Cerus Corp (CERS) 2005 Q2 法說會逐字稿

Good afternoon ladies and gentlemen and welcome to the second quarter 2005 Cerus earnings conference call. My name is Derrick and I will be your conference coordinator for today. At this time, all participants are in a listen-only mode. We will be facilitating a question-and-answer session towards the end of this conference. [Operator Instructions] I would now like to turn the presentation over to your host for today's call, Ms. Ruey-Li Hwangg (ph), Head of Investor Relations. Please proceed.

Thank you and good afternoon. Before I introduce Claes Glassell, the President and Chief Executive Officer of Cerus, I will remind you that during this call we will be making forward-looking statements that involve risks and uncertainties, including statements about developments, research, regulatory progress, commercialization, finances and business prospects.

Our actual results may differ materially from those suggested by forward-looking statements we will be making. I call your attention to the disclosure in our SEC filings in particular our quarterly report filed on our most recent Form 10-Q and the annual report filed on Form 10-K/A for the year ended December 31, 2004. Including the section entitled risk factors. To request a copy of our SEC filings and our press releases, please call 925-288-6000 or find them on our website at Cerus.com. This call will be archived temporarily on our website and will not be updated during that time. I will now turn over the call to Claes.

Thank you. I am here today with Bill Dawson, our Chief Financial Officer, and Larry Corash, our Chief Medical Officer, and David Cook, our Vice President of Research and Development.

Let me start by saying that I'm pleased to report, that in the second quarter we continued to make significant progress in our development programs and in our relationships with partners. We signed a definitive agreement with BioOne for commercialization of the INTERCEPT Blood System for plasma in parts of Asia. Previously, we received an up-front payment of $3 million in connection with signing the letter of intent for this transaction.

Under the terms of the definitive agreement, we may receive additional payments and milestone rewards totaling approximately $30 million in cash and BioOne equity. We would also receive royalties on future product sales. BioOne now has rights within their territories for the commercialization of both INTERCEPT platelets and plasma.

We are delighted to report that our research work was featured on the cover of a premiere scientific journal, Nature Medicine. Scientists from Cerus and U. C. Berkeley authored an article on Killed but Metabolically Active Microbes, a new class of vaccine. We believe this technological breakthrough has broad therapeutic potential in the areas of infectious disease. Our business strategy for this new platform will be somewhat similar to our Listeria business strategy that we are pursuing for cancer.

We anticipate entering into partnerships for specific therapeutic areas, and we also intend to identify a proprietary indication to be developed and commercialized by Cerus. An early objective is to be in the clinic in 2007, with a product based on this technology.

In our cancer immunotherapy programs, we are making good progress. We are maintaining our aim of filing an IND by year-end for our first product candidate, CRS-100, a Listeria based therapeutic designed to treat cancers that have spread to the liver.

The two other Listeria based immunotherapy programs our own CRS-207 and MEDI 543, which we’ve partnered with MedImmune, are both moving forward.

While we cannot comment on MedImmunes timeline for MEDI 543, we are targeting entering the clinic with CRS-207 in the second-half of 2006. CRS-207 combines our Listeria technology with Mesothelin , a proprietary antigen that is prevalently expressed in pancreatic and ovarian tumors.

I would now like to make four-points with regard to our Blood Safety Programs. First, in Europe we recently received an amended CE Mark certification, which would allow customers to store intercept platelets for up to seven days, extended from five days, prior to transfusion.

This will enable blood banks to reduce product discards and improve inventory management, which translates into an economic benefit. European market penetration is moving forward at a modest pace, and we are gaining new customers, but we are not yet satisfied. I would like to remind you, that we regard 2005 as a year of relaunch of intercept platelets.

Secondly, in collaboration with Baxter, we submitted the first module for the European CE Mark application for our INTERCEPT Plasma System. We are maintaining our aim to complete this submission by year-end. In addition, we have begun prelaunch activities, including marketing and round-table discussions.

Thirdly, as I mentioned earlier, we entered into a definitive agreement with BioOne for commercialization of the INTERCEPT blood system for plasma in parts of Asia.

We continue to be favorably impressed by BioOne's accomplishments in a short time. BioOne recently announced a joint venture with China Sensor for pharmaceutical international exchange to pursue commercialization of INTERCEPT platelets and plasma in China.

Finally, we recently presented data regarding our modified red-blood cell process at the International Society of Blood Transfusion in Athens, Greece.

Customers continue to express interest and support for INTERCEPT red cells. As we announced last quarter, we expect to make a decision later this year regarding re-entry of INTERCEPT red cells in the clinical trial, after consulting with the FDA.

Larry will comment further on our Blood Safety Programs in a few moments.

Finally, I want to reiterate that we are maintaining our financial discipline, including our 2005 goals with ending the year with approximately $45 million in cash. Later in the call, Bill will review our second quarter financials, which demonstrates our progress in achieving this objective. Now, I would like to turn the call over to David Cook, our Vice President of Research and Development.

Thanks, Claes. I would like to provide an update on our R&D progress in immunotherapy and then elaborate on a recent publication in Nature Medicine. As Claes mentioned, our CRS-100 development program remains on track for IND filing at the end of this year. In the last quarter, we completed our single-dose toxicology and bio distribution studies and initiated our multi-dose studies. We also reached agreement with our principal investigator at Johns Hopkins regarding the design of the Phase I clinical study.

This quarter, we will initiate the institutional review board filings at Johns Hopkins with a facilitate the start of studies in early 2006. A major achievement was the publication of our newest vaccines research in Nature Medicine. In that article, we describe a new class of vaccines, termed Killed -but-Metabolically-Active or KBMA for short.

This peer review publication is a recognition that the work by Cerus scientists is at the cutting edge of the immunotherapy field.

