Valneva SE (VALN) 2007 Q4 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Q4 2007 Iomai Financial Results Conference Call. My name is Heather and I'll be your coordinator for today.

(OPERATOR INSTRUCTIONS)

We will be facilitating a question and answer session towards the end of today's conference.

(OPERATOR INSTRUCTIONS)

As a reminder, this conference is being recorded for replay purposes. I would now like to turn the presentation over to your host for today's conference, Mr. Russell Wilson, Chief Financial Officer. Please proceed, sir.

Thank you. Good afternoon and welcome to Iomai Corporation's 2007 Year End 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 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 of management for future operations. The words may, continued, estimate, intend, plan, will, believe, project, expect, seek, anticipate, and similar expressions may identify their forward-looking statements, but the absence of these words does not necessarily mean that a statement is not forward-looking statements.

These forward-looking statements include, among other things -- statements about the implementation of our corporate strategy; our future financial performance and projected expenditures, including statements regarding sufficiency of existing cash and government contract revenues to fund operations into the third quarter of 2008; our ability to enter into future collaborations with pharmaceutical or biotechnology companies, or to obtain funding from government agencies; our product research and development activities including the timing and progress of clinical trials, such as a Phase II trial for the travelers' diarrhea vaccine; our ability to scale up manufacturing; our technology's potential efficacy; advantages of current approaches to vaccination including potential commercialization of a vaccine that could be self-applied; and broad applicability to infectious diseases; and our expectations that our technology will exhibit fewer systemic side effects than traditional injectable vaccines.

I refer you to the risks identified under the headings Factors that May Impact Future Results in the NDA of our third quarter Form 10-Q as well as other filings that we have made with the Securities and Exchange Commission. We'd also 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. Let me now turn the call over to Stan Erck, President and CEO of Iomai.

Thanks, [Rip], and good afternoon. Joining Rip and me today is Dr. Greg Glenn, who's the founder and Chief Scientific Officer of Iomai. So we've had a promising year end quarter but before we get into the specifics about our plans for the future, we'll 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. 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 to the immune system where a robust immune response can be stimulated.

All four of these candidates are needle-free patches about the size and shape of an adhesive bandage. Last month, in a new clinical study involving 160 subjects, we showed that those patches can be applied directly by consumers with results that are no different from results seen from a clinician applied patch. So what does this mean, practically? It means that we have moved one step closer to the day in which getting a vaccine means going to your mailbox, opening an envelope and applying a simple vaccine patch without the inconvenience of having to schedule an appointment.

Let me know give a quick overview of where we are with those four programs. Our lead program is for a travelers' diarrhea vaccine that has shown unprecedented efficacy in a Phase II field trial. We are now working toward an end of Phase II meeting with the FDA and meetings with the EU regulatory, the European Union regulatory authorities, so that we may conduct a pivotal Phase III trial in 2009.

Our adjuvant patch for use with the pandemic influenza vaccine is now in a 500 patient Phase I/II trial that will assess the safety and immunogenecity of the product when used with an injected H5N1 vaccine. We look forward to sharing those results with you in the next quarter. That program is being funded by a $128 contract awarded last year and we continue to meet all deadlines on that contract. That same adjuvant patch is being assessed for use with the injectable seasonal flu vaccine in the elderly. And finally, our work continues on a replacement for the traditional injected flu vaccine which is presently in preclinical testing.

The self-application data that I just told you about, in combination with the clinical results we have discussed over the past year, demonstrate that we have a promising, commercializable set of product candidates. I will now turn the call over to Rip, who will briefly discuss our fourth quarter results.

Thank you, Stan. Actually, let me summarize our 2007 results. We reported revenue of $10.7 million in 2007, which was up from $1.5 million reported for 2006. The increase in revenue in 2007 was principally from the reimbursement of expenses incurred under the DHHS contract. Total operating expenses were $39.8 million in 2007 compared to operating expenses of $33.9 million in 2006.

The almost $6 million increase in operating expenses was primarily due to five factors associated with supporting our development programs: higher payroll and stock option compensation expenses associated with a 28% increase in full time employee equivalents; higher facility costs associated with leasing additional space in our building; increased animal study costs associated with work performed under our DHHS contract; higher contract manufacturing costs associated with procuring and finishing the pandemic flu vaccine for the clinical trial under the DHHS contract; and finally, higher consulting costs associated with market studies for our product candidates. These increased costs were partially offset by lower development costs for our skin preparation system.

