Crescent Biopharma Inc (CBIO) 2013 Q2 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Q2 2013 Targacept Incorporated earnings conference call. My name is Jo and I will be your operator for today. At this time all participants are in listen-only mode. We will conduct a question-and-answer session towards the end of the conference. (Operator Instructions). As a reminder, this call is being recorded for replay purposes.

I would like to now turn the call over to your host, Dr. Stephen Hill, Targacept's President and Chief Executive Officer. Please proceed, sir.

Thank you, Joe, and good morning to everybody and thank you for joining us. With me this morning I have Alan Musso, our Chief Financial Officer, and David Hosford, our Vice President of Clinical Development and Regulatory Affairs.

First, let me inform you that comments made today may include forward-looking statements made under the Private Securities Litigation Reform Act of 1995. Forward-looking statements relate to plans, expectations, objectives or future events, financial results or condition including for any of our product candidates, the design, scope or other details of clinical trials; the timing for initiation or completion of or reporting results from clinical trials or for submission or approval of regulatory filings, target indications or commercial opportunities; as well as AstraZeneca's development plans for product candidates license from us; our cash runway; revenues or expenses; plans; expectations or any other matter that is not historical fact.

Actual results may differ materially from those expressed or implied by any forward-looking statement as a result of many factors including those described under the heading forward-looking statements in our press release from earlier today or under the heading risk factors in our most recent form 10-K or in later filings with the SEC. We caution you not to place undue reliance on any forward-looking statement.

Also any forward-looking statement that is made speaks only as of today and should not be relied upon as representing our views at any future date. We disclaim any obligation to update any forward-looking statement except as by required by applicable law.

So with that in mind this quarter has seen good progress in the advancement of our promising pipeline of Phase IIb product candidates all of which are aimed at addressing great unmet patient need. So let me start with a brief update of each of our clinical programs.

We announced in April that we had completed recruitment in our Phase IIb study of TC-5619, our wholly-owned alpha7 modulator as a treatment for negative symptoms and the cognitive dysfunction of schizophrenia. And it is that constellation of so-called negative symptoms such as social withdrawal and extreme indifference and the impacts from cognitive dysfunction that hinder schizophrenics from functioning in society.

The antipsychotic medications typically used to treat delusions and the hallucinations don't effectively address these other disease domains thereby leaving a significant unmet medical need and commercial opportunity.

An estimated 4.7 million patients in the world's seven major pharmaceutical markets have schizophrenia and a significant percentage suffer from the symptoms that we are targeting with 5619. In this study which was designed to enroll approximately 456 patients at sites about two-thirds in Eastern Europe and one-third in the US, our primary end point is the scale for the assessment of negative symptoms or SANS. We have also designated measures of cognitive dysfunction and overall everyday functioning as key secondary end points. With recruitment for this study now complete, we expect to report top line study results in late December or January.

Let me now turn to our program in overactive bladder where we announced in May the initiation of a Phase IIb study of TC-5214 designed to enroll approximately 750 patients at over 100 US sites. 5214 is a potent modulator of alpha3beta4 NNRs located in or around the bladder with a well-established safety and tolerability profile stemming primarily from a large clinical program conducted in another indication.

The strong scientific rationale supporting our efforts combines the compound's unique pharmacological and pharmacokinetic properties, scientific findings that implicate the role of alpha3 NNR in bladder function, promising preclinical findings with the compound, and clinical observations from the prior program.

There is a clear need for new therapies in this area with an estimated one out of six adults in the US suffering from overactive bladder. Currently available treatments have limited efficacy and for many tolerability drawbacks like excessive dry mouth that can lead to noncompliance and discontinuation of treatment.

On the clinical side, OAB is an indication with objective regulatory end points where Phase II success has historically translated into Phase III success and approval. Enrollment in our study has gone well to date and we expect to report topline results in the first half of 2014.

Finally, we also announced in April that we completed recruitment for our Phase IIb study of TC-1734 as a treatment for mild to moderate Alzheimer's disease. TC-1734 is an alpha4beta 2 modulator that is being tested as a monotherapy head to head against donepezil, the market leader. We continue to anticipate reporting topline data from this study in mid-2014.

Before we move into the financial update, let me close by reiterating our commitment to NNR therapeutics. We have built a pharmacologically diverse pipeline based on a belief with science behind us that NNRs play a key role in many biological functions. As Alan will review, we have a strong balance sheet that will see us through to the important clinical outcomes that I have mentioned and well beyond.

We do recognize that to build a sustainable company we will need to enhance our pipeline. We have a substantial library of NNR therapeutics with pharmacological diversity that provides us the potential to complement our pipeline with internal programs which is our strategic focus. We will also continue to be opportunistic in our evaluation of external prospects giving stringent consideration to criteria for cost of capital, potential synergy with our existing programs, and the opportunity to meaningfully enhance our overall company risk profile.

With that, I will turn the call over to Alan for a financial update and then we will be happy to take your questions.

Thanks, Steve. Let me briefly review our financial results for the second quarter of 2013 which we released earlier today.

We ended the second quarter with a balance of $164 million in cash and investments. Our net loss was $12.4 million for the second quarter of 2013 compared to net income of $14.5 million for the second quarter of 2012. For the six months ended June 30, 2013, our net loss was $20.4 million compared to net income of $16.8 million for the corresponding period of 2012.

