Matinas BioPharma Holdings, Inc. — Q3 2021 Form 10-Q
Reporting period: Three and nine months ended September 30, 2021. Matinas is a clinical-stage biopharmaceutical company developing LYPDISO and products using its lipid nanocrystal (LNC) delivery platform, including MAT2203 and MAT2501. It has no approved products and has not generated product-sale revenue.
Financial results and liquidity
| Metric | Q3 2021 | Q3 2020 | Nine months 2021 | Nine months 2020 |
|---|---|---|---|---|
| Revenue | $0 | $96,000 | $33,000 | $96,000 |
| Research and development expense | $4.62 million | $3.34 million | $10.34 million | $10.83 million |
| General and administrative expense | $2.26 million | $2.36 million | $7.71 million | $6.98 million |
| Operating loss | $6.88 million | $5.60 million | $18.02 million | $17.72 million |
| Net loss | $6.84 million | $5.45 million | $16.58 million | $16.11 million |
| Net loss per common share, basic and diluted | $0.03 | $0.03 | $0.08 | $0.09 |
- Nine-month operating cash use was $11.27 million, versus $13.06 million in 2020. Cash, cash equivalents and restricted cash rose to $25.17 million from $12.77 million at year-end 2020.
- At September 30, unrestricted cash, cash equivalents and marketable securities totaled approximately $53.8 million; restricted cash was approximately $0.3 million. Management believes available cash and marketable securities can fund planned operations into 2024.
- Total assets were $66.98 million and stockholders’ equity was $58.25 million. Total liabilities were $8.73 million, primarily lease liabilities; the filing reports no conventional borrowings. Operating lease liabilities totaled $4.80 million, including the expanded office lease.
- No operating margin was reported; the company remained loss-making, with minimal contract research revenue. The filing does not provide a clear product gross margin or a profitability outlook.
Changes versus comparable periods and balance-sheet developments
- Q3 R&D expense increased $1.3 million year over year, chiefly reflecting a $1.2 million noncash charge for 1.5 million shares issued under the Aquarius merger agreement and higher compensation, partly offset by lower clinical-trial expense.
- Nine-month R&D expense declined $0.5 million, reflecting completion of the LYPDISO clinical trial and approximately $1.6 million of Cystic Fibrosis Foundation (CFF) cost reimbursement, partly offset by the Aquarius charge and higher compensation.
- Nine-month G&A expense increased $0.7 million, mainly from compensation and insurance costs. Nine-month net loss increased about $0.5 million.
- Matinas raised $5.6 million net through its at-the-market stock sales during the first nine months. Common shares outstanding increased to 216.25 million from 200.11 million at year-end 2020. Series B preferred stock converted into 8.436 million common shares in June 2021.
- Marketable securities decreased to $28.91 million from $46.25 million at year-end 2020, while cash and cash equivalents increased to $24.92 million from $12.43 million.
Outlook, commentary and risks
- Management expects continuing substantial operating losses and increasing expenses as development advances; it expects product revenue no earlier than 2023, if ever. The company will likely need additional financing before reaching profitability, and says financing may not be available on acceptable terms.
- Near-term priorities include advancing MAT2203 toward efficacy data in cryptococcal meningitis, progressing MAT2501 preclinical work with CFF support, and pursuing LNC-platform collaborations. The company also stated it was seeking a partner to continue LYPDISO development after the ENHANCE-IT topline data announcement in February 2021.
- The CFF award provides up to $4.2 million for MAT2501 development, with further payments tied to milestones. The company recognized approximately $1.56 million of R&D credits under the award in the first nine months of 2021.
- The Bedminster lease expansion took effect August 1, 2021, extending the lease seven years and adding approximately $1.8 million in total commitments.
- Key risks include clinical and regulatory uncertainty, manufacturing and third-party dependence, intellectual-property protection, and the ability to secure capital. Management said COVID-19 had not significantly affected results for the reported periods, but future effects remain uncertain. No material changes to the prior annual-report risk factors were reported; no legal proceedings were listed.
- The filing reports no off-balance-sheet arrangements. Management concluded disclosure controls were effective as of September 30, 2021 and reported no material quarterly change in internal control over financial reporting.
Important facts for investors to verify
- Whether MAT2203 and MAT2501 development milestones, clinical results and timelines are progressing as planned.
- Whether the stated runway into 2024 remains supportable given continuing losses, development spending and potential financing needs.
- Terms and timing of CFF milestone funding, and progress in finding a LYPDISO development partner.
- Potential dilution from future equity financing and outstanding options and warrants; the filing lists 22.24 million options and 0.99 million warrants outstanding.
- Future lease payments and the impact of the seven-year office expansion on cash requirements.