Hello, and welcome to the Matinas BioPharma Fourth Quarter and Full-Year 2020 Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. I would now like to turn the conference over to Peter Vozzo, Investor Relations Representative for Matinas BioPharma. Peter, you may begin.

Thank you, Kevin. Good morning, everyone, and thank you for joining the Matinas BioPharma fourth quarter and full year 2020 results conference call. Earlier this morning, we issued a press release with our financial results along with business updates. The release is available on the Matinas BioPharma website under the Investors section.

Thank you, Peter. Good morning, everyone, and thank you for taking the time to join us today as we provide a business update and discuss our 2020 fourth quarter and full-year results. 2020 was a year of significant progress and timely execution for Matinas despite the ongoing global pandemic. Under the most challenging of circumstances, our company remained focused on our strategic objectives and took all necessary and appropriate steps to place patient and caregiver safety and well-being above all else, while ensuring that we were able to advance our clinical stage assets in multiple clinical trials. In looking back across 2020, I could not be prouder of our accomplishments. And with key results now in hand and several key upcoming catalysts and milestones in 2021, we are excited by what lies ahead. The completion of our head-to-head ENHANCE-IT trial of LYPDISO versus Vascepa was a major milestone for Matinas, and we believe that the results support the potential for LYPDISO to demonstrate its superior cardioprotective effect to Vascepa.

Thanks, Jerry, and good morning, everyone. In February of 2021, we announced top line results from ENHANCE-IT, a second randomized, parallel group crossover, head-to-head study of LYPDISO versus Vascepa, directly comparing their effectiveness in reducing triglycerides, their effects on other important lipid markers, and their effects on blood levels of eicosapentaenoic acid or EPA and other omega-3 fatty acids. It included 100 adult men and women with triglycerides between 150 and 499 milligrams per deciliter. Approximately 58% of study subjects had triglycerides greater than or equal to 200 milligrams per deciliter. The study protocol involves two 28-day treatment periods with a washout period of at least 28 days between treatments and was conducted at eight sites in the U.S. LYPDISO and Vascepa were each given as 2 grams twice daily with food in accordance with currently approved Vascepa labeling. The primary endpoint in ENHANCE-IT was the percent change from baseline to end of treatment in plasma triglycerides.

Thank you, Terry and good morning everyone. You will be hearing shortly from Dr. Matkovits about the progress we have made with MAT2203, our oral amphotericin B product and MAT2501, our oral amikacin product, both of which utilize the LNC platform. With amphotericin and amikacin, the challenges are similar, achieving high levels at the site of infection without the treatment-limiting toxicities associated with both. At this point I'd like to provide a little bit more background on our Lipid Nanocrystal or LNC delivery system that has made the delivery of these drugs possible. Fundamentally, our LNC platform is the next step in efficient, safe, targeted intracellular delivery. While amphotericin and amikacin have always had toxicity issues, newer complex treatments have a different problem: how to successfully deliver sophisticated new drugs like oligonucleotides, mRNA, gene therapy, new antivirals and even CRISPR-Cas9 into cells. Intracellular delivery is becoming increasingly important if medical science is to take full advantage of our growing understanding of cell biology. Unfortunately, at this point, the only two real options are Lipid Nanoparticles or LNPs and viral vectors, both of these delivery systems have significant challenges they are just not able to overcome. So there is a need for much more stable formulations for greatly improved delivery efficiency and for less of the toxicity and immunogenicity that are currently seen with LNPs and viral vectors. Moreover, there are size limitations on what LNPs and viral vectors can deliver, which can make the delivery of large mRNA protein complexes, for example, problematic. Even with these challenges, LNPs and viral vectors are widely used for the simple reason that, up until now, there have been no good alternatives.

