Matinas BioPharma Holdings, Inc. 10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2024 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-38022 MATINAS BIOPHARMA HOLDINGS, INC. (Exact name of registrant as specified in its charter) Delaware No. 46-3011414 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 1545 Route 206 South , Suite 302 Bedminster , New Jersey 07921 (Address of principal executive offices) (Zip Code) 908 - 484-8805 (Registrant’s telephone number, including area code) (Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report) Securities registered pursuant to Section 12(b) of the Act: Title of Each Class Trading Symbol(s) Name of Each Exchange on Which Registered Common Stock MTNB NYSE American Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐ Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated Filer ☒ Smaller reporting company ☒ Emerging growth company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒ As of November 13, 2024, there were 5,086,985 shares of the registrant’s common stock, $ 0.0001 par value, outstanding. MATINAS BIOPHARMA HOLDINGS, INC. Form 10-Q Quarter Ended September 30, 2024 Table of Contents Page PART - I FINANCIAL INFORMATION 3 Item 1. FINANCIAL STATEMENTS 3 Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 16 Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 23 Item 4. CONTROLS AND PROCEDURES 23 PART - II OTHER INFORMATION 24 Item 1. LEGAL PROCEEDINGS 24 Item 1A. RISK FACTORS 24 Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS 25 Item 3. DEFAULTS UPON SENIOR SECURITIES 25 Item 4. MINE SAFETY DISCLOSURES 25 Item 5. OTHER INFORMATION 25 Item 6. EXHIBITS 25 2 PART - I FINANCIAL INFORMATION Item 1. FINANCIAL STATEMENTS Matinas BioPharma Holdings, Inc. Condensed Consolidated Balance Sheets (in thousands, except for share data) September 30, 2024 December 31, 2023 (Unaudited) (Audited) ASSETS: Current assets: Cash and cash equivalents $ 10,295 $ 4,787 Marketable debt securities 500 8,969 Restricted cash – security deposit 50 50 Prepaid expenses and other current assets 896 1,737 Total current assets 11,741 15,543 Non-current assets: Leasehold improvements and equipment – net 1,648 1,923 Operating lease right-of-use assets – net 2,618 3,064 Finance lease right-of-use assets – net 17 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 8,836 9,561 Total assets $ 20,577 $ 25,104 LIABILITIES AND STOCKHOLDERS’ EQUITY: Current liabilities: Accounts payable $ 349 $ 514 Accrued expenses 1,037 1,447 Operating lease liabilities – current 733 656 Financing lease liabilities – current 5 5 Total current liabilities 2,124 2,622 Non-current liabilities: Deferred tax liability 341 341 Operating lease liabilities – net of current portion 2,319 2,877 Financing lease liabilities – net of current portion 14 18 Total non-current liabilities 2,674 3,236 Total liabilities 4,798 5,858 Stockholders’ equity: Common stock par value $ 0.0001 per share, 250,000,000 shares authorized at September 30, 2024 and December 31, 2023; 5,086,985 and 4,345,291 issued and outstanding as of September 30, 2024 and December 31, 2023, respectively * 1 — Additional paid-in capital 207,169 195,040 Accumulated deficit ( 191,391 ) ( 175,573 ) Accumulated other comprehensive loss — ( 221 ) Total stockholders’ equity 15,779 19,246 Total liabilities and stockholders’ equity $ 20,577 $ 25,104 * Adjusted to reflect the impact of the 1-for-50 reverse stock split effective as of August 30, 2024. 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 2024 2023 Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Revenue: Contract revenue $ — $ — $ — $ 1,096 Costs and expenses: Research and development 2,239 3,295 9,057 10,824 General and administrative 2,142 2,839 7,067 8,151 Total costs and expenses 4,381 6,134 16,124 18,975 Loss from operations ( 4,381 ) ( 6,134 ) ( 16,124 ) ( 17,879 ) Other income, net 106 79 306 251 Net loss $ ( 4,275 ) $ ( 6,055 ) $ ( 15,818 ) $ ( 17,628 ) Net loss per share – basic and diluted * $ ( 0.85 ) $ ( 1.39 ) $ ( 3.30 ) $ ( 4.06 ) Weighted average common shares outstanding: Basic and diluted * 5,037,829 4,345,291 4,791,572 4,345,291 Other comprehensive gain, net of tax Unrealized gain on securities available-for-sale 51 155 221 465 Other comprehensive gain, net of tax 51 155 221 465 Comprehensive loss $ ( 4,224 ) $ ( 5,900 ) $ ( 15,597 ) $ ( 17,163 ) * Basic and diluted net loss per common share and basic and diluted weighted average common shares outstanding used in computing basic and diluted loss per common share for the three and nine months ended September 30, 2024 and 2023 have been adjusted to reflect the impact of the 1-for-50 reverse stock split effective as of August 30, 2024. 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 4,345,291 $ — $ 195,040 $ ( 175,573 ) $ ( 221 ) $ 19,246 Stock-based compensation — — 2,951 — — 2,951 Issuance of common stock and warrants in public offering, net of stock issuance cost ($ 877 )* 671,033 1 9,178 — — 9,179 Issuance of common stock and warrants in public offering, net 671,033 1 9,178 — — 9,179 Issuance of common stock in reverse stock split 70,661 — — — — — Other comprehensive income — — — — 221 221 Net loss — — — ( 15,818 ) — ( 15,818 ) Balance, September 30, 2024 5,086,985 $ 1 $ 207,169 $ ( 191,391 ) $ — $ 15,779 Common Stock Additional Paid - in Accumulated Accumulated Other Comprehensive Total Stockholders’ Shares* Amount* Capital Deficit (Loss)/Income Equity Balance, June 30, 2024 5,016,324 $ 1 $ 206,269 $ ( 187,116 ) $ ( 51 ) $ 19,103 Stock-based compensation — — 965 — — 965 Issuance of common stock and warrants in public offering, net of stock issuance cost ($ 65 ) — — ( 65 ) — — ( 65 ) Issuance of common stock and warrants in public offering, net of stock issuance cost — — ( 65 ) — — ( 65 ) Issuance of common stock in reverse stock split 70,661 — — — — — Other comprehensive income — — — — 51 51 Net loss — — — ( 4,275 ) — ( 4,275 ) Balance, September 30, 2024 5,086,985 $ 1 $ 207,169 $ ( 191,391 ) $ — $ 15,779 5 Common Stock Additional Paid - in Accumulated Accumulated Other Comprehensive Total Stockholders’ Shares* Amount* Capital Deficit (Loss)/Income Equity Balance, December 31, 2022 4,345,291 $ — $ 190,092 $ ( 152,631 ) $ ( 824 ) $ 36,637 Stock-based compensation — — 3,676 — — 3,676 Other comprehensive income — — — — 465 465 Net loss — — — ( 17,628 ) — ( 17,628 ) Balance, September 30, 2023 4,345,291 $ — $ 193,768 $ ( 170,259 ) $ ( 359 ) $ 23,150 Common Stock Additional Paid - in Accumulated Accumulated Other Comprehensive Total Stockholders’ Shares* Amount* Capital Deficit (Loss)/Income Equity