Brickell Biotech Inc (BBI) 2008 Q3 法說會逐字稿

Good day and welcome, ladies and gentlemen, to the Vical Incorporated financial results conference call. At this time, I would like to inform you that this conference is being recorded and that all participants are in a listen-only mode. At the request of the company, we will open the conference up for questions and answers from invited participants after the presentation.

I will now turn the conference over to Mr. Alan Engbring, Executive Director of Investor Relations. Please go ahead, sir.

Hello, everyone. Welcome to our third quarter 2008 financial results conference call. Participating on the call today are Mr. Vijay Samant, our President and Chief Executive Officer; and Ms. Jill Church, our Chief Financial 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 program that are subject to risks and uncertainties that could cause 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 third quarter 2008 financial 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 Alan and welcome to all our participants. I think it's appropriate to begin today with some comments on the current economic environment and the implications for running a biotech company. We all know that the financial markets hate unknowns, and these have been very difficult times. Now that we know the results of yesterday's election, some of you are celebrating or lamenting the outcome, this one unknown, which was a cloud on the market, has been resolved. We hope the next administration will begin restoring stability and growth for our nation and leading us back to a position of strength in the global economy.

I would like to state publicly what I've told many of our investors during the last few months. We share in the disappointment of our stock price and we do not believe it reflects the true value of our company. Vical is in a better shape now than it was two years ago, both in terms of the breadth and the status of our programs and we're very excited about the future prospects of our company and remained focus on creating long-term shareholder value. Specifically, that means focusing on key independent development programs with the goal of advancing towards commercialization, leveraging additional applications of our technology through our partnerships, and more importantly, effectively managing our cash balances.

We have continued to make excellent progress with our clinical programs since our last conference call. And in today's call we'll update on each of our key independent and partnered programs and some of our recent developments improving our Phase III program for Allovectin-7 for metastatic melanoma, our Phase II CMV vaccine trial in stem cell transplant patients, our panflu program which has generated compelling Phase I data for which we are pursuing potential paths forward, our Vaxfectin adjuvant which continues to demonstrate benefits in a growing number of vaccine applications, and our partnered Phase III programs for angiogenesis, which could provide the first human product approvals based on our technology. Before I do that, I'll ask Jill Church, our CFO, to review our third quarter 2008 financial results. Jill.

Thank you, Vijay. We reported financial results for the third quarter of 2008 earlier today. These results were consistent with the results for the same period in 2007. The third quarter results reflect our ongoing activities in all of our clinical stage development programs, including our Phase III trial of Allovectin-7, our Phase II trial of our CMV vaccine and our Phase I trial of our pandemic influenza vaccine. These programs continue to provide our best long-term prospects.

Overall, our results for the third quarter are in line with our expectation for full year 2008, net loss and net cash burn. We ended the quarter with $49 million in cash, which is sufficient for our anticipated needs through at least 2009. Further details of our financial performance during the first nine months of 2008 will be available within the next few days when we expect to file our quarterly report on Form 10-Q. I will now turn the call back to Vijay.

Thank you, Jill. I will now move on to update on key independent and partnered programs beginning with Allovectin-7. Our Phase III registration trial for Allovectin-7 in patients with advanced metastatic melanoma is proceeding with ongoing support from our Japanese partner AnGes. AnGes has provided $15 million of the $23 million committed for this trial through a combination of equity investments and cash payments.

In addition to nearly 50 sites actively recruiting in the United States and Canada, we now have clinical sites open in Belgium, Germany, Italy, the Netherlands, Poland, Russia, Spain, and Switzerland. We'll be opening additional sites soon in Croatia, France, Israel, and Brazil. That means we'll have in excess of about 80 sites, including strategic international locations as we advance into a peak enrollment period. The rational for this ongoing geographic expansion is to allow completion of the patient recruitment as quickly as possible. Vical is conducting the Phase III [registration] study under a special protocol assessment agreement with the FDA.

The primary end point, if I remind you again, is an objective response rate at 24 weeks or more after randomization. As a reminder, Allovectin-7 already has offered drug designation for metastatic melanoma and should be eligible for a fast track review. We hope that these factors will translate into relatively short and clearly defined timeframe from completion of enrollment to an approval decision, assuming the data meets the appropriate endpoints.

