Repligen Corp (RGEN) 2010 Q2 法說會逐字稿

Good day, ladies and gentlemen. Welcome to the Repligen second quarter fiscal year 2010 earnings conference call. My name is Michelle, 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 today's conference. (Operator Instructions). I would now like to turn the presentation over to your host for today's call, Mr. William Kelly, Chief Financial Officer. Please proceed, sir.

Thank you, and good morning. The purpose of today's call is to briefly review our financial results for Q2 of our fiscal year 2010, update our financial projections for the year, and update the status of our development programs. Joining me today is Walter Herlihy, our President and CEO. 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 financial projections and projections for the US sales of Orencia, opportunities for licensing, our intellectual property portfolio, and our plans and projections for clinical trials. These statements are subject to certain factors which may cause Repligen's plans to materially differ or results to materially vary from those expected, including market acceptance of our products, unexpected preclinical or clinical results or delays, delays in manufacturing by us or our partners, failure to receive adequate supply of clinical materials from our partners, timing of product orders, delays in or failure of regulatory approval, adverse changes in commercial relationships 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.

This morning, we released our financial results for the second quarter of fiscal year 2010, which ended on September 30th, 2009. For the quarter, we recorded total revenue of $5.4 million, including product sales of $2.7 million and royalty and other revenue of $2.7 million. Current year royalty and other revenue benefited from a 28% increase in Orencia sales versus the same quarter last year. The company has continued to invest in our product pipeline, as research and development expenses increased $1 million or 41%, compared to prior year resulting in a net loss of $1 million for the quarter. Our cash and investments on September 30th were $60.2 million.

Today, we are updating our financial expectations for fiscal year 2010, which ends on March 31st, 2010, primarily to reflect changes resulting from the acquisition of the Spinal Muscular Atrophy program announced several weeks ago. We are confirming today a total revenue projection for fiscal year 2010 between $20 million and $22 million, including approximately $10 million in product sales, $10 million in royalty income, and $1 million in other revenue. R&D spending, including approximately $700,000 in licensing and $1 million in incremental development work associated with the SMA program, is now projected to be approximately $17 million.

SG&A spending is projected to be about $7.5 million, which is consistent with our prior guidance but represents an increase over the prior year as we continue our precommercialization efforts for secretin. As a result, we now expect our net loss to be between $7 million and $8 million compared to earlier guidance of $5 million to $6 million. Cash and investments on March 31st, 2010, are projected to be approximately $57 million. We are actively evaluating additional licensing or asset acquisitions to strengthen our therapeutics and bioprocessing businesses, and we will update our financial projections quarterly to reflect progress on this goal.

At this point, I would like to turn the call over to Walter Herlihy for an update on our development programs.

Thank you, Bill. Our most advanced product development program is RG-1068, synthetic human secretin, which we are evaluating in a Phase III trial for use with MRI to detect structural abnormalities of the pancreas. This quarter, we completed enrollment in patient treatment in our Phase III trial, which enrolled 258 patients at 23 clinical sites. As previously disclosed, there were no significant adverse events associated with the use of RG1068 in conjunction with MRI. All patients in the study also received a separate endoscopic procedure to confirm the MRI findings. This traditional procedure was associated with a significant number of serious adverse events, typically, pancreatitis requiring hospitalization. The stark contrast in the safety profile of secretin-enhanced MRI and endoscopy illustrates the significant clinical need for our product and is the primary reason why this program has received fast track designation from the FDA.

We expect to complete the compilation of the Phase III data by mid December, at which point, we will release the top line results. We are assuming our Phase III study will be successful and will suffice for an NDA filing, and thus we have begun the process of preparing a New Drug Application for filing in the United States. We met with the FDA last week to review our NDA filing plans. As a result, we believe we have a clear agreement with the agency on the statistical plan by which the Phase III data will be analyzed and the criteria by which the study will be judged a success. We also received guidance on the timing of submission of certain manufacturing data in order to be in sync with a potential six month expedited review of our NDA by the agency. Assuming a successful trial and continued support from the agency, we expect to file our NDA by the end of March, which may allow us to receive marketing approval by the end of 2010, assuming we receive expedited review.

Finally, as we begin to prepare for commercialization, we have defined three discrete market opportunities for RG-1068. The first is improved imaging of pancreatic ducts for patients who are currently receiving an MRI evaluation. We estimate this segment to be approximately 150,000 patients in the US. Second, we believe that the superior images and safety profile of secretin-enhanced MRI will allow us to position it as a superior alternative to endoscopy, for which the opportunity in the United States is an additional 125,000 to 150,000 patients. Finally, we are planning studies for 2010 which may develop additional uses with ultrasonic diagnostic procedures or for the detection of pancreatic cancer.

