Company Overview
Peak Bio, Inc. (PKBO) is a clinical-stage biopharmaceutical company focused on developing innovative therapies for multiple therapeutic areas, with a strong emphasis on cancer and immunological diseases. The company has established a diverse portfolio of potential treatments, leveraging its expertise in antibody-drug conjugates (ADCs) and targeted therapies.
Founded in 2015, Peak Bio has a rich history of scientific innovation and a management team with over 50 years of combined industry experience. The company’s lead platform, PH-1 or Thailanstatin, is a proprietary ADC technology that enables the design of highly effective and well-tolerated cancer treatments. Peak Bio’s pipeline also includes PHP-303, a small molecule inhibitor targeting Alpha-1 antitrypsin deficiency (AATD) and acute respiratory distress syndrome (ARDS).
Historical Background
In its early years, Peak Bio leveraged two decades of industry learning in the ADC field to develop a platform of proprietary technologies that enable the design of ADCs with improved efficacy, safety, and tolerability relative to existing antibody or ADC therapies. This focus on innovation has been a cornerstone of the company’s approach since its inception.
A significant milestone in Peak Bio’s history occurred in 2017 when the company entered into an acquisition, license, development and commercialization agreement with Bayer to acquire rights to the PHP-303 program. This small molecule, 5th generation Phase 2 clinical-ready neutrophil elastase (NE) inhibitor has since progressed through two Phase 1 trials in healthy volunteers, demonstrating dose-dependent pharmacokinetics and achieving the recommended Phase 2 dose without reaching a maximum tolerated dose.
However, Peak Bio has faced several challenges in recent years. In early 2023, the company received a determination letter from Nasdaq to delist its common stock and warrants, resulting in its securities trading on the OTC Markets OTC Pink Market tier. This development significantly impacted the company’s ability to raise capital through traditional channels. Additionally, in 2023, Peak Bio was forced to vacate and return possession of its leased laboratory and office facilities in Palo Alto, California, resulting in a significant impairment charge. The company was involved in litigation with the landlord over the breach of the lease, which was ultimately settled in 2024.
Financials and Liquidity
As of September 30, 2024, Peak Bio reported a cash balance of $862,140, down from $381,650 as of December 31, 2023. The company’s total assets stood at $1.64 million, a decrease from $2.60 million at the end of 2023. This decline in cash and total assets was primarily due to the company’s ongoing research and development activities, as well as its corporate operations.
Peak Bio reported a net loss of $2.80 million for the nine months ended September 30, 2024, compared to a net loss of $12.30 million for the same period in 2023. The company’s operating expenses decreased significantly, from $12.21 million in the first nine months of 2023 to $5.09 million in the same period of 2024, driven by reductions in research and development, as well as general and administrative costs.
For the most recent quarter (Q3 2024), Peak Bio reported no revenue and a net income of $1,713,936. The company’s operating cash flow (OCF) and free cash flow (FCF) for the quarter were both negative at -$2,369,704. It’s important to note that this was the company’s first quarter reporting financial results, so year-over-year growth comparisons are not available.
Despite these improvements, Peak Bio continues to face significant financial challenges. The company’s current liabilities of $22.40 million as of September 30, 2024 exceeded its current assets of $1.54 million, indicating a working capital deficit. This raises substantial doubt about the company’s ability to continue as a going concern. To address these concerns, Peak Bio has been actively exploring various financing options, including the sale of equity, debt financing, and potential collaborations with other companies.
The company’s liquidity position remains precarious, with a current ratio and quick ratio both at 0.0686. Peak Bio has no available credit lines, and its negative equity position makes the debt-to-equity ratio incalculable in a meaningful way.
Pipeline and Research and Development
Peak Bio’s product pipeline consists of two key segments: Oncology and Rare Disease and Inflammation.
In the Oncology segment, the company’s lead platform, PH-1 or Thailanstatin, is a proprietary ADC technology that utilizes a potent toxin payload with novel immunomodulatory effects targeting RNA splicing. The company’s most advanced PH-1 ADC product candidate is currently in clinical development, with plans to enter clinical trials for an additional Trop2-targeting ADC candidate by late 2024. The Trop2 antigen is broadly expressed in solid tumors, potentially offering a wide range of applications.
