What changed in this filing

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Item 7. Management’s Discussion and Analysis

2024-03-26 compared with 2023-03-22 · 159 added, 136 removed, 190 unchanged (61% of the section changed)

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MultiTAA-specific T cells are able to recognize multiple tumor targets to produce broad spectrum anti-tumor activity.

When infused into a cancer patient, the multiTAA-specific T cells are designed to kill cancer cells expressing the TAA targets and potentially recruit the patient’s immune system to participate in the cancer killing process.

We licensed the underlying technology for multiTAA-specific T cell therapy from BCM in March 2018.

When infused into a patient with cancer, the multiTAA-specific T cells are designed to kill cancer cells expressing the TAA and potentially recruit the patient’s immune system to participate in the cancer killing process.

We licensed the underlying technology for multiTAA-specific T cell therapy from Baylor College of Medicine, or BCM, in March 2018.

BCM had utilized the therapy in seven exploratory clinical trials.

In these studies, BCM treated over 150 patients suffering from a variety of cancers including lymphoma, multiple myeloma, acute myeloid leukemia, acute lymphoblastic leukemia, pancreatic cancer, breast cancer and various sarcomas.

In those studies, BCM saw evidence of clinical benefit, expansion of infused cells, epitope spreading, and decreased toxicity compared to other cellular therapies.

We are advancing three product candidates as part of our multiTAA-specific T cell program for:

autologous treatment of lymphoma, and selected solid tumors

allogeneic T cells for the treatment of acute myeloid leukemia, or AML

off-the-shelf products in various indications

Our current clinical development programs are:

● MT-401 for the treatment of post-transplant AML, currently in a Phase 2 clinical trial

● MT-401-OTS for the treatment of AML, for which we expect to dose the first patient in a Phase 2 clinical trial in 2023

● MT-601 for the treatment of pancreatic cancer, for which we have a cleared IND from the FDA to initiate a Phase 1 trial in the fourth quarter of 2023

● MT-601 for the treatment of lymphoma, for which we have a cleared IND from the FDA and initiated a Phase 1 trial in the first quarter of 2023

In these studies, BCM treated over 150 patients suffering from a variety of cancers including lymphoma, multiple myeloma, acute myeloid leukemia, or AML, acute lymphoblastic leukemia, or ALL, pancreatic cancer, breast cancer and various sarcomas.

In those studies, BCM saw evidence of clinical benefit, expansion of infused cells, and decreased toxicity compared to other cellular therapies.

We are advancing two product candidates for 3 clinical indications as part of our multiTAA-specific T cell program for:

● Autologous multiTAA product for the treatment of lymphoma and pancreatic cancer (MT-601)

● Off-the-Shelf (OTS) product in various indications (e.g., MT-401-OTS)

We do not genetically engineer our multiTAA-specific T cell therapies and we believe that our product candidates are superior to T cells engineered with chimeric antigen receptors, or CAR-T, for several reasons including:

● Multiple targets → enhanced tumoricidal effect→ minimized tumor immune escape

● Clinical safety → no treatment-related side effects, including cytokine release syndrome (CRS) or other severe adverse effects (SAEs), were attributed to the use of multiTAA-specific T cell therapies to date

● Non-genetically engineered T cell products → no risk of mutagenesis and reduced manufacturing complexity → lower cost

For these reasons, we believe our endogenous T cell receptor-based therapies may provide meaningful clinical benefit and safety to patients with both hematological and solid tumors.

We believe that the simplicity of our manufacturing process allows additional modifications to expand multiTAA-specific T cell recognition of cancer targets.

For example, we are currently analyzing the potential for a 12-antigen multiTAA-specific T cell therapy and assessing the potential for combination therapies for our multiTAA-specific T cell products.

We have positioned ourselves to be in full control of our research and development and clinical manufacturing needs by establishing a fully validated, FDA registered, manufacturing facility.

We believe that this has key advantages that distinguish us from our competitors, particularly because we are less reliant on contract manufacturing organizations, which are expensive and often have long lead times, shortages of skilled labor and a backlog of customers.

For example, we are assessing the potential of combining multiTAA-specific T cell products with other products.

Reverse Stock Split

On May 24, 2022, we held our annual meeting of stockholders at which our stockholders approved a proposal to effect an amendment to our certificate of incorporation, as amended, to implement a reverse stock split at a ratio within a range between and including one-for three (1:3) and one-for-twelve (1:12) and a corresponding reduction in the total number of authorized shares of our common stock.

On January 24, 2023, our board of directors approved the filing of a certificate of amendment to our amended and restated certificate of incorporation (the “Amendment”) with the Secretary of State of the State of Delaware to affect the one-for-ten (1:10) Reverse Stock Split of our outstanding common stock and a reduction in the total number of authorized shares of our common stock from 300,000,000 to 30,000,000 (the “Shares Reduction”).

