Executives
Alan Engbring - Executive Director, Investor Relations
Vijay Samant - President and Chief Executive Officer
Analysts
Ritu Baral - Canaccord
Jonathan Eckard - Citi
Lee Kalowski - Credit Suisse
Howard Liang - Leerink Swann
Eric Schmidt - Cowen & Company
Stephen Willey - Stifel
Vical Incorporated (VICL) Allovectin Phase 3 Results Conference Call August 12, 2013 8:00 AM ET
Operator
Good day, ladies and gentlemen, and welcome to the Vical Incorporated 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 Mr. Alan Engbring, Executive Director of Investor Relations. Please go ahead.
Alan Engbring - Executive Director, Investor Relations
Hello, everyone. Let me start by apologizing for my voice, I have been fighting cold, being here cough here and there. Welcome to our Allovectin Phase 3 results conference call. Conducting the call today is Vijay Samant, Vical’s President and Chief Executive Officer.
I will begin with a brief notice concerning projections and forecasts. This call includes forward-looking statements and projections and 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 Reports on Form 10-Q filed with the Securities and Exchange Commission, as well as the specific risks and uncertainties noted in Vical’s news release Allovectin Phase 3 results. These forward-looking statements represent company’s judgment as of today. The company disclaims, however, 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.
Vijay Samant - President and Chief Executive Officer
Thank you, Alan, and thank you to all our participants for joining us this morning. As a company and as individuals, we have invested substantial efforts and resources into the Allovectin program for nearly 20 years. We truly believed in the potential of this program based on our promising Phase 2 and earlier results, we are preparing for successful advancement through the regulatory approval process and towards the commercial launch. And so we are very deeply disappointed with the results announced this morning that our Phase 3 trial of Allovectin failed to beat either the primary or secondary efficacy endpoints.
We believe our trial was well designed to demonstrate a response rate and survival benefit for Allovectin compared with chemotherapy. We believe the results are clear and conclusive, but no margin for alternative interpretation. Allovectin, simply, did not provide the expected benefits, we do not see a feasible path forward for Allovectin and we are therefore terminating the program. We would like to recognize all the patients and their families, trial investigators that have been working in this for almost 20 years and employees who participate in the conduct of this trial, and thank them for all their efforts and also our partner AnGes in Japan who funded this clinical study.
The path forward for Vical is clear. Our immediate goal is to focus on our infectious disease vaccine programs and reduce expenses to conserve resources. These resources are substantial. As a reminder, we reported cash and investments of $70 million at mid-year, which we believe is adequate for our anticipated needs at least through the end of 2014. We have a proven platform technology with the Phase 3 CMV vaccine program totally funded by our licensee Astellas in independent programs for HSV-2 and CMV ready to advance into clinical testing, and a solid track record of preclinical and clinical infectious disease vaccine results with two approved animal health products. The failure of a single product in one application area does not diminish the potential for success with the remaining programs in other therapeutic areas.
We have a tremendous pool of talent and employees with a great depth of knowledge around the core plasma DNA technology with background in research, preclinical, and clinical development, regulatory and manufacturing, and all the other necessary support functions for a successful biotech company. We have a number of ongoing independent and partnered development programs.
Let me begin with ASP0113, our investigational therapeutic vaccine designed to control CMV in transplant recipients, our licensee, Astellas initiated a multinational 500-patient Phase 3 trial for hematopoietic cell transplant recipients in June. Astellas expects to initiate a Phase 2 trial of ASP0113 in solid organ transplant, SOT recipient for later this year. With our Vaxfectin-formulated therapeutic vaccine against herpes simplex virus type 2, we are planning to initiate a Phase 1/2 clinical trial, a proof-of-concept study before the end of 2013. Our Vaxfectin-formulated CyMVectin vaccine designed to prevent CMV infection before and during pregnancy has completed pre-clinical development and has been allowed R&D.
Our Vaxfectin adjuvant itself is a valuable asset that has been licensed to Bristol-Myers Squibb and Cyvax, and we are pursing pursing additional testing opportunities with several vaccine developers. Our licensees have demonstrated proof-of-concept of our vaccine technology with two products approved for use in animal health applications. In 2005 our licensee Novartis Aqua Health received Canadian approval to market its proprietary product Apex-IHN, a DNA vaccine to protect farm-raised salmon against infectious hematopoietic necrosis virus. In 2009 our licensee Merial, which is one of the largest animal health companies in the world and now a subsidiary of Sanofi, received approval from the USDA to sell ONCEPT, a therapeutic DNA vaccine designed to extend survival time for dogs with oral melanoma.
