Celldex Therapeutics Inc (CLDX) 0 Q0 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the fourth quarter and year end fiscal 2005 AVANT Immunotherapeutics, Inc. earnings conference call.

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

At this time all participants are in a listen-only mode.

We will be facilitating a question-and-answer session towards the end of today's conference. [OPERATOR INSTRUCTIONS].

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 conference, Dr. Una Ryan, President and Chief Executive Officer.

Please proceed.

Thank you very much.

Good morning, ladies and gentlemen.

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

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

I'd 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, Chip will first review AVANT's fourth quarter and year-end financial results, then I will give you a brief update on our lead clinical programs.

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

Good morning, ladies and gentlemen.

This -- we announced in our press release today AVANT's financial results for the fourth quarter and full year for 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 million or $0.05 per share for the fourth quarter of 2005 compared to a net loss of 3.7 million or $0.05 per share for the fourth quarter in 2004.

For the 12 months ending December 31st, 2005, the Company reported a net loss of 18.1 million or $0.24 per share compared to a net loss of 13.2 million or $0.18 per share for the 12 months ended December 31st, 2004.

The increase in loss between quarterly periods, primarily reflects a decrease in revenues due to the recognition of a milestone fee in 2004 of 2 million from GSK for the European filing of an application for market approval of Rotarix.

This was offset in part by a decrease in operating expenses due to a reduction in clinical trials costs and contract manufacturing costs for the Company's TP10 program in the fourth quarter of 2005.

The increase in loss between 12-month periods primarily reflects a decrease in product development and licensing revenues and an increase in research and development expenses.

The increase in R&D expenses is due to an increase in clinical trials costs during the first three quarters of 2005, associated with AVANT's TP10 Phase 2b study in women; increased personnel and facility costs incurred at our new Fall River facility; and increased general and administrative expenses.

Investment income increased in 2005, primarily reflecting higher average interest rates between years.

Outstanding shares at quarter end were approximately 74.2 million shares, and at December 31st, 2005, AVANT had cash and cash equivalents of 23.4 million.

Now let me update you are on the programs.

We want to emphasize that AVANT has tremendous capabilities in the vaccine space, an area which is becoming of great interest to both the public health and financial communities.

We've developed our vaccine resources to the point where we believe we can return value in the near term, midterm, and long term by creating a pipeline of proprietary product opportunities and high value partnerable candidates.

We have assembled the personnel infrastructure to do this and to do it repeatedly.

There's a rapidly growing multi-billion-dollar market for vaccines and we're making great headway here. 2005 was a year of significant milestones, capped by the continued commercialization of Rotarix, our vaccine by our partner, GlaxoSmithKline.

The $40 million milestone payment from Paul Royalty Fund that we anticipate on EU commercial launch of Rotarix will put us in a strong financial position to build our industry-leading bacterial vaccine franchise.

Other key events of 2005 included monetization of Rotarix assets with Paul Royalty Fund, and these should bring us 61 million in near-term non-dilutive financing, while AVANT retains a portion of longer term royalty streams.

Manufacturing of our oral bacterial vaccines began in our Fall River plant.

Demonstration of protective immunity in adults, children, and infants by CholeraGarde in a Phase 2 clinical trial in Bangladesh conducted by our partner, the International Vaccine Institute, who are funded by the Gates Foundation.

AVANT has assembled a broad portfolio of technologies and intellectual property that give it a strong competitive position in vaccines and immunotherapeutics.

A brief summary of our lead clinical programs follows.

First, TP10.

Clear results of the recently-completed TP10 study in women confirm that TP10 is well-positioned for a males-only cardiac bypass surgery indication.

AVANT expects to partner this program before advancing to a Phase 3 study.

On CETi, we have identified a new adjuvanted formulation for the vaccine.

We have received GMP peptide for the newly formulated vaccine, and we expect to complete toxicology, release, and stability studies in 2006.

About CholeraGarde, in the third quarter, we announced a break through in the control of cholera with positive preliminary results from a Phase 2 clinical trial of CholeraGarde in infants and children.

Researchers in Bangladesh found our single dose oral CholeraGarde vaccine to be well-tolerated and highly immunogenic with 77% of children aged nine months to five years and over 77% of adults generating protective immune responses.

There currently are no licensed cholera vaccines worldwide indicated for children underage two.

These data reinforce the strong safety and protective immune responses reported last year in adults receiving this vaccine.

AVANT is now preparing for a CholeraGarde Phase 3 clinical study in the U.S., planned for late this year.

In July, we also reported that AVANT, together with Harvard Medical School, would receive approximately $500,000 from the National Institutes of Health to apply VitriLife formulations to our CholeraGarde vaccine.

