輝瑞 (PFE) 2007 Q3 法說會逐字稿

Good morning, ladies and gentlemen, and welcome to the Icagen third quarter 2007 earnings conference call.

Today's call is being recorded.

(OPERATOR INSTRUCTIONS)

I would now like to turn this call over to Dr.

Richard Katz, Chief Financial Officer.

Please go ahead, sir.

Okay, thank you very much.

Good morning, everyone, and thank you for joining us today to discuss Icagen's corporate research and clinical progress, as well as our financial results for the third quarter of '07.

With me here today is Kay Wagoner, CEO, as well as Seth Hetherington, SVP, Clinical and Regulatory, here at Icagen.

Kay will begin the call today with a company overview and an update on our research and clinical programs, and then I will review the financial results, and then all of us will be delighted to take your questions.

So before we begin, I'd just like to read the following regarding any forward-looking statements that we may make today.

Various remarks that we may make about the Company's future expectations, plans and prospects constitute forward-looking statements for purposes of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.

Actual results may differ dramatically -- I'm sorry, significantly from these forward-looking statements as a result of various important factors, including those discussed in our most recent quarterly report on Form 10-Q as filed with the SEC.

In addition, any forward-looking statements represent our views only as of today and should not be relied upon as representing our views as of any subsequent date.

While we may elect to update forward-looking statements at some point in the future, we specifically disclaim any obligation to do so, even if our estimates change, and therefore you should not rely on these forward-looking statements as representing our views as of any date subsequent to today.

So with that let me now turn the call over to Kay.

Thanks, Rich.

This has been a very productive quarter for the Icagen team.

As some of you are aware, we announced achievements that demonstrate success in applying our ion channel technologies and our drug discovery capabilities towards potential new treatments for serious pain states as well as for epilepsy.

We've also made progress in our immuno-inflammatory program for Senicapoc, and I'm pleased today to take a moment to describe those three efforts.

In August we announced our global R&D collaboration with Pfizer to discover novel small molecules targeting three sodium channels for the treatment of pain and related disorders.

These ion channels allow the flow of ions -- sodium ions -- into cells, and are key to the generation and transmission of pain signals.

Therefore, compounds that modulate the function of these channels have the potential to be new therapies for pain.

Over the last two years, Icagen has discovered leads and advanced leads targeting these sodium channels.

Some of these leads have demonstrated convincing animal efficacy and promising drug-like properties.

Moreover, during that time the Company has developed a broad patent portfolio of issued and pending patents.

Pfizer recognized the strength of the Icagen sodium channel program which could be brought to a partnership.

This significant collaboration is supported both by $38 million in committed funding over the next two years to Icagen, and, as importantly, by a very strong commitment of Pfizer scientists to our joint effort.

This is a highly integrated, multisite effort by our joint project teams, and even in the short period of time since we announced the partnership, meaningful progress has been made.

Given the strength that both companies, Icagen and Pfizer, can bring to a collaboration, we believe that our combined efforts will accelerate productivity and more rapidly bring multiple compounds into the clinic.

Each of these compounds which becomes a clinical candidate has the potential to generate $359 million to Icagen in preclinical, clinical, regulatory and commercialization milestones.

This collaboration with one of the premier drug companies in the world attests to the strength of Icagen's technology and our excellent science and scientists.

We are also pleased with the progress in advancing our other ion channel programs, including our program to find new treatments for patients suffering from epilepsy.

In September we announced the initiation of a Phase I trial for a novel oral small molecule compound, ICA-105665, which I will generally call ICA-665, which was discovered by Icagen scientists.

This compound is a selective opener of subtypes of KCNQ potassium channels, for which genetic and physiological evidence has validated their role in abnormal neural excitability conditions such as certain seizure disorders and potentially for serious pain disorders such as neuropathic pain.

Preclinical studies conducted by Icagen and a division of the National Institutes of Health have demonstrated there are KCNQ agonists, including ICA-665, have potential utility in a wide range of epilepsy syndromes, including the potential to be effective in patients who continue to have seizures despite their current drug therapies.

Over 2.5 million people in the U.S.

suffer from epilepsy.

Approximately 30% of these people continue to experience seizures despite treatment with available drugs, and many more patients deal with unacceptable side effects to control the numbers of seizures that afflict them.

Therefore, treatment of epilepsy remains an unmet medical need for which a new mechanism of action for therapies is required.

Our technology is particularly applicable in this light, since no marketed drugs in the U.S.

work by selectively opening KCNQ channel subtypes.

In addition to epilepsy, our preclinical studies here at Icagen and at independent laboratories have shown that ICA-665 may have utility in certain pain states.

Therefore, the clinical development opportunity for this compound, as well as for a new series of backups being currently developed at Icagen, represents an outstanding strategic fit and opportunity for our company.

The initial Phase I trial for ICA-665, which is ongoing currently, is a double-blind, placebo-controlled safety, tolerability and pharmacokinetic study in healthy male volunteers receiving single ascending doses.

We expect data from this study to be available during the first quarter of 2008.

At the completion of that study, we will conduct a multiple ascending dose study.

