UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
| ☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended SeptemberJune 30, 20172021
OR
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number: 001-38022
MATINAS BIOPHARMA HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
| Delaware | No. 46-3011414 | |
| (State or other jurisdiction of | (I.R.S. Employer | |
| incorporation or | Identification No.) |
1545 Route 206 South, Suite 302
Bedminster, New Jersey07921
(Address of principal executive offices) (Zip Code)
908-443-1860908-484-8805
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of Each Class | Trading Symbol | Name of Each Exchange on Which Registered | ||
| Common Stock | MTNB | NYSE American |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes [X] ☒ No [ ]☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes [X] ☒ No [ ]☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company”company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| Non-accelerated | ☒ | Smaller reporting company | ☒ |
| Emerging growth company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B)13(a) of the SecuritiesExchange Act.[X] ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] ☐ No [X] ☒
As of November 10, 2017, 92,950,096August 5, 2021, there were shares of the registrant’s common stock, $0.0001 par value, per share, were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
None.
MATINAS BIOPHARMA HOLDINGS, INCINC.
FORMForm 10-Q
Quarter Ended SeptemberJune 30, 20172021
TABLE OF CONTENTSTable of Contents
| Page | ||
| PART - I FINANCIAL INFORMATION | ||
| Item 1. | FINANCIAL STATEMENTS | |
| Item 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | |
| Item 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | |
| Item 4. | CONTROLS AND PROCEDURES | |
| PART - II OTHER INFORMATION | ||
| Item 1. | LEGAL PROCEEDINGS | |
| Item 1A. | RISK FACTORS | |
| Item 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS | |
| Item 3. | DEFAULTS UNDER SENIOR SECURITIES | |
| Item 4. | MINE SAFETY DISCLOSURES | |
| Item 5. | OTHER INFORMATION | |
| Item 6. | EXHIBITS | |
| i |
Matinas BioPharma Holdings, Inc.
Condensed Consolidated Balance Sheets
Unaudited
| June 30, 2021 | December 31, 2020 | |||||||
| (Unaudited) | (Audited) | |||||||
| ASSETS: | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 30,352,359 | $ | 12,432,481 | ||||
| Marketable securities | 29,490,430 | 46,246,573 | ||||||
| Restricted cash – security deposits | 136,000 | 136,000 | ||||||
| Prepaid expenses and other current assets | 960,422 | 2,739,791 | ||||||
| Total current assets | 60,939,211 | 61,554,845 | ||||||
| Non-current assets: | ||||||||
| Leasehold improvements and equipment - net | 1,406,748 | 1,523,950 | ||||||
| Operating lease right-of-use assets - net | 3,034,155 | 3,276,639 | ||||||
| Finance lease right-of-use assets - net | 37,350 | 58,007 | ||||||
| In-process research and development | 3,017,377 | 3,017,377 | ||||||
| Goodwill | 1,336,488 | 1,336,488 | ||||||
| Restricted cash - security deposit | 200,000 | 200,000 | ||||||
| Total non-current assets | 9,032,118 | 9,412,461 | ||||||
| Total assets | $ | 69,971,329 | $ | 70,967,306 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY: | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 450,461 | $ | 349,941 | ||||
| Accrued expenses | 2,762,736 | 2,795,329 | ||||||
| Operating lease liabilities - current | 351,257 | 391,498 | ||||||
| Financing lease liabilities - current | 26,870 | 30,853 | ||||||
| Total current liabilities | 3,591,324 | 3,567,621 | ||||||
| Non-current liabilities: | ||||||||
| Deferred tax liability | 341,265 | 341,265 | ||||||
| Operating lease liabilities - net of current portion | 3,123,482 | 3,304,063 | ||||||
| Financing lease liabilities - net of current portion | 11,508 | 23,660 | ||||||
| Total non-current liabilities | 3,476,255 | 3,668,988 | ||||||
| Total liabilities | 7,067,579 | 7,236,609 | ||||||
| Stockholders’ equity: | ||||||||
| Series B Convertible preferred stock, stated value $ per share, shares authorized as of June 30, 2021 and December 31, 2020; and shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively | - | 3,797,705 | ||||||
| Common stock par value $ per share, shares authorized as of June 30, 2021 and December 31, 2020; and issued and outstanding as of June 30, 2021 and December 31, 2020, respectively | 21,462 | 20,010 | ||||||
| Additional paid-in capital | 180,929,263 | 167,192,003 | ||||||
| Accumulated deficit | (118,098,218 | ) | (107,507,193 | ) | ||||
| Accumulated other comprehensive income | 51,243 | 228,172 | ||||||
| Total stockholders’ equity | 62,903,750 | 63,730,697 | ||||||
| Total liabilities and stockholders’ equity | $ | 69,971,329 | $ | 70,967,306 | ||||
| September 30, 2017 | December 31, 2016 | |||||||
| (Unaudited) | (Audited) | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash and cash equivalents | $ | 9,000,674 | $ | 4,105,451 | ||||
| Restricted cash | 155,404 | 155,610 | ||||||
| Prepaid expenses | 1,017,372 | 304,427 | ||||||
| Total current assets | 10,173,450 | 4,565,488 | ||||||
| Leasehold improvements and equipment - net | 1,460,455 | 356,143 | ||||||
| In-process research and development | 3,017,377 | 3,017,377 | ||||||
| Goodwill | 1,336,488 | 1,336,488 | ||||||
| Other assets including long term security deposit | 535,999 | 540,845 | ||||||
| TOTAL ASSETS | $ | 16,523,769 | $ | 9,816,341 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| CURRENT LIABILITIES | ||||||||
| Accounts payable | $ | 341,593 | $ | 475,602 | ||||
| Note payable | 297,912 | 118,046 | ||||||
| Accrued expenses | 753,760 | 829,724 | ||||||
| Deferred revenue | 74,844 | - | ||||||
| Deferred rent liability | 395,620 | 11,485 | ||||||
| Lease liability | 19,020 | 9,936 | ||||||
| Total current liabilities | 1,882,749 | 1,444,793 | ||||||
| LONG TERM LIABILITIES | ||||||||
| Deferred tax liability | 1,205,141 | 1,205,141 | ||||||
| Lease liability - net of current portion | 47,914 | 16,446 | ||||||
| Stock dividends payable - long term | 603,143 | - | ||||||
| TOTAL LIABILITIES | 3,738,947 | 2,666,380 | ||||||
| STOCKHOLDERS’ EQUITY | ||||||||
| Series A Convertible preferred stock, stated value $5.00 per share, 1,600,000 shares authorized as of September 30, 2017 and December 31, 2016; 1,507,858 and 1,600,000 shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively, (liquidation preference - $8,142,433 at September 30, 2017) | 5,735,845 | 6,086,350 | ||||||
| Common stock par value $0.0001 per share, 250,000,000 and 250,000,000 shares authorized at September 30, 2017 and December 31, 2016, respectively; 92,950,096 issued and outstanding as of September 30, 2017; 58,159,495 issued and outstanding as of December 31, 2016 | 9,294 | 5,817 | ||||||
| Additional paid in capital | 54,686,207 | 36,237,504 | ||||||
| Accumulated deficit | (47,646,524 | ) | (35,179,710 | ) | ||||
| Total stockholders’ equity | 12,784,822 | 7,149,961 | ||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 16,523,769 | $ | 9,816,341 | ||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
Matinas BioPharma Holdings, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
| Three Months Ended | ||||||||
| September 30, | ||||||||
| 2017 | 2016 | |||||||
| Revenue: | ||||||||
| Contract research revenue | $ | 44,906 | $ | - | ||||
| Costs and Expenses: | ||||||||
| Research and development | 2,013,063 | 835,308 | ||||||
| General and administrative | 1,440,141 | 999,803 | ||||||
| Total costs and expenses | 3,453,204 | 1,835,111 | ||||||
| Loss from operations | (3,408,298 | ) | (1,835,111 | ) | ||||
| Other income/(expense), net | 13,584 | (3,325 | ) | |||||
| Net loss | $ | (3,394,714 | ) | $ | (1,838,436 | ) | ||
| Dividend to preferred shareholders | (608,343 | ) | - | |||||
| Convertible preferred stock beneficial conversion feature accreted as a deemed dividend | - | (4,393,809 | ) | |||||
| Net loss attributable to common shareholders | $ | (4,003,057 | ) | $ | (6,232,245 | ) | ||
| Net loss available for common shareholders per share - basic and diluted | $ | (0.04 | ) | $ | (0.11 | ) | ||
| Weighted average common shares outstanding: Basic and diluted | 92,222,601 | 57,628,917 | ||||||
| Nine Months Ended | ||||||||
| September 30, | ||||||||
| 2017 | 2016 | |||||||
| Revenue: | ||||||||
| Contract research revenue | $ | 104,781 | $ | - | ||||
| Costs and Expenses: | ||||||||
| Research and development | 6,711,997 | 2,399,595 | ||||||
| General and administrative | 5,264,609 | 3,293,233 | ||||||
| Total costs and expenses | 11,976,606 | 5,692,828 | ||||||
| Loss from operations | (11,871,825 | ) | (5,692,828 | ) | ||||
| Other income/(expense), net | 13,354 | (14,103 | ) | |||||
| Net loss | $ | (11,858,471 | ) | $ | (5,706,931 | ) | ||
| Dividend to preferred shareholders | (608,343 | ) | - | |||||
| Convertible preferred stock beneficial conversion feature accreted as a deemed dividend | - | (4,393,809 | ) | |||||
| Inducement charge from exercise of warrants | (16,741,356 | ) | - | |||||
| Net loss attributable to common shareholders | $ | (29,208,170 | ) | $ | (10,100,740 | ) | ||
| Net loss available for common shareholders per share - basic and diluted | $ | (0.33 | ) | $ | (0.18 | ) | ||
| Weighted average common shares outstanding: basic and diluted | 89,468,153 | 57,505,788 | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
Matinas BioPharma Holdings Inc.
Condensed Consolidated Statements of Cash Flow
Unaudited
| Nine Months Ended | ||||||||
| September 30 | ||||||||
| 2017 | 2016 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | (11,858,471 | ) | $ | (5,706,931 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | 56,229 | 39,965 | ||||||
| Deferred rent | 97,415 | 2,001 | ||||||
| Share based compensation expense | 2,239,259 | 1,274,108 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Prepaid expenses | 51,418 | 240,116 | ||||||
| Other assets | 5,081 | 105,269 | ||||||
| Accounts payable | (134,009 | ) | (288,379 | ) | ||||
| Accrued expenses - other liabilities | (1,120 | ) | 331,127 | |||||
| Net cash used in operating activities | (9,544,198 | ) | (4,002,724 | ) | ||||
| Cash flows from investing activities: | ||||||||
| Leasehold improvements | (823,886 | ) | - | |||||
| Net cash used in investing activities | (823,886 | ) | - | |||||
| Cash flows from financing activities: | ||||||||
| Proceeds from preferred stock issued for cash | - | 8,000,000 | ||||||
| Preferred stock issuance costs | - | (1,157,603 | ) | |||||
| Net proceeds from exercise of warrants | 14,834,344 | 240,000 | ||||||
| Net proceeds from ATM sales | 641,510 | - | ||||||
| Payment on capital lease liability | (9,383 | ) | (13,578 | ) | ||||
| Payments on notes payable | (203,164 | ) | (73,451 | ) | ||||
| Net cash provided by/ financing activities | 15,263,307 | 6,995,368 | ||||||
| Net increase in cash and cash equivalents | 4,895,223 | 2,992,644 | ||||||
| Cash and cash equivalents at beginning of period | 4,105,451 | 3,226,997 | ||||||
| Cash and cash equivalents at end of period | $ | 9,000,674 | $ | 6,219,641 | ||||
| Supplemental non-cash financing and investing activities: | ||||||||
| Deemed dividend for convertible preferred stock beneficial conversion feature | $ | - | $ | 4,393,809 | ||||
| Fair value of placement agent warrants as an issuance cost | $ | - | $ | 756,047 | ||||
| Stock dividend accrual | $ | 608,343 | $ | - | ||||
| Stock dividends issued and converted to common stock | $ | 5,200 | $ | - | ||||
| Additional paid-in-capital for modification of warrants | $ | 16,741,356 | $ | - | ||||
| Equipment acquired under capital lease | $ | 49,935 | $ | 31,064 | ||||
| Note Payable for insurance premiums | $ | 383,030 | $ | 262,324 | ||||
| Liability of payment of leasehold improvements by landlord | $ | 286,720 | $ | - | ||||
| Unearned restricted stock grants | $ | 381,333 | $ | - | ||||
| Conversion of preferred stock | $ | 350,412 | $ | - | ||||
The accompanying notes are an integral part of these condensed consolidated financial statements
| 1 |
Matinas BioPharma Holdings, Inc.
Condensed Consolidated Statements of Operations and Comprehensive Loss
Unaudited
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Revenue: | ||||||||||||||||
| Research and development | $ | - | $ | - | $ | 33,333 | $ | - | ||||||||
| Costs and expenses: | ||||||||||||||||
| Research and development | 2,480,764 | 3,410,237 | 5,722,196 | 7,497,120 | ||||||||||||
| General and administrative | 2,308,926 | 2,356,310 | 5,453,936 | 4,615,941 | ||||||||||||
| Total costs and expenses | 4,789,690 | 5,766,547 | 11,176,132 | 12,113,061 | ||||||||||||
| Loss from operations | (4,789,690 | ) | (5,766,547 | ) | (11,142,799 | ) | (12,113,061 | ) | ||||||||
| Sale of New Jersey net operating loss & tax credits | - | - | 1,328,470 | 1,073,289 | ||||||||||||
| Other income, net | (1,415 | ) | 156,000 | 66,904 | 383,327 | |||||||||||
| Net loss | $ | (4,791,105 | ) | $ | (5,610,547 | ) | $ | (9,747,425 | ) | $ | (10,656,445 | ) | ||||
| Preferred stock series B accumulated dividends | (184,899 | ) | (177,092 | ) | (395,799 | ) | (347,792 | ) | ||||||||
| Net loss attributable to common shareholders | $ | (4,976,004 | ) | $ | (5,787,639 | ) | $ | (10,143,224 | ) | $ | (11,004,237 | ) | ||||
| Net loss available for common shareholders per share - basic and diluted | $ | (0.02 | ) | $ | (0.03 | ) | $ | (0.05 | ) | $ | (0.06 | ) | ||||
| Weighted average common shares outstanding - basic and diluted | 205,215,259 | 197,601,500 | 204,547,251 | 194,636,326 | ||||||||||||
| Other comprehensive (loss)/income, net of tax | ||||||||||||||||
| Net unrealized (loss)/gain on securities available-for-sale | (85,163 | ) | (41,954 | ) | (176,929 | ) | 481,303 | |||||||||
| Reclassifications to net loss | - | (2,708 | ) | - | (2,719 | ) | ||||||||||
| Other comprehensive (loss)/income, net of tax | (85,163 | ) | (44,662 | ) | (176,929 | ) | 478,584 | |||||||||
| Comprehensive loss attributable to shareholders | $ | (4,876,268 | ) | $ | (5,655,209 | ) | $ | (9,924,354 | ) | $ | (10,177,861 | ) | ||||
The accompanying notes are an integral part of these condensed consolidated financial statements
| 2 |
Matinas BioPharma Holdings, Inc.
