Titan Pharmaceuticals Inc (TTNP) 2002 Q4 法說會逐字稿

Good afternoon. My name is Katina (ph) and I will be your conference facilitator today. At this time, I would like to welcome everyone to the Titan Pharmaceuticals fourth quarter and year-end 2002 conference call. Leading today's call will be Dr. Louis R. Bucalo, chairman, president and chief executive officer, Sunil Bhonsle, chief operating officer, Dr. Frank Valone, executive vice president of clinical development and regulatory affairs, and Robert Farrell, chief financial officer.

All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer period. If you would like to ask a question during this time, simply press star then the number one on your telephone keypad and questions will be taken in the order they are received. If you would like to withdraw your question, press the pound key.

Before we begin, I'd like to read the following Safe Harbor language. This presentation may contain projections or other forward-looking statements regarding future events of the future financial performance of the company. These projections or statements are only predictions. Actual events or results may differ materially from those in the projections or other forward-looking statements. Please see the company's filings with the SEC, including our most recent filing on Form 10-K for a discussion of important risk factors that could cause actual events or results to differ materially from those in the projections or forward-looking statement.

Thank you. Dr. Bucalo, you may begin your conference.

Thank you, Katina.

Good afternoon, everyone, and thank you for attending Titan's fourth quarter and year-end 2002 conference call.

On the call with me is Sunil Bhonsle, our chief operating officer, Dr. Frank Valone, our executive vice president of clinical development and regulatory affairs, and Robert Farrell, our chief financial officer.

I'd like to begin by saying that we're very excited about the potential of our current product development programs, about progress we plan to present at medical conferences in the coming months, and important new clinical studies that we will initiate. Our product development programs encompass eight products in clinical testing. We have made a strategic decision to presently focus our internal resources on four key product development programs. These programs are Spheramine for Parkinson's disease, Pivanex for non-small cell lung cancer, Gallium Maltolate for cancer and bone disease, and Probufen (ph) for opiate addiction.

Through this strategic focus, we hope to accelerate progress in core areas, as well as reduce development expenditures, giving us sufficient capital to advance these products through what we believe are key clinical trials, providing important data from controlled studies, as well as maximizing our cash position.

We're excited about the progress we're making in these four programs, and I'd like to discuss several items in these areas. With regard to Spheramine, in 2002 we reported positive results from our pilot clinical study in Parkinson's disease. Based on these results, we initiated a randomized phase II-B clinical study in advanced Parkinson's disease patients, in collaboration with our corporate partner, Schering AG. The results of pre-clinical and clinical testing of Spheramine to date have been very positive, and we look forward to recording two-year follow-up data from the pilot clinical study next week at the American Academy of Neurology meeting.

With regard to Pivanex, our histone deacetylase inhibitor with broad spectrum anti-cancer activity, we reported positive open label phase II clinical study results in non-small cell lung cancer at ASCO in 2002. And we are currently in the process of initiating a randomized phase II-B study of Pivanex, in combination with the chemotherapeutic agent doxetaxel in second-line therapy of non-small cell lung cancer, with patient enrollment to begin in mid-2003.

Gallium Maltolate, our novel oral agent for cancer and bone disease, is completing a phase I dose escalation study, and we expect to launch two phase II clinical studies, one in cancer, and one in cancer-related bone disease, in the second half of 2003.

In addition, regarding Probufen, we are currently initiating the first clinical study with this product, our novel long-term treatment for opiate addiction, with study initiations scheduled for Q2 2003.

In addition to these four core development programs, we have additional clinical programs that we plan to advance primarily through external collaborations. Novartis, our corporate partner for iloperidone, is evaluating possibly sublicensing Iloperidone, continuing product development itself, or potentially returning to the Titan.

With respect to our monochromal antibodies, government-sponsored collaborative groups are performing clinical trials of several of these antibody products. Titan is also reviewing data from the phase III clinical study of CeaVac, induce D (ph) colorectal cancer, and we are exploring the potential for continued development of CeaVac through external collaborations

Turning now to the financial results, our financial performance for the fourth quarter and fiscal year 2002 reflects the development costs associated with the completion of the phase III CeaVac clinical trial, as well as the continued advancement of our other core clinical programs. In 2003, our strategic focus and internal resources will be directed at advancing the four core programs, Spheramine, Pivanex, Gallium Maltolate and Probufen.

I'd now like to turn the call over to Bob Farrell, who will discuss our financials in more detail.

