0001582554 false Q3 Accelerated Filer 2020 --12-31 0001582554 2020-01-01 2020-09-30 0001582554 2020-11-03 0001582554 2020-09-30 0001582554 2019-12-31 0001582554 2020-07-01 2020-09-30 0001582554 2019-07-01 2019-09-30 0001582554 2019-01-01 2019-09-30 0001582554 MTNB:RedeemableConvertiblePreferredStockAMember 2019-12-31 0001582554 MTNB:RedeemableConvertiblePreferredStockBMember 2019-12-31 0001582554 us-gaap:CommonStockMember 2019-12-31 0001582554 us-gaap:AdditionalPaidInCapitalMember 2019-12-31 0001582554 us-gaap:RetainedEarningsMember 2019-12-31 0001582554 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-12-31 0001582554 MTNB:RedeemableConvertiblePreferredStockAMember 2020-01-01 2020-09-30 0001582554 MTNB:RedeemableConvertiblePreferredStockBMember 2020-01-01 2020-09-30 0001582554 us-gaap:CommonStockMember 2020-01-01 2020-09-30 0001582554 us-gaap:AdditionalPaidInCapitalMember 2020-01-01 2020-09-30 0001582554 us-gaap:RetainedEarningsMember 2020-01-01 2020-09-30 0001582554 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-01-01 2020-09-30 0001582554 MTNB:RedeemableConvertiblePreferredStockAMember 2020-09-30 0001582554 MTNB:RedeemableConvertiblePreferredStockBMember 2020-09-30 0001582554 us-gaap:CommonStockMember 2020-09-30 0001582554 us-gaap:AdditionalPaidInCapitalMember 2020-09-30 0001582554 us-gaap:RetainedEarningsMember 2020-09-30 0001582554 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-09-30 0001582554 MTNB:RedeemableConvertiblePreferredStockAMember 2020-06-30 0001582554 MTNB:RedeemableConvertiblePreferredStockBMember 2020-06-30 0001582554 us-gaap:CommonStockMember 2020-06-30 0001582554 us-gaap:AdditionalPaidInCapitalMember 2020-06-30 0001582554 us-gaap:RetainedEarningsMember 2020-06-30 0001582554 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-06-30 0001582554 2020-06-30 0001582554 MTNB:RedeemableConvertiblePreferredStockAMember 2020-07-01 2020-09-30 0001582554 MTNB:RedeemableConvertiblePreferredStockBMember 2020-07-01 2020-09-30 0001582554 us-gaap:CommonStockMember 2020-07-01 2020-09-30 0001582554 us-gaap:AdditionalPaidInCapitalMember 2020-07-01 2020-09-30 0001582554 us-gaap:RetainedEarningsMember 2020-07-01 2020-09-30 0001582554 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-07-01 2020-09-30 0001582554 MTNB:RedeemableConvertiblePreferredStockAMember 2018-12-31 0001582554 MTNB:RedeemableConvertiblePreferredStockBMember 2018-12-31 0001582554 us-gaap:CommonStockMember 2018-12-31 0001582554 us-gaap:AdditionalPaidInCapitalMember 2018-12-31 0001582554 us-gaap:RetainedEarningsMember 2018-12-31 0001582554 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-12-31 0001582554 2018-12-31 0001582554 MTNB:RedeemableConvertiblePreferredStockAMember 2019-01-01 2019-09-30 0001582554 MTNB:RedeemableConvertiblePreferredStockBMember 2019-01-01 2019-09-30 0001582554 us-gaap:CommonStockMember 2019-01-01 2019-09-30 0001582554 us-gaap:AdditionalPaidInCapitalMember 2019-01-01 2019-09-30 0001582554 us-gaap:RetainedEarningsMember 2019-01-01 2019-09-30 0001582554 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-01-01 2019-09-30 0001582554 MTNB:RedeemableConvertiblePreferredStockAMember 2019-09-30 0001582554 MTNB:RedeemableConvertiblePreferredStockBMember 2019-09-30 0001582554 us-gaap:CommonStockMember 2019-09-30 0001582554 us-gaap:AdditionalPaidInCapitalMember 2019-09-30 0001582554 us-gaap:RetainedEarningsMember 2019-09-30 0001582554 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-09-30 0001582554 2019-09-30 0001582554 MTNB:RedeemableConvertiblePreferredStockAMember 2019-06-30 0001582554 MTNB:RedeemableConvertiblePreferredStockBMember 2019-06-30 0001582554 us-gaap:CommonStockMember 2019-06-30 0001582554 us-gaap:AdditionalPaidInCapitalMember 2019-06-30 0001582554 us-gaap:RetainedEarningsMember 2019-06-30 0001582554 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-06-30 0001582554 2019-06-30 0001582554 MTNB:RedeemableConvertiblePreferredStockAMember 2019-07-01 2019-09-30 0001582554 MTNB:RedeemableConvertiblePreferredStockBMember 2019-07-01 2019-09-30 0001582554 us-gaap:CommonStockMember 2019-07-01 2019-09-30 0001582554 us-gaap:AdditionalPaidInCapitalMember 2019-07-01 2019-09-30 0001582554 us-gaap:RetainedEarningsMember 2019-07-01 2019-09-30 0001582554 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-07-01 2019-09-30 0001582554 MTNB:UnderwrittenPublicOfferingMember 2020-01-13 2020-01-14 0001582554 MTNB:UnderwrittenPublicOfferingMember MTNB:SalesAgreementMember srt:MaximumMember 2020-06-29 2020-07-02 0001582554 MTNB:UnderwrittenPublicOfferingMember MTNB:SalesAgreementMember 2020-06-29 2020-07-02 0001582554 MTNB:USTreasuryBondsMember 2020-09-30 0001582554 MTNB:USTreasuryBondsMember 2020-01-01 2020-09-30 0001582554 MTNB:USGovernmentNotesMember 2020-09-30 0001582554 MTNB:USGovernmentNotesMember 2020-01-01 2020-09-30 0001582554 us-gaap:CorporateDebtSecuritiesMember 2020-09-30 0001582554 us-gaap:CorporateDebtSecuritiesMember 2020-01-01 