Agenus Inc (AGEN) 2008 Q1 法說會逐字稿

Good morning. My name is Robin and I will be your conference operator today. At this time, I would like to welcome everyone to the Q1 2008 Antigenics Conference Call. (Operator Instructions) Thank you. Mr. Anstey, you may begin your conference.

Thank you, Robin and good morning, everyone. Welcome to Antigenics' conference call to discuss the results for the quarter ended March 31, 2008. With me today are Dr. Garo Armen, Chairman and CEO, and Shalini Sharp, Vice President and CFO.

We hope that all of you have had a chance to review the press release that was issued this morning. During this call we will review the financial results as well as provide a corporate update. We will then have the Q&A session.

But before we continue, I would like to remind you that this conference call will contain forward-looking statements, including but not limited to statements regarding the Company's financial position, the current and future development, regulatory and commercial activities and timelines for Oncophage, including our strategies for commercialization in Russia and the potential associated revenues and the decision and timing for filing a marketing application for conditional authorization in Europe, ongoing clinical trials, the value growth and opportunities of the Russian pharma market and the development of products containing QS-21 by our collaborative partners and licensees.

These risks and uncertainties include, among others, the risk of the inability of the Company to successfully implement a product launch strategy for Oncophage in Russia, the potential failure to operate within the Company's targeted burn rate and identify additional means of cost saving, decisions of regulatory authorities, doctors, patients and our collaborative partners and licensees, geopolitical developments, unfavorable data, retention of key employees and the factors described under the "Risk Factor" section of our Annual Report on Form 10-Q filed with the SEC for the period ended December 31, 2007.

Antigenics cautions investors that we do not expect to generate significant revenue from sales of Oncophage in Russia for several months, if ever. The amount of revenue we generate will depend on, among other things, securing reimbursement mechanisms and physician and patient assessment, the benefits and cost effectiveness of Oncophage. Antigenics also cautions investors not to place considerable reliance on the forward-looking statements contained in this call.

These statements speak only as of the date of this call 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 substantial risks and uncertainties, including those identified above. When evaluating Antigenics' business and securities, investors should give careful consideration to these risks and uncertainties

Before we move on, I would like to note that for the purposes of this call, the phrase "net burn rate" means cash used in operating activities plus capital expenditures, debt repayments and dividend payments.

With that, I will now turn the call over to Shalini Sharp, who will review the financial results for the quarter.

Thank you, Robert, and good morning everybody. I will now review our financial results for the quarter ended March 31, 2008.

For the first quarter of 2008 Antigenics incurred a net loss attributable to common stockholders of $11.3 million, or $0.20 per share. This figure includes approximately $3.0 million in non-cash charges related to depreciation and amortization and share-based compensation. This is compared with a net loss of $8.9 million, or $0.19 per share for the same period in 2007, which figure includes approximately $2.5 million in non-cash depreciation, amortization and share-based compensation expenses.

Revenues for the first quarter of 2008 were $850,000, generated from QS-21 license fees, royalties and product shipments. Revenues were $2.4 million for the same period in 2007. In the first quarter of 2007, we received and recognized a technology transfer milestone from GlaxoSmithKline of $2.0 million.

R&D expenses for the quarter ended March 31, 2008 were $5.7 million, compared with $6.0 million for the comparable period in 2007. This decrease primarily reflects a reduction in clinical trial-related expenses.

G&A expenses for the three months ended March 31, 2008 were $5.3 million, compared with $4.3 million in 2007. This increase is due mainly to registrational and pre-launch activities in Russia.

Our net cash burn for the first quarter of 2008 was $9.4 million, compared with $9.3 million in 2007. We had $35.4 million in cash, cash equivalents and short-term investments at the end of the first quarter.

Subsequent to the end of the quarter, we raised an additional $21 million in a private placement of common stock and warrants. This transaction resulted in a quarter-end pro forma cash balance of approximately $56 million. We believe our current cash balances are sufficient to fund our operations into the second half of 2009.

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

Good morning, everyone and thank you for joining us today. I will now provide an update on Antigenics' recent activities and achievements.

