Cassava Sciences Inc (SAVA) 2004 Q4 法說會逐字稿

Good day ladies and gentlemen and welcome to the 2004 Pain Therapeutics year-end 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 toward the end of this conference. (OPERATOR INSTRUCTIONS). I would now like to turn the presentation over to your host for today's call, Ms. Christi Waarich, Senior Manager of Investor Relations. Please proceed, ma'am.

Thank you. And thank you for joining us today. The purpose of this call is to discuss Pain Therapeutics' fourth-quarter and year-end 2004 financial results and to review our clinical programs. I would now like to introduce today's participants -- Peter Roddy, Chief Financial Officer, will discuss this morning's financial results and Remi Barbier, President and Chief Executive Officer, will review our clinical programs and provide closing comments. We will then open the call to a Q&A session. Before we begin, let me mention that during this conference call except for historical information and discussions contained herein statements may constitute forward-looking statements for the purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. PTI disclaims any intent or obligation to update these forward-looking statements the and claims the protection of the Safe Harbor for forward-looking statements contained in the Act. Examples of such statements include but are not limited to any statements relating to the Company's cash performance in 2005, the Company's R&D guidance or milestones for 2005, the Company's net loss in 2005, the Company's development of its drug candidates and the timing scope and expected completion or outcome of any clinical study, the potential benefits of the Company's drug candidates; the size of potential markets for the Company's products, and the expected commercial potential for success of the Company's drug candidates. Such statements are based on management's current expectations, but actual results may differ materially due to various factors including but not limited to those risks and uncertainties related to difficulties or delays in development, testing, regulatory approval, production and marketing of the Company's drug candidates, unexpected adverse side effects or inadequate therapeutic efficacy of the Company's drug candidates that could slow or prevent product approval. The risks that current and past results of clinical studies are not necessarily indicative of future results of clinical studies, the uncertainty of patent protection for the Company's property or trade secrets and the Company's ability to obtain additional financing as necessary. For further information regarding these another risks related to the Company's business investors should consult the Company's filings with the SEC including the Company's prospectus supplement, dated October 6, 2004, and its subsequent filings. With that I would now like to turn the call over to Pete Roddy, Chief Financial Officer.

Thank you, Christi. Good morning. For 2004, we hit our goals on time and under budget. We had 99.4 million at the end of 2004. We had said we would spend about 37 million in 2004 -- we actually spent about 33 million. During October, we raised about 54 million from our follow-on offering, bringing us out to almost 100 million. That cash gives us the financial strength to be able to bring all three of our drug candidates, Oxytrex, PTI-901, and Remoxy through development while continuing to own while worldwide commercial rights to the portfolio. Our 2004 spending was focused on the development and Phase III clinical trials of our three product candidates. For the year 2004, we had a net loss of 37.8 million or $1.01 per share compared to a net loss of 21.6 million or $0.73 per share in 2003.R&D expenses increased to 8.9 million for the fourth quarter of '04 from 6.1 million in the fourth quarter of 2003. R&D increased to 35.1 million for the year from 18.9 million for the year 2003. I will shift to guidance to 2005 now. We expect our cash requirements for 2005 will be $40 million plus or minus 10 percent. Also, we expect the net loss for 2005 to be about 41 million, again plus or minus 10 percent. The net loss will be slightly higher than the cash spending, primarily due to typical non-cash expenses. Our guidance includes cost to continue the development of precommercial activities for all three product candidates. We expect to continue to maintain a low-cost infrastructure in 2005. Our personnel and facilities costs are only about 6 to $7 million a year. Our net loss will be spread fairly evenly over the course of 2005, corresponding to the flow of our clinical data. We expect cash requirements and net loss in the first-quarter to be slightly higher than those in the following quarters. Naturally, our cash needs and expenses will continue to fluctuate on a quarter-to-quarter bases and continue to depend on the timing of our clinical trials and the other development expenses related to the three clinical programs.And with that, I'd like to turn the call over to Remi.

