CASI Pharmaceuticals Inc (CASI) 2005 Q2 法說會逐字稿

Good morning, and welcome to EntreMed's second 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, ladies and gentlemen. Welcome to our second quarter 2005 update conference call. Also participating with me in today's call will be Dr. Carolyn Sidor, our Vice President and Chief Medical Officer, Mr. Dane Saglio, our Chief Financial Officer, and Mr. Mark Corado, our Vice President-Corporate Development. My colleagues will join me for the question and answer portion of our call. Before I 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 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 filings with the Securities & Exchange Commission. The purpose of today's call is to update you on the progress we've made during the second quarter and to provide you with an overview of our goals and objectives for the remainder of 2005. At the conclusion of the formal update, the phone lines will be open for questions.

June 2005 marked the one-year anniversary of my appointment as CEO and President of EntreMed. Shortly after joining EntreMed, I set the goals of clarifying our business model, sharpening our focus and continuing our transition to development and commercialization. As evidenced by our continued momentum, we have made substantial progress in attaining these goals, and we remain on schedule with the program that they laid out last year. Over the past year, we have given guidance on the milestones and goals we set regarding our business strategy in each of our clinical and preclinical programs. Through streamlining operations, focusing resources on Panzem, our lead clinical product candidate, and accelerating our key pipeline programs, we have met these milestones and have set the stage for attaining the remainder of our objectives for 2005.

Today, we are focused solely on developing drugs for the treatment of cancer and inflammatory diseases. Our therapeutic focus is being built with a new generation of multimechanism drugs to treat cancer and inflammatory components by attacking two major components of the disease process: The diseased cells directly and the blood cells that nourish them. Our product candidates reflect an orientation towards small molecule drugs that attack multiple disease pathways, including angiogenesis inhibition, a core technical confidence of the Company. As we have said before, 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 now like to provide an update on our lead clinical stage cancer drug candidate, Panzem NCD, and the status of several of our preclinical programs in cancer and inflammatory diseases.

Panzem, also referred to as 2-Methoxyestradiol or 2ME2, is an orally active, well tolerated anti-cancer agent that has both antiproliferative and antiangiogenic activities. Panzem is an example of a new generation of cancer drug candidates that bind to tubulin and work 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. Earlier this year, we commenced two Phase 1b clinical studies with our new formulation of 2ME2, Panzem NCD, in patients with advanced cancer. The goals of these studies are to determine PK and safety for the new new formulation at escalating doses, and to determine a Phase 2 dose based on therapeutic levels associated with antitumor activity in preclinical models. The Phase 1b studies are on track, and we anticipate presenting results at a scientific meeting this fall. Enrollment in the Phase 1b studies continues on plan at both centers.

And in terms of findings to date, Panzem NCD appears to be well-tolerated, and we believe that we will meet our study objectives this quarter. In light of our progress, we have initiated discussions regarding a potential multi-study Phase 2 program. Clinical indications under consideration for the Phase 2 studies include breast, prostate, ovarian, glioblastoma, multiple myeloma and lung cancers. Specific indications will be selected based on the results from current Phase 1b clinical trial of Panzem NCD, as well as our prior Phase 1and Phase 2 clinical trials with Panzem capsules and preclinical 2ME2 mechanism in combination studies conducted by EntreMed scientists and our collaborators. For example, in June, we announced that Duke University Medical Center will conduct a clinical trial of Panzem NCD in patients with metastatic breast cancer under a grant from the Susan G. Komen Breast Cancer Foundation.

Even with the introduction of new therapies for treating breast cancer, 10-year survival rates remain at 50 to 80%, due to insufficient response to hormonal and chemotherapy. A primary resistance mechanism is thought to be the up regulations of HIF-1 alpha. An overexpression of HIF-1 alpha correlates with tumor aggressiveness, metastasis, and poor prognosis. 2ME2 is a potent inhibiter of HIF-1 alpha. Glioblastoma represents another indication that has been shown in preclinical models to be particularly sensitive to the overexpression of HIF-1 alpha. In addition, some ovarian and prostate cancer patients responded to Panzem in previous clinical trials. More recently, we announced results from an EntreMed collaborator showing a dose dependent increase in survival with Panzem NCD in a preclinical small cell lung cancer model.

