Financial Data and Key Metrics Changes - The company reported a net loss attributable to common shareholders of approximately $6.7 million or $0.03 per share for Q4 2021, compared to a net loss of $6.6 million or $0.03 per share for the same period in 2020 [26] - For the full year 2021, the net loss attributable to common shareholders was approximately $23.7 million or $0.11 per share, compared to a net loss of $23.2 million or $0.12 per share for 2020 [27] - Cash, cash equivalents, and marketable securities at December 31, 2021, were approximately $49.6 million, down from $58.7 million at December 31, 2020, with expectations that cash on hand is sufficient to fund operations through 2023 [30] Business Line Data and Key Metrics Changes - Research and development expenses were approximately $4.2 million in Q4 2021, up from $3.5 million in Q4 2020, while full-year R&D expenses were approximately $14.6 million compared to $14.3 million in 2020 [28] - General and administrative expenses were approximately $2.5 million in Q4 2021, down from $3 million in Q4 2020, with full-year SG&A expenses at approximately $10.2 million compared to $10 million in 2020 [29] Market Data and Key Metrics Changes - The company is focusing on expanding its LNC platform technology for the delivery of nucleic acids, which is expected to address significant market needs in the therapeutic area, particularly in invasive fungal infections projected to grow to an $8 billion market [15] Company Strategy and Development Direction - The company aims to aggressively move its LNC platform technology into the delivery of nucleic acids, including mRNA, DNA, and antisense oligonucleotides, positioning itself as a next-generation drug delivery platform [8] - Plans for MAT2203 include expanding the EnACT trial to include an additional cohort for step-down therapy, with an NDA submission anticipated in late 2023 or early 2024 [12] - The company is also preparing to submit a formal request for scientific advice to the European Medicines Agency to support global commercialization efforts for MAT2203 [13] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the ongoing clinical trials and the potential for MAT2203 to become a leading therapy for invasive fungal infections, with significant interest from third parties for licensing and partnerships [37] - The company is focused on expanding its internal capabilities and pipeline in the nucleic acid space, with plans to initiate preclinical studies for MAT2203 in other invasive fungal infections [14][20] Other Important Information - The company has added over 15 new scientists and professionals to its team, enhancing its capabilities in nucleic acid delivery [20] - The company is in advanced discussions with leading biopharmaceutical companies to validate its LNC platform and explore additional applications [24] Q&A Session Summary Question: Interest in MAT2203 for licensing or partnering - Management indicated that MAT2203 is a foundational drug demonstrating key attributes of the platform, attracting significant interest from third parties for potential partnerships [37][38] Question: Upcoming data for MAT2501 and collaborations with Genentech and Gilead - Data for MAT2501 is expected in mid-2022, with ongoing studies to validate its safety and efficacy [42] - The third compound with Genentech is anticipated to be in a unique area, while the second in vivo study with Gilead is set to commence shortly, focusing on oral delivery of remdesivir [45] Question: Design and impact of Cohort 5 on timelines - Management clarified that Cohort 5 is designed based on FDA feedback and is expected to maintain the timeline for NDA submission, with a focus on specific endpoints [50][51] Question: R&D and SG&A spending outlook for 2022 - The company plans to maintain disciplined spending in R&D and SG&A, with expectations that costs for Cohort 5 will be covered by NIH [66]

[Cautionary Note Regarding Forward-Looking Statements](index=4&type=section&id=CAUTIONARY%20NOTE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) This section cautions that the Form 10-K contains forward-looking statements subject to risks and uncertainties that may cause actual results to differ materially [Forward-Looking Statements Overview](index=4&type=section&id=Forward-Looking%20Statements%20Overview) This overview emphasizes that forward-looking statements in the 10-K are subject to risks and uncertainties, cautioning investors against undue reliance - The report contains forward-looking statements subject to risks and uncertainties, which may cause actual results to differ materially from expectations[13](index=13&type=chunk)[15](index=15&type=chunk) - Key factors that could cause actual results to differ include the ability to raise capital, timing of clinical trials and approvals, history of operating losses, dependence on early-stage product candidates and LNC platform, manufacturing capabilities, reliance on third parties, intellectual property protection, key personnel retention, and the impact of COVID-19[14](index=14&type=chunk) [Item 1. Business](index=5&type=section&id=Item%201.%20Business) Matinas BioPharma is a clinical-stage biopharmaceutical company focused on intracellular drug delivery using its proprietary Lipid Nanocrystal (LNC) platform, with a pipeline of anti-infective small molecules and plans to expand into nucleic acid delivery through collaborations [Company Overview](index=5&type=section&id=Company%20Overview) Matinas BioPharma is a clinical-stage biopharmaceutical company leveraging its LNC platform for anti-infective small molecules and expanding into nucleic acid delivery - Matinas BioPharma is a clinical-stage biopharmaceutical company utilizing its LNC delivery platform for nucleic acids and small molecules[17](index=17&type=chunk) - The LNC platform, exclusively licensed from Rutgers University, enables safe, efficient, and targeted intracellular delivery for various molecules (nucleic acids, proteins, small molecules) and has a neutral immunogenic profile, allowing repeated administration[18](index=18&type=chunk) - Current clinical pipeline includes MAT2203 (oral amphotericin B) and MAT2501 (oral amikacin), with plans to expand into nucleic acid delivery through internal efforts and external partnerships[17](index=17&type=chunk)[29](index=29&type=chunk) [Strategy](index=7&type=section&id=Strategy) The company's strategy focuses on leveraging its LNC platform to redefine intracellular delivery, advancing clinical assets, and expanding into nucleic acids through collaborations - Strategy focuses on redefining intracellular delivery using the LNC platform for small molecules and nucleic acids[31](index=31&type=chunk) - Feasibility collaboration with Genentech for oral formulations of proprietary compounds, extended through 2022[32](index=32&type=chunk) - Collaboration with NIAID to evaluate oral remdesivir formulations using LNC platform, with successful in vitro and in vivo studies[33](index=33&type=chunk) - Advancing MAT2203 towards NDA filing for cryptococcal meningitis via the EnACT study, demonstrating LNC's ability to cross the blood-brain barrier[32](index=32&type=chunk) - Progressing MAT2501 development for NTM infections with CFF financial support, including preclinical toxicology and a Phase 1 SAD study[33](index=33&type=chunk) [Our Lipid Nanocrystal (LNC) Platform Delivery Technology](index=8&type=section&id=Our%20Lipid%20Nanocrystal%20(LNC)%20Platform%20Delivery%20Technology) The LNC platform offers a stable, non-immunogenic solution for oral and targeted intracellular delivery of various molecules, differentiating itself from traditional technologies by protecting payloads and enabling delivery to activated cells - LNCs are composed of phospholipids (like phosphatidylserine) and calcium, forming a **stable, multilayered structure** that protects encapsulated molecules from degradation[36](index=36&type=chunk)[39](index=39&type=chunk) - LNCs offer flexible administration routes (oral, IV, intranasal) and can deliver a broad range of therapeutic agents, including small molecules, nucleic acids (ASOs, mRNA, siRNA, DNA plasmids up to **11kb**), vaccines, peptides, and proteins[40](index=40&type=chunk)[54](index=54&type=chunk) - LNCs enter cells via endocytosis and membrane fusion, utilizing phosphatidylserine (PS) on activated cell surfaces or PS receptors, enabling **targeted delivery** to phagocytes, infection sites, inflammation, and tumors without significant immune responses[18](index=18&type=chunk)[41](index=41&type=chunk)[42](index=42&type=chunk)[46](index=46&type=chunk)[51](index=51&type=chunk) Comparison of Drug Delivery Technologies | | Liposome | LNP | AAV Viral Vector | LNC | |---|---|---|---|---| | **Structure** | Aqueous interior surrounded by bilayer | Ionizable lipid complexing with mRNA; Non-aqueous interior | 26 nM Capsid housing <5 kb genome | Highly stable; Non-aqueous bilayer; Much longer shelf life | | **Formulation Goal** | Reduce Toxicity; Improve Bioavailability; Prolong half-life | Intracellular delivery (ASOs, siRNAs, mRNA); Mostly target liver | Control particle size; Minimize empty vectors | Encochleate water-soluble drugs; Further expand gene delivery; Significantly extend stability, shelf-life; Large and small molecules | | **Potential Applications** | Hydrophilic and Lipophilic drugs | mRNA, ASOs, siRNAs | Gene therapy | ASOs, mRNAs, siRNAs; Large nucleotides (up to 11 kB) | | **Issues** | Leakage of encapsulated drug; Fusion; Limited shelf life | Cationic lipid toxicity not suitable for chronic use; Anti-PEG allergic response; Very limited shelf stability; Cold-chain requirements | Very high production cost; Viral genome integration; Package size < 4k BP; Re-treatment problematic; Immunogenicity | Limited clinical experience to date | [Our LNC Clinical Stage Assets](index=12&type=section&id=Our%20LNC%20Clinical%20Stage%20Assets) Matinas BioPharma is developing two clinical-stage LNC-based product candidates: MAT2203 (oral amphotericin B) and MAT2501 (oral amikacin), with MAT2203 advancing towards NDA submission and MAT2501 in Phase 1 - MAT2203, an oral amphotericin B formulation, is the lead product candidate, with a pathway to NDA submission for cryptococcal meningitis following confirmatory data from the EnACT Trial's Cohort 5[55](index=55&type=chunk)[56](index=56&type=chunk) - MAT2501, an oral amikacin formulation, is the second clinical-stage candidate, currently in a Phase 1 SAD pharmacokinetic study for non-tuberculous mycobacterial (NTM) infections, with **significant financial support from the Cystic Fibrosis Foundation (CFF)**[57](index=57&type=chunk) - MAT2203 has received Qualified Infectious Disease Product (QIDP) and Orphan Drug designations, potentially granting up to **12 years of market exclusivity**[56](index=56&type=chunk) [MAT2203](index=13&type=section&id=MAT2203) MAT2203 is an oral LNC formulation of amphotericin B, designed to reduce toxicity and enable oral delivery for invasive fungal infections, with clinical data showing safety and efficacy in cryptococcal meningitis - MAT2203 is an oral LNC formulation of amphotericin B, designed to overcome the severe nephrotoxicity and IV-only administration limitations of the traditional drug, offering targeted delivery to infected cells[59](index=59&type=chunk)[61](index=61&type=chunk) - MAT2203 has received QIDP and Fast Track designations for various invasive fungal infections, including cryptococcosis, and Orphan Drug designation for cryptococcosis, potentially leading to **12 years of market exclusivity**[60](index=60&type=chunk) - Clinical data from EnACT Cohort 2 demonstrated MAT2203's safety and efficacy in CM patients, with **98% survival at Day 30** (vs. 88% for IV amphotericin B) and **97% CSF culture conversion** (vs. 76% for IV amphotericin B), without MAT2203-associated renal toxicity[71](index=71&type=chunk)[73](index=73&type=chunk) - The FDA has requested additional confirmatory evidence for step-down therapy in CM, leading to an expansion of the EnACT trial to Cohort 5. A CMC meeting is scheduled for Q1 2022 to support a potential NDA submission in late 2023[74](index=74&type=chunk) [MAT2203 - Product Profile](index=14&type=section&id=MAT2203%20-%20Product%20Profile) MAT2203's product profile features oral amphotericin B, a broad-spectrum fungicidal agent, with its LNC formulation preventing drug leakage, reducing off-organ toxicities, and expanding the therapeutic window - MAT2203 is an oral LNC formulation of amphotericin B, a broad-spectrum fungicidal agent with minimal reported clinical resistance[61](index=61&type=chunk) - The LNC formulation prevents drug leakage, reducing off-organ toxicities (e.g., renal toxicity) and enabling a **10x higher tolerable oral dose** in animal models compared to IV amphotericin B[64](index=64&type=chunk) - Preclinical studies in CM mouse models demonstrated MAT2203's ability to cross the blood-brain barrier, effectively treat infection, and eliminate IV amphotericin B's associated toxicity[63](index=63&type=chunk) [Clinical Data](index=15&type=section&id=Clinical%20Data) MAT2203 has been safely administered to 247 subjects across five trials, demonstrating safety and efficacy in HIV-positive CM patients in the EnACT trial, with high survival and CSF sterilization rates - MAT2203 has been safely administered to **247 subjects in 5 clinical trials**, with single doses up to **2.0g** and repeated doses up to **2.0g/day** for up to **60 months**, showing no MAT2203-associated renal toxicity or electrolyte abnormalities[67](index=67&type=chunk)[73](index=73&type=chunk) - In EnACT Part 2, Cohort 2, MAT2203 met its primary efficacy endpoint (Early Fungicidal Activity, EFA) with a mean EFA of **0.422 log10 CFU/mL/day**. CSF sterilization rates exceeded **90%**, and Day 30 survival was **98%** (vs. 88% for IV amphotericin B)[71](index=71&type=chunk) - The EnACT trial is currently enrolling Cohort 4 (all-oral regimen) with results expected in Q3 2022, and a new Cohort 5 is planned to replicate Cohort 2's step-down design with more patients[24](index=24&type=chunk)[25](index=25&type=chunk) [Health Authority Interactions](index=16&type=section&id=Health%20Authority%20Interactions) The FDA expressed no concerns with MAT2203 data but requested confirmatory evidence for step-down therapy, leading to a planned EnACT trial expansion and a Q1 2022 CMC meeting for NDA support - FDA expressed no concerns with MAT2203 efficacy, safety, or tolerability data, requesting additional confirmatory evidence for step-down therapy[74](index=74&type=chunk) - The company plans to expand the EnACT trial to include a new Cohort 5 in Uganda and will meet with the FDA in Q2 2022 to finalize its design and discuss a 30-day survival primary endpoint[74](index=74&type=chunk) - A key CMC meeting with FDA is scheduled for late Q1 2022 to support a potential NDA submission in late 2023, and the company is evaluating Breakthrough Designation and plans to engage with the EMA[74](index=74&type=chunk) [Antifungal Market Opportunity](index=16&type=section&id=Antifungal%20Market%20Opportunity) The global antifungal market, valued at $11.9 billion in 2018 and projected to reach $13.9 billion by 2026, faces challenges from increasing drug resistance and high mortality rates for invasive fungal infections, creating a need for new therapies Global Antifungal Market Size | Year | Market Value (approx.) | |---|---| | 2018 | $11.9 billion | | 2026 (projected) | $13.9 billion | - The global invasive fungal infection market was valued at over **$6 billion in 2018**, with over **1.5 million annual cases globally** (Candida, Aspergillus, Cryptococcus)[75](index=75&type=chunk) - High mortality rates (**20-50%**) and increasing drug resistance (e.g., fluconazole-resistant Candida, Candida auris) underscore the urgent need for new, safer antifungal agents[75](index=75&type=chunk)[77](index=77&type=chunk) [MAT2501](index=17&type=section&id=MAT2501) MAT2501 is an oral LNC formulation of amikacin, developed to treat multidrug-resistant bacterial infections like NTM lung disease, aiming for targeted lung delivery while reducing systemic toxicities - MAT2501 is an oral LNC formulation of amikacin, targeting multidrug-resistant bacterial infections, especially NTM lung disease in CF patients[78](index=78&type=chunk) - The LNC platform aims to deliver high levels of amikacin to the lung, avoiding the severe nephrotoxicity and ototoxicity of IV/inhaled amikacin[78](index=78&type=chunk) - MAT2501 has received Qualified Infectious Disease Product (QIDP) and Orphan Drug designations for NTM from the FDA[78](index=78&type=chunk) [MAT2501 Previous and Ongoing Studies](index=17&type=section&id=MAT2501%20Previous%20and%20Ongoing%20Studies) Preclinical studies, funded by the CFF, demonstrated MAT2501's efficacy against NTM strains in a CF mouse model, with ongoing toxicology and a Phase 1 SAD study expected to yield topline data in Q2 2022 - Preclinical studies, funded by the CFF, showed MAT2501 efficacy against amikacin-sensitive and resistant NTM strains in a CF mouse model[82](index=82&type=chunk) - The CFF has committed approximately **$4.6 million** to support MAT2501's early development through Phase 1, including preclinical toxicology and a SAD study[28](index=28&type=chunk)[57](index=57&type=chunk)[82](index=82&type=chunk) - Key acute and long-term toxicology studies are ongoing to support Phase 2 trials, alongside a SAD trial in healthy volunteers, with topline data anticipated in Q2 2022[57](index=57&type=chunk)[83](index=83&type=chunk) [NTM Treatment Guidelines and Limitations of Current Treatments](index=18&type=section&id=NTM%20Treatment%20Guidelines%20and%20Limitations%20of%20Current%20Treatments) NTM lung disease is a chronic condition with increasing prevalence, requiring toxic, lengthy combination therapies with poor adherence and cure rates, highlighting a significant unmet need for safer agents - NTM lung disease is a chronic, debilitating condition with increasing prevalence (over **8% annually**), affecting **75,000-100,000 patients in the US alone in 2018**[79](index=79&type=chunk) - Current NTM treatments involve highly toxic combination therapies for prolonged periods, with significant side effects (nephrotoxicity, ototoxicity from IV amikacin) leading to poor adherence and low cure rates (**25-40%** for macrolide resistance)[80](index=80&type=chunk)[81](index=81&type=chunk)[85](index=85&type=chunk) - MAT2501, as a safer and more targeted oral amikacin formulation, has the potential to address the significant unmet clinical need for improved NTM lung disease management[85](index=85&type=chunk) [LYPDISO](index=18&type=section&id=LYPDISO) LYPDISO is a prescription-only omega-3 fatty acid composition for cardiovascular and metabolic conditions, demonstrating superior triglyceride-lowering and EPA blood levels compared to Vascepa, with the company seeking a development partner - LYPDISO is a prescription-only omega-3 fatty acid-based composition for cardiovascular and metabolic conditions[86](index=86&type=chunk) - It has demonstrated effective triglyceride-lowering and significantly higher EPA blood levels compared to Vascepa in two head-to-head studies[86](index=86&type=chunk) - The company is actively seeking a partner to continue the development of LYPDISO[86](index=86&type=chunk) [Strategic Collaborations Using LNC Platform Delivery Technology](index=19&type=section&id=Strategic%20Collaborations%20Using%20LNC%20Platform%20Delivery%20Technology) Matinas BioPharma is pursuing strategic collaborations to broaden the LNC platform's application, reformulating molecules to improve delivery, reduce toxicity, and enable oral administration, with promising results from Genentech and NIAID partnerships - The LNC platform is being leveraged for strategic collaborations to reformulate molecules, improve delivery, reduce toxicity, and enable oral administration[88](index=88&type=chunk) - Feasibility collaboration with Genentech (extended through 2022) successfully formulated two proprietary compounds (small molecules and oligonucleotides) with intracellular delivery and no toxicity[89](index=89&type=chunk) - Collaboration with NIAID to develop oral remdesivir (LNC-RDV) showed successful in vitro and in vivo