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Christoph Westphal
Thank you very much. Welcome and thank you for joining us to discuss Sirtris Pharmaceuticals financial results and corporate highlights for the third quarter of 2007. My name is Christoph Westphal and I'm the Chief Executive Officer and Vice Chair of Sirtris Pharmaceuticals.
I am joined today by Mr. Garen Bohlin, Chief Operating Officer; Dr. Peter Elliott, Senior Vice President of Development; Dr. Michael Jirousek, Senior Vice President of Research; Mr. Paul Brannelly, Vice President of Finance; and Dr. Michelle Dipp, Director of Corporate Development.
We hope you have had the opportunity to review the quarterly results press release we issued earlier this morning.
Before moving into a discussion of the quarterly results please note that, in this call we will be making forward-looking statements within the meaning of the Safe Harbor provision of Section 21E of the Securities and Exchange Act of 1934.
All forward-looking statements involve risks and uncertainties that could cause actual results to differ materially. The forward-looking statements we make on today's call are based on our beliefs and expectations as of today only and are subject to potential change.
We refer you to the Risk Factor section of our registration statement on Form S1 for a discussion of the Company's risks and uncertainties that could affect these forward-looking statements. We caution listeners not to place undue reliance on any forward-looking statements as there are no assurances that the matters contained in such statements will be achieved.
With that said, I will make some summary comments on the Company's activities and then ask Garen Bohlin, Chief Operating Officer, to comment on our financial results. We will conclude this morning's call with a question-and-answer session.
On the clinical side, we continue to progress SRT501, our proprietary version of resveratrol, in clinical studies in both Type II diabetes and MELAS, a rare mitochondrial disorder.
We recently initiated a Phase II A study with SRT501 in combination with metformin in patients with Type II diabetes whose glucose levels are not adequately controlled by their metformin treatment. Approximately, 130 patients are expected to be enrolled in the primary end point at levels of HBA-1C.
Secondary end points include levels of fed and fasting glucose and insulin. We have two ongoing Phase I B studies with SRT501 in patients with Type II diabetes and we expect to announce results from the first of these studies at the end of 2007 or in early 2008.
The primary end points are safety and pharmacokinetics. Results for the second study will be announced in the first half of 2008.
We also have an ongoing Phase 1 B study with SRT501 in patients with mitochondrial encephalopathy, lactic acidosis and stroke like episodes also known as MELAS. A total of 20 patients, five in the placebo group and 15 in the treatment group, will be dosed once daily for three months in the primary end point for safety and pharmacokinetics.
Secondary end points include measurements of exercise tolerance. We are also considering additional clinical studies of SRT501 for the treatment of other diseases of aging such as cancer.
In addition, we have positive preclinical data that may support the use of SIRT1 activators in neurodegenerative disease, as presented at the American Neurological Association in October, and in lipid disorders as described in the October 11th issue of Molecular Cells.
With regard to our new chemical entities or NCEs, which are structurally unrelated to and up to 1000 times more potent than resveratrol, we plan to enter the clinic in a Phase I-a study in the first half of 2008. The sirtuins are a broad platform of therapeutic targets for diseases of aging.
The Company's focus to date has been on SIRT1 and now recent data provides support for expanding into members of the sirtuin target platform. Specifically SIRT3 has emerged as a possible target for metabolic disease as published in Cell on September 20, 2007.
Finally, in terms of our expanding intellectual property estate, we recently end licensed IP described as cholesterol regulating complex of SIRT1 and LXR in methods of use from the lab of Professor Leonard Guarente at the Massachusetts Institute of technology.
I will now hand it over to Garen Bohlin, Sirtris's Chief Operating Officer to discuss our third quarter financial highlights.
Garen Bohlin
Thank you, Christoph. Our net loss for the quarter ended September 30, 2007 was $9.7 million or $0.34 per share as compared to $4.9 million or $5.57 per share for the quarter ended September 30, 2006.
Net loss includes $1.3 million of stock-based compensation expense non-cash for the quarter ended September 30, 2007 and $199,000 of stock-based compensation expense for the quarter ended September 30, 2006.
Research and development expense for the third quarter of 2007 was $9.5 million as compared to $4.2 million for the third quarter of 2006. The increase is due primarily to increases in pre-clinical studies costs, external clinical trial costs, stock-based compensation expense, formulation expense for our product candidates, sponsored research costs, allocated occupancy and information technology costs, and personnel costs related principally to increases in research and development headcount.
General and administrative expense for the third quarter was $1.6 million compared to $1.1 million for the third quarter of 2006. The increase is due primarily to increases in professional fees associated with being a public company, stock-based compensation expense, personnel costs and allocated occupancy and information technology costs.
As of September 30, 2007, Sirtris had cash, cash equivalents and short-term investments of $127.1 million as compared to $50 million on December 31, 2006.
