Opexa Therapeutics Inc (NASDAQ:OPXA)
Q2 2014 Earnings Conference Call
August 14, 2014 5:00 PM ET
Neil Warma - Chief Executive Officer
Karthik Radhakrishnan - Chief Financial Officer
Christopher James - Brinson Patrick Securities
Good day ladies and gentlemen, and welcome to the Opexa Therapeutics Second Quarter Earnings Call. At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at time.
I would like to turn the call over to your host Neil Warma, Chief Executive Officer. Please go ahead.
Thanks very much, Patrick, and good afternoon to everyone. Welcome to Opexa Therapeutics second quarter 2014 earnings call. I am Neil Warma, President and CEO of Opexa. Again at this time all participants are in a listen-only mode. I have with me on the call today members of Opexa’s management team, and as mentioned outside at the end of the managements’ prepared remarks, we’ll questions from the audience. And again as a reminder the conference is being recorded.
Please note that the call includes forward-looking statements including financial expectations and projections of progress in our clinical development programs, that are subject to risks and uncertainties that could cause actual results to differ materially from those projected including the risks set forth in Opexa’s Annual Report on Form 10-K and quarterly reports on Form 10-Q filed with the Securities and Exchange Commission, as well as specific risks and uncertainties noted in our new release on the second quarter 2014 financial results.
On the call today, we’ll provide an update on the Abili-T clinical trial and Secondary Progressive Multiple Sclerosis, and we’ll also discuss the financial status of the Company as of June 30, 2014.
The second quarter of this year was a productive quarter for the Company. We executed well against the objectives and targets as they relate to the clinical trial and our overall operations. I think as most you are aware Opexa is primarily focused on the management and conduct of our important Phase IIb clinical trial to treat patients with the more advanced form of multiple sclerosis known as Secondary Progressive MS.
Since there are very few treatment options for individuals with Secondary Progressive MS, Opexa believes that its lead therapy Tcelna has the potential to be a treatment of choice for this group of patients. We also believe this market could represent a potential of $7 billion, market opportunity of $7 billion. We did receive fast-track designation from the FDA prior to initiating the trail based on the severe unmet medical need these patients faced. We were certainly pleased with that.
As we announced the couple of months ago, very pleased to have completed patients enrollment in the Abili-T trial. Again in the second quarter of this year all of the participating clinical trial sites worked diligently in order for us to hit this important milestone. The total number of Secondary Progressive patients, remember this trial was recruiting only those patients, MS patients with Secondary Progressive patients. The total number that were enrolled in the Abili-T trial was 190. So this was modestly higher than our targeted number of 180, but this serves us well we believe.
We were careful not to close out enrollment, and so all the patients that had entered the screening process were able to complete the screening which is how we ended with the few more patients above our target, again careful that we didn’t want to exclude any patients that had entered the screening process.
On behalf of the clinical team here led by Ken Frazier, again we would like to thank all of our participating trial sites and especially the patients for their dedication and support. And this is a two-year trial, we will continue to treat those enrolled in the study over the next two years providing each of them with a truly personalized therapy and we expect to have top-line data in the second half of the 2016.
Also as part of the Abili-T program, we continued to gather data from the immune monitoring biomarkers studying as I mentioned that is running as part of the Abili-T clinical trial. This has been managed by our Chief Scientific Officer, Don Healey and the R&D team. The blood samples collected from patients at various time points during the trial should provide us with valuable information that went un-blinded at the end the study and assessed together with the clinical results could lead to a more complete understanding of the progressive form of MS also could provide us with a better understanding of the underlying mechanism of action of Tcelna and importantly may possibly give rise to new intellectual property for the Company through the identification of novel biomarkers. So this is a truly kind of unique program looking at a number panel of biomarkers over the course of the study and we’re excited by the potential that it has when unwind the data in 2016.
I’d now like to turn the call over to Karthik Radhakrishnan, our Chief Financial Officer to provide an update on the financial results. So Karthik, if you please.
Thank you, Neil. We recognized revenues of $307,686 this quarter compared to 348,837 in the second quarter of last year. The revenues recognized each quarter are solely related to the $5 million upfront option fee payment made by Merck Serono in February 2013. Research and development expenses in the second quarter of 2014 was 3.4 million compared to 2.2 million from a year ago period. The increase in R&D is primarily a reflection of higher clinical trial cost, product manufacturing costs, and employee compensation associated with greater patient enrollment.
G&A expenses were 967,000 for the three months ended June 30th, 2014 compared to 750,000 for the three months ended June 30th, 2013. The increase in expenses due to increase in employee compensation stock compensation expense and is partially offset by decreased legal and professional fees related to financing activities.
We reported a net loss of 4.2 million in the second quarter of 2014 compared to a net loss of 3 million in the second quarter of 2013. The increased net loss is primarily related to a decrease in revenue and an increase in research and development expense, higher general and administrative expense and higher depreciation expense. The basic and diluted loss per share was $0.15 in the second quarter of 2014 compared to $0.37 per share in the second quarter of 2013.
Moving on to the balance sheet, we reported cash and cash equivalents of 16.2 million and stockholders’ equity of 13.6 million as of June 30th, 2014. We expect our cash runway to take us into the fourth quarter of 2015 based on the current Abili-T clinical trial activities and our general operations. With this I will turn the call back to Neil. Neil?
Thanks very much Karthik. I just want to take a minute also to speak to the potential of our preparatory T-cell platform; we spent substantial time and effort improving optimizing the T-cell manufacturing process and the overall platform. We commented on this before, we’re doing this to support the ongoing Phase IIb trail in MS, we’re doing this also to support future Phase III clinical trials. And we’re also doing this to support our possible advanced into other disease indications of the same platform.
Background work further evaluation is continuing at this time on identifying the next possible disease indication in our evaluation when we look at the potential number of disease opportunities specifically T-cell mediated autoimmune disease. The number is extensive, so it’s important for us to carefully assess and evaluate the complete list in order to make a calculated decision. Expanding the pipeline to another possible autoimmune disease as you know is a priority for us and we’ll certainly inform our shareholders once we’ve made a careful determination.
So in closing, I would like to reiterate our gratitude to the 35 clinical trial sites spread across the U.S. and into Canada and especially the 190 patients that enrolled in the Abili-T study, I would also this time like to commend and thank the Opexa team for their effort and dedication to developing this personalized therapy for MS patients. We believe this is a truly novel therapy being investigated in the landmark clinical study in a population of patients that has limited treatment choices. We will certainly continue in our efforts to advance Tcelna towards the markets.
With that I’d like to thank you for your attention and listening to our comments and we’d be happy to answer your questions at this time.
(Operator Instructions). Our first question comes from Christopher James from Brinson Patrick Securities. Your line is open.
Christopher James - Brinson Patrick Securities
My first question Neil, relates to your proprietary T-cell platform. How confident are you that or are you still in track to announce a new indication in 2014? And maybe sort of help me understand the processes in deciding the next indication; is there a specific committee or care group? How is that working?
As we mentioned previously in our public presentations that advancing possibly into another disease thereof to T-cell platform was a priority for us. And we mentioned in guidance kind of in the 2014 time period, so we’re still on track with that guidance. As far as process, as I mentioned there is a fairly lengthy list of potential diseases. So we certainly want to evaluate each one carefully. The criteria that we look at spans the range of science, clinical commercial potential on the science side. As you know and many know we’re looking at personalized therapy, understanding, identifying the specific antigens associated with the disease then being able to manufacture product based on that antigen profile for that disease.
So understanding what are the antigens. Are they known? Are there multiple? Are there only a few that comes into our assessments, obviously with multiple sclerosis there are multiple antigens who are very complex disease. It’s interesting for us; we look at 109 of those epitopes in our upfront screen for MS. So therefore looking at disease areas with potentially fewer antigens maybe a bit more of an obvious approach for us as a next step. Looking at orphan our prevalence if you will larger disease areas versus orphan or rare disease is something you look at very closely, understanding unmet medical need. Are there treatments currently being utilized for these diseases or is there an unmet medical need? Understanding scientific mechanism of actions, I mentioned Don Healey, our Chief Scientist is certainly very involved in understanding the role of T-cells possibly B-cells in some of these diseases and how a T-cell immunotherapy might impact that specific disease.
