MediciNova Inc (MNOV) 2011 Q2 法說會逐字稿

Good day, ladies and gentlemen. And welcome to the second-quarter 2011 MediciNova earnings conference call. My name is Jonathan, and I am your operator for today. At this time, all participants are in a listen-only mode. We will be conducting a question-and-answer session after the prepared remarks. (Operator Instructions) And as a reminder, this conference call is being recorded for replay purposes. I'd now like to hand the call off to one of your speakers for today, Mr. Mark Johnson, Director of Investor Relations and Corporate Development for MediciNova. You may proceed, sir.

Thank you, everyone, for calling in today. On the call, we have three members from MediciNova's Senior Management -- Dr. Yuichi Iwaki, President and CEO; Michael Coffee, Chief Business Officer and Interim Chief Financial Officer; and Dr. Kirk Johnson, Head of R&D and our Chief Scientific Officer. The Executive Team will provide an updated business presentation, followed by a Q&A. Please note the following Safe Harbor statement. Statements in this call that are not historical in nature constitute forward-looking statements within the meaning of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.

These forward-looking statements include, without limitation, statements regarding our portfolio of clinical and preclinical product candidates, including patient enrollment information and expected timing of completion of trials, and our outlook of our business development activities. These forward-looking statements may be preceded by, followed by, or otherwise include the words -- believe, expect, anticipate, intend, estimate, project, can, could, may, well, would, or similar expressions. These forward-looking statements involve a number of risks and uncertainties that may cause actual results or events to differ materially from those expressed or implied by such forward-looking statements.

Factors that may cause actual results or events to differ materially from those expressed or implied by these forward-looking statements include, but are not limited to -- the risks and uncertainties inherent in clinical trials, product development, and commercialization, such as the uncertainty in results, clinical trials, and product candidates; the uncertainty of whether the results of clinical trials will be predictive of results in later stages of product development; the risk of delays or failure to obtain or maintain regulatory approval; risks regarding intellectual property rights in product candidates and the ability to defend and enforce such intellectual property rights; the risk of failure of third parties upon which MediciNova relies to conduct its clinical trials and manufacturers of product candidates to perform as expected; the risk of increased costs and delays due to delays in the commencement, enrollment, completion, or analysis of clinical trials, or significant issues regarding the adequacy of clinical trial results, the execution of clinical trials, and the timing, cost, and design of future clinical trials and research activities; the timing of expected filings and the regulatory authorities; MediciNova's collaborations with third parties; the availability of funds to complete product development plans and MediciNova's ability to raise sufficient capital when needed; and the other risks and uncertainties described in MediciNova's filings with the Securities and Exchange Commission, including its annual report on Form 10-K for the year ended December 31, 2010, and its subsequent periodic reports on Forms 10-Q and 8-K.

Undue reliance should not be placed on these forward-looking statements, which speak only as of the date hereof. MediciNova disclaims any intent or obligation to revise or update these forward-looking statements. And now, a brief commentary from Dr. Yuichi Iwaki, President and CEO of MediciNova.

Thank you, Mark. And thank you, everyone, for joining the call. Today we would like to cover three topics in addition to the financial update, including -- number one, progress on MN-221-CL-007; number two, joint venture with ZMC; number three, progress with ibudilast development. Mike Coffee, Chief Business Officer of MediciNova, will now provide the business presentation.

Thank you, Yui. Our goal today is to review our second-quarter 2011 financial results, discuss our recent developments, and summarize our upcoming milestones. We will also review our current financial status and provide conference call participants with an opportunity to ask questions. Let's start with our first-quarter 2011 -- or second-quarter, I should say, 2011 financial results. For the quarter ending June 30, 2011, MediciNova reported a loss of $4.7 million, or $0.31 a share. There were no revenues for the quarter. Now, R&D expenses were $2 million. The decrease in R&D expenses were due primarily to the completion of the COPD trial, as well as bioavailability trials that were run in 2010; offset by an increase in spending on our ongoing MN-221 clinical trial, due to increased enrollment and a decrease in compensation expense, due to headcount reduction.