studies, reducing viral titers and improving clinical parameters in a SARS-CoV-2 mouse model, similar to subcutaneous remdesivir[90](index=90&type=chunk) - The company aims to license its LNC platform to strategic partners, generating upfront, license, milestone, and royalty payments[91](index=91&type=chunk) [Exclusive License Agreement with Rutgers University](index=19&type=section&id=Exclusive%20License%20Agreement%20with%20Rutgers%20University) Matinas BioPharma holds an exclusive worldwide license from Rutgers University for its LNC platform, involving tiered royalties, a sales milestone, an annual fee, and a recent issuance of 400,000 common shares for concessions - Matinas BioPharma holds an exclusive worldwide license from Rutgers University for the LNC platform delivery technology[18](index=18&type=chunk)[92](index=92&type=chunk) - Royalty payments: Tiered basis between low single digits and mid-single digits of net sales[92](index=92&type=chunk) - Sales milestone fee: **$100,000** when sales reach a specified threshold[92](index=92&type=chunk) - Annual license fee: **$50,000**[92](index=92&type=chunk) - Consideration: **400,000 shares of common stock** issued to Rutgers in February 2022 for concessions in the license agreement[92](index=92&type=chunk) - The license term is the longer of **8.5 years** from the first commercial sale or until the expiration of the last-to-expire licensed patent rights (expected until at least **2033**). Rutgers can terminate if commercial sales don't commence within eight years[94](index=94&type=chunk)[96](index=96&type=chunk) [Intellectual Property](index=20&type=section&id=Intellectual%20Property) Matinas BioPharma protects its product candidates and technologies through patents, trade secrets, FDA exclusivity, and contractual restrictions, including licensed patents for LNC/MAT2203 and owned patents for LNC applications and LYPDISO - The company protects its intellectual property through patents, trade secrets, proprietary know-how, FDA exclusivity, and confidentiality agreements[95](index=95&type=chunk)[100](index=100&type=chunk) [Exclusively Licensed and Matinas-Owned Intellectual Property Relating to Our Proprietary LNC Platform Delivery Technology and MAT2203](index=20&type=section&id=Exclusively%20Licensed%20and%20Matinas-Owned%20Intellectual%20Property%20Relating%20to%20Our%20Proprietary%20LNC%20Platform%20Delivery%20Technology%20and%20MAT2203) The company exclusively licenses 30 issued U.S. and foreign patents for its LNC platform and MAT2203 from Rutgers (until 2033) and owns over 30 pending applications for broad LNC applications (until 2040) - The company exclusively licenses **30 issued U.S. and foreign patents** and **2 pending applications** from Rutgers University for its LNC platform and MAT2203, with protection extending until at least **2033**[96](index=96&type=chunk) - Matinas owns over **30 pending patent applications** in the U.S. and internationally, covering broad LNC technology applications (e.g., amphotericin B LNCs, nucleic acid delivery, mycobacterial/cryptococcus treatments), with potential protection through **2040**[96](index=96&type=chunk) [Matinas-Owned Intellectual Property Relating to LYPDISO](index=20&type=section&id=Matinas-Owned%20Intellectual%20Property%20Relating%20to%20LYPDISO) Matinas BioPharma owns two issued U.S. patents and one Australian patent for LYPDISO, covering methods related to omega-3 fatty acids for cardiovascular conditions, with protection through 2033, plus eight pending applications - The company holds **two issued U.S. patents** and **one issued foreign patent (Australia)** for LYPDISO, covering methods related to triglyceride levels, cholesterol, and apolipoprotein C-III using omega-3 fatty acids (EPA and DPA), with protection through **2033**[98](index=98&type=chunk) - Eight additional patent applications cover LYPDISO's oil composition, other omega-3 fatty acid compositions, and formulations, with potential protection extending until at least **2033**[98](index=98&type=chunk) [Competition](index=21&type=section&id=Competition) Matinas BioPharma operates in a highly competitive biotechnology and pharmaceutical industry, facing numerous competitors with greater resources and more advanced product candidates for both MAT2203 (antifungals) and MAT2501 (aminoglycosides for NTM) - The biotechnology and pharmaceutical industries are highly competitive, with many competitors possessing greater financial and human resources, and more advanced product candidates[102](index=102&type=chunk) - MAT2203 competes with approved antifungal classes (polyenes, azoles, echinocandins), including branded therapies like Cancidas, Eraxis, Mycamine, Diflucan, Noxafil, Vfend, Sporanox, Cresemba, Ambisome, Abelcet, and generic amphotericin B deoxycholate, as well as pipeline candidates[106](index=106&type=chunk) - MAT2501 competes with aminoglycosides for NTM lung infections, including Arikayce® (inhaled amikacin) and IV amikacin (Amikin), along with generic IV amikacin manufacturers[107](index=107&type=chunk) [Manufacturing](index=22&type=section&id=Manufacturing) Matinas BioPharma conducts in-house manufacturing for clinical supplies of its LNC programs but is exploring third-party contract manufacturers for NDA support and commercial production, while relying on external suppliers for active pharmaceutical ingredients - The company has in-house manufacturing capabilities for clinical supplies of MAT2203, MAT2501, and LNC platform discovery programs[108](index=108&type=chunk) - Matinas is exploring third-party contract manufacturers for MAT2203 to support NDA filing and commercial production, and may expand internal capabilities[108](index=108&type=chunk) - The company relies on third-party suppliers for active pharmaceutical ingredients (amphotericin B and amikacin) and expects to enter into long-term supply arrangements[109](index=109&type=chunk) [Sales and Marketing](index=22&type=section&id=Sales%20and%20Marketing) The company currently lacks a sales and marketing infrastructure, planning to retain U.S. rights for specialized sales forces and commercialize through collaborative arrangements for broader and international markets - The company currently lacks a sales and marketing infrastructure[110](index=110&type=chunk) - Plans include retaining U.S. marketing/sales rights or co-promotion rights for products accessible via a specialized sales force[110](index=110&type=chunk) - For large markets and international territories, the strategy is to commercialize through collaborative arrangements with pharmaceutical and biotechnology partners[110](index=110&type=chunk) [Review and Approval of Drugs in the United States](index=22&type=section&id=Review%20and%20Approval%20of%20Drugs%20in%20the%20United%20States) The FDA regulates U.S. drug approval, requiring extensive nonclinical and clinical studies, NDA submission, and post-approval requirements, with expedited pathways available for serious conditions with unmet needs - FDA regulates drug approval under the FDCA, requiring extensive nonclinical studies (cGLP) and human clinical trials (cGCP) in three phases (Phase 1, 2, 3) to establish safety and efficacy[111](index=111&type=chunk)[113](index=113&type=chunk)[119](index=119&type=chunk)[120](index=120&type=chunk)[121](index=121&type=chunk) - The approval process involves NDA submission, FDA review (including pre-approval inspections for cGMP compliance), potential advisory committee review, and payment of user fees[115](index=115&type=chunk)[124](index=124&type=chunk)[126](index=126&type=chunk)[127](index=127&type=chunk) - Expedited programs (Fast Track, Breakthrough Therapy, Priority Review) and Accelerated Approval pathways exist for drugs addressing serious or life-threatening conditions with unmet medical needs, potentially shortening development or review times, but do not guarantee approval[128](index=128&type=chunk)[129](index=129&type=chunk)[130](index=130&type=chunk)[132](index=132&type=chunk)[134](index=134&type=chunk) [Nonclinical Studies](index=23&type=section&id=Nonclinical%20Studies) Nonclinical studies involve laboratory and animal testing under cGLP to assess drug purity, stability, safety, and activity, supporting IND applications and requiring long-term testing and cGMP manufacturing development - Nonclinical studies involve laboratory and animal testing under cGLP regulations to assess drug purity, stability, safety, and activity for initial human testing[113](index=113&type=chunk) - Results from nonclinical tests, manufacturing information, and clinical plans are submitted to the FDA as part of an IND application[113](index=113&type=chunk) - Additional requirements include long-term nonclinical testing (e.g., reproductive AEs, carcinogenicity) and developing cGMP-compliant manufacturing processes for commercial quantities[114](index=114&type=chunk) [Human Clinical Trials in Support of a Regulatory Approval](index=24&type=section&id=Human%20Clinical%20Trials%20in%20Support%20of%20a%20Regulatory%20Approval) Human clinical trials involve administering investigational products to subjects under GCP, progressing through Phase 1 (safety), Phase 2 (preliminary efficacy), and Phase 3 (pivotal efficacy/safety) studies, all requiring FDA and IRB approval - Clinical trials involve administering investigational products to human subjects under GCP requirements, with informed consent[116](index=116&type=chunk) - Trials are typically conducted in three phases: Phase 1 (safety, dosage tolerance), Phase 2 (adverse effects, preliminary efficacy), and Phase 3 (pivotal studies for efficacy, safety, risk-benefit in expanded populations)[119](index=119&type=chunk)[120](index=120&type=chunk)[121](index=121&type=chunk) - Protocols and amendments must be submitted to the FDA as part of the IND, and IRBs must review and approve each clinical trial[116](index=116&type=chunk)[117](index=117&type=chunk) [Submission of an NDA to FDA](index=25&type=section&id=Submission%20of%20an%20NDA%20to%20FDA) NDA submission requires successful nonclinical and clinical trials, manufacturing details, and proposed labeling, undergoing FDA review, pre-approval inspections, and potential advisory committee input, subject to user fees - NDA submission requires successful completion of nonclinical and clinical trials, detailed chemistry, manufacturing, controls, and proposed labeling, along with application user fees[124](index=124&type=chunk) - FDA conducts a preliminary review (60 days) and an in-depth substantive review (typically 10 months, 6 months for priority review), which can be extended[125](index=125&type=chunk) - Pre-approval inspections of manufacturing facilities (cGMP compliance) and clinical sites (GCP compliance) are mandatory, and novel drugs are typically referred to an FDA advisory committee[126](index=126&type=chunk)[127](index=127&type=chunk) [Fast Track, Breakthrough Therapy and Priority Review Designations](index=25&type=section&id=Fast%20Track%2C%20Breakthrough%20Therapy%20and%20Priority%20Review%20Designations) The FDA offers expedited review programs like Fast Track, Breakthrough Therapy, and Priority Review for serious conditions with unmet needs, aiming to accelerate development and review times for qualifying products - Fast Track designation is for serious/life-threatening conditions with unmet medical needs, allowing greater FDA interaction and rolling review[129](index=129&type=chunk) - Breakthrough Therapy designation is for drugs showing substantial improvement over existing therapies, providing intensive FDA guidance and potentially accelerated approval[130](index=130&type=chunk) - Priority Review designation is for drugs offering significant safety or effectiveness improvements, aiming for a six-month review target, and Priority Review Vouchers can accelerate review by up to four months for tropical disease products[132](index=132&type=chunk)[133](index=133&type=chunk) [Accelerated Approval Pathway](index=26&type=section&id=Accelerated%20Approval%20Pathway) The Accelerated Approval pathway allows early approval for serious conditions based on surrogate endpoints, requiring post-approval confirmatory studies and prior FDA review of promotional materials, with potential for market withdrawal if benefits are not verified - Accelerated approval is granted for serious/life-threatening conditions with meaningful therapeutic advantage, based on surrogate or intermediate clinical endpoints that predict clinical benefit[134](index=134&type=chunk)[135](index=135&type=chunk) - This pathway is contingent on the sponsor's agreement to conduct post-approval confirmatory studies (Phase 4) to verify clinical benefit[136](index=136&type=chunk) - Failure to conduct required studies or confirm clinical benefit can lead to expedited market withdrawal, and all promotional materials are subject to prior FDA review[136](index=136&type=chunk) [FDA's Decision on an NDA](index=27&type=section&id=FDA%27s%20Decision%20on%20an%20NDA) Following NDA evaluation, the FDA issues either an approval letter or a complete response letter, with approvals potentially including limitations, warnings, post-approval studies, or REMS, impacting market potential and profitability - FDA issues an approval letter for commercial marketing or a complete response letter for deficiencies[138](index=138&type=chunk) - Approval may include limitations on indications, warnings, post-approval studies (Phase 4), surveillance programs, or a Risk Evaluation and Mitigation Strategy (REMS)[139](index=139&type=chunk) - REMS can involve medication guides, communication plans, or elements to assure safe use (e.g., special training, restricted distribution, patient registries), materially affecting market and profitability[139](index=139&type=chunk) [Post-Approval Requirements](index=27&type=section&id=Post-Approval%20Requirements) Approved drugs are subject to continuous FDA regulation covering manufacturing, labeling, distribution, advertising, and adverse event reporting, with strict prohibitions on off-label promotion and severe penalties for non-compliance - Approved drugs are subject to pervasive and continuing FDA regulation covering manufacturing, labeling, distribution, advertising, and adverse event reporting[141](index=141&type=chunk) - Manufacturers must register with FDA and state agencies, comply with cGMP requirements, and undergo periodic inspections[142](index=142&type=chunk) - Failure to comply can result in sanctions such as product withdrawal, fines, injunctions, refusal of approvals, and criminal penalties. Off-label promotion is strictly prohibited and can lead to significant liability[144](index=144&type=chunk)[145](index=145&type=chunk) [Abbreviated New Drug Applications (ANDA) for Generic Drugs](index=28&type=section&id=Abbreviated%20New%20Drug%20Applications%20(ANDA)%20for%20Generic%20Drugs) The Hatch-Waxman Amendments enable generic drug approval via ANDAs, allowing reliance on RLD data if the generic is bioequivalent and identical, with approval withheld until non-patent exclusivity periods expire - ANDAs allow generic drug approval by relying on nonclinical and clinical data from a Reference Listed Drug (RLD)[147](index=147&type=chunk) - Generic drugs must be identical to the RLD in active ingredients, route, dosage form, strength, and bioequivalent[148](index=148&type=chunk) - ANDA approval is subject to the expiration of non-patent exclusivity periods for the RLD (five years for new chemical entities, three years for new clinical investigations)[150](index=150&type=chunk) [Hatch-Waxman Patent Certification and the 30 Month Stay](index=29&type=section&id=Hatch-Waxman%20Patent%20Certification%20and%20the%2030%20Month%20Stay) NDA sponsors list patents in the Orange Book, and ANDA applicants' Paragraph IV certifications can trigger patent infringement lawsuits, imposing an automatic 30-month stay on ANDA approval - NDA sponsors must list patents covering their product in the Orange Book[152](index=152&type=chunk) - ANDA applicants must certify against these listed patents, including a Paragraph IV certification if they claim non-infringement or invalidity[152](index=152&type=chunk)[153](index=153&type=chunk) - A Paragraph IV certification can lead to a patent infringement lawsuit, imposing an automatic **30-month stay** on ANDA approval[154](index=154&type=chunk) [Pediatric Studies and Exclusivity](index=29&type=section&id=Pediatric%20Studies%20and%20Exclusivity) The Pediatric Research Equity Act requires pediatric safety and effectiveness data in NDAs, with potential for deferrals or waivers, and pediatric exclusivity adding six months of marketing protection for accepted data - NDAs must include pediatric safety and effectiveness data, with sponsors submitting pediatric study plans[155](index=155&type=chunk) - The FDA can grant deferrals or waivers for pediatric data requirements[156](index=156&type=chunk) - Pediatric exclusivity adds **six months of marketing protection** to existing regulatory exclusivity if pediatric data, responding to an FDA request, is submitted and accepted[157](index=157&type=chunk) [Orphan Designation and Exclusivity](index=30&type=section&id=Orphan%20Designation%20and%20Exclusivity) Orphan drug designation is for rare diseases, granting seven years of market exclusivity upon FDA approval for that indication, preventing competitor approval with limited exceptions, but does not expedite review - Orphan drug designation is for products treating rare diseases (fewer than **200,000 U.S. individuals**)[159](index=159&type=chunk) - Designation does not expedite regulatory review but grants **seven years of market exclusivity** upon first FDA approval for the designated indication[159](index=159&type=chunk)[160](index=160&type=chunk) - Exclusivity can be lost if the designation was defective, supply is insufficient, or a later drug is proven clinically superior[160](index=160&type=chunk) [21st Century Cures Act](index=30&type=section&id=21st%20Century%20Cures%20Act) The 21st Century Cures Act modernizes healthcare, streamlines drug development, reauthorizes pediatric priority review vouchers, creates new voucher programs, and establishes a 'Limited Population Pathway' for antimicrobial products - The 21st Century Cures Act aims to modernize healthcare, spur innovation, and streamline drug development through increased federal funding for NIH and FDA[161](index=161&type=chunk) - It reauthorizes the rare pediatric disease priority review voucher program, creates a new voucher program for national security threat medical countermeasures, and streamlines combination product review[162](index=162&type=chunk) - Section 3042 establishes a 'Limited Population Pathway' for antimicrobial products treating serious infections with unmet needs, requiring special 'Limited Population' labeling[163](index=163&type=chunk) [Other Health Care Regulations](index=31&type=section&id=Other%20Health%20Care%20Regulations) The company is subject to health privacy laws (HIPAA, GDPR), fraud and abuse laws (anti-kickback, false claims), and the Affordable Care Act, with non-compliance carrying significant penalties and impacting business operations - The company is subject to U.S. federal and state health privacy laws (e.g., HIPAA, state data breach laws) and EU regulations (GDPR) governing personal and health information, with non-compliance risking enforcement actions, litigation, and penalties[165](index=165&type=chunk)[166](index=166&type=chunk) - Fraud and abuse laws, including the federal anti-kickback statute and false claims laws, restrict marketing practices and prohibit remuneration to induce healthcare purchases, with violations punishable by imprisonment, fines, and exclusion from federal programs[167](index=167&type=chunk)[168](index=168&type=chunk) - The Affordable Care Act (ACA) imposes health insurance requirements, provides subsidies, and affects reimbursement, with ongoing uncertainty regarding its implementation, amendments, or repeal potentially impacting the business[170](index=170&type=chunk)[171](index=171&type=chunk) [Health Privacy Laws](index=31&type=section&id=Health%20Privacy%20Laws) The company is subject to U.S. (HIPAA, HITECH) and EU (GDPR) health privacy laws, regulating the collection, use, and protection of health information, with