BioCryst Pharmaceuticals Inc (BCRX) 2009 Q1 法說會逐字稿

Hello, and welcome to the BioCryst Pharmaceuticals peramivir update and first quarter 2009 financial results conference call. (Operator instructions.)

Now I would like to turn the conference over to Mr. Robert Bennett. Mr. Bennett, please begin.

Yes, good morning, and welcome to BioCryst's first quarter financial results conference call and corporate update. Joining me on the call today are Jon Stonehouse, our Chief Executive Officer, Dr. William Sheridan, our Chief Medical Officer, and Stuart Grant, Chief Financial Officer.

Before we begin, I would like to remind you that today's conference call will contain forward-looking statements, including statements regarding future results, unaudited and forward-looking financial information, and company performance or achievements. These statements are subject to known and unknown risks and uncertainties, which may cause our actual results, performance, or achievements to be materially different from any future results or performance expressed or implied in this presentation. You should, therefore, not place undue reliance on the forward-looking statements. For additional information, including important risk factors, please refer to BioCryst documents filed with the SEC, which can be found on our company Web site.

This morning Jon Stonehouse will provide some background on BioCryst's discussions with government agencies regarding the potential use of peramivir for the treatment of H1N1 influenza, then Bill Sheridan will provide a clinical program update focusing on the outcome of the Phase 2 placebo-controlled study of 600-milligram, single-dose intramuscular peramivir in outpatient setting, as well as ongoing and future trials for peramivir, and a clinical update on forodesine. Stuart Grant will then conclude with the financial results for the first quarter.

With that, I will turn the call over to Jon.

Thanks, Rob.

Rob recently joined us as head of Investor Relations from Merck Serono so it's good to have him on board.

Well, good morning, everyone, and thanks for joining us today.

During this recent public health crisis over the 2009 H1N1 influenza A virus, or swine flu, the BioCryst team has had a number of interactions with various US government agencies, including the US Department of Health and Human Services BARDA, the US Food and Drug Administration, the US Centers for Disease Control and Prevention, and the Division of Microbiology and Infectious Disease within the National Institute of Allergy and Infectious Diseases at the National Institutes of Health.

This evolving epidemic was prompted -- has prompted the World Health Organization to raise the prepandemic preparedness status level from Level 3 to Level 5, one level short of a pandemic. In the United States the federal government has declared a public health emergency. As Janet Napolitano, Secretary of Homeland Security, has stated publicly, and I quote, "We do not yet know how widespread this flu will be within the United States so we continue to move aggressively to prepare," end quote. BioCryst is pleased to be able to contribute to this preparation.

As a part of the emergency planning, the acting secretary of Health and Human Services at the time called for the emergency use of certain medical products to treat H1N1. This is referred to as emergency use authorization, or EUA. As a part of the response to this emergency and based on discussions with HHS-BARDA, we are preparing a portion of our inventory of finished peramivir for potential addition to the CDC's Strategic National Stockpile. In parallel, intravenous peramivir is undergoing a pre-emergency use authorization review.

With its perennial route of administration, IV peramivir fills needs not addressed by currently available oral or inhaled antiviral treatments and, in addition, could prove valuable for the treatment of patients seriously ill and hospitalized with influenza.

The clinical activity of peramivir has been demonstrated in various clinical trials. The CDC recently evaluated various antivirals, including peramivir, in laboratory tests against clinical isolates of the H1N1 virus. Ten of the 13 isolates were tested for sensitivity to peramivir. All 10 isolates were susceptible to peramivir, and based on these laboratory results and clinical evidence of activity, safety, and tolerability of peramivir, we continue to support the relevant agencies in their pre-emergency use authorization review of IV peramivir.

Now I'd like to turn it over to Bill Sheridan for the clinical update, including our recent Phase 2 peramivir study results.

Thanks, Jon.

I will now review topline results of our recently completely peramivir Phase 2 clinical trial, describe our future peramivir development program, and provide some medical context regarding the potential emergency use authorization. Finally, I will conclude with a clinical update on our forodesine program.

Our recently completed Phase 2 study of peramivir was a randomized, double-blind, placebo-controlled trial conducted during the influenza seasons in the Southern and Northern Hemispheres. We started in Australia, New Zealand, and South Africa in 2008, and moved on to the United States late in 2008 and into early 2009.

