PART I Item 1. Business Matinas BioPharma develops LNC platform for drug delivery and seeks a partner for LYPDISO, an omega-3 formulation Company Overview Matinas BioPharma focuses on LNC platform for drug delivery and seeks a partner for LYPDISO for cardiovascular conditions - Matinas BioPharma is a biopharmaceutical company focused on improving intracellular delivery of critical therapeutics via its lipid nanocrystal (LNC) delivery platform and seeking a partner for LYPDISO™ (formerly MAT9001) for cardiovascular and metabolic conditions15 - The LNC platform, exclusively licensed from Rutgers University, uses phospholipids and calcium to nano-encapsulate target molecules, enabling safe, efficient, and targeted intracellular delivery through various routes (oral, intramuscular, intravenous, inhalation)1617 - MAT2203, an oral amphotericin B formulation, is the lead LNC-based drug candidate for invasive fungal infections, developed with NIH support and holding QIDP and Fast Track status for multiple indications, including cryptococcosis1920 - MAT2501, an oral amikacin program, is being developed for non-tuberculous mycobacterial (NTM) infection, largely funded by the Cystic Fibrosis Foundation (CFF), with positive preclinical proof-of-concept data21 - The company is pursuing strategic collaborations with biotech and pharmaceutical partners to expand the application of its LNC platform technology, including research evaluations with a top global pharmaceutical company, ViiV Healthcare, Genentech, and NIAID (for remdesivir)222324 - LYPDISO is a next-generation, highly purified omega-3 free fatty acid formulation designed for hypertriglyceridemia (HTG) and cardiovascular conditions, differentiated by its enhanced bioavailability and unique composition (high EPA plus DPA, low DHA)2526 - The ENHANCE-IT study showed LYPDISO's potential for superior cardioprotection over Vascepa, with significantly higher plasma EPA concentrations, leading the company to seek a partner for its further development28 Strategy The company's strategy centers on advancing its LNC platform and finding a partner for LYPDISO - The company's strategy focuses on improving intracellular delivery of therapeutics via its LNC drug delivery platform for small molecules, nucleic acids, gene therapies, proteins/peptides, and vaccines29 - A key strategic element is to find a partner for LYPDISO, a proprietary next-generation prescription omega-3 drug, believed to offer superior cardioprotective effects29 - Advancing clinical-stage LNC assets, delivering efficacy data for MAT2203 in cryptococcal meningitis, progressing MAT2501 development with CFF support, and expanding LNC platform utilization through collaborations are core strategic goals34402406 Our Lipid Nanocrystal (LNC) Platform Delivery Technology The LNC platform enhances drug delivery by encapsulating molecules for targeted intracellular uptake - The LNC platform addresses challenges in drug delivery by providing stable, unique multilayered structures composed of phospholipids (like phosphatidylserine) and calcium, protecting encapsulated molecules from degradation3337 - LNCs offer significant flexibility in administration routes (oral, intramuscular, intravenous, inhalation) and can encapsulate a broad range of molecules, including small molecules, nucleic acids (ASOs, mRNA, siRNA, DNA plasmids), and gene editing technologies (CRISPR/Cas9)37 - Unlike other technologies, LNCs can enter cells through phagocytosis, membrane fusion, or clathrin-mediated endocytosis, facilitated by phosphatidylserine (PS) on their surface, which interacts with activated cells and PS receptors383942 - LNCs improve existing drugs by enabling cell-targeted delivery, reducing blood levels (and thus toxicity), and allowing oral delivery of drugs previously only available intravenously, with observed rapid local accumulation in infected tissues4446474849 Our LNC Clinical Stage Assets The company's LNC platform has yielded clinical-stage candidates MAT2203 and MAT2501 for infectious diseases - The company has leveraged its LNC platform to develop two clinical-stage product candidates: MAT2203 (oral amphotericin B) and MAT2501 (oral amikacin)5053 - MAT2203 is being developed for cryptococcal meningitis (CM), with preclinical studies showing its ability to cross the blood-brain barrier, treat infection, and reduce toxicity compared to IV amphotericin B50 - The NIH-funded EnACT study for MAT2203 in CM patients in Uganda is exploring its use for induction and maintenance therapy, with potential for registrational approval and demonstrating LNC platform's CNS delivery capability51 - MAT2203 has received QIDP and Orphan Drug designations for cryptococcosis, potentially granting 12 years of marketing exclusivity upon FDA approval5156 - MAT2501, an oral amikacin, is being developed for non-tuberculous mycobacterial (NTM) infections, particularly in cystic fibrosis patients, with positive Phase 1 safety data and CFF funding for further preclinical and clinical studies53 MAT2203 MAT2203 is an oral amphotericin B formulation for invasive fungal infections, designed to reduce toxicity - MAT2203 is an oral LNC formulation of amphotericin B, a potent antifungal with little reported resistance, designed to overcome the severe nephrotoxicity and IV-only administration limitations of traditional amphotericin B5457 - The LNC delivery of amphotericin B aims for targeted delivery to infected cells, higher drug levels at infection sites, and lower free circulating drug, potentially reducing overall toxicity and improving safety5458 - Preclinical studies in CM mouse models demonstrated MAT2203's ability to cross the blood-brain barrier and treat the infection, positioning the LNC platform for CNS disorders54 - Key benefits of MAT2203 include potential to treat resistant pathogens, enable all-oral therapy for CM (especially in resource-limited settings), and reduce hospital costs associated with IV administration55 - MAT2203 has received QIDP, Fast Track, and Orphan Drug designations for cryptococcosis, potentially providing 12 years of marketing exclusivity upon FDA approval56 - Phase 1 of the EnACT study in HIV-positive cryptococcosis survivors showed MAT2203 was well-tolerated orally without common IV amphotericin toxicities, with 