Matinas BioPharma Holdings, Inc. 10-Q

Item 1. FINANCIAL STATEMENTS Matinas BioPharma Holdings, Inc. Condensed Consolidated Balance Sheets (in thousands, except for share data) March 31, 2024 December 31, 2023 (Unaudited) (Audited) ASSETS: Current assets: Cash and cash equivalents $ 1,071 $ 4,787 Marketable debt securities 7,039 8,969 Restricted cash – security deposit 50 50 Prepaid expenses and other current assets 2,129 1,737 Total current assets 10,289 15,543 Non-current assets: Leasehold improvements and equipment – net 1,829 1,923 Operating lease right-of-use assets – net 2,919 3,064 Finance lease right-of-use assets – net 20 21 In-process research and development 3,017 3,017 Goodwill 1,336 1,336 Restricted cash – security deposit 200 200 Total non-current assets 9,321 9,561 Total assets $ 19,610 $ 25,104 LIABILITIES AND STOCKHOLDERS’ EQUITY: Current liabilities: Accounts payable $ 473 $ 514 Accrued expenses 839 1,447 Operating lease liabilities – current 681 656 Financing lease liabilities – current 5 5 Total current liabilities 1,998 2,622 Non-current liabilities: Deferred tax liability 341 341 Operating lease liabilities – net of current portion 2,697 2,877 Financing lease liabilities – net of current portion 16 18 Total non-current liabilities 3,054 3,236 Total liabilities 5,052 5,858 Stockholders’ equity: Common stock par value $ 0.0001 per share, 500,000,000 shares authorized at March 31, 2024 and December 31, 2023; 217,482,830 and 217,264,526 issued and outstanding as of March 31, 2024 and December 31, 2023, respectively 22 22 Additional paid-in capital 196,067 195,018 Accumulated deficit ( 181,397 ) ( 175,573 ) Accumulated other comprehensive loss ( 134 ) ( 221 ) Total stockholders’ equity 14,558 19,246 Total liabilities and stockholders’ equity $ 19,610 $ 25,104 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 for share and per share data) Unaudited 2024 2023 Three Months Ended March 31, 2024 2023 Revenue: Contract revenue $ — $ 1,096 Costs and Expenses: Research and development 3,446 3,970 General and administrative 2,456 2,712 Total costs and expenses 5,902 6,682 Loss from operations ( 5,902 ) ( 5,586 ) Other income, net 78 73 Net loss $ ( 5,824 ) $ ( 5,513 ) Net loss per share – basic and diluted $ ( 0.03 ) $ ( 0.03 ) Weighted average common shares outstanding: Basic and diluted 217,358,085 217,264,526 Other comprehensive gain, net of tax Unrealized gain on securities available-for-sale 87 229 Other comprehensive gain, net of tax 87 229 Comprehensive loss $ ( 5,737 ) $ ( 5,284 ) 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, 2023 217,264,526 $ 22 $ 195,018 $ ( 175,573 ) $ ( 221 ) $ 19,246 Stock-based compensation — — 995 — — 995 Issuance of common stock in public offering, net of stock issuance cost ($ 2 ) 218,304 — 54 — — 54 Other comprehensive income — — — — 87 87 Net loss — — — ( 5,824 ) — ( 5,824 ) Balance, March 31, 2024 217,482,830 $ 22 $ 196,067 $ ( 181,397 ) $ ( 134 ) $ 14,558 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 Balance 217,264,526 $ 22 $ 190,070 $ ( 152,631 ) $ ( 824 ) $ 36,637 Stock-based compensation — — 1,272 — — 1,272 Other comprehensive income — — — — 229 229 Net loss — — — ( 5,513 ) — ( 5,513 ) Balance, March 31, 2023 217,264,526 $ 22 $ 191,342 $ ( 158,144 ) $ ( 595 ) $ 32,625 Balance 217,264,526 $ 22 $ 191,342 $ ( 158,144 ) $ ( 595 ) $ 32,625 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 2024 2023 Three Months Ended March 31, 2024 2023 Cash flows from operating activities: Net loss $ ( 5,824 ) $ ( 5,513 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 94 93 Stock based compensation expense 995 1,272 Amortization of operating lease right-of-use assets 145 132 Amortization of finance lease right-of-use assets 1 4 Amortization of bond discount 18 44 Changes in operating assets and liabilities: Operating lease liabilities ( 154 ) ( 132 ) Prepaid expenses and other current assets ( 393 ) 2,420 Accounts payable ( 41 ) ( 102 ) Accrued expenses and other liabilities ( 610 ) ( 2,305 ) Net cash used in operating activities ( 5,769 ) ( 4,087 ) Cash flows from investing activities: Proceeds from maturities of marketable debt securities 2,000 3,000 Net cash provided by investing activities 2,000 3,000 Cash flows from financing activities: Net proceeds from public offering of common stock 54 — Payments of finance lease liability – principal ( 1 ) ( 4 ) Net cash provided by/(used in) financing activities 53 ( 4 ) Net decrease in cash, cash equivalents and restricted cash ( 3,716 ) ( 1,091 ) Cash, cash equivalents and restricted cash at beginning of period 5,037 7,080 Cash, cash equivalents and restricted cash at end of period $ 1,321 $ 5,989 Supplemental non-cash financing and investing activities: Unrealized gain on marketable debt securities $ 87 $ 229 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 March 31, 2024, the Company had an accumulated deficit of $ 181,397 . The Company’s net loss was $ 5,824 for the three months ended March 31, 2024. 