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Edited Transcript of MTNB earnings conference call or presentation 2-Apr-19 12:00pm GMT

Full Year 2018 Matinas BioPharma Holdings Inc Earnings Call

BEDMINSTER Apr 11, 2019 (Thomson StreetEvents) -- Edited Transcript of Matinas BioPharma Holdings Inc earnings conference call or presentation Tuesday, April 2, 2019 at 12:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* James J. Ferguson

Matinas BioPharma Holdings, Inc. - Chief Medical Officer

* Jerome D. Jabbour

Matinas BioPharma Holdings, Inc. - Co-Founder, CEO, President & Director

* Theresa Matkovits

Matinas BioPharma Holdings, Inc. - Chief Development Officer

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Conference Call Participants

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* Chad Jason Messer

Needham & Company, LLC, Research Division - Senior Analyst

* Jerry Calhoun Isaacson

Roth Capital Partners, LLC, Research Division - MD & Senior Research Analyst

* Robert Cummins Hazlett

BTIG, LLC - MD of Equity Research Group

* Jenene D. Thomas

Jenene Thomas Communications, LLC - CEO

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Presentation

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Operator [1]

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Greetings, and welcome to Matinas BioPharma quarterly update conference call and webcast. (Operator Instructions) Please note this conference is being recorded.

I would now like to turn the conference over to your host, Jenene Thomas, Investor Relations. Ms. Thomas, you may begin.

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Jenene D. Thomas, Jenene Thomas Communications, LLC - CEO [2]

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Thank you, Sherry. Good morning, everyone, and thank you for joining the Matinas BioPharma quarterly update conference call and webcast. At this time, I would like to remind our listeners that remarks made during this call may state management's intentions, hopes, beliefs, expectations or projections of the future. These are forward-looking statements and involve risks and uncertainties. Forward-looking statements on this call are made pursuant to the safe harbor provisions of the federal securities laws. These forward-looking statements are based on Matinas 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 reports Matinas BioPharma files with the Securities and Exchange Commission. These documents are available in the Investors section of the company's website on the Securities and Exchange Commission's website. We encourage you to review these documents carefully.

Following the company's prepared remarks, the call will be opened up for a question-and-answer session. Joining me on the call today are Jerry Jabbour, Chief Executive Officer; Dr. Terry Ferguson, Chief Medical Officer; Dr. Terry Matkovits, Chief Development Officer; Dr. Raphael Mannino, Chief Scientific Officer; and Keith Kucinski, Chief Financial Officer.

It is now my pleasure to turn the call over to Jerry.

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Jerome D. Jabbour, Matinas BioPharma Holdings, Inc. - Co-Founder, CEO, President & Director [3]

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Thank you, Jenene, and good morning to all those dialed into our update call. At the beginning of this year, I made the statement that I thought Matinas could be one of the most exciting stories in biotech during 2019 based upon the fact that we believe we have 2 potential best-in-class assets. There is no question that our lead asset, MAT9001, a prescription-only omega-3, is going to be a tremendous driver of value for us. It's going to be used for treatment and we believe potentially for prevention in a large number of patients with cardiovascular and metabolic conditions. Quite simply, we are positioning MAT9001 to be a best-in-class drug in a multi-billion dollar cardiovascular market.

We are aggressively advancing this drug toward Phase III with an initial indication in the treatment of severe hypertriglyceridemia. We believe this is a product that is clearly differentiated from those omega-3 pharmaceutical products that are currently approved, and we will highlight the reason supporting our belief during this morning's call.

In addition to MAT9001, we are also actively pursuing what we believe has the potential to be a best-in-class drug delivery platform. If we think about some of the biggest challenges facing innovative medicine today, much of it centers on delivery. How do you package small molecules or nucleic acid polymers and deliver them inside a cell without generating an unintended immune response or undesirable toxicity.

If we look back a little more than 6 months ago, it is truly incredible how much progress has been made, how our world here at Matinas has changed and why we think we have positioned 2019 to be a transformational year. Given the nature of this update call, we believe it is important to walk everyone through some key highlights that have brought us to where we are today.

It began in September of 2018, when we added yet another industry veteran to our board, Patrick LePore as Vice Chairman. His presence is highly complementary to the impressive group we have been fortunate enough to attract. Right after that, the top line data from Vascepa's REDUCE-IT Outcomes Study were announced on September 24, 2018. That announcement immediately rekindled the vision we had all along for MAT9001 and validated our strategic decision to hold on to this valuable asset. The positive REDUCE-IT data was the spark we were waiting for to relaunch the development program for MAT9001, our prescription-only omega-3 product, specifically designed for patients with cardiovascular disease.

Following this important announcement, we added Dr. Terry Matkovits, an industry veteran and development expert who has been at companies such as Novartis and NPS, to help drive our LNC delivery technology forward. Though early stage, we are positioning our platform technology to hopefully play a meaningful role in solving significant delivery challenges in the gene therapy space. Her expertise in running development programs will also prove extremely valuable to overseeing our MAT9001 program globally.

The full primary REDUCE-IT results presented on November 10 at the AHA meetings in Chicago further reinforced the original design and development plans for MAT9001. The REDUCE-IT results were robust and clinically meaningful, and many physicians were very impressed. These data were potentially truly transformational.

