PDS Biotechnology Corp Q1 FY2023 Earnings Call

Good morning, and welcome to PDS Biotechnology's First Quarter 2023 Earnings Conference Call and Audio Webcast. On the call from the company are Dr. Frank Bedu-Addo, Chief Executive Officer; Dr. Lauren B. Wood, Chief Medical Officer; and Matt Hill, Chief Financial Officer. Earlier this morning, PDS Biotech issued a press release announcing the financial results for the quarter ended March 31, 2023. We encourage everyone to read the press release as well as PDS Biotech's report on Form 10-Q, which will be filed with the SEC shortly. The company's press release is available on the PDS website at pdsbiotech.com. In addition, this conference call is being webcast and will be archived on the company website for future reference. Before we begin, we need to remind everyone that on today's call, the company will be making forward-looking statements regarding regulatory and clinical candidate development plans as well as research activities. Certain information in this presentation may include forward-looking statements, including within the meaning of Section 21E of the United States Securities Exchange Act of 1934 as amended, and Section 27A of the United States Securities Act of 1933 as amended, concerning PDS Biotechnology Corporation and other matters. And these statements may discuss goals, intentions and expectations as to future plans, trends, events, results of operations or financial condition or otherwise based on current beliefs of the company's operations as well as assumptions made by and information currently available to management. These statements are subject to risks and uncertainties that may cause actual results to differ from those forecasted. A description of these risks can be found in PDS Biotech's most recent filings with the SEC. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this conference call. Except to the extent required by applicable law or regulation, PDSB undertakes no obligation to update the forward-looking statements included today to reflect subsequent events or circumstances. I will now hand the call over to Frank.