On January 24, 2023, our board of directors approved the filing of a certificate of amendment to our amended and restated certificate of incorporation (the “Amendment”) with the Secretary of State of the State of Delaware to effect the one-for-ten (1:10) Reverse Stock Split of our outstanding common stock and a reduction in the total number of authorized shares of our common stock from 300,000,000 to 30,000,000 (the “Shares Reduction”).

The Amendment became effective at 5:00 p.m.

Eastern Time on January 26, 2023.

Pursuant to the Amendment, at the effective time of the Amendment, every ten (10) shares of our issued and outstanding common stock was automatically combined into one (1) issued and outstanding share of common stock and the authorized shares of our common stock was reduce from 300,000,000 to 30,000,000, without any change in par value per share.

Pursuant to the Amendment, at the effective time of the Amendment, every ten (10) shares of our issued and outstanding common stock was automatically combined into one (1) issued and outstanding share of common stock and the authorized shares of our common stock was reduced from 300,000,000 to 30,000,000, without any change in par value per share.

The Reverse Stock Split affected all shares of our common stock outstanding immediately prior to the effective time of the Amendment.

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Research and Development Expenses

To date, our research and development expenses have related primarily to the development of our clinical platform and the identification and development of our product candidates.

Clinical and research and development expenses consist of expenses incurred in performing research and development activities, cost of our clinical trials, including compensation, share-based compensation expense and benefits for research and development employees and consultants, facilities expenses, overhead expenses, cost of supplies, manufacturing expenses, fees paid to third parties and other outside expenses.

Our research and development expenses are primarily costs associated with our clinical trials, including compensation, share-based compensation expense and benefits for employees and selected consultants, manufacturing expenses and fees paid to third parties.

Clinical costs are expensed as incurred.

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We determine which programs to pursue and how much to fund each program in response to ongoing scientific assessments, competitive developments, clinical trial results, as well as an assessment of each product candidate’s commercial potential.

We anticipate our research and development costs will continue to increase over the next several years due to increased spending on the clinical development and manufacturing of our product candidates.

We anticipate our clinical trial costs will continue to increase over the next several years due to increased spending on the clinical development and manufacturing of our product candidates.

General and Administrative Expenses

General and administrative expenses consist primarily of salaries and other related costs, including share-based compensation, for personnel in executive, finance, accounting, business development, legal and human resources functions.

Other significant costs include facility costs not otherwise included in research and development expenses, legal fees relating to patent and corporate matters, insurance costs and professional fees for consultancy, accounting, audit and investor relations.

We anticipate that our general and administrative expenses will increase in the future to support our continued research and development activities, and the potential commercialization of our product candidates.

We did not recognize any income tax expense for the years ended December 31, 2022 and 2021.

General and administrative expenses consist primarily of personnel costs, including share-based compensation, legal fees relating to patent and corporate matters, insurance costs, consulting and professional fees, audit and investor relations.

We recognized $4,000 in state tax expense for the year ended December 31, 2023 and none for the year ended December 31, 2022.

Other Income (Expense)

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Results of Operations For the Years Ended December 31, 2023 and 2022

The following table summarizes the results of our operations (rounded to the thousand except for per share amounts) for the years ended December 31, 2022 and 2021, together with the changes to those items:

The following table summarizes the results of our continuing operations (rounded to the thousand except for per share amounts) for the years ended December 31, 2023 and 2022, together with the changes to those items:

For the Years Ended

Related party service revenue

Total revenues

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Loss from operations

Other income (expense):

Other income (expenses):

Arbitration settlement

Interest income

Net loss per share, basic and diluted

Weighted average number of common shares outstanding

Loss from continuing operations before income taxes

We did not generate any revenue during the years ended December 31, 2023 and 2022, respectively, from the sales or licensing of our product candidates.

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On September 13, 2022, we received notice from the FDA that we had been awarded a $2.0 million grant from the FDA’s Orphan Products Grant program to support our Phase 2 clinical trial of MT-401 for the treatment of post-transplant AML.

During the year ended December 31, 2022, we recognized $0.1 million of revenue associated with the FDA grant.

In April 2022, we entered into a binding services agreement, or the Service Agreement, with Wilson Wolf.

Pursuant to the Services Agreement, Wilson Wolf made a cash payment to us in the amount of $8.0 million, as consideration for certain training and research services.

During the year ended December 31, 2022, we recognized $5.5 million of revenue associated with the Services agreement.

During the years ended December 31, 2023 and 2022, we recognized $0.4 million and $0.1 million of revenue associated with the FDA grant, respectively.

In May 2023, we received notice of a $2.0 million grant from the National Institutes of Health Small Business Innovation Research (“SBIR”) program to support the development and investigation of MT-401 for the treatment of AML patients following standard-of-care therapy with hypomethylating agents.

