BioCryst Pharmaceuticals Inc (BCRX) 2008 Q3 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Welcome to BioCryst's Third Quarter 2008 Financial Results and Corporate Update Conference Call. (OPERATOR INSTRUCTIONS)

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

Good morning. Welcome to BioCryst's Third Quarter 2008 Financial Results and Corporate Update conference call. Joining me on the call today are Jon Stonehouse, Chief Executive Officer of BioCryst, and Dr. William Sheridan, Chief Medical Officer. Before we begin, I will read a formal statement regarding risk factors associated with today's call.

Today's conference call will contain forward-looking statements regarding future events and the future financial performance of BioCryst. Such forward-looking statements may include predictions regarding the current and proposed clinical trials of forodesine HCL, ECX-4208, and peramivir, potential developments of compounds not in clinical testing, and cash flow projections, including the benefit of the US Department of Health and Human Services' funding of peramivir. These statements involve known and unknown risks and uncertainties and other factors that may cause the actual future of events or actual future financial performance to be significantly different from those expressed or implied by the forward-looking statements. Please refer to the section "risk factors" with in the company's most recent press releases and the documents the company files from time to time files 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 Web site 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.

On today's call, I will provide you with an overview of our financial performance for the quarter, Jon will then operate you with the corporate highlights, and Bill will give details of our clinical programs. Before I get into the details of the quarter and year to date numbers, can I remind you that the bulk of the company's revenue is still generated by reimbursement from the Department of Health and Human Services for costs incurred relative to the development of peramivir. The timing and level of our revenue inflow is therefore heavily influenced by the level of clinical activity on the peramivir program.

For the three months sender September 30, 2008, the company reported collaborative and other research and development revenues of $8.9 million, compared to $20.5 million for the three months ended September 30, 2007. The decrease was primarily driven by a reduction in peramivir, clinical development costs, and the associated revenue from HHS. R&D expenses for the same period were $16 million, compared to $29.7 million for the three months ended September 30, 2007. The decrease in R&D expenses was primarily attributable to a reduction in the clinical development costs associated with the peramivir program, a reduction in costs incurred relative to the company's preclinical programs, and the reduction in manufacturing costs associated with both the peramivir and forodesine HCL programs. These reductions were partially offset by an increase in BioCryst's clinical development costs for the forodesine HCL programs.

G&A expenses were $2.5 million for the September 30, 2008 compared to $2.6 million for the same period a year ago. The net loss for the quarter ended September 30, 2008, was $9 million, or $0.24 per share, compared to a net loss for the quarter ended September 30, 2007, of $11 million, or $0.32 per share. For the nine months ended September 30, 2008, collaborative R&D revenues were $22.3 million, compared to $43.1 million for the nine months ended September 30, 2007. This decrease is again driven by a reduction in peramivir-related activity leading to a reduction in costs and associated revenue from HHS, plus the $4.9 million reserve taken in the second quarter of 2008 for BioCryst's previously expected to receive from HHS, related to costs incurred in the Phase III program and intramuscular peramivir for outpatient influenza. These costs you may remember were associated with a Phase III program for peramivir which was voluntarily discontinued earlier this year. Reimbursement of these costs is currently under discussion with HHS.

R&D expenses were $51.3 million for the nine months ended September 30, 2008, compared to $64.9 million for the nine months ended September 30, 2007. The decrease in R&D expenses was due to a reduction in the clinical development cost and toxicology costs associated with the peramivir program, and the reduction in manufacturing costs associated with both the peramivir and forodesine HCL programs. These reductions were again partially offset by an increase in the company's clinical development costs for forodesine HCL, and increases in personnel-related costs and professional services.

G&A expenses were $8 million for the nine months ended September 30, 2008, compared to $7 million for the nine months ended September 30, 2007. The higher expenses were primarily due to an increase in professional fees and personnel-related fees. The net loss for the nine months ended September 30, 2008, was $34.8 million, or $0.91 per share, compared to a net loss for the nine months ended September 30, 2007, of $26.8 million, or $0.86 per share. As of September 30, 2008, the company held cash, cash equivalents and investments of $67.9 million. We recently implemented our work force right-sizing that reduced company head count by 20%. We currently have 79 employees.