Thanks, Raphael and good morning, everyone. I will provide a few key highlights on MAT2203 and discuss EnACT, our study to treat HIV-infected patients with cryptococcal meningitis. I will then follow with an update on MAT2501. 2020 was a significant year of progress for MAT2203 as we were able to advance this important LNC drug candidate in our EnACT study in Uganda, which explores the use of MAT2203 for both induction and maintenance or consolidation treatment of cryptococcal meningitis in HIV-infected patients. Data from part one of the EnACT study, which was completed early in 2020, were published in the Antimicrobial Agents and Chemotherapy or ACC, a Journal of the American Society of Microbiology. In the manuscript entitled Safety and Tolerability of a Novel Oral Formulation of Amphotericin B: Phase-1 EnACT trial, the published manuscript trial investigators concluded that MAT2203 was well tolerated when administered in four to six divided daily doses without the toxicities commonly seen with IV amphotericin B, with nearly 100% of patients expressing a preference for oral MAT2203 relative to amphotericin B delivered intravenously. The second part of EnACT, which is designed to assess both safety and efficacy of MAT2203 in HIV patients with an active cryptococcal meningitis infection was initiated early in 2020 but only began enrolling patients in July of 2020 due to the global pandemic. The second part of EnACT is divided into four distinct patient cohorts, with subsequent adjustments to the timing of MAT2203 and the duration of exposure to intravenous amphotericin B, the existing standard of care for patients with cryptococcal meningitis. In October of 2020, the Independent Data Safety Monitoring Board completed a pre-specified review of the first cohort and unanimously recommended progression to the second cohort of patients. As a reminder, in cohort 1, patients in the active arm received five days of intravenous amphotericin B followed by nine days of oral MAT2203 for the 14-day induction period and then continued on MAT2203 for an additional four-week maintenance period. Data from cohort 1 confirmed that treatment with oral MAT2203 was overall safe and generally well tolerated and did not indicate any potential renal safety signals, which has been a significant challenge and risk associated with intravenous amphotericin treatment. All patients in the MAT2203 group with positive central nervous system cultures at baseline became sterile during the induction and maintenance phases of the study. Cohort 2 shortens the lead-in treatment with intravenous amphotericin to two days and increases the duration of treatment with MAT2203 in the induction phase to 12 days. Cohort 2 includes 40 patients in the active arm and 16 on control therapy, which is intravenous amphotericin B. Following the induction phase, active patients continue on oral MAT2203 for the four-week maintenance or consolidation period. We are pleased to report that we have recently reached 50% of patient enrollment which is 28 of 56 patients in cohort 2, and we anticipate that data safety monitoring board evaluation of full safety and efficacy data from this cohort will occur in the third quarter of this year. We view cohort 2 as extremely important for a number of reasons. First, increasing the duration of oral MAT2203 during the induction phase to 12 days should provide more detailed insight into the efficacy of MAT2203 in this vulnerable patient population. We would expect to see continued improvement in reduction of CSF fungal counts and the achievement of sterility during induction without rebound during maintenance. This would be further validation that MAT2203 is effectively crossing the blood-brain barrier and treating this deadly invasive infection. Second, following DSMB evaluation of the data from cohort 2 and our own internal review, we anticipate meeting with the FDA to allow them to review all data generated to date in EnACT and to discuss opportunities to potentially accelerate development of MAT2203 through the limited population pathway for antibacterial and antifungal drugs, more commonly referred to as the LPAD pathway. This pathway was created to encourage and facilitate the development and approval of certain antibacterial and antifungal drugs to treat serious or life-threatening infections in limited populations of patients with unmet needs. Often development programs for drugs eligible for approval under the LPAD pathway will follow streamlined approaches to clinical development and may involve smaller, shorter or fewer clinical trials. We believe MAT2203 is an ideal candidate for the LPAD pathway and look forward to discussing the data from EnACT with the FDA later this year in an effort to further streamline the development and regulatory path toward an initial approval for the treatment of cryptococcal meningitis. We also anticipate discussing the way forward for additional indications for MAT2203 in treating other invasive fungal infections such as aspergillosis and invasive candidiasis. Ultimately, we believe MAT2203 has the potential to become the therapy of choice for the treatment of the most invasive fungal infections given the broad-spectrum nature of amphotericin B and the unique ability of our LNC platform to facilitate oral bioavailability and also mitigate issues related to the severe renal toxicity historically seen with IV-administered amphotericin B.