Thank you, Gabby, and thank you to everyone for joining our first quarter 2023 call today. We continue to be highly optimistic about the future of PDS Biotech. Our goal as a company is to develop novel cutting-edge therapies that have the potential to significantly advance and revolutionize the treatment of cancer. We plan to commercialize our lead clinical candidate, PDS0101 for first-line treatment of recurrent or metastatic HPV-positive head and neck cancer. PDS0101 is a novel investigational HPV targeted immunotherapy that stimulates a potent targeted T cell attack against HPV-positive cancers. In the randomized Phase III VERSATILE-003 trial, PDS0101 will be studied in combination with Merck's anti-PD-1 therapy, KEYTRUDA, versus KEYTRUDA monotherapy, which is the standard of care for this indication. We look forward to initiating the trial later this year. At ASCO next month, we plan to present updated interim results for the Phase II VERSATILE-002 trial of PDS0101 and KEYTRUDA, a first-line treatment for recurrent or metastatic HPV16-positive head and neck cancer. We recently announced acceptance of our abstract that will be a poster presentation summarizing the interim data from this trial at ASCO 2023. We are excited to say that it has also been selected for review and discussion during an expert head and neck cancer panel discussion. The abstracts are scheduled to be published on Thursday, May 25. On Tuesday, June 7 at 8:00 a.m. Eastern Time after our presentations, we plan to host a conference call to further discuss the data presented at ASCO. We'll issue a press release to announce the details around this event. The incidence of HPV-positive head and neck cancer continues to grow rapidly. Many of these patients are very sick and there is a lack of effective HPV-targeted therapies to address the disease. Our presentation at ASCO provides us with an opportunity to continue to share promising PDS0101 data with the clinical and scientific community and how the PDS0101 targeted immunotherapy may allow us to address the significant unmet medical need in advanced head and neck cancer. We have made tremendous progress this past year, achieving several significant milestones as we continue to advance our oncology pipeline. To date, we have demonstrated antitumor activity of PDS0101 in almost 100 patients across different types of HPV-positive cancers and at various stages of the disease with consistent results across all Phase II trials at over 30 clinical sites. Substantial biomarker data also highlights PDS0101's induction of powerful tumor-infiltrating HPV-16-specific killer T-cells. Favorable tolerability has been demonstrated in approximately 120 patients to date, where the PDS0101 has been delivered as a monotherapy in combination with standard of care chemo radiotherapy or with approved and investigational immuno-oncology agents. The favorable benefit-to-risk profile of PDS0101 warrants confirmation of its activity in a controlled registrational trial. Now let's discuss the details of the VERSATILE-003 trial. During the first quarter, we announced that we completed key tech transfer, scale-up and manufacturing activities required to initiate a global multicenter Phase III registrational trial. We have also continued conversations with the European regulatory agencies and are awaiting their feedback on the VERSATILE-003 study design. We affirm our plan to submit an investigational new drug or IND amendment to the U.S. Food and Drug Administration, or FDA, in the third quarter of 2023. The controlled Phase III registrational trial will randomize subjects one-to-one with PDS0101 in combination with KEYTRUDA as the active arm and with KEYTRUDA monotherapy as the comparator arm. We intend to conduct the trial at 90 to 100 clinical sites globally and to enroll approximately 330 individuals. The primary endpoints are overall survival or OS, and progression-free survival or PFS. Additionally, there will be 2 planned interim analyses that we anticipate may provide early opportunities for discussion with the FDA regarding accelerated approval. Initiation of this trial is a significant milestone for PDS Biotech, and we look forward to starting the VERSATILE-003 trial in the fourth quarter of this year. Also on our commercialization priority list is our triple combination of PDS0101, PDS0301, our novel investigational tumor targeting IL-12 and a commercial immune checkpoint inhibitor or ICI. This combination used on an investigational ICI has been evaluated in a Phase II clinical trial in all types of HPV-positive cancers, including anal, cervical, head and neck, penile, vaginal and vulvar cancers in both ICI-naive and ICI-refractory cancers with highly promising objective responses and survival benefits demonstrated in both. The Phase II results corroborated the results of the extensive published preclinical work done by the National Cancer Institute to understand and develop the combination. We announced a successful meeting with the FDA to discuss next steps for the program. As we last reported, we plan to commercialize this combination first in ICI-refractory head and neck cancer, the largest and most rapidly growing of the HPV cancer market. To inform the design of the registrational study, we anticipate initial data from the refractory arm of the VERSATILE-002 study evaluating the combination of PDS0101 and KEYTRUDA in ICI-refractory head and neck cancer during the third quarter of this year. This is the exact indication and population of patients we will be treating with the triple combination. We therefore believe that it is essential for us to obtain the data from the VERSATILE-002 trial before finalizing the design of the potential registrational study. We will hopefully be able to provide an update on the results and clinical design in the near future. Last quarter, we announced our acquisition of Merck KGaA's novel antibody conjugated IL-12, now designated PDS0301. Last month, we hosted our second key opinion leader, KOL, roundtable discussion. The discussion, which focused on IL-12, included National Cancer Institute immuno-oncology experts, Dr. James Gulley and Dr. Jeffrey Schlom. The discussion highlighted the potential of PDS0301 to overcome some of the current limitations of cytokine therapy. Unlike traditional IL-12, in PDS0301, IL-12 is conjugated to an antibody and utilizes the antibody to target areas of tumor necrosis. The targeting antibody brings IL-12 into the tumor and simultaneously limits IL-12 presence in the blood. This results in the potential to enhance IL-12 safety, while promoting its antitumor benefits. By targeting the IL-12 to the tumors after a simple subcutaneous injection, as seen in the current slide, the IL-12 is able to make the tumors more visible to T cells, also termed making the tumors hot in promoting T-cell infiltration and activation within the tumor. Dr. Schlom and Gulley highlighted some of the ongoing investigator-initiated trials at the National Cancer Institute. I would like to review some of the studies that were highlighted by Dr. Schlom and Gulley during the KOL event last month. Examples of some of these promising preclinical results are shown on the current slide, demonstrating in the first plot, eradication of a lung cancer tumor that is resistant to ICI treatment using the combination of PDS0301 and the histone deacetylase or HDAC inhibitor. In the second plot, we again see the significant reduction of established radiation-resistant tumors with the combination of PDS0301 and radiation. Based on these promising preclinical studies, as discussed during the KOL event, there are a number of PDS0301 National Cancer Institute investigator-initiated Phase II studies ongoing under PDS Biotech's collaborative research and development agreement with the National Cancer Institute. Four of these Phase II studies in combination with standard of care are being performed in a number of solid tumors, including prostate, colon, gallbladder cancer and Kaposi sarcoma among others. To date, PDS0301 has been administered to over 150 patients and has been generally well tolerated, even in combination with other cancer treatments. Now I would like to emphasize that these studies are being performed at no additional cost to PDS Biotech. That concludes my portion of the call, and I'd like to hand the call over to Matt to discuss the financial summary.