The change for both periods is primarily due to a decrease in deferred revenue recognition partially offset by lower research and development expenses and the non-recurrence in 2013 of restructuring charges that we incurred in 2012.

As we have guided previously based on our current operating plans, we expect our cash, cash equivalents and investments balance at the end of 2013 to be at least $135 million and we continue to expect that our cash resources will be sufficient to meet our operating requirements through at least the end of 2015.

With that, we will open up the call for your questions.

(Operator Instructions). Alan Carr, Needham & Company.

Thanks for taking my questions. A couple of them, both are around strategy. One, can you give us an update on I guess corporate strategy with respect to commercialization or partnering each of those three programs that are in the clinic?

And then also, you mentioned a commitment to NNR beyond the three compounds that are in the clinic. I am wondering if you can give us a general sense of what sort of indications your classes have -- compounds or classes of targets of NNR targets that are most interesting to you in the long term? Thanks.

Thanks, Alan. Starting with maybe to start with the last piece, we have said for a while that we want to explore the role of alpha7 and evaluate that beyond schizophrenia. As you know other companies have been looking at alpha7 modulation in Alzheimer's and we continue to consider that possibility and see if there is a cost effective way of exploring Alzheimer's beyond the programs we already have underway.

With regards to other programs, we do have some internal prioritization underway in terms of thinking about novel uses of NNRs and we look at that both in terms of central nervous system but also peripheral nervous system. As we often say, there are more [negative] receptors outside the brain then inside the brain so we think there is some interesting peripheral diseases that we could explore.

With regards to the first part of your question for commercialization strategy, at this point our assumption is that in the event of positive data from the schizophrenia program with our alpha7, we would most likely look for a partner to take that further certainly in schizophrenia, maybe additionally in Alzheimer's disease. It is not a hard and fast decision but at this point in time I think we would be better served by doing that and then showing we have sufficient resources to pursue the rest of our portfolio.

With regards to the overactive bladder program, that might be more feasible for us to take that through to registration on our own. But we keep all of those options open so we don't want to decide in advance of the data whether it is most advisable for our Company and for our shareholders to either keep those programs to a later stage or to partner them. But at the moment I think our plan for schizophrenia is to look for a partner.

I guess if I can toss in another one here, with respect to some other compounds that are like underdevelopment and going after cognition like in vivo and that sort of thing, how do you think your drugs profile might differ clinically?

It is tough to know clinically because unless you do a head to head trial with the two compound so the reality is that you don't really know what the risk-benefit profile of a drug is until you have pretty extensive exposure in real life subjects. So whichever compound turns out to be best in class is really unknown until you get close to commercialization indeed on the market.

Pharmacologically, we are confident that we have a very selective alpha7 modulator and that may discriminate between pure alpha7 modulators and compounds that have some mixed activity at alpha7 and 5HT receptors. It is tough to handicap whether that is a good thing or a bad thing at this point in time but my sense is that probably over time each of these programs that are focused on alpha7 may turn out to have slightly different risk-benefit profiles, may even end up being more or less useful in different patients or populations. But there is such a big disease area that I think there is plenty of room for two or three very effective drugs for these symptoms.

Thanks very much.

Thank you.

Juan Sanchez, Ladenburg.

Good morning. A couple of questions on IP. You could remind us of the IP for 5619 and 5214 and whether or not the overactive bladder findings can help you strengthen the IP for 5214.

The second question is whether or not the clinical findings in the depression program when it comes to urinary retention have been published somewhere?

Yes. So let me start with the second piece and I will maybe ask Alan Musso to give you some more specifics on the IP situation.

We haven't published as such the data from the depression study with regards to the incidence of urinary tract infection and retention of urine simply because it is very difficult to publish it in a contextual way that is meaningful. And we have done our own internal analysis and we have convinced ourselves that when we look at that data we see a dose-dependent increase, very modest levels, very low percentage so low single-digit percentages of UTI and retention of urine that seem to be correlated with dose. But the numbers are just not big enough to give it statistical significance but we thought it was a strong enough signal to support all of the preclinical work that justifies taking this compound into the clinic for overactive bladder.

So we are reasonably comfortable that that is a strong enough signal to add to the whole constellation of data that we have making this relevant and we will find out but the proof of the pudding is the Phase IIB data.

Alan, can you answer the IP question?

Sure. In the case of 5214, we have multiple patents that are issued as well as some that are pending basically looking towards the new indications for which we are pursuing. Those haven't issued but they have been filed and are being prosecuted so the current patent situation on that is patents that natural life through 2020 with an expected five years beyond that with Hatch-Waxman that would apply to 5214 as well as an ability if we file before September 30, 2017 to be granted NCE designation.

And in the case of 5619, that is also a patent estate that applies. One patent that we are quite excited about is a [salt] patent that extends into 2029 natural life that could be extended and we feel really good about the characteristics of that patent as being applicable for exclusivity.

Perfect. Thank you, guys.

(Operator Instructions). There are no further questions. I would like to turn the call back over to Dr. Stephen Hill for closing remarks. Thank you.

Thank you. So thank you firstly to all of the employees of Targacept for another very important quarter in the progression of our Company and thank you to all of you in the audience for your interest in our progress and hopefully you all have a great day. Thank you.

Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect. Good day.