Furthermore, with the assistance of key thought leaders in the field, we are planning our Phase II program for the treatment of epilepsy and expect to initiate one or more clinical trials in the second half of 2008, provided that the Phase I data are supportive.

Now let's turn to our program in inflammatory diseases.

Our leading ion channel target for our inflammatory disease program is KCa 3.1, or IK1.

This potassium channel target is expressed in a number of cell types, particularly in immune system cells and a variety of proliferating cells.

In immune system and proliferating cells KCa 3.1 may be upregulated when cells are activated or in certain disease states.

Our compound ICA-17043, or Senicapoc, which was previously in clinical trials for sickle cell disease, is a potent and selective blocker of this channel.

ICA-17043 has been studied in eight Phase I clinical trials, where it has been generally well tolerated.

And while it was not efficacious in sickle cell disease, for a number of years we and others have demonstrated that blocking this target -- KCa 3.1 -- with compounds such Senicapoc, can reduce inflammatory signals such as T cell proliferation, TNF-alpha levels and swelling in tissues in a variety of in vitro and animal model studies.

We are currently completing additional preclinical studies with Senicapoc in a variety of inflammatory and proliferative disorders and also intend to complete one additional Phase I study to explore higher doses of Senicapoc before moving into Phase II clinical studies in 2008.

The additional preclinical studies will allow us to select an optimized clinical strategy for this immuno-inflammatory disease program, and the additional Phase I data will allow us to clinically test higher doses if we desire to do so.

These are just some of the highlights of our key programs and our ongoing activities.

We will keep you apprised as some of the earlier research programs not discussed today mature to the stage of candidate compound selection.

I'd like to now turn the call over to Rich for the financial overview.

Thanks, Kay.

I'll be focusing my comments today on the results for the third quarter, but I'll be happy to address any issues regarding the year-to-date nine-month results in the Q&A.

Revenues for the third quarter of '07 totaled $12.9 million.

This compared to $2.2 million during the same period in 2006.

The increase in revenues for the third quarter of '07 as compared to the same period in '06 was due to a $10.1 million increase in revenue that resulted from the accelerated recognition of deferred revenue due to the termination of the McNeil collaboration and a $1.5 million increase in revenue due to the Pfizer collaboration.

These amounts were partially offset by decreased cost sharing reimbursement from McNeil with regard to the development of Senicapoc.

As a result of the termination of the McNeil collaboration, we did recognize the entire remaining balance of the deferred revenue, and that was all recognized in the third quarter.

Operating expenses for the third quarter of '07 were $7.7 million, and that compared to $8 million for the same period in '06, representing a decrease of 3%.

The decrease in operating expenses as compared to the same period in '06 was primarily due to decreased R&D expenses related to Senicapoc for sickle cell disease.

Net income for the third quarter of '07 totaled $5.6 million.

This compared to a net loss of $5.5 million during the same period in '06, and the income in the -- the income in 2007 as compared to the net loss in 2006 was primarily due to the accelerated recognition of deferred revenue from the McNeil collaboration, as previously noted.

As a result of the Pfizer collaboration, we're now providing revised financial guidance for 2007 which reflects both the formation of the Pfizer collaboration as well as the termination of the McNeil collaboration.

Due to the formation of the Pfizer collaboration we now expect revenues to be approximately $21 million instead of the previously announced range of $16 million to $17 million.

This revised revenue guidance includes the partial amortization of the $12 million upfront payment from Pfizer, the R&D funding from Pfizer, and the recognition of the entire balance of deferred revenue associated with the McNeil collaboration, which was approximately $12.5 million as of December 31, 2006.

R&D expense is now expected to be in the range of $27 million to $29 million instead of the previously announced range of $24 million to $28 million.

The guidance for R&D expense does reflect a noncash expense of approximately $1.6 million that was associated with the write-down of a capitalized license payment that had been made to Children's Medical Center Corporation in connection with the McNeil collaboration.

Our expectation for G&A expense is unchanged at approximately $5 million to $6 million.

Operating loss is now expected to be in the range of $11 million to $13 million instead of the previously announced range of $11 million to $15 million, and the operating loss guidance does include the noncash revenue and noncash expense associated with the termination of the McNeil collaboration agreement.

I would also note that the guidance includes the effect of stock-based compensation, in accordance with FAS 123R, and for 2007 our expectation for stock-based compensation expense is unchanged at approximately $2.5 million.

So to conclude, I would like to highlight particularly the Company's strong cash position.

We ended the third quarter with approximately $46 million of cash and cash equivalents.

In addition, the Company has available to it an equity put option, exercisable by Icagen, to sell to Pfizer at fair market value at the time of exercise up to 10 million of common stock, subject to certain terms and conditions, during the first 18 months of the collaboration.

We feel comfortable that our existing cash balance together with this equity put option and the ongoing R&D funding that we receive from Pfizer provides the Company with sufficient capital to drive the continued development of our programs through 2008 and well into 2009.

I would note that our programs continue to generate strong interest from major pharma and major biotech companies, but we are in the fortunate position of having sufficient resources to further advance these programs ourselves and of being able to enter into an additional partnership only if it makes good strategic sense to do so.

