Brickell Biotech Inc (BBI) 2010 Q1 法說會逐字稿

Good day and welcome, ladies and gentlemen, to the Vical Inc. 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 first-quarter 2010 financial results conference call. Participating on the call today are Vical's President and Chief Executive Officer, Mr. Vijay Samant and Vical's Chief Financial Officer, Ms. Jill Broadfoot.

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 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 first-quarter 2010 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, everyone. In our call today, I will cover some highlights and perspective for our recent developments and do our outlook for the remainder of the year. We will then open up the call to questions from our invited participants. First, Jill Broadfoot, our CFO, will review our first-quarter financial results. Jill?

Thanks, Vijay. Financially, we had a solid quarter in line with expectations and with past performance. We generated revenues of $1.5 million in the first quarter of 2010 compared to $2.3 million in the first quarter of 2009. Operating expenses were $10.1 million in the first quarter of 2010 compared with $10.6 million in the first quarter of 2009. The net loss was $8.5 million in the first quarter of 2010 compared with $8.2 million in the first quarter of 2009.

Our net cash use during the first quarter of 2010 was approximately $9 million, which was offset by the $3 million of capital raised through the exercise of all remaining warrants. Our net cash use for the first quarter was consistent with our prior projections for the full year, which include anticipated receipts from new or expanded partnerships not currently contracted. We ended the first quarter with cash and investments of approximately $48 million, which is sufficient for our anticipated needs at least through the end of 2011. With that, I will now turn the call back to Vijay.

Thank you, Jill. I will start today with an update on our immunotherapy for patients with metastatic melanoma. First, I want to highlight the importance of the recent approval of Dendreon's Provenge vaccine for prostate cancer. This long-awaited event is a victory both for cancer patients and for those who are developing novel therapeutics to treat them. We believe the [path paved] to the approval process should help cancer vaccines and immunotherapies in general and if all goes well, our own Allovectin-7 should be among the first -- among the next candidates up for consideration.

In Jan, we announced completion of enrollment of 375 subjects in our Phase III registration trial, but we still had a number of patients who were in screening at the time. As a result, we actually enrolled 390 subjects by the end of Feb. This is important for a couple of reasons. First, it highlights the enrollment momentum we saw at the back end of the trial and this (inaudible) shows continued interest by investigators in getting access to Allovectin-7 for their patients. Since this study is not blinded for physicians, the momentum suggests that their experiences with [broad] patient study may be encouraging. Jill?

Second, it illustrates the importance of not closing the trial database too soon. Since we enrolled half of the total subjects in the last 10 months of the enrollment period, it is likely that half of the responders will be identified in the last 10 months of follow-up. We want to make sure we continue the trial long enough to capture all of these responders. An important additional benefit of keeping the trial open is that we can reasonably expect survival data to mature within the same timeframe as the final response rate data.

We expect to lock the clinical trial database in mid 2011 as we gain further clarity by monitoring trial progress over the coming months. We will provide periodic updates and timelines. Before our next conference call in August, we also expect to have the results of our next Safety Monitoring Board review.

Next, I will review the recent progress on our CMV vaccine programs. We are ramping up collection of the audit final data of our Phase II of our TransVax therapeutic vaccine for transplant patients. Data analysis should be complete by late summer and we will announce the results at a suitable forum in the third quarter of this year.

Just to remind you, the data will include all key virological endpoints after four injections and 12 month follow-up. Just to recap the trial background. This trial was conducted in stem cell transplant recipients. These patients are receiving transplants to restore their immune systems after immunoablative treatments for their primary leukemias and lymphomas.

In short, these are very sick patients with minimally functioning immune systems and their one chance at success with their transplant procedure. We only enrolled patients who were CMV zero positive as they are at the high risk for CMV deactivation during their recovery period before their new immune system becomes fully functional.

Our TransVax vaccine is intended to reduce or eliminate the need for toxic and expensive antiviral drug therapies currently used to control CMV during this period of vulnerability. CMV deactivation in this patient population typically peaks within the first 100 days after the transplant procedure and between six and eight months. So it's very important to mount a sufficient immune response early in the recovery period to sustain it through the second wave.

We recently reviewed the preliminary immunogenicity data for our TransVax vaccine, which was placebo through 12-month follow-up in our Phase II trial. We are pleased that our vaccine was able to enhance both T cell and antibody responses to the encoded CMV antigens and to sustain those responses at least through 12-month analysis. We also saw an encouraging boost in both T cell and antibody responses after the fourth injection, which could prove very important in controlling late onset CMV reactivation.

Anyone interested can review this data in the CMV section of our website. We look forward to seeing the final results with a full evaluation of viral load and clinical endpoints in the third quarter.

Our second CMV vaccine is CyMVectin, our prophylactic vaccine intended to prevent infection in women before they become pregnant to protect against transmission of CMV to the fetus during pregnancy. The FD&A, I am pleased to say, has allowed our Phase I IND for CyMVectin and we are exploring collaborative opportunities for further development and commercialization.

We are among the leading developers of CMV vaccines to address this serious unmet need of those at risk from this virus. We believe the CMV franchise has the potential to add significant value to our shareholders.

Next I'll discuss our pan flu program. The recent pandemic clearly demonstrated the limitations of the established vaccine approach. This was a close call. We may not be lucky the next time around. The H1N1 was a mild pandemic. It also provides an opportunity for us, with these pandemics, to demonstrate the potential of our technology.

Since our last conference call, we have seen a commitment of funding from the US Navy through the Henry Jackson Foundation to conduct a Phase I trial of our H1N1 influenza vaccine. This funding complements the earlier funding provided by the US Navy and the Department of Defense Transformational Medical Technologies Initiative, or TMTI. Together, these department agencies are working to protect our military forces against future pandemics and other biological threats.

We just announced the initiation of the trial yesterday. It took a long time to get the funding from the Navy, but I wanted to provide a brief description of the trial design and our timeline moving forward. This is a small study. It's a double blinded, placebo-controlled study with about 20 subjects getting the vaccine and 10 of the volunteers will be getting placebo. We will be evaluating a single gene vaccine encoding the H1 hemoagglutinin from the California 0409 strain.

The vaccine will be formulated with our Vaxfectin adjuvant and will be dosed at 1 mg. We will dose at day zero and day 21 and we will be collecting data on tolerability and immunogenicity. We should have our preliminary immunogenicity data from the 21-day follow-up before our next conference call. We will continue to track the subjects up to six months to [rally] the long-term immune responses and the sustainability of the antibody responses.

This Phase I trial allows us to build on the success of our previous H5N1 vaccine trial with a second pandemic flu target and further demonstrate the potential of our technology as it relates to speed and immunogenicity obviously. We are also expanding the human safety database for our Vaxfectin adjuvant and establishing a platform for emerging disease vaccines for potential future use for rapid protection of approximately 3 million US military personnel. We are excited to get this trial underway and look forward to seeing the data.

Now to the angiogenesis programs, which are some of the most exciting developments in Vical's partnered programs. Sanofi-Aventis is approaching completion of its multinational pivotal Phase III trial designated as the TAMARIS trial for advanced PAD with the FGF-1 gene therapy called Temusi. That's the product name, Temusi -- T-E-M-U-S-I. Sanofi has posted details about the TAMARIS trial on the website and you may want to check it out through the link on the Vical homepage.

The treatment and follow-up in this trial are expected to be complete in the third quarter and Sanofi expects to present data in the fourth quarter of this year. This product has the potential to be introduced into the market as early as next year. So we are very excited with how this partnership has developed.

Our other angiogenesis partner, AnGes, which also funds our Allovectin-7 trial, is awaiting approval of its Collategene product in Japan. It has a special protocol assessment with the Japanese FDA for -- the US FDA for a Phase III trial in the United States. AnGes continues to interact with the Japanese regulatory agency and is optimistic regarding the approval process.

In summary, I am pleased with the progress we have made this quarter. We are advancing well in our independent and partnered programs and are looking forward to reaching some key milestones in the remainder of 2010. Let me highlight a few of those. There will be a safety independent report on Allovectin-7 before our next conference call. We should have the final results in the third quarter from our Phase II TransVax CMV vaccine study and when we present that data, some of the key vital endpoints we will be presenting are the occurrence rate, which is the number of patients who reactivated at least once.

We will also be talking about recurrence of CMV infection. That is the number of episodes of reactivation. The peak viral load comparisons between the vaccine and placebo groups, the [80] end of the curve, which is the amount of reactivation over time and the antiviral usage, both the amount of usage and the duration of the antiviral therapy.

We should also have results from our Phase I H1N1 vaccine trial, data from Sanofi's Phase III TAMARIS trial, an update on approval of Collategene. We will be presenting at multiple investor conferences over the next several weeks and hope we have an opportunity to meet with some of you there.

That concludes our prepared comments. Operator, we are now ready to open the call to questions from our invited participants.

(Operator Instructions). Alan Carr, Needham & Co.

Hi, good afternoon. Thanks for taking my question. I've got a few on TransVax. What sort -- what's the timing of -- are we going to see one-year clinical data and in what form, I guess, should we expect to see this data presented?

So excellent question, Alan. First of all, let me remind you what data is going to be presented. We have already presented the immunological data after the 12-month follow-up. This will be data after four injections and 12-month follow-up. And let me repeat what I said before. We will be showing the occurrence rate, which is how many times CMV reactivation occurs in patients, the number of episodes, peak viral load, (inaudible), antiviral usage and some other endpoints.

We have not publicly announced, but we'll be -- sometime in the third quarter, we will probably present it as a latebreaking in one of the major conferences or if the timing doesn't match, we will present the top-line data on a special conference call. But stay tuned.

Okay. And then how's the strategy coming along here in terms of partnering TransVax? Do you have discussions ongoing? Do you feel that this trial is enough to entice a partnership or is there something else that potential partners are looking for in terms of development?

No, I think the partners are all waiting for the final 12-month virological endpoints because those are really critical endpoints. And we are working very hard around the clock and gathering all the data and putting -- getting closer to locking the clinical database.

And remember, these are immune-compromised patients and the fact that you are mounting such good immune responses in HIV-like immune-compromised patients and if we can translate that into virological endpoints, that's a big (inaudible). I think that should be sufficient to convince some of our partners. So the answer is yes, we are talking to people. Yes, people are waiting for the 12-month data.

If you decide to bring this one along on your own, what would the cost be for a Phase III trial?

Well, it all depends on the size of the trial and the size of the trial is decided on the definition of the endpoint. So I think it's hard for me to speculate in terms of what the size of the trial is. But this is not a several -- a couple of hundred patient study is what our expectations are, okay? Because remember, the reactivation rate is very high. It's almost 70% and we are validating that again in this particular trial. So you don't need a huge database to get proof of concept. You really have to have a discussion with the FDA in terms of the safety database they require. That's really going to drive the size of the trial. Not the clinical endpoints to my knowledge.

Would you have some sort of end-of-Phase III -- could you fit in an end-of-Phase II meeting this year or would that be next year?

We haven't publicly announced, but our thought process would be, first of all, we are pretty (inaudible) deals with the regulatory agencies. Probably have a Type C meeting first to decide on the endpoint and then do the end-of-Phase II meeting. So we get two shots in terms of engaging the agency.

Okay, great. Thanks very much. Appreciate it.

Stephen Willey, Thomas Weisel Partners.

Thanks for taking the question. Circling back again to the CMV program, is there any more clarity with respect to whether or not you may have a end-of-Phase II data package submitted to the FDA before the data is presented at a conference?

No, I think, as I said, the sequence of the event is we will probably present not the end-of-Phase II, but a package for Type C meeting to formalize the endpoint for the Phase III study because, when we meet for the end-of-Phase II study, we need to make sure we have the Phase III design, as well as the endpoint defined. So our thought process is to get the endpoint defined first, get an agreement with the agency, that's the endpoint so when we go have am end-of-Phase II meeting, our engagement is much tighter and we get agreements in terms of what we expect to do.

So presumably then, because you want to have an endpoint defined before that meeting occurs, then that meeting will not be a gating factor in kind of dictating the pace of a potential collaboration?

No, we have been working -- we are working with experts, [KOLs] in terms of people who actually deal with CMV in a clinical setting day after day and those are the people, including people who have done a tremendous amount of CMV work, are helping us put together whatever is relevant that the FDA will accept. In the end, the FDA has to rely on the outside experts and if they don't have internal expertise, they will call an expert committee. Fortunately, we are dealing with most of the experts in this field ourselves.

And then I guess with respect to the H1N1 data, is there really any reason, just given the similarities between that and the H5 program, that we should see really anything materially different from an immunogenicity perspective?

Well, I think so because, remember, the H5N1 vaccine, the conventional vaccine required 90 mcg doses times two to get like a 40%, 50% zero conversion, but as the swine flu H1 vaccine requires only 15 mcg times two. So you had almost a sixfold lower dose getting the better zero conversion. So we expect that, A, we should do better in terms of the zero conversion rates that we saw in H5N1, okay? So the answer is -- this is a very highly immunogenetic pathogen so we should see the same benefits that the conventional vaccines saw even better with the DNA vaccines.

That's interesting. And then I realize too that you guys pushed out some brief data with respect to a malarial vaccine. And I know it's kind of a small end, but really not knowing anything about malarial vaccines, just wondering if there's anything that we can kind of benchmark those response rates to.

It is. It is an amazing response and you have sporadic data coming out on malaria saying that you've got partial protection. You'll see the big pharma companies. But that's remarkable data because it's not a fully optimized set of constructs and the kind of sterile challenge protection they got, and I don't do what the numbers were, they were small numbers.

4 out of 15.

4 out of 15. That's pretty good. The best protection rates that people have got are in the high 80%s and 90%s when they use [aerated] sporocytes and that's the gold standard. Unfortunately, that's not a practical way to develop a vaccine. Is it as close to the aerated sporocytes? No, but it's a step in the right direction, okay? And this was done only with two injections. The Navy is using it. And they are going to be developing -- spending further time on it. So I think it also helps us in terms of expanding the validation of our technology.

Okay. And I believe, in that trial too, there was also really no relationship to antibody titers despite the fact that I think three out of the four protected patients had T cell responses.

Yes, malaria is a parasitic disease. There are various stages of the Plasmodium. There is a blood stage, there is a liver stage and people have never really been able to correlate immune markers with protection, not for lack of trying. People have been trying to develop a vaccine for a long time. So that's not unusual.

Okay. Thank you and congrats on the progress.

Thank you. Appreciate that, Stephen.

Ren Benjamin, Rodman.

Hi, good afternoon and thanks for taking the questions. Could you give us or can you describe for us the cellular and antibody responses that you saw through the 12 months? Were there any statistics that were done since you have a placebo arm? Were they statistically significant or close? Can you just give us some more details regarding that trial or the data that was just presented?

Yes, I think so. The data is on the site. Alan, do you want to comment on that?

Yes, I think that's probably the best thing to do, Ren, is just take a look at the website because we've got those slides from that presentation up there in the detailed immunogenicity results.

But there is statistical significance particularly in the T cell responses if I recollect.

We did not put p values into (multiple speakers) because these are preliminary data and they will be updated along with the virological data that we come out with (multiple speakers).

Sorry, I jumped the gun. The data is good or we wouldn't have put it on the website. But we will indeed, when we present that data in the third quarter, that whole package will be updated with p values.

Got it. And then after the H1N1 trial is completed, presumably it's going to be fairly quick, what are the next steps for a program like that? Do you secure additional funding to move on to a larger study? Do you then apply -- do you just apply for some sort of expedited regulatory approval? What are the next steps?

This is a question that I wanted to answer. This is like the Meatloaf song -- you took the words right out of my mouth. Let me tell you why we are doing this program and the other way to ask the question is 12 months have gone, the pandemic influenza has come and gone, why is Vical doing this study? The reason we are doing this study is, first of all, the entire funding for the study has come from government sources for us. It allows us to expand our database both on safety of Vaxfectin and validation of the technology.

But more importantly, the monies that come from TMTI, which is the Transformational Technologies Initiative and their goal is to vaccinate 3 million American military personnel, okay, from emerging pathogens. They are not concerned about swine flu and pandemic flu. (inaudible) just comes in for the general population in terms of stockpiling. Here, they are looking at emerging pathogens and what they want from us is a proof of concept that can retranslate the speed with which we made this vaccine and got animal data.

Can we translate that animal data into humans? And if that translates to humans, then we'll get a chance to work with them on these undisclosed pathogens where their goal is to make 3 million doses in bulk and put them away. And so when that pathogen emerges, then the regulatory process starts.

So it's a pretty clean kind of concept, okay, as opposed to relying on a (inaudible) type for six, seven years, HHS grant where you [tie up] the entire company. And 3 million doses for a company of size at a bulk level, which is a reasonable kind of target that we can deal with as opposed to trying to contract it to third parties. So our goal is to work with the TMTI on emerging pathogens. Let the big boys go and stockpile this pandemic influenza vaccine because that's not in the cards at this stage.

And so just going forward with this thought process, what is the sort of economics that could be generated from this? I would imagine that there would be a lot of negotiations, but maybe there is so much money for this group that you can charge more pharmaceutical type prices and obtain a very good margin.

Well, I think the logical pathway would be if this trial pans out the way it ought to be, and the data comes out in terms of immunogenicity, the antibody levels and the sustainability of the antibody level, the next step would be to work on one such pathogens, go through the same process again, run a Phase I trial and demonstrate to that that we can mount immune responses, which will be funded by them. And if that occurs, at the end of that, you need to negotiate with them for price per dose and make the stuff.

I can't speculate at this stage, but take a look out what the government has paid even for companies like Sanofi and GSK and others. Those are pretty reasonable prices. For a company of our size, that kind of pricing environment of $20 to $30 a dose at a bulk level would be very lucrative.

Got it, thank you very much. And congrats on your progress.

Than you, Ren. Nice chatting with you.

Eric Schmidt, Cowen & Co.

Good morning, guys. Vijay, just a couple more questions on TransVax. Could you remind us with regard to the 12-months update whether this study is anyway powered to show recurrence rate differences or whether we are just looking at numerical maybe separation?

Each of the attributes -- in some attributes, indeed, it's powered and some attributes, it's not powered. But our goal is to show you p values across all those when the data comes down, just numerical differences or trends that we showed you last time and let the Street, the analysts and the pharma companies judge. But I think we feel, on the key endpoints, we should get some significant differences between placebo and vaccine and show statistical differences.

Okay. And then in terms of your partnership discussions, is there a type of collaboration that you are now shooting for? Are you still thinking about maybe separating the two CMV indications? Or would you just like to outlicense the entire (inaudible) program and sit back. Maybe you can talk.

Yes, I think clearly the individuals who are interested in the CMV TransVax program are a complete different set of companies than people who are interested in the CyMVectin program. People who are interested in the CyMVectin program obviously are the people who have better sources to go the long way. People who are interested in the TransVax program are midsized companies who go after orphan drugs because it's kind of an orphan kind of indication. There are a fixed set of patient populations. We are also looking for companies who have strength in Europe because we would like to do the trial also in Europe. Because, remember, our trial right now in TransVax is US-centric and if we could get an opportunity to do this trial in Europe, that would be great and that will allow us to accrue to the Phase III trial faster.

So they are different entities. Is it possible that there will be a single entity solicit both programs? Maybe, but right now, our pathways in terms of talking for both these commercial opportunities are two different set of groups.

And is one set of discussions more advanced and does the TransVax data kind of provides you with --?

The TransVax data is going to also provide us leverage on the CyMVectin program because here you are showing immune-compromised patients immune responses, both T cell and antibody responses, which kind of gives anybody looking at CyMVectin hope that indeed what we are saying, along with, by the way, the H5N1 flu data, which is antibody immediate data and the upcoming H1N1 data. All those [three] data package will help CyMVectin. But the CyMVectin data, the TransVax data is based on the TransVax actual data that will come out in September.

So should we expect a TransVax partnership before anything on CyMVectin?

Well, it's hard to predict how these partnership discussions go on. I can tell you there is reasonable interest right now. If I have something to announce, I would have announced it, but we are not there yet.

Okay, thanks a lot.

(Operator Instructions). Nathan Cali, Noble Financial.

Hi, guys. Good afternoon. Thanks for taking the question. Had a couple of questions that already were answered, but on your ONCEPT canine vaccine, is there an expected market opportunity there and are there any other currently marketed vaccines?

So the answer is there are no vaccines in the melanoma field to my knowledge. This is the first therapeutic vaccine approved in the history of mankind, either for animals or humans. It got approved before Provenge, so it's a groundbreaking approval, okay? I don't think there are any melanoma vaccines (inaudible) to my knowledge. I think the launch is proceeding well. We don't have the significant experience yet, but I would say, by the end of this year, we should have a general idea how the penetration is going. It has also been launched in Europe, from what I understand, in a few of the select countries. So I think we will find out how this proceeds.

And a question that you may not have the answer to yet, but on CyMVectin, any expectations for a Phase I and when that may start?

No, I think, as Eric Schmidt's question before, our focus right now -- we've got so much on our plate. We've got Allovectin-7 data collection, we've got TransVax in terms of both the data collection, the strategy with the FDA, we've got the swine flu study going on and we are not going to start on a new study. We want to make sure we manage our finances well and therefore, we would be looking actively for partnering that program. And again, that is dependent on the quality of the data that will come out in the third quarter of this year.

So you would probably partner that before you started a Phase I?

That is our goal at this stage.

Okay. And being that you guys have gotten some pretty good results from TransVax, and those patients are immuno-compromised, would you expect some better results in CyMVectin since that patient population will be a little bit different?

Yes, those are (inaudible) peers. It's also antibody immediate response. Vaxfectin is a different adjuvant. So it is a completely different modality and if our H5N1 and our swine flu vaccine, which is just getting into the clinic, the data from both [that] is to be translated to CyMVectin, we should expect very good results. Hopefully, better than what people have got with a protein-based vaccine. Just published in the New England Journal of Medicine, so you can look at the responses there.

Okay. Thank you.

And at this time, there are no further questions. I would now like to turn the call back 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 may now disconnect.