Celldex Therapeutics Inc (CLDX) 2008 Q2 法說會逐字稿

Good morning and welcome to the second-quarter 2008 AVANT Immunotherapeutics Incorporated earnings conference call.

My name is Robin and I will be your operator on today's call.

Before we begin our discussion, I would like to refer participants on the webcast to slide 2 and caution listeners that today's speaker will be making forward-looking statements.

Such statements reflect our current views with respect to future events and are based on assumptions and subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such forward-looking statements.

These forward-looking statements are subject to risks and uncertainties that may cause actual future experiences and results to differ materially from those discussed in the forward-looking statements.

Certain other factors that might cause AVANT's actual results to differ materially from those in the forward-looking statements, including those set forth under the headings Business Risk Factors and (inaudible) Analysis of Financial Conditions, or results of operations in each of AVANT's annual report on Form 10-K, its current report on Form 8-K, as well as those described in the AVANT press release and filings with the Securities and Exchange Commission.

You should carefully review all of these factors and you should be aware that there may be other factors that could cause these differences.

These forward-looking statements are based on information, plans and estimates as this call and AVANT does not promise to update any forward-looking statements too.

Please be advised that the question-and-answer period will be held at the close of this call.

I would now like to turn the call over to Mr.

Marucci, Interim President and CEO of AVANT Immunotherapeutics.

You may proceed.

Thank you.

Good morning, ladies and gentlemen, and thank you for joining us this morning.

I am Anthony Marucci, Interim President and CEO of AVANT Immunotherapeutics.

Joining me on the call today are Chip Catlin, AVANT's Senior Vice President and Chief Financial Officer, and Dr.

Tom Davis, AVANT's Senior Vice President and Chief Medical Officer.

The format for today's call is for Chip to review AVANT's second-quarter financial results and then I will provide a summary of the key recent events for the Company, provide a brief update on our programs and review our milestones for the remainder of the year.

Following the update, we will open the call to questions that Chip, Tom and I will be happy to answer.

Chip?

Thank you, Anthony.

We announced in our press release today financial results for AVANT's second quarter of 2008.

The press release is available on AVANT's website on the Investor Information page.

I will now review summary financial results for the three months ending June 30, 2008.

In the second quarter, we reported a net loss of $10.3 million, or $0.67 per share, compared with a net loss of $2.8 million or $0.33 per share for the comparable three months ended June 30 of 2007.

At June 30, 2008, our cash balance was $52.4 million.

This figure includes $40 million in upfront payments and an equity investment totaling $10 million, which were received pursuant to our license and development agreement with Pfizer.

It does not, however, include a $10 million milestone payment due from Paul Royalty Fund upon the US launch of Rotarix, which we expect in the second half of 2008.

Anthony will touch on this point later in the call.

With respect to these financial results, it is important to keep in mind two facts.

The first is that AVANT instituted a 1-for-12 reverse stock split on March 7 of 2008, and therefore the Company currently has approximately 15.7 million shares outstanding.

The second factor is that Celldex was deemed the accounting acquirer in the merger of the two companies, and therefore, historical financial information for 2007 reflects the results of Celldex only.

With that, I will hand the call back to Anthony.

Thanks, Chip.

The second quarter was extremely productive for the Company in the clinic and on the business front.

As we previously disclosed, one of the highlights of the quarter was AVANT's exclusive world-wide licensing agreement with Pfizer for our therapeutic cancer vaccine candidate, CDX-110, which is in the Phase 2/3 development for the treatment of glioblastoma multiforme, or GBM.

This transaction successfully closed in May.

The details of the deal are summarized on slide 3.

This agreement also gives Pfizer exclusive rights to the development of EGFRvIII vaccines in other potential indications.

As Chip mentioned, Pfizer made and upfront payment to AVANT of $40 million and made a $10 million equity investment in the Company.

