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MILLENNIUM PHARMACEUTICALS
Res. #20147577
Moderator: Mark Levin
January 22, 2002/3:00 p.m. MT
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MILLENNIUM PHARMACEUTICALS
MODERATOR: MARK LEVIN
JANUARY 22, 2002
3:00 P.M. MT
Operator: Thank you for holding. Welcome to the Millennium
Pharmaceuticals 2001 fourth quarter and year-end conference
call. At this time all participants are in a listen only mode.
There will be a question and answer session to follow. Please
be advised that this call is being taped at Millennium's
request. At this time I would like to introduce your host for
today's call, Gina Brazier, Director of Investor Relations at
Millennium Pharmaceuticals. Please go ahead.
Gina Brazier: Good afternoon and welcome to the Millennium Pharmaceuticals
2001 fourth quarter and year end conference call. I am Gina
Brazier, Director of Investor Relations at Millennium. With me
today are Mark Levin, Chairperson and Chief Executive Officer
for Millennium; Kevin Starr, Chief Operating Officer; Ron
Killian, current President and CEO of COR Therapeutics; John
Maraganore, Senior Vice President of Strategic Pipe
Development; and Clint Midley, Vice President of Corporate
Communications. We expect that all of you by now have seen a
copy of our news release that was issued this afternoon. We
want to spend most of our time during the conference call
answering any questions you might have.
Before I turn the call over to Mark, I'd like to say that
during this call we will be making forward-looking statements
including statements about our growth and future operating
results, discovery and development of products, potential
acquisitions, strategic alliances and intellectual property.
Various risks may cause Millennium's actual results to differ
materially including annual results, new drug discovery
[unintelligible] development processes, failing to obtain
patent protection for a discovery, commercial indications
[unintelligible] patents owned or controlled by third parties,
our dependence upon strategic alliance partners to develop and
commercialize products and services based on our work, typical
delays in obtaining regulatory approval to market products and
services resulting from our development efforts, and the
requirement that the scheduled funding to conduct research and
development and to expand commercialization activity.
For a further list and description of the risks and
uncertainties we face, see the report we have filed with the
Securities and Exchange Commission. We disclaim any intention
or obligation to update or revise any forward-looking
statements whether the result of new information, future
events or otherwise. Important additional information has been
filed with the SEC. Millennium has filed with the SEC a
registration statement on form S4 in connection with the
transaction and Millennium and COR have filed with the SEC and
mailed to their respective stockholders a joint proxy
statement prospectus in connection with the transaction. The
registration statement and the joint proxy statement
prospectus contain important information about Millennium, COR
to the transaction and related matters.
Investors and security holders are urged to read the
registration statement and the joint proxy statement
prospectus carefully. Investors and security holders may
obtain free copies of the registration statement and the joint
proxy statement prospectus and other documents filed with the
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January 22, 2002/3:00 p.m. MT
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SEC by Millennium and COR through the Website maintained by
the SEC at www.sec.gov. In addition, investor and securities
holders may obtain free copies of the registrations statement
and the joint proxy statement prospectus from Millennium by
contacting myself, or from COR by contacting Jerry Ennis.
Millennium, COR and their respective directors and executive
officers may be forwarded today's proxy through Millennium or
COR stockholders in connection with the transaction.
A list of the names of Millennium's directors and executive
officers and descriptions of their interest in Millennium is
contained in Millennium's proxy statement dated March 26,
2001, and obtain a report on form 10K for the year ended
December 31, 2000, and its current report on form 8K dated
December 6, 2001, which documents our files with the SEC. A
list of the names of COR's directors and executive officers
and descriptions of their interest in COR is contained in
COR's proxy statement dated April 26, 2001, the interim report
on form 10K for the year ended December 31, 2000, and its
current report on form 8K dated December 7, 2001, which
documents are filed with the SEC. A more complete description
is available in the registration statement and the joint proxy
statement prospectus.
The agenda for the call is, Kevin will review our financial
results for the year ended December 31, 2001, and discuss our
financial guidance for 2002. Mark will discuss the key
components of Millennium's strategy, our accomplishments for
2001 and then conclude with our corporate goal for 2002. We
will then take your questions. Kevin Starr will now review our
key financial results, Kevin.
Kevin Starr: Thanks Gina, and good afternoon to everybody. I'm pleased to
report the financial results for another very important year
at Millennium in building the leading biopharmaceutical
company. Our operating profile continues to reflect our
progress, including our strong balance sheet and ongoing
success in achieving our commitments to existing and new
alliance partners. For the full year 2001, revenue was $246.2
million, compared to $196.3 million for 2000. Millennium's
alliance strategy continues to provide the company with
significant funding used to build the enterprise.
Expenditures for research and development for the year ended
2001 were $400.6 million, versus $268.7 million for 2000. This
increase represents our continued investment in building a
sustainable product pipeline of important programs in major
franchise areas. General and administrative expenses for the
year ended 2001 were $82.7 million, versus $49.3 million in
2000. This increase is largely due to the expansion of
Millennium's commercial organization, other business groups,
and facilities and infrastructure necessary to support the
growth at all levels of our business.
