Agenus Inc (AGEN) 2005 Q2 法說會逐字稿

Good morning. My name is Meredith and I will be your conference facilitator. At this time, I would like to welcome everyone to the Antigenics Second Quarter Earnings Release Conference Call. [OPERATOR INSTRUCTIONS].

Thank you. Ms Sharp you may begin your conference.

Thank you Meredith, good morning everyone. Welcome to Antigenics Conference Call to discuss our corporate and clinical progress, as well as our financial results for the second quarter ended June 30, 2005.

With me today are Dr. Garo Armen, Chairman and CEO of Antigenics, and Peter Thornton, CFO of Antigenics.

We hope all of you have had a chance to review the press release that was issued this morning. We will review the financial results as well as operational highlights from the second quarter and then take any questions you might have for Garo or Peter.

But before I turn the call over to senior management, I would like to remind you that during this conference call, Antigenics’ representatives may make forward-looking statements, including statements regarding plans for and expected timing of commencement of new clinical trials, including combination studies, expansion of existing clinical trials and completion of ongoing trials. The timing for and results of analysis of data from Part 1 of the Company’s Phase III Renal Cell Carcinoma, or RCC trial, and the filing of a BLA for Oncophage in RCC.

Other potential filings with regulatory agencies, including plans to make global regulatory filings for Oncophage in RCC, potential commercialization of Oncophage, timing for analysis of data from the Company’s Phase III Melanoma trial, potential benefits of orphan drugs definition in the EU, plans for and timing of the filing of an amended IND for Aroplatin, FDA acceptance of an IND for AG-707, expected further development of product candidates addressing other immune disorders, potential broad applicability of the Company’s technologies and product candidates, and the potential for combination therapies.

These risks and uncertainties include, among others, the results from the Company’s clinical trials, the need for an extent of additional clinical trials, decisions by its regulatory agencies, timing and results of pre-clinical studies, and the factors described under factors that may impact future results in the management’s discussion and analysis of financial conditions and results of operations section of Antigenics’ Form 10-Q as filed with the Securities and Exchange Commission on May 10, 2005.

Antigenics cautions investors not to place considerable reliance on the forward-looking statements contained in this press release and on this earnings call. These statements speak only as of the date of this document and Antigenics undertakes no obligation to update or revise the statements. All forward-looking statements are expressly qualified in their entirety by this cautionary statement. Antigenics business is subject to financial risks and uncertainties, including those identified previously. When evaluating our business and securities, investors should give careful consideration to those risks and uncertainties.

I’ll now turn the call over to Peter Thornton who will review the financial results for the past quarter.

Thank you Shalini and good morning to everyone. I will now review our financial results for the quarter ended June 30, 2005. For the second quarter of 2005, Antigenics incurred a net loss from continuing operations of $21 million or $0.47 per share basic and diluted. This is compared to the net loss from continuing operations of $17 million or $0.38 per share basic and diluted for the same period in 2004 before taking account of $14 million [inaudible] during that quarter from the sale of the Company’s manufacturing rights to our feline leukemia virus vaccine.

The increased loss from continued operations is primarily due to continuing progress on the development of the Company’s pipeline, particularly Oncophage including startup costs associated with Part 2 of the Company’s Phase III trial in RCC pre-commercialization activities, interest costs on our convertible loan notes issued in January 2005, and severance costs.

Revenues for the quarter are comprised primarily of shipments of QS-21 to our QS-21 licensees. Revenues amounted to $85,000 for the 3 months ended June 30, 2005 as compared to $87,000 for the same period of 2004.

Turning to our operating expenses, total research and development expense for the quarter ended June 30, 2005 was $13.5 million compared with $10.9 million for the same period in 2004. This increase was driven by a high level of activity and progress on our development programs and includes higher employee benefits and other costs incurred on these programs, startup costs related to our Oncophage Renal Carcinoma Part 2 Phase III trials, preparation of 2 INDs and severance costs of approximately $400,000 included at the end of the quarter, incurred rather at the end of the quarter due to the elimination of some headcount positions.

