Matinas BioPharma Holdings Inc

Condensed Consolidated Balance Sheets

(in thousands, except for share data)

Condensed Consolidated Statements of Operations and Comprehensive Loss

(in thousands, except for share and per share data)

Condensed Consolidated Statements of Stockholders’ Equity

(in thousands, except for share data)

Condensed Consolidated Statements of Cash Flow

(in thousands)

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, 2024, the Company had an accumulated deficit of $187,116. The Company’s net loss was $11,543 for the six months ended June 30, 2024.

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

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

As of June 30, 2024, the Company had cash and cash equivalents of $4,216, marketable debt securities of $10,097 and restricted cash of $250. The Company does not believe the cash, cash equivalents and marketable debt securities on hand are sufficient to fund planned operations beyond the next twelve months from the filing date of these financial statements. As a result, substantial doubt exists about the Company’s ability to continue as a going concern.

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

Note 3 –Summary of Significant Accounting Policies

Basis of presentation and principles of consolidation

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

The Company’s significant accounting policies are described in Note 3 within the Company’s Notes to Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

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

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

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

Cash, Cash Equivalents and Restricted Cash

The Company presents restricted cash with cash and cash equivalents in the Condensed Consolidated Statements of Cash Flows. Restricted cash at both June 30, 2024 and December 31, 2023 of $250 represents funds the Company is required to set aside as collateral, primarily for one of the Company’s operating leases.

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported in the Condensed Consolidated Balance Sheets to the total of the amounts in the Condensed Consolidated Statements of Cash Flows as of June 30, 2024, December 31, 2023, June 30, 2023 and December 31, 2022:

Marketable Debt Securities

The Company has classified its investments in marketable debt securities as available-for-sale and as a current asset. The Company’s investments in marketable debt securities are carried at fair value, with unrealized gains and losses included as a separate component of stockholders’ equity. Unrealized losses and gains are classified as other comprehensive (loss)/income and costs are determined on a specific identification basis. Realized gains and losses from our marketable debt securities are recorded in other income, net. The Company did not incur any realized gains and losses during the three and six months ended June 30, 2024 and 2023. For the three and six months ended June 30, 2024, the Company recorded unrealized gains of $83 and $170, respectively. For the three and six months ended June 30, 2023, the Company recorded unrealized gains of $81 and $310, respectively. As of June 30, 2024 and December 31, 2023, the Company had net accumulated unrealized losses of $51 and $221, respectively.

The following tables summarize the Company’s marketable debt securities as of June 30, 2024:

All debt securities classified as available-for-sale are due to mature within one year of June 30, 2024.

The following tables summarize the Company’s marketable debt securities as of December 31, 2023:

All debt securities classified as available-for-sale are due to mature within one year of December 31, 2023.

Note 5 -Fair Value Measurements

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

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:

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 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, 2024 and December 31, 2023:

Depreciation and amortization expense for the three and six months ended June 30, 2024 was $90 and $184, respectively, and the three and six months ended June 30, 2023 was $97 and $190, respectively. During the six month periods ended June 30, 2023, the Company purchased equipment of $202. The Company didnot purchase any equipment during the six months ended June 30, 2024.

Note 7 –Accrued Expenses and Other Liabilities

Accrued Expenses, summarized by major category, as of June 30, 2024 and December 31, 2023 consist of the following:

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 of the three month periods ended June 30, 2024 and 2023, respectively, and $452 for each of the six month periods ended June 30, 2024 and 2023, respectively. The Company incurred amortization expense on its operating lease right-of-use assets of $149 and $135 for the three months ended June 30, 2024 and 2023, respectively, and $294 and $268 for the six months ended June 30, 2024 and 2023, respectively.

Finance Leases

The Company incurred interest expense on its finance leases of $0 and $1 for the three and six months ended June 30, 2024, respectively, and $1 and $2 for the three and six months ended June 30, 2023, respectively. The Company incurred amortization expense on its finance lease right-of-use assets of $2 and $3 for the three and six months ended June 30, 2024, respectively, and $1 and $5 for the three and six months ended June 30, 2023, respectively.

