Aptose Biosciences Inc (APTO) 2008 Q1 法說會逐字稿

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Lorus Therapeutics Inc. first-quarter 2008 financial results webcast. (OPERATOR INSTRUCTIONS) I would like to remind everyone that this conference is being recorded Wednesday, October 17, 2007, at 10 AM Eastern Time.

I would now like to turn the conference over to Dr. Aiping Young, President and Chief Executive Officer, and Mr. Mark Preston, Controller. Please go ahead.

Thank you for joining us today for Lorus Therapeutics' investor presentation to discuss recent corporate developments relative to Lorus's first-quarter 2008 earnings announcement.

My name is Aiping Young, and I'm Lorus' President and CEO. Also joining me today is Mark Preston, our Acting Controller. Together, we will give you an overview of the first-quarter highlights.

Before we get started, I would like to remind you that this presentation will contain forward-looking statements regarding future events or the future financial performance of the Company including, without limitation, statements regarding operating results in fiscal 2008, growth opportunities, and other statements that refer to Lorus's plans, prospects, expectations, strategies, intentions, and beliefs. These forward-looking statements are based on information available to Lorus today and Lorus assumes no obligation to update these statements as circumstances change.

It is my pleasure to be here to provide you with an update on our fiscal first-quarter progress. But first, Mark will take you through our financials.

Thank you, Aiping. I am pleased to report that the Company has strengthened its financial position through the completion of its reorganization arrangement, resulting in a nondilutive financing, and now has these funds available to advance its pipeline of products.

Before starting, just let me preface this discussion by stating that on July 10, 2007, when the Company completed the plan of arrangement of corporate reorganization, a new public entity was established. However, the new entity continued the old business of Lorus after the arrangement date with the same shareholders, officers, employees, and continued to be covered by the same Board of Directors as Old Lorus prior to the arrangement date. Therefore, the following discussion reflects Lorus as an ongoing business, ignoring any Old Lorus/New Lorus distinction. Further details about the arrangement are available on SEDAR.

Operating net loss for the period before the gain on sale of shares associated with the completion of the arrangement decreased 25% to C$2.1 million or C$0.01 per share in the first three months ended August 31, 2007, compared to C$2.8 million or C$0.01 per share in the same period last year. The decrease in the net loss in 2007 compared to 2006 is primarily due to lower research and development costs.

As a result of the arrangement, the Company recognized a gain on sale of shares of Old Lorus to the investor of approximately C$6.1 million. Under the arrangement, numerous steps were undertaken as part of the taxable reorganization. However, these steps did not result in any taxes payable, as the tax benefit of income tax attributes was applied to eliminate any taxes otherwise payable.

As condition of the transaction, the Company provided Old Lorus with certain indemnifications. In reference these indemnifications, $600,000 of the proceeds of the transaction have been held in escrow until the first anniversary of the transaction, which is July 2008. The Company has deferred any gain on this escrow amount until these funds are released, at which time the fair value of the indemnities will be reassessed.

We utilized cash of C$2.3 million in our operating activities in the first three months ended August 31, 2007, compared with C$1.8 million during the same period in 2006. This reflects a reduction in the Accounts Payable and an increase in the prepaid expenses and other assets.

At August 31, 2007, Lorus had cash and cash equivalents and marketable securities and short-term investments totaling C$17.1 million, compared to C$12.4 million at the end of May 2007. The increase in cash is a result of the corporate reorganization net of those funds utilized in the quarter.

Research and development expenses for the three months ended August 31, 2007, decreased 41% to C$728,000, compared to C$1.3 million for the first three months ended August 31, 2006. The decrease in spending compared with 2006 is due to reduced external research and testing costs in 2007 as compared to 2006. In addition, the Company did not incur any drug manufacturing or amortization of acquired R&D costs in 2007, as it did in 2006. The Company continues to leverage its research and development activities through the use of NCI sponsored trials.

General and administrative costs for the first three months ended August 31, 2007, decreased 6% to C$736,000 in the quarter, compared with C$788,000 for the same period in 2006. The decrease in general and administration costs is a result of staff reductions and continued focus on lowering costs in all areas of the business.

Interest income totaled C$140,000 in the three-month period ended August 31, 2007, compared to C$67,000 in the same period last year. The overall increase in interest income in the current period is due to higher average cash balances in the current three-month period compared to those of 2006, as well as higher interest rates.

Higher average cash and marketable security balances are primarily a function of the funds received as part of the August 2006 private placement and the completion of the arrangement in July 2007.

Overall, we are very pleased with the current financial position and continue to focus on maximizing the effectiveness of our spending in order to advance our research and development activity. That concludes the financial review of the first-quarter 2008. Aiping will now review operations.

Thank you, Mark. Now I would like to provide an update regarding the operational highlights of our first quarter. I'm very encouraged by the achievements we made in this quarter as we have aggressively moved forward in our drug development program. We focused our product profile and strengthened our Board and financial position.

The lead drug in our antisense portfolio, GTI-2040, continued to advance in the clinic, with the primary focus on leukemia as target indication. We had completed a proof of concept trial in Acute Myeloid Leukemia, AML and, as an extension of GTI-2040, development program in this indication.

The proof of concept combination clinical trial results were highly encouraging, demonstrating GTI-2040's safety and promising clinical responses. That is, complete responses in close to 40% of evaluable patients, six years of age or younger, compared to a historically expected rate for this patient population of between 10% and 20%.

This exciting finding supports further development of GTI-2040 in a clinical Phase 2 program in refractory/relapsed AML patients. And this is precisely what we have done in the first quarter, with the initiation of a more advanced Phase 2 clinical trial with GTI-2040 and high-dose Ara-C in refractory and relapsed AML patients.

Consistent with our focus on leukemia, Lorus has been exploring the possibilities in a clinical study, under the sponsorship of the US NCI Cancer Therapy Evaluation Program, that GTI-2040 has activity as a single entity in a disease that appears to be related to AML called myelodysplastic syndrome.

In the first quarter, we had begun enrollment in a new clinical trial to determine the pharmacodynamics and the pharmacokinetic effects, dose-response relationships, and the tolerability of GTI-2040 in patients with acute leukemia and myelodysplastic syndrome.

Although no announcement was made in this quarter, we have continued development of our small molecule program by advancing our lead molecule, LT-253, to preclinical studies that have shown LT-253 as a promising drug candidate with a high therapeutic window for the treatment of colon carcinoma and non-small cell lung cancer. Based on its important in vitro activity, its efficacy in in-vivo animal models of human colon and lung cancer, and on its safety profile, formal GLP toxicology studies are planned for later this calendar year in different animal species with the aim of filing an IND application to initiate a Phase 1 clinical trial next year.

We added four new members to its Board of Directors, replacing three previous directors that did not stand for reelection at its Company's annual general meeting. And that Denis Burger, co-founder and former chairman of Trinity Biotech PLC, and past chairman, CEO, and director of AVI Biopharma, Inc., will be the new Chairman of the Board of Directors for the Company.

The other three members are Herb Abramson, who joined the Board in July; and Mark Vincent and Susan Koppy, who were elected at this year's AGM. I am pleased to have attracted such high-quality professionals who bring to Lorus a combination of valuable experience and accomplishment in areas such as capital markets, product development, clinical research, and business development.

In this quarter, we have the completed a plan of arrangement and a corporate reorganization that resulted in gross proceeds of C$8.5 million, subject to a post-closing adjustment and an escrow amount of $600,000. The Company estimates net proceeds from this nondilutive financing will be approximately C$7 million. This concludes our comments on the first quarter. Thank you.