Agenus Inc (AGEN) 2009 Q4 法說會逐字稿

Good morning. My name is Whitney and I will be your conference operator today. At this time I would like to welcome everyone to the fourth quarter 2009 earnings call. (Operator Instructions) Ms. Sharp, you may begin your conference.

Thank you, Whitney, and good morning everyone. Welcome to Antigenics' conference call to discuss the financial results for the quarter and year ended December 31, 2009. With me today is Dr. Garo Armen, chairman and CEO. 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 a Q&A session.

But before we continue I would like to remind you that this conference call will contain forward-looking statements including without limitation statements regarding the company's cash position and development and commercialization efforts with respect to products and product candidates of the company and/or its licensees and partners. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially. Reference to these risks and uncertainties is made in today's press release and they are disclosed in more detail in our most recent filings with the US Securities and Exchange Commission. When evaluating Antigenics' business and securities investors should give careful considerations to these risks and uncertanties.

For the purpose of this call the phrase net cash burn means cash used in operating activities plus capital expenditures, debt repayments, and dividend payments. With that I will now review our financial results for the quarter and year ended December 31, 2009. For the year ended December 31, 2009, Antigenics incurred a net loss attributable to common stockholders of $31.1 million or $0.39 per share. This is compared with a net loss of $31.6 million or $0.50 per share for the same period in 2008. Antigenics recognized revenues in 2009 of $3.3 million compared with $2.7 million during 2008.

This increase in revenue was primarily driven by an increase in QS-21 license fees, royalties, and products shipments to our corporate partners. Research and development expenses in 2009 were $16.9 million compared with $20.7 million in 2008. General and administrative expenses in 2009 were $14.1 million compared with $19.8 million in 2008. These decreases reflect our cost containment efforts and declines and external expenditures related to the status of our efforts with Oncophage in Russia and in other territories. Our net cash burn for 2009 was $25.2 million compared with $29.9 million in 2008.

The 2009 results reflect, among other things, the company's efforts to support Oncophage in Russia, Europe, and other territories while also executing cost containment efforts. We anticipate that our net cash burn in 2010 will be in the range of $16 million to $18 million. Having raised net proceeds of $18.6 million through private placements of common stock, we have $30.1 million in cash, cash equivalents, and short-term investments at the end of 2009. We believe our current cash balances are sufficient to fund our operations at least into the second half of 2011.

This concludes the financial portion of the call. I'll now turn the call over to Dr. Garo Armen.

Thank you, Shalini. As many of you know, 2009 started with a hopeful stance continuing on the momentum of Oncophage approval in Russia in 2008. But unfortunately it ended with disappointment as we finished the year not having realized our ambition of obtaining EU registration for Oncophage.

Our other major asset class, QS-21, on the other hand, progressed in the hands of our licensees with 15 products in clinical development which contain our adjuvant. With these products progressing we are getting closer to potential commercialization of the first QS-21 containing vaccine.

In addition to these two assets, namely Oncophage and QS-21, we made progress with AG-707, our therapeutic vaccine against herpes simplex virus. The data from our four-arm, phase one trial has been analyzed and we're currently exploring potential partnerships in our efforts to advance this exciting and unique product in the clinic.

I would like to take a few minutes now to review our forward strategy regarding Oncophage in some detail. As a result of our EU disappointment we have made a deliberate decision to lower our costs across the board with regard to Oncophage and reposition it for further development which would be done principally with the participation of a potential partner.

More specifically, what all of this means for Oncophage is the following. Firstly, over the next six months we will be exploring if there is a realistic path to successful registration by refiling in the EU without having to conduct another full-blown trial in the intermediate stage RCC patients, of course. And I must stress that this is being pursued with minimal cost to the company.

Second, we're in the process of determining the magnitude of the commercial opportunity in Russia, both with and without government reimbursement. Again, these efforts are being undertaken with minimal cost to Antigenics.

Thirdly, and very importantly, we are actively pursuing a broad partnership opportunity for further clinical development of Oncophage in multiple cancer indications.

Our management as well as our board of directors and advisors agree that over the past 12 years we have generated a significant amount of clinical information and data to justify further development of Oncophage for purposes of product registration in multiple indications.

To expand on this rationale, for attractiveness of Oncophage for a partner, it is important to note that Oncophage represents a very unique opportunity in the cancer vaccine arena which is backed by a substantial amounts of published scientific pre-clinical and clinical data. Furthermore, over the course of the past 12 years Antigenics has achieved major regulatory manufacturing and quality bench marks for this novel personalized therapeutic cancer vaccine.

Basically we have accomplished the costly and time-consuming task of an enormous amount of development work. All of this means reduced product development risk at the stage of entry to phase three for a potential partner. This statement is particularly relevant when it comes to a promising new approach with a new class of molecules like Oncophage.

Now, consistent with our efforts to expand the use of Oncophage I'd like to provide you with a quick update on glioma. Most recently data from our ongoing investigator-sponsored, multi-center phase two trial of Oncophage in adults with recurrent glioblastoma continue to show encouraging results in efficacy in this fatal disease, as you know in this there are no curative therapies at the moment. The trial is being sponsored by the National Institutes of Health and patient advocacy groups. Enrollment is nearing completion with early results anticipated by the end of the year.

Now going back to our key Oncophage strategy point, fourthly, we're continuing to explore once again, at a minimal or no cost to Antigenics, various commercialization opportunities with novel strategies in places like South America, Australia, and even Europe. And lastly, with regard to Oncophage-related costs, which are the great bulk of our overall costs, we have already taken significant measures which is reflected in our expected burn rate for this year as Shalini expressed a few minutes ago versus last year. Nonetheless, we expect that these costs to decline noticeably, even from current levels, if we can consummate a broad partnership for the future development of Oncophage.

I will now briefly review our other major asset and value driver, QS-21. As many of you are aware, vaccines are regaining attention because of new, more powerful enablers of vaccine approaches currently in clinical development. Our QS-21 is one critical element in these new powerful vaccine approaches. During 2009 there were continuing advances in the clinic with vaccine products containing QS-21, and of course as these products get commercialized Antigenics will be collecting various royalty-related payments based on our licensees revenues from QS-21 containing products.

In addition, we also expect one and possibly two more products to enter phase three development this year. These are again products that contain QS-21. And this is in addition to the four which are in phase three development right now. And once again, as we've mentioned, total products containing QS-21 which are in clinical development currently number 15. As we've indicated in the past, QS-21 is a business which does not consume our cash. In fact, it has been a contributor of cash. And we expect this contribution to be significantly stepped up once QS-21 containing products are commercialized and achieve meaningful revenues for our licensees.

Next, and last, I will update you on our first infectious diseases therapeutic vaccine, lead molecule, AG-707. In the midst of our efforts to gain approval for Oncophage in Europe we did not spend much time discussing this program. The thought and the design of this broad technology approach for treating various infection diseases go back to our roots with the heat shock protein technology.

In the beginning of life for Antigenics, based on scientific facts and knowledge we made a decision to pursue cancer vaccine development in an individualized basis because of growing evidence that every patient's cancer is a different disease. At the time the world was somewhat skeptical of this view, but it is accurate to say today that there's very little doubt indeed cancers are individual from patient to patient. Now, you may say that this advanced knowledge has not yet given us a tremendous advantage in terms of commercial success or developmental success for that matter. But I would like to think and stress that the "not yet" part of the statement is relevant.

Similarly in the beginning of life for Antigenics we also made a deliberate decision based on, once again, on prior knowledge and experience in the field that therapeutic infectious diseases vaccine approaches should have two key components. One, that they produce primarily a T cell, more specifically a CD8 cell immune response, and two, they represent as much of the pathogens relevant in the genome as possible or practical. That would be for targeting purposes. Based on these considerations, we designed AG-707, our heat shock protein-based therapeutic vaccine which targets the HSV2 virus in the treatment of genital herpes.

During the course of 2009 we completed a very comprehensive four-arm phase one trial. And we plan on publishing the results from the analysis of this trial. Once again, because of the scarcity of cash and other resources we will be actively seeking a partnership in our efforts to take this program forward, and additionally exploring the construct of potentially other therapeutic vaccine-based approaches using the same heat shock protein technology platform.

These conclude my remarks, and I will now turn the conversation and I think the Q-and-A session back to Shalini.

Thank you, Garo. Whitney, could you please review the process for Q&A?

(Operator Instructions). And your first question comes from Yigal Nochomovitz from Rodman.

Good morning, this is Yigal Nochomovitz standing in for Ren. I'm just wondering, maybe you could start with Russia and wondering if you could give a little more granularity on the process of obtaining reimbursement there. I'm just wondering if there are specific items that the Russian authorities have delineated that need addressing. I understand that the importation/exportation licenses were granted some time ago.. So I'm just wondering perhaps if it's the level of reimbursement is what's holding things up, if you could give some clarity.

