Hello, and welcome to the Matinas BioPharma's Q1 2021 Results Conference Call and Webcast. At this time, all participants are in a listen-only mode. As a reminder, this conference is being recorded. It is now my pleasure to turn the call over to Peter Vozzo, Investor Relations. Please go ahead.

Thank you, Kevin. Good morning, everyone, and thank you for joining the Matinas BioPharma first quarter 2021 results conference call. Earlier this morning, we issued a press release with our financial results along with business updates. This 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 review our 2021 first quarter financial results, and provide a brief business update. At this point in the year, the reporting calendar becomes a bit compressed as we reviewed our 2020 financial results and provided an operational update a short while ago on March 29, and are now providing our first quarter report just 40 days later. Despite the short reporting interval, we continue to be very pleased with our overall progress, as we work towards several meaningful catalysts and milestones throughout 2021. In March, we outlined our plan and strategy to identify the right partner for our potential best-in-class prescription omega-3 drug LYPDISO, following the announcement of data from the enhanced head-to-head trial versus Amarin Corporation's Vascepa, where we once again showed superiority in the ability to achieve elevated levels of eicosapentaenoic acid or EPA in the blood, which has been demonstrated to correlate directly with the overall reduction of cardiovascular risk. The partnership process is ongoing with interested parties coming across the globe, including the U.S., EU and China.

Thanks, Jerry, and good morning, everyone. Turning now to our financial results. Cash, cash equivalents and marketable securities at March 31, 2021 were approximately $60.7 million compared to $58.7 million at December 31, 2020. The company reported a net loss attributable to common shareholders of approximately $5.2 million or $0.03 per basic and diluted share. These results are identical to those of the first quarter of last year. Research and development expenses were approximately $3.2 million in the first quarter of 2021 compared to approximately $4.1 million in the same quarter of 2020. The decrease was due primarily to the completion of the ENHANCE-IT trial of LYPDISO in January 2021.

Thanks, Keith. In summary, 2021 represents a transformational year for Matinas as we focus our attention and resources on our LNC platform and anticipate important and meaningful data from the EnACT trial in the near term. That combined with progress on MAT2501 and in our collaborations and focus on expanding the utilization of our potentially disruptive delivery technology, we believe we have positioned Matinas and our LNC platform for significant growth. The maturation of our LNC technology has enabled us to move it into the spotlight, and we look forward to continuing to share our progress with you during 2021 and beyond. We move forward from a strong financial position and are committed to creating significant value for our shareholders. With that, we have reached the conclusion of our prepared remarks. And I will turn the call over to the operator for a question-and-answer session.

Our first question today is coming from Bert Hazlett from BTIG. Your line is now live.

Thank you. Congratulations on the continued progress. Jerry, just on 2203 initially, do you have any sense of how much data might be necessary for you to really enthusiastically pursue the kind of an LPAD more rapid advanced pathway? And then I have a strategic question after that.

Yes, Bert, thanks for the question. It's a good one. But it's one that comes with some uncertainty, right, because at the end of the day you're talking about a pathway that's relatively new within FDA. But at the same time, one that has received increased attention and emphasis from the agency in terms of incentivizing companies to drive these drugs forward. So in terms of the magnitude of data, I don't know that that's really well understood. But what we do know is that the EnACT trial really represents a great opportunity in a very vulnerable patient population to highlight the attributes of 2203, both from a safety and efficacy perspective. And uniquely, it also gives the agency the opportunity to evaluate MAT2203, both from a step down therapy perspective and an induction perspective. So in those discussions with FDA, what we will be focused on is really highlighting the potential for MAT2203 in both of those areas. And the first two cohorts of EnACT really highlight the ability to effectively be used as a step down therapy, and the next two cohorts really will focus on showing the ability of MAT2203 as induction. Although you certainly can draw some conclusions from the first two cohorts about the overall efficacy profile of MAT2203, we're not going to be in position then to have to force the agency to look at the whole, and so we think that is going to give us an opportunity for them to really evaluate and perhaps accelerate what a maintenance or consolidation or a step down approval will look like, followed quickly by an approval for induction therapy. So we think that's a little bit unique here. And given the fact that you're dealing with a deadly fungal infection and patients who are likely in the hospital as a result, step down is a natural place to begin and one that we think won't require a tremendous amount of patience to be able to get FDA comfortable that this is an important solution for patients.

