PDS Biotechnology(PDSB) - 2023 Q3 - Quarterly Report

Part I — Financial Information Item 1. Financial Statements (Unaudited) This section presents unaudited condensed consolidated financial statements, covering balance sheets, operations, cash flows, and notes Condensed Consolidated Balance Sheets Condensed Consolidated Balance Sheets | Metric | September 30, 2023 ($) | December 31, 2022 ($) | Change ($) | Change (%) | | :-------------------------- | :------------------- | :------------------ | :--------- | :--------- | | Cash and cash equivalents | $54,251,387 | $73,820,160 | $(19,568,773) | -26.5% | | Total current assets | $56,838,412 | $76,480,390 | $(19,641,978) | -25.7% | | Total assets | $57,187,821 | $77,007,923 | $(19,820,102) | -25.7% | | Accounts payable | $5,366,564 | $1,219,287 | $4,147,277 | 340.1% | | Accrued expenses | $3,732,727 | $8,313,708 | $(4,580,981) | -55.1% | | Total current liabilities | $9,153,828 | $9,821,036 | $(667,208) | -6.8% | | Total liabilities | $32,703,993 | $33,005,893 | $(301,900) | -0.9% | | Total stockholders' equity | $24,483,828 | $44,002,030 | $(19,518,202) | -44.4% | | Accumulated deficit | $(133,602,399) | $(101,558,417) | $(32,043,982) | 31.5% | Condensed Consolidated Statements of Operations and Comprehensive Loss Condensed Consolidated Statements of Operations and Comprehensive Loss (Three Months Ended Sep 30) | Metric | Three Months Ended Sep 30, 2023 ($) | Three Months Ended Sep 30, 2022 ($) | Change ($) | Change (%) | | :----------------------------------- | :------------------------------ | :------------------------------ | :--------- | :--------- | | Research and development expenses | $6,448,528 | $4,352,987 | $2,095,541 | 48.1% | | General and administrative expenses | $4,071,158 | $2,926,209 | $1,144,949 | 39.1% | | Total operating expenses | $10,519,686 | $7,279,196 | $3,240,490 | 44.5% | | Loss from operations | $(10,519,686) | $(7,279,196) | $(3,240,490) | 44.5% | | Interest income (expenses), net | $(329,483) | $(145,254) | $(184,229) | 126.8% | | Net loss and comprehensive loss | $(10,849,169) | $(7,424,450) | $(3,424,719) | 46.1% | | Net loss per share, basic and diluted| $(0.35) | $(0.26) | $(0.09) | 34.6% | Condensed Consolidated Statements of Operations and Comprehensive Loss (Nine Months Ended Sep 30) | Metric | Nine Months Ended Sep 30, 2023 ($) | Nine Months Ended Sep 30, 2022 ($) | Change ($) | Change (%) | | :----------------------------------- | :----------------------------- | :----------------------------- | :--------- | :--------- | | Research and development expenses | $20,297,066 | $13,275,947 | $7,021,119 | 52.9% | | General and administrative expenses | $12,341,207 | $9,575,122 | $2,766,085 | 28.9% | | Total operating expenses | $32,638,273 | $22,851,069 | $9,787,204 | 42.8% | | Loss from operations | $(32,638,273) | $(22,851,069) | $(9,787,204) | 42.8% | | Interest income (expenses), net | $(811,730) | $(65,008) | $(746,722) | 1148.7% | | Benefit for income taxes | $1,406,021 | $1,198,905 | $207,116 | 17.3% | | Net loss and comprehensive loss | $(32,043,982) | $(21,717,172) | $(10,326,810) | 47.5% | | Net loss per share, basic and diluted| $(1.04) | $(0.76) | $(0.28) | 36.8% | Condensed Consolidated Statements of Changes in Stockholders' Equity Condensed Consolidated Statements of Changes in Stockholders' Equity | Metric | January 1, 2023 ($) | September 30, 2023 ($) | Change ($) | Change (%) | | :-------------------------- | :-------------- | :----------------- | :--------- | :--------- | | Total Stockholders' Equity | $44,002,030 | $24,483,828 | $(19,518,202) | -44.4% | | Accumulated Deficit | $(101,558,417) | $(133,602,399) | $(32,043,982) | 31.5% | | Additional Paid-in Capital | $145,550,491 | $158,075,994 | $12,525,503 | 8.6% | - During the nine months ended September 30, 2023, the company recognized $6,259,464 in stock-based compensation expense and received $5,647,467 from the net issuance of common stock through the Sales Agreement[15] Condensed Consolidated Statements of Cash Flows Condensed Consolidated Statements of Cash Flows | Metric | Nine Months Ended Sep 30, 2023 ($) | Nine Months Ended Sep 30, 2022 ($) | Change ($) | Change (%) | | :-------------------------------- | :----------------------------- | :----------------------------- | :--------- | :--------- | | Net cash used in operating activities | $(25,178,960) | $(18,180,773) | $(6,998,187) | 38.5% | | Net cash provided by financing activities | $5,610,187 | $24,580,588 | $(18,970,401) | -77.2% | | Net increase (decrease) in cash and cash equivalents | $(19,568,773) | $6,399,815 | $(25,968,588) | -405.8% | | Cash and cash equivalents at end of period | $54,251,387 | $71,642,437 | $(17,391,050) | -24.3% | - Cash paid for interest increased significantly to $3,031,129 for the nine months ended September 30, 2023, from $62,500 in the prior year[17] Notes to Condensed Consolidated Financial Statements - PDS Biotechnology Corporation is a clinical-stage immunotherapy company developing targeted cancer and infectious disease immunotherapies based on its Versamune, Versamune plus PDS01ADC, and Infectimune T cell-activating platforms[20] - The company has no commercially approved products and expects to incur operating losses for the foreseeable future, with substantial doubt existing about its ability to continue as a going concern[25][36][45] - In January 2023, the company entered into an exclusive global license agreement with Merck KGaA for PDS01ADC (M9241), involving potential milestone payments up to $116 million and a 10% royalty on net sales[65][66] - Total stock-based compensation expense for the nine months ended September 30, 2023, was $6,259,464, an increase from $3,821,923 in the prior year[56] - The company recognized an income tax benefit of $1.4 million for the nine months ended September 30, 2023, from the sale of New Jersey NOL carryforwards[63] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses financial performance, liquidity, and operations, highlighting increased expenses, net losses, and critical financing needs Cautionary Note Regarding Forward-Looking Statements - The report contains forward-looking statements that are subject to known and unknown risks, uncertainties, and other factors that may cause actual results to differ materially from expectations[80][82] - Key risks include the company's ability to protect intellectual property, anticipated capital requirements, dependence on additional financing, limited operating history, and the success, timing, and cost of clinical trials and regulatory approvals[81] Company Overview - PDS Biotech is a clinical-stage immunotherapy company developing targeted cancer and infectious disease immunotherapies based on its Versamune, Versamune plus PDS01ADC, and Infectimune T cell-activating platforms[84] - The company aims to overcome limitations of current immunotherapy approaches by activating high-quality, potent polyfunctional CD4 helper and CD8 killer T cells[84] Recent Developments - In December 2022, PDS Biotech executed an exclusive global license agreement with Merck KGaA for PDS01ADC (M9241), a tumor-targeting IL-12 fused antibody drug conjugate[85] - In February 2023, the company completed a successful Type B meeting with the FDA for a triple combination therapy (PDS0101, PDS01ADC, and an FDA-approved immune checkpoint inhibitor) for recurrent/metastatic, ICI resistant HPV-positive head and neck cancer[86] - In September and October 2023, data on the investigational universal flu vaccine PDS0202 and PDS0101 in combination with chemoradiotherapy for cervical cancer were presented, showing promising results[88][89] - Updated interim survival data from the NCI-led Phase 2 triple combination study in November 2023 showed a median overall survival of approximately 20 months in ICI resistant HPV-positive patients[93] Clinical Candidate Pipeline - The VERSATILE-002 Phase 2 clinical trial (PDS0101 + KEYTRUDA®) for recurrent/metastatic HPV16-positive head and neck cancer has completed enrollment in the ICI naïve arm, with a Phase 3 trial (VERSATILE-003) planned for Q1 2024[94][101] VERSATILE-002 (ICI Naïve Cohort) Interim Data (Oct 2023) | Metric | Result | Comparison to Approved ICI | | :-------------------------- | :----- | :------------------------- | | 24-month Overall Survival (OS) Rate | 74% | Less than 30% | | 12-month OS Rate | 80% | 30-50% | | Tumor Shrinkage | 60% | - | | Confirmed Overall Response Rate (ORR) | 27% | - | | Median Progression-Free Survival (PFS) | 8.1 months | 2-3 months | | Grade 3 TRAE | 13% | 13-17% Grade 3-5 | - The NCI-led Phase 2 triple combination study (PDS0101 + PDS01ADC + Bintrafusp Alfa) in ICI resistant HPV-positive patients showed a median OS of approximately 20 months, compared to historical median OS of 3-4 months[111][116] - The IMMUNOCERV Phase 2 trial (PDS0101 + Chemoradiotherapy) for locally advanced cervical cancer demonstrated a 100% objective response rate and 89% complete response rate by PET CT, along with rapid ctDNA clearance[117] - PDS0103 (MUC1-positive cancers) is in tech transfer and clinical scale-up, with IND submission planned for H1 2024, potentially delayed by resource allocation to PDS0101's pivotal trial[120][121] IL-12 Oncology Immunocytokine Pipeline - PDS01ADC is a novel investigational IL-12 fused antibody drug conjugate designed to enhance T cell proliferation, potency, and longevity in the tumor microenvironment, working synergistically with Versamune-based immunotherapies[123] - A Phase 1/2 clinical trial evaluating PDS01ADC in combination with docetaxel for metastatic prostate cancer showed PSA level decreases in all patients (61% with at least