Immunic Inc (IMUX) 2015 Q4 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Vital Therapies Fourth Quarter 2015 Financial Results Conference Call. At this time, 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 is being recorded. I would now like to introduce your host for today's conference, Mr. Al Kildani. Sir, you may begin.

Thank you, Chanel. Good afternoon, my name is Al Kildani, Vice President of Investor Relations and Business Development. Thank you for joining Vital Therapies Management Team on our conference call to discuss the Company's Operations Update and Earnings for the Fourth Quarter and Year-Ended December 31, 2015.

On today's call are several members of the Vital Therapies Senior Management Team, including Dr. Terry Winters, Co-Chairman and Chief Executive Officer, Mike Swanson, Executive Vice President and Chief Financial Officer, Duane Nash, President, Rob Ashley, Executive Vice President and Chief Technical Officer, Dr. Yon Tsonga Chief Medical Officer, and John Dunn, General Counsel.

Before we begin, we'd like to remind you that some of the statements we make today will include forward-looking statements, such as statements related to the timing and conduct of our clinical trial programs, future clinical trial results, the timing of certain development goals including regulatory filings, our projected cash runway, and plans and objectives of management for future operations.

Forward-looking statements are subject to a number of risks and uncertainties that could cause actual events or results to differ materially, including the risk that our clinical trials program is delayed or is ultimately unsuccessful. Please note that these forward-looking statements reflect our management's views only as of today's date and we disclaim any obligations to update any forward-looking statements except as required by law.

Please refer to our SEC filings for a more detailed discussion of the risk factors that could cause actual events or results to differ materially. Vital Therapies promptly makes available on its website reports that the Company files or furnishes with the SEC, Corporate governance information, press releases and other posters and presentations. A replay of this call will also be available on our website later today.

I would now like to introduce Dr. Terry Winters, Vital Therapies' Co-Chairman and CEO.

Thank you, Al. Good afternoon, everyone, and welcome to our Fourth Quarter 2015 Update Call. First, a brief summary of the Company for those of you who may be new to our story. We are developing ELAD, an extracorporeal, human, allergenic cellular therapy, which could improve survival in acute forms of liver failure. ELAD is at the Phase 3 Clinical Trial stage and has orphan drug designation in the United States and the European Union.

Assuming successful clinical results in the future, we plan to seek regulatory approval and to commercialize ELAD directly in most major markets of the world. VTI-208, our first Phase 3 Trial, which reported top-line data last August, enrolled 203 subjects primarily in severe acute alcoholic hepatitis, but did not meet its primary or secondary survival end-points. However, pre-specified analyses led us to the design of a new Phase 3 Trial called VTL-308.

The agenda for today's call will be to review, first, an update on the continuing analysis of data from VTI-208, our first Phase 3 Trial. Second, the status of the VTL-308 trial. Third, our latest work to define ELAD's mechanism of action. Fourth, an update on a Corporate matters, and finally, a summary of our Financial Results for the fourth quarter for year-ended December 31, 2015, after which we will open up the call for Q&A.

Since reporting top-line results for VTI-208 in August of last year, we have continued to collect survival data and to update our analysis in accordance with the pre-defined statistical plan. Although the trial did not meet its primary or secondary end-points, we continue to gain valuable information about the long-term outcomes in the study population.

Our initial database lock was July 31, 2015. At that time, we had a range of between 6 months and 27 months of follow-up data. The subjects are being followed in the VTI-208E extension study, with periodic contacts to assess long-term survival and the incidents of cancer, and liver transplant, and to assess quality of life. We have now updated the survival data as of December 31, 2015, giving us an additional five months of follow-up data.

Analysis of these new survival data has yielded some interesting observations. Number one, with the additional data, there are no significant changes in the conclusions from the July 31, 2015 data. Two, in the intent to treat population there were an additional four confirmed deaths, three in the control group and one in the ELAD group. In addition, one subject withdrew consent and two subjects were lost to follow-up. The overall survival data for the primary end-point of intent to treat Kaplan Meier analysis continued to show no difference between treated and control groups.

Three, the pre-specified and post-hoc subsets, which showed a strong trend for a significant difference in overall survival showed no significant changes. And four, the Kaplan-Meier analysis of the post-hoc subset of 60 subjects, that is the basis for the new VTL-308 Trial, maintained it's P-value of less than 0.01 and a hazard ratio of 0.28. Survival at 180 days was 89.7% in ELAD-treated subjects, and 48.4% in control subjects. There is, of course, no guarantee that these results can be replicated in the VTL-308 Trial.

We encourage you to take a look at the new Kaplan-Meier curves in our Form 10-K filing for a visual representation of the overall survival curve in the intent to treat population and in the pre-specified and post-hoc subsets. Overall, our continuing analysis of VTI-208 gives us greater confidence that we identified the appropriate patient population for study in VTL-308, and we are more excited than ever to move forward with this trial.