I am personally committed to the future success of Vical in my dozen plus years at Vical, the company has gone through a number of ups and downs and in every case we have moved beyond the setbacks and ultimately emerged as a stronger company even better positioned for success. In the coming weeks, we will end all development work on Allovectin program and quickly and as cost effectively as possible refocus the organization as needed to support our ongoing development programs. As we implement our short-term changes and refine a long-term plan, we will reach out again with periodic updates on our progress and outlook to our loyal shareholders.
This concludes our prepared comments for today. Operator, we are now ready to open the call for questions from our invited participants.
Question-and-Answer Session
Operator
Thank you, Mr. Samant. The question-and-answer session will begin at this time. (Operator Instructions) Our first question comes from Ritu Baral with Canaccord.
Ritu Baral - Canaccord
Hi, Vijay. Hi, everyone. Thanks for taking the question. Is there any sort of characterization of the data that you can give us at this point, are there any plans to release it either in publication or at a medical meeting, I am just curious as to how it relates to the technology and the platform for all your other programs?
Vijay Samant
I think it’s an excellent question. The key information that we released today is that the trial did not meet either the primary or secondary efficacy endpoints and the program is terminated. There is absolutely no ambiguity here, okay. The results were conclusive. You need to understand that we have been working feverishly in the last couple of days to get these results out as soon as possible. So, we have not yet had the opportunity really to review or share there results with our clinical trial participants, particularly the PIs. Okay, some of them who actually have been working with us for almost 15 years. And so we will need some time to review the data carefully and the ultimate goal is publication in a proper scientific conference. Okay, the answer is yes. We ran a good trial. The trial was well designed, well executed. It was a good scientific experiment, I am proud of the Vical employees and our PIs who conducted the trial. The conclusions are scientifically accurate, but not what we wanted.
Ritu Baral - Canaccord
Alright, thanks for taking the question.
Operator
We will take our next question from Lee Kalowski with Credit Suisse.
Lee Kalowski - Credit Suisse
Great. Thanks for taking my questions. I am wondering I guess shifting gears away from Allovectin, if you can give us any sort of update on the TransVax program as far as where enrollment is if there is anything you can update on that. And as far as the endpoint given the two stage trial when we might see some data, would we see data at when the overall survival from the first 100 patients restores it at the conclusion of the entire enrollment?
Vijay Samant
So, you asked multiple questions, first of all the trial just started recruiting towards the end of June. So, it’s too early to kind of start giving recruitment numbers, because it’s the early phases of the study, but the study is going to be recruited in large number of centers in U.S., Europe and Japan. The endpoint as we stated in our last earnings call is a well-thought-out endpoint. And as I mentioned to you in the call that survival as measured by Kaplan-Meier curve even if this application is a good indication of prevention of CMV reactivation, there is supportive data. This is also a definitive trial. There will be no accelerated approval here. We reached the results as planned. We should get full approval. The first 100 patients we will be testing the hypothesis. It’s an adaptive trial design to indeed make sure that the survival endpoint that has been offset by Astellas and us indeed is in the right direction.
And the answer to that question is yes, that will be the confirmed trial endpoint if the answer that we may have to add another composite variable to make it a composite endpoint, the answer will be yes. However, the remaining the remaining 400 patients will continue to recruit. You are asking a very good question, and I really don’t have an answer, but I am sure, Astellas and us we will at some point in time at the conclusion of the 100 patients indeed will inform you that the trial is on track and that either we have either adjusted on modifying the endpoint or we are going to proceed with the endpoint that was preset, which was survival. And the timing of that should be as soon as we complete the one year follow-up with the first 100 patients.
Lee Kalowski - Credit Suisse
Okay. So, when the first 100 patients, you expect to would there be a disclosure that as far as data is concerned or is simply about what you think what the endpoints are likely to be?
Vijay Samant
Well, I think I can’t speak for Astellas in terms of what their disclosure policy is as you know the program is fully licensed to them, but I think knowing Astellas I think one thing for sure, you will clearly get is update in terms of when the 100 patient analysis is complete and that we are proceeding with the next phase of the trial. Exactly what will be the period will be I am prejudging what Astellas really, but knowing the Astellas management, they provide regular updates on the clinical program. So, the answer to your question is yes, we will get updates. What level of those updates would be, I can’t comment on at this stage.
