Q4 2019 Earnings Call
Now my pleasure to introduce Phoenix president and CEO. Mr. Vanek a you may now begin.
Thank you Kate and good afternoon everyone welcome to Phoenix this fourth quarter and year-end 2019 Financial results and business update conference call during today's call. I will focus on discussing the status of our lead programs and Partnerships and how Phoenix has transformed into a company with its first FDA-approved products, the F 708, which is nearing commercialization. I will also provide an overview of our long-term strategy, which aims to leverage a proprietary protein development and production platform in order to expand our Pipeline and will then provide a quick summary of our fourth quarter 2019 Financial results before opening up the call for questions.
Looking back over the past twelve months. We've announced many positive Milestones. It makes us proud to realize that just a couple of years ago. Each one zone would have stood as a young successful the company.
June 2019 Elite programs Advanced significantly, we earn approximately $31 in milestones and achieved our first FDA approval with PS 708 month. We believe these achievements speak to the focused execution of the Phoenix team and to the ability of a protein platform to successfully produce a broad range of therapeutic candidates from peptides to life complex proteins as a result. We believe our platform offers multiple opportunities to generate near and long-term shareholder value as we enter our next phase of growth.
Discussing in Greater detail let me first turn to the status of the programs that have the potential to go commercial in the near future.
The main focus for a team of the past year has been around the advancement of our lead program. We have 708 potential therapeutic equivalent candidate to for sale in October 2019. We achieved the historic Milestone and celebrated the fda's approval of a new drug application for PF 708.
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At the reference list the drug like for sale, the FDA approved. 708 product is indicated for the treatment of osteoporosis in certain patients at high risk for fracture.
We've been continuing our efforts to obtain an a rating therapeutic equivalence designation for PS 708 relative to its reference truck for tail gate determination of that. May permit, the FDA-approved ds708 product to be automatically substituted for for sale, depending on applicable laws and policies within each of the fifty states in the US our collaboration partner Elgin to whom we have transferred the NBA intends to launch the FDA-approved ps78 product in the US FDA decision on the therapeutic equivalence evaluation of the prep.
An eight rating for this product will be primarily based on the FDA evaluating three distinct requirements that center around 1 showing pharmaceutical equivalents money to buy equivalents at 3 human factor comparability.
Both pharmaceutical Empire equivalents were part of our NBA and we believe that it's approval suggests that the FBI supports are equivalents to Forte. Oh for these first two elements.
To further enables you have to assess the third element of human factors comparability. We execute at 5. Even Factor studies including one study in 2019 that compared to pfm device head-to-head with will tell you.
We were very pleased with the results of that study, which we shared with you and submitted to the FDA the week after MBA approval in October last year.
We believe this Mission completes the information package required by the FDA to evaluate the therapeutic equivalence of our PS 708 products.
As we all the decision on a rating we have with up on her elbow Jim been diligently working on Commercial manufacturing and sales activities as part of the launch preparedness plans for be a 708 in the US and we were all looking forward to receiving the decision on a therapeutic equivalence rating.
As a reminder of the economics of a partnership with alvogen if we receive an a rating we are eligible to receive up to an additional twenty million in support and Regulatory off Stone Pavements. We are also eligible to receive a 50% gross profit split on sales If the product is rated as therapeutically equivalent to 4 tail and up to 40% of rated differently. We've been very pleased with our decision to work with allergen and seeing the allergen team come together and apply their resources as they prepare for this launch.
We've also engaged to commercialize and manufacture PF 708 in the EU certain countries in the Middle East and North Africa and the rest of world territories as we've discussed previously Salvage and has already established several agreements with their Partners across several countries and regions and has begun to engage the regulatory agencies in these other countries.
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Authorization application for PS 708 has been filed an accepted with the EMA and we currently believe that POF 708 could be approved in the EU as early as the second half of 2020 subject to granting of a marginal authorization by the European Commission on the EU centralized procedure and other factors.
