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BioMimetic Therapeutics, Inc. (NASDAQ:BMTI)

Q1 2010 Earnings Call Transcript

May 10, 2010 4:30 pm ET

Executives

Kearstin Patterson – Director, Corporate Communications

Sam Lynch – President and CEO

Larry Bullock – CFO

Steve Hirsch – COO and EVP, Orthopedics

Analysts

Michael Matson – Wells Fargo Securities

Imron Zafar – Deutsche Bank

Bill Plovanic – Canaccord

Erica Layon – Nobel Financial

Operator

Good afternoon. My name is Suzet and I will be your conference operator today. At this time, I would like to welcome everyone to the quarter one 2010 BioMimetic Therapeutics earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks there will be a question-and-answer session. (Operator Instructions)

Thank you. Ms. Patterson, you may begin your conference.

Kearstin Patterson

Thanks, Suzet. Before we begin, I would like to remind you that any statements made during this call can be considered forward-looking statements within meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on the current intent and expectations of the management of BioMimetic Therapeutics. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. There are many important factors that can cause actual results to differ materially from those indicated in the forward-looking statements. BioMimetic actual results and the timing and outcome of events may differ materially from those expressed in or implied by the forward-looking statements because of risks associated with the marketing of BioMimetic products and preclinical and clinical development activity, regulatory oversight and other risks detailed in the company's filings with the Securities & Exchange Commission. Except adds required by law, BioMimetic undertakes no responsibility for updating the statements made during this call. Please note that for your convenience this conference call webcast will be archived on the investor information section of our website for at least 30 days.

Now, I would like to hand the call over to Dr. Sam Lynch, President and CEO of BioMimetic Therapeutics.

Sam Lynch

Thank you, Kearstin, and good afternoon everyone and welcome to BioMimetic Therapeutics 2010 first quarter earnings conference call. I have with me on the call today Larry Bullock, CFO and Steve Hirsch, our COO and EVP of Orthopedics.

The first part of the call will address our product development programs and corporate activities which will then be followed up with Larry reviewing our financial results for the first quarter ending March 31, 2010. We'll also be happy to answer any questions that you may have during the Q&A portion at the end of the call.

Let me first start by expressing our appreciation to all of you who have reached out to us during the recent severe flooding that took place here in Nashville and to express your concern and your support for us. Happy to say that for the most part the BMTI family was very fortunate in getting through this unprecedented flood with only minimal damage to property and luckily BioMimetic itself did not receive any damage whatsoever. In the face of this severe natural disaster, which caused the loss of more than 30 lives in the Nashville and Middle Tennessee area, more than $1.5 billion in damage, we indeed feel very fortunate.

Now let's turn our attention to the matter at hand. First, we would like to discuss with you what we have been doing during this very busy first quarter. I will provide updates on our lead orthopedic product Canada, Augment Bone Graft, which is being developed as a preferred alternative to the use of autograft. Specifically, I’d first like to discuss with you a new analysis we performed for our pivotal clinical trial which compared Augment to autograph for treatment of foot and ankle fusions and of course, I will give you an update on the status of our PMA.

As a reminder, the goal of the clinical pivotal study was to establish non-inferiority of Augment Bone Graft to autograph that currently recognized bone standard in bone grafting for the treatment of foot and ankle fusions. In doing so, we would establish Augment as an extremely attractive alternative to autograph because its use would spare the patient the pain and potential morbidity affiliated with harvesting of the autograph from another location in the patient's body.

As you know, we released top line data from our North American pivotal trial in October of 2009 and we supplemented that data by providing information on additional secondary clinical end points from the trial along with functional and safety outcomes at our Analyst and Investor Meeting in March.

After reviewing these additional end points, we released in March, we believe that the overall data package for Augment has been strengthened as a result and further supports study hypothesis of non-inferiority. For a combined total of 18 primary and secondary study end points covering radiographic, clinical, functional and quality of life outcomes, 15 of these met statistical significance for non-inferiority which we believe provides a very strong body of evidence that the two treatments are indeed equivalent.