During the year ended December 31, 2023, we recognized $0.2 million of revenue associated with the SBIR grant.

All funding agencies have agreed to continue their financial support and to shift funds to the MT-401-OTS program.

Operating Expenses

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Research and Development Expense

Research and development expenses decreased by 6% to $26.1 million for the year ended December 31, 2022, compared to $27.8 million for the year ended December 31, 2021.

Research and development expenses or clinical trial costs decreased by 13% to $10.4 million for the year ended December 31, 2023, compared to $12.0 million for the year ended December 31, 2022, mainly as a result of the Cell Ready transaction.

The decrease of $1.6 million in 2023 was primarily attributable to the following:

o decrease of $1.7 million in sponsored research and consulting expenses from BCM agreements,

o decrease of $1.4 million in process development expenses,

o decrease of $0.6 million in technology licensing fees due to termination of Mayo license agreements, described below,

o decrease of $0.3 million in consulting expenses,

o decrease of $0.2 million in stock-based compensation expenses, offset by

o increase of $1.5 million in headcount-related expenses as we increased the number of research and development personnel,

o increase of $0.7 million in depreciation expense due to increased capital investments, and

o increase of $0.3 million in vaccine-based clinical trial expenses related to the termination of the Mayo license agreements, described below.

Included in research and development expenses are expenses related to agreements with BCM.

In November 2018 and February 2020, we entered in Sponsored Research Agreements with BCM, which provided for the conduct of research for us by credentialed personnel at BCM’s Center for Cell and Gene Therapy.

During the years ended December 31, 2022 and 2021, we incurred $0 and $0.03 million of expenses related to these agreements, respectively.

In September 2019, we entered in a Clinical Supply Agreement with BCM, which provided for BCM to provide to us multi tumor antigen specific products.

During the years ended December 31, 2022 and 2021, we incurred $0.7 million and $1.2 million related to this agreement, respectively.

In October 2019, we entered in a Workforce Grant Agreement with BCM, which provided for BCM to provide to us manpower costs of projects for manufacturing, quality control testing and validation run activities.

During the years ended December 31, 2022 and 2021, we incurred $0.4 million and $1.1 million related to this agreement, respectively.

In August 2020, we entered in a Clinical Trial Agreement with BCM, which provided for BCM to provide to us investigator-initiated research studies.

During the years ended December 31, 2022 and 2021, we incurred $0 and $0.5 million related to this agreement, respectively.

In October 2022, we and Mayo Foundation for Medical Education and Research, or Mayo, mutually agreed to terminate the (i) Patent and Know-How License Agreement dated March 25, 2012, the (ii) License and Assignment Agreement dated July 21, 2015, and the (iii) License and Assignment Agreement effective May 4, 2016, which we collectively refer to as the License Agreements, in accordance with and subject to the terms of those agreements, pursuant to which Mayo granted the Company license grants to patent rights, know-how and materials in each of the License Agreements (as defined therein) that were directed to our peptide-based immunotherapeutic vaccine programs.

Under the terms of the termination, the License Agreements are of no further force or effect.

All license grants under the License Agreements are terminated and all rights therein revert to Mayo.

We also will assign Mayo all of the INDs covered under the License Agreements, including any interest in any clinical trials relating to any IND.

● decrease of $2.1 million in process development expenses,

● decrease of $0.8 million in AML Phase 2 clinical trial expenses, offset by

● increase of $1.3 million in Cell Ready (outsourced) clinical manufacturing costs and process development expenses.

General and Administrative Expenses

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The decrease in general and administrative expenses of $3.8 million mainly comprised the following:

o increase of $0.6 million in severance expense related to headcount reductions,

o increase of $0.5 million in advisory and professional fees,

o increase of $0.1 million in other general and administrative expenses, offset by

o decrease of $0.1 million in other headcount-related expenses,

o decrease of $0.5 million in stock-based compensation,

o decrease of $0.4 million in rent and utility expenses, in part due to the termination of our office lease at 3200 Southwest Freeway, Suite 2500 in Houston, and

o decrease of $0.3 million in recruiting expenses.

In August 2022, we implemented changes to our organizational structure as part of an operational cost reduction plan to conserve our available capital by reducing headcount in our general and administrative function by approximately 23.5%, including the separation of the Company’s Chief Financial Officer.

● decrease of $3.2 million in headcount-related expenses, including stock-based compensation expense and net of severance expense,

● decrease of $0.6 million in rent and utilities expense, primarily as a result of the Cell Ready transaction, including its assumption of facility leases,

● decrease of $0.6 million in legal and professional fees,

● decrease of $0.2 million in insurance expense, offset by

● increase of $0.8 million in consulting expenses.