2020-09-30 0001582554 MTNB:StateAndMunicipalBondsMember 2020-09-30 0001582554 MTNB:StateAndMunicipalBondsMember 2020-01-01 2020-09-30 0001582554 2019-01-01 2019-12-31 0001582554 MTNB:USTreasuryBondsMember 2019-12-31 0001582554 MTNB:USTreasuryBondsMember 2019-01-01 2019-12-31 0001582554 us-gaap:CorporateDebtSecuritiesMember 2019-12-31 0001582554 us-gaap:CorporateDebtSecuritiesMember 2019-01-01 2019-12-31 0001582554 us-gaap:FairValueInputsLevel1Member MTNB:USTreasuryBondsMember 2020-09-30 0001582554 us-gaap:FairValueInputsLevel2Member MTNB:USTreasuryBondsMember 2020-09-30 0001582554 us-gaap:FairValueInputsLevel3Member MTNB:USTreasuryBondsMember 2020-09-30 0001582554 us-gaap:FairValueInputsLevel1Member MTNB:USGovernmentNotesMember 2020-09-30 0001582554 us-gaap:FairValueInputsLevel2Member MTNB:USGovernmentNotesMember 2020-09-30 0001582554 us-gaap:FairValueInputsLevel3Member MTNB:USGovernmentNotesMember 2020-09-30 0001582554 us-gaap:FairValueInputsLevel1Member us-gaap:CorporateDebtSecuritiesMember 2020-09-30 0001582554 us-gaap:FairValueInputsLevel2Member us-gaap:CorporateDebtSecuritiesMember 2020-09-30 0001582554 us-gaap:FairValueInputsLevel3Member us-gaap:CorporateDebtSecuritiesMember 2020-09-30 0001582554 us-gaap:FairValueInputsLevel1Member MTNB:StateAndMunicipalBondsMember 2020-09-30 0001582554 us-gaap:FairValueInputsLevel2Member MTNB:StateAndMunicipalBondsMember 2020-09-30 0001582554 us-gaap:FairValueInputsLevel3Member MTNB:StateAndMunicipalBondsMember 2020-09-30 0001582554 us-gaap:FairValueInputsLevel1Member 2020-09-30 0001582554 us-gaap:FairValueInputsLevel2Member 2020-09-30 0001582554 us-gaap:FairValueInputsLevel3Member 2020-09-30 0001582554 us-gaap:FairValueInputsLevel1Member 2019-12-31 0001582554 us-gaap:FairValueInputsLevel2Member 2019-12-31 0001582554 us-gaap:FairValueInputsLevel3Member 2019-12-31 0001582554 us-gaap:FairValueInputsLevel1Member MTNB:USTreasuryBondsMember 2019-12-31 0001582554 us-gaap:FairValueInputsLevel2Member MTNB:USTreasuryBondsMember 2019-12-31 0001582554 us-gaap:FairValueInputsLevel3Member MTNB:USTreasuryBondsMember 2019-12-31 0001582554 us-gaap:FairValueInputsLevel1Member us-gaap:CorporateDebtSecuritiesMember 2019-12-31 0001582554 us-gaap:FairValueInputsLevel2Member us-gaap:CorporateDebtSecuritiesMember 2019-12-31 0001582554 us-gaap:FairValueInputsLevel3Member us-gaap:CorporateDebtSecuritiesMember 2019-12-31 0001582554 MTNB:LabEquipmentMember 2020-09-30 0001582554 MTNB:LabEquipmentMember 2019-12-31 0001582554 us-gaap:LeaseholdImprovementsMember 2020-09-30 0001582554 us-gaap:LeaseholdImprovementsMember 2019-12-31 0001582554 MTNB:OperatingLeaseMember 2020-09-30 0001582554 MTNB:FinanceLeaseMember 2020-09-30 0001582554 MTNB:OperatingLeaseMember 2019-12-31 0001582554 MTNB:FinanceLeaseMember 2019-12-31 0001582554 2020-09-21 2020-09-23 0001582554 2020-09-23 0001582554 2020-09-22 2020-09-23 0001582554 MTNB:MarketSalesAgreementMember MTNB:BTIGLLCMember 2020-07-01 2020-07-02 0001582554 us-gaap:CommonStockMember 2020-01-12 2020-01-14 0001582554 us-gaap:CommonStockMember 2020-01-14 0001582554 2020-01-12 2020-01-14 0001582554 MTNB:AfterDeductingUnderwritingDiscountsAndCommissionsMember 2020-01-12 2020-01-14 0001582554 us-gaap:CommonStockMember srt:MaximumMember 2020-01-12 2020-01-14 0001582554 us-gaap:SeriesBPreferredStockMember 2020-01-01 2020-09-30 0001582554 us-gaap:SeriesBPreferredStockMember 2019-01-01 2019-09-30 0001582554 us-gaap:WarrantMember 2020-09-30 0001582554 us-gaap:WarrantMember srt:MinimumMember 2020-09-30 0001582554 us-gaap:WarrantMember srt:MaximumMember 2020-09-30 0001582554 MTNB:StockOptionsMember 2020-01-01 2020-09-30 0001582554 MTNB:StockOptionsMember 2019-01-01 2019-09-30 0001582554 MTNB:PreferredStockAndAccruedDividendUponConversionMember 2020-01-01 2020-09-30 0001582554 MTNB:PreferredStockAndAccruedDividendUponConversionMember 2019-01-01 2019-09-30 0001582554 us-gaap:WarrantMember 2020-01-01 2020-09-30 0001582554 us-gaap:WarrantMember 2019-01-01 2019-09-30 0001582554 2014-05-07 2014-05-08 0001582554 MTNB:TwoThousandThirteenEquityCompensationPlanMember 2020-09-30 0001582554 MTNB:TwoThousandThirteenEquityCompensationPlanMember 2020-01-01 2020-09-30 0001582554 2019-01-02 0001582554 us-gaap:ResearchAndDevelopmentExpenseMember 2020-07-01 2020-09-30 0001582554 us-gaap:ResearchAndDevelopmentExpenseMember 2019-07-01 2019-09-30 0001582554 us-gaap:ResearchAndDevelopmentExpenseMember 2020-01-01 2020-09-30 0001582554 us-gaap:ResearchAndDevelopmentExpenseMember 2019-01-01 2019-09-30 0001582554 us-gaap:GeneralAndAdministrativeExpenseMember 2020-07-01 2020-09-30 0001582554 us-gaap:GeneralAndAdministrativeExpenseMember 2019-07-01 2019-09-30 0001582554 us-gaap:GeneralAndAdministrativeExpenseMember 2020-01-01 2020-09-30 0001582554 us-gaap:GeneralAndAdministrativeExpenseMember 2019-01-01 2019-09-30 0001582554 MTNB:StockOptionsMember 2020-01-01 2020-09-30 iso4217:USD xbrli:shares iso4217:USD xbrli:shares xbrli:pure utr:sqft

