UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q Commission File Number: 001-37939 MARKER THERAPEUTICS, INC. (Name of registrant in its charter) | | | Securities registered pursuant to Section 12(b) of the Act: | | | Name of each exchange on which | | --- | --- | --- | | Title of each class | Trading Symbol(s) | registered | | Common Stock, par value $0.001 per share | MRKR | The Nasdaq Stock Market LLC | Indicate by check mark whether the registrant (1) filed all reports re ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended December 31, 2019 OR ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________________ to ________________. Commission File Number: 001-37939 MARKER THERAPEUTICS, INC. (Exact name of registrant as specified in its charter) Delaware 45-4497941 ( ...

Marker Therapeutics, Inc. (NASDAQ:MRKR) Q3 2019 Earnings Conference Call November 12, 2019 5:00 PM ET Company Participants Tony Kim – Chief Financial Officer Peter Hoang – President and Chief Executive Officer Mythili Koneru – Senior Vice President-Clinical Development Conference Call Participants Jackson Harvey – Nomura/Instinet Ted Tenthoff – Piper Jaffray Matt Biegler – Oppenheimer & Company Tony Butler – Roth Capital Yun Zhong – Janney Operator Greetings, and welcome to the Marker Therapeutics’ Third Qu ...

PART I – FINANCIAL INFORMATION [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed consolidated financial statements, including balance sheets, statements of operations, stockholders' equity, and cash flows, along with detailed notes explaining the company's operations, accounting policies, liquidity, and specific financial line items [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20as%20of%20September%2030,%202019%20and%20December%2031,%202018) This table provides a snapshot of the company's financial position, detailing assets, liabilities, and equity at specific points in time **Condensed Consolidated Balance Sheets (Unaudited):** | Metric | Sep 30, 2019 ($) | Dec 31, 2018 ($) | | :-------------------------- | :----------- | :----------- | | Cash and cash equivalents | $48,477,670 | $61,746,748 | | Total current assets | $50,461,877 | $61,996,642 | | Total assets | $51,402,472 | $62,144,310 | | Total current liabilities | $3,187,074 | $2,803,572 | | Total liabilities | $3,520,554 | $2,803,572 | | Total stockholders' equity | $47,881,918 | $59,340,738 | [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20for%20the%20three%20and%20nine%20months%20ended%20September%2030,%202019%20and%202018) This table presents the company's financial performance over specific periods, detailing revenues, expenses, and net loss **Condensed Consolidated Statements of Operations (Unaudited) - Three Months Ended September 30:** | Metric | 2019 ($) | 2018 ($) | Change ($) | % Change | | :---------------------------------- | :----------- | :----------- | :----------- | :------- | | Total revenues | $0 | $0 | $0 | 0% | | Research and development | $3,118,530 | $1,877,260 | $1,241,270 | 66% | | General and administrative | $2,536,204 | $2,551,146 | $(14,942) | (1)% | | Total operating expenses | $5,654,734 | $4,428,406 | $1,226,328 | 28% | | Loss from operations | $(5,654,734) | $(4,428,406) | $(1,226,328) | 28% | | Interest income | $259,248 | $0 | $259,248 | - | | Net loss | $(5,459,486) | $(4,388,406) | $(1,071,080) | 24% | | Net loss per share, basic and diluted | $(0.12) | $(0.32) | $0.20 | (63)% | **Condensed Consolidated Statements of Operations (Unaudited) - Nine Months Ended September 30:** | Metric | 2019 ($) | 2018 ($) | Change ($) | % Change | | :---------------------------------- | :----------- | :----------- | :----------- | :------- | | Total revenues | $0 | $205,994 | $(205,994) | (100)% | | Research and development | $9,103,670 | $5,303,647 | $3,800,023 | 72% | | General and administrative | $8,063,099 | $7,202,036 | $861,063 | 12% | | Total operating expenses | $17,166,769 | $12,505,683 | $4,661,086 | 37% | | Loss from operations | $(17,166,769) | $(12,299,689) | $(4,867,080) | 40% | | Interest income | $897,967 | $0 | $897,967 | - | | Net loss | $(16,348,802) | $(12,397,689) | $(3,951,113) | 32% | | Net loss per share, basic and diluted | $(0.36) | $(1.03) | $0.67 | (65)% | [Condensed Consolidated Statement of Stockholders' Equity](index=5&type=section&id=Condensed%20Consolidated%20Statement%20of%20Stockholders'%20Equity%20for%20the%20three%20and%20nine%20months%20ended%20September%2030,%202019%20and%202018) This table details changes in the company's equity over a period, reflecting transactions affecting capital and retained earnings **Condensed Consolidated Statement of Stockholders' Equity (Unaudited) - Nine Months Ended September 30, 2019:** | Metric | Amount ($) | | :-------------------------- | :----------- | | Balance at January 1, 2019 | $59,340,738 | | Stock options exercised for cash | $57,744 | | Warrants exercised for cash | $758,733 | | Stock warrants cashless exercised | $0 | | Stock-based compensation | $4,073,505 | | Net loss | $(16,348,802) | | Balance at September 30, 2019 | $47,881,918 | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20for%20the%20nine%20months%20ended%20September%2030,%202019%20and%202018) This table summarizes the cash inflows and outflows from operating, investing, and financing activities over specific periods **Condensed Consolidated Statements of Cash Flows (Unaudited) - Nine Months Ended September 30:** | Cash Flow Activity | 2019 ($) | 2018 ($) | Change ($) | | :---------------------------------- | :----------- | :----------- | :----------- | | Net cash used in operating activities | $(13,723,434) | $(8,317,314) | $(5,406,120) | | Net cash used in investing activities | $(362,121) | $0 | $(362,121) | | Net cash provided by financing activities | $816,477 | $7,482,296 | $(6,665,819) | | Net decrease in cash | $(13,269,078) | $(835,018) | $(12,434,060) | | Cash and cash equivalents at end of period | $48,477,670 | $4,294,271 | $44,183,399 | [Notes to Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and additional information supporting the condensed consolidated financial statements [NOTE 1: NATURE OF OPERATIONS](index=7&type=section&id=NOTE%201:%20NATURE%20OF%20OPERATIONS) This note describes the company's core business as a clinical-stage immuno-oncology firm developing T cell-based immunotherapies and peptide-based vaccines - Marker Therapeutics is a clinical-stage immuno-oncology company developing novel T cell-based immunotherapies and peptide-based vaccines for hematological malignancies and solid tumors[15](index=15&type=chunk) - Its MultiTAA T cell technology selectively expands non-engineered, tumor-specific T cells to recognize multiple tumor targets for broad anti-tumor activity[15](index=15&type=chunk) [NOTE 2: BASIS OF PRESENTATION](index=7&type=section&id=NOTE%202:%20BASIS%20OF%20PRESENTATION) This note clarifies that the interim financial statements are unaudited, prepared under U.S. GAAP and SEC rules, and should be read in conjunction with the prior annual report - Interim financial statements are unaudited, prepared under U.S. GAAP and SEC rules, and include normal recurring adjustments[16](index=16&type=chunk)[17](index=17&type=chunk) - They should be read in conjunction with the 2018 Form 10-K[17](index=17&type=chunk) [NOTE 3: LIQUIDITY AND FINANCIAL CONDITION](index=7&type=section&id=NOTE%203:%20LIQUIDITY%20AND%20FINANCIAL%20CONDITION) This note discusses the company's cash position, expected losses, and projected funding runway for operations - **$48.5 million** in cash and cash equivalents as