輝瑞 (PFE) 2009 Q4 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the fourth quarter 2009 Icagen Incorporated Earnings Conference Call.

My name is [Tawanda] and I will be your coordinator for today.

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

We will conduct a question and answer session towards the end of today's conference.

(Operator Instructions) As a reminder, this conference is being recorded for replay purposes.

I would now like to turn the presentation over to Dr.

Richard Katz, Executive VP and Chief Financial Officer.

You may proceed, sir.

Thank you, operator.

Good morning, everyone, and thanks for joining us today to discuss our corporate research and clinical progress, as well as our financial results for the fourth quarter and year end.

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

Kay will start the call today with a general overview.

Seth will then provide an update on our clinical program and I will briefly review our financial results.

Following our prepared remarks, we will of course be available to answer your questions.

Before we begin today, I would 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 materially 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.

Let me now turn the call over to Kay.

Thanks, Rich.

I'll initially summarize the results of our lead clinical program, the KCNQ program, ICA-105665 in epilepsy and pain, and then I'll ask Seth to give details of the Proof of Concept epilepsy trial.

We recently released those results and he will give you more details on that.

Then I'll update on other research activities and corporate matters before turning it back over to Rich.

You'll remember that ICA-105665 is our novel KCNQ agonist.

We recently completed two studies mechanistics, proof of concept studies, one in pain, and one in epilepsy.

Just to remind you, the Phase I program went really well.

The compound was well tolerated at all dose levels.

We had no serious adverse events, no dose limiting toxicities and we also didn't need to dose titrate.

The PK was linear, dose proportional, and consistent with BID dosing.

So all of those characteristics, if they are sustained in our future trials, would provide a significant competitive advantage over other currently available drugs in this space.

Most of them have dose limiting side effects, require more frequent dosing, or need to be titrated over an extended period of time.

The pain study was recently completed in healthy volunteers.

This trial was designed as a crossover study and we used 24 healthy male volunteers to assess the ability of our compound to decrease the sensation of pain when we stimulated that pain with either an injection of capsaicin or a mild sunburn.

The study was conducted by a CRO for us at one site in Europe, and while the compound was, again, well tolerated, we didn't see a significant effect of the compound to reduce the pain associated with capsaicin or the mild sunburn.

There are limitations to this type of volunteer study and we do not believe the results should be interpreted as meaning that ICA-105665 would not be effective in true pain syndromes.

We also completed a study of ICA-105665 in patients with photosensitive epilepsy.

This clinical study paradigm has been used to identify promising anti-epileptic drugs at early stages of development.

Other compounds have gone back and been used and tested in the photosensitivity protocol and those drugs have worked well there as well.

We had the benefit of working with experts in the field, including clinicians from the epilepsy consortium who helped designed our study.

And now, Seth will provide us with more detail on that study and describe the results of our photosensitivity study, which were positive and very encouraging.

Seth?

Thanks, Kay.

We've described in previous calls and press releases the photosensitivity studies and that it tests the ability of drugs to reduce what's called a photoparoxysmal response.

The response occurs in a special subset of patients with photosensitive epilepsy.

When these patients are exposed to light at specific frequencies, usually between two and 60 flashes per second.

They can develop epileptiform brain waves that are visible on electroencephalograms.

This can be quantified when studied in the controlled environment of a laboratory.

Just to note, the patients do not develop clinical seizures during these study procedures and in fact, they may not feel anything different at all.

So measuring this response can be very useful as a first indication of activity of a potentially new antiepileptic medication.

The technique has been used for many antiepileptic drugs that are currently marketed and others that are in clinical development currently.

If the drug reduces the photoparoxysmal response, we can conclude that it's getting into the brain and reducing neuroexcitability, which is the ultimate effect of any antiepileptic drug irrespective of the mechanism by which it works.

Now, let's get to the specifics of our study.

This was a placebo, controlled, single blind study.

Patients with known photosensitive epilepsy were admitted to an inpatient clinic.

EEG electrodes were placed on the patient in a standard array for the duration of the three-day testing.

On the first day, following a dose of placebo the range of frequencies of flashing lights, which is also called photostimulation, that elicited the photosensitive response was measured at several time points over the course of eight hours.

We expected that on this placebo day the range of photosensitive frequencies measured at each time point would remain relatively constant.

On the next day, the patients were given one dose of 665 and the photostimulation procedure was repeated.