 

 

 

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, 2020

 

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)

 

908-443-1860

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of Each Class   Trading Symbol   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 and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post 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 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 Act). Yes ☐ No

 

As of November 3, 2020, there were 199,249,758 shares of the registrant’s common stock, $0.0001 par value, outstanding.

 

DOCUMENTS INCORPORATED BY REFERENCE

 

None.

 

 

  

 
 

 


MATINAS BIOPHARMA HOLDINGS, INC.

Form 10-Q

Quarter Ended September 30, 2020

 

Table of Contents

 

    Page
     
PART - I FINANCIAL INFORMATION  
   
Item 1. FINANCIAL STATEMENTS 1
     
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 14
     
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 21
     
Item 4. CONTROLS AND PROCEDURES 21
     
PART - II OTHER INFORMATION  
   
Item 1. LEGAL PROCEEDINGS 22
     
Item 1A. RISK FACTORS 22
     
Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS 22
     
Item 3. DEFAULTS UNDER SENIOR SECURITIES 22
     
Item 4. MINE SAFETY DISCLOSURES 22
     
Item 5. OTHER INFORMATION 22
     
Item 6. EXHIBITS 22

 

i
 

 

Matinas BioPharma Holdings Inc.

Condensed Consolidated Balance Sheets

 

    September 30, 2020     December 31, 2019  
    (Unaudited)     (Audited)  
ASSETS:                
Current assets:                
Cash and cash equivalents   $ 7,051,225     $ 22,170,438  
Marketable securities     55,719,661       5,604,634  
Restricted cash     186,000       250,000  
Prepaid expenses and other current assets     2,246,128       1,897,784  
Total current assets     65,203,014       29,922,856  
                 
Non-current assets:                
Leasehold improvements and equipment - net     1,581,762       1,749,259  
Operating lease right-of-use assets - net     3,401,136       3,761,207  
Finance lease right-of-use assets - net     66,649       116,968  
In-process research and development     3,017,377       3,017,377  
Goodwill     1,336,488       1,336,488  
Restricted cash - security deposits     200,000       336,000  
Total non-current assets     9,603,412       10,317,299  
Total assets   $ 74,806,426     $ 40,240,155  
                 
LIABILITIES AND STOCKHOLDERS’ EQUITY:                
                 
