Plus Therapeutics Inc (PSTV) 2011 Q3 法說會逐字稿

Good afternoon, ladies and gentlemen. Welcome to the Cytori Therapeutics' third-quarter conference call. Today's call is being recorded. Before we begin, we want to advise you that over the course of the call and question-and-answer session, forward-looking statements will be made regarding events, trends and business prospects, which may affect Cytori's future operating results and financial position. Some of these risks and uncertainties are described under the Risk Factors section in Cytori's Security and Exchange Commission filings, which Cytori advises you to review. Cytori assumes no responsibility to update or revise any forward-looking statements to reflect events, trends or circumstances after the date they are made.

I will now turn the conference over to Christopher Calhoun, CEO. Please go ahead, sir.

Great. Thank you, Jessica. Cytori is pioneering a new era in medicine and we're dancing toward our goal of being the leader in cell therapy. We believe this new field will fundamentally change the practice of medicine. But to realize this significant opportunity we need to achieve what we call market access. This includes three key elements, clinical data, regulatory approvals and reimbursement. Much progress is being made to advance each of these areas. And these are important and validating milestones include tangible progress toward key goals such as peer-review publications from our trials, expanding current regulatory approvals to include no option chronic myocardial ischemia and comprehensive progress toward winning reimbursement.

Simultaneously, we have strengthened our balance sheet and reduced our cash utilization. With a critical eye on maintaining our focus, we're committed to making substantial progress on the key areas to achieve full market access. The third-quarter progress update has been described in detail in our press release and quarterly shareholders letter now available on the Cytori website. Therefore, we'd like to move straight into the Q&A session.

Jessica, please open the call to questions at this time.

Thank you. (Operator Instructions) And we'll now go to Steve Brozak from WBB Securities.

Well I appreciate the ability to be the first person to ask a question and I'll keep it simple. A lot of what we're looking at is the fact that you've got overseas sales. Can you talk us through what the reimbursement plans, policies are for those sales? And what the cycle is? What the cycle is now, what the cycle you expect is in the future because that might be able to give us some key into what happens when those sales might come into the United States?

Hi, Steve. It's Marc Hedrick. I'll focus my comments on Europe because that's the area where we're most advanced. With our technology and based on the way it's been reviewed through a Notified Body as a device in Europe the key first element of the reimbursement puzzle was getting CE marking. And then that was expanded later to adding specific claims in four areas, which you know about. Secondly, we needed to drive utilization. So those claims allowed us to get the system into doctor's offices and hospitals and so forth and began to build where it's now globally about 4,000 patients or so that have been treated. All that information is important because it drives other doctors to use the technology, notoriety and clinical presentations and so forth.

As you kind of move up the ladder, getting real peer-reviewed trial data becomes even more critical to -- an evidence-based world and that's where RESTORE 2 fit into the puzzle. And that's now been -- the manuscript's been completed. The 12-month data has been reported and we're kind of pushing towards acceptance of that publication and ultimately publication in a peer-review journal. Then kind of after that, you really almost take a country-by-country approach because different countries are different. We focused on the G5 and we're most advanced in the UK. And what we've done there is go to NICE, which is the National Institute of Health and Clinical Excellence and they are procedures within that where you can get the cell-enriched fat grafting for breast reconstruction. You can get notoriety and approval for that procedure, which we're working on.

At the same time, you can get specific device approval for Celution, which is an important near-term goal. What we're striving for as mentioned in the letter, that really gives you a pharmaco-economic tailwind so they can go an argue to NHS hospitals that it's cost-effective to use this technology over traditional fat grafting in the breast reconstruction market. So the puzzle, particularly in the UK, is now beginning to fit fully together. And with respect to ultimate reimbursement there are existing codes and then ultimately getting our own specific DRG, which come after approval of the technology from NICE.

Got it. Thank you, gentlemen.

(Operator Instructions) We'll now go to Ren Benjamin from Rodman.

Hi. Good afternoon, guys. And thanks for taking the questions. I guess just can you take us through -- you mentioned several clinical trials in the update, the letter to shareholders. Can you just take us through when for example the European heart attack trial will begin enrolling and when do you think enrollment and data will arrive? Or when we might see results? Same with the pre-IDE application for the US chronic myocardial ischemia trial? Can you give us a sense as to what's the design? How long do you think that it'll take? And then the same thing for the chronic myocardial ischemia CE mark trial?

Hey, Ren. It's Chris Calhoun. Good to talk to you. Let's start with the ADVANCE trial in Europe. So this is designed up to 360 patients. We have the first center initiated and the first patient enrolled back in the early -- the second quarter. And the focus of the trial is to get up to 30 to 35 different centers, mostly focused in the G5 but otherwise spread around Europe potentially a couple of other key places we want to target, which would include Australia, New Zealand and Canada as additional sites. So right now the focus is really on getting individual country approval and getting sites up. Because the enrollment rate for these types of trials ranges between half a patient per month per center to about a patient per month per center. So our enrollment goals are on the high end of that. So we're targeting about one patient per center per month. Once we've got critical mass of centers and we really shift our focus from getting country approvals and sites initiated towards really driving enrollment.

