Agenus Inc (AGEN) 2012 Q1 法說會逐字稿

Good morning. My name is Denise and I will be your conference operator today. At this time I would like to welcome everyone to the Agenus first quarter 2012 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks there will be a question-and-answer session. (Operator Instructions) Thank you.

Ms. Jonae Barnes, Vice President, Investor Relations and Corporate Communications, you may begin your conference.

Great. Thank you, and thank everybody for joining us on the call today. With me I have Garo Armen, Chairman and CEO, and Shalini Sharp, the CFO. During this call we will review our financial results as well as provide a corporate update. We will then open up the call to a Q&A session.

Before we continue, I would like to remind you that this conference call will contain forward-looking statements, including statements regarding the Company's cash position, timing of potential income streams and development and commercialization efforts, time lines, availability of data, and potential efficacy with respect to products and product candidates of the Company and its 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. These statements speak only as of the date of this call. And Agenus undertakes no obligation to update or revise the statements. All forward-looking statements are expressly qualified in their entirety by this cautionary statement. When evaluating Agenus' business and securities, investors should give careful consideration to these risks and uncertainties. As a reminder, this call is being recorded for audio replay.

With that, I will now hand the call over to Shalini to review our financial results for the first quarter of 2012.

Thank you, Jonae. Good morning, everyone, and thank you for joining us on today's call. By now we hope you've had the opportunity to review this morning's press release. For the first quarter of 2012, we reported net income attributable to common stockholders of $6.6 million or $0.29 per share for the first quarter of 2012, compared with a net loss attributable to common stockholders in the first quarter of 2011 of $6.2 million or $0.33 per share. During the first quarter of 2012, we recorded revenue of $13.4 million and received approximately $18 million in cash through an expanded $9 million agreement with GlaxoSmithKline of $6.25 million license of non-core technologies, and $2.8 million in equity issuances.

Cash provided by operating activities for the first quarter of 2012 was $11.3 million compared to cash used in operating activities of $4.6 million for the first quarter of 2011. Cash and cash equivalents were $24.6 million as of March 31, 2012.

Based on our net cash burn for 2012, which is anticipated to be in the range of $13 million to $15 million, we expect sufficient financial resources to fund operations through 2013.

This concludes the financial portion of the call. And Garo will now provide a corporate update.

Thank you, Shalini. As previously reported, Shalini will be stepping down as CFO as of August -- I'm sorry, as of May 11, 2012 and this will be her last quarterly teleconference with us. We thank Shalini for many years of substantial contribution as to Agenus and look forward to benefiting from her strategic insights and also very importantly tremendous knowledge of our Company and our business as she transitions to being a Member of our Board of Directors.

I'm very pleased to report that 2012 is already proving to be an exciting year for us on a number of fronts. As Shalini stated, we started the year by strengthening our balance sheet by $18 million. We expanded the license agreement with GlaxoSmithKline, which broadens the use of QS-21 in new important indications in GSK's biologics pipeline. In addition, we agreed to grant GSK the first right to negotiate for the purchase of Agenus or certain of our assets. This first right to negotiate expires after five years.

Both of our technology platforms, QS-21 Stimulon adjuvant and heat shock proteins, are poised to benefit from recent advances in the fields of immunology and cancer. As most of you are aware, between Agenus and its partners, 18 programs are in clinical development to-date.

I will start with a brief review of our QS-21 Stimulon adjuvant program, which among other things strengthens the body's immune response to an antigen and this of course makes the vaccine more effective. QS-21 is a key component of 15 prophylactic and therapeutic vaccines currently in clinical development, of which four are in Phase 3 studies. These programs are diversified across different therapeutic areas, address large market opportunities, and are being pursued with the resources and expertise of the best-in-class large pharmaceutical companies.

Through our corporate partner, GSK, QS-21 is the subject of four Phase 3 pivotal trials for vaccine candidates, including GSK's MAGE-A3 cancer immunotherapeutic for patients with non-small cell lung cancer and additionally for melanoma. In addition, RTS,S for malaria, and Herpes Zoster for shingles. The MAGE-A3 programs for melanoma and non-small cell lung cancer are event driven trials, meaning that the trials will continue until a fixed number of pre-specified events have occurred. GSK indicated this warning that data from MAGE-A3 Phase 3 trials will now be available in 2013.

