Schedule of Cash, Cash Equivalents and Restricted Cash
|
|
June 30,
2021
|
|
|
December 31,
2020
|
|
|
June 30,
2020
|
|
|
December 31,
2019
|
|
Cash and cash equivalents
|
|
$
|
30,352
|
|
|
$
|
12,432
|
|
|
$
|
14,904
|
|
|
$
|
22,170
|
|
Restricted cash included in current/long term assets
|
|
|
336
|
|
|
|
336
|
|
|
|
486
|
|
|
|
586
|
|
Cash, cash equivalents and restricted cash in the statement of cash flows
|
|
$
|
30,688
|
|
|
$
|
12,768
|
|
|
$
|
15,390
|
|
|
$
|
22,756
|
|
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 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 securities are recorded in other income, net. For the three and six months ended
June 30, 2021, the Company recorded unrealized losses of approximately $85 thousand and $177 thousand, respectively. For the three and
six months ended June 30, 2020, the Company recorded unrealized loss of approximately $42 thousand and unrealized gains of approximately
$481 thousand, respectively. As of June 30, 2021 and December 31, 2020, the Company had net accumulated unrealized gains of approximately
$51 thousand and approximately $228 thousand, respectively.
The
following tables summarizes the Company’s marketable securities as of June 30, 2021:
Summary of Marketable Securities
|
|
Amortized
|
|
|
Unrealized
|
|
|
Unrealized
|
|
|
|
|
|
|
Cost
|
|
|
Gain
|
|
|
(Loss)
|
|
|
Fair Value
|
|
U.S. Treasury Bonds
|
|
$
|
10,453
|
|
|
$
|
29
|
|
|
$
|
-
|
|
|
$
|
10,482
|
|
U.S. Government Notes
|
|
|
10,624
|
|
|
|
31
|
|
|
|
(1
|
)
|
|
|
10,654
|
|
Corporate Debt Securities
|
|
|
7,087
|
|
|
|
-
|
|
|
|
(9
|
)
|
|
|
7,078
|
|
State and Municipal Bonds
|
|
|
1,275
|
|
|
|
1
|
|
|
|
-
|
|
|
|
1,276
|
|
Total marketable securities
|
|
$
|
29,439
|
|
|
$
|
61
|
|
|
$
|
(10
|
)
|
|
$
|
29,490
|
|
Maturities
of debt securities classified as available-for-sale were as follows at June 30, 2021:
Schedule of Maturities of Debt Securities Available-for-sale
|
|
|
|
|
Accrued
|
|
|
Net Carrying
|
|
|
|
Fair Value
|
|
|
Interest
|
|
|
Amount
|
|
Due within one year
|
|
$
|
21,851
|
|
|
$
|
122
|
|
|
$
|
21,973
|
|
Due after one year through five years
|
|
|
7,639
|
|
|
|
25
|
|
|
|
7,664
|
|
|
|
$
|
29,490
|
|
|
$
|
147
|
|
|
$
|
29,637
|
|
The
following tables summarizes the Company’s marketable securities for the year ended December 31, 2020 consisted of the following:
Summary of Marketable Securities
|
|
Amortized Cost
|
|
|
Unrealized Gain
|
|
|
Unrealized
(Loss)
|
|
|
Fair Value
|
|
U.S. Treasury Bonds
|
|
$
|
18,293
|
|
|
$
|
136
|
|
|
$
|
-
|
|
|
$
|
18,429
|
|
U.S. Government Notes
|
|
|
22,148
|
|
|
|
82
|
|
|
|
-
|
|
|
|
22,230
|
|
Corporate Debt Securities
|
|
|
4,303
|
|
|
|
3
|
|
|
|
-
|
|
|
|
4,306
|
|
State and Municipal Bonds
|
|
|
1,275
|
|
|
|
7
|
|
|
|
-
|
|
|
|
1,282
|
|
Total marketable securities
|
|
$
|
46,019
|
|
|
$
|
228
|
|
|
$
|
-
|
|
|
$
|
46,247
|
|
Maturities
of debt securities classified as available-for-sale were as follows at December 31, 2020:
Schedule of Maturities of Debt Securities Available-for-sale
|
|
|
|
|
Accrued
|
|
|
Net Carrying
|
|
|
|
Fair Value
|
|
|
Interest
|
|
|
Amount
|
|
Due within one year
|
|
$
|
31,438
|
|
|
$
|
164
|
|
|
$
|
31,602
|
|
Due after one year through five years
|
|
|
14,809
|
|
|
|
36
|
|
|
|
14,845
|
|
|
|
$
|
46,247
|
|
|
$
|
200
|
|
|
$
|
46,447
|
|
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, marketable securities, prepaid expenses and
other current assets, 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:
Schedule of Fair Value Measurement of Assets and Liabilities
|
|
|
|
|
Fair Value Hierarchy
|
|
June 30, 2021
|
|
Total
|
|
|
(Level 1)
|
|
|
(Level 2)
|
|
|
(Level 3)
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marketable Securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Treasury Bonds
|
|
$
|
10,482
|
|
|
$
|
10,482
|
|
|
$
|
-
|
|
|
$
|
-
|
|
U.S. Government Notes
|
|
|
10,654
|
|
|
|
-
|
|
|
|
10,654
|
|
|
|
-
|
|
Corporate Debt Securities
|
|
|
7,078
|
|
|
|
-
|
|
|
|
7,078
|
|
|
|
-
|
|
State and Municipal Bonds
|
|
|
1,276
|
|
|
|
-
|
|
|
|
1,276
|
|
|
|
-
|
|
Total
|
|
$
|
29,490
|
|
|
$
|
10,482
|
|
|
$
|
19,008
|
|
|
$
|
-
|
|
|
|
|
|
|
Fair Value Hierarchy
|
|
December 31, 2020
|
|
Total
|
|
|
(Level 1)
|
|
|
(Level 2)
|
|
|
(Level 3)
