Pieris Pharmaceuticals, Inc. (NASDAQ:PIRS) is a biotechnology company that historically discovered and developed Anticalin® protein-based drugs to target validated disease pathways. The company's clinical pipeline consists of immuno-oncology (IO) bispecifics partnered with several major pharmaceutical companies, including Servier, Pfizer (formerly Seagen), and Boston Pharmaceuticals.

On March 27, 2024, Pieris announced an update on its review of strategic alternatives and a decision to implement measures that are expected to extend its cash runway into at least 2027. This strategic shift is aimed at maximizing the company's ability to capture potential milestones from its partnered 4-1BB bispecific Mabcalin™ protein IO assets, while also considering other strategic opportunities that may increase shareholder value.

As part of this new strategy, Pieris plans to discontinue all of its research and development efforts, which it expects to complete by the middle of 2024. The company will also reduce its workforce, including the executive leadership team, and the size of its Board of Directors. These cost-saving measures are expected to significantly lower the company's operating expenses going forward.

Business Overview

Pieris' Clinical Pipeline and Partnerships

Pieris' clinical pipeline consists of several IO bispecific drug candidates developed in partnership with leading pharmaceutical companies:

- SGN-BB228 (also referred to as PRS-346), a CD228 x 4-1BB bispecific antibody-Anticalin compound, is being developed by Pfizer. In January 2023, Pieris achieved a $5.0 million milestone when the first patient was dosed in a Pfizer-sponsored Phase 1 study of SGN-BB228.

- BOS-342 (also referred to as PRS-342), a GPC3 x 4-1BB bispecific Mabcalin compound, is exclusively licensed to Boston Pharmaceuticals. In August 2023, the first patient was dosed in a Boston Pharmaceuticals-sponsored Phase 1/2 study of BOS-342 in hepatocellular carcinoma (HCC), for which Pieris received a $2.5 million milestone payment.

- S095012 (also referred to as PRS-344), a bispecific Mabcalin compound comprising a PD-L1-targeting antibody and 4-1BB-targeting Anticalin proteins, is being developed by Servier on a worldwide basis. In July 2023, Pieris notified Servier that it was opting out of co-development and commercialization of S095012 in the United States, entitling Pieris to increased royalty rates and potential royalties and milestones.

Pieris is eligible to receive potential contingent milestone and royalty payments from this partnered 4-1BB bispecific Mabcalin protein franchise. This includes aggregated milestones of approximately $20.0 million upon first patient dosed in the Phase 2 trials for SGN-BB228, S095012, and BOS-342, and aggregated milestones of approximately $55.0 million upon first patient dosed in the pivotal clinical trials for these programs.

Discontinued Programs and Strategic Shift

In addition to its partnered IO programs, Pieris had previously been developing several proprietary drug candidates, including elarekibep, an inhaled IL-4Rα antagonist Anticalin protein for uncontrolled asthma, and PRS-220, an oral inhaled Anticalin protein targeting connective tissue growth factor (CTGF) for idiopathic pulmonary fibrosis and other fibrotic lung disorders.

However, in June 2023, AstraZeneca discontinued the Phase 2 clinical studies of elarekibep based on non-clinical safety findings in a 13-week toxicology study. This led AstraZeneca to terminate its collaboration agreement and platform license with Pieris in July 2023. Pieris has also decided to discontinue further development of PRS-220 for strategic and scientific reasons.

The discontinuation of these proprietary programs, along with the company's decision to opt out of co-development of S095012 with Servier in the United States, prompted Pieris to reevaluate its strategic direction. On March 27, 2024, the company announced its intention to discontinue all research and development activities and implement cost-saving measures to extend its cash runway into at least 2027.

Financials

For the fiscal year ended December 31, 2023, Pieris reported annual net income of -$24,543,000, annual revenue of $42,810,000, annual operating cash flow of -$53,819,000, and annual free cash flow of -$53,990,000.

Liquidity

As of March 31, 2024, Pieris had $19.1 million in cash, cash equivalents, and investments. The company believes that its currently available funds will be sufficient to fund its remaining limited operations through at least the next 12 months.

Risks and Challenges

Pieris' decision to explore strategic alternatives and discontinue its research and development efforts carries several risks and uncertainties. The company may not be successful in identifying and implementing any strategic opportunities, and any strategic transactions it pursues may not lead to increased shareholder value. Additionally, the process of considering strategic options could be costly and time-consuming, and may divert management's attention from the company's day-to-day operations.

Furthermore, Pieris' ability to realize the anticipated benefits of any potential strategic opportunity, including capturing potential milestones from its partnered programs, is highly uncertain. The company may also face challenges in obtaining value for its existing programs, if divested, and generating future shareholder value from its remaining assets.

Conclusion

Pieris Pharmaceuticals is at a critical juncture as it shifts its focus to maximizing the potential of its partnered 4-1BB bispecific Mabcalin protein IO assets and exploring strategic opportunities. The company's decision to discontinue all research and development activities and implement cost-saving measures is a bold move aimed at extending its cash runway and positioning the company for potential future success.

While the path forward is uncertain, Pieris' partnerships with leading pharmaceutical companies and the potential for significant milestone payments provide a glimmer of hope. Investors will closely watch the company's ability to navigate this strategic transition and deliver value for shareholders in the years to come.