Current liabilities:                
Accounts payable   $ 373,066     $ 679,310  
Accrued expenses     2,015,102       1,939,510  
Operating lease liabilities - current     417,874       423,741  
Financing lease liabilities - current     32,278       54,673  
Total current liabilities     2,838,320       3,097,234  
                 
Non-current liabilities:                
Deferred tax liability     341,265       341,265  
Operating lease liabilities - net of current portion     3,391,568       3,695,561  
Financing lease liabilities - net of current portion     30,054       54,513  
Total non-current liabilities     3,762,887       4,091,339  
Total liabilities     6,601,207       7,188,573  
                 
Stockholders’ equity:                
Series B Convertible preferred stock, stated value $1,000 per share, 8,000 shares authorized as of September 30, 2020 and December 31, 2019; 4,552 and 4,577 shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively; (liquidation preference - $4,552,000 at September 30, 2020)     3,964,034       3,985,805  
                 
Common stock par value $0.0001 per share, 500,000,000 shares authorized at September 30, 2020 and December 31, 2019; 198,969,758 and 163,156,984 issued and outstanding as of September 30, 2020 and December 31, 2019, respectively     19,896       16,315  
Additional paid-in capital     165,024,057       113,427,897  
Accumulated deficit     (101,166,313 )     (84,377,555 )
Accumulated other comprehensive income/(loss)     363,545       (880 )
Total stockholders’ equity     68,205,219       33,051,582  
Total liabilities and stockholders’ equity   $ 74,806,426     $ 40,240,155  

 

The accompanying notes are an integral part of these condensed consolidated financial statements

 

 1 

 

 

Matinas BioPharma Holdings, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss

Unaudited

 

    2020     2019     2020     2019  
    Three Months Ended
September 30,
    Nine Months Ended
September 30,
 
    2020     2019     2020     2019  
Revenue:                        
Contract research revenue   $ 95,833     $ -     $ 95,833     $ 89,812  
Costs and expenses:                                
Research and development     3,336,225       2,671,365       10,833,345       7,814,842  
General and administrative     2,364,214       1,889,892       6,980,155       5,460,023  
                                 
Total costs and expenses     5,700,439       4,561,257       17,813,500       13,274,865  
                                 
Loss from operations     (5,604,606 )     (4,561,257 )     (17,717,667 )     (13,185,053 )
Sale of New Jersey net operating loss     -       -       1,073,289       1,007,082  
Other income, net     155,093       156,872       538,420       378,151  
                                 
Net loss   $ (5,449,513 )   $ (4,404,385 )   $ (16,105,958 )   $ (11,799,820 )
                                 
Preferred stock series A accumulated dividends     -       (45,041 )     -       (338,613 )
Preferred stock series B accumulated dividends     (227,600 )     (115,500 )     (575,392 )     (349,500 )
                                 
Net loss attributable to common shareholders   $ (5,677,113 )   $ (4,564,926 )   $ (16,681,350 )   $ (12,487,933 )
                                 
Net loss available for common shareholders per share - basic and diluted   $ (0.03 )   $ (0.03 )   $ (0.09 )   $ (0.09 )
Weighted average common shares outstanding - basic and diluted     198,909,016       156,889,602       196,070,952       139,265,178  
Other comprehensive (loss)/income, net of tax                                
Net unrealized (loss)/gain on securities available-for-sale     (114,159 )     -       367,144       -  
Reclassifications to net loss     -       -       (2,719 )     -  
Other comprehensive (loss)/income, net of tax     (114,159 )     -       364,425       -  
Comprehensive loss attributable to shareholders   $ (5,563,672 )   $ (4,404,385 )   $ (15,741,533 )   $ (11,799,820 )

 

The accompanying notes are an integral part of these condensed consolidated financial statements

 

 2 

 

 

Matinas BioPharma Holdings, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

Unaudited

 

    Shares     Amount     Shares     Amount     Shares     Amount     Capital     Deficit     Income (Loss)     Equity  
    Redeemable Convertible
Preferred Stock A
    Redeemable Convertible
Preferred Stock B
    Common Stock     Additional
Paid - in
    Accumulated     Accumulated Other Comprehensive     Total Stockholders’  
    Shares     Amount     Shares     Amount     Shares     Amount     Capital     Deficit     Income (Loss)     Equity  
Balance, December 31, 2019     -     $               -       4,577     $ 3,985,805       163,156,984     $ 16,315     $ 113,427,897     $ (84,377,555 )   $ (880 )   $ 33,051,582  
Stock-based compensation     -       -       -       -       -       -       3,082,048       -       -       3,082,048  
Issuance of common stock as compensation for services     -       -       -       -       267,712       27       203,977       -       -       204,004  
Issuance of common stock in exchange for preferred stock     -       -       (25 )     (21,771 )     50,000       5       21,766       -       -       -  
Issuance of common stock in public offering, net of stock issuance costs ($3,298,790)     -       -       -       -       32,260,000       3,226       46,700,984       -       -       46,704,210  
Issuance of common stock in exchange for Options     -       -       -       -       132,073       14       107,313       -       -       107,327  
Issuance of common stock from the exercise of Warrants     -       -       -       -       1,737,389       172       797,409       -       -       797,581  
Stock dividend     -       -       -       -       1,365,600       137       682,663       (682,800 )     -       -  
Other comprehensive income     -       -       -       -       -       -       -       -       364,425       364,425  
Net loss     -       -       -       -       -       -       -       (16,105,958 )     -       (16,105,958 )
Balance, September 30, 2020     -     $ -       4,552     $ 3,964,034       198,969,758     $ 19,896     $ 165,024,057     $ (101,166,313 )   $ 363,545     $ 68,205,219  

