Matinas BioPharma Holdings, Inc. 10-Q

Item 1. FINANCIAL STATEMENTS Matinas BioPharma Holdings, Inc. Condensed Consolidated Balance Sheets (in thousands, except for share data) June 30, 2023 December 31, 2022 (Unaudited) (Audited) ASSETS: Current assets: Cash and cash equivalents $ 9,743 $ 6,830 Marketable debt securities 12,770 21,933 Restricted cash – security deposit 50 50 Prepaid expenses and other current assets 1,437 5,719 Total current assets 24,000 34,532 Non-current assets: Leasehold improvements and equipment – net 2,103 2,091 Operating lease right-of-use assets – net 3,345 3,613 Finance lease right-of-use assets – net 24 30 In-process research and development 3,017 3,017 Goodwill 1,336 1,336 Restricted cash – security deposit 200 200 Total non-current assets 10,025 10,287 Total assets $ 34,025 $ 44,819 LIABILITIES AND STOCKHOLDERS’ EQUITY: Current liabilities: Accounts payable $ 604 $ 618 Accrued expenses 1,372 3,099 Operating lease liabilities – current 608 562 Financing lease liabilities – current 5 7 Total current liabilities 2,589 4,286 Non-current liabilities: Deferred tax liability 341 341 Operating lease liabilities – net of current portion 3,221 3,533 Financing lease liabilities – net of current portion 20 22 Total non-current liabilities 3,582 3,896 Total liabilities 6,171 8,182 Stockholders’ equity: Common stock par value $ 0.0001 per share, 500,000,000 shares authorized at June 30, 2023 and December 31, 2022; 217,264,526 issued and outstanding as of June 30, 2023 and December 31, 2022 22 22 Additional paid-in capital 192,550 190,070 Accumulated deficit ( 164,204 ) ( 152,631 ) Accumulated other comprehensive loss ( 514 ) ( 824 ) Total stockholders’ equity 27,854 36,637 Total liabilities and stockholders’ equity $ 34,025 $ 44,819 The accompanying notes are an integral part of these condensed consolidated financial statements 3 Matinas BioPharma Holdings, Inc. Condensed Consolidated Statements of Operations and Comprehensive Loss (in thousands, except share and per share data) Unaudited 2023 2022 2023 2022 Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Revenue: Contract Revenue $ - $ 1,063 $ 1,096 $ 1,063 Costs and expenses: Research and development 3,559 4,127 7,530 9,105 General and administrative 2,600 2,861 5,311 5,606 Total costs and expenses 6,159 6,988 12,841 14,711 Loss from operations ( 6,159 ) ( 5,925 ) ( 11,745 ) ( 13,648 ) Sale of New Jersey net operating losses & tax credits - - - 1,734 Other income, net 99 2 172 13 Net loss $ ( 6,060 ) $ ( 5,923 ) $ ( 11,573 ) $ ( 11,901 ) Net loss per share – basic and diluted $ ( 0.03 ) $ ( 0.03 ) $ ( 0.05 ) $ ( 0.06 ) Net loss per share - basic $ ( 0.03 ) $ ( 0.03 ) $ ( 0.05 ) $ ( 0.06 ) Weighted average common shares outstanding: Basic and diluted 217,264,526 216,864,526 217,264,526 216,755,261 Weighted average common shares outstanding - basic 217,264,526 216,864,526 217,264,526 216,755,261 Other comprehensive gain/(loss), net of tax Unrealized gain/(loss) on securities available-for-sale 81 ( 125 ) 310 ( 609 ) Other comprehensive gain/(loss), net of tax 81 ( 125 ) 310 ( 609 ) Comprehensive loss $ ( 5,979 ) $ ( 6,048 ) $ ( 11,263 ) $ ( 12,510 ) The accompanying notes are an integral part of these condensed consolidated financial statements 4 Matinas BioPharma Holdings, Inc. Condensed Consolidated Statements of Stockholders’ Equity (in thousands, except for share data) Unaudited Shares Amount Capital Deficit (Loss)/Income Equity Common Stock Additional Paid - in Accumulated Accumulated Other Comprehensive Total Stockholders’ Shares Amount Capital Deficit (Loss)/Income Equity Balance, December 31, 2022 217,264,526 $ 22 $ 190,070 $ ( 152,631 ) $ ( 824 ) $ 36,637 Stock-based compensation - - 2,480 - - 2,480 Other comprehensive income - - - - 310 310 Net loss - - - ( 11,573 ) - ( 11,573 ) Balance, June 30, 2023 217,264,526 $ 22 $ 192,550 $ ( 164,204 ) $ ( 514 ) $ 27,854 Common Stock Additional Paid - in Accumulated Accumulated Other Comprehensive Total Stockholders’ Shares Amount Capital Deficit (Loss)/Income Equity Balance, March 31, 2023 217,264,526 $ 22 $ 191,342 $ ( 158,144 ) $ ( 595 ) $ 32,625 Stock-based compensation - - 1,208 - - 1,208 Other comprehensive income - - - - 81 81 Net loss - - - ( 6,060 ) - ( 6,060 ) Balance, June 30, 2023 217,264,526 $ 22 $ 192,550 $ ( 164,204 ) $ ( 514 ) $ 27,854 Common Stock Additional Paid - in Accumulated Accumulated Other Comprehensive Total Stockholders’ Shares Amount Capital Deficit Loss Equity Balance, December 31, 2021 216,269,450 $ 22 $ 184,251 $ ( 131,634 ) $ ( 145 ) $ 52,494 Stock-based compensation - - 2,475 - - 2,475 Issuance of common stock in exchange for Options 195,076 - 99 - - 99 Issuance of common stock pursuant to license agreement amendment 400,000 - 291 - - 291 Other comprehensive loss - - - - ( 609 ) ( 609 ) Net loss - - - ( 11,901 ) - ( 11,901 ) Balance, June 30, 2022 216,864,526 $ 22 $ 187,116 $ ( 143,535 ) $ ( 754 ) $ 42,849 Common Stock Additional Paid - in Accumulated Accumulated Other Comprehensive Total Stockholders’ Shares Amount Capital Deficit Loss Equity Balance, March 31, 2022 216,864,526 $ 22 $ 185,902 $ ( 137,612 ) $ ( 629 ) $ 47,682 Balance 216,864,526 $ 22 $ 185,902 $ ( 137,612 ) $ ( 629 ) $ 47,682 Stock-based compensation - - 1,214 - - 1,215 Other comprehensive loss - - - - ( 125 ) ( 125 ) Net loss - - - ( 5,923 ) - ( 5,923 ) Balance, June 30, 2022 216,864,526 $ 22 $ 187,116 $ ( 143,535 ) $ ( 754 ) $ 42,849 Balance 216,864,526 $ 22 $ 187,116 $ ( 143,535 ) $ ( 754 ) $ 42,849 The accompanying notes are an integral part of these condensed consolidated financial statements 5 Matinas BioPharma Holdings, Inc. Condensed Consolidated Statements of Cash Flow (in thousands) Unaudited 2023 2022 Six Months Ended June 30, 2023 2022 Cash flows from operating activities: Net loss $ ( 11,573 ) $ ( 11,901 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 190 155 Stock based compensation expense 2,480 2,475 Amortization of operating lease right-of-use assets 268 275 Amortization of finance lease right-of-use assets 5 12 Amortization of bond discount 73 110 Stock issued pursuant to license agreement amendment - 291 Changes in operating assets and liabilities: Operating lease liabilities ( 266 ) ( 256 ) Prepaid expenses and other current assets 4,282 ( 2,050 ) Accounts payable ( 13 ) ( 441 ) Accrued expenses and other liabilities ( 1,726 ) 1,443 Net cash used in operating activities ( 6,280 ) ( 9,887 ) Cash flows from investing activities: Purchase of marketable debt securities - ( 9,481 ) Proceeds from maturities of marketable debt securities 9,400 9,250 Purchases of leasehold improvements and equipment ( 202 ) ( 600 ) Net cash provided by/(used in) investing activities 9,198 ( 831 ) Cash flows from financing activities: Proceeds from exercise of options - 99 Payments of finance lease liability – principal ( 5 ) ( 12 ) Net cash (used in)/provided by financing activities ( 5 ) 87 Net increase/(decrease) in cash, cash equivalents and restricted cash 2,913 ( 10,631 ) Cash, cash equivalents and restricted cash at beginning of period 7,080 21,280 Cash, cash equivalents and restricted cash at end of period $ 9,993 $ 10,649 Supplemental non-cash financing and investing activities: Unrealized gain/(loss) on marketable debt securities $ 310 $ ( 609 ) The accompanying notes are an integral part of these condensed consolidated financial statements 6 MATINAS BIOPHARMA HOLDINGS, INC. Notes to Unaudited Condensed Consolidated Financial Statements (Tabular dollars and shares in thousands, except per share data) Note 1 – Description of Business Matinas BioPharma Holdings Inc. (“Holdings”) is a Delaware corporation formed in 2013. Holdings is the parent company of Matinas BioPharma, Inc. (“BioPharma”), and Matinas BioPharma Nanotechnologies, Inc. (“Nanotechnologies,” formerly known as Aquarius Biotechnologies, Inc.), its operating subsidiaries (“Nanotechnologies”, and together with “Holdings” and “BioPharma”, “the Company”). The Company is a clinical-stage biopharmaceutical company with a focus on identifying and developing novel pharmaceutical products. Note 2 – Liquidity, Plan of Operations and Going Concern The Company has experienced net losses and negative cash flows from operations each period since its inception. Through June 30, 2023, the Company had an accumulated deficit of $ 164,204 . The Company’s net loss was $ 11,573 for the six months ended June 30, 2023. The Company has been engaged in developing its lipid nanocrystal (“LNC”) platform delivery technology and a pipeline of associated product candidates, including MAT2203 and MAT2501, since 2011. To date, the Company has not obtained regulatory approval for any of its product candidates nor generated any revenue from 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. If the Company obtains U.S. 