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 March 31, 2024, the Company had cash and cash equivalents of $ 1,071 , marketable debt securities of $ 7,039 and restricted cash of $ 250 . In addition, on April 5, 2024, the Company completed a registered direct offering of its common stock, raising $ 9,250 , net of fees and expenses (see Note 13). The Company does not believe the cash and cash equivalents and marketable debt securities on hand are sufficient to fund planned operations beyond the next twelve months from the filing date of these financial statements. 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 its 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. 7 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. 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, 2023. 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 consist 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 March 31, 2024 and December 31, 2023 of $ 250 represents funds the Company is required to set aside as collateral, primarily for one of the Company’s operating leases. 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 March 31, 2024, December 31, 2023, March 31, 2023 and December 31, 2022: Schedule of Cash, Cash Equivalents and Restricted Cash March 31, 2024 December 31, 2023 March 31, 2023 December 31, 2022 Cash and cash equivalents $ 1,071 $ 4,787 $ 5,739 $ 6,830 Restricted cash included in current/non-current assets 250 250 250 250 Cash, cash equivalents and restricted cash in the statement of cash flows $ 1,321 $ 5,037 $ 5,989 $ 7,080 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. The Company did not incur any realized gains and losses during the three months ended March 31, 2024 and 2023. For the three months ended March 31, 2024 and 2023, the Company recorded unrealized gains of $ 87 and $ 229 , respectively. As of March 31, 2024 and December 31, 2023, the Company had net accumulated unrealized losses of $ 134 and $ 221 , respectively. The following tables summarize the Company’s marketable debt securities as of March 31, 2024: Schedule of Marketable Debt Securities Amortized Cost Unrealized Gain Unrealized (Loss) Fair Value Amortized Unrealized Unrealized Cost Gain (Loss) Fair Value U.S. Government Notes $ 7,173 $ — $ ( 134 ) $ 7,039 Total marketable debt securities $ 7,173 $ — $ ( 134 ) $ 7,039 All debt securities classified as available-for-sale are due to mature within one year of March 31, 2024. 8 The following tables summarize the Company’s marketable debt securities as of December 31, 2023: Amortized Unrealized Unrealized Cost Gain (Loss) Fair Value U.S. Treasury Bonds $ 999 $ — $ ( 3 ) $ 996 U.S. Government Notes 8,191 — ( 218 ) 7,973 Total marketable debt securities $ 9,190 $ — $ ( 221 ) $ 8,969 All debt securities classified as available-for-sale are due to mature within one year of December 31, 2023. 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 March 31, 2024 Total (Level 1) (Level 2) (Level 3) Assets Marketable Debt Securities: U.S. Government Notes $ 7,039 $ — $ 7,039 $ — Total $ 7,039 $ — $ 7,039 $ — Fair Value Hierarchy December 31, 2023 Total (Level 1) (Level 2) (Level 3) Assets Marketable Debt Securities: U.S. Treasury Bonds $ 996 $ 996 $ — $ — U.S. Government Notes 7,973 — 7,973 — Total $ 8,969 $ 996 $ 7,973 $ — 9 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 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 March 31, 2024 and December 31, 2023: Schedule of Leasehold Improvements and Equipment March 31, 2024 December 31, 2023 Equipment $ 2,463 $ 2,463 Leasehold improvements 1,155 1,155 Total 3,618 3,618 Leasehold improvements and equipment, gross 3,618 3,618 Less: accumulated depreciation and amortization 1,789 1,695 Leasehold improvements and equipment, net $ 1,829 $ 1,923 Depreciation and amortization expense for the three months ended March 31, 2024 and 2023 was $ 94 and $ 93 , respectively. Note 7 – Accrued Expenses and Other Liabilities Accrued Expenses, summarized by major category, as of March 31, 2024 and December 31, 2023 consist of the following: Schedule of Accrued Expenses March 31, 2024 December 31, 2023 Payroll and incentives $ 501 $ 1,176 General and administrative expenses 223 196 Research and development expenses 115 75 Total $ 839 $ 1,447 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 of the three month periods ended March 31, 2024 and 2023, respectively. The Company incurred amortization expense on its operating lease right-of-use assets of $ 145 and $ 132 for the three months ended March 31, 2024 and 2023, respectively. 