Document and Entity Information
Document and Entity Information - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2022 | Mar. 06, 2023 | |
Cover [Abstract] | ||
Document Type | 10-K | |
Amendment Flag | false | |
Document Period End Date | Dec. 31, 2022 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | FY | |
Current Fiscal Year End Date | --12-31 | |
Document Annual Report | true | |
Document Transition Report | false | |
Entity File Number | 001-39655 | |
Entity Registrant Name | GALECTO, INC. | |
Entity Central Index Key | 0001800315 | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 37-1957007 | |
Entity Address, Address Line One | 75 State Street | |
Entity Address, Address Line Two | Suite 100 | |
Entity Address, City or Town | Boston | |
Entity Address, State or Province | MA | |
Entity Address, Postal Zip Code | 02109 | |
City Area Code | +45 | |
Local Phone Number | 70 70 52 10 | |
Title of 12(b) Security | Common Stock, par value $0.00001 per share | |
Trading Symbol | GLTO | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 25,673,474 | |
Entity Public Float | $ 37.5 | |
Entity Well-known Seasoned Issuer | No | |
Entity Voluntary Filers | No | |
ICFR Auditor Attestation Flag | false | |
Auditor Name | EY Godkendt Revisionspartnerselskab | |
Auditor Location | Copenhagen, Denmark | |
Auditor Firm ID | 1757 | |
Documents Incorporated by Reference | DOCUMENTS INCORPORATED BY REFERENCE The registrant intends to file a definitive proxy statement pursuant to Regulation 14A relating to the 2023 Annual Meeting of Stockholders within 120 days of the end of the registrant’s fiscal year ended December 31, 2022. Portions of such definitive proxy statement are incorporated by reference into Part III of this Annual Report on Form 10-K to the extent stated herein. |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Current assets | ||
Cash and cash equivalents | $ 32,786 | $ 62,563 |
Marketable securities | 27,438 | 37,628 |
Prepaid expenses and other current assets | 3,686 | 9,911 |
Total current assets | 63,910 | 110,102 |
Marketable securities, non-current | 5,832 | 9,048 |
Operating lease right-of-use asset | 810 | 834 |
Equipment, net | 357 | 203 |
Other assets, non-current | 2,279 | 2,028 |
Total assets | 73,188 | 122,215 |
Current liabilities | ||
Accounts payable | 3,350 | 1,531 |
Accrued expenses and other current liabilities | 7,757 | 3,013 |
Total current liabilities | 11,107 | 4,544 |
Operating lease liabilities, non-current | 328 | 448 |
Total liabilities | 11,435 | 4,992 |
Commitments and contingencies (Note 9) | ||
Stockholders’ equity | ||
Preferred stock, par value of $0.00001 per share; 10,000,000 shares authorized at December 31, 2022 and 2021; no shares issued or outstanding as of December 31, 2022 and 2021 | ||
Common stock, par value of $0.00001 per share; 300,000,000 shares authorized at December 31, 2022 and 2021; 25,652,392 and 25,261,832 shares issued and outstanding at December 31, 2022 and 2021, respectively | ||
Additional paid-in capital | 279,733 | 273,655 |
Accumulated deficit | (217,736) | (156,112) |
Accumulated other comprehensive loss | (244) | (320) |
Total stockholders’ equity | 61,753 | 117,223 |
Total liabilities and stockholders’ equity | $ 73,188 | $ 122,215 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2022 | Dec. 31, 2021 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value | $ 0.00001 | $ 0.00001 |
Preferred stock, authorized | 10,000,000 | 10,000,000 |
Preferred stock, issued | 0 | 0 |
Preferred stock, outstanding | 0 | 0 |
Common stock, par value | $ 0.00001 | $ 0.00001 |
Common stock, authorized | 300,000,000 | 300,000,000 |
Common stock, issued | 25,652,392 | 25,261,832 |
Common stock, outstanding | 25,652,392 | 25,261,832 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Comprehensive Loss - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Operating expenses | ||
Research and development | $ 48,206 | $ 38,488 |
General and administrative | 13,001 | 13,739 |
Total operating expenses | 61,207 | 52,227 |
Loss from operations | (61,207) | (52,227) |
Other income (expense), net | ||
Interest income, net | 722 | 156 |
Loss on sale of marketable securities | (70) | |
Foreign exchange transaction gain (loss), net | (1,069) | 319 |
Total other income (expense), net | (417) | 475 |
Net loss | $ (61,624) | $ (51,752) |
Net loss per common share, basic | $ (2.43) | $ (2.05) |
Net loss per common share, diluted | $ (2.43) | $ (2.05) |
Weighted-average number of shares used in computing net loss per common share, basic | 25,409,123 | 25,261,832 |
Weighted-average number of shares used in computing net loss per common share, diluted | 25,409,123 | 25,261,832 |
Other comprehensive gain (loss), net of tax | ||
Currency translation gain (loss) | $ 265 | $ (917) |
Unrealized loss on marketable securities | (259) | (77) |
Reclassification adjustment for loss included in net income | 70 | |
Other comprehensive gain (loss), net of tax | 76 | (994) |
Total comprehensive loss | $ (61,548) | $ (52,746) |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders' Equity - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Accumulated Other Comprehensive Income (Loss) |
Beginning Balance, shares at Dec. 31, 2020 | 25,261,832 | ||||
Beginning balance at Dec. 31, 2020 | $ 165,489 | $ 269,175 | $ (104,360) | $ 674 | |
Stock-based compensation expense | 4,480 | 4,480 | |||
Other comprehensive gain (loss) , net | (994) | (994) | |||
Net loss | (51,752) | (51,752) | |||
Ending Balance, shares at Dec. 31, 2021 | 25,261,832 | ||||
Ending balance at Dec. 31, 2021 | 117,223 | 273,655 | (156,112) | (320) | |
Stock-based compensation expense | 5,571 | 5,571 | |||
Issuance of common stock; net of issuance costs of $0.2 million (in shares) | 390,560 | ||||
Issuance of common stock; net of issuance costs of $0.2 million | 507 | 507 | |||
Other comprehensive gain (loss) , net | 76 | 76 | |||
Net loss | (61,624) | (61,624) | |||
Ending Balance, shares at Dec. 31, 2022 | 25,652,392 | ||||
Ending balance at Dec. 31, 2022 | $ 61,753 | $ 279,733 | $ (217,736) | $ (244) |
Consolidated Statements of Ch_2
Consolidated Statements of Changes in Stockholders' Equity (Parenthetical) $ in Millions | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
Common stock issuance costs, net | $ 0.2 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Cash flows from operating activities | ||
Net loss | $ (61,624,000) | $ (51,752,000) |
Adjustment to reconcile net loss to net cash used in operating activities: | ||
Depreciation of equipment | 42,000 | 20,000 |
Stock-based compensation | 5,571,000 | 4,480,000 |
Amortization of premiums and discounts on marketable securities | 566,000 | 1,072,000 |
Net loss on sale of marketable securities | 70,000 | |
Amortization of right of use lease asset | 448,000 | 421,000 |
Accretion of lease liability | 58,000 | 75,000 |
Changes in operating assets and liabilities: | ||
Prepaid expenses and other current assets | 6,232,000 | (4,199,000) |
Other assets, non-current | (257,000) | (866,000) |
Accounts payable | 1,819,000 | (1,320,000) |
Accrued expenses and other current liabilities | 4,666,000 | 274,000 |
Operating lease liabilities | (523,000) | (513,000) |
Net cash used in operating activities | (42,932,000) | (52,308,000) |
Cash flows from investing activities | ||
Purchases of marketable securities | (44,865,000) | (84,209,000) |
Proceeds from sale of marketable securities | 57,445,000 | 36,384,000 |
Purchases of property and equipment | (196,000) | (223,000) |
Net cash provided by (used in) investing activities | 12,384,000 | (48,048,000) |
Cash flows from financing activities | ||
Proceeds from issuance of common stock, net of issuance costs | 507,000 | |
Net cash provided by financing activities | 507,000 | |
Net decrease in cash and cash equivalents | (30,041,000) | (100,356,000) |
Effect of exchange rate changes on cash and cash equivalents | 264,000 | (917,000) |
Cash and cash equivalents, beginning of year | 62,563,000 | 163,836,000 |
Cash and cash equivalents, end of year | 32,786,000 | 62,563,000 |
Supplemental disclosures of noncash activities: | ||
Operating lease liability arising from obtaining right-of-use assets | $ 488,000 | $ 411,000 |
Description of Business, Organi
Description of Business, Organization and Liquidity | 12 Months Ended |
Dec. 31, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business, Organization and Liquidity | 1. DESCRIPTION OF BUSINESS, ORGANIZATION AND LIQUIDITY Business Galecto, Inc., together with its consolidated subsidiaries (the “Company” or “Galecto”), is a clinical-stage biotechnology company developing novel therapeutics that are designed to target the biological processes that lie at the heart of fibrotic diseases and cancer. The Company’s initial focus is on the development of small molecule inhibitors of galectin-3 and lysyl oxidase-like 2 ("LOXL2”), which play key roles in regulating fibrosis and cancer. As of December 31, 2022, the Company’s wholly owned subsidiaries were PharmAkea, Inc. or PharmAkea, Galecto Securities Corporation and Galecto Biotech AB, a Swedish company. Galecto Biotech ApS, a Danish operating company, is a wholly-owned subsidiary of Galecto Biotech AB. Risks and uncertainties The Company is subject to risks common to companies in the biotechnology industry including, but not limited to, new technological innovations, protection of proprietary technology, dependence on key personnel, compliance with government regulations and the need to obtain additional financing. Product candidates currently under development will require significant additional research and development efforts, including extensive preclinical and clinical testing and regulatory approval, prior to commercialization. These efforts require significant amounts of additional capital, adequate personnel infrastructure and extensive compliance reporting capabilities. The Company’s product candidates are in development. There can be no assurance that the Company’s research and development will be successfully completed, that adequate protection for the Company’s intellectual property will be obtained, that any products developed will obtain necessary government regulatory approval or that any approved products will be commercially viable. Even if the Company’s product development efforts are successful, it is uncertain when, if ever, the Company will generate significant revenue from product sales. The Company operates in an environment of rapid change in technology and substantial competition from pharmaceutical and biotechnology companies. In addition, the Company is dependent upon the services of its employees and consultants. Liquidity and management plans Since inception, the Company has devoted substantially all its efforts to business planning, research and development, recruiting management and technical staff and raising capital, and has financed its operations primarily through the issuance of redeemable convertible preferred shares, debt financings and, most recently, the Company’s initial public offering, or IPO. As of December 31, 2022, the Company had an accumulated deficit of $ 217.7 million, from recurring losses since inception in 2011. The Company has incurred recurring losses and has not generated revenue as no products have obtained the necessary regulatory approval in order to market products. The Company expects to continue to incur losses as a result of costs and expenses related to the Company’s clinical development and corporate general and administrative activities. The Company had negative cash flows from operating activities during the years ended December 31, 2022 and 2021 of $ 42.9 million and $ 52.3 million, respectively, and current projections indicate that the Company will have continued negative cash flows for the foreseeable future as it continues to develop its product candidates. Net losses incurred for the years ended December 31, 2022 and 2021 amounted to $ 61.6 million and $ 51.8 million, respectively. At December 31, 2022, the Company’s cash, cash equivalents and