Condensed Consolidated Statements of Stockholders’ Equity
Unaudited
| Shares | Amount | Shares | Amount | Capital | Deficit | Income (loss) | Equity | |||||||||||||||||||||||||
Redeemable Convertible Preferred Stock B | Common Stock |
Additional Paid - in | Accumulated | Accumulated Other Comprehensive |
Total Stockholders’ | |||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Income (loss) | Equity | |||||||||||||||||||||||||
| Balance, December 31, 2020 | 4,361 | $ | 3,797,705 | 200,113,431 | $ | 20,010 | $ | 167,192,003 | $ | (107,507,193 | ) | $ | 228,172 | $ | 63,730,697 | |||||||||||||||||
| Stock-based compensation | - | - | - | - | 2,100,402 | - | - | 2,100,402 | ||||||||||||||||||||||||
| Issuance of common stock as compensation for services | - | - | 17,804 | 2 | 15,874 | - | - | 15,876 | ||||||||||||||||||||||||
| Issuance of common stock in exchange for preferred stock | (4,361 | ) | (3,797,705 | ) | 8,722,000 | 873 | 3,796,832 | - | - | - | ||||||||||||||||||||||
| Issuance of common stock in public offering, net of stock issuance costs ($3,298,790) | ||||||||||||||||||||||||||||||||
| Issuance of common stock in public offering, net of stock issuance costs, shares | ||||||||||||||||||||||||||||||||
| Stock issuance cost | ||||||||||||||||||||||||||||||||
| Issuance of common stock in public offering, net of stock issuance costs ($172,592) | - | - | 3,023,147 | 302 | 5,580,169 | - | - | 5,580,471 | ||||||||||||||||||||||||
| Issuance of common stock from the exercise of Common Stock Options | - | - | 1,062,883 | 106 | 1,400,552 | - | - | 1,400,658 | ||||||||||||||||||||||||
| Issuance of common stock from the exercise of Warrants | - | - | 1,057 | - | - | - | - | - | ||||||||||||||||||||||||
| Stock dividend | - | - | 1,687,200 | 169 | 843,431 | (843,600 | ) | - | - | |||||||||||||||||||||||
| Other comprehensive loss | - | - | - | - | - | - | (176,929 | ) | (176,929 | ) | ||||||||||||||||||||||
| Net loss | - | - | - | - | - | (9,747,425 | ) | - | (9,747,425 | ) | ||||||||||||||||||||||
| Balance, June 30, 2021 | - | $ | - | 214,627,522 | $ | 21,462 | $ | 180,929,263 | $ | (118,098,218 | ) | $ | 51,243 | $ | 62,903,750 | |||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Income (loss) | Equity | |||||||||||||||||||||||||
Redeemable Convertible Preferred Stock B | Common Stock |
Additional Paid - in | Accumulated | Accumulated Other Comprehensive |
Total Stockholders’ | |||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Income (loss) | Equity | |||||||||||||||||||||||||
| Balance, March 31, 2021 | 4,218 | $ | 3,673,176 | 204,283,972 | $ | 20,427 | $ | 175,189,608 | $ | (112,463,513 | ) | $ | 136,406 | $ | 66,556,104 | |||||||||||||||||
| Stock-based compensation | - | - | - | - | 1,027,345 | - | - | 1,027,345 | ||||||||||||||||||||||||
| Issuance of common stock as compensation for services | - | - | 10,244 | 1 | 7,937 | - | - | 7,938 | ||||||||||||||||||||||||
| Issuance of common stock in exchange for preferred stock | (4,218 | ) | (3,673,176 | ) | 8,436,000 | 844 | 3,672,332 | - | - | - | ||||||||||||||||||||||
| Issuance of common stock from the exercise of Common Stock Options | - | - | 210,106 | 21 | 188,610 | - | - | 188,631 | ||||||||||||||||||||||||
| Stock dividend | - | - | 1,687,200 | 169 | 843,431 | (843,600 | ) | - | - | |||||||||||||||||||||||
| Other comprehensive loss | - | - | - | - | - | - | (85,163 | ) | (85,163 | ) | ||||||||||||||||||||||
| Net loss | - | - | - | - | - | (4,791,105 | ) | - | (4,791,105 | ) | ||||||||||||||||||||||
| Balance, June 30, 2021 | - | $ | - | 214,627,522 | $ | 21,462 | $ | 180,929,263 | $ | (118,098,218 | ) | $ | 51,243 | $ | 62,903,750 | |||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Income (loss) | Equity | |||||||||||||||||||||||||
Redeemable Convertible Preferred Stock B | Common Stock |
Additional Paid - in | Accumulated | Accumulated Other Comprehensive |
Total Stockholders’ | |||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | (Loss) Income | Equity | |||||||||||||||||||||||||
| Balance, December 31, 2019 | 4,577 | $ | 3,985,805 | 163,156,984 | $ | 16,315 | $ | 113,427,897 | $ | (84,377,555 | ) | $ | (880 | ) | $ | 33,051,582 | ||||||||||||||||
| Stock-based compensation | - | - | - | - | 2,218,530 | - | - | 2,218,530 | ||||||||||||||||||||||||
| Issuance of common stock as compensation for services | - | - | 246,987 | 25 | 188,104 | - | - | 188,129 | ||||||||||||||||||||||||
| Issuance of common stock in exchange for preferred stock | (25 | ) | (21,771 | ) | 50,000 | 5 | 21,766 | - | - | - | ||||||||||||||||||||||
| Issuance of common stock in public offering, net of stock issuance costs ($3,298,790) | - | - | 32,260,000 | 3,226 | 46,700,984 | - | - | 46,704,210 | ||||||||||||||||||||||||
| Issuance of common stock from the exercise of Common Stock Options | - | - | 56,517 | 6 | 42,494 | - | - | 42,500 | ||||||||||||||||||||||||
| Issuance of common stock from the exercise of Warrants | - | - | 1,737,389 | 172 | 797,409 | - | - | 797,581 | ||||||||||||||||||||||||
| Stock dividend | - | - | 1,365,600 | 137 | 682,663 | (682,800 | ) | - | - | |||||||||||||||||||||||
| Other comprehensive income | - | - | - | - | - | - | 478,584 | 478,584 | ||||||||||||||||||||||||
| Net loss | - | - | - | - | - | (10,656,445 | ) | - | (10,656,445 | ) | ||||||||||||||||||||||
| Balance, June 30, 2020 | 4,552 | $ | 3,964,034 | 198,873,477 | $ | 19,886 | $ | 164,079,847 | $ | (95,716,800 | ) | $ | 477,704 | $ | 72,824,671 | |||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Income (loss) | Equity | |||||||||||||||||||||||||
Redeemable Convertible Preferred Stock B | Common Stock |
Additional Paid - in | Accumulated | Accumulated Other Comprehensive |
Total Stockholders’ | |||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Income (loss) | Equity | |||||||||||||||||||||||||
| Balance, March 31, 2020 | 4,552 | $ | 3,964,034 | 197,202,938 | $ | 19,719 | $ | 162,520,461 | $ | (89,423,453 | ) | $ | 522,366 | $ | 77,603,127 | |||||||||||||||||
| Stock-based compensation | - | - | - | - | 850,879 | - | - | 850,879 | ||||||||||||||||||||||||
| Issuance of common stock as compensation for services | - | - | 20,537 | 2 | 15,872 | - | - | 15,874 | ||||||||||||||||||||||||
| Stock issuance cost | - | - | - | - | 10,000 | - | - | 10,000 | ||||||||||||||||||||||||
| Issuance of common stock from the exercise of Warrants | - | - | 284,402 | 28 | (28 | ) | - | - | - | |||||||||||||||||||||||
| Stock dividend | - | - | 1,365,600 | 137 | 682,663 | (682,800 | ) | - | - | |||||||||||||||||||||||
| Other comprehensive loss | - | - | - | - | - | - | (44,662 | ) | (44,662 | ) | ||||||||||||||||||||||
| Net loss | - | - | - | - | - | (5,610,547 | ) | - | (5,610,547 | ) | ||||||||||||||||||||||
| Balance, June 30, 2020 | 4,552 | $ | 3,964,034 | 198,873,477 | $ | 19,886 | $ | 164,079,847 | $ | (95,716,800 | ) | $ | 477,704 | $ | 72,824,671 | |||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements
| 3 |
Matinas BioPharma Holdings, Inc.
Condensed Consolidated Statements of Cash Flow
Unaudited
| 2021 | 2020 | |||||||
| Six Months Ended June 30, | ||||||||
| 2021 | 2020 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | (9,747,425 | ) | $ | (10,656,445 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | 117,202 | 115,433 | ||||||
| Stock based compensation expense | 2,156,941 | 2,391,694 | ||||||
| Amortization of operating lease right-of-use assets | 242,485 | 237,909 | ||||||
| Amortization of finance lease right-of-use assets | 20,656 | 41,678 | ||||||
| Amortization of bond discount | 108,562 | - | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Operating lease liabilities | (220,822 | ) | (200,762 | ) | ||||
| Prepaid expenses and other current assets | 1,738,706 | 861,530 | ||||||
| Accounts payable | 100,520 | (184,733 | ) | |||||
| Accrued expenses and other liabilities | (32,593 | ) | (439,630 | ) | ||||
| Net cash used in operating activities | (5,515,768 | ) | (7,833,326 | ) | ||||
| Cash flows from investing activities: | ||||||||
| Purchase of marketable securities | (7,129,348 | ) | (67,670,491 | ) | ||||
| Proceeds from sales of marketable securities | 23,600,000 | 20,700,000 | ||||||
| Purchases of leasehold improvements and equipment | - | (5,749 | ) | |||||
| Net cash provided by/(used in) investing activities | 16,470,652 | (46,976,240 | ) | |||||
| Cash flows from financing activities: | ||||||||
| Net proceeds from public offering of common stock | 5,580,471 | 46,639,210 | ||||||
| Proceeds from exercise of warrants | - | 797,581 | ||||||
| Proceeds from exercise of options | 1,400,658 | 42,500 | ||||||
| Payments of capital lease liability - principal | (16,135 | ) | (36,235 | ) | ||||
| Net cash provided by financing activities | 6,964,994 | 47,443,056 | ||||||
| Net increase/(decrease) in cash, cash equivalents and restricted cash | 17,919,878 | (7,366,510 | ) | |||||
| Cash, cash equivalents and restricted cash at beginning of period | 12,768,481 | 22,756,438 | ||||||
| Cash, cash equivalents and restricted cash at end of period | $ | 30,688,359 | $ | 15,389,928 | ||||
| Supplemental non-cash financing and investing activities: | ||||||||
| Unrealized (loss)/gains on securities for sale | $ | (176,929 | ) | $ | 478,584 | |||
| Preferred stock conversion into common stock - Series B | $ | 3,797,705 | $ | 21,771 | ||||
| Unearned restricted stock grants | $ | 27,858 | $ | 73,490 | ||||
| Cashless exercise of warrants | $ | - | $ | 441,189 | ||||
| Stock dividends issued | $ | 843,600 | $ | 682,800 | ||||
| Deferred financing costs included in accrued expenses and other liabilities | $ | - | $ | 65,000 | ||||
The accompanying notes are an integral part of these condensed consolidated financial statements
| 4 |
MATINAS BIOPHARMA HOLDINGS, INC.
STATEMENT OF STOCKHOLDER’S EQUITY
Nine Months EndedSeptember 30, 2017
| Redeemable Convertible Preferred Stock | Common Stock | Additional Paid - in | Accumulated | Total Stockholders’ | ||||||||||||||||||||||||
| (Shares) | (Amount) | (Shares) | (Amount) | Capital | Deficit | Equity | ||||||||||||||||||||||
| Balance as of December 31, 2016 | 1,600,000 | $ | 6,086,350 | 58,159,495 | $ | 5,817 | $ | 36,237,504 | $ | (35,179,710 | ) | $ | 7,149,961 | |||||||||||||||
| Stock Based Compensation EE/Consultant Options | - | - | - | - | 1,623,621 | - | 1,623,621 | |||||||||||||||||||||
| Issuance of Common Stock as Compensation for services | - | - | 596,960 | 60 | 996,940 | - | - | 997,000 | ||||||||||||||||||||
| Net proceeds from exercise of warrants | - | - | 32,755,868 | 3,272 | 14,831,072 | - | 14,834,344 | |||||||||||||||||||||
| Issuance of Common Stock in exchange for preferred shares | (92,142 | ) | (350,505 | ) | 921,420 | 93 | 350,412 | - | - | |||||||||||||||||||
| Stock Dividends Issued | - | - | 10,400 | 1 | 5,199 | - | 5,200 | |||||||||||||||||||||
| ATM Stock Sales (net) | - | - | 505,953 | 51 | 641,459 | - | 641,510 | |||||||||||||||||||||
| Preferred dividends accrued | - | - | - | - | - | (608,343 | ) | (608,343 | ) | |||||||||||||||||||
| Net Loss | - | - | - | - | - | (11,858,471 | ) | (11,858,471 | ) | |||||||||||||||||||
| Balance as of September 30, 2017 | 1,507,858 | 5,735,845 | 92,950,096 | 9,294 | 54,686,207 | $ | (47,646,524 | ) | $ | 12,784,822 | ||||||||||||||||||
Matinas BioPharma Holdings, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
(Tabular dollars and shares in thousands, except per share data)
NOTE ANote 1 – NatureDescription of Business
Matinas BioPharma Holdings Inc. (“Holdings”) is a Delaware corporation formed in 2013. Holdings is the parent company of Matinas BioPharma, Inc. (“BioPharma”), and Matinas BioPharma Nanotechnologies, Inc. (“Nanotechnologies,” formerly known as Aquarius Biotechnologies, Inc.), its operating subsidiaries (“Nanotechnologies”, and together with “Holdings” and “BioPharma”, “the Company” or “we” or “our” or “us”). The Company is a development stageclinical-stage biopharmaceutical company with a focus on identifying and developing novel pharmaceutical products.
On January 29, 2015, we completed the acquisition of Nanotechnologies (the “2015 Merger”), a New Jersey-based, early-stage pharmaceutical company focused on the development of differentiatedNote 2 – Liquidity and orally delivered therapeutics based on a proprietary, lipid-based, drug delivery platform called “cochleate delivery technology.” Following the 2015 Merger, we are a clinical-stage biopharmaceutical company focused on identifying and developing safe and effective broad spectrum antifungal and anti-bacterial therapeutics for the treatment of serious and life-threatening infections, using our innovative lipid-crystal nano-encapsulation drug delivery platform.
On September 13, 2016, the Company completed the closing of an $8.0 million private placement equity financing. The Company sold to accredited investors an aggregate of 1,600,000 Series A Preferred Shares at a purchase price of $5.00 per share resulting in net proceeds of approximately $6.9 million. Each Series A Preferred Share is convertible into ten shares of common stock based on the current conversion price. For a detailed discussion of this transaction see Note F.
On January 13, 2017, the Company completed its tender offer to amend and exercise certain categories of existing warrants. Pursuant to the Offer to Amend and Exercise, an aggregate of 30,966,350 warrants were tendered by their holders and were amended and exercised in connection herewith. The gross cash proceeds from such exercises were approximately $13.5 million and the net cash proceeds after deducting warrant solicitation agent fees and other estimated offering expenses were approximately $12.7 million. For a detailed discussion of this transaction see Note D.
NOTE B – Liquidity, Plan of Operations and Going Concern
The accompanying financial statements have been prepared in conformity with generally accepted accounting principles.
The Company has experienced net losses and negative cash flows from operations each period since its inception. Through SeptemberJune 30, 2017,2021, the Company had an accumulated deficit of approximately $47.6$118.1 million. The Company’s operations have been financed primarily through the sale of equity securities. The Company’s net loss was approximately $9.7 million and $10.7 million for the nine monthssix-month periods ended SeptemberJune 30, 20172021 and 2016 was approximately $11.9 million and $5.7 million,2020, respectively.
The Company has been engaged in developing LYPDISO (formerly MAT9001) as well as its lipid nanocrystal (“LNC”) platform delivery technology and a pipeline of associated product candidates, including MAT2203 and MAT2501, since 2011. To date, the Company has not obtained regulatory approval for any of its product candidates nor generated any revenue from productsproduct sales, and the Company expects to incur significant expenses to complete development of its product candidates. The Company may never be able to obtain regulatory approval for the marketing of any of its product candidates in any indication in the United States or internationally and there can be no assurance that the Company will generate revenues or ever achieve profitability.
Assuming the Company obtains FDAFood and Drug Administration (“FDA”) approval for one or more of its product candidates, which the Company does not expect to receive until 2022 at the earliest, the Company expects that its expenses will continue to increase once the Company reaches commercial launch. The Company also expects that its research and development expenses will continue to increase as it moves forward with additional clinical studies for its current product candidates and developingdevelopment of additional product candidates. As a result, the Company expects to continue to incur substantial losses for the foreseeable future, and that these losses will be increasing.
To continue to fund its continued losses, onoperations, during January 13, 2017,2021, the Company completed a warrant tender offer,sold shares of common stock under its At-The-Market Sales Agreement with gross cash proceeds of $13.5 million andBTIG, LLC, generating net proceeds of approximately $12.7$5.6 million (see Footnote E for additional details)(See Note 11 – Stockholders’ Equity). Additionally, the Company has entered into a Controlled Equity OfferingSMSales Agreement with Cantor Fitzgerald & Co. “Cantor” ( see Footnote C), which allows the Company, subject to certain limited restrictions and daily sales limits, to sell shares of common stock having an offering price of up to $30 million. Through October 19, 2017, the Company has sold approximately 871 thousand shares of common stock pursuant to the Controlled Equity OfferingSMSales Agreement with Cantor raising over $1.1 million (see footnote C).
As of SeptemberJune 30, 2017,2021, the Company had cash and cash equivalents of approximately $ 9.030.4 million, marketable securities of approximately $29.5 million and restricted cash of approximately $0.3 million. We believeThe Company believes the cash and cash equivalents and marketable securities on hand are sufficient to fund planned operations through May 2018.into 2024.
The ability of the Company to continue as a going concern is dependent upon securing additional financing. While the Company believes in the viability of its strategy to raise additional funds, and believes that the actions presently being taken by the Company provide the opportunity for it to continue as a going concern, there can be no assurance that any financing will be available on acceptable terms, or at all. These consolidated financial statements do not include any adjustments related to the recoverability and classification of asset amounts or the amounts and classification of liabilities that might be necessary if the Company is unable to continue as a going concern.
NOTE CNote 3 – Controlled Equity Offering
On April 28, 2017, the Company entered into a Controlled Equity OfferingSMSales Agreement, or sales agreement, with Cantor Fitzgerald & Co., or “Cantor”, pursuant to which the Company may issue and sell, from time to time, shares of our common stock having an aggregate offering price of up to $30.0 million. Cantor Fitzgerald will be acting as sales agent and be paid a 3% commission on each sale.
As of September 30, 2017, the Company has sold approximately 506 thousand shares raising over $.6 million. From September 30, 2017 to filing approximately 365 thousand shares have been sold raising approximately $.5 million.
Through an internal Pricing Committee, the Company at various times, will establish selling criteria with Cantor based on minimum pricing and share volume. This criteria is based on the judgement of the Pricing Committee, there are no contractual minimums with regards to price or volume in the Sales Agreement.