The G&A expenses were $1.7 million for the quarter. The decrease in G&A expenses was due primarily to a decrease in stock-based compensation expense, as a result of headcount reduction. That was offset by an increase in professional fees, due primarily to the Chinese JV agreement. At June 30, 2011, we had $11.9 million in cash and cash equivalents, as compared to $25.4 million of cash and cash equivalents in June 30, 2010. Importantly, in addition, at June 30, 2011, we no longer carried any debt -- that's been repaid, or convertible notes -- they have matured, on our consolidated balance sheet.

Let me give you an update on ZMC, our Chinese joint venture. Also of note in the second quarter was the completion of the joint venture agreement with Zhejiang Medicine Company to develop and commercialize MediciNova's MN-221 in China. The completion of the agreement between MNOV and ZMC allows the JV to complete the final process with the Ministry of Commerce of the People's Republic of China. The business development update on MN-166 program -- as previously disclosed, while we have had considerable partnering activity with MN-166, we have not come to terms with partners to date. While we are intent on moving MN-166 to Phase 2b, in either chronic pain or progressive MS, we do want a transaction to be on competitive terms. That hasn't happened yet.

Going forward, we will be pursuing a range of options to achieve our goal of advancing MN-166 to Phase 2b; and that range of options will include a pharma partner, project finance, or MediciNova finance. Let me share with you two key factors that influence us on this. One -- we have had advanced discussions with several well-experienced contract research organizations in risk-sharing collaborations, and the results of those discussions and planning tell us we can bring down the cost of Phase 2b trials considerably. Two -- it's likely that any initial payment from partnering would be -- for running the Phase 2b trial, and as such, not add materially to our balance sheet.

So, given this, we are going to be selective in the route we take to advance MN-166 development. But we will be accountable for achieving our goal of having the resources necessary to advance to a Phase 2b trial by the year-end 2011. Now, let me turn this over to Dr. Kirk Johnson, Chief Scientific Officer of MediciNova, who is in charge of our overall research and development. And he will now comment on our ongoing clinical development programs. Kirk?

Thank you, Mike. And thanks, everyone, for joining the call. First and foremost, I'll spend a couple of minutes on MN-221, as an exacerbation clinical trial. So, this is the ongoing Phase 2 trial -- it continues to progress well with enrollment through the second and current quarter of this year. And we do remain optimistic that the trial will complete enrollment by the end of the year. Now, as we are completing the summer season, which, as we expected, had a bit of a lag in enrollment, we still have had enrollment above what we experienced last year. So, that's positive. And what we are looking at and are planning ahead for already and anticipating is the typical increase in asthma with the fall season. And so, the sites are primed and poised.

We are enrolling, and what we have done is added a few sites that are now coming online. And that will help out for enrollment in the fall season, and with this increased, anticipated exacerbation frequency. So, otherwise, in the MN-221 arena, we are looking ahead to potential Phase 3 design, looking into next year's planning for asthma exacerbation, and also actively considering the next steps in potential COPD development. And that's internally and with collaborators and consultants on the outside. And last, but not least, we do, as always, pay close attention to our IP situation; and so, we have extended some of our IT -- IP portfolio around this program, as well. I think that is a reasonable summary of the MN-221 programs.

What I would like to do is briefly comment on the MN-166 program, sort of following on some of Mike's comments about the business development and where we are at in that program. And as you may recall, this is ibudilast, a neurological drug program. We are pursuing three paths of clinical development and commercial potential that all follow -- or fall under the umbrella of a common pharmacological action and rationale. And so, those areas include drug addiction, which is largely NIDA-sponsored. And we continue to move along well on that front. I'll come back to that in just a minute. The other areas, and the areas of greatest corporate attention and effort, are really in the neuropathic pain and progressive MS areas.