Thank you. I have a quick follow-up regarding the 2203 comment. As we progress through Cohort 2, assuming there is advancement, do you anticipate sharing more information about the results of the first two cohorts, or will we perhaps only see a transition to Cohort 3 and later?

Yes, that's a good question and an important one, because when we announced cohort progression the first time, that's really all we did was we relied sort of on the independence of the DSMB, and because it was only 10 patients, we really just announced cohort progression. The plan for Cohort 2 is going to be different. So as of now, we anticipate that we will be sharing data from both of the cohorts, should the DSMB recommend progression, and we feel good about that. And we would release that data; we would likely have a call around that data, we would involve the principal investigator. And so we will be able to go into much more detail in terms of what we're actually seeing in these patients. Cohort 2 is 4x the size of Cohort 1. So you're really starting to get a meaningful amount of data. And we think it's important that people have the opportunity to evaluate that in and of itself. So that would be our plan for the third quarter timeframe.

Thanks. Looking forward to that. And then with regard to just bigger picture strategy, if our programs like 2501, Jerry, ones that you think that you will continue on to fruition, just given some of the successes that you've mentioned in this space with various companies, or do you expect this to be largely a partnership strategy in the near term? Like, maybe some of the development deals you have with Gilead and others? Just your thoughts on.

Yes, that's a valid question. With our platform technology, there are numerous potential applications that could lead us in various directions. We maintain that the infectious disease sector offers significant opportunities to demonstrate and validate the LNC platform technology. Products like 2203 and 2501 are crucial for us, and we believe they might also attract interest from larger companies with established commercialization teams. Pfizer's recent purchase of Amplyx demonstrates the existing demand for differentiated products that address infectious diseases. Our objective is to progress 2203 and 2501 to a stage where they become appealing to external partners. We don't need to make a definitive decision now about whether to pursue these alone or seek partnerships. We foresee potential opportunities. If we identify the right partnerships that offer strong value both domestically and internationally, we will collaborate. We may not need to relinquish all rights; we can retain some for co-promotion or other activities. Finding partners and creating value through licensing could provide us with the extra resources to invest more significantly in innovative areas like gene therapy and messenger RNA, where we believe we can make a substantial impact. This approach involves multiple strategies. Having early clinical-stage candidates allows us to produce meaningful data that could lead to partnerships. It positions us advantageously, as our work in gene therapy and messenger RNA, along with initiatives with Genentech, is still in the earlier stages. By advancing our infectious disease candidates, we are allowing our gene therapy efforts to develop further. While the specifics of the future are uncertain, we do anticipate demand for both oral amikacin and oral amphotericin from large pharmaceutical companies.

Great, thanks. Looking forward to the progress. Thank you.

Thank you. Our next question today is coming from Yasmeen Rahimi from Piper Sandler. Your line is now live.

Hi team, thank you for sharing all the updates. I have just one question related to the details. I would love to hear your thoughts on the key questions arising from discussions with partners. How mature are those discussions currently? Moreover, as mentioned in your press release, are you considering a strategy to engage multiple partners instead of relying on one global partner for development and commercialization? I would appreciate more granular details on those discussions and when we might expect some insights. Thank you for addressing my question.