96% of subjects preferring MAT2203 over IV amphotericin6162 - Cohort 1 of EnACT demonstrated MAT2203's safety and tolerability, leading to unanimous DSMB approval to progress to Cohort 2, which will assess oral MAT2203 as a step-down treatment after 2 days of IV amphotericin646667 - The global antifungal market was approximately $11.9 billion in 2018, with invasive fungal infections accounting for over $6 billion, highlighting a significant unmet medical need due to rising drug resistance and limited innovative therapies6971 MAT2501 MAT2501 is an oral amikacin formulation for non-tuberculous mycobacterial infections, supported by CFF - MAT2501 is an oral LNC formulation of amikacin, a broad-spectrum antibiotic, designed to achieve oral bioavailability, limit toxicity (nephrotoxicity, ototoxicity), and enable targeted delivery to infection sites, particularly for non-tuberculous mycobacterial (NTM) lung disease72 - NTM lung disease is a chronic, debilitating condition with increasing prevalence (8% annually), affecting 75,000-100,000 patients in the US in 2018, and is difficult to treat due to antibiotic resistance and challenges in drug delivery737475 - MAT2501 has received Qualified Infectious Disease Product (QIDP) and Orphan Drug designations for NTM treatment from the US FDA72 - Preclinical studies funded by the Cystic Fibrosis Foundation (CFF) demonstrated MAT2501's efficacy against NTM infections in CF mouse models, showing lower bacterial burden in lungs, spleen, and liver compared to parenteral amikacin or clarithromycin778488 - A CFF grant of $3.75 million was awarded in November 2020 to support MAT2501's continued development through a comprehensive preclinical toxicology program and a Phase 1 single ascending dose (SAD) study in healthy volunteers, expected to initiate in Q4 20217790 - Current NTM treatment guidelines recommend multi-drug therapies, including amikacin, but are limited by severe adverse effects (e.g., nephrotoxicity, ototoxicity) and patient nonadherence, highlighting the unmet need for safer, potent agents like MAT25018586 LYPDISO LYPDISO is a next-generation omega-3 drug for hypertriglyceridemia, with potential for superior cardioprotection - LYPDISO is a proprietary, next-generation prescription omega-3 drug, a complex mixture of EPA and DPA in a delayed-release soft gelatin capsule, specifically designed to treat hypertriglyceridemia (HTG) and cardiovascular/metabolic conditions91 - It is differentiated from other omega-3 products by its enhanced bioavailability (free fatty acid form) and unique composition (high EPA plus DPA, low DHA), with potential for potent impacts on triglycerides and other biomarkers91 - The development plan for LYPDISO utilizes a 505(b)(2) regulatory pathway, which is expected to be shorter and less expensive, relying partly on FDA findings for previously approved drugs92 - The ENHANCE-IT study, a head-to-head crossover trial against Vascepa, showed LYPDISO's potential as a best-in-class prescription omega-3 for cardiovascular risk reduction, with statistically significant improvements in TGs, total cholesterol, and VLDL cholesterol in the per-protocol population93116 - In ENHANCE-IT, LYPDISO demonstrated significantly higher plasma EPA concentrations (46% relative increase vs. Vascepa) and significant reductions in hs-CRP, suggesting superior cardioprotective and anti-inflammatory effects116117 - Given the high cost and time for cardiovascular outcomes trials, the company is seeking a partner for LYPDISO's continued development and has reallocated resources away from a Phase 3 program in severe hypertriglyceridemia (SHTG)93116 - Hypertriglyceridemia is a growing health concern, affecting over 50 million adults in the US with TGs ≥150 mg/dL, and is an independent risk factor for atherosclerotic cardiovascular disease and acute pancreatitis9496 - The global prescription omega-3 market is approaching $2 billion, with key competitors including Lovaza, Vascepa, and Epadel. Recent guidelines advocate omega-3 use in high CV risk patients with elevated TGs despite statin therapy98103 Strategic Collaborations Using LNC Platform Delivery Technology The LNC platform is being explored through collaborations for various therapeutic applications, including antivirals - The LNC platform is being explored for reformulating molecules that require protection, efficient cellular uptake, or are currently IV-only, including oligonucleotides, vaccines, and anti-inflammatory agents118 - Current collaborations include a research evaluation with a global pharmaceutical company for nucleic acid polymers (Jan 2019), a collaboration with ViiV Healthcare for antiviral drug candidates (May 2019), a feasibility collaboration with Genentech for proprietary compounds (Dec 2019), and a collaboration with NIAID to develop oral remdesivir formulations for COVID-19 (Dec 2020)119120121122 - These collaborations aim to create strategic verticals in innovative medicine, leveraging partners' expertise and resources, positioning the company as a licensor to generate upfront license, milestone, and royalty payments123 Exclusive License Agreement with Rutgers University The company holds an exclusive license from Rutgers for its LNC platform, involving royalties and fees - The company holds an Amended and Restated Exclusive License Agreement with Rutgers University for the LNC platform delivery technology125 - The agreement includes a license issue fee, an increased equity interest for Rutgers, tiered royalties (low to mid-single digits) on net sales, a one-time sales milestone fee of $100,000, and an annual license fee (initially $10,000, increasing to $50,000)125 - The license term extends until the longer of 7.5 years from first commercial sale or the expiration of the last-to-expire patent rights (currently until at least 2033). Rutgers can terminate if commercial sales of a licensed product do not commence within nine years126 Intellectual Property The company protects its products and LNC platform through patents, trade secrets, and regulatory exclusivity - The company protects its product candidates and technologies through patents, trade secrets, proprietary know-how, FDA exclusivity, and contractual restrictions127 - LYPDISO's patent portfolio includes two issued