Welcome to the Matinas BioPharma Second Quarter 2024 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. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to Jody Cain. Please go ahead.

This is Jody Cain with LHA. Thank you for participating in today's call. Joining me from Matinas BioPharma are Jerry Jabbour, Chief Executive Officer; and Keith Kucinski, Chief Financial Officer. Dr. Terri Matkovits, Chief Development Officer; and Dr. Terry Ferguson, Chief Medical Officer, will be available during the question-and-answer session. I'd like to remind listeners that remarks made during this call may state management's future intentions, hopes, beliefs, expectations or projections. These are forward-looking statements that involve risks and uncertainties, forward-looking statements made pursuant to the safe harbor provisions of federal securities laws. These forward-looking statements are based on current expectations, and actual results could differ materially. As a result, you should not place undue reliance on 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 reports Matinas BioPharma files with the Securities and Exchange Commission. These documents are available in the Investors 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, August 14, 2024. Matinas 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, Jody. Good afternoon, everyone, and thank you for joining us. We're pleased to begin today's call by reporting that we have signed a non-binding term sheet for the licensing of global rights to develop, manufacture and commercialize MAT2203. Our ongoing constructive dialogues to partner this oral formulation of the potent yet toxic antifungal amphotericin B cover not only the initial indication of patients with invasive aspergillosis with limited or no treatment options, but potentially all future treatment indications. We believe we have identified the right partner to maximize MAT2203's value in multiple territories. Our discussions have been quite productive and have covered a wide range of topics from development strategy and commercial manufacturing to regulatory and commercial positioning. We should state that this is a non-binding term sheet, and there is no guarantee that it will result in a definitive agreement, but we are very encouraged by this progress. Partnering this life-changing asset has been our top priority, and we've now taken a significant step forward in that process. We have confidence that we are on a path to placing this asset in highly capable hands, which is in the best interest of our company and our shareholders. Preparations are ongoing to enable the ORALTO Phase 3 registration trial with MAT2203 to initiate as soon as possible following the consummation of a partnership agreement. In the meantime, we continue to build real-world clinical evidence supporting MAT2203 in a variety of challenging and life-threatening fungal infections through our Compassionate/Expanded Use Access Program. In this program, MAT2203 has continuously demonstrated its potential to achieve positive clinical outcomes even in critically-ill patients and to do so safely. Since our last public update on June 24, seven additional patients ranging in age from 15 to 71 have gained access to oral MAT2203…

Thank you, Jerry. And good afternoon. Today, the company reported its financial results for the second quarter of 2024, which reflected a net loss of $5.7 million, or $0.02 per share. This compares to a net loss of $6.1 million, or $0.03 per share, for the second quarter of 2023. The company did not report any revenue during either of these periods. Total costs and expenses for the second quarter of 2024 were $5.8 million, compared with $6.2 million for the second quarter of 2023. The year-over-year decrease was primarily due to lower clinical development expenses, personnel costs and administrative expenses. Turning to our six month results, our net loss for the six months of 2024 were $11.5 million, or $0.05 per share, compared with a net loss for the first six months of 2023 of $11.6 million, also $0.05 per share. We reported no revenue for the first six months – I'm sorry, for the six months ended June 30, 2024. This compares with $1.1 million in revenue for the prior year period, which was generated from research collaborations with BioNTech and Genentech. Total cost and expenses for the first six months of 2024 were $11.7 million, compared with $12.8 million for the first six months of 2023. This decrease primarily reflects a decline in R&D expenses, as well as lower general and administrative expenses. Cash, cash equivalents and marketable securities as of June 30, 2024, were $14.3 million, compared with $13.8 million as of December 31, 2023. This increase reflects $10 million in gross proceeds raised through a registered direct offering in April, more than offsetting the company's negative cash flow from operations over the six month period. With that, I will turn the call back to Jerry.

Thanks, Keith. In closing, we are reporting positive real progress in consummating a partnership transaction with MAT2203 that we believe will be in the best interest of our company and bring value to our shareholders. We have signed a non-binding term sheet with a potential global partner and remain engaged in ongoing constructive discussions with our prospective licensee with the goal of finalizing this transaction as soon as possible. Our Compassionate/Expanded Use Access Program continues to highlight the ability of MAT2203 to safely target and effectively eradicate a variety of severe, potentially, deadly invasive fungal infections, even in the most challenging clinical circumstances. This program is gaining awareness within the medical community, with requests for access to MAT2203 significantly increasing in recent months. In fact, just yesterday we received two additional requests; bringing us close to 40 total enrollees should all current evaluations result in patient admittance and emergency IND approvals. This essential program is functioning like a basket study of invasive fungal infections and could position us and/or our partner for the support of potential expanded label discussions at the time of NDA filing. We continue to expand our knowledge base with our LNC platform. We're evaluating the best next steps for this technology as we determine how to maximize return to shareholders and look forward to providing additional guidance on next steps once we have secured our MAT2203 partnership, which remains the key focus of the company. With that review, I will turn the call over to the operator for Q&A. Morgan?