Balance, June 30, 2023 4,345,291 $ — $ 192,572 $ ( 164,204 ) $ ( 514 ) $ 27,854 Balance 4,345,291 $ — $ 192,572 $ ( 164,204 ) $ ( 514 ) $ 27,854 Stock-based compensation — — 1,196 — — 1,196 Other comprehensive income — — — — 155 155 Net loss — — — ( 6,055 ) — ( 6,055 ) Balance, September 30, 2023 4,345,291 $ — $ 193,768 $ ( 170,259 ) $ ( 359 ) $ 23,150 Balance 4,345,291 $ — $ 193,768 $ ( 170,259 ) $ ( 359 ) $ 23,150 * Adjusted to reflect the impact of the 1-for-50 reverse stock split effective as of August 30, 2024. The accompanying notes are an integral part of these condensed consolidated financial statements 6 Matinas BioPharma Holdings, Inc. Condensed Consolidated Statements of Cash Flow (in thousands) Unaudited 2024 2023 Nine Months Ended September 30, 2024 2023 Cash flows from operating activities: Net loss $ ( 15,818 ) $ ( 17,628 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 275 288 Stock based compensation expense 2,951 3,676 Amortization of operating lease right-of-use assets 446 406 Amortization of finance lease right-of-use assets 4 7 Amortization of bond (premium)/discount ( 16 ) 90 Changes in operating assets and liabilities: Operating lease liabilities ( 481 ) ( 411 ) Prepaid expenses and other current assets 839 3,996 Accounts payable ( 165 ) 217 Accrued expenses and other liabilities ( 410 ) ( 1,340 ) Net cash used in operating activities ( 12,375 ) ( 10,699 ) Cash flows from investing activities: Purchase of marketable debt securities ( 8,437 ) — Proceeds from maturities of marketable debt securities 17,145 10,500 Purchases of leasehold improvements and equipment — ( 218 ) Net cash provided by investing activities 8,708 10,282 Cash flows from financing activities: Net proceeds from public offerings of common stock and warrants 9,179 — Payments of finance lease liability – principal ( 4 ) ( 6 ) Net cash provided by/(used in) financing activities 9,175 ( 6 ) Net increase/(decrease) in cash, cash equivalents and restricted cash 5,508 ( 423 ) Cash, cash equivalents and restricted cash at beginning of period 5,037 7,080 Cash, cash equivalents and restricted cash at end of period $ 10,545 $ 6,657 Supplemental non-cash financing and investing activities: Unrealized gain on marketable debt securities $ 221 $ 465 The accompanying notes are an integral part of these condensed consolidated financial statements 7 MATINAS BIOPHARMA HOLDINGS, INC. Notes to Unaudited Condensed Consolidated Financial Statements (Dollars 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 September 30, 2024, the Company had an accumulated deficit of $ 191,391 . The Company’s net loss was $ 15,818 for the nine months ended September 30, 2024. The Company has been engaged in developing its lipid nanocrystal (“LNC”) platform delivery technology and a pipeline of associated product candidates, including MAT2203, 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 September 30, 2024, the Company had cash and cash equivalents of $ 10,295 , marketable debt securities of $ 500 and restricted cash of $ 250 . The Company does not believe the cash, 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. 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. 8 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. Reverse Stock Split On August 30, 2024, the Company effected a 1-for-50 reverse stock split of its issued and outstanding common stock (the “Reverse Stock Split”). The Company’s common stock began trading on a split adjusted basis on September 3, 2024. No fractional shares were issued as a result of the Reverse Stock Split as fractional shares of Common Stock were rounded up to the nearest whole share. Unless otherwise noted in these condensed consolidated financial statements, all shares of common stock, warrants convertible into shares of common stock, stock options, per share information, and related parameters specified in this quarterly report have been retroactively adjusted to reflect the Reverse Stock Split for all periods presented. Refer to Note 10 – Stockholders’ Equity for additional information related to the Reverse Stock Split. 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 September 30, 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 September 30, 2024, December 31, 2023, September 30, 2023 and December 31, 2022: Schedule of Cash, Cash Equivalents and Restricted Cash September 30, 2024 December 31, 2023 September 30, 2023 December 31, 2022 Cash and cash equivalents $ 10,295 $ 4,787 $ 6,407 $ 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 $ 10,545 $ 5,037 $ 6,657 $ 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 and nine months ended September 30, 2024 and 2023. For the three and nine months ended September 30, 2024, the Company recorded unrealized gains of $ 51 and $ 221 , respectively. For the three and nine months ended September 30, 2023, the Company recorded unrealized gains of $ 155 and $ 465 , respectively. As of September 30, 2024 and December 31, 2023, the Company had net accumulated unrealized losses of $ 0 and $ 221 , respectively. 9 The following tables summarize the Company’s marketable debt securities as of September 30, 2024: Schedule of Marketable Debt Securities Amortized Unrealized Unrealized Cost Gain (Loss) Fair Value Corporate Debt Securities $ 500 $ — $ — $ 500 Total marketable debt securities $ 500 $ — $ — $ 500 All debt securities classified as available-for-sale are due to mature within one year of September 30, 2024. 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. 10 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 September 30, 2024 Total (Level 1) (Level 2) (Level 3) Fair Value Hierarchy September 30, 2024 Total (Level 1) (Level 2) (Level 3) Assets Marketable Debt Securities: Corporate Debt Securities $ 500 $ — $ 500 $ — Total $ 500 $ — $ 500 $ — December 31, 2023 Total (Level 1) (Level 2) (Level 3) 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 $ — 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 September 30, 2024 and December 31, 2023: Schedule of Leasehold Improvements and Equipment September 30, 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 1,970 1,695 Leasehold improvements and equipment, net $ 1,648 $ 1,923 Depreciation and amortization expense for the three and nine months ended September 30, 2024 was $ 90 and $ 275 , respectively, and the three and nine months ended September 30, 2023 were $ 98 and $ 288 , respectively. During the nine month periods ended September 30, 2023, the Company purchased equipment of $ 218 . The Company did not purchase any equipment during the nine months ended September 30, 2024. Note 7 – Accrued Expenses and Other Liabilities Accrued Expenses, summarized by major category, as of September 30, 2024 and December 31, 2023 consist of the following: Schedule of Accrued Expenses September 30, 2024 December 31, 2023 Payroll and incentives $ 720 $ 1,176 General and administrative expenses 299 196 Research and development expenses 18 75 Total $ 1,037 $ 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. 