Celldex Therapeutics Inc (CLDX) 2006 Q1 法說會逐字稿

Good day, ladies and gentlemen; thank you for your patience and welcome to the AVANT conference call. My name is Janelle, and I will be your coordinator for today. (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, Dr. Una Ryan. Please proceed.

Good morning, ladies and gentlemen. I apologize for the delay. I'm Una Ryan, President and CEO of AVANT Immunotherapeutics, Inc. With me on the 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 the 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 can differ materially from those expressed in any forward-looking statements made by AVANT. During the call, Chip will review AVANT's first quarter financial results, then I'll give you a brief update on our lead clinical programs. Following that, we'll open the call to questions, and after answering questions, I'll make a few closing remarks.

Good morning, ladies and gentlemen. We announced in our press release today, AVANT's financial results for the first quarter of 2006. 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 $3 million, or $0.04 per share for the first quarter, compared to a net loss of $4.9 million, or $0.07 per share for the first quarter of 2005. The decrease in loss between quarterly periods primarily reflects an increase in revenues due to the receipt of a milestone payment in 2006 of 4 million from Glaxo for the European approval of Rotarix, 50% of which is creditable against future royalties.

Product development and licensing revenues of 2.6 million was recorded in the first quarter of 2006, and the remaining 1.4 million was remitted to Paul Royalty Fund. AVANT also recognized approximately 550,000 in revenue related to PRS purchased interest in the net royalties that AVANT receives from Rotarix worldwide net sales. The increase in revenue was all set in part by higher operating expenses primarily due to a $600,000 license fee expense recorded in the first quarter of 2006 for amounts that will be payable to Cincinnati Children's Hospital Medical Center in connection with the aforementioned 2006 Glaxo milestone payment. At March 31, 2006, AVANT had cash and cash equivalents of 59.8 million.

We want to emphasize that AVANT has tremendous capabilities in the realm of vaccines through our rapidly emerging platform of oral vaccines that's robust and flexible. Furthermore, we have developed our vaccine resources to the point where we believe we can return value in the near-term, mid-term, and long-term.

Two thousand and six to date has been a year of significant milestones capped by the receipt of a $40 million milestone payment from Paul Royalty Fund for the commercial launch of Rotarix. That, when combined with cash on hand, puts us in a strong financial position to build our industry-leading bacterial vaccines franchise.

Let me outline other key events of 2006. Glaxo received market approval of Rotarix from the European regulatory authorities, figuring a $4 million milestone payment to AVANT. Clear results of the recently completed TP10 study in women confirmed that TP10 is well positioned for a males only cardiac bypass surgery indication. AVANT expects to partner this program to complete development and to commercialize TP10.

Initiation of a Phase I-II trial of Ty800, a typhoid fever vaccine, by the National Institute of Allergy and Infectious Disease (NIAID), is being conducted at the Cincinnati Children's Hospital Medical Center. Finally, our Fall River vaccine manufacturing facility is now fully operational, producing AVANT's single dose oral vaccines.

So, AVANT has assembled a broad portfolio of technologies and intellectual property that give it a strong competitive position in vaccines and immunotherapeutics. I'm going to give a brief summary of our lead clinical programs.

First, TP10, our complement inhibitor. As I just mentioned, during the quarter we reported results from a Phase IIB study of TP10 in women undergoing cardiac bypass surgery. This study confirmed what we had seen in a previous Phase II trial that enrolled both men and women, and the positive results for men in the previous trial were statistically significant showing a survival benefit and a decreased complication rate, we believe there is a clear pathway forward for clinical development for a males-only indication in CABG surgery.

On the CETP vaccine, we have identified a new adjuvant therapy for our cholesterol management vaccine. We have received GMP peptide for the new vaccine formulation, and we expect to complete release and stability studies in 2006.

On CholeraGarde, in 2005 we announced positive results from a Phase II clinical trial of CholeraGarde in infants and children. Clinicians in Bangladesh found our single dose oral CholeraGarde vaccine to be well tolerated and highly immunogenic with 77% of children, age 9 months to 5 years, and over 70% of adults generating protective immune responses. AVANT is now preparing for a CholeraGarde Phase III clinical study in the U.S. planned for early 2007.