marketable securities amounted to $ 66.1 million, current assets amounted to $ 63.9 million and current liabilities amounted to $ 11.1 million. At December 31, 2021, the Company’s cash, cash equivalents and marketable securities amounted to $ 109.2 million, current assets amounted to $ 110.1 million and current liabilities amounted to $ 4.5 million. In the future, the Company will consider the following ways to fund its operations including: (1) raising additional capital through equity and/or debt financings; (2) new commercial relationships to help fund future clinical trial costs (i.e. licensing and partnerships); (3) reducing spending on one or more research and development programs by discontinuing development; and/or (4) restructuring operations to change its overhead structure. Volatility in equity capital markets may adversely affect the market price of the Company’s shares of common stock, which may materially and adversely affect the Company’s ability to fund its business through public or private sales of equity securities. The Company’s future liquidity needs, and ability to address those needs, will largely be determined by the success of its product candidates, key developments and regulatory events. Coronavirus pandemic The novel coronavirus (“COVID-19”) and its variants, and ensuing pandemic, has continued to spread worldwide, causing many governments to implement measures to slow the spread of the outbreak. COVID-19 and its variants have had a significant impact, both directly and indirectly, on businesses and commerce, as worker shortages have occurred; supply chains have been disrupted; facilities and production have been suspended; and demand for certain goods and services, such as medical services and supplies, has spiked, while demand for other goods and services has fallen. The Company continues to monitor the impact of COVID-19 and its subvariants and assess its strategy accordingly. However, there can be no assurance that the Company will not experience additional negative impacts associated with the COVID-19 pandemic, which could decrease or delay enrollment of patients in the Company’s clinical trials or otherwise cause interruptions or delays in the Company’s clinical trials, programs and services, and negatively impact the Company’s business, financial condition and results of operations. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2022 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of presentation The accompanying consolidated financial statements have been prepared in conformity with United States, or U.S., generally accepted accounting principles, or GAAP. Any reference in these notes to applicable guidance is meant to refer to U.S. GAAP, as found in the Accounting Standards Codification, or ASC, and Accounting Standards Update, or ASU, of the Financial Accounting Standards Board, or FASB. Principles of consolidation The Company’s consolidated financial statements for 2022 and 2021 include Galecto, Inc. and its subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Use of estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of expenses during the reporting periods. The Company bases its estimates on historical experience and various other assumptions that management believes to be reasonable under the circumstances. Significant items subject to such estimates and assumptions include contract research accruals, accounting for stock-based compensation and valuation of the Company’s deferred tax assets. Changes in estimates are recorded in the period in which they become known. The Company’s actual results could differ from those estimates. Currency and currency translation The consolidated financial statements are presented in U.S. dollars, the Company’s reporting currency. Galecto, Inc., Galecto Securities Corporation and PharmAkea’s functional currency is the U.S. dollar. The functional currency of the Company’s subsidiary Galecto Biotech AB, and its subsidiary Galecto Biotech ApS, is the Euro. Adjustments that arise from exchange rate changes on transactions of each group entity denominated in a currency other than the functional currency are included in other income and expense in the consolidated statements of operations. Assets and liabilities of Galecto Biotech AB and Galecto Biotech ApS recorded in their Euro functional currency are translated into the U.S. dollar reporting currency of the Company at the exchange rate on the balance sheet date. Revenue and expenses of Galecto Biotech AB and Galecto Biotech ApS recorded in their Euro functional currency are translated into the U.S. dollar reporting currency of the Company at the average exchange rate prevailing during the year. Resulting translation adjustments are recorded to accumulated other comprehensive income (loss), or OCI. Cash and cash equivalents The Company considers all highly liquid investments with original maturities at the date of purchase of three months or less to be cash equivalents. Cash and cash equivalents are stated at fair value and may include money market funds, U.S. Treasury and U.S. government-sponsored agency securities, corporate debt, commercial paper and certificates of deposit. The Company had money market funds of $ 16.4 and $ 49.6 million as of December 31, 2022 and 2021 , respectively, which are included in cash and cash equivalents and reported at fair value (Note 4). Concentrations of credit risk and off-balance sheet risk Financial instruments that subject the Company to significant concentrations of credit risk consist primarily of cash, cash equivalents and marketable securities. Substantially all of the Company’s cash is held at financial institutions that management believes to be of high-credit quality. The Company maintains its cash in bank deposit and checking accounts that at times exceed insured limits. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk. Investments in marketable securities The Company invests excess cash balances in short-term and long-term marketable debt securities. The Company classifies investments in marketable debt securities as either held-to-maturity or available-for-sale based on the facts and circumstances present at the time of purchase and re-evaluates classification at each balance sheet date. All investments in marketable debt securities at each balance sheet date presented, are generally considered as available-for-sale. Marketable debt securities with maturities of twelve months or less are classified as short-term investments and marketable debt securities with maturities greater than twelve months are classified based on their availability for use in current operations. The Company reports available-for-sale debt securities at fair value at each balance sheet date and includes any unrealized holding gains and losses (the adjustment to fair value), net of applicable taxes, in accumulated other comprehensive income (loss), a component of stockholders’ equity. The cost of debt securities is adjusted for the amortization of premium and accretion of discounts to maturity. Such amortization and accretion is included in interest income. Realized gains and losses are determined using the specific identification method and are included in other income (expense). If any adjustment to fair value reflects a decline in the value of the investment, the Company considers all available evidence to evaluate the extent to which the decline is “other than temporary,” including the intention to sell and, if so, marks the investment to market through a charge to the Company’s consolidated statements of operations and comprehensive loss. Fair value of financial instruments Fair value is defined as the price the Company would receive to sell an investment in a timely transaction or pay to transfer a liability in a timely transaction with an independent buyer in the principal market, or in the absence of a principal market, the most advantageous market for the investment or liability. A framework is used for measuring fair value utilizing a three-tier hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are as follows: Level 1 —Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; Level 2 —Quoted prices in markets that are not considered to be active or financial instrument valuations for which all significant inputs are observable, either directly or indirectly; and Level 3 —Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable. Financial instruments are categorized in their entirety based on the lowest level of input that is significant to the fair value measurement. The assessment of the significance of a particular input to the fair value measurement requires judgment and considers factors specific to the investment. To the extent that the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by us in determining fair value is greatest for instruments categorized in Level 3. The Company monitors the availability of inputs that are significant to the measurement of fair value to assess the appropriate categorization of financial instruments within the fair value hierarchy. Changes in economic conditions or model-based valuation techniques may require the transfer of financial instruments from one fair value level to another. In such instances, our policy is to recognize significant transfers between levels at the end of the reporting period. The significance of transfers between levels is evaluated based upon the nature of the financial instrument and size of the transfer relative to total net assets available for benefits. Leases The Company determines whether an arrangement is or contains a lease at the time it enters into a contract. For all leases, the Company determines the classification as either operating leases or finance leases. Operating leases are included in operating lease right-of-use, or ROU, assets and accrued expenses and other current liabilities and operating lease liabilities, noncurrent in the Company’s consolidated balance sheets. The Company has not entered into any financing leases. Lease recognition occurs at the commencement date and lease liability amounts are based on the present value of lease payments over the lease term. The lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. If a lease does not provide information to determine an implicit interest rate, the Company uses the Company’s incremental borrowing rate in determining the present value of lease payments. ROU assets represent the right to use an underlying asset for the lease term, and lease liabilities represent the obligation to make lease payments under the lease. ROU assets also include any lease payments made prior to the commencement date and exclude lease incentives received. Operating lease expense is recognized on a straight-line basis over the lease term. The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. Lease agreements with both lease and non-lease components, are generally accounted for together as a single lease component. Refer to Note 6 for further details. Property and equipment, net Property and equipment are recorded at cost. Costs associated with maintenance and repairs are expensed as incurred. Depreciation is provided using the straight-line method over the estimated useful lives: Asset Category Useful Life Equipment 5 - 7 years Furniture and fixtures 5 years Leasehold improvements Lesser of 10 years or the remaining term of the respective lease Impairment of long-lived assets Long-lived assets to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. When such events occur, the Company compares the carrying amounts of the assets to their undiscounted expected future cash flows. If the undiscounted cash flows are insufficient to recover the carrying value, an impairment loss is recorded for the difference between the carrying value and fair value of the asset. Through December 31, 2022 , no such impairment has occurred. Research and development expenses Research and development costs are expensed as incurred. The Company’s research and development expenses consist primarily of costs incurred for the development