Processa Pharmaceuticals, Inc. (PCSA): Advancing Next Generation Chemotherapy Treatments with Regulatory Science Approach

Published on September 24, 2024 | Ticker: PCSA

Processa Pharmaceuticals, Inc. (PCSA) is a clinical-stage biopharmaceutical company focused on incorporating its Regulatory Science Approach into the development of its Next Generation Chemotherapy (NGC) drugs to improve the safety and efficacy of cancer treatment. The company's NGC drugs are modifications of existing FDA-approved oncology drugs, resulting in an alteration of the metabolism and/or distribution while maintaining the well-known and established existing mechanisms of killing the cancer cells.

Business Overview

Processa's strategic prioritization is to advance its pipeline of NGC proprietary small molecule oncology drugs. The NGC products are new chemical entities that work by changing the metabolism, distribution and/or elimination of already FDA-approved cancer drugs or their active metabolites while maintaining the mechanism of how the drug kills cancer cells. The company believes its NGC treatments will provide improved safety-efficacy profiles when compared to their currently marketed counterparts – capecitabine, gemcitabine, and irinotecan.

The company's pipeline currently consists of NGC-Cap, NGC-Gem and NGC-Iri, as well as two non-oncology drugs (PCS12852 and PCS499) that it is exploring options for, including out-licensing or partnership opportunities.

NGC-Cap

NGC-Cap is a combination of PCS6422 and a lower dose of the FDA-approved cancer drug capecitabine. PCS6422 is an orally administered irreversible inhibitor of the enzyme dihydropyrimidine dehydrogenase (DPD), which metabolizes 5-Fluorouracil (5-FU), the major metabolite of capecitabine, to multiple metabolites classified as catabolites. These catabolites do not have any cancer-killing properties but frequently cause dose-limiting side effects. By administering NGC-Cap, the balance between anabolites and catabolites changes depending on the dosage regimens of PCS6422 and capecitabine used, making the efficacy-safety profile of NGC-Cap different than that of FDA-approved capecitabine.

The company recently completed enrollment in the Phase 1B trial for NGC-Cap in patients with advanced refractory gastrointestinal (GI) tract tumors. Data from this trial identified multiple dosage regimens with potentially better safety and efficacy profiles than currently existing chemotherapy regimens. Processa is now preparing to initiate a Phase 2 trial for NGC-Cap in breast cancer, having received agreement from the FDA that the data generated from past and existing studies could be used to directly support this new trial. The company plans to use the funding from its January 2024 public offering to begin enrolling patients in the third quarter of 2024.

NGC-Gem

NGC-Gem is a cytidine analog similar to gemcitabine (Gemzar®), but different enough in chemical structure that some patients are more likely to respond to PCS3117 than gemcitabine. Processa continues to evaluate the potential use of NGC-Gem in patients with pancreatic and other potential cancers and to evaluate ways to identify patients who are more likely to respond to NGC-Gem than gemcitabine. The company plans to meet with the FDA in 2024 to discuss potential trial designs for NGC-Gem, including implementation of the Project Optimus initiative as part of the design.

NGC-Iri

NGC-Iri is an analog of SN38 (SN38 is the active metabolite of irinotecan) and should have an improved safety/efficacy profile in every type of cancer that irinotecan is presently used. Processa is currently evaluating the manufacturing process and sites for the drug substance and drug product, and plans to initiate IND-enabling and toxicology studies for NGC-Iri in 2024, subject to available funding.

Financials

Financial Overview

For the three months ended March 31, 2024, Processa reported a net loss of 2.7 million, compared to a net loss of 4.0 million in the same period of 2023. The decrease in net loss was primarily due to a 1.2 million decrease in general and administrative expenses, partially offset by a 0.1 million decrease in research and development expenses.

Research and development expenses for the first quarter of 2024 were 1.5 million, down from 1.6 million in the prior year period. The decrease was attributable to having only one open clinical trial for NGC-Cap in 2024, compared to also incurring closing costs for the PCS12852 and PCS499 trials in the same period of 2023.

General and administrative expenses decreased to 1.3 million in the first quarter of 2024, down from 2.5 million in the prior year period. This decrease was primarily due to a non-recurring expense of 1.3 million recorded in 2023 related to a stock purchase warrant granted to Spartan Capital Securities, as well as a 0.1 million decrease in stock-based compensation.

For the full year 2023, Processa reported an annual net loss of 11.1 million and had no revenue. The company's annual operating cash flow was negative 8.1 million, and its annual free cash flow was also negative 8.1 million.

Liquidity and Capital Resources

As of March 31, 2024, Processa had cash and cash equivalents totaling 8.9 million. The company believes its current cash and cash equivalents will not be sufficient to fund its operations for a period of one year or more after the date the financial statements were available to be issued. As a result, substantial doubt exists about Processa's ability to continue as a going concern within one year after the date the financial statements were available to be issued.

The company's ability to execute its longer-term operating plans, including future preclinical studies and clinical trials for its portfolio of drugs, depends on its ability to obtain additional funding from the sale of equity and/or debt securities, a strategic transaction or other funding transactions. Processa plans to raise additional funds in the future through a combination of public or private equity offerings, debt financings, collaborations, strategic alliances, licensing arrangements and other marketing and distribution arrangements.

Risks and Challenges

Processa's ability to execute its operating plans is subject to various risks, including its limited operating history, limited cash and history of losses, ability to achieve profitability, and ability to obtain adequate financing to fund future operations. The company also faces risks related to the development and commercialization of its drug candidates, including the ability to obtain required regulatory approvals, competition from alternative products, and the adequacy of intellectual property protections.

Outlook

Despite these risks, Processa remains focused on advancing its NGC drug pipeline through clinical development, with the goal of providing better treatment options for cancer patients. The company's regulatory science approach, which incorporates the principles of the FDA's Project Optimus Oncology initiative, is expected to provide greater efficiencies, a higher possibility of drug approval, and a better ability to evaluate the benefit-risk profile of its NGC treatments compared to existing therapies.

As Processa prepares to initiate the Phase 2 trial for NGC-Cap in breast cancer and continues to evaluate the development paths for NGC-Gem and NGC-Iri, investors will be closely watching the company's progress in demonstrating the potential of its NGC approach to improve cancer treatment outcomes.

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