Orexigen Therapeutics, Inc. (OREX)
Q1 2010 Earnings Call Transcript
May 10, 2010 5:00 pm ET
Heather Turner – VP & General Counsel
Graham Cooper – CFO
Mike Narachi – President and CEO
Preston Klassen – SVP, Global Contrave Team
Phil Nadeau – Cowen & Company
Adam Cutler – Canaccord Adams
Bill Tanner – Lazard Capital Markets
Karen Jay [ph] – JP Morgan
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Good day, ladies and gentlemen, and welcome to the first quarter 2010 Orexigen Therapeutics Inc. earnings conference call. My name is Alicia, and I will be your coordinator for today. At this time, all participants are in listen-only mode. We will be conducting a question-and-answer session towards the end of this conference. (Operator instructions)
I would now like to turn the presentation over to Heather Turner, General Counsel. Please proceed.
Hello and thank you for joining us to discuss the company's first quarter 2010 financial results. I'm joined on this call by Mike Narachi, President and Chief Executive Officer; Graham Cooper, Chief Financial Officer; and Preston Klassen, Senior Vice President and Global Contrave Team Leader.
This afternoon we issued a press release that provides details of the company's financial results for the first quarter of 2010. Please note that all the information discussed on the call today is covered under the safe harbor provisions of the Private Securities Litigation Reform Act. I caution listeners that during this call the company’s management will be making forward-looking statements. Actual results could differ materially from those stated or implied by our forward-looking statements due to risks and uncertainties associated with the company’s business.
These forward-looking statements are qualified in their entirety by the cautionary statements contained in today’s press release and the company’s SEC filings including the annual report on Form 10-K that the company filed on March 11, 2010. The contents of this conference call contain time sensitive information that is accurate only as of the date of this live broadcast, May 10, 2010. Orexigen undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this conference call.
I will now hand the call over to Graham to discuss the Q1 financial results.
Thanks, Heather. During today's call, we will cover the key financial results for the first quarter ended March 31, 2010, followed by a discussion of the quarterly highlights from Mike. After that Preston will provide context for a few upcoming regulatory and publication events. Finally Mike will wrap things up prior to opening the call to your questions.
During the course of the discussion we will be referring to today’s press release and the attached statement of operations and balance sheet prepared in accordance with GAAP. I will be rounding numbers for the purpose of this call, please refer to these documents for precise figures. For the three months ended March 31, 2010 Orexigen reported a net loss of $14.1 million, or $0.30 per share attributable to common shareholders as compared to a net loss of $19.3 million or $0.56 per-share attributable to common for the first quarter of 2009.
Total operating expenses for the first quarter of 2010 were $14 million compared to $19.1 million for the first quarter of 2009. The decrease in operating expenses primarily reflects a reduction in R&D expenses of $7.8 million, principally related to the completion of contracts facing clinical trials, and completion of Contrave Phase 3 clinical trial, and completion of the Phase 2 clinical trial for Empatic, offset partly by an increase in G&A costs of $2.7 million due principally to increases in salary and personnel related costs, stock-based compensation and marketing expenses.
We ended the quarter with $17.8 million in cash and equivalents and an additional $57.5 million in marketable securities for total of $75.3 million. We continue to expect that our cash burn for 2010 will be approximately $60 million, consistent with prior guidance and that our cash is sufficient to last at least until mid-2011.
And with that I will turn the call over to Mike.
Thanks, Graham. We have been executing on three key priorities this year, submitting our NDA for Contrave, with an eye on review and approval; building an commercial organization with the insight and experience to prepare us for a successful launch of Contrave; and engaging in robust conversations with potential partners; targeting a deal with a highly competent motivated partner that can help us unlock the substantial potential of Contrave for obesity.
By submitting the NDA for Contrave in the first quarter, we are in the position for an FDA action as early as the first quarter of 2011, and meanwhile our solid financial footing and robust commercial propositions have put us in a good position to pursue high-value commercial partnership for Contrave.
As we have stated in the past, we believe that a strong partner in the US will help us maximize the commercial opportunity for Contrave. We are pursuing a preapproval deal which is in the best interest of both Orexigen and any prospective partner, so that we can prepare as soon as possible for a high-quality launch upon approval.
While we are pursuing a global partner, our first priority is the US opportunity for Contrave and as such we are positioning the ex-US opportunity an emphatic or second product as potential options in the deal. In terms of the type of deal we are considering, we do not see big upfront payment as the primary objective of a preapproval deal. We recognize that a key driver of success for any transaction will be having a partner that can help execute a comprehensive launch and life-cycle management strategy, where we can participate substantially in the economics. That points to a back end loaded deal, which is a message that has been received favorably among the companies with whom we are speaking.