Vaxart Inc (VXRT) 2010 Q3 法說會逐字稿

Good day ladies and gentlemen, and welcome to the third quarter 2010, Nabi Biopharmaceuticals, earnings conference call. My name is Jeremy and I will be your operator for today. At this time all participants are in listen only mode. Later, we will conduct a question-and-answer session. (Operator Instructions) I would now like to turn the conference over to your host for today, Mr. Gregory Fries, Manager of Investor Relations. Please proceed, sir.

Thank you, Jeremy. And good afternoon and thank you all for joining us today. The news release announcing our third quarter 2010 financial results is available on our website at www.nabi.com. I'd also like to remind you that today's call may include forward-looking statements. These forward-looking statements and related risk factors are more fully discussed in our annual report on Form 10-K for the fiscal year ended December 26, 2009 filed with the Securities and Exchange Commission. Additional information can also be found on our website at, again at www.nabi.com. Now, I'd like to turn the call over to Dr. Raafat Fahim, President and Chief Executive Officer of Nabi. Raafat?

Thank you, Greg, and thank you all for participating in the call. Joining me for today's call is Dr. Paul Kessler, Senior Vice President, Clinical Medical & Regulatory Affairs. Dr. Matthew Kalnik, Senior Vice President of Strategic Planning and Business Operations; and Mr. Ron Kocak, Controller and Chief Accounting Officer.

First I'd like to discuss the progress we have made in the development of NicVAX, our vaccine to treat nicotine addiction preventing smoking relapse. Enrollment on the first of the two Phase III NicVAX trials was complete in July. And the second Phase III trial is progressing on schedule, and we expect to announce completion of enrollment by year end. Results from the first and the second clinical trials are anticipated in the second half of 2011 and early 2012 respectively. In August, we strengthened our NicVAX patent portfolio when we received a US patent for the exclusive use of methods, for treating and preventing nicotine addiction with NicVAX and related nicotine vaccines. This patent makes it more difficult for our competitor to develop a related vaccine. We have four other US patents for NicVAX covering both composition of matter and therapeutic methodologies for treating and preventing nicotine addiction. Our US patents have expiration dates ranging from December 2018 to August 2024.

We also entered into a long-term commercial manufacturing agreement with Diosynth RTP, Inc. for the manufacture of drug substance that is integral to the production of NicVAX. This is an important step in the development of NicVAX. In the event we achieve positive results from Phase III trials and receive regulatory approval, we'll be prepared for commercialization of NicVAX. I am very pleased with the progress we are making.

We continued our common stock repurchase plan during the third quarter, repurchasing 1.1 million shares for $5.9 million at an average price of $5.33 per share. Through the first nine months of 2010, we repurchased 7.8 million shares of our common stock for $42.3 million at an average price of $5.45 per share. Since the inception of the share repurchase program in December 2007, we have repurchased a total of 19.9 million shares of our common stock for $87.2 million, at an average price of $4.39 per share, reducing the number of shares outstanding by nearly one-third. As of October 31, there were 42.5 million shares of Nabi common stock outstanding and a balance of approximately $27.8 million remaining available for share repurchase.

Now I'd like to review the third quarter financial results. For the quarter ended September 25, 2010, net income was $5.1 million or $0.12 per share, compared to a net loss of $7 million ,or $0.14 per share in the third quarter of 2009. Revenue for the third quarter was $12.3 million. This includes $3.2 million ratably recognized from the upfront payments from both the PentaStaph sale and the NicVAX option license agreement to GSK. In addition, we received an $8 million PentaStaph milestone payment and $1.1 million for services provided to GSK under the PentaStaph and NicVAX agreements. Revenue from the up front payments is being recognized ratably over the expected term of the joint steering committees created under each of these agreements.