Thank you, Pete. To echo what Pete said, we do feel that we ended the year of 2004 in very good shape. At the end of the year -- or I should say, we are entering the year of 2005 with three drug candidates in Phase III clinical trials. We're -- cash-wise, we are in a very sweet position -- nearly $100 million of cash. We retain ownership of all commercial rights to our drugs and we have a nice history of saying -- or doing what we say we are going to do, typically on time, on budget. And for these reasons, we are very excited about what the prospects of what's going to happen clinically in 2005. What I propose to do is spend a couple minutes kind of briefing over who we are and what we do for those of us who don't know us -- who are new to the story -- and then go into the specific detail of our three clinical programs. So, for those who are new to Pain Therapeutics, we are a biopharmaceutical Company out in South San Francisco. And we do specialize in clinical development -- specifically we specialize in the development of safer, or more efficacious, painkillers, which are sometimes called narcotic painkillers. The target market for our drugs is very large. Typically, it's -- IMS tells us it's somewhere between 5 and $6 billion in size for '03. And it has been a delivered strategy of ours to retain commercial rights through late stages of clinical development. Our strategy is a little bit different than many of similar companies of our size or our function. We focus -- we have a unique focus on clinical development. And specifically, we like the -- what we call late stage product, which is to say from IND to NDA. The second element of our strategy is to retain rights -- commercial rights -- to our drug candidates. The third strategy, or third corner of our strategy is to outsource our key function. We think it keeps our burn rate low. And it allows us to shop for the best vendors from time-to-time. And finally, the fourth element of our strategy as a company is to continuously be out there looking for new technologies or new products to in-license or to acquire. That's the overview of both who we are and our strategy. With this, I'd like to turn it over to some specifics for a little bit of a discussion on our clinical programs. Our pipeline is simple. We have three drugs and three drugs candidates in Phase III trials. All three are small molecules -- small molecule drugs. And all three are geared towards the treatment of severe chronic pain, such as pain associated with advanced osteoarthritis or chronic pain -- chronic lower back pain or pain typically associated with IDs. Our three drugs are Oxytrex, PTI-901, and Remoxy. Oxytrex is a -- it's an oral painkiller that is currently in a Phase III program. The Phase III program consists of two distinctive Phase III studies, all of -- consisting of a total of about 1400 patients who suffer from severe chronic pain. The reason we are developing Oxytrex is, our preclinical results and our clinical results indicate that Oxytrex -- patients who are given Oxytrex -- receive superior analgesic pain relief, as well as prolonged pain relief compared to a simple dose of oxycodone. I think for those who are in the -- who practice medicine, specifically pain management medicine, can appreciate the value of a drug that provides superior pain relief to oxycodone with no increase in side effects. Also our published preclinical results demonstrate that the technology in Oxytrex really results in a lack of opiate addiction, tolerance or physical dependence in animals. Now for obvious ethical reasons, we're not testing the concept of addiction or tolerance, or even dependence in humans. Our Phase III program consists of two Phase III studies, each of which are very large randomized placebo-controlled double-blind. And each Phase III study proposes to enroll over 700 patients. In June of '03 we initiated our first Phase III study. In September of '04 we announced the completion of patient enrollment. And we are pleased to announce that we are still on track and we expect to remain on track to unblind the data from our initial Phase III study in March of this year. In March of last year we initiated the second Phase III study with Oxytrex. This study is going very well. It is in about 700 patients -- a little bit over 700 patients -- who suffer from severe osteoarthritic pain. Like the first one it's randomized, double-blinded, placebo-controlled, et cetera. Enrollment is going very well. It's on track in over 40 U.S. sites. And as previously guided, we expected complete patient enrollment for our second Phase III study with Oxytrex in the second half of '05. Our second drug candidate, PTI-901, is intended to treatment men or women who suffer from