- This is the first in a series on blog posts providing notes and analysis from the earnings conference calls of the "Big Pharma" (term defined very loosely) partners of the stocks I cover here at BiotechDueDiligence.
- Cubist is partnered with Alnylam for an RNAI program against Respiratory Syncytial Civrus (RSV) - get full details at the ALNY research page.
- Cubist is co-promoting the antibiotic Dificid (fidaxomycin) with Optimer Pharma - get full details on the OPTR research page.
- Click here to access the CBST conference call transcript via Morningstar.
- See below the jump for excerpts and notes:
CBST 2q2011 earnings conference call excerpts:
---Robert J. Perez - EVP and COO: "I just got back actually from the launch preparation meeting with CUBICIN Optimer, and there’s a lot of enthusiasm from both companies about the muscles that would be put on this product. We do think that the existing relationships that we have are going to be quite helpful both in terms of formulary acceptance as well as, more importantly frankly, getting to infectious disease physicians to discharge planners to pharmacy to be able to present the product and to be able to access the decision makers who are often very, very challenging for new companies to be able to access. So we're very excited about it, and I can tell you the enthusiasm in that room from both companies was palpable. So stay tuned."
CB-183315 (potential competitor to Dificid)
---Robert J. Perez - EVP and COO: "I can see from a market perspective that right now you're right. We do see a lot of similarity to DIFICID, and frankly, we're flattered by that. We think DIFICID is a really great drug. The fact that we saw Phase 2 data in the ballpark for DIFICID, I think gives us a lot of enthusiasm about this program. Now, it was a very high bar to meet and the fact that this program met it makes us very excited. At this point, we're not going to go into how it's differentiated from DIFICID. I think we think that this is a significant market opportunity and there is room for more than one branded therapy. We still – we’ll have to run a Phase 3 trial and see what the ultimate results came out to be, but I think it's safe to say, Alan, that we are very pleased to have a product that looks after Phase 2 to be as good as something that is really a significant advancement versus anything we've seen previously."
---Michael W. Bonney - President and CEO: "Yeah. I think one thing to keep in mind here, Alan – it's Mike – is that in DIFICID and in 315, we have two different classes of antibiotics with different mechanisms of action and so forth, and while I'd like to say we have perfect understanding of how these things work against C. diff and we can figure that out sort of in a test tube but the human bowel is a very different environment. We have even with this very strong profile that DIFICID has a 15% roughly relapse rate that means that there is still unmet medical need out there and maybe this drug can help address that."'
---Alan Carr - Needham & Co.: "You emphasize that the expense associated with moving this in the Phase 3 was minimal. Can you give us a number or a range around that?"
---Michael W. Bonney - President and CEO: "Yeah [but he didn't answer]. It's a minimal. It's less than those antibiotic trials than it's two trials as opposed to two trials across multiple indications. The decision across us here, Alan, really is going to be a return on investment, a financial decision can we convince ourselves that the likely outcomes from the trial translate into enough market share given what we expect the market to do over the next number of years in order to generate a reasonable return on that investment. You know us. We set a pretty high bar where an internal rate of return should be here and so forth, and now that we have the data so that we can do more specific market research, that’s what we’re going to do over the Q3 to see if this product does in fact generate that kind of good (IRR)."
---Adnan Butt - RBC Capital Markets: …"Secondly, I just want to make sure that in terms of the – to see that Phase 3 trial there is nothing clinical (that’s right) it’s just marketing studies or basically it’s a financial decision. Since the third quarter will end way before the third quarter results come out. Will you wait till the third quarter call to announce the decision or whether it’d be a press release before that?"Robert J. Perez - EVP and COO: "With respect to the Phase 3 decisions for 315, on an – it is I will confirm it is a financial decision and frankly we haven’t discussed yet when we’re going to announce it, but we’ll announce it at the appropriate time once we make that decision."
- Note that the RSV program partnered with ALNY was not mentioned in either the earnings press release or on the conference call.
- "Also in Q2, we signed a two-year co-promote agreement with Optimer Pharmaceuticals for Cubist U.S. based acute care sales and medical affairs organizations to support the launch of DIFICID, an oral macrocyclic antibiotic recently approved for the treatment of Clostridium difficile-associated diarrhea or CDAD. This is a good deal for both Cubist and Optimer and we’re pleased to participate in a meaningful way in the launch of this important therapy to treat the growing problem of CDAD"
- "We believe this partnership reflects well on our knowledge of the complex dynamics in the U.S. hospital market. We are pleased with the strong working relationship we already have with Optimer as we move toward an early Q3 launch of DIFICID. There is no change to our previously issued guidance for anticipated service revenues this year. We expect to start booking service revenues in Q3" (Note that the 3q2011 report from OPTR will be our first insight also in overall sales of Dificid since the product launch in July 2011)
- The following exchange is from the q&a session:
---Robert J. Perez - EVP and COO: "I just got back actually from the launch preparation meeting with CUBICIN Optimer, and there’s a lot of enthusiasm from both companies about the muscles that would be put on this product. We do think that the existing relationships that we have are going to be quite helpful both in terms of formulary acceptance as well as, more importantly frankly, getting to infectious disease physicians to discharge planners to pharmacy to be able to present the product and to be able to access the decision makers who are often very, very challenging for new companies to be able to access. So we're very excited about it, and I can tell you the enthusiasm in that room from both companies was palpable. So stay tuned."
