Celldex Therapeutics Inc (CLDX) 2003 Q4 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the quarter four 2003 Avant Immunotherapeutics Inc. earnings conference call.

My name is Kelly and I will be your coordinator for today.

At this time, all participants are in listen only mode.

We will be facilitating a question-and-answer session towards the end of this conference.

If at any time during the call you require assistance, please press star followed by 0, and a coordinator will be happy to assist you.

As a reminder, this conference is being recorded for replay purposes.

I would now like to turn the presentation over to your host for today's call.

Dr. Ryan -- please proceed.

Thank you.

Good morning, ladies and gentlemen, I'm Una Ryan, President and CEO of Avant Immunotherapeutics Inc.

With me on this call is Chip Catlin, our Chief Financial Officer.

As usual, I would like to read a short prepared text before opening this call to questions.

I want to remind you that statements made by Avant during this call which 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.

During this call, I will first review Avant's fourth-quarter and year end financials then give you a brief update on our lead clinical programs and provide 2004 financial guidance.

Following that, I'll open the call to questions and after answering questions I will make just a few closing remarks.

So, first, for the fourth-quarter financial results.

We announced in our press release today Avant's financial results for the fourth-quarter of 2003.

The press release is filed as an exhibit to Form 8-K with the SEC and is available at Avant's web site on the investor information page.

Avant reported a net loss of 2.9 million or 5 cents per share per share for the fourth-quarter compared to a net loss of 3.5 million or 6 cents per share for the fourth-quarter of 2002.

For the full year ended December 31st, 2003, Avant reported a net loss of 12.7 million or 20 cents per share compared to a net loss of 13.8 million or 23 cents per share for fiscal 2002.

In 2003, Avant changed its accounting for patent costs and now expenses or patent costs as incurred.

As a result of this change the Company recorded a non-cash charge for the cumulative effect of the change in accounting principles of 1.2 million or 2 cents per share for the year ended December 31st, 2003.

The amount of the charge reflects the non amortized balance of capitalized patent cost as of January 1st, 2003 and does not represent any impairment of our patent portfolio.

Outstanding shares at quarter end were approximately 64.7 million shares.

At December 31st, 2003, Avant had cash and cash equivalent of 20.3 million -- a decrease of 3.2 million from the prior quarter.

On February the 13th, 2003, Avant announced a direct placement to institutional investments of common stock with gross proceeds of 24.7 million.

This brings our current cash position to approximately 43 million, which represents sufficient cash on hand to meet expected burn rate for more than two years.

Now let me talk about the financing activities.

We were pleased to have completed the direct placement of common stock totaling 24.7 million.

With the recent improvement in biotech financing, we raised additional funds to ensure that Avant's cash balances exceed our expected requirements for the next two years.

This financing also provides the resources that support further development of our clinical program, provides for our general working capital needs, and enables us to pursuit licensing and acquisition opportunities.

The direct placement was priced at $2.75 per share which reflects an 8.6 percent discount from the previous basic closing price of Avant's stock.

Like many other biotechs, we believe it's prudent to have taken advantage of the current financing window.

Now for our clinical program.

I want to emphasize strongly that Avant is a Company with a variety of late stage programs in clinical development.

A majority of these programs are supported through partnerships with major companies, governmental agencies, or international health organizations.

We are extremely pleased that our partner GlaxoSmithKline has entered Phase III clinical trials of Rotarix -- a two dose oral rotavirus vaccine.

Glaxo has vaccinated the majority of an expected 60,000 infants in the Phase III trial, primarily in Latin America and Southeast Asia.

GSK expects their initial launch to be in Mexico later this year.

To date, we have been awarded over 4.1 million in contracts from the Department of Defense and DVC.

Avant is now more than half way to achieving its goal of securing in excess of 8 million in funding for these programs over a two-year period.

We believe these contracts confirm our leadership position in the biodefense industry.

Specific funding of 3 million was included in the defense appropriations asked for fiscal year 2004 to support clinical work on the oral anthrax plague vaccine that Avant is developing for the Department of Defense.

Again, with respect to our clinical development program, we continue to advance CETi-1, our novel immunotherapeutic for cholesterol management.

Results in late 2003 from a Phase II study shows that the vaccine was well-tolerated and demonstrated proof of concept in humans that the vaccine approach could indeed raise HDL.

We're now evaluating a number of possibilities for the continued development of this vaccine including the use of new [indiscernible] to elicit a more robust antibody response.

We expect to have CETi back into the clinic in approximately 12 months.

Our intent remains to partner this product for further development and potential commercialization.

Last week, we announced a Phase IIB study of TP10 -- our complementary inhibitor -- in approximately 300 women undergoing cardiac surgery utilizing cardiopulmonary bypass, or CPB.

