What changed in this filing

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Item 7. Management’s Discussion and Analysis

2023-03-15 compared with 2022-03-08 · 186 added, 173 removed, 96 unchanged (79% of the section changed)

Discussion And Analysis Of Financial Condition And Results Of Operations

Management’s Discussion

And Analysis Of Financial Condition And Results Of Operations

following discussion and analysis of our financial condition and results of operations should be read together with our financial statements

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including those discussed below and elsewhere in this Annual Report and in other reports we file with the Securities and Exchange Commission,

particularly those under “Risk Factors.” Dollars in tabular format are presented in thousands, except per share data, or

otherwise indicated.

particularly those under “Risk Factors.” All dollars amounts stated in the tabular and paragraph formats are presented in

thousands, except per share data, or otherwise indicated.

are focused on redefining the intracellular delivery of nucleic acids and small molecules through our lipid nanocrystal (LNC) drug delivery

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elements of our strategy include:

our clinical stage assets based on our LNC platform delivery technology and continuing to expand utilization of this promising technology

into areas of innovative medicine beyond small molecules, including nucleic acids (e.g.

mRNA, DNA, antisense oligonucleotides (ASOs))

and proteins, both internally and through additional external collaborations and partnerships.

MAT2203 toward NDA filing through the ongoing EnACT study for the treatment of cryptococcal meningitis, which highlights the safety

and efficacy of this promising drug candidate, while also demonstrating the ability of our LNC platform technology to deliver potent

medicines across the blood-brain barrier with oral administration.

the development of MAT2501 through extensive preclinical toxicology and efficacy studies in NTM infections and completing a single

ascending dose (SAD) pharmacokinetic study in healthy volunteers later in 2022, all with the financial support of the CFF.

Advancing our LNC Platform

and expanding the utilization of this promising technology into areas of innovative medicine beyond small molecules, including nucleic

acids (e.g., mRNA, DNA, ASOs) and proteins.

Positioning MAT2203 for

an NDA filing for various indications for the treatment of serious IFIs, including cryptococcal meningitis.

We are seeking non-dilutive

funds from prospective third-party pharmaceutical partners and various governmental sources of capital, such as the Biomedical Advanced

Research and Development Authority (BARDA) and the NIH in order to continue the development of MAT2203 into Phase 3.

seeking the input and guidance of the FDA for an additional Phase 3 study of various IFIs.

Building an external pipeline

of collaborations focused on our LNC Platform with leading pharmaceutical companies like BioNTech, Genentech and National Resilience

to provide delivery solutions for their complex nucleic acid drug products.

have incurred losses for each period from inception.

Our net loss was approximately $23.3 million and $22.4 million for the fiscal years

ended December 31, 2021 and 2020, respectively.

Our net loss was $20,997 and $23,283 for the fiscal years ended December 31, 2022

and 2021, respectively.

We expect to incur significant expenses and operating losses over the next several years.

Accordingly, we will need additional financing to support our continuing operations.

We will seek to fund our operations through public

or private equity offerings, debt financings, government or other third-party funding, collaborations and licensing arrangements.

additional financing may not be available to us on acceptable terms, or at all.

Our failure to raise capital as and when needed would

impact our going concern and would have a negative impact on our financial condition and our ability to pursue our business strategy

and continue as a going concern.

Accordingly, we will

need additional financing to support our continuing operations.

We will seek to fund our operations through public or private equity

offerings, debt financings, government, or other third-party funding, collaborations, and licensing arrangements.

Adequate additional

financing may not be available to us on acceptable terms, or at all.

Our failure to raise capital as and when needed would impact our

ability to continue as a going concern and would have a negative impact on our financial condition and our ability to pursue our business

We will need to generate significant revenues to achieve profitability, and we may never do so.

