What changed in this filing

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Item 9A. Controls and Procedures

2021-03-29 compared with 2020-03-09 · 1259 added, 1250 removed, 1133 unchanged (69% of the section changed)

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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”).

on that evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and

procedures were not effective at the reasonable assurance level as of December 31, 2019, due to a material weakness

in our internal control over financial reporting, which is described below under “Management’s Annual Report

on Internal Control Over Financial Reporting.”

Our disclosure controls and procedures are designed to provide reasonable

assurance that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded,

processed, summarized and reported within time periods specified by the SEC’s rules and forms, and that such information

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.

a result of the material weakness identified, we performed additional analysis, substantive testing and other post-closing

procedures intended to ensure that our consolidated financial statements were prepared in accordance with U.S.

management believes that the consolidated financial statements and related notes thereto included in this annual report on Form

10-K fairly present, in all material respects, the Company’s financial condition, results of operations and cash flows for

the period presented.

Management’s

procedures were effective at the reasonable assurance level as of December 31, 2020.

disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed in the

reports that we filed or submitted under the Exchange Act is recorded, processed, summarized and reported within time periods

specified by the SEC’s rules and forms.

Disclosure controls and procedures include, without limitation, controls and procedures

designed to ensure that 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.

disclosed in our Annual Report on Form 10-K for the year ended December 31, 2019 filed with the SEC on March 9, 2020, management

previously identified a material weakness in our internal controls over financial reporting.

Based on management’s evaluation,

this material weakness was remediated as of December 31, 2020.

Report on Internal Control over Financial Reporting:

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in conditions, or that the degree of compliance with policies and procedures may deteriorate.

assessed the effectiveness of our internal control over financial reporting based on criteria established in “Internal Control—Integrated

Framework (2013)”

issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

assessed the effectiveness of our internal control over financial reporting based on criteria established in “Internal Control—Integrated

Framework (2013)” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

Based on this assessment,

management has concluded as of December 31, 2019, our internal control over financial reporting was not effective, as management

identified a deficiency in internal control over financial reporting that was determined to be a material

management has concluded as of December 31, 2020, our internal control over financial reporting was effective, as management did

not identify any deficiencies in internal control over financial reporting that was determined to be a material weakness.

material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there

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prevented or detected on a timely basis.

did not maintain an effective control environment over the internal control activities to ensure the processing of and reporting

of transactions are complete, accurate and timely.

Specifically, we have not designed and implemented a sufficient level of formal

financial reporting and operating policies and procedures that define how transactions should be initiated, processed, recorded

and reported, including presentation and disclosure in the consolidated financial statements.

material weakness identified above could result in a misstatement to the aforementioned account balances and disclosures

that would result in a material misstatement to the annual or interim consolidated financial statements would not be prevented

or detected on a timely basis.

has initiated a remediation plan to address the control deficiency that led to the material weakness.

The remediation plan includes,

but is not limited to, enhancement our operational procedures related to purchasing, receiving and recording expenditures.

previously identified material weakness during the year ended December 31, 2019 which has been remediated included not having

designed and implemented a sufficient level of formal financial reporting and operating policies and procedures that define how

transactions should have been initiated, processed, recorded and reported, including presentation and disclosure in the consolidated

financial statements.

implemented its remediation plan by enhancing operational procedures related to purchasing, receiving and recording expenditures,

including consulting with our third-party internal auditors throughout the period while formalizing and testing our review procedures.

in Internal Control Over Financial Reporting:

for changes being implemented by the Company to address the material weakness identified above, there have been no changes in

our internal control over financial reporting during the quarter ended December 31, 2019, that have materially affected, or are

reasonably likely not to materially affect, our internal control over financial reporting.

was no change, except as part of our remediation of the deficiency in internal controls described above, in our internal control

over financial reporting identified in connection with the evaluation required by paragraph (d) of Rules 13a-15(e) and 15d-15(e)

under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) that occurred during the period covered

by this report that has materially affected or is reasonably likely to materially affect our internal control over financial reporting.

Executive Officers And Corporate Governance

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Financial Officer

Technology Officer

Scientific Officer

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Prior to MediMedia, he was the Senior Vice President, Head of

Global Legal Affairs of Wockhardt Limited (2008-2012) and Senior Counsel and Assistant Secretary at Reliant (2004-2008).

in his career, he held positions as Commercial Counsel at Alpharma, Inc.

(2003-2004) and as a Corporate Associate at Lowenstein

Sandler LLP (1999-2003).

Global Legal Affairs of Wockhardt Limited (2008-2012), a global pharmaceutical and biotechnology company, and Senior Counsel and

Assistant Secretary at Reliant (2004-2008).

Earlier in his career, he held positions as Commercial Counsel at Alpharma, Inc.

and as a Corporate Associate at Lowenstein Sandler LLP (1999-2003).

Jabbour earned his J.D.

from Seton Hall University School of Law in New Jersey and a B.A.

in Psychology

from Loyola University in Baltimore.

from Seton Hall University School

of Law in New Jersey and a B.A.

in Psychology from Loyola University in Baltimore.

Ferguson, MD was appointed Chief Medical Officer in February 2019.

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Medical Affairs, at Amgen (NASDAQ:

Prior to Amgen Dr.

Ferguson held a number of

senior positions at AstraZeneca, including Vice President of US Cardiovascular Medical and Scientific External Relations, Therapeutic

Area Vice President of Cardiovascular Global Medical Affairs, U.S.

Development Brand Leader for BRILINTA ®

Senior Director, Clinical Research.

Before joining AstraZeneca he was Vice President of Surgical and Critical Care for The Medicines

AMGN), a multinational biopharmaceutical company.

Ferguson held a number of senior positions at AstraZeneca, a multinational pharmaceutical and biopharmaceutical company,

including Vice President of US Cardiovascular Medical and Scientific External Relations, Therapeutic Area Vice President of Cardiovascular

Global Medical Affairs, U.S.

Development Brand Leader for BRILINTA ® , and Senior Director, Clinical Research.

joining AstraZeneca he was Vice President of Surgical and Critical Care for The Medicines Company.

In addition, Dr.

Ferguson had more than 20 years of academic experience as the Associate Director of Clinical Cardiology

Research at the Texas Heart Institute, Co-Director of the Cardiology Fellowship Training Program at St.

Luke’s Episcopal

Hospital in Houston, where he was an Associate Professor of Medicine at Baylor College of Medicine, and a Clinical Assistant Professor

at the University of Texas Health Science Center at Houston.

Ferguson has served on the Editorial Board of numerous peer-reviewed

journals and has over 400 publications and book chapters.

more than 20 years of academic experience as the Associate Director of Clinical Cardiology Research at the Texas Heart Institute,

Co-Director of the Cardiology Fellowship Training Program at St.

Luke’s Episcopal Hospital in Houston, where he was an Associate

Professor of Medicine at Baylor College of Medicine, and a Clinical Assistant Professor at the University of Texas Health Science

Center at Houston.

Ferguson has served on the Editorial Board of numerous peer-reviewed journals and has over 400 publications

and book chapters.

Ferguson received his B.A.

(cum Laude) in Biology from Harvard University,

from the University of Pennsylvania School of Medicine and completed his post-graduate training at the University of

Michigan Medical Center, Ann Arbor, Michigan and Beth Israel Hospital, Boston, Massachusetts.

Kucinski was appointed Chief Financial Officer in January 2019.

He most recently served as Chief Financial Officer

at RemedyOne, a privately held healthcare consulting organization.

(cum Laude) in Biology from Harvard University, his M.D.

from the University

of Pennsylvania School of Medicine and completed his post-graduate training at the University of Michigan Medical Center, Ann

Arbor, Michigan and Beth Israel Hospital, Boston, Massachusetts.

Kucinski, MBA, CPA was appointed Chief Financial Officer in January 2019.

He most recently served as Chief Financial

Officer at RemedyOne, a privately held healthcare consulting organization.

Prior to that, he served as Vice President & Treasurer

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Stern School of Business at New York University.

Matkovits, PhD has served as Chief Development officer since October 2018.

She joined the Company after having most recently

served as the Chief Operating Officer of ContraVir Pharmaceuticals (NASDAQ:

CTRV) (now Hepion Pharmaceuticals), a clinical stage

biopharmaceutical company.

From 2013 to 2015, Dr.

Matkovits served as Global Program Leader at NPS Pharmaceuticals, a specialty

pharmaceutical company that was purchased by Shire in 2015.

Prior to her time at NPS, Dr.

Matkovits was Vice President, Innovation

Leader at The Medicines Company.

Earlier in her career, Dr.

Matkovits held a number of global leadership positions at Novartis

across Global Development and the U.S.

Commercial Organization, including as Head, Strategic Planning and Operations, U.S.

and Drug Regulatory Affairs.

Matkovits began her career at the Roche Institute of Molecular Biology and Organon where she

held positions in clinical development in women’s health and research in the area of infertility.

Matkovits serves on

the Board of Directors of BioSurplus and also serves as an Independent Director of Appili Therapeutics (TSX:

was selected to participate in Women in Bio’s Boardroom Ready Program in 2016.

Matkovits earned her Ph.D.

in Biochemistry

and Molecular Biology from the University of Medicine and Dentistry of NJ.

Liu, PhD, MBA was appointed Chief Technology Officer in December 2020.

Liu has over two decades of experience in the

formulation of small molecules, biologics, and gene therapies.

He joined the Company from Seqirus, a global leader in influenza

vaccine development and pandemic preparedness, where he served as the Director of Formulation and Delivery from 2017 to 2020.

Prior to his time at Seqirus, Dr.

Liu was the CMC Director at Cellics Therapeutics, a privately held biotechnology company based

in San Diego.

His early career focused on ophthalmic drug development at two leading eye care companies, Alcon and Allergan plc.

At Alcon, he led multiple CMC teams as the Senior Technical Lead from 2015 to 2017.

During his time at Allergan, Dr.

a critical role in realizing a paradigm shift for standard glaucoma care, focusing on sustained delivery drug development in his

role as a Principal Scientist.

Previously, he worked on pigment nanoparticle encapsulation at Hewlett-Packard.

in Polymer Chemistry from the University of Michigan, an M.B.A.

from the University of Massachusetts Amherst, and a B.S.

from the University of Science and Technology of China.

Mannino has served as our Chief Scientific Officer since September 2015.

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its Board of Directors from 1995 to 2000, when it was acquired by BioDelivery Sciences International, Inc.

Mannino served as BDSI’s Executive Vice President and Chief Scientific Officer from 2001 to 2009 and a member of its Board

of Directors from 2000 to 2007.

Mannino’s previous experience includes positions as Assistant, then Associate Professor,

Albany Medical College (1980 to 1990), and Instructor then Assistant Professor, Rutgers Medical School (1977 to 1980).

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in 1973 from the Johns Hopkins University, School of Medicine.

Matkovits, PhD has served as Chief Development officer since September 2018.

She joined the Company after having most

recently served as the Chief Operating Officer of ContraVir Pharmaceuticals (NASDAQ:

From 2013 to 2015, Dr.

Matkovits served

as Global Program Leader at NPS Pharmaceuticals.

Prior to her time at NPS, Dr.

Matkovits was Vice President, Innovation Leader

at The Medicines Company.

Earlier in her career, Dr.

Matkovits held a number of global leadership positions at Novartis across

Global Development and the U.S.

Commercial Organization, including as Head, Strategic Planning and Operations, U.S.

Drug Regulatory Affairs.

Matkovits began her career at the Roche Institute of Molecular Biology and Organon where she held

positions in clinical development in women’s health and research in the area of infertility.

Matkovits serves on the

Board of Directors of BioSurplus and also serves as an Independent Director of Aradigm Corporation (NASDAQ:

was recently appointed to serve on the Board of Appili Therapeutics.

Matkovits was selected to participate in Women in Bio’s

Boardroom Ready Program in 2016.

Matkovits earned her Ph.D.

in Biochemistry and Molecular Biology from the University of Medicine

and Dentistry of NJ.

Conrad has served as our Chairman of the Board since July 2013 and as Chairman of the Board of Matinas BioPharma since

October 2012.

Conrad has served as our Chairman of the Board since July 2013 and as Chairman of the Board of Matinas BioPharma, Inc.

since October 2012.

He also serves on the board of directors of Celldex Therapeutics, Inc.

CLDX) and as an Advisor to the Seaver

CLDX), biopharmaceutical company

focused on the development and commercialization of immunotherapies and other targeted biologics, and as an Advisor to the Seaver

Autism Center at Mount Sinai Hospital.

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in the United States.

Conrad previously served on the board of directors of Pharmasset, Inc.

(chairman), Savient Pharmaceuticals,

Inc., (NASDAQ:

Conrad previously served on the board of directors of Arbutus Biopharma Corporation (NASDAQ:

Pharmasset, Inc.

(chairman), Savient Pharmaceuticals, Inc.

SVNT), Dura Pharmaceuticals, Inc., UroCor, Inc., GenVec, Inc.

GNVC) (chairman), Sicor, Inc., Bone Care

International, Inc.

GNVC) (chairman), Sicor, Inc., Bone Care International, Inc.

(chairman), Sapphire Therapeutics, Inc.

(chairman), the medical advisory board of Henry Schein Inc.

HSIC), and he was a Director and Co-Founder of Reliant.

Pharmasset was acquired by Gilead Sciences, Inc.

for $11 billion in 2011.

(chairman), the

medical advisory board of Henry Schein Inc.

HSIC), and he was a Director and Co-Founder of Reliant Pharmaceuticals.

was acquired by Gilead Sciences, Inc.

for $11 billion in 2011 and Reliant was acquired by GlaxoSmithKline for $1.65 billion in

He received B.S.

degrees from the Brooklyn College of Pharmacy and an honorary Doctorate in Humane Letters from Long

Island University.

degrees from the Brooklyn College of Pharmacy and an honorary Doctorate in Humane Letters from

Long Island University.

We believe Mr.

Conrad is qualified to serve on our board of directors due to his extensive expertise and experience

in the life sciences industry and his extensive board experience.

LePore has served as Vice Chairman of the board of directors since September 2018.

LePore served as Chairman, CEO

and President of Par Pharmaceuticals, Inc.

PRX) from September 2006 through November 2012.

LePore transitioned to Chairman

of the new company beginning in November 2012 and directed its eventual sale to Endo (NASDAQ:

ENDP) in 2015.

He began his career

with Hoffmann La Roche and then founded Boron LePore and Associates, a medical communications company, which he took public in

1997 and was eventually sold to Cardinal Health in 2002.

He is a Chairman of the Board of Directors of Lanett Company, Inc., member

of the board of directors of PharMerica, and is a trustee of Villanova University.

LePore earned his bachelor’s degree

from Villanova University and Master of Business Administration from Fairleigh Dickinson University.

See description under “Management.”

Ende has served as a member of our board of directors since April 2017.

Ende is president of Ende BioMedical Consulting

Group, a privately-held consulting company which is focused on helping life sciences companies raise capital, identify licensing

partners, and optimize corporate structure as well as analyzing both private and public investment opportunities for clients within

the life sciences industry, a position he has held since 2009.

Conrad is qualified to serve on our board of directors due to his extensive expertise and

experience in the life sciences industry and his extensive board experience.

LePore has served as our Vice Chairman of the Board since September 5, 2018.

LePore served as chairman, chief executive

officer and president of Par Pharmaceuticals, Inc.

(NYSE:PRX), an operating company of Endo International plc, a generics and

specialty branded pharmaceutical company, from September 2006 until the company’s acquisition by private equity investor

TPG in November 2012.

He remained as chairman of the new company where he led the sale of the company to Endo Pharmaceuticals

LePore began his career with Hoffmann LaRoche.

Later, he founded Boron LePore and Associates, a medical communications

company, which he took public in 1997 and which was eventually sold to Cardinal Health.

He is chairman of the board of directors

of Lannett Company, Inc.

LCI), a pharmaceutical company, and is a trustee of Villanova University.

He previously served

as a member of the board of directors of PharMerica Corporation (NYSE:

PMC) and Innoviva, Inc.

LePore earned

his bachelor’s degree from Villanova University and Master of Business Administration from Fairleigh Dickinson University.

We believe Mr.

LePore is qualified to serve on our board of directors due to his executive leadership and significant experience

in the life sciences industry and his public company board experience.

See description under “Management.”

Ende has served on our board of directors since April 2017.

Ende is president of Ende BioMedical Consulting Group,

a privately-held consulting company which is focused on helping life sciences companies raise capital, identify licensing partners,

and optimize corporate structure as well as analyzing both private and public investment opportunities for clients within the

life sciences industry, a position he has held since 2009.

Ende serves as co-founder, chief executive and chief financial

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SNY) in 2011.

Ende is currently serving on the board of directors of Avadel Pharmaceuticals

AVDL) and Progenics Pharmaceuticals, Inc.

PGNX), on the Technology Transfer Committee of Mount Sinai Innovation

Partners and served as the Chairman of the Unsecured Creditor’s Committee overseeing the bankruptcy of Egenix, Inc.

2002 through 2008, Dr.

Ende is currently serving on the Technology Transfer Committee of Mount

Sinai Innovation Partners and served as the Chairman of the Unsecured Creditor’s Committee overseeing the bankruptcy of

From 2002 through 2008, Dr.

Ende was the senior biotechnology analyst at Merrill Lynch.

From 2000 through 2002, Dr.

Ende was the senior

biotechnology analyst at Banc of America Securities and, from 1997 to 2000, he was a biotechnology analyst at Lehman Brothers.

Ende received an MBA in Finance & Accounting from NYU –

Stern Business School in 1997, an MD from Mount Sinai School

of Medicine in 1994, and a BS in Biology and Psychology from Emory University in 1990.

Ende was the senior biotechnology analyst at Banc of America Securities and, from 1997 to 2000, he was a biotechnology analyst

at Lehman Brothers.

Ende received an MBA in Finance & Accounting from NYU – Stern Business School in 1997, an MD

from Mount Sinai School of Medicine in 1994, and a BS in Biology and Psychology from Emory University in 1990.

We believe Dr.

Ende is qualified to serve

on our board of directors due to his industry experience, including as president of Ende BioMedical Consulting Group and as a

biotechnology analyst, and his prior public company board experience.

Ende is qualified to serve on our board of directors due to his industry experience, including as president of Ende BioMedical

Consulting Group and as a biotechnology analyst, and his prior public company board experience.

Giordano has served as a member of our board of directors since September 2020.

Giordano has been President,

Chief Executive Officer and director of PLx Pharma Inc.

PLXP) since January 2016.

Previously, Ms.