Ty800, in February the NIAID initiated a Phase I-II clinical trial aimed at demonstrating the safety and immunogenecity of the Ty800 vaccine, which is being developed to offer rapid, single-dose protection against salmonella typhi, the cause of typhoid fever.

On manufacturing, the manufacturer of clinical trial supplies of AVANT's oral plague vaccine is now complete, and this product will enter human clinical testing in early 2007. We are currently manufacturing CholeraGarde for a planned Phase III study for the traveler's vaccine market. When that manufacturing task is done, we will begin making clinical trial supplies of Ty800 for the Phase II study that we plan to start in early 2007.

Rotarix. This is an example of an AVANT product that is being development, 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 over 65 countries worldwide including those of the European Union. AVANT's broad pipeline of programs and emerging portfolios next generation oral vaccines together with state-of-the-art technologies and manufacturing facilities offer exciting opportunity to build value in the near-term, mid-term and long-term.

Let me just go through this. In the near-term, 2006, we have already received the Rotarix milestone for the European Union launch, TP10 confirmatory Phase II data, and CholeraGarde Ty800 and ETEC will be manufactured in the Fall River facility this year.

In the mid-term, we expect to receive Rotarix U.S. milestones to monetize the cardiovascular programs, and we expect vaccine pipeline advancements in the clinic. In the long-term, we expect Rotarix royalties above the caps, cardiovascular program milestones, and commercial vaccine revenues.

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

(OPERATOR INSTRUCTIONS) Our first question comes from George Fulop of Needham & Co. Please proceed.

Good morning, thank you for the update. Can you please elaborate on the next step in the partnership discussions for TP10, how are they progressing, what is the interest like?

Good morning, George. We can give you an update. Of course, we don't discuss ongoing partnership negotiations, but we have several prospective partners, some from the smaller companies, biotech companies, and some from larger companies. I would say that we are beginning to discuss terms, but I can't give you a projection on when we will close.

And can you please outline for me what you think the regulatory path will be for Ty800, what you think a Phase II program and III program might look like, and how many years are we talking about?

I think that we could start the Phase II early next year, and I think that could be completed within the year. We will have to go to the FDA and see if that's sufficient to move to Phase III, but, as you know, we have our own manufacturing facility now, so I don't see any particular delay. If it's going to look like CholeraGarde, I think it will be at least 5,000 patients in Phase III, and probably take a little more than a year to complete the Phase III.

Very good. A brief housekeeping question. You mentioned Rotarix is now approved in 65 markets and in the release it was 63. Could you just clarify that, please?

I think that there are new countries coming along all the time, some of them are small. I don't know the final count; I do know that all 16 EU countries are included in that.

Thank you very much for the update.

You're welcome.

And our next question comes from Patrick Warnen, who is an individual investor. Please proceed.

Yes, hello, Dr. Ryan. I would just like to ask a question. Next year, do you have any estimates for what the cost is going to be for the trials, the Phase III for cholera or for the TYP trial for next year?

Let me have Mr. Catlin.

Yes. I think we're still working on negotiating the cost of the cholera Phase III trial with CROs. I think that's going to be -- I can give you a range of --

That would be great.

-- 18 to 25 million. The Phase II typhoid fever vaccine trial that you mentioned, I think will be in the $1 to $2 million. It's a relatively small number of subjects in that study. As Una alluded to earlier in her comments, the CholeraGarde trial is probably going to be close to or approximately 5,000 subjects.

Okay. And you said it's probably about a year for that trial to do?

I think that with all the reporting and everything, yes.

All right. Thank you very much.

You're welcome.

Our next question comes from Derek Jellinek from Roth Capital Partners. Please proceed.

Hi, thanks for taking my question. Good morning. Maybe you can tell me when you expect data from Ty800 for the Phase I-II study.

It should finish enrollment fairly soon, but the NIH has a follow-up period of six months, and so I think that -- well, I mean, I know we have to go through all of that. So, again, I would expect maybe the first half of 2007 to report out.

