Brickell Biotech Inc (BBI) 2010 Q2 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 this request of the Company, we will open the conference up for questions and answers for 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 second 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 reporting on Form 10-Q filed with the Securities & Exchange Commission, as well as the specific risks and uncertainties noted in Vical's news release on second 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, Vijay Samant.

Thank you. Welcome to all of the listeners. I will give you the highlights of our recent developments on our call today, update our outlook for the remainder of the year, and will then open the call to questions from invited participants, but before I do that, let me have our CFO, Jill Broadfoot, give you a financial update for this quarter.

Thank you Vijay. Financial results for the second quarter and first half of 2010 were consistent with expectations. Revenue for the first half of 2010 was $3.5 million, compared with $6.2 million for the first half of 2009, reflecting a reduction in revenue recognized from AnGes, as we approach completion of our Phase III Allovectin-7 trial. Last year's revenues also included a $1.5 million milestone payment from Merck for its cancer vaccine program.

Operating expenses were generally consistent year-over-year. The net loss was $16.9 million in the first half of 2010, compared with $14.3 million in the first half of 2009. We ended the first half of 2010 with cash and investments of approximately $40 million. Our cash used during the first half was approximately $18 million, which was partially offset by inflows of approximately $5 million from warrant exercises, which was consistent with our projections for the full year.

As a reminder, our forecast range included anticipated cash receipts from new or expanded partnerships not currently contracted. We continue to make progress towards those potential partnerships. With that, I will turn the call back to Vijay.

Thank you, Jill. I will cover the highlights in our developmental programs today, beginning with an update on our Allovectin-7 Immunotherapy for patients with Metastatic Melanoma. The recent approval of [Prolaunch] coupled with BM as a second line melanoma data therapy has created additional visibility for immunotherapy. I won't go into details about that data, but I want to make a few observations.

First in safety in our Phase II trial there were no drug related Grade III or IV adverse events, there were no discontinuations due to tolerability. We believe that is more impressive when you consider the average age of patients enrolled in that Phase II study was 60, and we treated several patients in their 90s. In our ongoing Phase III trail, an independent safety monitoring board recently completed four scheduled safety analysis, and recommended continuation of the trial for protocol. We believe the safety profile of A7 if it receives marketing approval, will make at it a compelling choice, especially for patients who are not able to tolerate toxic chemotherapy or biotherapy agents.

Second on efficacy, our Phase III trial was designed under an SPA to support approval as a post line therapy, we are comparing A-7 head to head against the chemotherapy standard of care. We believe our primary end point of response rate at 24 weeks, represents a meaningful benefits to patients, it will also evaluate survival. The historical chemotherapy controls have been typically demonstrated median survival of 9 to 12 months, A-7 achieved a median survival of almost 19 months in our Phase 2 trial. If we reach our expected goals in Phase III, we believe A-7 will be an attractive treatment option for metastatic melanoma.

Third on approach, while both [EPNA cell or] immunotherapies that rely on different and potentially complementary mechanisms of action, A-7 is designed to make tumor cells more visible, target for destruction by T-cells, EP is designed to reactivate these cells that have been down regulated by cancer, both products because of their unique mechanisms would have the opportunity to address significant unmet need for patients with metastatic melanoma. As a reminder, we completed an enrollment on our Phase III trial in February, with a total of 390 subjects. We expect to log the clinical trial database in the second half of 2011, as we gain further clarity by monitoring the trial progress, in the coming months we will provide you periodic updates and timelines.

Next I will review the status of our Phase II trial for our TransVax CMV vaccine. As we have noted previously these are primarily leukemia and lymphoma patients receiving transplants. We enrolled CMV-seropositive patients who at high risk for CMV reactivation during their recovery period, our TransVax vaccine is intended to reduce the need for toxic and expensive antiviral drug therapies used to control CMV, while the patient's immune system is being restored.

There are three important data sets to consider in our Phase 2 trial. Pay attention to this very carefully. The first as in most trials is safety. We had a clean safety review early in the study. There were no serious safety issues that prevented us from completing the trial for protocol. As part of our final data analysis will be comparing the full safety profile of the TransVax vaccine to the placebo.

In our last quarterly call we received a second data set, which is immunogenicity for our TransVax vaccine versus placebo, to the final 12-month follow-up, these data have been presented at our conference in April, and are available on the CMV section of our website, we are pleased that our vaccine was able to elicit sustained T-cell and antibody responses to the encoded CMV antigens. We believe this is the first time a vaccine has demonstrated success in immune-compromised patients. We also noted a boost in both T-cell and antibody responses after the fourth injection, which is relevant for the late onset of CMV reactivation.

The third data set involves efficacy, and we are evaluating a broad range of possibilities in this end-point defining study. Our four-month interim analysis last summer, which is available on our website, started to help us focus on the most important biological end points, such as time to initial viremia, duration of viremia, the number of viremiac episodes and peak viral load. Our goal for the 12-month analysis and the crux of the study is to complete that process and identify the most relevant efficacy endpoints for a Phase III trial. We look forward to presenting the final Phase 2 data and will announce the presentation details when they are confirmed. We have been working with the leading CMV experts and transplantation experts throughout the Phase 2 trial, and we have enlisted their help in designing a proper Phase 3 trial, we expect to review our proposed trial design with the FDA as soon as possible, in order to secure the necessary approvals to allow us to begin a Phase 3 trial next year.

I will shift now to our pandemic influenza program. Our ongoing Phase I trial of our H1 vaccine is being supported by funding from the US Navy and the Department of Defense, as transformational medical technologies program, or TMT, this trial expands on the success or our H5N1 vaccine, enrollment in this trial took longer than expected primarily because of a higher percentage of our volunteers tested positive to the H1N1 influenza virus. Remember we just started this trial in the late second quarter and by that time the H1N1 flu season has swept through the US, so is was hard to find patients. However we were able to find enough patients to complete enrollment, and are now back on track with the trial progress.

I am going to provide an update to one of our most exciting pre clinical programs, our vaccine for Herpes Simplex 2, or HSV-2. So last week at a Herpes Conference, we presented pre clinical data we believe were quite impressive. First a little background of the disease. HSV-2 is a Herpes virus, which means by the way the same family as CMV, because once you are infected, you are infected for life. After the initial sexually transferred infection the virus resides in a latent state in the ganglia, periodical outbreaks, genital lesions, and genital lesions lead to additional virus shedding and disease transmission.

At least 40 million people in the United States are infected with HSV-2, and about 1.6 million additional people are infected each year. About one out of six individuals in the US, and one out of four worldwide is infected with HSV-2 by age 50, so it is really a pandemic in the true sense. HSV-2 infection also significantly increases the risk of acquiring HIV. This is no approved vaccine for HSV-2, patients are typically treated with antiviral drugs, but they are inconvenient, expensive, and prone to drug resistance. The cost of treating HSV-2 in the United States are in the billions of dollars primarily related to drugs and outpatient medical care. Better approaches are clearly needed to reduce the HSV-2 lesions, shedding and transmission.

A prophylactic vaccine encoding HSV-2 glycoprotein D antigen, by the way it is a DNA vaccine, was formulated with our Vaxfectin adjuvant, it produced encouraged results in our pre clinical studies. Let me summarize those for you. The vaccine elicited antibody responses in 100% of mice against encoded antigens. It protect 100% of mice against subsequent challenge with a lethal dose of live virus. It reduced virus shedding in mice, both at primary and latent infection site, it elicited sterilizing immunity in 80% of mice as evidenced by no detectable virus after challenge, either the primary or latent infection sites.

The therapeutic vaccine encoded glycoprotein D protein as well as 2 HSV-2 tegument proteins, and was tested in a guinea pig model, compared with placebo, our vaccine significantly reduced the recurrence of HSV-2 lesions in animals with latent infection, with a P value of less than 0.05. They are excited by the progress so far, and pleased that the grant has been extended for another year. We intend to continue to develop this vaccine to address this significant unmet medical need. We will keep you posted on our progress.

Angiogenesis programs, Sanofi Aventis has now passed the final 12-month follow up point in its multi-national pivotal Phase 3 trial of Temusi, the clinical trial is known as TAMARIS, it is a gene therapy for advanced PAD, this double-blind placebo controlled trial enrolled more than 500 patients, and was designed to expand the safety and efficacy database from the successful Phase 2 trial, Sanofi expects to present the data in the fourth quarter of this year, and if all goes well, this could put this product in the market as early as next year.

In conclusion we are advancing well on our independent and partnered programs, and are looking forward to two important milestones before the year end. We expect to present final data from our Phase 2 double-blinded TransVax CMV vaccine study in September. Sanofi, our partner for a long period of time, expects to present the final results from the Phase 3 Temusi PAD trial in the fourth quarter.

We will be presenting at multiple investor conferences throughout the fall, and look forward to seeing some of you personally there in the future. That concludes our prepared comments. Operator, we are now ready to open the call to questions for my invited participates. Thank you.

Thank you Mr. Samant. (Operator Instructions). Questions will be taken in the order they are received. Please stand by for your first question. And our first question comes from Alan Carr,Needham & Company. Please go ahead.

Hi, good afternoon. Thanks for taking my question.

Hi, Alan.

You mentioned earlier that when you were talking about burn gel, that you were factoring in potential partnership revenue. Can you give us a sense of where things stand with the various programs that you are seeking to partner, and the extent of revenue that you are expecting from these partnerships this year?

Well, it is an excellent question, Alan. Obviously we are in active discussions, but we don't have partnership in hand, because if we had one, we would have told you. The revenue projections that we have included in our bond rate are not so huge that is it going to blow our bond rate out of line if we don't accomplish this particular partnership goal. I think the issue is not whether we are going to accomplish the partnership goal, but the timing of when that is going to occur, a good probability it may occur before the end of the year, if it doesn't occur it may shift one quarter, but independent of that, we have sufficient cash, okay.

Okay. And then thanks for going over the HSV-2 program. When do you think this one might move into the clinic?

Well, as I said in my formal presentation that the grant has been extended for one year, that means we want to do some additional work, okay. We want to put the program through some additional stringent challenges. Fine-tune the makeup of the vaccine to make sure that even further improvement on the data that we got.

So I think some time in the second half of the year, we should be in a position based on the data to decide where we want to take program, but the data so far is very encouraging, as you know the data that I mentioned and I hope you guys captured it, one out of four individuals in the whole world is inflected with HSV-2, and those numbers may be understated. So this is a pretty nasty bug.

And lastly, the internal question, anything new on Collategene approval in Japan?

I didn't mention anything specifically, because we haven't heard anything new, and the outcome of that is certainly in the hands of the Japanese regulatory authorities. Our partners are told they are going to hear it some time in the second half of this year, so we wait patiently for the outcome, okay?

And just sticking to their guidance of the second half of this year?

Yes, it better be, because it has been going for some time, okay? There are not that many patients for the agency to go through now, and I think both they and the agency are under pressure to make a call on this, okay?

Okay. Thank you very much.

Our next question comes from Eric Schmidt with Cohen and Company.

Hi, Vijay, how are you?

I amterrific, how are you?

Not bad. Just on the AnGes front, since we were discussing the approval in Japan. Is there any update on the ex-Japanese study starting up?

The PAD study, you mean?

Yes.

No, they are as we have a said previously, they are awaiting the outcome of the approval in Japan before embarking on that study. Because obviously that will be a pivotal point for them to even raise some more money for funding that study. They have sufficient cash to start the study, but they want to raise more money to get the study to its completion, so I think those events are both tied from a science perspective as well as from a financial perspective.

Turning to your own pipeline and a couple of milestones, do you expect any immunogenicity data from the H1N1 study this year?

Yes, I would say hopefully by second half of this year, okay. Alan, what did we say?

Well, our original guidance was delayed because of the longer time period to enroll patients, but we should have something out by fourth quarter.

By fourth quarter. Yes. Yes, fourth quarter we should have the data.

And I know you can't say exactly when the Allovectin results might be out, but is mid-next year still a decent estimate there?

I think we should have a good idea going into in first quarter in terms of how the, remember there are two issues in Allovectin-7, right. We have a minimum of 12-months of follow-up. And that 12-month follow-up ends in February, okay. At that point in time, if all of the patients are off treatment then it is a matter of closing the database, but there are still a lot of patients under study, then we are not going to close the database, and continue to treat the patients, because we want to make sure we get responders out, the study is blinded to us. So by February of next year, we should have an idea of where we are going to be.

And the second important point is survival. Okay. We want to make sure when we close the database, we also lock in the survival. So I think at this point in time, middle of the year, or second half should be a reasonable time, but we will give you a better understanding in the first quarter of next year.

Okay. And last question in terms of TransVax, and its progression into Phase III. Is that a study that you could start on your own, or would that be partner dependent?

We would love to partner the European component of it, because as you know the study that we done so far is in the United States, and unlike prolaunch where there are differences in terms of a treatment or modalities between US and Europe, the transplant modalities or the treatment modalities between US and Europe are pretty identical. So doing a study in Europe would allow us to recruit the study faster, it would also allow us to get after the European market, and that is where our focus is right now is to see who we can rope in to help on the European segment of the study.

Can we do the study on our own? Right now, yes, we can start the study, but obviously we need to raise more money to continue the study, but I think our efforts right now are focused on getting that CMV data out, particularly on TransVax to make sure the I s are dotted and the T s are crossed, and then the Allovectin-7 data collection, which is really a top priority. But don't forget in TransVax right now we are in the process of developing our Phase 3 trial designed, we are looking at approaches, how to engage the FDA in terms of the end points for the study, which we have not publicly disclosed, which we have been working with a whole bunch of experts, and proceed with that, and that in itself is a task right now.

All right. Thanks a lot. That is it for me.

Next we will go to Stephen Willey of Stifel Nicolaus.

Hi, thanks for taking the questions. Just to follow-up on Eric's question, you talked about how some of the end points in the TransVax trial are going to be a little complex with respect to some of the virological end points. Can you maybe talk about whether or not you feel a partner in the US given the complexity of that trial design would want to be involved in these current discussions around trial design, and anything you might go to the FDA with?

I think the first thing is the partner will want to see the data from the Phase 2, 12-month follow-up, okay? And if that virological data is exciting, then all bets are off, right, because it is the devil is in the details. It is all in the data. Okay? I can stand here and tell you virological end points are good enough, but if we can show in immune compromised patients that those biological end points can then be achieved, then you can get a partner excited.

Secondly, everybody knows that this is a slam dunk. Normally if you get a Phase 2 study done, and get a Phase 3 study done with an agreed upon end point with the FDA, and the vaccine is efficacious as we have seen so far, this is a locked up market. We have an Orphan drug status, the people are getting (mad) about transplants and are CMV positive, they will take this vaccine, okay. So there is not the issue of market penetrability or unknowns about how to achieve the commercial growth. So those are two very clear.

The third thing everybody knows that hey, CMV disease is not a valid end point because the entire treatment paradigm is based on virological end points, and if the FDA is going to insist on doing CMV disease, it will require a huge trial this will make this whole program moot. And so everybody knows including the clinical experts that are working with us, remember how they treat people, they use PCR, or whatever local assays, and look at the number of copies in the blood every week, okay? And then they put them immediately on an antiviral, such as Ganciclovir, CMV disease occurs in less than 2% or 3% of the patients, so that is not a relevant end point, and that is the goal, and the pieces and the expert opinion we are take to the Agency, okay. I think the European Agency on the other hand already understands the importance of virological end points, we have some convincing to do with the FDA.

So with the ultimate goal then, I guess prePhase 3 would be locking down an SPA, and the would that make it easier for a potential partner to come on board kind of halfway through the process?

I think what we would love to have the partner come on board after they have seen the Phase 2 12-month data. So they are part of the discussions with us with the Agency, particularly in the trial design.

Just with respect to AnGes, have you gotten any color on whether or not Collategene would be a bit of a restricted launch, if and when it is approved in Japan, because the trial was stopped so early, and I know we have seen this before in some of the previous Japanese Phase 3 trials that are stopped early. They typically have a pretty tapered and muted launch following that.

The answer to that question is I don't know. The Japanese are being quite mum on this issue, so we are awaiting, all we know is we are going to hear something in the second half of this year, definitively, okay.

Okay. Lastly on A-7 spending, I believe you have worked through all of the reimbursable expenses under the AnGes agreement, correct?

Jill, do you want to comment on that?

We are still recognizing revenue from that, and we are recognizing it ratably over the end of the period, the period of the trial.

Okay.

There is still some that we are burning through.

Okay. Thank you very much.

Thanks, Steve.

(Operator Instructions). We will go next to Ren Benjamin with Rodman and Renshaw.

Good afternoon, thanks for taking the questions. The majority of my questions have been answered, but regarding the Allovectin-7 program, Vijay can you remind me how many more SMB meetings there will be, and about how often are they going to be occurring?

I think every six months is when we have a meeting, so I would guess another two meetings, at most. Okay?

Okay. And just regarding the data set that will be presented in September, I am assuming that it will be around or at the ICAC conference, and we have already seen some of this data, so I wanted to see if you can get to some specifics as to what new and additional data we would be looking for? Is it extended follow-up, and will P-values be associated with all of the data that we are looking at coming up?

Excellent question. Let me remind the audience first of all, that data we have presented so far is as follows. We have presented safety data which was early safety look on the study, so we are going to show you all complete safety data in the entire 12-month follow up after to the last injection. We showed you virological end points with no P-values only up to four months, about two injections, the average of about 2 injections. Here we are going to show you all of virological end points, by the way which are on our website, after 12-month follow-up with all P-values. We are not going to hold anything back okay?And we already presented the 12-month immunogenicity data, so that is already behind us. Okay. So the real efficacy data, 12-month follow-up after all sets of injections, would be covered such as all of the virological end points would be covered at 4 months with P-values.

Got it. And just one final question, can you just give us an update, if there is one, regarding the HIV vaccine, and when we might expect completion of enrollment?

I think it is a long program. The program is continuing, as you know, it is the old VRC vaccine, which kind of got slowed down because of the adverse data that came out of the Merck HIV trial, there are a lot of force points in the study, so I will say the enrollment will continue through the end of 2011, or middle of 2011 at least, before meaningful data comes out sometime in 2012, 2013, so it is a long trial.

Okay. Perfect. Thanks a lot and good luck

Thank you, Ren.

As there are no further questions, I will now turn the call back over to Mr. Samant.

Thank you very much. We look forward to seeing some of you at the upcoming investor conferences come this fall.

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