Earnings Call Transcript - PDSB Q1 2022

Operator, Operator

Hello and welcome to PDS Biotechnology First Quarter 2022 Earnings Call and Webcast. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Gabby DeGravina. Please go ahead. Good morning. And welcome to PDS Biotechnology's first quarter 2022 earnings conference call and audio webcast. With me today 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 financial results for the quarter ended March 31, 2022. We encourage everyone to read the press release as well as PDS Biotech's report on Form 10-Q, which was filed with the SEC earlier this morning. The company's press release is available on the PDS website at pdsbiotech.com and the 10-Q should be posted later today. 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 product candidate development plans, as well as research activities. 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 the 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. As you can see, we are using a different format for the earnings call today, relying on slides to help summarize programs and milestones and aiming to streamline the presentation of background information and updates. We know your time is a precious commodity, and we aim to provide as much time as possible for Q&A. Your feedback on this new structure would be welcome. With that, I would now like to turn the call over to Frank. Frank?

Frank Bedu-Addo, CEO

Thank you Gabby. And thanks to all of you for joining us this morning. Before we get into the details of our recent achievements and financial results, we thought it would be helpful to give a brief review of our platforms and pipeline to put our accomplishments into context. We are also providing some visuals to aid our discussions. For those of you who may be new to this story, as a quick refresher, our pipeline is built on two proprietary T cell activating platforms: Versamune, on which I’m expanding our pipeline of clinical and pre-clinical molecularly targeted immuno-oncology candidates, and Infectimune, on which our advancing pre-clinical infectious disease pipeline is based. The Versamune platform allows us to administer tumor-specific protein by subcutaneous injection, resulting in powerful CD8 killer T cell responses against the cancer. The Infectimune technology is administered predominantly by intramuscular injection and results in both pathogen-specific T cell and antibody responses. PDS Biotech is developing multiple molecularly targeted cancer immunotherapy candidates such as our lead product, PDS0101. PDS0101 has been demonstrated in ongoing studies to target cancers that express or contain HPV and is agnostic to the anatomic location of the cancer. These Versamune-based immunotherapies therefore have the potential to treat a broad range of cancer types. With our Versamune platform, we seek to lead a transformation in the treatment of cancer towards not only more effective but also potentially safer therapies. We believe that we are well on our way to doing so. With our Infectimune technology, we seek to lead the development of more broadly protected vaccines, as seen in the preclinical results reported with our universal flu vaccine. Here we provide a broad overview of ongoing studies with our lead Versamune-based candidate PDS0101, which has been evaluated in four Phase II clinical trials. As a combination treatment in advanced and refractory cancers and also in locally advanced cancer. In early-stage cancer, PDS0101 is also being evaluated as a monotherapy. PDS0101 is a molecularly targeted immunotherapy that we are studying across the full spectrum of HPV-related cancers. By this, I mean that we are studying PDS0101 in all types of HPV-associated cancers, including anal, cervical, head and neck, penile, vaginal, and vulvar cancers. Secondly, we're studying these cancers at all stages of the disease, from early-stage cancer in our new adjuvant trial led by the Mayo Clinic to advanced checkpoint inhibitor refractory cancer in our National Cancer Institute-led trial. We estimate this could create an aggregate market potential of $5 billion to $6 billion in the United States and Europe for PDS0101. We are conducting these trials in collaboration with some of the most renowned institutions in the field, the National Cancer Institute, Merck, MD Anderson Cancer Center, and the Mayo Clinic. These strategic relationships have enabled PDS Biotech to achieve our goal of broadly covering the HPV cancer space. These relationships have provided multiple additional benefits to PDS Biotech; not only have they enhanced our expertise in the space, but we believe they have facilitated enrollment in the clinical trial. And importantly, through cost-sharing agreements, we have mitigated much of the financial burden of rapidly advancing our clinical studies. We are very excited that the data from the first two studies listed here, our National Cancer Institute-led triple combination trial and our VERSATILE-002 trial, will both be presented at this year's American Society of Clinical Oncology Annual Meeting ASCO occurring from June 3 through the 7th. We believe this is a real testament to the quality of work being done by our team and our partners, and we're very much looking forward to sharing these efficacy and safety results publicly. Do note that accepted abstracts are scheduled to be published on May 26th. On Tuesday, June 7 at 8 am after our presentations, we plan to host the conference call to further discuss the presented data from both trials. We’ll issue a press release to announce this event. Turning to trial updates. Let's first review our triple combination study. In this trial, we are evaluating PDS0101 in combination with Bintrafusp alfa, a bi-functional checkpoint inhibitor, and M9241, also known as NHS-IL12, two investigational immune-modulating candidates owned by Merck KGaA. By combining three components that activate the immune system by complementary anti-tumor mechanisms, our goal is to generate cancer-targeting killer T cells while successfully overcoming the immunosuppressive tumor environments. The triple combination has been evaluated across a range of HPV-positive, advanced relapsed, and refractory cancers that are well documented to be extremely difficult to treat, and for which more effective therapies are desperately needed. The data from this trial to be presented at ASCO will be a continuation of the study and data that was presented at ASCO last year in both checkpoint inhibitor naïve and checkpoint inhibitor refractory patients. We expect an update on how the patients whose data was presented have fared over the last year, essentially, how durable was the anticancer immune response, and what fraction of the patients remain alive? Improving overall survival is one of the most important goals of cancer treatment. Secondly, what do the overall responses, including the more recently enrolled patients, look like? We anticipate that, in addition to the solid preclinical data demonstrating the key contribution of each of the three agents towards the observed strong anti-tumor results, that the FDA may expect some demonstration of the