Brickell Biotech Inc (BBI) 2017 Q1 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Vical Q1 Earnings 2017 Conference Call. At this time, I'd like to inform you that this conference call is being recorded and that all participants are in a listen-only mode. (Operator Instructions) I would now like to turn the conference over to Mr. Tony Ramos, Vical Vice President and Chief Accounting Officer. Please go ahead.

Hello, everyone. Welcome to our first quarter 2017 financial results conference call. Joining me on the call today is Vical's President and Chief Executive Officer, Mr. Vijay Samant; Vical's Vice President of Vaccine Research, Dr. Larry Smith; Vical's Vice President, Clinical Vaccines, Dr. Anza Mammen; and Vical Director of Corporate Development and Project Management, Andrew Hopkins.

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. These statements 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 2017 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. I'm pleased that all our programs are proceeding according to plan. And as Tony will report, financially, we are well positioned to continue the advancement of our key internal development programs in 2017.

On the call today, Dr. Larry Smith will discuss our ASP0113 collaboration with Astellas, speaking specifically to the trial endpoints and the timing of the Phase III trial's top line results. Dr. Anza Mammen will discuss our ongoing with HSV-2 Phase II study, which recently completed an enrollment of 261 patients. And finally, Andrew Hopkins will provide an update on our antifungal program.

We're currently working with clinical experts and the FDA to begin a Phase II study to evaluate VL-2397 in the treatment of patients with invasive aspergillosis in the fourth quarter of 2017.

I just wanted to remind everyone that a replay of our R&D Day from May 2 is available on our website, where you can get an in-depth review of our programs, including commentaries from outside experts. We'll begin the call today with a review of financial results by Tony Ramos starting it off.

Thank you, Vijay. We reported financial results this morning for the first quarter 2017 which reflect continued progress in our ongoing development activities. Revenues were $3.2 million for the first quarter of 2017, which were primarily comprised of development activities performed under our agreement with Astellas related to the ASP0113 therapeutic vaccine program. That compares to revenue of $4.6 million for the first quarter 2016. Revenue for 2016 included $1.2 million of manufacturing service revenue related to our ASP0113 program.

We had a net loss of $2.8 million for the first quarter of 2017 compared with $2.4 million for the first quarter of 2016.

Our cash burn for the first quarter of 2017 was $1.8 million compared to a net cash burn of $1.7 million for the first quarter of 2016, which is consistent with our full year cash burn guidance of between $8 million and $11 million for 2017.

We ended the first quarter with $39.2 million in cash and investments. We believe that our current cash balance will be sufficient to fund our operations at least through 2018.

I will now turn the call over to Dr. Larry Smith.

Thank you, Tony. As you know, ASP0113 is our therapeutic CMV vaccine candidate partnered with Astellas that is designed to prevent CMV disease and associated complications in HCT recipients. ASP0113 is the first CMV vaccine to undergo testing in a pivotal Phase III trial, which completed enrollment of a total of 515 subjects at September of 2016. I am pleased to report that the final doses were administered in April of 2017 and all subjects should complete their 1-year follow-up by September 2017. The global Phase III trial recruited subjects at over 70 clinical sites and 11 countries in North America, Europe and Asia. Now you may recall that the primary endpoint of this trial is a composite of overall mortality in CMV end organ disease at 1 year after transplantation. An independent committee has been appointed to adjudicate all cases of CMV end organ disease, and data collection is in progress. Astellas anticipates [releasing] top line results in 1Q 2018. And we believe that ASP0113 is a first-in-class treatment for CMV in HCT recipients that offers the ability to harness the immune system to control CMV. Unlike an antiviral drug, which is active while it is being taken, a therapeutic vaccine has the potential to invoke immunological memory. This may allow sustained long-term protection against CMV and decrease the risk of [delayed] CMV reactivation and overall mortality associated with CMV.

Finally, we continue to work extensively with our colleagues at Astellas on CMC activities. I'm pleased to announce that we've completed the process validation activities for the ASP0113 drug substance, and we have now initiated the validation of the drug product process. Astellas has targeted a BLA filing in 2018.

I will now turn the call over to Dr. Anza Mammen.

Thank you, Larry. Vical has developed an HSV-2 therapeutic vaccine designed to reduce lesion recurrences in patients with symptomatic genital HSV-2 infection. The vaccine, VCL-HB01, is formulated with Vaxfectin and encodes full length HSV-2 antigens gD and UL46, selected through our collaboration with the University of Washington. We are currently conducting a Phase II trial in healthy adult subjects 18 to 50 years of age who are randomized 2 to 1 to receive either vaccine or placebo to evaluate the efficacy and safety of the vaccine. The primary endpoint of the trial is annualized lesion recurrence rate, which is a clinically meaningful endpoint for both patients and treating physicians as it provides important information on the number of recurrences over time in this chronic disease setting. The ongoing Phase II trial has been designed based on results from a previous Phase I/II trial that was presented at the 2016 American Society of Microbiology Microbe meeting. That analysis revealed a 57% reduction in lesion rate that was statistically significant with a p value of 0.009 compared to baseline in the VCL-HB01 vaccine arm at 9 months, along with trends in other secondary endpoints. In addition, the VCL-HB01 vaccine was immunogenic, producing a statistically significant increase in antigen-specific interferon gamma-producing T cells. The Phase II trial was initiated in September of last year, and I'm pleased to report that enrollment has been completed as of last month with a total of 261 subjects enrolled at 15 U.S. clinical sites.