Immediately thereafter, we put together a world-class cardiovascular scientific advisory team, led by Dr. Christie Ballantyne and Dr. John Kastelein, members of the Steering Committee of Amarin's REDUCE-IT and AstraZeneca's STRENGTH studies, respectively. These clinical and scientific leaders publicly shared their views that the PK/PD profile of MAT9001 was extremely promising and could indicate potential for meaningful differentiation and the possibility of becoming a best-in-class drug.

To kickoff 2019, we added strategic financial expertise with the appointment of our CFO, Keith Kucinski. Keith brings a new level of financial sophistication to the company and a track record of playing a key role in multiple transactions, including the sale of Par Pharmaceutical to ENDO for $8 billion in 2015.

At the J.P. Morgan conference in January, we announced our first research evaluation with a global top 10 pharma company. In this instance, we are going to take their nucleic acid polymer and create formulations utilizing our LNC technology for our collaborator to conduct a series of in vitro and in vivo studies.

Leveraging our LNC platform continues to be a key additional area of focus for the company. Our goal is to continue generating nondilutive funding through partnered programs and capitalize on the significant need for improved drug delivery to create a variety of strategic verticals while limiting financial and clinical development risk. The real idea here is to see how broadly this technology can be applied without us taking on the traditional burdens of full drug development.

Next, and a very key piece of the puzzle in terms of our leadership team, was attracting Dr. Terry Ferguson, our Chief Medical Officer, to leave Amgen and join Matinas and help lead the development program for a potentially game-changing asset like MAT9001. Dr. Ferguson will share some thoughts a little later in the call.

Finally, when we believed we had answers to all the major questions that the smart money was asking, we significantly transformed the financial position of the company. We brought in more than $30 million into the company, that together with existing cash on hand, extends our cash runway into 2021 through key data and inflection points across our business.

This significant transaction was led by high-quality, fundamental and sophisticated health care institutional investors, concentrated in less than 10 holders, all of who did extensive diligence on our data, on our drug, on the competitors and on the market and who understood the value that MAT9001 brings as well as the potential value associated with our LNC platform. This cash influx and the high quality of these institutional investors positions us to take the entire company forward and to the next level.

In turning now to speak about each of our assets in more detail, I will begin with MAT9001. MAT9001 was purposely designed to be a best-in-class product, to be the most bioavailable and to be the most effective omega-3 product in the cardiovascular space. With developments in the U.S. regulatory environment over the last 5 to 7 years, there is a streamlined 505 (b) (2) pathway now also supported with new chemical entity exclusivity for us to rapidly accelerate development of MAT9001 for an initial indication that does not require CV outcomes data. And with the way the omega-3 landscape seems to be setting up, with the data that's already been generated by Vascepa and with the potential addition of data from EPANOVA in the STRENGTH Outcomes trial, which we anticipate could read out in 2020, this is very reminiscent of exactly how the statin market developed. Early leaders established outcomes data for the class and then the better profile, best-in-class products came later and became the treatment of choice.

MAT9001 is a uniquely engineered prescription-only omega-3 fatty acid. It contains high levels of EPA, but it also includes a less well-known but very promising omega-3, docosapentaenoic acid or DPA. In preclinical work, for example, DPA has been shown to be up to 8x more potent than EPA in the reduction of triglycerides. It has also demonstrated some unique gene regulatory effects, downregulating enzymes, such as HMG-CoA reductase and PCSK9.

Since statins are known to actually raise PCSK9, the reductions in PCSK9 already demonstrated with MAT9001 provide a unique opportunity to potentially help statins work better. MAT9001 is also designed to be highly bioavailable. It's that combination of efficacy and bioavailability that we believe creates the profile of the best-in-class drug in this space. The market is extremely large. There are over 65 million patients in the U.S. alone that could potentially be using this drug. Obviously, we have more work to do before we can position ourselves to address this large patient population, but it's very exciting and encouraging that other prescription omega-3s are paving the way forward in demonstrating significant impact on cardiovascular outcomes.

The approved omega-3s come in 2 different molecular forms, LOVAZA and Vascepa or ethyl esters. EPANOVA is a free fatty acid. MAT9001, which is still in development, is also a free fatty acid. Free fatty acids are going to be much more bioavailable. Unlike the ethyl esters, they do not require the body to break them down for absorption. That becomes important when you consider that ethyl esters should be administered with food in order to be absorbed. We also believe the composition of MAT9001 avoids DHA-associated increases in LDL cholesterol.

Now in the fall of last year, we could have been in a position to say, "We are an omega-3 company." We believe we have a better profile. And theoretically, we believe that when we actually get data, we could be a best-in-class drug. Our reality is that we already actually have something nobody else has; head-to-head data against Vascepa that shows both, better bioavailability and superiority across virtually all lipid markers.

In fact, Dr. John Kastelein first called me on September 24 when the Vascepa top line data were announced. John, as you know, was the one who wrote the editorial in the New England Journal of Medicine on the REDUCE-IT trial. We had not worked with John. And although I was aware of his expertise and his reputation, I had never actually spoken with him before. John called me and said simply, "Jerry, I've seen your data. I think you could have a better drug, we've got to get moving." With that as impetus, we quickly established a very strong Scientific Advisory Board. Drs. Kastelein, Ballantyne, Bays and Maki have all been involved with every other omega-3 in some way, shape or form. Christie Ballantyne is on the Steering Committee for REDUCE-IT. John Kastelein is on the Steering Committee for STRENGTH.

