August 2021, the Company’s board of directors adopted an amendment to the Inducement Plan to increase the number of shares reserved to 2,000,000 shares, and in January 2022 the Company’s board of directors adopted an amendment to the Inducement Plan to further increase the number of shares reserved to 3,000,000 shares. As of June 30, 2022, there were 848,424 shares available for future grants under the Inducement Plan.

A summary of the Company’s stock option activity under the Inducement Plan for the six months ended June 30, 2022 is as follows:

WEIGHTED-

AGGREGATE

 

WEIGHTED-

AVERAGE

INTRINSIC

 

AVERAGE

REMAINING

VALUE

 

OUTSTANDING

EXERCISE

CONTRACTUAL

(IN

 

OPTIONS

    

PRICE

    

TERM (YEARS) 

    

THOUSANDS)

Outstanding as of December 31, 2021

1,813,600

$

2.08

9.6

Options granted

335,000

1.13

Options exercised

Options forfeited

(7,116)

3.69

Outstanding as of June 30, 2022

2,141,484

1.92

9.2

$

Vested or expected to vest as of June 30, 2022

1,557,284

1.91

9.2

Exercisable as of June 30, 2022

29,501

3.59

6.7

As of June 30, 2022, there was $1,645,467 of total unrecognized compensation expense related to unvested options under the Inducement Plan that will be recognized over a weighted-average period of approximately 3.2 years. There were no options exercised under the Inducement Plan during the six months ended June 30, 2022 and 2021. The total fair value of shares underlying options which vested in the six months ended June 30, 2022 and 2021 was $20,002 and $17,591, respectively.

During 2021 and the six months ended June 30, 2022, the Company granted stock options to purchase an aggregate of 584,200 shares to certain newly hired employees under the Inducement Plan which options were subject to the same performance vesting conditions described above with respect to the stock options granted in January 2022 under the 2013 Plan. The maximum fair value of $825,353 associated with the performance-based options is excluded from the unrecognized compensation expense under the Inducement Plan as the completion of the performance milestones were not probable as of June 30, 2022. The Company will reevaluate at the end of each reporting period the probability that the performance conditions will be achieved and will record any adjustments to the compensation cost at that time.

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The weighted-average fair value of the options granted under all equity incentive plans during the six months ended June 30, 2022 and 2021 was $0.78 per share and $2.63 per share, respectively, applying the Black-Scholes-Merton option pricing model utilizing the following weighted-average assumptions:

    

2022

2021

Expected term

 

6.25 years

6.25 years

Expected volatility

 

84.54%

83.75%

Risk-free interest rate

 

1.74%

0.67%

Expected dividend yield

 

0%

0%

Stock-based compensation expense was classified on the statements of operations as follows for the three and six months ended June 30, 2022 and 2021:

Three Months Ended June 30, 

Six Months Ended June 30, 

    

2022

2021

   

2022

2021

    

Research and development expense

$

270,050

$

609,321

$

588,875

$

1,298,294

General and administrative expense

 

693,708

 

952,840

 

1,455,525

 

1,878,052

Total stock-based compensation expense

$

963,758

$

1,562,161

$

2,044,400

$

3,176,346

9. Income Taxes

The Company has not recorded any tax provision or benefit for the six months ended June 30, 2022 and 2021. The Company has provided a valuation allowance for the full amount of its net deferred tax assets since realization of any future benefit from deductible temporary differences, net operating loss carryforwards and research and development credits is not more-likely-than-not to be realized at June 30, 2022 and December 31, 2021.

10. License and Collaboration Agreements

Apollomics

In January 2020, the Company entered into a collaboration and license agreement (the Agreement) with Apollomics (Hong Kong), Limited (Apollomics) for the development, manufacture and commercialization of products derived from two of the Company’s compounds, GMI-1271 and GMI-1687 (the Products) for therapeutic and prophylactic uses (the Field) in China, Taiwan, Hong Kong and Macau (the Territory). Under the terms of the Agreement, the Company granted Apollomics:

an exclusive license, with the right to sublicense, to develop, manufacture and have manufactured, distribute, market, promote, sell, have sold, offer for sale, import, label, package and otherwise the Products in the Field in the Territory; and
a non-exclusive license to conduct preclinical research with respect to Products in the Field outside of the Territory for the purposes of developing such Products for use in the Territory.

