BioCryst Pharmaceuticals Inc (BCRX) 2007 Q4 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Welcome to BioCryst fourth-quarter and fiscal-year 2007 financial results and corporate update conference call. At this time all participants are in a listen-only mode. Later we will open up the call for your questions. (OPERATOR INSTRUCTIONS) Please note this conference is being recorded.

I would like to turn the conference over to Mr. Stuart Grant, BioCryst's Chief Financial Officer.

Good morning. Welcome to BioCryst's fourth-quarter and fiscal year ended December 31, 2007 financial results conference call. Before we begin I will read a formal statement regarding risk factors associated with today's call. Today's conference call and accompanying slides will contain forward-looking statements regarding future events and the future financial performance of BioCryst. Such forward-looking statements may include predictions regarding current and proposed clinical trials of forodesine HCl, BCX-4208 and peramivir, potential development of compounds not in clinical testing, and cash flow projections, including the benefit of U.S. Department of Health and Human Services funding of peramivir. These statements involve known and unknown risks, uncertainties and other factors that may cause the actual future events or actual future financing performance to be significantly different from those expressed or implied by the forward-looking statements.

Please refer to the section "Risk Factors" in the Company's most-recent press releases and the documents that accompany files from time to time with the SEC. Specifically, you may refer to the Company's most recent Form 10-K, Form 10-Q, and Form 8-K, all of which are readily available on our website at www.biocryst.com. These documents contain and identify additional information regarding important factors that could cause the actual results to differ from those contained in the forward-looking statements. Such information can typically be found in the section marked "Risk Factors" or "Forward-Looking Statements." These statements may reflect the Company's views with respect to future events. BioCryst has no obligation to update or revise these statements. BioCryst cautions that you should not place undue reliance on these forward-looking statements.

Now I would like to turn the call over to Jon Stonehouse, BioCryst's Chief Executive Officer. Supporting slides for this call can be found by opening the link on our website.

Thank you, Stuart, and thank you everyone for joining us today. 2007 proved to be a year of both lessens learned and progress made. The results we saw from clinical trials with our lead candidates in 2007 provided more clarity and further validated the scientific strength of our pipeline. Despite some setbacks, our intramuscular peramivir trial demonstrated a strong safety profile. In further evaluation of the Phase II trial we also saw a trend of clinical envirologic activity with a dose response. I will provide more detail of these results and the progress made with our other candidates, forodesine HCl and BCX-4208, in a moment, but now I'd like to turn it back to Stuart to discuss our financial performance.

Thanks, Jon. I refer you to slide number two. For the fourth quarter ended December 31, 2007, BioCryst recorded revenues of $28.2 million compared to $2.1 million in the fourth quarter of 2006. The increase in revenue is primarily due to revenue from a contract with the U.S. Department of Health and Human Services for the development of peramivir, a $7 million milestone payment received from Shianogi and Co., Ltd., and the continuing amortization of deferred revenues from a collaborative agreement. The net loss for the quarter was $2.3 million, or $0.06 per share, compared to a net loss of $10.1 million of $0.34 per share for the quarter ended December 31, 2006.

R&D expenses for the fourth quarter were $29.1 million, compared to $11.2 million in the fourth quarter of 2006. The increase in R&D expense is attributable to an increase in clinical trial-related expenses, manufacturing costs for our lead product candidates, and costs related to an increase in the personnel supporting the development of our product candidates. G&A expenses for the fourth quarter were $2.5 million compared to $1.6 million in the fourth quarter of 2006. The increase in G&A expenses is based on an increase in personnel-related costs as result of increased head count, including an increase in the non-cash share-based compensation expenses for the quarter and an increase in professional fees.

On slide three you will see that for the full year ended December 31, 2007, the Company reported revenues of $71.2 million comparable to $6.2 million in 2006. The year-end increase as primarily due to revenue from the contract with HHS for the development of peramivir, the $7 million milestone payment received from Shianogi, and the continuing amortization of deferred revenue from a collaborative agreement. The net loss applicable to common shares for 2007 was $29.1 million, or $0.89 per share, as compared to $43.6 million, or $1.50 per share for 2006. The net loss for the year includes known cash charges of $1.4 million, or $0.04 per share, and stock-based compensation of $5.7 million, or $0.17 per share.

