Vaxart Inc (VXRT) 2010 Q4 法說會逐字稿

Good day, ladies and gentlemen. Welcome to the fourth quarter 2010 Nabi Biopharmaceuticals earnings conference call. My name is Diana and I'll be the operator for today. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session.

(Operator Instructions).

As a reminder, today's conference is being recorded for replay purposes. I would now like to turn the conference over to your host for today, Mr. Gregory Fries, Manager of Investor Relations. Please go ahead.

Thank you, Diana, and good afternoon and thank you for joining us today. As a reminder, the news release announcing our fourth quarter and full year 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 in our 10-K for fiscal year ended December 25, 2010, to be filed with the Securities and Exchange Commission. More information is available, again, on our website at www.nabi.com. Now I'd like to turn the call over to Dr. Raafat Fahim, President and Chief Executive Officer of Nabi.

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

2010 was another very productive year for us as we continued to add value from the transformational transactions with Glaxo Smith Kline Biologicals. Since closing the sale of PentaStaph and related assets in late 2009, we received $26.5 million of up front payment and achieved three of the four milestones associated with this sale and collected $21 million of milestone payments. There is one remaining $5 million milestone that we expect to achieve within the next two months.

In March 2010, we successfully closed an exclusive worldwide option and license agreement for NicVAX with GlaxoSmithKline Biologicals after the affirmative majority vote from our shareholders. You may recall that more than 73% of shares eligible to vote were cast in favor of this transaction and more than 99% of the shares actually voted were cast in favor of the deal. For this, we thank our shareholders for their overwhelming support of this agreement.

The first NicVAX Phase III clinical trial began in late 2009. In March 2010, we initiated the second Phase III clinical trial and completed enrollment in both of these trials in July and November of 2010, respectively. We expect to have the results from the first Phase III trial in the second half of this year. The results from the second trial are expected to be available in the first half of 2012. If the results of these two trials are positive, we will remain -- we will maintain a significant lead over our competitors to be first to market with a vaccine to treat nicotine addiction and prevent smoking relapse.

Our NicVAX portfolio grew in 2010, as we received the US patent for treating and preventing nicotine addiction with NicVAX and related nicotine conjugate vaccines. We now have four US patents related to our conjugate's vaccine technology. Our antibodies against nicotine and [methods] for using such conjugates and antibodies to treat nicotine addiction. Along with a composition of matter patent related to making nicotine hapten. We also have other patent applications for NicVAX.

We also prevailed in our position to a European patent belonging to Celtic Pharma that covered hapten carrier conjugates for use in drug abuse therapy, including nicotine addiction. The European patent office revoked this patent in its entirety. Celtic has filed an appeal that is currently under review. Overall, we have significantly strengthened or NicVAX patent portfolio through these actions.

We also entered into an agreement with Diosynth Biotechnology for the commercial manufacture of NicVAX [substance], which is an active component of the vaccine. The agreement secures the commercial manufacture of the vaccine in the event of possible positive Phase III trial results and subsequent regulatory approval of NicVAX.

Now, let's review the financial results. For the full year our net income was $0.9 million or $0.02 per share compared to a net loss of $18.7 million or $0.37 per share in 2009. For the quarter ended December 25, 2010, our net loss was $6.3 million or $0.15 per share compared to a net income of $1.1 million or $0.02 per share in the fourth quarter of 2009.

Revenue for 2010 was $35 million compared to $10.5 million in 2009. 2010 revenue reflects payments recognized under the NicVAX and PentaStaph with GSK and includes $13.2 million from the initial $21.5 million payment received from GSK for PentaStaph and $2.1 million from the initial $40 million payments received from GSK for NicVAX. In addition to $16 million for revenue related to successful achievement of two PentaStaph performance milestones as well as $3.2 million and $0.5 million related to services provided to GSK under the PentaStaph and NicVAX agreements.

2009 revenue included $3.1 million from the initial $21.5 million payments received from GSK for PentaStaph, $5 million for one of the PentaStaph performance milestones, and $2.4 million for services under the PentaStaph agreement. Unless exercises its NicVAX option this year, we expect 2011 revenue will decrease significantly since only one $5 million milestone of PentaStaph remains.

