Marker Therapeutics, Inc. — Q3 2022 Form 10-Q
Reporting period: Quarter and nine months ended September 30, 2022. Marker is a clinical-stage immuno-oncology company developing T-cell therapies, including MultiTAA candidates. Its lead candidate, MT-401, is in a Phase 2 trial for post-transplant AML. The interim financial statements are unaudited.
Financial performance and position
- Revenue: Q3 revenue was $3.95 million, comprising $1.00 million of grant income and $2.95 million of related-party service revenue. Nine-month revenue was $5.70 million. None came from product sales or licensing.
- Expenses and losses: Q3 operating expenses were $10.97 million and net loss was $6.92 million ($0.08 per share), versus $10.02 million and $12.43 million ($0.15 per share) in Q3 2021. For the first nine months, operating expenses were $31.80 million and net loss was $26.07 million ($0.31 per share), versus $29.71 million and $32.12 million ($0.43 per share) in 2021.
- Costs: Nine-month R&D expense increased 6% to $20.87 million; G&A increased 10% to $10.93 million. The filing does not report a conventional product gross margin; reported revenue is grant and services income.
- Cash flow: Nine-month operating cash use was $20.67 million; investing cash use was $4.82 million, primarily for manufacturing and research facility equipment; financing provided $0.06 million. Cash and restricted cash decreased $25.42 million to $18.08 million.
- Liquidity: Working capital was $11.14 million, down from $33.08 million at December 31, 2021. Total assets were $41.11 million and total liabilities $18.51 million. There was no reported debt; liabilities included $7.72 million of operating lease obligations.
Changes, outlook, and material developments
- Losses narrowed year over year, aided by grant and related-party service income and the absence of the prior-year $2.41 million arbitration charge; operating expenses nevertheless increased.
- Management said September 30 cash was expected to fund operating and capital needs through Q2 2023, but cautioned that assumptions could prove wrong and additional capital may be needed sooner. The filing states substantial doubt exists about the company’s ability to continue as a going concern. Management expects continued losses and no significant product revenue for at least several years.
- In April, related party Wilson Wolf Manufacturing Corporation paid $8.0 million for training and research services. Marker recognized $2.95 million in Q3 and reported $5.05 million deferred revenue at quarter-end. The agreement assigns Wilson Wolf ownership of specified resulting intellectual property and includes certain rights involving Marker’s manufacturing facility and potential financing.
- Marker received a $2.0 million FDA Orphan Products Grant award for MT-401, but had not received funds by the filing date. The company also reported a CPRIT award of approximately $13.1 million; it had received $2.4 million and recognized $2.75 million of grant income during the first nine months.
- Management reported that six patients in MT-401 trial Cohorts 4 and 5 had completed dose-limiting toxicity periods with no DLTs reported; an efficacy analysis was expected by year-end 2022. The company expected to dose the first patient in an MT-401-OTS Phase 1 trial in 2023 and planned MT-601 trials in 2023.
- In August, Marker reduced G&A headcount by approximately 23.5%, including separation of its CFO, as part of a cost-reduction plan; it accrued $0.5 million for severance. The second modular cleanroom entered service in June.
- Nasdaq granted an extension through February 13, 2023 to regain the $1.00 minimum bid-price requirement. A reverse split in a range from 1-for-3 to 1-for-12 had been authorized for board discretion, but had not been approved by the board as of the filing date.
- After quarter-end, Marker and Mayo Foundation mutually terminated license agreements for peptide-based vaccine programs, effective October 16, 2022. Marker paid a $2.5 million arbitration judgment in March 2022; the filing reports no other material active or pending legal proceedings.
Important facts for investors to verify
- Whether cash runway, grant receipts, and any additional financing are sufficient to support planned trials and operations; the stated runway ends in Q2 2023 and the filing identifies substantial going-concern doubt.
- Progress and efficacy data from MT-401 Cohorts 4 and 5, and the timing and funding of planned clinical programs.
- Revenue-recognition progress and remaining obligations under the Wilson Wolf related-party agreement, including the agreement’s intellectual-property and facility-related provisions.
- Nasdaq bid-price compliance and whether the board elects to implement a reverse stock split before the February 2023 deadline.
- Potential dilution: 83.6 million shares were outstanding at September 30, 2022; the filing also lists 9.96 million options and 18.48 million warrants, excluded from diluted loss per share as anti-dilutive.