PDS Biotechnology Corporation (PDSB) Earnings Call Transcript & Summary

Greetings. Welcome to PDS Biotechnologies conference call and audio webcast. [Operator Instructions] Please note, this conference is being recorded. I'll now turn the conference over to Nicole Jones with CG Capital. Nicole, you may now begin.

Good morning, and welcome to PDS Biotechnologies conference call and audio webcast. With me today from the company are Dr. Frank Bedu-Addo, Chief Executive Officer; Dr. Lauren V. Wood, Chief Medical Officer; and Matt Hill, Chief Financial Officer. Earlier this morning, PDS Biotech issued a press release announcing its exclusive global license agreement with Merck KGaA, Darmstadt, Germany for M9241, a novel investigational tumor targeting IL-12 compound. We encourage everyone to read the press release as well as PDS Biotech's report on Form 8-K, which will be filed with the SEC shortly. The company's press release is available on the PDS website at pdsbiotech.com. In addition, this conference call will be archived on the company website for future reference. Before we begin, we need to remind everyone that on today's call, the company will be making forward-looking statements regarding regulatory and product candidate development plans as well as research activities. Certain information in this presentation may include forward-looking statements, including within the meaning of Section 21E of the United States Securities Exchange Act of 1934 as amended, and Section 27A of the United States Securities Act of 1933 as amended, concerning PDS Biotechnology Corporation and other matters. These statements may discuss goals, intentions and expectations as to future plans, trends, events, results of operations or financial conditions or otherwise, based on current beliefs of the company's management as well as assumptions made by and information currently available to management. These assumptions 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, or speak only as of this 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 like to turn the call over to Dr. Frank Bedu-Addo. Frank?

Thank you, Nicole, and thank you all for joining us today. We are very excited about today's news, announcing our exclusive global license agreement with Merck KGaA, Darmstadt, Germany, for M9241. M9241 is a novel investigational tumor targeting interleukin 12 or IL-12 fusion compound formerly known as NHS-IL12. M9241 is a key component together with PDS0101 in the triple combination being studied in the National Cancer Institute-led trial. We announced updated overall survival data from this trial last week. As you may know, PDS Biotech has patented the combination of Versamune with cytokines, including IL-12. This proprietary and novel combination of Versamune and IL-12 has the potential to address a key limitation of immuno-oncology, which is the ability to more broadly overcome tumor-mediated immune suppression. There is a second important reason for our interest in M9241. Our lead Versamune-based product, PDS0101, has demonstrated the potential to overcome another significant limitation of immuno-oncology. When administered to cancer patients, PDS0101 induces the right type of tumor targeting killer T-cells with the right potency and in the right quantity. This capability of Versamune has resulted in what we believe are some of the most significant results to date in both locally advanced cervical cancer and recurrent metastatic head and neck cancer. The combination of the Versamune technology and IL-12 cytokine may now unlock the potential of cytokine in immuno-oncology. IL-12 is a well-documented T-cells stimulating cytokine, which can enhance the growth and function of T-cells. IL-12 has been evaluated as an immunotherapy in cancer, but has not yet achieved its intended potential to effectively treat cancer. In combination with Versamune, however, we are inducing and activating the right type of T-cell in the body. M9241 targets the tumor and enhances infiltration of these T-cells into the tumor and expansion of the T-cells within the tumor. This leads to enhanced killing efficacy. With Versamune and M9241, PDS Biotech now has in its pipeline, technologies designed to achieve both simultaneous induction of active tumor-infiltrating killer T-cells as well as cytokine infiltration of the tumors. We believe that due to the complementary effects of Versamune and M9241, the potential now exists to significantly advance the treatment of late-stage cancers with immunotherapy. Now to the terms of the agreement. Merck KGaA, Darmstadt, Germany has granted PDS Biotech, a worldwide exclusive license to M9241. Under the terms of the agreement, Merck KGaA will receive an upfront cash payment of $5 million and will be entitled to up to $11 million in development and regulatory milestone payments, including first commercial sale for the first 2 indications. In terms of commercial sales milestone payments, Merck KGaA will receive up to $105 million for the first 2 indications as well as a 10% royalty on future sales of M9241 with standard step-down provisions. Merck KGaA, Darmstadt, Germany, will receive 378,787 shares of PDS Biotech's common stock having a value of $5 million. This translates to approximately 1.3% of outstanding shares of PDS Biotech stock based on the closing price of PDS Biotech's common stock on December 30, 2022. As a reminder, the financial terms of this deal have been included in our financial projections. PDS Biotech will assume the responsibility for future development, commercialization and manufacturing. However, in order to support clinical development, Merck KGaA, Darmstadt, Germany, will provide the drug to PDS Biotech to perform ongoing and upcoming clinical studies. There are a number of ongoing investigator-initiated clinical trial utilizing M9241. PDS Biotech will assume ownership of these programs, and we, therefore, plan to perform an evaluation of each trial to determine which of these fits into our pipeline strategy and may provide a springboard to progress into later-stage trials. We very much appreciate Merck KGaA, Darmstadt, Germany's recognition of the potential of Versamune and M9241 to be differentiating in the field of cancer treatment. The exclusive agreement, we believe, also continues to provide validation of our approach to immunotherapy and the potential to commercialize M9241 in multiple indications with PDS0101, PDS0102 and PDS0103. I'll now turn the call over to Lauren for a quick update on the National Cancer Institute-led Phase II triple combination trial utilizing both M9241 and PDS0101. Lauren?

