PDS Biotechnology Corporation — Q2 2022 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2022. PDS is a clinical-stage immunotherapy company developing cancer and infectious-disease candidates using its Versamune and Infectimune platforms. It has no commercially approved products and reported no product revenue.
Financial performance and position
| Metric | Q2 2022 | Six months 2022 | Comparable 2021 period |
|---|---|---|---|
| Revenue | None | None | None reported |
| Research and development expense | $3.76 million | $8.92 million | $2.76 million Q2; $4.18 million six months |
| General and administrative expense | $3.33 million | $6.65 million | $2.34 million Q2; $3.98 million six months |
| Total operating expense | $7.09 million | $15.57 million | $5.11 million Q2; $8.16 million six months |
| Net loss | $5.82 million | $14.29 million | $0.59 million Q2; $3.64 million six months |
| Net loss per share, basic and diluted | $0.20 | $0.50 | $0.03 Q2; $0.16 six months |
Loss per share is shown as a loss. The much smaller 2021 Q2 net loss reflected a $4.52 million income-tax benefit, compared with $1.20 million in Q2 2022. The six-month tax benefit likewise declined to $1.20 million from $4.52 million, primarily because fewer accumulated New Jersey net operating losses were available for sale. The filing reports no meaningful product margins; the company has not generated commercial sales.
- Cash and liquidity: Cash and cash equivalents were $52.98 million at June 30, down from $65.24 million at December 31, 2021. Operating cash use was $12.29 million in the first half, versus $2.86 million in the first half of 2021. Financing provided only $0.03 million in the first half of 2022; the comparable 2021 period included $48.54 million of net equity-offering proceeds.
- Balance sheet: Total assets were $56.00 million, total liabilities $4.58 million, and stockholders’ equity $51.43 million. The filing reports no borrowings; liabilities were mainly accounts payable, accruals and operating leases.
- Share count: 28.46 million common shares were outstanding at June 30, 2022; 4.41 million potential shares from options and warrants were excluded from diluted loss per share as anti-dilutive.
Material changes and developments
- First-half operating expenses rose 91% year over year. R&D increased 114%, driven mainly by personnel, clinical-study, and manufacturing and quality costs. G&A increased 67%, primarily from personnel and legal costs.
- Management reported preliminary VERSATILE-002 results for PDS0101 plus pembrolizumab: 7 of 17 evaluable patients had an objective response, including two complete responses; 13 of 17 had response or stable disease. No treatment-related Grade 3 or higher adverse events were reported among 19 patients in the safety set. These are early, company-reported results without a control or comparative study and should not be treated as evidence of established benefit.
- The FDA granted Fast Track designation to PDS0101 in combination with pembrolizumab, and the VERSATILE-002 trial expanded into Europe.
- The company reported updated NCI Phase 2 triple-combination data for PDS0101, M9241 and bintrafusp alfa, including differing response results across M9241 dose groups. The data were preliminary; 13 of 30 patients had Grade 3 and two had Grade 4 treatment-related adverse events, with no Grade 5 events reported.
- PDS shifted near-term infectious-disease focus toward universal influenza vaccine development. Its Farmacore COVID-19 vaccine license expired May 31, 2022; the filing says Brazil funding had not been confirmed and clinical development had not begun.
- In July 2022, the company and its former CFO reached a confidential settlement of an arbitration claim alleging wrongful termination and seeking at least $3 million plus other amounts. The company reported no material change to accrued liabilities and no admission of liability.
Outlook, risks and contingencies
Management said June 30 cash was expected to fund operations and R&D for at least one year after the filing date. This is an estimate, not a guarantee: PDS expects continuing losses and increasing R&D spending, has no product revenue, and expects to need additional funding. It may seek equity or debt financing, government funding or partnerships; equity could dilute shareholders, while debt could impose repayment obligations and restrictive covenants. If capital is unavailable on acceptable terms, development programs may be delayed, reduced or stopped.
Key risks include clinical-trial enrollment, timing, safety and efficacy; regulatory and manufacturing requirements; intellectual-property protection; competition; and the ability to raise capital. The company said COVID-19 had delayed or slowed clinical-trial operations and could continue to affect enrollment and monitoring. It also identified geopolitical instability, inflation, market volatility and potential supply-chain or contractor disruption as risks, although it reported no material business impact from the Russia-Ukraine conflict or inflation to date. Management concluded disclosure controls were effective and reported no material internal-control changes during the quarter.
Important facts for investors to verify
- Cash runway assumptions against the actual pace of operating cash use and planned clinical spending.
- Subsequent VERSATILE-002 and NCI trial updates, including patient counts, follow-up, durability, safety and whether results are independently confirmed or controlled.
- Timing and funding for PDS0103 and PDS0202 development, and the practical impact of prioritizing PDS0101 and universal flu programs.
- Availability and terms of future financing, including remaining capacity under the shelf registration; the Aspire purchase agreement expired without raising capital.
- The tax-benefit accounting: the statements report a $1.20 million benefit in 2022, while the tax note also describes a full valuation allowance and says no benefit was recorded due to realization uncertainty; clarify the presentation and underlying NOL-sale treatment.
- Final terms and financial effect, if any, of the confidential former-CFO settlement.