a 60% decrease) and was well-tolerated[125] - The combination therapy was associated with favorable immune response changes, including decreases in T reg cells and increases in activated NK cells, memory CD8 T cells, proliferating CD4/CD8 T cells, and cytokines INF-γ and IL-10[125] Infectimune Development Strategy - The Infectimune platform aims to develop improved treatments and preventive options for infectious diseases, focusing on strong induction of CD8 and CD4 T cells as well as antibodies[128] - The company is focusing its near-term infectious disease activities on developing universal seasonal and pandemic flu vaccines, aligning with the NIAID's CIVICs program[129] - Preclinical data for the investigational universal flu vaccine PDS0202 demonstrated broad neutralization across multiple influenza strains and protection against lethal H1N1 challenge[132] Liquidity - The company has never been profitable and has incurred net losses in each year since inception, with an accumulated deficit of $133.6 million as of September 30, 2023[134] - As of September 30, 2023, the company had $54.3 million in cash and cash equivalents[135] - Future funding requirements are substantial and depend on the timing and costs of clinical trials, regulatory approvals, and potential collaborations, with significant uncertainty regarding the availability of additional capital[140] SELECTED FINANCIAL OPERATIONS OVERVIEW - The company has not generated any revenues from commercial product sales and does not expect to in the near future[136] Operating Expenses (Nine Months Ended Sep 30) | Expense Category | 2023 ($M) | 2022 ($M) | Change ($M) | Change (%) | | :----------------------- | :-------- | :-------- | :---------- | :--------- | | Research and Development | 20.3 | 13.3 | 7.0 | 53% | | General and Administrative | 12.3 | 9.6 | 2.7 | 29% | | Total Operating Expenses | 32.6 | 22.9 | 9.7 | 43% | - The increase in R&D expenses was primarily due to higher personnel costs ($2.0 million, including $1.0 million stock-based compensation), clinical trials ($3.4 million), and manufacturing expenses ($1.4 million)[145] - The increase in G&A expenses was mainly driven by higher personnel costs ($2.0 million, including $1.4 million stock-based compensation) and investor relations costs ($0.7 million)[146] - Income tax benefit increased to $1.4 million for the nine months ended September 30, 2023, from $1.2 million in 2022, due to an increase in New Jersey NOL carryforwards sold[147] Liquidity and Capital Resources - As of September 30, 2023, the company had $54.3 million in cash and cash equivalents, with primary uses of cash being operating expenses, particularly research and development[156] - Funding sources include proceeds from the sale of tax benefits ($1.4 million in April 2023), a $150 million shelf registration statement, and an at-the-market offering program which generated $5.7 million net value in 9M 2023[148][149][150][155] - The company entered into a venture loan and security agreement in August 2022 for $25 million (Loans A-D funded), with Loans E and F (totaling $10 million) having expired[151] - Substantial doubt exists about the company's ability to continue as a going concern for at least 12 months due to ongoing losses and uncertainty in securing additional financing on acceptable terms[158] Cash Flows Summary of Cash Flows (Nine Months Ended Sep 30) | Cash Flow Activity | 2023 ($M) | 2022 ($M) | Change ($M) | | :------------------------------- | :-------- | :-------- | :---------- | | Net cash used in operating activities | (25.2) | (18.2) | (7.0) | | Net cash provided by financing activities | 5.6 | 24.6 | (19.0) | | Net increase (decrease) in cash and cash equivalents | (19.6) | 6.4 | (26.0) | - The increase in net cash used in operating activities was primarily due to a $10.3 million increase in net loss, partially offset by a $2.4 million increase in non-cash stock-based compensation expense[161] - Net cash provided by financing activities decreased significantly in 2023 due to proceeds from common stock sales ($5.6 million) compared to the prior year's venture loan proceeds ($24.6 million)[162] Operating Capital Requirements - The company anticipates continued losses and increasing operating costs as it develops and seeks regulatory approval for its vaccine candidates, requiring substantial additional funding[163] - Future funding requirements depend on the initiation, progress, timing, and costs of clinical trials, regulatory requirements, intellectual property costs, and commercialization efforts[165] - Substantial doubt exists about the company's ability to continue as a going concern due to the uncertainty of securing adequate financing[164] Purchase Commitments - The company has no material non-cancelable purchase commitments with service providers, as contracts