PDS Biotechnology(PDSB) - 2023 Q2 - Quarterly Report

Part I — Financial Information Financial Statements (Unaudited) PDS Biotechnology reported a $21.2 million net loss for H1 2023, with cash and assets declining due to R&D investment Condensed Consolidated Balance Sheets Condensed Consolidated Balance Sheet Highlights (Unaudited) | Account | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $60,624,991 | $73,820,160 | | Total current assets | $63,350,949 | $76,480,390 | | Total assets | $63,754,250 | $77,007,923 | | Liabilities & Equity | | | | Total current liabilities | $7,904,189 | $9,821,036 | | Note payable, net of debt discount | $23,254,367 | $23,020,844 | | Total liabilities | $31,310,061 | $33,005,893 | | Accumulated deficit | $(122,753,230) | $(101,558,417) | | Total stockholders' equity | $32,444,189 | $44,002,030 | Condensed Consolidated Statements of Operations and Comprehensive Loss Statement of Operations Summary (Unaudited) | Metric | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | Research and development expenses | $8,004,852 | $3,761,646 | $13,848,538 | $8,922,961 | | General and administrative expenses | $4,691,321 | $3,331,006 | $8,270,049 | $6,648,913 | | Loss from operations | $(12,696,173) | $(7,092,652) | $(22,118,587) | $(15,571,874) | | Net loss and comprehensive loss | $(11,534,895) | $(5,819,200) | $(21,194,813) | $(14,292,722) | | Net loss per share, basic and diluted | $(0.37) | $(0.20) | $(0.69) | $(0.50) | Condensed Consolidated Statements of Cash Flows Cash Flow Summary (Unaudited) | Cash Flow Activity | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | $(18,003,030) | $(12,287,867) | | Net cash provided by financing activities | $4,807,861 | $29,917 | | Net increase in cash and cash equivalents | $(13,195,169) | $(12,257,950) | | Cash and cash equivalents at end of period | $60,624,991 | $52,984,672 | Notes to Condensed Consolidated Financial Statements - The company is a clinical-stage immunotherapy firm developing treatments for cancer and infectious diseases using its Versamune, Infectimune, and PDS0301 platforms, which are designed to activate potent T cells[20] - As of June 30, 2023, the company had $60.6 million in cash and cash equivalents, and management believes these funds are sufficient to continue operations and R&D programs for at least 12 months from the filing date of this report[36][44] - In August 2022, the company entered into a venture loan agreement for up to six term loans, receiving funds from Loans A, B, C, and D on August 24, 2022, with floating interest rates and a 48-month maturity[40][71] - In January 2023, the company entered into an exclusive global license agreement with Merck KGaA for the tumor-targeting antibody M9241 (now PDS0301), with potential milestone payments up to $11 million for development/first commercial sale and up to $105 million based on sales levels, plus a 10% royalty on net sales[67][68] - The company sold New Jersey Net Operating Loss (NOL) carryforwards, resulting in an income tax benefit of $1.4 million and $1.2 million for the six months ended June 30, 2023 and 2022, respectively[65] Management's Discussion and Analysis of Financial Condition and Results of Operations Management highlights clinical pipeline progress and increased R&D expenses, ending Q2 2023 with $60.6 million cash deemed sufficient for 12 months Company Overview and Recent Developments - PDS Biotech is a clinical-stage immunotherapy company focused on activating T cells to treat cancer and infectious diseases through its Versamune®, Infectimune®, and PDS0301 platforms[87] - In June 2022, the FDA granted Fast Track designation to the lead candidate, PDS0101, in combination with Merck's KEYTRUDA® for treating recurrent/metastatic HPV16-positive head and neck cancer[88] - In December 2022, the company executed an exclusive global license agreement with Merck KGaA for the tumor-targeting IL-12 agent M9241, now designated PDS0301[92] - In February 2023, the company successfully completed a Type B meeting with the FDA regarding a potential registrational trial for the triple combination of PDS0101, PDS0301, and an approved checkpoint inhibitor for ICI-refractory head and neck cancer[93] Clinical Candidate Pipeline - VERSATILE-002 (PDS0101 + KEYTRUDA®): Enrollment in the ICI-naïve arm was completed in May 2023, with plans to initiate a Phase 3 trial (VERSATILE-003) in Q4 2023[95][102] VERSATILE-002 ICI-Naïve Cohort Data (ASCO June 2023) | Metric | Result | | :--- | :--- | | Estimated 12-month overall survival rate | 87.1% | | Median progression-free survival | 10.4 months | | Objective response rate (confirmed & unconfirmed) | 41.2% (14/34 patients) | | Disease control rate | 70.6% (24/34 patients) | | Grade 3 treatment-related adverse events | 8.3% (4/48 patients) | - NCI Triple Combination Trial (PDS0101 + PDS0301): In ICI-refractory patients, the trial demonstrated a median overall survival of 21 months, significantly better than the historical 3-4 months, with an objective response rate of 63% at the optimal dose[106][110] - IMMUNOCERV Trial (PDS0101 + Chemoradiotherapy): In patients with locally advanced cervical cancer, 100% (9/9) showed an objective response, with 89% (8/9) achieving a complete response, and the 1-year disease-free and overall survival was 89%[111][113] Results of Operations Comparison of Operating Results (in thousands) | Period | Research & Development (in thousands) | General & Administrative (in thousands) | Net Loss (in thousands) | | :--- | :--- | :--- | :--- | | Three Months Ended June 30, 2023 | $8,005 | $4,691 | $(11,535) | | Three Months Ended June 30, 2022 | $3,762 | $3,331 | $(5,819) | | Six Months Ended June 30, 2023 | $13,849 | $8,270 | $(21,195) | | Six Months Ended June 30, 2022 | $8,923 | $6,649 | $(14,293) | - R&D expenses for the three and six months ended June 30, 2023 increased by $4.2 million and $4.9 million YoY, respectively, driven by higher costs for clinical trials, personnel (including stock-based compensation), and manufacturing[138][142] - G&A expenses for the three and six months ended June 30, 2023 increased by $1.4 million and $1.6 million YoY, respectively, primarily due to increased personnel costs (including stock-based compensation) and professional fees[139][143] Liquidity and Capital Resources - The company had $60.6 million in cash and cash equivalents as of June 30, 2023[153] - Management believes existing cash is sufficient to fund operations and R&D programs for 12 months following the filing of this report[154][160] - During the six months ended June 30, 2023, the company sold 576,462 shares of common stock for net proceeds of $4.8 million under its At Market Issuance Sales Agreement[148] - In April 2023, the company received approximately $1.4 million from the net sale of tax benefits through the New Jersey NOL program for tax year 2021[152] Summary of Cash Flows (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2023 (in thousands) | Six Months Ended June 30, 2022 (in thousands) | | :--- | :--- | :--- | | Net cash used in operating activities | $(18,003) | $(12,288) | | Net cash provided by financing activities | $4,808 | $30 | | Net increase in cash and cash equivalents | $(13,195) | $(12,258) | Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk is interest rate fluctuation, though management expects no material impact from rate changes or inflation - The company is exposed to market risk from interest rate fluctuations on its cash equivalents and variable interest rate debt[169] - Management does not expect operating results or cash flows to be materially affected by a sudden change in market interest rates[169] - Inflation has not had a material effect on the company's business, financial condition, or results of operations during the quarter[170] Controls and Procedures Management concluded disclosure controls were effective as of June 30, 2023, with no material changes to internal control over financial reporting - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report[171] - No changes in internal control over financial reporting occurred during the quarter ended June 30, 2023, that have materially affected, or are reasonably likely to materially affect, internal controls[173] Part II — Other Information Legal Proceedings The company is not currently a party to any material pending legal proceedings - The company is not a party to any material pending legal proceedings[69][174] Risk Factors There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2022 - No material changes have occurred in the company's risk factors since the filing of its Annual Report on Form 10-K for the year ended December 31, 2022[175] Unregistered Sales of Equity Securities and Use of Proceeds In April 2023, the company issued 100,000 unregistered common shares valued at $659,000 to DC Consulting LLC for services - In April 2023, the company issued 100,000 unregistered shares of common stock to DC Consulting LLC for consulting services, with a fair value of approximately $659,000 at issuance[176] Other Information During the quarter ended June 30, 2023, no directors or officers adopted, terminated, or modified a Rule 10b5-1 trading arrangement - No directors or officers adopted, terminated, or modified a Rule 10b5-1 trading arrangement during the quarter[179] Exhibits This section lists the exhibits filed with the Form 10-Q, including certifications by the Principal Executive Officer and Principal Financial Officer as required by the Sarbanes-Oxley Act of 2002, and XBRL data files - The report includes required certifications from the CEO and CFO under Sections 302 and 906 of the Sarbanes-Oxley Act[183]