NOTE D – Summary of Significant Accounting Policies
Basis of presentation and principles of consolidation
The accompanying unaudited condensed consolidated financial statements include the consolidated accounts of Holdings and its wholly owned subsidiaries, BioPharma, and Nanotechnologies,Nanotechnologies. The Company has prepared its condensed consolidated financial statements following the operational subsidiariesrequirements of Holdings.the SEC for interim reporting. The accompanying unaudited condensed consolidated financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and reflect the operations of the Company and its wholly-ownedwholly owned subsidiaries. All intercompany transactions have been eliminated in consolidation.
These interim unauditedThe Company’s significant accounting policies are described in Note 3 within the Company’s Notes to Consolidated Financial Statements included in the Company’s 2020 Form 10-K.
| 5 |
COVID-19
In March 2020, the World Health Organization declared COVID-19 a global pandemic. This contagious disease outbreak, which has continued to spread, and any related adverse public health developments, has adversely affected workforces, economies, and financial statements domarkets globally, and has and may continue to cause economic downturns.
The Company has been actively monitoring the impact of COVID-19. The financial results for the three and six months ended June 30, 2021 were not includesignificantly impacted by COVID-19. However, the Company cannot predict the impact of the progression of COVID-19 on future results or the Company’s ability to raise capital due to a variety of factors, including but not limited to the continued good health of Company employees, the ability of suppliers to continue to operate and deliver, the ability of the Company to maintain operations, any further government and/or public actions taken in response to the pandemic and ultimately the length of the pandemic.
Note 4 – Cash, Cash Equivalents, Restricted Cash and Marketable Securities
The Company considers all highly liquid financial instruments with original maturities of three months or less when purchased to be cash and cash equivalents and all investments with maturities of greater than three months from date of purchase are classified as marketable securities. Cash and cash equivalents consisted of cash in bank checking and savings accounts, money market funds and short-term U.S. treasury bonds that mature within three months of settlement date.
Cash, Cash Equivalents and Restricted Cash
The Company presents restricted cash with cash and cash equivalents in the informationConsolidated Statements of Cash Flows. Restricted cash represents funds the Company is required to set aside to cover building operating leases and footnotes required by U.S. GAAP for annual financial statementsother purposes.
The following table provides a reconciliation of cash, cash equivalents and should be readrestricted cash reported in conjunctionthe Condensed Consolidated Balance Sheets to the total of the amounts in the Condensed Consolidated Statements of Cash Flows as of June 30, 2021, December 31, 2020, June 30, 2020 and December 31, 2019:
Schedule of Cash, Cash Equivalents and Restricted Cash
| June 30, 2021 | December 31, 2020 | June 30, 2020 | December 31, 2019 | |||||||||||||
| Cash and cash equivalents | $ | 30,352 | $ | 12,432 | $ | 14,904 | $ | 22,170 | ||||||||
| Restricted cash included in current/long term assets | 336 | 336 | 486 | 586 | ||||||||||||
| Cash, cash equivalents and restricted cash in the statement of cash flows | $ | 30,688 | $ | 12,768 | $ | 15,390 | $ | 22,756 | ||||||||
Marketable Securities
The Company has classified its investments in marketable securities as available-for-sale and as a current asset. The Company’s investments in marketable securities are carried at fair value, with unrealized gains and losses included as a separate component of stockholders’ equity. Unrealized losses and gains are classified as other comprehensive (loss)/income and costs are determined on a specific identification basis. Realized gains and losses from our marketable securities are recorded in other income, net. For the audited financial statementsthree and six months ended June 30, 2021, the Company recorded unrealized losses of approximately $85 thousand and $177 thousand, respectively. For the three and six months ended June 30, 2020, the Company recorded unrealized loss of approximately $42 thousand and unrealized gains of approximately $481 thousand, respectively. As of June 30, 2021 and December 31, 2020, the Company had net accumulated unrealized gains of approximately $51 thousand and approximately $228 thousand, respectively.
| 6 |
The following tables summarizes the Company’s marketable securities as of June 30, 2021:
Summary of Marketable Securities
| Amortized | Unrealized | Unrealized | ||||||||||||||
| Cost | Gain | (Loss) | Fair Value | |||||||||||||
| U.S. Treasury Bonds | $ | 10,453 | $ | 29 | $ | - | $ | 10,482 | ||||||||
| U.S. Government Notes | 10,624 | 31 | (1 | ) | 10,654 | |||||||||||
| Corporate Debt Securities | 7,087 | - | (9 | ) | 7,078 | |||||||||||
| State and Municipal Bonds | 1,275 | 1 | - | 1,276 | ||||||||||||
| Total marketable securities | $ | 29,439 | $ | 61 | $ | (10 | ) | $ | 29,490 | |||||||
Maturities of debt securities classified as available-for-sale were as follows at June 30, 2021:
Schedule of Maturities of Debt Securities Available-for-sale
| Accrued | Net Carrying | |||||||||||
| Fair Value | Interest | Amount | ||||||||||
| Due within one year | $ | 21,851 | $ | 122 | $ | 21,973 | ||||||
| Due after one year through five years | 7,639 | 25 | 7,664 | |||||||||
| $ | 29,490 | $ | 147 | $ | 29,637 | |||||||
The following tables summarizes the Company’s marketable securities for the year ended December 31, 2016,2020 consisted of the following:
Summary of Marketable Securities
| Amortized Cost | Unrealized Gain | Unrealized (Loss) | Fair Value | |||||||||||||
| U.S. Treasury Bonds | $ | 18,293 | $ | 136 | $ | - | $ | 18,429 | ||||||||
| U.S. Government Notes | 22,148 | 82 | - | 22,230 | ||||||||||||
| Corporate Debt Securities | 4,303 | 3 | - | 4,306 | ||||||||||||
| State and Municipal Bonds | 1,275 | 7 | - | 1,282 | ||||||||||||
| Total marketable securities | $ | 46,019 | $ | 228 | $ | - | $ | 46,247 | ||||||||
Maturities of debt securities classified as available-for-sale were as follows at December 31, 2020:
Schedule of Maturities of Debt Securities Available-for-sale
| Accrued | Net Carrying | |||||||||||
| Fair Value | Interest | Amount | ||||||||||
| Due within one year | $ | 31,438 | $ | 164 | $ | 31,602 | ||||||
| Due after one year through five years | 14,809 | 36 | 14,845 | |||||||||
| $ | 46,247 | $ | 200 | $ | 46,447 | |||||||
Note 5 - Fair Value Measurements
The Company uses the fair value hierarchy to measure the value of its financial instruments. The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable. Observable inputs reflect assumptions market participants would use in pricing an asset or liability based on market data obtained from independent sources, while unobservable inputs reflect a reporting entity’s pricing based upon its own market assumptions. The basis for fair value measurements for each level within the hierarchy is described below:
| ● | Level 1 – Quoted prices for identical assets or liabilities in active markets. |
| ● | Level 2 – Quoted prices for identical or similar assets and liabilities in markets that are not active; or other model-derived valuations whose inputs are directly or indirectly observable or whose significant value drivers are observable. |
| ● | Level 3 – Valuations derived from valuation techniques in which one or more significant inputs to the valuation model are unobservable and for which assumptions are used based on management estimates. |
| 7 |
The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible as well as considers counterparty credit risk in its assessment of fair value.
The carrying amounts of certain cash and cash equivalents, current portion of restricted cash, marketable securities, prepaid expenses and other current assets, accounts payable, current portion of lease liability and accrued expenses approximate fair value due to the short-term nature of these instruments.
A summary of the assets and liabilities carried at fair value in accordance with the hierarchy defined above is as follows:
Schedule of Fair Value Measurement of Assets and Liabilities
| Fair Value Hierarchy | ||||||||||||||||
| June 30, 2021 | Total | (Level 1) | (Level 2) | (Level 3) | ||||||||||||
| Assets | ||||||||||||||||
| Marketable Securities: | ||||||||||||||||
| U.S. Treasury Bonds | $ | 10,482 | $ | 10,482 | $ | - | $ | - | ||||||||
| U.S. Government Notes | 10,654 | - | 10,654 | - | ||||||||||||
| Corporate Debt Securities | 7,078 | - | 7,078 | - | ||||||||||||
| State and Municipal Bonds | 1,276 | - | 1,276 | - | ||||||||||||
| Total | $ | 29,490 | $ | 10,482 | $ | 19,008 | $ | - | ||||||||
| Fair Value Hierarchy | ||||||||||||||||
| December 31, 2020 | Total | (Level 1) | (Level 2) | (Level 3) | ||||||||||||
| Assets | ||||||||||||||||
| Marketable Securities: | ||||||||||||||||
| U.S. Treasury Bonds | $ | 18,429 | $ | 18,429 | $ | - | $ | - | ||||||||
| U.S. Government Notes | 22,230 | - | 22,230 | - | ||||||||||||
| Corporate Debt Securities | 4,306 | - | 4,306 | - | ||||||||||||
| State and Municipal Bonds | 1,282 | - | 1,282 | - | ||||||||||||
| Total | $ | 46,247 | $ | 18,429 | $ | 27,818 | $ | - | ||||||||
U.S. treasury bonds are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices for identical assets in active markets. Marketable securities consisting of U.S. government notes, corporate debt securities and state and municipal bonds are classified as Level 2 and are valued using quoted market prices in markets that are not active.
Note 6 – Leasehold Improvements and Equipment
Leasehold improvements and equipment, summarized by major category, consist of the following as of June 30, 2021 and December 31, 2020:
Schedule of Leasehold Improvements and Equipment
| 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 | ||||||
| Leasehold improvements and equipment, net | $ | 1,407 | $ | 1,524 | ||||
Depreciation and amortization expense for the three and six months ended June 30, 2021 was approximately $59 thousand and $117 thousand, respectively, and for the three and six months ended June 30, 2020 was approximately $58 thousand and $115 thousand, respectively.
| 8 |
Note 7 – Accrued Expenses and Other Liabilities
Accrued Expenses, summarized by major category, as of June 30, 2021 and December 31, 2020 consist of the following:
Schedule of Accrued Expenses
| 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 | ||||
| * | At June 30, 2021, there was an approximately $807 thousand deferred liability under the Cystic Fibrosis Foundation (“CFF”) agreement and approximately $33 thousand in deferred revenue related to the Genentech Agreement. At December 31, 2020, there was an approximately $577 thousand deferred liability under the CFF Agreement and approximately $67 thousand in deferred revenue related to the Genentech Agreement. (See Note 9 – Collaboration Agreements, Licenses and Other Research and Development Agreements). |
Note 8 – Leases
The Company has various lease agreements with terms up to 10 years, including leases of office space, a laboratory and manufacturing facility, and various equipment. Some leases include purchase, termination or extension options for one or more years. These options are included in the Form 10-K filed withlease term when it is reasonably certain that the SECoption will be exercised.
Operating lease obligations
On November 1, 2013, the Company entered into a 7-year lease for office space in Bedminster, New Jersey which commenced in June 2014 at a monthly rent of approximately $13,000, increasing to approximately $14,000 per month toward the end of the term.
On September 23, 2020, the Company entered into an amendment to the Bedminster lease. Pursuant to the amendment, the Company leased an additional 3,034 rentable square feet (“Expansion Premises”). The amendment became effective upon delivery to the Company of the Expansion Premises, which occurred on March 31, 2017. InAugust 1, 2021, and extends the opinionterm of management, the interim unaudited financial statements reflectlease for seven years from such date. There is no renewal option, no security deposit, no residual value or significant restrictions or covenants other than those customary in such arrangements. Except as expressly provided, all normal recurring adjustments necessary to fairly stateother terms, covenants, conditions and agreements as set forth in the lease will remain unchanged and in full force and effect. The total lease commitment over the seven-year extension period is approximately $1.8 million.
The assets and liabilities from operating and finance leases are recognized at the lease commencement date based on the present value of remaining lease payments over the lease term using the Company’s financial position and resultsincremental borrowing rates or implicit rates, when readily determinable. Short-term leases, which have an initial term of operations for the interim periods presented. The year-end condensed consolidated balance sheet data presented for comparative purposes was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP.
Operating results for the nine12 months ended September 30, 2017or less, are not necessarily indicativerecorded on the balance sheet.
The Company’s operating leases did not provide an implicit rate that can readily be determined. Therefore, the Company uses a discount rate based on its incremental borrowing rate, which is determined using the average of the results that may be expected for any future interim periods or for the year ending December 31, 2017. For further information, refer to the consolidated financial statements and notes thereto includedborrowing rates explicitly stated in the Company’s Form 10-Kfinance leases.
The Company incurred lease expense for its operating leases of approximately $204 thousand and $407 thousand for the three and six months ended June 30, 2021, respectively, and approximately $203 thousand and $407 thousand for the three and six months ended June 30, 2020. The Company incurred amortization expense on its operating lease right-of-use assets of approximately $116 thousand and $243 thousand for the three and six months ended June 30, 2021, respectively, and approximately $120 thousand and $238 thousand for the three and six months ended June 30, 2020, respectively.
| 9 |
The Company incurred interest expense on its finance leases of approximately $1 thousand and $2 thousand for the three and six months ended June 30, 2021, respectively, and approximately $2 thousand and $4 thousand for the three and six months ended June 30, 2020, respectively. The Company incurred amortization expense on its finance lease right-of-use assets of approximately $9 thousand and $21 thousand for the three and six months ended June 30, 2021, respectively, and approximately $19 thousand and $42 thousand for the three and six months ended June 30, 2020, respectively.
The following table presents information about the amount and timing of liabilities arising from the Company’s operating leases, excluding the Expansion Premises which the Company had not taken control of as of June 30, 2021, and finance leases as of June 30, 2021:
Schedule of Maturity of Operating and Finance Leases Liabilities
| Maturity of Lease Liabilities | Operating Lease Liabilities | Finance Lease Liabilities | ||||||
| Remainder of 2021 | $ | 314 | $ | 17 | ||||
| 2022 | 645 | 19 | ||||||
| 2023 | 677 | 2 | ||||||
| 2024 | 710 | - | ||||||
| 2025 | 745 | - | ||||||
| 2026 | - | - | ||||||
| Thereafter | 1,458 | - | ||||||
| Total undiscounted operating lease payments | $ | 4,549 | $ | 38 | ||||
| Less: Imputed interest | 1,074 | - | ||||||
| Present value of operating lease liabilities | $ | 3,475 | $ | 38 | ||||
| Weighted average remaining lease term in years | 6.3 | 1.3 | ||||||
| Weighted average discount rate | 8.4 | % | 8.0 | % | ||||
The following table presents information about the amount and timing of liabilities arising from the Company’s operating leases, excluding the Expansion Premises which the Company had not taken control of as of December 31, 2020, and finance leases as of December 31, 2020:
| Maturity of Lease Liabilities | Operating Lease Liabilities | Finance Lease Liabilities | ||||||
| 2021 | $ | 685 | $ | 34 | ||||
| 2022 | 645 | 19 | ||||||
| 2023 | 677 | 2 | ||||||
| 2024 | 710 | - | ||||||
| 2025 | 745 | - | ||||||
| Thereafter | 1,458 | - | ||||||
| Total undiscounted operating lease payments | $ | 4,920 | $ | 55 | ||||
| Less: Imputed interest | 1,224 | - | ||||||
| Present value of operating lease liabilities | $ | 3,696 | $ | 55 | ||||
| Weighted average remaining lease term in years | 6.7 | 1.7 | ||||||
| Weighted average discount rate | 8.4 | % | 8.1 | % | ||||
Note 9 - Collaboration Agreements, Licenses and Other Research and Development Agreements
Cystic Fibrosis Foundation Therapeutics Development Award
On November 19, 2020, the Company entered into an award agreement (the “CFF Agreement”) with the CFF, pursuant to which it received a Therapeutics Development Award of up to $4.2 million (the “Award”) (of which $484,249 was received during 2020) to support the preclinical development (the “Development Program”) of the Company’s MAT2501 product candidate, a lipid nanocrystal oral formulation of the broad-spectrum aminoglycoside amikacin, for the treatment of pulmonary non-tubercular mycobacteria infections and other pulmonary diseases.
| 10 |
During the three and six months ended June 30, 2021, the Company recognized approximately $547 thousand and $971 thousand, respectively, as credits to research and development expenses related to the Award. At June 30, 2021, the remaining deferred liability balance is approximately $807 thousand (See Note 7 – Accrued Expenses and Other Liabilities). At December 31, 2020, a receivable of $650 thousand related to the Award was included in prepaid expenses and other current assets and a related deferred liability balance of $577 thousand was included in accrued expense and other current liabilities. The remainder of the Award will be paid to the Company incrementally in installments upon the achievement of certain milestones related to the development program as set forth in the CFF Agreement.
Genentech Feasibility Study Agreement
On December 12, 2019, the Company entered into a feasibility study agreement (the “Genentech Agreement”) with Genentech, Inc. (“Genentech”). This feasibility study agreement involves the development of oral formulations using the Company’s LNC platform delivery technology, which enables the development of a wide range of difficult-to-deliver molecules. Under the terms of the Genentech Agreement, Genentech shall pay the Company a total of $100 thousand for developing oral formulations of three molecules, or approximately $33 thousand per molecule, which will be recognized upon the Company fulfilling its obligations for each molecule under the Genentech Agreement. On December 13, 2019, per Genentech’s request, the Company billed Genentech for the total $100 thousand and recorded the upfront consideration as deferred revenue, which is recorded in accrued expenses on the consolidated balance sheets, and will recognize it over the term of the contract performance obligation period. During the year ended December 31, 2016.2020, the Company fulfilled its obligations for the first of three molecules. During the six months ended June 30, 2021, the Company fulfilled its obligations for the second of three molecules and recognized approximately $33 thousand of Genentech revenue. During the three months ended June 30, 2021, the Company did not fulfill any of its obligations and did not recognize any Genentech revenue.