U.S. patents and one foreign patent, covering methods related to triglyceride levels and omega-3 fatty acid compositions, providing protection through 2033128129 - The LNC platform and MAT2203 are protected by 30 issued U.S. and foreign patents (licensed from Rutgers) and over 20 Matinas-owned pending patent applications, extending protection through 2040130 - The LNC patent portfolio covers broad technology aspects, including amphotericin B LNCs, methods of delivering molecules, vaccine compositions, siRNA LNCs, and methods for treating mycobacterial and cryptococcus infections130 - The company also relies on trade secrets and know-how for its LNC platform and LYPDISO manufacturing, protected by confidentiality and invention assignment agreements132 Competition The company faces intense competition from established pharmaceutical firms and generic manufacturers - The biotechnology and pharmaceutical industries are highly competitive, with many competitors possessing greater resources and more advanced product candidates134 - For LYPDISO, competitors include large pharmaceutical companies selling prescription omega-3s (e.g., GlaxoSmithKline's Lovaza, Amarin's Vascepa) and fibrates, as well as generic versions of these products135 - Negative results from other omega-3 mixture studies (e.g., VITAL, ASCEND, meta-analyses) could negatively affect LYPDISO's utilization, despite its unique composition and higher dose regimen139 - MAT2203 will compete with approved antifungal classes (polyenes, azoles, echinocandins) and their generic versions, as well as other product candidates in clinical development143 - MAT2501 will primarily compete with other aminoglycosides for NTM lung infections, including Insmed's inhaled Arikayce® and IV amikacin (Amikin) from Bristol Myers Squibb and generic manufacturers144 Manufacturing The company relies on third-party manufacturers for LYPDISO and has in-house capabilities for LNC assets - The company relies on multiple third-party manufacturers for LYPDISO intermediates and final drug product, with plans to add more suppliers as development progresses145 - In-house manufacturing capabilities exist for MAT2203, MAT2501, and LNC platform discovery programs, sufficient for current clinical supplies and early commercialization, but future expansion or third-party contract manufacturers may be needed for larger commercial quantities146 - The company plans to secure long-term supply agreements for active pharmaceutical ingredients (amphotericin B for MAT2203 and amikacin for MAT2501) from third-party suppliers147 Sales and Marketing The company plans to commercialize products through partnerships or by building a specialized sales force - The company currently lacks a sales and marketing infrastructure148 - Plans include retaining U.S. marketing/sales rights or co-promotion rights for products with marketing approval, especially for specialized sales forces148 - For markets requiring a large sales force or outside the U.S., the company intends to commercialize through collaborative arrangements with leading pharmaceutical and biotechnology companies148 Review and Approval of Drugs in the United States The FDA drug approval process is lengthy and complex, involving multiple clinical phases and regulatory pathways - The FDA regulates drugs under the FDCA, requiring substantial time and financial resources for regulatory approvals and compliance150 - The approval process involves nonclinical studies (cGLP), submission of an IND, IRB approval, human clinical trials (GCP), NDA/BLA submission, FDA advisory committee review, manufacturing facility inspections (cGMP), user fees, and post-approval requirements (REMS, studies)151152 - Clinical trials typically proceed in three phases: Phase 1 (safety, dosage tolerance in small healthy/patient groups), Phase 2 (safety, preliminary efficacy, optimal dosage in larger patient groups), and Phase 3 (pivotal studies for efficacy and safety in expanded patient populations)157158159 - FDA offers expedited review programs: Fast Track (for serious/life-threatening conditions with unmet medical needs), Breakthrough Therapy (for substantial improvement over existing therapies), and Priority Review (for significant safety/effectiveness improvement)166167169170 - The Accelerated Approval Pathway allows approval for serious/life-threatening conditions based on surrogate or intermediate clinical endpoints, contingent on post-approval confirmatory studies172173174 - Post-approval, drugs are subject to ongoing FDA regulation, including recordkeeping, reporting, advertising/promotion rules, and cGMP compliance, with potential sanctions for non-compliance178179181182 - Generic drugs can be approved via Abbreviated New Drug Applications (ANDAs) by demonstrating bioequivalence to a Reference Listed Drug (RLD), relying on the RLD's nonclinical and clinical data184185 - The Hatch-Waxman Amendments provide non-patent data exclusivity periods (5 years for new chemical entities, 3 years for new clinical investigations) and a 30-month stay on ANDA approval if patent infringement litigation is initiated188189190 - Pediatric exclusivity can extend existing regulatory exclusivity by six months if pediatric study data responsive to an FDA request is submitted194 - Orphan Drug Designation grants 7 years of market exclusivity for drugs treating rare diseases (fewer than 200,000 US patients) upon first FDA approval for that indication195196 - The 21st Century Cures Act aims to modernize healthcare, spur innovation, and streamline therapy development, including provisions for novel trial designs and real-world evidence, and a 'Limited Population Pathway' for antimicrobials197198200 Other Health Care Regulations The company is subject to various healthcare regulations, including data protection, fraud, and pricing laws - The company is subject to various data protection laws, including federal and state health privacy laws (e.g., HIPAA, HITECH) in the U.S. and the GDPR in the European Union, governing the collection, use, disclosure, and protection of health-related personal information201202 - Failure to comply with these data protection laws can result in government enforcement actions, civil/criminal penalties, private litigation, and adverse publicity201202 - The