Now, we recently provided a press release on a collaborative trial in medication overuse headache that I can comment on in Q&A, if that's of interest. This does follow -- or fall under the chronic pain area. So, really, it's not a separate, only headache area; it tends to fall under the neuropathic pain and chronic pain area. So, in terms of ongoing trials and upcoming, the only ongoing trial currently in the MN-166 program is the methamphetamine Phase 1b trial, with Dr. Steve Shoptaw and colleagues at UCLA. And this is a crossover 12-patient trial between placebo, a low dose of 40 mg per day and a high dose of 100 mg per day, with overlapping methamphetamine infusion that's actually a trial that extends just over three weeks, is in a controlled in-unit setting, and is investigator-initiated and NIDA-funded trial. And that is enrolling well, and is staying on track with the expectations.

What is pending in the drug addiction area is a follow-on opioid self-administration trial with our collaborator, Dr. Sandy Comer at Columbia. And this protocol is being completed, and the funding is already considered to be in place for that. The medication overuse headache trial that I mentioned and that we shared last week in a press release is really an extension of some prior collaborative work with Professor Paul Rolan, a physician and researcher in Adelaide area who is a specialist in chronic pain, and particularly certain headache indications, including medication overuse headache. And so, that trial is -- has essentially completed all its regulatory and safety reviews, and will be kicking off here soon. In that trial -- that's an investigator-initiated funded trial, we are providing safety, regulatory, some clinical, pharmacological advice. And we have access to safety efficacy data, and to participate in this leading edge of a very interesting and medically high-need area.

So, finally, in terms of the corporate pursuit of neuropathic pain and progressive MS, we are -- have developed programs; and by program, I mean both protocols and CRO plans for the neuropathic pain, as well as [draft] programs for the progressive MS. And really, as Mike mentioned, those are pending some additional funding. And then, in the case of progressive MS, where we built upon the Phase 2 Europe trial that completed at the end of a couple years ago, we are repositioning that for progressive MS, and then executing the intellectual property support around that, as well. So, I think that covers the bulk of our R&D programs. There is lesser efforts going to a couple of the other back-up programs. And I think, with that, I'll turn it back over to Mike to complete some of his discussion. Thank you.

Thanks, Kirk. So, in the second quarter, MediciNova was able to eliminate all of its debt from the balance sheet. On April 1, we negotiated successfully an early prepayment, without penalty, of a venture loan from Oxford Finance Corporation. In addition, using the restricted cash on the balance sheet, MediciNova fully paid out all the outstanding convertible noteholders from the Avigen transaction after the June 18 expiration of the notes. We continue to be on track for 2011, with our operating cash burn to be approximately $16 million. On May 6, we filed for a $15 million at-the-market issuance with the bank McNicoll, Lewis & Vlak. We do not anticipate to raise money at our current valuation, but want to be in a position to potentially raise money after positive news flow by completing our targeted milestones.

In summary, we have accomplished much in the second quarter of 2011, and continue to be optimistic about our upcoming milestones. The milestones for the remainder of 2011 are to complete enrollment of the ongoing MN-221-007 trial, and to obtain resources that will allow our ibudilast program to advance in clinical development for either neuropathic pain or progressive MS, or both. We know you appreciate the shareholder value that will be created with the accomplishment of these goals. We thank you for your continued support, and are committed to rewarding our shareholders with solid accomplishments. With that, let me turn this back to Mark to open it up for Q&A.

Thank you, Mike. Please take this opportunity to ask management any questions you might have. And if you have any further questions after the call, please feel free to reach out to us at any time. Jonathan?

(Operator Instructions) Matt Kaplan, Ladenburg.

Congrats, first of all -- congrats on the progress you made cleaning out the balance sheet during the quarter. That's good news, obviously.

Just wanted to get a little bit more color on 221, MN-221, and the 007 study, specifically. Can you give us a little bit more detail, in terms of where you are in the enrollment study?