As I'm sure you're all aware, Antigenics recently announced the approval of Oncophage in Russia for the treatment of renal cell carcinoma, or RCC, patients at intermediate for a recurrence. This is the most substantive accomplishment in our Company's history, as we start our transition from a biotech research and development company to a commercial entity. We're proud to be among the very few biotech companies ever to bring to market the product that the Company was founded on.

Even more importantly, this is the first ever formal regulatory approval of a patient-specific therapeutic cancer vaccine. Now patients with non-metastatic RCC will have an approved treatment option, plus surgery, and that too is the first ever anywhere in the world.

Besides bring the first patient-specific cancer vaccine to be approved, this is the first of any type of therapeutic cancer vaccine to be approved in a major commercial market. The Russian pharmaceutical market was valued at almost $11 billion in 2006, which was a 27% increase from the previous year. Importantly, almost 80% of the dollar value comes from imported drugs and a number of these are in the high price category.

J.P. Morgan and other research outfits forecast that the market will continue to grow at a substantial rate, 10% per year or greater through 2009 and 2010. Within the pharmaceutical group, the oncology sector specifically has been doubling almost every year over the last several years to around $1.0 billion in value in 2007. Russia's impressive growth has forecasters predicting a $2.0 billion cancer drug market by 2010. Once again, this increase is mostly driven by new and expensive drugs.

This growth in Russia's pharmaceutical market is not surprising, considering its overall micro-economic boom. Russia's economy grew 7.0% per year between 2000 and 2007 and personal incomes have also been rising. Nominal disposable income is forecasted to have a compound annul growth rate of 21% between 2006 and 2009.

Russia is now the eighth largest economy in the world and while many other economies are faltering, it may continue to grow at a strong pace. We believe that the pharmaceutical market in Russia offers significant opportunities for patients and companies alike and we are implementing programs in order to participate in this significant opportunity.

In preparation for the launch of our products, we're waiting the issuance by the FDA of an export license for Oncophage to Russia. We're also waiting for the import and export permits from Russia. In the meantime, we're continuing to build our sales, marketing, and distribution infrastructure.

Our strategy is to launch Oncophage in collaboration with local distributors and our local agent. The product will be manufactured in Massachusetts and shipped either directly to hospitals or to an urban distribution center that will then courier the product to local hospitals.

We will initially focus our efforts on several centers of excellence, which have been selected for the quality of their facilities and staff and their larger patient bases, especially in RCC. These are mostly situated in and around Moscow, initially at least, which allows us to cover the prescribing population, with just a few sales representatives. After we have begun to treat patients, which we expect to occur in the second half of the year, we will expand our operations in Russia beyond the initial centers of excellence.

Concurrently with our logistical and sales plans, we are undertaking broad initiatives to educate Russian doctors on the benefits of Oncophage. Investigators from our trial and other Russian, European and American key opinion leaders have and will continue to present on Oncophage at a number of oncology, oncourology conferences, and key opinion leader meetings in Russia and elsewhere, primarily in Europe, of course.

Finally, we continue to review the reimbursement options available in Russia so that Oncophage can be available to as broad of a patient population as possible. While we will initially rely on the private pay market, we're working to obtain a mix of regional, hospital-administered, as well as federal reimbursement sources as soon as possible.

As we embark on our first commercialization plan for Oncophage, we continue to target opportunities in other major geographies. We are preparing to file a marketing authorization application in the European Union for conditional authorization of Oncophage in RCC by the end of 2008. Additional opportunities may also exist in other regions and we are in initial stages of exploring some of these opportunities.

Clearly, our focus for Oncophage in RCC is on opportunities existing outside of the United States. While we have not given up on the domestic market, our options here are limited until there is regulatory reform to accommodate the unique clinical and regulatory requirements of products like Oncophage, specifically products that target non-metastatic cancer patients.

In addition to our efforts in RCC, we're also focusing on our ongoing development activities in glioma, the most common type of brain cancer. This effort could possibly provide a pathway to market in the United States. The Phase II investigator-sponsored trial at the University of California, San Francisco continues to enroll patients at a good pace and we're very excited about the data we have seen to date in this disease areas of significant unmet medical need.

