Executives
Amy Sullivan - IR
Ron Renaud - CFO
Jean-Pierre Sommadossi - Chairman President and CEO
David Standring - EVP of Biology
Analysts
Richard Smith - JPMorgan
David Moskowitz - Caris & Company
Mark Schoenebaum - Bear Stearns
May-Kin Ho - Goldman Sachs
Jim Redick - FBR capital market
Howard Liang - Leerink Swann
Idenix Pharmaceuticals Inc. (IDIX) Q1 2008 Earnings Call April 29, 2008 8:30 AM ET
Operator
Good morning. My name is Carrie and I will be your conference operator today. At this time I would like to welcome everyone to the first quarter 2008 Earnings 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. You may begin.
Amy Sullivan - Investor Relation
Good morning and welcome to Idenix's conference call to discuss our first quarter financial results. With me today are Jean-Pierre Sommadossi, CEO, Ron Renaud, CFO, and Doug Mayers, Chief Medical Officer and David Standring, Executive Vice President of Biology.
Today's discussion contains estimates and other statements that are forward-looking under the Private Securities Litigation Reform Act of 1995. Such estimates and statements are based on current expectations and assumptions that are subject to risks and uncertainties, involving number of factors that could cause actual results to differ materially. Additional information concerning these factors is contained in our filings with the SEC, which are available on the investor section of our website at www.Idenix.com.
While we may elect to update forward-looking statements in the future, we specifically disclaim any obligation to do so, even if our estimates change. You should not rely on these forward-looking statements as representing our estimates as any date subsequent to today.
The agenda for the call is as follows. Ron will quickly review business highlights to date in 2008, and our first quarter financial results, and JP will close with our progress against our corporate milestones for 2008. We will open the call to Q&A, for which Doug and David will also be available. I will now turn the call over to Ron.
Ron Renaud - Chief Financial Officer
Thanks, Amy. During the first quarter we continue to make tremendous progress in our HCV and HIV discovery and development programs. With positive proof of concept data from IDX-899, as well as significant progress in all of our HCV preclinical programs, we're excited about the prospects for Idenix's future. Now, before I get into the financial results, I want to quickly recap the major events for the company to date in 2008. Back in February, we reported positive data from the first cohort of an ongoing Phase I, II study of IDX-899, our non-nucleoside reverse transcriptase inhibitor being developed for the treatment of HIV.
In the first dosing cohort of this study, the HIV infected treatment-naïve patient receiving 800-milligrams of IDX-899 once daily achieved a median reduction in plasma virus levels of approximately 2 log, or 99% after seven days of treatment. The 400 milligram cohort of this study is now complete and dosing has been initiated in the 200 milligram cohort.
To date no serious adverse events have been reported and no patients have discontinued from the study. We've submitted data from this trial for presentation at scientific meetings this summer. We also continue to make rapid progress with our Hepatitis C discovery and development programs. I just got back from EASL and I'm very optimistic about our programs. At EASL, we presented data from preclinical studies of IDX-184, our lead nucleotide pro candidate, as well as selected clinical candidates from our protease inhibitor program.
Specifically we're on track to submit an investigation of new drug applications for IDX 184 in the first half of 2008. Based on the preclinical pharmacology and toxicology profile of IDX 184 demonstrated to date, we anticipate that the first in line clinical trials should be initiated in the second half of 2008.
Our HCV protease inhibitor program has generated several clinical candidates exhibiting marked potency in the replicon system and good pharmacokinetic profiles in several animal species. We look forward to moving this program into the clinic in the first half of 2009.
Now let's move on to the financials. For the first quarter of 2008, we reported total revenues of $2 million, compared with total revenues of $24.8 million in the first quarter of 2007. Total revenues for the first quarter of 2008 consisted primarily of the amortization of upfront fees associated with development programs, licensed by Novartis and royalties associated with worldwide sales of Tyzeka/Sebivo or telbivudine. The reductions in total revenues for the first quarter of 2008 as compared to the first quarter of 2007 was due to a decline of approximately $12 million in reimbursements of research and development costs from Novartis and the lack of receipt of milestone statements during the first quarter of 2008.
We reported a net loss of $20.5 million, or a loss of $0.36 cents per basic and diluted share. For the first quarter of 2008 compared with a net loss of 11.6 million, or a loss of $0.21 cents per basic and diluted share for the first quarter of 2007.
