Business context and reporting period
This is Pieris Pharmaceuticals, Inc.’s unaudited Form 10-Q for the quarter and nine months ended September 30, 2020. The request metadata names “Pavella Therapeutics, Inc.”; that does not match the registrant named in the filing. Pieris is a clinical-stage biopharmaceutical company developing Anticalin-based therapeutics and relies on collaboration and licensing revenue; it had no product sales.
Financial performance and position
| Metric (USD millions, except per-share data) | Q3 2020 | Q3 2019 | Nine months 2020 | Nine months 2019 |
|---|---|---|---|---|
| Total revenue | 2.9 | 15.1 | 27.4 | 29.0 |
| Operating expenses | 15.9 | 18.0 | 49.0 | 54.8 |
| Operating loss | (13.0) | (2.9) | (21.5) | (25.8) |
| Net loss | (14.3) | (2.6) | (22.8) | (24.7) |
| Basic and diluted loss per share | (0.26) | (0.05) | (0.42) | (0.50) |
- Revenue is collaboration and license-based; product gross margin is not applicable. The filing does not provide a clear conventional operating margin measure.
- At September 30, 2020, cash and cash equivalents were $66.9 million and short-term investments were $15.8 million, totaling $82.6 million. Current assets were $88.7 million versus current liabilities of $19.7 million.
- For the first nine months, operating cash use was $32.5 million, investing cash provided was $24.4 million, and financing cash provided was $10.0 million. Cash and cash equivalents increased $4.6 million from year-end 2019.
- Total liabilities were $72.0 million, including $16.4 million of operating lease liabilities. The filing reports no off-balance-sheet arrangements and no material borrowings.
- Accumulated deficit was $197.0 million. Pieris said available cash, cash equivalents and investments were expected to fund operating and capital needs for at least 12 months from the filing date.
Material changes versus prior comparable periods
- Q3 revenue fell $12.2 million year over year, principally because Q3 2019 included substantial Servier collaboration revenue associated with discontinuation of PRS-332 co-development. Q3 2020 also had lower customer and collaboration activity.
- Nine-month revenue declined $1.6 million: higher Seagen revenue, including a $5.0 million milestone and revenue associated with a contract amendment, was largely offset by lower Servier collaboration revenue and cost-sharing revenue.
- Q3 net loss widened by $11.7 million year over year, mainly reflecting the lower revenue base and $1.3 million of other expense, versus $0.3 million of other income in Q3 2019. Nine-month net loss improved $1.9 million.
- Nine-month R&D expense decreased $5.0 million and G&A decreased $0.9 million year over year. The company attributed R&D reductions mainly to lower manufacturing and clinical or preclinical costs, partly offset by higher facility and personnel costs.
- During Q3, Pieris sold 3.57 million shares through its at-the-market program for $10.0 million gross and approximately $9.7 million net proceeds, contributing to dilution.
Outlook, commentary and risks
- FDA placed PRS-343 Phase 1 studies on partial clinical hold in July 2020 pending an additional in-use stability and compatibility study. Pieris said it had completed studies it deemed necessary, sought FDA feedback through a Type A meeting request, and expected to submit a Complete Response Letter in December. It then expected to begin a Phase 2 study in HER2-positive gastric cancer in 2021; these steps and timelines were not assured.
- Pieris reported encouraging but early PRS-343 Phase 1 findings, including responses in monotherapy and combination cohorts. These are preliminary clinical results, not evidence of approved or established efficacy.
- For PRS-060/AZD1402, AstraZeneca-sponsored Phase 2a work was expected to progress, with first patient dosing anticipated in Q1 2021, subject to regulatory and operational timing. A milestone payment was expected upon dosing.
- Pieris anticipated filing an IND for PRS-344 in 2021 and completing non-GLP preclinical work on PRS-352 before transfer to Servier. Seagen’s $5.0 million milestone for a preclinical program was recognized in the first half of 2020.
- The August 2020 Lilly agreement provides drug supply and collaboration for a planned Phase 2 PRS-343 combination study; the filing reports no financial statement impact from the agreement at that time.
- Management expects substantial continuing losses and cash needs. Risks include clinical and regulatory setbacks, the PRS-343 hold, dependence on partners and milestone timing, potential need for additional capital and dilution, foreign-exchange exposure, and possible COVID-19 effects on research, supply and trials.
- The company reported that disclosure controls were effective and that previously identified material weaknesses in IT general controls and revenue recognition controls had been remediated. No material legal proceedings were reported.
Most important facts for investors to verify
- Confirm the intended company: the supplied filing is for Pieris Pharmaceuticals, Inc., not Pavella Therapeutics, Inc.
- Check FDA actions and timing on the PRS-343 partial hold, including whether the hold was lifted and the Phase 2 study began.
- Monitor cash burn, collaboration receipts and milestone timing against the stated liquidity runway; assess whether additional financing is needed.
- Review subsequent clinical data and regulatory progress for PRS-060, PRS-343 and PRS-344, distinguishing preliminary findings from later-stage evidence.
- Track future collaboration revenue, Servier program changes, ATM share issuance and resulting dilution.