輝瑞 (PFE) 2007 Q4 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Q4 2007 Icagen earnings conference call.

My name is Lisa, and I will be your coordinator for today.

At this time, all participants are in a listen-only mode.

We will be facilitating a question and answer session towards the end of this conference.

(OPERATOR INSTRUCTIONS)

I would now like to turn the presentation over to your host for today's call, Mr.

Richard Katz, Chief Financial Officer.

Please proceed, sir.

Thank you.

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 fourth quarter of 2007 and for the full year.

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

Kay will begin the call today with a company overview and an update on our research and clinical programs.

Then I'll be reviewing the financial results and following that, all of us will be available to take your questions.

Before we begin, I would just like to read the following regarding any forward-looking statements that we may make today.

Our 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 materially from these forward-looking statements as a result of various important factors, including those discussed in our most recent quarterly report on Form 10Q, 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.

Good morning to all of you who are joining us on the phone or via webcast.

I'm very pleased with the progress we are making with our key clinical development and research programs, all of which are aimed at large markets.

We have ICA-105665, which I'll call ICA 665 for epilepsy and we have Senicapoc for asthma, and our multi-target ion channel programs for pain and related disorders.

All of these are very significant assets for Icagen.

The major headlines from our 2007 accomplishments are the following.

First, we filed an IND for ICA 665, our novel orally active KCNQ potassium channel agonist and initiated our clinical trials.

Second, we also filed an IND for Senicapoc, our novel oral small molecule potassium channel blocker as a potential treatment for asthma, and initiated a final Phase IB trial in January to investigate higher doses that could be used if they are needed and the asthma studies to start later this year.

Third, in our multitarget ion channel programs for pain, we have identified hits and leads and advanced leads, and as previously reported, we entered into a worldwide partnership with Pfizer on three of our sodium channel targets for pain during the third quarter of last year.

So let's take a closer look at the progress we're making on each of these programs.

First, ICA -665, this compound is a selective opener of subtypes of KCNQ potassium channels, for which genetic and physiological evidence is validated the role in abnormal neuroexcitability conditions, such as seizures, and potentially for serious pain disorders, such as neuropathic pain.

In preclinical studies that we conducted, and also in studies that were completed by a division of the NIH, it has been repeatedly demonstrated that our KCNQ agonists have potential utility in a wide range of epilepsy syndromes, including the potential to be effective in patients who continue to have seizures despite current drug treatments.

Over two million people in the U.S.

suffer from epilepsy, and approximately 30% of these continue to experience seizures, despite treatment with available therapies.

Many more of these patients deal with unacceptable side effects to control their seizures.

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

ICA -665 represents a potential therapy, with a new mechanism of action.

Our initial Phase I clinical trial for ICA -665 is a single dose (ascending) study in healthy male volunteers that is designed to assess the safety, tolerability and PK of the compound.

We have now completed this single dose study as originally planned by us, up to a maximum dose of 400 milligrams.

The drug has thus far been very well tolerated by healthy volunteers.

There have been no serious adverse events, no dropouts, and we have not reached a maximum tolerated dose.

Pending discussions with the FDA, which we expect to have quite soon, we expect either to continue the single dose study by exploring higher doses or to begin a healthy volunteer multidose escalation study to define the maximum tolerated dose.

We expect these studies are planned and will be conducted in the second quarter of 2008.

In conjunction with key thought-leaders in the field, our Phase II program is coming together and being finalized as to what the exact protocol will be.

And as previously reported, we currently expect to initiate those Phase II studies in the second half of 2008.

The clinical end point in our Phase II studies will be a reduction from baseline and seizure frequency, compared to placebo.

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

Therefore, the clinical development and market prospects for this compound represent an outstanding opportunity for Icagen.

Finally, just to note, in this KCNQ program, our ongoing preclinical work on a back-up series of compounds from a distinctly different structural class has progressed into advanced lead optimization, and this year we hope to select a second compound that could go into the clinic from this program.

We will of course file a patent application covering this back-up series of compounds.

Our second clinical program is to investigate Senicapoc in asthma.

Our IND submission in asthma was supported by a growing body of data linking KCa3.1, which is the potassium channel target for Senicapoc to inflammation, as well as efficacy data from a recently completed animal study that demonstrated the ability of Senicapoc to decrease antigen-induced increases in airway resistance and in airway hyper reactivity.

We are currently considering alternative trial designs for a proof of concept study in asthma patients.

This study will have a clinically relevant end point in FEV1, or forced expiratory volume, as a measure of asthma severity.

