輝瑞 (PFE) 2010 Q3 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the third-quarter 2010 Icagen earnings conference call.

My name is Latasha, 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 call over to Dr.

Richard Katz, Executive Vice President and CFO.

Please proceed, sir.

Thank you, operator.

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

With me here today is 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 the clinical program.

And I will make some brief remarks regarding our financial results.

Following our prepared remarks, we would of course be happy to take your questions.

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 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 to 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 let me now turn the call over to Kay.

Thank you.

Thanks for joining our quarterly call this morning.

We are very pleased with the progress in our Pfizer collaboration and in our other programs.

It was great to have Icagen's key role in the Pfizer collaboration validated by another extension of the research arm.

We were also delighted to receive three federal government grants totaling about $733,000 in support of three of our research programs, including our KCNQ potassium channel program, our sodium channel program, and our trip A-1 channel program.

Seth will speak in greater detail in a few minutes about our epilepsy and pain program with ICA-105665.

And then Rich will give you details of the financials.

But first let me give you a brief update on the progress in a number of our programs.

With respect to the Pfizer collaboration, we have recently completed an exploratory clinical study in healthy volunteers to investigate the pharmacokinetics of multiple compounds.

Our study channel collaboration with Pfizer has been extremely productive by taking a very broad approach to three key targets and the compounds that modulate those targets.

By that, I mean we have various interesting compounds and compound series that take us into different chemical spaces for each target.

Each of these leads has very different properties, and the exploratory clinical study informed our decision about compound and dose selection for Nav1.7 or SCN9A.

Thus, this de-risks some of our future clinical efforts around this target.

We believe that our collaboration compounds are among the most potent and selective sodium channel compounds in the industry and look forward to using them to prove our hypothesis that selective sodium channel compounds can be efficacious, with a greater safety profile, when compared to first- or second-generation nonselective sodium channel blockers.

We anticipate further clinical development of our best collaboration compound.

And we will update you on our clinical progress and any financial milestones associated with that progress in coming months.

Continued progress with the compounds that selectively target Nav1.7 is very important to both Icagen and Pfizer, as we believe that this is one of the most promising pain targets in the industry.

As we have noted previously, it has been -- this target has been genetically linked to both human pain disorders and to the ability to perceive pain.

There are two other important sodium channel targets in our collaboration with Pfizer, and we're making substantial progress on these as well.

We have some [subsidy] studies ongoing on some particularly interesting compounds at this stage.

Let me briefly update you on some of the other programs in our portfolio.

We have a very exciting trip A-1 program.

It's, again, a unique ion channel target.

It's also associated genetically with an episodic pain condition in individuals who have a gain-of-function mutation of this channel.

This channel's really different from the sodium channels and others that we've worked on.

It's activated by external and internal inflammatory irritants.

And so it could be useful in treating, we believe, inflammatory pain conditions.

It also may be important where there are environmental irritants that activate this target, such as in perhaps lung diseases.

We've made very steady progress in this target area.

It's a target of substantial interest to many small and large pharmaceutical companies.

And we have potent compounds that are bioactive in animal studies, which should form the basis for a nice partnership with another company.

Finally, without giving you much detail, we have a new target area in our pain portfolio.

We believe that this new target is very important in pain pathways and it will have immediate uptake of interest within the industry once we make a little bit more progress and begin marketing our efforts in that area.

And we'll talk about that more later, in a subsequent call.

So let me turn this over to Seth, and he will give you an update on 105665.

Following that, Rich will give you the financial update.

Thanks, Kay.

As you may know, this quarter we completed two clinical studies in the 665 clinical development program.

Previously, we'd completed studies in healthy volunteers and patients with epilepsy, using doses up to 400 milligrams per day, without achieving the maximum tolerated dose.

Subsequent to that, we reached an agreement with the FDA to continue clinical trials to explore higher doses.

First dose was a randomized, placebo-controlled, multiple-setting dose study that we conducted in healthy volunteers.

