Matinas BioPharma Holdings, Inc. — Q3 2020 Form 10-Q
Reporting period: Quarter and nine months ended September 30, 2020. Matinas is a clinical-stage biopharmaceutical company developing MAT9001 for cardiovascular and metabolic conditions and MAT2203 using its lipid nano-crystal (LNC) delivery platform. It had no approved products or product-sales revenue.
Financial performance and position
| Metric | Q3 2020 | Q3 2019 | Nine months 2020 | Nine months 2019 |
|---|---|---|---|---|
| Contract research revenue | $95,833 | $0 | $95,833 | $89,812 |
| Research and development expense | $3.34 million | $2.67 million | $10.83 million | $7.81 million |
| General and administrative expense | $2.36 million | $1.89 million | $6.98 million | $5.46 million |
| Operating loss | $5.60 million | $4.56 million | $17.72 million | $13.19 million |
| Net loss | $5.45 million | $4.40 million | $16.11 million | $11.80 million |
| Net loss per common share, basic and diluted | $0.03 | $0.03 | $0.09 | $0.09 |
| Net cash used in operating activities | Not separately provided | Not separately provided | $13.06 million | $9.19 million |
Liquidity: At September 30, cash and cash equivalents were $7.05 million, marketable securities were $55.72 million, and restricted cash was $0.39 million. Cash, cash equivalents and marketable securities totaled $62.77 million. Current assets were $65.20 million and current liabilities $2.84 million. Management said available cash and marketable securities were expected to fund planned operations into the first half of 2023.
Debt and cash flow: The filing reports no conventional borrowing balance; liabilities include operating and finance lease obligations totaling approximately $3.87 million, of which $0.45 million was current. Nine-month investing cash outflow was $49.76 million, primarily reflecting purchases and sales of marketable securities. Financing provided $47.50 million, principally from the January equity offering. Cash, cash equivalents and restricted cash decreased by $15.32 million over the nine months. Profit margins are not meaningful given minimal contract revenue and continuing operating losses.
Material changes versus prior periods
- Q3 R&D expense rose about 25% year over year; nine-month R&D expense increased about 39%. Management attributed the increases mainly to employee compensation and clinical-trial costs for MAT9001 and MAT2203.
- Q3 G&A expense increased about 25%, and nine-month G&A increased about 28%, primarily due to higher compensation and headcount.
- Nine-month net loss increased from $11.80 million to $16.11 million, while operating cash use rose from $9.19 million to $13.06 million.
- The company raised approximately $46.7 million net in a January 2020 public offering of 32.3 million shares. Common shares outstanding rose from 163.2 million at year-end 2019 to 199.0 million at September 30, 2020. No shares had been sold under the $50 million ATM program by quarter-end.
Outlook, commentary and risks
- Management expects continued significant expenses and operating losses, including increased R&D spending. Product revenue was not expected before 2023 at the earliest, if ever.
- Near-term priorities include advancing MAT9001 toward an initial severe hypertriglyceridemia indication, seeking MAT2203 efficacy data in the EnACT study for cryptococcal meningitis, and pursuing LNC platform collaborations. NIH support is described as non-dilutive support for MAT2203 work.
- COVID-19 temporarily halted trial enrollment in March. Enrollment and dosing resumed in the ENHANCE-IT study in June, and dosing resumed in EnACT in July. The company said the pandemic had not significantly affected reported-period financial results but could delay trials, disrupt suppliers and clinical operations, or impede future fundraising.
- The company has incurred recurring losses and negative operating cash flows, with an accumulated deficit of $101.2 million. It may need additional financing; unavailable or unfavorable financing could delay, reduce or terminate development. Equity financing may dilute shareholders, while collaborations could require relinquishing rights.
- A September 2020 office lease amendment adds 3,034 square feet, with a seven-year term expected to begin around January 2021 and approximately $1.8 million of total lease commitments.
- The company reported that a previously identified material weakness in internal controls was remediated as of June 30, 2020; disclosure controls were assessed as effective at September 30. No legal proceedings or subsequent events were reported.
Important facts for investors to verify
- Whether cash burn and development spending remain consistent with management’s stated runway into the first half of 2023, and whether additional financing will be needed.
- Clinical-trial enrollment, timing, safety and efficacy results for MAT9001 and MAT2203, including effects of COVID-19 and third-party supply or service disruptions.
- The terms, usage and potential dilution from the $50 million ATM facility and outstanding preferred stock, options and warrants.
- Whether contract research, grants and collaborations develop into meaningful, recurring revenue; the filing reports no product-sales revenue.
- Execution of the new office lease and continued effectiveness of the remediated financial-reporting controls.