Brickell Biotech Inc (BBI) 2014 Q1 法說會逐字稿

Good day, ladies and gentlemen. And welcome to this Vical -- first-quarter financial results Vical Incorporated 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. As a request of the Company, we will open the conference up for questions and answers from invited participants after the presentation.

I would now like to hand things over to Mr. Tony Ramos. Please go ahead, sir.

Hello, everyone. Welcome to our first-quarter 2014 financial results conference call. Joining me on the call today is Vical's President and Chief Executive Officer, Mr. Vijay Samant; and Vical's Vice President of Vaccine Research, Dr. Larry Smith.

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 independent and collaborative 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 its first-quarter 2014 financial results.

These forward-looking statements represent the Company's judgments and expectations as of today. The Company disclaims any intent or obligation to update these forward-looking statements.

Now I'd like to introduce Vical's President and Chief Executive Officer, Mr. Vijay Samant.

Thank you, Tony, and thank you to our participants for joining the call. Today we'll discuss the status of the clinical trials of our partner program ASP0113, formally known as TransVax. As you know, we have partnered that with Astellas. Then we'll give you an independent -- update on our independent program for the herpes simplex 2 vaccine. And to that effect, I've invited our VP of Research, Dr. Larry Smith, to join us today to give a look at some of the intriguing facets of our HSV-2 program.

We will begin the call with a review of financial results by our Chief Accounting Officer, Tony Ramos. Tony, you're on.

Thank you, Vijay. We reported financial results this morning for the first quarter of 2014, which reflected advancement in our HSV-2 and CMV product development programs, and our ongoing efforts to manage our operating expenses. Revenues were $2.4 million for the first quarter of 2014 compared with $1.6 million for the first quarter of 2013.

The increase in revenues was primarily the result of an increase in the development work performed under our contract with Astellas related to the ASP0113 vaccine program. The net loss was $3.5 million for the first quarter of 2014 compared with $9.3 million for the first quarter of 2013. The reduction in our net loss was primarily the result of the savings realized as a result of our August 2013 restructuring and other actions taken to improve the efficiencies of our operations.

I am pleased to report that our net cash use for the first quarter of 2014 was $2.5 million, compared to $8.5 million for the first quarter of 2013. The use of cash during the first quarter of 2014 is consistent with our prior guidance of $13 million to $16 million for the full-year.

I will now turn the call back to Vijay.

Thank you, Tony. I will begin with a clinical update of ASP0113. Again, this is our partnered program with Astellas. As you may recall, we announced that, in June, our partner Astellas initiated a pivotal Phase III trial in hematopoietic cell transplant recipients to support the registration of this important product.

For the Phase III trial, Astellas is enrolling patients who are CMV sero-positive, as they are at high risk for CMV reactivation during their post-transplant recovery period. We worked with Astellas to design this Phase with a primary endpoint that has the potential to support full approval in key markets with no post-approval study requirements. The Phase III trial incorporates an adaptive design that includes overall mortality as a standalone primary efficacy endpoint, but as a part of a composite endpoint.

Full approval requires a clinically meaningful endpoint. Based on this logic, the Phase III trial was designed with the primary endpoint of overall mortality at one year after transplantation. Astellas has done a very good job in ramping up this global study, which will eventually include approximately 100 clinical sites in North America, Europe, and Asia.

In parallel to this global Phase III LCD trial, Astellas is also conducting a Phase II HCT trial in Japan. This small trial was designed to assess the safety in Japanese allergenic HCT patients. You know, Japan always likes to do studies in their native population. A positive safety outcome will allow Japanese patients to be included in the pivotal Phase III study. Astellas completed enrollment in the Japanese Phase II study in February of 2014. And I'm pleased to announce that the interim safety data, which will be reviewed by the Safety Review Committee, supported the inclusion of Japanese native HCT patients in the global Phase III study.