The following table presents information about the amount and timing of liabilities arising from the Company’s operating leases and finance leases as of June 30, 2024:

The following table presents information about the amount and timing of liabilities arising from the Company’s operating leases and finance leases as of December 31, 2023:

Note 9 –Revenue Recognition, Collaboration Agreements and Other

The Company did not enter into any revenue recognition or collaboration agreements during the six months ended June 30, 2024.

BioNTech Research Collaboration

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

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

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

Genentech Feasibility Study Agreement

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

Note 10 –Stockholders’ Equity

Common Stock

For the six months ended June 30, 2024, the Company sold 33,551,638 shares of its common stock. On April 5, 2024, the Company closed a registered direct offering of 33,333,334 shares of its common stock and warrants to purchase up to an aggregate of 33,333,334 additional shares of common stock, at a combined purchase price of $0.30 per share and accompanying warrant. The Company generated gross proceeds of $10,000 and net proceeds of $9,190, after deducting underwriting discounts and commissions and other offering expenses. In addition, in February, the Company sold 218,304 shares of its common stock under the ATM with BTIG, LLC generating net proceeds of $54.

The Company did not sell any shares of its common stock during the six months ended June 30, 2023.

Warrants

As of June 30, 2024, the Company had outstanding warrants to purchase 33,333,334 shares of the Company’s common stock at an exercise price of $0.35 per share.

The warrants are exercisable six months after issuance date, April 5, 2024, and have afive-year term. Once exercisable, the warrants may be exercised at any time in whole or in part upon payment of the applicable exercise price until expiration of the Warrants. No fractional shares will be issued upon the exercise of the Warrants. The exercise price and the number of warrant shares purchasable upon the exercise of the warrants are subject to adjustment upon the occurrence of certain events, which may include stock dividends, stock splits, combination and reclassifications of the Company capital stock or other similar changes to the equity structure of the Company. The warrants do not have a redemption feature. They may be exercised on a cashless basis at the holder’s option and are classified as equity instruments.

The following table summarizes the changes in warrants outstanding for the six months ended June 30, 2024:

Basic and diluted net loss per common share

Net loss per share information is determined using the two-class method, which includes the weighted-average number of shares of common stock outstanding during the period and other securities.

Under the two-class method, basic net loss per share attributable to common stockholders is computed by dividing the net income attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period. Diluted net loss per share attributable to common stockholders is computed using the more dilutive of (1) the two-class method or (2) the if-converted method.

During the three and six months ended June 30, 2024 and 2023, diluted loss per common share is the same as basic loss per common share because, as the Company incurred a net loss during each period presented, the potentially dilutive securities from the assumed exercise of all outstanding stock options and warrants, would have an anti-dilutive effect. The following outstanding shares of potentially dilutive securities were excluded from the computation of diluted net loss per share because including them would have been anti-dilutive as of June 30, 2024 and 2023:

Note 11 –Accumulated Other Comprehensive Loss

The following table summarizes the changes in accumulated other comprehensive loss by component during the six months ended June 30, 2024 and 2023:

All components of accumulated other comprehensive income are net of tax.

Note 12 –Stock-based Compensation

The Company’s Amended and Restated 2013 Equity Compensation Plan (the “Plan”), which expired on May 7, 2024, provided for the granting of incentive stock options, nonqualified stock options, restricted stock units, performance units, and stock purchase rights. There were no significant modifications to the Plan during the six month periods ended June 30, 2024 and 2023. The term of the Plan was for 10 years. The Company intends to adopt a new equity compensation plan at its 2024 Annual Meeting, pending shareholder approval.

As of June 30, 2024, there were 50,712,275 awards, including both restricted stock grants and option grants, issued and exercised under the Plan and no remaining shares available for grant under the Plan.

The Company recognized stock-based compensation expense (options and restricted share grants) in its condensed consolidated statements of operations as follows:

As of June 30, 2024, total compensation costs related to unvested awards not yet recognized was $5,850 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, 2024: