Celldex Therapeutics Inc (CLDX) 2003 Q1 法說會逐字稿

Good morning and welcome ladies and gentlemen to the AVANT Immunotherapeutics first quarter 2003 financial results.

At this time, I would like to inform you that this conference is being recorded and all the participants are in answer only mode.

At the request of the company, we will open the conference call to question and answers after the presentation.

I will now turn the conference over to your host Dr. Una Ryan.

Please go ahead ma'am.

Thank you.

Good morning ladies and gentlemen.

I am Una Ryan, President and CEO of AVANT Immunotherapeutics, Inc.

With me on this call is Chet Catlin, AVANT's Chief Financial Officer.

I would like to read a short prepared text before opening the call to questions.

I want to remind you that statements made by AVANT during this call that are not historical fact, may be forward-looking statements that are subject to risks and uncertainties detailed in the company's filings with the Securities and Exchange Commission.

Actual results could differ materially from those expressed in any forward-looking statements made by AVANT.

We announced in our press release today AVANT's financial results for the first quarter of 2003, AVANT reported a net loss of $3.4 million or 6 cents per share for the first quarter compared to a net loss of $4.9 million or 8 cents per share for the first quarter in 2002.

Outstanding shares at quarter end were approximately 60.5 million shares.

At March 31, 2003, AVANT had cash and cash equipments of $19.8 million representing cash on hand to meet our expected run rate through 2004.

Cash declined by $5.3 million from December 31, 2002.

During the quarter, net cash used in operating activities was approximately $3.1 million and a one-time payment of $2 million was made for UPT's Technology.

The decrease in operating expense of $1.6 million primarily results from a reduction in Research and Development expenses in the first quarter of 2003 and this is due to decreased clinical trial costs and contract manufacturing costs.

During the first quarter of 2003, AVANT conducted fewer clinical trials as a result of the discontinuance of the company's TP turn trial during the first quarter of 2002 and the completion of the CholeraGarde Phase II dose-ranging study in 2002.

The reduction in manufacturing costs associated with the bacterial vaccines programs was due to limited contract manufacturing activities during the first quarter of 2003.

The decrease in operating expense further resulted from decreases in personal related expenses, sponsored research and manufacturing consultancy costs, offset in part by increases in license fees, facility related costs, insurance and legal expenses.

I want to emphasize strongly that AVANT is a company with a variety of late stage programs in clinical development, the majority of which are supported by major companies, governmental agencies or international health organizations.

In January, we were the extremely pleased to have been awarded the DoD, DVC contract for the development of an oral combination anthrax and plague vaccine since this provides non-diluted funding to the company.

Receipt of this contract means that AVANT should now have cash and cash equivalents on-hand through 2004; moreover we are excited about using our vectored vaccine technology in support of the country's Biodefense initiatives to develop advanced vaccines that may offer significant advantages in terms of administration, safety, efficacy, and storage over the current Biodefense vaccines.

With respect to our most advanced development programs, we continue to advance CETi-1 our novel immunotherapeutic for cholesterol management through clinical development with Phase II clinical results expected in the fourth quarter of this year.

We are supporting this current trial on our own with the intent to partner this product for further development and potential commercialization.

Importantly during this quarter, we were able to significantly enhance our intellectual property positions surrounding this program by acquiring seven intellectual property including a portfolio of pending patent applications from Pharmacia and yesterday we announced the issuance of a US patent that broadens our patent coverage on the use of AVANT's novel CETP vaccine technology for cholesterol management.

With our partners Glaxo and SmithKline we were developing a two-dose oral rotavirus vaccine that is expected to enter global late-stage clinical studies this year.

Finally, we are advancing the two lead products in our bacterial vaccines portfolio CholeraGarde vaccine and Ty800 typhoid fever vaccine in the clinic while offsetting the cost of these trials through our partners.

During the quarter, we announced receipt of an SBIR grant from the NIAID of the National Institutes of Health to support further prechemical developments of Ty800 and in addition, NIAID has committed to conduct a phase 1 in-patient dose-ranging clinical trial aimed at demonstrating the safety and immunogenicity of the Ty800 oral vaccine.

The NIAID trial seeks to confirm the safety and immunogenicity of the Ty800 oral vaccine that we observed in an earlier physician-sponsored Ty800 vaccine study.

So I want to emphasize that volunteer resembled a broad and deep portfolio of technologies and intellectual property that give us a strong competitive position in the vaccine arena with five above vaccines in clinical development.

