Valneva SE (VALN) 2006 Q2 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the second quarter 2006 Iomai Corporation finance results. My name is Jackie and I will be your audio coordinator for today's conference. At this time all participants are in a listen-only mode. We will be participating in 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 conference, Mr. Russell Wilson, Chief Financial Officer. You may go ahead, sir.

Thank you. Good morning and welcome to Iomai Corporation's second-quarter financial results conference call and our second call as a public company. Before we begin today's call, I need to remind you that this call may contain forward-looking statements that involve known and unknown risks and uncertainties that could cause actual results to differ materially from those expressed or implied by the forward-looking statements.

All statements on this call, other than statements of historical fact, are forward-looking statements. Forward-looking statements include statements regarding our future financial position, business strategy, budgets, projected costs, plans and objectives and management for future operations. May, continue, estimates, intend, plan, will, believe, project, expect, seek, anticipate and similar expressions may identify the forward-looking statements, but the absence of these words does not necessarily mean that a statement is not forward-looking.

These forward-looking statements include among other things statements about the implementation of our corporate strategy, our future financial performance and projected expenditures, our ability to enter into future collaborations with pharmaceutical companies, or to obtain funding from government agencies. Our product research and development activities, including the timing and progress of our clinical trials, our ability to scale-up, manufacturing and our projected expenditures, our technologies, potential efficacy, advantages over current approaches to vaccination and broad applicability to infectious diseases, as well as our expectations that our technology will exhibit fewer systemic side effects than traditional injectable vaccines.

I refer you to the risks identified under the heading Factors That May Impact Future Results in MD&A in our quarterly report on Form 10-Q, with three months ended June 30, 2006 as well as other filings we have made with the Securities and Exchange Commission. We would also like remind you that the statement speaks only as of the date of this call and Iomai undertakes no obligation to update or revise the statements. Let me now turn the call over to Stan Erck, our President and CEO of Iomai.

Thanks, Rip, and good morning. Joining Rip and me today is Dr. Greg Glenn, Founder and Chief Scientific Officer of Iomai. Before we discuss the second quarter and first-half financial results, I would like to take a moment to briefly summarize our unique vaccine technology and update you on the significant progress we have made in this quarter in each of our four development programs. Then Rip will review the results and I will return to give guidance on our goals for the remainder of the year in the early part of 2007.

So over the past six months we have continued to make strides in our effort to commercialize our core technology, transcutaneous immunization, what we call TCI, which is the brainchild of Dr. Glen Wiley who's at the Walter Reed Army Institute of Research. TCI is an approach that taps into the benefits of a major group of antigen presenting cells found in the outer layers of the skin which can generate and enhanced immune response.

Iomai has taken advantage of the skin's naturally occurring immune response in developing novel TCI patches to enhance the efficacy of existing vaccines, also to enable new vaccines that are viable only through transcutaneous administration and expand the global vaccine market. So our research suggests that our product can trigger immune responses as strong as, or stronger, than those seen in injectable vaccines and because the TCI patch can deliver antigens and adjuvants directly to the immune system, systemic side effects may be minimized.

We focused our development on four product candidates, each in a high-value area with significant and unmet medical needs. One, a novel skin patch to immunize against influenza. Two, an immune stimulant, or IS, patch that could boost the immune response to a traditionally injected flu vaccine. Three, the redevelopment of our IS patch to enhance immune responses to pandemic flu vaccines by as much as 10 to 100 fold, thereby permitting fewer or smaller doses of supply constrained vaccine for a needle-free skin patch for the treatment of enterotoxigenic E. coli, or ETEC, a major cause of traveler's diarrhea.