In April, the FDA granted EntreMed orphan drug status for Panzem in ovarian cancer, and previously the FDA granted orphan drug status for Panzem in multiple myeloma. In parallel with our Panzem NCD clinical studies, we continue to deepen our understanding of 2ME2 mechanisms. Results presented by our collaborators at Emery University during the 2005 American Association for Cancer Research annual meeting, demonstrated that 2ME2 depolymerizes microtubules, resulting in potent inhibition of HIP-1 of alpha, and does so in a dose-dependent manner. Cells with specific acquired tubulin mutations were unaffected by 2ME2, while cells with multi-drug resistance, or MDR mechanisms, which are often resistant to conventional cytotoxic agents, remained sensitive. Data from a second preclinical study also presented at the AACR demonstrated a 2ME2 induced programmed cell death in human pancreatic and gastric cells -- cancer cells -- that were up to 1,000 fold more resistant to cytotoxic drugs, such as Paclitaxel and Cisplatin.

In all cases, these resistant pancreatic and gastric cells were highly sensitive to 2ME2 and showed strong growth inhibition. These studies provide further evidence of 2ME2's potential antitumor and antiangiogenic mechanisms. Preclinical studies show that 2ME2 can attack tumors that are dependent on the proangiogenic activity of HIF-1 alpha and VEGF for survival. Since HIF-1alpha is an upstream regulator of VEGF, we believe 2ME2 may affect a different or broader range of tumors than current VEGF inhibitors. Furthermore, we believe that 2ME2's safety profile and lack of MDR chemo resistance may provide opportunities for combining Panzem NCD with conventional chemotherapies to increase effectiveness while decreasing toxicity. Preclinical studies have shown an additive or synergistic effect of 2ME2 plus Paclitaxel for head and neck squamous cell carcinoma and 2ME2 plus [INAUDIBLE] for inhibiting colon tumor growth.

As a result of these and prior findings, we anticipate conducting Phase 2 clinical studies with Panzem NCD as both model therapy and in combination with approved anti-cancer agents. We've also made substantial progress in 2ME2 in rheumatoid arthritis models. Angiogenesis is a primary contributor to the pathology of rheumatoid arthritis, and inhibiting angiogenesis represents a potential way to attenuate the development of this disease. Preclinical data from our 2ME2 rheumatoid arthritis program were presented this spring at the Annual Meeting of the American Association of Immunologists and at the Canadian Society for Immunology.

Results from the two preclinical animal studies show that treatment with 2ME2 resulted in a dose dependent decrease in severity of arthritic disease, as well as a marked inhibition of tissue and joint damage that are hallmarks of rheumatoid arthritis. The preclinical studies also demonstrated that 2ME2 decreases inflammation, halts disease progression and suggests that 2ME2 has disease modifying anti-rheumatic drug, or DMARD properties, that are dose dependent. Results from further preclinical studies with 2ME2 will be presented this month at the 7th World Congress on Inflammation to be held in Melbourne, Australia.

Work is continuing in-house and with collaborators to evaluate the potential for 2ME2 in rheumatoid arthritis. Now, rheumatoid arthritis affects over 2 million American adults, of which about 2/3 of them are women. The disease, which is characterized by pain, stiffness, swelling and deformity, can become debilitating. And within five-years of diagnosis, a third of patients are no longer working, and within ten years, half of the patients have substantial functional disabilities. And RA can shorten life expectancy by five to ten years. Inflammation is a process that is associated with many pathologies, including cancer, cardiovascular disease and arthritis. DMARDS are drugs have the ability to slowdown disease progression in rheumatoid arthritis and other autoimmune diseases. We are encouraged by the DMARD findings with 2ME2 because they offer the potential for us to cross over from cancer to non-oncology indications with this molecule and expand our market opportunities substantially.

Based on our progress to date, we expect to be in a position to file an IND for 2ME2 in rheumatoid arthritis next year. We also continue to make excellent progress in our 2ME2 analog program. The goal of this program has been to develop 2ME2 like candidates with improved antiangiogenesis, enhanced pharmacokinetics and comparable or better anti-tumor properties, while at the same time maintaining 2ME2's multiple mechanisms of action that include inducing apoptosis, finding microtubules, and inhibiting HIF-1 alpha. We have succeeded in accomplishing these goals and are moving forward with one of these compounds, ENMD-1198. Preclinical data for ENMD-1198 presented this year at the AACR annual meeting showed enhanced activity both in vitro and in an orthotopic lung cancer model when compared to 2ME2.

