CASI Pharmaceuticals Inc (CASI) 2005 Q1 法說會逐字稿

Good morning, and welcome to EntreMed's first quarter 2005 conference call. At this time, all participants have been placed in a listen-only mode. There will be a question-and-answer session prior to the conclusion of the call.

It is now my pleasure to turn the call over to your host, Mr. James S. Burns, EntreMed's President and CEO. Mr. Burns, you may begin.

Thank you and good morning everyone. Welcome to our quarterly update conference call. Also participating with me today in the call will be Mr. Dane Saglio, our Chief Financial Officer, Dr. Carolyn Sidor, our Vice President and Chief Medical Officer, Mr. Marc Corrado, Vice President, Corporate Development. My colleagues will join me for the question and answer portion of our call.

Before we begin I would like to remind our listeners that statements made during this call fall under the Private Securities Litigation Reform Act, such that statements made during this conference call are not descriptions of facts are forward-looking and subject to risk 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 filings with the Securities and Exchange Commission.

The purpose of today's call is to update you on our progress since I joined the Company and more specifically since the beginning of 2005. At the conclusion of the update the phone lines will be opened for questions. Next month it will be one year since I joined EntreMed and set the goal of clarifying our business model, sharpening our focus, and continuing our transition to development and commercialization. I am pleased with our progress so far, and we remain on-schedule with the program that I laid out to the Board at the time I took on the CEO assignment.

To achieve these goals we began implementing a near-term action plan that included streamlining operations, reinforcing fiscal management procedures, strengthening the management team, focusing resources on Panzem, our lead clinical product candidate, and accelerating our key pipeline programs. The Company is now focused solely on developing drugs for the treatment of cancer and inflammatory diseases.

Our therapeutic focus is being built with a new generation of multi-mechanism drugs, to treat cancer and inflammatory disorders by attacking two major components of the disease process. Diseased cells directly and the blood vessels that nourish them. Our product candidates reflect an orientation towards small molecule drugs that attack multiple disease pathways, including angiogenesis inhibition, a core technical competence of the Company, attacking tumors on multiple fronts is important since most cancers have 5 to 10 or more adaptive survival mechanisms that can result in drug resistance. I would like to now focus today's comments on our lead clinical-stage cancer drug candidate, and the status of several of our preclinical programs in cancer and inflammatory diseases.

Our lead product candidate, Panzem, also referred to as 2-Methoxyestradiol or 2ME2, is an orally active well-tolerated anticancer agent that has both anti-proliferative and anti-angiogenic activities. Panzem is part of a new generation of cancer drugs that bind the tubulin and works through multiple cellular pathways, attacking tumor cells directly to induce programmed cell death, or apoptosis, blocking blood vessels that feed tumors, angiogenesis inhibition, and by disrupting microtubules, an intracellular matrix necessary for the rapid division of cancer cells. 2ME2 down-regulates HIF 1-alpha, a pro-survival and pro-angiogenic transcription factors. Our scientists believe that 2ME2 may be one of the most potent inhibitors of HIF 1-alpha, which is overexpressed in more than 70% of human cancers, and in metastasis, including breast, prostate, head and neck, brain and liver, and lung cancers. We also believe that Panzem has the potential to be a unique cancer therapy, and may be particularly suited to treat cancers dependent on HIF 1-alpha for survival.

We are continuing to investigate 2ME2's tubular and HIF 1-alpha mechanisms, both in-house, and with our external collaborators. Our initial formulation of 2ME2, Panzem capsules has now been administered to a total of 171 patients in six trials. Panzem was well tolerated with an excellent safety profile in these advanced cancer patients. However, the sustained plasma levels were not acceptable with this capsule formulation to warrant additional clinical trials.

The one remaining Phase II trial with Panzem capsules in multiple myeloma capsules, which is being conducted at the Dana-Farber Cancer Institute at the Mayo Clinic is now fully enrolled. We anticipate that data from this trial will be available later in the year. Earlier this year we commenced phase 1b clinical trials with the new formulation of 2ME2, Panzem NCD, in patients with advanced cancer. These studies are being conducted at two sites, Indiana University Cancer Center and the University of Wisconsin Comprehensive Cancer Center. These phase 1b trials are on-track and we anticipate commencing phase 2 studies for Panzem NCD later this year.

