UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

⌧ Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended March 31, 2021

◻ Transition Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from _____ to _____.

Commission File Number: 001-37939

MARKER THERAPEUTICS, INC.

(Name of registrant in its charter)


Delaware		45-4497941
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)


3200 Southwest Freeway, Suite 2500 Houston, Texas		77027
(Address of principal executive offices)		(Zip Code)

(713) 400-6400
(Issuer’s telephone number)

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, par value $0.001 per share	MRKR	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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, non-accelerated filer, a smaller reporting company, or an emerging growth company. See definition of “accelerated filer”, “large 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 April 30, 2021, the Company had 83,013,929 shares of common stock issued and outstanding.

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		Page

PART I – FINANCIAL INFORMATION		1

Item 1.	Financial Statements (Unaudited)	1

	Condensed Consolidated Balance Sheets as of March 31, 2021 and December 31, 2020	1

	Condensed Consolidated Statements of Operations for the three months ended March 31, 2021 and 2020	2

	Condensed Consolidated Statement of Stockholders' Equity for the three months ended March 31, 2021 and 2020	3

	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2021 and 2020	4

	Notes to Condensed Consolidated Financial Statements	5

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	13

Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	18

Item 4.	Controls and Procedures.	19

PART II – OTHER INFORMATION		19

Item 1.	Legal Proceedings.	19

Item 1A.	Risk Factors.	19

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	19

Item 3.	Defaults Upon Senior Securities.	19

Item 4.	Mine Safety Disclosure.	20

Item 5.	Other Information.	20

Item 6.	Exhibits.	20

Signatures		21

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

MARKER THERAPEUTICS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)


	March 31,		December 31,
	2021		2020
ASSETS
Current assets:
Cash and cash equivalents	$	64,507,575	$	21,352,382
Prepaid expenses and deposits		1,962,924		2,057,924
Other receivables		1,000,867		1,000,559
Total current assets		67,471,366		24,410,865
Non-current assets:
Property, plant and equipment, net		10,298,225		3,570,736
Construction in progress		—		6,789,098
Right-of-use assets, net		10,592,490		10,844,116
Total non-current assets		20,890,715		21,203,950

Total assets	$	88,362,081	$	45,614,815

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	3,674,259	$	6,013,010
Lease liability		473,077		388,792
Total current liabilities		4,147,336		6,401,802
Non-current liabilities:
Lease liability, net of current portion		11,719,826		11,868,440
Total non-current liabilities		11,719,826		11,868,440

Total liabilities		15,867,162		18,270,242

Commitments and contingencies (see Note 10)		—		—

Stockholders' equity:
Preferred stock - $0.001 par value, 5 million shares authorized and 0 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively		—		—
Common stock, $0.001 par value, 150 million shares authorized, 83.0 million and 50.7 million shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively		83,014		50,731
Additional paid-in capital		437,430,839		383,533,326
Accumulated deficit		(365,018,934)		(356,239,484)
Total stockholders' equity		72,494,919		27,344,573

Total liabilities and stockholders' equity	$	88,362,081	$	45,614,815

See accompanying notes to these unaudited condensed consolidated financial statements.

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MARKER THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)


	For the Three Months Ended
	March 31,
	2021		2020
Operating expenses:
Research and development	$	5,643,029	$	3,816,618
General and administrative		3,137,958		2,826,995
Total operating expenses		8,780,987		6,643,613
Loss from operations		(8,780,987)		(6,643,613)
Other income (expense):
Change in fair value of warrant liabilities		—		31,000
Interest income		1,537		126,969
Net loss	$	(8,779,450)	$	(6,485,644)

Net loss per share, basic and diluted	$	(0.16)	$	(0.14)
Weighted average number of common shares outstanding, basic and diluted		56,470,247		46,084,383

See accompanying notes to these unaudited condensed consolidated financial statements.

