Microbot Medical Inc (MBOT) 2013 Q3 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the third-quarter StemCells, Inc. earnings conference call. My name is Britney and I'll be the operator for today. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. (Operator Instructions).

At this time, I would now like to turn the presentation over to your host for today, Mr. Martin McGlynn. Please proceed, sir.

Thank you, Britney, and welcome, everybody. Thank you for joining us today. Apologies -- we had a technical glitch, but I'm glad that we were able to resolve it.

So, with me today on our call is Rodney Young, our Chief Financial Officer. As Rodney is feeling a little bit under the weather, struggling with a heavy cold today, I will deliver the prepared remarks before opening up the call for Q&A.

Before proceeding, I'd like to remind everyone 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 our actual results may differ materially from anything projected during today's call, due to risks and uncertainties to which we are subject. These risks and uncertainties are described in our public filings with the Securities and Exchange Commission and at the end of our earnings release, which you're encouraged to consult.

Okay. So to the financial results, which were just released a little while ago, we'll start with the top line. Total revenue in Q3 2013 was $325,000 compared to $264,000 in Q3 of last year. SC Proven sales totaled $272,000, which is a 34% increase compared to $203,000 last year. Q3 was a strong quarter, and 2013 is looking like another strong year for SC Proven business. If you extrapolate the nine-month sales out to a full year, 2013 is tracking to grow around 25% over last year, which would be the third straight year of 20%-plus growth.

Turning to the expense side, third-quarter operating expenses increased by $1.6 million or 31% to $6.9 million compared to $5.3 million in 2012. The increase was predominantly due to increased R&D expenses, which were $1.7 million higher in the third quarter of 2013 compared to Q3 of last year. We saw higher direct and manufacturing expenses related to our clinical trial activities, and we added personnel to focus on clinical development. In addition, we increased spending on preclinical research, some of which was for specific projects that won't reoccur.

SG&A expenses were essentially flat in Q3 of 2013 compared to Q3 of last year. And in Q3, we no longer had any wind-down expenses related to our former facility in Rhode Island. So, loss from operations totaled $6.7 million in Q3 of 2013, and this compares to $5.1 million in Q3 of last year.

Turning now to items below the operating line. We reported other expense of $536,000 in the quarter compared to other expenses of $11.3 million in Q3 of 2012. The lower expense was due mainly to lower expense from the change in the fair value of our warrant liability. Just as a reminder, under warrant liability accounting, changes in the value of the warrant liability are passed through the income statement as income or expense, with increases in the liability recorded as expense, and decreases in the liability recorded as income. So the lower warrant liability expense in Q3 2013 reflects a smaller increase in the liability compared to the increase in Q3 of 2012. Regardless of whether we show income or expense from the change in warrant liability, it is a non-cash item.

Other items to note below the operating line include interest expense of $382,000 in Q3 compared to $11,000 in the same quarter last year. This increase is due to our higher debt level in 2013, mainly due to our loan from Silicon Valley Bank. Bottom line, in Q3 2013, we reported a net loss of $7.2 million, which equates to $0.17 per share. And this compares to a net loss of $16.3 million in Q3 of last year, or $0.54 per share.

Cash used in operating activities for the nine months ended September 30, 2013 totaled $16.4 million, which was about 10% higher than the $14.9 million cash used in operating activities in the first nine months of 2012. Also, as we noted in the press release issued earlier today, we have made a significant investment in a new GMP manufacturing facility to house our cell processing clean rooms; the related QC, QA and documentation systems; as well as process development laboratories -- all in preparation for the larger, multi-center Phase II proof of concept trials that are planned for next year.

Having evaluated a number of different strategies designed to secure our cell supply lines, we concluded that the best choice for both financial and strategic reasons was to invest in our own facility. As a result, we leased a suitable building in Sunnyvale, California; completed the design and construction; and recently received our drug manufacturing license from the state of California. While this facility involved an upfront CapEx investment, which totals about $4 million through September 30, this outlay is financially justified, as we will have significantly more production capacity with lower operating costs going forward, and strategically, this facility gives us greater control over our cell supply lines.

Turning now to our cash balances. So as of September 30, 2013, our reported cash totaled $21 million. However, on October 7, we closed n $18.6 million underwritten public offering, which included the exercise of the full overallotment option. So on a pro forma basis, including the net proceeds from the offering, we would have $38.3 million in cash as of September 30, 2013.

So moving away from the financials, I would now like to make a few comments and observations with regards to the business. As we've said in the past, our strategy is to build shareholder value by generating meaningful clinical data in a cash-efficient manner. We have an exciting clinical development plan and an experienced team in place. Our focus now is on execution.

