CASI Pharmaceuticals Inc (CASI) 2002 Q1 法說會逐字稿

Good morning, and welcome to the first quarter 2002 earnings call for EntreMed. I am Stephanie your operator, this morning's call will be hosted by Dr. John W. Holaday. EntreMed chairman and chief executive officer, Dr. Holaday will be presenting today's financial results followed by Dr. Ed Gubish, chief operating officer who will be outlining the company's up coming presentation. The presentation will be followed by a brief question and answer period. If you want to ask a question, press star and the number 1 on your telephone keypad. To withdraw your question press star then the number 2. Thank you, you may begin your conference.

Thank you, operator, prior to getting beginning the call I would like to remind our listeners comments made during this call fall under the safe harbor act in 1999 as follows. Has historical facts are forward-looking and subject to risk and uncertainty. Actual results cold differ materially from those currently anticipated due to a number of factors, including those set forth in the company's securities and exchange commission filing under risk factors, including risks relating to the early stage of products under development, uncertainty relating to clinical trials, dependency on third parties, future capital needs, and risks relating to customerization if any of the company's proposed products, such as marketing, safety, regulatory, patents, product liability, supply, competition, and other risks. I'd like to hand the call over to Dr. JOHN HOLADAY: EntreMed chairman and chief executive officer. John. Thank you, Amy. I thank you for joining

us today for first quarter 2002 earnings call. EntreMed has been busy on a variety of fronts. I'd like to share some of those with you. As you may remember, three weeks ago we had the American Association for cancer research meeting, where our scientists presented the latest on mechanisms of action of our lead product candidate as well as our rich pipeline of products that were also highlighted. Secondly, our clinical program is expanding. As you may have seen, we announced the addition of the University of California, San Francisco, as the second site for neuroendocrine tumors in our phase two study; the first site being [DanaFarbor] and those studies are progressing nicely.

We also prepared sufficient drug on hand for ongoing trials as well as for our planned studies during this fiscal year through our relationship with [Kiron] where we have manufactured endostatin in sufficient quantity to ensure those particular clinical trials can be not only adequately supplied with drugs but also expanded to meet our aggressive phase two program. Endostatin received orphan drug status from the Food & Drug administration for malignant melanoma. Also in just a moment, I'll have Ed Gubish highlight for you the 7 different Asco presentations; that there were seven submitted by our clinical investigators. All seven were accepted. He will provided you with some review of what to expect from society of clinical oncology meeting, which begins early next week. On the business development front, I'm pleased to say our strategy has been and always has been, to bring our product candidates into phase two studies to add value for partners as well as value for our shareholders. We announced last time our [Allagan] relationship that's been further solidified scientifically

by published report in experimental eye research demonstrating that panza prevented new blood vessel growth in a model of macular degeneration. It's one that typifies our strategy of capitalizing on a variety of diseases of angiogenesis while keeping our focus internally in our own program, directed towards oncology and cancer research. Numerous partnering discussions are well under way.

On the financial side, I also share with you some information that was released last week. We had a $50 million shelf offering that was planned and is put out into the marketplace or will be put out to meet the financial objectives as they occur.

We also continue with our program of strategic spending. We stockpiled drugs for the clinical program and will be highlighted.

So to highlight today's call, once again we will review our first quarter financial results. Dr. Gubish, [inaudible loud noise] of EntreMed American Society for clinical oncology presentations that are upcoming then Ed and I will be glad to take any questions.

Briefly, let me highlight the first quarter for you. We were really in line with ANALYST expectations. In 2002, for the first quarter our revenues were 800,000, less than quarter 1 of 2001. This was due to an absence of relative revenue from Thalidomide. As you recall, we sold our royalty stream last year although retaining so much side on the potential future sale of Thalidomide, we think that was an exceptional decision at the tiime and allowed us to plow more resources into our clinical trial program. Our R&D expenses increased in the

comparable 2001 period by $2 million. This reflects our strategy of manufacturing drugs to provide adequate stockpiles for our present phase two studies and those envisioned going forward in 2002 and beyond.

Our manufacturing in 2002 were approximately $10 million lower than the fourth quarter of 2001. Reflecting the fact in the last quarter of last year, a lot of the expenses for those manufacturing opportunities were expense. We have also increased GNA by about $600,000 over Q1 of 2001. This fundamentally reflects the 10% increase in personnel as we have grown our company in addition to outside professional fees and communications costs.

