Matinas BioPharma(MTNB) - 2024 Q1 - Quarterly Report

PART I - FINANCIAL INFORMATION This section provides the unaudited condensed consolidated financial statements and management's discussion and analysis for the quarter ended March 31, 2024 Item 1. FINANCIAL STATEMENTS This section presents Matinas BioPharma's unaudited condensed consolidated financial statements and related notes for the quarter ended March 31, 2024 Condensed Consolidated Balance Sheets This table provides a snapshot of the company's assets, liabilities, and stockholders' equity as of March 31, 2024, and December 31, 2023 | Metric | March 31, 2024 (Unaudited, in thousands) | December 31, 2023 (Audited, in thousands) | | :-------------------------------- | :--------------------------------------- | :-------------------------------------- | | ASSETS | | | | Cash and cash equivalents | $1,071 | $4,787 | | Marketable debt securities | $7,039 | $8,969 | | Total current assets | $10,289 | $15,543 | | Total assets | $19,610 | $25,104 | | LIABILITIES AND STOCKHOLDERS' EQUITY | | | | Total current liabilities | $1,998 | $2,622 | | Total liabilities | $5,052 | $5,858 | | Total stockholders' equity | $14,558 | $19,246 | | Total liabilities and stockholders' equity | $19,610 | $25,104 | Condensed Consolidated Statements of Operations and Comprehensive Loss This table details the company's revenues, expenses, and net loss for the three months ended March 31, 2024, and 2023 | Metric | Three Months Ended March 31, 2024 (in thousands) | Three Months Ended March 31, 2023 (in thousands) | | :-------------------------------- | :----------------------------------------------- | :----------------------------------------------- | | Contract revenue | $— | $1,096 | | Research and development expenses | $3,446 | $3,970 | | General and administrative expenses | $2,456 | $2,712 | | Total costs and expenses | $5,902 | $6,682 | | Loss from operations | $(5,902) | $(5,586) | | Net loss | $(5,824) | $(5,513) | | Net loss per share – basic and diluted | $(0.03) | $(0.03) | | Comprehensive loss | $(5,737) | $(5,284) | Condensed Consolidated Statements of Stockholders' Equity This table outlines changes in stockholders' equity, including stock-based compensation and net loss, for the three months ended March 31, 2024 | Metric | Balance, December 31, 2023 (in thousands) | Stock-based compensation (in thousands) | Issuance of common stock (in thousands) | Other comprehensive income (in thousands) | Net loss (in thousands) | Balance, March 31, 2024 (in thousands) | | :-------------------------- | :---------------------------------------- | :-------------------------------------- | :-------------------------------------- | :---------------------------------------- | :---------------------- | :--------------------------------------- | | Total Stockholders' Equity | $19,246 | $995 | $54 | $87 | $(5,824) | $14,558 | Condensed Consolidated Statements of Cash Flow This table summarizes cash flows from operating, investing, and financing activities for the three months ended March 31, 2024, and 2023 | Cash Flow Activity | Three Months Ended March 31, 2024 (in thousands) | Three Months Ended March 31, 2023 (in thousands) | | :-------------------------------- | :----------------------------------------------- | :----------------------------------------------- | | Net cash used in operating activities | $(5,769) | $(4,087) | | Net cash provided by investing activities | $2,000 | $3,000 | | Net cash provided by/(used in) financing activities | $53 | $(4) | | Net decrease in cash, cash equivalents and restricted cash | $(3,716) | $(1,091) | | Cash, cash equivalents and restricted cash at end of period | $1,321 | $5,989 | 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 Matinas BioPharma Holdings Inc. as a clinical-stage biopharmaceutical company - Matinas BioPharma Holdings Inc. is a clinical-stage biopharmaceutical company focused on identifying and developing novel pharmaceutical products[20] Note 2 – Liquidity, Plan of Operations and Going Concern This note addresses the company's liquidity, operational plans, and the substantial doubt regarding its ability to continue as a going concern - The Company has an accumulated deficit of $181,397 thousand as of March 31, 2024, and a net loss of $5,824 thousand for the three months ended March 31, 2024[21] - The Company's cash, cash equivalents, and marketable debt securities are not sufficient to fund planned operations beyond the next twelve months, leading to substantial doubt about its ability to continue as a going concern[24] - Future operations are dependent on controlling operating expenses, proceeds from future common stock sales via ATM, and