Matinas BioPharma Holdings, Inc. 10-K

Item 7. 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 related notes appearing elsewhere in this Annual Report on Form 10-K. Some of the information contained in this discussion and analysis or set forth elsewhere in this Annual Report on Form 10-K, including information with respect to our plans and strategy for our business and financing needs, includes forward-looking statements that involve risks and uncertainties and should be read together with the “Risk Factors” section of this Annual Report on Form 10-K for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. 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 Annual Report and in other reports we file with the Securities and Exchange Commission, particularly those under “Risk Factors.” All dollars amounts stated in the tabular and paragraph formats are presented in thousands, except per share data, or otherwise indicated. Overview We are a clinical-stage biopharmaceutical company focused on delivering groundbreaking therapies using our lipid nanocrystal (LNC) platform delivery technology (LNC Platform). Key elements of our strategy now include: ● Securing one or more partners to monetize the value of MAT2203 in the short term and raise additional non-dilutive capital through the licensing or sale of our lead LNC Platform product candidate. A partnership would likely seek to advance MAT2203 into Phase 3 development as quickly as possible, which could position a partner to commercialize MAT2203 upon approval and which could bring additional longer-term value to the Company and its shareholders. ● Conserving our cash resources while identifying and evaluating other strategic options for the Company, which could include the in-license of one or more assets or seeking a merger partner for the Company. On October 31, 2024, we announced that negotiations under the MAT2203 Term Sheet were terminated following notification from the perspective partner for reasons unrelated to MAT2203. As a result, we implemented an immediate 80% workforce reduction, eliminating 15 positions, including three members of senior management, and paused clinical development of MAT2203 to preserve cash while it evaluated a potential sale of MAT2203 and/or other strategic alternatives, including a potential winddown or dissolution of the Company. On February 13, 2025, we entered into a securities purchase agreement (the “February 2025 Agreement”) with a certain group of investors (the “February 2025 Investors”), pursuant to which they agreed to purchase from the Company 3,300 shares of our Series C Convertible Preferred Stock, par value $0.0001 per share (the “Preferred Stock”), and warrants to purchase up to 11,262,808 shares of common stock (the “2025 Warrants”) at a purchase price of $1,000 per share of Preferred Stock and accompanying 2025 Warrants for aggregate gross proceeds of $3.3 million before deducting offering expenses payable by the Company. The February 2025 Investors purchased 1,650 shares of Preferred Stock and accompanying 2025 Warrants to purchase up to 5,631,404 shares of common stock for gross proceeds to the Company of $1.65 million at an initial closing on February 13, 2025. Subject to the satisfaction of certain closing conditions, the February 2025 Investors purchased an additional 1,650 shares of Preferred Stock and accompanying 2025 Warrants to purchase up to 5,631,404 shares of common stock for gross proceeds to the Company of $1.65 million at a second closing on April 8, 2025. The shares of Preferred Stock are convertible into common stock at a conversion price of $0.586, and each share of Preferred Stock is initially convertible into 1,706 shares of common stock. The 2025 Warrants have an exercise price of $0.6446 per share. The 2025 Warrants purchased in the initial closing became exercisable on April 4, 2025, the effective date of the approval by our shareholders of the Stock Issuance Proposal (as defined below) (the “Shareholder Approval”) and will expire five years from the effective date of the Shareholder Approval, or April 4, 2030. The 2025 Warrants purchased in the second closing were immediately exercisable and will expire on April 8, 2030. In connection with the February 2025 Agreement, Dr. Robin L. Smith, MD, MBA was appointed to the Board. 57 For the years ended December 31, 2025 and 2024, our net loss was $10,345 and $24,251, 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 that the cash and cash equivalents on hand are sufficient to fund planned operations beyond the next twelve months from the filing date of this Annual Report. We will seek to fund our operations through public or private equity offerings, debt financings, government or other third-party funding, collaborations, and licensing arrangements. 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 We did not generate any revenue during the years ended December 31, 2025 and 2024. 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, which include: ● the cost of acquiring, developing, and manufacturing pre-clinical and human clinical trial materials; ● costs for consultants and contractors associated with Chemistry and Manufacturing Controls (CMC), pre-clinical and clinical activities and regulatory operations; ● expenses incurred under agreements with contract research organizations, or CROs, including the NIH, that conduct our pre-clinical or clinical trials; ● employee-related expenses, including salaries and stock-based compensation expense for those employees involved in the research and development process; and ● the reimbursement of certain expenses related to the CFF award agreement. 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. During 2025 our research and development expenses are lower compared with expenses incurred during 2024 as commencement of additional activities, was and continues to be subject to our ability to secure additional funding to support initiation of our Phase 3 registration trial for MAT2203, or to secure one or more partners to assume clinical development activities for MAT2203 and advance our LNC Platform delivery technology. The table below summarizes our direct research and development expenses for our product candidates and development platform for the years ended December 31, 2025 and 2024. 