chronic irritable bowel syndrome. And we believe that if the FDA approves PTI-901 for the indication of treatment of IBS, the drug will target a market in excess of $1 billion per year. I'd like to remind the audience that we do own all commercial rights to PTI-901. What is IBS? Well, it's essentially a very painful abdominal condition that typically leads to changes in bowel habits. Typically bouts of severe constipation or severe diarrhea. There are a lot of things we do know about IBS -- we certainly -- no one knows the cause of IBS and currently there is no cure for IBS. It's also very curious that IBS predominately affects women. Right now as I mentioned, there are no FDA-approved drugs to treat men with IBS. There are, however, two FDA-approved drugs to treat the symptoms of IBS in women and only women. In contrast we see IBS as a nervous system disorder, rather than strictly a diarrhea or constipation problem. And, specifically, we think that the right dose of PTI-901 can restore proper bowel function and relieve abdominal pain. In this sense, we see PTI-901 as representing a novel mechanism of action for the treatment of IBS. In November of 2003, we announced a Phase III program with PTI-901. The program consists of two Phase III studies, both studies are basically identical, with the exception that one study is enrolling 600 women. The second study is enrolling 600 men. Both studies are very tightly designed in the sense that they're both randomized, double-blinded, placebo-controlled, et cetera. And there what we propose to do is assess that clinical affects of 901 during a three-month treatment period. We, as previously announced, we expect to complete patient enrollment for the Phase III study in women in the second half of 2005. The enrollment rate is going well in the womens' study. And the enrollment rate in men is substantially slower than the enrollment rate for women, mostly because IBS, again, predominately affects women. And that brings us to our third drug candidate, which is called Remoxy. I will be the first to say that Oxytrex and to some extent PTI-901 are very complex drug candidates. On the other hand, Remoxy is remarkably simple. Remoxy is a -- it's an anti-abuse version of long-acting, oral oxycodone. Sales of long-acting oxycodone in '03 were about $2 billion. We own all rights to Remoxy. The problem with long-acting oxycodone is the active ingredient, which is oxycodone. It has an abuse potential very similar to morphine. And what we know is there's a whole segment of recreational drug abusers out there who enjoy basically crushing long-acting oxycodone and abusing it for the purposes of getting very high, very quickly. The lucky ones survived to do it again. The unlucky ones end up in the ER. And in fact, the government reports that we have access to tell us that in 2002 there were about 22,000 -- let me repeat that -- 22,000 oxycodone mentions in emergency room visits in '02. This is up from about 4000 oxycodone mentions in the ER in '94. So what is Remoxy? Well, Remoxy, it's a novel formulation. It is a novel invention that is specifically designed to foil recreational drug abusers who might attempt to otherwise tamper with the drug in order to get high. We've previously demonstrated some PK results in humans, showing that Remoxy is significantly less abusable than the brand leader in long-acting oxycodone. In addition, we announced in December of '04 that we initiated an initial Phase III trial in approximately 200 patients suffering from severe -- moderate to severe osteoarthritic pain. This trial is going very well. It's obviously less than a month old, so there's not new and different to announce, other than no issues with drug supply, no issues anywhere that we are aware of. I should also mention that we do plan to conduct additional clinical trials of additional formulations of Remoxy in 2005. Specifically, we recently met with the FDA and one of the things that we are in the process of negotiating with the FDA is a so-called special protocol for Remoxy, or a SpA. We have not finished the negotiations. I think most of you know that typically an SpA takes about 6 to 9 months to negotiate. And after we negotiate the final version of an SpA, we do anticipate initiating a second Phase III trial with Remoxy. This would be in the second half of '05. So, that was about a 10 minute nutshall summary of who we are and what we do. Again, what I'd like to say -- three shots on goal. Three drug candidates in Phase III clinical trials. And '05 is going to be a big year for us. We expect to unblind clinical data -- Phase III clinical data -- from both Remoxy, Oxytrex and 901 between now and December of '05. I think we have a few minutes for a Q&A session.