company is also subject to fraud and abuse laws, such as the federal Anti-Kickback Statute and False Claims Act, which restrict certain marketing practices and prohibit knowingly presenting false claims for payment under federal healthcare programs203205 - The Affordable Care Act (ACA) introduced significant healthcare reforms, including insurance requirements, subsidies, market reforms, and changes to Medicare reimbursement, with ongoing uncertainty regarding its implementation and potential impact206207 - The Generating Antibiotic Incentives Now (GAIN) Act grants an additional five years of marketing exclusivity for Qualified Infectious Disease Products (QIDPs) to encourage development of new antibacterial and antifungal drugs208209211 - Patent term restoration under the Hatch-Waxman Act allows for up to five years of patent term extension for time lost during product development and FDA regulatory review212 - Marketing products outside the U.S. requires compliance with varying regulatory requirements of other countries, including clinical trial approvals (e.g., European Clinical Trials Directive) and marketing authorization applications (e.g., centralized or decentralized procedures in the EU)213214215216218219 - Pharmaceutical coverage, pricing, and reimbursement are subject to significant uncertainty and government cost-containment programs, which could limit net revenue and profitability221222223 Human Capital Resources The company's success depends on attracting and retaining skilled personnel, with a focus on employee well-being - As of March 22, 2021, the company had 20 full-time employees, with no collective bargaining agreements226 - Success depends on attracting, developing, and retaining key personnel, whose skills, experience, and industry knowledge are crucial for operations and performance228 - Employee health and safety are core values, with actions taken to protect the workforce during the COVID-19 pandemic229 Research and Development R&D expenses increased in 2020, primarily supporting clinical and preclinical programs for product candidates Research and Development Expenses | Year Ended December 31, | Amount (millions) | | :---------------------- | :---------------- | | 2020 | $14.4 | | 2019 | $11.2 | - These expenses cover cash and non-cash costs related to clinical and preclinical programs (MAT2203, MAT2501) and the advancement of the drug delivery technology231 Corporate and Available Information Matinas BioPharma, incorporated in Delaware, provides public reports on its website and through the SEC - Matinas BioPharma Holdings, Inc. was incorporated in Delaware in May 2013, with operating subsidiaries Matinas BioPharma, Inc. and Matinas BioPharma Nanotechnologies, Inc232 - The company's principal executive offices are in Bedminster, New Jersey, and its website is www.matinasbiopharma.com[233](index=233&type=chunk) - Annual, Quarterly, and Current Reports (10-K, 10-Q, 8-K) are available free of charge on its website and through the SEC's website (www.sec.gov)[234](index=234&type=chunk) Item 1A. Risk Factors Investment in the company's stock is highly speculative, facing risks from COVID-19, funding needs, early-stage development, and competition - Investment in common stock is speculative and involves a high degree of risk, including potential loss of the entire investment236 - Operations, business, and financial results have been and could continue to be adversely impacted by the COVID-19 pandemic238 - The company has incurred significant losses since inception and may never achieve or maintain profitability, requiring substantial additional funding that may dilute stockholders or force relinquishment of rights238240245249 - Product candidates (LYPDISO, MAT2203, MAT2501) are in early development stages, and there is no certainty of regulatory approval, successful commercialization, or ability to compete effectively238259261296 - Reliance on third-party technology (Rutgers LNC platform) and manufacturers for product supply and clinical trials poses risks of loss of access, insufficient quantities, or non-compliance238266268324 - Clinical drug development is lengthy, expensive, and uncertain; delays, negative results, or serious side effects could prevent commercialization238273 - Challenges exist in protecting intellectual property rights, with risks of patent invalidation, infringement by others, or difficulty in maintaining trade secret protection238342344346 - The company has no sales and marketing organization and may struggle to establish one or find suitable partners for commercialization238289 - Regulatory changes, healthcare reform, and government pricing/reimbursement policies could negatively impact business and profitability238309311312 - Risks also include product liability lawsuits, cybersecurity breaches, difficulties in managing organizational growth, and volatility in common stock price238351356359370 Summary of Risk Factors Key risks include COVID-19 impact, funding needs, early product development, and reliance on third parties - Key risks include adverse impact from COVID-19, significant operating losses and need for additional funding, early development stage of product candidates, and dependence on third-party technology and manufacturing238 - Uncertainties in clinical trials, regulatory approvals, and commercialization efforts, along with intense competition, pose substantial threats to business success238 - Other risks involve intellectual property protection, sales and marketing capabilities, regulatory compliance, and potential dilution from equity issuances238 Risks Related to Our Financial Position and Need for Additional Capital The company faces significant operating losses and requires substantial additional funding, risking dilution or program delays - The company has incurred significant operating losses since inception, with a net loss of $22.4 million in 2020 and $17.4 million in 2019, and an accumulated deficit of $107.5 million as of December 31, 2020240 - Profitability is uncertain and depends on successful development, regulatory approval, and commercialization of product candidates, which are still in early stages241 - Substantial additional funding will be required for ongoing and planned clinical/preclinical studies, regulatory