of its product candidates and include expenses incurred under agreements with contract manufacturing organizations, or CMOs, contract research organizations, or CROs, investigative sites and consultants to conduct clinical trials and preclinical and non-clinical studies, costs to acquire, develop and manufacture supplies for clinical trials and other studies, salaries and related costs, including stock-based compensation, depreciation and other allocated facility-related and overhead expenses and licensing fees and milestone payments incurred under product license agreements where no alternative future use exists. The Company has met the requirements to receive a tax credit in Denmark for losses resulting from research and development costs of up to $ 3.6 million and $ 3.8 million for the years ended December 31, 2022 and 2021, respectively. The tax credit is reported as a reduction to research and development expense in the consolidated statements of operations. For the years ended December 31, 2022 and 2021 , research and development expenses include refundable tax credits of $ 0.8 million and $ 0.9 million, respectively. Accrued research and development costs Substantial portions of the Company’s preclinical and clinical trials are performed by third-party laboratories, medical centers, CROs and other vendors, or collectively, CROs. These CROs generally bill monthly for services performed, or bill based upon milestone achievement. For preclinical studies, the Company accrues expenses based upon estimated percentage of work completed and the contract milestones remaining. For clinical studies, expenses are accrued based upon the number of patients enrolled and the duration of the study. The Company monitors patient enrollment, the progress of clinical studies and related activities to the extent possible through internal reviews of data reported to the Company by the CROs, and correspondence with the CROs and clinical site visits. The Company’s estimates depend on the timeliness and accuracy of the data provided by the CROs regarding the status of each program and total program spending. The Company periodically evaluates the estimates to determine if adjustments are necessary or appropriate based on information it receives. Stock-based compensation The Company accounts for stock options granted in accordance with ASC 718, Compensation-Stock Compensation , or ASC 718. In accordance with ASC 718, compensation expense is measured at the estimated fair value of the stock options at grant date and is included as compensation expense over the vesting period during which an employee provides service in exchange for the award. All share-based awards granted are measured based on the fair value on the date of the grant and compensation expense is recognized with respect to those awards over the requisite service period, which is generally the vesting period of the respective award. The Company reverses any previously recognized compensation cost associated with forfeited awards in the period the forfeiture occurs. Equity-based compensation expense is classified in the Company’s consolidated statement of operations and comprehensive loss in the same manner in which the award recipients’ payroll costs are classified or in which the award recipients’ service payments are classified. The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes model. The following summarizes the inputs used: Expected volatility —The Company estimates its expected stock volatility based on the historical volatility of a publicly traded set of peer companies because we lack company-specific historical and implied volatility information due in part to the limited time in which we have operated as a publicly traded company. We expect to continue to do so until such time as we have adequate historical data regarding the volatility of our traded stock price. Expected term —The expected term of the Company’s stock options has been determined based on the expected time to liquidity. The Company uses the simplified method prescribed by the SEC’s Staff Accounting Bulletin No. 107, Share-Based Payment , to calculate the expected term of options granted because we lack company-specific historical and implied expected term information due in part to the limited time in which we have operated as a publicly traded company. Risk-free interest rate —The risk-free interest rate is based on the implied yield on a U.S. Treasury security at a constant maturity with a remaining term equal to the expected term of the option granted. Dividends —Expected dividend yield is zero because the Company does not pay cash dividends on common shares and does not expect to pay any cash dividends in the foreseeable future. Income taxes Deferred income tax assets and liabilities arise from temporary differences associated with differences between the financial statements and tax basis of assets and liabilities, as measured by the enacted tax rates, which are expected to be in effect when these differences reverse. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. The Company has generated net losses since inception and accordingly has not recorded a provision for income taxes. The Company follows the provisions of ASC 740-10, Uncertainty in Income Taxes, or ASC 740-10. The Company has not recognized a liability as a result of the implementation of ASC 740-10. A reconciliation of the beginning and ending amount of unrecognized tax benefits has not been provided since there is no unrecognized benefit since the date of adoption. The Company has not recognized interest expense or penalties as a result of the implementation of ASC 740-10. If there were an unrecognized tax benefit, the Company would recognize interest accrued related to unrecognized tax benefits and penalties in income tax expense. The Company has identified the United States, Denmark and United Kingdom as its major tax jurisdictions. Refer to Note 11 for further details. Net loss per share Basic net loss per share is computed by dividing the net loss by the weighted-average number of shares of common stock outstanding for the period. Diluted net loss per share is computed by dividing the net loss by the weighted-average number of shares of common stock and dilutive common stock equivalents outstanding for the period, determined using the treasury-stock method and the as if-converted method, for convertible securities, if inclusion of these instruments is dilutive. For the years ended December 31, 2022 and 2021 , both methods are equivalent. Basic and diluted net loss per share is described further in Note 12. Segments Operating segments are defined as components of an entity for which separate financial information is available and that is regularly reviewed by the chief operating decision maker, or CODM, in deciding how to allocate resources to an individual segment and in assessing performance. The Company’s CODM is its chief executive officer. The Company has determined it operates in one segment. Other comprehensive gain (loss) Other comprehensive gain (loss), or OCI, is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. The Company’s OCI includes currency translation and unrealized gain or (loss) on marketable securities. Emerging growth company status The Company is an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012, or JOBS Act. Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act, until such time as those standards apply to private companies. The Company may elect to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that it (i) is no longer an emerging growth company or (ii) affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act. As a result, and as a smaller reporting company, these financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates. Recently adopted accounting standards In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses: Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 requires measurement and recognition of expected credit losses for financial assets. In April 2019, the FASB issued clarification to ASU 2016-13 within ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging , and Topic 825, Financial Instruments . The ASU 2016-13 guidance became effective as of January 1, 2020, and must be adopted using a modified retrospective approach, with certain exceptions. This guidance is effective for public business entities that meet the definition of a SEC, excluding eligible smaller reporting companies for fiscal years beginning after December 15, 2019. For all other entities, including emerging growth companies, it is effective for fiscal years beginning after December 15, 2022. The adoption of ASU No. 2016-13 during the year ended December 31, 2022 did not have a material impact on the financial statements. Recently issued accounting standards The Company periodically reviews new accounting standards that are issued and has not identified any new standards that it believes merit further discussion or would have a significant impact on its financial statements. |
Investments in Marketable Secur
Investments in Marketable Securities | 12 Months Ended |
Dec. 31, 2022 | |
Investments, Debt and Equity Securities [Abstract] | |
Investments in Marketable Securities | 3. INVESTMENTS IN MARKETABLE SECURITIES Cash in excess of the Company’s immediate requirements is invested in accordance with the Company’s investment policy that primarily seeks to maintain adequate liquidity and preserve capital. A summary of the Company’s available-for-sale investments as of December 31, 2022 and 2021 consisted of the following (in thousands): At December 31, 2022 Amortized Gross Unrealized Gross Unrealized Fair Marketable securities: Cost Gains Losses Value Corporate bonds $ 27,573 $ — $ ( 135 ) $ 27,438 Total $ 27,573 $ — $ ( 135 ) $ 27,438 Marketable securities, non-current: Corporate bonds $ 5,963 $ — $ ( 131 ) $ 5,832 Total $ 5,963 $ — $ ( 131 ) $ 5,832 At December 31, 2021 Amortized Gross Unrealized Gross Unrealized Fair Marketable securities: Cost Gains Losses Value Corporate bonds $ 37,671 $ — $ ( 43 ) $ 37,628 Total $ 37,671 $ — $ ( 43 ) $ 37,628 Marketable securities, non-current: Corporate bonds $ 9,082 $ — $ ( 34 ) $ 9,048 Total $ 9,082 $ — $ ( 34 ) $ 9,048 |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Dec. 31, 2022 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | 4. FAIR VALUE MEASUREMENTS Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value are performed in a manner to maximize the use of observable inputs and minimize the use of unobservable inputs. The Company classified its money market funds within Level 1 because their fair values are based on their quoted market prices. The Company classified its debt securities within Level 2 because their fair values are determined using alternative pricing sources or models that utilized market observable inputs. A summary of the assets that are measured at fair value as of December 31, 2022 and 2021 is as follows (in thousands): Fair Value Measurement at Assets: Carrying Quoted Prices in Significant Significant Money market funds (1) $ 16,445 $ 16,445 $ — $ — Debt securities 33,270 — 33,270 — Total $ 49,715 $ 16,445 $ 33,270 $ — Fair Value Measurement at Assets: Carrying Quoted Prices in Significant Significant Money market funds (1) $ 49,626 $ 49,626 $ — $ — Debt securities 46,676 — 46,676 — Total $ 96,302 $ 49,626 $ 46,676 $ — (1) Money market funds with maturities of 90 days or less at the date of purchase are included within cash and cash equivalents in the accompanying consolidated balance sheets and are recognized at fair value. |
Prepaid Expenses and Other Curr
Prepaid Expenses and Other Current Assets | 12 Months Ended |
Dec. 31, 2022 | |
Prepaid Expense and Other Assets, Current [Abstract] | |
Prepaid Expenses and Other Current Assets | 5. PREPAID EXPENSES AND OTHER CURRENT ASSETS Prepaid expenses and other current assets consist of the following (in thousands): December 31, 2022 2021 Contract research and development costs $ 1,450 $ 5,569 Prepaid insurance costs 805 1,728 Research and development tax credit receivable 792 1,682 Value-added tax refund receivable 587 598 Other 52 334 Total prepaid expenses and other current assets $ 3,686 $ 9,911 |