Our goal is to become a leading developer of innovative vaccine that address health care needs on a global basis.

In this regard we completed the acquisition of

and new technology with the potential to reduce manufacturing cost and improve product stability in minimizing the needs of vaccine refrigeration.

With this technology and our cholera and salmonella affected delivery technologies we can now develop a new generation of vaccines that have an ideal product profile that is safe, effective orally single dose rapidly protecting and not requiring refrigeration.

In planning our activities for 2003, we have focussed our resources on completing of the CETi-1 phase two trials and meeting our obligations under the DOD DVC contract for an oral anthrax and plague vaccine.

At the same time we will advance our CholeraGarde and Ty800 typhoid fever vaccine in the clinic by observing the costs of these trials through our partners, international vaccine institute and the NIAID.

Though I just want to remind you again that this press release contains forward-looking statements, which are subject to a variety of risks, uncertainties, and other factors that could cause actual result to differ materially from those expressed in any such forward-looking statement.

So this is the end of my prepared statements, and I now welcome your questions.

Thank you.

The question and answer session.

You should have a question, please press 1 4, should you withdraw your question, please press 1 3.

The questions will be taken in the order they are received.

Please standby for the first question.

Our first question comes from Ren Benjamin.

Please state your question.

Good morning Una and Chet.

I have a quick question for you regarding the TP10 release that you had yesterday.

It seems like, it seems to be a beneficial effect in males one or two,

take on that as well as what developmental plans you may have with the TP10 program going forward?

Yes well it was really a very tantalizing result, as you know, a year ago, we were disappointed that TP10 did not make its primary endpoint, and we have spent the rest of the time until now, doing what companies do, which is analyzing the data in depth, and if you think back, maybe 10 years ago, trials were always done, just in males and as a woman, I think, I can say that you can see now, why women wanted to be included in trial that had we done the trials 10 years ago, we would probably had come out with a result very different from the one we announced a year ago.

As you can see, in males, there was a 36% reduction in risk incidents at a very good P value highly significant 0.01 and interestingly also in what we saw as a secondary end-point, and a combination of

and MI, which everyone would agree are the truly important end-points.

We did not see this benefit in females.

Now let me give you a sense then of the numbers.

The total trial with 564 patients, and it so happened, but there were only about 28 percent were women.

So it may be that we simply didn't have the numbers to see anything either way in women.

But as a result, the numbers for the males were quite substantial, actually quite big enough to be a phase 2.

So it is very tantalizing, we know that TP 10 inhibits complement equally well in men and women.

And we also know from a lot of studies, not only by AVANT but well known in the literature that men and women respond to cardiac surgery very differently, and that actually being female is an independent risk factor for cardiac surgeries.

So its again set the background of the strange difference based on gender in cardiac surgeries that we report the results.

We would not for example argue that this gender difference is something about TP 10, rather it is something about cardiac surgery.

I think that we will hold to what we said year ago, that it is unlikely that we, AVANT, would take TP10 into a phase 3 trial in cardiac surgery even if it were restricted to males at the moment, but we do have chemical grade material available, we can go into the clinic with a partner and as we have discussed over the year, we are already in active discussions with potential partners at the moment.

So I do see a clinical future for TP10, but I think we will not be taking this trial further forward ourselves.

Terrific, and one last question having more to do with the geopolitical climate around, are you guys working on anything having to do with the SARS virus?

Yes.

Well, of course, we would not be putting out an announcement on that unless we have something definitive to say, but at this point I would say we are extremely interested, we are a company that likes to address, really diseases of any type whether they are of national or international importance.

We believe that our vaccine technology - the same technology that is attractive to the military is really extremely well suited to a SARS program, however, we are not a virology company, we would expect others to determine what the protective antigens are.

The government has put out special notice on perhaps on RSP, a request of proposals, I myself have been very personally involved with other vaccines companies, in talking at a meeting that Tommy Thompson the Secretary set up, and actually also with some of the

.

I would say that while our vaccines are a very obvious way for us to address SARS, there are other things in our portfolio that we believe will require some minor testing, but might also be applicable to the SARS emergency and AVANT will be right there doing what we can, I just can't put out any public statements on it and so we know exact things what we might be doing.

Thank you very much.

You are welcome.

Our next question comes from Richard

.

Please say your question.

Good morning Una and Chat.

Good morning.

Una, when we first met, you said one of your basic goals was to save human lives.

It looks like you are going to succeed in that and my congratulations to you.

Oh! thank you.

We certainly can save male lives at the moment.