Looking at general and administrative expenses for the second quarter, these amount to $7.6 million compared with $6.6 million for the same period in 2004. The increase was primarily driven by our preparations for the commercialization of Oncophage, increased costs related to compliance with the Sarbanes-Oxley Act of 2002, and severance costs of approximately $200,000 incurred at the end of the quarter due to the elimination of some headcount positions.

Overall expenses for the quarter included certain items not expected to recur in the remaining quarters of the year including as previously mentioned severance costs of about $600,000 and a number of other items, and as such we expect our costs to moderate for the balance of the year in line with our expectations and taking account of the positive effect of these initiatives.

Turning to the balance sheet, cash, cash equivalents, and short-term investments amounted to $96.6 million at June 30, 2005 as compared to $114 million at the end of the previous quarter. Given our current cash position and anticipated foreign rates, we believe we will have sufficient cash to fund our operations into mid-2006, and we continue to carefully manage our available resources.

This concludes the financial portion of the call, and I will now turn it over to Garo to continue.

Thank you Peter, and thank you to all of you for dialing in this morning. I would like to take this opportunity to provide an update on the progress of our business over the past quarter. Last quarter, as you remember, I detailed the status of our preparations for commercialization and pre-commercialization activities. This quarter, I will focus primarily upon our clinical development programs.

Firstly, I will address the status of our Phase III program in Adjuvant RCC, that’s Renal Cell Carcinoma. This is a randomized controlled trial investigating the use of Oncophage versus observation in over 800 Adjuvant Renal Cell Carcinoma patients. Our primary end point is recurrence-free survival, but we’re also following patients for overall survival. During the quarter ended September 30, 2004 Part 1 of the trial was close to enrollment with over 800 patients enrolled. As you know, this is an event-drive trial and as such, it is not possible to predict the timing with certainty. We are awaiting a certain number of recurrences and deaths, which constitute events for a period before we can begin our final analysis.

For removing any ambiguity, Antigenics has no control over the timing of the events. Events will be reviewed and confirmed on a blinded basis by an independent clinical event committee, which we call CEC comprised of expert radiologists and an expert oncologist. Based on the overall trend of events in this trial to date, we anticipate that the final analysis will be triggered during the first half of 2006. Once the CEC review is underway later this year, we will be able to provide further guidance on a more accurate timing of final analysis. The rate of event can vary from month-to-month as they have occurred, and we will keep you informed of the latest assessment on a quarterly basis.

While we are anxious, as all of you are, to see the results of this trial, it is also critical that we not trigger data analysis prematurely and compromise the power of this trial. I want to assure you that the proper analysis and successful conclusion of C-12 Part 1 Trial is a very high priority for us.

If the efficacy data from this trial demonstrate a statistically significant improvement in recurrence survivals for patients treated with Oncophage, and if the FDA accepts the data from this trial as sufficient to support product registration, we would expect to file a DLA within approximately 6 months after completing the final analysis. Shortly thereafter, depending on the outcomes of discussions with health authorities elsewhere, we hope to submit for approval in Canada and Europe as well.

As you know from our filings and our previous conversations, the FDA has indicated to us that this trial alone will not be sufficient for product registration as our potency assays are not in place, or were not in place when we began this trial. However, if the results of our trial are positive we will approach the agency seeking permission to file for approval. There are several reasons why we feel that this could be a viable strategy, particularly under the accelerated approval process. The FDA has in the past approved cancer therapies on the basis of, as you will remember, much smaller single-arm trials when significant efficacy was demonstrated.

By contrast, our trial is the largest randomized trial to date in this patient population and it is designed to show statistically and clinically significant benefit to patients. Oncophage appears to have a favorable safety profile, particularly in comparison with other cancer therapies, and this patient population has no post-surgical treatment options available currently.

Let me now spend a few minutes to clarify our stance on the potency of our product and why we believe we may be able to have a reasonably strong case in our attempt to ask the FDA to consider our trial registration. As you know, we retain samples of product batches manufactured for our Phase III trials prior to the implementation of our potency assays so that we could test them for potency when a potency test was successfully developed by us. Now that our assays have been fully validated and accepted by the agency, we have performed retrospective potency testing on these batches, and we are currently completing our analysis of the data. At the time the FDA stated that our trial was insufficient for registration, they had not yet seen the results of our testing for potency on these collected samples.