Thank you, Frank. I want to reiterate Frank's excitement regarding this agreement. As you know, M9241 is one of the investigational compounds in the National Cancer Institute-led Phase II triple combination trial that also includes PDS0101 and the bifunctional checkpoint inhibitor Bintrafusp alfa. M9241 has been shown to target the tumors microenvironment and appears to further promote proliferation of Versamune induced T-cells in the tumors while also potentially enhancing the killing potency of the T-cells and overcoming immune suppression in the tumors. Let's talk about the use of this combination in the group of cancer patients who have historically been the most difficult to treat, the highest treatment far possible in oncology. The 29 patients that have all failed prior treatments, including checkpoint inhibitors. In this patient population, the reported historical median overall survival is only 3 to 4 months. We recently reported Phase II data showing a median overall survival of 21 months in this patient population. With the standard of care, it is generally reported that less than 10% of checkpoint inhibitor refractory patients have an objective response. With the PDS0101 based triple combination, the NCI has reported an objective response rate of 63% or 5 out of 8 treated patients with the optimal dose combination of PDS0101 and M9241. In addition, 79%, 11 out of 14 treated patients, demonstrated a greater than twofold increase in HPV 16 targeted T-cells. Additionally, for the group of advanced cancer patients, with cancer has continued to progress after platinum-based chemotherapy and who are checkpoint inhibitor naive, the median overall survival with standard of care is reported to be 7 to 11 months. In these patients, 75% of patients treated with the triple combination remain alive at a median follow-up of 27 months. Consequently, the median overall survival has still not been reached. 88%, or 7 out of 8 checkpoint inhibitor naive patients, had an objective response. The reported rates are less than 25% with approved checkpoint inhibitors and 38%, or 3 out of 8 naive patients, had a complete response. With these encouraging data in hand, we have scheduled a meeting with the Food and Drug Administration, also known as the FDA, to discuss the potential registrational trial for investigating the triple combination of M9241, PDS0101 and a checkpoint inhibitor in recurrent metastatic HPV-positive cancers. We look forward to updating the community on the outcomes from our meeting with the FDA. Looking ahead, our goal with the addition of M9241 to PDS Biotech's portfolio is to develop and hopefully achieve checkpoint inhibitor agnostic and independent combinations in advanced cancers. I'd like to note that going forward, M9241 will be known as and referred to as PDS0301 in our clinical development pipeline. This completes my discussion, and I'll now turn the call back over to Frank. Frank?

