Agenus Inc (AGEN) 2003 Q3 法說會逐字稿

Good morning, my name Libby and I will be your conference facilitator today. At this time, I would like to welcome everyone to the Antigenics third-quarter 2003 financial results conference call. (OPERATOR INSTRUCTIONS). Ms. Sripanich, you may begin your conference.

Thank you operator, and good morning. Welcome to the Antigenics conference call to discuss our corporate and clinical progress, as well as our financial results for the third quarter of 2003. This is Tanya Sripanich from the Investor Relations Department, and with me today are Garo Armen, Chairman and CEO of Antigenics; Russell Herndon, our President and Chief Operating Officer; Jonathan Lewis, our Chief Medical Officer; Elma Hawkins, our Vice Chairman; and Jeff Clarke, our Chief Financial Officer.

We hope that all of you have had a chance to review a copy of our earnings press release that went out this morning. We will review these results, as well as highlights for the quarter in this call and then open it up for questions. Before I turn the call over to Garo, I'd like to remind you that during this conference call, Antigenics representatives will make forward-looking statements, including statements about expectations for development programs in clinical trials; anticipated regulatory filings; and actions in future financial performance. These statements are subject to risks and uncertainties and Antigenics' actual results may differ materially from those projected in the forward-looking statements. These risks and uncertainties include, among other factors, factors related to be regulatory approval process described in the company's periodic filings with the Securities and Exchange Commission. Please see the "factors that may impact future results" section of the managements discussion and analysis of financial conditions and results of operations in the Antigenics quarterly report on form 10-Q for the quarter ended June 30, 2003 for a full discussion of these and other risk factors. Antigenics cautions investors not to place undue reliance on the forward-looking statements made on this call. These statements speak only as of the date of this call, and we undertake no obligation to update the forward-looking statements made on the call. I will now turn the call over to Dr. Armen.

Thank you, Tanya. I am pleased to provide update on the company's progress. First, I will review the financial highlights for the third quarter of 2003. Then, Dr. Lewis will report on are clinical programs and the progress of our lead clinical candidates. Finally, we will open the call to questions.

On the financials -- and please bear in mind that our net loss numbers reflect the net loss attributable to our common shares, in light of our recent placement of convertible preferred shares. For the three months ended September 30th, 2003, Antigenics incurred a net loss of 17.8 million, or 45 cents per share, compared to a net loss for the same three-month period in 2002 of 13.6 million, or 41 cents per share. For the 9 months ended September 30th, 2003 the company incurred a net loss of 47.9 million, or $1.23 per share. This is compared with a net loss for the same 9-month period in 2002 of 39.5 million, or $1.20 per share.

Revenues for the 3 months ended September 30th, 2003 were .8 million, compared with .9 million for the 3 months ended September 30th, 2002. For the 9 months ended September 30th, 2003, revenues were 3.5 million, compared with 2.6 million for the same period in 2002.

The total research and development costs for the 3 months ended September 30th, 2003 were 13.4 million, compared with 10.4 million for the 3 months ended September 30th, 2002. Total research and development costs were 35.7 million for the 9 months, and that compares with 28.5 million for the same period last year.

Total general and administrative expenses for the 3 months ended September 30th, 2003 were 5.1 million, compared with 4.3 million for the same period in 2002. For the 9-month period ending September 30th, 2003, total general and administrative expenses were 15.6 million, compared with 13.7 million for the same period in 2002.

Cash and cash equivalents in short-term investments accounted -- amounted to 103.7 million on September 30th, 2003. This balance includes approximately 31.6 million in proceeds from our private placement completed in late September of newly-created Series A convertible preferred shares.

Now, let's get on to the updates. As you know, on September 2nd, the FDA placed a partial clinical hold on our Phase III clinical trials for Oncophage, which includes trials in renal (ph) cell carcinoma and metastatic melanoma -- and requested additional product characterization information from us. At that time, we set a deadline for ourselves of 6 to 8 weeks to submit the required information. We have currently completed that documentation, and that documentation is now on its way to the FDA -- to be delivered to the FDA.

Our business development effort continues to move forward. We are currently in diligence meetings for partnership -- partnering Oncophage with potential worldwide pharma partners, as well as potential partners in Asia and Europe. Our current partnerships related to our QS-21 ajuvant trials are also still progressing and we continue to supply products to our partners.

