PDS Biotechnology Corporation (PDSB) Q2 2020 Earnings Report, Transcript and Summary

Greetings, and welcome to PDS Biotechnology's Second Quarter 2020 Financial Results. At this time all, participants are in a listen-only mode. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Deanne Randolph, Investor Relations.

Good morning, and welcome to PDS Biotechnology's second quarter 2020 earnings conference call and audio webcast. With me today are Dr. Frank Bedu-Addo, Chief Executive Officer; Dr. Lauren Wood, Chief Medical Officer; and Michael King, Interim Chief Financial Officer. Earlier this morning, PDS Biotech issued a press release announcing financial results for the three months ended June 30, 2020. We encourage everyone to read today's press release, as well as PDS Biotech's quarterly report on Form 10-Q, which will be filed with the SEC this afternoon. The Company's press release is available on PDS Biotech's website at pdsbiotech.com, and the quarterly report will be posted later today. In addition, this conference call is being webcast through the Company's website and will be archived there for future reference. Before we begin, I would like to caution listeners that comments made by management during the conference call will include forward-looking statements within the meaning of federal securities laws, including the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve material risks and uncertainties, and the Company's actual results may differ materially. For a discussion of this factors, including among others, the risks related to COVID-19, the impact such a pandemic may have on the Company's business operations, financial operations, and results of operations, and the Company's ability to respond to the related challenges, including those noted in this morning's press release, please refer to PDS Biotech's SEC filings. Investors. potential investors, and other listeners are urged to consider these factors carefully in evaluating the forward-looking statements, and are cautioned not to place undue reliance on such forward-looking statements. In addition, the content of this conference call contains time-sensitive information that is accurate only as of the date of the live broadcast, August 13, 2020. Except it's required by law, the Company undertakes no obligation to revise or update any statement to reflect events or circumstances that take place after the date of this call. Please be advised that since we are in the middle of a previously announced public offering, we will not be taking questions at the conclusion of the call today. Please refer to the prospectus for further information. With that, I would now like to turn the call over to Dr. Frank Bedu-Addo. Frank?

Thank you, Deanne, and welcome, everyone, to PDS Biotech's second quarter 2020 earnings conference call. This past quarter, we made significant progress across both our immuno-oncology and infectious disease programs, despite the challenging environment for clinical trial operations, due to the global COVID-19 pandemic. On last quarter's earnings call, we reported that we were planning and looking forward to initiating Phase 2 clinical development of our lead program, PDS0101. We also announced our intention to broaden our infectious disease programs to include the development of vaccines for both COVID-19 and universal influenza. Let me quickly summarize the progress that has been made since our last report. The first of the three planned Phase 2 trial of PDS0101 was initiated in June in advanced HPV-associated cancers, and it's recruiting according to schedule. We announced a clinical collaboration to perform a second Phase 2 study of PDS0101 in advanced localized cervical cancer at the MD Anderson Cancer Center. This trial is due to be initiated in the next few weeks. An award from the NIAID has been granted to fund pre-clinical development of diverse immune-based universal flu vaccines. Promising pre-clinical data from our COVID-19 vaccine has been generated, and discussions with the FDA regarding our data package and clinical strategy have also been initiated. A second COVID-19 vaccine is being developed in partnership with the Brazilian company, Farmacore, with pre-clinical funding received from Brazil's Ministry of Science, Technology, Innovation and Communication. I will now provide you with some detail on our various programs. I'll start with our ongoing oncology activities. In our oncology portfolio, as I mentioned, we were pleased to initiate the first of three currently planned Phase 2 clinical studies of our lead product, PDS0101, focused on the treatment of various advanced HPV-associated cancers. Some of you may be aware of the fact that design an initiation of this Phase 2 trial was the result of independent pre-clinical studies performed at the National Cancer Institute, combining PDS0101 with two clinical stage immune-therapeutic agents owned by EMD Serono, M7824, which is a bifunctional checkpoint inhibitor, and an NHS-IL12, which is a tumor targeted cytokine. These pre-clinical NCI studies demonstrated strong synergy between the three agents, leading to enhanced anti-cancer efficacy in animal