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marketable Securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Treasury Bonds
|
|
$
|
18,429
|
|
|
$
|
18,429
|
|
|
$
|
-
|
|
|
$
|
-
|
|
U.S. Government Notes
|
|
|
22,230
|
|
|
|
-
|
|
|
|
22,230
|
|
|
|
-
|
|
Corporate Debt Securities
|
|
|
4,306
|
|
|
|
-
|
|
|
|
4,306
|
|
|
|
-
|
|
State and Municipal Bonds
|
|
|
1,282
|
|
|
|
-
|
|
|
|
1,282
|
|
|
|
-
|
|
Total
|
|
$
|
46,247
|
|
|
$
|
18,429
|
|
|
$
|
27,818
|
|
|
$
|
-
|
|
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 June 30, 2021 and December 31, 2020:
Schedule of Leasehold Improvements and Equipment
|
|
June 30, 2021
|
|
|
December 31, 2020
|
|
Lab equipment
|
|
$
|
1,443
|
|
|
$
|
1,443
|
|
Leasehold improvements
|
|
|
878
|
|
|
|
878
|
|
Total
|
|
|
2,321
|
|
|
|
2,321
|
|
Less: accumulated depreciation and amortization
|
|
|
914
|
|
|
|
797
|
|
Leasehold improvements and equipment, net
|
|
$
|
1,407
|
|
|
$
|
1,524
|
|
Depreciation
and amortization expense for the three and six months ended June 30, 2021 was approximately $59 thousand and $117 thousand, respectively,
and for the three and six months ended June 30, 2020 was approximately $58 thousand and $115 thousand, respectively.
Note
7 – Accrued Expenses and Other Liabilities
Accrued
Expenses, summarized by major category, as of June 30, 2021 and December 31, 2020 consist of the following:
Schedule of Accrued Expenses
|
|
June 30, 2021
|
|
|
December 31, 2020
|
|
Payroll and incentives
|
|
$
|
619
|
|
|
$
|
1,094
|
|
General and administrative expenses
|
|
|
249
|
|
|
|
280
|
|
Research and development expenses
|
|
|
1,055
|
|
|
|
778
|
|
Deferred revenue and other deferred liabilities *
|
|
|
840
|
|
|
|
643
|
|
Total
|
|
$
|
2,763
|
|
|
$
|
2,795
|
|
*
|
At
June 30, 2021, there was an approximately $807 thousand deferred liability under the Cystic Fibrosis Foundation (“CFF”)
agreement and approximately $33 thousand in deferred revenue related to the Genentech Agreement. At December 31, 2020, there was
an approximately $577 thousand deferred liability under the CFF Agreement and approximately $67 thousand in deferred revenue related
to the Genentech Agreement. (See Note 9 – Collaboration Agreements, Licenses and Other Research and Development Agreements).
|
Note
8 – Leases
The
Company has various lease agreements with terms 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.
Operating
lease obligations
On
November 1, 2013, the Company entered into a 7-year lease for office space in Bedminster, New Jersey which commenced in June 2014 at
a monthly rent of approximately $13,000, increasing to approximately $14,000 per month toward the end of the term.
On
September 23, 2020, the Company entered into an amendment to the Bedminster lease. Pursuant to the amendment, the Company leased an additional
3,034 rentable square feet (“Expansion Premises”). The amendment became effective upon delivery to the Company of the Expansion
Premises, which occurred on August 1, 2021, and extends the term of the lease for seven years from such date. There is no renewal option,
no security deposit, no residual value or significant restrictions or covenants other than those customary in such arrangements. Except
as expressly provided, all other terms, covenants, conditions and agreements as set forth in the lease will remain unchanged and in full
force and effect. The total lease commitment over the seven-year extension period is approximately $1.8 million.
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 did 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 $204 thousand and $407 thousand for the three and six months
ended June 30, 2021, respectively, and approximately $203 thousand and $407 thousand for the three and six months ended June 30, 2020.
The Company incurred amortization expense on its operating lease right-of-use assets of approximately $116 thousand and $243 thousand
for the three and six months ended June 30, 2021, respectively, and approximately $120 thousand and $238 thousand for the three and six
months ended June 30, 2020, respectively.
The
Company incurred interest expense on its finance leases of approximately $1 thousand and $2 thousand for the three and six months ended
June 30, 2021, respectively, and approximately $2 thousand and $4 thousand for the three and six months ended June 30, 2020, respectively.