Now, moving over to our 2008 financial guidance, we ended the first quarter with approximately $99 million of cash, cash equivalents and marketable securities, putting our burn rate for the quarter at approximately $13 million. We continue to expect to end 2008 with approximately $50 million of cash, cash equivalents and marketable securities, assuming no milestone payments, license fees, reimbursement for development programs, and no financing activities during 2008.
Our anticipated use of cash in 2008 is comprised of expenditures related to our funding of development expenses for the HIV NNRTI program, HCV discovery efforts, G&A expenses, capital expenditures, and working capital. I'll now turn the call over to Jean-Pierre.
Jean-Pierre Sommadossi - Chairman, President and Chief Executive Officer
Thanks, Ron. We are very pleased with the initial antiviral activity and safety data that generated to date in the IDX-899 clinical development program. Based on the profile of IDX-899 exhibited today, we believe that IDX-899 could play an important role in the treatment of patients with HIV/AIDS. We also believe that if we continue to see the potency observed to date at 800 milligram, as we evaluate the 400 milligram and 200 milligram dose. IDX 899 could become an important component of a fixed dose combination treatment for HIV/AIDS.
I would like to quickly review our projected major milestones for 2008 and then we will open the call for questions. We expect to complete the proof of concept study for IDX-899 and then select the optimal doses to move forward into a six-week stage 2 clinical trial in the second half of 2008. As previously reported, we are targeting to pull now IDX-899 by year end and discussions are on going with several interested parties.
From our HCV programs, we are on track to file an IND and a CTA for IDX-184 in the first half of 2008 and then move the program into proof of concept testing. We then anticipate to generate data from this proof of concept study by the year end of 2008. We will also continue our efforts on IND-enabling studies for our protease inhibitor candidates, with the goal of finding an IND or CTA within the next 12 months or in the first half of 2008.
Our expertise and focus on antiviral discovery and developments has enabled us to efficiently execute our programs through IND-enabling preclinical studies, proof of concept testing, and then Phase II clinical studies. I am extremely proud of our discovery and development team, and with a comprehensive HCV programming, each of the three major classes of direct-acting HCV antiviral. We are uniquely positioned to be one of the first companies to develop our own specifically targeted antiviral therapy for HCV or STAT-C. On that note, I would like to end our formal remarks and open the floor to Q&A.
Operator, are there any questions?
Questions-And-Answer Session
Operator
(Operator Instructions). Your first question comes from Richard Smith with JPMorgan.
Richard Smith - JPMorgan
Good morning, everyone.
Jean-Pierre Sommadossi
Good morning, Richard.
Richard Smith - JPMorgan
Good morning. Just a couple of questions. One, on the liver-targeting technology, is there any base to suggest that it works in a diseased liver, as well as a healthy liver? I think most of the work is done in healthy tissue at the moment.
Jean-Pierre Sommadossi
There is no difference between healthy and HCV infected. David can you just go further and potentially you may refer to the P450 activity. So, David, why don't you go into more detail?
David Standring
We'll say that we have done studies in HCV infected chimps and although I wouldn’t claim that that is exactly the same disease as in man, I think that gives you a sense that it can work in the affected liver. The other point I think that Jean-Pierre was just alluding to is that we do not see for this drug a great deal of evidence that the CYP450 system is actually the driver of metabolism. It may play some role, but it seems to be a lesser role than with some other compounds at this point.
Richard Smith - JPMorgan
And just one follow-up. On the two protease candidates that you're taking forward, you provided some data I think on some of the other members, their resistance profile. Is there activity against things like the R155K variant?
Jean-Pierre Sommadossi
Yes, absolutely. I showed that at EASL. That the activity against the R155K, that’s basically full activity and also full to even better than full activity against A156. So in a sense, that distinguishes that from other compounds out there.
Richard Smith - JPMorgan
Okay. Alright, thanks.
Operator
Your next question comes from David Moskowitz with Caris & Company.
David Moskowitz - Caris & Company
Good morning, everyone.
Jean-Pierre Sommadossi
Good morning.
David Standring
Good morning.
David Moskowitz - Caris & Company
On the 899 proof of concept data that you're unveiling today, can you let us know, does that trigger the Novartis 90 day decision period? And, also, would you go over some of the advantages of this potential NNRTI versus what's on the market today?
Jean-Pierre Sommadossi
Sure. Ron will answer the first question and then Doug will answer the second one.