In parallel with our Panzem NCD clinical studies, we are also expanding our understanding of 2ME2 mechanisms. In April we presented further preclinical information on 2ME2 at the annual -- at the American Association for Cancer Research, AACR, the annual meeting in Anaheim, California. New data presented by our collaborators at Emory University demonstrated that 2ME2 depolarizes Cells with specific acquired tubulant mutations were unaffected by 2ME2. However cells with multi-drug resistant mechanisms, remain sensitive. Results presented at AACR from preclinical studies demonstrated that 2ME2 depolymerizes microtubules resulting in potent inhibition of HIF 1-alpha, and did so in a dose-dependant manner. Cells with specific acquired tubulin mutations were unaffected by 2ME2, however, cells with multi-drug resistance mechanisms, which are often resistant to conventional cytotoxic agents, remained sensitive. Results present at AACR from preclinical studies demonstrated that 2ME2 induced programmed cell death in human pancreatic and gastric cancer cells, that were up to 1,000-fold more resistant to cytotoxic drugs, such as Paclataxol and Sysplatin. In all cases these resistant pancreatic and gastric cells were highly sensitive to 2ME2 and showed strong growth inhibition.

A second preclinical study demonstrated that the combination of 2ME2 with Capecitabine plus radiation therapy was more effective in delaying colon tumor growth compared to Capecitabine alone or in combination with radiation. And a third preclinical study earlier in the year, showed positive results from the use of 2ME2 in combination with Paclataxol, a first line therapy for the treatment of recurrent or advanced head and neck squamous cell carcinoma. Advanced tumors, such as head and neck carcinoma, and the blood supply that feeds them dependent on hypoxic, or low oxygen environment to thrive. Anti-HIF 1-alpha agents like 2ME2 could be useful in treating these types of advanced cancers.

Taken together these studies demonstrate that, one, additional support for the mechanism by which 2ME2 exerts its anti-proliferative and anti-angiogenic effects. Two, demonstrate the potential use for 2ME2, even when chemo-resistance occurs, and third, demonstrate the potential for Panzem NCD alone and in combination with chemotherapeutic agents, such as Paclataxol and Capecitabine. Prior to -- prior and on-going phase 1 clinical trials, together with our preclinical studies, will form the basis for selecting phase 2 trials later this year.

In addition to Panzem NCD we have a robust pipeline of preclinical programs in the areas of oncology and inflammatory diseases. Our preclinical pipeline including 2ME2 analogs, 2ME2 in inflammatory disease, PAR-2 agonists, tubulant inhibitors, TFPI peptides, and our FGF-2 cancer vaccine are showing promise for treating both cancer and inflammatory diseases. All of our compounds with the exception of 2ME2 and the tubulant inhibitors that we license from Celgene, were discovered internally and are EntreMed's sole property.

I would like to provide a brief update on our key pipeline programs beginning with the analogs of 2ME2. The goal of our analog program has been to develop a second generation of 2ME2-like drugs, with improved anti-angiogenesis, enhanced pharmacokinetics, and comparable or better anti-tumor properties. We have succeeded in accomplishing this goal, and are moving forward with one of these compounds. We have modified the chemical structure of 2ME2 and developed a compound with increased anti-tumor properties, increased anti-angiogenic properties and improved pharmacokinetics, while maintaining 2ME2's mechanisms of action, including apoptosis, binding microtubules, and inhibiting HIF 1-alpha. Preclinical data for our lead 2ME2 analogs, which we call ENMD-1198 were also present last month at the AACR meeting in Anaheim, California.

Our first preclinical study conducted by EntreMed collaborators showed that enhanced activities of ENMD-1198 in both in-vitro and in an orthotopic animal lung cancer model when compared to 2ME2. Also, a dose-dependent increase in survival of these animals was observed, including the compounds potential in the treatment of human lung cancers. In a second preclinical study, EntreMed scientists demonstrated that 2ME2 analogs improved median survival times significantly in a metastatic lung cancer model and reduced tumor volume significantly in a separate orthotopic animal cancer model. In-vitro studies further demonstrated that 2ME2 analogs are microtubule destablizing agents that cause a reduction in HIF 1-alpha protein levels.

Data from these studies can be viewed by visiting the Therapeutic Pathways section of our website at www.EntreMed.com. IND-directed studies for this compound are currently under way, and we anticipate filing an IND later this year. Scientific research demonstrates that angiogenesis is the main contributor in the development and promotion of rheumatoid arthritis, a potential way to attenuate the development of this disease may be to inhibit angiogenesis. Our scientists and collaborators presented preclinical data from our 2ME2 rheumatoid arthritis program, this spring at the annual meeting of American Association of Immunologists and the Canadian Society for Immunology.

Results from the two preclinical animal studies showed that treatment with 2ME2 resulted in a dose-dependent decrease in the severity of arthritic disease, as well as a marked inhibition of tissue and joint damage that are the hallmarks of rheumatoid arthritis. The preclinical studies also demonstrated that 2ME2 decreases inflammation, halts disease progression, and suggest that 2ME2 has disease modified antirheumatic drug or DMARD properties that are dose-dependent. Work is continuing in-house and with collaborators to evaluate the potential for 2ME2 in inflammatory diseases, such as RA.