In June 2020, the Company and Apollomics entered into a clinical supply agreement pursuant to which the Company will manufacture and supply the Products at agreed upon prices. Apollomics has the option to begin manufacture of the Products after appropriate material transfer requirements are met. During the six months ended June 30, 2021, the Company recognized $1.1 million as revenue from the sale of clinical supplies to Apollomics. The Company did not recognize revenue under the clinical supplies agreement during the six months ended June 30, 2022.

The Company evaluated the Agreement under the provisions of ASC 606 and identified two performance obligations under this revenue arrangement: the (i) delivery of functional licenses and (ii) manufacture and supply of the Products. The initial transaction price consists of a $9.0 million non-refundable up-front payment which was allocated to

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the delivered functional licenses and recognized in full as revenue in the first quarter of 2020 given that the performance obligation was satisfied upon inception. The Agreement contains various forms of variable consideration, including (i) up to $75.0 million in development milestones based on achievement of certain clinical and regulatory events, (ii) up to $105.0 million of sales-based commercial milestones based on achievement of certain annual net sales targets, (iii) sales-based royalties at specified percentages of net sales ranging from the high single digits to 15%, and (iv) manufacture and supply of clinical and commercial Products. The Company has fully constrained the development milestone consideration using the most likely amount method and will recognize that revenue when it is probable that recognition of revenue related to the milestone will not result in a significant reversal in amounts recognized in future periods, and as such have been excluded from the transaction price. In September 2020, the Company received and recognized as revenue a non-refundable $1.0 million development milestone payment upon acceptance by Chinese regulatory authorities of a Phase 3 bridging study design to support registration in China. The Company did not recognize any milestone revenue under the Agreement for the six months ended June 30, 2022 or 2021.

The Company will recognize revenue related to the sales-based commercial and royalty milestones and royalties at the later of (i) when the related sales occur or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied), as they were determined to relate predominantly to the licenses granted to Apollomics and, therefore, have been excluded from the transaction price. Lastly, the Company has determined that the consideration for the manufacturing and supply is all variable and is fully constrained. Variable consideration allocated to manufacturing and supply will be recognized at a point in time when the Product is delivered and when the title to the Product is transferred to the customer pursuant to the agreement. The Company reassesses the transaction price in each reporting period and upon the occurrence of a change in circumstances or final resolution of any particular event.

11. Risks and Uncertainties

COVID-19

The impact of the continuing COVID-19 pandemic on the Company’s business and financial performance is uncertain and depends on various factors, including the duration of the pandemic, government restrictions and other actions, including relief measures and mass vaccination efforts, implemented to address the impact of the pandemic, and resulting impacts on the financial markets and overall economy. The imposition of directives by state and federal governments in the United States as well as governments in other regions of the world in response to the COVID-19 pandemic, including in locations in which its Phase 3 clinical trial of uproleselan is being conducted, did previously result in some delays associated with the trial. COVID-19 infection rates continue to fluctuate, particularly with the emergence of variants and sub-variants, which could still negatively affect the completion of the trial on the timeline that the Company currently expects. The Company is unable to determine the extent of the impact of the pandemic on its operations and financial condition going forward. These developments are highly uncertain and unpredictable, and may materially adversely affect the Company’s financial position and results of operations. The Company continues to closely monitor the COVID-19 situation and any potential impact to its planned activities.

