Madrigal Pharmaceuticals Inc (MDGL) 2009 Q2 法說會逐字稿

Good day and welcome to the Synta Pharmaceuticals second quarter 2009 financial results conference call. Today's conference is being recorded and webcast. (Operator instructions) At this time for opening remarks I would like to turn the call over to Rob Kloppenburg, Vice President of Investor Relations and Corporate Communications at Synta Pharmaceuticals. Please go ahead, sir.

Good morning and thank you all for taking the time to join us today. With me are Dr. Safi Bahcall, President and Chief Executive Officer of Synta Pharmaceuticals; Keith Ehrlich, our Vice President and Chief Financial Officer; Dr. Vojo Vukovic, Synta's Senior Vice President and Chief Medical Officer; Dr. Jim Barsoum, Senior Vice President, Research; and Michael Bailey, Senior Vice President and Chief Commercial Officer.

This morning we issued a press release that reported results for the second quarter of 2009 that can be found on our website at www.SyntaPharma.com.

I'd like to remind everyone that we will be making forward-looking statements during this teleconference call. Such statements, including statements relating to the timing and progress of clinical trials, reflect our current views with respect to future events and are based on assumptions and subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such forward-looking statements.

Risks and uncertainties include the risk that the results of completed clinical trials may not necessarily be predictive of results in larger, later-stage clinical trials, and the other risks and uncertainties described under Risk Factors in our Form 10-K for the year ended December 31, 2008 as filed with the SEC.

Synta undertakes no obligation to publicly update forward-looking statements whether because of new information, future events, or otherwise except as required by law.

I will now turn the call over to Dr. Bahcall, after which we will open the floor to questions. Safi?

Thanks, Rob. And thank you all for joining us this morning. Second quarter was a time of transition for Synta. We shifted our focus to STA-9090, our Hsp90 inhibitor, as well as our partnering efforts. Let me briefly highlight the status of our Hsp90 program.

There's a great deal of excitement in the medical oncology and pharmaceutical industry communities about the potential of the Hsp90 category based on the known critical role Hsp90 plays in supporting a broad range of cancer-promoting protein.

9090 is a synthetic small molecule Hsp90 inhibitor with a novel chemical structure that is unrelated to the first generation ansamycin class of Hsp90 inhibitors, which includes 17-AAG.

We believe that 9090 has the potential to be the leading program in this category. Our view, which is shared by investigators who will be leading our trials and have experience with other Hsp90 inhibitors is based on two things. First, the emerging clinical results from our current trials, including confirmed responses. And second, the preclinical data package.

The preclinical results have shown that 9090 is consistently 10 to 100 times more potent and has an improved toxicity profile compared to the first generation of Hsp90 inhibitors. Further strengthening the evidence of superiority to the 17-AAG family is the potent activity seen in cancers resistent not only to multiple kinase inhibitors such as Gleevec, Sutent, and Tarceva, but in cancers resistent to 17-AAG itself.

Some of these results have been published, such as the results in lung cancer from Dr. Shapiro's lab at the Dana-Farber, was represented at AACR this past spring. And some we expect to publish later this year or early next.

Together with the clinical results we have seen to date, these form a compelling package that has enabled us to initiate a broad development program for 9090 with a high degree of support from investigators. We anticipate that within a year, 9090 will be in a total of a dozen or more trials. We expect to initiate and announce several important trials between September and November this year.

To make this process as economical as possible for our shareholders, a smaller fraction of these trials will be Company sponsored and a larger fraction will be investigator sponsored. Our ability to be able to run numerous economical investigator sponsored trials is a reflection of the growing strength of the data package for this program.

A quick summary of where we are with ongoing trials. The two Phase 1 solid tumor studies continue to dose escalate with the drug well tolerated to date. We believe we have reached clinically relevant dose levels and we continue to escalate, which is an encouraging sign. So far, we have seen two confirmed responses as defined by RECIST criteria. A number of instances of tumor shrinkage that are not yet confirmed by RECIST criteria, and a number of cases of prolonged stable disease.

Certain of these responses have occurred in patients who failed to respond to any line of therapy, which is particularly encouraging. These responses have been informing to an extent our selection of next indications. We will announce the choice of next indications and trial design details as we initiate each study. We also expect to present clinical data from these Phase 1 programs at a medical meeting either later this year or early next. No final decision on timing of presentation has been made yet.

Immunologic cancers, the Phase 1/2 study with a twice weekly dosing schedule continues to dose escalate and we expect to initiate our fourth 9090 study, a Phase 1/2 study with a once a week dosing schedule in the coming weeks. The rationale for these indications is strong and we are eagerly anticipating launching the new study.

As we mentioned on the last call, we have begun partnering discussions for this program as well as for our other programs at the Company including VDA and Apilimod. We are in discussions with over 20 companies about a range of different possible types of deals, including a range of different combinations of assets and programs. The positive feedback we have received to date and the breadth of interest gives us confidence we will secure one or more partnerships over the coming six to nine months that will be attractive for our shareholders.

We have three goals in partnering. Number one, continue to provide Synta a strong financial position so we remain independent of equity financing markets. Number two, ensure a broad development program for each of our candidates so we maximize the likelihood of both clinical and commercial success for each drug candidate. And number three, preserve substantial product rights for our shareholders so that we are able to not only reduce overall financing risks to increase balance sheet and cost reduction, but also preserve substantial upside from our pipeline for our shareholders.