As we await our C-12 Part 1 data, we continue to make progress on the preparation of our global electronic filing if the results of this trial are positive. We also continue to reach out to key opinion leaders in our field and otherwise lay the groundwork for a successful potential commercial launch of our Oncophage.

In parallel with these activities, we have begun actively screening patients in Part 2 of our Phase III Renal Cell Carcinoma trial. This trial will be similar in design to Part 1 and will handle 600 patients. Depending on the analysis and the outcome of Part 1 it is possible that the design of Part 2 will have to be amended.

I would also like to touch upon our clinical program with Oncophage in melanoma. Unlike our Renal Cell Carcinoma trials, we do not believe our Phase III metastatic melanoma trial by itself will be sufficient for registration due to issues we had with manufacturing for our melanoma-source material. We have since made substantial improvements to our manufacturing process and plan to use the data from this trial as a basis for the design of a second Phase III trial in melanoma. We anticipate preliminary data from our current Phase III trial in metastatic melanoma will be available by the end of the year and most likely before the RCC data comes out. And just to remind you that this is a very large trial on its own; it’s a 320 patient randomized trial, so the data from our metastatic melanoma trials we expect to be also indicative of activity in Oncophage.

Oncophage is also under clinical investigation in metastatic RCC and non-small cell lung cancer secondly. Based on the same premise as Oncophage is our otologist-backed vaccine for liquid tumors AG-858 which utilizes heat shock protein 70 rather than GP96 as the carrier molecule for cancer antigens, as is the case with Oncophage by the way, at this time AG-858 is in Phase II trials in chronic myelogenous leukemia or CML in Gleevac refractory patients in combination with use of Gleevac. We plan to extend enrollment of this trial going forward. We’re also contemplating launching a trial studying AG-858 in combination with Gleevac versus Gleevac alone in chronic phase CML patients with early disease.

Also switching to infectious diseases for a moment, also utilizing our heat shock protein 70 is our off-the-shelf multi-valance [ph] vaccine for herpes simplex virus type 2, which causes genital herpes, a disease affecting 1 in 5 Americans over the age of 12. An IND for this product was recently submitted to the FDA, and we await notification of its acceptance.

Outside of the HSP platform, we are quite excited about Aroplatin, our liposomal platinum agent for the treatment of solid tumors. We have successfully reformulated this product, which had shown signals of efficacy in Phase II trials with our older formulation, and we plan to submit an amendment to our Platinum IND reflecting this improved formulation imminently.

Of course, we also continue to drive progress in our earlier stage programs, and have made advances in the development of our next-generation Oncophage which we’ll talk about from time to time, as well as applications of our heat shock protein technology in new therapeutic areas, such as autoimmune diseases and new infectious diseases beyond HSV type 2.

Finally as Peter mentioned we have taken steps to improve Antigenics’ operating efficiencies through the prioritization of our portfolio and a modest streamlining of our infrastructure. As always, we strive to be prudent with our resources, even as we invest in our future. As you can see, we are entering a very important period in our development and this is an exciting time for our Company.

This concludes my formal remarks, and I believe now we are ready to take questions.

Meredith could you review the process for asking questions please?

Yes. [OPERATOR INSTRUCTIONS]. Ren Benjamin, Rodman & Renshaw.

Good morning and thank you for taking my call. Garo can you tell us how the Part 2 trial is progressing? Are patients beginning to be enrolled and how many have been enrolled?

Yes, patients began enrollment recently Ren, and that continues. It’s just the beginning of the trial. We expect that by the end of September we will have in excess of 30 centers enrolling patients. So presumably based on that trend, the enrollment will pick up in the fourth quarter.

Okay great, and you have quite the, I mean quite a huge pipeline here, a lot of trials ongoing. Can you tell us when we might be able to see even preliminary data from several of the Phase II trials; for example the metastatic RCC or the non-small cell lung? Are we planning on seeing any of that data this year? Will we see the CML data maybe at Ashe [ph]?