Other income, on a net basis, for the year ended 2001 was
$112.1 million, versus $29.8 million for 2000. This increase
is due to a higher level of invested funds, as well as a $20
million payment related to our December 2001 restructuring of
our partial interest in Millennium and Ilex Partners limited
partnership. Net loss before acquisition related charges and
debt conversion expenses for the year ended 2001, was
consistent with guidance that we provided earlier in the year,
at $124.9 million, or 57 cents per share. This compares to a
net operating loss of $92 million, or 48 cents per share for
2000.
In addition, during 2001 Millennium recorded amortization
charges of $64.6 million, related to the 1999 acquisition of
Leukocyte [sp] and the 2000 acquisition of Cambridge Discovery
Chemistry from Oxford Molecular Group. As of December 31,
2001, Millennium had approximately $1.5 billion in cash, cash
equivalents and marketable securities. This meets our goal of
positive cash flow for the year.
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Now lets turn to our financial outlook for 2002. The guidance
is consistent with that previously announced in a press
release on January 7, 2002. Please note that this guidance
includes the impact of our merger with COR Therapeutics, we do
expect this transaction to close on February 12, 2002, as we
incurred and received earlier termination of the waiting
period under the Hart-Scott-Rodino Antitrust Act, and the SEC
has declared our S4 affective.
Our 2002 guidance reflects a continuation of our strategy of
leveraging our strong balance and making balanced investments
in building a leading biopharmaceutical company. To accomplish
this goal, this year we will focus our investments on
Integrilin growth and the continuation of building a
sustainable product pipeline across businesses in our now four
franchise areas, cardiovascular, oncology, inflammation and
metabolic disease.
We will build this investment onto our investment strategy for
a sustainable pipeline with 10 molecules in the clinic, and
three to four more new molecules headed to the clinic in 2002.
This will be followed by a goal of over five molecules
entering the clinic each year, beginning in 2005, and we'll
continue amassing the critical mass necessary to make this
happen. 2002 will have over $500 million in R&D spending, and
one of the strongest balance sheets in the industry. Now lets
turn to some of the specific guidance.
First lets start with revenue. In 2002 revenue will consist of
two components, Integrilin sales and strategic partnerships.
We expect worldwide Integrilin sales to increase 30% to
approximately $300 million in 2002. Of that Millennium expects
to record revenue of approximately $150 million. In addition,
we expect strategic alliance revenue of approximately $250
million, for a total revenue target of over $400 million for
the year.
Second, research and development expense. In 2002 we expect to
continue our investment strategy in our R&D efforts, resulting
in a total annual research and development spending in excess
of $500 million. The focus of these investments will include
expanded development programs for MLN341 and Integrilin, new
and ongoing clinical trials, continued investment in our
discovery engine and our industry-leading platform.
Third, net operating loss. As a result of these investments,
we expect to record a net loss from operations in the range of
$175-200 million for 2002. Fourth, cash and debt. We expect to
end 2002 with a very strong balance sheet, with a cash target
in excess of $1.7 billion and approximately $250 million in
long-term outstanding debt. In addition, acquisition related
charges, in addition to net loss from operations, Millennium
will record the following charges related to our acquisition
of COR Therapeutics. The acquisition is valued at
approximately $1.9 billion and will be accounted for as
follows, approximately $250 million will be recorded as a one
time, non-cash charge in 2002, for in process research and
development. Approximately $500 million of the total value
will be allocated to intangible assets, primarily related to
Integrilin. These specifically identified intangible assets
will be amortized over a 13 year period, with the 2002 impact
expected to be approximately $28 million. The remainder,
approximately $1.2 billion, will be allocated to net tangible
assets acquired and good will.
So with that, let me turn the call over to Mark.
Mark Levin: Thanks Kevin, and good afternoon everybody, and happy New
Year. Today I will discuss the progress we've made in creating
a leading biopharmaceutical company. I will focus my remarks
on our overall vision, our four franchise areas, our
accomplishments made in 2001, and then I will review our
corporate goal for 2002, including delivering on our promise.
But first I'd like to start on an overview of where we are
with the COR/Millennium merger.
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On December 6 we announced our intention to merge with COR
Therapeutics, and we expect to close on February 12, a little
over two months from the day of announcement, an amazing
effort on the entire team's part. The merger brings us the
following, the number one cardiovascular franchise in
biotechnology, with the leading inject able anti-platelet drug
on the market, and three to four additional molecules in the
clinic by year-end. It continues to build on one of the top
oncology franchises in the industry today, with one
therapeutic product on the market and a total of five to seven
molecules in the clinic by year-end. It brings us a leading
commercial organization in the United States, which we will be
expanding into oncology in both US and Europe. It brings us a
biological effort that strengthens all four franchises. And
finally, a very strong team that continue to build Millennium
for long-term success. This merger gives Millennium the
platform to deliver on our promise.
Let me just start off and summarize again for everybody our
vision, mission and strategy. Millennium's overall vision is
transcending medicine, making a difference in the quality of
people's lives. That is why we're all at Millennium. In order
to make a difference, we are building the leading
biopharmaceutical company with three key strategies. First of
all breakthrough products, products based on the cause and
pathway of human disease, and a sustainable pipeline,
something not done today in biotechnology. Secondly, the
combination of personalized medicine and productivity, these
are the core sells of our revolution in changing the future of
medicine and the future of the industry. And we wrap all this
together with a value creation model and commitment to
shareholders that is based on a sustainable pipeline,
personalized medicine, productivity and business innovation.