non-compliance risking significant penalties and litigation - U.S. laws like HIPAA and HITECH govern the collection, use, disclosure, and protection of health-related personal information, requiring patient authorizations for PHI disclosure[165](index=165&type=chunk) - The EU's GDPR establishes a regulatory framework for personal data, including consent, notifications, security, and data breach reporting, with potential for regulatory sanctions and civil fines for non-compliance[166](index=166&type=chunk) [Fraud and Abuse Laws](index=31&type=section&id=Fraud%20and%20Abuse%20Laws) Federal and state fraud and abuse laws, including the anti-kickback statute and false claims laws, restrict pharmaceutical marketing practices and prohibit inducements, with violations leading to severe civil and criminal penalties - The federal anti-kickback statute prohibits offering/receiving remuneration to induce purchases of healthcare items reimbursable by federal programs, with violations punishable by imprisonment, fines, and exclusion[167](index=167&type=chunk) - Federal false claims laws prohibit presenting false claims or making false statements for federal government payment, leading to prosecutions for inflated drug prices and off-label promotion[168](index=168&type=chunk) - Many states have similar anti-kickback and false claims laws, applying to state programs or regardless of payor[168](index=168&type=chunk) [Affordable Care Act](index=32&type=section&id=Affordable%20Care%20Act) The ACA reformed healthcare financing, imposing insurance requirements, providing subsidies, and strengthening false claims laws, with ongoing uncertainty regarding its future potentially impacting the company's business and financial condition - The ACA imposes individual and employer health insurance requirements, provides subsidies, mandates insurance market reforms, and expands Medicaid[170](index=170&type=chunk) - Amendments to the Federal False Claims Act under the ACA facilitate 'qui tam' (whistleblower) lawsuits[170](index=170&type=chunk) - Continued uncertainty regarding the ACA's implementation, potential amendments, or repeal could materially adversely impact the company's business and financial results[171](index=171&type=chunk) [Designation of and Exclusivity for Qualified Infectious Disease Products](index=32&type=section&id=Designation%20of%20and%20Exclusivity%20for%20Qualified%20Infectious%20Disease%20Products) The GAIN Act grants an additional five years of marketing exclusivity for QIDPs (antibacterial/antifungal drugs for serious infections), along with priority review and Fast Track status, but with specific limitations - The GAIN Act grants an additional **five years of marketing exclusivity** for Qualified Infectious Disease Products (QIDPs)[172](index=172&type=chunk) - A QIDP is an antibacterial or antifungal drug for human use intended to treat serious or life-threatening infections caused by resistant or qualifying pathogens[173](index=173&type=chunk) - QIDP designation also provides priority review and Fast Track status, but the five-year exclusivity extension has specific limitations, such as not applying to certain supplements or product changes[173](index=173&type=chunk)[174](index=174&type=chunk) [Patent Term Restoration and Extension](index=33&type=section&id=Patent%20Term%20Restoration%20and%20Extension) The Hatch-Waxman Act allows a limited patent term extension of up to five years to compensate for time lost during product development and FDA review, capped at 14 years from approval, with only one patent eligible per product - The Hatch-Waxman Act permits a patent term restoration of up to **five years** for time lost during product development and FDA regulatory review[176](index=176&type=chunk) - The restoration period is calculated as half the time between IND effective date and NDA submission, plus the time between NDA submission and approval, with a maximum of **14 years** from product approval[176](index=176&type=chunk) - Only one patent applicable to an approved drug product is eligible for this extension[176](index=176&type=chunk) [Review and Approval of Drug Products in the European Union](index=33&type=section&id=Review%20and%20Approval%20of%20Drug%20Products%20in%20the%20European%20Union) Marketing products in the EU requires compliance with diverse regulatory requirements, including clinical trial approval and marketing authorization via centralized (EU-wide) or decentralized (mutual recognition) procedures, with specific evaluation timeframes - Marketing products in the EU requires compliance with diverse regulatory requirements, including clinical trial approval from national authorities and ethics committees[177](index=177&type=chunk)[178](index=178&type=chunk) - Marketing authorization can be obtained through a centralized procedure (single EU-wide authorization, compulsory for certain products) or a decentralized procedure (mutual recognition among member states)[179](index=179&type=chunk)[180](index=180&type=chunk)[183](index=183&type=chunk) - The centralized procedure's maximum evaluation timeframe is **210 days**, with accelerated evaluation possible within **150 days** for products of major public health interest[181](index=181&type=chunk) [Pharmaceutical Coverage, Pricing and Reimbursement](index=34&type=section&id=Pharmaceutical%20Coverage%2C%20Pricing%20and%20Reimbursement) Uncertainty surrounds coverage and reimbursement by third-party payors, with governments implementing cost-containment measures and EU countries having varied pricing and reimbursement policies, creating high barriers for new products - Coverage and reimbursement for approved products by third-party payors (Medicare, Medicaid, commercial insurers) are uncertain, with payors potentially limiting coverage to specific formularies[185](index=185&type=chunk) - Governments are implementing cost-containment programs, including price controls and generic substitution, which could limit net revenue[185](index=185&type=chunk) - In the EU, pricing and reimbursement vary by country, with some requiring price agreements or controlling profitability, leading to downward pressure on healthcare costs and high barriers for new products[187](index=187&type=chunk) [Healthcare Law and Regulation](index=35&type=section&id=Healthcare%20Law%20and%20Regulation) The company's interactions with healthcare providers and payors are subject to federal and state fraud and abuse laws (anti-kickback, False Claims Act, HIPAA) and ACA transparency requirements, with non-compliance risking severe penalties - Arrangements with healthcare providers and payors are subject to federal and state fraud and abuse laws[189](index=189&type=chunk) - Federal healthcare anti-kickback statute prohibits remuneration to induce referrals or purchases under federal programs[193](index=193&type=chunk) - Federal False Claims Act imposes civil penalties for false or fraudulent claims to the government[193](index=193&type=chunk) - HIPAA and HITECH impose obligations for safeguarding individually identifiable health information[193](index=193&type=chunk) - ACA requires reporting of payments and transfers of value to physicians and teaching hospitals[193](index=193&type=chunk) - Violations can lead to civil penalties, criminal prosecution, and exclusion from federal healthcare programs[193](index=193&type=chunk) [Human Capital Resources](index=35&type=section&id=Human%20Capital%20Resources) Matinas BioPharma had 31 full-time employees as of February 25, 2022, with no collective bargaining agreements, emphasizing attracting and retaining key personnel and prioritizing employee health and safety, especially during COVID-19 - As of February 25, 2022, the company had **31 full-time employees** and no collective bargaining agreements[190](index=190&type=chunk) - Success depends on attracting, developing, and retaining key personnel, whose skills and experience are vital[190](index=190&type=chunk) - Employee health and safety is a core value, with actions taken to protect the workforce during the COVID-19 pandemic[191](index=191&type=chunk) [Research and Development](index=36&type=section&id=Research%20and%20Development) Research and development expenses were approximately $14.6 million in 2021 and $14.4 million in 2020, covering clinical and preclinical programs for MAT2203 and MAT2501, with some costs offset by CFF reimbursements Research and Development Expenses | Year | R&D Expenses (approx.) | |---|---| | 2021 | $14.6 million | | 2020 | $14.4 million | - R&D expenses include cash and non-cash costs for clinical and preclinical programs (MAT2203, MAT2501) and LNC platform development[194](index=194&type=chunk) - Reimbursements from the CFF grant for MAT2501 were approximately **$2.2 million in 2021** and **$0.1 million in 2020**[194](index=194&type=chunk) [Corporate and Available Information](index=36&type=section&id=Corporate%20and%20Available%20Information) Matinas BioPharma Holdings, Inc., incorporated in Delaware in 2013, provides its SEC filings (10-K, 10-Q, 8-K) free of charge on its website and through the SEC's website - Matinas BioPharma Holdings, Inc. was incorporated in Delaware in May 2013, with two operating subsidiaries[195](index=195&type=chunk) - The company's principal executive offices are located at 1545 Route 206 South, Suite 302, Bedminster, New Jersey 07921[196](index=196&type=chunk) - SEC filings (10-K, 10-Q, 8-K) are available free of charge on the company's website (www.matinasbiopharma.com) and the SEC's website (www.sec.gov)[197](index=197&type=chunk) [Item 1A. Risk Factors](index=36&type=section&id=Item%201A.%20Risk%20Factors) This section outlines key risks including significant operating losses, need for additional funding, uncertainties in regulatory approval and clinical trials, reliance on third parties, intellectual property protection challenges, competition, and impacts of healthcare law changes [Summary of Risk Factors](index=36&type=section&id=Summary%20of%20Risk%20Factors) This summary highlights key risks such as operating losses, funding needs, early development stage uncertainties, regulatory approval challenges, reliance on third parties, IP protection difficulties, competition, and healthcare law impacts - Significant operating losses since inception and expectation of continued losses, with no assurance of profitability[200](index=200&type=chunk)[201](index=201&type=chunk) - Need for substantial additional funding, which may cause dilution or require relinquishing rights[200](index=200&type=chunk)[201](index=201&type=chunk) - Early stage of development makes future viability difficult to assess, with potential for unforeseen expenses and delays[200](index=200&type=chunk)[201](index=201&type=chunk) - Uncertainty of regulatory approval for product candidates, lengthy and expensive clinical development process, and risks of negative or inconclusive trial results[200](index=200&type=chunk)[201](index=201&type=chunk) - Dependence on licensed technologies, third parties for clinical trials and manufacturing, and challenges in commercialization[200](index=200&type=chunk)[201](index=201&type=chunk) - Difficulties in protecting intellectual property rights and potential for infringement claims[200](index=200&type=chunk)[201](index=201&type=chunk) - Intense competition from other biotechnology and pharmaceutical companies[200](index=200&type=chunk)[201](index=201&type=chunk) - Impact of future legislation, healthcare reform, and communicable diseases (e.g., COVID-19) on business and financial results[200](index=200&type=chunk)[201](index=201&type=chunk) [Risks Related to Our Financial Position and Need for Additional Capital](index=38&type=section&id=Risks%20Related%20to%20Our%20Financial%20Position%20and%20Need%20for%20Additional%20Capital) Matinas BioPharma has incurred significant operating losses and an accumulated deficit, requiring substantial additional funding to advance product candidates, with failure to raise capital risking delays or termination of development programs and potential stockholder dilution Net Loss and Accumulated Deficit | Metric | 2021 | 2020 | |---|---|---| | Net Loss | $23.3 million | $22.4 million | | Accumulated Deficit (as of Dec 31) | $131.6 million | N/A | - The company expects to incur significant expenses and operating losses for the foreseeable future, requiring substantial additional funding[202](index=202&type=chunk)[208](index=208&type=chunk) - Raising additional capital through equity sales will dilute ownership, while debt financing may impose restrictive covenants. Failure to secure funding could delay or eliminate product development and commercialization efforts[212](index=212&type=chunk)[213](index=213&type=chunk) - As of December 31, 2021, the company had approximately **$49.9 million** in cash, cash equivalents, and marketable securities, estimated to fund operations through 2023[209](index=209&type=chunk) [Risks Related to Product Development, Regulatory Approval, Manufacturing and Commercialization](index=41&type=section&id=Risks%20Related%20to%20Product%20Development%2C%20Regulatory%20Approval%2C%20Manufacturing%20and%20Commercialization) Product development is lengthy and uncertain, with risks of delayed or denied regulatory approval, negative clinical trial results, reliance on third parties for manufacturing, and challenges in commercialization, all exacerbated by communicable diseases and economic conditions - Product development is a time-consuming, expensive, and uncertain process; success depends on completing preclinical/clinical studies, demonstrating safety/efficacy, obtaining regulatory approvals, establishing manufacturing, and commercializing products[219](index=219&type=chunk)[221](index=221&type=chunk)[232](index=232&type=chunk) - Clinical trials face risks of negative/inconclusive results, delays, serious side effects, and patient enrollment challenges, which could prevent or delay regulatory approval and commercialization[234](index=234&type=chunk)[236](index=236&type=chunk)[238](index=238&type=chunk) - The company relies heavily on third-party CROs and manufacturers for clinical trials and product supply, exposing it to risks of non-performance, non-compliance with cGMP/cGCP, and supply interruptions[229](index=229&type=chunk)[286](index=286&type=chunk)[289](index=289&type=chunk)[290](index=290&type=chunk) - Commercial success is uncertain, depending on market acceptance, pricing, reimbursement, and the ability to establish effective sales and marketing capabilities, which the company currently lacks[249](index=249&type=chunk)[252](index=252&type=chunk)[254](index=254&type=chunk) - Outbreaks of communicable diseases (e.g., COVID-19) and adverse global economic conditions can materially and adversely affect business, financial condition, and results of operations[295](index=295&type=chunk)[296](index=296&type=chunk) [Risks Relating to Our Intellectual Property Rights and Regulatory Exclusivity](index=57&type=section&id=Risks%20Relating%20to%20Our%20Intellectual%20Property%20Rights%20and%20Regulatory%20Exclusivity) The company's success depends on protecting its intellectual property, facing risks of license loss, patent challenges, trade secret breaches, and potential infringement claims, all of which could severely impair business operations - The company relies exclusively on its LNC platform delivery technology licensed from Rutgers; loss of these rights or defects in the technology would materially impair the business[297](index=297&type=chunk) - Protecting intellectual property is difficult and costly; patents may not be granted, or existing patents (owned or licensed) may be challenged, invalidated, or circumvented by third parties[301](index=301&type=chunk) - Reliance on trade secrets is risky due to difficulties in protection and potential for independent discovery or breaches of confidentiality[303](index=303&type=chunk) - Product candidates may infringe third-party intellectual property rights, leading to costly litigation, development delays, or the need for royalty/licensing agreements on unfavorable terms[306](index=306&type=chunk)[307](index=307&type=chunk) [General Company-Related Risks](index=60&type=section&id=General%20Company-Related%20Risks) Matinas BioPharma faces challenges in expanding its organization and retaining key personnel, substantial product liability risks, and vulnerabilities in computer systems to failures or security breaches, all impacting operations and reputation - The company needs to increase its organizational size (currently **31 employees**) to manage growth, which requires attracting and retaining highly qualified managerial, scientific, and medical personnel[310](index=310&type=chunk)[311](index=311&type=chunk)[313](index=313&type=chunk) - Loss of key employees, including the CEO, CDO, and CTO, would adversely impact business prospects[311](index=311&type=chunk) - The company faces substantial product liability risk from clinical testing and commercialization, potentially leading to significant liabilities, decreased demand, and reputational harm, which may not be fully covered by insurance[314](index=314&type=chunk)[315](index=315&type=chunk)[316](index=316&type=chunk) - Internal computer systems and those of CROs/contractors are vulnerable to failures or security breaches, risking data loss, program disruptions, and competitive harm, despite security measures[317](index=317&type=chunk) [Risks related to our Securities](index=62&type=section&id=Risks%20related%20to%20our%20Securities) Risks include significant royalty obligations to preferred stockholders, potential dilution from future equity issuances, no common stock dividends, volatile market price, anti-takeover provisions, limited judicial forum choice, and potential limitations on NOL carryforwards - Holders of Series A Preferred Stock are entitled to royalties of up to **$35 million per year** (**4.5% of Net Sales**, capped at **$25M**; **7.5% of Licensing Proceeds**, capped at **$10M**) upon commercialization or licensing of MAT2203/MAT2501, expiring in 2033[320](index=320&type=chunk) - The board can issue new preferred stock without stockholder approval, potentially diluting common stock voting power and equity interest[321](index=321&type=chunk)[328](index=328&type=chunk) - The company does not intend to pay dividends on common stock in the foreseeable future[322](index=322&type=chunk) - The common stock's market price has been and could remain volatile due to development progress, regulatory impacts, sales of large volumes of stock, and general market conditions[324](index=324&type=chunk) - Anti-takeover provisions in corporate documents and Delaware law could make acquisitions more difficult and limit stockholders' ability to replace management[330](index=330&type=chunk)[331](index=331&type=chunk) - The company's ability to use net operating loss carryforwards and other tax attributes may be limited by ownership changes under Sections 382 and 383 of the Internal Revenue Code[334](index=334&type=chunk) [Item 2. Properties](index=65&type=section&id=Item%202.%20Properties) Matinas BioPharma leases administrative office space in Bedminster, NJ, and laboratory space in Bridgewater, NJ, with leases expiring in August 2028 and July 2027, respectively - The company leases **8,900 square feet** of administrative offices in Bedminster, NJ, with a lease expiring in August 2028[335](index=335&type=chunk) - The company leases **14,000 square feet** of laboratory space in Bridgewater, NJ, with a lease expiring in July 2027[335](index=335&type=chunk) [Item 3. Legal Proceedings](index=65&type=section&id=Item%203.%20Legal%20Proceedings) Matinas BioPharma is not currently involved in any legal proceedings and is unaware of any pending or threatened claims, though future litigation may arise in the ordinary course of business - The company is not currently a party to any legal proceedings and is unaware of any pending or threatened claims[336](index=336&type=chunk) - The company may become involved in litigation in the future arising from its ordinary course of business[336](index=336&type=chunk) [Item 4. Mine Safety Disclosures](index=65&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to Matinas BioPharma Holdings, Inc. [PART II](index=62&type=section&id=PART%20II) This section covers market information for common equity, selected financial data, management's discussion and analysis of financial condition, market risk disclosures, financial statements, and controls and procedures [Item 5. Market For Registrant's Common Equity, Related Stockholder Matters And Issuer Purchases Of Equity Securities](index=65&type=section&id=Item%205.