PharmaCyte Biotech (PMCB) had a shareholder call to address the developments with their pancreatic cancer and diabetes trials. Most of the call was spent recapping the challenges that they faced in the pathway to regulatory approval. The only positive spin was that they seem to have definitive guidance on what they want to do. Their goal is to conduct a 250 patient Phase IIb clinical trial for pancreatic cancer using low dose Ifosfamide.
FDA Changing Rules
Original Cell lines from the late 1990’s and early 2000’s could no longer be used. The FDA mandated that the cell lines “must consist of identical cells.” This is almost common sense that in scientific experiments you use this so to not limit the number of variables. The company came off as if almost blaming the FDA for all the new challenges they are facing as a result of this when they got into the nuances that their lines were similar but not identical. The company admitted they spent one full year devoted to ensuring the cell line was stable. They studied other cell lines but concluded the original was the best. The likely reason they stuck with the original cell line was because had they not done so the FDA might have forced them to come back with another preclinical trial.
Problems in Manufacturing
The Fetal Calf Serum (FCS) was allowed for growth but not any more. PMCB contracted a company named Arita out of Italy to grow bot the Master and Working cell bank lines but the rate of growth slowed so when the cells were unfrozen and readied for injection, they struggled to re-establish themselves. Later, Auditors in Italy shut down Arita and wouldn’t allow them to continue to grow the cell lines resulting in additional delays. Alternative cell culture mediums didn’t work. The company lost at least 6 months due to this but has found a company in the states to continue the work. The company is currently working with another client but will be able to grow PMCB’s cells later this month.
Management
In January 2017 they hired Dr. Linda S. Sher – she became the Chief Medical Officer (CMO) to run the trial. The company cited that they didn’t give her the proper resources but frankly this seems like a cover for the failure of the initial drug design. She built a study with 40 patients and expected pivotal results. This was just unrealistic and reeks of an inexperienced CMO that knew overall survival was going to be the endpoint and that hasn’t changed. To her credit it seems she was able to negotiate the dosing of only 100 patients with the therapy to get her the power of the study needed to show pivotal results. When the endpoint is overall the survival the FDA pushes for much higher patient populations. This trial will involve only 250 patients total for the trial but given the history of missteps this doesn’t seem like nearly enough patients and represents significant risk to shareholders because if they get this wrong the phase II results could be in jeopardy.
CRO Hired
The company hired a TD2 as the CRO to complement the clinical trial. After they analyzed the requirements they had to back out because they didn’t have the infrastructure for such a large trial.
Funding
Extending the shelf registration is standard procedure and it allows them to keep their options open to raise money going into the IND Filing due in Q2 next year (180 day grace period from Oct 28th). They have raised $13.5 million. The CEO states they have enough funds to do what they need to do at the present time, but will need to raise more funds for the trial.
Diabetes
They talked about Mellegin cells – FDA indicated that they must be tested and company must demonstrate a low propensity for them to grow into a tumor. Testing revealed they aren’t stable and lose their beneficial properties over time. In doing this research as to why they were losing their beneficial properties they figured out what made them special and that moved them to use Primary Eyelet cells in their patented cell in the box technology. These studies were done at the University of Vienna? VetMed?
New Potential Trial
The reduction of acetis fluid seem to be an effective therapy. They did 7 pre-clinical studies but have conflicting results.
Investment Summary
This management team may have some great intellectual property but we really don’t know because there just isn’t enough data. They had one of the worst answers regarding the mechanism of action when they claimed there was a 3-5 fold increase of activity by the tumor in pre-clinical studies. Without knowing or hypothesizing how this works how can investors ever believe that this is a platform technology to build upon. The company clearly needs money to fund a 250 patient trial and that is going to be very dilutive to shareholders unless they do a better job selling investors on the promise of their team. This team has made many missteps and poor decision resulting in delays and costing investors opportunity. It’s unclear how much more runway investors will give this company but the valuation of this company is too high given the track record of performance, delays, and inconclusive results of the technology.
Uplisting to NASDAQ
Although its the company’s goal, they will pursue that avenue when their trials and overall business are further along. They also mentioned that they do not intend to Reverse Split the company shares either. Even though they do care about the share price as it does indirectly effect raising capital, the CEO’s vision is to concentrate on the trial and with success the share price will follow.
Future Communications
They are leaning towards “quarterly” shareholder meetings versus 8K’s or press releases.
Disclosure: PSInvestor.com was not compensated for the above article. We also do NOT hold a position in the company. The above is our opinion of the call, for our full disclaimer please click here.
