Altimmune Inc (ALT) 2009 Q1 法說會逐字稿

Good day ladies and gentlemen, and welcome to the First Quarter 2009 Pharmathene Earnings Conference Call. My name is Stacey, and I will be your conference moderator for today.

(Operator Instructions)

I would now like to turn the presentation over to your host for today's call, Ms. Stacey Jurchison. Please proceed.

Thank you Stacey. Good morning ladies and gentlemen, and thank you for participating today. I am Stacey Jurchison, the Director of Corporate Communications for Pharmathene. Joining me on this call this morning are David Wright, President and Chief Executive Officer; Christopher Camut, Vice President and Chief Financial Officer; and Eric Richman, Senior Vice President, Business Development & Strategic Planning.

Before we begin, I must remind you that during today's call management may make projections or other forward-looking statements regarding future events and the company's future performance. These forward-looking statements reflect Pharmathene's current perspective on existing trends and information. Any such forward-looking statements are not guarantees of future performance, and involve risks and uncertainties, including those noted in Pharmathene's filings with the SEC on forms 10-K, 10-Q and 8-K.

Actual results may differ materially from those projected in the forward-looking statements. For the benefit of those who may be listening to the replay, this call was held and recorded on May 15, 2009. Since then Pharmathene may have made announcements relating to the topics discussed. So please reference the company's most recent press releases and SEC filings.

Pharmathene disclaims any intent or obligation to update these forward-looking statements. I will now turn the call over to David Wright, President and Chief Executive Officer to begin. David.

Thank you Stacey. Good morning everyone. Thank you for joining us today to discuss our first quarter 2009 financial and operational results. I will begin with an operational overview, after which Chris will take you through the relevant financials. Following that, we will open up the call to your questions.

For those of you who are not able to listen on our April 28 conference call, let me begin with a recap of where we stand with regard to our SparVax, rPA anthrax vaccine program. You will recall that our proposal for the advanced development and delivery of SparVax to the Strategic National Stockpile is presently within the competitive range for procurement consideration by the Department of Health and Human Services through the Biomedical Advance Research and Development Authority.

The original request for proposal or RFP was issued by HHS in late February 2008, and outlined a requirement to procure 25 million doses of an rPA anthrax vaccine for the stockpile. We anticipated that that contract would be issued by HHS in mid-April. However, amendments to the solicitation were issued on April 15 and April 22 requiring bidders to submit a comprehensive plan to the US Food and Drug Administration outlining the specific regulatory strategy for product development under a contract.

The deadline for this submission is June 15, 2009. We have laid out what we believe is a comprehensive nonclinical and clinical development and regulatory strategy within our proposal to BARDA, which we feel represents a highly feasible and creditable path to licensure for SparVax. We have submitted a copy of this plan to BARDA on May 7, and they have reviewed the submission and provided feedback.

As we noted in our conference call a couple of weeks ago, while the deadline for submission to the FDA is June 15, our goal is to submit the plan no later than May 21, so the FDA can begin its review process, and we are on target to achieve that goal. I want to reiterate that while BARDA has not given us any time frame with regard to the award of the contract, we continue to believe that BARDA is firmly committed to advancing the rPA procurement process, and ultimately issuing awards under this solicitation.

Moving on, during the first quarter, we had the opportunity to present data on our biodefence products in several important conferences. In late March, we announced that new mechanism of action data for Valortim was presented at the Keystone Symposia on Molecular and Cellular Biology conference. You will recall that Valortim is our fully human anti-toxin monoclonal antibody, which is designed to protect against and treat anthrax infection.

The data was presented by Dr. Alan Cross, Professor of Medicine University of Maryland School of Medicine. Previous mechanism of action data showed that in addition to inhibiting anthrax toxin, Valortim appears to augment the immune system's ability to kill anthrax bacilli. Specifically in an in vitro mouse macrophage model, Valortim enhanced the killing of anthrax by macrophages in a time and dose dependent manner.

The new data builds upon this initial information in the mouse model by demonstrating that Valortim can also enhance the killing of anthrax by human dendritic cells. These are intriguing results, and further the possibility that Valortim is a compelling choice for procurement consideration in the Strategic National Stockpile. Also during the quarter, we responded to a broad agency announcement for anthrax antitoxins and therapeutics.

We received word recently that BARDA had accepted our White Paper and requested a full proposal, which is due on June 1. We are proposing development of an IV formulation of Valortim for the treatment of anthrax, and we will also be looking at developing a lyophilized formulation. We anticipate requesting funding of up to $70 million in our proposal.

