Marker Therapeutics(MRKR) - 2023 Q1 - Quarterly Report

PART I – FINANCIAL INFORMATION This section presents the unaudited condensed consolidated financial statements, management's discussion and analysis, market risk disclosures, and internal controls for the company Item 1. Financial Statements (Unaudited) This section presents the unaudited condensed consolidated financial statements for Marker Therapeutics, Inc. for the quarter ended March 31, 2023, including balance sheets, statements of operations, stockholders' equity, and cash flows, along with detailed notes explaining the company's operations, liquidity, accounting policies, and recent financial activities Condensed Consolidated Balance Sheets The balance sheet shows a decrease in cash and total assets, alongside a reduction in total liabilities and stockholders' equity from December 31, 2022, to March 31, 2023 | Metric | March 31, 2023 ($) | December 31, 2022 ($) | | :-------------------------- | :------------- | :---------------- | | Cash and cash equivalents | $6,401,243 | $11,782,172 | | Total current assets | $10,912,872 | $16,619,255 | | Total assets | $27,941,047 | $34,422,184 | | Total current liabilities | $5,204,048 | $7,781,809 | | Total liabilities | $12,027,699 | $14,821,147 | | Total stockholders' equity | $15,913,348 | $19,601,037 | - The Company effected a one-for-ten (1-for-10) reverse stock split of its common stock on January 26, 2023, and a corresponding reduction in authorized shares from 300 million to 30 million. All historical share and per share amounts have been adjusted[6] Condensed Consolidated Statements of Operations The statement of operations reveals a significant increase in total revenues, primarily from related party services, leading to a substantial reduction in net loss for the three months ended March 31, 2023 | Metric | Three Months Ended March 31, 2023 ($) | Three Months Ended March 31, 2022 ($) | | :-------------------------------------- | :-------------------------------- | :-------------------------------- | | Grant income | $1,234,336 | $964,322 | | Related party service revenue | $3,500,000 | — | | Total revenues | $4,734,336 | $964,322 | | Research and development | $7,270,742 | $7,026,066 | | General and administrative | $2,515,824 | $3,733,001 | | Total operating expenses | $9,786,566 | $10,759,067 | | Loss from operations | $(5,052,230) | $(9,794,745) | | Net loss | $(4,967,576) | $(9,910,508) | | Net loss per share, basic and diluted | $(0.57) | $(1.19) | - Total revenues significantly increased by 391% to $4.7 million for the three months ended March 31, 2023, primarily due to $3.5 million in related party service revenue[8] - Net loss decreased by 50% to $(4.97) million for the three months ended March 31, 2023, compared to $(9.91) million in the prior year period[8] Condensed Consolidated Statements of Stockholders' Equity The statement of stockholders' equity shows a decrease in total equity from January 1, 2023, to March 31, 2023, primarily driven by the net loss, partially offset by stock issuances | Metric | January 1, 2023 ($) | March 31, 2023 ($) | | :-------------------------------- | :-------------- | :------------- | | Common Stock Shares | 8,405,771 | 8,798,829 | | Common Stock Par value | $8,406 | $8,799 | | Additional Paid-in Capital | $447,641,680 | $448,921,174 | | Accumulated Deficit | $(428,049,049) | $(433,016,625) | | Total Stockholders' Equity | $19,601,037 | $15,913,348 | - Total stockholders' equity decreased from $19.6 million at January 1, 2023, to $15.9 million at March 31, 2023, primarily due to the net loss of $4.97 million, partially offset by common stock issuances and stock-based compensation[11] Condensed Consolidated Statements of Cash Flows The cash flow statement indicates a significant reduction in net cash used in operating activities, but an overall net decrease in cash and cash equivalents for the three months ended March 31, 2023 | Cash Flow Activity | Three Months Ended March 31, 2023 ($) | Three Months Ended March 31, 2022 ($) | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Net cash used in operating activities | $(5,888,295) | $(12,226,062) | | Net cash used in investing activities | $(112,608) | $(2,452,188) | | Net cash provided by financing activities | $619,974 | — | | Net decrease in cash and cash equivalents | $(5,380,929) | $(14,678,250) | | Cash and cash equivalents at end of period | $6,401,243 | $28,819,081 | - Net cash used in operating activities decreased significantly from $(12.23) million in Q1 2022 to $(5.89) million in Q1 2023[14] - Cash and cash equivalents at the end of the period decreased to $6.4 million as of March 31, 2023, from $11.8 million at the beginning of the period[14] Notes to Condensed Consolidated Financial Statements These notes provide detailed explanations of the company's business, significant accounting policies, liquidity, recent transactions, and other financial information for the reporting period - Marker Therapeutics, Inc. is a clinical-stage immuno-oncology company developing novel T cell-based immunotherapies for hematological malignancies and solid tumors, utilizing multiTAA T cell technology[16] - The Company completed a one-for-ten reverse stock split on January 26, 2023, reducing authorized shares from 300 million to 30 million[17] - As of March 31, 2023, the Company