Leases
Leases | 12 Months Ended |
Dec. 31, 2022 | |
Leases [Abstract] | |
Leases | 6. LEASES The Company has the following operating leases: Location Primary Use Lease Renewal Option Copenhagen, Denmark Corporate headquarters January 2025 None London, United Kingdom Office space February 2024 None Gothenburg, Sweden Office space May 2023 None Stevenage, United Kingdom Laboratory space August 2025 None The Company has no finance leases and has elected to apply the short-term lease exception to all leases of one year or less. Rent expense for years ended December 31, 2022 and 2021 was $ 0.5 million for both periods. Quantitative information regarding the Company’s leases for the years ended December 31, 2022 and 2021 is as follows (in thousands): Year Ended Lease Cost: 2022 2021 Operating lease cost $ 506 $ 496 Other Information: Operating cash flows paid for amounts included in the $ 523 $ 513 Operating lease liabilities arising from obtaining right-of-use $ 488 $ 411 As of December 31, 2022 and 2021 , the weighted average remaining lease term for operating leases was 1.8 years and 2.4 years, respectively. As of December 31, 2022 and 2021 , the weighted average discount rate for operating leases was 8 % for both periods. Operating lease liabilities are as follows at December 31, 2022 (in thousands): Operating 2023 $ 523 2024 293 2025 51 2026 — 2027 — Total lease payments 867 Less: imputed interest ( 63 ) Total lease liabilities $ 804 |
Property and Equipment, Net
Property and Equipment, Net | 12 Months Ended |
Dec. 31, 2022 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment, Net | 7. PROPERTY AND EQUIPMENT, NET Equipment as of December 31, 2022 and 2021 consisted of the following (in thousands): December 31, December 31, 2022 2021 Equipment $ 419 $ 223 Less: accumulated depreciation ( 62 ) ( 20 ) Equipment, net $ 357 $ 203 Depreciation expense for the years ended December 31, 2022 and 2021 was $ 42,000 and $ 20,000 , respectively. |
Accrued Expenses and Other Curr
Accrued Expenses and Other Current Liabilities | 12 Months Ended |
Dec. 31, 2022 | |
Payables and Accruals [Abstract] | |
Accrued Expenses and Other Current Liabilities | 8. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES Accrued expenses and other current liabilities consist of the following (in thousands): December 31, 2022 2021 Contract research and development costs $ 6,145 $ 1,575 Employee compensation costs 597 601 Lease liabilities, current 476 399 Other current liabilities 539 438 Total accrued expenses and other current liabilities $ 7,757 $ 3,013 |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 9. COMMITMENTS AND CONTINGENCIES Lease commitments The Company’s commitments related to lease agreements are disclosed in Note 6. Legal proceedings From time to time, the Company may be party to litigation arising in the ordinary course of its business. The Company was not subject to any material legal proceedings during the years ended December 31, 2022 and 2021, and, to its knowledge, no material legal proceedings are currently pending or threatened. Indemnification agreements The Company, as permitted under Delaware law and in accordance with its certification of incorporation and bylaws and pursuant to indemnification agreements with certain of its officers and directors, indemnifies its officers and directors for certain events or occurrences, subject to certain limits, which the officer or director is or was serving at the Company’s request in such capacity. The Company enters into certain types of contracts that contingently requires the Company to indemnify various parties against claims from third parties. These contracts primarily relate to (i) the Company’s bylaws, under which the Company must indemnify directors and executive officers, and may indemnify other officers and employees, for liabilities arising out of their relationship, (ii) contracts under which the Company must indemnify directors and certain officers and consultants for liabilities arising out of their relationship, and (iii) procurement, service or license agreements under which the Company may be required to indemnify vendors, service providers or licensees for certain claims, including claims that may be brought against them arising from the Company’s acts or omissions with respect to the Company’s products, technology, intellectual property or services. From time to time, the Company may receive indemnification claims under these contracts in the normal course of business. In the event that one or more of these matters were to result in a claim against the Company, an adverse outcome, including a judgment or settlement, may cause a material adverse effect on the Company’s future business, operating results or financial condition. It is not possible to estimate the maximum amount potentially payable under these contracts since the Company has no history of prior indemnification claims and the unique facts and circumstances involved in each particular claim will be determinative. |
Stock-Based Compensation
Stock-Based Compensation | 12 Months Ended |
Dec. 31, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
Stock-Based Compensation | 10. STOCK-BASED COMPENSATION Employee equity plan In March 2020, the Company's Board of Directors and stockholders approved the 2020 Stock Option and Grant Plan (“2020 Plan”). Holders of stock options under the 2020 Plan shall be entitled to exercise the vested portion of the stock option during the term of the grant. If a qualified exit, as defined in the 2020 Plan, occurs, then all of the holders' unvested options shall vest immediately. In October 2020, the Company's Board of Directors and stockholders approved the 2020 Equity Incentive Plan (“2020 Equity Plan”). Following the adoption of the 2020 Equity Plan, no further options are available to be issued under the 2020 Plan. Stock options granted under the 2020 Equity Plan generally vest over a four-year period and expire ten years from the grant date. The 2020 Equity Plan will cumulatively increase by 5 percent of the number of shares of common stock issued and outstanding on January 1 st each year until 2030. At December 31, 2022 , the Company had 884,566 options available for future grant under the 2020 Equity Plan. The following table sets forth the activity for the Company’s stock options during the periods presented: Number of Weighted- Weighted- Aggregate Outstanding at December 31, 2020 2,538,411 $ 4.67 8.8 20,009,769 Granted 1,631,000 9.49 — 8,160 Cancelled ( 170,683 ) 7.63 — — Outstanding at December 31, 2021 3,998,728 6.51 8.3 $ 1,357,655 Granted 1,827,750 2.98 — 111,013 Cancelled ( 47,593 ) 2.73 — — Outstanding at December 31, 2022 5,778,885 $ 5.43 7.9 $ — Vested and expected to vest at December 31, 2022 5,474,743 $ 5.43 8.3 $ — Vested and exercisable at December 31, 2022 2,667,144 $ 5.65 7.1 $ — The weighted-average grant date fair value of all stock options granted during the year ended December 31, 2022 was $ 2.22 . The intrinsic value at December 31, 2022 and 2021 is based on the closing price of the Company’s common stock on that date of $ 1.15 and $ 3.03 per share, respectively. Stock-based compensation The grant date fair value of stock options vested during the years ended December 31, 2022 and 2021 was $ 6.8 million and $ 2.6 million, respectively. Total unrecognized compensation expense related to unvested options granted under the Company’s stock-based compensation plan was $ 10.9 million at December 31, 2022 , which is expected to be recognized over a weighted average period of 2.2 years. The Company recorded stock-based compensation expense related to the issuance of stock as follows (in thousands): For the Year Ended 2022 2021 Research and development $ 2,618 $ 1,903 General and administrative 2,953 2,577 Total Stock-based compensation $ 5,571 $ 4,480 The Company uses a Black-Scholes option pricing model to determine fair value of its stock options. The Black-Scholes option pricing model includes various assumptions, including the fair value of common shares, expected life of stock options, the expected volatility based on the historical volatility of a publicly traded set of peer companies and the expected risk-free interest rate based on the implied yield on a U.S. Treasury security. The fair values of the options granted were estimated based on the Black-Scholes model, using the following assumptions: 2022 2021 Risk-free interest rate 1.7 % 0.7 % Expected term (in years) 6.0 6.0 Expected volatility 90.0 % 90.5 % Expected dividend yield 0 % 0 % |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 11. INCOME TAXES The Company had no income tax expense or benefit for the years ended December 31, 2022 and 2021 . The Company has incurred net operating losses for all the periods presented. The Company has not reflected the benefit of any such net operating loss carryforwards in the accompanying financial statements. In 2019 the domicile of the reporting entity has changed from Denmark to the United States resulting in a tax rate of 21 % in 2022 and 2021. This is discussed further below. The components of net loss are as follows (in thousands): Year Ended December 31, 2022 2021 Domestic $ ( 10,163 ) $ ( 11,252 ) Foreign ( 51,461 ) ( 40,500 ) Total $ ( 61,624 ) $ ( 51,752 ) Reconciliation of effective tax rate The effective tax rate for the years ended December 31, 2022 and 2021 is different from the statutory rate primarily due to the valuation allowance against deferred tax assets as a result of insufficient sources of income. The reconciliation of the statutory income tax rate to the Company’s effective income tax rate is as follows: Year Ended December 31, 2022 2021 Income tax benefit at the statutory rate 21.0 % 21.0 % Orphan Drug Credit 6.6 5.7 Permanent differences 2.5 3.5 State income taxes 1.1 1.3 Foreign rate differential 0.8 0.8 Change in valuation allowance ( 32.0 ) ( 32.3 ) Total — % — % Deferred taxes Deferred income taxes reflect the net effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The principal components of the Company’s deferred tax assets and liabilities consisted of the following (in thousands): December 31, Deferred tax assets: 2022 2021 Net operating loss carryforwards $ 43,716 $ 31,022 Orphan drug credit 8,036 3,948 U.S. research and development credits 1,191 1,191 Bonus compensation 544 274 Total deferred tax assets $ 53,487 $ 36,435 Valuation allowance ( 53,472 ) ( 36,435 ) Net deferred tax assets 15 — Deferred tax liabilities: Fixed assets ( 15 ) — Total deferred tax liabilities ( 15 ) — Net noncurrent deferred tax asset(liability) $ — $ — In assessing the realizability of deferred tax assets, management considers whether it is more-likely-than-not that some portion or all of the deferred tax assets will not be realized. The Company regularly assesses the likelihood that the deferred tax assets will be recovered from future taxable income. The Company considers projected future taxable income and ongoing tax planning strategies, then records a valuation allowance to reduce the carrying value of the net deferred taxes to an amount that is more-likely-than-not able to be realized. Based upon the Company’s assessment of all available evidence, including the previous three years of taxable income and loss after permanent items, estimates of future profitability, and the Company’s overall prospects of future business, the Company determined that it is more-likely-than-not that the Company will not be able to realize a portion of the deferred tax assets in the future. The Company will continue to assess the potential realization of deferred tax assets on an annual basis, or an interim basis if circumstances warrant. If the Company’s actual results and updated projections vary significantly from the projections used as a basis for this determination, the Company may need to change the valuation allowance against the gross deferred tax assets. On