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. The Company also expects that its research and development expenses will continue to increase as it moves forward with additional clinical studies for its current product candidates and development of additional product candidates. As a result, the Company expects to continue to incur substantial losses for the foreseeable future, and that these losses will be increasing. As of June 30, 2023, the Company had cash and cash equivalents of $ 9,743 , marketable debt securities of $ 12,770 and restricted cash of $ 250 . The Company believes the cash and cash equivalents and marketable debt securities on hand are sufficient to fund planned operations into the third quarter of 2024, but not beyond. As a result, substantial doubt exists about the Company’s ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent upon control over its operating expenses, anticipated proceeds from future sales of common stock through the At-The-Market Sales Agreement (“ATM”) with BTIG, LLC. and securing additional financing. While the Company believes in the viability of this strategy and believes the actions presently being taken by the Company provide the opportunity for it to continue as a going concern, there can be no assurance the Company will be successful in its implementation. In particular, utilization of the ATM may not be viable due to market conditions and new financing may not be available on acceptable terms, or at all. These consolidated financial statements do not include any adjustments related to the recoverability and classification of asset amounts or the amounts and classification of liabilities that might be necessary if the Company is unable to continue as a going concern. Note 3 – Summary of Significant Accounting Policies Basis of presentation and principles of consolidation The accompanying unaudited condensed consolidated financial statements include the consolidated accounts of Holdings and its wholly owned subsidiaries, BioPharma, and Nanotechnologies. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) and reflect the operations of the Company and its wholly owned subsidiaries. All intercompany transactions have been eliminated in consolidation. 7 The Company’s significant accounting policies are described in Note 3 within the Company’s Notes to Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. The Company’s management has considered all recent accounting pronouncements issued and believes that these recent pronouncements will not have a material effect on the Company’s financial statements. Note 4 – Cash, Cash Equivalents, Restricted Cash and Marketable Debt Securities The Company considers all highly liquid financial instruments with original maturities of three months or less when purchased to be cash and cash equivalents and all investments with maturities of greater than three months from date of purchase are classified as marketable debt securities. Cash and cash equivalents consisted of cash in bank checking and savings accounts, money market funds and short-term U.S. treasury bonds that mature within three months of settlement date. Cash, Cash Equivalents and Restricted Cash The Company presents restricted cash with cash and cash equivalents in the Condensed Consolidated Statements of Cash Flows. Restricted cash at both June 30, 2023 and December 31, 2022 of $ 250 represents funds the Company is required to set aside as collateral, primarily for one of the Company’s operating leases and other purposes. The following table provides a reconciliation of cash, cash equivalents and restricted cash reported in the Condensed Consolidated Balance Sheets to the total of the amounts in the Condensed Consolidated Statements of Cash Flows as of June 30, 2023, December 31, 2022, June 30, 2022 and December 31, 2021: Schedule of Cash, Cash Equivalents and Restricted Cash June 30, 2023 December 31, 2022 June 30, 2022 December 31, 2021 Cash and cash equivalents $ 9,743 $ 6,830 $ 10,399 $ 21,030 Restricted cash included in current/non-current assets 250 250 250 250 Cash, cash equivalents and restricted cash in the statement of cash flows $ 9,993 $ 7,080 $ 10,649 $ 21,280 Marketable Debt Securities The Company has classified its investments in marketable debt securities as available-for-sale and as a current asset. The Company’s investments in marketable debt securities are carried at fair value, with unrealized gains and losses included as a separate component of stockholders’ equity. Unrealized losses and gains are classified as other comprehensive (loss)/income and costs are determined on a specific identification basis. Realized gains and losses from our marketable debt securities are recorded in other income, net. For the three and six months ended June 30, 2023, the Company recorded unrealized gains of $ 81 and $ 310 , respectively. For the three and six months ended June 30, 2022, the Company recorded unrealized losses of $ 125 and $ 609 , respectively. As of June 30, 2023 and December 31, 2022, the Company had net accumulated unrealized losses of $ 514 and $ 824 , respectively. The following tables summarize the Company’s marketable debt securities as of June 30, 2023: Schedule of Marketable Securities Amortized Cost Unrealized Gain Unrealized (Loss) Fair Value Amortized Unrealized Unrealized Cost Gain (Loss) Fair Value U.S. Treasury Bonds $ 996 $ — $ ( 22 ) $ 974 U.S. Government Notes 12,288 — ( 492 ) 11,796 Total marketable debt securities $ 13,284 $ — $ ( 514 ) $ 12,770 8 Maturities of debt securities classified as available-for-sale were as follows at June 30, 2023: Schedule of Maturities of Debt Securities Available-for-sale Fair Value Due within one year $ 5,936 Due after one year through five years 6,834 $ 12,770 The following tables summarize the Company’s marketable debt securities as of December 31, 2022: Amortized Cost Unrealized Gain Unrealized (Loss) Fair Value Amortized Cost Unrealized Gain Unrealized (Loss) Fair Value U.S. Treasury Bonds $ 993 $ — $ ( 34 ) $ 959 U.S. Government Notes 16,324 — ( 721 ) 15,603 Corporate Debt Securities 5,440 — ( 69 ) 5,371 Total marketable debt securities $ 22,757 $ — $ ( 824 ) $ 21,933 Maturities of debt securities classified as available-for-sale were as follows at December 31, 2022: Fair Value Due within one year $ 13,240 Due after one year through five years 8,693 $ 21,933 Note 5 - Fair Value Measurements The Company uses the fair value hierarchy to measure the value of its financial instruments. The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable. Observable inputs reflect assumptions market participants would use in pricing an asset or liability based on market data obtained from independent sources, while unobservable inputs reflect a reporting entity’s pricing based upon its own market assumptions. The basis for fair value measurements for each level within the hierarchy is described below: ● Level 1 – Quoted prices for identical assets or liabilities in active markets. ● Level 2 – Quoted prices for identical or similar assets and liabilities in markets that are not active; or other model-derived valuations whose inputs are directly or indirectly observable or whose significant value drivers are observable. ● Level 3 – Valuations derived from valuation techniques in which one or more significant inputs to the valuation model are unobservable and for which assumptions are used based on management estimates. The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible as well as considers counterparty credit risk in its assessment of fair value. The carrying amounts of cash equivalents, current portion of restricted cash, prepaid expenses and other current assets, accounts payable, current portion of lease liabilities and accrued expenses approximate fair value due to the short-term nature of these instruments. A summary of the assets and liabilities carried at fair value in accordance with the hierarchy defined above is as follows: Schedule of Fair Value Measurement of Assets and Liabilities Fair Value Hierarchy June 30, 2023 Total (Level 1) (Level 2) (Level 3) Assets Marketable Debt Securities: U.S. Treasury Bonds $ 974 $ 974 $ — $ — U.S. Government Notes 11,796 — 11,796 — Total $ 12,770 $ 974 $ 11,796 $ — 9 Fair Value Hierarchy December 31, 2022 Total (Level 1) (Level 2) (Level 3) Assets Marketable Debt Securities: U.S. Treasury Bonds $ 959 $ 959 $ — $ — U.S. Government Notes 15,603 — 15,603 — Corporate Debt Securities 5,371 — 5,371 — Total $ 21,933 $ 959 $ 20,974 $ — Assets and liabilities carried at fair value $ 21,933 $ 959 $ 20,974 $ — U.S. treasury bonds are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices for identical assets in active markets. Marketable debt securities consisting of U.S. government notes and corporate debt securities are classified as Level 2 and are valued using quoted market prices in markets that are not active. Note 6 – Leasehold Improvements