PDS Biotechnology Corp [PDSB] Filings

10-Q 1 ef20012461_10q.htm 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to _____________

Commission file number 001-37568

	PDS Biotechnology Corporation
	(Exact name of registrant as specified in its charter)

Delaware		26-4231384
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

	303A College Road East Princeton, NJ 08540
	(Address of principal executive offices)

	(800) 208-3343
	(Registrant’s telephone number)


	(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading symbol(s)		Name of each exchange on which registered
Common Stock, par value $0.00033 per share		PDSB		The Nasdaq Stock Market LLC

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.

Large accelerated filer ☐

Accelerated filer ☐

Non-accelerated filer ☒

Smaller reporting company ☒

Emerging growth company ☐

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 November 7, 2023 was 31,107,763.

PDS BIOTECHNOLOGY CORPORATION

FORM 10-Q FOR THE QUARTER ENDED September 30, 2023

INDEX

			Page
Part I — Financial Information

	Item 1.	Financial Statements (Unaudited):

		Condensed Consolidated Balance Sheets	3

		Condensed Consolidated Statements of Operations and Comprehensive Loss	4

		Condensed Consolidated Statements of Changes in Stockholders’ Equity	5

		Condensed Consolidated Statements of Cash Flows	6

		Notes to Condensed Consolidated Financial Statements	7

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	33

	Item 4.	Controls and Procedures	33

Part II — Other Information			33

	Item 1.	Legal Proceedings	33

	Item 1A.	Risk Factors	33

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	34

	Item 3.	Defaults Upon Senior Securities	34

	Item 4.	Mine Safety Disclosures	34

	Item 5.	Other Information	34

	Item 6.	Exhibits	35

EXHIBIT INDEX			35
SIGNATURES			36

Index

PART 1.

FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS

PDS BIOTECHNOLOGY CORPORATION AND SUBSIDIARY

Condensed Consolidated Balance Sheets

	September 30, 2023			December 31, 2022
ASSETS	(unaudited)
Current assets:
Cash and cash equivalents	$	54,251,387		$	73,820,160
Prepaid expenses and other assets		2,587,025			2,660,230
Total current assets		56,838,412			76,480,390

Property and equipment, net		138,866			-
Financing lease right-of-use assets		210,543			374,888
Operating lease right-of-use asset		-			152,645

Total assets	$	57,187,821		$	77,007,923

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	5,366,564		$	1,219,287
Accrued expenses		3,732,727			8,313,708
Financing lease obligation-short term		54,537			56,612
Operating lease obligation-short term		-			231,429
Total current liabilities		9,153,828			9,821,036

Noncurrent liabilities:
Note payable, net of debt discount		23,412,764			23,020,844
Financing lease obligation-long term		137,401			164,013
Total liabilities:	$	32,703,993		$	33,005,893

STOCKHOLDERS’ EQUITY
Common stock, $0.00033 par value, 75,000,000 shares authorized at September 30, 2023 and December 31, 2022, 31,007,763 shares and 30,170,317 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively		10,233			9,956
Additional paid-in capital		158,075,994			145,550,491
Accumulated deficit		(133,602,399	)		(101,558,417	)
Total stockholders’ equity		24,483,828			44,002,030

Total liabilities and stockholders’ equity	$	57,187,821		$	77,007,923

See accompanying notes to the condensed consolidated financial statements.

Index

PDS BIOTECHNOLOGY CORPORATION AND SUBSIDIARY

Condensed Consolidated Statements of Operations and Comprehensive Loss

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
Operating expenses:
Research and development expenses	$	6,448,528		$	4,352,987		$	20,297,066		$	13,275,947
General and administrative expenses		4,071,158			2,926,209			12,341,207			9,575,122
Total operating expenses		10,519,686			7,279,196			32,638,273			22,851,069

Loss from operations		(10,519,686	)		(7,279,196	)		(32,638,273	)		(22,851,069	)

Interest income (expenses), net
Interest income		739,404			252,073			2,219,399			332,318
Interest expense		(1,068,887	)		(397,327	)		(3,031,129	)		(397,326	)
Interest income (expenses), net		(329,483	)		(145,254	)		(811,730	)		(65,008	)

Loss before income taxes		(10,849,169	)		(7,424,450	)		(33,450,003	)		(22,916,077	)
Benefit for income taxes		-			-			1,406,021			1,198,905
Net loss and comprehensive loss		(10,849,169	)		(7,424,450	)		(32,043,982	)		(21,717,172	)

Per share information:
Net loss per share, basic and diluted	$	(0.35	)	$	(0.26	)	$	(1.04	)	$	(0.76	)

Weighted average common shares outstanding, basic, and diluted		30,910,520			28,458,688			30,715,458			28,452,997

See accompanying notes to the condensed consolidated financial statements.

Index

PDS BIOTECHNOLOGY CORPORATION AND SUBSIDIARY

Condensed Consolidated Statements of Changes in Stockholders’ Equity

(Unaudited)

	Common Stock
	Shares Issued		Amount		Additional Paid-in Capital		Accumulated Deficit			Total Equity
January 1, 2022		28,448,612	$	9,387	$	123,904,602	$	(60,703,562	)	$	63,210,427
Stock based compensation expense		-		-		1,128,973		-			1,128,973
Issuances of common stock, from exercise of stock options		2,282		1		7,487		-			7,488
Net loss		-		-		-		(8,473,522	)		(8,473,522	)
Balance - March 31, 2022		28,450,894	$	9,388	$	125,041,062	$	(69,177,084	)	$	55,873,366
Stock based compensation expense		-		-		1,348,601		-			1,348,601
Issuances of common stock, from exercise of stock options		7,794		3		22,426		-			22,429
Net loss		-		-		-		(5,819,200	)		(5,819,200	)
Balance - June 30, 2022		28,458,688	$	9,391	$	126,412,089	$	(74,996,284	)	$	51,425,196
Stock based compensation expense		-		-		1,344,349		-			1,344,349
Issuances of warrants		-		-		1,713,714		-			1,713,714
Net loss		-		-		-		(7,424,450	)		(7,424,450	)
Balance - September 30, 2022		28,458,688	$	9,391	$	129,470,179	$	(82,420,734	)	$	47,058,836

	Common Stock
	Shares Issued		Amount		Additional Paid-in Capital		Accumulated Deficit			Total Equity
January 1, 2023		30,170,317	$	9,956	$	145,550,491	$	(101,558,417	)	$	44,002,030
Stock based compensation expense		-		-		2,080,319		-			2,080,319
Issuances of common stock from the Sales Agreement, net		553,293		183		4,588,339		-			4,588,522
Net loss		-		-		-		(9,659,918	)		(9,659,918	)
Balance - March 31, 2023		30,723,610	$	10,139	$	152,219,149	$	(111,218,335	)	$	41,010,953
Stock based compensation expense		-		-		2,105,538		-			2,105,538
Issuances of common stock, from exercise of stock options		1,409		1		8,848		-			8,849
Issuance of common stock for consulting agreement		100,000		33		609,967		-			610,000
Issuances of common stock from the Sales Agreement, net		43,169		14		243,729		-			243,743
Net loss		-		-		-		(11,534,895	)		(11,534,895	)
Balance - June 30, 2023		30,868,188	$	10,187	$	155,187,231	$	(122,753,230	)	$	32,444,188
Stock based compensation expense		-		-		2,073,607		-			2,073,607
Issuances of common stock from the Sales Agreement, net		139,575		46		815,156		-			815,202
Net loss		-		-		-		(10,849,169	)		(10,849,169	)
Balance - September 30, 2023		31,007,763	$	10,233	$	158,075,994	$	(133,602,399	)	$	24,483,828

See accompanying notes to the condensed consolidated financial statements.