In 2023, the Company implemented changes to its organizational structure due to the transaction with Cell Ready and to reduce operational costs.

In connection with these changes, the Company reduced headcount, including the separation of its former Chief Executive Officer, Peter Hoang, in May 2023 and its former Chief Accounting Officer, Michael Loiacono, in June 2023.

During the second quarter of 2023, the Company recorded $0.9 million of severance and termination-related costs.

The payments of these costs were completed in July of 2023.

Effective May 1, 2023, the Company’s board of directors appointed Dr.

Juan Vera as the Company’s President and Chief Executive Officer.

Effective June 30, 2023, the board of directors appointed Eliot M.

Lurier as the Company’s Interim Chief Financial Officer, whereby Mr.

Lurier provided consulting services to the Company pursuant to a consulting between the Company and Danforth Advisors, LLC (“Danforth”) and received no compensation directly from the Company.

On November 17, 2023, the Company terminated the consulting agreement between the Company and Danforth, effective January 16, 2024.

On November 17, 2023, Mr.

Lurier ceased serving as the Company’s Interim Chief Financial Officer and Dr.

Vera was appointed as the Company’s Principal Financial and Accounting Officer.

Other Income /(Expense)

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An arbitration proceeding was brought against us before the Financial Industry Regulatory Authority, Inc., or FINRA by a broker seeking to be paid compensation for two financing transactions that occurred in 2018, a warrant conversion and a private placement, each brokered by another broker.

The broker’s claims were based on a placement agent agreement for a private placement it brokered in

2017, under which it alleged it was entitled to compensation for the 2018 transactions.

The broker’s claims were based on a placement agent agreement for a private placement it brokered in 2017, under which it alleged it was entitled to compensation for the 2018 transactions.

The FINRA panel found in favor of the broker and awarded the broker $2.4 million for compensation, interest and attorney fees.

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Interest Income

Interest income was $0.2 million and $6,000 for the years ended December 31, 2022 and 2021, respectively, and was attributable to interest income relating to funds that are held in U.S.

Interest income was $0.5 million and $0.2 million for the years ended December 31, 2023 and 2022, 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.

The decrease in our net loss during the year ended December 31, 2022 compared to the year ended December 31, 2021 was due to higher grant income and related party service revenue, cost reductions in our research and development activities and moderate stabilization of our clinical trial activities.

Net Loss from continuing operations

The decrease in our net loss from continuing operations during the year ended December 31, 2023 compared to the year ended December 31, 2022 was due to higher grant income and related party service revenue, cost reductions in our research and development activities and moderate stabilization of our clinical trial activities.

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 the sales or licensing of our product candidates since inception and only have limited revenue associated with grants.

We have financed our operations primarily through public and private offerings of our stock and debt including warrants and the exercise thereof.

The following table sets forth our cash, cash equivalents and restricted cash and working capital as of December 31, 2022 and 2021:

Cash, cash equivalents and restricted cash

We have not generated any revenues from the sales or licensing of our product candidates since inception and only have limited revenue associated with grants to fund research.

We have financed our operations primarily through public and private offerings of our stock and debt including warrants and the exercise thereof, grants, and more recently through the cash proceeds received from the Cell Ready transaction and additional grants to fund research.

The following table sets forth our cash and cash equivalents and working capital as of December 31, 2023 and 2022:

December 31, 2023

December 31, 2022

Cash and cash equivalents

Working capital

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For the Years Ended

Net cash provided by (used in):

Continuing operations:

Net cash used in operating activities

Net cash provided by financing activities

Discontinued operations

Net cash used in operating activities

Net cash provided by (used in) investing activities

Net increase (decrease) in cash and cash equivalents

Continuing Operations

Operating Activities

Investing activities

Net cash used in operating activities from continuing operations during the year ended December 31, 2023 was $10.3 million.

The use of cash primarily related to our net loss from continuing operations of $14.0 million, partially offset by a $2.8 million increase from changes in assets and liabilities and $0.9 million of stock-based compensation.

Net cash used in operating activities from continuing operations during the year ended December 31, 2022 was $21.5 million.

The use of cash primarily related to our net loss from continuing operations of $19.8 million and a $4.7 million decrease from changes in assets and liabilities.

This decrease was partially offset by $3.3 million of stock-based compensation.

Financing Activities

Net (decrease) increase in cash, cash equivalents and restricted cash

Net cash provided by financing activities was $1.1 million and $0.2 million during the years ended December 31, 2023 and 2022, respectively, primarily due to the net proceeds received from sale of common stock through the ATM Agreement as well as the exercise of stock options.

Discontinued Operations

Operating Activities

Net cash used in operating activities during the year ended December 31, 2022 was $27.0 million.

The use of cash primarily related to our net loss of $29.9 million and a $5.8 million decrease from changes in assets and liabilities.