11 Operating lease obligations The Company incurred lease expense for its operating leases of $ 225 and $ 677 for the three and nine month periods ended September 30, 2024 and 2023, respectively. The Company incurred amortization expense on its operating lease right-of-use assets of $ 152 and $ 139 for the three months ended September 30, 2024 and 2023, respectively, and $ 446 and $ 406 for the nine months ended September 30, 2024 and 2023, respectively. Finance Leases The Company incurred interest expense on its finance leases of $ 1 and $ 2 for the three and nine months ended September 30, 2024, respectively, and $ 0 and $ 2 for the three and nine months ended September 30, 2023, respectively. The Company incurred amortization expense on its finance lease right-of-use assets of $ 1 and $ 4 for the three and nine months ended September 30, 2024, respectively, and $ 2 and $ 7 for the three and nine months ended September 30, 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 September 30, 2024: Schedule of Maturity of Operating and Finance Liabilities Maturity of Lease Liabilities Operating Lease Liabilities Finance Lease Liabilities Remainder of 2024 $ 245 $ 2 2025 998 7 2026 1,040 7 2027 944 7 2028 273 — Thereafter 138 — 2028 - - Thereafter - — Total undiscounted operating lease payments $ 3,638 $ 23 Less: Imputed interest 586 4 Present value of operating lease liabilities $ 3,052 $ 19 Weighted average remaining lease term in years 3.6 3.1 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 % 12 Note 9 – Revenue Recognition, Collaboration Agreements and Other The Company did not enter into any revenue recognition or collaboration agreements during the nine months ended September 30, 2024. 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. 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 On August 30, 2024, the Company effected the Reverse Stock Split. Accordingly, each of the Company’s stockholders received one share of the Company’s common stock for every 50 shares of the Company’s common stock that such stockholder held immediately prior to the effective time of the Reverse Stock Split. The Reverse Stock Split affected all of the Company’s issued and outstanding shares of common stock equally provided that no fractional shares of common stock were issued as a result of the Reverse Stock Split as fractional shares of common stock were rounded up to the nearest whole share. The Reverse Stock Split also affected the Company’s outstanding stock-based awards, warrants and other exercisable or convertible securities and resulted in the shares of common stock underlying such instruments being reduced and the exercise price or conversion price being increased proportionally by the Reverse Stock Split ratio. As a result of the Reverse Stock Split, the number of shares of common stock authorized for issuance was adjusted from 500,000,000 to 250,000,000 , and the par value of $ 0.0001 per share was not affected. Additionally, the number of issued and outstanding shares of the Company’s common stock was adjusted from 250,816,164 shares to 5,086,985 shares on August 30, 2024. For the nine months ended September 30, 2024, the Company sold 671,033 shares of its common stock. On April 5, 2024, the Company closed a registered direct offering of 666,667 shares of its common stock and warrants to purchase up to an aggregate of 666,667 additional shares of common stock, at a combined purchase price of $ 15.00 per share and accompanying warrant. The Company generated gross proceeds of $ 10,000 and net proceeds of $ 9,190 , after deducting underwriting discounts and commissions and other offering expenses. In addition, in February 2024, the Company sold 4,366 shares of its common stock under the ATM with BTIG, LLC generating net proceeds of $ 54 . 13 The Company did not sell any shares of its common stock during the nine months ended September 30, 2023. Warrants As of September 30, 2024, the Company had outstanding warrants to purchase 666,667 shares of the Company’s common stock at an exercise price of $ 17.50 per share. The warrants are exercisable six months after issuance date, April 5, 2024, and have a five-year term. Once exercisable, the warrants may be exercised at any time in whole or in part upon payment of the applicable exercise price until expiration of the Warrants. No fractional shares will be issued upon the exercise of the Warrants. The exercise price and the number of warrant shares purchasable upon the exercise of the warrants are subject to adjustment upon the occurrence of certain events, which may include stock dividends, stock splits, combination and reclassifications of the Company capital stock or other similar changes to the equity structure of the Company. The warrants do not have a redemption feature. They may be exercised on a cashless basis at the holder’s option and are classified as equity instruments. The following table summarizes the changes in warrants outstanding for the nine months ended September 30, 2024: Schedule of Shareholder Equity Warrants Outstanding Shares Outstanding at December 31, 2023 - Issued 666,667 Exercised - Tendered - Expired - Outstanding at September 30, 2024 666,667 Basic and diluted net loss per common share Net loss per share information is determined using the two-class method, which includes the weighted-average number of shares of common stock outstanding during the period and other securities. Under the two-class method, basic net loss per share attributable to common stockholders is computed by dividing the net income attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period. Diluted net loss per share attributable to common stockholders is computed using the more dilutive of (1) the two-class method or (2) the if-converted method. During the three and nine months ended September 30, 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 September 30, 2024 and 2023: Schedule of Anti-dilutive Securities Excluded from Computation of Earning Per Share As of September 30, 2024 2023 Stock options 872,063 664,689 Warrants 666,667 — Total 1,538,730 664,689 14 Note 11 – Accumulated Other Comprehensive Loss The following table summarizes the changes in accumulated other comprehensive loss by component during the nine months ended September 30, 2024 and 2023: Schedule of Components of Accumulated Other Comprehensive Loss 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 221 221 Balance, September 30, 2024 $ — $ — Balance, December 31, 2022 $ ( 824 ) $ ( 824 ) Net unrealized gain on securities available-for-sale 465 465 Balance, September 30, 2023 $ ( 359 ) $ ( 359 ) All components of accumulated other comprehensive income are net of tax. 