TRANSCRIPTION OF FINANCE NEWS NETWORK INTERVIEW WITH PHYLOGICA (AXX:PYC) CFO AND VP OF CORPORATE DEVELOPMENT, NICK WOOLF
Lelde Smits: Hello Lelde Smits reporting for the Finance News Network. Joining me today for an update from Phylogica is CFO and VP of Corporate Development, Nick Woolf.
Nick welcome. 2010 has been a year of significant change for the company with a shift to contract discoveries for major pharmaceutical companies. Who are you working with now and what’s the value of those deals?
Nick Woolf: Well thank you for those questions Lelde. In the past twelve months we’ve signed two collaborations, both with big pharmaceutical companies. One is a Swiss pharmaceutical company Roche and the other is with AstraZeneca, a UK based pharmaceutical company. Now the way that these deals are structured, they have an early research collaboration phase and then a downstream phase where the company licences our drugs, and we benefit from development milestones and royalties.
In terms of the total potential value of those deals we’re talking about over $100 million. Where we are today is still in the research collaboration phase and they’ve been paying for fee for service work for us to perform initial drug discovery.
Lelde Smits: Okay, starting with Roche could you go into a bit of detail about that contract?
Nick Woolf: Sure, well you say contracts I mean we call them partnerships. We signed the first deal with Roche in December last year, so we’re twelve months into it. The initial collaboration phase around the drug discovery was nine months and we concluded that in October. And since then they have been confirming the data that we generated and we’re hoping now to be able to move to the next stage of the collaboration, which is more lucrative to us.
And the field that we’re working in is a key area for the pharmaceutical industry. It’s about getting drugs inside of cells because a lot of diseases, a lot of disease pathways need to be targeted within the cell rather than on the surface of the cell, and that’s been a challenge for the industry.
Lelde Smits:Now to your deal with MedImmune the biologics unit of AstraZeneca. You’ve only recently commenced screening for drug candidates for a bacteria most commonly found in hospital acquired infections. Now with thousands of peptide candidates, how long does this usually take?
Nick Woolf: Well we signed the deal in August and just to give you a little bit more colour on what we’re working on, it’s as you mentioned a hospital acquired bug. It’s one of those super bugs, growing incidence and prevalence in hospitals and has been a real challenge for the healthcare industry and for patients suffering obviously. And we’re trying to find novel antibiotics that address it.
In terms of where we are with the deal, we’re still in the research collaboration phase - it’s going to take us sort of six to nine months to conclude that programme. We’re working in a joint collaboration with MedImmune and the collaboration is working fine and we’re executing on the research plan.
Lelde Smits: And what takes place after you’ve identified likely targets for the bug?
Nick Woolf: Well this is – you’re talking about the general structure of our deals and they’re all fairly similar in that we have a collaborative phase and then we offer a licensing – we offer our partners the opportunity to licence those drugs, of which they then take it into their own drug discovery and drug development engine. And we finish our work and they’re responsible for taking them through to market and we benefit from milestone payments and from success on commercialisation, based on our partner’s progress.
Lelde Smits: And now to other potential collaborations, has your increased presence in Europe through listing on the Frankfurt Stock Exchange, led to any other enquiries?
Nick Woolf: Absolutely, in fact it’s actively traded on the Frankfurt Exchange. I mean we’re trying to sort of boost that; we’re trying to sort of gain analyst coverage and coverage from brokers. In terms of our business and our commercialisation - absolutely, I mean we have our CEO now based in Europe, so he’s sort of on the doorstep of many of our potential clients. And we are currently on track to meet our objective of our third collaboration in the next few months.
We’re also talking to a number of other parties that we believe will come to the table in 2011 and we’ve set a guidance now that we’ll have three collaborations, or at least three new collaborations, new partners in place through the course of the next twelve months.
Lelde Smits: And what about the US pharma companies, are they aware of Phylogica?
Nick Woolf: Absolutely. I mean it’s a global marketplace and we’re talking to the top ten pharmaceutical companies as our primary targets. We’ve got negotiations ongoing with pretty much all of them at this point and about half of them are from the US. In fact we would hope that our next partnership is going to be with a US pharmaceutical company.
Lelde Smits: Now you’ve recently raised $2.3 million via a rights issue at 5 cents per share, but what does this mean for your cash position and where’s the funding going?
Nick Woolf: Well our cash position that we disclosed at 31st of October was $3 million and that takes us through, even on our base case assumption of no revenue which is not our expectation - that takes us through to the end of second quarter of 2011.
In terms of where the cash has been put to use, we raised it specifically to expand our infrastructure in our laboratories in Perth in Western Australia. We have a drug discovery platform with high through-put screening; it requires capital expenditure for robotic systems that allow us to perform our research collaborations more effectively. And that’s what primarily we’ve been putting our money towards.
Lelde Smits: Okay Nick last question. What else is in the short term outlook for Pylogica?
Nick Woolf: We have a very exciting twelve months ahead of us. As I mentioned, that we’re hopefully on track within the next few months for our third partnership. We’re also moving hopefully to the next stage of the collaboration that we discussed around Roche and of course behind that, you know there are two or three other deals that we’d hope to close within the next twelve months.
Lelde Smits: Nick Woolf congratulations on your progress this year.
Nick Woolf: Thank you Lelde.