This was in addition to $5.3 million of

stock-based compensation, $2.8 million of depreciation expense, $0.9 million of right-of-use asset amortization and lease liability accretion and a $0.3 million gain on lease termination.

Net cash used in operating activities during the year ended December 31, 2021 was $27.3 million.

The use of cash primarily related to our net loss of $41.9 million and a $5.5 million increase from changes in assets and liabilities.

This was in addition to $6.0 million of stock-based compensation, $2.1 million of depreciation expense and $1.0 million of right-of-use asset amortization and lease liability accretion.

Net cash used in operating activities from discontinued operations during the year ended December 31, 2023 was $6.1 million, which primarily related to our net loss from discontinued operations of $3.0 million, which is net of $2.5 million in revenue for which cash had been received in the prior period.

Net cash used in operating activities from discontinued operations during the year ended December 31, 2022 was $5.5 million, which primarily related to our net loss from discontinued operations of $10.2 million, partially offset by cash received in advance of related party revenue recorded.

Investing Activities

Net cash used in investing activities was $4.9 million and $3.1 million for the purchase of property and equipment and construction in progress for the years ended December 31, 2022 and 2021, respectively.

This included the purchase of $1.5 million and $1.6 million of property and equipment as well as $3.5 million and $1.6 million for the purchase of construction in progress for the years ended December 31, 2022 and 2021 respectively.

Purchases of property and equipment for the year ended December 31, 2022 were predominantly comprised of laboratory equipment along with $0.1 million of computers, software and equipment and $0.1 million of furniture and fixtures.

$3.5 million of purchases in construction in progress related to a second modular cleanroom and the continued buildout of our manufacturing facility.

Purchases of property and equipment for the year ended December 31, 2021 were comprised of $1.0 million in laboratory equipment, $0.2 million of computers, software and equipment and $0.3 million of furniture and fixtures and $0.1 million of leasehold improvements.

$1.6 million of purchases in construction in progress related to a second modular cleanroom and the continued buildout of our manufacturing facility.

Financing Activities

Net cash provided by financing activities was $0.2 million and $52.6 million during the years ended December 31, 2022 and 2021, respectively.

primarily due to the net proceeds received from sales from the ATM Agreement (as defined below) in 2022 and the underwritten public offering in 2021.

Net cash provided by investing activities from discontinued operations for the year ended December 31, 2023 was $18.7 million primarily due to the proceeds from the Cell Ready transaction, net of transaction costs.

Net cash used in investing activities from discontinued operations was $4.9 million for the year ended December 31, 2022.

$1.3 million in purchases of property and equipment for the year ended December 31, 2022 were comprised of laboratory equipment along with $0.1 million of computers, software and equipment and $0.1 million of furniture and fixtures.

$3.5 million of purchases in construction in progress related to a second modular cleanroom and the continued buildout of our former manufacturing facility.

Future Capital Requirements

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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.

On March 16, 2021, the Company issued an aggregate of 3,228,286 shares of its common stock, for net proceeds of $52.6 million, pursuant to an underwritten public offering.

In August 2021, the Company received notice of a Product Development Research award totaling approximately $13.1 million from the CPRIT to support the Company’s Phase 2 clinical trial of MT-401.

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Through the date of this filing, the Company has received $6.8 million of funds from the CPRIT grant.

The Company recorded $3.4 million of grant income related to the CPRIT grant as revenue for the year ended December 31, 2022.

On April 21, 2022, the Company entered into a binding Services Agreement, dated April 12, 2022 (see Note 9), with Wilson Wolf.

John Wilson is a member of the Company’s board of directors and is serving as the CEO of Wilson Wolf, therefore Wilson Wolf is a related party.

Wilson Wolf is in the business of creating products and services intended to simplify and expedite the transition of cell therapies and gene-modified cell therapies to mainstream society.

Pursuant to the Services Agreement, Wilson Wolf made a cash payment to the Company in the amount of $8.0 million.

For the year ending December 31, 2022, the Company recognized $5.5 million of revenue pursuant to the Services Agreement and at December 31, 2022, the Company recorded $2.5 million of related party deferred revenue on its consolidated balance sheet.

The Company recorded $2.7 million of grant income related to the CPRIT grant as revenue for the year ended December 31, 2023 and at December 31, 2023, the Company recorded $0.5 million of grant income receivable.

On September 13, 2022, the Company received notice from the FDA that it had awarded the Company a $2.0 million grant from the FDA’s Orphan Products Grant program to support the Company’s Phase 2 clinical trial of MT-401 for the treatment of post-transplant AML.

The Company recorded $0.4 million of grant income related to the FDA grant as revenue for the year ended December 31, 2023 and at December 31, 2023, the Company recorded $0.3 million of grant income receivable.

On March 13, 2023, the Company received $0.1 million of funds from the FDA grant.

