Crescent Biopharma Inc (CBIO) 2013 Q4 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Q4 2013 Targacept Inc earnings conference call. My name is Perita and I will be your operator for today.

(Operator Instructions)

As a reminder, this call is being recorded for replay purposes.

I would like to turn the call over to Dr. Stephen Hill, Targacept's President and CEO. Please proceed sir.

Thank you, Perita, and good morning, everyone, and thank you for joining us. With me this morning is Alan Musso, our Chief Financial Officer.

First, as usual, 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 conditions including for any of our product candidates, the design, scope, or other details of clinical trials, the timing for initiation or completion of, or for reporting of results from clinical trials, or for submission or approval of regulation filings. Target indications or commercial opportunities, as well as AstraZeneca's development plans for product candidates licensed from us, our cash runway, revenues or expenses, plans, expectations, or any other matter that is not a historical fact.

Actual results may differ materially from those expressed or implied by any forward-looking statements 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 as of any future date. We disclaim any obligation to update any forward-looking statement except as required by applicable law.

So with that traditional introduction, today I'm pleased to report good progress towards the completion of our two ongoing Phase 2b clinical trials, that is TC-5214 for overactive bladder and TC-1734 for Alzheimer's disease. Both of which are on track for top line results in the middle of this year.

In addition, we remain while capitalized having ended 2013 with over $140 million in cash and investments, and we continue to have the benefit of the talented and engaged workforce. We recently adopted our corporate goals for 2014, which are centered on the outcome of our TC-5214 Phase 2b study in overactive bladder, on operational excellence, enhancement of the Company's development pipeline, capital efficiency, and leadership, as measured by employee engagement factors. While our business is high risk and success cannot be assured, I'm confident our team will make every effort to deliver on our goals.

Now, let me provide you with a brief update on our clinical programs. As announced earlier this week, we succeeded in completing patient recruitment into our Phase 2b study of TC-5214, which we are studying as a treatment for overactive bladder, a disorder that affects approximately 40 million adults in the US and has been shown to seriously impact quality of life.

This is a robust Phase 2b study designed to randomize approximately 750 patients at over 100 US sites. TC-5214 is a potent antagonist of alpha3beta4 neuronal nicotinic receptors located in or around the bladder. Thus far has a well-established safety and tolerability profile stemming primarily from a large clinical program conducted in a different indication.

Given the size and design of the study and the objective regulatory endpoints for this indication, the results, which we expect in mid-2014 should provide us with a clinical data set that will inform us on the potential of TC-5214 to become a first in class treatment for patients with OAB. Because currently available treatments have limited efficacy, and for many, tolerability drawbacks that can lead to noncompliance and discontinuation of treatment, we believe that there is a clear need for new differentiated medications to treat overactive bladder.

Our second ongoing Phase 2b study is evaluating TC-1734 as a treatment for mild to moderate Alzheimer's disease. Patients in this study are receiving either TC-1734, our wholly-owned alpha4beta2 modulator, or the market leader, Donepezil, as a monotherapy in a head-to-head comparison over a 12 month treatment period. We continue to anticipate reporting top line data from this study in mid 2014.

Preparations continue for the start of an exploratory trial of a further compound, TC-6499 for the indication of diabetic gastroparesis. The planned crossover designed trial is expected to evaluate three doses of TC-6499 in placebo in approximately 20 subjects, utilizing a carbon breath test as a surrogate marker of gastric mortality. We anticipate that this study will get underway around the middle of this year.

For completeness, let me just mention that our pipeline also includes a molecule referred to AZD1446, which is licensed to AstraZeneca. AstraZeneca are currently assessing the data related to that compound with a view to possible further development.

With that, let me turn the call over to Alan for our financial update and then we will take questions. Alan?

Thanks Steve.

Let me now briefly highlight our financial results for the fourth quarter of 2013, and for the full year, which we released earlier today. For the fourth quarter of 2013 we had a net loss of $13.4 million, compared to a net loss of $15.9 million for the fourth quarter of 2012. The lower net loss for the 2013 period was due principally to a decrease of $1.6 million in research and development expenses and non-recurrence of $1.4 million of charges related to a work force reduction that we completed during the first -- fourth quarter of 2012.

For the year ended December 31, 2013, we reported a net loss of $46.7, compared to a net loss of $7 million for 2012. The higher net loss for 2013 was principally due to a decrease of $53.9 million in deferred revenue recognition, partially offset by a decrease in research and development expenses of $10.2 million, and a non-recurrence in 2013 of restructuring charges, for which we incurred $3.7 million of expense in 2012. As of December 31, 2013 cash and investment and marketable securities totaled $143.8 million.

Moving to our financial guidance for 2014, based on our current operating plan, we expect minimal operating revenues and we expect our operating expense to be in the range of $40 million to $45 million. We also expect our cash, cash equivalents, and investment balance at the end of 2014 to be at least $140 million. We continue to expect that our current cash resources will be sufficient to meet our operating requirements, at least through the end of 2015.

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

(Operator Instructions)

Robyn Karnauskas, Deutsche Bank.

This is Mohit Bansal for Robyn. I have two questions.

First, can you please help us understand what, according to you, would be good data in overactive bladder trials which will help you make a [good noble] decision? What are your thoughts on partnership for this asset? Then I have a follow-up.

