Conference call transcript part IConference call transcript part I
Matt Emmens: Good morning, my name is Matt Emmens and I'm President
and CEO of EMD Pharmaceuticals Incorporated which is a subsidiary of
Merck KGaA of Darmstadt, Germany. We're here today with Alex McPherson
who is President and CEO of Biomira which is a Canadian
biopharmaceutical company. We have the privilege today of announcing a
collaboration together that we're happy about, that we think can help
cancer patients throughout the world. First of all, let me talk about
the collaboration. The collaboration involves two important cancer
vaccines, the first called Theratope, the second called BLP25. The
first product is indicated for breast cancer, if the studies are
successful; the second product will be for lung cancer. Two important
cancers in the world. We're here today to talk about a collaboration
that involves development worldwide, marketing, co-marketing in the
United States and marketing for Merck and development for Merck
throughout the world. These important vaccines, we hope, can help
patients throughout the world in the next few years. Let me talk first
about what EMD Pharmaceuticals is and make sure that we don't confuse
Merck, the German pharmaceutical company with Merck & Company, the USA
company. They have common history but Merck KGaA is located in
Darmstadt, Germany and EMD Incorporated is located in Durham, North
Carolina is the US ethical pharmaceutical division of Merck KGaA. With
that, I would like to introduce Dr. Alex McPherson, President of Biomira.
Dr. McPherson: Thanks very much, Matt. And thank you ladies and
gentlemen for joining us, it's a great pleasure for me to be here on
this important occasion for Biomira and, I believe, for EMD and Merck
KGaA, as well. Biomira is a biotechnology company, which focuses on
therapeutic cancer vaccines and on the development of innovative
therapeutic approaches for the treatment of cancer. We intend to build
a profitable company for our investors and we intend to do this, in
part, through forward integration with such companies as Merck KGaA
and EMD. This will be done predominately through the development of
vaccines and related immunotherapeutic products primarily for the
treatment of cancer. Biomira is extremely pleased to have entered into
this global alliance with respect to co-promotion and collaboration
with Merck KGaA with respect to our two most advanced products,
Theratope for metastatic breast cancer, as Matt has said, and BLP25,
for non-small cell lung cancer, the smoker's cancer. Theratope vaccine
is a synthetic mimic, a carbohydrate or sugar of a particular molecule
sialyl Tn and it's a naturally occurring molecule on cells,
particularly the cells of the endothelium or the lining surface of a
variety of different organs such as the gut and the breast and lungs.
It's also found uniquely on cancer cells and it's because of the fact
that it's a unique molecule on cancer cells that when combined with a
carrier and injected with an adjuvant, it induces a very potent
antibody response which we are looking at for stabilization of breast
cancer and more importantly, on the basis of our phase II data,
improved survival in patients with spread of their breast cancer after
they've been treated with chemotherapy. We've just completed a 1030
patient phase III pivotal clinical trial for Theratope, 120 different
sites in 11 countries. This is probably the largest immunotherapeutic
trial ever conducted in the world. The trial is designed to test
whether or not the vaccine can improve the time to progression of
disease in women who have been treated with chemotherapy for their
metastatic breast cancer and most importantly whether it can improve
survival in those particular populations. The US Food and Drug
Administration has, in fact, designated Theratope vaccine as a Fast
Track program.
BLP25 vaccine is our follow on product candidate is in phase IIb
clinical trials in non-small cell lung cancer, the smoker's cancer.
And this particular product is a peptide as opposed to a carbohydrate
and in this case we're working with 25 amino acids, which are then
encapsulated in a liposome or a fat droplet about the size of a red
cell. It is believed that it enhances recognition of cancer cells by
the immune response, which is predominately what is called a T cell
response as opposed to the B cell response that Theratope induces.
Earlier phase I and phase II trials, looking at BLP25, have shown
exceptional safety, some early indication of efficacy. The current
study is designed to show whether or not safety is maintained in the
phase IIb trial as well as to see whether or not survival is improved.