Operations Overview

the years ended December 31, 2021 and 2020, we generated approximately $33 thousand and $158 thousand, respectively, in contract research

revenues, resulting from a grant with the CFF in 2020 and a feasibility study agreement entered into with Genentech in 2019.

to generate product revenue, which we do not expect to occur for many years, if ever, will depend heavily on the successful development

and eventual commercialization of our early-stage product candidates.

the year ended December 31, 2022, we generated $3,188 in contract research revenue resulting from the research collaboration with BioNTech

During the year ended December 31, 2021, we generated $33 in contract revenue from the feasibility study agreement with Genentech

Our ability to generate product revenue, which we do not expect to occur for many years, if ever, will depend heavily on the successful

development and eventual commercialization of our early-stage product candidates.

and Development Expenses

and development expenses consist of costs incurred for the development of product candidates MAT2203, and MAT2501and advancement of our

LNC platform delivery technology, which include:

cost of conducting pre-clinical work;

cost of acquiring, developing and manufacturing pre-clinical and human clinical trial materials;

for consultants and contractors associated with Chemistry and Manufacturing Controls (CMC), pre-clinical and clinical activities

and regulatory operations;

incurred under agreements with contract research organizations, or CROs, including the NIH, that conduct our pre-clinical or clinical

and development expenses consist of costs incurred for the development of product candidates MAT2203 and MAT2501, and advancement of

our LNC Platform, which include:

conducting pre-clinical work;

the cost of acquiring,

developing, and manufacturing pre-clinical and human clinical trial materials;

costs for consultants and

contractors associated with Chemistry and Manufacturing Controls (CMC), pre-clinical and clinical activities and regulatory operations;

expenses incurred under

agreements with contract research organizations, or CROs, including the NIH, that conduct our pre-clinical or clinical trials;

employee-related

expenses, including salaries and stock-based compensation expense for those employees involved

in the research and development process;

reimbursement of certain expenses related to the CFF award agreement.

expenses, including salaries and stock-based compensation expense for those employees involved in the research and development process;

the reimbursement of certain

expenses related to the CFF award agreement.

table below summarizes our direct research and development expenses for our product candidates and development platform for the years

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supplies, research and development (R&D) employee costs (including stock option expenses), travel and medical education.

Ended December 31,

research and development expenses:

Manufacturing

process development

staffing, overhead and other

research & development

Years Ended December 31,

Direct research and development expenses:

Manufacturing process development

Preclinical trials

Clinical development

Internal staffing, overhead and other

Total research & development

and development activities are central to our business model.

We expect our research and development expenses to increase because product

candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development,

primarily due to the increased size and duration of later-stage human trials.

Our research and development expenses reflect the reimbursement

of certain MAT2501 program expenses related to the CFF award agreement.

In addition, we will look to strategically expand the use of

our drug platform technology through additional development work.

During 2022, we will be focused on advancing our lead product candidate,

MAT2203, to efficacy data in the treatment of CM, accelerating the development of MAT2501 and also expanding application of our LNC platform

delivery technology through both internal efforts and collaborations with third parties.

We have also initiated a global process to identify

a suitable partner to continue the development of LYPDISO.

We expect our research and development expenses to increase over time because

product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical

development, primarily due to the increased size and duration of later-stage human trials.

However, we anticipate that our research and

development expenses during 2023 will be relatively consistent with expenses incurred in 2022 as we pause the development of MAT2501

to focus our existing resources on MAT2203 and advancement of our LNC platform delivery technology into the field of nucleic acids.

and Administrative Expenses

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relatively consistent with expenses incurred during 2022.

of Net Operating Losses (NOLs)

obtained from selling unused net operating losses (NOLs) and unused research tax credits under the New Jersey Technology Business Tax

Certificate Program was approximately $1.3 million and $1.1 million for the years ended December 31, 2021 and 2020, respectively.

income, net is largely comprised of interest income (expense) and franchise taxes.

of Net Operating Losses (NOLs) & Tax Credits

obtained from selling unused net operating losses (NOLs) and research and development tax credits under the New Jersey Technology Business

Tax Certificate Program was $3,491 and $1,328 for the years ended December 31, 2022 and 2021, respectively.

