Trubion Pharmaceuticals, Q1 2008 Earnings Call Transcript

Trubion Pharmaceuticals (TRBN)

Q1 2008 Earnings Call

May 08, 2008 5:00 pm ET

Executives

Jim DeNike - Senior Director, Corporate Communications

Dr. Peter Thompson - President, Chief Executive Officer and Chairman

Michelle Burris - Senior Vice President and Chief Financial Officer

Dr. Dan Burge - Chief Medical Officer

Dr. Ken Mohler - Senior Vice President of Research & Development

Analysts

Joel Sendek - Lazard Capital Market

Presentation

Operator

Please standby. Good afternoon ladies and gentlemen and welcome to the Trubion First Quarter 2008 Earnings Conference call. This call is being recorded. My name is Jimmy Jackson, I will be your conference operator for the call. During the presentation portion of the conference all lines will be in a listen-only mode. We will be taking the opportunity for your questions after the prepared remarks. (Operator instructions).

Now at this time, I would like the turn the call over to Trubion Senior Director of Corporate Communications Jim DeNike. Please go ahead sir.

Jim DeNike - Senior Director, Corporate Communications

Thank you Jimmy and thanks to everyone on the line for your continued interest. Joining me on the call today from Trubion are Dr. Peter Thompson, President, Chief Executive Officer and Chairman and Michelle Burris, Senior Vice President and Chief Financial Officer. Also joining the call for the Q&A are Dr. Dan Burge, Chief Medical Officer and Dr. Ken Mohler, Senior Vice President of Research & Development.

Earlier today we issued our first quarter 2007 financial results. And a copy of the press release can be found on our website at trubion.com. I’d like to remind each of you that today’s call may contain forward-looking statements based on our current expectations. These statements are only predictions and actual results may vary materially from those projected. Please refer to Trubion’s documents filed with the SEC concerning factors that could affect the company, copies of which are also available on our website, Peter.

Dr. Peter Thompson - President, Chief Executive Officer and Chairman

Thank you Jim and thanks to all of you for joining us today. My comments today will focus on our recent milestones and ongoing initiatives related to our commercial pipeline. Additionally, I will provide an overview of new R&D technology and development that along with our SMIP Technology will service as a foundation for future product candidates. Michelle will then provide a summary of our first quarter 2008 financial results and 2008 guidance and we’ll then welcome your questions.

Well, Trubion’s fiscal year is off to a strongest start and we have achieved several important milestones already this year. In March we announced that patient dosing has commenced in the Phase 1/2 of TRU-016 for chronic Lymphocytic Leukemia. A TRU-016 is Trubion’s proprietary product candidate that has demonstrated Potent Anti-Tumor activity in pre-clinical evaluation. The open label CLL trail has two parts of Phase 1 dose escalation study designed to evaluate the safety, tolerability and pharmacokinetics of TRU-016. And the Phase 2 study designed to further evaluate safety and estimate the clinical activity of TRU-016 in patients previously treated with CLL or small Lymphocytic Leukemia.

Participants will receive TRU-016 intravenously once a week, over a four week period. Based on pre-clinical data, we believe that TRU-016 may provide improved outcomes for patients with B-Cell malignancies like CLL when used on its own or with existing Chemo or Immuno therapies.

We also announced this week that our partner Wyeth has begun dosing patients in the 22 03 trial this is the next Phase 2b clinical trial of TRU-015, our lead product candidate for the treatment of Rheumatoid Arthritis. This study is expected to enroll 216 patients with active seropositive Rheumatoid Arthritis on a background of methotrexate. Primary outcome measurement will be the American college of Rheumatology, ACR50 response measured in 24 weeks.

Secondary outcome measurements will be the ACR20 and ACR70 response rates and the DAS-28 responses. We previously reported the trial data demonstrates TRU-015’s ability to significantly improve RS signs and symptoms and provide durable and consistent high level response rate with repeat administration of the single doses every six months during an ongoing study of maintenance therapy. This new study is designed to help us identify a preferred induction or initial regimen and allow us to strengthen TRU-015’s competitive differentiation.

As noted previously, we believe the study has been designed in a way, it could support a registration package. Additionally we announced in April that Wyeth has initiated patient dosing in a Phase 1 clinical trial for SBI-087, our next generation treatment for RA. The dose escalation clinical trial is evaluated in the safety, tolerability pharmacokinetics and pharmacodynamics of the single dose of SBI-087 in patients with Rheumatoid Arthritis.