the basis of this evaluation, a full valuation allowance at December 31, 2022 and December 31, 2021 was recorded of $ 53.5 million and $ 36.4 million, respectively, to reduce the net deferred tax assets to their estimated realizable value. The change in valuation allowance was $ 17.0 million. The Company is subject to taxation in the United States, United Kingdom and Denmark. As of December 31, 2022, tax years 2019 and forward were generally open to examination by the Danish tax authorities and tax year 2021 and forward was open to examination by the United States tax authorities. The Company is not under examination by any taxing authorities. As of December 31, 2022 , the Company had gross U.S. federal net operating losses, or NOLs, of $ 30.7 million and federal research and development credits, or R&D credits, of $ 1.2 million and Orphan Drug Credit, or ODC, of $ 8.0 million to offset tax liabilities. The federal R&D credit and ODC carryforwards begin to expire in 2033 and 2042, respectively. All of the federal NOLs have an infinite life. The Company also had gross state NOLs of $ 26.8 million, which are available to offset state tax liabilities. The state NOLs begin to expire in 2040. The Company also had NOLs in Denmark of $ 161.7 million which have an indefinite life. Federal and state NOLs and R&D credit and ODC carryforwards are also subject to annual limitations in the event that cumulative changes in the ownership interests of significant stockholders exceed 50% over a three-year period, as defined under Sections 382 and 383 of the Internal Revenue Code of 1986. The Company has not completed an analysis to determine if the NOLs and R&D credits are limited due to a change in ownership. The Company recognizes accrued interest related to unrecognized tax benefits and penalties as income tax expense. The Company does not have any material unrecognized tax benefits which would affect the effective tax rate if recognized. The Company does not have any unrecognized tax benefits which would reverse within the next twelve months. The Company is eligible for the Danish enhanced research and development tax allowance, providing for an increase in the deductible value of the amount of certain R&D expenditures. The deduction for R&D expenditures is set at 101.5 % for 2019, 130 % for 2020 through 2022, 108 % for 2023 through 2025 and 110 % for 2026. |
Net Loss Per Share
Net Loss Per Share | 12 Months Ended |
Dec. 31, 2022 | |
Earnings Per Share [Abstract] | |
Net Loss Per Share | 12. NET LOSS PER SHARE Basic and diluted net loss per share is calculated as follows (in thousands except share and per share amounts): Year Ended December 31, 2022 2021 Net loss $ ( 61,624 ) $ ( 51,752 ) Weighted-average number of shares used in computing net 25,409,123 25,261,832 Net loss per common share, basic and diluted $ ( 2.43 ) $ ( 2.05 ) The following outstanding potentially dilutive securities have been excluded from the calculation of diluted net loss per share, as their effect is anti-dilutive: Year Ended December 31, 2022 2021 Stock options to purchase common stock 5,778,885 3,998,728 |
Defined Contribution Plan
Defined Contribution Plan | 12 Months Ended |
Dec. 31, 2022 | |
Retirement Benefits [Abstract] | |
Defined Contribution Plan | 13. DEFINED CONTRIBUTION PLAN The Company has a 401(k)-defined contribution plan (the “401(k) Plan”) for its U.S. based employees. Eligible employees may make pretax contributions to the 401(k) Plan up to statutory limits. At the discretion of its Board, the Company may elect to match employee contributions. For the years ended December 31, 2022 and 2021 , the Company paid a match of up to 6 %, up to the maximum permitted by the Internal Revenue Code, which amounted to $ 0.1 million during both periods and is expensed as personnel costs when incurred. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2022 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | 14. RELATED PARTY TRANSACTIONS During the years ended December 31, 2022 and 2021 , the Company had no material related party transactions. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2022 | |
Subsequent Events [Abstract] | |
Subsequent Events | 15. SUBSEQUENT EVENTS The Company has evaluated subsequent events through the date on which the consolidated financial statements were issued. The Company has concluded that no subsequent events have occurred that require disclosure to the consolidated financial statements. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2022 | |
Accounting Policies [Abstract] | |
Basis of presentation | Basis of presentation The accompanying consolidated financial statements have been prepared in conformity with United States, or U.S., generally accepted accounting principles, or GAAP. Any reference in these notes to applicable guidance is meant to refer to U.S. GAAP, as found in the Accounting Standards Codification, or ASC, and Accounting Standards Update, or ASU, of the Financial Accounting Standards Board, or FASB. |
Principles of consolidation | Principles of consolidation The Company’s consolidated financial statements for 2022 and 2021 include Galecto, Inc. and its subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. |
Use of estimates | Use of estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of expenses during the reporting periods. The Company bases its estimates on historical experience and various other assumptions that management believes to be reasonable under the circumstances. Significant items subject to such estimates and assumptions include contract research accruals, accounting for stock-based compensation and valuation of the Company’s deferred tax assets. Changes in estimates are recorded in the period in which they become known. The Company’s actual results could differ from those estimates. |
Currency and currency translation | Currency and currency translation The consolidated financial statements are presented in U.S. dollars, the Company’s reporting currency. Galecto, Inc., Galecto Securities Corporation and PharmAkea’s functional currency is the U.S. dollar. The functional currency of the Company’s subsidiary Galecto Biotech AB, and its subsidiary Galecto Biotech ApS, is the Euro. Adjustments that arise from exchange rate changes on transactions of each group entity denominated in a currency other than the functional currency are included in other income and expense in the consolidated statements of operations. Assets and liabilities of Galecto Biotech AB and Galecto Biotech ApS recorded in their Euro functional currency are translated into the U.S. dollar reporting currency of the Company at the exchange rate on the balance sheet date. Revenue and expenses of Galecto Biotech AB and Galecto Biotech ApS recorded in their Euro functional currency are translated into the U.S. dollar reporting currency of the Company at the average exchange rate prevailing during the year. Resulting translation adjustments are recorded to accumulated other comprehensive income (loss), or OCI. |
Cash and cash equivalents | Cash and cash equivalents The Company considers all highly liquid investments with original maturities at the date of purchase of three months or less to be cash equivalents. Cash and cash equivalents are stated at fair value and may include money market funds, U.S. Treasury and U.S. government-sponsored agency securities, corporate debt, commercial paper and certificates of deposit. The Company had money market funds of $ 16.4 and $ 49.6 million as of December 31, 2022 and 2021 , respectively, which are included in cash and cash equivalents and reported at fair value (Note 4). |
Concentrations of credit risk and off-balance sheet risk | Concentrations of credit risk and off-balance sheet risk Financial instruments that subject the Company to significant concentrations of credit risk consist primarily of cash, cash equivalents and marketable securities. Substantially all of the Company’s cash is held at financial institutions that management believes to be of high-credit quality. The Company maintains its cash in bank deposit and checking accounts that at times exceed insured limits. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk. |
Investments in marketable securities | Investments in marketable securities The Company invests excess cash balances in short-term and long-term marketable debt securities. The Company classifies investments in marketable debt securities as either held-to-maturity or available-for-sale based on the facts and circumstances present at the time of purchase and re-evaluates classification at each balance sheet date. All investments in marketable debt securities at each balance sheet date presented, are generally considered as available-for-sale. Marketable debt securities with maturities of twelve months or less are classified as short-term investments and marketable debt securities with maturities greater than twelve months are classified based on their availability for use in current operations. The Company reports available-for-sale debt securities at fair value at each balance sheet date and includes any unrealized holding gains and losses (the adjustment to fair value), net of applicable taxes, in accumulated other comprehensive income (loss), a component of stockholders’ equity. The cost of debt securities is adjusted for the amortization of premium and accretion of discounts to maturity. Such amortization and accretion is included in interest income. Realized gains and losses are determined using the specific identification method and are included in other income (expense). If any adjustment to fair value reflects a decline in the value of the investment, the Company considers all available evidence to evaluate the extent to which the decline is “other than temporary,” including the intention to sell and, if so, marks the investment to market through a charge to the Company’s consolidated statements of operations and comprehensive loss. |
Fair value of financial instruments | Fair value of financial instruments Fair value is defined as the price the Company would receive to sell an investment in a timely transaction or pay to transfer a liability in a timely transaction with an independent buyer in the principal market, or in the absence of a principal market, the most advantageous market for the investment or liability. A framework is used for measuring fair value utilizing a three-tier hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are as follows: Level 1 —Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; Level 2 —Quoted prices in markets that are not considered to be active or financial instrument valuations for which all significant inputs are observable, either directly or indirectly; and Level 3 —Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable. Financial instruments are categorized in their entirety based on the lowest level of input that is significant to the fair value measurement. The assessment of the significance of a particular input to the fair value measurement requires judgment and considers factors specific to the investment. To the extent that the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by us in determining fair value is greatest for instruments categorized in Level 3. The Company monitors the availability of inputs that are significant to the measurement of fair value to assess the appropriate categorization of financial instruments within the fair value hierarchy. Changes in economic conditions or model-based valuation techniques may require the transfer of financial instruments from one fair value level to another. In such instances, our policy is to recognize significant transfers between levels at the end of the reporting period. The significance of transfers between levels is evaluated based upon the nature of the financial instrument and size of the transfer relative to total net assets available for benefits. |