So with that let me turn the call over to the operator to take your questions.

Thank you.

(OPERATOR INSTRUCTIONS)

We'll go first to Richard Smith, with J.P.

Morgan.

Hi.

Actually this is Mona for Richard.

Just a couple of questions.

So on ICA-665 I understand you're in Phase I, but -- and I know it's a bit early but I wonder if you could maybe speak about what the Phase II trials might look like, what your key experts are saying, what are the sort of typical lengths of these trials, what does the control arm look like and what the endpoint [could be].

Thank you.

Sure.

This is Seth Hetherington.

I'm the head of Clinical and Regulatory here.

I'll give you a couple of just top line outlines for this.

We've been in discussions with a number of experts in the field of epilepsy, and we are discussing more than one type of design.

But it's likely that we'll be looking at more than one dose level for 665 in the Phase II program.

And the endpoints that we'll be looking at are those that are pretty typical for this field -- that is, first of all, a reduction in seizure frequency; secondly, the proportion of patients that become seizure-free; and thirdly, a time to nth seizure analysis.

Any one of those could be the primary outcome for a given trial, and it all depends on the type of design.

You asked about the duration.

These Phase II studies typically run 18 to 24 months.

There may be other ways that we can -- or other strategies we could look at for getting some earlier readouts, but they would not be the kinds of readouts that I've given you as the primary endpoints, which are typical.

I think one of the clarifications is that the time on treatment during those Phase II trials is typically around three months.

Right.

The duration you're speaking to is the time you begin to recruit and then complete the trial and have complete data analysis.

That's exactly right.

That's very helpful.

And then just a question on Senicapoc and your plans to test the higher doses.

Now, in those earlier trials of Senicapoc in the Phase I -- initial Phase I trials, can you just remind me how high you went with the doses and what, if any, safety signals were seen?

Right.

If you'll remember, Senicapoc's been through Phase III trials, and it's been generally very well tolerated.

We've not seen any serious adverse events that we believe are related to Senicapoc.

The dosing levels used in prior clinical trials included a loading dose of 160 mg distributed over four days, followed by daily maintenance doses of 10 mg.

We'll be wanting to go to higher levels in a Phase I trial to give us some flexibility in looking at pharmacodynamic responses in other areas, since that dosing regimen that we previously tested was specific for sickle cell disease patients.

Now, we've tested Senicapoc in a number of normal, healthy volunteers and have not seen any safety signals in that limited population so far.

The Phase III trial, of course, was sickle cell patients, and the kinds of adverse events that you see in that patient population's going to be very, very different from the next population that we'll be studying.

So overall I think we could say it's very well tolerated.

We don't see any new safety signals that we expect to come out of another patient population.

Okay.

Just a point of clarification, actually I was more referring to the initial Phase I trial of how high you went, before you initiated the Phase III (inaudible).

Right.

Those involved single-dose -- single doses in normal volunteers of up to 200 mg.

But the trials for multiple dosing in normal volunteers followed the same sort of dosing pattern that we used in the Phase III trials.

And so, and then can you talk a little bit about what the rationale might be for using higher doses to sort of impact inflammatory indications rather than lower doses?

Right.

Well, again, it depends on localization of the target and distribution of the drug.

And in order to give us flexibility in a Phase II trial for any other indication, we want to be able to study a range of dose levels.

So the rationale is purely to give us this kind of flexibility and to again help us establish a pharmacodynamic response in Phase II.

And I guess it's too early for you to share what sort of inflammatory indications you're thinking about.

Right.

If you look at the literature, there are several areas that have been tested with other IK blockers.

Senicapoc's not been used in these trials.

So the Company is currently conducting some preclinical studies across a number of different areas, and those studies will help guide us in selecting our course of action in the future.

Okay, thanks, Seth.

And I think that we have said before that those studies -- those preclinical studies -- are being done in a number of indications, including asthma, rheumatoid arthritis, transplant studies, as well as atherosclerosis.

(OPERATOR INSTRUCTIONS)

We'll go next to Steven Becker, with Greenway Capital.

You noted -- I think Rich said at the end of his comments that there's strong interest from various partners for other indications.

Can you give a sense of what other indications would be interesting to partners?

Well, they're showing interest in a number of Icagen's programs that I spoke about today.

Certainly companies are interested in our epilepsy program, which also has potential applications for neuropathic pain.

In the Senicapoc immuno-inflammatory area, there's interest in asthma, rheumatoid arthritis, atherosclerosis, primarily.

Terrific.

Thank you very much.

And it appears we have no further questions at this time.

I'd like to turn the call back over to our speakers for any additional or closing remarks.

Sure.

Operator, why don't we -- sometimes people think of a question, so why don't we give people a minute more, and if there's no further questions we'll close it out at that time.

And it appears we still have no questions at this time.

Okay.

Well, thank you all very much for joining us.

We appreciate your taking the time this morning, and we look forward to updating you again next quarter.

Thanks very much.

And once again that does conclude today's call.

We do appreciate your participation.

You may disconnect at this time.