Mustang Bio(US:MBIO)2025-05-14 20:05PART I. FINANCIAL INFORMATION Unaudited Financial Statements Mustang Bio's Q1 2025 saw cash increase to $14.2 million and net loss decrease, despite ongoing going concern doubts Balance Sheets The balance sheet reflects a significant increase in cash and total assets, with a shift to positive stockholders' equity Balance Sheet Summary (Unaudited, in thousands) | | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $14,231 | $6,839 | | Total current assets | $14,909 | $8,606 | | Total Assets | $14,909 | $9,308 | | Liabilities & Stockholders' Equity | | | | Total current liabilities | $11,150 | $12,609 | | Total Liabilities | $11,300 | $13,181 | | Total Stockholders' Equity | $3,609 | $(3,873) | | Total Liabilities and Stockholders' Equity | $14,909 | $9,308 | Statements of Operations The statements of operations show a substantial reduction in total operating expenses and net loss for the quarter Statements of Operations Summary (Unaudited, in thousands) | | Three months ended March 31, 2025 | Three months ended March 31, 2024 | | :--- | :--- | :--- | | Research and development | $(964) | $3,804 | | General and administrative | $1,217 | $1,427 | | Total operating expenses | $253 | $5,231 | | Loss from operations | $(253) | $(5,231) | | Net Loss | $(153) | $(5,191) | | Net loss per share, basic and diluted | $(0.05) | $(24.81) | Statements of Cash Flows Cash flow statements indicate a significant increase in cash from financing activities, offsetting operating cash usage Cash Flow Summary (Unaudited, in thousands) | | Three months ended March 31, 2025 | Three months ended March 31, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(1,389) | $(5,321) | | Net cash from investing activities | $1,165 | $— | | Net cash provided by financing activities | $7,616 | $49 | | Net change in cash | $7,392 | $(5,272) | | Cash at end of period | $14,231 | $1,712 | Notes to Unaudited Financial Statements Key notes detail a reverse stock split, going concern doubts, lease termination gain, and recent equity financing - The company executed a 1-for-50 reverse stock split effective January 15, 2025. All share and per-share data have been retroactively adjusted3031 - Management has concluded that substantial doubt exists about the Company's ability to continue as a going concern for at least 12 months from the issuance date of the financial statements, due to expected operating losses and the need for additional funding3536 - In February 2025, the company terminated its Plantation Street Facility lease, resulting in a net gain of $0.4 million recorded in R&D expense, and sold the remaining equipment for approximately $1.2 million48 - In February 2025, the company raised approximately $6.8 million in net proceeds from a best efforts public offering of common stock and warrants5253 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses CAR T pipeline, recent financing, and cost reductions, while acknowledging ongoing going concern limitations Overview and Pipeline The company focuses on clinical-stage CAR T therapies for hematologic malignancies, autoimmune diseases, and solid tumors - Mustang Bio is a clinical-stage biopharmaceutical company focused on CAR T therapies for hematologic malignancies, autoimmune diseases, and solid tumors8485 - The company is exploring an investigator-sponsored trial for MB-109 (MB-101 CAR T + MB-108 oncolytic virus) for glioblastoma, potentially starting in Q1 20268892 - The company is focusing development of MB-106 (CD20-targeted CAR T) on autoimmune diseases, with a potential investigator-sponsored trial initiation in Q1 20269093 Recent Developments and Financing Recent developments include a reverse stock split, facility lease termination, and a public offering to regain Nasdaq compliance - On January 15, 2025, the company effected a 1-for-50 reverse stock split to regain compliance with Nasdaq's minimum bid price requirement96104 - In February 2025, the company terminated its Worcester, MA facility lease, sold remaining equipment to AbbVie for $1.0 million, and relocated its headquarters9899100 - The company regained compliance with Nasdaq's minimum stockholders' equity rule following a February 2025 public offering that raised net proceeds of approximately $6.8 million105108 - During Q1 2025, the company raised gross proceeds of $0.6 million under its At-the-Market (ATM) offering agreement111 Results of Operations Operating results show a significant decrease in total operating expenses and net loss due to cost-saving measures Comparison of Operations for the Three Months Ended March 31 (in thousands) | | 2025 | 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Research and development | $(964) | $3,804 | $(4,768) | (125)% | | General and administrative | $1,217 | $1,427 | $(210) | (15)% | | Total operating expenses | $253 | $5,231 | $(4,978) | (95)% | | Net Loss | $(153) | $(5,191) | $5,038 | (97)% | - The $4.8 million decrease in R&D expenses was primarily due to cost-saving actions from 2024, including workforce reduction and clinical trial closures. The figure for Q1 2025 includes a $0.7 million savings from settling aged payables and a $0.4 million net gain from the termination of the Plantation Street Facility lease, resulting in a credit for the quarter119 - General and administrative expenses decreased by $0.2 million, mainly due to lower consulting and professional services costs, partially offset by an increase in non-cash stock-based compensation120 Liquidity and Capital Resources The company's liquidity is characterized by $14.2 million cash, an accumulated deficit, and substantial going concern doubt - As of March 31, 2025, the company had cash and cash equivalents of $14.2 million and an accumulated deficit of $396.9 million122 - There is substantial doubt about the company's ability to continue as a going concern for the next 12 months, dependent on raising additional capital123 - The company is subject to the SEC's "baby shelf rules," which limits the amount of funds it can raise through its Form S-3 registration statement to one-third of its public float in any 12-month period, as its public float is below $75 million124 Quantitative and Qualitative Disclosures About Market Risks The company is a smaller reporting company and is not required to provide this information - As a smaller reporting company, Mustang Bio is not required to provide information under this item134 Controls and Procedures Management, including the principal executive and financial officer, evaluated the company's disclosure controls and procedures and concluded they were effective as of March 31, 2025. There were no material changes in internal control over financial reporting during the quarter - Based on an evaluation as of March 31, 2025, the company's principal executive and financial officer concluded that disclosure controls and procedures are effective135 - No material changes to internal control over financial reporting occurred during the most recent quarter136 PART II. OTHER