Mustang Bio, Inc. — FY 2020 Form 10-K
Reporting period: Fiscal year ended December 31, 2020; filed March 24, 2021. Mustang is a clinical-stage cell and gene therapy company and reported no product sales.
Financial performance and liquidity
| Metric | FY 2020 | FY 2019 |
|---|---|---|
| Revenue | No product revenue | No product revenue |
| Research and development | $37.2 million | $30.0 million |
| R&D — licenses acquired | $10.1 million | $6.3 million |
| General and administrative | $9.5 million | $9.6 million |
| Total operating expenses | $56.8 million | $45.9 million |
| Operating loss | $56.8 million | $45.9 million |
| Net loss | $60.0 million | $46.4 million |
| Basic and diluted loss per share | $1.14 | $1.29 |
| Operating cash flow | $(37.3) million | $(33.6) million |
- Net loss widened 29% as operating expenses rose 24%; R&D increased with higher staffing, vector manufacturing and academic-partner trial costs. Interest expense also increased, notably because of debt discount amortization and costs of repaying the Horizon loan.
- Year-end cash and cash equivalents were $97.8 million; restricted cash was $1.0 million. Current assets were $99.5 million and current liabilities $9.5 million. Management said year-end cash was expected to fund operations for at least one year from the filing date.
- Financing activities provided $78.1 million, principally from $59.8 million gross ATM proceeds and $37.2 million gross public-offering proceeds, partly offset by $15.8 million of Horizon debt repayment. The company also reported $44.9 million gross ATM proceeds from January 1 through March 18, 2021.
- Horizon notes were repaid in full in September 2020; notes payable were zero at year-end. Operating lease liabilities totaled $2.2 million. No profit margins are meaningful because the company had no product revenue.
- Common shares outstanding increased to 70.9 million at year-end from 39.4 million a year earlier. The filing cover reports 84.3 million common shares outstanding as of March 23, 2021.
Business, developments and outlook
The pipeline spans XSCID gene therapies (MB-107 and MB-207), CAR T candidates for blood cancers (MB-102, MB-104 and MB-106), CAR T candidates for solid tumors (MB-101, MB-103 and MB-105), and the oncolytic virus MB-108. No candidate was approved for sale, and Mustang expects continued significant losses and further funding needs.
- XSCID: The FDA removed a CMC hold on the MB-107 Phase 2 trial in January 2021. The company expected to enroll 10 patients and target topline data in the second half of 2022. An MB-207 Phase 2 IND was planned for the second quarter of 2021, with topline data targeted for the first half of 2023. Early clinical reports were encouraging, but patient numbers and follow-up remain limited.
- MB-106: After initial patients showed no response and limited CAR T expansion or persistence, the trial was paused for a manufacturing-process change. In the subsequent nine-patient group, the reported overall response rate was 89% and complete response rate 44%; all reported complete responses were ongoing at disclosure. A multicenter trial IND was planned for 2021.
- MB-102: A Mustang-sponsored Phase 1/2 trial for relapsed or refractory BPDCN began enrolling in 2020. The Phase 1 portion is to determine the maximum tolerated dose; additional indications may be considered depending on results.
- MB-108: Its Phase 1 trial was on clinical hold from October 2020 after toxicity at the highest dose. Resumption at a lower dose depended on FDA clearance; the hold and COVID-related enrollment delays were expected to delay the planned MB-101/MB-108 combination IND to the fourth quarter of 2021.
- MB-105: The filing described a single heavily pretreated patient with a 94% PSA reduction and tumor-imaging improvement, alongside cytokine release syndrome and hemorrhagic cystitis requiring transfusion. This is an early, individual-patient result, not evidence of established efficacy.
- Management cited potential COVID-19 effects on trial enrollment, site operations, manufacturing supply chains and regulatory review. It reported no material adverse business impact to date but could not assure that future effects would not be material.
Material risks, contingencies and unusual items
- Mustang has an accumulated deficit of $185.5 million, no product revenue and continuing cash burn; additional financing will be needed to advance development and, if successful, commercialization. Financing may dilute shareholders or require less favorable collaborations or licensing.
- Fortress Biotech controls voting majority and is entitled to annual stock dividends and shares equal to 2.5% of gross equity or debt financing under the Founders Agreement. These provisions create ongoing dilution and related-party governance risks.
- The 2020 net loss included $10.1 million of R&D-license expense, including a $7.6 million Fortress annual stock-dividend expense. The Horizon loan repayment generated approximately $2.1 million of interest expense related to early repayment.
- Product development depends substantially on academic partners and third-party manufacturers. Clinical failure, adverse effects, manufacturing or supply constraints, regulatory delays, intellectual-property disputes and reimbursement uncertainty could materially affect prospects.
- The company reported no material pending legal proceedings. Management concluded disclosure controls and internal control over financial reporting were effective; the independent auditor did not express an opinion on internal-control effectiveness.
Investor facts to verify
- Cash runway assumptions, post-year-end ATM proceeds and subsequent share count, including further dilution from Fortress-related issuances.
- Progress and actual enrollment/results for MB-107, MB-207 and the planned MB-106 multicenter trial against management’s stated timelines.
- FDA status and safety findings for MB-108, and whether enrollment resumed at a lower dose.
- Whether MB-106’s response rates persist with larger cohorts and longer follow-up, and whether the MB-105 single-patient signal is replicated.
- Future operating cash burn, license and milestone commitments, and the company’s ability to obtain financing on acceptable terms.