Business Overview and History
Mustang Bio, Inc. (NASDAQ:MBIO) is a clinical-stage biopharmaceutical company that has been at the forefront of translating medical breakthroughs in cell and gene therapies into potential cures for difficult-to-treat cancers. With a focus on hematologic malignancies and solid tumors, Mustang Bio has built an impressive pipeline of product candidates that have garnered significant attention in the industry.
Mustang Bio was incorporated in Delaware in March 2015, with the goal of leveraging cutting-edge technologies to develop novel treatments for cancer patients. The company's strategy has been to in-license promising product candidates from world-class research institutions and support their preclinical and clinical development.
In its early years, Mustang Bio focused on organizing the company, acquiring and developing proprietary technology, and identifying and obtaining preclinical data for various product candidates. The company licensed technologies from renowned institutions such as the City of Hope National Medical Center (COH), Fred Hutchinson Cancer Center (Fred Hutch), and Nationwide Children's Hospital, allowing it to develop a robust pipeline of CAR T therapies.
One of Mustang Bio's key partnerships is with COH, where the company has licensed several chimeric antigen receptor (CAR) T-cell therapies, including MB-101 targeting IL13Rα2 for the treatment of malignant brain tumors. The company has also collaborated with Fred Hutch on the development of MB-106, a CD20-targeted CAR T-cell therapy for non-Hodgkin lymphoma and chronic lymphocytic leukemia.
In 2017, Mustang Bio reached a significant milestone when the U.S. Food and Drug Administration (FDA) accepted the company's Investigational New Drug (IND) application for MB-106. This paved the way for the initiation of clinical trials for the product candidate. As of December 2023, approximately 40 patients had been treated in an ongoing Phase 1 clinical trial sponsored by Fred Hutch, and another 20 patients had been treated in a Phase 1 trial sponsored by Mustang Bio.
In 2023, Mustang Bio received Safety Review Committee approval to continue dose escalation in all three active arms of the ongoing Mustang-sponsored Phase 1 trial for MB-106. The company presented favorable safety, complete response rate, and durability data from this trial at the 2023 American Society of Hematology (ASH) Annual Meeting.
Mustang Bio's pipeline also includes MB-109, a combination of MB-101 CAR T-cell therapy and MB-108 oncolytic virus therapy for the treatment of IL13Rα2-positive glioblastoma and high-grade astrocytoma. In October 2023, the company received a safe-to-proceed approval from the FDA for its MB-109 IND application, allowing it to initiate a Phase 1 clinical trial.
Despite its progress, Mustang Bio faced setbacks in 2023 when it decided to discontinue development of several CAR T programs, including MB-102, MB-103, MB-104, and MB-105. This strategic decision was made to focus the company's limited resources on its priority programs.
Financial Performance and Liquidity
Mustang Bio has not yet generated any revenue from its product candidates, as they are still in various stages of clinical development. The company has been funded primarily through the sale of equity, with its most recent financing activities in 2024 raising approximately $5.3 million in net proceeds.
For the fiscal year 2023, Mustang Bio reported a net loss of $51.6 million, with operating cash flow (OCF) of -$49.5 million and free cash flow (FCF) of -$49.6 million. In the most recent quarter (Q2 2024), the company reported no revenue, a net loss of $8.2 million, OCF of -$2.3 million, and FCF of -$2.3 million. There was no year-over-year growth, as the company did not have any revenue in the most recent quarter or the prior year quarter.
As of June 30, 2024, Mustang Bio had cash and cash equivalents of $4.3 million. The company's net loss for the six months ended June 30, 2024, was $13.4 million, compared to a net loss of $32.9 million for the same period in 2023. The decrease in net loss was largely due to a reduction in research and development expenses, which the company attributed to a significant workforce reduction in April 2024 and the termination of several license agreements.
Mustang Bio's liquidity position remains precarious. As of June 30, 2024, the company had a negative debt/equity ratio due to total equity of -$8.3 million and no outstanding debt. The current ratio and quick ratio both stand at 0.46, indicating potential short-term liquidity challenges. The company does not appear to have any available credit lines.
Challenges and Risks
Mustang Bio's success is heavily dependent on the successful development and commercialization of its product candidates. The company faces significant regulatory and clinical hurdles, as well as competition from other biopharmaceutical companies working in the cell therapy space.
As a development-stage biotech firm, Mustang Bio has incurred significant losses since its inception, which is typical for companies without any approved products. The company's limited operating history has also presented challenges in demonstrating its ability to overcome the risks and uncertainties common in the biopharmaceutical industry.
In April 2024, Mustang Bio received a deficiency letter from Nasdaq notifying the company that it was not in compliance with the minimum stockholders' equity requirement for continued listing on the Nasdaq Capital Market. The company submitted a plan to regain compliance and was granted an extension through September 2024 to do so.
Additionally, in May 2024, Mustang Bio received a notice from Nasdaq indicating that the bid price of its common stock had closed below $1 per share for 31 consecutive business days, putting the company out of compliance with the minimum bid price requirement. Mustang Bio was afforded a 180-calendar day grace period to regain compliance, which could be extended if certain criteria are met.
These regulatory and financial challenges, coupled with the inherent risks associated with drug development, create significant uncertainty around Mustang Bio's ability to continue as a going concern. The company's future success will depend on its ability to navigate these obstacles and secure the necessary funding to advance its pipeline.
Outlook and Conclusion
Despite the challenges facing Mustang Bio, the company's focus on innovative cell therapy approaches for difficult-to-treat cancers remains a compelling investment thesis. The positive data from the company's ongoing clinical trials, particularly for MB-106, suggest that its product candidates have the potential to make a meaningful impact in the lives of cancer patients.
Mustang Bio's primary focus is on the development of its CAR T therapy pipeline, particularly MB-106, MB-101, and MB-109, through partnerships with leading research institutions. The company had previously pursued gene therapy programs but has since terminated those efforts to prioritize its CAR T therapies. In April 2024, the company underwent a significant reduction in workforce of approximately 81% to preserve capital and terminated certain license agreements, including with St. Jude, Leiden University, and Mayo Clinic.
The company is currently focused on advancing its MB-106 program, with plans for a proof-of-concept Phase 1 trial in autoimmune diseases, while pausing further development of its other product candidates due to resource constraints. This strategic focus is crucial given the company's limited financial resources and the need to prioritize its most promising programs.
However, Mustang Bio's near-term survival is contingent on its ability to address the Nasdaq compliance issues and secure additional financing. Investors will need to closely monitor the company's progress in these areas, as well as any potential updates regarding the development and regulatory approval of its product candidates.
Overall, Mustang Bio's journey highlights the challenges and risks inherent in the biopharmaceutical industry, as well as the potential rewards for companies that can successfully navigate these obstacles. As the company continues to push the boundaries of cell therapy innovation, its ability to execute on its strategic vision and secure the necessary funding will be critical in determining its long-term success.