Oruka Therapeutics Inc (ORKA) 2002 Q1 法說會逐字稿

Good afternoon and welcome ladies and gentlemen for the Hyseq Pharmaceuticals First Quarter Financial Results. At this time I would like to inform you that this conference is being recorded for rebroadcast and all participants are in the listen only mode. This rebroadcast will be available beginning today April 25 and closing on May 9. The number will be 1800-428-6051 with the availability number is 239398. At the request of the company we will open the conference for questions and answers after the presentation. I would now turn the conference over to Mr. Peter Garcia, Senior Vice President and Chief Financial Officer. Please go ahead sir.

Thank you . Welcome to all and thank you for participating in our call today. Before we get started I like to take a moment to read our safe harbor statement. Statements contained in this conference call including our outlook for 2002 and beyond which are not historical in nature are intended to be and hereby identified as forward-looking statement for purposes of the safe harbor provided by the Private Securities Litigation Act of 1995. Forward-looking statements may be identified by words such as ``believe``, ``expect``, ``anticipate``, ``should``, ``may``, ``estimate``,``goals, and ``'potential, `` among others. Such statements are based on our management's current expectations and involve risks and uncertainties. Actual results and performance could differ materially from those projected in the forward-looking statements as a result of many factors, including, without limitation, uncertainties relating to unanticipated difficulties and delays relating to gene identification, drug discovery, and clinical development processes, changes in relationships with strategic partners and dependence upon strategic partners for the performance of critical activities under collaborative agreements, the impact of competitive products and technological changes, uncertainties relating to our patent protection and regulatory approval, and uncertainties relating to our ability to obtain substantial additional funds required for progress in drug discovery and development. These and other factors are identified and described in more detail in our periodic reports filed from time to time with the SEC, including without limitation our Annual Report on Form 10-K for the year ended December 31, 2001. We disclaim any intent or obligation to update these forward-looking statements.

Excuse me. Today we will be hearing from Dr. Ted Love our President and Chief Executive Officer. In addition standing by to answer questions at the end of call our Chairman Dr. George Rathmann, our General Counsel Dr. Li-Hsien Rin-Laures, our Vice President of Research Dr. Walter Funk, and our Senior Director of Product Development . At this point I would like to turn the call over to Dr. Ted Love. Ted.

Thanks Peter. Welcome and thanks to you all for attending today's conference call. Today we would like to discuss highlights from our first quarter, as well as up coming milestones and progress for the year 2002. In terms of the highlights, two major things I want to talk about, one is our collaboration with Amgen.

That focuses on our lead product alfimeprase, which is a very exciting new thrombolytic that we are co-developing with Amgen for the treatment of peripheral vascular disease. The drug has a novel mechanism of action, which we think makes it particularly exciting. It has a large market, which is currently under , which represents approximately 500 million dollars per year in the US alone.

That 's based on the fact that there is approximately 100,000 patients per year in the US who present to the hospital with acute peripheral arterial occlusion, a clot in the arteries of the leg. There are also about 600,000 people per year who present to the hospital with clots in the veins in their legs, known as deep venous thrombosis and we think that this drug will be an ideal treatment for both of those areas in addition to something known as catheter occlusion. The unique mechanism of action that we get excited about relates to the fact that the drug, unlike any other drug in this category directly degrades fibrin, which gives its the capacity to be more effective than any of the other drugs as degrading fibrin and lysing blood clot.

The other thing, which is also quite interesting, is that the drug is inactivated systemically, therefore it is only active locally when it comes out of the clot, uh.... comes out the catheter in the side of the clot. But by being inactivated systemically you avoid these systemic toxicity that limit the use of all these drugs currently in this indication. Also to bottom line the safety mechanism provides the drug, which will help not only an improved safety profile, but also an improved profile, which is a unique combination in these. Lastly I will point out that the drugs in this category have an unusually high rate of developments itself. And that's one of that attracted us to it. In fact, a majority of thrombolytic every infant at the clinic have in fact resulted in marketed approved product and we think that will likely be the scenario for this drug as well. In terms of the relationship we think it is a bit of a design to leverage Amgen strength and Hyseq strength.

Amgen will continue to lead the manufacturing of the compound, Hyseq will lead to clinical development based upon the people here who have been involved with the development of thrombolytic such as TPA and intact. Lastly Amgen and Hyseq will jointly market the product as we have already shared in the past. COX and Archids will be shared as well and lastly I will simply point that Amgen is obviously a world class partner and has been fully reported and committed through our joint to get this molecule to the clinical as rapidly as possible.