The 2022 NOL sales included

tax years 2021 and 2020, and the 2021 NOL sale included tax year 2019.

income, net is largely comprised of interest income (expense) and dividends.

of Critical Accounting Policies and Accounting Estimates

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(i) Stock-based compensation, (ii) Fair value measurements,

(iii) Research and development costs, (iv) Goodwill and other intangible assets, and (v) Basic and diluted net loss per common share.

(iii) Research and development costs, and (iv) Goodwill and other intangible assets.

Operating Trends

current R&D efforts are focused on advancing our lead LNC product candidates, MAT2203, through clinical development toward an initial

indication for the treatment of CM, accelerating development of MAT2501 with the assistance of the CFF, and expanding application of

our LNC platform delivery technology through both internal efforts and collaborations with third parties.

Our R&D expenses consist

of manufacturing work and the cost of active pharmaceutical ingredients and excipients used in such work, fees paid to consultants for

work related to clinical trial design and regulatory activities, fees paid to providers for conducting various clinical studies as well

as for the analysis of the results of such studies, and for other medical research addressing the potential efficacy and safety of our

We believe that significant investment in product development is a competitive necessity, and we plan to continue these investments

in order to be in a position to realize the potential of our product candidates and proprietary technologies.

current R&D efforts are focused on advancing our lead LNC product candidate, MAT2203, through clinical development toward an initial

indication for the treatment of CM and expanding application of our LNC Platform through both internal efforts and collaborations with

third parties.

Our R&D expenses consist of manufacturing work and the cost of active pharmaceutical ingredients and excipients used

in such work, fees paid to consultants for work related to clinical trial design and regulatory activities, fees paid to providers for

conducting various clinical studies as well as for the analysis of the results of such studies, and for other medical research addressing

the potential efficacy and safety of our drugs.

We believe that significant investment in product development is a competitive necessity,

and we plan to continue these investments to be in a position to realize the potential of our product candidates and proprietary technologies.

expect that most of our R&D expenses in the near-term future will be incurred in support of our current and future preclinical and

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At the appropriate time, subject to the approval

of regulatory authorities, we expect to conduct early-stage clinical trials for each drug candidate.

We anticipate funding these trials

ourselves, and possibly with the assistance of federal grants, contracts or other agreements.

As we obtain results from trials, we may

elect to discontinue or delay clinical trials for certain products in order to focus our resources on more promising products.

of clinical trials may take several years, and the length of time generally varies substantially according to the type, complexity, novelty

and intended use of a product candidate.

of regulatory authorities, we expect to conduct early-stage clinical trials.

We anticipate funding these trials ourselves, and possibly

with the assistance of federal grants, contracts, or other agreements.

As we obtain results from trials, we may elect to discontinue

or delay clinical trials for certain products to focus our resources on more promising products.

Completion of clinical trials may take

several years, and the length of time varies substantially according to the type, complexity, novelty and intended use of a product candidate.

commencement and completion of clinical trials for our products may be delayed by many factors, including lack of efficacy during clinical

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Ended December 31, 2022 and 2021

following table summarizes our operating expenses for the years ended December 31, 2021 and 2020 (in thousands):

Ended December 31,

and development

and administrative

of net operating losses (NOLs)

We generated approximately $33 thousand and approximately $158 thousand for the years ended December 31, 2021 and 2020, respectively.

The amount earned in 2021 consists of contract research revenue resulting from the feasibility study agreement with Genentech, Inc.

earned in 2020 consists of contract research revenue resulting from a grant with the CFF and the feasibility study agreement with Genentech

Research and Development expenses.

R&D expense for the years ended December 31, 2021 and 2020 was approximately $14.6 million and $14.4 million, respectively.

increase of approximately $0.2 was due to a $1.2 million expense related to the Aquarius Merger Agreement, an increase

of $1.1 million in product development expenses, and an increase of approximately $0.9 million of compensation expense, primarily related

to headcount increases and the exercise of stock options, offset by a $3.0 million decrease in clinical trial expenses, primarily

related to the reimbursement of certain MAT2501 program expenses of approximately $2.2 million and approximately $0.8 million decrease

in other clinical trials expenses due to the completion of the MAT9001 clinical trials in 2020.

following table summarizes our operating expenses for the years ended December 31, 2022 and 2021:

Years Ended December 31,

Research and development

General and administrative

Operating Expenses

Sale of net operating losses (NOLs)

We generated $3,188 and $33 for the years ended December 31, 2022 and 2021, respectively.

