Matinas Biopharma Holdings, Inc.

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Welcome to the Matinus Biopharma Third Quarter 2023 Financial Results Conference Call. Currently, all participants are in a listen-only mode. Following management's prepared remarks, we will hold a Q&A session. To ask a question at that time, please press the star key followed by the number 1 on your touchtone phone. If anyone has difficulty hearing the conference, please press star zero for operator assistance. As a reminder, this conference is being recorded. I would now like to turn the conference over to Jody Kane. Please go ahead.

This is Jody Kane with LHA Investor Relations. Thank you for participating in today's call. Joining me from Martinez Biopharma are Jerry Jabbour, Chief Executive Officer of Dr. Terry Matkovic, Chief Development Officer, Dr. Terry Ferguson, Chief Medical Officer, and Keith Katynski, Chief Financial Officer. Tom Hoover, the company's Chief Business Officer, will be available to answer questions during the Q&A session. I'd like to remind listeners that remarks made during this call may state management's future intentions, hopes, beliefs, expectations, and projections. These are forward-looking statements that involve risks and uncertainties. Forward-looking statements are made pursuant to the safe harbor provisions of the federal securities laws. These forward-looking statements are based on Matinus Biopharma's current expectations, and actual results could differ materially. As a result, you should not place undue reliance on any forward-looking statements. Some of the factors that could cause actual results to differ materially from those contemplated by such forward-looking statements are discussed in the periodic report. Martinez Biopharma files with the Securities and Exchange Commission. These documents are available in the investor section of the company's website and on sec.gov. Furthermore, the content of this conference call contains information that is accurate only as of the date of the live broadcast, November 8th, 2023. Bettina's Biopharma undertakes no obligation to revise or update any statements to reflect events or circumstances, except as required by law. And now I'd like to turn the call over to Jerry Jabbour. Jerry?

Thank you, Jodi. Good afternoon, everyone, and thank you for joining us. There's been a tremendous amount of activity and industry attention on our company during the past few months. Much of this attention has been rightfully focused on our lead asset, MAT2203. We are very excited about the consistent positive clinical results for MAT2203 and our compassionate expanded use access program and the demonstration that MAT2203 can be a life-saving drug in patients with limited or no treatment options. Our LNC platform has afforded the opportunity to take amphotericin B, the most powerful and broad spectrum antifungal drug that has historically been saddled with severe toxicity issues and inconvenient administration, and create a safe and convenient product that has the potential to change the treatment paradigm for invasive fungal infections. Whether it has been saving the life of a young girl with AML, suffering from both mucor and aspergillosis, or achieving complete clinical resolution of a Candida Crusae infection in a 61-year-old male with a history of diabetes, kidney disease, lung disease, and heart disease, After just two weeks of treatment, MAT2203 has become an invaluable lifeline for patients. The patients in our Compassionate Expanded Use Access program are very similar to those we're intending to treat in Phase 3. Each patient successfully treated with MAT2203 increases our confidence for our proposed Phase 3 clinical trial. Earlier today, we announced that our recent FDA meeting was very successful in three key areas. FDA supported our intended target patient population with a step-down study design. Second, FDA formally acknowledged that MAT2203 is a potential candidate for registration under the LPAD pathway. And third, FDA expressed a willingness to accept a superiority composite primary endpoint. Dr. Makovits will go into more detail on all these areas in a moment, but it's important to emphasize that the potential to move away from a non-inferiority endpoint to a composite superiority endpoint is a significant win and something that could position MAT2203 for a much stronger label. And a stronger label brings with it a much more significant commercial market opportunity. We're grateful for our ongoing constructive dialogue with the FDA and look forward to finalizing the composite superiority endpoint as soon as possible. Earlier this week, we reported new in vivo data demonstrating the therapeutic efficacy of an oral LNC formulation of docetaxel. Building on successful in vitro demonstrations that our LNCs get taken up by tumor cells, these in vivo results were a big step forward for our delivery platform, taking us beyond our clinical success in infectious diseases and providing proof of principle that orally administered LNCs can effectively target large tumors and successfully deliver small molecule therapeutics. We have also advanced our internal oral LNC small oligonucleotide program and are excited to have documented biological activity in the form of cytokine knockdown and some early evidence of tangible clinical benefit in an imiquimod-induced murine psoriasis disease model. We have additional ongoing in vivo studies of LNC-formulated small oligonucleotides in inflammatory disease models and we expect data later in the fourth quarter. Dr. Ferguson will provide more details on our LNC platform work a bit later in the call. Overall, the team is very pleased with our recent progress. We are energized by the continued clinical validation with MAT2203 and FDA dialogue and excited by the potential expansion of the LNC platform into areas such as inflammation and perhaps most interestingly, cancer. I'll have additional comments on the financial picture and outlook later in the call following our CFO's review of our Q3 financial results. For now, I would like to turn the call over to Dr. Makovits to expand on our MAT2203 update. Terry?