Thanks very much, Lauren. We are clearly excited about our Versamune T-cells activating technology with the tumor targeted IL-12 cytokine, which has the potential to advance the treatment of cancer as highlighted in the differentiating results reviewed by Lauren. We believe this agreement with Merck KGaA, Darmstadt, Germany, provides further validation of our approach to cancer immunotherapy. The addition of the IL-12 asset expands our platforms and immunotherapeutic capabilities, giving us additional promising PDS Biotech owned platforms and possible combinations to effectively address multiple cancers. As Lauren mentioned, going forward, M9241 will now be known and referred to as PDS0301 in our pipeline. At this time, I would like to turn the call over to the operator to begin the question-and-answer portion of the call. Operator?

[Operator Instructions] Our first question is from the line of Louise Chen with Cantor Fitzgerald.

Happy New Year. This is Carvey on for Louise from Cantor. Congrats on the agreement. We're curious to know the versatility of M9241 what other indications or studies that it is actually approved in besides HPV-related cancers?

Carvey, thanks a lot for your question. Today, the most advanced clinical trial has been performed in the HPV cancers in the PDS Biotechnology study, However, there are, as I mentioned, a number of studies ongoing at the NCI in other indications, including prostate cancer, colon cancer and a few others that we will be evaluating. We're going to take a look at those studies that are currently ongoing, determine which of those fit into our pipeline and which of those could also provide a springboard for us to move into later-stage trials, but the PDS0101 trial in HPV-associated cancers is the most advanced trial that has been, in which M9241 has been evaluated.

The next question is from the line of Joe Pantginis with H.C. Wainwright.

Happy New Year as well. So Frank, I want to get a sense at least of your initial goals for the broader FDA path for 0301 here. So obviously, you guys highlighted the initial pathway for HPV positive, and I have a question about that. But what are your general thoughts right now before talking to the FDA about you would have to get this approved as a combination with inclusion of 0301? Or what kind of parameters are you looking at for multiple indications?

So those are a lot of the discussions that we will be having with the FDA. However, from our perspective, what we have done today is both in the preclinical studies as well as the clinical studies has been to really understand the contribution of each of the 3 components in that triple combination. We believe that the FDA will want to understand not only the safety of the individual components as well as the safety of the combined triple combination, but the FDA will also very likely want to understand the contribution of each of those -- of the 3 agents, right? So that's one of the key things that we've done both in the preclinical studies and have also continued to do in the human clinical study. So if you may recall, in ASCO 2021 at the presentation, one of the key results that was presented was the studies in HPV 16 negative patients, where it was demonstrated that no tumor regression was observed in HPV 16 negative patients. That was very important because it was critical to really demonstrate the critical key role of PDS0101 in generating the HPV 16 targeted T-cells. And so what that study demonstrated was that dose HPV16 T-cells induced specifically by PDS0101 were critical to the clinical outcomes that we were seeing with the combination. A very similar study was done with NHS IL-12, right, which is now PDS0301, looking at different doses of PDS0301 and demonstrating that the optimal dose was the high dose that we studied demonstrating that with that high dose and the optimal dose of PDS0101, we were seeing these very high regression rate, objective responses of 63%, for example, right? So some of these studies have already been done to provide -- hopefully provide the FDA with confidence that we understand the contribution of each of these components in the trial. So what we want to understand now is with the data that we have generated to date, the extremely promising overall survival as well as tumor regression rates, how do we get this -- how do we get this rapidly into commercialization. It's very important also to realize that this population that we're looking at are patients who have failed all treatment options available to them. So these are patients with very few remaining options with a very short overall survival, right? And so these are some of the discussions that we would like to have get the feedback from the FDA in terms of how they would like to see this trial designed. And hopefully, we can move this forward rapidly.

Got it. And then just quickly, I mean, with Lauren's comments about the broad strokes that she took on the potential registration path in HPV positive. I guess your prepared comment was also in combination with checkpoint inhibitor, which makes sense based on the data that you've already put forth. But when you say checkpoint inhibitor, does that include the potential for something beyond Bintrafusp alfa?

