Plus Therapeutics Inc (PSTV) 2006 Q2 法說會逐字稿

Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to the Cytori Therapeutics second-quarter financial results conference call. At that time all participants are in a listen-only mode. Following today's presentation, instructions will be given for the question-and-answer session. (OPERATOR INSTRUCTIONS).

As a reminder, this conference is being recorded Monday, the 14th of August, 2006. I would now like to turn the conference over to Mr. Chris Calhoun. Please go ahead, sir.

Good afternoon. This is Chris Calhoun, Chief Executive Officer of Cytori Therapeutics. We are joined today by our President, Dr. Marc Hedrick, and our Chief Financial Officer, Mark Saad.

Before we start, I would like to remind everyone the discussion today will include forward-looking statements regarding events and trends which may affect our future operating results and financial position. Some of these risks and uncertainties are described in the risk factors section in Cytori Therapeutics 2005 Form 10-K that is on file with the SEC.

Thank you for joining us this afternoon for our second-quarter conference call. We are excited to report on our extremely successful and eventful first half of 2006. Our discussion today in addition to our financials will focus on our current funding activities, including $16.8 million equity agreement announced last week and the tremendous research and development progress we've made, leading to the start of cardiac clinical trials in Europe later this year.

Over the past three years we have taken the compelling concept of using a patient's own stem cells to treat heart disease in real-time at the patient's bedside to reality. We have developed a comprehensive dossier of safety and efficacy data in multiple in-vitro and animal models. We have developed a CE Mark system called Celution that produces a safe and effective cellular output specifically tailored for the treatment of heart disease. And we have built both a world-class internal and external clinical team to plan and execute multiple complex clinical trials around the world. We are now ready to move forward into the clinic for the treatment of heart disease.

Prior to discussing the details of these upcoming clinical trials, I would like to take a few moments to explain the latest preclinical data preliminarily reported last month from our chronic ischemia preclinical study being conducted at Texas Heart Institute under the direction of Dr. Emerson Perin. This definitive preclinical study shows that adipose stem and regenerative cells are safe and effective for the treatment of chronic ischemia.

This study was conducted in a porcine model, the animal most predictive of future clinical success. Importantly, it was also the first preclinical cardiac study in which we used a Celution System for processing autologous adipose stem and regenerative cells. In this study, a chronic ischemic state was established in 13 pigs who then in a randomized and blinded fashion received either injections of saline or their own adipose stem and regenerative cells into the damaged area of their heart, using a specialized injection system.

Thirty days following treatment, we observed a 13% absolute and 29% relative improvement in the injection fraction in the cell-treated group relative to the saline treated controls. This means 13% more blood is being pumped out of the heart with each beat of the left ventricle. Furthermore, the heart walls in the treated group were 37% thicker than in the saline-treated group, and the investigators noted a significant decrease in the size of the infarct areas that were created in the ischemic model.

No stem and regenerative cell-related arrhythmias or morbidity was observed, showing the treatment to be safe in addition to being effective. Soon we will report the complete peer reviewed dataset at an upcoming medical conference. In summary, this study shows that the autologous use of Celution's cellular output was definitively safe and effective for the treatment of chronic ischemic disease in the most rigorous animal model available. Furthermore, it provided the key missing data upon which we can confidently move this unique therapy to the clinic.

Now to our clinical plan. I would first like to provide an overview of our upcoming clinical trial for the treatment of chronic ischemic heart disease. The PRECISE Trial will be performed in Madrid, Spain at the prestigious Gregorio Maranon Hospital. The co PIs will be Dr. Francisco Fernandez-Aviles, a world-renowned interventional cardiologist and specialist in cell therapy for cardiovascular disease and the previously mentioned Dr. Emerson Perin from the Texas Heart Institute.

This will be a randomized placebo-controlled dose escalation study in up to 36 patients with chronic ischemia with ejection fractions below 45% and who are not eligible for coronary artery bypass surgery or percutaneous coronary intervention. As part of the study, cells will be processed using the Celution System and delivered using a NOGA mapping and delivery system. The primary goal of this study is to determine safety. However, we will also measure ejection fraction for fusion, MVO2 and six-minute walk. Based on the anticipated start date, enrollment and observation periods, we expect preliminary results to be reported in the third quarter of 2008.