In November, the VTI-208 results were the subject of a late-breaker presentation made at the annual meeting of the American Association for the Study of Liver Disease, or AASLD, in San Francisco by David Reich MD, Professor and Chief of the Division of Multi-Organ Transplantation and Hepatobiliary surgery, Vice Chairman of the Department of Surgery at Drexel University College of Medicine and Hahnemann University Hospital in Philadelphia.

The presentation was made to an audience of over 3,000 liver physicians and staff. A paper describing the results of the trial is in preparation. The paper will be co-authored by the clinical investigators who enroll the most subjects in the VTI-208 study, representing major academic centers in the United States, United Kingdom and Australia. Although the timing of the publication of this paper is out of our control, we hope to see it in print later this year.

Moving to the status of our VTL-308 Phase 3 Clinical Trial, we remain on-track to enroll the first subject in the first-half of 2016. In November, we received written responses from FDA to our type-C briefing document that included a draft VTL-308 Trial protocol. Their responses were similar to our prior written guidance from FDA, and we are proceeding with the trial. FDA suggested that we incorporate an event-driven feature into VTL-308's design, which we have done.

VTL-308 enrollment will continue until at least 150 subjects have been enrolled and 55 deaths have occurred, which represents an event-rate consistent with what was observed in the target sub-population from VTI-208. We have three sites open in the US and they are actively screening for subjects. We expect to begin opening trial sites in the EU soon.

In preparation for initiating the VTL-308 enrollment, we held a investigators meeting in January for all US and EU sites; it was attended by clinical representatives of 37 of the 40 sites we are targeting for participation in VTL-308. We were encouraged by the level of engagement and excitement demonstrated by our clinical investigators.

In parallel with our work in launching the VTL-308 Trial, we have continued our R&D work to characterize ELADs mechanism of action as described in recent scientific presentations. Subject to the caveat that this is laboratory work and has not yet been related to clinical outcomes, I would like to summarize some of the new findings.

In November, we presented a really exciting poster at the AASLD meeting, confirming that 11 key factors known to stimulate liver regeneration are produced by the VTL-308 cells, and can be found in the fluid that has been circulated around the cells during production, known as conditioned media.

We also showed that this conditioned media actually reduced the rate of apoptosis, or cell death, of human hepatocytes in cell culture. This is significant because it could explain how ELAD stabilizes the liver and allows for its regeneration through preventing further hepatocyte cell death. This poster is now available on our website, and I would encourage you to review it at your convenience.

We have also recently completed a metabolomics study of samples for eight ELAD treated and eight control subjects from the VTI-208 Trial and from the conditioned media from our cell growth process. We will be reporting on this at a future medical meeting, but in summary, the work provides additional support that the VTL-308 cells in the cartridges performs some of the metabolic processes that comprise liver function and that the resulting metabolite levels are changed in the blood of ELAD treated patients.

This will help to support the four main pathways that we believe are significant parts of ELAD's mechanism of action. To recap, these are; number one, provide acute phase response proteins to help dampen the pro-inflammatory environment. Number two, promote liver regeneration by providing factors known to be associated with liver repair. Three, to produce blood coagulation factors that may address blood clotting imbalances common in patients with acute forms of liver failure. And four, to assist in the restoration of liver function be providing liver-specific metabolism and detoxification capabilities.

We are currently focusing research efforts on the first two topics, namely modulation of inflammation and promotion of liver regeneration, as our recent research suggests that these appear to have the greatest impact on mechanism of action. Before turning the call over to Mike Swanson and our EVP and CFO for a discussion of financial results, I would like to make a few comments on recent executive promotions, the investor lawsuits, and finances.

I am delighted to announce that Dr. Duane Nash has been promoted to President. I will remain the CEO and co-chairman. Duane will closely work with me on the strategic and personnel aspects of the Company. In addition, it is a great pleasure to recognize Mike Swanson's performance of the CFO responsibilities by promoting him to become Executive Vice President and CFO.

As you may be aware, there have been two securities class-action complaints filed against the Company, alleging securities law violations. The two complaints are substantially similar, and there are motions pending to consolidate the complaints into a single action, and also to select a lead-plaintiff. We have not yet had the opportunity to respond to the complaints, but we intend to defend these lawsuits vigorously.

As Mike will detail, we finished 2015 with a little over $83 million in cash. We believe that if we maintain our current plan, our existing cash will be sufficient to fund our operations into the first quarter of 2018. This is about four to six months less runway then we projected in our last investor call due to the fact that we have decided to reinitiate some of the programs we had tabled last fall, such as the long lead-time items necessary for filing the biological license application, or BLA.

We believe that the BLA work is prudent, since it will save significant time to approval, assuming as successful phase three trial. As we have mentioned before, we currently expect to raise the additional capital over the next two years, such as through at the market equity offerings. If that is not possible, we can reduce spending to help get us to top-line data for the VTL-308 trial expected in mid-2018.