There were two cohorts.

The first cohort received 250 milligrams twice a day, and the second cohort received 300 milligrams twice a day, for seven days each.

We've only recently received the unblinded data.

We're reviewing this now, but I can say that all reported adverse events were mild to moderate.

No subject had to stop taking the drug because of an adverse event.

And consequently, we did not reach the maximum tolerated dose.

The second study that we completed was a continuation of a previous study in patients with photosensitive epilepsy.

The maximum dose in the original part of the study was a single 400-milligram dose.

In the continuation of the study, the first cohort of six patients received a single dose of 500 milligrams.

The safety data from this cohort was reviewed by the investigators and by us and the protocol EEG reader prior to initiating a second cohort at 600 milligrams.

One patient was enrolled and received a single dose of 600 milligrams and experienced a serious adverse event.

This stopped the study, and it consequently defines the maximum tolerated dose for 665, according to the protocol procedures.

Fortunately, that event was brief.

The patient fully recovered and was doing well without any sequelae at follow-up.

We had discussions about the study and the serious adverse event with the FDA.

And as we stated in a press release, this event triggered a full clinical hold.

We've been asked by the FDA to provide the final data from both studies that I've described, along with a proposed development plan for 665.

After we've provided this information to the FDA and they've had a chance to review it, we'll have a discussion with the agency on the future path for 665 development.

Once we arrive at a final agreement, which we estimate obtaining either in the fourth quarter of this year or in the first quarter of next year, we'll then share our plans for 665 thereafter.

Now I'm going to turn the call back over to Rich Katz.

Thank you, Seth.

I'm going to keep my comments brief and just focus on the year-to-date results.

I'll be happy to answer questions relating to the quarterly results during the Q&A.

Just to highlight, revenues for the first nine months of 2010 and 2009 were consistent at about $8.3 million.

In the 2010 year to date, this included $3 million of milestone payments that we received from Pfizer recently, as well as $1 million that we'd received during the second quarter from a sale of noncore patent rights.

Revenues in 2009 included $3.7 million of amortization of the upfront payment from Pfizer, which became fully amortized during '09.

And revenues for both periods, of course, reflect the continued R&D funding from Pfizer.

Operating expenses during the year-to-date results were $13.9 million.

This compared with $17.6 million during 2009, a substantial decrease of about 21%.

The decrease was due to a variety of factors -- of course, the discontinuation of the development of Senicapoc, but also, importantly, the implementation of a variety of cost-control measures, including reductions in our workforce and other aspects of our expense structure.

We also had a decrease in our equity compensation expense.

There were some offsets in legal and patent expenses and license fee expenses.

But in general, the trend was certainly significantly down.

So as a result, the net loss for the first nine months of 2010 was $5.6 million, and this compared to $9.5 million during the same period in '09, so a decrease of north of 40%.

In terms of cash, cash used in operating activities was $5.8 million for the year to date, as compared to $12.6 million year to date in '09.

So that was a decrease of approximately 54%.

This was due -- of course, the Pfizer milestones that we received during the third quarter; the sale of the noncore asset that I mentioned; the reduction in operating expenses, particularly with regard to the use of cash for Senicapoc and various other cost-reduction measures.

So all of that resulted in a significant net savings in cash used in operations.

As of September 30, the Company had cash and cash equivalents of $11.7 million.

This does not include about $1.2 million of R&D funding from Pfizer that we would typically receive before the end of the quarter, but this period we actually received it just after the end of the third quarter.

And in addition, in November we announced that we'd been awarded approximately $0.75 million of federal grants related to the Qualifying Therapeutic Discovery Project program under Section 48D, and so that figure also was not included in the $11.7 million.

A couple of key points just to highlight -- Pfizer milestones, we did receive $3 million on the initiation of first-in-man studies for several compounds.

And we're certainly hopeful that one or more of those compounds may advance further.

