Brickell Biotech, Inc.
Q2 2012 Earnings Call Transcript

Published: 1 Aug 2012

[Operator:]

Please stand by, we’re about to begin. Good day and welcome, ladies and gentlemen, to the Vical Incorporated Financial Results Conference Call. At this time, I’d like to inform you that this conference is being recorded and that all participants are in a listen-only mode. At the request of the company, we’ll open the conference up for questions and answers from invited participants after the presentation. I will now turn the conference over to Mr. Alan Engbring, Executive Director of Investor Relations. Please go ahead, sir.

[Alan Engbring:]

Hello, everyone. Welcome to our second quarter 2012 financial results conference call. Participating on the call today are Vical’s President and Chief Executive Officer, Mr. Vijay Samant; and Vical’s Chief Financial Officer, Ms. Jill Broadfoot. I will begin with a brief notice concerning projections and forecasts. This call includes forward-looking statements including financial expectations and projections of progress in our research and clinical development programs that are subject to risks and uncertainties that could cause actual results to differ materially from those projected, including the risks set forth in Vical’s Annual Report on Form 10-K and Quarterly Reports on Form 10-Q filed with the Securities and Exchange Commission, as well as the specific risks and uncertainties noted in Vical’s news release on second quarter 2012 financial results. These forward-looking statements represent the company’s judgment as of today. The company disclaims, however, any intent or obligation to update these forward-looking statements. Now, I would like to introduce Vical’s President and Chief Executive Officer, Mr. Vijay Samant.

[Vijay Samant:]

Thank you, Alan, and welcome to all our participants in the call today. I’ll review the status of our key development program and our expectations for the remainder of this year into 2013. But before I begin, I want to forward the baton on to our CFO, Jill Broadfoot, to give you our latest financial highlights. Jill?

[Jill Broadfoot:]

Thank you, Vijay. We enjoyed continued financial strength through the second quarter of 2012. Revenues increased to $1.6 million for the second quarter of 2012 compared with $800,000 for the second quarter of 2011. The increase in revenues was driven primarily by reimbursements from Astellas for our costs and expenses in support of the TransVax program. Total operating expenses for the second quarter of 2012 were $9.5 million, consistent with the $9.3 million for the second quarter of 2011. Our net loss for the second quarter of 2012 was $7.9 million or $0.09 per share compared with a net loss of $8.4 million or $0.12 per share for the second quarter of 2011. We ended the first half of 2012 with cash and equivalents of $97 million including the $10 million milestone payment we received from Astellas in the second quarter, for which we recognized the revenue in the first quarter. We remain on track with our full-year 2012 cash burn forecast of $17 million to $22 million and believe we have sufficient capital for our planned activities through at least the end of 2013. I will now turn the call back to Vijay.

[Vijay Samant:]

Thank you, Jill. I’ll begin today with an update on our lead program, Allovectin, which is approaching completion of a pivotal Phase 3 trial of metastatic melanoma. I’ll remind you briefly of the program details. We enrolled 390 subjects with 2

[Operator:]

Thank you, Mr. Samant. (Operator Instruction) Our first question comes from Eric Schmidt with Cowen & Company.

[Eric Schmidt:]

Hello. Good afternoon, Vijay, and thanks for the introductory comments and taking my question. It’s about the Phase 3 Allovectin study. I was wondering if you could give us the exact number of patients that might have gone on to get either YERVOY or Zelboraf or even other investigational therapies. And I think you also made a statement that you – insinuated that maybe the control arm would have had fewer such patients receiving subsequent therapy. I’m wondering, one, if I heard you correctly and; two, what that might be based, on given again this trial is still blinded?

