Intec Pharma Ltd
Q4 2007 Earnings Call Transcript

Published: 10 Mar 2008

[Operator:]

Good day everyone and welcome to the Neose Technologies conference call. Today’s call is being recorded. With us today we have President and Chief Executive Officer, Dr. George J. Vergis and Senior Vice President and Chief Financial Officer, Mr. Brian Davis. Before I turn the call over to Dr. Vergis, I would like to mention that today’s call includes forward-looking statements that involve risks and uncertainties. Actual results could differ materially from the results discussed here. Factors that could cause or contribute to such differences include those discussed in sections in Neose’s annual report on Form 10-K for the year ending December 31, 2007 entitled risk factors and special note regarding forward-looking statements and discussions of potential risks and uncertainties in Neose’s subsequent filing to the SEC. The filing is available from the Securities and Exchange Commission at www.sec.gov and now I would like to turn the conference over to Dr. Vergis. Please go ahead, sir.

[George Vergis:]

Thank you operator and good afternoon everyone and thanks for joining us today. In today’s call we’ll discuss our operating and financial results for the fourth quarter and full year 2007 and early 2008 events and our corporate objectives for 2008. 2007 was a year marked by important successes in several of our programs. 2007 also included growing controversy in the erythropoietin category that ultimately led to a Neose’s strategic decision six weeks ago to discontinue our NE-180 candidate and reduce our workforce by 35%. Having covered the NE-180 discontinuation and workforce reduction at length on our prior conference call, the focus of this call would be on the successes in our GlycoPEG-GCSF and GlycoPEGylated hemostasis drug programs and how we expect to build upon those successes in 2008. In our GlycoPEG-GCSF program where our partner BioGeneriX AG leads and fully funds clinical development we completed two Phase I studies. The first Phase I trial was a weight based, ascending dose, randomized single blind study in 53 healthy subjects. The objectives were to assess safety, tolerability, dose response and pharmacokinetics of up to four different subcutaneous doses of GlycoPEG-GCSF in comparison to the standard marketed dose of Neulasta of a 100 micrograms per kilogram. The second Phase I trial was a randomized single blind study comparing GlycoPEG-GCSF given subcutaneously as a 6 milligram fixed dose to the currently approved and marketed 6 milligram fixed dose of Amgen Neulasta in 36 healthy subjects, again safety, tolerability, pharmacokinetics, and pharmacodynamics were studied. Data from these trials was consistent and encouraging demonstrating safety and tolerability as well as a 30% greater increase in neutrophil count and a 60% greater bioavailability versus Neulasta. These data along with our preclinical findings gives us confidence that the product profile of GlycoPEG-GCSF will meet or potentially exceed that of Amgen’s product and that of other candidates in development. In the first half of 2008 we expect our partner to commence a Phase II study comparing several doses of GlycoPEG-GCSF to the standard market fixed dose of Neulasta. This Phase II trial will be a multi-country, multi-site randomized double blind study enrolling up to 200 breast cancer patients receiving four cycles of chemotherapy. Clinical end points will include the duration of severe neutropenia and the incidence of febrile neutropenia as well as safety and tolerability. As a reminder this candidate is intended to compete in a market that had sales of $4.4 billion in 2006 and under our agreement with BioGeneriX, Neose has the rights to the product in the United States, Japan, Canada and Mexico. We also made significant progress in our GlycoPEGylated hemostasis programs with Novo Nordisk. Most importantly Novo Nordisk commenced the Phase I study of GlycoPEGylated recombinant blood factor VII in June of 2007 which triggered a milestone payment. In addition preclinical data on this drug candidate was presented at the annual meetings of the International Society on Thrombosis and Haemostasis and the American Society of Hematology including data demonstrating that GlycoPEGylation significantly prolongs the active half life of recombinant factor VII. We continue to support Novo Nordisk’s development efforts for GlycoPEGylated factors VIII and IX and were rewarded by milestone payments on each of these programs as well. We look forward to supporting Novo Nordisk in further advancing these three blood factors in 2008 and hope to demonstrate that progress through the receipt of milestone payments and additional data presentations. As we move into 2008 we do so as a leaner organization. However we are confident we have the resources in place to execute on our partner and programs. In addition the resources we have retained can be transitioned to new technology and product development activities later in the year and in early 2009 as we execute and are successful on our key programs. As Brian will discuss in further detail we expect that our existing cash and anticipated collaboration payments are sufficient to fund our operations into the third quarter of 2009. We have a current product pipeline of four products, two clinical and two in research, that are target to markets with aggregate sales of approximately $8 billion in 2006. At this point I will turn things over to Brian Davis for the financial discussion and at the conclusion of his remarks, we will be happy to take questions.