And outside the US and Europe would our support continues to advance Regulatory and Commercial progress in the fourth quarter allergen submitted a marketing authorization application to the Kingdom of Saudi Arabia VA and entered into exclusive commercialization agreements for PF 708 with Farm by a Korea and South Korea and Gem farmer in Canada.
Under the terms of these agreements Elgin will be responsible for the local activities through van bio and Jeff farmer.
It was also in discussions for licensing deals and certain remaining territories and we will keep you updated on progress there.
With all the activities and opportunities for PS 708. We are excited about the potential milestones and sales royalties that could have a positive impact on our business.
Turning now to our collaboration with jazz Pharmaceuticals through which we are developing two products PF 743 or JCP 458 as it is named in a gas portfolio a recumbent Iceberg for which Justice indicated. It is aiming to file it as early as the end of this year and we have 7:45 or Jay-Z p341 off a full of one long-acting recombinant of any genetics for which we learned a $15 million development Milestone payments in the fourth quarter.
Starting with P F. 7 4 3 in December 2019. The first page was enrolled in a pivotal Phase 2 or 3 clinical study. The study is being conducted in collaboration with children's oncology group and on his recent quarterly conference call just confirmed that it anticipates filing the vla as early as the fourth quarter of this year. Just also educated in the fourth quarter that the FDA granted Fast Track designation for JCP four or five eight in a treatment of acute lymphoblastic leukemia.
Do you have a nice Market Market has struggled with Supply Supply challenges due to ongoing Supply and Manufacturing issues at the sole manufacturer PF 743 has the potential soul for that enabling gas to potentially reach more patients in Need for this critical drug.
In addition we continue to advance development activities for PS 7:45, which is similar to 7:43. Our main responsibility for 7:45 is to hook up a product and process that can be tag transferred to a GMC facility and taken to the clinic the $15 Milestone. We learned in December brings the total development milestones Thursday 7:45 to 27 million dollars.
Under our agreement with Jess that covers both products. We are eligible to receive an aggregate total of up to two hundred twenty four point five million dollars in development and sales Milestones fees of this. We are still eligible to receive a hundred sixty two point five million this includes up to three and a half million for development milestones thirty-five million and Regulatory milestones and $125 million in sales milestones. We may also be eligible to receive tips mid-single digit royalties based on worldwide say same choice of any products resulting from the collaboration.
We are very pleased with the progress achieved and look forward to following gases continued advancement proud to be part of these programs that have the potential to bring significant benefits package critically ill patients.
Moving to a carrier protein Kremlin 97 which is the third potential Revenue driver in our current pipeline.
We have developments and Commercial Partnerships with both Merck and serum Institute of India or S. III amongst other partners.
Regarding Merc they are using promo 97 produced by a production strength based on the Phoenix expression technology in their v114 pneumococcal vaccine an additional programs and development. We are eligible to receive tips royalty payments based on net sales for all products that they develop that use the Kremlin 97 produced by the Phoenix expression technology package.
Next Viva on for is a 15 valid conjugate vaccine for the prevention of pneumococcal disease and is in fifteen phase three studies with data readouts from that comprehensive developer program expect to become available this year. We won Florida expected to be positioned as a key product in a new couple vaccine Market.
And the fourth quarter, we also saw the pre-qualification of a vaccine from a partner serum instead of India S III has developed a 10 valent pneumococcal conjugate vaccine a new muscle, which utilizes Kremlin 97 from a phoenix-based Productions threatened and initiated the process of World Health Organization and pre-qualification from numerous seal in the first quarter of 2019 as previously mentioned as I receive whle bullet prequalification for the product in Q4 and are preparing to make the products available for procurement month, but United Nations agencies and Agave vaccine Alliance.