So they are screening multiple patients have been included in the trial so far but really the effort of the team is to get country approvals and then get sites initiated. And we have four initiated sites currently. Probably a few more by the end of the year and we have 14 in the queue that we're working through. So I want to talk a little bit about what it means to get country approval. And it's a challenge because even though we think of Europe as a union and as a harmonized system, in practice it's not really working that way. It didn't in our first trial and it really isn't still today.

Because what we're doing is novel the regulatory -- and really unique in many ways over what people classically think of in terms of cell therapy as a biologic we go through an exercise in each individual country where they evaluate whether or not this is device based or whether this is a biologic that goes more of a pharmaceutical track and who owns that within the country's distinct regulatory agencies. Much like with the FDA, you've got CBER and you've got CDRH and you've got a device group and a biologic group and others. Similarly you have these different agencies in different countries and so it's a little hot potato and who actually regulates them.

So there's -- we've always come out with the right answer in every country we've ever been in but it's a process that just takes time and really a lot of effort from our team to get through. So the focus of the team right now is really on getting the G5 countries up and running and a few other core countries like Switzerland and so forth. And then we'll expand it to countries beyond that looking forward. So we want to get to a critical mass and then we're going to shift our focus towards really driving enrollment. So you can imagine if you've got 30 centers enrolling and you're doing on average one patient per center per month you can get your enrollment pretty quickly. So by the end of next year the goal is to have really a critical mass of centers, hopefully towards the higher end of what our goal is of 30 to 35 centers and really be driving enrollment at that point.

So full enrollment is anticipated sometime in 2013, probably late 2013. The primary regulatory endpoint on this trial, and there's multiple endpoints, but the primary regulatory endpoint is the six-month endpoint and looking at infarct side specifically. So having data coming out in second half of 2014 is what our timeline is today with all the assumptions built in to that. And we're on track for that as we stand today.

Shifting now towards the US IDE trial, the milestone meeting that we had early in the third quarter with FDA, where we went through concepts of trial design, preclinical data that we had generated over the last eight years and the data from our PRECISE and APOLLO trials in Europe really led to clarity from FDA. These are always a negotiation. You're discussing what a trial might look like. What concerns they may have. What additional information you may need to provide. Clinical trials or preclinical studies before you get into the actual clinical study. So these are really critical meetings and they're good for understanding where FDA is going to be as you submit your IDE application. So coming out of that meeting we actually felt very, very good that there didn't seem to be any major additional information items that we were going to have to go out and put together. No additional preclinical work that we foresaw or they could describe. So based on that we've now designed, developed the IDE.

So an IDE application is a pretty extensive amount of work. This is a clinical protocol. The investigator's brochure. Massive amount of background scientific information and other clinical information from our other trials ancillary documentation and consensus. So all of that's basically put together and our goal is to file this hopefully by the end of the month but our public goal is to have it done by the end of this year. And we're on track for that. It's now just kind of tidying everything up and getting that in.

With an IDE process usually there's a response back from FDA. I think it's a 30-day clock on them. And almost every IDE application goes through two rounds, maybe three rounds of questions from FDA, which we're anticipating and we kind of put those at a 60-day cycle. So we get a response back let's say end of January, we take 30 days to formulate our answers and respond back and then they have 30 days to come back with more questions. We're anticipating two, maybe three of those, which kind of gives us an approval mid-year that would then allow us to really get right into initiating that trial on our timeline of kind of mid-year next year.

So as of today we're on track with that. Now what can hang that up, FDA could come back with needing additional preclinical information. They may want us to do a study on something. We don't expect that and having already been in the clinic in Europe and 27 patients on a very, very similar design, similar dosage, similar delivery, full safety protocol and experience I think that we feel very good about what we're trying to do here in the US and that we're not going to have any additional surprises. But that's always a possibility. But as of today to be perfectly clear we're on track and the IDE is going in on our plan and we feel good about hoping to get this thing up and running in kind of mid-year.

Now the magnitude of the trial is going to be something on the order of what we did in Europe. So it's going to be single dose. It's going to be blinded, controlled placebo study, randomized. And it's going to be somewhere on the order of maybe 30 to 60 patients. That's part of the negotiation of what the IDE process is all about and what FDA is going to want to have and see. So a little bit of this is going to be developed over the next couple of quarters as we really work with FDA to define all the integers of the trial. But just in broad strokes that's what we're working on. Again in the case of FDA I expect we'll have similar functional endpoints like we had with PRECISE, MV02, METS. Obviously safety and all of those things as foundational but really looking at some core functional parameters the same kinds of thing we looked at in PRECISE that are clinically relevant and meaningful and ultimately approvable in the pivotal trial.

And likely the endpoints on that in the US, we had six months in Europe as you recall, likely we think FDA is going to want to follow them out to 12 months but that'll be part of the negotiation. But you could probably expect a 12-month cycle. It'll likely be a multiple center trial. We're going to try for more centers than fewer. So somewhere maybe between three and six or eight if we're lucky. But probably three to five is a good rule of thumb. That way we can get enrollment done as quickly as possible.