Lee Kalowski - Credit Suisse
Okay. Maybe one last question, as far as the expenses are concerned, when do you think you might provide updated guidance, and is there anything you can say about whether the cash burn is likely to be less than what it was in first half of the year?
Vijay Samant
We will provide in the coming weeks an updated burn guidance, which will give you a good indication of our strategy in terms of how we are going to conserve our cash resources. This has just hit us. We need to look at all our assets, which are both our people, our programmatic expenses, and look at opportunities to reduce those, so that we conserve this cash and focus our energies on the infectious disease programs. So, the answer is absolutely yes, in coming weeks, we will indeed provide you with an update.
Lee Kalowski - Credit Suisse
Okay, thanks.
Operator
We will take our next question from Jonathan Eckard with Citi.
Jonathan Eckard - Citi
Hello, thanks for taking the questions. So, I was just wondering and I apologize since I joined a little late, is there – can you give us any updates on what happens with the Japanese collaborations that you have around Allovectin and whatnot? And then also do you see potential to monetize some of the pipeline programs such as CyMVectin in order to one I guess increase the cash runway, and two, to help add some validity to the remaining pipeline assets? Thanks.
Vijay Samant
Jonathan, thank you for your question, I just was on the phone late last night about half an hour before we released the news information and the confidentiality with our partner AnGes. Obviously, their expectation was as was our expectation that the trial was going to meet the endpoint that extremely disappointed. Obviously, the application that they licensed this program though they have full rights for Allovectin is for head and neck cancer. I think once the clinical trial report is completed in this trial, they have the option as any company would do. So, they own the license, whether they want to take this program to the next stage and they will look at the data and with a different set of eyes. So, I can’t comment in terms of what their approach is, but as I told you, our conclusions based on the data analysis that we have done so far is that we are going to terminate everything that we are doing in Allovectin.
And your second question in terms of monetizing other assets, I think there are multiple assets for the opportunity for monetizing, but our energy in the last couple of months has been focused on Allovectin. We had the CVAs with multiple companies. We had a data room with the large pharmaceutical companies looking at this data. And assuming the data was positive, we would have actually moved very quickly in we are developing a partnership, particularly in the European front. I think the energy now is going to be focusing on our other assets, particularly CyMVectin which is a very partnerable asset. It’s a big indication. It’s probably the last big commercial indication in the vaccine space, where a proof-of-concept is understood unlike staph or hepatitis C and other infectious disease applications, which are big markets, but people still really don’t have a mechanistic way of developing a vaccine. So, the answer to that question is yes, also recognize that we did a deal with our adjuvant Vaxfectin, there have not been a lot of adjuvants I have been saying that like a broken record that this is an important, a development in adjuvant that we have two licensees so far. We are working with a number of companies and that’s going to be another way of monetizing our assets and support our cash burn rates.
Jonathan Eckard - Citi
Thank you very much.
Operator
We will take our next question from Howard Liang with Leerink Swann.
Howard Liang - Leerink Swann
Hi, thanks very much. Can you talk about how much of the R&D expense in the last year or so was for the Allovectin program?
Vijay Samant
I beg your pardon. What your question was, what were the expenses for Allovectin?
Howard Liang - Leerink Swann
Yes.
Vijay Samant
I think it’s in the 10-K. So, I don’t want to go. The proportion of what the number was the 10-K is the same number that we used. I don’t have my financial guy here offhand with me, I will be more than happy to give you. But I would say, majority of our expenses last year were all focused on Allovectin, because as I told you, Astellas is fully funding the ASP1103 study. So and little bit expense is the herpes simplex 2 program for the pre-clinical work that we did, but all our physical programmatic expenses were devoted to Allovectin. We are making conformance logs. We are getting ready for commercialization, stability studies, validation activities, a lot of effort went behind it. We had a one group that I actually forgot to thank in our interaction was Ciber and FDA who have been absolutely terrific partners, because working with us all the way through in terms of every aspect of this program. So, we really want to thank them, because they were very supportive throughout the evolution of this program.
Howard Liang - Leerink Swann
And then on the Phase 3 for Allovectin, would you characterize the results as the competitor outperforming your expectations or a treatment under performing?
Vijay Samant
Well, I think all I can tell you is that there was no difference between the (indiscernible) and Allovectin. Without getting into the granularity of the result, the hazard ratio is the clear indication and both treatments are equivalent, okay. The (indiscernible) arm did better than we expected. That’s what I will say at this stage.
