PDS Biotechnology Corporation (NASDAQ:PDSB) Q4 2022 Earnings Call Transcript

PDS Biotechnology Corporation (NASDAQ:PDSB) Q4 2022 Earnings Call Transcript March 28, 2023

Operator: Greetings. Welcome to PDS Biotechnology Fourth Quarter 2022 and Full-Year Earnings Conference Call. . A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. It’s my pleasure to turn the call over to Gabby DeGravina CG Capital Investor Relations. Please go ahead.

Gabrielle DeGravina: Good morning. And welcome to PDS Biotechnology’s fourth quarter and year-end 2022 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 financial results for the quarter and full year ended December 31, 2022. We encourage everyone to read the press release as well as PDS Biotech’s report on Form 10-K, 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 product candidate development plans, as well as research activity. 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. 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 management, as well as assumptions made by, and information currently available to, the 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. With that, I will hand the call over to Dr. Frank Bedu-Addo. Frank?

Frank Bedu-Addo: Thank you, Gabby. And thank you all for joining us on our year-end call today. We have made tremendous progress this past year, achieving several significant milestones as we continue to advance our oncology pipeline. Most importantly, progressing closer to what’s a registrational trial for our lead candidate, PDS0101. PDS0101 is a novel investigational human papilloma virus, or HPV, targeted immunotherapy that stimulates a potent targeted T cell attack against HPV positive cancers. Our goal is to commercialize PDS0101 as rapidly as possible by performing a well-designed Phase 3 trial that maximizes our potential for both speed and success. Therefore, our key priority in 2023 is to move forward efficiently with finalizing the development of PDS0101 for the treatment of HPV positive head and neck cancer and immune checkpoint inhibitor, or ICI naive patients.

Before we move into the fourth quarter updates, I would like to briefly mention the recent meetings we have had with the US Food and Drug Administration, also known as the FDA. These meetings were held to discuss the registrational pathways for our two most advanced phase two trials, VERSATILE-002 and the National Cancer Institute led, or NCI led, triple combination trial. In both meetings, the FDA provided very useful guidance on key elements of both trial designs. Therefore, we will be transitioning into Phase 3 clinical development this year, informed by the ongoing and maturing data from VERSATILE-002. This randomized, controlled Phase 3 trial will investigate PDS0101 in combination with KEYTRUDA versus KEYTRUDA alone in ICI naïve patients with recurrent or metastatic HPV 16 Positive head and neck cancer.

The Phase 3 trial will be called VERSATILE-003. In parallel, we will continue activities necessary to progress the NCI led triple combination of PDS0101, PDS0301, formerly known as M9241 or NHS IL-12, with an approved immune checkpoint inhibitor or ICI. Let’s now touch on the VERSATILE-002 Phase 2 trial update. The trial is investigating PDS0101 in combination with Merck’s KEYTRUDA, also known as pembrolizumab, in both ICI naïve and refractory patients. Interim results presented at ASCO 2022 demonstrated promising efficacy and safety profiles for the combination. Data from 17 patients with available imaging showed an objective response rate of 41%, which included confirmed and unconfirmed responses. At nine months of follow-up, the overall survival rate was 87%.

In the published KEYNOTE-048 study, the nine-month of overall survival rate for KEYTRUDA monotherapy was approximately 60%. We believe that the parameter of highest relevance to the FDA is the overall survival as in many immunotherapies improvements in objective response rate, or ORR, and progression free survival, or PFS, have not translated to improved overall survival, or OS. It should be noted that in recurrent or metastatic head and neck cancer where an FDA approved drug has been shown to improve survival, such as KEYTRUDA has, overall survival becomes the most important criteria by which the new drug or combination will be evaluated. As a reminder, this program has received Fast Track designation from the FDA. Following our FDA meeting in the third quarter of 2022, we initiated a tech transfer of the PDS0101 manufacturing process to our selected commercial manufacturer for the scale up and production of PDS0101 for VERSATILE-003.

