Marker Therapeutics, Inc. — Form 10-Q Summary
Reporting period: Quarter and nine months ended September 30, 2018. The filing covers the pre-merger company’s results; the merger with Marker Cell Therapy closed on October 17, 2018. The company is a clinical-stage immuno-oncology developer, with cell-based T-cell therapies, peptide cancer vaccines, and preclinical PolyStart technology. It reported no product sales.
Financial results and liquidity
| Metric | Q3 2018 | Q3 2017 | Nine months 2018 | Nine months 2017 |
|---|---|---|---|---|
| Revenue (grant income) | $0 | $183,000 | $206,000 | $183,000 |
| Research and development | $1.88 million | $1.62 million | $5.30 million | $3.82 million |
| General and administrative | $2.55 million | $2.55 million | $7.20 million | $5.17 million |
| Total operating expenses | $4.43 million | $4.17 million | $12.51 million | $8.98 million |
| Net loss | $4.39 million | $3.99 million | $12.40 million | $8.30 million |
| Basic and diluted loss per share | $0.32 | $0.39 | $1.03 | $0.91 |
At September 30, 2018, cash was $4.29 million, working capital was $690,000, total assets were $4.39 million, and total liabilities were $3.70 million. The balance sheet showed a $5,000 promissory note and $107,000 warrant liability; it reported no substantial debt balance. There was no meaningful operating margin given the lack of product revenue and continuing development costs.
For the first nine months, operating cash use was $8.32 million, versus $5.96 million in 2017. Financing provided $7.48 million, primarily from stock and warrant exercises and a private placement; cash decreased $835,000 to $4.29 million. The filing reports no material off-balance-sheet arrangements.
Changes and notable items
- Nine-month net loss increased by $4.10 million year over year, as operating expenses rose $3.52 million and the prior-year period included a $492,000 debt-extinguishment gain. R&D growth reflected clinical-trial activity; G&A growth included $2.2 million of merger-related costs.
- Q3 net loss increased by about $403,000 year over year. The quarter had no grant revenue, compared with $183,000 in Q3 2017.
- Warrant remeasurement resulted in $98,000 of expense for the nine-month 2018 period. The company also recorded a $728,000 deemed dividend in equity related to repricing warrants exercised by institutional holders.
- In the October 17 merger, former Marker Cell holders received 13,914,255 common shares and 5,046,003 warrants and options. The company also completed a private placement of 17.5 million shares and warrants for 13,437,500 shares, raising $70 million gross and approximately $61.8 million net of banker fees. Merger accounting and the allocation of acquired assets and assumed liabilities were not complete in this filing.
Outlook, management commentary, and risks
Management expected expenses to increase as clinical development advanced and stated that cash, including proceeds from the October financing, was expected to fund operations into mid-2020. The company expects continuing losses and will need additional capital; financing may not be available on acceptable terms, and insufficient funding could delay or reduce research and clinical programs. Future funding needs depend on development costs, trial progress, regulatory approvals, collaborations, and other factors.
The portfolio included MultiTAA T-cell programs and legacy TPIV200 and TPIV100/110 vaccine programs. Management described early clinical findings as potentially favorable, but these remain investigational and are not assurances of safety, efficacy, or approval. The filing noted interim results from an ovarian-cancer combination study: safety was established, while response and progression-free-survival results were not superior to expected single-agent checkpoint-inhibitor efficacy. The TPIV200 ovarian study planned an interim efficacy analysis in 2019 after 50 patients progressed. Management also cited approximately $28 million in Mayo Clinic DoD grants expected to support three studies; these are grants to Mayo, not unrestricted company funding.
Management reported disclosure controls as effective and no material changes in internal control over financial reporting. It reported no material pending legal proceedings. Clinical, regulatory, financing, merger-integration, dilution, and warrant-valuation risks remain relevant.
Most important facts for investors to verify
- Whether the $61.8 million net financing proceeds and management’s mid-2020 runway estimate adequately cover the planned post-merger development program.
- The final merger purchase accounting, including fair values assigned to acquired assets and assumed liabilities.
- Updated share count and dilution from merger consideration, the private placement, outstanding warrants, and options; the filing gives different share-count dates around the transaction.
- Progress, enrollment, safety, and efficacy results for the company’s clinical trials, including the planned TPIV200 interim analysis and the reported ovarian combination-study findings.
- The amount and timing of DoD/Mayo grant support available for the relevant trials, and the company’s obligations to provide supplies or trial funding.