For 2007, the net loss available to common stock holders was $28.3 million, or $1.16 per share compared to a net loss of $32.3 million or $2.03 per share for 2006. The lower net loss per share in 2007 was attributable to the increased revenues under our DHHS contract, which was awarded in January of 2007, and the increased number of shares outstanding as a result of issuing 6.3 million shares and our $30 million private placement completed in March 2007.

As of December 31, 2007, Iomai has common stock outstanding of 25.6 million shares. As of the end of 2007, Iomai had unrestricted cash and cash equivalents and marketable securities of $15.5 million along with $4 million in accounts receivable, compared to $22 million in cash and cash equivalents and [$2.4 million] in accounts receivable on December 30, 2007, I mean, excuse me, September 30, at the end of the third quarter.

Iomai expects to be able to fund its capital expenditures and operations with its current working capital and reimbursement of expenses under our existing government grants and contracts into the third quarter of 2008. Let me now hand the call back to Stan for some concluding remarks.

Thanks, Rip. I believe that the data we've collected to date now clearly demonstrates that skin vaccination is a good idea and you can prevent disease with a patch vaccine. The crucial element of our strategy now is finding partners for essential programs that can ensure that we take advantage of all the different markets for our products. We think there are a lot of ways to win and we're exploring them all.

Let me briefly summarize the opportunities. First, we're seeking a partner for our travelers' diarrhea vaccine patch to commercialize the vaccine in the U.S. and Europe. Those talks are ongoing. We continue to believe that we'll have news to share with you in the first half of this year. We believe that the diarrhea vaccine would be of great use to the military where diarrheal disease has a significant impact. A New England Journal of Medicine study of troops during the first Gulf War found that after an average of two months in Saudi Arabia, 57% of the surveyed troops had at least one episode of diarrhea and 20% reported that they were temporarily unable to carry out their duties because of diarrheal symptoms.

Contracting with the military can be an extended process but we believe this is a meaningful opportunity and have begun those discussions. Other markets for this same vaccine patch, diarrhea vaccine patch, are in developing countries. One is the prevention of diarrhea in infants in the developing world where 200 million infants and children are affected. Second is the private pay market for hundreds of millions of adults in those countries who get diarrhea and can afford a vaccine.

We are in active discussions around our patch base influenza vaccine. As we've mentioned before on these calls, we believe that we have one of the few ways to develop a highly differentiated flu vaccine and are exploring partnering with companies that have flu antigens that complement our patch technology. And finally, we're talking to companies about other uses of our adjuvant patch. Any vaccine that requires a booster shot could potentially use an Iomai immunostimulant patch or a self-applied take home patch vaccine intended to improve patient compliance.

We expect to hit several significant milestones for our programs in the coming months that will further build the case for our portfolio products. First, we expect to complete our Phase II program for travelers' diarrhea and have an end of Phase II meeting with the FDA later in 2008. We expect to conduct our pivotal Phase III study in travelers' diarrhea in 2009 and have pivotal data by as early as the end of next year.

Regarding our adjuvant patch for pandemic influenza, we expect to complete our Phase I/II trial on time, gather those results in the second quarter of 2008, and once we have those results in hand, we'll talk to DHHS about the next steps for our government contract which could result in an accelerated development schedule into Phase II programs and ultimately into licensure.

The quarter ahead is likely to be an exciting one for Iomai. We released crucial data on our DHHS pandemic flu program and we believe, will have partnership news to share. Our past accomplishments in the clinic make us optimistic about the future and we look forward to speaking with you later this year as we achieve some critical milestones. Now I'm turn the call back to the operator for questions.

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Your first question comes from the line of Jeff Goater with Cowen and Company. Please proceed.

Hey, good afternoon. Thanks for taking the question. Just a question on the IS patch. Can you just give us more details on the next steps in terms of the clinical plans, the types of trials that you're anticipating running and potentially the timing?

You're talking about for the adult --

Non-pandemic application.

Oh, the non-pandemic application. So as you know, we have data that shows that by -- with an injection in the elderly, of a flu vaccine, and looking at groups where you have an IS patch versus the groups that don't have an IS patch, you get a boosted immune response. We've conducted a -- and so we're trying to take that as a product candidate into the marketplace for boosting an immune response in the elderly.

We conducted a Phase I trial of 50 people in Australia, during the non-flu season and we're planning on taking the patch into the elderly but we're going to do that -- the timing of that trial, in the Phase II trial, will be after we get data from the pandemic flu data. The principle of boosting the immune response is roughly the same. The Company has been consumed in getting our travelers' diarrhea Phase II complete and in conducting the Phase I/II trial with pandemic, and so we want to see what those data tell us to help us design a better Phase II study for the elderly.