Our immediate priority is to complete enrollment in the ongoing spinal cord injury and dry age-related macular degeneration trials. We have now dosed eight of the 12 patients planned in our spinal cord injury trial, and are on track to complete enrollment in Q1 of 2014. You will recall that our dry AMD trial is a 16-patient trial with two cohorts of eight patients each. To date, we have dosed six patients, and are targeting to complete enrollment of the first cohort by the end of this year, and enrollment of the second cohort by middle-2014.

As has been our practice in the past, we will continue to provide updates on the progress of the trials, and we'll make interim data available at meaningful time points. Now having said that, I just wish to remind everyone that these are, first and foremost, safety trials, and that any evidence or signals of efficacy need to be treated cautiously.

The real exciting test comes with the start of the Phase I -- of the Phase II trials -- excuse me. And we plan to initiate Phase II studies for spinal cord injury and dry age-related macular degeneration shortly after we have completed enrollment in the Phase I/II trials. These Phase II trials will be designed to demonstrate clinical proof of concept. They will have control arms, and will be multicenter trials involving larger numbers of patients than the earlier trials. We anticipate initiating the Phase II trial for spinal cord injury in middle of 2014, and we anticipate initiating the Phase II trial for dry AMD later in the year.

Lastly, regarding PMD, or Pelizaeus-Merzbacher Disease, we have a meeting scheduled with the FDA for next month to discuss the design of a potential Phase II trial and the potential regulatory pathways to approval. So, while we still have a lot of work to do, the early clinical data is very encouraging, and we're really excited by the prospect that we could be looking at interim data from Phase II trials in spinal cord injury and AMD as early as the middle of 2015, with final data approximately one year later. Moreover, depending on the outcome of our meeting with the FDA next month regarding PMD, we could well add a third Phase II trial to our list.

So, with that, I will thank you for your attention. And I would now open the call up for questions.

(Operator Instructions). Keay Nakae.

Yes, thank you. For Marty or Rodney, how should we think about quarterly operating expense going forward for the next couple of quarters?

Thanks for the question, Keay. I'll just -- I'll have Rodney address that.

Keay, I think it's a little early for us to talk about that for next year. As Martin described, we have plans for multiple Phase II, larger Phase II trials to be initiated next year. So from a planning perspective, we actually have a lot of moving pieces. So, at this point, it's too early for us to really give you any good guidance for next year.

Okay. At least for maybe Q4, Q1, something similar to what you just posted in Q3 is reasonable?

Yes. I think for -- we're looking for 2013 as a whole will probably come in at about $24 million. So, on average, about $2 million -- $2.1 million, $2.2 million per month. That's a good estimate for Q4. And probably, as you correctly pointed out, things won't pick up until the latter part of 2014. So the early part of 2014 is probably similar to Q4.

All right, thanks for that. And then, Marty, as you start to think about what a Phase II spinal cord study could look like, if you had a control arm, give us a sense of what that trial design might look like. I know you're far from finalizing that, but just conceptually.

Well, are we talking about the spinal cord injury study?

Yes. Phase II spinal cord proof of concept study.

Right. So, obviously, the numbers will be greater. We're still working out the details. The control arm, there are reference points that we can go to in other trials involving spinal cord injury. Sham surgery is out of the question, but we're in the process of putting the finishing touches to the control arm. And, of course, a lot of this in turn will have to be reviewed and agreed to by the Agency.

Right. I guess that's really what I'm looking for -- some more clarity or creativity, perhaps, is maybe a better word in terms of what do you think would be an appropriate control arm for a study that you wouldn't have a lot of difficulty enrolling? And then in terms of efficacy, what kind of things do you think you might need to show, especially in terms of motor improvement?

All in the planning stages. Great questions. You can appreciate at this stage that I'd be very reluctant to disclose any of the details. This is a rapidly-moving project. It's also a competitive field. And we, first and foremost, want to make sure that we have a study design that accomplishes what we need to do and one that the FDA agrees with.

Okay. Well, we'll defer on that until we're a little further down the road then. Thanks.

Appreciate that. Thank you, Keay.

There are no further questions in the queue at this time, sir.

Okay. If there are no further questions, thank you, everybody, for joining us today. And we look forward to speaking with you early next year, when we will review the results for the year and for the fourth quarter. Thank you all.

Ladies and gentlemen, that concludes the presentation for today's conference. You may now all disconnect and have a wonderful day.