It is these key efforts that feed into an overall model that
we monitor and use to make decisions on a monthly and annual
basis to drive shareholder value.
Let me now go into more detail about the status of the
programs of each one of our franchise areas, and I'll start
with cardiovascular. Overall the cardiovascular area is the
leading franchise in the industry today, representing over $40
billion in sales. As a result of the merger with COR, we will
have Integrilin, the leading product in its class. And behind
that, a very strong clinical pipeline in the cardiovascular
area. Integrilin is a breakthrough product for acute coronary
syndrome. It's the number one anti-platelet agent in the IV
area, with $230 million in sales, representing 33% growth in
2001. Market share is now over 50%, which is a remarkable
accomplishment achieved over the last couple of years. We
expect 30% annual growth toward a $500 million plus market
opportunity over the next several years.
A second molecule behind Integrilin is Factor 10A, a very
important molecule in the overall anticoagulant area. This is
going to be a potential replacement for cumadin, a potential
multi billion-dollar market. We will end the year with four to
five molecules in the clinic, with an exciting discovery
pipeline.
Now let me talk about oncology. Genomics milicro pathway
biological systems again will drive our efforts in oncology.
Oncology is the leading area of unmet need in the world today,
and in collaboration with our partners, Millennium has brought
two oncology products to the market. In addition, Millennium
has a deep clinical and pre-clinical pipeline in the oncology
area. Our proteasome inhibitor, MLN 341 is a very important
molecule. We reported exciting preliminary data late last year
in early phase two studies in multiple myeloma. We believe
proteasome inhibition is a major point of intervention now in
the oncology area. MLN 341 represents a great opportunity for
us. New recons and new pathways, broad applications, liquid
and solid tumors and a very, very broad iloxial property
estate.
Our anti PSMA program is an antibody that selectively targets
PSMA, a protein or antigen uniquely [unintelligible] on the
surface of virtually all prostate cancer cells. PSMA
expression increases with advanced tumor grade and disease
phase, so as the disease gets worse, PSMA
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expression increases. ML 591 is now in phase one trials with
the [unintelligible] molecule, and we are very excited about
what we have seen so far. We expect to have a toxin conjugate
at phase one later this year.
In the receptor tyrosine kinase area, COR submitted an I&D for
CT5351A this past December. If things go well, this will be in
the clinic soon for acute myeloid leukemia. So as we look at
the overall oncology program, we have two products on the
market, 341 and 591 in the clinic, and by year-end we'll have
five to seven molecules in clinical trials with a deep
discovery effort in antibodies and small molecules.
Now let me summarize the inflammation franchise. Inflammation
is certainly one of the major markets, with over $25 billion
in sales today. We're working with rheumatoid arthritis,
asthma, IDD, multiple sclerosis and other major areas.
Millennium has two molecules in the clinic, 977 and MLN 02;
phase two data will be available on both of these programs
later this year. We will end the year with three to four
molecules in the clinic out of our inflammation franchise.
In addition we have strong expertise and a very exciting 50/50
partnership with Aventis in this area. Combined with Aventis
we have over 350 full time people working just in discovery on
these diseases. It's an extraordinary effort, probably one of
the largest in the world, on these diseases.
And finally, the metabolic franchise. We have a major effort
now in obesity across all the different organ sets. We're
looking in the brain at satiety and hunger. We're looking at
the gut in absorption. We're looking at adipose tissue for
thermo genesis, and we're driving a very important deep
discovery pipeline forward. Obesity clearly is going to be one
of the largest franchises going forward. Tens of millions of
people have this disease. Our first molecule, MLN4760, was put
in the clinic late last year and there is a potential for
another molecule to go into the clinic this year. We have a
very important relationship with Abbott, 50/50 around the
world, commercialization included. Combined, over 250 people
in research now working on driving molecules into the clinic.
So in summary, a little over three years ago we were talking
with you about genes and targets. Now those genes and targets
make up four franchise areas with tremendous potential in the
marketplace, and we've done all of this in just a few short
years. So let me go back now and summarize the 2001
accomplishments. A year ago as we always do, we stated our
goals for 2001. I'll now review our accomplishment toward
those goals, and I'll break it down into the four key
categories. First, breakthrough products. We stated we would
have CamPath on the market, CamPath was launched in the United
States in June and Europe in August, this goal was
accomplished. We said we expected to make rapid clinical
progress on MLN 341 by starting phase two multiple myeloma
trials and also multiple phase one solid tumor trials. Done.
In our inflammation franchise we expected to finish enrollment
with MLN02 in phase two trials in patients with Crohn's
disease and to initiate a phase two trial with MLN02 in
patients with ulcerative colitis. We met our goal on both of
these. Also out of our inflammation franchise we met our goal
of initiating phase two trials with MLN 977, for treatment of
patients with asthma. We expected to expand the breadth of
both clinical and pre-clinical pipelines overall by putting 12
new molecular entities into the clinic and another 12 new
molecular entities into lead optimization and pre-clinical
development. We feel that we did very strong justice to this
set of goals. While we did not get 12 into the clinic, we got
10 in plus one I&D filed, and through the merger with COR, one
additional product on the market. And we surpassed the lead
optimization pre-clinical goal by advancing 13 programs.
