Vical's CEO Discusses Q1 2012 Results - Earnings Call Transcript

Vical Incorporated (VICL)

Q1 2012 Earnings Call

May 2, 2012, 12:00 a.m. ET

Executives

Alan Engbring – Executive Director IR

Vijay Samant – President and Chief Executive Officer

Jill Broadfoot - CFO

Analysts

Eric Schmidt – Cowen & Co.

Reni Benjamin – Rodman & Renshaw

Lee Olesky – Credit Suisse

Steven Willey – Stifel Nicolaus

Nathan Kelly – Noble Financial

Presentation

Operator

Operator

Thank you and welcome ladies and gentlemen to the Vical Incorporated financial results conference call. (Operator Instructions)

I would now like to turn the conference over to Mr. Alan Engbring, Executive Director of Investor Relations. Please go ahead, sir.

Alan Engbring

Hello everyone. Welcome to our first quarter 2012 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 note concerning projections and forecasts. This call includes forward-looking statements including financial expectations and projections of progress in our research and clinical development program, that is subject to risks and uncertainties that could cause actual results to differ materially from those projected, including the risks as reported 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 first quarter 2012 financial results. These forward-looking statements represent the company’s estimates 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 Alan, and thank to all our participants for joining us in today’s call. I will provide a base on each of our key development programs and share some insight that I hope will be helpful. To begin with today, we’re going to deal with our latest financial results by our CFO Jill Broadfoot. Jill?

Jill Broadfoot

Thank you, Vijay. I’m pleased to announce we had a very strong first quarter financially in 2012. We raised approximately $50 million in a follow-on offering at the beginning of the quarter, and we earned another $10 million with a milestone payment from Astellas at the end of the quarter, for finalizing the general design of the TransVax Phase 3 trial. In addition, we recognized $1 million in contract service revenue related to our supply and services agreement with Astellas. We expect to continue receiving payments from Astellas under our supply and services agreement as we progress with the final preparations and conduct of the TransVax clinical trial.

Total revenues for the first quarter of 2012 were $11.5 million, compared with $600,000 in the first quarter of 2011. Total operating expenses for the first quarter of 2012 were $11.6 million, compared with $9.4 million for the first quarter of 2011, primarily due to a sub-license payment obligation related to the $10 million milestone payment from Astellas.

Our net income in the first quarter of 2012 was $200,000, which rounds to $.00 per share, compared with a net loss of $8.7 million, or $.12 per share, in the first quarter of 2011. We ended the first quarter of 2012 with cash and equivalents of $96 million.

During the first quarter of 2012, we were pleased to be able to sell two of our three auction-rate securities, and book a gain of approximately $300,000. The cash for the Astellas milestone payment was received in April, after quarter end, so our current cash position is even stronger. We believe we have sufficient capital to support our ongoing operations, our planned development activities and our preparation for our Allovectin commercialization. With that, I will now turn the call back to Vijay.

Vijay Samant

Thank you, Jill. I will begin with an update on our Phase 3 Allovectin program for patients with metastatic melanoma. Allovectin is our lead program. We are excited by our progress to-date in approaching the trial completion. We believe we have designed an excellent trial to highlight the patient benefits of immunotherapy compared with chemotherapy. We believe we have selected the right set of patients to demonstrate the benefits of immunotherapy. We believe our trial execution and data collection are well-managed, and definitely designed a data adjudication process for the primary endpoint, and believe the trial is adequately powered to demonstrate statistical significance on both the primary and secondary endpoints, and finally we expect to release the top-line data from both the endpoints by the end of the year.

As a reminder, we enrolled 390 subjects starting in Jan of 2007, ending in Feb 2010. Our trial allowed up to two years of treatment, so the last patients enrolled could have received treatment until Feb of 2012, as long as they had stable disease or partial responses. Those last patients enrolled completed their final treatments in Feb, and they completed their last post-treatment safety follow-up visits by the end of March, so the treatment stage of the trial is now complete. We are currently finishing the final data audits to verify that all the patient records are complete and correct. We expect to complete the data collection and the audit process for the primary efficacy endpoint response rate by the end of this month. That clears the path for completion of our independent endpoint assessment and adjudication process for our response rate endpoint. This process is two distinct steps, radiology and oncology, and they are conducted sequentially. They are pretty comprehensive steps.

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