PIERIS PHARMACEUTICALS, INC. (PIRS)·Q2 2023 Earnings Summary

Executive Summary

• Q2 2023 was dominated by partner-driven and corporate actions: AstraZeneca terminated the elarekibep collaboration, Pieris announced a strategic review, and approved a ~70% workforce reduction; quarter-end cash, cash equivalents and investments were ~$54.9M, providing liquidity for “remaining limited operations” for at least 12 months .
• Financially, Pieris swung to profit on collaboration accounting: Revenue rose to $20.06M vs $1.94M in Q1 and $3.70M in Q2 2022; net income was $3.98M vs $(13.18)M in Q1 and $(10.34)M in Q2 2022, helped by recognizing ~$12.5M from Genentech program discontinuations and ~$4.0M from AstraZeneca program discontinuation .
• No formal guidance was issued; management expects to curtail R&D (halt PRS‑220 Phase 2a readiness and PRS‑400 R&D, opt-out of PRS‑344 U.S. co-dev), recognize ~$3.4M severance in Q3, and pursue strategic alternatives with Stifel as advisor .
• Stock drivers: loss of the AstraZeneca program, strategic alternatives process, and optionality around partnering cinrebafusp alfa (HER2+ gastric, prior small data set with unconfirmed 100% ORR) and respiratory assets PRS‑220/PRS‑400 are the principal catalysts near-term .

What Went Well and What Went Wrong

• What Went Well

  • Collaboration-driven revenue recognition: Q2 revenue rose to $20.06M on Genentech target discontinuations ($12.5M) and an AstraZeneca discovery program discontinuation ($4.0M), enabling positive net income .
  • Balance sheet visibility: cash, cash equivalents, and investments totaled ~$54.9M at 6/30/23 ($44.94M cash and $9.94M short-term investments), and management believes funds support limited operations for at least 12 months .
  • Pipeline optionality: management signaled intent to partner PRS‑220 (CTGF/IPF), PRS‑400 (Jagged‑1) and re‑initiate cinrebafusp alfa via a partner; CEO: “We are pursuing strategic options across three main areas…” .

• What Went Wrong

  • Program termination: AstraZeneca discontinued dosing and later terminated the elarekibep alliance following 13‑week tox findings (inflammation-mediated lung tissue damage in NHP), removing a key respiratory pillar .
  • Corporate retrenchment: ~70% workforce reduction approved; ~$3.4M severance/termination costs expected in Q3; R&D scale-back and U.S. opt‑out for PRS‑344/S095012 .
  • Listing deficiency: Nasdaq minimum bid price notice received May 15, 2023; risk of delisting absent remediation (e.g., reverse split) within compliance windows .

Financial Results

• Income statement and liquidity (oldest → newest)

• Revenue by collaboration partner (Q2 2023)

• Margins and mixes

Note: Net Income Margin calculated as Net Income / Revenue using cited values.

• KPIs and line items (as available)

Guidance Changes

No formal financial guidance provided. Management executed a strategic pivot and cost actions.

Earnings Call Themes & Trends

(There was no Q2 2023 earnings call or transcript available; prior quarters used for trend context.)

Management Commentary

• Strategic reset: “We are pursuing strategic options… accelerating partnering discussions of PRS-220 and PRS-400… selecting the best possible development partner… to re-initiate clinical development of cinrebafusp alfa…” — Stephen Yoder, CEO .
• On elarekibep discontinuation: “Decision… based on lung findings from a non-clinical 13-week GLP toxicology study… not a concern for the active clinical studies but do not support long-term use” .
• Liquidity and runway: “On the basis of the Company’s approved budget and actions within management’s control, the Company believes that its currently available funds will be sufficient to fund the Company’s remaining limited operations through at least the next 12 months” .

Q&A Highlights

(From Q1 2023 call, as no Q2 call was available)

• PRS‑220 path post‑FibroGen CTGF readout: Management expected 2H23 Phase 1 data and viewed inhaled/local CTGF antagonism as potentially superior to systemic approaches; funding via partnerships/equity optionality discussed .
• Cinrebafusp alfa partnering: Active discussions with investors and pharma; timeline targeted for back half 2023; emphasis on compelling (small) efficacy signal .
• Elarekibep economics: Co‑development opt‑in mechanics and economics explained (25% cost share with cap or 50% for gross margin share), pre‑termination context .

Estimates Context

• Wall Street consensus via S&P Global was unavailable in our tool for PIRS (no CIQ mapping); as a result, we cannot provide beat/miss versus estimates for Q2 2023. We searched for “Primary EPS Consensus Mean” and “Revenue Consensus Mean” for “Q2 2023” but no mapping existed, so estimates comparisons are not included [GetEstimates error].

Key Takeaways for Investors

• The quarter’s positive EPS was one‑time in nature, driven by collaboration accounting from program discontinuations, not recurring product revenue; forward run-rate absent new deals likely reverts to losses as collaboration revenue normalizes .
• Loss of AstraZeneca elarekibep and the associated longer‑term revenue/milestone optionality is a structural negative; the pivot to strategic alternatives and heavy cost cuts aim to preserve runway and salvage asset value .
• Near‑term catalysts are transactional: a potential partner for cinrebafusp alfa (supported by small but notable HER2+ gastric data) and business development for PRS‑220/PRS‑400; execution here will drive sentiment .
• Liquidity (~$54.9M cash + investments at Q2‑end) provides time to pursue deals; expect ~$3.4M restructuring costs in Q3 and lower internal R&D burn thereafter .
• Listing risk (Nasdaq bid deficiency) adds technical overhang; corporate actions (reverse split, strategic deal) may be required to maintain listing .
• For trading: headlines on strategic alternatives, licensing/asset sales, or a partner-led restart of cinrebafusp alfa likely dominate short‑term price action; fundamental inflections from internal clinical readouts are limited near‑term given curtailed spending .