And I might have missed this in the prepared remarks, but the pandemic flu is on track for a Q2 release?

It is.

Okay. And, Rip, you mentioned that you guys have enough cash and grant commitments at this point to get into Q3. I'm assuming that doesn't include the additional $114 million that you'd be eligible for with a positive Phase I/Phase II result. Do you have a sense of how far along the $114 million might get to beyond Q3?

A lot of that is dependent on the timing of that follow on award. But once we get the follow on contract, we will then -- it will be a very accelerated program. So we will then move into -- it can range anywhere from $20 million to $30 million, potentially, next year, but that being said, it all depends on the timing and of the contract start, the following contract start with HHS. And based on the data, it probably will be -- there could be some redesign of that program. So when we have more -- when we have the data and have had discussions with HHS regarding the follow on contract, we'll be in a better position to give more accurate guidance on what that could be.

Okay. And then just lastly, Greg, in terms of the preclinical studies that you're running with the seasonal flu vaccine patch, can you just give us an update in terms of the issue that you saw in the Phase I/Phase II trial with the split virus and the non-homogeneous nature of the antigen that was delivered?

Sure. As we mentioned, the traditional flu vaccines are made in a process that's been around for some time and that process inactivates and splits the virus in a way that makes the antigens prone to clumping or aggregation. And all the manufactures have some additives to that to prevent that in the aqueous form. When we make this in the dry patch, these tendencies are accentuated and we, I think, have come to the point where we understand that process quite well and have essentially been able to fix this through modest changes in the formulation.

So we've evaluated a number of different antigens and we're quite confident now that we have a formulation that allows the particles to be suspended in the patch when they're hydrated on the arm into the discrete form which really would enhance the delivery of the antigen. And we're now at a point where I think we're ready to take on a specific antigen in the context of specific partnership and so that timing of getting to the clinic with that would really be now driven by a commercial agreement.

Okay, great. Thanks very much, guys.

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

All right, thank you. Good afternoon. I want to ask if you might elaborate a little bit on the trial design of the pandemic dose sparing Phase I and II and what you might be expecting to find there as this moves forward.

Hi, Brian, this is Greg.

Thanks.

The trial design has a three dose of the influenza H5M1 vaccine and it's given in five micrograms, 15 micrograms and 30 micrograms, to which we have then added the patch, either before the -- so each immunization is controlled without a patch and then each immunization is given with the immunostimulant patch. So I've corrected myself there. It's five micrograms, 15 micrograms and 45 micrograms of the flu antigen injected and then the patch does the single dose. And then we have a placebo arm as well.

So the outcomes we're looking for, obviously with the pandemic influenza, they're measuring HAI titers and we're looking to in, I think, this trial, to show that the adjuvant could improve the immune response to the H5M1 vaccine. These vaccines have proven to be generally poorly [econogenic] and so I think the first bar we're trying to reach here is to show that the adjuvant patch can improve the immune response to the injected H5M1 vaccine.

And then, secondly, we will look to see if the adjuvant effect at a lower dose might equally affect the non-adjuvant injected dose at a higher dose so that, in fact, we would show that you could dose spare as well. And so I think those would really be the main outcomes we expect to see from this trial. And the follow up trial, then, would try to optimize the adjuvant effect and we anticipate that we would do some dose ranging on the adjuvant patch in the follow up trial.

Okay. Has there been any increased clarity from DHHS about the degree of dose sparing that they may be looking for?

Well I think, you know -- there -- no, I think the clarity may be that -- it's clear that they're interested in the multiplicity of strategies for enhancing the immune response to these antigens. And I think they're interested in our technology is as ever bright and intense as it was when we were awarded the contract. So I think that the magnitude of the problems trying to cover the U.S. population with a limited supply of vaccine in a short period of time is very daunting and it's going to require several sets of strategies. And so we're glad to see there's been some successes. We would anticipate that if our technology looks good that we'd be a part of that plan.

Okay. Thank you very much.

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

Hi, good afternoon, Stan and Rip. Thanks for taking the question. Just a few clarifications. You mentioned that the data from the Phase II travelers' diarrhea patch final formulation study is due in the second half. Can you narrow it down a little bit and would you be able to tell me more precisely whether it's third quarter or fourth quarter that we should look for that?

Yes, third quarter.

Third quarter. And the same question, really, along the same lines as the pandemic flu data. When you say second quarter, is it early or late second quarter that we are looking at?

Navdeep, you're looking for dates now. So it's going to be -- we'll get -- we expect to get the data right around the very early part of the second quarter.

So you're -- this is right around the corner, right?