Leases | Leases The Company determines whether an arrangement is or contains a lease at the time it enters into a contract. For all leases, the Company determines the classification as either operating leases or finance leases. Operating leases are included in operating lease right-of-use, or ROU, assets and accrued expenses and other current liabilities and operating lease liabilities, noncurrent in the Company’s consolidated balance sheets. The Company has not entered into any financing leases. Lease recognition occurs at the commencement date and lease liability amounts are based on the present value of lease payments over the lease term. The lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. If a lease does not provide information to determine an implicit interest rate, the Company uses the Company’s incremental borrowing rate in determining the present value of lease payments. ROU assets represent the right to use an underlying asset for the lease term, and lease liabilities represent the obligation to make lease payments under the lease. ROU assets also include any lease payments made prior to the commencement date and exclude lease incentives received. Operating lease expense is recognized on a straight-line basis over the lease term. The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. Lease agreements with both lease and non-lease components, are generally accounted for together as a single lease component. Refer to Note 6 for further details. |
Property and equipment, net | Property and equipment, net Property and equipment are recorded at cost. Costs associated with maintenance and repairs are expensed as incurred. Depreciation is provided using the straight-line method over the estimated useful lives: Asset Category Useful Life Equipment 5 - 7 years Furniture and fixtures 5 years Leasehold improvements Lesser of 10 years or the remaining term of the respective lease |
Impairment of long-lived assets | Impairment of long-lived assets Long-lived assets to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. When such events occur, the Company compares the carrying amounts of the assets to their undiscounted expected future cash flows. If the undiscounted cash flows are insufficient to recover the carrying value, an impairment loss is recorded for the difference between the carrying value and fair value of the asset. Through December 31, 2022 , no such impairment has occurred. |
Research and development expenses | Research and development expenses Research and development costs are expensed as incurred. The Company’s research and development expenses consist primarily of costs incurred for the development of its product candidates and include expenses incurred under agreements with contract manufacturing organizations, or CMOs, contract research organizations, or CROs, investigative sites and consultants to conduct clinical trials and preclinical and non-clinical studies, costs to acquire, develop and manufacture supplies for clinical trials and other studies, salaries and related costs, including stock-based compensation, depreciation and other allocated facility-related and overhead expenses and licensing fees and milestone payments incurred under product license agreements where no alternative future use exists. The Company has met the requirements to receive a tax credit in Denmark for losses resulting from research and development costs of up to $ 3.6 million and $ 3.8 million for the years ended December 31, 2022 and 2021, respectively. The tax credit is reported as a reduction to research and development expense in the consolidated statements of operations. For the years ended December 31, 2022 and 2021 , research and development expenses include refundable tax credits of $ 0.8 million and $ 0.9 million, respectively. |
Accrued research and development costs | Accrued research and development costs Substantial portions of the Company’s preclinical and clinical trials are performed by third-party laboratories, medical centers, CROs and other vendors, or collectively, CROs. These CROs generally bill monthly for services performed, or bill based upon milestone achievement. For preclinical studies, the Company accrues expenses based upon estimated percentage of work completed and the contract milestones remaining. For clinical studies, expenses are accrued based upon the number of patients enrolled and the duration of the study. The Company monitors patient enrollment, the progress of clinical studies and related activities to the extent possible through internal reviews of data reported to the Company by the CROs, and correspondence with the CROs and clinical site visits. The Company’s estimates depend on the timeliness and accuracy of the data provided by the CROs regarding the status of each program and total program spending. The Company periodically evaluates the estimates to determine if adjustments are necessary or appropriate based on information it receives. |
Stock-based compensation | Stock-based compensation The Company accounts for stock options granted in accordance with ASC 718, Compensation-Stock Compensation , or ASC 718. In accordance with ASC 718, compensation expense is measured at the estimated fair value of the stock options at grant date and is included as compensation expense over the vesting period during which an employee provides service in exchange for the award. All share-based awards granted are measured based on the fair value on the date of the grant and compensation expense is recognized with respect to those awards over the requisite service period, which is generally the vesting period of the respective award. The Company reverses any previously recognized compensation cost associated with forfeited awards in the period the forfeiture occurs. Equity-based compensation expense is classified in the Company’s consolidated statement of operations and comprehensive loss in the same manner in which the award recipients’ payroll costs are classified or in which the award recipients’ service payments are classified. The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes model. The following summarizes the inputs used: Expected volatility —The Company estimates its expected stock volatility based on the historical volatility of a publicly traded set of peer companies because we lack company-specific historical and implied volatility information due in part to the limited time in which we have operated as a publicly traded company. We expect to continue to do so until such time as we have adequate historical data regarding the volatility of our traded stock price. Expected term —The expected term of the Company’s stock options has been determined based on the expected time to liquidity. The Company uses the simplified method prescribed by the SEC’s Staff Accounting Bulletin No. 107, Share-Based Payment , to calculate the expected term of options granted because we lack company-specific historical and implied expected term information due in part to the limited time in which we have operated as a publicly traded company. Risk-free interest rate —The risk-free interest rate is based on the implied yield on a U.S. Treasury security at a constant maturity with a remaining term equal to the expected term of the option granted. Dividends —Expected dividend yield is zero because the Company does not pay cash dividends on common shares and does not expect to pay any cash dividends in the foreseeable future. |
Income taxes | Income taxes Deferred income tax assets and liabilities arise from temporary differences associated with differences between the financial statements and tax basis of assets and liabilities, as measured by the enacted tax rates, which are expected to be in effect when these differences reverse. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. The Company has generated net losses since inception and accordingly has not recorded a provision for income taxes. The Company follows the provisions of ASC 740-10, Uncertainty in Income Taxes, or ASC 740-10. The Company has not recognized a liability as a result of the implementation of ASC 740-10. A reconciliation of the beginning and ending amount of unrecognized tax benefits has not been provided since there is no unrecognized benefit since the date of adoption. The Company has not recognized interest expense or penalties as a result of the implementation of ASC 740-10. If there were an unrecognized tax benefit, the Company would recognize interest accrued related to unrecognized tax benefits and penalties in income tax expense. The Company has identified the United States, Denmark and United Kingdom as its major tax jurisdictions. Refer to Note 11 for further details. |
Net loss per share | Net loss per share Basic net loss per share is computed by dividing the net loss by the weighted-average number of shares of common stock outstanding for the period. Diluted net loss per share is computed by dividing the net loss by the weighted-average number of shares of common stock and dilutive common stock equivalents outstanding for the period, determined using the treasury-stock method and the as if-converted method, for convertible securities, if inclusion of these instruments is dilutive. For the years ended December 31, 2022 and 2021 , both methods are equivalent. Basic and diluted net loss per share is described further in Note 12. |
Segments | Segments Operating segments are defined as components of an entity for which separate financial information is available and that is regularly reviewed by the chief operating decision maker, or CODM, in deciding how to allocate resources to an individual segment and in assessing performance. The Company’s CODM is its chief executive officer. The Company has determined it operates in one segment. |
Other comprehensive gain (loss) | Other comprehensive gain (loss) Other comprehensive gain (loss), or OCI, is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. The Company’s OCI includes currency translation and unrealized gain or (loss) on marketable securities. |
Emerging growth company status | Emerging growth company status The Company is an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012, or JOBS Act. Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act, until such time as those standards apply to private companies. The Company may elect to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that it (i) is no longer an emerging growth company or (ii) affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act. As a result, and as a smaller reporting company, these financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates. |
Recently adopted accounting standards and Recently issued accounting standards | Recently adopted accounting standards In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses: Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 requires measurement and recognition of expected credit losses for financial assets. In April 2019, the FASB issued clarification to ASU 2016-13 within ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging , and Topic 825, Financial Instruments . The ASU 2016-13 guidance became effective as of January 1, 2020, and must be adopted using a modified retrospective approach, with certain exceptions. This guidance is effective for public business entities that meet the definition of a SEC, excluding eligible smaller reporting companies for fiscal years beginning after December 15, 2019. For all other entities, including emerging growth companies, it is effective for fiscal years beginning after December 15, 2022. The adoption of ASU No. 2016-13 during the year ended December 31, 2022 did not have a material impact on the financial statements. Recently issued accounting standards The Company periodically reviews new accounting standards that are issued and has not identified any new standards that it believes merit further discussion or would have a significant impact on its financial statements. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Accounting Policies [Abstract] | |