approvals, manufacturing, commercialization, and intellectual property protection245246247 - Failure to raise capital when needed could force delays, reductions, or elimination of product development programs or commercialization efforts245 - Raising additional capital through equity sales may cause material dilution to stockholders, while debt financing could impose restrictive covenants249 - Stockholders may face substantial dilution from the exercise of outstanding options and warrants, conversion of preferred shares, and future issuance of common stock for merger milestones252 - The company's early operating history makes it difficult to evaluate future success or viability, with expected significant fluctuations in financial condition and operating results253255 - U.S. federal income tax reform (Tax Cuts and Jobs Act of 2017) could materially affect tax obligations and effective tax rate, with ongoing uncertainty regarding its full impact256257 Risks Related to Product Development, Regulatory Approval, Manufacturing and Commercialization Product development faces uncertainties in trials, regulatory approval, manufacturing, and market acceptance - The company's development efforts are in early stages, and success depends on timely completion of preclinical/clinical trials, demonstrating safety/efficacy, obtaining regulatory approvals, establishing manufacturing, and effective commercialization259260261 - Regulatory approval is not certain and delays can increase costs, delay market launch, and prevent commercialization261263 - Preclinical and clinical studies are expensive, difficult, and prone to delays or failures due to negative results, patient enrollment issues, regulatory holds, or unforeseen side effects273274275276 - The company relies on licensed technology from Rutgers; loss of access or defects could impair business and delay product development266 - Insufficient manufacturing capacity, reliance on third-party manufacturers, and non-compliance with cGMP standards could halt or delay commercialization268269328329330332 - Successful commercialization depends on market acceptance by physicians, patients, and payors, which is influenced by efficacy, safety, convenience, pricing, and inclusion in treatment guidelines270286287 - The company lacks a sales and marketing organization and may struggle to establish one or secure suitable collaboration arrangements, impacting commercialization success289290291 - Reliance on the 505(b)(2) regulatory pathway for LYPDISO, MAT2203, and MAT2501 carries risks, including potential patent infringement lawsuits, 30-month stays, or requirements for additional data293294295 - Intense competition from other biotechnology and pharmaceutical companies, including generic manufacturers, could reduce commercial opportunities and force price reductions296 - Post-marketing, products are subject to ongoing regulatory review, restrictions (e.g., REMS), and potential withdrawal, with penalties for non-compliance or unanticipated problems299300301302303305 - The company is evaluating next steps for LYPDISO development, seeking a partner, and has reallocated resources from a Phase 3 program, with no guarantee of a suitable partnership or realizing full value306 - Future legislative or regulatory reforms, including government restrictions on pricing and reimbursement, could negatively impact business and results of operations307309310311312313314315 - Penetrating foreign markets introduces additional regulatory burdens, economic instability, trade restrictions, and intellectual property protection challenges316318319 - Marketing products in violation of healthcare fraud and abuse laws (e.g., Anti-Kickback Statute, False Claims Act) or government price reporting laws could lead to civil or criminal penalties320321 - Heavy reliance on third parties (CROs, NIH, CFF) for clinical trials exposes the company to risks if these parties fail to perform or comply with regulations323324325 - LYPDISO, if approved as prescription-only, will face competition from non-prescription omega-3 dietary supplements, potentially limiting sales and pricing327 - Outbreaks of communicable diseases, like COVID-19, can materially and adversely affect business, financial condition, and results of operations by disrupting travel, supply chains, and facility operations335 Risks Relating to Our Intellectual Property Rights and Regulatory Exclusivity Intellectual property protection is challenging, with risks of patent invalidation, infringement, and loss of licensed rights - The company depends on the LNC platform delivery technology licensed from Rutgers, and loss of these rights due to breaches, challenges to validity, or bankruptcy could prevent development and commercialization of lead product candidates337339 - If development of the LNC platform is discontinued under certain conditions, the technology would be returned to former Aquarius stockholders, leading to loss of rights to lead product candidates340 - Protecting intellectual property rights is difficult and costly; patent positions are uncertain, and issued patents may be challenged, invalidated, or circumvented342343 - Reliance on trade secrets is risky as they are difficult to protect and can be independently discovered by competitors, or confidentiality agreements may be breached344 - Product candidates may infringe on third-party intellectual property rights, leading to costly litigation, delays, or the need for expensive licenses or redesigns346347348 - Generic competition for omega-3 products (like Vascepa) could negatively impact LYPDISO's sales and perceived value350 - There is no assurance of obtaining or maintaining orphan drug, fast-track, or QIDP designations or exclusivity, and such designations do not guarantee faster development or FDA approval279280282283 General Company-Related Risks General risks include managing growth, retaining personnel, product liability, cybersecurity, and stock price volatility - The company will need to significantly increase its organizational size to grow, which may lead to difficulties in managing growth and diverting management attention351 - Failure to attract and retain highly qualified personnel, including key executives, would adversely impact business strategy and prospects352355 - Product