Valneva SE (VALN) 2007 Q3 法說會逐字稿

Good day, ladies and gentlemen. And welcome to the Third Quarter 2007 Iomai Corporation Earnings Conference Call. My name is Amanda, and I will be your operator for today. At this time, all participants are in a listen-only mode. We will conduct a question and answer session towards the end of this conference.

(OPERATOR INSTRUCTIONS)

As a reminder, this conference is being recorded for replay purposes. I will now turn the call over to Mr. Russell Wilson, the Chief Financial Officer. Please proceed, sir.

Good morning. And welcome to Iomai Corporation's third quarter financial results conference call. Before we begin today's call, I need to remind you that this call may contain forward-looking statements that involve known and unknown risk 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. And forward-looking statements include statements regarding our future financial position, business strategy, budgets, projected cost, plans, and objectives of management and future operations. The words may, continue, estimate, intend, plan, will, believe, project, expect, seek, anticipate, and similar expressions may identify 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 projected expenditures; our technology's potential efficacy; advantages over current approaches to vaccination and broad applicability to infectious disease; as well as our expectations that our technology will exhibit fewer systemic side effects than traditional injectable vaccines.

I refer you the risks identified under the headings of factors that may impact future results in our MD&A financial condition and results of operations in our quarterly report on Form 10-Q for three months ended September 30, 2007, as well as other filings we've made with the Securities and Exchange Commission.

We also would like to remind you that these statements speak only as of the date of this call. And Iomai undertakes no obligation to update or revise the statements. At this time, let me turn the call over to Stan Erck, President and CEO of Iomai.

Thanks, Rip, and good morning. Before we discuss the third quarter financial results, let me first give you a brief overview of our technology, as well as an overview of where we stand with our programs. Then I'll hand the call back over to Rip, and he'll review the results. And finally, I'll give guidance on our goals for the coming months.

As most of you know, Iomai has four product candidates -- all built around a core technology known as transcutaneous immunization or TCI. TCI builds on Dr. Gregory Glenn's discovery that antigen-presenting cells found in the outer layer of the skin can be used to take vaccines and immune stimulants directly through the immune system, where a robust immune response can be stimulated.

We now have four product candidates based on TCI -- all needle-free patches. First is a traveler's diarrhea vaccine that has shown unprecedented efficacy in a Phase II field trial; an adjuvant patch for use with a pandemic influenza vaccine; the same adjuvant patch for use with the injectable seasonal flu vaccine in the elderly; and a needle-free patch designed to replace the traditional injected flu vaccine.

The last time we held a call, we discussed the top-line results from our Phase II field trial of our traveler's diarrhea vaccine. I'd like to briefly summarize the results, as they mark a significant turning point for that program. During the third quarter, we have done additional analysis of that data set and presented the results at ICAAC, which is the premiere infectious disease conference in a late-breaking presentation.

Our investigators followed 170 patients, who traveled to Guatemala or Mexico. One hundred eleven of these received placebo, and 59 received our vaccine. Patients in the vaccine group were 75 percent less likely to experience clinically is, and 84 percent less like to suffer severe diarrhea. Both are very highly significant findings. The results further suggest that those few vaccinated patients who were sickened, had less severe disease, recovered more quickly than the control patients.

One of the significant medical consequences of traveler's diarrhea that is not well-known is that those who contract traveler's diarrhea have a higher likelihood of developing irritable bowel syndrome or IBS. Importantly, our data suggest that patients who receive the Iomai patch were less likely to suffer the chronic complication of IBS. These results confirm that, not only do we have an excellent technological platform for vaccination, we have a viable commercial product that is easy for us to make in our pilot facility, easy to ship and store, and easy to apply.

There's a large and growing market for such a product. A recently completed market study [takes] a traveler's diarrhea market with more than $750 million a year.

So we're now completing a final Phase II immunogenistic study of that traveler's diarrhea vaccine made with our commercial-scale manufacturing equipment and facility. We plan to meet with the FDA next year to discuss our data and our plan for licensure. And we anticipate launch in our Phase III trial by the end of 2008.

We've also made great strides this quarter moving ahead with our other high priority program, which is our adjuvant patch for use with pandemic influenza vaccine. That patch is designed to boost the immune response to the vaccine, allowing public health officials to use lower doses of the limited pandemic influence vaccine. That program is being funded by $128 million government contract.

This quarter, we begin the first clinical trial of that patch -- an impressive 500-patient Phase I/II trial, that would give us crucial safety and immunogenistic data in the second quarter of next year. I'd like to give a great deal of the credit to the Iomai team for our work on the Department Health and Human Services contract. We continue to meet the deadlines on that contract throughout.

