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Edited Transcript of PFNX earnings conference call or presentation 7-Nov-18 9:30pm GMT

Q3 2018 Pfenex Inc Earnings Call

San Diego Nov 20, 2018 (Thomson StreetEvents) -- Edited Transcript of Pfenex Inc earnings conference call or presentation Wednesday, November 7, 2018 at 9:30:00pm GMT

TEXT version of Transcript


Corporate Participants


* Evert B. Schimmelpennink

Pfenex Inc. - CEO, President, Secretary & Director

* Susan A. Knudson

Pfenex Inc. - CFO


Conference Call Participants


* Robin Thai Garner Kalley

LifeSci Capital, LLC, Research Division - Senior Analyst




Operator [1]


Greetings, ladies and gentlemen, and welcome to the Pfenex Third Quarter 2018 Results and Business Update Call. (Operator Instructions) As a reminder, this conference is being recorded.

We'd like to remind you that some of the statements made during the call today are forward-looking statements, including statements with respect to our development and commercialization plans for PF708, Px563L, RPA563, PF743 and PF745, and our other product candidates; the expected regulatory pathways for our product candidates and our ability to satisfy the filing requirements for specific regulatory pathways; the expected timing and phases of our future clinical trials; the expected timing of our regulatory submissions and any potential future commercial launch; potential partnering opportunities for our product candidates; potential success of our product candidates and technology ; the potential to receive future payments under our agreements with Jazz, Alvogen, BARDA, Merck, Serum Institute of India, and our other collaboration partners; potential milestones for our product candidates; expectations for potential milestones in studies for Px563L and RPA563; anticipated regulatory developments with respect to our product candidates; potential growth opportunities and strategy; our ability to execute on our plans and drive shareholder value; and our future expectations with respect to the sufficiency of our cash and cash equivalents.

Actual results could differ materially from those contemplated by our forward-looking statements, and reported results should not be considered as an indication of future performance. Please look at our filings with the SEC for a discussion of the factors that could cause our results to differ materially. Additional information will also be set forth in our quarterly report on Form 10-Q for the quarter ended September 30, 2018, to be filed with the SEC.

The forward-looking statements on this call are based on information available to us as of today's date, November 7, 2018, and we disclaim any obligation to update any forward-looking statements except as required by law.

Earlier today, Pfenex released financial results for the third quarter of 2018. Pfenex earnings release and corporate presentation are currently available in the Investor Relations section of our website.

It is now my pleasure to introduce to you, your host, Pfenex' CEO, Mr. Eef Schimmelpennink. Sir, you may now begin.


Evert B. Schimmelpennink, Pfenex Inc. - CEO, President, Secretary & Director [2]


Thank you, Chad, and good afternoon, everyone. Welcome to Pfenex' Third Quarter 2018 Results and Business Update Conference Call. I'm Eef Schimmelpennink, President and CEO of Pfenex; and I am joined by Susan Knudson, our Chief Financial Officer.

During today's call, I will discuss our progress in the quarter and will also be providing an overview on our strategy for future growth. Susan will discuss our third quarter 2018 financial results, after which I will open the call for Q&A.

We continue to be very active in 2018 and have made considerable progress on all 4 of our distinct potential value drivers. Our Forteo therapeutic equivalent PF708; our partnership with Jazz, under which we developed PF743 and PF745; our anthrax vaccine programs that are funded by BARDA and our CRM197 business, for which we have royalty-bearing partnerships with, amongst others, Merck and Serum Institute India.

We continue to advance our clinical pipeline, are close to our first NDA submission, are increasing our focus on the approval and commercialization of our existing pipeline, and are exploring new pipeline and technology opportunities.

As a result, we continue to make progress towards several upcoming milestones that put us on a path towards transforming Pfenex from a development stage to a commercial stage biotech company. As part of that transition, we are pleased to have expanded the executive team with the addition of Shawn Scranton, as our Senior Vice President and Chief Operating Officer. We believe that Shawn's well-rounded experience in portfolio strategy, pharmaceutical research, clinical development and commercial operations makes him a strong fit for helping us guide our PF708 and other key programs ahead and generate strong shareholder value. In the 5 weeks that Shawn has been with us, he's already proven to be a great addition to the team.

Turning to an update on our key programs. PF708 continues to be a major focus of the Pfenex team as we are in the final stages of putting together the 505(b)(2) new drug application for this asset.

In July, we had a constructive pre-NDA meeting with the FDA. By way of background, the pre-NDA meeting is meant to discuss your upcoming submission, data package and filing strategy in detail, and when you leave your pre-NDA meeting, you will have a good understanding of the FDA's expectation for content of the NDA submission and a firm estimation of your products applications' readiness for filing.

