ROBTV interview May 3rdROBTV interview transcript, May 3rd
Announcer: Biomira shares leaped 17% in today's trading on the TSE.
The Edmonton based developer of cancer treatments announced a deal
with Germany's Merck. Together the companies plan to develop and
market Biomira's key products. Dr. Alex McPherson is Biomira's
President and CEO, he's in New York today and he joins us now to
discuss the announcement. Good afternoon.
Dr. McPherson: Good afternoon Janice.
Announcer: Well, you said the value of this fifteen year deal nears
$150 million. Can you break down where that money is going to come from?
Dr. McPherson: Well the breakdown is going to come from upfront
payments that will be part equity and part cash, in addition to that
there will be milestone payments, licensing fees and royalties which
in the aggregate will amount to in excess of $150 million US.
Announcer: Of the equity component, what percentage stake will Merck
Germany now have in Biomira?
Dr. McPherson: They'll take an equity stake which will be something
less than 5% of our outstanding shares.
Announcer: Any plans to increase that?
Dr. McPherson: They have the opportunity, of course, as anybody does,
through market acquisition of shares and they are looking at the
possibility of acquiring up to something in excess of 19 but less than
20% of shares. They'll be doing that however through market
acquisition not through treasury.
Announcer: Dr. McPherson, you looked at a number of companies before
deciding to partner with Merck Germany, what was it about this company
that seems to work well for Biomira?
Dr. McPherson: Two things Janice. The first was that we got the
opportunity to participate in a co-development and co-promotion
program for our two lead candidates in North America, the USA and
Canada. So that we are able to revenue share which is an enormous
improvement, in terms of return on investment for our shareholders, as
compared to a straight royalty share. And secondly we found that the
company had an enormously compatible culture with us. They are EMD,
which is the wholly owned subsidiary of Merck of Germany, is the
company that we'll be working most closely with in relation to going
forward with the oncology program and they're very entrepreneurial.
Their senior management has had substantial industrial experience,
mainly with Astra-Zeneca and we believe that that experience along
with our background in research and development and the attitudes and
so forth of the companies are exceptional.
Announcer: Now, this co-promotion arrangement, as opposed to strictly
a royalty agreement, would you say one is riskier than the other?
Dr. McPherson: Well, of course, yes. Royalty agreements, you basically
sit back and put the check in the bank. On the other hand a
co-promotion deal and a co-marketing deal allows the company to
forward integrate and become a more mature company with a view to
eventually bringing other products onstream for which we can provide
marketing, sales and distribution capability. It's important, as I say
often to people in our company that it's important that you know what
you don't know and there are certain things about marketing, sales and
distribution that we don't know and we'd like to learn from somebody
who does, such as Merck KGaA.
Announcer: Now, your R & D expenditures were $11 million in Q1, that's
up from $8.4 million in the year earlier, would you say that there was
a sense of urgency in trying to get this partnership done?
Dr. McPherson: Well, if negotiating over about an eighteen month
period is a sense of urgency then I guess that's a sense of urgency
but this has been a long time coming and we've been very patient
because we wanted the right deal for our investors and we think we've
acquired it.
Announcer: Now, your Theratope vaccine is a treatment for breast
cancer, when do you expect it to reach the commercial market?
Dr. McPherson: Well, this is a product which has got several analyses,
the last analysis which is to look at survival as the endpoint, will
start in the third quarter of 2003 and if successful, in terms of its
statistical differences between the treatment and the control group,
will be launched towards the end of 2004. It is possible if we are
successful in showing important differences in the interim analysis to
potentially have the product launched in the latter part of 2003 if
the second analysis is positive. Indeed, it might even be possible to
have the product launched in the latter part of 2002 if the time to
progression endpoint which will be looked at in the third quarter of
this year was strikingly significant.
Announcer: On the financial side, you had a net loss of operations of
$11.9 million in Q1, can you give us a rough timeline of profitability
for your company?
Dr. McPherson: Well that entirely depends upon the success of
launching the two products that we are currently talking about,
Theratope and BLP25, but certainly the expectation is that
profitability would occur after launch of the product. As I've just
indicated Theratope may be as late as the fourth quarter of 2004 or as
early, and I must admit in an unusual circumstance, as early as the
fourth quarter of 2002.
Announcer: Very quickly, sir, we have about 20 seconds left, your
shares got a really nice boost today, what have investors built into
this stock price?
Dr. McPherson: Well I think that they've built into the stock price
the fact that we have got basically the kind of alliance that they
want, a co-promotion, co-marketing deal with substantial cash payments
related to the alliance.
Announcer: Dr. McPherson, thank you so much for taking the time to
speak with us today.
Dr. McPherson: You're welcome. Thank you, Janice.
Announcer: Alex McPherson, President and CEO of Biomira, Inc. joined
us from New York.