Earnings Labs

Viridian Therapeutics, Inc. (VRDN)

Q4 2015 Earnings Call· Wed, Mar 16, 2016

$13.64

+1.04%

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Transcript

Operator

Operator

Welcome to the Signal Genetics Fourth Quarter And Full Year 2015 Earnings Conference Call. [Operator Instructions]. I would now like to turn the conference over to your host Mr. David Burke, VP of The Ruth Group. Thank you, Mr. Burke you may begin.

David Burke

Analyst

Thank you. And good afternoon and welcome to the Signal Genetics fourth quarter and full year 2015 financial results call. With me today are Samuel Riccitelli, President and Chief Executive Officer and Tamara Seymour, Chief Financial Officer of Signal Genetics. Earlier today Signal issued a press release announcing financial results for the three months and full year ended December 31, 2015. We encourage everyone to read today's press release which is available on Signals website at www.signalgenetics.com. In addition this conference call is being webcast to the company's website and will be archived there for 30 days. Please note that certain of the information discussed on the call today is covered under the Safe Harbor Provisions of the Private Securities Litigation. We caution listeners during this call Signal management will be making forward looking statements. Actual result could differ materially from those stated or implied but these forward-looking statements due to risks and uncertainties associated with the company's business. These forward-looking statements are qualified by the cautionary statements contained in signals press releases and SEC filings including its annual report on Form 10-K, this conference call contains time sensitive information that is accurate only as of the date of this live broadcast March 16, 2016. Signal undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this conference call. With that I would now like to turn the call over to Samuel Riccitelli. Sam?

Samuel Riccitelli

Analyst

Thank you, David and thank you all for joining us on today's annual corporate update call. It is very name to provide these types of updates at least annually and it is a pleasure to welcome you to our first investor conference call. I hope you all have had a chance to read our press release this afternoon. As we have provided financial and developmental updates much of which we will discuss in more detail on today's call. Overall we made tremendous progress in 2015 and we would like to start today by providing an overview of our focused growth strategy and the accomplishments we made during the year to support these objectives. We believe the strategic initiatives we have set forth provide a path that could create long term success for the company. And over the past year we’ve demonstrated our ability to accomplish many of the goals necessary to advance these aims. As a result of efforts in 2015 we believe we are well positioned to further our strategic objectives in 2016. At the commercial stage diagnostic company's marketing a genetic test that we have branded MyPRS, we have a unique ability to improve the care and treatment of multiple myeloma patients. MyPRS has a significant base of potential customers and partners to whom we can provide our proprietary services. With our test approved in all 50 states in the U.S. we have a large untapped market opportunity in front of us. Importantly we believe that our potential customers at the hospitals, research facilities and pharmaceutical companies that we target are as intent as we are on enhancing the personalized care of multiple myeloma patients. As they strive to make better informed treatment decisions for their patients. A comprehensive growth strategy is centered primarily on four main ideas.…

Tamara Seymour

Analyst

Thanks, Sam and thank you all for joining us today. For the fourth quarter of 2015 we generated net revenue of $659,000 compared to $655,000 for the fourth quarter of '14. The increase was primarily attributable to the increased volume in the number of tests sold to hospitals outside of UAMS which increased 131% over the same period in 2014 as well as revenues from services and tests performed for our pharmaceutical customers. These gains help to offset the decrease in the number of test billed under UAMS research program due to the reduction in research funds available at UAMS. And for the year ended December 31, 2015 net revenue was $2.5 million compared to $4.3 million in the prior year and this decrease in net revenue was primarily attributable to the decrease in the number of test billed under UAMS research program. And as we’ve previously mentioned in our quarterly earnings releases we expect continued declining revenue from the UAMS research programs because of the reduction in research funds available there. Cost of revenue for the fourth quarter of 2015 was $456,000 compared to $781,000 during the fourth quarter of 2014. The decrease was driven by a reduction in both the assigned laboratory personnel and laboratory supply cost which is a reflection of the lower test volumes for UAMS. This also led to a reduction in cost of revenue for the full year 2015 to $2.5 million from $3.4 million in the prior year. Research and development expenses for the fourth quarter of 2015 were $456,000 compared to $80,000 during the same period in 2014 and this increase was primarily attributable to increase labor, materials and supplies for our internal and sponsored research programs. And then for the full year 2015 R&D expenses were $1 million compared to $347,000…

Operator

Operator

[Operator Instructions]. Our first question comes from [indiscernible]. Please state your question.