We also wanted additional clinical development expertise and brought in Covance, one of the world's largest CROs as an adviser. Why Covance? They happen to be the central lab in REDUCE-IT and had a lot of expertise in this specific area.

And then there were always complex regulatory considerations. That's where we added Greenleaf Health and its principal, Dr. John Jenkins, the former head of the Office of New Drugs of FDA, who too had a lot of experience in evaluating omega-3 products while at FDA.

As this market continues to evolve and with more and more effective physician and payer education ongoing, we believe this could become a $10 billion-plus market. We like the fact that there are multiple players. Market expansion and growing awareness is very, very important.

With Vascepa due to potentially receive an expanded label later this year, and with EPANOVA and AstraZeneca looking to announce data from their outcomes trial, which we believe could read out in 2020 and with Acasti and CaPre set to announce Phase III data later this year, it is clear that omega-3s as a class are a therapy whose time has come. As a result, we believe we can benefit from the powerful second-mover advantage given the differentiated profile of MAT9001.

As I mentioned earlier, we recently appointed a prominent cardiovascular expert, Dr. Terry Ferguson as our Chief Medical Officer. I'd like to give Terry a few moments to introduce himself. Terry?

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James J. Ferguson, Matinas BioPharma Holdings, Inc. - Chief Medical Officer [4]

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Thanks, Jerry, and hello to everyone joining us on the call today. My name is Terry Ferguson. I'm a cardiologist, and I joined Matinas as Chief Medical Officer at the end of February. I came to Matinas by way of Amgen, where I've been for the last 2.5 years and where I led the cardiovascular and bone therapeutic area for U.S. Medical Affairs.

For me, this has been the culmination of a really interesting journey. My initial training was in a traditional academic phenotype, ultimately pivoting to full-time clinical research. Undergraduate at Harvard, medical school at Penn, postgraduate training at the University of Michigan and then Beth Israel in Boston for cardiology. From there, I spent more than 20 years at the Texas Heart Institute in Houston, leading their cardiovascular clinical research and building a fairly significant academic career as an established cardiovascular clinical trialist.

I moved to industry in 2008 first at The Medicines Company, then at AstraZeneca before coming to Amgen in 2016. And all along, on both the academic side and the industry side, my main motivation has been all about advancing the standards of care.

As a clinical researcher, for me, it's not so much about the data per se, but much more about what new data might actually mean in practice and how we can use it to make a difference for patients. A big part of what drove my move to industry was a chance to do this on a larger scale, not just bringing new drugs to market, but also helping find ways to optimally use them in the real world. I've had the opportunity and privilege to work on both the academic and industry worlds with a number of drugs that could be considered breakthrough cardiovascular therapies. Not all of them have made it into widespread clinical use.

And this brings me to why I'm here. I have to say for me, the REDUCE-IT study was truly transformational. Nobody really saw it coming. It has shaken the world of lipid management and cardiovascular prevention, 2 areas nearer and dearer to my heart in the cardiology lexicon. And the aftershocks continue as the role of omega-3s are highlighted in some of the most recent ADA guidelines.

After doing my own due diligence with friends in the academic world who are familiar with the MAT9001 data, this looks like a major contender in the omega-3 space. In November, the full REDUCE-IT data were presented at AHA, leading me to dig deeper into the MAT9001 head-to-head data versus Vascepa and to learn more about their LNC platform technology that you'll hear about in just a bit.

For me, this has turned out to be the perfect storm of the right data, right time, right people, right assets. And here I am making the leap from the big pharma world to a smaller company where I can personally make a significant impact on the future direction of a potential best-in-class drug in a class that is starting to get a lot more traction in the clinical world.

A few weeks ago, I was listening to the follow-on discussions of REDUCE-IT and omega-3s at the ACC meetings in New Orleans. And for me, that just reinforced what a great opportunity this is, for omega-3s, for MAT9001, for Matinas and most importantly, for what we can do for patients with cardiovascular disease. I'm truly thrilled to be here.

And with that, I'll turn it back over to you, Jerry.

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Jerome D. Jabbour, Matinas BioPharma Holdings, Inc. - Co-Founder, CEO, President & Director [5]

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Thank you, Terry. We're extremely pleased to have attracted someone of your caliber who brings with him significant expertise and relationships from some of the world's leading pharmaceutical companies. I'd now like to take some time to discuss our regulatory and clinical strategy for MAT9001.

So how do we get there with MAT9001? The first step is reactivating our IND, essentially a paper exercise that will be completed within the next month. Then, according to plans already agreed upon with the FDA as part of our original development program for MAT9001, we will conduct a 28-day tox study and a comparative PK study. We will submit those data to FDA and have an end-of-phase II meeting to review those data as well as our plans for our Phase III program.

Our plan is to get an SPA, a special protocol assessment, for each of our planned Phase III clinical trials. But the key here is to not just conduct the studies required for approval. Our strategy is to interlay studies required for approval with studies that will continue to differentiate MAT9001 from other prescription omega-3 products.