We have further strengthened our ties to the clinical community through such programs as our Investigator IND (ph) program, which started recently, as well as through our increased presence at medical and scientific conferences, which Dr. Lewis will speak about in greater detail in just a bit.

In addition, we continue to lay the foundation for our commercialization activity, including developing a pricing and reimbursement strategy, continuing to build a speaker bureau, and develop through leaders and implementing our publication plan.

Our research and development team, who are now successfully installed in our Lexington facility, have also made substantial progress. In addition to progress and efforts to put forth towards resolving the partial clinical hold, our R&D team has also made encouraging progress in our next generation AG-707 program, as well as continuing to refine and improve existing products.

I would now like to introduce Dr. Jonathan Lewis, our Chief Medical Officer, who will give you a progress report on our clinical programs. Jonathan?

Thank you, Garo. I will now update you on the lead clinical programs, as well as share with you some highlights regarding recent scientific and medical presentations and publications.

I will begin with the lead product, Oncophage. The first program, which is the renal cell program -- we do continue to treat patients in these Phase III trials for renal cell carcinoma. As you remember, at midyear, we had randomized 650 patients into the trial and we continued to enroll patients up until the time of the partial clinical hold. To date, we have not randomized 690 patients. With that, we remained on track to perform an interim (ph) analysis of this data from this trial around year-end.

The next program is melanoma. At the time of the partial clinical hold, the Phase III trial in metastatic melanoma was about 50 percent enrolled. We continue to treat those patients who are already enrolled, and we plan to continue with enrollment in this trial once the partial clinical hold has been lifted.

I will now speak about Oncophage in other indications. And to that end, Phase I/Phase II clinical trials for Oncophage in breast and lung cancer are planned to be open for enrollment during the final quarter of this year, and the first quarter of next year. The first -- a lung cancer trial -- will be conducted at St. Thomas's hospital in London, and this will be done in the ajuvant setting. The second -- a breast cancer trial, will enroll patients (indiscernible) to available therapies, and will be conducted at Memorial Sloan Kettering Cancer Center in New York.

I will now shift gears and review the AG-858 program. As you recall, the data from the pilot study of AG-858, in combination with Gleevec for treating CML, was presented at ASCO this year. Final data will be presented at the upcoming Ash (ph) meeting in December.

We have also initiated a large single-arm Phase II study, evaluating AG-858 in combination with Gleevec, and this trial is being conducted at the leading CMO centers in the United States and the United Kingdom. Enrollment is proceeding on-track, and we expect to complete enrollment next year. We also expect to have our first data from this trial available by the middle of next year.

I will now shift gears and review Aroplatin. And at the ECCO meeting in Copenhagen this last September, we reported the first data from the Phase II trial of Aroplatin as a monotherapy (ph) for colorectal cancer. This trial, as you remember, is being conducted under Dan Von Hoff at the Arizona Cancer Center. The data presented showed that in 15 evaluable patients, there was 1 patient with a partial clinical response, and two with disease stabilization. We continue to enroll patients in a Phase I and II study of Aroplatin as a monotherapy for advanced solid tumors amenable to (indiscernible) therapy. This study is being conducted at the John Wayne Cancer Center in California, and currently has enrolled 18 patients. We are currently evaluating the future development plans for Aroplatin.

I will now shift gears and speak to you about our infectious disease program. The genital herpes program continues to progress. As you remember, the (indiscernible) study with AG-702 is currently being tested in the Phase I trial at the University of Washington in Seattle. Enrollment in this trial for all of those levels is on-track, to be completed by the end of this year, with data from this trial being available by the middle of next year '04. We intend to launch the next phase of this herpes program by filing an IND by the end of this year, and beginning clinical testing soon thereafter. And this will be the multi-virulent (ph) vaccine, AG-707.

I will now review with you the recent conference activity. In September of this year, we presented two abstracts at the 12th annual European Cancer Conference -- ECCO -- in Copenhagen. Data from the Oncophage Phase I trial for pancreas cancer was presented in an oral session. In this pilot study, 10 evaluable patients had a median overall survival of 2.5 years or 30 months. And these results were notable in the setting of the historical median survival for these patients being about 16 months.