liability lawsuits, arising from clinical testing or commercialization, could result in substantial liabilities, limit commercialization, and harm reputation and financial condition356357358 - Internal computer systems or those of contractors are vulnerable to security breaches, potentially disrupting product development programs, causing data loss, and incurring liability359 - Future acquisitions or strategic alliances may not realize expected benefits if integration is unsuccessful or synergies are not achieved360 - The company is obligated to pay significant royalties (up to $35 million/year) on MAT2203 and MAT2501 sales/licensing proceeds, and dividends on Series B Preferred Stock, which will dilute common stockholders361362363 - The potential issuance of preferred stock by the board without stockholder approval could adversely affect common stockholders' voting power and equity interest364 - A reverse stock split, if implemented, may not achieve intended benefits like increased market price or improved liquidity, and could lead to further dilution from future equity issuances366367 - The company does not intend to pay dividends on common stock in the foreseeable future368 - An active public trading market for common stock may not be sustained, and share price volatility could lead to significant market losses or class action litigation369370 - Limited research coverage by analysts or adverse changes in recommendations could cause stock price and trading volume to decline372 - Failure to maintain an effective system of internal control over financial reporting, as evidenced by a material weakness in 2020 (since remediated), could adversely affect financial reporting reliability and investor confidence373374375376377 - Failure to build finance infrastructure and improve accounting systems could impair compliance with public company financial reporting requirements379380 - Upon dissolution, common stockholders may not recoup all or any portion of their investment, as preferred stockholders have priority381 - Anti-takeover provisions in corporate documents and Delaware law could make an acquisition more difficult, potentially limiting stockholder benefits383384385 - Exclusive forum provisions in the certificate of incorporation may limit stockholders' ability to choose a favorable judicial forum for disputes386 - The ability to use net operating loss carryforwards and other tax attributes may be limited by ownership changes under Section 382 of the Internal Revenue Code387 Item 1B. Unresolved Staff Comments The company has no unresolved staff comments from the SEC - There are no unresolved staff comments389 Item 2. Properties The company's administrative offices are in Bedminster, NJ, and it leases laboratory space in Bridgewater, NJ - Administrative offices: Approximately 5,900 sq ft in Bedminster, NJ, under a lease expiring May 2021. An amendment in September 2020 adds 3,034 sq ft and extends the lease for seven years from Q2 2021390 - Laboratory space: Approximately 14,000 sq ft in Bridgewater, NJ, under a lease expiring in 2027390 Item 3. Legal Proceedings The company is not currently involved in any legal proceedings and is unaware of any pending claims - The company is not currently a party to any legal proceedings and is not aware of any pending or threatened claims or actions391 - Future involvement in litigation relating to claims arising from ordinary course of business is possible391 Item 4. Mine Safety Disclosures This item is not applicable to the company - Not applicable392 PART II Item 5. Market For Registrant's Common Equity, Related Stockholder Matters And Issuer Purchases Of Equity Securities The company's common stock trades on NYSE American, with no cash dividends paid or anticipated, and no recent equity repurchases - Common stock is quoted on the NYSE American under the symbol "MTNB"392 Common Stock High and Low Sales Price (Fiscal Years 2019-2020) | Quarter | Fiscal Year 2019 High | Fiscal Year 2019 Low | Fiscal Year 2020 High | Fiscal Year 2020 Low | | :-------------- | :-------------------- | :------------------- | :-------------------- | :------------------- | | First Quarter | $1.41 | $0.60 | $2.31 | $0.60 | | Second Quarter | $1.11 | $0.79 | $0.92 | $0.52 | | Third Quarter | $0.76 | $0.59 | $0.96 | $0.67 | | Fourth Quarter | $2.27 | $0.63 | $1.47 | $0.76 | - As of March 12, 2021, there were approximately 123 record holders of common stock394 - The company has never paid cash dividends on its common stock and does not anticipate doing so in the foreseeable future, intending to retain all available funds for business development396 - No unregistered securities were sold recently, and no equity securities were repurchased by the issuer or affiliated purchasers during the period397398 Item 6. Selected Financial Data As a Smaller Reporting Company, Matinas BioPharma is not required to provide selected financial data - As a Smaller Reporting Company, Matinas BioPharma is not required to provide selected financial data per §229.301 of Regulation S-K399 - Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the audited consolidated financial statements for understanding the company's financial position399 Item 7. Management's Discussion And Analysis Of Financial Condition And Results Of Operations This section reviews the company's financial condition, highlighting significant losses, increasing R&D, and liquidity needs - The company's core strategy involves advancing its LNC platform technology and seeking a partner for LYPDISO, a next-generation prescription omega-3 drug401 - The company has incurred net losses since inception, with $22.4 million in 2020 and $17.4 million in 2019, and expects significant expenses and operating losses for the foreseeable future, requiring additional financing403 - Revenue is primarily from contract research, totaling $0.2 million in 2020 and $0.1 million in 2019, with no significant product revenue expected for many years404 - Research and development expenses increased to $14.4 million in 2020 from $11.2 million in 2019, driven by higher preclinical and clinical development, employee compensation, and manufacturing development409421 - General and administrative expenses rose to $10.0 million in 2020 from $7.8 million in 2019, mainly due