On November 14, 2023 HCW Biologics Inc. (the "Company" or "HCW Biologics") (NASDAQ: HCWB), a clinical-stage biopharmaceutical company focused on discovering and developing novel immunotherapies to lengthen healthspan by disrupting the link between inflammation and age-related diseases, reported financial results and recent business highlights for its third quarter ended September 30, 2023 (Press release, HCW Biologics, NOV 14, 2023, View Source [SID1234637625]).
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A human data readout from the ongoing Phase 1 clinical trial to evaluate HCW9218 in patients with chemo-refractory/chemo-resistant solid tumors was presented at the 38th Annual Meeting of the Society for Immunotherapy of Cancer (SITC) (Free SITC Whitepaper) ("SITC") by Melissa A. Geller, M.D., M.S., Professor and Division Director of Gynecologic Oncology in the Department of Obstetrics, Gynecology and Women’s Health at the University of Minnesota, who serves as a Principal Investigator of this trial, which is sponsored by the University of Minnesota.
Dr. Hing C. Wong, Founder and CEO of HCW Biologics, stated, "We believe the findings we shared in the preliminary human data readout at SITC (Free SITC Whitepaper) provide support for future Phase 2 studies of HCW9218 in combination with chemotherapy and/or immune checkpoint inhibitors against solid tumors in patients with ovarian cancer. We are pleased to see the consistency of results in humans with those that we saw in our preclinical animal studies. Together, we believe these findings verify the balanced bifunctional activities of HCW9218 in stimulating effector immune cells and reducing TGF-β-mediated responses."
Business Highlights:
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The Company expects to complete the initial phase of both of its ongoing clinical studies in cancer indications in late 2023 or early 2024.
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Highlights of the human data readout from the Phase 1 clinical trial presented at SITC (Free SITC Whitepaper) include:
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HCW9218 was administered subcutaneously once every three weeks for up to six cycles at dose levels 0.25 mg/kg (DL1), 0.5 mg/kg (DL2), 0.8 mg/kg (DL3) or 1.2 mg/kg (DL4). The median number of cycles was three.
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87% (13/15) had >4 lines of prior therapy. Tumor types included: Ovarian (n=6), Colorectal (n=4), Rectal (n=3), and Liver (n=2).
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53% (8/15) patients treated with HCW9218 were evaluated in a post-treatment assessment, including biopsies and scanning. Tumor types included: Ovarian (n=3), Colorectal (n=3), Rectal (n= 1) and Liver (n=1).
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50% (4/8) patients evaluated in post-treatment assessments exhibited stable disease following HCW9218 treatment. Patients showed stable disease lasting over 6 months. Clinical benefit was observed from DL2, DL3 and DL4.
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66% (2/3) patients with ovarian cancer who underwent post-treatment assessments showed stable disease.
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HCW9218 significantly reduced blood levels of TGF-β in cancer patients in a dose-dependent manner, without causing treatment-emergent skin lesions and bleeding events previously reported with TGF-β antagonists in clinic.
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Based on the ability of HCW9218 to activate, expand and induce tumor trafficking of progenitor exhausted stem-like and transitory CD8+ T cells, HCW9218 treatment presents a promising approach to enhancing the antitumor activity of immune checkpoint inhibitors in patients with solid tumors.
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Repeated HCW9218 administration at up to the highest planned dose level was well tolerated by patients with chemotherapy-refractory advanced solid tumors, which has provided support for the Recommended Phase 2 Dose level for future Phase 2 studies of HCW9218.
Third Quarter 2023 Financial Results:
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Revenues: Revenues for the quarter ended September 30, 2022 and 2023 were $1.8 million and $853,102, respectively. Revenues for the nine months ended September 30, 2022 and 2023 were $5.4 million and $1.5 million, respectively. Revenues were derived exclusively from the sale of licensed molecules to the Company’s licensee, Wugen. The licensed molecules are one of the inputs for manufacturing Wugen’s products. The Company expects Wugen to limit its purchases for the remainder of 2023, due primarily to changes in its clinical development program and delays in ramping up its manufacturing process.
