Marker Therapeutics, Inc. — Q1 2023 Form 10-Q
Reporting period: Three months ended March 31, 2023. Marker is a clinical-stage immuno-oncology company developing multiTAA-specific T-cell therapies. The interim financial statements are unaudited.
Financial performance and position
| Metric | Q1 2023 | Q1 2022 / prior period |
|---|---|---|
| Revenue | $4.73 million | $0.96 million |
| Operating expenses | $9.79 million | $10.76 million |
| Operating loss | $5.05 million | $9.79 million |
| Net loss | $4.97 million | $9.91 million |
| Net loss per share | $0.57 | $1.19 |
| Operating cash used | $5.89 million | $12.23 million |
| Cash and cash equivalents | $6.40 million at March 31 | $11.78 million at December 31, 2022 |
| Working capital | $5.71 million at March 31 | $8.84 million at December 31, 2022 |
- Q1 revenue comprised $1.23 million of grant income and $3.50 million of related-party service revenue. No revenue came from product sales or licensing.
- Research and development expense rose 3% to $7.27 million; general and administrative expense fell 33% to $2.52 million. Management attributed the R&D increase mainly to process development and the G&A decline largely to lower stock compensation and personnel costs.
- Cash declined by $5.38 million in the quarter. Financing provided $0.62 million, primarily from common-stock sales. Investing used $0.11 million.
- Total liabilities were $12.03 million, including $7.49 million of operating lease liabilities. The filing reports no borrowings outstanding.
Material changes and unusual items
- Revenue increased substantially, chiefly because Marker recognized the final $2.5 million under its $8.0 million services agreement with Wilson Wolf and earned an additional $1.0 million milestone fee. Wilson Wolf is a related party through a director who is its CEO. The $1.0 million receivable was collected in May 2023.
- Grant income increased year over year. The filing’s descriptions of Q1 FDA grant income are inconsistent: MD&A states $0.1 million, while a note states $1.2 million. The filing text does not provide a clear reconciled value; total grant income reported is $1.23 million.
- On January 26, 2023, Marker effected a 1-for-10 reverse stock split and reduced authorized common shares from 300 million to 30 million. Share and per-share data have been adjusted retrospectively.
- During Q1, Marker sold shares for $0.6 million under its ATM program and approximately $33,000 under its Lincoln Park purchase agreement. It also issued Lincoln Park 180,410 commitment-fee shares, valued at $0.5 million.
Outlook, liquidity, and risks
- Management said March 31 cash was expected to fund operations and capital needs into the third quarter of 2023, based on assumptions that may prove incorrect. The estimate excluded proceeds and anticipated cost savings from the subsequent Cell Ready transaction.
- Marker disclosed substantial doubt about its ability to continue as a going concern. It expects continued losses, has no product-sales revenue, and says it needs additional capital. Failure to raise funds could force delays, reductions, or termination of development programs.
- In May 2023, Marker agreed to sell or assign manufacturing facilities, equipment, leasehold improvements, and related agreements to Cell Ready for approximately $19 million. Closing was expected June 26, subject to conditions. Cell Ready is related to Marker through a director who is its CEO; it also intended to offer employment to approximately 50 Marker employees. The transaction had not closed as of the filing.
- Marker was conducting a strategic review of its clinical programs and said it would provide an update when complete; it gave no specific trial initiation or readout guidance in the filing. Programs include MT-401 for post-transplant AML, MT-401-OTS for AML, and MT-601 for pancreatic cancer and lymphoma.
- Juan Vera was appointed CEO effective May 1, 2023, following Peter Hoang’s resignation. Marker estimated approximately $0.4 million in severance costs for Hoang, to be recorded and paid in Q2. Vera serves on AlloVir’s board; Marker disclosed a $0.4 million AlloVir services work order.
- The filing identifies risks from the Cell Ready transaction’s potential delay or failure, capital-market volatility, clinical and regulatory uncertainty, and reliance on future financing. Management reported disclosure controls as effective and no material changes to internal control over financial reporting.
Most important facts for investors to verify
- Whether the Cell Ready transaction closed, whether the approximately $19 million consideration was received, and what costs or savings resulted.
- Marker’s subsequent cash balance, financing activity, and revised cash runway, including the effect of manufacturing-asset transfer and employee departures.
- The correct Q1 FDA grant-income amount and grant cash received; the note and MD&A figures conflict.
- Results of the strategic review, updated clinical plans and timelines, and any changes in program funding or trial execution.
- The terms and governance oversight of related-party arrangements with Wilson Wolf, Cell Ready, and AlloVir.