In summary, we are proud of the track record of partnerships we've been able to achieve to date and we look forward to achieving one or more similarly strong partnerships in the coming months.

With regard to elesclomol, we continue to collect and analyze data from the Phase 3 melanoma trials, including overall survival. An independent advisory panel will meet in the third quarter to review the collected data to date and provide the initial recommendations and path forward for the program.

Currently, we are not investing any material resources in the elesclomol program. In order to preserve focus of resources at the Company, we do not expect to invest any significant resources into elesclomol until we have either completed or made very strong progress towards completing a major partnership.

Finally, with regard to our crack MRM channel program, whose costs are fully reimbursed by our partner Roche, we are hard at work on a very promising series of compounds and are making good progress with the program.

Now I'll turn the call over to Keith Ehrlich, our Chief Financial Officer.

Thank you, Safi. And good morning, everyone. As of June 30, 2009, the Company had $60.5 million in cash, cash equivalents, and marketable securities. This compares to $73.6 million in cash, cash equivalents, and marketable securities as of December 31, 2008. As a result of the implementation of cost saving measures and based upon our current operating plans, we expect to end 2009 with approximately $40 million of cash resources. This estimate assumes no additional funds from new partnership agreements or equity financing events.

Total collaboration revenues were $4.7 million for the second quarter of the year as compared with contra revenue of $0.6 million for the second quarter of 2008.

Research and development expenses were $10.1 million for the second quarter of 2009 compared to $18.3 million for the same period in 2008. General and administrative expenses were $3 million for the second quarter of 2009 compared to $4 million for the same period in 2008.

Reductions in expenses from the prior period reflect the Company's cost cutting efforts following the suspension of the symmetry trial in the first quarter. Net loss was $8.5 million or $0.25 per basic and diluted share for the second quarter of 2009 compared to a net loss of $22.7 million or $0.67 per basic and diluted share for the same period in 2008.

More detailed financial information and analysis may be found in the Company's quarterly report on form 10-Q, which was filed this morning with the Securities and Exchange Commission.

I will now turn the call back to Safi.

Thanks, Keith. Before opening the call to questions, I would like to thank our employees for their hard work on our many initiatives this past quarter. We have a very exciting drug with STA-9090. We are beginning a very interesting organized auction around a series of possible partnerships and we have several additional shots on goal from other compounds in our pipeline. We are fortunate that our cash position and our partnering position provide us with financial security and we are very excited about our future.

I will now open the call to questions and discussion. Operator.

(Operator instructions) Our first question comes from Andrew Vaino with Roth Capital Partners. Please state your question.

Hey. Just a quick question on the 9090 program. When you dose with the 9090 to try to knock the Hsp90 do you notice any induction of Hsp70?

Jim will take that.

Yes, when you dose with 9090, it inhibits the activity of Hsp90 and as a consequence, Hsp70 is induced. And we actually can trace that in the clinic and we do see Hsp70 induction as a clinical biomarker. And that is a biomarker of activity of the drug.

Okay, thank you.

Our next question comes from Joel Sendek with Lazard Capital Markets. Please state your question.

Hi, thanks. So, I just wanted you to talk a little bit about your partnering strategy for 9090. I mean talk about how many essential partners do you have. And what's the urgency there? Is it more of a financial one? Is it just because you have overwhelming interest that you want to partner it out? Or might you hold onto the asset a little bit longer?

Joel, this is Safi. What we're doing is just as a matter of prudence getting started early with these discussions. Given the fact that we have a good cash position, that we have substantial costs at the Company being reimbursed. One of our partnerships, the CRAC partnership, we thought it would be a good idea to just start these discussion earlies -- this discussion early and broadly. So, we're looking at a range of different possible partnerships. Anything from a global deal to a regional deal to a discovery alliance. And we'll see how it goes.

Okay. So, it's more of a situation of being opportunistic in the asset that you have.

Exactly. And it is, as you say, in part driven by the high degree of interest we've had. Pharma companies knocking on our doors for the past year or two. These are companies that are very interested in the target, very familiar with the space. They talk regularly with leading investigators in the medical oncology community.

And because we've been spending a lot of time with top investigators over the last six months in many indications, some of the data on the drug has certainly gotten back to people in the industry. And so, we have quite a few people who have approached us about the program and we're now having those discussions in an organized way, a way that we think will generate the best possible terms for the Company.

Okay, thank you.

(Operator instructions) Our next question comes from David Harmon of UBS. Please state your question.

Safi?

Yes.

You can hear. Good. Has there been any delay in the projected partnership of 9090 from back early in the spring? My impression had been that there was a good possibility that there might be a partnership by this year as opposed to six to nine months from now.

No, I think the last call we said we had made a decision very recently to initiate discussions. But we don't have a strong preconception that we must do it one type of deal or another type of deal. And we're starting somewhat early, which creates -- puts us in an attractive position of not needing to rush into any deal.

Okay. Thank you.

Sure.

Ladies and gentlemen, that concludes the question and answer session. I will now turn the conference back over to Dr. Bahcall for any closing remarks.

That concludes our call. Thank you.

Ladies and gentlemen, this concludes today's teleconference. All parties may disconnect now. Thank you and have a nice day.