By John Vandermosten, CFA
READ THE FULL GRCE RESEARCH REPORT
Grace Therapeutics, Inc (NASDAQ:GRCE) reported fiscal year (FY) third quarter results following a series of announcements regarding conference participation, the raise of additional capital and results from the Phase III STRIVE-ON trial for GTx-104. The most important information was the data from the Phase III safety trial. In patients, it found excellent relative dose intensity, better outcomes, fewer intensive care unit readmissions and fewer ventilator days for GTx-104 compared with oral nimodipine. Following the data release, Grace executed a capital raise to fund pre-commercial development of GTx-104.
Third Quarter Financial and Operational Results
Grace reported third quarter fiscal year 2025 results in a press release and Form 10-Q filing with the SEC on February 13th. For the quarter ending December 31, 2024, operating expenses of $3.7 million were recognized. Net loss for 3Q:25 totaled ($4.2) million or ($0.36) per share. For FY 3Q:25 versus the same prior year period:
- General & Administrative expenses were $1.5 million, down 4% from $1.6 million attributable to lower professional fees, stock-based compensation, partially offset by higher salaries and benefits;
- Research and development expenses rose 52% to $2.2 million from $1.4 million as a result of increased research activities for the GTx-104;
- Net interest and other expense were ($1.1) million compared to $444,000 with the change predominantly related to a change in fair value of derivative warrant liabilities due to an increase in Grace stock price. Interest income fell due to lower cash balances;
- Net loss was ($4.2) million vs. ($2.4) million or ($0.36) per share vs ($0.21).
As of December 31st, 2024, cash totaled $11.1 million. This amount compares to the $23.0 million cash balance held at the end of 2023. Net cash from financing for the first nine months of fiscal year 2025 was $0. Following the end of the third quarter, Grace executed a private placement in February raised net proceeds of approximately $13.8 million.
STRIVE-ON Results
On February 10th, Grace announced results from its pivotal Phase III STRIVE-ON safety trial of GTx-104 in aneurysmal subarachnoid hemorrhage (aSAH). The trial met its primary endpoint of the number of patients with at least one episode of clinically significant hypotension reasonably considered to be caused by the drug. Patients receiving GTx-104 experienced a 19% reduction in at least one incidence of clinically significant hypotension compared to oral nimodipine (28% versus 35%). Secondary endpoints include safety, clinical and pharmacoeconomic outcomes.
Notably, patients in the GTx-104 arm saw almost 30% of patients achieve recovery and more favorable patient reported outcomes. For example, there were fewer bedridden patients in the IV arm and these patients took better care of their personal hygiene.
From a pharmacoeconomic standpoint, patients in the GTx-104 arm were less expensive to serve with a reduction in intensive care unit (ICU) length of stay[1] and fewer days on mechanical ventilation. This result stands to reason as more patients in the experimental arm achieved close to the target dose intensity (54%) compared with those in the control arm (8%). GTx-104 patients had a higher concentration of nimodipine in the bloodstream with less variability.
There were eight deaths on the GTx-104 arm compared to four deaths on the oral nimodipine arm. The survival status of one patient on the oral nimodipine arm was unknown. All deaths in both arms of the trial were due to severity of the patient’s underlying disease. No deaths were determined to be related to GTx-104 or oral nimodipine.
Summary of Findings
Patients were evaluated for 90 days, including the 21-day treatment period. Four patients in the GTx-104 arm (8%) had the most severe Hunt & Hess grade of V compared with one patient (2%) in the oral nimodipine arm. Other relevant findings include:
- 54% of patients who received GTx-104 had a relative dose intensity (RDI) of 95% or higher of the prescribed dose compared to only 8% on oral nimodipine;
- There was a 29% relative increase in the number of patients with favorable outcomes at 90 days receiving GTx-104 compared to oral nimodipine on the modified Rankin scale (mRS);[2]
- Quality of life as measured by EQ-5D-3L[3] favored patients receiving GTx-104 versus oral nimodipine;
- Fewer intensive care unit (ICU) readmissions, ICU days and ventilator days for patients receiving GTx-104 versus oral nimodipine;
- Adverse events were comparable between the two arms and no new safety issues were identified with patients receiving GTx-104.
Now that the data has been analyzed, management will hold a pre-new drug application (NDA) meeting with the FDA followed by an NDA submission by mid-2025. The application will be submitted under section 505(b)(2) which relies on the original sponsor’s data for safety and efficacy. Assuming no unexpected delays, we expect an FDA response by 1H:26. Grace will present additional data at an as yet unidentified conference, which we anticipate will occur later this year.
Private Placement Capital Raise
After the release of STRIVE-ON results, Grace announced a financing led by Nantahala Capital and ADAR1 Partners along with new and existing healthcare-focused institutional investors. The deal was structured to raise $15 million in upfront gross proceeds with another $15 million from warrant exercises. The warrant terms are structured so that the instruments undergo an accelerated expiration upon FDA approval of GTx-104.
Grace issued 4,418,292 shares of common stock with each share paired with one warrant for a combined price of $3.395. The warrants will either expire approximately three and a half years after issuance or, in the case of FDA approval of GTx-104, 60 days after the approval date. The warrant exercise price is $3.395.
Proceeds from the capital raise will be used to conduct pre-commercialization activities, general corporate purposes and to support the submission to the NDA. TD Cowen served as the placement agent for the private placement and Craig-Hallum acted as the financial advisor to the Company.
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[1] Length of stay was estimated to be almost 1.5 days less for the GTx-104 arm vs. the oral nimodipine arm.
[2] The mRS is commonly used for measuring the degree of disability or dependence in daily activities of people who have suffered a stroke or other neurological conditions. It ranges from 0 (no symptoms) to 6 (death), helping clinicians assess recovery and prognosis: mRS Scores: 0 – No symptoms | 1 – No significant disability; able to carry out all usual activities despite some symptoms. | 2 – Slight disability; unable to carry out all previous activities but able to look after own affairs without assistance. | 3 – Moderate disability; requires some help but able to walk without assistance. | 4 – Moderately severe disability; unable to walk or attend to bodily needs without assistance. | 5 – Severe disability; bedridden, incontinent, and requires constant nursing care. | 6 – Death. The mRS is used in clinical trials, patient assessment and rehabilitation planning to track functional outcomes over time and guide treatment decisions.
[3] This is the EuroQoL system which examines five dimensions of health (mobility, self-care, usual activities, pain/discomfort, anxiety/depression) and the level of severity of each (no problems, some problems, extreme problems) for stroke patients.