Would that report out before you commence your Phase II?

Well, we'll have to go to the FDA to be sure that they will accept interim data from that study and let us go ahead, but we certainly intend to ask that question, because we expect to have the material ready and to be anxious to start the Phase II as soon as we can.

Right. I'll ask another question, if I may. Outside of CholeraGarde and Ty800, when do you expect to have the other bacterial vaccines into clinic?

The plague vaccine should start early in 2007, but the one that's kind of moving surprisingly well now is ETEC, and as you remember, E. coli is a large market, so I think that one, too, can probably get in the clinic in '07. So, I think there's an important point here. Cholera and typhoid fever are very important vaccines in their own right, but what ETEC and plague do is illustrate the power of those two platforms to vector other antigens. So, I think getting plague and/or ETEC in the clinic next year is very important.

And one more, if I may, on partnership for TP10, getting back to the first question. You said you were in discussion terms now, you didn't really have a timeline, but do you see this happening before the end of this year?

I never predict when partnerships will close. We certainly hope as soon as possible, and at present I don't know whether we will be partnering for [inaudible] field worldwide, or whether we may be [inaudible] up indications.

Okay, great. Thanks so much.

(OPERATOR INSTRUCTIONS) We have a question from Mr. Robert Eastley, who is an individual investor. Please proceed.

Good morning, Dr. Ryan. A question regarding Rotarix's marketing application in the U.S. From what I've read in the media, the approximate date is early 2007. Is that still on track?

That seems to be, yes. As a part of wisdom at the moment is that GSK will file early in '07 and, if fortunate, that means that we should be ready to launch in the U.S. in '08, but it could take longer. I think it's unlikely to be shorter than that, but I think you were correct in reading the tea leaves.

Okay. One more question on TP10. There have been studies, pre-clinical studies, as well as some human studies indicating that the age-related macular degeneration is caused at least partly by complement, and it would seem that maybe TP10 would be indicated for that kind of condition. Has that come up in your negotiations, or are you thinking about maybe starting pre-clinical studies for TP 10 on that indication?

Yes, you're certainly very [inaudible] and a very exciting story developing now on this clear relationship between complement activation and AMD, which is a huge market opportunity. What's exciting is that complement inhibitors may be involved in dry forms of the disease, as well as wet forms of AMD, so we certainly are thinking about it scientifically. We are beginning to line up partnerships for pre-clinical, just collaborations on this subject. But, yes, it has come up in discussions, and that's why I said I wasn't sure whether we would be partnering for full fields worldwide, or whether we might carve out certain indications. I don't know how it will turn out, but you have certainly picked a very interesting indication that would be [carveable] out and the intraocular would probably be easily separable from intravascular.

And one more similar question on TP10. You have -- or one of your collaborators has published data in cardiac anaphylaxis, which is also a significant market, and where TP10 seems to be effective in fairly low doses. Have you considered pushing forward for that indication at this point?

We will not ourselves, but, of course, we provide potential partners with a long list of potential indications where we have pre-clinical data and in several where we have clinical data as well. So, I think for further development on that one, it would be up to the partner.

Okay, thank you very much.

You're welcome.

(OPERATOR INSTRUCTIONS) At this time, Dr. Ryan, there are no further questions.

Right. Well, I'd like to remind you that in 2006, we've already achieved four notable milestones -- results from the Phase IIB female study of TP10, we believe provides a clear clinical development pathway for males-only indication for TP10 in cardiac bypass surgery. Glaxo has received market approval of Rotarix from the European regulatory authorities triggering a $4 million milestone payment to AVANT. Initiation of a Phase I-II trial of Ty800 by the NIAID has occurred. We received the $40 million milestone payment from Paul Royalty Fund that, when combined with cash on hand, puts us in a strong financial position to build our bacterial franchise. I remind you again that this press release and 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 any such forward-looking statements. We look forward to updating you on our program next quarter. Goodbye.

Thank you for your participation in today's conference. This concludes the presentation. You may now all disconnect. Have a great day.