models. The results of this novel triple combination study were recently published in the Journal for the Immunotherapy of Cancer. We are pleased to have this NCI-led Phase 2 clinical trial underway, as we believe that this novel immunotherapeutic triple combination has the potential to form the basis of a therapeutic platform applicable to the treatment of multiple different solid tumors. Dr. Wood will provide additional details on this Phase 2 clinical study. On June 4, we announced a second PDS0101 Phase 2 clinical trial to be conducted at the University of Texas MD Anderson Cancer Center in Houston. This clinical study is being performed in collaboration with the lead investigator, Dr. Ann H. Clark, MD, PhD, who is Associate Professor of radiation oncology. And this study will investigate the safety and cancer outcomes of a combination of PDS0101 with the standard of care, which is chemoradiotherapy. The study will also evaluate the correlation of safety and tumor aggression with specific biomarkers of immune response in patients with locally advanced cervical cancer. We believe that this PDS0101 combination has strong potential to demonstrate enhanced clinical benefit to patients with locally advanced cervical cancer over a standard of care chemoradiation therapy. We expect the study, which as I mentioned earlier, is the second of three currently planned PDS0101 trials, to be initiated in the next few weeks, barring any unforeseen events. On April 16, we announced that the initiation of the multi-site Phase 2 VERSATILE 002 trial, evaluating the combination of PDS0101 and standard of care Keytruda, had been delayed due to the severe adverse impact of the COVID-19 pandemic on cancer trial operations. We have remained in close contact with our VERSATILE 002 clinical sites, and we are currently evaluating the possibility of reopening the trial in the near future. This clinical trial, when initiated, will be the third PDS0101 Phase 2 trial. Now, it is important to note that the VERSATILE 002 trial is quite unique among immuno-oncology studies, in that this immunotherapeutic formulation addresses first line treatments of recurrent or metastatic cancer. As the first line of treatment, this means that these patients will have the opportunity to take Keytruda and PDS0101 without having been previously treated with chemotherapy. We believe the addition of PDS0101 to Keytruda has strong potential to enhance clinical efficacy in the first line treatment of this disease, and we look forward to initiating the study as soon as reasonably feasible. PDS Biotech, as you may have noticed, has implemented a comprehensive strategy of combining our lead immunotherapy PDS0101 with standard of care or other equally promising immunotherapeutic agents, with the goal of providing high-quality and improved therapeutic options to cancer patients. Each of the three currently planned PDS0101 Phase 2 trials has been partnered with a world renowned leader in the oncology field. Each one of these Phase 2 trials will provide preliminary efficacy of the PDS0101 combinations, and we look forward to progressing and reporting on the clinical outcomes of these novel combinations in the future. Now, moving on from PDS0101 to our broader oncology pipeline. Earlier this year, we announced the expansion of an existing cooperative research and development agreement with the National Cancer Institute to include preclinical and clinical studies of our PDS0103 immunotherapy. PDS0103 combines the Versamune platform with novel small peptide sequences of the tumor associated protein known as Mucin 1 or MUC1. These peptides are modified from their native sequences to be more strongly recognized by the human immune system. These novel proprietary MUC1 peptides were developed by the National Cancer Institute. MUC1 is highly present or expressed in multiple tumor types, including ovarian, breast, colorectal, and lung cancers, and its presence in the tumor is often associated with drug resistance and poor disease prognosis. PDS0103 is designed to train the T-cells to recognize the MUC1 proteins and to activate the trained T-cells, attack and kill the MUC1 expressing tumor cells. Under this expanded collaboration agreement, the National Cancer Institute will initially evaluate PDS0103 in combination with other immunotherapeutic agents in pre-clinical studies, with potential progression into a human clinical trial under the collaboration agreement. Our comprehensive strategy of partnering with some of the leading experts in the field of cancer immunotherapy has provided us with the opportunity to efficiently expand and progress our Versamune-based oncology pipeline towards efficacy proof of concept in several cancer indications. As I mentioned earlier, in addition to the progress made with our immuno-oncology pipeline, we've also made significant progress with our infectious disease portfolio. We have taken a very similar partnering approach with expert institutions to efficiently develop a robust pipeline of Versamune-based preventive vaccines for tuberculosis, influenza, and COVID-19. As you may recall, in February of this year, we announced an