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Galera Therapeutics, Inc. (GRTX)·Q3 2023 Earnings Summary

Executive Summary

  • Q3 2023 delivered reduced operating spend and a narrower net loss: net loss of $(15.1)M and EPS of $(0.33) vs $(20.7)M and $(0.48) in Q2 2023 and $(16.0)M and $(0.60) in Q3 2022 .
  • Regulatory setbacks dominated: FDA Type A minutes reiterated the need for an additional Phase 3 trial for avasopasem; management discontinued both GRECO trials (rucosopasem) following GRECO-2 futility results .
  • Liquidity improved on cuts and trial halts: cash, cash equivalents and short-term investments were $28.4M; runway guided “into 2025” post-trial discontinuation .
  • Strategic alternatives evaluation commenced (Stifel engaged), a key narrative and potential stock catalyst pending transaction outcomes .

What Went Well and What Went Wrong

What Went Well

  • Cost discipline: R&D fell to $6.1M (from $8.1M y/y), with lower avasopasem costs and reduced personnel expense following the workforce reduction; G&A held at $5.0M (vs $4.9M y/y) despite legal and commercialization costs largely offset by headcount cuts .
  • Cash runway extended as a result of program changes and reductions, with management guiding funding “into 2025” after discontinuing GRECO-1/2 .
  • Positive medical signal presented: ROMAN trial data showed a 50% reduction in cisplatin-related CKD at one year in the avasopasem arm vs placebo, across dosing schedules and CKD stages (ASN Kidney Week presentation) .

What Went Wrong

  • Regulatory setback: FDA confirmed an additional Phase 3 trial is required to support avasopasem resubmission, lengthening timelines and capital needs .
  • Pipeline contraction: GRECO-2 (LAPC) failed futility, leading to discontinuation of both GRECO-2 and GRECO-1 (NSCLC), removing near-term clinical catalysts and potential value-creation paths .
  • Restructuring charges of $2.3M in Q3 associated with the ~70% workforce reduction, reflecting execution costs of strategic pivot .

Financial Results

MetricQ3 2022Q1 2023Q2 2023Q3 2023
Net Loss ($USD Millions)$(16.0) $(17.7) $(20.7) $(15.1)
EPS ($USD)$(0.60) $(0.50) $(0.48) $(0.33)
R&D Expense ($USD Millions)$8.1 $7.3 $7.6 $6.1
G&A Expense ($USD Millions)$4.9 $6.6 $9.2 $5.0
Restructuring ($USD Millions)———$2.3
Cash & ST Investments ($USD Millions)—$47.8 $38.8 $28.4

Notes:

  • The press release statements of operations present operating expenses and net loss; no product revenue was reported in the Q3 2023 press release Exhibit 99.1 .
  • Weighted average shares (Q3 2023): 45,477,952 .

KPIs (operating):

  • Workforce reduction: ~70% headcount cut (22 employees); charges recognized in Q3 were $2.3M; action aimed at lowering OpEx and extending runway .
  • Cash runway guidance: into Q2 2024 (post-August RIF) updated to into 2025 post GRECO discontinuation .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Cash RunwayOperating horizonInto Q2 2024 (post-August 2023 workforce reduction) Into 2025 (post GRECO-1/2 discontinuation) Raised (extended)
GRECO-2 (LAPC)Enrollment & toplineEnroll complete H1 2024; topline by YE 2024 Discontinued post futility analysis (data cutoff Oct 9, 2023) Lowered/Withdrawn
GRECO-1 (NSCLC)Enrollment & toplinePhase 2 enrollment completion H2 2023; topline H2 2024 Discontinued following GRECO-2 futility Lowered/Withdrawn
Avasopasem (SOM) Regulatory PathApproval pathCRL received; requested Type A meeting FDA Type A minutes: additional Phase 3 required for resubmission Clarified (more trials required)

