Since our initiation in January, Portage Biotech Inc. (NASDAQ:PRTG), has reported its third quarter financial and operational results, and continued to progress the Phase Ia/Ib PORT-6 trial. Eight academic center clinical sites are enrolling patients and the Phase Ia dose escalation portion of the trial has advanced to the third cohort. Updates at major scientific conferences are expected in late May and November. This includes the 2024 American Society of Clinical Oncology (ASCO) Annual Meeting which will be held May 31 to June 4 and the 2024 Society for Immunotherapy of Cancer (SITC) Annual Meeting from November 6 to 11. Based on our conversations with management, enrollment in the trial is progressing favorably with principal investigators showing marked interest and identifying a steady stream of candidates.
Milestones
➢ Strategic update and shift in focus to PORT-6 & PORT-7 – January 2024
➢ SITC Presentation ADPORT-601 for PORT-6) Annual Meeting
➢ PORT-6/-7 pivotal studies - 2026
3Q:24 Financial Results
Portage reported fiscal year 3Q:24 results in a Form 6-K filing with the SEC on February 28th. For the quarter ending December 31, 2023 and the comparable prior year quarter, no revenues were reported. Loss for the third quarter totaled ($36.4) million or ($1.74) per share. Operational expenses fell 15% as increases in research and development (R&D) expenses were more than offset by a decline in general and administrative (G&A) expenses.
➢ Research and development expenses totaled $2.8 million, up 9% from $2.5 million as increases in R&D services, consulting fees, licensing fees and clinical costs were partially offset by lower share-based compensation, manufacturing costs and payroll related expenses. Greater clinical activity in FY:24 was mostly balanced by recognition of drug substance manufacturing in the prior year that was not repeated;
➢ General & Administrative expenses were $1.3 million, down 44% from $2.2 million. Decreases in non-cash share-based compensation, professional fees, payroll related expenses, directors’ and officers’ insurance and other miscellaneous expenses contributed to the change. Less activity related to IP management and regulatory filings and repricing in the insurance markets were larger themes driving the year over year change;
➢ Other items totaling ($41.9) million primarily consisted of the impairment loss related to iOx and the pause in the PORT-2 iNKT engager program. Other losses related to Stimunity the registered direct offering and a variety of other miscellaneous categories rounded out the remainder;
➢ Net interest income totaled $66,000 as higher interest on cash balances contributed to a higher year over year total;
➢ Net income tax benefit of $9.5 million contrasts with a ($2.2) million expense;
➢ Net loss was ($36.4) million vs. ($11.5) million or ($1.74) and ($0.44) per share, respectively.
As of December 31, 2023, cash totaled $5.3 million. This amount compares to the $10.5 million balance in cash held at the end of fiscal year 2023 on March 31, 2023. Cash used in operations for 3Q:24 was ($3.4) million versus ($2.7) million for 3Q:23. Portage disclosed that it had been selling its Intensity Therapeutics shares following the end of its lockup period on January 2, 2024. As of February 26th, 2024, Portage had sold $2.1 million worth and may continue to sell, depending on market conditions in the coming months in order to extend its cash runway. Due to the Intensity sales, the company noted that the cash balance remained at $5.3 million as of January 31st and that it would need approximately $5 million to finish out the year with the present research and development plan.
Adenosine A2A/A2B Antagonist Program Background
In contrast to other adenosine receptor antagonists, PORT-6 offers improved durability, potency and selectivity which may address some of the shortcomings faced by other candidates in the class. PORT-6 binds to receptors for over 10 hours in preclinical models, in comparison with other agents that bind for less than half this duration. These binding kinetics allow for less frequent dosing. Potency is an important attribute as it allows PORT-6 to out-compete the natural ligand, increasing its effectiveness when there are high levels of adenosine in the tumor microenvironment. PORT-6 selectivity is another strong point which allows it to bind only to the A2A receptor thereby avoiding off-target effects and allowing for higher dosing and associated greater efficacy.
Cancers with high levels of adenosine A2A receptor expression include prostate, non-small cell lung, head and neck and renal cell cancer. A2B receptor expression is additionally found in relatively higher levels in colorectal, endometrial and ovarian cancer. Portage has launched a basket trial that will examine several cancers that demonstrate a high proportion of adenosine and expression of adenosine receptors.
Portage intends to develop a companion diagnostic to identify a biomarker-defined patient population. Several gene biomarker signatures have been evaluated and peers using a biomarker-defined population have shown improved survival in patients administered the A2A antagonist with high adenosine expression. Portage appears to favor using an immunohistochemistry (IHC) -derived biomarker to select high adenosine expressing patients. Similar to other I-O drugs that have been approved for MSI-high or mismatch repair deficient tumors, PORT-6 may be approved based on the biomarker profile of the tumor rather than its origin site.
Key reasons to own Portage shares:
➢ Experienced pharmaceutical management team with development & commercialization successes
o Bristol Myers Squibb, Johnson & Johnson,
o Strong academic & industry network
o Team members have obtained approval for multiple assets
➢ Product focus on candidates that address known resistance in approved therapies
➢ Two platforms with multiple clinical studies underway
o Anti-adenosine platform featuring PORT-6 (TT-10) and PORT-7 (TT-4)
▪ Targets A2A & A2B expressing solid tumors alone and with Keytruda
▪ May seek approval in biomarker defined population
o iNKT engager (PORT-2)
▪ Offers features of both natural killer and T cells
▪ Stimulates innate and adaptive immune system for anti-cancer response
▪ Evaluated alone and in combination with Keytruda
➢ Offers additional assets on featured platforms
o PORT-3 – includes combination of PORT-2 with vaccine
o A2A/A2B dual antagonist
o Gut-restricted A2B antagonist
Summary
Following our early 2024 initiation, Portage has continued to advance its PORT-6 program and is enrolling patients in the eight active clinical sites. Management has guided towards incremental data readouts at ASCO in about three months’ time and at SITC in the late fall. The cash runway has been extended somewhat with the sale of $2.1 million of Intensity Therapeutics shares that Portage held on its balance sheet. We expect that strong data presented at ASCO will demonstrate the vitality of the adenosine program, attract investor interest and support further access to capital. We maintain our valuation of $7.00 per share.
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