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Research and development (R&D) expenses: R&D expenses for the quarter ended September 30, 2022 and 2023 were $2.6 million and $1.7 million, respectively, a decrease of $981,352, or 37%. R&D expenses for the nine months ended September 30, 2022 and 2023 were $6.4 million and $5.5 million, respectively, a decrease of $868,434, or 14%. The change is primarily attributable to a decrease in preclinical expenses and manufacturing costs and an increase in costs associated with clinical trial activities. As of September 30, 2023, the Company anticipates it has the required supplies of its lead molecules, HCW9218 and HCW9302, in place to provide for planned clinical development activities for the next 20-24 months. In the three months ended September 30, 2023, costs were incurred primarily for master cell bank characterization for HCW9101H, a high-producing cell line of a key component of the manufacturing process for the Company’s proprietary molecules including those licensed to Wugen, as well as ancillary activities such as shipping, insurance and storage. During this period, all preclinical costs were incurred to complete IND-enabling activities for HCW9302. The Company expects to submit an IND application for permission to conduct a clinical trial to evaluate HCW9302 in an autoimmune disorder by the end of 2023.
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General and administrative (G&A) expenses: G&A expenses for the quarter ended September 30, 2022 and 2023 were $1.7 million and $3.6 million, respectively, an increase of $1.9 million, or 107%. G&A expenses for the nine months ended September 30, 2022 and 2023 were $5.3 million and $9.7 million, respectively, an increase of $4.4 million, or 83%. The increase was primarily attributable to increases in professional fees, which include legal fees associated with legal proceedings brought against the Company by Altor BioScience, LLC and NantCell, Inc., or Altor/NantCell, which is discussed further below.
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Net loss: Net loss for the quarter ended September 30, 2022 and 2023 was $3.9 million and $4.9 million, respectively, an increase of $1.0 million, or 26%. Net loss for the nine months ended September 30, 2022 and 2023 was $9.5 million and $14.3 million, respectively, an increase of $4.8 million, or 51%.
Financial Guidance
As of September 30, 2023, the Company held $11.2 million in cash and cash equivalents. In addition, the Company recognized prepaid expenses of $1.7 million, and a deposit for interest reserve of $5.3 million. The Company advanced $4.4 million toward its new lab and manufacturing facilities prior to drawing funds available under the 2023 Loan Agreement. With the current cash and cash equivalents and funds available to the Company under the 2023 Loan Agreement, including recouping the amounts advanced toward its new lab and manufacturing facilities, the Company believes it has adequate capital to fund operations and other commitments to the end of 2024.
On April 27, 2023, in connection with the Altor/NantCell matter, the U.S. District Court for the Southern District of Florida (the "Court") approved the parties’ stipulation and ordered the parties to arbitration. On May 1, 2023, Altor/NantCell filed a demand against the Company before JAMS. On May 3, 2023, Altor/NantCell dismissed the federal court action without prejudice and the Court ordered the case dismissed without prejudice and closed the case. Altor/NantCell’s proceeding against the Company is now proceeding in arbitration before JAMS. Although adverse decisions (or settlements) may occur in arbitration, it is not possible to reasonably estimate the possible loss or range of loss, if any, associated therewith at this time. As such, no accrual for these matters has been recorded within the Company’s financial statements. In the year ahead, the Company expects to continue to incur legal expenses on its own behalf in connection with the legal proceedings brought against it by Altor/NantCell. Further, while legal expenses incurred by Dr. Wong in connection with the arbitration against him that was initiated by Altor/NantCell are covered through advancement of expenses from Altor/NantCell, under certain circumstances, the Company may be required to advance his legal fees. The Company incurred legal expenses on its own behalf in the period ended September 30, 2023, and it expects to continue to incur material costs and expenses in connection with defending itself in the foregoing legal matters through the end of 2023 and into 2024.