Ron Renaud
Yeah, so David, as we pointed out, we're still in the midst of enrolling patients in the 200 milligram cohort. So, the study is actually not completed yet. We would anticipate that at the end of, at the end of the 200 milligram cohort and the collection of data and putting it together, that would be the, that would be the official end of the proof of concept study. So the 90 day clock has not started yet.
Jean-Pierre Sommadossi
Doug, on the advantages?
Doug Mayers
I think that right now the -- it's very clear that the Sustiva is the market leader and the drug you have to run up against, and there are a number of issues where improvements can still occur. It has a low barrier to resistance, so one mutation comes up quickly and it kills the whole class of non-nukes of first generation. We have a more protease like resistance profile. It has a significant amount of CNS neurologic toxicity, which we fear to have less than in our ongoing stage in healthy volunteers and in HIV-infected patients. And I think most importantly, it has genotoxicity associated with in with woman of child bearing potential and we're currently doing studies to confirm that we would not have that side effect. So, we think there are a number of places where one can potentially go after a first generation non-nuke.
David Moskowitz - Caris & Company
Thanks. And just a question on the Tyzeka, looks like sales are, revenues from your perspective are pretty light this quarter. Is there anything you can give us with respect to end market sales for Tyzeka?
Jean-Pierre Sommadossi
No, as you know that Tyzeka/Sebivo is now the sole responsibility of Novartis. So, you would have to ask them, but we're not at liberty to disclose the inline sales.
David Moskowitz - Caris & Company
Okay. And, if I take your burn rate from the first quarter, which you indicated was $13 million plus the $2 million in revenue, it suggests you were spending $15 million in the quarter. If I annualize that, it's $60 million bucks, which essentially goes from your year end cash position of $112, down to $50 million that you're expecting to have. So, it looks like using that calculation, just straight-lining the first quarter, you're not expecting to have any revenues for the year. Now, you might say, well, expenses are going to ramp up as you move into the clinical study, but still it doesn't look like you're expecting very much in terms of revenues. Can you comment on that at all?
Jean-Pierre Sommadossi
Yeah, I'll make it real easy for you, David. As I pointed out to you before, we finished last year with $112 million. We expect to finish this year with about $50 million. I'm not going to get into the granularity or give any guidance on the P&L line-by-line basis. I think, it gets to be pretty simple math. I'll leave the spreadsheets up to you guys.
David Moskowitz - Caris & Company
And, just one last question, on the protease inhibitor, you guys talked about some preclinical work that you're doing in this program at EASL. Can you just briefly talk about some of the highlights of that product, that program?
Jean-Pierre Sommadossi
Yes, I would be glad to. I think we have compounds that are basically considerably more potent than some of the compounds that are out there in the clinic at this point. It shows single nanomolar potency against both the enzyme actually sub nanomolar potency against both the enzyme and the replicon system. And, we think also they have a favorable PK profile. We did three sets of PK studies and we showed that the clearance of the compounds is low. They remain at concentrations well above the EC50 even at 24 hours. And they also concentrate to some degree of other end of the liver and they are favorable resistance profile as well. So, we think these features are favorable.
David Moskowitz - Caris & Company
Did you give any data on any chimp studies or anything like that?
Jean-Pierre Sommadossi
Well, at this time, we have no data further than what we have presented at EASL with the PI.
David Moskowitz - Caris & Company
Thanks, JP.
Operator
Your next question comes from Mark Schoenebaum with Bear Stearns.
Mark Schoenebaum - Bear Stearns
Thanks for taking my question guys.
Jean-Pierre Sommadossi
Hi, Mark.
Mark Schoenebaum - Bear Stearns
Hey, how are you?
Jean-Pierre Sommadossi
I am good.
Mark Schoenebaum - Bear Stearns
This is probably the last quarterly conference call I'll ever get to dial into as a Bear Stearns employee, so just for the record.
Jean-Pierre Sommadossi
We look forward to hearing from you.
Mark Schoenebaum - Bear Stearns
Yes, hopefully it will be somewhere else. Okay, on the 184 human trial, can you just remind us what that when you move that into man, what that trial is going to look like and how much data you're going to have by the end of the year, help frame expectations for that?
Jean-Pierre Sommadossi
Right now we are not going to give you any detail on the development plan until we have some feedback from the FDA. So, I think that hopefully we will be able to do that in the next quarter earnings call, and the only thing what we can tell you is that we're going to do the proof of concept in term of dose escalation, we will do a seven days monotherapy.
