PDS Biotechnology Corp - Quarter Report: 2022 March (Form 10-Q)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the quarterly period ended March 31, 2022
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from ____________ to _____________
Commission file number 001-37568
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PDS Biotechnology Corporation
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(Exact name of registrant as specified in its charter)
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Delaware
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26-4231384
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(State or other jurisdiction of incorporation or organization)
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(IRS Employer Identification No.)
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25B Vreeland Road, Suite 300, Florham Park, NJ 07932
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(Address of principal executive offices)
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(800) 208-3343
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(Registrant’s telephone number)
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(Former name, former address and former fiscal year, if changed since last report)
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Securities registered pursuant to Section 12(b) of the Act:
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Title of each class
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Trading symbol(s)
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Name of each exchange on which registered
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Common Stock, par value $0.00033 per share
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PDSB
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes
☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large
accelerated filer”, “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer ☐
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Accelerated filer ☐
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Non-accelerated filer ☒
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Smaller Reporting Company ☒
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Emerging growth company ☐
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant
to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐
No ☒
The number of shares of the registrant’s Common Stock, par value $0.00033 per share, outstanding as of May 5, 2022 was 28,450,894.
PDS BIOTECHNOLOGY CORPORATION
FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2022
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Page
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Part I — Financial Information
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Item 1.
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Financial Statements (Unaudited):
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| 4 |
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| 5 |
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| 6 |
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7
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Item 2.
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15
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Item 3.
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26
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Item 4.
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26
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Part II — Other Information
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26 |
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Item 1.
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26
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Item 1A.
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26
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Item 2.
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27 | ||
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Item 3.
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27
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Item 4.
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27 | ||
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Item 5.
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27
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Item 6.
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27
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29
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PART 1.
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FINANCIAL INFORMATION
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ITEM 1.
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FINANCIAL STATEMENTS
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Condensed Consolidated Balance Sheets
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March 31, 2022
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December 31, 2021
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ASSETS
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(unaudited)
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|||||||
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Current assets:
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||||||||
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Cash and cash equivalents
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$
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58,881,101
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$
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65,242,622
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||||
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Prepaid expenses and other
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1,849,406
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1,597,569
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||||||
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Total current assets
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60,730,507
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66,840,191
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||||||
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Property and equipment, net
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–
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86
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||||||
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Operating lease right-to-use asset
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308,327
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357,611
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||||||
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Total assets
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$
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61,038,834
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$
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67,197,888
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LIABILITIES AND STOCKHOLDERS’ EQUITY
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||||||||
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Current liabilities:
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||||||||
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Accounts payable
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$
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2,745,709
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$
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1,309,403
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Accrued expenses
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1,961,468
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2,187,704
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||||||
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Operating lease obligation-short term
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311,311
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258,924
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||||||
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Total current liabilities
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5,018,488
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3,756,031
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||||||
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Noncurrent liability:
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||||||||
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Operating lease obligation-long term
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146,980
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231,430
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Total liabilities:
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$
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5,165,468
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$
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3,987,461
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STOCKHOLDERS’ EQUITY
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||||||||
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Common stock, $0.00033
par value, 75,000,000 shares authorized at March 31, 2022 and December 31, 2021, 28,450,894 shares and 28,448,612 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively
|
9,388
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9,387
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||||||
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Additional paid-in capital
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125,041,062
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123,904,602
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Accumulated deficit
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(69,177,084
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)
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(60,703,562
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)
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Total stockholders’ equity
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55,873,366
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63,210,427
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Total liabilities and stockholders’ equity
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$
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61,038,834
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$
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67,197,888
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See accompanying notes to the condensed consolidated financial statements.
Condensed Consolidated
Statements of Operations and Comprehensive Loss
(Unaudited)
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Three Months Ended March 31,
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||||||||
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2022
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2021
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Operating expenses:
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Research and development expenses
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$
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5,161,315
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$
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1,413,057
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General and administrative expenses
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3,317,907
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1,636,216
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Total operating expenses
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8,479,222
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3,049,273
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Loss from operations
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(8,479,222
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)
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(3,049,273
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)
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Other income
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||||||||
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Interest income
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5,700
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655
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Net loss and comprehensive loss
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$
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(8,473,522
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)
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$
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(3,048,618
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)
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Per share information:
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||||||||
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Net loss per share, basic
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$
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(0.32
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)
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$
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(0.14
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)
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Net loss per share, diluted
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$
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(0.32
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)
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$
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(0.14
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)
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Weighted average common shares outstanding, basic
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26,161,156
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22,263,838
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Weighted average common shares outstanding, diluted
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26,161,156
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22,263,838
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||||||
See accompanying notes to the condensed consolidated financial statements.
Condensed Consolidated
Statements of Changes in Stockholders’ Equity
(Unaudited)
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Common Stock
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Additional | |||||||||||||||||||
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Shares
Issued
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Amount
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Paid-in
Capital
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Accumulated
Deficit
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Total Equity
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||||||||||||||||
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Balance - December 31, 2020
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22,261,619
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$
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7,346
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$
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70,907,315
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$
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(43,785,085
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)
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$
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27,129,576
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||||||||||
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Stock-based compensation expense
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–
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–
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257,622
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–
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257,622
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Issuance of common stock from 401K match
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16,642
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–
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35,747
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–
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35,747
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Net loss
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–
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–
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–
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(3,048,618
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)
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(3,048,618
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)
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Balance - March 31, 2021
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22,278,261
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$
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7,346
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$
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71,200,684
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$
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(46,833,703
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)
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$
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24,374,327
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Common Stock
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Additional | |||||||||||||||||||
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Shares
Issued
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Amount
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Paid-in
Capital
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Accumulated
Deficit
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Total Equity
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||||||||||||||||
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Balance - December 31, 2021
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28,448,612
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$
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9,387
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$
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123,904,602
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$
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(60,703,562
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)
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$
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63,210,427
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||||||||||
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Stock-based compensation expense
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–
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–
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1,128,973
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–
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1,128,973
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|||||||||||||||
| Issuance of common stock from exercise of stock options |
2,282 | 1 | 7,487 | – | 7,488 | |||||||||||||||
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Net loss
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–
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–
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–
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(8,473,522
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)
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(8,473,522
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)
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Balance - March 31, 2022
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28,450,894
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$
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9,388
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$
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125,041,062
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$
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(69,177,084
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)
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$
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55,873,366
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See accompanying notes to the condensed consolidated financial statements.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
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Three Months Ended March 31,
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2022
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2021
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Cash flows from operating activities:
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Net loss
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$
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(8,473,522
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)
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$
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(3,048,618
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)
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Adjustments to reconcile net loss to net cash used in operating activities:
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||||||||
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Stock-based compensation expense
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1,128,973
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257,622
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Stock-based 401K company common match
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–
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35,747
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||||||
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Depreciation expense
|
86
|
1,860
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Operating lease expense
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60,257
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60,257
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Changes in assets and liabilities:
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||||||||
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Prepaid expenses and other assets
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(251,837
|
)
|
(721,849
|
)
|
||||
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Accounts payable
|
1,436,306
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(464,626
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)
|
|||||
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Accrued expenses
|
(226,236
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)
|
119,473
|
|||||
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Operating lease liabilities
|
(43,036
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)
|
(42,057
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)
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||||
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Net cash used in operating activities
|
(6,369,009
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)
|
(3,802,191
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)
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||||
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Cash flows from financing activities:
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||||||||
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Proceeds from exercise of stock options
|
7,488 | – | ||||||
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Net cash provided by financing activities
|
7,488 |
–
|
||||||
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Net decrease in cash and cash equivalents
|
(6,361,521
|
)
|
(3,802,191
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)
|
||||
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Cash and cash equivalents at beginning of period
|
65,242,622
|
28,839,565
|
||||||
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Cash and cash equivalents at end of period
|
$
|
58,881,101
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$
|
25,037,374
|
||||
See accompanying notes to the condensed consolidated financial statements.
Notes to Condensed Consolidated Financial Statements (Unaudited)
Note 1 – Nature of Operations
PDS Biotechnology Corporation, a Delaware corporation (the “Company” or “PDS”), is a clinical-stage immunotherapy company developing a growing pipeline of cancer immunotherapies and infectious disease vaccines designed
to overcome the limitations of current immunotherapy and vaccine technologies. The Company’s proprietary T-cell activating platforms designed to train the immune system to better attack and
destroy disease; Versamune®, for treatments in oncology and Infectimune™, for treatments in infectious disease When paired with an antigen, which is a
disease-related protein that is recognizable by the immune system, Versamune and Infectimune have both been shown to induce, in vivo, large quantities of high-quality, highly potent polyfunctional CD4+ helper and CD8+ killer T-cells, a specific sub-type of T-cell that is more effective at killing infected or target
cells. Infectimune is also designed to promote the induction of disease-specific neutralizing antibodies. The Company’s immuno-oncology product candidates are of potential interest for use as a component of combination product candidates
(for example, in combination with other leading technologies such as checkpoint inhibitors) to provide more effective treatments across a range of advanced and/or refractory cancers. The Company is also evaluating our immunotherapies as
monotherapies in early-stage disease. PDS is developing targeted product candidates to treat several cancers including Human Papillomavirus (HPV)-associated cancers, melanoma, colorectal, lung, breast and prostate cancers. The Company’s
infectious disease candidates are of potential interest for use in COVID-19 and universal influenza vaccines.
From
the Company’s inception, it has devoted substantially all of its efforts to drug development, business planning, engaging regulatory, manufacturing and other technical consultants, acquiring operating assets, planning and executing clinical
trials and raising capital.
In
December 2019, a novel (new) coronavirus known as SARS-CoV-2 was first detected in Wuhan, Hubei Province, People’s Republic of China, causing outbreaks of the coronavirus disease, known as COVID-19, that has now spread globally. On January 30,
2020, the World Health Organization (WHO) declared COVID-19 a public health emergency. The Secretary of Health and Human Services declared a public health emergency on January 31, 2020, under section 319 of the Public Health Service Act (42
U.S.C. 247d), in response to the COVID-19 outbreak. On March 11, 2020, the WHO declared COVID-19 a pandemic and on March 13 the President declared a national emergency in response to the pandemic. The full impact of the COVID-19 pandemic is
unknown and continues to evolve. The COVID-19 pandemic has and could continue to negatively affect the Company’s liquidity and operations. The FDA issued and since updated guidance to assist sponsors in assuring the safety of trial
participants, maintaining compliance with Good Clinical Practice (GCP) and minimizing risks to trial integrity. Clinical trial sites have implemented institution-specific measures securing the safety of patients and staff to ensure the
integrity of the trials in the face of the ongoing pandemic. COVID-19 related travel and other restrictions may also impact the potential for on-site monitoring visiting and audits and inspections Company personnel, third parties, and
regulators. There may be shortages of site personnel and equipment necessary for the timely completion of clinical trials. PDS is providing support to address these challenges, but these mitigation measures may not overcome the obstacles that
the pandemic has wrought which continue to impede progress of clinical trials.