With that, I will turn it back over to Christoph.
Christoph Westphal
Thanks Garen. I will now ask the operator to open up our call for questions, and we would be happy to answer any questions you might have.
Question-and-Answer Session
Operator
(Operator Instructions) We will go to Corey Casamov (ph) with JPMorgan.
Corey Casamov - JPMorgan
Great, good afternoon guys. Thanks for taking my questions. Just a couple of them for you here. First of all, regarding the upcoming data for the Phase 1b study for SRT501. First of all, what type of efficacy data could we realistically expect to see in a 28-day trial?
Is there anything about sirtuins as a class that might allow this drug to show a clear signal in such a short period of time?
Christoph Westphal
Thanks very much Corey from JP Morgan. We expect to announce data at the end of this year or very early next year for the first Phase 1-B study. That's once a day dosing in Type II diabetes.
We’ve not yet disclosed the setting where we will present those data, but I would like to take this opportunity to emphasize that we continue to progress SRT501 in the clinic for multiple diseases of aging. The initial data set will be PK and safety as our primary end points as we've continued to articulate to the street.
We are also confident in moving our MTs into the clinic in the first half of 2008 and just as a reminder our NCEs are structurally unrelated to and 1000 times more potent then SRT501 and certainly focus in the pharmaceutical world, they are interested in our NCEs as well.
Corey Casamov - JPMorgan
Okay. Then, as far as how you may present the data, it sounds like no clear decision has been made? Do you at this point should we look for a press release once you have the results or is this more something you would hold for publication in a journal?
Christoph Westphal
So, you are alluding to, appropriately, to the fact that we in general ultimately prefer to publish in the academic press. I think given the interest in these data you can imagine top line data at a conference and a press release accompanying that.
Corey Casamov - JPMorgan
Okay. And then, a last question I have is regarding your IP. You've obviously set a pretty good wall around sirtuins and metabolic studies. Can you describe, however, the type of protection that you may or may not have in non-metabolic settings in particular? I'm talking about in oncology given the recent developments there surrounding the potential impact of sirtuins in that area?
Christoph Westphal
Yes, I will let Garen take that question.
Garen Bohlin
Yes, Corey, that's a good question. In the broadest form, we have claims pending right now that would cover any activators of SIRT1 applied to treat a broad range of diseases including cancer, as well as metabolic and many, many other therapeutic disease areas. So, essentially methods and mechanisms claims that would be highly protective across a broad range of therapeutic disease areas.
Christoph Westphal
And I would just add we have increasing confidence in the strength of our broad patented state and that's validated as we talk to folks.
Corey Casamov - JPMorgan
Okay. Great. Thanks for taking my questions.
Christoph Westphal
Thank you.
Operator
We will go next to Bret Holley with CIBC World Markets.
Bret Holley - CIBC World Markets
Yes, hi guys. How are you? Thanks for taking my questions. First question has to do with your partnership plans with the NCEs. It strikes me that a third party might be interested in seeing these proof of concept data for 501 before they may act on a partnership with the NCEs. What kind of feedback are you getting in your discussions along those lines?
Christoph Westphal
Bret, that’s a great question and certainly something on the mind of many folks on the buy side. We would seek to partner our programs when we can receive the most value for our investment.
We currently believe at that point will be in Phase II-A data range and at least some education such as Type II diabetes that require large patient trial numbers and significant commercialization capability.
So again I would like to say the same thing we say when we meet with the buy side, which is, we are not setting expectations for partnership in the next 12 to 18 months; but we continue discussion at senior levels of pharmaceutical companies.
Bret Holley - CIBC World Markets
Okay. Fair enough. And then, on SIRT3, what kind of time line would be reasonable? I mean obviously the science is becoming more evolved; it's fair to say, over the last six months. I'm just wondering how fast you can act and how fast frankly you need to act is your perception?
Christoph Westphal
It’s a great question. We continue to believe, we are several years ahead of probably half a dozen pharmaceutical companies that are interested in this space. At current, we continue to be encouraged by the data on the additional sirtuins such as SIRT3 and we plan to expand our platform beyond SIRTE1 at the right point. I should emphasize that SIRT3 is still under devaluation as potentially the next most likely sirtuin target area. Currently we are not really providing a time line.
Bret Holley - CIBC World Markets
Okay. So there's no idea of what would be critical path to make that decision at this point? Just that that is kind of where you're heading?
Christoph Westphal
Yes. I mean we will continue as we've done to be, I think, quite transparent with the buy side and to continue to keep folks up-to-date.
Bret Holley - CIBC World Markets
Okay. Thank you very much.
Christoph Westphal
Thank you.
Operator
We’ll go next to Edward Tenthoff with Piper Jaffray.
