Vaxart Inc (VXRT) 2017 Q1 法說會逐字稿

Good day, ladies and gentlemen and welcome to the Therapeutics first-quarter 2017 financial results conference call.

(Operator Instructions)

I would now like to introduce your host for today's conference Mr. Will O'Connor of Stern Investor Relations. Sir, you may begin.

Thank you, operator. Welcome to the Aviragen Therapeutics conference call and webcast to review the Company's first-quarter fiscal year 2017 earnings results and to provide an update on recent pipeline and corporate developments.

Earlier today we issued a press release which outlines the topics that we plan to discuss. The release is available at AviragenTherapeutics.com.

With me today from Aviragen Therapeutics our President and CEO Dr. Joseph Patti, EVP and CFO Mark Colonnese and Vice President of Clinical Development Anna Novotney-Barry.

Before we began 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 vary materially from what is discussed on today's call.

With that I'll now turn the call over to Aviragen's CEO Dr. Joseph Patti.

Thanks, Will, and good afternoon, everyone. The first quarter has been very exciting and a busy time at Aviragen highlighted by considerable progress being made in our clinical programs which includes the completion of enrollment in the Phase 2b SPIRITUS trial as well as the BTA585 Phase 2a RSV Challenge Trial which I'm pleased to announce this afternoon.

With that, let me highlight a few key milestones from each of our Phase 2 antiviral programs. Let's begin with vapendavir.

As I just mentioned, today we announced that we've completed enrollment in the Phase 2b SPIRITUS trial which is a multicenter, randomized, double-blind, placebo-controlled, dose ranging study of vapendavir in moderate-to-severe asthmatics. These patients are experiencing symptomatic HRV infection and have a history of their asthma worsening with an upper respiratory tract infection.

Just to remind everyone, the primary endpoint of the SPIRITUS trial is the change from baseline to study day 14 measured by an asthma control questionnaire-6, or ACQ-6. The study as powered at 80% to detect a 0.5 change in the ACQ score, which is considered a clinically relevant. The secondary endpoints are focused on safety, tolerability and lung function assessments.

Given a 35-day follow-up for each period, the last patient is expected to complete this study in early December. There are a number of activities including extensive virological testing that are required to close out the clinical study prior to data analysis, many of which are outsourced. So we anticipate top-line data approximately eight weeks after last patient, last visit.

Last month we held a Key Opinion Leader breakfast in New York City focus on the significant burden of HRV infections in at-risk patient populations. The meeting featured keynote presentations from Frederick Hayden, Professor Emeritus of Infectious Diseases and International Health at the University of Virginia School of Medicine, and Dr. Sebastian Johnston, Professor of Respiratory Medicine and Allergy at Imperial College London and Director of the Wellcome Trust Centre for Respiratory Infection.

We were encouraged by the enthusiasm these experts had for our broad-spectrum capsid binder as a treatment for HRV infections in high risk patients including asthmatics and individuals with COPD. Both of these populations currently have limited therapeutic options when faced with upper respiratory infections.

Important takeaways from the presentation were first, HRV infections account for 60% to 80% of the virally induced asthma exacerbation; second, dosing of vapendavir during the initial signs of an upper respiratory tract infection should provide adequate time to reduce viral loads in the subsequent lower respiratory tract infections that are often associated with asthma exacerbations; and lastly, patients with chronic obstructive pulmonary disease, or COPD, experienced HRV-mediated exacerbations may benefit from treatment with vapendavir since their symptoms often last longer than asthmatics and are often in many cases more severe. Doctors Hayden and Johnston's presentations were webcast and are available on our website for those interested in learning more about the impact of HRV infections in at-risk patient populations.

Now let's turn to BTA585, our oral fusion inhibitor in development for the treatment and prevention of RSV infections. A safety committee in early October reviewed the data from the first cohort of 400 milligrams BID in the Phase 2 study designed to evaluate the safety, pharmacokinetics and antiviral activity of orally dosed 585 in healthy volunteers challenged intranasally with RSV. The committee approved the progression to the second cohort, 600 milligrams BID.

I'm happy to announce today that enrollment is complete in the second cohort and that in early December the study will be clinically complete. We anticipate top-line data will be available from the study around the end of the year.

Finally, we have made considerable progress on the manufacturing front of BTA074, our 5% topical antiviral in a Phase 2 trial for the development -- or for the treatment, sorry -- of condyloma caused by HPV type 6 and 11. As you may recall, a delay in the availability of drug product limited the number of clinical sites we could activate to conduct the Phase 2 study.

We have now successfully completed GMP manufacturing of the active pharmaceutical ingredient and anticipate shipping the formulated drug product next month. We have made sufficient clinical trial material to add approximately 30 new clinical sites. Once we have the new sites up and running and enrolling patients, we will be able to give better guidance on when top-line data would be available.

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

Thanks, Joe, and good afternoon, everyone. Today I'll be reviewing the financial results for the first quarter of fiscal year 2017 as well as providing an update of our cash position. So let's start with the bottom line.

Our net loss for the three-month period ended September 30, 2016 was $10 million or $0.26 per share as compared to $6.6 million or $0.17 per share in the same period of 2015. The income statement components of our loss are as follows. Revenue decreased to about $100,000 this year for the three-month period ended September 30, 2016 from $1.7 million for the same period in 2015, due entirely to lower royalty revenues. We had some modest government stockpiling sales of the flu product Relenza in 2015 while there was no stockpiling in 2016.

On the topic of Relenza, you may have noticed some recent news regarding the US Court of Appeals decision upholding the patent office's rejection of claims of our patent application related to the method of prevention and treatment of influenza by inhalation of zanamivir, which is the generic name for Relenza. At this time we are working with our partner, GlaxoSmithKline, to evaluate if there any possible next steps in the prosecution of this patent application. We will keep you apprised of any Relenza updates in our future communications.