clinical contribution of each of the agents in the combination. The role of PDS0101 was very clearly demonstrated in the early data. To study the contribution of NHS-IL12, the National Cancer Institute is evaluating high and low doses of the drug, and we expect that some of this data may also be presented at ASCO. The preliminary efficacy data appears to support the diverse platform's potential unique ability to aid in the recruitment, training, and activation of large numbers of critical cancer-attacking killer T cells in vivo, even in very ill patients. We plan, in the near future, to initiate discussions with the FDA to align on the registrational path. Now turning to our VERSATILE-002 Phase II trial which is studying PDS0101 in combination with Merck's Keytruda, or pembrolizumab, in patients with HPV16 positive metastatic and/or recurrent head and neck cancer. As with the triple combination trial, this trial has two study groups: checkpoint naïve patients and checkpoint refractory patients. In this trial, PDS Biotech is seeking to improve clinical benefits over what is seen with Keytruda monotherapy. In addition to improving tumor shrinkage and overall survival, we believe that a significant treatment advantage will be achieved if enhanced clinical benefit is attained without compounding or increasing the toxicity profile over what has been reported with Keytruda monotherapy. In February of this year, promising preliminary safety data were presented at the multidisciplinary head and neck cancer symposium. None of the first 18 patients showed any treatment-related grade three or higher toxicities. This is extremely unusual for any cancer therapy, and particularly for a combination therapy. To put the safety profile in perspective, I'll quickly refer to a news article in March out of the Hollings Cancer Center at the Medical University of South Carolina, one of the top head and neck cancer centers in the country. The principal investigator on our study, Dr. Kuzma, had enrolled his first patient onto the study in August of 2021. The patient had a tumor mass of about eight centimeters and signs of spread. By March of 2022, the tumor had shrunk to two centimeters, and the patient was reported to have continued to have a high quality of life through treatments. To quote Dr. Kuzma, 'The treatments involved in this trial so far have been very tolerable, which is nice because sometimes investigational treatments can produce some side effects.' The main side effects of the study treatment we've seen are some pain and redness around the injection site and fatigue. Do note that we have reported a small patient size of 18. However, if this combination of efficacy and safety continues to be seen in a significant number of patients, this approach of using diverse immune T cell activating technology could be transformative in cancer treatment. We look forward to presenting detailed efficacy data from the first arm of the VERSATILE-002 trial at ASCO. Next, let's spend a minute or two on our preclinical risk immune-based oncology programs. PDS0103 targets mucin-1 or MUC1. Given the presence of MUC1 across several solid tumors, we believe PDS0103 could have utility in the treatment of a broad range of cancers including breast, ovarian, lung, and colon cancers, a very substantial global market. We previously discussed our positive preclinical data, which demonstrated PDS0103's ability to promote the induction of a large number of polyfunctional and highly potent MUC1 specific CD8 killer T cells. The PDS0103 antigens have been successfully manufactured, and preliminary stability and immunogenicity testing of the new clinical grade antigens is in progress by PDS Biotech, as is process development for the manufacture of the PDS0103 pharmaceutical product. Following a recent positive pre-IND meeting with the FDA, we continue to expect to file an IND for the program in the fourth quarter of 2022. We've also continued to make progress on our top program, PDS0102. As you know, late last year, we in-licensed rights to the National Cancer Institute's proprietary T cell receptor gamma alternate reading frame protein tumor antigen, abbreviated TARP. Based on preliminary studies, we expect our candidate PDS0102 to facilitate the generation of TARP specific CD8 killer T cells and may have utility in the treatment of both solid and liquid tumors, including AML, prostate, and breast cancers. Manufacturing efforts here are ongoing. However, given all of our ongoing programs, we are not devoting significant resources to the TARP program and now expect clinical launch sometime in 2023. Lastly, before passing it over to Matt, I'd like to briefly discuss our Infectimune-based infectious disease preclinical pipeline. We believe that the key differentiating attributes of the Infectimune platform technology are the strong induction of viruses or pathogens, which can be leveraged to improve treatment and preventive options for several infectious diseases. In January of 2022, we announced preclinical data on our universal flu program sponsored by the NIAID, demonstrating the potential of Infectimune technology with computationally designed influenza proteins developed by the laboratory of Dr. Ted Ross at the University of Georgia. The Universal seasonal flu vaccine, PDS0202, generated broadly protective anti-influenza immune responses across multiple strains of influenza. These data, as well as our COVID-19 data, have provided a unique opportunity to highlight Infectimune's potentially transformative utility in the development of more broadly effective and longer-lasting protective vaccines. We are hopeful that we could receive non-dilutive financing from the NIH to progress our universal flu program into human clinical trials. Based on the highly promising data recently announced with the universal flu vaccine and the current focus of the NIAID on developing more effective flu vaccines, PDS Biotechnology has decided to strategically focus our near-term infectious disease activities to align with the interests of the NIAID to have a near-term focus on influenza. This will involve the development of the universal seasonal flu vaccine and also potential development of a universal pandemic influenza vaccine, based on similar computationally designed antigens, as has shown promise with Infectimune. The company has out-licensed the COVID-19 vaccine PDS0203 to the Brazilian company Farmacore specifically for development in Latin America. The progression of the Farmacore development program was delayed in the fourth quarter of 2021. After review of the program by PDS, Biotech and Farmacore, the agreement with Farmacore was extended through May 31, 2022, to provide additional time to Farmacore to commence manufacturing and scale up drug product for use in clinical trials. We have re-evaluated the progress of the program and, as described above, have determined to strategically focus our near-term efforts on the development of the universal flu vaccines. The licensing agreement with Farmacore will expire on May 31, 2022. With that, I'll now turn it over to Matt for a review of our financial results. Matt?

