Emergent BioSolutions Inc (EBS) 2009 Q4 法說會逐字稿

Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to the Trubion's fourth quarter and year end 2009 earnings conference call. I will be your conference operator. Currently, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. (Operator Instructions) As a reminder, this conference may be recorded. Now I would like to turn the program over to your speaker, Trubion's senior director and corporate communications, Jim DeNike. Please go ahead.

Thanks, Huey, and thanks everyone for joining us. On the call today from Trubion are Dr. Steven Gillis, our Executive Chairman and Acting President; Michelle Burris, our Chief Operating Officer; Dr. Ken Mohler, our Chief Scientific Officer, and John Bencich, our Chief Financial Officer. Dr. Scott Stromatt, our Chief Medical Officer is traveling today and unable to join us.

Earlier today we issued our fourth quarter and year ended December 31, 2009, financial results and a copy of the press release can be found on our website at Trubion.com. I would like to remind each of you that today's conference call may contain forward-looking statements based on our current expectations. These statements are only predictions and actual results may vary materially from those projected. Please refer to Trubion's documents filed with the SEC that concerning factors that could affect the Company, copies of which are also available on the website. I will turn the call over the to Steve.

Thank you for joining us. Thank you for joining us. During today's call, Michelle will provide an update on our clinical programs and development under our Facet Biotech and Pfizer collaborations in Scott's absence and Ken will provide an overview of our R&D efforts. John will review our Q4 and 2009 results and 2010 guidance and will then open the call for questions. Before I turn the call over to Michelle, I will take a moment to summarize our progress in 2009 and provide an update on our CEO search.

In 2009 continue to pursue developments of our product candidates while carefully managing our resources. We announced a strategic collaboration with Facet Biotech for the joint development of TRU-016 and CD37 directed therapies. We received an up-front payment and equity investment totaling $30 million and may also receive up to $176.5 million in additional payments upon achievement of certain development, regulatory and sales milestones outlined in the TRU- 016 clinical development plan. Finally, we and our partner announced positive data from TRU- 016 ongoing evaluation in CLL at the American Society of Hematology meeting in December.

In collaboration with Pfizer, we reported positive on going TRU- 015 retreatment data for patients with rheumatoid arthritis and announced the initiation of two studies evaluating our second generation CD20 product candidate, SBI-087 and in June Pfizer extended the research portion of our collaboration through December 22, 2010, resulting in a payment of approximately $3.3 million to Trubion.

In addition to our clinical assets, we also presented positive preclinical data on our SCORPION and TRU-ADhanCe technologies and look forward to presenting further preclinical on the three product platforms later this year. We intend to pursue additional partnerships that will allow us to continue to advance these and other preclinical assets. Before I turn the call over to Michelle, I would like to comment briefly on Abbott's recently announced intent to acquire our partner, Facet, and update you on our CEO search.

As I am sure you are aware, last week Abbott announced it had signed an agreement to acquire Facet and Abbott expects the transaction to close in the second quarter of this year. I am pleased to report that Abbott has already reached out to us to discuss the collaboration. They indicated that they remain interested in TRU- 016 and intend to proceed with its development following the close of the transaction. We are very encouraged by our recent with Abbott and look forward to working with them when the transaction closes. In the meantime, we will continue to pursue the objectives and the improved development plan.

With regard to our search for a new CEO, we are actively interviewing seasoned bio technology Pharma executives who have a proven track record of success developing public companies and commercially viable products. We have received strong interest to date, interviewed several candidates in our offices in Seattle and I expect additional candidate visits to occur in the coming weeks. Successful completion of this search remains one of our top near-term priorities and I am pleased with the results to date. At this time, I will turn the call over to Michelle who will provide an update on our Facet and Pfizer alliances. Michelle.

Thank you, Steve. First I will provide an update on the clinical development of TRU- 016, the lead candidate in our Facet alliance. Together with Facet, we have agreed to and are implementing an aggressive clinical development plan for TRU- 016. By the end of the second quarter of this year, we expect to expand the ongoing Phase I CLL monotherapy study to include patients with non-Hodgkin's lymphoma. Currently, the study is evaluating TRU- 016 in patients with relapsed or refractory CLL. Investigators from the Ohio State University presented data from the study at the American Society of Hematology annual meeting in December demonstrating that TRU- 016 continues to show early promising clinical activity in a heavily pretreated population. Later this year we plan to initiate two additional clinical trials for TRU- 016. A Phase I/II study evaluating TRU-016 in combination with chemotherapy in patients with relapsed CLL and a Phase I study evaluating TRU- 016 in combination with chemotherapy in patients with relapsed follicular NHL. As a reminder, TRU-016 is built on our proprietary small modular immunopharmaceutical platform which we refer to as SMIP. Because it uses a different mechanism of action and current on-market therapies, we believe TRU- 016 may present a new treatment option for patients with these cell malignancies either as a stand-alone treatment or when used in combination with other therapies.

I will now provide a brief update on SBI-087, the next generation SMIP candidate that we are developing with Pfizer for the treatment of RA and SLE. SBI-087 is a more potent humanized SMIP being developed as a subcutaneous treatment for RA and SLE. In December, Pfizer initiated a Phase II study of SBI-087 for the treatment of RA. This study is designed to evaluate the safety and efficacy of a dose and dosage regimen of SBI-087. The study will enroll approximately 200 seropositive patients with active RA who are on a stable dose of methotrexate. The primary outcome measure will include responses based on the ACR 20 response from the American College of Rheumatology. Patient dosing and the Phase II SBI-087 RA study began in December 2009 with an interim data review anticipated to occur in late 2010 or early 2011. Final data anticipated at the end of 2011. Enrollment in the Phase I RA study is complete and an abstract has been submitted for presentation of these results at [ULAR] later this year.

Patient recruitment is also underway and an additional Phase I study of SBI-087 for RA in Japan. Finally, Pfizer is conducting a Phase I clinical study of SBI-087 in SLE in which patient dosing has begun and recruitment is ongoing. An abstract has also been submitted for presentation of the preliminary Phase I SLE results.

Turning now to TRU- 015 we announced positive data in October 2009 from the second course of retreatment in the first Phase IIB clinical trial for RA demonstrating that administration of TRU-015 every 24 weeks produces well tolerated results that are comparable with the more than 4-1/2 years of retreatment compiled to date from the first study of TRU-015 in RA study in 2001. In September 2009, enrollment was completed in the ongoing second Phase IIB dose regimen findings clinical trial for RA referred to as the 2203 trial with final data expected in the middle of this year. The interim analysis of the second Phase IIB clinical trial of TRU-015 in RA met the predefined primary end point demonstrating superiority of TRU-015 over placebo. The studies predefined primary end point at the American College of Rheumatology or ACR 50 response at week 24.

As we reported in our earnings release and Form 10-K, Pfizer has informed us that it will decide whether to begin a Phase III study of TRU-015 for the treatment of RA after reviewing data from the ongoing Phase II SBI-087 RA study in addition to the final data from the ongoing Phase IIB TRU-015 to 203 RA study. As I mentioned, an interim data review for the Phase II SBI-087 RA study is planned and we believe it could occur in late to 2010 or early 2011 with final data anticipated at the end of 2011. This concludes my update on Trubion's alliance program so I will turn the call over to Ken for an update on several of our new preclinical assets.

Thank, Michelle. I am very excited to discuss three new preclinical programs with you today that are based on two of our technology platforms, Smith Therapeutics and SCORPION multispecific therapeutics. The first is our DRACO Anti-CD3 program which is built upon our SMIP technology platform. As a reminder, SMIP's are designed to address limitations of monoclonal antibodies. This technology allows us to design and develop candidates for a range of targets and biological activities with unique structural characteristics, differentiated design, improved bio distribution, reliable manufacturing, and broad therapeutic application.

Our DRACO Anti-CD3 candidates are designed to overcome limitations so the second generation Anti-CD3 monoclonal antibodies currently in clinical development. These monoclonal antibodies have shown positive responses; however, improved safety profile is needed as some patients continue to demonstrate cytokine release syndrome. Trubion has developed SMIP Anti-CD3 product candidates that retain immunosuppressive activity with significantly reduced cytokine released activity. We believe our SMIP Anti-CD3 program addresses significant unmet needs in the areas of latent autoimmune diabetes in adults, solid organ transplant and other autoimmune diseases that could represent large market opportunities for this program. More information on this and our other programs are available in the product section of our website.

We are also exploring two new product candidates based upon our SCORPION multi-specific therapeutic technology, programs we call X1 and X2. As we have previously shared, SCORPION Therapeutics is our novel platform for the development of multispecific product candidates that combine single chain binding and a factor to main libraries with additional C-terminal moieties that's unique structure enables simultaneous multivalent engagement of two or more different soluble or cell surface targets providing the capability for differentiated signaling.

I will begin with an overview of X1 SCORPION therapeutics. These are molecule that combine a TNF inhibitor with select single chain moieties in order to address the deficiencies of existing anti-TNF therapies. While existing anti-TNF therapies are effective in treating some autoimmune and inflammatory diseases, a significant number of patients failed to respond or failed to sustain a long-term response which suggests the need for differentiated treatments. We have developed an array of IL-6 inhibitors that we believe will expand the activity of TNF-based therapies when used in conjunction with X! SCORPION therapeutics. Preclinical studies show that X1 SCORPIONs are capable of dual targeting and retain binding activity in pharmacokinetic properties and we look forward to presenting additional data on this preclinical candidate later this year.

Our X2 SCORPION candidates are a combination of CTLA-4 ectodomains and single chain moieties designed to address the deficiencies of CTLA-4 therapies such as Orencia and belatacept. Initially, we are studying candidates that combine the CTLA-4 ectodomain with the IL-10 cytokine. In preclinical studies, combination therapy with X2 SCORPION therapeutics showed enhanced potency and immunosuppressive activity compared to single agents such as Orencia and belatacept. Based on the data we have observed to date, we believe that our multi-specific SCORPION therapeutics may provide a better treatment option for patients and provide a commercial advantage to single agents alone. We are pursuing a number of scientific presentations for these and other programs, a list of confirmed presentation opportunities, accepted abstracts and final data presentations can be found in the investor section of our website under events and presentations. I will now turn the call over to John for a review of financials and guidance for 2010.

Thanks, Ken. I will take a moment to review our fourth quarter and year ended December 31, 2010, financials and then review our guidance for 2010. Revenue for the fourth quarter of 2009 was $5.2 million compared with $4.3 million for the fourth quarter of 2008. Revenue for the year ended December 31, 2009, was $18 million compared with $16.5 million for the year ended December 31, 2008. The increase in 2009 revenue resulted primarily from our strategic collaboration with Facet Biotech including $800,000 for recognition of the $20 million up-front fee and $1.4 million equity premium and $1.3 million collaborative research funding.

The increase in revenue related to the Facet Biotech collaboration was partially offset by a decrease in revenue recognized from our collaboration with Pfizer. The decrease in revenue related to an extension of the recognition period of the up-front fee during 2008 and lower costs for the Phase IIB clinical trial for TRU-015 and the treatment of rheumatoid arthritis during 2009. Revenue from the Pfizer collaboration for the year ended December 31, 2009, included $11 million for collaborative research funding and $4.9 million for recognition of the $40 million up-front fee. Pfizer completed this acquisition of Wyeth in October and reaffirmed its commitment to comply with the terms of the original collaboration agreement between Wyeth and Trubion.

