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Tekmira Pharmaceuticals Corporation (NASDAQ:TKMR)

Q1 2013 Earnings Call

May 14, 2013, 04:00 pm ET

Executives

Jodi Regts - Director, Investor Relations

Mark Murray - President & CEO

Ian Mortimer - EVP, Finance & CFO

Analysts

Shaukat Khan - Maxim Group

Doug Loe - Byron Capital Markets

Operator

Good day ladies and gentlemen and welcome the Tekmira Provides Corporate Update and Announces First Quarter Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. (Operator Instructions) As a reminder today’s program is being recorded.

I would now like to introduce your host for today's program, Ms. Jodi Regts, Director of Investor Relations. Please go ahead.

Jodi Regts

Thanks, Jonathan. Good afternoon, and thank you for joining us today on this conference call and webcast to provide a corporate update for Tekmira Pharmaceuticals Corporation and reported results for the first quarter ended March 31, 2013. Joining me on the call is Dr. Mark Murray, Tekmira’s President and CEO along with Ian Mortimer Executive Vice President and Chief Financial Officer.

I would like to remind everyone that certain statements made on today's call will be forward looking and involve know and unknown risks, uncertainties and other factors that may cause the actual results to be materially different from any future results expressed or implied by such forward-looking statements. We do not expect to update forward-looking statements continually as conditions change. A more complete discussion of the risks and uncertainties facing Tekmira appears in Tekmira’s Form 20-F for the year-ended December 31, 2012 which is filed on EDGAR and SEDAR and available online under the investors section of our website. This conference call is being webcast live and the archive will be available on our website at www.tekmirapharm.com following our call today.

Just to provide a brief overview with the format for today's call, Mark will provide a corporate update and Ian with then outline key financial highlights. Mark will then provide some closing remarks before we open up the call for your questions.

So now over to Mark.

Mark Murray

Good afternoon, everyone and thank you for joining us on our call today. I am pleased to report that we have achieved a number of key milestones over the last few months which I will summarize today.

We recognized that in order to bring innovative new therapeutics to patients and maximize value to our shareholders, we must focus on developing our proprietary pipeline of RNAi products in therapeutically important and commercially attractive markets. The most advanced therapeutic in our pipeline is TKM-PLK1, which targets a well validated oncology target.

Compared to small molecule PLK1 inhibitors, our TMK-PLK1 therapeutic is more potent and specific, and importantly, TKM-PLK1 does not accumulate in bone marrow, thus avoiding the main toxicity of small molecule PLK1 inhibitors. So in this product, we have matched a good target in PLK-1 with a superior mechanism of action RNAi interference and we have the additional benefit of using tumor directed LNP delivery with a formulation designed specifically for oncology applications.

At the annual meeting of the American Association of Cancer Research which took place in April, we presented positive data from the completed dose escalation portion of our TMK-PLK1 Phase I clinical trial, which was conducted in a population of advanced cancer patients with solid tumors. The data demonstrated that TKM-PLK1 showed encouraging signs of drug activity with RNAi activity confirmed in a tumor biopsy.

Overall with the dose escalation part of Phase I trial, our several objectives have already been achieved, including establishing a TKM-PLK1 is well tolerated, establishing the maximum tolerated dose with the weekly dosing schedule, observing encouraging signs of drug activity and confirming that TMK-PLK1 triggered RNAi action in tumor biopsy. We are encouraged that two patients enrolled with gastrointestinal carcinoid neuroendocrine cancer both responded to treatment with TKM-PLK1.

As Dr. Mark Gilbert commented on our conference call at AACR, the patients enrolled in our trial had extensive disease, so TMK-PLK1 has provided a meaningful clinical benefit to these patients. Building on these results, we are looking forward to initiating a Phase II clinical trial in patients with previously treated gastrointestinal carcinoid neuroendocrine cancer in the second half of this year. We believe this indication is of high value to Tekmira based on the lack of available therapies for patients and few competing therapies in development. We are also evaluating additional clinical indications for TMK-PLK1 development and we will be in a position to provide further guidance later this year.

Turning now to our collaboration with the U.S. government’s Department of Defense TMT program, we are pleased that our contract has recently been modified to support development plans that incorporate a much more potent LNP formulation and advancements in manufacturing technology as well as providing for $6.9 million in additional funding. We have initiated preclinical chemistry manufacturing and control studies that support the use of these improvements in the program and anticipate completing a submission to the FDA in the second half of 2013 in order to support the use of the enhanced product in a continuing Phase I clinical trial.

New data supporting some of Tekmira's recent LNP formulation and manufacturing advancements, including lyophilization technology and data on potent subcutaneous administration of LNP will be presented tomorrow at the 15th Annual TIDES Summit. Needless to say, we continue to make significant progress on the LNP platform and continue to believe our technology is the absolute gold standard in the delivery of RNAi therapeutics.

Just briefly, I would like to summarize some of the near-term catalysts expected from our current partnerships. For over a decade, the Tekmira team has focused its scientific expertise on overcoming the challenges of RNAi delivery, which resulted in Tekmira owning the gold standard in LNP delivery technology.

Today, our LNP delivery technology enables our own pipeline of products and those of our partners. We've granted a license to Alnylam to use our LNP technology to enable certain of its RNAi therapeutic products, including ALN-TTR02, ALN-VSP and ALN-PCS02. We will receive milestone and royalty payments as these LNP enabled products are developed and commercialized.

ALN-TTR02 is an RNAi therapeutic for the treatment of TTR-mediated amyloidosis, or ATTR, is enabled by Tekmira's LNP technology. As guided by Alnylam, we expect that the initial data from the Phase III, ALN-TTR02 trial will be presented at the 2013 Biennial Meeting of the Peripheral Nerve Society being held June 29 to July 1 in St. Malo, France.

By year end, it is expected that ALN-TTR02 will enter a Phase III trial, triggering a $5 million milestone payment to Tekmira. We're also entitled to receive a $5 million milestone payment for enabling Alnylam’s ALN-VSP partner to initiate a clinical trial in China, which is expected to occur in 2013.

In addition to Alnylam, we continue to collaborate with a number of other biotechnology and biopharmaceutical companies. And as we have said in previous calls, we believe that there is an increased appetite from partners wanting access to our LNP technology and we will provide update as these relationships mature.

I hope my comments today encapsulate the key progress made by Tekmira over the past quarter and provide some guidance on our anticipated near-term milestones. At this point, I would like to turn the call over to Ian, who will go over the financial highlights.

Ian Mortimer

Thanks, Mark. Good afternoon, everyone. I will place our Q1 2013 results into contacts by comparing them to our Q1 2012 results. Tekmira’s net loss for Q1 2013 was $2.6 million as compared to a net loss of $3.2 million for Q1 2012. Looking at revenue, in Q1 2013 revenue was $2.2 million as compared to $3.6 million in Q1 2012. Most of our revenue for the first quarter as of both 2013 and 2012 is from our Department as Defense contract to develop TKM-Ebola. Under the contract we are being reimbursed for cost incurred and we are in an incentive fee. Expenses incurred on the contract are presented on a gross basis in our financial statements that is both as expenses and as revenues.

In Q1 2012, expenses and revenues for TKM-Ebola were relatively high as we had commenced the Phase I clinical trial. We expect revenue from this contract to increase in the second quarter of 2013, as technology transfer, manufacturing and other non-clinical studies were all be ongoing.

As Mark mentioned earlier, we recently signed a modification to our TKM-Ebola contract and this provides a greater certainty of revenue from this collaboration into late 2014.

Turning now to expenses, total research, development, collaborations and contract expenses increased slightly from $4.1 million in Q1 2012 to $4.2 million in Q1 2013. For the reasons just discussed, TKM-Ebola contract expenses were higher in the first quarter of 2012 than they were in the first quarter of 2013. Offsetting these however, our early stage research expenses have increased in the current quarter as we work to identify additional drug candidates for development.

