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Dyax Corp. (NASDAQ:DYAX)

Deutsche Bank 39th Annual Health Care Conference

May 7, 2014 11:20 am ET

Executives

George Migausky - VP, CFO

Analysts

Robyn Karnauskas - Deutsche Bank Securities, Inc.

Robyn Karnauskas - Deutsche Bank Securities, Inc.

Okay. Good afternoon. Thank you all for joining us. So the last presentation ahead of lunch is from Dyax Corporation, in which we will have George Migausky, the Chief Financial Officer, who will give a presentation then followed by Q&A. So for those of you want to use assistance feel free otherwise raise your hand I'm happy to bring over the mike.

George Migausky

Okay. Thanks, Robyn. As Robyn said, I'm George Migausky, the VP, CFO at Dyax and by the way there is plenty of good seats up front. So anybody who should feel so inclined can certainly come up.

So here obviously to talk to you about Dyax and it's been a big and interesting and pretty positive year for us. But before I do that I do want to point out that there will be some forward-looking statements made during the course of this presentation and I want to call your attention to that and particularly to any of the risks associated with those forward-looking statements.

So there is two parts to our business and really we think we are pretty uniquely positioned and so why do I say that? Well we've got a product that's proved commercializing, we sell it ourselves here in the U.S. which generates positive cash flow that help support the rest of Dyax.

We also have a pipeline that has a risk reduced asset of some significance and so everybody knows the risks around drug developments are pretty substantial but we like to talk to you about why this asset that we have is relatively de-risk.

And then on top of that we have this whole other part to our business, this licensing portfolio, based on our phage display technology there are number of licenses over the years and that portfolio now has 10 clinical stage product candidates in the portfolio including three in Phase 3 and most particularly one that is now been approved and that was literally in the last couple of weeks Lilly CYRAMZA is one of the assets in this portfolio. And so with this clinical success, we do stand to receive a substantial amount of future royalties and other fees that come from this licensing portfolio. So I'll talk more about that later about this sort of diversified approach to our business is pretty important.

So we'll start with the product and development side of the business and our focus is on the plasma kallikrein kinin system. So we are not over the map, we are not looking in Oncology and CNS and every place else. We are really focused in this area. It's lead by KALBITOR that's the product that we commercialize today. As I mentioned that's a product that's cash flow positive for us, it's for treating acute attacks of hereditary into edema and then complementing KALBITOR is our, you might think of like a next generation type of product that's DX-2930 to address the prophylactic HAE market and this could be a real game changing product. It will be the first true prophylactic in the HAE space and this is what we believe is also a risk reduced type of asset. So complementing 2930 also is a biomarker program and biomarker asset that we've developed, we also like to talk to you about.

So for those who may not be as familiar with Dyax or with HAE as a disease, just a brief introduction to that? So for those who have heard this before my apologies? But it is a genetic condition, it's characterized by inflammatory swelling that can be in the periphery hands and feet, it can be in the abdomen, which is excruciatingly painful, in the face obviously here is a picture of a patient who is undergoing a facial attack. Also in the larynx, which is particularly concerning because that is life threatening.

So these attacks are unpredictable in nature. They can be quite frequent involve with an average of 20 or more attacks a year that can range from a few per year to many more than that per year for a patient. So you can sort of do the math, right if you've got 20 attacks in these episodes last three to five days, you've got substantial amounts of loss time whether at school or work, you're in pain, it's really a debilitating situation and then the attendance issues of things like depression that come when you're experiencing that and have a condition like this.

So we have KALBITOR, a drug that we market in the U.S. for patients 12 and up and it's for treating acute attacks of HAE. It is indicative for all attack locations that's particularly important as it includes laryngeal attacks and those are the life threatening attacks and as was demonstrated in our clinical trial and now with the products on the market, it resolves the attack and it lasts. We also differentiate ourselves from some of the other competitors in this space but the high level of services we also bring attendant to the drug itself. So for administration in the home by a health care professional with a nursing service primarily that's well dreamful we have others lining up now as well available 24X7 to show up and take care of you, the patient, to for your attack at a time when you're experiencing the highest level of anxiety and that's something that we have seen our patients truly appreciate particularly those who are comforted by the fact that they have somebody to help administer this drug during the time of an attack.

