Astex Pharmaceuticals Management Discusses Q2 2012 Results - Earnings Call Transcript

Astex Pharmaceuticals (ASTX)

Q2 2012 Earnings Call

July 30, 2012 4:30 pm ET

Executives

Timothy L. Enns - Senior Vice President of Investor Relations, Business Development & Corporate Communications

James S. J. Manuso - Chairman and Chief Executive Officer

Michael Molkentin - Chief Financial Officer, Principal Accounting Officer and Corporate Secretary

Mohammad Azab - Chief Medical Officer

Analysts

Boris Peaker - Oppenheimer & Co. Inc., Research Division

Robin Davison - Edison Investment Research Limited

George B. Zavoico - McNicoll, Lewis & Vlak LLC, Research Division

Presentation

Operator

Good day, ladies and gentlemen, and welcome to the Astex Pharmaceuticals Quarter 2 2012 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the call over to your host for today, Mr. Timothy Enns, Senior Vice President, Corporate Communications and Marketing. Sir, you may begin.

Timothy L. Enns

Thank you, operator. Good day, and thank you for joining us for Astex Pharmaceuticals 2012 Second Quarter Financial Results Conference Call. With me today are Dr. James Manuso, Chairman and Chief Executive Officer; Dr. Harren Jhoti, President and member of the Board of Directors; Dr. Mohammad Azab, Chief Medical Officer; Dr. Martin Buckland, Chief Business Officer; and Michael Molkentin, Chief Financial Officer. In a few moments, Jim Manuso and Michael Molkentin will deliver remarks on the 2012 second quarter financial results and our business outlook for the year. After prepared comments, we will open the line for questions. Earlier today, we issued a press release with our financial results. A copy of the press release is available in the Investor Relations section of our website at www.astx.com.

In addition, this call is being webcast and may also be accessed via our website. A webcast replay will be available for 30 days.

During this call, we will make projections and forward-looking statements that are based on management's current expectations. Actual results may differ materially from these forecasts and projections due to various factors. There are significant risks and uncertainties in biotechnology research and development. There can be no guarantee that our projects, products or product candidates will progress preclinically or clinically as we expect or that we will ultimately obtain approvals for the indications that we seek. Moreover, even if our products or product candidates are approved in the future, we cannot guarantee they will be commercially successful. The company's results may also be affected by a variety of factors such as competitive developments, launches of new products, the timing of anticipated regulatory approvals or other regulatory action, the actions of our strategic partners and collaborators with respect to the products we license or codevelop and patent disputes and litigations.

For additional information and discussion concerning the risk factors that affect the company's business, please refer to the company's filings with the Securities and Exchange Commission. The company undertakes no duty to update forward-looking statements.

Our upcoming investor conference presentations will include the Stifel Nicolaus Healthcare Conference Seminar -- excuse me, in September on the 5th through the 6th in Boston; Newsmakers in Biotechnology Industry on September 7 in New York; and the Rodman & Renshaw Annual Global Investment Conference, September 9 to 11 in New York.

I'll now turn the call over to Dr. James Manuso, who will provide highlights of our accomplishments during the 2012 second quarter. Jim?

James S. J. Manuso

Thank you, Tim. Good afternoon, and thank you for joining us for Astex Pharmaceuticals 2012 Second Quarter Conference Call.

The past quarter was particularly successful for Astex. Our financial position continued to remain strong, and included a 25% increase in Dacogen royalty revenue over the prior year. We ended the quarter with $121 million in cash and marketable securities, and we posted net income of $1.2 million. Additionally, for fiscal year 2012, we are increasing royalty guidance to up to $70 million.

Operationally, we are in Phase II with 4 clinical products. By year end, we expect to initiate additional Phase II clinical proof-of-concept trials in solid tumors for our prioritized products, SGI-110 and AT13387.

We're especially pleased that the European Union's Committee for Medical Products for Human Use, or CHMP, recently recommended that Dacogen be approved for the treatment of elderly acute myeloid leukemia or AML patients aged 65 and above who are not candidates for induction chemotherapy. The CHMP is the committee responsible for the scientific assessment of products seeking marketing authorization throughout the European Union. The CHMP's positive opinion is now referred to the European Commission for its approval. As Dacogen is approved in the EU, it would be the first drug ever approved for the treatment of elderly AML and, as an orphan drug, Dacogen would have 10 years of market exclusivity for the elderly AML indication in the EU.

Further, if Dacogen is approved in the EU, Astex would earn a $5 million milestone payment upon first commercial sale of the drug. As the market develops further in the EU, we could earn another one-time $5 million milestone payment when annual sales for Dacogen in the G5 countries exceed $100 million.

In addition, royalty revenues payable to Astex will continue to be in the range of 20% to 30% of net sales, consistent with the original license terms.

It is expected that Janssen, the licensee for Dacogen in territories outside of the United States, Canada and Mexico, will receive the final regulatory decision from the European Commission by the end of the third quarter of 2012.

As a reminder, the CHMP opinion is based on data from the DACO-016 trial, the largest elderly AML trial ever conducted. This randomized open-label multicenter Phase III clinical trial compared Dacogen versus patient's choice, with physicians' advice of either supportive care or low-dose cytarabine in patients 65 years and older with newly diagnosed de novo or secondary acute myeloid leukemia and poor or intermediate-risk cytogenetics.

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