Just to reiterate, we are entitled to receive milestone payments as GSK's QS-21-containing programs advance as well as royalties on net sales for at least 10 years after commercial launch of the first prophylactic and the first therapeutic product, with some exceptions which can extend these timelines.

QS-21 is being studied in clinical trials that target billion dollar markets such as non-small cell lung cancer and melanoma, shingles and Alzheimer’s' disease. This unique proprietary asset of ours represents a significant and unusually diversified value driver for our Company. Again, the QS-21 programs are funded entirely by our partners benefiting from their financial development, sales and marketing resources. It is an extraordinary advantage for a company of our size to be in a position to benefit from the success of much larger established companies with a very diversified line of products.

I will now turn to our own proprietary product pipeline, beginning with the Prophage Series vaccines. We continue to advance our Heat Shock Protein Platform in oncology in a [fiscally] responsible manner [through our] innovative, collaborative and other programs, including for example NewVac LLC in Russia, which is a local Russian company and also very importantly our recently announced randomized glioma study, which will be sponsored and implemented by a U.S. based cooperative group.

I am very pleased to report that the National Cancer Institute approved a study of Prophage Series 200 vaccine in a large, randomized Phase 2 trial in combination with Avastin in patients with surgically resectable recurrent glioblastoma. This study will be sponsored and implemented, as I said earlier, by the Alliance Group for Clinical Trials in Oncology, an NCI cooperative group. And this will obviously investigate the combination of G-200 with Avastin in a three-arm randomized study of approximately 220 patients with surgically resectable recurrent glioma. This study will use overall survival as the primary endpoint and will compare the efficacy of G-200 given the Avastin either concurrently or in progression versus Avastin alone in a therapy of surgically resectable recurrent glioma.

Also in April, during the Plenary Session of the 80th American Association of Neurological Surgeons Annual Scientific Meeting, updated data and analysis from the Phase 2 study for Prophage G-200 in recurrent glioblastoma patients were presented. The data presented showed that G-200-treated patients lived significantly longer than 86 comparable patients treated with alternative therapies during the study period.

Let me elucidate on what we mean by comparable patients. In the analysis, both G-200-treated group and the control patients underwent more than 90% resection of recurrent glioblastoma and had Karnofsky performance status of greater than 70. The median overall survival for the control patients was only 32.8 weeks with a six-month survival of 68% compared to median survival of 47.6 weeks and 93% six month survival rate for the vaccine treated group, and this had a p value of 0.01.

In addition to the recurrent GBM study with G-200, a Phase 2 trial evaluating the Prophage G Series vaccines in patients with newly diagnosed glioblastoma is ongoing and we expect that screening for the trial will finish within the next few weeks.

Now let me turn to our HerpV program. HerpV, as you know, is a novel and exciting recombinant of the shelf therapeutic vaccine for the treatment of genital herpes. Genital herpes is caused by the herpes simplex virus-2 also known as HSV-2. This vaccine uses both our platform technologies, heat shock proteins or HSVs and QS-21. Not only is HerpV the most advanced herpes vaccine in the clinic, but it is also one to our knowledge, which use that polyvalent antigenic construct approach with one of the most powerful adjuvants available, our own QS-21.

HerpV contains 32 HSV-2 derived immunogenic antigens and was designed with the intent of treating a broad population of HSV-2 infected individuals. We're currently in the process of preparing, manufacturing (inaudible) HerpV for our Phase 2 trial and remain untracked to commence the trial during the second half of this year.

It is anticipated that we could have initial results from the HerpV trial as early as the end of 2013. The Phase 2 study for HerpV will measure the effect of vaccination in viral shedding in HSV-2 infected individuals. Key experts in the field believe that a reduction in viral shedding could be the best predictor of reduction in recurrent outbreaks and transmission. Given the significant unmet medical need represented by genital herpes we believe that if HerpV is shown to be safe and efficacious our HerpV therapeutic vaccine could be a true blockbuster product.

In closing, this is a very exciting time for the Company between Agenus and its partners there are a number of upcoming milestone events all of which could be of great value to us and to our shareholders. Importantly, our strength and financial position during the quarter allows us to reach these milestones with our exciting resource or existing resources. With over a dozen clinical programs in development in GSK biologics pipeline, which contain our QS-21 adjuvant, we're pleased to be able to participate in the future success of the world's number one ranked vaccine company.