Although
there is uncertainty related to the anticipated impact of the COVID-19 pandemic on the Company’s future results, Management believes the current cash reserves, leave the Company well-positioned to manage the business through this crisis as it
continues to unfold. However, the impacts of the COVID-19 pandemic are broad-reaching and continuing and the financial impacts associated with the COVID-19 pandemic are still uncertain.
Note 2 – Summary of Significant Accounting
Policies
| (A) |
Unaudited interim financial statements:
|
The interim balance
sheet at March 31, 2022, the statements of operations and comprehensive loss and changes in stockholders’ equity for the three months ended March 31, 2022 and 2021, and cash flows for the three months ended March 31, 2022 and 2021 are
unaudited. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. GAAP, in accordance with the requirements of the Securities and Exchange Commission (“SEC”) for interim reporting. As
permitted under those rules, certain footnotes or other financial information that are normally required by U.S. GAAP can be condensed or omitted. These condensed consolidated financial statements have been prepared on the same basis as the
Company’s annual financial statements and, in the opinion of management, reflect all adjustments, consisting only of normal recurring adjustments that are necessary for a fair statement of its financial information. The results of operations
for the three months ended March 31, 2022 are not necessarily indicative of the results to be expected for the year ending December 31, 2022 or for any other future annual or interim period. The balance sheet as of December 31, 2021 included
herein was derived from the audited condensed consolidated financial statements as of that date. These condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and
notes thereto as of and for the year ended December 31, 2021, filed by the Company with the SEC in its Annual Report on Form 10-K on March 31, 2022.
| (B) |
Use of estimates:
|
The preparation of condensed consolidated financial
statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the reported amounts of revenues and expenses at the date of the consolidated financial
statements and during the reporting periods, and to disclose contingent assets and liabilities at the date of the consolidated financial statements. Actual results could differ from those estimates. The most significant estimate relates to the
fair value of securities underlying stock-based compensation.
| (C) |
Significant risks and uncertainties:
|
The Company’s operations are subject to a number of factors
that may affect its operating results and financial condition. Such factors include, but are not limited to: the clinical and regulatory development of its products, the Company’s ability to preserve its cash resources, the Company’s review of
strategic alternatives, the Company’s ability to add product candidates to its pipeline, the Company’s intellectual property, the ability to efficiently and effectively conduct its clinical trials, competition from products manufactured and
sold or being developed by other companies, the price of, and demand for, Company products if approved for sale, the Company’s ability to negotiate favorable licensing or other manufacturing and marketing agreements for its products, the
Company’s ability to raise capital, and the effects of health epidemics, pandemics, or outbreaks of infectious diseases, including the recent COVID-19 pandemic and its variants.
The Company currently has no commercially approved
products. As such, there can be no assurance that the Company’s future research and development programs will be successfully commercialized. Developing and commercializing a product requires significant time and capital and is subject to
regulatory review and approval as well as competition from other biotechnology and pharmaceutical companies. The Company operates in an environment of rapid change and is dependent upon the continued services of its employees and consultants
and obtaining and protecting its intellectual property.
| (D) |
Cash equivalents and concentration of cash balance:
|
The Company considers all highly liquid securities with a
maturity weighted average of less than three months to be cash equivalents. The Company’s cash and cash equivalents in bank deposit accounts, at times, may exceed federally insured limits.
| (E) |
Research and development:
|
Costs incurred in connection with research and development
activities are expensed as incurred. These costs include licensing fees to use certain technology in the Company’s research and development projects as well as fees paid to consultants and entities that perform certain research and testing on
behalf of the Company.
Costs for certain development activities, such as clinical
trials, are recognized based on an evaluation of the progress to completion of specific tasks using data, such as patient enrollment, clinical site activations or information provided by vendors on their actual costs incurred. Payments for
these activities are based on the terms of the individual arrangements, which may differ from the pattern of costs incurred.
| (F) |
Patent costs:
|
The Company expenses patent costs as incurred and
classifies such costs as general and administrative expenses in the accompanying statements of operations and comprehensive loss.
| (G) |
Stock-based compensation:
|
The Company accounts for its stock-based compensation in
accordance with ASC Topic 718, Compensation—Stock Compensation (“ASC 718”). ASC 718 requires all stock-based payments to employees, directors and non-employees to be recognized as expense in the consolidated statements of operations and
comprehensive loss based on their grant date fair values. In order to determine the fair value of stock options on the date of grant, the Company uses the Black-Scholes option-pricing model. Inherent in this model are assumptions related to
expected stock-price volatility, option term, risk-free interest rate and dividend yield. While the risk-free interest rate and dividend yield are less subjective assumptions that are based on factual data derived from public sources, the
expected stock-price volatility and option term assumptions require a greater level of judgment. The Company expenses the fair value of its stock-based compensation awards to employees and directors on a straight-line basis over the requisite
service period, which is generally the vesting period. The Company recognizes forfeitures as they occur.
| (H) |
Net loss per common share:
|
Basic and diluted net loss per common share is determined
by dividing net loss attributable to common stockholders by the weighted average common shares outstanding during the period. For all periods presented, the common shares underlying the stock options and warrants have been excluded from the
calculation because their effect would be anti-dilutive. Therefore, the weighted average shares outstanding used to calculate both basic and diluted loss per common share is the same.
The potentially dilutive securities excluded from the
determination of diluted loss per share as their effect is antidilutive, are as follows:
|
As of March 31,
|
||||||||
|
2022
|
2021
|
|||||||
|
Stock options to purchase Common Stock
|
3,932,392
|
1,899,193
|
||||||
|
Warrants to purchase Common Stock
|
124,604
|
197,518
|
||||||
|
Total
|
4,056,996
|
2,096,711
|
||||||
Note 3 – Liquidity
As of March 31, 2022, the Company had $58.9
million of cash and cash equivalents. The Company’s primary uses of cash are to fund operating expenses, primarily research and development expenditures. Cash used to fund operating expenses is impacted by the timing of when the Company pays
these expenses, as reflected in the change to the Company’s outstanding accounts payable and accrued expenses.
On July 29, 2019, the
Company entered into a common stock purchase agreement, or the Aspire Purchase Agreement, with Aspire Capital pursuant to which, the Company has the right, in its sole discretion, to present Aspire Capital Fund, LLC, or Aspire Capital, with a
purchase notice, directing Aspire Capital (as principal) to purchase up to 100,000 shares of the Company’s common stock per business
day, in an aggregate amount of up to $20.0 million of its common stock, or the Purchased Shares, over the term of the Aspire Purchase
Agreement. The Company may sell an aggregate of 1,034,979 shares of its common stock (which represented 19.99% of its outstanding shares of common stock on the date of the Aspire Purchase Agreement) without stockholder approval. The Company may sell
additional shares of its common stock above the 19.99% limit provided that (i) the Company obtains stockholder approval or (ii)
stockholder approval has not been obtained at any time the 1,034,979 share limitation is reached and at all times thereafter the
average price paid for all shares issued under the Aspire Purchase Agreement, is equal to or greater than $5.76, which was the
consolidated closing bid price of the Company’s common stock on July 26, 2019. The minimum price at which the Company can sell shares under the Aspire Purchase Agreement is $0.50. On July 29, 2019, the Company issued 100,654 shares of its common
stock to Aspire Capital, as consideration for entering into the Aspire Purchase Agreement, which the Company refers to as the Commitment Shares. The Company recorded the fair value of the shares at July 29, 2019 of $603,924 as an expense in the third quarter of 2019. Concurrently with the Aspire Purchase Agreement, the Company entered into a registration rights
agreement with Aspire Capital, or the Registration Rights Agreement. In accordance with the Registration Rights Agreement, on August 20, 2019, the Company filed a Registration Statement on Form S-1 (File No. 333-232988) to cover the resale of
the Commitment Shares and any Purchased Shares issuable to Aspire Capital under the Aspire Purchase Agreement. The Aspire Purchase Agreement expired in January 2022, and no capital was raised under the Aspire Purchase Agreement.
In February 2020, the
Company completed an underwritten public offering, in which it sold 10,000,000 shares of common stock at a public offering price of
$1.30 per share. The shares sold included 769,230 shares issued upon the exercise by the underwriter of its option to purchase additional shares at the public offering price, minus underwriting discounts and commissions. The
Company received gross proceeds of approximately $13 million and net proceeds of approximately $11.9 million after deducting underwriting discounts and commissions.
In July 2020, the
Company filed a shelf registration statement, or the 2020 Shelf Registration Statement, with the SEC, for the issuance of common stock, preferred stock, warrants, rights, debt securities and units, which the Company refers to collectively as
the Shelf Securities, up to an aggregate amount of $100 million. The 2020 Shelf Registration Statement was declared effective on July
31, 2020.
In August 2020, the
Company sold 6,900,000 shares of its common stock at a public offering price of $2.75 per share pursuant to the 2020 Shelf Registration Statement, which includes 900,000 shares issued upon the exercise by the underwriter of its option to purchase additional shares at the public offering price, minus underwriting discounts and commissions. The
Company received gross proceeds of approximately $19.0 million and net proceeds of approximately $17.1 million, after deducting underwriting discounts and offering expenses.
In May 2021, the Company received approximately $4.5 million from the net sale of tax benefits through 2019 to an unrelated, profitable New Jersey corporation pursuant the Company’s participation
in the New Jersey Technology Business Tax Certificate Transfer Net Operating Loss (NOL) program for State Fiscal Year 2020.
In June 2021, the Company completed an underwritten public offering in which it sold 6,088,235 shares of common stock at a public offering price of $8.50 per share pursuant to
the 2020 Shelf Registration Statement, which includes 794,117 shares issued upon the exercise by the underwriter of its option
to purchase additional shares at the public offering price, minus underwriting discounts and commissions. the Company received gross proceeds of approximately $51.7 million and net proceeds of approximately $48.5 million, after deducting underwriting
discounts and offering expenses. Approximately $29,300,000 of Shelf Securities remain available for future sale under the 2020
Shelf Registration Statement.
In April 2022, the Company received approximately $1.2 million from the net sale of tax benefits to an unrelated, profitable New Jersey corporation pursuant the Company’s participation in the New Jersey Technology Business Tax
Certificate Transfer NOL program for State Fiscal Year 2021.
