Achieve Life Sciences Inc (ACHV) 2004 Q1 法說會逐字稿

Good afternoon. My name is Erika, and I will be your conference facilitator today.

At this time, I would like to welcome everyone to the Sonus Pharmaceuticals first-quarter conference call. All lines have been placed on music hold -- on mute to prevent any background noise. After the speakers' remarks, will be a question and answer period.

If you would like to ask a question during this time, simply press star then the number 1 on your telephone keypad. If you would like to withdraw your question, press the pound key.

Thank you. At this time, I would like to turn the call over to Mr. Mike Martino, President and CEO. Sir, you may begin.

Thanks, Erika, hello and welcome everyone to our first-quarter conference call. With me today are Dr. Michael Stewart, Chief Medical Officer, and Pamela Dull, Director of Investor Relations.

On today's call, we will provide an update on our progress since we last talked to you a short eight weeks ago, as well as review our financial highlights. Then, of course, we would welcome the opportunity to answer any of your questions. The headline is that while it is still early in the year, I believe that we are on track to achieve our objectives.

We are steadily moving forward with the implementation of our clinical and regulatory plans for TOCOSOL Paclitaxel, and we're also aggressively pursuing other opportunities to build our product pipeline.

Before providing the update, however, as you probably read today in our press release, Rick Klein has decided for personal reasons to step down [INAUDIBLE] as Chief Financial Officer. I would like to elaborate on this announcement.

While this may seem sudden, we understand why Rick has made this decision, and thank him for his many years of service and contributions to Sonus. Rick wanted to complete the year-end reporting process, as well as the first-quarter reporting process, and to certify the first-quarter 10-Q.

And we are grateful for his commitment during this personally difficult time. We have initiated a search for a Chief Financial Officer, and have talked to several interested and highly qualified candidates. We will update you as appropriate on our efforts.

In the interim, our Controller, Craig Euty, will work closely with me to handle the day-to-day responsibilities of the job. Before we review our first quarter progress, I'd like to ask Pam to provide our financial results.

Thanks, Mike. First, I would 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 10-K and other SEC filings, all of which can be accessed on our website at www.sonuspharma.com.

Turning to the financials, we reported a net loss of 3.6 million dollars or 20 cents per share for first quarter of 2004, compared with a net loss of $2.3 million or 17 cents per share for first quarter of last year.

The plans higher net loss reflects an increased level of R&D spending, primarily for TOCOSOL Paclitaxel clinical development activities, and to a lesser extent, our research programs and corporate development initiatives.

On the balance sheet, we ended the quarter with $16.9 million of cash, and no debt.

Looking ahead, and as outlined on our last update, we continue to expect that our net cash during the year 2004 will be in the range of 1 to $1.5 million per month, as we continue to execute the clinical and regulatory plans for TOCOSOL Paclitaxel and continue corporate development initiatives to bring additional products forward. I will now turn the call back over to Mike.

Thanks, Pam. As I have said earlier, the first quarter reflects a continuation of our progress in 2003.

First, I would like to review developments with TOCOSOL Paclitaxel and, of course, Michael Stewart will be prepared to elaborate on this in the Q&A.

I am pleased to report that patient enrollment has moved as quickly as expected in the clinical pharmacology study, which was initiated late last year to support a possible 505(b)(2) new drug action for TOCOSOL Paclitaxel.

By the end of March, 36 patients had been enrolled and randomized in this study. Some patients have completed treatment, while others continue to finish their prescribed courses. With current enrollment, we believe it is highly likely that we will achieve the protocol required target of 20 fully evaluable patients.

Our goal remains to complete this study and review the data with the FDA during the summer, then gain their agreement on the protocol for a confirmatory phase 3 efficacy study, which we will implement in the second half of the year.

Under our parallel regulatory development program designated as Fast Track by FDA, we are continuing to initiate critical US clinical sites in our phase 2-B bladder cancer study, where are looking to confirm the promising results achieved in this indication in the Phase 2-A studies.

We believe that pursuing approval for treatment of metastatic or inoperable urothelial traditional cell cancer represents an excellent opportunity for TOCOSOL Paclitaxel to meet an unmet medical need.

With regard to the phase 2-A studies, we completed patient enrollment in 2003, as you know, and we continue to be encouraged by the safety and efficacy results to date.

I am pleased to inform you that three abstracts on these studies have been accepted for presentation at the ASCO annual meeting being held June 5 to the 8 in New Orleans.

In addition to the previously reported response rate and safety data for TOCOSOL Paclitaxel, the posters will provide an update on the time-to-disease progression data. As some patients continue on treatment in one study, the one-year survival data continue to mature and will be available later in the year.