In order to receive approval for severe hypertriglyceridemia, we need to conduct the comparative PK, a bridging tox study and one Phase III study in patients with triglyceride levels of 500 and above, very similar to the trials conducted with every currently approved omega-3 drug. That's good enough for approval in severe hypertriglyceridemia. But if you want to position this drug to impact a rapidly emerging omega-3 class the same way that Lipitor impacted the statin class, we believe and understand that you need a differentiated profile. Therefore, we will conduct another head-to-head study against Vascepa, this time in patients treated over 2 separate 28-day periods, again in a crossover design.

We believe these data are likely to be very compelling. Importantly, we do not need to wait for an end-of-phase II meeting to start this study. So we plan to initiate this study in the beginning of 2020 with a readout by September of 2020. We'll also conduct a second Phase III study in patients with triglyceride levels 200 to 499, similar to other prescription Omega-3s in order to generate additional data in a REDUCE-IT-like patient population.

Our goal is for patients, doctors and payers to be able to look at these data side by side. We believe there is a good chance that outcomes data may not be necessary regardless of whether the STRENGTH Outcomes trial is positive or not. If you look at how the statin market evolved and that some of the other cardiovascular drugs, including PCSK9 and P2Y12 inhibitors, all of which Dr. Ferguson is very familiar with, not all of these drugs had outcomes data in their label. We look forward to seeing how the landscape evolves over the next few years.

In terms of intellectual property, we believe this is a well-protected drug. We have 2 issued patents extending protection through at least 2033. We have 4 additional pending U.S. patents and patents that are filed internationally providing protection. We expect to expand our IP protection as we advance the development of MAT9001.

As I mentioned earlier, we also believe based upon FDA precedent, that NCE exclusivity will be afforded to drugs in this class regardless of regulatory path. So here is what our time line looks like: we anticipate filing our IND in 2022. You will see that an important element of this development program is to generate data for differentiation, while at the same time allowing sufficient time for market expansion.

There are already ongoing educational programs about the benefits of omega-3 following REDUCE-IT. We want that educational process for REDUCE-IT and Vascepa and eventually for STRENGTH and EPANOVA to have the chance to broadly engage and disseminate across the cardiovascular and diabetes communities, so that when MAT9001 is potentially approved in 2023, our drug will be entering as a potential best-in-class drug in a market that's far, far larger than it is today. That's the omega-3 opportunity. And if that were our only asset, Matinas would already be a very investable company. But one of the benefits of our strategy to hold on to MAT9001 until the REDUCE-IT data came out was our ability to significantly advance our lipid nano-crystal delivery platform. We now have multiple shots on goal with important upcoming news flow.

I would like to now spend some time providing an important update on our proprietary lipid nano-crystal, or LNC delivery technology, including our lead drug MAT2203. However, before proceeding, I would like to introduce Dr. Terry Matkovits who joined Matinas in October of last year as Chief Development Officer, principally to drive our LNC delivery platform forward alongside Dr. Mannino. Terry?

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Theresa Matkovits, Matinas BioPharma Holdings, Inc. - Chief Development Officer [6]

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Thank you, Jerry. It is my pleasure to have joined the team and to participate in the call this morning. By way of background, I'm a biochemist and molecular biologist by training. I've been in industry in drug development leadership roles for over 25 years at global multinational pharma, midsize biotech and start-ups, including Novartis, The Medicines Company, NPS, Shire and ContraVir before joining Matinas.

Throughout my career, I've led the successful development of 4 globally commercialized products across a number of therapeutic areas. My decision to join the company preceded the news in the omega-3 world. The most compelling reason I joined the company was the LNC delivery platform technology. Having been a drug developer for all of my career, the delivery of drugs that are potent and effective that have delivery challenges, whether it is off-organ toxicity or low oral bioavailability has been a challenge across a number of classes of drugs.

The value of the platform to deliver in a highly efficient and targeted way, drugs that span a variety of therapeutic classes, small molecules, peptides, vaccines, proteins, oligonucleotides as well as other therapeutic interventions was really compelling for me. The LNC platform has such an established strong data set that has consistently demonstrated its utility and highly efficient oral delivery capability, which was key for me joining the company to drive the development of these various clinical opportunities in numerous therapeutic areas of high unmet medical need.

Following my due diligence of the LNC technology and evaluating the data the company had generated to date, joining Matinas was an easy decision. Also, shortly after I joined Matinas and the full REDUCE-IT data was announced, I saw the potential of MAT9001 to be a best-in-class cardiovascular therapy in what is projected to be a new multi-billion dollar omega-3 drug class. This made joining Matinas an even more exciting opportunity for me.

I believe my experience in running large domestic and global drug development programs will be especially valuable in driving MAT9001 towards successful approval. I look forward to continuing working with the team to capitalize on the potentially significant opportunities within our reach.

With that, I'll turn the call back over to Jerry.

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Jerome D. Jabbour, Matinas BioPharma Holdings, Inc. - Co-Founder, CEO, President & Director [7]

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Thank you, Terry. We have assembled a very strong leadership team at Matinas, and we are moving forward in 2019 from a position of real strength. We have a diversified position with multiple shots on goal for our potential best-in-class product candidates and potential best-in-class delivery platform technology, which could bring substantial value from ongoing and future collaborations. We believe our LNC delivery technology has the potential to enable the oral, safe and intracellular delivery of medicines. We have early data with numerous molecules and have demonstrated that we can take drugs like amphotericin, which currently is IV only and highly toxic and make it orally available and well tolerated for prolonged administration.