Thank you very much for your interest in Agenus. We hope that you have found this update to be useful. And I will now conclude my remarks and turn the session to Q&A.

(Operator Instructions). Joe Pantginis, ROTH Capital Partners.

Hi guys, good morning and thanks for taking for question. Couple of quick questions around the recurrent glioblastoma study if you don't mind. First, it's my understanding that the steering committee that looks at these types of studies is actually a very, very stringent committee. I was just wondering if you could add any color around this to be able to get this over 200 patient study approved in the first place that will be run through NCI.

The second question that I have is, just curious regarding, obviously this remains an unmet medical need in the recurrent state and does this study have the potential to be a registrational study even from a conservative standpoint -- or an aggressive standpoint.

And then the last question that I have is, I would assume that the cost to Agenus around this study are somewhat minimal. So I was just curious whether you have any changes to your plans or any color you might want to add about future additional tumor indications at this point? Thank you.

Sure Joe. I think you have very astutely remarked about the -- at least the qualification that one needs to present to get an NCI sponsored study. As you very well know the resources of the NCI have been diminishing over the last few years and it's become highly competitive to qualify for an NCI sponsored study. So in that regard we went through a very extensive process and our investigator who drove this process went through a very, very extensive due diligence process in consideration for them to do this. So this is a terrific accomplishment by him, Dr. Andrew Parsa and a -- I think a good vote of confidence that such a prestigious group has taken it upon them to do an extensive study in the context of, as I said, it's a 220 or so patient study, it will be a randomized study, it will have all the bells and whistles for the proper controls and it will be done in a pristine fashion. And also given the fact that the end point here is overall survival, there is very little wiggle room in terms of this beauty, the integrity of the results that one can get from the study. So, overall, these things are positive.

Now let me turn to your second question of whether or not this could be registrational. Now, while it's a long shot that it could be registrational, of course, it being registrational will be a function of the robustness of the outcome from this study. If the results are really fantastic, meaning that, for example, if the combination of Avastin with Oncophage is providing some synergy and there is by the way a reasonable amount of scientific rationale to expect such a synergy then it could theoretically be a study where the regulators will have a difficult time to -- to reject the outcomes or the results.

Now, we as a company are in an unusual position because as you know we have patient experience with about 1,000 patients treated with Oncophage across a different group of indications. So this bodes well for our readiness to support registration of a compound both from a safety perspective as well as given the fact that we are a unique product, it's a personalized vaccine but we have had terrific experience in characterizing the product and making sure that all the product related and other ancillary issues that [take] some times, companies with novel and unique approaches over the years. So we have a lot of years under our belt and all of those things could bode well should the results be absolutely fantastic for potential quick registration.

Now with regard to other indications, if I understood your question properly, as you know we have tested Oncophage in eight different types of cancers. So we have considerable experience working with different tumor types and some preliminary data that we've had from even some of the smaller trials, Phase 1 and Phase 2 trials. Now we -- our intent, I did mention this in my formal remarks, but we are intent on exploring, for example, combination trials in Russia in other indications. And so -- so whether or not we will pursue additional indications in large randomized trials in other indications with co-operative groups would be a function of additional resources. So there are some of these considerations in the pipeline and some active discussions, but once again we're a company of only about 60 professionals and it's difficult for us to really expand our resources to do too many things. So, we're trying to focus our attention to things that we can handle well and that have the resources to put behind.

Well, sure. It's certainly not -- you certainly have your hands full already so that's certainly understandable. And thank you very much for the added color.

Thank you.

John Sonnier, William Blair.

Hi. Thanks for taking the question and congrats on a lot of good progress over there, Garo.

Thank you.

Hey, I -- my question is really on the sequencing of the, I guess, the readouts at GSK and I understand with event-driven studies when timelines get pushed out and sometimes that can be a good thing obviously, but what I'm wondering in this case is in so far as we have a little bit more evidence to be optimistic about the non-small cell lung cancer trial, do you think there is a possibility we now get that data first in front of melanoma?