The Company incurred amortization expense on its finance lease right-of-use assets of approximately $9 thousand and $21 thousand for
the three and six months ended June 30, 2021, respectively, and approximately $19 thousand and $42 thousand for the three and six months
ended June 30, 2020, respectively.
The
following table presents information about the amount and timing of liabilities arising from the Company’s operating leases, excluding
the Expansion Premises which the Company had not taken control of as of June 30, 2021, and finance leases as of June 30, 2021:
Schedule of Maturity of Operating and Finance Leases Liabilities
Maturity of Lease Liabilities
|
|
Operating Lease
Liabilities
|
|
|
Finance Lease Liabilities
|
|
Remainder of 2021
|
|
$
|
314
|
|
|
$
|
17
|
|
2022
|
|
|
645
|
|
|
|
19
|
|
2023
|
|
|
677
|
|
|
|
2
|
|
2024
|
|
|
710
|
|
|
|
-
|
|
2025
|
|
|
745
|
|
|
|
-
|
|
2026
|
|
|
-
|
|
|
|
-
|
|
Thereafter
|
|
|
1,458
|
|
|
|
-
|
|
Total undiscounted operating lease payments
|
|
$
|
4,549
|
|
|
$
|
38
|
|
Less: Imputed interest
|
|
|
1,074
|
|
|
|
-
|
|
Present value of operating lease liabilities
|
|
$
|
3,475
|
|
|
$
|
38
|
|
|
|
|
|
|
|
|
|
|
Weighted average remaining lease term in years
|
|
|
6.3
|
|
|
|
1.3
|
|
Weighted average discount rate
|
|
|
8.4
|
%
|
|
|
8.0
|
%
|
The
following table presents information about the amount and timing of liabilities arising from the Company’s operating leases, excluding
the Expansion Premises which the Company had not taken control of as of December 31, 2020, and finance leases as of December 31, 2020:
Maturity of Lease Liabilities
|
|
Operating Lease
Liabilities
|
|
|
Finance Lease Liabilities
|
|
2021
|
|
$
|
685
|
|
|
$
|
34
|
|
2022
|
|
|
645
|
|
|
|
19
|
|
2023
|
|
|
677
|
|
|
|
2
|
|
2024
|
|
|
710
|
|
|
|
-
|
|
2025
|
|
|
745
|
|
|
|
-
|
|
Thereafter
|
|
|
1,458
|
|
|
|
-
|
|
Total undiscounted operating lease payments
|
|
$
|
4,920
|
|
|
$
|
55
|
|
Less: Imputed interest
|
|
|
1,224
|
|
|
|
-
|
|
Present value of operating lease liabilities
|
|
$
|
3,696
|
|
|
$
|
55
|
|
|
|
|
|
|
|
|
|
|
Weighted average remaining lease term in years
|
|
|
6.7
|
|
|
|
1.7
|
|
Weighted average discount rate
|
|
|
8.4
|
%
|
|
|
8.1
|
%
|
Note
9 - Collaboration Agreements, Licenses and Other Research and Development Agreements
Cystic
Fibrosis Foundation Therapeutics Development Award
On
November 19, 2020, the Company entered into an award agreement (the “CFF Agreement”) with the CFF, pursuant to which it received
a Therapeutics Development Award of up to $4.2 million (the “Award”) (of which $484,249 was received during 2020) to support
the preclinical development (the “Development Program”) of the Company’s MAT2501 product candidate, a lipid nanocrystal
oral formulation of the broad-spectrum aminoglycoside amikacin, for the treatment of pulmonary non-tubercular mycobacteria infections
and other pulmonary diseases.
During
the three and six months ended June 30, 2021, the Company recognized approximately $547 thousand and $971 thousand, respectively, as
credits to research and development expenses related to the Award. At June 30, 2021, the remaining deferred liability balance is approximately
$807 thousand (See Note 7 – Accrued Expenses and Other Liabilities). At December 31, 2020, a receivable of $650 thousand related
to the Award was included in prepaid expenses and other current assets and a related deferred liability balance of $577 thousand was
included in accrued expense and other current liabilities. The remainder of the Award will be paid to the Company incrementally in installments
upon the achievement of certain milestones related to the development program as set forth in the CFF Agreement.
Genentech
Feasibility Study Agreement
On
December 12, 2019, the Company entered into a feasibility study agreement (the “Genentech Agreement”) with Genentech, Inc.
(“Genentech”). This feasibility study agreement involves the development of oral formulations using the Company’s LNC
platform delivery technology, which enables the development of a wide range of difficult-to-deliver molecules. Under the terms of the
Genentech Agreement, Genentech shall pay the Company a total of $100 thousand for developing oral formulations of three molecules, or
approximately $33 thousand per molecule, which will be recognized upon the Company fulfilling its obligations for each molecule under
the Genentech Agreement. On December 13, 2019, per Genentech’s request, the Company billed Genentech for the total $100 thousand
and recorded the upfront consideration as deferred revenue, which is recorded in accrued expenses on the consolidated balance sheets,
and will recognize it over the term of the contract performance obligation period. During the year ended December 31, 2020, the Company
fulfilled its obligations for the first of three molecules. During the six months ended June 30, 2021, the Company fulfilled its obligations
for the second of three molecules and recognized approximately $33 thousand of Genentech revenue. During the three months ended June
30, 2021, the Company did not fulfill any of its obligations and did not recognize any Genentech revenue.
