Celldex Therapeutics Inc (CLDX) 2006 Q2 法說會逐字稿

Good day ladies and gentlemen and welcome to the Q2, 2006, AVANT earning conference call.

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

[OPERATOR INSTRUCTIONS].

I would now like to turn the presentation over to your host for today's conference, President and CEO, Ms. Una Ryan.

Please proceed, ma'am.

Thank you.

Good morning, ladies and gentlemen.

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

With me on the call is Chip 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 the call which are not historical facts may be forward-looking statements that can 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 the call chip will review AVANT's second quarter financial results and then I will give you a brief update on our lead chemical 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.

Today we announced our press release AVANT's financial results for the second quarter, 2006.

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 $5.7 million, or $0.08 per share for the second quarter, compared to a net loss of $4.7 million, or$0.06 per share for the second quarter of 2005.

For the six months ending June 30, 2006, the company reported a net loss of $8.6 million, or $0.12 per share, compared to a net loss of $9.6 million, or $0.13 per share for the six months ending June 30, 2005.

The increase in loss between quarterly periods, primarily reflects a decrease in revenues due to lower billing levels for DVC, for the Anthrax plague program and increased in operating expenses due to increased manufacturing costs incurred on the company's TP10 program, operating expenses of our fall river manufacturing facility and increased G&A expenses which were partly offset by an increase in investment income.

The decrease in loss between six-month 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 credible against future royalties.

Product development and licensing revenue of $2.6 million was recorded in the first quarter of 2006 and the remaining 1.4 million was related to royalty funds.

AVANT also recognized approximately 550,000 in revenue related to RRFs purchase interest and the net royalties that AVANT receives from Rotarix net worldwide sales and this was recorded in the second quarter of 2006.

The increase in revenues for the six months was offset partly by higher operating expenses primarily due to increased license fees, are R&D personal and related costs and office and facilities related costs associated with our Fall River operations.

At June 30, 2006, AVANT had cash and cash equivalents of $53.5 million.

Now let me update you on the clinical program.

We want to emphasize that AVANT has tremendous capabilities in the realm of vaccines through our robust and flexible platform for oral vaccines that's rapidly generating an emerging pipeline of potential products.

We've to date developed our vaccine reports to the point where we believe we can return value from this technology in the near term, the midterm and the long-term.

Earlier today AVANT was very pleased to announce that the international vaccine institute, the IVI, has received 21 million in funding from the Bill and Melinda Gates foundation for a Cholera vaccine initiative, called Chao V., which will include conducting further clinical trials of CholeraGarde, AVANT's Cholera vaccine.

IVI plans to conduct fades two and phase III clinical trials of clear guard in, CholeraGarde in Bangladesh and India beginning in 2007.

IV I will be purchasing clinical materials produced at AVANT's Fall River, Massachusetts, manufacturing facility for the trials.

So 2006 to date has been a year of significant milestones, capped by the receipt of a 40 million milestone payment from Paul Royalty funds and a commercial launch of Rotarix that when combined with cash on hand puts us in a strong financial position to build our industry leading bacterial vaccine franchise.

Let me outline other key events of 2006.

Glaxo received market approval of Rotarix from the European regulatory authorities, triggering a $4 million milestone payment to AVANT.

So that's on top of the $40 million from Paul Royalty funds.

Clear results of the recently completed TP10 study in women concern that TP10 is well position for a males only cardiac bypass surgery indication and AVANT expects to partner this program to complete development and to commercialize TP10. initiation of a phase I, two trial of Ty800, our Typhoid fever vaccine by the national institute, NIAID, this trial 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, or recall vaccine.

So AVANT has assembled a broad portfolio of technologies and intellectual property that give us a strong, competitive position in vaccines and Immunotherapeutics.

A brief summary of our lead clinical programs follows: TP10, our complementary inhibitor, as I just mentioned in February we reported results from a phase II B study of TP10 in women undergoing cardiac bypass surgery.

This study concerned what we had suspected from our previous phase II trials that enrolled both men and women, that TP10 doesn't provide a benefit to women in this setting.

As the positive results foremen in the previous trial was a statistically significant, showing a survival benefit and decreased complication rate we believe the results seen in this second try in women only provide a clear pathway forward for clinical development for a males only indication in surgery.