R&D expenses were $94.1 million for the year ended December 31, 2007 compared to $47.1 million in 2006. The increase in R&D expenses is attributable to an increase in clinical trial-related expenses, manufacturing costs for our lead product candidates, and cost relates to the increase in the personnel supporting the development of our product candidates. G&A expenses were $9.5million for the year ended December 31, 2007 compared to $6.1 million in 2006. The increase in G&A expenses is from personnel-related costs, including an increase of $1.2 million and the non-cash share-based compensation expenses for the period and increase an in professional fees.

Slide four shows our cash position. As of December 31, 2007, the Company had cash, cash equivalents and investments of $85 million, which is in line with our previous expectations. For 2008 we expect our net cash used to be between $25 million and $30 million. This burn rate could vary significantly, depending on the timing of such expenses and related reimbursement from HHS. Please also be aware that this expected burn rate is positively impacted by the expected receipt of a significant receivable from HHS that we hold at 31 December, 2007.

This concludes our financial report and I will now turn the call back to Jon.

Thank you, Stuart. As I mentioned previously, we gained significant scientific insight in 2007 for all of our lead product candidates. These results, combined with our strong balance sheet, will allow BioCryst to further advance our lead candidates in 2008. With the results obtained from the peramivir studies conducted in 2007, we were well prepared to initiate a new Phase II trial for the intramuscular form of peramivir during the 2008 flu season. At this time I would like to recap what we observed in the fourth quarter for our Phase II IM peramivir trial. This was a multicenter randomized double-blind placebo-controlled study in 344 subjects with uncomplicated acute influenza. We evaluated both the safety and efficacy of IM peramivir in two dose groups, 150-milligrams and 300-milligrams. The primary end point was time to alleviation of symptoms and there were also other relevant secondary end points such as time to resolution of fever and viral shedding.

Slide six shows our top-line efficacy data in the primary efficacy analysis population of 313 subjects. Each data showed that there was a trend in both the 150 and 300-milligram dose groups in improvement of time to alleviation of symptoms. This was not statistically significant. In a prespecified sub group analysis of males versus females we saw a meaningful difference in our primary efficacy end point in males that showed a 58.8 hour improvement in time to alleviation of symptoms. In addition, based upon data collected to date, peramivir is safe and well tolerated. There were no significant differences in adverse effects reported between subjects who received peramivir versus subjects who received placebo.

Slide seven shows data on our most-relevant secondary end point, viral titers. This end point measures the amount of virus is that being secreted in the nasal passages, the primary site of infection. We measured viral titers.at base line and at a number of time points post injection. As you can see, subjects who were administered 150 milligrams of peramivir demonstrated a statistically significant decrease in viral titers.at 24 hours. However, this effect was not significant at 48 hours. In contrast, those subjects treated with 300 milligrams of peramivir showed a statistically significant decrease in viral titers.with p-values of >0.001 at 24 hours and at 48 hours. Our interpretation of these results is that a higher dose of peramivir provides sustained antiviral activity. To further explore the results from the study we conducted a series of additional analyses. One of these analyses suggested that only a portion of subjects received an adequate intermuscular injection.

This post-hock analysis is presented on slide eight and includes subjects with an increase in creatine kinase levels 48 hours post injection. This is a validated indicator of muscle injury. In this subset of subjects, there was a 44.6 hour reduction compared to placebo in the time to alleviation of symptoms in subjects receiving 150-milligram peramivir and a 64.8 hour reduction in subjects receiving 300 milligrams of peramivir. Our interpretation of these results suggests that an an adequate intramuscular injection is an important factor in achieving clinical response.

In the fourth quarter of 2007, we also initiated two pharmacokinetic studies of peramivir. Slide nine shows the results of study 117, a PK study in healthy volunteers to evaluate the administration of IM peramivir according to standard nursing guidelines. We enrolled male and female subjects with a range of BMIs from normal to obese. Adequate injection was achieved in all male subjects. In women who were overweight or obese, a longer needle was required to require plasma concentration similar to those in women of normal BMI receiving an adequate injection. In overweight and obese women, a needle shorter than recommended in nursing guidelines resulted in approximately 25% lower drug exposure. These data enable us to provide clear guidance on the correct choice of needle length to ensure adequate and consistent exposure across subjects in future trials.

To confirm our observations from the 117 PK study a second study was conducted in obese subjects using needles shorter than those recommended in nursing guidelines. As seen on slide 10, study 111 versus 118 confirmed that overall drug exposure is decreased by approximately 20% when peramivir is not administered into the muscle. Impairing the PK profile of cross studies when peramivir is administered intramuscularly according to nursing guidelines, a clear dose response is observed between 150 milligrams and 600 milligrams. Our interpretation based on the results obtained to date is that adequate and sustained exposure is necessary to produce a decrease in viral titers and demonstrate the clinical benefit of peramivir. Therefore, we will follow nursing guidelines for needle length based on gender and BMI and evaluate a dose higher than 300 milligrams in future trials. The next step in development -- in the development program include conducting a PK study with our new IM formulation of peramivir at 300 milligrams and a higher dose. We are in the process of designing the next Phase II trial for peramivir, which is expected to begin later this year.

