Microbot Medical Inc (MBOT) 2014 Q1 法說會逐字稿

Good day, ladies and gentlemen, and welcome to StemCells' first-quarter 2014 earnings release conference call. (Operator Instructions). As a reminder, this conference call may be recorded. I would now like to hand the conference over to Mr. Greg Shiffman, Chief Financial Officer. Sir, you may begin.

Thank you. Welcome, everybody, and thank you for joining us today. With me today are Martin McGlynn, our President and Chief Executive Officer, and Dr. Stephen Huhn, our Vice President of CNS Clinical Research.

Before we proceed, 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 anytime in the future and our actual results may differ materially from anything projected during today's call due to risk and uncertainties to which we are subject.

These risk and uncertainties are described in our public filings with the Securities and Exchange Commission and at the end of our earnings release which you are encouraged to consult. Now with that, I will turn the call over to Martin.

Thanks Greg. So this afternoon I'll limit my prepared remarks to the notable progress in our clinical translation efforts since our last call on March 12 and what you should be looking for the rest of 2014 as it unfolds. So let's start with the progress report.

We achieved a major milestone for the Company when we completed enrollment in the 12 patient Phase I/II thoracic spinal cord injury trial. This trial enrolled seven patients with no motor or sensory function below the site of injury. These are classified as ASIA A patients. And five patients with no motor function and limited sensory function below the site of injury otherwise classified as ASIA B according to the American Spinal Injury Association Impairment Scale.

So this brings to 30 the total number of patients who have been successfully transplanted with the Company's proprietary expandable HuCNS-SC cells.

Secondly, in our Geographic Atrophy of age-related macular degeneration clinical trial, we received the green light from an independent data monitoring committee after a thorough review of all of the available data to proceed to transplanting the last eight patients in Cohort II in the Company's 16 patient Phase I/II trial.

Age-related macular degeneration is the leading cause of blindness in the elderly. Now you may recall that the eight patients in Cohort I were in a very advanced stage of the disease with very poor vision. The first four patients received the low dose of 200,000 cells into the most affected eye while the second group of four received 1 million cells.

The eight patients to be transplanted now in Cohort II will each receive 1 million cells into the most affected eye. However, their condition will be less severe than those enrolled in the first cohort.

Thirdly, we finalize the design of the randomized controlled Phase II clinical trial in spinal cord injury and we have made significant progress in the planning and preparation for this trial which is planned to begin later this year.

Now as mentioned on our last call, this study will enroll patients with injury to the cervical spinal cord which usually results in loss of both arm and leg function. These patients account for approximately 60% of all spinal cord injuries. The endpoints in this trial both focus on measuring direct changes in strength and function of the upper extremities.

Now it is important to remember that even slight improvements in motor function can result in significant quality of life improvements for patients suffering from spinal cord injuries as well as substantial savings to the healthcare system. So turning now for the rest of 2014 you should look for the Company to do a number of things.

Number one, to provide clinical trial updates from the ongoing Phase I/II trial in thoracic spinal cord injuries. Dr. Armin Curt, the principal investigator for the trial at Balgrist Hospital in Zurich, will present the next update this coming Friday, May 16, at the annual meeting of the American Spinal Injury Association being held in San Antonio, Texas.

This update will include data on eight subjects with six to 12 months of follow-up data. The team from Zurich will also be presenting trial data at the 32nd annual symposium of the National Neurotrauma Society which is to be held in San Francisco June 29 to July 2.

You should also look for us to report the first interim clinical results from the ongoing Phase I/II trial in Geographic Atrophy of age-related macular degeneration. And this will be done at the annual meeting of the International Society for Stem Cell Research in Vancouver, Canada that is being held June 18-21.

We also plan to announce completion of enrollment in that study and that of course would be another major milestone for the Company. We plan to announce initiation of the randomized Phase II proof concept trial in cervical spinal cord injury. And last, by no means least, to announce initiation of the randomized Phase II study in geographic atrophy of age-related macular degeneration. So that is a very significant menu for the rest of the year.

