CASI Pharmaceuticals Inc (CASI) 2004 Q1 法說會逐字稿

Good morning and welcome to the EntreMed first quarter 2004 conference call. I am Bill, and I will be your operator for this event. The conference call leader will be Mr. Neil Campbell, EntreMed president and chief operating officer. We expect the duration of this presentation to be approximately 10 minutes with a brief question-and-answer period immediately following. If you wish to ask a question, please press star followed by 1 on your touchtone telephone. If your question has been answered or you wish to withdraw your question, press star followed by 2. Questions will be taken in the order they are received. The slides and audio are available on the Web at www.entremed.com and a replay of the audio portion will be available from April 27th through May 4th at 888-286-8010 in the U.S. and Canada, or 617-801-6888 internationally. The passcode for the replay will be 28626342.

Mr. Campbell, you may proceed.

Thank you, Bill. Good morning and welcome to EntreMed's first quarter 2004 conference call. I want thank all of you for joining me this morning.

Before beginning the call, I'll remind our listeners that comments made during this call fall under the Private Securities Litigation Reform Act as follows -- Statements herein that are not descriptions of historical facts are forward-looking and subject to risks and uncertainties. Actual results could 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."

During today's call, I'll provide an overview of our first quarter 2004 financial performance and corporate highlights. Then I will conclude with a brief question-and-answer session.

During the three months ending March 31, 2004, revenues decreased from approximately $514,000 in 2003 to $98,000 in 2004. The 2003 amount resulted primarily from two sources -- first, a grant received to support our endostatin Phase II clinical trial in patients with neuroendocrine tumors; and, two, contract revenues resulting from performance as a subcontractor under an NIH-sponsored malaria vaccine program. During the first quarter of 2004 we did not record any grant or NIH subcontract revenues. The first quarter 2004 revenue represents amortized licensing fees from the Allergan and Alchemgen agreements.

Research and development expenses were approximately $3.1m for the first quarter of 2004 as compared to $2.6m for the comparable period of 2003. The increase in 2004 reflects continuing pre-clinical costs and clinical expenses related to the initiation of Phase I trial to assess various dosing approaches for reformulated Panzem. The 2004 increase also reflects increased costs associated with further development of our pipeline drug candidates, particularly our new chemical entities.

The first quarter 2004 general and administrative expenses were approximately $2.1m and the first quarter 2003 G&A expenses were $1.6m.

The net loss per share was 14 cents for the quarter ending March 31, 2004, versus a net loss of 16 cents per share for the same period last year. As of March 31, 2004, the company had approximately $30.7m in cash and short-term investments.

Now I'd like to turn to the first quarter 2004 highlights and begin with an update on Panzem also known as 2-methoxyestradiol or 2ME2. Earlier today we announced that we completed our Phase I clinical trial using reformulated Panzem in healthy volunteers. During the trial we looked at several dosage forms of Panzem to evaluate the pharmacokinetics and safety of each form. The best of these formulation approaches was a liquid form the resulted in significantly higher-peak blood levels of Panzem than those achieved with the original clinical formulation; also to note that these formulations did not show any additional toxicity relative to the old formulation.

We plan to initiate additional oncology trials with the reformulated Panzem in early 2005, but prior to that we will do the following -- first, we expect to use a liquid product format to achieve sustained blood levels by exploring various dose and scheduling options. Second, we will continue to evaluate solid dosage formats. Third, we will continue to assess the long-term stability of the drug candidate and then, lastly, negotiate a long-term agreement with a G&P manufacturer to produce adequate product to support our planned clinical program.

The next highlight during the first quarter was the company's 2ME2 analog program. During the annual meeting of the American Association for Cancer Research, or AACR, EntreMed scientists presented data on three lead 2ME2 analogs for oncology. We have identified these compounds for further studies direct towards an investigational new drug application, or an IND. In preclinical models these analogs demonstrated a reduced rate of metabolism, improved pharmacokinetics, and improved anti-tumor activity.

We are also exploring the use of these compounds in several other disease indications. Further, these analogs' mechanisms of action include the induction of apoptosis, or programmed cell death; the targeting of microtubules; and the inhibition of hypoxia inducible factor 1 alpha, or HIF1 alpha. HIF1 alpha has been shown to be over-expressed in more than 70% of human cancers and their metastases including breast, prostate, brain, lung, and head and neck cancers.

