Achieve Life Sciences Inc (ACHV) 2003 Q3 法說會逐字稿

Good afternoon, my name is Tiffany and I will be your conference facilitator today. At this time, I would like to welcome everyone to the Sonus Pharmaceuticals Q3 quarterly conference call. All lines have been placed on mute to prevent any background noise. After the speakers remarks, there will be a question and answer period. (OPERATOR INSTRUCTIONS). Thank you, Mr. Martino, you may begin your conference.

Thanks Tiffany. Good afternoon, everyone, and thank you for joining us today for our third-quarter conference call. This is Mike Martino. With me are Dr. Michael Stewart, Chief Medical Officer; Rick Klein, Chief Financial Officer; and Pamela Dull, Investor Relations Manager.

Since our last quarter quarterly update, we have continued to make very solid progress with the implementation of our strategy and the advancement of our lead product, TOCOSOL Paclitaxel. We're pleased to summarize and share our perspectives on this progress with you today. To begin, Rick will provide an overview of the financial results for the quarter. Then Michael will review advances with our clinical and regulatory programs, including a discussion of Fast Track, and how that fits into our regulatory strategy, as well as an update of our Phase 2A clinical data. I will conclude our prepared remarks with an update on other strategic initiatives, including, of course, corporate partnering discussions for TOCOSOL Paclitaxel.

Before we review these details, I would like to highlight three key messages that we would like you to take away from today's call. First, the Fast Track designation that we announced last week is an important milestone in the implementation of our regulatory strategy. This designation will directly facilitate our pursuit of a new taxane indication for the treatment of metastatic or inoperable bladder cancer. It also supports the other two legs of our regulatory strategy. Mike will provide more commentary on this in just a moment, but I want to say that we're very pleased to achieve this milestone.

Second, we have now completed the initial efficacy evaluations for all patients enrolled in our Phase 2A ovarian, bladder, and lung cancer trials. With the continued addition of patients, treatment cycles, and cumulative doses, we continue to see durable data to support our belief that TOCOSOL Paclitaxel is a convenient, safe, and effective product. Again, Michael will review this data with you in just a moment, including, for the first time, a look at the time-to-disease progression data in our non-small-cell lung cancer trial.

Third, and finally, we are gaining momentum in the implementation of our strategy. With the successful completion of our private placement in July, the continuing strength of the maturing data from ongoing clinical trials, and progress in implementing our regulatory strategy -- including the initiation of the next round of studies, as well as the granting of the Fast Track designation -- we are in a stronger position, going forward, to achieve our most important objective -- maximizing the value of TOCOSOL Paclitaxel.

I will come back to these comments at the end of our discussion. Now, I would like to ask Rick to review our financial results.

Thanks Mike. Before reviewing our financial results, I'd like to remind everyone that some of the statements made today may include predictions, estimates, and other information that might be considered forward-looking. These statements are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results could differ from our predictions and estimates, as a result of various risk factors, including those identified in our Form 10k and other SEC filings, all of which can be accessed on our website at sonuspharma.com.

Turning to the financials, we ended the third quarter with $22.1 million of cash on the balance sheet, and we have no debt. We significantly enhanced our cash balance during the third-quarter via private placement, whereby we raised $13.1 million in net proceeds. Importantly, the enhanced cash balance will allow us to implement the regulatory strategy and clinical plan for TOCOSOL Paclitaxel.

In terms of our cash burn and financial results, we reported a net loss of $2.5 million, or 15 cents per share for the third-quarter; and a net loss of $7.9 million, or 53 cents per share, for the first 9 months of the year. The financial results to date reflect a spend rate of slightly less than $1 million per month on average. Going forward into the fourth quarter and early 2004, we expect our spend rate will increase to support the critical investment in the TOCOSOL Paclitaxel regulatory strategy and, to a lesser extent, new product developments. Including the increased level of investment, we expect to end 2003 with approximately $19 million in cash, a balance sufficient to fund the company's plans through 2004. That completes the snapshot of our financial results, and I'll now turn the call over to Michael Stewart.