The study is powered to see a reduction in number of micturitions per day of one micturition per day over and above placebo. In addition, the co-primary endpoint is to see a reduction of one incontinent episode per day over and above placebo. That would reflect at least as good, and maybe better, efficacy than anything currently available.

So clearly, if we meet the statistical endpoints then we believe that we would have a very competitive product into the marketplace. If we were to fall short of that and not meet the statistical endpoints we may still see a level of clinical impact that might be interesting to pursue in combination therapy. But I think we would have to review that in the light of the actual data.

In terms of partnering, at this point we are not proactively seeking partners for this program. We do believe if we get a positive result that we have the skills and resources to take the program through a Phase 3 pivotal program, certainly in the US and maybe in addition in Europe as well.

To submit a package to the regulatory authorities for potential approval. So we believe the we have the ability to do that and that currently is our plan.

Great. And then maybe another question, so if you do not see a signal in this trial, what are the other options you are thinking about putting the Company forward?

Say that again?

So I mean it question is, if the trial does not work and then, so how should we think about the different options you have for taking the Company forward?

In the event that the overactive bladder study proves clearly negative, then we are looking at two options. One is what I would call a fairly modest approach which is to license in or bring from our own in-house portfolio two or three more, relatively early stage, maybe early Phase 2 programs, at the same stage of development as the gastroparesis program that we've already communicated so we pull now our portfolio.

The alternative is to look for an asset, probably an external asset that would require in-licensing, that would basically replace the overactive bladder program. If the overactive bladder program is negative then we then look to apply the resources that we have to a program which would be about the same stage had the overactive bladder turned out positive. We are in the process of looking at external opportunities, both as more modest earlier Phase 2 programs, but also later stage programs that would basically be a swap out in the event that OAB is negative.

Okay, thank you.

Thank you.

(Operator Instructions)

Alan Carr, Needham & Company.

A little bit of a follow-up on 5214 and then a question on 6499. So with 5214 in OAB, can you comment on the baseline patient profile of the entire population that's been enrolled? Does it meet your expectations in terms of severity of disease and that sort of thing?

And then with 6499 can you comment on the Phase 1 and Phase 2 work that's been done on that trial in the past? I'm wondering how well characterized it is. Thanks.

Yes, so starting with 5214, we saw the sort of patients exactly in line with what we'd expect to see for a study of this type. Both in terms of number of micturitions per day. So typically these folks coming into these studies have 12 or 13 micturitions per day, the entry criteria is a minimum of 8, but the average tends to be around 12, 13 and we haven't seen anything unusual in that respect.

We also determined in advance that we wanted to have at least 75% of patients in the study would be wet OAB, i.e. patients with incontinent episodes and we have indeed met that goal. So the profile of the patients who have entered the study are very much in line with what you would expect for the population that we were looking to treat. I don't think there is anything out of the ordinary in that respect.

In terms of 6499, this a compound that has been in humans in the past, and in particular we started a relatively small Phase 2 study in Irritable Bowel Syndrome with constipation. We did indeed in that study see fairly significant pact in spontaneous bowel movements. Although with other priorities we didn't progress that compound at that time. So we do know the compound has an effect on GI motility, particularly lower GI motility and we're hopeful that we will see that same sort of effect in upper GI, in this case gastric motility.

Great. Thanks very much.

Chris Hoecke, Mallard Research.

In regards to 6499 you're probably familiar with the Tranzyme program in gastroparesis, it had a couple of Phase 2's that failed. Obviously a different target and failed for all kinds of reasons. But was there anything that you took away from what happened with that program regarding baselines or lead-in phase that informed your strategy or design going forward?

Yes, I think it is tough to translate one mechanism to another, that is why I think the proof of principle study that we are doing actually is a neat way of giving us some early information in a relatively cost effective way. So the gastric breath test that we are planning in very simplistic terms is you provide a standardized breakfast to the patients who will be starting the Phase 1 unit and within that you give them heavy carbon, it's not a radioactive carbon, but it's a heavy carbon which then you can measure in the expired breath. So as the food is absorbed and metabolized.

Obviously the slower the rate of gastric emptying, the less the food gets absorbed and the less heavy carbon there is to be metabolized and excreted in the breath. So I think that will give us a pretty good handle on whether this particular compound might be effective in gastroparesis, which is clearly not an easy disease to treat. But I'm not sure that we can draw too much from the Tranzyme experience in terms of a different mechanism of action.

Great, thanks a lot.

Thank you Chris. We have no more questions and I would now like to turn the call over to Dr. Stephen Hill for closing remarks.

Alan, if you are still on the phone I think I may have misheard the comment about year end cash for 2014, so could I just ask you to repeat that because I think I heard a number which may not have been correct, just for the record can you give us --?

Yes, we expect our year end cash at the end of 2014 to be at least $100 million.

1-0-0, yes?

That is correct.

Okay, thank you. Perita, if there are no more questions?

There are more questions, no.

Okay. With that, maybe just thank you very much everybody on the line. We appreciate your attendance on the call and hope you all have a great day despite the weather wherever you happen to be. Thank you and have a good week. Bye-bye.

Thank you. Ladies and gentlemen, thank you for your participation in today's conference. This concludes the presentation. You may now disconnect and thank you for joining.