%20Market%20For%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20And%20Issuer%20Purchases%20Of%20Equity%20Securities) Matinas BioPharma's common stock trades on NYSE American under 'MTNB,' with 107 record holders as of February 25, 2022, no cash dividends paid or anticipated, and recent unregistered securities sales for agreements - Common stock is quoted on the NYSE American under the symbol "MTNB"[337](index=337&type=chunk) - As of February 25, 2022, there were approximately **107 record holders**, and the closing sale price was **$0.60 per share**[338](index=338&type=chunk) - The company has never paid cash dividends and does not anticipate doing so in the foreseeable future, prioritizing funds for business development[339](index=339&type=chunk) - February 8, 2022: **400,000 shares** issued to Rutgers as partial consideration for the Second Amended and Restated Exclusive License Agreement[340](index=340&type=chunk) - September 3, 2021: **1,500,000 shares** issued to Aquarius Biotechnologies Inc. holders as partial consideration for an amendment to the Aquarius Merger Agreement, in place of certain milestone payments[341](index=341&type=chunk) - No repurchases of equity securities were made during the reporting period[342](index=342&type=chunk) [Item 6. Selected Financial Data](index=66&type=section&id=Item%206.%20Selected%20Financial%20Data) This item is reserved and contains no information [Item 7. Management's Discussion And Analysis Of Financial Condition And Results Of Operations](index=67&type=section&id=Item%207.%20Management%27s%20Discussion%20And%20Analysis%20Of%20Financial%20Condition%20And%20Results%20Of%20Operations) This section analyzes Matinas BioPharma's financial condition and operating results, detailing significant losses, minimal revenue, R&D expenses, liquidity, and the critical need for additional financing to support its LNC platform and product development - The company focuses on redefining intracellular delivery using its LNC drug delivery platform for small molecules, nucleic acids, gene therapies, proteins/peptides, and vaccines[345](index=345&type=chunk) Net Loss and Accumulated Deficit | Metric | 2021 | 2020 | |---|---|---| | Net Loss | $23.3 million | $22.4 million | | Accumulated Deficit (as of Dec 31, 2021) | $131.6 million | N/A | - The company expects to incur significant expenses and operating losses for the foreseeable future, requiring additional financing to support continuing operations[346](index=346&type=chunk)[373](index=373&type=chunk) - As of December 31, 2021, cash, cash equivalents, and marketable securities totaled **$49.6 million**, expected to fund operations through 2023[365](index=365&type=chunk)[516](index=516&type=chunk) [Overview](index=67&type=section&id=Overview) Matinas BioPharma is a clinical-stage biopharmaceutical company focused on its LNC platform, advancing clinical assets and expanding into nucleic acids, while incurring significant losses and requiring additional financing - The company is a clinical-stage biopharmaceutical company focused on redefining intracellular delivery via its LNC drug delivery platform[345](index=345&type=chunk) - Advancing clinical stage assets (MAT2203, MAT2501) and expanding LNC platform into nucleic acids[348](index=348&type=chunk) - Advancing MAT2203 toward NDA filing for cryptococcal meningitis[348](index=348&type=chunk) - Progressing MAT2501 development for NTM infections with CFF support[348](index=348&type=chunk) - The company has incurred net losses since inception (**$23.3M in 2021**, **$22.4M in 2020**) and expects continued losses, necessitating additional financing[346](index=346&type=chunk) [Financial Operations Overview](index=67&type=section&id=Financial%20Operations%20Overview) The company's financial operations show minimal contract research revenue, anticipated increases in R&D expenses offset by CFF reimbursements, consistent G&A expenses, and income from selling New Jersey NOLs - Revenue is minimal, primarily from contract research (Genentech feasibility study and CFF grant), with significant product revenue not expected for many years[347](index=347&type=chunk) - R&D expenses are expected to increase as product candidates advance, with some MAT2501 program expenses reimbursed by the CFF[350](index=350&type=chunk) - General and administrative expenses are expected to remain relatively consistent[352](index=352&type=chunk) - Income from selling New Jersey net operating losses (NOLs) was approximately **$1.3 million in 2021** and **$1.1 million in 2020**[353](index=353&type=chunk) [Research and Development Expenses](index=68&type=section&id=Research%20and%20Development%20Expenses) R&D expenses increased slightly to $14.6 million in 2021, driven by Aquarius Merger Agreement expenses, product development, and compensation, partially offset by decreased clinical trial expenses due to CFF reimbursements Direct Research and Development Expenses (in thousands) | Category | 2021 | 2020 | |---|---|---| | Manufacturing process development | $2,724 | $1,421 | | Preclinical trials | $401 | $744 | | Clinical development | $2,261 | $5,149 | | Regulatory | $339 | $95 | | Internal staffing, overhead and other | $8,858 | $6,950 | | **Total R&D** | **$14,583** | **$14,359** | - The **$0.2 million increase** in R&D expenses from 2020 to 2021 was driven by a **$1.2 million expense** for the Aquarius Merger Agreement, a **$1.1 million increase** in product development, and a **$0.9 million increase** in compensation[361](index=361&type=chunk) - This increase was partially offset by a **$3.0 million decrease** in clinical trial expenses, primarily due to **$2.2 million in CFF reimbursements** for MAT2501 and an **$0.8 million decrease** in other clinical trial expenses[361](index=361&type=chunk) [General and Administrative Expenses](index=69&type=section&id=General%20and%20Administrative%20Expenses) General and administrative expenses increased slightly to $10.2 million in 2021 due to higher compensation and insurance costs, partially offset by lower professional fees, and are expected to remain consistent in 2022 General and Administrative Expenses | Year | Amount (approx.) | |---|---| | 2021 | $10.2 million | | 2020 | $10.0 million | - The increase was primarily due to higher compensation expense from stock option exercises and increased insurance expense[362](index=362&type=chunk) - This was offset by lower professional fees and consulting expenses[362](index=362&type=chunk) - General and administrative expenses are anticipated to remain relatively consistent in 2022[352](index=352&type=chunk) [Sale of Net Operating Losses (NOLs)](index=69&type=section&id=Sale%20of%20Net%20Operating%20Losses%20(NOLs)) Income from the sale of unused New Jersey net operating losses (NOLs) and research tax credits under the New Jersey Technology Business Tax Certificate Program was approximately $1.3 million in 2021, an increase from $1.1 million in 2020 Income from Sale of NOLs | Year | Amount (approx.) | |---|---| | 2021 | $1.3 million | | 2020 | $1.1 million | - The company recognized income from selling unuse

Matinas BioPharma Holdings, Inc. (NYSE:MTNB) Q3 2021 Earnings Conference Call November 8, 2021 8:30 AM ET Company Participants Peter Vozzo - Investor Relations Jerome Jabbour - Chief Executive Officer Keith Kucinski - Chief Financial Officer Terry Ferguson - Chief Medical Officer Terry Matkovits - Chief Development Officer Raphael Mannino - Chief Scientific Officer Conference Call Participants Robert Hazlett - BTIG Greg Fraser - Truist Operator Greetings and welcome to Matinas BioPharma's Third Quarter 2021 ...

[PART I - FINANCIAL INFORMATION](index=3&type=section&id=PART%20-%20I%20FINANCIAL%20INFORMATION) This section presents Matinas BioPharma Holdings, Inc.'s unaudited condensed consolidated financial statements for the quarter ended September 30, 2021, along with management's discussion and analysis of financial condition and results of operations, market risk disclosures, and controls and procedures [Item 1. FINANCIAL STATEMENTS](index=4&type=section&id=Item%201.%20FINANCIAL%20STATEMENTS) This item includes the company's condensed consolidated balance sheets, statements of operations and comprehensive loss, statements of stockholders' equity, and statements of cash flow, along with detailed notes explaining significant accounting policies, liquidity, and specific financial line items [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) **Condensed Consolidated Balance Sheets (in thousands)** | Metric | Sep 30, 2021 | Dec 31, 2020 | Change | | :--------------------------------- | :----------- | :----------- | :----- | | Total Current Assets | $56,481 | $61,555 | $(5,074) | | Total Non-Current Assets | $10,504 | $9,412 | $1,092 | | **Total Assets** | **$66,985** | **$70,967** | **$(3,982)** | | Total Current Liabilities | $4,099 | $3,568 | $531 | | Total Non-Current Liabilities | $4,632 | $3,669 | $963 | | **Total Liabilities** | **$8,731** | **$7,237** | **$1,494** | | Total Stockholders' Equity | $58,254 | $63,731 | $(5,477) | | **Total Liabilities and Stockholders' Equity** | **$66,985** | **$70,967** | **$(3,982)** | [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) **Condensed Consolidated Statements of Operations (in thousands)** | Metric | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | | :--------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Revenue: R&D | $0 | $96 | $33 | $96 | | R&D Expenses | $4,621 | $3,336 | $10,343 | $10,833 | | G&A Expenses | $2,257 | $2,364 | $7,711 | $6,980 | | Total Costs and Expenses | $6,878 | $5,700 | $18,054 | $17,814 | | Loss from Operations | $(6,878) | $(5,605) | $(18,021) | $(17,718) | | Sale of NJ NOL & Tax Credits | $0 | $0 | $1,328 | $1,073 | | Other Income, net | $41 | $155 | $108 | $538 | | **Net Loss** | **$(6,837)** | **$(5,450)** | **$(16,584)** | **$(16,106)** | | Net Loss Attributable to Common Shareholders | $(6,837) | $(5,677) | $(16,980) | $(16,681) | | Net Loss Per Share (Basic & Diluted) | $(0.03) | $(0.03) | $(0.08) | $(0.09) | | Weighted Average Common Shares Outstanding | 215,179,949 | 198,909,016 | 208,130,431 | 196,070,952 | [Condensed Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) **Changes in Stockholders' Equity (in thousands)** | Item | Balance Dec 31, 2020 | 9 Months Ended Sep 30, 2021 Changes | Balance Sep 30, 2021 | | :--------------------------------- | :------------------- | :-------------------------------- | :------------------- | | Redeemable Convertible Preferred Stock B | $3,797,705 | $(3,797,705) | $0 | | Common Stock (Shares) | 200,113,431 | 16,134,097 | 216,247,528 | | Common Stock (Amount) | $20,010 | $1,615 | $21,625 | | Additional Paid-in Capital | $167,192,003 | $15,976,984 | $183,168,987 | | Accumulated Deficit | $(107,507,193) | $(17,427,575) | $(124,934,768) | | Accumulated Other Comprehensive Income (loss) | $228,172 | $(229,766) | $(1,594) | | **Total Stockholders' Equity** | **$63,730,697** | **$(5,476,447)** | **$58,254,250** | - The company converted all **4,361 shares of Series B Preferred Stock** into **8,722,000 shares of common stock** during the nine months ended September 30, 2021, eliminating the preferred stock balance[16](index=16&type=chunk) - Issued **3,023,147 shares of common stock** in a public offering, generating net proceeds of approximately **$5.6 million**[16](index=16&type=chunk) [Condensed Consolidated Statements of Cash Flow](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flow) **Condensed Consolidated Statements of Cash Flow (in thousands)** | Cash Flow Activity | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | Change | | :--------------------------------- | :-------------------------- | :-------------------------- | :----- | | Net Cash Used in Operating Activities | $(11,266) | $(13,060) | $1,794 | | Net Cash Provided by/(Used in) Investing Activities | $16,713 | $(49,756) | $66,469 | | Net Cash Provided by Financing Activities | $6,957 | $47,497 | $(40,540) | | Net Increase/(Decrease) in Cash, Cash Equivalents and Restricted Cash | $12,404 | $(15,319) | $27,723 | | Cash, Cash Equivalents and Restricted Cash at End of Period | $25,173 | $7,437 | $17,736 | [Notes to Unaudited Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) These notes provide detailed explanations and breakdowns of the financial statement line items, significant accounting policies, and other relevant financial information, including business description, liquidity, fair value measurements, lease obligations, collaboration agreements, income taxes, stockholders' equity, and stock-based compensation [Note 1 – Description of Business](index=9&type=section&id=Note%201%20%E2%80%93%20Description%20of%20Business) Matinas BioPharma Holdings Inc. is a clinical-stage biopharmaceutical company focused on developing novel pharmaceutical products, including its lipid nanocrystal (LNC) platform delivery technology and associated product candidates - Matinas BioPharma Holdings Inc. is a **clinical-stage biopharmaceutical company**[21](index=21&type=chunk) - Focuses on identifying and developing **novel pharmaceutical products**[21](index=21&type=chunk) [Note 2 – Liquidity and Plan of Operations](index=9&type=section&id=Note%202%20%E2%80%93%20Liquidity%20and%20Plan%20of%20Operations) The company has a history of net losses and negative cash flows from operations, with an accumulated deficit of $124.9 million as of September 30, 2021. It expects to continue incurring substantial losses as it develops product candidates but believes its current cash and marketable securities are sufficient to fund operations into 2024 - Accumulated deficit of approximately **$124.9 million** as of September 30, 2021[22](index=22&type=chunk) **Net Loss (in millions)** | Period | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | | :-------------------------- | :-------------------------- | :-------------------------- | | Net Loss | $(16.6) | $(16.1) | - The company has not obtained regulatory approval for any product candidates nor generated revenue from product sales[23](index=23&type=chunk) - Cash and cash equivalents of approximately **$24.9 million** and marketable securities of approximately **$28.9 million** as of September 30, 2021, are believed sufficient to fund operations into **2024**[26](index=26&type=chunk) [Note 3 – Summary of Significant Accounting Policies](index=9&type=section&id=Note%203%20%E2%80%93%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the basis of presentation for the unaudited condensed consolidated financial statements, which adhere to U.S. GAAP and SEC interim reporting requirements, and includes a specific discussion on the impact of COVID-19 [COVID-19](index=10&type=section&id=COVID-19) - Financial results for the three and nine months ended September 30, 2021, were not significantly impacted by COVID-19[31](index=31&type=chunk) - The company cannot predict the future impact of COVID-19 on results or capital raising ability due to various factors[31](index=31&type=chunk) [Note 4 – Cash, Cash Equivalents, Restricted Cash and Marketable Securities](index=10&type=section&id=Note%204%20%E2%80%93%20Cash,%20Cash%20Equivalents,%20Restricted%20Cash%20and%20Marketable%20Securities) This note details the company's cash, cash equivalents, restricted cash, and marketable securities, including their classification, fair value measurements, and changes in unrealized gains/losses on available-for-sale securities [Cash, Cash Equivalents and Restricted Cash](index=10&type=section&id=Cash,%20Cash%20Equivalents%20and%20Restricted%20Cash) **Cash, Cash Equivalents and Restricted Cash (in thousands)** | Metric | Sep 30, 2021 | Dec 31, 2020 | Sep 30, 2020 | Dec 31, 2019 | | :--------------------------------- | :----------- | :----------- | :----------- | :----------- | | Cash and cash equivalents | $24,923 | $12,432 | $7,051 | $22,170 | | Restricted cash | $250 | $336 | $386 | $586 | | **Total** | **$25,173** | **$12,768** | **$7,437** | **$22,756** | [Marketable Securities](index=10&type=section&id=Marketable%20Securities) - Marketable securities are classified as **available-for-sale** and carried at fair value[35](index=35&type=chunk) **Unrealized Gains/(Losses) on Marketable Securities (in thousands)** | Period | 3 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2020 | | :--------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Unrealized (Loss)/Gain | $(53) | $(230) | $(114) | $367 | **Marketable Securities Composition (in thousands)** | Type | Sep 30, 2021 Fair Value | Dec 31, 2020 Fair Value | | :------------------------ | :---------------------- | :---------------------- | | U.S. Treasury Bonds | $3,505 | $18,429 | | U.S. Government Notes | $16,010 | $22,230 | | Corporate Debt Securities | $9,142 | $4,306 | | State and Municipal Bonds | $250 | $1,282 | | **Total** | **$28,907** | **$46,247** | [Note 5 - Fair Value Measurements](index=11&type=section&id=Note%205%20-%20Fair%20Value%20Measurements) The company uses a fair value hierarchy (Level 1, 2, and 3) to measure financial instruments. Most marketable securities are classified as Level 2, valued using quoted market prices in inactive markets, while U.S. Treasury bonds are Level 1 - Fair value hierarchy categorizes inputs into **Level 1** (active markets), **Level 2** (inactive markets or observable inputs), and **Level 3** (unobservable inputs)[37](index=37&type=chunk)[38](index=38&type=chunk) **Fair Value Hierarchy of Marketable Securities (in thousands)** | Type (Sep 30, 2021) | Total | Level 1 | Level 2 | Level 3 | | :------------------------ | :---- | :------ | :------ | :------ | | U.S. Treasury Bonds | $3,505 | $3,505 | $0 | $0 | | U.S. Government Notes | $16,010 | $0 | $16,010 | $0 | | Corporate Debt Securities | $9,142 | $0 | $9,142 | $0 | | State and Municipal Bonds | $250 | $0 | $250 | $0 | | **Total** | **$28,907** | **$3,505** | **$25,402** | **$0** | [Note 6 – Leasehold Improvements and Equipment](index=12&type=section&id=Note%206%20%E2%80%93%20Leasehold%20Improvements%20and%20Equipment) Leasehold improvements and equipment, net, increased slightly to $1.569 million as of September 30, 2021, from $1.524 million at December 31, 2020, driven by new purchases **Leasehold Improvements and Equipment, Net (in thousands)** | Category | Sep 30, 2021 | Dec 31, 2020 | | :--------------------------------- | :----------- | :----------- | | Equipment | $1,610 | $1,443 | | Leasehold improvements | $935 | $878 | | Total | $2,545 | $2,321 | | Less: accumulated depreciation and amortization | $976 | $797 | | **Leasehold improvements and equipment, net** | **$1,569** | **$1,524** | - Depreciation and amortization expense for the nine months ended September 30, 2021, was approximately **$179 thousand**, up from **$173 thousand** in the prior year period[41](index=41&type=chunk) [Note 7 – Accrued Expenses and Other Liabilities](index=13&type=section&id=Note%207%20%E2%80%93%20Accrued%20Expenses%20and%20Other%20Liabilities) Total accrued expenses increased to $2.894 million as of September 30, 2021, from $2.795 million at December 31, 2020, primarily due to an increase in deferred revenue and other deferred liabilities, including a significant deferred liability under the Cystic Fibrosis Foundation agreement **Accrued Expenses (in thousands)** | Category | Sep 30, 2021 | Dec 31, 2020 | | :--------------------------------- | :----------- | :----------- | | Payroll and incentives | $944 | $1,094 | | General and administrative expenses | $217 | $280 | | Research and development expenses | $501 | $778 | | Deferred revenue and other deferred liabilities | $1,232 | $643 | | **Total** | **$2,894** | **$2,795** | - Deferred liability under the Cystic Fibrosis Foundation agreement increased to approximately **$1,199 thousand** at September 30, 2021, from **$577 thousand** at December 31, 2020[42](index=42&type=chunk) [Note 8 – Leases](index=13&type=section&id=Note%208%20%E2%80%93%20Leases) The