In addition, there were 3 patients who survived for a longer period than expected. One patient is still alive and disease-free after more than 5 years, and 2 others are also alive and disease-free at 2.5 and 2.2 years after treatments. In addition, we presented at the conference data from the Phase II trial of Aroplatin, as I have just mentioned.

At the European School of Hematology, known as ESH, a meeting in (indiscernible) earlier this month -- and this was a meeting of attended by the global leaders in leukemia. We presented on the HSP clinical translational program, and also hosted a satellite symposium on the immunotherapy of CML.

As I mentioned earlier, the final data from the pilot study of AG-858, in combination with Gleevec, was presented at ASH in December. And also, (indiscernible) presented at ASH will be updated data from the Phase II trial of Oncophage for low-grade indolent, non-Hodgkins lymphoma.

Let me shift gears and speak to you about recent publications. Along with (indiscernible) and maintaining our presents at conferences and meetings, we have been active in publishing. In mid-August the results from our Phase II trial of Oncophage in patients with metastatic colon cancer were published as a feature article in Clinical Cancer Research. In that trial, 52 percent of patients responded immunologically to treatments with Oncophage. These respondents demonstrated a (indiscernible) overall survival of 100 percent, compared to about 50 percent for the non-respondents.

At the beginning of this month -- October -- The Journal of Immunology published the immunological data from the Phase II Oncophage trial for melanoma and colon cancer. In this analysis, about half of the patients who received Oncophage demonstrated cancer-specific immune responses, including an increased production of T-cells that can specifically attack the melanoma or colon cancer cells. In addition, the immunological mechanism (ph) of action was observed to be the same in both melanoma and colorectal cancer.

In summary, despite the partial clinical hold setback, we continue to progress in the clinic. We continue to demonstrate the potential applicability of heat shock protein treatments to multiple different types of cancer. And we will be starting trials, including new cancers -- that being lung and breast -- in the near future.

That concludes the clinical development updates. Thank you.

Thank you, Jonathan. We will now open the call to questions. Operator?

(OPERATOR INSTRUCTIONS). Mark Monane, Needham and Company.

A couple of questions -- could you comment on what you believe to be the state-of-the-arts therapy in melanoma? I know there are a number of different trials going on. I think there were some interesting trials on immunotherapy in melanoma presented at Asco this year. What, in your opinion, is the state-of-the-art in melanoma? And does Oncophage potentially fit in there?

Certainly. Since Jonathan Lewis is an expert in the field of melanoma, I will ask him to address this question, specifically. Jonathan?

The state-of-the-art is the following -- and that is that in early melanoma, most patients are curable by operation. As regard to late-stage melanoma, most patients are incurable by any means. The current standard of care for those treatments include DTIC chemotherapy, or in the oral form, temozolomide,

In addition, some patients are give immunotherapy, and that immunotherapy usually is experimental. And then, there is a whole host of different ones being tested -- some by academic centers, some by the MCI (ph), and some by different companies. Most recently, there was data from a study done by Genta (ph), and that is the data, as regards to product (ph) (indiscernible). Again, I think at this time, it is very difficult to interpret what those data are actually going to mean. And how that is going to impact or not impact on the standard of care.

Specifically, addressing Oncophage, there is clearly a need for treatment that is going to be effective in late-stage melanoma. There are a variety of candidates that are moving down the track towards that. And, one of those is Oncophage. Again, based on what we have seen across several different cancer types, based on what we have seen in early-stage testing in melanoma -- and again, these are the same late-stage patients -- it is certainly promising. And again, one of the lead candidates amongst all of these is Oncophage. And to attest to that, the next big trial to be done by the big cooperative groups, is going to be done using Oncophage.

That is good information. Concerning the trial that you are doing right now -- when you say, Jonathan, that you're 50 percent enrolled, how many patients is that?

The target number for enrollment is 350 in this trial. And so we are approximately halfway there.

I don't want to play word games. But on the renal cell, I thought I heard you say that the interim result will be out some time towards the end of the year. Does that mean, potentially, we might hear about it in the beginning of next year?