Summary of Estimated Useful Life of Asset | Property and equipment are recorded at cost. Costs associated with maintenance and repairs are expensed as incurred. Depreciation is provided using the straight-line method over the estimated useful lives: Asset Category Useful Life Equipment 5 - 7 years Furniture and fixtures 5 years Leasehold improvements Lesser of 10 years or the remaining term of the respective lease |
Investments in Marketable Sec_2
Investments in Marketable Securities (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Investments, Debt and Equity Securities [Abstract] | |
Summary of Available-for-Sale Investments | A summary of the Company’s available-for-sale investments as of December 31, 2022 and 2021 consisted of the following (in thousands): At December 31, 2022 Amortized Gross Unrealized Gross Unrealized Fair Marketable securities: Cost Gains Losses Value Corporate bonds $ 27,573 $ — $ ( 135 ) $ 27,438 Total $ 27,573 $ — $ ( 135 ) $ 27,438 Marketable securities, non-current: Corporate bonds $ 5,963 $ — $ ( 131 ) $ 5,832 Total $ 5,963 $ — $ ( 131 ) $ 5,832 At December 31, 2021 Amortized Gross Unrealized Gross Unrealized Fair Marketable securities: Cost Gains Losses Value Corporate bonds $ 37,671 $ — $ ( 43 ) $ 37,628 Total $ 37,671 $ — $ ( 43 ) $ 37,628 Marketable securities, non-current: Corporate bonds $ 9,082 $ — $ ( 34 ) $ 9,048 Total $ 9,082 $ — $ ( 34 ) $ 9,048 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Fair Value Disclosures [Abstract] | |
Summary of Assets Measured at Fair Value | A summary of the assets that are measured at fair value as of December 31, 2022 and 2021 is as follows (in thousands): Fair Value Measurement at Assets: Carrying Quoted Prices in Significant Significant Money market funds (1) $ 16,445 $ 16,445 $ — $ — Debt securities 33,270 — 33,270 — Total $ 49,715 $ 16,445 $ 33,270 $ — Fair Value Measurement at Assets: Carrying Quoted Prices in Significant Significant Money market funds (1) $ 49,626 $ 49,626 $ — $ — Debt securities 46,676 — 46,676 — Total $ 96,302 $ 49,626 $ 46,676 $ — (1) Money market funds with maturities of 90 days or less at the date of purchase are included within cash and cash equivalents in the accompanying consolidated balance sheets and are recognized at fair value. |
Prepaid Expenses and Other Cu_2
Prepaid Expenses and Other Current Assets (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Prepaid Expense and Other Assets, Current [Abstract] | |
Schedule of Prepaid Expenses and Other Current Assets | Prepaid expenses and other current assets consist of the following (in thousands): December 31, 2022 2021 Contract research and development costs $ 1,450 $ 5,569 Prepaid insurance costs 805 1,728 Research and development tax credit receivable 792 1,682 Value-added tax refund receivable 587 598 Other 52 334 Total prepaid expenses and other current assets $ 3,686 $ 9,911 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Leases [Abstract] | |
Summary of Operating Leases | The Company has the following operating leases: Location Primary Use Lease Renewal Option Copenhagen, Denmark Corporate headquarters January 2025 None London, United Kingdom Office space February 2024 None Gothenburg, Sweden Office space May 2023 None Stevenage, United Kingdom Laboratory space August 2025 None |
Quantitative Information Regarding Leases | Quantitative information regarding the Company’s leases for the years ended December 31, 2022 and 2021 is as follows (in thousands): Year Ended Lease Cost: 2022 2021 Operating lease cost $ 506 $ 496 Other Information: Operating cash flows paid for amounts included in the $ 523 $ 513 Operating lease liabilities arising from obtaining right-of-use $ 488 $ 411 |
Summary of Operating Lease Liabilities | Operating lease liabilities are as follows at December 31, 2022 (in thousands): Operating 2023 $ 523 2024 293 2025 51 2026 — 2027 — Total lease payments 867 Less: imputed interest ( 63 ) Total lease liabilities $ 804 |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Property, Plant and Equipment [Abstract] | |
Summary of Equipment | Equipment as of December 31, 2022 and 2021 consisted of the following (in thousands): December 31, December 31, 2022 2021 Equipment $ 419 $ 223 Less: accumulated depreciation ( 62 ) ( 20 ) Equipment, net $ 357 $ 203 |
Accrued Expenses And Other Cu_2
Accrued Expenses And Other Current Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Payables and Accruals [Abstract] | |
Schedule of Accrued Expenses and Other Current Liabilities | Accrued expenses and other current liabilities consist of the following (in thousands): December 31, 2022 2021 Contract research and development costs $ 6,145 $ 1,575 Employee compensation costs 597 601 Lease liabilities, current 476 399 Other current liabilities 539 438 Total accrued expenses and other current liabilities $ 7,757 $ 3,013 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
Summary of Stock Options Activity | The following table sets forth the activity for the Company’s stock options during the periods presented: Number of Weighted- Weighted- Aggregate Outstanding at December 31, 2020 2,538,411 $ 4.67 8.8 20,009,769 Granted 1,631,000 9.49 — 8,160 Cancelled ( 170,683 ) 7.63 — — Outstanding at December 31, 2021 3,998,728 6.51 8.3 $ 1,357,655 Granted 1,827,750 2.98 — 111,013 Cancelled ( 47,593 ) 2.73 — — Outstanding at December 31, 2022 5,778,885 $ 5.43 7.9 $ — Vested and expected to vest at December 31, 2022 5,474,743 $ 5.43 8.3 $ — Vested and exercisable at December 31, 2022 2,667,144 $ 5.65 7.1 $ — |
Summary of Stock-based Compensation Expense | For the Year Ended 2022 2021 Research and development $ 2,618 $ 1,903 General and administrative 2,953 2,577 Total Stock-based compensation $ 5,571 $ 4,480 |
Summary of Fair Value Assumptions of Options Granted Estimated Based on Black-Scholes Model | The fair values of the options granted were estimated based on the Black-Scholes model, using the following assumptions: 2022 2021 Risk-free interest rate 1.7 % 0.7 % Expected term (in years) 6.0 6.0 Expected volatility 90.0 % 90.5 % Expected dividend yield 0 % 0 % |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
Summary of Components of Net Loss | The components of net loss are as follows (in thousands): Year Ended December 31, 2022 2021 Domestic $ ( 10,163 ) $ ( 11,252 ) Foreign ( 51,461 ) ( 40,500 ) Total $ ( 61,624 ) $ ( 51,752 ) |
Schedule of Reconciliation of Statutory Income Tax Rate to Effective Income Tax Rate | The reconciliation of the statutory income tax rate to the Company’s effective income tax rate is as follows: Year Ended December 31, 2022 2021 Income tax benefit at the statutory rate 21.0 % 21.0 % Orphan Drug Credit 6.6 5.7 Permanent differences 2.5 3.5 State income taxes 1.1 1.3 Foreign rate differential 0.8 0.8 Change in valuation allowance ( 32.0 ) ( 32.3 ) Total — % — % |
Schedule of Components of Company's Deferred Tax Assets and Liabilities | The principal components of the Company’s deferred tax assets and liabilities consisted of the following (in thousands): December 31, Deferred tax assets: 2022 2021 Net operating loss carryforwards $ 43,716 $ 31,022 Orphan drug credit 8,036 3,948 U.S. research and development credits 1,191 1,191 Bonus compensation 544 274 Total deferred tax assets $ 53,487 $ 36,435 Valuation allowance ( 53,472 ) ( 36,435 ) Net deferred tax assets 15 — Deferred tax liabilities: Fixed assets ( 15 ) — Total deferred tax liabilities ( 15 ) — Net noncurrent deferred tax asset(liability) $ — $ — |
Net Loss Per Share (Tables)
Net Loss Per Share (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Earnings Per Share [Abstract] | |
Schedule of Basic and Diluted Net Loss Per Share | Basic and diluted net loss per share is calculated as follows (in thousands except share and per share amounts): Year Ended December 31, 2022 2021 Net loss $ ( 61,624 ) $ ( 51,752 ) Weighted-average number of shares used in computing net 25,409,123 25,261,832 Net loss per common share, basic and diluted $ ( 2.43 ) $ ( 2.05 ) |
Schedule of Antidilutive Securities Excluded from Calculation of Diluted Net Loss Per Share | The following outstanding potentially dilutive securities have been excluded from the calculation of diluted net loss per share, as their effect is anti-dilutive: Year Ended December 31, 2022 2021 Stock options to purchase common stock 5,778,885 3,998,728 |
Description of Business, Orga_2
Description of Business, Organization and Liquidity - Additional Information (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Description Of Business Organization And Liquidity [Line Items] | ||
Accumulated deficit | $ 217,736 | $ 156,112 |
Net loss | (61,624) | (51,752) |
Cash, cash equivalents and marketable securities | 66,100 | 109,200 |
Cash and cash equivalents | 32,786 | 62,563 |
Current assets | 63,910 | 110,102 |
Current liabilities | 11,107 | 4,544 |
Clinical Development and Corporate General and Administrative Activities | ||
Description Of Business Organization And Liquidity [Line Items] | ||
Net loss | $ (42,900) | $ (52,300) |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Additional Information (Details) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 USD ($) Segment shares | Dec. 31, 2021 USD ($) shares | |
Summary Of Significant Accounting Policies [Line Items] | ||
Original maturities at the date of purchase of liquid investments | three months or less | |
Money market funds | $ 16,400 | $ 49,600 |
Preferred stock, issued (in shares) | shares | 0 | 0 |
Expected dividend yield | $ 0 | |
Number of operating segments | Segment | 1 | |
Research and Development | ||
Summary Of Significant Accounting Policies [Line Items] | ||
Refundable tax credit | $ 3,600 | $ 3,800 |
Tax credit refund receivable | $ 800 | $ 900 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Summary of Estimated Useful Life of Asset (Detail) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Equipment | Minimum | ||
Property Plant And Equipment [Line Items] | ||
Estimated useful life of asset | 5 years | 5 years |
Equipment | Maximum | ||
Property Plant And Equipment [Line Items] | ||
Estimated useful life of asset | 7 years | 7 years |
Furniture and Fixtures | ||
Property Plant And Equipment [Line Items] | ||
Estimated useful life of asset | 5 years | |
Leasehold Improvements | ||
Property Plant And Equipment [Line Items] | ||
Estimated useful life of asset | Lesser of 10 years or the remaining term of the respective lease |
Investments in Marketable Sec_3
Investments in Marketable Securities - Summary of Available-for-Sale Investments (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Schedule of Available for Sale Securities [Line Items] | ||
Debt Securities Available For Sales Type Extensible List | us-gaap:CorporateDebtSecuritiesMember | us-gaap:CorporateDebtSecuritiesMember |
Investments - Current | ||
Schedule of Available for Sale Securities [Line Items] | ||
Amortized Cost | $ 27,573 | $ 37,671 |
Gross Unrealized Losses | (135) | (43) |
Fair Value | 27,438 | 37,628 |
Investments - Noncurrent | ||
Schedule of Available for Sale Securities [Line Items] | ||
Amortized Cost | 5,963 | 9,082 |
Gross Unrealized Losses | (131) | (34) |
Fair Value | $ 5,832 | $ 9,048 |
Fair Value Measurements - Summa
Fair Value Measurements - Summary of Assets Measured at Fair Value (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 | |
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |||
Assets fair value | $ 49,715 | $ 96,302 | |
Money Market Funds | |||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |||
Assets fair value | [1] | 16,445 | 49,626 |
Debt Securities | |||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |||
Assets fair value | 33,270 | 46,676 | |
Level 1 | |||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |||
Assets fair value | 16,445 | 49,626 | |
Level 1 | Money Market Funds | |||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |||
Assets fair value | [1] | 16,445 | 49,626 |
Level 2 | |||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |||
Assets fair value | 33,270 | 46,676 | |
Level 2 | Debt Securities | |||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |||
Assets fair value | $ 33,270 | $ 46,676 | |