company has various operating and finance lease agreements, with a significant amendment to its Bedminster office lease extending the term for seven years from August 2021. Lease liabilities are recognized based on the present value of payments using incremental borrowing rates [Operating lease obligations](index=13&type=section&id=Operating%20lease%20obligations) - The Bedminster office lease was amended, extending the term for **seven years** from August 1, 2021, and adding **3,034 rentable square feet**[45](index=45&type=chunk) **Operating Lease Liabilities (in thousands)** | Maturity of Lease Liabilities | Sep 30, 2021 | Dec 31, 2020 | | :--------------------------------- | :----------- | :----------- | | Total undiscounted operating lease payments | $6,146 | $4,920 | | Present value of operating lease liabilities | $4,803 | $3,696 | | Weighted average remaining lease term (years) | 6.3 | 6.7 | | Weighted average discount rate | 7.7% | 8.4% | [Note 9 - Collaboration Agreements, Licenses and Other Research and Development Agreements](index=14&type=section&id=Note%209%20-%20Collaboration%20Agreements,%20Licenses%20and%20Other%20Research%20and%20Development%20Agreements) The company has collaboration agreements, including a Therapeutics Development Award from the Cystic Fibrosis Foundation for MAT2501 development and a feasibility study agreement with Genentech for LNC platform technology, which generate contract research revenue and offset R&D expenses [Cystic Fibrosis Foundation Therapeutics Development Award](index=14&type=section&id=Cystic%20Fibrosis%20Foundation%20Therapeutics%20Development%20Award) - Received a Therapeutics Development Award of up to **$4.2 million** from the CFF to support preclinical development of MAT2501[52](index=52&type=chunk) - Recognized approximately **$1.558 million** as credits to R&D expenses for the nine months ended September 30, 2021, related to the Award[53](index=53&type=chunk) [Genentech Feasibility Study Agreement](index=15&type=section&id=Genentech%20Feasibility%20Study%20Agreement) - Agreement with Genentech involves developing oral formulations using the company's LNC platform technology for a total of **$100 thousand** across three molecules[54](index=54&type=chunk) - Recognized approximately **$33 thousand** of revenue for the nine months ended September 30, 2021, upon fulfilling obligations for the second molecule[54](index=54&type=chunk) [Note 10 – Income Taxes](index=15&type=section&id=Note%2010%20%E2%80%93%20Income%20Taxes) The company recognized income from the sale of New Jersey Net Operating Losses (NOLs) and Research and Development (R&D) tax credits under a state program [Sale of net operating losses (NOLs) & tax credits](index=15&type=section&id=Sale%20of%20net%20operating%20losses%20(NOLs)%20%26%20tax%20credits) **Sale of NOLs & Tax Credits (in millions)** | Period | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | | :-------------------------- | :-------------------------- | :-------------------------- | | Income from NOLs & Tax Credits | $1.3 | $1.1 | [Note 11 – Stockholders' Equity](index=15&type=section&id=Note%2011%20%E2%80%93%20Stockholders'%20Equity) This note details changes in stockholders' equity, including common stock issuances from an ATM sales agreement and the Aquarius Merger Agreement, the conversion of all Series B Preferred Stock into common stock, and information on outstanding warrants and diluted EPS [Common Stock](index=15&type=section&id=Common%20Stock) - Issued **1,500,000 unregistered shares of common stock** on September 3, 2021, related to the Aquarius Merger Agreement, recorded as a **$1.2 million R&D expense**[56](index=56&type=chunk) - Sold **3,023,147 shares of common stock** under its At-The-Market Sales Agreement, generating net proceeds of approximately **$5.6 million** for the nine months ended September 30, 2021[57](index=57&type=chunk) [Preferred Stock](index=16&type=section&id=Preferred%20Stock) - All **4,361 shares of Series B Preferred Stock** were automatically converted into **8,436,000 shares of common stock** on June 19, 2021[59](index=59&type=chunk) - The company made dividend payments totaling **1,687,200** and **1,365,600 shares of common stock** on June 19, 2021, and 2020, respectively, to Series B Preferred Stockholders[60](index=60&type=chunk) [Warrants](index=16&type=section&id=Warrants) - As of September 30, 2021, the company had outstanding warrants to purchase **988,000 shares of common stock**, with exercise prices ranging from **$0.50 to $0.75 per share**[62](index=62&type=chunk) **Warrants Activity (in thousands)** | Item | Dec 31, 2019 | Dec 31, 2020 | Sep 30, 2021 | | :--------------------------------- | :----------- | :----------- | :----------- | | Outstanding | 5,397 | 1,328 | 988 | | Exercised | (2,576) | (320) | N/A | | Expired | (1,493) | (20) | N/A | [Basic and diluted net loss per common share](index=17&type=section&id=Basic%20and%20diluted%20net%20loss%20per%20common%20share) - Diluted EPS is the same as basic EPS due to net losses, making potentially dilutive securities anti-dilutive[64](index=64&type=chunk) **Potentially Dilutive Securities Excluded from Diluted EPS (in thousands)** | Security Type | As of Sep 30, 2021 | As of Sep 30, 2020 | | :--------------------------------- | :----------------- | :----------------- | | Stock options | 22,242 | 22,260 | | Preferred Stock and accrued dividend upon conversion | 0 | 9,104 | | Warrants | 988 | 1,328 | | **Total** | **23,230** | **32,692** | [Note 12 – Accumulated Other Comprehensive (Loss)/Income](index=17&type=section&id=Note%2012%20%E2%80%93%20Accumulated%20Other%20Comprehensive%20(Loss)%2FIncome) Accumulated other comprehensive income shifted from a gain of $228 thousand at December 31, 2020, to a loss of $2 thousand at September 30, 2021, primarily due to net unrealized losses on available-for-sale securities during the period **Accumulated Other Comprehensive (Loss)/Income (in thousands)** | Metric | Dec 31, 2020 | 9 Months Ended Sep 30, 2021 | Sep 30, 2021 | | :--------------------------------- | :----------- | :-------------------------- | :----------- | | Balance | $228 | N/A | $(2) | | Net unrealized loss on securities available-for-sale | N/A | $(230) | N/A | [Note 13 – Stock-based Compensation](index=17&type=section&id=Note%2013%20%E2%80%93%20Stock-based%20Compensation) The company's equity compensation plan allows for various awards, with stock-based compensation expense totaling $3.217 million for the nine months ended September 30, 2021. Unrecognized compensation costs for unvested awards amount to $8.4 million [Stock Options](index=18&type=section&id=Stock%20Options) **Stock Options Activity (in thousands)** | Item | Outstanding at Jan 1, 2021 | Granted | Exercised | Forfeited | Expired | Outstanding at Sep 30, 2021 | | :--------------------------------- | :------------------------- | :------ | :-------- | :-------- | :------ | :-------------------------- | | Stock Options | 22,551 | 4,796 | (1,063) | (2,701) | (1,341) | 22,242 | [Restricted Stock Awards](index=18&type=section&id=Restricted%20Stock%20Awards) - Granted **24 thousand restricted stock awards** for the nine months ended September 30, 2021, primarily to Board members or vendors[71](index=71&type=chunk) - Recorded general and administrative expense of approximately **$85 thousand** for restricted stock awards for the nine months ended September 30, 2021[71](index=71&type=chunk) [Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=19&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 condition, results of operations, and liquidity for the periods presented, including forward-looking statements, an overview of strategy, detailed financial operations, current operating trends, and a comparison of financial results [CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS](index=19&type=section&id=CAUTIONARY%20NOTE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) This section warns readers that the report contains forward-looking statements subject to various known and unknown risks and uncertainties, including those related to funding, product development, regulatory approvals, and the impact of the COVID-19 pandemic, which could cause actual results to differ materially - The report contains forward-looking statements that involve known and unknown risks and uncertainties[74](index=74&type=chunk) - Key risk factors include the ability to raise additional capital, timing of clinical trials and approvals, history of operating losses, dependence on early-stage product candidates, and the impact of COVID-19[75](index=75&type=chunk) [Overview](index=20&type=section&id=Overview) The company's strategy focuses on improving intracellular delivery of therapeutics via its lipid nanocrystal (LNC) drug delivery platform and seeking a partner for LYPDISO, a proprietary omega-3 drug. Key strategic elements include advancing clinical-stage LNC assets, delivering efficacy data for MAT2203, progressing MAT2501 preclinical development, and expanding LNC platform applications through collaborations - Focused on improving intracellular delivery of therapeutics using its **lipid nanocrystal (LNC) drug delivery platform**[77](index=77&type=chunk) - Seeking a partner for **LYPDISO**, a proprietary, next-generation prescription omega-3 drug[77](index=77&type=chunk) - Strategic goals include advancing clinical-stage LNC assets (**MAT2203**, **MAT2501**) and expanding LNC platform utilization through collaborations[79](index=79&type=chunk)[82](index=82&type=chunk) [Financial Operations Overview](index=21&type=section&id=Financial%20Operations%20Overview) This section provides an overview of the company's revenue, research and development expenses, general and administrative expenses, income from NOLs and tax credits, and other income, highlighting the significant R&D investments and the expectation of continued operating losses [Revenue](index=21&type=section&id=Revenue) **Contract Research Revenue (in thousands)** | Period | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | | :-------------------------- | :-------------------------- | :-------------------------- | | Revenue | $33 | $96 | - The company does not expect to generate product revenue until **2023** at the earliest, if ever[81](index=81&type=chunk) [Research and Development Expenses](index=21&type=section&id=Research%20and%20Development%20Expenses) - R&D expenses consist of costs for **MAT2203**, **MAT2501**, **LYPDISO**, and **LNC delivery technology**, including preclinical work, clinical trial materials, consultants, CROs, and employee-related expenses[82](index=82&type=chunk)[83](index=83&type=chunk) **Direct Research and Development Expenses (in thousands)** | Category | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | | :--------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Manufacturing process development | $844 | $318 | $1,572 | $928 | | Preclinical trials | $99 | $119 | $101 | $598 | | Clinical development | $586 | $1,295 | $1,652 | $3,994 | | Regulatory | $44 | $39 | $129 | $73 | | Internal staffing, overhead and other | $3,048 | $1,565 | $6,889 | $5,240 | | **Total R&D** | **$4,621** | **$3,336** | **$10,343** | **$10,833** | - R&D expenses are expected to increase as product candidates advance to later clinical stages and the drug platform technology expands[84](index=84&type=chunk) [General and Administrative Expenses](index=22&type=section&id=General%20and%20Administrative%20Expenses) - G&A expenses primarily include salaries for executive and finance functions, facility costs, insurance, investor relations, and professional fees[85](index=85&type=chunk) - Anticipates G&A expenses to remain relatively consistent with the prior year in **2021**[86](index=86&type=chunk) [Sale of Net Operating Losses (NOLs) & Tax Credits](index=22&type=section&id=Sale%20of%20Net%20Operating%20Losses%20(NOLs)%20%26%20Tax%20Credits) **Income from Sale of NOLs & Tax Credits (in millions)** | Period | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | | :-------------------------- | :-------------------------- | :-------------------------- | | Income | $1.3 | $1.1 | [Other Income, net](index=22&type=section&id=Other%20Income,%20net) - Primarily consists of interest income/(expense), dividends, and franchise taxes[88](index=88&type=chunk) [Application of Critical Accounting Policies and Accounting Estimates](index=22&type=section&id=Application%20of%20Critical%20Accounting%20Policies%20and%20Accounting%20Estimates) - Critical accounting policies include **Stock-based compensation**, **Fair value measurements**, **Research and development costs**, **Goodwill and other intangible assets**, and **Basic and diluted net loss per common share**[90](index=90&type=chunk) [Current Operating Trends](index=23&type=section&id=Current%20Operating%20Trends) The company's R&D efforts are focused on advancing MAT2203 and MAT2501 through clinical and preclinical development, respectively, and expanding its LNC platform technology through collaborations. Significant investment in product development is expected to continue, with R&D expenses primarily supporting preclinical and clinical programs - R&D efforts are focused on advancing **MAT2203** (clinical development for CM), accelerating **MAT2501** (preclinical development with CFF assistance), and expanding LNC platform technology through collaborations[92](index=92&type=chunk) - Expects all near-term R&D expenses to support current and future preclinical and clinical development programs[93](index=93&type=chunk) [Results of Operations](index=23&type=section&id=Results%20of%20Operations) This section compares the company's revenues and operating expenses for the three and nine months ended September 30, 2021, against the corresponding periods in 2020, detailing changes in R&D, G&A, and other income [Comparison of the three months ended September 30, 2021 to the three months ended September 30, 2020](index=23&type=section&id=Comparison%20of%20the%20three%20months%20ended%20September%2030,%202021%20to%20the%20three%20months%20ended%20September%2030,%202020) **Revenues and Operating Expenses (in thousands)** | Metric | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2020 | Change | | :--------------------------------- | :-------------------------- | :-------------------------- | :----- | | Revenues | $0 | $96 | $(96) | | Research and development | $4,621 | $3,336 | $1,285 | | General and administrative | $2,257 | $2,364 | $(107) | | **Operating Expenses** | **$6,878** | **$5,700** | **$1,178** | - R&D expenses increased by approximately **$1.3 million**, primarily due to a **$1.2 million** expense from the Aquarius Merger Agreement common stock issuance and increased compensation, partially offset by decreased clinical trial expenses[96](index=96&type=chunk) - G&A expenses decreased due to lower compensation, professional fees, and consulting expenses[97](index=97&type=chunk) [Comparison of the nine months ended September 30, 2021 to the nine months ended September 30, 2020](index=24&type=section&id=Comparison%20of%20the%20nine%20months%20ended%20September%2030,%202021%20to%20the%20nine%20months%20ended%20September%2030,%202020) **Revenues and Operating Expenses (in thousands)** | Metric | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | Change | | :--------------------------------- | :-------------------------- | :-------------------------- | :----- | | Revenues | $33 | $96 | $(63) | | Research and development | $10,343 | $10,834 | $(491) | | General and administrative | $7,711 | $6,980 | $731 | | **Operating Expenses** | **$18,054** | **$17,814** | **$240** | | Sale of net operating losses (NOLs) | $1,328 | $1,073 | $255 | - R&D expenses decreased by approximately **$0.5 million**, mainly due to the completion of the LYPDISO clinical trial and **$1.6 million** in expense reimbursement for MAT2501, partially offset by the **$1.2 million** Aquarius Merger Agreement expense and increased compensation[99](index=99&type=chunk) - G&A expenses increased by approximately **$0.7 million**, primarily due to higher compensation from stock option exercises and increased insurance, partially offset by lower professional fees[100](index=100&type=chunk) [Liquidity and capital resources](index=24&type=section&id=Liquidity%20and%20capital%20resources) The company has historically funded operations through equity offerings and had $53.8 million in unrestricted cash, cash equivalents, and marketable securities as of September 30, 2021. It details cash flow activities (operating, investing, financing) and outlines future funding requirements, expecting existing funds to last into 2024 [Sources of Liquidity](index=24&type=section&id=Sources%20of%20Liquidity) - Funded operations since inception through private placements and public offerings of equity securities, raising approximately **$156.7 million** in gross proceeds[102](index=102&type=chunk) - As of September 30, 2021, had unrestricted cash, cash equivalents, and marketable securities totaling approximately **$53.8 million**[103](index=103&type=chunk) [2020 At-The-Market Sales Agreement](index=25&type=section&id=2020%20At-The-Market%20Sales%20Agreement) - Sold **3,023,147 shares of common stock** under the ATM Sales Agreement for the nine months ended September 30, 2021, generating net proceeds of approximately **$5.6 million**[105](index=105&type=chunk) [2020 Common Stock Offering](index=25&type=section&id=2020%20Common%20Stock%20Offering) - Closed an underwritten public offering of approximately **32.3 million shares of common stock** in January 2020, generating net proceeds of approximately **$46.7 million**[106](index=106&type=chunk) [Cash Flows](index=25&type=section&id=Cash%20Flows) This section provides a summary of cash flows from operating, investing, and financing activities for the nine-month periods ended September 30, 2021 and 2020, highlighting significant changes in each category [Operating Activities](index=25&type=section&id=Operating%20Activities) **Net Cash Used in Operating Activities (in thousands)** | Period | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | Change | | :-------------------------- | :-------------------------- | :-------------------------- | :----- | | Net Cash Used | $(11,266) | $(13,060) | $1,794 | - The decrease in cash used in operating activities was primarily due to a **$1.0 million** decrease in working capital adjustments and **$0.8 million** lower expenses[108](index=108&type=chunk) [Investing Activities](index=25&type=section&id=Investing%20Activities) **Net Cash Provided by/(Used in) Investing Activities (in thousands)** | Period | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | Change | | :-------------------------- | :-------------------------- | :-------------------------- | :----- | | Net Cash Provided/(Used) | $16,713 | $(49,756) | $66,469 | - The significant increase in cash provided by investing activities was mainly due to a **$10.3 million** increase in proceeds from marketable securities maturities and a **$56.4 million** decrease in marketable securities purchases compared to the prior year[109](index=109&type=chunk) [Financing Activities](index=26&type=section&id=Financing%20Activities) **Net Cash Provided by Financing Activities (in thousands)** | Period | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | Change | | :-------------------------- | :-------------------------- | :-------------------------- | :----- | | Net Cash Provided | $6,957 | $47,497 | $(40,540) | - The decrease in cash from financing activities was primarily due to lower net proceeds from equity offerings (**$5.6 million** from ATM sales in 2021 vs. **$46.6 million** from public offering in 2020)[110](index=110&type=chunk) [Funding Requirements and Other Liquidity Matters](index=26&type=section&id=Funding%20Requirements%20and%20Other%20Liquidity%20Matters) - Expects existing cash and cash equivalents to fund operating expenses and capital expenditures into **2024**[111](index=111&type=chunk) - Anticipates significant expenses and increasing operating losses due to further preclinical and clinical studies, new product candidate development, regulatory approvals, manufacturing, and intellectual property maintenance[111](index=111&type=chunk) - Future funding needs will be met through equity offerings, debt financings, government funding, collaborations, and licensing arrangements, with no committed external sources other than limited grant funding[112](index=112&type=chunk) [Contractual Obligations and Commitments](index=27&type=section&id=Contractual%20Obligations%20and%20Commitments) - The amendment to the Bedminster lease, effective August 1, 2021, extends the term for **seven years** with a total lease commitment of approximately **$1.8 million**[114](index=114&type=chunk) [Off-Balance Sheet Arrangements](index=27&type=section&id=Off-Balance%20Sheet%20Arrangements) - The company did not have any off-balance sheet arrangements during the periods presented[115](index=115&type=chunk) [Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=27&type=section&id=Item%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) The company's market risk exposure is limited to its cash, cash equivalents, and marketable securities, which are primarily interest-earning instruments. Due to the short-term nature of its portfolio, a sudden change in interest rates is not expected to materially impact its financial condition - Market risk exposure is limited to cash, cash equivalents, and marketable securities, totaling **$53.8 million** as of September 30, 2021[116](index=116&type=chunk) - Primary exposure is interest income sensitivity, but the short-term nature of instruments limits material impact from interest rate changes[116](index=116&type=chunk) [Item 4. CONTROLS AND PROCEDURES](index=27&type=section&id=Item%204.