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 historically 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 option expenses), travel and medical education. Years Ended December 31, 2025 2024 Direct research and development expenses: Manufacturing process development $ — $ 892 Preclinical trials 14 1,074 Clinical development 3 405 Regulatory 61 285 Internal staffing, overhead and other 7 8,777 Total research & development $ 85 $ 11,433 58 General and Administrative Expenses 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 2026 will decrease slightly compared to expenses incurred during 2025 as a result of cost-cutting measures implemented to conserve cash. Asset Impairment Charges During the fourth quarter of 2024, we identified impairment indicators for certain long-lived assets, primarily due to the terminated partnership negotiations for the future development and commercialization of MAT2203 and the subsequent cost-cutting measures. We remeasured the fair value of the Company’s long-lived assets and recognized non-cash impairment charges of $4,431, $1,336 of which related to goodwill, $757 related to IPR&D and $2,338 related to other assets. These amounts are reflected as impairment charges in the consolidated statements of operations and comprehensive loss for 2024. We did not record an asset impairment charge in 2025. Change in fair value of warrant liability In a series of transactions on February 13, 2025, and April 8, 2025, we closed a private placement investment with certain investors in which the investors received shares of Preferred Stock and 2025 Warrants. The 2025 Warrants were initially classified as a liability upon each issuance date with the fair value estimated using a Monte Carlo simulation model. On June 26, 2025, we entered into a warrant amendment with the February 2025 Investors. Under such amendment, the terms of the 2025 Warrants were amended enabling for reclassification of the 2025 Warrants to equity. Other (Expense)/Income, net Other (expense)/income, net for the year ended December 31, 2025 and 2024 were ($261) and $262, respectively. Other (expense)/income, net decreased compared to the prior period primarily due to recording issuance costs of $251 in connection with the transactions contemplated by the February 2025 Agreement. 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 .” Of these policies, the following are considered critical to an understanding of our Audited Consolidated Financial Statements as they require the application of the most difficult, subjective and complex judgments: (i) Other intangible assets, and (ii) Warrants. Recent Accounting Pronouncements Refer to “Note 3 – Summary of Significant Accounting Policies” in the accompanying notes to the consolidated financial statements for a discussion of recently adopted and issued accounting pronouncements and their impact or expected impact on our financial positions and results of operations. 59 Current Operating Trends Our current R&D efforts are focused on advancing our lead LNC product candidate, MAT2203. Our R&D expenses consist of fees paid to consultants for work related to clinical trial design and regulatory activities, fees paid to providers for conducting various clinical studies as well as for the analysis of the results of such studies, and for other medical research addressing the potential efficacy and safety of our drugs. We believe that significant investment in product development is a competitive necessity, and we are seeking a partner to assist us in continuing to make these investments to be in a position to realize the potential of our product candidates and proprietary technologies. We expect that most of our R&D expenses in the near-term, if any, will be incurred in support of MAT2203 and positioning that drug for a partnership with a well-funded and experienced third party biotech or pharmaceutical company. Financial impact of events beyond our control Our financial condition and results of operations may be impacted by factors we may not be able to control, such as pandemics, global supply chain disruptions, global trade disputes, tariffs 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. The Company’s financial results for the years ended December 31, 2025 and 2024 were not significantly impacted by factors beyond our control, such as those described above. However, the Company cannot predict the impact of any of these factors on future results or the Company’s ability to raise capital due to a variety of factors, including but not limited to the continued good health of Company employees, the ability of service providers and suppliers to continue to operate and deliver, the ability of the Company to maintain operations, and any government and/or public actions taken in response to these factors. Results of Operations Years Ended December 31, 2025 and 2024 The following table summarizes our operating results for the years ended December 31, 2025 and 2024: Years Ended December 31, 2025 2024 Expenses: Research and development $ 85 $ 11,433 General and administrative 6,875 8,729 Impairment charges of goodwill and other intangible assets — 2,093 Impairment charges of other assets — 2,338 Operating Expenses $ 6,960 $ 24,593 Research and Development expenses. R&D expense for the years ended December 31, 2025 and 2024 was $85 and $11,433, respectively. The decrease of $11,348 was due to a decrease of $2,584 of clinical trial expenses, primarily related to the pause of our MAT2203 development program, $8,764 decrease in total compensation expenses related to the reduction in force. General and Administrative expenses. G&A expense for the years ended December 31, 2025 and 2024 was $6,875 and $8,729, respectively. The decrease of $1,854 over the prior year was primarily attributable to lower stock-based compensation expense and decreased headcount. Impairment charges. For the year ended December 31, 2025, we did not record impairment charges. For the year ended December 31, 2024, we recorded $4,431 of impairment charges, $1,336 of which related to goodwill, $757 related to IPR&D and $2,338 related to other long-lived assets, primarily due to the terminated partnership negotiations for the future development and commercialization of MAT2203 and subsequent cost-cutting measures. Liquidity and capital resources Sources of Liquidity We have funded our operations since inception primarily through private placements of our preferred stock and our common stock and common stock warrants. As of December 31, 2025, we have raised a total of $170,336 in gross proceeds and $156,594, net proceeds, from sales of our equity securities since inception in 2013. As of December 31, 2025, we had cash and cash equivalents, excluding restricted cash, totaling $3,999. 