We are encouraged by these findings with 2ME2 because they offer the potential to crossover from cancer to non-oncology indications with this molecule. In 2005 we accelerated our work on PAR-2, our Proteinase Activated Receptor-2. PAR-2 is a protein that is expressed on the surface of multiple normal cell types, but is up-regulated dramatically during inflammation. Our scientists discovered the first compound identified as an antagonist of PAR-2. This antagonist inhibits tumor growth, the formation of new blood vessels, and has been shown to be an inhibitor of inflammation in preclinical models.

The pivotal discovery made by EntreMed scientists showed a PAR-2 mediated link between inflammation and cancer, leading to the discovery of the first antagonist. Additional small molecule PAR-2 antagonists with increased activity, have now been synthesized, and we are currently studying PAR-2's potential therapeutic applications in oncology and inflammatory diseases. Preclinical data presented in a podium presentation at the AACR meeting this spring in Anaheim, show that our PAR-2 antagonists inhibit tumor growth and formation of new blood vessels in animal models. Data also demonstrated the inhibition of inflammation in preclinical rheumatoid arthritis and acute inflammation models.

PAR-2 is now a target for inflammatory disease and its inhibition represents a novel approach to their treatment. We are continuing to study the mechanisms of action for these PAR-2 compounds to identify additional PAR-2 antagonists, and to determine the potential applications for PAR-2 antagonists in oncology and inflammatory diseases. EntreMed owns all intellectual property associated with the PAR-2 antagonist program.

Now to further strengthen our preclinical pipeline, in March 2005 we entered into an exclusive worldwide license agreement with Celgene, for the development and commercialization of its small molecule tubular inhibitor compounds for the treatment of cancer. Tubulant inhibitors comprise a broad family of compounds that bind the tubulin and disrupt microtubules, resulting in programmed cell death. In In-vitro and in-vivo studies, Celgene tubulant inhibitors have been shown to inhibit tumor cell proliferation in a dose-dependent manner, and in in-vitro studies to inhibit angiogenesis. Celgene's tubular inhibitors are covered by issue and impending patents.

This agreement represents an important step forward for our growth plan. Celgene's dual acting tubulant inhibitors strengthen our preclinical oncology pipeline with compounds that attack tumor cells directly and the blood vessels that nourish them. Our lead product candidate, Panzem NCD, works as both a microtubule destabilizing agent, and as an anti-angiogenic agent. And we intend to maintain this focus on multi-mechanism drugs that exhibit both anti-proliferative and anti-angiogenic properties. Additionally, our tubulant inhibitor agreement further strengthens the relationship between EntreMed and Celgene, our largest shareholder. The two companies have a good working relationship, and I believe that this transaction will provide additional opportunities for our companies to work together. And for further information and details on tubulant inhibitors, please visit our website at www.EntreMed.com.

I would like to provide a brief overview of our current financial position as well. On May 10th we filed our report containing financial results for the three months ending March 31, 2005, on Form 10-Q, and for first quarter 2005, we reported a loss of 5.5 million, or $0.13 per share, versus a loss of 5 million or $0.14 per share for the comparable period in 2004. Total expenses for first quarter 2005 were higher than prior year, due to the initiation of two phase 1b studies for our lead product Panzem, and fees associated with the end licence of Celgene's tubulin inhibitor program.

However, the increase in R&D expenses was somewhat offset by a reduction in G&A expenses, consistent with the reallocation of resources to our clinical and preclinical programs. As of March 31st, 2005, the Company reported cash and short-term investments of approximately $43.6 million. Gross proceeds of 10.5 million received from the exercise by Celgene of warrants to purchase 7 million shares of EntreMed common stock are included in the 43.6 million figure. We believe that this transaction, along with our cash, short-term investments, and in-flows from other contractual arrangements, will be sufficient to fund planned operations in to 2007. We provided previous guidance that net expenditures for operations would total approximately 20 million in 2005, and we remain on-track with that projection. Planned expenditures include initiation of phase 1 and phase 2 Panzem NCD clinical trials, an IND filing and phase 1 trials for our lead 2ME2 analog, manufacturing for our clinical programs, and the continued development of our other key preclinical pipeline candidates.