%20CONTROLS%20AND%20PROCEDURES) The company's management, including its principal executive and financial officers, evaluated the effectiveness of its disclosure controls and procedures as of September 30, 2021, concluding they were effective at a reasonable assurance level. No material changes in internal control over financial reporting were identified during the third quarter of 2021 [Evaluation of Disclosure Controls and Procedures](index=27&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) - Disclosure controls and procedures were evaluated and deemed effective at the reasonable assurance level as of September 30, 2021[117](index=117&type=chunk) [Changes in Internal Control Over Financial Reporting](index=27&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) - No material changes in internal control over financial reporting were identified during the third quarter of 2021[119](index=119&type=chunk) [PART II - OTHER INFORMATION](index=28&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) This section covers other required disclosures, including legal proceedings, risk factors, unregistered sales of equity securities, defaults under senior securities, mine safety disclosures, and a list of exhibits [Item 1. LEGAL PROCEEDINGS](index=28&type=section&id=Item%201.%20LEGAL%20PROCEEDINGS) - No legal proceedings to report[121](index=121&type=chunk) [Item 1A. RISK FACTORS](index=28&type=section&id=Item%201A.%20RISK%20FACTORS) - No material changes from the risk factors reported in the Annual Report on Form 10-K for the fiscal year ended December 31, 2020[122](index=122&type=chunk) [Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=28&type=section&id=Item%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) - Issued **1,500,000 unregistered shares of common stock** on September 3, 2021, under the Aquarius Merger Agreement, exempt from registration under Section 4(a)(2) of the Securities Act[123](index=123&type=chunk) [Item 3. DEFAULTS UNDER SENIOR SECURITIES](index=28&type=section&id=Item%203.%20DEFAULTS%20UNDER%20SENIOR%20SECURITIES) - No defaults under senior securities[124](index=124&type=chunk) [Item 4. MINE SAFETY DISCLOSURES](index=28&type=section&id=Item%204.%20MINE%20SAFETY%20DISCLOSURES) - Not applicable[125](index=125&type=chunk) [Item 5. OTHER INFORMATION](index=28&type=section&id=Item%205.%20OTHER%20INFORMATION) - No other information to report[126](index=126&type=chunk) [Item 6. EXHIBITS](index=28&type=section&id=Item%206.%20EXHIBITS) - Refers to the Exhibit Index for a list of exhibits filed or furnished with the report[127](index=127&type=chunk) [SIGNATURES](index=29&type=section&id=SIGNATURES) The report is duly signed on behalf of Matinas BioPharma Holdings, Inc. by its Chief Executive Officer, Jerome D. Jabbour, and Chief Financial Officer, Keith A. Kucinski, on November 8, 2021 [EXHIBIT INDEX](index=30&type=section&id=EXHIBIT%20INDEX) This section lists the exhibits filed or furnished with the Quarterly Report on Form 10-Q, including certifications and Inline XBRL documents

Financial Data and Key Metrics Changes - Cash, cash equivalents, and marketable securities at June 30, 2021, were approximately $59.8 million, compared to $58.7 million at December 31, 2020 [39] - Research and development expenses were approximately $2.5 million in Q2 2021, down from approximately $3.4 million in the same quarter of 2020, primarily due to the completion of the enhancement study of LYPDISO [40] - General and administrative expenses were approximately $2.3 million in Q2 2021, essentially unchanged from $2.4 million in the same period in 2020 [41] - The net loss attributable to common shareholders was approximately $5 million or $0.02 per share, compared to a net loss of $5.8 million or $0.03 per share in the same period of 2020 [41] - The company believes that cash on hand is sufficient to fund operations into 2024 [42] Business Line Data and Key Metrics Changes - The company is focusing on its Lipid Nanocrystal (LNC) Platform, which has shown potential for safe and effective intracellular drug delivery [10][12] - MAT2203, targeting HIV patients with cryptococcal meningitis, has completed enrollment for Cohort 2, with data expected to be discussed in September [16] - MAT2501, an oral formulation of amikacin, is set to enter a Phase 1 study in healthy volunteers in Q4 2021 [29] - The company has successfully formulated a potential oral version of Gilead's Remdesivir, with in vitro studies showing promising antiviral activity [31][34] Market Data and Key Metrics Changes - The company is addressing significant unmet medical needs in vulnerable patient populations, particularly with MAT2203 and MAT2501 [25][30] - The LNC Platform is positioned to transform the delivery of various therapeutic agents, including small molecules and complex biologics [14] Company Strategy and Development Direction - The company aims to validate its LNC Platform through ongoing clinical trials and collaborations with leading pharmaceutical companies [10][12] - There is a focus on obtaining regulatory approval for MAT2203 as a step-down therapy for cryptococcal meningitis, leveraging the unmet need in this area [25][63] - The company is exploring multiple regulatory pathways, including the Limited Population Pathway for anti-infective medicines [63] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about upcoming data releases and the potential for significant milestones in the near term [43] - The company is confident in its ability to navigate regulatory discussions and expedite the development of its drug candidates [63][66] Other Important Information - The company has received positive feedback from the FDA regarding its development plans for MAT2501 [29] - The LNC Platform's ability to deliver drugs effectively across the blood-brain barrier is highlighted as a key advantage [18] Q&A Session Summary Question: Insights on MAT2501 and Remdesivir development timelines - Management indicated that MAT2501 will follow a streamlined regulatory process similar to MAT2203, with initial studies expected to begin by the end of next year [51][54] - For Remdesivir, in vivo studies are anticipated to start soon, with initial human data expected in the first half of 2022 [59] Question: Accelerated approval pathways for MAT2203 - Management discussed the potential for multiple regulatory pathways, including LPAD, and emphasized the importance of the data from Cohort 2 in discussions with the FDA [63][66] Question: Expectations for EnACT trial data - Management confirmed that survival data will be a key measure in both Cohort 1 and Cohort 2, with the design aimed at facilitating a step-down indication [71][73] Question: Number of patients in Cohort 2 and future milestones - Cohort 2 included 56 patients, with 40 on active treatment and 16 in the control group, and management expects to complete the EnACT trial in 2022 [82][85]

[PART I - FINANCIAL INFORMATION](index=4&type=section&id=PART%20-%20I%20FINANCIAL%20INFORMATION) This section presents the company's unaudited condensed consolidated financial statements, management's discussion, market risk, and controls [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20FINANCIAL%20STATEMENTS) This section presents Matinas BioPharma Holdings, Inc.'s unaudited condensed consolidated financial statements, including the balance sheets, statements of operations and comprehensive loss, statements of stockholders' equity, and statements of cash flow, along with detailed notes explaining significant accounting policies, liquidity, and specific financial line items for the periods ended June 30, 2021, and December 31, 2020 [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section details the company's financial position, including assets, liabilities, and equity at specific reporting dates Condensed Consolidated Balance Sheets (June 30, 2021 vs. December 31, 2020) ($ in thousands) | Item | June 30, 2021 (Unaudited) | December 31, 2020 (Audited) | | :-------------------------------- | :------------------------ | :------------------------ | | Cash and cash equivalents | $30,352 | $12,432 | | Marketable securities | $29,490 | $46,247 | | Total current assets | $60,939 | $61,555 | | Total assets | $69,971 | $70,967 | | Total liabilities | $7,068 | $7,237 | | Total stockholders' equity | $62,904 | $63,731 | - Cash and cash equivalents significantly increased from **$12.4 million** at December 31, 2020, to **$30.4 million** at June 30, 2021, while marketable securities decreased from **$46.2 million** to **$29.5 million**[12](index=12&type=chunk) - Total assets slightly decreased from **$71.0 million** to **$70.0 million**, and total stockholders' equity also saw a minor decrease from **$63.7 million** to **$62.9 million**[12](index=12&type=chunk) [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) This section outlines the company's financial performance, detailing revenues, expenses, and net loss over specific periods Condensed Consolidated Statements of Operations and Comprehensive Loss (Three Months Ended June 30) ($ in thousands) | Item | 2021 | 2020 | | :-------------------------------- | :--------- | :--------- | | Research and development revenue | $0 | $0 | | Research and development expenses | $2,481 | $3,410 | | General and administrative expenses | $2,309 | $2,356 | | Total costs and expenses | $4,790 | $5,767 | | Net loss | $(4,791) | $(5,611) | | Net loss per share (basic and diluted) | **$(0.02)** | **$(0.03)** | Condensed Consolidated Statements of Operations and Comprehensive Loss (Six Months Ended June 30) ($ in thousands) | Item | 2021 | 2020 | | :-------------------------------- | :----------- | :----------- | | Research and development revenue | $33 | $0 | | Research and development expenses | $5,722 | $7,497 | | General and administrative expenses | $5,454 | $4,616 | | Total costs and expenses | $11,176 | $12,113 | | Net loss | $(9,747) | $(10,656) | | Net loss per share (basic and diluted) | **$(0.05)** | **$(0.06)** | - For the three months ended June 30, 2021, net loss decreased to **$4.8 million** from **$5.6 million** in the prior year, primarily due to lower R&D expenses[14](index=14&type=chunk) - For the six months ended June 30, 2021, net loss improved to **$9.7 million** from **$10.7 million** in the prior year, with R&D expenses decreasing by approximately **$1.8 million**[14](index=14&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) This section details changes in the company's equity accounts, including common stock, preferred stock, and additional paid-in capital - As of June 30, 2021, the company had **214.6 million shares** of common stock outstanding, an increase from **200.1 million shares** at December 31, 2020[16](index=16&type=chunk) - Series B Convertible Preferred Stock was fully converted into common stock during the six months ended June 30, 2021, resulting in the issuance of **8.7 million common shares**[16](index=16&type=chunk)[61](index=61&type=chunk) - Additional paid-in capital increased by approximately **$13.7 million**, primarily due to common stock issuance from public offering, stock-based compensation, and preferred stock conversion[16](index=16&type=chunk) [Condensed Consolidated Statements of Cash Flow](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flow) This section summarizes cash flows from operating, investing, and financing activities over specific periods Condensed Consolidated Statements of Cash Flow (Six Months Ended June 30) ($ in thousands) | Cash Flow Activity | 2021 | 2020 | | :-------------------------------- | :----------- | :----------- | | Net cash used in operating activities | $(5,516) | $(7,834) | | Net cash provided by/(used in) investing activities | $16,471 | $(46,976) | | Net cash provided by financing activities | $6,965 | $47,443 | | Net increase/(decrease) in cash, cash equivalents and restricted cash | $17,920 | $(7,367) | | Cash, cash equivalents and restricted cash at end of period | $30,688 | $15,390 | - Net cash used in operating activities decreased by **$2.3 million** to **$5.5 million** for the six months ended June 30, 2021, compared to **$7.8 million** in the prior year[19](index=19&type=chunk)[111](index=111&type=chunk) - Investing activities shifted from using **$47.0 million** cash in H1 2020 to providing **$16.5 million** in H1 2021, primarily due to a decrease in marketable securities purchases and an increase in proceeds from sales[19](index=19&type=chunk)[112](index=112&type=chunk) - Net cash provided by financing activities significantly decreased from **$47.4 million** in H1 2020 to **$7.0 million** in H1 2021, mainly due to a smaller public offering in 2021 compared to 2020[19](index=19&type=chunk)[113](index=113&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the unaudited condensed consolidated financial statements [Note 1 – Description of Business](index=9&type=section&id=Note%201%20%E2%80%93%20Description%20of%20Business) This note describes the company's core business as a clinical-stage biopharmaceutical entity focused on novel product development - Matinas BioPharma Holdings Inc. is a clinical-stage biopharmaceutical company focused on identifying and developing novel pharmaceutical products[21](index=21&type=chunk) - The Company operates through its wholly-owned subsidiaries, Matinas BioPharma, Inc. and Matinas BioPharma Nanotechnologies, Inc[21](index=21&type=chunk) [Note 2 – Liquidity and Plan of Operations](index=9&type=section&id=Note%202%20%E2%80%93%20Liquidity%20and%20Plan%20of%20Operations) This note discusses the company's financial liquidity, accumulated deficit, and plans for funding future operations - The Company has an accumulated deficit of approximately **$118.1 million** as of June 30, 2021, and has experienced net losses and negative cash flows from operations since inception[22](index=22&type=chunk) - Net loss for the six-month periods ended June 30, 2021 and 2020, was approximately **$9.7 million** and **$10.7 million**, respectively[22](index=22&type=chunk) - As of June 30, 2021, the Company had **$30.4 million** in cash and cash equivalents and **$29.5 million** in marketable securities, which are believed to be sufficient to fund operations into 2024[26](index=26&type=chunk) [Note 3 – Summary of Significant Accounting Policies](index=9&type=section&id=Note%203%20%E2%80%93%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the key accounting principles and practices used in preparing the condensed consolidated financial statements - The condensed consolidated financial statements are prepared in accordance with U.S. GAAP for interim reporting and include the consolidated accounts of Holdings and its wholly-owned subsidiaries[27](index=27&type=chunk) - Significant accounting policies are consistent with those described in the Company's 2020 Form 10-K[28](index=28&type=chunk) [COVID-19 Impact](index=10&type=section&id=COVID-19) This note addresses the impact of the COVID-19 pandemic on the company's financial results and future operations - The financial results for the three and six months ended June 30, 2021, were not significantly impacted by COVID-19[30](index=30&type=chunk) - The Company cannot predict the future impact of COVID-19 on its results or ability to raise capital due to ongoing uncertainties[30](index=30&type=chunk) [Note 4 – Cash, Cash Equivalents, Restricted Cash and Marketable Securities](index=10&type=section&id=Note%204%20%E2%80%93%20Cash,%20Cash%20Equivalents,%20Restricted%20Cash%20and%20Marketable%20Securities) This note details the composition and fair value of the company's cash, cash equivalents, restricted cash, and marketable securities - Cash and cash equivalents include highly liquid financial instruments with original maturities of three months or less, while marketable securities have maturities greater than three months[31](index=31&type=chunk) Cash, Cash Equivalents and Restricted Cash (as of June 30, 2021 vs. December 31, 2020) ($ in thousands) | Item | June 30, 2021 | December 31, 2020 | | :-------------------------------- | :------------ | :-------------- | | Cash and cash equivalents | $30,352 | $12,432 | | Restricted cash | $336 | $336 | | Total cash, cash equivalents and restricted cash | $30,688 | $12,768 | Marketable Securities (as of June 30, 2021) ($ in thousands) | Type | Fair Value | | :-------------------------------- | :----------- | | U.S. Treasury Bonds | $10,482 | | U.S. Government Notes | $10,654 | | Corporate Debt Securities | $7,078 | | State and Municipal Bonds | $1,276 | | Total marketable securities | $29,490 | - The Company recorded unrealized losses of approximately **$85 thousand** and **$177 thousand** for the three and six months ended June 30, 2021, respectively, on available-for-sale securities[34](index=34&type=chunk) [Note 5 - Fair Value Measurements](index=11&type=section&id=Note%205%20-%20Fair%20Value%20Measurements) This note explains the company's methodology for measuring financial instruments at fair value using a hierarchical framework - The Company uses a fair value hierarchy (Level 1, 2, and 3) to measure financial instruments, maximizing observable inputs[37](index=37&type=chunk)[38](index=38&type=chunk)[39](index=39&type=chunk) - U.S. Treasury bonds are classified as Level 1, while U.S. government notes, corporate debt securities, and state and municipal bonds are classified as Level 2[41](index=41&type=chunk) [Note 6 – Leasehold Improvements and Equipment](index=12&type=section&id=Note%206%20%E2%80%93%20Leasehold%20Improvements%20and%20Equipment) This note details the company's leasehold improvements and equipment, including their net book value and depreciation expenses Leasehold Improvements and Equipment, Net (as of June 30, 2021 vs. December 31, 2020) ($ in thousands) | Item | June 30, 2021 | December 31, 2020 | | :-------------------------------- | :------------ | :-------------- | | Lab equipment | $1,443 | $1,443 | | Leasehold improvements | $878 | $878 | | Total | $2,321 | $2,321 | | Less: accumulated depreciation and amortization | $914 | $797 | | Net | $1,407 | $1,524 | - Depreciation and amortization expense for the six months ended June 30, 2021, was approximately **$117 thousand**, consistent with **$115 thousand** in the prior year[42](index=42&type=chunk) [Note 7 – Accrued Expenses and Other Liabilities](index=13&type=section&id=Note%207%20%E2%80%93%20Accrued%20Expenses%20and%20Other%20Liabilities) This note provides a breakdown of the company's accrued expenses and other liabilities, including deferred revenue Accrued Expenses (as of June 30, 2021 vs. December 31, 2020) ($ in thousands) | Category | June 30, 2021 | December 31, 2020 | | :-------------------------------- | :------------ | :-------------- | | Payroll