Michelle, we'll know take questions.

(OPERATOR INSTRUCTIONS). George Fulop, Needham & Company.

I appreciate the report. Remi, can you kindly go into more detail about what the focus might be in the second Phase III Remoxy trial? What condition, what the design might be? Or the focus and the duration of that trial?

I will repeat the question to make sure I got it right. The question I believe is -- can we provide a little bit more guidance about the design for the second Phase III study with Remoxy? Is this correct?

Yes, and the potential duration and what that implies regarding potential filing of an NDA.

The purpose of this call is to provide clinical guidance and financial guidance for 2005. So we're going to restrict ourselves to what we can reasonably predict or what we challenge ourselves to conduct in 2005. The second Phase III study, again, is the subject of some negotiations with the FDA. Those negotiations, we feel, are going very well. We continue to believe they are strongly supportive of the Remoxy program. And we intend to initiate a Phase III trial in second half of the year. What might that trial look like? It probably will be a three-month or a 12-week study, probably several hundred patients in size, the drug will be -- Remoxy will be compared to a placebo. And we feel -- it's probably going to be a relatively low hurdle, to the extent that oxycodone, the active pharmaceutical ingredient in Remoxy has been around for 80 plus years.

Elmer Piros, Rodman.

Remi, I was wondering if you could remind us the Phase II outcomes with Oxytrex? If I remember correctly, that was a four-arm study, one arm being a placebo, the second arm being oxycodone, and two different Oxytrex doses. And I think that there was at least two theoretical explanations in observing that the twice daily Oxytrex dose was actually superior to both placebo and oxycodone. One being that maybe there is a different dose administration schedule. And the second, which I personally believe, but if you can strengthen our beliefs here, I appreciate it. The second explanation is that the ultra low-dose antagonist actually enhanced the analgesic efficacy. Could you please help us to sort this out, please.

Yes, it's actually quite a simple question, because it's already been sorted out quite well at a number of levels. The question I believe is -- why twice-a-day, instead of four times a day administration? You know, if you look at that -- I can answer that question at several levels. I'm just trying to decide which level to answer it. At the pharmacology level, which is probably the easiest level to understand, if you sit down and look at the half-life of oxycodone, it is approximately, depending on who you believe, somewhere between 60 and 90 minutes. I think it is reasonable to assume that a product with a half-life of 60 to 90 minutes cannot provide 12 hours of pain relief. That we can all agree on. Furthermore, that is essentially the pharmacological grounds for the commercial success of drugs such as Oxycontin. Oxycontin provides twice-a-day dosing, or steady amounts of oxycodone dosing, over a 12-hour period. So, to believe that -- if you believe this, and you really have to, if one is rational -- there's just no way that twice-a-day dosing of oxycodone alone could provide patients with sufficient pain relief over 12 hours. Furthermore, I should also point out that oxycodone -- the base agreement -- the active pharmaceutical ingredient -- is approved and only approved in its base form, as a four times a day drug. In drug development, you always have to test your drug -- if you are testing your drug against a reference drug, you have to test it against both the dose that is FDA-approved as well as the dosing schedule. So we can't go around inventing different dosing schedules.

I see. Okay.

So that's that one level. The second level is the more interesting one. I think you called it the -- you had a couple of hypotheses -- I would really -- to us it's not a hypothesis. It's really driven by empirical data. If you look at the data, whether it's the preclinical data, whether it's the electrophysiology data, whether the clinical data, what we see very clearly across the board is that the addition of the low-dose naltrexone provides two benefits -- one is, substantially more pain relief. The second is prolonged pain relief. So, again the empirical data holds across both the clinical data, preclinical data and electrophysiology cellular level. Now I should also add if there any scientists on the line, or those who are interested in opioid receptor pharmacology, that most recently, I believe about three months ago, we published -- posted a presentation at a peer reviewed conference, showing that the addition of the low-dose naltrexone provides really a change in the receptor itself -- a kind of a structural change in the opioid receptor itself. And the change induces both prolonged pain relief as well as additional pain relief. So I think on a number of levels, we really kind of beat that horse endlessly.

Thanks for doing it again.

R.K. Ramakanth, Rodman & Renshaw.

I have a housekeeping question to start up with. This is for Pete Roddy. What is the total number of shares outstanding as of December 31st, 2004?

We have about 43,500,000 -- I think 43,700,000 or so.

Okay. Thank you. The next two questions are for Remi. This is timeline questions again. On the second Phase III trial for Oxytrex in osteoarthritis, can you please tell us what percentage of enrollment is completed at this point? Can you give us a little bit more specific specificity in terms of when we should expect announcement of results? I know that you have stated that it is second half of '05, but can we get a little bit more clarity on that?