Slide 11 shows our pipeline. I'd like to point out that our pipeline includes two important other drugs -- other drug candidates, forodesine HCl and BCX-4208. Forodesine HCl is also well positioned to make progress in the upcoming year. In 2007 we saw positive interim data from our ongoing Phase I/II trial involving forodesine HCl for the treatment of patients with refractory cutaneous T-cell lymphoma. which was presented at the American Society of hematology meeting. Patients who received oral forodesine HCl showed an overall response rate of 39%. This overall response rate included two patients who had a complete response, 6% of the population. Patients with erythroderma also demonstrated positive results, showing a 65% improvement in erythroderma

Additional trials for forodesine HCl in combination with bendamustine also displayed a positive significant synergistic effect in patients with chronic lymphocytic leukemia. While making the decision to discontinue our T-cell ALL trial involving the IV formulation of forodesine HCl and shift our focus to CTCL was difficult, we believe this was the right strategic move. This positive clinical data from the Phase I/II trial of forodesine HCl for the treatment of patients with refractory cutaneous T-cell lymphoma and our oral HC -- oral forodesine HCl's excellent safety profile reinforces our confidence about the future of forodesine HCl. Enrollment in the pivotal forodesine HCl trial evaluating patients with CTCL is ongoing and is on track to be completed in 2009. We expect the results to be available in the second half of 2009.

Our third clinical drug candidate, and one of our most promising, is BCX-4208, a next-generation PNP inhibitor with the potential to address multiple autoimmune indications. Roche is our partner on this program and is advancing this candidate further in ongoing Phase II -- in an ongoing Phase II trial in psoriasis. You will see on slide 12 our goals for 2008. In March we expect our partner Shianogi to give an update on their Phase II IV peramivir trial. In the second half of the year we expect to initiate the Phase II IM peramivir trial. In the third quarter of 2008 we expect to file an IND on one of our preclinical autoimmune drug candidates. We also expect in the fourth quarter we will have preliminary data from our trial evaluating forodesine HCl in patients with CLL. With our three lead candidates well positioned, 2008 looks to be a year of development and advancement for BioCryst.

I'd now like to open the call up for questions.

(OPERATOR INSTRUCTIONS) The first question comes from Ren Benjamin of Rodman & Renshaw. Please go ahead.

Good morning and thank you for taking the question. Can we talk -- maybe the first question can go to Stuart. Can we talk a little bit about how much of the HHS funding is still available for use. I believe in the last conference call you mentioned that HHS will fund the development of peramivir for certain trials and not others, and can we get some more clarity regarding that reimbursement for this year?

Good morning. Nothing really has changed significantly from the last time we spoke. We continue to work with them. HHS has indicated that the ongoing IV trial and the upcoming IM trial that we've talked about on the call this morning will be funded, so that's been the key for the discussion at this point in time. And we are planning to get through both of those trials and then we'll just continue dialogue with HHS as to how we move forward in the future, but those two programs continue to be funded and nothing new from HHS at this point in time.

Okay. Regarding -- the amount of revenues in reimbursement that you got from HHS was quite good for 2007. Do you expect something similar in 2008? So I guess another way of asking that is do you expect the expenses to be around the same level in 2008?

I think we had a lot of activity last year on peramivir in particular and the focus of our attention this year, as I said, is the IV program and the IM program, so whatever expenses we incur and those up to -- in a typical Phase II programs, whatever expenses we incur in those will be fully reimbursed and those will be reflected in the revenue this year. We've talked about borrowing this year of somewhere between $25 million and $30 million and that reflects the clinical program that we have on going and reflects the reimbursement from HHS that we expect in support of those programs.

And I must have missed it earlier in the call, but you mentioned there was a large receivable from HHS that's already on the books or is it impacting this cash burn? Can you repeat what your guidance was?