I would like to point out that we experienced a huge surge in interest from potential subjects towards the end of the enrollment period. This is a testament not only to our outstanding clinical sites that have worked tirelessly to identify eligible subjects, but also to the interest that patients have expressed in participating in our trial. We expect that all vaccinations will be completed by this July.

Following the 4-dose vaccination series, subjects enter a 12-month surveillance period, during which they record daily in their electronic diary whether they have lesions or not. If they experience a new recurrence, the subjects are evaluated by the investigator in the clinic within 48 hours of the onset of the recurrence. This way, the investigator can verify the recurrence, both clinically and virologically, removing some of the subjectivity attributed to subjects self-reporting their recurrences. Once the last subject has completed 9 months of follow-up, the primarily analysis will be conducted. We expect the release of top line data during the second quarter of 2018.

I would like to point out a number of improvements to the Phase II trial design from our experiences with the previous trial. Firstly, we added a fourth dose to the vaccination series in order to further maximize the immunologic responses in this trial. Secondly, we selected annualized recurrence rate as the primarily endpoint of this trial after consultation with our advisers and the FDA, given that annualized recurrence rate is a potentially clinically meaningful registration endpoint. Furthermore, each recurrence that applies to the primary endpoint will be both clinically and biologically confirmed in the clinic, enhancing the accuracy of the endpoint analysis by again reducing the subjectivity in subject-reported recurrences. Thirdly, important data is collected using an electronic diary instead of a paper diary so that subjects can conveniently enter data online without being able to enter catch-up or potentially erroneous entries into a paper diary immediately prior to a clinic visit. And finally, in contrast to the earlier crossover study design, the Phase II trial compares our VCL-HB01 vaccine in parallel with a large placebo group, alleviating the concern of biological variability within each subject. We feel that these important changes have helped to optimize the trial execution and will, in turn, maximize the likelihood of success. Again, we expect top line results to be available during the second quarter of 2018.

I will now turn the call over to Andrew Hopkins.

Thank you, Anza. As Vijay stated at the beginning of the call, we are on track to initiate a Phase II efficacy study to evaluate VL-2397 in the treatment of patients with invasive aspergillosis in the fourth quarter of 2017. We're working with our clinical experts and FDA towards this objective.

As a reminder, the FDA has granted Vical QIDP, Orphan Drug and Fast Track designations to VL-2397 for the treatment of invasive aspergillosis. Under the QIDP designation, we have been able to interact intensively with FDA on the design of the Phase II trial, and we are exploring an expedited development pathway for VL-2397. We intend to keep investors apprised of our progress on this front.

We're also pleased to note that VL-2397 will be featured in 4 poster presentations and an oral presentation at the June ASM Microbe meeting in New Orleans. The oral presentation to be delivered by Dr. Sean Sullivan will provide a summary of the clinical and nonclinical development of VL-2397 to date. The posters will include a presentation by Dr. Anza Mammen on the safety and pharmacokinetics from the Phase I study, a summary by Laura Kovanda from Astellas Pharma and the University of Liverpool on the population pharmacokinetic analysis from the Phase I study, an evaluation by Dr. Sean Sullivan on the limited potential drug interactions of VL-2397, and finally, a review of an NIH-sponsored in-vivo study by Dr. Nathan Wiederhold from the University of Texas Health Science Center San Antonio that investigated the effect of VL-2397 to treat wild-type and drug-resistant Candida glabrata.

Now to briefly review the completed Phase I clinical trial. This was a randomized double-blind placebo-controlled study designed to evaluate safety and tolerability and pharmacokinetics of single and multiple ascending doses of intravenous VL-2397 in 96 healthy volunteers. The results point to a favorable safety and pharmacokinetic profile, as we will describe in more detail at ASM in June.

Invasive aspergillosis represents a sizable unmet medical need in immunocompromised patients due to a high mortality rate despite available antifungal therapies. Patient populations at risk include those with AML and ALL and allogeneic HCT recipients. VL-2397 has a potential to be an effective and well-tolerated therapy in these and other immunocompromised patients who are susceptible to invasive fungal infections.

I will turn the call back to Vijay

Thank you, Andrew. In summary, we continue to make excellent progress on all of our development programs. We believe that we are well positioned to continue to advance our clinical programs according to plan. Our management team's primary focus is to advance our clinical programs and to manage our cash burn. We burned $1.8 million during the first quarter to fund our operations, which was consistent with our full year guidance of cash burn of $8 million to $11 million. We ended the first quarter with $39.2 million, and we believe our current cash balance would be sufficient to fund our operations at least through 2018.