So this business for us we did about $40 million last year. Our guidance this year is $44 million to $49 million. We did about $12.5 million in Q1 which is in the books now and the growth here really is driven by the treatment rate, which can be quite variable but the treatment rate the rate at which patients actually use the drug to treat their attacks, but also by adding patients and we add patients both naïve patients who are not on any of the navel therapies that are available that may be on using steroids or may be using nothing at all and then to some degree also patients who have tried another therapy and are switch to a drug like KALBITOR as well.

So KALBITOR is for treating acute attacks, the real game changing product could be with the strength that we have in the clinic. So really exciting product, it's an opportunity to be a true prophylactic and that will stop the attacks, aim certainly to stop the attacks before they occur.

This is a Fully Human Monoclonal Antibody that has it's a high affinity and inhibitor of plasma kallikrein as it says on the slide it does not target pre-kallikrein or inhibit other serine protease and where we are right now is that we've completed a Phase 1 study that study was done during 2013, the results were came out during Q1 of this past year. It was a single ascending dose study that was in healthies there were four dosing cohorts and there were eight patients or eight subjects for cohort including two placebo patients. And just as a brief summary of those phase one results I mean that the top-line is perhaps most important because it was a safety oriented study. It was well tolerated following single dose. And the peak April file also suggest that we can attain a stable target blood level, the PED data and this was from two biomarker essays were also very supportive and the rate of administration which would and is sub-cu also makes for a relatively low administration burden, the half life was also determined as part of the study 17 day to 20 day half life, which for us means this drug that translates into a dosing that while we haven't set with the dosing interval would be probably on the order of one or two times per month. That will be a sub-cu dosing one or two times per month.

So next up for us is the Phase 1B study. This study is depending on how you define underway. The study is underway and that definition gets to have you got the site set up, are you recruiting patients, have you dosed the patients. So on the first two items, yes, we've got the site set up we're recruiting patients dosing of the first patient should occur very shortly. So certainly before midyear and this is a study that will be in HAE patients as compared to the 1A study which was in healthies, from ascending the peak dose study there will be three dose groups in the 1B study and six patients per cohort including two placebo and so while we look for trends efficacy type trends the study really is focused on safety. It's not about efficacy, it's really focused on safety and determining the appropriate dose level as we move forward for our next study which would be a pivotal study. So we will begin dosing shortly and we would expect the results from this trial to be available in early 2015.

So how do we know if 2930 is shaping up to be a good or a true prophylactic drug. So we think this four key elements that are listed out here. One is that we have a clinically relevant target and in particular that plasma kallikrein being central to the kinin pathway activation, we certainly know KALBITOR is addressing that same pathway and we know KALBITOR treats acute attacks successfully. So when we think about a relatively de-risk asset this is an important component of having a risk reduced asset. Also obviously it's for chronic use and so it needs to be safe, any drug needs to be safe but particularly for chronic use and with a high affinity and specificity for the target plasma kallikrein well certainly it looks positive on that respect having a long half life, which will allow for infrequent dosing to be yet another measure that's important and as I did mention 17 day to 20 day half life certainly suggest one or two time per month dosing.

And then convenient administration. Sub-cu administration one or two times per month is something that we think would be a real winner in the prophylactic space. So we still need to prove all this in the clinic, it's -- in that sense it's still early days but so for 2930 is on track to meet all of these objectives.

So we also have in assisting really DX-2930 in clinical development, the biomarker assay that we developed and that assay detects activated plasma kallikrein in patient plasma. And so what we're using it for really is primarily to be an aid in assistance to help more rapidly develop the DX-2930 as well as using that assay as one of the elements for assessing some other disorders where plasma kallikrein activation may be an issue and these are disorders such as crohn's RA, various mass cell disorders again where plasma kallikrein activation is thought to be one of the bad actors and we do expect to have some early information in this regard in the middle part of this year. We've been testing some blood samples for patients in these disease areas, looking at a lot of the literature, and so we hope to have some interesting information coming up during this year.

So I can shift gears back to where I alluded to earlier and I was first began speaking on our licensing portfolio. So this portfolio is built around our phage display technology, we license the phage library over a number of years, we now have multiple late-stage clinical programs of the six Phase 3 trials either underway or completing, in some cases actually the top-line data is out.