amended research and development collaboration between PDS Biotech and the Brazilian company, Farmacore, to develop a Versamune-based vaccine for tuberculosis. Initial vaccine testing has demonstrated promising pre-clinical results. Formulation development continues at PDS Biotech, with further pre-clinical animal testing to be conducted by Farmacore. In April, we announced that PDS Biotech would be expanding our infectious disease pipeline beyond the TB vaccine. Over the last four months, we have added three vaccines to our infectious disease pipeline, of which two out of the three are partnered. Of note is the fact that we are applying our Versamune technology platform to the development of what we refer to as the next generation T-cell inducing COVID-19 vaccine. Despite the current focus on the development of antibody inducing vaccines, recently emerging data on this global pandemic has highlighted the important role of T-cells in COVID-19 immunity and the importance of developing COVID-19 vaccines capable of generating high levels of active virus-specific T-cells, in addition to neutralizing antibodies, in order to potentially achieve more durable protection against COVID-19 infection. We recently reported preliminary pre-clinical results from our COVID-19 vaccine candidate, PDS0203, which demonstrated rapid induction of both killer CD8 T-cells and helper CD4 T-cells, in addition to neutralizing antibodies. These strong immune responses occurred within just 14 days of vaccination. Dr. Lauren Wood will review the pre-clinical data for PDS0203 in more detail momentarily. The promising pre-clinical data for PDS0203 allowed us to initiate discussions with regulatory agencies and receive feedback regarding the clinical development plan. We continue to be engaged in discussions with other governments and non-government organizations regarding our strategy of applying Versamune to the development of a simple, safe, and effective COVID-19 T-cell inducing vaccine. In June, we announced the expansion of our development collaboration with Farmacore to advance PDS0204, a second T-cell activating next generation COVID-19 vaccine candidate, combining our Versamune platform with a Farmacore-developed novel recombinant SARS-CoV-2 protein. Under the newly expanded agreement, PDS and Farmacore are working to rapidly accelerate development towards Phase 1 clinical testing in Brazil, with initial pre-clinical funding support provided by Brazil's Ministry of Science, Technology, Innovation, and Communication. We believe this collaboration will allow us to quickly assess the efficacy of PDS0204 to reduce the continuing spread of COVID-19 infections. I will now switch from COVID to flu. In June, we announced that Professor Jerold Woodward, a collaborator at the University of Kentucky School of Medicine, was recently awarded a grant by the National Institute of Allergy and Infectious Diseases, NIAID, to accelerate development of PDS0202 adverse immune-based universal influenza vaccine that induces both antibody and T-cell responses against multiple strains of the flu virus. This award provides further validation of the promise of the Versamune platform to provide a durable, and broadly protective, and potentially longer lasting vaccine against multiple strains of influenza. We look forward to continuing our discussions with NIAID, as pre-clinical development work at PDS Biotech and the University of Kentucky advanced toward Phase 1 human clinical trials. We believe that these recent collaborations and government grants provide us with the financial resources to continue with the development of our infectious disease portfolio, and also enhances our scientific partnerships. We look forward to strategically advancing both our oncology and infectious disease pipelines through clinical development until its future commercialization. Moving on to our financial position. Most of you may know that the Company just completed a $16.5 million financing. Our strategy of partnering with experts has provided us with the unique opportunity to build a robust pipeline of cancer therapies and infectious disease vaccines with financial efficiency and the ability to limit the use of the Company's financial resources. It is extremely important for the Company to have the financial resources to optimize the value of our portfolio and to advance some of these products to clinical data generation and proof of concept. This raise is quite important, especially considering the market volatility and uncertainties created by COVID-19 and other factors, by providing the Company with the necessary financial runway. Barring any unforeseen or unusual events, this allows the Company to focus on our product development, and provides us with the resources to advance all three currently planned PDS0101 Phase 2 clinical trials through initial data generation. Michael King, PDS Biotechnology's interim CFO, will provide additional information on the Company's financial position. I would now like to hand the call over to Dr. Lauren Wood, our Chief Medical Officer, to discuss recent clinical updates in our oncology and infectious disease pipelines. Lauren?