A dose dependent increase in survival of these animals was also observed, indicating the compound's potential in treatment of human lung cancers. Results from additional preclinical studies demonstrated that 1198 improved median survival times significantly in a metastatic lung cancer model and reduced tumor volumes significantly in a separate orthotopic animal cancer model. In vitro studies further demonstrated that ENMD-1198 is a microtubule destabilizing agent that causes a reduction in HIF-1alpha protein levels. Data from these studies can be viewed by visiting the Therapeutic Pathways section of our website, at www.entremed.com. IND directive studies are currently underway and we anticipate filing an IND for ENMD-1198 in the fourth quarter of this year.

In keeping with our focus on tubule and binding anti-cancer agents that have both antiproliferative and antangiogenic properties, we are working to identify one or more lead tubulin inhibitor compounds to develop and commercialize under our exclusive world-wide license agreement with Celgene. Tubulin inhibitors comprise a broad family of compounds that bind the tubulin and disrupt microtubules, thereby resulting in programmed cell death. Tubulin inhibitors covered under this license agreement have been shown to inhibit tumor cell proliferation in a dose dependent manner, both in vitro and in vivo studies, and to inhibit angiogenesis in in vitro studies. The tubulin inhibitors are covered by multiple issued and pending patents. These dual acting tubulin inhibitors deepen our pipeline with oncology compounds and attack tumor cells directly and the blood vessels that nourish them. Additionally, our tubulin inhibitor agreement further strengthens the relationship between EntreMed and Celgene, our largest shareholder.

Please visit our website for additional detail on tubulin inhibitors. I would like to now switch to provide an overview -- a brief overview of our current financial position. On August 9, 2005, we filed our Form 10-Q report containing financial results for the three-months and six-months ending June 30, 2005. For the second quarter of 2005, we reported a loss of 4.3 million or $0.09 per share, versus a loss of 4.2 million or $0.12 per share for the comparable period last year. Our total expenses for the second quarter 2005 were in line with our expectations. Increased R&D expenditures, which reflect our progress on Panzem NCD in our key preclinical programs, were partially offset by a reduction in administrative expenses.

As of June 30, 2005, the Company reported cash and short term investments of approximately $37.7 million. We believe that our cash, short term investments and inflows from other contractual arrangements will be sufficient to fund planned operations into 2007. We have 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 for the remainder of 2005 include the continuance of Phase 1 and the start of Phase 2 Panzem NCD clinical trials, an IND filing for ENMD-1198, manufacturing for our clinical programs, and the continued development of other preclinical candidates. We expect to record royalty revenues from Celgene's Thalomid sales in the 3rd and 4th quarters of this year. Based on Celgene, the guidance on Thalomid sales, we expect to book royalty revenue in excess of 4 million for 2005.

So in summary, we've already made substantial progress toward accomplishing our 2005 milestones. And the milestones that we've achieved so far this year include: One, commencement of Phase 1b clinical trials for Panzem NCD; initiation of [R&D] directive studies for our 2ME2 analog ENMD-1198; demonstration of DMARD activity for 2ME2 in multiple preclinical RA models; presentation of data demonstrating antiinflammatory and anticancer activity for our PAR-2 antagonist; initiation of a tubulin inhibitor program on EntreMed based on the exclusive world-wide oncology license from Celgene; and we obtained orphan drug designation for 2ME2 in ovarian cancer, adding to the designation we already have for multiple myeloma. And furthermore, we've strengthened our balance sheet via Celgene's investment earlier this year. We continue to move forward with a development-driven business model focused on cancer and inflammatory diseases. We have adjusted our priorities to confirm to that business model, and we are pursuing a focused strategy for enhancing shareholder value.

