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Processa Pharmaceuticals, Inc. (PCSA)·Q3 2022 Earnings Summary

Executive Summary

  • Q3 2022 focused on clinical progress: PCS12852 met its Phase 2A proof-of-concept with statistically better gastric emptying at 0.5 mg vs placebo (p<0.10), and safety was mild-to-moderate; management plans a Phase 2B in 2023 .
  • Next Generation Capecitabine (NGC; PCS6422 + capecitabine) identified dosing regimens and 5‑FU exposure profiles including dose-limiting side effects; observed reformation of DPD ~24–72 hours post‑6422 and ~50× potency vs capecitabine, with a Phase 2B planned in 2023 under FDA’s Project Optimus .
  • Liquidity supports operations into Q3 2023; cash was $9.1M at 9/30/22; nine‑month net loss widened to $14.4M driven by R&D and G&A, while non‑cash compensation helped conserve cash .
  • Wall Street EPS/revenue consensus from S&P Global was unavailable; estimate comparisons cannot be provided for Q3 2022 (S&P Global data unavailable).

What Went Well and What Went Wrong

What Went Well

  • PCS12852 achieved a prokinetic effect in gastroparesis patients with statistically improved gastric emptying at 0.5 mg vs placebo (p<0.10); AE profile was mild-to-moderate without clinically significant cardiovascular events; Phase 2B targeted for 2023. Quote: “We are pleased that this first Phase 2A study… was able to demonstrate a prokinetic effect” – Dr. Sian Bigora .
  • NGC program defined dose regimens/exposures, demonstrated ~50× potency vs capecitabine, and clarified DPD reformation timing, positioning for a 2023 Phase 2B under Project Optimus. Quote: “NGC potency was increased to 50 times greater than reported for FDA-approved capecitabine” – Dr. David Young .
  • Enrollment initiatives across programs improved screening queues; executives took equity over cash comp (305,617 shares, ~$916k FV) to conserve cash and align incentives .

What Went Wrong

  • Losses widened on higher trial activity: nine‑month net loss rose to $14.4M vs $8.2M prior year; R&D rose to $8.3M (+$3.5M YoY) and G&A to $6.1M (+$2.7M YoY) .
  • PCS499 enrollment remained difficult due to ultra‑rare patient identification and COVID disruptions; management implemented supplemental enrollment programs and may need flexible sample sizes subject to FDA dialogue .
  • PCS12852 Phase 2A efficacy signal based on small cohorts (n=6 vs n=8) and a lenient p<0.10 threshold; symptom improvement analysis pending, highlighting inherent small‑study risk and need for larger Phase 2B validation .

Financial Results

Liquidity, Losses, and Operating Metrics

MetricQ1 2022Q2 2022Q3 2022
Cash and Equivalents ($USD Millions)$14.3 $12.1 $9.1
Net Loss ($USD Millions, YTD)$3.2 $8.4 $14.4
Diluted EPS (Loss per Share, YTD)$0.20 $0.53 $0.90
Net Cash Used in Operating Activities ($USD Millions, YTD)$1.8 $4.1 $7.1
Shares Outstanding (Millions)15.8 15.8 15.9

Notes:

  • Company did not disclose quarterly revenue or margin figures in these documents; PCSA is a clinical-stage biotech and did not present sales metrics in Q1–Q3 2022 materials .
  • Prior year comparison: nine‑month 2021 net loss was $8.2M ($0.54/share) vs $14.4M ($0.90/share) in 2022 .

Operating Expenses (Year-to-Date)

MetricQ1 2022Q2 2022 (6M)Q3 2022 (9M)
R&D Expense ($USD Millions, YTD)$2.0 $5.2 $8.3 (+$3.5M YoY)
G&A Expense ($USD Millions, YTD)$1.2 $3.2 $6.1

Clinical KPIs

KPIQ1 2022Q2 2022Q3 2022
PCS12852 Phase 2A Enrollment/Status5 patients enrolled; targeting Sep/Oct completion On target to complete enrollment by September; top-line by year-end GEBT: mean t50 change −31.90±50.53 min (0.5 mg) vs −9.36±42.43 min (placebo), p<0.10; mild-to-moderate AEs; symptom analysis by year-end
NGC (PCS6422 + capecitabine) ProgressProtocol amended; enrolling; aim to increase potency across all dosing days Enrolling Cohorts 2B/2C; MTD expected by end-2022/early-2023 Identified dose regimens; DPD reformation ~24–72h; ~50× potency; Phase 2B planned in 2023
PCS499 (uNL) Enrollment/StatusRemedial initiatives; pre-screen process added COVID headwinds; interim cohort enrollment targeted 2022 Interim analysis mid-2023; final results near end-2023; screening challenges persist

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
PCS12852: Phase 2A Enrollment & Top-Line2022Complete enrollment by September; present top-line data before year-end Achieved GEBT improvement; symptom analysis expected by year-end; Phase 2B to initiate in 2023 Delivered/maintained timeline; added 2023 Phase 2B plan
NGC (PCS6422+capecitabine): Next Step2022–2023Determine MTD by early 2023 Phase 2B efficacy/safety trial to initiate in 2023 following FDA meeting under Project Optimus Maintained path; clarified Phase 2B start
PCS499: Interim Analysis2023Interim cohort enrolled by end-2022 Interim analysis mid-2023; final results near end-2023; continued enrollment efforts Deferred timeline (later readout)
Cash RunwayThrough Q3 2023$12.1M at 6/30/22; runway into Q3 2023 $9.1M at 9/30/22; runway into Q3 2023 confirmed Maintained runway guidance