The objective of the study is to assess the ability of TP10 to reduce the incidence of death and heart attack that occurs in cardiac surgery patients on CPB that's potentially improving post operative outcome.

The study will be conducted at approximately 15 clinical sites in the United States and will conclude around year end 2004.

Finally, the International Vaccine Institute -- IVI -- is making excellent progress in its Phase II trial of CholeraGarde in Bangladesh.

In January, we announced positive results in the adult portion of this trial in which over 70 percent of the vaccinated adults responded with a favorable immune response.

IVI is now vaccinating toddlers, age two to five years and will then vaccinate infants under 23 months of age.

Avant expects IVI to provide data from the pediatric portions of their study during the second half of 2004.

I want to emphasize that Avant is assembled aboard and beat portfolio technologies and intellectual property that give us a strong competitive position in the areas of vaccines and immunotherapeutics with six of our programs in clinical development.

We've assembled innovative vaccine technologies including the acquisition of VitriLife in 2003 and new technology with the potential to reduce manufacturing cost and improve product stability eliminating the need for vaccine refrigeration.

With this technology and our cholera and salmonella (indiscernible) delivery technologies named Vibrio vex and Salmo Vex we can now develop a new generation of vaccine that have an ideal product profile.

Safe, effective, oral, single does, rapidly protective and not requiring refrigeration.

So this is the end of my introductory statements and we now welcome your questions.

[Operator Instructions].

Russell Gilbertson of Roth Capital Partners.

Congratulations on a great year.

I had a question regarding some PT 10.

What is the criteria, the exclusion criteria, that you're going to be applying to the women in that test?

And also what are the criteria you mean to define M-I in these patients?

Is it EKG, is it laboratory tests, combination, and what specifically are the parameters?

Yes they are very good questions.

We can tell you're a medical man.

We will be taking the normal age group -- 18 and above.

We will be excluding people who are immuno-suppressed.

We will be excluding diabetics and we are selecting for high-risk, not very high risk but high-risk patients going to cardiac surgery which will include patients who are having CABG plus a valve operation but not all valve operations.

The importance of your question about how we measure MIs is that the primary endpoint of the trial will be death of M.I. (ph) We believe that we have an exemplary and well-controlled methods for doing those.

All of the patients will have their enzymes measured and it will be 10 times above the normal baseline limit.

Which, I think, removes any question about whether a heart attack or not, but furthermore they will have their EKGs read and they will all be adjudicated by a single expert in reading EKGs which is Dr. Bernard Chafeman (ph).

So I think that this is an area where companies in the past have had certain kinds of figure out how best to do it.

I think we've learned from our own experience and from the experience of others but we really will be reading both Q-wav and non Q-wav MIs.

Okay so both Q-wav, non Q-wav, will you include say for example, subanocardial (ph) (indiscernible) MIS that possibly don't show EKG changes but have elevated enzymes?

No.

Cynthia Davis of Charis and Company.

Actually just had a question regarding the CETi.

I was wondering if we can get a little bit more clarification on the plans going forward?

You said it might go back into the clinic in 12 months.

Would that be further Phase II trials or would that be Phase III trials?

I want to be very clear on this.

We were very pleased with the results we had.

We were able to translate immunogenicity we'd seen in Phase I into an elevation of HDL in the Phase II so we've got to proof of principle in more than 90 percent of the patients.

However we never believed that that would be the only Phase II.

We will not be moving forward to Phase III.

What we're doing now is looking at the results and learning from them.

What we find, Cynthia, is that if we plot HDL against immunogenicity, against antibody we find the people with the highest titers (ph) have the highest HDL.

In some cases, over 25 percent.

So it's clear that while we have no problem with 8 to 10 percent increase it would be very nice to have a., a greater proportion of the patients with 25 percent and greater durability just in case people don't go back every six months exactly.

So what we're doing -- we know from some preclinical animal studies that there are antigens out there that are much more potent in raising the adjuvants than alum.

We used alum for very sound reasons in our Phase I and Phase II.

Alum is the only approved adjuvant (ph) FDA approved adjuvants.

We certainly with such a new technology didn't want to give the FDA both a new vaccine and a adjuvant.

Now I think that the safety profile the tolerability looks very nice.

I think we're willing to go to an adjuvant that gives a stronger response.

I mean everybody knows that alum doesn't -- is fairly weak?

So we have found at least a couple of adjuvants we know will give us a better antibody response judging from our preclinical data.

We are now in discussions with these potential partners to decide if we are how we should license or codevelop.

And, obviously, I can't discuss any of those things until they come to fruition, but then, we would expect to combine our peptide vaccine with one of these adjuvants, at least one of which has already been in the clinic.

And so has a CMT section.

So we're being fairly conservative about what we have to do but we would not go forward to Phase III.