The amount earned during 2022 consists

of contract research revenue resulting from the research collaboration with BioNTech SE while the amount earned during 2021 resulted

from the feasibility study agreement with Genentech Inc.

and Development expenses.

R&D expense for the years ended December 31, 2022 and 2021 was $16,678 and $14,583,

respectively.

The increase of $2,095 was due to an increase of $2,327 of compensation expense, primarily related to headcount

increases, $1,441 increase in clinical trials expenses due to the continued advancement of MAT2203, partially offset by an increase

in the reimbursement of certain MAT2501 program expenses of $811 and a decrease of $916 primarily related to the Aquarius Merger

Agreement in 2021 in connection with the LNC Platform.

and Administrative expenses.

General and administrative expense for the year ended December 31, 2021 was approximately $10.2

million, an increase of approximately $0.2 million over prior year.

The increase in general and administrative expense was primarily

due to higher compensation expense related to the exercise of stock options and increased insurance expense offset by lower professional

fees & consulting expense.

of net operating losses (NOLs).

The Company recognized approximately $1.3 million and $1.1 million for the years ended December

31, 2021 and 2020, respectively, in connection with the sale of state net operating losses and state research and development credits

to a third party under the New Jersey Technology Business Tax Certificate Program.

G&A expense for the years ended December 31, 2022 and 2021 was $11,100 and $10,185, respectively.

The increase of $915 over prior year was primarily due to higher compensation expense related to stock-based compensation of $506 and

increased headcount.

of net operating losses (NOLs) & tax credits.

The Company recognized $3,491 and $1,328 for the years ended December 31, 2022

and 2021, respectively, in connection with the sale of state net operating losses and state research and development credits to a third

party under the New Jersey Technology Business Tax Certificate Program.

The 2022 NOL sales included tax years 2021 and 2020, and the

2021 NOL sale included tax year 2019.

and capital resources

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stock warrants.

As of December 31, 2021, we have raised a total of approximately $156.7 million in gross proceeds and $144.0 million,

net, from sales of our equity securities.

of December 31, 2021, we had cash, cash equivalents and marketable securities, excluding restricted cash, totaling $49.6 million.

As of December 31, 2022, we have raised a total of $156,651 in gross proceeds and $143,941, net, from sales of our equity

securities since inception in 2013.

of December 31, 2022, we had cash, cash equivalents and marketable debt securities, excluding restricted cash, totaling $28,763.

At-The-Market Sales Agreement

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pursuant to which we may offer and sell, from time to time, through BTIG, as sales agent and/or principal, shares of our 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

having an aggregate offering price of up to $50 million, subject to certain limitations on the amount of common stock that may be offered

and sold by us set forth in the Sales Agreement.

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BTIG may terminate the Sales Agreement in certain limited circumstances.

As of December 31, 2020, we

did not sell any shares of our 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.

Common Stock Offering

January 14, 2020, the Company closed an underwritten public offering of its common stock.

The offering resulted in the sale of approximately

32.3 million shares to the public at a price of $1.55 per share.

The Company generated net proceeds of approximately $46.7 million.

Company granted the underwriters a 30-day option (the “option”) to purchase up to approximately 4.8 million additional shares

of common stock subject to the same terms and conditions.

No additional shares of the Company’s common stock were sold pursuant

to this option.

following table sets forth the primary sources and uses of cash for each of the period set forth below (in thousands):

Ended December 31

used in operating activities

used in investing activities

provided by financing activities

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

cash used in operating activities for the year ended December 31, 2021 was approximately $15.2 million, compared to approximately $17.4

million in the prior year.

The decrease of approximately $2.2 million for the period was primarily due to a decrease of approximately

$2.0 million of working capital adjustments due to the timing of receipts and payments in the ordinary course of business and approximately

$0.9 million of net non-cash items offset by approximately $0.8 million of an increase in net loss in the current period.

that there will be an increase in cash used in operations during 2022 due to higher research and development expenses as we continue

to move our product candidates and LNC platform delivery technology forward in their development cycles.