Let me address that, Mark. There are two issues that need to be taken into consideration here. One is strictly administrative. We have hired an outside group to review those radiology reports independently, and in a blinded fashion, as part of the protocol. So that there would be no prejudice introduced into the process.

We are racing, right now, to complete that process with the outside independent group, because without that determination by them, we cannot complete the interim analysis. So, that is due to be happening, or to be concluded, some time between now and around year-end -- meaning year-end plus or minus two weeks, basically.

Okay. That makes sense.

The other issue is that there is always a possibility -- although we've had no indications of that -- that the FDA could come back to us and ask us to delay the interim look (ph) if the clinical hold issue is not resolved by then. We hope that it will be resolved by then and this will not be an issue.

Right. That makes sense. That was my last question -- and that is -- what do you expect -- when you said it was in the mail, is it traditionally -- is it really on the way there? Or has it been shipped? And what have you heard from the FDA about when they might give their thoughtful response back to you?

Okay. Let me just explain to you a little bit. Since the clinical hold was put into place, we've had a number of informal conversations with the FDA, and we've had the formal correspondents articulating exactly what their requirements were. And those have all been factored into the final documentation. The final documentation is completed, and we expect that to be delivered to the FDA, either today or tomorrow. It will be done in person, essentially. So, that is the latest update I have for you on that issue.

The FDA has 30 days to respond to us. So, the response can be that the clinical hold has been lifted, or it could be that they will come back to us with no more questions, which will necessitate us, again, compiling the information to satisfy additional questions, if there are any. And then supplying them with the additional information.

Terrific. Thanks for the update. Very helpful.

Thank you, Mark. Next question?

Cory Kasimov, Ryan, Beck.

A few questions here really on each of your late-stage programs. Starting off with Oncophage, if you could please remind us of the exact number of events that triggers the interim look in the renal cells study? And then, if you can go into a little bit of explanation in terms of possibilities here. Obviously, you have the two clear-cut book-end possibilities -- either there is a statistically significant improvement right of the bat, or there is no benefit whatsoever. And then, it seems that there could be something that is in-between, where you see some nice trends, but it is a little too early to achieve statistical significance. If that is the case, what would that mean for the study in terms of both timelines and in terms of your reaction to the data? I guess I will ask that question -- (multiple speakers)

Sure. Let me address those issues one at a time. As far as the number of events, it is a minimal 52 events. We believe we have exceeded that by a decent margin. So, the data cutoff date has been decided by the internal and external clinical group and the DSM to be a specific date, and we anticipate that by that date, the number of events will have exceeded the 52.

In terms of the realm of possibilities -- certainly, there are 3 possibilities. One would be that the results will be such that the DSMB be will decide there is a very clear separation -- statistically clear separation -- based on these numbers and based on the interim look between the treatment arm and the control arm. And, if such is the case, then we will have discussions with the agency to see how we may go about filing a BLO (ph) for product improvement.

Another possibility is that the interim look, as you suggested, shows a separation, but has not quite made the statistical cut, which means that the study will be continuing to its conclusion. And, that will be sometime later on next year, where all the results will be in for the analysis, based on time-to-progression data. And then the statistical analysis will be applied on the final results.

And a third possibility is that the product could be just deemed based on safety and/or efficacy, not to be in the best interest of the patients. And, if such is the case, DSMB could make a recommendation to hold trials because the patients, in their opinion, would be hurt by treatment versus the control group.

So, those are the realm of possibilities. Based on what we know -- it is unlikely to be the third one, based on safety. And, we have no reason to believe, based on what we know, that the third possibility would be a likely scenario, based on efficacy, as well.

Okay, that clarification is helpful. Then, with regard to the melanoma study -- the Phase III. Regardless of when this clinical hold is removed -- whether it's in 30 days, in 60 days, whatever -- how long thereafter do you think it would take to complete enrollment of the Phase III melanoma study, now that you are 50 percent enrolled and it sounds like you have more centers that were up and running, right, at the time the clinical holds came in place?

Right. Our best guesstimate is somewhere around probably 9 months, to be conservative.

Okay. Great. Then, a couple of really quick questions regarding 858 and Aroplatin. For 858, how many -- I apologize if you said this in your prepared remarks -- but, how many patients will be in the final analysis from the pilot study that is going to be presented at ASH?