And of course, we are eligible for milestones both on compounds that might advance from that initial study, as well as compounds that may be moved into first-in-man studies against the other targets, the two other sodium channel targets that are part of the collaboration.

The Pfizer renewal was a key event for us during the quarter.

This secured $5 million of committed funding through year-end 2011, so we felt very, very good about that.

We're also quite pleased with the government grant.

We continue to have efforts to reduce our burn rate.

We have reduced our workforce significantly.

We're now at about -- down about 45% from the peak of our employment.

And that represents, of course, a very substantial savings.

We've implemented a variety of other cost savings measures, and in total, we've now brought our burn rate down in the range very close to $2 million per quarter.

That, of course, is including the -- there's a net burn rate including the Pfizer R&D funding that we get.

Importantly, that does not include a projected figure for the next study for 665.

As we get further clarity on what that study will be, we'll update you with regard to cost estimates for that and what that would mean for our burn rate.

Also, I just want to point out that we have significant opportunities for additional non-dilutive financing.

The Pfizer milestones were certainly very welcome, but our hope and expectation is that we will have further opportunities there.

We also believe that we'll have partnership opportunities on both our trip A-1 program, and as we get further clarity from the FDA in terms of our plans for 665, we would hope to have partnership opportunities there as well, both of which could significantly extend our runway.

Finally, I'd just like to make the point that we did implement the 1.1-for-8 reverse stock split during the quarter.

And that, of course, brought the stock back up above $1, and so we have now regained NASDAQ compliance with the issues that we had confronted there for a while.

So that will wrap up my comments, and we'd be happy to take your questions at this point.

(Operator Instructions).

And your first question comes from the line of Christopher James with MLV.

Please proceed.

Hi, good morning, Kay, Rich, and Seth, and thanks for taking my questions.

Good morning, Chris.

Thanks.

Just a couple quick questions on -- initial questions on 665.

In the patient with the 600-milligram dose from the photo epilepsy study, can you give a little bit more color into the nature of the event?

You said it was brief, but how long did it last, and were there any associated neurological deficits?

We're not discussing any details of the case until we've had our discussion with the FDA and we have clarity on our path for 665.

But as I mentioned, there were no sequelae in this patient, and that includes neurological sequelae, actually.

She had a complete recovery.

Okay.

Thanks, and I know you can't discuss, but just one more.

Could you comment on whether this patient was on concomitant meds?

And I ask because I assume 665 will be used in combination with other AEDs.

What do you think this means for future combination therapy?

We don't think it has any implications on combinations or restrictions or any adjustments that would be needed for use in combination.

Thanks.

And then on the Nav1.7 program, congrats on the Pfizer extension there.

And when do you think you're going to advance that into the clinic?

I think that we will be able to give you some clarity on that in the upcoming months.

Until we make the final decisions and agree on what we can say with Pfizer, I can't give you any specifics.

But I'm very hopeful that in a short period of time we'll be able to give you a specific update on that one.

Thanks, Kay.

Appreciate that.

And then finally, maybe again difficult here, but could you provide an update on the status of -- I know you're seeking strategic alternatives, and could you give us an update on how those are going and what you've been pursuing there?

Sure, Chris.

We continue to have interest both in forming partnerships as well as potentially considering a larger transaction, whether a merger and acquisition, and we've had an ongoing effort for some time.

We continue with that.

I think it's safe to say that we can't discuss anything that would -- we just can't say too much about it, Chris.

I'm sure you understand.

Sure.

Sure.

Suffice to say that it is an ongoing effort.

Thanks, Richard, and good luck.

Thanks, Chris.

(Operator Instructions).

I show no further questions in the queue.

Okay.

Well, I thank everyone for joining us today, and we appreciate your participation.

Certainly we'll look forward to keeping you updated on our next call.

Thank you.

This concludes the presentation.

Thank you for your participation.

You may all now disconnect.

Good day.