In the second quarter of 2006 we made progress with each of these programs and with the development of our TCI approach overall. Let me highlight several areas of significant recent progress. We submitted on May 2, 2006, to the Department of Health and Human Services in response to the government's request a proposal -- it's called an RFP -- for further development of our IS patch to expand the supply of pandemic influenza vaccines. In the RFP issued in March 2006 the HHS stated that it is looking to stretch the domestic influenza vaccine supply in the event of influenza pandemic by awarding multiyear contracts for preclinical study, clinical testing and regulatory development targeted toward -- to selected organizations developing approaches that use fewer or smaller doses of vaccine.

In line with the government's RFP and if awarded a contract, we will develop a plan to produce in a six-month period 150 million doses of our IS patch. This patch is designed to enhance the immune response to any manufactured pandemic influenza vaccine, an advantage that may allow the public health service to employ a universal dose-sparing strategy to extend the supply of vaccine. If Iomai is awarded the government contract to work on the IS patch, Solvay Pharmaceuticals has agreed to provide the necessary pandemic influenza vaccine for use in preclinical and clinical testing.

We expect the HHS to award three to five contracts against this RFP sometime in the fall. There is a budget set aside of $150 million for fiscal 2006 for this program, and we believe that the plan will call for accelerated development through licensure.

We have also accumulated evidence that our drive formulation influenza vaccine and immunostimulant adjuvant patches are stable for six months at room temperature. This finding suggests our products can be stockpiled in advance of a public health emergency and shipped via mail without requiring refrigeration. These are essential properties for a product could be used in an influenza pandemic.

We have also filed an IND, an investigational new drug application with the U.S. Food and Drug Administration to begin a trial comparing our needle-free influenza vaccine patch to the traditional injectable version of the vaccine. We have also received a key patent that broadens our intellectual property position on our TCI patch technology and further affirms our leadership in the field.

During the second quarter 2006 we began other trials for our traveler's diarrhea vaccine and preliminary results for one of these have indicated that our traveler's diarrhea vaccine patch when self-applied works equally well as when applied by health care providers. In a situation where you have mass vaccination, such as pandemic flu, the ability to self-administer is crucial for rapid vaccination.

The Phase 2 trial designed to test our vaccine patch for traveler's diarrhea and volunteers traveling the sites in Mexico and Guatemala has begun and rolling. The results from that trial will begin provide investigators with the crucial information needed to launch Phase 3 program. These studies will build on the results of our clinical trial in which our dry vaccine patch for traveler's diarrhea achieved high immune responses in those vaccinated and outperformed our earlier liquid ETEC patch formulations.

And we have also made significant additions to our Board of Directors this past quarter. We have been able to recruit Dr. Tom Vernon, an M.D., a former Vice President of Policy, Public Health and Medical Affairs at Merck while we also recruited to our Board Weller Meyer, President and CEO of Acacia Federal Savings Bank. They were both elected to the Board on July 5, and at the same time Dr. James Young resigned from the Board. Jim had served on the Board as a representative of MedImmune which invested in Iomai's last venture round of financing. Jim's resignation is in line with MedImmune policy of not maintain Board representation after a portfolio company goes public. So we are proud of our progress in meeting our development goals and validation of our TCI technology. I'll now turn the call over to Rip who will briefly discuss the second- quarter results.

Thank you, Stan. Let me now summarize our second quarter and first-half results. We had revenue of $408,000 in second quarter of 2006, down slightly from the second quarter of 2005. Revenues in the second quarter of 2006 reflect reimbursement of expenses under our grant from the NIH for the development of our IS patch technology for pandemic flu applications.

Total operating expenses were $8.2 million in the second quarter of 2006 compared to operating expenses of $4.5 million in the second quarter of, 2005. And as in the first quarter, the increase in operating expenses for the second quarter was primarily due to, one, increased development cost for our skin preparation system, two, increased clinical trial cost principally for our needle-free vaccine patch for the prevention of traveler's diarrhea. Finally, higher payroll costs associated with year-to-year increase in headcount as well as expensing of stock options.