Our additional losses in the quarter of 1 2002 versus quarter one 2001 were due to manufacturing, as previously described, and a higher GNA, combined with a lower interest income and the revenue. I want to remind our colleagues over the last year we've successfully brought in over $75 million gross to the company through various financial transactions, and we continue in our aggressive strategy of finding the right way to bring in financial opportunities through partnering, through further offerings, et cetera.

I'd like to now turn this call over to Dr. Ed Gubish, who will provide you with some information about the upcoming American Society for clinical oncology meeting.

Thanks, John. We're certainly delighted that seven of our investigators are presenting on clinical trial suits at this year's [ASCO]. A full presentations, full releases on these presentations will be available on those days that they

present their material.

For instance, on Sunday, Dr. George Wilding from the university of Wisconsin will be presenting on phase two data with Panzem and prostate cancer. He'll be talking about PSA levels and cancer activity increased viability with new formulations. On Monday morning, Dr. Adams [Dicker] from Thomas Jefferson university will present results from the combination of angiostatin, plus radiation therapy clinical trial that's been conducted for the last year or so. He will talk again about safety data, with no additional toxicity, to radiation therapy, as well as talk about responses. Dr. [Pernado] on Tuesday morning will discuss endostatin phase 1 clinical trial on solid tumors. This study's been ongoing in comparing subcutaneous administration versus intravenous administration in the Netherlands for over a year. He will also talk about the safety of these different routes of administration, as well as compare the pharmacokinetics.

In that same section Drs. [Sledge] and [Miller] from the University of Indiana will talk about not only the single agent study of [panzam] in breast cancer patients but also the combination of panzam with Taxotere in a breast cancer patient population. Both of these investigators will talk about clinical benefits and pharmacokinetics including the interaction with Taxotere.

On Tuesday, Dr. Paul [Eter] will talk about the first phase one trial with endostatin. And this one that was started at [Danafarber] institute, and he now has extensive safety and PK data. He will talk about clinical benefits and he will talk about long-term use of endostatin in his patient population.

That will be followed by Dr. [Amiel Voost], who has been using angiostatin by subcutaneous injection for prolonged periods of time. He will discuss the safety of this administration, as well as long-term stable disease.

This provides for a full ASCO presentation, starting on Saturday of next--this week, going through Tuesday. John.

Thank you, Ed. One of the things we're very excited about is that patients now with the protein drug of endostatin and angiostatin injecting themselves on a daily basis much like the diabetic would for insulin. We think this perhaps harbors in a new strategy for treating the disease and certainly commensurate with the progress we've made developing antiangiogenic drugs. At the [ASCO] meetings we'll highlight not only the data retained from the phase ones but also emphasize the fact these new formulations are allowing us more flexibility and opportunities in delivering these drugs in more effective concentrations. As a matter of fact, as we look at the clinical investigators that were presented for review by the people at the ASCO meetings, all seven of seven were submitted were accepted, which is a very good record, and also we must remember that the data that were presented reflect fixed point in time in December when the abstracts were submitted, so we're looking forward to getting the latest update from our clinical versions to include that additional time period.

One of the things I'd also like to bring to your attention on Monday, May 27th at the [ASCO] meetings at 7:00 a.m. or shortly thereafter, we will be updating an ANALYST: meeting on a webcast and will have several of our clinical investigators presenting at that point in time. I would encourage you to dial

into the EntreMed.com website and participate in that webcast if you'd like to see the latest and greatest from the information presented by the clinical trial versions. I'd also like to remind you we're having our annual shareholders meeting Thursday, June the sixth, we'll be sending out the annual reports and the proxy statements this Friday. As always we encourage you to mail in your proxy.

And then finally, always remember go to the EntreMed webcast at or to the EntreMed website at www.entra met.com for the latest information on [ASCO] the pending press releases that will highlight the clinical data going to be presented there.

Stephanie, I'd now like to have you open the phone lines so we can answer any questions our participants might have.

At this time I'd like to remind everyone if you'd like to ask a question press star and the number 1 our on your telephone keypad. Your first question comes from Yvonne [Marindale.]

Hi, guys. A couple of quick question, the first one is what is your current cash position, if you could.

Certainly. We presently are going to report that we have just over $26 million in cash, we'll be filing our SEC statement within an hour or so.

And the interest rate you will receive on that cash position at the moment?

I am not certain exactly what that is but it's in the neighborhood of 2% or thereabouts.

Then I had a quick question with regard to R&D expenses. You--how do you see this progressing over the year, do you see them being stable at the current levels of the first quarter or increase slightly or increase a lot, and that would probably also relate to, you know, how how much you have currently, and manufactured for the clinical trials of the drug products and how your supply is at the current moment?

