Brickell Biotech Inc (BBI) 2004 Q2 法說會逐字稿

Good day, and welcome to the Vical second-quarter conference call. This call is being recorded. For opening remarks and introductions, I would like to turn the conference over to Mr. Alan Engbring. Please go ahead, sir.

Hello. I'm Alan Engbring, Executive Director of Investor Relations at Vical. Welcome to our second-quarter financial results conference call. Participating on the call today are Mr. Vijay Samant, our President and Chief Executive Officer; and Dr. David Kaslow, our Chief Scientific Officer. I will begin with a brief notice concerning projections and forecasts.

This call includes forward-looking statements including financial expectations and projections of progress in our research and development programs that are subject to risks and uncertainties that could cost actual results to differ materially from those projected, including the risks set forth in Vical's annual report on Form 10-K and quarterly reports on Form 10-Q filed with the Securities and Exchange Commission as well as the specific risks and uncertainties noted in Vical's news release on second-quarter 2004 results. These forward-looking statements represent the Company's judgment as of today. The Company disclaims, however, any intent or obligation to update these forward-looking statements.

Now I would like to introduce Vical's President and Chief Executive Officer, Mr. Vijay Samant.

Thank you Allen. We will start with an update on our programs and recent progress, then we will take questions from our callers. If time permits we may also address a few questions that were submitted in advance. We will begin with an update on our high dose Allovectin-7 program and metastatic melanoma. On our last conference call we reviewed the detailed guidance resulting from our 2 end of phase II meetings with the FDA for Allovectin-7. Our End-of-Phase II clinical review meeting was based in large part on the November 2003 safety and efficacy data from the full 127 high dose core. We recently presented a summary of these data at the ASCO and LDG (ph) meetings and today I would like Dr. David Kaslow, our Chief Scientific Officer to provide you with an update on this program. David?

Thank you Vijay. To start, a reminder of the guidance we received at our end of Phase II clinical review meeting. First, overall survival is not a required endpoint; rather a meaningful response rate with a reasonable duration of response would be acceptable as the surrogate endpoint of efficacy.

Second, the Allovectin-7 arm of the registration trial must have at least 25 responders. Third, the safety database would need to be expanded beyond those patients in the current high-dose Phase II to determine the safety profile required for licensure of high does Allovectin-7. Given the fact that there were no dropouts due to treatment related toxicity in our Phase II high dose trial, it is highly likely that the sample size for demonstrating efficacy in that registration file would likely be sufficient to satisfy accrual for determining the safety profile required for licensure of high dose Allovectin-7.

Finally, the agency agreed to review the design of our registration trial protocol through a special protocol assessment or SPA. Subsequent to our end of Phase II meeting, we convened an expert panel to design the registration trial based on the comments that we received from FDA. Dr. John Kirkwood, a leading melanoma clinician and world renowned melanoma clinical trial expert has championed this effort with us. We have had several informal discussions with clinical reviewers at Seaver (ph) to review the protocol we've designed with our clinical experts. We are now well positioned for an SPA and anticipate that by the end of 4Q '04 we could provide you with guidance on the endpoints, size, timeline and costs of the registration trial.

With that, I will turn it back to Vijay.

Thank you David. Next we turn to our vaccine programs, starting with our DNA-based immunotherapeutic vaccines (indiscernible). With approximately $1 million funding from the NIH, we continue to advance our CME vaccine through clinical testing. It began a Phase I clinical trial in early (indiscernible) in late March. This trial is an open label randomized dose escalation study with up to 34 healthy (ph) subjects in 4 groups at doses of 0.2, 0.6 and 2 mg. And normally that trial is ongoing, this initial Phase I trial tests the vaccine for safety and immunogenicity in preparation for a future clinical trial in bone marrow transplantation.

We plan to present initial interim data from the study at ICAAC meeting later this year. In support of our ongoing development of this vaccine, we recently held a meeting with about 20 of the leading medical experts on CMV infection and transplantation here in San Diego. The purpose of this meeting was to introduce our vaccine program to clinical experts and gather valuable feedback on the design of our Phase II clinical trials.

Anthrax. In our Anthrax vaccine program we are developing the Next Generation bivalent, cationic lipid formulation Anthrax vaccine designed to provide a broader cross protection against Anthrax in the currently approved Anthrax vaccine. Remember that the preclinical data from the Anthrax vaccine program demonstrated complete protection of rabbits at 7.5 months post-vaccination against a lethal spore inhalation challenge. Nonclinical development of the Anthrax vaccine is being supported by a 3-year approximately $6 million NIH grant awarded in July of 2003.