All of our resources are focused on the advancement of the late stage clinical pipeline and the most promising pre-clinical compounds. With that focus, I am pleased to reconfirm that the cash bump for the year-ended December 31, 2008, will remain at the lower end of the $25 million to $30 million guidance we gave earlier in the year. We have a strong balance sheet with no debt. We have full funding of the ongoing Phase II peramivir trial from HHS and look forward to ongoing dialogue with HHS relative to future funding. I am confident that we have the resources required and the spending at the appropriate rate to help us to move our key programs forward toward licensure in the timelines we have set out for you. That includes our financial report for the third quarter of 2008 and I will now turn the call over to Jon.

Thanks, Stuart. I would like to start by telling you how excited we are about the eventful week we just had. On Monday, we announced encouraging results from our Phase II study of intravenous, or IV peramivir in patients hospitalized with influenza. On Tuesday, full data from the Shionogi sponsored Phase II trial of IV peramivir in the outpatient setting was presented in a poster during the ICAC annual meeting. Our Chief Medical Officer Bill Sheridan will discuss the results from these studies and their significance in a few minutes.

As you can see from the announcements this week we continue to make significant advancements in our clinical programs, meet milestones and focus on the execution of our late stage programs. Our peramivir program is advancing towards Phase III, as demonstrated by the recent completion of the Phase II study of outpatient IV peramivir in uncomplicated influenza sponsored by Shionogi and the Phase II study of inpatient IV peramivir in patients hospitalized with influenza. In addition, our Phase II study of outpatient intramuscular or IM peramivir in acute uncomplicated influenza is moving to the northern hemisphere. We anticipate finishing this trial by the second quarter of 2009.

We're looking forward to the future results from our peramivir program. There is a high demand from the government, and the infectious disease community to have a pereneral influenza drug, a demand that was clear from what we saw this week at the ICAC/IDSA meeting. There is a need to treat sick patients in hospitals with the pereneral medicine and ensure 100% compliance with outpatient therapy that can be administered with a single dose in the doctor's office. Currently, this treatment doesn't exist, and BioCryst is leading the way.

We are also making progress with our P & P franchise. The lead product here is forodesine HCL with two studies ongoing, a pivotal Phase II study for CTCL and a small exploratory study of forodesine HCL in CLL. Enrollment in the CTCL study slowed over the summer below our projections. We have taken action to accelerate enrollment and early indications are that these actions are having a positive effect. We will monitor enrollment over the next quarter, and give you an update on our next earnings call.

We also announced final results from the Phase II A trial of BCX-4208 in September that evaluated the safety and tolerability and [pharmaco] kinetic profile of BCX-4208 in psoriasis. Results from this trial, as well as from laboratory investigations of BCX-4208 and forodesine HCL will be presented during the American Society of Hematology annual meeting taking place in San Francisco in December.

This concludes our review of recent company developments. Now, I would like to turn the call over to Bill to provide more details on recently-reported results from our clinical programs.

Thank you. As Jon mentioned earlier, a poster was presented this week at the ICAC/IDSA meeting detailing the results of the Shionogi sponsored placebo controlled Phase II trial of outpatients single dose intravenous peramivir in acute uncomplicated influenza. This trial made its primary end point of time to alleviation of symptoms, to both 300-milligram dose and a 600-milligram dose of peramivir. This result was highly statistically significant. The P values were 0.0046 in each case. Hazard ratios were 0.681 and 0.666 respectively. For peramivir 300-milligrams and peramivir 600-milligrams associated with median time to alleviation of symptoms of 59.1 hours and 59.9 hours compared to 81.8 hours, for placebo.

