Tempest Therapeutics Inc (TPST) 2017 Q3 法說會逐字稿

Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to OvaScience's conference call to discuss the company's third quarter 2017 financial results. (Operator Instructions) I would like to remind everyone that this conference call is being recorded.

I will now turn the conference over to Jennifer Viera with OvaScience. Please go ahead.

Good afternoon, and thank you for joining us on today's call to discuss OvaScience's financial results for the third quarter ended September 30, 2017.

With me today are: Dr. Christopher Kroeger, our Chief Executive Officer; and Jonathan Gillis, our Vice President of Finance.

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 and subsequent quarterly reports on Form 10-Q 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 Chris who will discuss highlights from the quarter, followed by Jonathan who will discuss our financial results. After our remarks, we'll open the call for Q&A.

I'll now turn the call over to Chris. Chris?

Thank you, Jennifer, and good afternoon, everyone. Thank you for joining us on today's call to discuss OvaScience and our updates for the third quarter of 2017.

Before I begin, let me start by providing a brief background for those of you who I haven't yet had a chance to meet. Previously, I served as the CEO of Cardioxyl Pharmaceuticals, a company focused on developing therapeutics for acute and chronic heart failure. There, I led a highly effective research and development team that advanced multiple heart failure therapies and ultimately engineered the sale of that company to Bristol-Myers Squibb. Prior to Cardioxyl, I led the biotech and medical device investing efforts as a Partner at The Aurora Funds, a venture capital firm based in North Carolina. As many of you know, I joined OvaScience in September, and it has been a great pleasure to work with this very capable and passionate team here. It's a company driven by an important mission to create a future in which every women can have her own genetic child. The breakthrough discovery of egg precursor cell, or EggPCs, forms the core of this company, and we are focused on translating this promising science into transformative treatments for women's fertility. It was the phenomenal potential of this novel technology, combined with the profound unmet medical need in the fertility space, that encouraged me to join OvaScience.

Over the last 2 months, I have worked with the team here to hone our focus as a scientifically rigorous data-driven organization and to efficiently advance our suite of novel treatments. We've made important progress in accelerating the pace and efficiency of our research and development efforts for both the OvaPrime and OvaTure programs, which will enable us to build the compelling clinical and preclinical datasets required to advance both the treatments. I look forward to working with the talented group here at OvaScience to execute on our mission of transforming women's fertility.

I'll now turn to our progress in the third quarter. Let me begin with OvaPrime. OvaPrime is a potential fertility treatment that could help a woman who makes too few or no eggs by transferring her own concentrated EggPC cells to a different region of her own ovary where they may mature into fertilizable eggs. In the third quarter, we continued to make progress in our single-center prospective blinded and placebo-controlled study of OvaPrime, which is designed to assess the treatment safety in women with either primary ovarian insufficiency or poor ovarian response. The study is also designed to evaluate several exploratory secondary endpoints, including OvaPrime's effect on patient's anti-mullerian hormone, follicle stimulating hormone and estradiol levels as well as egg follicle development as measured by ultrasound. We will use data from this study to inform our future clinical development strategy and the design of subsequent OvaPrime studies.

We increased the modified intent-to-treat population in the OvaPrime study from 50 to 70 in order to include a greater number of subjects with primary ovarian insufficiency. As a result, the enrollment target for this study was increased to 95. To date, 78 patients have been enrolled, and we remain on track to complete biopsies in 70 OvaPrime study patients and to announce the initial readout of 6 months of post-eggPC reintroduction safety data from 20 patients by the end of the year.

I'll now turn to OvaTure, our potential fertility treatment that could help a woman produce healthy fertilizable eggs without hormone injections by maturing EggPC cells into eggs in vitro. Under the OvaTure collaboration, we continue to work with our partner, Intrexon, to progress the OvaTure program. In the third quarter, we focused primarily on 2 initiatives: First, for both human and bovine OvaTure, we continue to optimize culture conditions for the maturation of EggPC cells with a goal of producing more mature eggs capable of fertilization. We also introduced several new analytical assays to better identify the stage of the maturing EggPC cell-derived egg. We have adopted existing assays from the reproductive research field for chromosomal spread and mitochondrial localization and are evaluating newer exploratory assays to help determine which EggPC cell-derived eggs are ideal candidates for future fertilization studies. Our aim is to identify the optimal developmental stage of a maturing EggPC cell that will provide the highest likelihood of fertilization and to make our process both more robust and repeatable.

Our second initiative involves 2 bovine fertilization strategies for EggPC cell-derived eggs. The first of these strategies, conventional IVF, involves standard insemination techniques and is traditionally used in the bovine space. We have continued to iterate this technique to identify the best conditions for eggs derived from EggPC cells. The second strategy, intracytoplasmic sperm injection, or ICSI, involves the injection of a single sperm into the egg. While ICSI is becoming increasingly prevalent in human clinical practice, it is not typically used in bovine IVF. We are working to adapt this process to the bovine model, which requires both training as well as the development of several technical modifications to the human procedure. These IVF and ICSI efforts are being conducted in parallel and will inform our future OvaTure development.

Together with Intrexon, we have multiple fertilization studies in progress that will complete by year-end. I realize that we have previously communicated a goal of fertilizing a bovine EggPC cell-derived egg in 2017. While we are actively undertaking what we believe are a series of well-designed experimental approaches, at this stage, there is no certainty that the ongoing efforts will result in a fertilized bovine egg by year-end. That said, I can assure you that we are aggressively pursuing fertilization and are committed to advancing the OvaTure program.