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We had also stated that one to two of the molecular entities
in the clinic would be genomically derived. We succeeded in
that goal in November when we announced the initiation of
phase one trials with MLN 4760 for the potential treatment of
obesity. Let me now move on to the productivity and
personalized medicine goals for 2001.
In addition to generating $80 million in revenue from our
productivity platform, which we said we would, we aggressively
continue to move the platform downstream. We are now
addressing bottlenecks within the clinical process and have
initiated multiple efforts from [unintelligible].
We have signed another of important partnerships to move our
platforms downstream into pharmacogenomics and admin. These
include collaborations with Far Side, Structural Genomics and
Abbott, to name a few.
And we also expected to make aggressive strides to expand the
depth and reach of our unparalleled pipeline and met that goal
by characterizing more than 2,000 drugable [sp] targets, and
more than 70 high through put screens. Let me now move onto
the final category, Valuperation [sp].
We said that we would continue to implement our M&A strategy
to bring in late-stage molecules products, technology and
capabilities, and we feel we've been very highly successful in
meeting that goal through our Cor merger. We signed a 50-50
deal with Abbot in the area of metabolic disease early in the
year, thus meeting our metabolic disease goal. We set forth as
a goal an aggressive [unintelligible] licensing strategy and
have met that goal by bringing in several clinical and
pre-clinical programs, including MLM 591 for Prostate Cancer,
GCC for Colin Cancer and a portfolio of new candidates to work
in a manner similar to Dual Topolyte [sp] Tyrosine inhibitors
but with nominal DNA damaging mechanisms of action for solid
tumors.
From an intellectual property standpoint, we exceeded our goal
of 200 issued patents and 2,000 patent applications. In short,
it was a great year for all of us at Millennium. We end this
year with two therapeutic products on the market, four
franchise areas, 10 molecules in the clinic and one of the
strongest financial positions in the industry.
Let me now move onto our 2002 goals. Our first set of goals,
we [unintelligible] are our overall goal of building a
sustainable pipeline of very [unintelligible] products, a key
strategy in our objective of creating the leading
biopharmaceutical company. First, we intend to generate a 30%
increase sales in the worldwide sales of Integrilin for a
total of $300 million. We intend to accomplish through a
variety of initiatives, including seizing market share,
growing the market through our innovative Crusade trial and
adding new indications for this blockbuster product.
Two, we plan to initiate a Phase III trial for Millennium MLM
341 in multiple Myeloma in the first half of 2002. We and a
number of clinicians are very excited about the promise of
this drug. So the initiation of Phase III trials represents a
significant step forward in bringing this drug towards
commercialization. We will also continue a very aggressive
combination trial program in solid tumors.
Three, we plan to enter three to four new molecular entities
in the clinic. As you could probably surmise form my
discussion of our four franchise areas, we have a very deep
pre-causal pipeline from which to draw these clinical
candidates in 2002.
Four, like last year, we intend to deliver our 75 high through
put screens, which has been and will continue to be a key
factor in our discovery engine and key to a long-term
sustainable pipeline.
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January 22, 2002/3:00 p.m. MT
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And fifth, under product pipeline, is our overall total R&D
investment. As Kevin said, it's expected to be over $500
million for 2002, which is in the top of the biotechnology
industry. This considerable research and discovery effort will
drive the acceleration of our clinical pipeline as well with
moving the discovery in pre-clinical compounds forward
quickly. All of this is directed towards building a steady
stream of novel and important products, through the
development process, towards the markets and patients.
And the next category of goals relates to personalized
medicine and productivity, the cornerstone of our revolution
to changing the future of medicine and the pharmaceutical
industry. We believe in marshaling the forces of personalized
medicine productivity will be necessary to create a major
biopharmaceutical company that generates products that make a
difference in peoples' lives.
In 2002, we will have a major effort underway to incorporate
pharmacogenomics in six clinical programs, which we believe
represents the strongest commitment in the industry to this
effort.
And finally, on the Valuperation side, we continue to target
break-even in 2004. We will continue to pursue merger and
acquisition opportunities of both products and companies as we
did last year. We will continue to see transforming alliances
with pharmaceutical companies and others. And we will end the
year with a strong balance sheet of approximately $1.7 billion
in cash, and $250 million in long-term outstanding debt.
So in summary, Millennium is delivering on our promise of
building a major biopharmaceutical company. We have the
leading injectable anti-platelet drug growing to $300 million
in 2002. We have 10 molecules in the clinic, with three to
four new molecules in the clinic in 2002. We have 341 entering
Phase III trials for multiple Myeloma in the first half of
2002, and important combination trials for solid tumors
continuing. We are building a sustainable pipeline, with
five-plus molecules entering the clinic and one to two new
products entering the markets [unintelligible] every year
beginning in 2005. This has never been done before in
biotechnology.
The critical mass necessary to make it happen, $500 million in
R&D and one of the strongest balance sheets in the industry,
the vision of personalized medicine and productivity and the
ability to build the biopharmaceutical company of the future
and to make a difference in the totality of peoples' lives.