All secondary end points were also met. These included change from baseline, in comp sit symptom score, time waited change in influenza virusTitus from baseline to two days following infusion, time to resolution of fever, and time to resumption of normal activities. Peramivir was well tolerated in the study, with a similar adverse event profile to that of placebo. We are very encouraged by these results. Peramivir reduced time to alleviation of symptoms by approximately 22 hours, with a hazard ratio of 0.666 at the 600-milligram dose. This result supports the clinical efficacy of peramivir in the treatment of patients with influenza. This placebo-controlled trial was a critical kit to peramivir and demonstrated for the first time that a single administration of this novel potent neuraminidase inhibitor can be effective in treating seasonal influenza. We look forward to learning more about the clinical benefits and safety profile of peramivir in the upcoming Shionogi sponsored Phase III trial of intravenous peramivir in outpatient influenza.

On Monday of this week, we also announced encouraging results from our exploratory Phase II trial of peramivir in patients hospitalized for serious or potentially life-threatening influenza. This randomized double blind, double dummy trial examined peramivir administered IV daily for five days, compared with (inaudible) known as [Chamoflu] twice daily for five days. As stated in our call on Monday we are pleased to have achieved all of our goals in the study which are as follows.

Number one, to identify the comp sit end point to time of clinical stability as clinically meaningful and whether or not it should be used in future studies in influenza patients.

Number two, determine if the virology results in hospitalized setting are those of the outpatient setting.

Number three, compare the clinical efficacy of (inaudible) and peramivir.

Number four, observe a mortality rate at least as good as that published in the epidemiology studies.

And number five, evaluate its IV effect at the doses study, had a safety profile in patients hospitalized with influenza.

For further details on the study design and results, a recast replay of Monday's conference call can be found on our Web site.

I would like to note here, three important points regarding the Phase II trial in patient hospitalized with influenza. First, this trial was received as a landmark study by influenza experts, and represents the first-ever prospected clinical trial to be completed in patients hospitalized with influenza. These results provide us with invaluable knowledge about the course of illness and its treatment in this setting. The findings of this study will be utilized in the design of future clinical trials, serving as a framework for studying the treatment of influenza in hospitalized patient.

Second, this study demonstrated peramivir's potential to fill a significant medical need in the treatment of influenza in patients who are hospitalized with serious or potentially life-threatening influenza. Currently, there are no anti-virals for these patients approved in the United States. And according to the US Centers for Disease Control, 36,000 people died of complications from influenza each year. These statistics represent not only the US, so the scale of the problem is large. In this trial, we observed no mortality patients concerned to have influenza. This is an important finding worthy of follow-up because the previous prospective epidemiology study, published in Clinical Infectious Disease in 2007, reported a mortality rate in 10% in 219 patients not treated with neuraminidase inhibitors. In addition, the virus was quickly cleared and patient did well overall as judged by other clinical end points, including no clinical relapses, discharge from hospital after a median of 4.0 days, and a median time to resumption of usual activities of 10.8 days. In published epidemiology studies by comparison the median length of hospital stays for patients admitted for influenza was 6.0 days.

Third, peramivir over five days IV was generally safe and well tolerated in patients hospitalized for influenza, adding to our expanding database of the safety and tolerability of peramivir. We will submit detailed results for presentation at an upcoming medical meeting and will provide an update as to the next steps, following consultations of the FDA and colleagues at HHS.

Finally I would like to summarize results from our Phase IIA trial of BCX-4208 which were announced in September. The results of the full study analysis were consistent with the interim analysis reported in May of 2008. The study met its primary objectives of safety and tolerability and displayed dose dependent reductions in peripheral blood lymphocyte counts including subsets involving B cells, total T cells, T helper cells and (inaudible) toxic cells and also reductions in plasma uric acid. And plasma drug levels increased with dose and oral BCX-4208 was generally safe and well tolerated at doses up to 120-milligrams daily for six weeks.

Clinical efficacy in psoriasis which was the secondary objective was not observed with the doses and duration of administration tested. These results expand our knowledge of P & P inhibition in the clinic and confirm the specificity of the effect and suggest that BCX-4208 may have utility in diseases dependent on T cells, B cells or uric acid and have additional investigation. We expect to initiate a Phase II trial in 2009. This concludes my review of recently-announced results from our clinical program. I will now send it back to Jon for further remarks.

