Emergent BioSolutions Inc (EBS) 2010 Q2 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Trubion Pharmaceuticals second-quarter 2010 earnings conference. (Operator Instructions). As a reminder, today's call is being recorded.

At this time, I would now like to turn the conference over to your host, the Senior Director of Corporate Communications, Mr. Jim DeNike. Sir, you may begin.

Thanks, Joe, and thanks, everyone, for joining us. With me today from Trubion is Michelle Burris, our Chief Operating Officer; Dr. Scott Stromatt, our Chief Medical Officer; and John Bencich, our Chief Financial Officer. Also joining us on the call for Q&A is Dr. Ken Mohler, our Chief Scientific Officer.

Earlier today, we issued our second-quarter and six-month 2010 financial results, and a copy of our press release can be found on our website at Trubion.com.

Before I turn things over to Michelle, I'd 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 concerning factors that could affect the Company, copies of which are also available on our website.

I'll now turn the call over to Michelle.

Thank you, Jim, and thanks to all of you for joining us today.

I would like to first briefly recap the announcement we made last Thursday regarding our merger acquisition and agreement with Emergent BioSolutions, and will then ask Scott and John to provide an update on our clinical programs and financials.

As most of you are likely aware, Emergent, a global biopharmaceutical company headquartered in Rockville, Maryland, has agreed to acquire Trubion. Under the terms of the agreement, at the closing of the transaction each outstanding share of Trubion common stock will be converted into an upfront payment of $1.365 per share in cash and 0.164 shares of Emergent BioSolutions common stock.

The upfront payment represents a value of $4.55 per share, or approximately $96.8 million, based on Trubion's total common shares outstanding, the net value of diluted stock options, and the trading average of Emergent BioSolutions' common stock for the five trading days prior to the signing of the definitive agreement.

Trubion Pharmaceuticals' stockholders will also receive one contingent value right, or CVR, per share, which will entitle the holder to receive cash payments based on the achievement of certain predefined milestones that are outlined in detail in the merger press release on our website. The total potential aggregate value of the CVRs is $38.7 million, or $1.75 per share, over a 36-month period post-closing.

The combination of the upfront consideration, along with the potential value of the CVRs, results in a total consideration of up to $135.5 million for Trubion stockholders.

We are very pleased that Emergent intends to maintain our research and development laboratories and offices in Seattle upon completion of the acquisition, and that our location will become a therapeutics-focused product development site for the combined company. We believe the combination of Emergent's strong financial position and expertise in the development of biologics with Trubion's innovative SMIP and SCORPION protein therapeutic product candidates and technologies will accelerate the continued development of these promising products and technologies.

As a reminder, additional details related to the merger agreement, including the location and timing of a special meeting of stockholders, will be included in the proxy statement which we expect to file with the SEC and mail to Trubion stockholders in the coming weeks.

At this time, I'd like to invite Scott to provide an update on our clinical development.

Thank you, Michelle. I'll start with an overview of results from our Abbott collaboration.

We are in the process of initiating sites and qualifying patients for the commencement of a Phase IB/II combination study of TRU-016 and bendamustine in patients with relapsed CLL, or chronic lymphocytic leukemia, and have failed up to three prior treatments.

The primary endpoint for the Phase IB is the incidence of dose-limiting toxicities. We expect to enroll up to 14 patients with relapsed CLL in this portion of the study.

Phase II of this study will assess the safety and efficacy of TRU-16 in combination with bendamustine. We will compare that with patient responses to standalone bendamustine treatment. The primary endpoint for Phase II is overall response rate as defined by the 2008 International Workshop on Chronic Lymphocytic Leukemia, or the IWCLL criteria. We expect to enroll 100 patients in the Phase II study.

In both phases of the study, we will evaluate the pharmakinetics and pharmadynamics of TRU-016, as well as development of antibodies to TRU-016.

In addition, we plan to initiate a Phase I chemotherapy TRU-016 combination study in relapsed NHL patients by the end of the year. We also intend to present final data on the TRU-016 Phase I monotherapy study at ASH in December.