The Company’s primary
uses of cash are to fund operating expenses, primarily research and development expenditures. Cash used to fund operating expenses is impacted by the timing of when the Company pays these expenses, as reflected in the change in its outstanding
accounts payable and accrued expenses.
The Company evaluated
whether there are any conditions and events, considered in the aggregate, that raise substantial doubt about its ability to continue as a going concern within one year after the filing of this Quarterly Report on Form 10-Q. The Company’s
budgeted cash requirements in 2022 and beyond include expenses related to continuing development and clinical studies. Based on its available cash resources and cash flow projections as of the date the consolidated financial statements were
available for issuance, management believes there are sufficient funds to continue operations and research and development programs for at least one year after the date of this Quarterly Report on Form 10-Q.
The Company plans to
continue to fund its operations and capital funding needs through equity and/or debt financings. However, the Company cannot be certain that additional financing will be available when needed or that, if available, financing will be obtained on
terms favorable to the Company or its existing stockholders. The Company may also enter into government funding programs and consider selectively partnering for clinical development and commercialization. The sale of additional equity would
result in additional dilution to the Company’s stockholders. Incurring debt financing would result in debt service obligations, and the instruments governing such debt could provide for operating and financing covenants that would restrict its
operations. If the Company is unable to raise additional capital in sufficient amounts or on acceptable terms, we may be required to delay, limit, reduce, or terminate its product development or future commercialization efforts or grant rights
to develop and market immunotherapies that the Company would otherwise prefer to develop and market itself. Any of these actions could harm its business, results of operations and prospects. Failure to obtain adequate financing also may
adversely affect the Company’s ability to operate as a going concern.
Note 4 – Fair Value of Financial Instruments
There were no transfers among Levels 1, 2, or 3 during 2022 or 2021.
|
Fair Value Measurements at Reporting Date Using
|
||||||||||||||||
|
Total
|
Quoted Prices in
Active Markets
(Level 1)
|
Quoted Prices in
Inactive Markets
(Level 2)
|
Significant
Unobservable Inputs
(Level 3)
|
|||||||||||||
|
As of March 31, 2022: (unaudited)
|
||||||||||||||||
|
Cash and cash equivalents
|
$
|
58,881,101
|
$
|
58,881,101
|
$
|
–
|
$
|
–
|
||||||||
|
As of December
31, 2021:
|
||||||||||||||||
|
Cash and cash equivalents
|
$
|
65,242,622
|
$
|
65,242,622
|
$
|
–
|
$
|
–
|
||||||||
Note 5 – Leases
Effective March 5, 2020, the Company entered into a
sublease for approximately 11,200 square feet of office space located at 25B Vreeland Road, Suite 300, Florham Park, NJ. The
sublease commenced on May 1, 2020 and will continue for a term of forty (40) months with an option to renew through October 31, 2027.
As of March 31, 2022 there are seventeen (17) months remaining in the lease term. Upon inception of the lease, the Company recognized
approximately $0.7 million of a ROU asset and operating lease liabilities. The discount rate used to measure the operating lease
liability as of May 1, 2020 was 9.15%. Throughout the period described above the Company has maintained, and continues to maintain,
a month-to-month lease for its research facilities at the Princeton Innovation Center BioLabs located at 303A College Road E, Princeton NJ, 08540.
Supplemental cash flow information related to operating leases is as follows:
|
As of March 31,
|
||||||||
|
2022
|
2021
|
|||||||
|
Cash paid for operating lease liabilities
|
$
|
43,036
|
$
|
42,058
|
||||
|
Right-of use assets recorded in exchange for lease obligations
|
$
|
–
|
$
|
–
|
||||
Maturity of the Company’s operating lease liability is as follows:
|
Year ended December 31,
|
||||
|
2022 (remaining nine months)
|
$
|
251,953
|
||
|
2023
|
239,470
|
|||
|
2024
|
–
|
|||
|
2025
|
–
|
|||
|
2026 and after
|
–
|
|||
|
Total future minimum lease payments
|
491,423
|
|||
|
Less imputed interest
|
(33,132
|
)
|
||
|
$
|
458,291
|
|||
Note 6 – Accrued Expenses
Accrued expenses and other liabilities consist of the following:
|
As of
March 31, 2022
|
As of
December 31, 2021
|
|||||||
|
Accrued research and development
|
$
|
428,993
|
$
|
227,400
|
||||
|
Accrued professional fees
|
799,633
|
485,400
|
||||||
|
Accrued compensation
|
732,842
|
1,458,310
|
||||||
| Accrued rent | – | 16,594 | ||||||
|
Total
|
$
|
1,961,468
|
$
|
2,187,704
|
||||
Note 7 – Stock-Based Compensation
The Company has three equity compensation plans: the 2009 Stock Option Plan, 2014 Equity Incentive Plan and the 2018 Stock
Incentive Plan (the “Plans”).
In 2014, the Company’s stockholders approved the 2014 Equity Incentive Plan pursuant to which the Company may grant up to 91,367
shares as ISOs, NQs and restricted stock units (“RSUs”), subject to increases as hereafter described (the “Plan Limit”). In addition, on January 1, 2015 and each January 1 thereafter and prior to the termination of the 2014 Equity Incentive
Plan, pursuant to the terms of the 2014 Equity Incentive Plan, the Plan Limit was and shall be increased by the lesser of (x) 4%
of the number of shares of Common Stock outstanding as of the immediately preceding December 31 and (y) such lesser number as the Board of Directors may determine in its discretion. In March 2019, the Plan was amended and restated which
removed the annual increase component and was limited to 826,292 shares.
As previously disclosed, on December 8, 2020, the Board of Directors of the Company adopted, subject to stockholder approval, the Second Amended and Restated PDS Biotechnology Corporation 2014 Equity Inventive Plan (the “Restated
Plan”), which would amend and restate the Amended and Restated PDS Biotechnology Corporation 2014 Equity Incentive Plan (the “Current Plan”). The Company held its annual meeting of stockholders on June 17, 2021 (the “Annual Meeting”). The
stockholders voted to approve the Restated Plan at the Annual Meeting. The Restated Plan is identical to the Current Plan in all material respects, except as follows: (a) the number of shares of Common Stock authorized for issuance under
the Restated Plan will increase from 826,292 shares to 3,339,243 shares, plus the total number of shares that remained available for issuance, that are not covered by outstanding awards issued under the Current Plan, immediately prior to
December 8, 2020; and (b) the Restated Plan will terminate on December 7, 2030, unless earlier terminated. Please reference the disclosure in Note 9. As of March 31, 2022, there were 1,325,499 shares available for grant under the Current Plan.
In 2018, the Company’s stockholders approved the 2018 Stock Incentive Plan pursuant to which the Company may grant up to 558,071
shares as (i) Stock Options, (ii) Stock Appreciation Rights, (iii) Restricted Stock, (iv) Preferred Stock, (v) Stock Reload Options and/or (vi) Other Stock-Based Awards.
Pursuant to the terms of the Plans, ISOs have a term of ten years from the date of grant or such shorter term as may be
provided in the option agreement. Unless specified otherwise in an individual option agreement, ISOs generally vest over a four-year
period. Unless terminated by the Board, the Plans shall continue to remain effective for a term of ten years or until such time
as no further awards may be granted and all awards granted under the Plans are no longer outstanding.
On June 17, 2019, the Board adopted the 2019 Inducement Plan (the “Inducement Plan”). The Inducement Plan provides for the grant of non-qualified stock options. The Inducement Plan was recommended for approval by the Compensation
Committee of the Board and subsequently approved and adopted by the Board without stockholder approval pursuant to Rule 5635(c)(4) of the Nasdaq Listing Rules.
On December 9,
2020, the Company amended the Inducement Plan solely to increase the total number of shares of Common Stock reserved for issuance under the Inducement Plan from 200,000 shares to 500,000 shares. The 2019 Inducement Plan will be
administered by the Compensation Committee of the Board. In accordance with Rule 5635(c)(4) of the Nasdaq Listing Rules, non-qualified stock options under the 2019 Inducement Plan may only be made to an employee who has not previously been
an employee or member of the Board (or any parent or subsidiary of the Company), or following a bona fide period of non-employment by the Company (or a parent or subsidiary of the Company), if he or she is granted such non-qualified stock
options in connection with his or her commencement of employment with the Company or a subsidiary and such grant is an inducement material to his or her entering into employment with the Company or such subsidiary. As of March 31, 2022,
there were 114,715 shares available for grant under the 2019 Inducement Plan.
The Company’s stock-based compensation expense was recognized in operating expense as follows:
| Three Months Ended March 31, |
||||||||
|
2022
|
2021
|
|||||||
| (unaudited) |
||||||||
| Stock-Based Compensation | ||||||||
|
Research and development
|
$ |
369,050
|
$ |
60,385
|
||||
|
General and administrative
|
759,923
|
197,236
|
||||||
|
Total
|
$ |
1,128,973
|
$ |
257,622
|
||||
The fair value of options and warrants granted during the three months ended
March 31, 2022 was estimated using the Black-Scholes option valuation model utilizing the following assumptions:
|
Three Months Ended March 31,
|
||||||||
|
2022
|
2021
|
|||||||
|
Weighted Average
|
Weighted Average
|
|||||||
|
(unaudited)
|
||||||||
|
Volatility
|
99.13
|
%
|
100.38
|
%
|
||||
|
Risk-Free Interest Rate
|
1.10
|
%
|
0.35
|
%
|
||||
|
Expected Term in Years
|
6.64
|
5.82
|
||||||
| Dividend Rate | 0.00 | % |
0.00 | % |
||||
|
Fair Value of Option on Grant Date
|
$
|
4.88
|
$
|
1.73
|
||||
The following table summarizes the number of options outstanding and the weighted average exercise price:
|
Number
of Shares
|
Weighted
Average
Exercise Price
|
Weighted Average
Remaining
Contractual
Life in Years
|
Aggregate
Intrinsic Value
|
|||||||||||||
|
Options outstanding at December 31, 2021
|
3,163,835
|
$
|
5.57
|
7.90
|
$
|
10,839,589
|
||||||||||
|
Granted
|
945,005
|
6.09
|
||||||||||||||
|
Exercised
|
(2,282
|
)
|
3.18
|
|||||||||||||
|
Forfeited
|
(174,166
|
)
|
4.91
|
|||||||||||||
|
Expired
|
–
|
–
|
||||||||||||||
|
Options outstanding at March 31, 2022
|
3,932,392
|
$
|
5.73
|
8.08
|
$
|
6,445,883
|
||||||||||
|
Vested and expected to vest at March 31, 2022
|
3,932,392
|
$
|
5.73
|
8.08
|
$
|
6,445,883
|
||||||||||
|
Exercisable at March 31, 2022
|
1,545,118
|
$
|
6.27
|
6.33
|
$
|
2,272,600
|
||||||||||
At March 31, 2022 there was approximately $14,572,753 of unamortized stock option compensation expense, which is expected to be recognized over a remaining average vesting period of 3 years.
