Mustang Bio, Inc. — Q1 2024 Form 10-Q
Reporting period: Three months ended March 31, 2024. Mustang is a clinical-stage cell and gene therapy company controlled by Fortress Biotech. It reported no product revenue; margins are therefore not meaningful.
Financial results and liquidity
| Metric | Q1 2024 | Q1 2023 / prior balance date |
|---|---|---|
| Revenue | None reported | None reported |
| Research and development expense | $3.8 million | $14.0 million |
| General and administrative expense | $1.4 million | $2.3 million |
| Net loss | $5.2 million; $0.46 per share | $16.7 million; $2.06 per share |
| Cash used in operating activities | $5.3 million | $17.8 million |
| Cash and cash equivalents | $1.3 million at March 31 | $6.2 million at December 31, 2023 |
| Total cash, cash equivalents and restricted cash | $1.7 million at March 31 | $7.0 million at December 31, 2023 |
| Total liabilities | $19.5 million | $17.6 million at December 31, 2023 |
| Stockholders’ equity (deficit) | $(4.9) million | $0.1 million at December 31, 2023 |
Operating expenses fell 68% year over year, and net loss narrowed 69%. Management attributed lower R&D costs mainly to reduced personnel, lab, facility and program costs, including a bonus accrual reversal and forgiveness of certain St. Jude payables. The prior-year comparison also included substantial interest expense on a term loan, which was repaid and terminated in April 2023. Q1 2024 financing cash flow was $49,000; investing cash flow was zero. No material interest-bearing debt was reported at quarter-end; operating lease liabilities were $2.4 million.
Material developments and outlook
- Management concluded substantial doubt exists about Mustang’s ability to continue as a going concern for at least 12 months after the financial statements’ issuance. It expects Q1-end cash, together with approximately $3.3 million net proceeds from a May 2 offering, to fund operations into Q1 2025, based on its revised operating plan. Further financing is needed and is not assured.
- In April, the company approved an approximately 81% workforce reduction, expected to be substantially completed in Q2 2024. It estimates approximately $0.2 million of one-time termination costs, with possible additional costs.
- Mustang reported promising MB-106 clinical findings: the follicular lymphoma arm had a 100% complete response rate in six patients, with no cytokine release syndrome above grade 1 and no ICANS reported. The FDA granted MB-106 RMAT designation for relapsed or refractory Waldenström macroglobulinemia and follicular lymphoma. However, Mustang does not expect to start the planned pivotal Phase 2 WM trial in 2024 because of limited resources. The MB-109 study also is on hold pending additional resources.
- In April, Mustang terminated its St. Jude licenses and related agreement in exchange for mutual release and forgiveness of amounts owed. It gave notice to terminate its Leiden University Medical Centre license; termination terms remained under discussion.
- On May 13, Mustang, uBriGene and CFIUS agreed to abandon the remaining facility-related transaction. CFIUS determined the transaction posed a national-security risk. uBriGene must dispose of purchased equipment within 180 days, subject to the agreement’s terms. Mustang had received $6 million upfront when the asset sale closed in July 2023; the filing does not identify additional proceeds from the abandoned transaction.
- The May 2 offering generated approximately $3.3 million net proceeds, excluding any warrant exercises. It included common shares and substantial pre-funded and other warrants; exercise and approval provisions could result in significant dilution. Existing investor warrants were also repriced from $1.58 to $0.237 per share.
- Nasdaq notified Mustang that it did not meet the $2.5 million minimum stockholders’ equity requirement. Mustang submitted a compliance plan on April 29; Nasdaq’s decision and the company’s ability to regain compliance are uncertain.
Key risks and items to verify
- Whether Mustang can secure further capital and extend its stated runway; the going-concern uncertainty remains despite the May offering.
- Nasdaq’s decision on the compliance plan and the company’s ability to satisfy continued listing requirements.
- The final financial, asset-disposal and operational consequences of the CFIUS agreement, including whether equipment is returned or disposed of.
- Potential dilution from the May offering and repriced warrants, including required stockholder approval and actual warrant exercises.
- Whether staffing and funding constraints delay or halt MB-106, MB-109 and other development programs; clinical findings remain preliminary and do not establish approval or commercial success.
- Whether termination discussions with Leiden result in additional obligations or costs. The filing reports no legal proceedings, but contractual and other contingencies remain.