Lets now switch gears from Oncophage to our second key asset, QS-21, an important component in a substantial number of both prophylactic and therapeutic vaccines being developed by our licensees. QS-21 stimulates the immune system to provide a stronger immune response against viruses, bacteria, tumor or other cells that we're trying eradicate.

Our strategy with QS-21 has been to license it to various collaborative partners for use in their investigational vaccines. Our three key partners, GSK, Elan and Acambis are utilizing QS-21 in almost 16 vaccines that are currently in development.

Antigenics receives manufacturing fees on a cost-plus basis for providing QS-21, plus along the way milestones, as certain contractual payments are made, and most importantly, we get royalties on commercial sales of vaccines containing QS-21.

It is important to note that these royalties are payable independently of patents underlying QS-21 and typically extend for 10-plus years after the first commercial introduction. It is also important to note that QS-21 is profitable for Antigenics today. There is minimal or no cash outlay by Antigenics associated with the programs, as well as development is funded by our licensees.

Some of the most prominent and promising vaccine programs containing QS-21 are GSK's Phase III non-small cell lung cancer vaccine and Phase II malaria vaccine, Acambis' Phase I universal influenza vaccine and Elan's Phase II Alzheimer's Disease vaccine.

We're certainly excited by the abundance of activity with QS-21. It is used in numerous vaccines that cover the range of infectious diseases and cancers, as well as stages of development from clinical through Phase III. It is possible that the first vaccine containing QS-21 could reach the market in the 2009 to 2010 timeframe and that would mean that our royalty payments would commence at around that time.

Before I close out my prepared remarks, I'd like to briefly mention our most recent financing transaction. Immediately following our announcement on the Russian approval, we received an unsolicited offer for a direct placement of our stock. Given the uncertainty currently facing the equity markets and the possibility that the situation may not improve in the near-term, our Board decided to accept this offer.

As you know, we raised gross proceeds of $21 million, which brings a total amount raised since the beginning of this year to $47 million. Antigenics is now in more a more comfortable financial position that will help us to capitalize on the opportunities that we are currently pursuing.

I thank you all for listening today and we should move on to the Q&A portion of the call, Robert.

Thanks, Garo. At this time we are ready to take questions. Robin, could you please review again the Q&A process?

(Operator instructions) Your first question comes from the line of Aaron Lindberg with Wm Smith & Co.

Looking for a little bit more detail around the Russian launch. When did you guys file for the export license with the FDA?

The week after the Russian approval was announced.

Great and then can you provide a little bit more detail around the selected centers of excellence? I think that it was on the website that you guys had talked a little bit more broadly about Moscow and St. Petersburg, maybe 10 centers to start with and on the call it sounded like maybe it was more initially focused in Moscow. Can you just add a little bit of clarification there?

Sure. The initial setup will be for the purposes of making sure that all the logistical issues are ironed out and you're correct that we will be targeting centers in St. Petersburg. But the initial two or three centers will be opened up in Moscow and shortly thereafter, within weeks of that, the additional centers will follow.

So it's just for the purposes of making sure that we have perfected the art of putting into place all the logistical issues as we have, by the way, in the context of our clinical trials, because we conducted clinical trials at over 150 centers around the world and similar procedures were followed. So what were doing is very similar to that, except that this is a commercial activity, of course, and there'll be reimbursement issues that will require additional attention.

So by the end of this year we hope to be open with about 10 to 12 centers that will include Moscow and St. Petersburg and next year we plan on expanding those into greater numbers as we get our feet wet, if you will, in this exciting new market.

Excellent, thank you and then can you also give a little bit more understanding around where you are in the process related to regional reimbursement? I know that out of the shoot you'll go with the private pay, but can you help us understand the process there around Moscow and St. Petersburg?

Sure. The regional reimbursement plans are -- regional reimbursement, by the way, means that Russia is comprised of many regions similar to the states in the U.S., if you will. Each region is driven by their own economic wealth and economic drivers. Some regions happen to be wealthier than others and as a result, they have more cash, if you will, that they could allocate to programs like ours, or health care in general.