The third clinical study underway is a Phase II trial in Solid Organ Transplants. With this Phase II trial, Astellas is enrolling patients who are CMV sero-negative, will receive a kidney transplant from a CMV seropositive donor. These so-called D-plus R-minus patients are at high risk for CMV infection and disease after transplantation, so we believe vaccination with ASP0113 may provide protection against CMV in this group.

This trial will enroll 140 SOT recipients, and dosing of the first patient was announced in December. The primary endpoint of this Phase II trial will be the incidence of CMV viremia after transplantation. We'll also be monitoring several secondary endpoints, including CMV disease; CMV-specific anti-oral therapy; graft survival; and overall mortality.

Astellas is currently anticipating the study to be complete in the first half of 2017. We continue to provide updates for this ongoing trial as they become available. Astellas is also conducting a fourth clinical trial -- a Phase I pharmacokinetics and immunogenicity trial in dialysis patients to characterize the immune response following vaccination. And this study is being conducted, Larry, in the United States, correct?

Correct.

It's important to point out that all four trials -- four trials, as I repeat myself -- are being conducted and funded by Astellas, and that all our effort to support these trials, including manufacturing, regulatory and clinical support activities, are also funded by Astellas. I think as a result of the efficient cost-cutting that Tony and the team have undertaken, and the funding that we received from Astellas, we have been able to maintain a very good burn rate for this quarter. And we hope we continue in that fashion in the future.

In summary, we are extremely pleased to be working with Astellas who is an excellent partner for the CMV vaccine program. We are excited to have the Phase III trial underway as well as other Phase II trials. And we look forward to completing the process as efficiently as possible.

Next, I'll provide you an update of our HSV-2 clinical program. After I finish the update, I'll have Larry Smith, our VP of Vaccine Research, to provide you with a summary of the unique features of our vaccine design and the preclinical testing data.

As previously announced, we initiated a Phase I/II trial in December of 2013. This trial is a randomized, double-blind, placebo-controlled study to be conducted at seven sites in the United States. We plan to enroll approximately 150 subjects who are HSV-2 positive, and who have experienced two to nine recurrences per year of general herpes lesions, who are otherwise normal and healthy.

Because this is the first time these vaccines have been tested in humans, we are performing a dose escalation for the first two cohorts; assuming favorable safety, a full dose of vaccine for the third cohort. The first and the second cohorts have been fully enrolled and the dosing is nearly complete. We are already screening our third and final cohort, and the subjects will have initiated swab collection to monitor pre-vaccine shedding rates. Importantly, this Phase I/II trial was designed with a primary efficacy endpoint for this third cohort, so that patients in the third dose escalation study will be included in the overall efficacy.

Let me take a few minutes to elaborate the efficacy component of our Phase II trial. We expect these symptomatic subjects with a history of recurrent general herpes to shed HSV-2 from mucosal tissue on an average of 20% of the time based upon the results of an early independent study. We intend to measure viral shedding rates for 60 days before the first vaccination and then again for 60 days after the last vaccination. This before and after shedding data effectively lets each subject serve as their own control. Because this is a randomized controlled trial, we have an opportunity to demonstrate proof of concept for efficacy against an important virologic endpoint, which is a surrogate clinical endpoint for mainly recurrence of general herpes lesions.

In summary, our HSV-2 Phase I Class II clinical trial is proceeding according to plan. Additional details for this trial can be found at clinicaltrials.gov. Because there are a few competing HSV-2 therapeutic vaccine candidates, I've invited our VP of Research, Dr. Larry Smith, to discuss the unique nature of Vical's HSV-2 vaccine and its clinical trial design. Larry will also provide you with a summary of the preclinical testing supporting our HSV-2 program.

Larry, you're on

Thank you, Vijay. We developed our HSV-2 vaccine in collaboration with Dr. David Cole and Dr. Larry Corey at the University of Washington in Seattle. The key HSV-2 antigens were identified in their lab following extensive screening. We created DNA vaccines from these key HSV-2 antigens and tested them in several animal models.