Corporate partnering discussions for TOCOSOL Paclitaxel are also ongoing and productive. I expect that these discussions will converge over the next few months, with the availability of the clinical pharmacology data and discussions with the FDA, and I remain confident that we will secure a partnership this year.

In addition to executing on our plans for TOCOSOL Paclitaxel, we remain focused on driving our research and corporate development efforts towards building and broadening our product pipeline.

At the recent meeting of the American Association for Cancer Research, or AACR, held in Orlando, we were pleased to present a poster reporting on encouraging preclinical data on our novel new Camptothecin derivitives, including a formulation that shows increased anti-tumor activity in animal tumor models as compared to an approved Camptothecin analog.

Today two Camptothecin analogues, topotecan and irinotecan, are approved for the treatment of colorectal, ovarian and lung cancers. However, we believe that a Camptothecin formulation with an acceptable side effect profile and with potential for anti-tumor activity will present a better therapeutic alternative than the currently marketed analogues.

In addition to further evaluation of the Camptothecin class of drugs, we are also investigating the application of our TOCOSOL technology to other classes of anti-cancer compounds, with the goal of positioning additional products for clinical development.

As we continue to advance the development of TOCOSOL Paclitaxel and other product and business development initiatives, we believe that 2004 will mark another important influxion point for Sonus.

Moving through this year, we remain sharply focused on the following goals: First, reviewing the clinical pharmacology data with the FDA during the summer and gaining their agreement on the protocol for a confirmatory Phase 3 efficacy trial under the 505(b)(2) strategy.

Second, initiating that pivotal trial to give us the ability to submit a 505(b)(2) new drug application in late 2005 or early 2006.

Third, continuing to implement the other paths of our clinical and regulatory strategy for TOCOSOL Paclitaxel, including enrollment in the Phase 2-B bladder cancer study and initiation of Phase 2-B studies in other cancers to support the third leg of our regulatory plan.

Fourth, securing a partner to capitalize on the commercial opportunity of TOCOSOL Paclitaxel. And finally, continuing to leverage the potential of our technology and capabilities through internal research and product development and external corporate development activities.

That completes our prepared remarks, and we'd be pleased to answer any questions that you may have. Erika, can you please open the line for questions?

At this time, I would like to remind everyone, in order to ask a question, please press star, then the number 1 on your telephone keypad.

We will pause for just a moment to compile the Q&A roster. Your first question comes from David Miller of Biotech Monthly.

Good afternoon.

Hi, David.

Well, the -- are you trying to design the Phase 2-B bladder study to provide with you data that is sufficient enough to give you an opportunity to file under -- for Fast Track accelerated approval?

Well, let me give you a quick answer and then turn it over to Mike. I think the answer is, we won't know until we have the data, and the conservative assumption is, in fact, that we will need to conduct an additional pivotal trial. Michael?

I -- I certainly agree that that is the considered assumption.

If your question is whether or not -- we do have Fast Track designation for the program already. If the question is whether trial alone would support accelerated approval, that, as Mike said, will depend on review of the results with FDA. We certainly have -- have designed this.

It's being conducted as an extremely rigorous trial for exactly that reason -- that we wanted -- if it -- if the results are promising enough, we want it to be able to stand on its own legs.

Okay. Is it randomized, and can you give us an idea of some of the -- of the size of the trial?

Oh, sure. The Phase 2-B is an open-labeled trial, which is currently sized for somewhere around 45 patients. I don't remember the exact number, 44, 46.

It's -- you know, it was designed specifically powered to be pretty rigorous. And obviously, we are being very careful about everything that is going on in the trial. The enrollment criteria are very strict and very specific. The evaluation criteria are strict and specific, and will be done by an independent third party.

Can you give us some guidance about how you are going to handle releasing the data from your PKPD [PHONETIC] study that you will be meeting with the FDA about this summer?

Well, it is hard to speculate, David, on releasing data that is, at this point, unknown to us.

Right.

Philosophically, we believe that the real value in the data will accrue to the meeting with FDA and subsequent agreement, or not, on the protocol for the confirmatory efficacy trial, and we believe that that is really the value creation point, or not.

Of course, we -- we understand that any material information regarding that trial would have to be released in a timely and appropriate way.

Okay. Have you actually started enrolling people in the Phase 2-B bladder trial?

Yes.

Okay. And the last question is, when do you expect to have that TOCOSOL Camptothecin drug in clinical trials?

Well, we are -- our objective has been to secure the development of TOCOSOL Paclitaxel, and that effort has really been utilizing our available resources.

Right.

We will look to move another product into the clinic, whether that's a Camptothecin derivative or another product candidate, by the end of this year or early next year; but again, that is resource-gated. And I think as you know, these things aren't turned off and on easily.

