Vical's CEO Discusses Q2 2012 Results - Earnings Call Transcript

Vical Incorporated (VICL)

Q2 2012 Earnings Call

August 1, 2012 12:00 PM ET


Alan Engbring – Executive Director, IR

Vijay Samant – President and CEO

Jill Broadfoot – SVP, CFO and Secretary


Eric Schmidt – Cowen & Company

Lee Kalowski – Credit Suisse

Howard Liang – Leerink Swann

Stephen Willey – Stifel Nicolaus



Please stand by, we’re about to begin. Good day and welcome, ladies and gentlemen, to the Vical Incorporated Financial Results Conference Call. At this time, I’d like to inform you that this conference is being recorded and that all participants are in a listen-only mode. At the request of the company, we’ll open the conference up for questions and answers from invited participants after the presentation.

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

Alan Engbring

Hello, everyone. Welcome to our second 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 notice concerning projections and forecasts.

This call includes forward-looking statements including financial expectations and projections of progress in our research and clinical development programs that are subject to risks and uncertainties that could cause actual results to differ materially from those projected, including the risks set forth 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 second quarter 2012 financial results. These forward-looking statements represent the company’s judgment 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 welcome to all our participants in the call today. I’ll review the status of our key development program and our expectations for the remainder of this year into 2013. But before I begin, I want to forward the baton on to our CFO, Jill Broadfoot, to give you our latest financial highlights. Jill?

Jill Broadfoot

Thank you, Vijay. We enjoyed continued financial strength through the second quarter of 2012. Revenues increased to $1.6 million for the second quarter of 2012 compared with $800,000 for the second quarter of 2011. The increase in revenues was driven primarily by reimbursements from Astellas for our costs and expenses in support of the TransVax program. Total operating expenses for the second quarter of 2012 were $9.5 million, consistent with the $9.3 million for the second quarter of 2011. Our net loss for the second quarter of 2012 was $7.9 million or $0.09 per share compared with a net loss of $8.4 million or $0.12 per share for the second quarter of 2011. We ended the first half of 2012 with cash and equivalents of $97 million including the $10 million milestone payment we received from Astellas in the second quarter, for which we recognized the revenue in the first quarter. We remain on track with our full-year 2012 cash burn forecast of $17 million to $22 million and believe we have sufficient capital for our planned activities through at least the end of 2013.

I will now turn the call back to Vijay.

Vijay Samant

Thank you, Jill. I’ll begin today with an update on our lead program, Allovectin, which is approaching completion of a pivotal Phase 3 trial of metastatic melanoma. I’ll remind you briefly of the program details. We enrolled 390 subjects with 2:1 randomization. The trial started in January of 2007, ended in February 2010. Our trial followed up to two years of treatment. So, the last patient had to complete treatment by February of 2012. We completed the last follow-up visits in March of 2012 and completed the final data audits by the end of May.

We’re now conducting the independent endpoint assessment and adjudication process for the primary efficacy endpoint response rate. The process is two steps, radiology and oncology, and they’re conducted in that sequence. We reviewed this process in detail in our last call, so I won’t go through that process again today. But I’ll remind you that both the committee, which is doing the adjudication, and the company, remained blinded throughout this process as to whether each subject was at the treatment arm or the control arm.

This entire adjudication process is expected to take several months. It’s a rigorous process and the results will remain blinded until we each trigger – until we reach trigger for the secondary endpoint of survival. For the survival endpoint, we are tracking the overall number of death events with the trial. We are blinded to the number of events for study arm. And just as a reminder, we are tracking the survival in a separate database.

Our Phase 3 trial was 90% powered to detect the survival difference of 18 versus 11 months. Now, if these survival assumptions were accurate, we should have reached the target number of death events by now. Since we have not, we know that the control arm, the treatment arm or both may be living longer. To value these alternatives, we looked at some additional information. As a proxy for Phase 3 control arm, we looked at 61% of the patients in our high dose Allovectin Phase 2 trial who received one cycle or less of treatment which should have provided minimal survival benefit.

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