Marker Therapeutics, Inc. — FY 2019 Form 10-K
Reporting period: Fiscal year ended December 31, 2019; financial results are compared with FY 2018. The filing was signed March 12, 2020. Marker is a clinical-stage immuno-oncology company with no approved products and no product-sales revenue.
Business context
Marker is developing MultiTAA-specific, non-engineered T-cell therapies for blood cancers and solid tumors, alongside peptide-based cancer vaccines. Its lead company-sponsored program, MT-401, targets AML following stem-cell transplant. Most other T-cell trials are conducted by Baylor College of Medicine (BCM); the company relies on BCM and other third parties for research and manufacturing.
Financial performance and liquidity
| Metric | FY 2019 / Dec. 31, 2019 | FY 2018 / Dec. 31, 2018 |
|---|---|---|
| Revenue | $213,000, entirely grant income | $206,000, entirely grant income |
| Research and development expense | $12.8 million | $8.0 million |
| General and administrative expense | $10.0 million | $24.4 million |
| Total operating expenses | $22.7 million | $148.4 million |
| Net loss | $21.4 million; $0.47 per share | $148.0 million; $7.75 per share |
| Cash used in operating activities | $18.3 million | $14.5 million |
| Cash and cash equivalents | $43.9 million | $61.7 million |
| Working capital | $43.5 million | $59.2 million |
| Total liabilities | $2.3 million | $2.8 million |
Marker reported no product or licensing revenue and no income tax expense. Gross margin and operating margin are not meaningful for this pre-commercial company. FY 2019 interest income was $1.1 million, versus $0.3 million in 2018. Cash declined by $17.8 million during 2019; financing provided $0.8 million, primarily from warrant and option exercises, while investing used $0.4 million. The balance sheet showed lease liabilities of approximately $0.5 million and a $31,000 warrant liability; no material borrowings were reported.
Management estimated that year-end cash would fund operating and capital needs into the second quarter of 2021, subject to assumptions that could prove incorrect. The company expects continued losses and says it will need substantial additional funding.
Changes versus FY 2018
- Net loss fell by $126.5 million, but the comparison is dominated by a $116.0 million charge in 2018 for acquired, unapproved intellectual property in the merger. That charge did not recur in 2019.
- R&D expense rose 61% to $12.8 million, reflecting higher staffing, consulting, stock compensation and process-development costs, partly offset by lower clinical-trial expense.
- G&A expense fell 59% to $10.0 million, mainly because 2018 included larger stock-based compensation and merger-related costs.
- Operating cash use increased from $14.5 million to $18.3 million despite the lower reported net loss.
- Weighted-average shares outstanding increased to 45.6 million from 19.1 million, largely reflecting the 2018 merger and financing.
Clinical progress, outlook and material risks
- MT-401 / AML: In February 2020, the FDA permitted the Phase 2 trial to begin with a safety lead-in of about six patients. Use of product made with one alternative-supplier reagent remained on partial hold pending FDA review of final reagent data and a certificate of analysis. Management expected those materials by the end of Q2 2020 and aimed to address the hold and complete initial enrollment in the second half of 2020. The planned randomized portion covers 160 patients at about 20 transplant centers: 120 adjuvant patients and 40 patients with active disease.
- Early clinical observations: BCM-reported AML data included 11 of 13 adjuvant patients surviving at the reported follow-up, with nine in continuing complete remission; results came from a small early-stage trial. In pancreatic cancer, interim results included responses or disease stabilization in some patients. Small BCM trials also reported responses in lymphoma, ALL and multiple myeloma. These observations are preliminary and are not evidence of established efficacy.
- Tolerability: The company reported no cytokine release syndrome or neurotoxicity in its MultiTAA trials as of December 2019, but small early trials cannot establish the safety profile in broader populations.
- Vaccines: Marker discontinued its Phase 2 TPIV200 platinum-sensitive ovarian cancer trial in November 2019 after an unblinded interim review did not meet its prespecified probability-of-benefit threshold; the DSMB raised no safety concern. The company was reviewing its vaccine programs and could de-emphasize or terminate some of them.
- Manufacturing and funding: Marker has no manufacturing facilities and depends on BCM and other suppliers. Reagent documentation, supplier availability, process comparability, scale-up and the planned transfer to additional GMP capacity could delay trials or increase costs. Management anticipates higher R&D and G&A spending and may seek equity, debt or collaboration funding.
- Other risks and contingencies: The filing identifies substantial clinical, regulatory, competitive, intellectual-property, reimbursement and financing risks. It also warned that COVID-19 could disrupt enrollment, clinical sites and research. A broker had initiated FINRA arbitration seeking approximately $1 million relating to 2018 transactions; Marker said it intended to defend the claim. No other material active or pending legal proceedings were reported.
- Subsequent financing and dilution: In February 2020 Marker entered a 30-month agreement allowing it, at its discretion, to sell up to $30 million of stock to Aspire Capital, subject to agreement terms and share limits. At year-end 2019, approximately 22.7 million warrants and 5.0 million options were outstanding. The company does not expect to pay dividends.
- Audit and controls: The auditor gave an unqualified opinion on the financial statements and internal control over financial reporting; management also concluded controls were effective as of year-end.
Key facts investors should verify
- Current status of the MT-401 Phase 2 trial, including resolution of the reagent-related partial hold, enrollment, and any changes to timing or design.
- Whether the projected cash runway to Q2 2021 remains valid, actual cash burn, and the company’s need and ability to obtain additional capital.
- Progress and reproducibility of manufacturing transfer, alternative-supplier qualification, and plans and costs for GMP capacity.
- Updated clinical-trial results and whether preliminary responses translate into controlled, durable benefit and acceptable safety.
- Strategic decisions on TPIV200 and other vaccine programs following the ovarian-trial discontinuation.
- Potential dilution from warrants, options and any Aspire Capital stock sales, along with developments in the approximately $1 million arbitration claim.