Finally, we achieved an important CMC program milestone in the first quarter. We filled and released the first commercial scale cGMP lot of Valortim, which will be used for upcoming non-clinical studies and clinical trials. As you know, we have an ongoing study of Valortim in the African Green Monkey model, which we expect will be completed later this year.

Data from the first cohort of the study had been submitted for presentation at two major medical meetings this fall. Early in this quarter, we also presented data for both SparVax and Valortim at the 7th Annual ASM Biodefense and Emerging Diseases Research Meeting in Baltimore. The results presented included those from a Phase II trial of SparVax with 415 healthy volunteers, which showed that the overall SparVax is safe and well tolerated, was immunogenetic at two different dose levels, and promoted good immunological recall subsequent to a challenge dose.

Pharmacokinetic data for Valortim from studies conducted in nonhuman primates was also presented. Inhalation anthrax in such models is believed to show a similar disease course as in humans, and Valortim has demonstrated preliminary efficacy in the post-exposure prophylaxis and therapeutic settings in these animal models.

With respect to Protexia, our nerve agent program, the Phase I clinical trial of Protexia is still ongoing. We expect the (inaudible) portion of the trial would be completed in the next few months. Finally, as Chris will review in a moment, Pharmathene strengthened its balance sheet during the quarter through a public offering of common stock and warrants, resulting in gross proceeds of approximately $5.5 million.

I want to note that we remain strong focused on continuing to maximize operational efficiencies throughout the organization, while minimizing expenses in order to extend our cash runway. Going forward, we will pursue additional financing opportunities as needed. With that said, I will turn the call over to Chris to provide a brief summary of our financial results for the quarter. Chris.

Thank you David. For the first quarter ended March 31, 2009, revenues were $5.5 million compared to $5.8 million for the same period in 2008. Revenues for the quarter ended March 31 '09 consisted primarily of contract funding from the United States Government for the development of Protexia, SparVax and RypVax.

Research and development expenses were $5.7 million for the quarter ended March 31, 2009, compared to $5.9 million for the first quarter of 2008. For both quarterly periods, these expenses resulted from the research and development activity related to programs for Valortim and Protexia, and for the first quarter of '09 also reflected activities related to the SparVax, RypVax and third generation rPA vaccine programs, which were acquired during the second quarter of 2008.

Expenses associated with general and administrative functions were $5.1 million in the first quarter of 2009 compared to $4.4 million in the same period of 2008. These amounts included non-cash stock compensation expense of $0.7 million and $0.5 million for the quarters ended March 31, 2009 and 2008 respectively.

G&A expenses increased in the most recent quarter primarily due to the increased consulting and legal services associated with compliance and operating as a publicly traded entity. Costs related to preparing and submitting various bids and proposals, litigation efforts, and increased employee costs resulting primarily from additional headcount through the Avecia acquisition.

These increases were partial offset by reduced travel and other administrative overhead costs. The net loss attributed to common shareholders for the quarter ended March 31, 2009, was $6 million or $0.23 per share compared to $4.7 million or $0.22 per share loss in the first quarter of 2008. Pharmathene's available cash, cash equivalents and short-term investments as of March 31, 2009, totaled $24 million, excluding restricted cash of approximately $9 million.

At December 31, 2008, the company's available cash, cash equivalents and short-term investments were $22.9 million, excluding restricted cash at the time of $12 million. The $1.1 million increase at the end of the first quarter in cash was attributable to the receipt, as David had mentioned of approximately $5 million in net proceeds from the public offering completed in March of 2009, and this was partially offset by funding of operations and the repayment of debt.

This financing, as David mentioned, helps to strengthen our balance sheet and will help the company to execute on our product development plan. At this point, I'm going to have turned it back to David to wrap up. David.

Thank you Chris. Before we open the call to your questions, let me emphasize as I have in the past, how really enthusiastic we are about the prospects for Pharmathene. Importantly, we remain confident that we are well positioned to receive a contract from HHS for the advanced development and procurement of SparVax. Meanwhile, we continue to advance our biodefence product pipeline and expect to achieve notable milestones this year.

Specifically, we intend to complete the Phase I clinical trial for Protexia. If successful, the Department of Defense at its discretion may elect to fund the next phase of development under our contract, which would provide an additional funding of up to $65 million for the Protexia program, obtain additional development funding for the Valortim program, complete an initial dose ranging study of Valortim in an African Green Monkey model in collaboration with scientists at the United States Army and Medical Research Institute for Infectious Disease evaluating the AGM model as a preferred model for testing new anthrax therapeutics.