With that, I'll turn it over to our operator for questions.
Thank you very much.
Operator: At this time, we will take any questions you may have. If you
have a question, please press the one followed by the four on
your touchtone phone, and you will hear a three-toned prompt
to acknowledge your request. If you would like to cancel your
question please press the one followed by the three. Your
first question comes from Maykin Ho, Goldman Sachs. Please go
ahead.
Maykin Ho: Hi Mark.
M. Levin: Hi Maykin, how are you?
M. Ho: Thanks. On the 341 program, can you give us a little bit more
detail in terms of the Phase III trial for [unintelligible]
Myeloma? And also, some of the studies that we might be seeing
results on this year on solid tumors?
M. Levin: Yeah, Maykin. John Maraganore's going to do that.
J. Maraganore: Hi, Maykin. The 341 program is still--the final design is
still being finalized. We're looking at a trial that will be
between 400 and 600 patients. We'll be randomizing patients to
receive either 341 or high-dosed Exemethizone [sp]. Patients
enrolled in the trial will include relapse patients as
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Page 8 of 15
well as patients that have refractory. And, we plan to conduct
the trial in over 50 sites. We believe that the end point for
the trial will be timed to disease progression.
M. Ho: And the other tumors?
J. Maraganore: We continue to have aggressive programs, as you know, on the
solid tumor setting, in addition to our studies that we
started earlier last year with [unintelligible]. We recently
started a program with Haxatier [sp]. We expect to have much
of these data in addition to additional Myeloma data at the
upcoming Asco meeting in May.
M. Ho: Oh, that's great. And, is Vaughn on the phone?
J. Maraganore: Vaughn is.
M. Ho: Hi Vaughn. Can you tell us a little bit about the status of
Integrilin, what you're seeing in the marketplace, in terms of
share? And also the usage and duration setting?
[Unintelligible-background noise] it comes to Crusade?
V. Killian: Sure. In terms of usage, our market share in the November
timeframe, our patient market share was in the low 50s. We
crossed over the 50% level and now we're seeing our market
share in the mid-50s. So the market share is continuing to
grow for Integrilin on a patient basis. And obviously, the
dollars lag that but are tracking in the same direction.
In terms of Crusade, Crusade is enrolling sites right now and
we're going to have our first pass at data from hospitals at
the ACC meeting in March.
M. Ho: OK. And, what are you seeing in terms of duration of usage and
the usage in the emergency room?
V. Killian: You know we don't expect to get the results from that market
research survey until mid-February. So I would imagine that
sometime around the ACC we'd be making that data available.
We don't have the most recent data in house, Maykin.
M. Ho: OK.
V. Killian: OK?
M. Ho: It seems that from market share data then it seems that the
pick up due to September 11th is now working its way through?
V. Killian: Yeah. You know, there are several dynamics that were going on
there. One was, as you recall we had to get our sales force
back to full strength, get over that lull of September.
Actually right now, Mark, Kevin and I were all, and John as
well, at our national sales meeting, we have all of our sales
force here getting excited about the new merger and focusing
back in on Integrilin and we have, I believe, darned near a
full sales force.
We have one territory opened. I'll save it for you, if you
want.
M. Levin: Hey Maykin, this is Mark. Several of us sat in on that meeting
most of the day today. I'll tell you, the excitement in the
room about Integrilin but also the merger between the two
companies was just incredible. And, you know, I came away from
that even more convinced that this is going to be just a
wonderful, extraordinary merger.
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M. Ho: That's good to hear. Thank you very much.
Operator: Your next question comes from Matt Geller, with CIBC World
Markets. Please go ahead.
Matt Geller: Hi, could you go into some more details about MLN-02, in terms
of what we might expect to learn from the Phase II? What the
design of the study and what the timing is and what other
[unintelligible] studies it might lead to?
J. Maraganore: Hi Matt, John Maraganore.
M. Geller: Hi.
J. Maraganore: MLN-02, as you know, is our Anti-Alpha 4 Beta 7 antibody. This
is a de-immunized antibody directing, effectively, a surgical
strike at blocking T-Cell migration to the inflamed
[unintelligible] in inflammatory bowel disease. And we believe
this is a drug that's got potential, not only in Chron's
disease, which is where drugs like Remacaid [sp] and Emberol
[sp] are currently proven to be effectively. But also in Ulcer
Colitis, which is effectively an untapped market today, with
the existing drugs, biologics that have been introduced in
IBD.
We completed, in December, our Chron study. This is a study of
180 patients. It was a multi-dose, placebo-controlled, double
blind randomized study across multiple centers, largely in
Canada. And we will be reporting on the results of that study
in the first half of this year.
The end point of that study is the Chron's Disease activity
index, which as you know Matt, is the standard end point that
is used for measuring efficacy of a drug. The nice thing about
that end point is that it also turns out to be an approvable
end point from the FDA. But that obviously would come out of
our Phase III studies.
M. Geller: Will that be presented at DDW this year? Or--?
J. Maraganore: The timing-we're having to finalize the timing on that. It
won't be a formal presentation at DDW, but the results may
coincide with that meeting.
M. Geller: And is this a controlled--this is a controlled double-blind
study that you've already unblinded and seen the results of?
