Marker Therapeutics, Inc. — Filing Summary
Important entity context: This is TapImmune Inc.’s Form 10-Q for the quarter ended March 31, 2018, not a standalone quarterly report of Marker Therapeutics. TapImmune entered into a merger agreement with Marker on May 15, 2018; the filing describes Marker as the proposed merger partner.
Business context and reporting period
TapImmune was a clinical-stage immuno-oncology company developing peptide- and gene-based cancer vaccines. Its programs included TPIV200 (Folate Receptor Alpha) and TPIV110 (HER2/neu), alongside preclinical PolyStart technology. Financial results cover the three months ended March 31, 2018, compared with the same period in 2017. The company reported no product revenue and remained dependent on external financing.
Key financial metrics
| Metric | Q1 2018 / March 31, 2018 | Comparable period / December 31, 2017 |
|---|---|---|
| Revenue | No revenue reported for the quarter | No revenue reported since inception, per management |
| Research and development expense | $1.600 million | $0.989 million in Q1 2017 |
| General and administrative expense | $1.598 million | $1.428 million in Q1 2017 |
| Total operating expenses | $3.197 million | $2.417 million in Q1 2017 |
| Net loss | $3.196 million; $0.30 per share | $2.420 million; $0.29 per share in Q1 2017 |
| Cash used in operating activities | $2.346 million | $1.924 million in Q1 2017 |
| Cash | $2.801 million | $5.129 million at December 31, 2017 |
| Working capital | $0.616 million | $3.658 million at December 31, 2017 |
| Total liabilities | $2.314 million, including a $5,000 promissory note and $8,000 warrant liability | $1.522 million at December 31, 2017 |
Gross margin was not applicable because the company reported no revenue. Cash declined by $2.328 million in the quarter; financing activities provided $18,125, from stock-option exercises. Management said existing cash was expected to fund operations into the third quarter of 2018. The filing states substantial doubt about the company’s ability to continue as a going concern.
Material changes and operating developments
- Net loss increased by approximately $777,000 year over year. R&D expense rose primarily because of clinical-trial activity; G&A increased with compensation and headcount, investor-relations costs, stock-based compensation, and legal and other professional fees.
- TapImmune reported completed enrollment in its company-sponsored 80-patient TPIV200 triple-negative breast cancer Phase II trial, with interim data expected in mid-2018. It also reported enrollment activity in ovarian cancer studies and a planned TPIV110 amended IND submission in mid-2018.
- Q1 stock-based compensation was approximately $136,000, compared with approximately $376,000 in Q1 2017. Basic and diluted weighted-average shares were 10.62 million, versus 8.43 million.
Outlook, financing, risks, and unusual items
- Management expected operating expenses to continue at a similar pace through 2018, largely to support Phase II trials, and said substantial additional capital would be required. Financing might involve equity, debt, alliances, or other transactions; availability and terms were uncertain.
- After quarter-end, TapImmune agreed to sell 1.3 million shares at $2.40 per share for $3.12 million gross proceeds and entered warrant exercise agreements expected to provide approximately $2.0 million. Both transactions were subject to customary closing conditions. CEO John Wilson separately committed to provide up to $1 million, subject to conditions.
- The proposed merger was subject to shareholder approval, other closing conditions, and commitments for at least $25 million of third-party equity financing to close concurrently. Former Marker and TapImmune stockholders were each expected to own approximately 50% of the combined company under stated assumptions, before the contemplated concurrent financing.
- The merger agreement provides for a $1.5 million termination fee in specified circumstances; the filing also describes potential reimbursement of certain fees and expenses of up to $2 million under specified termination circumstances.
- Management identified financing availability, clinical and regulatory outcomes, and the ability to execute development plans as significant risks. The filing also disclosed that management concluded disclosure controls and procedures were not effective as of March 31, 2018; no material change in internal control over financial reporting was reported for the quarter.
Important facts for investors to verify
- Whether the post-quarter share sale and warrant exercises closed, and the resulting cash proceeds and dilution.
- Whether the CEO’s financing commitment was funded and whether the proposed merger’s required financing and other closing conditions were satisfied.
- Current cash runway, expected clinical-trial spending, and any subsequent financing or changes to the going-concern assessment.
- Timing and results of the TPIV200 and TPIV110 clinical milestones, including the anticipated interim data and amended IND submission.
- Remediation of the ineffective disclosure controls, and the circumstances and potential costs associated with any merger termination.