Transcript of Cleveland BioLabs

Transcription

1 Transcript of Participants Rachel Levine Vice President of Investor Relations Dr. Yakov Kogan Chief Executive Officer Neil Lyons Chief Financial Officer Dr. Langdon Miller Senior Medical Advisor Analysts Mara Goldstein - Cantor Fitzgerald Walter Schenker - MAZ Partners Presentation Operator Greetings, and welcoe to the First Quarter 2014 Investor Update call. At this tie, all participants are in a listen-only ode. A question and answer session will follow the foral presentation. (Operator instructions.) As a reinder, this conference is being recorded. I would now like to turn the conference over to your host, Rachel Levine, Vice President of Investor Relations. Thank you. You ay begin. Rachel Levine Vice President of Investor Relations Thank you, and good orning, everyone. Welcoe to CBLI s First Quarter 2014 Investor Conference call. Joining us today are, Dr. Yakov Kogan, our Chief Executive Officer; Mr. Neil Lyons, Chief Financial Officer; and Dr. Langdon Miller, our Senior Medical Advisor. Before we begin, I d like to reind all listeners that throughout this call we ay ake stateents that constitute forward-looking stateents within the eaning of the Private Securities Litigation Refor Act of Investors are cautioned that any such forward-looking stateents are not guarantees of future perforance or the successful execution of the copany s strategic plan, and involve risks and uncertainties. Additionally, I want to ephasize that soe of the inforation discussed on this call, particularly our financial and cash outlook and our forward-looking developent plan are based on inforation as of today,, and that actual results ay differ aterially fro the expectations and assuptions discussed today as a result of various factors. Such risks, uncertainties and factors include the risks outlined in our copany s filings with the Securities and Exchange Coission including our ost 1

2 recently filed 10-K. The inforation provided on this conference call should be considered in light of such risks. CBLI does not assue any obligation to update inforation contained on this call. Dr. Kogan will open this orning s call, by sharing progress on our priorities for the year and pass the call to Mr. Lyons to recap results for the period and discuss updates to the financial outlook. Dr. Kogan will then return for closing rearks and open the call for questions. At this tie, I d like to turn the call over to Dr. Yakov Kogan, CEO. Please go ahead. At this tie, I d like to turn the call over to Dr. Yakov Kogan, CEO. Please go ahead. Dr. Yakov Kogan Chief Executive Officer Thank you, Rachel, and thank you to everyone for joining us this orning. We are pleased to share the progress we are aking with our strategic objectives for We are focused on pursuing a pre-eergency use authorization, or pre-eua subission for Entoliod as a radiation countereasure and establishing clinical proof of pharacodynaic activity for CBL0137 and Entoliod as cancer therapies. Preparations are well underway for our July eeting with the FDA to evaluate the potential for a pre-eua subission for the Entoliod radiation progra, and present our projection of estiated huan dose to the FDA. We are in the process of copiling sections of the pre-eua dossier as part of our briefing package. Our goal for this eeting is to establish what steps reain in pursuing pre-eua status for Entoliod as a radiation countereasure, which ay assist us in deterining the value of the progra for us or for a potential partner. Partnering the Entoliod radiation countereasure progra is paraount for us, as we do not wish to reain solely dependent on governent funding to advance its developent to a BLA. We plan to continue to work with governent agencies as funding is available, but believe additional support is iportant to the long-ter success of the progra. For those less failiar with EUA, this is the vehicle through which the US governent is able to adinister unlicensed rescue therapies in eergency situations. If the FDA grants pre-eua status, purchases of Entoliod could be ade for stockpiling in the event of a disaster. Actual use of the stockpiled drug (and conversion of pre-eua to EUA) would occur only in a declared eergency situation. Over 70% of the dollars spent to date on countereasures in the U.S. strategic national stockpile have been for unlicensed drugs. We believe achieving pre-eua status could also drive foreign governent support for this progra. Unlike a BLA or NDA subission, which includes all data requireents for full licensure, a pre-eua subission is based only on data accuulated up to the tie of filing and that are relevant for the proposed eergency use. Let s now review advances on the oncology side of our business. Dosing of Entoliod in patients with advanced cancers continues at Roswell Park Cancer Institute. The seventh cohort is currently being treated and we are still estiating that this trial will conclude dosing around the end of the year, assuing a axiu tolerated dose is reached. 2

3 Preparations are also oving along for a healthy subject study with Entoliod in the Russian Federation. In this study we plan to follow a siilar dosing regien as in the advanced cancer trial at Roswell Park. The healthy-subject study will be supported in part by a contract with the Ministry of Industry and Trade or MPT of the Russian Federation. Both of these studies incorporate pharacodynaic assays easuring response of specific types of iune cells to adinistrations of Entoliod. We believe these data will help us better assess Entoliod s potential as an iunotherapeutic agent. And, the healthy-subject trial ay help support our safety database for Entoliod s edical radiation countereasure indication. With respect to our other product candidates, we recently reported the successful copletion of a Phase 1 trial with CBL0102, an orally adinistered sall olecule. Like our optiized oncology drug candidate CBL0137, this copound also acts by blocking activity of the chroatin reodeling coplex, FACT, but has a copletely different cheistry than CBL0137 and is not as potent. The study of CBL0102 was perfored in heavily pre-treated patients with advanced cancers for which no standard care exists or which had becoe resistant to conventional therapies. All patients had tuors involving the liver, given CBL0102's high relative biodistribution into the liver. The priary objective of the study was to evaluate for a axiu tolerated dose and dose-liiting toxicities of CBL0102 in these patients. Secondary objectives were to characterize the drug's safety and to profile its pharacokinetics. The study also assessed for preliinary evidence of CBL0102 antituor activity. CBL0102 was generally well-tolerated and a recoended Phase 2 dose of 400 g/day was established. The ost coon adverse events were skin discoloration due to drug accuulation in skin, fatigue, upper abdoinal pain, ild to oderate gastrointestinal disorders, and hepatic transainase elevations, with ost events being low grade. By eight weeks of therapy, a partial tuor regression was recorded in one breast cancer patient, who experienced a 46% reduction in target lesion axiu diensions. Disease stabilization was observed in four other patients (patients with breast cancer, hepatocellular carcinoa, salivary gland cancer, and rectal cancer). In the patient with hepatocellular carcinoa, long-ter stabilization was observed for a period of 7.5 onths, during which the patient reained on continuous CBL0102 treatent. We are encouraged by the outcoe of this trial and are looking to partner CBL0102 for future potential developent. Our priary focus, however, reains on CBL0137, our optiized proprietary FACT inhibitor, which is currently being evaluated in ongoing Phase 1 trials assessing both oral and intravenous forulations. Both CBL0137 trials are progressing on schedule. Dosing of the third cohort is underway in the intravenous study and recruitent of the seventh cohort was recently initiated in the oral study. Dose escalation will continue until a axiu tolerated dose is reached. We are planning to release an interi report on safety, pharacokinetics and pharacodynaic data collected fro the first six cohorts of the oral study in the third quarter of this year. 3