Okay. And the CE mark, I think you mentioned that there's no meaningful barriers to approval. So can you just take us through what is the process and when we might expect a decision?

Yes. Absolutely. I think that we feel that we're right on with what we projected at the beginning part of the year, that this process kind of knowing our Notified Body that we're working with and what they're timelines have been and what other approval processes that we've been in with them have taken and we're kind of right on track with that. And we're feeling good about it. So the process was -- the application back in kind of late Q1, early Q2 that led to -- and we paid for what's called an accelerated review where they send their team in to San Diego and they spend a few days going through in our case two different aspects of the file. There's the aspect that looks at the devise and the enzymes and all of that part. And that's a technical review. And then there's the clinical review where they look at the data from the trials. And in this case they looked at the PRECISE data as well as all of the preclinical data and there's an extensive amount of preclinical data that we have in that field.

So the technical review -- there was some questions as always. We've responded and answered all of those. We believe that as of today all the major issues from that have been worked out and we don't foresee any new issues on the technical side. We think that's probably closing out if it's not already closed out and that part will be check the box.

On the clinical side there have been questions back and forth. This week we're responding to some additional information, adding in some of the 18-month data that shows a stability of the effect, the magnitude of the effect and the clinical benefit, safety profile. Things that really support that this is a real therapeutic effect and that's going in as I said sometime this week. And the ball will be back in their court.

Based on all of the pretty close and ongoing dialogue we've had with the Notified Body and in our experience with them over the years, they've very direct. They don't come in the last minute with big surprises or things that -- or play any games. They're very direct and our experience has been that what they tell us is pretty much right on. And so far, knock on wood, I think that we're right on track. We don't foresee any land mines or new issues popping up that we haven't already addressed even in this current round of questions.

So timing wise, as you see the Celution One file that we thought we'd have a little bit earlier, everything's been completed there for a while and we still are just waiting for the final paperwork to come through. Sometimes there's a delay just because they're big and busy and we try to make sure we're important to them and squeaky wheel if we can. So timing wise we don't control their timeline but we do push as hard as we can. So we're on track from everything on our side and we feel good about there really don't seem to be any new or major issues that we haven't already addressed.

Perfect. Thanks, guys. And good luck.

Thanks, Ron. Sorry about the long answer.

No. That was perfect.

(Operator Instructions) We'll now go to Caroline Corner from McNicoll, Lewis and Vlak.

Thanks for taking my call. A couple of questions. First of all you mentioned the next step in the UK is to go to this NICE committee. Could you describe what the positive outcome from that would be [a typical] facilitate use of the system. Is it like a CPT code type of thing where something will go into effect in 2013 or something? Is that what we're looking for out of there? Or what is the outcome?

There are a couple of important outcomes with respect to NICE. One is recognition of the procedure. Importantly we've already been recognized as a procedure. I say we, cell-enriched fat grafting for breast reconstruction has been recognized by a joint committee of the plastic surgery societies in the UK, which is very important. It's kind of self-recognition amongst the field. Then the hope is that NICE would recognize the procedure in their clinical guidelines and that's a process that's ongoing and that can continue to go forward as we discuss what the new procedures beyond cell-enriched fat grafting. So it's not just limited to that.

And then on the device side there's an advisory committee for new medical technology that reviews the device in particular for its safety, clinical effectiveness as well as its cost-effectiveness. And then the output from that would be a recommendation to NHS member hospitals as well as the broader UK committee -- broader UK medical society that the technology itself is cost effective. Coding comes later after that process and that's a variably difficult process and generally speaking most new technologies like that use existing codes to formulate their payment for the technology and then kind of the Holy Grail, Brass Ring is ultimately your own code. But you don't need your own code to be economically successful.

Okay. Thanks. That's helpful. And most of my trial related questions have been answered. So looking at the commercial business, you started in mid-2010 shifting to hospital based sales. But then it says in the press release today or in the business update that 20% of the systems that are shipped currently drive 80% of the consumables. Can you talk a little bit how you're going to get that to change?

Yes. This is Clyde Shores. So I think now a lot of the installed base that we have, many of those were aesthetic clinics and the 20% continue to use consumables for those cosmetic and aesthetic procedures. But as we've shifted toward moving and focusing our limited direct resources in the hospitals we're looking to establish market access there, establish key opinion leaders. Get recognition for the clinical data that we have like RESTORE. Get peer-to-peer education. And then as we do that -- and also as well as that getting those particular key accounts a high degree of post-sales support and training and that will drive consumer, consumable utilization. So that's how we're going to focus on driving that and broadening the base,0 not only the footprint but the base of installed systems that utilize more consumables.

Okay. Thank you very much for taking my questions.

And it appears there are no further questions. So I will turn the conference back over to our presenters for any additional or closing remarks.

Great. Thank you for your time, your support and investment in our mission to bring innovative new cell therapy products to patients around the world. Appreciate your time today. Thank you.

This concludes today's presentation. Thank you for your participation.