Unidentified Analyst

Analyst

First question for you, can you tell us what the mix now is for revenues between UAMS and outside--?

Tamara Seymour

Analyst

Yes I can, so for the year the full year 2015 UAMS sourced revenue was 54% and for the fourth quarter it was 24%. So you can see a decreasing overtime because of the research programs.

Unidentified Analyst

Analyst

And I know it's not a big number but what sort of the percentage in Q4 of revenue to pharma partners?

Tamara Seymour

Analyst

It's a $116,000 and you'll be able to see that of course when K is filed. So you’re right it's not a big number yet but it's definitely the initial revenue that we’re seeing.

Unidentified Analyst

Analyst

Okay, and then maybe switching gears to the clinical study. Which of these studies you think will be completed first and we possibly see results in 2015 for?

Samuel Riccitelli

Analyst

So we will likely see results from both of the studies in 2016 and typically the way these kinds of programs work is the initial findings are published in the abstract form likely in one of the large venues that these kinds of cancers are discussed that for example ASCO or at most likely later in the year the ASH Meeting. So I would anticipate something from both of these studies by that time period.

Unidentified Analyst

Analyst

And just qualitatively can you comment on how the studies are progressing?

Samuel Riccitelli

Analyst

Both are going very well. Of course the MD Anderson study is prospective in nature so we won't have a full picture of the results you know for a least a couple of years down the road but we're hoping to get some interim insights as I said that could be published in abstract form. The Moffitt studies are looking at the retrospective specimens for a couple of indications one obviously for advancing AMG but some of the clinicians at Moffitt has some other insights that MyPRS maybe able to bring advantage for. These are really speculative in nature and exploratory but they could be very exciting and so and again those studies are all progressing well, the teams are engaged at the clinical sites. Patients are being enrolled in the prospective study and good stuff is happening.

Unidentified Analyst

Analyst

Okay. And then just a final question, if we think about operating expenses in 2014 versus 2015 how should we be looking at the different line items there, R&D, SG&A?

Tamara Seymour

Analyst

Well what we have said is that our cash that was on hand at December 31 which was $10.8 million would last us between 12 and 15 months. So you can see overall what the cash burn is and that is a bit of an increase of what we saw in 2015. And I think a big portion of that would be due to these academic collaboration that we’re just getting started in 2015 and then we would anticipate possibly doing more in 2016 as well.

Operator

Operator

Our next question comes from [indiscernible]. Please state your question.

Unidentified Analyst

Analyst

First question is regarding to the top line revenue. I think Tamara just mentioned that UAMS revenue represent 24% of 4Q '15, 44% of overall 2015 revenue. 54%?

Tamara Seymour

Analyst

54% of full year and 24%. Q4.

Unidentified Analyst

Analyst

Okay. So what is the percentage number for 4Q and for full year 2014?

Tamara Seymour

Analyst

So for Q4 it was 97% and for full year it was 84%.

Unidentified Analyst

Analyst

Okay.

Operator

Operator

[Operator Instructions]. Our next question comes from George Zavoico with Jones Trading. Please state your question.

George Zavoico

Analyst · Jones Trading. Please state your question.

Your guidance for 2015 that would be nice, 12 to 15 months, does that include or if it does how much revenue does that include that you will be bringing in or is it just OpEx?

Samuel Riccitelli

Analyst · Jones Trading. Please state your question.

Well we haven't given that kind of guidance George at this stage, being a young company and given the level of revenues that we are operating with those aren't the kinds of data that we share outside the company. Rest assured we have very detailed internal targets that the management team is held accountable for. But at this stage especially given some of the uncertainties around the clinical trial services revenue that we expect for the year from our pharmaceutical company partners, it's hard for them to predict let alone for us to predict patient involvement curve. So, because of that we just we just haven't provided those insights.

George Zavoico

Analyst · Jones Trading. Please state your question.

So the guidance doesn’t include any revenue, then it's just OpEx? I mean I'm not looking for details, I just wanted to know if you’re including any revenue in there or not. If you can't answer that--

Tamara Seymour

Analyst · Jones Trading. Please state your question.

Absolutely there is revenue, you’ve got all the revenue that we're projecting and all of the expenses included. We're just not giving guidance. You know one of the things that we’re also looking at the pharmaceutical revenue tends to be lumpy because it's based on clinical trial enrollment and that’s hard for us to predict so that's one of the reasons that we’re not giving that guidance.