Note
10 – Income Taxes
Sale
of net operating losses (NOLs) & tax credits
The
Company recognized approximately $1.3 million and approximately $1.1 million for the six months ended June 30, 2021 and 2020 in connection
with the sale of certain State of New Jersey Net Operating Losses (“NOL”) and Research and Development (“R&D”)
tax credits to third parties under the New Jersey Technology Business Tax Certificate Transfer Program. During the three months ended
June 30, 2021 and 2020, the Company did not sell any NOL and R&D tax credits.
Note
11 – Stockholders’ Equity
Common
Stock
For
the six months ended June 30, 2021, the Company sold 3,023,147 shares of its common stock under its At-The-Market Sales Agreement with
BTIG, LLC, at an average price of $1.90, generating gross proceeds of approximately $5.8 million and net proceeds of approximately $5.6
million.
On
January 14, 2020, the Company closed an underwritten public offering of 32.3
million shares of its common stock at a purchase
price of $1.55
per share. The Company generated gross proceeds
of approximately $50.0
million and net proceeds of approximately $46.6
million, after deducting underwriting discounts and
commissions and other estimated offering expenses.
Preferred
Stock
In
connection with a public offering of Series B Preferred Stock, on June 19, 2018, the Company filed the Series B Certificate of Designation
with the Secretary of the State of Delaware to designate the preferences, rights and limitations of the Series B Preferred Stock. Pursuant
to the Series B Certificate of Designation, the Company designated 8,000 shares of the Company’s previously undesignated preferred
shares as Series B Preferred Stock. On June 19, 2021, each share of Series B Preferred Stock was automatically converted into 2,000 shares
of the Company’s common stock resulting in the issuance of 8,436,000 shares of common stock. As of June 30, 2021 and December 31,
2020 there were 0 and 4,361 shares of Series B Preferred stock outstanding, respectively.
Dividends.
Subject to certain ownership limitations, holders of the Series B Preferred Stock received dividends paid in the Company’s common
stock as follows: (i) a number of shares of common stock equal to 10% of the shares of common stock underlying the Series B Preferred
Stock then held by such holder on June 19, 2019, (ii) a number of shares of common stock equal to 15% of the shares of common stock underlying
the Series B Preferred Stock then held by such holder on June 19, 2020 and (iii) a number of shares of common stock equal to 20% of the
shares of common stock underlying the Series B Preferred Stock then held by such holder on June 19, 2021. Based on an accounting of the
holders of record of Series B Preferred Stock on June 19, 2021 and 2020, the Company made dividend payments totaling 1,687,200 and 1,365,600
shares of common stock, respectively.
Warrants
The
Company has issued two types of warrants: (i) investor warrants and (ii) placement agent warrants. All warrants are exercisable immediately
upon issuance and have a five-year term. The warrants may be exercised at any time in whole or in part upon payment of the applicable
exercise price until expiration. No fractional shares will be issued upon the exercise of the warrants. The exercise price and the number
of shares purchasable upon the exercise of the investor warrants are subject to adjustment upon the occurrence of certain events, which
include stock dividends, stock splits, combinations and reclassifications of the Company’s capital stock or other similar changes
to the equity structure of the Company.
As
of June 30, 2021, the Company had outstanding warrants to purchase an aggregate of 1,325,810 shares of common stock at exercise prices
ranging from $0.50 to $0.75 per share. A summary of warrants outstanding as of June 30, 2021 and December 31, 2020 is presented below,
all of which are fully vested:
Summary
of Shareholders Equity Warrants Outstanding
|
|
|
Shares
|
|
Outstanding at December 31, 2019
|
|
|
|
5,397
|
|
Issued
|
|
|
|
-
|
|
Exercised
|
|
|
|
(2,576
|
)
|
Tendered
|
|
|
|
-
|
|
Expired
|
|
|
|
(1,493
|
)
|
Outstanding at December 31, 2020
|
|
|
|
1,328
|
*
|
Outstanding at December 31, 2020
|
|
|
|
1,328
|
*
|
Issued
|
|
|
|
-
|
|
Exercised
|
|
|
|
(2
|
)**
|
Tendered
|
|
|
|
-
|
|
Expired
|
|
|
|
-
|
|
Outstanding at June 30, 2021
|
|
|
|
1,326
|
***
|
*
|
Weighted
average exercise price for outstanding warrants is $0.55.
|
**
|
Converted
into approximately 1 thousand shares of commons stock.
|
***
|
Weighted
average exercise price for outstanding warrants is $0.54.