Pre-clinical research suggest that SBI-087 a humanized SMIP has enhanced potency in B-Cell Depletion and vivo compared to Rituxan and other CD20-directed therapies. We look forward to reporting the results once this trial is completed.

We also announced in the first quarter that Wyeth intends to pursue SBI-087 for the treatment of Systemic Lupus Erythematosus and we expect an IND filing in the second half of 2008. SBI-087 is the latest product in our pipeline based on our small modular Immuno pharmaceutical technology. With TRU-016, TRU-015 and SBI-087 Trubion’s pipeline now includes three differentiated compounds under the development for the treatment of autoimmune inflammatory diseases and cancer.

As in years past, we will be presenting at numerous Investor and Scientific Conferences in 2008, last week I presented the company update at the Morgan Stanley Global Healthcare Unplugged Conference in Miami, I am looking ahead several members of the executive team including Michelle, Ken and myself will be presenting at upcoming Investor Conferences such as the Bank of America 2008 Health Care Conference in Las Vegas and the Needham Healthcare Conference in New York, because we are unable to attend these meetings we will post any presentation materials and the links to webcast on the Investors Section of our website.

In addition to progress in the clinic we are working on several exciting pre-clinical program and continuing to broaden our proprietary pipeline of differentiated product candidates. While as noted previously, we will provide additional detail on targets and timeline once we have advanced programs to an IND track. We wanted to share some of the advances in building novel next generation technologies, which will expand the foundation of our product development efforts.

Our current product development efforts are based now on three technology platforms that comprise the expanded foundation for Trubion’s product development efforts. SMIP protein therapeutics, scorpion protein therapeutics and potency-enhancing technology for immuno-pharmaceutical. Most of you are already aware of our SMIP technology as a reminder, SMIP therapeutics are a single-chain polypeptides comprising one binding domain, enhanced domain and then a factor domain designed in an effort to meet predetermined therapeutic specifications for specific disease.

The SMIPS are monospecific therapeutics that is their drugs that recognize and attached to a single antigen target and initiate their biological activity. Our current clinical assets TRU-015 and SBI-087 and TRU-016 are all based on our SMIP technology. Well like SMIP, Scorpions are also novel single-chain polypeptide comprised of functional domains for naturally occurring protein. However, Scorpions are multi-specific and/or multivalent therapeutics in nature and are capable of targeting two or more antigen simultaneously. The ability to target multiple antigens with the single Scorpion molecule may enable significant advances in safety and efficacy beyond that which can be achieved with existing monospecific therapies.

For example the Scorpion format allows us to develop single therapies that simultaneously inhibit multiple ligand–receptor interactions or they manipulate style or signaling pathways by cross linking multiple sclerosis receptors. Scorpions have pharmacokinetics features much as SMIPs do and an attractive manufacturing profile and can retain all of the effective functions of the existing immuno-pharmaceuticals like SMIP and antibodies.

Several of our pre-clinical programs are using this exciting new platform technology and will provide additional information as IND candidates are selected and timelines are finalized. And in addition to SMIPs and Scorpions we have also developed technology that’s capable of markedly enhancing the potency of existing therapies that work through FC directed or antibody directed cellular cytotoxicity or ADCC. This effective mechanism is known to be an important determiner of efficacy for some immuno-pharmaceuticals and oncology indication, which has lead the great interest in developing methods for enhancing ADC potency.

Existing method have imposed challenges and risks on product development either by introducing potentially Immunogenic, Immuno acid mutation and highly conserved protein demands whereby requiring the use of novel invalidated manufacturing cell lines. Trubion has created actually a simple proprietary manufacturing methodology for ADCC potency enhancement that we believe has overcome these challenges. This method generates product candidates with greater than 10 fold increases in ADCC potency and long in vivo half-lives. Importantly it can be applied late in development to establish manufacturing cell lines without reducing cell line viability or productivity allowing for retained product quality.

Our research and development strategy includes novel multi specific and/or multivalent and potency enhancing technologies that we believe along with our proven SMIP platform will provide the basis for development of additional first-in-class and best-in-class product candidates for many years to come. We look forward to updating you on these exciting technologies when we have selected product candidates for advancement and it doubles our expectations with the timing of R&D filings.