One other issue is to briefly announcement of a collaboration with the company called Genetastix that represents an outfit to get access to human antibody, our production and facilitator all first to get human antibody to the substantial number of Hyseq antigens that we have identified.

And with that I will turn the call back over to Pete for some discussion on our financials.

Thank you Ted. Today we reported our Q1, 2002 financial results and I refer you to our press release. At the end of the press release the financial result identifies.. I also like to take few minutes just to identify the major highlights that are in that press release.

Our statement of operations our revenues in Q1 of this year were 5.2 million dollar that compares to 5.7 million dollar for the same period in 2001. I would like to remind you that most of the revenue is from work recognized and completed for our BASF collaboration. In addition, our expenses for the quarter were 24 million dollar, which compares to 12 million dollar for the same period of 2001. Of the 24 million dollar, 10 million dollar was related to a non-cash charge for the issuance of 1 to our collaborative partner Amgen. Without this non-cash IMR expenses would have been 14 million dollar, which approximately increase of 2 million dollar over the prior year of the same period.

This primarily resulted increase expenses in R&D for both internal efforts and our collaborators in our facilities. For the first quarter 2002, we reported a net loss of 19 million dollar or 1 dollar and 1 cent per share. However excluding the one time non-cash charge, our pro forma net loss is 9 million dollars or 48 cents per share. This compares to a net loss of 6.7 million or 49 cents per share for the same period of 2001.

Turning to our balance sheet, our cash balance at the end of March 31 was 6.5 million that compares to 12.3 million at the end of December 2001. As we announced on April 9th, we completed a 15 million dollar private placements. That was obviously an effort to build upon the August private placement or pipeline that we did in 2001. It included many of those same investors. It also included many new Biotech institutional investors.

Our reported 6 million dollars in cash does not include the recently raised 15 million dollars. With our previous cash balance, our recent financing and our line of credit available from . We have enough cash to get us through Q1, 2003. We are managing our finances carefully. We are looking at the ways, non-diluted ways to bring cash into the company and are also looking at ways to reduce our burn rate without compromising the key corporate roles that Ted will update us on.

We remain opportunistic about the prospect of raising additional capital. For example we anticipate raising additional capital this year based upon expected completion of our alfimeprase Phase I trial by year end and enter it into Phase II early next year.

Turning to our corporate communications and investor relation's area, high features committed to providing quality and investor communications. Based upon the progress that we made over the past year, we feel this is an appropriate time to increase high-field visibility. I am pleased to announce that we have hired Nicole Estrin. She will assist in our efforts as our manager of corporate communications and investor relations.

Aside from bringing an energetic and healthy attitude to the job, Nicole brings over 5 years of experience in public and investor relations including biotech industry experienced with and GCI group. To contact in phone, to reach her by phone 8440-8746-4572 or Email at nestrin@Hyseq.com.

Before I turn the call back over to Ted, I would like to respond publicly to the numerous questions we received over the past month from investors about the company and specifically the stock price. Obviously, if you look at the stock prices, the scorecard or report cards we are disappointed. But we are convinced that the current market value of the company does not reflect the progress we have made over the past 12 months and the recent decline in our stock price is the result of the current market conditions in general as opposed to any, being related to the company. Unfortunately, many recent negative announcements from the other Biotech companies have weighed heavily on the entire sector.

As of today the NASDAQ, Biotech index is at 52 weeks low. Likewise many of our peers are trading average near 52-weeks low . By focusing on high speed we continue to remain optimistic about our future and look forward to commencing our first group of trial this quarters and expect to continue it in the corporate calls, which I will now turn over to Ted to discuss. Ted.

Thanks Pete.

Looking to the progress that we made and beyond, I would like to specifically talk about 7 things. One is progress with , number 2, general progress on the research front, number three, our patent successes, number four, up coming deals and collaboration, number five, our strategy for the future and finally therefore a few housekeeping that I would like to finish on.

In terms of the , we have made substantial progress actually signing the deal on January 8 with Amgen, the owner ship of the R&D has been successfully transferred from Amgen to high seek and we are now leading all the FDA interactions around the molecule.

We have identified a number of clinical site to initiate Phase I study, clinical drug has been completely and ready and for shipment. We have identified an outstanding clinical investigator who will lead the effort as clinical investigator and that is Dr. Kim who is the head of vascular surgery at the clinic and a leader in the field of peripheral arterial disease.