George Zavoico

Analyst · Jones Trading. Please state your question.

I understand that. I just wanted to know whether you were including any revenue in there at all.

Tamara Seymour

Analyst · Jones Trading. Please state your question.

Yes.

Samuel Riccitelli

Analyst · Jones Trading. Please state your question.

The other variable to keep in mind George is that the collection time for test that we have already sold and service is still rather lengthy and so we are in some ways able to steer a little bit by the way when we look at the cash projections.

George Zavoico

Analyst · Jones Trading. Please state your question.

Next question, UAMS the lead investigator as I recall he moved from Arkansas, is that correct?

Samuel Riccitelli

Analyst · Jones Trading. Please state your question.

That’s correct, you're speaking of Bart Barlogie, the guy that is still the brains behind much of this.

George Zavoico

Analyst · Jones Trading. Please state your question.

Can you can say if he's going to be moved to be -- going to be ramping up the research again that might draw more revenue or might result in more revenue to you once he gets going and get some grants or is that just speculation?

Samuel Riccitelli

Analyst · Jones Trading. Please state your question.

That would be pure speculation. You know Bart's a unique and amazing physician in our opinion and I'd be shocked if he did not continue to do research in the area of multiple myeloma I think that would be a real disappointment to many patients both current and future patients, it would be our hope that he would continue to do that but how that that relates to Signal Genetics is completely unknown. Not predictable at all.

Operator

Operator

Our next question is a follow-up from [indiscernible]. Please state your question.

Unidentified Analyst

Analyst

I was wondering if you can comment on where you’re at with your development efforts for new tests based on next gen sequencing equipment?

Samuel Riccitelli

Analyst

Yes. We have spoken about this a bit. So we made the decision last year to launch an NGS program and we have the equipment in-house and the staff now and the IT capabilities to do that. In the near term our focus is purely on the research market, we’re not willing to venture into the clinical [indiscernible] for next gen sequencing services given the size of our company and the absolute uncertainty around reimbursement if any for clinical testing service utilizing NGS. So for now we're building capabilities and have the ability to partner up with our potential pharmaceutical company collaborators and sell those services to that market space but we're not going to participate at this stage in the clinical market. And the research testing capability is ready and so we are actively marketing that to potential collaborators.

Operator

Operator

Our next question is a follow-up from [indiscernible]. Please state your question.

Unidentified Analyst

Analyst

So this question is regarding the NCCN guideline. So the current NCCN guideline for multiple myeloma mentions the gene expression profiling and I quote the SEC panel unanimously agreed that although GEP [ph] is not currently routinely used in clinical practice during diagnosis work up, GEP [ph] is useful to [Technical Difficulty] and individualized treatment. So my question is what it take for MyPRS test to be included in NCCN guidelines?

Samuel Riccitelli

Analyst

Well I can say this, if it was upto me it should already have been included in the NCCN guidelines but unfortunately the NCCN committee hasn’t yet consulted me personally. But having said that it is our view and our belief as a company that the evidence to include the GEP-70 signature which is with UAMS named the gene expression signature that we licensed when they initially disclosed it to the world back in 2007. The subsequent amount of validation that has been performed on that assay on this test which we brand MyPRS has been overwhelming as I’ve stated many times in many venues, 17 peer reviewed publication, verifying utility of this gene expression test and performed in four different countries around the world. Again all this has been published and it's been in the literature for a long time. So you know the process that the NCCN has and that we have to obey by is that we will need to make petition to the NCCN and clarify any misunderstandings or inconsistences that may exist about how to use gene expression testing for this particular patient population especially as it relates to identifying those patients with the most aggressive form of the disease. and we believe the utility for the test as well demonstrated for newly diagnosed patients, it's well demonstrated for the relapse condition for these patients and there is even a building amount of evidence and some that has already been already published before it's utility in predicting onset of myeloma from the smoldering of myeloma condition, maybe not MGUS but at least the smoldering condition. And so we will be petitioning NCCN as it has been disclosed we have hired a Chief Medical Officer here now who is well versed in how these processes work, has made these petitions for other assays, for other companies in his past work. And he'll be doing the same things for Signal Genetics now. And so you know it's a little bit, I suspect like making sausage perhaps, that’s how it works but we'll make our petition, we will show the evidence that has already been established and we will hear your critiques and hopefully gain a favorable vote and become included.

Operator

Operator

There are no further questions at this time. Ladies and gentlemen this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation.