PART I - FINANCIAL INFORMATION This part details Matinas BioPharma's unaudited financial statements, including balance sheets, operations, equity, and cash flow, highlighting a $101.2 million accumulated deficit and sufficient liquidity into 2023 Item 1. Financial Statements This section provides Matinas BioPharma's unaudited condensed consolidated financial statements, including balance sheets, statements of operations, equity, and cash flow, with accompanying notes Condensed Consolidated Balance Sheets This section presents the company's financial position at specific dates, detailing assets, liabilities, and stockholders' equity Condensed Consolidated Balance Sheet Highlights (September 30, 2020 vs. December 31, 2019) | Metric | Sep 30, 2020 (Unaudited) | Dec 31, 2019 (Audited) | | :-------------------------------- | :----------------------- | :--------------------- | | Cash and cash equivalents | $7,051,225 | $22,170,438 | | Marketable securities | $55,719,661 | $5,604,634 | | Total current assets | $65,203,014 | $29,922,856 | | Total assets | $74,806,426 | $40,240,155 | | Total liabilities | $6,601,207 | $7,188,573 | | Total stockholders' equity | $68,205,219 | $33,051,582 | Condensed Consolidated Statements of Operations and Comprehensive Loss This section outlines the company's revenues, expenses, and net loss over specific periods, including comprehensive loss Condensed Consolidated Statements of Operations Highlights (Nine Months Ended September 30) | Metric | 2020 (Unaudited) | 2019 (Unaudited) | Change (YoY) | | :-------------------------------- | :--------------- | :--------------- | :----------- | | Contract research revenue | $95,833 | $89,812 | +$6,021 | | Research and development expenses | $10,833,345 | $7,814,842 | +$3,018,503 | | General and administrative expenses | $6,980,155 | $5,460,023 | +$1,520,132 | | Total costs and expenses | $17,813,500 | $13,274,865 | +$4,538,635 | | Net loss | $(16,105,958) | $(11,799,820) | $(4,306,138) | | Net loss per common share | $(0.09) | $(0.09) | $0.00 | Condensed Consolidated Statements of Stockholders' Equity This section details changes in the company's equity accounts, including common stock, additional paid-in capital, and accumulated deficit Condensed Consolidated Statements of Cash Flow This section reports the cash inflows and outflows from operating, investing, and financing activities over specific periods Condensed Consolidated Statements of Cash Flow Highlights (Nine Months Ended September 30) | Metric | 2020 (Unaudited) | 2019 (Unaudited) | Change (YoY) | | :-------------------------------- | :--------------- | :--------------- | :----------- | | Net cash used in operating activities | $(13,060,126) | $(9,193,089) | $(3,867,037) | | Net cash used in investing activities | $(49,756,351) | $(405,604) | $(49,350,747)| | Net cash provided by financing activities | $47,497,264 | $29,841,637 | +$17,655,627 | | Net (decrease)/increase in cash, cash equivalents and restricted cash | $(15,319,213) | $20,242,944 | $(35,562,157)| | Cash, cash equivalents and restricted cash at end of period | $7,437,225 | $33,250,782 | $(25,813,557)| - The Company had an accumulated deficit of approximately $101.2 million through September 30, 2020, and expects to incur substantial and increasing losses for the foreseeable future as it continues product development2325 Notes to Unaudited Condensed Consolidated Financial Statements This section provides detailed explanations and additional information supporting the unaudited condensed consolidated financial statements Note 1 – Description of Business This note describes Matinas BioPharma Holdings Inc. as a clinical-stage biopharmaceutical company focused on novel product development - Matinas BioPharma Holdings Inc. is a clinical-stage biopharmaceutical company focused on identifying and developing novel pharmaceutical products22 Note 2 – Liquidity and Plan of Operations This note discusses the company's financial liquidity, historical losses, and plans for funding future operations - The Company has experienced net losses and negative cash flows from operations since inception, with an accumulated deficit of approximately $101.2 million as of September 30, 202023 - The Company's lead product candidate is MAT-9001, and it is also developing its lipid nano-crystal (LNC) platform delivery technology and associated product candidates24 - As of September 30, 2020, the Company had $7.1 million in cash and cash equivalents and $55.7 million in marketable securities, which are believed to be sufficient to fund operations into the first half of 202327 Note 3 – Summary of Significant Accounting Policies This note outlines the key accounting principles and policies used in preparing the condensed consolidated financial statements - The unaudited condensed consolidated financial statements are prepared