Giordano served as

the Interim Chief Executive Officer of ClearPoint Learning, Inc., a privately held learning and training platform company, from

May 2015 through November 2015.

She also served on the ClearPoint board of directors from December 2009 through November 2015.

Previously, Ms.

Giordano served as the Chief Executive Officer of Healthcare Corporation of America (NYSE:

HCA), a leading healthcare

provider, from January 2014 through August 2014.

From June 2009 to August 2012, Ms.

Giordano served as Chief Operating Officer

and then as Chief Executive Officer, President and a member of the board of directors of Xanodyne Pharmaceuticals, Inc., a privately-held

a branded specialty pharmaceutical company with development and commercial capabilities focused on pain management and women’s

Prior to that, she served as President, Americas, for Cegedim Dendrite (formerly Dendrite International Inc.), a global

technology services company, from 2007 to 2008 and as Senior Vice President of the Global Customer Business Unit of Cegedim Dendrite

from 2004 to 2007.

Giordano holds a Bachelor of Science degree in nursing from Wagner College.

We believe Ms.

qualified to serve as a director due to her extensive experience in commercialization, general management and knowledge of the

pharmaceutical and health care industries.

Scibetta has served as a member of our board of directors since November 2013.

Scibetta has served as Chief Executive

Officer of Maverick Therapeutics, a development stage immuno-oncology company since 2017.

Prior to Maverick, Mr.

appointed President of Pacira Pharmaceuticals (Nasdaq:

PCRX), in October 2015, where he oversaw commercial and medical support

activities, and directed commercial manufacturing, tech transfer and research and development.

Scibetta served as Pacira’s

Chief Financial Officer from 2008 to 2016 where he led its 2011 initial public offering and subsequent debt and equity financings.

He is currently Chief Executive Officer

of Maverick Therapeutics, a development stage immune-oncology company.

Prior to Maverick, he was President and Chief Financial

Officer of Pacira Pharmaceuticals, Inc.

PCRX), a specialty pharmaceutical company, a position he has held since October

Prior to that, Mr.

Scibetta served as Chief Financial Officer of Bioenvision Inc.

BIVN), a commercial-stage oncology

company acquired by Genzyme, from 2006 to 2007, and Merrimack Pharmaceuticals, an oncology-focused systems biology company, from

2001 to 2006.

Earlier in his career, Mr.

Scibetta spent over a decade in investment banking where he was responsible for sourcing

and executing transactions for a broad base of public and private healthcare and life sciences companies.

Scibetta serves

as a director and chairman of the audit committee of Aquestive Therapeutics (NYSE:

AQST), a specialty pharmaceutical company,

and a director of Maverick Therapeutics.

Scibetta received his B.S.

in Physics from Wake Forest University and his M.B.A from

the University of Michigan.

We believe Mr.

Scibetta is qualified to serve on our board of directors because of his extensive management

experience in the pharmaceutical industry, his investment banking experience and his experience as a chief financial officer and

audit committee member of several publicly traded companies.

Stern has served as a member of our board of directors since July 2013.

Stern has been the head Private Equity Banking

at Aegis Capital Corp.

and CEO of SternAegis Ventures since 2012 and became one of our directors in July 2013.

Prior to Aegis,

from 1997 to November 2012, he was with Spencer Trask Ventures, Inc., most recently as a Senior Managing Director, where he managed

the structured finance group focusing primarily on the technology and life science sectors.

Stern held increasingly responsible

positions from 1989 to 1997 with Josephthal & Co., Inc., members of the New York Stock Exchange, where he served as Senior

Vice President and Managing Director of Private Equity Marketing.

He has been a FINRA licensed securities broker since 1987 and

a General Securities Principal since 1991.

Stern is a director of Dance Biopharm, Inc.

Stern is a former director of InVivo

Therapeutics Holdings Corp.

NVIV), Organovo Holdings, Inc.

ONVO), and PROLOR Biotech Ltd., which was sold to

Opko Health, Inc.

OPK) for approximately $600 million in 2013.

Stern holds a Bachelor of Arts degree with honors from

The University of South Florida in Tampa.

Scibetta was the Chief Financial Officer of Pacira since 2008.

Prior to joining Pacira in August 2008,

he served as a consultant to Genzyme Corporation following the sale of Bioenvision Inc.

BIVN) to Genzyme in 2007.

2006 to 2007 Mr.

Scibetta was CFO of Bioenvision.

From 2001 to 2006, he was Executive Vice President and Chief Financial Officer

of Merrimack Pharmaceuticals Inc.

Scibetta has previously served on the board of directors at the following

life sciences companies:

NEPH), Merrimack Pharmaceuticals and Labopharm Inc.

Prior to his executive management

experience, Mr.

Scibetta spent over a decade in investment banking where he was responsible for sourcing and executing transactions

for a broad base of public and private healthcare and life sciences companies.

Scibetta received his Bachelor of Science in

Physics from Wake Forest University and an MBA from the University of Michigan.

We believe Mr.

Stern is qualified to serve on our board of directors because of his

extensive experience in corporate finance and experience in the life science industries.

Scibetta is qualified to serve

on our board of directors because of his extensive management experience in the pharmaceutical industry, his investment banking

experience and his experience as a chief financial officer and audit committee member of several publicly traded companies.

Wikler has served as a member of our board of directors since January 2018.

Wikler currently serves as the Principal

of Infectious Disease Technology Development Consulting (IDTD Consulting) where he provides clinical, medical and regulatory strategic

insight to companies developing new technologies for the treatment and prevention of infectious diseases, a position he has held

of Infectious Disease Technology Development Consulting (IDTD Consulting), a privately-held consulting firm, where he provides

clinical, medical and regulatory strategic insight to companies developing new technologies for the treatment and prevention of

infectious diseases, a position he has held since 2015.

Prior to that from 2012 to 2015, Dr.

Wikler served at The Medicines Company (NASDAQ:

MDCO) as VP, New Business Ventures

and VP and Medical Director, Infectious Disease Care.

Wikler served at The Medicines Company

MDCO), a biopharmaceutical company, as VP, New Business Ventures and VP and Medical Director, Infectious Disease Care.

Over the course of his career Dr.

Wikler held senior leaderships positions

for a number of pharmaceutical companies, including as Chief Development Officer of Rib-X Pharmaceuticals, Inc., a privately-held

biopharmaceutical company developing new antibiotics to provide superior coverage, safety and convenience for the treatment of

serious and life-threatening infections, President and Chief Executive Officer of IASO Pharma Inc., a privately-held clinical

stage biotechnology company focused on the development of antibacterial and antifungal therapeutics, the Institute for One World

Health, a 501(c)(3) nonprofit drug development organization, Mpex Pharmaceuticals, Inc., a privately-held company focused on developing

and manufacturing therapies for antibiotic resistance with focus on gram-negative organisms, Peninsula Pharmaceuticals, Inc.,

a privately held biopharmaceutical company focused on developing and commercializing antibiotics to treat life-threatening infections

(acquired by Johnson & Johnson (NYSE:

JNJ)), ViroPharma Incorporated (NASDAQ:

VPHM), Bristol-Myers Squibb Company (NYSE:BMY),

and Ortho-McNeil Pharmaceutical (a division of Johnson & Johnson).

Wikler began his career at Smith Kline & French/Smith

Kline Beecham where he held positions of increasing responsibilities over ten years.

Wikler held a variety of positions at

the FDA, including the Deputy Director of the Division of Anti-Infective Drug Products.

Wikler held senior leaderships positions for a number of pharmaceutical companies, including

as Chief Development Officer of Rib-X Pharmaceuticals, Inc., a privately-held biopharmaceutical company developing new antibiotics

to provide superior coverage, safety and convenience for the treatment of serious and life-threatening infections, President and

Chief Executive Officer of IASO Pharma Inc., a privately-held clinical stage biotechnology company focused on the development

of antibacterial and antifungal therapeutics, the Institute for One World Health, a 501(c)(3) nonprofit drug development organization,

Mpex Pharmaceuticals, Inc., a privately-held company focused on developing and manufacturing therapies for antibiotic resistance

with focus on gram-negative organisms, Peninsula Pharmaceuticals, Inc., a privately held biopharmaceutical company focused on

developing and commercializing antibiotics to treat life-threatening infections (acquired by Johnson & Johnson (NYSE:

ViroPharma Incorporated (NASDAQ:

VPHM), Bristol-Myers Squibb Company (NYSE:BMY), and Ortho-McNeil Pharmaceutical (a division of

Johnson & Johnson).

Wikler began his career at Smith Kline & French/Smith Kline Beecham where he held positions of

increasing responsibilities over ten years.

Wikler held a variety of positions at the FDA, including the Deputy Director of

the Division of Anti-Infective Drug Products.

Wikler earned a B.A.

from Franklin and Marshall, an M.D.

degree from Temple University School of Medicine, and his M.B.A.

from the University Of Pennsylvania

Wharton School Of Business.

He completed his Infectious Diseases Fellowship at the Hospital of the University of Pennsylvania

and is a Fellow of the Infectious Diseases Society of America.

in Chemistry from Franklin and Marshall, an M.D.

from Temple University School of Medicine, and his M.B.A.

from the University of Pennsylvania Wharton School of Business.

his Infectious Diseases Fellowship at the Hospital of the University of Pennsylvania and is a Fellow of the Infectious Diseases

Society of America.

We believe Dr.

Wikler is qualified to serve on our board of directors because of his extensive management

experience in the pharmaceutical industry and his clinical and regulatory experience in the area of infectious diseases.

are no family relationships among any of our directors or executive officers.

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individuals who are experts in their chosen fields and recipients of many academic honors and awards.

board of directors has four standing committees —

an Audit Committee, a Compensation Committee, a Nominating and Corporate

board of directors has four standing committees — an Audit Committee, a Compensation Committee, a Nominating and Corporate

Governance Committee and a Scientific Advisory Committee.

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The Audit Committee reviews and approves all transactions with affiliated parties.

James Scibetta, Herbert Conrad, and Eric Ende currently serve as members of the Audit Committee with James Scibetta, serving as

its chairman.

All members of the Audit Committee have been determined to be financially literate and are considered independent

directors as defined under The NYSE American’s listing standards and applicable SEC rules and regulations.

qualifies as an audit committee “financial expert”

as that term is defined by SEC regulations.

The Audit Committee

met four times during 2019.

James Scibetta, Herbert Conrad, Eric Ende and Natasha Giordano currently serve as members of the Audit Committee, with James Scibetta,

serving as its chairman.

All members of the Audit Committee have been determined to be financially literate and are considered

independent directors as defined under The NYSE American’s listing standards and applicable SEC rules and regulations.

Scibetta qualifies as an audit committee “financial expert” as that term is defined by SEC regulations.

Committee met four times during 2020.

Our Board has adopted an Audit Committee Charter, which is available for viewing at www.matinasbiopharma.com .

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as its chairman.

All members of the Compensation Committee are considered independent directors as defined under The NYSE American’s

listing standards.

The Compensation Committee met once during 2019.

Our Board has adopted a Compensation Committee Charter, which

is available for viewing at www.matinasbiopharma.com .

The Compensation Committee met three times during 2020.

Our Board has adopted a Compensation Committee Charter,

which is available for viewing at www.matinasbiopharma.com .

and Corporate Governance Committee .

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All members of the Nominating

and Corporate Governance Committee are considered independent directors as defined under The NYSE American’s listing standards.

The Nominating and Corporate Governance Committee met once during 2019.

Our Board has adopted a Nominating and Corporate Governance

Charter, which is available for viewing at www.matinasbiopharma.com .

and Corporate Governance Committee are considered independent directors as defined under The NYSE American’s listing standards.

The Nominating and Corporate Governance Committee met three times during 2020.

Our Board has adopted a Nominating and Corporate

Governance Charter, which is available for viewing at www.matinasbiopharma.com .

Advisory Committee .

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owners of more than 10% of a registered class of our equity securities, to file reports of ownership and changes in ownership

with the Securities and Exchange Commission (the “SEC”).

These persons are required by SEC regulations to furnish

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furnished to us and written representations that no other reports were required during the fiscal year ended December 31, 2020,

all reports required to be filed under Section 16(a) were filed on a timely basis except that, due to administrative errors, each

Conrad, Ende, Jabbour, Mannino, Sciabetta and Wikler failed to timely file a Form 4 with respect to single

transaction, and Mr.

Stern failed to timely file a Form 4 with respect to two transactions.

Each error was corrected

in later filings for the reporting person.

Compensation Table –

all reports required to be filed under Section 16(a) were filed on a timely basis.

Compensation Table – 2020

following table presents information regarding the total compensation awarded to, earned by, or paid to our chief executive officer

chief financial officer and the three most highly-compensated executive officers (other than the chief executive officer)

who were serving as executive officers as of December 31, 2019 for services rendered in all capacities to us for the years ended

December 31, 2019 and December 31, 2018 and up to two additional individuals for whom disclosure would have been provided but

for the fact that the individual was not serving as an executive officer of the Company as of December 31, 2019.

These individuals

are our named executive officers for 2019.

and the two most highly-compensated executive officers who were serving as executive officers as of December 31, 2020 for services

rendered in all capacities to us for the years ended December 31, 2020 and December 31, 2019.

These individuals are our named

executive officers for 2020.

and Principal Position

Other Compensation ($)

Executive Officer

Financial Officer

Medical Officer

Development Officer

All Other Compensation ($)

Chief Executive Officer

Chief Medical Officer

Theresa Matkovits

Chief Development Officer

reflect the grant date fair value of option awards granted in 2020 and 2019 in accordance with Accounting Standards Codification

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Ferguson was reimbursed for relocation costs.

Rongen resigned on March 15, 2018.

reflect severance payments made to Mr.

Rongen in connection with his resignation.

Disclosure to Summary Compensation Table

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Under the terms of Mr.

Jabbour’s employment agreement,

Jabbour received a signing bonus of $84,000 and a base salary of $350,000 per year.

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Jabbour received an option grant to purchase 1,000,000 shares on March 22, 2018 and is also

be eligible to receive additional option grants and equity grants at the discretion of our Compensation Committee.

eligible to receive additional option grants and equity grants at the discretion of our Compensation Committee.

If we terminate

Jabbour’s employment without cause or Mr.

Jabbour resigns with good reason (absent a change of control), we are required

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If we terminate Mr.

Jabbour’s

employment without cause during the 24-month period immediately following a change of control or Mr.

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termination of his employment.

December 31, 2018, we entered into an employment agreement with Mr.

Kucinski which was effective as of January 2, 2019.

the terms of Mr.

Kucinski’s employment agreement, Mr.

Kucinski receives a base salary of $250,000 per year.

Kucinski is eligible to receive an annual bonus, which is targeted at 30% of his base salary but which may be adjusted by

our Compensation Committee based on his individual performance and our performance as a whole.

Kucinski is also eligible to

receive option grants at the discretion of our Compensation Committee.

If we terminate Mr.

Kucinski’s employment without

Kucinski resigns with good reason, we are required to pay him severance of up to twelve months of his base salary

plus benefits.

In addition, the vesting of his outstanding options will be accelerated by six months upon such termination.

Kucinski is also subject to a customary non-disclosure agreement, pursuant to which Mr.

Kucinski has agreed to be subject to a

non-compete during the term of his employment and for a period of eighteen months following termination of his employment.

February 22, 2019, we entered into an employment agreement with Mr.

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the terms of Mr.

Ferguson’s employment agreement, Mr.

Ferguson receives a base salary of $375,000 per year.

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If we terminate Mr.

Ferguson’s employment without

Ferguson resigns with good reason, we are required to pay him severance of up to twelve months of his base salary

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the terms of Ms.

Matkovits’

employment agreement, Ms.

Matkovits’ employment agreement, Ms.

Matkovits receives a base salary of $350,000 per year.

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If we terminate Ms.

Matkovits’

employment without

Matkovits’ employment without

Matkovits resigns with good reason, we are required to pay her severance of up to twelve months of his base salary

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a non-compete during the term of her employment and for a period of eighteen months following termination of his employment.

March 27, 2017, the Company entered into an employment agreement with Mr.

Rongen, with the terms effective as of March 1, 2017.

Under the terms of Mr.

Rongen’s employment agreement, he received a base salary of $400,000 per year, subject to periodic

adjustments as determined by our Board or Compensation Committee.

In addition, Mr.

Rongen was eligible to receive an annual bonus,

targeted at 50% of his base salary based on his individual performance and our performance as a whole, as determined by our Board

or Compensation Committee.

If we terminated Mr.

Rongen’s employment without cause or Mr.

Rongen resigned with good reason,

subject to Mr.

Rongen’s execution and non-revocation of a release and compliance with any post-termination obligations owed

to us, we were required to pay him severance of up to twelve months of his base salary, in effect on the date of termination,

plus COBRA payments for twelve months.

In addition, the vesting of his outstanding options, and any other outstanding equity held

by him at the time of his termination, would be accelerated by six months upon such termination.

If we terminated Mr.

Rongen’s

employment without cause during the 24 month period immediately following a change of control or Mr.

Rongen resigned with good

reason during the 24 month period immediately following a change of control, subject to Mr.

Rongen’s execution and non-revocation

of a release and compliance with any post-termination obligations owed to us, we were to pay him severance of up to eighteen months

of his base salary, in effect on the date of termination, and his target annual bonus for the year in which the termination occurs

plus COBRA payments for eighteen months.

In addition, his outstanding options and any other outstanding equity held by him at

the time of his termination, would vest in full upon such termination.

Rongen is also subject to a customary non-disclosure

agreement, pursuant to which Mr.

Rongen has agreed to be subject to a non-compete and non-solicit covenant during for a period

of eighteen months following termination of his employment.

entered into a separation agreement dated March 15, 2018 with Mr.

Rongen pursuant to which, among other things, Mr.

receive 15 months in base salary as severance, payable in accordance with the Company’s standard payroll practices over

15 months, Mr.

Rongen agreed to provide transition services to assist in the transition process and Mr.

Rongen will be provided

with an extension through three years after the separation date of the exercise period for his vested stock options.

The separation

agreement further provides for certain restrictions on sales of shares of our common stock held by Mr.

Equity Awards at Fiscal Year-End Table –

Equity Awards at Fiscal Year-End Table – 2020

following table summarizes, for each of the named executive officers, the number of shares of common stock underlying outstanding

stock options held as of December 31, 2020.

Option Awards

unexercisable

July 20, 2024

Theresa Matkovits

Equity Compensation Plan

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Effective May 8, 2014, upon the approval of our Board

of Directors and our stockholders, we amended and restated our 2013 Equity Compensation Plan, primarily to include “evergreen”

provisions, which state provide that number of shares of common stock available for issuance under the Plan is subject to an automatic

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December 31 of the preceding calendar year or a lesser number of shares of common stock determined by the Board of Directors;

to amend the definition of “fair market value”;

and to increase the limits on awards under the Plan.