The transfer was successful, and the Phase 3 clinical product was successfully completed this quarter. The final sections of the chemistry, manufacturing and control section, also known as CMC, of the amended IND are in progress. Most importantly, we are gaining insight into the potential progression free survival and overall survival data that continue to mature from VERSATILE-002. These PFS and overall survival data are critical to our ability to design the statistical portion of the Phase 3 clinical study. The duration it has taken for us to begin to gain insight to these critical parameters and possible endpoints is highly encouraging, as it signifies that the majority of patients are staying alive and not rapidly progressing. As I mentioned, overall survival is the most important parameter by which the FDA typically prefers to confirm approval of oncology products.

We are hopeful, based upon previously presented and ongoing results, that we will be able to show improved PFS and OS with the PDS0101/KEYTRUDA combination. We are also currently in communication with the European regulatory agencies and expect feedback on the VERSATILE-003 clinical protocol and CMC section in the second quarter of this year. If possible, we intend to also incorporate their comments into the final protocol design that will be submitted to the FDA and other country-specific agencies for review. We therefore expect to file an amended IND in the third quarter of this year, which should allow us to present the protocols to the investigational review boards, or IRBs, for the various sites as we perform the process of site activation.

Overall, these startup activities typically take four to six months. We are working towards the goal of opening up the trial in the fourth quarter of this year and expect the trial to be run at 90 to 100 global sites. There are a number of reasons why we have decided to progress the VERSATILE-003 trial ahead of the triple combination. First of all, obtaining an approval for the PDS0101 product specifically simplifies our development of future combinations of other agents such as PDS0301 with PDS0101 from a regulatory perspective. IND-related activities are further progressed with this program due to the earlier FDA meeting and also the clear regulatory pathway for combination of an investigational agent with a commercial approved product. Importantly, we have fast track for this program and with our clinical design, having good potential for PDS0101 to become the first approved immunotherapy to address HPV positive cancer.

In parallel, we continue to aggressively work towards getting the triple combination to a similar position, and we’ll provide updates on progress in the future. So, transitioning to updates on the NCI-led Phase 2 triple combination trial for patients with advanced HPV positive cancers. Last month, we announced a successful meeting with the FDA for the triple combination of PDS0101 and PDS0301 with an FDA approved ICI for the treatment of recurrent or metastatic HPV 16 positive ICI refractory head and neck cancer. Our ability to replace the investigational ICI with a commercial ICI simplifies the regulatory pathway to develop the triple combination. Our strategic decision to acquire the novel antibody conjugated IL-12, now PDS0301, has mitigated operational risk and potential hurdles in moving the program forward.

It has also unencumbered the agent for broader use in our pipeline. Importantly, by replacing the investigational ICI with a commercial ICI and acquiring PDS0301, we also simplified and clarified the future economics pertaining to the current and future commercial combinations of PDS0301 with our pipeline products or other products. It is also important to note that the PDS0301 acquisition deal does not financially burden development of the product as very minimal payments are due ahead of successful commercialization. This agreement also includes the supply of the clinical PDS0301 product by Merck KGaA, Darmstadt, Germany. This partnership, as you can see, therefore, maximizes the potential for development and financial success for both parties.

We are extremely pleased with our partnership with Merck KGaA and with the updated survival outcome results we reported from the triple combination last quarter. PDS Biotech has selected advanced ICI refractory HPV 16 positive head and neck cancer as the initial indication for which the triple combination will be developed. These patients have few options and no clear effective standard of care therapy despite the severity of the disease. Survival data from the trial has been encouraging and the triple combination therapy appears to be reasonably well tolerated, with grade 3 adverse events reported in 43% of patients and grade 4 treatment-related adverse events reported in only 7% of patients. In December, we reported expanded National Cancer Institute interim data that included 50 patients.

Of those, 37 HPV 16 positive patients were evaluable and 29 out of the 37 patients had failed ICI treatment and were therefore ICI refractory. Median overall survival was 21 months in the 29 ICI refractory patients who received the triple combination. Of note, the reported historical median overall survival in patients with HPV positive ICI refractory disease and treated with an ICI is only three to four months. As we announced on February 27, after our FDA meeting, our trial of the triple combination will initially target ICI refractory HPV 16 positive head and neck cancer. The best published median overall survival data to date in ICI refractory head and neck cancer is 8.2 months. The expanded data continue to demonstrate the durability and tolerability of the PDS0101 based triple combination therapy in advanced HPV positive cancers, and it is exciting to see consistency in the data with each update.