of September 30, 2019[18](index=18&type=chunk) - The company anticipates **substantial losses** during its development phase[19](index=19&type=chunk) - Current cash resources are projected to fund operations through at least **Q4 2020**[21](index=21&type=chunk) [NOTE 4: SIGNIFICANT ACCOUNTING POLICIES](index=8&type=section&id=NOTE%204:%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note outlines key accounting policies, including the adoption of new lease accounting standards and their impact on financial reporting - Adopted ASC Topic 842, Leases, effective January 1, 2019, recognizing right-of-use assets and lease liabilities for operating leases[22](index=22&type=chunk)[26](index=26&type=chunk) - Recorded approximately **$637,000** in right-of-use assets and **$670,000** in lease liabilities upon adoption[28](index=28&type=chunk) [NOTE 5: NET LOSS PER SHARE](index=10&type=section&id=NOTE%205:%20NET%20LOSS%20PER%20SHARE) This note provides details on the calculation of basic and diluted net loss per share, including the impact of anti-dilutive securities **Net Loss Per Share (Basic and Diluted):** | Period | 2019 ($) | 2018 ($) | | :-------------------------- | :----------- | :----------- | | Three Months Ended Sep 30 | $(0.12) | $(0.32) | | Nine Months Ended Sep 30 | $(0.36) | $(1.03) | **Anti-dilutive Securities (Nine Months Ended Sep 30):** | Security Type | 2019 (Number of Securities) | 2018 (Number of Securities) | | :-------------------------- | :----------- | :----------- | | Common stock options | 4,655,000 | 439,000 | | Common stock purchase warrants | 22,618,000 | 4,625,000 | | Common stock warrants - liability treatment | 56,000 | 27,000 | | Potentially dilutive securities | 27,329,000 | 5,091,000 | [NOTE 6: PROPERTY AND EQUIPMENT](index=11&type=section&id=NOTE%206:%20PROPERTY%20AND%20EQUIPMENT) This note details the company's property and equipment, net of accumulated depreciation, and related depreciation expenses **Property and Equipment, Net:** | Metric | Sep 30, 2019 ($) | Dec 31, 2018 ($) | | :-------------------------- | :----------- | :----------- | | Lab equipment | $100,000 | $0 | | Computers, equipment and software | $209,000 | $66,000 | | Office furniture | $178,000 | $82,000 | | Leasehold improvements | $23,000 | $0 | | Total | $510,000 | $148,000 | | Less: accumulated depreciation | $(71,000) | $0 | | Property and equipment, net | $439,000 | $148,000 | **Depreciation Expense:** | Period | Amount ($) | | :-------------------------- | :----------- | | Three Months Ended Sep 30, 2019 | $31,000 | | Nine Months Ended Sep 30, 2019 | $71,000 | [NOTE 7: LEASES](index=11&type=section&id=NOTE%207:%20LEASES) This note provides information on the company's operating lease liabilities, right-of-use assets, and lease expenses **Operating Lease Information (Sep 30, 2019):** | Metric | Amount ($) | | :-------------------------- | :----------- | | Operating lease liabilities | $533,000 | | Right-of-use assets | $502,000 | **Lease Expense (Nine Months Ended Sep 30, 2019):** | Expense Type | Amount ($) | | :-------------------------- | :----------- | | Operating lease expense | $165,000 | | Short-term lease expense | $73,000 | | Variable lease expense | $65,000 | | Total Lease Expense | $303,000 | [NOTE 8: ACCOUNTS PAYABLE AND ACCRUED LIABILITIES](index=12&type=section&id=NOTE%208:%20ACCOUNTS%20PAYABLE%20AND%20ACCRUED%20LIABILITIES) This note details the composition and changes in the company's accounts payable and accrued liabilities **Accounts Payable and Accrued Liabilities:** | Category | Sep 30, 2019 ($) | Dec 31, 2018 ($) | Change ($) | | :-------------------------- | :----------- | :----------- | :----------- | | Accounts payable | $1,369,000 | $1,619,000 | $(250,000) | | Compensation and benefits | $1,060,000 | $416,000 | $644,000 | | Professional fees | $276,000 | $236,000 | $40,000 | | Technology license fees | $0 | $80,000 | $(80,000) | | Investor relations fees | $0 | $297,000 | $(297,000) | | Other | $154,000 | $106,000 | $48,000 | | Total | $2,859,000 | $2,754,000 | $105,000 | [NOTE 9: WARRANT LIABILITY AND FAIR VALUE MEASUREMENTS](index=12&type=section&id=NOTE%209:%20WARRANT%20LIABILITY%20AND%20FAIR%20VALUE%20MEASUREMENTS) This note explains the company's warrant liability, its fair value measurement, and changes during the period **Warrant Liability (Level 3 Fair Value):** | Metric | Sep 30, 2019 ($) | Dec 31, 2018 ($) | | :-------------------------- | :----------- | :----------- | | Warrant liability | $129,000 | $49,000 | **Changes in Level 3 Liabilities (Nine Months Ended Sep 30, 2019):** | Metric | Amount ($) | | :-------------------------- | :----------- | | Balance - January 1, 2019 | $49,000 | | Change in fair value of warrant liability | $80,000 | | Balance – September 30, 2019 | $129,000 | [NOTE 10: COMMITMENTS AND CONTINGENCIES](index=13&type=section&id=NOTE%2010:%20COMMITMENTS%20AND%20CONTINGENCIES) This note discloses the company's commitments and potential contingent liabilities, including an ongoing arbitration claim - The Company is defending an arbitration claim for approximately **$1 million** from a broker related to compensation for 2018 transactions, based on a 2017 placement agent agreement[44](index=44&type=chunk) [NOTE 11: STOCKHOLDERS' EQUITY](index=13&type=section&id=NOTE%2011:%20STOCKHOLDERS'%20EQUITY) This note details changes in stockholders' equity, including common share issuances from warrant and option exercises, and stock-based compensation - **190,258 common shares** were issued from warrant exercises, generating **$759,000**[45](index=45&type=chunk) - **11,980 common shares** were issued from stock option exercises, generating **$58,000**[49](index=49&type=chunk) - **47,400 common shares** were issued for consulting agreements, recognizing **$265,000** in stock-based compensation, and **29,040 shares** to non-employee directors, recognizing **$174,000**[50](index=50&type=chunk)[51](index=51&type=chunk) **Share Purchase Warrants (Sep 30, 2019):** | Metric | Number of Warrants | Weighted Average Exercise Price ($) | Weighted Average Remaining Contractual Life (years) | Total Intrinsic Value ($) | | :-------------------------- | :----------------- | :------------------------------ | :------------------------------------------------ | :-------------------- | | Balance - January 1, 2019 | 23,016,000 | $4.78 | 4.29 | $26,066,000 | | Warrants granted | 45,000 | $4.26 | - | - | | Exercised for cash | (190,000) | $3.99 | - | - | | Cashless exercise | (7,000) | $3.97 | - | - | | Expired or cancelled | (190,000) | $13.88 | - | - | | Balance - September 30, 2019 | 22,674,000 | $4.71 | 3.59 | $16,676,000 | [NOTE 12: STOCK-BASED COMPENSATION](index=15&type=section&id=NOTE%2012:%20STOCK-BASED%20COMPENSATION) This note provides a breakdown of stock-based compensation expenses and the unrecognized compensation cost **Stock Compensation Expenses:** | Period | Sep 30, 2019 (3 Months) ($) | Sep 30, 2018 (3 Months) ($) | Sep 30, 2019 (9 Months) ($) | Sep 30, 2018 (9 Months) ($) | | :-------------------------- | :------------------------ | :------------------------ | :------------------------ | :------------------------ | | Research and development | $553,000 | $189,000 | $1,844,000 | $656,000 | | General and administrative | $631,000 | $662,000 | $2,230,000 | $1,292,000 | | Total | $1,184,000 | $851,000 | $4,074,000 | $1,948,000 | - Unrecognized stock-based compensation cost was **$14.4 million** as of September 30, 2019, with a weighted-average recognition period of **3.13 years**[53](index=53&type=chunk) [NOTE 13: RELATED