Marker Therapeutics, Inc. — Form 10-Q Summary
Reporting period: Quarter and nine months ended September 30, 2019. The filing was signed November 12, 2019. Marker is a clinical-stage immuno-oncology company developing MultiTAA T-cell therapies and peptide-based vaccines; it reported no product sales.
Financial performance and position
| Metric | Q3 2019 | Q3 2018 | Nine months 2019 | Nine months 2018 |
|---|---|---|---|---|
| Revenue | $0 | $0 | $0 | $206,000 |
| Research and development expense | $3.12 million | $1.88 million | $9.10 million | $5.30 million |
| General and administrative expense | $2.54 million | $2.55 million | $8.06 million | $7.20 million |
| Net loss | $5.46 million | $4.39 million | $16.35 million | $12.40 million |
| Basic and diluted loss per share | $0.12 | $0.32 | $0.36 | $1.03 |
| Operating cash used | Not separately stated | Not separately stated | $13.72 million | $8.32 million |
- Q3 operating expenses rose 28% year over year, principally from higher R&D spending. Nine-month operating expenses rose 37%; R&D increased 72% as the company expanded personnel and infrastructure for clinical development. G&A growth reflected staffing, professional fees and office costs, partly offset by lower merger-related costs.
- Loss per share improved comparatively, but weighted-average shares increased to 45.5 million for the nine-month period from 12.1 million in 2018; the comparison therefore reflects substantial share-count change.
- Cash and cash equivalents were $48.48 million at September 30, down from $61.75 million at December 31, 2018. Working capital was $47.28 million, versus $59.19 million. Nine-month cash used in investing was $362,000; financing provided $816,000, mainly from option and warrant exercises. Net cash decreased $13.27 million.
- Total liabilities were $3.52 million, including $533,000 of operating lease liabilities and a $129,000 warrant liability. The filing reports no funded borrowing or other conventional debt balance. Operating margin is not meaningful given the absence of revenue and the company’s development-stage losses.
Material developments, outlook and risks
- Liquidity outlook: Management expected September 30 cash to fund operating and capital requirements through at least Q4 2020, based on revised plans and timing assumptions. The company cautioned that actual cash use could be faster and that additional financing may be needed. It expects substantial losses for several years and anticipates raising capital through debt, equity or collaborations.
- AML trial: The FDA placed the planned Phase 2 MultiTAA post-transplant AML trial on clinical hold pending technical and quality information concerning two manufacturing reagents. Marker submitted its response on October 28, 2019 and expected an FDA response within 30 days; it anticipated starting the trial in 2020, subject to the hold being lifted.
- Ovarian cancer trial: In October 2019, Marker elected to suspend its Phase 2 TPIV200 platinum-sensitive advanced ovarian cancer trial after interim results did not meet its prespecified probability-of-success threshold. The DSMB reported no safety concern; Marker anticipated closing the trial in Q1 2020 after further data review.
- Other clinical commentary: The company reported encouraging but preliminary observations in several partner-led trials, including AML and pancreatic cancer. In the triple-negative breast cancer TPIV200 study, 31 of 34 patients in a preliminary analysis showed an immune response; the data remained subject to independent statistical review. As of September 30, 14 of 80 treated patients had experienced disease progression. These early findings are not proof of efficacy.
- Contingency: A broker initiated FINRA arbitration seeking approximately $1 million in compensation relating to 2018 transactions. Marker disputed the claims and said it would defend itself.
- Financial reporting controls: Management concluded disclosure controls were ineffective at September 30 because of an unremediated material weakness involving timing of stock-based compensation expense recognition. It reported remediation steps, including automated software and consultant review, but had not declared the weakness remediated. Management nevertheless stated the filed financial statements were fairly stated in all material respects.
- Key risks: Clinical and regulatory uncertainty, the AML clinical hold, manufacturing scale-up and reliance on Baylor College of Medicine and other vendors, need for additional financing and potential dilution, competition, intellectual-property and collaboration risks, and the possibility of further trial delays or failures.
Important facts for investors to verify
- Whether the FDA lifted the AML clinical hold and whether the planned Phase 2 trial began on the expected schedule.
- Final results and closure status of the suspended TPIV200 ovarian cancer trial, and the full independent analysis of the preliminary breast cancer data.
- Cash burn, updated operating plans and financing needs relative to management’s Q4 2020 runway estimate.
- Progress toward remediating the stock-based compensation control weakness and any subsequent control deficiencies.
- Outcome and potential financial exposure from the broker’s approximately $1 million arbitration claim.
- Potential dilution from outstanding securities: at September 30, approximately 22.7 million warrants and 4.7 million stock options were outstanding; common shares issued and outstanding were 45.7 million.