Further, we have shown in preclinical studies that we can take nucleic acid polymers, deliver them to cells and express proteins while limiting toxicity. A critical aspect of delivery in this space, we believe, is being able to penetrate the cell membrane or gain access to a cell, without damaging or destroying the cell membrane in the process. That, unfortunately, is one of the results or the downsides of the currently available technologies.

Lipid nanoparticles are being used by many companies in the gene therapy space. Unfortunately, regular lipid nanoparticles enter the cell via cell membrane degradation, and you can typically see a lot of cell death and unfortunate side effects as a result. Among the benefits that our LNC technology provides is a non-aqueous interior, which translates into potentially longer shelf-life stability, even at room temperature. We believe that we can deliver biologically active molecules into cells fusogenically with limited toxicity and without unintended immune responses. When our particles interact with the cell membrane, cell membrane integrity is maintained. As exciting as this is, we want to be clear that this is early stage and something we want to learn more about.

So how do you drive all of these things forward? Well, a number of large pharmaceutical companies are interested in learning more about our technology. They've already shown a willingness to spend money for early proof-of-concept data across a number of therapeutic categories. As I stated earlier, we announced our first evaluation with a large top 10 global pharmaceutical company in January. Our strategy is to utilize their expertise in the design of gene therapies and their substantial financial resources to drive this technology forward in a nondilutive manner. We are comfortable in being patient as we wait for important data, which we believe could create multiple compelling licensing opportunities. We believe that this platform technology could position us to implement a business strategy similar to that of Zuma or ligand, which act as a licensor and create multiple streams of revenue.

Our lead internal drug based on the LNC platform technology is MAT2203, an orally administered formulation of amphotericin B, where we've taken that IV-only highly toxic drug and now made it oral and essentially removed the toxicity typically seen with IV administration.

Amphotericin B historically has potent activity against most of the serious deadly fungal infections. Previously, we had been positioning MAT2203 for an initial indication in the prophylaxis for the prevention of invasive fungal infections in immunocompromised ALL patients. We continue to have the support of scientific and clinical experts in the field with regard to that indication, but something else interesting happened over the past few months.

The National Institutes of Health, our long-time collaborator on the LNC platform technology, came to us and essentially said, "We've seen your data. You've shown you can deliver amphotericin orally and can have a meaningful impact on cryptococcal meningitis, a severe, life-threatening brain fungal infection." We're so encouraged with that data that in collaboration with the University of Minnesota, we plan to take MAT2203 into a clinical trial in cryptococcal meningitis as quickly as possible. The NIH has actually granted funding for a Phase II clinical trial, which could even potentially become a pivotal registration quality trial. We believe this is an optimal strategy to advance MAT2203 with nondilutive dollars and potentially demonstrate impactful benefit in areas of significant unmet medical need.

Prophylaxis also remains very much in our sight, and we believe that it could eventually be a very promising utilization of MAT2203. But the ability to utilize NIH dollars to advance the platform and at the same time, demonstrate that our technology can effectively cross the blood-brain barrier following oral administration could open up the doors to a variety of CNS applications with other molecules. Therefore, we believe that MAT2203 is the standard bearer for the LNC technology.

Success with MAT2203 could become the entryway to very interesting additional applications of our unique technology. In the coming months, we will be able to provide more insight into the specifics of the design and the timing of the NIH study in cryptococcal meningitis.

In closing, the current leadership and expertise of our management team and board is of the highest quality. We believe we truly have the right team in place, Drs. Ferguson, Matkovits and Mannino will provide critical scientific subject matter expertise, while Mr. Kucinski and I drive the business. Matinas is a not a binary investment. We believe that we will continue to be the envy of many small biotechs, focused on the development of a single asset.

With respect to MAT9001, we have a potential best-in-class drug, focused on a multi-billion dollar market. We have a clear development plan with a potential for additional head-to-head data against Vascepa as early as Q3 of 2020. We will commence 2 Phase III studies thereafter and have the potential for an NDA filing in 2022. We believe this could be ideal market timing.

With respect to the LNC platform, we believe we could have the opportunity to potentially provide a solution to one of the most significant challenges presented by innovative medicine today, a drug delivery solution where a vehicle can effectively protect genetic material and deliver in a fusogenic, nontoxic, nondestructive way to cells, thereafter utilizing these cells to target delivery to various tissues, including potentially crossing the blood-brain barrier.

We think this breadth of utility could give us the potential to become partner of choice and put Matinas in position to collect licensing fees, milestones and royalties on product sales for each of the products on which we choose to partner. Again, this is early stage, but we believe very promising.

From a financial perspective, our recent financing, supported by fundamental health care institutional investors, provides validation. The company is now well funded to drive clinical development through key data points with more than $40 million in cash on hand. This is by far the most significant financing in our company's history and sends a strong signal that the work we are doing here is creating significant value for investors, but more importantly, is positioning our products and our technology to provide valuable solutions for patients and doctors.

Following this financing transaction, we now have a cash runway well into 2021 and can return our collective focus to executing on our business and operational strategy. 2018 truly did set the table. And now 2019 and beyond will become our opportunity to execute. While financings like these can certainly relieve some pressure, what is clear is that our sense of urgency, our attention to detail and our focus on meeting our time lines and objectives must be greater than ever.