And this is critical because the median survival, for this horrible
disease once it is at a stage IIIb or stage IV level, is only on the
order of nine months. So, we certainly are working very hard in two of
the major cancers, in the world, with respect to trying to improve
survival in these patients, using a product which is relatively safe
in comparison to virtually all other therapeutics that are currently
available.
Now the collaboration details relate to the fact that we will jointly
market the products with Merck KGaA through EMD in the USA. We will
retain marketing rights in Canada. Merck KGaA will have full
development rights, marketing and development rights in the rest of
the world with the exception of Israel and the Palestinian Autonomy
Area, for which agreements were already in place. Biomira will receive
an upfront equity payment as well as a cash payment and Biomira will
also receive significant cash and equity payments with respect to our
BLA or Biological License Applications, submissions for first and
second cancer indications and for sales milestones. The total value of
the agreement to Biomira exceeds US $150 million in license, milestone
payments and equity investments plus sales and royalties. Biomira and
Merck KGaA will share development costs in North America and Merck
KGaA will be responsible for clinical studies and marketing outside of
North America. Biomira is exceptionally pleased to be working through
Merck KGaA in association with EMD with Matt here as the President and
CEO of that particular wholly owned subsidiary. We will be
manufacturing the vaccines for worldwide use and will be entitled to
an equal share of product sales in the US and Canada and royalties on
sales for all other territories.
Matt Emmens: Thank you, Alex. And EMD and Merck KGaA are especially
excited about the vaccines as it adds to our product development
pipeline focused on oncology. Our primary focus in the US has been
oncology; in fact we run the oncology business worldwide from the USA
at EMD. Merck KGaA, as you know, is a large company. We have over
33,500 employees, we are in 52 countries throughout the world and we
have over 200 operating companies. So, our size, our global ability to
develop the drug and our ability to, in a short term, market the US
given approval excites the many talented employees both at EMD and in
Germany and in France where our two headquarters cities are. We'd be
happy to take questions at this time and answer them the best we can.
Announcer: Gentlemen, our first question is from the Internet and I
think it goes to both of you.
Question: What does each company bring to this collaboration?
Matt Emmens: I would say Merck KGaA brings 330 years of pharmaceutical
experience. It's the oldest pharmaceutical company on the face of the
Earth. EMD is probably the newest pharmaceutical company in the United
States but it brings the ability to globally develop and market these
vaccines should they be successful in clinical trials. The focus on
oncology that we have, with a preference towards biotherapeutics,
allows us to be particularly interested in anything that stimulates
the immune system to attack cancer. We think it's a certainly more
targeted way, we're pretty sure it's a safer way and for patients that
have these dreaded diseases, a much more comfortable way to treat a
devastating illness. So, our experience, our global network, we think
will increase the probability of success with these vaccines and
should they be approved by the agencies we will get them in the hands
of physicians to treat patients with cancer.
Dr. McPherson: I actually think, Matt, is reticent to comment on some
of the really superior attributes of Merck KGaA and particularly,
frankly, EMD. EMD, in particular, in the United States with whom we'll
be working very heavily in relation to the oncology market, is an
aggressive company, which is committed to the development of oncology
products. They also have an entrepreneurial spirit which fits very
well with Biomira's culture and we believe that combining these two
groups, our two companies, with their substantial experience in the
clinical and regulatory, as well as developing experience in
marketing, sales and distribution along with our research and
development background, particularly in immunotherapeutics and our
world leading area of development in relation to cancer vaccines is
going to be, as they say, a marriage made in heaven.
Announcer: Our second question is from a caller, Brian Bapty. Go ahead.
Question: Hi guys and congratulations with your partnership, just a
quick question, I mean, I guess it's no surprise that you didn't break
out the details there, a lot of these things aren't publicized but do
you think of that $150 million you could give us a little bit of a
breakdown as to what you?ll see, sort of, before filing, after filing
and how much, sort of, will be contributed to assisted research?
Matt Emmens: We are reluctant to get into the details, as you point
out, I can tell you that they are milestone based, they are based on
registration, they are based on approval and certain marketing
milestones post approval. The total value of the deal would be in
excess of $150 million should the products be as successful as we
think they would be. That is the amount of detail we would get into today.