in accordance with U.S. GAAP and include the consolidated accounts of Holdings, BioPharma, and Nanotechnologies28 - The COVID-19 pandemic did not significantly impact financial results for the three and nine months ended September 30, 2020, but future impacts on results or capital raising ability are uncertain31 - The Company adopted ASU 2018-13 and ASU 2018-18 on January 1, 2020, neither of which had a material impact on the condensed consolidated financial statements3233 Note 4 – Cash, Cash Equivalents, Restricted Cash and Marketable Securities This note provides details on the company's cash, cash equivalents, restricted cash, and marketable securities holdings and related gains/losses Cash, Cash Equivalents and Restricted Cash (in thousands) | Item | Sep 30, 2020 | Dec 31, 2019 | Sep 30, 2019 | Dec 31, 2018 | | :------------------------------------------------ | :----------- | :----------- | :----------- | :----------- | | Cash and cash equivalents | $7,051 | $22,170 | $32,665 | $12,447 | | Restricted cash included in current/long term assets | $386 | $586 | $586 | $561 | | Total cash, cash equivalents and restricted cash | $7,437 | $22,756 | $33,251 | $13,008 | - The Company recorded unrealized losses of approximately $114.2 thousand for the three months ended September 30, 2020, and unrealized gains of approximately $367.1 thousand for the nine months ended September 30, 2020, on marketable securities37 Marketable Securities as of September 30, 2020 (in thousands) | Type | Amortized Cost | Unrealized Gain | Unrealized (Loss) | Fair Value | | :------------------------ | :------------- | :-------------- | :---------------- | :--------- | | U.S. Treasury Bonds | $25,575 | $220 | — | $25,795 | | U.S. Government Notes | $22,305 | $116 | $(1) | $22,420 | | Corporate Debt Securities | $6,201 | $19 | — | $6,220 | | State and Municipal Bonds | $1,275 | $10 | — | $1,285 | | Total | $55,356 | $365 | $(1) | $55,720| Note 5 - Fair Value Measurements This note details the fair value hierarchy and measurements applied to the company's financial assets Fair Value Hierarchy of Assets as of September 30, 2020 (in thousands) | Asset Type | Total | Level 1 | Level 2 | Level 3 | | :------------------------ | :-------- | :-------- | :-------- | :------ | | U.S. Treasury Bonds | $25,795 | $25,795 | — | — | | U.S. Government Notes | $22,420 | — | $22,420 | — | | Corporate Debt Securities | $6,220 | — | $6,220 | — | | State and Municipal Bonds | $1,285 | — | $1,285 | — | | Total | $55,720 | $25,795 | $29,925 | — | - Cash and cash equivalents, money market funds, and 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 243 Note 6 – Leasehold Improvements and Equipment This note provides information on the company's leasehold improvements and equipment, including depreciation and amortization expenses Leasehold Improvements and Equipment, Net (in thousands) | Category | Sep 30, 2020 | Dec 31, 2019 | | :-------------------------------- | :----------- | :----------- | | Lab equipment | $1,443 | $1,437 | | Leasehold improvements | $878 | $878 | | Total | $2,321 | $2,315 | | Less: accumulated depreciation and amortization | $739 | $566 | | Net | $1,582 | $1,749 | Depreciation and Amortization Expense (in thousands) | Period | 2020 | 2019 | | :------------------------------------ | :----------- | :----------- | | Three months ended September 30 | $57.8 | $52.0 | | Nine months ended September 30 | $173.2 | $148.9 | Note 7 – Accrued Expenses This note details the composition of the company's accrued expenses, including payroll, general and administrative, and R&D Accrued Expenses (in thousands) | Category | Sep 30, 2020 | Dec 31, 2019 | | :---------------------------- | :----------- | :----------- | | Payroll and incentives | $805 | $978 | | General and administrative expenses | $250 | $428 | | Research and development expenses | $856 | $421 | | Deferred revenue | $104 | $100 | | Other | — | $13 | | Total | $2,015 | $1,940 | Note 8 – Leases This note outlines the company's lease arrangements, including lease expenses and significant lease amendments Lease Expense (in thousands) | Lease Type | Period | 2020 | 2019 | | :--------- | :------------------------------------ | :---- | :---- | | Operating | Three months ended September 30 | $203.4 | $610.3 | | Operating | Nine months ended September 30 | $610.3 | $610.3 | | Finance | Interest expense (three months) | $1.4 | $2.8 | | Finance | Interest expense (nine months) | $5.4 | $9.3 | | Finance | Amortization expense (three months) | $8.6 | $25.0 |\ | Finance | Amortization expense (nine months) | $50.3 | $97.8 | - The Company amended its administrative office lease in Bedminster, New Jersey, to include an additional 3,034 square feet, extending the lease term by seven years from January 15, 2021, with a total commitment of approximately $1.8 million55 Note 9 – Income Taxes This note provides information on the company's income tax-related activities, specifically the sale of net operating losses Sale of Net Operating Losses (NOLs) (in millions) | Period | 2020 | 2019 | | :------------------------------------ | :---- | :---- | | Three months ended September 30 | $0 | $0 | | Nine months ended September 30 | $1.1 | $1.0 | Note 10 – Stockholders' Equity This note details changes in stockholders' equity, including public offerings, ATM agreements, warrants, and diluted net loss per share - On July 2, 2020, the Company entered into an At-The-Market (ATM) Sales Agreement to offer and sell up to $50 million of common stock, but no shares were sold under this agreement as of September 30, 202057 - On January 14, 2020, the Company completed a public offering of 32.3 million common shares at $1.55 per share, generating net proceeds of approximately $46.7 million58 Warrants Outstanding (in thousands) | Metric | Dec 31, 2018 | Dec 31, 2019 | Sep 30, 2020 | | :------------------------------------ | :----------- | :----------- | :----------- | | Outstanding shares | 5,799 | 5,397 | 1,328 | | Weighted average exercise price | N/A | $0.62 | $0.55 | | Shares exercised (9 months ended Sep 30, 2020) | N/A | N/A | (2,576) | | Shares expired (9 months ended Sep 30, 2020) | N/A | N/A | (1,493) | - 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 (stock options, preferred stock, warrants) during periods of net loss66 Note 11 – Accumulated Other Comprehensive (Loss)/Income This note presents the changes in accumulated other comprehensive income or loss, primarily from unrealized gains/losses on available-for-sale securities Changes in Accumulated Other Comprehensive (Loss)/Income (Nine Months Ended September 30, 2020, in thousands) | Component | Net Unrealized (Losses)/Gains on Available-for-Sale Securities | Accumulated Other Comprehensive (Loss)/Gain | | :---------------------------------------- | :------------------------------------------------------------- | :------------------------------------------ | | Balance, December 31, 2019 | $(1) | $(1) | | Unrealized gain on securities available-for-sale | $368 | $368 | | Reclassifications to net loss | $(3) | $(3) | | Net current period other comprehensive income | $365 | $365 | - There were no accumulated other comprehensive (losses)/gains during the nine months ended September 30, 201969 Note 12 – Stock-based Compensation This note details the company's stock-based compensation expense, including modifications to stock options and unrecognized compensation costs Stock-based Compensation Expense (in thousands) | Category | Three Months Ended Sep 30, 2020 | Three Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2019 | | :------------------------ | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Research and Development | $358 | $185 | $1,538 | $834 | | General and Administrative | $595 | $486 | $1,807 | $1,463 | | Total | $953 | $671 | $3,345 | $2,297 | - The Company modified certain vested stock options during the nine months ended September 30, 2020, extending their exercise terms by two years, resulting in an additional stock-based compensation expense of approximately $432.8 thousand recorded in R&D72 - As of September 30, 2020, total unrecognized compensation costs for unvested awards were approximately $9.0 million, with a weighted-average recognition period of 2.9 years73 Note 13 – Subsequent Event This note reports on any significant events that occurred after the reporting period but before the financial statements were issued - There were no subsequent events to report76 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section analyzes Matinas BioPharma's financial condition, results of operations, and liquidity, covering business overview, COVID-19 impact, and key financial changes - The Company is a clinical-stage biopharmaceutical company focused on developing MAT9001 for cardiovascular and metabolic conditions and applying its LNC platform delivery technology8283 - The Company has incurred losses since inception, with a net loss of approximately $16.1 million for the nine months ended September 30, 2020, and expects significant future expenses, necessitating additional financing83 - The COVID-19 pandemic temporarily halted clinical trial enrollment in March 2020, which resumed in June/July, and while it did not significantly impact financial results for the reported period, future impacts on trials and capital raising remain uncertain8588 Cautionary Note Regarding Forward-Looking Statements This note advises readers that the report contains forward-looking statements subject to risks and uncertainties that may cause actual results to differ - This report contains forward-looking statements subject to risks and uncertainties, including those related to the COVID-19 pandemic, which