Marker Therapeutics, Inc. — Q1 2020 Form 10-Q
Business context and reporting period. This clinical-stage immuno-oncology company reported for the three months ended March 31, 2020. It is developing MultiTAA T-cell therapies and peptide-based vaccines; it reported no product revenue.
Financial results and liquidity
| Metric | Q1 2020 | Q1 2019 / prior date |
|---|---|---|
| Revenue | None | None |
| Research and development expense | $3.82 million | $2.83 million |
| General and administrative expense | $2.83 million | $2.81 million |
| Total operating expenses | $6.64 million | $5.64 million |
| Net loss | $6.49 million | $5.32 million |
| Basic and diluted loss per share | $0.14 | $0.12 |
| Cash used in operating activities | $4.10 million | $3.88 million |
| Cash and cash equivalents | $40.26 million | $43.90 million at Dec. 31, 2019 |
| Working capital | $38.83 million | $43.49 million at Dec. 31, 2019 |
| Total liabilities | $3.39 million | $2.27 million at Dec. 31, 2019 |
Operating margins are not meaningful because the company had no revenue. The filing reports no conventional borrowings; liabilities primarily include accounts payable, accrued liabilities, and lease obligations. Net cash decreased $3.65 million in Q1, including $0.55 million of warrant-exercise proceeds and $0.10 million of capital expenditures.
Material changes versus the prior comparable period
- Net loss increased by $1.17 million, or 22%, and loss per share rose from $0.12 to $0.14.
- R&D expense rose 35%, primarily due to increased headcount, process development, and clinical consulting; lower peptide-vaccine trial expense partly offset the increase.
- Interest income declined by $0.20 million, reflecting lower reported interest income on invested cash.
- Cash fell by $3.65 million from year-end 2019. Accounts payable and accrued liabilities increased by approximately $1.20 million during the quarter.
- The company issued 345,357 commitment shares to Aspire Capital and received $0.55 million from warrant exercises. Shares outstanding were 46.5 million at March 31, up from 45.7 million at year-end.
Outlook, developments, risks, and contingencies
- Management estimated March 31 cash would fund operating expenses and capital expenditures into the latter half of Q2 2021, while cautioning that this estimate depends on assumptions and funding needs could arise sooner. The company expects continuing substantial losses and additional financing needs.
- FDA permitted the company to proceed with the MT-401 Phase 2 post-transplant AML trial, beginning with a six-patient safety lead-in. Initiation was expected to be delayed by COVID-19-related enrollment and site disruptions and delays from an alternative reagent supplier; the FDA’s partial hold related to use of that supplier’s reagent remained unresolved. FDA granted MT-401 orphan drug designation in April 2020.
- The company reported COVID-19 disruptions to research, manufacturing access, and clinical timelines. It did not expect a material long-term liquidity impact based on its then-current assessment, but warned that disruption to capital markets could impair future financing access.
- Expansion plans add significant future commitments: a Houston headquarters lease with approximately $5.6 million in initial-term fixed rent; a manufacturing-facility lease with approximately $11.1 million in fixed rent, contingent on the landlord acquiring the property; and approximately $6.0 million for modular cleanroom design and construction. An April 30, 2020 research-facility lease adds approximately $1.1 million in fixed rent over its initial term.
- A broker sought approximately $1 million in FINRA arbitration over compensation allegedly related to 2018 transactions. The company disputed the claims and said it intended to defend itself.
- Aspire Capital committed to purchase up to $30 million of shares over 30 months, subject to agreement terms and share limits; no shares had been purchased under the agreement as of March 31. Issuances could dilute existing shareholders.
- Other material risks include clinical-trial failure or delay, dependence on Baylor College of Medicine and third-party suppliers, manufacturing scale-up and regulatory challenges, continuing financing requirements, and competition. The company reported effective disclosure controls and no material adverse legal proceedings as of March 31, apart from the described arbitration claim.
Important facts for investors to verify
- Whether the MT-401 partial clinical hold was resolved, the alternative reagent documentation accepted, and trial enrollment initiated as planned.
- Actual cash burn, capital spending, and runway against management’s estimate into the latter half of Q2 2021.
- Timing, conditions, and potential dilution from any Aspire Capital share purchases or other financing.
- Execution and total costs of the manufacturing buildout and new facility leases, including the contingent manufacturing lease and cleanroom contract.
- Outcome and potential financial exposure from the approximately $1 million broker arbitration claim.