Tempest Therapeutics Inc (TPST) 2017 Q1 法說會逐字稿

Welcome to the OvaScience Reports First Quarter 2017 Earnings Results Call. My name is Victoria and I will be your operator for today's call. (Operator Instructions) Please note that this conference is being recorded.

And I will now turn the call over to Jennifer Viera. Jennifer, you may begin.

Good afternoon and thank you for joining us on today's call to discuss OvaScience's financial results for the first quarter ended March 31, 2017. With me today are Dr. Michelle Dipp, our Co-Founder and Executive Chair; and Christophe Couturier, our Chief Financial Officer.

Our discussions during this conference call will include forward-looking statements. Please see our press release issued this afternoon and our annual report on Form 10-K for important risk factors that could cause our actual results to differ materially from those projected or suggested in the forward-looking statements. We undertake no obligation to update or revise the information provided on this call as a result of new information or future results or developments.

We will begin first with Michelle who will discuss highlights from the quarter, followed by Christophe who will discuss our financial results. After our remarks, we will open the call for Q&A.

Now, I'll turn the call over to Michelle. Michelle?

Thank you, Jennifer, and good afternoon, everyone. Thank you for joining us on today's call to discuss OvaScience, our financial performance, and our progress in the first quarter.

At OvaScience, we are deeply committed to providing women with new fertility treatment options. We work daily to leverage the breakthrough discovery of EggPC cells to create novel treatments that can enable every woman to have biological child and every couple to build the family they deserve.

Today, I will highlight the recent progress across our portfolio of treatments beginning with OvaTure. OvaTure is our next-generation in vitro fertilization, or IVF treatment, that has the potential to help women produce healthy, young, fertilizable eggs without hormone injections. This is by maturing EggPC cells into eggs in vitro. As the next-generation IVF treatment, OvaTure could be used in every woman seeking treatment for infertility, including those unable to undergo hormone hyperstimulation.

Over the last five years, our scientists, together with our partner Intrexon, have defined a culture process that supports the in vitro maturation of EggPC cells into eggs. The ultimate test to determine the maturation of a healthy egg and embryo is successful fertilization. In 2017, we are focused on maturing bovine and human EggPC cells that are developmentally competent, meaning they exhibit certain characteristics that suggest the possibility of fertilization and development into embryo.

As we described last quarter, we have observed three key criteria of developmental competence, as applicable in both bovine and human EggPC cell-derived eggs. Through OvaXon, our joint venture with Intrexon, we can continue to progress fertilization studies for bovine EggPC cell-derived eggs.

We remain on track to achieve our goal of fertilizing a bovine egg by year-end. Beyond that, we expect to complete a bovine embryo transfer by the end of the first half of 2018 and ultimately to achieve the birth of a calf by the end of the first half of 2019. Importantly, our progress in the bovine model could serve as a proof-of-concept for our ongoing efforts in human.

In human preclinical models, before we can begin fertilization studies, we must obtain authorization. As we pursue this authorization, we are working with our clinical partners to develop a repeatable and robust process for the maturation of human EggPC cells so that we can increase the likelihood of success when we start fertilization studies. We expect to have mature human EggPC cell-derived eggs ready for fertilization studies and to receive the requisite authorization to fertilize and for research purposes by the end of the first half of 2018.

Turning now to OvaPrime. OvaPrime is designed to replenish egg reserve in women who do not produce any or enough eggs for IVF by transferring a woman's EggPC cells into her own ovary where they may mature into fertilizable eggs. Two primary reasons why a woman may not produce sufficient eggs for IVF includes diminished ovarian reserve or DOR and primary ovarian insufficiency or POI. We are currently running a prospective, controlled, blinded, and randomized company-sponsored trial to evaluate the safety of OvaPrime in women with either POI or DOR. As a secondary endpoint, this trial will also measure OvaPrime's effect on patient's hormone levels and follicular development as measured by ultrasound.

To date, we have enrolled 60 patients and completed reintroductions in 36 patients. We remain on track to complete enrollment of 70 patients by the end of the first half of 2017. As we've guided previously, we expect to complete biopsies in 70 patients by the end of the year and reintroductions in all patients by the end of the first half of 2018. We also expect by the end of 2017 to provide an initial data readout from 20 patients, including safety data from patients six months after EggPC cells are reintroduced into the ovaries.

Finally, I'll turn to AUGMENT, our treatment design to improve egg health and thereby IVF success rates by using mitochondria from a woman's own EggPC cells during IVF. AUGMENT is available at select partner clinics in Canada and Japan. And in the first quarter, we were pleased to welcome the first babies born to women treated in Japan. And just recently we were pleased to celebrate the second birthday of baby Zain, the first baby born using the AUGMENT treatment.

With regards to the United States, we recently met with the FDA regarding the AUGMENT treatment and we will continue to work with the agency under its available procedures to determine the most appropriate regulatory pathway for potential entry into the U.S. We will provide an update at the appropriate time in the future.

Separately, we continue to reassess our clinical trial strategy for AUGMENT, including our planned multi-center study and the study being conducted by the IVI Group in Valencia, Spain. We look forward to providing an update on our path forward at the appropriate time in the future.

With that, I will now turn the call over to Christophe who will review our financial results from the first quarter. Christophe?

Thank you, Michelle, and good afternoon, everyone. As Michelle just outlined, over the last three months we have worked to reposition our organization towards the development of OvaTure and OvaPrime. To demonstrate our progress, I will first compare our Q1 2017 financial results to Q4 2016 and follow-up with a comparison to Q1 2016.

