Processa Pharmaceuticals, Inc. (PCSA)·Q2 2021 Earnings Summary

Executive Summary

• PCSA advanced its pipeline and added RX-3117 (PCS3117), citing four clinical programs with addressable markets of $500 million–$1.5 billion; Q2 reported net loss of $3.2M and diluted EPS of -$0.20 as R&D/G&A increased with trial execution .
• Management guided to near-term catalysts: PCS12852 IND filing in September, Q4 2021 interim analysis for PCS6422, and H1 2022 interim data for PCS499; biomarker assay development for PCS3117 underway with validation targeted H1 2022 .
• Liquidity remains solid: cash/equivalents were $20.8M at 6/30, with CFO reiterating runway “through 2023” to fund ongoing trials and assay development .
• Potential stock catalysts: enrollment progress and interim data across programs, Russell Microcap index inclusion, and clarity on biomarker-driven 3117 strategy; estimate comparisons unavailable due to lack of S&P Global consensus retrieval at time of query .

What Went Well and What Went Wrong

What Went Well

• In-licensed RX-3117 (PCS3117) with FDA orphan designation for pancreatic cancer; assays being developed to identify responders, with Phase 2B biomarker study targeted for H2 2022 .
• Execution milestones achieved: first patient dosed in PCS6422 Phase 1B and first two patients dosed in PCS499 Phase 2B, with defined interim timelines (Q4 2021 for 6422; H1 2022 for 499) .
• Management quote underscores cadence of catalysts: “we see a consistent cadence of upcoming catalysts and tremendous amount of near-term value creation.” — Dr. David Young (CEO) .

What Went Wrong

• Operating expenses accelerated with clinical execution: Q2 R&D rose to $1.6M (from $427k YoY) and G&A to $1.3M (from $375k YoY), driving net loss to $3.2M (from $0.733M YoY) and EPS to -$0.20 (from -$0.13 YoY) .
• 499 screening challenges: ~10 pre-screened NL patients didn’t meet criteria due to factors like travel burden or ulcer characterization, highlighting enrollment complexity in rare disease .
• 6422 interim timing modestly pushed: from “near end of Q3 2021” (Q1 remarks) to “Q4 2021” (Q2 update), reflecting trial cadence and biomarker/assay workstreams .

Financial Results

Income Statement (Quarterly)

Note: Company did not disclose revenue in Q1/Q2 press releases; margins cannot be calculated from disclosed materials .

Balance Sheet Snapshot

Q2 Year-over-Year

KPIs and Operational Milestones

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “During the second quarter we… in-licensed another clinical asset - RX-3117 – and will have four clinical programs with addressable markets of $500 million to $1.5 billion… we see a consistent cadence of upcoming catalysts and tremendous amount of near-term value creation.” — Dr. David Young, CEO .
• “We have enough cash to support our efforts through 2023, while completing the 499 Phase 2B trial, the 12852 Phase 2A trial, the… maximum tolerated dose… in the 6422 Phase 1B trial, and the development of the 3117 biomarker assays.” — Dr. David Young .
• “The increase in our net loss primarily relates to clinical trial costs… for PCS499… PCS6422… and costs we incurred licensing PCS3117.” — James Stanker, CFO .

Q&A Highlights

• 6422 interim focus: metabolic impact and DPD assay selection; efficacy plus safety preferred for registrational path, with potential to go adaptive Phase 3 depending on data .
• 3117 Phase 3 design: options include biomarker-selected patients or gemcitabine-resistant cohorts; final approach depends on Phase 2B biomarker results .
• 499 interim: placebo response expected to be very low, informing Phase 3 sample size and FDA dialogue; interim aims for 8–10 patients .
• Trial cost ranges: current trials (499, 6422, 12852) each ~$3–$5M; 3117 biomarker development 6–12 months; 3117 study likely around ~$3M (preliminary) .

Estimates Context

• Wall Street consensus estimates via S&P Global were unavailable at time of query, so comparisons to consensus for Q2 2021 EPS and revenue cannot be provided. We attempted to retrieve S&P Global data but could not access it during this session.
• Investors should focus on operational cadence and cash runway until revenue-generating catalysts emerge .

Key Takeaways for Investors

• Pipeline execution de-risks the story: first patients dosed in 6422/499 and defined interim timelines are near-term catalysts that can re-rate the stock on clinical read-throughs .
• Biomarker strategy is central: 3117 and 6422 programs’ biomarker work may enable patient selection advantages and registrational efficiency; watch assay validation progress through H1 2022 .
• Liquidity supports milestones: $20.8M cash and runway through 2023 reduces financing overhang in the near term, supporting multiple data events .
• Modest timeline shifts (6422 interim to Q4) reflect realistic cadence; maintain expectations around Q4 2021 and H1 2022 data to drive narrative and potential partnering interest .
• Rare-disease enrollment for 499 carries execution risk; interim placebo response will be pivotal for Phase 3 design and commercial potential .
• With no disclosed revenue and higher opex, fundamentals hinge on clinical proof points; short-term trading likely to react to interim data and index inclusion headlines; medium-term thesis rests on biomarker-enabled oncology and orphan dermatology value creation .

Additional Sources Reviewed

• Q2 2021 8-K press release and Items 2.02/9.01 .
• Q2 2021 earnings call transcript (remarks and Q&A) .
• Q1 2021 8-K press release and call transcript for trend context .
• FY2020 year-end 8-K press release for baseline and milestones .