Capstone Holding Corp (CAPS) 2009 Q1 法說會逐字稿

Good day, everyone, and welcome to the Capstone Therapeutic's first quarter 2009 financial results conference call. As a reminder, today's call is being recorded. (Operator Instructions). There will be a question-and-answer session to follow. And now at this time, I would like to turn over the call to the Vice President, Business Development for Capstone Theapeutic, Mr. Dana Shinbaum. Please go ahead, sir.

Thank you. Thanks, everyone, for tuning in today. For the slides that accompany today's preparation please log on to www.capstonethx.com and click on the investor section. Before we begin, I will call your attention on slide two to our Safe Harbor statement. Today's discussion may contain forward-looking statements about the business prospects of Capstone Therapeutics. You may review a list and description of the risks associated with our business in Capstone's 10-k report filed with the US Securities and Exchange Commission. Please also see our website, www.capstonethx. com for additional information.

Joining me are Mr. Jock Holliman, Executive Chairman and Dr. Randy Steer, President of Capstone Therapeutics. Here now is Mr. Jock Holliman.

Thank you. Good afternoon, everyone. Slide number three, please, is our corporate profile slide. Capstone is a clinical stage biopharmaceuticals company developing two novel peptide molecules for vascular disease and scarring. We have a strong IP portfolio and a skilled staff in all biopharmaceutical disciplines.

Slide four. We continue to advance our programs toward anticipated value events. Both peptide molecules have been shown to work as expected and appear safe and have well defined pathways to commercialization. For AZX100, we have developed through our pre-clinical and clinical safety work, a compelling rational to proceed toward commercialization and dermal scarring by initiating Phase II. This program is underway as we will address in a moment.

We recently restructured staff and programs to provide more capital within the 2009 budget for clinical trials and dermal scarring. With a reduction in force in April of five full time and two part-time employees, Capstone now has a lean staff of 22. Slide five is a molecular rendering of AZX100. It's a heat shot protein 20 muscle relaxing and anti-fibrotic cargo coupled to a protein transduction domain carrier. A very novel and efficient compound.

Slide number six. AZX100 is a unique peptide due to its novel construction is bypasses cell surface receptors and directly affects the (inaudible) skeleton inside the cell, relaxing smooth muscle and reducing or inhibiting fibrosis. Targeted indications include dermal scarring, asthma, pulmonary fibrosis and vascular applications such as intimal hyperplasia.

In slide seven, you'll find the bases upon which we proceeded to Phase II in dermal scarring. We have cellular preclinical and clinical safety evidence that support the rational as well as solid market numbers suggesting commercial upside potential. As we have mentioned on past teleconferences, Capstone's primary market research findings believe that the future of in evasive surgery will require some form of prophylactic intervention for scar reduction. A drug serving this indication could become standard of care. Please turn to slide eight. The broad categories of dermal scarring include cosmetic and aesthetic, post surgical scarring from general surgery and other severe scars such as keloids. We believe these markets may represent aggregate drug revenue potential in excess of $1 billion.

Slide number nine. The dermal scarring arena covers a broad range of indications, and we showed this slide to you in February. From atropic to hypertrophic to keloid scars, keloids are the toughest to treat and they occur most often in pigments skin. They can cause loss of range of motion when located near a joint and they're visually prominent. Standard of care in dermal scarring varies as well. Even among plastic surgeons and medical dermatologists there may be disagreement as to proper treatment. There is no standard of care approved and labeled for keloid scar reduction. We intend to task whether AZX100 can affectively treat a full range of scarring indications.

Slide ten. As mentioned, we're managing two clinical programs in dermal scarring at present. The first is an arthroscopic shoulder surgery scarring trial targeting reduction of the at rovic and possibly hypertrophic scars. Second is a keloid scarring program which targets prevention of keloid reformation following surgical excision of the original scar. These programs by FDA safety guidelines have lengthy follow-up periods of 12 months. We will be looking at interim analysis and observational data late in 2009 or early in the first quarter of 2010.

Page 11. In addition to the Phase II studies in dermal and keloid scarring we continue to examine the potential of AZX100 in other indications. We now have early signals of effectiveness observed in both our pulmonary fibrosis program at levellist respiratory research institute and our intimal hyperplasia program in real access at the University of Cincinnati. We plan to embark shortly on investment collaboration indications in these indications.

Slide 12. This is our old friend,TP508, Chrysalin. Slide 13, please. You will recall our landmark preclinical prosign studies in chronic myocardialin escemia at Texas A&M and acute myocardialin infarction at Harvard Beth Israel Deaconist. Articles describing Doctor Selky's AMI studies are now published in prominent journals. The process of seeking a development partner is on going and in acute myocardial infarction. The world has charged, and potential large pharma partners are downsizing and facing their own uncertain times. There is no guarantee that a deal will be done for partnering this indication, but our activities are on going and we're making some progress.

Please turn to page 14. This is a list of the key publications for AZX100 and PP508 in the last several months and in our industry credibility is built through published data and peer reviewed scientific journals. We delivered on this promise and our science is sound.