The 2013 Equity

Compensation Plan, as amended and restated, is referred to herein as the “2013 Plan.”

general purpose of the 2013 Plan is to provide an incentive to our employees, directors, consultants and advisors by enabling

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Subject to the 2013 Plan .

As of February 28, 2020 the aggregate number of shares of common stock available for issuance

in connection with awards granted under the 2013 Plan is 28,947,923 shares, subject to customary adjustments for stock splits,

stock dividends or similar transactions (the “Initial Limit”).

Incentive Stock Options may be granted under the 2013

Plan with respect to all of those shares.

The number of shares of common stock available for issuance under the 2013 Plan will

automatically increase on January 1st of each year for a period of ten years, commencing on January 1, 2015, in an amount equal

to four percent (4%) of the total number of shares of common stock outstanding on December 31st of the preceding calendar year

(the “Annual Increase”).

Notwithstanding the foregoing, the Board of Directors may act prior to the first day of any

calendar year, to provide that there shall be no increase in the share reserve for such calendar year or that the Annual Increase

in the share reserve for such calendar year shall be a lesser number of shares of common stock than would otherwise occur pursuant

to the preceding sentence.

The number of shares of common stock which may be issued in respect of Incentive Stock Options is equal

to the Current Limit, and will be increased on each January 1, by the Annual Increase for such calendar year.

As of March 14, 2021 the aggregate number of shares of common stock available for issuance in

connection with awards granted under the 2013 Plan is 36,952,460 shares, subject to customary adjustments for stock splits, stock

dividends or similar transactions (the “Initial Limit”).

Incentive Stock Options may be granted under the 2013 Plan

with respect to all of those shares.

The number of shares of common stock available for issuance under the 2013 Plan will automatically

increase on January 1st of each year for a period of ten years, commencing on January 1, 2015, in an amount equal to four percent

(4%) of the total number of shares of common stock outstanding on December 31st of the preceding calendar year (the “Annual

Notwithstanding the foregoing, the Board of Directors may act prior to the first day of any calendar year, to

provide that there shall be no increase in the share reserve for such calendar year or that the Annual Increase in the share reserve

for such calendar year shall be a lesser number of shares of common stock than would otherwise occur pursuant to the preceding

The number of shares of common stock which may be issued in respect of Incentive Stock Options is equal to the Current

Limit, and will be increased on each January 1, by the Annual Increase for such calendar year.

the extent that any award under the 2013 Plan payable in shares of common stock is forfeited, cancelled, returned to the Company

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and Conditions of Options .

Options granted under the 2013 Plan may be either “incentive stock options”

are intended to meet the requirements of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”)

or “nonqualified stock options”

that do not meet the requirements of Section 422 of the Code.

Options granted under the 2013 Plan may be either “incentive stock options” that

are intended to meet the requirements of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”)

or “nonqualified stock options” that do not meet the requirements of Section 422 of the Code.

The Compensation Committee

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and/or (iv) by such other method as may be approved by the Compensation Committee and set forth in an award

option may be transferred other than by will or by the laws of descent and distribution, and during a recipient’s lifetime

an option may be exercised only by the recipient or the recipient’s guardian or legal representative.

option may be transferred other than by will or by the laws of descent and distribution, and during a recipient’s lifetime

an option may be exercised only by the recipient or the recipient’s guardian or legal representative.

However, the Compensation

Committee may permit the transfer of a nonqualified stock option, share-settled stock appreciation right, restricted stock award,

performance share or share-settled other stock-based award either (a) by instrument to the participant’s immediate family

(as defined in the 2013 Plan), (b) by instrument to an inter vivos or testamentary trust (or other entity) in which the award

is to be passed to the participant’s designated beneficiaries, or (c) by gift to charitable institutions.

The Compensation

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provided that no amendment shall adversely affect the rights of a participant with respect to an outstanding award without the

participant’s consent.

In addition, our board of directors may at any time amend, suspend, or terminate the 2013 Plan, provided

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reasonable expenses incurred in connection with attending board of director and committee meetings.

Compensation Table –

Compensation Table – 2020

following table summarizes the annual compensation for our non-employee directors during 2020.

Cash Compensation

Herbert Conrad

Natasha Giordano

Matthew Wikler

reflect the grant date fair value of stock awards and option awards granted in 2020 in accordance with Accounting Standards

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Committee Interlocks and Insider Participation

Compensation Committee of the Board of Directors is currently composed of the following four non-employee directors:

Chair, Patrick G.

Compensation Committee of the Board of Directors is currently, and was for the last fiscal year, composed of the following four

non-employee directors:

Eric Ende, Chair, Patrick G.

LePore, James Scibetta and Matthew Wikler.

During the last fiscal year, the Compensation Committee was composed

of the following four non-employee directors:

Chair, Eric Ende, Patrick G.

LePore, James Scibetta and Matt Wikler.

the Compensation Committee is or was formerly an officer or an employee of the Company during the last fiscal year.

no executive officer of the Company serves on the compensation committee or board of directors of a company for which any of the

Company’s directors serve as an executive officer.

No member of the Compensation

Committee is or was formerly an officer or an employee of the Company during the last fiscal year.

In addition, no executive officer

of the Company serves on the compensation committee or board of directors of a company for which any of the Company’s directors

serve as an executive officer.

Please see Item 13.

Ownership Of Certain Beneficial Owners And Management And Related Stockholder Matters.

following table sets forth the number of shares of common stock beneficially owned as of February 17, 2020 by:

following table sets forth the number of shares of common stock beneficially owned as of March 14, 2021 by:

of our stockholders who is known by us to beneficially own 5% or more of our common stock;

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Applicable percentage

ownership in the following table is based on 196,556,519 shares outstanding as of February 17, 2020.

In computing the number of

shares beneficially owned by a person and the percentage ownership of that person, shares of common stock that are subject to

options or warrants held by that person and exercisable as of, or within 60 days of, February 17, 2020 are counted as outstanding.

These shares, however, are not counted as outstanding for the purposes of computing the percentage ownership of any other person(s).

ownership in the following table is based on 204,276,412 shares outstanding as of March 14, 2021.

In computing the number of shares

beneficially owned by a person and the percentage ownership of that person, shares of common stock that are subject to options

or warrants held by that person and exercisable as of, or within 60 days of, March 14, 2021 are counted as outstanding.

shares, however, are not counted as outstanding for the purposes of computing the percentage ownership of any other person(s).

Except as may be indicated in the footnotes to this table and pursuant to applicable community property laws, each person named

in the table has sole voting and dispositive power with respect to the shares of common stock set forth opposite that person’s

Unless indicated below, the address of each individual listed below is c/o Matinas BioPharma Holdings, Inc., 1545 Route

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of Beneficial Owner

of Shares Beneficially Owned

Beneficially Owned

Opportunity, LLC & Vivo Capital IX LLC (1)

Beneficially Owned

Capital, LLC (1)

and Executive Officers

Ferguson (10)

Kucinski (10)

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Based solely on information contained in a Schedule 13G/A filed on February 16, 2021.

Includes 10,277,463

shares of Common Stock held by Vivo Opportunity Fund, L.P., of which Vivo Opportunity, LLC is the general partner, and 1,826,015

shares of Common Stock held by Vivo Capital Fund IX, L.P., of which Vivo Capital IX, LLC is the general partner.

members of Vivo Opportunity, LLC and Vivo Capital IX, LLC are Albert Cha, Gaurav Aggarwal, Shan Fu, Frank Kung and Michael Chang,

none of whom has individual voting or investment power with respect to the shares and each of whom disclaims beneficial ownership

of such shares.

The address for reporting each person is 192 Lytton Avenue, Palo Alto, CA 94301.

Based solely on information contained in a Schedule 13G filed on February 14, 2020.

Shared voting and dispositive power

of the shares is held by Boxer Capital, LLC, Boxer Asset Management Inc.

Shared voting and dispositive power of the

shares is held by Boxer Capital, LLC, Boxer Asset Management Inc.

and Joe Lewis.

The address for each reporting

person is 11682 El Camino Real, Suite 320, San Diego, CA 92130.

Includes (i) 15 convertible preferred shares if converted to 30,000 common shares, and (ii) 2,343,750 shares of common stock issuable

upon exercise of options that are exercisable within sixty days of February 17, 2020.

Does not include 2,031,250 shares of common

stock underlying options that are not exercisable within sixty days of February 17, 2020.

The address for each reporting person is 11682

El Camino Real, Suite 320, San Diego, CA 92130.

Includes (i) 15 convertible preferred shares if converted to 30,000 common shares, and (ii) 2,705,243shares of common stock issuable

upon exercise of options that are exercisable within sixty days of February 17, 2020.

upon exercise of options that are exercisable within sixty days of March 14, 2021.

Does not include 2,657,257 shares of common

stock underlying options that are not exercisable within sixty days of February 17, 2020.

stock underlying options that are not exercisable within sixty days of March 14, 2021.

Includes (i) 100 convertible preferred shares if converted to 200,000 common shares, and (ii) 1,098,727 shares of common stock

issuable upon exercise of options that are exercisable within sixty days of March 14, 2021.

Does not include 51,085 shares of

common stock underlying options that are not exercisable within sixty days of March 14, 2021.

Includes (i) 12 convertible preferred shares if converted to 24,000 common shares, and (ii) 835,394 shares of common stock issuable

upon exercise of options that are exercisable within sixty days of February 17, 2020.

Does not include 118,214 shares of common

stock underlying options that are not exercisable within sixty days of February 17, 2020.

Includes 256,320 shares of common stock issuable upon exercise of options that are exercisable within sixty days of February 17,

Does not include 129,325 shares of common stock underlying options that are not exercisable within sixty days of February

upon exercise of options that are exercisable within sixty days of March 14, 2021.

Does not include 51,085 shares of common stock

underlying options that are not exercisable within sixty days of March 14, 2021.

Includes 63,982 shares of common stock issuable upon exercise of options that are exercisable within sixty days of March 14, 2021.

Does not include 223,935 shares of common stock underlying options that are not exercisable within sixty days of March 14, 2021.

Includes 444,666 shares of common stock issuable upon exercise of options that are exercisable within sixty days of March 14,

Does not include 63,584 shares of common stock underlying options that are not exercisable within sixty days of March 14,

Includes (i) 12 convertible preferred shares if converted to 24,000 common shares, and (ii) 897,894 shares of common stock issuable

upon exercise of options that are exercisable within sixty days of February 17, 2020.

Does not include 62,659 shares of common

stock underlying options that are not exercisable within sixty days of February 17, 2020.

Includes (i) 1,783,756 shares of common stock issuable upon exercise of outstanding Warrants that are exercisable within sixty

days of February 17, 2020, (ii) 763,715 shares of common stock issuable upon exercise of options that are exercisable within sixty

days of February, 17, 2020, (iii) 300,000 shares of common stock that are owned by Pavilion Capital Partners, LLC, which is wholly-owned

Stern, (iv) 300,000 shares of common stock that are owned by Piper Ventures Partners, LLC, which is wholly-owned by Mr.

Stern, (v) 600,000 shares of common stock that are owned by SternAegis Ventures LLC, which is wholly-owned by Mr.

1,750,000 shares held by AKS Family Foundation and (vii) 3,256,483 shares of common stock held by AKS Family Partners (vii) 85

convertible preferred shares if converted to 170,000 common shares.

Does not include 62,659 shares of common stock underlying

options that are not exercisable within sixty days of February 17, 2020.

upon exercise of options that are exercisable within sixty days of March 14, 2021.

Does not include 51,085 shares of common stock

underlying options that are not exercisable within sixty days of March 14, 2021.

Includes (i) 6 convertible preferred shares if converted to 12,000 common shares, and (ii) 660,394 shares of common stock issuable

upon exercise of options that are exercisable within sixty days of February 17, 2020.

Does not include 152,241 shares of common

stock underlying options that are not exercisable within sixty days of February 17, 2020.

Includes 94,792 shares of common stock issuable upon exercise of options that are exercisable within sixty days of February 17,

Does not include 755,208 shares of common stock underlying options that are not exercisable within sixty days of February

Includes 158,334 shares of common stock issuable upon exercise of options that are exercisable within sixty days of February 17,

Does not include 716,666 shares of common stock underlying options that are not exercisable within sixty days of February

upon exercise of options that are exercisable within sixty days of March 14, 2021.

Does not include 76,085 shares of common stock

underlying options that are not exercisable within sixty days of March 14, 2021.

Includes 439,601 shares of common stock issuable upon exercise of options that are exercisable within sixty days of March 14,

Does not include 985,399 shares of common stock underlying options that are not exercisable within sixty days of March 14,

Includes 475,534 shares of common stock issuable upon exercise of options that are exercisable within sixty days of March 14,

Does not include 899,466 shares of common stock underlying options that are not exercisable within sixty days of March 14,

Does not include 600,000 shares of common stock underlying options that are not exercisable within sixty days of March 14, 2021.

Includes (i) 10 convertible preferred shares if converted to 20,000 common shares, and (ii) 781,879 shares of common stock issuable

upon exercise of options that are exercisable within sixty days of February 17, 2020.

Does not include 284,374 shares of common

stock underlying options that are not exercisable within sixty days of February 17, 2020.

Includes 233,334 shares of common stock issuable upon exercise of options that are exercisable within sixty days of February 17,

Does not include 816,666 shares of common stock underlying options that are not exercisable within sixty days of February

upon exercise of options that are exercisable within sixty days of March 14, 2021.

Does not include 353,121 shares of common stock

underlying options that are not exercisable within sixty days of March 14, 2021.

Includes 590,637 shares of common stock issuable upon exercise of options that are exercisable within sixty days of March 14,

Does not include 884,363 shares of common stock underlying options that are not exercisable within sixty days of March 14,

See notes (2) through (13).

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following table summarizes information about our equity compensation plans as of December 31, 2020.

of Common Stock

upon Exercise

of Outstanding

Plan Category

Number of Shares

Common Stock to be Issued upon

Exercise of Outstanding Options

Weighted-Average

Exercise Price of

Outstanding Options

Remaining Available for

Future Issuance Under

Equity Compensation

(excluding securities

reflected in column (a))

compensation plans approved by stockholders(1)

compensation plans not approved by stockholders

Number of Options

Available for Future Issuance Under Equity Compensation Plans (excluding securities reflected in column

Equity compensation plans approved by stockholders(1)

Equity compensation plans not approved by stockholders

amounts shown in this row include securities under the Matinas BioPharma Holdings, Inc.

Amended and Restated 2013 Equity Incentive

Plan (the “2013 Plan”).

accordance with the “evergreen”

provision in our 2013 Plan, an additional 6,526,279 shares were automatically

made available for issuance on the first trading day of 2020, which represents 4% of the number of shares outstanding

on December 31, 2019;

Plan (the “2013 Plan”).

accordance with the “evergreen” provision in our 2013 Plan, an additional 8,004,537 shares were automatically

made available for issuance on the first trading day of 2021, which represents 4% of the number of shares outstanding on December

these shares are excluded from this calculation.

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than terms generally available to an unaffiliated third party under the same or similar circumstances, the extent of the benefits

to us, the availability of other sources of comparable products or services and the extent of the related party’s interest

in the transaction.

on information requested from and provided by each of our directors, our board of directors has determined that Messrs.

Conrad, Eric Ende, Patrick LePore, James Scibetta and Matthew Wikler are “independent directors”

as such term is defined

in the rules of The NYSE American’s corporate governance requirements and Rule 10A-3 promulgated under the Securities Exchange

Act of 1934, as amended.

Conrad, Eric Ende, Patrick LePore, James Scibetta, Matthew Wikler and Ms.

Natasha Giordano are “independent directors”

as such term is defined in the rules of The NYSE American’s corporate governance requirements and Rule 10A-3 promulgated

under the Securities Exchange Act of 1934, as amended.

Accounting Fees And Services

following table represents aggregate fees billed to the Company for the fiscal years ended December 31, 2020 and 2019, by EisnerAmper

LLP, the Company’s independent registered public accounting firm.

Ended December 31,

LLP, the Company’s independent registered public accounting firm.

Years Ended December 31,

(in thousands)

Fees consist of fees billed for professional services rendered for the audit of our annual financial statements, audit of

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And Financial Statement Schedules

Agreement, dated July 11, 2013, by and among the Company, Matinas Merger Sub, Inc., and Matinas BioPharma, Inc.

(incorporated

by reference to Exhibit 2.1 to Amendment No.

1 to the Company’s Registration Statement on Form S-1 filed with the SEC

on February 7, 2014).

and Plan of Merger (the “Merger Agreement”) with Aquarius Biotechnologies, Inc., a Delaware corporation (“Aquarius”),

Saffron Merger Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of the Company (“Merger Sub”) and

Carl Craft, as the stockholder representative (incorporated herein by reference to Exhibit 2.1 to the Company’s Current

Report on Form 8-K filed with the SEC on January 30, 2015).

of Incorporation (incorporated by reference to Exhibit 3.1 to Amendment No.

1 to the Company’s Registration Statement

on Form S-1 filed with the SEC on February 7, 2014).

Merger Agreement, dated July 11, 2013, by and among the Company, Matinas Merger Sub, Inc., and Matinas BioPharma, Inc.

(incorporated by reference to Exhibit 2.1 to Amendment No.

1 to the Company’s Registration Statement on Form S-1 filed

with the SEC on February 7, 2014).

of Amendment, dated October 29, 2015 to Certificate of Incorporation.

(incorporated herein by reference to the Company’s

Current Report on Form 8-K filed with the SEC on November 5, 2015).

of Designation of Series A Preferred Stock (incorporated by reference to Exhibit 3.1 of the Company’s Current Report

on Form 8-K filed August 1, 2016 with the Securities and Exchange Commission).

of Designation of Series B Preferred Stock (incorporated by reference to Exhibit 3.1 of the Company’s Current Report

on Form 8-K filed June 19, 2018 with the Securities and Exchange Commission).

Stock Specimen (incorporated by reference to Exhibit 4.1 of the Company’s Annual Report on Form 10-K for the year ended

December 31, 2016, filed March 31, 2017 with the Securities and Exchange Commission).

of Warrant (incorporated by reference to Exhibit 4.1 to Amendment No.

1 to the Company’s Registration Statement on Form

S-1 filed with the SEC on February 7, 2014).

of 2015 Investor Warrant.

1 to the Company’s Registration Statement on Form S-1 filed with the SEC on February 7, 2014).