So before closing, I'd like to just share you a few thoughts that I think are very relevant to our field. This field of cell-based therapeutics continues to be plagued by an abundance of hype around the promise of the various therapies that are either in preclinical testing or early uncontrolled open label Phase I trials.

In addition, there has been a dearth of data from sufficiently powered well-controlled trials that have hard clinical endpoints. That said, some companies have invested the time and money to fully characterize their candidate cell in vitro and in vivo, thereby establishing a well grounded rationale of the clinical targets that they have decided to pursue. Many of them then publish the results in peer reviewed scientific journals for the world to see.

I am proud to say that StemCells, Inc. is one such Company. We have worked diligently and methodically since our scientists isolated and purified HuCNS-SC cells approximately 14 years ago, have thoroughly characterized these cells. We have then rigorously evaluated them in various animal models of injury and disease affecting the brain, the eye and the spinal cord prior to initiating clinical trials.

So now with 30 patients transplanted to date, our human safety database continues to grow and we are now poised to zero in on measuring efficacy and clinical benefit in well-controlled, Phase II proof of concept studies. Studies of this type are considered to be the gold standard for demonstration of clinical utility.

Our initial reports are based on small open label Phase I studies and lysosomal storage disorders, myelination disorders such as Pelizaeus-Merzbacher disease, chronic spinal cord injury and age-related macular degeneration. The safety, tolerability and feasibility of the approach, combined with signs of preliminary efficacy from these early trials, have been very important to our overall development plan.

With this progress and success we are now expanding the size and scope of our studies to multicenter, randomized controlled Phase II trials with hard clinical endpoints statistically powered for efficacy. And the data from these studies will start to become available next year.

So to the immediate future we look forward to sharing our clinical data later this quarter from the ongoing Phase I/II studies and to updating you on our ongoing progress on our next call. So with that, I will turn the call over to Greg who will discuss our financial results for the quarter.

Thank you, Martin. I share Martin's enthusiasm. This is a very exciting time for the Company and I am looking forward to the upcoming data releases from our ongoing clinical trials. Now let me quickly go over our financial results for the quarter.

In Q1 2014, total revenue was up year-over-year by approximately $55,000 or 19%. Our SC proven sales increased Q1 2014 over Q1 2013 by 51% or approximately $107,000. We see opportunities for the SC proven business and expect to see continued growth in their revenues. Licensing and other revenue in the first quarter of 2014 was not significant.

Operating expenses were up quarter over quarter by approximately 10% or about $677,000. This increase primarily reflects cost associated with the increased enrollment in the ongoing Phase I/II trials and activities taking place as we prepare to initiate the two Phase II efficacy proof of concept studies later this year.

Similarly, loss from operations increased by approximately 10% or approximately $643,000 driven by the $677,000 growth in operating expenses. For Q1 2014, we reported approximately $720,000 of net other expense from which approximately $327,000 is associated with a change in the fair value of our warrant liability. This is a non-cash item driven by a change in the value of our stock price.

Just a reminder, under warrant liability accounting, changes in warrant liability are passed through the statement of operations as either income or expense depending on the direction of the stock price movement. In addition to the warrant liability we had approximately $380,000 of interest expense.

We reported a net loss of $0.14 per share this quarter for an aggregate net loss of $7.6 million. In 2013 we reported a net loss of $0.17 per share or $6.4 million. The net loss increased year-over-year is primarily driven by the increased expenses associated with our ramp up in clinical activity, the non-cash expenses associated with the change in our warrant liability and the interest expenses associated with the loan from Silicon Valley Bank.

Our net cash usage was approximately $4.1 million for Q1 2014. This included the receipt of approximately $3.8 million from the California Institute of Regenerative Medicine associated with progress made in our IND filing for Alzheimer's.

Our cash and cash equivalents are approximately $26.4 million, giving us a strong balance sheet to continue to move our clinical operations forward. Let me now turn the call back over to Martin for some final closing comments.

