Matinas BioPharma Holdings, Inc. — Q2 2014 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2014. The company is a development-stage biopharmaceutical business focused on MAT9001, an omega-3 candidate for severe hypertriglyceridemia, and the early MAT8800 liver-disease discovery program. It reported no operating revenue.
Financial performance and position
| Metric | Q2 2014 | Q2 2013 | Six months 2014 | Six months 2013 |
|---|---|---|---|---|
| Revenue | $0 | $0 | $0 | $0 |
| Research and development | $1.12 million | $0.24 million | $2.19 million | $0.29 million |
| General and administrative | $1.30 million | $0.10 million | $2.36 million | $0.17 million |
| Net loss | $2.43 million | $0.34 million | $4.56 million | $0.46 million |
| Basic and diluted loss per share | $0.08 | $0.03 | $0.14 | $0.05 |
| Operating cash flow | Not presented quarterly | $(3.94) million | $(0.43) million |
At June 30, cash and cash equivalents were $6.65 million, down from $10.84 million at December 31, 2013. Total assets were $7.36 million; total liabilities were $0.91 million, including $0.08 million of current and long-term lease liabilities. No borrowings are reported. Current assets were $6.69 million and current liabilities $0.87 million. The six-month cash decrease was $4.19 million: $3.94 million used in operations and $0.26 million used for equipment purchases; there was no financing cash flow. Accumulated deficit was $8.40 million. Gross margin and profitability measures are not applicable given the absence of revenue.
Changes, outlook and risks
- Year-over-year operating expenses increased substantially as MAT9001 manufacturing-process development, preclinical work, staffing, infrastructure and public-company, legal and compliance costs expanded. 2013 was a partial start-up year, which also affects comparisons.
- Management expected existing cash to fund operations only through approximately January 2015 and stated that additional financing was necessary. Recurring losses and funding needs raise substantial doubt about the company’s ability to continue as a going concern. No committed external funding source was identified.
- Management expected an IND filing and initial human study in Q3 2014; it was considering FDA Special Protocol Assessment discussions in late 2014, with a pivotal Phase III study targeted for late 2014 or early 2015. The company projected an NDA filing in late 2016 and possible U.S. commercialization in 2017, subject to clinical, regulatory and manufacturing outcomes.
- Estimated development costs through initiation of Phase III were $5–7 million, including completed work; estimated further costs through the first NDA were $20–60 million, expected to require future fundraising. The company cautioned that FDA disagreement with its proposed regulatory pathway could increase funding needs.
- Key risks include clinical and regulatory uncertainty, GMP manufacturing and third-party dependence, competition, intellectual-property protection, and the possibility that financing is unavailable or dilutive. The company reported no legal proceedings and no material changes to previously disclosed risk factors during the quarter.
- Disclosure controls were deemed ineffective at the reasonable-assurance level because of material weaknesses in financial close/accounting resources and segregation of duties. Remediation efforts were underway, but successful remediation had not been established.
Important facts for investors to verify
- Current cash runway, subsequent financing, and whether the stated January 2015 funding horizon changed.
- Actual timing and results of the MAT9001 IND, human study, FDA discussions and any Phase III plans; the timelines in this filing are forward-looking.
- Updated development budget and the regulatory pathway accepted by FDA, including the potential $20–60 million funding requirement.
- Whether internal-control material weaknesses were remediated and whether financial reporting controls improved.
- Potential dilution: 32 million common shares were outstanding as of August 8, 2014, alongside 15.25 million warrants outstanding at June 30 and stock options. The filing gives inconsistent option totals in different passages (3,059,802 and 3,059,082); verify the correct figure.