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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 June 30, 2023

 

OR

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from             to             

 

Commission File Number: 001-38022

 

 

MATINAS BIOPHARMA HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

 

Delaware   No. 46-3011414
(State or other jurisdiction of   (I.R.S. Employer
incorporation or organization)   Identification No.)

 

1545 Route 206 South, Suite 302

Bedminster, New Jersey 07921

(Address of principal executive offices) (Zip Code)

 

908-484-8805

(Registrant’s telephone number, including area code)

 

 

(Former Name, Former Address and Former Fiscal Year,

if Changed Since Last Report)

 

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

 

Title of Each Class   Trading Symbol(s)   Name of Each Exchange on Which Registered
Common Stock   MTNB   NYSE American

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

 

Yes ☒ No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

 

Yes ☒ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer Accelerated filer
       
Non-accelerated Filer Smaller reporting company
       
    Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No

 

As of August 4, 2023, there were 217,264,526 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 June 30, 2023

 

Table of Contents

 

    Page
     
PART - I FINANCIAL INFORMATION 3
     
Item 1. FINANCIAL STATEMENTS 3
     
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 15
     
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 22
     
Item 4. CONTROLS AND PROCEDURES 22
     
PART - II OTHER INFORMATION 23
     
Item 1. LEGAL PROCEEDINGS 23
     
Item 1A. RISK FACTORS 23
     
Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS 23
     
Item 3. DEFAULTS UNDER SENIOR SECURITIES 23
     
Item 4. MINE SAFETY DISCLOSURES 23
     
Item 5. OTHER INFORMATION 23
     
Item 6. EXHIBITS 23

 

  2 

 

 

PART - I FINANCIAL INFORMATION

 

Item 1. FINANCIAL STATEMENTS

 

Matinas BioPharma Holdings, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except for share data)

 

   June 30, 2023   December 31, 2022 
   (Unaudited)   (Audited) 
ASSETS:          
Current assets:          
Cash and cash equivalents  $9,743   $6,830 
Marketable debt securities   12,770    21,933 
Restricted cash – security deposit   50    50 
Prepaid expenses and other current assets   1,437    5,719 
Total current assets   24,000    34,532 
           
Non-current assets:          
Leasehold improvements and equipment – net   2,103    2,091 
Operating lease right-of-use assets – net   3,345    3,613 
Finance lease right-of-use assets – net   24    30 
In-process research and development   3,017    3,017 
Goodwill   1,336    1,336 
Restricted cash – security deposit   200    200 
Total non-current assets   10,025    10,287 
Total assets  $34,025   $44,819 
           
LIABILITIES AND STOCKHOLDERS’ EQUITY:          
           
Current liabilities:          
Accounts payable  $604   $618 
Accrued expenses   1,372    3,099 
Operating lease liabilities – current   608    562 
Financing lease liabilities – current   5    7 
Total current liabilities   2,589    4,286 
           
Non-current liabilities:          
Deferred tax liability   341    341 
Operating lease liabilities – net of current portion   3,221    3,533 
Financing lease liabilities – net of current portion   20    22 
Total non-current liabilities   3,582    3,896 
Total liabilities   6,171    8,182 
           
Stockholders’ equity:          
Common stock par value $0.0001 per share, 500,000,000 shares authorized at June 30, 2023 and December 31, 2022; 217,264,526 issued and outstanding as of June 30, 2023 and December 31, 2022   22    22 
Additional paid-in capital   192,550    190,070 
Accumulated deficit   (164,204)   (152,631)
Accumulated other comprehensive loss   (514)   (824)
Total stockholders’ equity   27,854    36,637 
Total liabilities and stockholders’ equity  $34,025   $44,819 

 

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

 

  3 

 

 

Matinas BioPharma Holdings, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(in thousands, except share and per share data)

Unaudited

 

   2023   2022   2023   2022 
   Three Months Ended
June 30,
   Six Months Ended
June 30,
 
   2023   2022   2023   2022 
Revenue:                    
Contract Revenue  $-   $1,063   $1,096   $1,063 
Costs and expenses:                    
Research and development   3,559    4,127    7,530    9,105 
General and administrative   2,600    2,861    5,311    5,606 
                     
Total costs and expenses   6,159    6,988    12,841    14,711 
                     
Loss from operations   (6,159)   (5,925)   (11,745)   (13,648)
Sale of New Jersey net operating losses & tax credits   -    -    -    1,734 
Other income, net   99    2    172    13 
                     
Net loss  $(6,060)  $(5,923)  $(11,573)  $(11,901)
Net loss per share – basic and diluted  $(0.03)  $(0.03)  $(0.05)  $(0.06)
Weighted average common shares outstanding:                    
Basic and diluted   217,264,526    216,864,526    217,264,526    216,755,261 
Other comprehensive gain/(loss), net of tax                    
Unrealized gain/(loss) on securities available-for-sale   81    (125)   310    (609)
Other comprehensive gain/(loss), net of tax   81    (125)   310    (609)
Comprehensive loss  $(5,979)  $(6,048)  $(11,263)  $(12,510)

 

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

 

  4 

 

 

Matinas BioPharma Holdings, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(in thousands, except for share data)

Unaudited

 

   Shares   Amount   Capital   Deficit   (Loss)/Income   Equity 
   Common Stock  

Additional

Paid - in

   Accumulated  

Accumulated Other

Comprehensive

  

Total

Stockholders’

 
   Shares   Amount   Capital   Deficit   (Loss)/Income   Equity 
Balance, December 31, 2022   217,264,526   $22   $190,070   $(152,631)  $(824)  $36,637 
Stock-based compensation   -    -    2,480    -    -    2,480 
Other comprehensive income   -    -    -    -    310    310 
Net loss   -    -    -    (11,573)   -    (11,573)
Balance, June 30, 2023   217,264,526   $22   $192,550   $(164,204)  $(514)  $27,854 

 

   Common Stock  

 

Additional

Paid - in

   Accumulated  

Accumulated Other

Comprehensive

  

Total

Stockholders’

 
   Shares   Amount   Capital   Deficit   (Loss)/Income   Equity 
Balance, March 31, 2023   217,264,526   $22   $191,342   $(158,144)  $(595)  $32,625 
Stock-based compensation   -    -    1,208    -    -    1,208 
Other comprehensive income   -    -    -    -    81    81 
Net loss   -    -    -    (6,060)   -    (6,060)
Balance, June 30, 2023   217,264,526   $22   $192,550   $(164,204)  $(514)  $27,854 