Thanks, Greg. So, as I have mentioned before, 2014 really is a transformational year for StemCells, Inc. We are making great strides on our goal of bringing breakthrough therapies to market based on proprietary HuCNS-SC human neural stem cell technology.

This quarter we will be releasing a lot of new clinical data which, for the investors on this call, should translate into much better insight in the near-term into the capabilities of the technology. Over the next 2.5 years, we will have final results from our controlled Phase II proof of concept efficacy study and on top of this we are looking to file an IND for Alzheimer's in 2016.

So I hope you can see why I am excited about our prospects going forward. And with that I would like to open the call for questions.

(Operator Instructions). Keay Nakae, Ascendiant Capital.

Thank you, good afternoon. Martin, I'm wondering if it this time you are able to share any of the details about the proposed design of the Phase II cervical spine study. I guess specifically I'd be interested in knowing which specific metrics or instruments you are going to be using to measure upper body improvements?

We are not yet ready to disclose a lot of detail about the design of the trial. But I certainly can have Dr. Huhn share with you some of the techniques that we will be planning to use to evaluate function in upper extremities.

Yes, so without going into much detail, there are a number of validated and standardized ways of measuring motor and sensory outcome in the spinal cord research community and clinical community. And those outcomes all measure hard endpoints in [summative] degrees of muscle strength for all the different muscle groups of the arms and the legs.

So, those are the types of evaluations that we are going to focus on as we embark upon this trial. They are going to be well recognized, well accepted metrics.

Okay, well we will look forward to you giving us more information about that when you are able to. Maybe shifting gears to AMD, I guess two questions. The first one is at the upcoming presentation of the interim results, how many of the first cohort of eight patients will the data be covering is the first part of the question?

So the data for that will cover seven of the eight patients in whom we have adequate follow-up on in which to make an interim observation.

Okay great. And then maybe just theoretically as we think about the next study in AMD that you are planning on starting later this year, can you give us a sense of what that design might look like? You know, obviously you are zeroing in on a dose and maybe perhaps with the second cohort a degree of severity of disease. But anything else you can give us regarding a potential design or thoughts about a potential design would be helpful.

Sure, so without going in, again, to too much detail, the way we view this next trial in AND, is one that will provide us proof of concept. And that proof of concept I think is best done through a randomized controlled study.

That is going to give us the best sense of the data when we look at a group of patients who have been transplanted versus a group of patients who have not. And again, with metrics that are very determined, very defined, well recognized by the field in determining the progress of the disease in the treated patient versus a non-treated patient.

Okay, well that is all I have at this point. Thanks.

Steven Dunn, LifeTech Capital.

I guess getting back to the spinal cord, what kind of data will we be seeing on Saturday, the interim results? Is it going to be more mature safety, more mature efficacy and which patients will we see in?

So what we have disclosed is that we have, as Martin had indicated, now a follow-up that extends from six to 12 months in the first eight subjects in the study. So the data set will be an update from where we left off last year in which we were discussing the outcome in the first three patients of the study in whom we had adequate follow-up at that point, at least six to 12 months.

So now we're updating that with an additional five patients and their outcomes now, as I said, between six and 12 months. And it will be a full outcome of their safety and tolerability of our intervention as well as our preliminary efficacy observations.

Okay, so we are going to be like -- to translate that, we will be getting longer-term follow-up data plus new data on five patients?

Yes, so the data that we're going to speak to is the Phase I/II study which has a term of 12 months. And so, we want to provide additional data on the patients that have come into that study in whom we have at least a minimum of six months data to out to 12 months.

Okay, great. That should be a very significant catalyst. A little bit on Alzheimer's. Are we expecting Dr. LaFerla to publish any of his preclinical filings on the Alzheimer's program?

So, I believe Dr. LaFerla is already published, Steve, on his preclinical work with the mouse cells into the mouse brain. And I also believe he has presented data on the human cells into the mouse brain. We can revisit the file with you and make sure that your bibliography is up to date.

