Brickell Biotech Inc (BBI) 2011 Q1 法說會逐字稿

Good day and welcome ladies and gentleman 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 first-quarter 2011 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 in 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 10K, 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 2011 financial results. These forward-looking statements represent the Company's judgement 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. Our current highlights today from ongoing development programs and outline our anticipated progress for the remainder of the year. But, before that, I will ask Jill Broadfoot, our CFO, to review our first-quarter financial results. Jill.

Thank you, Vijay. For the first quarter of 2011, total revenues were $600,000 compared with $1.5 million for the first quarter of 2010, which reflected the completion of the AnGes funded portion of our Phase 3 Allovectin trial. We reduced R&D expenses in the first quarter of 2011 compared with the first quarter 2010, primarily as a result of lower clinical trial costs for our Phase 3 Allovectin trial and our Phase 2 TransVax trial.

Total operating expenses were $9.4 million in the first quarter of 2011, compared with $10.1 million in the first quarter of 2010. We ended the first quarter with cash and investments of approximately $52 million, which was consistent with our prior guidance and which we believe is sufficient to support our ongoing development programs at least through 2012. With that, I will now turn the call back to Vijay.

Thank you Jill, I'll start today with some exciting regulatory developments with TransVax, our [Inaudible] vaccine for transplant patients. We announced at this morning's earnings release that we recently had a successful End-of-Phase 2 meeting with the FDA. The agency understands that [Phase 3] endpoint is not practical, it was open to considering a clinically relevant CMV viremia endpoint or a combined endpoint that also includes use of antiviral therapy.

Just to jog your memory, we previously announced that we had a successful meeting with the EMA and received positive scientific advice on a number of important features of our proposed trial design. Importantly, the EMA confirmed our position that CMV disease is not a practical as the primary Phase 3 endpoint. We are currently working with a group of CMV and TransVax experts, and are excited about progress towards defining the endpoints for our pivotal Phase 3 trial. We expect to finalize the design in the next quarter, which will allow us to begin the trial later this year.

Next, I'll provide an update for our novel Allovectin therapy for metastatic melanoma. Since our last call, the melanoma community welcomed the approval of the new immunotherapy from [Inaudible] which we believe bodes well for Allovectin and further paves the path for approval of additional immunotherapies. This new [BMS] drug is not a cure and there is plenty of opportunity for additional treatments in the melanoma space.

It is approved on a median survival of 10.1 months, which is not much different from [Dicarbsin]. It is delivered by infusion in a hospital setting. Patients must be monitored closely, and they frequently require aggressive treatment to control side effects. In the Phase 3 study, it generated greatly [Inaudible] immune response -- immune-related adverse event in 10% to 15% of the patients and had a drug-related death rate of more than 2%.

Let me remind you results from our Phase 2 trial of Allovectin. We had a median overall survival of 18.8 months, we had a zero event of grade [3 to 4] adverse events. Our treatment is delivered in an outpatient setting, with no pre-treatment and minimal post-administration monitoring. Many patients go home, or even back to work after their weekly injections. In our Phase 2 trial, half of our patients were more than 60 years old, many of whom cannot tolerate existing therapies. We believe Allovectin could be an excellent treatment option for metastatic melanoma patients.

Another key point is that Allovectin's mechanism action is unique, among both existing and emerging therapies. Allovectin works by directing T cells to find and attack the melanoma tumours. Some of the new approaches increase the overall number of active T cells or increase broad immune system activity, or targets specific melanoma [subdide]. All of these approaches should be compatible with Allovectin, and some may even be synergistic. We believe there is plenty of opportunity for Allovectin in the treatment of metastatic melanoma.

As a part of our planning for commercialization of Allovectin, we recently commissioned a detailed melanoma market analysis during the first quarter from a leading consulting firm. They interviewed key opinion leaders, physicians, oncology practice managers and payers to evaluate the potential market for Allovectin selling in the United States and Europe. The report is, of course, proprietary but I'll share some of the key top-line observations.

Peak sales for Allovectin for metastatic melanoma were projected at between $0.5 billion and $1 billion, confirming that our earlier guidance on these sales estimates was on the conservative side. Remember, Allovectin has substantial additional potential beyond melanoma through label expansion into head and neck cancer and other types and sorts tumors.

Now, let's go to the status of our timeline of our program. I'll remind you that we completed enrollment in our Phase 3 trial in February 2010 with a total of 390 subjects. The minimum efficacy follow-up for stable-diseased patients in our trial is one year, which we passed in February 2011 for the last patients enrolled. The maximum follow-up is two years which would take us to February 2012 so the database lock should occur sometime between February 2011 and February 2012.

In this morning's earnings release, we confirmed our guidance for a potential database lock in the second half of 2011. Let me add a little color to that guidance. We are focused on two endpoints in the study. The primary endpoint is response rate at 24 weeks or more after randomization, the secondary endpoint is overall survival. For both, we are looking for Allovectin-7 to demonstrate superiority over chemotherapy control which is the [Inaudible], in this case. The data will remain blinded until we lock the database, and we need to lock the database for both endpoints at the same time.

For the response rate endpoint, as long as patients continue to receive treatment, they have the potential to respond. We don't want to lose any potential responders by stopping the trial too early, so we need to make sure we have as few patients as possible in treatment when we decide to lock that component of the database. At this time, we are tracking close to expectations regarding the number of patients remaining on study.

For the survival endpoint, we need to reach a certain number of death events to be in a statistical comfort zone. At this time, we are running behind expectations on death event rates. Remember, we enrolled half of the patients in the last 10 months of enrollment, so projections are well back-end loaded. This means that the [ventric] could catch up with expectation over the next two months; however, there's always the possibility that if we do not catch up, we may not be able to lock the database by the year-end 2011. Remember, the randomization is 2 to 1, so twice the number of patients are getting Allovectin-7. We will be tracking both of these parameters closely though the summer. We plan to provide an update on the timing of the database lock in our next conference call in early August. We are very excited by our progress, with both of these programs, and continue focusing on details as we approach completion of this particular program.

Next, I'll provide a brief update on our vaccine for H1N1 influenza which completed a Phase 1 study during the first quarter. The trial was funded with support of the US Government, was conducted in collaboration with the Naval Medical Research Center. Vical was the first company to remind you to develop manufacturing and initiate animal testing in a vaccine against H1N1 of the swine pandemic influenza during 2009 outbreaks. We've demonstrated the potential of our technology very quickly through these efforts, but waited -- and waited for US Government funding to support the Phase 1 trial.

The primary focus of the Phase 1 trial was to provide further validation in [Inaudible] technology platform, for DNA [vaccine] technology and our [Inaudible]. Our results are encouraging, more than half the vaccine subjects for a small trial of this size generated neutralizing antibodies against H1N1 virus with no safety issues. The secondary purpose of conducting this study was to advance our platform technology towards more serious consideration by the US government for potential application in future infectious disease outbreaks. We announced during the first quarter that we had extended our relationship with NMRC to further develop our platform. For the past [3 days], we have seen multiple threats from emerging infectious diseases as well as ongoing threats from established infectious diseases for which there is no effective vaccine. We are pleased to work with the US government towards building a first response vaccine capability to protect military personnel.

In conclusion, we expect to continue our progress in our independent development programs through the remainder of 2011, in our Phase 3 trial of Allovectin-7 we continue to drive towards locking the database in the second half of 2011, and will provide an update in our next quarterly conference call. In our TransVax CMV vaccine program, we expect to finalize the design of our Phase 3 trial in the next quarter and initiate the trial in the second half of 2011. Our Japanese partner AnGes expects to initiate a multinational Phase 3 clinical trial of its Collategene angiogenesis product. We ended the quarter on track with our financial projections, with sufficient cash to continue development of our ongoing programs at least through to 2012.

This concludes our prepared comments. Operator, we are now ready to open call to questions from our invited participants. Thank you.

Thank you Mr. Samant. The question and answer session will begin this time. (Operator Instructions) Eric Schmidt, Cowen and Company.

Good morning and thank you for taking my questions. Vijay, I was hoping you could help us understand a little bit more of the term clinically relevant with regard to of the endpoint on CMV vaccination, and also if you have some early thoughts about how you might combine clinically relevant veremia with reduced medications in some sort of a composite end point? And lastly, whether you plan on SPA for the Phase 3?

Well, you ask some very good questions. I think we have an expert meeting in the one month at a workshop in Europe where we are actually finally nailing down the definition of clinical significant veremia. Because really that's the threshold at which treatment starts and we want to make sure we use the most common denominator that hospitals across the world use in their treatment paradigm. So we will develop a position paper, and we will enforce it as we embark on this clinical trial. So the number can be 1,000 copies or 1,500 copies, we don't know what the number is but that number is what clinical significant veremia means, okay. The definition is which we start the treatment.

Your second question was whether -- is there an opportunity to combine some elements of duration of anti-viral therapy or initiation of anti-viral therapy with clinical veremia endpoint. I think the answer to that question is yes. And again, we're looking at experts to make sure as we put this combined endpoint, how robust it would be from writing a label for this product, how robust it would be in terms of designing the clinical trial, keeping in mind that we want to keep the clinical trial small, so it's an [off the drugs] status. I think using some element of anti-viral therapy as a part of the endpoint is indeed doable, and we're not at the stage ready to discuss that because we are in active discussion with the agency

And the third question was whether we need an SPA? It all depends on where we are in terms of our agreement with the agency. I don't want to speak on behalf of the agency. I think the agency is been very collaborative with us in this particular attraction. If this collaboration continues, vaccines generally don't get require an SPA but if we have some level of ambiguity, it makes sense to get a statement. The downside of getting an SPA, it takes longer to negotiate the SPA so it impacts on the start of the trial. So those are the things that we need to weigh as we get into this quarter.

Great, thanks a lot.

Ren Benjamin, Rodman.

Thanks for taking the questions. Vijay, can you just remind us what the number of events are that you need for overall survival? Have you told us that before?

We have not publicly disclosed that, but -- because something -- otherwise we'll have to start (inaudible) on every call where we have those events, but it is a 390 patient study so the event rate is going to be between somewhere between 250 and 350, okay. The longer you wait for the event to occur, the longer the death certificate, the longer trial is to remain open. I think we are working with statistical experts to come -- we are targeting an event rate so that we are in a good statistical comfort zone given the parameters that we know from our Phase 2trial without closing the database too soon. So I am not in a position to disclose the number, but I -- trust me, we will pick a number which will give us a lot of confidence from our Phase 2 database and meet that endpoint.

Okay. Is there a potential for a sixth independent safety review or are we all done with safety reviews?

We will have one more, I think. Alan, correct me if I'm wrong.

Those are run every six months or so as long as the trial is open so we'll keep doing those every six months.

Do you mean the way the first 5 have gone, we don't expect anything unusual?

And then after the database is locked, about how long might it take to report top-line data? So, what sort of -- will it be relatively quickly, is the analysis pretty simple or is there something a lot more complex?

It will take a few months because one of the things we have to do once the database is locked is we have to adjudicate the response rate by an independent set of adjudicators. Because, we don't want to announce the response rate endpoint and then the adjudicators find that the numbers different. Plus the adjudicators and VP announce the numbers so I think the adjudication has to occur because the response rate numbers is to be based on the adjudicators' number. We are right now working with -- on the endpoint adjudication process with an outside group. Allow a couple months to -- after we lock the database. It's not going be next day.

Okay, and just switching gears to CMV. Any sort of -- anything you can tell us regarding partnership talk with [simvesta]?

I will tell you which I've told you guys in our individual conversations that our partnering discussions continue. There's a lot of interest in this particular compound but at this point I don't have anything to share with you.

Okay, and then, just remind me if we're on track for TransVax and HCT patients, the Phase 3 trial in the second half of this year, and maybe the potential for transaction solid organ TransVax in the future?

So, obviously -- so the logic of the -- the logistics of this thing, the game plan, would be just do the -- get the TransVax HCT trial design agreed by both the agencies, start the trial, and once that's designed start the SOT trial. We can start the SOT trial because it's going to be a Phase 2 B study but we can't start the study until we lock up on this particular endpoint. So that is really the -- on the critical path. And though it's in the second half, it is really towards the end of the year when we'll start the study, given fact where we are right now.

Terrific, thank you for answering my questions, and congratulations on your progress.

(Operator Instructions) Vernon Bernadino, Dawson James.

Just wanted to dig down a little bit on TransVax some more. You have provided guidance for us starting the Phase 3 at the end of the year and you mentioned a meeting I believe next month or later this month with some specialists in Europe. Can you tell us again what that meeting is? And with the guidance of the second half of the year, I was wondering how much of the Phase 3 design and logistics you'll need be determined considering the meeting that you will have coming up? And then I have a follow-up question if I may.

Sure. First of all, I just want to make sure this is not the mother of all meetings. We have attractions going on with experts all the time. There is a CMV conference coming up sometime in Europe, and we're going to meet the experts again because it gives us a forum to meet a lot of the experts at that point in time. I think we have done a lot of homework at the endpoint. We need to make sure one of endpoint and trial design that we come up needs to be harmonized between US and Europe, so again we are on two different trials, and so that's really the goal right now is to making sure, come with a clinical trial design that's workable in both regulatory environment.

Thanks and a follow-up question if I may. Regarding Collategene, just wondering if you could provide or at least flesh out a few more details regarding AnGes' discussions with the Japanese regulatory authorities? And or just provide color on their discussions. Thanks.

As you know, they are Phase 3 study which is a small study of 40 patients, the data was really outstanding. Unfortunately the Japanese agencies thought that they didn't have a sufficient safety database and I asked them to do a larger study. That study design by the way has been now finalized. They also have a special multiple protocol for SPA from the FDA, and the same study designed will cover the Japanese component (inaudible). I think (inaudible) financing more, making sure there's sufficient capital in hand to both stop the study and bring it to its full completion and my counterpart in Japan, Yamada, feels that indeed that's doable.

Greta, thank you for taking my questions.

Nicholas Bishop, Cowen & Company.

Hi, actually most of my questions have been answered. I just wondered if you could provide any more detail that you could about what the next steps are on TransVax with respect to reaching agreement with the FDA? How much more discussion is expected and about how long that will take? What you see the next steps there as being?

I think as I said our goal is to get this done in the next quarter. So, our goal right now is based on the ongoing discussions with the agency and there have been more than one discussions, and with our experts to propose the endpoint and the trial design, and get the agreement of the trial design.

Normally nobody discusses an endpoint, you discuss the trial design and endpoint in a single continuum and that's exactly what we're going to do now. We're at that stage. We have gone through the stage of having early discussion the endpoint, now we've got to put the trial design because they go hand-in-hand. Based on the endpoint the size of the trial is -- needs to be defined. So we're at that stage and we are right now sharpening up our pencils to come up with that number, and our goal is again to keep trial design small so it's manageable.

Okay, thanks very much.

(Operator Instructions) Stephen Willey, Stifel Nicolaus.

Good afternoon, and thanks for taking the questions. With respect to TransVax, a couple questions. Would you be looking to leverage the agreed-upon endpoint in the HCT trial into the solid organ setting, just given that CMV disease I think is a little bit more relevant in solid organ transplant setting?

I think while we have not -- as I said before, our energy right now is on really the TransVax endpoint. But the SOT has a variety of opportunities and I will send you a paper after this meeting where there's a clear opportunity using CMV veremia as the endpoint, okay. Where there's a -- despite all the anti-viral treatment there is still a huge gap that the anti-viral -- a viral load limit reduction can be shown in that patient population.

So I don't think we want to go towards the CMV disease direction at all because a, characterizing CMV disease is not easy, the trial designs are complicated, it is a much larger study to do, and all the clinical experts that we speak, you really see veremia as really the threshold to treat -- it's really a well-established -- I better be careful how I say this. It is really a (inaudible) for CMV disease. If you get enough CMV reactivation and enough number of reactivations, if you don't stop it you're going to get CMV disease. That's really how clinically the disease is being treated right now. So I think we will stay on the anti-viral -- the veremia is an endpoint even in that (inaudible) population.

Okay, and maybe without disclosing patient numbers for the Phase 3 HCT trial might look like, maybe just give a little bit of color around what internally the expectations are?

Our goal is around 300 patients, 300 or less.

Okay, and then with respect to the pace of patient enrollment into that trial, and just the competitive landscape I guess and the number of HCTs that are ongoing right now?

I think we've learned how to do studies in this patient population now. We know which centers to go to. We know how to recruit and I think we know which hospital centers are really getting the right number of patients so the trial recruitment can be done pretty rapidly, particularly if we do the -- if we expand the number of centers, I forget how many exact centers, we have 16 or 18 centers. We'll probably double or triple those centers in the United States, we'll have an equal number in Europe so we can recruit this trial pretty rapidly, okay.

On the front of competition, I don't know of any competition at the stage of this patient population, because remember, the uniqueness of our technology, this is -- this particular (inaudible) reactivation can be stooped really by a live [attended] virus. The live attended virus (inaudible) to this patient population because there's breakthrough. The core pieces of our technology is that we mimic a live attended vaccine by putting 2 genes and 2 plasmas. One is the [amoprotein] and the one is the internal [goal protein]. One gives antibodies, one gives T cells. I don't think anybody can with conventional technology using a [GB] protein can do a vaccine in this patient population.

Okay, thanks Vijay.

(Operator Instructions)

If there are no questions, ladies and gentlemen, thank you very much.

That does conclude today's conference, we thank everyone for their participation.