Right, so we are in the process Ren, as you can imagine and also preparation for potential filing, we are in the process of cleaning up all of our data from previous trials, as well as getting the data up to current state, if you will with the existing, or ongoing trials. And so it is reasonable to expect some publications as well as presentations, both from completed trials and as far as the new trials are concerned it would be premature to have any data in the next 3 to 6 months from the lung cancer trial. However, we may have some data in the first half of the year for the metastatic RCC trial. So we’ll have a better read on that certainly in the fourth quarter of this year.

In terms of CML, as the data matures we will be able to share that. I’m not certain of any submissions for abstracts for Ashe but certainly we will appropriately disclose data as it matures.

Okay great, well t hank you very much for taking the questions.

Maged Shenouda, UBS.

Sure hi, thank you for taking my questions. First can you update us on the number of events accrued to date in the first part of the Renal Cell Carcinoma Phase III trial, and the number of events required to conduct the analysis?

Certainly, as I said earlier, the number of events required for the final analysis is approximately 220, but that refers to the number of clean events, so that means these are events after the scrutiny of the CEC review. These are the independent radiologists that will have to determine whether the events are clean or that they are as a result of pre-existing disease. Even though the trial specifies non-metastatic RCC patients, we know from prior experience that a number of these patients enrolled in our trials did have existing disease, but were reported by the various centers as not having metastatic at the time of enrollment.

So as a result of that, and as mandated by the FDA and our own internal standards, one of the functions of the CEC is to determine which patient had pre-existing disease at the time of surgery and which patients really meet the strict criteria as defined in our protocol Even though we expect to do a intent-to-treat analysis on all patients enrolled in the trial, we need to make sure that the trial is powered for patients who comply with the strict definition of enrollment in the trial.

So just to update you on where are with the actual events, we are currently in excess of 220 gross events. These are not clean events and we won’t know what the attrition rate will be exactly until CEC has reviewed the data, and that’s one of the reasons I indicated in my remarks that we will have a clear indication as to the exact timing of the final analysis once the CEC review is well underway and that we expect to happen some time in the fourth quarter.

So we had assumed a certain level of attrition because of what I just spoke about, and if our assumptions are conservative, we will get there sooner. If our assumptions are not, then we will get there a little later.

Okay thank you. Just one other follow-up question. Let’s say the FDA requires the completion of Part 2 of the Renal Cell Carcinoma program, how long do you anticipate enrollment would take in that program if you don’t have to amend the protocol?

Right, so that’s a hypothetical question in terms of we don’t have to amend the protocol, but if we don’t have to amend the protocol and if the readout from the first trial is positive, we expect enrollment to be very quick because there isn’t very much competition in these patients right now in terms of product development activity. There are some products that may enter Phase III patients, but there isn’t very much right now, for Phase III patients rather. So based on the, if there is positive readout it will be very quick. If we have to amend it and let’s say hypothetically we have to convert it into a single-arm trial, then too we expect enrollment to be quicker. So I’d say perhaps to be conservative inside of 2 years.

Inside of 3 years?

Two years.

Oh 2 years, and just by way of benchmarks how long did the first part take to enroll?

The 800 patients we enrolled in approximately 3-1/2 years.

Okay great, thank you very much.

Jonathan Gray;Stanford C. Bernstein

The press release alludes to the Company’s interest in conducting small trials of combinational therapy with other agents in conjunction with Oncophage. It indicates that the first such Adjuvants would be I guess the ATRA-IV. Could you tell us what it is about ATRA-IV that, what the mode of action might be in its interaction with Oncophage?

Absolutely Jonathan, I think this is an excellent question. Just to clarify, whereas we have chosen to enter the clinic in Stage III patients with Oncophage used as mono-therapy, in Stage IV patients we have seen reasonably consistent activity of Oncophage as measured by either objective tumor responses or by immunological responses or by improvement in survival terms as compared to other controls, matched controls, because these trials have not been randomized trials. But we’ve seen reasonably consistent activity across the board. However, the response rate in Stage IV patients has been modest when Oncophage has been used as mono-therapy. They have been real but modest. And because of that, in order to give Oncophage, if you will more power to improve that lower level of activity, we have thought that an appropriate combination agent would be quite logical to pursue. As you remember on this front, several years ago Avastin alone showed no activity in late-stage in cancer patients. But when the strategy was reformulated and Avastin was used in connection with chemotherapy agents, they showed very profound activity in similar stage patients.

So it’s the same kind of strategy if you will. Now as to the choice of ATRA-IV, this is the old Astrogen [ph] product; it is injectible [inaudible] acids; it’s a differentiation agent, which is now available in oral form. Our product was the result of an acquisition from Aronex Corporation, and our product is a liposomal injectible formulation which has a number of positive attributes as reported in earlier trials as compared to the oral product.

ATRA-IV alone as mono-therapy has shown some level of activity in, when it is used in the treatment of State IV Renal Cell Carcinoma patients. There have been some interesting readouts of activity when it’s used alone in Renal Cell Carcinoma patients.

In addition to that, ATRA-IV has been demonstrated to have an Adjuvant activity in help regulating certain immune cells, dendritic cells or perhaps macrophages in moving them to a more mature state. And this work has been done independently of us and it is a logical agent for us to test because both in terms of its activity in Renal Cell Carcinoma by itself, as well as its activity in help regulating certain cells of the immune system. It is a very complementary approach to what we do with Oncophage alone. But we will test this in Renal Cell Carcinoma patients, in melanoma patients, and perhaps some additional indications when the trial gets started over the next several months.

We are also interested in testing Oncophage with other agents beyond ATRA-IV and we are in the process of working diligently now with several companies to see how some of these strategies may be put into practice hopefully over the next 3 to 6 months.

That’s very exciting. I wonder if I could ask a follow-on question. Is it possible that Oncophage would have a diagnostic application in terms of immuno-pheno typing in terms of the way it displays the Antigenic profiles tumors. Might it add something in terms of the ability to identify diagnostically specific markers?

You’re talking about our heat shock protein technology?

Yes, the Oncophage molecule itself seems to me, looks like it would work to help diagnose exactly what the antigens are on the patients.

Right, I mean these are kind of a conceptual scientific adventures that we go through early on in our development and I think you are absolutely right because Oncophage does bind to all the relevant antigens, which can be used to fish out some of these unique antigens. But because of tactical limitations of technologies to do this on a routine basis, Jonathan we have not yet embarked on that but I think for the future, it’s something that deserves consideration.

Thank you very much.

Mark Monane, Needham.

Thank you. Good morning, thanks for taking my questions. Could you help us understand what the -- I understand what a clean event is and I understand that you had over 220 total events, I think you called it gross. What’s the percentage Garo please of events that turn out to be clean events? Can you tell us that?

Well, that’s what I tried to address in my remarks earlier Mark, and a clean even simply means patients that recur or die after they are surgically excised and have been treated with Oncophage or not, because in the observation arm, they are not treated with Oncophage, they are observed. But that these patients not have existing or pre-existing disease when they started the treatment.

The rationale for that as you can imagine, if we define an event as a recurrence and the patient has already got disease at the time of starting treatment, we really can’t call a future observation a recurrence any more. Is that something that makes sense?

Oh no, it’s very clear. Let me be -- I’m sorry I didn’t do a good job -- let me be --

You have to take these patients out of the mix, but now we are not certain as to how many of the patients that have been reported to us as having recurred, we’re not certain how many of these patients already had baseline disease when they were surgically excised.

So you are going beyond 220 events because you know that some of these patients will have had metastasized disease or would not have been proper for enrollment in the trial, but you don’t know what that number is, so you’re just going ahead and enrolling extra numbers. Did I get that right?

Oh no, no, no, no, I think we, as you know we did this trial at 130 centers. We have very strict enrollment criteria. But if you’re schooled in looking at radiology slides for Renal Cell Carcinoma at times small lesions are very difficult to read as lesions. And so, for example, if a second radiologist looks at a film and sees something suspicious that was missed by the center who enrolled the patient and enrolled the patient as a clean patient, we need to make an adjustment for that. So those patients need to be taken out of the mix for the analysis, which is guided strictly by patients who meet our eligibility criteria.

I understand, you did a good job explaining the difference; how will you know when you have 220 clean events?