Well, we were, Yvonne, very interested in taking advantage of the opportunity to put some drug supply aside last year, and we certainly did that through our relationship with [Kiron] and other manufacturing, so we expect that our burn rate in Q 2 of 2002 is going to be less, is forecast to remain stable essentially until we do decide to manufacture additional drugs which will not be for several months at the earliest, emphasizing the facts we've got plenty of drugs to supply our clinical 2002 trial program actually expand further clinical trials presently in design process.

We can expect R&D and SG&A to remain stable for the rest of the year?

That's correct, Yvonne.

Thank you.

Thank you very much.

Your next question comes from Allan [Irback] with Wells Fargo.

Hi, good morning, John.

Good morning, Howard.

John, can you clarify some issues regarding the status of some senior management positions? Am I correct that both Joanna [Horbin] as well as Tom Russo have left the company?

Several months ago Joanna Horbin accepted a position with a company in Boston, Massachusetts indeed is no longer with the company, likewise Tom Russo is no longer with the company effective approximately four to five months ago. During the meantime we have reinforced our senior management as you know we brought on Neil Campbell about a year ago from [Salara] who now manages our corporate development is doing an exceptional job. His team is also Martha [Connoly] a seasoned veteran of the biotechnology industry working on business development. We also brought onboard Dr. Carolyn [Sedore] who manages our clinical trial program and our relationships with the Food & Drug administration. And several others. So this is part of the usual process of transition. Indeed, Dr. Jim Johnson, our senior VP for corporate counsel came onboard as well from the firm of Kilpatrick and Stockton, and now manages our in-house intellectual property needs as well as serves as general counsel for the company. It's part of the process of any company growing and dynamic there are changes for senior management certainly we think we've added to our senior management provide with us a great team go forward.

In terms of the responsibilities that Joanna had, as well as Tom had, Joanna was your executive vice-president in terms of commercial development, who has taken over those responsibilities?

As I shared with you a moment ago Neil Campbell has been onboard since April of last year, he came to us from Salara where he managed the commercialization of the genes at Salara, 17 years of experience, to include [Abbott] and many others and is certainly managing quite well our dialog with strategic partners.

And on the financial side, who is currently acting as your CFO.

As always we have had the able stance of Steve Goldfarb who serves as our vice-president for finance and he's been working closely with us for about four years now and of course Ernston Young works closely with us and manages all our accounting needs.

Great. Thank you.

Thank you, Allen.

At this time, I would like to remind everyone if you would like to ask a question press star and the number 1 on your telephone keypad.

OPERATOR: I'd like to go ahead and conclude the call, just summarize once again thanking the various participants for joining us today on this conference call which is part of our routine process, I do believe we have one other caller coming in, maybe I'll take that call then we'll conclude.

Your next question comes from Neil [Quinhangler.]

Good morning, John. It's Neil Quinhangler. How are you.?

I'm fine.

I'm looking forward to the presentation at ASCO and it appears to be encouraging. Could you summarize bring us up to date on where our subsidiary [Maxsite] stands right now?

We're very pleased to do that. Under the able leadership of Doug [Dirschler] Maxsite has grown in its opportunities tremendously over the last year. What we have done not only brought forward our concepts of enhanceing blood oxygen delivery into phase 1 clinical trials in Cincinatti, also brought forward a new way of looking at the process of high volume flow [electrical poreration] a as a way of delivering drugs. Neil, what we've shown is we can recruit white blood cells and using non-viral vectors put genes into those blood cells on a patient by patient basis, allowing them to track it through the body and manufacture protein. This has been reduced to practice with a number of promising drug candidates, including those already being used to treat patient such as [epogen] and others and even endostatin and angiostatin where it's been shown the viral strategy, as well as a non-viral Maxsite strategy flow [electrolyting ] that into white blood cells produces sufficient protein quantity in pre-clinical models to decrease tumor size. Then finally we found way to recruit platelets which are little work horses in the bloodstream that are often involved in infection and also in closing wounds. These platelets likewise can have drugs inserted into them and still function normally. So on the scientific front we've made great progress furthermore on the partnering front tremendous progress as well a lot of companies very interested in finding new ways to deliver genes and to get a quick answer from the gene all the way through the pre-clinical studies without having to go through the laborious

process of something production. We're pleased with the progress and looking forward to more progress to be announced in the near future

Thank you.

Once again I want to thank all of you for participating in our May 20th, in our webcast today ask you to join us on the 20th of May webcast ASCO meetings held in Orlando,, Florida beginning this weekend then extending into early next week. I'll look forward to meeting with you once again, next quarter.

Thank you for participating in today's conference call. You may now disconnect.