So, we have seen that data. I was just curious the work he is doing now to prepare for the IND in 2016, if there were any more studies -- more mature publications, I would say?

No, we haven't -- I mean the work that we are doing currently with assistance from the California Regenerative Medicine, is all IND enabling activities, a fair amount of which is repeating previous work that was done in Dr. LaFerla's lab in making sure that everything -- all of the data and all of the study conduct is in compliance with the GLP and meets FDA requirements.

Okay, great. One final question, this one is for Greg. A little housekeeping on the financials. Your cash burden was lower this first quarter. I was wondering if you could give us a little guidance on what you are looking at for full-year 2014 as we begin additional new Phase II trials.

Right, so the guidance that we have given year end I would say we're just remaining consistent. And that is where we said we expected a net cast usage of between $30 million to $34 million. So, slightly up to last year, not up substantially. Better than net and, again, this number was a net.

We did have some cash that came in from the California Institute for Regenerative Medicine associated with expenses and costs that we are incurring related to moving forward to the Alzheimer's IND filing. And so, that is one of the reasons it's a little bit lower this quarter.

Okay, great. I will catch that in the Q. All right, thanks very much, guys.

Jason Kolbert, Maxim.

Hi, thanks. Most of my questions have been answered, but I just want to make sure that I understand what data is going to be presented this Saturday on May 17? Are we going to see any new data on new patients? Or is this going to be a rehash of kind of the original cohorts that were treated and presented?

Yes, so we have already presented on the first three patients who have completed the study. We will be presenting the data on five additional patients, data for which has not been previously released.

Okay, terrific. So that is exciting and potentially it could represent additional proof of concept around the current trial. And can you -- and I'm sorry if I missed this earlier -- have you talked a little bit about the number of sites and the enrollment dynamics that you're preparing for the US Phase II trial in spine?

We have spoken about it generally, Jason, but we are anticipating that the number of sites involved in the Phase II spinal cord injury trial will be in or around about a dozen.

Okay. And help me understand the math behind the dozen sites and in terms of the target enrollment so we can get an idea of how long it might take for that trial to enroll?

So what we have said, Jason, is that we anticipate based on the metrics that we have looked at, we anticipate approximately 12 months to enroll the patients that we are planning for the study. And the study, as I said, will have hard clinical endpoints and will be sufficiently powered to give us the statistical confidence that we are looking for. So about a year of enrollment.

Okay, thank you. And kind of similar questions too as we approach the June 18, June 21 presentation, can you help us understand how kind of the next development cycle in AMD might move forward? And again, I apologize if I missed this and you spoke on an earlier.

No problem. So obviously the first data that will come out on the AMD will be at the International Society of Stem Cell Research. That is June 18 through 21 in Vancouver, Canada. The next catalyst I guess will be announcement of completion of enrollment in that Phase I/II study which is imminent. And then the initiation of the Phase II control study. So all of those events on the agenda for this year.

And have we -- Martin, have you discussed the size -- same thing, the size of the number of sites and how long it might take once you start the Phase II to get it enrolled?

Yes, so approximately the same numerous sites as the spinal cord injury trial. And enrollment anticipated to take approximately a year from initiation. We have not specifically issued the number of patients that we'll be targeting for the trial, but we will be discussing that in greater detail as the year unfolds.

I think for us it is going to be really helpful as we get -- as we start to think of Stem as the Phase II trial, as a Phase II Company to really understand the Phase II trials and kind of the powering assumptions and the potential for P values at what powerings. And as we start to treat you more like any other Phase II trial. So we look forward to that clarity. Thanks very much for the update today.

Ling Wang, Chardan Capital Markets.

Just a couple follow-ups for the Phase I/II spinal cord injury study that will be updated at the conference this Saturday. Can you remind us for the first three patients how long the follow-up time? And also, for the additional [filing] patients, are those a mix of the ASIA-A or B or mostly the A patients?