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 nine month periods ended September 30, 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. As of September 30, 2024, there were 965,678 awards, including both restricted stock grants and option grants, issued and exercised under the Plan and no remaining shares available for grant under the Plan. 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 September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Research and Development $ 387 $ 507 $ 1,212 $ 1,576 General and Administrative 578 689 1,739 2,100 Total $ 965 $ 1,196 $ 2,951 $ 3,676 As of September 30, 2024, total compensation costs related to unvested awards not yet recognized was $ 4,597 and the weighted-average periods over which the awards are expected to be recognized was 2.2 years. Stock Options The following table summarizes the activity for Company’ stock options for the nine months ended September 30, 2024: Schedule of Stock Option Activity Stock Options Outstanding at December 31, 2023 934,243 Granted — Exercised — Forfeited ( 18,649 ) Expired ( 43,531 ) Outstanding at September 30, 2024 872,063 Note 13 – Subsequent Events On October 31, 2024, the Company announced that negotiations under a previously disclosed non-binding term sheet regarding global rights to MAT2203 have been terminated following notification from the prospective partner. As a result, the Company implemented an 80% workforce reduction effective on that date and ceased all product development. The severance cost associated with this initiative, which will be settled in cash, totaled approximately $ 2,150 and will be paid over a twelve-month period following the workforce reduction effective date. 15 Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis of our financial condition and results of operations should be read together with our financial statements and the related notes and the other financial information included elsewhere in this Quarterly Report on Form 10-Q. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those discussed below and elsewhere in this Quarterly Report on Form 10-Q, in our Annual Report on Form 10-K for the year ended December 31, 2023 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. CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS This report on Form 10-Q contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 under Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include statements with respect to our beliefs, plans, objectives, goals, expectations, anticipations, assumptions, estimates, intentions and future performance, and involve known and unknown risks, uncertainties and other factors, which may be beyond our control, and which may cause our actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. All statements other than statements of historical fact are statements that could be forward-looking statements. You can identify these forward-looking statements through our use of words such as “may,” “can,” “anticipate,” “assume,” “should,” “indicate,” “would,” “believe,” “contemplate,” “expect,” “seek,” “estimate,” “continue,” “plan,” “point to,” “project,” “predict,” “could,” “intend,” “target,” “potential” and other similar words and expressions of the future. There are a number of important factors that could cause the actual results to differ materially from those expressed in any forward-looking statement made by us. These factors include, but are not limited to: ● our possible retention of an advisor to assist with a potential transaction involving MAT2203 and the evaluation of other alternatives including but not limited to winddown and dissolution of the Company; ● our reduction by 80% of our workforce and the cessation of all product development activities; ● our ability to raise additional capital to fund our operations and to develop our product candidates; ● our anticipated timing for preclinical development, regulatory submissions, commencement and completion of clinical trials and product approvals; ● our history of operating losses in each year since inception and the expectation that we will continue to incur operating losses for the foreseeable future; ● our dependence on product candidates which are still in an early development stage; ● our reliance on our proprietary lipid nanocrystal (LNC) platform delivery technology, and certain related patents which are exclusively licensed to us by Rutgers University; ● our ability to manufacture GMP batches of our product candidates which are required for preclinical and clinical trials and, subsequently, if regulatory approval is obtained for any of our products, our ability to manufacture commercial quantities; ● our ability to complete required clinical trials for our lead product candidate and other product candidates and obtain approval from the FDA or other regulatory agents in different jurisdictions; ● our dependence on third parties, including third parties to manufacture our intermediates and final product formulations and third-party contract research organizations to conduct our clinical trials; ● our ability to maintain or protect the validity of our patents and other intellectual property; ● our ability to retain and recruit key personnel; 16 ● our ability to internally develop new inventions and intellectual property; ● interpretations of current laws and the passages of future laws; ● our lack of a sales and marketing organization and our ability to commercialize products, if we obtain regulatory approval, whether alone or through potential future collaborators; ● our ability to successfully commercialize, and our expectations regarding future therapeutic and commercial potential with respect to, our product candidates; ● the accuracy of our estimates regarding expenses, ongoing losses, future revenue, capital requirements and our needs for or ability to obtain additional financing; ● developments and projections relating to our competitors or our industry; and ● the factors listed under the heading “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023, elsewhere