may cause actual results to differ materially78 - Key factors that could cause actual results to differ include the ability to raise capital, timing of clinical results, regulatory approvals, competition, reimbursement uncertainties, third-party performance, and intellectual property costs81 Overview This section provides a general business overview, strategic focus, and highlights the company's historical net losses and future expectations - Matinas BioPharma is a clinical-stage biopharmaceutical company focused on developing MAT9001 for cardiovascular and metabolic conditions and applying its LNC platform delivery technology82 - The company's strategy includes advancing MAT9001 for severe hypertriglyceridemia (SHTG), delivering efficacy data for MAT2203 in cryptococcal meningitis (CM) with NIH support, and expanding LNC platform applications through collaborations87 - The Company has incurred net losses of approximately $16.1 million and $11.8 million for the nine months ended September 30, 2020 and 2019, respectively, and expects to incur significant expenses and operating losses in the coming years83 Impact of COVID-19 This section discusses the effects of the COVID-19 pandemic on clinical trial timelines and potential future financial or operational impacts - The COVID-19 pandemic led to a temporary halt in clinical trial enrollment in March 2020, with enrollment and dosing resuming in June and July85 - The pandemic could adversely affect the ability to complete trials on expected timelines, impact third-party service providers, and cause delays in regulatory approvals or drug supply8586 - Financial results for the three and nine months ended September 30, 2020, were not significantly impacted by COVID-19, but future impacts on results or capital raising are unpredictable88 Financial Operations Overview This section provides an overview of the company's revenue generation, research and development expenses, and other income components Contract Research Revenue (Nine Months Ended September 30) | Year | Revenue | | :--- | :------ | | 2020 | $95.8K | | 2019 | $89.8K | - The Company does not expect to generate product revenue until 2023 at the earliest, if ever, depending on successful product candidate development and commercialization89 Research and Development Expenses (in thousands) | Category | 3 Months Ended Sep 30, 2020 | 3 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2019 | | :-------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Manufacturing process development | $318 | $353 | $928 | $462 | | Preclinical trials | $119 | $487 | $598 | $1,063 | | Clinical development | $1,295 | $413 | $3,994 | $1,746 | | Regulatory | $39 | $37 | $73 | $170 | | Internal staffing, overhead and other | $1,565 | $1,381 | $5,240 | $4,374 | | Total R&D | $3,336 | $2,671 | $10,833 | $7,815 | - General and administrative expenses are expected to increase in 2020 due to public company status, employee compensation, investor relations, intellectual property protection, and insurance costs94 Sale of Net Operating Losses (NOLs) (in millions) | Period | 2020 | 2019 | | :------------------------------------ | :---- | :---- | | Nine months ended September 30 | $1.1 | $1.0 | - Other income, net, primarily consists of interest income and dividends from cash and investments, offset by interest expense and franchise taxes96 - Current R&D efforts focus on advancing MAT9001 for SHTG, expanding LNC platform technology through collaborations, and driving MAT2203 to efficacy data in CM100 Results of Operations This section analyzes the company's financial performance, comparing revenues and expenses for the reported periods Comparison of Three Months Ended September 30 (in thousands) | Metric | 2020 | 2019 | Change (YoY) | | :------------------------ | :---- | :---- | :----------- | | Revenues | $96 | $0 | +$96 | | Research and development | $3,336| $2,671| +$665 | | General and administrative | $2,364| $1,890| +$474 | | Operating Expenses | $5,700| $4,561| +$1,139 | - The increase in R&D expenses for the three months ended September 30, 2020, was primarily due to higher employee compensation and clinical trial costs for MAT9001 and MAT2203105 Comparison of Nine Months Ended September 30 (in thousands) | Metric | 2020 | 2019 | Change (YoY) | | :------------------------ | :----- | :----- | :----------- | | Revenues | $96 | $90 | +$6 | | Research and development | $10,834| $7,815 | +$3,019 | | General and administrative | $6,980 | $5,460 | +$1,520 | | Operating Expenses | $17,814| $13,275| +$4,539 | | Sale of net operating losses (NOLs) | $1,073 | $1,007 | +$66 | - The increase in general and administrative expenses for both periods was mainly due to higher compensation expense from increased employee headcount106110 Liquidity and Capital Resources This section details the company's cash position, funding