Approximately

$16.8 million of cash was provided by and approximately $40.7 million of cash was used in investing activities for the years ended December

31, 2021 and 2020, respectively.

The increase of $57.5 million was primarily due to the approximately $8.8 million increase in proceeds

received from maturities of our marketable securities and the decrease of approximately $48.9 million in purchases of marketable securities

as compared to the prior year partially offset by $0.2 million in purchases of equipment and leasehold improvements for the year ended

December 31, 2021.

cash provided by financing activities was approximately $7.0 million and approximately $48.0 million for the years ended December 31,

2021 and 2020, respectively.

The decrease of $41.0 million in cash provided by financing activities is primarily due to the Company raising

approximately $5.6 million of net proceeds from the January 2021 ATM sales of our common stock compared to the approximately $46.7

million of net proceeds that was raised from the January 2020 public offering of common stock.

Other financing activities included

a decrease of approximately $0.8 million from the exercising of warrants offset by an increase of approximately $0.8 million from the

exercising of stock options.

During 2022, we did not sell

any shares of our common stock under the ATM Sales Agreement.

During 2021, BTIG sold 3,023,147 shares of the Company’s common stock

generating gross proceeds of $5,753 and net proceeds of $5,580, after deducting BTIG’s commission on gross proceeds.

31, 2022, the ATM’s available capacity was $44,247.

following table sets forth the primary sources and uses of cash for each of the period set forth below:

Years Ended December 31

Cash used in operating activities

Cash provided by investing activities

Cash provided by financing activities

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

cash used in operating activities for the year ended December 31, 2022 was $19,156, compared to $15,223 in the prior year.

of $3,933 for the period was primarily due to an increase of $6,324 of working capital adjustments due to the timing of receipts and

payments in the ordinary course of business and the $1,200 Aquarius agreement charge in 2021 offset by $2,286 of a decrease in net loss

in the current period, the $936 increase in stock based compensation expense, including other non-cash expenses, and the license agreement

charge of $291 in 2022.

We expect that there will be a similar amount of cash used in operations during 2023 as we continue to move our

product candidates and LNC Platform forward in their development cycles.

cash of $4,877 was provided by investing activities for the year ended December 31, 2022, while $16,770 of net cash was provided by investing

activities for the year ended December 31, 2021.

The decrease of cash provided by investing activities of $11,893 was primarily due to

the $24,975 decrease in proceeds received from maturities of our marketable debt securities and the increase of $632 in purchases of

equipment and leasehold improvements, partially offset by the decrease of $13,714 in purchases of marketable debt securities as compared

to the prior year.

cash provided by financing activities was $79 and $6,965 for the years ended December 31, 2022 and 2021, respectively.

The decrease of

$6,886 in cash provided by financing activities is primarily due to the Company raising $5,580 of net proceeds from the 2021 ATM sales

of our common stock for which the Company did not have similar equity raises during year ended December 31, 2022, and a decrease in the

receipt of proceeds of $1,316 from the exercise of stock options.

Requirements and Other Liquidity Matters

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will increase substantially if and as we:

further preclinical and clinical studies of MAT2203, our lead product candidate, even is such studies are primarily financed with

non-dilutive funding from NIH;

the conduct of further preclinical and clinical studies of MAT2501, even if such studies are primarily financed with non-dilutive

funding from the CFF;

to discover and develop additional product candidates;

regulatory approvals for any product candidates that successfully complete clinical trials;

the manufacture of larger quantities of product candidates for clinical development and potentially commercialization;

expand and protect our intellectual property portfolio;

additional clinical, quality control and scientific personnel;

operational, financial and management information systems and personnel, including personnel to support our product development and

planned future commercialization efforts and personnel and infrastructure necessary to help us comply with our obligations as a public

expect that our existing cash, cash equivalents and marketable securities will be sufficient to fund our operating expenses and capital

expenditures requirements through 2023.