I'm pleased with the continued progress on the ASP0113 program. Astellas completed enrollment and are about 7 months into the study's 1-year follow-up period. Astellas anticipates that the top line data from the trial will be available in the first quarter of 2018.

In April, we announced that we had met the target enrollment on our HSV-2 Phase II efficacy trial, and we expect top line data to be announced in the second quarter of 2018. The first-in-human Phase I trial of our novel antifungal VL-2397 in 96 subjects has been completed, and preliminary results point to a favorable safety and pharmacokinetic profile for VL-2397. The data set would be presented in the ASM conference in New Orleans. We're exploring an expedited development pathway for VL-2397, and our plan is to initiate a Phase II efficacy study in the fourth quarter of 2017.

This is an exciting time at Vical given the amount of late-stage clinical data that we expect to disclose within the next 12 months. This concludes our prepared statements for today. Operator, we are now ready to open the call to questions from our invited participants.

(Operator Instructions) I would now like to take the first question Ram Selvaraju with Rodman & Renshaw.

Okay, these are relatively straightforward. Firstly, could you comment on the kind of filing process that you expect to be followed for ASP0113? Is this going to be a rolling BLA or not? If it's a rolling BLA, with what kind of sequence do you expect sections of the BLA to submitted? And do you anticipate that an advisory panel will be required for this agent? And if so, what might be the content of such panel discussions, with particular emphasis on what the panel discussion might be regarding the primary endpoint? And then with respect to financial, some housekeeping things. When do you anticipate the 10-Q to be filed? And what was stock-based compensation during the quarter? And then finally, just a quick question on VL-2397. What might an expedited development pathway, which I believe is the language used in your press release this morning, look like for VL-2397?

Well, you asked a lot of questions. I need to now make sure I memorized them right. So let me go through the questions in the order, if I remember. If I missed something, correct me. Your first question is it going to be a rolling BLA, or is it going to be a standard BLA filing. I think at the present time, Astellas has not indicated to us that it will be a rolling BLA, but this could obviously change. I think this is going to be a standard filing. We expect, Larry, an under-12-months response from the agency. The agency will look at the data and decide on the strength of the data whether they want to have an adcom or not. In most vaccine approvals, to my knowledge and having been awarded a few of them, such as in my Merck days with hepatitis A, varicella (inaudible) and others, the agency normally does for vaccines call an adcom meeting so I wouldn't be surprised that they want to call adcom meeting in this case. And the adcom meetings will generally look at, primarily, first thing for vaccines is safety. Is the vaccine safe? The second thing, is whether it's efficacious and the endpoints are clinically meaningful. And that's really going to be the focus. And it'll be a mix of scientific experts who has CMV expertise, and there'll be general vaccine experts in that field of that adcom composition. But it's hard to speculate who will be on those committees at this stage. Does that answer your question?

Yes. No, that's very, very helpful.

What else did you have on ASP0113? I missed it before.

No, on 0113, those were the only questions.

Okay. And the next question you had was...

10-Q.

The 10-Q, the 10-Q filing, Tony, when will that be?

We'll file that this afternoon after the call, probably around 11:00. And the stock comp for the quarter was about $200,000.

Do you expect that to stay constant in subsequent quarters?

I would think so. It depends on where the stock price is. But yes, I think it would probably be right around $200,000. But I'll take a look at that.

Okay. And then just maybe the expedited development pathway, maybe you could give us some color on what that means.

Well, the expedited -- there are a variety of pathways that we are exploring with the agency. One is whether proof of concept can give us an ability to commercialize this product on a small defined clinical trial. Or we can get an agreement with the agency on the size of 2 clinical trials that will be required for full approval a priori, not on the outcome of the first trial results. Or can we go with an adaptive trial design which will allow us to look at the first set of data and say, "hey, the data looks really good," and then rapidly execute on the remaining portion of the study. So different pathways are available. And I think our discussions are in a flux right now. They've not been finalized. Hopefully, in the next 2 or 3 months, we'll be in firm footing to tell you exactly what the agency and we agreed on.

And we'll take our next question from David Bouchey with IFS Securities.

I just have a couple of quick housekeeping questions. And the first is, your restricted cash, it's that going to be about the same as it was for the end of December?

Yes. The restricted cash will be the same amount until later in the year, around July, August time frame, and then it'll drop.

All right. And lastly, do have anything new going on in your relationship with AnGes?

I think we -- as we -- I think we didn't put a press release, but AnGes put a press release out that we are working collaboratively on a hepatitis B program, which is in the pre-clinical stage. We haven't made a big deal about it yet because until we get some good preclinical data, it'd be premature to talk about it. But we are very active in a collaboration where they're contributing some expertise and we are contributing an expertise. It's a hepatitis B approach towards a therapeutic modality, okay? That's what I would say at this stage, okay?

And there are no further questions. I would like to turn the conference back over to Vijay for any additional remarks. Please go ahead.

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 this does conclude today's presentation. We thank you all for your participation, and you may now disconnect.