Agreement and Plan of Merger (the “Merger Agreement”) with Aquarius Biotechnologies, Inc., a Delaware corporation (“Aquarius”), Saffron Merger Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of the Company (“Merger Sub”) and J.

Carl Craft, as the stockholder representative (incorporated herein by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed with the SEC on January 30, 2015).

Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to Amendment No.

1 to the Company’s Registration Statement on Form S-1 filed with the SEC on February 7, 2014).

Bylaws (incorporated by reference to Exhibit 3.2 to Amendment No.

1 to the Company’s Registration Statement on Form S-1 filed with the SEC on February 7, 2014).

Certificate of Amendment, dated October 29, 2015 to Certificate of Incorporation.

(incorporated herein by reference to the Company’s Current Report on Form 8-K filed with the SEC on November 5, 2015).

Certificate of Designation of Series A Preferred Stock (incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K filed August 1, 2016 with the Securities and Exchange Commission).

Certificate of Designation of Series B Preferred Stock (incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K filed June 19, 2018 with the Securities and Exchange Commission).

Common Stock Specimen (incorporated by reference to Exhibit 4.1 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2016, filed March 31, 2017 with the Securities and Exchange Commission).

Form of Warrant (incorporated by reference to Exhibit 4.1 to Amendment No.

1 to the Company’s Registration Statement on Form S-1 filed with the SEC on February 7, 2014).

Form of 2015 Investor Warrant.

(incorporated by reference to Exhibit 4.4 to the post-effective amendment No.

1 to Form S-1 filed

with the SEC on April 17, 2015).

of 2015 Placement Agent Warrant.

1 to Form S-1 filed with the SEC on April 17, 2015).

Form of 2015 Placement Agent Warrant.

(incorporated by reference to Exhibit 4.5 to the post-effective amendment No.

1 to Form S-1

filed with the SEC on April 17, 2015).

of 2016 Placement Agent Warrant (incorporated by reference to Exhibit 4.7 to the Registration Statement on Form S-1 filed

with the SEC on November 2, 2016).

1 to Form S-1 filed with the SEC on April 17, 2015).

Form of 2016 Placement Agent Warrant (incorporated by reference to Exhibit 4.7 to the Registration Statement on Form S-1 filed with the SEC on November 2, 2016).

of Securities*

BioPharma Holdings, Inc.

Amended and Restated 2013 Equity Compensation Plan (incorporated herein by reference to Exhibit 10.6

to the Company’s Annual Report on Form 10-K filed on March 31, 2015.) &dagger;

of Incentive Stock Option Agreement (incorporated by reference to Exhibit 10.7 to Amendment No.

1 to the Company’s Registration

Statement on Form S-1 filed with the SEC on February 7, 2014).

of Non-Qualified Stock Option Agreement (incorporated by reference to Exhibit 10.8 to Amendment No.

1 to the Company’s

Registration Statement on Form S-1 filed with the SEC on February 7, 2014).

of Indemnification Agreement (incorporated by reference to Exhibit 10.14 to Amendment No.

1 to the Company’s Registration

Statement on Form S-1 filed with the SEC on February 7, 2014).

effective as of November 4, 2013, by and between the company and A-K Bedminster Associates, L.P.

(incorporated by reference

to Exhibit 10.17 to Amendment No.

1 to the Company’s Registration Statement on Form S-1 filed with the SEC on February

and Restated Exclusive License Agreement dated as of January 29, 2015, by and between Rutgers, the State University of New

Jersey and Aquarius Biotechnologies, Inc.

(incorporated herein by reference to Exhibit 10.18 to the Company’s Annual

Report on Form 10-K filed on March 31, 2015).

Agreement, dated September 1, 2015, between Matinas Biopharma Holdings, Inc.

and Raphael J.

(incorporated herein

by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on September 1, 2015).

Agreement, dated as of December 15, 2016, by and between CIP II/AR Bridgewater Holdings LLC, and Matinas BioPharma Holdings,

(incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC

on April 28, 2017).

Matinas BioPharma Holdings, Inc.

Amended and Restated 2013 Equity Compensation Plan (incorporated herein by reference to Exhibit 10.6 to the Company’s Annual Report on Form 10-K filed on March 31, 2015.) †

Form of Incentive Stock Option Agreement (incorporated by reference to Exhibit 10.7 to Amendment No.

1 to the Company’s Registration Statement on Form S-1 filed with the SEC on February 7, 2014).

Form of Non-Qualified Stock Option Agreement (incorporated by reference to Exhibit 10.8 to Amendment No.

1 to the Company’s Registration Statement on Form S-1 filed with the SEC on February 7, 2014).

Form of Indemnification Agreement (incorporated by reference to Exhibit 10.14 to Amendment No.

1 to the Company’s Registration Statement on Form S-1 filed with the SEC on February 7, 2014).

Lease, effective as of November 4, 2013, by and between the company and A-K Bedminster Associates, L.P.

(incorporated by reference to Exhibit 10.17 to Amendment No.

1 to the Company’s Registration Statement on Form S-1 filed with the SEC on February 7, 2014).

Amended and Restated Exclusive License Agreement dated as of January 29, 2015, by and between Rutgers, the State University of New Jersey and Aquarius Biotechnologies, Inc.

(incorporated herein by reference to Exhibit 10.18 to the Company’s Annual Report on Form 10-K filed on March 31, 2015).

Lease Agreement, dated as of December 15, 2016, by and between CIP II/AR Bridgewater Holdings LLC, and Matinas BioPharma Holdings, Inc.

(incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on April 28, 2017).

Therapeutic Development Award Agreement, dated November 19, 2020, between Matinas BioPharma Holdings, Inc.

and the Cystic Fibrosis Foundation.*

At-The-Market Sales Agreement, dated July 2, 2020, between Matinas BioPharma Holdings, Inc.

and BTIG, LLC (incorporated herein by reference to Exhibit 1.01 to the Company’s Current Report on Form 8-K filed with the SEC on July 2, 2020).

of EisnerAmper LLP*

10 unchanged sentences

31, 2020 and 2019;

(iii) Consolidated Statement of Changes in Stockholders’

Equity (Deficit) for the Years Ended December

(iii) Consolidated Statement of Changes in Stockholders’ Equity (Deficit) for the Years Ended December

31, 2020 and 2019;

19 unchanged sentences

Chairman of the Board

Natasha Giordano

OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

3 unchanged sentences

have audited the accompanying consolidated balance sheets of Matinas BioPharma Holdings, Inc.

and Subsidiaries (the “Company”)

as of December 31, 2019 and 2018, and the related consolidated statements of operations and comprehensive loss, stockholders’

equity, and cash flows for each of the years in the two-year period ended December 31, 2019 and the related notes (collectively

referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material

respects, the consolidated financial position of the Company as of December 31, 2019 and 2018, and the consolidated results of

their operations and their cash flows for each of the years in the two-year period ended December 31, 2019, in conformity with

accounting principles generally accepted in the United States of America.

also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”),

the Company’s internal control over financial reporting as of December 31, 2019, based on criteria established in the Internal

Control - Integrated Framework ( 2013 ) issued by the Committee of Sponsoring Organizations of the Treadway Commission

(“COSO”), and our report dated March 9, 2020 expressed an adverse opinion.

in Accounting Principle

discussed in Note 3 to the financial statements, the Company has changed its method of accounting for leases effective January

1, 2019, using the modified retrospective approach, due to the adoption of Accounting Standards Update 2016-02.

financial statements are the responsibility of the Company’s management.

and Subsidiaries as of December

31, 2020 and 2019, and the related consolidated statements of operations and comprehensive loss, stockholders’ equity, and

cash flows for each of the years in the two-year period ended December 31, 2020, and the related notes (collectively referred

to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects,

the consolidated financial position of the Company as of December 31, 2020 and 2019, and the consolidated results of their operations

and their cash flows for each of the years in the two-year period ended December 31, 2020, in conformity with accounting principles

generally accepted in the United States of America.

financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on

the Company’s financial statements based on our audits.

We are a public accounting firm registered with the PCAOB and are

required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable

rules and regulations of the Securities and Exchange Commission and the PCAOB.

the Company’s financial statements based on our audits.

We are a public accounting firm registered with the Public Company

Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company

in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission

and the PCAOB.

conducted our audits in accordance with the standards of the PCAOB.

1 unchanged sentence

to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error

Our audits included performing procedures to assess the risks of material misstatement of the financial statements,

whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a

test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the

accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the

financial statements.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial

As part of our audits we are required to obtain an understanding of internal control over financial reporting but not

for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to

error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence

regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles

used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

EisnerAmper LLP

have served as the Company’s auditor since 2011.

OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

the Board of Directors and Stockholders

BioPharma Holdings, Inc.

on the Internal Control over Financial Reporting

have audited Matinas BioPharma Holdings, Inc.

and Subsidiaries’

(the “Company”) internal control over financial

reporting as of December 31, 2019, based on criteria established in the Internal Control - Integrated Framework (2013)

issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).

In our opinion, because of

the effect of the material weakness described in the following paragraph on the achievement of the objectives of the control criteria,

Matinas BioPharma Holdings, Inc.

and Subsidiaries has not maintained effective internal control over financial reporting as of

December 31, 2019, based on criteria established in the Internal Control - Integrated Framework ( 2013 ) issued by

material weakness is a control deficiency, or combination of deficiencies, in internal control over financial reporting, such

that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements

will not be prevented or detected on a timely basis.

The following material weakness has been identified and included in management’s

The Company determined they did not maintain an effective control environment over the internal control activities

to ensure the processing of and reporting of transactions are complete, accurate and timely.

Specifically, the Company has not

designed and implemented a sufficient level of formal financial reporting and operating policies and procedures that define how

transactions should be initiated, processed, recorded and reported, including presentation and disclosure in the consolidated

financial statements.

This material weakness was considered in determining the nature, timing, and extent of the audit tests applied

in our audit of the December 31, 2019 financial statements, and this report does not affect our report dated March 9, 2020, on

those financial statements.

also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”),

the consolidated balance sheets of Matinas BioPharma Holdings, Inc.

and Subsidiaries as of December 31, 2019 and 2018, and the

related consolidated statements of operations and comprehensive loss, stockholders’

equity, and cash flows for each of the

years in the two-year period ended December 31, 2019, and the related notes, and our report dated March 9, 2020 expressed an unqualified

Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment

of the effectiveness of internal control over financial reporting, included in the accompanying management annual review on Internal

Control over Financial Reporting.

Our responsibility is to express an opinion on the Company’s internal control over financial

reporting based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent with

respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities

and Exchange Commission and the PCAOB.

conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit

to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that

a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the

assessed risk.

Our audit also included performing such other procedures as we considered necessary in the circumstances.

that our audit provides a reasonable basis for our opinion.

and Limitations of Internal Control over Financial Reporting

entity’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability

of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted

accounting principles.

An entity’s internal control over financial reporting includes those policies and procedures that

(i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions

of the assets of the entity;

(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation

of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the

entity are being made only in accordance with authorizations of management and directors of the entity;

and (iii) provide reasonable

assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the entity’s assets

that could have a material effect on the financial statements.

of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections

of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes

in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Audit Matters

critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements

that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that

are material to the consolidated financial statements and (ii) involved especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken

as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit

matter or on the accounts or disclosures to which it relates.

for research and development expenses

disclosed in the consolidated statements of operations, for the year ended December 31, 2020, the Company incurred significant

research and development (“R&D”) expenses, which amounted to approximately $14.4 million.

At December 31, 2020,

the Company had accrued $1.4 million for R&D expenses on the consolidated balance sheet.

A large amount of the Company’s

R&D expenses are service fees paid to contract research organizations (“CROs).

The R&D activities with these CROs

are documented in contractual agreements and are typically performed over an extended period, and there may be several milestones

of the services in one agreement.

Therefore, the allocation of the service expenses based on the progress of the R&D projects

and the milestones completed for the appropriate financial reporting period involved judgement and estimation.

identified management’s estimate of accruals for R&D expenses as a critical audit matter due to the significance of

these expenses to the financial statements and the subjectivity involved in estimating the progress of the R&D projects and

service fees accrued for the completion of milestones by the CROs.

As a result, auditor judgement and additional testing were

required to perform procedures and evaluate audit evidence related to the accruals for R&D expenses.

the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the

consolidated financial statements.

Our audit procedures related to the accruals for R&D expenses included the following, among

others, (i) we obtained an understanding of management’s process and evaluated the design of controls related to the accrual

process for R&D expenses;

(ii) we read selected research agreements to evaluate whether the progress and the completion of

milestones reported by the representatives of the CROs and the corresponding service fees are based on the respective contractual

terms, (iii) we sent confirmations to CROs, on a sample basis, to confirm the amount of the total R&D service fees incurred

for the year and the amounts of outstanding payables under the terms of the contracts, and (iv) we selected projects from the

open contract list at year end and made inquiries of the Company research personnel regarding the project status, and we also

inspected invoices received subsequent to year-end and additional documents and correspondence with the CROs, supporting management’s

estimate of R&D expenditures.

EisnerAmper LLP

have served as the Company’s auditor since 2011.

BioPharma Holdings, Inc.

Balance Sheets

and cash equivalents

expenses and other current assets

Current assets:

improvements and equipment - net

lease right-of-use assets - net

lease right-of-use - net

research and development

cash - security deposits

Cash and cash equivalents

Marketable securities

Restricted cash

Prepaid expenses and other current assets

Total current assets

Non-current assets:

AND STOCKHOLDERS’

dividends payable

lease liabilities - current

Leasehold improvements and equipment - net

Operating lease right-of-use assets - net

Finance lease right-of-use assets - net

In-process research and development

Restricted cash - security deposits

Total non-current assets

LIABILITIES AND STOCKHOLDERS’ EQUITY:

Current liabilities:

tax liability

lease liabilities - net of current portion

rent liability

Accounts payable

Accrued expenses and other liabilities

Operating lease liabilities - current

Financing lease liabilities - current

Total current liabilities

Non-current liabilities:

Stockholders’

A Convertible preferred stock, stated value $5.00 per share, 1,600,000 shares authorized as of December 31, 2019 and 2018,

respectively;

0 and 1,467,858 shares issued and outstanding as of December 31, 2019 and 2018, respectively;

(liquidation preference

- $0 at December 31, 2019)

B Convertible preferred stock, stated value $1,000 per share, 8,000 shares authorized as of December 31, 2019 and 2018, respectively;

4,577 and 4,819 shares issued and outstanding as of December 31, 2019 and 2018, respectively;

(liquidation preference - $4,577,000

at December 31, 2019)

stock par value $0.0001 per share, 500,000,000 and 250,000,000 shares authorized at December 31, 2019 and 2018, respectively;

163,156,984 and 113,287,670 issued and outstanding as of December 31, 2019 and 2018, respectively

paid-in capital

Deferred tax liability

Operating lease liabilities - net of current portion

Financing lease liabilities - net of current portion

Total non-current liabilities

Total liabilities

Stockholders’ equity:

Series B Convertible preferred stock, stated value $ 1,000 per share, 8,000

shares authorized as of December 31, 2020 and 2019, respectively;

4,361 and 4,577 shares issued and outstanding as of December

31, 2020 and 2019, respectively;

(liquidation preference - $ 4,361,000 at December 31, 2020)

Common stock par value $ 0.0001 per share, 500,000,000 shares authorized at

December 31, 2020 and 2019, respectively;

200,113,431 and 163,156,984 issued and outstanding as of December 31, 2020 and 2019,

Additional paid-in capital

Accumulated deficit

( 107,507,193 )

( 84,377,555 )

other comprehensive loss

stockholders’

liabilities and stockholders’

Accumulated other comprehensive income/(loss)

Total stockholders’ equity

Total liabilities and stockholders’ equity

accompanying notes are an integral part of these consolidated financial statements.

1 unchanged sentence

Statements of Operations and Comprehensive Loss

the Year Ended

research revenue

and Expenses:

and development

and administrative

For the Year Ended December

Contract research revenue

Costs and Expenses:

from operations

Research and development

General and administrative

Total costs and expenses

Loss from operations

( 24,206,552 )

( 18,921,036 )

of New Jersey net operating loss

for income taxes

Sale of New Jersey net operating loss

Other income, net

$ ( 22,446,838 )

$ ( 17,372,651 )

stock series A accumulated dividends

stock series B accumulated dividends

loss attributable to common shareholders

Preferred stock series A accumulated dividends

Preferred stock series B accumulated dividends

Net loss attributable to common shareholders

$ ( 23,240,280 )

$ ( 18,296,811 )

loss attributable to common shareholders per share - basic and diluted

average common shares outstanding:

comprehensive loss, net of tax

loss on securities available-for-sale

comprehensive loss, net of tax

Comprehensive

loss attributable to shareholders

Net loss attributable to common shareholders per share

- basic and diluted

Weighted average common shares outstanding:

Basic and diluted

Other comprehensive income/(loss), net of tax

Net unrealized gain/(loss) on securities available-for-sale

Reclassification of realized gain on securities

available-for-sale to net loss

Other comprehensive income/(loss), net of tax

Comprehensive loss attributable to shareholders

$ ( 22,217,786 )

2 unchanged sentences

BioPharma Holdings, Inc.

Statements of Changes in Stockholders’

Statements of Changes in Stockholders’ Equity

Income/(Loss)

Convertible Preferred Stock A

Convertible Preferred Stock B

Preferred Stock B

Other Comprehensive

Stockholders’

Income/(Loss)

December 31, 2018

$ (51,274,542 )

of common stock as compensation for services

1 unchanged sentence

of common stock in exchange for preferred shares B

of Preferred Series B net of issuance costs ($943,750)

stock sales (net)

of warrants to placement agent

dividends accrued

(14,083,073 )

of common stock in public offering, net of stock issuance costs ($ 2,315,878 )

of common stock in exchange for Options

of common stock in exchange for Warrants

comprehensive loss

December 31, 2019

$ (65,944,759 )

December 31, 2019

of common stock as compensation for services

of common stock in exchange for preferred shares A

of common stock in exchange for preferred shares B

2 unchanged sentences

of common stock in exchange for Warrants

comprehensive loss

(17,372,651 )

comprehensive income

December 31, 2020

( 107,507,193 )

$ (84,377,555)

accompanying notes are an integral part of these consolidated financial statements.