Thanks, Jerry, and good afternoon, everyone. As Jerry mentioned, we held a highly productive and collaborative meeting with the Division of Anti-Infectives of FDA last month that included attendance by the director of the Office of Infectious Diseases, John Farley, and his deputy director. Their participation is highly unusual at the division level, and we believe that it is a direct reflection of the FDA's interest in advancing MAT2203 towards registration. As in previous meetings with the agency, The FDA agreed that MAT2203 was most likely to be used in azole-resistant or azole-intolerant patients or in patients with limited treatment options. Clinical success in this target patient population continues to be supported by the clinically meaningful outcomes seen in patients receiving MAT2203 in our Compassionate Use Expanded Access Program. in which patients with no other treatment options are receiving MAT2203 for treatment of multiple fungal infections in multiple different tissues, highlighting the ability of MAT2203 to safely target and effectively eradicate a variety of severe and potentially deadly invasive fungal infections in the most challenging clinical circumstances. During our meeting with the FDA, there was general agreement on the main elements of the Phase III study design for the treatment of invasive aspergillosis in patients with limited treatment options. The FDA confirmed that MAT2203 may be a candidate for the limited population pathway for antifungal and antibacterial drugs, or LPAD. Labeling for drugs under the LPAD pathway conveys that the approval is based on a benefit-risk assessment that more flexibly considers the severity, rarity, or prevalence of the particular infection the drug is intended to treat and the lack of alternatives available for the patient population. Under the LPAD registration and approval pathway, MAT2203 would continue to qualify for QIDP incentives under the FDA priority review and fast track designation, as well as orphan drug exclusivities that could allow for 12 years of exclusivity protection in the US and possibly 10 years in the EU. MAT2203 could also potentially still be eligible for consideration for breakthrough designation. A significant discussion point during the meeting with FDA centered around the statistical assumptions regarding the primary endpoint for the Phase III study in a non-inferiority trial design. Particularly important was having the FDA spontaneously express openness to an alternative superiority composite endpoint. One proposal we are considering for a composite endpoint includes therapeutic success consisting of mortality, partial or complete global response, and the ability to complete study treatment with no discontinuations or changes in dosing due to adverse events at day 42 that are treatment related. We believe that with this new composite superiority endpoint, MAT2203 could be optimally positioned for a favorable regulatory and commercial outcome, given the clinical data that has been generated to date in our compassionate use program, as well as the clinical experience from our completed ENACT trial. The study protocol with the new composite endpoint is being finalized and will be submitted to FDA for alignment in the next few weeks. The company believes that a superiority composite endpoint would not change the projected study size, which we believe will be less than 200 patients, or enrollment timeline, which we believe could be 22 to 24 months. Given the substantially better safety profile of our oral MAT2203 compared with IV-administered amphotericin B seen to date, including the rate of toxicity seen with IV-administered amphotericin B in the published literature, The FDA has communicated its commitment to work with MATINAS on an off-cycle basis to finalize the Phase III protocol as soon as possible. Overall, the positive outcome of our meeting with the agency was driven by FDA's desire to put forth the best possible study design position for regulatory and commercial success, with the goal of ultimately making MAT2203 widely available to patients. We are confident that FDA's stance on this design puts us or a partner in a position of strength to launch our product with a much stronger label, which can also be built upon during the subsequent lifecycle of this product. An optimal initial label at launch, not unexpectedly, has increased partner interest in this asset. Given that we plan on addressing the highest need patients, most of whom have limited or no treatment options, We believe that our case for BARDA to assist with the funding of further clinical development of MAT2203 is quite strong. We are preparing a white paper and anticipate submitting this to BARDA following alignment with the FDA on our phase three program. The challenge with BARDA and any non-dilutive government funding can be the process and associated timelines for making a decision and funding an award. However, we remain hopeful that the compelling unmet need in this patient population might accelerate this process. Circling back to our Compassionate Use and Expanded Access program, since instituting this program over a year ago, we have received inbound requests from physicians at the NIH, University of Michigan, Nationwide Children's Hospital, and Johns Hopkins, amongst others. They've contacted us on behalf of patients who have experienced significant renal toxicity while receiving IV amphotericin B and or have not responded to or are unable to tolerate azoles or other classes of antifungals. A total of 12 patients have been enrolled in this program to date. In October, we announced that a 61-year-old male with a challenging medical history achieved complete clinical resolution of a Candida cruciae infection following only two weeks of treatment with MAT2203. Treatment with IV amphotericin B deoxycholate was discontinued due to renal toxicity, and the patient was transitioned to MAT2203, which was well-tolerated with no adverse effects. Treatment with MAD-2203 also led to improvement of his kidney function to baseline. Earlier this month, another patient was enrolled in this program at Vanderbilt University Medical Center. This patient is suffering from a CNS-based fusarium infection and required transition from IV amphotericin due to significant electrolyte abnormalities. Once electrolytes are stabilized, this patient should be able to be discharged from the hospital to receive treatment at home. We continue to evaluate requests for access where the compassionate use of MAT2203 may help patients without other treatment options. Overall, we have a drug we believe has the potential to enact a paradigm shift in the treatment of invasive fungal infections. We are focused on submitting and gaining final agreement with FDA on our Phase III study, and the potential for an advantageous composite primary endpoint is a significant development for this drug. Once aligned, we look forward to progressing into our Phase III trial as quickly as possibly thereafter. I'd like to now turn the call over to Dr. Ferguson, our Chief Medical Officer. Terry?