We are also able to report today the specifics of our upcoming clinical trial for the treatment of acute myocardial infarction or heart attack. The APOLLO Trial will be a randomized, placebo-controlled, single-blinded safety and feasibility study in up to 48 heart attack patients. Professor Patrick Serruys will be the principal investigator for the trial, which will take place at the Thoraxcenter, Erasmus University Medical Center in the Netherlands.

As part of this study, the patients' stem and regenerative cells will be extracted and concentrated in about an hour using the Celution System, and then infused into the ischemic area of the heart by intercoronary delivery. Based on the anticipated start date, enrollment and observation periods, we expect preliminary results to be reported in mid 2008.

In addition to these two new cardiac clinical trials, recall that during the second quarter we reported the imminent start of an investigator-initiated clinical trial of our Celution System to evaluate the use of adipose stem and regenerative cells for the treatment of breast cancer after partial mastectomy and radiation therapy. It is with great excitement today that I can report that our Celution System was used successfully for the first time clinically as part of this study at Kyushu Central Hospital in Japan.

The first three patients were treated in the second quarter, and more will be enrolled over the year. We anticipate closing enrollment in mid 2007, with preliminary data to report it thereafter. The study outcome variables will be principally safety oriented, while important measurements indicative of efficacy will also be measured.

I will now turn to our financials which are detailed in our Form 10-Q and press release that we filed earlier today. Total product and development revenues for the three and six months ended June 30, 2006 were $516,000 and $1.8 million respectively, compared to $1.5 million and $3.3 million for the same periods in 2005. Research and development expenses for the three and six months ended June 30, 2006 were $6 million and $11.2 million respectively, compared to $3.5 million and $6.6 million for the three and six months ended June 30, 2005.

General and administrative expenses for the three and six months ended June 30, 2006 were $3.6 million and $6.8 million, compared to $2.3 million and $4.4 million for the same periods in 2005. Net loss for the three and six months ended June 30, 2006 was 7.3 and $14.8 million compared to a net loss of 5.4 and $9.9 million for the same periods in 2005. Cash, cash equivalents and short-term investments were $9.3 million as of June 30, 2006.

Subsequent to the end of the second quarter, Cytori entered into an agreement to raise $16.8 million through the sale of 2.9 million shares at our August 9th closing price of $5.75 per share to a syndicate of investors. This financing was led by Olympus Corporation and included both new and existing institutions. We view this financing round as a strong validation of both our technology and our clear business model.

Since our IPO six years ago, this is only the second time we have sold stock, the first being the sale of 1.1 million shares to Olympus in May 2005. To further strengthen our balance sheet, we are in active discussions regarding the sale of our noncore HYDROSORB and Thin Film product lines. In terms of operating expenses for the remainder of the year, we will significantly reduce our total operating expenses through decreased allocation of resources to our noncore biomaterials operations, as well as reductions in certain product development costs resulting from the sharing responsibilities under our Olympus-Cytori joint venture.

The net result is that our resources will be more focused toward efforts that will directly result in clinical experience. Furthermore, we completed the buildout of our new research facility which resulted in approximately $2 million of non-recurring capital expenditures during the first half of the year. These factors combined with other adjustments will resort over time in reducing the ongoing cash burn to approximately $2 million per month before any potential benefit from the biomaterials operations are measured.

Since our strategic partnership was announced with Olympus Corporation last year, we have continued to seek partnerships in the area of cell therapy that are consistent with our strategic goals. Our recently announced partnership with Cambrex Bio Science and the therapeutic option acquired by Olympus Corporation are components of these goals, and we are aggressively pursuing other strategic relationships in an array of business areas. Today, I have outlined the most recent evidence of Cytori's rapid evolution from a preclinical to a clinical stage biotechnology company, and thus far we are on track to accomplish all of our strategic goals articulated for 2006, specifically we have achieved the CE Mark on the Celution System and the related option payment from Olympus Corporation. We strengthened our balance sheet through a recently announced $16.8 million equity financing; reported very promising results from our preclinical cardiac studies for both acute and chronic heart disease; proved that our Celution System can provide autologous stem cells in real-time at the patient's bedside for the treatment of an important medical problem; achieved all relevant prerequisite work in anticipation of starting clinical trials for cardiac disease.

For the remainder of the year, we intend to begin enrollment in at least one of our two cardiac clinical studies with the second following shortly thereafter, actively pursue opportunities to divest both of our biomaterials product lines, and continue to enroll patients in the first in man clinical program for the treatment of breast cancer using the Celution System.

