News: Phylogica moving in on deals in FY13

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Transcription of Finance News Network Interview with Phylogica Limited (ASX:PYC) CFO and VP Corporate Development, Nick Woolf



Lelde Smits: Hello I’m Lelde Smits for the Finance News Network and joining me today from drug discovery company Phylogica Limited (ASX:PYC) is CFO and VP Corporate Development, Nick Woolf. Nick welcome back.



Nick Woolf: Thank you Lelde.



Lelde Smits: Phylogica has just released its full year results: What were the highlights in fiscal 2012?



Nick Woolf: Well for the financial year we announced a revenue of $2 million, and that was a little behind where we’d hoped to be for the full year. There were a couple of deals that have slipped into this financial year that we’re hoping to close shortly. And our loss for the year was just short of $4 million which is in line with our sort of cash burn expectations, and our move towards sustainability.



Lelde Smits: Looking ahead, when do you expect to become cash flow positive?



Nick Woolf: Well providing we can deliver on our expectations for this year, and we are well positioned for that, you know we think FY13 could be the year where we reach a break-through position.



Lelde Smits: Great, now the full year results also made mention of managing costs. Where do you anticipate this would occur?



Nick Woolf: Well we’ve been focusing our efforts really on where our discovery alliance partners have wanted us to focus. And that’s been primarily in the area of cell penetrating peptides. So, using our peptides from our libraries as transporters to carry payloads into cells and also addressing intractable intracellular targets. You know, where there’s a great unmet need for new therapies that can penetrate cell walls.



Lelde Smits: So to recap, what are the biggest milestones that Phylogica achieved over the last financial year?



Nick Woolf: So during the year we announced our largest deal to date which was with Janssen, one of the Pharma companies of Johnson & Johnson. And that’s a very broad ranging deal - again, potentially our largest financially. We also announced progress with Pfizer, another of our collaborators where we’re working in the therapeutic vaccine space. And we were able to reach a key milestone in that collaboration.



Lelde Smits: And could you elaborate on your sources of revenue throughout the year?



Nick Woolf: Well again, it’s focused on these two collaborations. So during the financial year, Janssen paid us both an upfront payment and also the first instalment of research funding, under the fee for service arrangement that we have. So it was close on $2 million from Janssen and we had also payments related to the Pfizer collaboration.



Lelde Smits: So Nick, what areas do you expect to focus on in the coming year?



Nick Woolf: Well we’re looking to land a number of deals in a number of different areas. And we are working hard with Janssen still on cell penetrating peptides, as I mentioned before. And this is trying to deliver one of their scaffolds into a certain cell line that’s of relevance to them. And we are still pursuing with our collaboration with the Roche Group, peptides that can penetrate the brain. And that’s an area where we are also working internally on second generation approaches to that end.



Lelde Smits: Looking closer at your alliances, could you tell us about your other major collaborations?



Nick Woolf: Sure, well I touched on the Janssen collaboration which we initiated during the financial year and that is proceeding very well. The Pfizer collaboration currently is at a stage where Pfizer vaccines are evaluating the results, the successful results from the first stage. And we hope that that deal will continue to them exercising their options to licence. We have an ongoing collaboration with the Roche Group around as I mentioned, blood brain barrier delivery of our peptides. And again, our peptides are in the evaluation phase and the next step will be hopefully, a commercial licence from that.

And fourthly, we have a relationship with MedImmune which is the biologics unit of AstraZenica. And there we are working on finding peptides with antibiotic properties to address a major superbug in hospitals called pseudomonas. And again, that relationship is progressing well.



Lelde Smits: And Nick what are your plans for future partnerships?



Nick Woolf: Well we’re working hard to get a number of deals across the line over the next few months. We had two deals that we’d hoped to announce as I mentioned, before the end of the 30 June 2012. And those deals are now moving to closure and hopefully in the next few weeks, we’ll be able to announce the first of those. And behind that we have really the deepest pipeline of deal flow that we’ve had to date. We’re talking to big pharma and also more medium sized companies in some instances, about deals that are significantly larger in scope and richer in terms of the economics, than deals that we have done so far.



Lelde Smits: Finally Nick, what milestones will Phylogica be aiming to achieve in Fiscal 2013?



Nick Woolf: Well we’ve touched on some of those points already; obviously new deals are important to us. And we’re looking to evolve our business model to some extent where in some of the deals that we have under negotiation today, we’re looking to retain co-development rights, whereby Phylogica is able to put its own money into the development work of our peptides.

And as a result, we can reap much larger milestones and royalty rates from the successful commercialisation of those drugs. I mean in addition obviously, extending our current deals in terms of the relationships and we are talking to some of our current partners around much broader relationships again.



Lelde Smits: Nick Woolf, thanks again for the update.



Nick Woolf: Thank you Lelde.



Ends