We are fully expecting to be able to meet the previous cycle in enrolling our first patient in the first half of this year. In terms of the actual product itself, it is a healthy program, which is designed to address, but we think it is the major risk that is the Phase administration in human.

It will uh.. uh... at the careful type 1 study, we will obviously position out to move into a Phase I program where we will begin to examine efficacy. And the goal here would be to complete the Phase I program by the end of the year and initiate the Phase II program in North America and Europe in early 2003. The focus and expertise of the management team should enable Hyseq to develop alfimeprase as rapidly and as effectively as anyone given our previous experience in developing a fibrinolytic agent.

Now turning to our research updates, we can turn to make progress, but the prior to our gene collection and the development of the potential growth candidates, we think that we are certainly still early. We have identified a number of preclinical candidates in the areas such as cancer, bone marrow transplantation, and a variety of other indications. In terms of our collaborations with our three major partners, they are going quite well with Kirin, Deltagen, and Aurora, specifically with Kirin we have currently identified 13 genes that are approved and are on schedule to get the 50 genes into their mouse knock-in model before year-end.

Two of these genes are already in mouse in real and have possibly acquired these in immune cell regulation and supporting to cell proliferation. On the patent front, we will continue to deal up on, what we know would be a shirk of patent ultimately. We now have 7 tissue patents and 10 more allowed patents and are on track to meet our goals of 25t issue patents on our human genes by year-end. In terms of deals and collaborations, we are working on a number of revenue generating deals and collaborations, and other strategic alliances, which obviously are not appropriate to announce at this point. We will continue to also look into the benefits of potentially enlightening additional products. We think, all of these goals above support what we said before and that is after transition from being a two company to a fully integrated Biopharmaceutical concern.

In terms of the two house-keeping issues, one is related to this call, because we have made our milestones by ultimately occurring outside the quarterly schedule, we are going to adjust our conference call schedules conducting calls periodically around major news events from milestones and holding them at the end of the year.. holding one at the end of the year, rather than having one on a quarterly basis. So there now will be one at the end of the year and additional calls held around then. Lastly, in spite of our annual meeting due to scheduling conflicts our annual shareholder meeting will be moved from Wednesday May 29th to Tuesday August 6th at one at 11:00 AM Pacific time at our offices, which is 675, Almanor Avenues, Sunnyvale, California. This completes our prepared remarks. Hyseq management team is here and we will be happy to entertain any questions.

Thank you. The question and answer session will begin now. If you are using a speakerphone, please put up your hands before pressing any numbers. If you have a question please press 1 followed by 4 on your push button phone. If you wish to withdraw your question, please press 1 followed by 3. Your questions will be taken in the orders received. Please standby for your first question.

Once again ladies and gentlemen, if you have a question please press 1 followed by 4 at this time.

Our first question comes from John . Please state your question.

Good afternoon Ted. And Peter, how are you?

Very good.

Hai John

Maybe you could this for me Ted. Could you maybe put this drug in the context and what would be the competitive landscape out there currently?

Well, the prior dominant drug in the treatment of peripheral arterial occlusion with a drug of Abbokinase, which is zero Kinase manufactured by Apex. That drug was on the market and was actually well liked for the treatment for PAO, but they have some limitations. It was removed from the market in 1998 due to some ENT manufacturing concerns.

Well, the prior dominant drug in the treatment of peripheral arterial occlusion with a drug of Abbokinase, which is zero Kinase manufactured by Apex. That drug was on the market and was actually well liked for the treatment for PAO, but they have some limitations. It was removed from the market in 1998 due to some ENT manufacturing concerns. But that year while it was in the market, it actually ended up selling more than selling more than 200 million dollars in a favorable year in the indication of PAO and I should mention that all of this was of . It was never approved for these indications.

Our drawback contracts, number one will be approved by the indication and benefit of promoting that indication. Number two, is dramatically we are talking one half to one four of magnitude more affective that rapidly needs than the drug like our kinase basis on the animal studies that we have done. Lastly, Urokinase and all the Plasminogen activators act through conversion of Plasminogen plasmin and plasmin is a aphylic mixed with enzyme that circulates and does a great deal of damage cell to other clotting factors and other clots. It might be really therapeutic or helps the patient at the point.

So, although this drug results in systemic bleeding and haemorrhage. By contact this drug is very rapidly inactivated by optima globulin. It actually never sees the specific circulation and putting all this in the context the differences would be that we expect to have in an approval, we expect based on the entomology and all the animal data have addressed that it is both affective more affective and based on any other drug in this indication.

Interesting, will you be able to elucidate or work with FDA on that mechanics of action having the systemic effects so that give you broader label?

