PDS Biotechnology Corp. — Q3 2021 Form 10-Q
Reporting period: Quarter and nine months ended September 30, 2021. PDS is a clinical-stage immunotherapy company developing cancer therapies and infectious-disease vaccines using its Versamune platform. It has no approved products and reported no commercial revenue.
Financial results and position
- Revenue: None reported; the company does not expect near-term product revenue.
- Q3 2021: Operating expenses were $6.96 million, including R&D of $3.69 million and G&A of $3.27 million. Net loss was $6.96 million, or $0.24 per share, versus a $3.91 million loss, or $0.21 per share, in Q3 2020.
- Nine months: Operating expenses totaled $15.12 million, up 39% from $10.87 million. Net loss was $10.60 million, or $0.43 per share, compared with $10.82 million, or $0.73 per share, in 2020. The 2021 result included a $4.52 million tax benefit from selling New Jersey tax-loss benefits.
- Cash flow: Operating cash use was $7.98 million for the nine months, compared with $8.52 million in 2020. Financing provided $48.89 million, principally from the June 2021 stock offering. Cash increased $40.90 million to $69.74 million.
- Liquidity and debt: Current assets were $71.34 million and current liabilities $3.58 million at quarter-end. Total liabilities were $3.89 million, including operating lease obligations; the filing reports no borrowings. Management said available cash was expected to fund operations and R&D for at least 12 months after filing, while noting future financing may be needed.
- Margins: Not meaningful because the company had no revenue. Accumulated deficit was $54.38 million.
Material changes and notable developments
- Q3 R&D expense rose 79% year over year, primarily from higher personnel and clinical-study costs. G&A rose 77%, mainly due to personnel costs, including stock compensation and severance. For the nine months, R&D increased 44% and G&A 34%.
- June’s public offering generated approximately $48.5 million in net proceeds and increased shares outstanding; 28.44 million shares were outstanding at September 30. Approximately $29.3 million remained available under the shelf registration statement.
- Management reported preliminary results from an NCI-led PDS0101 combination study: among small groups of HPV16-positive patients, objective responses were reported in 5 of 8 checkpoint-inhibitor-naïve patients and 5 of 12 checkpoint-inhibitor-refractory patients. These interim results are not definitive evidence of efficacy.
Outlook, risks and contingencies
- The company expects losses and R&D spending to continue and likely increase as programs advance. It expects preliminary results from VERSATILE-002 in late 2021 or early 2022 and from the IMMUNOCERV study in 2022; it planned a Phase 1/2 study for PDS0102 in the second half of 2022.
- COVID-19 has delayed or slowed clinical-trial operations and enrollment. The NCI-led PDS0101 combination trial’s recruitment was temporarily paused for administrative reasons in October 2021; the company said the pause was unrelated to safety or efficacy and did not then expect it to affect data timing.
- Brazil’s stated commitment of up to approximately $60 million for a COVID-19 vaccine program remained subject to funding availability and negotiations. PDS said it had not received confirmation that funds were available and clinical development had not begun.
- A putative stockholder class-action and derivative suit challenges approval of the amended equity plan and certain executive option awards. Damages are unspecified; the company said it could not estimate costs or predict the outcome.
- Other notable items: the CFO was terminated without cause effective September 30, with separation terms still under discussion. Subsequent to quarter-end, the company disclosed a TARP patent license with customary milestones and royalties.
Key facts for investors to verify
- Cash consumption relative to the stated 12-month funding outlook, and whether additional financing or dilution is required.
- Enrollment, recruitment status, data timing and full-study results for PDS0101 trials; assess the small sample sizes and preliminary nature of reported responses.
- Whether Brazil’s proposed vaccine funding becomes available and whether the program advances.
- Developments, potential costs and outcome of the equity-plan litigation, and the terms of the CFO’s separation.
- Future R&D and G&A growth, including the impact of stock-based compensation.