It's around the corner, yes.

And what about the -- sorry -

I'm just going to say we're going to have to caution you. It always takes some time in a complex trial -- we've got ten groups and 500 people, to analyze the data and then we have an obligation to discuss the data with HHS first. So there will be some delay from the time the data is first available to the time that we announce anything.

Great. Great to have that color. And then, regarding the trial in the elderly patients, the influenza trial. Is there a time frame for the data release there?

No, we have purposefully not scheduled that trial yet. We're waiting until we see this data. It will give us a lot of information as to how to power and design the Phase II trial. So we haven't timed it yet.

That's great. Great. Thanks for taking my questions. Have a good day.

You're welcome.

Your next question is from the line of David Webber with Broadpoint Capital. Please proceed.

Hi. Thanks for taking the question. Just a follow up on an earlier question. Can you give us any sense of what HHS would need to see in the pandemic flu data to authorize the second phase of the contract?

Yes. As I think Greg mentioned, they have not -- we don't have a target. There's no MHAI c number. There's no hurdle or bar that they've said if you get a one third or one fifth dose sparing that we've crossed the hurdle and if we don't, we don't. I think that what we're all looking for is to show an adjuvant effect in this early trial. Remember, we haven't optimized anything. We've taken a guess at a dose of adjuvant and we want to see what the adjuvant effect is with these lower doses of antigen.

And so the expectation is if we show a clear adjuvant effect that we're going to carry forward into Phase II. Remember the HHS has already appropriated the funds for this. So we don't have to go back to Congress. We don't worry about election years at this point. We just need to all agree that there's an adjuvant effect and then there's a series of trials that we would jump into to optimize a dose range and [doing application] and those sorts of things. But again, the answer is that there's no set bar. It's just going to be the combined wisdom and judgment of DHHS and Iomai, whatever that is.

Okay. That's fair enough. Do you have any thought on -- you just mentioned that we would have to wait to hear about the data until after you had analyzed it and shown it to HHS. Any sense of how long that could take?

I don't think it will take terribly long. I don't -- I can't -- it's not going to be months.

Okay. And if I recall correctly, there were a number of studies and planning projects that also had to be completed as part of this first stage of the contract. Have they all been done now?

Yes. One thing we've done. We've done a beautiful job of executing this contract. We've met every milestone that was assessed for us on time or early. So the only thing left for us now is [them].

Okay. And then, last question, on travelers' diarrhea patch. So if all goes well with the end of Phase II meeting, I assume, later this year, then you'd be planning -- the pivotal trial would be a summer time trial in Mexico or the like?

It will be in Mexico and Guatemala. The design of that trial will depend -- we're doing two things. We're submitting a package of data to three different countries in the European Union and getting scientific advice. That's happening in real time right now. We'll have -- those meetings are scheduled. We'll get back data from those scientific advice meetings. We use those data to help us design a proposal to the FDA for a Phase III trial and it will be the result of that -- the discussion from that meeting that will allow us to formalize a Phase III trial.

And we say the summer because the peak season for diarrhea, if you will, in Latin America, is in the wet months which is typically between June and September. That's when you get the most diarrhea. It's also when you get the most travelers. So you get the highest attack rate and we anticipate starting recruiting before that. We'll probably have people go down before the summer but the main majority of the cohort will be in the summer.

Okay. Well, thanks very much.

You bet.

Your next question comes from the line of Angela Larson with FIG. Please proceed.

Good afternoon and thanks for taking the question. When, staying with the travelers' diarrhea, so you're looking to announce a commercial partner potentially before you've completed the confirmatory Phase II? Do I have that correct?

Well, the confirmatory Phase II -- let's be clear on what that is. We've got our efficacy data from a Phase II trial. The remaining Phase II trial is to show that now that we've switched over to a commercial manufacturing process, so we've built an automated process and we just want to make sure that before we use that same -- that patch in the Phase III, that it gets immune response and safety in a couple of hundred people, make sure that there's nothing that we anticipated in that patch. It won't be an efficacy study. It will be an immunogenecity study. So we don't think that -- we think that we have all the data we need to have a strong corporate partner for travelers' diarrhea.

Okay. And you mentioned that you were helping to announce the commercial travelers' diarrhea partner in the first half of '08. Is that true for any relationship with the military or might that take a little longer?

The military will take longer.

Okay. Great. Thank you.

As there are no further questions, I would like to turn the call back over to Mr. Stan Erck for closing remarks.

Okay. Well thank you, all, for joining. Again, as I said, we're going to have an interesting second quarter and we're looking forward to reporting to you 90 days from now. Thank you.