We are also developing RG-2417, our oral formulation of uridine, for acute treatment of depression in patients with bipolar disorder. Our Phase II-b trial is actively recruiting at 15 sites, and we have enrolled 94 of the planned 150 patients. We plan to open several more sites this year at academic centers to enable us to meet our goal of completing enrollment by mid-2010. To date, the number of serious adverse events is consistent with an excellent safety profile observed in our Phase II-a study and we are recruiting patients whose history of disease symptoms matches our target patient profile.

We are also developing inhibitors of specific HDAC enzymes for Friedreich's ataxia. We are currently evaluating one of our lead compounds in a GLP two species toxicology study, which is required by the FDA prior to the initiation of clinical trials. We should have data from this study by the end of the year. If the drug is well tolerated, we will be able to file an IND in mid 2010.

As previously disclosed, we licensed certain intellectual property for potential treatment for Spinal Muscular Atrophy, or SMA, from families of spinal muscular atrophy. SMA is a devastating neuromuscular disease caused by a defect in a single gene, which results in low levels of a protein, known as SMN. The license compounds have shown activity in raising levels of SMN in patient cells and have produced marked improvements in two mouse models of SMA. The acquisition of this program is consistent with our goal of building a sustainable company with a focus on CNS and orphan diseases.

In summary, we have made significant progress in advancing our pipeline in the last quarter, with completion of the Phase III for RG-1068 and a productive dialogue with the FDA, advancement of our uridine and Friedreich's ataxia products towards important clinical milestones, and the acquisition of a new product candidate for SMA. Operator, at this time, we would like to open the call to questions.

Thank you, sir. (Operator Instructions). Our first question comes from the line of Joe Pantginis of Merriman Curhan Ford. Please proceed.

Good morning. Thanks for taking the questions and thanks for the update. Quick question to forward-looking. Obviously, we spent a lot of time talking about the upcoming Phase III data and we are all looking for a positive outcome hopefully. Maybe you could just now fast forward a little bit. You did mention a couple of potential markets you might be looking to go in and start studies in. Any initial type of color you can give with regard to what these studies might look like, either for an endoscopy study or a pancreatic cancer study.

In the case of pancreatic cancer we would be interested in seeing if we could reproduce the findings in literature that demonstrate in approximately 20 patients that the use of secretin enhances one's ability to define the edges and thus the size of a pancreatic tumor. We have protocols under development for that particular application, and we would hope to, assuming we get IRB approval, initiate such a study in the first half of 2010. If we get positive results there, then we would expand to a larger more robust Phase 2 study. The second thing we are examining right now we have under IRB review at a single site is the use of RG-1068 to enhance the ability to visualize pancreatic abnormalities when using an ultrasonic evaluation, which is an alternative to MRI, and again that study is at about the same place, assuming we get IRB approval this year, we would start that in the first half of 2010 as well.

Great, Walt. Thanks a lot and good luck with the Phase III.

(Operator Instructions). And our next question comes from the line of [Michael Pinero of MBP Associates]. Please proceed.

Hello, Dr. Herlihy, thanks for taking the questions. The website still indicates that you are investigating RG-1068 for use in determining pancreatic function. Can you explain whether you stopped doing that and how that would relate to the ChiRhoClin secretin products which apparently already have FDA approval letters for use with the --.

We had done studies with collaborators using RG-1068 to look at the ability to detect changes in pancreatic fluid production in patients with disease and while we have some interesting data there, we think that the results there are not as robust as in some other areas so we have chosen to focus on the areas I just mentioned, the enhancement of MRI, replacement of endoscopy, pancreatic cancer and ultrasound as the first four segments to attack. We may come back to that later, but at the moment, we think there are larger and more discrete opportunities in other areas.

I understand that you are going to market the ChiRhoClin secretins also?

No, we don't have any plans in that area. We plan to market our RG-1068 product if that is approved by the FDA in the United States, and we are seeking marketing partners in Europe and other parts of the world at the moment.

You did mention that several calls ago that you were looking for such a marketing partner. Are we getting closer to achieving that since we are getting close to --?

I think that we certainly have had conversations with numerous marketing partners. They, as we are all interested in seeing what the Phase III data looks like. I think that is the springboard for accelerating marketing partner discussions.

One final question, if I may. The original work on HDAC inhibitor particularly in September showed really positive results with respect to Huntington's chorea, and that is no longer on the website. Have you given up on that?

We are still working on the area but there are multiple areas beyond Friedrich's ataxia in which we are evaluating our HDAC inhibitors and we are still sorting through which is the best second indication to take those into. We haven't designated a second indication yet.

Thank you again for your answers.

Sure.

(Operator Instructions). I'm currently showing we have no further questions at this time. I would like to turn the presentation back over to Mr. Walter Herlihy for any closing remarks.

Okay. I thank everyone for participating in today's call, and as always, if you have additional questions before our next teleconference, feel free to contact the company directly at investor relations.

Ladies and gentlemen, thank you for your participation in today's conference. This does conclude your presentation and you may now disconnect. Have a wonderful day.