Matinas BioPharma(MTNB) - 2021 Q2 - Quarterly Report

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