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ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Certain statements contained in this Quarterly Report on Form 10-Q may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The words or phrases “would be,” “will allow,” “intends to,” “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimate,” “project,” or similar expressions, or the negative of such words or phrases, are intended to identify “forward-looking statements.” We have based these forward-looking statements on our current expectations and projections about future events. Because such statements include risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements. Factors that could cause or contribute to these differences include those below and elsewhere in this Quarterly Report on Form 10-Q, our Annual Report on Form 10-K, particularly in Part I – Item 1A, “Risk Factors,” and our other filings with the Securities and Exchange Commission. Statements made herein are as of the date of the filing of this Form 10-Q with the Securities and Exchange Commission and should not be relied upon as of any subsequent date. Unless otherwise required by applicable law, we do not undertake, and we specifically disclaim, any obligation to update any forward-looking statements to reflect occurrences, developments, unanticipated events or circumstances after the date of such statement.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited financial statements and related notes that appear in Item 1 of this Quarterly Report on Form 10-Q and with our audited financial statements and related notes for the year ended December 31, 2021, which are included in our Annual Report on Form 10-K filed with the SEC on March 3, 2022.

Overview

We are a clinical-stage biotechnology company focused on the discovery and development of novel glycomimetic drugs to address unmet medical needs resulting from diseases in which carbohydrate biology plays a key role. We are developing a pipeline of proprietary glycomimetics, which are small molecules that mimic the structure of carbohydrates involved in important biological processes, to inhibit disease-related functions of carbohydrates such as the roles they play in inflammation, cancer and infection. We believe this represents an innovative approach to drug discovery to treat a wide range of diseases. We are focusing our efforts on drug candidates for diseases that we believe will qualify for orphan drug designation.

Our proprietary glycomimetics platform is based on our expertise in carbohydrate chemistry and our understanding of the role carbohydrates play in key biological processes. Most human proteins are modified by the addition of complex carbohydrate structures to the surface of such proteins, which affects the functions of the proteins and their interactions with other molecules. Our initial research and development efforts have focused on drug candidates targeting selectins, which are proteins that serve as adhesion molecules and bind to carbohydrates that are involved in the inflammatory component and progression of a wide range of diseases, including hematologic disorders, cancer and cardiovascular disease. For example, we believe that members of the selectin family play a key role in tumor metastasis and resistance to chemotherapy. Inhibiting specific carbohydrates from binding to selectins has long been viewed as a potentially attractive approach for therapeutic intervention. The ability to successfully develop drug-like carbohydrate compounds that inhibit binding with selectins, known as selectin antagonists, has historically been limited by their potency and the complexities of carbohydrate chemistry. We believe our expertise in the rational design of potent glycomimetic antagonists with drug-like properties and in carbohydrate chemistry enables us to identify highly effective selectin antagonists and other glycomimetics that may inhibit the disease-related functions of certain carbohydrates in order to develop novel drug candidates to address orphan diseases with high unmet medical need.

Our lead glycomimetic drug candidate, uproleselan, is a specific E-selectin inhibitor that we are developing to be used in combination with chemotherapy to treat patients with acute myeloid leukemia, or AML, a life-threatening hematologic cancer, and potentially other hematologic cancers. In 2021, we completed enrollment of patients in a randomized, double-blind, placebo-controlled Phase 3 pivotal clinical trial to evaluate uproleselan in individuals with relapsed/refractory AML, the design of which was based on guidance received from the U.S. Food and Drug Administration, or FDA. Based on current projections, we anticipate reaching the overall survival events trigger mid-year 2023, with top line data disclosure shortly thereafter.

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We have also entered into a Cooperative Research and Development Agreement, or CRADA, with the National Cancer Institute, or NCI, part of the National Institutes of Health, to conduct a Phase 2/3 randomized, controlled clinical trial testing the addition of uproleselan to a standard chemotherapy regimen. Enrollment of the Phase 2 portion was completed in November 2021. There will be a planned interim analysis that will evaluate event-free survival and whether the pre-specified threshold for continuing to Phase 3 has been met. The trial may also provide support for regulatory filings, if the results of the planned interim analysis are sufficiently positive.

Uproleselan is also being studied in multiple investigator-sponsored trials, with data readouts from some or all of these trials expected in 2022 or 2023.

We have rationally designed an innovative antagonist of E-selectin, GMI-1687, that could be a subcutaneously administered treatment. Initially developed as a potential life-cycle extension to uproleselan, we believe that GMI-1687 could be developed to broaden the clinical usefulness of an E-selectin antagonist to conditions where outpatient treatment is preferred or required. In May 2022, we filed an investigational new drug application, or IND, for GMI-1687 in Sickle Cell Disease and received the “safe to proceed” letter from the FDA in June 2022. We are actively seeking a licensing partner to continue clinical development of this drug candidate.