Well, hopefully we will save all kinds of lives.

I have a few questions if I may?

Yes.

In your complement TP10 release, you indicated that the study results suggest a treatment benefit to males participating in the trial with no significant benefit to females.

Are you basically saying that when you have one combined population of males and females, that the statistical significance does not appear?

That is exactly what I am saying that I also want to make it very clear that with the very slow number of females we had, things actually went the other way and we see no significant difference between treated and placebo between TP10 treated patients and placebo, but statistics are a strange thing with small numbers.

So I don't feel confident in really saying whether there was a benefit are lack of it in females, but I think we can just quote the numbers out as they occurred and for a quite large number of those males, I think over 200 patients in placebo and 200 in the treated group, we saw a very real benefit that was significant.

When we put the two genders together, we, as you know, saw a minor difference, a minor improvement but not significant.

So what your saying is basically true, but I don't want to mislead people that I cannot say that we almost saw a benefit in females and we didn't see a benefit in females.

But, basically when you analyzed this separately, you saw a statistically significant benefit in men?

Yes, and it was not slow Richard, I mean the primary endpoint in males was a 36 percent benefit at a P value 0.01.

If you look at just deaths on MI alone, it is a 43 percent benefit with a P value of 0.02.

Now again, there were no statistical penalties taken though this was not a subgroup that we determined we would analyze, but it is extremely interesting and I think physicians around the world are saying it is very intriguing.

Was the only variable then in the male group the TP10, whether they receive TP10 or not?

Let me restate that.

When we analyze the incidence of the primary endpoint, which was a four-point endpoint in people who just received placebo and people who received the two highest doses of TP10s, which is how we analyzed the primary endpoints for both genders' population, we see this benefit.

So, we aren't taking anything else into account at this point.

Ok, that's what I wanted to find out.

If I may, another question, in reading Dr. Wheeler's paragraph here, he says, I am quoting, "it would seem more likely that these findings are related more to the surgery than to TP10," I assume he is talking of the combined product, otherwise, does he mean the TP10 has no effect in men?

No, no, he doesn't mean that.

He means that what I was saying to Ren Benjamin earlier.

We already know that there are differences in the genders and how people respond to cardiac surgery.

As I said, women just don't do as well in cardiac surgery.

It seems to be an independent risk factor, independent of age and things like that.

So, what I think Dr. Wheeler's statement is, is that we know that TP10 inhibits the complement system equally well in men and women.

So, he is saying this isn't some funny quirk of TP10 that favors men.

He is saying that the result that we get with the gender difference is more related to gender differences in response to cardiac surgery than any gender difference in TP10.

So, we don't have these data, but if I were to go further on that with you, we are simply saying, we might not see a gender difference in other clinical indications.

I probably, I was confused because I assumed the, with indicating TP10 was of no effect and your results were phenomenal with the 36 percent and the 43 percent.

Absolutely, what he was saying is there is, if you just take a tube of blood from a female and a tube of blood from a male, you will see equally good complement inhibition with TP10 , that's what he is saying it shows no difference.

Okay, one last point if I may, are you indicating in your request that these results would be helpful in partnering this program and realizing the financial value, I assume that there are steps underway with this new information that would help us?

Let me just say we are extraordinarily careful about fair disclosure.

This press release went out late last night.

So from now on, potential partners will see these data, will have them discussed in detail, but even before these data, as I said there are many other indications of value in this program and so we simply have to find the most synergistic partner.

That's fine and again my congrulations.

I think these suggest wonderful results.

This is exciting.

It is, thank you very much.

Thank you.

As a reminder should you have a question, please press 1,4 at this time.

Our next question comes from John Davis.

Please state your question.

Yes, I just wanted to elaborate a little bit on the TP10 and the TP20.

First of all, do you have any understanding of why there might be a difference between men and women?

No, I'll tell you again exactly what we do know, we do not see from any of our clinical aspects or any of the work we have done in animals before, any difference in the ability of TP10 or TP20 to inhibit complement in male bloods versus female bloods.

So, we have not detected or analyzed any difference, than we have not been alerted to a difference there.

So, I think the answer is, if there is a mechanism that requires explanation it would be in the way that women respond to cardiac surgery as compared to how men respond to cardiac surgery.

We have checked quickly but not analyzed in detail our previous trials and experience and we have always included those men and women in our transplant trials, our ARDS trials.

So again, we have noticed a difference before, we don't believe that this difference is as yet, there has never been a description in the literature, differences in the way males and females activate complements or in any aspect of the complement cascade.

