Marker Therapeutics, Inc. 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 21E of the Securities and Exchange Act of 1934, as amended, that involve risks and uncertainties. All statements other than statements relating to historical matters including statements to the effect that we “believe”, “expect”, “anticipate”, “plan”, “target”, “intend” and similar expressions should be considered forward-looking statements. Our actual results could differ materially from those discussed in the forward-looking statements as a result of a number of important factors, including factors discussed in this section and elsewhere in this Quarterly Report on Form 10-Q, and the risks discussed in our other filings with the SEC. Such risks and uncertainties may be amplified by the COVID-19 pandemic and its potential impact on our business and the global economy. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management’s analysis, judgment, belief or expectation only as the date hereof. We assume no obligation to update these forward-looking statements to reflect events or circumstance that arise after the date hereof. As used in this quarterly report: (i) the terms “we”, “us”, “our”, “Marker” and the “Company” mean Marker Therapeutics, Inc. and its wholly owned subsidiaries, Marker Cell Therapy, Inc. and GeneMax Pharmaceuticals Inc. which wholly owns GeneMax Pharmaceuticals Canada Inc., unless the context otherwise requires; (ii) “SEC” refers to the Securities and Exchange Commission; (iii) “Securities Act” refers to the Securities Act of 1933, as amended; (iv) “Exchange Act” refers to the Securities Exchange Act of 1934, as amended; and (v) all dollar amounts refer to United States dollars unless otherwise indicated. The following should be read in conjunction with our unaudited condensed consolidated interim financial statements and related notes for the six months ended June 30, 2021 included in this Quarterly Report. Company Overview We are a clinical-stage immuno-oncology company specializing in the development and commercialization of novel T cell-based immunotherapies and innovative peptide-based vaccines for the treatment of hematological malignancies and solid tumor indications. We developed our lead product candidates from our MultiTAA-specific T cell technology, which is based on the selective expansion of non-engineered, tumor-specific T cells that recognize tumor associated antigens, or TAAs, which are tumor targets, and then kill tumor cells expressing those targets. These T cells are designed to recognize multiple tumor targets to produce broad spectrum anti-tumor activity. We are advancing two pipelines of product candidates as part of our MultiTAA-specific T cell program: the autologous T cells for the treatment of lymphoma, multiple myeloma, or MM, and selected solid tumors and the allogeneic T cells for the treatment of acute myeloid leukemia, or AML, and acute lymphoblastic leukemia, or ALL. Because we do not genetically engineer the MultiTAA-specific T cell therapies, we believe that our product candidates are easier and less expensive to manufacture, have lower toxicities than current engineered chimeric antigen receptor, or CAR-T, and T cell receptor-based therapies and may provide patients with meaningful clinical benefit. We are also developing innovative peptide-based immunotherapeutic vaccines for the treatment of metastatic solid tumors. We are pursuing post-transplant AML as the lead indication for our first company-sponsored MultiTAA-specific T cell program. In April 2020, the FDA granted orphan drug designation to MT-401 for the treatment of AML after receiving an allogeneic stem cell transplant. The MultiTAA-specific T cell therapy has been well tolerated in an ongoing Phase 1 clinical trial in AML and myelodysplastic syndrome, or MDS, conducted by our strategic partner Baylor College of Medicine, or BCM. As reported in a recent publication by Lulla et al., 11 of the 17 patients in the adjuvant disease setting dosed with the MultiTAA-specific T cell therapy after receiving an allogeneic hematopoietic stem cell transplant, or HSCT, never relapsed [median leukemia-free survival, or LFS, not reached at a median follow-up of 1.9 years], with 11 of 15 patients remaining alive (estimated two-year overall survival of 77%) at a median follow-up of 1.9 years post-infusion, which compares favorably with HSCT outcomes for risk-matched AML/MDS patients post-HSCT [median LFS of nine to 15 months and two-year survival probability of 42%]. Additionally, eight patients were treated for active disease that was resistant to salvage therapy post-HSCT with a median of five prior lines of therapy (range: four to 10). One of the eight patients crossed over from the adjuvant group, while two patients enrolled twice, but all three patients had active AML that failed another line of salvage therapy after their first MultiTAA-specific T cell infusion. Two of the eight patients achieved objective responses, with one complete response and one partial response, with six patients continuing with stable disease. 