Celldex Therapeutics Inc (CLDX) 2005 Q1 法說會逐字稿

Welcome to the First Quarter 2005 AVANT Earnings Conference Call. [OPERATOR INSTRUCTIONS] I would now like to turn the presentation over to your host for today's call Dr. Una Ryan.

You may proceed Ma'am.

Good morning ladies and gentlemen.

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

With me on this call are Chip Catlin AVANT's Chief Financial Officer and Tim Cooke, our Chief Operating 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, which are not historical facts 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'll first review AVANT's first quarter financials and then give you a brief update on our lead clinical programs.

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

So, for the first quarter financial results.

We announced in our press release today that AVANT's financial results for the first quarter of 2005.

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

AVANT reported a net loss of $4.9 million or $0.07 per share for the first quarter compared to a net loss of $1.9 million or $0.03 per share for the first quarter in 2004.

The increase in loss between periods, primarily reflects a decrease in revenues as a result of the recognition of $2 million in one-time revenue items in the first quarter of 2004 and an increase in 2005 of operating expenses, due to increased contract manufacturing costs incurred on the Company's TP10 program and operating expenses of our Fall River facility.

Outstanding shares at quarter end were approximately 74.1 million shares.

At March 31, 2005 AVANT had cash and cash equivalents of $27.3 million, a decrease of $4.4 million from the prior quarter.

Now for the clinical programs, we're pleased that our partner GlaxoSmithKline Biologicals, GSK has launched Rotarix in Mexico for the prevention of gastroenteritis caused by Rotavirus infection.

We anticipate that this is just a first of a series of marketing approvals for Rotarix as GSK continues its worldwide launch effort for this vaccine.

GSK has already filed some market approval in more than 30 countries worldwide as well as with the European regulatory authorities.

Royalty revenue to AVANT from Rotarix sales should begin in the second quarter of 2005 with estimate totaling about $1 million to $2 million for the year, increasing over the next several years as more countries approve this much needed vaccine.

With respect to our complement inhibitor TP10, enrolment in the Phase IIb study in women undergoing cardiac bypass surgery has progressed more slowly than we anticipated.

Recently, we have added new sites and taken other steps to increase enrolment.

We now expect enrolment for this trial to complete as soon as possible and to report our result around the year-end of 2005 or early in 2006.

This January, we completed a very constructive end of Phase II meeting with the FDA to discuss our plans regarding the Phase III clinical development of TP10.

The FDA emphasized their interest in accessing safety in females and showing at least a trend in efficacy in the current Phase IIb study prior to starting a Phase III trial.

We do not believe the current Phase IIb study needs to provide strong evidence of efficacy in women for AVANT to proceed to a Phase III study.

We will continue routine ongoing discussions with the FDA to further define the clinical pathway for TP10 in cardiac bypass surgery and the FDA's requirement for a special protocol assessment.

AVANT is seeking to partner the TP10 program prior to starting a Phase III trial.

With respect to our CETP vaccine for cholesterol management, in pre-clinical testing we have identified a new adjuvanted formulation for the vaccine that elicits more than a 10-fold increase in anti-CETP antibody titers when compared with the current CET1 vaccine, and we have contracted for the production of GMP peptide for the new vaccine.

AVANT is seeking a development partner for this program.

Last November, we opened our new vaccine manufacturing facility in Fall River, Massachusetts.

We are at present validating this facility, its systems and equipments, and expect it to be operational by the end of the second quarter.

The facility will produce our anthrax plague vaccine, our travelers’ vaccine, and will implement our VitriLife technology.

With respect to our biodefense program, during the quarter we received sub contract modifications from our partner DVC, which increased contracted funding by $2.4 million.

Total government funding commitments for our oral combination anthrax-plague vaccine program are approximately $10 million.

In 2005, AVANT expects to report two additional achievements, firstly our partner the International Vaccine Institute (IVI) should announce results in midyear of the Pediatric caution of the Phase II trial of AVANT's oral cholera vaccine ongoing in Bangladesh where Cholera is endemic.

Secondly, the National Institute of Health should initiate a Phase I/II clinical trial in approximately 50 subjects aimed at demonstrating the safety and immunogenicity of AVANT's typhoid fever vaccine Ty800 as an NIH-funded clinical site.

I want to emphasize strongly that AVANT is a company with late stage programs.

We now have an approved Human Healthcare product in Rotarix and six other products in clinical development, greatly diversifying our risk and providing us with many exciting opportunities.

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

Theses collaborations validate the value of our pipeline and from a financial perspective enable us to advance so many products towards commercialization.

This is the end of my introductory statement and we now welcome your questions.

[OPERATOR INSTRUCTIONS] Eric

, Roth Capital Partners.

Just a couple of questions, if I may.

Would you, Una -- can you please update us on your partnership discussions for both TP10 and CETi-1?

Yes.

We are in discussions about those programs.

As we have always said, for TP10, we expect to bring a partner onboard prior to Phase III.

As you know, the female Phase IIb study has evolved more slowly than we anticipated, but I think the story hasn't changed.

Both for the FDA and for a partner, I think there's interest in seeing the results of the Phase IIb study in women, and while at one point we had considered we might have an interim look, we've decided that for better part of wisdom to complete the enrollment and make the announcement on the full cohort.

With regard to CETi, yes, we are in discussions on partnering that program, so we have more than one option for taking it forward.

Right.

Do you happen to know how many infants have been dosed to date in Mexico and if there have been infants dosed, what does the CETi database look like?

Well, it is approved in Mexico.

So, this would be just out in the field, it is a commercial vaccine.

I don't how much monitoring there will be.

I'm sure safety issues will be reported.

We have no direct confirmation of sales from GSK.

They have 60 days to pay us, so if they did dosing in the first quarter, we should know that by the end of May.