It takes some time and preparation to move a product into the clinic.

Right. Okay. Thank you very much.

Your next question comes from Matthew Kaplan of Punk, Ziegel & Company.

Hi, guys. Thanks for taking my question.

Hi, Matt.

A couple of questions with respect to -- first, the topics of the abstracts at ASCO. Can you give us an idea of what they -- what the headlines would be there.

I guess -- you mentioned that time-to-progression data would be some of the new stuff that we would see. Any other -- any other topics to be discussed there?

Well, Matt, what we are doing is updating -- this is Mike Stewart.

Hi.

We are updating the data that continue to emerge from the Phase 2-A trials and also lung, bladder and ovarian cancer. And I think that really is the headline.

We intend to present up-to-the-minute data as they have occurred. As you know, these trials are still ongoing, although they are reaching their conclusion, as Mike alluded to earlier. We will reach one-year survival to all enrolled patients later this year -- not in time for the ASCO presentations, unfortunately.

Beyond that, no, one of the reasons I won't get into any of the details that we have in previous conference calls is because ASCO, as you know, has extremely strict guidelines about not releasing information that is going to be presented at the annual meeting. And we have to abide by those guidelines.

Thank you.

I think it is fair to say, Matt, that we are excited to have the opportunity to present the posters and update the data.

Great. And second question, Mike. Could you characterize the -- the status of the partnership discussions with Alanal [PHONETIC]?

And also with respect to that, talk a little bit about what type of partnership in terms of terms you are looking to get.

Well, Matt, I think that -- first, I appreciate the interest in that information, and I'd like to be as responsive as possible without negotiating publicly or without disclosing what I think is -- is material information before its time.

We are pleased with the progress and the content of-those discussions. As I said in the last call and in my last round of public presentations in New York, we are at the point where I really do believe that those discussions will converge with the availability with the clinical pharmacology data on a -- on a deal that we will find attractive.

It is likely that that deal will have a significant profit-sharing component, and we are aiming to hold on to co-promotion and/or co-marketing rights in relation to the rest of the strategy that we are beginning to outline and implement.

And I am confident that we are going to get the deal done. Beyond that, I am not sure that there is much I can add.

Right. And just with respect to the pharmacology study. It seems as though your -- you are well into that study, with 36 patients being enrolled by the end of -- end of the quarter, end of March. Any -- any sense you can give us in terms of where -- how that study has gone, and what you have seen so far?

What I would say is that I think from an execution standpoint, it's gone remarkably well. The investigators that have participated in this study and their teams at each site have worked very, very hard.

This is a very complicated study, logistically demanding, very difficult to do. I think that we've seen a number of very, very cooperative patients and some very hard-working staff that have collaborated to -- to make it possible.

As Mike indicated, you know, as we start to see emerging data and analyses and as you know -- there is some independent parties involved in doing that work -- as we start to do that, we are very mindful of our obligations to report anything that is material.

At the same time, we are very mindful of our responsibilities to the investigators to allow them to report to -- in the scientific literature, and in the middle of all of that, obviously, we're going to be talking with the FDA.

Okay. Thank you, Mike.

I would add to that, Matt, that, you know, Michael is being rather modest on behalf of he and his staff, and hand-wrap credit to investigators and not take some of it.

I would say that number one, this was an extremely complicated study, as I -- I think have expressed to some of you individually that when we say 20 fully evaluable patients, that means 20 people who have received a cycle of TOCOSOL Paclitaxel, and around each drug has had 18 blood samples drawn over period of five days following each drug administration, for a total number of 36 samples that have to be drawn on time, prepared, and analyzed.

And I would have to say that with the very aggressive objectives we set for this trial, that under the circumstances, the implementation has been extraordinary.

That also explains -- given the number of samples, the number of patients, and the complexity of the trial -- that also explains why just having patients enrolled doesn't mean that we have data that we can look at, and it is the type of trial where having some data is more dangerous than having no data.

You really need to wait to see the fully reported evaluated data before we know where we are. And while we are very pleased to have 36 patients enrolled and randomized, we aren't at the point yet where we have the database we need to make observations.

Thanks, guys.

Thanks, Matt

At this time, there are no further questions.

Well, thank you, Erika. That completes our prepared remarks, and we'd be pleased to answer -- I am sorry, Erika, if there are no further questions, I would want to thank all of you for joining us today.

As always, we appreciate your continued support. We look forward to keeping you updated on future developments.

I might point out here that the next opportunity to speak formally with you will be at our annual shareholders' meeting on <ay 5, where. of course, we will be making a presentation, and a live webcast of this. meeting will be available on our website.

Erika, that concludes the call. Thank you.

Thank you and thank you for participating in today's conference. You may disconnect at this time.