conduct further

preclinical and clinical studies of MAT2203, our lead product candidate, even is such studies are primarily financed with non-dilutive

funding from NIH;

seek to discover and develop

additional product candidates;

seek regulatory approvals

for any product candidates that successfully complete clinical trials;

require the manufacture

of larger quantities of product candidates for clinical development and potentially commercialization;

maintain, expand, and protect

our intellectual property portfolio;

hire additional clinical,

quality control and scientific personnel;

add operational, financial

and management information systems and personnel, including personnel to support our product development and planned future commercialization

efforts and personnel and infrastructure necessary to help us comply with our obligations as a public company.

expect that our existing cash, cash equivalents and marketable debt securities will be sufficient to fund our operating expenses and

capital expenditures requirements into the second quarter of 2024.

such time, if ever, that we can generate product revenues sufficient to achieve profitability, we expect to finance our cash needs through

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arrangements.

We do not have any committed external source of funds other than limited grant funding from the CFF and NIH.

To the extent

that we raise additional capital through the sale of common stock, convertible securities or other equity securities, the ownership interest

of our stockholders may be materially diluted, and the terms of these securities may include liquidation or other preferences that adversely

affect your rights of our common stockholders.

Debt financing and preferred equity financing, if available, would result in increased

fixed payment obligations and may involve agreements that include covenants limiting or restricting our ability to take specific actions,

such as incurring additional debt, making capital expenditures or declaring dividends, that could adversely impact our ability to conduct

our business.

Securing additional financing could require a substantial amount of time and attention from our management and may divert

a disproportionate amount of their attention away from day-to-day activities, which may adversely affect our management’s ability

to oversee the development of our product candidates.

To the extent that we raise additional capital through the sale of common stock, convertible securities or other equity

securities, the ownership interest of our stockholders may be materially diluted, and the terms of these securities may include liquidation

or other preferences that adversely affect your rights of our common stockholders.

Debt financing and preferred equity financing, if

available, would result in increased fixed payment obligations and may involve agreements that include covenants limiting or restricting

our ability to take specific actions, such as incurring additional debt, making capital expenditures, or declaring dividends, that could

adversely impact our ability to conduct our business.

Securing additional financing could require a substantial amount of time and attention

from our management and may divert a disproportionate amount of their attention away from day-to-day activities, which may adversely

affect our management’s ability to oversee the development of our product candidates.

we raise additional funds through collaborations, strategic alliances or marketing, distribution, or licensing arrangements with third

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rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.

financial condition and results of operations may also be impacted by other factors we may not be able to control, such as global supply

chain disruptions, global trade disputes and/or political instability.

Increases in interest rates, especially if coupled with reduced

government spending and volatility in financial markets, may have the effect of further increasing economic uncertainty and heightening

Additionally, rising inflation rates may affect us by increasing operating expenses, such as employee-related costs and

clinical trial expenses, negatively impacting our results of operations.

On March 10, 2023, Silicon Valley Bank (“SVB”)

was closed by the California Department of Financial Protection and Innovation, and the Federal Deposit Insurance Corporation (“FDIC”)

was appointed as receiver.

We have deposit accounts at SVB.

The standard deposit insurance amount is up to $250 thousand per depositor,

per insured bank, for each account ownership category.

On March 12, 2023, the U.S.

Treasury, Federal Reserve, and FDIC announced that

SVB depositors will have access to all of their money starting March 13, 2023.

The Company does not expect to be negatively impacted

by these events.

Obligations and Commitments

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ACCOUNTING PRONOUNCEMENTS

to Note 3 - “ Significant Accounting Policies ,” in the accompanying notes to the consolidated financial statements

for a discussion of recent accounting pronouncements.

And Qualitative Disclosures About Market Risk

Not applicable.

to Note 3 - “ Summary of Significant Accounting Policies ,” in the accompanying notes to the consolidated financial

statements for a discussion of recent accounting pronouncements.

Quantitative And Qualitative

Disclosures About Market Risk

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

What changed 10-K

Item 7. Management’s Discussion and Analysis