Predictive Oncology Inc. (NASDAQ:POAI) is a knowledge-driven company that is applying artificial intelligence (AI) to support the development of optimal cancer therapies, which can ultimately lead to more effective treatments and improved patient outcomes. The company operates in three key business areas: AI-powered drug response predictions, biologics formulation services, and medical fluid waste management systems.

Recent Developments

Groundbreaking Ovarian Cancer Study Validates AI Capabilities

One of Predictive Oncology's recent highlights was the successful completion of a retrospective multiyear study conducted in collaboration with UPMC Magee-Womens Hospital in Pittsburgh. The study aimed to determine if the company's AI capabilities could build multi-omic machine learning models that would be better than clinical data alone in predicting both short- and long-term survival outcomes among ovarian cancer patients.

The study included data from 235 ovarian cancer patients from 2010 through 2016, with a broad array of inputs such as patient data, whole exome sequencing, whole transcriptome sequencing, drug response profile, and digital pathology profiles. Predictive Oncology was able to deliver strong predictive models with high levels of accuracy, demonstrating the ability to identify prognostic subgroups within the ovarian cancer patient population.

The significance of these study results is that the models can be used as an important decision support tool to better tailor therapies to individual patients and positively affect overall survival. Furthermore, the company believes there are many opportunities to leverage this information for purposes beyond clinical utility, such as developing digital pathology applications, designing more efficient and effective clinical trials, and identifying novel biomarkers to drive drug discovery.

Collaboration with Fujifilm to Enhance Biologics Safety

In another recent development, Predictive Oncology announced a collaboration with Fujifilm to co-market its EndoPrep sample treatment technology, together with Fujifilm's PYROSTAR bacterial endotoxin detection reagent. This collaboration aims to reduce protein interference and bacterial endotoxin testing of biopharmaceutical products, which is crucial for ensuring drug safety before entering animal trials or human clinical trials.

Endotoxins, also known as lipopolysaccharides (LPS), are highly resistant to sterilization processes, and accurate detection and removal of endotoxins in biopharmaceuticals are required. In a proof-of-concept study, Predictive Oncology and Fujifilm achieved reproducible and accurate measurements of endotoxin in the presence of specific interfering proteins in biologics, demonstrating the versatility of Predictive Oncology's biologics technology.

Advancing Intranasal Flu Vaccine Development with FluGen

Predictive Oncology is also making meaningful progress with FluGen in the development of a first-of-its-kind intranasal flu vaccine. This project is part of a $6.2 million Phase IIb grant awarded by the United States Department of Defense. Predictive Oncology is utilizing its formulations expertise to help FluGen develop its M2SR vaccine that is soluble and stable in a refrigerated state, which is a vital part of the drug development process. This would address the need for a longer vaccine shelf life to support global distribution, including remote locations.

Unlike the standard of care flu vaccines, M2SR stimulates mucosal, humeral, and cellular immunity, and has shown activity as a vaccine vector for other respiratory vaccines in infectious diseases, including a COVID-19 flu combination.

Expanding Collaborations and Partnerships

Predictive Oncology has also been making progress with its collaboration with Cvergenx to develop a genomics-based approach to precision radiation therapy and drug discovery using AI. Over the past year, the company has evaluated, trained, or developed models to predict changes in radio sensitivity for more than 3,000 different drug exposures, as well as using well-established gene expression databases. These findings form the basis of an NIH SBIR Phase 1 grant to screen vast libraries of compounds to accelerate the potential development of drugs, drug combinations, or repurpose drugs to sensitize or protect human subjects from the effects of radiation.

Furthermore, the company has expanded its collaborations with Merck & Company, OCMS, and Redwire Space, leveraging its synergistic activities and creating new and more interesting opportunities.

Financials

For the first quarter of 2023, Predictive Oncology reported revenues of $419,646, up from $239,895 in the same period of 2022. The increase was primarily due to a change in sales mix with increased sales of STREAMWAY systems. The company's net loss for the quarter was $4,218,843, or $1.04 per basic and diluted share, compared to a net loss of $3,421,802, or $0.86 per basic and diluted share, in the first quarter of 2022.

As of March 31, 2023, Predictive Oncology had $5,197,235 in cash and cash equivalents, compared to $8,728,660 as of December 31, 2022. The company's stockholders' equity stood at $4,053,671 as of March 31, 2023, down from $8,271,780 as of December 31, 2022.

For the full year 2022, Predictive Oncology reported annual revenue of $1,780,093 and a net loss of $13,983,967. The company's annual operating cash flow was -$13,189,390, and its annual free cash flow was -$13,491,761.

Liquidity

Predictive Oncology has incurred significant and recurring losses from operations for the past several years and, as of March 31, 2023, had an accumulated deficit of $171,980,726. The company had cash of $5,197,235 as of March 31, 2023, and needs to raise significant additional capital to meet its operating needs.

The company had short-term obligations of $4,516,661 and long-term operating lease obligations of $2,027,348 as of March 31, 2023. Predictive Oncology does not expect to generate sufficient operating revenue to sustain its operations in the near term, and during the three months ended March 31, 2023, it incurred negative cash flows from operations of $3,416,021.

As a result of these conditions, substantial doubt exists about the company's ability to continue as a going concern within one year after the date the unaudited condensed consolidated financial statements included in the Q1 2023 Quarterly Report on Form 10-Q are issued. Predictive Oncology is evaluating alternatives to obtain the required additional funding to maintain future operations, including equity financing, issuing debt, entering into other financing arrangements, or monetizing operating businesses or assets.

Conclusion

Predictive Oncology's recent achievements, including the successful ovarian cancer study, the collaboration with Fujifilm, and the progress in intranasal flu vaccine development, demonstrate the company's strong capabilities in leveraging AI and its proprietary biobank to drive innovation in oncology drug discovery and development. However, the company's significant and recurring losses, negative cash flows, and the need for substantial additional capital raise concerns about its ability to continue as a going concern in the near term. Investors should closely monitor the company's efforts to secure the necessary funding to sustain its operations and execute on its strategic initiatives.