Filing identity and reporting period
Important identity discrepancy: The request identifies PDS Biotechnology Corp., but the supplied Form 10-Q is for Edge Therapeutics, Inc. (CIK/company identity is not otherwise verified here), for the quarter ended September 30, 2017. The summary below describes the supplied filing, not a PDS Biotechnology filing.
Edge was a clinical-stage biotechnology company developing hospital-based therapies. Its lead candidate, EG-1962, was in a Phase 3 study for aneurysmal subarachnoid hemorrhage (aSAH); it had no commercially approved products.
Financial results and liquidity
| Metric | Q3 2017 | Q3 2016 | Nine months 2017 | Nine months 2016 |
|---|---|---|---|---|
| Revenue | No product revenue | No product revenue | No product revenue | No product revenue |
| Research and development | $6.91 million | $6.72 million | $23.48 million | $18.05 million |
| General and administrative | $3.99 million | $3.55 million | $12.37 million | $10.53 million |
| Total operating expenses | $10.90 million | $10.28 million | $35.84 million | $28.57 million |
| Net loss | $11.28 million | $10.76 million | $36.96 million | $29.31 million |
| Basic and diluted loss per share | $0.37 | $0.37 | $1.23 | $1.02 |
As a pre-revenue company, the filing does not report product margins. For the first nine months of 2017, operating cash use was $31.46 million, investing cash use was $0.16 million, and financing provided $22.53 million. Cash and cash equivalents were $97.31 million at September 30, down from $106.40 million at December 31, 2016.
Total assets were $101.24 million. Current liabilities were $11.70 million, including $5.45 million of short-term debt. Long-term debt was $14.88 million; the balance-sheet carrying amounts therefore total approximately $20.34 million. The loan agreement provides for $20 million of principal at a 9.15% minimum rate, with principal repayment scheduled to begin in March 2018 and maturity in February 2020. The debt is secured by substantially all assets other than intellectual property, which is subject to a negative pledge.
Material changes and business developments
- For the nine months, operating expenses increased 25% and net loss increased 26% year over year. R&D rose 30%, mainly from higher clinical-study costs; G&A rose 17%, including higher personnel, professional fees, and employee separation costs.
- In April 2017, the company raised approximately $17.4 million net in a registered direct stock offering. It also drew the remaining $5 million tranche under its Hercules loan in May.
- In June 2017, the company amended its development arrangement and entered into a manufacturing and supply agreement with Oakwood for EG-1962. Oakwood was the sole manufacturer of EG-1962 used in the ongoing Phase 3 trial.
Outlook, risks, and contingencies
- Management expected the NEWTON 2 interim analysis in early 2018; depending on the results, the trial could continue to full readout, then expected in late 2018. The company said existing cash should fund anticipated needs through that readout, but cautioned that this forecast depends on assumptions and actual cash needs may be higher.
- The company expected significant expenses and operating losses to continue and had no committed sources of capital. It may need additional financing or collaborations; inability to obtain funding could delay, scale back, or end development programs.
- Key risks include trial enrollment and outcomes, regulatory requirements (including the possibility of another Phase 3 study or changes to the program), manufacturing and third-party performance, competition, intellectual property, and future financing. EG-1962 manufacturing concentration with Oakwood is a notable execution risk.
- Potential commitments include up to $14.75 million of Evonik milestones, up to $4.5 million of Oakwood development milestones (of which $1.5 million was paid in July 2017), and up to $2.25 million of Oakwood supply milestones, in addition to potential royalties. These milestone amounts are contingent, not all current liabilities.
- The filing reported no material litigation and no material changes to the risk factors in the prior annual report. Management said disclosure controls were effective and reported no material change in internal control over financial reporting.
Most important facts to verify
- Confirm the intended issuer: the supplied filing is for Edge Therapeutics, Inc., not PDS Biotechnology Corp.
- Verify NEWTON 2 interim and final results, trial timing, enrollment, and any additional FDA requirements.
- Assess cash burn and whether the stated runway through the expected late-2018 readout remains achievable; the filing’s estimate is forward-looking.
- Review debt repayment terms, collateral and covenants, and the timing and conditions of contingent Evonik and Oakwood payments.
- Check the company’s ability to maintain manufacturing capacity and supply for EG-1962 through its sole clinical-trial manufacturer.