美國安進 (AMGN) 2002 Q2 法說會逐字稿

Welcome to Tularik's Second quarter 2002 financial results conference call.

At this time, all participants are in a listen-only mode.

There will be a question and answer session to follow.

Please be advised that this call is being taped.

At this time, I'd like to introduce to you your host for today's call, Ms. [Tracy McCarthy], investor relations at.

Please go ahead.

[Tracy McCarthy]: Thank you operator.

Good afternoon and thank you for joining us today to discuss our 2002 second quarter results.

Presenting highlights from the quarter today are Dave Goeddel our founder and Chief Executive Officer and Corinne Lyle our CFO. [Michael Levy], our Vice President of development and chief medical officer, is also here and available to answer any questions you may have about our clinical development programs during the Q&A portion of the call.

Before we get started let me remind you that some of the statements made today will be forward-looking and that our actual results may differ materially from those suggested.

Please refer to our most recent SEC filings for information concerning factors that could cause these differences.

The information in this conference call related to projections or other forward-looking statements may be relied upon subject to the previous Safe Harbor Statement.

As of the date of this call, let me undertake no duty to update this information.

I will now turn the call over to Dave Goeddel.

Go ahead Dave.

Thanks Tracy and thank you all for joining us this afternoon.

I'd like to take a minute to review our second quarter highlights and then Corinne will discuss the quarterly financial results.

Going into the second half of 2002 we feel very good about the progress we've made so far this year.

We're excited about our ongoing clinical programs and we are pleased to announce today new developments in both.

Today we announce that we have scheduled an end of phase 2 meeting with the FDA on August 26, 2002, to discuss a proposed phase 3 protocol for a lead anti-cancer drug candidate, T67.

As many of you read in our May 20th press release during the ASCO meeting, T67 showed activity against [Pedacellular Carcinoma] or HCC in both phase 1 and phase 2 trials.

The purpose of the end of phase 2 meeting with the FDA is to discuss the protocol design for the proposed phase 3 study.

We anticipate providing details regarding the ultimate design protocol after we've come to an agreement on these parameters with the FDA.

We also announced today the opening of phase 2 clinical trials with their second generation anticancer drug T607.

We are conducting four separate trials, one each for patients suffering from HCC, ovarian cancer, gastric cancer, and non-Hodgkin's lymphoma.

The end point for each study is radiological response; although, we are also looking at alpha fetal protein levels in the HCC trial.

Turning to new partnering developments during the quarter, we announced collaboration with [INAUDIBLE] company to jointly discover and develop human therapeutics that act on orphan, feed protein coupled receptors or GPCRs.

We received a cash payment for a contribution of 5 GCPR targets and we will share equally all clinical development costs and profit in the U.S. and Europe.

We are also entitled to milestone and royalty payments as compounds progress through clinical trials to registration outside of the U.S. and Europe.

Now I will turn the call over to Corinne Lyle, our CFO to review the financial results.

Thank you Dave.

First I'd like to review the quarter and then reiterate our guidance for the remainder of 2002.

In the second quarter of 2002, revenues from collaborative research and development were 6.6 million compared to 2001's second quarter revenues of 8.3 million.

Revenue was primarily derived from research payments from Japan Tobacco and metabolic diseases, Roche and inflammation, Metorex for the development of therapeutic antibodies in the cancer area, and Tanku in the area of and GPCRs.

The research portion of our collaboration with Roche expired our July 7 are compounds resulting from this collaboration are being pursued by both polaric and Roche.

Revenue declined as a result of various research collaborations ending in late 2001.

Total research and development expenses for the second quarter 2002 increased to 28.6 million from 21.8 million for the same period in 2001, due to increased head count growth in our development in chemistry groups and activities associated with the progression of our clinical compounds and our potential IND candidates.

Expenses for research supplies and materials also increased.

In addition, the acquisition of the compute rated molecular design groups from [Patherics] last July increased research expenses in 2002.

We also continue to consolidate 100 % of the expenses incurred at Cumbre since we are majority shareholders in that entity.

While we continue to allocate substantial resources to our clinical development and drug discovery efforts, we have maintained tight controls over all other spending and are pleased to report that GNA expenses for the second quarter 2002 remain relatively flat at 3.3 million compared to 3.4 million for the same period last year.

We continue to be in a strong financial position.

We began the third quarter with approximately 206 million in cash and marketable securities including 22.9 million in cash at our majority-owned subsidiary, Cumbre.