Moving on to the MD Anderson led IMMUNOCERV Phase 2 trial. The study is being performed in patients with locally advanced cervical cancer with large tumors over 5 centimeters in size. Remarkable clinical and biomarker data were presented at SITC 2022. 100% of patients treated with the combination of PDS0101 and standard of care chemo radiation therapy had a clinical response with tumor shrinkage greater than 60%. 89%, or eight of the nine patients, treated with the combination demonstrated a complete response, or CR, with no evidence of the disease on day 170. These results are encouraging and we look forward to updating you when additional data becomes available. The Mayo Clinic continued studying PDS0101 in early stage, pre-metastatic HPV 16 Positive oral cancer in a Phase 2 trial.

Patients continue to be recruited and treated, and we are hopeful that we’ll see data before the end of this year. As we’ve mentioned before, the Mayo Clinic study is an investigator-initiated trial, meaning we do not have control over its progress, enrollment and treatment or the timing around data readouts. However, our expectation is that study investigators would present preliminary data when available at a medical congress. Moving on to our broader oncology pipeline. Tech transfer for PDS0103is in progress. Pending availability of manufacturing slots and all the activities associated with initiating VERSATILE-003, we are hoping to file the IND in the second half of this year. We expect to file the IND for PDS0102 in 2024. Before I turn the call over to Lauren, I will reiterate that we plan to initiate the VERSATILE-003 Phase 3 trial by the fourth quarter of this year.

We continue to make significant progress with the program. Clinical manufacturing is complete. Late stage CMC activities are ongoing as well as finalization of the clinical protocol. And we expect to file the amended IND in the third quarter. I will now turn the call to Lauren to walk us through the clinical updates.

Lauren Wood : Thanks, Frank. I’d like to recap some of the exciting data we announced in the last several months. With respect to PDS0301 monotherapy, clinical research conducted by the NCI was recently published in the peer reviewed journal International Immunopharmacology. The study assessed immune changes in relation to the dose level and dosing schedule of PDS0301. The study also evaluated the correlates of several treatment-related immunologic changes with clinical responses. Researchers evaluated a subset of 23 patients with advanced cancers who participated in a Phase 1 clinical trial of PDS0301. Patients receiving the higher dose of PDS0301 generated more robust immune responses. Importantly, stronger immune responses were seen at the higher dose level.

These data highlight the immunological activity of PDS0301 which supports the immune response data seen to date in the NCI triple combination study. The ability to increase IL-12’s presence within the tumors and to limit its exposure in the circulating blood constitutes a significant advancement in the development of cytokine-based immunotherapy. The research published by the NCI demonstrates the potential of PDS0301 as a tumor-targeting IL-12 and its ability to stimulate immune activation and increase the frequency of immune responses that potentially overcome the immunosuppressive tumor microenvironment. Published studies of biologically active doses of PDS0301 monotherapy were associated with greater than or equal to grade 3 treatment-related adverse events in 20% of patients, and all of these were transient.

One grade 4 treatment-related adverse event was observed and no grade 5 treatment related adverse events occurred. This was published by Strauss and colleagues in 2019 in clinical cancer research. Importantly, these biologically active doses are associated with increases in specific immune cells and improved clinical outcomes. Now moving on to our preclinical programs. Recently, data on both PDS0102 and PDS0103 were presented at the 2022 American Association for Cancer Research, also known as AACR, special conference on tumor immunology and immunotherapy. The poster presentation highlighted the development of Versamune-based drug formulations containing multi epitope peptide antigen sequences of the tumor associated protein TARP, which is also known as T cell receptor gamma chain alternate reading frame protein as well as modified sequences of the mucin-1 oncoprotein or MUC1.

The preclinical research provided the foundation for the clinical development of PDS0102 as a potential treatment for TARP associated acute myeloid leukemia, prostate and breast cancers, and PDS0103 as a potential treatment for MUC1 associated breast, colon, lung, ovarian and other cancers. Key findings for PDS0102 were high levels of CDA killer T cell responses against multiple TARP antigens and predominant induction of multifunctional potent killer T cells, similar to what’s been seen and observed with PDS0101. Key findings for PDS0103 were, again, similar to PDS0101 and PDS0102, the induction of high levels of CDA killer T multifunctional responses against multiple MUC1 antigen and effective targeting and killing of MUC1 positive targets in vitro.