PARTY TRANSACTIONS](index=15&type=section&id=NOTE%2013:%20RELATED%20PARTY%20TRANSACTIONS) This note discloses transactions with related parties, including research agreements and consulting fees - Incurred **$37,000** to BCM under a Sponsored Research Agreement for the nine months ended September 30, 2019[56](index=56&type=chunk) - Incurred **$233,000** under a consulting agreement with Dr. Juan Vera, a board member who transitioned to an employee in September 2019[58](index=58&type=chunk)[59](index=59&type=chunk) - No expenses were incurred under a Clinical Supply Agreement with BCM during the nine months ended September 30, 2019[58](index=58&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.](index=17&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) This section provides management's perspective on the company's financial performance and condition, detailing its business overview, recent operational developments, a comparative analysis of financial results for the three and nine months ended September 30, 2019, and a discussion of liquidity, capital resources, and critical accounting policies [Company Overview](index=17&type=section&id=Company%20Overview) This section describes the company's business as a clinical-stage immuno-oncology firm, its core technology, and lead clinical programs - Clinical-stage immuno-oncology company specializing in T cell-based immunotherapies and peptide-based vaccines for hematological malignancies and solid tumors[64](index=64&type=chunk) - MultiTAA T cell technology uses non-engineered, tumor-specific T cells, designed for broad anti-tumor activity with potentially easier manufacturing and reduced toxicities compared to CAR-T therapies[64](index=64&type=chunk) - Lead indication is post-transplant AML, with promising Phase 1/2 clinical trial results (**11 of 13 adjuvant patients survived, 9 in complete remission**; active disease patients showed **4-21 months survival** vs. **4.5 months historical**)[65](index=65&type=chunk) - Developing peptide-based immunotherapeutic vaccines (TPIV100 for HER2/neu breast cancer, TPIV200 for FRa breast/ovarian cancers), with TPIV200 receiving Orphan Drug and Fast Track Designations for ovarian cancer[68](index=68&type=chunk) [Recent Developments](index=18&type=section&id=Recent%20Developments) This section highlights key recent operational events, including FDA clinical holds and the suspension of a Phase 2 trial - FDA placed a clinical hold on the planned Phase 2 trial for MultiTAA therapy in post-transplant AML, requesting additional information on third-party reagent specifications[71](index=71&type=chunk) - Company submitted a complete response to the FDA on October 28, 2019, and expects to initiate the Phase 2 trial in **2020**[73](index=73&type=chunk) - Phase 2 clinical trial of TPIV200 for platinum-sensitive advanced ovarian cancer was suspended in October 2019 due to not meeting the pre-specified probability of success criteria, despite no safety concerns[74](index=74&type=chunk) [Results of Operations](index=20&type=section&id=Results%20of%20Operations) This section provides a comparative analysis of the company's financial results for the three and nine months ended September 30, 2019 and 2018 [Comparison of the Three Months Ended September 30, 2019 and September 30, 2018](index=20&type=section&id=Comparison%20of%20the%20Three%20Months%20Ended%20September%2030,%202019%20and%20September%2030,%202018) This section compares the company's financial performance for the three-month periods, detailing changes in key expense categories and net loss **Results of Operations - Three Months Ended September 30:** | Metric | 2019 ($) | 2018 ($) | Change ($) | % Change | | :-------------------------- | :----------- | :----------- | :----------- | :------- | | Research and development | $3,119,000 | $1,877,000 | $1,242,000 | 66% | | General and administrative | $2,536,000 | $2,551,000 | $(15,000) | (1)% | | Total operating expenses | $5,655,000 | $4,428,000 | $1,227,000 | 28% | | Net loss | $(5,460,000) | $(4,388,000) | $(1,072,000) | 24% | | Interest income | $259,000 | $0 | $259,000 | - | - Increase in R&D costs driven by personnel-related expenses, including stock-based compensation and consulting, to build internal infrastructure for MultiTAA T cell product development[77](index=77&type=chunk) - Decrease in G&A expenses primarily due to a **$0.6 million** reduction in merger-related expenses from 2018, partially offset by increases in headcount-related expenses and legal/professional fees[81](index=81&type=chunk) - Interest income in 2019 was from net proceeds of October 2018 equity financing held in U.S. Treasury notes and government agency-backed securities[79](index=79&type=chunk) [Comparison of the Nine months Ended September 30, 2019 and September 30, 2018](index=22&type=section&id=Comparison%20of%20the%20Nine%20months%20Ended%20September%2030,%202019%20and%20September%2030,%202018) This section compares the company's financial performance for the nine-month periods, detailing changes in grant income, operating expenses, and net loss **Results of Operations - Nine Months Ended September 30:** | Metric | 2019 ($) | 2018 ($) | Change ($) | % Change | | :-------------------------- | :----------- | :----------- | :----------- | :------- | | Grant income | $0 | $206,000 | $(206,000) | (100)% | | Research and development | $9,104,000 | $5,304,000 | $3,800,000 | 72% | | General and administrative | $8,063,000 | $7,202,000 | $861,000 | 12% | | Total operating expenses | $17,167,000 | $12,506,000 | $4,661,000 | 37% | | Net loss | $(16,349,000) | $(12,398,000) | $(3,951,000) | 32% | | Interest income | $898,000 | $0 | $898,000 | - | - Grant income of **$206,000** in 2018 was from a Department of Defense grant to Mayo Foundation for TPIV200 clinical trial supplies[83](index=83&type=chunk) - Increase in R&D costs due to higher personnel-related expenses, including stock-based compensation and consulting, for internal infrastructure build-up and MultiTAA T cell product development[84](index=84&type=chunk) - Increase in G&A expenses due to higher headcount-related expenses, legal and professional fees, and office-related expenses, partially offset by a **$2.0 million** decrease in merger-related expenses from 2018[84](index=84&type=chunk) - Interest income in 2019 was from net proceeds of October 2018 equity financing held in U.S. Treasury notes and government agency-backed securities[86](index=86&type=chunk) [Liquidity and Capital Resources](index=23&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's cash position, working capital, cash flow activities, and future funding requirements **Cash and Working Capital:** | Metric | Sep 30, 2019 ($) | Dec 31, 2018 ($) | | :-------------------------- | :----------- | :----------- | | Cash and cash equivalents | $48,478,000 | $61,747,000 | | Working capital | $47,275,000 | $59,193,000 | - Net cash used in operating activities was **$13.7 million** for the nine months ended September 30, 2019, primarily due to a net loss of **$16.3 million** and increased prepaid expenses[90](index=90&type=chunk) - Net cash provided by financing activities was **$0.8 million** in 2019, significantly lower than **$7.5 million** in 2018, which included proceeds from a private placement[93](index=93&type=chunk) - The Company expects to incur substantial losses and will require significant additional funding for R&D, clinical trials, and commercialization, projecting current cash to fund operations through at least **Q4 2020**[94](index=94&type=chunk)[95](index=95&type=chunk) [Critical