I think it was designed to have about 200 patients enrolled, and you say you are on track to complete by year end, enrollment. How far along are you in that process right now?

Well, yes, we are intending to enroll 200 patients, and that's 100 each at a placebo and the active drug treatment arm. Now, we don't routinely update our enrollment numbers. What I can say is that we -- we do project enrolling the necessary patient numbers to conclude this trial by the end of the year.

And that is now based, obviously, on increasing relative or correlative data from looking at, actually, 2 summers and last fall, and the performance as we have been holding against those prior standards. So, we do anticipate an upswing this fall.

And so, proportionately, we are not quite there. But given the September, October, November, December enrollment experiences the last couple of years, we are feeling pretty confident that that's about where we'll be at the end of the year.

All right. And in terms of adding additional sites, how many more sites do you plan to add, I guess, in preparation for the fall asthma studies?

We actually added 3 this summer. And those are now, essentially, all completed; and 2 of the sites are actually starting the screening process. There is still 1 that needs to sort of complete the final training and whatnot. And then, we are looking at potentially another site here that's partly -- more on the West Coast, that's partly through the approval and training process. So, that will be the Southern California site.

Great. Assuming you complete enrollment by year end, or depending on when you complete enrollment, what do you -- how should we think of the time it should take to get a top-line readout on the study?

Right. We worked on that quite a bit recently, and putting a lot of the architecture in place, and the time line. So, we will have -- we do anticipate top-line results in that first quarter, by the end of that first quarter.

It will obviously depend on when we finish enrollment, lock the database. But, in fact, we do anticipate it in the first quarter. So, there will not be a long analysis and data-crunching time frame.

Great. And then, talk a little bit about what your plans are from a business point of view, in terms of -- assuming that the data is positive, what are your plans for the drug in this (inaudible)?

Matt, I think we are going down 2 paths -- 1 is partnering and the other is continuing new development. So, we have had partnering activities underway for a considerable period of time. And there are a number of companies that -- who like this product and are eager to see the data, and have done diligence and are under confidential disclosure. And we continue to maintain discussion with them, and to keep them up to date in the progress, so that once the data -- top-line data is available, that they can move quickly, and if we were to partner, we could do that in a relatively short period of time.

In parallel with that, we look at the fact that there is nobody in this world that knows how to run acute asthma exacerbation trials as well as MediciNova. And we are -- have -- are well set up here to run a Phase 3 program. So, we will look at that.

If the -- all of the elements that are necessary for us to be able to move forward and do that ourselves are there, we will be prepared to do that. So, I would expect we will just continue to run down a parallel path as we move towards the end of the trial, and be able to go in either direction, which we think offers the best potential benefit for our shareholders.

And then, just a couple more questions and I'll jump back in queue. In terms of -- during your prepared remarks, you mentioned Phase 3 design in the acute asthma setting. Can you give us a little bit more color in terms of what your thoughts are, in terms of the Phase 3 design right now? And then, also, in conjunction with that, talk a little bit about the COPD indication too, and what it would take to move that forward.

Sure. Good question. In terms of the Phase 3 design, I think we'll -- as we get closer to that, we'll probably disclose a little more thoughts on that. But really -- and part of what is becoming more and more apparent and is in some ways have -- in many respects, this ongoing Phase 2 trial, has become pivotal in nature.

So, the Phase 3 programs will not change substantially from this Phase 2. What there will be is some opening of inclusion/exclusion criteria. We may be able to shorten some of the -- and sort of lessen the complexity and shorten the duration. But, some of the core aspects of the Phase 3, at least 1 of potentially 2 Phase 3 trials, will be quite similar to the current trial.

And so, that's -- that's, I think, encouraging, that -- because you hope not to change too much in many respects, such that you're -- if it is proof of concept positive, then you are even more confident that Phase 3 outcomes will hold. So, that's the asthma exacerbation.