We’re pleased with the preclinical research to date for these compounds, confirming their biologic activity. The manufacture of PDS0102 antigens is complete, and the scale up and manufacture of PDS0103 clinical products is in progress. There’s been wide discussion among immunologists and infectious disease experts regarding the ability to develop more effective and more broadly acting vaccines against various infectious agents. One key area of research is the development of novel strategies to elicit CD4 T cells, also known as T helper cells, that can be much more broadly effective in providing protection against infection. An important advantage of CD4 T cells is their ability to be less susceptible to viral mutation. Two important preclinical studies, utilizing the Infectimune platform were published in February 2023 in the peer reviewed journal Viruses.

New research performed in a laboratory of preeminent CD4 T cell researcher, Dr. Andrea Sant, at the University of Rochester Center for Vaccine Biology and Immunology, studied Infectimune and demonstrated the technology’s potency in eliciting CD4 T cells. The studies focused on comparing Infectimune induced immune responses following primary vaccination against influenza with immune responses induced by leading commercial vaccine adjuvants. The study concluded that Infectimune dramatically enhanced CD4 T cell responses relative to two leading approved vaccine technologies that we’re evaluating in the study. The second publication in Viruses from Drs. Siva Gandhapudi and Gerald Woodward from the University of Kentucky College of Medicine demonstrated the ability of Infectimune with protein viral antigens to generate a broad and protective immune response against viruses, including multiple strains of influenza.

Infectimune was tested in animal models of influenza. The investigational universal flu vaccine PDS0202 demonstrated induction of T cell and neutralizing antibodies against multiple strains of influenza. T cell responses were also generated against non-mutating regions of the flu virus. Importantly, PDS0202 completely protected animals from lethal challenges with influenza viruses. These consistent preclinical results among the two studies are promising and we continue discussions with NIAID regarding clinical funding for our universal flu vaccine. We will keep you posted as we move discussions forward. To summarize where we are today. First with our Versamune based oncology program. We are highly encouraged by the consistency in the clinical response and survival data we see coming from the VERSATILE-002, IMMUNOCERV and triple combination trial.

The Phase 2 biomarker study results reported by both the NCI and MD Anderson at SITC 2022 demonstrated induction of the right type of potent tumor infiltrating multifunctional killer T cells in the right quantity, which correlated with clinical responses in both cases. With our Infectimune based infectious disease program, we are similarly excited about the potential, especially considering the two studies independently reported in the journal Viruses last month. Both studies demonstrate the unique potential of Infectimune not only to induce CD8 T cells, but also to induce multifunctional CD4 T cells that are more broadly reactive and potentially less susceptible to viral mutations, while also inducing broadly reactive neutralizing antibodies.

At this time, I’d like to turn the call over to Matt to review our financial summary. Matt?

Matthew Hill : Thank you, Lauren. We had an extraordinary year at PDS Biotech. As we move the business forward, our financial strategy continues to seek to mitigate financial risk while supporting our overall commercial strategy. Our goal remains to select the most promising combinations and indications and rapidly progress into registrational trials. We’re excited to prepare our lead candidate, PDS0101, for a registrational trial. We currently estimate our Phase 3 VERSATILE-003 trial will cost approximately $60 million, which is part of our operational budget and projections. Now let’s take a look at our summary financials for the year ended December 31, 2022. Net loss for the year ended December 31, 2022 was approximately $40.9 million or $1.43 per basic share and diluted share compared to a net loss of approximately $16.9 million, or $0.66 per basic share and diluted share for the year ended December 31, 2021.

The higher net loss was primarily due to personnel costs, clinical research and quality of manufacturing costs and the cost to license our PDS0301 asset. Research and development expenses for the year ended December 31, 2022 increased to approximately $29.4 million compared to approximately $11.3 million for the year ended December 31, 2021. The increase of $18.2 million was primarily attributable to an increase in personnel costs of $2.3 million, clinical costs of $2.3 million, manufacturing costs of $3.6 million, and $10 million for the rights to PDS0301 from Merck KGaA, Darmstadt Germany. Of the $10 million, $5 million was in cash and the balance in shares of our common stock. General and administrative expenses for the year ended December 31, 2022 increased to approximately $12.2 million compared to approximately $10.2 million for the year ended December 31, 2021.