securing additional financing[25] Note 3 – Summary of Significant Accounting Policies This note outlines the significant accounting policies used in preparing the financial statements, including U.S. GAAP compliance and consolidation principles - The financial statements are prepared in accordance with U.S. GAAP and include consolidated accounts of Holdings and its wholly-owned subsidiaries, with all intercompany transactions eliminated[27] Note 4 – Cash, Cash Equivalents, Restricted Cash and Marketable Debt Securities This note details the composition and fair value of cash, cash equivalents, restricted cash, and marketable debt securities | Metric | March 31, 2024 (in thousands) | December 31, 2023 (in thousands) | March 31, 2023 (in thousands) | December 31, 2022 (in thousands) | | :------------------------------------------------ | :---------------------------- | :------------------------------- | :---------------------------- | :------------------------------- | | Cash and cash equivalents | $1,071 | $4,787 | $5,739 | $6,830 | | Restricted cash | $250 | $250 | $250 | $250 | | Cash, cash equivalents and restricted cash (Statement of Cash Flows) | $1,321 | $5,037 | $5,989 | $7,080 | | Marketable Debt Securities (March 31, 2024) | Amortized Cost (in thousands) | Unrealized Gain (in thousands) | Unrealized (Loss) (in thousands) | Fair Value (in thousands) | | :------------------------------------------ | :---------------------------- | :----------------------------- | :------------------------------- | :------------------------ | | U.S. Government Notes | $7,173 | $— | $(134) | $7,039 | | Total marketable debt securities | $7,173 | $— | $(134) | $7,039 | - The Company recorded unrealized gains of $87 thousand and $229 thousand for the three months ended March 31, 2024 and 2023, respectively, on marketable debt securities[32] Note 5 - Fair Value Measurements This note provides information on the fair value hierarchy for marketable debt securities | Fair Value Hierarchy (March 31, 2024) | Total (in thousands) | Level 1 (in thousands) | Level 2 (in thousands) | Level 3 (in thousands) | | :------------------------------------ | :------------------- | :--------------------- | :--------------------- | :--------------------- | | Marketable Debt Securities: U.S. Government Notes | $7,039 | $— | $7,039 | $— | | Total | $7,039 | $— | $7,039 | $— | - U.S. Treasury bonds are classified as Level 1, while U.S. government notes are classified as Level 2 within the fair value hierarchy[38] Note 6 – Leasehold Improvements and Equipment This note details the net book value of leasehold improvements and equipment, including depreciation and amortization expenses | Category | March 31, 2024 (in thousands) | December 31, 2023 (in thousands) | | :-------------------------------- | :---------------------------- | :------------------------------- | | Equipment | $2,463 | $2,463 | | Leasehold improvements | $1,155 | $1,155 | | Total | $3,618 | $3,618 | | Less: accumulated depreciation and amortization | $1,789 | $1,695 | | Leasehold improvements and equipment, net | $1,829 | $1,923 | - Depreciation and amortization expense was $94 thousand for Q1 2024, a slight increase from $93 thousand in Q1 2023[39] Note 7 – Accrued Expenses and Other Liabilities This note breaks down the components of accrued expenses, including payroll, general and administrative, and research and development | Category | March 31, 2024 (in thousands) | December 31, 2023 (in thousands) | | :-------------------------- | :---------------------------- | :------------------------------- | | Payroll and incentives | $501 | $1,176 | | General and administrative expenses | $223 | $196 | | Research and development expenses | $115 | $75 | | Total accrued expenses | $839 | $1,447 | Note 8 – Leases This note provides details on operating and finance lease liabilities, including lease expenses and weighted-average terms - Operating lease expense was $226 thousand for both Q1 2024 and Q1 2023, while amortization expense on operating lease right-of-use assets was $145 thousand in Q1 2024, up from $132 thousand in Q1 2023[43] | Lease Liabilities (March 31, 2024) | Operating Lease Liabilities (in thousands) | Finance Lease Liabilities (in thousands) | | :--------------------------------- | :--------------------------------------- | :--------------------------------------- | | Total undiscounted lease payments | $4,114 | $26 | | Present value of lease liabilities | $3,378 | $21 | | Weighted average remaining lease term (years) | 4.1 | 3.7 | | Weighted average discount rate | 9.2% | 11.6% | Note 9 – Revenue Recognition, Collaboration Agreements and Other This note discusses revenue recognition policies