Now I will turn the call over to Mike Swanson.

Thanks, Terry, and good afternoon. As Terry alluded to, we ended December 31, 2015 with cash and cash equivalence of $83.4 million. Our average monthly cash usage for operations and capital expenditures during 2015 was approximately $4.4. million. Assuming we limit our focus, principally to the VTL-308 clinical trial and related activities, we expect our average monthly cash usage from 2016 to be about $3 million a month. Our use of cash will vary based primarily on the timing and enrollment of the VTL-308 Trial.

Summarizing our results for the quarter ended December 31, 2015, the Company reported a net-loss of $9.9 million, a $0.34 basic and diluted loss per share. Non-cash expenses for stock-based compensation, depreciation, and amortization totaled to $1.5 million in the fourth quarter of 2015. This compared to a net-loss of $14 million, or a $0.59 basic and diluted loss per share for the corresponding period in 2014, which included non-cash expenses of $1 million for stock-based compensation, depreciation, and amortization.

For details on these financial results, please refer to our press release issues earlier today, and our 2015 annual report on Form 10-k.

With that I'd like to turn it back over to Terry.

Thank you, Mike. Before we take your questions, I would like to summarize our key upcoming milestones.

First, enrollment of the first subject in VTL-308 is anticipated in the first half of 2016, the top-line data expected in mid-2018. Second, additional presentations on ELAD mechanism of action are expected at medical meetings in 2016. Third, the possible publication of the VTI-208 results in a peer reviewed journal later this year.

We would now like to open up the call to your questions. In addition to Mike Swanson, joining me for the Q&A portion of our call are Dr. Duane Nash, President, Rob Ashley, Executive Vice President and Chief Technical Officer, Dr. Yan Tsonga, Chief Medial Officer, and John Dunn, our General Counsel.

Operator, can you please provide instructions and open up the call for questions?

(Operator Instructions) Katherine Xu of William Blair.

I wonder whether you could help us review the assumptions, statistical powering assumptions for VTL-308.

The power assumptions were built originally around the outcome of the VTI-208 Study, which had replicated that outcome exactly where there's been significance with about 70 patients or so in the study split between the two arms in a 1:1 randomization.

However we decided that we would aim for 150 patients to really ensure that the study was extremely well powered, given our assumptions for hazard ratio and variation in the study. So, with 150 patients in the study, depending on the hazard ratio, the study is powered between 0.95 and 0.99 to achieve a significant p-value less than 0.05 outcome.

Matt Keeler of Credit Suisse.

Just on the added 208 follow-up data that was in today's release, can you give us any color on the cause of deaths in the control and ELAD arms? And anything you can tell us about the length since you got a range of follow-up times, how long past the index hospital stay those deaths occurred?

In general terms, the patients died from the same sorts of things that you would anticipate alcoholic hepatitis patients to die from; things like multi-organ failure, liver failure, renal failure, and so on. There is no significant difference between the causes of death that the ELAD-treated patients and the control patients when you get into these out times long past the period of time of ELAD treatment.

If you look at the Kaplan Meier curve you can assess the times of death because you see each event is characterized by a step down in the Kaplan Meier curve. And so, those particular four subject's time of death would be identified in the Kaplan Meier curve.

So maybe a little bit more color. So if you remember what we presented in August, we presented data from patients through July 31, and the last patient was enrolled as of the end of January, so at that point we had at least 180 days on every single patient. And what would have occurred right now would have been death that would have occurred subsequent to 180 days.

Now, the conventional wisdom about acute alcoholic hepatitis is that it's about a six month process, so chances are a patient who does have acute alcoholic hepatitis, if they're going to die, they probably would die in the first six months.

So, I don't have at the tip of my fingers when these four deaths occurred, but we do know they occurred after six months and there could be a variety of causes. They could be a car accident, they could be a heart attack or they could be a separate episode of acute alcoholic hepatitis.

One follow-up on the enrollment three centers so far. When do you think that you'll have most of all the US sites opened and able to enroll?

That's a good question. It's always difficult to anticipate that. In general terms, it takes about six months to open up a site these days, and quite frankly, the process is getting longer. There are increasing layers of bureaucracy in the science and in the process in general.

I would be very disappointed if we couldn't have a large majority of the sites up and running by the middle of this year. But I doubt that we could get up to the full 40 sites by then, but it is a prolonged process and we have to have a great deal of patience in working with them.

(Operator Instructions) I'm showing no further questions at this time. I would now like to turn the call over to management for some closing remarks.

Thank you, Operator, we appreciate it. And thanks to everybody for being on the call today. We look forward to the next one at the end of the first quarter. Thank you, I think we're through. Bye.

Ladies and gentlemen, thank you for participating in today's conference, this concludes today's program. You may all disconnect, everyone have a great day.