So, that's an effort whereby we contact each and every municipality and try to make a compelling case for the reimbursement of Oncophage, either in their region or in, for example, Moscow, that is sponsored by regional reimbursement by them and so that's an ongoing process. We have been undertaking this activity ever since the approval has taken place and we expect to continue with that and as each region comes on we would have a source of reimbursement from a municipal entity.

Great.

The central government reimbursement is a bit more formal process and the application for that goes in typically in the fall. And we are now putting together all the documentation to be able to apply for that by this fall and once that's approved, a product would have a certain amount of dollars allocated to it, if you will, for reimbursement by the central government.

And when the central government one is approved, does that supercede the regional one or just provide a different source of funds?

No. It provides an additional source of funds.

Okay and then what is your strategy for pricing in Russia, given this anticipated evolution of payors?

Pricing in Russia these days is similar or slightly higher than places like Europe or the U.S. As you may know, in the last several years, mainly since 2005, a number of large oncology players, Novartis, Roche, J&J, and so on, have been selling substantial quantities of their oncology products in Russia. And the reimbursement for these products are at either European or American pricing levels or higher, so we anticipate that pricing for Oncophage would be at the mid-to-low end of the recently introduced costly product, if you will and in such --.

So that might be in the neighborhood of $50,000 for a year's treatment?

We haven't really formally announced pricing, but I think in that neighborhood is probably as good a guess as any.

Okay, excellent. Well, I'll jump out of the queue here and let somebody else get in. thank you.

Ren Benjamin, Rodman & Renshaw.

Hi, good morning, Garo and congratulations on your progress. A couple of questions just regarding timing. You've already submitted for the export license and you have import and export licenses for Russia that are also expected. When do you think you will receive those?

Well, the period that the FDA is required to respond is 60 days since the submission of the license application. So, if you counted, we have approximately six to seven weeks waiting period.

And then what about from Russia?

Similar. It varies there. It's a different system, but we anticipate that those will be in place in a similar timeframe as well.

Okay and you mentioned from the previous question regarding central government reimbursement that the application would occur in the fall. What's the timing for that? How long does it normally take to evaluate that application and come back with a verdict?

Typically it's quick. We understand it's within a couple of months.

Okay and then just to talk a little bit more about the sales effort; you talked about the centers of excellence. You mentioned a small group of sales reps. I was wondering if you could give us some more specifics as to how many? Would they be hired in Russia? Would there be someone managing all this here in the U.S. or will the entire group be in Russia and what sort of increase in SG&A might we see for this year, based on these salespeople?

Sure. The numbers were talking about are small. We already have several people in place in Russia that work with our Russian agent, so we will be using them as the conduit for our sales and marketing. There are three people in place already. We would probably hire another one so there'd be a total of approximately four people. Russian hospitals that specialize in oncourology are a fairly concentrated number, if you will. So targeting them is not a very difficult process. It's always challenging, but not very difficult.

We have been engaged in a number of meetings, educational programs, over the last nine months with the oncourology and oncology community in Russia. So the level of recognition, and some of you may have seen this in news reports that have come out and media coverage out of Russia, there is a very high level of recognition of Oncophage, what it does, how it should be used by the leading oncourologists in Russia. And that doesn't include just Moscow, but Moscow in-regions, St. Petersburg, Kazan, and other regions as well.

So that is our target and because we have a high level of name recognition and knowledge built already by the experts, we expect that our effort to market and sell Oncophage would be a continuation of that process.

In terms of managing that, we plan on bringing onboard a very, very experienced global oncology executive and that would be in the relatively near-term, if you will. And that person will manage the Russian effort and also manage the potential commercialization of Oncophage in other regions like Europe and some of the exploratory markets that are developing around the world.

In terms of SG&A, we have largely budgeted those numbers into our 2008 budget. So unless something remarkable happens and it changed, we expect that our burn rate, and Shalini may want to comment on this, will be in the range that we have specified before.

