Business Overview and History
Processa Pharmaceuticals, Inc. (PCSA) is a clinical-stage biopharmaceutical company focused on developing the next generation of chemotherapeutic drugs to enhance the efficacy and safety of cancer treatment. The company's strategic priority is to advance its pipeline of proprietary "Next Generation Chemotherapy" (NGC) small molecule oncology drugs, which aim to improve upon widely used FDA-approved cancer drugs by modifying their metabolism and distribution in the body while maintaining their proven cancer-killing mechanisms.
Processa Pharmaceuticals, Inc. was founded in the early 1990s by a team of experienced pharmaceutical executives and researchers, including Dr. David Young and Dr. Sian Bigora. The founders had previously worked with the FDA to develop multiple guidance documents related to regulatory science, which is the science of developing new tools, standards, and approaches to assess the safety, efficacy, quality, and performance of all FDA-regulated products.
Over the past three decades, Drs. Young and Bigora have expanded upon the original regulatory science concept by adding focused preclinical and clinical studies to justify the benefit-risk assessment required for FDA approval when designing the development programs of new drug products. This approach, which Processa calls its "Regulatory Science Approach", identifies the scientific information the FDA requires to determine whether the benefit outweighs the risk of a drug in a specific patient population and at a specific dosage regimen.
The company's Regulatory Science Approach, conceived in the early 1990s, utilizes principles associated with the FDA's Project Optimus Oncology initiative and related guidance to design more efficient and informative clinical trials for its NGC drug candidates.
Processa's pipeline currently consists of three NGC programs - NGC-Cap, NGC-Gem, and NGC-Iri - as well as two non-oncology assets, PCS12852 and PCS499, which the company is seeking to out-license or partner. The NGC programs are new chemical entities that aim to modify the metabolism, distribution, and/or elimination of already FDA-approved cancer drugs, such as capecitabine, gemcitabine, and irinotecan, in order to improve their safety and efficacy profiles.
The company's lead program, NGC-Cap, is a combination of the DPD inhibitor PCS6422 and a lower dose of the FDA-approved drug capecitabine. By altering the metabolism of 5-fluorouracil (5-FU), the active metabolite of capecitabine, NGC-Cap has demonstrated the potential for significantly greater 5-FU exposure and cancer-killing activity compared to capecitabine alone, while also showing a more favorable safety profile in a Phase 1b trial. Processa is currently evaluating NGC-Cap in a global, open-label, adaptive Phase 2 trial in patients with advanced or metastatic breast cancer, with initial data expected in mid-2025.
In 2022, Processa completed a Phase 1B trial for NGC-Cap in patients with advanced, progressive gastrointestinal tract tumors. The trial demonstrated that the irreversible inhibition of an enzyme called dihydropyrimidine dehydrogenase (DPD) by one of the components of NGC-Cap could alter the metabolism, distribution and elimination of the cancer-killing 5-FU, making NGC-Cap significantly more potent than the FDA-approved capecitabine drug alone. However, the Phase 1B trial also identified dosage regimens that caused dose-limiting toxicities, including one patient death, which Processa had to address moving forward.
NGC-Gem, Processa's second NGC program, is a cytidine analog similar to the FDA-approved drug gemcitabine (Gemzar), but with a modified metabolic pathway that may provide benefits for patients who are resistant or become resistant to gemcitabine. The company plans to meet with the FDA to discuss potential trial designs for NGC-Gem, including the implementation of the Project Optimus initiative. A Phase 2A trial of NGC-Gem in relapsed or refractory pancreatic cancer was previously completed by Ocuphire Pharma prior to Processa licensing the asset.
Processa's third NGC program, NGC-Iri, is an analog of SN-38, the active metabolite of the FDA-approved drug irinotecan. Preclinical studies have shown that NGC-Iri can deliver more of the cancer-killing SN-38 molecules to the tumor compared to irinotecan or its liposomal formulation, Onivyde, potentially leading to improved efficacy and a better safety profile. The company is currently evaluating manufacturing options and conducting IND-enabling studies for NGC-Iri. In 2025, Processa plans to expand the preclinical analysis for NGC-Iri.
Financial Overview
Processa does not currently generate any revenue, as its drug candidates are still in clinical development. The company has incurred net losses since its inception, reporting a net loss of $9.12 million for the nine months ended September 30, 2024. As of September 30, 2024, Processa had $2.89 million in cash and cash equivalents, which, based on its current business plans, is not sufficient to fund operations for the next 12 months.