Sure, first of all Dr. LaFerla will be presenting on Friday of this week. I'm sorry (multiple speakers).

Friday or Saturday?

On Friday. Friday the 16th, not Saturday. So the answer to your second question, yes, there will be a mix of ASIA A's and B's in the data set.

I see. And also, I mean, given this is a single arm study, I guess perhaps you can share some insight with us, what kind of (inaudible) [that apparently the five] patients are going to be new data but what would be some of the key things you would look at as a [posit] or a sign for the data from this trial?

So obviously we will be looking for safety, tolerability. We'll be looking for signs of any reaction or adverse events associated with the cells or immune suppression or the surgery. I mean that is -- the primary purpose of this Phase I/II study is safety and something you can't take for granted.

But we will also be talking about elements that we have spoken about for the first three patients who have completed the trial. So we'll be looking at similar data sets and data points.

Okay, great. And I just wanted to confirm, I thought the presentation was on Saturday, the 17 (technical difficulty) or is that Friday?

Our most recent information is that it is this coming Friday.

Okay, great thank you.

Jason Zhang, Edison Investment.

Hi, you have laid out a very good -- I guess what data do we look at for the spinal cord presentation. For the AMD that will be presented in June, you said it will be eight patients from the Cohort I. Could you also describe to us what type of data are you going to be presenting there? Are those all new data or is this somewhat an update of what you have reported before?

Hey, Jason, so first of all the data set will be for seven of the eight patients in the first cohort. We again will look at safety, tolerability looking for any kinds of evidence of adverse events and then we will be looking at a number of different aspects of signs of potential benefit in these patients. We haven't announced any of the data sets on the AMD study so far.

Okay. And then for the Phase II trials, you obviously have some idea about the trial design or maybe everything already determined. With the data that will be coming out for both of the spinal cord injury and the Phase I trial, how are you going to use that data to help the Phase II trial design in each case?

I'll ask Dr. Huhn to address that, but essentially the data that we have seen and we've reported on to date, as well as that which has not yet been reported, has helped us and has helped inform our thinking in terms of the design of these studies. But I will have Dr. Huhn expand on that.

So, there are things that we can glean and have insight with regard to the development of both programs, in spinal cord injury and AMD, that we are observing in the first two studies that are helping us shape the design and structure and how we approach the proof of concept studies. So we definitely have benefited from that.

Perhaps the one that is most concrete that we can talk about today is the fact that how you administer cells is a very important aspect of the therapy. It gets to the root of administration, the dose, the surgical technique. And we have now developed a huge experience not only in spinal cord injury, but -- in my opinion 12 is a very big number for this particular field -- but a very good experience now with AMD with having dosed our first eight patients.

So we have a lot of comfort in our surgical approach, the technique, the cell dose that really has a lot of bearing on being able to ask even more complex questions with a meaningful dose in our future studies. So that is really one big outcome of our first couple of studies.

And also, as we embark on Phase II, assuming that patient numbers are certainly going to be more than what you have experienced before, how are you preparing the manufacturing site? Are you also improving the process and hopefully trying to standardize that process in anticipation of Phase III trials down the road?

So the manufacturing process has been fully established and bedded down and there will be no change to the manufacturing process that we have used today to date for the Phase II studies. Obviously going beyond that scale up will be the most important consideration.

We invested last year in the design, build out, and startup of our own GMP manufacturing facility here in California. And that facility is fully up and operational and we have produced and released a patient product from that new facility. So, we have a very, very good handle on the manufacturing process and the supply chain.

Okay, that is very helpful. Thanks.

You are welcome.

Thank you. I am showing no further questions at this time. I'd like to hand the conference over to Mr. Martin McGlynn for closing remarks.

Well, thank you very much, everybody, for joining us today on our quarterly call. And of course we look forward to updating you on our clinical progress as the year progresses. And once again, thank you for your time and thank you for joining us.

Ladies and gentlemen, thank you for participating in today's conference. This concludes our program. You may all disconnect and have a wonderful day.