In the Rare Disease and Inflammation segment, Peak Bio is developing PHP-303, a small molecule, 5th generation Phase 2 clinical-ready neutrophil elastase (NE) inhibitor. The company is planning a Phase 2 clinical study of PHP-303 in patients with Alpha-1 antitrypsin deficiency (AATD), a rare genetic disorder. PHP-303 has already completed two Phase 1 trials in healthy volunteers, demonstrating promising results.
Peak Bio’s research and development efforts have been focused on improving the efficacy, safety, and tolerability of its ADC and small molecule candidates compared to existing therapies. The company’s proprietary technologies aim to address the limitations of traditional ADC and small molecule treatments, providing patients with more effective and better-tolerated therapeutic options.
Merger with Akari Therapeutics
On March 4, 2024, Peak Bio announced a definitive agreement to merge with Akari Therapeutics, Plc (Nasdaq: AKTX), a late-stage biotechnology company developing advanced therapies for autoimmune and inflammatory diseases. The combined entity will operate as Akari Therapeutics, Plc and is expected to continue trading on the Nasdaq Capital Market under the ticker symbol AKTX.
The merger will create an expanded pipeline that features Peak Bio’s ADC platform technology and Akari’s PAS-nomacopan program for Geographic Atrophy, a debilitating ophthalmic disease. The combined company’s portfolio will span early and late-stage development assets, offering the potential for a diverse and compelling set of therapeutic opportunities.
The transaction is expected to close by the end of 2024, subject to customary closing conditions, including regulatory approvals and shareholder approvals from both companies.
Management Changes
In August 2024, Peak Bio’s former interim CEO, Stephen LaMond, departed from the company. On August 27, 2024, the company entered into a Separation and General Release Agreement with LaMond, pursuant to which the company agreed to pay him a fee of $524,300 payable in 24 equal monthly installments beginning September 1, 2024. The agreement also provides for the payment of COBRA benefits for up to 18 months starting September 1, 2024.
Risks and Challenges
Despite the potential of Peak Bio’s pipeline, the company faces several significant risks and challenges that investors should be aware of:
Clinical Development Risks: The successful development and regulatory approval of Peak Bio’s drug candidates, particularly the PH-1 ADC platform and PHP-303, are subject to the inherent risks and uncertainties associated with clinical trials, including the potential for failed studies, adverse side effects, and regulatory setbacks.
Competitive Landscape: The biopharmaceutical industry is highly competitive, and Peak Bio’s therapies may face significant competition from other approved or emerging treatments, which could impact the commercial potential of the company’s pipeline.
Regulatory Uncertainties: Peak Bio’s drug candidates are subject to rigorous regulatory approval processes, and any delays or failures in obtaining necessary approvals could significantly impede the company’s ability to bring its products to market.
Execution Risks: The successful integration and execution of the planned merger with Akari Therapeutics will be crucial for the combined entity’s ability to leverage the strengths of both companies and realize the anticipated synergies.
Revenue Generation: Peak Bio has not generated any product revenue to date, as it is still in the clinical development stage for its product candidates. The company’s ability to generate revenue in the future will depend on the successful development and commercialization of its pipeline products.
Outlook and Conclusion
Peak Bio’s focus on developing innovative oncology therapies, particularly its proprietary PH-1 ADC platform, has positioned the company at the forefront of the next generation of targeted cancer treatments. The company’s pipeline, including the promising PHP-303 program, offers the potential for addressing significant unmet medical needs in areas such as AATD and ARDS.
However, Peak Bio’s ongoing financial challenges and the inherent risks associated with clinical development and commercialization present substantial hurdles that the company must overcome. The planned merger with Akari Therapeutics represents a strategic move to bolster the combined entity’s resources and pipeline, potentially enhancing its chances of success in the competitive biopharmaceutical landscape.
As Peak Bio navigates these challenges and works towards the completion of the Akari merger, investors will closely monitor the company’s ability to secure additional funding, advance its pipeline, and execute on its strategic objectives. The outcome of these efforts will be crucial in determining the long-term prospects of Peak Bio and its role in shaping the future of oncology and rare disease therapeutics.
Disclaimer: This article is for informational purposes only. It does not constitute financial, legal, or other types of advice. While every effort has been made to ensure the accuracy of the information presented here, the author and the publisher do not make any guarantees about the completeness, reliability, and accuracy of this information.