The second quarter 2006, the net loss available to common stockholders was $7.5 million or $0.45 loss per share compared to a net loss available to common stockholders of $5.1 million or 6.57 loss per share in the second quarter of 2005. The lower net loss per share in the second quarter of 2006 compared to 2005 was attributable to an increase in the weighted average number of shares outstanding due to the Company's initial public offering in the first quarter of 2006. And as of June 30, 2006 Iomai had common stock outstanding of 16.9 million shares.

As of June 30, 2006 unrestricted cash and cash equivalents and marketable securities were $24 million compared to $29.5 million at March 31, 2006. We expect to be able to fund our capital expenditures and growing operations with current working capital through early 2007. Now, let me hand the call back to Stan for some concluding remarks.

Thanks. In the coming months we'll be testing our vaccines against influenza and traveler's diarrhea and we anticipate accomplishing the following in the second half of 2006. First, signing of a corporate partnership with our needle-free influenza program; also initiation of a Phase 1/2 trial comparing Iomai needle-free influenza patch to a traditional intramuscular vaccine in the second half of 2006, initiation of a Phase 2 study of our IS patch to enhance immune response to traditional influenza vaccine in the elderly in the second half of 2006, and a continuation of a series of Phase 2 studies for the prevention of E. coli related traveler's diarrhea.

At the time where concerns about influenza both seasonal outbreaks of the virus and the prospect of a pandemic are receiving increased attention, Iomai has steadily advanced its novel clinical programs. The data we have gathered already this year, along with the results of our ongoing and upcoming trials, will help further define Iomai's leadership in the vaccine field. Thank you all for your participation. So let me now turn the call back to the operator for questions.

(OPERATOR INSTRUCTIONS). Annabel Samimy, UBS.

Hi, guys. It's Annabel Samimy. I'm sure you know where I am from.

Yes, I do.

Just had a quick question regarding if you could just give us an idea of the timing of some of the data releases, when we can expect those throughout the rest of year, and also maybe into early 2007 and what they are.

So I expect -- this is now, let's see, this is now August. So the expectation, the various trial data that are coming up will be data from trials already begun and perhaps dosing's finished on -- my guess is is that in the September/October time frame, we'll have announcements on the data from a couple of these Phase 2 ETEC trials.

The flu trial, the first flu trial which is the needle-free influenza trial, we expect to start before the end of September. We filed -- I didn't think we mentioned in the conference that we filed our IND recently. Data from that won't be out until the very beginning of 2007. We have a second flu trial which will be the IS patch in the elderly. Our expectation is that trial will be dosing in early fourth quarter with the data at the same time. I think it is just at the turn of the year.

And then the other two announcements I think will be sometime before the end of the year will be the announcement of whether we qualified for the contract award for the RFP for pandemic influenza and then secondly as we have stated previously, we expect to be able to announce a flu partnership deal in the second half of this year.

And when exactly is the contract supposed to be awarded?

Well, what they announced early on was that they were trying to award the contract by September 30 which of course is the government's fiscal year. They have -- I'd don't want to raise expectations because they have always been late. My guess is that if it isn't by September 30, it will be sometime in the fall.

Okay. And then for the ETEC trials, the data that is going to be coming out is some of the field data?

It's the -- the field data, that trial we just started accruing and dosing patients very recently. So I don't expect the data from that trial to come out until the first quarter of next year. The data that will come out are data on such things as a dose ranging which is expected to start late this quarter or early fourth quarter. There will be trials that we have already dosed, which we will talk about the first advanced studies with Iomai own produced adjuvant. It will be -- I don't know. Help me out, Greg. Are there other -- what's other data that will be coming out this year?

My colleagues on the line here? Greg? I guess he is not on the line right now. So it will be, yes, basically dose ranging and first demand studies with the Iomai LT and studies comparing patch site application, different patch applications.

Sounds great. Thank you.

Jeff [Gutter], Cowen & Co.

It's Jeff Gutter from Cowen & Co. Thanks for taking my question. Stan, just have a quick question for you. The patent that issued in June, does that cover both the wet and dry patch design?