One of the key antigens tested was glycoprotein D. In a very stringent mouse challenged model, we demonstrated that the full-length version of this antigen provided significantly higher levels of protection than a truncated version of glycoprotein D. We also demonstrated a benefit for the use of our Vaxfectin adjuvants. These studies were followed up with very stringent therapeutic guinea pig challenge studies conducted by Dr. Nigel Bourne at the University of Texas Medical branch.

In these experiments, glycoprotein D was tested in conjunction with plasmids expressing HSV-2 tegument proteins. Compared to the other published preclinical therapeutic vaccine studies conducted by competitors, our studies employed a two-fold higher HSV-2 challenge dose and a less frequent vaccination schedule. Now, despite these stringent conditions, our vaccine provided significant reductions in HSV-2 lesion recurrences.

We believe our vaccine composition will be key to success -- specifically, number one, the platform's unique ability to assimilate natural protein production pathways; number two, the careful selection of the antigens included in the vaccine, full-length glycoprotein D and a full-length tegument protein; and number three, the use of our unique proprietary Vaxfectin adjuvant, which has already been tested in several clinical trials.

All of these attributes together provide a promising therapeutic vaccine. Our current Phase I/II clinical trial design allows us to proceed rapidly without additional dosing studies. This may allow us to embark on a pivotal Phase III trial sooner than our competition.

With that, I would like to turn back the call to Vijay.

In summary, in 2014, we expect to see continued advancement in our ongoing clinical programs. I'm frankly very pleased how rapidly the Company has executed the HSV-2 program, and we are working towards completion of enrollment in our Phase I/II trial. Our partner Astellas is making steady progress in enrolling patients in this Phase III trial of TransVax in stem cell transplant recipients, and its Phase II trial of TransVax in Solid Organ Transplant recipients.

We'll continue to report future progress as it occurs in our quarterly updates. That concludes our prepared comments today. Operator, we are now ready to open the call to questions from our invited participants. Thank you.

(Operator Instructions) Christopher James, Brinson Patrick Securities.

Thanks for taking my questions. And congratulations on a great quarter and your recent progress. My first question, I guess, pertains to the HSV trial design. It's interesting -- collecting shedding data two months before and after treatment, and these patients serving as their own control. Could you talk a little bit about sort of why you decided on this particular design? Is this sort of unique? Or is this consistent with other HSV trials?

Well, I think -- it's a great question, first of all, because some of the other trials are using less than 60-day or shedding measurement. I think, Larry, if I'm correct, it's our 28-day measurements most people are using, right?

28 days with two twice-a-day (multiple speakers) --.

Twice a day. Well, talking to the KOs and the experts based on the experience that they've had with other trials, they thought that using a 60-day once-a-day shedding measure would be more rigorous, would provide more meaningful data, would eliminate any other progression that you see in these collections. And so, the 60-day concept came from KOLs, our expert consultants. But it really is based on the findings of the earlier trials that were completed.

Great. Thanks for taking my question. Sort of along those same lines, I think you previously mentioned that you're looking for an ability to detect a 30% reduction between groups. Sort of -- just help us understand, put that into context and help us understand sort of what's the clinical relevance there? And maybe sort of what reduction in outbreaks could this potentially correlate with?

Larry, do you want to take that?

Sure. So, viral shedding occurs very frequently in symptomatic herpes subjects. And that shedding is really a virologic surrogate to clinical -- to the clinical manifestations of herpes. So the more that people shed and the higher levels that they shed, it's basically very highly associated with their clinical manifestations of genital herpes. So we are really trying to reduce that shedding rate.

We monitor it before vaccination and then again after it. And we're looking for a decreased number of days in which they shed and/or a decreased viral load at which they shed. And we think those are appropriate surrogates of the clinical manifestations of herpes.

Yes, very well-correlated with recurrence of lesions now. What a 30% reduction or 40% reduction and how it impacts the recurrence of lesions is really something that we find on the efficacy study. I just want to remind you that that's a secondary endpoint, right, Larry?

Yes.

A measurement of recurrence of lesions.