We would continue with a Phase II or Phase I-2.

Steve Ostroski of Middlegate Securities.

Good morning, Dr. Ryan.

First of all, I'd like to congratulate you on an excellent year of progress for Avant.

I think you're doing an absolutely superb job of steering this Company.

I appreciate it and from the beginning of 2004, we've already made good progress.

So, let's hope we can keep up another good year.

My question is about TP10.

I've been following the Company for quite some time -- originally Virus Research Institute -- and I know that the TP10 program dates back quite some time.

And I was curious and a bit concerned about how strong the intellectual property protecting this product is at this point with the passage of so much time.

It's a very good question but let me reassure you quickly.

This was a key T-Cell Sciences product.

Another part of the Company with which you are less familiar but which I know well.

TP10 has a magnificent patented stage with patents issued in the U.S., Europe, and other major market countries.

But what's so impressive about it is we have used patents, we have composition of matter patents, we have manufacturing patents, we have half-life patents, and although the initial patents issued in '93, I believe we will have patent coverage in the whole estate into the late teens.

It's a very good question and I'm glad to have the opportunity to reassure all the listeners on it.

Thank you.

Richard Auslander of UBS.

Una, first on the TP10 on the women's CABG trials.

Are you taking women who have had heart attacks as well as before the mortality rate, obviously, being much higher in the initial group?

Yes.

We -- as I said, it's a general category of high risk.

So they're -- having had a previous heart attack is not really the governing issue.

The issue is that they need to be something else like a problem in another organ, a redo of the CABG, the addition of valve surgery.

As I said not all valves but some valve surgeries so that there needs to be something beyond just a heart attack that would make these patients high risk.

I understand that.

Normally if a person has had a heart attack and goes into the bypass, your mortality rate is about 35 to 40 percent.

If they've not had a heart attack it's 3 to 5 percent so you're going to take both types of patients.

We are actually going for an expected event rate which is heart attack or death of -- in the 20, 25 percent and it was actually that placebo event rate that was a problem in women's group last time.

You would expect that women would have a higher event rate than men or the general blended population so perhaps up to your 30 even 35 percent.

We did not see that.

We had a seriously low rate and we believe we just had an extremely small number of women.

That is why as we move forward in this new trial, we will have equal numbers of women on placebo and equal numbers of women on the single TP10 5 mg level so that we should have power in both arms that we didn't get before.

But you will be people who have heart attack before [indiscernible] heart attacks.

Secondly, are you taking postmenopausal women?

No.

How about women on HRC?

The hormone replacement therapy.

No.

We actually did look in the previous trial and did not see any effects of that, but by and large I can't quite remember but I think we're going for women between 18 and 65 years of age and I do not believe we will include women on HRT.

Last question.

What is happening with TP20?

Yes.

TP20 is still preclinical.

We believe that it has great potential for those diseases or conditions which would include a strong neutral [indiscernible] component as well as a strong complement activating component.

In all of our discussions with potential partners, we have found that there is an interest in both products.

So we are unlikely to do separate deals on TP10 and TP20.

So I think that you will see that when we do partner TP10 we will partner TP20 alongside it.

We ourselves are not taking it into the clinic or taking it into clinical grade manufacturing at this point.

I can understand that.

I would assume that any licensing stream you get from royalties would differentiate between the two, however.

Yes they do -- TP20 has its own patented stage.

But there is of course some overlap with the base for TP10's very strong patent position that I mentioned before but, yes, they are different products, different market opportunities, and certainly should have different either royalties streams or reward rates that are distinct.

[Operator Instructions].

There are no further questions in queue at this time, Dr. Ryan.

Please feel free to proceed with your closing comments.

Thank you.

Well, again, I just want to emphasize strongly that Avant is a company with a variety of late stage programs in clinical developments.

As I mentioned already in 2004 we've accomplished several notable milestones.

In January '04 we announced positive results from the adult portion of the Phase II clinical trial of CholeraGarde in Bangladesh.

Earlier this month, we announced a financing of approximately 25 million which provides cash balances that now exceed our currently anticipated requirements for the next two years.

And last week we announced a Phase II trial of TP10 in approximately 300 female patients undergoing cardiac surgery with cardiopulmonary bypass.

In addition, we're moving forward towards a more fully integrated company with a build out of a pilot manufacturing facility in Fall River, MA, which will implement our VitriLife technology.

So let me just remind you again that this press release and the conference call contain forward-looking statements that are subject to a variety of risks, uncertainties, and other factors that could cause actual results to differ materially from those expressed in these forward-looking statements.

So speaking of forward looking, I look forward to talking to you again at the next quarter.

Thank you.

Goodbye.

Ladies and gentlemen, thank you for your participation in today's conference.

This concludes the presentation.

You may now disconnect.

Have a good day.