|
Basic
and diluted net loss per common share
During
the three and six months ended June 30, 2021 and 2020, diluted earnings per common share is the same as basic earnings 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, warrants and conversion of preferred stock, 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 attributable to common shareholders
because including them would have been anti-dilutive for the three and six months ended June 30, 2021 and 2020:
Schedule
of Anti-Diluted Securities Excluded FromComputation of Earning Per Share
|
|
As of June 30,
|
|
|
|
2021
|
|
|
2020
|
|
Stock options
|
|
|
22,162
|
|
|
|
22,317
|
|
Preferred Stock and accrued dividend upon conversion
|
|
|
-
|
|
|
|
9,104
|
|
Warrants
|
|
|
1,326
|
|
|
|
1,328
|
|
Total
|
|
|
23,488
|
|
|
|
32,749
|
|
Note
12 – Accumulated Other Comprehensive Income
The
following table summarizes the changes in accumulated other comprehensive income by components during the three months ended June 30,
2021 and 2020:
Schedule
of Components of Accumulated Other Comprehensive Income
|
|
Net Unrealized (Losses)/Gains on Available-for-Sale Securities
|
|
|
Accumulated Other Comprehensive
Income
|
|
Balance, December 31, 2020
|
|
$
|
228
|
|
|
$
|
228
|
|
Net unrealized loss on securities available-for-sale
|
|
|
(177
|
)
|
|
|
(177
|
)
|
Reclassifications to net loss
|
|
|
-
|
|
|
|
-
|
|
Net current period other comprehensive loss
|
|
|
(177
|
)
|
|
|
(177
|
)
|
Balance, June 30, 2021
|
|
$
|
51
|
|
|
$
|
51
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2019
|
|
$
|
(1
|
)
|
|
$
|
(1
|
)
|
Net unrealized gain on securities available-for-sale
|
|
|
482
|
|
|
|
482
|
|
Reclassifications to net loss
|
|
|
(3
|
)
|
|
|
(3
|
)
|
Net current period other comprehensive income
|
|
|
479
|
|
|
|
479
|
|
Balance, June 30, 2020
|
|
$
|
478
|
|
|
$
|
478
|
|
All
components of accumulated other comprehensive income are net of tax.
Note
13 – Stock-based Compensation
The
Company’s Amended and Restated 2013 Equity Compensation Plan (the “Plan”) provides for the granting of incentive stock
options, nonqualified stock options, restricted stock units, performance units, and stock purchase rights. There were no significant
modifications to the Plan during the six months ended June 30, 2021 and 2020.
With
the approval of the Board of Directors and a majority of shareholders, effective May 8, 2014, the Plan was amended and restated to provide
for an automatic increase in the number of shares of common stock available for issuance under the Plan each January, commencing January
1, 2015, in an amount up to four percent (4%) of the total number of shares of common stock outstanding on the preceding December 31st.
The
following table contains information about the Company’s stock plan at June 30, 2021:
Schedule
of Equity Compensation Plan by Arrangements
|
|
Awards
Reserved for
Issuance
|
|
|
Awards
Issued &
Exercised
|
|
|
Awards
Available
for Grant
|
|
2013 Equity Compensation Plan
|
|
|
36,952
|
*
|
|
|
27,127
|
**
|
|
|
9,825
|
|
*
|
Increased
by 8,005 thousand on January 1, 2021 representing 4% of the total number of shares of common stock outstanding on December 31, 2020.
|
**
|
Includes
both restricted stock grants and option grants
|
The
Company recognized stock-based compensation expense (options and restricted share grants) in its condensed consolidated statements of
operations as follows:
Schedule
of Recognized Stock-Based Compensation
|
|
Three Months Ended
June 30,
|
|
|
Six Months Ended
June 30,
|
|
|
|
2021
|
|
|
2020
|
|
|
2021
|
|
|
2020
|
|
Research and Development
|
|
$
|
460
|
|
|
$
|
358
|
|
|
$
|
945
|
|
|
$
|
1,180
|
|
General and Administrative
|
|
|
596
|
|
|
|
587
|
|
|
|
1,212
|
|
|
|
1,212
|
|
Total
|
|
$
|
1,056
|
|
|
$
|
945
|
|
|
$
|
2,157
|
|
|
$
|
2,392
|
|
As
of June 30, 2021, total compensation costs related to unvested awards not yet recognized was approximately $9.4 million and the weighted-average
periods over which the awards are expected to be recognized was 2.8 years.
Stock
Options
The
following table summarizes the activity for Company’ stock options for the three months ended June 30, 2021:
Schedule
of Stock Option Activity
|
|
Stock Options
|
Outstanding at January 1, 2021
|
|
22,551
|
Granted
|
|
4,697
|
Exercised
|
|
(1,063)
|
Forfeited
|
|
(2,681)
|
Cancelled
|
|
-
|
Expired
|
|
(1,341)
|
Outstanding at June 30, 2021
|
|
22,163
|
Restricted
Stock Awards
During
the six months ended June 30, 2021 and 2020, the Company granted restricted stock awards for 18 thousand and 247 thousand shares of common
stock, respectively. These awards are typically granted to members of the Board of Directors as payment in lieu of cash fees or as payment
to a vendor pursuant to a consulting agreement. The Company values restricted stock awards at the fair market value on the date of grant.
The Company recorded the value of these restricted awards as general and administrative expense of approximately $28 thousand and $57
thousand for the three and six months ended June 30, 2021, respectively, and approximately $93 thousand and $173 thousand for the three
and six months ended June 30, 2020, respectively, in the Condensed Consolidated Statement of Operations. As of June 30, 2021, there was
approximately $28 thousand of total unrecognized compensation costs related to 100,000 non-vested restricted stock grants which are expected
to be recognized over a weighted-average period of 0.3 years.