So again a very detailed approach to understanding the mechanism of the disease and the mechanism of our possible product to treat that disease. Conversations with, you mentioned kind of a project team if you will. We’re certainly all part of that project at the Company, but we certainly enlist the expertise and guidance from opinion leaders for each specific disease. So we’ve gone out so to speak, to meet and chat with and discuss with clinicians in various of these disease areas to ask them, how they treat the patients. If they do feel there is an unmet medical need, if they think that a personalized T-cell immunotherapy approach would be relevant, would be an important advance in their disease areas, also getting that kind of buying and understanding from the clinical community is very important.
And then also as I said on top of it; the competitive analysis who is in the field, not only what’s on the market, but what’s in development and how potentially could Opexa’s product be differentiated, in this space and certainly part of our assessment, then doing a little bit of modeling, mapping out the clinical path is certainly the regulatory aspect what we believe FDA would feel about T-cell therapeutic approach in this area. Is there any event, knowledge we can get on a regulatory path.
So this as I said is a very extensive assessment, we want to make sure when we advance into the next indication that we have a solid understanding, and taking some of the risk off the table. Obviously there is still the whole process of treating patients and the whole clinical development plan which brings risks associated with that. But we want to take as much -- we wand understand as much as we can and take some of the risks off the table, so when we make an informed decision we’re that much more confident that we’ll able to advance forward.
So it’s certainly a bit of process that takes time, but as I said there is a number of moving parts, a number of external internal evaluations and assessments that need to take place. And this is all part of anybody’s early development program. For us as I said it’s when we disclose what that next opportunity will be is kind of the question for us you want to have checked some of these boxes first before we go out and we’re going to be careful to manage expectations when we move forward.
Christopher James - Brinson Patrick Securities
It sounds like a very comprehensive assessment and just go on track, definitely look forward to hearing about that new indication. Just one quick follow-up, in your screening process, how confident are you that you’re actually enrolling patients that have Secondary Progressive MS versus some other subtype relaxing or primary progressive. What’s your confidence level there?
Again a very good question. We had a lot of discussion leading up to this study. Keep in mind with our Scientific Advisory Board and anybody can just click on the Web site and see the names there. But our Scientific Advisory Board are some of the biggest names really in the world of multiple sclerosis. Many, if not all of these folks have been involved in relapsing remitting Secondary Progressive MS trials, we got a lot of input and feedback from them.
One of the big discussions is around what’s the definition of Secondary Progressive? How do we differentiate Secondary Progressive patients truly from those that are relapsing remitting? So our definition and again this was presented too and discussed with the FDA and kind of got support from the FDA prior to initiating our study. Our definition looks at those patients that demonstrated progression, independent of relapses.
So patients entering our study must have shown true signs of disease progression, independent of any relapse. So a relapse could not count towards a patient’s progression if you will. So patients could still relapses, but again in determining whether that patient was truly relapsing that judgment had to be done taking the relapse kind of out of the equation.
So over the past, can you believe it was 24 months? Patients had the past two years, 24 months patients had to demonstrate disease progression, independent of relapse that was in disease progressions to find as a one point change in the EDSS scale that was maintained for three months.
So this is probably the biggest determining factor that gave us confident that those patients that were being enrolled into the study truly had Secondary Progressive MS. Because as you know well you certainly know because you’ve dealt with these patients and as a neurosurgeon you know they feel very well. There is no hard defined line in the sand if you will, from one day they’re relapsing remitting, the next day the patients Secondary Progressive.
So there is this somewhat subjective determination. So the more we can rely on a solid quantifiable definition the more likely it is that we truly have the Secondary Progressive patients in our trial. We also look at EDSS with that disability scale that kind of internally recognized scale that measures progression in MS patients.
For our patients in this study, the EDSS was 3:6, so again only patients with EDSS a lower level of 3 and the upper level 6 could be enrolled into the trial. So again that provided us with confidence that the patients coming into the study were truly secondary progressive. There have been large pharma companies out there which have kind of used a little bit of our looser definition if you will around secondary progressive. For us we won with a very conservative type definition again supported to our discussions with FDA and with our Scientific Advisory Board as well.
(Operator Instructions). This ends the Q&A session for today. Ladies and gentlemen, thank you for participating in today’s program. This concludes the program. You may all disconnect.
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