Personally, I'm extremely proud of all we have accomplished and how far we have come in a very short period of time. And I look upon our future with a sense of optimism, hope and excitement. We are appreciative of the impact of this important moment. We look forward to keeping our valued investors informed as we progress our drug candidates and platform technology and to attracting new investors who are just now learning about Matinas and what we believe is our significant upside.

Thank you for joining today. I will now turn the call over to the operator to facilitate our question-and-answer session.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question is from Jerry Isaacson with Roth Capital.

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Jerry Calhoun Isaacson, Roth Capital Partners, LLC, Research Division - MD & Senior Research Analyst [2]

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So Jerry, one of the things you talked about a lot was really to nice see is the substantial public offering that you just finished. Wonder if you could just comment a little bit further on when you're pitching this to the investors that you mentioned. What are you -- what's your stated use of funds for the offering?

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Jerome D. Jabbour, Matinas BioPharma Holdings, Inc. - Co-Founder, CEO, President & Director [3]

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Great. Thanks, Jerry, and thanks for joining the call today. So in what was a very quick, but very deep process in terms of meeting with these institutional investors, it was clear that there was a lot of interest in MAT9001. And that the goal in raising this amount of money was certainly to put our company in position to drive that asset forward through meaningful clinical events. So I would say that our primary focus with those funds is to drive MAT9001 forward, but that's also because we have the luxury of supportive partners who are providing nondilutive dollars to drive MAT2203 forward, for example. So we're in a little bit of an envious position where we have 2 assets that have attracted a lot of attention. Obviously, on a relative value basis, MAT9001 looks like a great investment relative to some of the other omega-3s in the space and then we're equally grateful for the continued support of the NIH who continues to advance development of MAT2203. So the funds that we brought in, I'd say, were primarily earmarked for MAT9001 and general corporate purposes, and we will look towards those nondilutive dollars to drive MAT2203 and the platform forward. And on the platform side, it's really because of the wherewithal and financial resources of prospective collaborators who are interested that we think will give us the opportunity to, again, potentially use nondilutive dollars on the platform side.

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Jerry Calhoun Isaacson, Roth Capital Partners, LLC, Research Division - MD & Senior Research Analyst [4]

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Okay. Appreciate that. So another thing I wanted to kind of dig into with you a little bit, Jerry is, you've talked -- you've been talking about this partnership with the global pharmaceutical company on the LNC platform side, but not too many details available so far. So what can you tell us about this in terms of what might be some triggering moments that would give us more detail? And should we expect to see any revenue on the books from this partnership?

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Jerome D. Jabbour, Matinas BioPharma Holdings, Inc. - Co-Founder, CEO, President & Director [5]

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Yes, it's a good question, Jerry. So it's a really interesting process for us. Because as we've come out with more and more data on the LNC platform, it obviously has attracted a lot of interest. There's clearly a challenge in the gene therapy space with delivery. What we learned during this process, and we were already aware of it to a certain degree, but there is an enormous amount of competition and a huge amount of sensitivity on the part of these large pharmaceutical companies to keep exactly what they're doing secret or confidential. And so that's the primary reason for a lack of information, is really just us having a willingness to accept our partners' conditions to kind of move that forward. The model we've chosen to implement there is all about not deciding or setting a precedent for value too early. We're more than comfortable going into these earlier-stage proof-of-concept in vitro and in vivo studies where we'll look at things like immunogenicity or expression of proteins as a gateway for that partner to be able to make deeper investment and longer term -- have a longer-term relationship there. Our expectation is that we will begin to yield data from that collaboration probably toward the end of this year. There's still a lot going on within that large pharma partner in terms of coming up with the right nucleic acid polymer to put into it. So there is a lot of thought being put into design. But our expectation is that once that proof of concept happens, whether it's with this or some of the other discussions that are ongoing, it's that initial data which we believe will put us in a better position to be able to outline a longer-term collaboration, whether it takes the form as an option to license agreement or a straight-out license remains to be seen, but those programs typically take 4 to 6 months to generate that early data. And so it's at that point kind of later this year where we plan to hopefully stack up a number of these. And so that from the end of 2019 and into 2020, we're going to have multiple opportunities to see data from these collaborations, which could put the company in a very good position to execute on longer-term collaborations.

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Jerry Calhoun Isaacson, Roth Capital Partners, LLC, Research Division - MD & Senior Research Analyst [6]

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Okay. So I just have one more question. The ADA obviously came out with some great guidance last week regarding the omega-3s that this could be potentially considered to be an important part of the standard of treatment for certain diabetes patients. So I wonder if you guys could just talk about that a little bit and what it means for Matinas?

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Jerome D. Jabbour, Matinas BioPharma Holdings, Inc. - Co-Founder, CEO, President & Director [7]

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Sure. And for this one, I mean, there is no better person in the room to answer that question than Dr. Ferguson. So I'd offer, Terry, to make some remarks.

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James J. Ferguson, Matinas BioPharma Holdings, Inc. - Chief Medical Officer [8]

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Yes, and I think that the very quick recognition by the ADA of the potential importance of omega-3s as part of the preventive therapy in patients with diabetes, there is a lot of things that are wrong within patients with diabetes. One of them is so called diabetic dyslipidemia where they have lipid abnormalities. They also can have elevated triglycerides, and the omega-3s wind up being perfectly positioned in that population to safely and effectively provide prevention. In a REDUCE-IT trial, at least 60% of those patients in REDUCE-IT were patients who had diabetes. So I think that again there is growing recognition in the clinical community for the importance of the omega-3s in improving outcomes in otherwise at-risk patients. And I think that's just the tip of the iceberg for other things that may be coming in terms of the guidelines.