The trial enrolled a total of 405 subjects, 18 years of age or older, with acute, uncomplicated influenza concerned by positive rapid antigen tests. The symptom duration was 36 hours or less. Review of study randomization, protocol-specified procedures, [viral count] completion, patient retention, and peramivir blood level results indicate that the study execution was high quality.

While the study demonstrated a numerical trend in its primary endpoint of improvement in the median time to alleviation of symptoms in subjects with concerned acute, uncomplicated influenza infection versus placebo, the difference between the two study groups was not statistically significant. The median time to alleviation of symptoms was 91.1 hours for those subjects receiving a single 600-milligram injection of intramuscular peramivir, compared to 106.1 hours observed in those subjects receiving placebo. The P value was 0.22.

Further, while in previous studies we observed a significant effect on viral shedding, we did not observe a significant improvement in virology in this trial. Single-dose peramivir 600 milligrams by IM injection was generally safe and well tolerated with a similar adverse event profile noted in the peramivir and placebo treatment groups.

BioCryst is not planning additional developments of intramuscular peramivir at this time. Instead, our efforts are focused on development of the intravenous formulation.

Efficacy has been clearly demonstrated in patients with acute, uncomplicated influenza in Shionogi & Company, Limited's Phase 2 study of intravenous peramivir completed last year. Based on the positive results of that trial, Shionogi initiated its ongoing pivotal Phase 3 study of intravenous peramivir for the treatment of seasonal influenza in the outpatient setting. This Phase 3 study began in December with an enrollment target of 1,050 patients in Japan, Taiwan, Hong Kong, and South Korea.

BioCryst anticipates that Shionogi will complete their Phase 3 program within this influenza season, and they expect to file for a new drug approval in Japan by the end of this fiscal year.

The efficacy of intravenous peramivir demonstrated in a prior study conducted by Shionogi & Company indicates the potential of peramivir as a treatment for acute, uncomplicated influenza. Based on the clinical evidence of activity, safety, and tolerability of peramivir, we are currently in discussions with HHS-BARDA and FDA regarding further development of intravenous peramivir as a treatment for influenza and the funding of associated clinical trials.

We are also in negotiations with the Division of Microbiology and Infectious Diseases at NIH, part of the National Institute of Allergy and Infectious Diseases, to conduct a study of intravenous peramivir in a pediatric-patient population.

And, finally, I would like to return to Jon's earlier discussion on the potential use of peramivir during this current H1N1 influenza situation.

We do not know how this new virus will behave in the future. So far it has spread very quickly to multiple countries around the world. We are fortunate that the mortality in the United States has been much lower than in Mexico. Influenza experts are concerned, though, that the virus could evolve into a more virulent form, resulting in waves of more serious infections. For this reason, it is wise to continue our activities for pandemic preparedness, and BioCryst is pleased to be able to contribute and participate in those preparations.

Turning to our forodesine program, we continue to make progress in enrolling our pivotal Phase 2 study of forodesine in patients with relapsed cutaneous T-cell lymphoma. This study is progressing, and study investigators are showing strong commitment, including the recruitment of a number of new investigators and investigative sites recently. The trial is advancing towards the approximately 130 subjects necessary to complete this pivotal trial, and we expect to announce preliminary data from this study in the first half of 2010.

Regarding the clinical programs for the development of forodesine, we will provide an update on our ongoing Phase 2 chronic lymphocytic leukemia study evaluating 200 milligrams of forodesine twice daily by the end of 2009.

This concludes the clinical update. I will now turn the call over to Stuart to discuss the first quarter financials.

Morning. At the end of March 2009, the company had cash, cash equivalents and investments of $54.2 million, and based on what we know today, the company continues to expect that net cash used in 2009 should be between $30 million and $38 million depending on the achievement of certain clinical milestones. We believe this cash position will support our clinical program well into 2010.

Research and development expenses were $11.3 million for the three months ended March 31, 2009, compared to $21.9 million for the same period a year ago. The decrease in R&D expenses was primarily attributable to a reduction in clinical development costs associated with the peramivir program, a reduction in manufacturing costs associated with both the peramivir and forodesine HCl programs, and a reduction in costs incurred related to the company's preclinical programs.

For the three months ended March 31, 2009, the company reported collaborative and other R&D revenues of $4.4 million, compared to $10.8 million for the first quarter of 2008. This decrease was driven by a reduction in revenues from the contract with the US Department of Health and Human Services for the development of peramivir and that (inaudible) result from the low spend that I just talked about on the program.

