PDS Biotechnology Corporation — FY2021 Form 10-K
Reporting period: Fiscal year ended December 31, 2021; filed March 31, 2022. PDS is a clinical-stage immunotherapy company developing Versamune oncology and Infectimune infectious-disease platforms. It had no approved products or commercial product revenue.
Financial performance and liquidity
| Metric | FY2021 | FY2020 |
|---|---|---|
| Product revenue | None | None |
| Research and development expense | $11.25 million | $7.92 million |
| General and administrative expense | $10.18 million | $6.98 million |
| Total operating expenses | $21.44 million | $14.90 million |
| Net loss | $16.92 million | $14.85 million |
| Net loss per share, basic and diluted | $0.66 | $0.89 |
| Cash used in operating activities | $12.49 million | $13.15 million |
| Cash and cash equivalents, year-end | $65.24 million | $28.84 million |
- Operating expenses rose 44%; R&D increased 42% and G&A increased 46%. The filing attributes increases mainly to clinical and regulatory work, personnel and stock-based compensation.
- The 2021 net loss included a $4.52 million income-tax benefit from selling New Jersey tax benefits. Management says operating cash use would have increased by $3.9 million excluding the NOL sale.
- Financing activities provided $48.89 million, principally from a June 2021 stock offering that generated $48.54 million net proceeds. Shares outstanding rose from 22.26 million to 28.45 million during the year.
- Year-end total assets were $67.20 million, total liabilities $3.99 million and stockholders’ equity $63.21 million. The filing reports no debt; liabilities principally include payables, accruals and operating leases. No meaningful operating margin is available because the company had no revenue.
Business developments and changes
- PDS0101: The lead oncology candidate was being evaluated in Phase 2 studies, including combinations with pembrolizumab (KEYTRUDA), NCI-led immunotherapies, and chemoradiotherapy for HPV-associated cancers. The MD Anderson study’s enrollment was affected by COVID-19.
- PDS0102 and PDS0103: TARP- and MUC1-based candidates remained preclinical. PDS obtained a nonexclusive worldwide NCI license for TARP rights in November 2021. A pre-IND meeting for PDS0103 occurred in early 2022; management said it expected to submit an IND in Q3 or Q4 2022 and begin human trials by year-end.
- Infectious-disease programs: PDS0202, a universal influenza candidate, remained in preclinical development, with further development dependent on nondilutive financing. PDS0203, a COVID-19 vaccine being developed by Farmacore in Brazil, was delayed in Q4 2021; the agreement was extended through May 31, 2022 for manufacturing and scale-up work. Although Brazil’s ministry committed to funding up to approximately $60 million, PDS said it had not confirmed that the funds were available.
- Clinical and preclinical programs remain dependent on collaborators and third-party manufacturers; PDS does not operate its own cGMP manufacturing facilities.
Outlook, risks and unusual items
- Management expects continued losses and significant R&D spending, with no stated revenue or earnings guidance. It says available cash should fund operations and R&D for at least 12 months from the report date; another risk-factor passage says cash may fund the operating plan for at least 24 months. These differing runway statements warrant reconciliation.
- Additional financing will be required to advance programs and potentially commercialize products. Equity financing could dilute shareholders; debt or partnerships could impose restrictions or require the company to surrender rights. Approximately $29.3 million remained available under the 2020 shelf registration statement. The Aspire purchase agreement expired in January 2022.
- Key risks include clinical failure or delays, regulatory approval uncertainty, trial enrollment challenges, COVID-19 impacts, competition, intellectual-property protection, reliance on third parties, manufacturing scale-up, reimbursement and future financing needs. Early and interim clinical findings may change and may not predict later-stage results.
- Post-period clinical updates: in February 2022, PDS reported that the pembrolizumab combination met the preliminary response threshold in the checkpoint-inhibitor-naive cohort, allowing full enrollment; this was an interim milestone, not a final efficacy result. NCI-reported interim data for the triple combination included small patient cohorts and should be interpreted cautiously.
- A former CFO’s arbitration demand alleges at least $3 million in damages; PDS disputes the allegations and had accrued $300,000. A separate stockholder lawsuit over equity-plan approval was voluntarily dismissed in February 2022 after stockholder ratification.
Most important facts for investors to verify
- Cash runway assumptions and the apparent 12-month versus 24-month statements; actual quarterly cash burn and any subsequent financing.
- Final, adequately powered clinical results, safety data, enrollment and timelines for PDS0101 trials; distinguish preliminary company or investigator updates from final analyses.
- Whether Farmacore achieves manufacturing scale-up and whether the stated Brazilian funding becomes available; verify any resulting effect on PDS0203 milestones.
- Progress and financing for PDS0102, PDS0103 and PDS0202, including actual IND submissions and trial starts versus management’s stated expectations.
- Potential dilution, stock-based compensation, the remaining shelf capacity, and resolution or changes in the former CFO arbitration accrual.