Vical Incorporated. Q2 2010 Earnings Call Transcript

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Vical Incorporated. (VICL)

Q2 2010 Earnings Call Transcript

August 03, 2010 12:00 pm

Executives

Alan Engbring - Executive Director, IR

Vijay Samant - President & CEO

Jill Broadfoot - SVP, CFO & Secretary

Analysts

Alan Carr - Needham & Co

Eric Schmidt - Cowen & Company

Steven Willey - Stifel Nicolaus

Reni Benjamin - Rodman & Renshaw

Presentation

Operator

Good day and welcome ladies and gentleman 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 question-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 sir.

Alan Engbring

Hello everyone, welcome to our second quarter 2010 financial results conference call. Participating on the call today are Vical’s President and Chief Executive Officer, Mr. Vijay Samant and Vical’s Chief Financial Officer, Ms. Jill Broadfoot. I will begin with a brief notice concerning projections and forecast.

This call includes forward-looking statements including financial expectations and projections of progress in our research and 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 on second quarter 2010 financial results. These forward-looking statements represent the 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

Thank you and welcome to all our listeners I’ll review the highlights of our recent developments in our call today, update our outlook for the remainder of the year and will then open the call to questions from invited participants, but before I do that let me have our CFO Jill Broadfoot to give you financial update for this quarter.

Jill Broadfoot

Thank you, Vijay. Financial results for the second quarter and first half of 2010 were consistent with expectations. Revenue for the first half of 2010 was $3.5 million compared with $6.2 million for the first half of 2009 reflecting the reduction in revenue recognized from AnGes as we approach completion of our Phase 3 Allovectin-7 trial.

Last year’s revenues also included a $1.5 million milestone payment from Merck for its cancer vaccine program. Operating expenses were generally consistent year-over-year and net loss was $16.9 million in the first half of 2010 compared with $14.3 million in the first half of 2009. We ended the first half of 2010 with cash and investments of approximately $40 million.

Our cash used during the first half was approximately $18 million which was partially offset by inflows of approximately $5 million from more exercise which was consistent with our projections for the full year.

As a reminder, our forecast range included anticipated cash receipts from new or expanded partnerships not currently contracted. We continue to make progress towards those potential partnerships. With that I will turn the call back to Vijay.

Vijay Samant

Thank you Jill, I will cover the highlights in our development programs today beginning with an update on Allovectin-7 immunotherapy for patients with metastatic melanoma. The recent approval of [Provenge] coupled with BMS’s second line melanoma data [task] therapy has created additional visibility for immunotherapy. I won’t go in to details about those data, but want to make a few observations.

First on safety, in our Phase 2 trial, there were no drug-related Grade 3 or Grade 4 adverse events, there were no discontinuations due to tolerability. We believe that’s more impressive when you consider the average of patients enrolled in that Phase 3 was 60 and we treated several patients in the 90s.

In our ongoing Phase 3 trial and Independent Safety Monitoring Board recently completed fourth scheduled safety analysis and recommended continuation of the trial for protocol. We believe safety profile of A-7 if it receives marketing approval would make it a compelling choice especially for patients who are not able tolerate toxic chemotherapy or biotherapy agents.

Second on efficacy, our Phase 3 trial was designed under an SPA to support approval as the first line therapy. We are comparing A-7 head-to-head against the chemotherapy standard of care. We believe our primary endpoint of response rate at 24 weeks or more would represent the meaningful benefits to patients. We will also evaluate survival of the historical chemotherapy controls have been typically demonstrated median survival of nine to 12 months. A-7 achieved a median survival of almost 19 months in our Phase 2 trial. If we reach our accepted goals in Phase 3, we believe A-7 would be an attractive treatment option for metastatic melanoma.

So on approach, while both EP and A-7 of immunotherapies that rely on different and potentially complementary mechanism of action, A7 is designed to make tumor cells more visible target for destruction by T-Cells, EP is designed to reactivate T-Cells that have been down regulated by cancer, both products because of their unique mechanisms would have the opportunity to address significant unmet need for patients with metastatic melanoma.

As a reminder we completed an enrollment on our Phase 3 in February with a total of 390 subjects. We expect to log the clinical trial database in the second half of 2011, as we gain further clarity by monitoring a trial progress. Over the coming months, we will provide you periodic updates and timelines.

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