Okay and from a logistics point of view, can you provide, I guess, some comfort as to -- when investors first look at the story they'll probably sit back and think, well, how can a company based in the U.S. try to -- how will they be able to manage the process where a tumor is being shipped from Russia back to the manufacturing plant in Massachusetts and then all going back. Can you help us understand how the logistics will work?

Sure. I mean, as you may recall, we have done this 800 times already and I don't want to speculate on what 800 patients could mean. Obviously it would mean a substantial revenue for us, but we've done this 800 times already in the context of our clinical trials in countries as far away as Australia.

We've done it over 200 times in Russian, Japan, Europe, Poland, Eastern Europe, U.S. and Canada. So the logistical issues, while may be viewed as a challenge for most companies, they remain a challenge. However because of our experience and know-how and having done this over the last six, seven years it has been streamlined and perfected, if you will, to the point where we feel reasonably comfortable that it should be a seamless transition in a commercial setting.

Well, when you talk about this experience, you're referring to the worldwide Phase III trial that was conducted?

That's correct. Two Phase III trials, melanoma and RCC.

Okay. Right.

And many other Phase II trials conducted, if you will, in six other indications.

So, with the potential for this new revenue stream, what are your thoughts regarding the potential for post-marketing studies or the collection of data, lets say from these Russian patients, in order to supplement or potentially a U.S. application? Or do you think that, or do you feel that sales will speak for itself and you'll just leave it at that?

Well, I mean, as you know, we tend to do things in a methodical, prudent way. We've had a history of doing it and not letting costs get out of hand we will continue with that culture.

But having said that, we have a survival registry in place for our Phase III RCC trial. That continues to collect data on survival of patients, because the end point that we got approval with in Russia was recurrence-free survival. And while we have indicated that overall survival is following a very similar trend, because of the fewer number of deaths the numbers are not yet statistically significant.

So we're continuing to collect data, hoping that the numbers will become more meaningful as more deaths occur, which will be a follow-through from the recurrences of these patients.

In addition to that, were contemplating a number of other opportunities that we are in discussions with third parties to conduct additional trials like we have in glioma, at a third party's cost. In the context of our educational programs in Europe and Russia, we have met with well over 60 key opinion leaders around the world, primarily Europe and Russia, and garnered a substantial level of support and enthusiasm for the use of Oncophage in other indications. And we're having discussions now, preliminary discussions to see if third party's can sponsor some of these trials at their own cost and so those are ongoing programs.

And in addition to that, as you know, glioma is a program that there's a lot of excitement for in the U.S. and we continue to push that program forward and hope that we will start the enrollment of the expanded portion of a Phase II program very, very soon. That could potentially provide much more objective data on the benefits of Oncophage in glioma versus what we have seen in the single-out trials previously.

Okay and a final question, milestones for the remainder of 2008. What should we be looking for from the Company, especially data presentations, but obviously also the initiation of sales in Russia?

Sure. As we've said, our current anticipation is that we expect to start selling product in the second half of this year and in terms of milestones, certainly we expect sales to start. But I should caution you that those sales will start at a slower pace, because this is a new market, a new product, a new indication and to be conservative we have said we would expect the initial ramp-up to be modest. But we expect there to be commercial sales.

Now, in addition to that, in terms of milestones, our ability to get reimbursement sources lined up will be important, both at the regional level in terms of private pay mechanisms, as well as the central government level. In addition to those three, there are also payment methodologies through certain hospitals in Russia that provide their own funding for terms like this. So were exploring all of these opportunities and as we put them into place, we will certainly update you on the progress we've made.

In addition to Russia, as you know, we expect to file the EMEA conditional approval filing in the second half of this year. That will be an important milestone for us. And outside of Oncophage, there'll be, by the way, presentations and more developments on the glioma data throughout the balance of the year. And with QS-21, as our partners make progress, we expect that that will provide a more substantive timeline and the opportunities associated with products that use QS-21.

And could you just specify any of the data presentations, not just for Oncophage but I guess there's the potential for maybe some of the other products?

I don't have those specifics, Ren, but if you'll get in touch with us we can provide you with the specific timelines.

Great. Thank you very much and congratulations.

Neal Karelitz, Oppenheimer & Co.