Thank you, Frank. Let's now look at our financial results for the 3 months ended March 31, 2023. Net loss for the 3 months ended March 31, 2023, was approximately $9.7 million or $0.32 per basic and diluted share compared to a net loss of $8.5 million or $0.32 per basic and diluted share for the same period of 2022. The higher net loss this quarter was due to personnel costs, clinical studies costs and medical affairs expenses. Research and development expenses for the quarter ended March 31, 2023, increased to approximately $5.8 million compared to $5.2 million for the 3 months ended March 31, 2022. The increase of approximately $600,000 was primarily attributable to an increase of $200,000 in clinical studies and medical affairs, $800,000 in personnel costs, and about $100,000 in professional fees, offset by a decrease of $500,000 in manufacturing costs. General and administrative expenses for the first quarter of 2023 increased slightly to approximately $3.6 million compared to $3.3 million for the same period of 2022. The $300,000 increase was primarily attributable to an increase of $800,000 in personnel costs, which was offset by a decrease of $500,000 in professional fees. Total operating expenses for the quarter ended March 31, 2023, were approximately $9.4 million compared to total operating expenses of approximately $8.5 million for the 3 months ended March 31, 2022. In April, we monetized our net operating loss carryforwards in the state of New Jersey, receiving $1.4 million to the net sale of tax benefits to an unrelated profitable New Jersey Corporation, pursuant to the company's participation in the New Jersey Technology Business Tax Certificate Transfer net operating loss program for the tax year 2021. We ended our quarter with approximately $65.2 million in cash. The cash burn was impacted as a result of the $5 million payment to Merck KGaA for the in-license of PDS0301 and our continuing prudent financial discipline and efficient execution of our ATM. I would like to reiterate that the investigator-initiated trials on PDS0301 are at no incremental cost to the company. Our cash balance will fund the company operations as well as research and development programs, we believe, into the third quarter of 2024. This completes my financial discussion. And at this time, I would like to hand the call back to the operator for the Q&A session.

Our first question is coming from Louise Chen from Cantor Fitzgerald.

So I wanted to ask you on your Phase III study, the VERSATILE-003. Can you give more color on how you're looking at the interim analysis, the potential timing around the first interim analysis? And then secondly, can you provide more thoughts on the expert panel that's going to review your VERSATILE-002 study at ASCO? And are you presenting other data at ASCO in addition to 002 and if so, what will that be? And then last question is just how do we think about SG&A and R&D expenses through the remainder of the year, especially in light of the fact you're going to start this Phase III study?

I'll answer the first part of your question, and then I'll hand over to Lauren to discuss the expert panel at the head and neck cancer session, and then to Matt to discuss the SG&A. So the first part of your question, Louise, had to do with how we're looking at the interim data and how we're designing the trial around some of those interim data points. So as I mentioned, the endpoints for the trial are going to be overall survival as well as progression-free survival. What we're looking at is for the interim data to be meaningful, the goal here is to design the statistical study, so that we have robust statistics even around the interim data points. So the first data point will be interim data points for both PFS and overall survival. And the second interim data point would be the final PFS as well as interim for OS. And then, of course, the final readout will be the OS readout, right? And so those are put in place just to make sure that we're looking at a specific number of patients that will give us a significant or strong robustness around the statistics. But also, we anticipate that by the time we go to have any of those discussions with the FDA, we'd also have the VERSATILE-002 study completed and the data from that study to also back up what we will be updating, what we'll be discussing around those interim results. And Lauren, I will hand over to you to discuss the panel at the ASCO conference.

Yes. Thanks, Frank, and thanks, Louise, for your question. So following the presentation of our poster at the head and neck poster session that will be held on Monday afternoon, June 6, there will be an ASCO poster discussion of several presented poster abstracts. The expert panel will be looking not only at VERSATILE-002, but several other approaches to the treatment of head and neck cancer. And during this poster discussion, there will be a specific assessment of the data that's presented and points of discussion by members of the panel. We're excited about this, because it is an opportunity for greater awareness of VERSATILE-002 as well as in the context of discussion of all of the potential approaches that are being presented during the meeting for the treatment of this very challenging population.