As currently planned, the study will be a placebo-controlled trial, with approximately 20 patients per arm of the study.

Each patient will be provided with a loading dose, followed by a once-daily dose of Senicapoc.

FEV1 response to a provocative challenge will be compared before and after treatment with Senicapoc.

We believe this will be a relatively small, cost effective study, which is currently planned to begin in the second half of this year.

Finally, I would like to highlight our steady progress in our multitarget pain program.

Over the last two years, Icagen has discovered hits, leads and advanced leads targeting a variety of ion channels in the pain pathway, and we have demonstrated convincing animal efficacy with our promising compounds.

The work has generated a broad patent portfolio of issued and pending patents.

Our partner, Pfizer, recognized the strength of the Icagen (sodium channel) pain program and on that basis we began our partnership in August of 2007.

This significant partnership is supported both by $38 million in near-term funding, of which approximately $30 million has been received to date, and as importantly by a very strong commitment of the Pfizer scientists to our joint efforts.

This is a highly integrated multisite effort, in which I am very pleased with the progress that has been made in a very short time.

In this partnership, each of the three targets is expected to yield one more compound, which may become clinical candidates.

Each of these clinical candidate compounds has the potential to generate $359 million to Icagen in preclinical, clinical, regulatory and commercialization milestones, following which we would receive royalties on that sale.

This collaboration, I believe, with one of the premier drug companies in the world, attests of the strength of our technology and to our excellent scientists.

Our 2008 goal for the Pfizer collaboration is to identify an IND candidate that can be progressed into clinical trials.

In summary, we believe that 2007 was a strong year for Icagen and that 2008 will be even better, bringing important achievements in our clinical programs as we move into Phase II studies in epilepsy and asthma, and our research programs in which we will identify new compounds and one or more new clinical candidates.

With our solid cash balance, which was further strengthened recently by Pfizer's second investment in Icagen, we are well positioned to continue this positive momentum in the coming months.

So with that, I would like to turn the call over to Rich to review the financial results for the fourth quarter and to provide you with our financial guidance for 2008.

Thank you, Kay.

I'll be focusing my comments today on the results for the fourth quarter, but I'll be happy to address any questions regarding the 2007 full year results in the Q&A.

Revenues for the fourth quarter of '07 totaled $2.9 million, this compared to $1.7 million during the same period in '06.

This was a 65% increase, and it was due primarily to our collaboration with Pfizer that was formed during the third quarter of 2007, partially offset by a decrease in revenue due to the termination of our collaboration with McNeil.

Operating expenses for the fourth quarter of '07 were $6.9 million.

That compared to $8.3 million for the same period in '06, representing a decrease of 16%.

This decrease in operating expenses was primarily due to decreased R&D expenses related to the development of Senicapoc, partially offset by increased R&D expenses related to the development of 665.

Our net loss for the fourth quarter of '07 was $3.6 million.

This was a decrease of 43% as compared to the $6.2 million net loss during the same period in '06.

The decrease in net loss was, again, primarily due to the increase in revenues noted above, as well as the decrease in operating expenses.

Turning to financial guidance, during 2008, we expect revenues to be in the range of $11 million to $12 million, including recognition of $6 million of deferred revenue in connection with our Pfizer collaboration, as well as $5.5 million of R&D funding from that collaboration.

This revenue guidance incidentally does not include any potential additional revenues that we could receive from any new collaborations that we might form during the year.

R&D expense during '08 is expected to be in the range of $22 million to $26 million.

This will be driven largely by expenditures related to our ongoing research programs, as well as our epilepsy and asthma clinical programs, including, as Kay mentioned, the anticipated initiation of Phase II studies in our lead programs during the second half of this year.

G&A expense during '08 is expected to be in the range of $6 million to $7 million, and we expect the operating loss for '08 to be in the range of $16 million to $20 million.

We also expect a cash used in operations will be in the range of $19 million to $23 million.

This guidance includes approximately $2.2 million of stock-based compensation expense under FAS 123(R).

So I would like to close the financial remarks by just highlighting our strong cash position.

We ended the fourth quarter with approximately $44 million of cash and cash equivalents.

This does not include approximately $10 million of proceeds that were raised in connection with our private placement with Pfizer, which closed on February 13th.

So as we continue to tightly manage our burn, we do feel comfortable that our cash balance today, along with the ongoing R&D funding that we will continue to receive from Pfizer, provides the company with sufficient capital to drive our programs through 2009.

I would also like to note that our programs continue to generate significant interest from major pharma and major biotech companies.