There are also several different events in the next 12 months that I will walk you through separately but one event that was pretty important for us very recently was the approval of CYRAMZA otherwise known as, previously known with technical term ramucirumab that's Lilly drug that is in multiple oncology trials but the one that received approval a couple of weeks ago FDA approval was for a gastric and that's using CYRAMZA as a second line mono therapy for gastric cancer.

So they also have yet another gastric trial that's the so-called Rainbow trial, which has reported positive top-line data and that was a combination therapy with paclitaxel and so that data has been released it is positive they expect to file and that could well be the next indication lined up for CYRAMZA.

I'll come to few of the other data points we have going on, but for us this is important because we get royalty a 2% to 3% royalty net to Dyax that's the net amount that comes to us and there is a pretty significant portfolio. I mean here is a sort of snapshot of the portfolio where it stands today with a number of the indications and this portfolio matures in two ways.

It has new candidates enter the clinic and this is a snapshot of the clinical portfolio only. As new candidates enter the clinic but also as things move left to right as it's facing you left to right through the clinic and if we looked at this a year ago, and two years ago, and three years ago, you would see the progression that has already occurred.

It's also important for us because aside from the royalty we get there is no cost associated with this program to Dyax. It's all the heavy lifting is done by licensees, all the clinical trials and commercialization and everything else associated with these drugs is the responsibility of the licensees. They are addressing a large commercial opportunities and a lot of the analysts have a lot of different assessments on how big some of these markets are. I think a lot of people in this room are probably familiar with many of those but they are addressing pretty significant opportunities.

And in addition to Lilly's drugs which certainly are leading the way our drug candidates that are leading the way, there is also some pretty interesting compounds like Biogen's Anti-Lingo and Merrimack's MM-121 that are also little bit earlier but also part of this portfolio.

So just to point out a few of the events the near-term milestones that are coming up. I mentioned Lilly, which is now in some respects in the rear view mirror as far as the gastric approval, but for CYRAMZA there will be a couple of other or there is expected to be a couple of other FDA submissions both for the other, the second gastric indication as well as for non-small cell lung for which there has been positive top-line data, so FDA submissions this year.

There is also top-line data expected for a couple of other indications again under the CYRAMZA banner and that's for liver and colorectal. Then beyond CYRAMZA that's a Necitumumab, which is the fully human monoclonal antibody, the full human Erbitux essentially they will have data in filing this year as squamous non-small cell lung cancer. So a lot of events just within the all the therapy as this portfolio really continues to mature.

Now, shifting gears yet again, just looking at the balance sheet, a few of the other key drivers for the company. We have a strong balance sheet these days $187 million of cash and that's cash that can take 2930 to commercialization and that's what Dyax retaining all worldwide rights for that compound. We also provide thus with the resources to explore the other non-HAE other plasma kallikrein mediated opportunities that I mentioned earlier and to be able to really explore those without concerns about what our balance sheet looks like.

More near-term our 2014 guidance is denoted up there, we reiterated that guidance last week on our Q1 call, that's the KALBITOR sales of $44 million to $49 million with total top-line revenues $53 million to $59 million. But important to note what it does not include in the guidance is any of the royalties that would be generated from CYRAMZA. Lilly is marketing that drug we have no insights on their timing or on their plans for how they will be marketing it or for that matter what the ramp may be on that. So we brought that out of our guidance, it's all upside beyond what we have here.

So in ramping up it's useful to take a look at some of the near-term catalyst near-term being sort of the next 12 months for us. When I talked about the DX-2930 and the next clinical data point for us where will be the Phase 1B data that should be early next year. Also some early data from the other plasma kallikrein mediated disorders which would be the middle part of this year.

I've spent a few minutes already on the multiple of our P data points. So I won't go over those again. But importantly CYRAMZA royalties commence, which is the first royalty bearing product in LFR P&Ls, which you meant. For us, we would expect certainly by Q3 of this year.

So when I started out I was talking about unique position and hopefully I've laid out why that is the case. We have a product that we are selling today generating positive cash flow. We have a risk reduced clinical candidate that could be a true game changing product and we have a licensing portfolio that's really just hitting the early part of it maturation that could be a real significant cash flow generator for us. So a lot of different pieces to our business.

And with that, it wraps up my prepared remarks and we have 10 minutes and 58 seconds for questions.

Question-and-Answer Session

[Call ends abruptly].

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