The $2 million increase was primarily attributable to an increase in personnel costs of $1.3 million and professional fees of $0.7 million. Total operating expenses for the year ended December 31, 2022 were approximately $41.7 million compared to total operating expenses of approximately $21.4 million for the year ended December 31, 2021. Loss per basic and diluted share for the year ended December 31, 2022 was $1.43 as compared to a loss of $0.66 cents per basic and diluted share for the year ended December 31, 2021. The increase in loss per share can be primarily attributed to the investment in R&D and $10 million recorded to in-license PDS0301 which was all expensed in the fourth quarter. It accounts for approximately $0.35 of loss per basic and diluted share.

We ended the year with approximately $73.8 million in cash, which is attributed to our continued prudent financial discipline and efficient execution of our ATM. Based on the company’s available cash resources and cash flow projections, the company believes this balance is sufficient to fund the company, operations and research and development programs into the third quarter of 2024. This concludes my portion of the call and I’d like to turn the call over to the operator for our question-and-answer session. Operator?

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Q&A Session

Operator: . Our first question today is coming from Leland Gershell from Oppenheimer.

Leland Gershell: Congratulations on all the progress. Just a question maybe for Lauren. As we look forward to the VERSATILE-003 trial, I know you’re still collecting data from 002 with respect to informing the statistical considerations, but do you have a sense of the size of the enrollment of what 003 may look like?

Lauren Wood: The design and the total sample size of VERSATILE-003 will be informed by the VERSATILE-002 data that’s maturing in the ICI naïve population. We are looking for consistencies in trends. And we anticipate that we will have additional updates to that data in the spring that will allow us to finalize the protocol and give us a sample size to conduct the trial as efficiently as possible.

Leland Gershell: With regard to the triple combo study, you have yet to identify the ICI you’ll be using except that it’ll be a commercially available one. Is there any information you are awaiting to learn that will allow you to settle on the choice of that ICI or at least allow the public to know what that is?

Lauren Wood: That’s an excellent question. Well, in terms of the design of the triple combination study, we plan to leverage and also have maturing data from the ICI refractory population of VERSATILE-002. As Frank iterated, overall survival, we know, is going to be key to informing the design of that trial. And we would like to have maturing data from VERSATILE-002 in the ICI refractory population since that will be the focus of the triple combination study. As you’re aware, there are two immune checkpoint inhibitors that have approval in the head and neck recurrent metastatic disease indication. And we will be making that determination as we get more informed data on overall survival from ICI refractory patients.

Frank Bedu-Addo: Just to add a little bit to what Lauren said, as you know, there are two commercial checkpoint inhibitors that have been approved, right? KEYTRUDA and OPDIVO for head and neck cancers. So, it’s going to be one of those two. But also in terms of the strategy to design the trial, one of the things we want to do is to be prudent in getting all the information we need. So, one of the reasons why we’ve seen the kind of data we’ve seen today in our clinical trials is that we were very systematic in our preclinical studies, and making sure that we did all the necessary studies, understand exactly how this technology is working, select the optimal conditions, go into the clinical trials. And based upon that, we’ve seen very consistent results from trial to trial.

That’s the reason why we’re running all these various Phase 2 clinical trials, right, to gain as much information as possible that can then inform design of these trials. And now since we are going to a commercial checkpoint inhibitor with PDS0101, that’s exactly what we are evaluating in the ICI refractory arm of VERSATILE-002. And so, really having some information on how that’s performing could be very informative in terms of how we design the trial. For example, assume we design a 350 patient trial, but wait a few months later and understand exactly whether we actually see an improvement in overall survival potentially with a dual combination, maybe we end up starting a few months later, but with a much smaller design that’s a lot more efficient, which would then dramatically reduce our cost and speed to commercialization.

So we just want to make sure that we’re doing what’s in the best interest of our shareholders, making sure we get the information that we specifically designed the trials to provide, and then based upon that information, progress into final design of that trial.

Operator: Next question is coming from Louise Chen from Cantor Fitzgerald.