Thanks, Terry, and good afternoon, everyone. Today, I'll provide an update on initial results from our work in two important therapeutic areas, oncology and inflammation. Specifically, I'll review our in vivo results with an LNC small molecule formulation in oncology and share recent additional in vivo data highlighting our LNC platform capabilities for the oral delivery of small oligonucleotides. First, we've progressed from earlier in vitro studies that confirmed the efficacy of an LNC formulation of docetaxel in inhibiting tumor cell growth in cell culture to our recently announced positive in vivo results with oral LNC docetaxel in a syngeneic murine melanoma model. Docetaxel is a well-known chemotherapeutic agent widely used in the management of malignant diseases. These in vivo results showed successful oral delivery docetaxel to tumors and a therapeutic response that was comparable to that of conventional IV docetaxel. In this study, mice who developed melanoma tumors in response to injected murine tumor cells, oral LNC docetaxel given daily showed significant reductions in tumor volume compared with untreated controls, with mean reductions at least two weeks, at two weeks, of 63% with high-dose oral LNCs and 57% with lower-dose oral LNCs. This compares favorably with 68% reductions with IV docetaxel. Similar significant reductions in tumor weight were noted with the oral LNCs. Importantly, no systemic toxicities were noted with nine days of daily oral treatment with LNC docetaxel. Body weight was stable over the treatment duration, and hematologic parameters were similar to untreated controls. These encouraging results confirm our belief that phosphatidylserine expression on the outer surface of tumor cells presents a targeting opportunity for potential future oncology applications with our LNC platform. Next, I'd like to highlight recent data from our oral small oligonucleotide program. Building on previously shared work in human whole blood that showed avid uptake of LNCs by macrophages, dendritic cells, neutrophils, and some T-cell subtypes, we have been investigating a variety of LNC formulations of two small oligonucleotides. designed to knock down the production of the inflammatory cytokines IL-17A and TNF-alpha. Similar to our work with docetaxel, initial in vitro studies verified that LNC formulations of these two oligonucleotides were able to consistently knock down IL-17A and TNF-alpha in cell culture. More recently, we have evaluated the in vivo biologic activity of orally administered LNC formulations of these oligonucleotides in a series of studies in a murine model using both high-potency and lower-potency lipopolysaccharide, or LPS, stimulation. The LPS model is an acute inflammatory model in which healthy animals are injected with LPS, in a severe acute inflammatory response. This model is commonly used to evaluate the biologic effect of therapies targeting cytokines in the inflammatory cascade. Biologic activity is usually measured by reductions in the levels of the targeted cytokines. Initial LPS studies of varying doses of an IL-17A targeted LNC using lower potency stimulation documented substantial IL-17A knockdown, with about 40% of animals showing complete knockdown. More recent studies with more potent LPS stimulation have shown lesser degrees of knockdown. Similar studies with an oral LNC formulation of an oligonucleotide blocking the formation of TNF-alpha are ongoing. These preliminary studies provide evidence supporting biological activity of orally administered LHC formulations of small oligonucleotides. However, additional work will be necessary to clarify the strength and time course of cytokine inhibition for both IL-17A and TNF-alpha, and to determine whether the level of cytokine knockdown achievable with orally administered small oligos will be sufficient to provide clinical benefit in disease models where targeting these cytokines can play a meaningful therapeutic role. To this end, we have recently conducted preliminary in vivo studies with an oral LNC formulation in a murine imiquimod-induced psoriasis model. In this model, an irritant imiquimod was applied daily to the skin of healthy mice, resulting in a pathological picture closely resembling human psoriatic lesions. Importantly, blocking IL-17A with monoclonal antibodies has been associated with improvement in the severity of skin lesions in both this model and in human psoriasis. Similar to the LPS model, the severity of the response is proportional to the amount and duration of imiquimod exposure. An initial pilot study evaluated our oral LNC formulation of the anti-IL-17A oligonucleotide in a high-dose imiquimod model and identified reductions in skin IL-17A mRNA expression in comparison to treatment with imiquimod alone. thus confirming the biological activity of an orally administered small oligonucleotide in a disease model. More recent studies in a lower-dose imiquimod model have provided additional evidence of associated clinical benefit with qualitative improvements in skin lesion appearance, such as redness and scaling of the lesions. Additional in vivo studies evaluating the therapeutic potential of oral LNC knockdown of both IL-17A and TNF-alpha are ongoing in other disease models, with data readouts expected in the fourth quarter of this year. With those comments, I'd like to turn the call over to Keith Kosinski, our Chief Financial Officer, to review our financial performance. Keith?