Turning now to research and development expense, we increased our investment to $7.6 million for the three-month period ended September 30, 2016 from $5.5 million in the same period of 2015. The increase reflected higher clinical costs related to our Phase 2a Challenge Trial investigating the use of BTA585 for the treatment of RSV and higher expenses for producing clinical supplies of BTA074 for its Phase 2 clinical trial for the treatment of condyloma.

This trend of modestly higher R&D costs should continue at least for the period that we have three concurrent Phase 2 clinical trials ongoing. Looking at general and administrative costs, we continue to keep a lid on our G&A spending and there was no increase in spending in 2016 over 2015's level.

The last item on our income statement is non-cash interest expense of about $400,000 related to the sale of a portion of our Inavir royalties in April 2016. This expense is merely an accounting convention that has no impact on the Company's cash position. The Company held $58.3 million in cash as of September 30, 2016 and, based on our current operating plan, which includes our three ongoing Phase 2 development programs, should last until roughly early 2018.

As a reminder, the first-quarter financial results as well as this afternoon's announcement are available in the investor section of our website. At this point, let's open up the call for questions. Operator?

(Operator Instructions) Kevin DeGeeter, Ladenburg.

Hey, good afternoon, guys. Congratulations on the progress and for wrapping up enrollment on two studies.

Two quick questions from me. First off, if the data from BTA585 RSV Challenge study supports further development, can you just remind us as to the duration of any additional animal studies that will be required before we can move into clinical development in a pediatric application?

Sure, Kevin. Thanks. So, that varies by region.

Obviously, the program still remains on clinical hold in the US. And as we have indicated previously, our desire is to provide the FDA with the data from this ongoing clinical trial as well as preclinical studies that we've conducted. We believe we'll be able to deliver those results to the FDA in Q1, so we would hope to have an answer on clinical hold in Q2.

With that, if that is favorable and the clinical hold is lifted for pediatric trial we would have to conduct additional juvenile animal tox studies which would take between 10 and 12 months to conduct that for a pediatric study. If the trial is lifted, obviously -- if the clinical hold is lifted, that would potentially give us the opportunity to look into adult clinical studies in the US. Ex-US, or outside of the US, that would be -- that would vary on country by country and whether or not they required juvenile animal tox studies before initiating a juvenile clinical study.

Okay, terrific. And just one more question with regard to vapendavir. Should we expect that data to be released top line in a press release or are you targeting a potential medical meeting for the release of that data?

The initial release will be in a press release. And there's going to be a vast wealth of information clinically -- clinical as well as from a virology perspective. So we will look at a number of conferences in the future to present that data in a formal scientific fashion but top-line data would, we anticipate, would be in the press release.

Terrific. I'll get back in the queue.

Christopher James, FBR & Company.

Hi, thanks for taking the questions and congrats on the progress during the quarter. Just a couple questions on the ACQ-6 score.

I think you said a delta of 0.5 is clinically relevant. Can you maybe talk a little bit about the scoring and really what components do you anticipate to be most sensitive to vapendavir and which are most clinically relevant?

I'll let Anna Novotney-Barry, our VP of Clinical, answer that one there, Chris.

Sure, thank you.

So the ACQ that we're using in the clinical trials, the ACQ-6, in the first five questions, our patient reported answers to questions about the status of their asthma and their asthma systems and control. And the sixth question is an objective measurement of lung function FEV1 taken by clinic staff and reported, therefore, by the investigator.

With regard to which of the six components of the single ACQ score would be most sensitive to treatment, that's really difficult to say at this point. But the instrument was validated to reflect the degree of asthma control and has been validated with those components in it and they are all equally weighted.

So a maximum score on the ACQ-6 would be a score of 6 which would reflect very poor asthma control and very few people would be walking around with a score that high. Anything above a score of 1.5 on the ACQ is considered abnormal and reflective of asthma that is not well controlled.

Great. So is it fair to say that the first five components are subjective and the last component, FEV1, is the objective measure? And then of the first five scores, are those taken by the patient? Are those electronic diaries? How are you capturing the first five scores?

So, the first five scores are completed directly by the patient reflecting their asthma symptoms over the previous week. And the patient records those using a digital pen on paper.

And the digital pen is similar to, say, the workings of a smart phone in that the pen automatically transmits as the patient is recording the answers on a booklet. And so it's sort of nifty and it's real-time.

And so it's electronic and we know that the patient is completing it and when they are completing it by virtue of that. Yet to the person it just feels like they are filling out a survey on a piece of paper. So -- does that answer your question on that?

No, it does, but it just begs another question and I'll jump back in the queue. Are patients reminded if they forget to fill out a component or if they don't fill it out on time? I'm assuming it's a daily diary.

Yes, so you can't go back, you can't have a patient go back and if they forgot to answer one of the questions on the six-question instrument, you can't go back and do that because -- if the time frame has changed like if it's a week later or whatever. But because it is real-time recorded by -- and transmitted by the digital pen, we know if a patient is completing their instruments on time and, therefore, you can manage very well compliance with the instrument. And so we expect very little missing data because we didn't use just a paper method to collect this instrument.

Great. That's helpful. I'll hop back in the queue.

I look forward to the data. Thank you.

(Operator Instructions) I'm not showing any additional questions at this time.

Fine, so just in closing today, we are very excited for what the future holds in the next several months as we reach several important milestones that represent a culmination of all the heavy lifting our employees have done the last few years. We believe each respiratory antiviral program independently represents a considerable global market opportunity that has limited therapeutic options and that our direct acting antivirals are well-positioned to address.

I look forward to updating you on future calls. Thank you for joining us this afternoon and have a great rest of your day.

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