We expected that if there were to be a positive response to 665 the range of frequencies that elicited the photosensitive response would decrease relative to the day before as the plasma concentration of 665 increases.

All the EEGs were read by an expert who was blinded to the day of testing.

Once the readings were complete, the difference between the two days and photosensitive range at each time point was calculated.

Then we used a pre-specified definition to declare whether the patient had a significant reduction in the photosensitive response and whether that response was complete abolition or a partial reduction of the response.

On the third day, the procedure was repeated at two time points to look for a carryover effect at 24 and 28 hours.

As Kay mentioned, we had a positive outcome of the study with two out of the four responding at the highest dose tested of 400 milligrams.

Incidentally, one of these patients was also tested at the lowest dose and also responded positively.

The overall results were viewed by all of our investigators as encouraging and meeting the endpoints of the study.

As we've seen in prior studies, there were no serious adverse events, no dose limiting side effects in any of the doses studied and all patients tolerated the dose very well.

While we'd like to test 665 at higher doses, our investigators tell us that the current results support continued clinical trials even at the 400-milligram dose.

So we're currently evaluating the next best steps.

Given that we don't have a maximum tolerated dose and the lack of significant adverse events at the top dose tested, one possibility is to explore even higher doses in patients with photosensitive epilepsy or in healthy volunteers.

And another possibility, which is supported by investigators as well, is to broaden out to a more generalizable Phase II epilepsy study at the current doses that we have.

We'll be discussing our results with the FDA in the near future and arrive at a decision together on the next steps for the continued development of 665.

Just to restate, we're very encouraged by these recent results with 665 in this very important study and to let you know, we've been invited to present the results of this clinical trial at an international conference later on this month.

Thanks, Seth.

Beyond 105665, we have a very broad KCNQ program and we are convening a panel of scientists in April to select a backup compound to 10665, which will be available for late stage studies in preparation for an IND.

This compound that we will choose will be different chemically and in many other ways from 105665 but is similar in its selective activity for KCNQ channels.

You'll remember, also, that we have other internal research and preclinical programs.

We have a very nice program in TRP-A1 in pain and related disorders and we have our ongoing external collaboration with Pfizer where we target sodium channels for a variety of pain conditions.

And we're making substantial progress in both of those and we look forward to announcing milestones in the coming quarters on those programs.

Just a few words on our corporate and business development activities before I turn the call back over to Rich.

First, we are of course well aware of the need to conserve capital and therefore during 2009, as we reported, we implemented a number of cost reduction measures, which have been extremely helpful in decreasing our use of capital.

And going forward, we'll continue to look for additional opportunities to conserve cash while remaining committed to our core focus on ion channels, especially for new treatments in epilepsy and pain.

We also recognize the importance of executing strategic transactions in addition to the renewal that we did last year with Pfizer.

We continue to work with our advisors at JPMorgan to execute this strategy.

This is an area of very high priority for our management and the Icagen Board of Directors.

Finally, with the positive news from our photosensitivity epilepsy study and the continuing strengthening of our research programs and platform, we are evaluating new ways to form strategic partnerships that may provide new mechanisms for financing our business.

For example, we are one of the few companies, if not the only one that combines a target focus on ion channels, a core strength in drug discovery, and the know how to perform early stage clinical trials, Phase Is, early proof of concept trials in the area, such as pain and epilepsy.

Thus, we have the ability to provide many of the steps in kind of a one-stop shop as it were, from the beginning of ion channel drug discovery through clinical proof of concepts and there are many large companies that you may be aware, such as Johnson and Johnson and GSK, who recently publicly acknowledged that they were decreasing their internal emphasis on these research and early clinical skill sets, particularly in the therapeutic areas of pain and epilepsy.

So we may be an excellent conduit for new clinical compounds for late stage development in these areas.

We're also investigating other ways in which to finance our operation.

So let me turn the call over to Rich Katz to not only summarize our financial results, but also discuss other corporate matters and new initiatives.

Thanks, Kay.

I'm going to focus my remarks on the full year results and certainly be happy to address questions of quarter-over-quarter results in the Q&A.

Revenues for 2009 were $9.6 million.

This compared to $12.3 million during 2008 and the decrease in revenues was driven entirely by the recognition, complete recognition of the upfront payment that we received from Pfizer that was fully amortized during the third quarter of 2009.