to increased employee-related expenses and professional fees410422 - The company generated $1.1 million in 2020 and $1.0 million in 2019 from the sale of New Jersey net operating losses (NOLs) and research tax credits411423 - As of December 31, 2020, cash, cash equivalents, and marketable securities totaled $58.7 million, with an additional $5.6 million in net proceeds from common stock sales in January 2021, projected to fund operations into 2024425426436 - Future funding needs are substantial, expected to be met through equity offerings, debt financings, government funding, and collaborations, with risks of dilution or relinquishing technology rights437438 Overview The overview highlights the company's LNC platform focus, LYPDISO partnership search, and ongoing net losses - Matinas BioPharma focuses on improving intracellular delivery of therapeutics via its LNC drug delivery platform and seeking a partner for LYPDISO, a proprietary next-generation prescription omega-3 drug401 - Key strategic elements include advancing LNC clinical-stage assets (MAT2203, MAT2501), delivering efficacy data for MAT2203 in cryptococcal meningitis, progressing MAT2501 preclinical development with CFF support, and expanding LNC platform applications through collaborations402406 - The company has incurred net losses of $22.4 million in 2020 and $17.4 million in 2019, expecting continued losses and requiring additional financing403 Financial Operations Overview This section details revenue sources, R&D expenses, G&A costs, and other income, showing increasing operational expenses Contract Research Revenue | Year Ended December 31, | Revenue (millions) | | :---------------------- | :----------------- | | 2020 | $0.2 | | 2019 | $0.1 | - Revenue is primarily from contract research grants (Cystic Fibrosis Foundation) and feasibility study agreements (Genentech), with no significant product revenue expected for many years404 - Research and development expenses include costs for preclinical work, clinical trial materials, consultants, CROs (including NIH), and employee-related expenses405407 Direct Research and Development Expenses (in thousands) | Category | 2020 | 2019 | | :------------------------------ | :---------- | :---------- | | Manufacturing process development | $1,421 | $1,081 | | Preclinical trials | $744 | $1,538 | | Clinical development | $5,149 | $2,565 | | Regulatory | $95 | $190 | | Internal staffing, overhead and other | $6,950 | $5,861 | | Total R&D | $14,359 | $11,235 | - R&D expenses are expected to increase as product candidates advance through clinical development and the LNC platform technology expands409 - General and administrative expenses consist of salaries, facility costs, insurance, investor relations, and professional fees, anticipated to increase in 2021410 Sale of Net Operating Losses (NOLs) (in millions) | Year Ended December 31, | Amount (millions) | | :---------------------- | :---------------- | | 2020 | $1.1 | | 2019 | $1.0 | - Other income, net, is primarily comprised of interest income (expense) and franchise taxes412 Application of Critical Accounting Policies and Accounting Estimates Critical accounting policies involve significant management judgment for areas like stock-based compensation and R&D costs - Critical accounting policies requiring significant management judgment and estimates include stock-based compensation, fair value measurements, research and development costs, goodwill and other intangible assets, and basic and diluted net loss per common share414415 Current Operating Trends Current R&D focuses on advancing MAT2203 and MAT2501, with increasing investment and inherent clinical trial uncertainties - Current R&D efforts focus on advancing MAT2203 towards efficacy data in CM, accelerating MAT2501 preclinical development with CFF assistance, and expanding the LNC platform through third-party collaborations416 - Most R&D expenses in the near future will support preclinical and clinical development programs rather than technology development, with significant investment considered a competitive necessity417 - The commencement and completion of clinical trials are subject to uncertainties like efficacy, safety issues, participant recruitment, funding, and regulatory delays, making accurate timing and cost estimates difficult418 Results of Operations Net loss increased in 2020 due to higher R&D and G&A expenses, despite a slight rise in contract research revenue Operating Expenses (in thousands) | Category | 2020 | 2019 | | :------------------------------ | :---------- | :---------- | | Revenues | $158 | $90 | | Research and development | $14,359 | $11,235 | | General and administrative | $10,006 | $7,776 | | Total Operating Expenses | $24,365 | $19,011 | | Loss from operations | $(24,207) | $(18,921) | | Sale of New Jersey net operating loss | $1,073 | $1,007 | | Other income, net | $686 | $541 | | Net loss | $(22,447) | $(17,373) | - Contract research revenue increased from $89.8 thousand in 2019 to $158.3 thousand in 2020, primarily from CFF grants and a Genentech feasibility study420 - R&D expenses increased by $3.2 million in 2020 to $14.4 million, mainly due to higher preclinical/clinical development ($1.8 million) and employee compensation ($1.3 million)421 - General and administrative expenses increased by $2.2 million in 2020 to $10.0 million, driven by employee-related expenses ($1.7 million) and professional fees ($0.4 million)422 - Income from the sale of New Jersey NOLs was $1.1 million in 2020 and $1.0 million in 2019423 Liquidity and Capital Resources Liquidity is supported by equity offerings, with cash projected to fund operations into 2024, but future needs remain substantial - Since inception, operations have been funded primarily through private placements and public offerings of equity securities, raising $150.9 million gross and $138.4 million net424 Cash, Cash Equivalents and Marketable Securities (in millions) | As of December 31, | Amount (millions) | | :----------------- | :---------------- | | 2020 | $58.7 | | 2019 | $27.8 | - In January 2021, the company sold 3,023,147 shares of common stock under an At-The-Market Sales Agreement, generating $5.8 million gross and $5.6 million net proceeds426 - Public offerings of common stock generated net