Now for Ty800, the NIAID has funded the manufacture AVANT's typhoid fever vaccine, Ty800, for clinical testing and has initiated a Phase 1/2 clinical trial aimed at demonstrating the safety and immunogenicity of the Ty800 vaccine.

To give you an update on flu, using our bacterial vectors, AVANT's scientists are in the process of cloning H5N1 protective antigens, towards our plan to develop a single-dose oral pandemic flu vaccine amenable for mass vaccinations.

On manufacturing, the manufacture of clinical trial supplies of our oral plague vaccine is now complete, and this product will enter human clinical testing later this year.

We're currently manufacturing CholeraGarde for a planned Phase 3 study for travelers, and when the manufacturing task is done, we will then begin making clinical trial supplies of Ty800 for a Phase 2 study that we plan to start in early 2007.

And now for Rotarix.

Rotarix is an example of an AVANT product that has been developed, partnered, and commercialized, and where we have already monetized some of the future earnings potential of the product to provide financial resources to develop our core franchise.

Rotarix, under Glaxo's guidance, is now licensed in the EU and approximately 35 additional countries worldwide.

AVANT's broad pipeline of programs and emerging portfolio of next-generation oral vaccines, together with state-of-the-art technologies and manufacturing facilities, offer exciting opportunities to build value in the near term, midterm, and long term.

In the near term, we've already achieved two of our milestones, the European approval of Rotarix and TP10 confirmatory Phase 2 data.

We are currently manufacturing our CholeraGarde product in the Fall River facility.

But having achieved these milestones, I want to remind you of the exciting opportunities ahead of us.

AVANT has an industry-leading pipeline of vaccines for the $2 billion bacterial vaccine diseases, and will have three products in the clinic by the end of this year.

The resources that we will be receiving from Rotarix milestones for U.S. launch and a potential TP10 commercialization partnership provide us with a strong financial position to build shareholder value over the long term.

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

[OPERATOR INSTRUCTIONS].

George Fulop, Needham & Co.

Good morning, everyone.

Thanks for taking my question.

Good morning, George.

Two quick questions, please.

One on revenue guidance in 2006 and second on some update on the GSK strategy in the U.S.

So first, in the revenue guidance of 6 to 7 million for 2006, can you break out what you think the relative ratio between the government contracts and product milestone royalties would be?

I suspect it will be reverse of what we've seen in the past.

George, I'll answer the Rotarix question, and Chip will talk about the financial guidance.

Let me start with Rotarix.

We understand that GSK is absolutely on the mark for their strategy for the U.S., which we have always announced to be following Merck's launch here.

We have heard from Beatrice De Vos that they plan to file in the U.S. in early 2007.

And depending on the exact timing, we would expect to launch sometime in 2008, or conceivably 2009.

On -- with respect to the revenues, George, I would remind you that the -- that GSK paid us a $2 million milestone at the end of '04, and that later this year in -- we believe in the second quarter, we'll receive a $4 million milestone from GSK for approval in the EU, both of those milestones, 50% of those milestones are creditable against future royalties of -- that GSK may have to pay.

I think that we expect to have minimal royalty revenue recognition on the deferred revenue from the Paul Royalty deal in 2006.

So most of, if not all of the revenue that we're forecasting is derived from contract and grant revenue.

Okay.

Thank you.

There is -- I would add, though, that there is 50% of the milestone that we will expect to receive in the second quarter that would be recognized as revenue in this year.

Very good.

Derek Jellinek, Roth Capital Partners.

Good morning.

Good morning, Derek.

When do you envision actually securing a partner for TP10 and CETi-1, and would you partner the CETi program prior to the entrance back into the clinic, possibly in '07?

Let me take them separately.

TP10, now that we have the results from the study confirming really our original Phase 2, I think we can move ahead with partnering for TP10.

We are in discussions with partners large and small, and we hope that will proceed at a pace.

As you know, it's very, very difficult to give a hard line time.

With CETi, we are planning to go ahead and reformulate, do all of the necessary release and tox, studies and meet with the FDA to find out what a new Phase 2 or 1/2 would entail.

I think we would be open to partnering CETi at any time, as it is now, or after a Phase 2.

I think it will just simply depend on partner appetite.

Right.

Outside of CholeraGarde and Ty800, when do you expect to have the other bacterial vaccines in the clinic?

Well, we have manufactured the plague vaccine already, and so we expect to be in the clinic around the end of the year with that one.

Ty800 is interesting because we're currently conducting a Phase 2 -- 1/2 with the NIH.

Again, we have to meet with the FDA to see if when we manufacture our new material with VitriLife at Fall River, we could then move forward directly to a Phase 2, but we don't know that answer until we've met with the FDA.

Flu is ongoing at the lab bench but will not be ready for the clinic this year.

And we hope that we will be able to initiate the toxicology studies for the ETEC and Shigella travelers' vaccine this year.