Despite this evidence, however, there remain some questions surrounding the patients who were excluded from the mITT type of analysis due to specific and pre-specified exclusion criteria. And we were still getting asked about whether or not the inclusion of those patients would change the primary end point results.

We have previously stated that we would perform an analysis of these additional patients if and when the FDA requested us to do so, but following this submission of the third and final PMA clinical module which incorporates all the clinical data to the agency, we undertook this post-hoc analysis in an attempt to determine the impact of including those patients that were excluded due to significant protocol violations back into the primary study population.

This analysis demonstrated that adding these 17 excluded patients back to the mITT group resulted in a total safety population that is also patients who had surgery performed in the study, so every patient that received the surgery was 414 patients which includes 272 Augment treated patients and 142 Autograph treated patients.

When this population was analyzed for the primary end point of CT fusion rated 24 weeks, the results remained statistically significant for non-inferiority consistent with the previously reported analysis for the pre-specified mITT population. To clarify, this additional analysis revealed that even with the inclusion of these 17 patients who had experienced significant protocol violations, Augment as compared to autograph would still meet statistical significance for non-inferiority. As a result of this analysis, we are more convinced than ever that Augment has demonstrated itself to be equivalent to Autograph from an efficacy standpoint with clear safety advantages for the physician and the patient.

So what then is the status of our PMA? I am sure most of you are aware that in early February 2010 we submitted a third and final PMA module to the FDA which supplements the preclinical pharmacology and toxicology and quality manufacturing modules that we submitted to the agency in the second quarter of 2009 for the approval of Augment in the United States. This third PMA module contains the 24-week data from the North American Augment pivotal study.

This submission was consistent with the FDA approved Investigation Device Exemption or IDE for Augment which very specifically stated that and I quote, the study will be submitted for PMA review after all patients complete 24 weeks of follow-up with an update provided once all patients complete the 12 month follow-up visit closed quote.

Despite this explicit statement in our approved IDE, the FDA has now requested that we submit 12 month safety data for at least 85% of the study patients before they will formally accept the PMA as filed and continue their review. Accordingly, we have recently submitted to the FDA the safety data on all 100% of the patients that received surgery through the final 12-month study end point and we are now awaiting the official notification from the FDA that our PMA has accepted as amended.

The FDA staff has in fact told us that the submission of this data alone should be sufficient to allow the agency to begin their review of the clinical module of our PMA and we expect to receive the official filing letter very, very soon. It should be noted there were no safety issues that led to the FDA's request for the additional safety data. Rather their request appears to be based on a growing desire by the FDA for longer term follow-up for all clinical trials.

We expect the impact of the FDA's review therefore to be minimal since there were no new serious adverse events between six and 12 months and there have been no device related serious adverse events throughout the entire study. However, as a result of the FDA's request for the 12-month safety data, we anticipate that our PMA will now be accepted as filed in May during our May -- at our May submission as opposed to the early February date when we had submitted the initial clinical module. Therefore, it is reasonable to now expect that in either the fourth quarter of 2010 or perhaps the first quarter of 2011 an orthopedic advisory committee is likely to be convened to advise the FDA whether they believe the product is safe and effective.

While the FDA is not bound by the conclusions of the advisory panel, their approval decisions are often consistent with the panel's conclusions. We anticipate that approval of Augment in the United States should occur within several months following the panel meeting if indeed the panel concludes the Augment is in fact safe and effective. In fact, once we receive the panel's favorable recommendation, we plan to begin in earnest hiring and training of our field sales team for commercializing and marketing Augment.

While we have had to modify some of our timelines in response to the additional requests from the FDA, this doesn't change our opinion in the ultimate approvability of our PMA and the product. Further, our recent interaction with the agency has in fact given us a better perspective of the requirements for the PMA and will help us not only with Augment but also future product approvals.

Now, I will provide you with an update on Augment in other parts of the world. I will start with Canada. Since the introduction of the product in Jan 2010, the company and its Canadian distributors have been calling on orthopedic surgeons and hospital administrators to familiarize them with the clinical and economic advantages of using Augment as an alternative to autograph in foot and ankle fusions.