We are, however, in the fortunate position of having sufficient capital resources to advance these programs ourselves.

We certainly are open to considering partnership opportunities, but we are in the position of being able to pursue them only if it makes good strategic sense.

So that will conclude the financial update portion of the call and we'll now be pleased to turn the call over to your questions.

Thank you.

(OPERATOR INSTRUCTIONS) At this time, there are no questions.

Actually, our first question comes from Christopher James from Rodman & Renshaw.

Please proceed.

Mr.

James, your line is open.

You're free to speak.

Oh, hi.

Hi, guys.

Sorry.

I was on mute.

Sorry about that.

Just wanted to congratulate you on an excellent quarter and year.

Just one question on the ICA -665 program and then a couple housekeeping questions.

The restore data was pretty impressive with Retigabine just wanted to hear your thoughts on potentially contrasting and comparing 665 versus Retigabine.

How would you think about differentiating your molecule from the other known KCNQ drug?

Hi, Chris.

This is Seth Hetherington.

First of all, we look at the data from that Phase III study as very good news for 665.

These clinical trial results demonstrate that the KCNQ target really is valid and a very good target for the treatment of patients with lack of full control of their seizure disorders.

So we are very encouraged and eager to test 665 for the effectiveness and the safety profile.

And I think at the end of the day, it's going to be precisely that data that will help us position 665 relative to the competition out there.

Right, thanks.

I don't know if you saw, but Pfizer actually showed for the first time looks like they highlighted the [SBN-9] program on their analyst day.

Can you give us any, I guess, any further color as to timing of when you'll announce something potentially entering the clinic?

We have, as you know, not disclosed the specific targets that we're working on with Pfizer.

There are three of the setting channel targets that we're working on and we're making great progress.

We hope to have a clinical candidate this year and that will generate a milestone, and at that point in time we will release that information so that you will know exactly where we are in the program with Pfizer.

Great.

It's important to note, just as Kay mentioned, it is a three-target program with Pfizer, and so we have a broad effort in that area, and there is, of course, the possibility that we could have more than one compound emerge against a given target or against all three of the targets.

Right.

Great.

Just a couple of housekeeping questions.

No R&D reimbursement this quarter?

Looks like in the past quarter, you've always had something in that line.

Yes.

The R&D reimbursement line, Chris, was specifically when we had the McNeil collaboration, we would pay for the entire clinical trial cost, and then we would receive half of that back from McNeil, and that was R&D, we put that under the line that you have just mentioned, reimbursed R&D expenditures.

But currently, our funding from Pfizer is in our other revenue line, because we don't -- it's not a third party reimbursement.

In other words, it's not reimbursement for third party expenditures.

It's actually direct payments to Icagen and therefore falls in the other line.

Right.

So going forward, we would expect it there -- not to be in that line, or --

That's correct.

Everything will be under the line, I guess it's research and development fees.

R&D fees, right.

That includes both the -- so, there's two components for that, Chris.

There's the ongoing R&D funding that we receive from Pfizer and that's approximately $11 million over a two-year period, so about $5.5 million per year.

And then the second piece that falls into that is the amortization of the up-front license payment that we received from Pfizer.

So we received a $12 million upfront payment that's being amortized on a straight line basis over a two-year period.

Right.

Thanks, Rich.

Sure.

One final.

Fully diluted share count?

I didn't see that in the press release.

Let me get that for you, Chris.

One second.

Sure.

We'll come right back to you on that.

(OPERATOR INSTRUCTIONS) Sir, there are no further questions.

Chris, the answer to your question on the share count, 40.8 million.

There are no further questions.

That -- Chris, does that answer -- that's the -- oh, okay.

Chris?

I don't know if Chris can still hear or others can still hear.

The 40.8 million is the share count as of end of '07.

That's the year-end share count.

And then we issued an additional 5.8 million shares to Pfizer recently in connection with the second equity investment of $10 million.

Pardon me, Christopher, your line is open.

You're free to speak.

No, that's it.

Thanks, Rich.

That clarifies, thanks.

Sure.

Chris, you're also aware we have warrants outstanding, and so forth, and that will all appear in the 10K --

Okay.

-- which will be filed in a couple days.

At this time, there are no further questions.

Operator, we'll wait a minute or two, see if there's other -- any other people who have questions, and if not, we'll wrap up.

Sure.

All right.

Well, thank you all for joining us, and we look forward to keeping you updated on our next call.

And thank you, again, for attending.

Thank you for participating in today's conference.

You may now disconnect.

Thank you.

Have a great day.