Thank you, Terry. Starting today with our third quarter results, We reported zero revenue for the third quarter of 2023, whereas in the third quarter of 2022, we reported revenue of $1.1 million, which was generated from our research collaboration with BioNTech. Total costs and expenses for the third quarter of 2023 were $6.1 million, which compares with $6.5 million for the third quarter of 2022. The decrease was primarily attributable to lower manufacturing costs of clinical trial materials, lower clinical consulting fees, and lower headcount related expenses. Our net loss for the third quarter of 2023 was $6.1 million, or 3 cents per share. This compares with a net loss for the third quarter of 2022 of $6.5 million, also 3 cents per share. Turning now to our nine-month results. Revenue for the first nine months of 2023 was $1.1 million, compared with $2.1 million for the first nine months of 2022. Total costs and expenses for the first nine months of 2023 were $19 million, compared with $21.2 million for the first nine months of 2022. The company's net loss for the first nine months of 2023 was $17.6 million or 8 cents per share. This compares with the net loss for the first nine months of 2022 of $17.4 million, also 8 cents per share. Cash, cash equivalents and marketable securities as of September 30th, 2023 were $18.2 million. Based on current projections, we believe our cash is sufficient to fund planned operations into the third quarter of 2024. We are actively seeking to extend our cash runway by securing non-dilutive funding from potential third-party development partners and government grant programs through agencies such as BARDA, as well as from potential public or private equity offerings. With that, I'll turn the call back to Jerry.

