Microbot Medical Inc (MBOT) 2011 Q4 法說會逐字稿

Good day, ladies and welcome to the fourth quarter and year end 2012 StemCells, Incorporatedearnings conference call. My name is Derrick, and I will be your operator for this call. At this time all participants are in a listen-only mode. We will facilitate a question and answer session towards the end of the conference. (Operator Instructions). As a reminder this conference is being recorded for replay purposes. I would now like to turn the conference over to the President and Chief Executive Officer Mr. Martin McGlynn. You may proceed.

Thank you, Derrick. Welcome everybody. Happy you could join us today. On our call today Rodney Young, our Chief Financial Officer and I, will deliver some prepared remarks, Rodney's remarks will include a discussion on the financial results for 2011, and then I will follow this with a discussion of this very exciting period in our progression as a Company. This will be followed then by a question and answer period, where we will be joined by some other members of the executive team.

So to begin, I would like to hand over to Rodney Young, our Chief Financial Officer.

Thank you, Martin. Before we proceed I would like to remind everyone again that during today's call, we will be making some forward-looking statements which reflect our current views, and are based upon certain assumptions that may or may not ultimately prove valid. We assume no obligation to update these forward-looking statements any time in the future, and the Company's actual results may differ materially from anything projected during today's call, due to the risks and uncertainties to which we are subject. These risks and uncertainties are described in our public filings with the SEC,also at the end of today's press release.

So to our numbers. In 2011 we made significant progress in controlling our expenses and cash burn rate which was one of the key goals we had for the year. We initiated a number of actions to reduce our burn rate including a significant reduction in force which we completed in May, as well as the relocation of our corporate headquarters which we accomplished in July. So looking at our expenses for 2011 our R&D expenses totaled $19.9 million, which was about 5% lower than in 2010 while our SG&A expenses were $8.2 million, or about 12.5% lower in 2010. So we continue to prioritize our resources on our clinical development programs while trying to minute minimize our other expenses as best we can.

Also helping us reduce our burn is our revenue producing SC Proven media and reagents business. This business is continuing to show strong growth. For 2011 our revenues from product sales totaled $663,000, which was up 33% compared to 2010, and that followed a strong 2010 where sales were up 30% over 2009. This is clearly coming off a relatively small base, but the business is growing with both unit volume increases around and a number of new product launches contributing to this growth. Overall then our loss from operations in 2011 was $27.4 million. That figure excludes a $655,000 write-off for an intangible asset. This was 6.6% lower than the $29.4 million operating loss we reported in 2010.

Our cash used in operating activities which I think is the best proxy for our cash burn rate was $22 million in 2011, this was down 10% compared to $24.5 million we reported in 2010. Our burn rate is clearly on a downward trajectory, and we want to continue that trend. As we look to 2012, we are targeting a burn rate in the $18 million to $20 million range, as we execute on our extensive clinical trial agenda. Lastly we closed the year with $16.6 million in cash, cash equivalents, and marketable securities. However, since the end of the year we also had approximately $1.4 million come in through warrant exercises and licensing fees. Including these proceeds our pro forma cash balance as of December 31, 2011 was $18 million.

We also have a number of near term opportunities to access additional potential funds. First, there are more than 7 million of the Series B warrants still outstanding from our financing in December of 2011. If these are all exercised before they expire in early May, we would get additional proceeds of approximately $9 million. Secondly we have submitted to the California Institute for Regenerative Medicine, or the CIRM, two applications for disease team research awards, one for Alzheimer's disease, and one for spinal cord injury. These awards could be for up to $20 million each, and are intended to help fund the preclinical development IND enabling activities needed to file the INDs needed for clinical studies in these two indications. CIRM has said they intend to select the award recipients and fund the research awards this summer.

Now, I will turn the call back over to Martin.

Thanks, Rodney. So you may recall that last quarter we reiterated our belief that the best pathway for growing shareholder value is for StemCells, Inc. to generate clinical data for our human CNS stem cell program, and to do so in a thoughtful cash conscious way. As Rodney has just explained, and as our financial results show, we continue to manage our expenses and our cash burn in an efficient manner, and I will convey to you momentarily additional data from our growing clinical trial activities are beginning to emerge.