A significant component of the transaction is that AVANT is eligible to receive milestone payments exceeding $390 million for the successful development and commercialization of CDX-110 and additional EGFR product vaccines.

We will also receive double-digit royalties on any CDX-110 product sales.

Going forward, Pfizer will fund all costs associated with the development and commercialization of CDX-110.

Importantly though, AVANT will continue to play an important role in the development of CDX-110.

Following on the heels of the Pfizer agreement, as shown on slides 4 and 5, we reinforced the clinical profile of CDX-110 with strong clinical data that was presented at ASCO from the Phase 2 ACTIVATE trial and from the continuation study ACT II in patients with newly-diagnosed EGFRvIII-positive GBM.

In the ACTIVATE study, median overall survival time was 26 months compared to 15.2 months in a historical matched cohort, and a median time to progression of 14.2 months, which just about doubled the historical matched controls progression of 7.13 months.

Further preliminary results from the ACT II study currently estimated median overall survival to be 33.1 months.

Although the median has not yet been reached, this estimate is encouraging, giving that the survival of the matched historical control group was only 14.3 months, and the subgroup treated with temozolomide was just slightly better at 15.2 months.

The estimated overall time to progression in ACT II was 16.6 months, which compares very favorably with 6.4 months and 6.6 months for the historical group with and without temozolomide, respectively.

Based on the separation we have seen thus far between CDX-110 patients and the controls, as the data matures, we are understandably very optimistic about CDX-110.

In June, following ASCO, we announced a multiyear clinical research collaboration with 3M, which gives us access to their proprietary immune response modifier, Resiquimod and additional Toll-Like Receptors 7/8 agonists.

Resiquimod is a TLR 7 which is known as an immune-stimulating properties.

We use these vaccine adjuvants in combination with our proprietary APC-Targeting Technology to create enhanced immunotherapeutics at AVANT.

This license agreement has increased the scope and depth of our vaccine discovery and development platform, and illustrates AVANT's fundamental commitment to advancing our scientific leadership and precision-targeted immunotherapy development.

Additionally in the quarter, we reported good progress in our infectious disease portfolio.

We announced that the NIAID, an Institute of the National Institutes of Health, had initiated a Phase 1 safety study of AVANT's investigational single-dose oral vaccine designed to offer combined protection against both E.

coli, or ETEC, and cholera.

ETEC infection is a major cause of travelers' diarrhea.

This is an important endorsement of our preclinical programs by the NIH, and we are pleased to have their support.

We also reported results that the double-blind placebo-controlled multicenter Phase 2 clinical trial of Ty800, our typhoid fever vaccine candidate, met all primary endpoints.

Importantly, immunogenic response was dose-dependent.

We also saw positive immune responses for seroconversion rates in both the low- and high-dose groups.

A positive rate was prospectively defined as a 4-fold increase in anti-LPS titers over the pre-dose level, and this was attained by a 65%, or 36 of 55 patients, in the low-dose group, and 80%, or 44 out of 55 patients, in the high-dose group.

This response was significantly higher than placebo, and we are in enthusiastic about the potential of Ty800 as a well-tolerated and effective vaccine candidate.

Related to Chip's earlier comments on Rotarix expectations, in April, Glaxo received approval from the US FDA for Glaxo's Rotarix product for the prevention of rotavirus gastroenteritis in infants.

Rotarix is already marketed in the EU and offers protection against the most commonly occurring types of rotavirus.

With only two doses, Rotarix allows infants to complete the vaccination series by the time they are four months old.

The FDA approval triggered a $1.5 million milestone payment from Glaxo, $750,000 of which AVANT retained.

Furthermore, as Chip mentioned, we anticipate the launch of Rotarix in the US in the second half of 2008, a milestone which will trigger a $10 million milestone payment from the Paul Royalty Fund.

In summary, we had an exciting and productive quarter.

Not only did we secure a significant partnership agreement with Pfizer for CDX-110, but we also rounded out an already rich data package with positive Phase 2 survival data that was presented at ASCO.

