Repligen Corp (RGEN) 2007 Q4 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the fourth quarter Repligen earnings conference call. My name is Rob, and I will be your coordinator for today. At this time all participants are in listen-only mode, but we will be conducting a question-and-answer session toward the end of this conference. (OPERATOR INSTRUCTIONS)

At this time I'd now like to turn the call over to your host, Mr. Dan Muehl, Chief Financial Officer. You may proceed.

Thank you and good morning. Joining me today is Walter Herlihy, our Chief Executive Officer. The purpose of today's call is to review our results for fiscal year 2007, update our fiscal year 2008 financial expectations and provide an update on corporate developments. At the outset I would like to state that this discussion will contain forward-looking statements which are not guarantees of future performance such as our projections of future revenues, profits, losses and financial stability, opportunities for collaboration and licensing, our intellectual property portfolio, our plans for clinical trials and the likelihood of success and litigation. These statements are subject to certain factors which may cause Repligen's plans to materially differ or results to materially vary from they those expected including market acceptance of our products, unexpected pre-clinical or clinical results or delays, the need for additional research and testing, delays in manufacturing by us or our partners, failure to receive adequate supply of product and clinical materials from our partners, timing of product orders, delays in or failure of regulatory approvals, access to capital, adverse changes in commercial relationships, the risks that results of earlier clinical trials are not necessarily predictive of the safety and efficacy results in larger clinical trials and a variety of other risks set forth in our filings with the Securities and Exchange Commission including but not limited to our annual report on Form 10-K. Except in circumstances in which prior disclosure becomes materially misleading in light of subsequent events, we do not intend to update any of these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

This morning we released our financial results for fiscal year 2007, which ended on March 31, 2007. For the year, we recorded total revenue of $14.1 million, including product sales of $13.1 million, up 9% from the prior year and our best year-to-date. Our product gross margin was 72%, identical to last year, resulting in gross profits of $9.5 million. Our net loss for the year was $889,000, which includes $837,000 of stock-based compensation expense under FAS-123, which we recorded for the first time in fiscal year 2007. Our cash and investments on March 31st were $22.6 million or $780,000 less than prior year.

For fiscal year 2008 we expect revenue of between 16.5 and $17.5 million including product sales of between 15.5 and $16.5 million, an increase of between 19% and 27%. We expect our GAAP net loss for the next year to be between $3.5 and $4.5 million, and we expect our cash at March 31, 2008, to be approximately $18 million.

We are pleased that our protein A business continues to provide a growing stream of revenue and profits which allows to us invest in our intellectual property and our pipeline without many of the financial risks normally associated with a clinical stage biotechnology company. Now for an update on the Company, I will turn it over to Walt.

Thank you, Dan. In our Protein A business we are pursuing additional business development activity to improve both the security and the revenue potential of our business. Yesterday we announced a four-year supply agreement with Applied Biosystems, our second largest customer, which ensures that we will be supplying Applied with Protein A through mid-2011. During the quarter we also made excellent progress on negotiating a long-term supply agreement with a potential new customer which we expect to announce shortly.

Now let me turn to our intellectual property assets, our patent infringement lawsuit with MIT against ImClone and their ERBITUX product has progress to do the stage of summary judgment. Presently, we are waiting for the court to rule on our motion for sanctions against ImClone and its attorney and to set a trial date. We also own intellectual property on the use of CTLA4Ig for the treatment of rheumatoid arthritis, Multiple Sclerosis and lupus, which is the subject of litigation with Bristol-Myers who markets its CTLA4lg for the treatment of rheumatoid arthritis under the brand name of Orencia. Last year Repligen and the University of Michigan jointly filed suit against Bristol for patent infringement in the U.S. District Court for the Eastern District of Texas. We have now substantially completed the exchange of documents with Bristol and will initiate depositions during the summer. We are working on a well defined schedule set by the court and unless there is a settlement we expect a trial in Texas in April of 2008.

Turning now to our product pipeline, we are developing Secretin as an agent to improve MRI images of the structure of the pancreas to, for example, identify structural abnormalities as an aid of the diagnosis of pancreatitis. Last month we reported top line results of a Phase II clinical trial. This trial was defined based a retrospective evaluation of MRI images collected over the past several years in which Secretin was used off label to assess pancreatic duct structure and which suggested that the use of Secretin would increase the sensitivity of identification of abnormal structures by approximately 20%. Thus it was very encouraging that the Phase II study, which included data from 13 clinical sites, also documented improvement of approximately 20% in sensitivity with no loss of specificity. This study also documented a highly statistically significant improvement in the confidence of the diagnosis based on improved ability to visualize the pancreatic ducts and improve clarity of the images. We believe that this is a clinically relevant finding which may allow physicians to make a definitive assessment without the need for additional testing.

We are currently compiling a statistical report to submit to the FDA in July which will be the basis of an end of Phase II meeting several months thereafter. At that time we will discuss with the agency the requirements for approval of our product candidate and potential Phase III trial design. We believe there are more than 100,000 MRI procedures in the U.S. each year which would benefit from Secretin image enhancement which would imply a U.S. market opportunity in this indication of more than $30 million. We are also enrolling patients in a separate trial to evaluate the use of Secretin to assess the function of the pancreas with a non-invasive MRI procedure. This Phase I - II study will seek to confirm prior reports that the magnitude of the response of Secretin can be diagnostic of the health of the pancreas in patients with known or suspected pancreatitis. We expect results in September.

Our second product candidate is an oral formulation of Uridine, a naturally occuring nucleoside, which we are developing for the depression associated with bipolar disorder. Our Phase II placebo controlled proof of concept study is now fully enrolled and we expect to have top line data from the study in September. The primary end point for this trial is the MADRAS depression scale and a second scale which measures mania, a well known side effect of most approved anti-depressants. In April we announced an agreement with the Scripps Research Institute for an exclusive license to a patent application covering a class of compounds with potential use in Friedreich's ataxia and potentially other related diseases. These compounds have been shown to increase the level of frataxin, the protein which is deficient Friedreich's patients in both patient tissue and in animal model of the disease. We have selected several compounds for a more detailed characterization of their pharmacology and toxicology to determine if any may be a clinical candidate. Separately, we are evaluating our lead compounds in animal models of Huntington's disease, spinal muscular atrophy and myotonic dystrophy. We expect the results from both of these initiatives by year's end.

Besides the progress in strengthening our pipeline in the past quarter we remain fully engaged in assessing additional product acquisition opportunities in neurology and we remain committed to acquiring additional product candidates. In summary, we are pleased with the results for the fourth quarter, which have included progress on securing and expanding our Protein A business, steady progress in the CTLA4Ig litigation, a successful Phase II trial of Secretin for pancreatic imaging and a new product development program in Friedreich's ataxia. Than concludes our prepared remarks for today and we would happy to answer any questions you may have at this time.

(OPERATOR INSTRUCTIONS) As no one has queued up I'd like to turn the call back over to management for closing remarks.

Okay. Thank you for listening in to on today's conference call and if questions do arise in the future, feel free to contact the Company directly. Thank you very much.

Ladies and gentlemen, this concludes the presentation. Thank you for your participation in today's event. Have a great day.