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HTBX: Multiple Milestones on the Horizon

By John Vandermosten, CFA



Second Quarter 2018 Results

Heat Biologics, Inc. (NASDAQ:HTBX) reported second quarter 2018 results in an August 14th release and concurrently filed the supporting 10-Q with the SEC. Following a busy first quarter which included a stock split, an investor update and an interim data report for HS-110, the second quarter was more subdued, but did include a comprehensive list of milestones and a $21 million capital raise.

In the second quarter, Heat reported total revenues of $1.1 million compared to $411 thousand in 2Q:17. This amount represented CPRIT grant money which is directed towards the PTX-35 T-cell activation platform. Research and development costs totaled $3.5 million, rising 62% as expenditures for PTX-35 accelerated to $1.4 million and the HS-130 program increased to $0.4 million. No funds were directly allocated to these programs in 2Q:17. General and administrative expenses fell by 14% to $1.4 million as costs related to the Pelican acquisition that occurred in 2Q:17 did not appear in 2Q:18.

Cash and equivalents as of June 30, 2018 were $24.7 million, compared to $9.8 million at the end of 2017. Heat continues with no debt on the books. Cash burn was ($8.0) million in 2Q:18 compared to ($2.5) million in 2Q:17 with the amount lower than earnings of ($4.1) million due to cash prepayments likely related to accelerated trial expenses.

Since our initiation last month, Heat has continued to enroll in its active HS-110 trial and prepare for its IND filing for HS-130 and PTX-35. While our valuation only accounts for sales of HS-110, the company has other candidates in development that could yield value as great as HS-110. Following the release of the 2Q:18 results, we maintain our target price of $5.00.

Corporate Milestones

Heat is conducting Phase II trials for HS-110 and preparing HS-130 (ComPACT) and PTX-35 for IND submission. Below we list key milestones on the horizon for Heat Biologics. Over the next two years we anticipate the following events.

‣ Closing of $20.7 million public offering – 2Q:18
‣ Receive $6.9 million in CPRIT grant funds – 3Q:18
‣ HS-110 (NSCLC) interim data readout - 4Q:18
‣ ComPACT IND filing – 4Q:18
‣ ComPACT first patient enrollment – 4Q:18
‣ IND for PTX-35 – 1Q:19
‣ Receipt of $6.9 MM in CPRIT grant funds (PTX-35) – 1Q:19
‣ Enroll first patient in PTX-35 Phase I trial – 1Q:19
‣ Complete Phase II NSCLC enrollment – 2Q:19
‣ Interim ComPACT data readout – 2Q:19
‣ HS-110 Phase II final readout – 2Q:19
‣ HS-110 End of Phase II Meeting – Mid 2019
‣ HS-110 NSCLC Phase III ready – 3Q:19
‣ Interim PTX-35 data readout – 3Q:19
‣ Discussion with potential partners – 2018 / 2019
‣ Develop Phase III / commercial manufacturing capacity for HS-110 – 2018 / 2019.

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