For the full year, general and administrative expenses net of allocation of a portion of these expenses to cost of services was $6.2 million compared to $10 million in 2009. A 38% decrease. This decrease reflects our continuing efforts to reduce overall costs and lower legal expenses and facility costs. We expect G&A expenses for 2011 to be comparable to 2010.

Total 2010 research and development expenses were $26.1 million compared to $16.5 million in 2009. This increase is principally attributable to the two ongoing NicVAX Phase III trials and NicVAX manufacturing related activities. We expect R&D expenses in 2011 to be comparable to the 2010 level as we continue to advance the ongoing clinical trials and prepare for the commercial manufacture of NicVAX, including the required clinical testing of manufactured commercial lots of the vaccine.

Net cash provided by operating activities for 2010 was $39.9 million compared to $6.2 million for 2009. This increase is primarily due to the $66.3 million received from GSK as related to the NicVAX and PentaStaph agreement upset in part by cash expenditure for our operating expenses. We ended the year with cash, cash equivalents, and marketable securities totaling $110.7 million compared to $119 million at the end of 2009. The principal components of the decrease were payments of $42.8 million for common stock repurchases settled in 2009 and $6.1 million for the repurchase of debt that was partially upset by net cash provided by operating activities.

In fiscal 2010, we repurchased $7.8 million for common our stock for $42.3 million at an average price of $5.45 per share. Since the inception of this 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 of $4.39 per share. This is approximately one-third of the shares that were outstanding when the repurchase program was initiated in 2007. Approximately $27.8 million of the authorized $115 million remains available for repurchase stock.

To summarize, 2010 marked a year of significant achievements for Nabi and we're looking forward to a productive and exciting 2011. The entire Nabi team and I are excited and fully focused on executing what we hope to be a successful Phase III NicVAX program, which we believe is the key to fully unlocking shareholder value. That concludes our prepared remarks. Operator, let's open the call for questions.

(Operator Instructions)The first question will come from the line of Jeffrey Cohen C.K. Cooper & Company.

Thanks for taking my questions. So, could you give us the most recent share count beyond the 42,002 from December 2010?

You mean the total outstanding?

Yes.

42.5 million, approximately.

And, what was purchased in Q4, as far as the share repurchase?

Actually, very little. Approximately 800 shares or so.

And can you comment about what's been purchased in 2011?

No, I can't.

Okay. So, R&D comparable in 2011 to 2010?

Correct. We believe so, yes.

Okay. Cost of service? For 2011?

It's very difficult to estimate the cost of services accurately because it reflects whatever GSK wants from us. And it actually changes on a monthly basis depending on what they want. So, I'm unable to answer that question, Jeff.

And still no word on PhosLo? No one has heard anything?

We didn't. If you have heard, let us know.

I haven't.

Okay. I guess that makes two of us. I haven't either.

Okay. And timeline-wise, September, October to hear of the first trial results?

What I'm comfortable with is what I said, Jeff, which is the second half of '11.

Okay. Perfect. Thank you very much.

Thank you very much for your questions.

The next question will come from the line of Nathan Cali, Noble Financial.

Good afternoon. Thanks for taking my question.

Sure, Nathan.

So, the total carry loss forward, do you guys have a number for that?

I think it's reported in the 10-K and it's something in the neighborhood of 180 or so.

Okay. And do you guys have an expected tax rate going forward? Let's say in 2013 when expected revenues are supposed to come in? Is there a tax rate?

No, we have not disclosed any tax rates.

And then as far as the patents that are filed currently, what do they run in the US and Europe?

The patents that we have without any extension, the first one would be 2018 without extensions and we expect extension of somewhere between maybe -- I don't know -- five to seven years or so.

Okay. And that would be both for Europe and the US?

Very close to each other, yes.

Okay. Thanks.

Thank you.

(Operator Instructions)There are no more questions at this time. I'd like to turn the call back to Dr. Fahim for closing remarks.

Thank you, operator. And thank you all for joining us today and for your continued support.

And ladies and gentlemen, this concludes today's presentation. Thank you once again for your participation. You may now disconnect and have a great day.