[1] Money market funds with maturities of 90 days or less at the date of purchase are included within cash and cash equivalents in the accompanying consolidated balance sheets and are recognized at fair value. |
Prepaid Expenses and Other Cu_3
Prepaid Expenses and Other Current Assets - Schedule of Prepaid Expenses and Other Current Assets (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Prepaid Expense and Other Assets, Current [Abstract] | ||
Contract research and development costs | $ 1,450 | $ 5,569 |
Prepaid insurance costs | 805 | 1,728 |
Research and development tax credit receivable | 792 | 1,682 |
Value-added tax refund receivable | 587 | 598 |
Other | 52 | 334 |
Total prepaid expenses and other current assets | $ 3,686 | $ 9,911 |
Leases - Summary of Operating L
Leases - Summary of Operating Leases (Details) | 12 Months Ended |
Dec. 31, 2022 | |
Copenhagen, Denmark | |
Operating Leased Assets [Line Items] | |
Operating lease, expiration date | Jan. 31, 2025 |
Operating lease,renewal option | None |
London,United Kingdom | |
Operating Leased Assets [Line Items] | |
Operating lease, expiration date | Feb. 29, 2024 |
Operating lease,renewal option | None |
Stevenage, United Kingdom | |
Operating Leased Assets [Line Items] | |
Operating lease, expiration date | Aug. 31, 2025 |
Operating lease,renewal option | None |
Gothenburg, Sweden | |
Operating Leased Assets [Line Items] | |
Operating lease, expiration date | May 31, 2023 |
Operating lease,renewal option | None |
Leases - Additional Information
Leases - Additional Information (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Leases [Abstract] | ||
Rent expense | $ 0.5 | $ 0.5 |
Weighted average remaining lease term for operating leases | 1 year 9 months 18 days | 2 years 4 months 24 days |
Weighted average discount rate for operating leases | 8% | 8% |
Leases - Quantitative Informati
Leases - Quantitative Information Regarding Leases (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Lease Cost: | ||
Operating lease cost | $ 506 | $ 496 |
Operating cash flows paid for amounts included in the measurement of lease liabilities | 523 | 513 |
Operating lease liability arising from obtaining right-of-use assets | $ 488 | $ 411 |
Leases - Summary of Operating_2
Leases - Summary of Operating Lease Liabilities (Details) $ in Thousands | Dec. 31, 2022 USD ($) |
Operating Leases | |
2023 | $ 523 |
2024 | 293 |
2025 | 51 |
Total lease payments | 867 |
Less: imputed interest | (63) |
Total lease liabilities | $ 804 |
Property and Equipment, Net - S
Property and Equipment, Net - Summary of Equipment (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Property, Plant and Equipment [Abstract] | ||
Equipment | $ 419 | $ 223 |
Less: accumulated depreciation | (62) | (20) |
Equipment, net | $ 357 | $ 203 |
Property and Equipment, Net - A
Property and Equipment, Net - Additional Information (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 42,000 | $ 20,000 |
Accrued Expenses and Other Cu_3
Accrued Expenses and Other Current Liabilities - Schedule of Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Payables and Accruals [Abstract] | ||
Contract research and development costs | $ 6,145 | $ 1,575 |
Employee compensation costs | 597 | 601 |
Lease liabilities, current | $ 476 | $ 399 |
Operating Lease, Liability, Current, Statement of Financial Position [Extensible Enumeration] | Accrued Liabilities and Other Liabilities | Accrued Liabilities and Other Liabilities |
Other current liabilities | $ 539 | $ 438 |
Total accrued expenses and other current liabilities | $ 7,757 | $ 3,013 |
Stockholders' Equity - Addition
Stockholders' Equity - Additional Information (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2022 | |
Subsidiary Sale Of Stock [Line Items] | ||
Common stock, authorized | 300,000,000 | 300,000,000 |
Preferred stock, authorized | 10,000,000 | 10,000,000 |
Common stock, outstanding | 25,261,832 | 25,652,392 |
Common stock, dividends per share declared | $ 0 | |
Common stock, dividends per share paid | $ 0 |
Stock-Based Compensation - Addi
Stock-Based Compensation - Additional Information (Details) - USD ($) $ / shares in Units, $ in Millions | 1 Months Ended | 12 Months Ended | |
Oct. 31, 2020 | Dec. 31, 2022 | Dec. 31, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of options, granted | 1,827,750 | 1,631,000 | |
Stock Options | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Weighted-average grant date fair value of stock options granted | $ 2.22 | ||
Intrinsic value per share of stock options | $ 1.15 | $ 3.03 | |
Fair value of stock options vested | $ 6.8 | $ 2.6 | |
2020 Plan | Stock Options | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock options available for future grant | 0 | ||
Unrecognized compensation expense | $ 10.9 | ||
2020 Equity Incentive Plan | Stock Options | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock options, vesting period | 4 years | ||
Stock options, expiration period | 10 years | ||
Stock options available for future grant | 884,566 | ||
Unrecognized compensation expense that is expected to be recognized over a weighted-average period | 2 years 2 months 12 days |
Stock-Based Compensation - Summ
Stock-Based Compensation - Summary of Stock Options Activity (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Share-Based Payment Arrangement [Abstract] | |||
Number of Options, Outstanding | 3,998,728 | 2,538,411 | |
Number of Options, Granted | 1,827,750 | 1,631,000 | |
Number of Options, Cancelled | (47,593) | (170,683) | |
Number of Options, Outstanding | 5,778,885 | 3,998,728 | 2,538,411 |
Number of Options, Vested and expected to vest | 5,474,743 | ||
Number of Options, Vested and exercisable | 2,667,144 | ||
Weighted average exercise price per share, Outstanding | $ 6.51 | $ 4.67 | |
Weighted average exercise price per share, Granted | 2.98 | 9.49 | |
Weighted average exercise price per share, Cancelled | 2.73 | 7.63 | |
Weighted average exercise price per share, Outstanding | 5.43 | $ 6.51 | $ 4.67 |
Weighted average exercise price per share, Vested and expected | 5.43 | ||
Weighted average exercise price per share, Vested and exercisable | $ 5.65 | ||
Weighted average remaining contractual term (in years), Outstanding | 7 years 10 months 24 days | 8 years 3 months 18 days | 8 years 9 months 18 days |
Weighted average remaining contractual term (in years), Vested and expected to vest | 8 years 3 months 18 days | ||
Weighted average remaining contractual term (in years), Vested and exercisable | 7 years 1 month 6 days | ||
Aggregate intrinsic value, Outstanding | $ 1,357,655 | $ 20,009,769 | |
Aggregate intrinsic value, Granted | $ 111,013 | 8,160 | |
Aggregate intrinsic value, Outstanding | $ 1,357,655 | $ 20,009,769 |
Stock-Based Compensation - Su_2
Stock-Based Compensation - Summary of Stock-based Compensation Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total Stock-based compensation | $ 5,571 | $ 4,480 |
Research and Development | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total Stock-based compensation | 2,618 | 1,903 |
General and Administrative | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total Stock-based compensation | $ 2,953 | $ 2,577 |
Stock-Based Compensation - Su_3
Stock-Based Compensation - Summary of Fair Value Assumptions of Options Granted Estimated Based on Black-Scholes Model (Details) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Share-Based Payment Arrangement [Abstract] | ||
Risk-free interest rate | 1.70% | 0.70% |
Expected term (in years) | 6 years | 6 years |
Expected volatility | 90% | 90.50% |
Expected dividend yield | 0% | 0% |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) - USD ($) | 12 Months Ended | |||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Operating Loss Carryforwards [Line Items] | ||||
Income tax expense or benefit | $ 0 | $ 0 | ||
Tax rate | 21% | 21% | ||
Valuation allowance | $ 53,472,000 | $ 36,435,000 | ||
Change in valuation allowance | 17,000,000 | |||
Orphan drug credit | $ 8,036,000 | $ 3,948,000 | ||
Operating loss carryforwards, Limitations on Use | The Company also had NOLs in Denmark of $161.7 million which have an indefinite life. Federal and state NOLs and R&D credit and ODC carryforwards are also subject to annual limitations in the event that cumulative changes in the ownership interests of significant stockholders exceed 50% over a three-year period, as defined under Sections 382 and 383 of the Internal Revenue Code of 1986. | |||
Research and Development | ||||
Operating Loss Carryforwards [Line Items] | ||||
Tax allowance | 101.50% | |||
2020 through 2022 | Research and Development | ||||
Operating Loss Carryforwards [Line Items] | ||||
Tax allowance | 130% | |||
2023 through 2025 | Research and Development | ||||
Operating Loss Carryforwards [Line Items] | ||||
Tax allowance | 108% | |||
2026 | Research and Development | ||||
Operating Loss Carryforwards [Line Items] | ||||
Tax allowance | 110% | |||
Federal | ||||
Operating Loss Carryforwards [Line Items] | ||||
Net operating loss carryforwards | $ 30,700,000 | |||
Research and Development tax credits | 1,200,000 | |||
Orphan drug credit | 8,000,000 | |||
State | ||||
Operating Loss Carryforwards [Line Items] | ||||
Net operating loss carryforwards | 26,800,000 | |||
Denmark | ||||
Operating Loss Carryforwards [Line Items] | ||||
Net operating loss carryforwards | $ 161,700,000 |
Income Taxes - Summary of Compo
Income Taxes - Summary of Components of Net Loss (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | ||
Domestic | $ (10,163) | $ (11,252) |
Foreign | (51,461) | (40,500) |
Total | $ (61,624) | $ (51,752) |
Income Taxes - Schedule of Reco
Income Taxes - Schedule of Reconciliation of Statutory Income Tax Rate to Effective Income Tax Rate (Details) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | ||
Tax rate | 21% | 21% |
Orphan Drug Credit | 6.60% | 5.70% |
Permanent differences | 2.50% | 3.50% |
State income taxes | 1.10% | 1.30% |
Foreign rate differential | 0.80% | 0.80% |
Change in valuation allowance | (32.00%) | (32.30%) |
Income Taxes - Schedule of Comp
Income Taxes - Schedule of Components of Company's Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Deferred tax assets: | ||
Net operating loss carryforwards | $ 43,716 | $ 31,022 |
Orphan drug credit | 8,036 | 3,948 |
U.S. research and development credits | 1,191 | 1,191 |
Bonus compensation | 544 | 274 |
Total deferred tax assets | 53,487 | 36,435 |
Valuation allowance | (53,472) | $ (36,435) |
Net deferred tax assets | 15 | |
Deferred tax liabilities: | ||
Fixed assets | (15) | |
Total deferred tax liabilities | $ (15) |
Net Loss Per Share - Schedule o
Net Loss Per Share - Schedule of Basic and Diluted Net Loss Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Earnings Per Share [Abstract] | ||
Net loss | $ (61,624) | $ (51,752) |
Weighted-average number of shares used in computing net loss per common share, basic | 25,409,123 | 25,261,832 |
Weighted-average number of shares used in computing net loss per common share, diluted | 25,409,123 | 25,261,832 |
Net loss per common share, basic | $ (2.43) | $ (2.05) |
Net loss per common share, diluted | $ (2.43) | $ (2.05) |
Net Loss Per Share - Schedule_2
Net Loss Per Share - Schedule of Antidilutive Securities Excluded from Calculation of Diluted Net Loss Per Share (Details) - shares | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Stock Options to Purchase Common Stock | ||
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share | 5,778,885 | 3,998,728 |
Defined Contribution Plan - Add
Defined Contribution Plan - Additional Information (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Defined Contribution Plan Disclosure [Line Items] | ||
Contribution paid by employer | $ 0.1 | $ 0.1 |
Maximum | ||
Defined Contribution Plan Disclosure [Line Items] | ||
Employer matching contribution | 6% | 6% |
Related Party Transactions - Ad
Related Party Transactions - Additional Information (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Related Party Transactions [Abstract] | ||
Related party transactions | $ 0 | $ 0 |