Turning to guidance for the remainder of the year, we continue to expect revenue in 2002 to be in the range of 25 to 30 million, which going forward will include revenues from existing collaborations with Japan Tobacco, Metorex and Tanku as well as potential revenues from new collaborations.

We continue to expect our net losses to be approximately 90 million and expect our burn rate for 2002 to be approximately 75 million.

Thank you and now we'd like to open the call to your questions.

Thank you.

At this time we will take any questions you may have.

If you have a question, press the 1 on your touchtone phone and you will be put into the queue.

If you would like to cancel your questions, press the pound key to drop out of queue.

Again if you have a question, press the one, and to cancel a question, press the pound key.

If you are using a speakerphone please pick up your hand set to ask a question.

Our first question comes from [Jim Reddock] with bank of America.

Please go ahead.

[Jim Reddock]: Hi, thanks.

Question about the revenue guidance, first off.

Can you say what of the 25 to 30 you have committed thus far, from those three collaborators that you mentioned and secondly what is the environment like for partnering with a pharmaceutical company these days?

What's the quality of your discussions?

We have heard from several other companies that it's much tougher than it has been in the past and is this one of your late preclinical programs that you would like to partner?

Thanks.

Jim, hi.

It's Corinne.

How are you?

[Jim Reddock]: Great thanks.

So with respect to the guidance for the year 25 to 30 million, that includes almost entirely committed revenues and the reason there's a range is because we are expecting to do another collaboration in the second half of this year and the timing of that is hard to predict.

So we feel very comfortable in this range.

And we're not really providing more guidance in that at this point.

With respect to the current environment, I'll turn it over to Dave and he can comment.

Hi, Jim.

I think we're actively in discussions with a number of big Pharma companies about potential collaborations.

So I guess I'd say from our perspective, there hasn't been a change at least in having potential partners interested in what we're doing and having serious discussions.

I guess it'll come down to the end do we get a new deal or not.

[Jim Reddock]: Okay.

Thank you.

And we have a question from [Joel Syndic] with [Lesard].

Please go ahead.

[Joel Syndic]: Thanks, two questions.

First of all, can you just tell us what the difference is between your 90 million estimated net loss and the burn of 75, what makes up the 15 of the non-cash things go to the P&L or is it something else and then a clinical question after that.

Thanks.

Joel, most of the difference is derived from non-cash charges such as depreciation and amortization expenses, which will probably range around 11 million or so this year.

So that's the bulk of it.

In addition, as you may recall in the beginning of the year we did collaboration with Metorex which was an equity collaboration at 100% premium to the stock price.

We are allowed to recognize the premium portion of that in our revenues and that gets spread out over the term of the collaboration for two years, but the equity portion of it doesn't show up in our P&L but it does show up obviously, in terms of the offset to the burn.

For example, those are the things that lead to the difference between the cash and the expense line.

[Joel Syndic]: Okay.

And the depreciation and amortization are mostly in the R&D line?

Exactly, yes.

[Joel Syndic]: Okay.

As far as your meeting with the FDA in late August, what are your using for your internal projections as to when you might start a phase 3?

I know it's probably hard to answer that in the meaning itself, but maybe internal projections or where you would guide us to start thinking about the beginning of that time line.

[Michael Levy]: Hi, Joel, Michael Levy.

How are you?

[Joel Syndic]: Good, thanks.

[Michael Levy]: As you say, it's difficult to predict exactly before we have the meeting with the FDA, and we do want to begin a global program, initiating a study in North America, Asia and Europe.

But we still think that we could potentially be getting that by the end of this year, get it going by the end of this year.

[Joel Syndic]: Okay.

And then how about on other programs, the pre-clinical pipeline?

Any plan to start a clinical trial or file any IND's from anything there or this year?

[Michael Levy]: Yes.

Actually, at the end of the Second quarter, we submitted the necessary documents to begin phase 1 trials in the U.K. with one of our novel compounds.

And we expect to start those phase 1's in the 4th quarter.

[Joel Syndic]: Okay.

Thank you.

And we have a question from Charles Duncan with [Resner Glenworth].

Yes.

Good afternoon folks.

A couple of questions.

First of all, at the beginning of the year, you talked about T611 being important and what, and now that's not currently in the pipeline.

Could you help us understand a little bit about some of the criteria that you used to do that portfolio management, and then I have a follow-up question.

This is Dave.

I'll take that.

I think we've discussed all the decisions, all the things that went into T611 probably about a few months ago.