in this report and other reports that we file with the Securities and Exchange Commission. All forward-looking statements are expressly qualified in their entirety by this cautionary notice. You are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date of this report or the date of the document incorporated by reference into this report. We have no obligation, and expressly disclaim any obligation, to update, revise or correct any of the forward- looking statements, whether as a result of new information, future events or otherwise. We have expressed our expectations, beliefs and projections in good faith, and we believe they have a reasonable basis. However, we cannot assure you that our expectations, beliefs or projections will result or be achieved or accomplished. Overview We are a clinical-stage biopharmaceutical company. In October 2024, we announced that negotiations under a previously disclosed non-binding term sheet regarding global rights to our MAT2203 (oral amphotericin B) product candidate have been terminated following notification from the prospective partner. As a result, we implemented an 80% workforce reduction and ceased all product development activities to conserve cash. We may retain an advisor to assist us with a potential transaction involving MAT2203, and will evaluate other alternatives including but not limited to winddown and dissolution of the company. Prior to ceasing product development activities, we were focused on delivering groundbreaking therapies using our lipid nanocrystal (LNC) platform delivery technology (LNC Platform) and sought to develop an internal pipeline of products utilizing the LNC Platform to successfully encapsulate small molecules and small oligonucleotides and facilitate targeted and extrahepatic delivery to desired cell tissues without toxicity. Key elements of our strategy included: ● Advancing MAT2203 into the ORALTO trial for the treatment of invasive aspergillosis in patients with limited treatment options by securing a development and/or commercial partner. This initial indication is designed to be a gateway indication to establish the pharmacodynamic bridge necessary to expand the use of MAT2203 into other indications to treat deadly invasive fungal infections (e.g., mucormycosis, candidiasis and the endemic mycoses) through limited additional clinical work under a 505(b)(2) pathway, thereby making MAT2203 a pipeline in a product. ● Expanding the utilization of our LNC Platform with other small molecules and small oligonucleotides into inflammation and oncology in order to develop an internal pipeline of differentiated drug candidates. Oral, extrahepatic and non-toxic intracellular delivery of these molecules would represent a significant advancement. 17 ● Building an external pipeline of collaborations focused on our LNC Platform with leading pharmaceutical companies to provide delivery solutions for their complex small molecules and small oligonucleotides, including ASOs and siRNAs. For the nine month periods ended September 30, 2024 and 2023, our net loss was $15,818 and $17,628, respectively. We have incurred losses for each period from our inception and expect to incur additional losses for the foreseeable future. We do not believe the cash, 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. We seek to fund our operations through public or private equity offerings, debt financing, government or other third-party funding, collaborations and licensing arrangements. These financing alternatives may not be available to us on acceptable terms, or at all. As a result, substantial doubt exists about our ability to continue as a going concern. Financial Operations Overview Revenue During the three and nine months ended September 30, 2024, we did not generate any revenue. During the three and nine months ended September 30, 2023, we generated $0 and $1,096, respectively, in contract research revenue resulting from the research collaborations with BioNTech SE and Genentech Inc. 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. Research and Development Expenses Research and development expenses consist of costs incurred for the development of product candidate MAT2203 and advancement of our LNC platform delivery technology, which include: ● the cost of 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 National Institutes of Health (NIH), that conduct our pre-clinical or clinical trials; and ● employee-related expenses, including salaries and stock-based compensation expense for those employees involved in the research and development process. The table below summarizes our direct research and development expenses for our product candidates and development platform for the three and nine months ended September 30, 2024 and 2023. Our direct research and development expenses consist principally of external costs, such as fees paid to contractors, consultants, analytical laboratories and CROs and/or the NIH, in connection with our development work. We typically use our employee and infrastructure resources for manufacturing clinical trial materials, conducting product analysis, study protocol development and overseeing outside vendors. Included in “Internal staffing, overhead and other” below is the cost of laboratory space, supplies, research and development (R&D) employee costs (including stock-based compensation), travel and medical education. 18 Three months ended September 30, Nine months ended September 30, 2024 2023 2024 2023 Direct research and development expenses: Manufacturing process development $ 203 $ 349 $ 753 $ 942 Preclinical trials 171 101 1,034 350 Clinical development 104 314 375 1,183 Regulatory 62 133 233 463 Internal staffing, overhead and other 1,699 2,398 6,662 7,886 Total research and development $ 2,239 $ 3,295 $ 9,057 $ 10,824 Research and development activities are central to our business model. 