Marker Therapeutics, Inc. — Q2 2019 Form 10-Q
Business context and reporting period. Marker is a clinical-stage immuno-oncology company developing MultiTAA T-cell therapies, peptide vaccines and preclinical PolyStart technology. This unaudited filing covers the quarter and six months ended June 30, 2019; comparative periods are the corresponding 2018 periods. The company reported no product-sales revenue.
Financial highlights
| Metric | Q2 2019 | Q2 2018 | Six months 2019 | Six months 2018 |
|---|---|---|---|---|
| Revenue | $0 | $206,000 | $0 | $206,000 |
| Research and development | $3.15 million | $1.83 million | $5.99 million | $3.43 million |
| General and administrative | $2.72 million | $3.05 million | $5.53 million | $4.65 million |
| Operating loss | $5.87 million | $4.67 million | $11.51 million | $7.87 million |
| Net loss | $5.57 million | $4.81 million | $10.89 million | $8.01 million |
| Basic and diluted loss per share | $0.12 | $0.41 | $0.24 | $0.71 |
For the six months, operating cash outflow was $8.06 million, investing outflow was $305,000 and financing inflow was $63,000, producing an $8.30 million decrease in cash. Cash and cash equivalents were $53.44 million at June 30, down from $61.75 million at December 31, 2018. Working capital was $50.83 million, compared with $59.19 million. Management estimated cash would fund operating and capital needs through at least Q3 2020, subject to assumptions and possible changes in plans.
There was no revenue-based operating margin to assess. The company had $3.59 million in total liabilities, including approximately $580,000 of operating lease liabilities and $65,000 of warrant liability; the filing reports no conventional borrowings. Stockholders’ equity was $51.40 million and accumulated deficit was $316.99 million. Potential dilution includes approximately 23.0 million outstanding warrants and 4.6 million stock options at June 30.
Changes versus prior comparable periods
- Six-month net loss increased $2.88 million, or 36%, as operating expenses rose 43%; R&D increased 75%, primarily from personnel, stock compensation and consulting as the company expanded infrastructure and clinical development.
- Q2 net loss increased $758,000, or 16%. Q2 R&D increased 73%, while G&A decreased 11%, mainly because the 2018 quarter included merger-related costs.
- The 2018 periods included $206,000 of grant income; 2019 did not. Interest income was $639,000 for the first half of 2019, versus none in 2018, reflecting investment of proceeds from the October 2018 equity financing.
- Loss per share was lower year over year despite higher net losses, largely alongside a substantially higher weighted-average share count following the prior-year merger and financing activity.
Outlook, programs and risks
- Management expects substantial losses and additional funding needs while candidates remain in development; it may seek debt or equity financing and collaborations. Equity or convertible financing could dilute shareholders; debt could impose fixed payments and restrictive covenants.
- The company planned to submit an IND in Q3 2019 for a Phase 2 post-transplant AML trial. It also expected interim TPIV200 platinum-sensitive ovarian cancer data in Q4 2019 and said it might initiate additional Phase 2 trials in 2020.
- Management described interim pancreatic cancer MultiTAA findings from a small, ongoing BCM-sponsored study. As of July 5, 2019, 19 patients had received infusions. In evaluable Arm A patients, three had objective responses, four had stable disease, one had a mixed response and one had progression; Arm B had three patients with stable disease or clinical stabilization and three with clinical decline. These are preliminary, non-pivotal observations, not evidence of established efficacy.
- Management reported no observed cytokine release syndrome or neurotoxicity in the described MultiTAA trials as of July 2019. Trial results remain preliminary; larger controlled studies, regulatory review and manufacturing development are required.
- Key risks include clinical failure or delays, regulatory uncertainty, reliance on BCM and other third parties for research and manufacturing, the need to develop scalable cGMP capacity, financing needs, competition, and intellectual-property and licensing exposure.
- A broker sought approximately $1 million in FINRA arbitration relating to two 2018 transactions, alleging entitlement under an earlier placement-agent agreement. The company disputed the allegations and intended to defend itself.
- Disclosure controls were assessed as ineffective because of an unremediated material weakness in controls over timing of stock-based compensation for certain option grants. Remediation efforts included stronger review procedures and transition to third-party software. Management nevertheless stated the financial statements were fairly stated in all material respects.
Most important facts for investors to verify
- Whether cash burn, clinical spending and operating plans remain consistent with the stated runway through at least Q3 2020, and what additional financing may be required.
- Subsequent status and results of the planned AML IND/Phase 2 trial, ovarian-cancer data, and ongoing pancreatic and other clinical studies; distinguish preliminary findings from validated outcomes.
- Progress, cost and timing of manufacturing scale-up and any changes to BCM or other third-party arrangements.
- Whether the material weakness has been remediated and whether controls remain effective in later filings.
- Developments and potential financial exposure in the approximately $1 million arbitration, alongside warrant and option dilution and the company’s future financing terms.