At this time I would like to summarize our progress and milestones and corporate goals so far in 2005. We have already made substantial progress toward accomplishing our 2005 milestones. So far we commenced our Panzem NCD clinical trials early in the first quarter, and enrollment is proceeding according to plan. We initiated IND directed studies for analog ENMD-1198, and were able to demonstrate DMARD activity for 2ME2 in our RA models. We also showed anti-inflammatory and anti-cancer activity for PAR-2 antagonists, and we completed the Celgene tubulant inhibitor license. In addition we obtained Orphan drug designation for 2ME2 in ovarian cancer, adding to the designation we have for multiple myeloma, and lastly we strengthened our balance sheet via Celgene's investment.

We're moving forward in a number of fronts. As I have described in previous updates, we have reshaped our business model, focused on cancer and inflammatory diseases, adjusted our development priorities, and formulated a strategy for recreating shareholder value. Our resources are now concentrated primarily on our lead product Panzem NCD, which is moving forward in phase 1b clinical studies, and these trials remain on-track.

We have several late preclinical programs that are IND candidates within a 6 to 12-month period. An IND this year for ENMD-1198 and IND directive studies for 2ME2 in RA. We have the potential for broadening 2ME2's indications beyond oncology into rheumatoid arthritis, with a disease modifying anti-rheumatic drug candidate. We have a potential opportunity for a first-in-class therapy with PAR-2 for treating inflammatory diseases and/or cancer. We have added further depth to our preclinical pipeline through the Celgene tubular inhibitor oncology program in an area directly aligned with our expertise.

We will continue to deemphasize other noncore applications for angiogenesis inhibitors, in order to stay focused on oncology and inflammatory diseases. And while we concentrate our resources on Panzem and the most promising preclinical programs, we will also partner other programs early where we need to share risks, accelerate the effort, or bring particular expertise to bear, such as our collaboration with Affymax on the TFPI program. We will continue our commitment to collaborative studies related to the tubulin and HIF 1-alpha, inhibition pathways of 2ME2, and our 2ME2 analogs. We believe that an increased understanding of these mechanisms will help guide our future clinical efforts.

We will continue to build our management team, particularly in the areas of clinical research, regulatory affairs, drug development, and business development. And we will also explore opportunities to raise additional capital, in order to share clinical costs through co-development and commercialization partnerships. And I believe that these are all key steps that we will need to undertake in the process of building a sustainable franchise of novel multi-mechanism drugs to treat cancer and inflammatory diseases.

My intention is to build our business through a balanced combination of internal development, product acquisitions, technology licenses, and partnerships. We intend to focus our business development activities on cancer and inflammatory diseases, particularly product candidates and technologies that play to our expertise in angiogenesis cell cycle regulation and inflammation. From a business development perspective, we'll focus our energies on drug candidates to treat cancer and inflammatory diseases through initiatives that include, end licensing or acquiring preclinical and clinical product candidates, that target the multiple pathways similar to those of our current pipeline programs.

We'll look to acquire technology that enhances our capability to develop anticancer and anti-inflammatory drugs that target multiple cellular pathways, and we'll seek development partners for Panzem or other product candidates, where we can both add and receive substantial value from the partnership. These efforts are designed to deepen our pipeline, create a balanced portfolio of preclinical and clinical product candidates, and to mitigate the risk associated with a narrow clinical pipeline. The process of identifying development partners, additional technology, and product acquisitions is continuing, with a goal of completing several such transactions during 2005. And as our plans take shape we will provide further guidance on business development milestones.

In conclusion I'd like to point out that we believe that EntreMed is on the leading edge of next generation of multi-mechanism therapies, and that we have unique differentiable product candidates, and we will continue to build our business around cancer and anti-inflammatory drugs, that target multiple pathways, and we'll continue to develop and strengthen our capabilities in this area. We believe we have a robust pipeline of product candidates that attack our disease cells directly, and block the formation of blood vessels -- that nourish those disease cells. We also believe that we have adequate resources to meet our near-term goals and the financial means to carry us into 2007, together with a plan for the building the capital and the expertise in the long run.

And on a final note before we open up the meeting to the Q&A session, we'll be sending our proxy materials shortly for our annual shareholders meeting, which will be held in Rockville, Maryland, and the specific date and time, and specific date and location will be provided in the proxy materials.

So thank you again for joining the update call, and, operator, I would like to now open the line for questions.

Thank you. [OPERATOR INSTRUCTIONS] Sir, at this time I am showing no questions.

Okay. Well, we'll leave it for a few more seconds, and if there are no questions, then we'll go ahead and conclude the call.

[OPERATOR INSTRUCTIONS] At this time, I am still showing no questions.

Okay. I think, once again thank you all for attending the update call, and we'd like to -- hope you'll join us next time for a further update on our progress. Thank you all very much, and have a great day.

Thank you. This concludes today's teleconference. Please disconnect your lines at this time, and have a wonderful day.