So, I do believe that again to a sort of restate Dr. Wheeler's statement in here, this is probably a peculiarity of the way people respond to cardiac surgery.

Obviously at some point, we would like to know the mechanism of the difference.

Right now, we are simply reporting the data as we find them.

It will be a great research project for somebody.

I think it is rather unlikely we would take it on in the launch.

Do you know how many men and how many women were in that trial the year and what they are talking about now?

Yes I would say the total number of patients were 564.

There were fewer than a 100 if my memory in either the placebo or the TP10 treated females, and the rest of the patients were all males.

So roughly 1/4 or a little more of the patients were females and 3/4 of 564 were males.

Now these aren't exact numbers but I am just giving you that we had more males so the confidence with which we can give you the numbers for males is much greater and it may be we simply had too few females to detect anything at all.

I see, so unless I am getting this wrong, the 100 female patients and the lack of significance with regard to their treatment is what brought down the overall trial results I guess?

Yes.

Right.

Can you...

And I should add that this, a paper on this has been submitted to the American Society of Anesthesiologists and one of our investigators Dr.

who was a member of the Data Safety Monitoring Board would be expected to present that if submission is accepted.

So we will have a chance for people to look at tables in more details.

Can you also simply talk about right now the status of the ownership over TP10 and TP20.

Is it wholly yours?

If you could just talk about that now?

Yes it is wholly owned by AVANT.

We pay a license fee to Johns Hopkins University for a portion of the intellectual property owned by

one of the inventors but AVANT with the other set of inventors so at that time they belong to a company called T cell Sciences, which is, you know, the company that became AVANT, so we have 100 percent ownership of TP10 and TP20.

We again, pay a slow license fee to Albert Einstein College on TP20.

There are no other corporate partners.

We 100 percent own this and there are no encumbrances or complications around ownership.

The patent estate is magnificent, that is the only word I can use for it, it is a very strong patent estate, and in answering Mr. Benjamin earlier about the value of this program, some of it lies in the patent estate, in the intellectual property.

If the other people allow, I can go back through record one, but I just have a few more questions.

The next is just, what would you think would be the next step in order to sort of figure out what to do with TP10.

Would it be to do a phase 2 or would it be to do phase 3.

Would it be that you could do a small trial to see whether or not you could maybe enhance the value with the program before partnering it or are you really not going to touch it in any which way and just try to partner it and have a partner.

Again, we keep our options open and we don't announce such definitive plans if we have it.

I think it is fairly unlikely at the moment that AVANT will alone go into a phase III in cardiac surgery, but we do have phase II clinical material on hand, it is conceivable that AVANT might conduct an additional trial in another indication, but again we might offer that material to a potential partner.

And also the last question, actually do you have a time line for when you might know when you are going to be able to announce what way you are planning on doing with TP10 you know it will be in a quarter by the end of the year, you think how plans are...

We do not give out our

plans on that because I will be in a schedule for long time and you cannot in advance say when they are full control, so we will do the best deal we can as soon as we can.

Great, also just finally can you give us an update on CETi-1 and the rotavirus

with Glaxo please?

Let me do those in the other order.

Rotarix is extremely high in the favoritism list at GlaxoSmithKline.

We expect Phase III trials to start this year, 2003.

We will announce it as soon as they do.

But that program is moving aggressively and well over 6,000 patients are being treated in Phase II and we would expect a Phase III trial in numbers larger than 60,000.

So that one now, we will expect to be a 2003 event moving into Phase III, CETi-2, that one is CETi-1 as well that way is moving very well in the Phase II.

We have completed the treatment phase of the trial.

We are in the follow-up phase of the trial that is very important neither the patients nor the physicians know the treatment.

It is very important for us to keep it that way through the completion of the trial.

We expect to announce results in the fourth quarter.

Thank you very much.

You are welcome.

Thank you, once again.

Should you have a question, please press 1* at this time.

As there are no further questions, I will now turn the conference back to Dr. Ryan to conclude.

Well, it has been an exciting first quarter for us, AVANT is very happy with the results.

We will be pleased to keep you updated as we move through the next quarter.

I just wanted to finish on the note to say we look forward very much to seeing those of you who can make it to our annual meeting on May the 15, at 2 o' clock, here at the company.

I just wanted to point out that the proxy says that that is a Wednesday, it is not, it is a Thursday, but we still look forward to seeing you on May the 15, at 2 o' clock.

Thank you very much.

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