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 2024 will be lower compared with expenses incurred during 2023 until such time as we are able to secure additional funding to support initiation of our ORALTO trial for MAT2203 and advancement of our LNC platform delivery technology. General and Administrative Expenses General and administrative expense for the three and nine months ended September 30, 2024 were $2,142 and $7,067, respectively, and the three and nine months ended September 30, 2023 were $2,839 and $8,151, respectively. General and administrative expenses consist principally of salaries and related costs for personnel in executive and finance functions. Other general and administrative expenses include facility costs, insurance, investor relations expenses, professional fees for legal, patent review, consulting and accounting/audit services. We anticipate that our general and administrative expenses during 2024 will decrease slightly compared to expenses incurred during 2023. Other Income, net Other income, net is largely comprised of interest income/(expense) and dividends. Reverse Stock Split On August 30, 2024, we effected a 1-for-50 reverse stock split of our issued and outstanding common stock (the “Reverse Stock Split”). As a result of the Reverse Stock Split, each of our stockholders received one share of our common stock for every 50 shares such stockholder held immediately prior to the effective time of the Reverse Stock Split. Unless otherwise noted, all shares of common stock, common stock per share data and shares of common stock underlying stock-based awards and warrants convertible into shares of common stock included in these condensed consolidated financial statements, including the exercise or conversion price of such equity instruments, as applicable, have been retroactively adjusted to reflect the Reverse Stock Split for all periods presented. Application of Critical Accounting Policies and Accounting Estimates A critical accounting policy is one that is both important to the portrayal of our financial condition and results of operation and requires management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. For a description of our significant accounting policies, refer to “Note 3 – Summary of Significant Accounting Policies ” in our 2023 Form 10-K. Of these policies, the following are considered critical to an understanding of our Unaudited Condensed Consolidated Financial Statements as they require the application of the most difficult, subjective and complex judgments: (i) Research and development costs, and (ii) Goodwill and other intangible assets. Recent Accounting Pronouncements Refer to “Note 3 – Summary of Significant Accounting Policies” in the Notes to Unaudited Condensed Consolidated Financial Statements for a discussion of recently adopted accounting pronouncements and their expected impact on our financial positions and results of operations. 19 Current Operating Trends In October 2024, we announced implementation of an 80% workforce reduction (the “October RIF”) and ceased all product development activities to conserve cash. We may retain an advisor to assist us with a potential transaction involving MAT2203, and will evaluate other alternatives including but not limited to winddown and dissolution of the company. While this evaluation is ongoing, we expect our R&D expenses will be limited to costs associated with supporting the Company’s MAT2203 Compassionate/Expanded Use Access Program and other costs necessary to maintain compliance with certain regulatory requirements. Prior to the October RIF, our R&D efforts had been 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 consisted 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. Results of Operations Comparison of the three months ended September 30, 2024 to the three months ended September 30, 2023 The following tables summarize our revenues and operating expenses for the periods presented: Three Months Ended September 30, 2024 2023 Revenues $ — $ — Expenses: Research and development $ 2,239 $ 3,295 General and administrative 2,142 2,839 Operating Expenses $ 4,381 $ 6,134 Revenues. During the three months ended September 30, 2024 and 2023, we did not generate any revenue. Research and Development expenses. Research and Development (R&D) expense for the three months ended September 30, 2024 and 2023 was $2,239 and $3,295, respectively. The decrease in R&D expense was primarily attributable to lower headcount related expenses, and lower manufacturing and clinical trial expenses. General and Administrative expenses. General and Administrative (G&A) expense for the three months ended September 30, 2024 and 2023 was $2,142 and $2,839, respectively. The decrease in G&A expense was primarily attributable to lower consulting fees and lower headcount related expenses. Comparison of the nine months ended September 30, 2024 to the nine months ended September 30, 2023 20 The following tables summarize our revenues and operating expenses for the periods presented: Nine Months Ended September 30, 2024 2023 Revenues $ — $ 1,096 Expenses: Research and development $ 9,057 $ 10,824 General and administrative 7,067 8,151 Operating Expenses $ 16,124 $ 18,975 Revenues. During the nine month periods ended September 30, 2024 and 2023, we generated revenue of $0 and $1,096. The amount earned during the prior year consists of contract research revenue resulting from the research collaboration with BioNTech SE and Genentech Inc. Research and Development expenses. R&D expense for the nine month periods ended September 30, 2024 and 2023 was $9,057 and $10,824, respectively. The decrease in R&D expense was primarily attributable to lower stock based compensation expense, a decrease in other payroll related costs due to decreased headcount and the decrease in manufacturing and clinical trial expenses. General and Administrative expenses. G&A for the nine month periods ended September 30, 2024 and 2023 was $7,067 and $8,151, respectively. The decrease in G&A expense was primarily attributable to lower stock based compensation expense, consulting fees and decreased insurance premiums. Liquidity and capital resources Sources of Liquidity We have funded our operations since inception primarily through private placements and public offerings of our equity securities. As of September 30, 2024, we have raised a total of $166,907 in gross proceeds and $153,445, net, from sales of our equity securities. As of September 30, 2024, we had unrestricted cash, cash equivalents and marketable debt securities totaling $10,795. 