INFORMATION Legal Proceedings The company reported no legal proceedings - None137 Risk Factors The company faces substantial financial, operational, and strategic risks, including going concern doubts, unproven products, and third-party reliance Risks Related to Our Finances and Capital Requirements The company faces significant financial risks, including a history of losses, going concern doubts, and limited capital raising ability - The company has a history of significant losses, with an accumulated deficit of $396.9 million as of March 31, 2025, and expects to incur losses for the foreseeable future140 - There is substantial doubt about the company's ability to continue as a going concern, as it will need to raise additional funding which may not be available on acceptable terms143144 - The company's ability to raise funds is limited by SEC "baby shelf rules," restricting sales under its Form S-3 to one-third of its public float (which is under $75 million) in any 12-month period157159 Risks Related to Our Business Strategy, Structure, and Organization The company's success depends heavily on unproven CAR T product candidates, potentially limiting other opportunities - The company's future success is heavily dependent on its CAR T product candidates, which are based on a relatively new and unproven approach to cancer treatment that presents significant challenges168173 - As a company with limited resources, it may forgo or delay opportunities with other product candidates that could prove to have greater commercial potential176 Risks Inherent in Drug Development and Commercialization Drug development faces risks including costly clinical trials, uncertain regulatory approval, potential side effects, and market acceptance challenges - Clinical trials are expensive, time-consuming, and may be delayed or suspended for numerous reasons, including difficulty enrolling patients, which could increase costs and hinder regulatory approval178182 - Product candidates are subject to extensive and uncertain regulation by the FDA and other authorities, and there is no guarantee of receiving approval186189 - Serious or unacceptable side effects identified during development could lead to the abandonment or limitation of product candidates200 - Even if approved, product candidates may not achieve broad market acceptance among physicians, patients, and payors, which would limit revenues218 Risks Related to Reliance on Third Parties The company heavily relies on third parties for preclinical studies, clinical trials, and manufacturing, posing risks to development and supply - The company relies on third parties, such as CROs and licensors (COH, Fred Hutch), to conduct preclinical studies and clinical trials, and these parties may not perform satisfactorily231237 - The company contracts with third parties for the manufacturing of its product candidates, which increases risks related to supply sufficiency, cost, regulatory compliance (cGMP), and potential delays238243 - The company relies on third parties for all aspects of its LV vector production, and any failure by these parties could delay or halt development and commercialization246248 Risks Relating to Legislation and Regulation Affecting the Biopharmaceutical and Other Industries The company is subject to healthcare reform and anti-kickback laws, potentially increasing costs and limiting profitability - The company is subject to healthcare reform measures, such as the ACA and the Inflation Reduction Act (IRA), which could increase compliance costs, constrain pricing, and adversely affect its ability to market products profitably255257258 - Business relationships with healthcare providers and payors are subject to anti-kickback, fraud and abuse, and other healthcare laws, which could expose the company to significant penalties if violations occur264266 Risks Related to Intellectual Property and Potential Disputes Thereof Intellectual property risks include challenges in obtaining and maintaining patents, reliance on licensors, and potential costly lawsuits - The company's success depends on its ability to obtain and maintain patent protection, which is an uncertain, expensive, and time-consuming process271276 - The company depends on its licensors (e.g., COH, Fred Hutch) to maintain and enforce the intellectual property covering its product candidates, and has limited control over their actions280281 - The company may become involved in costly lawsuits to protect its patents or defend against claims that it infringes on the intellectual property rights of third parties286287 Risks Relating to Our Control by Fortress Fortress Biotech's majority control creates potential conflicts of interest and dilutive stock issuances for other shareholders - Fortress Biotech controls a voting majority of the company's common stock, allowing it to influence all matters requiring stockholder approval, which may create conflicts of interest297 - Fortress has the right to receive significant annual stock grants, which will dilute the holdings of other common stockholders298 General Risks and Risks Associated with Ownership of our Common Stock General risks include cyber-attacks, stock price volatility, and the ongoing risk of Nasdaq delisting despite recent compliance - The company's business is vulnerable to computer system failures and cyber-attacks, which could result in the loss of confidential information, disrupt development programs, and cause reputational harm301303 - The market price of the company's common stock has been and may continue to be volatile321 - The company recently regained compliance with Nasdaq's listing requirements but is subject to a one-year monitoring period and faces the risk of future delisting if it fails to maintain compliance329330 Unregistered Sales of Equity Securities and Use of Proceeds On January 1, 2025, the company issued 69,046 shares of its common stock to Fortress Biotech as an Annual Stock Dividend, representing 2.5% of its fully-diluted outstanding equity as of December 31, 2024. The issuance was exempt from registration under the Securities Act - On January 1, 2025, the company issued 69,046 shares of common stock to Fortress as an Annual Stock Dividend, representing 2.5% of the company's fully-diluted equity. This was deemed exempt from registration under Section 4(a)(2) of the Securities Act331332 Defaults Upon Senior Securities The company reported no defaults upon senior securities - None333 Mine Safety Disclosures The company reported no mine safety disclosures - None334 Other Information During the first quarter of 2025, none of the company's directors or officers adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement - No directors or officers adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the three months ended March 31, 2025335 Exhibits This section lists the exhibits filed with the Form 10-Q, including agreements related to asset sales, corporate governance documents, warrant forms, securities purchase agreements, and officer certifications