 

   Common Stock  

 

Additional

Paid - in

   Accumulated  

Accumulated Other

Comprehensive

  

Total

Stockholders’

 
   Shares   Amount   Capital   Deficit   Loss   Equity 
Balance, December 31, 2021   216,269,450   $22   $184,251   $(131,634)  $(145)  $52,494 
Stock-based compensation   -    -    2,475    -    -    2,475 
Issuance of common stock in exchange for Options   195,076    -    99    -    -    99 
Issuance of common stock pursuant to license agreement amendment   400,000    -    291    -    -    291 
Other comprehensive loss   -    -    -    -    (609)   (609)
Net loss   -    -    -    (11,901)   -    (11,901)
Balance, June 30, 2022   216,864,526   $22   $187,116   $(143,535)  $(754)  $42,849 

 

   Common Stock  

 

Additional

Paid - in

   Accumulated  

Accumulated Other

Comprehensive

  

Total

Stockholders’

 
   Shares   Amount   Capital   Deficit   Loss   Equity 
Balance, March 31, 2022   216,864,526   $22   $185,902   $(137,612)  $(629)  $47,682 
Stock-based compensation   -    -    1,214    -    -    1,215 
Other comprehensive loss   -    -    -    -    (125)   (125)
Net loss   -    -    -    (5,923)   -    (5,923)
Balance, June 30, 2022   216,864,526   $22   $187,116   $(143,535)  $(754)  $42,849 

 

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

 

  5 

 

 

Matinas BioPharma Holdings, Inc.

Condensed Consolidated Statements of Cash Flow

(in thousands)

Unaudited

 

   2023   2022 
   Six Months Ended June 30, 
   2023   2022 
Cash flows from operating activities:          
Net loss  $(11,573)  $(11,901)
Adjustments to reconcile net loss to net cash used in operating activities:          
Depreciation and amortization   190    155 
Stock based compensation expense   2,480    2,475 
Amortization of operating lease right-of-use assets   268    275 
Amortization of finance lease right-of-use assets   5    12 
Amortization of bond discount   73    110 
Stock issued pursuant to license agreement amendment   -    291 
Changes in operating assets and liabilities:          
Operating lease liabilities   (266)   (256)
Prepaid expenses and other current assets   4,282    (2,050)
Accounts payable   (13)   (441)
Accrued expenses and other liabilities   (1,726)   1,443 
Net cash used in operating activities   (6,280)   (9,887)
           
Cash flows from investing activities:          
Purchase of marketable debt securities   -    (9,481)
Proceeds from maturities of marketable debt securities   9,400    9,250 
Purchases of leasehold improvements and equipment   (202)   (600)
Net cash provided by/(used in) investing activities   9,198    (831)
           
Cash flows from financing activities:          
Proceeds from exercise of options   -    99 
Payments of finance lease liability – principal   (5)   (12)
Net cash (used in)/provided by financing activities   (5)   87 
           
Net increase/(decrease) in cash, cash equivalents and restricted cash   2,913    (10,631)
Cash, cash equivalents and restricted cash at beginning of period   7,080    21,280 
           
Cash, cash equivalents and restricted cash at end of period  $9,993   $10,649 
           
Supplemental non-cash financing and investing activities:          
Unrealized gain/(loss) on marketable debt securities  $310   $(609)

 

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

 

  6 

 

 

MATINAS BIOPHARMA HOLDINGS, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

(Tabular dollars and shares in thousands, except per share data)

 

Note 1 – Description of Business

 

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

 

Note 2 – Liquidity, Plan of Operations and Going Concern

 

The Company has experienced net losses and negative cash flows from operations each period since its inception. Through June 30, 2023, the Company had an accumulated deficit of $164,204. The Company’s net loss was $11,573 for the six months ended June 30, 2023.

 

The Company has been engaged in developing its lipid nanocrystal (“LNC”) platform delivery technology and a pipeline of associated product candidates, including MAT2203 and MAT2501, since 2011. To date, the Company has not obtained regulatory approval for any of its product candidates nor generated any revenue from product sales, and the Company expects to incur significant expenses to complete development of its product candidates. The Company may never be able to obtain regulatory approval for the marketing of any of its product candidates in any indication in the United States or internationally and there can be no assurance that the Company will generate revenues or ever achieve profitability.

 

If the Company obtains U.S. Food and Drug Administration (“FDA”) approval for one or more of its product candidates, the Company expects that its expenses will continue to increase once the Company reaches commercial launch. The Company also expects that its research and development expenses will continue to increase as it moves forward with additional clinical studies for its current product candidates and development of additional product candidates. As a result, the Company expects to continue to incur substantial losses for the foreseeable future, and that these losses will be increasing.

 

As of June 30, 2023, the Company had cash and cash equivalents of $9,743, marketable debt securities of $12,770 and restricted cash of $250. The Company believes the cash and cash equivalents and marketable debt securities on hand are sufficient to fund planned operations into the third quarter of 2024, but not beyond. As a result, substantial doubt exists about the Company’s ability to continue as a going concern.

 

The ability of the Company to continue as a going concern is dependent upon control over its operating expenses, anticipated proceeds from future sales of common stock through the At-The-Market Sales Agreement (“ATM”) with BTIG, LLC. and securing additional financing. While the Company believes in the viability of this strategy and believes the actions presently being taken by the Company provide the opportunity for it to continue as a going concern, there can be no assurance the Company will be successful in its implementation. In particular, utilization of the ATM may not be viable due to market conditions and new financing may not be available on acceptable terms, or at all. These consolidated financial statements do not include any adjustments related to the recoverability and classification of asset amounts or the amounts and classification of liabilities that might be necessary if the Company is unable to continue as a going concern.

 

Note 3 – Summary of Significant Accounting Policies

 

Basis of presentation and principles of consolidation

 

The accompanying unaudited condensed consolidated financial statements include the consolidated accounts of Holdings and its wholly owned subsidiaries, BioPharma, and Nanotechnologies. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) and reflect the operations of the Company and its wholly owned subsidiaries. All intercompany transactions have been eliminated in consolidation.

 

  7 

 

 

The Company’s significant accounting policies are described in Note 3 within the Company’s Notes to Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

 

The Company’s management has considered all recent accounting pronouncements issued and believes that these recent pronouncements will not have a material effect on the Company’s financial statements.

