AmpliPhi Biosciences Corp. (NYSEMKT:APHB)
Q4 2015 Earnings Conference Call
March 30, 2015 4:30 PM ET
Matt Dansey - Business Development Manager
Scott Salka - Chief Executive Officer
Keith Markey - Griffin Securities, Inc.
David Bautz - Zacks Investment Research
Good afternoon and welcome to the AmpliPhi Biosciences Full-Year 2015 Financial Results Conference Call. Today’s call is being recorded. For opening remarks and introductions, I’d like to turn the call over to Matt Dansey, Business Development Manager. Please go ahead, sir.
Thanks. During the call, we will make statements related to our business that may be considered forward-looking and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All forward-looking statements are based upon AmpliPhi’s current expectations and involve a number of risks and uncertainties including the risks and uncertainties described in AmpliPhi’s Annual Report on Form 10-K for the year ended December 31, 2015 as filed with the Securities and Exchange Commission.
Actual results and the timing of events could differ materially from those anticipated in such forward-looking statements as a result of these risks and uncertainties. You were cautioned not to place undue reliance on these forward-looking statements, which speak only as of the time they were made. All forward-looking statements are qualified in their entirety by this cautionary statement and we undertake no obligation to revise or update any forward-looking statements.
Now, I’ll turn the call over to Scott Salka, CEO of AmpliPhi Biosciences.
Thank you, Matt. With me on the call is Steve Martin, our CFO. We will begin the call by providing an overview of 2015 and recent highlights, followed by our fiscal year 2015 financial results. We will then take your questions.
2015 was a very productive year for AmpliPhi. And in the first quarter of 2016 we continued building on that success. So I’d like to start by highlighting key 2015 accomplishments.
We completed a $13 million private placement of common stock in March of 2015 that was a key step on the path to advancing our product candidates. Following the fundraising, we received a European patent for a bacteriophage therapy designed to fight biofilm related bacterial infections.
The patent claims protect certain aspects of the company’s AB-PA01 program, proprietary mixture of bacteriophage targeting Pseudomonas infections in the lungs of patients with cystic fibrosis. In the second quarter, AmpliPhi made significant progress towards achieving our near and longer term clinical and commercial objectives when we receive cGMP manufacturing clearance for a facility in Slovenia.
In August, following our successful reverse stock split, we listed the company on the New York Stock Exchange market and started trading under our current ticker APHB. This was a key milestone that both strengthen our ability to fund development of our programs, as well as position us as the publically-traded late leader in bacteriophage therapy.
In September, we presented positive data, demonstrating that the efficacy of our prototype bacteriophage cocktail is comparable to Vancomycin, a standard-of-care antibiotic for treating Staph aureus lung infections.
Staph has demonstrated widespread resistance to traditional antibacterial agents and there is an urgent and growing need for novel treatments. In November, we signed a clinical trial agreement with the University of Adelaide and the Queen Elizabeth Hospital in Adelaide to conduct a Phase I clinical trial of AB-SA01 in patients with chronic rhinosinusitis associated with active Staph aureus infection.
In December, we received clearance from the Australian authorities to commence our first clinical study. We initiated patient screening immediately prior to the holidays. The successes of 2015 continued into 2016 with the announcement in January of the dosing of the first patient in the chronic rhinosinusitis study and with the announcement of the acquisition of key bacteriophage assets from UK-based Novolytics.
These assets included bacteriophage-related intellectual property, bacteriophage libraries, formulations and regulatory know-how, as well as GLP toxicology data that will help broaden our intellectual property portfolio and accelerate the development of our phage-based therapeutics.
On top of these operational achievements, we appointed Vijay Samant and Paul Grint to our Board of Directors, enhancing AmpliPhi’s commercial leadership experience. We also welcome Steve Martin as Chief Financial Officer. Steve brings a wealth of additional experience to our management team. And I’m thrilled to welcome all of them into the team. And as I mentioned earlier, Steve is with us on the call.
With that said, I will now review our 2015 year-end financial results.
Cash and cash equivalents as of December 31, 2015 totaled $9.4 million. The company anticipates its current financial resources will provide sufficient cash to fund operations through the third quarter of 2016. The company raised a net of $12.3 million from the sale of common stock in 2015 to fund its development programs.
Revenues related to sublicensing agreements from our legacy gene therapy program were approximately $0.5 million for the year ended December 31, 2015, compared to $400,000 for the prior year.
Research & development expenses for the year ended December 31, 2015 totaled $4 million, compared to $5.8 million for the year ended December 31, 2014. These expenses were attributable to advancing our two clinical programs: AB-SA01 for Staph aureus and AB-PA01 for Pseudomonas. And to successfully manufacture bacteriophage clinical trial material for use in our clinical study in Australia.
The year-over-year decrease was primarily attributable to lower non-clinical spending in 2015 as compared to 2014, the inclusion in 2014 of one-time startup cost related to the Slovenian cGMP manufacturing facility, the benefit from Australian government research grant of $0.5 million and the impact of lower average exchange rates in 2015 as compared to 2014. Partially offsetting these factors were higher costs related to our Slovenian facility being operational for a full year in 2015 as compared to a partial year in 2014.