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, 2020 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, together with any statements related in any way to the COVID-19 pandemic including its impact on the Company,
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. In addition, the extent to which the COVID-19 pandemic will continue to impact
our business and financial results going forward will be dependent on future developments such as the length and severity of the crisis,
the potential resurgence of the crisis, future government actions in response to the crisis and the overall impact of the COVID-19 pandemic
on the global economy and capital markets, among many other factors, all of which remain highly uncertain and unpredictable. 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
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, including LYPDISO ™ (formerly MAT9001), MAT2203 and MAT2501, which are still in an early
development stage;
|
|
|
●
|
our
ability to successfully partner for the development of LYPDISO;
|
|
|
●
|
our
reliance on our proprietary lipid nanocrystal (LNC) platform delivery technology, which is licensed to us by Rutgers University;
|
|
|
●
|
our
ability to manufacture GMP batches of our product candidates, including LYPDISO, MAT2203 and MAT2501, 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;
|
|
|
●
|
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; and
|
|
|
●
|
developments
and projections relating to our competitors or our industry;
|
|
|
●
|
our
operations, business and financial results have been and could continue to be adversely impacted by the current public health pandemic
related to COVID-19, and
|
●
|
the
factors listed under the heading “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2020,
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 focused on creating value through improving the intracellular delivery of critical therapeutics through our paradigm-changing lipid
nanocrystal (LNC) drug delivery platform and its application to overcome current challenges in safely and effectively delivering small
molecules, nucleic acids, gene therapies, proteins/peptides, and vaccines. We are also focused on creating value through finding a partner
to continue the development of LYPDISO, our proprietary, next-generation prescription omega-3 drug, which we believe is differentiated
from all other prescription omega-3 products and positioned to potentially demonstrate superior cardioprotective effects.
Key
elements of our strategy include:
●
|
Advancing
our clinical stage assets based on our LNC platform delivery technology and continuing to expand utilization of this promising technology
into areas of innovative medicine.
|
●
|
Delivering
efficacy data for MAT2203 in the EnACT study for the treatment of cryptococcal meningitis, which would highlight the safety and efficacy
of this promising drug, while highlighting the ability of our LNC platform technology to deliver potent medicines across the blood-brain
barrier following oral administration.
|
●
|
Progressing
the development of MAT2501 through extensive preclinical toxicology and efficacy studies in NTM infections and completing a single
ascending dose pharmacokinetic study in healthy volunteers later in 2021, all with the financial support of the Cystic Fibrosis Foundation.
|
|
|
●
|
Expanding
the application of our LNC platform delivery technology through collaborations with sophisticated and well-resourced biotech and
pharmaceutical companies in areas of innovative medicine.
|
We
have incurred losses for each period from our inception. For the six months ended June 30, 2021 and 2020, our net loss was approximately
$9.7 million and $10.7 million, respectively. We expect to incur significant expenses and operating losses over the next several years.
Accordingly, we will need additional financing to support our continuing operations. 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. Adequate
additional financing may not be available to us on acceptable terms, or at all. Our failure to raise capital as and when needed would
impact our going concern and would have a negative impact on our financial condition and our ability to pursue our business strategy
and continue as a going concern. We will need to generate significant revenues to achieve profitability, and we may never do so.
Financial
Operations Overview
Revenue
During
the six months ended June 30, 2021, we generated contract research revenue of approximately $33 thousand resulting from the feasibility
study agreement with Genentech Inc. and no revenue during the six months ended June 30, 2020. Our ability to generate product revenue,
which we do not expect to occur until 2023 at the earliest, 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 candidates MAT2203, MAT2501, LYPDISO and advancement
of our LNC delivery technology platform, 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 six months ended June 30, 2021 and 2020. 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.
|
|
Three months ended June 30,
|
|
|
Six months ended June 30,
|
|
|
|
2021
|
|
|
2020
|
|
|
2021
|
|
|
2020
|
|
Direct research and development expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Manufacturing process development
|
|
$
|
237
|
|
|
$
|
305
|
|
|
$
|
726
|
|
|
$
|
610
|
|
Preclinical trials
|
|
|
-
|
|
|
|
328
|
|
|
|
2
|
|
|
|
479
|
|
Clinical development
|
|
|
290
|
|
|
|
1,206
|
|
|
|
1,068
|
|
|
|
2,699
|
|
Regulatory
|
|
|
43
|
|
|
|
15
|
|
|
|
85
|
|
|
|
34
|
|
Internal staffing, overhead and other
|
|
|
1,911
|
|
|
|
1,556
|
|
|
|
3,841
|
|
|
|
3,675
|
|
Total research and development
|
|
$
|
2,481
|
|
|
$
|
3,410
|
|
|
$
|
5,722
|
|
|
$
|
7,497
|
|
Research
and development activities are central to our business model. We expect our research and development expenses to increase 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. In addition, we will look to strategically expand the use
of our drug platform technology through additional development work. During 2021, we will be focused on advancing our lead product candidate,
MAT2203, to efficacy data in the treatment of cryptococcal meningitis (CM), accelerating the preclinical development of MAT2501 and also
expanding application of our LNC platform delivery technology through collaborations with third parties. We have also initiated a process
to identify a suitable partner to continue the development of LYPDISO following the announcement of topline date from the ENHANCE-IT
study in February 2021.