Index

PDS BIOTECHNOLOGY CORPORATION AND SUBSIDIARY

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	Nine Months Ended September 30,
	2023			2022
Cash flows from operating activities:
Net loss	$	(32,043,982	)	$	(21,717,172	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation expense		6,259,464			3,821,923
Issuance of shares in consulting agreement		610,000			-
Amortization of debt discount		391,920			72,722
Depreciation expense		12,624			86
Operating lease expense		160,685			180,772
Finance lease depreciation expense		30,297			37,417
Changes in assets and liabilities:
Prepaid expenses and other assets		73,205			(1,171,337	)
Finance lease right-of-use asset		-			(306,487	)
Accounts payable		4,147,277			727,987
Accrued expenses		(4,580,981	)		240,799
Finance lease liabilities		-			138,402
Operating lease liabilities		(239,469	)		(205,885	)
Net cash used in operating activities		(25,178,960	)		(18,180,773	)

Cash flows from financing activities:

Proceeds from issuance of note payable		-			25,000,000
Payment for debt issuance costs		-			(449,329	)
Proceeds from exercise of stock options		8,849			29,917
Payments of finance lease obligations		(46,129	)		-
Proceeds from issuance of common stock, net of issuance costs		5,647,467			-
Net cash provided by financing activities		5,610,187			24,580,588

Net increase in cash and cash equivalents		(19,568,773	)		6,399,815
Cash and cash equivalents at beginning of period		73,820,160			65,242,622
Cash and cash equivalents at the end of period	$	54,251,387		$	71,642,437

Supplemental information of cash and non-cash transactions:

Cash paid for interest	$	3,031,129		$	62,500
Fair value of warrants issued in connection with debt	$	-		$	1,713,741

See accompanying notes to the condensed consolidated financial statements.

Index

PDS BIOTECHNOLOGY CORPORATION AND SUBSIDIARY

Notes to Condensed Consolidated Financial Statements (Unaudited)

Note 1 – Nature of Operations

PDS Biotechnology Corporation, a Delaware corporation (the “Company” or “PDS Biotech”), is a clinical-stage immunotherapy company developing a growing pipeline of targeted cancer and infectious disease immunotherapies based on its Versamune^®, Versamune^® plus our IL12 fused antibody-drug conjugate (ADC) PDS01ADC (formerly PDS0301/M9241) and Infectimune^® T cell-activating platforms and PDS01ADC tumor targeting immunocytokine. The Company believes its targeted immunotherapies have potential to overcome the limitations of current immunotherapy approaches through the activation of the right type, quantity and potency of T cells. Versamune, and Versamune plus PDS01ADC is 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. PDS01ADC is an investigational tumor targeting IL-12 that enhances the proliferation, potency and longevity of T cells in the tumor microenvironment. Versamune plus PDS01ADC enhances the proliferation, potency and longevity of antigen specific multifunctional CD8 T cells in the tumor microenvironment and works synergistically to overcome tumor immune suppression.

The Company’s immuno-oncology clinical candidates are of potential interest for use as a component of combination clinical candidates (for example, in combination with other leading technologies such as immune checkpoint inhibitors) to provide more effective treatments across a range of advanced cancers. The Company is also evaluating our immunotherapies as monotherapies in early-stage disease. PDS Biotech is developing targeted clinical candidates to treat several cancers including Human Papillomavirus (HPV)-positive cancers, melanoma, colorectal, lung, breast and prostate cancers. The Company’s infectious disease candidates are of potential interest for use in universal influenza vaccines.

Note 2 – Summary of Significant Accounting Policies

(A)	Unaudited interim financial statements:

The interim balance sheet at September 30, 2023, the statements of operations and comprehensive loss and changes in stockholders’ equity and cash flows for the three and nine months ended September 30, 2023 and 2022 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 and nine months ended September 30, 2023 are not necessarily indicative of the results to be expected for the year ending December 31, 2023 or for any other future annual or interim period. The balance sheet as of December 31, 2022 included herein was derived from the audited 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, 2022, filed by the Company with the SEC in its Annual Report on Form 10-K on March 28, 2023.

(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 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 clinical candidates, the ability to preserve its cash resources, the Company’s review of strategic alternatives, the ability to add clinical 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 ability to negotiate favorable licensing or other manufacturing and marketing agreements for its products, the ability to raise capital, and the effects of health epidemics, pandemics, or outbreaks of infectious diseases.

Index

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 trial 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. 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 September 30,
	2023		2022
Stock options to purchase Common Stock		5,383,902		4,370,846
Warrants to purchase Common Stock		506,229		506,229
Total		5,890,131		4,877,075

Index

(I)	Income taxes:

The Company provides for deferred income taxes under the asset and liability method, which requires deferred tax assets and liabilities to be recognized for the future tax consequences attributable to net operating loss carryforwards and for differences between the financial statement carrying amounts and the respective tax bases of assets and liabilities. Deferred tax assets are reduced if necessary, by a valuation allowance if it is more likely than not that some portion or all of the deferred tax assets will not be realized.

(J)	Fair value of financial instruments:

ASC 820, Fair Value Measurement, specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect market assumptions. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement).

The three levels of the fair value hierarchy are as follows:

●

Level 1 — Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 1 primarily consists of financial instruments whose value is based on quoted market prices such as exchange-traded instruments and listed equities.

●

Level 2 — Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly (e.g., quoted prices of similar assets or liabilities in active markets, or quoted prices for identical or similar assets or liabilities in markets that are not active). Level 2 includes financial instruments that are valued using models or other valuation methodologies.

●

Level 3 — Unobservable inputs for the asset or liability. Financial instruments are considered Level 3 when their fair values are determined using pricing models, discounted cash flows or similar techniques and at least one significant model assumption or input is unobservable.

