Vical, Inc (NASDAQ:VICL) Q4 2013 Earnings Conference Call February 12, 2014 ET
Tony Ramos - Chief Accounting Officer
Vijay Samant - President and CEO
Jonathan Eckard - Citigroup
Good day and welcome ladies and gentlemen to the Vical Incorporated Financial Results Conference Call. At this time, I would like to inform you that this conference is being recorded and that all participants are in a listen-only mode. At the request of the Company, we will open the conference up for questions-and-answers from invited participants after the presentation.
I will now turn the conference over to Tony Ramos, Vical’s Vice President and Chief Accounting Officer. Please go ahead.
Hello, everyone. Welcome to our 2013 financial results conference call. Joining me on the call today is Vical's Vice President and Chief Executive Officer, Mr. Vijay Samant. I will begin with a brief notice concerning projections and forecasts. This call includes forward-looking statements, including financial expectations and projections of progress in our independent and collaborative research and 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 Vical's Annual Report on Form 10-K and Quarterly Report on 10-Q filed with the Securities and Exchange Commission, as well as the specific risks and uncertainties noted in Vical's news release on 2013 financial results.
These forward-looking statements represent the Company's judgment and expectations as of today. The Company disclaims any intent or obligation to update these forward-looking statements.
Now, I would like to introduce Vical's President and Chief Executive Officer, Mr. Vijay Samant.
Thank you, Tony, and thank you to participants for joining the call. Today, we will discuss the status of our key independent development programs including a detailed look at the recently started herpes simplex 2 study as well as updates on several clinical trials of ASP0113, formally known as TransVax. We will begin the call with a review of financial results by our Chief Accounting Officer, Tony Ramos, Tony back to you.
Thank you, Vijay. We recorded financial results this morning for 2013 which reflected advancement in our HSV-2 and CMV product development program supported by a strong balance sheet. Revenues were $7.7 million for 2013 compared with $17.5 million for 2012. The decrease in revenues was primarily result of the $10 million milestone payment received from the Astellas last year for progress in the ASP0113 vaccine program.
The net loss was $31.2 million for 2013 compared with $22.9 million for 2012. With the Astellas milestone payment last year and $2.2 million restructuring charge recognized in 2013 accounting for most of that difference. Our net use of cash for the second half of 2013 was approximately $14.1 million, which is in line with our second half forecasted range of $13 million to $15 million. We ended the year with cash and investments of $55.5 million.
Our recently completed restructuring have had a significant positive impact on our 2014 cash burn rate and additionally we’ve taken actions to improve the efficiencies of our operation, which we believe will lead to additional cost savings. We are also forecasting an increase in the fully funded supporting activities we conduct for the ASP0113 program. As a result we are projecting a net cash burn for 2014 of between $13 million and $16 million. We believe our cash on hand at December 31, 2013 should be sufficient to fund our operations into 2016.
With that I will now turn the call back to Vijay.
Thank you, Tony. I’ll begin with our most recent clinical program, our therapeutic vaccine for HSV-2. This vaccine is designed to help control outbreaks and shedding in people already infected with the virus. More than 500 million people worldwide and about one out of every six in the 15 to 49 age group are living with chronic HSV-2 infection. So this represents a significant unmet medical need and a large commercial opportunity.
Most of these subjects either do not have access or do not effectively use the antiviral drugs that are available which are the only treatment options at this point. As previously announced we initiated a Phase 1/2 trial in December of 2013. This trial is a randomized double-blind placebo controlled study to be conducted at seven sites in the U.S., we plan to enroll approximately 150 subjects for HSV-2 positive who experience two to nine recurrences per year of general herpes lesions, but who are otherwise are normal and healthy. Because this is the first time these vaccines have been tested in humans we are performing a dose escalation for the first two cohorts and assuming a favorable safety a full dose of vaccine for the third cohort.
The first cohort has been dosed and we are actively screening the second cohort and formally this is a Phase 1/2 trial was designed with primary efficacy endpoint for the third cohort which include safety obviously.