We are also developing a drug candidate, GMI-1359, that simultaneously targets both E-selectin and a chemokine receptor known as CXCR4. In the fourth quarter of 2021, we terminated a Phase 1b trial of GMI-1359 in hormone receptor positive breast cancer patients whose tumors had spread to bone. We are also advancing other preclinical-stage programs, including small-molecule glycomimetic compounds that inhibit the protein galectin-3, which we believe may have potential to be an orally administered treatment for fibrosis, cancer and cardiovascular disease.

We have financed our operations primarily through private placements of our securities, up-front and milestone payments under our license and collaboration agreements and the net proceeds from public offerings of common stock, including sales of common stock under at-the-market sales facilities with Cowen and Company LLC, or Cowen. We have no approved drugs currently available for sale, and substantially all of our revenue to date has been revenue from up-front and milestone payments under license and collaboration agreements.

Since inception, we have incurred significant operating losses. We had an accumulated deficit of $400.8 million as of June 30, 2022 and we expect to continue to incur significant expenses and operating losses over at least the next several years. Our net losses may fluctuate significantly from quarter to quarter and year to year, depending on the timing of our clinical trials and our expenditures on other research and development activities. Our forecasted expenses include those we will need to undertake in order to:

initiate, conduct and complete our ongoing and planned clinical trials of uproleselan, including fulfilling our funding and supply commitments related to the ongoing clinical trials of uproleselan;
conduct NDA-enabling activities related to manufacture, toxicology and clinical pharmacology for our product candidates;
manufacture additional uproleselan drug supplies for validation and prepare for commercialization;
seek regulatory approvals for any drug candidates that successfully complete clinical trials;
ultimately establish a sales, marketing and distribution infrastructure and scale up external manufacturing capabilities to commercialize any drug candidates for which we may obtain regulatory approval;
maintain, expand and protect our intellectual property portfolio;
maintain sufficient levels of insurance, including product liability and directors, officers and corporate liability insurance policies; and
add personnel to support our drug development and potential future commercialization efforts.

To fund further operations, we will need to raise capital. We may obtain additional financing in the future through the issuance of our common stock, through other equity or debt financings, potentially including the use of our at-the-market sales facility with Cowen, or through collaborations or partnerships with other companies. We may not be able to raise additional capital on terms acceptable to us, or at all, and any failure to raise capital as and when needed could compromise our ability to execute on our business plan. Although it is difficult to predict future liquidity requirements, we believe that our existing cash and cash equivalents will be sufficient to fund our operations into the third quarter of

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2023 without giving effect to potential business development opportunities, such as upfront or milestone payments under license and collaboration agreements, or additional financing activities including the potential sale of common stock under our at-the-market sales facility or otherwise. However, our ability to successfully transition to profitability will be dependent upon achieving a level of revenues adequate to support our cost structure. We cannot assure you that we will ever be profitable or generate positive cash flow from operating activities.

Our Collaboration and License Agreements

Apollomics

In January 2020, we entered into an exclusive collaboration and license agreement with Apollomics (Hong Kong) Limited, or Apollomics, for the development and commercialization of uproleselan and GMI-1687 in Mainland China, Hong Kong, Macau and Taiwan, also known as Greater China. Under the terms of the agreement, Apollomics will be responsible for clinical development and commercialization in Greater China. We will also collaborate with Apollomics to advance the preclinical and clinical development of GMI-1687. We received an upfront cash payment of $9.0 million and in September 2020 received a $1.0 million development milestone payment. Subject to the terms of the agreement, we will be eligible to receive potential further milestone payments totaling approximately $179.0 million, as well as tiered royalties ranging from the high single digits to 15%, as a percentage of net sales. Apollomics will be responsible for all costs related to development, regulatory approvals, and commercialization activities for uproleselan and GMI-1687 in Greater China, and we and Apollomics expect to enter into clinical and commercial supply agreements with respect to our provision of uproleselan and GMI-1687 to Apollomics. We retain all rights for both compounds in the rest of the world. There were no milestones recognized from Apollomics for the six months ended June 30, 2022.