(K)

Leases:

The Company determines if an arrangement is a lease at inception and recognizes the lease in accordance with ASC 842, Leases (“ASC 842”). Both financing and operating leases are included in right-of-use (“ROU”) assets, lease obligation-short term and lease obligation-long term in the Company’s consolidated balance sheets. ROU assets represent the right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. The ROU assets and lease liabilities are recognized at the lease commencement date based on the present value of the lease payments over the lease term. The Company determines the portion of the lease liability that is current as the difference between the calculated lease liability at the end of the current period and the lease liability that is projected 12 months from the current period.

Note 3 – Liquidity

As of September 30, 2023, the Company had $54.3 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. Since inception, the Company has experienced net losses and negative cash flows from operations each fiscal year. The Company has no revenues and expects to continue to incur operating losses for the foreseeable future and may never become profitable.

The Company funds its operations through equity and/or debt financings such as the following:

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 to the Company’s participation in the New Jersey Technology Business Tax Certificate Transfer NOL program for tax year 2020.

In August 2022, the Company filed a shelf registration statement, or the 2022 Shelf Registration Statement, with the SEC for the issuance of common stock, preferred stock, warrants, rights, debt securities, and units, up to an aggregate amount of $150 million, $50 million of which covers the offer, issuance and sale by the Company of its common stock under the Sales Agreement (as discussed below). The 2022 Shelf Registration Statement was declared effective on September 2, 2022.

Index

In August 2022, the Company entered into an At Market Issuance Sales Agreement, or the Sales Agreement, with B. Riley Securities, Inc. and BTIG, LLC, each an Agent and collectively the Agents, with respect to an at-the-market offering program under which the Company may offer and sell, from time to time at its sole discretion, shares of its common stock, having an aggregate offering price of up to $50 million, or the Placement Shares, through or to the Agents, as sales agents or principals. Upon delivery of a placement notice and subject to the terms and conditions of the Sales Agreement, the Agents may sell the Placement Shares by any method permitted by law deemed to be an “at the market” offering as defined in Rule 415 of the Securities Act of 1933, as amended, including, without limitation, sales made through The Nasdaq Capital Market or on any other existing trading market for the Company’s common stock. The Agents will use commercially reasonable efforts to sell the Placement Shares from time to time, based upon the Company’s instructions (including any price, time or size limits or other customary parameters or conditions the Company may impose). The Company will pay the Agents a commission equal to three percent (3%) of the gross sales proceeds of any Placement Shares sold through the Agents under the Sales Agreement, and the Company has also provided the Agents with customary indemnification and contribution rights. The Company is not obligated to make any sales of its common stock under the Sales Agreement. The offering of Placement Shares pursuant to the Sales Agreement will terminate upon the earlier of (i) the sale of all Placement Shares subject to the Sales Agreement or (ii) termination of the Sales Agreement in accordance with its terms. For the year ended December 31, 2022, the Company sold 1,238,491 shares of common stock with a net value of $9.9 million pursuant to the Sales Agreement. During the three and nine months ended September 30, 2023, the Company sold 139,575 and 736,037 shares, respectively, of its common stock with a net value of $0.8 million and $5.6 million, respectively, pursuant to the Sales Agreement.

In August 2022, the Company entered into a venture loan and security agreement, or the Loan and Security Agreement, with Horizon Technology Finance Corporation, as lender and collateral agent for itself and the other lenders. The Loan and Security Agreement provides for the following 6 separate and independent term loans: (a) a term loan in the amount of $7,500,000, or Loan A, (b) a term loan in the amount of $10,000,000, or Loan B, (c) a term loan in the amount of $3,750,000, or Loan C, (d) a term loan in the amount of $3,750,000, or Loan D, (e) a term loan in the amount of $5,000,000, or Loan E, and (f) a term loan in the amount of $5,000,000, or Loan F, (with each of Loan A, Loan B, Loan C, Loan D, Loan E, and Loan F, individually a Loan and, collectively, the Loans). Loan A, Loan B, Loan C, and Loan D were delivered to the Company on August 24, 2022. Loan E and Loan F were uncommitted Loans that could have been advanced by the lenders upon the parties agreement prior to July 31, 2023 upon the satisfaction of certain conditions. At this time the option to advance Loan E and Loan F has expired and Loan E and Loan F are no longer available to the Company under the Loan and Security Agreement. The Company may only use the proceeds of the Loans for working capital or general corporate purposes. Each Loan matures on the 48-month anniversary following the applicable funding date unless accelerated pursuant to certain events of default. Payments on the principal balance begin on October 1, 2024 and are paid monthly in the succeeding 24 months. The principal balance of each Loan bears a floating interest. The interest rate is calculated initially and, thereafter, each calendar month as the sum of (a) the per annum rate of interest from time to time published in The Wall Street Journal as contemplated by the Loan and Security Agreement, or any successor publication thereto, as the “prime rate” then in effect, plus (b) 5.75%; provided that, in the event such rate of interest is less than 4.00%, such rate shall be deemed to be 4.00% for purposes of calculating the interest rate. Interest is payable on a monthly basis based on each Loan principal amount outstanding the preceding month. The Company, at its option upon at least ten (10) business days’ written notice to the lenders, may prepay all (and not less than all) of the outstanding Loan by simultaneously paying to each lender an amount equal to (i) any accrued and unpaid interest on the outstanding principal balance of the Loans; plus (ii) an amount equal to (A) if such Loan is prepaid on or before the Loan Amortization Date (as defined in the Loan and Security Agreement) applicable to such Loan, 3% of the then outstanding principal balance of such Loan, (B) if such Loan is prepaid after the Loan Amortization Date applicable to such Loan, but on or before the date that is 12 months after such Loan Amortization Date, 2% of the then outstanding principal balance of such Loan, or (C) if such Loan is prepaid more than 12 months after the Loan Amortization Date but prior to the stated maturity date applicable to such Loan, 1% of the then outstanding principal balance of such Loan; plus (iii) the outstanding principal balance of such Loan; plus (iv) all other sums, if any, that shall have become due and payable thereunder. No prepayment premium will be applied to any outstanding balance of any Loan paid on the stated maturity date.

The Loan and Security Agreement contains customary representations, warranties and covenants, including covenants by the Company limiting additional indebtedness, liens, including on intellectual property, guaranties, mergers and consolidations, substantial asset sales, investments and loans, certain corporate changes, transactions with affiliates, and fundamental changes.

In April 2023, the Company received approximately $1.4 million from the net sale of tax benefits to an unrelated, profitable New Jersey corporation pursuant to the Company’s participation in the New Jersey Technology Business Tax Certificate Transfer NOL program for tax year 2021.

Index

Going Concern

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 in accordance with ASC 205-40. Since inception, the Company has experienced net losses and negative cash flows from operations each fiscal year. The Company has no revenues and expects to continue to incur operating losses for the foreseeable future and may never become profitable.