and Equipment Leasehold improvements and equipment, summarized by major category, consist of the following as of June 30, 2023 and December 31, 2022: Schedule of Leasehold Improvements and Equipment June 30, 2023 December 31, 2022 Equipment $ 2,507 $ 2,305 Leasehold improvements 1,155 1,155 Total 3,662 3,460 Leasehold improvements and equipment, gross 3,662 3,460 Less: accumulated depreciation and amortization 1,559 1,369 Leasehold improvements and equipment, net $ 2,103 $ 2,091 Depreciation and amortization expense for the three and six months ended June 30, 2023 was $ 97 and $ 190 , respectively, and the three and six months ended June 30, 2022 was $ 86 and $ 155 , respectively. During the six month periods ended June 30, 2023 and 2022, the Company purchased equipment of $ 202 and $ 600 , respectively. Note 7 – Accrued Expenses and Other Liabilities Accrued Expenses, summarized by major category, as of June 30, 2023 and December 31, 2022 consist of the following: Schedule of Accrued Expenses June 30, 2023 December 31, 2022 Payroll and incentives $ 1,027 $ 1,705 General and administrative expenses 257 455 Research and development expenses 88 130 Deferred revenue * - 721 Other deferred liabilities ** - 88 Total $ 1,372 $ 3,099 * At December 31, 2022, the balance included $ 688 related to an exclusive research collaboration with BioNTech SE (the “BioNTech Agreement”) and $ 33 related to a feasibility study agreement with Genentech, Inc. (the “Genentech Agreement”). (See Note 9 – Revenue Recognition, Collaboration Agreements and Other). ** At December 31, 2022, the balances of $ 88 related to an award agreement with the Cystic Fibrosis Foundation (the “CFF Agreement). (See Note 9 – Revenue Recognition, Collaboration Agreements and Other). 10 Note 8 – Leases The Company has various lease agreements, including leases of office space, a laboratory and manufacturing facility, and various equipment. Some leases include purchase, termination or extension options for one or more years. These options are included in the lease term when it is reasonably certain that the option will be exercised. The assets and liabilities from operating and finance leases are recognized at the lease commencement date based on the present value of remaining lease payments over the lease term using the Company’s 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. The Company’s operating leases do not provide implicit rates, therefore the Company utilized a discount rate based on its incremental borrowing rate to record the lease obligations. The Company’s finance leases provide readily determinable implicit rates. Operating lease obligations The Company incurred lease expense for its operating leases of $ 226 for each for the three month periods ended June 30, 2023 and 2022, respectively, and $ 452 for each of the six month periods ended June 30, 2023 and 2022, respectively. The Company incurred amortization expense on its operating lease right-of-use assets of $ 135 and $ 268 for the three and six months ended June 30, 2023, respectively, and $ 139 and $ 275 for the three and six months ended June 30, 2022, respectively. Finance Leases The Company incurred interest expense on its finance leases of $ 1 and $ 2 for the three and six months ended June 30, 2023, respectively, and $ 0 and $ 1 for the three and six months ended June 30, 2022, respectively. The Company incurred amortization expense on its finance lease right-of-use assets of $ 1 and $ 5 for the three and six months ended June 30, 2023, respectively, and $ 6 and $ 12 for the three and six months ended June 30, 2022, respectively. The following table presents information about the amount and timing of liabilities arising from the Company’s operating leases and finance leases as of June 30, 2023: Schedule of Maturity of Operating and Finance Liabilities Maturity of Lease Liabilities Operating Lease Liabilities Finance Lease Liabilities Remainder of 2023 $ 467 $ 4 2024 956 7 2025 998 7 2026 1,040 7 2027 944 7 Thereafter 411 - Total undiscounted operating lease payments $ 4,816 $ 32 Less: Imputed interest 987 7 Present value of operating lease liabilities $ 3,829 $ 25 Weighted average remaining lease term in years 4.8 4.4 Weighted average discount rate 9.2 % 11.6 % 11 The following table presents information about the amount and timing of liabilities arising from the Company’s operating leases and finance leases as of December 31, 2022: Maturity of Lease Liabilities Operating Lease Liabilities Finance Lease Liabilities 2023 $ 916 $ 10 2024 956 7 2025 998 7 2026 1,040 7 2027 944 7 Thereafter 411 - Total undiscounted operating lease payments $ 5,265 $ 38 Less: Imputed interest 1,170 9 Present value of operating lease liabilities $ 4,095 $ 29 Weighted average remaining lease term in years 5.3 4.5 Weighted average discount rate 9.2 % 11.1 % Note 9 – Revenue Recognition, Collaboration Agreements and Other BioNTech Research Collaboration On April 8, 2022, the Company entered into the BioNTech Agreement to evaluate the combination of mRNA formats utilizing the Company’s proprietary LNC platform delivery technology. Under the terms of the BioNTech Agreement, the Company received an exclusivity fee in the amount of $ 2,750 , and BioNTech SE funded certain of the Company’s research expenses that were incurred under the agreement. The term of the agreement began on the effective date and expired on April 8, 2023. The $ 2,750 license fee was recorded as deferred revenue and was recognized over the term of the contract performance obligation period, which the Company concluded to be 12 months after the execution of the contract. The clinical research services were invoiced as service revenue was earned on a monthly basis during the term of the contract. During the first quarter of 2023, $ 688 of the contract research revenue was recognized from the license fee and $ 375 was earned from the monthly clinical research services performed by the Company. As of March 31, 2023, the Company had recognized all of contract research revenue from the BioNTech Agreement. Cystic Fibrosis Foundation Therapeutics Development Award On November 19, 2020, the Company entered into the CFF Agreement with the Cystic Fibrosis Foundation (“CFF”), pursuant to which it received a Therapeutics Development Award of up to $ 4.2 million (the “Award”) (of which $ 484 had been previously received) to support the preclinical development (the “Development Program”) of the Company’s MAT2501 product candidate. On November 19, 2021, the Company and CFF entered into an Amendment to the CFF Agreement which added an additional milestone payment in the amount of $ 321 , which was received in the fourth quarter of 2021. As of June 30, 2023, the Company has received approximately $ 3.6 million of the $ 4.5 million Award, including the Amendment’s additional milestone payment, and a related deferred liability balance of $ 0 and $ 88 is included in accrued expenses at June 30, 2023 and December 31, 2022, respectively. During the fourth quarter of 2022, for financial and technical reasons, the Company determined that it was not commercially reasonable to continue the development of MAT2501 and instead elected to focus existing resources on other initiatives. As a result, the Company will not receive the balance of the Award and has no further obligations to CFF. 12 Genentech Feasibility Study Agreement On December 12, 2019, the Company entered into the Genentech Agreement which involves the development of oral formulations using the Company’s LNC platform delivery technology. Under the terms of the Genentech Agreement, Genentech paid the Company a total of $ 100 for the development of three molecules, or $ 33 per molecule, which is being recognized upon the Company fulfilling its obligations for each molecule under the Genentech Agreement. The Company recorded the upfront consideration as deferred revenue, which is included in accrued expenses on the consolidated balance sheets. As of December 31, 2022, the Company completed its obligations related to the first and second of the three molecules. During the six months ended June 30, 2023, the Company completed its obligations related to the remaining molecule. Note 10 – Income Taxes Sale of net operating losses (NOLs) & tax credits The Company recognized $ 0 and $ 1,734 for the six month periods ended June 30, 2023 and 2022, respectively, in connection with the sale of certain state net operating losses (“NOLs”) and research and development tax credits to a third party under the New Jersey Technology Business Tax Certificate Transfer Program. Note 11 – Stockholders’ Equity Common Stock On February 8, 2022, the Company issued 400,000 unregistered shares of its common stock to Rutgers, The State University of New Jersey (“Rutgers”), as partial consideration pursuant to the Second Amended and Restated Exclusive License