In September 2020, the China National Medical Products Administration (NMPA) Center for Drug Evaluation (CDE) granted IND approval for uproleselan (also known as APL-106), enabling the initiation of a Phase 1 pharmacokinetics and tolerability study and a planned Phase 3 bridging study of APL-106 in combination with chemotherapy in relapsed/refractory AML. In January 2021, APL-106 was granted Breakthrough Therapy Designation from the China NMPA CDE for the treatment of relapsed/refractory AML. In March 2021, Apollomics enrolled the first patient in the Phase 1 study and enrolled the first patient in the Phase 3 portion of the trial in November 2021.

In June 2020, we entered into a clinical supply agreement with Apollomics under which we will manufacture and supply uproleselan product to Apollomics at agreed upon prices. Apollomics has the option to begin manufacture after appropriate material transfer requirements are met. During the year ended December 31, 2021, we recognized $1.1 million in revenue from the sale of clinical supplies to Apollomics under the clinical supply agreement. There was no revenue recognized from the sale of clinical supplies to Apollomics for the six months ended June 30, 2022.

Critical Accounting Policies and Significant Judgments and Estimates

Our management’s discussion and analysis of our financial condition and results of operations are based on our financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses in our financial statements. On an ongoing basis, we evaluate our estimates and judgments, including those related to our revenue recognition, accrued research and development expenses, stock-based compensation expense and income taxes. We base our estimates on historical experience, known trends and events and various other factors that we believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other resources. Actual results may differ from these estimates and judgments under different assumptions or conditions. We periodically review our estimates in light of changes in circumstances, facts and experience. The effects of material revisions in estimates are reflected in our financial statements prospectively from the date of the change in estimate.

We define our critical accounting policies as those accounting principles generally accepted in the United States that require us to make subjective estimates and judgments about matters that are uncertain and are likely to have a material impact on our financial condition and results of operations, as well as the specific manner in which we apply those principles. For a description of our critical accounting policies and estimates, please see the disclosures in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2021. There have not been any material changes to our critical accounting policies and estimates since December 31, 2021.

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Components of Operating Results

Revenue

To date, we have not generated any revenue from the sale of our drug candidates and do not expect to generate any revenue from the sale of drugs in the near future. Substantially all of our historical revenue consisted of upfront and milestone payments under license and collaboration agreements.

Research and Development

Research and development expenses consist of expenses incurred in performing research and development activities, including compensation and benefits for full-time research and development employees, facilities expenses, overhead expenses, cost of laboratory supplies, clinical trial and related clinical manufacturing expenses, fees paid to CROs and other consultants and other outside expenses. Other preclinical research and platform programs include activities related to exploratory efforts, target validation, lead optimization for our earlier programs and our proprietary glycomimetics platform. Our research and development expenses have related primarily to the development of rivipansel, uproleselan and our other drug candidates.

We do not currently utilize a formal time allocation system to capture expenses on a project-by-project basis because we are organized and record expense by functional department and our employees may allocate time to more than one development project. Accordingly, we only allocate a portion of our research and development expenses by functional area and by drug candidate.

Research and development costs are expensed as incurred. Non-refundable advance payments for goods or services to be received in the future for use in research and development activities are deferred and capitalized. The capitalized amounts are expensed as the related goods are delivered or the services are performed.

Research and development activities are central to our business model. Drug candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later stage clinical trials. It is difficult to determine with certainty the duration and completion costs of our current or future preclinical studies and clinical trials of our drug candidates, or if, when or to what extent we will generate revenues from the commercialization and sale of any of our drug candidates that obtain regulatory approval. We may never succeed in achieving regulatory approval for any of our drug candidates.