The Company’s budgeted cash requirements in 2023 and beyond include expenses related to continuing development and clinical trials. The Company plans to execute its operating plan by obtaining additional capital, principally through entering into collaborations, strategic alliances, or license agreements with third parties and/or additional public or private debt and equity financing. However, there is no assurance that additional capital and/or financing will be available to the Company, and even if available, whether it will be on terms acceptable to the Company or its existing shareholders or in the amounts required. 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 unsuccessful in securing sufficient financing, it may need to delay, reduce, or eliminate its research and development programs, which could adversely affect its business prospects, grant rights to third parties to develop and market immunotherapies that the Company would otherwise prefer to develop and market itself or cease operations. 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.

As a result of these uncertainties, and as its plans are outside of management’s control, the Company has concluded that substantial doubt exists about the Company’s ability to continue as a going concern for a period of at least 12 months from the date of the issuance of these unaudited condensed consolidated financial statements. The unaudited condensed consolidated financial statements do not include any adjustments to the carrying amounts and classifications of assets and liabilities that would result if the Company was unable to continue as a going concern.

Note 4 – Fair Value of Financial Instruments

There were no transfers among Levels 1, 2, or 3 during the three and nine months ended September 30, 2023 or 2022.

	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 September 30, 2023: (unaudited)
Cash and cash equivalents	$	54,251,387	$	54,251,387	$	–	$	–

As of December 31, 2022
Cash and cash equivalents	$	73,820,160	$	73,820,160	$	–	$	–

The carrying value of the Note Payable approximated its fair value at September 30, 2023 due to its variable rate.

Note 5 – Leases

Operating Lease:

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 August 31, 2023 the lease term has expired and was not renewed. Upon inception of the sublease, 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.

Index

Supplemental cash flow information related to operating leases is as follows:

	As of September 30,
	2023		2022

Cash paid for operating lease liabilities	$	239,469	$	205,885

Financing Lease:

The Company has financed certain laboratory equipment as follows:

	As of September 30,
	2023		2022

Cash paid for finance lease liabilities	$	60,684	$	306,487

Maturity of the Company’s financing lease liability is as follows:

Year ended September 30,
2023	$	17,464
2024	$	69,850
2025	$	69,850
2026	$	40,108
2027 and after	$	26,724
Total future minimum lease payments		223,996
Less imputed interest		(32,058	)
Remaining lease liability	$	191,938

The Company entered into four financing leases for laboratory equipment with a total cost of $251,959 with four to five-year terms and a capitalized interest rate of 9.15%. Each of the lease agreements include a bargain purchase option to acquire the equipment at the end of the lease term. The aggregate monthly payments are approximately $6,000. In the nine months ended September 30, 2023, the Company exercised a bargain purchase option, which resulted in recognition of property and equipment of $151,490.

Note 6 – Accrued Expenses

Accrued expenses and other liabilities consist of the following:

	As of September 30, 2023		As of December 31, 2022
Accrued research and development	$	79,910	$	5,645,737
Accrued professional fees		1,570,401		550,259
Accrued compensation		1,785,173		1,837,330
Accrued interest on debt		296,875		280,382
Accrued rent		368		-
Total	$	3,732,727	$	8,313,708

Index

Note 7 – Stock-Based Compensation

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 amended and restated the Amended and Restated PDS Biotechnology Corporation 2014 Equity Incentive Plan (the “Current Plan”). At the annual meeting of stockholders on June 17, 2021 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. On July 14, 2023, the Company’s stockholders approved an amendment to the Current Plan increasing the number of shares of common stock for issuance from 4,165,535 to 6,565,535 shares. As of September 30, 2023, there were 119,013 shares available for grant under the Restated 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. As of September 30, 2023, there were 190,799 shares available for grant under the Restated Plan.

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 8, 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. On May 17, 2022, the Company further amended the Inducement Plan solely to increase the total number of shares of Common Stock reserved for issuance under the Inducement Plan from 500,000 shares to 1,100,000 shares. The 2019 Inducement Plan is 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 September 30, 2023, there were 185,315 shares available for grant under the 2019 Inducement Plan.

The Company’s stock-based compensation expense related to stock options was recognized in operating expense as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
	(unaudited)				(unaudited)
Stock-Based Compensation
Research and development	$	782,249	$	493,083	$	2,389,561	$	1,349,664
General and administrative		1,291,358		851,267		3,869,903		2,472,259
Total	$	2,073,607	$	1,344,350	$	6,259,464	$	3,821,923

Index

There were 59,500 and 1,214,000 of options granted during the three and nine month periods ended September 30, 2023, respectively and 87,000 and 1,526,005 of options granted during the three and nine month period ended September 30, 2022, respectively. The fair value of options granted during the three and nine months ended September 30, 2023 and 2022 was estimated using the Black-Scholes option valuation model utilizing the following assumptions.

	Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
	Weighted Average			Weighted Average			Weighted Average			Weighted Average
	(unaudited)						(unaudited)
Volatility		150.26	%		101.43	%		142.47	%		99.56	%
Risk-Free Interest Rate		3.92	%		3.03	%		4.04	%		1.70	%
Expected Term in Years		5.59			6.08			6.06			6.41
Dividend Rate		–			–			–			–
Fair Value of Option on Grant Date	$	4.77		$	2.58		$	10.35		$	4.80

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, 2022		4,171,311		$	5.56		7.89	$	32,779,920
Granted		1,214,000			11.14
Exercised		(1,409	)		-
Forfeited and expired		-			-
Options outstanding at September 30, 2023		5,383,902		$	6.82		7.63	$	4,685,828
Vested and expected to vest at September 30, 2023		5,383,902		$	6.82		7.63	$	4,685,828
Exercisable at September 30, 2023		2,722,797		$	5.72		6.67	$	3,225,309

At September 30, 2023 there was approximately $18,568,032 of unamortized stock option compensation expense, which is expected to be recognized over a remaining average vesting period of 2.51 years.

The Company entered into an agreement with DC Consulting for certain consulting services and issued 100,000 shares in connection with the agreement.

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 2023 and there will be no current income tax expense. Additionally, there was a full valuation allowance against the net deferred tax assets as of September 30, 2023 and December 31, 2022. 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 and nine months ended September 30, 2023 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 positions taken on their income tax returns. The Company has analyzed its tax positions and has concluded that as of September 30, 2023, 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 and nine months ended September 30, 2023 and for the year ended December 31, 2022.

Index

In accordance with the State of New Jersey’s Technology Business Tax Certificate Program, which allows certain high technology and biotechnology companies to sell unused NOL carryforwards to other New Jersey-based corporate taxpayers, the Company sold New Jersey NOL carryforwards, resulting in the recognition of $1.4 million and $1.2 million of income tax benefit, net of transaction costs in the nine months ended September 30, 2023 and 2022, respectively.

Note 9 – Commitments and Contingencies

Rent

For month-to-month arrangements not impacted by the adoption of ASC 842, rent for the three and nine months ended September 30, 2023 was $106,171 and $359,373 respectively, compared to the three and nine months ended September 30, 2022 of $55,500 and $165,500.