General and administrative expenses was $1.4 million, compared to $2.4 million in 2009. Reflecting our continued -- continuing efforts to reduce expenses, lower legal and facilities cost, and an allocation of a portion of these costs to cost of services associated with the PentaStaph and NicVAX agreement. Total recession development expense was $6.8 million compared to $4.7 million in 2009. This increase is primarily attributable to increased activities associate with the NicVAX Phase III trials as well as the NicVAX manufacturing related activities, and is net of $2.7 million of cost reimbursements through previously ordered grants from the National Institute on Drug Abuse and Department of Defense. We expect R&D expenses over the remainder of 2010 to be comparable to the third quarter expenses.

Another contributing factor to our third quarter net income was $1.8 million income tax benefit. This benefit was the result of the Worker, Home Ownership, and Business Assistance Act of 2009. This legislation provided for an extended five year net operating loss carry back period and suspended the alternative minimum tax net operating loss limits. Which allowed us, to recover alternative minimum tax payments the Company made in the past five years.

Net cash provided by operating activities in the first nine months of 2010 was $41.5 million, compared to a net cash use of $13.8 million in 2009. We ended the quarter with cash, cash equivalents, and marketable securities totaling $112.2 million compared to $119 million at December 24, 2009. The principle component of the decrease was $42.8 million to settle common stock repurchases, $6.1 million to repurchase the last of our outstanding senior convertible notes, partially upset by net cash provided from continuous operations.

That concludes our prepared remarks. Operator let's open the call for questions.

(Operator Instructions) Our first question comes from Jeffrey Cohen. Please proceed.

Hi, Raafat, thanks for taking my call. Couple brief questions. Timing on your Q? Do you expect it out tonight?

Correct.

Okay. And so what was the stock purchases between the end of the quarter and currently?

Yes. It was minimal. We -- It wasn't significant.

Okay. You've got, it looks like R&D was 6.8%. How do you think that might look over the next few quarters? It seems like earlier in the year, the peak was stated to be later in the year. So, are we running at around peak?

Well, I would say that we are running around peak. I mean, obviously, clearly as you know there might be slight increases, slight decreases but we are running around peak because the two clinical trials are now in full gear and all our activities are in place. So, I would expect that this number will be maintained, as I'm saying, with some minimal fluctuations up or down.

Okay. And then theoretically it probably tapers off the middle of 2011?

Yes. Theoretically you can think of it this way, yes.

The NIDA grant was $2.7 million this quarter. So, is that amount used up now?

No. The NIDA grant has not been used up now and the $2.7 million represents both the NIDA as well as the minimal amount from the Department of Defense.

Okay. So, do you state what's left on the NIDA grant?

We have not talked about that publicly, no.

Okay. That's it for me. Thank you.

Thanks, Jeff.

Our next question comes from Stephen Dunn. Please proceed.

Hi. Thank you for taking my questions, Raafat.

Sure, Steve.

I just have a little color --I got quite few -- a little buzz in August when a private company called Selecta Biosciences got a small $3 million grant from the government to start doing what sounds like what you've already been doing for years. So, I guess if you could for the benefit of investors, could you comment as much as possible on NicVAX versus what Selecta is doing and the importance of your niche-iticity or access in unit response or --? Could you comment at all for investors?

I mean, certainly I can't comment directly on what Selecta is doing, but I can tell you that it clearly what NicVAX is doing and what we are doing with NicVAX Certainly this is a vaccine for smoking cessation. So, in essence it stimulates immune response. The body's own immune response to produce antibodies to nicotine and that prevents nicotine from crossing the blood brain barrier and causing the euphoria that one gets when they smoke.

Because of that, I think it's unique from that perspective. The nanotechnology that Selecta has, they claim it's safer or anything like that, we have, as I mentioned, we have not had any adverse events, serious adverse events from the vaccine that is different from placebo. So we think the vaccine is very safe, but exactly the technology, the nanotechnology that they are working with at Selecta, I can't comment on that specifically.

Okay. Thanks, Raafat. It was just the question I think needed to be discussed a little bit. Thanks.

Thank you so much. I appreciate you pointing that out.

(Operator Instructions) At this time, sir there are no questions queued.

Well, thank you all for joining us today and for your continued support.

Ladies and gentlemen, that concludes today's conference. Thank you for your participation. You may now disconnect. Have a great day.