They're also completing a phase three clinical trials that will support a regulatory submission in India. The second product being developed by Si, which also utilizes Crema 97 and it's checked to the Phoenix expression technology license. Is it thermostable pentavalent meningococcal, you're going to vaccine that is entered into a phase 3 study. This product is also targeting markets in developing countries.
Phoenix is eligible to receive it.
Royalty payment based upon net sales for both products supposed to into regulatory approval.
Turn into a development evaluation and license agreement with Alex. We are providing access to defeat expression technology platform to Advanced Aesthetics proprietary Sparks proteins that activate dead silence and reprogram and the generous after complex T cell-based therapies on the disagreement. We are eligible to receive development funding in addition to developing Regulatory and Commercial Milestones ranging from 2.6 million to 18 million for each product incorporating as Fox protein expressed using a production string bass the Phoenix expression technology as well as royalties on worldwide sales of any such product.
We have completed the development of both Xbox One or PS4 and 53's box to be at 7:54 and our service has opted into the commercial licenses off both production strings. We look forward to keeping you updated on our Aesthetics SLX collaboration and other new developments that we have started.
As I discussed at the opening of the call, I believe in the potential that are proprietary protein production platform has in developing biopharmaceuticals. This feeds directly into our strategy took us around three pillars the first one being focused and actually cute the second one expense selectively in a third evolve into by a farmer.
Looking at the first pillow for the last two years. We've been fully focused on executing against our core portfolio and I believe the status of our current pipeline is testimony to the success and gave you that we've been able to create and the ability to use this to fuel further growth.
Girl that amongst us we believe will come from a second pillar as our core programs have been nearing the completion of their development Cycles. We've been able to use the capacity that became available to suggestively expand our Pipeline with a combination of wholly-owned products and new relative bearing Partnerships around products for which our platform is highly enabling.
I've seen you previously that we are in early development with a new wholly-owned program PSA 10. The recombinant peptides aiming at solving a significant loss therapy challenge. We are looking forward to sharing more details with you as we progress the program through its preclinical phase.
Programs with our Partnerships within our partnership with our salads are examples of developments where we believe our platform is uniquely enabling and that are structured to allow us to capture both near and long-term value from it. We are currently evaluating other partnering opportunities that match our strategy, but we license our technology and receive Milestone payments and royalty Revenue.
after development pillar focuses on novel by pharmaceutical products
We have almost two decades of experience and expressing natural and engineered proteins and I believe that our historical success rates are over 80% in expressing the desired active protective protein off a demonstrated success in achieving regulatory approval for our lead product and our platform team and infrastructure are suitable to enable development of Novel peptide and protein based off that critics.
Understanding that currently approved drugs Target only a small subset of proteins linked to a disease suggests that there may be a large potential drug development opportunity still out there with so many of these targets. The industry is increasingly focused on smaller size proteins and engineered scaffolds to achieve biological activity under
Interestingly it is it is especially these type of modalities that Phoenix has shown to be capable of developing. I believe this presents an opportunity for Phoenix to potentially become a player in this new age of biologics and can overtime evolved Phoenix into a Innovative biotechnology company.
Following a extensive research efforts. We have identified a set of high-value validated biological targets that we intend to pursue we believed of interests are in disease areas of unmet medical needs with a moderately-sized patient population allowing Phoenix to potentially develop the products through phase 3 clinical studies.
And the fourth quarter of last year, we engaged a third-party collaborator to deploy their internal libraries of Novel binding modalities to screen against the Phoenix targets of interests in order to isolate the issue that could potentially become Phoenix wholly-owned novel products. We have chosen these modalities both because of the promise to become novel therapeutic proteins as well as for the fit with the Phoenix book form, which will allow us to take the development and CMC in apps. We are currently in the process of Target screening and effort to isolate the first set of lead candidates.
Those candidates currently grouped on the P F9 1X will be transferred to Phoenix and could become holy on for the candidates developed by us.