 

Note 4 – Cash, Cash Equivalents, Restricted Cash and Marketable Debt Securities

 

The Company considers all highly liquid financial instruments with original maturities of three months or less when purchased to be cash and cash equivalents and all investments with maturities of greater than three months from date of purchase are classified as marketable debt securities. Cash and cash equivalents consisted of cash in bank checking and savings accounts, money market funds and short-term U.S. treasury bonds that mature within three months of settlement date.

 

Cash, Cash Equivalents and Restricted Cash

 

The Company presents restricted cash with cash and cash equivalents in the Condensed Consolidated Statements of Cash Flows. Restricted cash at both June 30, 2023 and December 31, 2022 of $250 represents funds the Company is required to set aside as collateral, primarily for one of the Company’s 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 June 30, 2023, December 31, 2022, June 30, 2022 and December 31, 2021:

 

   June 30,
2023
   December 31,
2022
   June 30,
2022
   December 31,
2021
 
Cash and cash equivalents  $9,743   $6,830   $10,399   $21,030 
Restricted cash included in current/non-current assets   250    250    250    250 
Cash, cash equivalents and restricted cash in the statement of cash flows  $9,993   $7,080   $10,649   $21,280 

 

Marketable Debt Securities

 

The Company has classified its investments in marketable debt securities as available-for-sale and as a current asset. The Company’s investments in marketable debt securities are carried at fair value, with unrealized gains and losses included as a separate component of stockholders’ equity. Unrealized losses and gains are classified as other comprehensive (loss)/income and costs are determined on a specific identification basis. Realized gains and losses from our marketable debt securities are recorded in other income, net. For the three and six months ended June 30, 2023, the Company recorded unrealized gains of $81 and $310, respectively. For the three and six months ended June 30, 2022, the Company recorded unrealized losses of $125 and $609, respectively. As of June 30, 2023 and December 31, 2022, the Company had net accumulated unrealized losses of $514 and $824, respectively.

 

The following tables summarize the Company’s marketable debt securities as of June 30, 2023:

 

   Amortized Cost   Unrealized Gain   Unrealized (Loss)   Fair Value 
   Amortized   Unrealized   Unrealized     
   Cost   Gain   (Loss)   Fair Value 
U.S. Treasury Bonds  $996   $   $(22)  $974 
U.S. Government Notes   12,288        (492)   11,796 
Total marketable debt securities  $13,284   $   $(514)  $12,770 

 

  8 

 

 

Maturities of debt securities classified as available-for-sale were as follows at June 30, 2023:

 

   Fair Value 
Due within one year  $5,936 
Due after one year through five years   6,834 
   $12,770 

 

 

The following tables summarize the Company’s marketable debt securities as of December 31, 2022:

 

    Amortized Cost     Unrealized Gain     Unrealized (Loss)     Fair Value  
   

Amortized

Cost

   

Unrealized

Gain

   

Unrealized

(Loss)

    Fair Value  
U.S. Treasury Bonds   $ 993     $     $ (34 )   $ 959  
U.S. Government Notes     16,324             (721 )     15,603  
Corporate Debt Securities     5,440             (69 )     5,371  
Total marketable debt securities   $ 22,757     $     $ (824 )   $ 21,933  

 

 

Maturities of debt securities classified as available-for-sale were as follows at December 31, 2022:

 

    Fair Value  
Due within one year   $ 13,240  
Due after one year through five years     8,693  
    $ 21,933  

 

Note 5 - Fair Value Measurements

 

The Company uses the fair value hierarchy to measure the value of its financial instruments. The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable. Observable inputs reflect assumptions market participants would use in pricing an asset or liability based on market data obtained from independent sources, while unobservable inputs reflect a reporting entity’s pricing based upon its own market assumptions. The basis for fair value measurements for each level within the hierarchy is described below:

 

Level 1 – Quoted prices for identical assets or liabilities in active markets.
   
Level 2 – Quoted prices for identical or similar assets and liabilities in markets that are not active; or other model-derived valuations whose inputs are directly or indirectly observable or whose significant value drivers are observable.
   
Level 3 – Valuations derived from valuation techniques in which one or more significant inputs to the valuation model are unobservable and for which assumptions are used based on management estimates.

 

The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible as well as considers counterparty credit risk in its assessment of fair value.

 

The carrying amounts of cash equivalents, current portion of restricted cash, prepaid expenses and other current assets, accounts payable, current portion of lease liabilities and accrued expenses approximate fair value due to the short-term nature of these instruments.

 

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

 

                    
       Fair Value Hierarchy 
June 30, 2023  Total   (Level 1)   (Level 2)   (Level 3) 
Assets                    
Marketable Debt Securities:                    
U.S. Treasury Bonds  $974   $974   $   $ 
U.S. Government Notes   11,796        11,796     
Total  $12,770   $974   $11,796   $ 

 

  9 

 

 

                    
       Fair Value Hierarchy 
December 31, 2022  Total   (Level 1)   (Level 2)   (Level 3) 
Assets                    
Marketable Debt Securities:                    
U.S. Treasury Bonds  $959   $959   $   $ 
U.S. Government Notes   15,603        15,603     
Corporate Debt Securities   5,371        5,371     
Total  $21,933   $959   $20,974   $ 

 

U.S. treasury bonds are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices for identical assets in active markets. Marketable debt securities consisting of U.S. government notes and corporate debt securities are classified as Level 2 and are valued using quoted market prices in markets that are not active.

 

Note 6 – Leasehold Improvements and Equipment

 

Leasehold improvements and equipment, summarized by major category, consist of the following as of June 30, 2023 and December 31, 2022:

 

   June 30, 2023   December 31, 2022 
Equipment  $2,507   $2,305 
Leasehold improvements   1,155    1,155 
Total   3,662    3,460 
Less: accumulated depreciation and amortization   1,559    1,369 
Leasehold improvements and equipment, net  $2,103   $2,091 

 

Depreciation and amortization expense for the three and six months ended June 30, 2023 was $97 and $190, respectively, and the three and six months ended June 30, 2022 was $86 and $155, respectively. During the six month periods ended June 30, 2023 and 2022, the Company purchased equipment of $202 and $600, respectively.