Thanks, Keith. In summary, this is a very exciting time for our company. In MAT2203, we have a late stage asset that's positioned to enter phase three. This drug is supported by robust, positive clinical data and a regulatory and clinical trial strategy designed to potentially provide superiority data on a composite endpoint and potentially line up for registration under the advantageous LPAD pathway. The combination of focusing treatment with MAT2203 on an orphan patient population with a superiority composite primary endpoint is designed to maximize commercial potential while filling what is perhaps the biggest current unmet need in the treatment of deadly invasive fungal infections. Further supported by the potential for 12 years of market exclusivity upon approval, should not be a surprise that partner interest in MAT2203 has increased significantly over the last month or so. Our goal is to use the recent FDA dialogue and clarity to accelerate these discussions and identify the ideal partner or partners for this drug, which will allow us to fully fund and commence phase three as soon as possible and ensure that the right commercial partner is in place to maximize that opportunity. Given the uncertain and volatile capital markets, our primary objective is to extend our cash runway in a non-dilutive manner, and we believe the elements are now in place to forge a meaningful partnership. Also, as we continue to generate potential LNC platform expanding data in areas like inflammation and cancer, both with small molecules and orally available small oligonucleotides, we remain open to the right partnerships with companies looking to apply our unique and proprietary delivery technology to their molecules. Additionally, we will look for opportunities to selectively access the capital markets if the terms make sense for our company and our stockholders based upon the expected advancement of our technology and the generation of additional compelling data. Finally, We would like to thank our stockholders for their support at our recent annual meeting of stockholders held on November 1st, and for successfully passing each of the four proposals in our proxy statement. One of the key proposals for the company was obtaining shareholder approval for authorization of our board of directors to potentially implement a reverse split of our stock over the next year. Although in September we received a notice of noncompliance from NYSE due to our low share price, Recent progress and accompanying increase in valuation have positioned us to potentially regain compliance organically. As a result, there are no immediate plans to consider a reverse split of our stock. Moving forward, our board will only consider affecting a reverse split if it seemed to be in the best interest of our stockholders and our company. Overall, we continue to focus our efforts and resources on maximizing the potential for MAT2203 and on generating additional data with our LNC platform in areas where we believe our technology is differentiated and can create distinct advantages over currently available therapies. We are intent on closing 2203 very strong and remain thankful for your ongoing support. With that review, I'll now turn the call over to the operator for Q&A. Chloe?

As a reminder, if you wish to register to ask a question in today's Q&A session, you will need to press star then the number one on your telephone. If your question has been answered and you wish to withdraw your polling request, you may do so by pressing the star then number two on your telephone keypad. If you are using a speakerphone, please pick up your handset before entering your request. One moment, please, for the first question.

While we're waiting for the first question, I would like to mention that we will be holding meetings with investment professionals during the 2024 JPMorgan Healthcare Conference being held January 8 to 11 in San Francisco. If you are interested in scheduling a meeting, please contact LHA Investor Relations. Okay, Chloe, I think we're ready for that first question.

Perfect. We'll move first to Julian Harrison with BTIG. Your line is open.

Hi. Congrats on the progress, and thank you for taking my questions. First, great to hear about the FDA's openness to a superiority trial. I'm curious if this maybe will involve any changes to the comparator arm, and if not, can you just remind us of the plan there? And then also, can you just remind us of the corresponding market opportunity here in azole-resistant or intolerant invasive aspergillosis?

Sure. Julian, thanks for your question. For the first part of that question, I'll turn it over to Dr. Machemitz to talk about, you know, the design and specifically the control arm and how our recent dialogue can impact that. Terry?

Sure, thanks, Julian. So our fundamental trial design has not changed. The target patient population for the trial will still be patients with invasive aspergillosis with limited treatment options, so patients who cannot receive a nasal for reasons of intolerance, drug-drug interactions, or issues of resistance. So all of the patients will start with IV amphotericin, and once they are deemed appropriate for oral step-down, The patients will be randomized two-thirds to treatment with MAT2203 as step-down. The remaining one-third of the patients will continue on IV amphotericin until they are no longer able to tolerate upon which a decision will have to be made by the treating physician to manage the relevant drug-drug interactions if an azole would be the only other treatment option for the patient. So this very much is reflective of the patients that are currently being treated with IV Amphotericin in our Compassionate Use Access Program.