and incentives | $619 | $1,094 | | General and administrative expenses | $249 | $280 | | Research and development expenses | $1,055 | $778 | | Deferred revenue and other deferred liabilities | $840 | $643 | | Total | $2,763 | $2,795 | - Deferred liability under the Cystic Fibrosis Foundation agreement increased to approximately **$807 thousand** at June 30, 2021, from **$577 thousand** at December 31, 2020[44](index=44&type=chunk) [Note 8 – Leases](index=13&type=section&id=Note%208%20%E2%80%93%20Leases) This note describes the company's lease agreements, including office and laboratory facilities, and their associated liabilities and terms - The Company has various lease agreements, including office space and a laboratory facility, with terms up to 10 years[45](index=45&type=chunk) - An amendment to the Bedminster lease, effective August 1, 2021, extends the term for seven years with a total commitment of approximately **$1.8 million**[47](index=47&type=chunk) Maturity of Lease Liabilities (as of June 30, 2021) ($ in thousands) | Period | Operating Lease Liabilities | Finance Lease Liabilities | | :-------------------------------- | :------------------------ | :---------------------- | | Remainder of 2021 | $314 | $17 | | 2022 | $645 | $19 | | 2023 | $677 | $2 | | 2024 | $710 | $0 | | 2025 | $745 | $0 | | Thereafter | $1,458 | $0 | | Total undiscounted lease payments | $4,549 | $38 | | Present value of lease liabilities | $3,475 | $38 | | Weighted average remaining lease term | 6.3 years | 1.3 years | | Weighted average discount rate | 8.4% | 8.0% | [Note 9 - Collaboration Agreements, Licenses and Other Research and Development Agreements](index=14&type=section&id=Note%209%20-%20Collaboration%20Agreements,%20Licenses%20and%20Other%20Research%20and%20Development%20Agreements) This note details the company's collaboration, licensing, and R&D agreements, including funding and revenue recognition - The Company received a Therapeutics Development Award of up to **$4.2 million** from the Cystic Fibrosis Foundation (CFF) to support preclinical development of MAT2501[54](index=54&type=chunk) - Approximately **$971 thousand** was recognized as credits to R&D expenses related to the CFF Award for the six months ended June 30, 2021[55](index=55&type=chunk) - Under a feasibility study agreement with Genentech, the Company recognized approximately **$33 thousand** in revenue for fulfilling obligations for the second of three molecules during the six months ended June 30, 2021[56](index=56&type=chunk) [Note 10 – Income Taxes](index=15&type=section&id=Note%2010%20%E2%80%93%20Income%20Taxes) This note outlines the company's income tax provisions, including the recognition of net operating losses and R&D tax credits - The Company recognized approximately **$1.3 million** and **$1.1 million** for the six months ended June 30, 2021 and 2020, respectively, from the sale of New Jersey Net Operating Losses (NOLs) and R&D tax credits[57](index=57&type=chunk) [Note 11 – Stockholders' Equity](index=15&type=section&id=Note%2011%20%E2%80%93%20Stockholders'%20Equity) This note details changes in stockholders' equity, including common stock issuances, preferred stock conversions, and outstanding warrants - For the six months ended June 30, 2021, the Company sold **3.0 million shares** of common stock under its At-The-Market Sales Agreement, generating net proceeds of approximately **$5.6 million**[58](index=58&type=chunk) - On June 19, 2021, all Series B Preferred Stock was automatically converted into **8.4 million shares** of common stock, resulting in zero preferred shares outstanding[61](index=61&type=chunk) - As of June 30, 2021, the Company had outstanding warrants to purchase **1.3 million shares** of common stock at exercise prices ranging from **$0.50** to **$0.75** per share[64](index=64&type=chunk) - Diluted net loss per common share is the same as basic net loss per common share due to the anti-dilutive effect of potentially dilutive securities[66](index=66&type=chunk) [Note 12 – Accumulated Other Comprehensive Income](index=18&type=section&id=Note%2012%20%E2%80%93%20Accumulated%20Other%20Comprehensive%20Income) This note details components of accumulated other comprehensive income, focusing on unrealized gains or losses on available-for-sale securities Accumulated Other Comprehensive Income (as of June 30, 2021 vs. December 31, 2020) ($ in thousands) | Item | June 30, 2021 | December 31, 2020 | | :-------------------------------- | :------------ | :-------------- | | Balance | $51 | $228 | | Net unrealized loss on securities available-for-sale | $(177) | N/A | | Net current period other comprehensive loss | $(177) | N/A | - Accumulated other comprehensive income decreased from **$228 thousand** at December 31, 2020, to **$51 thousand** at June 30, 2021, primarily due to net unrealized losses on available-for-sale securities[68](index=68&type=chunk) [Note 13 – Stock-based Compensation](index=18&type=section&id=Note%2013%20%E2%80%93%20Stock-based%20Compensation) This note describes the company's stock-based compensation plans and the associated expenses recognized - The Company's 2013 Equity Compensation Plan provides for various equity grants, with shares available for issuance automatically increasing each January[69](index=69&type=chunk)[70](index=70&type=chunk) Stock-based Compensation Expense (Six Months Ended June 30) ($ in thousands) | Category | 2021 | 2020 | | :-------------------------------- | :--------- | :--------- | | Research and Development | $945 | $1,180 | | General and Administrative | $1,212 | $1,212 | | Total | $2,157 | $2,392 | - As of June 30, 2021, total unrecognized compensation costs related to unvested awards were approximately **$9.4 million**, to be recognized over a weighted-average period of 2.8 years[72](index=72&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=20&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 condition and results of operations, highlighting key trends, liquidity, capital resources, and future outlook. It includes a cautionary note on forward-looking statements and discusses the Company's strategic focus on its LNC drug delivery platform and product candidates [Cautionary Note Regarding Forward-Looking Statements](index=20&type=section&id=Cautionary%20Note%20Regarding%20Forward-Looking%20Statements) This note highlights the inherent uncertainties and risks associated with forward-looking statements within the report - The report contains forward-looking statements subject to known and unknown risks and uncertainties, which may cause actual results to differ materially[77](index=77&type=chunk) - Key risk factors include the ability to raise additional capital, timing of clinical trials and approvals, history of operating losses, and dependence on early-stage product candidates[78](index=78&type=chunk) - The extent of COVID-19's impact on business and financial results remains highly uncertain and unpredictable[77](index=77&type=chunk) [Overview](index=21&type=section&id=Overview) This section provides a high-level summary of the company's strategic focus, drug delivery platform, and financial outlook - The Company focuses on improving intracellular delivery of therapeutics through its lipid nanocrystal (LNC) drug delivery platform[80](index=80&type=chunk) - Strategic goals include advancing clinical stage assets (MAT2203, MAT2501), expanding LNC platform utilization, and seeking a partner for LYPDISO development[82](index=82&type=chunk)[86](index=86&type=chunk) - The Company expects to incur significant expenses and operating losses for the foreseeable future, requiring additional financing[83](index=83&type=chunk) [Financial Operations Overview](index=22&type=section&id=Financial%20Operations%20Overview) This section outlines the company's revenue generation, expected product revenue timeline, and primary R&D expense areas - Contract research revenue of approximately **$33 thousand** was generated during the six months ended June 30, 2021, from the Genentech feasibility study[84](index=84&type=chunk) - Product revenue is not expected until 2023 at the earliest, contingent on successful development and commercialization of early-stage product candidates[84](index=84&type=chunk) - Research and development expenses are primarily for MAT2203, MAT2501, LYPDISO, and the LNC delivery technology platform[85](index=85&type=chunk) [Current Operating Trends](index=23&type=section&id=Current%20Operating%20Trends) This section discusses ongoing R&D initiatives, anticipated expense increases, and potential delays in clinical trials - Current R&D efforts focus on advancing MAT2203 for cryptococcal meningitis, accelerating MAT2501 preclinical development with CFF assistance, and expanding LNC platform collaborations[96](index=96&type=chunk) - R&D expenses are expected to increase due to later-stage clinical development and strategic expansion of the drug platform technology[88](index=88&type=chunk) - The commencement and completion of clinical trials are subject to numerous uncertainties and potential delays, which could materially affect financial condition[98](index=98&type=chunk) [Results of Operations](index=24&type=section&id=Results%20of%20Operations) This section analyzes the company's financial performance by comparing key revenue and expense figures across reporting periods [Comparison of Q2 2021 to Q2 2020](index=24&type=section&id=Comparison%20of%20the%20three%20months%20ended%20June%2030,%202021%20to%20the%20three%20months%20ended%20June%2030,%202020) This section compares the company's operating expenses for the three months ended June 30, 2021, against the same period in 2020 Operating Expenses (Three Months Ended June 30) ($ in thousands) | Expense Category | 2021 | 2020 | Change (YoY) | | :-------------------------------- | :--------- | :--------- | :----------- | | Research and development | $2,481 | $3,410 | $(929) | | General and administrative | $2,309 | $2,357 | $(48) | | Total Operating Expenses | $4,790 | $5,767 | $(977) | - R&D expenses decreased by approximately **$0.9 million**, primarily due to the completion of the LYPDISO clinical trial in January 2021[100](index=100&type=chunk) - General and administrative expenses slightly decreased by approximately **$48 thousand**, with higher compensation and insurance offset by lower professional fees[101](index=101&type=chunk) [Comparison of H1 2021 to H1 2020](index=25&type=section&id=Comparison%20of%20the%20six%20months%20ended%20June%2030,%202021%20to%20the%20six%20months%20ended%20June%2030,%202020) This section compares the company's revenues and operating expenses for the six months ended June 30, 2021, against the same period in 2020 Revenues and Operating Expenses (Six Months Ended June 30) ($ in thousands) | Item | 2021 | 2020 | Change (YoY) | | :-------------------------------- | :--------- | :--------- | :----------- | | Revenues | $33 | $0 | $33 | | Research and development | $5,722 | $7,497 | $(1,775) | | General and administrative | $5,454 | $4,616 | $838 | | Total Operating Expenses | $11,176 | $12,113 | $(937) | | Sale of net operating losses (NOLs) | $1,328 | $1,073 | $255 | - R&D expenses decreased by approximately **$1.8 million**, primarily due to the completion of the LYPDISO clinical trial[103](index=103&type=chunk) - General and administrative expenses increased by approximately **$0.8 million**, mainly due to higher compensation and insurance expenses[104](index=104&type=chunk) - Income from the sale of NOLs and tax credits increased to **$1.3 million** in H1 2021 from **$1.1 million** in H1 2020[105](index=105&type=chunk) [Liquidity and Capital Resources](index=25&type=section&id=Liquidity%20and%20capital%20resources) This section evaluates the company's ability to meet financial obligations and its sources of funding [Sources of Liquidity](index=25&type=section&id=Sources%20of%20Liquidity) This section identifies the primary means by which the company has historically funded its operations and its current liquid assets - Since inception, the Company has raised approximately **$156.7 million** in gross proceeds from equity securities sales[106](index=106&type=chunk) - As of June 30, 2021, unrestricted cash, cash equivalents, and marketable securities totaled approximately **$59.8 million**[107](index=107&type=chunk) [2020 At-The-Market Sales Agreement](index=25&type=section&id=2020%20At-The-Market%20Sales%20Agreement) This section details the proceeds generated from the sale of common stock under the At-The-Market Sales Agreement - For the six months ended June 30, 2021, the Company sold **3.0 million shares** of common stock under its ATM Sales Agreement, generating net proceeds of approximately **$5.6 million**[108](index=108&type=chunk) [2020 Common Stock Offering](index=26&type=section&id=2020%20Common%20Stock%20Of%20ering) This section describes the net proceeds obtained from the public offering of common stock in January 2020 - In January 2020, a public offering of approximately **32.3 million shares** of common stock generated net proceeds of approximately **$46.7 million**[109](index=109&type=chunk) [Cash Flows](index=26&type=section&id=Cash%20Flows) This section provides a summary and analysis of the company's cash flows from operating, investing, and financing activities Cash Flow Summary (Six Months Ended June 30) ($ in thousands) | Activity | 2021 | 2020 | | :-------------------------------- | :--------- | :--------- | | Operating activities | $(5,516) | $(7,834) | | Investing activities | $16,471 | $(46,976) | | Financing activities | $6,965 | $47,443 | | Net increase/(decrease) in cash | $17,920 | $(7,367) | - The decrease in cash used in operating activities was primarily due to lower R&D expenses and working capital adjustments[111](index=111&type=chunk) - The significant increase in cash provided by investing activities was driven by increased proceeds from marketable securities maturities and decreased purchases[112](index=112&type=chunk) - The decrease in cash from financing activities was mainly due to the smaller scale of equity offerings in 2021 compared to 2020[113](index=113&type=chunk) [Funding Requirements and Other Liquidity Matters](index=27&type=section&id=Funding%20Requirements%20and%20Other%20Liquidity%20Matters) This section outlines the company's projected funding needs, expected sources of future capital, and potential risks - The Company expects existing cash and cash equivalents to fund operating expenses and capital expenditures into 2024[115](index=115&type=chunk) - Future funding needs are expected to be met through equity offerings, debt financings, government funding, collaborations, and licensing arrangements[116](index=116&type=chunk) - Failure to raise additional funds could lead to delays or termination of product development and commercialization efforts[117](index=117&type=chunk) [Contractual Obligations and Commitments](index=27&type=section&id=Contractual%20Obligations%20and%20Commitments) This section details the company's significant contractual obligations, including lease agreements and their financial commitments - The Bedminster lease amendment, effective August 1, 2021, extends the lease term for seven years with a total commitment of approximately **$1.8 million**[118](index=118&type=chunk) [Off-Balance Sheet Arrangements](index=27&type=section&id=Of%20-Balance%20Sheet%20Arrangements) This section confirms the absence of any off-balance sheet arrangements during the reported periods - The Company did not have any off-balance sheet arrangements during the periods presented[119](index=119&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=28&type=section&id=Item%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) This section assesses the Company's exposure to market risk, primarily focusing on interest rate sensitivity related to its cash, cash equivalents, and marketable securities - The Company's market risk exposure is limited to its cash, cash equivalents, and marketable securities, totaling **$59.8 million** as of June 30, 2021[120](index=120&type=chunk) - Due to the short-term nature of its investment portfolio, a sudden change in market interest rates is not expected to have a material impact on financial condition[120](index=120&type=chunk) - The Company does not have any foreign currency or other derivative financial instruments[120](index=120&type=chunk) [Item 4. Controls and Procedures](index=28&type=section&id=Item%204.%20CONTROLS%20AND%20PROCEDURES) This section details the evaluation of the Company's disclosure controls and procedures and reports on any changes in internal control over financial reporting [Evaluation of Disclosure Controls and Procedures](index=28&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) This section reports on the effectiveness of the company's disclosure controls and procedures as assessed by management - As of June 30, 2021, the principal executive officer and principal financial officer concluded that the Company's disclosure controls and procedures were effective at the reasonable assurance level[121](index=121&type=chunk) [Changes in Internal Control Over Financial Reporting](index=28&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) This section confirms that there were no material changes in the company's internal control over financial reporting during the period - There were no changes in internal control over financial reporting during the second quarter of 2020 that materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting[123](index=123&type=chunk) [PART II - OTHER INFORMATION](index=29&type=section&id=PART%20-%20II%20OTHER%20INFORMATION) This section includes disclosures on legal proceedings, risk factors, equity sales, defaults, mine safety, and other information [Item 1. Legal Proceedings](index=29&type=section&id=Item%201.%20LEGAL%20PROCEEDINGS) This section states that there are no legal proceedings to report - There are no legal proceedings to report[125](index=125&type=chunk) [Item 1A. Risk Factors](index=29&type=section&id=Item%201A.%20RISK%20FACTORS) This section refers to the Annual Report on Form 10-K for a comprehensive list of risk factors and confirms no material changes in the current reporting period - There were no material changes from the risk factors set forth in the Annual Report on Form 10-K for the fiscal year ended December 31, 2020[126](index=126&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=29&type=section&id=Item%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) This section indicates that there were no unregistered sales of equity securities or use of proceeds to report - There were no unregistered sales of equity securities and use of proceeds to report[127](index=127&type=chunk) [Item 3. Defaults Under Senior Securities](index=29&type=section&id=Item%203.%20DEFAULTS%20UNDER%20SENIOR%20SECURITIES) This section states that there were no defaults under senior securities - There were no defaults under senior securities[128](index=128&type=chunk) [Item 4. Mine Safety Disclosures](index=29&type=section&id=Item%204.%20MINE%20SAFETY%20DISCLOSURES) This section indicates that mine safety disclosures are not applicable to the Company - Mine safety disclosures are not applicable[129](index=129&type=chunk) [Item 5. Other Information](index=29&type=section&id=Item%205.%20OTHER%20INFORMATION) This section states that there is no other information to report - There is no other information to report[130](index=130&type=chunk) [Item 6. Exhibits](index=29&type=section&id=Item%206.%20EXHIBITS) This section provides an index of exhibits filed or furnished with the Quarterly Report on Form 10-Q - The report includes an Exhibit Index listing certifications and XBRL documents[131](index=131&type=chunk)[137](index=137&type=chunk)

Matinas BioPharma Holdings, Inc. (NYSE:MTNB) Q1 2021 Earnings Conference Call May 10, 2021 8:00 AM ET Company Participants Peter Vozzo - Investor Relations Jerome Jabbour - Chief Executive Officer Keith Kucinski - Chief Financial Officer Conference Call Participants Robert Hazlett - BTIG Yasmeen Rahimi - Piper Sandler Gregory Fraser - Truist Securities Operator Hello, and welcome to the Matinas BioPharma's Q1 2021 Results Conference Call and Webcast. At this time, all participants are in a listen-only mode. ...