But let me start by calling out the remarkable in vivo properties of our proprietary human neural stem cells. These cells effect or have the potential to affect many of the key functions or impairments of the human central nervous system. They have been shown to remyelinate nerve axons in the shiverer mouse, which is a model widely used to study myelination disorders. They have been shown to restore lost motor function to hind limbs in widely accepted spinal cord injury models in mice, and they have been shown capable of preserving the vision of rats that would otherwise go blind in a model which is a well-established model of retinal disease, known as the Royal College of Surgeons Rat Model. And as we have seen with the mouse neural stem cells to the work of Dr. Frank LaFerla's lab at UC Irvine, mouse neural stem cell can enhance memory in a mouse model of Alzheimer's disease.

As I have stated in the past and I will repeat again today, our clinical translation goal is to try to replicate as many of these exciting results in human patients. Our first clinical trial was with our human neural stem cells in Batten disease. We successfully completed that 6-patient Phase I safety trial inJanuary of 2009, and submitted the study report to the FDA. The data showed that the procedure, and the cells and immunosuppression regimen were well tolerated.

Today our clinical program is the broadest and most advanced cell based therapy program in the field, and that we are targeting all three elements of the central nervous system, the brain, the spinal cord, and the eye. With current clinical programs either planned, enrolling or complete in each of these areas, which is a significant and unique accomplishment in the stem cell field. The studies include a Phase I trial in Pelizeaus-Merzbacher disease, or PMD, a rare and progressive condition affecting the central nervous system.

PMD is one of a group of similar disorders known collectively as leukodystrophies what are characterized by abnormal white matter of the brain, caused by incomplete development of the myelin sheath surrounding nerve axons. Results of this study will be very important for the Company as PMD is a proxy for a spectrum of myelination disorders that represent significant unmet medical need, including certain forms of cerebral palsy. Transverse myelitis, MS, spinal cord injury, and even stroke. The study is now complete, and we expect results to be presented in a matter of days at the Annual Meeting of the European Leukodystrophy Association to be held in Paris.

Next a Phase I-II trial in spinal cord injury which was initiated in March of 2011, we expect to have an interim look from this study from the Asia A cohort in the second quarter of this year. And third a Phase I-II study for age-related Macular degeneration, for which the FDA granted authorization to proceed this past month. Through a robust preclinical program we have now accumulated a storehouse of important data demonstrating that these cells and graft survive, their function and their fate is well characterized, and we have shown that they neuroprotect, and they also replace neurons. This data has served to provide the basis for our translational agenda to clinical testing.

To date, we have shown successful transplantation of up to one billion cells into the human brain, as well as engraphment and migration deep into the human brain with no evidence of Tumorigenesis. We have observed the safety and tolerability of immune suppression out to 12 months, and more importantly, the ability for our cells to survive for an extended period of time post-cessation of immunosuppression. These observations combine to give us a great optimism in the clinical programs unfolding before us.

Let me address each of these programs in detail beginning with Pelizeaus-Merzbacher disease. In February of this year we completed our Phase I study in PMD at UCSF under the direction of Dr. David Rowitch. Again this is a rare inherited condition involving the central nervous system, and one in a group of disorders known as leukodystrophies, which are all characterized by myelin sheath abnormalities. The primary focus in this first trial is safety. We are looking for evidence of donor derived myelin formation in the patient's brains following the transplantation of our cells. We are also looking for changes in neuropsychological testing for development and cognitive functions, as well as any signs of improved neurological function.

Four patients with conatal PMD, the most severe and fatal form of the disease, have been transplanted. Typically such patients are not expected to achieve measurable gains in any of the observation criteria I just mentioned. We chose PMD for this proof principle study, because it is associated with the lack of normal myelin development, and unlike Batten disease can be more easily diagnosed at birth. Moreover as PMD patients are not expected to form new myelin, evidence of new myelin formation after the stem cells have been transplanted could have real significance.

This open labeled trial was initiated in October of 2009. All four patients were transplanted with the human neural stem cells, and were evaluated regularly over a 12 month period in order to monitor and evaluate safety and tolerability of the surgery, immunosuppression and the implanted cells. We are planning to follow the effects of this therapy long-term. As with our Phase I NCL trial, a separate four-year observational study has been initiated. We were very encouraged by an early MRI examination of the patient that was farthest along at 12 and 18 months in terms of the MRI evaluation. This individual showed evidence of donor-derived myelin formation or de novo myelin, which we believe is derived from the grafted human neural stem cells.

We are excited to see the full data set presented at the European Leukodystrophy Association Meeting, which is expected to be on Saturday, March 31 of this year. Results will be presented by Dr. David Rowitch, UCSF's Professor of Pediatrics and Neurological Surgery, and Chief of Neonatology, as well as a Howard Hughes Investigator.