Sure. The two questions, I believe. A little bit more specificity on when we might see actual results. And the second question has to do with the patient enrollment trends. The second Phase III trial with Oxytrex is in a little bit over 700 patients who suffer from severe chronic pain, due to advanced osteoarthritis. We are beyond a 50 percent enrollment rate. So we've got over 350 patients enrolled. In fact, we are closer to three-quarters of the patients enrolled. And we do expect to announce patient completion sometime in probably Q2 of this year. As for when we might get data, I cannot be more specific than saying second half and here's why. It all depends on whether patients -- the last few patients drop out, or whether they continue with the entire three-month treatment period. If they drop out -- if they drop out early in the study, then clearly we'll have results a month, maybe a couple months earlier. If the last few patients continue with the entire three-month treatment course, then, obviously, the trial will go out by two, three months.

Okay. Thank you. One other question on timeline is -- are the studies which are being conducted with PTI-901 in IBS. You just told us that enrollment in men is going a little bit slower than the women, just because of the patient population out there. And in the press release, the Company reports that you would have data available in the second half of '05. Again, would we see the data from both the studies at the same time? Or the mens' study and the womens' study, the data would come out at different times?

No, it's two different studies. If you've got two different studies with two different enrollment rates, we are not going to slow one down to make them end coterminously. We will publish data as we get it. We do expect to have -- in fact, I can tell you -- that we will get the womens' study -- the data from the womens' study ahead of the mens' study. Probably what I should add, or what I should have said earlier is that we are not doing anything to speed up the enrollment rate for man. The enrollment rate for women is, again, very nicely on track. And when we look at that data, if it's everything we expect it to be, then obviously, we will take steps to perhaps accelerate the enrollment rate for the men by opening up additional clinical sites, et cetera. But for now, we're very pleased with the rate that both trials are going. You know, for about nine months now, we've been saying that the mens' study is not as fast as the womens' study, again, mostly because there simply more women who suffer from IBS than men. And also the fact that men generally do not get referred to gastroenterologists for IBS because there's no treatment. So primary docs typically do not like to refer to specialists, knowing that there is nothing that the specialist can do.

Okay. Thank you, and I'll step back into the queue, in case I have more questions.

Andrew Swanson, Citigroup.

Thanks very much. Just a couple of quick questions. First on Remoxy -- now that you have had an opportunity to talk to the FDA at some length about the protocol for the second trial, does it give you any comfort or confidence in the design of the first trial? And maybe you could remind us of some of the details of that protocol. And then secondly, on PTI-901 -- obviously, as you've just mentioned at some length, the trial in men enrolling more slowly than had previously been anticipated -- now looking like a 2006 event, just based on your press release -- is there any circumstance with which you'd be able to file PTI-901, based on the strength of the data in women? Thanks very much.

Yes, to be clear, we see PTI-901 Phase III results as a 2005 event, for the womens' study. Whether or not we pursue an NDA for women only versus men, I don't know. That will be driven by the data and by future discussions with the FDA. As far as the Remoxy program is concerned, again, we feel very good. We've had a series of conversations with the FDA. These are all very encouraging. Remember that oxycodone abuse is a -- it's a national problem, it's a healthcare problem, it's a social problem. And to the extent that we provide a potential solution to a problem that afflicts at a number of different levels, there's a lot of support for it. The details of the Phase III study were released back at the end of January. But I'm happy to go over them. It's a randomized, double-blinded, placebo-controlled study being conducted in the United States. It's being conducted to confirm both the safety and efficacy of Remoxy in approximately 200 patients with severe osteoarthritic pain. It's a one -- there will be a one-week titration period during which patients receive Remoxy or matching placebo -- I'm sorry -- after which patients receive Remoxy or matching placebo for at least four weeks. The dose in the Phase III study for Remoxy is 20mg twice daily, which is to say, a total of 40mg per patient, per day. And the endpoint is pain relief as measured by standard VAS scores. We do expect results for the Phase III study in Remoxy in late 2005.

I'm showing there are no more questions in the queue at this time.

Thank you for listening. And that concludes our call and we'll talk to you again soon.

Ladies and gentlemen, thank you for your participation in today's conference call. This does conclude the presentation. You may now disconnect. Good day.