Celldex Therapeutics Inc (CLDX) 2009 Q1 法說會逐字稿

Good morning and welcome to the Celldex Therapeutics Incorporated first quarter 2009 earnings conference call.

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

Before we begin our discussion, I would like to 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.

Certain factors that may cause Celldex's actual results to differ materially from those in the forward-looking statements include those set forth under the headings Business Risk Factors, Management Discussion and Analysis of Financial Conditions and Results of Operations in each of Celldex's annual reports on form 10K as well as those described in Celldex's press release and other 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 of this call and Celldex does not promise to update any forward-looking statements to reflect changes and underlying assumptions or factors, new information, future events or other changes.

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

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

Anthony Marucci, President and CEO of Celldex Therapeutics.

Please proceed, sir.

Good morning.

Thank you for joining us.

(Technical difficulty) President and CEO of Celldex.

Joining me on the call today are Chip Catlin, our Senior Vice President and Chief Financial Officer, Tom Davis, our Senior Vice President and Chief Medical Officer and Tibor Keler, our Senior Vice President and Chief Scientific Officer.

During the first quarter Celldex accomplished several important objectives in direct support of our strategy to build a leading immunotherapy company.

In January we divested a number of non-core programs granting exclusive license to Vaccine Technologies Inc.

to develop and commercialize our CholeraGarde and ETEC vaccine programs, and executing the sale of poultry vaccine assets to Lohmann Animal Health International.

The monetization of these assets adds to an already strong cash position which we believe will allow us to continue to strategically focus and grow our business despite the current macroeconomic environment.'

More importantly, we are now in a position to focus our resources and attentions solely on our Precision Targeted Immunotherapy Platform and the novel clinical and preclinical programs emerging from this technology.

To that end, in the first quarter of '09 Celldex continued to add value to the Precision Targeted Immunotherapy Platform by in-licensing two additional molecules for development in cancer, inflammatory and infectious diseases.

We completed a strategic licensing arrangement with Amgen, acquiring exclusive rights to FMS-like tyrosine kinase 3 ligand, or Flt3 and CD40 ligand.

Flt3 and CD40 ligand are immune-modulating molecules that increase the numbers and activity of immune cells that control immune responses.

We believe these ligands may hold significant opportunity for synergistic development in combination with our other proprietary molecules in the Company's portfolio.

The Amgen agreement marks the third strategic transaction that we've closed in the past year to secure technologies and product candidates whose therapeutic potential we believe can be fully realized through the integration with our Precision Targeted Immunotherapy Platform and we look forward to exploring these molecules and advancing other candidates from the platform into clinical trials in the coming months and years.

With this I will now ask Chip to review Celldex's financial results for the first quarter and look forward to answering your questions at the close of the call.

Chip?

Thank you, Anthony.

We announced in our press release today financial results for Celldex's first quarter of 2009.

The press release is available on Celldex's website on the Investor Relations page.

It is important to note that the historical 2008 financial results reflect the activities of pre-merger Celldex prior to March 8, 2008, when the Company was privately held.

I will now review summary financial results for the three months ending March 31, 2009.

In the first quarter of 2009 we reported a net loss of $7.7 million or $0.49 per share compared with a net loss of $22.1 million or $2.19 per share for the comparable three months ended March 31 of 2008.

The decrease in net loss between the three month periods was primarily due to increased revenues, a gain on sale of assets in 2009 as well as a non-cash charge in 2008 of $14.8 million related to purchased in-process research and development accorded in connection with the merger.

These items were offset by increased R&D expenses in 2009 as a result of the combined operations of AVANT and Celldex.

At March 31, 2009, Celldex reported cash and cash equivalents of $39.4 million.

Revenues for 2009 increased by $3.6 million compared with revenues for 2008.

The increase in product development and licensing revenue in 2009 primarily reflects recognition of $1.3 million in Pfizer deferred revenue related to CDX-110 in 2009.

The increase in contracts and grant revenue in 2009 compared to 2008 primarily reflects increased levels of vaccine development work billable to Rockefeller University between the two three-month periods.

In 2009 Celldex also recognized $2.1 million in product royalty revenue related to offsetting royalty expense payable to Cincinnati Children's Hospital.

There was no such product royalty revenue in 2008.

We believe that our current cash position and expected sources of revenue will meet estimated working capital requirements and fund our operations through 2010.

I'll now turn the call back to Anthony.

Thanks Chip.

We have a number of events and milestones anticipated over the next 12 months to build on our progress in 2008.

We plan on presenting updated results from the ACT II trial of CDX-110 and preliminary phase 1 data for 1307 at ASCO in June.

In the clinic, we anticipate initiating two clinical trials in our cancer programs, a phase 2 study for CDX-1307 in the fourth quarter of '09 and the initiation of a phase 1/2 study for CDX-1401 in the third quarter.

CDX-2401, an infectious disease program which is funded by the Gates Foundation and Rockefeller University, is also moving forward with a planned phase 1 trial in healthy volunteers which will be developed for the prevention of HIV and is expected to initiate later this year.

In addition, we will also give further guidance on the clinical path for a phase 1/2 study for CDX-1135 in renal disease during the fourth quarter.

Given our news flow is largely event driven and timely in nature, Celldex is going to begin to transition to event-driven conference calls rather than predetermined calls at the close of each fiscal quarter.

The second quarter results, which will be in August, will be the last such regularly scheduled call.

We are committed to transparent shareholder communication and therefore we will hold calls to discuss selected material events such as certain clinical trial results and other times when we have significant news.

We also plant to provide general corporate update calls from time to time to provide additional forums for interaction with our shareholders.

We believe that this will enable us to communicate directly and in a more meaningful way about the events that are important to our strategic progress and are of interest to our shareholders.