10 Finance Leases The Company incurred interest expense on its finance leases of $ 1 for the three months ended March 31, 2024 and 2023. The Company incurred amortization expense on its finance lease right-of-use assets of $ 1 and $ 4 for the three months ended March 31, 2024 and 2023, 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 March 31, 2024: Schedule of Maturity of Operating and Finance Liabilities Maturity of Lease Liabilities Operating Lease Liabilities Finance Lease Liabilities Remainder of 2024 $ 721 $ 5 2025 998 7 2026 1,040 7 2027 944 7 2028 273 — Thereafter 138 — 2028 273 — Thereafter 138 - Total undiscounted operating lease payments $ 4,114 $ 26 Less: Imputed interest 736 5 Present value of operating lease liabilities $ 3,378 $ 21 Weighted average remaining lease term in years 4.1 3.7 Weighted average discount rate 9.2 % 11.6 % 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, 2023: Maturity of Lease Liabilities Operating Lease Liabilities Finance Lease Liabilities 2024 $ 956 $ 7 2025 998 7 2026 1,040 7 2027 944 7 2028 273 — Thereafter 138 - Total undiscounted operating lease payments $ 4,349 $ 28 Less: Imputed interest 816 5 Present value of operating lease liabilities $ 3,533 $ 23 Weighted average remaining lease term in years 4.3 3.9 Weighted average discount rate 9.2 % 11.6 % 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. 11 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. 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 three months ended March 31, 2023, the Company completed its obligations related to the remaining molecule. Note 10 – Stockholders’ Equity Common Stock For the three months ended March 31, 2024 and 2023, the Company sold 218,304 and 0 , respectively, shares of its common stock under the ATM with BTIG, LLC. Warrants As of March 31, 2024, the Company did not have any outstanding warrants to purchase shares of the Company’s common stock. Basic and diluted net loss per common share During the three months ended March 31, 2024 and 2023, 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 March 31, 2024 and 2023: Schedule of Anti-dilutive Securities Excluded from Computation of Earning Per Share As of March 31, 2024 2023 Stock options 46,031,560 34,677,699 Warrants — 238,000 Total 46,031,560 34,915,699 Note 11 – Accumulated Other Comprehensive Loss The following table summarizes the changes in accumulated other comprehensive loss by component during the three months ended March 31, 2024 and 2023: 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, 2023 $ ( 221 ) $ ( 221 ) Net unrealized gain on securities available-for-sale 87 87 Balance, March 31, 2024 $ ( 134 ) $ ( 134 ) Balance, December 31, 2022 $ ( 824 ) $ ( 824 ) Net unrealized loss on securities available-for-sale 229 229 Balance, March 31, 2023 $ ( 595 ) $ ( 595 ) All components of accumulated other comprehensive income are net of tax. 12 Note 12 – Stock-based Compensation The Company’s Amended and Restated 2013 Equity Compensation Plan (the “Plan”), which expired on May 7, 2024, provided 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 three month periods ended March 31, 2024 and 2023. The term of the Plan was for 10 years . The Company intends to adopt a new equity compensation plan at its 2024 Annual Meeting, pending shareholder approval. The following table contains information about the Company’s stock plan at March 31, 2024: Schedule of Equtiy Compensation Plan by Arrangements Awards Reserved for Issuance Awards Issued & Exercised Awards Available for Grant 2013 Equity Compensation Plan 62,984,400 * 50,712,275 ** 12,272,125 * Increased by 8,690,581 on January 1, 2024, representing 4 % of the total number of shares of common stock outstanding on December 31, 2023. ** 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 March 31, 2024 2023 Research and Development $ 415 $ 553 General and Administrative 580 719 Total $ 995 $ 1,272 As of March 31, 2024, total compensation costs related to unvested awards not yet recognized was $ 6,840 and the weighted-average periods over which the awards are expected to be recognized was 2.4 years. Stock Options The following table summarizes the activity for Company’ stock options for the three months ended March 31, 2024: Schedule of Stock Option Activity Stock Options Outstanding at December 31, 2023 46,707,934 Granted — Exercised — Forfeited — Expired ( 676,374 ) Outstanding at March 31, 2024 46,031,560 Note 13 – Subsequent Events On April 5, 2024, the Company closed a registered direct offering of 33,333,334 shares of its common stock and warrants to purchase up to an aggregate of 33,333,334 additional shares of common stock, at a combined purchase price of $ 0.30 per share and accompanying warrant. The company generated gross proceeds of approximately $ 10,000 and net proceeds of approximately $ 9,250 , after deducting underwriting discounts and commissions and other offering expenses. 13