Congratulations. I think it's getting to be very exciting and I congratulate you. Just two quick questions, please. Beyond Russia and Europe, are there any other growth opportunities that you can specifically tell us that you're looking at for Oncophage and also if there are, how long would it take to get into those markets?

The first part, Neil, is easy. Yes there are those opportunities. Some of you may have noticed that this morning GSK announced a realignment of their organization to specifically take advantage of the growth opportunities in markets that were not even looked at several years ago but now have become major players and account for 25% of the pharmaceutical market today and are growing and expected to be accounting for a larger share of the pie in the future. These include Russia, China, India.

We will be targeting and we are preliminarily looking at the mechanisms by which we can target China and India. In addition, also we have an interest in Brazil and Brazil represents a very significant population, also a particularly significant population for RCC, so were looking at these markets.

But I cannot tell you the timelines associated with them, because when we got into Russia we, again, did it slowly and methodically and felt confident over time as we learned the mechanisms there. And I expect that over the next six months or so we will get more comfortable, perhaps, to provide you with a more definitive expectation of what may happen in those countries and what the timelines will be.

Terrific and my last question. I happened to be skimming through the Wm Smith & Company update for Antigenics' dated April 10th. In the report it mentions, and I'll quote here just so I'm not off base here, it says, "Antigenics indicated the filing for approval of the first vaccine containing QS-21 could take place by year-end '08. This is a six month improvement over our projections", over their projections.

So, the question is what drug do you think that is, what company is it and if they do expect to file for the approval by the end of the year, when do you think the first data presentation would be on that product? Can you tell us more about that?

I will try to provide more light. However, I'm limited, because we cannot disclose what the product is because our licensee hasn't disclosed it and wishes not to and we cannot even disclose which licensee it is. Now, you know the collection of licensees, but we can't disclose which one.

Well, it could be Glaxo, Elan or Acambis, most likely.

Right. That's right.

Okay.

So outside of that, I just want to make sure that you understand these are products which are being developed and the timelines are typically being driven by these companies and we have very little control over it.

The update we provided in terms of a potential filing at the end of this year is consistent with the update that they have provided to us, at this point. It may change and if it changes we'll give you more information on that. But we can't tell you which one it is and I think in some cases, these companies disclose the information publicly and in some cases they don't. In this particular case, I believe they don't want to disclose the information because of competitive reasons.

Okay. Most likely before they make the filing would they publicly, say, give us the data presentation? I mean, usually that is the case. Am I correct?

Not always, not always.

They could file without giving us the data?

Possibly, depending on the product and the profile of the product, yes.

Okay. Very good, okay, terrific.

Thank you.

Robert Petrozzo, National Securities.

Good morning, Garo, and thanks for taking my questions. One of them were answered. But I read that same article and I found it kind of fascinating that GSK is going to be forming what they call in the article, "an emerging market's unit" just to focus on building business in China and Russia and India, like you mentioned.

As far as Antigenics is concerned, can you give us an idea of the growth opportunity for Oncophage in Russia, not only in renal cell, but in other indications?

It's a bit premature. Let me give you some numbers, Robert, that may help you understand the landscape in Russia. There are approximately 16,000 kidney cancer cases per year in Russia and of those approximately 30%, give and take 5.0 percentage points, are represented by the specific patient classification that our indication covers, meaning the patients in the intermediate risk disease setting. So that comes down to about a patient population, a target patient population for RCC of approximately 4,000-plus patients per year.

Now clearly were not going to be able to get to all of those patients for a variety of reasons. But given that we have no competition for these patients, in other words, there are no drugs that are approved anywhere in the world for patients with intermediate risk RCC and this brings an important point and I'll take a minute to cover that point.

If you look at the cancer market globally, we really concentrate today on patients who are in a state of crisis. Meaning patients that are being treated with oncological products, as well as some of the new so-called targeted therapies, are really metastatic patients and once patients enter the states of metastases, it is pretty much a point of no return for solid tumors. That whatever we do for them at best will buy, perhaps, a few months of life.