G&A expenses were $2.5 million for the three months ended March 31, 2009, compared to $2.9 million for three months ended March 31, 2008. The lower expenses were primarily due to the decrease in professional fees and operating costs, as well as cost containment measures that we took last year following the downsizing of our workforce.

Net loss for the quarter ended March 31, '09, was $9.3 million, or $0.24 per share, compared to a net loss for the same period last year of $13.1 million, or $0.34 a share.

That concludes the financial update, and at this time we'll open up the call to questions.

(Operator instructions.) Our first question is from Joseph Schwartz of Leerink Swann. Please go ahead.

Morning, guys.

Morning, Joe.

I was wondering if you could give us a sense of potential value of the 1,000-dose order to you?

Yes, that's just clinical material that we have available so it's a small number of vials, and I don't think it's a material impact to the company in terms of value.

Okay. So are they actually purchasing it for any price per dose? Like Tamiflu and Relenza was stockpiled, I think, from $12.00 to $20.00 or so a dose, if I recall.

We're still in discussions with the various agencies, and so it's premature to comment on that.

All right. And do you have a sense of under what conditions it will be delivered and, I guess, paid for at whatever rate?

So, again, we're in discussions with the agencies. There's a number of steps involved in an EUA process, but the first one and probably the most important is that you actually get the authorization. And as I said in my comments, we're in the pre-EUA review, and until we have that completed, it's premature to talk about the rest of the process.

Okay. And can you tell us what proportion of your inventory this represents?

Eleven-hundred courses. Very small. We have large quantities of API, and we have the ability to make significantly larger quantities of API. So this represents a small portion.

Okay. And I believe it's manufactured at [Sealog]; is that right? And what is the size of that facility?

So, again, we've got multiple manufacturers on the API front and a large manufacturer for finished goods. I think the bottom line is we're not limited by manufacturing to meet the demand. So we'd be able -- with the supplies we have and the ability to ramp up, we'd have the ability to meet demand.

Okay. I'll get back in the queue then. Thank you.

Sure.

Thank you. Our next question is from Ren Benjamin of Rodman & Renshaw. Please go ahead.

Hi. Good morning, and thanks for taking the questions. Can we talk a little bit more about the emergency use authorization? What is the timing here? And you mentioned that it's a process and you're in review. What is -- what all is involved in a review, and then what are the next steps? Assuming the review's positive.

Yes, so we can't go into the details, but I can give you some general pieces, and then maybe Bill can comment as well.

So you can imagine that there's an intensive discussion -- and we've had this over the last ten days -- around clinical and regulatory, so reviewing documents, talking about how it's going to be used. So significant amount of discussion around clinical and regulatory reviewing a lot of the data that we have available.

The second piece is around capacity, and so we've had a number of discussions with our suppliers, and there's been a thorough review by the various agencies with our suppliers as well. So I would say that the bulk of the activity in the last ten days has been around that.

And so -- unless Bill wants to jump in -- what about --

-- make a comment.

Okay.

So this -- the process for the emergency use authorization is part of the regulations that allow the government to make either approved drugs available for unapproved uses or approved devices available for unapproved testing uses or unapproved drugs available in the context of a declared public health emergency.

So, obviously, peramivir is an investigational drug, it's not approved, and the process involves very detailed and thorough review of all of the available safety and clinical efficacy information and all of the available manufacturing quality and process control [parts] of information and understanding of the quality of all of that data.

Okay. And then in regards to timing, what is -- how long does a typical review take?

Yes, that's up to the government. I can tell you that we've been in round-the-clock discussions over the last ten days, and I'm very impressed by the movement of all various government agencies. I mean, this has been something where everybody's putting a ton of effort into it. So how this proceeds -- I think we've made a lot of progress on a number of different fronts, but I can't predict how much longer this will take.

Okay. Do you have a sense as to -- from your talks with the agencies as to what sort of a stockpile grant or what sort of inventory they would like to acquire?

Yes, we haven't had detailed discussions on the needs yet, and we have had conversations around what our capacity is, and we've shared that with them. But I think there's a couple of parameters that, at least my opinion, you may want to look at.

One is, in the seasonal flu market, you see about 200,000 people in the US end up in the hospital each year. So -- and that's CDC data. If you look at the HHS Web site, you see that, if it's as severe a pandemic as that we saw in 1918, as much as 10 million people could end up in the hospital. So -- and I think the last point is is that the use here is in the hospital so it's peramivir daily over the course of five days.