Note 8 – Income Taxes
In assessing the realizability of the net deferred tax assets, the Company considers all relevant positive and negative evidence to determine whether it is more likely than not that some portion or all of the deferred income tax assets
will not be realized. The realization of the gross deferred tax assets is dependent on several factors, including the generation of sufficient taxable income prior to the expiration of the net operating loss carryforwards. The Company expects
to have a loss for 2022 and there will be no current income tax expense. Additionally, there was a full valuation allowance
against the net deferred tax assets as of March 31, 2022 and December 31, 2021. As such, the Company recorded no income tax
benefit due to realization uncertainties.
The Company’s U.S. statutory rate is 21%. The primary factor impacting the effective tax rate for the three months ended
March 31, 2022 is the anticipated full year operating loss which will require full valuation allowances against any associated net deferred tax assets.
Entities are also required to evaluate, measure, recognize and disclose any uncertain income tax provisions taken on their income tax returns. The Company has analyzed its tax positions and has concluded that as of March 31, 2022,
there were no uncertain positions. The Company’s U.S. federal and state net operating losses have occurred since its inception and
as such, tax years subject to potential tax examination could apply from that date because the utilization of net operating losses from prior years opens the relevant year to audit by the IRS and/or state taxing authorities. The Company did
not have any unrecognized tax benefits and has not accrued any interest or penalties for the three months ended March 31, 2022 and for the year ended December 31, 2021. In April 2022, the Company received approximately $1.2 million from the sale of its New Jersey state net operating losses.
Note 9 – Commitments and Contingencies
Employment Matters
The Company has entered into employment agreements with each of its executive officers. The employment agreements generally provide for, among other things, salary, bonus and severance
payments. The employment agreements generally provide for between 12 months and 24 months of severance benefits to be paid to an executive (as well as
certain potential bonus, COBRA and equity award benefits), subject to the effectiveness of a general release of claims, if the executive terminates his or her employment for good reason or if the Company terminates the executive’s employment
without cause. Such severance payments may be provided 90 days prior to and for as long as 24 months following the effective date of a change in control. The continued provision of severance benefits is conditioned
on each executive’s compliance with the terms of the Company’s confidentiality and invention and assignment agreement as well as his or her release of claims.
Rent
For month-to-month arrangements not impacted by the adoption of ASC 842, rent for the three months ended March 31, 2022 and 2021, rent was $55,500 and $36,017 respectively.
Legal Proceedings
On July 23, 2021, David R. Rosener, a purported stockholder of the Company, filed a putative class action and shareholder derivative complaint in the Court of Chancery of the
State of Delaware (C.A. No. 2021-0644 JRS) against the Company and all of its directors and certain of its executive officers. The plaintiff named all current directors of PDS as defendants as well as PDS’s Chief Scientific Officer and PDS’s Chief
Medical Officer and also named PDS as a nominal defendant. The plaintiff claimed PDS’s bylaws required tabulation of broker non-votes on Proposal 3 at the Company’s 2021 annual stockholder meeting held on June 17, 2021 (the “2021 Annual Meeting”),
which sought shareholder approval of the Second Amended and Restated PDS Biotechnology Corporation 2014 Equity Incentive Plan (the “Restated Plan”). The complaint asserted claims for breach of fiduciary duties, declaratory judgment, waste of
corporate assets and unjust enrichment in connection with the Restated Plan and the granting of an aggregate of 1,040,700 stock options
to certain executive officers pursuant to the Restated Plan. The plaintiff sought unspecified monetary damages, to have the Restated Plan declared void, and recission of the grant of stock options as ultra vires. At the Special Meeting of
Stockholders held on January 19, 2022, the requisite stockholders of the Company voted to ratify the prior approval of the Restated Plan which was adopted at the 2021 Annual Meeting and the stock options issued under the Restated Plan. Thereafter,
on February 22, 2022, the plaintiff filed a notice of voluntary dismissal in the Court of Chancery of the State of Delaware.
On or about December 27, 2021, Seth Van Voorhees, the former Chief Financial Officer of the Company, filed a Demand for Arbitration against the
Company with the American Arbitration Association, asserting that he was wrongfully terminated. In his demand, Dr. Van Voorhees contends that his alleged damages are expected to be no less than $3,000,000, plus interest, arbitration costs, attorneys’ fees and punitive damages. The Company denies all alleged wrongful conduct and the Company is vigorously defending the
matter.
While there can be no assurances as to the ultimate outcome of any legal proceeding or other loss contingency involving the
Company, management does not believe any pending matter will be resolved in a manner that would have a material adverse effect on its financial position, results of operations or cash flows. The Company may be involved, from time to time, in
additional legal proceedings and claims arising in the ordinary course of its business. Such matters are subject to many uncertainties and outcomes are not predictable with assurance.
Note 10 – Retirement Plan
The
Company has a 401(k) defined contribution plan for the benefit for all employees and permits voluntary contributions by employees subject to IRS-imposed limitations. The 401(k) employer contributions were $48,957 and $35,747 for the three
months
ended March 31, 2022 and 2021, respectively.
Note 11– Subsequent Events
In April 2022, we received approximately $1.2
million from the net sale of tax benefits to an unrelated, profitable New Jersey corporation pursuant our participation in the New Jersey Technology Business Tax Certificate Transfer Net Operating Loss (NOL) program for State Fiscal Year 2021.
| ITEM 2. |
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
The following discussion
and analysis of our financial condition and results of operations should be read in conjunction with our unaudited interim condensed consolidated financial
statements and related notes thereto appearing elsewhere in this Quarterly Report on Form 10-Q (this “Quarterly Report”) and with the audited financial statements and notes thereto of the Company as of and for the year ended December 31, 2021 on Form
10-K, filed with the Securities and Exchange Commission, or SEC, on March 31, 2022.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q (this “Quarterly Report”) contains 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 the Company 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, management.
Forward-looking statements generally include statements that are predictive in nature and depend upon or refer to future events or conditions, and include words such as “may,” “will,” “should,” “would,” “expect,” “anticipate,” “plan,” “likely,”
“believe,” “estimate,” “project,” “intend,” “forecast,” “guidance”, “outlook” and other similar expressions among others. Forward-looking statements are based on current beliefs and assumptions that are subject to risks and uncertainties and are not
guarantees of future performance. Actual results could differ materially from those contained in any forward-looking statement as a result of various factors, including, without limitation:
| ● |
the Company’s ability to protect its intellectual property rights;
|
| ● |
the Company’s anticipated capital requirements, including the Company’s anticipated cash runway and the Company’s current expectations regarding its plans
for future equity financings;
|
| ● |
the Company’s dependence on additional financing to fund its operations and complete the development and commercialization of its product candidates, and
the risks that raising such additional capital may restrict the Company’s operations or require the Company to relinquish rights to the Company’s technologies or product candidates;
|
| ● |
the Company’s limited operating history in the Company’s current line of business, which makes it difficult to evaluate the Company’s prospects, the
Company’s business plan or the likelihood of the Company’s successful implementation of such business plan;
|
| ● |
the timing for the Company or its partners to initiate the planned clinical trials for PDS0101, PDS0103, PDS0203 and other Versamune and
Infectimune based products and the future success of such trials;
|
| ● |
the successful implementation of the Company’s research and development programs and collaborations, including any collaboration studies concerning
PDS0101, PDS0203 and other Versamune and Infectimune based products and the Company’s interpretation of the results and findings of such programs and collaborations and whether such results are sufficient to support the future success of the
Company’s product candidates;
|
| ● |
the success, timing and cost of the Company’s ongoing clinical trials and
anticipated clinical trials for the Company’s current product candidates, including statements regarding the timing of initiation, pace of enrollment and completion of the trials (including our ability to fully fund our disclosed clinical
trials, which assumes no material changes to our currently projected expenses), futility analyses, presentations at conferences and data reported in an abstract, and receipt of interim results (including, without limitation, any preclinical
results or data), which are not necessarily indicative of the final results of the Company’s ongoing clinical trials;
|
| ● |
expectations for the clinical and preclinical development, manufacturing, regulatory approval, and commercialization of our product candidates;
|
| ● |
any Company statements about its understanding of product candidates mechanisms of action and interpretation of preclinical and early clinical results
from its clinical development programs and any collaboration studies; the acceptance by the market of the Company’s product candidates, if approved; the timing of and the Company’s ability to obtain and maintain U.S. Food and Drug
Administration or other regulatory authority approval of, or other action with respect to, the Company’s product candidates; and
|
| ● |
other factors, including legislative, regulatory, political and economic developments not within the Company’s control, including unforeseen circumstances
or other disruptions to normal business operations arising from or related to COVID-19 and those listed under Part II, Item 1A. Risk Factors.
|
Any forward-looking statements in this Quarterly Report reflect our current views with respect to future events or to our
future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed
or implied by these forward-looking statements. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Except as required by law, we assume no obligation to update or revise these forward-looking statements
for any reason, whether as a result of new information, future events or otherwise.
In this Quarterly Report, unless otherwise stated or the context otherwise indicates, references to “PDS,” “the Company,”
“we,” “us,” “our” and similar references refer to PDS Biotechnology Corporation, a Delaware corporation.
Company Overview
We are a clinical-stage immunotherapy
company developing a growing pipeline of molecularly targeted immunotherapies designed to overcome the limitations of current immunotherapy and vaccine technologies. We own the proprietary T-cell activating platforms designed to train the immune
system to better attack and destroy disease; Versamune®, for treatments in oncology and Infectimune™, for treatments in infectious disease. When paired
with an antigen, which is a disease-related protein that is recognizable by the immune system, Versamune and Infectimune have both been shown to induce, in vivo, large quantities of high-quality, highly potent polyfunctional CD4+ helper and CD8+ killer T-cells, a specific sub-type of T-cell that is more
effective at killing infected or target cells. Infectimune is also designed to promote the induction of disease-specific neutralizing antibodies. Our immuno-oncology product candidates are of potential interest for use as a component of combination
product candidates (for example, in combination with other leading technologies such as checkpoint inhibitors) to provide more effective treatments across a range of advanced and/or refractory cancers. We are also evaluating our immunotherapies as
monotherapies in early-stage disease for oncology. We are developing targeted product candidates to treat several cancers including Human Papillomavirus (HPV) associated cancers, melanoma, colorectal, lung, breast and prostate cancers. Our
infectious disease candidates are of potential interest as vaccines to prevent COVID-19 and universal influenza.
