Oruka Therapeutics Inc (ORKA) 2008 Q1 法說會逐字稿

Good afternoon. My name is Jason and I'll be your conference operator today. At this time, I would like to welcome everyone to the Nuvelo Q1 '08 financial results conference call hosted by Nuvelo Chairman and CEO, Dr. Ted W. Love, and Senior Vice President and CFO, Lee Bendekgey.

All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. (OPERATOR INSTRUCTIONS).

I would now like to turn the call over to Ms. Danielle Bertrand.

Presentations by Nuvelo management on this conference call and webcast will include statements regarding our anticipated financial results and operating use of cash in fiscal year 2008. The timing progress of Nuvelo's clinical stage and research programs, the potential benefits that patients may experience in the use of our clinical stage compounds, and the expenses, revenues and potential for profits and sales of any drug products developing from such programs, which statements are hereby identified as forward-looking statements for purposes of the Safe Harbor provided by the Private Securities Litigation Reform Act of 1995.

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 drug discoveries, clinical development processes, risks relating to regulatory approval, enrollment rates for patients in our clinical trials, changes in relationship with strategic partners and dependence upon strategic partners for the performance of critical activities under collaborative agreements, stock market conditions, the impact of competitive products and technological changes and uncertainties relating to our ability to obtain funding.

These and other factors are identified and described in more detail in Nuvelo's filings with the SEC, including without limitation, Nuvelo's Annual Report on Form 10K for the year ended December 31st, 2007, and subsequent filings. We disclaim any intent or obligation to update these forward-looking statements.

I'll now turn the call over to Dr. Ted Love.

Thank you, Danielle, and thank you, all, for joining us this afternoon to review Nuvelo's first quarter financial results and an updated outlook for 2008.

With me today is Lee Bendekgey, our Senior Vice President and Chief Financial Officer. I will begin today's presentations with an update on our strategy, including a discussion of the progress we've made in our clinical programs. Lee will then provide an overview of our first quarter 2008 financial results.

For those of you who dialed into the conference call, please note that we are hosting a virtual slide presentation for today's call, which can be accessed via webcast from our website.

First, I want to describe our strategy for building shareholder value going forward. It's a four-prong strategy and the first element of the strategy is to aggressively advance our pipeline and R&D programs. We've already announced, and I will be describing, completion of our Phase I proof-of-concept with 172 and our strategy to get into a Phase II program as quickly as possible toward the end of this year or the beginning of 2009.

We've also announced a strategy to accelerate the development of NU206 through a program expansion and I'll just grab that today.

And finally, we're also focused very much on expanding additional candidates through our Leukemia Antibody and Wnt Therapeutics research programs.

The second part of our strategy involves leveraging partnership opportunities with a focus on accelerating our research and development and also enhancing our financial strength.

As you know, we are focused moving NU172 forward and similar to what we did with our Alfimeprase, once we get that program to a stage where it would be appropriate to partner, that would certainly be a consideration.

And we've also had a variety of discussions potentially about research partnerships, so we can't comment on specifics, but those are opportunities that are real in terms of partnership opportunities.

Thirdly, in terms of the strategy, we focused on potentially analyzing a candidate and we recognize the challenge, but we've worked very hard to look at opportunities which are in the cardiovascular space which are programs that would advance the clinical state of the Company. We're focused on trying to analyze something that we have a high degree of confidence will actually work and successful be approved based on the data available.

So we recognize that that's a high bar, but that's really the bar that we've been focused on in terms of analysis, and we hope that at some point, we will have something to announce, although we can't obviously make promises.

The fourth and last stage of this strategy is to maintain our financial strength and it obviously begins with judicious use of our capital resources, and as you know, and we'll describe, we have two years of cash on hand today and we're trying to make sure that we manage that cash and manage the business to maintain this financial strength.

So now turning to the first clinical program I want to talk about, NU172, the first point really is that it is targeting a major medical problem that we think we may be able to do something very important for. So to set the stage, we really are focused on a specific element of anticoagulaton; that is the anticoagulaton that is required in-hospital and a clinic when you're trying to do a medical procedure.