General and administrative expenses for the year ended December 31, 2015 were $6.4 million compared to $6.9 million for the same period in 2014. This decrease was primarily attributable to $600,000 expense in 2014 related payments to certain stockholders as required by the terms of Series B preferred stock purchase agreement and lower compensation in stock-based compensation expenses which were partially offset by higher legal and accounting expenses.
Loss from operations for the fiscal year ended December 31, 2015 was $10.2 million compared to $14.1 million for the year ended December 31, 2014. Based on our current operating plan, we believe our existing resources will be sufficient to fund our planned operations through the third quarter of 2016. We are currently evaluating alternatives and opportunities to raise capital needed for the advancement of our business.
This completes today’s update and we are happy to take questions at this time. Operator, please begin the question-and-answer period.
[Operator Instructions] And we’ll take our first question from Keith Markey with Griffin Securities. Please go ahead. Your line is open.
Hi, Scott. Hi, Steve. A couple of questions, I was just wondering if you might elaborate a little bit on the relationship that you have with the Westmead Institute Center for Infectious Diseases and Microbiology.
Sure, Keith. Thank you. So the Westmead is a research institute in Australia and you’re referring to the government grant that we got in conjunction with Westmead from the Australian government. That grant totals just under US$900,000. That work will be spearheaded by the Westmead. We’ll provide certain phage expertise and phage capabilities. And it’s targeting the development of phage that can target infections, E. coli and Klebsiella infections.
Okay. Thanks. And then, what is the status enrollment in your Staph trial with the University of Adelaide?
Again, Keith, thanks for the question. So we - as we stated, we initiated enrollment in that study in January of this year. And we expect to complete the enrollment around the middle part of the year. So I can say that we are on target for doing so. We’re excited about the fact that we’re screening patients, we’re finding - there is no shortage of patients that are eligible for the study. And so it’s just a matter of getting those patients do the study and dosed. And so, we expect to complete that study middle part of the year.
Great. And then, can you just give us a brief update on the collaboration with the U.S. Army?
Absolutely, Keith, so as you know, we had this collaboration with the U.S. Army for a while. It’s a wonderful relationship that we’ve developed with them. We expect - as we’ve already stated this year, we expect to initiate our second clinical study with the U.S. Army that will happen shortly. And we expect to fully enroll that Phase I clinical study in the first-half of 2016. That is a study initially focused on applying Staph aureus phage to the skin of healthy volunteers to assess the safety of that phage preparation.
Great. I’ll go back in the queue. Thank you.
Thank you. [Operator Instructions] We’ll go ahead and take our next question from David Bautz with Zacks Investment Research. Please go ahead. Your line is open.
Hey, guys, how are you doing today?
Hi, how are you doing? Thanks for participating in the call, appreciate it.
Sure thing, I just have a couple questions. The first one is could you elaborate a little bit more on what was acquired in the Novolytics acquisition? I mean was there products that could eventually end up in the pipeline or maybe if you could expand upon that a little bit more?
A great question and I don’t anticipate that there is a product that will come from that acquisition. What we did get was a library of phages. So those phages will certainly be added to the libraries of phage that we screen against important pathogens. We also got certain know-how from that Novolytics acquisition. And that know-how includes experiences with the regulatory agencies in the UK. There is really important formulation know-how.
Novolytics had been working on a topical application of phage, so it is a gel type of an application. So we got that type of information as well form Novolytics.
Okay. Thanks for that. And my last one is, so I know the sinusitis study that’s currently ongoing is primarily a safety study, but I was wondering if you could talk a little bit about what you might consider a success when you’re looking at some of the secondary endpoints.
Great question. So, yes, as you pointed out, this is primarily a safety study. It’s an open-label study, so both the patients and physicians know that everybody is getting treated with the phage. But what we are looking at is, from a qualitative standpoint we’re looking at the infection and assessing the infection prior to dosing and post-dosing, so that includes pictures taken of the infected area and assessment made by the surgeon who is looking via an endoscope into the - deep into the sinuses of the patient to characterize the extent of the infection.
We’re also swabbing that active side of infection; culturing, making sure that the infection is Staph and then we can somewhat quantify that infection prior to and post dosing because, again, we take the culture prior to the patient being dosed by the phage, after the patient being dosed by the phage.
So it is a safety study. We primarily want to ensure that we can safely deliver the phage operation to the patients without any adverse events. But certainly we would like to see some directional improvement in the infection.
Okay. Thanks for taking my questions.
Thank you very much, David.
Thank you. [Operator Instructions] And it does appear we have no further questions at this time. I will now hand the program back over to Scott Salka for any additional or closing remarks.
Thank you very much, Tanisha. So in summary we have a busy and very exciting year ahead as we continue our Phase I clinical trial and advance our product development efforts. Thank you so much for joining us today and have a pleasant day.
And that does conclude today’s program. We like to thank you for your participation. Have a wonderful day.
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