Marker Therapeutics, Inc. — Q2 2020 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2020. Marker is a clinical-stage immuno-oncology company developing MultiTAA T-cell therapies and peptide-based vaccines. The unaudited interim results are not necessarily indicative of full-year results.
Financial results and liquidity
| Metric | Q2 2020 | Q2 2019 | Six months 2020 | Six months 2019 |
|---|---|---|---|---|
| Revenue | $467,000 | $0 | $467,000 | $0 |
| Research and development expense | $4.28 million | $3.15 million | $8.09 million | $5.99 million |
| General and administrative expense | $2.55 million | $2.72 million | $5.37 million | $5.53 million |
| Net loss | $6.34 million | $5.57 million | $12.83 million | $10.89 million |
| Basic and diluted loss per share | $0.14 | $0.12 | $0.28 | $0.24 |
- Revenue was grant income for clinical supplies for a Mayo Foundation Phase 2 breast cancer trial; the company reported no product-sales revenue.
- Six-month operating cash use was $8.40 million, investing cash use was $3.93 million, and financing cash inflow was $0.55 million. Cash declined $11.78 million to $32.12 million.
- At June 30, cash and cash equivalents were $32.12 million and working capital was $29.78 million, compared with $43.90 million and $43.49 million, respectively, at December 31, 2019. Accumulated deficit was $340.36 million.
- Total liabilities were $14.01 million, including $9.48 million of operating lease liabilities; the filing reports no outstanding debt balance. Lease commitments include long-term headquarters, research, and manufacturing facility arrangements.
- Operating expenses rose 16% in Q2 and 17% for the six-month period. R&D growth reflected increased personnel and process-development costs, partly offset by lower peptide-vaccine trial expense. Lower interest income also contributed to the larger net loss.
Material developments, outlook, and risks
- Going concern and funding: Management states cash was expected to fund operations and capital expenditures into Q2 2021, but identifies substantial doubt about the company’s ability to continue as a going concern. This estimate depends on assumptions that may prove incorrect; additional capital is expected to be needed. Marker may seek equity or debt financing or collaborations.
- Potential financing and dilution: A February 2020 agreement gives Aspire Capital the potential to purchase up to $30 million of common stock over 30 months; no shares had been purchased by June 30. The agreement includes an exchange cap and share-price conditions. Marker issued 345,357 commitment shares. Separately, 21.38 million warrants and approximately 5.84 million options were outstanding at quarter-end.
- Clinical progress and delays: The FDA permitted initiation of the MT-401 Phase 2 post-transplant AML trial with a safety lead-in, but a partial hold applies to product made using an alternative-supplier reagent. The supplier’s reagent documentation was delayed, and COVID-19 was expected to delay site activation and patient enrollment. MT-401 received FDA orphan drug designation for AML after allogeneic stem-cell transplant.
- Other clinical update: In interim pancreatic cancer trial results, 4 of 13 evaluable patients had objective responses and 6 had stable disease; the company reported no infusion reactions, cytokine release syndrome, or neurotoxicity. These are interim results from a small trial, not confirmatory evidence of efficacy.
- Facilities and commitments: Marker began expanding Houston research and manufacturing capacity. It recorded $2.6 million of cleanroom construction in progress; the project was estimated at $6.0 million total. New or expanded leases carry stated fixed rent of approximately $5.6 million for headquarters, $1.1 million for the research facility, and $11.1 million for the manufacturing facility over their initial terms, plus operating expenses.
- COVID-19: The company reported disruptions to research and clinical activities and anticipated trial delays. It did not expect a material long-term liquidity impact based on its then-current assessment, but warned that pandemic developments could affect operations, capital access, and share value.
- Contingency: A broker sought approximately $1 million in FINRA arbitration relating to 2018 transactions. Marker disputed the claims and intended to defend itself. Management said it was not party to legal proceedings likely to have a material adverse effect.
- Management expected continuing losses as R&D and clinical development continue. The filing provides no product-revenue, profitability, or quantified earnings guidance.
Most important facts for investors to verify
- Whether the stated cash runway into Q2 2021 remains achievable, and the timing and terms of any additional financing.
- Progress on the alternative reagent documentation and partial FDA hold, and the actual start and enrollment pace of MT-401 Phase 2.
- Whether COVID-19 or manufacturing-facility buildout causes further clinical, operational, or capital-cost delays.
- Potential dilution from Aspire Capital purchases, warrants, options, and any future equity financing.
- Developments in the FINRA arbitration and the company’s ability to meet its contractual facility and lease obligations.