 

Note 7 – Accrued Expenses and Other Liabilities

 

Accrued Expenses, summarized by major category, as of June 30, 2023 and December 31, 2022 consist of the following:

 

   June 30, 2023   December 31, 2022 
Payroll and incentives  $1,027   $1,705 
General and administrative expenses   257    455 
Research and development expenses   88    130 
Deferred revenue *   -    721 
Other deferred liabilities **   -    88 
Total  $1,372   $3,099 

 

  * At December 31, 2022, the balance included $688 related to an exclusive research collaboration with BioNTech SE (the “BioNTech Agreement”) and $33 related to a feasibility study agreement with Genentech, Inc. (the “Genentech Agreement”). (See Note 9 – Revenue Recognition, Collaboration Agreements and Other).
     
  ** At December 31, 2022, the balances of $88 related to an award agreement with the Cystic Fibrosis Foundation (the “CFF Agreement). (See Note 9 – Revenue Recognition, Collaboration Agreements and Other).

 

  10 

 

 

Note 8 – Leases

 

The Company has various lease agreements, including leases of office space, a laboratory and manufacturing facility, and various equipment. Some leases include purchase, termination or extension options for one or more years. These options are included in the lease term when it is reasonably certain that the option will be exercised.

 

The assets and liabilities from operating and finance leases are recognized at the lease commencement date based on the present value of remaining lease payments over the lease term using the Company’s incremental borrowing rates or implicit rates, when readily determinable. Short-term leases, which have an initial term of 12 months or less, are not recorded on the balance sheet. The Company’s operating leases do not provide implicit rates, therefore the Company utilized a discount rate based on its incremental borrowing rate to record the lease obligations. The Company’s finance leases provide readily determinable implicit rates.

 

Operating lease obligations

 

The Company incurred lease expense for its operating leases of $226 for each for the three month periods ended June 30, 2023 and 2022, respectively, and $452 for each of the six month periods ended June 30, 2023 and 2022, respectively. The Company incurred amortization expense on its operating lease right-of-use assets of $135 and $268 for the three and six months ended June 30, 2023, respectively, and $139 and $275 for the three and six months ended June 30, 2022, respectively.

 

Finance Leases

 

The Company incurred interest expense on its finance leases of $1 and $2 for the three and six months ended June 30, 2023, respectively, and $0 and $1 for the three and six months ended June 30, 2022, respectively. The Company incurred amortization expense on its finance lease right-of-use assets of $1 and $5 for the three and six months ended June 30, 2023, respectively, and $6 and $12 for the three and six months ended June 30, 2022, respectively.

 

The following table presents information about the amount and timing of liabilities arising from the Company’s operating leases and finance leases as of June 30, 2023:

 

Maturity of Lease Liabilities 

Operating Lease

Liabilities

  

Finance Lease

Liabilities

 
Remainder of 2023  $467   $4 
2024   956    7 
2025   998    7 
2026   1,040    7 
2027   944    7 
Thereafter   411    - 
Total undiscounted operating lease payments  $4,816   $32 
Less: Imputed interest   987    7 
Present value of operating lease liabilities  $3,829   $25 
           
Weighted average remaining lease term in years   4.8    4.4 
Weighted average discount rate   9.2%   11.6%

  

  11 

 

 

The following table presents information about the amount and timing of liabilities arising from the Company’s operating leases and finance leases as of December 31, 2022:

 

Maturity of Lease Liabilities 

Operating Lease

Liabilities

  

Finance Lease

Liabilities

 
2023  $916   $10 
2024   956    7 
2025   998    7 
2026   1,040    7 
2027   944    7 
Thereafter   411    - 
Total undiscounted operating lease payments  $5,265   $38 
Less: Imputed interest   1,170    9 
Present value of operating lease liabilities  $4,095   $29 
           
Weighted average remaining lease term in years   5.3    4.5 
Weighted average discount rate   9.2%   11.1%

 

Note 9 – Revenue Recognition, Collaboration Agreements and Other

 

BioNTech Research Collaboration

 

On April 8, 2022, the Company entered into the BioNTech Agreement to evaluate the combination of mRNA formats utilizing the Company’s proprietary LNC platform delivery technology. Under the terms of the BioNTech Agreement, the Company received an exclusivity fee in the amount of $2,750, and BioNTech SE funded certain of the Company’s research expenses that were incurred under the agreement. The term of the agreement began on the effective date and expired on April 8, 2023.

 

The $2,750 license fee was recorded as deferred revenue and was recognized over the term of the contract performance obligation period, which the Company concluded to be 12 months after the execution of the contract. The clinical research services were invoiced as service revenue was earned on a monthly basis during the term of the contract.

 

During the first quarter of 2023, $688 of the contract research revenue was recognized from the license fee and $375 was earned from the monthly clinical research services performed by the Company. As of March 31, 2023, the Company had recognized all of contract research revenue from the BioNTech Agreement.

 

Cystic Fibrosis Foundation Therapeutics Development Award

 

On November 19, 2020, the Company entered into the CFF Agreement with the Cystic Fibrosis Foundation (“CFF”), pursuant to which it received a Therapeutics Development Award of up to $4.2 million (the “Award”) (of which $484 had been previously received) to support the preclinical development (the “Development Program”) of the Company’s MAT2501 product candidate. On November 19, 2021, the Company and CFF entered into an Amendment to the CFF Agreement which added an additional milestone payment in the amount of $321, which was received in the fourth quarter of 2021.

 

As of June 30, 2023, the Company has received approximately $3.6 million of the $4.5 million Award, including the Amendment’s additional milestone payment, and a related deferred liability balance of $0 and $88 is included in accrued expenses at June 30, 2023 and December 31, 2022, respectively. During the fourth quarter of 2022, for financial and technical reasons, the Company determined that it was not commercially reasonable to continue the development of MAT2501 and instead elected to focus existing resources on other initiatives. As a result, the Company will not receive the balance of the Award and has no further obligations to CFF.

 

  12 

 

 

Genentech Feasibility Study Agreement

 

On December 12, 2019, the Company entered into the Genentech Agreement which involves the development of oral formulations using the Company’s LNC platform delivery technology. Under the terms of the Genentech Agreement, Genentech paid the Company a total of $100 for the development of three molecules, or $33 per molecule, which is being recognized upon the Company fulfilling its obligations for each molecule under the Genentech Agreement. The Company recorded the upfront consideration as deferred revenue, which is included in accrued expenses on the consolidated balance sheets. As of December 31, 2022, the Company completed its obligations related to the first and second of the three molecules. During the six months ended June 30, 2023, the Company completed its obligations related to the remaining molecule.