Thanks Rick. The emerging data from our Phase 2A studies continue to look solidly encouraging, and I will review those with you in a moment. First though, I would like to talk about our regulatory strategy and explain why we are so excited about Fast Track designation as part of that strategy. As you know, we have a three-part regulatory strategy for TOCOSOL Paclitaxel, which is focused on obtaining initial market entry with a competitive label, as fast as we can. One part of this strategy is to seek approval of TOCOSOL Paclitaxel through a 505(b)(2) new drug application, by comparing our product to Taxol, the currently marketed paclitaxel product.

I am particularly pleased to report that we have implemented the first tactical step in the 505(b)(2) program, with the activation of a clinical pharmacology study that will provide potentially-pivotal data for our NDA. The primary endpoint of this study is to compare the amounts of the active ingredients in paclitaxel actually delivered into the blood circulation by our product and Taxol -- with both products administered at the approved Taxol dose of 175 mg per square meter. Up to 40 patients may be enrolled and treated in this study, and our goal is to have the data reviewed and discussed with the FDA next summer. The results from this study will be the basis for reaching final agreement with the FDA about the primary endpoint of the confirmatory efficacy trial that will follow and will serve as the basis for NDA review.

In parallel with the 505(b)(2) program, to gain approval of TOCOSOL Paclitaxel, for the indications currently approved for Taxol, we are also, through a separate clinical development program, pursuing approval of our product for the treatment of inoperable or metastatic urothelium transitional cell carcinomas, which are mostly bladder cancers. There is no approved therapy in the U.S. for the treatment of this disease. The Fast Track designation that we have just received applies directly to this clinical trial's program, and enhances the opportunity to bring TOCOSOL Paclitaxel to patients and physicians as quickly as possible.

We will initiate a Phase 2B bladder cancer study later this month, using a weekly dosing regimen. FDA will review the results of that clinical trial expeditiously under the Fast Track designation to determine what additional data might be needed to support an NDA submission.

Obtaining Fast Track designation is an important regulatory milestone. It clarifies that Sonus and the FDA will work efficiently together to develop TOCOSOL Paclitaxel. The CMC (ph) and non-clinical development activities for this product support all three of our clinical development paths. Under Fast Track, we will not only take advantage of expedited meetings with FDA on clinical trials for bladder cancer, we will also have the opportunity to bring our CMC and (indiscernible) to FDA as soon as they are ready for review and discussion.

In addition to the clinical pharmacology study under 505(b)(2) and the bladder trial under Fast Track, we also remain on schedule to initiate two new Phase 2B studies in ovarian and breast cancer before the end of this year. The ovarian and breast cancer studies are designed to explore potentially-higher efficacy, resulting from increased dose levels or dose densities, compared to approved paclitaxel dosing regimens. In a short-term, they will provide additional safety data to support our 505(b)(2) application, or an application for treatment of bladder cancer under its clinical program. In the longer-term, they are designed to support claims for greater efficacy that would be the basis for supplemental NDAs. I hope it is clear that the objective of our regulatory strategy is to translate the promise of TOCOSOL Paclitaxel into real benefits for people with cancer. And to deliver a valuable new product to them as fast as we can do it.

Now, let me provide an update of the data from the Phase 2A studies in ovarian, non-small-cell lung, and bladder cancers. First, let me remind you that, during our last quarterly conference call, we announced that patient enrollment has been completed in all three studies. At that time, about half of the patients in the ovarian cancer study had only recently begun treatment, and were not yet evaluable for initial anti-tumor responses. I'm pleased to report that all patients have now completed at least their first evaluation for anti-tumor efficacy, and overall safety and efficacy data continue to look quite good.

With regard to the clinical update that we're sharing with you this afternoon, the complete clinical data will be reported in full detail at two upcoming cancer conferences. The Chemotherapy Foundation Symposium, which will be held November 12th through 15th in New York, at which Sonus will make an oral presentation on Friday afternoon, November 14th. And the MCI EOR-TC AACR (ph) meeting being held in Boston November 17th through 21st, where Sonus will have a poster presentation on Tuesday afternoon, November 18. The data presented at those two conferences will also be available on our web site at www.sonuspharma.com following the MCI EOR-TC meeting.

