Vaxart Inc (VXRT) 2016 Q2 法說會逐字稿

Good morning, ladies and gentlemen. Welcome to the Biota Pharmaceuticals second-quarter 2016 earnings conference call. At this time, all participants are in a listen-only mode. Following the formal remarks, we will open the call up to your questions.

I would now like to turn the call over to Will O'Connor of Stern Investor Relations. Please go ahead.

Thank you, operator. My name is Will O'Connor of Stern Investor Relations. I would like to welcome you to the Biota conference call and webcast to review the Company's second-quarter 2016 earnings results and to provide an update on recent pipeline and corporate developments.

This morning, we issued a press release which outlines the topics that we plan to discuss today. The release is available at biotapharma.com With me today from Biota are President and CEO, Dr. Joseph Patti; EVP and CFO, Mark Colonnese; and Vice President of Clinical Development, Anna Novotney-Barry.

Before we begin the call, I would like to remind you that today's discussion will contain forward-looking statements that involve risks and uncertainties. These risks and uncertainties are outlined in today's press release and in the Company's recent filings with the Securities and Exchange Commission, which we urge you to read. Our actual results may differ materially from what is discussed on today's call.

With that, I would like to turn the call over to Biota's CEO, Dr. Joseph Patti.

Thanks, Will, and good morning, everyone. This year got off to a strong start as we've been able to capitalize on the momentum created from our corporate and clinical compliments from last year. Earlier this week, we began screening patients for our Phase II study of BTA074, a first-in-class direct-acting antiviral in the development for the treatment of genital warts, or condyloma.

Condyloma are caused by human papilloma virus types 6 and 11, the most common manifestation of HPV infection and also the most commonly sexually transmitted viral disease worldwide. Not only is condyloma common, it's also highly infectious and is frequently transmitted to a partner, approximately 65% of the time following exposure. Currently approved topical treatments for condyloma have demonstrated not only suboptimal efficacy, but also considerable local skin toxicity.

In this 210-patient randomized placebo-controlled Phase II trial, we hope to further validate the biological activity of BTA074 seen in the previous Phase IIa study, and also confirm its exceptional skin tolerability.

Moving on to our respiratory antiviral programs, let's begin with BTA585, our fusion inhibitor, in development for the treatment of RSV infections in the children, the elderly and immunocompromised patients. We recently completed a 60-subject randomized placebo-controlled Phase I single-ascending-dose clinical trial evaluating the safety and PK in healthy volunteers. We had six dose-level cohorts in the trial ranging from 50 milligrams to 800 milligrams.

Data from the SAD study showed that BTA585 was generally well tolerated at all dose levels, and overall there was a low incidence of adverse events. Additionally, there were no serious or severe adverse events and no drug-related clinically significant changes in ECGs or laboratory values.

The pharmacokinetic data indicated that doses of 100 milligrams or greater of BTA585 rapidly achieved levels in the plasma that would be expected to have antiviral activity. With these encouraging data, we initiated a Phase I multiple-ascending-dose trial in healthy volunteers which was designed to evaluate the safety and PK of 100 milligrams, 400 milligrams, and 600 milligrams of BTA585 dosed orally twice daily for seven days. Dosing is now complete, and we expect topline safety and PK results later this quarter.

The next clinical development step for BTA585 is a Phase IIa RSV challenge study. We anticipate enrolling subjects next quarter and expect to report topline data from the Phase II trial in the second half of this year.

Finally, a brief update on vapendavir, an oral treatment for human rhinovirus infections in moderate to severe asthmatics, and the Phase IIb SPIRITUS trial. We are continuing to enroll patients at 68 clinical sites in the US and Europe. It appears that the cold season came a little late this year and didn't get started in earnest until November. But we have been encouraged with the increase in randomizations observed over the last several months.

Based on our current projections, we continue to anticipate that topline data from the SPIRITUS trial will be available in the second half of this year.

So to summarize, we anticipate the following important milestones in 2016: for our RSP fusion inhibitor BTA585, report data from the Phase I multiple-ascending-dose trial later this quarter, initiate a Phase IIa channel study next quarter, and report Phase II data from that trial in the second half of the year, and also for vapendavir, complete enrollment and report topline data in the second half of the year from the Phase IIb SPIRITUS trial.

With that, I'll turn the call over to Mark to review the financials.

Thanks, Joe, and good morning, everyone. Today I'll be reviewing the financial results of the second quarter of our 2016 fiscal year, as well as providing an update on our cash position. So let's start with a review of our revenue and expenses.

Revenue decreased to $1.7 million for the three-month period ended December 31, 2015, from $13.9 million in the same period of 2014. There were a couple factors contributing to this variance, with the largest being related to contract service revenue.

In December -- in the December 2014 quarter, we recorded more than $7 million in revenue from a government contract that has since been concluded. As such, there was no corresponding contract revenue this year.

Also impacting our year-to-year comparison was lower royalty revenue from our two flu products that are commercialized by GlaxoSmithKline and Daiichi Sankyo, respectively. The royalty decline was related to a larger Relenza government stockpile order received in the prior year and a decline in seasonal sales of the products.

At this point, the seasonal sales decline seems to be timing related, reflecting an unusually early flu season in 2014. In that year, we saw very high revenues in the fourth quarter and lower revenues in the first quarter of 2015, which is the reverse of what we'd normally see, since winter is typically by far the most severe flu season.

Coming back to the current-year revenues, we are encouraged by the fact that if we look at end-market sales of our licensed flu product in the December quarter for each of the last five years, excluding last year's aberrant early season, we saw a greater than 20% increase in this year's sales over any of the prior-year levels. So our partners are doing a nice job for us in their respective markets.

Turning now to cost of revenue, we saw a decline to zero this quarter, which reflected the absence of the service revenue from the concluded government contract.

Research and development expense increased to $6.3 million for the three-month period ended December 31, 2015, from $4.8 million in the same period in 2014, which we feel is reflective of progress we've made with our product pipeline.

In the current December quarter, we have been funding our large Phase IIb SPIRITUS trial with vapendavir and two Phase I trials with BTA585, as well as paying for startup activities for our Phase IIb trial with BTA074. In the prior year, most of our R&D costs were related to our early-stage research program and the facility where we conducted them.

Based on our strategy to transition to a clinical-stage organization with higher value potential, we have shut down the early-stage facility and are now focused on progressing our clinical candidates rapidly towards late-stage clinical development. As such, with our two product candidates, BTA585 and BTA074, ramping up their Phase II clinical activities next quarter, we expect that our R&D spending will continue to grow, albeit at a measured pace.

Our general and administrative expenses were reduced to $2.1 million this quarter from $2.6 million in the comparable prior-year quarter. This decline was due to administrative cuts associated with closing our early-stage research facility.

In summary, we reported a net loss of $6.5 million for the three-month period ended December 31, 2015, as compared to net income of $6.5 million in the second quarter of the prior fiscal year. Basic and diluted net loss per share were each $0.17 for the three-month period this year compared to basic and diluted earnings per share of $0.19 in the same period of 2014.

Turning to our cash position, we held $57.2 million of cash and investments at December 31, 2015. We expect that this cash will be sufficient to get us to important clinical data readouts later this year from two of our Phase II programs, with an appropriate cushion.

As a reminder, the second-quarter 2016 financial results, as well as this morning's announcement, will be available on the Investors section in our website.

At this point let's open up the call for questions. Operator?

(Operator Instructions). Anita Dushyanth, Zacks Investment.

Good morning. How are you today? So my question is a couple of things. One is have you started enrolling for the Phase I multiple-ascending-dose concerning the BTA585?

And my second question is regarding the SPIRITUS. Would you be able to tell us how many people have been enrolled in the trial so far?

Yes, Anita. Actually the Phase I multiple-ascending-dose for 585 has been completed. All the dose cohorts are done. We haven't unblinded the study yet and we are still waiting for PK. So as I said in the prepared remarks, we expect later this quarter to have the topline results from that study.

As far as enrollment for SPIRITUS, because it does change weekly, depending on how many colds in our screened population, we don't give guidance on exact patients enrolled, other than to say that we feel comfortable, based on where we are at, that we should have topline data from that study in the second half of this year.

Okay, thank you.

(Operator Instructions). Christopher James, FBR.

Good morning, and thanks for taking my questions. Just regarding the BTA585 data, what should we expect from those data, and what would you consider good versus great results? And then I have a follow-up, thanks.

I'll let Anna handle that question.

The two key things we are assessing in the SAD and MAD Phase I studies are, of course, safety, tolerability, and PK. As far as the PK, what we want to see is plasma levels of BTA585 that reach levels that are consistent with antiviral activities in vitro. And so that's a key thing that we are measuring in the studies. Of course, you want to look for safety and tolerability, which means the absence of a safety signal or a trend that would be adverse. A change in -- you don't want see changes in clinical laboratory values, changes in other assessments such as ECGs or physical exams.

And so that's what is being assessed there. And that's what allows you to move ahead into efficacy studies into Phase II. And also, hopefully what you see with your PK is a dose response, so that it becomes possible to accurately select a dose for efficacy studies.

Great, that's really helpful. And then on vapendavir, remind us your partnering strategy, and when do you think you will have sufficient data set to partner the asset?

Obviously, the data, the totality of the data is going to be the driver for our partnering strategy. And so I think the good news is I think we have a lot of optionality with all of our programs, including vapendavir. We definitely will engage with potential partners that have the data so they are aware that is coming. So we will have the appropriate discussions there. But I think it's unlikely that anything substantive would happen prior to having that topline data the second half of this year.

Great. Thanks, Joe, I'll jump back in the queue.

(Operator Instructions) And I'm showing no further questions at this time. I'd like to turn the call back to management for closing remarks.

Thank you. In closing, we are very pleased with the progress we've made executing our clinical strategies. Our three clinically active programs address important viral infections that have limited therapeutic options. We are in a solid financial position from which to continue to execute our plans, and we expect to achieve a number of clinical milestones in the coming months that we believe should enhance our shareholder value.

Thank you for joining this morning, and have a great weekend.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program. You may all disconnect. Everyone have a great day.