Note 10 – Income Taxes
Sale of net operating losses (NOLs) & tax credits
The Company recognized approximately $1.3 million and approximately $1.1 million for the six months ended June 30, 2021 and 2020 in connection with the sale of certain State of New Jersey Net Operating Losses (“NOL”) and Research and Development (“R&D”) tax credits to third parties under the New Jersey Technology Business Tax Certificate Transfer Program. During the three months ended June 30, 2021 and 2020, the Company did not sell any NOL and R&D tax credits.
Note 11 – Stockholders’ Equity
Common Stock
For the six months ended June 30, 2021, the Company sold shares of its common stock under its At-The-Market Sales Agreement with BTIG, LLC, at an average price of $, generating gross proceeds of approximately $5.8 million and net proceeds of approximately $5.6 million.
On January 14, 2020, the Company closed an underwritten public offering of million shares of its common stock at a detailed discussion aboutpurchase price of $per share. The Company generated gross proceeds of approximately $50.0 million and net proceeds of approximately $46.6 million, after deducting underwriting discounts and commissions and other estimated offering expenses.
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Preferred Stock
In connection with a public offering of Series B Preferred Stock, on June 19, 2018, the Company filed the Series B Certificate of Designation with the Secretary of the State of Delaware to designate the preferences, rights and limitations of the Series B Preferred Stock. Pursuant to the Series B Certificate of Designation, the Company designated shares of the Company’s significant accounting policies, see Note C topreviously undesignated preferred shares as Series B Preferred Stock. On June 19, 2021, each share of Series B Preferred Stock was automatically converted into shares of the consolidated financial statementsCompany’s common stock resulting in the 2016 Form 10-K. During the nine months ended Septemberissuance of shares of common stock. As of June 30, 2017,2021 and December 31, 2020 there were no significant updates made and shares of Series B Preferred stock outstanding, respectively.
Dividends. Subject to certain ownership limitations, holders of the Series B Preferred Stock received dividends paid in the Company’s significantcommon stock as follows: (i) a number of shares of common stock equal to 10% of the shares of common stock underlying the Series B Preferred Stock then held by such holder on June 19, 2019, (ii) a number of shares of common stock equal to 15% of the shares of common stock underlying the Series B Preferred Stock then held by such holder on June 19, 2020 and (iii) a number of shares of common stock equal to 20% of the shares of common stock underlying the Series B Preferred Stock then held by such holder on June 19, 2021. Based on an accounting policies.of the holders of record of Series B Preferred Stock on June 19, 2021 and 2020, the Company made dividend payments totaling and shares of common stock, respectively.
The Company’s financial instruments that are exposed to concentrations of credit risk consist primarily of cash. Cash balances are maintained principally at two major U.S. financial institutions and are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to regulatory limits. At all times throughout the nine months ended September 30, 2017, the Company’s cash balances exceeded the FDIC insurance limit. Warrants
The Company has not experiencedissued two types of warrants: (i) investor warrants and (ii) placement agent warrants. All warrants are exercisable immediately upon issuance and have a five-year term. The warrants may be exercised at any lossestime in such accounts.whole or in part upon payment of the applicable exercise price until expiration. No fractional shares will be issued upon the exercise of the warrants. The exercise price and the number of shares purchasable upon the exercise of the investor warrants are subject to adjustment upon the occurrence of certain events, which include stock dividends, stock splits, combinations and reclassifications of the Company’s capital stock or other similar changes to the equity structure of the Company.
As of June 30, 2021, the Company had outstanding warrants to purchase an aggregate of 1,325,810 shares of common stock at exercise prices ranging from $0.50 to $0.75 per share. A summary of warrants outstanding as of June 30, 2021 and December 31, 2020 is presented below, all of which are fully vested:
Summary of Shareholders Equity Warrants Outstanding
| Shares | |||||
| Outstanding at December 31, 2019 | 5,397 | ||||
| Issued | - | ||||
| Exercised | (2,576 | ) | |||
| Tendered | - | ||||
| Expired | (1,493 | ) | |||
| Outstanding at December 31, 2020 | 1,328 | * | |||
| Outstanding at December 31, 2020 | 1,328 | * | |||
| Issued | - | ||||
| Exercised | (2 | )** | |||
| Tendered | - | ||||
| Expired | - | ||||
| Outstanding at June 30, 2021 | 1,326 | *** | |||
Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carry forwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates.
The Company adopted the provisions of ASC 740-10 and has analyzed its filing positions in jurisdictions where it may be obligated to file returns. The Company believes that its income tax filing position and deductions will be sustained on an audit and does not anticipate any adjustments that will result in a material change to its financial position. Therefore, no reserves for uncertain income tax positions have been recorded. The Company’s policy is to recognize interest and/or penalties related to income tax matters in income tax expense. The Company had no accrual for interest or penalties as of September 30, 2017.
| ** | Converted into approximately 1 thousand shares of commons stock. |
| *** | Weighted average exercise price for outstanding warrants is $. |
Basic and diluted net loss per share is computed by dividing net loss available to common shareholders byshare
During the weighted average number of shares outstanding during the period. Dilutedthree and six months ended June 30, 2021 and 2020, diluted earnings per common share is the same as basic earnings per common share because, as the Company incurred a net loss during each period presented, the potentially dilutive securities from the assumed exercise of all outstanding stock options, warrants and conversion of preferred stock, and warrants would have an anti-dilutive effect. The following schedule details the numberoutstanding shares of shares issuable upon the exercise of stock options, warrants and conversion of preferred stock, which have beenpotentially dilutive securities were excluded from the computation of diluted net loss per share calculation as the inclusionattributable to common shareholders because including them would behave been anti-dilutive for the three and nine month periods ended September 30, 2017 and 2016:
| Three Month period Ended September 30, | Nine Month period Ended September 30, | |||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Stock options | 11,526 | 8,321 | 11,526 | 8,321 | ||||||||||||
| Preferred Stock issuable upon conversion | 15,078 | 16,000 | 15,078 | 16,000 | ||||||||||||
| Warrants | 5,961 | 40,518 | 5,961 | 40,518 | ||||||||||||
| Total | 32,565 | 64,839 | 32,565 | 64,839 | ||||||||||||
Goodwill is assessed for impairment at least annually on a reporting unit basis, or more frequently when events and circumstances occur indicating that the recorded goodwill may be impaired. In accordance with the authoritative accounting guidance we have the option to perform a qualitative assessment to determine whether it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount. If we determine this is the case, we are required to perform the two-step goodwill impairment test to identify potential goodwill impairment and measure the amount of goodwill impairment loss to be recognized, if any. If we determine that it is more-likely-than-not that the fair value of the reporting unit is greater than its carrying amounts, the two-step goodwill impairment test is not required.
As defined in the authoritative guidance, a reporting unit is an operating segment, or one level below an operating segment. Historically, we conducted our business in a single operating segment and reporting unit. In the period ended September 30, 2017, we assessed goodwill impairment by performing a qualitative test for our reporting unit. During our qualitative review, we considered the Company’s cash position and our ability to obtain additional financing in the near term to meet our operational and strategic goals and substantiate the value of our business. Based on the results of our assessment, it was determined that it is more-likely- than-not that the fair value of the reporting units are greater than their carrying amounts. There was no impairment of goodwill for the period ended September 30, 2017.
We review other intangible assets for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable or that the useful lives of these assets are no longer appropriate. The authoritative accounting guidance allows a qualitative approach for testing indefinite-lived intangible assets for impairment, similar to the impairment testing guidance for goodwill. It allows the option to first assess qualitative factors (events and circumstances) that could have affected the significant inputs used in determining the fair value of the indefinite-lived intangible asset. The qualitative factors assist in determining whether it is more-likely-than-not (i.e. > 50% chance) that the indefinite-lived intangible asset is impaired. An organization may choose to bypass the qualitative assessment for any indefinite-lived intangible asset in any period and proceed directly to calculating its fair value. Our indefinite-lived intangible assets are IPR&D intangible assets. In all other instances, we used the qualitative test and concluded that it was more-likely-than-not that all other indefinite-lived assets were not impaired and therefore, there were no impairments in period ended September 30, 2017.
Pursuant to the Certificate of Designations, the Series A Preferred Shares earn dividends at a rate of 8.0% once per year on the anniversary of the Initial Closing, payable to the holders of such Series A Preferred Shares in shares of common stock upon conversion. Dividends do not require declaration by the Board of Directors. Dividends are accrued annually as of the date the dividend is earned in an amount equal to the contractual rate of 8% of the stated value.
The Company records rent on a straight line basis. Differences between monthly rent expenses and rent payments are known asdeferred rents. Deferred rents are recorded in either an asset account (e.g., other current or noncurrent assets) when the cumulative difference between rent expenses and rent payments as of a balance sheet date is negative or a liability account (e.g., other current or noncurrent liabilities) when the cumulative difference is positive. Due to our escalating rents, the Company is currently recording a deferred rent liability.
In January 2017, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (“ASU”) No. 2017-04,“Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment”.The Board is issuing the amendments in this update to simplify the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. Instead an entity should perform its goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. We are required to apply the amendments in this for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. We have evaluated this standard and believe it will not have a material impact on our consolidated financial position or results of operation.
In August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments”, which amended the existing accounting standards for the statement of cash flows. The amendments provide guidance on eight classification issues related to the statement of cash flows. The Company is required to adopt the guidance in the first quarter of 2018 and early adoption is permitted. The amendments should be applied retrospectively to all periods presented. For issues that are impracticable to apply retrospectively, the amendments may be applied prospectively as of the earliest date practicable. The Company does not believe the adoption will have a material impact on the Company’s consolidated statements of cash flows.
In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers”. ASU 2014-09 represents a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Partnership expects to be entitled to receive in exchange for those goods or services. This ASU sets forth a new five-step revenue recognition model which replaces the prior revenue recognition guidance in its entirety and is intended to eliminate numerous industry-specific pieces of revenue recognition guidance that have historically existed. In August 2015, the FASB issued ASU No. 2015-14, “Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date”,which defers the effective date of ASU 2014-09 by one year, but permits companies to adopt one year earlier if they choose (i.e., the original effective date). As such, this ASU is effective for annual reporting periods beginning after December 15, 2017 for public companies and 2018 for private companies. Companies may use either a full retrospective or a modified retrospective approach to adopt this ASU. We do not believe that adoption of the standard for contract research revenue will have a material impact on our consolidated financial position or results of operation. We will continue our evaluation of ASU 2014-09, including how it may impact new arrangements we enter into as well as new or emerging interpretations of the standard, through the date of adoption. The Company will adopt the guidance in ASU 2014-09 as of January 1, 2018 and apply the modified retrospective approach.
In March 2016, the FASB issued ASU No. 2016-09, “Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting.” This ASU simplifies several aspects of the accounting for share–based payment award transactions. The ASU is effective for interim and annual periods beginning after December 15, 2016. Early application is permitted. The Company has adopted this standard with an effective date January 1, 2017 which had an immaterial impact on our consolidated financial position or results of operation.
In February 2016, the FASB issued ASU No. 2016-02, “Leases”. The new standard will require most leases to be recognized on the balance sheet which will increase reported assets and liabilities. Lessor accounting remains substantially similar to current guidance. The new standard is effective for annual and interim periods in fiscal years beginning after December 15, 2018, which for us is the first quarter of 2019 and mandates a modified retrospective transition method. We do not intend to early adopt and are currently assessing the impact of this update, but preliminarily believe that its adoption will not have a material impact on our consolidated financial statements.
The Company accounts for the beneficial conversion feature on its convertible preferred stock in accordance with ASC 470-20,Debt with Conversion and Other Options. The Beneficial Conversion Feature (“BCF”) of convertible preferred stock is normally characterized as the convertible portion or feature that provides a rate of conversion that is below market value or in-the-money when issued. We record a BCF related to the issuance of convertible preferred stock when issued. Beneficial conversion features that are contingent upon the occurrence of a future event are recorded when the contingency is resolved.
To determine the effective conversion price, we first allocate the proceeds received to the convertible preferred stock and then use those allocated proceeds to determine the effective conversion price. If the convertible instrument is issued in a basket transaction (i.e., issued along with other freestanding financial instruments), the proceeds should first be allocated to the various instruments in the basket. Any amounts paid to the investor when the transaction is consummated (e.g., origination fees, due diligence costs) represent a reduction in the proceeds received by the issuer. The intrinsic value of the conversion option should be measured using the effective conversion price for the convertible preferred stock on the proceeds allocated to that instrument. The effective conversion price represents proceeds allocable to the convertible preferred stock divided by the number of shares into which it is convertible. The effective conversion price is then compared to the per share fair value of the underlying shares on the commitment date.
The accounting for a BCF requires that the BCF be recognized by allocating the intrinsic value of the conversion option to additional paid-in capital, resulting in a discount on the convertible preferred stock. This discount should be accreted from the date on which the BCF is first recognized through the earliest conversion date for instruments that do not have a stated redemption date. The intrinsic value of the BCF is recognized as a deemed dividend on convertible preferred stock over a period specified in the guidance.
NOTE E – 2017 Warrant Tender Offer
On January 13, 2017, the Company completed its tender offer to amend and exercise certain categories of existing warrants.
Pursuant to the Offer to Amend and Exercise, an aggregate of 30,966,350 Warrants were tendered by their holders and were amended and exercised in connection therewith for an aggregate exercise price of approximately $15.5 million, including the following: 3,750,000 Formation Warrants; 754,000 Merger Warrants; 7,243,750 2013 Investor Warrants; 500,000 Private Placement Warrants; 14,750,831 2015 Investor Warrants; 722,925 $2.00 Placement Agent (PA) Warrants (of which 721,987 were exercised on a cashless basis); 1,426,687 $1.00 PA Warrants (of which 1,424,812 were exercised on a cashless basis); and 1,818,157 $0.75 PA Warrants (of which 1,774,017 were exercised on a cashless basis). The gross cash proceeds from such exercises were approximately $13.5 million and the net cash proceeds after deducting warrant solicitation agent fees and other estimated offering expenses were approximately $12.7 million. Prior to the Offer to Amend and Exercise, the Company had 58,159,495 shares of common stock outstanding and warrants to purchase an aggregate of 40,255,234 shares of common stock. Immediately following the Offer to Amend and Exercise (after the effect of certain cash and cashless exercises), the Company issued in exchange for the warrants 29,666,782 common shares.
The Company considers the warrant amendment to be of an equity nature as the amendment allowed the warrant holder to exercise a warrant and receive a common share which represents an equity for equity exchange. Therefore, the change in the fair value before and after the modification of approximately $16.7 million will be treated as a change in additional paid in capital (APIC) as an inducement charge. The cash received upon exercise in excess of par is also accounted through APIC.
The Company retained Aegis Capital Corp. (“Aegis Capital”) to act as its Warrant Agent for the Offer to Amend and Exercise pursuant to a Warrant Agent Agreement. Aegis Capital received a fee equal to 5% of the cash exercise prices paid by holders of the warrants (excluding the placement agent warrants) who participated in the Offer to Amend and Exercise. In addition, the Company agreed to reimburse Aegis Capital for its reasonable out-of-pocket expenses and attorney’s fees, including a $35,000 non- accountable expense allowance.
NOTE F – Leasehold improvements and equipment
Leasehold improvements and equipment, summarized by major category, consist of the following ($ in thousands) for the ninesix months ended SeptemberJune 30, 20172021 and year ended December 31, 2016:2020:
| September 30, 2017 | December 31, 2016 | |||||||
| Lab equipment | $ | 472 | 438 | |||||
| Furniture and fixtures | 20 | 20 | ||||||
| Equipment under capital lease | 81 | 31 | ||||||
| Leasehold improvements | 1,084 | 7 | ||||||
| Total | 1,657 | 496 | ||||||
| Less: accumulated depreciation and amortization | 196 | 140 | ||||||
| Leasehold improvements and equipment, net | $ | 1,461 | $ | 356 | ||||
Depreciation and amortization expense for the three and nine months ended September 30, 2017 was approximately $31 thousand and $56 thousand, respectively. Depreciation and amortization expense for the three and nine months ended September 30, 2016 was approximately $15 thousand and $40 thousand, respectively.
On February 12, 2016, the Company entered in a new 36-month capital lease for lab equipment. On May 15, 2017, the Company entered into a second 36-month capital lease for lab equipment. The payments under the leases are accounted for as interest and payments under capital lease using 3-year amortization. During the three and nine months ended September 30, 2017 the Company recognized interest expenseSchedule of approximately $823 and $2,873, respectively, associated with the lease payments.Anti-Diluted Securities Excluded FromComputation of Earning Per Share
| As of June 30, | ||||||||
| 2021 | 2020 | |||||||
| Stock options | 22,162 | 22,317 | ||||||
| Preferred Stock and accrued dividend upon conversion | - | 9,104 | ||||||
| Warrants | 1,326 | 1,328 | ||||||
| Total | 23,488 | 32,749 | ||||||
NOTE G – Stock Holders Equity
Preferred Stock
In accordance with the Certificate of Incorporation, there are 10,000,000 authorized preferred shares at a par value of $ 0.001. In connection with the 2016 Private Placement, on July 26, 2016, the Company filed a Certificate of Designation (the “Certificate of Designations”) with the Secretary of the State of Delaware to designate the preferences, rights and limitations of the Series A Preferred Shares. Pursuant to the Certificate of Designations, the Company designated 1,600,000 shares of the Company’s previously undesignated preferred stock as Series A Preferred Stock. As of September 30, 2017, the Company had 1,507,858 shares of Series A Preferred Stock outstanding.