14 Table of Contents ​ We submitted an investigational new drug, or IND, application to the United States Food and Drug Administration, or the FDA, to initiate a Phase 2 clinical trial of MultiTAA-specific T cell therapy, which we refer to as MT-401 (zedenoleucel), in post-allogeneic HSCT patients with AML in both the adjuvant and active disease setting. The dose administered in this multicenter trial is currently 100 million cells every two weeks for three doses. In the adjuvant setting, patients will be randomized to either MultiTAA-specific T cell therapy at approximately 90 days post-transplant versus standard of care observation, while the active disease patients will receive MT-401 following relapse post-transplant as part of a single-arm group. We have completed the safety lead-in portion of the trial in June 2021. We initiated the remainder of the Phase 2 trial in July 2021 and plan to complete enrollment of approximately 20 patients and activate additional clinical sites across the United States in the fourth quarter of 2021 in order to report results from the active disease arm of the trial in the first quarter of 2022. We expect to begin manufacturing MT-401 for the Phase 2 trial at our cGMP manufacturing facility in the third quarter of 2021. We reported interim data for an ongoing Phase 1/2 clinical trial of the MultiTAA-specific T cell therapy for the treatment of pancreatic adenocarcinoma being conducted by BCM. In this trial, we have observed a clinical benefit correlated with the post-infusion detection of tumor-reactive T cells in patient peripheral blood and within tumor biopsy samples in patients in the tumor-resection arm of the trial. These T cells exhibited activity against both targeted antigens and non-targeted TAAs, indicating induction of antigen spreading. To date, we have not observed any cytokine release syndrome or neurotoxicity in this trial. We are also evaluating the MultiTAA-specific T cell therapies in a Phase 2 clinical trial for the treatment of breast cancer and in Phase 1 clinical trials for the treatment of ALL, lymphoma, MM and sarcoma, all of which are being conducted by BCM. As of June 2021, the MultiTAA-specific T cell therapies have been generally well tolerated by all of the patients enrolled in clinical trials in hematological and solid tumor indications with no incidents of cytokine release syndrome or neurotoxicity, which are frequently associated with CAR-T therapies. Our ongoing clinical trials may be also affected by the COVID-19 pandemic. Based on our observations in clinical trials in AML, pancreatic cancer, lymphoma, ALL and MM, we believe that the MultiTAA-specific T cell therapies have the potential to mediate a meaningful anti-tumor effect, as well as significant in vivo expansion of T cells. We may initiate additional clinical trials investigating other indications in addition to our planned Phase 2 trial in post-transplant AML patients. Pipeline Our clinical-stage pipeline, including clinical trials being conducted by BCM and other partners, is set forth below: ​ ​ 15 Table of Contents ​ Results of Operations In this discussion of our results of operations and financial condition, amounts in financial tables, other than per-share amounts, have been rounded to the nearest thousand. Comparison of the Three Months Ended June 30, 2021 and 2020 The following table summarizes the results of our operations for the three months ended June 30, 2021 and 2020: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Three Months Ended ​ ​ ​ June 30, ​ ​ ​ ​ ​ 2021 2020 Change Revenues: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Grant income ​ $ — ​ $ 467,000 ​ $ (467,000) ​ (100) % Total revenues ​ — ​ 467,000 ​ (467,000) (100) % Operating expenses: ​ ​ ​ ​ ​ ​ ​ Research and development ​ 7,350,000 ​ 4,277,000 ​ 3,073,000 72 % General and administrative ​ 3,559,000 ​ 2,547,000 ​ 1,012,000 40 % Total operating expenses ​ 10,909,000 ​ 6,824,000 ​ 4,085,000 60 % Loss from operations ​ (10,909,000) ​ (6,358,000) ​ (4,551,000) 72 % Other income (expense): ​ ​ ​ ​ ​ ​ ​ ​ Change in fair value of warrant liabilities ​ — ​ — ​ — — ​ Interest income ​ 2,000 ​ 16,000 ​ (14,000) (88) % Net loss ​ $ (10,907,000) ​ $ (6,342,000) ​ $ (4,565,000) 72 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net loss per share, basic and diluted ​ $ (0.13) ​ $ (0.14) ​ $ 0.01 (7) % Weighted average number of common shares outstanding, basic and diluted ​ 83,030,000 ​ 46,573,000 ​ 36,457,000 78 % ​ Revenue Grant income We did not receive any grant income during the three months ended June 30, 2021. During the three months ended June 30, 2020, we received $0.5 million of a grant awarded to the Mayo Foundation from the U.S. Department of Defense to fund the Phase 2 clinical trial of TPIV100 for the treatment of HER2/neu breast cancer. The portion of the grant we received compensated us for clinical supplies manufactured by us for the clinical trial. Operating Expenses Operating expenses incurred during the three months ended June 30, 2021 were $10.9 million compared to $6.8 million during the three months ended June 30, 2020. Significant changes and expenditures in operating expenses are outlined as follows: Research and Development Expenses Research and development expenses increased by 72% to $7.4 million for the three months ended June 30, 2021, compared to $4.3 million for the three months ended June 30, 2020. The increase of $3.1 million in 2021 was primarily attributable to the following: o increase of $0.8 million in expenses related to our AML clinical trial, 16 Table of Contents ​ o increase of $0.7 million in headcount-related expenses, o increase of $0.5 million in process development expenses, o increase of $0.7 million in sponsored research expenses from BCM agreements, o increase of $0.3 million in rent and utilities, o increase of $0.2 million in other expenses, and o increase of $0.4 million in depreciation expenses primarily attributable to our manufacturing facility and related expenses, offset by o decrease of $0.5 million in expenses related to our vaccine clinical trials. General and Administrative Expenses General and administrative expenses were $3.6 million and $2.5 million for the three months ended June 30, 2021 and 2020, respectively. The increase of $1.1 million in 2021 was primarily attributable to the following: o increase of $0.3 million in legal fees, o increase of $0.3 million in headcount-related expenses, o increase of $0.2 million in rent and utilities, and o increase of $0.3 million in other expenses. Other Income (Expense) Interest Income Interest income was $2,000 and $16,000 for the three months ended June 30, 2021 and 2020, respectively, and was attributable to interest income relating to funds that are held in U.S. Treasury notes and U.S. government agency-backed securities. Net Loss The increase in our net loss during the three months ended June 30, 2021 compared to the three months ended June 30, 2020 was due to the continued expansion of our research and development activities, increased expenses relating to future clinical trials, and the overall growth of our corporate infrastructure. We anticipate that we will continue to incur net losses in the future as we continue to invest in research and development activities, including clinical development of our MultiTAA T cell product candidates. 17 Table of Contents ​ Comparison of the Six Months Ended June 30, 2021 and 2020 The following table summarizes the results of our operations for the six months ended June 30, 2021 and 2020: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Six Months Ended ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, ​ ​ ​ ​ ​ ​ 2021 2020 Change Revenues: ​ ​ ​ ​ Grant income ​ $ — ​ $ 467,000 ​ $ (467,000) (100) % ​ Total revenues ​ — ​ 467,000 ​ (467,000) (100) % ​ Operating expenses: ​ ​ ​ ​ ​ ​ Research and development ​ 12,993,000 ​ 8,094,000 ​ 4,899,000 61 % ​ General and administrative ​ 6,697,000 ​ 5,374,000 ​ 1,323,000 25 % ​ Total operating expenses ​ 19,690,000 ​ 13,468,000 ​ 6,222,000 46 % ​ Loss from operations ​ (19,690,000) ​ (13,001,000) ​ (6,689,000) 51 % ​ Other income (expense): ​ ​ ​ ​ ​ ​ ​ ​ ​ Change in fair value of warrant liabilities ​ - ​ 31,000 ​ (31,000) (100) % ​ Interest income ​ 4,000 ​ 143,000 ​ (139,000) (97) % ​ Net loss ​ $ (19,686,000) ​ $ (12,827,000) ​ $ (6,859,000) 53 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net loss per share, basic and diluted ​ $ (0.28) ​ $ (0.28) ​ $ (0.00) 0 % ​ Weighted average number of common shares outstanding ​ 69,824,000 ​ 46,329,000 ​ 23,495,000 51 % ​ ​ Revenue Grant income We did not receive any grant income during the six months ended June 30, 2021. During the six months ended June 30, 2020, we received $0.5 million of a grant awarded to the Mayo Foundation from the U.S. Department of Defense to fund the Phase 2 clinical trial of TPIV100 for the treatment of HER2/neu breast cancer. The portion of the grant we received compensated us for clinical supplies manufactured by us for the clinical trial. Operating Expenses Operating expenses incurred during the six months ended June 30, 2021 were $19.7 million compared to $13.5 million during the six months ended June 30, 2020. Significant changes and expenditures in operating expenses are outlined as follows: Research and Development Expenses Research and development expenses increased by 61% to $13.0 million for the six months ended June 30, 2021, compared to $8.1 million for the six months ended June 30, 2020. The increase of $4.9 million in 2021 was primarily attributable to the following: o increase of $1.3 million in expenses related to our AML clinical trial, o increase of $1.3 million in headcount-related expenses, o increase of $0.6 million in process development expenses, o increase of $0.9 million in sponsored research expenses from BCM agreements, 18 Table of Contents ​ o increase of $0.7 million in rent and utilities, and o increase of $0.9 million in depreciation expenses primarily attributable to our manufacturing facility and related expenses, offset by o decrease of $0.8 million in expenses related to our vaccine clinical trials. General and Administrative Expenses General and administrative expenses were $6.7 million and $5.4 million for the six months ended June 30, 2021 and 2020, respectively. The increase of $1.3 million in 2021 was primarily attributable to the following: o increase of $0.1 million in insurance expenses, o increase of $0.6 million in headcount-related expenses, o increase of $0.3 million in rent and utilities, and o increase of $0.3 million in other expenses. Other Income (Expense) Change in Fair Value of Warrant Liabilities Change in fair value of warrant liabilities for the six months ended June 30, 2021 was $0 as compared to $31,000 for the six months ended June 30, 2020. Interest Income Interest income was $3,900 and $0.1 million for the six months ended June 30, 2021 and 