Thank you for the question. We don't want to overlook these details. The start of this process has been intriguing, with global interest expressed. This interest isn't surprising given the expansion of Vascepa and its recent approvals in Europe and China, alongside the rising issue of cardiovascular disease in places like China. It's still too early to determine if we will partner with one global entity for development or if the approach will be more regional. The critical areas we need to address revolve around intellectual property, supply chain, and commercial differentiation, especially in the U.S. We believe we have strong answers for each of these aspects. Starting with commercialization in the U.S., we have a differentiated product. Whether potential partners want to pursue SHTG or engage in cardiovascular risk reduction, we have demonstrated multiple times how this drug stands apart from Vascepa and any generics. The REDUCE-IT trial continues to reveal the significance of EPA levels, with recent analysis from Dr. Bhatt showing significant impacts on cardiovascular risk when achieving an EPA blood level of 104, while we reached 143 in ENHANCE-IT. Furthermore, there is a distinct difference in LYPDISO’s capacity to achieve levels above 104 compared to Vascepa. Thus, we see various opportunities worldwide from a commercial perspective. Regarding intellectual property, our situation differs significantly from Vascepa. Our patents focus on deep compositions that include DPA, granting us exclusivity advantages in the U.S. and potentially in the EU, which Amarin could never fully leverage. As for the supply chain, we are confident in our development expertise, and we feel a partner can easily take over this complex supply chain. However, it will take a few months. We anticipate more data announcements at the upcoming ACC event next week, providing additional insights from REDUCE-IT and STRENGTH, which will help complete the picture. As we approach the third and fourth quarters, we expect to share more substantial updates. Overall, we are encouraged by the interest we've received, and the early-year uncertainties faced by Amarin don't appear to have deterred potential partners from wanting to explore and assess LYPDISO thoroughly.

Thank you, Jerry.

Thank you. Our next question is coming from Greg Fraser from Truist Securities. Your line is now live.

Good morning. It's Greg Fraser for Gregg Gilbert. On MAT2501, should we think about the sequence of development as getting the proof-of-concept data in NTM first and then you consider other indications like gram-negative bacterial infections, or can you move forward with the gram-negative program before you have the efficacy data in NTM?

Hi, Greg, thanks for your question. It's quite significant because this isn't a step-by-step process; rather, there's a foundational aspect we need to establish. Part of our current efforts, supported by the Cystic Fibrosis Foundation, involves determining both short- and long-term toxicity, which is essential for advancing into programs that target gram-negative bacterial infections. We won't necessarily follow a strict progression from Phase 2 and Phase 3 for NTM before addressing gram-negative. However, it's critical to build that foundation demonstrating that we maintain a safe product, which has shown effectiveness in NTM. The key toxicity studies we conduct over 28-day and 90-day periods will support various programs we aim to pursue. As we complete these studies and move through Phase 1 with healthy volunteers, we'll work alongside the FDA regarding this data, which will help us better anticipate how we might undertake some initiatives simultaneously. Importantly, the Cystic Fibrosis Foundation has expressed its ongoing support for MAT2501 and NTM, so pursuing programs in parallel doesn't imply we will significantly increase our internal resource demands. Thus, establishing this foundation in 2021 can enable us to explore multiple paths simultaneously.

Got it. That's helpful. And then how should we think about R&D spend this year and next year, assuming that continues and 2501 advances into Phase 2 next year?

Yes, it remains relatively consistent, Greg, when you look at it on a year-over-year basis, especially with EnACT, since that trial is financially supported by the National Institutes of Health. Our cost obligations there really are from certainly from a supply perspective, and then from an oversight perspective, and meeting our obligations as a sponsor. So they don't change meaningfully, where they could change is dependent on what we would discuss with the FDA, for example, on LPAD approval and whether we will need some patients in the U.S., for example, for 2203. The trade-off there would be a much earlier approval. So that's something that I think we would trade every day. And on 2501, that will change, but again, it remains sort of contingent on what support we get from the Cystic Fibrosis Foundation. So year-over-year right now, the way we forecast things, it looks pretty similar, but that could change depending on regulatory interactions and a trade-off for earlier commercial opportunity.

Got it. Thanks very much.

Thank you. We’ve 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 thanks to everyone for joining us today. We appreciate your continued interest in Matinas, and the entire 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.