 

 

    Shares     Amount     Shares     Amount     Shares     Amount     Capital     Deficit     Income (Loss)     Equity  
   

Redeemable Convertible
Preferred Stock A

    Redeemable Convertible
Preferred Stock B
    Common Stock    

Additional

Paid - in

    Accumulated    

Accumulated Other

Comprehensive

   

Total

Stockholders’

 
    Shares     Amount     Shares     Amount     Shares     Amount     Capital     Deficit     Income (Loss)     Equity  
Balance, June 30, 2020            -     $                -       4,552     $ 3,964,034       198,873,477     $ 19,886     $ 164,079,847     $ (95,716,800 )   $ 477,704     $ 72,824,671  
Stock-based compensation     -       -       -       -       -       -       863,518       -       -       863,518  
Issuance of common stock as compensation for services     -       -       -       -       20,725       2       15,873       -       -       15,875  
Issuance of common stock from the exercise of Options     -       -       -       -       75,556       8       64,819       -       -       64,827  
Other comprehensive loss     -       -       -       -       -       -       -       -       (114,159 )     (114,159 )
Net loss     -       -       -       -       -       -       -       (5,449,513 )     -       (5,449,513 )
Balance, September 30, 2020     -     $ -       4,552     $ 3,964,034       198,969,758     $ 19,896     $ 165,024,057     $ (101,166,313 )   $ 363,545     $ 68,205,219  

 

 

    Shares     Amount     Shares     Amount     Shares     Amount     Capital     Deficit     Income (Loss)     Equity  
   

Redeemable Convertible
Preferred Stock A

    Redeemable Convertible
Preferred Stock B
    Common Stock     Additional
Paid – in
    Accumulated    

Accumulated Other

Comprehensive

    Total
Stockholders’
 
    Shares     Amount     Shares     Amount     Shares     Amount     Capital     Deficit     Income (Loss)     Equity  
Balance, December 31, 2018     1,467,858     $ 5,583,686       4,819     $ 4,196,547       113,287,670     $ 11,329     $ 72,294,921     $ (65,944,759 )   $  -     $ 16,141,724  
Stock-based compensation     -       -       -       -       -       -       2,059,373       -       -       2,059,373  
Issuance of common stock as compensation for services     -       -       -       -       415,178       41       301,838       -       -       301,879  
Issuance of common stock in exchange for preferred shares A     (1,467,858 )     (5,583,686)       -       -       14,678,580       1,468       5,582,218       -       -       -  
Issuance of common stock in exchange for preferred shares B     -       -       (199 )     (173,296 )     398,000       40       173,256       -       -       -  
Issuance of common stock in public offering, net of stock issuance costs ($2,315,878)     -       -       -       -       29,471,986       2,947       30,100,359       -       -       30,103,306  
Stock dividend     -       -       -       -       4,468,860       446       2,233,983       (1,060,145 )     -       1,174,284  
Net loss     -       -       -       -       -       -       -       (11,799,820 )     -       (11,799,820 )
Balance, September 30, 2019     -     $ -       4,620     $ 4,023,251       162,720,274     $ 16,271     $ 112,745,948     $ (78,804,724 )   $ -     $ 37,980,746  

 

 

    Shares     Amount     Shares     Amount     Shares     Amount     Capital     Deficit     Income (Loss)     Equity  
   

Redeemable Convertible
Preferred Stock A

    Redeemable Convertible
Preferred Stock B
    Common Stock     Additional
Paid – in
    Accumulated    

Accumulated Other

Comprehensive

    Total
Stockholders’
 
    Shares     Amount     Shares     Amount     Shares     Amount     Capital     Deficit     Income (Loss)     Equity  
Balance, June 30, 2019     1,467,858     $ 5,583,686       4,630     $ 4,031,959       144,205,850     $ 14,420     $ 104,601,220     $ (73,813,195 )   $  -     $ 40,418,090  
Stock-based compensation     -       -       -       -       -       -       608,129       -       -       608,129  
Issuance of common stock as compensation for services     -       -       -       -       292,984       29       184,597       -       -       184,626  
Issuance of common stock in exchange for preferred shares A     (1,467,858 )     (5,583,686 )     -     -       14,678,580       1,468       5,582,218       -       -       -  
Issuance of common stock in exchange for preferred shares B     -       -       (10 )     (8,708 )     20,000       2       8,706       -       -       -  
Stock dividend     -       -       -       -       3,522,860       352       1,761,078       (587,144 )     -       1,174,286  
Net loss     -       -       -       -       -       -       -       (4,404,385 )     -       (4,404,385 )
Balance, September 30, 2019     -     $ -       4,620     $ 4,023,251       162,720,274     $ 16,271     $ 112,745,948     $ (78,804,724 )   $ -     $ 37,980,746  

 

The accompanying notes are an integral part of these condensed consolidated financial statements

 

 3 

 

 

Matinas BioPharma Holdings Inc.