Conversion:
Each Series A Preferred Share is convertible at the option of the holder into such number of shares of the Company’s common stock equal to the number of Series A Preferred Shares to be converted, multiplied by the stated value of $5.00 (the “Stated Value”), divided by the Conversion Price in effect at the time of the conversion (the initial conversion price will be $0.50, subject to adjustment in the event of stock splits, stock dividends, and fundamental transactions). Based on the current conversion price, each share of the Series A Preferred Stock is convertible into ten shares of common stock. A fundamental transaction means: (i) our merger or consolidation with or into another entity, (ii) any sale of all or substantially all of our assets in one transaction or a series of related transactions, or (iii) any reclassification of our Common Stock or any compulsory share exchange by which Common Stock is effectively converted into or exchanged for other securities, cash or property. Each Series A Preferred Share will automatically convert into common stock upon the earlier of (i) notice by the Company to the holders that the Company has elected to convert all outstanding Series A Preferred Shares; provided however that in the event the Company elects to force automatic conversion pursuant to this clause (i), the conversion date for purposes of calculating the accrued Dividend (as defined below) is deemed to be July 29, 2019, which is the third anniversary of the Initial Closing, (ii) three years from the Initial Closing, (iii) the approval of the Company’s MAT2203 product candidate by the U.S. Food and Drug Administration or the European Medicines Agency (the “Regulatory Approval”) or (iv) the Regulatory Approval of the Company’s MAT2501 product candidate.
Beneficial Conversion Feature - Series A Preferred Stock (deemed dividend):
Each share of Series A Preferred Stock is convertible into shares of common stock, at any time at the option of the holder at a conversion price of $0.50 per share. On July 29, 2016, August 16, 2016, and September 12, 2016, the date of issuances of the Series A, the publicly traded common stock prices were $0.67, $0.70, and $1.00 per share, respectively.
Based on the guidance in ASC 470-20-20, the Company determined that a beneficial conversion feature exists, as the effective conversion price for the Series A preferred shares at issuance was less than the fair value of the common stock into which the preferred shares are convertible. A beneficial conversion feature based on the intrinsic value of the date of issuances for the Series A was approximately $4.4 million. The beneficial conversion amount of approximately $4.4 million was then accreted back to the preferred stock as a deemed dividend and charged to accumulated deficit as the conversion rights were 100% effective at the time of issuance in the third quarter of 2016.
Liquidity Value and Dividends:
Pursuant to the Certificate of Designations, the Series A Preferred Shares accrue dividends at a rate of 8.0% once per year on the anniversary date of the Initial Closing, payable and only payable to the holders of such Series A Preferred Shares in shares of common stock upon conversion. Dividends of approximately $608 thousand have been accrued as paid-in-kind through September 30, 2017 and approximately $ 5 thousand has been earned and converted into common stock at the election of the holders. The Series A Preferred Shares vote on an as converted basis with the Company’s common stock. Upon any dissolution, liquidation or winding up, whether voluntary or involuntary, holders of Series A Preferred Shares are entitled to (i) first receive distributions out of our assets in an amount per share equal to the Stated Value plus all accrued and unpaid dividends, whether capital or surplus before any distributions shall be made on any shares of common stock and (ii) second, on an as-converted basis alongside the common stock.
Pursuant to the Certificate of Designations, the liquidation value of a Series A Preferred Share is equal to the stated value of $5.00 per share (as adjusted for stock splits, stock dividends, combinations or other recapitalizations of the Series A Preferred Stock) plus any earned but unpaid dividends.
Royalty:
The Series A Preferred Shares include the right, as a group, to receive: (i) 4.5% of the net sales of MAT2203 and MAT2501, in each case from and after the date, respectively, such candidate has received FDA or EMA approval, subject in all cases to a respective to a cap of $ 25 million per calendar year, and (ii) 7.5% of the proceeds, if any, received by the Company in connection with the licensing or other disposition by the Company of MAT2203 and/or MAT2501 (“Royalty Payment Rights”), subject in all cases to a cap of $ 10 million per year. The royalty is payable so long as the Company has valid patents covering MAT2203 and MAT2501, as applicable. The Royalty Payment Rights are unsecured obligations of the Company. The royalty payment will be allocated to the holders based on their pro rata ownership of vested Series A Preferred Shares. The royalty rights that are part of the Series A Preferred Shares will vest, in equal thirds, upon each of the July 29, 2017, July 29, 2018, and July 29, 2019, which are the first, second and third anniversary dates of the Initial Closing, (each a “Vesting Date”); provided however, if the Series A Preferred Shares automatically convert into common stock prior to the 36 month anniversary of the initial closing, then the royalty rights that are part of the outstanding Series A Preferred Shares shall be deemed to be fully vested as of the date of conversion. Even if the Series A Preferred Shares are purchased after the initial closing, the vesting periods for the royalty rights that are part of the Series A Preferred Shares shall still be based on the Vesting Dates. During the first 36 months following the initial closing, the right to receive a royalty will follow the Series A Preferred Shares; after July 29, 2019, the royalty payment rights may be transferred separately from the Series A Preferred Stock subject to available exemption from registration under applicable securities laws. The Company believes that such rights are not separable free-standing instruments requiring bifurcation at the date of transaction. The Company may recognize a deemed dividend for the estimated fair value of the vested portion of the royalty rights in future periods. As of September 30, 2017, no accrual has been recorded for royalty payments as it is not probable at this time that any amount will be paid.
Classification:
These Series A Preferred Shares are classified within permanent equity on the Company’s condensed consolidated balance sheet as they do not meet the criteria that would require presentation outside of permanent equity under ASC 480Distinguishing Liabilities from Equity.
Warrants
As of September 30, 2017, the Company had outstanding warrants to purchase an aggregate of 5,961,269 shares of common stock at exercise prices ranging from $0.50 to $2.00 per share
The Warrants were exercisable immediately upon issuance and have a five-year term. The Warrants may be exercised at any time in whole or in part upon payment of the applicable exercise price until expiration of the Warrants. No fractional shares will be issued upon the exercise of the Warrants. The exercise price and the number of warrant shares purchasable upon the exercise of the Investor Warrants (as opposed to Placement Agent Warrants) are subject to adjustment upon the occurrence of certain events, which include stock dividends, stock splits, combinations and reclassifications of the Company capital stock or similar “organic changes” to the equity structure of the Company (see Warrant table below). Accordingly, pursuant to ASC 815, the warrants are classified as equity.
The Company may call the Warrants, other than the Placement Agent Warrants, at any time the common stock trades above $5.00 (for warrants issued in 2013) or above $ 3.00 (for warrants issued in 2015) for twenty (20) consecutive days following the effectiveness of the registration statement covering the resale of the shares of common stock underlying the Warrants, provided that the Warrants can only be called if such registration statement is current and remains effective at the time of the call and provided further that the Company can only call the Investor Warrants for redemption, if it also calls all other Warrants for redemption on the terms described above. The Placement Agent Warrants do not have a redemption feature. The Placement Agent warrants may be exercised on a “cashless” basis. Such term is a contingent feature and within the control of the Company, therefore does not require liability classification.
A summary of equity warrants outstanding as of September 30, 2017 is presented below, all of which are fully vested.
After
Note 12 – Accumulated Other Comprehensive Income
The following table summarizes the effectchanges in accumulated other comprehensive income by components during the three months ended June 30, 2021 and 2020:
Schedule of certain cashComponents of Accumulated Other Comprehensive Income
| Net Unrealized (Losses)/Gains on Available-for-Sale Securities | Accumulated Other Comprehensive Income | |||||||
| Balance, December 31, 2020 | $ | 228 | $ | 228 | ||||
| Net unrealized loss on securities available-for-sale | (177 | ) | (177 | ) | ||||
| Reclassifications to net loss | - | - | ||||||
| Net current period other comprehensive loss | (177 | ) | (177 | ) | ||||
| Balance, June 30, 2021 | $ | 51 | $ | 51 | ||||
| Balance, December 31, 2019 | $ | (1 | ) | $ | (1 | ) | ||
| Net unrealized gain on securities available-for-sale | 482 | 482 | ||||||
| Reclassifications to net loss | (3 | ) | (3 | ) | ||||
| Net current period other comprehensive income | 479 | 479 | ||||||
| Balance, June 30, 2020 | $ | 478 | $ | 478 | ||||
All components of accumulated other comprehensive income are net of tax.
The Company’s Amended and cashless exercises of warrants, the Company received net cash proceeds of approximately $12.7 million from the warrants tendered on January 13, 2017 and approximately $2.1 million for warrants exercised outside the tender offer, for a total of approximately $14.8 million of proceeds in the first quarter. All warrants tendered in the second quarter were cashless warrants. No warrants were tendered in the third quarter.
NOTE H – Stock Based Compensation
In August 2013, the Company adopted theRestated 2013 Equity Compensation Plan (the “Plan”), which provides for the granting of incentive stock options, nonqualified stock options, restricted stock units, performance units, and stock purchase rights. Options underThere were no significant modifications to the Plan may be granted at prices not less than 100% ofduring the fair value of the shares on the date of grant as determined by the Board Committee. The Board Committee determines the period over which the options become exercisable subject to certain restrictions as defined in the Plan, with the current outstanding options generally vesting over three years. The term of the options is no longer than ten years. The Company currently has available 1,397,606 shares of common stock for issuance under the plan.six months ended June 30, 2021 and 2020.
With the approval of the Board of Directors and a majority Shareholders,of shareholders, effective May 8, 2014, the Plan was amended and restated. The amendment providesrestated to provide for an automatic increase in the number of shares of common stock available for issuance under the Plan each January, (with Board approval), commencing January 1, 2015, in an amount up to four percent (4%(%) of the total number of shares of common stock outstanding on the preceding December 31st.
Schedule of Equity Compensation Plan by Arrangements
| Awards Reserved for Issuance | Awards Issued & Exercised | Awards Available for Grant | ||||||||||
| 2013 Equity Compensation Plan | 36,952 | * | 27,127 | ** | 9,825 | |||||||
| * | Increased by thousand on January 1, 2021 representing % of the total number of shares of common stock outstanding on December 31, 2020. |
| ** | Includes both restricted stock grants and option grants |
Schedule of Recognized Stock-Based Compensation
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||||||
| 2017 | 2016 | 2017 | 2016 | Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||||||||||||
| Research and Development | $ | 280 | $ | 212 | $ | 785 | $ | 483 | $ | 460 | $ | 358 | $ | 945 | $ | 1,180 | ||||||||||||||||
| General and Administrative | 271 | 268 | 1,454 | 791 | 596 | 587 | 1,212 | 1,212 | ||||||||||||||||||||||||
| Total | $ | 551 | $ | 480 | $ | 2,239 | $ | 1,274 | $ | 1,056 | $ | 945 | $ | 2,157 | $ | 2,392 | ||||||||||||||||
| Reserved | Awards | |||||||||||
| for | Awards | Available | ||||||||||
| Issuance | Issued | for Grant | ||||||||||
| 2013 Equity Compensation Plan | 14,155 | 12,757 | * | 1,398 | ||||||||
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* includes both stock grants
As of June 30, 2021, total compensation costs related to unvested awards not yet recognized was approximately $ million and option grantsthe weighted-average periods over which the awards are expected to be recognized was years.
Stock Options
Schedule of Stock Option Activity
| Stock Options | ||
| Outstanding at January 1, 2021 | 22,551 | |
| Granted | 4,697 | |
| Exercised | (1,063) | |
| Forfeited | (2,681) | |
| Cancelled | - | |
| Expired | (1,341) | |
| Outstanding at June 30, 2021 | 22,163 |
Restricted Stock Awards
During the six months ended June 30, 2021 and 2020, the Company granted restricted stock awards for thousand and thousand shares of common stock, respectively. These awards are typically granted to Septembermembers of the Board of Directors as payment in lieu of cash fees or as payment to a vendor pursuant to a consulting agreement. The Company values restricted stock awards at the fair market value on the date of grant. The Company recorded the value of these restricted awards as general and administrative expense of approximately $28 thousand and $57 thousand for the three and six months ended June 30, 2017 (number2021, respectively, and approximately $93 thousand and $173 thousand for the three and six months ended June 30, 2020, respectively, in the Condensed Consolidated Statement of options in thousands):
| Weighted | ||||||||
| Number of | average | |||||||
| Options | Exercise Price | |||||||
| Outstanding at December 31, 2016 | 8,290 | $ | 0.93 | |||||
| Granted | 3,235 | 2.91 | ||||||
| Outstanding at September 30, 2017 | 11,525 | $ | 1.43 | |||||
Operations. As of SeptemberJune 30, 2017, the number of vested shares underlying outstanding options was 7,881,492 at a weighted average exercise price of $2.22. The aggregate intrinsic value of in the-money options outstanding as of September 30, 2017 was approximately $4.0 million. The aggregate intrinsic value is calculated as the difference between the Company’s closing stock price of $1.32 on September 30, 2017, and the exercise price of options, multiplied by the number of options. As of September 30, 2017,2021, there was approximately $5.4 million$ thousand of total unrecognized share-based compensation. Suchcompensation costs related to non-vested restricted stock grants which are expected to be recognized over a weighted averageweighted-average period of approximately 0.86 years.
All options expire ten years from date of grant. Except for options granted to consultants, all remaining options vest entirely and evenly over three years. A portion of options granted to consultants vests over four years, with the remaining vesting being based upon the achievement of certain performance milestones, which are tied to either financing or drug development initiatives.
The Company recognizes compensation expense for stock option awards on a straight-line basis over the applicable service period of the award. The service period is generally the vesting period, with the exception of options granted subject to a consulting agreement, whereby the option vesting period and the service period defined pursuant to the terms of the consulting agreement may be different. Stock options issued to consultants are revalued quarterly until fully vested, with any change in fair value expensed. The following weighted-average assumptions were used to calculate share based compensation for the three and nine months ended September 30, 2017 and 2016:
| For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Volatility | 67.09%-70.7 | % | 44.72% - 89.15 | % | 67.09%-82.26 | % | 44.72%-89.15 | % | ||||||||
| Risk-free interest rate | 2.015%-2.075 | % | 1.150%-1.280 | % | 1.89%-2.22 | % | 1.14%-1.42 | % | ||||||||
| Dividend yield | 0.0 | % | 0.0 | % | 0.0 | % | 0.0 | % | ||||||||
| Expected life | 6.0 years | 6.0 years | 6.0 years | 6.0 years | ||||||||||||
The Company does not have sufficient historical information to develop reasonable expectations about future exercise patterns and post-vesting employment termination behavior. The Company uses the “simplified method” described in Staff Accounting Bulletin (SAB) 107 to estimate expected term of share option grants.
The expected stock price volatility assumption was determined by examining the historical volatilities for industry peers, as the Company has limited history for the Company’s common stock. The Company will continue to analyze the historical stock price volatility and expected term assumptions as more historical data for the Company’s common stock becomes available.
The risk-free interest rate assumption is based on the U.S treasury instruments whose term was consistent with the expected term of the Company’s stock options.
The expected dividend assumption is based on the Company’s history and expectation of dividend payouts. The Company has never paid dividends on its common stock and does not anticipate paying dividends on its common stock in the foreseeable future. Accordingly, the Company has assumed no dividend yield for purposes of estimating the fair value of the Company share-based compensation.
The Company accounts for forfeitures as they occur.
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NOTE I – PREPAID EXPENSES
Prepaid expenses, summarized by major category, consist of the following for the nine months ended September 30, 2017 and year ended December 31, 2016.
| September 30, 2017 | December 31, 2016 | |||||||
| Insurance Premium | $ | 423 | $ | 162 | ||||
| Deposits | 213 | 36 | ||||||
| Vendor Services | 381 | 106 | ||||||
| $ | 1,017 | $ | 304 | |||||
NOTE J – NOTES PAYABLE
The notes payable amount of $298 thousand ending in September 30, 2017 and $118 thousand ending on December 31, 2016, are the financing amounts related to the Company’s insurance policies.
NOTE K – COMMITMENTS
On November 1, 2013, the Company entered into a 7-year lease for office space in Bedminster, New Jersey which commenced in June 2014, at a monthly rent of $12,723, increasing to approximately $14,200 per month toward the end of the term, May 2021.
On December 15, 2016, the Company entered into a 10 year, 3-month lease to consolidate our locations while expanding our laboratory and manufacturing facilities. The lease began in August 2017. The monthly rent started at approximately $43,000 and increases to approximately $64,000 in the final year. The rental payments total approximately $6.4 million over the life of the lease which is scheduled to end late 2027.
The Company records rent expense on a straight-line basis. Rent expense for the three months ended September 30, 2017 and 2016 was approximately $141,000 and $63,000, respectively. Rent expense for the nine months ended September 30, 2017 and 2016 was approximately $317,000 and $188,000, respectively.