Exclusive License Agreement

In January 2023, we entered into an exclusive global license agreement with Merck KGaA, Darmstadt, Germany for the tumor targeting IL 12 fused antibody drug conjugate, M9241 (the “Merck KGaA License Agreement”). Pursuant to the Merck KGaA License Agreement, the Company agreed to make (i) development and first commercial sale milestone payments totaling up to $11 million upon the achievement of certain milestones, including the dosing of the fifth patient in a Phase 3 trial of the clinical candidate and first commercial sale of the product for a first and second indication in a major market, and (ii) up to $105 million upon achieving certain aggregate sales levels of the product.

The Company also agreed to pay Merck KGaA, Darmstadt, Germany a royalty of 10% on aggregate net sales of product as specified in the Merck KGaA License Agreement on a product-by-product and country-by-country basis until the later of: (i) ten years after the first commercial sale of a product in a given country; and (ii) the expiration or invalidation of the licensed patents covering the compound or product in such country. The royalty rate is subject to reduction in that event that a product is not covered by a valid patent claim, a biosimilar to the compound or the product comes on the market in a particular country, or if the Company obtains a license to any intellectual property owned or controlled by a third-party, but for which such license would be infringed by making, using or selling the compound.

Legal Proceedings

The Company is currently not a party to, and the Company’s property is not currently the subject of, any material pending legal proceedings. The Company may be involved, from time to time, in legal proceedings and claims arising in the ordinary course of business. Such matters are subject to many uncertainties and outcomes are not predictable with assurance.

Note 10 – Venture Loan and Security Agreement

In August 2022, the Company entered into a Venture Loan and Security Agreement (the “Loan and Security Agreement”) with Horizon Technology Finance Corporation, as a lender and collateral agent for itself and the other Lenders (in such capacity, the “Collateral Agent”), and the other persons party thereto from time to time as lenders (“Lenders”).

Term loan Amounts. The Loan and Security Agreement provides for the following six (6) separate and independent term loans: (a) a term loan in the amount of $7,500,000 (“Loan A”), (b) a term loan in the amount of $10,000,000 (“Loan B”), (c) a term loan in the amount of $3,750,000 (“Loan C”), (d) a term loan in the amount of $3,750,000 (“Loan D”), (e) a term loan in the amount of $5,000,000 (“Loan E”), and (f) a term loan in the amount of $5,000,000 (“Loan F”) (with each of Loan A, Loan B, Loan C, Loan D, Loan E, and Loan F, individually a “Loan” and, collectively, the “Loans”). Loan A, Loan B, Loan C, and Loan D were delivered to the Company on August 24, 2022. Loan E and Loan F were uncommitted Loans that could have been advanced by the Lenders upon the parties agreement prior to July 31, 2023 upon the satisfaction by the Company of certain agreed upon conditions. At this time the option has expired and Loan E and Loan F are no longer available to the Company under the Loan and Security Agreement. The Company may only use the proceeds of the Loans for working capital or general corporate purposes.

Maturity. Each Loan matures on the 48 month anniversary following the applicable date on which a Loan is made to or on account of the Company under the Loan and Security Agreement (the “Maturity Date”) unless accelerated pursuant to agreed upon events of default. All amounts outstanding under each Loan will be due and payable upon the earlier of the Maturity Date or the acceleration of the loans and commitments upon an event of default.

Index

Interest Rate. The principal balance of each Loan bears a floating interest. The interest rate is calculated initially and, thereafter, each calendar month as the sum of (a) the per annum rate of interest from time to time published in The Wall Street Journal as contemplated by the Loan and Security Agreement, or any successor publication thereto, as the “prime rate” then in effect, plus (b) 5.75%; provided that, in the event such rate of interest is less than 4.00%, such rate shall be deemed to be 4.00% for purposes of calculating the interest rate. Interest is payable on a monthly basis based on each Loan principal amount outstanding the preceding month.

Amortization. Each Loan shall commence amortization upon the date set forth on the promissory note executed in connection with the respective Loan, upon which the Company is required to commence making equal payments of principal plus accrued interest on the outstanding principal amount of the respective Loan (the “Loan Amortization Date”), and continuing thereafter on the first business day of each calendar month through the Maturity Date.

Prepayment Premium. The Company may, at its option upon at least ten (10) business days’ written notice to the Lenders, prepay all (and not less than all) of the outstanding Loan by simultaneously paying to each Lender an amount equal to (i) any accrued and unpaid interest on the outstanding principal balance of the Loans; plus (ii) an amount equal to (A) if such Loan is prepaid on or before the Loan Amortization Date applicable to such Loan, three percent (3%) of the then outstanding principal balance of such Loan, (B) if such Loan is prepaid after the Loan Amortization Date applicable to such Loan, but on or before the date that is twelve (12) months after such Loan Amortization Date, two percent (2%) of the then outstanding principal balance of such Loan, or (C) if such Loan is prepaid more than twelve (12) months after the Loan Amortization Date but prior to the stated Maturity Date applicable to such Loan, one percent (1%) of the then outstanding principal balance of such Loan; plus (iii) the outstanding principal balance of such Loan; plus (iv) all other sums, if any, that shall have become due and payable hereunder. No prepayment premium will be applied to any outstanding balance of any Loan paid on the stated Maturity Date.

Security. The Company’s obligations are secured by a security interest in all of the assets of the Company, subject to limited exceptions and excluding the Company’s intellectual property.

Covenants; Representations and Warranties; Other Provisions. The Loan and Security Agreement contains customary representations, warranties and covenants, including covenants by the Company limiting additional indebtedness, liens, including on intellectual property, guaranties, mergers and consolidations, substantial asset sales, investments and loans, certain corporate changes, transactions with affiliates, and fundamental changes.

Default Provisions. The Loan and Security Agreement provides for events of default customary for term loans of this type, including but not limited to non-payment, breaches or defaults in the performance of covenants, insolvency, and bankruptcy by and/or of the Company.

Warrant and Debt Discount. In connection with the Loan and Security Agreement, the Company issued Horizon Technology Finance Corporation and Powerscourt Investments XXV, LP warrants to purchase an aggregate total of 381,625 shares of the Company’s common stock at an initial exercise price of $3.6685 per share. Each warrant is classified as equity and is exercisable at any time for a period beginning on the date of grant and ending on the earlier of (A) 10 years from the date of grant, and (B) the closing of (A) (i) the sale, lease, exchange, conveyance or other disposition of all or substantially all of the Company’s property or business, or (ii) its merger into or consolidation with any other corporation (other than a wholly-owned subsidiary of the Company), or any transaction (including a merger or other reorganization) or series of related transactions, in which more than 50% of the voting power of the Company is disposed of, in each case, for cash or for marketable securities meeting certain requirements as described in the applicable warrants. The key assumptions used in the Black-Scholes option pricing model were (i) expected term of 10 years, (ii) a risk-free rate of 3.11%, (iii) expected volatility of 93.8%, (iv) and no estimated dividend yield. In addition, the Company incurred third party and lender fees of $449,329 for the nine months ended September 30, 2022. These proceeds were allocated on a basis that approximates the relative fair value method. The fair value of the warrant and fees incurred were recorded as a debt discount and are being recognized as interest expense over the life of the Loan and Security Agreement using the effective interest method. The unamortized debt discount was $2,524,736 as of September 30, 2023. The Company recognized interest expense of $1,064,300 and $3,016,572 for the three and nine months ended September 30, 2023 and $158,397 and $391,920 was related to the amortization of the debt discount for the three and nine months ended September 30, 2023.