We were pleased with the outcome of the meeting. The FDA did not request any additional clinical, nonclinical or analytical comparability studies, and confirmed their support of our overall filing strategy.

As a reminder, on the clinical side, the NDA will include the positive Phase III clinical data announced earlier this year, which showed comparable overall profiles between PF708 and Forteo, after 24 weeks of daily injection in osteoporosis patients as well as results from the PF708-101 study, which compares to the pharmacokinetics of PF708 and Forteo in healthy subjects, and toxicological and other nonclinical data.

Considering the FDA feedback from our pre-NDA meeting, we believe we have completed all the clinical and nonclinical studies necessary to submit an NDA for our PF708, another 505(b)(2) regulatory pathway in the U.S, refencing Forteo as the Reference Listed Drug.

On the manufacturing end, the FDA agreed with our plan to complete process validation after the NDA submission and prior to marketing. However, they requested that we include the NDA -- that we include in the NDA, release data from one batch manufactured in the commercial facility. We have now completed both the manufacturing and analyzing of this batch, which will be included in our NDA.

As we are completing our NDA, we are working closely with our U.S. commercial partner, Alvogen. In just a few months since we have been working with them, Alvogen has proven to be a valuable partner, offering us access to their team's expertise and resources. As a result, we remain on track to submit the NDA to the FDA in the fourth quarter of 2018.

Turning to the commercialization strategy for PF708. As you will know, Lilly's Forteo, or teriparatide is a recombinant peptide. Since our first discussions with the FDA, the agency has indicated that they want to ensure that all products that seek approval with Forteo as Reference Listed Drug, does not give rise to increased immunogenicity risk. They, therefore have always been clear with us that they would require a Phase III clinical study in patients. We believe that we are the only company that in the near term will seek approval of a recombinant-derived teriparatide, and we believe that we are the only company that has completed clinical studies to support its submission.

With Alvogen, our U.S. commercial partner, we are planning for entry in this $1.7 billion worldwide market in the U.S. as early as the fourth quarter of 2019, subject to FDA acceptance, approval and other factors.

Moving onto our second potential revenue driver. Our collaboration with Jazz Pharmaceuticals, through which we are developing, both PF743, a recombinant crisantaspase and PF745, a recombinant crisantaspase with half-life extension technology. We have continued to make good progress on both of our products in development and believe our success on these programs to date is one more demonstration of how uniquely enabling our platform technology is.

Under our agreement with Jazz, we are eligible to receive an aggregate total of $224.5 million in development and sales milestone fees, of which $188.5 million is still to be received. Of this $188.5 million, $30 million are development milestones, primarily for PF745, $34 million on regulatory milestones and $125 million are sales milestones. We are also eligible to receive tiered royalties on worldwide sales of any products resulting from the collaboration. We remain inspired by the potential patient benefits that these programs can bring and look forward to updating you as we progress.

Turning to our anthrax vaccine programs, Px563L and RPA563. Which are another illustration of the versatility of Pfenex' capabilities and have the potential to be our third revenue stream. Both Px563L and RPA563 are novel anthrax vaccine candidates under development by Pfenex to address the U.S. government's need for additional supply of stable and dose-bearing anthrax vaccine. These programs are funded by the U.S. government under a $145 million advanced development contract with BARDA.

In the second half of 2018, BARDA approved additional funding for analytical work and in nonclinical animal study. We have a meeting with the FDA in December to discuss these results. The outcome of this meeting, and the subsequent internal program review with BARDA can lead to a potential Phase II study start in 2019, subject to continued funding by BARDA.

Moving to our carrier protein, CRM197, our fourth revenue driver. We have development and commercial partnerships in place with, both Merck and the Serum Institute of India, and as well as others. The product continues to be used or is expected to be used by them and other partners in multiple clinical-stage products for diseases including pneumococcal and meningitis infections.

In June 2018, Merck became the first Phase III study of V114, its investigational 15 valent conjugate vaccine for the prevention of pneumococcal disease, which will evaluate the safety, tolerability and immunogenicity of V114. Two additional Phase III studies were started in July of 2018. The decision to move V114 into Phase III studies was based on the findings of Phase I and Phase II studies. Merck has not disclosed projected launch timing, however, analysts' reports are suggesting it can be as early as 2021.

Pfenex also has a partnership with Serum Institute of India, or SII. SII is the world's largest vaccine manufacturer by number of doses produced, producing more than 1.3 billion doses in 2017, which are being used in over 170 countries. As part of this partnership, SII built a dedicated facility to produce our CRM197 and uses it in 2 conjugate vaccines that are in advanced Phase III development. As with the Merck partnership, we are eligible to receive milestone and royalty payments.