With the COPD, what we have been doing is working internally and with folks on the outside to really better assess what is the -- the real need in the opportunities in COPD. Is it considering potentially more than 1 administration of this IV infusion? What are some of the varying inclusion and exclusion criteria around this patient population, which does have more comorbidity?

And is there the need or opportunity for sort of a Phase 1b-2a intermediate step, before a major Phase 2 proof of concept trial? So, those -- that's where we're at right now. And I think that we will probably, before long, have more to share on that front.

But it's exciting that there is recognition of the potential in COPD, beyond what we've done already in our Phase 1b trial; and that moving in that direction, pending funding, support, et cetera, will actually broaden the product portfolio -- or the product profile characteristics substantially.

Great. Well, thanks for taking all my questions.

Ed [Arsey], MLV.

I just wanted to get a little bit better sense on the Ibudilast program. I believe you said that you were looking to get some sort of progress on 1 of 3 paths by the end of this year. And I was wondering if you could just discuss a little bit further what your thinking is on each of those? And what do you think the time line is, other than just by end of year?

Okay. Let me do it from the back end. I don't know that I'll give you a better idea on the time line, other than the end of the year. That's about the best I can do for you right now.

But what I can tell you is, that as I mentioned in my prepared remarks, we have done a good bit of work on the design of these Phase 2b trials, and working together in a very collaborative manner with some contract research organizations that have brought the cost of these trials down to a point where our Board and our Management thinks we are going to look seriously at considering doing the trial -- 1 of these trials ourselves, or obtain project financing.

We are going to consider that, in addition to looking at potential pharma partnering. So, it's become attractive enough for us to do that. And to be perfectly honest, the value equation for what we have to put into a trial, versus what we get with completed Phase 2b data, has become pretty compelling for us to consider doing this ourselves.

What I'm telling you is, we are going to go down a path here between now and the end of the year, and we're going to look at continued pharma partnering, we're going to look at project financing, and we're going to look at, depending on our cash resources, are we able to initiate the trial ourselves? And again, the goal is that by the end of the year, we will be -- and have things in place to be able to start that trial early in 2012. And it could be from, as I said, any of these resources.

Okay, great. Thanks for taking my question.

Kim Lee, Global Hunter Securities.

Wondering if you can give us any more color on what the rate of patient enrollment has been in the past few months, since you last updated us on the Q1 call? So, anything would be helpful there.

Yes, sure. I think the -- I think the key point is that the summer was a bit sluggish; and we, I think even on that call, we anticipated that. And at the same time, though, we have been enrolling this summer above and beyond what we did last summer.

And so, if that also holds for this fall, compared to enrollment last fall and early winter, I think we'll be in good shape. I apologize that I can't give you precise numbers. It's just not really our policy; but that's, I think, probably the best way I can describe it.

Okay, great. Thanks.

(Operator Instructions) Matt Kaplan, Ladenburg.

Just a -- 1 quick follow-up with respect to 221. You mentioned some progress on intellectual property -- on the intellectual property front. Could you give us some more color on that?

Yes, we have -- it has not published yet, but we have filed a patent to solidify our exclusivity in the asthma -- acute asthma exacerbation arena. And so, that's -- I mean, it's obvious, but it is, I think, opportunistic, and will ultimately be important, as well.

So, that was 1 of them. And there's another filing that we have made, pertaining to potential additional routes of administration, that has not yet published, as well. So, that's about as much as I can say at this point in time.

Okay. Fair enough. Thanks, guys.

And at this time, I show no further questions in queue. I would like to hand the call back to Mr. Mark Johnson for closing remarks.

Thank you, Jonathan. We hope this call has been helpful to all of you. We truly appreciate all your questions, and hope we have answered them appropriately. If you do have any further questions, please follow up with us at any time. Thank you, everyone, for your participation today, and have a wonderful night.

Ladies and gentlemen, thank you for your participation in today's call. This does conclude the presentation. You may now disconnect. Have a good day.