Celldex Therapeutics Inc (CLDX) 2009 Q2 法說會逐字稿

Good morning and welcome to the Celldex Therapeutics, Incorporated second quarter and six months 2009 earnings conference call.

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

Before we begin our discussion, I would like to refer to slide two 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.

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 report on Form 10K, Forms 10-Q 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 the 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 call over to Mr.

Anthony Marucci, President and CEO of Celldex Therapeutics.

You may proceed.

Good morning and thank you for joining us.

I'm Anthony Marucci, President and CEO of Celldex.

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

Tom Davis, our Senior Vice President and Chief Medical Officer, and Dr.

Tibor Keler, our Senior Vice President and Chief Scientific Officer.

The second quarter of 2009 marked the achievement of a number of significant business and clinical accomplishments for Celldex including the execution of two strategic transactions and the presentation of data for multiple clinical programs at the American Society of Clinical Oncology Annual Meeting in this past June.

I'd like to take a few moments to walk you through these events and starting on slide three before I ask Chip to review the financials with you.

In the summer of 2008, Celldex launched a major strategic initiative to identify and acquire a series of handpicked assets to augment our Precision Targeted Immunotherapy Platform.

As you know, the PTI Platform embodies what we believe to be the future of treatment for life threatening and debilitating diseases through a combination immunotherapy approach.

PTI allows us to mix and match the optimal combinations of antibodies, antigens and immunomodulators to treat the targeted disease.

Over the last 12 months we've fulfilled our strategic initiative with the execution of four transactions, each of which contributes additional assets to the PTI Platform to create an even greater set of opportunities to deliver more potent and promising regimens to patients.

Let me quickly recap them for you -- In June of 2008, we announced a clinical research collaboration with 3M to access their proprietary immune response modifier, Resiquimod, and additional toll-like receptor 7/8 agonists for use as vaccine adjuvants for clinical studies within our proprietary APC Targeting Technology.

This was followed a few months later by a licensing agreement with the University of Southampton in the United Kingdom to develop human antibodies towards CD27, a potentially important target for immunotherapy of various cancers.

In April of 2009 we expanded our PTI Platform by acquiring from Amgen exclusive rights to the Flt3 and CD40 ligands, molecules that increase the numbers and activity of immune cells that control immune responses.

This brings us to our fourth and most significant transaction of the last 12 months, the proposed acquisition of CuraGen, which we announced in May.

When completed, this acquisition will bring a Phase II clinical asset called CR011 and an additional portfolio of ten fully-owned oncology-focused human antibodies to our platform, plus approximately $54 million in net cash, adding to our already healthy cash position.

These antibodies were thoroughly studied, vetted and ultimately selected from a target antibody deal CuraGen executed with Abgenix, since bought by Amgen, to develop antibody therapeutics against the most promising drug targets within the human genome.

The most advanced candidate from the platform, CR011, is currently in two Phase II studies, one in breast and the other in melanoma.

The second candidate is CR014, which is being evaluated as a potential treatment in ovarian cancer and renal cell carcinoma and is currently in preclinical development.

The additional nine candidates are all novel antibody programs that are under review to enter preclinical studies in the coming years.

As we have stated previously, we anticipated closing this transaction in the third quarter of 2009.

We look forward to the integration of CuraGen because we believe that the combination of CuraGen and Celldex's synergistic technologies under our PTI Platform will fuel the design of new therapeutics and targeted treatment regimens that maximize the beneficial aspects of the immune system and result in increasing value creating milestones and partnership opportunities for the Company.

To this end, let me walk you through our most recent clinical development accomplishments.

We had the opportunity to present data on CDX-110 and CDX-1307, both of which were very well received at ASCO this past June.

First on slide four, in collaboration with our partner Pfizer, we presented updated data on the Phase II ACTIVATE and ACT II clinical trials, which continue to suggest that vaccination with CDX-110 may be able to improve time to tumor progression and overall survival used in patients with newly diagnosed glioblastoma multiforme, the most deadly form of brain cancer.

Both Phase II trials are single arm studies in patients with newly diagnosed and optimally resected EGFRvIII-positive GBM.

In each trial, patients received CDX-110 as a monotherapy following completion of a chemoradiation with concurrent temozolomide.