This is very large body of patients. If you just look at coronary artery bypass surgery and percutaneous coronary interventions, you're talking about 450,000 cabbage patients and about 1.2 million PCI patients. So this is a large opportunity that goes even beyond these two populations.

The standard of care has not advanced in my career as a physician. Today, we still continue to use Heparin to provide the anticoagulaton, followed by protamine to reverse that anticoagulaton, and we know that this is a regimen which has certain side effects and certain limitations. So we think that if we can make a dent here, it is really an important thing in terms of medical therapy.

We've thought significantly about the ideal profile for a drug and we tried to describe what that profile is. In terms of the administration, you'd expect a drug to be predictable; that is, you know how much you can give to a patient based on their weight to achieve the target effect. You'd like a drug that has almost immediate onset, so that you can immediately begin the procedure upon its administration. And you'd like for the drug to rapidly wear off without requiring an antidote for reversal.

On the safety side, in addition to the drug being safe itself, we'd like a therapy which introduces less risk of bleeding than the current approach, both less risk of bleeding during the surgical procedure, but also following the procedure.

Obviously, we'd like to avoid the thrombocytopenia that is common with Heparin and we'd like a synthetically available product to get around issues of any kind of -- obviously, a synthetic product would be a cleaner product.

On the efficacy side, we'd like a product which is potent, something that is active against thrombin, whether it's clot-bound or free, and specifically, for bypass surgery, we'd like a drug that works when the blood is static.

So turning now to what do we now about 172 and how did it match up with that ideal profile? Well, we know that 172 is a direct-acting thrombin inhibitor. We know exactly how it interacts with thrombin on the [XO-52] domain, so it's a validated target that we have confidence will produce an anticoagulant effect.

In terms of where it might be used, as I mentioned, we see ideal indications as being cabbage and other cardiovascular procedures, as well as percutaneous coronary interventions.

And the profile that we think we're demonstrating with Alfimeprase, which I'll come back with NU172, which I'll come back to, is a predictable anticoagulant effect, rapid onset and offset of anticoagulant activity. We think it could be a product, obviously, that does not require an antidote, but also may not require use of antifibrinolytics which are often used in the setting of bypass surgery to reduce bleeding.

And obviously, we would be looking to avoid the thrombocytopenia that's often seen, as I mentioned, in the setting of administration of Heparin.

So we've announced completion of Phase I proof-of-concept study. I really want to take a minute to emphasize why this is not your typical Phase I study. It's important to recognize that the anticoagulation being applied to these patients in these settings is not being given to cure a problem. It's simply being given to induce a pharmacodynamic state of preventing the blood from clotting when it's in the setting in the bypass surgery of a circuit, a bypass circuit device.

So this Phase I study really gives us an assessment of the drug's capacity to create that pharmacodynamic state. So in this Phase I study, the primary end point was safety and tolerability and the pharmacokinetics of the very typical end points for a Phase I.

We started in healthy volunteers, 30 patients total divided into six cohorts, as you can see on this slide, ranging from a dose of .2 mgs per kg all the way up to a final dose of 2 milligrams per kilogram.

So what did we see? Well, in summary, we saw a very nice safety profile. There were no serious adverse events seen at all during this trial, and on the efficacy side, we saw exactly what we'd like to see, specifically, at the highest does of 2 milligrams per kilogram, we achieved an average ACT of 450 seconds, which is exactly in the range that you'd like to be for bypass surgery of 400 to 450 seconds.

We also saw a rapid return to normal baseline for clotting measurement upon simple discontinuation of the drug, and we saw a calculated plasma half-life of approximately 10 minutes.

So now going to the next slide and looking at some of the actual data, you can see that again, at the highest dose of 2 mgs per kg, the patient had ACTs north of 430 seconds -- 400 seconds, an average of 415 seconds. You can see at the lower doses that there was a proportional lower amount of drug in those individuals. So the drug was well behaved from a pharmacokinetic perspective.

You also note that there is a rapid return of baseline as measured by the ACT upon discontinuation of the product. So it really did have all of the PK, as well as the pharmacodynamics that we wanted to see in the ideal drug.