Listed below is a summary of future minimum rental payments (including the remainder of 2017) as of September 30, 2017:
| Year Ending December 31, | Lease Commitments | |||
| Remainder of 2017 | $ | 126 | ||
| 2018 | 683 | |||
| 2019 | 707 | |||
| 2020 | 732 | |||
| 2021 | 657 | |||
| Future minimum lease payments through 2021 | $ | 2,905 | ||
The Company was obligated to provide a security deposit of $300,000 to obtain the headquarter office lease space located in Bedminster, New Jersey. This deposit was reduced by $100,000 in 2016 and 2015 and will be reduced to $50,000 by yearend, as long as the Company makes timely rental payments.
To obtain the laboratory and facility site located in Bridgewater, New Jersey, the Company was obligated to provide a security deposit of $586,000. This security deposit can be reduced $100,000 on each of the first three anniversaries of the rent commencement date which was August 1, 2017. On the fourth anniversary, it can be reduced another $86,000, with the balance over the remaining life of the lease.
On February 18, 2016, the Company entered into a Cooperative Research and Development Agreement (CRADA) with the National Institute of Allergy and Infectious Diseases to support NIH investigators in the conduct of clinical research to investigate the safety, efficacy, and pharmacokinetics of encochleated drug products in patients with fungal, bacterial, or viral infections at an annual funding of $200,000 per year for 3 years.
On November 10, 2016, the Company entered into a Cooperative Research and Development Agreement (CRADA) with the National Institute of Allergy and Infectious Diseases to support NIH investigators to acquire technical, statistical and administrative support for research activities as well as to pay for supplies and travel expenses for a total amount of $132,568 paid in 4 equal quarterly installments beginning in the fourth quarter 2016 and each quarter during 2017.
Through the 2015 Merger, we acquired a license from Rutgers University, The State University of New Jersey (successor in interest to the University of Medicine and Dentistry of New Jersey) for the cochleate delivery technology. The Amended and Restated Exclusive License Agreement between Nanotechnologies and Rutgers provides for, among other things, (1) royalties on a tiered basis between low single digits and the mid-single digits of net sales of products using such licensed technology, (2) a one-time sales milestone fee of $100,000 when and if sales of products using the licensed technology reach the specified sales threshold and (3) an annual license fee of initially $10,000, increasing to $50,000 over the term of the license agreement.
On September 12, 2016, the Company conducted a final closing of a private placement offering to accredited investors shares of the Company’s Series A Preferred Stock. As part of this offer, the investors received royalty payment rights if and when the Company generates sales of MAT2203 or MAT2501. Pursuant to the terms of the Certificate of Designations of Preferences, Rights and Limitations (the “Certificate of Designations”) for our outstanding Series A Preferred Stock, we may be required to pay royalties of up to $35 million per year. If and when we obtain FDA or EMA approval of MAT2203 and/or MAT2501, which we do not expect to occur before 2021, if ever, and/or if we generate sales of such products, or we receive any proceeds from the licensing or other disposition of MAT2203 or MAT2501, we are required to pay to the holders of our Series A Preferred Stock, subject to certain vesting requirements, in aggregate, a royalty equal to (i) 4.5% of Net Sales (as defined in the Certificate of Designations), subject in all cases to a cap of $25 million per calendar year, and (ii) 7.5% of Licensing Proceeds (as defined in the Certificate of Designations), subject in all cases to a cap of $10 million per calendar year. The Royalty Payment Rights will expire when the patents covering the applicable product expire, which is currently expected to be in 2033.
On June 1, 2017, the Company entered into an agreement with Medpace, a clinical research organization, to provide services in a Phase II clinical trial. The overall cost is estimated to be $1.4 million through August 2018.
The Company has entered into two lab equipment leases. A 36 month lease ending June, 2019 with payments totaling $ 31 thousand. The second is a 60 month lease ending in May, 2022 with payments totaling $ 49 thousand. Each lease allows for a dollar buy out of the equipment.
The Company also has employment agreements with certain employees which require the funding of a specific level of payments, if certain events, such as a change in control, termination without cause or retirement, occur.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsMANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and results of operations should be read together with our financial statements and the related notes and the other financial information included elsewhere in this Quarterly Report.Report on Form 10-Q. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those discussed below and elsewhere in this Quarterly Report on Form 10-Q, in our Annual Report on Form 10-K for the year ended December 31, 20162020 and in other reports we file with the Securities and Exchange Commission, particularly those under “Risk Factors.” Dollars in tabular format are presented in thousands, except per share data, or otherwise indicated.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This report on Form 10-Q contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 under Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.amended. Forward-looking statements include statements with respect to our beliefs, plans, objectives, goals, expectations, anticipations, assumptions, estimates, intentions and future performance, and involve known and unknown risks, uncertainties and other factors, which may be beyond our control, together with any statements related in any way to the COVID-19 pandemic including its impact on the Company, and which may cause our actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. In addition, the extent to which the COVID-19 pandemic will continue to impact our business and financial results going forward will be dependent on future developments such as the length and severity of the crisis, the potential resurgence of the crisis, future government actions in response to the crisis and the overall impact of the COVID-19 pandemic on the global economy and capital markets, among many other factors, all of which remain highly uncertain and unpredictable. All statements other than statements of historical fact are statements that could be forward-looking statements. You can identify these forward-looking statements through our use of words such as “may,” “can,” “anticipate,” “assume,” “should,” “indicate,” “would,” “believe,” “contemplate,” “expect,” “seek,” “estimate,” “continue,” “plan,” “point to,” “project,” “predict,” “could,” “intend,” “target,” “potential” and other similar words and expressions of the future.
There are a number of important factors that could cause the actual results to differ materially from those expressed in any forward-looking statement made by us. These factors include, but are not limited to:
| ● | our ability to raise additional capital to fund our operations and to develop our product candidates; | |
| ● | ||
| our anticipated timing for preclinical development, regulatory submissions, commencement and completion of clinical trials and product approvals; | ||
| ● | our history of operating losses in each year since inception and the expectation that we will continue to incur operating losses for the foreseeable future; | |
| ● | ||
| ● | our ability to successfully partner for the development of LYPDISO; | |
| ● | our reliance on our proprietary | |
| ● | our ability to manufacture GMP | |
| ● | our ability to complete required clinical trials for our lead product candidate and other product candidates and obtain approval from the FDA or other regulatory agents in different jurisdictions; |
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| ● | our dependence on | |
| ● | our ability to maintain or protect the validity of our patents and other intellectual property; | |
| ● | our ability to | |
| ● | our ability to internally develop new inventions and intellectual property; | |
| ● | interpretations of current laws and the passages of future laws; | |
| ● | our lack of a sales and marketing organization and our ability to commercialize products, if we obtain regulatory | |
| ● | ||
| ● | the accuracy of our estimates regarding expenses, | |
| ● | ||
| developments | ||
| ● | our operations, business and financial results have been and could continue to be adversely impacted by the current public health pandemic related to COVID-19, and |
| ● | the factors listed under the |
All forward-looking statements are expressly qualified in their entirety by this cautionary notice. You are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date of this report or the date of the document incorporated by reference into this report. We have no obligation, and expressly disclaim any obligation, to update, revise or correct any of the forward- looking statements, whether as a result of new information, future events or otherwise. We have expressed our expectations, beliefs and projections in good faith, and we believe they have a reasonable basis. However, we cannot assure you that our expectations, beliefs or projections will result or be achieved or accomplished.
Overview
We are a clinical-stage biopharmaceutical company focused on developing innovative anti-infectives for orphan indications. Our product and development candidates are derived using our unique and proprietary lipid-crystal nano-particle, or cochleate, formulation platform delivery technology. Our proprietary cochleate delivery technology platform, licensed from Rutgers University on an exclusive worldwide basis, nano-encapsulates drugs and is designed to make these drugs orally bioavailable, well tolerated and safer and less toxic while providing targeted and safecreating value through improving the intracellular delivery of pharmaceuticals directly to the site of infection or inflammation. We believecritical therapeutics through our cochleate technology provides us with an efficient and broadly applicableparadigm-changing lipid nanocrystal (LNC) drug delivery platform with particular utilityand its application to overcome current challenges in diseasessafely and conditions in which the immune system plays a significant modulation roleeffectively delivering small molecules, nucleic acids, gene therapies, proteins/peptides, and where the immune system facilitates the active transport of our lipid crystal nano-particles throughout the body.
Currently, wevaccines. We are also focused on creating value through finding a partner to continue the anti-infective market and ondevelopment of LYPDISO, our proprietary, next-generation prescription omega-3 drug, candidates which we believe is differentiated from all other prescription omega-3 products and positioned to potentially demonstrate the value and innovation associated withsuperior cardioprotective effects.
Key elements of our unique cochleate delivery platform technology while potentially providing significant health economic benefit to the health care system. We believe initially focusing on the anti-infective market has distinct advantages for the development of products which meet significant unmet medical need, including:strategy include:
| ● | Advancing our clinical stage assets based on our LNC platform delivery technology and continuing to expand utilization of this promising technology into areas of innovative medicine. |
| ● | Delivering efficacy data for MAT2203 in the EnACT study for the treatment of cryptococcal meningitis, which would highlight the safety and efficacy of this promising drug, while highlighting the ability of our LNC platform technology to deliver potent medicines across the blood-brain barrier following oral administration. |
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| ● | ||
| ● | ||
MAT2203 and MAT2501
We have leveraged our platform cochleate delivery technology to develop two clinical-stage products that we believe have the potential to become best-in-class drugs. Our lead product candidate MAT2203 is an orally-administered cochleate formulation of a broad spectrum anti-fungal drug called amphotericin B. We are initially developing MAT2203 for the prevention of invasive fungal infections (IFIs) due to immunosuppressive therapy, as well as for the treatment of serious fungal infections.
In early June 2017, we reported interim data from the NIH-Conducted Phase 2a Clinical Study of Orally-Administered MAT2203 for the Treatment of Chronic Refractory Mucocutaneous Candidiasis. At that time, two out of the two patients with long-standing azole resistant mucocutaneous candidiasis met the primary endpoint of the Phase 2a study, achieving ≥ 50% clinical response with treatment of MAT2203. Patient #01 achieved a 57% reduction in clinical symptoms after 8 weeks on therapy while patient #02 achieved an 85% reduction in such clinical symptoms after 6 weeks of treatment. MAT2203 was well tolerated with majority of adverse events observed being mild in severity and mostly unrelated to study drug. Importantly, for both patients renal and liver function parameters remained well within normal ranges during the core study as well as during the first 6-month extension of this study. In July 2017, the NIH/NIAID institutional review board approved continuation of treatment of patients in the study-extension for an additional 6 months, for total extension of up to one year.
In late June 2017, we announced the topline data from our Phase 2 study in Vulvovaginal Candidiasis (VVC) using MAT2203. In the context of our overall program for MAT2203 with the aim to develop our lead product for the prevention of invasive fungal infections in patients who are immunocompromised due to immunosuppressive therapy, our goal was, in addition to further establishing the safety and tolerability of MAT2203, to demonstrate efficacy of MAT2203 through a mechanism involving systemic absorption in a non-life threatening fungal infection. This study concept is consistent with early human efficacy studies in the development of other anti- fungal therapies. This Phase 2 study was not designed or powered to support an indication for the treatment of VVC and therefore supplant fluconazole as the standard of care. While we were advised to utilize fluconazole as the standard of care in VVC as an active control as part of the study design, comparison to fluconazole in the treatment of VVC is of limited relevance given our ultimate development goals for MAT2203 in uses where fluconazole is contraindicated or inferior. The key data generated from this study includes additional safety and tolerability data as well as evidence of systemic absorption and distribution resulting in efficacy reflected by dose response effects and improvement in disease severity scores.
In this VVC study, we met the primary endpoint and were able to demonstrate that oral delivery of encochleated amphotericin B is safe and well tolerated without the severe kidney and liver toxicities typically seen with administration of intravenous amphotericin B. Drug-related treatment emergent adverse events in this study were mostly of mild and gastro-intestinal nature and were seen at a rate of 20%, 18% and 2% respectively for MAT2203 200mg, MAT2203 400mg, and fluconazole. Consistent with the safety observations in the NIH study, in this VVC study no drug-related effects on liver function were observed and kidney function parameters stayed within normal ranges during the entire study for all 91 patients treated with MAT2203 for 5 days.
Following our announcement of topline data in late June 2017, we continued to receive data from the study in the following weeks and also were able to more fully analyze the complete data set in light of our overall development objectives for MAT2203. In this particular study, 137 patients with moderate-to-severe VVC were randomized to MAT2203 200mg (46 patients), MAT2203 400mg (45 patients), or fluconazole (46 patients), with a respective disease score of 10.9, 10.0, and 10.8 established as the composite score of six disease severity attributes, which were each scored as 0, 1, 2, or 3. On day five after initiation of treatment, the disease severity score had declined significantly for all three treatment groups with approximately 60% reduction for both MAT2203 treatment groups and 80% for the fluconazole group. On day twelve after initiation of treatment (the test of cure visit), treatment severity score had further declined for all three treatment groups with approximately 80% reduction for both MAT2203 treatment groups (mean scores of 2.2 and 1.8 respectively for the 200mg and 400mg dose groups) and 94% for the fluconazole group (mean score of 0.5).
On the more stringent criterion of clinical cure (the primary evaluation endpoint in the most recent FDA guidance on the treatment of VVC), the clinical cure rates for MAT2203 200mg, MAT2203 400mg, and fluconazole in the modified intent-to-treat (mITT) population were 52%, 55%, and 75% respectively. In the larger population of all randomized patients based on clinical diagnosis by the KOH method, the clinical cure rates for MAT2203 200mg, MAT2203 400mg, and fluconazole were 57%, 64%, and 76% respectively. Finally, in the per-protocol (PP) population, the clinical cure rates for MAT2203 200mg, MAT2203 400mg, and fluconazole were 52%, 65%, and 75% respectively. This additional data analyses revealed a consistent trend of a better cure rate with the MAT2203 400mg dose group as compared to the 200mg dose group, importantly indicating a dose-response effect.
Furthermore, in evaluating the criterion of eradication rate for both doses of MAT2203 studied, there appears to be a more rapid onset of the eradication effect in the modified intent to treat (mITT) population on day-5 after treatment initiation with the MAT2203 400mg dose group (13%) as compared to the 200mg dose group (4%), again indicating a dose-response effect.
Considering the data generated from the VVC study contrasted with the data from our ongoing NIH Phase 2 study, it appears that both higher doses and longer duration of therapy, which yielded a significant clinical response in the immunocompromised patients in the NIH study, could be important factors in demonstrating additional efficacy in mucosal candidiasis, especially with respect to eradication. Accordingly, we believe that utilizing a higher dose for a longer duration in this study may have resulted in improvement in overall clinical and mycological responses in VVC. An observed dose-response effect is a well-established manner to uncover drug effects during the early drug development stage prior to optimizing the dosing/treatment regimen. The observed improvements in disease severity scores, as well as the dose-response effects in clinical cure rates and onset of mycological eradication in this VVC study, we believe bring together the support for the proof-of-concept of systemic delivery of MAT2203 to the site of infection in humans.
Based on the overall data set we have generated to date, we plan to seek an FDA meeting in the near term to discuss the data and the development path forward toward commencing a registration trial for an indication for the prevention of invasive fungal infections in patients with ALL (Acute Lymphoblastic Leukemia) as the next step in our overall development program for MAT2203 following the conclusion of our planned and announced Phase 2 PK/Tolerability study of MAT2203 in leukemia patients.
We are pursuing a first indication for the prevention of invasive fungal infections in patients with ALL because the risk for invasive fungal infections (IFIs) in patients being treated for ALL is high, with an associated high risk of lethality. Currently, there is no standard of care for preventing these high risk IFIs in ALL patients. The established treatment regimens for ALL are highly sensitive to liver-metabolized drug-drug interactions, causing serious concerns for drug-drug interaction induced side-effects. Amphotericin B is not liver metabolized and when incorporated in the lipid-crystal nano-particle structure of MAT2203, this otherwise toxic IV only compound can now be safely orally administered (providing patient convenience over ~12 weeks prophylactic treatment duration), without the typical kidney and liver toxicity associated with other Amphotericin B formulations.
Our second clinical stage product candidate is MAT2501, an orally administered, encochleated formulation of the broad spectrum aminoglycoside antibiotic amikacin which may be used to treat different types of multidrug-resistant bacteria, including non-tuberculous mycobacterium infections (NTM), as well as various multidrug-resistant gram negative and intracellular bacterial infections. In March 2017, we announced topline results from a Phase 1 single escalating dose clinical trial of MAT2501 in healthy volunteers in which no serious adverse events were reported and where oral administration of MAT2501 at all tested doses yielded blood levels that were well below the safety levels recommended for injected amikacin, supporting further development of MAT2501 for the treatment of NTM infections.
