PDSB - PDS Biotechnology: Good Data But I Am A Little Perplexed By Their Finances

Summary

• Over the last 18 months, PDS Biotechnology has continued producing some good data in HPV-associated cancers.
• However, I am a little perplexed by their finances.
• I will continue to watch this stock.

PDS Biotech ( PDSB ) uses its Versammune platform combined with tumor-specific proteins or antigens to develop targeted immunotherapies for oncology. I covered it in September 2021. It has a preclinical program in infectious diseases which we will ignore today. The pipeline looks like this:

Lead asset PDS0101 is a liposomal multipeptide therapeutic vaccine against HPV positive cancers, "developed using the company's Versamune platform. Versamune is interesting; it consists of positively charged nanoparticles the size of viruses, and one or more therapeutic agents - in this case HPV16 E6/E7 peptide antigens." PSD0101 is targeting multiple HPV-positive cancers in four phase 2 trials, with data available for 100 patients in safety and 60 in efficacy. The company partners with Merck, MD Anderson Cancer Center, National Cancer Institute and Mayo Clinic, and has an exclusive global license from Merck KGaA, Darmstadt, Germany for tumor targeting IL-12 fusion protein PDS0301. Lead indications are recurrent/metastatic HPV-positive Head and Neck cancer, a trial running in a basket of cancers - HPV-positive anal, cervical, head and neck, penile, vaginal, vulvar cancers, a phase 2 trial in 1st line treatment of locally advanced (IB3-IVA) cervical cancer, and Pre-metastatic HPV-associated oropharyngeal cancer (OPSCC).

The company capsuled the following data from its various phase 2 trials:

Lead asset PDS0101 targets HPV-associated cancers. More than 46,000 US patients are diagnosed with HPV-associated cancers every year. HPV vaccinations are now available, but the company states, citing data from research done in oropharynx cancer patients, that these vaccinations will not have any impact on the incidence of these HPV-associated cancers for decades to come. This presents a $6bn market opportunity for PSD0101.

For the Head and Neck cancer indication, the company partners with Merck, whose Keytruda is the approved therapy for this indication. In preliminary data for PSD0101 plus keytruda combo presented at ASCO 2022, ORR of 41.1% was observed, compared to just 19% in keytruda monotherapy. 9-month OS was 87.2%, while keytruda 12-month OS was just 49%. Lastly, 17% of patients had grade 3 or higher AEs, while there were none with grade 3 or higher TEAE in the PSD0101 trial.

I covered the data from the basket trial in my previous coverage. They plan to begin a registrational trial based on that data. Over the last 18 months, PDSB has released a number of trial results which are interim or preliminary data, and all have shown promise. However, the market will need them to complete a phase 3 trial, that too as lead sponsor, before they will be properly noticed. They did complete an end-of-phase 2 meeting with the FDA, and are planning a registrational trial in HNSCC following the successful VERSATILE-02 phase 2 trial.

Financials

PDSB has a market cap of $324mn and a cash balance of $71mn. The company entered into a venture loan and security agreement with Horizon Technology Finance Corporation, which provides them with up to $35 million in term loans. The company keeps a very tight rein on its expenses. Research and development expenses were $4.4 million for the three months ended September 30, 2022, while general and administrative expenses were $2.9 million. At that rate, even what amounts to a pretty small cash balance should last them for another 8 quarters at the least - plus they have that loan, which gives them a few more quarters. Thus they are set for funds, if they can maintain this rate of spend, which they obviously can't, when they begin phase 3 trials. However, one reason they can keep their R&D expenses low is because their trials are getting sponsored by other people.

Bottomline

Frankly, I am a little perplexed by PDS. By all reports, their data seems outstanding and providing adequate proof of concept for their platform. Yet their earnings call consisted of a lot of theory (see the CEO's talk). With the kind of data they have produced (PDSB was a winner of ASCO 2021, going up 94%), I would think they would focus a lot more on their data, topline data from the VERSATILE trial, plans for registrational trials and so on. I just thought they were still discussing how their platform builds on current immunotherapies, and so on; when all they should be discussing - trumpeting - is that data.

I was also unable to figure out their low expenses. Companies running four phase 2 trials do not manage to spend only some $4mn in R&D. If they have other people sponsoring their trials, there should have been discussions about royalties and upfront and milestone payments and so on. There's not a lot of that in their 10-K .

I think PDSB needs some patience. I am not buying this stock right now, but I will continue to watch it for more progress into pivotal trials. I will then take another look at the stock.

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