On the CETP vaccine we have identified a new adjutant for our cholesterol management vaccine.

We have received TMP peptide for the new vaccine formulation and we expect to complete release and stability studies in 2006.

On CholeraGarde as previously stated, we are really very pleased with the IVIs many Is continued support of our CholeraGarde vaccine.

We believe this funding confirms the importance of an effective Cholera vaccine for the developing world based on the very positive results experienced in the IV Is fades two clinical trial of CholeraGarde in infants and children conducted in Bangladesh.

Researchers there found single dose oral CholeraGarde vaccine to be well tolerated and highly immunogenic with 77% of children aged months to five years and over 70% of adults generating protective immunoresponses.

AVANT is now preparing for its own CholeraGarde Phase III study in the U.S. for the travellers vaccine market planned for the first half of 2007.

Ty 800, in February the NIAID initiated a phase I, two, clinical trial demonstrating the safety and immuno geneticy of the Ty 800 vaccine which is being developed to offer rapid, single dose projections against Salmonella Typhi, the cause of Typhoid fever, 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.

When that manufacturing task is done we will begin making clinical trial supplies of Ty 800 for a phase II study that we plan to start in early 2007.

By defense of Army expects to filed an IND, an investigational new drug application in the fourth quarter of 2006 to initiate phase I human safety studies in early 2007 of its oral plague vaccine candid.

AVANT's broad pipeline of programs and else merging 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.

So let me tell where you we are.

In 2006, which is the new near term, we have received milestones for launch in Europe, at that then phase II data, CholeraGarde, Ty800E T.

tech are being manufactured in the fall river facility.

In the midterm, we expect to receive Rotarix milestones for U.S. launch, to monetize the cardiovascular programs and to advance the vaccine pipeline.

And in the long-term, we expect Rotarix royalties, the cardiovascular program milestones and, of course, the commercial vaccine products that we are developing now.

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

[OPERATOR INSTRUCTIONS].

First question comes from the line of George Fulop, Needham and Company,

Good morning, and thanks for the update, and congratulations on the Gates Foundation news.

Thank you.

I wanted to just find out more about how the funding works with the IVI and regard to the specific Phase II and III trials.

Are the decisions and plans are already in place and specifically, are there the Phase II and Phase III separated geographically, they in both Bangladesh and India and if you can go into more detail on the timing and what sort of percent of the funds that were awarded to the IVI goes towards the support of the AVANT programs?

Yes.

We don't have a full breakdown or we are not at liberty to give all of the details but let me tell was I can.

First, you need to understand that the Gates Foundation does not directly fund for profit companies like AVANT.

However, our entire Phase II and Phase III programs for the developing world will be funded with Gates money.

So we will not have to pay for those at all.

Let me tell you some details.

The adult study, which is a Phase II using the new formulation that's material made in Fall River, will be administered at two doses, ten to the eighth and ten to the ninth.

The pediatric Phase II which will be for nine-month old children, will be given concurrently with the measles vaccine, and again CholeraGarde will be given at ten to the eighth and ten to the ninth doses.

Then there will also be a phase II study in HIV positive adults because this is a problem with the prevalence there.

And the Phase III study will be for safety and efficacy and all of the studies will be conducted in Bangladesh and India.

Great.

I also wanted to follow up with a question regarding -- I'm sorry, checking my notes here and I apologize for that.

Wanted to get your thoughts on the update of the Avian Flu program and what your thoughts are in general about that possibility, and overall with regard to some of the other -- let's start with that, Avian Flu.

The vaccines that are ready now are being stock-piled from of Avantis and GSK is getting ready.

What we still don't know if the pandemic, when it comes will be H5N1 Those vaccines are directed against H5N1 and we hope they will be useful.

There are new scientific studies coming out that suggest the possibilities of recombination in a way to get to, get human to human infection less likely than thought before, but they are just research studies.

So we are continuing to work with our approach because AVANT's platform yields oral vaccines that in many cases are single dose.

So we believe there's a huge advantage there.

Right now, we are in animal studies and animal studies don't tell you if you have the right thing for humans but we are progressing with it just as we have with our biodefense programs and we will continue working forward with it.