 

Note 10 – Income Taxes

 

Sale of net operating losses (NOLs) & tax credits

 

The Company recognized $0 and $1,734 for the six month periods ended June 30, 2023 and 2022, respectively, in connection with the sale of certain state net operating losses (“NOLs”) and research and development tax credits to a third party under the New Jersey Technology Business Tax Certificate Transfer Program.

 

Note 11 – Stockholders’ Equity

 

Common Stock

 

On February 8, 2022, the Company issued 400,000 unregistered shares of its common stock to Rutgers, The State University of New Jersey (“Rutgers”), as partial consideration pursuant to the Second Amended and Restated Exclusive License Agreement between the Company and Rutgers. The agreement provides for (1) royalties on a tiered basis between low single digits and the mid-single digits of net sales of products using such licensed technology, (2) a one-time sales milestone fee of $100 when and if sales of products using the licensed technology reach the specified sales threshold and (3) an annual license fee of $50 over the term of the license agreement. There was also a reduction in the consideration paid to Rutgers in the event of a sublicense to a third party of the exclusive patent rights granted pursuant to the Agreement. The Company recorded a $291 research and development expense related to the issuance of the 400,000 shares based on the closing price of the Company’s common stock of $0.728 on the date of issuance.

 

For the six months ended June 30, 2023, the Company did not sell any shares of its common stock under its At-The-Market Sales Agreement with BTIG, LLC.

 

Warrants

 

As of June 30, 2023, the Company did not have any outstanding warrants to purchase shares of the Company’s common stock. The following table summarizes the changes in warrants outstanding during 2022 and for the six months ended June 30, 2023:

 

   Shares 
Outstanding at December 31, 2021   988 
Issued   - 
Exercised   (400)
Expired   (350)
Outstanding at December 31, 2022   238 
Issued   - 
Exercised   - 
Expired   (238)
Outstanding at June 30, 2023   - 

 

  13 

 

 

Basic and diluted net loss per common share

 

During the three and six months ended June 30, 2023 and 2022, diluted loss per common share is the same as basic loss per common share because, as the Company incurred a net loss during each period presented, the potentially dilutive securities from the assumed exercise of all outstanding stock options and warrants, would have an anti-dilutive effect. The following outstanding shares of potentially dilutive securities were excluded from the computation of diluted net loss per share because including them would have been anti-dilutive as of June 30, 2023 and 2022:

 

   As of June 30, 
   2023   2022 
Stock options   34,544    27,729 
Warrants   -    988 
Total   34,544    28,717 

 

Note 12 – Accumulated Other Comprehensive Loss

 

The following table summarizes the changes in accumulated other comprehensive loss by component during the three months ended June 30, 2023 and 2022:

 

   Net Unrealized
Gain/(Loss) on
Available-for-Sale
Securities
   Accumulated
Other
Comprehensive
Loss
 
Balance, December 31, 2022  $(824)  $(824)
Net unrealized gain on securities available-for-sale   310    310 
Balance, June 30, 2023  $(514)  $(514)
           
Balance, December 31, 2021  $(145)  $(145)
Net unrealized loss on securities available-for-sale   (609)   (609)
Balance, June 30, 2022  $(754)  $(754)

 

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 month periods ended June 30, 2023 and 2022.

 

The following table contains information about the Company’s stock plan at June 30, 2023:

 

   Awards
Reserved for
Issuance
   Awards
Issued &
Exercised
   Awards
Available
for Grant
 
2013 Equity Compensation Plan   54,294*   39,359**   14,935 

 

* Increased by 8,691 on January 1, 2023, representing 4% of the total number of shares of common stock outstanding on December 31, 2022.
** 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:

 

  

Three Months Ended

June 30,

  

Six Months Ended

June 30,

 
   2023   2022   2023   2022 
Research and Development  $516   $555   $1,069   $1,105 
General and Administrative   692    660    1,411    1,370 
Total  $1,208   $1,215   $2,480   $2,475 

 

As of June 30, 2023, total compensation costs related to unvested awards not yet recognized was $7,437 and the weighted-average periods over which the awards are expected to be recognized was 2.3 years.

 

Stock Options

 

The following table summarizes the activity for Company’ stock options for the six months ended June 30, 2023:

 

   Stock Options  
Outstanding at December 31, 2022  34,739  
Granted  65  
Exercised  -  
Forfeited  (221 )
Expired  (39 )
Outstanding at June 30, 2023  34,544  

 

 

  14 

 

 

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, 2022 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, including risks and uncertainties related to the impact of COVID-19, and which may cause our actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. All statements other than statements of historical fact are statements that could be forward-looking statements. You can identify these forward-looking statements through our use of words such as “may,” “can,” “anticipate,” “assume,” “should,” “indicate,” “would,” “believe,” “contemplate,” “expect,” “seek,” “estimate,” “continue,” “plan,” “point to,” “project,” “predict,” “could,” “intend,” “target,” “potential” and other similar words and expressions of the future.

 

There are a number of important factors that could cause the actual results to differ materially from those expressed in any forward-looking statement made by us. These factors include, but are not limited to:

 

our ability to raise additional capital to fund our operations and to develop our product candidates;
   
our anticipated timing for preclinical development, regulatory submissions, commencement and completion of clinical trials and product approvals;
   
our history of operating losses in each year since inception and the expectation that we will continue to incur operating losses for the foreseeable future;
   
our dependence on product candidates which are still in an early development stage;
   
our reliance on our proprietary lipid nanocrystal (LNC) platform delivery technology, which is licensed to us by Rutgers University;
   
our ability to manufacture GMP batches of our product candidates which are required for preclinical and clinical trials and, subsequently, if regulatory approval is obtained for any of our products, our ability to manufacture commercial quantities;
   
our ability to complete required clinical trials for our lead product candidate and other product candidates and obtain approval from the FDA or other regulatory agents in different jurisdictions;
   
our dependence on third parties, including third parties to manufacture our intermediates and final product formulations and third-party contract research organizations to conduct our clinical trials;
   
our ability to maintain or protect the validity of our patents and other intellectual property;
   
our ability to retain and recruit key personnel;

 

  15 

 

 

our ability to internally develop new inventions and intellectual property;
   
interpretations of current laws and the passages of future laws;
   
our lack of a sales and marketing organization and our ability to commercialize products, if we obtain regulatory approval, whether alone or through potential future collaborators;
   
our ability to successfully commercialize, and our expectations regarding future therapeutic and commercial potential with respect to, our product candidates;
   
the accuracy of our estimates regarding expenses, ongoing losses, future revenue, capital requirements and our needs for or ability to obtain additional financing;
   
developments and projections relating to our competitors or our industry;
   
our operations, business and financial results may be adversely impacted by 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, 2022, elsewhere in this report and other reports that we file with the Securities and Exchange Commission.