60 2025 Private Placement On February 13, 2025, we entered into the February 2025 Agreement, pursuant to which we agreed to issue and sell, in a private placement, an aggregate of 3,300 shares of Preferred Stock, initially convertible into up to 5,631,404 shares of our common stock, with a stated value of $1,000 per share, and 2025 Warrants to purchase up to an aggregate of 200% of the shares of common stock into which the shares of Preferred Stock are initially convertible, or 11,262,808 shares of common stock, for an offering price of $1,000 per share of Preferred Stock and accompanying 2025 Warrants. Pursuant to the February 2025 Agreement, on February 13, 2025, we issued and sold in an initial closing 1,650 shares of Preferred Stock, initially convertible into up to 2,815,702 shares of common stock, and accompanying 2025 Warrants, initially exercisable for up to 5,631,404 shares of common stock, for gross proceeds of $1.65 million. On April 4, 2025, we obtained stockholder approval for the issuance of the Preferred Stock and 2025 Warrants, as required by the rules and regulations of NYSE American, including Section 713 of the NYSE American Company Guide, and issued and sold, in a second closing, an additional 1,650 shares of Preferred Stock, initially convertible into up to 2,815,702 shares of common stock, and accompanying 2025 Warrants, initially exercisable for up to 5,631,404 shares of common stock, for gross proceeds of $1.65 million. 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 $9,179, after deducting underwriting discounts and commissions and other offering expenses. 2020 At-The-Market Sales Agreement On July 2, 2020, we entered into an At-The-Market Sales Agreement (the “Sales Agreement”) with BTIG, LLC (“BTIG”), pursuant to which we may offer and sell, from time to time, through BTIG, as sales agent and/or principal, shares of our common stock having an aggregate offering price of up to $50 million, subject to certain limitations on the amount of common stock that may be offered and sold by us set forth in the Sales Agreement. BTIG will be paid a 3% commission on the gross proceeds from each sale. We may terminate the Sales Agreement at any time; BTIG may terminate the Sales Agreement in certain limited circumstances. During 2024, we sold 218,000 shares of our common stock under the Sales Agreement generating gross proceeds of $56 thousand. We did not sell any shares under the Sales Agreement during 2025. At December 31, 2025, the Sales Agreement’s available capacity was $44,191. However, such capacity is limited by the restrictions imposed by General Instruction I.B.6 to Form S-3, which limits the amount we can raise through primary public offerings of securities in any twelve-month period using Form S-3 to an aggregate of one-third of our public float. Cash Flows The following table sets forth the primary sources and uses of cash for each of the periods set forth below: Years Ended December 31 2025 2024 Cash used in operating activities $ (7,011 ) $ (15,885 ) Cash provided by investing activities 335 9,208 Cash provided by financing activities 3,391 9,174 Net (decrease)/increase in cash and cash equivalents and restricted cash $ (3,285 ) $ 2,497 Operating Activities Net cash used in operating activities for the year ended December 31, 2025 was $7,011, compared to $15,885 in the prior year. Net losses of $10,345 and $24,251 for the years ended December 31, 2025 and 2024, respectively, were partially offset by working capital adjustments due to the timing of receipts and payments in the ordinary course of business, adjustments for non-cash stock based compensation expense, impairment charges and change in fair value of the warrant liability. 61 Investing Activities Net cash provided by investing activities for the year ended December 31, 2025 was $335, compared to $9,208 of net cash provided by investing activities for the year ended December 31, 2024. The decrease in cash provided by investing activities was primarily due to a year over year decrease of $9,208 in net maturities of marketable debt securities, partially offset by $335 from the net sales of assets in 2025. Financing Activities Net cash provided by financing activities was $3,391 and $9,174 for the years ended December 31, 2025 and 2024, respectively. The decrease in cash provided by financing activities is primarily due to the net proceeds from the sale of our Preferred Stock and 2025 Warrants of $3,271 and the exercise of warrants $129 during the year-ending December 31, 2025, being less than the net proceeds from the registered direct sale of our common stock of $9,179 during the year-ended December 31, 2024. Going Concern We expect to continue to incur significant expenses and increasing operating losses for the foreseeable future. We do not believe that our existing cash and cash equivalents will be sufficient to fund our operating expenses and capital expenditures requirements beyond the next twelve months from the filing date of this Annual Report. 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 revenues sufficient to achieve profitability, we 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 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 secure one or more partners to monetize the value of MAT2203 or future product candidates 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. 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 other expenses, negatively impacting our future results of operations. Contractual Obligations and Commitments Refer to Note 11 – “Commitments” in the accompanying notes to the consolidated financial statements for a discussion of the Company’s contractual obligations and commitments. 62 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. RECENT ACCOUNTING PRONOUNCEMENTS Refer to Note 3 - “ Summary of Significant Accounting Policies ,” in the accompanying notes to the consolidated financial statements for a discussion of recent accounting pronouncements. Item 7A. Quantitative And Qualitative Disclosures About Market Risk Not applicable.