Operating expenses for 2009 were $22.4 million and that compared to $27.9 million during 2008, representing a decrease of approximately 20%.

The decrease in the operating expenses was due to a variety of factors, most notably the cost control measures that we put in place, including the limited workforce reduction, but savings really across the board in terms of our activities whether it be research, preclinical studies, or ongoing corporate expenses.

We also had a significant savings in the 665 program.

That was driven primarily by the timing of the studies and the expenses that we were recognizing accordingly.

And then finally, we had a decrease in our equity compensation expense as well.

These decreases were partially offset by increases related to the development of Senicapoc for asthma, which we have discontinued of course and a restructuring charge in connection with the workforce reduction.

Net loss for '09 was $12.8 million.

This compared to $14.8 million for 2008, a decrease of 14% and this was driven by the cost savings measures primarily that I reference above as well as partially offset by a decrease in revenue and interest income.

Cash used in operations for 2009 was $15.4 million and this compared to $18 million during 2008.

We ended the year with approximately $18.1 million of cash and cash equivalents.

Let me note that we stated in the press release we will receive a going concern opinion from our auditors in connection with the filing of our 10-K, which will be filed later this afternoon and let me just spend a minute or two to address that.

As everyone is aware, we only recently received the results of our photosensitive epilepsy study, which were as Kay and Seth had both mentioned, quite encouraging.

As a result, we do think that that will open a number of opportunities for the Company and we're exploring three principal avenues.

The first is a potential acquisition of the Company.

Secondly is a partnership, one or more partnerships around our lead program or perhaps some of our other programs that Kay was alluding to as well, and then third would be additional equity capital.

And we are moving forward on all three of those fronts to evaluate the opportunities.

JPMorgan, as Kay mentioned, is assisting us with potential acquisition discussions as well as potential partnership discussions and we are exploring opportunities to bring additional capital into the Company through equity financing.

On the equity financing, if I can just go a little bit deeper there for a minute, we are looking at two primary means of equity financing.

The first would be a traditional private placement and we are --- have been in discussions with investors who have had significant interest in the Company for some time.

I think that it's fair to say that most investors were keenly interested to see the results of the 665 program.

Now that we have those proof of concept results, I think that the discussions can be advanced.

No assurances on that front certainly, but we do think that there is potential to do an equity financing and we're certainly going to be exploring that.

The second thing that I would like to mention as well is we are also evaluating the opportunity to enter into what has variously being called a standby equity distribution agreements or ATM facilities and these are mechanisms that are increasingly widely used for companies to, in essence, issue stock on an ongoing basis in rather small amounts, but that nonetheless over time could add up to a significant influx of capital.

And we're in the process of evaluating those alternatives as well and we'll be formulating our thoughts with regard to all three of these options over the coming quarter, and we'll of course keep you updated.

So with that, let me turn the call back over to the operator and we'll be happy to answer any questions that you may have.

(Operator Instructions) And our first question comes from the line of Christopher James with MLV.

Please proceed.

Hi.

Good morning, guys, and congratulations on the great data with ICA-665 in epilepsy and thanks for taking my questions.

Maybe we can start with the Phase IIa data in epilepsy itself and then move to more strategic questions.

Obviously, the drug has efficacy at the 400-milligram dose with no DLTs.

I guess going off the assumption that one could dose escalate, what gives you confidence that you could go higher in dose and sort of based off what you've seen in both humans and animals?

Well, again, I think the key issue is that number one, the tolerance of the drug as demonstrated so far indicates that we probably have some room to run before we see significant side effects in people.

The issue is going to be discussing this with the FDA and making sure that they are bought into that concept, and I'll leave it at that.

Sure.

Sure.

I guess sort of next steps, can you give us an idea of the timing of your talks with the FDA and sort of what are your plans going forward with respect to trial design size and timing of enrollment just given the relatively rare population of patients with this sort of photosensitive -- ?

Well, I think there are two branches you might consider here and the timing on this is variable.

It's according to the FDA's clock.

We don't know what they're going to say to us and what else we may need to do prior to going to the next steps.

They could ask for additional information, for instance, but let's just assume in the next quarter we come to a resolution and we have a plan to go forward.

What would that look like?

One possibility is to continue with the photosensitivity study to look at higher doses to see if we get more of a response or a more complete response in additional patients.