Thanks, Terry and good morning, everyone. Turning now to our financial results, for the fourth quarter of 2020, the company reported a net loss attributable to common shareholders of approximately $6.6 million or $0.03 per basic and diluted share, compared to a net loss attributable to common shareholders of approximately $5.8 million or $0.04 per basic and diluted share for the same quarter of 2019. For the full year 2020, the company reported a net loss attributable to common shareholders of approximately $23.2 million or $0.12 per basic and diluted share, compared to a net loss attributable to common shareholders of approximately $18.3 million or $0.13 per basic and diluted share for 2019. The increased loss for each period was due primarily to an increase in operating expenses. Research and development expenses were approximately $3.5 million in the fourth quarter of 2020 compared to approximately $3.4 million in the same quarter of 2019. For full year 2020, R&D expenses were $14.4 million compared to $11.2 million for full year 2019. The increase for full year 2020 was due primarily to higher preclinical and clinical development expenses and employee compensation related to the development of LYPDISO, MAT2203, and MAT2501. General and administrative expenses were approximately $3 million in the fourth quarter of 2020 compared to the previous year's fourth quarter G&A expenses of approximately $2.3 million. For the full year 2020, G&A expenses were $10 million, compared to $7.8 million for full year 2019. The increase in both periods was due primarily to increased headcount and professional fees. Cash, cash equivalents, and marketable securities at December 31, 2020 were approximately $58.7 million, compared to $27.8 million at December 31, 2019. The year-over-year increase is due primarily to the sale of approximately 32.3 million shares of the company's common stock at a price of $1.55 per share during January 2020, generating net proceeds of approximately $46.7 million. In July 2020, the company entered into an At-The-Market Sales Agreement with BTIG, pursuant to which the company may offer and sell from time to time, through BTIG, shares of its common stock, having an aggregate offering price of up to $50 million subject to certain limitations. As of December 31, 2020, the company did not sell any shares of its common stock under the sales agreement. However, during January 2021, the company sold approximately 3 million shares of its common stock under the Sales Agreement, generating net proceeds of approximately $5.6 million. Based on current projections, management believes that cash on hand is sufficient to fund operations into 2024.

Thanks, Keith. In summary, 2020 was a year of significant accomplishment for Matinas. As we look forward now to the balance of 2021, our focus is on improving the intracellular delivery of critical therapeutics through our paradigm-changing LNC platform delivery technology. We believe our technology can be differentiated from any other intracellular drug delivery technology being applied today and has the potential to solve some of the challenges presented by the use of lipid nanoparticles and viral vectors. Our proprietary phosphatidylserine-based LNCs can enter cells in a variety of ways without unintended adverse immune consequences and without cell-based toxicity or death. And we have the flexibility with both route of administration and with the types and sizes of molecules that can be formulated inside our LNCs. Cohort 2 from the EnACT study continues enrollment and represents a great opportunity for further validation of MAT2203 and our LNC platform in highly vulnerable patients suffering from a deadly fungal infection, which requires drug transport across the blood-brain barrier. MAT2501 is poised to advance rapidly during 2021 and positions that drug for a Phase 2 program next year. And we are excited to see our relationship with Genentech continue and expand as well as how our initial formulations of Gilead’s remdesivir perform in NIAID preclinical studies over the next few months. We also remain confident that we will find the right partner to continue the development of LYPDISO and maximize the opportunity presented by a differentiated omega-3 with the capability of achieving elevated blood levels of EPA in the fight against cardiovascular risk. With a cash runway into 2024, and with sole control over a potentially disruptive delivery platform, we believe this is a very exciting time for our company and our stockholders and we look forward to keeping you apprised of our progress throughout the year. With that, we have reached the conclusion of our prepared remarks, and I will turn the call over to our operator for the question-and-answer session.

Thank you. Now we’ll be conducting a question-and-answer session. Our first question today is coming from Yasmeen Rahimi from Piper Sandler. Your line is now live.