20 patients.

Twenty patients. Okay, and then with Aroplatin -- an update, if possible, on the enrollment of the second cohort in the Phase II colorectal study and when we could see data there?

Sure. Let me put Jon on that one.

Again, at this time, what we're doing is evaluating how best to proceed with the program. The reason for that is that, based on the first part of the study, we have taken that as of the PIs (ph). And they had positive results. And so the question becomes -- do we continue using this as a monotherapy? Or, do we move straight ahead into using it as a combination therapy? And to that end, we are evaluating several different possibilities, including ongoing pre-clinical testing. And, as soon as we have a better sense of that, we will give you more guidance.

Okay. Great. Thanks for taking the question, guys.

Raymond Myers, Princeton Institutional.

I want to ask about these two new trial that you are planning for Oncophage in breast cancer and in lung cancer. I was interested in the trial design; how many patients; your thoughts about the timing of enrollment; and the length of the trial, particularly the lung cancer, which is in (indiscernible) setting. And then also, I assumed these would be also impacted by the clinical hold.

Okay. Let me address that issue first. As you know, these trials will not be impacted by the clinical hold at all. That was the interpretation of the partial clinical hold in that the only two trials that were impacted by the partial clinical hold were the Phase III trials for Oncophage in renal cell carcinoma and melanoma. So any other program outside of those Phase III trials will not be impacted by the clinical hold at all. And, with that, I will have Jon answer the questions in more detail. Jon?

Ray, thank you. So first, regarding breast -- this trial is expected to start, again, around the end of this year. It is going to be a trial in patients with stage four phase breast cancer. It is going to be done under the direction of Larry Norton (ph) at Memorial Sloan Kettering. We're not going to release any information regarding the actual study itself. And the reason for that -- it still undergoing the review process. And once it starts, we will release full information as to the exact number, etc. We expect that trial to be concluded by the end of '04.

The second trial is in lung cancer. And similarly, again, it is being done at the largest thoracic center in the United Kingdom, which is a very large center in London. Again, we expect this one to start by the end of this year. And again, in terms of the actual specific details, we will release that at the time that we start the trial for the same reason -- it is going through the final review process right now -- by the IRB, (indiscernible) institution. And the timing for the end of that, again, we expect to have by around the end of '04.

End of '04, even though it's an ajuvant trial?

That is correct.

Is it primarily a safety-in-dosing trial? Is that why it is so short?

The primary influences are going to be issues of feasibility and safety. At the same time, we are going to examine different clinical end points.

Good. Thank you very much. Can we move on to some questions of the finances? Primarily, you are moving to a new production facility. And, can you tell us about the progress towards that and the cash flow expected to be spent on that in the fourth quarter?

Sure. Let me just tell you that we have completed that facility. This is a facility in Lexington, Massachusetts. It will house our entire Massachusetts operations. And, we have moved in all functions into the facility, with the exception of manufacturing, and we anticipate that manufacturing will be moved in over the next two months or so.

And, as far as the finances are concerned, I will allow Jeff Clarke, our Chief Financial Officer, to address those issues.

Sure. Ray, on the capital expenditures -- our investment we have made in the facility as of September 30th, are approximately $16.1 million, which was in line with the budget that we had for the project. We still have a small level of investment to make in the facility for punch list (ph) items and some additional equipment. But, we are on target for that. And, as you know, we secured a debt facility with GE Capital to finance a good portion of that project.

As for our projected cash burn in the fourth quarter, it should be in line with our cash burn in the third quarter -- somewhere between 12 to $14 million in the fourth quarter.

Great. And Jon, can you maybe give us a little guidance about cash burn throughout 2004? And particularly R&D, now that we've got a couple of new projects starting up -- but then, you've got clinical holds on the melanoma. Where do we see R&D trending next year?

Sure. I think R&D expenses will go up marginally, not vary significantly, because several of our largest programs are unwinding, such as the renal cell carcinoma program, which will have accounted for the single largest expense item during the course of 2003, and other things will be coming up. So, on balance, our burn rate will be perhaps marginally up, but not significantly up from where we are from the fourth quarter levels.

Great. We look forward to more news in the future. Thank you.