CB-183315 (potential competitor to Dificid)
- "In this trial of 209 patients, both doses of CB-183315 demonstrated a clinical cure rate for resolution of diarrhea comparable to Vancocin. Interestingly, the percent of patients who experienced a clinical cure who then had a subsequent recurrence that is the recurrence rate was 36% in the Vancocin arm and was 17% in the CB-183315 250 milligram treatment group.[Note however that they neglected to mention that the lower dose arm actually had the better cure rate 92 vs 87%] This is about a 50% reduction in recurrence rate, which was statistically significant. In this trial, approximately 32% of patients were infected with the hypervirulent NAP-1 strain of C. difficile. The clinical response in recurrence rates in the subset of patients infected with the NAP-1 strain was similar in the CB-183315 in Vancocin groups. In this trial, both doses of CB-183315 were generally safe and well tolerated. Based on these results, our development team has begun planning for Phase 3. So we would be ready to start trials in 2012 if we reach a go-forward decision. We will make a go/no go decision for Phase 3 by the end of this quarter following an updated analysis of the CDAD commercial opportunity." [I am on record as believing that the decision will be to NOT proceed with this program - click here for my rationale and analysis]
- From the above comment, it appears as though CBST is waiting to see how the Dificid launch goes before deciding to embark on a phase 3 program for CB-183315. Note that CB-183315 has shown ZERO differentiation from Dificid, so perhaps they want to see how Dificid competes with the existing generic and branded products. To my crude analysis, neither a poor nor an awesome OPTR launch would support further development of the CBST drug. I'd love to hear other perspectives though...and CBST is trying to at least convince us that they will proceed...
- "On the latter, I want to echo the enthusiasm expressed by Steve on the potential of the 315 program. While we will make a go/no go on Phase 3 later this quarter, the relatively low cost of Phase 3 coupled with significant and growing unmet need in the treatment of CDAD around the world weigh in favor of the go-forward decision. This is an asset for which we owe no royalties. The Phase 3 program will be narrow in scope and therefore less costly than for many other antibiotics."
- The following exchanges took place during the q&a session...sorry that it is a bit lengthy (I was surprised that this was such a big topic of discussion):
---Robert J. Perez - EVP and COO: "I can see from a market perspective that right now you're right. We do see a lot of similarity to DIFICID, and frankly, we're flattered by that. We think DIFICID is a really great drug. The fact that we saw Phase 2 data in the ballpark for DIFICID, I think gives us a lot of enthusiasm about this program. Now, it was a very high bar to meet and the fact that this program met it makes us very excited. At this point, we're not going to go into how it's differentiated from DIFICID. I think we think that this is a significant market opportunity and there is room for more than one branded therapy. We still – we’ll have to run a Phase 3 trial and see what the ultimate results came out to be, but I think it's safe to say, Alan, that we are very pleased to have a product that looks after Phase 2 to be as good as something that is really a significant advancement versus anything we've seen previously."
---Michael W. Bonney - President and CEO: "Yeah. I think one thing to keep in mind here, Alan – it's Mike – is that in DIFICID and in 315, we have two different classes of antibiotics with different mechanisms of action and so forth, and while I'd like to say we have perfect understanding of how these things work against C. diff and we can figure that out sort of in a test tube but the human bowel is a very different environment. We have even with this very strong profile that DIFICID has a 15% roughly relapse rate that means that there is still unmet medical need out there and maybe this drug can help address that."'
---Alan Carr - Needham & Co.: "You emphasize that the expense associated with moving this in the Phase 3 was minimal. Can you give us a number or a range around that?"
---Michael W. Bonney - President and CEO: "Yeah [but he didn't answer]. It's a minimal. It's less than those antibiotic trials than it's two trials as opposed to two trials across multiple indications. The decision across us here, Alan, really is going to be a return on investment, a financial decision can we convince ourselves that the likely outcomes from the trial translate into enough market share given what we expect the market to do over the next number of years in order to generate a reasonable return on that investment. You know us. We set a pretty high bar where an internal rate of return should be here and so forth, and now that we have the data so that we can do more specific market research, that’s what we’re going to do over the Q3 to see if this product does in fact generate that kind of good (IRR)."
---Adnan Butt - RBC Capital Markets: …"Secondly, I just want to make sure that in terms of the – to see that Phase 3 trial there is nothing clinical (that’s right) it’s just marketing studies or basically it’s a financial decision. Since the third quarter will end way before the third quarter results come out. Will you wait till the third quarter call to announce the decision or whether it’d be a press release before that?"
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