We achieved 2 key milestones in this program during the second quarter. In June, the NIH advised us that it would support a Phase I clinical trial of our Anthrax vaccine at 2 NIH-funded vaccine and treatment evaluation units. These are clinical centers of excellence set up to conduct trials for the government. We began the trial in July, and are testing the vaccine to 50 healthy adult volunteers for safety and immune responses. Successful completion of this trial could lead to additional trials to support marketing approval under the FDA's animal rules. And could encourage development of other vaccines using the same technology that we used in the Anthrax development program.

We have been allowed to advance to human testing with an Anthrax vaccine without first conducting monkey studies. As a reminder and as we have said this before, it will only continue to advance this program if we secure additional funding from the U.S. Government.

Collaborative programs. Through our multiple partner programs, we have additional opportunities both to advance the application of our platform technology and establish future revenue streams. I'll provide you a brief status report on each of these programs.

First, our long-standing partner, Merck continues in Phase I testing with their HIV vaccine based on our plasma DNA technology. We expect an update on that program in the second half of 2004. You may also recall that Merck acquired options on several cancer vaccine targets last year and the exercise of those options would formalize Merck's effort to apply arm plasma DNA technology in this challenging area of cancer.

At the NIH, we had 2 collaborators in several vaccine programs. I'll remind you that these are NIH funded programs and that Vical's commercialization rights and the creators and licensees for some of these targets. And in addition, we have manufactured preclinical and clinical supplies for these programs and anticipate increasing revenues from this activity as our new manufacturing facility becomes fully operational.

Two D&A vaccine programs at the NIH have advanced into Phase I clinical testing.

Ebola. I would like to brief you on the progress of the Ebola vaccine, which has entered into human clinical testing in November of 2003. We believe this is the only Ebola vaccine program that has advanced to human testing. We are delighted to inform you that we learned from the NIH that the Phase I trial is now fully enrolled with 27 subjects and the last of the 3 monthly doses, including the highest dose at 8 mg should be completed soon.

We are hopeful that the initial data from the study will be available in the next several months. This vaccine (indiscernible) both cellular and antibody to immediate responses and the data from this initial trial could provide a human proof of concept for our plasma DNA technology. Remember this vaccine would likely be approved under the animals which would result in a rapid approval process.

We were also encouraged by the recent approval of the Project BioShield, specifically we would specify initial stockpiling of the Ebola vaccine at about $90 million and a long-term procurement of about $260 million. If the NIH is successful, this could benefit Vical directly since we have a license from the NIH to commercialize the vaccine they are developing. We believe the significance of this program was underscored in the July 27th Wall Street Journal editorial entitled entrepreneurs versus bioterror, which described the value of Project BioShield, and specifically highlighted Vical's Ebola vaccine program.

HIV. The NIH is also exploring a novel approach to HIV vaccine development by targeting highly conserted (ph) animal proteins in addition to internal proteins from Class (ph) A, B and C of the HIV pathogen. The NIH reported encouraging data from this program at the Keystone conference earlier this year and we are watching with interest for an update in the near future.

NIH vaccine programs for West Nile Virus and SARS are progressing to preclinical development. The manufacturing of the clinical supplies of these vaccines is complete and both could be ready to enter human clinical testing this year.

Other partner programs include 2 angiogenesis applications. Advantis Gencell is using our technology to VEGF-2 of one gene (ph) to promote growth of new blood vessels in patients with peripheral arterial diseases. Published interim results from our 51 patient Phase I trial indicated that the treatment is well tolerated with no serious adverse events related to treatment. Interim results also indicated a significant reduction in pain at the 6 month study end point with a P-value of less than 0.001 and newly visible blood vessels in 33 percent of patients using conventional arterial-graphy (ph) 3 months after treatment.

Aventis Gencell is currently running 2 Phase II trials and we expect that data from one of these trials could be available later this year. We are pleased to receive $1.2 million milestone payment under this agreement in July, confirming our partner's progress in this program.

Our second angiogenesis partner is Corautus Genetics and their program uses VEGF-2 Gene in patients with coronary artery disease. Patients earlier received FDA approval to start the Phase II-B trial and we're excited to see this program finally moving ahead.

We have 2 partners in the animal health arena. Merial, a joint venture between Merck and Adventis is the world's largest animal health company. Their multiple targets under license and have advance to clinical stages of development in their lead programs. Aqua Health, a division of Novartis is using our technology in vaccine for salmon. They recently completed a field trial in 3 million fish and we expect to hear results from that effort by the end of this year.

Next I will go onto the financial results. Earlier today we reported a net loss of $5.3 million for the second quarter of 2004 compared with a net loss of 6.9 million for the first quarter of last year. Actually second quarter of last year. The decrease in net loss reflected increased revenues for the quarter driven by both contract manufacturing shipments and milestone payments. For the first 6 months of 2004, our reported net loss was $14.4 million compared with a net loss of $13.9 million for the first half 2003. Our performance to date is consistent with our forecast for the full year.