Let me take a few minutes to elaborate on the efficacy component of our Phase1/2 trial. We expect these symptomatic subjects with a history of recurrent general herpes lesions to shed HSV-2 from mucosal tissue on an average of over 20% of the time based upon the results of our prior study. We intend to measure viral shedding rates for 60 days before the first vaccination and then again for 60 days after the last vaccination. This before and after shedding date are effectively less each subject to service their own control because this is a randomized controlled trial. We have an opportunity to demonstrate a proof of concept for efficacy against the biologic endpoint that is an appropriate surrogate for our clinical endpoint namely recurrence of general herpes lesions.
Just to remind you we embarked on this clinical trial following solid preclinical data showing that our vaccine could provide significant reductions in HSV-2 lesion recurrences when given therapeutically. We believe our vaccine’s composition will be the key to success specifically the antigens included in the vaccine, the use of our Vaxfectin adjuvant. And finally the overall vaccine platform using plasmid DNA to stimulate natural protein production pathways, all combined to provide a promising therapeutic HSV-2 vaccine.
In summary our HSV-2 vaccine trial is proceeding according to plan through initial dose escalation portions. Next I will discuss our CMV Vaccine ASP0113. This product is currently being tested in clinical trials in partnership with Astellas Pharma that I will briefly describe next. Additional details of each of these trials can be found at www.clinicaltrials.gov.
If some of you were at JP Morgan and seen Astellas presentation both our phase III and phase II programs were prominently displayed in their pipeline and really the cornerstone of their transplant franchise strategy. So, in collaboration with our partner Astellas, we announced in June the initiation of a phase III, pivotal phase III trial in hematopoietic cell transplant recipients to support the registration of ASP0113 that’s the Astellas’ name for the phase III trial, Astellas is enrolling patients who were CMV-Seropositive as they area at high risk for CMV reactivation during their post-transplant recovery period.
We worked with Astellas to design this phase III trial with a primary endpoint that has the potential to support full approval in all key markets with no post-approval study requirements. The phase III trial incorporates an adaptive design that includes overall mortality as a standalone primary efficacy endpoint or us to potentially a part of a composite endpoint. Full approval requires a clinically meaningful endpoint based on this logic the phase III trial was designed with the primary endpoint of overall mortality at one year after transplant. Astellas has done a remarkable job in ramping this global trial, which will eventually recruit up to 100 clinical sites for enrollment in North America, Europe and Asia.
In parallel to this global phase III HCT trial, Astellas is also conducting a phase II HCT trial in Japan. This small trial was designed to assess safety in the Japanese population, in the actual patient population and will allow integration of Japanese HCT patients into the global phase III study.
The third clinical study underway is the global phase II trial in solid organ transplant SOT recipients. With this phase II trial Astellas is enrolling patients who are CMV seronegative who will receive a kidney transplant from a CMV-Seropositive donor. This so called D+/R- patients are at high risk of CMV infection in the disease after transplantation. So, we believe vaccination with ASP0113 may provide protection against CMV in this group. The trial will enroll about 140 SOT recipients and dosing of the first patient was announced in December. The primary endpoint of this phase II trial will be the incent of CMV viremia after transplantation we will also be monitoring several secondary endpoints including CMV disease, CMV specific antiviral therapy, graft survival and overall mortality, we will continue to provide updates for this ongoing trial.
It’s important to point out that we are fully funded by Astellas in all our support efforts including manufacturing, clinical supplies, regulatory and other clinical activities. In summary, we are extremely pleased to be working with Astellas. They are a terrific partner and really bring the best in terms of the transplant setting knowledge to the CMV vaccine effort that we are jointly collaborating on. We are excited to have phase III trial underway as well as the other phase II trials. We look forward to completing the process as efficiently as possible and we will provide you periodic updates.