CMV -- during the third quarter we are pleased to pass the milestone of enrolling 80th stem cell transplant patient in our Phase II CMV vaccine trial. As a reminder, patient undergoing stem cell transplants typically is suffering from advanced cancers of the circulatory or lymphatic system and must undergo complete or nearly complete destruction of the immune system to clear the cancer. These patients then receive a transplant of stem cells from a healthy donor, which can start to rebuild their immune systems. The transplant recipients are treated with immunosuppressive drugs to prevent graft rejection. Suppression of the immune system frequency allows latent CMV to reactivate, causing serious medical complications during the recovery period. Our vaccine is intended to reduce or eliminate the need for anti-viral drugs during these periods. We expect during the current quarter to announce results of an interim analysis in this trial on both subjects who are enrolled by the end of March of 2008. We believe that successful completion of this trial will provide broad proof of concept for a CMV vaccine and could open the door to safety and efficacy testing in a much larger market for preventing congenital CMV disease. They're currently validating opportunities to move forward with such a program and exploring interest from potential partners.

I would now move on to our program in the panflu area. Our partner, (inaudible) AnGes MG expressed interest during the third quarter in our panflu program. Both our companies signed a non binding letter of intent in October indicating our mutual interest in licensing the development of marketing rights for our H5N1 panflu DNA vaccine in Japan, only, to AnGes. While we do not normally announce a non-binding letter of intent, we agreed to do so at the request of AnGes. And this was an exception in this case to allow them to discuss the proposed license agreement with the Japanese Ministry and Health, Labor, and Welfare and with key shareholders in the interest of securing funding for this program.

You may recall that we reported breakthrough data in July showing that our panflu program achieved a potential protective level of antibody responses by day 56 in at least 50% and up to 67% of the valuable subjects in high dose cohorts in 100 subject Phase I study, with no respondents in the placebo cohort. In our trial, the responders were defined as those subjects achieving H5 hemagglutinin inhibition titers of at least 40, and achieving at least a fourfold increase from baseline hemagglutinin inhibition or HI titers. Since then, we reported expanded data showing that the highest dose cohort responses were sustained in 80% to 100% of the responders through the end of the study at day 182. That's almost six months after vaccination. Similar results for a vaccine deployed during the early stages of pandemic outbreak could provide substantial protection to the at risk population and potentially alter the course of the pandemic. We are continuing collection of more data from this trial and will provide updates in the coming months at an appropriate scientific conference.

Let me now move to Vaxfectin. Our Phase I paninfluenza program marked the first use in humans of our partnered Vaxfectin adjuvant -- patented Vaxfectin adjuvant -- and was a highly successful initial application. The adjuvant is well tolerated and other Vaxfectin formulated DNA vaccines also demonstrated good tolerability and significant immune responses in multiple animal models, including nonhuman primate models. Vaxfectin has also demonstrated a significant dose sparing effect with both the commercial seasonal influenza and the government-stockpiled H5N1 panflu vaccine. A number of potential collaborators are exploring additional applications for Vaxfectin as an adjuvant for other protein based vaccines against infectious diseases as well as cancer. We have not publicly disclosed the names of these collaborators. However, some have been disclosed. I want to cover them in this talk this morning.

We have -- on a protein based influenza vaccine we reported previously that adding Vaxfectin to the protein based commercial seasonal influenza vaccine or to the stockpiled protein based H5N1 panflu vaccine allowed up to 10 fold dose pairing in mice, providing equal or better immune responses with as little as 0.1 of the dose required for unformulated vaccines. So you can take that inventory and spin almost tenfold. Or latest data from additional studies in mice showed that Vaxfectin formulated seasonal influence on vaccine generated broader, more balanced antibody responses than unformulated vaccines and also generated influenza-specific T cell responses. In addition, we are able to drive substantial increases in either the antibody or T cell responses without reducing the other type of response compared with the unformulated vaccine by adjusting the ratio of Vaxfectin to vaccine. The ability to tailor the type of immune response would present a major advantage in vaccine development.

Cancer vaccine. In the first demonstration of mice in a Vaxfectin formulated cancer vaccine, we saw a 100 fold increase in antigen specific CD8 T cell responses compared with unformulated vaccine. The CD8 T cells are deployed by the immune system to identify and destroy [infected] or cancerous cells. We expect that such a significant increase in these essential immune system agents will provide an important advantage in the future development of cancer vaccine.

HIV. We have entered into research collaboration with the Karolinska Institute, or the [Karolinska Institute] as it's best known in English, which is a Swedish institute for infectious disease control to evaluate Vaxfectin formulated preventive DNA vaccine against HIV in a Phase I human clinical trial as part of a prime boost regimen. The Vaxfectin adjutant is intended to optimize the priming of immune responses which could increase the performance of the viral vector vaccine or potentially even eliminate the need for such a vaccine boost. Progress with DNA vaccines for HIV continues despite the setback suffered by other approaches in the recent past.

Measles. The current live attended measles vaccine is not effective in infants less than 12 months also because of the antibody inherited from their mothers block the vaccine's activity. DNA vaccines are not subjected to maternal antibody blocking because they do not contain any part of the pathogen itself. Studies in both juvenile and infant nonhuman primates showed that a Vaxfectin formulated DNA vaccine provided long-term protection against measles challenge. Results were published in the August issue of Clinical and Vaccine Immunology by collaborators at Johns Hopkins School of Public Health and School of Medicine. Diane Griffin was the principal investigator. An effective and affordable measles vaccine that could provide infants less than 12 months of age would be a tremendous benefit in developing countries, and DNA vaccines offers the best approach to that pathway. The Vaxfectin adjutant is currently being evaluated by potential partners for a variety of additional vaccine applications.

Let me now move on to the angiogenesis programs. Among our ongoing partnered programs, the most advanced is our angiogenesis collaboration with AnGes. AnGes filed an NDA in Japan in March of 2008 for the use of Collategene, which is their trademark, as a treatment for PAD and Burger's Disease. We received $1 million milestone payment from AnGes in July reflecting the continued progress of the Collategene program program. If it is approved in Japan, Collategene would become the first commercial product for human use based on our technology. From all the feedback we received, the discussions with the agency have gone well so far, but it's still hard to predict the timing of the approval. We're hopeful the approval will come in the next six to 12 months since the date of the filing.

We also have a second angiogenesis program with Sanofi-Aventis, who is currently conducting a [planned] patient multinational Phase III registration trial. The primary end point in the Sanofi trial is prevention of amputation in PAD patients which is based on clear benefit provided by the same treatment in Phase II study, which reached statistical significance. Sanofi's latest projection is to file a BLA for this program, which would provide some [peer] of exclusivity in most of the international markets being pursued.

In conclusion, we look forward to continued progress with our independent programs and continued news from our partnered programs through the remainder of the year. While financial markets remain in turmoil, Vical programs are in great shape and driving forward. We'll continue to operate our business in the best long-term interest of our shareholders. That concludes my prepared comments. Operator, we're now ready for any questions from our invited participants. Thank you.

Thank you, Mr. Samant. The question-and-answer session will begin at this time. (OPERATOR INSTRUCTIONS) Our first question comes from Alan Carr of Needham. Please go ahead.

Hi, good afternoon, everyone. Wonder if you could tell us a bit more about cash and cash burn for this year and maybe into next year as well. Do you expect a similar level in '09 as in '08?

Well, we ended the last quarter with about $60 million in cash. Jill, why don't you fill on?

We ended the quarter with about $50 million in cash, and as Vijay said in the beginning, we're going to be very prudent with our cash management, particularly in these tough economic times. But given our cash burn guidance of $27 million to $32 million, we should be ending the year with $44 million to $39 million, which is at least sufficient for our operations through 2009. So we're doing good.

Okay. And then if I can ask about the CMV program as well, how many patients were enrolled by March of '08? How much data will you have available in this interim efficacy analysis?

We're going to go to put all that data out in the next month or two, I guess, Alan, is that fair?

Yes, as soon as we get to a point where we're able to do that.

Obviously, it's not a large number of patients, but I think the only reason we'll publish the data if it makes sense. So stay tuned. I think more important also is that we will go beyond the 80 patient point and also you'll hear that when we announce the completion of the enrollment.

Okay. I recall that you had said at one point you may enroll up to 240 in this trial. Is that still a goal here or is it somewhere in between 80 and there?

The confusion here I think is we have two arms in this trial. There's a recipient only arm and the donor recipient arm. Each of those was to enroll up to 80 recipients. So that would be a total of 160 recipients if you went full bore for each arm.

I understand. That makes sense.

Another 80 donors.

The focus of the study is primarily in the recipient arm only. So that is where we are focused.

After we owned the recipient only arm, we announced after that that we were focusing on that arm to the exclusion really of the donor recipient arm, and so we've been really concentrating on that recipient only arm.

So you have 80 recipients so far, is that right?

Yes.

Those are the key in terms of assessing the value of the vaccine.

One last item on this is you mentioned that next step was to go to a broader CMV population after this, potentially with a partner. Was that something that you would do after the CMV trial is completed or was that -- is that going to be based in part on this interim analysis?

Well, the answer to your question is both yes. I mean, first is the term analysis has to be favorable to make sure the vaccine is immunogenic in these immune compromised patients. Having said, that the pathway for going in congenital females is a completely different pathway compared to this patient population. So they are really parallel pathways. But we [won't] take that path too forward. A partner won't fund it unless they see results from this study.

Final results, you think?

Even the interim results should be a good indication how the trial is going. If we don't have good interim results it doesn't make any sense for somebody to -- then they'll say let's wait for the final results.

Okay. Fair enough. Thanks very much.

Thank you.

(OPERATOR INSTRUCTIONS) And our second question comes from Tom Shrader with Rodman.

Good afternoon, guys.

Hi, Tom.

In the CMV trial, just to follow up a little bit on the previous line, is immunogenicity pretty much what you're interested in or are you you interested in titers in patients? Given the different -- ?

We're interested in multiple things. We're interested in immunogenicity because if you don't have immunogenicity, that means the vaccine is of no value. Everything else becomes [naught]. That's the first screen. The screen subsequent to that is the number of anti-viral treatments the patients get, the duration of anti-viral treatments, CMV disease -- and viral load.

So if you get good immunogenicity, do you think that's enough? Because the other ones are extremely subjective end points. They could be all over the place depending on different centers.

Absolutely. The fact that you can get immunogenicity in these immune compromised patients and the vaccine takes in the patient, that's really terrific data.

Then would you be pretty confident it would work in pregnant mothers, things like that?

Absolutely. If you can take immunocompromised patients and show the vaccine works in them, then you can go on to healthy mothers who have good immune system, it's definitely going to work in them.

So you think it would be enough to partner, just to show immunogenicity?

It's also a pretty exciting data from a pure scientific perspective, okay. Remember this is also showing immune responses in individuals who already have deep-seated infections, it's a therapeutic vaccine response, okay.

Okay. And kind of along the same things, on Vaxfectin, are you looking to partner that exclusively in the panflu arena or is there interest in trying to help other vaccines? I'm sure you know a lot of vaccines.

We have said that before. I'm not saying something different. We're working with a variety of people. We're working with panflu -- with Vaxfectin on panflu. We're working with Vaxfectin in the field of cancer. We're working with Vaxfectin in the field of [SR&A], variety of approaches are being tested. We're really leveraging this adjutant, not just for panflu, but for a variety of other applications that we now have human data where it's been tolerated, well tolerated -- the feather in our cap or giving the confidence to people who want to test it.

Has the panflu data increased interest?

Absolutely. It's one of the best human data that we have put out with DNA vaccines. All these years, if I may point out to you, DNA vaccine data has been tried on targets such as HIV where no other approach has worked. This is the first time we have taken and showed in humans that an accepted analytical method that our vaccine performs equal or better compared to the other approaches.

How about the panflu, the different -- the subtype analysis and cross-protection, when will we see those data in?

We put some of the data out already, Tom. We showed that the vaccine -- I will send you the data. The vaccine is indeed cross-protective, and we'll put on more cross-protection data as I told you in the end. We're doing more data. We'll produce, get some more T cell data, more cross-protection data. But the first cut of the data is already presented.

I saw the first round.

More will come out.

Thank you, Vijay.

Thanks again.

(OPERATOR INSTRUCTIONS) If there are no further questions, I will now turn the call over to Mr. Samant.

Thank you all for participating. We hope to see some of you individually at one of our scheduled presentations before the next conference call. Thank you.

Ladies and gentlemen, this concludes our conference for today. You you may now disconnect.