So I think one other piece -- I don't think you should compare it to the outpatient use of Tamiflu and Relenza from a price point. This is for seriously ill, hospitalized people, and the numbers can range from the numbers that I gave you.

Got it. And then you had mentioned capacity and that you are talking with (inaudible). I think in the past we -- I don't know why 10 million doses or something is coming to mind so it's probably wrong -- but I think in the past, when we had the Avian flu scare, we had more concretely discussed capacity. Is it -- can you give us a sense as to what the capacity is that is currently available?

Yes, I don't want to go into the details of that, but I'll go back to what I had said earlier to Joe that the demand will not be limited by our capacity. I believe that we've -- we've worked hard with the government to make sure that we have a number of suppliers, we've worked hard to think through the various scenarios in the event of a pandemic, we've had -- over the last ten days, we've had a number of conversations with our suppliers. They are prepared to move heaven and earth to make available whatever the government needs. So, again, I don't think capacity will be the constraining factor there.

Got it. You had mentioned that -- correct me if I'm wrong -- 10 out of 12 isolates were tested and showed a benefit. What sort of tests were done, and how do you -- how did you determine that it showed a benefit? Was it just viral (inaudible) -- viral (inaudible) decreases or what was done, and what was the difference -- what do you think caused the two isolates that weren't effective by peramivir to behave that way?

Let me clarify the information first. The Centers for Disease Control conducted these laboratory tests so they're not clinical tests. And there were 13 clinical isolates available. Ten of those were put into a lab-bench test with peramivir in solution, and the test involves inhibiting the neuraminidase enzyme of the virus, in this case the 2009 influenza H1N1 virus that everybody's been talking about.

And so that's -- the result of that assay is read out as what concentration inhibits 50% of the virus, so called IC50, and the results were reported in a publication, the Morbidity Mortality Weekly Report put out by the Centers for Disease Control, and that's footnoted in our press release if you would like to look at the data.

The numbers that the CDC reported are very similar to the numbers we've seen with wild-type ordinary seasonal influenza of that subtype in previous years and reported in literature and also in our labs.

Okay. Okay. Do you know as to the isolates that for whatever reason peramivir didn't inhibit the neuraminidase --

Let me be clear. Only 10 of the 13 were tested with peramivir, and all 10 showed sensitivity.

Oh, great. Okay. I apologize. I didn't get that right.

And let's see, just regarding the Phase 2 IM. So -- just so I understand that. The IM program is now effectively shelved. Is that correct, or is there going to be more analysis done in this trial? Is there a 900-milligram dose that may be evaluated or you might think of evaluating?

We will certainly continue to analyze the data. It takes a long time to thoroughly analyze all of the data from a large study like that with lots of outcome measures.

With regard to the future of the intramuscular route of administration, our efforts and focus are going to be on the intravenous route. It's -- so that's where our efforts are. So I think that, for the moment, we're not going to be concentrating on IM.

Any thoughts or any ideas as to why, especially when correcting for the needle length, that the trials didn't achieve statistical significance?

I think we need to continue to analyze the data to get a more thorough understanding of the outcome. I can tell you that I'm completely confident that the study was conducted at very high quality. So the results are not confounded somehow by some lapse in study conduct.

Got it. And I guess not to leave Stuart out, so one last question for him. You mentioned that the burn -- excuse me -- is going to be maintained or there's no change in -- as far as the burn guidance is concerned. And given that no more effort is going to be put into the IM study or developing the IM peramivir, why isn't the burn going down? Where are the funds getting reallocated to?

So thanks for not leaving me out, Ren. I appreciate that.

So remember that peramivir is neutral to burn. Every dollar we spend is refunded by the government. So any changes in the clinical program for peramivir don't impact our burn. That's neutral too. So the fact that we're not -- we're focused on IV, as opposed to IM, doesn't change our burn. The burn is consumed by the rest of the company and the other programs.

Okay. Great. Thank you, guys, very much, and good luck.

Thank you, Ren.

Thanks, Ren.

(Operator instructions.) Our next question is from Joseph Schwartz of Leerink Swann. Please go ahead, sir.

Hi. Thanks for taking the follow-up. I was wondering does emergency use authorization represent a temporary approval? How does that work?

Yes. So just to be clear, we're in the state of the review stage.

Right.

Okay. So if an emergency use authorization is issued, that's typically for one year. It's possible for the government to renew that. It's also possible for the government to rescind it at any time.