However, drugs like ours that are used in the intermediate risk disease setting, are designed to prevent patients from advancing to that point of no return. So, when we can prevent recurrences, as the data suggested in approximately 50% of the intermediate risk patients, that benefit could be a very important and lasting benefit for these patients.

And so the reason I mentioned this is because the patients we're targeting are in that category, with the purpose of preventing recurrence and for those patients in RCC there are no approved drugs. Ours is the only drug approved anywhere in the world for that purpose. So we hope that we will get to a decent penetration rate in RCC.

Outside of RCC, we are looking at various mechanisms, which can responsively allow the expansion of our label to other indications. But it is premature to make any comments on this now, but we are looking at those opportunities and we will update you for the Russian side of things, as well as outside of Russia, as to what the reality is as we get more traction.

In terms of markets in China, India, Brazil and elsewhere, these are relatively untapped and the opportunities are at least as large as Russia or even much larger in cases like India and China. And the question is how do we get through the approval process there and how do we put into place the processes for commercialization and once again, it's premature, because we haven't really got to a comfort point to make any statements, but were preliminarily exploring those.

That's great. Thank you very much and congratulations.

Aaron Lindberg, Wm Smith & Co.

Thanks, just a couple quick follow-ups. In terms of the Russian agent that you're using for distribution, what type of margin is going to be typical for them for this kind of therapy?

The Russian agent doesn't really take much margin, Aaron. It's a fee-for-service business, basically. However, Russian distributors, some of you may know, work on pretty hefty margins. Russian distributor margins, it's not unusual for them to have margins of 20% or thereabouts.

So these are local, established distributors and typically they are there also to facilitate reimbursement, because of their knowledge of the different markets and the different mechanisms that are available, so the distributor margins are approximately 20% or so.

Okay and then just moving away from Oncophage for a second, did you reach the maximum tolerated dose in the Aroplatin trial?

Yes. Again, we're in the very preliminary stages of looking at the data. We may have and as we get more knowledge of that, we will update you.

Okay and as far as you know has the toxicity profile remained attractive?

I can't comment on that because we need to analyze the data at the maximum tolerated dose and then expand on how were going to move forward or if we're' going to move forward with Aroplatin.

Fair enough and then on the glioma trial, do you -- I know that you made a comment just broadly about upcoming data. But do you have a sense of when we might see more Phase I data out of that?

We're in the process of looking at the immunological readouts from that trial, Aaron, and I expect that we will have some data, certainly in the second half of this year, or at least preliminary data on the immunological workup in the second half of this year.

Okay and is there any update that you can give us regarding partnering opportunities for products that are currently in the pipeline?

Unfortunately, these deals take a while and it isn't done until we sign on the dotted line, if you will. We have active discussions with some major companies for the prospect of partnering Oncophage. We are evaluating the wisdom of doing it, either in certain geographies or not. So, other than that, I can't tell you very much because these discussions are ongoing in various stages, but I cannot really provide any light as to when they may conclude or if they would conclude.

Fair enough. Last question. What are your expectations for operating expenses for the remainder of 2008? Is Q1 a good level or do you just anticipate a continued sequential build from this level for the Russian launch?

Shalini?

Hi Aaron. I think the expenditures for the Russian launch are obviously going to drive a slightly higher cash burn versus relative to 2007. Q1 is a little bit deceptive, in that we have certain expenses that go out in Q1 that will not necessarily take place every quarter.

Our interest payments, for example, happen in this quarter, bonus payments happen in this quarter, prepayments on insurance, etc. So I would not take this quarter's cash burn and annualize that. I would look maybe a little bit more to last year to see what some of those fluctuations are from quarter-to-quarter.

Sounds good. Thanks much.

At this time, there are no further questions.

Thank you. I'd like to remind listeners that a replay of this call will be available approximately two hours from now, through midnight ET on May 15th. Please dial 1-800-642-1687 from the U.S. or 706-645-9291 internationally. The access code is 44383079. The replay will also be available on our Company website in approximately two hours.

If you have additional questions after today's call, please feel free to call us at 1-800-962-AGEN. Thanks.

This does conclude today's conference call. You may now disconnect.