Senior Executive Officers On the Conference Call:
- Ted Myles -Interim President, CFO and Executive VP of Corporate Development
- Eddy Anglade - Executive VP of Clinical Development
- Matt Vincent - Director of Business Development
Todd (Operator): It is now my pleasure to turn the webcast over to Ted Myles, Interim President, CFO and EVP of Corporate Development. Ted, the floor is you.
Ted Myles: Thank you Todd and welcome to Advanced Cell Technology's year-end corporate update call. My name is Ted Myles and I am Advanced Cell's interim President, CFO and Executive Vice President of Corporate Development. I am joined today by a couple of my colleagues: Dr. Eddy Anglade, our Executive Vice President of Clinical Development, and Matt Vincent, Director of Business Development.
Before we get started, I just want to remind you that we will be making forward looking statements as defined by federal securities laws. Actual results could vary materially. Factors that could cause actual results to vary are described in our filings with the SEC, most recently our Annual Report on Form 10 K as filed on April 1st, 2014. You should pay particular attention to the risk factors contained in those documents we file from time to time with the Securities and Exchange Commission. The risk identified there, and as well others not identified by the company, could cause the company's actual results to differ materially from those expressed in any forward looking statements.
I want to start by thanking all of you for your support and patience as we moved through 2013 and into 2014. Our remarks today will cover a wide range of topics that we feel are important to driving the company forward. We will take questions at the end of the call but as part of our new approach to managing the company, we are going to err on the side of saying less and hopefully doing more. While this may be frustrating to some of our more enthusiastic and inquisitive shareholders, we believe this is the right approach to running a publically traded company that is involved in ongoing clinical trials.
Now let's begin. Let's first talk about leadership. At the end of 2013 and early 2014 we transitioned our leadership team with a number changes. Mike Heffernan, a highly regarded industry veteran was appointed Chairman of our Board of Directors. With his increased role as Chairman, Mike is providing a higher level of involvement and valuable guidance as we refine our strategic direction. In June of 2013, I joined the company as the CFO and EVP of Corporate Development, and in January of this year I stepped into the interim President role. My objectives during this interim post is to partner with Mike, the rest of the Board and senior management team is to drive this company forward while the company conducts its search for a permanent CEO.
In January 2014, Dr. Eddy Anglade joined our company as the Executive Vice President of Clinical Development. Eddy's mandate is directly aligned with his experience - to establish our clinical and regulatory affairs capability and to develop and implement our strategy as we prepare for Phase II of our clinical trials. In addition to having a great deal of experience as a clinical and regulatory executive, Eddy is trained as an ophthalmologist which makes him a great fit for our company.
Hiring an executive with expertise in clinical development and ophthalmology is directly aligned with our primary focus as a company. We have a leadership position in regenerative ophthalmology and with our RPE clinical programs in particular. Our clinical trials in age-related macular degeneration and Stargardt's macular degeneration are our highest priorities. Eddy is building a small clinical development and regulatory affairs team with the goal of increasing our rate of enrollment in our current trials and in positioning us to become a Phase II company.
I will now ask Eddy to provide some information about his background and to share his observations based on his first 90 days on his job. Eddy?
Eddy Anglade: Thank you Ted for the introduction and opportunity to address the audience. By way of background, I trained as an ophthalmologist at the Massachusetts Eye & Ear Infirmary with further subspecialty training in ocular information at the National Eye Institute. For the past 17 years I have worked in positions of increasing responsibility in the pharmaceutical industry. Prior to joining ACT, I was a cofounder and chief medical officer at Lux Biosciences, a development phase company with assets in multiple ocular indications. At Lux, I established and oversaw all aspects of clinical development and regulatory strategy. With the support of an excellent core and expanded development team we conducted over 15 clinical trials spanning three indications. The late-stage programs we conducted took place on four continents and included well of 1000 patients.
Now, there are two critical elements that drove my decision to joining ACT. First, the potentially transformative aspect of the cell-based technology platform coupled with the demonstration of their potential in the patients that have been treated to date. And second, and equally important, the quality of the leadership that has been drawn to the company at the level of the senior management team, the Board of Directors, and the stellar group of investigators.
In the three months since joining the organization, I have been familiarizing myself with all aspects of the AMD and SMD trials and I have been working closely with our outstanding group of investigators. We are working hard to increase the rate of enrollment in the Phase I program and we are developing our plans for the Phase II trials. As you might imagine, a great deal of thought is required to set the course for a Phase II proof-of-concept study, particularly in the case of a novel therapeutic class, and we are working diligently to design the right experiments so that we ask the right questions in order to maximize the impact of the information and knowledge gained in these trials.