Accounting Policies](index=25&type=section&id=Critical%20Accounting%20Policies) This section affirms the consistency of critical accounting estimates, judgments, and assumptions with the prior annual report - Critical accounting estimates, judgments, and assumptions are consistent with those described in the Annual Report on Form 10-K for the year ended December 31, 2018[98](index=98&type=chunk) [Off-Balance Sheet Arrangements](index=25&type=section&id=Off-Balance%20Sheet%20Arrangements) This section confirms the absence of material off-balance sheet arrangements that could impact the company's financial condition - No material off-balance sheet arrangements exist that could affect financial condition, results of operations, or liquidity[99](index=99&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk.](index=25&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk.) As a smaller reporting company, Marker Therapeutics, Inc. is not required to provide quantitative and qualitative disclosures about market risk - The Company is a smaller reporting company and is not required to provide market risk disclosures[100](index=100&type=chunk) [Item 4. Controls and Procedures.](index=25&type=section&id=Item%204.%20Controls%20and%20Procedures.) This section addresses the effectiveness of the company's disclosure controls and procedures, highlighting a material weakness in internal control over financial reporting related to stock-based compensation, and outlines the remediation efforts undertaken [Evaluation of Disclosure Controls and Procedures](index=25&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) This section details the assessment of disclosure controls and procedures, noting a material weakness in internal control over financial reporting - Disclosure controls and procedures were **not effective** as of September 30, 2019, due to a material weakness in internal control over financial reporting[102](index=102&type=chunk) - Material weakness stemmed from ineffective controls related to the timing of recording non-cash stock-based compensation expenses for select stock option grants with non-standard vesting schedules[103](index=103&type=chunk) - Despite the material weakness, consolidated financial statements are deemed fairly stated in all material respects[102](index=102&type=chunk) [Changes in Internal Control Over Financial Reporting](index=26&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) This section describes the changes implemented to address the material weakness in internal control over financial reporting, including software adoption and consultant engagement - Transitioned manual calculation of stock-based compensation expenses to a third-party automated software system[111](index=111&type=chunk) - Implemented further internal control procedures, including hiring an equity administration consultant to review calculations[111](index=111&type=chunk) - No other material changes in internal controls over financial reporting during the three months ended September 30, 2019[105](index=105&type=chunk) PART II – OTHER INFORMATION [Item 1. Legal Proceedings.](index=26&type=section&id=Item%201.%20Legal%20Proceedings.) As of September 30, 2019, the Company was not a party to any legal proceedings that management believes are likely to have a material adverse effect on its business - No legal proceedings are likely to have a material adverse effect on the Company's business as of September 30, 2019[106](index=106&type=chunk) [Item 1A. Risk Factors.](index=26&type=section&id=Item%201A.%20Risk%20Factors.) This section outlines significant risks that could materially affect the company's business, financial condition, and results of operations, categorized into risks related to business and intellectual property, government regulation, and the company's securities [Risks Related to our Business and Intellectual Property](index=26&type=section&id=Risks%20Related%20to%20our%20Business%20and%20Intellectual%20Property) This section details risks associated with the company's development-stage nature, personnel, clinical trials, competition, manufacturing, and intellectual property - The Company is a development-stage company with a history of operating losses and an accumulated deficit of **$322.5 million** as of September 30, 2019, expecting continued losses and requiring substantial additional financing[109](index=109&type=chunk) - Success depends on attracting and retaining key personnel and maintaining its strategic relationship with Baylor College of Medicine (BCM), which involves potential conflicts of interest due to multiple roles of officers/directors[112](index=112&type=chunk)[114](index=114&type=chunk)[117](index=117&type=chunk)[118](index=118&type=chunk) - Product development is lengthy, expensive, and uncertain; early clinical results are not predictive of later-stage success, and clinical trials are subject to risks like recruitment delays, lack of efficacy, unacceptable side effects, and regulatory holds (e.g., FDA clinical hold on MultiTAA therapy for post-transplant AML)[120](index=120&type=chunk)[124](index=124&type=chunk)[125](index=125&type=chunk)[126](index=126&type=chunk)[129](index=129&type=chunk) - The biotechnology and immunotherapy industries are highly competitive, with rapid technological developments and numerous competitors, many with greater financial and R&D resources[121](index=121&type=chunk)[219](index=219&type=chunk) - Manufacturing scale-up for complex cell therapies is challenging, costly, and subject to risks like process development issues, contamination, equipment failure, and reliance on sole-source vendors (e.g., Wilson Wolf for G-Rex® cell culture device)[146](index=146&type=chunk)[147](index=147&type=chunk)[151](index=151&type=chunk)[154](index=154&type=chunk)[157](index=157&type=chunk)[158](index=158&type=chunk)[162](index=162&type=chunk) - Commercial success depends on obtaining, maintaining, and enforcing patents and proprietary rights, but this is uncertain due to risks of patent invalidation, infringement claims, and reliance on licensed technologies from BCM and Mayo Foundation[169](index=169&type=chunk)[170](index=170&type=chunk)[174](index=174&type=chunk)[180](index=180&type=chunk)[187](index=187&type=chunk)[193](index=193&type=chunk)[198](index=198&type=chunk) [Risks Related to Government Regulation](index=53&type=section&id=Risks%20Related%20to%20Government%20Regulation) This section addresses risks stemming from extensive FDA and international regulations, compliance requirements, healthcare reform, and orphan drug designation - Products are subject to extensive and costly FDA and international regulations, with no precedent for commercialization of its novel T cell therapies, leading to an uncertain and lengthy approval process[234](index=234&type=chunk)[235](index=235&type=chunk) - Non-compliance with regulatory requirements (pre- or post-marketing) can lead to fines, product removal, delays, and other adverse consequences, and approval in one country does not guarantee approval in others[236](index=236&type=chunk)[239](index=239&type=chunk)[240](index=240&type=chunk)[242](index=242&type=chunk) - Business activities are subject to federal and state healthcare fraud and abuse laws (e.g., Anti-Kickback Statute, False Claims Act, HIPAA, Sunshine Act), with potential for significant civil/criminal penalties and exclusion from federal programs for non-compliance[246](index=246&type=chunk)[247](index=247&type=chunk)[248](index=248&type=chunk)[255](index=255&type=chunk) - Healthcare reform measures (e.g., ACA, drug pricing scrutiny) could adversely affect product pricing, reimbursement, and commercialization, potentially limiting market access and profitability[250](index=250&type=chunk)[251](index=251&type=chunk)[253](index=253&type=chunk)[254](index=254&type=chunk) - Benefits of orphan drug designation (e.g., **7-year market exclusivity** for TPIV200 in ovarian cancer) are not guaranteed and can be lost, and new regulatory pathways for biosimilars could reduce market exclusivity[257](index=257&type=chunk)[259](index=259&type=chunk)[260](index=260&type=chunk)[261](index=261&type=chunk) [Risks Related to our Securities](index=61&type=section&id=Risks%20Related%20to%20our%20Securities) This section covers risks concerning internal control weaknesses, stock price volatility, potential dilution from future equity sales, warrant accounting, and dividend policy - Identified a material weakness in internal control over financial reporting related to stock-based compensation, which could materially affect financial condition and stock price if not remediated[265](index=265&type=chunk)[266](index=266&type=chunk) - The common stock trading price is highly volatile due to various factors, including operating results, clinical trial outcomes, new equity issuances, and market conditions, making it susceptible to class action litigation[267](index=267&type=chunk)[269](index=269&type=chunk) - Future sales of additional equity securities, including shares from **22.7 million** outstanding warrants and **4.7 million** options, could cause substantial dilution and adversely affect the market price[274](index=274&type=chunk) - Complex accounting for warrants with embedded derivative rights requires revaluation each period, leading to unpredictable charges to the statement of operations[275](index=275&type=chunk) - The Company does not anticipate paying cash dividends for the foreseeable future[276](index=276&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.](index=64&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds.) During the period, the Company issued 17,400 shares of common stock to Corporate Profile LLC pursuant to a vendor agreement, under exemptions from the Securities Act of 1933, including Section 4(2) - Issued **17,400 shares** of common stock to Corporate Profile LLC under a vendor agreement, pursuant to Securities Act of 1933 exemptions (e.g., Section 4(2))[277](index=277&type=chunk) [Item 3. Defaults Upon Senior Securities.](index=64&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities.) The Company reported no defaults upon senior securities - No defaults upon senior securities[278](index=278&type=chunk) [Item 4. Mine Safety Disclosure.](index=64&type=section&id=Item%204.%20Mine%20Safety%20Disclosure.) This item is not applicable to the Company - Not applicable[278](index=278&type=chunk) [Item 5. Other Information.](index=64&type=section&id=Item%205.%20Other%20Information.) This item is not applicable to the Company - Not applicable[278](index=278&type=chunk) [Item 6. Exhibits.](index=65&type=section&id=Item%206.%20Exhibits.) The report includes various exhibits, such as the Certificate of Incorporation, Bylaws, CEO and CFO certifications, and XBRL taxonomy documents - Exhibits include Certificate of Incorporation, Bylaws, CEO and CFO certifications (31.1, 31.2, 32.1, 32.2), and XBRL taxonomy documents[279](index=279&type=chunk) Signatures [Signatures](index=66&type=section&id=Signatures) The report was signed on November 12, 2019, by Peter L. Hoang, President, Chief Executive Officer and Principal Executive Officer, and Anthony Kim, Chief Financial Officer and Principal Financial and Accounting Officer, on behalf of Marker Therapeutics, Inc. - The report was signed by Peter L. Hoang (President, CEO, Principal Executive Officer) and Anthony Kim (CFO, Principal Financial and Accounting Officer) on **November 12, 2019**[282](index=282&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q Commission File Number: 001-37939 MARKER THERAPEUTICS, INC. (Name of registrant in its charter) | DELAWARE | 45-4497941 | | --- | --- | | (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | | 3200 Southwest Freeway, Suite 2240 | | | Houston, Texas | 77027 | | (Address of principal executive offices) | (Zip Code) | | (713) 400-6400 | | | (Issuer's telephone number) | | | Secur ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q Commission File Number: 001-37939 MARKER THERAPEUTICS, INC. (Name of registrant in its charter) DELAWARE 45-4497941 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 3200 Southwest Freeway, Suite 2240 Houston, Texas 77027 (Address of principal executive offices) (Zip Code) (713) 400-6400 (Issuer's telephone number) Indicate by check mark whether the registrant (1) filed all rep ...

Part I [Business](index=8&type=section&id=ITEM%201.%20BUSINESS) Marker Therapeutics develops non-engineered MultiTAA T cell therapies and peptide vaccines, focusing on clinical advancement for hematological malignancies and solid tumors [Overview and Strategy](index=8&type=section&id=Overview%20and%20Strategy) The company is a clinical-stage immuno-oncology firm developing MultiTAA T cell immunotherapies and peptide vaccines, aiming to expedite clinical development and commercialization - The company specializes in developing **non-engineered, Multi-Tumor Associated Antigen (MultiTAA) T cell therapies** and peptide-based vaccines for hematological malignancies and solid tumors[20](index=20&type=chunk) - Key strategic elements include expediting clinical development for lead candidates, advancing into Phase II trials for post-transplant AML in the second half of 2019, and continuing collaboration with BCM for research and manufacturing[24](index=24&type=chunk)[25](index=25&type=chunk)[27](index=27&type=chunk) - The company plans to invest in its platform to expand into new indications, explore dosing regimens, and leverage relationships with its founding institutions and scientific advisors[30](index=30&type=chunk)[31](index=31&type=chunk) - A strategic review is underway to evaluate the peptide vaccine programs to determine future resource allocation, which may lead to de-emphasizing or terminating certain programs[32](index=32&type=chunk) [Product Pipelines and Clinical Data](index=9&type=section&id=Product%20Pipelines%20and%20Clinical%20Data) The company's pipeline features MultiTAA T cell products showing clinical benefit in Phase I trials and peptide vaccines advancing through Phase II studies - The MultiTAA T cell platform offers advantages over CAR-T/TCR therapies, including being **non-gene-modified**, having a **lower rate of adverse events (no CRS observed)**, and appearing to drive endogenous immune responses through "epitope spreading"[36](index=36&type=chunk)[37](index=37&type=chunk)[39](index=39&type=chunk) Phase I Clinical Trial Results (BCM) | Indication | Group | Patients Treated/Evaluable | Key Outcomes | Response Duration | | :--- | :--- | :--- | :--- | :--- | | Lymphoma | Active Disease | 15 | 6 Complete Responses (CR), 3 Stable Disease | 5 months to >5 years (ongoing CRs) | | Lymphoma | Adjuvant | 17 | 15 in continuing CR | 3 to >48 months | | AML/MDS | Active Disease | 6 | 1 CR, 1 Partial Response, 2 Disease Stabilization | 7 to 13 months | | AML/MDS | Adjuvant | 11 (evaluable) | 9 in continuing CR | 6 weeks to 2.5 years | | Multiple Myeloma | Active Disease | 8 (evaluable) | 1 CR, 3 Partial Responses | 6 to 29 months | | Multiple Myeloma | Adjuvant | 8 | 7 in continuing CR | 6 to 22 months | Peptide Vaccine Development Status | Product/Candidate | Description | Application | Status | | :--- | :--- | :--- | :--- | | TPIV100/110 | Peptide Vaccine | Treatment of HER2/neu+ Breast Cancer | Phase I completed; Phase I(b) & I/II to start in 2019 | | TPIV200 | Peptide Vaccine | Treatment of Folate Receptor Alpha+ Breast and Ovarian Cancer | Phase I completed; Multiple Phase II trials ongoing | | PolyStart™ | Nucleic acid expression tech | Broad Application to "Prime"-and-"Boost" | Preclinical | [Key Agreements and Intellectual Property](index=16&type=section&id=Key%20Agreements%20and%20Intellectual%20Property) The company's operations heavily rely on licensed intellectual property, primarily from BCM for MultiTAA technology and Mayo Foundation for peptide vaccines - Entered an exclusive license agreement with BCM for MultiTAA technology, involving an initial equity issuance, potential milestone payments up to **$64.85 million**, and tiered royalties ranging from **0.65% to 5.0%** on net sales[66](index=66&type=chunk)[67](index=67&type=chunk) - A Sponsored Research Agreement (SRA) with BCM was established to support ongoing research, with the company committed to paying BCM up to **$256,272** for the first two years[73](index=73&type=chunk) - Exclusively licensed TPIV100/110 (HER2/neu) and TPIV200 (Folate Receptor Alpha) vaccine technologies from the Mayo Foundation, including upfront payments of **$300,000** and **$350,000** respectively, plus future milestones and royalties[85](index=85&type=chunk)[91](index=91&type=chunk)[95](index=95&type=chunk) - The company owns issued U.S. patents for its PolyStart™ technology, providing protection until approximately **March 2035**[102](index=102&type=chunk) [Manufacturing, Competition, and Regulation](index=22&type=section&id=Manufacturing%2C%20Competition%2C%20and%20Regulation) The company relies on third-party manufacturing, faces intense competition in immuno-oncology, and operates under extensive government regulation throughout the product lifecycle - The company relies on third-party contractors for all manufacturing, with **BCM's GMP facility** being the current sole manufacturer for MultiTAA-specific T cells for clinical trials[109](index=109&type=chunk)[112](index=112&type=chunk) - Faces intense competition from major pharmaceutical and biotechnology companies with greater resources, including Juno Therapeutics/Celgene/Bristol Myers Squibb, Kite Pharma/Gilead, and Novartis in the cell therapy space[118](index=118&type=chunk) - Product development is subject to a lengthy, expensive, and uncertain regulatory review process by the FDA and other global authorities, including preclinical testing and three phases of clinical trials before a Biologics License Application (BLA) can be submitted[124](index=124&type=chunk)[125](index=125&type=chunk) - The company may seek Fast Track Designation and Accelerated Approval for its product candidates to expedite development and review for serious conditions with unmet medical needs[132](index=132&type=chunk)[135](index=135&type=chunk) - As of December 31, 2018, the company had **11 full-time employees**[178](index=178&type=chunk) [Risk Factors](index=35&type=section&id=ITEM%201A.%20RISK%20FACTORS) The company faces significant risks including operating losses, financing needs, reliance on key personnel and licensed IP, clinical trial uncertainties, and complex regulatory processes [Risks Related to Business and Intellectual Property](index=35&type=section&id=Risks%20Related%20to%20Business%20and%20Intellectual%20Property) The company faces risks from accumulated deficits, reliance on key personnel and BCM, uncertain clinical development, complex third-party manufacturing, and intellectual property vulnerabilities - The company is a development-stage company with a history of operating losses and an accumulated deficit of approximately **$306.1 million** as of December 31, 2018[186](index=186&type=chunk) - Success is highly dependent on key personnel and the strategic relationship with Baylor College of Medicine (BCM), requiring additional agreements for future clinical trials and manufacturing[187](index=187&type=chunk)[189](index=189&type=chunk)[191](index=191&type=chunk) - Manufacturing is complex and reliant on third parties, with initial MultiTAA T cell manufacturing solely dependent on **BCM's cGMP facility** and future needs for pivotal trials requiring new capacity[224](index=224&type=chunk) - The manufacturing process relies on specialized equipment from limited vendors, including the **G-Rex® cell culture device from Wilson Wolf**, which could create supply risks and conflicts of interest[232](index=232&type=chunk)[241](index=241&type=chunk) - The company's commercial success depends on protecting its licensed and owned intellectual property, primarily from BCM and the Mayo Foundation, which could be lost if obligations are not met or patents are challenged[256](index=256&type=chunk)[259](index=259&type=chunk)[270](index=270&type=chunk) [Risks Related to Government Regulation](index=61&type=section&id=Risks%20Related%20to%20Government%20Regulation) The company faces extensive, costly, and uncertain government regulation, with no precedent for MultiTAA T cell therapy approval, and risks from evolving healthcare laws affecting pricing and market access - The company's products are subject to comprehensive and expensive regulation by the FDA and other authorities, a process that can take many years with an uncertain outcome[314](index=314&type=chunk) - There is no precedent for the successful commercialization of MultiTAA T cell therapy, which may create further challenges and delays in the regulatory approval pathway[315](index=315&type=chunk) - Even if regulatory approval is obtained, the company will be subject to ongoing obligations, including **cGMP compliance**, adverse event reporting, and potential post-marketing trials, with non-compliance risking fines or product withdrawal[317](index=317&type=chunk)[323](index=323&type=chunk) - Changes in healthcare laws, including the **ACA** and other pricing reforms, could negatively impact the prices and reimbursement for the company's products, affecting commercial viability[325](index=325&type=chunk)[326](index=326&type=chunk) - The company has received **Orphan Drug Designation** for TPIV200 in ovarian cancer, but there is no guarantee it will maintain this status or receive associated benefits like seven-year market exclusivity[331](index=331&type=chunk) [Risks Related to our Securities](index=67&type=section&id=Risks%20Related%20to%20our%20Securities) Investment in the company's common stock carries significant risk due to price volatility, potential dilution from future equity sales and warrant/option exercises, and no anticipated cash dividends - The trading price of the company's common stock is subject to substantial fluctuation and volatility[339](index=339&type=chunk) - Future sales of equity securities are expected to fund operations, which will result in **dilution to existing stockholders**[346](index=346&type=chunk) - As of December 31, 2018, there were outstanding warrants to purchase approximately **23.0 million shares** and options to purchase **4.1 million shares**, which, if exercised, could cause significant dilution and potentially depress the stock price[347](index=347&type=chunk) - The company does not anticipate paying any cash dividends in the foreseeable future[349](index=349&type=chunk) [Unresolved Staff Comments](index=70&type=section&id=ITEM%201B.%20UNRESOLVED%20STAFF%20COMMENTS) The company reports no unresolved staff comments - None[350](index=350&type=chunk) [Properties](index=70&type=section&id=ITEM%202.