and the status of collaboration agreements with BioNTech and Genentech - The BioNTech Agreement, which provided an exclusivity fee of $2,750 thousand and funded research expenses, expired on April 8, 2023, with all contract research revenue recognized by March 31, 2023[46][47][48] - The Genentech Agreement, involving the development of oral formulations, was completed during Q1 2023, with all obligations fulfilled for the three molecules[49] Note 10 – Stockholders' Equity This note details changes in stockholders' equity, including common stock sales and potentially dilutive securities - The Company sold 218,304 shares of common stock under its At-The-Market Sales Agreement (ATM) during Q1 2024, compared to zero shares in Q1 2023[50] | Potentially Dilutive Securities | As of March 31, 2024 | As of March 31, 2023 | | :------------------------------ | :------------------- | :------------------- | | Stock options | 46,031,560 | 34,677,699 | | Warrants | — | 238,000 | | Total | 46,031,560 | 34,915,699 | - Diluted loss per common share is the same as basic loss per common share due to the anti-dilutive effect of potentially dilutive securities[52] Note 11 – Accumulated Other Comprehensive Loss This note presents the changes in accumulated other comprehensive loss, primarily from unrealized gains on available-for-sale securities | Component | Balance, December 31, 2023 (in thousands) | Net unrealized gain on securities available-for-sale (in thousands) | Balance, March 31, 2024 (in thousands) | | :------------------------------------ | :---------------------------------------- | :---------------------------------------------------------------- | :--------------------------------------- | | Net Unrealized Gain/(Loss) on Available-for-Sale Securities | $(221) | $87 | $(134) | | Accumulated Other Comprehensive Loss | $(221) | $87 | $(134) | Note 12 – Stock-based Compensation This note outlines stock-based compensation expenses by category and the remaining unrecognized compensation costs | Expense Category | Three Months Ended March 31, 2024 (in thousands) | Three Months Ended March 31, 2023 (in thousands) | | :----------------------- | :----------------------------------------------- | :----------------------------------------------- | | Research and Development | $415 | $553 | | General and Administrative | $580 | $719 | | Total | $995 | $1,272 | - Total compensation costs related to unvested awards not yet recognized were $6,840 thousand as of March 31, 2024, with a weighted-average recognition period of 2.4 years[55] - The 2013 Equity Compensation Plan expired on May 7, 2024, and the Company intends to adopt a new plan pending shareholder approval[54] Note 13 – Subsequent Events This note discloses significant events occurring after the balance sheet date, including a registered direct offering - On April 5, 2024, the Company completed a registered direct offering, raising approximately $10,000 thousand in gross proceeds and $9,250 thousand net, from the sale of 33,333,334 shares of common stock and accompanying warrants[57] Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This section provides management's analysis of the company's financial condition, operational results, and liquidity, including the going concern risk Overview This overview introduces Matinas BioPharma's strategic focus on its LNC platform and highlights its financial performance and going concern status - Matinas BioPharma is a clinical-stage biopharmaceutical company focused on developing groundbreaking therapies using its proprietary lipid nanocrystal (LNC) platform delivery technology[63] - Key strategic elements include advancing MAT2203 into the ORALTO trial for invasive aspergillosis, expanding LNC Platform utilization into inflammation and oncology, and building external collaborations with pharmaceutical companies[65] - The Company incurred net losses of $5,824 thousand and $5,513 thousand for Q1 2024 and Q1 2023, respectively, and expects continued losses, with substantial doubt about its ability to continue as a going concern[66] Financial Operations Overview This section summarizes key financial trends, including contract revenue decline and expected R&D expense adjustments - Contract research revenue decreased from $1,096 thousand in Q1 2023 to $0 in Q1 2024, as prior collaborations with BioNTech SE and Genentech Inc. concluded[67] | Expense Category | Three Months Ended March 31, 2024 (in thousands) | Three Months Ended March 31, 2023 (in thousands) | | :-------------------------------- | :----------------------------------------------- | :----------------------------------------------- | | Research and development | $3,446 | $3,970 | | General