San Antonio — [Updated 9/27/17, 12:02 p.m. See below.] Pelican Therapeutics, a biotech startup recently re-acquired by the company that founded it, is moving to San Antonio and receiving about $200,000 from the city’s government to do so.
The San Antonio City Council approved a plan last week to give the grant to Pelican as long as the company creates at least 22 new jobs in the next five years. Pelican, which was previously based in Austin, TX, is developing experimental immunology treatments for cancer. [A previous version of this paragraph based on a city agenda said the money would go to Heat; this has been corrected.]
The move to San Antonio comes after an already busy year for Pelican, which was founded in 2009 by Heat Biologics (NASDAQ: HTBX), a Durham, NC-based company that itself is developing cancer immunotherapies. Pelican spun out as a separate company in 2011 because Heat didn’t have the funding to develop Pelican’s two drug candidates, according to Heat founder and CEO Jeffrey Wolf. Through direct holdings and ownership in other organizations, Wolf and other executives and board members at Heat maintained a majority of the ownership of Pelican, and are selling 80 percent of Pelican back to Heat for cash, stock, and potential future milestones, according to regulatory filings.
Pelican is developing a monoclonal antibody and a protein that aim to stimulate or proliferate the response of T cells, which are cells that attack and kill cancer. In May, Pelican received a $15.2 million grant from the Cancer Prevention and Research Institute of Texas (known as CPRIT in the state) to perform preclinical work on the products and take one of them through a 70-person Phase 1 trial.
Wolf says the company plans to hire new people for research, clinical trial, manufacturing, and management in San Antonio, all of whom will help the company decide which drug to push into clinical testing. The company hasn’t disclosed any kind of timeline for its drug development process.
“We’re looking at Pelican as a major asset for Heat—an asset that could really help establish us as a key player in the part of immunotherapy that we’re focused on,” Wolf said in a telephone interview.
One hire has already been made: George Peoples, a San Antonio cancer researcher and military surgeon, was picked to be the chief medical officer for both Heat and Pelican. Wolf says he has known Peoples for years, and the company was recently working with Peoples’ contract research organization, Cancer Insight.
Peoples is the chief medical officer for other biotechs in San Antonio, including Rapamycin Holdings. His prior work has focused on cancer vaccines, and those drugs have had both successes and failures. Peoples received an award in 2016 from the local biomedical organization for his career and research.
Heat’s own research strategy has shifted in recent years. It has stopped developing its bladder cancer immunotherapy, HS-410, Wolf says. In November 2016, the company reported data from a Phase 2 trial that didn’t meet its goals: the company’s vaccine showed no statistically significant difference from a placebo, according to a regulatory filing.
Now, Heat is focused on HS-110, a lung cancer treatment it is testing in a Phase 2 trial in combination with Bristol-Myers Squibb’s checkpoint inhibitor nivolumab (Opdivo).
Heat, which is traded on the Nasdaq Capital Market for early stage companies with small market caps, has historically raised funding through public offerings. Heat has been trying to boost its stock price after receiving notice from Nasdaq in March that it wasn’t in compliance with a requirement to keep its stock above $1 for 30 consecutive days. Nasdaq officials told Heat this month that it has about six months to accomplish that goal. The company’s stock traded at 67 cents per share as of 3:45 p.m. in New York today.