And the second is to -- and actually, if we didn't that would tell us that we may be at the top of our therapeutic curve anyway.

So it's a reasonable thing to do.

The alternative is to do a small, Phase II study, approximately 60 patients and we've described this before.

Something like a crossover design where patients are entered with a baseline period to collect information on their background seizure frequency and then get put on either 665 or placebo for a period of time.

After that period of time, there's a washout period time and then they go to whatever the other alternative treatment was.

So that type of typical crossover design has been done in the past and can be very useful for estimating the overall response rate and the degree of response.

And you can use those statistics then to design a more thorough study of a larger number of patients.

And that would, in a reasonable scenario might be started by the end of the year.

Great.

So just strategically, I know you can't discuss sort of timing of anything, but could you give us an idea of what potential partners or acquirers may be looking for?

Is it more greater proof of concept with 665, additional compounds to be identified from the pain collaboration with Pfizer, or is it something else?

I guess maybe I'll take a crack at that, certainly Kay can add to my comments.

I think that as everyone is aware, we had engaged JPMorgan to help us with strategic options, including an acquisition or sale of the Company back in some time ago.

We announced it in June 2009, I believe.

So at that time, we had proof of concept trials ongoing for both Senicapoc as well as for 665 and it was, I think, challenging to come to a successful conclusion with data from four studies still pending.

At this point, all those studies have been completed, most recently, 665 with the very favorable data that we saw in the photosensitive epilepsy trial.

So I think we now are in a very different position than we were nine months ago when we were having these discussions.

And so we have just started -- JPMorgan, on our behalf, has just started contacting the major players who had shown interest in the past, whether it's with regard to an acquisition or a collaboration.

And so those discussions are just now underway.

I would expect, Chris, over the next quarter that we'll have more clarity on the progress of those and be able to give you an update as appropriate.

But I think it's safe to say that we -- this is a program that has been of significant interest to several companies and I think the data that we have today is certainly very supportive of a program that is, as Seth mentioned, has so far shown a very nice safety profile.

And now we have some very good efficacy data.

So I do think there will be significant interest and we'll be working actively to translate that interest into a transaction, provided that it makes sense financially and for our shareholders to do so.

But we're going to be actively evaluating those opportunities.

Just to move a little bit, Chris, into the financing side.

The other option, of course, is that we move the program forward internally ourselves into a Phase II program, provided that the FDA lends us their support in moving that direction.

And to that end, we're looking at opportunities to raise equity capital.

And I think that either would be a very viable approach and we're going to be looking closely at the pros and cons of each, and trying to do whatever makes the most sense for the Company and its shareholders.

So we're going to be looking at all those options.

I think, as I said, we should have more to update you on in about three months time.

Great.

Thanks, Rich.

Really, really helpful.

Absolutely.

Thanks for the questions, Chris.

Sure, just one last question if I may.

I know you're going to announce some sort of -- maybe you can just sort of give us a better idea of the timing for the identification of the pain compounds and with Pfizer, and sort of what should we expect in terms of milestones that they may trigger?

We have three, as you'll remember, Chris, we have three separate targets that we're working with in Pfizer, all sodium channel targets, one of which is the NAV 1.7 that we're particularly high on, as is Pfizer.

And let me state it as more the objective.

The objective at this point is that we identify a clinical candidate or two clinical candidates over the course of the next, let's say between now and the end of the summer.

And we think we're on track to do that.

One of them would be, we believe in the NAV 1.7 program and one of them would be in one of the other sodium channel targets.

So we think we're on track there.

It's also possible that Pfizer may initiate what's called a microdose study, which would be first a manned type of study, primarily to look at pharmacokinetics rather than a true safety study in the traditional sense of a Phase I study.

But we do think that we're on track to receive, then, at least one and potentially two milestone payments between now and the end of the summer.

Again, we can't provide assurance on that.

Timelines can change, but that's our current expectation.

Thanks again and congrats on the data.

Thanks, Rich.

(Operator Instructions) And with no further questions in queue, I would now like to turn the call back over to Dr.

Richard Katz for closing remarks.

Well, I'd just like to thank everyone for joining us on the call today.

We're certainly very pleased to be able to report to you the progress that we've made and we're looking forward to keeping you updated.

Thank you, again.

Thank you for joining today's conference.

That concludes the presentation.

You may now disconnect and have a great day.