Northfield Laboratories, Inc. F2Q09 (Qtr End 11/30/08) Earnings Call Transcript

Northfield Laboratories, Inc. (NFLD)

F2Q09 Earnings Call

January 12, 2009 11:00 am ET

Executives

Sophia H. Twaddell - Vice President, Corporate Communications

Dr. Steven A. Gould M.D. - Chairman and Chief Executive Officer

Jack J. Kogut – Senior Vice President Administration and Interim Chief Financial Officer

Analysts

Lynn Brecken – Brecken Capital

Presentation

Operator

Welcome to the Northfield Laboratories second quarter 2009 earnings conference call. My name is Damali and I will be your operator for today. (Operator Instructions) As a reminder, this conference is being recorded for replay purposes. I would now like to turn the presentation over to your host for today’s conference, Ms. Sophia Twaddell, Vice President of Corporate Communications.

Sophia H. Twaddell

Good morning. Welcome to our second quarter conference call for fiscal year 2009 for the period ended November 30, 2008. We filed our quarterly report with the SEC on Form 10-Q last Friday and issued a press release after the markets closed. This is available on Northfield’s website, www.northfieldlabs.com.

Before we begin our prepared remarks let me point out that during this call we may make projections and other forward-looking statements regarding our future business plans, strategies, and clinical and regulatory developments affecting our PolyHeme product. These statements involve risks and uncertainties that could cause the company’s actual results to differ materially from those predicted. A condensed list of these risk factors appears at the end of our press release and a more comprehensive discussion appears in our most recent annual report filed with the SEC.

Now I am going to turn the call over to our Chairman and Chief Executive Officer, Dr. Steven A. Gould.

Dr. Steven A. Gould

Good morning everyone and thank you for joining us today. I would like to begin by wishing everyone a happy New Year. 2008 was certainly a remarkable year in many ways and I hope that 2009 will be a good year for all.

As you know, the timing of these conference calls is based on the reporting of our financials for the quarter to the SEC, so Jack Kogut, our Senior Vice President of Administration, will begin by summarizing the numbers. I will then give an update on some of our activities during the quarter ending November 30, 2008, discuss a number of important recent events and what you may expect in the coming months.

Let me turn the call over to Jack for the financials.

Jack J. Kogut

The following information was disseminated in our SEC 10-Q filing and press release issued Friday, January 9, 2009, after the markets closed.

For the second fiscal quarter Northfield reported a net loss of $5.6 million, or $0.21 per share, compared with a net loss of $5.0 million, or $0.19 per share, for the corresponding period last year. At the close of the quarter Northfield reported shareholders equity of $16.5 million with $10.1 million in cash and marketable securities.

As a development-stage company, Northfield does not generate revenues. We estimate that based on our current forecast our current funds are sufficient for five to six months from the November 30, 2008, date of the financial statement.

Now I will turn the call back over to Steve.

Dr. Steven A. Gould

Let me now give you an update on our most recent key activities and our plans going forward.

This is without a doubt an exciting and crucial year for Northfield. Our major accomplishment was a submission of the BLA for PolyHeme to FDA in October for the treatment of life-threatening red-blood-cell loss when an oxygen-carrying fluid is required and red blood cells are not available, followed by the FDA response in December that the BLA had been accepted for filing and was designated for priority review with a review goal date of April 30, 2009.

These both represent major milestones for Northfield and our shareholders. I know this is a topic of greatest interest to everyone so let me expand a bit on how we got here.

We believe that the totality of our clinical data demonstrates that PolyHeme has the potential to provide life-sustaining capability to bleeding patients with life-threatening hemoglobin levels when blood is not immediately available and to thereby address a critical unmet medical need.

The results from our Phase III multi-center trial document that critically-injured patients receiving PolyHeme without blood for up to 12 hours following injury have comparable survival to control patients receiving early red-blood cell transfusions. This is an exceedingly important observation that demonstrates that PolyHeme does what it is intended to do. That is the basis for our proceeding with the BLA.

Although there were some differences in safety parameters between the treatment and control groups, we believe the overall study results demonstrate that PolyHeme has an acceptable safety profile with a favorable benefit to risk ratio for the intended patient population: that is patients at risk of dying from life-threatening loss of hemoglobin who have a need for transfusion to increase their oxygen-carrying capacity where there is a high mortality without treatment and there is no available, adequate alternative.

Furthermore, we believe that the combination of these findings with the multiple logistic benefits of universal compatibility, reduced risk of viral disease transmission, and long-term storage capability result in a compelling basis for the use of PolyHeme with the potential to save lives in the intended clinical settings.

That is the case we have to FDA in the BLA and we will continue to make in the coming months as we proceed toward what we hope will be a successful outcome.

Another key accomplishment was the publication of the data from the multi-center Phase III trial in the online version of The Journal of the American College of Surgeons in November and in this month’s print edition of the same journal.

This was a landmark study that represents the first experience in this country with the use of a hemoglobin-based oxygen carrier starting in the pre-hospital setting and this important paper is now available to all who have an interest in the fields.

Let me briefly summarize a few other areas. On the investor outreach front, we participated in the Rodman and Renshaw Healthcare Conference in New York in November and we will be presenting at the BIO CEO & Investor Conference in February. We will provide details on the webcast closer to the date.

We continue our active outreach program to institutional investors, conducting both one-on-one meetings and conference calls to keep the investment community up to date on our progress.

This is also a very exciting time in Washington. We have continued to keep our representatives in Congress, Senator Dick Durbin, and Representatives Jan Schakowsky and Mark Kirk, apprised of our progress with the BLA for PolyHeme. Senator Durbin has been instrumental in helping Northfield receive Congressional appropriations of nearly $5.0 million for the continued development of PolyHeme.

I had the opportunity to brief both Senator Durbin and his staff and Congresswoman Schakowsky in person in Washington last week to bring them up to date on our progress and I hope they will continue to support our development.

Our key activities going forward include supporting the BLA and preparing for a pre-licensure inspection of our manufacturing facility and a potential blood product advisory committee meeting, as well as our continued efforts in both business and commercial development, additional fund raising, and further research and development.

It is indeed a very busy and challenging time for Northfield, but also an incredibly exciting period as we continue to strive to deliver a potential life-saving therapy to patients who need transfusions in situations when blood is not available.

In closing, we appreciate your continued interest and support and look forward to providing further updates as the year progresses. The next few months are certainly critical to Northfield. I want to assure you that the Board, the officers, and all of our employees are focused on doing everything possible to ensure the success of PolyHeme and Northfield.

This concludes my prepared remarks for today. I will be happy to take your questions.

Question-and-Answer Session

Operator

(Operator Instructions) Your first question comes from Lynn Brecken – Brecken Capital.

Lynn Brecken – Brecken Capital

Assuming you get FDA approval, how quickly would be the time frame from approval to actually revenue generation and what are the plans to actually fund the company, either before or after that event?

Dr. Steven A. Gould

The first question is how quickly to revenue. We have talked before that, I want to put that into context. I think you are probably aware that the manufacturing capacity at present is in the 5,000 to 7,500 units per year range.

We think with that capacity we have a built-in network of the 32 sites, which represent the major pharma centers around the country, so we think we would be in a position to begin selling and distributing the product in a fairly rapid fashion.

I do want to clarify for you that, as we clearly have stated in our 10-Q, at that volume we won’t become profitable, which feeds into your second question about plans for fund raising.

There is nothing specific that I have to say to you. As I mentioned, we are certainly exploring fund raising potential opportunities. There is nothing I can specifically at that point but our ability to scale up manufacturing and expand the revenue will certainly depend on those activities going forward.

Lynn Brecken – Brecken Capital

So if I understand it, if you get FDA approval, you have the infrastructure in place to actually generate revenues and potentially become cash flow break-even?

Dr. Steven A. Gould

No. Half of that is correct. Again, I want to be clear. I will try and say it simply. We have a limited manufacturing capacity at present. And we think with the capacity that we will be producing over the course of the year, and with our relationships with the major trauma centers around the country, we think we are in a position to generate revenue. That’s the first part.

I do want to be clear that those volumes of manufacture will not lead to profitability. That requires going on to a manufacturing expansion which, as I said, feeds into the fund raising opportunities and further development.

Operator

There are no further questions in the queue.

Dr. Steven A. Gould

If there are no further questions, I thank everyone for joining us today and we look forward to keeping you updated on our progress.

Operator

This concludes today’s conference call.

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