In the first quarter, we encountered individual hospital requirements to review any new product for clinical and cost effectiveness prior to the use of the product in the hospital. Depending on the institution, we have found that this process can take up to three to six months. Further compounding the reluctant of households to improve the use of Augment is that their physical year for these institutions ended March 31st, so many hospitals were in a kind of emergency-only mode for the last fiscal quarter.

However, since the beginning of April the first surgeries of Augment were performed at several key institutions and we have seen increased demand for the product from the foot and ankle surgery community. Further, we have been working with our distributor on strategy that is will enable the product to be used on a more routine basis as opposed to justly highly compromised and high-risk situations. These strategies include pricing on clinical pathways as well as the use of comparative cost effectiveness data for autograph versus autograph.

As we continue, the product approval requirements for individual Canadian hospitals and implement some of these plans, we expect that substantially more surgeons will have access to the use of Augment for the treatment of their patients. The other Augment news relates to Australia, in February of this year, we also filed an application with the Australian Therapeutic Goods Administration or TGA for the approval of Augment for the treatment of foot and ankle fusions.

The basis for the application was the North American pivotal clinical trial and the Canadian registration trial which we believe will provide sufficient evidence of the product safety and effectiveness in this indication as replacement for autograph. In anticipation of product approval, we have established a relationship with Surgical Specialties of Australia, an orthopedic distributor who will represent us in Australia and New Zealand.

Now let me turn to Augment Injectable Bone Graft. We previously announced that in 2009 we filed the investigational testing authorization or ITA application to help Canada for and an IDE application with the U.S. FDA. Health Canada approved the Augment Injectable ITA and in October 2009, we initiated enrollment in a North American pivotal clinical trial to evaluate the safety and effectiveness of Augment Injectable Bone Graft as a substitute for autograph again in foot and ankle fusion procedures.

As of May the 3rd, a total of 65 patients have been enrolled in the Augment Injectable study with five sites actively enrolling patients in Canada. Over the last few months we have been in discussions with the FDA regarding the details of an IDE for Augment Injectable including how we could combine the U.S. patients with the ongoing Canadian study and how we can use some control patient from the Augment pivotal study in this trial as well.

During that time we have been informally advised by the FDA that in an effort to ensure greater consistency in the categorization of new combination products, they will be seeking a Request for Designation or what's called an RFD by the office of combination products within the agency for all new combination product approval requests going forward. An RFD is a formal request of the FDA uses to determine if a device drug combination will be reviewed as a device or as a drug. This determination is made based on whether the device component or the drug component is deemed to be the primary mode of action for the product and may require up to 60 days for review by the FDA.

While all of our interactions on the Augment Injectable IDE have so far been with the device group at the FDA and there has been no indication from the agency that they will view awing meant injectables anything but a device, we feel that it is in our best interest to file an RFD on Augment Injectable so we can memorialize this understanding.

We intend to file the Augment RFD, the Augment Injectable RFD during the second quarter of this year. Although we believe that the device component of Augment Injectable serves as the primary mode of action and again there has never been any assertion by the agency otherwise and therefore should continued to be reviewed as a device, we feel the need to have a formal determination from the agency in hand again to memorial lies this understanding before we move further along in the project.

We expect to receive a final decision on our IDE in the second half of 2010. At this time, I should point out that the FDA has recently reconfirmed that an RFD will not be required for Augment Bone Graft which will continue to be reviewed as a device.

Now, to discuss a few things on the corporate front, in April of 2010, we successfully completed our Bioresearch Monitoring Inspection visit by the FDA, otherwise known as a BIMO Audit. The FDA inspectors reviewed virtually every chronicle file, monitoring the report, investigational device accountability log and other documents, procedures, forms and records related to the Augment pivotal clinical trial and the associated regulatory submissions and quality systems.

The FDA inspection covered nine main regulatory agenda areas which define the rules for the conduct of a clinical trial under the FDA guidelines as well as the manner we apply appropriate parts of 21 CFR 820, which are the general quality systems regulations for medical device companies.