Got it, got it. Okay, then, maybe one more on this program and then one on the CMV. What could you sort of tell us about your partnership strategy around this program? And would the data be sufficient to drive a meaningful collaboration?

Well, this is a program that, first of all, it's homegrown. We've put a lot of effort behind it working with Fred Hodge, particularly with Dr. Cole and Dr. Lanacoring's lab. We own a lot of intellectual property surrounding it. And this is a pretty reasonable program in terms of the size of the pivotal study. Obviously, it has to be discussed with the Agency. But based on our guesstimates, this is a reasonable program for us to take forward. So unless there's a partnership activity that occurs, which is going to be very lucrative, this is a program that we really want to leverage for Vical shareholders' benefit.

Got it. Okay. And then on to the CMV, the -- I think you mentioned Astellas is integrating -- I'm just referring to the Phase II study in Japan that's -- how do you plan to, I guess, integrate the Phase II with the global Phase III design, which appears to have a mortality endpoint? And do you see any sort of challenges along that (multiple speakers) --?

No. No. Let me just -- and Larry, correct me if I say this -- the Phase II study really was to make sure that in the Japanese population, the vaccine is, first of all, tolerated. There are no safety issues. And it's -- and there really -- it's really the safety component that was done in those small number of patients.

The minute the safety is A-okay by the Data Safety Review Committee, now the patients will be automatically enrolled in the Phase III -- the patients from now on, which will go directly in the Phase II study. So those patients which are in the safety analysis are not enrolled in the efficacy analysis. Okay?

Got it. Okay. Thanks for the clarification. Congrats and I'll jump back into queue.

Thank you.

Joel Beatty, Citi.

This is Joel calling in for Jon Eckard. Thanks for taking my questions. My first question is about the Vaxfectin adjuvant. Recently, there's been some sub-ex for other novel adjuvants seeking approval from regulators. What's some of the work you've done with Vaxfectin that gives you comfort around this adjuvant that it may not carry some of the same concerns?

I did go over -- I think in any adjuvant, since I've been in this vaccine business a very long time -- and you know alum is probably the most widely-used adjuvant across the world today -- and when people call alum, alum is not alum, because every company that makes alum is a different alum, okay? So it's an aluminum hydroxide combination.

The proof of any adjuvant is a lot of safety data, okay, in humans. And I think I -- I will tell you that we have gone through multiple clinical trials so far in a small patient database and we're getting more experience in humans. So I think that's the first step. If you haven't tested an adjuvant in humans, and we have survived testing in -- Larry, how many clinical trials have we gone through so far? Three?

A total actually of -- yes, a total of three.

Three. And then HSV-2 is our next trial. So we've got three trials and then the HSV-2 is our fourth trial. So, hey, we made a good progress and we have survived; the adjuvant is well-tolerated. All the preclinical data and the human clinical data in humans have shown that Vaxfectin indeed value-adds to the antigen or the plasma that it's formulated with. So, so far, so good.

And that's why any adjuvant -- as you know, we are doing a dose-ranging study, starting with one-quarter dose, then half-dose and a full dose in the HSV-2 study. We have a drug master file. The adjuvant is well-characterized. It's not a molecular adjuvant that people have accessing TLR5 or TLR9 pathway. There are some autoimmune issues. This is a synthetic lipid that was developed at Vical through a wide screening of variety of lipid combinations. It's -- and it has been well-characterized in our OCMC program. And we have a drug master-point.

And we -- as we have said this before, and there is no mistake that we published recently data where the adjuvant was used in preclinical studies with Baxter few vaccine where we showed that it shows almost -- what, Larry, [10-4], [15-4] dose sparing. Okay? (multiple speakers)

Definitely.

In their vaccine in their testing in their laboratory. So it's being currently tested on a variety of fronts, and hopefully, it will lead to some more partnerships beyond what we have seen so far.