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 2021 will remain relatively consistent with the prior year.
Sale
of Net Operating Losses (NOLs) & Tax Credits
Income
obtained from selling unused net operating losses (NOLs) and unused research tax credits under the New Jersey Technology Business Tax
Certificate Program was approximately $1.3 million and $1.1 million for the six months ended June 30, 2021 and 2020, respectively.
Other
Income, net
Other
income, net is largely comprised of interest income/(expense), dividends and franchise taxes.
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 2020 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) Stock-based compensation,
(ii) Fair value measurements, (iii) Research and development costs, (iv) Goodwill and other intangible assets, and (v) Basic and diluted
net loss per common share.
Current
Operating Trends
Our
current R&D efforts are focused on advancing our lead LNC product candidates, MAT2203, through clinical development toward an initial
indication for the treatment of CM, accelerating preclinical development of MAT2501 with the assistance of the CFF, and expanding application
of our LNC platform delivery technology through collaborations with third parties. Our R&D expenses consist 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, and we plan to continue these investments in order to be in
a position to realize the potential of our product candidates and proprietary technologies.
We
expect that all of our R&D expenses in the near-term future will be incurred in support of our current and future preclinical and
clinical development programs rather than technology development. These expenditures are subject to numerous uncertainties relating to
timing and cost to completion. We test compounds in numerous preclinical studies for safety, toxicology and efficacy. At the appropriate
time, subject to the approval of regulatory authorities, we expect to conduct early-stage clinical trials for each drug candidate. We
anticipate funding these trials ourselves, and possibly with the assistance of federal grants, contracts or other agreements. As we obtain
results from trials, we may elect to discontinue or delay clinical trials for certain products in order to focus our resources on more
promising products. Completion of clinical trials may take several years, and the length of time generally varies substantially according
to the type, complexity, novelty and intended use of a product candidate.
The
commencement and completion of clinical trials for our products may be delayed by many factors, including lack of efficacy during clinical
trials, unforeseen safety issues, slower than expected participant recruitment, lack of funding or government delays. In addition, we
may encounter regulatory delays or rejections as a result of many factors, including results that do not support the intended safety
or efficacy of our product candidates, perceived defects in the design of clinical trials and changes in regulatory policy during the
period of product development. As a result of these risks and uncertainties, we are unable to accurately estimate the specific timing
and costs of our clinical development programs or the timing of material cash inflows, if any, from our product candidates. Our business,
financial condition and results of operations may be materially adversely affected by any delays in, or termination of, our clinical
trials or a determination by the FDA that the results of our trials are inadequate to justify regulatory approval, insofar as cash in-flows
from the relevant drug or program would be delayed or would not occur.
Results
of Operations
Comparison
of the three months ended June 30, 2021 to the three months ended June 30, 2020
The
following tables summarizes our revenues and operating expenses for the comparative periods presented:
|
|
Three Months Ended June 30,
|
|
|
|
2021
|
|
|
2020
|
|
Revenues
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
Research and development
|
|
$
|
2,481
|
|
|
$
|
3,410
|
|
General and administrative
|
|
|
2,309
|
|
|
|
2,357
|
|
Operating Expenses
|
|
$
|
4,790
|
|
|
$
|
5,767
|
|
Revenues.
We did not generate any revenue during the three months ended June 30, 2021 and 2020.
Research
and Development expenses. Research and Development (R&D) expense for the three months ended June 30, 2021 and 2020 was approximately
$2.5 million and $3.4 million, respectively. The decrease in R&D expenses was primarily due to the completion of the LYPDISO clinical
trial in January 2021.
General
and Administrative expenses. General and administrative expense for the three months ended June 30, 2021 and 2020 was approximately
$2.3 million and $2.4 million, respectively, compared to the prior year. The decrease in general and administrative expense was primarily
due to higher compensation and insurance expenses being more than offset by lower professional fees & consulting expense.
Comparison
of the six months ended June 30, 2021 to the six months ended June 30, 2020
The
following tables summarizes our revenues and operating expenses for the comparative periods presented:
|
|
Six Months Ended June 30,
|
|
|
|
2021
|
|
|
2020
|
|
Revenues
|
|
$
|
33
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
Research and development
|
|
$
|
5,722
|
|
|
$
|
7,497
|
|
General and administrative
|
|
|
5,454
|
|
|
|
4,616
|
|
Operating Expenses
|
|
$
|
11,176
|
|
|
$
|
12,113
|
|
|
|
|
|
|
|
|
|
|
Sale of net operating losses (NOLs)
|
|
$
|
1,328
|
|
|
$
|
1,073
|
|
Revenues.
During the six months ended June 30, 2021 we generated revenue of approximately $33 thousand and $0 during the same period in
2020. The amount earned during the current period consists of contract research revenue resulting from the feasibility study agreement
with Genentech Inc.