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2 2023)Current Period (Q3 2023)Trend
Regulatory/Approval OutlookQ1: NDA priority review; PDUFA Aug 9, 2023 . Q2: FDA CRL; plan for Type A meeting .FDA Type A minutes confirm need for an additional Phase 3; resubmission contingent on new trial .From optimism (Q1) → setback (Q2) → clarity with higher bar (Q3).
R&D Execution (GRECO trials)Q1/Q2: Ongoing enrollment in GRECO-2 (LAPC) and GRECO-1 (NSCLC), timelines set for completion and topline readouts .GRECO-2 futility; discontinuation of both GRECO trials .Negative inflection; pipeline de-risked via discontinuation.
Cash Runway & OpExQ1: Runway into Q4 2023 . Q2: Runway into Q2 2024 post RIF .Runway guided into 2025 post program halts .Extending runway via reductions and portfolio changes.
Strategic AlternativesQ2: Evaluation of strategic alternatives initiated .Stifel engaged to review/execute alternatives (merger, sale, licensing) .Intensifying strategic pivot.
Avasopasem Medical SignalsN/A in Q1/Q2 aside from workflow and compendia strategy .ASN data: 50% reduction in cisplatin-related CKD at one year vs placebo .Emerging supportive data for broader toxicity profile.

Note: No standalone Q3 2023 earnings call transcript was located in our document catalog; company hosted an August 10, 2023 conference call related to the CRL .

Management Commentary

  • “Given the considerable time and investment required for additional clinical trials, we find it prudent to explore strategic options… We also made the difficult decision to discontinue our GRECO trials…” — J. Mel Sorensen, M.D., President & CEO .
  • “After discussing the data with the FDA, it is clear that their position is another Phase 3 trial is required.” — J. Mel Sorensen, M.D. .
  • “We will analyze the data collected to date to determine next steps for the asset…” — J. Mel Sorensen, M.D., on GRECO discontinuation .

Q&A Highlights

  • A Q3 earnings call transcript was not available; strategic and regulatory clarifications were communicated via press releases (Oct 31 Type A minutes; Nov 14 Q3 update) .

Estimates Context

  • S&P Global consensus estimates were unavailable via our API during this session; therefore, estimates comparisons to SPGI are not provided.
  • Third-party reference indicates Q3 2023 EPS consensus of approximately -$0.40 vs reported EPS of -$0.33, implying a modest beat on EPS; use with caution pending SPGI confirmation .

Key Takeaways for Investors

  • Regulatory bar reset: FDA requires a new Phase 3 for avasopasem SOM, elongating timelines and increasing capital intensity; near-term approval path deferred .
  • Portfolio focus and cash preservation: halting GRECO-1/2 reduces burn and extends runway into 2025, buying time for strategic review .
  • Operating improvements: sequentially lower net loss and R&D spend underscore execution on cost takeout (Q3 net loss $(15.1)M vs $(20.7)M in Q2) .
  • Strategic alternatives are the primary catalyst: engagement of Stifel (merger/asset sale/licensing) signals potential for transaction-driven value outcomes .
  • Avasopasem medical signal in CKD could support broader value narratives despite SOM setback, pending future development strategy .
  • Limited visibility on estimates: SPGI consensus unavailable; third-party suggests EPS beat, but strategic outcomes (and financing) will likely drive valuation more than near-term EPS for a pre-revenue biotech .
  • Risk skew: execution risk on strategic path and financing remains elevated post-CRL and trial halts; monitor updates closely (transaction progress, regulatory dialogue) .
Sources: Q3 2023 8-K earnings press release and exhibits **[1563577_0001193125-23-276640_d596085dex991.htm:0]** **[1563577_0001193125-23-276640_d596085dex991.htm:1]** **[1563577_0001193125-23-276640_d596085dex991.htm:2]** **[1563577_0001193125-23-276640_d596085dex991.htm:3]** **[1563577_0001193125-23-276640_d596085dex991.htm:4]**; Oct 31, 2023 8-K Type A minutes and strategic update **[1563577_0001193125-23-266704_d568178dex991.htm:0]**; Q2 2023 8-K press release and exhibits **[1563577_0001193125-23-211441_d517610dex991.htm:0]** **[1563577_0001193125-23-211441_d517610dex991.htm:1]** **[1563577_0001193125-23-211441_d517610dex991.htm:3]**; Q1 2023 8-K press release and exhibits **[1563577_0001193125-23-141380_d476140dex991.htm:0]** **[1563577_0001193125-23-141380_d476140dex991.htm:1]** **[1563577_0001193125-23-141380_d476140dex991.htm:2]** **[1563577_0001193125-23-141380_d476140dex991.htm:5]**; CRL 8-K press release (Aug 10, 2023) **[1563577_0001193125-23-208137_d538959d8k.htm:2]** **[1563577_0001193125-23-208137_d538959dex991.htm:0]**. Additional reference for EPS consensus (non-SPGI): TipRanks **[https://www.tipranks.com/stocks/grtx/earnings]**.