%20PROPERTIES) The company leases all its office and laboratory facilities, including its Houston corporate headquarters and R&D space at Texas Medical Center - The company does not own any real estate and leases all its office and laboratory facilities[351](index=351&type=chunk) - In February 2019, the corporate headquarters was relocated from Jacksonville, Florida to a leased office in Houston, Texas[352](index=352&type=chunk) - In January 2019, the company leased laboratory space at JLABS, located at the Texas Medical Center in Houston, for research and development activities[353](index=353&type=chunk) [Legal Proceedings](index=70&type=section&id=ITEM%203.%20LEGAL%20PROCEEDINGS) As of December 31, 2018, the company was not a party to any material legal proceedings - As of December 31, 2018, the company was not a party to any material legal proceedings[354](index=354&type=chunk) [Mine Safety Disclosure](index=70&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURE) This item is not applicable to the company - Not Applicable[355](index=355&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=71&type=section&id=ITEM%205.%20MARKET%20FOR%20REGISTRANT'S%20COMMON%20EQUITY%2C%20RELATED%20STOCKHOLDER%20MATTERS%20AND%20ISSUER%20PURCHASES%20OF%20EQUITY%20SECURITIES) The company's common stock trades on Nasdaq under 'MRKR', has 492 stockholders, does not pay dividends, and issued 65,000 unregistered shares to vendors in Q4 2018 - The company's common stock is listed on the **Nasdaq Capital Market** under the symbol "MRKR"[357](index=357&type=chunk) - No dividends have been declared or paid, and the company does not intend to pay cash dividends in the foreseeable future[358](index=358&type=chunk) - In Q4 2018, **65,000 shares** of common stock were issued to vendors for services, exempt from registration under the Securities Act of 1933[359](index=359&type=chunk) [Selected Financial Data](index=71&type=section&id=ITEM%206.%20SELECTED%20FINANCIAL%20DATA) As a smaller reporting company, Marker Therapeutics is not required to provide the information for this item - The company is a smaller reporting company and is not required to provide the information under this item[360](index=360&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=72&type=section&id=ITEM%207.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) This section details the company's financial condition and operations, highlighting the 2018 merger and **$70 million** financing, resulting in a **$148.0 million** net loss primarily due to a **$116.0 million** R&D charge, and ending 2018 with **$61.7 million** cash [Recent Developments and Products](index=72&type=section&id=Recent%20Developments%20and%20Products) Recent developments include the October 2018 merger and **$70 million** financing, expanding the pipeline with MultiTAA T cell products and peptide vaccines advancing in clinical trials - Completed a merger with Marker Cell Therapy, Inc. on **October 17, 2018**, and concurrently raised **$70 million** in a private placement[368](index=368&type=chunk)[371](index=371&type=chunk) - Following the merger and financing, pro forma ownership on a fully diluted basis was approximately **27.5%** for former Marker Cell stockholders, **27.5%** for pre-merger company stockholders, and **45%** for private placement stockholders[372](index=372&type=chunk) - The company is advancing two MultiTAA T cell products: **MAPP** (autologous for lymphoma, MM) and **LAPP** (allogeneic for AML, MDS), both in Phase 1 trials[375](index=375&type=chunk) - The **TPIV200** (Folate Receptor Alpha) vaccine program includes a company-sponsored Phase II trial in ovarian cancer and a DoD-funded Phase II trial in triple-negative breast cancer[387](index=387&type=chunk)[392](index=392&type=chunk) [Results of Operations](index=80&type=section&id=Results%20of%20Operations) The company reported a **$148.0 million** net loss in 2018, up from **$11.0 million** in 2017, primarily due to a **$116.0 million** non-cash R&D charge from the merger and increased operating expenses Results of Operations (in thousands, except per share data) | | 2018 | 2017 | Change (%) | | :--- | :--- | :--- | :--- | | Grant Income | $206 | $183 | 13% | | R&D - IP Acquired | $116,045 | $0 | N/A | | Research and Development | $7,953 | $5,251 | 51% | | General and Administrative | $24,380 | $6,412 | 280% | | **Loss from Operations** | **($148,172)** | **($11,480)** | **1191%** | | **Net Loss** | **($147,958)** | **($10,982)** | **1247%** | | Net Loss Per Share | ($7.75) | ($1.16) | 568% | - The **$116.0 million** expense for R&D - Intellectual Property Acquired represents the fair market value of assets acquired in the Merger, immediately expensed as the IP had not yet received regulatory approval[410](index=410&type=chunk) - The **$18.0 million** increase in G&A expenses was primarily due to **$12.5 million** in stock-based compensation, **$4.0 million** in merger-related legal and professional fees, and increases in headcount and investor relations costs[413](index=413&type=chunk)[417](index=417&type=chunk) [Liquidity and Capital Resources](index=82&type=section&id=Liquidity%20and%20Capital%20Resources) The company's cash and equivalents increased to **$61.7 million** by December 31, 2018, primarily from a **$70 million** private placement, with current reserves expected to fund operations through Q2 2020 Cash and Working Capital (in thousands) | | Dec 31, 2018 | Dec 31, 2017 | | :--- | :--- | :--- | | Cash and cash equivalents | $61,747 | $5,129 | | Working Capital | $59,193 | $3,658 | Summary of Cash Flows (in thousands) | | 2018 | 2017 | | :--- | :--- | :--- | | Net Cash used in Operating Activities | ($14,480) | ($8,439) | | Net Cash used in Investing Activities | ($148) | $0 | | Net Cash provided by Financing Activities | $71,245 | $5,717 | - In **October 2018**, the company raised **$70.0 million** in gross proceeds from a private placement of common stock and warrants[424](index=424&type=chunk) - The company expects its cash as of **December 31, 2018**, will be sufficient to fund operations and capital requirements through at least the **second quarter of 2020**[431](index=431&type=chunk) - As of **December 31, 2018**, the company has federal **Net Operating Loss (NOL)** carryforwards of approximately **$57.0 million** to offset future taxable income[433](index=433&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=85&type=section&id=ITEM%207A.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) As a smaller reporting company, Marker Therapeutics is not required to provide the information for this item - The company is a smaller reporting company and is not required to provide the information under this item[436](index=436&type=chunk) [Financial Statements](index=85&type=section&id=ITEM%208.%20FINANCIAL%20STATEMENTS) This section incorporates by reference the company's audited consolidated financial statements and the independent registered public accounting firm's report - The Financial Statements are incorporated by reference to pages **F-1 to F-27** of the report[437](index=437&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=85&type=section&id=ITEM%209.%20CHANGES%20IN%20AND%20DISAGREEMENTS%20WITH%20ACCOUNTANTS%20ON%20ACCOUNTING%20AND%20FINANCIAL%20DISCLOSURE) The company reports that it has had no changes in, or disagreements with, its principal independent accountants - The company has had no changes in, or disagreements with its principal independent accountants[438](index=438&type=chunk) [Controls and Procedures](index=85&type=section&id=ITEM%209A.