HTBX: Breaking into the Big Leagues: $100 Million + 3 Clinical Candidates

By John Vandermosten, CFA

NASDAQ:HTBX

READ THE FULL HTBX RESEARCH REPORT

Heat Biologics, Inc. (NASDAQ:HTBX) has made substantial progress this year with the entry of HS-130 and PTX-35 into the clinic. Substantial preclinical work has also taken place for a coronavirus vaccine which may enter the clinic next year. Year to date, Heat has been opportunistic in raising capital and has accumulated over $100 million on the balance sheet that should sustain operations for the next several years.

We update our valuation to reflect the increase of shares outstanding and the entry of HS-130 and PTX-35 into the clinic. Our valuation work generates a target price of $3.50. See our report for full details.

Corporate Milestones

Below we list key milestones for Heat Biologics.

‣ Complete HS-110 Phase II NSCLC enrollment – 2Q:19

‣ HS-130 (ComPACT) IND filing and FDA Clearance – August 2019

‣ HS-110 interim data readout – November 2019

‣ HS-110 Phase II interim readout – 4Q:19

‣ First patient dosed in HS-130 Phase I – December 2019

‣ PTX-35 IND clearance and first patient dosing – 2Q:20

‣ ASCO Poster Presentation – May 29, 2020

‣ Various coronavirus vaccine milestones – 2020

‣ Discussion with potential partners – Ongoing

‣ Complete HS-130 Phase I trial – 4Q:20

‣ Develop Phase III / commercial manufacturing capacity for HS-110 – 2020

Second Quarter 2020 Results

Heat Biologics reported second quarter 2020 results in an August 7th release concurrent with the submission of the 10-Q to the SEC. Heat has been busy advancing preclinical work for a coronavirus vaccine, assembling data related to the Phase II HS-110 DURGA trial and raising significant capital to support the pipeline of projects. Heat management has also attended scientific and investor events sharing the company’s development progress. The company is in the process of preparing a data package to share with the FDA in an End-of-Phase II meeting that we expect will be scheduled soon. Phase I trials for PTX-35 and HS-130 for solid tumors are now underway and we add a valuation component for these candidates for the first time. The company also announced the issuance of patent 10,758,611 for a vector co-expressing vaccine and costimulatory molecules.

Revenues for the second quarter were $0.6 million, representing the recognition of grant income from CPRIT supporting the PTX-35 T cell activation platform. Research and development expenditures totaled $2.8 million, down 18% compared with the prior year second quarter amounts, as patients transitioned from active treatment to long-term follow up and as a result of lower manufacturing costs related to PTX-35. These declines were offset by a slight increase in HS-130 costs related to regulatory consulting and investigator site payments and the initiation of coronavirus programs. General and administrative expenses fell 3% to $1.8 million. Other expenses totaled $0.2 million and interest earned from cash and equivalents was $56,000. Net loss for 2Q:20 was ($4.5) million or ($0.05) per share compared with ($4.8) million or ($0.14) per share in 2Q:19.

Cash and equivalents as of June 30, 2020 were $47.0 million, compared to $14.8 million at the end of 2019. Heat continues with no debt on the books. Cash burn was ($4.5) million in the first quarter compared with ($4.1) million in 2Q:19. Net cash provided by financing activities totaled $24.5 million, representing proceeds from the issuance of common stock. Following the end of the reporting period, Heat raised an additional $58.5 million in capital from its at-the-market (ATM) facility and reported over $100 million in cash and short term investments as of August 6, 2020.

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