1 unchanged sentence

Statements of Cash Flows

the Year Ended

flows from operating activities:

to reconcile net loss to net cash used in operating activities:

and amortization

compensation expense

on disposal of equipment

of operating lease right-of-use assets

of finance lease right-of-use assets

of bond discount

tax liability

in deferred rent

in operating assets and liabilities:

lease liabilities

expenses and other current assets

expenses and other liabilities

cash used in operating activities

flows from investing activities:

of marketable securities

of leasehold improvements and equipment

cash used in investing activities

flows from financing activities:

proceeds from public offering of common stock

proceeds from issuance of Series B convertible preferred stock

proceeds from ATM sale

of capital lease liability - principal

of note payable

from exercise of stock options

cash provided by financing activities

increase in cash, cash equivalents and restricted cash

cash equivalents and restricted cash at beginning of period

cash equivalents and restricted cash at end of period

non-cash financing and investing activities:

assets obtained in exchange for liabilities

stock conversion into common stock - series A

stock conversion into common stock - series B

dividends issued and converted to common stock

dividends accrual

restricted stock grants

loss on marketable securities

issued to placement agent

payable for insurance premiums

acquired under capital lease

the Year Ended December 31,

Cash flows from operating activities:

$ ( 22,446,838 )

$ ( 17,372,651 )

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization

Stock-based compensation expense

Loss on disposal of equipment

Amortization of operating lease right-of-use assets

Amortization of finance lease right-of-use assets

Amortization of bond discount

Realized gain on sale of marketable securities

Changes in operating assets and liabilities:

Operating lease liabilities

Prepaid expenses and other current assets

( 1,358,713 )

Accounts payable

Accrued expenses and other liabilities

Net cash used in operating activities

( 17,367,836 )

( 14,092,066 )

Cash flows from investing activities:

Purchases of marketable securities

( 72,106,359 )

( 5,605,654 )

Proceeds from sales of marketable securities

Purchases of leasehold improvements and equipment

Net cash used in investing activities

( 40,666,952 )

( 6,011,258 )

Cash flows from financing activities:

Net proceeds from public offering of common stock

Proceeds from exercise of warrants

Proceeds from exercise of options

Payments of capital lease liability - principal

Payments of note payable

Net cash provided by financing activities

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

( 9,987,957 )

Cash, cash equivalents and restricted cash at beginning

Cash, cash equivalents and restricted cash at end

Supplemental non-cash financing and investing activities:

Unrealized gain (loss) on marketable securities

Cashless exercise of warrants

Stock dividends issued

Non-Cash prepaid from exercise of options

Preferred stock conversion into common stock - series B

Unearned restricted stock grants

Stock dividends accrual

Right-of-use assets obtained in exchange for liabilities

Preferred stock conversion into common stock - series A

accompanying notes are an integral part of these consolidated financial statements.

Description of Business

Note 1 – Description of Business

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,”

known as Aquarius Biotechnologies, Inc.), its operating subsidiaries (“Nanotechnologies”, and together with “Holdings”

and “BioPharma”, “the Company”

or “we”

or “our”

or “us”).

(“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”).

is a clinical-stage biopharmaceutical company with a focus on identifying and developing novel pharmaceutical products.

3 unchanged sentences

2020, the Company had an accumulated deficit of approximately $ 107.5 million.

The Company’s net loss for the years

ended December 31, 2019 and 2018 were approximately $17.4 million and $14.1 million, respectively.

Company has been engaged in developing MAT-9001, its lead product candidate, as well as its lipid nano-crystal (“LNC”)

platform delivery technology and a pipeline of associated product candidates since 2011.

To date, the Company has not obtained

regulatory approval for any of its product candidates nor generated any revenue from product 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.

the Company obtains Food and Drug Administration (“FDA”) approval for one or more of its product candidates, the Company

The Company’s net loss for the years ended

December 31, 2020 and 2019 were approximately $ 22.4 million and $ 17.4 million, respectively.

Company has been engaged in developing LYPDISO (formerly MAT-9001), its lead product candidate, as well as its lipid nanocrystal

(“LNC”) platform delivery technology and a pipeline of associated product candidates since 2011.

To date, the Company

has not obtained regulatory approval for any of its product candidates nor generated any revenue from product 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.

the Company obtains Food and Drug Administration (“FDA”) approval for one or more of its product candidates, the Company

expects that its expenses will continue to increase once the Company reaches commercial launch.

8 unchanged sentences

sold pursuant to an over-allotment option granted to the underwriters of the public offering, resulting in additional net proceeds

to the Company of approximately $2.3 million (See Note 12).

of December 31, 2019, the Company had cash and cash equivalents of approximately $22.2 million, marketable securities of

approximately $5.6 million and restricted cash of approximately $0.6 million.

On January 14, 2020, the Company completed

an underwritten public offering of common stock, generating gross cash proceeds of approximately $50.0 million and net proceeds

of approximately $46.7 million (see Note 15).

The Company believes the cash and cash equivalents and marketable securities

on hand are sufficient to fund planned operations into the second half of 2022.

to the Company of approximately $ 2.3 million.

In addition, on January 14, 2020, the Company completed an underwritten public offering

of common stock, generating gross cash proceeds of approximately $ 50.0 million and net proceeds of approximately $ 46.7 million.

(See Note 12 – Stockholders’ Equity).

of December 31, 2020, the Company had cash and cash equivalents of approximately $ 12.4 million, marketable securities of approximately

$ 46.2 million and restricted cash of approximately $ 0.3 million.

During January 2021, the Company sold 3,023,147 shares of common

stock under its At-The-Market Sales Agreement with BTIG, LLC, generating gross proceeds of approximately $ 5.8 million and net

proceeds of approximately $ 5.6 million.

The Company believes the cash and cash equivalents and marketable securities on hand are

sufficient to fund planned operations into 2024.

3 – Summary of Significant Accounting Policies

3 unchanged sentences

The accompanying consolidated financial statements have been prepared in accordance with accounting

principles generally accepted in the United States of America (“U.S.

GAAP”) and reflect the operations of the Company

principles generally accepted in the United States of America (“U.S.

GAAP”) and reflect the operations of the Company

and its wholly owned subsidiaries.

All intercompany transactions have been eliminated in consolidation.

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, economics, and financial markets

globally, potentially leading to an economic downturn.

Company has been actively monitoring the COVID-19 pandemic and its impact globally.

The financial results for the year ended December

31, 2020 were not significantly impacted by COVID-19.

However, the Company cannot predict the impact of the progression of the

COVID-19 pandemic 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.

preparation of consolidated financial statements in conformity with U.S.

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items subject to such estimates and assumptions include, but are not limited to, the assessment of the impairment of goodwill

and intangible assets, level 3 fair value measurement of financial instruments, the determination of stock-based compensation,

contingent consideration and assets and liabilities acquired in a business combination.

and intangible assets, level 3 fair value measurement of financial instruments, income tax valuations, the determination of stock-based

compensation, contingent consideration and research and development expenses.

and geographic information

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The Company views its operations and manages its business in one operating and reporting segment.

and cash equivalents

cash equivalents and restricted cash

Company considers all highly liquid financial instruments with original maturities of three months or less when purchased to be

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Cash and cash equivalents consisted of cash in bank checking and savings accounts, money market funds

treasury bonds.

Company presents restricted cash with cash and cash equivalents in the Consolidated Statements of Cash Flows.

Restricted cash

represents funds the Company is required to set aside to cover building operating leases and other purposes.

following table provides a reconciliation of cash, cash equivalents and restricted cash reported in the Consolidated Balance Sheets

to the total of the amounts in the Consolidated Statements of Cash Flows as of December 31, 2019 and 2018 (in thousands):

of December 31,

and cash equivalents

cash included in current/long term assets

cash equivalents and restricted cash in the statement of cash flows

and short-term U.S.

treasury bonds that mature within three months of settlement date.

The Company presents restricted cash with

cash and cash equivalents in the Consolidated Statements of Cash Flows.

Restricted cash represents funds the Company is required

to set aside to cover building operating leases and other purposes.

For a complete disclosure of the Company’s cash, cash

equivalents and restricted cash, see Note 4 – Cash, Cash Equivalents, Restricted Cash and Marketable Securities.

securities, all of which are available-for-sale, consist of U.S.

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Marketable securities

are carried at fair value, with unrealized gains and losses reported as accumulated other comprehensive income, except for losses

from impairments which are determined to be other-than-temporary.

Realized gains and losses and declines in value judged to be

other-than-temporary are included in the determination of net loss and are included in other income, net.

Fair values are based

on quoted market prices at the reporting date.

Interest and dividends on available-for-sale securities are included in other income,

are carried at fair value, with unrealized gains and losses reported as accumulated other comprehensive income/(loss), except

for losses from impairments which are determined to be other-than-temporary.

Realized gains and losses and declines in value judged

to be other-than-temporary are included in the determination of net loss and are included in other income, net.

Fair values are

based on quoted market prices at the reporting date.

Interest and dividends on available-for-sale securities are included in other

For a complete disclosure of the Company’s marketable securities, see Note 4 – Cash, Cash Equivalents,

Restricted Cash and Marketable Securities.

Concentration

of credit risk

Company’s financial instruments that are exposed to concentrations of credit risk consist primarily of cash, cash equivalents,

restricted cash and marketable securities.

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are maintained at U.S.

financial institutions and are insured by the Federal Deposit Insurance Corporation (“FDIC”)

up to regulatory limits.

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value of its business.

Based on the results of the Company’s assessment, it was determined that it is more-likely-than-not

that the fair value of the reporting unit is greater than its carrying amount.

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as level 3 to the amounts presented in the statement of financial position.

lived intangible assets are composed of in-process research and development (“IPR&D”) and represent projects acquired

in a business combination that have not reached technological feasibility or that lack regulatory approval at the time of acquisition.

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An impairment loss, if any, is calculated by comparing the fair value of the asset to its carrying value.

If the asset’s

carrying value exceeds its fair value, an impairment loss is recorded for the difference and its carrying value is reduced accordingly.

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assets were not impaired during the years ended December 31, 2020 and 2019.

If a nonrecurring fair value measurement for an IPR&D

impairment was required, sufficient information will be provided to permit reconciliation of the fair value of the asset categorized

within the fair value hierarchy as level 3 to the amounts presented in the statement of financial position.

February 2016, the Financial Accounting Standards Board (the “FASB”) established Accounting Standards Codification

(“ASC”) Topic 842, “Leases”, by issuing Accounting Standards Update (“ASU”) No.

February 2016, the Financial Accounting Standards Board (the “FASB”) established Accounting Standards Codification

(“ASC”) Topic 842, “Leases”, by issuing Accounting Standards Update (“ASU”) No.

2016-02, which

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The new standard

establishes a right-of-use (“ROU”) model that requires a lessee to recognize a ROU asset and lease liability on the

balance sheet for all leases with a term longer than 12 months.

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months or less;

option to not separate lease and non-lease components in the Company’s lease contracts;

package of practical expedients applied to all of its leases, including (i) not reassessing whether any expired or existing

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with the adoption of ASC Topic 842.

The Company’s accounting for finance leases remained substantially unchanged.

related to the amount, timing and uncertainty of cash flows arising from leases are included in Note 8, Leases.

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on the first, second and third anniversary of July 29, 2016, which was paid to the holders of such Series A Preferred Stock in

the form of shares of the Company’s common stock when converted.

In addition, and subject to provisions detailed more fully

in Note 12, Stockholders’

Equity, shares of Series B Preferred Stock earn dividends at rates of 10%, 15% and 20% once per

in Note 12, Stockholders’ Equity, shares of Series B Preferred Stock earn dividends at rates of 10 %, 15 % and 20 % once per

year on the first, second and third anniversary, respectively, of June 19, 2018.

Dividends are payable to holders of the Series

B Preferred Stock in the form of shares of the Company’s common stock.

Preferred stock dividends do not require declaration

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rate of the stated value.

Company accounts for business combinations using the acquisition method of accounting which requires the recognition of tangible

and identifiable intangible assets acquired and liabilities assumed at their estimated fair values as of the acquisition date.

The Company allocates any excess purchase price over the estimated fair value assigned to the net tangible and identifiable intangible

assets acquired and liabilities assumed to goodwill.

Transaction costs are expensed as incurred and reported in general and administrative

Results of operations and cash flows of acquired companies are included in the Company’s operating results from

the date of acquisition.

conversion feature of convertible preferred stock

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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

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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.

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of December 31, 2020.

the Company incurred net operating losses in every tax year since inception, the 2014 through 2018 income tax returns are

subject to examination and adjustments by the IRS for at least three years following the year in which the tax attributes are

the Company incurred net operating losses in every tax year since inception, the 2014 through 2019 income tax returns are subject

to examination and adjustments by the IRS for at least three years following the year in which the tax attributes are utilized.

Value Measurements

defined in ASC 820 “Fair Value Measurement”, fair value measurements should be disclosed separately by three levels

of the fair value hierarchy.

For assets and liabilities recorded at fair value, it is the Company’s policy to maximize the

use of observable inputs (quoted prices in active markets) and minimized the use of unobservable inputs (the Company’s assumptions)

For assets and liabilities recorded at fair value, it is the Company’s policy to maximize the

use of observable inputs (quoted prices in active markets) and minimized the use of unobservable inputs (the Company’s assumptions)

when developing fair value measurements, in accordance with the established fair value hierarchy.

For a complete disclosure of

the Company’s fair value measurements, see Note 5 –

Fair Value Measurements.

the Company’s fair value measurements, see Note 5 – Fair Value Measurements.

compensation to employees consist of stock option grants and restricted shares that are recognized in the consolidated statement

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consisting of stock options granted to consultants, are valued using the Black-Scholes valuation model.

The measurement of stock-based

compensation is subject to periodic adjustments as the underlying equity instruments vest and is recognized as an expense over

the period which services are received.

The Company calculates the fair value of option grants utilizing the Black-Scholes pricing

model and estimates the fair value of restricted stock based upon the estimated fair value or the common stock.

The amount of

stock-based compensation recognized during a period is based on the value of the portion of the awards that are ultimately expected

The authoritative guidance requires forfeitures to be estimated at the time stock options are granted and warrants are

issued and revised or adjustments made as they occur.

The Company calculates

the fair value of option grants utilizing the Black-Scholes pricing model and estimates the fair value of restricted stock based

upon the estimated fair value or the common stock.

The amount of stock-based compensation recognized during a period is based

on the value of the portion of the awards that are ultimately expected to vest.

The Company accounts for forfeitures as they occur.

The term “forfeitures”

is distinct from “cancellations”

or “expirations”

and represents only the unvested portion of the surrendered

stock option or warrant.

The term “forfeitures” is distinct from “cancellations” or “expirations” and represents only

the unvested portion of the surrendered stock option or warrant.

resulting stock-based compensation expense for both employee and non-employee awards is generally recognized on a straight-line

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loss per share information is determined using the two-class method, which includes the weighted-average number of shares of common

stock outstanding during the period and other securities that participate in dividends (a “participating security”).

The Company considered its Preferred Stock to be participating securities because they included rights to participate in dividends

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to common stockholders is calculated by adjusting the net loss of the Company for the accretion on the Preferred Stock.

are not allocated to preferred stockholders as they do not have an obligation to share in the Company’s net losses.

with net income attributable to common stockholders, the Company would allocate net income first to preferred stockholders based

on dividend rights under the Company’s certificate of incorporation and then to preferred and common stockholders based

on ownership interests.

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of the diluted shares as of December 31, 2020 and 2019 are as follows (in thousands):

of December 31,

Stock and accrued dividend upon conversion

to Topic 606, we recognize revenue to depict the transfer of promised goods or services to a customer in an amount that reflects

the consideration to which the entity expects to be intitled in exchange for those goods or services.

To achieve this core principle,

Topic 606 outlines a five-step process for recognizing revenue from customer contracts that includes i) identification of the

contract with a customer, ii) identification of the performance obligations in the contract, iii) determining the transaction

Schedule of Antidilutive Securities

As of December 31,

Stock options

Preferred Stock and accrued dividend upon conversion

to Topic 606, the Company recognizes revenue to depict the transfer of promised goods or services to a customer in an amount that

reflects the consideration to which the entity expects to be intitled in exchange for those goods or services.

To achieve this

core principle, Topic 606 outlines a five-step process for recognizing revenue from customer contracts that includes i) identification

of the contract with a customer, ii) identification of the performance obligations in the contract, iii) determining the transaction

price, iv) allocating the transaction price to the separate performance obligations in the contract, and v) recognizing revenue

associated with performance obligations as they are satisfied.

contract inception, we assess the goods or services promised within each contract and assess whether each promised good or service

is distinct and determine those that are performance obligations.

We then recognize as revenue the amount of the transaction price

that is allocated to the respective performance obligation when the performance obligation is satisfied.

the year ended December 31, 2019, the Company’s revenues consist of a research grant to provide research and development

services to the Cystic Fibrosis Foundation (“CFF”).

The grant contract has a single performance obligation that is

recognized over time as the services are performed.

contract inception, the Company assesses the goods or services promised within each contract and assess whether each promised

good or service is distinct and determine those that are performance obligations.

The Company then recognizes as revenue the amount

of the transaction price that is allocated to the respective performance obligation when the performance obligation is satisfied.

the years ended December 31, 2020 and 2019, the Company’s revenues primarily consist of a research grant to provide research

and development services to the Cystic Fibrosis Foundation (“CFF”).

The grant contract has a single performance obligation

that is recognized over time as the services are performed.

There are no contract assets or liabilities associated with this grant.

certain contract performance obligations in this contract were completed, it is currently the Company’s only contract with

revenue from a customer for 2019 and 2018 and disaggregation of revenue is not required.

The Company had approximately

$90 thousand and $120 thousand of research grant revenue for the years ended December 31, 2019 and 2018, respectively.

December 12, 2019, the Company entered into a feasibility study agreement (the “Agreement”) with Genentech, Inc.

(“Genentech”).

This feasibility study will involve the development of oral formulations using the Company’s LNC platform delivery technology,

As certain contract performance obligations in this contract were completed, it was the Company’s only contract with revenue

from a customer for 2019 and disaggregation of revenue is not required.

The Company had approximately $ 125.0 thousand and $ 89.8

thousand of CFF research grant revenue for the years ended December 31, 2020 and 2019, respectively.

December 12, 2019, the Company entered into a feasibility study agreement (the “Agreement”) with Genentech, Inc.

(“Genentech”).

This feasibility study will involve 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 Agreement, Genentech shall

pay to the Company a total of $100 thousand for three molecules, or approximately $33 thousand per molecule, which will be recognized

Under the terms of the Agreement, Genentech paid

the Company a total of $ 100 .0 thousand for three molecules, or approximately $ 33.3

thousand per molecule, which will be recognized

upon the Company fulfilling its obligations for each molecule under the 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.

The Company did not complete any contract performance obligations during 2019.