In summary, in 2014 we expect to see continued advancement of our ongoing clinical programs, the rapid progression towards a complete commence enrollment of our Phase 1/2 II trial of our HSV-2 vaccine. Our partner Astellas is making steady progress enrolling patients in this phase III trial of TransVax in stem cell transplant recipients and its phase II trial of transplants and solid organ transplant recipients. We will report future progress as it occurs in our quarterly updates.
This concludes my prepared comments for the day. Operator, we are now ready to open the call for questions from our invited participants.
Thank you, Mr. Samant. The question-and-answer session will begin at this time (Operator Instructions) Our first question comes from Jonathan Eckard with Citi. Please go ahead.
Jonathan Eckard - Citigroup
Hello, thanks for taking my question. So, first Vijay on the HSV program, based on how the trial is designed, could you point to what you are looking at internally from the data eventually result from this that’s going to help compare how you stand against the other HSV vaccines that are in the clinic? And then I am going to come back with a follow-up question about some of the other pipeline programs.
And so, I think without talking about the other HSV-2 programs, I think you need to look at two things when you compare our program with the other programs, is the antigens that we are using, the study design that we are using, the definition of what an HSV-2 positive day, our shedding day in individual is, the precision of the (inaudible) that we are using. So, you just can’t compare the end results. You need to look at the entire study design including the kind of follow-up period that we’re doing. Okay, we have a 60-day follow-up period, people having different follow-up periods. So all those need to take in account, but I think we need to show a statistical significance at least a 30% reduction between the two groups okay at minimum.
Jonathan Eckard - Citigroup
Okay, great. And then I don’t or I may have missed it whatever, but the -- with the burn rate that you guys are predicting for ’14 and I didn’t see you mention about the CMV prophylactic vaccine program. I am just wondering, what are some of other things in the background that are not highlighted in the press release that could play a role into 2014 with [the rest of the] partnering. I’m not sure you keep comparing some of other assets and potential partnering opportunities there?
Absolutely and we know we’ve been careful not to talk about partnering efforts because it ain’t over until it’s over till you have a partner, so why prejudge it but as we said before I go to see CMV, we’ve been working with Vaxfectin with a couple of big pharma companies in terms of using Vaxfectin in their construct in comparing with their best mousetrap and those studies take a long time these are all preclinical animal studies. And some of those studies are coming to fruition and if those studies indeed point out that the data is better than their own mousetrap that will lead to partnership on Vaxfectin.
One of the beauties of Vaxfectin is we’ve done on already 100 plus patients I think approximately in humans and we’re also embarking on another study with HSV-2. So I don’t want to call anything safe, but I think it’s a tolerable adjuvant and it’s a new class of adjuvant, it’s not a molecular adjuvant. So that could lead to a potential partnership opportunity.
CMV, also we’re working based on some NIH brand can show that the vaccine responses that we’re getting, the antibody responses are towards the epithelial region which are really the kind of antibodies that you require for them to be effective in congenital infection. And once we have that data in hand, we will publish that because that will give us a pathway to prove that this gB concept along with BB-65 is indeed a valid concept because if you go back and look at the Sanofi study which was a few years ago, the gB protein vaccine, they got neutralizing antibodies in 90% but they’re not utilizing to the right target and therefore the efficacy was less than 40%.
We certainly don’t want to do that and so this data that we’re working in on NIH and a grant from an NIH when that comes out will give us much more confidence including our partners who we have been talking to for a long time to see whether this an appropriate target to embark on a study. We obviously don’t have money because the study is a large study to get a proof of concept. So those are the two areas we’re working on. Obviously, we’re looking on number of other things to advance or broaden pipeline, but I’m not willing to talk about it at this stage.
Jonathan Eckard - Citigroup
Thanks very much.
Ladies and gentlemen, this concludes our question-and-answer session. I’ll go now turn the call back over to Mr. Samant.
Well, thank you for joining us for this call and we look forward to seeing you in other places in the near future. Thank you again.
Thank you, ladies and gentlemen. This does conclude our conference for today. You may now disconnect.
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