Page 15. Reviewing key financial metrics, we closed the March 31st, '09 quarter with $43.6 million in cash, within guidance. The balance sheet has no long-term determine. Our 52-week trading range, $0.40 to $1.09. And our market cap as of May 7, last Thursday, was $27.7 million.

Page 16, this is a quick snapshots of our balance sheet. And you'll see highlighted in yellow are cash and cash equivalents and short-term investments totaling $43.6 million. Slide 17, our loss for the year-over-year was $4.1 million or $0.10 per share. We spent a little bit more money in the first quarter intentionally as planned on the start-up of these dermal scarring clinical programs. Page 18. Capstone has done a solid job of advancing its programs while minimizing use of cash. Since this management team took over in mid 2006, we've been consistently favorable to guidance. 2009 guidance estimates cash usage of between $14 million and $16 million. We reaffirmed that guidance at this time. We continue our relentless focus on preserving cash.

Page 19, in summary, our intent is to drive all of our programs to value events for shareholders as quickly as we can. This year, we are totally focused on AZX100, blocking and tackling and phase two dermal scarring studies. We're also excited about the announcement on this call about preclinical data from loveless and pulmonary fibrosis, a completely unserved clinical need that has a terminal population annually in the US of about 40,000. This is another proof point of mechanism and anti-fibrosis for AZX100. We're excited about that. We're working hard and we're ready to take any questions you may have.

Thank you, sir. (Operator Instructions). We'll go first to Barbara Bagley with Lewis Capital Management.

Hi, Jock, hi Dana, thanks for the updates.

Hey, Barbara.

I'm wondering on the AZX100, when do you guys anticipate the enrollment will be complete for the Phase II dermal scarring?

Well, we continue to enroll aggressively in both studies. The shoulder study, we will cut off effectively, enrollment for the interim look by midsummer, probably by the end of July. And again, this is a moving target based upon our enrollment. Seven months after that is when we can take our interim futility analysis, according to the protocol. So, we anticipate having a sufficient number of enrollees in the program by midsummer to go ahead and let the clock run 7 months and then take that look. That's the answer for the first part of our two studies.

And how many enrollees are you targeting.

Well, the original protocol targeted approximately 150.

And do you think you'll get close to that?

Not in this first iteration. The protocol was written to take an interim analysis, futility analysis, on roughly half the patient population. And all I can say is we're making progress. It is unlikely we'll hit the full 77 by the end of July.

Would you say you got two-thirds of that?

That's all I'm going to tell you, Barbara.

Okay. All right. I was just trying to get a sense.

The enrollment has been a little bit slower than we wanted. We've taken some, the usual steps to increase incentives and outreach to the clinical sites. We actually added an additional clinical site. So, it's under control, but it's not as brisk as we would like. I still believe we're going to have enough patients in the study to have a proper analysis, and that's really the purpose of the study.

Right.

Now on keloid, on keloid, we've had, you ask the tough questions and we're actually thrilled with keloid. We're ahead of schedule in keloid and we're actually adding some more patients to the keloid study. We're testing a couple of extra doses. If you'll remember in February, we were just testing two doses, and now we're testing four. The keloid study again is a pilot study, but we're powering it up and we'll see how our enrollment goes. And once again the '04 keloid study was targeted at 30 and we've expanded that to 60. And we also hope by the end of June to enter a six-month followup period on keloid. So sometime around December 31st, we should be able to take a peek and have some observational data. Okay.

Okay. Thanks. I wonder also, I've noticed some adds here in Southern California for a keloid study. Do you know if that one is yours or is that something related with Capstone.

It is a thrill to have an investor paying attention and doing research in our industry space. Thank you. Yes, it is. That's the third site that we are opening in keloid in the Pasadena area. So that's very cool that you noticed. Thanks.

Actually, I have to give Scott credit for that. He noticed it. There was like a recruitment notice in the L.A. Times. But any way, it looks good. That's exciting.

We're thinking that this market response in keloid may be indicative of the fact that there is a nice market there. And it certainly is an underserved indication. And we're getting some feedback from our existing two clinical sites that the patient population is really excited about the possibility of not having their keloids reformed.

Great.

Okay. Super. Thanks, Barbara.

Okay.

(Operator Instructions). And gentlemen, at this time, there appear to be no further questions.

Okay. Well, thanks, everybody, for tuning in today. And once again, we're in that quiet period where we are just executing our clinical trials. I'll hopefully have some more guidance for you on enrollment and timelines in our August conference call. We're spending money very slowly. It was painful to go through this reduction in force. But it was necessary to put some more money this year into our clinical programs. And that's where the rubber meets the road and where we'll create value for our shareholders. So thanks for your support. Our stock has improved a little bit over the last several weeks. And we thank you for being such good loyal shareholders. Keep the faith and we'll talk to you again in August.

And that does conclude today's conference call. Again, we thank you for your participation.