John, you are very, obviously very astute on these subjects, so let me just provide a little bit more color on all of these things. As you know, GSK had indicated that melanoma data could be out as early as the end of this year and lung cancer would be next year. So as you said, given that these are event driven trials, meaning, you cannot analyze the results until you hit a prespecified number of events. So the analysis is triggered by them and I get a lot of questions from people saying, do you have some interim results or do you have any indication of activity and so on, so forth. While people could have indications of activity when you are doing cancer trials in patients with tumor burden, because you can see tumor shrinking and that will give you an idea as to whether or not a [product is active]. Remember that these trials in patients who are free of tumor after surgery.

So you don't have tumor burden to measure any activity against, and you have got 1,300 patients in one trial of about 2,300 patients in the other trial at hundreds of centers across the world. It's impossible for you to do an analysis or get an indication before the final analysis is triggered with a final number of events coming in. So, but I know this is a long-winded answer to your question, but getting back to the timelines, where they had set by the end of year for melanoma, now they are saying next year, so we assume that that's a slight extension of timelines. As far as lung cancer is concerned I would be speculating, but can it come before melanoma? Possibly, it can come before melanoma. So that would be the best guess we have right now on this. Anything else will be a speculation and given that GSK is a large conservative company, I think they would probably not commit to any more specific timelines than what I am giving you here.

That's fair enough. And then with HerpV program, you guys are obviously in a, I think an enviable position. My question is, if you look forward to when we get the Phase 2 read out, is there anything in the competitive landscape that you expect to change between now and then? Any inflection points from competitors who might even have or you'd expect to have in that time frame read outs from initial studies? Thanks.

Okay. So, we do not. Not certainly in the herpes vaccine space. We are the most advanced company in the world, believe it or not, even though we are a tiny little company, we are the most advanced company with a herpes simplex 2 vaccine lead. And any other company generating results will be the preclinical or phase 1. And as you know, phase 1 results will have limitations, so we expect that we will probably have the most meaningful read out by the time this trial is completed, now expected to be the second half of 2013.

Okay. Thanks a lot.

Thank you.

Ren Benjamin, Rodman.

Hi, good morning, everyone and congratulations on the progress. Maybe just starting off with the G-200 study that was recently updated, Garo, can you give us a sense as to what were the alternative therapies that were used and then also were these patients somehow or the data from these patients somehow gathered from multiple centers or was it from the same center?

The G-200 is from the same center, whereas the G-100 is from multiple centers. That's a study that we expect to be concluding enrollment in the next few weeks. So because of this, because of the bias, a potential bias that could be introduced a more rigorous comparator were presented at this AANS Conference that took place a couple of weeks ago, whereby we or the investigator looked at what are the potential sources of bias given the restrictions that are imposed upon us or upon the patients enrolled in the G-200 trial. And those two key indicators are the level of resection imposed on patients and the Karnofsky scale. So they went back from the same center mined information based on the more than 90% resection criteria, which is imposed on our patients. And also Karnofsky scales, and came up with 86 patients that were perfect comparators for the study. And as you could see that comparison was favorable.

So, other than that Ren, we cannot say very much because ultimately the proof of the pudding would be in a randomized study and that is the objective of certainly the Alliance trial, the NCI sponsored Alliance trial. And there the odds are stacked in our favor because you are working with not just a randomized trial structure, but also a drug that could have synergistic benefit for patients in this setting.

And, sorry, just as a follow-up to that, when we talk about alternative therapies, were they experimental therapies or were these patients treated with what is now considered the standard with Avastin?

The patients in the Alliance trial would be patients that will get the standard of care.

Yes, sorry, I guess, I wasn't being clear. In the G-200 study where we're looking at the comparable patients, the 86 that were mined (inaudible) mentioned alternative therapies.

Right.

And so --

Okay. Alternative therapies in this setting are simply whatever physicians prescribe, which is after they recur for palliative care is typically Avastin and chemotherapy.

Got it. Okay. That makes sense. And then -- sorry, just switching gears to the NCI study. Could you give us any sort of a sense regarding the timing of this study? It's been approved what -- how long does it take to get on the docket and start enrolling patients and how long do you think the study could take?

Well, we had first of all the formalities, the final agreement and so on and so forth to work out with them. And I will unfortunately be able to give you a better timeline on these things probably over the next few months.