 

All forward-looking statements are expressly qualified in their entirety by this cautionary notice. You are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date of this report or the date of the document incorporated by reference into this report. We have no obligation, and expressly disclaim any obligation, to update, revise or correct any of the forward- looking statements, whether as a result of new information, future events or otherwise. We have expressed our expectations, beliefs and projections in good faith, and we believe they have a reasonable basis. However, we cannot assure you that our expectations, beliefs or projections will result or be achieved or accomplished.

 

Overview

 

We are a clinical-stage biopharmaceutical company focused on delivering groundbreaking therapies using our lipid nanocrystal (LNC) platform delivery technology (LNC Platform) to maximize global clinical impact and patient access. The Company is developing an internal portfolio of products and strives to be the partner of choice for leading pharmaceutical companies seeking to develop novel formulations that capitalize on the unique characteristics of the LNC Platform to facilitate, enhance and optimize the delivery of complex nucleic acids. Our current internal pipeline consists of MAT2203 (oral amphotericin B), a highly potent antifungal drug which we have successfully made oral, safe, and well-tolerated for patients. We also have internal discovery programs ongoing in the formulation and delivery of small oligonucleotides, namely antisense oligonucleotides (ASOs) and silencing or short interfering RNAs (siRNAs). We are also intent on expanding the application of our LNC Platform through collaborations with well-respected pharmaceutical companies whose molecules and compounds benefit from the unique capabilities of our delivery technology, which can provide oral bioavailability and facilitate non-toxic and efficient intracellular delivery of nucleic acids, particularly in the fields of mRNA and DNA.

 

Key elements of our strategy include:

 

Advancing our LNC Platform and expanding the utilization of this promising technology into areas of innovative medicine beyond small molecules, including nucleic acids (e.g., mRNA, DNA, ASOs) and proteins.
   
Positioning MAT2203 for an NDA filing for various indications for the treatment of serious IFIs, including cryptococcal meningitis. We are seeking non-dilutive funds from prospective third-party pharmaceutical partners and various governmental sources of capital, such as the Biomedical Advanced Research and Development Authority (BARDA) and the NIH to continue the development of MAT2203 into Phase 3. We are also seeking the input and guidance of the FDA for an additional Phase 3 study of various IFIs.
   
Building an external pipeline of collaborations focused on our LNC Platform with leading pharmaceutical companies like Genentech and National Resilience to provide delivery solutions for their complex nucleic acid drug products.

 

  16 

 

 

For the six month periods ended June 30, 2023 and 2022, our net loss was $11,573 and $11,901, respectively. We have incurred losses for each period from our inception and expect to incur additional losses for the foreseeable future. We believe the cash, cash equivalents and marketable debt securities on hand are sufficient to fund planned operations into the third quarter of 2024, but not beyond. We will seek to fund our operations through public or private equity offerings, debt financing, government or other third-party funding, collaborations and licensing arrangements. These financing alternatives may not be available to us on acceptable terms, or at all. As a result, substantial doubt exists about our ability to continue as a going concern.

 

Financial Operations Overview

 

Revenue

 

During the three and six months ended June 30, 2023, we generated $0 and $1,096, respectively, in contract research revenue resulting from the research collaborations with BioNTech SE and Genentech Inc., and $1,063 during the three and six months ended June 30, 2022, respectively, from the research collaboration with BioNTech SE. Our ability to generate product revenue, which we do not expect to occur for many years, if ever, will depend heavily on the successful development and eventual commercialization of our early-stage product candidates.

 

Research and Development Expenses

 

Research and development expenses consist of costs incurred for the development of product candidate MAT2203 and advancement of our LNC platform delivery technology, which include:

 

the cost of conducting pre-clinical work;
   
the cost of acquiring, developing and manufacturing pre-clinical and human clinical trial materials;
   
costs for consultants and contractors associated with Chemistry and Manufacturing Controls (CMC), pre-clinical and clinical activities and regulatory operations;
   
expenses incurred under agreements with contract research organizations, or CROs, including the National Institutes of Health (NIH), that conduct our pre-clinical or clinical trials; and
   
employee-related expenses, including salaries and stock-based compensation expense for those employees involved in the research and development process.

 

The table below summarizes our direct research and development expenses for our product candidates and development platform for the three and six months ended June 30, 2023 and 2022. 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, 
   2023   2022   2023   2022 
Direct research and development expenses:                    
Manufacturing process development  $289   $688   $593   $1,572 
Preclinical trials   87    60    249    625 
Clinical development   341    626    869    1,209 
Regulatory   137    233    330    402 
Internal staffing, overhead and other   2,705    2,520    5,489    5,297 
Total research and development  $3,559   $4,127   $7,530   $9,105 

 

  17 

 

 

Research and development activities are central to our business model. We expect our research and development expenses to increase over time because product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage human trials. However, we anticipate that our research and development expenses during 2023 will be lower than expenses incurred in 2022 as we pause the development of MAT2501 to focus our existing resources on MAT2203 and advancement of our LNC platform delivery technology into the field of nucleic acids.

 

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 2023 will remain relatively consistent with expenses incurred during 2022.

 

Sale of Net Operating Losses (NOLs) & Tax Credits

 

Income obtained from selling unused net operating losses (NOLs) and research and development tax credits under the New Jersey Technology Business Tax Certificate Transfer Program was $0 and $1,734 for the six month periods ended June 30, 2023 and 2022, respectively.

 

Other Income, net

 

Other income, net is largely comprised of interest income/(expense) and dividends.

 

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 2022 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, (v) Basic and diluted net loss per common share, and (vi) Revenue recognition.

 

Recent Accounting Pronouncements

 

Refer to “Note 3 – Summary of Significant Accounting Policies” in the Notes to Unaudited Condensed Consolidated Financial Statements for a discussion of recently adopted accounting pronouncements and their expected impact on our financial positions and results of operations.

 

Current Operating Trends

 

Our current R&D efforts are focused on advancing our lead LNC product candidate, MAT2203, through clinical development toward an initial indication for the treatment of CM and expanding application of our LNC Platform through both internal efforts and collaborations with third parties. Our R&D expenses 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 to be in a position to realize the potential of our product candidates and proprietary technologies.

