Marker Therapeutics, Inc. — Q2 2022 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2022. Marker is a clinical-stage immuno-oncology company developing MultiTAA T-cell therapies and peptide-based vaccines. Its lead program, MT-401, is in Phase 2 for post-transplant AML; it had no product sales or licensing revenue.
Financial highlights
| Metric | Q2 2022 | Q2 2021 | Six months 2022 | Six months 2021 |
|---|---|---|---|---|
| Revenue | $0.79 million | $0 | $1.75 million | $0 |
| Operating expenses | $10.07 million | $10.91 million | $20.83 million | $19.69 million |
| Net loss | $9.24 million | $10.91 million | $19.15 million | $19.69 million |
| Basic and diluted loss per share | $0.11 | $0.13 | $0.23 | $0.28 |
- Revenue was grant income, principally from the CPRIT award supporting the MT-401 Phase 2 trial—not commercial product revenue. No product gross margin is reported.
- At June 30, cash and cash equivalents were $25.82 million, versus $42.35 million at December 31, 2021. Working capital was $15.80 million, down from $33.08 million.
- For the first six months, operating cash use was $13.02 million, investing cash use was $4.72 million, and financing provided $0.06 million. Cash, cash equivalents and restricted cash decreased by $17.68 million. The comparable 2021 period included $52.55 million of financing proceeds.
- Total liabilities were $24.29 million, including $11.56 million of operating lease liabilities. The filing reports no conventional debt balance. The $8.0 million Wilson Wolf payment was recorded as related-party deferred revenue, not recognized revenue at quarter-end.
Changes and notable items
- Q2 operating expenses fell 8% year over year, mainly due to lower process-development and BCM research costs; net loss narrowed 15%. For the first half, operating expenses rose 6%, while net loss narrowed 3%, reflecting grant income and expense timing.
- First-half research and development expense increased 5% to $13.58 million, while general and administrative expense increased 8% to $7.25 million. The weighted-average share count for the first half rose 19% year over year, primarily reflecting the 2021 equity offering.
- Marker completed and placed a second modular cleanroom into service in June 2022. First-half capital spending on property, equipment and construction in progress was $4.72 million.
- The company paid a $2.5 million FINRA arbitration judgment in March 2022 and recorded an additional approximately $0.1 million expense in the first half.
Outlook, risks and contingencies
- Management estimated that June 30 cash would fund operating expenses and capital requirements through Q2 2023, but cautioned that assumptions may prove incorrect and that additional capital may be needed sooner. The filing states that substantial doubt exists about the company’s ability to continue as a going concern; it has no product-sales revenue and depends on raising capital.
- In August 2022, after quarter-end, Marker announced a roughly 23.5% reduction in general and administrative headcount, including separation of its CFO. Estimated severance and termination costs are approximately $0.7 million, to be recorded in Q3 2022.
- Under an April 2022 agreement, Wilson Wolf Manufacturing, a related party whose CEO serves on Marker’s board, paid $8.0 million for training and research services. Marker expected to recognize the consideration over approximately 12 months as services are delivered. Wilson Wolf also has specified rights relating to Marker’s manufacturing facility in certain insolvency or business-cessation circumstances, and a first opportunity to provide certain asset-secured financing. An additional $1.0 million may be payable if specified work is completed within one year.
- The company reported Nasdaq’s minimum-bid-price deficiency, with an August 15, 2022 deadline to regain compliance. Stockholders and the board had approved a discretionary reverse split within a 1-for-3 to 1-for-12 range; the board had not approved one as of the filing. The filing also cites clinical-development, financing, dilution, macroeconomic and trial-execution risks.
- Management’s August program updates said the FDA accepted the MT-601 lymphoma IND, with a Phase 1 trial planned for 2023; MT-401 had 13 evaluable patients, including five treated using a revised process with no reported dose-limiting toxicities; and first dosing for MT-401-OTS remained targeted for 2023. These are forward-looking or early clinical updates, not evidence of approval or efficacy.
Facts investors should verify
- Whether subsequent filings confirm the cash runway, any new financing, and progress toward or resolution of the Nasdaq bid-price requirement.
- Whether CPRIT funds are received and recognized as qualifying trial costs are incurred, and how much of the $13.1 million award remains available.
- Progress, enrollment, safety and timing for MT-401, MT-401-OTS and MT-601, including whether planned trial milestones are achieved.
- Revenue recognition and performance under the Wilson Wolf agreement, including the related-party protections and potential additional payment.
- The effects of the post-quarter workforce reduction, severance costs and CFO transition on expenses and operations.