Absolutely. These are some discussions that we want to have with the FDA. And we have data with other checkpoint inhibitors that demonstrate that this -- we can get very similar results with other types of checkpoint inhibitors or other checkpoint inhibitor. So all these are actually on the table to discuss with the FDA in terms of -- for PDS, we are looking at the most rapid path to commercialization and what will be most efficient for the company and shareholders. And so these are all discussions that we would like to have with the FDA in terms of what would be the most effective and the optimal combination for us to move rapidly towards commercialization. So absolutely, that is on the table for discussion with the FDA.

Our next question is come from the line of Leland Gershell with Oppenheimer.

Congrats on this deal, Frank. I wanted to ask a couple of questions. Maybe a follow-up to Joe's question just before, but with Bintrafusp alfa also being a Merck's asset, wondering if that had been contemplated at all in your discussions around 9241 or if that's a completely separate topic and something which perhaps PDS is less interested in versus another more kind of straight off checkpoint inhibitor? And I also want to ask, if you do have preclinical data showing whether the other checkpoint inhibitor the approved ones attributed so forth, have shown efficacy along with 9241 and PDS0101 in the settings that we're talking about.

Sure. So really, with this -- the discussion is regarding M9241, NHS-IL12, this was really specific. Our discussions with Merck KGaA were really specific to M9241 primarily because of the synergy that we have seen with Versamune, the Versamune-based products. So very importantly here, if you look at what Versamune is doing in terms of generating these specific tumor targeting multifunctional T-cells and the IL-12 also being a tumor-targeted IL-12. So what's really -- what was really -- what we really liked about this particular IL-12 is the fact that it is a tumor-targeting IL-12, right? And so the data that we have generated to date really confirmed our belief that if you generate the right type of T-cells and you can get the IL-12 to also infiltrate the tumors that we could generate these powerful antitumor responses even in very late-stage terminally ill patients, right? And so because of that synergy, if you look at the preclinical studies that have also been published, right, the work that was done by the National Cancer Institute, it shows a really strong synergy between diverse immune-based products as well as the NHS-IL12. The work that we have done to date at PDS also shows a strong synergy between our Versamune-based products and checkpoint inhibitors. So what's also important to realize here is that the synergies are actually between the Versamune and IL-12 as well as the Versamune and the checkpoint inhibitor. If you look at the publication, when the IL-12 and the checkpoint inhibitor were combined together, you didn't see any of those results in terms of T-cell clonality or generation of T-cells significant tumor aggression, right? And so what we have demonstrated is that there is synergy between PDS0101 in multiple types of checkpoint inhibitors. We've looked at anti-PD-1, PD-L1 as well as the bifunctional checkpoint inhibitor and we see very consistent results in terms of the synergy with the checkpoint inhibitors, right? So with all that information in hand, we really focused on the NHS-IL12, the M9241, based upon the uniqueness of that specific agent as well as out the availability of other checkpoint inhibitors that we could potentially use and that was the rationale behind why we really focused specifically on the PDS0301.

Terrific. Okay. And then just a clarifying question on the manufacturing. So Merck KGaA will continue to provide material for the foreseeable future. So will that transfer to PDS over time? Or will they continue to make it in the commercial setting with PDS effectively buying from? How will that work, ultimately, assuming based on to market?

Right. So currently, in order to facilitate things and not increase our cost dramatically, you can see this really as a collaboration and partnership, even though we are licensing from Merck KGaA. It's still a partnership and collaboration. And I think both parties want to do everything we can to make sure that this progresses rapidly and is successful, right? So to facilitate clinical development, Merck KGaA will provide us with the clinical product. We will -- so for the ongoing clinical trials as well as future clinical trials, we will have approximately 2 years to transfer the process and take over the process so that by the time we get to commercial production that the process would have been transferred effectively to PDS or selected commercial manufacture of PDS. And so really, that's how we are partnering together to maximize the potential and cost to get this too rapidly into commercialization.

Okay. Great. But we look forward to hearing on the regulatory updates as you have your FDA interactions.