Great.

One more if I may.

Maybe you can answer this.

What does the defense appropriation budget look like for '06?

Well, for '06, it's very lean.

We are actually getting ready for the '07 fiscal year.

We have funds that have already been appropriate for us that will last us into '07.

As I said, we are really at fairly advanced stages now with the plague portion of that vaccine, so we're at the expensive manufacturing stage and getting ready for the clinic, and we do have the funds for that, at least to get started in the clinic, and we are applying now to look for '07 funding.

But I think there it's looking increasingly difficult, and we hope we'll get the appropriate support from Senators Bond and Kennedy.

I've already been to Washington looking for it.

Great.

Thank you.

You're welcome.

[OPERATOR INSTRUCTIONS].

Russell Gilbertson, Caris & Company.

Hi, Una.

Hi, Chip.

Good morning, Russ.

The question.

Comment on the opportunity for providing bacterial vaccines in the developing world and how AVANT expects to be profitable in addressing this enormous unmet need.

Yes, it's a very interesting question.

AVANT's development strategy has always been to do development on somebody else's nickel.

We have the IP.

We would pay for that for our travelers portfolio and for our food safety programs.

We have had a lot of support in the molecular biology stages from the Department of Defense, directed at anthrax and plague, but no question benefiting the global disease vaccines as well, and we've been enormously helped by Gates money and NIH money for the very expensive clinical trials, and we are applying again for Gates funding.

So that talks about the development piece.

Now, I was in Washington on Monday talking with BioVentures for Global Health, GAVI, and World Bank colleagues about this new concept of advanced procurement, or advanced purchasing commitments that the G7 countries are trying to put together.

Now, the pilots for that will probably not be our bacterial vaccines, but more likely things like malaria, TB, and AIDS.

But this is an extremely exciting opportunity for companies like AVANT, because this is a completely new source of funding.

So the concept, Russ, is that the manufacturer would get paid a decent price and the number of doses in the price would be guaranteed for a certain period of time.

After that, one would have to negotiate with each of the countries for presumably a lower price, and there would probably be a sort of holding of that same price even during the AMC period.

So that's one really exciting new source of financing.

And I think the other thing to remember is, that if AVANT develops these vaccines for the travelers' market, and gets FDA approval for that, they will be on the market, and if you now turn your attention to GSK's forecast for Rotarix, GSK is forecasting a very substantial market for the rest of the world.

So that won't be for the poorest countries.

Those will get taken care of by GAVI and these new AMCs, but for the more middle-class countries, say of Latin America, we're expecting to be able to sell.

So I think the concept of tiered pricing has to be here, but we are expecting to make a margin in many countries outside the U.S. and Europe.

Thanks for that detailed explanation.

But would do you see as the major obstacles in terms of distribution in the developing world?

Obviously, there would be a problem with getting enough margin there and maybe subsidies will help you, but what about distribution and dealing with some of the foreign governments?

Well, these aren't really subsidies.

These would be guaranteed purchases, pretty much like BioShield.

I think the biggest problems are overcome by VitriLife, in that we can avoid the cold chain and overcome by the fact that we have single dose, and they are oral, so the actual product could be quite cheaply prepared in bulk.

I think the distribution will have to be done by UNICEF and WHO, and if you look at their capabilities with things like polio, they are distributed worldwide.

We would not be able to take on issues of politics and corruption and those things in some of the countries, but again, it is not easy, but we expect to make the vaccines and to have them distributed by the large NGOs.

I think it will be possible to make a small margin, and as I said, profitability will really depend on our high-margin developed world market.

But I don't think we'll be giving them away for tax benefits.

Thanks, Una.

Great.

[OPERATOR INSTRUCTIONS].

At this time, Dr. Ryan, I'm showing no further questions.

Well, thank you.

Let me just remind everyone that already in 2006 we've achieved three notable milestones.

Results from a Phase 2b female study of TP10, our compliment inhibitor, confirms the data for female subjects in a previous trial indicating that TP10 doesn't provide a benefit to women.

We believe these results provide a clear development pathway for a males-only indication for TP10 in cardiac bypass surgery.

Glaxo received market approval of Rotarix from the European regulatory authorities, triggering a 4 million milestone payment to AVANT with 50% retained by AVANT.

Initiation of a Phase 1/2 trial of Ty800 by the National Institutes of Allergy and Infectious Disease is being conduct at the Cincinnati Children's Hospital Medical Center.

I want to remind you again that this press release and conference call contained 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 any such forward-looking statements.

We look forward to updating you on our programs next quarter, and good morning for now.

Thank you.

Once again, ladies and gentlemen, we thank you for your participation in today's conference.

This concludes the presentation.

You may now disconnect.

Have a great day.