So what's our strategy to move forward? We're trying to be very aggressive in moving forward very rapidly. Our plan now is to begin a Phase I beef study, where we'll continue to obviously look at safety and tolerability of the drug, as well as the PKPD in the setting of now [Ebolas] followed by a prolonged infusion in healthy volunteers.

We expect to begin this trial shortly and actually have data available from this trial in the third quarter of this year.

As I mentioned, this will be a [Ebolas] infusion and the infusion will last up to four hours. The intent here really is to give the drug in the same setting that we would expect to give in the setting of coronary artery bypass surgery.

Then ultimately, toward the end of this year or the beginning of next year, we expect to initiate enrollment in the setting of coronary artery bypass surgery, so it's a very aggressive strategy, but an appropriate strategy, with a compound that has the predictable profile that we think we're identifying with this compound.

I'd now like to shift gears and talk to you about our second clinical compound and that is NU206, but to introduce NU206, I want to first talk about the Wnt Therapeutic program in general and the Wnt pathway.

The Wnt pathway, we know, is a very important pathway in cellular growth and development. It's particularly important in the GI tract and in bone. And this pathway, essentially as we've shown in this slide, has a way of being stimulated, as well as a way of being turned off spontaneously. And that's how you get the regulation of stimulation of growth of epithelial cells or bone when it's required and turning that down when it's no longer required.

The advantages that we've been able to establish as a Company in the Wnt pathway is that we're one of the first companies to begin to work on this pathway. We've assembled a significant amount of eternal know-how, as well as intellectual property in the pathway. We think it will be a pathway where we'll be able to identify multiple drugs over time, and we're not the only company that feels that way.

We are somewhat unique in that we're a company that already has a lead candidate, which we are moving into clinical trials, NU206. I want to now switch over to NU206.

NU206 has a mechanism of action that we've elucidated. It works by stimulating the Wnt pathway, thereby up-regulating beta-catenin, which generates intracellular signaling and cell replication of epithelial cells and bone cells.

We've also focused with NU206 on potentially looking at the product in upper and lower-GI tract disorders. That would include inflammatory bowel disorder, as well as mucositis due to chemo or radiation therapy in the setting of cancer.

Some of the characteristics that we're particularly excited about with NU206 include that it's a repair agent for the GI tract and potentially bone. That would make it a complementary agent in the setting of IBD, where most of our efforts today are focused on anti-inflammatory agents. So this will provide a potential of having a drug that stimulates repair, while the other drugs are focused on essentially slowing down the proliferative process, the inflammatory proliferative process that's going on.

We are also very happy to say that we observed no tumor proliferative properties, despite many efforts to look. We've looked for those kinds of concerns, both in vitro and in vivo, and have seen no activity, again, despite a great deal of effort to look for that. So we're very excited about its potential.

I'll show you a little bit of data. Now we're looking at a slide where there are essentially two models, both in the mouse where we are first looking at a model of IBD and then finally, a model of mucositis. So if you look at the panel on the left, and the picture at the top left, you can see this is a mouse that has experienced a knockout of the IL-10 gene and then has been fed certain agents which do damage in the GI tract.

And you can see the remarkable damage that's been done with disruption of not only the epithelial layer, but the sub-epithelial layer, with massive infiltration of inflammatory cells.

Below that, you can see an animal that was treated the exact same way in terms of the IL-10 knockout, was also given the same toxin, but you see remarkable preservation of the epithelium and essentially, no inflammatory cells present at all, so really a remarkable result with simply the addition of NU206 in this model.

Looking to the panel on the right, you can see another model again. In this model, we are giving massive doses of radiation to the head of these animals, which induces ulcers in the oral cavity or in the mouth, and you can see again, with increasing doses of NU206, we're able to provide substantial protection against the development of ulcers.

So both evidence in the upper and lower-GI tract of activity and suggest the potential use in mucositis, as well as potentially IBD.

Now I'm switching a little bit to the strategy and where we are. To be very frank, we've had a number of discussions with the FDA about how to move this forward and we've started off in the -- we've started in the oncology division and moved very much into what is typical for that division into patients who had cancer. Specifically, we've been looking at patients who have had previous episodes of mucositis and we've anticipated this trial might not roll as fast as we would like.

