Matinas BioPharma Holdings, Inc. — Q1 2016 Form 10-Q
Reporting period: Three months ended March 31, 2016; balance-sheet comparisons are with December 31, 2015. Matinas is a clinical-stage biopharmaceutical company developing anti-infective drug candidates using its licensed cochleate delivery platform. It had no product revenue and reported no revenue in the quarter.
Financial performance and liquidity
| Metric | Q1 2016 | Q1 2015 |
|---|---|---|
| Revenue | $0 | $57,636 |
| Research and development expense | $921,711 | $1,448,413 |
| General and administrative expense | $1,315,777 | $1,177,841 |
| Net loss | $2,244,610 | $2,570,111 |
| Basic and diluted loss per share | $0.04 | $0.07 |
| Net cash used in operating activities | $1,542,551 | $2,322,827 |
- Cash and cash equivalents were $1.67 million at March 31, down from $3.23 million at year-end; restricted current cash was approximately $100,000.
- Total current assets were $1.91 million and current liabilities $1.32 million. Total liabilities were $2.53 million, including a $1.21 million deferred tax liability. The filing reports no conventional borrowings outstanding.
- Total assets were $6.75 million; stockholders’ equity was $4.22 million. Accumulated deficit was $25.43 million.
- No meaningful product gross margin was reported; the company had no product sales. Operating costs substantially exceeded revenue.
- Warrants outstanding covered 39.25 million shares, and options covered approximately 8.28 million shares. These potential shares were excluded from diluted loss per share as antidilutive.
Changes versus the prior-year quarter
- Revenue fell to zero from approximately $58,000 because NIH-related contract research arrangements ended in 2015.
- R&D expense declined by approximately $527,000, primarily due to lower clinical-study spending associated with MAT9001, according to management.
- G&A expense rose by approximately $138,000, primarily due to a market study for MAT2501.
- Net loss narrowed by approximately $326,000. Operating cash use also declined, while Q1 2015 financing included $4.28 million of private-placement proceeds; Q1 2016 had no comparable financing proceeds.
- Shares outstanding increased from 35.56 million weighted-average shares in Q1 2015 to 57.29 million in Q1 2016, reflecting the larger equity base following prior financing and acquisition activity.
Outlook, risks and other notable items
- Going concern and funding: Management said March 31 cash was expected to fund operating obligations only through July 2016. Recurring losses and the need for additional capital raise substantial doubt about the company’s ability to continue as a going concern. The company had no committed external funding and warned financing may be unavailable or on unfavorable terms.
- Spending outlook: Management expected R&D expense to remain relatively flat or decrease slightly in the near term and G&A expense to be flat for 2016, subject to cost controls and public-company compliance costs. It expected losses and expenses to remain significant as development proceeds.
- Pipeline: MAT2203, an oral amphotericin B candidate, was in a Phase 2a study for Candida infections; management anticipated results during 2016, subject to NIH timelines. MAT2501, an oral amikacin candidate, had an open IND and the company planned to initiate Phase 1 studies during 2016. MAT2203 had FDA QIDP/Fast Track status for aspergillus; MAT2501 had QIDP and Orphan Drug designations.
- Other programs: The company was exploring partnering options for MAT9001, an omega-3 candidate for hypertriglyceridemia, and MAT8800, an omega-3 discovery program.
- Key risks: Clinical and regulatory outcomes are uncertain; the company has no approved products or product revenue; it depends on additional financing, third-party manufacturers and CROs, and Rutgers-licensed technology. Equity financing could dilute shareholders; debt or collaboration financing could impose restrictions or require surrendering valuable rights.
- Commitments and contingencies: Future minimum lease payments totaled approximately $880,000. The Rutgers license includes tiered royalties, annual fees and a sales milestone fee. The filing reported no legal proceedings, no material changes to previously disclosed risk factors, and no off-balance-sheet arrangements.
- Unusual accounting items: No impairment of goodwill or in-process R&D was recorded in the quarter. The company reported $393,000 of share-based compensation expense and $2.4 million of unrecognized compensation cost expected to be recognized over about 1.3 years.
Investor verification points
- Verify the timing and availability of additional financing, given the disclosed July 2016 cash runway and going-concern uncertainty.
- Track MAT2203 Phase 2a enrollment and results, and MAT2501’s planned Phase 1 initiation and subsequent development milestones.
- Assess cash burn against the company’s stated cost-control expectations and verify whether new revenue or partnership funding is obtained.
- Evaluate potential dilution from outstanding warrants and options, alongside the terms of any future financing.
- Review the prior Form 10-K risk factors and subsequent filings for changes in clinical, regulatory, intellectual-property, manufacturing, or liquidity risks.