Our resources are now concentrated primarily on our lead product candidate, Panzem NCD, which is moving forward favorably in Phase 1b clinical studies. These trials remain on plan, and we believe that we will meet the study objectives this quarter. We have several late preclinical programs that are IND candidates within the next 6 to 12 month period, an IND this year for ENMD-1198 and IND directive studies for 2ME2 in RA by mid-2006. We have the potential for broadening 2ME2's indication beyond oncology into rheumatoid arthritis, with disease-modifying antirheumatic drug candidate. We have the potential with Panzem to be the first targeting tumors that overexpress HIF-1 alpha, and we have the opportunity for a first-in-class therapy with PAR-2 for treating antiinflammatory diseases and/or cancer.

We've added bench strength to our multimechanism oncology pipeline with the addition of Celgene's tubulin inhibitors, providing potential additional product opportunities in an area aligned directly with our expertise. We will continue to de-emphasize other 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 seek to partner other programs early where we need to share risk, accelerate our effort, or bring a particular expertise to bare, such as we did with our collaboration with Affymax in the TFPI program. We will continue our commitment to collaborative studies relating to 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. And we will continue to build our management team, particularly in the areas of clinical research, regulatory affairs and drug development. And we will also explore opportunities to raise additional capital or to share clinical costs through codevelopment and commercialization partners -- partnerships. We are focusing our business development activities on cancer and inflammatory diseases, particularly product candidates and technology that play to our expertise in angiogenesis, cell cycle regulation and inflammation.

As part of our focus, we will seek to in-license or acquire preclinical and clinical stage product candidates that target multiple pathways similar to those of our current pipeline programs, and to acquire technology that enhances our ability to develop anti-cancer and antiinflammatory drugs. These efforts collectively are designed to one, deepen our pipeline; two, create a balanced portfolio of preclinical and clinical candidates; and three, broaden our clinical pipeline in order to mitigate the risks associated with a narrow clinical pipeline. I believe that these are all key steps that will help us create a sustainable franchise of novel multimechanism 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.

I'm encouraged by the progress we've made so far. We have a unique differential set of product candidates that attack diseased cells directly and block the formation of blood vessels that nourish those diseased cells. And we continue to build our business around cancer and antiinflammatory drugs that target multiple pathways, and we will continue to develop and add to our capabilities in this area. While we are concentrating the bulk of our efforts on our lead clinical program, we are making excellent progress across our pipeline. We expect to continue meeting this year's milestones, and we are working to position the Company favorably going into 2006.

We have the adequate resources to meet our near term goals, the financial means to carry us into 2007, and have planned for building the capital and expertise for the long run. And finally, to view our most recent corporate presentation, please visit our website, again, at www.entremed.com. Thank you all for participating in today's call, and operator, I would like to now open the line for questions. Thank you all very much.

Thank you. The call will now be open for questions. If you have a question, please press star 1 on your touch-tone phone at this time. You may remove yourself from the queue by pressing the pound key. Questions will be taken in the order they are received. And to provide optimum sound quality, we ask that you pick up your handset while posing your question. Our first question comes from Mona [Iyesha] with Needham & Company.

Hi, good morning.

Good morning, Mona.

How are you?

Doing well, thank you. How are you today?

Well.

Good.

I have two questions, actually. On the Phase 1b study, can you tell us how many patients were finally enrolled in that study, or if it's still -- the enrollment is still ongoing?

I'll turn that over to Carolyn, Mona.

Okay.

The study does remain ongoing, and in terms of numbers of patients, just to clarify, it's always been our policy, as you know, to present our data at a scientific meeting, usually our clinical investigators do that. And sometime in the near future, we'll be going through the process of preparing an abstract, as well as having it peer reviewed by the organizers of the meeting; and at the point where that's accepted as either an oral presentation or a poster, we can then provide more information about how and when the data will be presented.

Okay, and then -- so can you speak at all about what kind of dose ranges were evaluated in the study?

Yes, that will all be a part of the presentation.

Okay. And I understand that the main aim was to look at safety and tolerability, but can you talk about other parameters that you were evaluating as well? Or what other data can we expect to see, perhaps?

Yes, the objectives of the trial -- both studies, actually -- were to evaluate the pharmacokinetics, to look at safety, and then obviously, any time you do a cancer study, there's an efficacy component. So those will be the parameters that we expect to be presented.