%20CONTROLS%20AND%20PROCEDURES) Management concluded the company's disclosure controls and internal control over financial reporting were effective as of December 31, 2018, with Marcum LLP issuing an unqualified attestation report - Management concluded that the company's disclosure controls and procedures were effective as of **December 31, 2018**[439](index=439&type=chunk) - Management concluded that the company's internal control over financial reporting was effective as of **December 31, 2018**, based on the **COSO framework**[440](index=440&type=chunk) - The independent registered public accounting firm, **Marcum LLP**, issued an unqualified opinion on the effectiveness of the company's internal control over financial reporting[441](index=441&type=chunk)[447](index=447&type=chunk) [Other Information](index=87&type=section&id=ITEM%209B.%20OTHER%20INFORMATION) This section details executive compensatory arrangements approved March 14, 2019, including a **$181,250** cash bonus for the CEO, a **$380,000** base salary increase, and a 2019 bonus program for top executives - On **March 14, 2019**, the Board approved a discretionary cash bonus of **$181,250** for President and CEO Peter Hoang for 2018 performance[455](index=455&type=chunk) - Mr. Hoang's employment agreement was amended, increasing his annual base salary to **$380,000** effective **January 1, 2019**[457](index=457&type=chunk)[459](index=459&type=chunk) - A prior stock option grant to Mr. Hoang for **1,359,855 shares**, which had vested immediately, was amended to add a four-year monthly vesting schedule through **September 2022**[456](index=456&type=chunk) - A 2019 bonus program was approved for top executives, with target bonuses of up to **50%** of base salary for the CEO, **40%** for the CFO, and **35%** for the CAO, based on specific corporate objectives[458](index=458&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=89&type=section&id=ITEM%2010.%20DIRECTORS%2C%20EXECUTIVE%20OFFICERS%20AND%20CORPORATE%20GOVERNANCE) Information on directors, executive officers, and corporate governance will be incorporated by reference from the company's definitive proxy statement, and a Code of Ethics is available online - Information required by this item will be incorporated by reference from the company's upcoming Proxy Statement[464](index=464&type=chunk) - The company has adopted a Code of Ethics and Business Conduct, available on its website[465](index=465&type=chunk) [Executive Compensation](index=89&type=section&id=ITEM%2011.%20EXECUTIVE%20COMPENSATION) The information required for this item, including the Compensation Discussion and Analysis, will be incorporated by reference from the company's definitive proxy statement - Information required by this item will be incorporated by reference from the company's upcoming Proxy Statement[466](index=466&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=89&type=section&id=ITEM%2012.%20SECURITY%20OWNERSHIP%20OF%20CERTAIN%20BENEFICIAL%20OWNERS%20AND%20MANAGEMENT%20AND%20RELATED%20STOCKHOLDER%20MATTERS) The information required for this item, including details on security ownership and equity compensation plans, will be incorporated by reference from the company's definitive proxy statement - Information required by this item will be incorporated by reference from the company's upcoming Proxy Statement[467](index=467&type=chunk) [Certain Relationships and Related Transactions and Director Independence](index=89&type=section&id=ITEM%2013.%20CERTAIN%20RELATIONSHIPS%20AND%20RELATED%20TRANSACTIONS%20AND%20DIRECTOR%20INDEPENDENCE) The information required for this item, including details on related party transactions and director independence, will be incorporated by reference from the company's definitive proxy statement - Information required by this item will be incorporated by reference from the company's upcoming Proxy Statement[469](index=469&type=chunk) [Principal Accounting Fees and Services](index=89&type=section&id=ITEM%2014.%20PRINCIPAL%20ACCOUNTING%20FEES%20AND%20SERVICES) The information required for this item, including details on independent auditors' fees and services, will be incorporated by reference from the company's definitive proxy statement - Information required by this item will be incorporated by reference from the company's upcoming Proxy Statement[470](index=470&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=90&type=section&id=ITEM%2015.%20EXHIBITS%20AND%20FINANCIAL%20STATEMENT%20SCHEDULES) This section lists all documents filed as part of the Form 10-K, including financial statements, auditor reports, and an extensive exhibit index of agreements and corporate governance documents - This section lists the financial statements, financial statement schedules (if applicable), and all exhibits filed with the report[473](index=473&type=chunk) - An exhibit index is provided, listing material contracts, corporate governance documents, and other required filings[474](index=474&type=chunk)[616](index=616&type=chunk) [Form 10-K Summary](index=90&type=section&id=ITEM%2016.%20FORM%2010-K%20SUMMARY) The company reports no summary for this item - None[477](index=477&type=chunk) Financial Statements [Consolidated Balance Sheets](index=94&type=section&id=Consolidated%20Balance%20Sheets) As of December 31, 2018, total assets were **$62.1 million** and stockholders' equity was **$59.3 million**, a significant increase from 2017 primarily due to 2018 financing and merger activities Consolidated Balance Sheet Data (in thousands) | | Dec 31, 2018 | Dec 31, 2017 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $61,747 | $5,129 | | Total current assets | $61,997 | $5,180 | | **Total Assets** | **$62,144** | **$5,180** | | **Liabilities & Equity** | | | | Total current liabilities | $2,804 | $1,522 | | **Total Liabilities** | **$2,804** | **$1,522** | | **Total Stockholders' Equity** | **$59,341** | **$3,658** | | **Total Liabilities and Stockholders' Equity** | **$62,144** | **$5,180** | [Consolidated Statements of Operations](index=95&type=section&id=Consolidated%20Statements%20of%20Operations) For 2018, the company reported a net loss of **$148.0 million** (or **$7.75** per share), significantly higher than 2017, mainly due to a **$116.0 million** non-cash R&D charge from the merger Consolidated Statement of Operations Data (in thousands, except per share data) | | Year Ended Dec 31, 2018 | Year Ended Dec 31, 2017 | | :--- | :--- | :--- | | Grant income | $206 | $183 | | R&D - intellectual property acquired | $116,045 | $0 | | Research and development | $7,953 | $5,251 | | General and administrative | $24,380 | $6,412 | | **Loss from operations** | **($148,172)** | **($11,480)** | | **Net loss** | **($147,958)** | **($10,982)** | | **Net loss per share, Basic and Diluted** | **($7.75)** | **($1.16)** | [Consolidated Statements of Cash Flows](index=97&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating activities was **$14.5 million** in 2018, while financing activities provided **$71.2 million**, leading to a year-end cash balance of **$61.7 million** Consolidated Cash Flow Data (in thousands) | | Year Ended Dec 31, 2018 | Year Ended Dec 31, 2017 | | :--- | :--- | :--- | | Net cash used in operating activities | ($14,480) | ($8,439) | | Net cash used in investing activities | ($148) | $0 | | Net cash provided by financing activities | $71,245 | $5,717 | | **Net increase (decrease) in cash** | **$56,617** | **($2,722)** | | **Cash at end of year** | **$61,747** | **$5,129** |