PDS Biotechnology Corporation (PDSB) Earnings Call Transcript & Summary

Greetings, and welcome to the PDS Biotechnology Financing Conference Call.[Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Gabby DeGravina of Investor Relations. Thank you. Please go ahead.

Good morning, and welcome to PDS Biotech financing conference call. With me today from the company are Dr. Frank Bedu-Addo, Chief Executive Officer; and Matt Hill, Chief Financial Officer. Yesterday afternoon, PDS Biotech issued a press release announcing that the company completed a debt financing agreement. We encourage everyone to read the press release as well as PDS Biotech's Form 8-K, which includes other updates and was also issued yesterday afternoon. And the company's press release is available on its website at pdsbiotech.com. In addition, this conference call is being webcast and will be archived on the company website for future reference. Before we begin, we need to remind everyone that on today's call, the company will be making forward-looking statements regarding potential development plans. These statements are subject to risks and uncertainties that may cause actual results to differ from those forecasted. A description of these risks can be found in PDS Biotech's most recent filings with the SEC. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this conference call, except to the extent required by applicable law or regulation, PDS Biotech undertakes no obligation to update the forward-looking statements included today to reflect subsequent events or circumstances. With that, I would now like to turn the call over to Dr. Frank Bedu-Addo. Frank?

Thank you, Gabi, and thank you, everyone, for joining us today. Yesterday, we announced the completion of a $35 million debt financing agreement with Horizon Technology Finance, a leading specialty finance company with an extensive history of supporting innovative life science companies. As many of you know, it is prudent that we remain opportunistic around capital needs, and we are pleased to have closed this deal with favorable terms, given the current market uncertainty. We believe this agreement with Horizon serves as a validation of our technology, data and intellectual property, all of which we are extensively vetted as part of Horizon's due diligence process. We continue to be highly confident in the potential and value of the company's technology platforms and data. This debt offers PDS Biotech the capital needed to transition us into the registrational phase of development for PDS0101 while minimizing the dilution to our shareholders. The timing of this financing is in line with our business objectives as we prepare for our upcoming meeting with the Food and Drug Administration to discuss the registrational trial design for our lead program. This transaction immediately strengthens our balance sheet and further extends our cash runway as we move PDS0101 to a potential registrational trial in 2023. At this time, I will now turn the call over to Matt to have him walk through the details of the financing. Matt?

Thank you. As Frank mentioned, we completed a $35 million debt financing agreement with Horizon Technology Finance. As part of the agreement, we received an initial tranche of $25 million at closing and have an option to receive an additional $10 million. Interest accrues at the Wall Street General prime rate, which has a floor of 4% plus 5.75%. Each advance of the loan will be repaid in 48 monthly payments consisting of 24 monthly payments of interest only followed by 24 monthly payments of principal and accrued interest. In connection with the financing, we issued Horizon warrants to purchase up to 4% of the loan amount for 381,625 shares of our common shares at an approximate exercise price of $3.67 per share. This represents approximately 1% of our outstanding shares and is based on a 10-day volume weighted average price on the execution of the term sheet. We believe the confirmatory due diligence undertaken by Horizon further validates our technology, data and IP. We are pleased that we're able to obtain a market rate nondilutive financing under current market conditions. This positions us well to execute towards anticipated milestones. We expect to use the proceeds from this financing to support our ongoing clinical development of PDS0101, other candidates within the pipeline and for general working capital purposes. This financing adds approximately $25 million to the $53 million reported at the end of June 2022. We've been financially prudent in leveraging our clinical partnerships, allowing us to run 4 Phase II trials, while also progressing our oncology and infectious disease pipelines. This cash provides us with additional flexibility of the head of the FDA meeting planned for this quarter. And under the current business plan, it extends our runway into the second quarter of 2025. In the event we begin a registrational trial in 2023 and Obviously, the cash burn would increase. But based on current models, cash runway would be into the second quarter of 2024, but that will depend on, among other things, FDA feedback and timing of the start of a registrational trial. In addition to this financing announcement, we put a $150 million shelf filing in place, of which $50 million is part of an at-the-market offering or ATM. This is merely an important housekeeping item for any biotech company at our stage, while we remain opportunistic and as seen in our decision to finance our upcoming development needs via debt vehicle, we do not intend to draw down on the ATM at this time. With that, I'd like to turn the call over to the operator to open up the line for a brief question-and-answer session. Operator?

[Operator Instructions]The first question is coming from Louise Chen of Cantor Fitzgerald.

Congrats on financing. Just a couple of questions from us. Will the latest financing accelerate pipeline advancement, if so, which product candidates will likely to be ahead of schedule.

Thank you very much for your question. So I think, as we mentioned, one of the key things we're looking at is potential advancement of our PDS0101 trial, hopefully, into a registrational trial sometime in 2023. We are prioritizing the commercialization of PDS0101 at this time. And therefore, we are hopeful that we will come to alignment with the FDA on the clinical trial design. And we anticipate that this financing will help us prepare to get the registrational trial underway. Our goal is to commercialize PDS0101 as rapidly as possible, and therefore, we will prioritize moving that program forward. And hopefully, once we have the discussions with the FDA, we will then understand much better what the time line would be and what the pathway would be for the registrational trial of PDS0101. I hope that answers your question.

Yes. Okay. Thank you so much for the clarification, and congrats on the finding to again.

[Operator Instructions]At this time, I'd like to turn the floor back over to Dr. Bedu-Addo for closing comments.

Thank you again for your time and for joining us on today's call. We are pleased to have Horizon Capital Finance as a financing partner. Based on our recently reported data and the fact that PDS0101 has now been administered to over 100 patients in our ongoing Phase II trials, we are increasingly optimistic about the potential of our technology and products to transform the treatment of cancer. We are excited about the short- and long-term milestones ahead of us. And we -- and as we move forward, we will continue to update you on our progress. Have a great day.

Ladies and gentlemen, thank you for your participation. This concludes today's conference. You may disconnect your lines or walk off the webcast at this time, and enjoy the rest of your day.