[Brian Davis:]

Good afternoon everyone. We reported today a net loss for the full year 2007 of $28.5 million or $0.57 per share compared to a net loss of $27.1 million or $0.82 per share for 2006. The net loss for 2007 included non-cash income of $6.6 million relating to a decrease in the fair value of our warrant liability. The net loss for the full year 2006 included a $7.3 million gain from the sale of our former corporate headquarters and pilot manufacturing plant. Our net loss for the fourth quarter of 2007 was $3.2 million or $0.06 per share compared to a net loss of $9.5 million or $0.29 per share in the fourth quarter of 2006. Fourth quarter of 2007 included non-cash income of $3.2 million relating to a decrease in the fair value of our warrant liability. Our 2007 revenues were $8.8 million compared to $6.2 million in 2006. In both years revenues were comprised of revenues from our collaborations with Novo Nordisk and BioGeneriX. The increase in the 2007 period was due to a 50% -- 50% of the increase in 2007 was due to Novo Nordisk with the remaining half due to BioGeneriX. For the fourth quarter of 2007 our collaborative revenues were approximately $2.7 million compared to $600,000 in the fourth quarter of ’06. The increase in revenues for both the fourth quarter of 2007 and the full year 2007 were due to the increased revenues under the Novo Nordisk and BioGeneriX agreements. For 2007 our total operating expenses increased to $45.7 million from $40.6 million in 2006 excluding the $7.3 million gain on the Witmer Road facility mentioned earlier. This increase in research and development -- in operating expenses was due to primarily a $5.9 million increase in research and development expenses. Those expenses increased during 2007 due to $6.8 million of additional external costs for our NE-180 program and $3.3 million of additional costs associated with our collaborations with Novo Nordisk and BioGeneriX. Those were partially offset by lower payroll and facility related costs resulting from the restructurings that were implemented in 2006 and 2007. General and administrative expenses for 2007 were $700,000 lower than in 2006 primarily due to lower payroll expenses partially offset by increased consulting costs. Our total operating expenses for the fourth quarter of 2007 were $9.4 million compared to $10.3 million in the fourth quarter of 2006. This decrease was primarily due to a $1.2 million decrease in research and development expenses over the prior year. This was due to a $2.8 million decrease in NE-180 external costs and lower payroll and facility related expenses partially offset by $2.1 million of additional external costs incurred on behalf of our collaborations with Novo Nordisk and BioGeneriX. Our general and administrative expenses increased by $300,000 over the same period in the prior year primarily due to increased consulting costs and legal costs associated with intellectual property partially offset by lower payroll expense. Lastly, we ended the year with $19.3 million in cash and cash equivalents. With respect to our financial outlook for 2008, we will continue our practice of providing guidance with regard to net cash utilization. Net cash utilization for 2008 is expected to be approximately $15 million. Our existing cash expected proceeds from collaborations, some license agreements and interest income should be sufficient to meet our operating and capital requirements at least into the third quarter of 2009. These estimates do not take into account any proceeds from non-diluted sources of additional capital such as new partnering activities. Operator this concludes our prepared remarks we are ready for questions.

[Operator:]

Thank you. (Operator Instructions) Your first question comes from Vernon T. Bernardino with Rodman and Renshaw.

[Vernon T. Bernardino:]

Hi, thanks for taking my question. Just wondering if you could describe to us what preparations still are being undertaken by your partners regarding deputative products prior to the initiation of Phase II studies second half this year.

[George Vergis:]

Great question Vernon we anticipate commencing phase II trial with BioGeneriX in the first half as we said so as you look at that the likely things that all companies in joint development deal with are the appropriate approvals in the jurisdictions where we will study the drug, final preparations of drug supply and having that supply at all the multi-site facilities within the countries all of that followed by actual dosing of the compound.

[Vernon T. Bernardino:]

Okay and you will directly manufacture and supply product to BioGeneriX?

[George Vergis:]

Actually we provide -- our Company is providing the reagents necessary to put GlycoPEGylation onto the GCSF molecule but our partner BioGeneriX is responsible for the actual manufacture and supply of the GCSF in structure.

[Vernon T. Bernardino:]

Will there be any prospect sometime in the future regarding data stability and TK data regarding those -- the product candidate.

[George Vergis:]

I am not certain at your question Vernon could you say it may be another way?

[Vernon T. Bernardino:]

Just wondering if in comparison just wondering if they could also -- will they also be planning to show the improvements where by the process of GlycoPEGylation has instilled on GCSF.

[George Vergis:]

Well in studies that we have done and phase II study and studies moving forward pharmacokinetics will be measured in those studies and that will be reported on in the data sets. As far as how the GlycoPEGylation takes place and specifically what’s done scientifically in relation to cost of good, it’s unlikely that that information would be shared.

[Vernon T. Bernardino:]

Okay, thank you for taking my questions.

[George Vergis:]

You are welcome.

[Operator:]

And another reminder for our audience. (OPERATOR INSTRUCTIONS) and we have no further questions and I will turn the conference back over to Dr. Vergis for additional closing remarks.

[George Vergis:]

Thank you operator and thank you all for your interest in Neose. We look forward to keeping to up-to-date on our future calls. Have a great day.

[Operator:]

That just concludes today’s conference. We do thank you for you participation. Have a great day.