4 Finally, we are on track to start a Phase 1 healthy subject study with CBLB612 later this year with planned endpoints of establishing a axially tolerated dose and characterizing CBLB612 s ability to obilize bone arrow ste cells into the circulation. Preclinical studies have shown that the efficacy of CBLB612 exceeds that of G-CSF, the arket-leading drug used for stiulating the bone arrow to produce white blood cells. This study is also supported by an MPT contract. At this point, I will hand the call over to Neil to review the financials and return in a bit for closing rearks. Neil Lyons Chief Financial Officer Thank you, Yakov. First, a few coents about our financial results: For the first quarter ended March 31, 2014, our total revenues reained relatively flat at $1.3 illion copared to the first quarter of We have historically recorded revenue fro grants and contracts issued fro both the U.S. governent and the Russian Federation. For Q1, revenue fro the U.S. governent decreased copared to Q1 of the prior year by approxiately $400,000, which was offset by an increase in revenue fro the Russian Federation, priarily related to the Mobilan grant awarded in Q4 of Research and developent expenses for Q1 of 2014 decreased by $2.9 illion, or 54% overall copared to Q1 of 2013, and it reported at $2.4 illion. Fro a product perspective, there were three drivers for this net overall decrease. First, biodefense spending is down largely due to the copletion of a non-irradiated NHP trial, and other activities that were underway in Second, developent of the Panacela copounds was narrowed, and focused priarily on those copounds receiving developent support fro the Russian Federation. And finally, costs related to the Curaxin copounds (CBL0102 and CBL0137) were less due priarily to the copletion of the CBL0102 study. Fro a functional perspective, $1.5 illion of the decrease relates to reductions in costs associated with third-party vendors for the reasons I just reviewed; $1 illion of the cost reductions relate to reduced personnel cost associated with our transition of personnel to Buffalo BioLabs; $200,000 relates to other cost savings in the area of facilities and travel; and $200,000 relates to reductions in non-cash copensation costs. For Q1 of 2014, general and adinistrative expenses are down $1.1 illion, or 31% copared to Q1 of 2013 and is reported at $2.4 illion. This reduction is due to reduced personnel cost of $700,000, $400,000 of which was cash-based and $300,000 related to non-cash equity copensation, and $400,000 in reduced business developent and professional fees as copared to Q1 of Of note, the cobined personnel-related cash cost savings aounted to $1.4 illion for both the research and developent and the general adinistrative functions as copared to Q1 of Let us now review our existing liquidity and capital resources. In addition to our cash and receivables, we also access capital through developent contracts and fro our financial partners in our subsidiaries, Incuron and Panacela. On a consolidated basis, we reported $13.7 illion of cash and short-ter investents at March 31, 2014 with $12 illion available for general use, and $1.7 illion restricted for the use of our subsidiaries. We also had $400,000 in receivables. 4

5 At March 31, 2014, we had been awarded $21.7 illion in currently active contracts fro the Russian Federation, $17.2 illion of which had been funded with the reaining $4.5 illion to be funded in the future. Of the $17.2 illion that was funded, we received and recognized as revenue on a contract-to-date basis $10.9 illion, leaving $6.3 illion to be recognized as revenue in the future. Of the $6.3 illion, $1.1 illion has been received and is reflected as deferred revenue on our balance sheet. In addition, Incuron s financial partner, Bioprocess Capital Partners, should contribute their final equity tranche of 180 illion Russian rubles set forth in their original investent agreeent or approxiately $5 illion based on recent exchange rates during the second quarter of this year. Panacela s financial partner, Rusnano, originally coitted to $26 illion in funding, of which $15.5 illion reains available for investent at their option. Now oving on to historical cash burn and cash guidance, please reference the table of non-gaap easures included in our earnings release this orning. For the first quarter, CBLI s stand-alone onthly cash burn, that is without Panacela and Incuron, was $800,000 copared to our guidance of $1.1 illion to $1.2 illion per onth on average. This favorable variance to the average onthly guidance was anticipated in our projections. Please note that we plan on increased onthly spending later in the year as we increase developent activities with third party vendors and start to pay down the Hercules debt in Noveber. Additionally, the oney BioLabs 612 receives fro the Russian Ministry of Industry and Trade coes in tranches, usually at the beginning and end of the calendar year. Therefore, the cobination of grant receipts at BioLabs 612 and relatively reduced spending in the first quarter generates a favorable net cash burn variance in coparison to the average onthly figure provided in our guidance. CBLI s consolidated onthly cash burn was one illion dollars which favorably copares to our guidance of $1.7 illion or $1.8 illion per onth on average for reasons siilar to what I just discussed. Given that these first quarter results are consistent with our projections, we continue to believe CBLI s standalone cash resources will last into the first quarter of The continued financing of our operations reains a top priority. As we have indicated before, we continually evaluate all reasonable fors of financing. We believe that our clinical oncology progress, including follow-on study designs will be of interest to biotech investors and coercialization partners. We intend to counicate updates to our financing plans and clinical data throughout the coing onths. As part of our financing plans, we will consider onetizing drug candidates that we do not prioritize for internal developent, out-licensing prioritized drug candidates to coercialization partners, or other strategic corporate actions, and raising capital through the issuance of securities. We cannot coent on the tiing of any specific action or a cobination of actions, but we want to be clear that we are considering all of these actions and intend to finance operations in the ost advantageous fashion. That concludes y coents. Yakov, please continue. 5

