Mustang Bio, Inc. — 2023 Form 10-K Summary
Business context and reporting period
For the fiscal year ended December 31, 2023; filed March 11, 2024. Mustang is a clinical-stage cell and gene therapy company with no approved products and no product sales. Its programs include MB-106 (CD20 CAR T), MB-101/MB-108 (glioma therapies, including the MB-109 combination), XSCID gene therapies MB-117/MB-217, and RAG1-SCID program MB-110. The company discontinued four City of Hope CAR T programs in 2023 and sold its manufacturing assets to uBriGene.
Financial performance and liquidity
| Metric | 2023 | 2022 |
|---|---|---|
| Revenue | No product revenue | No product revenue |
| Research and development | $40.5 million | $62.5 million |
| General and administrative | $9.7 million | $12.2 million |
| Operating loss | $49.3 million | $76.2 million |
| Net loss | $51.6 million | $77.5 million |
| Net loss per share | $6.00 | $10.09 |
| Cash used in operations | $49.5 million | $65.1 million |
Operating margins are not meaningful because the company had no product revenue. Research and development expense declined 35%, principally reflecting reduced spending on discontinued programs and lower personnel and laboratory costs. The 2023 operating loss includes a $1.5 million gain on sale of property and equipment. Net loss includes $2.8 million of debt-extinguishment loss.
At year-end, cash and cash equivalents were $6.2 million, restricted cash was $0.8 million, total assets were $17.7 million, and total liabilities were $17.6 million. The company reported $123,000 of stockholders’ equity and an accumulated deficit of $381.0 million. Long-term debt was zero after repaying the Runway term loan for $30.4 million in April 2023; operating lease liabilities totaled $2.5 million. Management said year-end cash was expected to fund operations and clinical trials only through the first quarter of 2024 and disclosed substantial doubt about the company’s ability to continue as a going concern for at least 12 months after issuance of the financial statements.
Material changes versus the prior year
- Net loss improved by $25.9 million, while operating cash use declined by $15.6 million year over year.
- Mustang received $6.0 million upfront from the uBriGene asset sale and recorded a $1.5 million gain. A further $5.0 million is contingent on raising at least $10.0 million in post-closing equity and obtaining landlord consent to transfer the facility lease. By year-end, the company had raised approximately $4.6 million toward that financing threshold.
- The October registered direct offering and concurrent private placement generated approximately $4.4 million gross proceeds, before about $0.5 million of costs, and included substantial warrant issuance. ATM proceeds fell to $0.2 million from $6.6 million in 2022.
- The company reduced its operating footprint, including reducing leased office space at Mercantile Street. It nevertheless committed to spend at least $8.0 million over two years on manufacturing services under its uBriGene agreement.
Outlook, risks and unusual items
- Management said additional capital is necessary; financing may not be available on acceptable terms or at all. It may reduce spending, delay or terminate programs, pursue partnerships, or sell assets. The company’s Form S-3 fundraising capacity is constrained by the “baby shelf” rules while public float remains below $75 million.
- Management expected FDA feedback in the first quarter of 2024 on a proposed MB-106 registrational trial in Waldenström macroglobulinemia, with first-patient treatment targeted for the second half of 2024 and possible top-line results in the second half of 2026. These are expectations, not guarantees. The company also anticipated requesting RMAT designation; as of the filing, it had not reported receiving it.
- In preliminary MB-106 data presented in 2023, all nine indolent lymphoma patients responded clinically: all five follicular lymphoma patients achieved complete response; the three Waldenström patients had one very good partial response and two partial responses; one hairy cell leukemia variant patient had stable disease. No CRS above grade 1 or ICANS was reported in that cohort. These small, early-stage results are not proof of efficacy or approval prospects.
- The FDA accepted the MB-109 IND in October 2023. Initiation of its Phase 1 study remained subject to resource allocation. The XSCID programs shifted to modified lentiviral vectors after clonal expansion concerns with predecessor products; new studies were anticipated in 2024, subject to vector availability.
- CFIUS review of the uBriGene transaction remained open as of the filing. The landlord had not consented to the lease transfer, and uBriGene could seek good-faith repurchase negotiations because the facility had not transferred within 120 days. CFIUS mitigation or asset divestiture could disrupt manufacturing; failure to meet the financing and landlord-consent conditions could forfeit the contingent payment.
- Fortress Biotech controls voting power and is entitled to an annual stock dividend equal to 2.5% of fully diluted capitalization, as well as shares equal to 2.5% of equity or debt financing proceeds under the Founders Agreement. These arrangements may dilute other stockholders. The October financing’s warrants also create potential dilution.
- KPMG issued an unqualified audit opinion and highlighted the uBriGene transaction as a critical audit matter. The audit report emphasized the going-concern uncertainty. Management reported effective disclosure controls and internal control over financial reporting.
Important facts for investors to verify
- Current cash, cash burn, financing obtained after year-end, and whether the company can fund operations beyond the disclosed first-quarter 2024 runway.
- Progress toward the additional $5.4 million equity raise needed to reach the uBriGene contingent-payment threshold, landlord consent, and CFIUS’s final determination and any required mitigation.
- Manufacturing continuity, the $8.0 million minimum commitment, and any changes to the facility transfer or potential repurchase arrangements.
- Updated MB-106 clinical data, FDA feedback, trial timing, and whether resources permit the MB-109 and gene therapy programs to advance.
- Potential dilution from outstanding warrants, future financing, Fortress’s stock and financing entitlements, and other equity awards.