So, and just to add to that, Julian, I think one of the benefits is that the control arm is not changing. And that's important when you think about this as a composite endpoint. You know, you would be ordinarily, you don't see a superiority endpoint certainly in an antifungal trial, and certainly you wouldn't exercise a superior, you wouldn't add a superiority endpoint if you were just going head-to-head, for example, in all-cause mortality with IV amphotericin versus oral amphotericin. But what the composite endpoint does, especially being able to define it as therapeutic success and include a change in treatment regimen, for example, you're going to have a control arm in this study where any change from IV amphotericin in the control arm is going to be viewed as a failure potentially. And you're going to contrast that with oral MAT 2203, which we've seen in other instances in other patients, can be given for long periods of time without the toxicity seen with IV amphotericin, which is exactly what necessitates a change in therapy. So we'll see how that dialogue goes. with FDA, but this is the unique position that MAT 2203 is in. And what we really bring to the table here is that safety element and allowing amphotericin B to be used for long periods of time. That's the goal. And ideally you wouldn't change the control arm at all. We don't have to. And that's why we think a composite superiority endpoint is really a significant step forward for the program. And then in terms of the market, you know, you're looking at here an orphan population in and of itself with invasive aspergillosis. We're targeting initially patients with limited treatment options. There are about 15 to 16,000 patients annually in the U.S. that are invasive aspergillosis patients. About a third of those would fall into the category of patients with limited treatment options, meaning that they can't, they're resistant to azole therapy. They can't take a nasal because of drug to drug interaction, you know, with other medications that they're taking that happens a lot in the cancer arena. And so the value of that population right now is the fact that it's orphaned and they have no other alternatives. So you are looking at an opportunity where if you layer on some of the pharmacoeconomic impact that we believe we can bring in getting patients out of the hospital in treating their fungal infections, it becomes a significant opportunity. You know, we estimate, you know, conservatively with the help of outside groups, that that could be, you know, a $300 million market alone in the U.S. just for that limited patient population. A lot of that will be dependent upon the data we see in phase three and discussions with payers. But that's where the matchup of an orphan patient population and a superiority endpoint, which you haven't seen recently, in these antifungal trials is really the ideal set of circumstances to then have, you know, pretty productive discussions with payers, where in this patient population, they're typically not going to get in the way of the infectious disease doctor's desire to treat these patients and save their lives. So we think it's a big commercial opportunity for this indication alone. And then remember, this is a pipeline and a product, and there is an opportunity with the pharmacodynamic bridge established by this phase three program to quickly move into other invasive fungal infections with limited, you know, clinical trials necessary. So it's important that you start with a strong foundation, and that's why we're so excited by what Dr. Makovits and her team have been able to achieve so far with FDA. We have a little bit further to go to finalize that endpoint, but obviously a big change from non-inferiority to superiority.

Excellent. Very helpful. One final question, if I may. The potential LPAD designation, I'm wondering how soon that might be confirmed. Is that something you expect clarity on, on or around regulatory submission, or perhaps earlier?

The way LPAD works, it's not like getting a special protocol assessment. LPAT is a termination made at the time of NDA filing, at the time of NDA approval. It gives the agency the opportunity to look at the totality of the data and our ability to address that restricted patient population. But their formal feedback to us that we're a potential candidate is consistent with what they've done for other groups. Currently, there's only two products approved. on LPAD, but that'll be a review issue. But certainly with the design of this study and the target patient population, we fit well within the criteria outlined by FDA to qualify for that. But you don't expect any sort of declaration in advance. That's not how it works.

Okay, great. Thanks again for taking the questions. Thanks, Julian.

And once more, I will turn the call back to the speakers for any closing remarks.

Thanks, Chloe. Thanks to everyone for joining us today. We're thrilled with our FDA update. We're thrilled with our LNC docetaxel data. We look forward to additional data, clinical disease impact from the small oligonucleotide program. We've come a long way in 2023. We're not done. We're excited and optimistic about our company's future, and we can't wait to report additional progress over the next few months. In the meantime, we wish all of our investors and anyone listening to the call a very happy Thanksgiving holiday. Have a great night, and thanks for joining us. Take care.

This does conclude today's program. Thank you for your participation. You may disconnect at any time and have a wonderful evening.