But basically, it was going to have a longer timeline than we expected and the tradeoff against other things that were coming along, we didn't see over all in that case the benefit of continuing when it was going to take probably a year longer than we anticipated and the market size didn't match up to some of the new things that were coming along and going to be entering the clinic this year and next.

So was the decision based primarily on the commercial opportunity and the time to get on there or was it based on some preliminary look at efficacy measures?

No, I think it was a combination of a number of things.

As I said, one of them was additional time length and that it had to do with the reformulation, the reformulation was going to cost a few million dollars in addition to taking the year.

We had Pharmaco Kinetic complications in that there was a fairly great patient-to-patient variability in the levels of drug we were seeing.

So I think we saw a number of things.

And that even raised a potential side effect or toxicity issue with the variable Pharmaco Kinetics.

So I think you can take all those plus the commercial side added on to it and the timeline.

And our hope is we're always going to have more good things than we can handle and the ones that get all the bottom of the pile are going to get eliminated.

Okay.

And then with regard to the product candidate that you just filed an IND on or effectively did, you know, necessary paper to commence clinical development, can you provide us some additional color on at least the disease area that that's in?

No.

At this time, we've decided not to do that and that's really for competitive reasons.

And what we'll plan to do going ahead is on a molecule by molecule basis as that things enter the clinic and when we dose first patients we will make the decision to disclose at that time.

So that's why we didn't make an announcement when we filed these documents and we're looking to the 4th quarter to actually treat patients and we'll have more information on this program at that time.

Okay.

So we're to assume that it's a very competitive market?

No.

Or a large market opportunity?

It's a very large market opportunity, yes.

Okay.

Good deal.

Thanks.

And if there are any additional questions, please press the one, at this time.

And we have a question from Meg Maloy with Goldman Sachs.

Please go ahead.

[Meg Maloy]: Yes.

Thanks.

High everyone.

Just wondering Dave could you remind us again the dose ranging work being done with T67 and I don't know how much you care to talk about this but if you had your [INAUDIBLE] how would you like to see the phase 3 studies designed?

I think I'll turn that one over to Michael who's here to address the dose rate.

[Meg Maloy]: Great, thanks.

[Michael Levy]: Hi Meg, it's Michael.

I didn't catch the tail end of your question.

What was the last thing you said?

[Meg Maloy]: I said if you had your [INAUDIBLE] how would you like to have the phase 3 studies designed?

Right, well with respect to the phase 3 [INAUDIBLE] design, we've decided we're going to talk about that after we've had our meeting with the FDA and we have a definitive picture in how we're going to go forward.

In terms of the dose, we're progressing the plan that we discussed last time.

We want to go into the phase 3 trials with a dose increase of approximately 50%, looking at 250 milligrams weekly.

We're gearing up to do just that.

[Meg Maloy]: Okay.

So have you found the dose ranging phase 2 type work on that?

In order to support we're done a number of things, we've done a Pharmaco Kinetic analysis that we've talked about in the past.

We've checked different dosage regimens and we've opened up a trial which is currently underway to retest the maximum tolerated dose in carcinoma specifically to confirm that data we've seen in the past and that our Pharmaco Kinetic calculations are in fact spot on.

[Meg Maloy]: Okay.

All right.

Great.

Thanks a lot.

We have a follow-up question from Charles Duncan from [Resner Glenworth].

Please go ahead.

Just really a follow-up question to Jim Reddox's question, which is along the lines of the current environment for deal making.

Do you see there being - what are the key points of demand for the pharmaceutical companies talking to you?

Are they more product specific or target specific or do you think that companies are interested in talking to Tularik because of some more platform capability?

That's a tough question.

I think most companies are different from each other.

I think all of them are interested in product opportunities.

But we have some talks that are initiated by clinical people, some by research people, some by business development people, and each of them appears often to have different goals and reasons for wanting to talk to us and different whole range of programs from very early targeted identification to our most advanced clinical compounds, and but in general I think across the board there's interest in clinical compounds whereas the other sorts of deals may be more specific to each company.

Even early stage compounds Dave?

Or early stage clinical compounds?

I think the place they all become interested is when there's a clinical proof of concept.

Okay.

Thank you.

And Dr. Goeddel, there are no further questions at this time.

Please continue.

Okay.

I'd like to thank awful you for joining us this afternoon and we look forward to share our progress with you over the coming months.

Thanks.

Ladies and gentlemen, that does conclude our conference for today.

Thank you for your participation.