In April 2022, we announced two abstracts had been accepted for presentation at the 2022 American Society of Clinical
Oncology Annual Meeting: Abstract number 6041, PDS0101 a novel type 1 interferon and CD8+ T-cell activating immunotherapy in combination with pembrolizumab in subjects with recurrent/metastatic HPV16-positive squamous cell carcinoma (HNSCC) and
Abstract number 2518, Phase II evaluation of the combination of PDS0101, M9241, and bintrafusp alfa with HPV16+ malignancies.
Our current pipeline of Versamune-based targeted immunotherapies and Infectimune-based therapies focuses on the use of
selected disease-associated antigens that have been demonstrated to be associated with a variety of solid tumors, as well as specific infectious diseases.
VERSATILE-002: PDS0101 + KEYTRUDA®
In November 2020, our VERSATILE-002 Phase 2
clinical trial evaluating the combination of PDS0101 in combination with Merck’s anti-PD-1 therapy, KEYTRUDA® (pembrolizumab) which is the FDA-approved
standard of care for first-line treatment of recurrent/ metastatic head and neck cancer commenced and is actively recruiting patients. The clinical trial will evaluate the efficacy and safety of this therapeutic combination as a first-line
treatment in patients with recurrent or metastatic head and neck cancer and high-risk human papillomavirus-16 (HPV16) infection.
In this PDS Biotech-sponsored trial,
patients whose cancer has returned or spread following initial treatment, will be able to avoid chemotherapy and take this combination of two immuno-therapy drugs. Enrolling patients with more functional immune systems that have not been
compromised by extensive chemotherapy may allow improved efficacy of the combination. Patients in the trial will receive a total of 5 cycles of combination therapy in the context of standard of care KEYTRUDA® therapy administered every three weeks until disease progression. The primary endpoint of VERSATILE-002 is the objective response rate – or ORR – at six months following
initiation of treatment. There are two cohorts in the trial. Cohort 1 is for patients that are yet to be treated with a checkpoint inhibitor (CPI naïve) and cohort 2 which consists of patients that have failed checkpoint inhibitor therapy (CPI
refractory).
In February 2022, we announced we had achieved the preliminary efficacy milestone of at least four or more objective responses of the first
17 patients in the CPI naïve arm which now allows that arm to proceed to full enrollment. We also announced detailed preliminary safety data which showed that the combination is well tolerated without evidence of enhanced or significant toxicity in the
first 18 patients in the CPI naïve arm. We continue to enroll patients in the first stage of the CPI refractory arm.
National Cancer Institute: PDS0101+ M9241 +Bintrafusp Alfa
In June 2020, the first patient was dosed under a PDS0101 Cooperative Research and Development Agreement (CRADA), in
NCI, led Phase 2 clinical trial evaluating PDS0101 with NHS-IL12 (M9241), and M7824 (Bintrafusp Alfa), both of which are owned by EMD Serono (Merck KGaA) in patients with advanced/refractory HPV-associated cancers who have failed prior treatment. In
February 2021, we announced that the NCI’s Phase 2 clinical trial of PDS0101 for the treatment of advanced/refractory HPV-associated cancers achieved its preliminary objective response target in patients naïve to checkpoint inhibitors which allowed
for full enrollment of approximately 20 patients in this group. In addition, based on promising results in the CPI naïve arm, the trial was amended to allow enrollment of a separate cohort of checkpoint inhibitor-refractory patients for assessment
of safety and activity of the triple combination. Preliminary efficacy assessment of the triple combination in this added group of 20 checkpoint inhibitor refractory patients is ongoing. The NCI recently achieved the intended enrollment objective of
30 patients in the CPI refractory arm of the trial. The trial has enrolled 45 patients and we plan to continue enrollment in the trial until the total enrollment of 56 patients is achieved.
Preclinical study results arising from this
CRADA were recently published in the Journal for ImmunoTherapy of Cancer, Immunomodulation to enhance the efficacy of an HPV therapeutic vaccine (Journal for ImmunoTherapy of Cancer 2020;8:e000612. doi:10.1136/
jitc-2020-000612), indicating that PDS0101 generated both HPV-specific T-cells and an associated antitumor response when used as a monotherapy. When PDS0101 was
combined with two other novel clinical-stage anti-cancer agents, Bintrafusp Alfa and M9241, the preclinical data suggested that all three therapeutic agents worked synergistically to provide superior tumor T-cell responses and subsequent tumor
regression when compared to any of the agents alone or the 2-component combinations. If the published preclinical data demonstrating powerful activity of the triple combination is successfully confirmed in the ongoing Phase 2 trial, this triple
combination could form the basis of a unique platform providing improved cancer treatments across multiple cancers.
In June 2021, at the American Society of Clinical Oncology (ASCO) conference the NCI announced interim data in this
trial which included, data in both CPI naïve and refractory patients. In the CPI naïve group 83% (5/6) of patients had an objective response, and 1 subject had achieved a complete response with no evidence of disease. 100% of the CPI naïve patients
were alive at a median duration of 8 months. In the CPI refractory group 42% (5/12) of patients had an objective response, and 1 subject had achieved a complete response with no evidence of disease. 10/12 (83%) of CPI refractory patients were alive
at a median duration of 8 months. An update provided in January 2022 showed as of December 31, 2021, that >40 subjects had been recruited into the trial and 30 HPV16-positive patients had been evaluated. The median survival of all patients (3:1
CPI refractor to naïve) was 12 months and progressing. The historical survival of CPI naïve and CPI refractory advanced HPV-associated cancers when treated with CPI are 7-11 months and 3-4 months respectively.
MD Anderson Cancer Center (IMMUNOCERV): PDS0101+ Chemoradiotherapy
In October 2020, a third PDS0101 Phase 2 clinical study was initiated with The University of Texas MD Anderson Cancer
Center and is actively recruiting patients. This clinical trial is investigating the safety and anti-tumor efficacy of PDS0101 in combination with standard-of-care chemo-radiotherapy, or CRT, and their correlation with critical immunological
biomarkers in patients with locally advanced cervical cancer. PDS believes that Versamune’s strong T-cell induction has the potential to meaningfully enhance efficacy of the current standard of care CRT treatment in this indication. The enrollment
rate in this trial continues to be negatively impacted by the COVID-19 pandemic and enrollment is on-going.
Mayo Clinic: PDS0101 Monotherapy and in combination with KEYTRUDA
In February 2022 we announced the
initiation of an Investigator-Initiated Trial (ITT), MC200710, for PDS0101 alone or in combination with the checkpoint inhibitor, KEYTRUDA®, in patients with HPV-associated oropharyngeal cancer (HPV(+)OPSCC) at high risk of recurrence. The
trial is being led by Drs. David Routman, Katharine Price, Kathryn Van Abel, and Ashish Chintakuntlawar of Mayo Clinic, a nationally and internationally recognized center of excellence for the treatment of head and neck cancers. We believe that this
upcoming trial not only broadens our addressable patient population of those affected by the increasing incidence of HPV(+)OPSCC, but also allows us to better understand the activity of PDS0101 alone or in combination with KEYTRUDA® in
earlier stages of disease. This trial is currently open for enrollment.
In this trial treatment will be administered before patients proceed to transoral robotic surgery (TORS) with curative intent. Treatment
in this setting is referred to as neoadjuvant treatment. PDS0101 has been shown to induce killer T-cells that target and kill HPV-positive cancers, either alone or in combination with checkpoint inhibitors in preclinical studies, and in combination in
clinical studies of patients with advanced recurrent/metastatic HPV-associated cancers. This trial will explore whether PDS0101 with or without checkpoint inhibition may increase HPV-specific anti-tumor responses, potentially resulting in tumor
shrinkage, pathologic regression, and decreases in circulating tumor DNA (ctDNA).
Our clinical development strategy of combining PDS0101 with standard of care treatment is designed to mitigate risk in
our proof-of-concept phase 2 trials. It is also designed to demonstrate the potential for significantly enhanced clinical benefit to patients over the standard of care, without compounding toxicity. If we achieve this goal, we believe that we will
have a clear path towards commercialization of PDS0101 in multiple indications. After initial commercial approval, our strategy of combining PDS0101 with standard of care also positions us for rapid market penetration and expansion.
Other Versamune® -Based Products in Development:
PDS0102
PDS0102 is an investigational immunotherapy utilizing tumor-associated and immunologically active T-cell receptor gamma
alternate reading framed protein (TARP) from the NCI. PDS0102 is designed to treat TARP-associated cancers including, acute myeloid leukemia (AML), prostate and breast cancer. In our preclinical work, the administration of PDS0102, the
Versamuine+TARP antigen combination led to the induction of large numbers of polyfunctional tumor targeted killer T-cells. In addition, the TARP tumor antigen alone has already been studied at the NCI in men with prostate cancer and been shown to be
safe, immunogenic with slowing tumor growth rates (NCT00972309). We are evaluating the next steps in the clinical development of PDS0102 and are seeking nondilutive financings to progress to human trials.
PDS0103
In April 2020, the above mentioned, PDS-NCI CRADA was expanded beyond PDS0101 to include clinical and preclinical
development of PDS0103. PDS0103 is an investigational immunotherapy owned by us and designed to treat cancers associated with the mucin-1, or MUC-1, oncogenic protein. These include cancers such as ovarian, breast, colorectal and lung cancers.
PDS0103 combines Versamune with novel highly immunogenic agonist epitopes of MUC-1 developed by the NCI and licensed by PDS. PDS0103 is currently in late preclinical development.
MUC1 is highly expressed in several types
of cancer and has been shown to be associated with drug resistance and poor disease prognosis in breast, colorectal, lung and ovarian cancers, for which PDS0103 is being developed. Expression of MUC-1 is often associated with poor disease
prognosis, due in part to drug resistance. In preclinical studies, and similarly to PDS0101, PDS0103 demonstrated the ability to generate powerful MUC1-specific CD8 killer T-cells. In the first quarter of 2022, we held a pre-IND meeting with the
FDA on PDS0103 and plan to submit our IND package in the fourth quarter of 2022.