The Agreement has a single performance obligation

that is recognized over time as the services are performed.

There are no contract assets or liabilities associated with this Agreement.

As certain Agreement performance obligations in this agreement were completed, disaggregation of revenue is not required.

December 31, 2020, the Company completed the first of three molecules and the Company recognized approximately $ 33.3

thousand of revenue for the year ended

December 31, 2020.

The Company is scheduled to complete the remaining two molecules during 2021.

Collaboration

Company assess whether its collaboration agreements are subject to ASC Topic 808, Collaborative Arrangements (Topic 808)

based on whether they involve joint operating activities and whether both parties have active participation in the arrangement

and are exposed to significant risks and rewards.

To the extent that the arrangement falls within the scope of Topic 808, the

Company will apply by analogy the unit of account guidance under Topic 606 to identify distinct performance obligations, and then

determine whether a customer relationship exists for each distinct performance obligation.

If the Company determines a performance

obligation within the arrangement is with a customer, the Company applies the guidance in Topic 606.

If a portion of a distinct

bundle of goods or services within an arrangement is not with a customer, then the unit of account is not within the scope of

Topic 606, and the recognition and measurement of that unit of account shall be based on analogy to authoritative accounting literature

or, if there is no appropriate analogy, a reasonable, rational, and consistently applied accounting policy election.

terms of such arrangements typically include payments to the Company for one or more of the following:

up-front fees;

and regulatory payments;

product supply services;

research and development cost reimbursements;

profit-sharing arrangements;

royalties on certain products if they are successfully commercialized.

As part of the accounting for these arrangements, the Company

develops assumptions that require judgment to determine the standalone selling price for each performance obligation identified

in the contract.

These key assumptions may include forecasted revenues, clinical development timelines and costs, reimbursement

rates for personnel costs, discount rates and probabilities of technical and regulatory success.

License Fees:

If the license to the Company’s intellectual property is determined to be distinct from the other performance

obligations identified in the arrangement, the Company would recognize revenues from nonrefundable up-front fees allocated to

the license when the license is transferred to the licensee and the licensee is able to use and benefit from the license, which

generally would occur at or near the inception of the contract.

For licenses that are bundled with other promises, the Company

would utilize judgment to assess the nature of the combined performance obligation to determine whether the combined performance

obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress for purposes

of recognizing revenues from nonrefundable up-front fees.

The Company will evaluate the measure of progress at the end of each

reporting period and, if necessary, adjust the measure of performance and related revenue recognition.

and Development Milestone Payments:

At the inception of each arrangement that includes development milestone payments, the

Company will evaluate whether the milestones are considered probable of being reached and estimate the amount to be included in

the transaction price using the most likely amount method.

If it is probable that a significant revenue reversal would not occur,

the associated milestone value is included in the transaction price.

Milestone payments that are not within the Company’s

or the licensee’s control, such as regulatory approvals, are not considered probable of being achieved until uncertainty

associated with the approvals has been resolved.

The transaction price is then allocated to each performance obligation, on a

relative standalone selling price basis, for which the Company will recognize revenue as or when the performance obligations under

the contract are satisfied.

At the end of each subsequent reporting period, the Company re-evaluates the probability of achieving

such development and regulatory milestones and any related variable consideration constraint, and if necessary, adjust our estimate

of the overall transaction price.

Any such adjustments are recorded on a cumulative catch-up basis.

and Development Cost Reimbursements:

The Company’s collaboration arrangements may include promises of future clinical

development and drug safety services, as well as participation on certain joint committees.

When such services are provided to

a customer or partner, and they are distinct from the licenses provided to the Company’s collaboration partners, these promises

are accounted for as a separate performance obligation which the Company estimates using internal development costs incurred and

projections through the term of the arrangements.

The Company records revenues for these services as the performance obligations

are satisfied over time based on measure of progress.

However, if the Company concludes that its collaboration partner is not

a customer for those collaborative research and development activities, it presents such payments as a reduction of research and

development expenses.

and Development Arrangement:

Under the terms of our research and development agreement with the Cystic Fibrosis Foundation

Therapeutics, Inc.

(“CFF Agreement”), the Company did not account for this arrangement in accordance with Topic 606.

However, the Company has determined that it is a partner under a collaboration agreement as it shares in the risks and rewards

that would be received if the product is successful and commercialized.

Therefore the funds received under the terms of this agreement

will be recorded as reimbursements of research and development costs and reduce the research and development expenses in the Company’s

Statements of Operations and Comprehensive Income/(Loss).

The Company records the reimbursements for certain materials and other

research and development costs associated with the agreement when it is probable that a significant reversal in the amount of

cumulative costs have been recognized.

As of December 31, 2020, the Company recognized approximately $ 73.4 thousand of reimbursed

research and development costs associated with the CFF Agreement.

For a complete disclosure of the CFF Agreement, see Note 9 –

Collaboration Agreements, License and other Research and Development Agreements.

and development expenses

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research and development expenses incurred under arrangements with third parties, such as contract research organizations

(“CROs”) and other vendors and contract manufacturing organizations (“CMOs”) for the production of

drug substance and drug product;

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part of the process of preparing our financial statements, the Company is required to estimate its accrued expenses.

involves reviewing quotations and contracts, identifying services that have been performed on the Company’s behalf and estimating

the level of service performed and the associated cost incurred for the service when the Company has not yet been invoiced or

otherwise notified of the actual cost.

Certain of the Company’s service providers invoice the Company monthly in arrears

for services performed or when contractual milestones are met.

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balance sheet date in its financial statements based on facts and circumstances known to the Company at that time.

periodically confirms the accuracy of its estimates with the service providers and make adjustments if necessary.

The significant

estimates in the Company’s accrued research and development expenses are related to expenses incurred with respect to CROs,

CMOs and other vendors in connection with research and development and manufacturing activities.

periodically confirms the accuracy of its estimates with the service providers and adjust if necessary.

The significant estimates

in the Company’s accrued research and development expenses are related to expenses incurred with respect to CROs, CMOs and

other vendors in connection with research and development and manufacturing activities.

Company bases its expense related to CROs and CMOs on its estimates of the services received and efforts expended pursuant to

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financial terms of these agreements are subject to negotiation, vary from contract to contract and may result in uneven payment

There may be instances in which payments made to the Company’s vendors will exceed the level of services provided

and result in a prepayment of the applicable research and development or manufacturing expense.

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Although the Company does not expect its estimates to be materially different from amounts actually

incurred, the Company’s understanding of the status and timing of services performed relative to the actual status and timing

of services performed may vary and could result in us reporting amounts that are too high or too low in any particular period.

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and administrative expenses in the consolidated statements of operations.

comprehensive loss

comprehensive loss consists of net loss and unrealized losses on marketable securities available-for-sale and is presented in

the Consolidated Statements of Operations.

comprehensive income/(loss)

comprehensive income/(loss) consists of net gains/(losses) and unrealized losses on marketable securities available-for-sale and

is presented in the Consolidated Statements of Operations.

adopted accounting pronouncements

June 2018, the FASB issued ASU No.

2018-07, “Compensation - Stock Compensation (Topic 718):

Improvements to Nonemployee

Share-Based Payment Accounting.”

These amendments expand the scope of Topic 718, Compensation - Stock Compensation to include

share-based payments issued to nonemployees for goods or services.

Consequently, the accounting for share-based payments to nonemployees

and employees will be substantially aligned.

The Company adopted the guidance on January 1, 2019.

The adoption did not have a

material impact on our consolidated financial statements.

January 2017, the FASB issued ASU No.

2017-04 “Intangibles - Goodwill and Other (Topic 350):

Simplifying the Test for Goodwill

Impairment”.

The amendment simplifies the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment

Instead an entity should perform its goodwill impairment test by comparing the fair value of a reporting unit with its carrying

An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s

however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit.

required to apply the amendments for the annual or any interim goodwill impairment tests in fiscal years beginning on January

The Company early adopted the guidance on December 31, 2019.

The adoption did not have a material impact on our consolidated

financial statements.

accounting pronouncements not yet adopted

June 2016, the FASB issued ASU 2016-13, “Financial Instruments –

Credit Losses (Topic 326):

Measurement of Credit

Losses on Financial Instruments”.

The standard represents a significant change to the impairment model for most financial

assets that are measured at amortized costs and certain other instruments from an incurred loss model to an expected loss model

which will be based on an estimate of current expected credit loss (“CECL”) and provides targeted improvements on

evaluating impairment and recording credit losses on available-for-sale debt securities through an allowance account.

is effective for public entities in fiscal years beginning after December 15, 2019, including interim periods within those fiscal

The Company has evaluated the disclosure requirements of this standard and does not expect it to have a material impact

on its consolidated financial statements.

August 2018, the FASB issued ASU 2018-13, “Changes to Disclosure Requirements for Fair Value Measurements”, which

June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”)

2016-13, “Financial Instruments – Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments”.

The standard represents a significant change to the impairment model for most financial assets that are measured at amortized

costs and certain other instruments from an incurred loss model to an expected loss model which will be based on an estimate of

current expected credit loss (“CECL”) and provides targeted improvements on evaluating impairment and recording credit

losses on available-for-sale debt securities through an allowance account.

The guidance is effective for public entities in fiscal

years beginning after December 15, 2019, including interim periods within those fiscal years.

The adoption did not have a material

impact on our consolidated financial statements.

November 2019, the FASB Issued ASU 2019-11, “Codification Improvements to Topic 326, Financial Instruments – Credit

The amendments in this standard represent changes to clarify, correct errors in, or improve the Codification.

amendments make the Codification easier to understand and easier to apply by eliminating inconsistencies and providing clarifications.

This standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019.

The adoption did not have a material impact on our consolidated financial statements.

August 2018, the FASB issued ASU 2018-13, “Changes to Disclosure Requirements for Fair Value Measurements”, which

will improve the effectiveness of disclosure requirements for recurring and nonrecurring fair value measurements.

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fiscal years, beginning after December 15, 2019.

The Company has evaluated the disclosure requirements of this standard

and does not expect it to have a material impact on its consolidated financial statements.

November 2018, the FASB issued ASU 2018-18, “Collaboration Arrangements (Topic 808):

The adoption did not have a material impact on our consolidated financial statements.

November 2018, the FASB issued ASU 2018-18, “Collaboration Arrangements (Topic 808):

Clarifying the Interaction between

Topic 808 and Topic 606”, to clarify when ASC 606 should be used for collaborative arrangements when the counterparty is

The Guidance precludes an entity from presenting consideration from a transaction in a collaborative arrangement as

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for public entities in fiscal years beginning after December 15, 2019, and interim period therein.

The Company has evaluated

the standard and does not expect it to have a material impact on its consolidated financial statements.

November 2019, the FASB Issued ASU 2019-11, “Codification Improvements to Topic

326, Financial Instruments –

Credit Losses”.

The amendments in this standard

represent changes to clarify, correct errors in, or improve the Codification.

The amendments

make the Codification easier to understand and easier to apply by eliminating inconsistencies

and providing clarifications.

This standard is effective for fiscal years, and interim

periods within those fiscal years, beginning after December 15, 2019.

The Company has

evaluated the accounting and disclosure requirements of this standard and

does not expect it to have a material impact on its consolidated financial

December 2019, the FASB Issued ASU 2019.12, “Income Taxes, (Topic 740):

Simplifying the Accounting for Income Taxes”.

The adoption did not

have a material impact on our consolidated financial statements in 2020, see Note 9 – Collaboration Agreements, License

and other Research and Development Agreements.

accounting pronouncements not yet adopted

December 2019, the FASB Issued ASU 2019-12, “Income Taxes, (Topic 740):

Simplifying the Accounting for Income Taxes”.

This standard removes certain exceptions to the general principles and improves consistent application of and simplify GAAP for

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will have on its consolidated financial statements.

Reclassification

Reclassifications

of certain 2018 balances were made to be consistent with the 2019 presentation.

Cash, Cash Equivalents and Marketable Securities

4 – Cash, Cash Equivalents, Restricted Cash and Marketable Securities

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 Equivalents and Restricted Cash

Company presents restricted cash with cash and cash equivalents in the Consolidated Statements of Cash Flows.

Restricted cash

represents funds the Company is required to set aside to cover building operating leases and other purposes.

following table provides a reconciliation of cash, cash equivalents and restricted cash reported in the Consolidated Balance Sheets

to the total of the amounts in the Consolidated Statements of Cash Flows as of December 31, 2020, December 31, 2019 and December

31, 2018 (in thousands):

Schedule of Cash, Cash Equivalents and Restricted Cash

Cash and cash equivalents

Restricted cash included in current/long term assets

Cash, cash equivalents and restricted cash in the statements of cash flows

Company has classified its investments in marketable securities as available-for-sale and as a current asset.

Our investments

in marketable securities are carried at fair value, with unrealized gains and losses included as a separate component of stockholders’

Unrealized gains and losses are classified as other comprehensive income (loss) and costs are determined on a specific

identification basis.

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 gains and losses are classified as other comprehensive income (loss) and costs are determined

on a specific identification basis.

Realized gains and losses from our marketable securities are recorded in other income, net.

ended December 31, 2019, the Company reported an unrealized loss of $0.1 thousand.

The Company had an accumulated unrealized loss

of $0.1 thousand for the year ended December 31, 2019.

The Company had no marketable securities for the year ended December 31,

following tables summarizes the Company’s cash, cash equivalents and marketable securities for the year ended December 31,

For the years ended December 31, 2020 and 2019, the Company recorded unrealized gains/(losses) of approximately $ 237.5 thousand

and $ 0.9 thousand, respectively, and reclassed approximately $ 8.5 thousand to net loss from operations from the sale of certain

securities during 2020.

As of December 31, 2020 and 2019, the Company had net accumulated unrealized gains of approximately $ 228.2

thousand and net accumulated unrealized losses of approximately $ 0.9 thousand, respectively.

following tables summarizes the Company’s marketable securities for the year ended December 31, 2020 consisted of the following

(in thousands):

Summary of Cash, Cash Equivalents and Marketable Securities

Amortized Cost

Unrealized Gain

Unrealized (Loss)

Treasury Bonds

Government Notes

Corporate Debt Securities

State and Municipal Bonds

Total marketable securities

of debt securities classified as available-for-sale were as follows at December 31, 2020 (in thousands):

Schedule of Maturities of Debt Securities Available-for-sale

Due within one year

Due after one year through five years

following tables summarizes the Company’s cash, cash equivalents and marketable securities for the year ended December 31,

2019 consisted of the following (in thousands):

and cash equivalents

Summary of Cash, Cash Equivalents and Marketable Securities

Amortized Cost

Unrealized Gain

Unrealized (Loss)

Cash and cash equivalents

Treasury Bonds

Debt Securities

marketable securities

cash, cash equivalents and marketable securities

Corporate Debt Securities

Total marketable securities

Total cash, cash equivalents and marketable securities

of debt securities classified as available-for-sale were as follows at December 31, 2019 (in thousands):

within one year

after one year through five years

have determined that the unrealized losses are deemed to be temporary as of December 31, 2019.

We believe that the unrealized

losses generally are the result of increases in the risk premiums required by market participants rather than an adverse change

in cash flows for a fundamental weakness in the credit quality of the issuer or underlying assets.

We have the ability and intent

to hold these investments until a recovery of fair value, which may be maturity.

We do not consider the investment in corporate

bonds to be other-than-temporarily impaired at December 31, 2019.

Schedule of Maturities of Debt Securities Available-for-sale

Carrying Amount

Due within one year

Due after one year through five years

Company determined that the unrealized gains and (losses) are deemed to be temporary as of December 31, 2020.

Unrealized gains

and (losses) generally are the result of increases in the risk premiums required by market participants rather than an adverse

change in cash flows for a fundamental weakness in the credit quality of the issuer or underlying assets.

The Company has the

ability and intent to hold these investments until maturity.

The Company does not consider the investment in marketable securities

to be other-than-temporarily impaired at December 31, 2020.

5 - Fair Value Measurements

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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.

for fair value measurements for each level within the hierarchy is described below:

1 – Quoted prices for identical assets or liabilities in active markets.

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.

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.

3 – Valuations derived from valuation techniques in which one or more significant inputs to the valuation model are

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the extent possible as well as considers counterparty credit risk in its assessment of fair value.

carrying amounts of certain cash and cash equivalents, current portion of restricted cash, accounts receivable, prepaid expenses,

accounts payable, current portion of lease liability and accrued expenses approximate fair value due to the short-term nature

of these instruments.

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.

summary of the assets and liabilities carried at fair value in accordance with the hierarchy defined above is as follows (in thousands):

Value Hierarchy

and cash equivalents

Schedule of Fair Value Measurement of Assets and Liabilities

Fair Value Hierarchy

December 31, 2020

Marketable Securities:

Treasury Bonds

Debt Securities

and cash equivalents consisted of cash in bank checking and savings accounts, money market funds and U.S.

treasury bonds and 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 corporate debt securities are classified as Level 2 and are valued

using quoted market prices in markets that are not active.

Company had no marketable securities for the year ended December 31, 2018 and cash and cash equivalents consisted of cash in bank

checking and savings accounts.

Government Notes

Corporate Debt Securities

State and Municipal Bonds

Fair Value Hierarchy

December 31, 2019

Cash and cash equivalents

Marketable Securities:

Treasury Bonds

Corporate Debt Securities

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.

6 – Leasehold Improvements and Equipment

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(in thousands):

Ended December 31,

under capital lease

Schedule of Leasehold Improvements and Equipment

Lab equipment

Leasehold improvements

accumulated depreciation and amortization

improvements and equipment, net

and amortization expense for the years ended December 31, 2019 and 2018 was approximately $206 thousand and $218 thousand, respectively.

Due to the adoption of the new lease accounting pronouncement in January 2019 and the reclass of certain right-of-use assets upon

adoption, the Company reclassed $559 thousand and $72 thousand of assets and related accumulated depreciation, respectively.

addition, in July 2019, the Company recorded an asset write-off of approximately $14 thousand, including $7 thousand

of related accumulated depreciation.

Accrued Expenses

Expenses, summarized by major category, consist of the following for years ended December 31, 2019 and 2018 (in thousands):

of December 31,

and incentives

and administrative expenses

and development expenses

Leasehold improvements and equipment, net

and amortization expense for the years ended December 31, 2020 and 2019 was approximately $ 231.1 thousand and $ 206 .0 thousand,

respectively.

Due to the adoption of the new lease accounting pronouncement in January 2019 and the reclass of certain right-of-use

assets upon adoption, the Company reclassed $ 559 thousand and $ 72 thousand of assets and related accumulated depreciation, respectively.