In February 2024, the Company received $0.3 million of funds from the FDA grant.

In May 2023, the Company announced that it had received a $2.0 million grant from the National Institutes of Health Small Business Innovation Research (“SBIR”) program to support the development and investigation of MT-401 for the treatment of AML patients following standard-of-care therapy with hypomethylating agents.

The Company recorded $0.2 million of grant income related to the SBIR grant as revenue for the year ended December 31, 2023 and at December 31, 2023, the Company recorded $0.2 million of grant income receivable.

In February 2024, the Company received $0.2 million of funds from the SBIR grant.

All funding agencies have agreed to continue their financial support and to shift funds to the MT-401-OTS program.

As of December 31, 2023, we had working capital of $14.1 million, compared to working capital of $8.8 million as of December 31, 2022.

Operating expenses incurred during the fiscal year ended December 31, 2023 were $17.9 million compared to $23.3 million in the prior year.

Based on our revised clinical and research and development plans and our revised timing expectations related to the progress of our programs, we expect that our cash and cash equivalents as of December 31, 2022 will enable us to fund our operating expenses and capital expenditure requirements into the third quarter of 2023.

Based on our clinical plans and our timing expectations related to the progress of our programs, we expect that, together with drawdowns of available grant funds, our cash and cash equivalents as of December 31, 2023 will enable us to fund our operating expenses and capital expenditure requirements into the fourth quarter of 2025.

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.

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.

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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.

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However, our use of the shelf registration statement on Form S-3 will be limited for so long as we are subject to General Instruction I.B.6 of Form S-3, which limits the amounts that we may sell under the registration statement and in accordance with the ATM agreement.

The Sales Agents will be entitled to compensation under the Sales Agreement at a commission rate equal to 3.0% of the gross sales price per share sold under the ATM Agreement, and we have provided each of the Sales Agents with indemnification and contribution rights.

During the year ended December 31, 2022, we sold 60,651 shares of our common stock under the ATM Agreement for net proceeds of $0.2 million.

The Sales Agents will be entitled to compensation under the Sales Agreement at a commission

rate equal to 3.0% of the gross sales price per share sold under the ATM Agreement, and we have provided each of the Sales Agents with indemnification and contribution rights.

During the year ended December 31, 2023, we sold 265,334 shares of our common stock under the ATM Agreement for proceeds of $1.0 million.

During the year ended December 31, 2022, we sold 60,651 shares of our common stock under the ATM agreement for proceeds of $202,100.

Stock Purchase Agreement

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The purchase agreement does not exhibit any of the characteristics for liability classification under ASC Topic 480, Distinguishing Liabilities from Equity.

During the year ended December 31, 2022, we did not sell any shares of our stock under the Purchase Agreement.

During the year ended December 31, 2023, we sold 12,500 shares of our stock under the Purchase Agreement.

In January 2023, Lincoln Park was issued 180,410 shares of stock as a commitment fee at a value of $0.5 million.

On February 29, 2024, we terminated the Purchase Agreement with Lincoln Park effective March 1, 2024.

Going Concern

We have no sources of revenue to provide incoming cash flows to sustain our future operations.

As outlined above, our ability to pursue our planned business activities is dependent upon our successful efforts to raise additional capital.

These factors raise substantial doubt regarding our ability to continue as a going concern within one year after the date that the financial statements are issued.

Prior to the Cell Ready transaction, there was substantial doubt regarding the Company’s ability to continue as a going concern, which was alleviated by the proceeds from the transaction.

As outlined above, we expect that our cash and cash equivalents including drawdowns from available grant funds will enable us to fund our operations into the fourth quarter of 2025.

However, our ability to pursue our longer term planned business activities is dependent upon our successful efforts to raise additional capital and obtain grant funding.

Our consolidated financial statements have been prepared on a going concern basis, which implies that we will continue to realize our assets and discharge our liabilities in the normal course of business.

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On an ongoing basis, we evaluate our estimates and judgments, including those related to accrued expenses and stock-based compensation.

We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under

the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the reported amounts of expenses that are not readily apparent from other sources.

Actual results could differ from those estimates, particularly given the significant social and economic disruptions and uncertainties associated with the ongoing coronavirus pandemic and the COVID-19 control responses.

We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the reported amounts of expenses that are not readily apparent from other sources.

Actual results could differ from those estimates.

Discontinued Operations

The Purchased Assets sold to Cell Ready pursuant to the Cell Ready Purchase Agreement constituted a significant disposition and as such, the Company concluded that the disposition of its Purchased Assets represented a strategic shift that had a major effect on its operations and financial results.

Therefore, the Purchased Assets, related party revenue, service revenue and related expenses are classified as discontinued operations for all periods presented herein.

See Note 6 to the accompanying financial statements for further information.