Infectimune Development Strategy
We believe that the key differentiating attributes of the Infectimune platform technology are strong induction of CD8+
and CD4+ T-cells as well as antibodies which can be leveraged to improve treatment and preventive options in several infectious disease indications. In January 2022 we announced preclinical data on our universal flu program sponsored by the
National Institute of Allergy and Infectious Disease (NIAID) demonstrating the potential of the Infectimune technology with computationally designed influenza proteins developed by the laboratory of Dr. Ted Ross at the University of Georgia to
generate broadly protective anti-influenza immune responses across multiple strains of influenza. This data as well as our COVID-19 data has provided a unique opportunity to highlight Infectimune’s potentially transformative utility in the
development of more broadly effective and longer lasting protective vaccines. Current preventive and prophylactic vaccine approaches and technologies predominantly focus on creating strong induction of antibody responses. However, the induction
of T-cell responses, in addition to antibody responses, provides more durable and broad protection against infectious diseases.
Earlier announced preclinical studies performed at the University of Kentucky on a potential COVID-19 vaccine indicate
that the vaccine elicits the induction of highly active and potent virus-specific CD8 killer and CD4 helper T-cells within 14 days of treatment. The study also showed induction of the long-lasting virus-specific memory T-cells necessary for longer
term protection. A 30-45-fold increase in COVID-19 specific T-cells was observed by day 14 when compared to the vaccine without Versamune. These preclinical studies also indicated induction of strong anti-SARS-CoV-2 neutralizing antibodies within
14 days, with a 20-25-fold increase when compared to the vaccine without Versamune.
The peer-reviewed scientific publication “A Newcastle Disease Virus (NDV) Expressing a Membrane-Anchored Spike as a Cost-Effective Inactivated SARS-CoV-2 Vaccine” by Sun et al. Vaccines (2020, volume 8, issue 4, page 771) also
provides strong rationale for clinical development of an Infectimune-based COVID-19 vaccine to maximize the full breadth of immune responses induced against SARS-CoV-2. This research conducted at the Mount Sinai Icahn School of Medicine, NY,
indicated that there is powerful antibody induction by Versamune against SARS-CoV-2 at low antigen doses suggesting potential for an effective antigen dose sparing COVID-19 vaccine. These data are based on preclinical studies combining our
Infectimune technology with an inactivated Newcastle disease virus (NDV)/SARS-CoV-2 vaccine (NDV vaccine) developed at Mount Sinai.
Based on the highly promising data recently announced with the universal seasonal flu vaccine and the current focus
of the NIAID in developing more effective flu vaccines, we have decided to opportunistically focus our near-term infectious disease activities to align with the interests of the NIAID Collaborative Influenza Vaccine Innovation Centers (CIVICs)
program. This will involve development of a universal seasonal flu vaccine and also potential development of a universal pandemic influenza vaccine based on similar computationally designed antigens as have shown promise with Infectimune.
We had out-licensed the Covid-19 vaccine (PDS0203) to the Brazilian company Farmacore for development in Latin
America. Initial financial support for the program had been provided by the Brazilian government for preclinical development. On February 22, 2021, we and Farmacore announced that Blanver Farmoquímica e Farmacêutica S.A joined their efforts
(collectively the “Consortium”) to develop and commercialize a novel COVID-19 vaccine in Latin America. Under the terms of the agreement, São Paulo-based Blanver will manufacture, promote, distribute, and commercialize the Infectimune-based COVID-19
vaccine in Latin America. On March 11, 2021 we announced that the Consortium received a commitment from the Secretary for Research and Scientific Training of the MCTI, Brazil to fund up to approximately US$60 million to support the clinical development
and commercialization of an Infectimune-based COVID-19. The progression of the Farmacore development program was delayed in the fourth quarter of 2021. After a review of the program by PDS and Farmacore, the agreement with Farmacore was extended for
six months to May 31, 2022 to provide additional time for Farmacore to commence manufacturing and scale up of drug product for use in clinical trials and any necessary process development work. We have evaluated the progress of the program and as
described above have determined to strategically focus our near-term efforts on the development of universal flu vaccines. The licensing agreement with Farmacore will expire on May 31, 2022.
Our current pipeline of Versamune and Infectimune-based therapies is as follows:
We have never been profitable and have incurred net losses in each year since inception. Our net losses were $8.5 million,
and $3.0 million for the three months ended March 31, 2022 and 2021, respectively. As of March 31, 2022, we had an accumulated deficit of $69.2 million. Substantially all of our net losses have resulted from costs incurred in connection with our
research and development programs and from general and administrative costs associated with these operations.
As of March 31, 2022, we had $58.9 million in cash and cash equivalents.
Our future funding requirements will depend on many factors, including the following:
| ● |
the timing and costs of our planned clinical trials;
|
| ● |
the timing and costs of our planned preclinical studies of our Versamune® platform;
|
| ● |
the outcome, timing and costs of seeking regulatory approvals;
|
| ● |
the terms and timing of any future collaborations, licensing, consulting or other arrangements that we may enter into;
|
| ● |
the amount and timing of any payments we may be required to make in connection with the licensing, filing, prosecution, maintenance, defense and
enforcement of any patents or patent applications or other intellectual property rights; and
|
| ● |
the extent to which we license or acquire other products and technologies.
|
SELECTED FINANCIAL OPERATIONS OVERVIEW
Revenue
We have not generated any revenues from commercial product sales and do not expect to generate any such revenue in the
near future. We may generate revenue in the future from a combination of research and development payments, license fees and other upfront payments or milestone payments.
Research and Development Expenses
Research and development expenses include employee-related expenses, licensing fees to use certain technology in our
research and development projects, costs of acquiring, developing and manufacturing clinical trial materials, as well as fees paid to consultants and various entities that perform certain research and testing on our behalf. Costs for certain
development activities, such as clinical trials, are recognized based on an evaluation of the progress to completion of specific tasks using data such as patient enrollment, clinical site activations or information provided by vendors on their actual
costs incurred. Payments for these activities are based on the terms of the individual arrangements, which may differ from the pattern of costs incurred, and are reflected in the consolidated financial statements as prepaid or accrued expenses. Costs
incurred in connection with research and development activities are expensed as incurred.
We expect that our research and development expenses will increase significantly over the next several years as we advance
our Versamune-based immuno-oncology or Infectimune- based infectious disease candidates into and through clinical trials, pursue regulatory approval of our investigational candidates and prepare for a possible commercial launch, all of which will also
require a significant investment in contract and internal manufacturing and inventory related costs.
The process of conducting human clinical trials necessary to obtain regulatory approval is costly and time consuming. We
may never succeed in achieving marketing approval. The probability of successful commercialization of our drug candidates may be affected by numerous factors, including clinical data obtained in future trials, competition, manufacturing capability and
commercial viability. As a result, we are unable to determine the duration and completion costs of our research and development projects or when and to what extent we will generate revenue from the commercialization and sale of any of our product
candidates.
Results of Operations
The following table summarizes the results of our operations for the three months ended March 31, 2022 and 2021:
|
Three Months Ended
March 31,
|
Increase
|
|||||||||||||||
|
2022
|
2021
|
$ Amount
|
%
|
|||||||||||||
|
(in thousands)
|
||||||||||||||||
|
Operating expenses:
|
||||||||||||||||
|
Research and development expenses
|
$
|
5,161
|
$
|
1,413
|
$
|
3,738
|
265
|
%
|
||||||||
|
General and administrative expenses
|
3,318
|
1,636
|
1,682
|
103
|
%
|
|||||||||||
|
Total operating expenses
|
8,479
|
3,049
|
5,430
|
178
|
%
|
|||||||||||
|
Loss from operations
|
(8,479
|
)
|
(3,049
|
)
|
5,430
|
178
|
%
|
|||||||||
|
Interest income, net
|
6
|
1
|
5
|
500
|
%
|
|||||||||||
|
Net loss and comprehensive loss
|
$
|
(8,473
|
)
|
$
|
(3,048
|
)
|
$
|
5,425
|
178
|
%
|
||||||
Research and Development Expenses
Research and development (R&D) expenses increased to $5.2 million for the three months ended March 31, 2022 from $1.4 million for the three months ended March 31, 2021. The increase of $3.7 million
in 2022 was primarily attributable to an increase of $1.8 million in manufacturing services and quality costs, $1.04 million in clinical study and regulatory costs, $0.8 million in personnel costs and $0.06 million in facilities.
General and Administrative Expenses
General and administrative expenses increased to $3.3 million for the three months ended March 31, 2022 from $1.6 million for the three months ended March 31, 2021. The increase of $1.7 million is
primarily attributable to an increase of $1.0 million in personnel costs, $0.6 million in legal fees and $0.1 in marketing expenses.
Liquidity and Capital Resources
In July 2019, we entered into a common stock purchase agreement, or the Aspire Purchase Agreement, with Aspire Capital
pursuant to which, we have the right, in our sole discretion, to present Aspire Capital Fund, LLC, or Aspire Capital, with a purchase notice, directing Aspire Capital (as principal) to purchase up to 100,000 shares of our common stock per business
day, in an aggregate amount of up to $20.0 million of our common stock, or the Purchased Shares, over the term of the Aspire Purchase Agreement. We may sell an aggregate of 1,034,979 shares of our common stock (which represented 19.99% of our
outstanding shares of common stock on the date of the Aspire Purchase Agreement) without stockholder approval. We may sell additional shares of our common stock above the 19.99% limit provided that (i) we obtain stockholder approval or (ii)
stockholder approval has not been obtained at any time the 1,034,979 share limitation is reached and at all times thereafter the average price paid for all shares issued under the Aspire Purchase Agreement, is equal to or greater than $5.76, which
was the consolidated closing bid price of our common stock on July 26, 2019. The minimum price at which we can sell shares under the Aspire Purchase Agreement is $0.50. On July 29, 2019, we issued 100,654 shares of our common stock to Aspire Capital,
as consideration for entering into the Aspire Purchase Agreement, which we refer to as the Commitment Shares. We recorded the fair value of the shares at July 29, 2019 of $603,924 as an expense in the third quarter of 2019. Concurrently with the
Aspire Purchase Agreement, we entered into a registration rights agreement with Aspire Capital, or the Registration Rights Agreement. In accordance with the Registration Rights Agreement, on August 20, 2019 we filed a Registration Statement on Form
S-1 (File No. 333-232988) to cover the resale of the Commitment Shares and any Purchased Shares issuable to Aspire Capital under the Aspire Purchase Agreement. The Aspire Purchase Agreement expired in January 2022, and no capital was raised under the
Aspire Purchase Agreement.