We continue to be impressed with the encouraging anti-tumor efficacy that is being shown in all three studies. The breakdown of the clinical responses by indication is as follows. In the ovarian cancer study, we have now observed two complete responses and 14 partial responses among 52 evaluable patients, for an overall objective response rate of 31 percent. This compares to 1 complete response and 6 partial responses with an objective response rate of 25 percent reported in our last update.

In the non-small-cell lung cancer study, three complete responses and 6 partial responses have been observed among 43 evaluable patients, for an overall objective response rate of 21 percent. This includes conversion of one partial response to a complete response since our last update, with the overall response rate remaining the same.

In the bladder cancer study, two complete responses and 7 (ph) partial responses have been seen among 27 evaluable patients, yielding an overall objective response rate of 33 percent, which is unchanged since our last report.

Anti-tumor response rates are important in assessing the efficacy of the drug. But, the clinical benefit to the patient is confirmed by looking at the duration of the benefit. As a reminder, all of these trials were designed with a primary endpoint of objective anti-tumor response, and secondary endpoints of time-to-disease progression and one-year survival.

With respect to time-to-disease progression, the data at this time are incomplete to assess median TTP in the ovarian and bladder cancer studies. However, among the non-small-cell lung cancer patients treated with TOCOSOL Paclitaxel, we now have time-to-progression data for more than half of them. And the preliminary median time-to-progression in this second line population is 3.7 months, with a 95 percent (indiscernible) interval of 3.5 to 5.4 months. We will have final data on time-to-progression for all patients in this study early in 2004. We believe, however, that the data already indicates that TOCOSOL Paclitaxel delivers at least the expected clinical benefits of paclitaxel to this population, while at the same time, having reduced toxicity and shortened infusion duration.

To put this current estimate of time-to-progression into context, previously-published reports using Taxol in similar second line non-small-cell lung cancer patients have indicated median TTP durations of as short as 2.3 months. While publications of Taxol/(indiscernible) combination regimens used as first line treatments, including the studies listed in the Taxol label, have reported median time-to-progression duration in previously-untreated patients ranging from 4 to 7 months. Thus, we believe our initial data on time-to-progression in the second line non-small-cell study confirmed the efficacy suggested by the objective response rate in that study.

At this point, none of the three trials yet has enough data to assess median one-year survival. You will recall that enrollment into all three studies was completed in the first half of this year. So the data for one-year survival rates will mature during the first half of next year. We also believe that TOCOSOL Paclitaxel continues to demonstrate an excellent safety profile. With over 2,000 doses administered to 150 patients in our Phase 2A studies. At the highest dose level in the Phase 2A program, using weekly dosing of 120 mg per meter squared, which is also the dose at which most patients have been treated, 75 percent of doses have been given on time at the full planned dose. Among the patients who required a temporary dose reduction, 76 percent of them returned to full dose by the following week, and 97 percent were back to full dose within two weeks. TOCOSOL Paclitaxel is well tolerated.

We are frequently asked about the performance of TOCOSOL Paclitaxel, with respect to two well-known toxicities of Taxol -- peripheral neuropathy and neutropenia. Peripheral neuropathy is a disabling side effects, commonly seen during treatment with the marketed paclitaxel products, and it often limits the patient's ability to stay on therapy. In our studies, 70 percent of patients have not experienced any neuropathy. We still have not observed a case of Grade 4 neuropathy and Grade 3 neuropathy has been seen in relatively few patients, despite both the high weekly and cumulative doses administered. We believe that a low rate of neuropathy will be a direct patient benefit, and a very important product differentiator for TOCOSOL Paclitaxel. Among the minority of patients who did develop peripheral neuropathy, many of them did not worsen with continued treatment, and some improved, even while continuing to receive TOCOSOL Paclitaxel. In our experience, they were not disabled, and did not need to stop treatment.

With regard to neutropenia, an expected side effect from cytotoxic drugs, Grade 3 or 4 toxicity has occurred in only one-third of patients in the Phase 2A program to date. Importantly, neutropenia accompanied by a fever, or febrile neutropenia, has occurred in only 2 percent of the patients. Updated data about the other types of toxicities typically expected from treatment with paclitaxel will be presented in full detail at the two upcoming professional meetings that I mentioned. In all categories, we continue to see a consistently-good safety profile for TOCOSOL Paclitaxel.

