Heat Biologics Inc (NASDAQ: HTBX) is a US-based immuno-oncology company. It is engaged in developing therapies that activate a patient's immune system against cancer, utilizing an engineered form of gp96. The group's T cell-stimulating therapeutic vaccine platform technologies, Immune Pan-Antigen Cytotoxic Therapy (ImPACT) and Combination Pan-Antigen Cytotoxic Therapy (ComPACT) form the basis of its product candidates.

Key highlights 

• Recently the Company completed its gp96-based COVID-19 vaccine cell line ("ZVX-60"), which is being developed for use as either a standalone vaccine or in combination with other vaccines to enhance prophylactic protection. Given its vaccine platform's utility and versatility, the Company looks forward to advancing ZVX-60 into clinical development.

• The Company is encouraged by the recent Phase 3 data reported by other vaccine developers and commended the FDA for their fast action to accelerate approval. Notably, the group believe ZVX-60 holds promise as an adjunct therapy to enhance the protection provided by other vaccine approaches. 

• The group is applying for several large grants to support clinical development and are engaged in collaboration discussions, which the group believe may provide attractive and nondilutive pathways to help accelerate development of their COVID-19 program; however, there can be no assurance that they will receive such grant funding or if received, the amount of such grant funding. 

• The Company has multiple product candidates in development leveraging the gp96 platform, including HS-110, which has completed enrolment in its Phase 2 trial, HS-130 in Phase 1, and a COVID-19 vaccine program in preclinical development. Besides, they are also developing a pipeline of proprietary immunomodulatory antibodies, including PTX-35 which enrols in a Phase 1 trial. The table below reflects the products at different stages.

Source: Company 

Financial overview of Q3 2020

Source: Company 

• The company recognized USD 0.85 million of grant revenue for qualified expenditures under the CPRIT grant and NIH grant in Q3 2020. This grant revenue primarily reflects the expected timing of completion of deliveries under the contracts' current phase.

• The general and administrative expense was USD 6.6 million in Q3 2020, compared to USD 2.0 million in the previous corresponding period. The significant increase was primarily due to stock-compensation expense.

• The company reported a net loss of USD 8.9 million, in Q3 2020 compared to a net loss of USD 6.2 million in Q3 2019. The rise in net loss was primarily due to higher G&A expenses. 

Key risks associated with investment

If the COVID-19 pandemic continues and persists for an extended period, the Company could experience significant disruptions to its clinical development timeline, which would adversely affect their business, financial condition, results of operations and growth prospects. 

Stock recommendation

Recently the company has completed its gp96-based COVID-19 vaccine cell line ("ZVX-60"), which is being developed for use as either a standalone vaccine or in combination with other vaccines to enhance prophylactic protection. The company is in the clinical trial stage and yet to receive any approval. Further, the management expects to continue to generate operating losses and experience negative cash flows, and it is uncertain to predict the time of profitability. Therefore, based on the aforementioned facts, and risks involved, we recommend an "Avoid" rating on the stock at the closing price of USD 6.34 as on 15 January 2021.

Source: Refinitiv (Thomson Reuters)

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