Condensed Consolidated Statements of Cash Flow

Unaudited

 

    2020     2019  
    Nine Months Ended
September 30,
 
    2020     2019  
Cash flows from operating activities:                
Net loss   $ (16,105,958 )   $ (11,799,820 )
Adjustments to reconcile net loss to net cash used in operating activities:                
Depreciation and amortization     173,246       148,918  
Loss on disposal of equipment     -       6,417  
Stock based compensation expense     3,344,577       2,297,483  
Amortization of operating lease right-of-use assets     360,071       336,192  
Amortization of finance lease right-of-use assets     50,319       97,794  
Changes in operating assets and liabilities:                
Operating lease liabilities     (309,860 )     (262,405 )
Prepaid expenses and other current assets     (406,869 )     (783,715 )
Accounts payable     (306,244 )     390,148  
Accrued expenses and other liabilities     140,592       375,899  
Net cash used in operating activities     (13,060,126 )     (9,193,089 )
                 
Cash flows from investing activities:                
Purchase of marketable securities     (74,200,602 )     -  
Proceeds from sales of marketable securities     24,450,000       -  
Purchases of leasehold improvements and equipment     (5,749 )     (405,604 )
Net cash used in investing activities     (49,756,351 )     (405,604 )
                 
Cash flows from financing activities:                
Net proceeds from public offering of common stock     46,639,210       30,103,306  
Proceeds from exercise of warrants     797,581       -  
Proceeds from exercise of options     107,327       -  
Payments of capital lease liability - principal     (46,854 )     (61,827 )
Payments of note payable     -       (199,842 )
Net cash provided by financing activities     47,497,264       29,841,637  
                 
Net (decrease)/increase in cash, cash equivalents and restricted cash     (15,319,213 )     20,242,944  
Cash, cash equivalents and restricted cash at beginning of period     22,756,438       13,007,838  
                 
Cash, cash equivalents and restricted cash at end of period   $ 7,437,225     $ 33,250,782  
                 
Supplemental non-cash financing and investing activities:                
Unrealized gains on marketable securities   $ 364,425     $ -  
Preferred stock conversion into common stock - Series B   $ 21,771     $ 173,296  
Cashless exercise of warrants   $ 441,189     $ -  
Unearned restricted stock grants   $ -     $ 125,600  
Stock dividends issued   $ 682,800     $ 2,234,429  
Stock dividends accrual   $ -     $ 1,060,145  
Right-of-use assets obtained in exchange for liabilities   $ -     $ 4,453,028  
Preferred stock conversion into common stock - Series A   $ -     $ 5,583,686  

 

The accompanying notes are an integral part of these condensed consolidated financial statements

 

 4 

 

 

MATINAS BIOPHARMA HOLDINGS, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
(Tabular dollars and shares in thousands, except per share data)

 

Note 1 – Description of Business

 

Matinas BioPharma Holdings Inc. (“Holdings”) is a Delaware corporation formed in 2013. Holdings is the parent company of Matinas BioPharma, Inc. (“BioPharma”), and Matinas BioPharma Nanotechnologies, Inc. (“Nanotechnologies,” formerly known as Aquarius Biotechnologies, Inc. and together with “Holdings” and “BioPharma”, “the Company” or “we” or “our” or “us”). The Company is a clinical-stage biopharmaceutical company with a focus on identifying and developing novel pharmaceutical products.

 

Note 2 – Liquidity and Plan of Operations

 

The Company has experienced net losses and negative cash flows from operations each period since its inception. Through September 30, 2020, the Company had an accumulated deficit of approximately $101.2 million. The Company’s net loss for the nine months ended September 30, 2020 was approximately $16.1 million.

 

The Company has been engaged in developing MAT-9001, its lead product candidate, as well as its lipid nano-crystal (“LNC”) platform delivery technology and a pipeline of associated product candidates 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 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.

 

To continue to fund operations, on January 14, 2020, the Company completed an underwritten public offering of common stock, generating gross cash proceeds of approximately $50.0 million and net proceeds of approximately $46.7 million. In addition, on July 2, 2020, the Company entered into an At-The-Market (“ATM”) Sales Agreement (the “Sales Agreement”) with BTIG, LLC (“BTIG”), pursuant to which the Company may offer and sell, from time to time, through BTIG, as sales agent and/or principal, shares of its common stock having an aggregate offering price of up to $50,000,000, subject to certain limitations on the amount of common stock that may be offered and sold by the Company set forth in the Sales Agreement. BTIG will be paid a 3% commission on the gross proceeds from each sale. As of September 30, 2020, the Company did not sell any shares of its common stock under the ATM Sales Agreement (see Note 10).

 

As of September 30, 2020, the Company had cash and cash equivalents of approximately $7.1 million, marketable securities of approximately $55.7 million and restricted cash of approximately $0.4 million. The Company believes the cash and cash equivalents and marketable securities on hand are sufficient to fund planned operations into the first half of 2023.