Thank you, Frank, and once again, welcome, everyone, to this morning's conference call. As Frank mentioned in his opening remarks, we have made significant progress over the past few months in both our immuno-oncology and infectious disease pipelines. The recent initiation of our Phase 2 clinical study with the National Cancer Institute for our lead candidate, PDS0101, as well as our continued pre-clinical work in COVID-19 and influenza, continue to demonstrate our commitment to building a strong repository of clinical and scientific data on our Versamune platform, while progressing the products through clinical development to successful commercialization. Before I review our recent clinical advancements, I'd like to provide a quick overview of how the Versamune technology platform works. Our product pipeline is based on combining our proprietary Versamune T-cell activating technology with tumor or virus associated proteins to enhance the recognition by the human immune system. Versamune effectively delivers these disease-specific proteins called antigens to the immune system for effective uptake and processing, while simultaneously activating the critical Type 1 interferon immunologic pathway. These two important activities result in a generation of potent disease-specific killer T-cells, as well as neutralizing antibodies. Activated disease-specific T-cells are of critical importance in both immuno-oncology and infectious disease, as these activated T-cells have the ability to identify and kill both cancer cells, as well as virus infected cells, and to provide long-term immune memory. We believe that Versamune overcomes many of the key limitations of current therapeutic and prophylactic approaches in generating these powerful disease attacking killer T-cells. Likewise, Versamune's demonstrated ability to activate the preventative or defensive arm of our immune system by rapidly generating neutralizing antibodies also provides for near-term protection from infectious pathogens. The ability to rapidly generate these broad and potent immune responses that include both killer T-cells and antibodies present an important opportunity to develop new vaccines and treatments to improve disease outcomes. I'll now turn to the multiple recent study initiations for our lead oncology candidate, PD0101. As you may remember, PDS0101 is a combination of Versamune with a proprietary mix of short proteins, from human papillomavirus 16, the most virulent and high-risk type of HPV associated with the development of cancer. In June, we were very pleased to announce that the National Cancer Institute had dosed the first patient in a Phase 2 clinical study of PDS0101 in combination with two immune modulating agents, the novel bifunctional checkpoint inhibitor, M7824 and an antibody conjugated cytokine called NHS-IL12. This study will enroll approximately 30 patients with advanced HPV-associated cancer, and its primary endpoint is to evaluate the objective response rate of this novel triple combination in head and neck, cervical, anal, and other HPV related cancers. The first eight patients will be evaluated for safety and objective response before the trial expands to full enrollment. We believe this clinical study, based on the published pre-clinical data of the triple combination, represents a critical next step in validating Versamune's ability to induce high levels of tumor-specific CD8 killer T-cells, and that this combination has the potential to significantly improve clinical outcomes for patients with recurrent metastatic HPV-associated cancers. We look forward to providing updates as this trial progresses. As Frank mentioned earlier, PDS Biotech and MD Anderson Cancer Center are preparing to initiate a trial to evaluate PDS0101 in combination with standard of care chemoradiotherapy for treatment of advanced localized cervical cancer. This second combination trial, to be conducted in approximately 35 patients, will investigate the safety and preliminary anti-tumor activity of the PDS0101 chemoradiation therapy combinations and its correlation with various important biomarkers of immune response. We believe that PDS0101's demonstrated ability to activate the immune system to induce tumor-retargeting killer T-cells provides strong potential to improve treatments to patients with cervical cancer. Finally, we have been in frequent communication with our clinical sites regarding our VERSATILE 002 study of PDS0101 in combination with Keytruda that was paused in the early months of COVID-19. Sites have implemented institution-specific measures to ensure the safety of patients and staff, as well as the conduct of clinical research studies, despite the ongoing pandemic. On the study, patients will receive a total of five cycles of combination therapy in the context of standard of care Keytruda therapy, administered every three weeks until disease progression. Although many oncology clinical studies were paused, patients' needs for novel cancer treatment options for recurrent metastatic disease did not. We anticipate being able to reactivate this study by year end, and remain optimistic about the study's contribution to confirming PDS0101's ability to enhance standard of care treatments for patients with advanced cancers. Now, I would like to summarize our work in the development of a next generation COVID-19 vaccine. We recently announced pre-clinical data for PDS0203, which pairs our Versamune platform with a recombinant protein derived from SARS-CoV-2, virus that causes COVID-19. The SARS-CoV-2 protein includes sections that induce an antibody response, as well as sections that are recognized by CD8 CD4 T-cells. Recent research has highlighted the important role that our T-cells may play in providing protection against COVID-19. This emerging knowledge highlights the importance of developing vaccines capable of generating high levels of virus-specific CD8 and CD4 T-cells, in addition to neutralizing antibodies to potentially achieve more durable protection against COVID-19 infection. In pre-clinical studies, PDS0203 