Very good.

And can you comment on the status of the Rotarix worldwide approval, currently 65 markets, but what the plans are going forward there and any update, I know my notes to date that Glaxo will get for-market approval in early 2007, any update on that.

No, we believe that most of the energy that's ongoing now is with the European launch which is ongoing.

I think the 65 countries was sort of a July number.

There may be more now, but I think the focus is on Europe, and I have not heard any update -- we still expect that they will file earlier, which we believe should give them a launch in '08 in the U.S.

Just to remind you that we would get a $10 million milestone at that point from our Paul Royalty fund.

Thank you for the update.

Thank you.

[OPERATOR INSTRUCTIONS].

Next question comes from the line of John Donohue.

Good morning, Dr. Ryan.

Good morning.

I've been a long-term shareholder, eight years, and two years ago at the shareholder meeting, I asked you what else could we do to get some support from Wall Street and I still would like an answer to that question today if there's anything that the Company is planning to do to gives some more support behind our stock.

We have a hell of a story and we were frustrated at that time as we are now where the stock price today.

I understand.

I remember your question well and enjoyed seeing you at the last stockholders meeting.

We have actually done a number of things and it's still frustrating.

You can see today that we have very, very strong news and a rather lukewarm response.

We have engaged a very good PR person to introduce us to wealthy investors in Europe.

We've already done a meeting in London.

We are continuing to meet individually with, we believe, important prospective investors.

We attend all of the conferences to which we are welcome.

You have to be invited to the bankers' conferences and we pay to go to ones such as Bio or other investor meetings on the Street.

I feel we are being as aggressive as we can be.

I am always willing to meet with prospective investors and shareholders.

If you have friends or colleagues, I will meet with them.

And we just put out the news as best we can and continue to make the very good progress we've been making all along.

That's the best we can do then.

Thank you so much.

Our next question comes from the line of [Bill Hendricks.] Please proceed.

Good morning.

Good morning.

I'm curious with respect to the vitriolize process if there are any external customers using this now?

Yes, I think that was a little bit of a confusing story before.

When we first licensed the technology, we had thought that we might not only use it for our own product but perhaps for other people's.

We now find that our Fall River facility is completely full and scheduled for our own products, and that it would be quite counterproductive to have to do development for other people's products simply to receive royalties down the line.

So we have had a number of queries, but we are in fact not doing contract manufacturing for other people with vitriolize at the moment.

We are completely occupied taking care of our own manufacturing needs.

Remember we have three or four products going into clinical trials early in '07.

One of them is the CholeraGarde phase III.

So we have some very high requirements for materials and we simply can't take on anything more at the moment.

Are you in a position to license this technology to other manufacturing facilities?

We are if they are in the areas of our license, yes.

So that would be for oral bacterial vaccines and one or two other sort of very small niche areas, yes, we are.

Because I'm looking at the news release that you folks put out when you actually bought the technology.

And it covers proteins, enzymes, viruses, bacteria, other sales, I was just wondering --

No, very good point.

In terms of its technical abilities it covers all of those things.

AVANT chose just to do the license for the area of oral vaccines and bacterial vaccines where we were working.

At some point in the future we might choose to extend that license if it was suitable for our own products.

At the moment, we would expect potential partners to go ahead and do that, pay for those licenses themselves.

With regards to patent protection are your patents listed on your website?

No, they aren't.

But we have very, very strong patent protection in all of our areas.

If would you like to contact me or contact the Company, we can point you to specific areas.

Everything that's issued is available from the U.S.

Government patent office.

I just, would it be convenient for stockholders like myself to have access to it on the website.

All right.

Well, we will take that suggestion.

It's quite a long list.

We have over 300 patents, but if it would be helpful, that's what the website is for, so we are grateful for the suggestion and I can see Chip writing it down now.

The other question is, what's the latest on your relationship with Pfizer?

It's as always, very good.

We have a program ongoing with them largely involving a St. Louis subsidiary for animal vaccines.

So for live stock and other animals.

That is ongoing.

I appreciate your time.

Thank you.

[OPERATOR INSTRUCTIONS].

Our next question comes from the line of [Robert Urtze], please proceed.