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 2022)Previous Mentions (Q2 2022)Current Period (Q3 2022)Trend
R&D execution/enrollmentAdded pre-screening; remedial programs; PCS12852 progressing Cohort additions; improving queues; PCS12852 on track PCS12852 PoC achieved; PCS499 remains difficult; continued enrollment push Improving on PCS12852; mixed for PCS499
Regulatory strategy (Project Optimus)N/ADiscussed protocol amendments and FDA interactions Explicit plan to run Phase 2B under Project Optimus to find optimal dosing More defined
Cash conservation/governanceEquity comp to conserve cash Continued equity incentives Executives acquired 305,617 shares (~$916k FV) to align with shareholders Reinforced alignment
Gastroparesis program (PCS12852)Enrollment, plan for GEBT/symptoms top-line Expect GEBT in Oct; symptoms by year-end GEBT positive; safety benign; symptom readout pending Progressed to data
Oncology NGC programAiming for potency across all dosing days; protocol amended Cohort work targeting MTD DPD reformation window, potency, tolerability characterized; Phase 2B plan Advanced clarity
PCS3117 roadmap/biomarkersAssay development; FDA meeting targeted end‑2022 Assay/sample matrix ongoing; FDA meeting early‑2023 Preparing FDA meeting H1 2023; define target population/line of therapy Timeline refined

Management Commentary

  • “We are delighted to report our push to enroll patients in PCS12852 (Gastroparesis) and PCS6422 (Next Generation Capecitabine) has helped us get critical data and report successful preliminary results in both trials.” – Dr. David Young, CEO .
  • “We are pleased that this first Phase 2A study with PCS12852 was able to demonstrate a prokinetic effect and improve gastric emptying in gastroparesis patients.” – Dr. Sian Bigora, CDO .
  • “In the ongoing Phase 1B trial, Processa has successfully identified NGC dosage regimens… while NGC potency was increased to 50 times greater than reported for FDA‑approved capecitabine.” – Dr. David Young .
  • CFO: “Our cash balance at September 30, 2022 was $9.1 million… sufficient to complete our three ongoing clinical trials and fund our operations into the third quarter of 2023.” .

Q&A Highlights

  • DPD inhibition window: Optimal would be longer (closer to ~72 hours); variability exists across patients; dosing will adapt accordingly .
  • Project Optimus approach: Plan is one Phase 2B to optimize efficacy/safety balance, then proceed to pivotal, consistent with non-oncology development paradigms .
  • PCS12852 efficacy and endpoints: GEBT improved; FDA approval hinges on symptom improvement (validated composite or subcategories); 12‑week minimum treatment guidance; safety will be tracked up to one year .
  • PCS12852 dosing: 0.5 mg vs 0.1 mg explored; safety data supports potential doses above 0.5 mg (up to ~1.0 mg considered), far below 5 mg used in prior studies .
  • PCS499 enrollment challenges: Misclassification of lesions and ultra‑rare population; ongoing supplemental efforts; potential to reduce sample size with FDA flexibility if placebo response is near zero .
  • PCS3117 path: Assay development for biomarkers ongoing; FDA meeting targeted in the first half of 2023 to define indication, dosing, and line of therapy .

Estimates Context

  • Wall Street consensus (S&P Global) for Q3 2022 EPS and revenue was unavailable due to access limits; therefore, estimate comparisons cannot be provided for this period (S&P Global data unavailable).
  • PCSA did not disclose quarterly revenue or margin metrics in its Q3/Q2/Q1 materials; comparisons vs estimates for revenue/margins are not possible from provided documents .

Key Takeaways for Investors

  • PCS12852 delivered a positive GEBT signal with benign safety; upcoming symptom data will be pivotal for derisking the Phase 2B and will likely be a near-term catalyst .
  • NGC’s ~50× potency and defined DPD window strengthen its differentiation; the Project Optimus-guided Phase 2B to hone dosing could be value‑creating if efficacy/safety balance is demonstrated .
  • Cash runway into Q3 2023 provides time to reach multiple data readouts (PCS12852 symptoms, NGC MTD/Phase 2B start, PCS499 interim), though incremental funding/partnering may be needed for larger studies .
  • Loss expansion is expected given trial progression; continued use of non‑cash comp mitigates cash burn, but operating losses will likely persist absent partnership inflows .
  • For trading: watch for symptom readout on PCS12852 (approval‑relevant endpoint) and any FDA interactions/Phase 2B initiations; these events may drive sentiment and liquidity near term .
  • Medium term: clinical execution (enrollment, regulatory clarity), partnering prospects post‑readouts, and alignment of dosing strategies under Project Optimus will shape valuation trajectory .
  • Data quality caveats: PCS12852 PoC was small (n=14 across key arms) with p<0.10; Phase 2B scale/readout will be essential to validate clinical benefit and durability .