In addition, in July 2019, the Company recorded an asset write-off of approximately $ 14 thousand, including $ 7 thousand of related

accumulated depreciation.

7 – Accrued Expenses and Other Liabilities

expenses and other liabilities, summarized by major category, consist of the following for years ended December 31, 2020 and 2019

(in thousands):

Schedule of Accrued Expenses

As of December 31,

Payroll and incentives

General and administrative expenses

Research and development expenses

Deferred revenue and other deferred liabilities *

December 31, 2020, approximately $ 576.6 thousand is the remaining balance of the CFF Agreement’s deferred liability

and approximately $ 66.6 thousand is deferred revenue related to the Genentech feasibility study agreement.

The $ 100.0 thousand

of deferred revenue at December 31, 2019 is the upfront payment for the Genentech feasibility study agreement.

Company has various lease agreements with terms up to 10 years , including leases of office space, a laboratory and manufacturing

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are included in the lease term when it is reasonably certain that the option will be exercised.

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 incremental borrowing rates or implicit rates, when

readily determinable.

Short-term leases, which have an initial term of 12 months or less, are not recorded on the balance sheet.

Company’s operating leases do 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 borrowing rates explicitly stated

in the Company’s finance leases.

Company incurred lease expense for its operating leases of approximately $814 thousand and $745 thousand for the years ended December

31, 2019 and 2018, respectively.

Company incurred interest expense on its finance leases of approximately $12 thousand and $13 thousand for the years ended December

31, 2019 and 2018, respectively.

The Company incurred amortization expense on its finance lease right-of-use assets of approximately

$123 thousand and $104 thousand for the years ended December 31, 2019 and 2018, respectively.

following table presents information about the amount and timing of liabilities arising from the Company’s operating and

finance leases as of December 31, 2019 (in thousands):

of Lease Liabilities

Lease Liabilities

undiscounted operating lease payments

Imputed interest

value of operating lease liabilities

average remaining lease term in years

average discount rate

following table presents a summary of future minimum lease payments arising from the Company’s operating leases as of December

31, 2018 (in thousands):

future minimum lease payments

lease obligations

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.

Company was obligated to provide an initial security deposit of $300,000 to obtain the office lease space.

The deposit was subsequently

reduced and is currently $50,000, which it will remain at for the balance of the lease term.

2014 at a monthly rent of approximately $ 13,000 , increasing to approximately $ 14,000 per month toward the end of the term, which

The Company was obligated to provide an initial security deposit of $ 300,000 to obtain the office lease space.

of December 31, 2020, the total deposit had been returned to the Company.

September 23, 2020, the Company entered into an amendment to the Bedminster lease.

Pursuant to the amendment, the Company will

lease an additional 3,034 rentable square feet (“Expansion Premises”).

The amendment becomes effective upon the date

on which the landlord delivers to the Company the Expansion Premises, which is expected to occur in the second quarter of 2021,

and extends the term of the lease 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 other 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.

December 15, 2016, the Company entered into a 10-year, 3-month lease to consolidate our locations while expanding our laboratory

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security deposit of $ 586,000 .

This deposit was subsequently been reduced to $486,000.

It can be further reduced by $100,000, $100,000

and $86,000 on each of the next three anniversaries of the rent commencement date, respectively, after which it will remain at

$200,000 for the balance of the lease term.

For a description of lease disclosures related to the amount, timing and uncertainty

of cash flows arising from leases, see Note 8 - Leases of the Consolidated Financial Statements.

and development agreements

Company has financial obligations resulting from Cooperative Research and Development Agreements (“CRADAs”) entered

into with the with the National Institute of Allergy and Infectious Diseases (“NIH”) as follows:

This deposit was subsequently reduced to $ 286,000 .

It can be further reduced by $ 86,000 on the next

anniversary of the rent commencement date, after which it will remain at $ 200,000 for the balance of the lease term.

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 incremental borrowing rates or implicit rates, when

readily determinable.

Short-term leases, which have an initial term of 12 months or less, are not recorded on the balance sheet.

Company’s operating leases do 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 borrowing rates explicitly stated

in the Company’s finance leases.

Company incurred lease expense for its operating leases of approximately $ 813.7 thousand for the years ended December 31, 2020

The Company incurred amortization expense on its operating lease right-of-use assets of approximately $ 484.6 thousand

and $ 452.1 thousand for the years ended December 31, 2020 and 2019, respectively.

Company incurred interest expense on its finance leases of approximately $ 6.7 thousand and $ 11.7 thousand for the years ended

December 31, 2020 and 2019, respectively.

The Company incurred amortization expense on its finance lease right-of-use assets of

approximately $ 59.0 thousand and $ 122.8 thousand for the years ended December 31, 2020 and 2019, respectively.

following table presents information about the amount and timing of liabilities arising from the Company’s operating leases,

excluding the Expansion Premises of the amended Bedminster lease which the Company has not taken control of as of December 31,

2020, and finance leases as of December 31, 2020 (in thousands):

Schedule of Maturity of Operating and Finance Leases Liabilities

Maturity of Lease Liabilities

Operating Lease Liabilities

Finance Lease Liabilities

Total undiscounted operating lease payments

Imputed interest

Present value of operating lease liabilities

Weighted average remaining lease term in years

Weighted average discount rate

following table presents information about the amount and timing of liabilities arising from the Company’s operating and

finance leases as of December 31, 2019 (in thousands):

Maturity of Lease Liabilities

Operating Lease Liabilities

Finance Lease Liabilities

Total undiscounted operating lease payments

Imputed interest

Present value of operating lease liabilities

Weighted average remaining lease term in years

Weighted average discount rate

9 - Collaboration Agreements, License and Other Research and Development Agreements

Fibrosis Foundation Therapeutics Development Award

November 19, 2020, the Company entered into an award agreement (the “Agreement”) with Cystic Fibrosis Foundation (“CFF”),

pursuant to which it received a Therapeutics Development Award of up to $ 4.2 million (the “Award”) (of which $ 484,249

had been previously received) to support the preclinical development (the “Development Program”) of the Company’s

MAT2501 product candidate (the “Product”), a lipid nanocrystal oral formulation of the broad-spectrum aminoglycoside

amikacin, for the treatment of pulmonary non-tubercular mycobacteria infections and other pulmonary diseases (the “Field”).

first payment under the Agreement, in the amount of $ 650.0

thousand, became due upon execution of

the Agreement.

The Company invoiced the CFF in November 2020 and payment was subsequently received in February 2021.

31, 2020, the related receivable of $ 650.0

thousand is included in prepaid expenses

and other current assets and the related deferred liability balance of $ 576.6

is 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 and progress of the Development

Program, as set forth in the Agreement.

the Company ceases to use commercially reasonable efforts directed to the development of MAT2501 in the Field, (an “Interruption”)

and fails to resume the development of the Product after receiving from CFF notice of an Interruption, then the Company must either

repay the amount of the Award actually received by the Company, or grant to CFF (1) an exclusive (even as to the Company), worldwide,

perpetual, sublicensable license under technology developed under the Agreement that covers the Product for use in treating infections

in CF patients (the “CF Field”), and (2) a non-exclusive, worldwide license under certain background intellectual

property covering the Product, to the extent necessary to commercialize the Product in the CF Field.

to the terms of the Agreement, the Company is obligated to make royalty payments to CFF contingent upon commercialization of the

Product in the Field up to a maximum of five (5) times the Award or approximately $ 21.2 million (the “Royalty Cap”),

payable in three equal annual installments following the first commercial sale of the Product, the first of which is due within

90 days following the first commercial sale of the Product.

The Company may also be obligated to make a payment to CFF if the

Company transfers, sells or licenses the Product in the CF Field, or if the Company enters into a change of control transaction

which will be applied against the Royalty Cap.

In addition, the Company is also obligated to make up the two royalty payments

of CFF of the approximately $ 4.2 million each, due in the calendar years in which specific net sales milestones are achieved.

term of the Agreement commenced on November 19, 2020 and expires on the earlier of the date on which the Company has paid CFF

all of the fixed royalty payments set forth therein, the effective date of any license granted to CFF following an Interruption,

or upon earlier termination of the Agreement.

Either CFF or the Company may terminate the agreement for cause, which includes

the Company’s material failure to achieve certain development milestones.

The Company’s payment obligations survive

the termination of the Agreement.

Company concluded that the CFF award is in the scope of ASC 808.

Accordingly, as discussed in Note 3, the award amounts received

from CFF upon achievement of certain milestones are recognized as credits to research and development expenses in the period the

Development Program’s expenses are incurred.

During the year ended December 31, 2020, the Company recognized $ 73.4 thousand,

as credits to research and development expenses related to the CFF award.

In addition, the Company concluded under the guidance

in ASC 730 that it does not have an obligation to repay funds received once related research and development expenses are incurred.

Feasibility Study Agreement

December 12, 2019, the Company entered into a feasibility study agreement (the “Agreement”) with Genentech, Inc.

(“Genentech”).

This feasibility study agreement will involve 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 Agreement,

Genentech shall pay to the Company a total of $100.0 thousand for three molecules, or approximately $33.3 thousand per molecule,

which will be recognized upon the Company fulfilling its obligations for each molecule under the 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.

As of December 31, 2020, the Company completed the first of three molecules

and the Company recognized approximately $ 33.3 thousand of Genentech revenue for the year ended December 31, 2020.

did not complete any contract performance obligations during 2019.

Research and development agreements

Company has financial obligations resulting from Cooperative Research and Development Agreements (“CRADAs”) entered

into with the with the National Institute of Allergy and Infectious Diseases (“NIH”) as follows:

February 19, 2016, the Company agreed to provide funds in the amount of $ 200,000 per year under a CRADA to support NIH investigators

in the conduct of clinical research to investigate the safety, efficacy, and pharmacokinetics of encochleated drug products

in the conduct of clinical research to investigate the safety, efficacy, and pharmacokinetics of LNC platform drug products

in patients with fungal, bacterial, or viral infections.

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the Company renewed the CRADA for an additional three years with an annual funding commitment of $ 200,000 .

April 2, 2019, the Company agreed to provide funds in the amount of $157,405 per year

under a CRADA 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.

April 2, 2019, the Company agreed to provide funds in the amount of $ 157,405 per year under a CRADA to support NIH investigators

in the conduct of clinical research to investigate the safety, efficacy, and pharmacokinetics of LNC platform drug products

in patients with fungal, bacterial, or viral infections.

The term of the CRADA is three years .

normal business operating agreements

addition, in the course of normal business operations, the Company enters into agreements with contract service providers to assist

in the performance of research & development and manufacturing activities.

Expenditures to these third parties represent significant

costs in clinical development and may require upfront payments and long-term commitments of cash.

Subject to required notice periods

and obligations under binding purchase orders, the Company can elect to discontinue the work under these agreements at any time.

the acquisition of Aquarius, the Company 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 LNC platform delivery technology.

The Amended and

Restated Exclusive License Agreement provides for, among other things, the payment of (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 the current fee amount of $ 50,000 over the term of the license agreement.

10 – Commitments

payment rights

September 12, 2016 the Company conducted a final closing of a private placement offering to accredited investors of shares of

the Company’s Series A Preferred Stock.

As part of this offer, the investors received royalty payment rights if and when

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If and when the Company obtains FDA or

the European Medicines Agency (“EMA”) approval of MAT2203 and/or MAT2501, which the Company does not expect to occur

before 2023, if ever, and/or if the Company generates sales of such products, or the Company receives any proceeds from the licensing

or other disposition of MAT2203 or MAT2501, the Company is required to pay to the holders of the Series A Preferred Stock, subject

to certain vesting requirements, in the aggregate, a royalty (the “Royalty Payment Rights”) equal to (i) 4.5% of Net

Sales (as defined in the Series A Certificate of Designation), subject in all cases to a cap of $ 25 million per calendar year,

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which is currently expected to be in 2033 .

the acquisition of Aquarius, the Company 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 LNC platform delivery technology.

The Amended and

Restated Exclusive License Agreement provides for, among other things, the payment of (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.

Company also has employment agreements with certain employees which require the funding of a specific level of payments, if certain

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(now known as Matinas BioPharma Nanotechnologies, Inc.)

to the terms of the merger agreement with Aquarius Biotechnologies, Inc., we may be required to issue up to an additional 3,000,000

to the terms of the merger agreement with Aquarius Biotechnologies, Inc., the Company may be required to issue up to an additional

3,000,000 shares of our common stock upon the achievement of certain milestones.

The milestone consideration consists of (i) 1,500,000 shares

issuable upon the dosing of the first patient in a phase III trial sponsored by us for a product utilizing Aquarius’

cochleate delivery technology and (ii) 1,500,000 shares issuable upon FDA approval of the first NDA submitted by us for a product

utilizing Aquarius’

proprietary cochleate delivery technology.

The Company concluded that the contingent share issuance

represented equity settled contingent consideration and have recorded the amounts to equity since inception.

None of these milestones

have yet been reached, and accordingly, as of December 31, 2019 no additional shares have been issued.

The milestone consideration consists of (i) 1,500,000

shares issuable upon the dosing of the first patient in a phase III trial sponsored by us for a product utilizing Aquarius’

proprietary LNC platform delivery technology and (ii) 1,500,000 shares issuable upon FDA approval of the first NDA submitted by

us for a product utilizing Aquarius’ proprietary LNC platform delivery technology.

The Company concluded that the contingent

share issuance represented equity settled contingent consideration and have recorded the amounts to equity since inception.

of these milestones have been reached, and accordingly, as of December 31, 2020 no additional shares have been issued.

normal business operating agreements

addition, in the course of normal business operations, the Company enters into agreements with contract service providers to assist

in the performance of research & development and manufacturing activities.

Expenditures to these third parties represent significant

costs in clinical development and may require upfront payments and long-term commitments of cash.

Subject to required notice periods

and obligations under binding purchase orders, the Company can elect to discontinue the work under these agreements at any time.

11 – Income Taxes

Company utilizes the liability method of accounting for deferred income taxes.

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available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.

The Company’s

policy is to record interest and penalties on uncertain tax positions as income tax expense.

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components of the income tax provision are as follows (in thousands):

Schedule of Income Tax Provision

Ended December 31,

expense (benefit):

Current expense (benefit):

expense (benefit):

Total current expense (benefit):

Deferred expense (benefit):

income tax expense (benefit):

Total deferred expense (benefit):

Total income tax expense (benefit):

income taxes reflect the net effects of temporary differences between the carrying amounts of assets and liabilities for financial

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A reconciliation of the statutory U.S.

federal rate to the Company’s

effective tax rate is as follows:

Ended December 31,

at US Statutory Rate

Taxes, net of Federal benefit

Schedule of Effective Income Tax Rate Reconciliation

Year Ended December 31,

Income at US Statutory Rate

State Taxes, net of Federal benefit

Permanent Differences

Valuation Allowance

Discrete items

Company has no current income taxes payable other than certain state minimum taxes which are included in general and administrative

components of the Company’s deferred tax assets (liabilities) for 2019 and 2018 consist of the following (in thousands):

Ended December 31,

and Amortization

Operating Loss Carry-forwards

Credit Carryforwards

Deferred tax assets

deferred tax asset (liability)

December 22, 2017, the Tax Cuts and Jobs Act (“The Act”), was signed into law by President Trump.

The Act includes

a number of provisions, including the lowering of the U.S.

corporate tax rate from 35 percent to 21 percent, effective January

1, 2018 and the establishment of a territorial-style system for taxing foreign-source income of domestic multinational corporations.

In December 2017, the SEC issued Staff Accounting Bulletin No.

118, Income Tax Accounting Implications of the Act (“SAB118”),

which allows us to record provisional amounts during a measurement period not to extend beyond one year of the enactment.

Company re-measured its deferred tax assets and liabilities as of December 31, 2017, applying the reduced corporate income

tax rate and recorded a provisional decrease to the deferred tax assets of approximately $4.9 million, with a corresponding

adjustment to the valuation allowance.

The adjustment also resulted in recording an income tax benefit of $0.4 million for

the year ended December 31, 2017.

In the fourth quarter of 2018, we completed our analysis to determine the effect of the

Tax Act and there were material adjustments as of December 31, 2018, including a reduction of the net deferred tax liability

due to the indefinite lived net operating loss generated in 2018.

That adjustment resulted in recording an income tax benefit

of $0.5 million for the year ended December 31, 2018.

components of the Company’s deferred tax assets (liabilities) for 2020 and 2019 consist of the following (in thousands):

Schedule of Deferred Tax Assets and Liabilities

Year Ended December 31,

Share-based Compensation

Depreciation and Amortization

Accrued Liability

Net Operating Loss Carry-forwards

R&D Credit Carryforwards

ROU Liability

Total Deferred tax assets

Valuation allowance

Net deferred tax asset (liability)

March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law making several changes to

the Internal Revenue Code.

The changes include, but are not limited to:

allowing companies to carryback certain net operating

losses, and increasing the amount of net operating loss carryforwards that corporations can use to offset taxable income.

tax law changes in the Act did not have a material impact on the Company’s income tax provision.

assessing the realizability of deferred tax assets, the Company considers whether it is more likely than not that some portion

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generation of taxable income during the periods in which the temporary differences representing net future deductible amounts

become deductible, and is impacted by the Company’s ability to carryforward losses to years in which the Company

has taxable income.

Due to the Company’s history of losses and lack of other positive evidence to support taxable

income, the Company has recorded a valuation allowance against those deferred tax assets that are not expected to be realized.

The valuation allowance was approximately $19.7 million and approximately $14.5 million as of December 31, 2019

and 2018, respectively, representing an increase of approximately $5.2 million.

of December 31, 2019, the Company had Federal net operating loss carryforwards of approximately $64.9 million.

also had federal and state research and development tax credit carryforwards of approximately $1.9 million.

net operating loss and tax credit carryforwards will expire at various dates beginning in 2033, if not utilized.

The difference

between the statutory tax rate and the effective tax rate is primarily attributable to the valuation allowance offsetting deferred

become deductible, and is impacted by the Company’s ability to carryforward losses to years in which the Company has taxable

Due to the Company’s history of losses and lack of other positive evidence to support taxable income, the Company

has recorded a valuation allowance against those deferred tax assets that are not expected to be realized.

The valuation allowance

was approximately $ 25.2 million and approximately $ 19.7 million as of December 31, 2020 and 2019, respectively, representing an

increase of approximately $ 5.5 million.

of December 31, 2020, the Company had Federal net operating loss carryforwards of approximately $ 38.1 million which will begin to expire in 2032 .

In addition, the Company has federal net operating loss carryforwards

of approximately $ 45.0 million which have an indefinite carryforward period.