Howard Liang - Leerink Swann
Great. And then the for the HSV program that you are starting by the end of the year how soon might we see data from program?
Vijay Samant
But you know we will probably in the coming weeks as we develop do our cash burn, we will give you more granularity on the program, the clinical trial design, the timing of the data. So, just hold off on that, but I think it’s a pretty exciting program. It’s a larger market. There is hardly any effort that’s going on. Valtrex is the only anti-viral that’s being used. No new advancements in the field, and we are one of the few companies that we are aware of who is working for development of a therapeutic vaccine in this period and it’s a proof-of-concept study. So, bear with us for a few weeks as we will give you update in the coming weeks, okay, and in terms of the breadth and the depth of the program.
Howard Liang - Leerink Swann
Thanks very much.
Operator
(Operator Instructions) We will take our next question from Eric Schmidt with Cowen & Company.
Eric Schmidt - Cowen & Company
Thanks for taking my question. Just one more on the burn rate, so should we take the $70 million last again to or through the end of 2014 according to the press release, is that sort of the minimum cash run-rate feature and that with further restructurings or re-focusings you can do potentially better than that?
Vijay Samant
The answer is yes. I think that’s the minimum, that’s at least to 2014, but we probably be able to get a little better than that, okay. And I think we should be able to give you much better guidance in the coming weeks okay. We just got this news off the press. We haven’t had a chance to do a lot of thinking here on that front. But I think we, in the coming weeks, will give you a clear idea of what our burn rate is going to be in the remainder of the year and what our burn rate expectations are for the year 2014. The answer is correct, yes.
Eric Schmidt - Cowen & Company
Okay. And one more question and I am not trying to be harsh, I appreciate your personal commitment to seeing Vical through, but I do have cash, it’s been well over 20 years if Vical has been working on DNA-based delivery technology and still no major successes to show for. When you and the Board discuss the potential future of the company, will you include in that discussion things like basically winding down operations and just trying to monetize the existing partnerships you have and give back cash to shareholders?
Vijay Samant
The answer is no Eric, because if you go back and look this failure has nothing to do with the DNA platform, it has to do with the mechanistic approach of how this cancer mechanistic DNA based application is going to work and it didn’t work. If you take a look at our H5 flu data which was in a human study we have hemoglutinin titers which are equivalent to what you get in a conventional protein vaccine. Our Phase 2 study in immunocompromised patient, the immuno responses are superb and that’s the reason Astellas did exhaustive due diligence license this programs. So, we have actually optimized the core technology, that doesn’t mean that we are not going to look at other opportunities. But I think far from anything I think this has given a lot more strength. And some of our preclinical data on our herpes simplex too is the best that has been seen. So, the answer is no, I think we are committed to this platform, we are committed to advancing the programs to turn the pipeline and we are open to other opportunities.
Eric Schmidt - Cowen & Company
Okay, thank you.
Operator
We will take our next question from Stephen Willey with Stifel.
Stephen Willey - Stifel
Yeah. Hi, good morning. Just wondering if you can maybe provide some color as to when we might see the next non-dilutive capital come out of the Astellas TransVax program, if there is anything associated with the initiation of a Phase 2 in solid organ or do we need to get some kind of regulatory milestone on the hematopoietic front? Thanks.
Vijay Samant
Steve we haven’t disclosed that, but I don’t think there is anything that is in the near term, the start of the Phase 2 study or initiation of the Phase 3 study. I think most of the cash flow that’s going to come from that is the funding of all our people here, okay, as it relates to the manufacturing support that we are going to provide, the analytical validation, the quality support, whatever regulatory support. So, it’s all our burn rate as it relates to all the supplies we provide to them. Everything that we do for them is reimbursed by them and that’s where for the coming months where the – but it will be softening our cash flow burn rate okay, by the support that we are going to get from them with this particular program. But then short-term there are no milestones that I know.
Stephen Willey - Stifel
Okay, thanks.
Operator
If there are no further questions, I would now like to turn the call over back over to Mr. Samant.
Vijay Samant - President and Chief Executive Officer
First of all, I want to thank all of you for participating in this call. I want to thank all the shareholders who are listening to us. We are as disappointed as they are, but we committed to reemerge from this crisis as a much stronger company. We look forward to updating all of you on our progress and plans and to seeing some of you at the upcoming conferences. Until then, we thank you for your continued support and understanding.
Operator
Ladies and gentlemen, this concludes our conference for today. You may now disconnect.
Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.
THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.
If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!
No comments:
Post a Comment