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HTBX: $25M in Cash to Advance Portfolio

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By John Vandermosten, CFA



Full Year 2019 Results

Heat Biologics, Inc. (NASDAQ:HTBX) reported full year 2019 results in a March 30 release along with the submission of the 10-K to the SEC. During 2019 and year to date, Heat has attended numerous scientific and investment conferences and advanced its Phase II trial for HS-110. An investigational new drug application (IND) was submitted for HS-130, resulting in clearance to start in-human trials and dosing of the first patient. The IND for PTX-35 has been submitted and clearance is expected in 2Q:20. There have also been several posters presented that provide an interim look at the multiple cohorts in the Durga trial. The focus has been on the interim data from Cohorts A and B in the Durga trial, which is examining HS-110 in combination with checkpoint inhibitors for both checkpoint naïve and experienced patients. Both groups demonstrated impressive overall survival (OS) and other clinical efficacy in interim findings.

Revenues were $3.0 million for 2019, representing CPRIT grant money which is directed towards the PTX-35 T cell activation platform. Heat caught up with expectations in the fourth quarter after the IND filing for PTX-35 and received $2.0 million in CPRIT funds. Research and development costs totaled $13.0 million, down 20% compared to 2018 on lower clinical trial expense for HS-110 as the trial completed enrollment. Other programs, including HS-130 and PTX-35 were also down in spend compared to the prior year. These declines were offset by increases in costs for the Zika program, T-cell costimulatory programs and higher stock compensation expense. General and administrative expenses rose 34% to $9.4 million due to an increase in personnel and greater stock-based compensation. Other expenses of $1.3 million were related to goodwill impairment and change in fair value of contingent consideration.

As of the end of 2019, Heat has received $13.7 million in funds from the CPRIT grant, out of a total award of $15.2 million. The remaining balance will be awarded after all requirements have been met. The company must contribute an additional $2.4 million to the PTX-35 program as a condition of receiving the balance of funds.

Cash and equivalents as of December 31, 2019 were $14.8 million, compared to $27.7 million at the end of 2018. Heat continues with no debt on the books. Cash burn was ($13.0) million for the year compared to the ($22.3) million in 2018. Add-back of deferred revenue, the goodwill impairment loss related to the 2017 Pelican acquisition and change in fair value of contingent consideration explained the majority of the difference between net loss of ($20.0) million and the ($12.8) million cash used in operations. Following the end of the reporting period, Heat raised additional capital from a variety of sources and reports over $25 million in cash as of March 23, 2020.


The expansion of the coronavirus into a pandemic has changed the landscape for many biotechnology research and development companies. The spread of the virus may delay trial progression and the availability of drug product. However, it also has highlighted and advanced programs to the forefront that many companies, including Heat Biologics, have developed in infectious disease. Heat’s wholly-owned subsidiary, Zolovax, has been focused on developing medicines and vaccines for infectious diseases using the gp96 platform for many years. Previous research has been conducted for simian immunodeficiency virus, malaria and Zika. In March 2020, Heat entered into a research agreement with the University of Miami (UM) to sponsor new research and development of a SARS-CoV-2 (coronavirus) vaccine and diagnostic test.

The vaccine incorporates multiple SARS-CoV-2 antigens using the gp96 platform. The approach is expected to induce long-term immunity and provide protection against future infections. Heat’s coronavirus vaccine avoids anti-vector immunity and viral activation, as no virus is used, while activating T and B cells with high immunogenicity. The activation of T and B cells drives induction of mucosal immunity and long term memory response. In early March the company filed multiple provisional patent applications for its technology that apply to treating and preventing infection from the SARS-CoV-2 virus.

The coronavirus diagnostic will be a rapid, inexpensive, point-of-care, paper-based test specific for SARS-CoV-2. It is a non-polymerase chain reaction (PCR) based rapid diagnostic that uses a combination of reverse transcription recombinase polymerase amplification (RT-RPA) and a paper-based microfluidic analytical detection platform. This simple structure of the diagnostic eliminates the need for the instruments and reagents used in PCR testing.


Heat Biologics made substantial progress in 2019 with advancements for all four cohorts in its Phase II trial for NSCLC. In November, the team presented data at the Society for Immunotherapy of Cancer (SITC), with several posters summarizing data from the company’s pipeline. During the first quarter of 2020, Heat was opportunistic in raising capital raising and reported over $25 million in cash at the end of the period. They have also re-energized their work on infectious disease and have launched programs to develop a coronavirus vaccine using the gp96 platform and construct a diagnostic test for the virus.

Checkpoint inhibitors have been an exciting new are of immunotherapy; however, they are only successful in a minority of patients. Heat’s portfolio seeks to awaken the immune system and increase the effectiveness of checkpoint inhibitors even in patients previously treated with checkpoint inhibitors. Interim data suggest that there may be a synergy between the two approaches and we are eagerly awaiting additional data to determine whether may be the case.

Progress in being made across the portfolio and in addition to updates for HS-110, HS-130 received clearance to commence a Phase I dose finding trial and has dosed its first patient. We also anticipate the start of a trial for PTX-35 in the near term following IND clearance.

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