The Company also

had federal and state research and development tax credit carryforwards of approximately $ 2.3 million.

The federal net operating

loss and tax credit carryforwards will expire at various dates beginning in 2033, if not utilized.

The difference between the

statutory tax rate and the effective tax rate is primarily attributable to the valuation allowance offsetting deferred tax assets.

of the net operating losses and general business tax credits carryforwards may be subject to a substantial limitation under Sections

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The Company has not completed a study to determine

whether it had undergone an ownership change since the Company’s inception

of net operating losses (NOLs)

Company recognized approximately $1.0 million for the year ended December 31, 2019 in connection with the sale of certain State

of New Jersey Net Operating Losses (“NOL”) and Research and Development (“R&D”) tax credits to a third

party under the New Jersey Technology Business Tax Certificate Transfer Program.

The Company had no sales of NOLs or R&D tax

credits for the year ended December 31, 2018.

In addition, the Tax Act imposes significant additional limitations on the deductibility

of interest and limits net operating loss (NOL) deductions to 80% of net taxable income for losses arising in taxable years beginning

after December 31, 2017.

Related Parties

members of the Company’s Board of Directors have relationships with the Company that create the potential for both real,

as well as perceived, conflicts of interests.

Capital Corp.

Adam Stern, a director of the Company, has been Head of Private Equity Banking at Aegis Capital Corp.

(“Aegis”) and

CEO of SternAegis Ventures since 2012.

Aegis acted as a selected dealer for our public offering of Series B Preferred Stock in

June 2018, which raised gross proceeds of $8 million.

In connection with the offering the Company agreed to issue placement agent

warrants to purchase that number of shares of common stock equal to 1.5% of the aggregate number of shares of common stock underlying

the shares of Series B Preferred Stock sold in the offering (not including any shares payable pursuant to the contemplated dividend

A total of 240,000 warrants were issued, of which Adam Stern and Aegis were collectively issued 81,080.

related party transactions were entered into during the year ended December 31, 2019.

Except as disclosed above regarding Aegis

Adam Stern, no other related party transactions were entered into during the year ended December 31, 2018.

Stockholders’

Company recognized approximately $ 1.1 million and $ 1.0 million for the years ended December 31, 2020 and 2019, respectively, in

connection with the sale of certain State of New Jersey Net Operating Losses (“NOL”) and Research and Development

(“R&D”) tax credits to a third party under the New Jersey Technology Business Tax Certificate Transfer Program.

In addition, the Tax Cuts and Jobs Act, signed into law on December 22, 2017 imposes significant additional limitations on the

deductibility of interest and limits net operating loss (NOL) deductions to 80% of net taxable income for losses arising in taxable

years beginning after December 31, 2017.

This NOL limitation has currently been suspended for years 2018 through 2020 as a result

of the CARES Act.

12 – Stockholders’ Equity

At-The-Market

Equity Offering

July 2, 2020, the Company entered into an At-The-Market (“ATM”) Sales Agreement (the “Sales Agreement”)

with BTIG, LLC (“BTIG”), pursuant to which the Company may offer and sell, from time to time, through BTIG, as sales

agent and/or principal, shares of its common stock having an aggregate offering price of up to $ 50,000,000 , subject to certain

limitations on the amount of common stock that may be offered and sold by the Company set forth in the Sales Agreement.

be paid a 3 % commission on the gross proceeds from each sale.

The Company may terminate the Sales Agreement at any time;

may terminate the Sales Agreement in certain limited circumstances.

As of December 31, 2020, the Company did not sell any shares

of its common stock under the ATM Sales Agreement.

During January 2021, BTIG sold 3,023,147 shares of the Company’s common

stock generating gross proceeds of approximately $ 5.8 million and net proceeds of approximately $ 5.6 million, after deducting

BTIG’s commission on gross proceeds.

January 14, 2020, the Company closed on an underwritten public offering of 32.3 million shares of its common stock at a purchase

price of $ 1.55 per share.

The Company generated gross proceeds of approximately $ 50.0 million and net proceeds of approximately

$ 46.7 million, after deducting underwriting discounts and commissions and other estimated offering expenses.

In addition, the

Company granted the underwriters a 30-day option to purchase up to approximately 4.8 million additional shares of its common stock

on the same terms and conditions.

No additional shares of the Company’s common stock were sold pursuant to this option.

March 19, 2019, the Company closed an underwritten public offering of its common stock.

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In addition, the Company granted

the underwriters a 30-day option (the “option”) to purchase up to an additional 4,090,909 shares of common stock subject

to the same terms and conditions.

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Pursuant to the Series A Certificate of Designation, the Company designated 1,600,000 shares

of the Company’s previously undesignated preferred shares as Series A Preferred Stock.

In connection with a public offering

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Pursuant to the Series

B Certificate of Designation, the Company designated 8,000 shares of the Company’s previously undesignated preferred shares

as Series B Preferred Stock.

A Preferred Stock

July 29, 2019, the Company effected a mandatory conversion of all then outstanding shares of Series A Preferred Stock in accordance

with terms of the underlying Certificate of Designation.

The conversion resulted in the issuance of 14,678,580 shares of the Company’s

common stock.

In addition, the Company issued 3,522,860 shares of common stock as payment-in-kind for dividends that were accrued

to shareholders of Series A Preferred Stock.

to the automatic conversion of the Series A Preferred Stock on July 29, 2019, each share of Series A Preferred Stock was convertible

at the option of the holder into such number of shares of the Company’s common stock equal to the number of shares of Series

A Preferred Stock to be converted, multiplied by the stated value of $5.00 per share (the “Stated Value”), divided

by the Conversion Price in effect at the time of the conversion (the initial conversion price is $0.50, subject to adjustment

in the event of stock splits, stock dividends, and a “fundamental transaction”

as defined below).

Based on the conversion

price and number of shares outstanding, the Series A Preferred Stock were converted into 14,678,580 shares of common stock.

“fundamental transaction”

(i) a merger or consolidation of the Company 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 share of Series A Preferred Stock 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 Stock;

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, (ii) July 29, 2019, (iii)

the approval of the Company’s MAT2203 product candidate by the FDA or the EMA (the “Regulatory Approval”) or

(iv) the Regulatory Approval of the Company’s MAT2501 product candidate.

Conversion Feature- Series A Preferred Stock (deemed dividend):

to the automatic conversion of the Series A Preferred Stock on July 29, 2019, each share of Series A Preferred Stock was 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 the guidance in ASC 470-20-20, the Company determined that a beneficial conversion feature existed, as the effective conversion

price for the Series A Preferred Stock at issuance was less than the fair value of the common stock which the preferred shares

are convertible into.

A beneficial conversion feature based on the intrinsic value of the date of issuances for the Series A Preferred

Stock was approximately $4.4 million.

Value and Dividends:

to the Certificate of Designation, the Series A Preferred Stock accrued dividends at a rate of 8.0% once per year on the first

three anniversaries of July 29, 2016, which were paid to the holders of such Series A Preferred Stock in shares of common stock

upon conversion.

Dividends of approximately $1.8 million, representing 3,522,860 shares of common stock, were accrued as paid-in-kind

through July 29, 2019, with $0.6 million accrued in each of 2019, 2018 and 2017.

Series A Preferred Stock includes the right, as a group, to receive:

(i) a royalty of 4.5% of the net sales of the Company’s

MAT2203 and MAT2501 product candidates, in each case from and after the date, respectively, such product candidate has received

FDA or EMA approval, and (ii) a royalty of 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”).

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

The royalty rights that are part of the Series A Preferred Stock vested in equal thirds, on July 29, 2017, July 29, 2018,

and July 29, 2019 (each a “Vesting Date”) Following the July 29, 2019 conversion of Series A Preferred Stock, the

Royalty Payment Rights may be transferred subject to available exemption from registration under applicable securities laws.

rights were 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 Royalty Payment Rights in future periods.

As of December

31, 2019, no accrual has been recorded for royalty payments as it is not probable at this time that any amount will be paid.

B Preferred Stock

June 19, 2018, the Company entered into a placement agency agreement with ThinkEquity, a Division of Fordham Financial Management,

Inc., as placement agent, relating to the offering, issuance and sale of up to 8,000 shares of the Company’s Series B Convertible

Preferred Stock, par value $ 0.0001 per share with a stated value of $ 1,000 per share which are convertible into an aggregate of

up to 16,000,000 shares of the Company’s common stock at an initial conversion price of $0.50 per share.

up to 16,000,000 shares of the Company’s common stock at an initial conversion price of $ 0.50 per share.

The offering also

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Subject to the Beneficial Ownership Limitation (defined below), each share of Series B Preferred Stock will be

convertible into shares of the Company’s common stock at any time at the option of the holder at an initial conversion price

of $ 0.50 per share subject to adjustment for reverse splits, stock combinations and similar changes as provided in the Certificate

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Dividends will not accrue and will not be paid following optional conversion.

years ended December 31, 2019 and 2018, 242 shares and 3,181 shares, respectively, of Series B preferred stock were converted

into shares of common stock.

years ended December 31, 2020 and 2019, 216 shares and 242 shares, respectively, of Series B preferred stock were converted into

shares of common stock.

Subject to the Beneficial Ownership Limitation described below, each share of Series B Preferred Stock shall automatically

convert into 2,000 shares of the Company’s common stock at an initial conversion price of $0.50 per share upon the earlier

of (i) the first FDA approval of one of our product candidates, (ii) the 36-month anniversary of the of the filing of the Certificate

of Designation for the Series B Preferred Stock with the Secretary of State of Delaware (the “COD Effective Date”

which is June 19, 2018) or (iii) the consent to conversion by holders of at least 50.1 % of the outstanding shares of Series B

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Stock to the extent that, after giving effect to such conversion such holder would beneficially own in excess of the Beneficial

Ownership Limitation, or such holder, together with such holder’s affiliates, and any persons acting as a group together

with such holder or affiliates, would beneficially own in excess of the Beneficial Ownership Limitation.

The “Beneficial

Ownership Limitation”

is 4.99% of the number of shares of the Company’s common stock outstanding immediately after

The “Beneficial

Ownership Limitation” is 4.99% of the number of shares of the Company’s common stock outstanding immediately after

giving effect to the issuance of shares of common stock issuable upon conversion of Series B Preferred Stock held by the applicable

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Subject to the Beneficial Ownership Limitation described above, holders of the Series B Preferred Stock are entitled to receive

dividends payable in the Company’s common stock as follows:

(i) a number of shares of common stock equal to 10% of the shares

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on such anniversary date.

Based on an accounting of the holders of record of Series B Preferred Stock on June 19, 2019, the Company

paid the 12-month anniversary dividend payment of 10%, totaling 946,000 shares of common stock.

Based on an accounting of the holders of record of Series B Preferred Stock on June 19, 2019 and 2020,

the Company paid the 12-month anniversary dividend payments of 10 % and 15 %, respectively, totaling 946,000 shares and 1,365,600

shares, respectively, of common stock.

the event a fundamental transaction is consummated prior to the automatic conversion of the Series B Preferred Stock, the dividends

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Notwithstanding the

foregoing, to the extent that a holder’s right to participate in any dividend in shares of common stock to which such holder

is entitled would result in such holder exceeding the Beneficial Ownership Limitation, then such holder shall not be entitled

to participate in any such dividend to such extent and the portion of such shares that would cause such holder to exceed the Beneficial

Ownership Limitation shall be held in abeyance for the benefit of such holder until such time, if ever, as such holder’s

beneficial ownership thereof would not result in such holder exceeding the Beneficial Ownership Limitation.

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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.

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placement agent warrants do not have a redemption feature.

They may be exercised on a cashless basis at the holder’s option.

investor warrants and placement agent warrants are classified as equity instruments.

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below, all of which are fully vested (in thousands):

at December 31, 2017

at December 31, 2018

at December 31, 2019

Weighted average exercise price for outstanding warrants is $0.62.

Weighted average exercise price for outstanding warrants is $0.61.

Accumulated Other Comprehensive Loss

components of accumulated other comprehensive loss were as follows (in thousands):

Unrealized Gains (Losses) on Available-for-Sale Securities

Other Comprehensive Loss

December 31, 2018

comprehensive loss before reclassifications

other comprehensive loss for the year

December 31, 2019

components of accumulated other comprehensive loss are net of tax.

Summary of Shareholders Equity Warrants Outstanding

Outstanding at December 31, 2018

Outstanding at December 31, 2019

Outstanding at January 01, 2020

Outstanding at December 31, 2020

average exercise price for outstanding warrants is $ 0.62 .

into approximately 1,737 thousand shares of common stock.

average exercise price for outstanding warrants is $ 0.55 .

13 – Accumulated Other Comprehensive Income/(Loss)

following table summarizes the changes in accumulated other comprehensive income/(loss) by components during the years ended December

31, 2020 and 2019 (in thousands):

Schedule of Components of Accumulated Other Comprehensive Income/(Loss)

Net Unrealized (Losses)/Gains

on Available-for-Sale Securities

Accumulated Other Comprehensive

Balance, December 31, 2018

Net unrealized loss on securities available-for-sale

Reclassifications to net loss

Net current period other comprehensive loss

Balance, December 31, 2019

Balance, January 01, 2020

Net unrealized gain on securities available-for-sale

Reclassification of realized gain on securities

available-for-sale to net loss

Net current period other comprehensive income

Balance, December 31, 2020

components of accumulated other comprehensive income/(loss) are net of tax.

14 – Stock-based Compensation

Company’s Amended and Restated 2013 Equity Compensation Plan (the “Plan”) provides for the granting of incentive

stock options, nonqualified stock options, restricted stock units, performance units, and stock purchase rights.

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as follows (in thousands):

Ended December 31,

and Development

and Administrative

following table contains information about the Company’s stock plan at December 31, 2019:

Reserved for Issuance

Issued & Exercised

Available for Grant

Schedule of Recognized Stock-Based Compensation

Year Ended December 31,

Research and Development

General and Administrative

following table contains information about the Company’s stock plan at December 31, 2020:

Schedule of Equity Compensation Plan by Arrangements

Awards Reserved for Issuance

Awards Issued &

Awards Available for

2013 Equity Compensation Plan (in thousands)

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both stock grants and option grants

following table summarizes the Company’

stock option activity and related information for the period from January 1, 2018

following table summarizes the Company’ stock option activity and related information for the period from January 1, 2019

to December 31, 2020 (options in thousands):

Average Exercise Price

Average Contractual Term in Years

at January 1, 2018

at December 31, 2018

at December 31, 2019

Schedule of Stock Option Activity

Number of Options

Weighted Average Exercise Price

Weighted Average Contractual Term in Years

Outstanding at January 1, 2019

Outstanding at December 31, 2019

Outstanding at January 01, 2020

Outstanding at December 31, 2020

in the issuance of approximately 782 thousand shares of common stock due to certain cashless exercises.

following table summarizes outstanding options at December 31, 2020, by their exercise price (options in thousands):

of Exercise Prices

Average Exercise Price Per Share

Schedule of Outstanding Options Exercise Price

Range of Exercise Prices

Number Outstanding

Weighted Average Exercise Price Per Share

$ 0.41 - $ 0.69

$ 0.74 - $ 1.12

$ 1.24 - $ 1.61

$ 2.27 - $ 3.32

of December 31, 2020, the number of vested shares underlying outstanding options was 13,413,955 at a weighted average exercise

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The aggregate intrinsic value of in-the-money options outstanding as of December 31, 2020 was $ 8.0 million.

aggregate intrinsic value is calculated as the difference between the Company’s closing stock price of $2.27 on December

aggregate intrinsic value is calculated as the difference between the Company’s closing stock price of $ 1.36 on December

31, 2020, and the exercise price of options, multiplied by the number of options.

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The Company recorded the value of these restricted awards as general and administrative expense of approximately

$360 thousand and $616 thousand in the consolidated statement of operations for the years ended December 31, 2019 and 2018, respectively.

As of December 31, 2019, there was $59 thousand of total unrecognized compensation costs related to 200,000 non-vested restricted

stock grants which are expected to be recognized over a weighted-average period of 0.3 years.

$ 291.9 thousand and $ 360.1 thousand in the consolidated statement of operations for the years ended December 31, 2020 and 2019,

respectively.

As of December 31, 2020, there was $ 68.5 thousand of total unrecognized compensation costs related to 100,000 non-vested

restricted stock grants which are expected to be recognized over a weighted-average period of 0.8 years.

Company recognizes compensation expense for stock option awards and restricted stock awards on a straight-line basis over the

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The service period is generally the vesting period, with the exception of awards granted

subject to a vendor’s consulting agreement, whereby the award vesting period and the service period defined pursuant to

the terms of the consulting agreement may be different.

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The following weighted-average assumptions were used to calculate share-based compensation for the comparative periods

Schedule of Share Based Payment Assumptions

the Year Ended December 31,

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post-vesting employment termination behavior.

Hence, the Company uses the “simplified method”

described in Staff Accounting

Hence, the Company uses the “simplified method” described in Staff Accounting

Bulletin (SAB) 107 to estimated the expected term of share option grants.

expected stock price volatility assumption is based the Company’s historical stock price volatility.

15 – Subsequent Events

January 14, 2020, the Company closed on an underwritten public offering of 32.3 million shares of its common stock at a purchase

price of $1.55 per share.

The company generated gross proceeds of approximately $50.0 million and net proceeds of approximately

$46.7 million, after deducting underwriting discounts and commissions and other estimated offering expenses.

the Company granted the underwriters a 30-day option to purchase up to approximately 4.8 million additional shares of its

common stock on the same terms and conditions.

No additional shares of the Company’s common stock were sold pursuant to

All of the shares in the offering are being sold by the Company.

February 19, 2020, the Company provided notice of its termination of the Controlled Equity Offering SM

Sales Agreement, dated as of April 28, 2017 (the “Equity Sales Agreement”),

by and between the Company and Cantor Fitzgerald & Co.

(“Cantor”).

The termination of the Equity Sales Agreement

was effective on February 29, 2020.

Pursuant to the terms of the Equity Sales Agreement, the Company could offer and sell shares

of its common stock, par value $0.0001 per share (the “Common Stock”), having an aggregate offering price of up to

$30.0 million from time to time through Cantor.

Through December 31, 2019, the Company raised net proceeds of approximately

$10.4 million under the Equity Sales Agreement.

The Company is not subject to any termination

penalties related to the termination of the Equity Sales Agreement.

January 2021, the Company sold 3,023,147 shares of its common stock under its ATM Sales Agreement with BTIG, LLC, generating gross

proceeds of approximately $ 5.8 million and net proceeds of approximately $ 5.6 million.

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 9A. Controls and Procedures