We are finalizing 14-day stocks, so we believe that chronic toxin to animal species, we believe that monotherapy with seven days will be plenty to get an idea, and then move very rapidly into triple combination, and you may have seen that David actually has presented some interesting data with 184 with a strong synergy was we driving. So, we really look forward to putting combination 184 with (inaudible). So, just to summarize, we'll give you some more, I'll say details with our next earning call.
Mark Schoenebaum - Bear Stearns
Okay, but your discussions with the FDA, there's no issues, you fully -- I mean, I just want to make sure that the data is definitely coming out by the end of the year. I mean is there a lot -- have you left yourself a lot of flat.
Jean-Pierre Sommadossi
You will have the data by the end of the year. You know, what we're going to do, as I think we have mentioned, we are going to file both, an IND and a CTA. We are going to go straight both in the U.S. and in Europe.
Mark Schoenebaum - Bear Stearns
Okay.
Jean-Pierre Sommadossi
So, before we are going to give you some details, we want to hear back from both agencies and that's why we will give you the details by-- with our next call and we definitely will update in the clinic by the end of this year.
Mark Schoenebaum - Bear Stearns
And, on 899, you mentioned that the 90-day clock would start ticking at the conclusion of the 200 milligram dose cohort. Can you give us any color as to when that cohort will be, when, when you'll have the data from that cohort?
Ron Renaud
Hey, Mark, it's Ron. What I would say is we're in the midst of enrolling that cohort right now. As you know, the cohorts are pretty small, but we don't have any control over, you know, how quickly those patients are enrolled. So, I would just say, you know, stay tuned there. It -- we're going to come up on May 1st, here. So, I feel pretty comfortable saying it will be sometime in May.
Mark Schoenebaum - Bear Stearns
Okay. And then Ron, just one house keeping question for you, do you guys have a -- what's your cash and do you have any auction rate security exposure, anything like that?
Ron Renaud
Yeah, so as of the end of 2007, we had about $11 million in auction rate securities. We've actually been able to work that down to about $2.4 million in auction rate securities. So right now, very, very small part of our overall portfolio, more than half of our portfolio right now is in government agencies and treasury-type securities. So, we're in pretty good position. We're not, we're not burdened with a whole lot of the auction rates.
Mark Schoenebaum - Bear Stearns
Alright. Well, good job. You did better than Bear did. Okay, thank you.
Ron Renaud
Thanks.
Operator
(OPERATOR INSTRUCTIONS). Your next question comes from May-Kin Ho with Goldman Sachs.
Ron Renaud
Hi, May-Kin.
May-Kin Ho - Goldman Sachs
Hey. On 184, when we get the data at the end of the year, approximately how many patients should we expect?
Ron Renaud
Again, this is too early to give you some ideas, and what we anticipate is probably about like any proof of concept, 4 to 5 cohorts and maybe higher. We have not even finalized yet the protocol, so it's too early to say something here.
May-Kin Ho - Goldman Sachs
And then on 899, one of the [emphasis] to going for ATRIPLA, which has a lot of advantage in terms of convenience. I know that you are doing drug-drug interaction studies, but ultimately in terms of making it into one pill, what is your strategy?
Jean-Pierre Sommadossi
Well, first, we will have to see with which corner we will ultimately decide to do a deal, and as a function of that then obviously the strategy will be delineated. So, until we have not finalized such ownership, it's very difficult to predict which and whether there would be a fixed dose combination with 899, and which classes of drug will be combined with 899.
As you know, May-Kin that the field of HIV treatment is evolving extensively from a nucleoside based first line with, in combination with PI or with non-nucleoside Sustiva, but it's clear that it is evolving as well with potentially other paradigm treatment for HIV. So it's -- right now it's too early to predict again, the type of formulation and the type of co-formulation or combination, we will have with 899.
May-Kin Ho - Goldman Sachs
And what are you looking for in the partnership?
Jean-Pierre Sommadossi
Well, I think what we are looking for is obviously to maximize the value of 899 and it's clear that for HIV, we are looking for a partner with a critical mass in HIV today, so that we can move 899 very rapidly with that company. So, it's clear that and actually we have already did some pretty detailed NPV analysis, and it's clear that the NPV very tremendously, depending of the potential partner that could be possibly associated with us. So, it's clear that we are looking forward to maximize shareholder value and clearly to maximize the value of 899.
May-Kin Ho - Goldman Sachs
Would you want to get co-promotional rights?