At this point, we don't have any reimbursement from Russia. So any patients that come in are coming on the basis of private pay. And we're waiting to see if there's an opportunity, because this is a unique program. And we are not necessarily under the oncology reimbursement program. So we're waiting for a special consideration. And unfortunately, you know, as you know we have been waiting for a little bit of time for this. And I don't have any really additional points that would clarify the situation other than to say that the efforts are underway. And as I said in my talk, these are not being pursued at any cost to Antigenics. So it's being done by agents in Russia who, if we are successful, of course, would be our business partners or our distributors in Russia.

So you mentioned the private pay arrangements. Could you give us some sense as to the magnitude and how many patients have actually purchased the Oncophage outright in Russia? And if so, what was the price of the drug?

Shalini, I don't know if we have revealed that publicly. I don't know the regulatory issues of talking about this right now. But I will turn it to you if you'd like.

Yes. So we have not provided any public information about the pricing of the drug at this time. It is something that we are still working on, so we're not able to provide final guidance. I think we've provided very broad guidance in the past saying that oncology therapeutics in Russia can sell from anywhere from $25,000 a patient up to multiple hundreds of thousands of dollars per patient per year. And we would certainly expect to be at the low end of that range in terms of the end user price.

Okay. Thank you. And then turning to the EU, I understand you received a negative opinion. But at the same time, we know there's a very strong precedent in the EU for negative opinions being reversed. And, in fact, I'm looking at a table here of probably six or seven companies for which there was a negative opinion and then subsequent to refiling there was a conditional or full approval. So I'm just wondering if you could comment on that precedent and how or what strategy you're taking forward to potentially follow through there.

Certainly. I think you make good points. And we are doing several things. One is to make sure that the basis for rejection is accurately reflected in the final documentation. And the basis for our asking for approval and substantiating the efficacy of Oncophage in those patients is also accurately reflected in the report that will be published. So that is the first step. Second, we will be, over the next month or so, we will be exploring meetings in Europe with specific country regulatory representatives, picking countries that are in a leadership position in this particular field, in the field of oncology and specifically immunology, and getting a temperature read as to their position and what we may be able to do, short of running another eight-year trial, in order to gain approval. So these discussions will take us through the end of April. And at that point we'll have a better and clearer way forward as to what pathway we will take, if indeed we will take any path going forward in Europe.

And have you met with the EMEA since the decision was released or is that still pending?

No. We haven't met with the EMEA and there will be no meeting with the EMEA until the individual countries are explored. We've had obviously interactions with the EMEA with regard to the publication of the report that will articulate the reasons for their rejection and the reasons for our filing in the first place.

And let me just turn to one final question on the glioma studies. I know there was some discussion of the potential to draw up plans for a phase three study under the direction of Dr. Parsa at UCSF. I'm just wondering if you could provide an update there and if those plans are underway.

Certainly. As I said, the glioma program is a very exciting program. And exciting not just from our perspective but particularly from the perspective of the investigators, Dr. Parsa is the lead investigator, and patients as well as the sponsors of the study, NIH, and the patient advocacy groups. Now, having said that, entering into phase three is a pretty serious and costly undertaking. And that's one of the reasons we will be spending some serious time over the coming 6 to 12 months, hopefully shorter, with regard to a broad partnership through which such a trial cost could be underwritten. And so while we have protocols drawn up, not just for a phase three trial for glioma but we also have it for a number of other indications, we are using these protocols in our discussions to justify a potential registration pathway for Oncophage in multiple indications in phase three.

So, in essence, what I said before was that we're shifting strategy a bit in terms of the bulk of our effort being put into a broad collaboration with a partner where we can justify, based on everything that we have generated which is a tremendous amount of data and justification, we can justify moving Oncophage in multiple phase three trials for registration purposes. And I'm not talking about the kinds of phase three trials that would take 8 to 10 years but shorter phase three trials in, perhaps, somewhat sicker patients. Even in combination with other agents, whereby we can achieve success.

Thanks. And just one more if I may just really quickly. You mentioned the AG-707 study, has that new data for the four-arm phase one been released or should we be expecting that shortly?

It has not been released. And I believe we would be releasing it in connection with a publication of the data.

Okay. Very good. Thanks again. And good luck.

Thank you.

(Operator Instructions). And there are no questions at this time.

Thank you. I would like to remind listeners that a replay of this call will be available approximately two hours from now through midnight Eastern time on August 18th, 2010. Please dial 1-800-642-1687 from the US or use the international number which is 706-645-9291. The access code is 56756319. The replay will also be available on our company Web site in approximately two hours. If you have additional questions after today's call, you may call us at 800-962-AGEN. Thank you.

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