Financial Operations Overview
We are a development stage company and have generated approximately $105 thousand in contract research revenues during the nine months ended September 30, 2017 and no revenue in the nine months ended September 30, 2016. We have incurred losses for each period from our inception. OurFor the six months ended June 30, 2021 and 2020, our net loss was approximately $11.9$9.7 million and $5.7$10.7 million, for the nine months ended September 30, 2017 and 2016, respectively and approximately $3.4 million and $1.8 million for the three months ended September 30, 2017 and 2016, respectively. We expect to incur significant expenses and increasing operating losses forover the foreseeable future. We expect our expenses to increase significantly in connection with our ongoing activities to develop, seek regulatory approval and commercialization of MAT2203 and MAT2501 and any other product candidates we choose to develop based upon our platform technology.next several years. Accordingly, we will need additional financing to support our long term continuing operations. We will seek to fund our operations through public or private equity orofferings, debt financings, government or other sources, which may includethird-party funding, collaborations with third parties.and licensing arrangements. Adequate additional financing may not be available to us on acceptable terms, or at all. Our failure to raise capital as and when needed would impact our going concern and would have a negative impact on our financial condition and our ability to pursue our business strategy and continue as a going concern. We will need to generate significant revenues to achieve profitability, and we may never do so.
Financial Operations Overview
Revenue
WeDuring the six months ended June 30, 2021, we generated Contract Research Revenue in the amountcontract research revenue of approximately $105$33 thousand forresulting from the ninefeasibility study agreement with Genentech Inc. and no revenue during the six months ended SeptemberJune 30, 2017 versus zero in2020. Our ability to generate product revenue, which we do not expect to occur until 2023 at the same periodearliest, if ever, will depend heavily on the successful development and eventual commercialization of 2016. This revenue is directly related to our grant with the Cystic Fibrosis Foundation Therapeutics Inc. to study MAT2501, for the treatment of nontuberculous mycobacterium infection (NTM) in preclinical models. The contract will last into 2018.early-stage product candidates.
Research and Development Expenses
Research and development expenses consist of costs mainly incurred for the development of product candidates MAT2203, MAT2501, LYPDISO and MAT2501advancement of our LNC delivery technology platform, which include:
| ● | the cost of conducting pre-clinical work; |
| ● | the cost of acquiring, developing and manufacturing pre-clinical and human clinical trial materials; |
| ● | costs for consultants and contractors associated with Chemistry and Manufacturing Controls (CMC), pre-clinical and clinical activities and regulatory operations; |
| ● | expenses incurred under agreements with contract research organizations, or CROs, including the National Institutes of Health (NIH), that conduct our pre-clinical or clinical trials; and |
| ● | employee-related expenses, including salaries and stock-based compensation expense for those employees involved in the research and development process. |
The table below summarizes our direct research and development expenses for our product candidates and development platform for the three and ninesix months ended SeptemberJune 30, 20172021 and 2016.2020. Our direct research and development expenses consist principally of external costs, such as fees paid to contractors, consultants, analytical laboratories and CROs and/or the NIH, in connection with our development work. We typically use our employee and infrastructure resources for manufacturing clinical trial materials, conducting product analysis, study protocol development and overseeing outside vendors. Included in “Internal Staffing, Overhead and Other” below is the cost of laboratory space, supplies, R&Dresearch and development (R&D) employee costs (including stock option expenses)stock-based compensation), travel and medical education.
| Three Months ended September 30, | Nine Months ended September 30, | |||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| ($ in thousands) | ($ in thousands) | |||||||||||||||
| Direct research and development expenses: | ||||||||||||||||
| Manufacturing process development | $ | 56 | $ | 35 | $ | 218 | $ | 74 | ||||||||
| Preclinical trails | 261 | 133 | 603 | 146 | ||||||||||||
| Clinical development | 467 | 22 | 2,642 | 332 | ||||||||||||
| Regulatory | 53 | 34 | 181 | 73 | ||||||||||||
| Internal staffing, overhead and other | 1,176 | 611 | 3,068 | 1,775 | ||||||||||||
| Total research and development | $ | 2,013 | $ | 835 | $ | 6,712 | $ | 2,400 | ||||||||
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| Three months ended June 30, | Six months ended June 30, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Direct research and development expenses: | ||||||||||||||||
| Manufacturing process development | $ | 237 | $ | 305 | $ | 726 | $ | 610 | ||||||||
| Preclinical trials | - | 328 | 2 | 479 | ||||||||||||
| Clinical development | 290 | 1,206 | 1,068 | 2,699 | ||||||||||||
| Regulatory | 43 | 15 | 85 | 34 | ||||||||||||
| Internal staffing, overhead and other | 1,911 | 1,556 | 3,841 | 3,675 | ||||||||||||
| Total research and development | $ | 2,481 | $ | 3,410 | $ | 5,722 | $ | 7,497 | ||||||||
Research and development activities are central to our business model. ProductWe expect our research and development expenses to increase because product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage human trials.
We expect our R&D expenses to increase during 2017 and 2018 as we implement our additional Phase II studies and start Phase III with MAT2203 as well as start our Phase II studies with MAT2501. In addition, we will look to strategically expand the use of our drug platform technology through additional development work. During 2021, we will be focused on advancing our lead product candidate, MAT2203, to efficacy data in the treatment of cryptococcal meningitis (CM), accelerating the preclinical development of MAT2501 and also expanding application of our LNC platform delivery technology through collaborations with third parties. We have and will increase our headcountalso initiated a process to support our ongoing productidentify a suitable partner to continue the development and incur additional rental expense with our new laboratory and manufacturing facility.of LYPDISO following the announcement of topline date from the ENHANCE-IT study in February 2021.
General and Administrative Expenses
General and administrative expenses consist principally of salaries and related costs for personnel in executive and finance functions. Other general and administrative expenses include facility costs, communicationinsurance, investor relations expenses, and professional fees for legal, patent review, consulting and accountingaccounting/audit services.
We anticipate that our general and administrative expenses to increaseduring 2021 will remain relatively consistent with the prior year.
Sale of Net Operating Losses (NOLs) & Tax Credits
Income obtained from selling unused net operating losses (NOLs) and unused research tax credits under the New Jersey Technology Business Tax Certificate Program was approximately $1.3 million and $1.1 million for the full year 2017 compared to 2016 due to increased expenses related to our status as a publicly traded company, including increased compensation expense (including stock based compensation), headcount to support our expanded operationssix months ended June 30, 2021 and expenses in support of compliance with the requirements of Section 404 of the Sarbanes Oxley Act.2020, respectively.
Other income/(expense),Income, net
Other income/(expense),income, net is largely comprised of interest income, interest expenseincome/(expense), dividends and franchise taxes.
Application of Critical Accounting Policies and Accounting Estimates
OurA critical accounting policies are more fully described in Note Cpolicy is one that is both important to the portrayal of our financial statements includedcondition and results of operation and requires management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.
For a description of our significant accounting policies, refer to “Note 3 – Summary of Significant Accounting Policies” in our annual report2020 Form 10-K. Of these policies, the following are considered critical to an understanding of our Unaudited Condensed Consolidated Financial Statements as they require the application of the most difficult, subjective and complex judgments; (i) Stock-based compensation, (ii) Fair value measurements, (iii) Research and development costs, (iv) Goodwill and other intangible assets, and (v) Basic and diluted net loss per common share.
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Current Operating Trends
Our current R&D efforts are focused on Form 10-Kadvancing our lead LNC product candidates, MAT2203, through clinical development toward an initial indication for the year ended December 31, 2016, there have been no material changes to our critical accounting policies.
Stock-Based Compensation
Option Grants
We account for all share-based compensation payments issued to employees, directors, and non-employees using an option pricing model for estimating fair value. Accordingly, share-based compensation expense is measured based ontreatment of CM, accelerating preclinical development of MAT2501 with the estimated fair valueassistance of the awards onCFF, and expanding application of our LNC platform delivery technology through collaborations with third parties. Our R&D expenses consist of manufacturing work and the datecost of grant. We recognize compensation expenseactive pharmaceutical ingredients and excipients used in such work, fees paid to consultants for work related to clinical trial design and regulatory activities, fees paid to providers for conducting various clinical studies as well as for the portionanalysis of the awardresults of such studies, and for other medical research addressing the potential efficacy and safety of our drugs. We believe that significant investment in product development is ultimatelya competitive necessity, and we plan to continue these investments in order to be in a position to realize the potential of our product candidates and proprietary technologies.
We expect that all of our R&D expenses in the near-term future will be incurred in support of our current and future preclinical and clinical development programs rather than technology development. These expenditures are subject to numerous uncertainties relating to timing and cost to completion. We test compounds in numerous preclinical studies for safety, toxicology and efficacy. At the appropriate time, subject to the approval of regulatory authorities, we expect to conduct early-stage clinical trials for each drug candidate. We anticipate funding these trials ourselves, and possibly with the assistance of federal grants, contracts or other agreements. As we obtain results from trials, we may elect to discontinue or delay clinical trials for certain products in order to focus our resources on more promising products. Completion of clinical trials may take several years, and the length of time generally varies substantially according to the type, complexity, novelty and intended use of a product candidate.
The commencement and completion of clinical trials for our products may be delayed by many factors, including lack of efficacy during clinical trials, unforeseen safety issues, slower than expected to vest overparticipant recruitment, lack of funding or government delays. In addition, we may encounter regulatory delays or rejections as a result of many factors, including results that do not support the period during whichintended safety or efficacy of our product candidates, perceived defects in the recipient renders the required services to us using the straight-line single option method. In accordance with authoritative guidance, we re-measure the fair valuedesign of non-employee share-based awards as the awards vest,clinical trials and recognize the resulting value, if any, as expensechanges in regulatory policy during the period of product development. As a result of these risks and uncertainties, we are unable to accurately estimate the related services are rendered.
Significant Factors, Assumptionsspecific timing and Methodologies Used in Determining Fair Value
We apply the fair value recognition provisions of ASC Topic 718, Compensation-Stock Compensation, which we refer to as ASC 718. Determining the amount of share-based compensation to be recorded required us to develop estimates of the fair value of stock options as of their grant date before operating as a public company. We recognize share-based compensation expense ratably over the requisite service period, which in most cases is the vesting period of the award. Calculating the fair value of share-based awards requires that we make highly subjective assumptions.
We use the Black-Scholes option pricing model to value our stock option awards. Use of this valuation methodology requires that we make assumptions as to the volatilitycosts of our common stock,clinical development programs or the expected termtiming of material cash inflows, if any, from our product candidates. Our business, financial condition and results of operations may be materially adversely affected by any delays in, or termination of, our stock options, andclinical trials or a determination by the risk free interest rate for a periodFDA that approximates the expected termresults of our stock options and our expected dividend yield. As a publicly-held company with a limited operating history, we utilized data from a representative group of companiestrials are inadequate to estimate expected stock price volatility. We selected companiesjustify regulatory approval, insofar as cash in-flows from the biopharmaceutical industry with similar characteristics to us, including those in the early stagerelevant drug or program would be delayed or would not occur.
Results of product development and with a therapeutic focus.Operations
We use the simplified method as prescribed by the Securities and Exchange Commission Staff Accounting Bulletin No. 107,Share-Based Payment, to calculate the expected termComparison of stock option grants to employees as we do not have sufficient historical exercise data to provide a reasonable basis upon which to estimate the expected term of stock options granted to employees.
We recognize compensation expense for stock option awards on a straight-line basis over the applicable service period of the award. The service period is generally the vesting period, with the exception of options granted subject to a consulting agreement, whereby the option vesting period and the service period defined pursuant to the terms of the consulting agreement may be different. Stock options issued to consultants are revalued quarterly until fully vested, with any change in fair value expensed. For awards subject to performance conditions, the Company recognizes stock-based compensation expense using the accelerated attribution recognition method when it is probable that the performance condition will be achieved. The following range of assumptions were used to value options granted for the three and nine months ended September 30, 2017 and 2016 and to re-measure stock options issued to consultants.
| For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Volatility | 67.09%-70.7 | % | 44.72% - 89.15 | % | 67.09%-82.26 | % | 44.72%-89.15 | % | ||||||||
| Risk-free interest rate | 2.015%-2.07 | % | 1.15%-1.28 | % | 1.89%-2.22 | % | 1.14%-1.42 | % | ||||||||
| Dividend yield | 0.0 | % | 0.0 | % | 0.0 | % | 0.0 | % | ||||||||
| Expected life | 6.0 years | 6.0 years | 6.0 years | 6.0 years | ||||||||||||
The expected term of stock options represents the weighted average period the stock options are expected to remain outstanding and is based on the options vesting term, contractual terms, and industry peers as we did not have sufficient historical information to develop reasonable expectations about future exercise patterns and post-vesting employment termination behavior.
The expected stock price volatility assumption was determined by examining the historical volatilities for industry peers, as our stock has not been trading long enough to calculate its own volatility. We will continue to analyze the historical stock price volatility and expected term assumptions as more historical data for our common stock becomes available. The risk-free interest rate assumption is based on the U.S. Treasury instruments whose term was consistent with the expected term of our stock options. The expected dividend assumption is based on our history and expectation of dividend payouts.
We have never paid dividends on our common stock and do not anticipate paying dividends on our common stock in the foreseeable future. Accordingly, we have assumed no dividend yield for purposes of estimating the fair value of our share-based compensation.
The closing price of our stock (on the date of a grant) is used as an input in the measurement of stock-based compensation.
Share-based compensation expense associated with stock options and restricted stock granted to employees and non-employees for the three months ended SeptemberJune 30, 2017 and 2016 was approximately $0.6 million and $0.5 million, respectively; for the nine months ended September 30, 2017 and 2016 was approximately $2.3 million and $1.3 million, respectively. As of September 30, 2017, we had approximately $5.0 million of total unrecognized share-based compensation expense, which we expect2021 to recognize over a weighted-average remaining vesting period of approximately .8 years. In future periods, our share-based compensation expense is expected to increase as a result of recognizing our existing unrecognized share-based compensation for awards that will vest and as we issue additional share-based awards to attract and retain our employees.
We have included stock based compensation as part of our operating expenses in our statement of operation for the three and nine months ended September 30 ($ in thousands) as follows:
Three Months ended September 30, | Nine Months ended September 30, | |||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Research and development | 280 | 212 | 785 | 483 | ||||||||||||
| General and administrative | 271 | 268 | 1,454 | 791 | ||||||||||||
| Total | $ | 551 | $ | 480 | $ | 2,239 | $ | 1,274 | ||||||||
The 2013 Equity Compensation Plan, or the Plan, is the only active plan pursuant to which options to acquire common stock or restricted stock awards can be granted and are currently outstanding. As of September 30, 2017, there were 1,397,606 shares of our common stock available for issuance under the Plan.
As of September 30, 2017, we had outstanding options to purchase an aggregate of 11,526,027 shares of our common stock with a weighted average exercise price of $2.22. The computation of the aggregate intrinsic value is based upon the difference between the original exercise price of the options and our estimate of the fair value of our common stock at September 30, 2017.
Emerging Growth Company Status
Under Section 107(b) of the Jumpstart Our Business Startups Act of 2012, emerging growth companies can delay adopting new or revised accounting standards until such time as those standards apply to private companies. We have irrevocably elected not to avail ourselves of this exemption from new or revised accounting standards and, therefore, we will be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies.
Results of Operations ($ in Thousands)
Comparison of Three Months Ended September 30, 2017 and 2016.
| 2017 | 2016 | Increase | ||||||||||
| Revenues | $ | 45 | - | 45 | ||||||||
| Cost and expenses: | ||||||||||||
| Research and development | $ | 2,013 | $ | 835 | $ | 1,178 | ||||||
| General and administrative | 1,440 | 1,000 | 440 | |||||||||
| Total cost and expenses | $ | 3,453 | $ | 1,835 | $ | 1,618 | ||||||
Revenues:Revenue for the three months ended SeptemberJune 30, 2017 were approximately $45 thousand, compared to $02020
The following tables summarizes our revenues and operating expenses for the prior period. Revenue consists ofcomparative periods presented:
| Three Months Ended June 30, | ||||||||
| 2021 | 2020 | |||||||
| Revenues | $ | - | $ | - | ||||
| Expenses: | ||||||||
| Research and development | $ | 2,481 | $ | 3,410 | ||||
| General and administrative | 2,309 | 2,357 | ||||||
| Operating Expenses | $ | 4,790 | $ | 5,767 | ||||
Revenues. We did not generate any revenue earned underduring the Cystic Fibrosis Foundation Therapeutics Inc. grant to study MAT2501, for the treatment of pre-clinical nontuberculous mycobacterium infection (NTM). The grant will last into 2018.three months ended June 30, 2021 and 2020.
Research and Development expenses:expenses. Research and Development (R&D) expense for the three months ended SeptemberJune 30, 2017 increased2021 and 2020 was approximately $1.2$2.5 million compared to the prior year period. This increase isand $3.4 million, respectively. The decrease in R&D expenses was primarily due to an increasethe completion of the LYPDISO clinical trial in spending on clinical studies for MAT2203, headcount additions, lab operations and analytical development costs. In the longer term, we expect R&D expenses to increase as we conduct additional clinical studies for our product candidates.January 2021.
General and Administrative expenses. General and Administrative expensesadministrative expense for the three months ended SeptemberJune 30, 2017 were2021 and 2020 was approximately $1.4$2.3 million an increaseand $2.4 million, respectively, compared to the prior year. The decrease in general and administrative expense was primarily due to higher compensation and insurance expenses being more than offset by lower professional fees & consulting expense.