In February 2020, we completed an underwritten public offering, in which we sold 10,000,000 shares of common stock at a
public offering price of $1.30 per share. The shares sold included 769,230 shares issued upon the exercise by the underwriter of its option to purchase additional shares at the public offering price, minus underwriting discounts and commissions. We
received gross proceeds of approximately $13 million and net proceeds of approximately $11.9 million after deducting underwriting discounts and commissions.
In July 2020, we filed a shelf registration statement, or the 2020 Shelf Registration Statement, with the SEC, for the
issuance of common stock, preferred stock, warrants, rights, debt securities and units, which we refer to collectively as the Shelf Securities, up to an aggregate amount of $100 million. The 2020 Shelf Registration Statement was declared effective on
July 31, 2020. On August 13, 2020, we sold 6,900,000 shares of its common stock at a public offering price of $2.75 per share pursuant to the 2020 Shelf Registration Statement, which includes 900,000 shares issued upon the exercise by the underwriter
of its option to purchase additional shares at the public offering price, minus underwriting discounts and commissions. We received gross proceeds of approximately $19.0 million and net proceeds of approximately $17.1 million, after deducting
underwriting discounts and offering expenses.
In August 2020, we sold 6,900,000 shares of our common stock at a public offering price of $2.75 per share pursuant to
the 2020 Shelf Registration Statement, which includes 900,000 shares issued upon the exercise by the underwriter of its option to purchase additional shares at the public offering price, minus underwriting discounts and commissions. We received gross
proceeds of approximately $19.0 million and net proceeds of approximately $17.1 million, after deducting underwriting discounts and offering expenses.
In May 2021, we received approximately $4.5 million from the net sale of tax benefits to an unrelated, profitable New
Jersey corporation pursuant our participation in the New Jersey Technology Business Tax Certificate Transfer Net Operating Loss (NOL) program for State Fiscal Year 2020.
In June 2021, we sold 6,088,235 shares of common stock at a public offering price of $8.50 per share pursuant to the 2020
Shelf Registration Statement, which includes 794,117 shares issued upon the exercise by the underwriter of its option to purchase additional shares at the public offering price, minus underwriting discounts and commissions. We received gross proceeds
of approximately $51.7 million and net proceeds of approximately $48.5 million, after deducting underwriting discounts and offering expenses. Approximately $29,300,000 of Shelf Securities remain available for future sale under the 2020 Shelf
Registration Statement.
In April 2022, we received approximately $1.2 million from the net sale of tax benefits to an unrelated, profitable New
Jersey corporation pursuant the Company’s participation in the New Jersey Technology Business Tax Certificate Transfer NOL program for State Fiscal Year 2020.
As of March 31, 2022, we had $58.9 million in cash and cash equivalents. Our primary uses of cash are to fund operating
expenses, primarily research and development expenditures. Cash used to fund operating expenses is impacted by the timing of when we pay these expenses, as reflected in the change in our outstanding accounts payable and accrued expenses.
We evaluated whether there are any conditions and events, considered in the aggregate, that raise substantial doubt about
our ability to continue as a going concern within one year after the filing of this Quarterly Report on Form 10-Q. Based on such evaluation and our current plans, which are subject to change, management believes that our existing cash and cash
equivalents as of March 31, 2022 will be sufficient to satisfy our operating cash needs for at least one year after the filing of this Quarterly Report on Form 10-Q.
We plan to continue to fund our operations and capital funding needs through equity and/or debt financings. However, we
cannot be certain that additional financing will be available when needed or that, if available, financing will be obtained on terms favorable to us or our existing stockholders. We may also enter into government funding programs and consider
selectively partnering for clinical development and commercialization. The sale of additional equity would result in additional dilution to our stockholders. Incurring debt financing would result in debt service obligations, and the instruments
governing such debt could provide for operating and financing covenants that would restrict our operations. If we are unable to raise additional capital in sufficient amounts or on acceptable terms, we may be required to delay, limit, reduce, or
terminate our product development or future commercialization efforts or grant rights to develop and market immunotherapies that we would otherwise prefer to develop and market ourselves. Any of these actions could harm our business, results of
operations and prospects.
Cash Flows
The following table shows a summary of our cash flows for each of the periods indicated (in thousands):
|
Three Months Ended March 31,
|
||||||||
|
2022
|
2021
|
|||||||
|
Net cash used in operating activities
|
$
|
(6,369
|
)
|
$
|
(3,802
|
)
|
||
|
Net cash provided by financing activities
|
7
|
–
|
||||||
|
Net decrease in cash and cash equivalents
|
$
|
(6,362
|
)
|
$
|
(3,802
|
)
|
||
Net Cash Used in Operating Activities
Net cash used in operating
activities was $6.4 million and $3.8 million for the three months ended March 31, 2022 and 2021, respectively. The increase in net cash used in operating activities of $2.6 million was primarily due to an increase in net loss of $5.4 million, a decrease in accrued expenses of $0.3 million, partially
offset by an increase in accounts payable of $1.9 million, an increase in prepaid expenses of $0.4 million and an increase in stock compensation of $0.8 million.
Operating Capital Requirements
To date, we have not generated any product revenue. We do not know when, or if, we will generate any product revenue and
we do not expect to generate significant product revenue unless and until we obtain regulatory approval and commercialize one of our current or future product candidates. We anticipate that we will continue to generate losses for the foreseeable
future, and we expect the losses to increase as we continue the development of, and seek regulatory approvals for, our tablet vaccine candidates, and begin to commercialize any approved vaccine candidates. We are subject to all of the risks incident to
the development of new products, and may encounter unforeseen expenses, difficulties, complications, delays and other unknown factors that may harm our business. We expect to incur additional costs associated with operating as a public company and
anticipate that we will need substantial additional funding in connection with our continuing operations.
We evaluated whether there are any conditions and events, considered in the aggregate, that raise substantial doubt about
our ability to continue as a going concern within one year after the filing of this Quarterly Report. Our budgeted cash requirements in 2021 and beyond include expenses related to continuing development and clinical studies. We believe that our
existing cash and cash equivalents as of March 31, 2022 are sufficient to continue operations and research and development programs for at least one year after the date of this Quarterly Report. Until we can generate significant cash from our
operations, we expect to continue to fund our operations with available financial resources. These financial resources may not be adequate to sustain our operations.
We have based our projections of operating capital requirements on assumptions that may prove to be incorrect and we may
use all of our available capital resources sooner than we expect. Because of the numerous risks and uncertainties associated with research, development and commercialization of pharmaceutical products, we are unable to estimate the exact amount of our
operating capital requirements. Our future funding requirements will depend on many factors, including, but not limited to:
| ● |
the initiation, progress, timing, costs and results of our planned clinical trials;
|
| ● |
the effects of health epidemics, pandemics, or outbreaks of infectious diseases, including the recent COVID-19 pandemic, on our business operations,
financial condition, results of operations and cash flows;
|
| ● |
the outcome, timing and cost of meeting regulatory requirements established by the U.S. Food and Drug Administration, or FDA, the European Medicines
Agency, or EMA, and other comparable foreign regulatory authorities;
|
| ● |
the cost of filing, prosecuting, defending and enforcing our patent claims and other intellectual property rights;
|
| ● |
the cost of defending potential intellectual property disputes, including patent infringement actions brought by third parties against us now or in the
future;
|
| ● |
the effect of competing technological and market developments;
|
| ● |
the cost of establishing sales, marketing and distribution capabilities in regions where we choose to commercialize our products on our own; and
|
| ● |
the initiation, progress, timing and results of our commercialization of our product candidates, if approved, for commercial sale.
|
Please see the section titled “Risk Factors” elsewhere in the Quarterly Report and Annual Report for additional risks
associated with our operations.
Purchase Commitments
We have no material non-cancelable purchase commitments with service providers as we have generally contracted on a
cancelable, purchase order basis.
Critical Accounting Policies and Estimates
Our management’s discussion and analysis of our financial condition and results of operations is based on our financial
statements, which have been prepared in accordance with U.S. GAAP. Our accounting policies are more fully described in Note 2 to the consolidated financial statements included in this Quarterly Report on Form 10-Q. As described in Note 2, the
preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well
as the reported revenue generated and expenses incurred during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form
the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Estimates are assessed each period and updated to reflect current information. Actual results may differ from these
estimates under different assumptions or conditions. We believe that the discussion in our management’s discussion and analysis addresses our most critical accounting policies, which are those that are most important to the portrayal of our financial
condition and results of operations and require management’s most difficult, subjective and complex judgments.
There have been no material changes to our critical accounting policies and estimates during the three months ended March 31, 2022 from
those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2021.
Operations and Liquidity
While the potential economic impact brought
by and over the duration of the COVID-19 pandemic may be difficult to assess or predict, the COVID-19 pandemic has resulted in significant disruption of global financial markets, which could in the future negatively affect our liquidity. In addition,
a recession or market volatility resulting from the COVID-19 pandemic could affect our business. We have taken proactive, aggressive action throughout the COVID-19 pandemic to protect the health and safety of our employees and expect to continue to implement these measures until we determine that
the COVID-19 pandemic is adequately contained for purposes of our business. We may take further actions as government authorities require or recommend
or as we determine to be in the best interests of our employees. Given the nature and type of our short-term investments, we do not believe that the
COVID-19 pandemic will have a material impact on our current investment liquidity.
Outlook and Impact of COVID-19 on our Business
In December 2019, a novel (new) coronavirus known as SARS-CoV-2 was first detected in Wuhan, Hubei Province, People’s Republic of China,
causing outbreaks of the coronavirus disease, known as COVID-19, that has now spread globally. On January 30, 2020, the World Health Organization (WHO) declared COVID-19 a public health emergency. The Secretary of Health and Human Services declared a
public health emergency on January 31, 2020, under section 319 of the Public Health Service Act (42 U.S.C. 247d), in response to the COVID-19 outbreak. On March 11, 2020, the WHO declared COVID-19 a pandemic and on March 13 the President declared a
national emergency in response to the pandemic. The full impact of the COVID-19 pandemic is unknown and rapidly evolving. The COVID-19 pandemic has and could continue to negatively affect the Company’s liquidity and operations. To date, two of the
three recently initiated PDS0101 clinical trials were delayed, specifically as a result of the adverse impact the COVID-19 pandemic has had on clinical trial operations for cancer indications in the United States. The FDA issued and since updated
guidance to assist sponsors in assuring the safety of trial participants, maintaining compliance with Good Clinical Practice (GCP) and minimizing risks to trial integrity. Clinical trial sites have implemented institution-specific measures securing
the safety of patients and staff to ensure the integrity of the trials in the face of the ongoing pandemic. All three studies have since been initiated despite the pandemic challenges; however, the evolving COVID-19 pandemic has impacted the pace of
enrollment in clinical trials in general and we may be negatively affected with our trials. COVID-19 related travel and other restrictions may also impact the potential for on-site monitoring visiting and audits and inspections by us, third parties,
and regulators. There may be shortages of site personnel and equipment necessary for the timely completion of our trials. We are providing support to address these challenges, but these mitigation measures may not overcome the obstacles that the
pandemic has wrought which continue to impede progress of clinical trials.