The next step with the 2ME2 analog program is to conduct IND-directed studies. It's important to note that the analog compounds were discovered, designed, and developed by EntreMed, and the respective intellection property belongs exclusively to the company.

We also presented data on our immunomodulator, ENMD 0996 at the AACR meeting. ENMD 0996 specifically blocks the activity of fibroblast growth factor number 2, or FGF-2. With no effect on any angiogenesis stimulators. EntreMed scientists presented data demonstrating that three months following administration with ENMD 0996, preclinical animal models showed inhibition of metastases. Also, there was no evidence of toxicity in preclinical models or any effects upon normal physiology specifically related to wound healing and reproduction.

We have begun working on the next stages of the ENMD 0996 program and are currently conducting further preclinical challenged studies. We also are investigation possible therapeutic uses with this compound as well as exploring external opportunities to support its continued development. Similar to our 2ME2 analog program, ENMD 0996 was discovered and developed by EntreMed and the respective intellectual property belongs exclusively to the company.

On May 18, EntreMed's senior vice president for research and development, Dr. Udo Klein in London. As of the date of today's conference call, EntreMed has no planned presentations for the American Society of Clinical Oncology's Annual Meeting, or ASCO, to be held this June in New Orleans, Louisiana.

Before opening the lines for a few questions, I'd like to remind our listeners of further detailed information about EntreMed in general and about our first quarter's available at our Website at www.entremed.com and also in our filings with the Securities and Exchange Commission.

This concludes my formal comments, and now I'd like to take a few questions. Bill, could you please open the line?

Thank you very much, Mr. Campbell. As a reminder, ladies and gentlemen, if you would like to ask a question, please hit star 1 on your telephone. If your question has been answered or you'd like to withdraw your question, please hit star 2. Questions will be taken in the order they are received, and our first question comes from Neil Kleinhandler. Please proceed, sir.

Yes, Neil Campbell, this is Neil Kleinhandler, how are you?

Good morning, Neil.

Good morning, I want you to just expand a little bit on the Panzem study, if you would. Is the company satisfied with this Phase I study, and have you reached the anticipated goals?

The answer is yes. The original goal was to take the existing formulation and to improve the bio-availability. In the assessment of the program over the past year, we wanted to achieve three things -- first one was to increase the bio-availability, which is the amount of drug circulating in the bloodstream; secondly, is to hopefully observe no additional toxicities that would limit the program; and then, thirdly, this will have an orally-available product acceptable for oncology, and we've achieved those goals.

Thank you.

Next question, please.

Thank you very much. The next question comes from Ren Benjamin of Rodman Renshaw. Please proceed, sir.

Good morning and congratulations on your ongoing progress.

Thank you.

Can you talk to us a little bit about the ongoing myeloma trial and then -- and the trial that was supposed to be the bridging study. What's going on with that and how do clinicians feel about the drug?

Currently, as you know, we have a Phase II trial in multi-myeloma at two sites -- the Dana-Farber in Boston and the Mayo Clinic in Rochester, Minnesota. We have enrolled 50 of 70 patients in that trial, and the investigators, to date, are pleased with the work they've done so far. Now with the announcement today of completing the Phase I trial and moving forward, we're working with both the agency FDA and the investigators to find a way to move the drugs forward, either into that multi-myeloma trial or additional multi-myeloma trials, and the decision of which way we will go will be given in the not-too-distant future as we move forward.

Is this trial ongoing or will the trial be on a hold until the new -- until a formulation is decided?

The trial is ongoing is we'll continue to enroll patients.

Terrific. Can you talk to us a little bit about the Selegine relationship -- the Selegine R&D relationship?

As you know, we did a licensing arrangement in December of 2002 for thalidomide analogs. We announced in the first quarter of 2003 that we were moving forward in discussions from a preclinical research discovery and development relationship. The relationship between EntreMed and Selegine continues to be very good, and we have continued our discussions, and we expect to make any type of announcement related to the relationship sometime in the future, and when we'll make that announcement, it will be at the appropriate time.