Initiating therapeutic efficacy model development studies of Valortim in the New Zealand White Rabbit and in nonhuman primates to determine their acceptability to provide efficacy data under the FDA Animal Rule. And last begin two Phase I clinical trials of Valortim in combination with antibiotics to determine safety in humans.

As always, we look forward to keeping you updated on our progress. That concludes the remarks, my remarks this afternoon. Operator, could you please instruct the audience on the Q&A procedure.

(Operator Instructions). Your first question comes from the line of Boris Peaker with Rodman & Renshaw. Please proceed.

Yes, hi. Thank you for taking my question. Quick question on SparVax, have you had any interaction with the FDA in terms of exactly what they are looking for or is it just what we've heard since the last call?

We have had interactions with the FDA, and what we are asking the FDA is to review and comment on our program. So it is not so much what they are looking for. They are looking for -- they would look at this in a way they would look at any other program that was submitted to them for review and comment.

And have they commented at all on the timeline or any kind of milestones that they will announce that they like it or don't like it or they want you to go back and do something else?

They said they would look at this in as rapid fashion as possible. Other than that there are no specifics given.

Well, thank you very much.

Your next question comes from the line of Debra Fiakas with Crystal Equity Research. Please proceed.

Thank you. Just one quick housekeeping question, and then my one question, if you could just repeat the cash flow from operations, and then comment on the White Paper, a little more detail on the White Paper that you submitted to BARDA for the IV formulation of Valortim. The proposal that you indicated would be submitted by June 1. Do I understand correctly that this is a non-competitive situation, and also could you describe perhaps what the decision-making timeline might be with regard to that proposal?

Debra, I did not hear the first part of the question.

I'm sorry. The very first part of the question was actually if you could just repeat what your cash usage by operations was, and then my main question is about the...

I got the main question on the White Paper.

Okay, very good.

Chris do you want to handle the first part, please?

We will repeat in our cash from operations (inaudible) that you repeated back is correct.

Okay. The White Paper, this is a process that when you say it is non-competitive. It is competitive, but it is non-competitive, and I know I'm talking on both sides of my mouth, but what I mean by that is it is not a winner take all, but each program is analyzed for the value they think it will proceed or produce, and then programs that are chosen on that basis are asked to put in a full proposal.

So it is similar in nature to what you would see if you were going to the NIH for a grant. You know, there are competitive elements to them, but it is not one person take all. There may be several grants given under this. And the June 1 submission is basically a work plan, and is a series of milestones and charts of what we will do and how we will spend this money.

Your next question comes from the line of Steve Brozak with WBB Securities. Please proceed.

Hi, good morning gentlemen. The question basically goes back to the FDA submission, typically, and I know there is not much precedent for this, typically you know you would be looking at something where after you would have had the contract awarded, you would have basically been in a position where the FDA would weigh in.

What are your thoughts, because now all of a sudden it is sort of like you are getting an advantage here with the FDA, because probably a good portion of the questions are going to be answered before you even have to worry about the contract. So even though it is being perceived a little bit of a delay, now you have got an advantage in that you pretty much get the contract. You know what you are looking for. How do you position yourself with that and what do you think about that type of statement?

I think it is pretty true Steve. However, I'm going to say that we have been working with the FDA on this project for several years. There are no surprises. They are not going to see any surprises. What I think that you are hitting on is that this will give us an advantage in going forward in that it is an opportunity to see how the FDA is truly thinking in a formal manner rather than what they normally tell you in an informal manner.

So I think this is an advantage, and I think they will respond quickly, but it also -- from the government from having any real surprises coming down the line. And I think that is part of the intention of this.

Okay, so in a nutshell it is not -- well, I guess it would be in a situation also for investors it would be an advantage, because that are less things. There are less unknowns how to quantify in terms of valuing your stock investment and your stock. That's would probably be an accurate statement as well. Wouldn't it?

It would be. Yes, it would be.

Great. I look forward to hearing in the future. Thank you.

Thanks Steve.

At this time, I would like to turn the presentation back over to David Wright for closing remarks.

Well, thank you for joining us this afternoon or I guess it is this morning, still morning, didn't go that long. We look forward to updating you again in our second quarter conference, which will be in August. If there is anything, breaking news in between as we have tried in the past, we truly want to keep our investors fully informed, but if there is something you need to know, please don't hesitate to contact our investor relations department at any time for any additional information.

As always, we welcome your feedback and your questions. Thank you very much for this meeting.

We thank you for your participation in today's conference. This does conclude the presentation. You may now disconnect and have a great day.