In addition, we added to the immunotherapy platform that includes our proprietary APC-targeting technology vaccine platform by entering into a collaboration with 3M to access key TLR agonists.

Our milestones for 2008, many of which have already been met, are shown on slide 6.

Looking forward to the second half of the year, we will announce clinical results on our programs.

We will also plan to execute license agreements for our therapeutic monoclonal antibody program, and, as Chip mentioned, anticipate receiving a $10 million milestone payment with the US launch of Rotarix.

AVANT is dedicated to expanding the potential for immunotherapy in cancer and infectious disease, and look forward to updating you on our comprehensive strategy as we continue to progress both our partnership with Pfizer and our internal programs.

That concludes our prepared remarks.

At this time, I'd like to open the call to questions-and-answer section.

(OPERATOR INSTRUCTIONS) Mark Monane.

Congratulations on your progress.

Thank you, Mark.

Speaking of progress, could you give us an update on the current trial in terms of recruitment and enrollment in GBM?

Tom?

As you know, we've partnered that now with Pfizer.

We are not characteristically releasing information on specific accrual; that tends to focus people in on numbers rather than the overall progress of the study.

So we've not publicly been talking about where the trial stands, and we're certainly not changing that policy at this point.

I can tell you, however, that things are moving along nicely and we are very happy working with Pfizer at this point, who clearly have prioritized this program and are focusing a lot of their resources on it.

So we are very pleased with how things are going.

And in and in terms of bringing 110 in for the other indication that may be targeted using the -- may I have the EGFR target, VIII target?

As you know, there are a lot of other possible indications were the vaccine could be used.

Again, early on in the relationship with Pfizer; we're still going through the processes of figuring out what data are necessary to pick the best first-line indication after GBM, and Pfizer is spending a lot of time focusing on that as well.

We are still waiting for final decisions and haven't made those yet.

In terms of Pfizer, I know that Pfizer has their own immunostimulant program with the COLY acquisition, but we were pleased to see that AVANT formed this agreement with 3M regarding Toll-Like Receptors.

How do you see these programs being integrated into the current programs and into future programs involving the active immunotherapy portfolio?

That is a great question.

We are very pleased to be able to access both the 3M TLR 7/8 agonist and, through a partnership with a company, Oncovir, to access Hiltonol, which is a TLR-3 agonist.

As you mentioned, Pfizer and other large companies are trying to bring in several different immune modulators that they could use in a comprehensive regimen.

We're very pleased that we're able to do the same thing, even though we are a fairly small company.

Those agonists, as you probably know, really are designed to hit the emergency buttons on the immune system to really boost an immune response.

Right now, we are focusing in on our APC platform, which is a broad mechanism whereby we can initiate a broadening response within patients.

By adding the TLR agonist to those vaccines, we're hoping to be able to come up with an even more robust effect to break immune tolerance to allow the vaccines to control cancers.

I'm sure you are aware that we are in two Phase 1 studies using the first of our APC vaccines, CDX-1307, and we are planning to have final safety data from 1307, alone and in combination with GMC, assessed by the end of the year.

But we are now beginning to accrue to a combination of 1307 with a Hiltonol, the TLR 3 agonists, and we hope that in the very near future we will be able to add Resiquimod, the TLR 7/8 agonist to that combination, thereby creating a regimen with three important elements that, again, we hope will be able to make even stronger immune responses that could drive cancer vaccines into the realm of inducing tumor responses of tumor shrinkage.

We are hoping to have data from the combinations by the end of the first half of next year.

By the end of the first half.

And then since it is summer, a lot of people will be traveling.

And the Travelers' Vaccine I know is designed to think about those commercial travelers that are enjoying educational or recreational pursuits.

I noticed the Intercell and Iomai merger; going forward, I think Travelers' Vaccine was important there.

Maybe you could talk about how you view the current vaccine development and what steps will be needed in order to go into Phase 3.