6 Thank you, Neil. Before we conclude, I would like to ake a few coents related to our recently filed proxy and upcoing annual eeting. First, we are noinating three new directors to our board: Dr. Daniel Hoth, Dr. Alexander Polinsky, and Richard McGowan, Esq. All three gentleen have industry expertise and diverse perspectives that we believe will be extreely valuable as we continue to progress our clinical research and develop our products. Dr. Hoth brings ore than 35 years of experience in clinical drug developent, priarily in cancer. He had held leadership positions in both NIH and biotech firs. He currently consults in the area of cancer drug developent priarily for biotech copanies. He has contributed to the developent of several FDA approved drugs including Kyprolis, Nexavar, Adcetris, Vectibix and Vitravene. He was Senior Vice President and Chief Medical Officer at Axys Pharaceuticals and Senior Vice President and Chief Medical Officer at Cell Genesys Inc. He also served as Director of the Division of AIDS at the National Institute of Allergy and Infectious Disease. Prior to this, he served as the Chief of the Investigational Drug Branch at National Cancer Institutes and was responsible for all clinical investigations of IND stage anticancer pharaceuticals. Dr. Polinsky is currently Chief Executive Officer and President of OncoTartis, Inc. and Everon Biosciences, Inc., two biotechnology copanies he co-founded in 2009, with Bioprocess Capital Partners and Dr. Andrei Gudkov, our Chief Scientific Officer and board eber. Bioprocess Capital Partners is our co-shareholder in Incuron LLC, which is currently developing our lead oncology drug candidate, CBL0137. Dr. Polinsky also serves on the Boards of 4Medica, Inc., Gowan Copany and AtheroNova, Inc., a public copany. Dr. Polinsky established and served as Chief Executive Officer of The Pfizer Incubator, starting three biotechnology copanies. Before this, he led the developent of Pfizer External Research Network and Phara Incubator concepts at Pfizer Global Research Technology. Dr. Polinsky established and anaged a $750 illion Pfizer investent in the creation of a odern drug screening collection, as well as the copany s global cheistry outsourcing network. Mr. McGowan practiced law for over 30 years, retiring fro active practice in For 24 years, Mr. McGowan specialized on a national level in the prosecution of ass tort pharaceutical drug, product liability, and class action cases where he served on several Lead Plaintiff Coittees and as Class Counsel. Fro 2000 to 2008, he was also a partner and President of SFB Holdings, a private investent copany that worked with icro-cap copanies. Mr. McGowan is a long-tie shareholder of the copany. As we welcoe these new noinees, two of our existing Board ebers will retire fro service following the expiration of their current ters. Dr. David Hohn has served as one of our directors since June 2011, and was appointed Chairan of the board in April We are very grateful to David for his dedication, counsel, and leadership. He has been an advocate for CBLI for years and is largely responsible for our partnership with Roswell Park and nuerous other beneficial relationships. Siilarly, Dr. Paul DiCorleto has served as one of the copany's directors since 2003 and was a strong supporter of CBLI since our founding in partnership with the Cleveland Clinic. We thank Paul for his years of service and deeply appreciate his advice along the way. 6