Matthew Hill, CFO

Thank you, Frank. And thanks to all of you on the call today. In this challenging environment we currently find ourselves in, we're truly grateful to our investors and analysts for their support and continued interest in the PDS Biotech story. For the first quarter ended March 31, 2022, here are some of the financials. Research and Development expenses increased to approximately $5.2 million for the three months ended March 31, 2022, from approximately $1.4 million for the three months ended March 31, 2021. The increase of approximately $3.7 million in 2022 was primarily attributed to an increase of $1.8 million in manufacturing services and quality costs, $1 million in clinical and regulatory costs, and $0.8 million in personnel costs. General and administrative expenses increased to approximately $3.3 million for the three months ended March 31, 2022, from approximately $1.6 million for the three months ended March 31, 2021. The increase of approximately $1.7 million is primarily attributed to an increase in $1 million in personnel costs, $0.6 million in legal fees, and $0.1 million in marketing costs. In April, we were able to monetize our net operating loss carry forwards in the state of New Jersey, receiving $1.2 million from 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 state fiscal year 2021. We ended the quarter with $58.9 million in cash, a strong position resulting from our partnering model and continuous financial discipline that we project will fund our operations into 2024. With that, why don't we open it up to questions?

Louise Chen, Analyst

Hi, congratulations on all the progress this quarter. And thanks for taking my questions. So I have two questions for you. First one is, you talked about a lot of different programs and initiatives. So what are the pushes and pulls on your cash runway that you mentioned that goes through 2024? And then secondly, as you think about allocating your resources and meaningful time and dollars, how do you think about how you're going to do that with oncology and infectious disease being on the front burner so to say? Thank you very much.