Bob?

Thank you, Lou.

In fourth quarter 2002, revenues were approximately $236,000, compared to $589,000 for fourth quarter 2002. For fiscal year 2002, revenues were approximately 2.9 million, compared to 4.6 million in fiscal year 2001. The higher revenue in 2001 was primarily due to additional licensing fees for iloperidone and SPIR grant revenue for the pilot clinical study of Spheramine. Our net loss for the fourth quarter 2002 was approximately 8.9 million or 32 cents per share compared to 6.3 million or 23 cents per share for the same period last year.

For the fiscal year 2002, the net loss was approximately 28.2 million or $1.02 cents per share, compared to 17.5 million or 63 cents per share for fiscal year 2001. The increase in net loss was primarily due to the higher R&D expenses that were necessary to complete the Phase III clinical study of CeaVac and expand our core clinical development programs.

Interest income, net of other expenses for the fourth quarter 2002, was $233,000 compared to 1.6 million for fourth quarter 2001. For fiscal year 2002, interest income net of other expenses was approximately 3.8 million compared to 6.7 million for fiscal year 2001. The difference is related to lower interest rates and our lower average cash balance. And as of the end of the year 2002, we had approximately 73.5 million in cash and marketable securities.

For 2003, as Louis mentioned, we are focusing our internal resources in four product development programs which will enable us to decrease our R&D spend by approximately 25% this year.

Thank you, Bob.

I'd now like to discuss our development programs in more detail. As you heard from the highlights I previously provided, we have made important progress in a number of areas. I'll begin now by providing some additional detail on our four core product programs.

During the fourth quarter, Titan and our corporate partner Spheramine, Schering AG initiated a randomized controlled blinded Phase IIB clinical study of Spheramine in the treatment of late-stage Parkinson's disease. Schering is funding this clinical study which will enroll 68 patients and is expected to be completed in mid-2005. This study was initiated based on the positive results from the Spheramine pilot clinical study which showed that treatment with Spheramine produced significant improvement in motor function and quality of life in six patients with advanced Parkinson's disease.

Two years post-treatment, the results from the pilot study continue to show great promise. These new data will be presented at the American Academy of Neurology meeting next week.

We also made progress during 2002 advancing Pivanex, a compound with broad spectrum anti-cancer activity that we are initially developing for the treatment of non-small cell lung cancer. Results of the Phase II clinical study presented at AAPSCO (ph) last year demonstrated that Pivanex has single agent activity in non-small cell lung cancer.

We also presented pre-clinical data showing that Pivanex can be combined with current chemotherapy agents, including doxetaxel to increase anti-cancer activity. Additional pre-clinical results showing synergy with doxetaxel in non-small cell lung cancer will be presented in early April at the American Association for Cancer Research.

Based on the positive results of these studies, we are now preparing to initiate a randomized Phase IIB clinical trial of Pivanex in combination with doxetaxel in non-small cell lung cancer, and patient enrollment is expected to commence in mid-2003. Patient enrollment will begin following the successful completion of our dose escalation trial, which is currently being conducted.

Last year, we also continued to advance a Phase I-II clinical study of Gallium Maltolate, our novel oral agent that inhibits cancer-related and bone-related cellular processes. We are currently completing the Phase I portion of this study to establish an appropriate dose level, and we expect to initiate two Phase II clinical studies in the second half of 2003. One of these Phase II studies will examine the anti-cancer effects of Gallium Maltolate in several cancers and the second study will evaluate the treatment in metastatic bone disease.

Probufen is a long-term treatment in development for opiate addiction that uses our proprietary ProNeura drug delivery system to deliver Bufanorfin(ph), an approved agent for treating opiate addiction. Results from pre-clinical testing have demonstrated the ability of Probufen to deliver sustained therapeutic levels of Bufanorfin for more than eight months, with no adverse effects. We presented these results last summer at the International Conference on Pain and Chemical Dependency. We're currently in the process of initiating Phase I study of Probufen and patient enrollment is expected to begin next quarter.

In addition to these four core development programs, Titan is also engaged in clinical research of other products through collaborations with corporate and government partners. These programs will focus on external collaborations for further development.

Regarding Iloperidone for the treatment of schizophrenia, our corporate partner for Iloperidone, Novartis completed a study last summer evaluating the EKG profile of patients receiving Iloperidone, which showed that a change in QTC interval for Iloperidone was roughly comparable to that of Zaprasadil (ph), a currently approved agent. The FDA agrees with this assessment, and has indicated that one additional successful pivotal Phase III study is necessary to complete the efficacy data package prior to any NDA submission.