Also TKM-PLK1 clinical trial expenses are higher in the first quarter of 2013 as compared to the first quarter of 2012 as we continue to enroll patients in our expansion cohort and start to plan Phase II development. General and administrative expenses decreased from $1.8 million in Q1 2012 to $0.9 million in Q1 2013. Q1 2012 expenses were higher as they included legal fees incurred in respect of a lawsuit against Alnylam and AlCana that were settled in November 2012.

Now looking at our cash position and burn rate, at March 31, 2013 we held $43.8 million in cash. We are maintaining the cash runway in 2013 revenue and expense guidance that we provided in our 2012 year end MD&A.

I will remind you that we expect our cash given the various assumptions provided in our year end MD&A to last into 2015. We are also maintaining our guidance that we expect to have greater than $35 million in cash at the end of 2013.

I will now turn things back to Mark for some concluding comments before we open the call up for your questions.

Mark Murray

Thanks, Ian. First and foremost, we have recognized that we must demonstrate the clinical value of our pipeline in a range of therapeutically important, commercially attractive markets. Our strong balance sheet provides added fuel for Tekmira to propel a number of product candidates to various stages of clinical development by 2015, including TKM-PLK1, TKM-Ebola and others. Our work over the last decade has established Tekmira's LNP technology as the gold standard solution to the challenge of RNAi delivery.

Importantly however we continue to improve upon and adapt our LNP formulations and manufacturing technologies. We are truly excited about working with partners in the RNAi field and are well positioned to pursue product platforms and strategic partnering deals with pharmaceutical partners. This year will mark the advancement of our own TKM-PLK1 product into a Phase 2 trial and our technology is expected to enable our partner's product in a Phase 3 trial by the end of this year.

I appreciate your participation on this call today and I will now turn things over to the operator, who will open up the call for questions. Operator?

Question-and-Answer Session

Operator

(Operator Instructions) Our first question comes from the line of Jason Kolbert from Maxim Group.

Shaukat Khan - Maxim Group

Hi, how you guys doing? This is Shaukat Khan calling in for Jason Kolbert. It seems like you guys are moving forward with your TKM programs. I have a quick question, a couple of quick questions about LNP and PLK1 trial. As far as your partnerships for LNP goes, are you guys -- I remember that you guys were thinking about partnering with some agricultural companies as far, any other movement with different partners yet or no?

Mark Murray

As it relates I think to the question as it relates to the agricultural collaboration we still as we've guided previously we still are collaborating with one of the large agricultural companies. That work is ongoing and as that relationship matures we will be able to provide additional guidance.

Shaukat Khan - Maxim Group

And I know you guys had a 10 patient expansion of the Phase 1 trial for the PLK1 what's the status of that and which patients were actually recruited for those, those 10 patients trial?

Mark Murray

So the expansion cohort is still ongoing as we guided a few weeks ago at ACR. We are about half way through that expansion cohort and we expect to see the data later this year.

Shaukat Khan - Maxim Group

And they are all in endocrine or it's again multiple different cancers.

Mark Murray

No as it's an extension study of the ongoing Phase 1 trial, it is more of an all comers focused on advanced solid tumors.

Shaukat Khan - Maxim Group

And have you guys identified the next target that you will be bringing to Phase 1 trial either ALDH2 or WEE1, and CSN5?

Mark Murray

We have not yet identified it. There are a number of targets under consideration.

Shaukat Khan - Maxim Group

Alright and how is your relationship with BMS so far, have you guys, have they given you guys any pre clinical data on any targets that you might be looking at or is it still too early?

Mark Murray

Well, that's, so we have a very productive relationship with them, looking at a lot of targets but we have not selected one that we might take out of that collaboration.

Shaukat Khan - Maxim Group

Alright. Thank you very much, guys. I totally I appreciate it.

Operator

Thank you. Our next question comes from the line of (Inaudible) from [Edison]. Your question please.