Vaccines can be based on live attenuated organisms, which are known to be potent but carry the occasional risk of causing disease. Alternatively, vaccines can be based on killed organisms or recombinant proteins. These approaches are safer, but typically less potent. The KBMA technology offers the prospect of combining the potency of a live vaccine with safety of a killed vaccine.

We believe KBMA vaccines will have important commercial applications as immunotherapy for chronic intracellular infections, such as HIV, Hepatitis B and Hepatitis C.KBMA vaccines elicit potent cellular immune responses and it is precisely these responses that are required for the immune system to eradicate intracellular infections. In the area of biodefense, KBMA vaccines may be suitable for a rapidly developing more potent protective vaccines against, for examples, Anthrax, Tularemia and Bubonic Plague. The main source of funding for our work has been a grant from the National Institutes of Health for development of an Anthrax vaccine, which we announced last year.

One of the things that is particularly pleasing to me is that the KBMA vaccines leverages the science and clinical experience behind our INTERCEPT blood safety products. Thus, our scientists have combined our immunotherapy and blood safety platforms in a creative way that we believe will add to shareholder value in the long-term. I would now like to turn the call over to Dr. Larry Corash, our Chief Medical Officer, who will comment on progress made during the quarter in our Blood Safety Program.

Thank you, David. I would like to begin by welcoming Dr. Joseph Eiden to Cerus. He recently joined our team as Vice President of Clinical Research and Medical Affairs. Dr. Eiden comes to us from Chiron Vaccines, where he guided clinical teams in the United States for development of vaccines for prevention of meningitis, influenza and HIV.

Turning now to our Platelet System in Europe, this quarter we received an amended CE Mark extending the storage period from five to seven days for platelets prepared with our system. The INTERCEPT treatment systems already enables earlier release and better availability of platelets compared to bacterial detection testing.With the new INTERCEPT labeling, the effective shelf life of platelet is further prolonged, which offers important economic and logistical advantages. For example, one of our European customers who had early experience with seven-day old INTERCEPT platelets, improved platelet availability and reduced outdating of platelets.

As another sign of progress, our active active hemovigilence program continues to confirm the safety profile of INTERCEPT.

This quarter, we submitted the first module of our CE Mark application for the Plasma System and held a productive meeting with regulatory authorities in Europe.We have conducted process validation studies for the plasma system in three European blood centers, and we held pre-launch meetings for plasma with blood centers in Spain, Italy, France, Norway, and Germany.We also completed the last of our Phase III, clinical trial reports, and will be presenting these data at the meeting of the International Society for Hemostasis and Thrombosis this month.

For the red-blood cell program, we are encouraged by data generated using the modified S-303 treatment process. At the I.S.B.T. meeting in July, we presented additional data, demonstrating that red cells prepared with the modified process do not react with the antibodies in a rigorous animal model.In addition, a report of our cardiovascular Phase III trial for acute anemia using the original process has been accepted for publication in TRANSFUSION. In that study, the data indicated that INTERCEPT red blood cells were equivalent to conventional red cells. These data, in combination with the S-303 modified process, will be presented to the FDA. I will now turn the call over to Bill Dawson, our Chief Financial Officer, for a discussion of the second-quarter financial results.

Thanks, Larry. Revenues for the second quarter were $5.5 million, up from $3.8 million for the second quarter of 2004, primarily due to amounts recognized in the current period from past up-front payments from BioOne Corporation and MedImmune, for which revenue recognition was deferred.Total operating expenses for the second quarter of 2005 were $8.5 million, down from $14.1 million for the same period of 2004, due primarily to the effects of the strategic realignment implemented in June 2004.

Net loss for the second quarter of 2005 was $2.8 million or $0.12 per share, compared to a net loss of 11.5 million or $0.52 cents per share in the second quarter of 2004.The net loss in the current period reflects both increased funding for R&D programs and reduced operating expenses as well as a significant reduction in interest expense, as a result of the February 2005 settlement of the loan dispute with Baxter Capital.

For the six months ended June 30th, 2005 total revenues were $11.9 million, compared to $7.4 million for the same period in 2004.Net income was $18.6 million, or $0.80 cents per diluted share for the six months ended June 30, 2005, compared to a net loss of $20.7 million, or $0.94 cents per share for the same period in 2004.Net income for the six-month period in 2005, includes a one time gain of $22.1 million recognized in February, 2005, as a result of the loan settlement.

At June 30, 2005, the Company had cash, cash equivalents and short-term investments of $52.2 million, down from $55.9 million at March 31, 2005. Our cash consumption during the quarter of $3.7 million is reflective of the steps we have taken to run our business efficiently. Funding our Blood Safety Programs with externally available funds from the Department of Defense and BioOne and investing in our immunotherapy programs in a measured fashion. As Claes mentioned earlier, we are maintaining our goal of ending the year with approximately $45 million in cash. Now, I will turn the call back over to Claes for some concluding remarks.

Thank you, Bill. As you have heard on this call, we continue to gain momentum, transforming Cerus into a broader product driven company. We thank you for your interest in Cerus, and are now happy to respond to questions.

[Operator Instructions]. Your first question comes from the line of John Bossler of Dominick and Dominick. Please proceed.

Claes, congratulations on another great quarter. Now, a year into your stewardship. Question regarding the KBMA study and report, is that on your website anywhere, and is there a way that you can publish that on your website for the investors?

I believe it is on the website already.

Okay.

So you can access it there.

Congratulations and we look forward to continued progress.

If you don't find it give me a call.

Thank you.

Thank you.

[Operator Instructions] There are no further questions at this time.

Thank you all for listening and participating today. This will conclude our call for this quarter and I hope will you join us again when we report our results for the third quarter, 2005.

This concludes today's presentation. You may now disconnect. Thank you and have a great day.