Matinas BioPharma Holdings, Inc. — FY 2019 Form 10-K
Reporting period: Fiscal year ended December 31, 2019; comparative figures are for FY 2018. The company is a clinical-stage biopharmaceutical developer with no product sales. Its programs include MAT9001, an omega-3 candidate, and the lipid nano-crystal (LNC) delivery platform, including MAT2203.
Financial performance and position
| Metric | FY 2019 | FY 2018 |
|---|---|---|
| Revenue | $89,812 | $119,750 |
| Research and development expense | $11.23 million | $6.79 million |
| General and administrative expense | $7.78 million | $7.98 million |
| Operating loss | $18.92 million | $14.65 million |
| Net loss | $17.37 million | $14.08 million |
| Net loss attributable to common shareholders | $18.30 million | $14.99 million |
| Basic and diluted loss per common share | $0.13 | $0.15 |
| Cash used in operating activities | $14.09 million | $10.32 million |
- Revenue was limited to grant and contract research activity; the company reported no product-sale revenue. There is no meaningful product gross margin disclosed.
- R&D expense rose approximately $4.45 million, primarily from higher preclinical and clinical development, employee compensation, and manufacturing development. G&A declined approximately $0.20 million.
- FY 2019 net loss included $1.01 million of income from selling New Jersey tax losses and credits; FY 2018 included a $0.51 million income tax benefit. The 2019 operating loss therefore widened despite these non-operating items.
- At year-end, cash and cash equivalents were $22.17 million, marketable securities $5.60 million, and restricted cash $0.59 million. Current assets were $29.92 million; current liabilities were $3.10 million; total liabilities were $7.19 million; and stockholders’ equity was $33.05 million.
- Cash provided by financing activities was $29.85 million, mainly from the 2019 common-stock offering. Cash used in investing activities was $6.01 million, principally for marketable securities. The company reported no note payable at year-end; lease liabilities totaled approximately $4.12 million operating and $0.11 million finance.
Material changes and financing
- Net loss increased about 23% year over year, while operating cash use increased about 37%. Weighted-average common shares rose to 145.2 million from 98.1 million; per-share loss narrowed to $0.13 from $0.15.
- The March 2019 offering generated approximately $30.1 million net proceeds. After year-end, the January 14, 2020 offering of 32.3 million shares generated approximately $46.7 million net proceeds. Management estimated existing funds plus that offering would support planned operations into the second half of 2022; this estimate depends on assumptions and is not assured.
- Series A preferred stock converted into common stock in July 2019. Series B preferred stock remained outstanding, with conversion and stock-dividend terms that may add shares. Outstanding options and warrants also create potential dilution.
- Adoption of lease accounting in 2019 brought operating lease right-of-use assets and liabilities onto the balance sheet. The company also terminated its at-the-market equity sales agreement effective February 29, 2020.
Outlook, programs, and key risks
- MAT9001: Management planned to seek an FDA End-of-Phase 2 meeting after final study reports, then discuss a possible pivotal Phase 3 study for severe hypertriglyceridemia using the 505(b)(2) pathway. The proposed study design, size, timing, and approval pathway remained subject to FDA feedback. Topline results from the ENHANCE-IT head-to-head study versus Vascepa were anticipated in Q4 2020.
- MAT2203: The EnACT study in cryptococcal meningitis began in Uganda in October 2019. The company reported in February 2020 that its Phase 1 dose-escalation portion had completed without significant safety or tolerability issues and that the safety board approved Phase 2. Management anticipated study completion in late 2021; efficacy and regulatory approval were uncertain.
- Platform collaborations and other candidates: The filing describes research or feasibility work with NIH/NINDS, ViiV Healthcare, Genentech, and an unnamed global pharmaceutical company. MAT2501 development depended partly on grant support; no product revenue from these efforts was assured.
- The company expected continuing losses and increasing R&D spending, had never generated product-sale revenue, and stated that additional financing could be needed. Further equity financing could dilute shareholders; collaboration funding could require relinquishing rights.
- Other principal risks include clinical and regulatory failure or delay; reliance on third-party manufacturers, research organizations, and Rutgers-licensed technology; competition and reimbursement uncertainty; and the possibility that cash is consumed faster than forecast.
- Control weakness: Management concluded internal control over financial reporting was ineffective at December 31, 2019 because formal financial-reporting and operating procedures were insufficient. The auditor issued an adverse opinion on internal controls, while giving an unqualified opinion on the financial statements. Management described a remediation plan; effectiveness had not yet been demonstrated.
- No legal proceedings were reported. The filing gives no formal financial guidance on revenue or profitability.
Important facts for investors to verify
- Current cash runway and spending against management’s estimate of funding into the second half of 2022.
- MAT9001 study reports, FDA feedback, pivotal-trial requirements, and ENHANCE-IT results and timing.
- EnACT Phase 2 enrollment, safety, efficacy, and study-completion progress.
- Remediation of the material weakness and any subsequent auditor assessment of internal controls.
- Potential dilution from Series B preferred stock, preferred-stock dividends, options, warrants, and milestone shares; also review the Series A royalty rights tied to MAT2203 and MAT2501.