Marker Therapeutics, Inc. — Q1 2022 Form 10-Q
Business context and reporting period. Marker Therapeutics is a clinical-stage immuno-oncology company developing MultiTAA T-cell therapies and peptide-based vaccines. This unaudited filing covers the three months ended March 31, 2022; comparisons are with Q1 2021 unless noted.
Financial performance and position
- Revenue: $964,000, all grant income from the CPRIT award supporting the MT-401 Phase 2 trial; no product sales or licensing revenue.
- Operating expenses: $10.76 million, up 23%. Research and development was $7.03 million, up 25%; general and administrative expense was $3.73 million, up 19%.
- Loss: Operating loss was $9.79 million versus $8.78 million. Net loss was $9.91 million versus $8.78 million; basic and diluted loss per share was $0.12 versus $0.16. No meaningful operating margin is reported for this development-stage business.
- Cash flow: Operating cash use was $12.23 million versus $8.10 million; investing cash use was $2.45 million versus $1.40 million. There was no financing cash flow in Q1 2022; Q1 2021 included $52.66 million of net equity proceeds.
- Liquidity: Cash, cash equivalents and restricted cash totaled $28.82 million at quarter-end, down from $43.50 million at December 31, 2021. Working capital was $22.80 million, versus $33.08 million.
- Debt and obligations: The filing reports no borrowings; operating lease liabilities totaled approximately $11.72 million. Total liabilities were $19.25 million.
- Capital spending: Construction in progress was $4.09 million, including costs for a second modular cleanroom. Total assets were $54.96 million and stockholders’ equity was $35.71 million.
Material changes versus Q1 2021
- Operating expenses increased by $1.98 million, principally from higher clinical and research activity, staffing and sponsored research. The company attributed the $1.13 million increase in net loss to expanded R&D, future-trial spending and corporate infrastructure growth.
- Grant income of $964,000 was recognized in Q1 2022; there was no revenue in Q1 2021.
- Weighted-average shares outstanding increased 47% to 83.11 million, while loss per share decreased to $0.12 from $0.16.
- Operating cash use rose $4.13 million. Investing outflows increased with manufacturing and research facility purchases. The prior-year period included a public offering; Q1 2022 had no financing proceeds.
- The company paid a $2.5 million arbitration judgment in March 2022, including an additional $0.1 million interest award. The additional expense recorded in Q1 was approximately $0.1 million.
Outlook, risks and notable items
- Management expected March 31 cash, cash equivalents and restricted cash to fund operating and capital needs into Q2 2023. The estimate depends on assumptions that may be wrong, and the filing says substantial additional funding will be needed. Management disclosed substantial doubt about the company’s ability to continue as a going concern.
- After quarter-end, Wilson Wolf paid Marker $8.0 million under a services agreement. The payment is allocated to training and manufacturing-process work; related work-direction intellectual property is owned by Wilson Wolf. Wilson Wolf may have rights relating to Marker’s manufacturing facility in specified circumstances and a first right to offer financing for certain assets. The agreement provides for a further $1.0 million payment if specified work is completed within one year. The filing does not provide an updated cash-runway estimate incorporating this payment.
- Marker had received $2.4 million of the approximately $13.1 million CPRIT award; the grant supports the MT-401 Phase 2 adjuvant AML trial.
- Pipeline plans included MT-401 in Phase 2 for post-transplant AML; first-patient dosing of MT-401-OTS in a Phase 1 AML trial expected in 2023; and planned IND submissions in 2022 for MT-601 programs in pancreatic cancer and lymphoma. These are forward-looking plans, not guaranteed outcomes.
- Marker was below Nasdaq’s $1.00 minimum bid-price requirement and had until August 15, 2022 to regain compliance, with a possible additional compliance period subject to conditions.
- The company said it did not expect a material long-term liquidity impact from COVID-19 based on its assessment, but noted pandemic and broader market disruptions could affect operations and access to capital. No material changes to the risk factors in its 2021 Form 10-K were reported.
- Management stated disclosure controls and procedures were effective and that there were no material changes in internal control over financial reporting during the quarter. No material active or pending legal proceedings were reported apart from the resolved arbitration matter.
Important facts for investors to verify
- Whether Marker can raise sufficient capital to fund its plans beyond the stated Q2 2023 runway estimate, and how the subsequent $8.0 million Wilson Wolf payment affects cash needs.
- Progress, enrollment, timelines and results for MT-401 and the planned MT-401-OTS and MT-601 trials, including any delays or changes to clinical plans.
- CPRIT grant disbursements and eligible spending, and the timing and completion obligations under the Wilson Wolf agreement, including ownership and use of intellectual property.
- Nasdaq bid-price compliance status and any resulting listing actions.
- Actual cash burn, manufacturing-facility spending and potential dilution from equity financing or the ATM program. As of May 1, 2022, 83,599,187 common shares were issued and outstanding.