2024 Registered Direct Offering On April 5, 2024, the Company closed a registered direct offering of 666,667 shares of its common stock and warrants to purchase up to an aggregate of 666,667 additional shares of common stock, at a combined purchase price of $15.00 per share and accompanying warrant. The Company generated gross proceeds of approximately $10,000 and net proceeds of approximately $9,190, after deducting underwriting discounts and commissions and other offering expenses. Cash Flows The following table sets forth the primary sources and uses of cash, cash equivalents and restricted cash for each of the periods set forth below: Nine Months Ended September 30, 2024 2023 Cash used in operating activities $ (12,375 ) $ (10,699 ) Cash provided by investing activities 8,708 10,282 Cash provided by/(used in) financing activities 9,175 (6 ) Net increase/(decrease) in cash and cash equivalents and restricted cash $ 5,508 $ (423 ) 21 Operating Activities Net cash used in operating activities was $12,375 and $10,699 for the nine month periods ended September 30, 2024 and 2023, respectively. Net losses of $15,818 and $17,628 for the nine month periods ended September 30, 2024 and 2023, respectively, were partially offset by working capital adjustments due to the timing of receipts and payments in the ordinary course of business and adjustments for non-cash stock based compensation expense. Investing Activities Net cash provided by investing activities was $8,708 and $10,282 for the nine month periods ended September 30, 2024 and 2023, respectively. The decrease of cash used in investing activities was primarily due to a $8,437 purchase of marketable securities offset by a $6,645 increase in maturities of marketable debt securities and a $218 decrease in the purchases of leasehold improvements and equipment. Financing Activities Net cash provided by/(used in) financing activities was $9,175 and ($6) for the nine month periods ended September 30, 2024 and 2023, respectively. The increase in cash provided by financing activities is primarily due to the net proceeds received from the sale of our common stock in the registered direct offering, $9,125, and the net proceeds received from the sale of our common stock under the ATM with BTIG, LLC, $54. Funding Requirements and Other Liquidity Matters We expect to continue to incur administrative expenses and operating losses as we seek a potential transaction involving MAT2203, and continue to evaluate other alternatives including but not limited to winddown and dissolution of the company. We anticipate that our expenses will increase substantially if we secure additional funding allowing us to resume product development activities and: ● conduct further preclinical and clinical studies of MAT2203, our lead product candidate; ● 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; and ● 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. We do not expect that our existing cash, cash equivalents and marketable debt securities will be sufficient to fund our operating expenses and capital expenditure requirements 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. Until such time, if ever, that we can generate product revenues sufficient to achieve profitability, we would expect to finance our cash needs through a combination of private and public equity offerings, debt financings, government or other third-party funding, collaborations, and licensing arrangements. 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. 22 If we raise additional funds through collaborations, strategic alliances or marketing, distribution, or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves. Our 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 these risks. 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. Off-Balance Sheet Arrangements We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined under SEC rules, such as relationships with unconsolidated entities or financial partnerships, which are often referred to as structured finance or special purpose entities, established for the purpose of facilitating financing transactions that are not required to be reflected on our balance sheets. Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. Not applicable. Item 4. CONTROLS AND PROCEDURES. Evaluation of Disclosure Controls and Procedures. Disclosure Controls and Procedures: As of September 30, 2024, under the supervision and with the participation of our principal executive officer and principal financial officer we have evaluated, the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based on that evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of September 30, 2024. Our disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed in the reports that we filed or submitted under the Exchange Act is recorded, processed, summarized and reported within time periods specified by the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to our management, including principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. Changes in Internal Control Over Financial Reporting There were no changes in our internal control over financial reporting identified in connection with the above evaluation that occurred during the third quarter of 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. 23 PART II - OTHER INFORMATION Item 1. LEGAL PROCEEDINGS. None. Item 1A. RISK FACTORS. Except as set forth below, there were no material changes from the risk factors set forth under Part I, Item 1A., “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023. You should carefully consider the risk factors contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 in addition to the other information set forth in this report which could materially affect our business, financial condition or future results. The risks and uncertainties described in this report and in our Annual Report on Form 10-K for the year ended December 31, 2023, as well as other reports and statements that we file with the SEC, are not the only risks and uncertainties facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also have a material adverse effect on our financial position, results of operations or cash flows. O ur business to date has been significantly dependent on the success of MAT2203, and we have decided to discontinue further development of MAT2203 and devote significant time and resources to identifying and evaluating strategic alternatives, which may not be successful. To date, we have invested significant efforts and financial resources in the research and development of MAT2203, which was our lead product candidate in clinical trials. In October 2024, we announced that negotiations under a previously disclosed non-binding term sheet regarding global rights to MAT2203 have been terminated following notification from the prospective partner. As a result, we implemented an 80% workforce reduction effective as of October 31, 2024 and ceased all product development activities to conserve cash. We may retain an advisor to assist us with a potential transaction involving MAT2203, and will evaluate other alternatives including but not limited to winddown and dissolution of the company. There can be no assurance that efforts to identify and evaluate a potential buyer or partner for MAT2203 