Frank Bedu-Addo, CEO

Louise, thanks a lot for your questions. So addressing the first one in terms of where we allocate our resources as we look at both oncology and infectious diseases, we have instituted a pretty aggressive partnering program. I think one of the things you'll probably realize compared to our peers is the quality of partners that we brought on to our programs, which we believe, in addition to providing significant validation of the approach we've taken, as Matt also said, and as I said in the presentation, is also very important in how we allocate our financial resources and the benefit that these partnerships have also provided to PDS in terms of our ability to broadly cover the HPV cancer space and actually perform four clinical trials with PDS0101 across all HPV cancer indications, right? So this is really strategic. It was a very strategic approach for PDS, very importantly, addressing this question of allocation of financial resources. Other than the Keytruda trial, where we are responsible for financially managing that trial, our partners provide a significant cost-sharing benefit for each of the other clinical trials. Right. So that approach has allowed us to accomplish what we're doing today. As we look forward to going into pivotal trials, part of what we will do is determine how best and how financially efficiently we can perform those pivotal trials, right? Two key pivotal trials that we would want to start talking about and start evaluating now are the Keytruda trial, as well as the triple combination trial. Right. So those are key things that we will continue to update folks on as we continue to progress those trials. But the partnership agreements and partnership arrangements have been very significant and very important in allowing us to accomplish what we are accomplishing today. And as we go into PDS0103 and 0102, we don't want to spread ourselves too thin, right? We also have to keep shareholders in mind and ensure that we are utilizing our shareholders' investments judiciously. That's one key reason why we're now focusing on going into PDS0103, which would be the first program beyond HPV cancer, and hopefully getting that IND filed by the end of this calendar year. Again strategically, one of the key things we'd want to do is understand exactly how we're going to do that in terms of reporting potential partnerships, or if we decide to finance that ourselves, again, designing a very efficient clinical trial approach. After that, looking at how best to progress PDS0102, which is also ready to go into human clinical trials, potentially also in partnership. These are key things that we're looking at very strategically, ensuring we create the most value financially efficiently. As we progress into infectious diseases, one of the key things that you may notice is that we have really focused on utilizing non-dilutive financing to progress our infectious disease programs. The current program with Infectimune was funded by the NIAID with the Infectimune and universal seasonal flu antigens was funded by the NIAID. We are also looking to hopefully obtain some additional NIAID or NIH funding to take that into human clinical trials. When it comes to our capital resources, our goal is currently to dedicate those to the oncology programs, which we believe will provide near-term value creation to our shareholders and really to focus non-dilutive funds on progressing the infectious disease programs. Lewis, did that answer your questions?

Louise Chen, Analyst

Yes, it did. Thank you very much.

Frank Bedu-Addo, CEO

You're welcome.

Leland Gershell, Analyst

Hey, good morning, and thanks for taking my questions. As we look forward to the upcoming data at ASCO, just want to ask Frank, longer term as we think about the development path for PDS0101 and any regulatory perspectives on how we should think about next steps for this development program on route to potential delay filing? Thanks.

Frank Bedu-Addo, CEO

Hey Leland, thanks a lot for your questions. For both programs, one of the key things that we would want to do would be to have discussions with the FDA sooner rather than later, probably sometime early in the third quarter to align on what the regulatory pathway would be for both programs. For the Keytruda program, the goal here, as we mentioned, is to really move the needle significantly in terms of the clinical benefits and improving the clinical benefit over what we see with Keytruda, without compounding the toxicity. The data we've seen really to date in the first 18 patients, we believe is very significant in allowing us to potentially achieve that goal of enhancing the clinical benefit without compounding the toxicities, and that we believe would be very important in positioning this combination very favorably in the eyes of the oncologists who will be treating a lot of these patients. What we found from a lot of the market research we've done is how important safety is to these oncologists, especially with the earliest stage cancer patients. Right? So we believe if this continues and progresses, it positions this combination very favorably. Leland, we anticipate that we will have to perform a control study, which are some of the key things that we want to discuss with the FDA in terms of what they would want to see in the control arm as we move into the pivotal trial. With the triple combination, one of the key things we've done is really look at three investigational agents, and one of the key questions people have asked is how quickly are we going to move this into a pivotal trial based upon the data we've seen today, which is really unprecedented. One of the key things I mentioned during my portion of the call was the fact that the NCI is looking at high and low doses of NHS-IL12. The reason we're doing this is we believe very strongly that the FDA will want to understand the role that each of these components plays, which of these drugs is really contributing towards the clinical output we’re seeing. To avoid going into a pivotal trial where we'll be looking at multiple arms examining different combinations, we believe that it's prudent to confirm sooner rather than later the role of each of these three components. If you may recall, after last year's ASCO, it became very clear the role that PDS0101 played in the combination. What the NCI is doing now is looking at high and low doses of NHS-IL12 to try to tease out the role of NHS-IL12 and hopefully provide some confirmation of the important role it plays. Bintrafusp has already been evaluated as a monotherapy in this exact patient population. If we can go to the FDA, clearly showing each of these three agents is contributing significantly to the clinical outcome, it allows us to perform a focused and quick pivotal trial and get this to commercialization sooner rather than later. That is the strategy we're taking. The goal is hopefully, shortly after ASCO to be able to sit down with the FDA and come to some alignment on what that regulatory strategy and pathway would look like.