Thanks, Bill. In closing, I would like to remind that you we have several upcoming key milestones through the course of next year and are on track to move towards our goal of bringing products to market. These milestones are, number one, providing signal results on our forodesine study and CLL, and initiate Shionogi's Phase III trial, number three, deliver our Phase II outpatient IM peramivir study results, number four initiate appropriate next studies of IV peramivir in hospitalized patients. Number five, initiate the next Phase II study of BCX-4208, and lastly, number six, fully enroll the pivotal trial of forodesine HCL and CTCL. This has been a great week at BioCryst. We have encouraging results from our trials, important milestones are coming soon and most importantly we're making progress towards our ultimate goal, bringing new medicines to market for patients in need. At this point, I'd like to open the call up to questions.

(OPERATOR INSTRUCTIONS) Our first question comes from Charles Duncan of JMP Securities.

Good morning, guys. Congratulations on the peramivir results.

Thanks, Charles.

I had a question regarding peramivir, the funding of peramivir's further development. I imagine it is a little too early to fully bet these results with HHS, but what has been the response, and if you can give us a probability, must be high -- that this we would re-up to continue to fund this development?

Charles, this is John. We've shared the top line data with HHS. We will continue to review the full data set with HHS as well. They will be involved in the discussions that we have about the future steps and future trial, and the discussions with FDA, and of course, as a result of all of those discussions, we will be talking about future funding. I don't want to handicap or put a probability on it. One of the things that was really important to HHS was the drop in viral load, and you know, clearly from this trial, when you see a two log drop, that is an attractive aspect to the results of this trial.

Okay. And with these results, I imagine you're giving some thought to commercializing the drug. Have you had additional or new interest by the pharmaceutical industry?

Well, one of the things we've talked about in the past is that we will absolutely, as a part of our strategy, partner the seasonal flu component of peramivir, because number one, it is a primary care sale, and number two, it is seasonal, so with good results, of course, it makes the asset more attractive. So we anticipate that will have some good success in pursuing that partnership.

And then hopping over to forodesine, you mentioned the CTCL enrollment patterns. Those seem pretty normal to me. But can you give us an update on timing?

Hi, it is Bill, Charles. As I would mentioned in the call, enrollment slowed a bit over the summer. We took some action to accelerate enrollment and that seems to be having a good effect. And we will keep monitoring the situation. This is, as you know, quite an uncommon illness, so it is not surprising that enrollment varies month by month.

And at this point, Charles, I don't think it makes sense to give you a view of the enrollment until we get a couple more months under our belt and have a better view in terms of the timing of when we will complete enrollment.

I mean that makes sense to me, and it is consistent with what we're hearing from other companies with CTCL programs. Last question is, on -- for Stuart, in terms of the cash guidance, are you assuming any change in terms of the inflows in that, or could it actually stretch out with additional inflows?

No, the bulk of the revenue, Charles, is still coming from HHS reimbursement, obviously. There are some milestones, depending on when Shionogi finish their -- what I would say is pretty dependent on HHS at this point in time, and as I said, that can be lumpy given the spend pattern on the peramivir program. So to say we feel good about $68 million on the balance sheet at this point in time, we are very happy that we did the type a year ago. We will run through $25 million this year. So we will come out this year, we started at $85 million so I suspect we will come out somewhere around $60 million, run rate of $25 million. And we have a good cash run rate at this point in time. And obviously if we did anything on the seasonal indication, that would be an upside to that. But without any extraordinary influence we feel good about the run rate we have right now.

Yeah at least two years of cash is a differentiated aspect. Congratulations on the peramivir results and thanks for the added color.

Thank you.

Our next question comes from Ren Benjamin of Rodman.

Hi, good morning. And thanks for taking the question. I guess just to get some more clarity regarding the IV study, the Phase III IV study that Shionogi has been running, do you know, do you have an idea as to the timing and as to how the trial will be designed and how long it will take?