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MARKER THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(UNAUDITED)


								Total
	Common Stock			Additional Paid-		Accumulated		Stockholders’
	Shares	Par value		in Capital		Deficit		Equity
Balance at January 1, 2021	50,731,072	$	50,731	$	383,533,326	$	(356,239,484)	$	27,344,573
Issuance of common stock for cash (net of offering costs of $3.9 million)	32,282,857		32,283		52,520,475		—		52,552,758
Stock-based compensation	—		—		1,377,038		—		1,377,038
Net loss	—		—		—		(8,779,450)		(8,779,450)
Balance at March 31, 2021	83,013,929	$	83,014	$	437,430,839	$	(365,018,934)	$	72,494,919


								Total
	Common Stock			Additional Paid-		Accumulated		Stockholders’
	Shares	Par value		in Capital		Deficit		Equity

Balance at January 1, 2020	45,728,831	$	45,728	$	371,573,909	$	(327,533,414)	$	44,086,223
Warrants exercised for cash	458,334		459		549,541		—		550,000
Issuance of common stock as commitment fee for future financing	345,357		345		(345)		—		—
Stock-based compensation	—		—		1,344,592		—		1,344,592
Net loss	—		—		—		(6,485,644)		(6,485,644)
Balance at March 31, 2020	46,532,522	$	46,532	$	373,467,697	$	(334,019,058)	$	39,495,171

See accompanying notes to these unaudited condensed consolidated financial statements.

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MARKER THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)


	For the Three Months Ended
	March 31,
	2021		2020
Cash Flows from Operating Activities:
Net loss	$	(8,779,450)	$	(6,485,644)
Reconciliation of net loss to net cash used in operating activities:
Depreciation and amortization		502,743		35,265
Changes in fair value of warrant liabilities		—		(31,000)
Stock-based compensation		1,377,038		1,344,592
Amortization on right-of-use assets		251,626		47,361
Changes in operating assets and liabilities:
Prepaid expenses and deposits		95,000		(189,650)
Other receivables		(308)		31,584
Accounts payable and accrued expenses		(2,442,581)		1,197,613
Lease liability		(64,329)		(49,187)
Net cash used in operating activities		(9,060,261)		(4,099,066)
Cash Flows from Investing Activities:
Purchase of property and equipment		(441,134)		(99,821)
Net cash used in investing activities		(441,134)		(99,821)
Cash Flows from Financing Activities:
Proceeds from issuance of common stock, net		52,656,588		—
Proceeds from exercise of warrants		—		550,000
Net cash provided by financing activities		52,656,588		550,000
Net increase (decrease) in cash		43,155,193		(3,648,887)

Cash and cash equivalents at beginning of the period		21,352,382		43,903,949
Cash and cash equivalents at end of the period	$	64,507,575	$	40,255,062


	For the Three Months Ended
	March 31,
	2021		2020
Supplemental schedule of non-cash financing activities:
Offering cost not yet paid	$	103,830	$	—
Reclassifications between construction in progress and fixed assets	$	6,789,098	$	—
Issuance of common stock as commitment fee for future financing	$	—	$	345

See accompanying notes to these unaudited condensed consolidated financial statements.

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MARKER THERAPEUTICS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2021

(Unaudited)

NOTE 1: NATURE OF OPERATIONS

Marker Therapeutics, Inc., a Delaware corporation (the “Company” or “we”), is a clinical-stage immuno-oncology company specializing in the development and commercialization of novel T cell-based immunotherapies and innovative peptide-based vaccines for the treatment of hematological malignancies and solid tumor indications. The Company’s MultiTAA T cell technology is based on the selective expansion of non-engineered, tumor-specific T cells that recognize tumor associated antigens, which are tumor targets, and kill tumor cells expressing those targets. These T cells are designed to recognize multiple tumor targets to produce broad spectrum anti-tumor activity.

NOTE 2: BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and pursuant to the instructions to Form 10-Q and Article 8 of Regulation S-X of the Securities and Exchange Commission (“SEC”) and on the same basis as the Company prepares its annual audited consolidated financial statements. In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation of such interim results.

The results for the condensed consolidated statement of operations are not necessarily indicative of results to be expected for the year ending December 31, 2021 or for any future interim period. The condensed consolidated balance sheet at March 31, 2021 has been derived from unaudited financial statements; however, it does not include all of the information and notes required by U.S. GAAP for complete financial statements. The accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements for the year ended December 31, 2020 and notes thereto included in the Company’s annual report on Form 10-K filed on March 9, 2021.

NOTE 3: LIQUIDITY AND FINANCIAL CONDITION

As of March 31, 2021, the Company had cash and cash equivalents of approximately $64.5 million. The Company’s activities since inception have consisted principally of acquiring product and technology rights, raising capital, and performing research and development. Successful completion of the Company’s development programs and, ultimately, the attainment of profitable operations are dependent on future events, including, among other things, its ability to access potential markets; secure financing; successfully progress its product candidates through preclinical and clinical development; obtain regulatory approval of one or more of its product candidates; maintain and enforce intellectual property rights; develop a customer base; attract, retain and motivate qualified personnel; and develop strategic alliances and collaborations. From inception, the Company has been funded by a combination of equity and debt financings.

On March 16, 2021, the Company issued an aggregate of 32,282,857 shares of its common stock, for net proceeds of $52.6 million.

The Company expects to continue to incur substantial losses over the next several years during its development phase. To fully execute its business plan, the Company will need to complete certain research and development activities and clinical trials. Further, the Company’s product candidates will require regulatory approval prior to commercialization. These activities will span many years and require substantial expenditures to complete and may ultimately be unsuccessful. Any delays in completing these activities could adversely impact the Company. The Company plans to meet its capital requirements primarily through issuances of debt and equity securities and, in the longer term, revenue from sales of its product candidates, if approved.

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Based on the Company’s clinical and research and development plans and its timing expectations related to the progress of its programs, the Company expects that its cash and cash equivalents as of March 31, 2021 will enable the Company to fund its operating expenses and capital expenditure requirements into the first quarter of 2023. The Company has based this estimate on assumptions that may prove to be wrong, and the Company could utilize its available capital resources sooner than it currently expects. Furthermore, the Company’s operating plan may change, and it may need additional funds sooner than planned in order to meet operational needs and capital requirements for product development and commercialization. Because of the numerous risks and uncertainties associated with the development and commercialization of the Company's product candidates and the extent to which the Company may enter into additional collaborations with third parties to participate in their development and commercialization, the Company is unable to estimate the amounts of increased capital outlays and operating expenditures associated with its current and anticipated clinical trials. The Company’s future funding requirements will depend on many factors, as it:

●	initiates or continues clinical trials of its product candidates;

●	continues the research and development of its product candidates and seeks to discover additional product candidates;

●	seeks regulatory approvals for any product candidates that successfully complete clinical trials;

●	maintains and enforces intellectual property rights;

●	establishes sales, marketing and distribution infrastructure and scale-up manufacturing capabilities to commercialize any product candidates that may receive regulatory approval;

●	evaluates strategic transactions the Company may undertake; and

●	enhances operational, financial and information management systems and hires additional personnel, including personnel to support development of product candidates and, if a product candidate is approved, commercialization efforts.

In addition to the foregoing, based on the Company’s current assessment, the Company does not expect any material impact on its long-term liquidity due to the COVID-19 pandemic. However, the Company will continue to assess the effect of the pandemic on its operations, including its clinical programs. The extent to which the COVID-19 pandemic will impact the Company’s business and operations will depend on future developments that are highly uncertain and cannot be predicted with confidence, such as the ultimate geographic spread of the disease, the duration of the outbreak, the duration and effect of business disruptions and the short-term effects and ultimate effectiveness of the travel restrictions, quarantines, social distancing requirements and business closures in the United States and other countries to contain and treat the disease. While the potential economic impact brought by, and the duration of, COVID-19 may be difficult to assess or predict, a widespread pandemic could result in significant disruption of global financial markets, reducing the Company’s ability to access capital, which could in the future negatively affect the Company’s liquidity. In addition, a recession or market correction resulting from the spread of COVID-19 could materially affect the Company’s business and the value of its common stock.

NOTE 4: SIGNIFICANT ACCOUNTING POLICIES

New Accounting Standards

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) or other standard setting bodies that the Company adopts as of the specified effective date. Unless otherwise discussed, the Company does not believe that the impact of recently issued standards that are not yet effective will have a material impact on its financial position or results of operations upon adoption.

Recent Accounting Standards Adopted in the Year

Income Taxes

In December 2019, the FASB issued ASU No. 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted. The Company has adopted the new standard effective January 1, 2021 and has concluded that the adoption of this standard did not have a material impact on its condensed consolidated financial statements and related disclosures.

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NOTE 5: NET LOSS PER SHARE

Basic loss per common share is computed by dividing net loss by the weighted average number of common shares outstanding during the reporting period. Diluted loss per common share is computed similarly to basic loss per common share except that it reflects the potential dilution that could occur if dilutive securities or other obligations to issue common stock were exercised or converted into common stock.

The following table sets forth the computation of net loss per share for the three months ended March 31, 2021 and 2020, respectively:


	For the Three Months Ended
	March 31,
	2021		2020
Numerator:
Net loss	$	(8,779,450)	$	(6,485,644)

Denominator:
Weighted average common shares outstanding		56,470,247		46,084,383

Net loss per share:
Basic and diluted	$	(0.16)	$	(0.14)

The following securities, rounded to the nearest thousand, were not included in the diluted net loss per share calculation because their effect was anti-dilutive for the periods presented:


	For the Three Months Ended
	March 31,
	2021	2020
Common stock options	7,490,000	6,291,000
Common stock purchase warrants	20,830,000	21,381,000
Potentially dilutive securities	28,320,000	27,672,000

NOTE 6: OTHER RECEIVABLES

Pursuant to the Company’s lease agreement for its manufacturing facility, the Company incurred and paid for the construction invoices directly for both the structural improvements of the facility and the building of the manufacturing modular cleanroom (i.e. leasehold improvements and manufacturing equipment). In accordance with the agreement, upon completion of the facility’s construction, the Company was owed up to $1.0 million as reimbursement, and as such a landlord receivable was recorded, which provides for a legal right to receive construction reimbursements from the landlord for tenant improvement allowances. During the fiscal year ended 2020, the Company recorded a $1.0 million receivable in its condensed consolidated financial statements. The Company received the $1.0 million reimbursement in April 2021.

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NOTE 7: PROPERTY AND EQUIPMENT

Property and equipment consist of the following as of March 31, 2021 and December 31, 2020, respectively:


		March 31,		December 31,
	Estimated Useful Lives	2021		2020
Lab and manufacturing equipment	5 Years	$	6,661,000	$	2,360,000
Computers, equipment and software	3-5 Years		897,000		835,000
Office furniture	5 Years		678,000		678,000
Leasehold improvements	Lesser of lease term or estimated useful life		3,156,000		289,000
Total			11,392,000		4,162,000
Less: accumulated depreciation			(1,094,000)		(591,000)
Construction in progress			—		6,789,000
Total fixed assets, net		$	10,298,000	$	10,360,000

In June 2020, the Company entered into a lease for a manufacturing facility in Houston, Texas. In connection with the manufacturing facility, the Company has incurred costs pursuant to an agreement with a vendor to design, engineer, build and eventually install modular cleanrooms in a manufacturing facility. $6.8 million was recorded in fixed assets - construction in progress on the balance sheet as of December 31, 2020. The completion of the facility’s construction occurred during December 2020 and the Company received its certificate of occupancy in January 2021, and as such was placed into service in January 2021. During January 2021, $4.0 million of the costs previously recorded as construction in progress were recorded to lab and manufacturing equipment and $2.8 million were recorded to leasehold improvements.

Depreciation expense for the three months ended March 31, 2021 and 2020 was approximately $0.5 million and $0.03 million, respectively.

NOTE 8: LEASES

The Company leases manufacturing, research and administrative facilities under operating leases. The Company evaluates its contracts to determine if an arrangement is a lease at inception and classify it as a finance or operating lease. Currently, all of the Company’s leases are classified as operating leases. Leased assets and corresponding liabilities are recognized based on the present value of the lease payments over the lease term. The lease terms may include options to extend when it is reasonably certain that the Company will exercise that option.

Topic ASC 842 requires the Company to recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. Right-of-use assets are recorded in other assets on the Company’s condensed consolidated balance sheets. Current and non-current lease liabilities are recorded in other accruals within current liabilities and other non-current liabilities, respectively, on its condensed consolidated balance sheets. Costs associated with operating leases are recognized on a straight-line basis within operating expenses over the term of the lease.

As of March 31, 2021, the Company had total operating lease liabilities of approximately $12.2 million and right-of-use assets of approximately $10.6 million, which were included in the condensed consolidated balance sheet.

Such leases do not require any contingent rental payments, impose any financial restrictions, or contain any residual value guarantees. Certain of the Company’s leases include renewal options and escalation clauses; renewal options have not been included in the calculation of the lease liabilities and right-of-use assets as the Company is not reasonably certain to exercise the options. Variable expenses generally represent the Company’s share of the landlord’s operating expenses. The Company does not act as a lessor or have any leases classified as financing leases.

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The following summarizes quantitative information about the Company’s operating leases for the three months ended March 31, 2021 and 2020, respectively:


	For the Three Months Ended
	March 31,
	2021		2020
Operating lease expense summary:
Operating lease expense	$	425,000	$	55,000
Short-term lease expense		—		19,000
Variable lease expense		133,000		15,000
Total	$

SEC Form 10-Q filed by Marker Therapeutics, Inc.