[Operator Instructions] Your first question comes from Scott Henry with Alliance Global Partners. Your line is open.

Thank you and good afternoon. Just a couple of quick questions. First, good news on the non-binding term sheet. Obviously, you can’t give out specifics, but generally speaking, should we be thinking about an upfront payment and as well reimbursement for the ORALTO trials? Are those kind of key components of what you’re looking for in this type of deal through this agreement or another one?

Hi, Scott. Thanks for the question. And actually, without commenting on it specifically, I do think it’s appropriate to say that we would expect not just the non-binding term sheet but a definitive agreement to be structured similar to what you would typically see and have seen in this area with some combination of an upfront payment, certainly development and commercial milestones, royalties and the additional potential elements of how you’re going to treat clinical development costs and manufacturing, which we have outlined for investors before, specifically referencing our intended tech transfer of manufacturer from here at Matinas to Thermo Fisher. So there’s a lot of moving parts there, but I think as investors try to get their arms around what is the meaning of a non-binding term sheet, it’s just that. It’s the framework for a deal, but all of those elements have been discussed. And I think it’s safe to say that any definitive agreement that we arrive at with this intended partner on a global basis would include some combination of those essential elements.

Okay. Thank you for that color. And then given the time line for a partnership, it’s taking a little longer than expected. Would you still expect the ORALTO trial to start in fourth quarter of 2024 or perhaps we should think about early 2025? [Indiscernible]

Yes. It’s a fair question. And I think it’s appropriate for us to address that this has taken, I think, longer than any of us had expected. And I think that speaks to the complexity of these sorts of dialogues. But it also speaks to how important it is to have a complete alignment across the board and no surprises. I mean if you look in this category in the recent past, you had a global big pharma that was surprised by CMC issues, which arose after a definitive agreement was signed. And I think that has caused certainly, everyone in this category to make sure that all of those boxes are checked. And so the diligence process around this transaction has been pretty thorough. And I think that has explained the passage of time as much as anything else, and why it’s taken a little bit longer. I do think it eliminates surprises post a partnership announcement and does put you in a position to get things started as quickly as possible once a transaction is consummated and if a transaction is consummated. In terms of timing, we’re not sitting on our laurels. So the team here is actively working with a global CRO to sort of put pieces in place. It’s a sliding scale, Scott, in terms of, are you going to have product ready? And any time that you’re getting ready to start a Phase 3 trial, there are a number of steps that need to be done and boxes checked before you can have first patient first dose. But we do think that we have confidence that the study can initiate in the fourth quarter of this year, but whether or not that results in a first patient first visit in 2024, that’s probably safer for 2025. But taking that into account, there are a number of steps that we’ve taken in discussions with the global CRO to take sort of this delay into account, make some adjustments to how the study is set up, the number of sites so that you’re not losing sort of enrollment time on the back end. So we’ve tried to be proactive in addressing that issue so that at the end of the day, not only are we putting ourselves in a position to initiate the trial or our partner to initiate the trial as soon as we can, but also sort of maximize the time for Phase 3 and sort of get through it as quickly as we can, so eventually, we can have this product be filed under an NDA and be ready for commercialization as soon as possible. We still project that enrollment is going to take about 24 months in this study. So things have lined up. Yes, the calendar has slid a little bit, but we’re working hard to make sure that doesn’t have too much of an impact on the back end.

Okay. Great. Final question. With regards to the LNC platform in the oncology indications, how should we interpret the additional weight loss we’re seeing? Obviously, typically a good thing, but less so on an oncology trial. Would you think that is molecule related? Or would you think it’s a lack of thriving? How – just curious, I saw it in there a couple of times how you would interpret that.