Note 11 – 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 $32,861 and $164,631 for the three and nine months ended September 30, 2023, respectively, compared to the three and nine months ended September 30, 2022 of $31,515 and $119,232 respectively.

Index

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, 2022 on Form 10-K, filed with the Securities and Exchange Commission, or SEC, on March 28, 2023.

Cautionary Note Regarding Forward-Looking Statements

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 clinical 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 clinical 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 Versamuneand Infectimune based clinical candidates and the future success of such trials;

●

the successful implementation of the Company’s research and development programs and collaborations, including any collaboration trials concerning the Company’s Versamune and Infectimune based clinical candidates 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 clinical candidates;

●

the success, timing and cost of the Company’s ongoing clinical trials and anticipated clinical trials for the Company’s current clinical 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 clinical candidates;

●

any Company statements about its understanding of clinical candidates’ mechanisms of action and interpretation of preclinical and early clinical results from its clinical development programs and any collaboration trials; the acceptance by the market of the Company’s clinical candidates, if approved;

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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 clinical candidates; and

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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 those listed under Part II, Item 1A. Risk Factors.

Index

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 Biotech,” “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 targeted cancer and infectious disease immunotherapies based on our Versamune^®, Versamune^® plus IL12 fused anti-body drug conjugate (ADC) PDS01ADC (formerly PDS0301/M9241) and Infectimune^® T cell-activating platforms and PDS01ADC tumor targeting immunocytokine. We believe our targeted immunotherapies have the potential to overcome the limitations of current immunotherapy approaches through the activation of the right type, quantity and potency of T cells. Versamune, and Versamune plus PDS01ADC are utilized 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. PDS01ADC is an investigational tumor targeting IL-12 that enhances the proliferation, potency and longevity of T cells in the tumor microenvironment. Versamune plus PDS01ADC enhances the proliferation, potency and longevity of antigen specific multifunctional CD8 T cells in the tumor microenvironment and works synergistically to overcome tumor immune suppression.

Recent Developments

In December 2022, we executed an exclusive global license agreement with Merck KGaA, Darmstadt, Germany for the tumor targeting IL12 fused antibody drug conjugate, M9241, which joined our pipeline as PDS01ADC. PDS01ADC is a novel investigational tumor-targeting fusion protein of Interleukin 12 that enhances the proliferation, potency, infiltration and longevity of T cells in the tumor microenvironment and is therefore designed to overcome the limitations of cytokine therapy which today have resulted in high toxicity and limited therapeutic potential. The proprietary combination of Versamune plus PDS01ADC is designed to overcome tumor immune suppression utilizing a different mechanism from immune checkpoint inhibitors (ICI). The ownership of both assets we believe will streamline the registrational process and its use. The combination of Versamune® and IL-12 to overcome immune suppression is patented by PDS Biotech. In a Phase 2 National Cancer Institute (NCI)-led clinical trial in ICI resistant patients, the combination of PDS0101 and PDS01ADC administered with an investigational bi-functional ICI resulted in a median overall survival of approximately 20 months, which compares favorably to the historical median survival of 3-4 months reported in ICI resistant HPV-positive cancers when treated with ICIs and best reported median survival to date with systemic therapy of 8.2 months in ICI resistant head and neck cancer.

In February 2023, we announced a successful completion of a Type B meeting with the FDA for the triple combination of PDS0101 and PDS01ADC with an FDA-approved immune checkpoint inhibitor for the treatment of recurrent/metastatic, ICI resistant head and neck cancer that is positive for the human papilloma virus (HPV) type 16. In recent interactions with the FDA, we confirmed the required contents of a clinical protocol for the potential registrational trial.

In June 2023, an abstract was presented at the 2023 American Society of Clinical Oncology: Abstract number 6012, Safety and Efficacy of Immune Checkpoint Inhibitor (ICI) Naïve Cohort from Study of PDS0101 and Pembrolizumab in HPV16-Positive Head and Neck Squamous Cell Carcinoma (HNSCC). The abstract was also selected as one of the featured posters reviewed by an expert panel in the Head and Neck Cancer discussion session.

In September 2023, data on our investigational universal flu vaccine, PDS0202, were presented at the 9^th European Scientific Working Group on Influenza (ESWI) conference. These data demonstrated broad neutralization across multiple influenza strains and provided protection against infection after challenging animals not previously exposed to flu with lethal doses of the pandemic H1N1 flu virus.

Index

In October 2023, data demonstrating PDS0101 in combination with standard-of-care (SOC) chemoradiotherapy was associated with a rapid decline in human papillomavirus circulating cell-free DNA (ctHPV-DNA), a potential predictive biomarker of treatment response. The data from the IMMUNOCERV Phase 2 clinical trial were featured in an oral presentation at the American Society for Radiation Oncology Annual Meeting.

In October 2023, updated interim data based on an August 2^nd cut off from 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 was presented. The data was presented at a Company-sponsored key opinion leader roundtable.

In October 2023, interim safety and immune response data was presented for the first-in-human Phase1/2 clinical trial evaluating PDS01ADC in combination with current SOC chemotherapy, docetaxel, to treat metastatic castration sensitive and castration resistant prostate cancer. The data was featured in an oral presentation at the 11^th Annual Meeting of the International Cytokine & Interferon Society.

In October 2023, immune response data from a preliminary analysis of a subset if patients in our VERSATILE-002 Phase 2 clinical trial was presented at the European Society for Medical Oncology Congress 2023.

In November 2023, we announced updated interim survival data from our NCI-led Phase 2 triple combination study.

In November 2023, preclinical data from our NCI-led trial including PDS0101, PDS01ADC and an HDAC inhibitor in ICI-resistant HPV-16 positive cancer was presented during a poster presentation at the Society for Immunotherapy of Cancer 38^th Annual Meeting.

Clinical Candidate Pipeline

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. Enrollment in stage 2 of 2 for the ICI naïve arm and the ICI resistant arms are complete. The clinical trial will evaluate the efficacy and safety of this therapeutic combination as a first and second 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 following initial treatment or spread will be treated with the combination of PDS0101 and KEYTRUDA^® to evaluate if the addition of PDS0101 might improve the efficacy reported in published studies of KEYTRUDA^® alone. 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 who have yet to be treated with an immune checkpoint inhibitor (ICI naïve) and cohort 2 which consists of patients who have failed immune checkpoint inhibitor therapy (ICI resistant).

In February 2022, we achieved the preliminary efficacy milestone of at least four or more objective responses of the first 17 patients in the ICI naïve arm that allowed 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 ICI naïve arm. We have completed enrollment in Stage 1 of the ICI resistant arm and we are waiting for sufficient follow up to conduct the futility analysis.

Index

In June 2022, we presented additional preliminary efficacy and safety data from this trial at the ASCO Annual Meeting (Weiss J et al. J Clin Oncol 40, 2022 (suppl 16; abstr 6041)). The abstract provided preliminary data on 19 patients (safety) with available imaging data for 17 of the 19 patients (efficacy). Data on 17 patients was presented. Highlights from the abstract were as follows:

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Confirmed and unconfirmed response rates thus far (tumor shrinkage greater than 30%) seen in 7/17 (41.2%) patients in comparison to the published results of approximately 19% for approved ICIs, used as monotherapy for recurrent or metastatic head and neck cancer, with 2 of the 7 having complete responses (CR)

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Stable disease (SD) was reported in 6/17 (35.3%) patients, with 4 of the 6 (67%) experiencing tumor shrinkage of less than 30%

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Clinical efficacy (ORR + SD) was seen in 13/17 (76.5%) patients

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Progressive/ongoing disease was reported in 4/17 (23.5%) patients

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Patients had received a median of 4/5 doses of PDS0101 (range 1-5) and 9/35 doses of KEYTRUDA® (range 1-18)

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There were no treatment-related adverse events greater than or equal to Grade 3 (N=19)

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No patients required dose interruption or reduction on the combination treatment

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No patients discontinued the combination treatment

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At 9 months of follow up (median not yet achieved):

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Progression free survival (PFS) rate was 55.2%

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Overall survival (OS) rate was 87.2%

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No control or comparative studies have been conducted between ICIs and PDS0101

In May 2022, we expanded this trial into Europe and in June 2022, as described above, we received Fast Track designation from the US FDA for PDS0101 in combination with pembrolizumab.

In August 2022, our independent Data Monitoring Committee (DMC) met and evaluated data from 43 patients and noted there were no Grade 3 or greater treatment-related adverse events attributed to the combination. The DMC recommended continuing the trial with no modifications.

In October 2022, we announced the results of an end-of-phase 2 meeting with the FDA for PDS0101 in combination with KEYTRUDA^®. We have completed the plan for the Phase 3 clinical program that will support the submission of a BLA for PDS0101 and have submitted to the FDA.

In December 2022, we completed the first stage of enrollment in the ICI resistant arm. Cohort follow-up is in progress that will permit a futility analysis to determine progression to stage 2 enrollment is in progress.

In May 2023, we completed enrollment in the ICI naïve arm. We filed our amended IND with the FDA in the third quarter of 2023. In October 2023, we received feedback from the FDA on the amended IND. Later in October, as part of business development discussions, we received insights from a potential business partners on the Phase 3 clinical protocol. The clinical and medical teams are currently evaluating this feedback and therefore plan to initiate a Phase 3 trial, VERSATILE-003 in the first quarter of 2024.

In June 2023, an abstract was presented at the 2023 American Society of Clinical Oncology: Abstract number 6012, Safety and Efficacy of Immune Checkpoint Inhibitor (ICI) Naïve Cohort from Study of PDS0101 and Pembrolizumab in HPV16-Positive Head and Neck Squamous Cell Carcinoma (HNSCC). The abstract was also selected as one of the featured posters to be reviewed by an expert panel in the Head and Neck Cancer discussion session. Data on 34 patients was presented. The data from the abstract is as follows:

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Estimated 12-month overall survival rate was 87.1%. Published results are 36-50% with approved ICIs used alone.

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Median progression-free survival was 10.4 months (95% CI 4.2, 15.3). Published results are median PFS of 2-3 months for approved ICIs when used as monotherapy in patients with similar PD-L1 levels.

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A disease control rate (disease stabilization or tumor shrinkage) of 70.6% (24/34)

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Confirmed and unconfirmed objective response rate is 41.2% (14/34 patients), which is identical to the preliminary response rate data PDS Biotech previously reported at ASCO 2022 (7/17 patients). To date these responses have been confirmed in nine of the 34 patients (26.5%), including one complete response.

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15/34 patients (44.1%) had stable disease.

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9/34 patients (26.5%) had progressive disease.

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4/48 (8.3%) of patients had a Grade 3 treatment-related adverse event (TRAE). No Grade 4 or higher TRAEs were observed.

Index

In October 2023, at a key opinion roundtable updated interim data was presented based on an August 2^nd cut off from 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. Data on 52 patients was presented. The data from the roundtable based on investigator assessment were as follows:

Highlights from the ICI naïve cohort include:

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24-month overall survival (OS) rate is 74%; published 24-month survival rate of less than 30% for approved ICI.

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12-month OS rate is 80%; published results of 30-50% with approved ICIs¹.

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Tumor shrinkage seen in 60% (31/52) of patients.

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Confirmed overall response rate (ORR) is 27% (14/52) to date.

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Median progression-free survival (PFS) is 8.1 months to date; published results of 2-3 months PFS with approved ICIs.

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13% (8/62) of patients experienced Grade 3 treatment-related adverse events (TRAE) and 0% (0/62) experienced Grade 4 or 5 TRAE; published results report 13-17% Grade 3-5 TRAE with approved ICI monotherapy.

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60% (33/55) of patients have CPS score of 1-19 (who generally have a weaker response to KEYTRUDA^®), and 40% (22/55) have CPS score >20 (who generally have a higher response to KEYTRUDA^®).

Highlights form the ICI refractory cohort include:

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The 12-month OS rate is 56%. The published median 12-month OS rate is 17% with no salvage chemotherapy following tumor progression on ICI (ICI Resistant).

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0% (0/21) confirmed ORR suggests that PDS0101’s impact on survival does not appear to be dependent on tumor shrinkage.

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4% (1/25) of patients experienced Grade 3 TRAE and 0% (0/21) patients experienced Grade 4 and 5 TRAE.