Patrick Schneglesby (ph), Meta (ph) Partners.

A lot of them have been answered; I just have two quick questions. One for Jonathan, or maybe both for Jonathan. You mentioned that the melanoma -- that you may initiate some more melanoma trials, or that the corporate -- (multiple speakers)

Cooperative groups?

Thank you, cooperative groups. Will they initiate trials. Do you have any timeline on that and size on that? Or is it just too preliminary?

Sure. Jon?

We have spoken before, and we will confirm with you that the EORTC are going to be doing a trial in melanoma. This is going to be a large trial. It may or may not be done together with other cooperative groups in the United States.

As to the exact timing of when that is going to start -- and the duration and so on -- that is going to be a function of when the possible clinical hold is going to be lifted. So I cannot tell you with any degree of certainty now, as to exactly when. I can tell you that we are well-along in terms of the planning for this trial, and well-along in terms of, again, having a protocol, and having the various members of the EORTC up and running. But again, clearly, this is going to depend on when the partial clinical hold is going to be lifted.

And the reason, by the way, just for clarification, again, is that Phase III trials are impacted by the partial clinical hold, whether they are underway or to-start, but the rest of the trials are not.

Okay. Thank you. One follow-up on that -- with respect to the renal cell carcinoma trial -- the Phase III trial -- you mentioned early this morning you have 650 patients enrolled right now. What was the goal? I guess what I'm -- maybe I am confused, but I was under the impression that that was fully-enrolled and would not be affected by the hold. Am I missing something?

That is correct -- that the initial target for this trial was 650 patients, and to randomize. And we have randomized, as Jon mentioned, to date 690. And are continuing to enroll patients up to a certain time line for purposes of two things. (indiscernible) One was -- a very high level of enthusiasm by the clinicians who continue to enroll patients in this trial. Because remember, again, patients that qualify for our Phase III renal cell carcinoma trial with Oncophage do not have any other options. Our control is (indiscernible).

And the second reason was that we wanted to over-randomize, rather than under-randomize, because you won't be hurt by that process. And, of course, you have a little bit more, but it is the prudent thing to do. As of now, we have exceeded our initial target for (multiple speakers).

Okay. So is some of his over-enrollment that you're pursuing now related to the "statistical hit" that you might take later on this year when you look at the data?

Right. Patrick, no it is not. The reason to over-enroll is the following -- the fundamental reason -- and that is that with the end point of time-to-progression, we want to be very sure that within the group of (indiscernible) to treat, we have a sufficient number of patients who do not have metastatic disease at (indiscernible), as dictated by the protocol. And again, we are quite certain of that, but one of the things that we found is that even at the best of centers, there are a small proportion -- and I can't give you the exact number, but it is less than a few percent -- of patients who are deemed to be non-metastatic, who actually turn out to be metastatic. So really, that is the primary rationale to over-enroll here -- to be quite sure that you have a group of patients who at time point zero (ph) do not have metastatic disease.

Okay. Thank you. One very last question with respect to the breast cancer/lung cancer trials that you are planning enrolling. I assume they are Phase II. One question there is -- given the fact that you are currently on hold -- on partial clinical hold -- have you thought about the fact that if you start these trials -- I'm sure you have -- if you start these trials with the current product specifications, as is for Oncophage, that patients that you are enrolling will be enrolled with current specifications that the FDA could potentially come back with slightly difference specifications of the products?

I will ask Russ Herndon, our President and Chief Operating Officer to answer that question. Russ?

The question -- it deals with whether or not the FDA could come back and request more information?

The question is as follows -- let us assume Oncophage, as is now, after the review of the FDA, will require -- will be specified slightly different. In other words, when you start another Phase II trial right now with Oncophage as it is specified right now -- going forward that Oncophage may no longer be the one that the FDA is seeking to describe in its product characterization. Hence, you would start a trial -- you would essentially -- from a registration point of view, these patients would not necessarily fall under evaluable subjects?

If I understand what you are saying correctly, the issue associated with the trials is designed as a biologic product. The product is as it is delivered. So, the material in the vial for Oncophage is the product that is being given to patients. And that we use the same manufacturing method for all the materials that are currently being used in any of our clinical trials. So, obviously, as we would continue to develop the product, and as technology allows, we would continue to characterize our materials to better understand them. But, that would just be increased information that would apply to all studies, and would not be separate from the studies that are currently being run versus studies that would be run in the future.