Lauren, I'll add to that, that Dr. Katharine Price from Mayo Clinic will be presenting the PDS VERSATILE-002 study.

Thanks, Frank. Louise, great question. So essentially, what we envision going forward in our projections regarding cash burn is that we will steadily ramp up until we reach about $12 million to $13 million a quarter in cash burn. This increase will primarily be associated with R&D expenses. We don't anticipate significant increases in administrative costs, except for what is necessary to manage the company. Additionally, we have our noncash stock compensation expense, which was about $2 million this quarter. Is that helpful, Louise?

Yes, it does. And this $12 million to $13 million, you plan to achieve that by, say, the fourth quarter? Is that what the kind of burn it's going to be? And then, if you're saying you're adding on $2 million, so it's like $14 million to $15 million on a GAAP basis?

Yes, we expect to reach that by the third and fourth quarter of this year.

Our next question is coming from Leland Gershell from Oppenheimer. Our noncash stock compensation expense for this quarter was approximately $2 million. Louise, is that helpful? Yes, it is. You intend to achieve that $12 million to $13 million by the fourth quarter, correct? And considering the additional $2 million, that brings the total to around $14 million to $15 million on a GAAP basis? Yes, we expect to reach those figures by the third and fourth quarters of this year.

I have a few questions. Firstly, regarding VERSATILE-003 and the planned interim analyses, do you anticipate having established criteria with the FDA for potential accelerated approval, or will this be a topic for discussion once you have the data? Secondly, there may be opportunities to evaluate the benefits of the PDS0101 plus KEYTRUDA combination as a doublet in the ICI refractory population. Given that we are still waiting for data from VERSATILE-002, is there a possibility that you might look into this combination in addition to the triple combo for those patients in the future? Lastly, the data presented at the recent event concerning the Entinostat combination appear promising. Has this sparked any ideas for clinical trial initiatives involving HDAC inhibitors?

Thank you for the questions, Leland. To start with the VERSATILE-003 trial, we've been discussing the interim results and their potential for FDA accelerated approval. The FDA does not guarantee product approvals based on interim data; they prefer to wait for conclusive results before making a decision. Our approach has been to ensure that there's a robust statistical design and enough patient samples so that the interim results, together with the VERSATILE-002 findings, provide a strong case for a favorable conversation with the FDA. The FDA is currently reviewing our protocols, and they agreed to this review before we submit our amended IND, which should align our plan with their expectations. Concerning the PDS0101 and KEYTRUDA in the VERSATILE-002 trial, we remain committed to advancing this combination, particularly for patients who are refractory to checkpoint inhibitors, alongside PDS0301, our tumor-targeted IL-12. The studies conducted at the National Cancer Institute highlighted the benefits of IL-12 in this specific patient group. We observed the differences between high and low doses, clarifying IL-12's role. Our focus with the PDS0101 and KEYTRUDA doublet is not to decide whether to proceed with it or the triple combination but to refine the statistical design for that trial. This will help us assess the doublet's performance in that patient population and determine how it compares to the current standard of care. Each trial is crucial, providing significant data that we owe to ourselves and our shareholders. We aim to extract all relevant information to inform our trial design effectively. Specifically, we want to determine if the doublet improves overall survival compared to the triple combination and how we should structure our endpoints based on findings from both combinations, guiding the trial's statistical design. Regarding the HDAC inhibitors, the preclinical data generated at the National Cancer Institute is very encouraging. This study is part of an ongoing Phase II clinical trial at the institute. One advantage of some HDAC inhibitors is that they are already FDA approved, allowing us to conduct studies using these approved agents. You are correct that the preclinical findings surrounding the combination of PDS0301 and HDAC inhibitors have been very promising for us. Importantly, these ongoing studies come at no additional cost to PDS, continuing the trend we’ve seen with many PDS0101 trials. I hope this clarifies your questions.

Yes. No, it did. Looking forward to ASCO.

Our next question is coming from Kalpit Patel from B. Riley Securities.

This is Andy Fleszar on for Kalpit. A couple from us on updated results for VERSATILE-002 at ASCO. Can you give us a sense of how many patients' worth of data we should expect? And are you anticipating the data to be mature enough to present 12-month OS or median OS from the study?