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Operator [9]

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Our next question is from Bert Hazlett with BTIG.

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Robert Cummins Hazlett, BTIG, LLC - MD of Equity Research Group [10]

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Jerry, I'd love to ask with regard to MAT9001, what is it that -- what components of 9001 are driving the differentiated lipid profile? Is it the bioavailability of EPA? Is it the inclusion of DPA? Could you just talk a little bit about again some of the more specifics of 9001 and some of the competitive data that you have to date versus Vascepa?

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Jerome D. Jabbour, Matinas BioPharma Holdings, Inc. - Co-Founder, CEO, President & Director [11]

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Sure, and I'll tag team this with Dr. Ferguson, but I think you hit on the key elements. For us, differentiation is all about efficacy and bioavailability. And obviously, the bioavailability starts with the free fatty acids that are going to be much more easily absorbed. And as you saw in our head-to-head crossover study against Vascepa, that attribute of our product resulted in there being 5x more in terms of the level of EPA in the blood, which is unusual when you think about Vascepa being a pure EPA product and ours being a combination of a number of different omega-3s. The fact that we were able to get that increased amount of EPA into the blood demonstrates the importance of bioavailability. That's also going to play a role we believe in the type of diet that's required for these patients to absorb, for example, an ethyl ester. It kind of goes against what are the recommended kind of guidelines for these patients in terms of diet. And then on the efficacy side, certainly a product that's higher in EPA is important. As important that we believe is the elimination of DHA when we're talking about that lack of an impact on LDL cholesterol. But for us, DPA does play an important role. And we also need to recognize that we need to understand and learn more about DPA, but the fact that it does seem to be much more potent in the reduction of triglycerides than EPA is clearly having an impact on our ability to downregulate a lot of these lipid markers. And I think if you were to rank the omega-3s in terms of impact on reduction of triglycerides, for example, DPA would be leading the pack. Actually, DHA would be second in terms of its impact on reduction of triglycerides and EPA would be third. The reality is that, that DHA also has that impact on LDL cholesterol, so that adding DPA to this in a meaningful amount gives us that ability to hit triglycerides harder. It's one of the reasons why you saw such a robust difference in reduction of triglycerides in our head-to-head trial. At 33%, that's a very, very significant number in terms of percentage reductions in patients with triglyceride levels 200 to 499. And then when you layer on DPA's impact on things like APOCIII and PCSK9, it gives us a lot of encouraging data pointing towards differentiation and that we could be uniquely different. But Terry Ferguson may add a little bit to that?

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James J. Ferguson, Matinas BioPharma Holdings, Inc. - Chief Medical Officer [12]

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Yes. And I think that as you look at sort of getting to the key of the differentiation, is it better bioavailable EPA? Is it the addition of DPA? Or is it some combination of both? If you just look at the lens of triglycerides, better bioavailability will give you more triglyceride lowering and DPA will give you better triglyceride lowering. I think that looking at the more sophisticated lipid markers instead, it's not just all about the bioavailability. The bioavailability is very important and that has to do with overcoming some of the variability, your potency, your ability to have -- how much you dose or pill counts and things like that, but also the feature that Jerry mentioned, the reduction in PCSK9, which is not what you see with EPA, may be one of the unique characteristics relating to DPA. We've got a lot more to learn about this, but I think that there is a very interesting opportunity to explore both the better bioavailability and the addition of the unique amounts of DPA to what we have in MAT9001.

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Robert Cummins Hazlett, BTIG, LLC - MD of Equity Research Group [13]

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That's very helpful and it dovetails right into my next question, which is, as you -- as we consider that additional head-to-head study due out in the third quarter of next year, what incremental data do you hope to get from that study? And can you just talk a little bit about the trial design or patient inclusion that you -- that might help you better elucidate the profile of MAT9001 in that study?

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James J. Ferguson, Matinas BioPharma Holdings, Inc. - Chief Medical Officer [14]

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I think that it is, a couple of things are going to be going into that study. First, it's going to be larger. Next, it will be not just looking at a low-fat diet, which could have disadvantage to Vascepa in some respects since ethyl esters require food and optimally a high-fat meal for best absorption. So we'll be looking at food effects and we'll have the opportunity to explore in more detail some of the lipid signals and some of the other signals that may give us more information around how MAT9001 is truly differentiated. So I think it will give us more data in relevant clinical circumstances and an opportunity to probe a little bit deeper into the things that we think are going to be differentiating us.

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Robert Cummins Hazlett, BTIG, LLC - MD of Equity Research Group [15]

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Terrific. And then just shifting to the LNC technology. Congratulations on the progress so far with the initial research collaboration. When -- and what types of deliverables, Jerry, should we expect from this? And then what does an optimal agreement look like with the LNC technology? You're touching on it, but I just want to maybe understand what could be coming here as you progress forward with the technology.