7 Next, I want to discuss soething that is close to y heart and I certain to each of you shareholders, the success of CBLI. As I know you are acutely aware, the copany s share price has been down since we announced the end of our negotiations with BARDA in January. We have focused our efforts on a few key initiatives that we believe have the best chance to deliver near-ter and ultiately long-ter value, naely pursuing the Pre-EUA for Entoliod as a radiation countereasure and generating clinical proof of pharacodynaic activity for our oncology drug candidates, CBL0137 and Entoliod. We are pursuing partnerships for every progra, and have taken every easure possible to reduce our burn rate and axiize efficiencies, as Neil described before. As part of this effort, Andrei Gudkov and I have voluntarily reduced our base pay by 20% as have our directors. We all believe in CBLI s potential and are coitted to achieving success. Our directors have been extreely active and have ade theselves available on a frequent basis to support anageent as we have dealt with a significant aount of change over the past year. We recognize the need to direct our financial resources where they will benefit CBLI the ost, into our progras and retention of key staff. We want the sae things our shareholders want, for the arket to recognize CBLI s true value. Our vision is to build a successful and sustainable biopharaceutical copany with a risk-balanced pipeline of first-in-class drug candidates designed to address significant unet edical needs. We re very excited about our pipeline and coitted to deonstrating the utility of our drug candidates in the clinic. We have a lot of hard work cut out for us, but believe we are on track with our key 2014 objectives. As always, we thank you for your support. Our annual eeting will be held on June 11 th in Buffalo, New York and we hope to see you there. We will now open the call to questions. Operator, please begin the Q&A. Operator Thank you. (Operator s instructions) Our first question coes fro the line of Mara Goldstein with Cantor Fitzgerald. Please proceed with your question. <Q>: Thanks. I have two questions actually. And the first is on the July eeting with FDA. Maybe you could go through with us the various scenarios, as it relates to the tieline coing out of that July eeting, if the FDA agrees that you can ove forward, and what are the relevant data and inflection points around that progra that we should then be focused on. And lastly, I was hoping you could aybe just touch on the search for a CMO and if that is suspended at this period in tie, or still active. Yes, certainly, Mara. Thank you for your question. I will start answering your question nuber two and then I ll ask Dr. Miller who is our acting Chief Medical Officer and Senior Medical Advisor to answer nuber one. So, we are extreely pleased and satisfied with Dr. Miller s services provided to us on a part-tie basis to ove the Entoliod and Curaxin progras forward. So, we are currently not in an active search for additional edical help and expertise. Dr. Miller has been working with us since February 2014 and has deonstrated his excellent and outstanding capacity in this regard. 7

8 With this, I would like to ask Dr. Miller to answer the first question. Langdon Miller - Senior Medical Advisor and Consultant Thanks for that vote of confidence, Yakov. Yes, we are proceeding with preparing the package for the FDA to apprise the of the current situation with Entoliod. We reain very encouraged by the data. The efficacy data are very strong, and as you know, we have safety data in a large nuber of healthy subjects. At this point, with the calculation of an appropriate huan dose, we d like to go talk to the about the package. Assuing a positive outcoe fro the eeting, we would begin preparation iediately after that for a copilation of a dossier to subit. We anticipate that it would require several onths of work to coplete that and consolidate all of our findings for a subission. <Q>: Okay. Thank you. Operator Thank you. Our next question coes fro the line of Walter Schenker with MAZ Partners. Please proceed with your question. <Q>: I ight as well use y two questions to hello, everyone and I just want to thank David for the work he s done for the copany. Since we can get an interi analysis, which we will then hear about, on the phase I study on CBL0137, what would it take to get soe sort of interi input fro the phase I study of Entoliod? That s the first question. Langdon, could you please answer Walter s first question? Langdon Miller - Senior Medical Advisor and Consultant Right. So, as it relates to the phase I study of Entoliod, we are continuing with the dose escalation there. I think we are anticipating that once a axiu tolerated dose is identified and dose liiting toxicities are characterized that we could provide further inforation about what we re observing in that study. <Q>: But, we don t know how any ore cohorts that s going to take. Langdon Miller - Senior Medical Advisor and Consultant At this juncture, no. The dose escalation is proceeding with that study, and we haven t seen any unusual drug-related events in the course of that trial. <Q>: Okay and going back to the question on the FDA eeting in July and the response that would it take onths, I not sure exactly how any onths to copile a dossier. We re copiling a dossier to what end? What is the next step assuing whatever the definition of a favorable eeting is? Walter, it s a pre-eua filing with FDA. <Q>: So, the next step that we hopefully will achieve is subitting a pre-eua subission. 8

9 Correct. <Q>: Okay. Thank you. Operator Thank you. (Operator s instructions) We ll pause a oent to allow for any other questions to coe in. Thank you. Ladies and gentleen, this concludes today s call. As a reinder, this call will be available on replay by dialing, and entering ID nuber Thank you for your participation and have a wonderful day. 9