Good morning and congratulations for the funding for CholeraGarde funding for the Phase II and Phase III trials.

Thank you.

We are very pleased.

A question on the good cholesterol booster vaccine.

I guess we are going to to release in 2006.

When do you expect to get back into, I guess a clinical Phase I/II trial?

A little difficult to answer you directly.

As you know would like to see this program move forward with a partner. adjuvant approaches and while we will do the release and stability so we will be ready to move forward with Vaximmune, the adjuvant that we've licensed, we are in conversations with partners who might want to use something else.

And so I can't give you a more direct answer on that.

The TP10 partnering discussions, how far along are you and do you have an expectation as to when those will be finalized?

Well, since you and I last talked they are progressing well.

There have been several more meetings.

As I have said on this call before, one of the exciting things about TP10 is that we do have the post Phase II opportunity for cardiac surgery and other cardiovascular or other surgical indications, but a new opportunity has arisen as a result of the very great interest in AMD, age-related macular degeneration and the success of the anti genesis drugs that are out there.

So we are really proceeding on parallel pathways, but there's no reason why one partner could not partner for all.

But at the moment, we are engaged in discussions on both types of partnership.

And, no, I'm always careful not to give you a quarter when we could go but they are very active discussions ongoing.

Okay.

And as a follow up to one of the previous callers, in terms of the share price of AVANT, I'm also a long time shareholder, and I'm also perplexed as to why the evaluation is relatively low considering that you have a $1 billion product in Rotarix and its licensed to the biggest vaccine manufacturer in the world.

And you also have other good products including CholeraGarde and TP10 and some of the other vaccines that are coming up.

And also the general situation is very positive for vaccines with the Bill Gates Foundation and Warren Buffet donating billions into that area.

Have you thought of trying to increase the profile of AVANT in terms of giving more interviews, maybe trying different avenues to promote the company?

Yes, I think those are all creative ideas.

I do give a lot of interviews.

They are some of them local, but I think you being a scientist might want to look at the August issue of Nature.

I don't know if it's out yet but I do know they interviewed me and I will be profiled in it.

I would like to see the company profiled as much as myself and we have been in genetic engineering news on the manufacturing of vitriolization.

We really are in many cases the envy of other companies in terms of the amount of PR we get without trying very hard.

But I think it's a good idea.

We will -- I think the ones that are perhaps worth not doing are the sponsored ones where you have to pay to be interviewed, but we do try to go for everything that we believe will be well regarded by investors.

And any other suggestions I'm not a shrinking violet, I'm willing to do it.

I'm wondering if there should be an approach to Capital Markets in South America, for example, in Brazil and Argentina, Rotarix is sold in those markets.

And also markets in Asia like India, Singapore, Hong Kong, where Rotarix is distributed, and obviously there would be awareness of the vaccine but they may not know that AVANT is the owner of that vaccine.

It's a good idea.

We have not had very much success with foreign markets other than Europe.

Go have some investment from China and southeast Asia, but we would certainly listen -- I think those are good suggestions which we will think about.

Right now we put the efforts into increased presence largely in Europe.

Okay.

Thank you very much and congratulations.

Thank you.

[OPERATOR INSTRUCTIONS].

Ladies and gentlemen, this concludes the question and answer period of today's conference.

I will turn it back to management for any closing remarks.

Thank you.

So just to close, in 2006 we really achieved five notable milestones.

The IVI has received $21 million in funding from the Bill and Melinda Gates Foundation for a Cholera vaccine initiative that includes conducting further clinical trials of AVANT's CholeraGarde, results from the phase II B female study in TP10, we believe will provide clear clinical development pathway for a males only indication in TP10 in cardiac bypass surgery, Glaxo received market approval for Rotarix triggering a $4 million milestone payment to AVANT with 50% retained by AVANT.

We received the $40 million milestone payment from Paul Royalty Fund that when combined with cash on hand puts us in the strong financial position to build our industry leading bacterial vaccine franchise, initiation of a Phase I, II, trial of Ty 800 by the National Institute of Allergy and Infectious Disease.

I just want to remind you again that this press release and conference call contain forward-looking statements which are subject to a variety of risks and 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.

Goodbye.

Thank you for your participation.

You may now disconnect.

Have a wonderful day.