Okay. Thank you so much.

Jennifer McNealy (ph), Franklin.

This as a quick follow-up to that last question and then I have a couple more. I think what the prior person was asking is -- if there is some change in process (technical difficulty) through all of the patients in your trials?

Jennifer, you are not coming through clearly. If you could speak a little bit louder --

Okay. The question, as a follow-up to the prior question was -- if, during the clinical hold, the FDA requires you to change the process or the material in (indiscernible) -- does that change the consistency of the material -- you know, let's say the patients that are in one phase of the trial patients (indiscernible) what patients had in another phase of the trial?

Sure. I think one clarification now (indiscernible) rush to elaborate on this, is necessary -- is that none of the discussions that we've had with the FDA has involved them requesting a process change for the product. The process is fixed. I think the issues that they have raised have been additional data, so that we can characterize the product, based on the specifications that they have. And, given that we have an individualized protein therapeutic, clearly, we're breaking new ground in terms of the kinds of data that can and cannot be generated because of the nature of our product. And those are the issues that we have come to negotiate with the FDA. Russ, do you want me to add anything to that?

No. (multiple speakers)

I think I understand. When you were talking about your burn rate before, I don't know if I caught what you said on 2004 for the burn rate?

Right. I will have Jeff answer that more specifically.

Sure. What we said before, Jennifer, was that we do expect our burn rate to increase marginally next year. We are currently in our annual budgeting process right now. So, I cannot give any more specific guidance on that. But, we do expect it to increase marginally.

Just to recap, the burn rate for the fourth quarter is estimated to be somewhere in the neighborhood of 12 to $14 million. The burn rate in 2003, obviously, including the capital expenses associated with the new facility and the magnitude of any capital expenditures next year will be significantly lower than what we incurred in 2003. So, just to provide some level of guidance, we expect a marginal increase from the anticipated fourth quarter burn rate, which will not include very much in the form of capital expenses. .

Okay. And then a final question on the interim look. It sounds like that's going to happen around Q4. How would you communicate that to us, especially if there's really no change, or if you are just going to keep going with the trial?

At that time -- I think maybe John could elaborate on the DSMB process, but DSMB looks at -- that's the Data Safety and Monitoring Board -- looks at the data that is not visible to us. Meaning, they will have access to data, based on the data provided to them by our external CRO, as well as the external radiology review company. And, we will make an assessment, and we will make a recommendation to us in terms of how to proceed. And that recommendation will be appropriately disseminated to you and the world for, presumably, after consultation with the FDA. Jon, do you want to --?

Yes. I think Garo articulated that well again. So again, we expect that to be at the end of Q4, or the beginning of Q1 next year. And again, it is going to go through the process, and the evaluation of the DSMB is going to be what is communicated to the outside world.

Okay. Great. Thank you.

Joy Marshall (ph), CCL (ph) partners.

Most of my questions have been answered. I just had two quick questions regarding the credit facility. What has been drawn down, if anything, on that?

Sure. Jeff will answer that question.

Sure, Joy. As of September 30th, we had drawn 12.2 million of the facility.

Okay. Just a clarification on one of your previous comments -- the 16.1 million of CapEx -- was that for the first 9 months? Over what period is that?

That is correct. Generally, it was incurred from the beginning -- excuse me -- the end of the first quarter through September 30th, 2003. So we have an additional draw that we will do in the near future on the facility.

So, even though that is the CapEx for this year, it includes all the capital expenditures associated with the new facility, because the project started consuming cash in the first quarter of this year.

Right.

Okay. Thank you very much.

Buddy Lyons, The Stanford Group.

Can you just remind us why the clinical hold applies to the melanoma trials and would not apply to the new breast and lung trials?

Okay. So, just to recap on this one, one more time -- when the FDA communicated their decision to put us on clinical hold, they specifically communicated to us that the clinical hold was a partial clinical hold, and that they had no toxicity issues associated with our product. And, I believe that one of the reasons for the agency's moving in this direction was to make sure that we complied with all the rules and the regs associated with product registration.