It does. It's very broad.

And then is Rick still on the line or did those guys get cut off?

It seems to me like they got cut off.

Maybe I will float the question you. Just on the R&D spend fourth quarter, pretty big jump quarter over quarter, I was just wondering if there is one time items or we should look at the $6.8 million as kind of a base that you'll be building on.

No, I think that what our expectation was this year is that we have -- we added a substantial number of trials started, initiated in the second quarter. So that is the main reason for the jump. That and some engineering because for product development issues, the engineering stuff will be coming down toward the end of the year and so that will help lower the expenses. But our plan right now is to continue to be very active in clinical trials. So the expectation is still that -- I mean it has been throughout the year that we would spend roughly $30 million this year, with a $6 million end-of-year cash balance which would take us into the first quarter of 2007.

Great. And then just a quick question on the RFP. I know you are expecting a decision kind of late September time frame. Have there been any incremental news flow from the government between the time you submitted it and the time you are expecting a decision, just to kind of give you an idea that everything is on track in terms of the review, even kind of an administrative type of event where they have indicated that the contract or the application is --

Good question. No, they have been appropriately I think silent on this. They take a very serious view as to making any announcements prior to notifying the companies who are in the running.

Thank you very much. That's all I had.

David Webber, First Albany.

Just another question on the HHS contract awards. If you were to get one, what would you expect in terms of the size of the award? Would the pot be divided evenly amongst contract winners or what would you expect?

You know it is really hard to answer because I, of course, have no way of knowing what other people applied for. I mean I do know, as I mentioned, that the government had set aside $150 million to cover the first year in -- for a contract where they expect to award three to five contracts. So you can take and divide by five or three or whatever number, and you can see that it would be -- their expectation is that it would be a substantial first year award and our portion of that would be, you know --

Sorry. We're back. I apologize.

That's okay. I don't know if you heard the rest of it. But our expectation -- if you recall, the government awarded something, a contract for about $1 billion a couple of months ago. I believe it was five companies ranging anywhere from $100 million to $298 million. And our four or five-year projection is that we would be in that same range.

Thank you very much. And, Russell, you are back online with us, correct?

Yes. With Dr. Gregory Glenn.

Wonderful. You have a question from Soham Pandya from Susquehanna.

That's Soham Pandya from Susquehanna. Good afternoon, folks. Just a question on the sort of an update on the corporate partnership that you are trying to establish for the needle-free program. Can you just give us an update on that? How far along are some conversations you're having with folks and sort of can you talk about what we should anticipate in terms of scope of the program, in terms of milestones, and issues such as that?

Yes. I will do my best. But you might know that you won't get a lot of details at this stage of the conversation. We are -- we continue to be -- have the high expectation that we will have a deal this year which as we're getting toward the end of year, you probably recognize that we are in later stages of discussion.

I can't give you a time that we expect to sign the deal. It just will be this calendar year is our expectation. The scope of it will cover -- that's under discussion right now. And it could cover anywhere from one to four flu programs. If you recall, we have the annual patch that would replace the annual flu vaccination. We also have a program for an IS patch to boost immune response in the elderly. And then there's a couple of opportunities for pandemic. One is our IS dose-sparing patch and the second, perhaps even larger opportunity is one to make a completely needle-free pandemic flu patch which could be stockpiled or used in a mass vaccination.

All of those programs are part of our flu business, and we're talking about some or all of those programs with the potential partners. Our expect patient and our strategy has been to build as much value into the programs before we partner, so that we can have not only substantial upfront payments but keep a downstream, a large piece of the pie, and so our discussions are surrounding both of those issues.

Great. And then in terms of just the follow-on on that and in terms of the Phase I/2 trials that you're looking at with the needle-free flu patch, you mentioned data in early 2007. Can you just talk about what sort of trial that is, how many patients were looking at? Is it largely a dose ranging study, and are you looking at sort of HA titer levels? Are you going to have that sort of data in early 2007?

