PharmAthene, Inc. (NYSEMKT:PIP)
Q4 2013 Earnings Conference Call
March 11, 2014 4:30 PM ET
Stacey Jurchison - Director of Corporate Communications
Eric Richman - President and CEO
Linda L. Chang - SVP and CFO
Good day, ladies and gentlemen, and welcome to the Year End 2013 PharmAthene Incorporated Earnings Conference Call. My name is Crystal, and I will be your operator for today. At this time all participants are in listen-only mode. Later, we will conduct a question-and-answer session. (Operator Instructions) As a reminder, this conference is being recorded for replay purposes.
I would now like to turn the conference over to your host for today, Ms. Stacey Jurchison. Please proceed.
Thank you, and good afternoon, everyone. Joining me on the call today are Eric Richman, President and Chief Executive Officer; and Linda Chang, Senior Vice President and Chief Financial Officer.
Before we begin, I would like to point out that during today's call, we will be making projections and other forward-looking statements, which are based on our current beliefs and expectations. Please be aware that these statements are subject to certain risks and uncertainties. We advise you to consult PharmAthene's filings with the SEC for additional information.
I will now turn the call over to Eric to begin.
Good afternoon and thank you for joining us today for our year-end business review. Linda will take you through our financial results for 2013 in just a moment. But first I will provide a high level summary of recent activities and our expectations for 2014. Let’s begin with a brief review of our SparVax program. We are continuing to execute under our current contract and have made important progress in many areas including GMP manufacturing, immunobiology and the non-clinical animal studies, all of which lead to continue clinical studies.
We recently completed a non-clinical efficacy study of SparVax in the New Zealand White Rabbit Model. This is a widely accepted model which has been used historically to measure the efficacy of anthrax vaccines. The study was designed to evaluate the efficacy of SparVax at three different doses compared to the currently licensed anthrax vaccine BioThrax and the accepted model for inhalation anthrax infection. The in-light portion of the study has been completed and I am pleased to report that SparVax performed very well. The data showed 100% survival for both products at the estimated human equivalent dose and demonstrated non-inferiority of our product and in aerosol challenge study where rabbits were exposed to approximately 22 million scores of anthrax.
Under the FDA’s animal rule, human efficacy can be calculated by comparing immunogenicity data in humans to immunogenicity and efficacy data in accepted animal models. So we are particularly encouraged by these data. We are also encouraged by the fact that the product used in this study was nearly two years old and showed a strong protected effect. Having demonstrated impressive non-clinical data, our main priority now is to correlate the animal data with the immunogenicity in humans and determine an estimate of efficacy. We were preparing to begin a Phase 2 clinical trial and we’ve received notification from the FDA in December of 2013 regarding the pre-clinical hold.
The FDA has two main considerations regarding clinical studies; first, that there is sufficient product to conduct a study; and second, to ensure potency of the product to rapid duration of the study. Because of the age of our product, which was 22 months at the time the trial was scheduled to begin, the FDA requested that we make a fresh lot and begin the trial with new clinical material which is exactly what we intend to do. As at any biologic potency naturally declines overtime hence the reason for product shelf line is generally limited for biologics.
Fortunately we do not have to do a new fermentation but rather just fill both drug substances that have already been made. In addition to producing a new lot the FDA has also requested that we continue to collect stability data on the previously manufacturing engineering and see GMP lots and provide release test results for the new lot and stability updates for the both drug substance used to produce this lot. We are working closely with the FDA and BARDA to meet this objective. We have already commenced pre-manufacturing activities to support the production of a new clinical lot. While we can’t provide firm guidance yet on the estimated timeframe to begin the clinical trial, we are committed to addressing the FDA’s request and advances SparVax into the clinical as soon as practical.