sources, and future capital requirements for operations and development - Since inception, the Company has funded operations through private placements and public offerings, raising approximately $150.9 million in gross proceeds and $138.4 million net112 - As of September 30, 2020, cash, cash equivalents, and marketable securities totaled $62.8 million, expected to fund operations into the first half of 2023113122 Cash Flows (Nine Months Ended September 30, in thousands) | Activity | 2020 | 2019 | Change (YoY) | | :---------------------------------------- | :------ | :------ | :----------- | | Cash used in operating activities | $(13,060)| $(9,193) | $(3,867) | | Cash used in investing activities | $(49,756)| $(406) | $(49,350) | | Cash provided by financing activities | $47,497 | $29,842 | +$17,655 | | Net (decrease)/increase in cash, cash equivalents and restricted cash | $(15,319)| $20,243 | $(35,562) | - The increase in cash used in investing activities by $49.4 million was primarily due to the purchase and maturities of marketable securities in 2020120 - The increase in cash provided by financing activities by $17.7 million was mainly due to $46.6 million net proceeds from the January 2020 public offering, compared to $30.1 million from the March 2019 offering, plus proceeds from warrant and option exercises121 - Future funding requirements are expected to increase substantially for preclinical and clinical studies, regulatory approvals, manufacturing, intellectual property, and operational expansion122 Item 3. Quantitative and Qualitative Disclosures About Market Risk This section describes the company's limited market risk exposure, primarily from interest rate sensitivity on short-term, high-quality investments - The Company's market risk is limited to cash, cash equivalents, and marketable securities, all with maturities of one year or less129 - Investment policy restricts investments to investment-grade credit ratings and U.S. government fixed income securities129 - Primary market risk is interest income sensitivity; however, due to the short-term and high-quality nature of investments, a sudden change in interest rates is not expected to have a material impact129 Item 4. Controls and Procedures This section confirms the effectiveness of disclosure controls and the remediation of a previously identified material weakness in internal financial reporting controls - As of September 30, 2020, the Company's disclosure controls and procedures were evaluated and concluded to be effective at the reasonable assurance level130 - A material weakness in internal controls over financial reporting, identified in the 2019 Form 10-K, was remediated as of June 30, 2020132 - Remediation involved enhancing operational procedures for purchasing, receiving, and recording expenditures, and formalizing and testing review procedures134 PART II - OTHER INFORMATION This part contains additional information not covered in the financial statements, including legal proceedings, risk factors, and exhibits Item 1. Legal Proceedings This section confirms that no legal proceedings were reported for the specified period - No legal proceedings were reported137 Item 1A. Risk Factors This section states no material changes to previously disclosed risk factors, advising investors to consider all risks from prior and current filings - No material changes to risk factors from the Annual Report on Form 10-K for the fiscal year ended December 31, 2019, were reported138 - Investors are advised to carefully consider previously disclosed risk factors, as well as other information in this report and other SEC filings, as additional unknown or immaterial risks could still have a material adverse effect138 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section reports no unregistered sales of equity securities or related use of proceeds during the period - No unregistered sales of equity securities or use of proceeds were reported139 Item 3. Defaults Under Senior Securities This section confirms that no defaults under senior securities were reported for the period - No defaults under senior securities were reported140 Item 4. Mine Safety Disclosures This section clarifies that mine safety disclosures are not applicable to the company's operations - Mine safety disclosures are not applicable141 Item 5. Other Information This section indicates that no other material information was reported for the period - No other information was reported142 Item 6. Exhibits This section lists all exhibits filed with the Quarterly Report on Form 10-Q, including certifications and XBRL documents - The exhibit index includes certifications from the CEO and CFO (pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), and 18 U.S.C. Section 1350) and various XBRL documents149
Matinas BioPharma(MTNB) - 2020 Q3 - Quarterly Report