There were no issues surrounding patient protection or data quality and no 483 deficiencies were issued. In conclusion, the inspectors indicated that our overall quality systems are in compliance with FDA regulations. The FDA inspection spanned nearly three weeks and was a very arduous task that surely wouldn't have been successful without the dedicated and competent people we have on staff at BioMimetics BioMimetics.

To complete such a rigorous lengthy audit without any observations issued by the examiners is further testimony to the high quality of work done here at BioMimetics. We also have some good news about an addition to BMTI's patent portfolio. The U.S. patent and trademark office has allowed the company's U.S. patent application entitled compositions and methods of use for treating bone.

The allowed claims within this patent to application cover methods of treating impaired bone to facilitate and strengthening and healing of bone using enough he will compositions of PDGF combined with matrix materials having defined characteristics. This patent is in addition to the earlier patent that we announced in January 2009. When issued, the latest patents will cover the use of Augment and Augment Injectable to treat bone injuries or conditions and will remain in force until 2025.

Lastly, we would like to remind you all that the Annual Meeting of stockholders has been scheduled for Thursday, June 17, 2010, at 8 a.m. Central Time at our headquarters here in Franklin, Tennessee. The holders of our common stock of record at the close of business on April the 19th, 2010, are entitled to vote at the Annual Meeting. On a personal note, I would like to invite all other shareholders to attend this meeting.

I would now like to pass the call over to Larry Bullock, our Chief Financial Officer, to briefly discuss the first quarter financial results. Larry?

Larry Bullock

Thanks, Sam. Our first quarter 2010 financial results reflect the ongoing progress in our orthopedic product development programs that Sam just described. We continue to strive to be financially prudent in managing our business by keeping our organizational growth to a minimum, by continuously monitoring expenses and by implementing cost conservation measures wherever possible. This has been a focus as we make the important investments to advance multiple product candidates through clinical development.

Now to summarize our first quarter results. Our net loss for the first quarter 2010 was $8.5 million compared to a net loss of $8 million for the same period in 2009. Total revenue for the quarter was approximately $350,000 and includes approximately $110,000 of royalty income and $240,000 of sublicense fee income. These 2010 revenues are flat with the first quarter of 2009, for which we reported approximately $380,000 of revenues also consisting of royalty income and sublicense fee income.

Research and development expenses were $4.2 million for the first quarter of 2010 compared with $5.2 million for the same period in 2009. The R&D expenses primarily relate to clinical trials in the United States, Canada and the European Union for our orthopedic product candidates, as well as continuing expenses for new and ongoing preclinical studies and regulatory filings.

Our R&D costs decreased due to our focus on controlling costs in 2010, as well as a decrease in costs related to certain clinical trials which wrapped up in 2009. The $1 million decrease is primarily the result of first a decrease of approximately $500,000 in contract manufacturing and professional services costs in 2010, primarily since we are not producing the volume of clinical supplies in 2010 compared to what we were doing in 2009, as certain orthopedic clinical trials came to a close in 2009.

Second, a decrease of approximately $300,000 in professional service fees for validation consulting, regulatory and outside R&D costs. And third, a decrease of approximately $200,000 in salaries, payroll taxes, benefits, insurance, recruiting, relocation and general activity with the R&D programs.

General and administrative expenses were $3.8 million for the first quarter of 2010 compared to $2.4 million for the same period in 2009. These expenses consist primarily of salaries, wages and related benefits for employees in the general administrative functions, professional services and ramped utilities and maintenance costs for our facilities.

During the first quarter of 2010 we experienced an increase of approximately $1 million in professional services costs, mostly related to our preparation for future commercialization of our product candidates including Augment. In addition, we experienced an increase of approximately $200,000 in salaries, benefits, payroll taxes and stock compensation and an increase of approximately $200,000 in rent, utility and maintenance costs for our facilities.

Now turning to the balance sheet, we ended the quarter with $67.1 million of cash, cash equivalents and investments. This includes $11.4 million of cash and cash equivalents and $55.7 million of investments in U.S. government sponsored enterprise of GSE securities and U.S. Treasury notes.

At this point I will provide our financial outlook for 2010. Please note that these projections are based on our current expectations and assumptions related to the costs and timing of our ongoing and anticipated activities such as clinical trials, preclinical studies and regulatory filings.

We expect our year end 2010 cash and investments balance to range from $36 to $43 million and we expect our net cash use to be between $32 and $39 million.

Finally, our net loss for the year is as expected to be between $36 and $43 million. We believe these resources position the company very well to continue the development of our very exciting platform technology and to begin the process for commercialization of Augment Bone Graft.

With that I would like to thank you for your interest in BioMimetic and I will turn the call back over to Dr. Lynch.

Sam Lynch

Thank you, Larry. In closing, let me briefly review our progress and summarize our upcoming goals.

First, we have performed an additional statistical analysis that included the 17 patients previously excluded from the Augment pivotal clinical trial due to significant protocol violations. This analysis confirmed that Augment met the primary end point of the study and was equivalent to autograft even if these patients had been included in the primary study population.

Second, we submitted 12-month safety data and this data included no new serious device related adverse events to the FDA, so that they can proceed with the review of the clinical module of our PMA. These data confirm and continue to demonstrate the improved safety profile of Augment as compared to autograft.

Third, we have successfully completed a very rigorous three-week FDA inspection without any 483 deficiencies being noted by the FDA inspectors, the true testimony to the quality and rigorous nature of the work done at BioMimetics.

Fourth, Augment has been stocked and the first surgeries have been performed with Augment at key institutions in Canada.

Fifth, we have enrolled 65 patients in the Augment Injectable North American pivotal clinical trial.

And sixth, we have received an allowance of an additional patent, covering Augment and Augment Injectable and potentially other formulations from the U.S. Patent and Trademark Office.

Key upcoming activities include receipt of the official Augment PMA filing letter from the FDA and a determination of the data for the upcoming panel meeting.

Second, we'll file an RFD for Augment Injectable in the second quarter, so coming up soon and receive final approval on the IDE for Augment Injectable and the second half of this year so that we may initiate the U.S. patient enrollment in the this Augment Injectable pivotal trial.

Third, we still plan to initiate a sports medicine pilot trial by the end of this year.

And fourth, we expect to report on 12-month data from the Augment pivotal clinical trial, it is the 12-month efficacy data from the North American Augment pivotal clinical trial, as well as the Augment EU data later this summer around the time of the AOFAS, the American Orthopaedic Foot and Ankle Society meeting.

So the first quarter of 2010 has definitely been a busy one for us at BioMimetics. We have reported additional safety and effectiveness analyses that confirm the strength of our Augment pivotal clinical trial data. We continue to be encouraged by the enrollment rates in Canada for the Augment Injectable pivotal trial.

And we past a very rigorous FDA audit that disclose nod deficiencies and deemed our overall quality systems to be in compliance. As a result of these achievements, our confidence in the successful approval of our Augment PMA has grown substantially.

We would now be happy to answer any questions that you may have. I will turn the call back over to Suzet for further instructions the Q&A portion of the call.

Question-and-Answer Session

Operator

(Operator Instructions) Your first question is from Michael Matson with Wells Fargo Securities.

Michael Matson – Wells Fargo Securities

Hi. I guess, just wonder if there is any chance that the FDA, given that they have come back and asked for the additional 12-month safety data, would want to come back and look at 12-month efficacy data as well?

Larry Bullock

Right. Mike, we certainly have received no indication of that. I mean that would obviously be part of a formal review by the agency. We have met with them, had specific dialog with them about this request for the 12-month safety data. And they have never even brought up the interest in seeing the 12-month efficacy data in order to officially file the PMA, so we certainly wouldn't expect. In fact, again, they have told us specifically once they get the 12-month safety data which again we have already submitted to them that that should be sufficient.

Michael Matson – Wells Fargo Securities

Okay. And then the additional 17 patients, that analysis, was that due to a request from the FDA or you just decided to go ahead and do that because you were getting so many questions about it?

Larry Bullock

The latter is exactly correct. It was not due to any requests from the FDA at all or even a hint of a request, nothing. It was specifically due to the fact that after we filed the PMA, we felt like the time was appropriate to go ahead and do that sort of post talk type of analysis, just to put to the bed once and for all the speculation regarding what would have been the case had those 17 patients been included.

Michael Matson – Wells Fargo Securities

Okay. And then, obviously it is good news around the FDA inspections. Did these cover your manufacturing plans or not and are there going to be any additional inspections required post approval before you can launch the product?

Larry Bullock

This was specifically an audit on our clinical files and regulatory submissions, related to the pivotal clinical trial and our general quality systems as they relate to clinical and regulatory. It did not include specific manufacturing audits. Those will be scheduled prior to PMA approval, but a number of -- we're fortunate in that a number of our suppliers have already been audited by the FDA for GEM 21, so we know that they are at least from those last audits in compliance, but they will be probably for the most part audited again prior to this PMA approval.

Michael Matson – Wells Fargo Securities

All right. I guess my final question would just be on the European approval process. I didn't hear a whole lot about the timeline there, just wondering if you can provide an update.

Larry Bullock

For Augment?

Michael Matson – Wells Fargo Securities

Yeah. Sorry, sorry for Augment.

Larry Bullock

Yeah. We do still expect to file the four EU approval of Augment in the second half of this year. And we expect Augment in the second half of this year and we expect six to 12-month review process or probably nine to 12-month review process there.

Michael Matson – Wells Fargo Securities

Okay. That's all I have. Thank you.

Larry Bullock

Okay. Thank you, Mike.

Operator

Thank you. The next question comes from Imron Zafar with Deutsche Bank.

Imron Zafar – Deutsche Bank

Good afternoon. Thanks for taking my question. I want to focus my questions on this RFD process. Can you just elaborate a little bit more on what the application involves, in other words what criteria they're looking at in terms of designation of drug or device?

Sam Lynch

Yes. It is a formal process where by the company submits a formal request for designation. In other words, we request that the agency specifically review the combination product and officially designate, whether it is a medical device or a drug and who the primary review branch should be such as CDRH of the devices group. Their review, the office of combination products at the agency reviews our submission then and makes a determination primarily based upon what they and the company believe to be the primary mode of action, so which component, whether the device component or the biologic or drug component contributes the primary mode of action.

We went through -- this is nothing, to some extent it's nothing new. We have gone through similar discussions for GEM 21S and for Augment previously. We had believed and then discussions with the agency, felt like they believed that because we had already gone through this process twice that we did not need to go through it again for Augment Injectable. But again we're told recently about a policy within the FDA that whereby they're basically requiring all RFDs on all combination products. So we just felt like it was important if you will to check that box and do this process now just to take away any level of uncertainty before we started the U.S, portion of the pivotal trial.

Imron Zafar – Deutsche Bank

Okay. And then in the event that FDA designates it as a drug, how then would this impact the clinical trial work requirements versus your current plan, in terms of patients, end points, number of trials? I would assume there would be a pretty big change in what the requirements of drug approval versus the device approval. Do you have a plan B and what is that plan B?

Sam Lynch

Right. Well, the first thing we of course want to do in that case would be to meet with the reviewers and the center for drugs that would be responsible for the clinical review. Again, I would just emphasize, Imron that we are and we get reviewed by the drug's reviewers as part of the combination products review. So it is not like we don't already get a very rigorous review of the CMC section of our filings, so that would be nothing new. What would be new is review by the clinical people and the drug's group and so we would want to meet with them just as we met with the device folks and make sure that we are on the same page on the clinical design. I would say that we believe that the design that we have is rigorous and would certainly be on par with the quality of a pivotal clinical trial that the drugs people would expect. That being said, clearly drugs has a tradition of wanting two pivotal clinical trials, so it could mean that there might be a need for a second pivotal clinical trial, for ,again, we're just talking Augment Injectable now.

Imron Zafar – Deutsche Bank

Right.

Sam Lynch

So there is no guarantee of that, but it certainly is a possibility.

Imron Zafar – Deutsche Bank

Okay. But the trial design wouldn't necessarily change, in other words, if it was reclassified as a drug, the Canadian patients that are already been treated in the data that are being collected there, those would still be useful in a drug based pivotal study?