Property and Equipment

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Leasehold improvements are amortized over the shorter of the estimated useful life or the remaining lease term.

Property and equipment - Construction in Progress

In June 2020, the Company entered into a lease for a manufacturing facility in Houston, Texas.

In connection with the manufacturing facility, the Company has incurred costs pursuant to an agreement with a vendor to design, engineer, build and install modular cleanrooms in a manufacturing facility.

The facility’s construction was completed during December 2020, and a certificate of occupancy was delivered to the Company in January 2021, and as such was placed into service in January 2021.

All costs associated with the buildout were recorded as either manufacturing equipment and/or leasehold improvements and amortized over the estimated useful life of the asset and/or leasehold lease.

During the third and fourth quarters of 2021, and in connection with the Company’s manufacturing facility in Houston, Texas, the Company incurred $2.2 million of costs pursuant to an agreement with a vendor to build and eventually install a second modular cleanroom.

Such costs were recorded in fixed assets – construction in progress on the balance sheet as of December 31, 2021.

Upon completion and installation of the modular cleanroom in 2022, all costs associated with the buildout, including $1.9 million of costs incurred during the first quarter of 2022, were recorded as manufacturing equipment and amortized over the estimated useful life.

Impairment Testing of Long-Lived Assets and Right-Of-Use Assets

Management reviews long-lived assets (including property and equipment) and right-of-use assets for assets under operating leases for impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable.

Recoverability of assets is determined by first grouping the long-lived assets at the lowest level for which there are identifiable cash flows, and then comparing the carrying value of each asset group to its forecasted undiscounted cash flows.

If the evaluation of the forecasted cash flows indicates that the carrying value of the assets is not recoverable, an impairment charge is recognized for the amount in excess of the carrying amount over its fair value.

The Company performed a test for recoverability related to its manufacturing facility in Houston, Texas at December 31, 2022 and concluded that the carrying value of its long-lived assets was recoverable.

Stock-Based Compensation

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Qualifying grant income earned in advance of cash received from grants is recognized as revenue and recorded as other receivable.

During the fourth quarter of 2021, the Company received $2.4 million advancement of funds in relation to the CPRIT grant.

The Company recorded $3.4 million of grant income related to the CPRIT grant as revenue for the year ended December 31, 2022.

At December 31, 2022, the Company recorded $2.3 million of grant income receivable, which represented grant income earned in advance of the next tranche of funds to be received from CPRIT.

In January 2023, the Company received $2.4 million from CPRIT.

The Company recorded $0.1 million of grant income related to the FDA grant as revenue for the year ended December 31, 2022 and at December 31, 2022, the Company recorded $0.1 million of grant income receivable.

On March 13, 2023, the Company received $0.1 million of funds from the FDA grant.

In September 2022, the Company received notice from the FDA that it had awarded the Company a $2.0 million grant from the FDA’s Orphan Products Grant program to support the Company’s Phase 2 clinical trial of MT-401 for the treatment of post-transplant AML.

All funding agencies have agreed to continue their financial support and to shift funds to the MT-401-OTS program.

New Accounting Standards

From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies that the Company adopts as of the specified effective date.

Unless otherwise discussed, the Company does not believe that the impact of recently issued standards that are not yet effective will have a material impact on its financial position or results of operations upon adoption.

Recently Issued Accounting Standards Not Yet Adopted

Improvements to Reportable Segment Disclosures

In November 2023, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No.

2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures.

The ASU requires disclosures to include significant segment expenses that are regularly provided to the chief operating decision maker, among other provisions.

The ASU is effective for fiscal year periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

Early adoption is permitted and the ASU requires retrospective application to all prior periods presented in the financial statements.

The Company is currently evaluating the standard to determine the impact of adoption to its consolidated financial statements and disclosures.

Improvements to Income Tax Disclosures

In December 2023, the FASB issued ASU No.

2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures (ASU 2023-09), which improves the transparency of income tax disclosures by requiring consistent categories and greater disaggregation of information in the effective tax rate reconciliation and income taxes paid disaggregated by jurisdiction.

It also includes certain other amendments to improve the effectiveness of income tax disclosures.

This guidance will be effective for the annual periods beginning the year ended December 31, 2025.

Early adoption is permitted.

Upon adoption, the guidance can be applied prospectively or retrospectively.

We do not expect the adoption of this guidance to have a material impact on its consolidated financial statements.

Off-Balance Sheet Arrangements

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At December 31, 2023 and 2022, we recorded a 100% valuation allowance against our deferred tax assets of approximately $39.7 million and $41.3 million, respectively, as our management believes it is uncertain that they will be fully realized.

For the year ended December 31, 2023, we realized $3.6 million of federal net operating losses and $0.1 million of state net operating losses as a result of the gain on sale of assets and capitalization for Section 174 R&E expenditures.