With the completion of our field study and traveler's diarrhea, we have shown for the first time that vaccination with a skin patch can prevent illness in real-world situations. And we've paved the way to enter Phase III trials beginning Iomai's transformation into a late-stage product company. I will now turn the call over to Rip, who will briefly discuss our third quarter results.

Thank you, Stan. And let me now summarize our third quarter results. Revenue of $3 million in the third quarter of 2007 was up significantly from the $30,000 earned in the third quarter of 2006. This expected increase reflects revenue related to our DHHS contract, under which we are reimbursed for expenses plus a fixed fee.

Total operating expenses were $9.2 million in third quarter of 2007, compared to total operating expenses of $9.5 million in third quarter of 2006. And for the third quarter of 2007, the net loss available to common stockholders was $6.1 million or $0.24 loss per share, compared to a net loss available to common stockholders of $9.3 million or $0.55 loss per share in third quarter of 2006. Again, the lower net loss reflects the increase in revenue from the DHHS contract.

As of end of the third quarter, Iomai had common stock outstanding of approximately 25.6 million shares. And as of September 30, 2007, unrestricted cash and cash equivalents and marketable securities were $22 million, compared to $26.4 million at the end of the second quarter 2007.

The Company currently expects to be able to fund its capital expenditures and operations with its current working capital and expected revenue from our DHHS contract into the second half of 2008. Let me know hand the call back to Stan for some concluding remarks.

Thanks again, Rip. So the results we've gathered this year, particularly in traveler's diarrhea demonstrate excellent proof of concept for the power of our TCI platform. Our strategy now is to use these data to find commercial partners. We have a number of discussions underway for each of our programs. Our goal is to sign one of our partnerships in the first half of 2008. These partnerships may be used to fund further development, to provide working capital or provide a pathway to the marketplace for our current product candidates.

In addition, we are looking at additional opportunities for our products. Our traveler's diarrhea vaccine has several markets. One is a commercial traveler's diarrhea market, one is a military market, and a third is a market in the developing world where the ETEC bacteria is endemic, and a pediatric vaccine is desperately needed.

The Gates Foundation has recently given a non-profit organization called PATH $50 million to help accelerate research on vaccines to address ETEC-related diarrhea. We believe we are clearly a leading candidate for a PATH grant. We expect to hit several significant milestones for our programs in the coming months that will further build the case for our portfolio products. We expect to complete our Phase II program for traveler's diarrhea and have an end of Phase II meeting with the FDA by mid-2008.

We expect to initiate our pivotal Phase III study in traveler's diarrhea by the end of next year. Regarding our adjuvant patch for pandemic influenza, we expect to complete our Phase I/II trial on time and gather results in the second quarter of 2008.

This was a key quarter in establishing the commercial potential of TCI. With the positive reception to the traveler's diarrhea data at ICAAC, we are moving as quickly as possible with all of our clinical and pre-clinical programs. And we look forward to sharing that progress with you in the months to come. Let me turn it back to the operator now for questions.

(OPERATOR INSTRUCTIONS). The first question comes from the line of Jeff Goater with Cowen and Company. Please proceed, sir.

Hey, good morning, guys. And thanks for taking the questions. Stan, on the follow-on Phase II study for the traveler's diarrhea vaccine -- I might have missed this in the prepared remarks. But has that been initiated? And if not, when will it get started?

It has not been initiated yet. And it will get started either later this year -- we expect completion of that trial. Perhaps it will be a two trial in succession. We expect completion of that in the second quarter in advance of assembling the data for the end of Phase II meeting with the FDA.

Okay. So you said it may be two trials. Could you give us a rough idea of what the Phase II or the two Phase II studies might look like?

Now remember, we have all of the efficacy data that we're going to get from the Phase II study that we already did. Now what we need to do is to manufacture the product that we plan to commercialize in advance of our Phase III meeting.

What we want to do is, you know, we spent the last year or so upgrading and expanding the capability of our commercial manufacturing process. We want to make a GMP run-off of that and test that patch in human trials. So it'll be a straight immunogenicity trial, testing the new patch against volunteers in the U.S.

Okay. So it will just be a single trial then?

Well, it depends. We also want to make sure -- what we want to do is be prepared to have a self-administered patch. So we run a separate trial that has an arm of self-administered versus clinician administered.

Okay, got it. And then in the Q, you indicate that the Phase III program for the traveler's diarrhea vaccine will run approximately $30 million to $45 million. If you can just kind of give us your thoughts on how you're thinking about paying for the Phase III program and kind of connected to that, what your general partnership plans are for the product.