For the most recent fiscal year (2023), Processa did not report any revenue or net income. For the most recent quarter (Q3 2024), the company reported revenue of $0 and a net loss of $3.38 million. Year-over-year, Processa did not experience any revenue growth as they do not have any products on the market yet. The net loss increased by 62.8% compared to the same quarter last year, driven primarily by higher research and development expenses as the company progressed its lead drug candidate NGC-Cap into a Phase 2 clinical trial for metastatic breast cancer.
To fund its ongoing operations and clinical development activities, Processa has financed its operations primarily through public equity offerings, including a $6.3 million raise in January 2024 and the sale of $931,000 in common stock under an at-the-market (ATM) offering in July 2024. The company also filed a $50 million shelf registration statement in May 2024, which includes an ATM program of up to $2.4 million, to provide additional financial flexibility as it advances its pipeline.
Liquidity
Processa's cash burn rate has increased as it has progressed its NGC-Cap program into a Phase 2 trial and continues to evaluate its other NGC drug candidates. The company will need to obtain additional funding, potentially through equity or debt financings, strategic partnerships, or other transactions, in order to continue its clinical development activities and operations beyond the next 12 months.
Processa has a debt-to-equity ratio of 0.026, indicating a conservative capital structure. The company's current ratio and quick ratio are both 3.97, suggesting strong liquidity. However, given the company's ongoing cash burn and lack of revenue, additional funding will be required to sustain operations and advance clinical programs.
Key Developments and Milestones
In July 2024, Processa received FDA clearance of its Investigational New Drug (IND) application for NGC-Cap, enabling the initiation of a Phase 2 clinical trial in patients with advanced or metastatic breast cancer. The company dosed the first patient in this trial on October 2, 2024, a significant milestone in the development of its lead program.
Additionally, in August 2024, Processa presented positive preclinical data for its NGC-Iri program, demonstrating that the drug candidate can deliver more of the cancer-killing SN-38 molecules to the tumor compared to irinotecan or Onivyde. These findings support the potential for NGC-Iri to provide improved efficacy and a better safety profile than currently available irinotecan-based therapies.
The company also recently strengthened its leadership team with the appointment of Russell Skibsted as Chief Financial Officer in July 2024, bringing extensive experience in finance, capital markets, and life sciences operations.
In 2023, Processa completed a Phase 2A trial for PCS12852 in gastroparesis patients with positive results. Additionally, the company decided to cease further enrollment in the Phase 2 trial for PCS499 in ulcerative Necrobiosis Lipoidica due to difficulties identifying and enrolling patients. Processa continues to evaluate options to monetize these non-core drug assets, which may include out-licensing or partnering.
Risks and Challenges
As a clinical-stage biopharmaceutical company, Processa faces several key risks and challenges common to the industry, including:
1. Regulatory and clinical development risk: The company's ability to successfully develop and obtain regulatory approval for its NGC drug candidates is subject to the inherent uncertainties and risks associated with the drug development process.
2. Funding and liquidity risk: Processa's current cash resources are not sufficient to fund its operations for the next 12 months, and the company will need to raise additional capital through equity or debt financing, partnerships, or other transactions to continue its development activities.
3. Competitive landscape: Processa's NGC programs face competition from other novel cancer therapies, both in development and on the market, which may have more advanced clinical data or commercialization timelines.
4. Intellectual property protection: The company's ability to protect its proprietary technology and drug candidates through patents and other intellectual property rights is crucial to its success.
5. Reliance on third-party relationships: Processa's business model relies on partnerships and collaborations with contract research organizations, manufacturing facilities, and other third parties, which introduces additional risks and uncertainties.
Outlook and Conclusion
Processa Pharmaceuticals is taking a unique approach to oncology drug development by leveraging its Regulatory Science Approach to create "Next Generation Chemotherapies" that aim to improve the safety and efficacy of widely used cancer treatments. With its lead program, NGC-Cap, now in a Phase 2 trial for metastatic breast cancer and promising preclinical data for its NGC-Iri candidate, the company is making steady progress in advancing its pipeline.
However, Processa faces significant challenges, including the need to raise additional capital to fund its ongoing operations and clinical development activities. The company's ability to successfully navigate the regulatory landscape and compete in the crowded oncology space will be critical to its long-term success.
As Processa continues to execute on its strategic priorities and reach key milestones, investors will closely monitor the company's progress and the potential of its NGC platform to deliver meaningful improvements in cancer treatment options. While the path forward carries inherent risks, Processa's innovative approach and experienced management team make it a compelling story worth following in the biopharmaceutical sector.