National Cancer Institute: PDS0101+ M9241 (now PDS01ADC) +Bintrafusp Alfa

In June 2020, the first patient was dosed under a PDS0101 Cooperative Research and Development Agreement (CRADA), in the NCI led Phase 2 investigator-initiated trial evaluating PDS0101 with an IL-12 ADC now PDS01ADC, and M7824 (Bintrafusp alfa), which is owned by EMD Serono (Merck KGaA) in patients with advanced HPV-positive cancers who have failed prior treatment. In February 2021, the NCI’s Phase 2 clinical trial of PDS0101 for the treatment of advanced HPV-positive cancers had achieved its preliminary objective response target in patients naïve to check point inhibitors which allowed for full enrollment of approximately 20 patients in this group. In addition, based on promising results in the ICI naïve arm, the trial was amended to allow enrollment of a separate cohort of IC -resistant patients for assessment of safety and activity of the triple combination. The trial has been closed for enrollment. Preliminary efficacy assessment of the triple combination in this added group of 29 ICI resistant patients has been completed and evaluation of long-term patient survival ongoing.

Preclinical study results arising from this CRADA were published in the Journal for ImmunoTherapy of Cancer, Immunomodulation to enhance the efficacy of an HPV therapeutic vaccine (Journal for ImmunoTherapy of Cancer2020;8:e000612. Doi:10.1136/ jitc-2020-000612), and indicate that PDS0101 generated both HPV-specific T cells and an associated antitumor response when used as a monotherapy. When PDS0101 was combined with the two other novel clinical-stage anti-cancer agents, Bintrafusp Alfa and M9241 (which is now owned by us and referred to as PDS01ADC), 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. The published preclinical data demonstrating powerful activity of the triple combination appears to be corroborated in the Phase 2 trial, and this triple combination could form the basis of a unique platform providing improved cancer treatments across multiple cancers.

Index

In June 2022, at the 2022 ASCO Annual Meeting, the NCI provided an update to the preliminary data presented at the 2021 meeting (Strauss J et al. J Clin Oncol 40, 2022 [suppl 16; abstr 2518]). This included data from 30 HPV16-positive patients and highlights were as follows:

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Objective response (OR = >30% tumor reduction) was seen in 88% (7/8) of patients with ICI naive disease; 4/7 (57%) patients’ responses are ongoing (median 17 months).

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With ICI resistant patients: PDS0301 dosing appears to affect response rates, with 5/8 (63%) patients receiving PDS0301 at 16.8 mcg/kg achieving an OR compared to 1/14 (7%) patients who received PDS0301 at 8 mcg/kg achieving an OR; 4/6 (67%) patients’ responses are ongoing (median 12 months).

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Tumor reduction was seen in 45% (10/22) of patients with ICI resistant disease, including patients receiving high or low dose PDS0301.

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In ICI resistant patients treated with high or low dose PDS0301, survival outcomes were similar (p=0.96 by Kaplan Meier analysis). At a median of 12 months of follow up 17/22 (77%) of patients were alive.

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In ICI naïve patients 6/8 (75%) were alive at median 17 months of follow up.

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Similar OR and survival were seen across all types of HPV16-positive cancers.

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Preliminary safety data: 13/30 (43%) of patients experienced Grade 3 treatment-related adverse events (AEs), and 2/30 patients (7%) experienced Grade 4 AEs. There were no grade 5 treatment-related AEs.

We believe the study results to date strongly suggest, in agreement with the published preclinical studies, that all 3 drugs contribute to the clinical outcomes.

In September 2022, we determined, in agreement with the NCI, to select the ICI resistant patients as the preferred treatment group in the on-going PDS0101-based triple combination therapy in advanced HPV-positive cancers and the trial was closed to further enrollment given the ICI resistant arm had been fully recruited.

In October 2022, we presented additional interim data as follows:

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Survival data: 66% (19/29) of HPV16-positive ICI resistant patients in the cohort were alive at a median follow up of 16 months.

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Safety profile: 48% (24/50) patients experienced Grade 3 treatment-related adverse events (AEs), and 4% (2/50) patients experienced Grade 4 AEs. There were no Grade 3 treatment-related AEs.

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HPV16-positive ICI naïve patients: 75% (6/8) were alive at a median follow up of 25 months and 38% (3/8) of responders had a complete response.

In December 2022, we presented interim data as follows:

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Median OS was 21 months in 29 checkpoint inhibitor resistant patients who received the triple combination. The reported historical median OS in patients with ICI resistant disease is 3-4 months seen with checkpoint inhibitors and best reported median survival to date with systemic therapy of 8.2 months in ICI resistant head and neck cancer.

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In ICI naïve subjects, 75% remain alive at a median follow-up of 27 months. As a result, median OS had not yet been reached. Historically median OS for similar patients with platinum experienced ICI naïve disease is 7-11 months.

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Objective response rate (ORR) in ICI resistant patients who received the optimal dose of the triple combination is 63% (5/8). In current approaches ORR is reported to be less than 10%.

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ORR in ICI naïve patients with the triple combination is 88%. In current approaches ORR is reported to be less than 25% with FDA-approved ICIs in HPV-positive cancers.

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Safety data had not changed since October’s update. 48% (24/50) of patients experienced Grade 3 (moderate) treatment-related adverse events (AEs), and 4% (2/50) patients experienced Grade 4 (severe) AEs, compared with approximately 70% of patients receiving the combination of ICIs and chemotherapy reporting Grade 3 and higher treatment-related AEs.

In February 2023, we announced the successful completion of a Type B meeting with the FDA for the combination therapy of PDS0101, PDS01ADC, and an FDA-approved immune checkpoint inhibitor for the treatment of recurrent/metastatic HPV-positive ICI-resistant head and neck cancer. We confirmed the required contents of the trial design for a potential registrational trial of the combination.

Index

In November 2023, we released updated interim survival data as follows:

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75% of immune checkpoint inhibitor (ICI) naïve patients remain alive at 36 months; published median overall survival (OS) in similar patients is 7-11 months

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12-month survival rate in (ICI) resistant patients is 72%

PDS Biotechnology Corp [PDSB] Filings
10-Q	[2023-11-14]
10-Q	[2023-08-14]
10-Q	[2023-05-15]
10-K	[2023-03-28]
10-Q	[2022-11-14]
10-Q	[2022-08-08]
10-Q	[2022-05-11]
10-K	[2022-03-31]
10-Q	[2021-11-10]
10-Q	[2021-08-12]
10-Q	[2021-05-13]
10-K	[2021-03-18]
10-Q	[2020-11-13]
10-Q	[2020-08-13]
10-Q	[2020-05-13]
10-K	[2020-03-27]
S-1	[2019-12-17]
10-Q	[2019-11-07]
S-1	[2019-08-02]
10-Q	[2019-08-01]
10-Q	[2019-05-14]
10-K	[2019-02-21]
10-Q	[2018-11-01]
10-Q	[2018-08-01]
10-Q	[2018-05-01]
10-K	[2018-03-01]
10-Q	[2017-11-01]
10-Q	[2017-08-01]
10-Q	[2017-05-03]
10-K	[2017-03-02]
10-Q	[2016-11-01]
10-Q	[2016-08-03]
10-Q	[2016-05-03]
10-K	[2016-03-08]
10-Q	[2015-11-06]
S-1	[2015-08-14]