Hi, team. Thank you for taking the questions and for the really thoughtful and detailed updates. Two questions for you. Maybe the first one is just walk me through why, what the reason for the decision is for not pursuing severe hypertriglyceridemia, but rather focus into the broader population? And then the second question is, I would like to understand a little bit more about the opportunities on using the LNC platform, specifically for mRNA constructs and gene therapy? And thank you again for taking my questions.

Thank you, Yasmeen. Regarding the decision to not proceed with the AMPLIFY trial, which was the Phase 3 trial set for severe hypertriglyceridemia, this came after a thorough examination of the ENHANCE-IT data. The insights from that data suggest that the potential of LYPDISO may be higher than we initially believed. The capability to increase blood levels of EPA indicates that LYPDISO might offer a superior cardioprotective effect compared to Vascepa. After consulting with our Scientific Advisory Board, we determined that prioritizing a cardiovascular outcomes trial would be the best approach. Continuing with both paths could lead to a scenario where we seek approval in a narrower indication in severe hypertriglyceridemia, and even if we were successful in 2024, it would only mark the start of our exclusivity period. Given LYPDISO's profile and our belief in its potential to attract a partner for broader development, maximizing our opportunity is essential. This involves positioning LYPDISO as a treatment for reducing cardiovascular risk, which helps to maintain our exclusivity and allows us to aim for a wider label. It also enables us to avoid the financial burden of swiftly seeking approval without taking into account the challenges faced by other companies, such as Amarin’s experience with skinny labeling. Overall, we believe that collaborating with a partner to carry out a cardiovascular outcomes trial will be crucial, especially given Matinas's current capabilities. Data indicates that there should be interest from potential partners in assisting with this endeavor. That ultimately directed our decision. Terry Ferguson, do you have anything to add?

No, no Jerry, I think you hit the high points. And I think that, again depending on the partner that could remain an opportunity. But in thinking about this and thinking about the very clear signal that this appeared to be a very good drug for cardiovascular risk reduction, not to jeopardize that period of exclusivity for that much larger opportunity seemed to make the most sense for right now.

And then Yasmeen, these decisions are never made in a vacuum. So, they're always made with an idea of what technology or what expertise and what products are within your company, what is the best allocation of resources. And as we evaluated the entire company, particularly with the emergence of the LNC platform and the opportunity presenting itself, that LYPDISO has the potential to become a superior cardioprotective drug, it made sense to line things up this way. Does that answer your first question?

Yes. Thank you, Jerry, that's helpful. Thank you for the additional color.

Sure. And so, now to turn to your second question on the LNC platform, particularly how it may apply to things like messenger RNA and gene therapy. There is no question that drug delivery continues to be one of the greatest challenges in the development of medicine today, and the ability to get specifically complex nucleic acid polymers inside a cell is really hard. And you can tell by how long it's taken some companies, look at Alnylam, how long it took them working with lipid nanoparticles to get their first drug approved in that area with ONPATTRO. What we've seen with LNCs historically is the ability to formulate these complex nucleic acid polymers. And so, as we sit here today, yes, we're working on important drugs like amphotericin and amikacin, the LNCs help them achieve results that would not be possible without that technology. But we do recognize that there's a lot of attention today, particularly because of COVID-19 and the emergence of the vaccines, which are mRNA based and do use lipid nanoparticles to deliver, we know that they can be effective. But we also know that there are limitations. They can't be used chronically. There are issues with toxicity and other things. And we've seen the ability and have formulated DNA plasmids as large as 11 kilobases. We've gotten formulations of mRNA stable at room temperature for four weeks, in a refrigerator for up to six months. So we know we have the ability to formulate these drugs and we expect to have the opportunity to work with some of these companies to demonstrate our ability to sort of move forward in that area. But maybe, Raphael, could you just talk about, the particular effect that we could have in formulating a gene therapy or a messenger RNA and the unique way, which we could deliver it inside a cell, and the multitude of cells that we're talking about here, and maybe focus again on phosphatidylserine.