Yes. So our plan is to get a partner to help finance the cost of that program. And I think we've been clear about that in the past, that our progress is that we first get good data. Then we get companies who are interested in the traveler's diarrhea vaccine. And we go through a due diligence process, ultimately leading to commercial discussions of terms. And we're well into that process right now. And we expect to have a partner before we enter Phase III.

Okay. So you don't at all see the follow-on Phase II study as a rate limiting step for a partnership agreement?

No, I don't.

Okay.

In fact -- because we going to base the partnership upon the efficacy data that we've got -- already have in hand.

Okay. And then on the Phase I/Phase II trial for the pandemic flu program, just remind us what the hurdle is to be able to pull down the additional $114 million.

It's just data. In theory there are two issues. One is are the funds procured or not? And in our discussion with HHS, is that there's no additional government -- not procurement, but --

Appropriation.

Appropriation, sorry I said that word. The funds have been appropriated. So it's all data-driven, just like any clinical development program.

Okay. And just a couple questions for Rip. You'd mentioned that, I guess, the cash on hand is enough to get you into H2 of '08. It was unclear. Are you including the $114 million in that rough kind of --

No. This is just -- that is just assuming that we do not get the follow-on DHHS contract, nor do we have a traveler's diarrhea partnership. It's sort of worst-case currently.

Okay. And then in terms of -- if you are able to pull down the $114 million or access it post the Phase I/Phase II trial, should we think of that as, kind of, just a non-stop process that you will be able to roll right into that? Or is there some sort of administrative potential time delay, where you'll have to submit the Phase I, Phase II data to the HHS for review; and then kind of get the okay to begin drawing down --

That's a great question. I asked them that specifically Jeff. And the answer was that they will review the data and give us a response as quickly as possible. They expect that they would rapidly. And so what does that mean? I don't know whether that means a couple weeks or several weeks. But the expectation is that we could get an answer quickly and roll into the next Phase II trial based upon the data.

Okay, great. Thanks for taking the questions, guys.

Your next question comes from the line of Brian McCarthy with Merriman Curhan Ford. Please proceed.

Hi, good morning.

Good morning.

Hi, Brian.

Just a quick question regarding the final formulation Phase II trial and its design. In particular, I was wondering if you're considering the incorporation of the single vaccination arm.

No, we're not.

Okay, very good. All right, thank you.

Okay.

Your next question comes from the line of [Mark Cronkew] who's a private investor.

Hi, guys. Thanks for taking the call.

Hey, Mark.

I just have a quick question regard -- free flu --

Hello, you're breaking up.

Mark, you broke up. So we can't hear you.

Regarding the needle-free flu patch, I was wondering when we could expect some pre-clinical data in mice.

Ah, okay. So we typically don't publish pre-clinical data in mice. Or mice -- in fact, our model happens to be guinea pigs instead of mice. But --

Okay.

Nevertheless, it's data that we've been gathering that we plan to use in finding a corporate partner who will provide a different antigen for the program. So I don't expect -- we don't have any -- let's put it this way, we don't have any plans to publish that data right now.

Okay. Thank you.

You're welcome.

Your next question comes from the line of Navdeep Jaikaria with Rodman & Renshaw. Please proceed, sir.

Navdeep, how are you?

It's [Mohan Solei] for Navdeep Jaikaria.

Okay.

The SG&A expenses were lower for this quarter as compared to the previous one. So going forward, is this what we can expect?

I think, in a general sense, yes. I mean there is some -- it's not totally smooth, because we go forward with clinical trials -- you know, as you start up clinical trials, the way we do our payment is they're all milestone driven. In other words, the clinics, the sites, have to meet certain recruitment guidelines, immunization guidelines, et cetera. So a lot of it is driven from that standpoint.

But the general rule, I think the fourth quarter -- I would expect it to be comparable to the third quarter generally, as we begin the initiation of the formulation trial for the final Phase II. The first quarter will probably be a little heavier on the R&D side.

The other thing that I want to ask you is how large is the Phase II trial is going to be for the traveler's diarrhea?

For which trial?

The final Phase II formulation trial -- commercial formulation.

It will be on the order of magnitude of 150 to 200. And it could depend upon whether we do two trials or one.

Okay. Thanks so much.

(OPERATOR INSTRUCTIONS). There are no further questions at this time. I would now like to turn the call back over to Mr. Stan Erck for closing remarks.

Okay. I appreciate everybody joining us today. And as always, feel free to visit our website to get updates. Thanks very much.

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