As mentioned, we have CRM197 partnerships in various stages and continue to sell non-GMP and cGMP-grade CRM197 to vaccine development-focused pharma partners.

Lastly, we continue to believe that the most prudent path for the development of our P582 Lucentis and PF529 Neulasta biosimilar programs is in the -- is in collaboration with a strategic development partner.

We continue to seek partners with whom we would advance those programs and business development efforts in that vein continue.

As I discussed earlier, we believe Pfenex is at a pivotal point in transitioning from a development to a commercial stage biotech company. I'm excited about our future as a potential commercial company, our robust pipeline and continued focus to leverage our Pfenex Expression Technology to create value for our shareholders via both new pipeline candidates as well as partner collaborations.

I will now turn the call over to Susan Knudson, our Chief Financial Officer.


Susan A. Knudson, Pfenex Inc. - CFO [3]


Thank you, Eef. I will now review our third quarter 2018 results. Our revenue decreased by $1.5 million or 29% to $3.6 million for the 3 months ended September 30, 2018, compared to $5 million for the same period in 2017. The increase in revenue was due to a milestone related to our Jazz agreement achieved in the third quarter of 2017. There were no similar milestones achieved in this third quarter of 2018.

Additionally, there was less activity related to our product candidates under our contract with BARDA in the third quarter of 2018 compared to the prior year.

Our cost of revenue decreased by approximately $0.3 million or 16% for the 3 months ended September 30, 2018, compared to the same period in 2017. This result is primarily from a decrease in activity related to our contract with BARDA.

Research and development expenses increased by approximately $0.9 million or 12% to $9 million for the 3 months ended September 30, 2018, compared to $8.1 million in the same period in 2017. This increase was primarily due to increased activity for our product candidate, PF708, to satisfy the clinical, manufacturing and regulatory filing requirements for our NDA, which we expect to submit to the FDA in the fourth quarter of 2018.

Selling, general and administrative expenses decreased by $0.2 million or 4% to $3.8 million in the 3 months ended September 30, 2018, compared to $4 million in the same period in 2017.

Finally, our cash and cash equivalents as of September 30, 2018 were $67.8 million. We believe that our existing cash and cash equivalents and cash inflow from operations will be sufficient to meet our anticipated cash needs for at least the next 12 months, including all necessary activities leading up to and including potential commercial launch of PF708 in the United States expected in the fourth quarter of 2019, subject to FDA acceptance and approval of the new drug application and other factors.

Now I'll turn the call back to Eef for closing remarks.


Evert B. Schimmelpennink, Pfenex Inc. - CEO, President, Secretary & Director [4]


Thank you, Susan. Pfenex is at a pivotal point in our development and I'm excited about our future as we continue to focus on leveraging our Pfenex Expression Technology to create value for our shareholders. I see opportunity for future growth for Pfenex with focus on our key assets and continuing our business and corporate development assets, seeking new collaborations. We look forward to continuing to execute on our plan to drive shareholder value.

This will conclude our prepared remarks. I would now like to ask the operator to open the call for questions.


Questions and Answers


Operator [1]


(Operator Instructions) The first question will be from Robin Garner with LifeSci Capital.


Robin Thai Garner Kalley, LifeSci Capital, LLC, Research Division - Senior Analyst [2]


Quick question for you about the Jazz programs, and if you can provide any additional color on that development? And when you anticipate entering into the clinic?


Evert B. Schimmelpennink, Pfenex Inc. - CEO, President, Secretary & Director [3]


Thank you, Robin. Great question. For those that have listened to Jazz's conference call yesterday, it's clear from their remarks that the situation on the supply constraint continues to exist. It was also mentioned by Bruce Cozadd at that moment, that they're not in a position yet to disclose where they are with the development of the product and when that will go into the clinic. So I will limit my comments in a similar way by saying that we are confident that the development is moving forward very well, that it's up to Jazz to start to indicate when the product will enter into the clinical, and how that regulatory program, or what that regulatory program looks like, and when the product could first hit the market. It's clear from everything that's in the public domain, that's -- that it is a very serious situation for patients and that everybody is looking for a quick and adequate solution to the situation.


Operator [4]


(Operator Instructions) Ladies and gentlemen, this concludes our question-and-answer session. So I'd like to turn the conference back over to Eef Schimmelpennink for any closing remarks.


Evert B. Schimmelpennink, Pfenex Inc. - CEO, President, Secretary & Director [5]


Thank you, Chad, and thank you, everybody, for dialing in. Looking forward to keeping you updated on the progress that we make in the fourth quarter of 2018.


Operator [6]


Thank you, sir. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.