are generally on a cancelable, purchase order basis[167] Critical Accounting Policies and Estimates - The financial statements are prepared in accordance with U.S. GAAP, requiring management to make estimates and assumptions that affect reported amounts[168] - There have been no material changes to the company's critical accounting policies and estimates during the nine months ended September 30, 2023, from those disclosed in the 2022 Annual Report on Form 10-K[169] Off-Balance Sheet Arrangements - The company did not have any material off-balance sheet arrangements during the periods presented and does not currently have any[170] Smaller Reporting Company - The company remains a 'smaller reporting company' and intends to rely on exemptions from certain disclosure requirements[171] - It will cease to be a smaller reporting company if its non-affiliate public float exceeds $250 million with annual revenues over $100 million, or if its non-affiliate public float exceeds $700 million[171] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section discusses the company's exposure to market risks, focusing on interest rate fluctuations and the impact of inflation on operations Interest Rate Risk - The company is exposed to market risks from changes in the interest rate on its variable-rate debt borrowings and interest income sensitivity from cash equivalents[172] - Due to the short-term nature of its investment portfolio and debt agreement, an immediate 100 basis point increase in interest rates is not expected to have a material effect on the fair market value of the portfolio or operating results/cash flows[172] Inflation Risk - Inflation generally affects the company by increasing labor costs and contract pricing[173] - Inflation has not had a material effect on the company's business, financial condition, or results of operations during the three months ended September 30, 2023[173] Item 4. Controls and Procedures This section reports on the effectiveness of disclosure controls and procedures and changes in internal control over financial reporting Evaluation of Disclosure Controls and Procedures - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of September 30, 2023[174] Changes in Internal Control over Financial Reporting - There were no changes in internal control over financial reporting identified during the quarter ended September 30, 2023, that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[175] Part II — Other Information Item 1. Legal Proceedings The company is not currently involved in any material pending legal proceedings - The company is not currently a party to any material pending legal proceedings[176] Item 1A. Risk Factors This section highlights significant risks, including substantial doubt about the company's ability to continue as a going concern due to ongoing losses and financing uncertainty - The company has identified conditions and events that raise substantial doubt regarding its ability to continue as a going concern[178] - As of September 30, 2023, the company had $54.3 million in cash and cash equivalents and used $18.2 million in operations during the nine months ended September 30, 2023, expecting continued significant cash outflows and losses[178] - The uncertainty in securing additional funding means the company may need to delay, reduce, or eliminate research and development programs, or cease operations, which could materially and adversely affect its stock price and ability to obtain financing[178][181] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds No unregistered sales of equity securities or use of proceeds were reported for the period - None to report[182] Item 3. Defaults Upon Senior Securities No defaults upon senior securities were reported during the period - None to report[182] Item 4. Mine Safety Disclosures Mine safety disclosures are not applicable to the company's operations - Not applicable[183] Item 5. Other Information No directors or officers adopted, terminated, or modified Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarter - No directors or officers adopted, terminated, or modified Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarter ended September 30, 2023[184] Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including the Equity Incentive Plan, certifications, and XBRL documents - The exhibits include the Third Amended and Restated PDS Biotechnology Corporation 2014 Equity Incentive Plan, certifications of principal executive and financial officers, and XBRL Instance Document and Taxonomy Extension Documents[187] SIGNATURES This section contains the official signatures of the President, CEO, and CFO, certifying the report filing - The report was signed on November 14, 2023, by Frank Bedu-Addo, President and Chief Executive Officer, and Matthew Hill, Chief Financial Officer[191]