Marker Therapeutics, Inc. — Q2 2023 Form 10-Q
Reporting period: Three and six months ended June 30, 2023; unaudited. Marker is a clinical-stage immuno-oncology company developing multiTAA-specific T-cell therapies. Comparative results reflect discontinued operations following the sale of manufacturing assets.
Key financial results
| Metric | Q2 2023 | Q2 2022 | Six months 2023 | Six months 2022 |
|---|---|---|---|---|
| Revenue, continuing operations | $0.76 million | $0.79 million | $2.00 million | $1.75 million |
| Operating expenses, continuing operations | $4.90 million | $6.06 million | $10.44 million | $12.68 million |
| Loss from continuing operations | $(4.10) million | $(5.23) million | $(8.32) million | $(11.01) million |
| Net income (loss) | $2.52 million | $(9.24) million | $(2.45) million | $(19.15) million |
| Operating cash used, total | — | $12.94 million | $13.02 million |
- Continuing revenue consisted of grant income, not product sales or licensing revenue. Q2 included approximately $0.7 million from CPRIT and $0.1 million from an FDA grant.
- Q2 net income included an $8.79 million gain on the Cell Ready asset sale, partly offset by a $2.18 million loss from discontinued operations. The six-month net loss includes the same sale gain and $2.92 million of discontinued-operation losses.
- At June 30, cash and cash equivalents were $18.12 million, versus $11.78 million at December 31, 2022. Working capital was $19.04 million, versus $8.84 million. Total liabilities were $2.92 million, including $2.66 million of accounts payable and accrued liabilities; the filing reports no debt balance.
- Six-month cash flows included $18.66 million provided by investing activities, primarily from the asset sale, and $0.62 million from financing. Cash increased by $6.34 million.
Material changes and developments
- On June 26, 2023, Marker sold and transferred manufacturing facilities, equipment, leasehold improvements and related agreements to Cell Ready for $19.0 million. The transaction was treated as a significant strategic shift and reported as discontinued operations.
- Cell Ready is a related party: its CEO, John Wilson, is a Marker director. The parties intend to enter a long-term services agreement covering research and development, manufacturing and regulatory support, but had not executed it by the filing date.
- Marker no longer operates its own cGMP manufacturing facilities and expects to depend on third parties for clinical and potential commercial manufacturing. Approximately 50 former employees received employment offers from Cell Ready.
- Operating expenses from continuing operations fell 19% in Q2 year over year and 18% for the first half. Lower R&D and G&A costs included reduced headcount, stock compensation and rent; Q2 G&A also included $0.9 million of severance and termination costs. Severance payments were completed in July.
- The company effected a 1-for-10 reverse stock split in January 2023. It also raised approximately $0.6 million under its ATM during the first half and approximately $33,000 through the Lincoln Park facility; additional equity issuance could dilute shareholders.
Outlook, risks and other matters
- Management estimated that June 30 cash would fund operations and capital requirements into Q4 2025. It cautioned that this estimate relies on assumptions that may prove incorrect. The Cell Ready proceeds alleviated previously disclosed substantial doubt about the company’s ability to continue as a going concern.
- Marker expects substantial losses for several years, has no product-sales revenue, and expects to need additional capital over time. It may need to delay, reduce or eliminate development programs if financing is unavailable or unfavorable.
- Management is conducting a strategic review of clinical development programs, including trial initiation and readout guidance; the filing gives no updated program guidance or timetable.
- Key risks include dependence on third-party manufacturing, the absence of an executed long-term Cell Ready services agreement, possible manufacturing capacity or regulatory-compliance issues, and failure to achieve anticipated transaction benefits or cost savings. Market volatility may also constrain access to capital.
- Marker reported no material legal proceedings and no material changes to previously disclosed risk factors other than the Cell Ready-related risks described in the filing. Disclosure controls were assessed as effective.
Investor facts to verify
- Whether Marker and Cell Ready executed the planned long-term services agreement, and its terms, costs and service commitments.
- Whether the $19.0 million sale proceeds and resulting cash runway support operations through Q4 2025 as projected.
- Updates to the strategic review, clinical trial timelines and grant funding, including CPRIT and FDA grant receipts and conditions.
- Future cash burn, financing needs, and potential dilution under the ATM and Lincoln Park agreements.
- That reported Q2 net income is driven by the one-time asset-sale gain rather than recurring operating performance.