Sam Lynch

Yeah. We have thought about that, looked into that and we believe that certainly our trial design is scientifically very, very rigorous and it would to use your term not necessarily change.

Imron Zafar – Deutsche Bank

Okay. And then last question, what other precedents are there whereby this should be looked at as a device and devil's advocate. Is really the drug, the primary mode of action here, the PDGF?

Sam Lynch

Again, I would just emphasize, we have been through this process twice before from that standpoint. It is not new. Gem 21 and Augment have both been through this kind of process and discussions with the agency, look the FDA, obviously, one can predict exactly what their current views are but we have had discussions about the primary mode of action of both GEM 21S and Augment.

So, again, the primary mode of action has been the way they make these determinations for many years. And so I think that it would be certainly reasonable to expect that this should stay as a device. And keep in mind also that the TCP component of the Augment Injectable or of Augment as file 10-K cleared as a device for treating bone voids, where as of course PDGF alone is not approved for as I said alone, is not approved for treating bone defects. So I think we have got very strong arguments as we have used in the past for why this should stay as a device.

Imron Zafar – Deutsche Bank

Okay. Excellent. One last quick follow-up to Mike's question, on the timing of -- you mentioned the timing of the EU filing. Are we still going to see the data at the Foot and Ankle meeting this summer?

Sam Lynch

Yes.

Imron Zafar – Deutsche Bank

Okay. Great. Thank you very much.

Operator

Thank you. Your next question comes from the Bill Plovanic with Canaccord.

Bill Plovanic – Canaccord

Thank you. Good evening. Can you hear me, okay?

Sam Lynch

Yes, Bill.

Bill Plovanic – Canaccord

Fantastic. So Just on the ITT, mITT, on the 17 patients, jog, my memory here, I just don't -- I am out of my office today. Was that all the patients that were excluded or was there more than that excluded in the original mITT analysis?

Sam Lynch

That is all the patients that were treated that received surgery. There were an additional group of I think it was 20 patients that we're randomized but never received surgery, Bill and that may be what you're thinking about.

Bill Plovanic – Canaccord

Okay. Yeah. Exactly. And then just a follow-up on the Imron's question. If this is moved to a drug the injectable, one, TCP is different than the -- remind us what the carrier is for the injectable, I believe it's collagen. And then two, if it does go to a drug, it's not just two studies, it would also be different end points where it has to be a clinical end point rather than a radiographic end point, isn't that correct?

Sam Lynch

Okay. Let me take each of those questions one at a time. So the matrix material, the matrix component or the device component in AIBG, Augment Injectable is a combination, a mixture of 80% TCP and 20% collagen. The collagen simply acts as a binding agent and allows for the fluid injection of the graft. So it's 80% TCP, TCP is obviously a smaller particle size compared to what we have in Augment, but it is still 80% TCP and 20% collagen. So it does have majority of TCP in it.

The second part of your question I honestly, Bill, I don't know the answer to but we will get back to you on that. We clearly have as you know, clinical end points in the Augment pivotal clinical trial as well as this Augment Injectable pivotal clinical trial. Whether or not we would have to choose one of those clinical end points, which by the way again math statistical significance for non-inferiority, as the primary end point we'll get back to you on that.

Bill Plovanic – Canaccord

Okay. It seems as if you go from 100% TCP to 80, 20 with TCP collagen it seems pretty good as a predicate. So I guess that doesn't concern me. And then you have treated a lot of patients in Canada. Do you stop enrollment at some point and can you use that data for Canadian approval at some point?

Sam Lynch

Right now, we do not plan to stop enrollment. I think if the process continues to drag on in the U.S. that is something that we have certainly talked about and discussed, but we don't have any plans right at the moment to stop enrollment. We allow -- we expect to continue to allow those Canadian surgeons to enroll at least up to a 100 patients at a minimum before we would consider stopping the AIBG trial.

And to your second question, yes, regardless of what happens in the U.S. we certainly would expect that data in generated in Canada would be useful not only for providing powering analyses and so forth for any updated U.S. pivotal clinical trial but for also approval of AIBG, Augment Injectable in Canada.

Bill Plovanic – Canaccord

Okay. Great. That's all I have. Thanks.

Sam Lynch

Okay. Thank you, Bill.

Operator

(Operator Instructions) And your next question comes from Erica Layon with Nobel Financial.

Erica Layon – Nobel Financial

Hi. Thanks for taking my call. My first question is on the Canadian opportunity. This is a bit of a surprise to see the delays and some of the hospitals are seeing. Do you know what proportion of hospitals are looking to these trials before they begin using it?

Sam Lynch

What proportion of the hospitals in Canada are looking for what, Erica?

Erica Layon – Nobel Financial

Are looking for some sort of review on the cost effectiveness or the clinical effectiveness that you referenced earlier in your discussion, the three to six month timeframe?

Sam Lynch

I am going to turn that over to Steve since he's had certainly the most direct interaction with the Canadian hospitals.

Steve Hirsch

Yeah, Erica. Virtually, every hospital in Canada has some type of whether they call it new technology evaluation committee or new products evaluation committee. So that's pretty routine for just about every hospital in Canada for any new product. What they do then, is they look at both clinical data that's available and then they look for what is this product a replacement for? And then what's the cost effectiveness related?

So they're not necessarily looking for formal studies, but they are looking for a rationale of why should we adopt this new product, what are the products that perhaps we're using right now that this product would replace and what's the financially impact? So that's the process that we're going through with most of these Canadian hospitals.

Erica Layon – Nobel Financial

Okay. So that tells us the both hospitals that is started using it have had a satisfactory review of the data, we would expect to they would and I guess we would assume that by sometime next quarter, we would work the majority of the Canadian hospitals?

Steve Hirsch

Yeah. Correct to your first comment and clearly we're prioritizing what we believe are the big procedural opportunity hospitals. Clearly, we have a group of clinical investigators that are the some of the highest a volume foot and ankle surgeons and the opinion leaders in Canada. It's definitely our priority to get all of their sites approved and I hope that by next quarter we can report that we have done that.

Erica Layon – Nobel Financial

Okay. That would be definitely great news. Then looking to the income statement, definitely a jump in the G&A but should we be looking at this for the level going forward for the rest of the year or where the commercialization costs are relatively one-time event?

Steve Hirsch

So that was relatively one time event. I would not expect to see those expenses or the $1 million that we discussed continue.

Erica Layon – Nobel Financial

Okay. Okay.

Steve Hirsch

Towards the end of the year, as we actually start hiring for commercialization, there may be additional expenses, but that's only upon anticipated success.

Erica Layon – Nobel Financial

And to be expected. And then the last question I have for you is once you have an approved product, will you still need to file an RFD for each new product or as soon as there is a strong predicate that's already gone through the process will that requirement be reduced?

Sam Lynch

Erica, I think we -- at this point, our working assumption is that we probably will file an RFD for pretty much every new product. I think there is very strong precedence out there for Augment Injectable. And yet again our discussions with the agency led us to believe that we probably should file an RFD for that again just to memorial eyes our understanding if nothing else. So I think given the changing nature and conservative nature out of the FDA these days. We'll probably look to file an RFD on all of our product candidates going forward.

Erica Layon – Nobel Financial

Okay. Thank you very much for the information.

Sam Lynch

Thank you.

Operator

(Operator Instructions) And there are no further questions at this time. I would like to turn the call over to Dr. Lynch.

Sam Lynch

Thank you, Suzet. We appreciate the support and feedback we have received from all of our investors over the past quarter. We believe that the new data that we have announced today adds to our growing confidence in the approval of our Augment PMA and we are very excited about that. We remain committed to initiation of our Augment Injectable pivotal clinical trial in the U.S. as soon as possible presumably in the second half of this year and look forward to the opportunity to present our data from the Augment pivotal trial to an FDA orthopedic advisory panel again hopefully by the end of this year or early next year.

And finally, we remain committed as a vision and company to becoming a leader in the development and marketing a protein based regenerative orthobiologics. With that, let me close and thank you all for joining us today.

Operator

Thank you. This concludes today's conference call. You may now disconnect.

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Source: BioMimetic Therapeutics, Inc. Q1 2010 Earnings Call Transcript

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