The duration, costs and timing of clinical trials and development of our drug candidates will depend on a variety of factors that include:

per patient trial costs;
the number of patients that participate in the trials;
the number of sites included in the trials;
the countries in which the trial is conducted;
the length of time required to enroll eligible patients, which could be lengthened as a result of the ongoing COVID-19 pandemic;
the number of doses that patients receive;
the drop-out or discontinuation rates of patients;
potential additional safety monitoring or other studies requested by regulatory agencies;
the duration of patient follow-up; and
the safety and efficacy profile of the drug candidate.

In addition, the probability of success for each drug candidate will depend on numerous factors, including competition, manufacturing capability and commercial viability. We will determine which programs to pursue and how

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much to fund each program in response to the scientific and clinical success of each drug candidate, as well as an assessment of each drug candidate’s commercial potential.

General and Administrative

General and administrative expenses consist primarily of salaries and other related costs, including stock-based compensation, for personnel in executive, finance, accounting, business development and human resources functions. Other significant costs include facility costs not otherwise included in research and development expenses, legal fees relating to patent and corporate matters and fees for accounting and consulting services. We anticipate that our general and administrative expenses will increase in the future as we undertake commercialization efforts for uproleselan.

Interest Income

Interest income consists of interest income earned on our cash and cash equivalents.

Results of Operations for the Three and Six Months Ended June 30, 2022 and 2021

The following tables set forth our results of operations for the three and six months ended June 30, 2022 and 2021:

 

Three Months Ended June 30, 

Increase/(Decrease)

(dollars in thousands)

    

2022

    

2021

    

    

Revenue

$

75

$

$

75

NA

Costs and expenses:

                        

Research and development expense

 

7,973

 

10,167

 

(2,194)

(22)

%

General and administrative expense

 

5,455

 

4,237

 

1,218

29

%

Total costs and expenses

 

13,428

 

14,404

 

(976)

(7)

%

Loss from operations

 

(13,353)

 

(14,404)

 

1,051

(7)

%

Interest income

 

86

 

5

 

81

1,620

%

Net loss and comprehensive loss

$

(13,267)

$

(14,399)

$

1,132

(8)

%

Six Months Ended June 30, 

Increase/(Decrease)

(dollars in thousands)

    

2022

    

2021

    

    

Revenue

$

75

$

1,056

$

(981)

(93)

%

Costs and expenses:

                        

Research and development expense

 

17,577

 

21,315

 

(3,738)

(18)

%

General and administrative expense

 

10,511

 

8,425

 

2,086

25

%

Total costs and expenses

 

28,088

 

29,740

 

(1,652)

(6)

%

Loss from operations

 

(28,013)

 

(28,684)

 

671

(2)

%

Interest income

 

93

 

11

 

82

745

%

Net loss and comprehensive loss

$

(27,920)

$

(28,673)

$

753

(3)

%

Revenue

During the six months ended June 30, 2022 and 2021, we recognized $75,000 and $1.1 million, respectively in revenue from agreements with Apollomics.

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Research and Development Expense

The following tables summarize our research and development expense by functional area for the three and six months ended June 30, 2022 and 2021:

Three Months Ended June 30, 

Increase/(Decrease)

(dollars in thousands)

    

2022

    

2021

    

Clinical development

$

2,794

$

4,469

$

(1,675)

(37)

%

Manufacturing and formulation

 

1,605

 

1,584

 

21

1

%

Contract research services, consulting and other costs

 

322

 

696

 

(374)

(54)

%

Laboratory costs

 

468

 

492

 

(24)

(5)

%

Personnel-related

 

2,514

 

2,317

 

197

9

%

Stock-based compensation

270

609

(339)

(56)

%

Research and development expense

$

7,973

$

10,167

$

(2,194)

(22)

%

Six Months Ended June 30, 

Increase/(Decrease)

(dollars in thousands)

    

2022

    

2021

    

Clinical development

$

5,811

$

9,122

$

(3,311)

(36)

%

Manufacturing and formulation

 

4,547

 

3,875

 

672

17

%

Contract research services, consulting and other costs

 

711

 

1,239

 

(528)

(43)

%

Laboratory costs

 

966

 

1,005

 

(39)

(4)

%

Personnel-related

 

4,953

 

4,776

 

177

4

%

Stock-based com