It's fairly typical that these trials are slow, so we've come up with an alternative strategy that we're implementing. That would be a strategy which -- we involve going ex-U.S. and doing a single dose of ascending trial, again, in about 50 volunteers looking at how we see the pharmacokinetics and tolerability of the drug where we think that this strategy gives us a way to accelerate doing what we ultimately want to do, which is get into patients either with inflammatory bowel disorder or patients with mucositis that we can either correct or prevent.

That completes my opening remarks. I'd now like to turn the call over to Lee for the financial update.

Thanks, Ted. I'd now like to spend a few minutes with you reviewing our first quarter 2008 financial results and providing you with additional insight into what to expect for the balance of the year.

As we announced today, net cash used in operating activities for the first quarter of 2008 was $16.4 million. Operating expenses for the quarter were 19.5 million. Included in that total is $4 million in one-time expenses, consisting of a $2.5 million restructuring charge and $1.5 million in facility exit charges.

Our net loss for the quarter was $18.4 million again, including the same $4 million in one-time charges that I just discussed.

To put the cash use and the operating expenses into context, it's important to remember that Q1 was, even before we announced our restructuring, always intended to be the quarter in which we had the highest expenses and the largest cash consumption. And the reason for that was that this was the quarter in which we, under any circumstance, were going to have the greatest clinical development activity.

We had two Phase II trials ongoing in Q1, along with the NU172 trial which we began and completed, as well as the initial expenses associated with the NU206 mucositis trials.

In addition, in the quarter, we -- at the very end of the quarter, we announced our restructuring. So we didn't get the benefits of the restructuring, but we did see the expenses, as well as some of the associated cash burn.

With this in mind, and keeping in mind that we are reiterating our full year guidance, you can expect that for the remaining three quarters, both operating expenses and our net use of cash will decline rather significantly.

Turning now to our balance sheet, as we announced today, we ended the quarter with cash, cash equivalents, marketable securities and restricted cash totaling $87.2 million.

We are continuing to manage our resources very carefully, as evidenced by the restructuring and accordingly, we are reiterating our financial guidance, which is for the full year to have net cash used in operating expenses -- operating activities, a range from 43 million to 48 million and our total operating expenses, including the $4 million of one-time charges I just described, range from 47 million to 52 million.

On this go-forward expense rate and cash burn, this means that we have comfortably two years of cash on hand as of the beginning of this quarter.

At this point, I'll turn it -- turn the call back over to Ted, who will walk you through our upcoming milestones.

Thank you, Lee. I'd like to end, as we said, by walking through the upcoming milestones. So starting with NU172, we're very pleased that we've already announced very exciting data in terms of proof-of-concept in Phase I with NU172. we are now very focused on getting a second Phase I trial done with [Ebolas] and a four-hour infusion done, so that we can get that data to you in the third quarter of this year.

And ultimately, with 172, we're focused on getting our cabbage study started toward the end of this year or the beginning of next year.

In terms of NU206, we are very focused right now on getting this initial mucositis study started and equally important, if not more importantly, getting a Phase I ex-U.S. trial going that we think we can complete more rapidly to support getting into a Phase II program.

And then finally, in terms of research, as I mentioned, we continue to make good progress in our research, both in Wnt Therapeutics, as well as Leukemia Therapeutic Antibodies, and we expect to identify at least one candidate from one of these programs before year end.

At Nuvelo, achieving our milestones is really a big priority for us. We look forward to aggressively moving our pipeline, looking at partnership opportunities, looking at end-licensing opportunities to expand our pipeline and maintaining our strong financial position.

We look forward to reporting our progress to all of you over the year as we continue to do this.

Operator, can you please poll for questions?

(OPERATOR INSTRUCTIONS). There are currently no questions. Dr. Love, do you have any further remarks?

I'll just end by thanking everyone for joining us today and we look forward to following up with many of you individually as we travel and do other calls. Thank you again.

That concludes this afternoon's teleconference. You may now disconnect.