Jean-Pierre Sommadossi
Too early to talk.
May-Kin Ho - Goldman Sachs
Alright, thank you.
Jean-Pierre Sommadossi
Thank you.
Operator
Your next question comes from Jim Redick [ph] with FBR capital market.
Jean-Pierre Sommadossi
Hi, Jim.
Jim Redick - FBR capital market
Good morning. One more question on 899, and that is if -- when you're going through these further dosing cohorts, if by some chance the efficacy at the 400 or the 200 milligram doses falls off for some reason, would you be prepared to push the 800 milligram dose into Phase II? Are you comfortable with it -- thanks?
Jean-Pierre Sommadossi
We thought that we're not going to release data that we thought it was obvious that when we -- just to give you some color that when we decide to go to the 200 milligram, we always indicated that we were -- the protocol is designed that the efficacy, or the antiviral activity has to be between 1.5 and 2 logs at seven days. So, it's clear that, although we have not reported the exact data, that to go down to 200-milligrams, we have to see already more than 1.5 log at seven days with 400 milligram. And, then after we will evaluate, now it was 200 milligrams. So, without going into details with exact numbers, you know now that with 400 milligram, we are indeed within the 1.5 to 2 logs antiviral activity at seven days.
Ron Renaud
Once per day.
Jim Redick - FBR capital market
Okay, thank you.
Operator
(OPERATOR INSTRUCTIONS). Your next question comes from Howard Liang with Leerink Swann.
Jean-Pierre Sommadossi
Hi, Howard.
Howard Liang - Leerink Swann
Good morning. So you mentioned proof of concept study for 184. So, can I assume -- I would assume that means that the patient study directly. I think there is, there are certain hurdles in terms of animal toxicology data that you need, to go directly into a multiple dose trial in patients versus the single dose trial in healthy volunteers. Can you talk about what those hurdles were, whether you are comfortable with that? You've crossed that hurdle?
Jean-Pierre Sommadossi
Well, again, I'm going to let Doug, our chief medical officer, to answer that question. But, it's clear, let's not forget that we have filed maybe five INDs in this company, and we have a pretty good idea the kind of safety net we need to go. It's more basically to get some indication and whether the strategy will be different in Europe than as compared to the U.S. But, in term of the, the safety margin, I'll let Doug address it.
Doug Mayers
Yes. For this compound we have 14 days of toxicology data which indicates that we will be many, many, many fold below the no effect level in both monkeys and rats. This is actually a challenging compound because of liver targeting, you actually don't see much drug, either in the blood or the urine. So, actually the only way to measure our exposure in the liver is going to be look at the viral load reductions. So, we think that by picking very healthy HCV infected patients and walking up slowly from very safe levels that we can safely look in patients and also get a good indication of the activity and exposure to the drug.
Howard Liang - Leerink Swann
Okay, great. Then I have a question regarding the protease inhibitor, HCV protease inhibitor program. It looks like these compounds have less potency against genotype 3 and to some extent less potency against genotype 2. Can you remind us how big a difference is it between genotype 1 and 3, I guess, how hard is it for some for us to go from type 1 to type 3?
Jean-Pierre Sommadossi
David?
David Standring
So, I mean the data that we showed at EASL shared with you all there basically says that we're very active against genotype 1A and 1B. We lose some activity against genotype 2A, but still pretty potent there, and we lose quite a considerable amount of activity against genotype 3. So, I mean, I think the point from our perspective is that really what we're targeting is genotype 1A and 1B with this disease and that is where we're planning to go.
Howard Liang - Leerink Swann
And are they, different -- are they, I mean, how many mutations would that take to, for the virus to go from 1A to 3?
Ron Renaud
Well that depends a lot on the particular islet you're looking at, so it's a little hard to answer that question generally, but this is quite a significant number of changes between the different genotypes and also between even different subtypes.
Howard Liang - Leerink Swann
Okay, great. And for 899 presentation this summer, do you know which meeting it is yet?
Ron Renaud
We have presented -- we have submitted abstract both of the resistance meeting in Spain and the World AIDS meeting in Mexico.
Howard Liang - Leerink Swann
Thanks very much.
Operator
At this time, there are no questions. Ms. Sullivan do you have any closing remarks?
Amy Sullivan
Yeah, thank you for your time today and your interest in Idenix. If you have any additional questions, please feel free to call.
Operator
And, that concludes today's first quarter 2008 earnings conference call. You may now disconnect.
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