2020, respectively, and was attributable to interest income relating to funds that are held in U.S. Treasury notes and U.S. government agency-backed securities. As part of the reaction to the COVID-19 pandemic, the Federal Reserve cut rates in mid-March of 2020 to a range of 0.0% - 0.25%. As such, we recorded lower interest income during the six months ended June 30, 2021. Net Loss The increase in our net loss during the six months ended June 30, 2021 compared to the six months ended June 30, 2020 was due to the continued expansion of our research and development activities, increased expenses relating to future clinical trials, and the overall growth of our corporate infrastructure. We anticipate that we will continue to incur net losses in the future as we continue to invest in research and development activities, including clinical development of our MultiTAA T cell product candidates. Liquidity and Capital Resources We have not generated any revenues from product sales since inception. We have financed our operations primarily through public and private offerings of our debt and equity securities. 19 Table of Contents ​ The following table sets forth our cash and cash equivalents and working capital as of June 30, 2021 and December 31, 2020: Cash and Working Capital ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, December 31, ​ ​ 2021 ​ 2020 Cash and cash equivalents ​ $ 57,221,000 ​ $ 21,352,000 Working capital ​ $ 54,364,000 ​ $ 18,009,000 ​ Cash Flows The following table summarizes our cash flows for the six months ended June 30, 2021 and 2020: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Six Months Ended ​ ​ June 30, ​ 2021 2020 Net Cash provided by (used in): ​ ​ Operating activities ​ $ (15,906,000) ​ $ (8,401,000) Investing activities ​ (781,000) ​ (3,928,000) Financing activities ​ 52,556,000 ​ 550,000 Net increase (decrease) in cash and cash equivalents ​ $ 35,869,000 ​ $ (11,779,000) ​ Operating Activities Net cash used in operating activities during the six months ended June 30, 2021 was $15.9 million compared to $8.4 million for the same period last year. The changes in cash flow from operating activities during the six months ended June 30, 2021 were due to $19.7 million of net losses and a $0.8 million decrease from changes in operating assets and liabilities. This was offset by $3.0 million of stock-based compensation, $1.0 million of depreciation expense and $0.5 million right-of-use asset amortization and lease liability accretion. Investing Activities Net cash used in investing activities was $0.8 million and $3.9 million for the purchase of property and equipment during the six months ended June 30, 2021 and 2020, respectively. The increase relates to purchases of laboratory equipment for the manufacturing facility. Financing Activities Net cash provided by financing activities was $52.6 million during the six months ended June 30, 2021, due to the net proceeds received from the underwritten public offering. Net cash provided by financing activities was $0.6 million during the six months ended June 30, 2020. Future Capital Requirements To date, we have not generated any revenues from the commercial sale of approved drug products, and we do not expect to generate substantial revenue for at least the next several years. If we fail to complete the development of our product candidates in a timely manner or fail to obtain their regulatory approval, our ability to generate future revenue will be compromised. We do not know when, or if, we will generate any revenue from our product candidates, and we do not expect to generate significant revenue unless and until we obtain regulatory approval of, and commercialize, our product candidates. We expect our expenses to increase in connection with our ongoing activities, particularly as we continue the research and development of, continue or initiate clinical trials of and seek marketing approval for our product candidates. In addition, if we obtain approval for any of our product candidates, we expect to incur significant commercialization expenses related to sales, marketing, manufacturing and distribution. We anticipate that we will need substantial additional funding in connection with our continuing operations. If we are unable to raise capital when needed or on attractive terms, we could be forced to delay, reduce or eliminate our research and development programs or future commercialization efforts. 20 Table of Contents ​ On March 16, 2021, we issued an aggregate of 32,282,857 shares of our common stock, for net proceeds of $52.6 million pursuant to an underwritten public offering. As of June 30, 2021, we had working capital of $54.4 million, compared to working capital of $18.0 million as of December 31, 2020. Based on our clinical and research and development plans and our timing expectations related to the progress of our programs, we expect that our cash and cash equivalents as of June 30, 2021 will enable us to fund our operating expenses and capital expenditure requirements into the first quarter of 2023. We have based this estimate on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we currently expect. Furthermore, our operating plan may change, and we may need additional funds sooner than planned in order to meet operational needs and capital requirements for product development