Leland Gershell, Analyst

Great, thank you. We look forward to the ASCO presentation.

Frank Bedu-Addo, CEO

Welcome.

Laura Suriel, Analyst

Hello, this is Laura Suriel calling in for Jim Malloy. Thank you for taking our questions. So a follow up on the last question that was asked regarding the versatile and the triple combination trial of PDS0101. So when does a company have an overall idea of when the completed enrollment might be finished for these two trials? Will that follow up after the ASCO meeting that's coming up this summer? Or will that follow after the talks of the FDA that the company is planning to have? And as a second question, are there any updates regarding the IMMUNOCERV Phase II trial of PDS0101? And is the company still in line to obtain preliminary data for this trial mid-year? Thank you.

Frank Bedu-Addo, CEO

Thanks a lot for your questions. So in terms of the first two trials and enrollments, starting with the triple combination trial. As of the last release we made regarding enrollment, the NCI had enrolled 45 patients and have achieved the goal of enrolling 30 in the checkpoint inhibitor refractory arm. They have enrolled that much more quickly than they are enrolling the naive arm. What they're doing now is enrolling all comers, both checkpoint inhibitor refractory and naive to get to their goal of 56 total patients quickly. The last guidance they gave us was that they anticipate completing enrollment for that trial sometime during the summer, and that’s the last guidance that we received from the NCI on that trial. With the VERSATILE-002, that's a larger trial. We anticipate, based on the recruitment, as you know, is very difficult to predict. We are hopeful that we should be able to at least get to the end of the stage, the first arm. So we have the checkpoint inhibitor naive, which started first and which we will be reporting on at ASCO, and also the refractory arm. We hope that we can make significant progress towards getting to the end of recruitment, hopefully sometime early next year. What we want to do is to have discussions with the FDA, based on the current data that we have generated, to get a good understanding from the FDA on how much more data they would want us to collect or whether they want us to collect any more data and then make a decision on what we do moving forward. We will not be able to even if we make a transition to a pivotal trial, we will probably still have to keep this trial going just for ethical reasons to make sure that all the patients get their full treatments. So these are some of the things we are currently evaluating internally, and some of the discussions we will be having with the FDA. Hopefully, we will be able to provide you with some details, and some more solid details probably sometime in the third quarter regarding how this is going to progress. In terms of the immunotherapy, it is still on track. We still anticipate providing updates and preliminary data sometime early in the third quarter of this year. So that's still on track.

Robert LeBoyer, Analyst

Good morning. My question has to do with the influenza program. And I want to know if you have any timeframes for filing INDs or starting clinical trials?

Frank Bedu-Addo, CEO

With the influenza program, we have not received any details yet from the NIAID. We know Dr. Tedros is working with them. We are hopeful that we will be able to receive some funding to go into human clinical trials. But until we know for sure whether or not that's going to happen, it's very difficult to project any IND filing dates. A lot of it is going to depend on whether or not we get the funding to take it into human clinical trials. In our minds, we've made the decision that our capital resources will be focused on the oncology programs, and we're really going to be depending on non-dilutive financing to take that program into human clinical trials. We are quite hopeful, but the moment we have some idea of whether that's going to happen or not and when it is going to happen, we will then be able to provide much more solid details on when the IND filing will occur.

Robert LeBoyer, Analyst

Okay, great. Thank you very much for that.

Frank Bedu-Addo, CEO

You're very welcome. Again, thank you very much for joining us today. We continue to look forward to updating all of you on our clinical and preclinical progress throughout the year. We will certainly be in touch shortly with more details about our data presentations and events surrounding ASCO. In the meantime, we hope you have a great rest of the week. Thank you very much for all your support of the company, and thank you again for joining us today. Have a great day.

Operator, Operator

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