Agreement between the Company and Rutgers. The agreement provides for (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 when and if sales of products using the licensed technology reach the specified sales threshold and (3) an annual license fee of $ 50 over the term of the license agreement. There was also a reduction in the consideration paid to Rutgers in the event of a sublicense to a third party of the exclusive patent rights granted pursuant to the Agreement. The Company recorded a $ 291 research and development expense related to the issuance of the 400,000 shares based on the closing price of the Company’s common stock of $ 0.728 on the date of issuance. For the six months ended June 30, 2023, the Company did not sell any shares of its common stock under its At-The-Market Sales Agreement with BTIG, LLC. Warrants As of June 30, 2023, the Company did not have any outstanding warrants to purchase shares of the Company’s common stock. The following table summarizes the changes in warrants outstanding during 2022 and for the six months ended June 30, 2023: Summary of Shareholder Equity Warrants Outstanding Shares Outstanding at December 31, 2021 988 Issued - Exercised ( 400 ) Expired ( 350 ) Outstanding at December 31, 2022 238 Issued - Exercised - Expired ( 238 ) Outstanding at June 30, 2023 - 13 Basic and diluted net loss per common share During the three and six months ended June 30, 2023 and 2022, diluted loss per common share is the same as basic loss per common share because, as the Company incurred a net loss during each period presented, the potentially dilutive securities from the assumed exercise of all outstanding stock options and warrants, would have an anti-dilutive effect. The following outstanding shares of potentially dilutive securities were excluded from the computation of diluted net loss per share because including them would have been anti-dilutive as of June 30, 2023 and 2022: Schedule of Anti-dilutive Securities Excluded from Computation of Earning Per Share As of June 30, 2023 2022 Stock options 34,544 27,729 Warrants - 988 Total 34,544 28,717 Note 12 – Accumulated Other Comprehensive Loss The following table summarizes the changes in accumulated other comprehensive loss by component during the three months ended June 30, 2023 and 2022: Schedule of Components of Accumulated Other Comprehensive (Loss) Income Net Unrealized Gain/(Loss) on Available-for-Sale Securities Accumulated Other Comprehensive Loss Balance, December 31, 2022 $ ( 824 ) $ ( 824 ) Net unrealized gain on securities available-for-sale 310 310 Balance, June 30, 2023 $ ( 514 ) $ ( 514 ) Balance, December 31, 2021 $ ( 145 ) $ ( 145 ) Net unrealized loss on securities available-for-sale ( 609 ) ( 609 ) Balance, June 30, 2022 $ ( 754 ) $ ( 754 ) All components of accumulated other comprehensive income are net of tax. Note 13 – Stock-based Compensation The 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. There were no significant modifications to the Plan during the six month periods ended June 30, 2023 and 2022. The following table contains information about the Company’s stock plan at June 30, 2023: Schedule of Equtiy Compensation Plan by Arrangements Awards Reserved for Issuance Awards Issued & Exercised Awards Available for Grant 2013 Equity Compensation Plan 54,294 * 39,359 ** 14,935 * Increased by 8,691 on January 1, 2023, representing 4 % of the total number of shares of common stock outstanding on December 31, 2022. ** Includes both restricted stock grants and option grants The Company recognized stock-based compensation expense (options and restricted share grants) in its condensed consolidated statements of operations as follows: Schedule of Recognized Stock Based Compensation Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Research and Development $ 516 $ 555 $ 1,069 $ 1,105 General and Administrative 692 660 1,411 1,370 Total $ 1,208 $ 1,215 $ 2,480 $ 2,475 As of June 30, 2023, total compensation costs related to unvested awards not yet recognized was $ 7,437 and the weighted-average periods over which the awards are expected to be recognized was 2.3 years. Stock Options The following table summarizes the activity for Company’ stock options for the six months ended June 30, 2023: Schedule of Stock Option Activity Stock Options Outstanding at December 31, 2022 34,739 Granted 65 Exercised - Forfeited ( 221 ) Expired ( 39 ) Outstanding at June 30, 2023 34,544 14