As of June 30, our cash, cash equivalents and marketable securities were $85 million. Let me point out here that our cash balance does not reflect the full value of revenues recognized in the second quarter since receipt of cash payments from the Gencell milestone and the Murial license and a portion of our contract manufacturing occurred after June 30th, and so they are not reflected in the $85 million balance.

Our current cash results are sufficient to continue development in our existing programs and explore opportunities for additional programs for our own research activities, potential in-licensing or acquisition or potential collaboration with development partners.

That concludes by prepared statements. Operator, we're now ready to open the call for questions from our invited participants.

(OPERATOR INSTRUCTIONS) Eric Schmidt with SG Cowen.

Good morning, Vijay. I was hoping that you could talk to us a little bit more about safety requirements in human beings for approval of vaccines required under the 2 animal rule. So specifically either to Anthrax or Ebola and whether you've gotten any sort of definitive guidance from the powers that be in Washington as to how many safety -- what sort of a safety database you need there?

I think it’s an excellent question. I will answer the first part of the question and then I will pass it on to David. First of all, have we received any guidance from the FDA? The answer to that question is no. I think the safety requirements in the 2 animal rule are going to be based -- and this is again my judgment -- intrinsically on the safety of the technology that is being used in development of that vaccine. If you for example are using the vaccine which is being developed using a live attenuated strain, then the safety requirements are going to be much higher as opposed to a plasma DNA vaccine, which have a much stronger safety profile.

So it depends on the construct, it depends on the targets. So there are 2 variables that need to go in and it depends on the indication -- that is the third variable. So all those 3 variables have to be kind of pulled in and that will lead to an output from the FDA. We feel confident based on the outstanding safety profile so far we have seen with our plasma DNA technology in humans that we will get benefit of that learning curve as we begin these discussions of the 2 animals. David, do you want to add anything?

Sure. We tried to address that question in our pre-IND meeting on Anthrax with the FDA. And it pushed back, saying it was premature. But offered to allow us to bring that topic up for discussion at the end of Phase I meeting so they would have the benefit of seeing what the safety profile looked like out of that Phase I trial.

Okay.

(OPERATOR INSTRUCTIONS)

If there are no specific questions there are some pre-submitted questions that I want to answer. The first question was -- are you planning to partner Allovectin-7? If so, what kind of partner would you seek? As I've told people in several Phase II meetings, we are open to collaboration for further development of our uncommercialization Allovectin-7, especially if we can identify a partner with the right sources and expertise.

Our interest would be driven by the desire to enroll patients quickly in our registration trial. We believe that our network within the melanoma community in the United States is excellent, but we do not have a presence outside the country. The ideal partner that we'd look for would have established access to melanoma communities in Europe and perhaps Australia, but primarily Europe would be our focus.

We also would have the resources and know-how to conduct quality clinical trials in those regions. We have identified a number of potential partners, some have contacted us, some we have contacted and are actively investigating the level of interest but cannot predict at this time when we will be successful in finding such partners.

(OPERATOR INSTRUCTIONS)

Another question that was pre-submitted is what impact does approval of Project BioShield act (indiscernible)? Are you in line to get funding for your Anthrax and Ebola programs? Do you plan to pursue additional bio-defense programs? The answer to all of these questions at a 60,000 feet level is absolutely yes. Project BioSheild is boon for the biotech industry because it allows you to work on targets which are really in the national interest but allow you then to validate the technologies you are going to their development process. And the validation of your technology particularly as you use various agents (ph) or constructs (ph). It is more applications on the commercial side, so that is the first application. The second application is you develop a lot of learning (indiscernible) expertise, so that if a new entry into your own development programs you can move much faster.

And thirdly, if you are successful in any of these targets, then our money is allocated as I very well told you in my earlier discussion. There are monies now highlighted in the Project BioShield for Ebola. As I told you, we are one of the first programs we believe which is in clinical trials for Ebola. And if we're successful, that is, if we are NIH successful, we have commercial rights from the NIH and we'll certainly be in line to go after those numbers.

The same thing applies with Anthrax. Our vaccine, the plasma is inherently stable and one of the advantages for our Anthrax vaccine is our plasma technology's long-term stability. And if stockpiling is an important element of the bio-terrorism effort, plasma can be stored for a long period of time that could save the government money in the long run. Again, the trials had to be successful but we're very optimistic how both of those programs are going. Operator, are there any other questions?

There appear to be no questions from the phone at this time.

In that case, I want to thank you all for participating. We hope to see some of you individually or at one of your scheduled presentations before the next conference call. Thank you.

That does conclude today's presentation. We thank you for your participation, and you may now disconnect.