MAIA Biotechnology, Inc. — Q3 2022 Form 10-Q
Business context and reporting period
Clinical-stage oncology biotechnology company developing therapies targeting cancer, with its lead program, THIO, focused on non-small cell lung cancer (NSCLC). This unaudited report covers the quarter and nine months ended September 30, 2022, compared with the corresponding 2021 periods. MAIA had no revenue.
Financial results and liquidity
- Q3 operating expenses: $4.00 million, up 79% year over year. Research and development (R&D) was $2.34 million, up 117%; general and administrative (G&A) was $1.65 million, up 44%.
- Q3 operating loss: $4.00 million. Net loss was $3.93 million; net loss attributable to MAIA shareholders was $5.03 million, including a $1.10 million deemed dividend for IPO-related ratchet shares. Basic and diluted loss per share was $0.49.
- Nine-month results: Operating expenses were $10.88 million, up 127%; operating loss was $10.88 million. Net loss was $10.65 million, versus $9.69 million in 2021. Net loss attributable to MAIA shareholders was $12.20 million, including $1.55 million in deemed dividends for warrant modification and ratchet shares.
- Cash flow: Cash used in operations was $9.15 million for the nine months, versus $2.52 million in 2021. Financing provided $12.67 million; cash increased $3.49 million.
- Balance sheet at September 30: Cash was $14.06 million; working capital was $12.32 million; current assets were $14.78 million and current liabilities were $2.46 million. Total liabilities were $2.46 million, consisting of accounts payable and accrued expenses; no debt balance was reported.
- Margins: Not meaningful because the company reported no revenue. Interest expense was minimal in 2022; Australian R&D incentives contributed $0.23 million of income for the nine-month period.
Material changes versus the prior comparable periods
- Q3 R&D spending rose mainly due to THIO-101 clinical-trial preparation and startup, increased staffing, and related costs. Nine-month R&D expense rose $4.55 million, principally from clinical and preclinical work and higher payroll and bonuses.
- G&A increased with added headcount, professional fees, and costs of operating as a public company.
- Although operating losses grew, Q3 net loss was lower than in 2021, primarily because 2021 included convertible-note extinguishment and financing-related fair-value charges. Nine-month shareholder-attributable loss increased, including the 2022 deemed dividends.
- MAIA completed its IPO in August 2022: 2.3 million shares were sold for $11.5 million gross proceeds. Net proceeds were approximately $9.1 million after offering costs. It also raised approximately $2.47 million in 2022 private equity financing proceeds, net of transaction costs.
Outlook, risks, contingencies, and unusual items
- Management said available funds were expected to support the THIO-101 lead-in and preliminary Phase 2 efficacy work for the next 12 months from the filing date. The company expects continued losses, will need additional capital for clinical development and commercialization, and gave no assurance that financing will be available on acceptable terms. If funding is insufficient, it may reduce compensation or delay or narrow clinical programs.
- The first patient in the Phase 2 THIO-101 study was dosed in Australia in July 2022. The study is planned across Australia and Europe; the filing reports Australian approval and submission of a similar European application. The company also received FDA Orphan Drug Designations for THIO in hepatocellular carcinoma and small-cell lung cancer.
- THIO’s collaboration with Regeneron provides cemiplimab for the NSCLC trial at no charge, but grants Regeneron NSCLC development exclusivity for the trial period. Licensing agreements carry potential future milestone and royalty obligations; no milestone payments were due at September 30, 2022.
- Management reported no current COVID-related trial delays or cost increases, but warned of possible future effects. It terminated planned research activities in Russia in connection with the war in Ukraine. No material legal proceedings were reported.
- Disclosure controls were not effective at the reasonable-assurance level because of a material weakness in financial review and approval controls and lack of segregation of duties. Management is taking remediation steps, including hiring accounting staff, but gave no assurance these efforts will be successful.
Most important facts for investors to verify
- THIO-101 enrollment, safety and preliminary efficacy progress, and the status of European trial authorization.
- Cash burn, actual trial spending, and whether funding will extend beyond the stated 12-month support for lead-in and preliminary efficacy work.
- IPO net proceeds and offering-cost reconciliation: the filing reports approximately $9.1 million net overall, while its use-of-proceeds disclosure itemizes approximately $7.706 million and $1.388 million net for the IPO and over-allotment, respectively.
- Remediation of the material weakness and any subsequent changes in disclosure controls or financial reporting procedures.
- Potential licensing milestones, future royalties, and the scope and duration of Regeneron’s NSCLC exclusivity.