Okay, and I guess on the Selegine relationship -- what are the different outcomes that can occur? Would it be a co-development type of process? Can you just take us through what are the different outcomes?

In the first quarter we announced that we would be looking at working together to do lead validation, looking at potentially preclinical drug candidates under either licensing or development scenarios, and no decisions have been made to be made announcements at this time, but we're exploring all options both from an early discovery to a preclinical development program. This could be in conjunction with them, or this could be more of a licensing arrangement.

Perfect -- and, finally, while you advance your pipeline forward on your own, can you talk to us about, maybe, other ways in which you can bolster your pipeline with additional clinical-stage molecules?

The goal, of course, with all biotech companies is not to have any binary events. So even though we believe the potential for Panzem looks good in moving that forward, we continue to advance our preclinical pipeline, which consists of 2ME2 analogs and some of the elements we've talked about as well as the way to help complement our pipeline, we'll continue to look for opportunities outside the company. This will not be the predominant means for the pipeline, but it will be looking for filling voids or gaps. And so we're active in that pursuit and, of course, any deals that were done, we would announce at the appropriate time. We're looking at all venues, all options at this point to strengthen our pipeline.

Perfect, thanks very much.

Thank you very much. Next question, please.

Ladies and gentlemen, just as a reminder, if you'd like to ask a question, please press star 1 on your telephone, and we will wait to compile a list of further questions. The next question comes from Charlie Mills of Mills Value Advisor. Please proceed.

Yes, just to ask you this question -- if the analogs are more powerful, and you own all the intellectual property, why doesn't it make sense to just concentrate on that?

If you look at both the analogs and Panzem itself, they have differences -- profiles, related toxicity, efficacy, mechanisms of action -- and very similar historically to what the company has done around thalidomide and thalidomide analogs. We're taking the same approach that most companies would do. Panzem provides us opportunities that the analogs may or may not, and the analogs provide additional opportunities, and I speak in the context of both oncology as well as non-oncology indications.

So we're looking at it as a portfolio management approach of providing the best small molecules both for oncology as well as the possibilities for non-oncology applications. And then also, too, as the clinical data suggests that we have a compound as of today that is minimal or no toxicity and has clinical benefit activity that's been previously seen. The goal, really, was to increase bio-availability, which we have achieved that goal, and so we're moving forward with Panzem as well as our pipeline.

Could you give me a percentage on how much the percent was increased?

It's hard to give a rough percentage, and the reason for that is if you look at drug attrition rates from different phases of trials, there are industry statistics -- I think we know more about the compounds at this stage but, generally speaking, you would probably see -- I don't know -- I mean -- a target is typically 20% to 25% at this stage of the game, but this is -- you know, average rates for the industry.

All right, good. Thank you.

Thank you very much, sir. Again, ladies and gentlemen, it is star 1 if you wish to ask a question. We do have one more -- William Kurtz from Wellington and Company. Please proceed, sir.

Excuse me, good morning, Neil, it's Peter Longman at HG Wellington.

Good morning, Peter. Thank you for joining the call.

Not a bit -- would you mind commenting on angiostatin and endostatin, please?

Sure, as you know, in the first quarter of this year, that we transferred the rights for endostatin and angiostatin to Children's Hospital, and with the Asian rights to Alchemgen. We continue to support the efforts to Children's and to Alchemgen. There are patients still on trial for both endostatin and angiostatin, but further updates, decisions, and announcements will come from Children's Hospital where the rights have been transferred to -- or Alchemgen regarding rights in Asia.

Okay, thank you. Have you retained any interest in those two?

Yes, according to the announcement that was made in the first quarter, we have rights that align themselves to Alchemgen in Asia, and then for any subsequent deals that would be done outside of Asia, which is termed "the rest of the world," we would be entitled to 20% of anything that would incur. So, for example, milestones, up front stocks, royalties, things like that. So we've retained upside value.

Thanks a lot, Neil.

Thank you very much. I want to thank all our listeners for joining the call this morning. Once again, for additional information about the company or about our filings, you can go to www.entremed.com or you can go to the SEC and Edgar under "EntreMed." Thank you once again and have a good day.

Thank you very much, ladies and gentlemen, for your participation in today's conference. This concludes the presentation. You may now disconnect; have a good day.