Coupled with the efficacy data, now including both response rate and time-to-progression figures in the non-small-cell lung cancer population, we believe that a question that some of you have asked in the past can be answered. Do you sacrifice efficacy to have improved safety and tolerability? We believe the data to date demonstrates that the answer is no. TOCOSOL Paclitaxel delivers at least the full efficacy of paclitaxel with improved safety and tolerability.

Mike, I'll turn the call back to you, now.

Thanks, Michael. Let me say, again, that we're very pleased with the progress that we continue to make with TOCOSOL Paclitaxel. The data from our Phase 2A clinical trials continues to hold up with time, and we believe it compares favorably to both approved taxanes and those in development. We have outlined a regulatory plan that gives us more than one opportunity to get TOCOSOL Paclitaxel approved and on the market, and we are aggressively implementing that plan.

The Fast Track designation applies directly to our bladder strategy, and is important recognition of the potential of TOCOSOL Paclitaxel to provide a convenient, safe, and efficacious therapy for patients with that disease. However, we believe that the Fast Track designation also supports the other legs of our regulatory strategy, and should be perceived as a positive indication of our intent and our ability to aggressively implement that plan. In addition to our clinical and regulatory advances, I am also pleased to report that we have begun commercial scale manufacturing of TOCOSOL Paclitaxel, in collaboration with our manufacturing partner, Secor. This milestone marks an important event, and I would like to take this opportunity to thank our internal team at Sonus, as well as the team at Secor, who have worked together so hard and diligently to successfully scale our manufacturing process.

Now, let me update you on our corporate partnering discussions, which are ongoing with prospective partners, including several new parties who have recently expressed interest. I continue to be pleased with both the number of the discussions and the content of those discussions. At this point in the year in the negotiating process, however, I have to say that it is unlikely that we will sign and announce a deal by year-end.

Now, let me give you some additional perspective on that and tell you why I am confident that we will conclude a partnership at an appropriate time and at the appropriate value. Of course, our objective has always been to maximize the value of this partnership for Sonus and our shareholders. At the beginning of the year, when I established the expectation of concluding a corporate partnership during 2003, in addition to maximizing value, our primary need for doing this was to provide the necessary cash to implement our strategy. Inherent in this objective was the assumption that, given the state of the capital markets in early 2003, our corporate partnership would be the only viable source of this necessary cash. By the middle of the year however, the data from our Phase 2A trials had continue to mature; the capital markets had strengthened; and we were able to complete an equity financing on terms that we felt were reasonable. The cash from that financing enables us to initiate the new trials for TOCOSOL Paclitaxel, as Michael has announced today that we have, independent of the need for cash from a corporate partner. And as Rick indicated earlier, provide sufficient capital through 2004.

We believe that our clinical data will continue to mature and develop over this year and early next. Specifically, as Michael indicated, we would expect to have complete median time-to-disease progression data by early next year; mature one-year survival data by the middle of next year; and a discussion with the FDA regarding our clinical pharmacology data and the resulting endpoint for the confirmatory efficacy study in the 505(b)(2) program by next summer. We believe that these elements, a continuing strength of the clinical data, and the ongoing implementation and progress of our regulatory plan will have a positive impact on the value of TOCOSOL Paclitaxel, and importantly, on our ability to realize that value through a corporate partnership, which remains our objective.

In summary, we are entering a new and exciting phase of development for TOCOSOL Paclitaxel. We moved this product in the clinical studies less than three years ago, and we have made significant strides in a short period of time. Today, the trials that we're initiating will provide data that will be the basis for regulatory approval, and we are eager to get the potential benefits of TOCOSOL Paclitaxel to patients and physicians, alike. And gaining market entry expeditiously remains a top priority. That completes our prepared remarks, and we will be pleased to answer any questions that you may have. Tiffany could you please open the line for the first question?

(OPERATOR INSTRUCTIONS) Mr. Martino, there no questions at this time.

Well Tiffany, thank you. If there no further questions, we would like to thank all of you for joining us today. As always, we continue to appreciate your support, and we look forward to keeping you updated on future developments in a timely manner. Thank you.

Thank you for attending today's Sonus Pharmaceuticals Q3 quarterly conference call. You may now disconnect.