Mustang Bio, Inc. — Q1 2021 Form 10-Q
Reporting period: Three months ended March 31, 2021; filed May 14, 2021. Mustang is a clinical-stage cell and gene therapy company and a majority-controlled subsidiary of Fortress Biotech. It has no approved products and generated no product revenue.
Financial performance
| Metric | Q1 2021 | Q1 2020 |
|---|---|---|
| Revenue | None reported | None reported |
| Research and development expense | $11.6 million | $9.3 million |
| General and administrative expense | $3.5 million | $2.0 million |
| Total operating expenses | $15.1 million | $11.5 million |
| Net loss | $15.0 million | $11.9 million |
| Net loss per share, basic and diluted | $0.19 | $0.28 |
| Net cash used in operating activities | $15.6 million | $10.2 million |
No revenue-based margins are meaningful. R&D expense increased 25%, primarily from laboratory supplies, consulting and professional fees, sponsored research, and personnel costs; lower third-party clinical trial costs partially offset the increase. G&A rose 77%, including shares issued to Fortress in connection with the ATM financing.
Financial position and liquidity
- Cash and cash equivalents were $129.4 million at March 31, 2021, compared with $97.8 million at year-end 2020. Including restricted cash, cash totaled $130.4 million.
- Total assets were $141.8 million; total liabilities were $8.5 million; stockholders’ equity was $133.4 million. The balance sheet reports no borrowings; operating lease liabilities were $2.2 million.
- Operating cash outflow and fixed-asset purchases were funded chiefly by $47.6 million of financing cash flow. The company raised $48.4 million gross, or approximately $47.5 million net, through its ATM offering.
- Accumulated deficit was $200.4 million. Management said available cash was expected to fund anticipated operating cash requirements for at least one year from the filing date, while noting that further financing will be needed to fully develop and commercialize candidates.
Changes, outlook and key developments
- Net loss increased $3.1 million year over year, while loss per share declined because weighted-average shares outstanding rose to 80.5 million from 42.0 million.
- The ATM sale issued approximately 11.6 million shares at an average $4.17 per share. Under its Founders Agreement, Fortress received 325,221 shares related to the financing; the company also issued 2,001,490 annual dividend shares to Fortress. These arrangements and future financings create dilution risk.
- Management expects R&D and G&A costs to rise as programs advance. No revenue or profitability guidance was provided.
- Pipeline plans included a pivotal Phase 2 MB-107 trial in newly diagnosed XSCID patients, with topline data targeted for the second half of 2022, and a planned second-quarter 2021 IND filing for MB-207 in previously transplanted XSCID patients, with topline data targeted for the first half of 2023.
- Subsequent developments disclosed in the filing: the FDA accepted the MB-106 IND on May 10, 2021; an MB-106 interim analysis reported a 92% overall response rate and 58% complete response rate among 12 patients after a manufacturing modification. These are early, small-sample results from a partner-sponsored study, not evidence of approval. The filing also reported that the MB-107 clinical hold had been removed in January 2021.
- Management reported no expected material COVID-19 impact on long-term development timelines or liquidity based on its assessment, but continued to monitor potential operational effects. The filing identifies clinical, regulatory, manufacturing, financing, intellectual-property, third-party, and Fortress-control risks.
Important facts for investors to verify
- Cash burn, trial spending, and whether the stated cash runway remains adequate as clinical programs and capital needs evolve.
- Progress and regulatory timelines for MB-107, MB-207, and the company-sponsored MB-106 trial; evaluate the size, follow-up, and source of reported clinical data.
- Further share issuance, remaining ATM or shelf capacity, and dilution from Fortress’s financing-fee and annual-share rights.
- Potential obligations under research, license, manufacturing, and lease agreements, and any changes in financing or debt arrangements.
- Whether COVID-19, trial enrollment, manufacturing capacity, or regulatory review causes delays or additional costs.