As I mentioned before there is a range of myelination disorders for which PMD carries relevance, including other leukodystrophies, some forms of cerebral palsy, transverse myelitis, stroke, multiple sclerosis, and also has been demonstrated in several studies post-traumatic demyelination in spinal cord injury, was the subject of our Phase I-II trial underway in Switzerland, and the program where we expect our next most near term results.

For spinal cord injury extensive preclinical studies conducted in collaboration with researchers at UC Irvine, demonstrate that our human neural stem cells engraph long-term, migrate along the spinal cord to the point of injury, and differentiate into neurons and specialized cells called oligodendrocytes, that in turn are responsible for the creation for the creation of myelin. When transplanted into the spinal cord of mice with lower spinal cord injury, our human neural stem cells restored neurofunction in mice with sub acute and chronic spinal cord injury. These data suggest the prospect of expanding the window of opportunity for intervention in spinal cord injury, and therefore the potential to treat a much broader population of injured patients.

We have made important progress in our Phase I-II trial which was initiated in march of 2011 at Balgrist Hospital in Zurich. Phase I enrollment and dosing are now complete for the Asia A cohort,where patients with no motor or sensory function is preserved after the injury. We expect to have an interim look at these data in the second quarter of this year. Having completed dosing of the Asia A cohort, screening for Asia B patients, who have less severe incomplete spinal cord injury has now begun. Here again while our first priority is to assess safety in each patient, we will also be evaluating changes in sensations, motor function, as well as bowel and bladder function.

I want to add that we are pleased with how the study is being received, there is great enthusiasm among the investigators and patients, and folks who are very interested in and instrumental in the whole field of spinal cord injury. Also in spinal cord injury in collaboration with Doctors Anderson and Cummings at UC Irvine, we continue to make progress in the preclinical evaluation of cervical injuries where the majority of injuries to the spine occur. In January of this year we submitted an application to the CIRM to help fund the various IND enabling activities necessary to initiate a clinical trial. As mentioned by Rodney earlier, funding can be for up to $20 million for each disease team, and we expect CIRM's decision in the summer of this year.

So now to the eye, in January we announced publication in the International peer reviewed European Journal of Neuroscience, of results demonstrating that our cells protect host photo receptors, and preserve vision in an animal model of retinal disease. These results were the most robust shown to date in the RCS animal model. One of the more striking findings was that the effect on vision was long lasting, and it correlated with the survival of the cells more than 7 months post-transplant,which is substantially longer than other cell types transplanted into the same model. Also important particularly for potential clinical application was that the cells spread from the site of initial application to cover more of the retina over time.

Shortly following this announcement the FDA authorized initiation of a Phase I-II clinical trial over neural stem cells in the dry form of age-related macular degeneration. This trial which will begin enrolling shortly, is an open label dose escalation study, expected to enroll a total of 16 patients. Cells will be administered by a single injection into the space beneath the retina. Patients' vision will be evaluated using conventional methods of ophthalmological assessment, at predetermined intervals over a one year period. Patients will then be followed for an additional four years in a separate observational study.

Finally to Alzheimer's disease. In September of last year we announced that we had been awarded a CIRM disease team therapy development planning award of approximately $100,000 to allow the Company as collaborators at UC Irvine to prepare a full disease team planning application, to help fund the preclinical development of human neural stem cells as a treatment for Alzheimer's disease. This collaboration is based on the work of Dr. Frank LaFerla's lab at UC Irvine, which demonstrated that mouse neural stem cells enhance memory in t a mouse model of Alzheimer's disease. This groundbreaking research was published in August of 2009 in the proceedings of the National Academy of Sciences.

As everyone knows, Alzheimer's disease is a devastating progressive neurogenerative disease for which there is no cure or effective treatment option. According to the Alzheimer's Association today approximately 5.4 million Americans age 65 and older have the disease. It is the sixth leading cause of death in the United States. The number is expected to rise by 7.7 million by 2030 as the Baby Boomer generation ages, and to between 11 million and 16 million by 2050.

Spending this year by the federal Medicare and Medicaid programs for people with Alzheimer's is estimated at $130 billion, and projected to top $1 trillion by 2050. So we use the planning award funds that we have received from CIRM to apply for a full CIRM disease team research award in January. If successful we could expect to receive up to $20 million in CIRM funding beginning this summer, that would help pay for the preclinical work that needs to be done to file the IND, which would be targeted to occur within four years of the CIRM funding.

So clearly this is an exciting time for StemCells, Inc. and a period where progress we are making in our human neural stem cell clinical programs is beginning to bear fruit. The full results of our PMD trial which will be presented in two weeks time, mark the beginning of this important period for our Company, for our product, and for our many collaborators in the medical and research communities. We look forward to sharing these results with you, along with the results from our programs in all of the major areas of the central nervous system in which our cells are being tested, and will do so in the coming quarters.

I thank you for your attention, and we would be more than happy to take any questions that you might have.

(Operator Instructions). Our first question from the line of Keay Nakae of Ascendiant. Please proceed.

Just a couple of quick questions regarding logistics of your clinical trials. Marty, in the spinal cord study as you move onto the Asia B do you need to do the interim look of the Asia A first before you can roll those patients?

We have preferentially made that part and parcel of the protocol design, and because it is part and parcel of the protocol of course, as sponsor we are obligated to adhere to the protocol. So it is built in. It is part and parcel of a very sure-footed approach to making sure that there are no latent adverse events in the most severely injured cohort, before we start transplanting into the less severe, the Asia Bs and Cs.

Okay. And then on that question on the AMD study, what else is left to do before you can begin enrollment in that trial?

We are in the stages where we are interacting with the ethics committee at the institutions, and also involved in finalizing contracts, clinical study contracts, and once all of that is bedded in, we will initiate the study and start enrolling.

Okay, great. Thank you.

The next question is coming from the line of Steven Dunn from LifeTech Capital. Please proceed.

Good afternoon everyone. Congratulations on the tremendous progress we have seen. I would like to start off with the PMD. Now we are going to see the data at the EU Leukodystrophy Conference in about what two weeks. What I want to ask you is in a roundabout way, is if we see myelination, or we see that the results are successful, would stem cell then continue on in PMD, or would you choose a different leukodystrophy indication?

Our intention once we have got the data, or we are fully okay with that data, our intention would be to meet with various experts in white matter tract disorders and leukodystrophies, share the data with them, and make sure that the science and the clinical observations still are compelling. As it relates to not just PMD but also leukodystrophies. I think it would be fair to say that our intention would be if the data is supportive our intention would be to advance to a controlled study in PMD.

But would you leave open the possibility of actually beginning a trial with another indication leukodystrophy, or just do one single indication then?

Well, in the matter of progressing clinical trials you have to follow a logical and ordered series of steps for a specific disease, because each IND approval is disease specific and product specific, but that would not prohibit us from filing another IND to initiate a study in other leukodystrophies.

Okay. Moving on. A quickie on chronic spinal cord. Now that the trial has opened up to US enrollment for Asia B and C patients, has opening up the US enrollment had an effect on your trial randomization enrollment?

So at this stage we are screening for Asia Bs, and there are a number of potential patients on the screening list, and a number of them have come from North America.

Great. On the Dry MD trial, could you give us a little color on how many sites you are looking at which gives us kind of a color on how many IRBs you have got to dose for?

We have the green light for a multi center trial, and we are working our way through center by center trying to stay focused and to initiate the trial as quickly as possible. And then based on those experiences we will make the determination of how many other sites to add, and how quickly to feather them in if at all. The fact of the matter is that the prevalence of patients, there are significant numbers of patients, and we don't anticipate any difficulties whatsoever in being able to enroll the 16 patients that we need.

Okay. So there haven't been any changes to the protocol since the IND has been approved?That has been locked down, and that is what you are going with right now, is that correct?

The IND was submitted and approved in January, and we were given the green light to proceed.

Okay. Last year you launched like I think a dozen new products in your tools and technologies line. That is a significant amount. Would we be seeing any new product launches this year, or are you going to focus on increasing the sales of what was launched last year?

Well, after we acquired the SC Proven business from SCS in 2009, we did so and we had a material number of ideas for new product opportunities, and we have picked those pretty quickly, and we are able to prioritize so that is why we had such a surfeit of healthy new product launches. But of course, one wouldn't expect the rate of new product launches to continue at that rate. We do have other product, new product opportunities both on the drawing board and in the pipeline, but I would not expect to see the same number of SKUs being launched as we did in the last year or two, because of the large number. However, we plan to make up in quality what we would lose in numbers.

Okay, great. Thanks very much. And again congratulations, and I will jump back in the queue.

Thanks, Steve.

(Operator Instructions). At this time I am showing no further questions in queue. I would like to turn the call back over to Mr. Martin McGlynn for any closing remarks.

Well, thank you very much everybody for joining the call. And we appreciate the opportunity to update you on our programs, and we look forward to keeping you appraised of our progress on our quarterly calls. Thank you very much.

Ladies and gentlemen, that concludes today's conference. We thank you for your participation. You may now disconnect. Have a great day.