Stem cell therapies can be considered a new class of therapeutic not unlike antibiotics, chemotherapeutics, and antibody therapies, all now in routine clinical use. Cytori intends to lead in this emerging field and is positioned to do so by virtue of its unique technology, the talented and highly trained group of dedicated employees, an energetic and experienced management team, a strong partnership with Olympus Corporation, and a clearly defined and differentiated strategic business plan. We will now turn the call over for questions.

(OPERATOR INSTRUCTIONS) Brian Gagnon, Gagnon Securities. Please go ahead.

Good afternoon, gentlemen. Can you talk a little bit more about Olympus? How many people do they have working on this project; specifically. do they have people in your shop, and do they have other people around the world working on this?

Thanks for your question. Olympus is increasingly apportioning more and more of its development workforce to this particular project as they become more certain of its eventual success. That said, about now we have approximately 30 to 40 individuals in the Olympus side working on various aspects of this project, most of which are involved in the development of the ultimate clinically useful and salable version of the Celution System. The contacts between the two companies has continued to grow as we send teams to Japan and Japan sends teams to the U.S. to work collectively to get the ultimate clinical device to market.

So thus far, this partnership represents a unique situation for our company and I think for Olympus, too, and we are on track to meet our timelines to get the fully commercializable version of Celution to market.

That's impressive that there are that many people that are working, and you're not paying for them, right?

No, we're not.

That's fantastic. You mentioned the potential sale of the HYDROSORB and the Thin Film lines, though I wouldn't have mentioned it otherwise, but can you talk a little bit further about that? Is there something you would like to accomplish this year, or is it something that is further out?

I think the messaging that we have made over the past couple of quarters has been pretty clear. It is our goal to divest both of these noncore assets and bring in that cash to reinvest into our cell therapy technology. We are in processes with both technologies; we've identified buyers, and we're moving through the process. Now, unfortunately it's a little bit challenging to give guidance on these kinds of things as they just take some time. Certainly it is our goal to get them done as quickly as possible, and we think we are on track to do that.

Good luck.

(OPERATOR INSTRUCTIONS). Ken Arnold, Everglades Capital Management.

Good afternoon, gentlemen. Chris, you outlined the clinicals for acute MI and chronic ischemia, and you talked about preliminary results in mid 2008 for the MI and third quarter for the chronic ischemia. Can you talk a little bit about the breast reconstruction trial in Japan and when we can expect preliminary results there?

Thanks for the question. That trial is progressing. We plan on continuing to roll patients over the fall and into early '07, and then potentially close out that trial in mid '07, and hopefully present results after that, depending on the pace of enrollment. Originally, we said that would be about a 12 to 18-month trial length. We still think we are on track to hit those numbers.

Can you talk a little bit how well the Celution System performed in those first three cases?

Yes, I can tell you directly because I was in the OR for all three cases. And the Celution System performed incredibly well for all three cases. There were no issues, no problems; all three patients did well. The operative time went down significantly in each case as we were on a little bit of a learning curve.

And I've seen over the last few weeks some of the data and follow-up from those patients, and the patients appear to be going well. And there is a tremendous amount of excitement at the Kyushu Central Hospital that is performing that study to enroll more breast cancer patients.

Flawlessly, would you say the machine performed, or is that a little out there?

I'm sorry?

Would you say it performed flawlessly; and that's a first-generation machine you're using, correct?

I would absolutely say the machine and the system performed flawlessly in these first three cases.

Thanks very much.

(OPERATOR INSTRUCTIONS) Management, there are no further questions. Please continue with any closing comments.

Thank you, Michael. I want to reiterate that our adipose stem and regenerative cell technology represents tremendous potential for changing the way cardiovascular disease, as well as other important conditions, may be treated. Cytori Therapeutics is a clinical stage company now poised to expand its pipeline into multiple therapeutic areas that represent large markets and unmet medical needs. We thank you for your continued support and invite you to participate in our exciting growth.

Ladies and gentlemen, this does conclude the Cytori Therapeutics second- quarter financial results conference call. If you would like to listen to a replay of today's conference call in its entirety, you may do so by dialing 303-590-3000, using the access code 11067643. That number again to listen to a replay of today's call, 303-590-3000, using the input PIN access number 11067643.

You may now disconnect. Thank you for using ACT Teleconferencing. Have a very pleasant day.