PART I - FINANCIAL INFORMATION [Financial Statements](index=4&type=section&id=Item%201.%20FINANCIAL%20STATEMENTS) This section presents the unaudited condensed consolidated financial statements for Q1 2021, encompassing balance sheets, statements of operations, stockholders' equity, and cash flows, accompanied by detailed notes [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2021, total assets increased to **$72.4 million**, driven by cash and marketable securities, while total liabilities decreased to **$5.8 million**, resulting in increased stockholders' equity of **$66.6 million** Condensed Consolidated Balance Sheet Highlights (Unaudited) | Account | March 31, 2021 | December 31, 2020 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $23,382,743 | $12,432,481 | | Marketable securities | $37,283,697 | $46,246,573 | | Total current assets | $63,135,665 | $61,554,845 | | Total assets | $72,350,569 | $70,967,306 | | **Liabilities & Stockholders' Equity** | | | | Total current liabilities | $2,221,352 | $3,567,621 | | Total liabilities | $5,794,465 | $7,236,609 | | Total stockholders' equity | $66,556,104 | $63,730,697 | [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) For Q1 2021, the company reported a net loss of approximately **$5.0 million** or **($0.03) per share**, consistent with the prior year, with minimal revenue and total expenses of approximately **$6.4 million** Condensed Consolidated Statements of Operations (Unaudited) | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | Revenue | $33,333 | $ - | | Research and development expense | $3,241,432 | $4,086,883 | | General and administrative expense | $3,145,010 | $2,259,631 | | Loss from operations | $(6,353,109) | $(6,346,514) | | Net loss | $(4,956,320) | $(5,045,898) | | Net loss per share - basic and diluted | $(0.03) | $(0.03) | [Condensed Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Equity) Stockholders' equity increased from **$63.7 million** to **$66.6 million**, primarily due to **$5.6 million** net proceeds from a public stock offering and stock-based compensation, partially offset by net loss - During Q1 2021, the company issued **3,023,147 shares** of common stock in a public offering, raising net proceeds of **$5,580,471**[17](index=17&type=chunk) - Stock-based compensation expense for Q1 2021 was approximately **$1.1 million**[17](index=17&type=chunk) [Condensed Consolidated Statements of Cash Flow](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flow) Net cash used in operating activities was approximately **$4.7 million**, while investing activities provided **$8.8 million** and financing activities provided **$6.8 million**, leading to a net cash increase of **$11.0 million** for Q1 2021 Condensed Consolidated Statements of Cash Flow (Unaudited) | Cash Flow Activity | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | Net cash used in operating activities | $(4,651,113) | $(4,664,546) | | Net cash provided by/(used in) investing activities | $8,816,859 | $(54,967,709) | | Net cash provided by financing activities | $6,784,516 | $47,439,344 | | Net increase/(decrease) in cash | $10,950,262 | $(12,192,911) | [Notes to Unaudited Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) The notes detail the company's status as a clinical-stage biopharmaceutical firm with an accumulated deficit of **$112.5 million**, but with **$60.7 million** in cash and marketable securities, sufficient to fund operations into 2024, alongside key collaborations and a **$5.6 million** stock offering - The company is a clinical-stage biopharmaceutical company focused on developing novel pharmaceutical products using its lipid nanocrystal (LNC) platform delivery technology[22](index=22&type=chunk)[24](index=24&type=chunk) - As of March 31, 2021, the company had cash and cash equivalents of **$23.4 million** and marketable securities of **$37.3 million**, which are believed to be sufficient to fund planned operations into **2024**[27](index=27&type=chunk) - The company entered into an award agreement with the Cystic Fibrosis Foundation (CFF) for up to **$4.2 million** to support the preclinical development of its MAT2501 product candidate, recognizing **$424,000** as credits to R&D expenses in Q1 2021[55](index=55&type=chunk)[56](index=56&type=chunk) - Under a feasibility study agreement with Genentech, the company recognized approximately **$33,000** of revenue in Q1 2021 for developing an oral formulation of a second molecule[57](index=57&type=chunk) - In Q1 2021, the company sold **3,023,147 shares** of common stock under its At-The-Market Sales Agreement, generating net proceeds of approximately **$5.6 million**[26](index=26&type=chunk)[59](index=59&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=19&type=section&id=Item%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management discusses the company's LNC platform, clinical asset advancement, and financial performance for Q1 2021, reporting a **$5.0 million** net loss, with **$60.7 million** in cash and marketable securities expected to fund operations into 2024 - The company's strategy is focused on advancing its LNC platform technology, delivering efficacy data for MAT2203 in the EnACT study, progressing MAT2501 with support from the Cystic Fibrosis Foundation, and expanding collaborations[81](index=81&type=chunk)[84](index=84&type=chunk) - The company expects to continue incurring significant expenses and operating losses and will need additional financing, which it plans to seek through equity/debt offerings, collaborations, or other funding[82](index=82&type=chunk) [Results of Operations](index=23&type=section&id=Results%20of%20Operations) Q1 2021 revenue was minimal at **$33,000**, while R&D expenses decreased by **$0.9 million** to **$3.2 million** due to trial completion, and G&A expenses increased by **$0.8 million** to **$3.1 million** due to higher compensation Direct Research and Development Expenses (in thousands) | Expense Category | Three months ended March 31, 2021 | Three months ended March 31, 2020 | | :--- | :--- | :--- | | Manufacturing process development | $489 | $305 | | Preclinical trials | $9 | $151 | | Clinical development | $771 | $1,493 | | Regulatory | $42 | $19 | | Internal staffing, overhead and other | $1,930 | $2,119 | | **Total research and development** | **$3,241** | **$4,087** | - The decrease in R&D expenses was primarily due to the completion of the LYPDISO clinical trial in January 2021[100](index=100&type=chunk) - The increase in G&A expense was primarily due to higher compensation expense related to the exercise of stock options during the quarter[101](index=101&type=chunk) [Liquidity and Capital Resources](index=24&type=section&id=Liquidity%20and%20Capital%20Resources) As of March 31, 2021, the company held approximately **$60.7 million** in cash and marketable securities, raising **$5.6 million** from ATM sales, with **$4.7 million** net cash used in operations, sufficient to fund operations into 2024 - As of March 31, 2021, the company had cash, cash equivalents and marketable securities totaling approximately **$60.7 million**[103](index=103&type=chunk) - In Q1 2021, the company sold **3,023,147 shares** of common stock under its ATM Sales Agreement, generating net proceeds of approximately **$5.6 million**[104](index=104&type=chunk) - The company expects its existing cash and cash equivalents will be sufficient to fund its operating expenses and capital expenditures requirements into **2024**[110](index=110&type=chunk) Cash Flow Summary (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | Cash used in operating activities | $(4,651) | $(4,664) | | Cash provided by/(used in) investing activities | $8,817 | $(54,968) | | Cash provided by financing activities | $6,785 | $47,439 | [Quantitative and Qualitative Disclosures About Market Risk](index=26&type=section&id=Item%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) The company's market risk is primarily interest rate sensitivity on its **$60.7 million** cash and marketable securities, but due to the short-term nature of investments, no material impact from U.S. interest rate changes is anticipated - The company's primary market risk is interest income sensitivity from changes in U.S. interest rates on its cash, cash equivalents, and marketable securities[115](index=115&type=chunk) - Due to the short-term nature of the investment portfolio, a sudden change in market interest rates is not expected to have a material impact on financial condition or operations[115](index=115&type=chunk) [Controls and Procedures](index=26&type=section&id=Item%204.%20CONTROLS%20AND%20PROCEDURES) As of March 31, 2021, disclosure controls and procedures were deemed effective, with modifications to internal controls over financial reporting resulting from the implementation of a new ERP system during the quarter - Management concluded that the company's disclosure controls and procedures were **effective** as of March 31, 2021[116](index=116&type=chunk) - During the quarter ended March 31, 2021, the company implemented a **new ERP system**, which led to changes in its internal control over financial reporting[118](index=118&type=chunk) PART II - OTHER INFORMATION [Legal Proceedings](index=27&type=section&id=Item%201.%20LEGAL%20PROCEEDINGS) The company reported no legal proceedings during the reporting period - None[119](index=119&type=chunk) [Risk Factors](index=27&type=section&id=Item%201A.%20RISK%20FACTORS) No material changes were reported from the risk factors previously disclosed in the Annual Report on Form 10-K for the fiscal year ended December 31, 2020 - There were **no material changes** from the risk factors set forth in the Annual Report on Form 10-K for the fiscal year ended December 31, 2020[120](index=120&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=27&type=section&id=Item%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) The company reported no unregistered sales of equity securities or use of proceeds during the reporting period - None[121](index=121&type=chunk) [Other Information](index=27&type=section&id=Item%205.%20OTHER%20INFORMATION) This item is not applicable for the current reporting period - Not applicable[124](index=124&type=chunk) [Exhibits](index=27&type=section&id=Item%206.%20EXHIBITS) This section refers to the Exhibit Index, listing all exhibits filed with the Quarterly Report on Form 10-Q, including CEO and CFO certifications and XBRL data files - The Exhibit Index lists **certifications from the CEO and CFO (31.1, 31.2, 32.1)** and **XBRL-related documents (101.1-101.6)** filed with the report[125](index=125&type=chunk)[131](index=131&type=chunk)

LNC Platform & Technology - Matinas BioPharma focuses on improving intracellular delivery of therapeutics using its Lipid Nanocrystal (LNC) delivery technology[4] - LNCs are differentiated from liposomes, LNPs, and viral vectors due to their unique structure, formulation goals, and potential applications, offering advantages like stability and the ability to deliver large molecules[23] - The LNC platform enables targeted delivery to activated cells through membrane fusion, phagocytosis, or endocytosis, leveraging phosphatidylserine (PS) for cellular targeting[27] MAT2203 (Oral Amphotericin B) - The global Amphotericin B market is approximately $800 million in 2018, with a potential for expansion to $6 billion within the invasive fungal infection market[50] - EnACT, a Phase 2 study in HIV patients with cryptococcal meningitis, is assessing the safety, tolerability, and efficacy of MAT2203, with enrollment >50% and on schedule[4, 62] MAT2501 (Oral Amikacin) - Matinas BioPharma received $3.75 million in funding from the Cystic Fibrosis Foundation to accelerate the development of MAT2501 for nontuberculous mycobacterial (NTM) disease[4, 74] - MAT2501 has the potential to become the first oral aminoglycoside, addressing a significant unmet need in the treatment of NTM infections, with 80,000-90,000 US NTM patients, 40% of whom are refractory to treatment[68] LYPDISO™ (MAT9001) - ENHANCE-IT study data demonstrated significantly higher plasma EPA concentrations with LYPDISO™ compared to Vascepa®, with a 46% relative percent increase change from baseline EPA level vs Vascepa®[85] - The ENHANCE-IT data supports the pursuit of a cardiovascular outcomes indication for LYPDISO™[87]

Financial Data and Key Metrics Changes - For Q4 2020, the company reported a net loss of approximately $6.6 million or $0.03 per share, compared to a net loss of approximately $5.8 million or $0.04 per share in Q4 2019 [62] - For the full year 2020, the net loss was approximately $23.2 million or $0.12 per share, compared to a net loss of approximately $18.3 million or $0.13 per share in 2019, primarily due to increased operating expenses [63] - Cash, cash equivalents, and marketable securities at December 31, 2020, were approximately $58.7 million, up from $27.8 million at the end of 2019, mainly due to the sale of approximately 32.3 million shares at $1.55 per share in January 2020 [65] Business Line Data and Key Metrics Changes - Research and development expenses for Q4 2020 were approximately $3.5 million, slightly up from $3.4 million in Q4 2019, while full-year R&D expenses increased to $14.4 million from $11.2 million in 2019, driven by higher clinical development costs [64] - General and administrative expenses for Q4 2020 were approximately $3 million, compared to $2.3 million in Q4 2019, with full-year G&A expenses rising to $10 million from $7.8 million, attributed to increased headcount and professional fees [64] Market Data and Key Metrics Changes - The completion of the ENHANCE-IT trial of LYPDISO versus Vascepa was highlighted as a major milestone, with results suggesting LYPDISO's potential for superior cardioprotective effects [11][12] - The company is focusing on securing a global partner for LYPDISO's continued development, indicating a strategic shift towards broader cardiovascular indications rather than severe hypertriglyceridemia [12][28] Company Strategy and Development Direction - The company aims to refocus on its LNC platform delivery technology, which is believed to differentiate it from other intracellular delivery technologies [13][19] - The LNC platform is expected to provide important preclinical and clinical data in 2021, with ongoing collaborations with leading pharmaceutical companies [14][17] - The company is pursuing external partnerships to maximize the opportunity for LYPDISO, focusing on cardiovascular risk reduction rather than smaller indications [28][77] Management's Comments on Operating Environment and Future Outlook - Management expressed pride in the accomplishments of 2020 despite challenges posed by the global pandemic, emphasizing a focused strategy moving forward [10][18] - The company anticipates significant progress in 2021, particularly with MAT2203 and MAT2501, and is optimistic about the potential of its LNC platform [18][70] Other Important Information - The company has taken steps to protect its intellectual property, with 24 patents issued in the last five years related to the LNC platform [19] - The company is evaluating opportunities to expand the application of its LNC platform in innovative areas such as mRNA and gene therapy [18] Q&A Session Summary Question: Why is the company not pursuing severe hypertriglyceridemia but focusing on a broader population? - The decision was based on a close review of ENHANCE-IT data, suggesting LYPDISO has a higher potential for cardioprotective effects, leading to a focus on cardiovascular outcomes rather than a smaller indication [75][76][77] Question: What are the opportunities for using the LNC platform for mRNA constructs and gene therapy? - The LNC platform is seen as a solution to the challenges of delivering complex nucleic acid polymers, with the potential for improved stability and efficacy compared to existing technologies [82][84]