had approximately $6.4 million in cash and cash equivalents and expects this to fund operations into the third quarter of 2023, excluding the anticipated $19.0 million from the Cell Ready Agreement[20][31] - The Company recognized $1.1 million from a CPRIT grant and $0.1 million from an FDA Orphan Products Grant for its MT-401 Phase 2 clinical trial during the three months ended March 31, 2023[23][25] - The Company recognized $3.5 million in related party service revenue from Wilson Wolf Manufacturing Corporation, including a $1.0 million milestone payment for completing services within one year[24][53][54] - In May 2023, the Company entered into the Cell Ready Agreement to assign manufacturing facility leases, sell equipment, and assign related contracts to Cell Ready, LLC for approximately $19.0 million, with the transaction expected to close on June 26, 2023[28][29][73][74][75] - The Company's future funding requirements depend on clinical trial progress, R&D, regulatory approvals, commercialization efforts, and strategic transactions, raising substantial doubt about its ability to continue as a going concern[32][33][34][35] - Stock-based compensation expense for the three months ended March 31, 2023, was $0.66 million, down from $1.63 million in the prior year, with $3.5 million in unrecognized compensation cost remaining[62] - Juan Vera was appointed President and CEO on April 27, 2023, replacing Peter Hoang, with an option grant of 100,000 shares approved on May 10, 2023[76][145][146] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. This section provides management's perspective on the company's financial condition and results of operations for the three months ended March 31, 2023, compared to the same period in 2022. It covers revenue, operating expenses, net loss, liquidity, capital resources, and recent developments, highlighting the company's reliance on external funding and the going concern uncertainty Company Overview This section outlines Marker Therapeutics' focus as a clinical-stage immuno-oncology company developing T cell-based immunotherapies for various cancers, leveraging its multiTAA-specific T cell technology - Marker Therapeutics is a clinical-stage immuno-oncology company focused on developing T cell-based immunotherapies for hematological malignancies and solid tumors, leveraging its multiTAA-specific T cell technology licensed from The Baylor College of Medicine[83][84] - The company is advancing three product candidates: autologous treatment for lymphoma and solid tumors, allogeneic T cells for AML, and off-the-shelf products, with current clinical programs including MT-401 for post-transplant AML and MT-601 for pancreatic cancer and lymphoma[85] Recent Developments This section highlights key recent events, including the Cell Ready Agreement for manufacturing facility sale and the one-for-ten reverse stock split - In May 2023, the Company entered into the Cell Ready Agreement to sell its manufacturing facilities, equipment, and related contracts to Cell Ready, LLC for approximately $19.0 million, with the transaction expected to close on June 26, 2023[87][88][89] - On January 26, 2023, the Company completed a one-for-ten reverse stock split, reducing authorized common stock shares from 300 million to 30 million[90] Results of Operations This section analyzes the company's financial performance for the three months ended March 31, 2023, focusing on revenue growth, expense management, and the resulting net loss reduction Summary of Operations (Three Months Ended March 31) | Metric | 2023 (Thousands of $) | 2022 (Thousands of $) | Change (Thousands of $) | Change (%) | | :-------------------------- | :----------- | :----------- | :------------- | :--------- | | Grant income | 1,234 | 964 | 270 | 28% | | Related party service revenue | 3,500 | — | 3,500 | 100% | | Total revenues | 4,734 | 964 | 3,770 | 391% | | Research and development | 7,271 | 7,026 | 245 | 3% | | General and administrative | 2,516 | 3,733 | (1,217) | (33)% | | Total operating expenses | 9,787 | 10,759 | (972) | (9)% | | Loss from operations | (5,052) | (9,795) | 4,743 | (48)% | | Net loss | (4,968) | (9,911) | 4,943 | (50)% | | Net loss per share | (0.57) | (1.19) | 0.62 | (52)% | - Total revenues increased by 391% to $4.7 million in Q1 2023, driven by $3.5 million in related party service revenue from Wilson Wolf and increased grant income[92][93][94][95][96] - Operating expenses decreased by 9% to $9.8 million in Q1 2023, primarily due to a 33% decrease in general and administrative expenses, partially offset by a 3% increase in research and development expenses[92][97][98][99] - The decrease in net loss by 50% to $(4.97) million was attributed to the timing of process development expenses, lower BCM clinical supplies costs, and higher grant income, despite continued R&D expansion[92][102] Liquidity and Capital Resources This section discusses the company's cash position, working capital, cash flow activities, and future funding requirements, highlighting the going concern uncertainty Cash and Working Capital | Metric | March 31, 2023 ($) | December 31, 2022 ($) | | :-------------------- | :------------- | :---------------- | | Cash and cash equivalents | $6,401,000 | $11,782,000 | | Working capital | $5,709,000 | $8,837,000 | Summary of Cash Flows (Three Months Ended March 