Okay. Okay, and then switching gears very quickly to the HerpV update and study. Have you talked with -- I know that in the past to come up with this design you had talked with key opinion leaders and gotten their input when designing this study that you will begin. I guess one question is, have you had any discussions with regulatory bodies regarding the study yet? And then also, please correct me if I am wrong. But I thought the study especially looking at viral shedding was originally perceived to be a fairly quick study that could have a readout within months and at least due to the update today, it seems like it will be a longer study. Has there been a change in the focus of the study?

First of all let me answer the second part of it. There has been absolutely no change in the timing -- timelines associated with this study. We have stuck to our regional estimates of readout by the end of next year. Now, what you may be wondering is, why don't we start the study today? And the reason we haven't started the study today is because of manufacturing lead-time, manufacturing lead-time because this product requires manufacturing of two components. The heat shock protein, the recombinant heat shock protein, 70 component and the synthesis of 32 peptides. Both of this are being done by different vendors meaning the peptides are being synthesized by one vendor and the heat shock protein-70 is being synthesized by or manufactured by another vendor. And the two components come to us in-house to our own GMP facilities here and we reconstitute them and then we obviously make the QS-21 and have the final product.

So the lead time for all of this has always been the third quarter of this year, Ren. No change in that at all, because we went to vendors last year and priced and timed all of the stuff. And so the lead time is -- the lead time takes us into the third quarter of this year and that is as of the estimates we had from the middle of last year. So no change there at all. The enrollment in the trial -- well concurrently with this by the way we are now getting ready with the centers. So the centers are essentially going to be up and ready running when the product is manufactured.

So we won't lose any time on that. It will take us, we estimate, a few months only to enroll patients and then the swapping, remember the patients need to be swapped for 45 days -- after they enroll, they are to swap for 45 days prior to vaccination. And then there is three shots of vaccine and then the booster shot. And then they are swapped after vaccination for 45 days as well. And so if you combine all of this and do the analysis, it will take us towards probably the second half of next year.

Got it. And just any discussions with regulatory bodies?

So, that's what I was going to comment next. The answer is, yes. And with where we are right now, we do not, based on what I know, and we do not anticipate any regulatory obstacles here.

Okay. And then just one final question. Can you talk to us a little bit about upcoming milestones in terms of data presentations, preclinical or clinical for the rest of the year?

Okay. So, there won't be much in terms of clinical data presentations from our own pipeline meaning heat shock proteins and there is nothing to report in terms of HSP data other than what Dr. Parsa had reported. At some point we will start seeing results from our G-100 trial, okay. There may be some interim data reported on that towards the end of this year. There will be some scientific publications we expect in the second half of this year under heat shock protein technology from our own programs. And as far as QS-21 is concerned, as you know, that's in the hands of our partners and I think it's reasonable to expect that there will be a bunch of clinical presentations at upcoming conferences on that, but since we haven't cleared with them, I cannot tell you any more than this.

Perfect. Thank you very much and good luck.

Thank you.

Megan McCloskey, MLV & Co.

Hi, guys, congratulations on a fantastic start to 2012. I have a couple of questions about the Russian collaborations. How are the commercialization efforts being implemented by NewVac starting out for the year and what are you guys seeing moving there?

Certainly, Megan. Russian (technical difficulty) NewVac and ChemRar who is the parent company essentially are going full blast, meaning, they are well underway with respect to setting up their manufacturing facility and we are working very intimately with them to make sure that all the key criteria and the standards are implemented in their manufacturing facility. The manufacturing is expected to be up and running sometime next year. And until then we will provide commercial products from our Lexington, Massachusetts facility for launch needs. My impression is that they are getting ready for launch soon. And we will let you know exactly obviously when the product gets formally launched, we will put out a press release on this.

(inaudible). And you commented on a licensing with Integrated Biotherapeutics, can you give us any information on what they're working on with Agenus?

It's a -- it's an [earliest] program, as you know, and really nothing notable to report on that one.

Okay. Great. Thanks, Garo. Congratulations.

There are no further questions queued up at this time.

Great. Thank you. I would like to remind listeners that a replay will be available approximately two hours after the call through midnight Eastern Time on October 24, 2012. Replay number is 855-859-2056 domestic, or 404-537-3406 international. And the access code is 71868897. The replay will also be available on our website approximately two hours after the call. And if you have any additional questions after today's call, you could certainly call us at 800-962-2436. Thank you very much.

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