First Quarter 2019 Results
Heat Biologics, Inc. (NASDAQ:HTBX) reported first quarter 2019 results in a May 15 release and concurrently submitted the companion 10-Q to the SEC. Since the beginning of the year, Heat attended several scientific and investment conferences including Biotech Showcase, ASCO-SITC Clinical Immuno-Oncology Symposium, the WuXi Healthcare Forum in Shanghai as well as others in the US and China. The company also provided an update on HS-110 early in the year that demonstrated encouraging data in patients whose disease had progressed after checkpoint inhibitor therapy.
Management anticipates filing two investigational new drug (IND) applications this summer. This includes HS-130, a dual-acting immunotherapy designed to deliver local T cell activation and co-stimulation and PTX-35, a T cell costimulatory antibody that is being developed by the Pelican subsidiary.
Revenues for the first quarter were $0.7 million, representing CPRIT grant money which is directed towards the PTX-35 T-cell activation platform. This compares to our estimates of $2.0 million and is a slower pace that we had forecast. Research and development costs totaled $3.2 million, rising 10% as the PTX-35 antibody and PTX-15 fusion protein program expand and greater amounts were used in unallocated R&D. General and administrative expenses rose 88% to $3.3 million on increased stock-based compensation expense.
Cash and equivalents as of March 31, 2019 were $23.5 million, compared to $27.7 million at the end of 2018. Heat continues with no debt on the books. Cash burn was ($4.2) million for 1Q:19 matching the amount in the comparable 2018 period. Add-back of $2.1 million of stock based compensation explained the majority of the difference between net loss of ($5.8) million and the ($4.2) million cash used in operations. Capital expenditures were $45,000 and were allocated towards lab equipment.
The HS-110 trial reported interim Phase II data in early March. Cohort A includes naïve patients treated with HS-110 and nivolumab and Cohort B includes checkpoint inhibitor patients that have progressed, but then treated with HS-110 and nivolumab. Initial results have been promising which we discuss in a previous article. We expect these two cohorts to complete enrollment in the second quarter. There are two additional cohorts, which will be designated C and D which will look at HS-110 used in combination with pembrolizumab and pembrolizumab and chemotherapy. About 20 patients are expected to be enrolled in the C and D cohorts and 120 patients overall.
PTX-35 and HS-130
In an October press release, the company highlighted its progress on Pelican’s PTX-35 program citing several accomplishments. We anticipate the investigational new drug (IND) application will be presented to the FDA this summer, which should be followed shortly after by the next tranche of CPRIT funds. The CPRIT Grant is expected to allow Pelican to develop PTX-35 through a 70-patient Phase I clinical program.
Pelican is working with Selexis for cell line expression for the CMC development of PTX-35. Selexis will also help develop PTX-15 and the TNFRSF25 agonist program.
Heat is also expected to file an IND for HS-130 this summer to conduct a Phase I safety trial. The candidate is in development to treat solid tumors and will employ the ComPACT technology which delivers the gp96 heat shock protein along with a T-cell co-stimulatory fusion protein (OX40L). Current good manufacturing process (cGMP) and IND-enabling activities are underway. The Phase I trial will be focused on safety; however, the precise indication and setting have not yet been determined.
Presentations & Interim Results
Heat is a frequent participant in scientific conferences where it submits posters and discuss trial data. Since the start of the year, Heat has participated in ASCO-SITC Clinical Immuno-Oncology Symposium and at American Association for Cancer Research (AACR). In late February 2019, Heat provided preliminary data and an update to its HS-110 Durga trial which suggested that HS-110 + nivolumab may restore responsiveness to therapy after checkpoint inhibitor therapy. The combination also produced results that provided several encouraging conclusions. Patients with cold tumors demonstrated better survival than patients with hot tumors; there exists a correlation between injection site reaction and improved overall survival (cohort A) and adding HS-110 to nivolumab may restore responsiveness after progression on prior checkpoint inhibitor therapy.
Heat’s AACR Annual Meeting poster entitled “Generation of a novel, allogeneic cell-based, Gp96-Ig/OX40L cancer vaccine, improves anti-tumor immunity and long-term memory T-cell generation” was presented on April 1. It concluded that a combination of an allogeneic tumor line expressing gp96-Ig and OX40L-Ig is a potent stimulator of anti-tumor CD8+ T-cell immune responses in animals. The sub-study, which examined the effectiveness of varying ratios of gp96 and OX40L-Ig, observed the most favorable ratio between 1:0.5 and 1:1 respectively as well as synergistic impacts from the use of both compounds and minimum active biological doses. Following the issuance of the poster, work has advanced and the ratios are expected to evolve as further study is conducted.
Heat is conducting Phase II trials for HS-110 and preparing HS-130 (ComPACT) and PTX-35 for IND submission. Below we list key milestones for Heat Biologics which have occurred in 2018 or are expected over the next several quarters.
‣ HS-110 (NSCLC) interim data readout – 1Q:19
‣ Receipt of $6.9 MM in CPRIT grant funds (PTX-35) – mid-year 2019
‣ Complete HS-110 Phase II NSCLC enrollment – 2Q:19
‣ HS-130 (ComPACT) IND filing – 2019
‣ PTX-35 IND filing – 2Q:19
‣ HS-110 Phase II interim readout – 4Q:19
‣ Interim PTX-35 data readout – 4Q:19
‣ Interim ComPACT data readout – 4Q:19
‣ Discussion with potential partners – Ongoing
‣ Develop Phase III / commercial manufacturing capacity for HS-110 – 2019
View Exhibit I – Pipeline
Heat Biologics has participated in numerous investment and scientific conferences year to date while concurrently developing INDs applications for HS-130 and PTX-35. We expect to see these INDs submitted to the FDA over the next few months and first enrollment commencing shortly after. Interim results for HS-130 were also presented, demonstrating that HS-110 and nivolumab may restore responsiveness to treatment in NSCLC patients after receiving prior lines of checkpoint inhibitor therapy.
The company has a favorable cash position, holding over $23 million in funds which will be augmented by additional CPRIT funds for advancement of PTX-35, which we anticipate will be received following IND submission. Cash is sufficient to advance pipeline activities until 2020.
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