Although there is uncertainty related to the anticipated impact of the COVID-19 pandemic on our future results, we believe
our current cash reserves, leave us well-positioned to manage our business through this crisis as it continues to unfold. However, the impacts of the COVID-19 pandemic are broad-reaching and continuing and the financial impacts associated with the
COVID-19 pandemic are still uncertain.
As previously stated, we licensed Versamune to Farmacore in Brazil to develop PDS0203; a vaccine for the prevention of
COVID-19. The Secretary for Research and Scientific Training of The Ministry of Science, Technology and Innovation of Brazil provided a commitment to fund up to approximately US$60 million to support the clinical development and commercialization of a
Versamune-based COVID-19 vaccine in Brazil. We have not received confirmation of the availability of financial resources within the MCTI to support the clinical development and commercialization of a Versamune-based COVID-19 vaccine in Brazil. Clinical
development and commercialization of a Versamune-based COVID-19 vaccine in Brazil has not been initiated. Due to delays in the program, in the fourth quarter of 2021, we met
with Farmacore and performed a detailed program review. As the result of that review, we extended the contract with Farmacore for six months through May 31, 2022. We have evaluated the progress of the program and have determined to strategically
focus on PDS0202 universal flu vaccine. The licensing agreement with Farmacore will expire on May 31, 2022.
Off-Balance Sheet Arrangements
We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined
in the rules and regulations of the SEC.
Smaller Reporting Company
As of January 1, 2021, we are no longer an “emerging growth company,” as defined in the Jumpstart Our Business Startups
Act of 2012, or the JOBS Act. However, we remain a “smaller reporting company,” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended. We will cease to be a smaller reporting company if we have a non-affiliate public float in
excess of $250 million and annual revenues in excess of $100 million, or a non-affiliate public float in excess of $700 million, determined on an annual basis. As a smaller reporting company, we are permitted and intend to rely on exemptions from
certain disclosure requirements that are applicable to other public companies that are not smaller reporting companies. We will continue to take advantage of some or all of the available exemptions.
| ITEM 3: |
QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
|
The primary objectives of our investment activities are to ensure liquidity and to preserve principal, while at the same
time maximizing the income we receive from our cash and marketable securities without significantly increasing risk. As of March 31, 2022, we had cash equivalents of $58.9 million that were held in a non-interest-bearing money operating account and an
institutional U.S. Treasury money market fund. Our primary exposure to market risk is interest rate sensitivity, which is affected by changes in the general level of U.S. interest rates. Due to the short-term maturities of our cash equivalents and the
low risk profile of our investments, we do not believe that an immediate 100 basis point change in interest rates would have a material effect on the fair market value of our cash equivalents. To minimize the risk in the future, we intend to maintain
our portfolio of cash equivalents and short-term investments in institutional market funds that are comprised of U.S. Treasury and Treasury backed repurchase agreements.
| ITEM 4: |
CONTROLS AND PROCEDURES
|
Evaluation of Disclosure Controls and Procedures
An evaluation was carried out, under the supervision of and with the participation of our management, including our Chief Executive
Officer and our Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15 (e)) under the Securities Exchange Act of 1934, or the Exchange Act, as of the end of the period covered
by this report. Based on the evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that our disclosure controls and procedures are effective to ensure that the information required to be disclosed by us in the reports
we file or submit under the Exchange Act was recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Exchange Act)
identified in connection with the evaluation identified above that occurred during the quarter ended March 31, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
| PART II. |
OTHER INFORMATION
|
| ITEM 1. |
LEGAL PROCEEDINGS
|
The information in Note 9 to the Condensed Consolidated Financial Statements contained in Part I, Item 1 of this Quarterly
Report on Form 10-Q is incorporated herein by reference. There are no matters which constitute material pending legal proceedings to which we are a party other than those incorporated into this item by reference from Note 9 to our Condensed
Consolidated Financial Statements for the quarter ended March 31, 2022 contained in this Quarterly Report on Form 10-Q.
| ITEM 1A. |
RISK FACTORS
|
With the exception of the risk factors noted below, there have been no material changes from our risk factors as
previously reported in our Annual Report on Form 10-K for the year ended December 31, 2021. However, any investment in our business involves a high degree of risk. Before making an investment decision, you should carefully consider the information we
include in this Quarterly Report on Form 10-Q, including our unaudited interim condensed consolidated financial statements and accompanying notes, our Annual Report on Form 10-K for the year ended December 31, 2021 filed on March 31, 2022, including
our financial statements and related notes contained therein, and the additional information in the other reports we file with the Securities and Exchange Commission. These risks may result in material harm to our business and our financial condition
and results of operations. In this event, the market price of our common stock may decline and you could lose part or all of your investment. Additional
risks that we currently believe are immaterial may also impair our business operations. Our business, financial conditions and future prospects and the trading price of our common stock could be harmed as a result of any of these risks.
Our operations and business, financial condition, and prospects may be adversely affected by the current military conflict between Russia
and Ukraine and other future social and geopolitical instability.
We are exposed to the risk of changes in social, geopolitical, legal, and economic conditions. The global economy has been, and may
continue to be, negatively impacted by Russia’s invasion of Ukraine. As a result of Russia’s invasion of Ukraine, the United States, the European Union, the United Kingdom, and other G7 countries, among other countries, have imposed substantial
financial and economic sanctions on certain industry sectors and parties in Russia. Broad restrictions on exports to Russia have also been imposed. These measures include: (i) comprehensive financial sanctions against major Russian banks; (ii)
additional designations of Russian individuals with significant business interests and government connections; (iii) designations of individuals and entities involved in Russian military activities; and (iv) enhanced export controls and trade sanctions
limiting Russia’s ability to import various goods. The negative impacts arising from the conflict and these sanctions and export restrictions may include reduced consumer demand, supply chain disruptions and increased costs for transportation, energy,
and raw materials. Although none of our operations are in Russia or Ukraine, further escalation of geopolitical tensions could have a broader impact that expands into other markets where we do business, which may adversely affect our business and
financial condition, results of operations and prospects.
Our results of operations and liquidity needs could be materially affected by market fluctuations and general economic conditions
Our results of operations could be materially affected by economic conditions generally, both in the United States and elsewhere around
the world. Concerns over inflation. Energy costs, geopolitical issues, and the availability and cost of credit have in the past and may continue to contribute to increase volatility and diminished expectations of the economy and markets going forward.
Market upheavals may have an adverse effect on us. In the event of a market downturn, our results of operations could be adversely affected. Our future cost of equity or debt capital and access to the capital markets could be adversely affected, and
our stock price could decline. There may be disruption or delay in the performance of our third-party contractors and suppliers. If our contractors, suppliers and partners are unable to satisfy their contractual obligations, our business could suffer.
In addition, we maintain significant amounts of cash and cash equivalents at one financial institution that are in excess of federally insured limits, and we may experience losses on those deposits.
| ITEM 2. |
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|
There were no unregistered sales of the Company’s equity securities during the three months ended March 31, 2022.
| ITEM 3. |
DEFAULTS UPON SENIOR SECURITIES
|
None.
| ITEM 4. |
MINE SAFETY DISCLOSURES
|
Not applicable.
| ITEM 5. |
OTHER INFORMATION
|
None.
| ITEM 6. |
EXHIBITS
|
|
Exhibit
Number
|
Exhibit Description
|
|
|
Third Amended and Restated Bylaws of PDS Biotechnology Corporation (filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K
filed on March 15, 2022, and incorporated by reference herein).
|
||
|
10.1+
|
PDS Biotechnology Corporation Change of Control Severance Plan effective as of March 14, 2022 (filed as Exhibit 10.21 to the
Company’s Annual Report on Form 10-K filed on March 31, 2022, and incorporated herein by reference).
|
|
|
10.2**+
|
Amended and Restated Executive Employment Agreement by and between Frank K. Bedu-Addo and PDS Biotechnology Corporation, effective as
of March 14, 2022 (filed as Exhibit 10.22 to the Company’s Annual Report on Form 10-K filed on March 31, 2022, and incorporated herein by reference).
|
|
|
10.3**+
|
Executive Employment Agreement by and between Gregory Conn, Ph.D. and PDS Biotechnology Corporation, effective as of March 14, 2022
(filed as Exhibit 10.23 to the Company’s Annual Report on Form 10-K filed on March 31, 2022, and incorporated herein by reference).
|
|
|
10.4**+
|
Executive Employment Agreement by and between Matthew Hill and PDS Biotechnology Corporation, effective as of March 14, 2022 (filed
as Exhibit 10.24 to the Company’s Annual Report on Form 10-K filed on March 31, 2022, and incorporated herein by reference).
|
|
|
10.5**+
|
Executive Employment Agreement by and between Lauren V. Wood, M.D. and PDS Biotechnology Corporation, effective as of March 14, 2022
(filed as Exhibit 10.25 to the Company’s Annual Report on Form 10-K filed on March 31, 2022, and incorporated herein by reference).
|
|
|
31.1*
|
Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as
adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
31.2*
|
Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as
adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
32.1*
|
Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 (furnished herewith).
|
|
|
32.2*
|
Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 (furnished herewith).
|
|
|
101.INS*
|
XBRL Instance Document
|
|
|
101.SCH*
|
XBRL Taxonomy Extension Schema Document
|
|
|
101.CAL*
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
101.DEF*
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
101.LAB*
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
101.PRE*
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
104
|
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)
|
| * |
Filed herewith (unless otherwise noted as being furnished herewith)
|
| + |
Indicates management contract or compensatory plan.
|
| ** |
Certain portions of the Exhibit have been redacted pursuant to Item 601(b)(10)(iv) of Regulation S-K.
|
Pursuant to the requirements of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly
authorized.
|
PDS Biotechnology Corporation
|
|||
|
May 11, 2022
|
By:
|
/s/ Frank Bedu-Addo
|
|
|
Frank Bedu-Addo
|
|||
|
President and Chief Executive Officer
(Principal Executive Officer)
|
|||
|
May 11, 2022
|
By:
|
/s/ Matthew Hill
|
|
|
Matthew Hill
|
|||
|
Chief Financial Officer
|
|||
|
(Principal Financial and Accounting Officer)
|
|||