What I can tell you is that April 26 for that week was PAHO, that's the Pan American Health Organization's annual vaccine day for the Americas.

So, we would expect that during the week of April 26, a very large number of children in Mexico City would have been immunized, but we have no direct numbers provided to us.

One more question quickly.

I'm also wondering if you have been actively pursuing licensing agreements with your Vectored Vaccine platform or VitriLife technology.

No.

We have not been actively looking for partners for the Vectored Vaccines, largely because we believe this is a business where we can put our own resources and efforts to drive value.

And for the travelers' vaccines, which are a very important part of that, we believe this is an area where we could drive forward to commercializing ourselves with a relatively small sales force.

As you know, the biodefense program is funded by the DoD, and so the safety is -- the approved vaccines are distributed by Lohmann and Pfizer continues to pay for the intellectual property for that part of the program.

So, for the travelers' and global health vaccines, we are actually planning to move forward ourselves.

I thought it might be interesting at this point to introduce Tim Cooke, who is our Chief Operating Officer, and ask him to give you an update on how we will implement VitriLife in our manufacturing plants and how we believe we can get most value from that in that acquired program.

Tim, would you like to talk?

Sure.

Thank you, Una.

Yes, I have spent a long time in the vaccines industry and 9 years in the Merck Vaccine Division.

And so, I joined AVANT last August and intensely interested in both the cardiovascular programs and the vaccine programs.

I think the vaccines have a tremendous product profile, single-dose, oral vaccines and the ability to stabilize them with VitriLife technology makes a very competitive vaccine product.

And so, we can compete very effectively in established markets like Typhoid or have the ability to get into markets like ETEC.

And I think the travelers' vaccine market is very exciting.

I did a full market analysis of the VitriLife technology looking at the potential value creation by offering that under license to other companies for their vaccines and basically concluded that we create the most value for the shareholders by driving the development internally with our own vaccines, but incorporating VitriLife into our own vaccines.

Because

in the travelers' markets, take these products all the way to the market and market them ourselves and manufacture them ourselves.

So, we are going to focus on driving our own products forward, incorporating VitriLife into our own products, and utilize the resources of Fall River manufacturing facility that way.

And I believe that will create the most value for the shareholders.

Great.

Thank you, both.

Okay.

Daniel Isaac, Private Investor.

I have been the shareholder of AVANT now for over 10 years, and I have become extremely frustrated over the direction of the Company in terms of its stock and share value.

Can you please tell us why, even though we are making progress, rotavirus in our license, we are now trading at a $1.20 something, $1.30?

How do you explain that?

Well, of course, we are very frustrated with it too.

If you'd ask me a year ago, how we intended to improve the value of AVANT stock, I would have told you that we were looking forward to the approvals and launch of Rotarix.

The Street does not seem to be very interested in ex-US launches as is reflected.

So, I think that what we are going to do now, Dan, is really evaluate what has been an extremely successful program.

When we were an R&D company, we were very focused on immunotherapeutics, both enhancing and inhibiting the immune system.

Now, we becoming a late-stage company, I think it's a confusing picture for the Street because those very tight immunology technologies have now spread into new clinical indications and new commercial indications, which really has made us into a two-headed monster with cardiovascular indications on the one hand and infectious disease indications on the other.

So, I think that with our Fall River plant able to make our own oral single dose vaccine preserved with VitriLife, it is the better part of wisdom for us to partner the cardiovascular programs, which will be expensive Phase III trials, and where the commercial skills and marketing skills of the big companies will be really essential, and for us to focus on the vaccine story to--

Well, doctor, with all respect, we've heard the same now going on for years.

You haven't heard this before.

This is a new strategy, focus our own resources on the vaccines and make a much simpler story for the Street.

Do you feel that the Wall Street (was

the Company is due to its senior management?

Yes, even I feel that the management is one of the strong features of the Company.

But if you want any of my -- the end of my story to you, we have heard a new IR firm, MacDougall Biomedical Communications, Inc. to help us put this new story forward, and the Company will continue to move the programs forward, to increase value, and we hope that the Street will wake up and see that.

One last question, Doctor.

I had read recently that you have been awarded 400,000 shares of AVANT, and I would like to know on what basis that decision was made?

Yes, I can tell you.

It was a sort of catch-up.

I own less -- a smaller percentage of this Company than almost any other CEO in the industry.

And I think with the new rules, it was the Board of Directors' view that I needed to have a percentage ownership in the Company, and the most advantageous way for the Company to get that, bearing in mind all of the new tax and accounting rules, was to give me restricted stock.

They will vest over 4 years and they still, I think, don't bring me up to the level that most CEO's are at.

Okay.

Thank you, doctor.

[OPERATOR INSTRUCTIONS] And at this time, Dr. Ryan, there are no more questions.

I will turn the call back over to you.

Thank you.

Again, I want to turn this out strongly that AVANT is a company with a variety of late-stage programs and clinical development.

Already in 2005, we have accomplished two notable milestones.

We announced that GSK had filed in late 2004, the market approval of Rotarix with the European regulatory authorities triggering a $2 million milestone payment to AVANT.

Also in January, GSK announced the launch of Rotarix in Mexico, representing the first step in the series of global product launches to begin this year.

I would not ask the question, but I want to emphasize very clearly that AVANT is not doing a capital ways at the moment, and that we have no immediate plans to offer stock.

We are very comfortable with our financial position going forward.

I would remind you again that this press release and conference call contain forward-looking statements, which are subject to a variety of risks, uncertainties, and other factors that could cause actual results to differ materially from those expressed in any such forward-looking statements, and we look forward to updating you on our programs next quarter.

Thank you, good bye.

Thank you for your participation in today's conference.

That concludes the presentation.

You may now disconnect and have a great day.