Financial results will continue to be issued via press release and form 10Q.

Of course we always welcome your input and encourage you to contact us at any time with questions and comments.

In closing, we are pleased with our accomplishments thus far in 2009 and look forward to continuing to update you as we realize the therapeutic potential of our Precision Targeted Immunotherapy Platform and continue our mission to deliver novel and promising immunotherapies.

Thank concludes our prepared remarks at this time and I'd like to open the call to a question and answer session.

(OPERATOR INSTRUCTIONS) And our first question comes from the line of Mark Monane from Needham.

Please proceed.

Good morning and thank you for reviewing the quarter with us.

I have a couple of questions.

Could you give us a little bit more information on the Pfizer collaboration and if you think the roadmap has changed with the Dendreon results in active immunotherapy.

Well Mark, the discussions with Pfizer are on the planned next study are continuing to move forward and as we've said in the past, once we've finalized the decision and the path forward with the clinical results, we will certainly issue news to the shareholders and to the public.

And how about your thoughts on active immunotherapy or the team's thoughts on active immunotherapy given the positive results from Dendreon?

Well Mark, of course we're very relieved to see the data they recently announced, suggesting that they have mediated a benefit in overall survival in patients with advanced prostate cancer.

This of course confirms the whole premise that active immunotherapy can influence the course of the malignant disease.

Everything seems lined up for their success at this point but it depends very much on the FDA and we'll have to see what happens, but I think that, again, affirms our goal of using active immunotherapy to influence an assortment of malignancies.

As you know with the 110 program we're working in glioblastoma in a setting somewhat similar to that that Dendreon has been taking on in prostate cancer, so we hope that our data, as we complete the ACT III study will reflect a similar path.

That was helpful.

And concerning the Precision Targeted Immunotherapy Platform, there has been some discussion in the science literature about going after a single target, a multiple target at one time.

Can you describe how -- what strategy you think would be best for bringing forward the Flt3 and the CD40 ligand?

Well there are several different facets.

As far as targets on the tumor goes, yes, there is an increasing body of data that the more targets, the more antigens that you can direct the immune system against, the better your chance of success.

But of course another large area in the immunologic literature focuses on the tumor's ability to limit or control an immune response and therefore escape from the immune system in the normal environment.

So by using Flt3 ligand and CD40 ligand and other compounds that we currently have in he clinic that are designed to increase or (inaudible) immune response, we are hoping to both be able to target one or more antigens on the tumor with a more immune potent immune system driven by Flt3 ligand, driven by our TLR agonists in the hope of seeing a more potent effect, a hope of actually being able to cause tumors to regress in addition to suppress them in the adjuvant setting similar to what Dendreon has been doing.

Tibor, would you like to add anything to that?

Just emphasize further the idea about the combinations.

I think a lot of data have come out recently, Mark, with regard to how these agents can be exploited perhaps in a much more meaningful way than initially -- their initial development as monotherapy.

And as we understand better their role and their ability to expand the appropriate types of immune cells and when to provide the activating agent, I think we can have a much better chance of impacting the disease.

Yes, this is Glen.

I have a couple of financial questions.

I notice there was an increase in R&D in the first quarter '09.

Is that trend going to continue and is there an update on your cash burn for 2009?

Glenn, good morning.

It's Chip.

We will continue with our guidance that we had given you earlier in the year.

Primarily we expect our cash and revenue sources to take us through 2010.

We did have some licensing fees for some of the technology we've spoken about, in-licensing that was charged to R&D in the quarter, so I think that R&D expense will sort of continue or be slightly less in the coming quarters.

Thank you for that information.

Thanks very much.

And our next question comes from the line of Joe Pantginis from Merriman.

Please proceed.

Hi guys, good morning.

Thanks for taking the question.

Quick question looking forward on your Flt3 ligand asset, obviously there's a lot of literature out there about the potential role of the molecule in oncology.

Can you offer a little summary about what the potential of Flt3 ligand is for autoimmune disorders or for diabetes?

Sure.

This is Tibor, Joe.

There has been a lot of new data that's focused on the ability of Flt3 ligand to function as a growth factor, not only for dendritic cells as has been originally described, but also to promote the growth and up-regulation of T regulatory cells, which are very important in controlling autoimmunity.

And under certain conditions it's been demonstrated that providing Flt3 ligand treatment is actually very effective in models of diabetes and other autoimmune diseases.

So certainly we are very interested in working with some of our collaborators on exploiting all of the opportunities for Flt3 ligand including how this may be used to control various autoimmune diseases.

Great.

Thanks a lot for the information.

(OPERATOR INSTRUCTIONS) And our next question comes from the line of Jonathan Aschoff from Brean Murray.

Please proceed.

Hi, good morning, guys.

Good morning, Jonathan.

I was wondering is the G&A down trend, is that over?

It was trending 3Q, 4Q '08 and then popped up in the first quarter of '09, so should that be sort of a trend going forward or kind of flat or down from there?

I think it's going to be flat from there or slightly down.

We had some stock-based compensation charges in the first quarter, Jonathan, that most likely will not repeat in the subsequent quarters.

Okay, and the 110's going to be a poster at ASCO or an oral?

It's in a poster at ASCO.

Okay.

And the last thing was the entire difference between the burn and the net loss would be stock comp?

There's stock comp and there's depreciation and amortization and some of those things.

The usual non-cash items.

All right.

Thank you very much.

Thank you.

And I show no further questions at this time.

Okay, thank you operator and thank you everyone for joining us today.

We look forward to seeing many of you at the upcoming events and reporting to you throughout the year as we continue to move our programs forward.

Have a good day, everyone.

Thank you for your participation in today's conference.

This concludes today's presentation.

You may now disconnect and have a great day.