and commercialization. Because of the numerous risks and uncertainties associated with the development and commercialization of our product candidates and the extent to which we may enter into additional collaborations with third parties to participate in their development and commercialization, we are unable to estimate the amounts of increased capital outlays and operating expenditures associated with our current and anticipated clinical trials. Our future funding requirements will depend on many factors, as we: ● initiate or continue clinical trials of our product candidates; ● continue the research and development of our product candidates and seek to discover additional product candidates;seek regulatory approvals for our product candidates if they successfully complete clinical trials; ● establish sales, marketing and distribution infrastructure and scale-up manufacturing capabilities to commercialize any product candidates that may receive regulatory approval; ● evaluate strategic transactions we may undertake; and ● enhance operational, financial and information management systems and hire additional personnel, including personnel to support development of our product candidates and, if a product candidate is approved, our commercialization efforts. Because all of our product candidates are in the early stages of clinical and preclinical development and the outcome of these efforts is uncertain, we cannot estimate the actual amounts necessary to successfully complete the development and commercialization of product candidates or whether, or when, we may achieve profitability. Until such time, if ever, that we can generate substantial product revenue, we expect to finance our cash needs through a combination of equity or debt financings and collaboration arrangements. We plan to continue to fund our operations and capital funding needs through equity and/or debt financing. We may also consider new collaborations or selectively partner our technology. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interests of our stockholders will be diluted, and the terms may include liquidation or other preferences that adversely affect the rights of our existing stockholders’ common stock. The incurrence of indebtedness would result in increased fixed payment obligations and could involve certain restrictive covenants, such as limitations on our ability to incur additional debt, limitations on our ability to acquire or license intellectual property rights and other operating restrictions that could adversely impact our ability to conduct our business. If we raise additional funds through strategic partnerships and alliances and licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies or product candidates or grant licenses on terms unfavorable to us. We may also be required to pay damages or have liabilities associated with litigation or other legal proceedings involving our company. In addition to the foregoing, based on our current assessment, we do not expect any material impact on our long-term liquidity due to the COVID-19 pandemic. However, we will continue to assess the effect of the pandemic on our operations. The extent to which the COVID-19 pandemic will impact our business and operations will depend on future developments that are highly uncertain and cannot be predicted with confidence, such as the ultimate geographic spread of the disease, the duration of the outbreak, the duration and effect of business disruptions and the short-term effects and ultimate effectiveness of the travel restrictions, quarantines, social distancing requirements and business closures in the United States and other countries to contain and treat the disease. While the potential economic impact brought by, and the duration of, COVID-19 may be difficult to assess or predict, a widespread pandemic could result in significant disruption of global financial markets, reducing our ability to access capital, which could in the future negatively affect our liquidity. In addition, a recession or market correction resulting from the spread of COVID-19 could materially affect our business and the value of our common stock. 21 Table of Contents ​ Critical Accounting Policies The condensed consolidated financial statements are prepared in conformity with U.S. GAAP, which require the use of estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent liabilities at the date of the financial statements, and the reported amounts of expenses in the periods presented. We believe that the accounting estimates employed are appropriate and resulting balances are reasonable; however, due to inherent uncertainties in making estimates, actual results could differ from the original estimates, requiring adjustments to these balances in future periods. The critical accounting estimates that affect the consolidated financial statements and the judgments and assumptions used are consistent with those described under Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2020. Off-Balance Sheet Arrangements We have not entered into any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes of financial condition, revenues, expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors. ​ Item 3. Quantitative and Qualitative Disclosures About Market Risk We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item. ​