and administrative | $2,456 | $2,712 | | Total costs and expenses | $5,902 | $6,682 | - R&D expenses are expected to be lower in 2024 compared to 2023 until additional funding is secured for the ORALTO trial and LNC platform advancement[70] Results of Operations This section details the company's revenues and operating expenses, explaining the drivers behind changes in R&D and G&A costs | Metric | Three Months Ended March 31, 2024 (in thousands) | Three Months Ended March 31, 2023 (in thousands) | | :-------------------------- | :----------------------------------------------- | :----------------------------------------------- | | Revenues | $— | $1,096 | | Research and development | $3,446 | $3,970 | | General and administrative | $2,456 | $2,712 | | Operating Expenses | $5,902 | $6,682 | - The decrease in R&D expense was primarily due to lower clinical trial consulting costs and headcount costs[80] - The decrease in G&A expense was mainly attributable to lower stock-based compensation expense and decreased insurance premiums[81] Liquidity and Capital Resources This section discusses the company's cash position, recent financing activities, and ongoing challenges in funding future operations - As of March 31, 2024, the Company had cash, cash equivalents, and marketable debt securities totaling $8,110 thousand[83] - A registered direct offering on April 5, 2024, generated approximately $9,250 thousand in net proceeds, but existing funds are still not expected to fund operations beyond the next twelve months, raising substantial doubt about going concern[85][91] | Cash Flow Activity | Three Months Ended March 31, 2024 (in thousands) | Three Months Ended March 31, 2023 (in thousands) | | :-------------------------------- | :----------------------------------------------- | :----------------------------------------------- | | Cash used in operating activities | $(5,769) | $(4,087) | | Cash provided by investing activities | $2,000 | $3,000 | | Cash provided by/(used in) financing activities | $53 | $(4) | | Net decrease in cash, cash equivalents and restricted cash | $(3,716) | $(1,091) | Off-Balance Sheet Arrangements This section confirms the absence of any off-balance sheet arrangements for the reported periods - The Company did not have any off-balance sheet arrangements during the periods presented or currently[95] Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK This section states that market risk disclosures are not applicable to the company for the reporting period - This item is not applicable to the Company[96] Item 4. CONTROLS AND PROCEDURES This section confirms the effectiveness of the company's disclosure controls and procedures and reports no material changes in internal control over financial reporting - The Company's disclosure controls and procedures were evaluated and deemed effective at the reasonable assurance level as of March 31, 2024[97] - No changes in internal control over financial reporting occurred during Q1 2024 that materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting[100] PART II - OTHER INFORMATION This section provides additional information not covered in the financial statements, including legal proceedings, risk factors, and exhibits Item 1. LEGAL PROCEEDINGS This section confirms that there are no legal proceedings to report for the company - There are no legal proceedings to report[101] Item 1A. RISK FACTORS This section states that there were no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K - No material changes from the risk factors set forth in the Annual Report on Form 10-K for the fiscal year ended December 31, 2023[102] Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS This section reports no unregistered sales of equity securities or use of proceeds to disclose - There are no unregistered sales of equity securities and use of proceeds to report[103] Item 3. DEFAULTS UPON SENIOR SECURITIES This section confirms that there were no defaults upon senior securities - There are no defaults upon senior securities to report[104] Item 4. MINE SAFETY DISCLOSURES This section indicates that mine safety disclosures are not applicable to the company - Mine safety disclosures are not applicable[105] Item 5. OTHER INFORMATION This section states that there is no other information to report - There is no other information to report[106] Item 6. EXHIBITS This section provides an index of exhibits filed or furnished with the Quarterly Report on Form 10-Q - The exhibit index lists documents such as the Certificate of Incorporation, Bylaws, Common Stock Purchase Warrant, Securities Purchase Agreement, Placement Agency Agreement, and certifications from the CEO and CFO[107][115]