Greg, do you want to do that?

So the trial is structured to be a dose ranging trial. With the adjuvants, we will have a fixed dose of the flu antigen. As you probably know, the annual flu antigen has 15 micrograms of each strain and so for a total of 45 micrograms of flu, and that will be the same for the patch and then we will dose range over the adjuvants. And that will be done in a different cohorts. Approximately, 30 subjects per group will -- in which we'll see the data. And it will be compared directly to the IM injection.

And how many doses of the adjuvant itself?

It will be three different doses of adjuvants.

Glen [Yaffe], [Stockjock Partners].

I was wondering if you could comment on your understanding of the flu vaccine stockpiles that will be available for the upcoming year and perhaps what is known about the following year and what you would expect the cost of your patch to be versus IM vaccines, as well as how it might compare with intranasal flu vaccine and if you see that as a significant competitor to either from an ease of delivery relative to an injection and/or cost standpoint?

I don't know much about -- the stockpile issue is I think you're asking how much H5N1 type antigen would be put into a stockpile. Is that the question?

In the past several years, there has been a shortage of flu vaccine. I was just wondering if the expectations are for the current year and the following year that with renewed capacity if they'd be able to have the appropriate amount stockpiled ahead of time going into the --

My understanding is that everybody that there has been -- there's continued expansion of the supply of vaccine. Of course, that is always subject to good quality flow at the plants, but given that there won't be any interruptions in individual suppliers, there should be enough vaccine to expand the -- to supply the market.

By the way, the market at least in the U.S. has been in the 80 to 100 million dose range over the past few years and the expectation or at least the goal of people like HHS or CDC is to get that up to 180 million dollars -- 180 million doses in the next three to five years. So I think that folks are -- companies are expanding, from what I hear, expanding supply to meet those needs both in the U.S. and Europe. You asked about cost --

Cost as well as any comparisons with intranasal vaccine.

So cost, we expect that our patch will cost in the same general vicinity of what an IM injection cost. I think it is probably going to be less expensive than an intranasal injection, but I don't have their cost numbers before us. But -- so we are in the same ballpark as an IM.

The advantages of course that a patch brings versus either IM or intranasal is that we have the possibility of having a room temperature stable patch, which neither of those has, which allows for an ease of administration and storage and distribution. It is also possible that our either pandemic flu patch or possibly the annual flu patch would be a self-administered patch which could be particularly important in the case of mass vaccination with the pandemic patch where you would want to even perhaps mail it out and hand it out for some application. So there are quite a few advantages to a simple application of a patch versus a health care worker supplied administered injection or, for that matter, an intranasal vaccination.

At this time, you have no further questions so I'd like to turn the call back over to Stan. I do apologize. You do have a follow-up with David Webber from First Albany.

Thanks. Stan, I was wondering, could you comment at all on the recent GSK pandemic flu vaccine data. What the implications are -- might be for you?

The data looked -- I mean I haven't seen the actual data. I have seen the news stories. And to me it looks like a great indication that our IS patch is going to work. It shows that an adjuvant can reduce a dose of required vaccine to achieve a protective response. This is precisely what our whole program has been. As you know we will have the opportunity to have an adjuvant patch that could work with everybody's pandemic vaccine. And so it -- we have characterized it as a universal adjuvant patch. And I think the GSK data just shows it's likely to work.

And how do they administer the adjuvant?

Greg, you may know more about this, but I think that they just simply -- I think mix it -- well, I don't know. I'm assuming that they mix -- they formulate it in with the antigen itself.

Yes, they mix and inject.

At this time you have no further questions. So I'd like to turn the call back over to Stan for closing comment.

Okay. Thanks. This is our second quarterly call. We look forward to reporting, as you probably heard from implications of the call, more data coming out in the third quarter. So we look forward to talking to you then.

Thank you, ladies and gentlemen, for your participation in today's presentation. You may now disconnect and have a wonderful day.