Will you need a partner, will you need to do large field studies, how should we think about this program?

Well, I think we have a much broader ambition around those bacterial vaccine programs.

You are probably aware that we are targeting several different pathogenic agents, including typhoid, E.

coli or ETEC, the toxigenic form.

And our ultimate ambition is to combine four of them together into a multi-potent vaccine that could prevent most of the current pathogens that plague both the developing world and travelers from this country.

What we think is necessary for that program is to have solid Phase 2 data with each individual vaccine, and we certainly reported that kind of data with the Ty800 trial that we presented earlier this year.

We need to move forward with ETEC, potentially a paratyphoid vaccine that will follow on.

And once we have Phase 2 data, we'd combine them all into a Phase 3.

Of course, vaccines in a healthy population do require large Phase 3 studies, and it's quite likely that those studies will need to be performed in a setting where the diseases are common -- so again, the developing world.

It's a small company; it's going to be a challenge for us to do those large studies, and we are very interested in partnering those programs with companies that have a basis in the developing world that are going to be able to perform those studies most efficiently.

But in the meantime, we are certainly moving forward to generate the Phase 2 data that will be necessary.

We certainly think that these vaccines the have potential to have a huge impact on global health, even beyond the obvious market in travelers' diarrhea, which certainly plagues people in the developed world.

Very helpful.

And then lastly, to fund this program, Chip, could you be kind enough to go over what you expect to be the cash expenditures this year, operations used -- and cash used in operations going forward?

Sure.

We finished the quarter, as you know, with $52.4 million in cash, and we expect losses the balance of this year between $16 million and $18 million.

We do expect -- as Anthony and I both mentioned in the call earlier, we do expect GSK to launch Rotarix in the second half of this year, and that will generate a $10 million milestone payment from Paul Royalty Fund to us.

So we expect cash at the end of the year to be in the range of $44 million to $46 million.

So the cash burn will drop in the second half of the year, given that $10 million milestone payment.

Thanks for the comprehensive review and congratulations on a very productive second quarter.

Thank you, Mark.

Jonathan Aschoff.

Good morning, Anthony.

I was wondering for the 1307, would there even be the most preliminary of efficacy information and first release in the latter part of '08 or it would still be safety?

Certainly by the end of the year, we will have all of the dose escalation data around 1307, alone and in combination with GM-CSF.

So we are planning to report at the Society of Biology Therapy all the data around safety and immune responses we've seen to date, and also clinical outcome for patients.

So we should be covering the spectrum of what we've seen so far with the vaccine and what we think we can expect in the future.

Again, a patient with the TLR agonists, I think, is going to be most exciting.

And as we build on that within the current trials, we should fairly efficiently generate data on what the whole combination regimen can do, again, first half next year.

For the 110, the ACT II trial, do you think -- the venue you picked out to update information on this or would it be a stand-alone press release?

Jonathan, I'm sorry, we didn't hear the question.

For ACT II, the next (technical difficulty) data, do you think it will be a scientific conference or just a stand-alone press release -- when you update us on the ACT II data?

Well, the data from Duke presented at ASCO this year for ACT II were still relatively preliminary.

We do think in a year the data will be much more mature; we should have a final progression-free survival number and be very close to a final overall survival number.

So we are generally targeting ASCO of next year for a more final data presentation and would be press releasing it around that academic meeting.

Okay.

So I should no longer expect (technical difficulty), let's say, six months after ASCO kind of update, right?

No, I don't think so.

I mean, of course, the Duke folks are very excited about the program and will probably be talking at other meetings.

But we will be focusing in on the ASCO data, is where we think it will be a much more mature data set.

Okay, thank you very much.

At this time, there are no further questions.

Thank you, everyone, for joining us today.

We look forward to seeing many of you at investor conferences throughout the fall and updating you on our program.

Ladies and gentlemen, this concludes your conference.

You may now disconnect.

Good day.