[Vijay Samant:]

So, let me give you a little background on it. So going to answer your question in a long-winded way. First of all, just a reminder, our study started in Jan of 2007 and then the last patient was enrolled in Jan of – Feb of 2010 and the final patient came off the study in Feb of 2012. During the conduct of our studies between Jan 2007 and Feb of 2010, the pivotal studies were going on for Zelboraf as well as YERVOY and both those were in treatment naive patients, so none of the patients were eligible, okay, for getting our drug even if they decided to drop out of our study because once they enrolled, it’s hard to get into another program. Even in the chemorefractory study that YERVOY conducted, you see about halfway through the study, which is early on in the study, and modified the protocol not to include any patients which are involved in a survival study as well, okay. So, the earliest approval to my knowledge, and you can check on it because on top this – YERVOY was approved in the United States in – sometime in March, about April of 2011, really not available through May, okay, is my best guess, okay, and then Zelboraf was available in September 2011. Our last patient when enrolled was February 2010 and European availability of this drug was low. The compassionate use was not widely used for both these drugs and you could independently checkout. So, if you say that the likelihood and the fact that we’re 2

[Eric Schmidt:]

All right, so that was my follow-up. I mean, do you have an ability to follow-up patients for subsequent treatments or...?

[Vijay Samant:]

No, we do not have the ability to follow-up the studies – the randomized study when it was done, there was no requirement to follow-up what the subsequent treatments were.

[Eric Schmidt:]

Okay, and then last question on the primary endpoint. I know you’re going through all the rigors of collecting and adjudicating that data. At the end of the day I guess simply put, does it really matter if assuming that overall survival is good, this is a drug that you would expect to be approved regardless of the success on the primary endpoint, and I guess vice versa if the overall survival is poor does primary endpoint data have any chance of rescuing you?

[Vijay Samant:]

I think you are a very smart and logical person. Where did you go to school, Eric?

[Eric Schmidt:]

Not quite the school that your daughters attended, but not bad either.

[Vijay Samant:]

No, the reason I bring that up is, obviously your logic is absolutely right and I wish your thinking will be reflected by the FDA. But you know, we have to go – since adjudication is part of our special protocol assessment, we don’t want to violate any elements of our special protocol assessment and that’s why we’re going through that reverse adjudication, so nobody can question that we abandoned it because we had some knowledge of what the primary endpoint was, because we have no knowledge and so we are following it. Obviously the data will stand on its own in the end, okay, and obviously we meet one endpoint versus the other, it all depends on the quality of the data in the end, Eric.

[Eric Schmidt:]

Okay. Thanks for taking my questions.

[Operator:]

We’ll take our next question from Lee Kalowski with Credit Suisse.

[Lee Kalowski:]

Thanks. Good afternoon or I guess good morning your time. Thanks for taking my question. Just one – just a very quick clarification. Last quarter, you had talked about – it sounded like the data would be available both in Q4 and now it sounds like you’re saying that it would be done as soon as practical. Has anything changed that – such that the overall survival data is not going to be available in 2012? It might just be a minor point. And then secondly, I understand that you’re blinded on the response rate. Is there anything that could happen with that, that could have the committee unblinded? In other words, is there a threshold such that the data is so positive that they would want it unblinded or that there would be some sort of utility analysis?

[Vijay Samant:]

Let me go back to your second question first and then I’ll go to the first question, okay. First to all this – the committee that’s doing adjudication will be doing blinded adjudication. They will have no knowledge of which arm the patient is in. So, they will be counting responders in the study in the end, okay, and it will be in a log database. That won’t be transferred to us till we request them to transfer to us. And once it’s transferred, we will break the chord. So, the committee has no knowledge. And plus this is an adjudication committee, this is not a data safety management committee, okay. So, they have no authority in terms of declaring, even if they had the knowledge. Does that answer your question?

[Lee Kalowski:]

Yeah, I think so. So in other words basically both – the analysis of both will be done simultaneously?

[Vijay Samant:]

Simultaneously, and the committee which is doing adjudication is doing in a blinded fashion. They don’t know which arm the patient is in.

[Lee Kalowski:]

Got it.

[Vijay Samant:]

Got it. So regarding your question, no, I think you need to understand we are on track. As I’ve said before on prior earnings call that the death event is slow and nothing has changed, which – this is how it works, right. In this business, you could get a slug of death in the month of October and we can read the endpoint or you can get a slug of deaths in October and slow down completely in November, December. We also need time to analyze the data. This is such an important study for us and we want to make sure once we unblind the data we need to bring a couple of experts before we announced the topline results so that we don’t make a mistake, so that our outside exports scrutinize the statistical plan, the analysis and if it occurs – God forbid, this occurs in the last two weeks of December, we’ll probably not announce that data at that point in time because it doesn’t make sense at that point to announce any data and we’ll probably announce early in Jan. So, that’s where we. So there’s no substantial change, but we wanted to caution people so that people understand that there’s some lag time after the data’s unblinded where we do a careful set of analysis.