proceeds of $46.7 million in January 2020 and $30.1 million in March 2019428429 - A Series B Preferred Stock offering in June 2018 raised $8 million gross and $7.1 million net430 Cash Flows (in thousands) | Category | 2020 | 2019 | | :-------------------------------- | :---------- | :---------- | | Cash used in operating activities | $(17,368) | $(14,092) | | Cash used in investing activities | $(40,667) | $(6,011) | | Cash provided by financing activities | $48,047 | $29,852 | | Net (decrease)/increase in cash | $(9,988) | $9,749 | - Net cash used in operating activities increased by $3.3 million in 2020 to $17.4 million, primarily due to increased net loss offset by higher non-cash stock-based compensation432 - Net cash used in investing activities increased by $34.7 million in 2020 to $40.7 million, mainly due to net purchases of marketable securities433 - Net cash provided by financing activities increased by $18.1 million in 2020 to $48.0 million, driven by higher net proceeds from common stock offerings and exercise of warrants/options435 - Existing cash, cash equivalents, and marketable securities, plus recent proceeds, are expected to fund operating expenses and capital expenditures into 2024436 - Future cash needs will be financed through equity/debt offerings, government funding, and collaborations, with risks of dilution or relinquishing rights437438 Contractual Obligations and Commitments This section refers to Note 10 for details on the company's contractual obligations and commitments - Refer to Note 10 – "Commitments" in the consolidated financial statements for a discussion of the Company's contractual obligations and commitments440 Off-Balance Sheet Arrangements The company has no off-balance sheet arrangements as defined by SEC rules - The company did not have, and does not currently have, any off-balance sheet arrangements as defined under SEC rules441 Recent Accounting Pronouncements This section refers to Note 3 for a discussion of recent accounting pronouncements - Refer to Note 3 - "Significant Accounting Policies" in the consolidated financial statements for a discussion of recent accounting pronouncements442 Item 7A. Quantitative And Qualitative Disclosures About Market Risk The company's market risk is limited to interest rate sensitivity on its cash and marketable securities, with no foreign currency exposure - Market risk exposure is limited to cash, cash equivalents, and marketable securities, totaling $58.7 million as of December 31, 2020443 - Primary market risk is interest income sensitivity to changes in U.S. interest rates443 - Due to the short-term nature of investments, a sudden change in market interest rates is not expected to have a material impact on financial condition or results of operations443 - The company does not have any foreign currency or other derivative financial instruments443 Item 8. Financial Statements And Supplementary Data Financial statements and the independent auditor's report are incorporated by reference from Part IV, Item 15 - Financial statements and the independent registered public accounting firm report are incorporated by reference from Part IV Item 15, "Exhibits, Financial Statement Schedules" of this Annual Report on Form 10-K444 Item 9. Changes In And Disagreements With Accountants On Accounting And Financial Disclosure This item is not applicable to the company - Not applicable445 Item 9A. Controls And Procedures Disclosure controls were effective as of December 31, 2020, with a previously identified material weakness remediated - As of December 31, 2020, disclosure controls and procedures were evaluated and concluded to be effective at the reasonable assurance level446 - A material weakness in internal controls over financial reporting identified in the 2019 Annual Report was remediated as of December 31, 2020448453 - Management concluded that internal control over financial reporting was effective as of December 31, 2020, with no identified material weaknesses451 - Remediation involved enhancing operational procedures for purchasing, receiving, and recording expenditures, and formalizing/testing review procedures454 - No other material changes in internal control over financial reporting occurred during the period455 Item 9B. Other Information The company has no other information to report under this item - None456 PART III Item 10. Directors, Executive Officers And Corporate Governance This section outlines the company's executive officers and board of directors, their experience, and committee structures Executive Officers and Directors | Name | Age | Position(s) | | :--------------- | :-- | :-------------------------------------------- | | Herbert Conrad | 88 | Chairman of the Board, Director | | Jerome D. Jabbour| 46 | Chief Executive Officer and President, Director | | James J. Ferguson| 67 | Chief Medical Officer | | Keith A. Kucinski| 51 | Chief Financial Officer | | Hui Liu | 53 | Chief Technology Officer | | Raphael J. Mannino| 73 | Chief Scientific Officer | | Theresa Matkovits| 53 | Chief Development Officer | | Patrick G. LePore| 65 | Vice Chairman of the Board, Director | | Eric Ende | 52 | Director | | Natasha Giordano | 59 | Director | | James S. Scibetta| 56 | Director | | Matthew Wikler | 71 | Director | - Key executive officers include Jerome D. Jabbour (CEO & President), James J. Ferguson (CMO), Keith A. Kucinski (CFO), Hui Liu (CTO), Raphael J. Mannino (CSO), and Theresa Matkovits (CDO), bringing extensive experience in biopharmaceuticals, R&D, and finance459460461463464465 - The board of directors includes Herbert Conrad (Chairman), Patrick LePore (Vice Chairman), Eric Ende, Natasha Giordano, James S. Scibetta, and Matthew Wikler, all with significant industry and leadership experience467468469470471472 - The board has four standing committees: Audit, Compensation, Nominating and Corporate Governance, and a Scientific Advisory Committee475 - The Audit Committee oversees financial reporting and internal controls, with James Scibetta as chairman and all members (Herbert Conrad, Eric Ende, Natasha Giordano) being independent and financially literate476 - The Compensation Committee advises on employee and director compensation, with Eric Ende as chairman
Matinas BioPharma(MTNB) - 2020 Q4 - Annual Report