will result in any definitive offer to consummate a strategic transaction, or if made what the terms thereof will be or that any transaction will be approved or consummated. If any definitive offer to consummate a sale is received, there can be no assurance that a definitive agreement will be executed or that, if a definitive agreement is executed, the transaction will be consummated. In addition, there can be no assurance that any transaction, involving our company and/or assets, that is consummated would enhance shareholder value. There also can be no assurance that we will conduct further drug research or development activities in the future. Any such strategic transaction may require us to incur non-recurring or other charges, may increase our near-and long-term expenditures and may pose significant integration challenges or disrupt our management or business, which could If we do not successfully consummate a transaction involving MAT2203, our board of directors may decide to pursue a winddown or dissolution of our company. In such an event, the amount of cash available for distribution to our stockholders will depend heavily on the timing of such dissolution as well as the amount of cash that will need to be reserved for commitments and contingent liabilities. There can be no assurance that a transaction involving MAT2203 will be consummated, and previous efforts to do so have not been successful. If no transaction is completed, our board of directors may decide to pursue a winddown or dissolution. In such an event, the amount of cash available for distribution to our stockholders will depend heavily on the timing of such a decision and, ultimately, such liquidation, since the amount of cash available for distribution continues to decrease as we fund our limited operations while we evaluate our options. In addition, if our board of directors were to approve and recommend, and our stockholders were to approve, a winddown or dissolution of our company, we would be required under Delaware corporate law to pay our outstanding obligations, as well as to make reasonable provision for contingent and unknown obligations, prior to making any distributions in liquidation to our stockholders. Our commitments and contingent liabilities may include (i) obligations under our employment and related agreements with certain employees that provide for severance and other payments following a termination of employment occurring for various reasons, including a change in control of our company; (ii) potential litigation against us, and other various claims and legal actions arising in the ordinary course of business; and (iii) non-cancelable facility lease obligations. As a result of this requirement, a portion of our assets may need to be reserved pending the resolution of such obligations. In addition, we may be subject to litigation or other claims related to a winddown or dissolution of our company. If a winddown or dissolution were pursued, our board of directors, in consultation with its advisors, would need to evaluate these matters and make a determination about a reasonable amount to reserve. Accordingly, holders of our common stock could lose all or a significant portion of their investment in the event of a winddown or dissolution of our company 24 Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS. None. Item 3. DEFAULTS UPON SENIOR SECURITIES. None. Item 4. MINE SAFETY DISCLOSURES. Not applicable. Item 5. OTHER INFORMATION. During the nine months ended September 30, 2024, none of the Company’s directors or officers adopted or terminated any contract, instruction or written plan for the purchase or sale of the Company’s securities that was intended to satisfy the affirmative defense conditions of Rule 10b5–1(c) or any “non-Rule 10b5-1 trading arrangement” (as such terms are defined in Item 408 of Regulation S-K of the Securities Act). Item 6. EXHIBITS. See the Exhibit Index following the signature page to this Quarterly Report on Form 10-Q for a list of exhibits filed or furnished with this report, which Exhibit Index is incorporated herein by reference. 25 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. MATINAS BIOPHARMA HOLDINGS, INC. BY: /s/ Jerome D. Jabbour Dated: November 13, 2024 Jerome D. Jabbour Chief Executive Officer (Principal Executive Officer) /s/ Keith A. Kucinski Dated: November 13, 2024 Keith A. Kucinski Chief Financial Officer (Principal Financial and Accounting Officer) 26 EXHIBIT INDEX 3.1 Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to Amendment No. 1 to the Company’s Registration Statement on Form S-1 filed with the SEC on February 7, 2014). 3.2 Bylaws (incorporated by reference to Exhibit 3.2 to Amendment No. 1 to the Company’s Registration Statement on Form S-1 filed with the SEC on February 7, 2014). 3.3 Certificate of Amendment, dated October 29, 2015 to Certificate of Incorporation. (incorporated herein by reference to the Company’s Current Report on Form 8-K filed with the SEC on November 5, 2015). 3.4 Certificate of Amendment, dated August 30, 2024 to Certificate of Incorporation. (incorporated herein by reference to the Company’s Current Report on Form 8-K filed with the SEC on September 3, 2024). 4.1 Common Stock Purchase Warrant, dated April 5, 2024 (incorporated herein by reference to the Company’s Current Report on Form 8-K filed with the SEC on April 5, 2024). 10.1 Securities Purchase Agreement, dated April 2, 2024 (incorporated herein by reference to the Company’s Current Report on Form 8-K filed with the SEC on April 5, 2024). 10.2 Placement Agency Agreement, dated April 2, 2024 (incorporated herein by reference to the Company’s Current Report on Form 8-K filed with the SEC on April 5, 2024). *31.1 Certification of Chief Executive Officer *31.2 Certification of Chief Financial Officer *32.1 Section 1350 Certifications *101.1 Inline XBRL Instance Document. *101.2 Inline XBRL Taxonomy Extension Schema Document. *101.3 Inline XBRL Taxonomy Extension Calculation Linkbase Document. *101.4 Inline XBRL Taxonomy Extension Definition Linkbase Document. *101.5 Inline XBRL Taxonomy Extension Label Linkbase Document. *101.6 Inline XBRL Taxonomy Extension Presentation Linkbase Document. 104 Cover Page Interactive Data File (embedded within the Inline XBRL document) * Filed herewith. † Indicates a management contract or compensation plan, contract or arrangement. Certain portions of this exhibit, that are not material and would likely cause competitive harm to the registrant if publicly disclosed, have been redacted pursuant to Item 601(b)(10) of Regulation S-K. 27