[Lee Kalowski:]

All right. Thank you, Vijay; appreciate that.

[Operator:]

(Operator Instructions) We’ll go next to Howard Liang with Leerink Swann

[Howard Liang:]

Thanks very much. How – assuming the Phase 3 data are positive, how soon can you file this? I guess I’m wondering whether you’re ready with the CMC portion – or other portion of the filing.

[Vijay Samant:]

It looks like you’ve a manufacturing guide there. Obviously, we’re working very hard on it. The CMC component is very important including conformance log, validations, stability, and that’s where a lot of the energy in the company is right now focused on. I said our goal is to file between the six to nine months after unblinding and making the data available, okay. We’ll give you a better guidance as the data becomes available, but there’s a lot of activity going on in the company focused on that. We actually have a core group in the company completely focused on getting that done. I just want to remind you, our manufacturing is relatively simple, okay. It’s not like some other companies where they’re doing patient-specific cell therapy. This is a generic fermentation process that we use – which is used to equalize fermentation. There are two purification steps. So, the manufacturing is not complicated, but again you’ve got to do the things correct and that’s where the focus is right now.

[Howard Liang:]

Okay. So if I remember correctly, there’s no interim analysis in this trial. Has there been any opportunity for the DSMB to stop the trial for – either for security or for positive efficacy?

[Vijay Samant:]

It’s a data safety board. They don’t have any efficacy data, but they could have stopped it on the basis of safety if they received a stage 3 or 4 adverse event, and we’ve had I don’t know how many...

[Alan Engbring:]

We’ve completed five reviewed lots safety, but it’s the safety monitoring board. There’s no...

[Vijay Samant:]

And we’ll have one final review later this year which will be our final review. So, those reviews have gone well, okay.

[Howard Liang:]

Okay, great. Thanks very much.

[Operator:]

(Operator Instructions) We’ll go next to Stephen Willey from Stifel Nicolaus.

[Stephen Willey:]

Yeah, thanks for taking the question. Just quickly on the TransVax Phase 3 trial initiation; can you maybe just talk about kind of what’s going on there and I guess if there are any kind of specific bottlenecks to that trial getting started? Presumably, you’ve gotten feedback from the FDA on what the efficacy endpoint need to look like. And is this just kind of getting a drug supply up and running? Is this getting trial sites up and running? And then secondly, when do you anticipate communicating to us I guess when – or what that endpoint does indeed look like? And is that something that we need to wait to see on clintrials.gov? Thanks.

[Vijay Samant:]

It’s an excellent question. I don’t think – first of all, let me tell you that drug supply is ready. It’s all – we manufactured the stuff. I want to thank the Vical team, put a lot of effort behind it. I think you need to understand it, as I mentioned in my script today, that we’ve handed over the baton or the stewardship of this program to Astellas which is a much bigger partner than us. And it has been a lot of time – the people in business development and the clinical group who do due diligence in acquiring the program are a small group in a large company. A whole bunch of people then get involved and need to be educated with the basic tenets of the program. Then we’ll participate in the clinical trial design. Here, we have a smaller committee of four or five people. It’s a larger committee, then there’s a joint venture – joint partnership development committee. So there are a lot of multiple steps that large corporations go through. When I did with committees, there have been interactions with the FDA. We’ve transferred the R&D to them. So, their regulatory reports have been established credibility with the agency’s counterpart. So there are no delays; it’s just then the time with the educational overlap between the two companies and transferring the baton. I think the clinical trial design has been set, and I think we should be able to give you sometime later this year, hopefully sooner, in terms of what the trial size is, what the endpoints are. But I think Astellas is all energized to take this program forward. And as I said before, that they plan to start the Phase 2 (inaudible) study shortly thereafter.

[Stephen Willey:]

Okay, thanks.

[Operator:]

If there are no further questions, I’ll now turn the call back over to Mr. Samant.

[Vijay Samant:]

Well, thank you all for participating. We hope to see you – some of you individually at one of our next scheduled presentations before the next conference call. Again, thank you for your interest in Vical.

[Operator:]

Ladies and gentleman, this concludes our conference for today. You may now disconnect.