Research
and Development expenses. Research and Development (R&D) expense for the six months ended June 30, 2021 and 2020 was approximately
$5.7 million and $7.5 million, respectively. The decrease in R&D expenses was primarily due to the completion of the LYPDISO clinical
trial in January 2021.
General
and Administrative expenses. General and administrative expense for the six months ended June 30, 2021 and 2020 was approximately
$5.5 million and $4.6 million, respectively. The increase in general and administrative expense was primarily due to higher compensation
expense related to the exercise of stock options and increased insurance expense.
Sale
of net operating losses (NOLs). The Company recognized approximately $1.3 million and $1.1 million for the six months ended June
30, 2021 and 2020, respectively, in connection with the sale of state net operating losses and state research and development credits
to third parties under the New Jersey Technology Business Tax Certificate Program.
Liquidity
and capital resources
Sources
of Liquidity
We
have funded our operations since inception through private placements and public offerings of our equity securities. As of June 30, 2021,
we have raised a total of approximately $156.7 million in gross proceeds and $143.9 million, net, from sales of our equity securities.
As
of June 30, 2021, we had unrestricted cash, cash equivalents and marketable securities totaling approximately $59.8 million.
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 $50,000,000, 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. As of December 31, 2020, we
did not sell any shares of our common stock under the ATM Sales Agreement. For the six months ended June 30, 2021, the Company sold 3,023,147
shares of its common stock under its ATM Sales Agreement with BTIG, LLC, at an average price of $1.90, generating gross proceeds of approximately
$5.8 million and net proceeds of approximately $5.6 million.
2020
Common Stock Offering
On
January 14, 2020, we closed an underwritten public offering of our common stock. The offering resulted in the sale of approximately 32.3
million shares to the public at a price of $1.55 per share. We generated net proceeds of approximately $46.7 million. We granted the
underwriters a 30-day option (the “option”) to purchase approximately 4.8 million additional shares of common stock subject
to the same terms and conditions. No additional shares of our common stock were sold pursuant to this option.
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:
|
|
Six Months Ended June 30,
|
|
|
|
2021
|
|
|
2020
|
|
Cash used in operating activities
|
|
$
|
(5,516
|
)
|
|
$
|
(7,834
|
)
|
Cash provided by/(used in) investing activities
|
|
|
16,471
|
|
|
|
(46,976
|
)
|
Cash provided by financing activities`
|
|
|
6,965
|
|
|
|
47,443
|
|
Net increase/(decrease) in cash and cash equivalents and restricted cash
|
|
$
|
17,920
|
|
|
$
|
(7,367
|
)
|
Operating
Activities
Net
cash used in operating activities was approximately $5.5 million and $7.8 million for the six-month periods ended June 30, 2021 and 2020,
respectively. The decrease of approximately $2.3 million was primarily due to a decrease in R&D expenses of approximately $1.8 million
and $1.5 million of working capital adjustments due to the timing of receipts and payments in the ordinary course of business, partially
offset by approximately $0.8 million of higher general and administrative expenses. We expect that there will be an increase in cash
used in operations during the remainder of 2021 due to higher research and development expenses as we continue to move our product candidates
and delivery platform forward in their development cycles.
Investing
Activities
Approximately
$16.5 million of cash was provided by and approximately $47.0 million of cash was used in investing activities for the six-month periods
ended June 30, 2021 and 2020, respectively. The increase of approximately $63.5 million was primarily due to the approximately $2.9 million
increase in proceeds received from maturities of our marketable securities and the decrease of approximately $60.5 million in purchases
of marketable securities as compared to June 30, 2020.
Financing
Activities
Net
cash provided by financing activities was approximately $7.0 million and approximately $47.4 million for the six-months periods ended
June 30, 2021 and 2020, respectively. The decrease of approximately $40.4 million in cash provided by financing activities was primarily
due to the Company raising approximately $5.6 million of net proceeds from the January 2021 ATM sales of our common stock compared to
the approximately $46.6 million of net proceeds that was raised from the January 2020
public offering of common stock. Other financing activities included a decrease of approximately $0.8 million from the exercising of
warrants and an increase of approximately $1.4 million from the exercising of stock options.
Funding
Requirements and Other Liquidity Matters
We
expect to continue to incur significant expenses and increasing operating losses for the foreseeable future. We anticipate that our expenses
will increase substantially if and as we:
●
|
conduct
further preclinical and clinical studies of our lead product candidates, MAT2203 and MAT2501, even if such studies are supported
with non-dilutive funding from third parties;
|
|
|
●
|
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
expect that our existing cash and cash equivalents will be sufficient to fund our operating expenses and capital expenditures requirements
into 2024.
Until
such time, if ever, that we can generate product 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. We do not have any committed external source of funds other than limited grant funding from the CFF. 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.
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.
Contractual
Obligations and Commitments
On
August 1, 2021, the amendment to the Company’s Bedminster lease became effective upon delivery of the Expansion Premises and extends
the term of the lease for seven years from such date. The total lease commitment over the seven-year extension period is approximately
$1.8 million. (See Note 8 – Leases)
Besides
the amendment to the Bedminster lease, there have been no other material changes from the disclosures relating to our contractual obligations
reported in our Annual Report on Form 10-K for the year ended December 31, 2020.
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.