Our next question is from the line of Kalpit Patel with B. Riley.

This is Andy on for Kalpit. Congrats on the agreement and progress. We know that you have been subject to the NCI's time lines regarding releasing data for the triplet combination, but do you have any sense of when we should expect a more detailed picture of baseline patient demographics or more granular results?

Andy so when you talk about patient -- I think a lot of those will be presented in due course. And the NCI has tried to present quite a bit of that data in their presentations at both ASCO '21 and 2022. Most of the data that has been presented actually has been more in terms of the therapies that the patients had been on prior to getting on to this combination. However, I think in terms of the overall demographics, gender, race and so forth, those will probably be presented eventually when the entire clinical results are published. Very often, you see that those details being presented in the final presentation or the final results. I'll ask Lauren to jump in here if she has anything to add to the specific question. Lauren, anything to add here?

Only that additional details in terms of the entire population, we know will be included in a planned publication. And I know the NCI has that as a focus early in this year given the maturity of the data and the fact that the trial initiated in June of 2020.

Okay. And Andy in terms of the timing -- the timing of additional data. I mean, with an investigator-initiated trial, some of those are a little bit out of our hands. The NCI has been very, very collaborative in terms of updating us whenever they can. And so I anticipate that, that will continue to be the case, but it's very difficult to project exactly when we will see additional data just based upon the fact that it is led and managed by the National Cancer Institute.

That makes sense. And then as you move towards a registrational study with the triplet combination, are there any gating factors that we should be aware of outside of alignment with the regulatory agency?

Other gating factors? In terms of alignment with the regulatory agencies, we would, of course, have to make sure that the clinical materials are available as part of our agreement with Merck KGaA. So that's something that we would have to make sure it's available. We've discussed the arrangement there. And also, we would also have to make sure that as we're going to BLA, we have the commercial manufacturing process in place, so that's going to be part of our BLA filing to make sure that, that transfer is also occurring over the next couple of years. So I think those would be some of the key things that we would want to ensure are in place to facilitate progressing this into clinical trials.

Our next question is from the line of Emma Ulker with WH Ireland.

Congratulations on the new announcement. Could I ask a question about the financials about the cash time line or runway. You've referred to the fact that your current forecast do include to cover the cost of the upcoming registrational trial in the triple combination. Could you give us an indication of how far that cash runway reaches and whether that also includes a potential pivotal trial in the VERSATILE-002 follow-on trial?

I will actually hand over to Matt, and Matt will walk us through some of the financial forecast.

Absolutely. Thanks. Great question. What we've disclosed to the public with respect to our cash runway is that, first of all, we're going to evaluate the feedback from the FDA on the triple combination and make a determination of what is the lowest risk, speediest commercialization for one or two whether it's going to be VERSATILE-002 or the triple combination. That being said, in -- if we begin a trial in mid-2023 -- registrational trial in mid-2023, depending on the size of the trial, depending on other factors and the feedback from the FDA, we believe that the cash we have on the balance sheet now will last us into Q2 of 2024. So we've got enough cash on hand, and we can manage that cash as well, but we need to get that feedback from the FDA so that our clinical people can do the work. We'll let their sleeves do the work that they need to do to get the completion of the trial design, but we're very excited to be able to add this asset to our portfolio for all the reasons that Frank and Lauren have discussed.

Just to clarify, that could -- that evaluation could imply then that you see the lowest risk and the best way forward and the speediest way forward and that could be an either/or sort of scenario then for those 2 combinations that you have currently ongoing in Phase II?

Yes. It could be an either/or or it could be both, depending on how the discussions shake out with the FDA. That's accurate.

At this time, we've reached end of the question-and-answer session. I'll hand the call over to Frank Bedu-Addo for closing remarks.

Thank you very much. Thanks to all for joining us today, and we will continue to update you on our progress through the year. And at this time, I would like to wish all of you a happy and successful 2023. Thank you very much again.

This will conclude today's conference. You may disconnect your lines at this time. Thank you for your participation.