So Andy, thanks a lot for the question. I'll talk about the first part, and I'll hand over to Lauren. Today, the number of patients that are in that portion of the trial hasn't been made public yet. The abstracts will be public, I think, as we said, on May 25. So all that information regarding the size of the trial, where we are today, number of patients and so forth will all become public on May 25. Lauren, is there anything you want to add to that?

No, just that we will be looking to update the data that was presented in June of last year, where in our initial population of 17 subjects, we had 9-month PFS rates of 54% and overall survival rates at 9 months. So that data will be updated in a larger population for a longer duration of monitoring, and the specific details will be in the release that comes out on May 25.

Okay. And then one follow-up. It sounds like PDS0101 has been successfully manufactured for the Phase III. What CMC-related work still needs to be performed? And what are the key bottlenecks before filing an amended IND in the third quarter?

We transferred our manufacturing process from our clinical manufacturer to our potential commercial manufacturer, which requires tech transfer and scaling up. The Phase III clinical product has been successfully manufactured and released by this manufacturer. One key task is to update the CMC package to reflect the new manufacturing process, as moving from small to large scale may involve slight changes in processes or different equipment used. These changes need to be properly documented in the CMC package. Additionally, the analytical methods used to release the product must be validated when transitioning to the new manufacturer. We are currently on track with these activities, aiming to file the IND in the third quarter. Our CMC activities are focused on accurately characterizing the manufacturing and release processes. The stability program requires us to gather a specific number of months of stability data before filing the IND. All these CMC activities are ongoing and are on schedule for the IND filing in Q3.

Our next question is coming from Robert LeBoyer from NOBLE Capital Markets.

Can you give us any guidance as to when these interim analyses in the VERSATILE trial will be expected in terms of timing on the calendar or whether it's going to be triggered by a number of events, whether it's progression or any of the criteria in the trial or enrollment or anything else to get an idea of when to expect them?

Yes. We plan to make that information public in due time. Right now, we are waiting for feedback from the FDA. It's important for us to ensure that the FDA approves the trial before we set any timelines. Our first priority is to obtain alignment with the FDA, which we expect to achieve later this quarter. We are designing the trial based on the enrollment rates we've seen in VERSATILE-002, where we've observed strong recruitment rates. There is significant interest in the Phase III trial from many sites, reflecting the positive results we have shared so far. We are optimistic about meeting or exceeding the enrollment rates seen in VERSATILE-002. We are considering engaging 90 to 100 sites globally to enhance enrollment speed and improve trial performance. We will share more information once we finalize everything and successfully submit the IND.

Congratulations on all the progress.

Your next question today is coming from James Molloy from Alliance Global Partners.

Do you have an update on the triple combo, the 301 and Ventra, with data expected in the fourth quarter of '23? Can you discuss how partnership discussions are progressing for VERSATILE? Is the outcome largely dependent on the ASCO data, or what is the current status? How do you view the partnership environment at this time?

Thank you, James. Regarding the triple combination, we've previously noted the median overall survival for the refractory population. In the naive population, we shared last quarter that at 27 months, 75% of the patients were still alive, without yet reaching the median overall survival. We anticipate an update on the survival of CPI-naive patients sometime this year, either this quarter or next. Those patients are still being monitored, and this may provide an update from the triple combination trial with Ventra. As we transition to the Phase III registrational trial, we will be moving from Ventra to a commercial checkpoint inhibitor. We're currently engaged in partnership discussions and have been actively seeking potential partners to advance these programs. One crucial aspect that facilitates these discussions is the Phase III protocol and progress into Phase III, as potential partners often want to understand the commercialization strategy and the likelihood of successfully completing that trial. Our current status is significant in aiding these discussions and advancing our conversations with potential partners. As you know, business development is a key focus area for us at PDS, and we expect these discussions to continue to progress. Thank you very much. So to all, we really appreciate you joining today's first quarter 2023 earnings conference call. We are extremely pleased with the progress we have made this quarter. We continue to be excited about our upcoming milestones this year, especially for our lead clinical candidate, PDS0101. We look forward to continuing to update you on our progress. I wish you all a great week, and thank you very much.

Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time, and have a wonderful day. We thank you for your participation today.