 

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 of America (“U.S. GAAP”) and reflect the operations of the Company and its wholly owned subsidiaries. All intercompany transactions have been eliminated in consolidation.

 

The Company’s significant accounting policies are fully described in Note 3 within the Company’s Notes to Consolidated Financial Statements included in the Company’s 2019 Form 10-K.

 

 5 

 

 

In March 2020, the World Health Organization declared COVID-19 a global pandemic. This contagious disease outbreak, which has continued to spread, and any related adverse public health developments, has adversely affected workforces, economics, and financial markets globally, potentially leading to an economic downturn.

 

The Company has been actively monitoring the COVID-19 pandemic and its impact globally. The financial results for the three and nine months ended September 30, 2020 were not significantly impacted by COVID-19. However, the Company cannot predict the impact of the progression of the COVID-19 pandemic on future results or the Company’s ability to raise capital due to a variety of factors, including the continued good health of Company employees, the ability of suppliers to continue to operate and deliver, the ability of the Company to maintain operations, any further government and/or public actions taken in response to the pandemic and ultimately the length of the pandemic.

 

Recently adopted accounting pronouncements

 

In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Updated (“ASU”) 2018-13, “Changes to Disclosure Requirements for Fair Value Measurements”, which will improve the effectiveness of disclosure requirements for recurring and nonrecurring fair value measurements. The standard removes, modifies, and adds certain disclosure requirements, and is effective for fiscal years, and interim` periods within those fiscal years, beginning after December 15, 2019. The Company adopted the guidance on January 1, 2020. The adoption did not have a material impact on our condensed consolidated financial statements.

 

In November 2018, the FASB issued ASU 2018-18, “Collaboration Arrangements (Topic 808): Clarifying the Interaction between Topic 808 and Topic 606”, to clarify when ASC 606 should be used for collaborative arrangements when the counterparty is a customer. The guidance precludes an entity from presenting consideration from a transaction in a collaborative arrangement as revenue from the contracts with the customers if the counterparty is not a customer for that transaction. The guidance is effective for public entities in fiscal years beginning after December 15, 2019, and interim period therein. The Company adopted the guidance on January 1, 2020. The adoption did not have a material impact on our condensed consolidated financial statements.

 

Note 4 – Cash, Cash Equivalents, Restricted Cash and Marketable 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 securities. Cash and cash equivalents consisted of cash in bank checking and savings accounts and money market funds.

 

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 represents funds the Company is required to set aside to cover building operating leases and other purposes.

 

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported in the Condensed Consolidated Balance Sheets to the total of the amounts in the Condensed Consolidated Statements of Cash Flows as of September 30, 2020, December 31, 2019, September 30, 2019 and December 31, 2018:

 

 

    September 30,
2020
    December 31,
2019
    September 30,
2019
    December 31,
2018
 
Cash and cash equivalents   $ 7,051     $ 22,170     $ 32,665     $ 12,447  
Restricted cash included in current/long term assets     386       586       586       561  
Cash, cash equivalents and restricted cash in the statement of cash flows   $ 7,437     $ 22,756     $ 33,251     $ 13,008  

 

 

Marketable Securities

 

The Company has classified its investments in marketable securities as available-for-sale and as a current asset. The Company’s investments in marketable securities are carried at fair value, with unrealized gains and losses included as a separate component of stockholders’ equity. Unrealized gains and losses are classified as other comprehensive income (loss) and costs are determined on a specific identification basis. Realized gains and losses from our marketable securities are recorded in other income, net. For the three and nine months ended September 30, 2020, the Company recorded unrealized losses of approximately $114.2 thousand and unrealized gains of approximately $367.1 thousand, respectively. The Company had no unrealized gains or losses for the three and nine months ended September 30, 2019. As of September 30, 2020 and December 31, 2019, the Company had net accumulated unrealized gains of approximately $363.5 thousand and net accumulated unrealized losses of approximately $0.9 thousand, respectively.

 

 6 

 

 

The following tables summarizes the Company’s marketable securities as of September 30, 2020:

 

    Amortized     Unrealized     Unrealized        
    Cost     Gain     (Loss)     Fair Value  
U.S. Treasury Bonds   $ 25,575     $ 220     $     $ 25,795  
U.S. Government Notes     22,305       116       (1 )     22,420  
Corporate Debt Securities     6,201       19             6,220  
State and Municipal Bonds     1,275       10             1,285  
Total marketable securities   $ 55,356     $ 365     $ (1 )   $ 55,720  

 

Maturities of debt securities classified as available-for-sale were as follows at September 30, 2020:

 

          Net Carrying  
    Fair Value     Amount  
Due within one year   $ 33,547     $ 33,726  
Due after one year through five years     22,173       22,225  
    $ 55,720     $ 55,951  

 

The following tables summarizes the Company’s cash, cash equivalents and marketable securities for the year ended December 31, 2019:

 

    Amortized     Unrealized     Unrealized        
    Cost     Gain     (Loss)     Fair Value  
Cash and cash equivalents   $ 22,169     $ 1     $     $ 22,170  
                                 