Okay. And on your 2ME2 analog program, can you maybe compare and contrast what the PK profile of that is compared to your lead program? And, you know, what implications are there for dosing? I mean, I understand they're preliminary, but still --

I think the candidate that we have chosen, ENMD-1198, certainly is behaving very differently in terms of pharmacokinetics, safety and efficacy in our preclinical evaluation, so it's probably not appropriate to make any direct comparisons, even though the program started out to develop an analog of 2-Methoxyestradiol, we now have a new chemical entity that has its own profile. And some of that's been discussed already at the AACR meeting; and again, in the fall, I think we'll have additional data. So people will be able to look at this molecule and evaluate it on its own set of data.

Oh, very good. And on your RA study with 2ME2, can you remind me again, are the antiinflammatory effects be at the same dose -- at a similar dose range as the antitumor effects, or is it different?

We don't expect the doses to be the same; however, we're still working through the dose regimen in the RA models, so I really can't comment on that. Again, there will be some information presented, as Jim mentioned, in Australia in the next week or two. We'll also have additional data, I think, early next year to talk about.

Okay, and then one final question, actually, that relates to your vaccine program. If I recall correctly, your intention there was to partner that. Can you maybe provide us with an update?

Well, we -- what we wanted to do, Mona, on that particular program was to continue to collect a little bit more data so we would have a package that would be in reasonable shape for partnering, so we're still in the process of pulling the package together.

Okay. Can you describe maybe a little more what your ongoing efforts on that front are?

Sure. As you may know from previous information, the vaccine worked very well in models where it was used prophylactically. However, we would like to challenge it more and look at therapeutic models, and that's what we're in the process of doing now, actually seeing whether the vaccine has therapeutic potential.

Okay, very good. Well, thanks very much.

Thank you, Mona.

Our next question comes from Ren Benjamin with Rodman and Renshaw.

Hi, good morning, Carolyn, Jim, how are you?

Fine, thank you, Ren. How are you this morning?

Good. I'm sorry, I jumped on the call a little late today, and you may have answered these questions already, but just for edification, can you tell me how the program in -- well, what the status of the program in rheumatoid arthritis is, when do you think you may get into the clinic? And then as a separate question -- and again, I apologize if you've answered these questions -- regarding the data from the ongoing Phase 1b trial. When might we see some initial data?

I'm going to let Carolyn pick right up on that, Ren.

Yes, I did mention, maybe before you got on, but we'll be going through the process of submitting the data -- actually our investigators will -- for a scientific meeting this fall. Obviously, that requires an abstract and acceptance of that abstract after a peer review. And once that process is complete, we'll be glad to provide information about where and when the data will be presented. So that's a work in process. As far as the rheumatoid arthritis program is concerned, we're very encouraged by the preclinical data that we have seen to date.

However, before we make a commitment to the clinic, we'd like to do a few more studies to maximize the potential to be successful, and that really involves, as with any clinical program, looking at dose and schedule, optimum time to deliver the drug in terms of the disease process. So as Jim has mentioned, we anticipate filing an IND next year for this indication. Everything is on schedule to do that.

Okay. Regarding the publication of some key results, I know that we've talked about this in the past, the other Phase 1-2 result from the prostate cancer trial, as well as the Phase 2 results from the multiple myeloma trial. When do you think we might see the publication of those results?

The Phase 2 prostate cancer publication is accepted; all I can say is stay tuned, don't go away in the next few weeks.

Okay.

As far as the multiple myeloma study is concerned, we have had discussions with the investigators and we are putting the data together. I can't really give you a time line on that.

Okay. Great, thank you very much.

Thank you, Ren.

Once again, if there are any remaining questions, please press star one on your telephone at this time. Our next question comes from Steven Quitman.

Mr. Burns, congratulations on the wonderful work you're doing.

Thank you.

You had mentioned the study going on at Duke Medical School, with the combination trial of Panzem NCD and Dosetaxel. Do you have any information as to when the results from that study will be available? I know it's supposed to be only a 15-day study. What information do you have about a time line on that?

Let me just correct one thing. The announcement that we made was the grant being awarded to Duke. In that grant, there are a number of studies, both preclinical and the clinical trial that you described. The clinical trial has not, to my knowledge, started yet; so at the point in time when that does begin, we'll be glad to discuss the contents of that trial and the time line.

Thank you very much.

Once again, if there are any final questions, please press star one on your telephone at this time. Okay. It appears we have no further questions. This concludes today's teleconference. Please disconnect your lines at this time, and have a wonderful day.