I continue to be impressed with the level of engagement and thought leadership that I have received from this world-class group of investigators. To test our initial hypothesis for the Phase II plan we recently had a scientific meeting with the MHRA, the United Kingdom's equivalent of the U.S. FDA. During our discussion with the MHRA, we explored a number of our preliminary assumptions about trial size, design, and endpoints. The feedback that we received was very helpful and we are preparing for a similar meeting later this year with the FDA. Providing guidance on timing at this time would not be prudent since we cannot control the FDA's schedule but the step is on the path to achieving our corporate objective of initiating Phase II trials by the end of 2014. I look forward to updating you on future calls as we have more information.
Now, I turn the call back to Ted. Ted.
Ted Myles: Thanks Eddy. As we talk about our Phase I progress and our Phase II plan, I know the obvious topic on everyone's mind is our interim results. Over the past several months, we have been analyzing our data in collaboration with our clinical investigators. While we and our investigators are excited about these data, we made the corporate decision not to press release them at this time. We believe that the credibility that comes from publication in a top-tier peer-reviewed scientific journal is valuable and we feel that it is in our best interest to support this process. We obviously can't guarantee when a paper will be published, if at all, but we believe that it is the appropriate approach at this time. We continue to be enthusiastic by what we are seeing in the data and we look forward to updating you when circumstances are appropriate.
We are moving forward with our plan to initiate our MMD trial. We are finalizing the paperwork necessary to start the trial with Dr. Schwartz and his team at the Jules Stein Eye Institute at UCLA. ACT management along with our Board of Directors and investigators at UCLA have determined that we should increase our investment in the RPE franchise by initiating this trial in MMD. These are the same cells that are used in our AMD and SMD trials. It stands to reason that the interim results that we observed in those trials played a role in helping to drive our decision to invest further in the RPE program. Myopic Macular Degeneration, or MMD, is a leading cause of blindness around the world and particularly in Asian populations. We look forward to updating you on this important program as we get started.
We are also reviewing our pre-clinical programs. There are a number of exciting programs in the ocular space, namely, our photoreceptor and retinal ganglion progenitor programs. We believe these programs, while our preclinical data are very early, are promising because of the potential clinical relevance in a variety of significant eye diseases, including macular degeneration, retinitis pigmentosa, and glaucoma.
As of March 31st 2014, we had approximately $4 million of cash on hand and approximately $6.5 million remaining available to us under our Lincoln Park Capital arrangement. We will initiate a fund-raising effort in the near future and our goal is to bring in sufficient capital to fund corporate objectives, with a particular emphasis on our expanded RPE trials. The goal is to capitalize the company with enough funding for 12 to 18 months of operations. We believe uplisting our stock to a national exchange is part of that overall fundraising plan. And uplisting the stock to NASDAQ is a corporate objective. We continue to view the NASDAQ uplisting, the reverse split, and institutional financing as a linked set of activities, and we are working hard to line those all up in the best possible way for ACT shareholders. There is obviously a lot involved in bringing all these activities together. So, I am not going to speculate about timing at this time in point, but we will keep you posted as is appropriate.
As a final comment, I just want to reiterate that we are excited about our scientific programs, the quality of the people that we have attracted to the company, from the employees to the board members and our investigators in our clinical trials. We believe that we got a very special company with a lot of programs that are high potential to be translating into clinical success.
Now I would like to open the call for questions.
Questions and Answers Session:
Ted Myles: While they queue up questions on line and by phone, I pull down a couple that I have seen here. Someone asked have you or will you be adding new clinical trial sites to support your Phase II trials in the US and in the UK? I'll ask Eddy to answer that.
Eddy Anglade: Thank you Ted. The answer to the question is 'yes', we will add sites as appropriate. We want to be as aggressive as we can be, trying to draw between a balance of being efficient with resources and maximizing the effectiveness of our programs. So, yes, the studies will be multinational in nature.
Ted Myles: There is another question about the original 50 K cell patients and whether or not they gonna be receiving a second injection? I also ask Eddy to answer that one.
Eddy Anglade: Ted thanks. So, as you all are aware, we are currently in Phase I. The goal of Phase I trials obviously is to - or Phase I/II I should say - the goal of those trials is primarily to look at safety with an emphasis on efficacy. Prior to re-administering a drug in any patient, we would have had to demonstrate safety and efficacy. And those patients would in all likelihood be eligible for treatment after approval.
Ted Myles: Operator, are there any questions coming in?
Operator: Yes, we have a question from John Redaelli. Your line is open.
Ted Myles: Hi John...Go ahead.
John Redaelli: Yes, hi Ted. This is John Redaelli, Twenty2 at investorstemcell.com. Ted, I had the pleasure of meeting you at our recent shareholder meeting in October at Palm Springs. You strike me as a clean-cut straight shooter. And after seeing the 8 K, excuse me, the 10 K that you and your team put together here the other day, I want to let you know that I am convinced that you want to point our boat in the right direction. I have a few questions. Let me start with the first one, if you don't mind. As we look forward to the days and weeks ahead, what are some of the catalysts, or events, that might take place that could have a positive impact on our share price? Any details and rough timelines would be appreciated.