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Comparison of the six months ended June 30, 2021 to the six months ended June 30, 2020
The following tables summarizes our revenues and operating expenses for the comparative periods presented:
| Six Months Ended June 30, | ||||||||
| 2021 | 2020 | |||||||
| Revenues | $ | 33 | $ | - | ||||
| Expenses: | ||||||||
| Research and development | $ | 5,722 | $ | 7,497 | ||||
| General and administrative | 5,454 | 4,616 | ||||||
| Operating Expenses | $ | 11,176 | $ | 12,113 | ||||
| Sale of net operating losses (NOLs) | $ | 1,328 | $ | 1,073 | ||||
Revenues. During the six months ended June 30, 2021 we generated revenue of approximately $440$33 thousand largely due to an increaseand $0 during the same period in professional fees associated with strategic consulting and investor relations as well as an increase in employee compensation/benefits, and insurance costs. G&A expenses are expected to increase for remainder of 2017 to meet2020. The amount earned during the requirements of a public company and explore possible business development opportunities.
Comparison of Nine Months Ended September 30, 2017 and 2016.
| 2017 | 2016 | Increase | ||||||||||
| Revenues | $ | 105 | - | 105 | ||||||||
| Cost and expenses: | ||||||||||||
| Research and development | $ | 6,712 | $ | 2,400 | $ | 4,312 | ||||||
| General and administrative | 5,265 | 3,293 | 1,972 | |||||||||
| Total cost and expenses | $ | 11,977 | $ | 5,693 | $ | 6,284 | ||||||
Revenues: Revenue for the nine months ended September 30, 2017 were approximately $105, compared to $0 for the nine months ended September 30, 2016. Revenuecurrent period consists of contract research revenue earned underresulting from the Cystic Fibrosis Foundation Therapeuticsfeasibility study agreement with Genentech Inc. grant to study MAT2501, for the treatment of pre-clinical nontuberculous mycobacterium infection (NTM). The grant will last into 2018.
Research and Development expenses:expenses. Research and Development (R&D) expense for the ninesix months ended SeptemberJune 30, 2017 increased2021 and 2020 was approximately $4.3$5.7 million compared to the prior year period. This increase isand $7.5 million, respectively. The decrease in R&D expenses was primarily due to an increasethe completion of the LYPDISO clinical trial in spending on clinical studies and preclinical studies, associated with both MAT2203 and MAT2505, increased in headcount, stock based compensation and increase in laboratory operations costs as a result of our new laboratory facilities. In the longer term, we expect R&D expenses to increase as we conduct additional clinical studies for our product candidates.January 2021.
General and Administrative expenses:expenses. General and Administrative expensesadministrative expense for the ninesix months ended SeptemberJune 30, 2017 were2021 and 2020 was approximately $5.3$5.5 million anand $4.6 million, respectively. The increase of $2.0 million over the same period in 2016. This increase is mainlygeneral and administrative expense was primarily due to increaseshigher compensation expense related to the exercise of stock options and increased insurance expense.
Sale of net operating losses (NOLs). The Company recognized approximately $1.3 million and $1.1 million for the six months ended June 30, 2021 and 2020, respectively, in professional fees associatedconnection with legal services, accounting services, strategic consultingthe sale of state net operating losses and investment relations services, as well an increase in employee compensation benefit expenses.state research and development credits to third parties under the New Jersey Technology Business Tax Certificate Program.
Liquidity and capital resources
Sources of Liquidity
We have funded our operations since inception through private placements and public offerings of our equity instruments, a warrant tender offering and the use of the Company’s Controlled Equity Offering Sales Agreement with Cantor.securities. As of SeptemberJune 30, 2017,2021, we have raised a total of approximately $42$156.7 million in gross proceeds and $143.9 million, net, proceeds through these offerings.from sales of our equity securities.
As of June 30, 2021, we had unrestricted cash, cash equivalents and marketable securities totaling approximately $59.8 million.
2020 At-The-Market Sales Agreement
On April 3, 2017, the Company filed a shelf registration statement on Form S-3July 2, 2020, we entered into an At-The-Market Sales Agreement (the “Sales Agreement”) with the Securities and Exchange CommissionBTIG, LLC (“BTIG”), pursuant to which allows us towe may offer issue and sell, from time to time, together through BTIG, as sales agent and/or separately, in one or more offerings, any combination of (i) our common stock, (ii) our preferred stock, which we may issue in one or more series, (iii) warrants, (iv) senior or subordinated debt securities, (v) subscription rights and (vi) units, consisting of any combination of the securities listed above. We will describe in a prospectus supplement the securities we are offering and selling, as well as the specific terms of the securities. The aggregate public offering price of the securities that we may offer from time to time pursuant to the shelf registration statement will not exceed $150.0 million. We will offer the securities in an amount and on terms that market conditions will determine at the time of the offering.
On April 28, 2017, the Company entered into a Controlled Equity OfferingSMSales Agreement, or sales agreement, with Cantor Fitzgerald & Co., or “Cantor”, pursuant to which the Company may issue and sell, from time to time,principal, shares of our common stock having an aggregate offering price of up to $30.0 million. Cantor Fitzgerald$50,000,000, subject to certain limitations on the amount of common stock that may be offered and sold by us set forth in the Sales Agreement. BTIG will be acting as sales agent and be paid a 3% commission on the gross proceeds from each sale. Through September 30, 2017We may terminate the Sales Agreement at any time; BTIG may terminate the Sales Agreement in certain limited circumstances. As of December 31, 2020, we raised approximately $0.6 million in net proceeds through salesdid not sell any shares of our common stock under this program over approximately 5 weeks selling approximately 500 thousand shares.
Asthe ATM Sales Agreement. For the six months ended June 30, 2021, the Company sold 3,023,147 shares of September 30, 2017, we hadits common stock under its ATM Sales Agreement with BTIG, LLC, at an accumulated deficitaverage price of $1.90, generating gross proceeds of approximately $47.6$5.8 million working capitaland net proceeds of approximately $8.3 million and cash and cash equivalents totaling approximately $9.0$5.6 million.
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2017 Warrant Tender2020 Common Stock Offering
On January 13, 2017,14, 2020, we closed an underwritten public offering of our common stock. The offering resulted in the Company completed its tender offer to amend and exercise certain categoriessale of existing warrants.
Pursuantapproximately 32.3 million shares to the Offer to Amend and Exercise, an aggregate of 30,966,350 warrants were tendered by their holders and were amended and exercised in connection therewith for an aggregate exercisepublic at a price of $1.55 per share. We generated net proceeds of approximately $15.5$46.7 million. The aggregate gross cash proceedsWe granted the underwriters a 30-day option (the “option”) to purchase approximately 4.8 million additional shares of common stock subject to the same terms and conditions. No additional shares of our common stock were approximately $13.5 million and the net cash proceeds after deducting warrant solicitation agent fees and other estimated offering expenses were approximately $12.7 million.sold pursuant to this option.
Cash Flows
The following table sets forth the primary sources and uses of cash, cash equivalents and restricted cash for each of the periodperiods set forth below:
| Six Months Ended June 30, | ||||||||
| 2021 | 2020 | |||||||
| Cash used in operating activities | $ | (5,516 | ) | $ | (7,834 | ) | ||
| Cash provided by/(used in) investing activities | 16,471 | (46,976 | ) | |||||
| Cash provided by financing activities` | 6,965 | 47,443 | ||||||
| Net increase/(decrease) in cash and cash equivalents and restricted cash | $ | 17,920 | $ | (7,367 | ) | |||
| Nine months ended | ||||||||
| September 30, | ||||||||
| 2017 | 2016 | |||||||
| Cash used in operating activities | $ | (9,544 | ) | $ | (4,003 | ) | ||
| Cash used in investing activities | (824 | ) | - | |||||
| Cash provided by financing activities | 15,263 | 6,996 | ||||||
| Net increase (decrease) in cash and cash equivalents | $ | 4,895 | $ | 2,993 | ||||
Operating Activities
We have incurred significant costs in the area of research and development, including clinical supply manufacturing, regulatory and clinical development costs and costs associated with being a public company. Net cash used in operating activities was approximately $9.5$5.5 million and $7.8 million for the nine monthssix-month periods ended SeptemberJune 30, 20172021 and 2020, respectively. The decrease of approximately $4.0$2.3 million forwas primarily due to a decrease in R&D expenses of approximately $1.8 million and $1.5 million of working capital adjustments due to the nine months ended September 30, 2016.timing of receipts and payments in the ordinary course of business, partially offset by approximately $0.8 million of higher general and administrative expenses. We expect that there will be an increase in cash used in operations during the remainder of 2021 due to higher research and development expenses as we continue to move our product candidates and delivery platform forward in their development cycles.
Investing Activities
There wereApproximately $16.5 million of cash was provided by and approximately $47.0 million of cash was used in investing activities for the nine monthssix-month periods ended SeptemberJune 30, 20172021 and 2020, respectively. The increase of approximately $.8$63.5 million for leasehold improvements.was primarily due to the approximately $2.9 million increase in proceeds received from maturities of our marketable securities and the decrease of approximately $60.5 million in purchases of marketable securities as compared to June 30, 2020.
Financing Activities
Net cash provided by financing activities was $15.3approximately $7.0 million and approximately $47.4 million for the nine monthssix-months periods ended SeptemberJune 30, 20172021 and 2020, respectively. The decrease of approximately $40.4 million in cash provided by financing activities was primarily due to the Company raising approximately $5.6 million of net proceeds from the warrant tender offer (approximately $ 12.7 million per Note D), warrants exercised by investors outside of this offer approximating $ 2.1 million, proceeds of approximately $0.6 million provided byJanuary 2021 ATM sales of our common stock through our Controlled Equity Agreement, additional capital leases, offset bycompared to the approximately $46.6 million of net proceeds that was raised from the January 2020 public offering of common stock. Other financing activities included a pay downdecrease of notes payable.approximately $0.8 million from the exercising of warrants and an increase of approximately $1.4 million from the exercising of stock options.
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Funding Requirements and Other Liquidity Matters
MAT2203 and MAT2501 are still in development stages. We expect to continue to incur significant expenses and increasing operating losses for the foreseeable future. We anticipate that our expenses will increase substantially if and as we:
| ● | conduct | |
| ● | ||
| seek to discover and develop additional product | ||
| ● | seek regulatory approvals for any product candidates that successfully complete clinical trials; |
| ● | require the manufacture of larger quantities of product candidates for clinical development and potentially commercialization; | |
| ● | maintain, expand and protect our intellectual property portfolio; | |
| ● | hire additional clinical, quality control and scientific personnel; and | |
| ● | add operational, financial and management information systems and personnel, including personnel to support our product development and planned future commercialization efforts and personnel and infrastructure necessary to help us comply with our obligations as a public company. |
As of September 30, 2017, the Company hadWe expect that our existing cash and cash equivalents of approximately $9.0 million. We believe the cash and cash equivalents on hand arewill be sufficient to fund planned operations through May 2018. We will need additional financing to fund our operating expenses and capital expenditures requirements into 2024.
Until such time, if ever, that we can generate product revenues sufficient to initiateachieve profitability, we expect to finance our cash needs through a combination of private and public equity offerings, debt financings, government or other third-party funding, collaborations and licensing arrangements. We do not have any committed external source of funds other than limited grant funding from the CFF. To the extent that we raise additional capital through the sale of common stock, convertible securities or other equity securities, the ownership interest of our stockholders may be materially diluted, and the terms of these securities may include liquidation or other preferences that adversely affect your rights of our common stockholders. Debt financing and preferred equity financing, if available, would result in increased fixed payment obligations and may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends, that could adversely impact our ability to conduct our intended clinicalbusiness. Securing additional financing could require a substantial amount of time and attention from our management and may divert a disproportionate amount of their attention away from day-to-day activities, which may adversely affect our management’s ability to oversee the development of our product candidates.
If we raise additional funds through collaborations, strategic alliances or marketing, distribution, or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs file additional patent applications and enhance our intellectual property position for lead compounds, and prepare for submission of an NDA for MAT2203 and MAT2501, and potentially conduct preclinical work in order to identifyor product candidates utilizing our cochleate delivery platform technology. We have entered into a Controlled Equity OfferingSMSales Agreement, or sales agreement, with Cantor Fitzgerald & Co., or Cantor Fitzgeraldgrant licenses on terms that may not be favorable to provide us with the potential of raising additional capital.us. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market any product candidates under our development that we would otherwise prefer to develop and market ourselves.
Until the time we can generate substantial product revenues from commercializing MAT2203, MAT2501 or any future product candidates, if ever, we expect to finance our cash needs through a combination of private and public equity offerings, debt financings, collaborations, strategic alliances and/or licensing arrangements. We do not have any committed external source of funds. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect your rights as a common stockholder. Debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends and could increase our expenses and require that our assets secure such debt. If we raise additional funds through collaborations, strategic alliances or licensing arrangements with pharmaceutical partners, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market any product candidates under our development that we would otherwise prefer to develop and market ourselves.
Contractual Obligations and Commitments
ExceptOn August 1, 2021, the amendment to the Company’s Bedminster lease became effective upon delivery of the Expansion Premises and extends the term of the lease for seven years from such date. The total lease commitment over the Medpace contract entered into June 1, 2017,seven-year extension period is approximately $1.8 million. (See Note 8 – Leases)
Besides the amendment to the Bedminster lease, there have been no other material changes from the disclosures relating to our contractual obligations reported in our Annual Report on Form 10-K for the year ended December 31, 2016.2020.
Off-Balance Sheet Arrangements
We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined under SEC rules, such as relationships with unconsolidated entities or financial partnerships, which are often referred to as structured finance or special purpose entities, established for the purpose of facilitating financing transactions that are not required to be reflected on our balance sheets.
RECENT ACCOUNTING PRONOUNCEMENTS
Refer to Note (c)(6), “Recent Accounting Policies,” in the accompanying notes to the condensed consolidated financial statements for a discussion of recent accounting pronouncements.
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Not applicable.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Our exposure to market risk is limited to our cash, cash equivalents and marketable securities. As of June 30, 2021, we had $59.8 million in unrestricted cash, cash equivalents and marketable securities. Such interest-earning instruments carry a degree of interest rate risk. The primary objectives of our investment activities are to preserve principal, provide liquidity and maximize income without significantly increasing risk. Our primary exposure to market risk is interest income sensitivity, which is affected by changes in the general level of U.S. interest rates. However, because of the short-term nature of the instruments in our portfolio, a sudden change in market interest rates would not be expected to have a material impact on our financial condition and/or results of operation. We do not have any foreign currency or other derivative financial instruments.
Item 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures.
Disclosure Controls and Procedures:
As of SeptemberJune 30, 2017, we evaluated,2021, under the supervision and with the participation of our principal executive officer and principal financial officer we have evaluated, the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). Based on that evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures arewere effective at the reasonable assurance level as of SeptemberJune 30, 2017. 2021.
Our disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed in the reports that we filefiled or submitsubmitted under the Exchange Act is recorded, processed, summarized and reported within time periods specified by the SEC’s rules and forms,forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that such information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to our management, including principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, but not absolute, assurance that the objectives of the disclosure controls and procedures are met. The design of any disclosure control and procedure also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.
Changes in internal control over financial reporting.Internal Control Over Financial Reporting
ThereThere were no changes in our internal control over financial reporting identified in connection with the above evaluation that occurred during the second quarter ended September 30, 2017of 2020 that have materially affected, or areis reasonably likely to materially affect, our internal control over financial reporting.
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PART - II OTHER INFORMATION
None.Item 1. LEGAL PROCEEDINGS
None.
Item 1A. RISK FACTORS
There were no material changes from the risk factors set forth under Part I, Item 1A., “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016.2020. You should carefully consider thesethe risk factors contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 in addition to the other information set forth in this report which could materially affect our business, financial condition or future results. The risks and uncertainties described in this report and in our Annual Report on Form 10-K for the year ended December 31, 2016,2020, as well as other reports and statements that we file with the SEC, are not the only risks and uncertainties facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also have a material adverse effect on our financial position, results of operations or cash flows.
During the three months ended September 30, 2017, we issued to two consulting firms an aggregate of 400,000 restricted shares of our common stock as payment for consulting services provided to us. These shares vest over the service period of six months.Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None of the foregoing transactions involved any underwriters, underwriting discounts or commissions, or any public offering. We made the offers, sales and issuances of the above securities in reliance on the exemptions from registration under the Securities Act by virtue of Section 4(a)(2) of the Securities Act (or Regulation D promulgated thereunder) because the issuance of securities to the recipients did not involve a public offering.None.
None.Item 3. DEFAULTS UNDER SENIOR SECURITIES
None.
Item 4. MINE SAFETY DISCLOSURES
Not applicable.
On November 13, 2017, Douglas F. Kling gave notice of his intention to resign as the Company’s Senior Vice President for Clinical Development to pursue other business opportunities. Mr. Kling’s resignation will be effective as of November 28, 2017.Item 5. OTHER INFORMATION
Not applicable.
Item 6. EXHIBITS
See the Exhibit Index following the signature page to this Quarterly Report on Form 10-Q for a list of exhibits filed or furnished with this report, which Exhibit Index is incorporated herein by reference.
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SIGNATURES
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| MATINAS BIOPHARMA HOLDINGS, INC. | |
| BY: | |
| /s/ | |
| Dated: | |
| Chief Executive Officer (Principal Executive Officer) | |
| /s/ | |
| Dated: | |
| (Principal Financial and Accounting Officer) |
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EXHIBIT INDEX
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