demonstrated rapid induction of highly potent virus-specific CD8 killer and CD4 helper T-cells, as well as neutralizing antibodies. Importantly, these pre-clinical studies also demonstrated induction of long-lasting virus-specific memory T-cells, which are essential for long-term protection. Specifically, PDS0203 demonstrated a 30 to 45 fold increase in COVID-19 specific T-cells by day 14, when compared to the SARS-CoV-2 protein without Versamune. These pre-clinical studies also confirmed the induction of strong anti-SARS-CoV-2 neutralizing antibodies within 14 days of vaccination, a 20 to 25 fold increase over the vaccine without first immune. Importantly, the levels of these neutralizing antibodies at day 14 were comparable to those observed in hospitalized COVID-19 patients. Lastly, these pre-clinical studies showed a further substantial increase in neutralizing antibody levels up to 30 days after vaccination. These pre-clinical data demonstrate PDS0203's ability to rapidly induce high levels of both protective antibodies and long-lasting virus-specific T-cells against COVID-19. We're hopeful that these results demonstrated in the pre-clinical studies will translate well to humans. Our goal is to develop a next generation vaccine that provides the breadth and level of immune responses necessary for a safe and effective vaccine with durable protection against COVID-19. We are optimistic that PDS0203 has the potential to clearly differentiate itself from other COVID-19 vaccines in development by providing a high level of virus-specific killer immune responses and potential long-term protection against the virus. We remain committed to investigating this potential by quickly advancing PDS0203 into Phase 1 trials to confirm its ability to rapidly induce both killer T-cell and neutralize antibody responses. We recently received feedback from the FDA on our pre-clinical and clinical development plan for PDS0203, and are currently working to incorporate their recommendations into our clinical trial design and additional pre-clinical studies. The ability of Versamune to induce a broad range of antiviral immune responses is also being applied to the development of a universal flu vaccine, PDS0202. Upcoming PDS0202 pre-clinical studies are being funded by a grant from the NIAID. We hope to complete these development studies in 2021 and then rapidly progress this program into human clinical trials. I would now like to hand the call over to our interim CFO, Michael King. Michael?

Thank you, Lauren. I would like to review our financial results for the three months ended June 30, 2020. For the second quarter of 2020, net loss was approximately $2.9 million, or $0.19 per basic and diluted share, compared to a net loss of approximately $3.9 million, or $0.75 per basic and diluted share for the second quarter of 2019. Research and development expenses totaled approximately $1.4 million in the second quarter of 2020, compared to approximately $1.9 million in the same period in 2019, a decrease of 26%. For the second quarter of 2020, G&A expenses were approximately $1.5 million, compared with approximately $2.4 million for the second quarter of 2019, a decrease of 38%. Total operating expenses for the second quarter were approximately $2.9 million, compared to total operating expenses of approximately $4.3 million for the same period in 2019, a decrease of 33%. As of June 30, the Company's cash balance was approximately $16.9 million. In addition, on Tuesday this week, we announced pricing of a previously announced underwritten public offering, consisting of six million shares of common stock at a public offering price of $2.75 per share. The gross proceeds from this offering are expected to be $16.5 million before deducting underwriting discounts, commissions, and other offering expenses. In addition, we've granted the underwriter, Oppenheimer and Co., a 30-day option to purchase up to 900,000 additional shares of common stock at the public offering price, less the underwriting discounts and commissions. This offering is closing today, subject to customary closing conditions. Because Biotech intends to use the proceeds from this offering to fund working capital and general corporate expenses, as Frank mentioned earlier, we expected this will provide us with the necessary financial resources to advance all three currently planned PDS0101 Phase 2 clinical trials through initial human clinical data. This concludes our financial statements. I would like to hand the call back to Frank for final remarks. Frank?

Thank you, Michael. Before we end the call, I would like to thank our dedicated team and clinical partners for all their work over the past quarter. The initiation of a Phase 2 trial, in partnership with the National Cancer Institute, and the upcoming Phase 2 clinical trial at MD Anderson Cancer Center continue to validate our novel Versamune platform in the field of immuno-oncology. In addition, the recent grant from the NIAID for the development of a universal influenza vaccine and the financial support our partner, Farmacore, has received for the pre-clinical development of the COVID-19 vaccine will help us to advance those programs rapidly towards human clinical trials. Over the coming months, we look forward to reinitiating our Phase 2 combination trial of PDS0101 and Keytruda, addressing first line treatment of recurrent or metastatic HPV positive head and neck cancer. We also look forward to advancing our COVID-19 vaccine programs into clinical trials. The recent fund raise provides us with the financial resources to progress the development of our PDS0101 programs through initial Phase 2 data. Over the next six to 18 months, we also aim to progress at least one of our infectious disease pipeline products into human clinical trial. We aim to work diligently to deliver on multiple clinical milestones, and thank our shareholders for their continued support. That concludes our prepared remarks. Thank you very much for joining us today. End of Q&A: This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.