We also continue to make important advances with regard to our analytical efforts. Over the past year, we have established a much better understanding of the immunobiology of rPA and developed a newer more precise assay for potency release testing which was accepted by the FDA. As a result of our progress, Dr. Peter Fusco our Vice President of Immunobiology, was invited to give a presentation this week on the development of stability indicating assays for rPA anthrax vaccines at the workshop on the biology of anthrax being held in the UK. And later this month we were invited to present comprehensive analytical data at the upcoming new technologies new vaccines conference.
Now moving on, we also made substantial progress in our litigation against SIGA Technologies in 2013 and expect an important ruling from the Delaware Court of Chancery soon. To summarize the litigation activities, in May 2012, we won a judgment from the Delaware Court of Chancery, awarding us 50% of the net profits over a period of 10 years from worldwide sales of SIGA’s smallpox antiviral Arestvyr in any related products after SIGA received the first 40 million in net profits. The ruling was subsequently appealed to Delaware Supreme Court and in May 2013, the higher court affirms SIGA’s liability for their failure to negotiate in good faith the terms of a license agreement with us. The case was remanded to the Delaware Court of Chancery for reconsideration of the damages award consistent with the new liability finding.
We subsequently filed a motion which was granted permitting us to reopen the record and introduce relevant new facts for the court’s consideration regarding the current commercial status of Arestvyr. As SIGA mentioned on their conference call yesterday, that it began delivering Arestvyr to the Strategic National Stockpile in March 2013. Currently, they have delivered nearly half the requisite 2 million treatment courses to the Strategic National Stockpile under their 430 million initial base contracts and expect to complete full delivery by the end of first quarter of 2015. All the procedural aspects of the demand have now been completed including oral arguments which took place in Delaware Chancery Court on January 15th. We expect the court to issue a ruling soon and we remain confident in the merits of our case and look forward to this decision.
With that, I will now turn it over to Linda to continue.
Thank you, Eric. Hopefully by now you have seen our 2013 year-end earnings press release which we issued aftermarket today, I will briefly review the key financials and refer you to our latest SEC filing for additional information. We reported 17.9 million in contract revenue for 2013, compared to 25.2 million for the same period in 2012. Revenue was lower in 2013 due to the narrower scope of development activity in our SparVax program as a result of the FDA clinical hold, and also the partial federal government shutdown in October. Correspondingly, our R&D expenses for the year were also lower at 15.3 million compared to 19.5 million in 2012.
Our G&A expenses in 2013 were higher at 13.3 million compared to 11.6 million in 2012. The increase in G&A expenses include a one-time charge of 3.3 million relating to the terminated merger with Theraclone Sciences. In terms of our cash position, we ended the year with approximately 10.5 million in cash and equivalents while our combined cash and receivable balance totaled approximately 14.1 million. Finally, our net loss for the year was 11.6 million, or $0.23 per share, compared to a net loss of 4.9 million, or $0.10 per share in 2012 due to the reasons I have just described.
In 2014, we will continue to operate with the same degree of efficiency demonstrated in recent years and carefully manage our cash usage while we pursue additional U.S. government funding for our programs and await the outcome of the SIGA litigation.
With that, I will turn the call back to Eric to wrap up.
Thank you, Linda. We look forward to keeping you updated on our progress in 2014. We have a clear path forward to address the SparVax clinical hold and we’re making progress with regard to these efforts. Our goal is to resume clinical development of SparVax this year and we’re firmly committed to working with the FDA and BARDA to achieve this. Finally, we anticipate a ruling from the Delaware Court of Chancery soon and expect that the decision will be significant event for PharmAthene. We look forward to sharing this information with investors and we’ll keep you apprise of any developments.
That concludes my prepared remarks of today. Operator, could you please open the call for questions.
(Operator Instructions) With no questions in the queue, I will now turn the call back to Eric for closing remarks.
Thank you again for joining us today and for your continued interest in PharmAthene. Have a good evening.
And ladies and gentlemen that concludes today’s presentation. You may now disconnect. Have a great day.
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