Since Phase III trials are designed for product registration, the agency wants to make sure that we complied with the rules that will be necessary to adhere to for a BLA filing. And since Phase II trials will not be required, in terms of product characterization and other issues, to be regulated in the same manner, we are free to pursue our Phase II trials, or earlier stage trials, without being affected by the partial clinical hold.

Thank you.

Next question, please.

Anthony Payne, Caris & Company.

Most of my questions have been answered. There are just a couple of small ones. First -- (indiscernible) on 30 days that the FDA has -- does the clock start when they actually receive the document, which, presumably, will be tomorrow?

Russ?

Yes, that is correct.

So, it will be counted from tomorrow 30 days on.

That is correct.

And the second question was -- at ASH presentation, could you just reiterate what you will be presenting at the ASH conference here in San Diego?

Jonathan, if you could articulate.

Sure. Two things -- one, an update on the final data from the CML trial, which is AG-858 plus Gleevac. And two will be, again, a final update on the non-Hodgkin's lymphoma study, which is using Oncophage.

Okay. Great. Thank you very much.

Next question, please.

Stu Weisbroad (ph), Merlin Biomed (ph).

Sir, your line is open.

Maybe we can skip that and answer the next question, please.

Aaron Holmetter (ph).

Can you clarify -- do you need to be off the partial clinical hold to do the renal cell statistical analysis? (multiple speakers) The interim?

We don't, by law, need to be off the partial clinical hold to do the interim analysis. However, if the FDA request that we hold that off until the partial clinical hold is removed, then we will comply with that. However, it is also very important to realize that we cannot start our BLA filing process until we are off the clinical hold.

Right.

We must be off clinical hold in order to start the BLA filing process.

Aaron Holmetter So, it is advantageous if you're not off clinical hold -- is it, from a statistical viewpoint, advantageous to wait for the analysis, then, until you are? Because it is positive you could not file anyway?

Well, I think the determination on that, we will make based on some preliminary feedback that we will receive from the FDA -- both on the products side, based on our submission, as well as the guidance we get from the clinical side of the FDA.

And why would the FDA have a view at all as to whether or not you do the statistical analysis, which has been pre-planned, based on a series of events?

That, I cannot elaborate on. I mean, just because we cannot read their mind. What we are simply saying is that they may request it, and if they do, we will respect that.

Have they requested it at this point? Or have they indicated they may want to have that discussion?

They have not.

Okay. Great, Garo, thanks very much.

Michael McGinley, Oppenheimer.

The question really is two things. Number one, in June on your annual meeting conference call, Dr. Srivastava had mentioned a major manuscript being worked on to be submitted by the Journal of Clinical Oncology. He said it would take about three months to compile and possibly print. We're at four-and-a-half months. Has there been any progress? Is there anything you can elaborate on?

That is probably referring to the AG-858, our CML product -- the initial study for the CML product. Since then, there was a decision made to extend the study from 10 patients to 20 patients. And because of that, we will first present the data at ASH, based on the 20 patients. And only after that presentation, will we entertain the idea of a submission to an appropriate journal for publication.

Okay. Secondly, you just mentioned that the partial hold was placed on the two Phase III Oncophage products -- melanoma --

Cell.

However -- because that was going to be used as a basis to file a BLA. However, I was under the impression that the Phase II AG-858/Gleevec combo could be used as a basis for a filing. Is that true?

So, if the same rules apply to the AG-858, as they did apply to Oncophage, we would have to resolve the product characterization issues first before we can even entertain the idea of whether or not that trial could be used for the BLA filing.

Lastly, what is the exact date? December? For that ASH meeting?

Jon?

The first week of December.

The first week of December?

Yes.

All right, gentlemen -- and ladies -- have a great day.

Next question, please.

At this time, there are no further questions.

Well, if there are no further questions, we thank you for your time and please, again, feel free to call us individually if you have any specific questions. If not, we look forward to updating you at the next event. Thank you very much.

A replay will be available approximately two hours after this call through midnight, Eastern Time, on November 6, 2003. Please dial 1-800-642-1687 from the U.S. Or us the international number, which is 706-645-1991. The access code is 297-4815. The replay will also be available on our website two hours from now. Thank you.