U.S. Treasury Bonds   $ 4,003     $     $ (1 )   $ 4,002  
Corporate Debt Securities     1,604             (1 )     1,603  
Total marketable securities   $ 5,607     $     $ (2 )   $ 5,605  
                                 
Total cash, cash equivalents and marketable securities   $ 27,776     $ 1     $ (2 )   $ 27,775  

 

Maturities of debt securities classified as available-for-sale were as follows at December 31, 2019:

 

          Net Carrying  
    Fair Value     Amount  
Due within one year   $ 5,002     $ 5,019  
Due after one year through five years     603       607  
    $ 5,605     $ 5,626  

 

The Company determined that the unrealized gains and (losses) are deemed to be temporary as of September 30, 2020. Unrealized gains and (losses) generally are the result of increases in the risk premiums required by market participants rather than an adverse change in cash flows for a fundamental weakness in the credit quality of the issuer or underlying assets. The Company has the ability and intent to hold these investments until maturity. The Company does not consider the investment in marketable securities to be other-than-temporarily impaired at September 30, 2020.

 

 7 

 

 

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 certain cash and cash equivalents, current portion of restricted cash, prepaid expenses, accounts payable, current portion of lease liability and accrued expenses approximate fair value due to the short-term nature of these instruments.

 

A summary of the assets and liabilities carried at fair value in accordance with the hierarchy defined above is as follows:

 

          Fair Value Hierarchy  
September 30, 2020   Total     (Level 1)     (Level 2)     (Level 3)  
Assets                        
Marketable Securities:                                
U.S. Treasury Bonds   $ 25,795     $ 25,795     $     $  
U.S. Government Notes     22,420             22,420        
Corporate Debt Securities     6,220             6,220        
State and Municipal Bonds     1,285             1,285        
Total   $ 55,720     $ 25,795     $ 29,925     $  

 

          Fair Value Hierarchy  
December 31, 2019   Total     (Level 1)     (Level 2)     (Level 3)  
Assets                        
Cash and cash equivalents   $ 22,170     $ 22,170     $     $  
Marketable Securities:                                
U.S. Treasury Bonds     4,002       4,002              
Corporate Debt Securities     1,603             1,603        
Total   $ 27,775     $ 26,172     $ 1,603     $  

 

 

Cash and cash equivalents consisted of cash in bank checking and savings accounts, money market funds and 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 securities consisting of U.S. government notes, corporate debt securities and state and municipal bonds 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, 2020 and December 31, 2019:

 

 

    September 30,
2020
    December 31,
2019
 
Lab equipment   $ 1,443     $ 1,437  
Leasehold improvements     878       878  
Total     2,321       2,315  
Less: accumulated depreciation and amortization     739       566  
Leasehold improvements and equipment, net   $ 1,582     $ 1,749  

 

 8 

 

 

Depreciation and amortization expense for the three and nine months ended September 30, 2020 was approximately $57.8 thousand and approximately $173.2 thousand, respectively, and for the three and nine months ended September 30, 2019 was approximately $52.0 thousand and approximately $148.9 thousand, respectively.

 

Note 7 – Accrued Expenses

 

Accrued Expenses, summarized by major category, as of September 30, 2020 and December 31, 2019 consist of the following:

 

    September 30,
2020
    December 31,
2019
 
Payroll and incentives   $ 805     $ 978  
General and administrative expenses     250       428  
Research and development expenses     856       421  
Deferred revenue     104       100  
Other     -       13  
Total   $ 2,015     $ 1,940  

 

Note 8 – Leases

 

The Company has various lease agreements with original terms of up to 10 years, 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 an implicit rate that can readily be determined. Therefore, the Company uses a discount rate based on its incremental borrowing rate, which is determined using the average of borrowing rates explicitly stated in the Company’s finance leases.

 

The Company incurred lease expense for its operating leases of approximately $203.4 thousand and approximately $610.3 thousand for the three and nine months ended September 30, 2020 and 2019, respectively.

 

The Company incurred interest expense on its finance leases of approximately $1.4 thousand and approximately $5.4 thousand for the three and nine months ended September 30, 2020, respectively, and approximately $2.8 thousand and approximately $9.3 thousand for the three and nine months ended September 30, 2019, respectively. The Company incurred amortization expense on its finance lease right-of-use assets of approximately $8.6 thousand and approximately $50.3 thousand for the three and nine months ended September 30, 2020, respectively, and approximately $25.0 thousand and approximately $97.8 thousand for the three and nine months ended September 30, 2019, respectively.

 

The following table presents information about the amount and timing of liabilities arising from the Company’s operating and finance leases as of September 30, 2020:

 

 

Maturity of Lease Liabilities   Operating Lease Liabilities     Finance Lease Liabilities  
Remainder of 2020   $ 193     $ 9  
2021     685       34  
2022     645       19  
2023     677       2  
2024     710       -  
Thereafter   $ 2,203     $ -  
Total undiscounted operating lease payments   $ 5,113       64  
Less: Imputed interest     1,304     $ 2  
Present value of operating lease liabilities   $ 3,809     $ 62  
                 
Weighted average remaining lease term in years     6.9       1.9  
Weighted average discount rate     8.4%     8.1%