Sure. Yes, thanks. And then also one other question on the CMV. Could you tell us about the differences in the market size between the ASP0113 vaccine partnered with Astellas and then with your other preclinical CMV vaccine? And then also have you decided on a timeline to move that preclinical vaccine ahead? And what would affect that decision?

Well, you asked a couple of questions. And I think the first question is what the market size is for the ASP0113. You know, there are about 50,000 patients and the HCT patients US and equal number of patients in Europe, but there is a JAMO reference, which I'll send you later on, which clearly lays out, by region, what the antibody's cell transplants that are occurring. So, that can give you even much more better clarity then my top-of-the-line numbers. Okay?

It's a -- it's an important market. It's an important unmet medical need. And the point that you need to understand -- a lot of people understand -- this is not an antiviral. This is a vaccine. Our data was published in the Lancet from the Phase II study, which is a double-blind efficacy study. Vaccine fundamentally alters the landscape. It teaches the immune system how to detect the pathogen and destroy the pathogen. It's not virucidal. Okay? It doesn't have the level of toxicities that most of the antivirals do.

Take a look at ganciclovir. Okay? People, despite getting ganciclovir, succumb to CMV disease. So, antivirals are not a solution. They are augmentative therapy, and vaccines are really the fundamental scope. A therapeutic vaccine would really make a lot of difference both in hematopoietic cell transplant, and even more importantly, in Solid Organ Transplant, who are immunocompromised throughout their lifetimes are forgetting their organ transplants.

So they always have this fear of CMV reactivation. So, that's the transplant market and that's where we are partnered with Astellas. Our preclinical data -- we have an IND, it's the CyMVectin program, which I understand you referred to, which is the vaccine -- which is not a therapeutic vaccine, but it's a prophylactic vaccine for prevention of CMV infection of females of childbearing age.

And the challenge there for us to embark on a program like that on our own is doing a small Phase I/II study is okay. But the real proof of concept study, as you see in the Gardasil study, which is in a similar patient population, requires a lot of resources. And none of the big companies have embarked on it. They are still debating whether they have the funding to embark on such a proof of concept study. And a lot of discussions are going on by pharma big companies, including us, in terms of a surrogate endpoint, which will allow us to reduce the size of the study. And until that occurs, I don't think you will see any meaningful partnering activities in that program or us taking that program forward.

Sure. Thanks for those answers. That's all I have for now.

Thank you.

(Operator Instructions) Reni Benjamin, H.C. Wainwright.

Thanks for taking the questions and congratulations on the progress. Vijay, I guess just a couple of questions, maybe starting with HSV-2. You had mentioned that you're measuring two months before and two months after. I could be wrong, but I thought competitors in the field are measuring six months. And I guess the question is, how confident are you or how do you know you will be able to capture any sort of a difference within two months? Maybe the patient should be followed for a year in order to get a sense as to the amount of the difference you might see in lesions or shedding. Can you help me understand that a little better?

So, actually, if you -- because James' earlier question was on the money. We are actually doing a much more rigorous measurement of shedding data. Most of the people who are doing this study are only doing a 28-day shedding study, okay? We're doing a 60-day shedding study, so ours is much more rigorous. And as I'd explained previously that -- why did we pick 60 as opposed to a 28-day? Because with 28 days, you can get data quickly.

It came from discussing with our KOLs with their experience, with the previous trials in terms of making sure that the era progression, the data is flattened out, that 60-day will get us a rigorous baseline. So, people have shown reductions, statistical reduction with a 28-day shedding. With 60-day, we should be establishing every patient solid baseline so our calculations of the reductions will be very meaningful.

So nobody is doing six months of shedding. It's hard to do six months of shedding every day, man, as a patient. It's a tough task to shed. And these are very motivated patients. Okay? That's the amazing part of it. The HSV-2 patient, I mean, you're doing shedding every day for 60 days. And then putting those swabs and returning them to a central lab for PCR. Okay? A lot of effort.

Can you give us a sense as to when -- I mean, in terms of timeline, when do you think either enrollment will be complete or when we might see the first glimpses of data?