J. Maraganore: No, haven't unblinded the trial yet. We are currently at this
point stopped enrollment. We still are collecting data as it
relates to follow up in patients that are completing their
last follow up route.
M. Geller: Great, thanks a lot.
J. Maraganore: Thanks, Matt.
Operator: Your next question comes from David Witzke with CS First
Boston. Please go ahead sir.
May Robb: Hey, it's May Robb and David and we have a few questions. One
of the questions related to the financials. In terms of SG&A,
SG&A and R&D, you're significantly above [unintelligible] this
quarter, so, you know, excluding the impact of acquisition,
which definitely wasn't in the numbers here, what are the
reasons? Especially on the SG&A line, and would you expect
that trend to continue? And also, David has a few questions.
K. Staff: Yes, thanks. This is Kevin. On the SG&A side, I think you're
starting to see the evolution of Millennium's strategy that,
prior to the Cor merger, to build some critical mass in our
commercial
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area. One of the biggest drivers was us gearing up for a lot
of the activities related to 341 on the market side.
We also had some significant business expansion over here.
We've talked, in the past, about Millennium's growth. From a
people and facilities side, we have about 400 thousand square
feet that are now under construction at Millennium. Some of
that space is now coming on line. And those are really the two
primary drivers of the increase in G&A. It's really commercial
infrastructure build and then overall build to support the
infrastructure operating the company.
And so, what you're going to see post-merger with Cor is,
we'll be breaking out, as Cor has done traditionally the sales
and marketing line separate from G&A. So you'll more modest
growth in the traditional G&A and you'll see us making some
pretty significant investments over the next 12 to 18 months
in building more commercial capabilities, not just focused on
Integrilin but really getting ready for 341.
M. Robb: OK, and David has a few questions.
David Witzke: Kevin, I had a couple of questions relating to the quarterly
break out. The first, the Cam [unintelligible] revenues from
the JV[crosstalk].
K. Starr: Yeah.
D. Witzke: [Crosstalk] 20, third and fourth quarters, will that be spread
out over the year? Or recognized in those quarters?
K. Starr: We will have--we'll recognize those Cam[unintelligible]
payments in the fourth quarter of each year.
D. Witzke: Both of them? OK.
K. Starr: And so, remember folks, when we announce that restructuring of
that partnership, we will receive three additional payments,
in addition to the 20. We'll have received three additional
payments of $40 million each, over the next three years.
D. Witzke: OK, and a couple of other, on the accounting, as far as the
share count following the closure, the merger, are we looking
at 58 million new shares? Or, is it 78 million?
K. Starr: No, it's closer to--it's about 56, 55 to 56 million
shares, is what we put in our S4. We think we'll be pretty
close to that, pretty close to that number in the transaction.
But one thing as you know is, depending on what happens with
the convertible debt over the year, would add to that share
base. But excluding the convertible debt, we've been averaging
about a 3 to 4% dilution effect related to normal use of our
stock with options, which is pretty standard, actually a
little bit below industry average right now.
D. Witzke: OK, and then finally, the distribution of the $250 million
guidance for partnership revenues? How will that look over the
quarters?
K. Starr: Well, I think it'll look like it has been traditionally. We
previously weigh that towards the tail end of the year. I
think we've come in at a pretty close pattern on that, each of
the last two or three years. So, we suspect it will look very
similar to that.
D. Witzke: OK, thank you.
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K. Starr: Thanks David.
M. Robb: Thanks.
Operator: Your next question comes from Ellen Lubman, with Robertson
Stephens. Please go ahead.
Ellen Lubman: Thanks. One of my questions was answered. But the other one
was, I was just curious as to how, I guess, the development
with the Athi [sp] collaboration is coming along? And how will
you be using that in the personalized medicine area, and if
you are already doing so? Thanks.
M. Levin: Hi, this is Mark. On the Athi collaboration is coming along
very well. Let me just step back and tell you a little bit
about what drove that for us. You know, as you know over the
last few years, certainly from the day we founded the company,
we were very focused on the early stages of the gene in drug
discovery, genes, targets and leads. And we built inside our
own transcriptional profiling facility, based on our own Nylon
[sp] technology.
But based on our commitment to move downstream and build a
fully integrated company, at the focus inside on things that
we can do best and things that cannot be done on the inside,
we again have built this facility.
Over the last year or so, based on the fact that genes are
becoming available, therefore Olivos [sp] are much more
important, we've now been convinced that the Athi Metrics
technology is the best technology in the industry, for us to
really base our transcriptional profiling facility on. So,
you're going to see us aggressively, in 2002, replace our own
Nylon platform with the Athi platform, and use that across our
overall gene discovery, target discovery. We'll use it in
Margery [sp] discovery all the way from gene to patient.
And we expect to complete most of that transition during the
year 2002.
E. Lubman: Great, thank you.
M. Levin: OK, thanks.
Operator: Thank you. Your next question will come from Dennis Harp, with
Deutsche Bank. Please go ahead sir.
Dennis Harp: Thank you. The first question is for Kevin. On your cash
balance, what do you expect to earn as far as your interest
rate?