Yes. And this is like – Scott, it’s a great question. And this is sort of the interesting and challenging part of early-stage drug development, right? Because at the same time, you’re trying to drive and show that you have biological activity and therapeutic efficacy, particularly – I mean and biological activity would apply more to the oligonucleotide. But if we’re talking about LNC-docetaxel, for example, some of what we’re doing is cranking the dose really high. And so that, to some degree, when you’re talking about docetaxel, we think, can explain some of the weight loss. But we also think – remember, this is in oral therapy that’s traditionally been given IV. And when you’re giving an oral therapy in animal studies, you could have gavage issues, which could have all sorts of ramifications on how these animals feed or eat, which could be contributing to the weight loss. And so that’s in the case of docetaxel, and that’s why we’re looking for ways to sort of optimize that formulation to not only increase the therapeutic index, but be able to give as much as we can and even split the dose into two doses. And we’ve even begun to see a dose response there, which is positive. When you look at miriplatin, you're dealing with a different animal altogether. It's a high – much more highly toxic agent, and different cargo sometimes create different characteristics of the LNC. In the case of miriplatin, I think without drawing too many conclusions because a lot of work is still ongoing internally, we would attribute more of the weight loss we saw in the miriplatin side to the toxicity of the agent. But we're doing some additional work to verify that, that is in fact the case. And at the end of the day, what we want to be able to do is encapsulate whatever chemotherapeutic agent we're targeting in a way that we can create that oral availability that we can still have that specific tumor targeting and lower toxicity. And we're just in these early stages, you're optimizing, you're cranking the dose sometimes, you're splitting the dose sometimes. So it's not surprising that in some context, you're going to see weight loss. But the team is working hard to better understand those and at least in the case of miriplatin, we think it's agent-specific and not related to the platform.

Okay. Great. Thank you for taking the question.

Scott. Thanks very much.

Your next question comes from Jason McCarthy with Maxim Group. Your line is open.

Hi. This is Joanne Lee on the call for Jason McCarthy. Thanks for taking the question and congratulations on securing the partnership for ORALTO. My question on the anticipated time line for the Phase 3 launch was answered. But just as a follow-up, with the recent milestone achieved, could you just remind us on some of the key design elements and objective measures of the upcoming non-inferiority study?

Sure. Joanne thanks very much for the question. And I'm going to turn it over to Dr. Matkovits to talk about the design, but I would say we're really proud of our progress. I wouldn't quite say milestone achieved yet. We don't have – we have not secured the definitive agreement. Obviously, we're working very hard to deliver that as soon as we can, and that's when we'll pop the champagne. But we do think that this is an important progress toward that milestone, narrowing it down to a single party, working with them to make sure that all of those questions are answered and that we're setting the program up for success as soon as we pass that baton. We don't want to have any drops. But that might – we'll consider the milestone achieved when we have a definitive agreement. So I just want to be fair about that. But Terri, for a second, why don't you just remind everyone what that design element of the ORALTO study looks like, number of patients, what we're going up against and what's the key primary and secondary end points?

Sure. Thanks, Joanne, for the question. So to remind everyone, the ORALTO trial is a non-inferiority trial, a two-arm trial, where we are targeting assessing the efficacy of MAT2203 after a two-day IV ampho step down to MAT2203 with treatment out to 12 weeks. And this non-inferiority trial will be targeting patients with invasive aspergillosis who have no other treatment options. So they either have a toxicity or a lack of tolerance to the Azole class, or they have some significant clinical drug-drug interaction that preclude them from the ability of being treated with an Azole. So the comparator arm will be an arm where patients will receive IV liposomal amphotericin for as long as are able to tolerate the treatment with the primary endpoint of mortality at six weeks. Now we've added some key secondary endpoints to the trial because we believe that one of the key attributes of MAT2203 is the ability to receive the drug longer term without any of the safety sequelae that you see with IV-administered ampho. So key secondary end point will be safety, looking at the proportion of patients who have to switch from IV amphotericin in the comparator arm to another treatment regimen, whether that be a drug holiday from IV ampho or reduction of dose and comparing those toxicity-related dosing changes, if you will and testing for superiority. And that test would be done at the 12-week endpoint. We'll also be looking at global response to treatment, so looking at clinical, radiological and mycological response at 12 weeks. And also importantly looking at the pharmacoeconomic impact of oral MAT2203 because the value proposition in addition to the safety benefit is the ability to transition patients as early as possible to the outpatient setting where they have a lower use of health care resources and a higher quality of life. And so we're tracking this in our ongoing compassionate use program where we're seeing that patients are very quickly transitioned to home care after they're able to switch from IV amphotericin to our oral MAT2203. And of course, throughout the course of the study, we'll be evaluating mortality through the 12-week endpoint.

Great. Appreciate all those details. Looking forward to more updates on the program. Thank you.

Thank you.

Thanks Joanne.

At this time there are no further questions in queue. I'd like to turn the call back over to Jerry Jabbour for any further remarks.

Thanks Morgan, and thank you for joining us today and for your interest in Matinas. We remain excited and very optimistic about our company's future and look forward to reporting further progress during our third quarter conference call in November. Thank you again, and have a nice evening.

This concludes the Matinas BioPharma Second Quarter 2024 Conference Call. Thank you for attending, and have a wonderful rest of your day.