Edward Tenthoff - Piper Jaffray
Great thanks very much and our congrats on the progress this year. Just one quick housekeeping question and then another sort of larger kind of pass forward question. We did see R&D spike up pretty significantly in the third quarter. Is this more of an appropriate go forward rate way with all of the clinical and pre-clinical work that is ongoing?
And as you look at new indications including cancer, with the NCEs close to advancing into the clinic, does it make more sense to maybe wait for more potent compounds before advancing into cancer or is the goal here to kind of begin to establish proof of concept?
Christoph Westphal
These are great questions Ed. We appreciate them. First of all you pointed out, I think rightly, that our increase in spending is come in R&D and really much more modestly in G&A. I think that is a strong indication where we want to spend our money.
We are very focused on a lean infrastructure. We still have roughly 50 folks here. We've barely hired any since our IPO and we are focused on maintaining a strong balance sheet so that we have no interesting and important control of our strategic fate.
I think that probably answers your first question. You also asked about cancer as an indication. There are data from numerous pre-clinical studies supporting SIRT1 activation for the treatment of cancer. We are in the process of evaluating various oncology indications for SRT501 and more broadly speaking for SIRT1 activation.
We do expect that those trials could initiate in the second half of 2008. I think the final question was 501 versus NCEs. In our view of them we think that 501 is really a unique advantage that our Company has just as we are mimicking a natural process and to remind you, I knew you know this, maybe other folks on the call will not. But we always do emphasize we believe have genetic validation of our approach.
We have this cohort in Finland that seems to be healthier with increased SIRT1 activation. We published that in Cell. We have physiological validation for our approach that the data on calorie-restricted humans in Louisiana that we publish.
Also in JAMA and German we have pre-clinical therapeutic validation and we are obviously in the stage now of hoping to show validation on a clinical level. So on that front we think 501 is a very important, very interesting tool for us. And we do continue to believe that it is a potential drug opportunity.
Edward Tenthoff - Piper Jaffray
And actually, Christoph, I'm sorry just to clarify, the question was more along the lines of I think we understand that 501 is advancing in Type II diabetes now for proof of concept and potentially important in MELAS and other indications.
But I guess my question was more in new indications such as cancer, especially considering we will be starting those trials probably in the late half of next year as you described. Does it make sense to wait for more potent compounds than NCEs to advance into cancer versus 501? So it's more a question of why go into cancer with 501 since the NCEs are close by?
Christoph Westphal
Well that's a great question. It's actually and I'm glad you made it more precise sorry to not have answered it originally. There is a wealth of data regarding resveratrol and SIRT1 activation for the treatment of cancer. There's actually nearing 20 papers published on that.
And so we think it is a really unique advantage we have with SRT501 and resveratrol specifically in cancer. We do believe and I think it's fair to assume that SIRT1 activation in general is attractive. But certainly SRT501 specifically could be very attractive.
Edward Tenthoff - Piper Jaffray
Thanks that’s very helpful.
Operator
(Operator Instructions) We’ll go next to Mike King, with Rodman & Renshaw.
Mike King - Rodman & Renshaw
Yeah, hi. I think you took care of most of my questions and answered to Ted's questions, but maybe Christoph you could cite for us unless you're keeping it under wraps for now. But where you think the greatest biologic validation is of SIRT1 activation in cancer?
Christoph Westphal
I think it's fair to say that you could look at both solid and liquid tumors. We think there's actually quite interesting data points in both of those arenas. We are continuing to still evaluate which ones one might consider going after.
But we actually think that SIRT1 activation, specifically resveratrol on its own and, then, even you go back to the calorie restriction literature which has a wealth of data related to prevention and actually treatment of cancer. We think it is a pretty strong case.
Mike King - Rodman & Renshaw
And just in terms of strategy do you think early on in those types of studies you would go into sort of broad signal seeking types of studies or do you think you might do some kind of enriched study where you would select certain tumor types to focus on more definitively?
Christoph Westphal
You know we're still early in our evaluation. We haven't decided, but you obviously have been in biotech and covering the industry a long time and, certainly, the latter option is quite an interesting one and Peter Elliott who runs our development you know developed Velcade with Julian Adams.
So we certainly feel we have a lot of internal expertise in the area.
Mike King - Rodman & Renshaw
Great. Thank you.
Operator
Ladies and gentlemen, this will conclude our question-and-answer portion of the call. I'd like to turn the conference back over to management now for any additional or closing comments.
Christoph Westphal
Yes. Thank you very much. We appreciate everybody dialing in and the thoughtful questions from the analysts who called in and asked those questions. We look forward to speaking with each of you in the near future.
Operator
Ladies and gentlemen, this does conclude our conference for today. We appreciate your participation and you may now disconnect.
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