Before we open the call to questions, I would like to turn the call over to Michelle for a summary of our first quarter financial results and a review of our 2008 guidance. Michelle?

Michelle Burris - Senior Vice President and Chief Financial Officer

Thanks Peter. I would like to take a moment to review our first quarter 2008 financials and then the guidance for the year. Revenue for the first quarter of 2008 was 4.0 million compared to 4.8 million in 2007. The decrease was primarily due to an extension of the recognition of the upfront fee as well as the slight decrease in reimbursement revenue for the Wyeth collaboration and that’s related to the Phase 2b clinical study for TRU-015 and RA.

Revenue for the first quarter of 2008 and 2007 included 1.5 million and 2 million respectively for amortization of the 40 million upfront fees from the Wyeth collaboration. This upfront fee is being deferred and recognized on a straight-line basis over the estimated term of the research and development service period of six years and three months.

Total operating expenses for the first quarter were 10.5 million compared to 10.9 million for the first quarter of 2007, the decrease was primarily due to lower outside manufacturing cost for our proprietary product candidate TRU-016. The decrease was partially by an increase in personnel related expenses.

Net loss for the first quarter was 6 million or $0.33 per diluted common share this is compared to a net loss of 5 million or $0.29 per diluted common share in the first quarter of 2007. As of March 31, 2008, we had 72.1 million in cash, cash equivalent and investments. This is compared with the total of 78.5 million for the year ended December 31, 2007.

Our guidance has not changed since our last earnings call, we anticipate 2008 revenue to be in the range of 15 million to 20 million that is generated fees, milestones and reimbursement earned through our Wyeth collaboration. Total operating expenses are expected to be approximately 53 million to 58 million for 2008. The [plant] increased in 2008 operating expenses is primarily attributable to clinical trial expenses associated with the re-treatment study which is being completed by us for the product candidate TRU-015. Increases are also attributable to manufacturing and clinical comp associated with our TRU-016 product candidate and increased personnel related expense.

Finally, operating cash requirements in 2008 are expected to be approximately $35 million to $40 million. That concludes my update on our financials and once again I would like to thank you all for joining us today and we look forward to updating you again on our next earnings call.

As we open the call for questions, I would also like to remind you that doctors Burge and Mohler are available for questions as needed. Operator please go ahead.

Question-and-Answer Session

Operator

Certainly. (Operator instructions). And we will take our first question Joel Sendek with Lazard.

Joel Sendek

Thanks two questions on the new study, the new 015 study did you disclose what the doses that you will be using?

Dr. Dan Burge

We have not disclosed the dose in that study.

Joel Sendek

Okay. Can you tell me whether there was one of the doses from the Phase 2b?

Dr. Dan Burge

Yes, it is.

Joel Sendek

It is, okay. And next why did you choose ACR50 as a primary?

Dr. Dan Burge

ACR50 is one of the accepted end points have fused in clinical studies, it’s been imprecated with other clinical products, so that was a preference of our partners.

Joel Sendek

Okay. And then second question on 087, can you talk about the IP status of that and whether it is separate, do you have a separate IP as it might be stronger than 015?

Dr. Peter Thompson

Hi Joel, this is Peter.

Joel Sendek

Hi, Peter.

Dr. Peter Thompson

The SBI-087 is a different molecule than TRU-015 and so it may enjoy somewhat different patent protection whether that ultimately proves to be stronger than the pattern protection for TRU-015, which we believe to be strong, remains to be seen as things move forward both in the patent office and elsewhere.

Joel Sendek

And could it potentially infringe in the Genentech IP, the same way 015 dose or what the upside of that?

Dr. Peter Thompson

It is a CD20 directed therapy as TRU-015 is and to the extent that you are referencing the matter that we are opposing in Europe that is directed to CD20 directive therapies.

Joel Sendek

Okay, great. Thanks a lot.

Operator

(Operator instructions). And it appears we have no further questions. Dr. Thompson I will hand the conference back to you for any closing comments.

Dr. Peter Thompson

Well, I would like to thank everyone again for their continued interest and support of Trubion and we look forward to speaking with you again soon.

Operator

And that will conclude our conference. Again thank you all for your participation. Please enjoy the rest of your day.

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