Matinas BioPharma Holdings, Inc. — Q2 2020 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2020. Matinas is a clinical-stage biopharmaceutical company developing MAT9001, an omega-3 candidate for cardiovascular and metabolic conditions, and MAT2203, an oral amphotericin B candidate using its lipid nanocrystal (LNC) platform. It has no approved products and has not generated product-sales revenue.
Financial results and liquidity
| Metric | Q2 2020 | Q2 2019 | Six months 2020 | Six months 2019 |
|---|---|---|---|---|
| Revenue | $0 | $89,812 | $0 | $89,812 |
| Research and development | $3.41 million | $2.83 million | $7.50 million | $5.14 million |
| General and administrative | $2.36 million | $1.78 million | $4.62 million | $3.57 million |
| Operating loss | $5.77 million | $4.52 million | $12.11 million | $8.62 million |
| Net loss | $5.61 million | $3.34 million | $10.66 million | $7.40 million |
| Net loss per common share, basic and diluted | $0.03 | $0.03 | $0.06 | $0.06 |
For the six months, operating cash outflow was $7.83 million, compared with $5.12 million a year earlier. Investing activities used $46.98 million, principally reflecting purchases and sales of marketable securities; financing activities provided $47.44 million, primarily from the January 2020 stock offering. Cash, cash equivalents and restricted cash totaled $15.39 million at June 30, while marketable securities were $53.05 million. The company reported $68.0 million in cash, cash equivalents and marketable securities and stated these resources were expected to fund planned operations into the first half of 2023.
At June 30, total assets were $79.09 million, current assets $69.21 million, total liabilities $6.26 million, and stockholders’ equity $72.82 million. Liabilities included operating and finance lease obligations; the balance sheet reports no conventional borrowings. Accumulated deficit was $95.72 million. No operating margin is meaningful given the absence of material revenue.
Material changes and financing
- Year-over-year losses increased as R&D and G&A spending rose. Management attributed the increases principally to clinical-trial costs and higher employee compensation and headcount.
- The company recorded $1.07 million from selling New Jersey net operating losses and R&D tax credits in the first half of 2020, versus $1.01 million in the prior-year period. No such proceeds were recorded in Q2 2020, compared with $1.01 million in Q2 2019.
- The January 2020 offering of 32.3 million common shares at $1.55 per share generated approximately $46.7 million net proceeds. Outstanding common shares rose to 198.9 million from 163.2 million at year-end 2019.
- After quarter-end, the company’s Form S-3 registration statement became effective, permitting offerings of up to $200 million in aggregate securities. A related at-the-market agreement permits common-stock sales of up to $50 million, subject to its terms; the filing does not report proceeds from these arrangements.
Outlook, risks and notable items
- Management expects substantial expenses and operating losses for the foreseeable future, with R&D costs expected to rise as development advances. Product revenue was not expected before 2023 at the earliest, if ever. The company expects it will need additional financing; funding availability and terms are uncertain, and equity financing could dilute shareholders.
- Development priorities include advancing MAT9001 toward an initial indication for severe hypertriglyceridemia, pursuing MAT2203 efficacy data in cryptococcal meningitis with NIH support, and seeking LNC-platform collaborations. The filing provides no quantified clinical or financial guidance beyond the stated cash runway.
- COVID-19 caused a temporary pause in clinical-trial enrollment in March. Enrollment and dosing in ENHANCE-IT resumed in June, and dosing in EnACT resumed in July. Management said first-half financial results were not significantly affected, but warned of possible trial, supplier, regulatory and financing delays; limited business disruptions were expected to continue into Q3 2020.
- Stock-based compensation included approximately $433,000 of additional expense from extending the exercise period of certain vested options. Unrecognized compensation cost for unvested awards was approximately $9.7 million at June 30.
- The company stated a previously identified material weakness in internal controls over financial reporting was remediated by June 30, 2020. Disclosure controls were assessed as effective at the reasonable-assurance level. No legal proceedings were reported.
Important facts for investors to verify
- Whether clinical milestones for MAT9001 and MAT2203 remain achievable given COVID-19, recruitment, regulatory and supply-chain risks.
- Whether the stated runway into the first half of 2023 holds under planned spending, and when additional capital may be required.
- Any subsequent use of the $50 million ATM facility or broader $200 million shelf registration, including resulting dilution and financing terms.
- The potential effects of outstanding preferred-stock conversion rights, warrants and stock options on future share count.