Yes, we had a fairly large receivable from HHS at 31 of December. That's obviously been audited by our auditors, that's a clean receivable. That will flow in to us over the early part of this year, so that is positively impacting the bottom for 2008 and what I wanted just to see was that we will burn between $25 million and $30 million this year. As we get out towards 2009 and ongoing, we will not see that positive impact from that kind of receivable, so for a company at our stage in the development cycle with the programs that we've got ongoing, I would just caution that beyond 2008 I would expect a more reasonable burn rate to be in the $3 million to $4 million range and I think it's worth people just bearing that in mind beyond 2008. So that's fairly normal burn rate for a company with our kind of pipeline, but this year's burn will be between $25 million and $30 million, again positively impacted from receivable from HHS.

Right, okay. So maybe moving on to Jon, what/s happening with the ongoing IV study? We didn't mention that on the call or at least didn't spend any time on it, so can you give us an update as to what's happening there?

Sure, and let me mention that Tom Simon, our interim Chief Medical Officer, is here with us and will be fielding questions. So with regard to the IV study, as we had mentioned, in the summer we enrolled our first patient in the southern hemisphere and made good progress in the enrollment in the southern hemisphere. We have since moved that trial to the northern hemisphere and continue to enroll patients. And I think one thing that I wanted to point out is that this is for hospitalized patients, so these are very sick patients, and we still need to fit that timeline of onset of symptoms of 72 hours or less, so recruiting patients for this trial goes a little bit slower than the normal seasonal flu trial.

Do you think that this trial will get completed in the northern hemisphere's flu season or do you think we'd have to go back to the south again?

That's a tricky one to answer, because -- remember, the end point is a new end point, exploratory end point that we worked out with the FDA, and as you know there aren't drugs approved in this indication. So the sizing of this study was based on some estimates of this end point and the original sizing's 120 patients. There'll be data monitoring committee that'll do an interim analysis at a certain target -- prespecified target point and then based on what they see, they'll make a recommendation on either keeping the study at 120 or increasing the study. So given that it's difficult when we don't know what the ultimate total enrollment will be to predict when the study will be completed.

Can you remind me of what this new primary end point is? And then also, the DSMB is going to meet to do an interim, what triggers the interim analysis?

I'll let Tom answer that.

The primary end point is time to clinical stability. There are five dimensions of clinical stability. It's fever, respiratory rate, blood pressure, pulse and oxygen saturation. In order to be considered clinically stable you'd have to hit on normalization of fever and oxygen saturation and then two of the other three, so that's the end point. The data monitoring committee looks at that at a prespecified point and based on that makes a sizing recommendation.

And is that prespecified point just a particular enrollment, like when half the people have enrolled, or is it something else?

Ren, it's the percentage of the 120.

Okay, and you guys -- based on the enrollment rates that you see right now you don't know when that interim analysis will happen or do you have an idea as to when that could happen?

Again, I don't want to predict when the enrollment -- how the enrollment will go at this point in time.

Okay. Maybe we can -- I guess one question is, I think the last time we had this conference call you had mentioned that you'd like to get the IM trial started by mid year or so. It seems like you're taking a little bit more of cautious step and looking to start in next year's flu season. Can you talk to us a little bit about what additional studies or what additional thought processes are you going through that's causing this slight push back?

So what we said is later this year and our intent is to start the trial in the southern hemisphere. We have experience there and that's our plan. I think one gating factor is that we said we're using a new formulation and it's important that we do the clin pharm work on that new formulation to make sure that it has the bioavailability that we expect it will have and the safety and tolerability.

And so when is that work going to get done and when might we see those results?

In terms of the clin pharm --

Right.

-- or the Phase II?

The clin pharm.

We -- it's unlikely that we'll report the pharm. There's no reason for us to believe that this trial won't have the bioavailability that we expect it to have and be safe and well tolerated. So the next update that we'll give you is that we've enrolled the first patient in the Phase II study.

Got you.

Like I said, our target assuming all goes well is the southern hemisphere.

Okay. Okay, thank you for the clarification. The Phase IIb study -- or the Phase II study that's ongoing with Roche right now on psoriasis, can you give us any idea as to, A, how that is proceeding and B, when that might get completed? And I guess C, correct me if I'm wrong, but when the trial -- when Roche takes this to a Phase IIb study, I remember vaguely that there's a significant milestone that's triggered with that, and so do you have any clarity on when that might happen?

To remind you, in the summer -- I believe it was July of last year -- Roche had enrolled the first patient in this IIa study. Enrollment continues to progress, we're very pleased with how Roche has been managing the trial and continues to progress it, but we leave it to Roche to communicate when they expect this trial to be completed. The logical next step, assuming that all goes well -- remember, the primary end point here is safety and so assuming that all goes well in this trial, then you're right, we would move to a Phase IIb with Roche and the timing of that's difficult to predict at this point in time. But you're also correct that the initiation of that IIb will trigger a milestone BioCryst from Roche.

