4/28/05 1st q cc notes
1. 1st q review
11% decrease in r&d expenses
based on survey of 75 oncologists, V mm 3rd line share= 40-50%; has grown to 25-30% 2nd line share; had some 1st line mm, mantel cell and follicular revenue; seeing combo use with dex, thal, melphalan, doxyrubicin; physicians seeing less side effects, e.g. reversible peripheral neuropathy; favorable reimbursement environment; 2nd line growth to continue during year
I - - 5% growth in ex-factory sales year over year; 3% temporary decline q over q;
I milestone to be amortized over year; V milestone recognized in 1st q; they are the only milestones expected this year
Guidance- - V inventory levels to decrease by 1 week in 2 q as they realize benefits of sole source distribution model; in 2 q, to receive $ 10 m gain from sale of investment in transform pharmaceuticals; reconfirming 2005 guidance
$ 576 m cash as of 3/31/05, which does not reflect the $ 40 m milestone payments
2. r & d update
ortho announced approval for V 2nd line mm in EU today; US snda was based on apex trial, which showed significant results for entire patient population, as well as in subset of patients in 2nd line; for entire patient population, there was a 75% higher risk of death in dex arm and in the 2nd line subset, a 156% higher risk of death in dex arm;
in Sydney, strong data in front line setting; stem cell harvesting successful, preserving the option for transplantation after V therapy; Vista trial, a front line P 3 trial comparing MP(melphalan predisone) vs. V + MP in non-transplant setting; Everest P 4 re-treatment trial
hard to draw comparisons between V and R (Revlimid); V was single agent; R was in combo with dex; V has shown a higher single agent response rate and longer time to disease progression than R; and V trial had sicker patients in it than R trial ( 6 vs. 3 prior therapies); another difference: V was tested for 24 weeks; R/dex, until disease progression; a combo V+R P 1 trial showed a 73% response rate
V in NHL, 2 P2 trial data with single agent V in mantel cell and follicular showed impressive results; initiation of P 2 single agent V trial in nsclc-bac and adenocarcinoma with bac features, which represents 20% of nsclc patients, who have relapsed after egfr inhibitor treatment; bio-marker component looking for gene mutations to determine why V has been seen to be so effective in bac;
I - - Clear platelet trial I + plavix; early acs trial; event registry
2704 - - showed clinical activity; interim results in P1/2 at asco in may
3. 4 focus areas update
(i) V is market leader in relapsed mm; pursuing compendia listings for front line mm, relapsed mantel cell and follicular; focus on nsclc (frontline and 2nd line) and bac , prostate and ovarian; V stroke trial by year-end
I - - re-branding initiative
(ii) Strategic business relationships- - still expects at least 1 revenue-generating agreement this year; confident
continuing in-licensing discussions
continuing out-licensing a la UCB
(iii) pipeline advances: 2704; 518; 1202; 02; 3897; 8054; discovery - - 2nd generation proteasome inhibitor
(iv) quality initiatives benchmarked against industry leaders
4. key events over 6-9 months
asco data - - V in relapsed and front line mm; relapsed mantel cell; nsclc, sclc; 2704 interim data
malignant lymphoma data in june at lugano - - interim P 2 data V in combo with rituxan for relapsed follicular and marginal zone NHL
I data - - TTT and AHA
Initiate trials this year:
V trials - - 2 additional frontline mm, series of P 2 nsclc , P1b stroke
1202 - - ms, possibly atherosclerosis, scleroderma
518 - - P1/2 aml in combo with standard treatments
aurora kinase - - P 1 in 2005
Next steps re:
2704- - prostate
3897- - RA
02 - - UC
publication strategy
at least one business relationship which generates revenue
5. q & a
(i) how will the free, compassionate use program of R affect V revenue? - - no major effect; already considered in our 2005 forecast
(ii) why I revenue and reimbursement down this q? - - 5% increase year over year; 3% decline q 4 vs. q 1; we’re making inroads in ACS; true-up with sgp varies q to q; slight revenue decrease shouldn’t be considered a trend
(iii) loss of Bob Terifay? - - reviewing candidates now
(iv) what is V’s share in front line mm? - - 2-4%
(v) are there impediments to front line mm growth? - - compendia listing will positively affect reimbursement
(vi) since you only reiterated revenue guidance, does that imply slower V sales growth in succeeding quarters? Does that mean that V will grow more slowly in 2nd line than in 3rd line? ( ??) - - guidance is provided once a year; positive 1 week inventory drawdown as V moves to sole source distributor
(vii) V inventory levels? - - constant in q 1 at 2 week level; expect to go to 1 week in 2 q
(viii) How many patients were in V mantel cell trial? - - 150 patients; interim data at asco will contain a robust # of patient data
(ix) Re: the r&d expense reduction, was it primarily a headcount reduction or a reduction in projects? - - no change in # of projects; saving $ on outside costs as we build expertise internally; no change in headcount levels; there will be a slight decrease in r&d expenses for 2005
(x) What is your mantel cell snda strategy? - - evaluate data to see if there’s an early registration opportunity
(xi) What does your physician study tell you about 2nd line mm market vis-à-vis R? - - V will be leader in relapsed and refractory, and frontline; combos will be the future; since V has strong single agent survival data , it will be the partner of choice
(xii) What will be the potential V combo studies? - - all of the standard agents + R
(xiii) What is the ratio of r&d spend for discovery vs. development? - - 2 to 1 in favor of development
(xiv) I inventory levels and drawdowns? - - don’t control I inventory; drawdown 1 week q4 to q 1
(xv) What is the mantel cell and follicular compendia listing timeframe? - - supported filing; don’t know when they will decide; front line V mm compendia support will be in 2005-6 timeframe
(xvi) V sales share in mantel cell and follicular? - - don’t know
(xvii) How do antibody therapies like avastin affect your trial designs and oncology strategy? - - we have a balanced portfolio of targeted antibodies and oral small molecule inhibitors; re: targeted antibodies, we have 5-6 discovery molecules based on genomics; we have a targeted antibody that we think will be a new development candidate next year for a different range of cancers over and above prostate
(xviii) How many patients will be in interim analysis of 2704 at asco? - - ~ 21 patients; by end of this year, we expect to have a dose for a pivotal trial; we’re still varying dose and schedules
(xix) What is the rationale for V in stroke? - - there is a inflammatory cell infiltration; one mechanism is nf kappa b inhibition; data comes from permanent occlusion rat study where V significantly reduced size of infarct vs. placebo; data at international meeting in june
(xx) V retreatment in refractory setting? What is size of market? How long is treatment duration? - - based on preclinical studies and anecdotal reports of retreatment responses; no idea of size of market; treatment duration would be similar to 3rd line treatment
(xxi) European sales royalty?- - JNJ doesn’t comment; it exceeded mlnm’s plan #
6. impressions
the analyst community has taken a renewed interest; good to see that mlnm is fighting back on R misperceptions; wonder whether V can be extended to other inflammatory-related indications over and above stroke; good to see continued genomics-based discovery efforts; mgmt. seems much more confident of their strategy than on recent calls
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