Novartis is currently evaluating the potential next steps for Iloperidone, which may include sublicensing the compound to another company, continuing Iloperidone development or returning the rights to Titan.

We will provide updates on this as they become available.

We also have three additional products in development that are in clinical studies being conducted by the oncology cooperative groups funded by the National Cancer Institute. These products are monoclonal antibodies. In particular, the results of a Phase III study of CeaVac for the treatment of advanced stage or induce D colorectal cancer were announced in December 2002. Preliminary analysis from the study demonstrated a trend toward overall survival improvement of approximately two to three months in patients receiving more than five doses of CeaVac versus placebo, but failed to demonstrate a significant improvement in the primary endpoint of survival and the overall efficacy evaluable (ph) population, or intent to treat population. We believe there is considerable evidence in this study of a treatment benefit of CeaVac, and additional product development of CeaVac through potential external government collaborations is currently under review.

Government sponsored national clinical cooperative groups continue to evaluate CeaVac and Titan's other monoclonal antibodies, TriAb and TriGem. Two Phase II studies are currently in progress, which include combination therapy with CeaVac and TriAb, one being conducted by the radiation therapy oncology group for the treatment of non-small cell lung cancer and the other being conducted by the cancer and leukemia group B for the treatment of colorectal cancer. In addition, the Southwest oncology group is conducting a Phase II study of TriAb and TriGem in small cell lung cancer.

We look forward to updating you on additional progress as we move forward this year.

At this point, I would like to open up the call and help answer any questions you may have.

Could you please assist us with any questions from the group?

At this time, I would like to remind everyone if you would like to ask a question, please press star, then the number 1, on your telephone keypad.

Your first question comes from Jerry Woo(ph).

Hi. For Iloperidone, is there any more detail you can give for Novartis' development decision? Have they started initiating any conversations with other companies or any -- planning any kind of time line when we could maybe hear a little bit more as far as the actual development decision?

We can't provide at this time any more detail on the status of any possible discussions that Novartis might be having, but as I mentioned, we will continue to update this as more information becomes available. It's our hope and anticipation that Novartis will complete the decision and any additional processes involved within the next three to six months, but we don't have any absolute guarantees on that time frame. But we think that's a reasonable expectation.

Okay. And I have a few financial questions.

Yes.

What are revenue expectations for this year?

Revenue expectations are in the range of 100 to $200,000 for 2003.

Okay. And I know you're targeting to reduce your R&D expenditures by about 25%. Any more detail you can provide as far as how that's going to look throughout the year? Is that going to be, you know, more weighted towards the back half of the year when you initiate additional clinical trials?

Well, we're not really in a position to provide more detail on projections for 2003, but the reductions should be fairly evenly divided throughout the year.

Okay. And then for the interest income that you reported this year, it's a little bit lower than what's been reported in previous quarters. Is there any kind of extra expenses being included in that line?

Bob?

No, the -- we had the portfolio invested in a number of very high-yielding instruments, most of which matured early this quarter, and the -- for the last couple years, interest income has been very good, yield has been very attractive, in this lower interest rate environment. However, we have lesser interest revenue projected.

So really it's just a result of changes in interest rate and reduction in the cash balance.

Okay. Thanks.

Thank you.

Your next question comes from Bruce O'Brien (ph).

Hi. Given that Titan has been one of the, if not the worst performer in the biotech universe, over the last few years, what could you do -- or what are you doing to restore investor confidence?

Thank you, Bruce.

The question relates to what Titan is doing to restore investor confidence, and what Titan is doing is focusing on areas where we believe there's significant potential for generating positive results in clinical studies which, if achieved will be very value-enhancing for our company. This has been a very difficult environment for many companies, including Titan, and in particular, when we had difficulties with two of our lead products, this places us in a difficult position with respect to the financial markets and the public markets.

But fortunately, we are in a position to have more than sufficient cash to follow these programs, and we believe that that's the appropriate course to continue to build scientific evidence, clinical evidence, and value in our portfolio.

Again, if you would like to ask a question, please press star, then the number 1, on your telephone keypad.

At this time, there are no further questions.

All right. Thank you very much. Thank you for participating. Good day.

That concludes today's Titan Pharmaceuticals fourth-quarter and year-end 2002 conference call. You may now disconnect.