Matinas BioPharma Holdings, Inc. — Q1 2021 Form 10-Q
Reporting period: Three months ended March 31, 2021. Matinas is a clinical-stage biopharmaceutical company developing drug candidates and its lipid nanocrystal (LNC) delivery platform. It has no approved products and has not generated product-sales revenue.
Financial results and liquidity
| Metric | Q1 2021 | Q1 2020 |
|---|---|---|
| Revenue | $33,000 | $0 |
| Research and development expense | $3.24 million | $4.09 million |
| General and administrative expense | $3.15 million | $2.26 million |
| Operating loss | $6.35 million | $6.35 million |
| Net loss | $4.96 million | $5.05 million |
| Net loss attributable to common shareholders | $5.17 million ($0.03 per share) | $5.22 million ($0.03 per share) |
| Net cash used in operating activities | $4.65 million | $4.66 million |
Revenue was contract research revenue under a Genentech feasibility agreement; it is not product revenue. The company also recorded $1.33 million from selling New Jersey net operating losses and tax credits, versus $1.07 million a year earlier. The 2021 amount was receivable at quarter-end. The filing does not provide a meaningful product gross margin.
At March 31, 2021, cash and cash equivalents were $23.38 million and marketable securities were $37.28 million, totaling approximately $60.7 million; restricted cash was $0.34 million. Current assets were $63.14 million and current liabilities $2.22 million. Total liabilities were $5.79 million, including operating and finance lease liabilities; the filing reports no material conventional borrowings. Management believes cash and marketable securities are sufficient to fund planned operations into 2024, while noting continued losses and future financing needs.
Changes versus the prior-year quarter and balance-sheet developments
- R&D expense declined about 21%, primarily because the LYPDISO clinical trial was completed in January 2021. G&A expense rose about 39%, primarily due to higher compensation expense related to stock-option exercises.
- Net loss improved by approximately $0.09 million; operating loss was essentially unchanged. Operating cash use was also nearly unchanged.
- Cash, cash equivalents and restricted cash increased $10.95 million during the quarter. Investing activities provided $8.82 million, mainly reflecting net sales and maturities of marketable securities; financing activities provided $6.78 million.
- The company sold 3.02 million shares through its ATM program at an average price of $1.90, generating approximately $5.8 million gross and $5.6 million net proceeds. Common shares outstanding increased to 204.28 million from 200.11 million at year-end.
Outlook, management commentary and risks
- Management expects ongoing substantial operating losses and higher operating cash use during the remainder of 2021 as development advances. Product revenue is not expected before 2023 at the earliest, if ever.
- Near-term priorities include advancing MAT2203 toward efficacy data in the EnACT study for cryptococcal meningitis; progressing MAT2501 preclinical work with Cystic Fibrosis Foundation support and targeting a single-ascending-dose pharmacokinetic study in healthy volunteers later in 2021; and expanding LNC collaborations.
- After the LYPDISO ENHANCE-IT topline announcement in February 2021, the company began seeking a partner to continue its development.
- The Cystic Fibrosis Foundation award provides up to $4.2 million for MAT2501 development, subject to milestones and program progress. The company has no committed external funding source beyond limited CFF and NIH support.
- Key risks include clinical or regulatory delays or failure, manufacturing and third-party dependencies, intellectual-property protection, ability to recruit and retain personnel, and the need to raise additional capital. Equity financing could dilute shareholders; other financing or partnerships could impose restrictive terms or require relinquishing rights.
- COVID-19 did not significantly affect Q1 2021 results, but future effects on operations, suppliers and access to capital remain uncertain. The company completed implementation of a new ERP system during the quarter and changed related financial-reporting processes. It reported no material change to the risk factors in its 2020 Form 10-K and no legal proceedings.
Important facts for investors to verify
- Whether MAT2203 and MAT2501 meet development milestones, and the timing and significance of clinical or preclinical results.
- Whether the LYPDISO partnering effort yields a partner and what the ENHANCE-IT data imply for further development.
- Cash burn, access to future funding, and whether management’s runway estimate into 2024 remains supportable as development spending changes.
- Potential dilution from further equity issuance and the effect of outstanding preferred stock, options and warrants.
- Progress under the CFF award and Genentech agreement, including milestone-dependent funding and remaining contract obligations.