Well, I think that the label will probably revolve primarily around what you demonstrate in the clinic. I mean that is the way it traditionally works. But I think if we were to forecast ahead, what we would expect is that this animal data should track into medical clinical aspect and that is clinical aspect that we are rapidly able to and effectively every patient that is present. That really is the only expectation of these drugs. In addition due to the cyclic profile, I think we will able to generate a Phase III database, which dramatically exceeds what you see with the other drug. All of that would in the label and if again will again be based up the clinical data that we generate during the year to process that.

One last our potential market opportunity, what would we consider when we guess this might have in the market with this type of profile?

We conservatively estimated that the markets in the US would be in the range of 500 million dollars per year and the only thing that I would ask is that there is another fairly substantial market that we have not talked about our catheter plan and that relates to the proportion of patients, a large proportion of patients who are on prolonged in fusion such as chemotherapy who have catheters implanted subcutaneously. Those catheters can occasionally clot off and the options there is to replace them surgically while trying to remove the clot by administration of a drug of this category.

Again Abbokinase was approved actually for this indication and in the last year in the market they were tracking approximately 100 million dollars in that indication. So actually if you take the PAO market, the capital clearance market and even minimum attributable penetration into the deep venous thrombosis market. It began to get fairly impressive numbers in the range of more than 500 million dollars for the year in the US alone.

Excellent. Thanks for that answer, Ted.

As a final remainder, Ladies and Gentleman if you have question please press one followed by four a this time. We have another question from John , please state you question, sir.

Quick question to you guys, on you partnership with the , is that the correct pronunciation? What is the turn around time for these guys on you delivering an antigen and then being able to show you that they can deliver this ultra monoclonal bacteria.

I think you are referring to our collaboration with Genetastix, which relates to the.....

Okay yes sorry Ted.

Is it about it, Okay. Walter may want to give you some inside on that.

The turn around is actually very quick there, technology is based on a molecular identification of a single chain human antibody from the library. We have indications from Genetastix that the turn around is relatively treating within the very few number of months. We don't have an exact date on that, but we expect within the next short few months to actually getting reagents back from that arrangement.

And what are we looking at currently from the organics at is that more of six months, what are we looking at for their turn around?

They are generally animal based model of producing humanized antibody or human antibody, the turn around on those are generally, I don't want to speak for those companies but generally they are of much longer duration typically in the range of 6 to 12 months.

Okay, now I just wanted to kind of get some , is part of that because you are working with single chain here and you are not actually going in animals.

Yeah, because the single chain in particular for Genetastix. It is not based on any animal model work. It is based entirely yeast hybrid work.

Excellent. Thank you Walter.

If there are no further questions I would turn the conference back to Dr Ted Love, President and CEO to conclude.

We will remain on line to give a couple moments to give people questions if there are, but I think 2 more minutes for questions.

Sure. We have a question from Gren . Please state your question, Sir.

Hai, Ted I am with UBS Warburg.

If all goes well with your lead compound, then you go on to the clinic and complete your trials and start your Phase II early next year, what kind of time frame are we looking at to you, potentially getting that through the clinical process into the market?

Our goal is to get the MDA submitted by the 2005, which is a pretty aggressive goal but it is not unrelated based upon what we have been able to do with drugs of this type. We will be developing them at Amgen and . It is an aggressive down line but it is one that we think we can get down and that will get a 10 MDA by 2005 and hopefully the potential revenue by 2006.

Okay. Thank you very much.

Ladies and Gentlemen if you have a question please press one followed by four at this time. Currently we appear to have no further questions.

Okay. I will be happy wrap up then. Just in wrapping up, I want to thank all of the people on call for tuning in and for your continuous support of the Hyseq pharmaceuticals. I want to assure you all that we are very aware of the difficult climate out there and we are very focused on that as you can tell in this call, giving alternate Phase approved in a highly efficient and rapid manner so that we can begin to get a revenues stream for the company that is sustainable.

We also want to stress the fact that there is a very senior and experienced management in the company here, which is considering all the things that we need to consider in order to ensure the company's success in the long run. We look forward for you to join the future conference call as we said on an annual basis in terms of schedule but also on a periodic basis as and when events occur finally I want to thank you again for you support and look forward our success together at Hyseq pharmaceuticals.

Ladies and Gentleman, should you wish to access this rebroadcast, it will be available at 1800-428-6051with the pin number 239398. That concludes the conference for today. Thank you all for participating and have a nice day. All parties may disconnect now.