Separately, we're continuing to work with our academic partners to secure authorization to fertilize human EggPC cell-derived eggs and embryos outside of the U.S.

Taking a step back, while our organization is completely committed to rapidly progressing the pioneering technology that comprises the OvaTure program, my own perspective and experience is that biological research is by its very nature unpredictable and that it is difficult to anticipate specific timelines for discovery stage work. Consequently, I think it is most helpful and appropriate to provide development guidance only once we progress closer to the clinic. Going forward, you can expect us to continue to transparently communicate all significant updates as OvaTure progresses, but we will no longer provide discovery milestone guidance.

Moving to AUGMENT. We recently granted an exclusive license to IVF Japan Group to provide the treatment in Japan. We're very pleased to enter into this agreement, which will allow us to continue to offer the AUGMENT treatment in Japan while incurring minimal additional expense. Importantly, the agreement will enable us to generate additional AUGMENT outcomes data and help inform the target patient profile for this treatment.

We're pleased that our strategic focus on R&D has enabled us to make significant progress advancing our OvaPrime and OvaTure programs, and we look forward to updating you on our efforts as we continue to move forward on this exciting new path for the company.

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

Thank you, Chris, and good afternoon, everyone. Over the last 9 months, we have worked hard to realign and rightsize our organization to focus our resources on the development of OvaPrime and OvaTure and to extend our cash runway into the first quarter of 2020. Our progress to date, driven primarily by our December 2016 and June 2017 restructurings, is reflected in the financial results we announced earlier this afternoon.

The following discussion of operating costs and expenses are exclusive of restructuring charges. Compared to the third quarter of 2016, our total operating costs and expenses have decreased by $8.5 million or 48.3%, down to $9.1 million in the third quarter of 2017. Moreover, R&D expenses represented 44% of our total operating costs and expenses for the third quarter of 2017 compared to 28% in the third quarter of 2016 and SG&A expenses represented 56% of our total operating expenses this quarter compared to 71% in the third quarter of 2016.

Let me now walk through our financial results. Research and development expenses for the third quarter were $4 million compared to $5 million for the same period in 2016. The decrease was driven by decreased employee-related costs, including stock-based compensation expense. Selling, general and administrative expenses for the third quarter were $5.1 million compared to $12.6 million for the same period in 2016. This decrease was primarily driven by reduced employee-related costs, including stock-based compensation expense, and decreased marketing and other commercial-related expenses.

Net loss for the third quarter was $9.4 million or $0.26 per share compared to a net loss of $19.3 million or $0.54 per share for the same period in 2016. The net loss for the third quarter of 2017 includes restructuring charges of $0.4 million. As of September 30, 2017, we had cash, cash equivalents and short-term investments of $75.7 million compared to $114.4 million as of December 31, 2016. The cash outlays related to the restructurings in the third quarter of 2017 represent $1.6 million. We expect additional cash outlays related to the restructurings of $1.2 million over 2017 and 2018.

Looking ahead, our cash balance will be used to fund our corporate strategy, including the ongoing clinical development of OvaPrime and the continued preclinical development of OvaTure through key milestones in 2019. Based on our current operating plans, we anticipate that we will have sufficient cash without additional financing to support our efforts into the first quarter of 2020. This guidance reflects our current operating plans and, of course, is subject to change based on results of our ongoing development efforts with OvaPrime and OvaTure.

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

Thank you, Jon. We will now begin the Q&A session. Operator?

(Operator Instructions) And our first question comes from Alethia Young from Crédit Suisse.

This is [Irene] on for Alethia. So just first, a question for Dr. Kroeger. From your time at the company so far, how do you think about the opportunities and challenges moving forward? And how do you view these factors sort of informing how we should think about the company? And then also, one on the -- you touched on this a little bit in the prepared remarks, but could you frame the motivation and sort of the strategy around the AUGMENT licensing deal both from a clinical and a commercial perspective as we think about this development pathway going forward?

Thanks, [Irene]. So I think the first question was my take on the overall opportunities here and the opportunities and challenges within the company. So my assessment of the opportunities for OvaPrime and OvaTure, in particular, is that these are areas of very significant unmet medical need. And frankly, the core technology combined with these unmet medical needs are what drew me to OvaScience in the first place. I think, OvaPrime as you know, is addressing patients with primary ovarian insufficiency and poor ovarian response. And these are patients for whom there are few or no therapies currently in the fertility space. So OvaPrime is addressing what is a very large area of unmet need -- medical need in the fertility space. OvaTure is addressing patients who are either unable or unwilling to undergo hormone stimulation as part of their IVF cycle, so again, another very large area of unmet medical need and the large market opportunity. As I've -- since I've joined the company, I think -- as I've taken a hard look at the company, the mission of the company remains unchanged, and that's really to continue to work to translate the breakthrough discoveries of egg precursor cells into important therapies for the fertility market. We're continuing to hone our scientific focus to become a more rigorous and data-driven organization. And as I've started to develop the overarching strategy, I think that remains fairly clear, which is to generate robust, thorough and compelling preclinical and clinical datasets that support the safety and efficacy of OvaPrime and OvaTure. With respect to AUGMENT, I think that synthesizes well with our push toward a data-driven organization. The deal with IVF Japan, importantly, will provide us with significant new outcomes data and will help us to refine the appropriate patient population for the AUGMENT therapy.

(Operator Instructions) We have no further questions at this time. Do we have any further closing remarks?

No, we're all set, operator. Thanks so much. And if you have any follow-up questions, please contact us here at OvaScience. Thanks, everyone, and have a great night.

Thank you, ladies and gentlemen. This concludes today's conference call. Thank you for participating. You many now disconnect.