Our target is right now rather than giving you how many patients are enrolled or when the plan is, our target is to have the data sometime in the middle of next year. If that changes and we accelerate it, we'll let you -- if it's going to delay, we'll let you know, but right now the goal is to get that data by the middle of next year.

Okay. And so the same question for the CMV Phase III program. Can you give us a sense as to how enrollment is going and the timing of completion for either enrollment or data?

The -- and, Tony, correct me if I'm wrong. This is -- we've got to be careful. Astellas is running the program. It's their program so we don't want to say anything affirmative -- but the enrollment is expected based on their Q&A's and their communication to the media by fourth quarter of 2015. That's the milestone that they put out. (multiple speakers)

This is -- they are recruiting. So just as you look at some of the competitive studies where people are recruiting CMV, we are recruiting worldwide in 100 centers. These are hard patients to get. These are really sick patients to get. So, we are telling you fourth Q 2015, Astellas has done a lot of homework in terms of projecting their timeline, okay? So this is not a nilly-willy projection.

Right. And then just extrapolating from that, the primary endpoint is one year mortality; so I'm assuming by the end of 2016 is when we'll see the data?

2016 -- yes, something in that timeframe. (multiple speakers) Yes, you've got it. You're right on the money.

And then is there any interim, is there any sort of an interim analyses or anything built into the study?

Yes, there is. Because remember there is -- it's an adaptive trial design, 500 patients. We are going to look-see at the data in the first 100 patients to make sure that the mortality endpoint is following the appropriate track. If it's following the appropriate track, then the efficacy portion of the trial 400 will stick to the mortality endpoint. Okay.

If you believe that we need to augment it with some other measures and create a composite endpoint, we'll indeed do that. We need to make sure whatever the final endpoint is, is agreed with the FDA if we're going to change from mortality to something else, before we recruit the last patient. Whatever that endpoint is, that has to be completed no later than the end of 4Q 2015. And that's what our target of enrollment of the patients is.

So, yes, there is an interim analysis at 100 patients, at which you will look at how the mortality endpoint is trending. Are we going to stick to that endpoint? Are we going to play the composite endpoint?

And would I be -- would it be unfair for me to say -- I mean, just given that this started in June 2013, that the interim analysis would likely happen in 2014 this year?

We have not publicly disclosed, but, you know, I mean, yes, if we are going to recruit the trial by fourth-quarter 2015, you have to make that judgment yourself.

Got it, okay. So one final question. Can you give us any sort of expected milestones for 2014? Data presentations at upcoming scientific conferences or anything that you feel we should be focused on?

I think, more importantly, I think we will be talking more about our HSV-2 program at the proper forms, including some of the preclinical data, that we need to really position correctly, so people understand how -- Larry kind of mentioned how the uniqueness of our preclinical data we use 2X challenge compared to the competitive 1X challenge; our dosing regimen was different from one competitors have used.

So I think we need to communicate that. And we'll take the appropriate opportunity to make sure that data is properly presented. I think the -- since I said our timeline for giving you some idea of what the data on the HSV-2 program -- which is the middle of 2015 -- at some point in time, we'll have to give you some update in terms on where the trial is in terms of progression or completion of enrollment. I think that would be a meaningful endpoint.

We should also hopefully present some data on Vaxfectin, just like we did with that Baxter data a few months ago, where we showed the dose-sparing capabilities of Vaxfectin in influenza. We are working with some other people. Hopefully, some of that data will mature and we'll be able to share with you how Vaxfectin is behaving in some of the other studies that we are conducting. And some periodic updates on CMV as we make good progress, okay, including, hopefully, some partnering activities and some programs, okay. But those are all unpredictable. When they happen, they will happen.

Got it. Thank you very much and good luck.

Thank you, Reni.

At this time, there are no further questions. I'll hand things back to our speakers for any additional or closing remarks.

Well, thank you all for participating. We look forward to continued progress in our development programs and to meeting with some of you at our upcoming conferences. Thank you very much.

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