Sure. Thank you. I think one of the first things is just to go back to our ability number one, to be taken up and expressed in a macrophage. Macrophages are one of the major antigen presenting cells in the immune system. And the second thing is that although people tend to focus on antibodies for things like influenza virus and coronavirus, we also know that cell-mediated immunity killer T-cells are probably much more effective at protecting a person from lung destruction or lung disease than the antibodies are. And the third is that although we give most of these vaccines intramuscularly, it has been shown and we have shown with the Lipid Nanocrystals that delivering them orally allows you to express both antibody and cell-mediated immune responses on the mucosal surface, which is the way that these viruses enter the body. So just focusing on respiratory viruses, and the ability to make a vaccine that is safer, because you can give it intramuscularly, you can boost, you don't get side effects when you do that, you can give it orally so that you can or intravenously so that you can immunize and get better strong mucosal immunity, as well as systemic immunity gives the Lipid Nanocrystal a large advantage over anything like a lipid nanoparticle or viral vector. When you extend from there, and you go to and you look at other cells like virally infected cells, inflamed cells with chronic immune inflammation, inflammatory disease, and cancer cells, all of these cells, they start as normal cells when they convert or are converted into pathogenic cells by virus infection, by oncogenesis, by inflammation, that and phosphoserine receptors in some cases, are seen to appear on the outside of the cell surface. So both of those things maximize and enable the targeting delivery of that the nanocrystal formulated drugs, as well as the uptake either by phagocytosis or through fusion. And that's important just to get into a little bit more immunology, in that if you want an antibody response, you want to delivery let's say into an endosome, but if you want cell-mediated immunity, you need to have the antigen directly in the cytoplasm. So our ability to enter a cell in both ways maximizes our ability to enhance the efficacy of the drug that we're delivering.

Thanks. Was that helpful?

Yes, very much. Thank you.

Thank you. Our next question today is coming from Gregg Gilbert from Truist Securities. Your line is now live.

Good morning, folks. It's Greg Fraser on for Gregg Gilbert. A couple of questions on MAT2203. Assuming the results for the second cohort are supportive of moving forward, can you just walk us through the timeline for the third and the fourth cohorts? And you mentioned meeting with the agency following completion of the second cohort to discuss an accelerated approval pathway, what would be a best case scenario in terms of timing if you're able to pursue an accelerated pathway and if that route is not available, how should we think about the likely regulatory path?

Thank you, Greg. I'll address your questions in reverse. Regarding speculation on the speed of the LPAD pathway, without reviewing the data with the FDA, it's challenging to make predictions. There have been very few companies that have successfully utilized this pathway so far. We know our drug was the first approved under the LPAD pathway. With cryptococcal meningitis and a drug like amphotericin, we believe this is an ideal situation for leveraging the LPAD pathway, but predicting the timing for approval is difficult at this moment. However, it is conceivable that, upon reviewing the back half of the EnACT study, we could find a way to expand the study size, potentially including a U.S. arm, which could turn EnACT into a registration trial. That would be the best-case scenario, but we need to assess the data first and discuss it with the FDA before forecasting anything. Terry Matkovits, could you please go over the sizes of cohorts 3 and 4 along with the expected timelines for completing EnACT?

Sure, Jerry. So the enrollment in the EnACT trial, of course, is dependent on largely when the patients will present since it's an acute fungal infection. But our current estimated timing for the cohort progression as we discussed in the third quarter of this year, we anticipate to have a readout of the stage two data, which we believe will be pivotal to the discussion of the potential for the LPAD review with the FDA. Stage three will be initiated in the third quarter of this year with a readout by the early fourth quarter of this year and that is a smaller cohort of patients where we're looking at the 14 days, 14 cohort of 14 patients. Stage four, which is really the critical cohort looking at an all oral treatment of patients with cryptococcal meningitis will be initiated in the fourth quarter of this year based on our enrollment projections, with the readout of the initial stage of the study by the first half of 2022.

Thanks, Terry.

Thank you. We have reached the end of our question-and-answer session. I'd like to turn the floor back over to management for any further or closing comments.

Thanks, Kevin, and thank you all for joining us today. We appreciate your continued interest in Matinas, and the team here looks forward to providing you with updates on our future progress. Have a great day.

Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.