K. Starr: Well, that's a tough one to forecast, Dennis. I wish I had
your crystal ball on that one. You know, our overall net
interest incumbent in our projections, are factored into that
loss profile. There's obviously going to be a little bit of
variability. We're probably in the, you know, 4 to 5, or 5.5%
range. It depends on, you know, short-long-term yields shape
out over the next year.
D. Harp: The second question is more for Mark, I guess. That is, you're
standing by the objective of '04 profitability. Are you able
to get there with the Cor acquisition alone? Or, should we be
anticipating additional acquisitions, either companies or
products that would get you there by '04?
M. Levin: That's a good question. Again, as we've started, it's break
even, plus or minus, by 2004. And we've felt for many years
now that it was important, not only to build a strong
discovery and development pipeline, but really drive the
company to break even and then, eventually over the next few
years, very aggressive growth on an annual basis. So '04 is
the break-even year, plus or minus.
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We expect to do that with Integrilin growing as it, the
possibilities of 341 entering the marketplace in that time.
And also, as you suggest, it's going to be most likely
dependent on additional acquisitions of late stage molecules
or products on the market today. And that continues to be an
ongoing effort of ours. We're looking, but the most likely
scenarios are to continue to look in the cardiovascular and
oncology areas. Again, late stage molecules, and/or products.
It could potentially happen somewhere else, but those are the
areas. So look for Integrilin growth, 341 and acquisitions of
late molecules and/or products for oncology and
cardiovascular.
D. Harp: Great, and I have one final question. Of the three to four new
products to enter the clinic in 2002, what might those be?
M. Levin: Well, as I mentioned when I went through the overall summary,
the actual that we have opportunities across the entire
pipeline. If you remember, I mentioned our goal for '01 was
the end of the year, with 12 late stage molecules or
pre-clinical candidates. We ended the year with 13. So, it
could come out of those 13 candidates and those 13 candidates
are actually in the cardiovascular area and the oncology area,
for the most part. But they also exist in inflammation and
metabolic disease. So, they're distributed across all four
franchises.
So, we enter this year with high confidence about those three
to four molecules entering the clinic in 2002.
D. Harp: And, would you care to say, of those 13, which are the top one
or two that you think are most promising?
M. Levin: I wouldn't want to comment on any specific molecule. As you
know, [unintelligible] for pre-clinical [unintelligible]
candidates do occur. And we really don't want to say it's this
particular molecule, or this particular molecule. We have lots
of opportunities. We're certainly excited about all of them.
So, I think it's better to say that we've got 13 candidates in
front of us and we think we will certainly hit the three to
four this year.
And I think more importantly, if you remember, I said by the
year 2005, based on the discovery pipeline we see in front of
us, we will be delivering five-plus molecules to the clinic
every year, forever, essentially. And that's something I think
is really very important to consider, because no other company
in biotechnology does that today.
D. Harp: Great. Thank you very much.
M. Levin: Thanks.
Operator: Your next question will come from Caroline Pratt, with
Needham. Please go ahead.
Caroline Pratt: Hi everybody. My question is, can somebody talk about the RTK
program beyond Flip 3? What therapeutic areas are you looking
at, and specifically, maybe, what compounds?
J. Maraganore: Sure Caroline, this is John. We have a very [unintelligible]
rich pipeline behind RTK, and Vaughn should certainly chime in
here. It builds off of the receptor Tyrosine Kinase work that
has been going on at Cor for many, many years. It also
synergizes very nicely with the Kinase work that's been going
on at Millennium, for quite some time.
And, as we look in front of us now, we clearly with CT53518
have got a program with a filed I&D, we expect that to head to
the clinic shortly, and that's going to be the lead molecule,
and
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that's FLID3 Lygan, which as you know is genetically modified
in patients with acute myeloid leukemia, and represents almost
a glivet [sp] like strategy for intervening in that disease.
Behind that we've got a program, 608, which is a backup
program with some attributes that we think might make it
suited for diseases like glyoblastoma, this includes ability
of that molecule to penetrate the blood brain barrier. And
then we think there are opportunities even beyond that with
agents that are more targeted toward the MGF receptor in
settings such as fibrosis and restenosis. So we think that, we
look at this across in fact, three of our franchises, so we're
covering cardiovascular, inflammation and oncology with this
whole platform of receptor tyrosine kinases, and obviously can
build off of that in a very significant way.
M. Levin: Hey John, this is Mark. What's also exciting about this, and
John was getting to that, is that the expertise in kinases in
general expands across now the merged company. We've
identified over 100 novel kinases at Millennium. COR has been
doing chemistry in the overall kinase area; we're doing
chemistry in the kinase area. We just formed a relationship
with Structural Genomics in the overall structural area to
look at kinase structure. We're building up our own group
inside. So overall receptor tyrosine kinase's internal
tyrosine kinases, the structural chemistry around that is
really going to drive this across all of our franchises.
V. Killian: And this is Vaughn, just to tag on to what John said, this is
one of the hidden reasons we were so excited about this
merger, that there is a lot more commonality of biological
interest between the two companies that most people recognize.
But we recognized the minute we started talking with Mark and
the rest of the scientists here at Millennium.
Woman: Great, thank you.
M. Levin: Thanks Carol.
Operator: Your next question will come from Jeff Meacham with UBS
Warburg; please go ahead.
Jeff Meacham: Hi guys, good afternoon.
