Matinas BioPharma Holdings, Inc. — Form 10-Q Summary
Reporting period: Quarter ended September 30, 2014. Matinas is a development-stage biopharmaceutical company with no operating revenue. Its lead candidate is MAT9001, an omega-3 fatty acid drug being developed initially for severe hypertriglyceridemia; MAT8800 is an early discovery program focused on liver disease.
Financial results and position
- Revenue: None. The company had not generated revenue and did not expect product revenue before 2017, if ever.
- Third quarter: R&D expense was $1.07 million versus $745,000 in Q3 2013; G&A was $1.54 million versus $708,000. Total operating expenses were $2.61 million versus $1.45 million. Net loss was $2.61 million versus $1.46 million; basic and diluted loss per share was $0.08 versus $0.10.
- Nine months: R&D expense was $3.26 million versus $1.03 million; G&A was $3.89 million versus $874,000. Total operating expenses were $7.15 million versus $1.91 million. Net loss was $7.18 million versus $1.91 million; loss per share was $0.22 versus $0.13.
- Cash flow: Cash used in operations was $5.55 million for the first nine months of 2014, compared with $1.32 million in 2013. Investing activities used $289,000, primarily for laboratory equipment; there were no financing cash flows in the 2014 period. Cash declined by $5.83 million.
- Liquidity and balance sheet: Cash and equivalents were $5.01 million at September 30, down from $10.84 million at December 31, 2013. Current assets were $5.11 million and current liabilities $1.02 million. Total liabilities were $1.04 million, including $66,541 of lease liabilities; the filing reports no debt financing. Accumulated deficit was $11.01 million.
- Margins: Not applicable because the company had no revenue. Expenses included $1.45 million of share-based compensation for the nine-month period, versus $178,000 a year earlier.
Changes, outlook, and risks
- Year-over-year expenses increased as MAT9001 manufacturing-process development and preclinical work advanced, infrastructure and headcount grew, and public-company, professional, and share-based compensation costs rose. The filing also notes 2013 was a partial start-up year.
- Management stated that September 30 cash was expected to fund operations and capital expenditures approximately into the beginning of March 2015. The company had no committed external funding source and said additional capital would be needed; failure to obtain it could delay, reduce, or end development activities.
- Management estimated $5–$7 million in R&D costs through initiation of Phase III and an additional $20–$60 million through an NDA filing. The filing says at least $20–$60 million of additional capital may be required for the Phase III program and NDA, depending in part on FDA agreement with the proposed regulatory pathway.
- MAT9001’s IND was filed with the FDA on October 20, 2014, after quarter-end. Management expected the first human study in Q4 2014, a possible Special Protocol Assessment review in early 2015, Phase III initiation in mid-2015, an NDA filing in early 2017, and approval in late 2017 at the earliest. These are expectations, not assured outcomes.
- Recurring losses and operating cash outflows raised substantial doubt about the company’s ability to continue as a going concern. The company warned it may never obtain approval, generate significant revenue, or become profitable; clinical, manufacturing, regulatory, competition, IP, and financing risks are material.
- Future minimum lease payments were $1.10 million as of September 30, 2014. No legal proceedings were reported. Management said disclosure controls were effective at a reasonable assurance level following remediation of previously identified material weaknesses.
Important facts for investors to verify
- Cash runway, actual cash use, and the timing and terms of financing needed to fund clinical development.
- FDA feedback on the proposed 505(b)(2) pathway and the timing, design, and results of human and Phase III studies.
- MAT9001 manufacturing readiness, supplier validation, and the evidence supporting efficacy, safety, and product differentiation.
- Potential dilution and overhang from 15.25 million outstanding warrants and 5.42 million outstanding options, as well as future equity compensation.
- Whether projected development costs, regulatory milestones, and commercialization timing remain achievable.