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Jerome D. Jabbour, Matinas BioPharma Holdings, Inc. - Co-Founder, CEO, President & Director [16]

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Sure. In terms of deliverables, I mean, we do have the ability to see any of the data that comes out of this evaluation and share it with third parties in a blinded manner. The timing of that is a little bit up in the air. I mean, I think we are expecting that we'll be in position to have something by the end of the year. It's a little bit out of our control because it doesn't necessarily kick off until we receive the partners of nucleic acid polymer, which we believe is imminent. But it really should be 4 to 6 months. Whether or not we're in position to press release that or whether or not that data will be available to be shared at scientific meetings remains kind of a discussion item between us and our partner. Our expectation is that should it perform the way we expect it to perform, there will be no lack of desire to make those results known on either party because it's going to position us really well. And then in terms of optimal structure, I mean, this is a perfect technology for licensing. Our expertise is in developing the formulations and figuring out the right combination of materials in order to create these stable formulations and facilitate this delivery in a nontoxic, nondestructive manner. And so we very much want to maintain that as being our expertise. So whether it's an option to license, which gives the pharmaceutical partner the ability to control at which point they takeover or trigger a full license payment, we've seen plenty of precedent in this space for what the terms of those agreements look like. It's hard to speculate on exact dollar counts, but I would expect that in the option to the -- the exclusive option there would be a significant payment in order to exercise that option, a license fee we would expect would also be significant. And we also plan to control the scope of these licenses not just by the type of molecule that we're doing but certain therapeutic areas within a molecule. For example, if we're talking about something like messenger RNA, we don't envision unless it's a very substantial agreement that a partner will be getting a blanket license to all applications of our technology in the messenger RNA world. For example, we envision that to be limited by therapy. And then obviously milestones based upon development, we don't expect to have to contribute to the cost of clinical development, we recognize that, that may result in smaller milestone or license payments. But we believe that's the optimal business model for us in order to kind of mitigate our risk on the clinical development sides and then position ourselves for product royalties. Whether it's high single digits or low double digits I think would depend on the particular nature of the collaboration. But that's how we envision it. And we're already in the planning stages of how we would like to set the precedent and what the structure will look like. So that when we do find ourselves in a position of potentially being able to execute on one of these license agreements, we're setting this up to be a precedent for future arrangements as well.

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Operator [17]

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Our next question is from Chad Messer with Needham & Company.

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Chad Jason Messer, Needham & Company, LLC, Research Division - Senior Analyst [18]

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One of the findings from REDUCE-IT that I found sort of surprising and interesting was a lack of correlation of the benefit -- of the CV benefit with actual triglyceride levels. And this seems to point to some of the pleiotropic effects of omega-3s on things like blood pressure and blood viscosity. What data did you have on MAT9001 on some of these nonlipid endpoints? And what are your plans to look into these in the future?

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James J. Ferguson, Matinas BioPharma Holdings, Inc. - Chief Medical Officer [19]

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I think that you bring up a really good point, and one of the striking features of REDUCE-IT is that not all of the benefit in REDUCE-IT can be laid just at the feet of triglyceride. So there are other things that are going on the so called pleiotropic effects that you mentioned. And I think that our forthcoming study is a chance to explore a lot of those things. It's very clear that the 3 main omega-3s out there, EPA, DHA and DPA all do somewhat different things. And I think that, for instance, DHA is associated with elevations in LDL, whereas the others are not. DPA, which is in our product, is associated with reductions in PCSK9, which we haven't seen in the others. And I think that there's going to be an opportunity in the forthcoming studies to begin to explore in a number of different areas just what exactly mechanistically may be going on. The omega-3s do a lot of things besides just lower triglycerides. And I think we're going to have an opportunity in our future studies to begin to tease out some of those details.

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Jerome D. Jabbour, Matinas BioPharma Holdings, Inc. - Co-Founder, CEO, President & Director [20]

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And Chad, just to follow up on that, I mean, when we're talking about a pure EPA product having demonstrated in REDUCE-IT, the significant impact on outcomes and the fact that it can't all be laid at the feet of triglycerides, some of this will depend on how STRENGTH reads out, which also has DHA in it. And so if STRENGTH comes out positive, it's not simply going to be an EPA effect. There must be something about a high-dose, high purity prolonged use of omega-3s, which is having an impact. But for example, if STRENGTH were to come out not as robust as REDUCE-IT or not produce as near results, there must be something unique about EPA. And I think we would acknowledge that. But I think that's also where we feel very comfortable and very excited about the profile of MAT9001. And that's going to get back to the bioavailability. Our ability to get higher levels of EPA positions us pretty well regardless of how additional data strikes out. And I think even looking at the REDUCE-IT data, I think people are still trying to tease out whether or not you are seeing kind of these anti-inflammatory, these antithrombotic effects. I think even more research is required there even on the Vascepa side. For example, you couldn't even necessarily tie it to something like CRP. That's where our second-mover advantage and our ability to continue to tease out the primary and secondary endpoints for our study becomes important because as this landscape evolves, as more data comes out, both from REDUCE-IT and then eventually from the STRENGTH trial, we will add and look to add different data points in order for us to be able to tease out kind of differentiation. And we look forward to kind of being able to take advantage of our second-mover status to design things in order to give -- or create more data to give answers to some of the questions that are coming out of these studies.

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Operator [21]

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Ladies and gentlemen, this concludes today's teleconference. You may disconnect your lines at this time, and thank you for your participation.