Ted Myles: Ok, thanks for your comments and for your question. I think the important point here is in the days and the weeks ahead and the short-term nature of the stock price, - we are really interested in building value and long-term sustainable value in the company, and not so focused on the daily stock price. I think that the items that I touched on throughout the talk, really, the progress of our Phase I trials, our migration to become a Phase II clinical trial company, the progress of our preclinical programs, stabilizing the financing of the company, all of those things, we believe, will help us get on track and become a highly valuable Phase II biotech company that is steered in the right direction and does things the right way. So, those are really the key items that we are focused on.
John Redaelli: Because of our strong positive trial results thus far, have we or will we seek to move forward next with a pivotal phase trial or apply for breakthrough therapy designation?
Ted Myles: That's a great question for my colleague. I let Eddy answer that.
Eddy Anglade: Yes, thanks very much. So, your point is very well taking in terms of the decision about how to proceed with the pivotal trial versus not. So, those are areas that are going to be under active exploration and discussion with regulators, and you know, at the appropriate time we will inform you with the outcome of those discussions. Obviously, they have to be vetted carefully internally and with our Board of Directors as well. With regard to breakthrough status, typically that is being granted after Phase II results are obtained. That what has happened in most cases. And, assuming that we have positive results at that point, we will certainly consider it, and if it is clearly in the benefit of the company to do that, we'll apply for breakthrough status.
Ted Myles: Ok, next question.
Operator: The next question is from Patrick Curzio. Your line is open.
Patrick Curzio: Hi Ted, great 10 K. Thanks for putting that out. Just a couple of quick ones. The MMD trial, is the plan still to find external funding, perhaps like a government, CIRM type source, or fund it internally?
Ted Myles: As of now the plan is we have got budget for it to fund it internally. We would be thrilled if external funding, non-dilutive funding, came in - and we're focused on pursuing non-dilutive funding. But at this point, the MMD trial is assumed to be funded - at least for the Phase I pilot phase 12 patients - will be funded internally.
Patrick Curzio: Ok. And then on the 10 K you listed - in the space in there on the Gordon lawsuit - you listed about 3.8 million as an estimate based on a reset price that you guys had arrived at. It looked to be about 1.4 cents. There is a loss contingency of like 6.2 million, and I think the difference was accounted for in interest charges and a perceived settlement extra amount. Can you tell us what that extra amount is based on? Is that based on discussions or previous lawsuits? How did you arrive at that number?
Ted Myles: Everything that we really want to comment on around the detailed accounting is really covered in the 10 K. That's an application of the accounting rules, and particularly ASC 450, and I don't want to get into more detail about that now.
Patrick Curzio: Ok. And was DSMB approval received for cohort 3 in the US, just like it was in the UK? Or where they separate this time?
Eddy Anglade: This is Eddy Anglade. That is imminent. So, the DSMB will be reviewing the safety data from the previous cohort, and we'll know in short order about their decision.
Patrick Curzio: It was received in the UK, though, right? [inaudible]
Eddy Anglade: Correct.
Patrick Curzio: Ok. Thank you. Appreciate it.
Ted Myles: Thank you for your question.
Operator: Here is another question from Herbert Dean. Your line is open.
Herbert Dean: Yes. Could you bring us up to date on the status of Dr. Lanza with the company in his current role?
Ted Myles: Yes, Dr. Lanza is our Chief Scientific Officer and he is highly engaged, and we expect he will be our CSO for a long, long time. I think your question, the underlying in your question that I am getting from some online as well, is about the status of his contract. His contract discussions are between him and the compensation committee. So, I am not going to comment on those. That is a private matter until the contract is signed and then, following Securities laws, we will update everyone as required.
Herbert Dean: He has a continued role in…
Ted Myles: Oh absolutely, absolutely.
Herbert Dean: Can I ask the second question about your platelet studies?
Ted Myles: Sure.
Herbert Dean: Could you comment on where you are with that in terms of investigational activity?
Ted Myles: Yes, we really gotten the platelets to a point where we feel we have demonstrated some value. And now we sort of set it aside. We are allocating capital to our other programs. We have taken it as far as we gonna take it on our own nickel. And we are exploring governmental opportunities for large sums of non-dilutive funding but there is no guarantee of that. It is probably not likely, and until that money comes in, we are probably not going to advance the program internally.
Herbert Dean: What about another partnership arrangement - because that seems like a big area, too?
Ted Myles: Possibly. Absolutely. That's what I meant by other non-dilutive funding. Yes, good question. Any other questions in the queue?
Operator: There are no questions at this time.
Ted Myles: Ok. Well, I want to thank you all for your support. I believe ACT shareholders have a unique blend of passion, perseverance, and patience and we really hope that we can reward all of our stakeholders as we work hard to bring our cell therapies to the many patients in need. We look forward to speaking with you again next month when we report our first quarter results. Thank you and have a terrific day.
Operator: Thanks for all participants for joining us today. We hope you found this broadcast presentation informative. This concludes our webcast. You may now disconnect.
Have a good day.