Total operating expenses for the fourth quarter of 2009 were $10.4 million compared with $10.7 million for the fourth quarter of 2008. Total operating expenses for the year ended December 31, 2009, were $46.8 million compared with $43 million for the year ended December 31, 2008. The fourth quarter decrease in operating expenses was primarily due to decreased outside manufacturing and lab expenses. The 12-month increase in operating costs was primarily due to higher outside manufacturing and clinical development costs related to our TRU-016 product candidate and partially offset by an increase in personnel costs resulting from the 25% workforce reduction in February of 2009.

Net loss for the fourth quarter of 2009 was $5.3 million or $0.29 per diluted common share compared with a net loss of $6.4 million or $0.36 per diluted common share for the fourth quarter of 2008. For the year ended December 31, 2009, net loss was $29.2 million or $1.55 per diluted common share compared with a net loss of $25.6 million or $1.43 per diluted common share for the year ended December 31, 2008. We had $54.8 million in cash, cash equivalents and investments as of December 31, 2009, compared with $52.9 million as of December 31, 2008.

Moving on to our financial guidance for 2010, we anticipate 2010 revenues to be approximately $25 million to $30 million earned through the Company's Pfizer and Facet collaborations. Our cash requirement in 2010 are expected to be approximately $27 million to $32 million.

Our financial guidance for 2010 includes an anticipated milestone of $6 million from Facet for the initiation of a Phase II study of TRU-016 in CLL patients. This milestone is expected to be achieved in the second half of 2010. Based on our current forecast, and excluding any proceeds for potential new partnerships or financing, we expect that our existing capital resources will support our operations for at least the next 18 months. We believe our progress in advancing both alliance based and proprietary assets in 2009 has us well positioned in 2010 to achieve a number of key milestones. We look forward to speaking with you throughout the year as we continue to make progress against our clinical, research and development, business development and financial objectives. On behalf of my colleagues, I would like to thank you again for joining us today and at this time I would like to invite Huey to open the call for questions.

Thank you, sir. (Operator Instructions) We do have a question on line. It comes from Joe Aguilera with BioRevolution Capital. Please go ahead.

Hi, guys. Good work and good quarter. One question for Michelle and Ken. On the CLL, Michelle, you mentioned on the Phase I/Phase II combo and then the Phase I combo. We expect to start those data probably middle of 2010, correct?

Correct.

And then when would we have that data? Some time in the middle of 2011?

You might see some interim data in 2011.

Okay. Maybe this one is for you, Ken. In terms of the MOA on 016, how do you compare the MOA of ours versus Rituxan or any other CD20s out there that we feel that we we have advantages over the current therapies?

Sure, Joe. We have been looking at that fairly extensively both internally at Trubion along with Facet and some of our outside collaborators and it appears as though the signaling properties associated with TRU-016 are very different from CD20 directed therapy inducing very strong apoptotic signals in fresh LLC cells as well.

Michelle, the share count is 20.2 million shares out, correct? That was after the Facet buy?

That is correct, yes. Including the Facet shares.

Okay. And another question on the SCORPION, Steven, maybe this is for you on how we look on the partnership, what's the update there? Could we be looking at a partnership some time in the next year or so? Maybe you can give us a little feedback?

Sure, Joe. We have a number of conversations ongoing with both representatives from a Pharma community as well as significant size biotech companies and it is our goal to push those discussions into term sheets and negotiations on transactions and we look forward to providing updates on the progress later on this year.

Okay. And then one more, on the lupus data on the Phase I, when would we have the lupus data on 087 roughly, Ken?

I believe we have with our partner Pfizer submitted to release that data, at least some of that preliminary data, later this year at [ULAR] and that would be preliminary Phase I SLE data.

Right. Okay. Thanks, guys.

Thank you.

Thank you, Joe. (Operator Instructions). Everyone, there appears to be no further questions in the queue. With that, I would like to conclude today's program. Ladies and gentlemen, thank you for your participation and have a wonderful day. Attendees, you may now disconnect.