Shionogi hasn't disclosed the details publicly, and what we have transmitted is they are well advanced in their planning for their Phase III program. They expect to initiate the study in the upcoming season and we will see what happens.

And based on these study results, I mean clearly, the data looks very promising. Is it incorrect to extrapolate, if you will, that when we look at the IV study results, and we try to compare it to the IM study that is ongoing right now, is it sort of incorrect to think about it that if the bio-availability issue, or the issue of actually getting a lot of drug into the bloodstream with the IM formulation is fixed, that you should see somewhat similar results to what you've seen in the IV study?

So let me say a couple of things in that. First off, we are extremely pleased to have Shionogi as our partner. I can't say enough good things about the fact, the speed at which they moved, the quality of the trials that they've done, and the fact that they're getting great results, you know, they have just been a fantastic partner, so that's the first point. In terms of kind of extrapolating from their trial to our trial, I think there are a lot of similarities. One is, you know, it is in the outpatient setting. Person comes in, goes to see their doctor, gets treated with one dose, and goes home. And the end point is time to alleviation of symptoms, so it is the same end point as we use in our trial. And one of the things that we've discussed quite a bit in the past is that we felt that we needed to get drug exposure up, and by using the 600-milligram dose, we feel that we've got adequate drug exposure in our Phase II trial that we would expect that we would get similar results to what we've seen in Shionogi's study.

That's fair. Okay. And I guess going forward, and thinking about the IM study and potentially moving into a pivotal study, would the pivotal study also -- would that be placebo-controlled, or you know, in your talks with the agency, would you have to have an active control in that study as well, since you have a product that is already approved?

In the setting of uncomplicated acute influenza in outpatient, the standard is placebo controlled and that's the Phase II is constructed and that's the way we would expect that Phase III would be constructed.

Okay great. You mentioned, Jon, quite a few milestones at the end, but I'm going to try to peg you to some sort of timing. I understand that within the next six to 12 months, but can you give me some clarity, some more clarity as to when these milestones may come to fruition, in what quarters?

So the first one, CLL, signals, we expect that by the end of the year. Number two, Shionogi, initiating their trial, the upcoming flu season, so that starts December, January, somewhere in that time frame. Delivering the results of our outpatient study, sometime in the second quarter, you know, a lot of that depends on when the flu kicks in. But we're wrapping up that study. So some time in the second quarter I think is a safe bet. The appropriate next study for the hospitalized flu program, I can't say any more than sometime next year. A lot of that depends on the discussions with the FDA and the like and we will try to move that as quickly as we can. Initiate the next Phase II study with BCX-4208, I would say probably the second half of next year. And then fully enroll, I don't want to make any comments on that because I really want three more months of enrollment before I make any commitments on the CTCL study for forodesine. Is that enough to pin me down?

Yeah, that's good. And then there is ash data in the fourth quarter of this year for 4208, correct?

Bill can you give you a little bit of insight on that.

We had three posters. The safety and pharmaco dynamic results from the 4208 study in psoriasis will be presented (inaudible) and we have a couple of laboratory posters, one on 4208, from Dr. Band here at BioCryst, and there is also a poster regarding studies on forodesine in the laboratory from Dr. Hominga.

Okay. I think that's it for me. Thank you, guys, very much.

Thanks, Ren.

(OPERATOR INSTRUCTIONS) I would like to turn the call back over to our moderators for any closing comments.

Thank you. Just a couple of things to think about as we close out this call. I think the first thing is we've got a sizable amount of cash in the bank, as Stuart has already mentioned. We plan to tightly manage our resources. And we got a lot of support from partners, like HHS and Shionogi, so we anticipate that we will continue to be able to keep our burn rate low. We continue to execute on our plan and we will continue to deliver results. And all of these, we believe, are attractive characteristics when one considers investing in biotech, especially when you consider this current economic environment. So we will be continuing to give you updates. We're at Rodman and Renshaw in a couple of weeks and we'll be at J.P. Morgan at the start of the next year. So again, thanks as always for your interest in BioCryst and have a great day.

That concludes today's teleconference. Thank you for participating. You may now disconnect.