Turning to SBI-087 and our collaboration with Pfizer, in June positive data was presented from two Phase I studies of SBI-087 at EULAR, and those presentations are available in the events section of our website. The first presentation addressed a Phase I study of SBI-087 for RA. This study was designed to evaluate the safety, tolerability, pharmakinetics, and pharmadynamics in ascending single doses of SBI-087 in patients with controlled RA.

Data from 60 patients demonstrated that SBI-087 is generally well tolerated and results in potent B-cell depletion when given as a subcutaneous dose with a day of treatment oral corticosteroid regimens.

The second presentation focused on an open-label Phase I study of SBI-087 for lupus, or SLE. Data were available for 18 patients, well controlled SLE. Similar to the results we saw in the Phase I RA study, preliminary results demonstrate that SBI-087 was generally well tolerated by patients with well controlled lupus when administered as a single subcutaneous dose with a day of treatment oral steroid regimen.

That concludes our clinical update. At this time, I will turn the call over to John for a review of our financial results.

Thanks, Scott. Revenue for the second quarter and six months ended June 30, 2010, increased to $5.7 million and $11.2 million, respectively, compared with $4.1 million and $8.3 million, respectively, in 2009.

Revenue was primarily earned through our strategic collaboration with Pfizer for the development of CD-20-directed candidates, including SBI-087, and Abbott for the development of CD-37-directed targets, including TRU-016.

During the second quarter and first half of 2010, we recognized $3.8 million in revenue from the Abbott collaboration. The $3.8 million includes recognition of $1.1 million from the $20 million upfront fee and $1.4 million equity premium received from Abbott, as well as $2.7 million earned through collaborative research.

The increase in revenue from the Abbott partnership was partially upset by lower revenue generated by our collaboration with Pfizer. The decrease in revenue was attributed to lower costs related to the retreatment studies of TRU-015 for rheumatoid arthritis, as well as the decrease in the upfront -- excuse me, the amount of reimbursable legal fees.

Revenue earned from our partnership with Pfizer during the first half of the year was $7.4 million, which included $2.4 million for recognition of the $40 million upfront fee received in January 2006 and $5 million earned through collaborative research. This is compared with $8.3 million earned in revenue during the first half of 2009, which was composed of $2.4 million for the recognition of the $40 million upfront fee and $5.9 million in revenue earned through collaborative research.

Total operating expenses for the second quarter and first half of 2010 were $11.3 million and $22.8 million, respectively, compared with $10.7 million and $25.9 million in 2009. The increase in operating expenses during the second quarter was due to increased clinical development costs related to the initiation of the Phase I/II clinical trial of TRU-016 -- or 16201 study and increased TRU-016 manufacturing costs.

These increases were partially offset by lower personnel costs.

Net loss for the second quarter and six months ended June 30, 2010, decreased to $5.7 million, or $0.28 per diluted common share, and $11.8 million, or $0.58 per diluted common share, respectively. This is compared to a net loss of $6.7 million, or $0.37 per diluted common share, and $17.7 million, or $0.99 per diluted common share, in 2009.

We had $42.1 million in cash, cash equivalents, and investments as of June 30, 2010, compared with $54.8 million as of December 31, 2009.

We have revised our 2010 guidance based on a change in timing of the anticipated milestone of $6 million from Abbott for the initiation of the Phase II portion of the TRU-016 study in CLL patients, as well as changes to our CD-20 partnership with Pfizer. As a result, we have decreased our anticipated annual operating cash requirements from $33 million to $38 million to $29 million to $34 million. Our revenue guidance remains unchanged.

That concludes our prepared remarks. I would like to once again thank all of you for joining us today and ask Joe to open the call for questions.

(Operator Instructions). I'm showing no questions on the phones.

Thanks, Joe. At this time, we'd like to thank everybody again for dialing in and look forward to speaking with you in the future.

Ladies and gentlemen, thank you for your participation during today's conference. This concludes the program. You may now disconnect. Everyone, have a great day.