Our P&L for Q1 2017 reflects our shift in corporate strategy. Compared to Q4 2016, our total operating costs on expenses, excluding restructuring charges, have decreased by 23% or $4 million to $13.1 million in Q1 2017. Restructuring charges were $5.4 million in Q4 2016 and $1.5 million in Q1 2017.

Research and development expenses, excluding restructuring charges, represented 44% of the total operating costs on expenses for Q1 2017 as compared to 27% in Q4 2016. Our selling, general and administrative expenses, excluding restructuring charges, decreased by $3.8 million or 35% in Q1 2017 as compared to Q4 2016. Finally, our cash burn on a like-for-like basis decreased by 29% from Q4 2016 to Q1 2017.

I will now turn to our financial results for Q1 2017 as compared to Q1 2016. Revenue for the quarter was $63,000 compared to $146,000 for the same period last year. Cost of revenue for the quarter, excluding restructuring charges, was $269,000 compared to $1.2 million for the same period in 2016. This decrease was primarily driven by commercial volume on the significant reduction in commercial expansion reports.

R&D expenses for the quarter, excluding restructuring charges, were $5.8 million compared to $6 million for the same period in 2016. SG&A expenses for the quarter, excluding restructuring charges, were $7.1 million compared to $14.5 million for the same period in 2016. This year-over-year decrease of $7.3 million or 51% was driven by a $4.2 million decrease in employee-related costs due to reduced headcount, $1.8 million decrease in marketing-related costs, and $1.3 million decrease in legal accounting tax on other-related expenses associated with international expansion.

Net loss for the quarter was $14.9 million or $0.42 per share compared to net loss of $21.8 million or $0.80 per share for the same period in 2016. The net loss for the quarter ended March 31, 2017 includes restructuring charges of $1.5 million related to the reduction of our footprint in Japan and severance charges for employees with delayed plan termination dates.

Our cash burn for Q1 2017 was $15.3 million compared to $16.6 million in Q1 2016. Our Q1 cash burn includes restructuring-related cash outlay of $2.3 million. We expect the total one-time cash expenditures related to the restructuring to be between 5.9 (technical difficulty) --

Hi, operator?

Yes. You are live.

Okay, great. Thank you. Sorry about that. We got disconnected. Christophe is going to go back to the cash burn section.

Okay. So I'll start again from the cash burn section. Net loss for the quarter was $14.9 million or $0.42 per share compared to net loss of $21.8 million or $0.80 per share for the same period in 2016. The net loss for the quarter ended March 31, 2017 includes restructuring charges of $1.5 million related to the reduction of our footprint in Japan and severance charges for employees with delayed plan termination dates.

Our cash burn for Q1 2017 was $15.3 million compared to $16.6 million in Q1 2016. Our Q1 2017 cash burn includes restructuring-related cash outlay of $2.3 million. We expect the total one-time cash expenditures related to the restructuring to be between $5.9 million and $6.4 million over 2017 and 2018.

As of March 31, 2017, we had cash, cash equivalents and short-term investments of $99.1 million. This cash balance will be used to support our corporate strategy, including our ongoing clinical trial of OvaPrime, the continued preclinical development of OvaTure, and maintaining the availability of AUGMENT to patients in our current markets. We continue to expect that our operating cash burn for 2017 will be between $45 million and $50 million, and that we will have sufficient funds without additional financing to support our operating plan into Q1 2019.

Thank you for your attention. I will now turn the call back over to Jennifer.

Thank you, Christophe. We'll now begin the Q&A session. Operator?

(Operator Instructions) We do have a question from Alethia Young from Credit Suisse. Please go ahead.

Hi, guys. This is [Ellie] on for Alethia. Thanks for taking the question. So in thinking about the early data on the 20 patients by the end of 2017, what are the key safety measures that we should pay attention to and what are your expectations there? Thanks.

Thanks so much for the question. We appreciate it. Yes, we're really excited about OvaPrime. I mean, as you know, this current OvaPrime trial is the first-in-human study. And so since first-in-human studies are primarily designed to address the intervention safety profile following extensive discussions with our ethics committee, we agreed that safety is in fact the most important endpoint. So really what we are looking for is both safety to the patient and safety to the offspring. So we will be monitoring all of the subjects as well as the offspring for safety.

Just as an aside, efficacy is also a great interest. So the secondary endpoint will evaluate the impact of OvaPrime on ovarian reserve. And so, we are accessing the changes from baseline in terms of the hormone levels. We're also looking at antral follicle count, which you can look at by ultrasound. And then, of course, fertilization of the eggs, embryonic development, number of embryo transfers, and then ultimately pregnancy.

Great. Thanks. And just in terms of the hormone levels. I mean what -- are there specific targets that we should be looking for? And I mean in your view, what would be sort of good data here? Thanks.

So we're basically looking for changes in AMH and FSH and because it's very specific to the patient, I won't comment on exactly what we're looking for. But we're essentially looking for changes in those hormone levels. Those are usually early signs that maturation of egg precursor cells is taking place. So we follow that with an ultrasound. And it's the ultrasound that allows you to look for the antral follicle count. And the follicle is basically housing the egg. That's where the egg is growing which is why is measure that.

There are no further questions at this time. This concludes today's call --

Okay. Thank you for joining us today. We look forward to providing additional updates on future calls. And of course if you have any other questions, please feel free to reach out to us directly at OvaScience. Thanks and have a good evening.

Thank you. Ladies and gentlemen, this concludes today's call. Thank you for participating. You may now disconnect.