Marker Therapeutics, Inc. — Q1 2019 Form 10-Q
Reporting period: Three months ended March 31, 2019. Marker is a clinical-stage immuno-oncology company developing cell-based therapies and peptide-based cancer vaccines. It reported no product revenue; historically, funding has come primarily from equity and debt financings, with some grant revenue.
Financial performance and position
- Revenue: No product revenue was reported.
- Net loss: $5.32 million, versus $3.20 million in Q1 2018. Basic and diluted loss per share was $0.12 versus $0.30; weighted-average shares increased to 45.47 million from 10.62 million.
- Expenses: Operating expenses rose to $5.64 million from $3.20 million. R&D increased to $2.83 million from $1.60 million; G&A increased to $2.81 million from $1.60 million. Management attributed increases to staffing, infrastructure, clinical development, professional expenses and stock-based compensation.
- Cash flow: Operating cash use was $3.88 million, compared with $2.35 million. Investing used $0.22 million, principally for property and equipment; financing provided $0.06 million. Cash declined $4.04 million during the quarter.
- Liquidity: Cash and cash equivalents were $57.71 million at March 31, down from $61.75 million at year-end 2018. Working capital was $55.09 million, versus $59.19 million. Management said available cash, cash equivalents and investment securities were expected to fund operations and capital needs through at least Q2 2020, subject to assumptions and potential changes in plans.
- Balance sheet: Total assets were $58.99 million and total liabilities were $3.38 million. No borrowings are reported; liabilities included $0.63 million of operating lease obligations and a $0.06 million warrant liability. The company had an accumulated deficit of $311.42 million.
- Margins: Not meaningful because the filing reports no product revenue.
Material changes and notable items
- Expense growth drove the larger net loss. Interest income of $0.33 million, earned on cash held in short-term U.S. Treasury and government-backed securities, partly offset operating losses.
- Stock-based compensation increased to $1.53 million from $0.14 million. Unrecognized compensation cost on unvested awards was $15.7 million at quarter-end.
- Marker adopted lease accounting guidance effective January 1, 2019, recording right-of-use assets and lease liabilities. At March 31, lease liabilities were approximately $0.63 million and right-of-use assets approximately $0.59 million.
- Common shares outstanding were 45,484,483 as of May 3, 2019. The filing describes a large warrant overhang, including approximately 23.0 million outstanding warrants at March 31.
- The company relocated its headquarters from Jacksonville to Houston and established access to laboratory space at the Texas Medical Center.
Outlook, programs and risks
- Marker expected substantial losses for several years and said it would need additional financing to execute its plans. Future funding could come from equity, debt or collaborations; equity could dilute shareholders, debt could add fixed obligations and restrictions, and partnerships could require surrendering rights.
- Management planned pre-IND discussions with the FDA in Q2 2019 and an IND submission in Q3 for a company-sponsored study focused on post-transplant AML/MDS. It also anticipated an update on its pancreatic-cancer solid-tumor program in Q3 2019. These are forward-looking plans, not reported outcomes.
- Programs included Phase 1 MultiTAA T-cell studies and Phase 2 peptide-vaccine studies, including TPIV200 for ovarian and breast cancers and TPIV100/110 for HER2-related indications. Clinical updates cited by the company include small patient groups and ongoing trials; results remain subject to confirmation in further studies.
- Key risks include clinical-trial enrollment and success, regulatory approval, manufacturing, market acceptance, reimbursement, intellectual-property protection and the need to raise capital. The company cautioned that development timing, costs and eventual commercialization are uncertain.
- Controls: Management concluded disclosure controls were not effective because of a material weakness in controls over the timing of stock-based compensation expense for certain option grants. Remediation steps were being initiated. Management nevertheless stated that the financial statements were fairly stated in all material respects.
- The company reported no material legal proceedings and no material change to the risk factors in its 2018 Form 10-K.
Important facts for investors to verify
- Cash runway assumptions and the timing or terms of any additional financing.
- Progress against FDA, IND and clinical-trial milestones, including enrollment, safety and efficacy results.
- Whether the stock-based compensation control weakness is remediated and whether controls operate effectively.
- The potential dilution from outstanding warrants, options and future equity financing.
- Clinical and commercial claims in light of the limited, early-stage nature of the cited patient data.