The CEC as I said earlier, the independent radiology committee needs to tell us.

Oh okay.

How many of these events are truly occurrences with no baseline disease.

And based on what you know now, you believe that will happen in the first half of next year?

Okay, so based on what we know now, that’s a reasonable assumption.

Got it now, thank you very much. Thanks for going over that. On the Phase II trials for metastatic RCC, what do you hope to learn from those trials, and how will that impact Part 2 of the Phase III trials?

Please repeat that question again.

I’m sorry. In the trial I believe you call 100-23, which is the Phase II metastatic RCC trial, Phase II.

That’s 21, C-21 is the metastatic -- you’re talking about the RCC trial, I’m sorry.

The RCC trial, what do you hope to learn from that trial, and how will that impact what you’re doing in the current Part 2 of the Phase III trial?

Okay, so if I imply that the metastatic RCC trial will not impact how we conduct Part II; however, C-12 Part I analysis will impact and perhaps result in fine-tuning Part 2.

Got it, that makes sense. And the last question is we’ve heard a lot of information over the last couple of weeks from [inaudible] in cancer vaccines. We have some news from Geron on a partnership, Dendron has some Phase III trials. Can you comment on where you think Oncophage fits in to active immuno-therapy and comment on where you think the field is going from here?

As you said, the field of cancer vaccine is perhaps coming of age a little bit more than it had previously. It is a fact that skepticism, and it’s valid skepticism, is there because there has been no successful development in the field of cancer vaccine so far, not unlike a number of years ago as you remember when antibodies were tested, we had a number of failures until the first success. And not unlike that, we believe firmly that the field of cancer vaccines will succeed; certainly we don’t proclaim to be the only players in the field. There are a number of very viable and valid technologies. We are pursuing our heat shock protein technology which is the basis for Oncophage because of our firm belief that cancers are individual diseases, and because of this individuality one needs to alert the immune system to specifically target the nuances, the unique attributes of a specific person’s cancer. And Oncophage, in our opinion based on the science which has been published in over 100 peer review journals by us and by many others does demonstrate its ability to do that rather well. So we believe our approach is a particularly targeted approach to deal with the individuality of this disease.

And that’s one of the reasons we have braved the difficulties of an individualized approach, and I have referred to this before, certainly an off-the-shelf approach is simpler than an individualized approach, but we believe the rationale behind our approach is so strong that we need to reduce it to practice, and we indeed have reduced it to practice because we have treated now well over 800 patients fairly routinely with Oncophage made from a patient’s own tumor tissue without any major difficulties.

Thank you very much for the added information. I appreciate it.

Samuel Kim [ph], Prudential Equity Group.

Hi thanks for taking my call. As a follow-up to the clean and unclean events, wasn’t recurrent disease part of your enrollment criteria, or was it not?

Recurrent disease is not part of our enrollment criteria. In fact, our case report forms enrollment criteria specifically indicate that patients to be enrolled in this trial are not to be with disease burden prior to enrollment other than the primary tumor. However, as I told Mark Monane a few minutes ago, some of the lesions are very difficult to detect, and a confirmation on whether or not for certain a patient has existing disease cannot be made sometimes until months after enrollment. And the purpose of our independent review analysis is to be able to see which patients really fall into the category of non-metastatic RCC patients and which are with existing metastatic disease.

Okay, thanks for clearing that up, but in regards to your Part 1 RCC trial, can you add some color to the timeline of the retrospective potency analysis for Oncophage?

As I said, we have completed the testing and we are in the process of analysis, and it shouldn’t take very long, and we are very encouraged with the results so far.

So somewhere in the, by year-end do you think?

Certainly by then.

Okay thank you.

There are no further questions.

thank you very much.

Thank you. To close the call, a replay will be available approximately 2 hours from now through midnight Eastern Time on August 11, 2005. Please dial 800/642-187 from the US or use the international number, which is 706/645-9291. The access code will be 7730381. The replay will also be available on our Company website in approximately 2 hours.

If you have additional questions after today’s call, please call us at 800/962-AGEN, that’s 800/962-2436. Thank you.

Thank you. This concludes today’s conference call. You may now disconnect.