Unidentified Analyst

(Inaudible) hello Ian and Mark and thank you for taking my questions. Congratulations on a good quarter, I had a question just regarding the TKM-PLK1, is there any possibility of there being some additional studies, sponsorships by NCI or other parties for this part of compound?

Mark Murray

(Inaudible) This is Mark. We are looking at other indications and we are looking at possible collaboration of a variety types, yeah.

Unidentified Analyst

Okay. And also just maybe going back on the ALDH2, can you give us just an update on status of that program and when we should expect that to reach the clinic stage.

Mark Murray

So that program is ongoing, we're continuing to do preclinical work and evaluate it as a possible candidate.

Unidentified Analyst

And I guess this was already asked but do you have a timeline as to when do you expect to announce other candidates for the IND stage or when we would should expect to hear from next candidates to reach the clinic?

Mark Murray

Yeah, that's a good question and as you heard, we talked about some of the targets that we've looked at. We stated as a corporate objective that we'll be identifying our next product for development later this year.

Operator

Thank you. Our next question comes from the line of Doug Loe from Byron Capital Markets. Your question please.

Doug Loe - Byron Capital Markets

Yeah, thanks very much and good afternoon gentlemen. Thanks for the update on the pipeline. I actually had a more (Inaudible) question if you don't mind, as you know and as indicated in the press release, you know the product was approved back in the Q3 of last year and just the end of the question I can clearly ask Talon as I wanted to but I was wondering if you had any color on feedback from them as to sort of the status of their partnering initiatives and what timeframe you would expect for that product to be launched?

Mark Murray

That's a good question. Yeah, we do talk to the Talon guys and get updates from them. I mean, all we can say publicly is what they've guided to which is that they are looking for partners to launch that product commercially.

Operator

Thank you. (Operator Instructions) And our final question comes from the line of (inaudible) from [Ascended Capital]. Your question please.

Unidentified Analyst

Yes. Thank you. Mark, you talked about some subcu delivery data to be presented without giving away the answer, can you at least give us some background on the context of how you evaluate it, that type of delivery.

Mark Murray

Sure, [Ki] well I'm not sure exactly what you mean, but in other words we have model targets and we can compare, IV administration to subcu administration to some of the data that's been presented by others on subcu administration. And we have find that we can do it successfully and quite potently.

Unidentified Analyst

Okay, great, we'll look forward to that data.

Mark Murray

I'm sorry?

Unidentified Analyst

We'll look forward to that data release. Back to PLK1 as you look for other targets, I know you've just answered that you're looking for collaborators, but where you actually go forward with another target without a collaborator?

Mark Murray

Yes, we will.

Unidentified Analyst

Okay. Great thanks that's all I have.

Ian Mortimer

Yeah and maybe, [Ki] just had to that last comment from Mark, the way that we have dealt our financial model and the guidance we have been giving in terms of our cash runway includes not only us taking PLK and so Phase 2 development ourselves, but also accounts for us moving additional programs into development our-self.

Operator

Thank you. And we did get a final question from the line (Inaudible). Your question please.

Unidentified Analyst

Hi guys, congratulations. I just have a quick question about the PLK1 Phase 2 trial and can you -- can you give out specific about the timeframe on, we should expect to that initiation over the past two maybe, later this year on quarter three or quarter four, or end of the next year?

Mark Murray

Thanks, [Grant], we haven't updated that guidance specifically to a quarter the guidance we're giving right now is that we anticipate starting the Phase 2 trial in neuroendocrine tumors before the end of 2013.

Unidentified Analyst

Okay, that's a last, and thanks.

Operator

Thank you. This does conclude the question and answer session of today's program. I would like to hand the program back to Ian Mortimer for closing remarks.

Ian Mortimer

Great, thanks everyone for joining us on the call today. And we look forward to continuing to share our progress with you over the coming months, thank you. We will now end the call.

Operator

Thank you. And thank you, ladies and gentlemen for your participation in today's conference. This does conclude the program. You may now disconnect, good day.

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