It is important to mention that a big part of our success over the last several years stems from being very diligent in how we deploy our capital and I intend to continue to run our company in that way. I think it opens up a good point to Pivot to the financials for a fourth-quarter and full-year 2019.
total revenue increased by 21.1 million or 628% to 24.4 million in the three month period ended December 31st 2019 compared to three point three million in the same period in 2018
Increase in revenue from the quarter was primarily due to a $15 million development Milestone achieved during the quarter related to the Jets collaboration agreement five million dollars earned from LVL for FDA approval of our NBA 4pf 708 of which two point five million was The Upfront payment that had been deferred.
An increase of Kremlin $97 for the full year 2019. Our Avenue was 15.3 million dollars an increase of 209% or 35.5 million compared to 2018 revenue of 14.9 million primarily driven by achievement of jazz development milestones, totaling 20, totally totalling twenty-seven million television Milestone and sub-licensing revenue of 11 million in revenue from Alex and Kremlin 97,000 sales partially offset by degree decrease in revenue from Barnum and recognize revenue from Jess that was previously deferred as The Upfront payment took us was fully amortized in mid 2019.
Cost of Revenue aesthetic at one point 1 million for both the three months ending December 31st, 2019 and 2018 decreases rejecting from reduced activity from the bottom program where upset by increases from Kramer ninety-seven products sales for the full year 2019 cost of Revenue was four point nine million a decrease of 3% or Point 1 million compared to five million in 2018 primarily driven by a decline in productivity offset by increases resulting from a work on Athletics as well as greater greater crime or 97 Black Sails.
Research and development expenses increased by approximately six million or 12% to 5.9 million month period ended December 31st, 2019 compared to five point three million insane. In 2018. This increase was primarily due to new research projects partially offset by wage increase in costs related to PF 708 for the full year 2019. R&D expenses were twenty five point five million a decrease of 25% or 8.3 million compared to 2018 expenses of 39.9 million. This is this decrease was mostly due to the reduction of Labor and subcontractors cost as the majority of them perform to support PS 708 and the a filing was completed in late 2018.
Sdna expenses increased by approximately 1.9 million or 50% to 5.9 million in the three month period ending December 31st, 2015 compared to three point nine million in the same. In 2018. The increases were primarily due to higher expenses related to Legal Consulting and expansion of business Thursday. It's for the full-year sg&a expenses increased by 3.2 million or 21% to 19.1 million compared to five fifteen point eight million in 2018 cash and cash equivalents as of December 31st, 2019 with 55.6 million.
in addition
In two separate transactions in the first months of 2020 Phoenix utilized its ATM to sell approximately 1.88 million shares of common stock for approximately net box seats of nineteen point four million dollars.
In closing we are pleased with the flow of positive news throughout 2019. And as we start out 20 20, we believe there are many possible opportunities to drive near Long Term growth for a business. This is truly an exciting time for Phoenix and our shareholders. Thanks again to the Phoenix team for that continued great work and to all of our investors for your continued support. This concludes. Our prepared remarks. I would not like to ask the operator to open the call for questions.
We will now begin the question-and-answer session to ask a question. You may press * then 1 on your touchtone phone. If you're using a speaker phone, please pick up your handset before pressing the keys to withdraw your question, please press star then to our first question is from Jason Butler from Life. Go ahead. Hi. Thanks for taking the question. First one on seven zero eight twenty extent. You can can you update as on page where you think your interactions with FDA for achieving the therapeutic rating equivalents rating? Absolutely. Thanks. Thanks Jason quick question and one that obviously life isn't all of our minds. So we've been we continue to interact with the FDA in a in a very collaborative way and they continue to insure us dead.
They're actively reviewing our our data. We've also been informed that up to the highest level within the FDA people are aware of this month. So given that historically benchmarks that we've seen about a three or six to nine month period of evaluation. We're about 5,000. Um, I continue to expect that. Uh, we should we should be hearing back from the FDA. Um, not too long from that.