PDS Biotechnology Corporation — Q2 2021 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2021. The interim financial statements are unaudited. PDS is a clinical-stage immunotherapy company developing cancer therapies and infectious-disease vaccines using its Versamune platform. It has no commercially approved products and generated no product revenue.
Financial results and position
| Metric | Q2 2021 | Q2 2020 | Six months 2021 | Six months 2020 |
|---|---|---|---|---|
| Revenue | No product revenue | No product revenue | No product revenue | No product revenue |
| Research and development expense | $2.76 million | $1.41 million | $4.18 million | $3.39 million |
| General and administrative expense | $2.34 million | $1.52 million | $3.98 million | $3.58 million |
| Total operating expenses / operating loss | $5.11 million / $(5.11) million | $2.94 million / $(2.94) million | $8.16 million / $(8.16) million | $6.97 million / $(6.97) million |
| Net loss | $(0.59) million | $(2.93) million | $(3.64) million | $(6.91) million |
| Net loss per share, basic and diluted | $(0.03) | $(0.19) | $(0.16) | $(0.54) |
| Net cash used in operating activities | Not separately stated | Not separately stated | $(2.86) million | $(7.27) million |
The lower net loss primarily reflects a $4.52 million income-tax benefit from selling New Jersey net operating loss tax benefits; operating loss increased. The company remains loss-making, so conventional profit margins are not meaningful.
- Liquidity: Cash and cash equivalents were $74.75 million at June 30, 2021, versus $28.84 million at December 31, 2020. Management stated cash was expected to fund operations and research and development for at least 12 months after the filing.
- Cash flows: Six-month financing cash inflow was $48.77 million, principally from a June public offering that generated $48.54 million net. Cash increased $45.91 million over the period. No investing cash flow was reported.
- Capital structure: The June offering issued 6.09 million shares at $8.50 per share; approximately $29.3 million remained available under the shelf registration. Shares outstanding were 28.42 million on August 6, 2021.
- Debt and obligations: No borrowing debt was reported. Total liabilities were $4.40 million, including $0.55 million of operating lease obligations; $0.16 million of lease obligations was current.
- Other balance-sheet measures: Total assets were $77.39 million and stockholders’ equity was $72.99 million. Accumulated deficit was $47.42 million.
Material changes and operating developments
- Q2 operating expenses rose 74% year over year, driven by R&D expense growth of 95% and G&A growth of 54%. Management attributed the R&D increase mainly to clinical studies; G&A growth primarily reflected personnel costs.
- For the six months, operating expenses increased 17%. R&D growth was mainly related to clinical studies and personnel, partly offset by lower consulting and manufacturing costs.
- Operating cash use was lower than the prior-year period, but management noted that comparison was affected by the NOL sale. The company also raised substantial equity capital, increasing cash and share count.
- The 2021 Q2 net loss was reduced by the tax benefit; without that benefit, the loss would more closely reflect the increased operating loss.
Outlook, risks, and notable items
- Management expects R&D spending to increase significantly as clinical programs advance. It expects continued losses and does not anticipate significant product revenue unless a candidate is approved and commercialized.
- The VERSATILE-002 Phase 2 study of PDS0101 plus KEYTRUDA was actively recruiting; the protocol was expanded to include checkpoint-inhibitor-refractory patients. Preliminary data were expected in Q4 2021 to Q1 2022.
- An NCI-led Phase 2 study of PDS0101 with bintrafusp alfa and NHS-IL12 reported interim response observations at ASCO. These are early, small-cohort results, not established evidence of efficacy. The filing reported no new or additional toxicities attributed to adding PDS0101 at that point.
- A Phase 2 PDS0101 chemo-radiotherapy study in cervical cancer was recruiting, with preliminary data expected in the first half of 2022.
- Brazil’s Ministry of Science, Technology and Innovation had indicated a potential commitment of up to approximately $60 million for a Versamune-based COVID-19 vaccine program, but funding availability was unconfirmed and development had not begun. The company planned to review next steps with its partner.
- COVID-19 had delayed two PDS0101 trials and could continue to slow enrollment, site operations, monitoring, and inspections.
- Additional financing may be needed; equity issuance could dilute shareholders, while debt could impose repayment and covenant obligations. The Aspire Capital facility had not been used as of June 30, 2021.
- A shareholder lawsuit filed July 23, 2021 challenges the vote approving the amended equity incentive plan and related executive option awards. The company could not estimate costs or predict the outcome and intended to defend the case.
Important facts for investors to verify
- Whether clinical trial enrollment, safety, and efficacy results support management’s stated development plans and expected data timelines.
- Whether cash burn accelerates as clinical programs expand, and how long available cash can fund operations under updated spending assumptions.
- Whether the potential Brazilian vaccine funding becomes available, receives regulatory authorization, and leads to a clinical program.
- The continuing impact of COVID-19 on trial enrollment and operations, and any material developments in the shareholder lawsuit.
- The dilution and financing implications of future equity issuance, including remaining shelf capacity and any use of the Aspire Capital facility.