M. Levin: Good afternoon.
J. Meacham: Could you update us on the status of the oral 2B3 inhibitor?
Are you guys going to go forward with this program, or are you
instead focusing more on Integrilin for indications?
V. Killian: This is Vaughn. As you know the oral 2B3A program is one
that's been plagued by misfortune on the part of all the
competitive products. The only product out there beside
karmafiban [sp] is a product from Dupont/Merck that is now
part of the BMS collaboration. We've been waiting to see the
results of their phase three trial before we even recommended
to Millennium that they invest in that program. Clearly until
you see that its hard to proceed down this path. And looking
at the rich pipeline that Mark has already described for you,
and John started to describe, we think that until there's
clear evidence that we might have a significant opportunity
here, we're much better off allocating resources elsewhere.
But the product is still there, still available and can be
moved forward very rapidly.
J. Meacham: OK. And I guess a question for John, could you also update us
on the status of MLN977? You said that we'll see data this
year?
J. Maraganore: Yes, that's our program in asthma. This is a small molecule
drawn that's targeting fibro glysoginase [sp] which is a
central pathway in the generation of proto-inflammatory
leucotwains [sp]. We have an oral program that's in phase two,
we also have an inhaled program that we're
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developing, because we've seen some very strong data regarding
the ability of providing topical delivery of this drug, to
have a more significant anti-inflammatory affect. We will be
completing enrollment of our phase two program over the first
half of the year, and will be reporting our results this year
as well.
J. Meacham: Any indication as to the end points of the trial, or the
number of patients?
J. Maraganore: Sure. The program is enrolling across multiple centers, up to
300 patients. We have, as a primary end point of the study;
we're looking at FEV1. It's a multi-dose study, so we're
looking at multiple doses of the drug, we're looking at the
effects on FEV1, which is a primary end point in many asthma
studies, and we are also looking at secondary endpoints as it
relates to other symptoms of asthma, like nocturnal symptoms.
J. Meacham: OK, great, thanks.
Operator: Your next question will come from Anna Kazanchyan with
Wachovia Securities; please go ahead.
Anna Kazanchyan: How are you?
M. Levin: Hi, how are you?
A. Kazanchyan: Fine, thank you. Several of my questions have already been
answered, but I have just two additional questions. You did
mention that you intend to grow through M&A during this year
and going forward. Could you provide us a little more color on
that as far as are you looking more to acquire companies
versus product, and if you are looking to acquire companies,
how do you plan to deal with explosive growth that may result?
And secondly, now that you have the fourth franchise, the
cardiovascular franchise, I assume you also will be looking at
cardiovascular compounds and companies, but overall it has
been my impression that these trials require more prolonged
follow up and are generally enrolling more patients, they are
more expensive than some of the cancer trials that one can
conduct. In light of that I'm wondering if the R&D estimate
for next year is a little bit more conservative than it should
be? Thank you.
M. Levin: OK, good questions. Let me just kind of give you a little
color on that, as you suggested. One of the important things
to think about is when you're building, as we are, the next
major biopharmaceutical company, is that certainly you want to
drive it internally, but you want to complement it with
expertise, technologies and certainly molecules and products
from the outside. And we had a board meeting, which we've
talked about many times before, a little over three years ago,
where we said, lets drive the company from the inside, but
lets complement it with expertise and with molecules from the
outside.
And if you look back at the history of the entire
pharmaceutical industry, not just over the last couple of
years, but if you look at Pfizer and the Merck's and all the
major pharmaceutical companies, 30 and 40 and 50 and 60 years
ago, they were all built by bringing important companies
together, again not just over the last couple of years. So
that's been a Millennium premise, in order to build a major
company, bring assets together. So where are we today? Well,
we do have a major effort in this whole area. We have a team
in place; the team is continuously evaluating what we believe
to be the major most important companies in the industry. We
are also evaluating all the pipelines of the major companies,
and certainly evaluating a lot of the pipelines of the major
pharmaceutical companies.
These discussions are ongoing every week, we have a
significant meeting every Monday night where we review all the
data, and it's tied into an overall value creation model that
we're driving the company on, building a major pharmaceutical
company over the next 10 years. So where are
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we focused today? We're focused certainly on cardiovascular
area and the oncology area, as I said before. We're looking
for late stage molecules and/or products on that market.
That's the driving force today. I should tell you that it
doesn't have to occur this month or six months from now, or
twelve months from now, its based on the quality and the match
of the people and the products, and they will occur at the
appropriate time. A big part of this overall strategy is
continuous evaluation, continuously talking to the best people
in the industry, and then the appropriate opportunity. Because
if you're not talking all the time, you will miss a lot of
important opportunities. So focus is cardiovascular and
oncology, and we believe that's certainly going to be key in
breaking even in '04 and building a major company over the
next eight to ten years. Does that answer your first question?
A. Kazanchyan: Yes, thank you.
M. Levin: OK, thanks. Hello?
Operator: One moment. That's all the time for questions we have today,
please continue with your presentation.
G. Brazier: That concludes the Millennium Pharmaceuticals 2001 financial
results conference call, thank you all for participating.
M. Levin: Thanks everybody, have a great day.
Operator: Ladies and gentlemen, that does conclude your conference call
for today. Thank you for participating.