 

  18 

 

 

We expect that most 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. 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. 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 to focus our resources on more promising products. Completion of clinical trials may take several years, and the length of time 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, 2023 to the three months ended June 30, 2022

 

The following tables summarize our revenues and operating expenses for the periods presented:

 

   Three Months Ended June 30, 
   2023   2022 
Revenues  $-   $1,063 
           
Expenses:          
Research and development  $3,559   $4,127 
General and administrative   2,600    2,861 
Operating Expenses  $6,159   $6,988 

 

Revenues. During the three months ended June 30, 2023 and 2022, we generated revenue of $0 and $1,063. The amount earned during the prior year resulted from the exclusive research collaborations with BioNTech SE.

 

Research and Development expenses. Research and Development (R&D) expense for the three months ended June 30, 2023 and 2022 was $3,559 and $4,127, respectively. The decrease in R&D expense was primarily attributable to a decrease in manufacturing costs of clinical trial materials and a decrease in clinical trial consulting costs, partially offset by higher compensation expense due to increased head count from 2022.

 

General and Administrative expenses. General and administrative expense for the three months ended June 30, 2023 and 2022 was $2,600 and $2,861, respectively. The decrease in general and administrative expense was primarily due to a decrease in consulting fees between periods.

 

Comparison of the six months ended June 30, 2023 to the six months ended June 30, 2022

 

The following tables summarize our revenues and operating expenses for the periods presented:

 

   Six Months Ended June 30, 
   2023   2022 
Revenues  $1,096   $1,063 
           
Expenses:          
Research and development  $7,530   $9,105 
General and administrative   5,311    5,605 
Operating Expenses  $12,841   $14,710 
           
Sale of New Jersey net operating losses (NOLs) and tax credits  $-   $1,734 

 

  19 

 

 

Revenues. During the six month periods ended June 30, 2023 and 2022, we generated revenue of $1,096 and $1,063. The amount earned during the current year consists of contract research revenue resulting from the research collaboration with BioNTech SE and Genentech Inc., while the amount earned during the prior year resulted from the research collaboration with BioNTech SE.

 

Research and Development expenses. Research and Development (R&D) expense for the six month periods ended June 30, 2023 and 2022 was $7,530 and $9,105, respectively. The decrease in R&D expense was primarily attributable to a decrease in manufacturing costs of clinical trial materials and a decrease in clinical trial consulting costs.

 

General and Administrative expenses. General and administrative expense for the six month periods ended June 30, 2023 and 2022 was $5,443 and $5,605, respectively. The decrease in general and administrative expense was primarily due to a decrease in consulting fees between periods.

 

Sale of New Jersey net operating losses (NOLs) & tax credits. The Company recognized $0 and $1,734 for the six month periods ended June 30, 2023 and 2022, respectively, in connection with the sale of state net operating losses and research and development tax credits to third parties under the New Jersey Technology Business Tax Certificate Transfer 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, 2023, we have raised a total of $156.7 million in gross proceeds and $143.9 million, net, from sales of our equity securities.

 

As of June 30, 2023, we had cash, cash equivalents and marketable debt securities totaling $22,513.

 

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, 
   2023   2022 
Cash used in operating activities  $(6,280)  $(9,887)
Cash provided by/(used in) investing activities   9,198    (831)
Cash (used in)/provided by financing activities   (5)   87 
Net increase/(decrease) in cash and cash equivalents and restricted cash  $2,913   $(10,631)

 

Operating Activities

 

Net cash used in operating activities was $6,280 and $9,887 for the six month periods ended June 30, 2023 and 2022, respectively. Net losses of $11,573 and $11,901 for the six month periods ended June 30, 2023 and 2022, respectively, were partially offset by working capital adjustments due to the timing of receipts and payments in the ordinary course of business. We expect that there will be a decrease in cash used in operations during the remainder of 2023 due to lower research and development expenses.

 

  20 

 

 

Investing Activities

 

Net cash provided by/(used in) investing activities was $9,198 and ($831) for the six month periods ended June 30, 2023 and 2022, respectively. The increase of cash provided by investing activities of $10,029 was primarily due to the $9,481 decrease in purchases of marketable debt securities, the $398 decrease in purchases of leasehold improvements and equipment, and the $150 increase in maturities of marketable debt securities.

 

Financing Activities

 

Net cash (used in)/provided by financing activities was ($5) and $87 for the six month periods ended June 30, 2023 and 2022, respectively. The decrease of $92 is primarily due to the decrease in the receipt of proceeds of $99 from the exercise 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 MAT2203, our lead product candidate, even if such studies are primarily financed with non-dilutive funding from the NIH;
   
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, cash equivalents and marketable debt securities will be sufficient to fund our operating expenses and capital expenditures requirements into the third quarter of 2024, but not beyond. As a result, substantial doubt exists about the Company’s ability to continue as a going concern.

 

Until such time, if ever, that we can generate product revenues sufficient to achieve profitability, we expect to finance our cash needs through a combination of private and public equity offerings, debt financings, government or other third-party funding, collaborations, and licensing arrangements. To the extent that we raise additional capital through the sale of common stock, convertible securities or other equity securities, the ownership interest of our stockholders may be materially diluted, and the terms of these securities may include liquidation or other preferences that adversely affect your rights of our common stockholders. Debt financing and preferred equity financing, if available, would result in increased fixed payment obligations and may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures, or declaring dividends, that could adversely impact our ability to conduct our business. Securing additional financing could require a substantial amount of time and attention from our management and may divert a disproportionate amount of their attention away from day-to-day activities, which may adversely affect our management’s ability to oversee the development of our product candidates.

 

  21 

 

 

If we raise additional funds through collaborations, strategic alliances or marketing, distribution, or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.

 

Our financial condition and results of operations may also be impacted by other factors we may not be able to control, such as global supply chain disruptions, global trade disputes and/or political instability. Increases in interest rates, especially if coupled with reduced government spending and volatility in financial markets, may have the effect of further increasing economic uncertainty and heightening these risks. Additionally, rising inflation rates may affect us by increasing operating expenses, such as employee-related costs and clinical trial expenses, negatively impacting our results of operations.

 

Off-Balance Sheet Arrangements

 

We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined under SEC rules, such as relationships with unconsolidated entities or financial partnerships, which are often referred to as structured finance or special purpose entities, established for the purpose of facilitating financing transactions that are not required to be reflected on our balance sheets.

 

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

Not applicable.

 

Item 4. CONTROLS AND PROCEDURES

 

Evaluation of Disclosure Controls and Procedures.

 

Disclosure Controls and Procedures:

 

As of June 30, 2023, under the supervision and with the participation of our principal executive officer and principal financial officer we have evaluated, the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based on that evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of June 30, 2023.

 

Our disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed in the reports that we filed or submitted under the Exchange Act is recorded, processed, summarized and reported within time periods specified by the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to our management, including principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

 

Changes in Internal Control Over Financial Reporting

 

There were no changes in our internal control over financial reporting identified in connection with the above evaluation that occurred during the second quarter of 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

  

  22 

 

 

PART - II OTHER INFORMATION

 

Item 1. LEGAL PROCEEDSINGS

 

None.

 

Item 1A. RISK FACTORS

 

There were no material changes from the risk factors set forth under Part I, Item 1A., “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022. You should carefully consider the risk factors contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 in addition to the other information set forth in this report which could materially affect our business, financial condition or future results. The risks and uncertainties described in this report and in our Annual Report on Form 10-K for the year ended December 31, 2022, as well as other reports and statements that we file with the SEC, are not the only risks and uncertainties facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also have a material adverse effect on our financial position, results of operations or cash flows.

 

Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

None.

 

Item 3. DEFAULTS UNDER SENIOR SECURITIES

 

None.

 

Item 4. MINE SAFETY DISCLOSURES

 

Not applicable.

 

Item 5. OTHER INFORMATION

 

None.

 

Item 6. EXHIBITS

 

See the Exhibit Index following the signature page to this Quarterly Report on Form 10-Q for a list of exhibits filed or furnished with this report, which Exhibit Index is incorporated herein by reference.

 

  23 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

  MATINAS BIOPHARMA HOLDINGS, INC.
   
  BY:
   
  /s/ Jerome D. Jabbour
Dated: August 9, 2023 Jerome D. Jabbour
  Chief Executive Officer (Principal Executive Officer)
   
  /s/ Keith A. Kucinski
Dated: August 9, 2023 Keith A. Kucinski
  Chief Financial Officer
  (Principal Financial and Accounting Officer)

 

  24 

 

 

EXHIBIT INDEX

 

3.1   Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to Amendment No. 1 to the Company’s Registration Statement on Form S-1 filed with the SEC on February 7, 2014).
3.2   Bylaws (incorporated by reference to Exhibit 3.2 to Amendment No. 1 to the Company’s Registration Statement on Form S-1 filed with the SEC on February 7, 2014).
3.3   Certificate of Amendment, dated October 29, 2015 to Certificate of Incorporation. (incorporated herein by reference to the Company’s Current Report on Form 8-K filed with the SEC on November 5, 2015).
4.6   Description of Securities (incorporated herein by reference to the Company’s Annual Report on Form 10-K filed with the SEC on March 8, 2022).
*31.1   Certification of Chief Executive Officer
*31.2   Certification of Chief Financial Officer
*32.1   Section 1350 Certifications
*101.1   Inline XBRL Instance Document.
*101.2   Inline XBRL Taxonomy Extension Schema Document.
*101.3   Inline XBRL Taxonomy Extension Calculation Linkbase Document.
*101.4   Inline XBRL Taxonomy Extension Definition Linkbase Document.
*101.5   Inline XBRL Taxonomy Extension Label Linkbase Document.
*101.6   Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104   Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

* Filed herewith.

† Indicates a management contract or compensation plan, contract or arrangement. Certain portions of this exhibit, that are not material and would likely cause competitive harm to the registrant if publicly disclosed, have been redacted pursuant to Item 601(b)(10) of Regulation S-K.

 

  25 

 

 

Exhibit 31.1

 

CERTIFICATION

 

I, Jerome D. Jabbour, certify that:

 

1. I have reviewed this report on Form 10-Q of Matinas BioPharma Holdings, Inc.;

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: August 9, 2023 By: /s/ Jerome D. Jabbour
  Name: Jerome D. Jabbour
  Title: Chief Executive Officer

 

   

 

 

Exhibit 31.2

 

CERTIFICATION

 

I, Keith A. Kucinski, certify that:

 

1. I have reviewed this report on Form 10-Q of Matinas BioPharma Holdings, Inc.;

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: August 9, 2023 By: /s/ Keith A. Kucinski
  Name: Keith A. Kucinski
  Title: Chief Financial Officer

 

   

 

Exhibit 32.1

 

SECTION 1350 CERTIFICATIONS

 

Pursuant to 18 U.S.C. §1350 as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, the undersigned officers of Matinas BioPharma Holdings, Inc. (the “Company”) hereby certify that to their knowledge and in their respective capacities that the Company’s quarterly report on Form 10-Q to which this certification is attached (the “Report”), fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

Date: August 9, 2023 By: /s/ Jerome D. Jabbour
  Name: Jerome D. Jabbour
  Title: Chief Executive Officer
     
Date: August 9, 2023 By: /s/ Keith A. Kucinski
  Name: Keith A. Kucinski
  Title: Chief Financial Officer

 

This certification shall not be deemed “filed” for any purpose, nor shall it be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act. A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Matinas BioPharma Holdings, Inc. and will be retained by Matinas BioPharma Holdings, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

 

   

 

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Cover - shares
6 Months Ended
Jun. 30, 2023
Aug. 04, 2023
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Document Fiscal Year Focus 2023  
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Entity File Number 001-38022  
Entity Registrant Name MATINAS BIOPHARMA HOLDINGS, INC.  
Entity Central Index Key 0001582554  
Entity Tax Identification Number 46-3011414  
Entity Incorporation, State or Country Code DE  
Entity Address, Address Line One 1545 Route 206 South  
Entity Address, Address Line Two Suite 302  
Entity Address, City or Town Bedminster  
Entity Address, State or Province NJ  
Entity Address, Postal Zip Code 07921  
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v3.23.2
Condensed Consolidated Balance Sheets - USD ($)
$ in Thousands
Jun. 30, 2023
Dec. 31, 2022
Current assets:    
Cash and cash equivalents $ 9,743 $ 6,830
Marketable debt securities 12,770 21,933
Restricted cash – security deposit 50 50
Prepaid expenses and other current assets 1,437 5,719