If we determine in the future that we will be able to realize all or a portion of our net operating loss carryforwards, an adjustment to valuation allowance against our deferred tax assets would increase net income in the period in which we make such a determination.

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We do not believe that inflation has had a material impact on our results of operations for the periods presented, except with respect to payroll-related costs and other costs arising from or related to government-imposed regulations.

Recent Developments

On February 22, 2024, we entered into a Master Services Agreement for Product Supply (the “MSA”) with Cell Ready LLC (“Cell Ready”) to provide services previously performed by the company until the disposition of its contract development and manufacturing operations.

Cell Ready, which is owned by one of our directors and shareholders, Mr.

John Wilson, is a contract development and manufacturing organization (CDMO).

Pursuant to the MSA, the Company may contract with Cell Ready for the provision of various products and services from time to time by entering into work orders with Cell Ready.

If the services involve the supply of product, Cell Ready is required to supply such product in conformance with the product requirements set forth in the applicable work order(s).

The MSA contains customary representations, warranties and indemnification provision.

The initial term of the MSA is three years and may be extended upon the mutual written agreement of the parties.

Either party may terminate the MSA (a) for material breach by the other party if such breach has not been cured within 30 days following notice of termination or (b) if the other party is the subject of an insolvency event.

Under the MSA, Cell Ready is to use only personnel with sufficient qualifications and experience to supply the services contemplated by the MSA, provide its personnel with adequate training and assume full responsibility for its personnel’s compliance with the MSA.

Further, Cell Ready is required to provide the Company with assistance and cooperation in order for the Company to obtain and maintain all necessary regulatory approvals, at the Company’s expense.

With regard to intellectual property, the MSA provides that each party will solely and exclusively own all right, title and interest in and to their Background IP and all inventions derived from such background IP (such invention being referred to as Foreground IP).

Background IP means all intellectual property either (a) owned or controlled by a party prior to the effective date of the MSA or (b) developed or acquired by a party independently from performance under the MSA without the use of, reliance on, or access to the other parties confidential information.

Furthermore, pursuant to the MSA, Cell Ready grants to the Company a non-exclusive, perpetual, irrevocable, transferable, assignable, fully-paid up, royalty-free, worldwide license to and under any of Cell Ready’s Background IP and Foreground IP to the extent they are incorporated or embedded in any deliverables provided to the Company or in the process of generating or manufacturing such deliverables and reasonably necessary or useful for the Company to make, have made, manufacture, have manufactured, use, have used, offer for sale, sell, import, and otherwise exploit such deliverables.

The Company grants to Cell Ready until the termination or expiry of any applicable Work Order and for a period not exceeding the term of the MSA, a non-exclusive, fully paid-up, non-transferable, non-sublicensable limited license under and to the Company’s Background IP made available to Cell Ready pursuant to a Work Order solely to the extent required for Cell Ready to provide the services under such Work Order.

Also on February 22, 2024, the Company entered into Work Order #1 under the MSA, pursuant to which Cell Ready will provide the Company with GMP drug product for Marker MT-401 and/or MT-601.

The services include the delivery of final drug product and quality control testing.

The Company also requested Cell Ready to provide general support services in connection therewith.

The total projected sum (inclusive of taxes) for the services under Work Order #1 are not anticipated to exceed $750,000.

The services will cover the anticipated manufacturing costs for the first quarter of 2024.

Additional Work Orders are expected to be generated for the remainder of 2024.

The above description of the MSA and Work Order #1 do not purport to be complete and are qualified in their entirety by reference to the full text of the MSA and Work Oder #1, copies of which are attached hereto as Exhibits 10.8 and 10.9 and are incorporated herein by reference.

The MSA has been filed as an exhibit to this Annual Report on Form 10-K to provide investors with information regarding the terms of the MSA and is not intended to modify or supplement any factual disclosures about the Company in its public reports filed with the SEC.

In particular, the MSA is not intended to be, and should not be relied upon as, disclosure regarding any facts and circumstances relating to the Company.

The representations, warranties, and covenants contained in the MSA have been made solely for the purposes of the MSA and as of specific dates;

were solely for the benefit of the parties to the MSA;

are not intended as statements of fact to be relied upon by the parties’ shareholders;

may no longer be true as of a given date;

and may apply standards of materiality in a way that is different from what may be viewed as material by shareholders.

Security holders are not third-party beneficiaries under the MSA and should not rely on the representations, warranties, and covenants or any descriptions thereof as characterizations of any actual state of facts or of the condition of the Company.

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.

FINANCIAL STATEMENTS

The Financial Statements are incorporated herein by reference to pages F-1 to F-25 at the end of this report and the supplementary data is not applicable.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

We have had no changes in, or disagreements with our principal independent accountants.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis