Brickell Biotech Inc (BBI) 2012 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'd 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 second-quarter 2012 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 on our research and clinical 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 second-quarter 2012 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 on the call today. I will review the status of our key development programs and our expectations for the remainder of this year into 2013. But before I begin I want to forward the baton onto our CFO, Jill Broadfoot, to give you our latest financial highlights.

Thank you, Vijay. We enjoyed continued financial strength through the second quarter of 2012. Revenues increased to $1.6 million for the second quarter of 2012 compared with $800,000 for the second quarter of 2011. The increase in revenues was driven primarily by reimbursements from Astellas for our costs and expenses in support of the TransVax program. Total operating expenses for the second quarter of 2012 were $9.5 million, consistent with the $9.3 million for the second quarter of 2011.

Our net loss for the second quarter of 2012 was $7.9 million, or $0.09 per share. Compared with a net loss of $8.4 million or $0.12 per share for the second quarter of 2011. We ended the first half of 2012 with cash and equivalents of $97 million. Including the $10 million milestone payment we received from Astellas in the second quarter for which we recognized the revenue in the first quarter. We remain on track with our full-year 2012 cash burn forecast of $17 million to $22 million. And believe we have sufficient capital for our planned activities through at least the end of 2013. I will now turn the call back to Vijay.

Thank you, Jill. I will begin with an update on our lead program, Allovectin, which is approaching completion of a pivotal Phase 3 trial in metastatic melanoma. I'll remind you briefly of the program details. We enrolled 390 subjects with 2 to 1 randomization. The trial started in Jan of 2007, ended in Feb 2010. Our trial followed up to two years of treatment. So the last patients had to complete treatment by Feb of 2012. We completed the last follow-up visits in March of 2012. And completed the final data audits by the end of May.

We are now conducting the independent end point assessment and adjudication process for the primary efficacy end point response rate. The process has two steps -- radiology and oncology. And they are conducted in that sequence. We reviewed this process in detail in our last call, so I won't go through that process again today. But I will remind you that both the committee, which is doing the adjudication, and the Company remained blinded throughout this process as to whether each subject was in the treatment arm or the control arm.

This entire adjudication process is expected to take several months. It's a rigorous process. And the results remain blinded until we reach trigger for the secondary end point of survival. For the survival end point we are tracking the overall number of death events for the trial. We are blinded to the number of events for study arm. Just as a reminder, we are tracking the survival in a separate database.

Our Phase 3 trial was 90% powered to detect a survival difference of 18 versus 11 months. If these survival assumptions were accurate, we should have reached the target number of death events by now. Since we have not, we know that the control arm and treatment arm are both maybe living longer. To value these alternatives we looked at some additional information.

As a proxy for Phase 3 control arm, we looked at 61% of the patients in our high-dose Allovectin Phase 2 trial who received one cycle or less of treatment, which should have provided minimal survival benefit. As another proxy for Phase 3 control arm, we looked at the normal LDH patients in our earlier Phase 3 trial which evaluated dacarbazine with and without low-dose Allovectin. Just a reminder, the Allovectin dose in that study was 10 micrograms. It was 2 milligrams in this study which is a 200-fold increase.

In both of these substrate analyses, the result was not substantially different from my initial control arm survival assumption of 11 months. Regarding year one (inaudible), we have a limited number of patients from our Phase 3 control arm which could have had access to these new melanoma treatments. But the impact on the control arm of these new drugs on the order of survival is unknown.

To estimate survival for the Phase 3 Allovectin treatment arm, we looked at the most relevant subset from the Phase 2 study again. The chemo-naive patient subgroup, which met the current trial criteria, had a median survival of 22.5 months. As a reminder, we modified the resist criteria for Phase 3 which allows more patients to receive Allovectin. Most of them will receive at least two cycles of treatment, which should potentially help increase the survival for the Allovectin arm.

In addition, we reported on a mouse study showing synergy between Allovectin and the mouse equivalent of Yervoy. If that synergy translates to humans, we would expect patients from our Allovectin arm to derive greater benefits from Yervoy than these patients from our control arm.

Combining all these factors, we believe that the overall median survival in the Allovectin treatment arm of our Phase 3 trial has the potential to be higher than our initial assumption of 18 months. Of course, there may be other factors that we are not considering. And we will not know whether this is true until we conduct the final statistical analysis.

We are very pleased with the trial's progress to date. The databases for the primary and secondary efficacy end points will remain blinded until both are locked, which we anticipate will occur in late 2012. We plan to conduct the final statistical analysis for both end points simultaneously. And announce the top-line results for both end points as soon as practical after that. As always, these time line projections reflect our best estimates but could change due to developments we do not control.

Let me now move to CMV, our key program in the area of hematopoietic cell transplant. TransVax is designed to control CMV infection or reactivation in transplant patient, was licensed to Astellas last summer. We have transferred the stewardship of this program to Astellas, and have been working together to finalize the design of a multi-national pivotal Phase 3 trial for TransVax for recipients of stem cell transplants.

Our progress towards that goal in the first quarter triggered a $10 million milestone payment to Vical that we discussed on our last call. Based on our guidance from [FDNE and maybe] have confirmed that CMV disease will not be the primary end point of the Phase 3 trial.

We continue to support Astellas in advancing the TransVax program. In our services and supply agreement, Vical will manufacture TransVax for Astellas through clinical development and commercial launch. And continue to support Astellas in product development activities. We expect Astellas to initiate the Phase 3 trial of TransVax for stem cell transplant recipients later this year. And to initiate a Phase 2 efficacy trial of TransVax for solid organ transplant recipients shortly thereafter.

In our vaccine development pipeline, the next important candidate is the herpes simplex type 2 vaccine. I'll simply remind you that we are completing the remaining requirements to support an IND application. And we expect to be ready to initiate the phase 1/2 trial in 2013.

In conclusion, as Jill outlined on earlier calls, we have sufficient financial resources to support our planned development at least -- at least -- through 2013. As noted, we continue to make good progress in our development programs. Our expectations for the remainder of 2012 into 2013 include locking the databases for the primary and secondary efficacy end points in our Phase 3 trial of Allovectin, which we anticipate will occur in late 2012. And announcement of the top-line results for both end points as soon as practical after that.

The initiation of Astellas of Phase 3 trial in TransVax in stem cell transplant recipients in the later part of this year. And a Phase 2 trial of TransVax in solid organ transplant recipients shortly thereafter. And the initiation of Phase 1/2 trial of our therapeutic vaccine for herpes simplex 2 in 2013. This concludes my prepared comments. Operator, we are now ready to open the line for questioning from my invited participants.

(Operator instructions). Eric Schmidt with Cowen and Company.

It's about the Phase 3 Allovectin study. I was wondering if you could give us the exact number of patients that might have gone on to get either YERVOY or ZELBORAF, or even other investigational therapies. I think you also made a statement that insinuated that maybe the control arm would have had fewer such patients receiving subsequent therapy? I'm wondering, one, if I heard you correctly. And, two, what that might be based on given, again, this trial is still blinded.

Let me give you a little background on it, to answer your question in a long winding way. First of all, just a reminder, our study started in Jan of 2007. And then the last patient was enrolled in Feb of 2010. And the final patient came off the study in Feb of 2012. During the conduct of our studies between Jan '07 and Feb of 2010, the pivotal studies were going on for ZELBORAF, as well as YERVOY. And both those were in treatment-naive patients. So none of the patients were eligible for getting our drug, even if they decided to drop out of our study because once they are enrolled it's hard to get into another program.

Even in the chemorefractory study that YERVOY conducted, you see about halfway through the study, which is early on in the study, they modified the protocol not to include any patients which are involved in a survival study as well. So the earliest approval, to my knowledge -- and you can check on it because you're on top of this -- YERVOY was approved in the United States sometime in March or April of 2011. Really not available through May, is my best guess. And then ZELBORAF was available in September 2011. Our last patient enrolled was Feb 2010 and the European availability of this drug was low. The compassionate use was not widely used for both these drugs. And you can independently check out.

So if you say that the likelihood, and the fact that we are 2 to 1 randomized, and if the assumption in the control arm is 11 months, I'm speculating at this stage that it will be patients that died in the control arm, as they were predicted, then the likelihood of them getting these new drugs after approval was low. That's the way the thesis was. But that's, again, subject to a question. We don't have any knowledge of which patients got what because we don't follow the subsequent treatments.

All right. That was my follow-up. Do you have an ability to follow up patients for subsequent treatments?

No, we do not have the ability to follow up. The study is a randomized study. When it was done, there was no requirement to follow up on what the subsequent treatments were.

Okay. And then last question on the primary end point data. I know you're going through all the rigors of collecting and adjudicating that data. At the end of the day, simply put, does it really matter if assuming overall survival is good, this is a drug that you would expect to be approved regardless of the success on a primary end point? And, vice versa, if overall survival is poor, does primary end point data have any chance of rescuing you?

I think you are a very smart and logical person. Where did you go to school, Eric?

Not quite the school that your daughters attended, but not bad either.

The reason I bring that up is obviously your logic is absolutely right and I wish your thinking will be reflected by the FDA. But since adjudication is part of our special protocol assessment, we don't want to violate any elements of our special protocol assessment and that's why we are going through that rigorous adjudication. So nobody can question that we abandoned it because we had some knowledge of what the primary end point was because we have no knowledge. And so we are following it, obviously, and the data will stand on its own in the end. And obviously, we meet one end point versus the other, it all depends on the quality of the data in the end, Eric.

Okay. Thanks for taking my questions.

Lee Kalowski with Credit Suisse.

Just one very quick clarification. Last quarter you had talked about, it sounded like the data would be available both in Q4. And now it sounds like you're saying that it would be done as soon as practical. Has anything changed such that the overall survival data is not going to be available in 2012? It may just be a minor point. And then secondly, I understand that you're blinded on the response rate. Is there anything that could happen with that, that could have the committee unblinded? In other words, is there thresholds such that the data is so positive that they would want it unblinded or that there would be some sort of futility analysis?

Let me go back to your second question first and then I will go to your first question. First of all, the committee that's doing adjudication will be doing blinded adjudication. They will have no knowledge of which arm the patient is in. So they will be counting responders in the study in the end and it will be in a locked database. That won't be transferred to us until we request them to transfer to us. And once it's transferred, we will break the chord, so the committee has no knowledge. And plus, this is an adjudication committee. This is not a data safety management committee. So they have no authority in terms of [declaring], even if they have the knowledge. Does that answer your question?

Yes, I think so. So in other words, basically the analysis of both will be done simultaneously

Simultaneously. And the committee which is doing adjudication is doing it in a blinded fashion. They don't know which arm the patient is in.

Got it.

Regarding your question, no. I think you need to understand, we are on track. As I have said before in my prior earnings call, that the [death eventers] is slow, and nothing has changed. But this is how it works in this business. You could get a slug of deaths in the month October and reach can reach the end point. Or you could get a slug of deaths in October and slow down completely in November and December. We also need time to analyze the data. This is such an important study for us and we want to make sure, once we unblind the data, we need to bring a couple of experts before we announce the top-line results so that we don't make a mistake. So that our outside experts scrutinize the statistical plan, the analysis. And if it occurs, God forbid this occurs in the last two weeks in December, we will probably not announce that data at that point in time because it doesn't make sense at that point to announce any data, and we probably announce in early Jan. So that's where we are. So there's no substantial change. But we wanted to caution people so that people understand that there's some lag time after the data is unblinded where we do a careful set of analysis.

All right. Thank you, Vijay. I appreciate that.

(Operator Instructions) Howard Liang with Leerink Swann.

Assuming the Phase 3 data are positive, how soon can you file? I'm wondering whether you're ready with the CMC portion and other portions of the filing.

It looks like a manufacturing guide area. Obviously we are working very hard on it. The CMC component is very important, including conformance log, validation, stability. And that's where a lot of the energy in the Company is right now focused on. I said our goal is to file between the six to nine months after unblinding and making the data available. We will give you a better guidance as the data becomes available. But there's a lot of activity going on in the Company focused on that. We actually have a core group in the Company completely focused on getting that done. I just want to remind you, our manufacturing is relatively simple. It's not like some other companies, what they are doing is patient-specific cell therapy. This is a genetic fermentation process that we use, which use equal fermentation. There are two purification steps. The manufacturing is not complicated. But, again, you've got to do the things correct, and that's where the focus is right now.

Okay. If I remember correctly, there is no interim analysis in this trial. Has there been any opportunity for the DSMB to stop the trial for either futility or for positive efficacy?

It's a data safety board. They don't have any efficacy data. But they could have stopped it on the basis of safety, if they were seeing grade 3 or 4 adverse events. And we have had -- Alan, how many?

We've completed five reviewed (inaudible) safety. But it's a safety monitoring board. There's no efficacy.

And we'll have one final review later this year which will be a final review. So those reviews have gone well.

Okay. Great. Thanks very much.

(Operator Instructions) Stephen Willey from Stifel, Nicolaus.

Just quickly on the TransVax Phase 3 trial initiation, can you maybe just talk about what's going on there? And if there are any specific bottlenecks to that trial getting started. Presumably you've gotten feedback from the FDA on what an efficacy end point needs to look like. Is this just getting a drug supply up and running? Is this getting trial sites up and running? And then, secondly, when do you anticipate communicating to us what that end point does indeed look like? And is that just something that we need to wait to see on clintrials.gov? Thanks.

It's excellent question. First of all, let me tell you the drug supply is ready. We manufactured the stuff and I want to thank the Vical team who put a lot of effort behind it. I think you need to understand that we, as I mentioned in my script today, that we handed over the baton of the stewardship of this program to Astellas, which is a much bigger partner than us. It has been a lot of time. The people in business development and the clinical group who do due diligence in acquiring the program are a small group in a large company. A whole bunch of people then get involved and need to be educated with the basic tenets of the program. Then who participate in the clinical trial design here, we have a smaller committee of four or five people. It's a larger committee. Then there's a joint venture, joint partnership development committee.

So there's a lot of multiple steps that large corporations go through. Variety of committees. There have been interactions with the FDA. We have transferred the IND to them so their regulatory person then establishes credibility with the Agency's counterpart. So there are no delays. It's just taking the time with the educational overlap between the two companies and transferring the baton. I think the clinical trial design has been set. And I think we should be able to give you some time later this year, hopefully sooner, in terms of what the trial size is; what the end points are. But I think Astellas is all energized to take this program forward. And as I said before, that they plan to start the Phase 2 (inaudible) and study shortly thereafter.

Okay. Thanks.

If there are no further questions, I'll now turn the call back over to Mr. Samant.

Thank you all for participating. We hope to see you, some of you individually, at one of our next scheduled presentations before the next conference call. Again, thank you for your interest in Vical.

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