31) | Cash Flow Activity | 2023 (Thousands of $) | 2022 (Thousands of $) | | :-------------------------------- | :----------- | :----------- | | Net cash used in operating activities | (5,888) | (12,226) | | Net cash used in investing activities | (113) | (2,452) | | Net cash provided by financing activities | 620 | — | | Net decrease in cash and cash equivalents | (5,381) | (14,678) | - The Company expects its cash and cash equivalents of $6.4 million as of March 31, 2023, to fund operating expenses and capital expenditure requirements into the third quarter of 2023, excluding the anticipated $19.0 million from the Cell Ready Agreement[118] - The Company has no product sales revenue and relies on equity/debt financings and collaboration arrangements to fund operations, facing substantial doubt about its ability to continue as a going concern[110][119][125][126] - During Q1 2023, the Company sold 200,261 shares for $0.6 million under its ATM Agreement and 12,500 shares for $33,000 under a purchase agreement with Lincoln Park Capital Fund, LLC[123][124] Item 3. Quantitative and Qualitative Disclosures About Market Risk. As a smaller reporting company, Marker Therapeutics, Inc. is not required to provide quantitative and qualitative disclosures about market risk - The Company is a smaller reporting company and is not required to provide quantitative and qualitative disclosures about market risk[128] Item 4. Controls and Procedures. Management, including the principal executive and financial officers, evaluated the effectiveness of the company's disclosure controls and procedures, concluding they were effective as of March 31, 2023. No material changes to internal control over financial reporting were reported during the quarter - Management concluded that the Company's disclosure controls and procedures were effective as of March 31, 2023[129][130] - No material changes in internal control over financial reporting occurred during the three months ended March 31, 2023[133] PART II – OTHER INFORMATION This section provides disclosures on legal proceedings, risk factors, equity sales, senior securities, mine safety, other corporate information, and exhibits Item 1. Legal Proceedings. The Company is not currently a party to any material legal proceedings and is unaware of any pending or threatened legal actions that could adversely affect its business, operating results, or financial condition - The Company is not currently a party to any material legal proceedings and is not aware of any pending or threatened legal actions that could adversely affect its business[134] Item 1A. Risk Factors. This section refers to the risk factors detailed in the Company's Annual Report on Form 10-K, with no material changes noted other than those specifically related to the announcement and potential non-completion of the Cell Ready transaction, which could disrupt business operations and impact financial performance - No material changes to risk factors were identified, other than those related to the announcement and pendency of the Cell Ready transaction[135] - The Cell Ready transaction could cause business disruptions, impair ability to attract/retain key personnel, create difficulties with partners, limit alternative business opportunities, and lead to litigation[136][137][143] - Failure to complete the Cell Ready transaction could adversely affect the Company's stock price, result in significant unrecoverable costs, and generate negative publicity[139][144] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. The Company did not record any issuances of unregistered equity securities during the three months ended March 31, 2023 - No unregistered sales of equity securities were recorded during the three months ended March 31, 2023[140] Item 3. Defaults Upon Senior Securities. The Company reported no defaults upon senior securities during the period - There were no defaults upon senior securities[141] Item 4. Mine Safety Disclosure. This item is not applicable to the Company - This item is not applicable[142] Item 5. Other Information. This section discloses the grant of a one-time stock option for 100,000 shares to Juan Vera, the newly appointed President and Chief Executive Officer, with a four-year annual vesting schedule - On May 10, 2023, the board approved a one-time stock option grant of 100,000 shares to Juan Vera, the new President and CEO, vesting in equal annual installments over four years[145][146] Item 6. Exhibits. This section lists all exhibits filed with the Quarterly Report on Form 10-Q, including corporate documents, agreements, certifications, and XBRL interactive data files - The report includes various exhibits such as the Certificate of Incorporation, Bylaws, Separation Agreement with Peter Hoang, Purchase Agreement with Cell Ready, and certifications from the CEO and CFO[148] Signatures The report is signed by Juan Vera, President, Chief Executive Officer and Principal Executive Officer, and Michael J. Loiacono, Chief Accounting Officer and Principal Financial and Accounting Officer, certifying its submission in accordance with the Exchange Act - The report was signed on May 15, 2023, by Juan Vera, President, Chief Executive Officer and Principal Executive Officer, and Michael J. Loiacono, Chief Accounting Officer and Principal Financial and Accounting Officer[152][153]