And I believe last quarter you said that there would be an update this quarter for the IV hospitalized patients trial. Is that still on track, and what can we expect to hear at that time?

So we presented the data for the -- the full data for the IV hospital patient trial at the Bangkok flu meeting -- Infectious Disease meeting in February, Dr. Michael Ison was the lead investigator, and so that abstract is in the public domain. We -- that's available if you would like to take a look at it.

But we continue to be in discussions with FDA and HHS on the overall IV program, and the hospital piece of that is, obviously, a key element, and so we're continuing those discussions. We've been focusing a bit in the last ten days on this emergency use piece, but we continue to plan and work with the agencies on our Phase 3 program as well.

Okay. Great. That's helpful. And I saw that 80% or so of the patients in this IM study that you just reported were Tamiflu resistant. How many of the patients in the ongoing Phase 2 have a similar resistance profile, and is this a concern at all?

Just to clarify, the Phase 2 study (inaudible) approximately 80% of subjects in the analysis said Tamiflu resistant is the Phase 2 study that we just completed. That study's wrapped up, and we're continuing to analyze the data.

In regards to future studies that we start, the -- as you know, the vaccine makers have a hard time in working with the government every year to figure out which strains to put into the vaccine because it's somewhat unpredictable what's going to be the dominant strain or which strains will be dominant in the next influenza season. That remains the case. So it's not clear yet, especially with the emergence of this new 2009 strain, what's going to happen in the next flu season. So whether or not the Tamiflu-resistant strain is a large component of that or is dominant or even persists, no one can tell at this stage.

Uh-huh. I remember that the IC50's and 90's of peramivir in an older paper were -- they looked good. They were a lot lower than Tamiflu and Relenza in most cases. I'll take a look at the Morbidity and Mortality Weekly Report, but is there a way you can summarize for us how peramivir compares on these measures versus Tamiflu and -- for the H1N1 that was tested in the ten isolates?

Sure. So the 2009 isolates tested right in the ballpark of what we've seen for sensitive strains of wild-type H1N1 in previous studies, and that's published in the literature, and it's subnanomolar is the way to describe that. The H274Y Tamiflu-resistant strain does affect peramivir IC50's in the laboratory, and the IC50's you get with that strain are around about 30 to 40 nanomolar. So that's different from a fraction of a nanomolar, obviously. There is a difference with oseltamivir, or Tamiflu, and in the case of oseltamivir, the resulting IC50's are in the several-hundred range typically.

So I think it remains to be determined still with peramivir whether or not more than one dose might be effective against that particular virus. And as I said before, we're still in the process of analyzing all of the data from the Phase 2 study that we just completed. So it's a bit premature to draw conclusions.

Okay. Great. And can you tell us whether antivirals were evaluated by the CDC?

Yes. Other -- yes. The report that I mentioned lists zanamivir, or Relenza; oseltamivir, Tamiflu; and also looks at adamantanes. And as you probably saw from press reports, one of the worrying things about this new virus is that, despite the fact that it's an H1 strain, which is typically sensitive to all the drugs, like rimantadine, this one is resistant to the rimantadine class of drugs.

Uh-huh. Okay. And then my last question would be do you know what the status, if any, of IV forms of either of the other two neuraminidase inhibitors, Tamiflu or Relenza, is?

That question's best directed to the other sponsors, but as far as we know, nobody else is developing an intravenous formulation of an antiflu or antiviral.

And if they decided to, we'd certainly be far ahead of them.

Great. Okay. Great. Thanks for the (inaudible).

You're welcome.

Thank you. This does conclude today's question-and-answer session. I would like to turn the conference back over to Mr. Stonehouse for any closing remarks.

Thank you, and, again, thanks for everyone joining the call today.

We've said all along that stockpiling is the value driver for peramivir. Our assumption has been that stockpiling comes after approval. Recent events and our trial results have led us to alter our development program to focus on IV, and initial feedback from government agencies is supportive of moving forward. So we're in discussions with these agencies on how to move forward into Phase 3.

The events of the past ten days have opened the possibility of peramivir being added as a weapon to the Strategic National Stockpile. We're in the pre-EUA review, but there's no assurances of getting this review. So we've got to let the process work its way through, and we will work very closely with the various government agencies to give them the information they need to do a proper review. But what this pre-EUA review underscores are two things. One, there is a serious need for a perennial antiviral, and, two, peramivir may fill this need.

So we'll keep you posted on the progress that we make, and, as always, thank you for your interest in BioCryst.