Dr. McPherson: And I suppose we can say that there is an upfront
equity investment in Biomira and as well a cash contribution on the
upfront side.
Announcer: Our next question is also from a caller. Go ahead.
Question: Yes, on the equity component because it will come out next
quarter anyhow, how was equity was taken?
Dr. McPherson: Ha ha.
Matt Emmens: Go ahead Alex.
Dr. McPherson: After you, Hortense.
Announcer: Could we turn down the volume of the callers, just a little
bit? It's very, very loud.
Dr. McPherson: It's certainly less than 5% and that's about all we can
say at this point in time.
Matt Emmens: We have the ability to increase our share, but no more
than 19% over time as Merck KGaA chooses.
Announcer: Our next question is also from the Internet.
Question: Does the Biomira collaboration bring as much value as the
Imclone deal did to Merck?
Matt Emmens: I would say, with some caution, it could. It's always
nice to have hindsight in the pharmaceutical industry and say how
brilliant you were when you make a deal like this. The pharmaceutical
business is full of risk. As you are early in trials you know, in
phase I we give most products less than a 10% chance, as we get into
phase II we give them somewhere in the 20 to 30% chance and in phase
III we give them a 70-75% chance. So, as we look at these products,
they're in phase III however we treat them and think of them more as a
phase II. It's a large trial, a well designed trial, by the way, it's
a FDA Fast Track trial and these drugs could be successful but at the
same time value in a deal is tricky and fraught with difficulty. The
markets, should the products work, are among the largest in cancer,
the need by patients is among the greatest and we hope for the best.
Dr. McPherson: As our investors certainly know because they've been
very patient in relationship to us moving forward with this alliance,
we have waited and looked at a wide variety of potential alliances and
I can say without equivocation that this is as good an alliance as we
have seen in the marketplace in the recent past.
Announcer: The next question is from a caller, Wayne Schnarr.
(Dog barking)
Dr. McPherson: You've changed Wayne.
Announcer: Go ahead caller.
Question: For Matt, could you describe the products you are currently
marketing in the United States?
Matt Emmens: In the United States, Merck KGaA or EMD markets nothing
directly. We are in, we have 100 people in Durham, North Carolina, the
primary numbers of those people are involved in drug development for
Merck's pipeline, which is promising. You may know that Merck KGaA
licensed Glucophage or metformin to BMS which is one of the largest
selling diabetes drugs in the world. We have also recently licensed an
antidepressant to Smith-Kline-Glaxo. So our research has been
productive, however we are choosing to stay in very focused areas and
those two areas are primarily oncology and metabolism; which would
include diabetes and obesity.
Announcer: Our next question, also from the Internet.
Question: You said EMD will lead Merck KGaA's oncology efforts; can
you describe more about this role?
Matt Emmens: Yes, the unique history of Merck, as I said, Merck &
Company and Merck KGaA go back to the 1800's when the Merck family
owned the whole business. Merck & Company were split off due to World
War I and the capturing of the assets of Merck, so Merck KGaA is
really the parent company of Merck & Company. That history is
important because Merck chose not to be in the pharmaceutical business
since World War I in the United States until the 80's when we started
purchasing assets which include Dey Pharmaceuticals in California,
Lexigen Pharmaceuticals in Boston, Massachusetts and other holdings,
Park in the generic business. And as we've gathered these assets it's
become apparent that Merck's pipeline will be fruitful and you have to
be in the United States to be in the global pharmaceutical market,
it's generally about half or 40% of the global market. And as these
products come through the pipeline, we have to establish both a
development presence here, so that it can be tried in American
populations, these products and eventually a marketing force. So we
run the worldwide oncology business here but we're also in the
business of setting up a fully functional pharmaceutical company from
research done in Boston to development done primarily in Durham and
throughout the world by Merck KGaA and ultimately commercialization
which will involve a marketing and sales, and a sales force in place
calling on physicians in the United States.
End of part I