DEF: Matinas BioPharma Seeks Stockholder Approval for Key Stock Issuance and Change of Control

Matinas BioPharma is holding a special meeting on April 4, 2025, to seek stockholder approval for a stock issuance that could result in a change of control, as well as to ratify the appointment of its independent auditor.

Summary

• Matinas BioPharma Holdings, Inc. is convening a Special Meeting of Stockholders on April 4, 2025, to vote on key proposals.
• The primary proposal involves seeking approval for the issuance of up to 16,894,212 shares of common stock upon conversion of Series C Convertible Preferred Stock and exercise of warrants, potentially resulting in a change of control as defined by NYSE American guidelines.
• Stockholders will also vote to ratify the appointment of EisnerAmper LLP as the company's independent registered public accounting firm for the year ending December 31, 2025.
• A third proposal seeks approval to adjourn the meeting, if necessary, to solicit additional proxies if sufficient votes are not secured for the stock issuance or auditor ratification.
• The record date for determining stockholders eligible to vote is February 10, 2025.
• The Board of Directors recommends voting FOR all three proposals.

Sentiment

Score: 4

Explanation: The document indicates financial challenges and potential dilution for existing shareholders, but also highlights the board's efforts to secure funding and explore strategic alternatives. The sentiment is cautiously negative due to the company's need for capital and the potential for a winddown if the proposal fails.

Positives

• The offering is expected to provide $3.3 million in gross proceeds, bolstering the company's financial condition.
• The Board believes the offering is more favorable than alternative financing options, considering potential dilution and the likelihood of securing other capital sources.
• The funding will allow the company to continue exploring strategic alternatives to maximize shareholder value.
• The Board has determined that the terms and conditions of the Purchase Agreement are more favorable than those that could have been negotiated with other potential strategic partners and/or investors.

Negatives

• Approval of the stock issuance proposal will result in dilution of existing stockholders' ownership interests.
• If the Stock Issuance Proposal is approved, existing stockholders will suffer dilution in their ownership interests in the future upon the issuance of shares of common stock upon conversion of the Preferred Stock and exercise of the Warrants.
• The sale into the public market of these shares also could materially and adversely affect the market price of our common stock.
• If stockholder approval is not obtained, the company may need to consider a winddown or dissolution.

Risks

• Failure to obtain stockholder approval could hinder the company's ability to secure the second tranche of funding.
• The market price of the company's common stock could be adversely affected by the issuance of new shares.
• Existing stockholders face dilution of their ownership interests if the stock issuance proposal is approved.
• The company's future is uncertain if stockholder approval is not obtained, potentially leading to a winddown or dissolution.

Future Outlook

The company intends to use the proceeds from the offering to continue exploring strategic alternatives to maximize shareholder value. If stockholder approval is not obtained, the company will continue its evaluation of alternatives, including a winddown or dissolution of the Company.

Management Comments

• The Board believes that approval of the Stock Issuance Proposal, the appointment of EisnerAmper LLP as our independent registered public accounting firm for the year ending December 31, 2025, and the Adjournment Proposal are advisable and in our best interests and that of our stockholders and recommends that you vote FOR these proposals.
• After careful consideration, the Board determined that the Offering, including the issuance of Common Stock upon conversion of the Preferred Stock and exercise of the Warrants, are advisable and in the best interests of the Company and its stockholders, and determined to recommend that our stockholders approve the Stock Issuance Proposal.

Industry Context

Many small-cap biotech companies face challenges in securing funding, often resorting to dilutive financing methods like the offering described in this document. Stockholder approval is a standard requirement for issuances exceeding certain thresholds, particularly when a change of control is possible.

Comparison to Industry Standards

• The need for shareholder approval for issuances of 20% or more of outstanding stock is standard practice under NYSE American LLC Company Guide Section 713, aligning with industry norms for protecting shareholder interests.
• The engagement of a proxy solicitor, Advantage Proxy, for a fee of $15,000 plus expenses is a common practice for companies seeking to ensure sufficient shareholder turnout and voting on critical proposals.
• The terms of the Preferred Stock and Warrants, including conversion price adjustments and beneficial ownership limits, are typical features designed to balance the interests of the company and the investors.

Management Changes

Stakeholder Impact

• Existing stockholders face potential dilution of their ownership interests.
• The company's employees' jobs may be at risk if the company is unable to secure funding and is forced to wind down operations.
• The company's creditors may be impacted depending on the outcome of the vote and the company's ability to continue as a going concern.

Next Steps

• Stockholders need to vote on the proposals before the Special Meeting on April 4, 2025.
• The company will proceed with the second closing of the offering if stockholder approval is obtained.
• If stockholder approval is not obtained by April 10, 2025, the company will call a meeting of stockholders every four months thereafter to seek Stockholder Approval until the earlier of the date Stockholder Approval is obtained or the Preferred Stock and Warrants are no longer outstanding.
• The company will continue to evaluate strategic alternatives, including a winddown or dissolution, if stockholder approval is not obtained.

Key Dates