Okay. And then I guess one final question and that is the ongoing CLL trial. Can you give us some details as to that trial, how it's being conducted and I believe you said there'll be some data at the end of this year. I assume at this year's ASHE meeting, but maybe you fill us in?

We have two trials for CLL. One that's been running for quite sometime and actually enrollment's starting to pick up, and another trial that we expect to start shortly. Both studies are single0arm studies, using the 200-milligram forodesine HCl per day, and the end point is complete response or partial response after two cycles of therapy, which is eight weeks. And we expect to have some signaling data from both those studies by the end of this year that we'd be able to share.

And both those studies are ongoing and how many patients are scheduled to be enrolled?

We haven't communicated the total enrollment on those trials at this point in time. But one study has been up and running for a while, and as I said, the enrollment's starting to pick up, and we've got a second study that we hope to start in the very near future.

Terrific. Thank you very much.

You're welcome.

(OPERATOR INSTRUCTIONS) The next question comes from [David Bluvstein] of Suttonbrook. Please go ahead.

Thanks for taking the question. Real quick question, can you remind us since you targeted or brought up a higher dose -- I think it was 600-milligrams -- and you showed some C-max and AUC data on the slides, can you remind us how we think about a therapeutic index and dose limiting tox with this compound and whether we have a lot of room here or whether we're going against the ceiling?

Sure. Thanks for the question, David. Tom Simon. We have very solid preclinical data indicating that we have a lot of head room above 300 milligrams, so we're not bumping up in any ceiling from that respect. We're going to select our higher dose based on the additional PK and tolerability data we with the more concentrated formulation and at this point I can tell you it will be about 300. I don't really want to specify exactly what.

Tom, when do you see DLT here?

Again?

When would you see dose limiting tox?

We haven't seen any safety issues at this point.

Okay, thank you.

The next question comes from Douglas Chow of Caris & Company. Please go ahead.

Hi, thanks. I just wanted to follow up on the new compound that you plan to file the IND on, is that a PNP inhibitor or some thing else?

Yes, so it's a next generation PNP inhibitor. It's got tighter binding. We believe that it'll allows us some better dosing flexibility and so far it seems to be fairly straightforward to synthesize and manufacture. So this is one that we retain full global commercial rights to and assuming all goes well to the third quarter our plans are to file an IND and to start to pursue that in an autoimmune indication.

I see. And this one is designed to have different properties relevant to BCX-4208?

Yes. It's a next generation and there are some subtle differences with this compound as compared to previous -- earlier generation PNP inhibitors.

Okay, thanks.

Your welcome.

The next question comes from Joseph Schwartz of Leerink Swann. Please go ahead.

Thank you for taking the question. I was wondering if you could give us a sense of when you think the optimal time for a forodesine partnership in the U.S. and/or rest of world might be?

Yes, the key with forodesine is how big this is compound going to be, and the answer to that is where can we use it? Right now we're pursuing a later-stage CTCL pivotal trial. That, in and of itself, probably doesn't support a commercial organization for BioCryst. If we see signals in CLL with this trial we're doing, if we're able to move it up into earlier stages of CTCL, then it becomes a more commercially attractive compound for us to move forward ourselves. So we're going to just continue to move these two studies forward -- or three studies forward and make that decision at a later date.

Okay. Then for my follow up, the next generation PNP inhibitor you noted that there were some subtle differences. Would this drug come to market, do you think, after forodesine and 4208 or is there a way that you can develop it faster in a niche, orphan-type indication? And then how would you contemplate that you'll be able to prevent the other two drugs from being used in whatever indications you go forward with for the new PNP inhibitor if there were price differences?

So I want to be careful not to try to differentiate this from previous PNP inhibitors because it's early early days and I think it's premature to say that. I think the main message we want to get across to you from a strategic stand-point is, this is a PNP inhibitor that we retain full global commercial rights to, and if -- our thought processes is, if PNP works in one autoimmune indication it's likely to work in others. And so the opportunity to move it into different areas, different indications is pretty significant, and as I said, we retain full commercial rights to that.

Thank you.

You're welcome.

At this time I would like to turn the conference back over to Jon Stonehouse for closing remarks.

So again we appreciate your participation in the call. We really look forward to the progress and the opportunity that we have ahead of us in 2008. We believe it's an important year for BioCryst and believe we can make great progress. So, as always we appreciate your interest in BioCryst and have a good day. Thank you.

This concludes today's conference call. You may now disconnect.