Importantly, in both studies, CDX-110 was generally well tolerated with local injection site reactions being the most commonly reported toxicity.

The final ACTIVATE data includes 18 patients and shows immediate overall survival of 26 months and a median time to progression of 14.2 months.

Additionally, three patients remain without relapse more than four years from surgery and continue to receive the vaccine within the clinical trial.

The ACT II trial, shown on slide five, includes 22 patients.

Median time to progression is 15.2 months and three patients remain without relapse after more than two years and continue to receive the vaccine.

We have yet to reach the median overall survival in the study and we look forward to announcing the final data on this ACT II study in the future.

In addition and in line with preclinical data that suggests the combination with temozolomide could augment immune responses, patients in the ACT II study show robust serological evidence of an immune response against EGFRvIII.

Efficacy data from both ACTIVATE and ACT II compare favorably to the data for a historically controlled group of 17 patients matched for EGFRvIII expression, extent of resection and performance status where the median time to progression is 6.3 months and the median overall survival was 15 months.

Secondly, we also delivered an oral presentation of positive data from our two Phase I studies of CDX-1307 outlined on slide six.

CDX-1307 is a dendritic cell targeted immunotherapy designed to stimulate an immune response against hCG Beta, the target antigen frequently expressed in epithelial tumors.

These dose- escalation studies of CDX-1307 were designed to investigate the safety and immunogenicity of the candidate using different routes of administration and in combination with single and multiple immune modulators from Celldex's proprietary platform, including the recently in-licensed assets.

I am pleased to report that CDX-1307 was well tolerated with no dose-limiting toxicities to date.

In the combination cohorts, seven patients with breast, colorectal or pancreatic cancers have experienced disease stabilization from 2.2 months to well over 6.5 months in this heavily treated patient population.

Based on these results we intend to initiate a randomized Phase II clinical trial of CDX-1307 around year end 2009.

Before I turn the call over to Chip, I'd also like to point out that we have successfully manufactured two products, CDX-1401 and 1307 and are initiating our third product from our Fall River, Massachusetts facility.

Successfully performing these activities in-house along with the toxicology and other preclinical activities is beneficial to Celldex as it allows us to exercise control over quality, timing and costs over these programs.

It has been a very busy quarter and a successful first half of the year.

With this, I'm going to ask Chip to review Celldex's financial results for the second quarter before closing the call with a few comments on what to watch for in the second half of the year.

Chip?

Thank you Anthony.

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

The press release is available at Celldex's website on the News and Events 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 ended June 30, 2009.

In the second quarter of 2009 we reported a net loss of $8.7 million or $0.55 per share compared with a net loss of $10.3 million or $0.67 per share for the comparable three months ended June 30, 2008.

The decrease in net loss between the three month periods was primarily due to increased revenues and a decrease in G&A expenses, offset in part by increased R&D expenses in 2009 and a decrease in investment and other income.

Results for this quarter included approximately $1 million, or $0.06 per share, of transaction expenses recorded in connection with the CuraGen acquisition.

At June 30, 2009, Celldex reported cash and cash equivalents of $31.6 million.

Revenues for the second quarter of 2009 increased by $723,000 compared with revenues for the same period in 2008.

The increase in product development and licensing revenue between periods primarily reflects an increase of $810,000 in Pfizer related revenue in 2009.

The decrease in contracts and grants revenue in 2009 compared to 2008 primarily reflects the deferral of certain revenues billable to Rockefeller University.

In the second quarter of 2009, Celldex also recognized $1.2 million in product royalty revenue related to offsetting royalty expense payable to Cincinnati Children's Hospital.

With the expected completion of the CuraGen acquisition, we believe that our current cash position, when combined with CuraGen's cash resources and expected sources of revenue, will meet estimated working capital requirements and fund operations into 2012.

I'll now turn the call back to Anthony.

Thanks Chip.

So as we look to the second half of the year and beyond, we remain confident in our ability to advance Celldex's powerful immunotherapy platform and pipeline.

As I mentioned at the outset, we have been able to execute on the important strategic goals that we have set out for ourselves a year ago and these successes have already contributed to, and should continue to contribute to bolster, our pipeline and platform as well as our financial resources over the near term.

Turning to slide seven, we anticipate closing the CuraGen acquisition in the third quarter and believe we'll be in a position to make decisions on the next steps for the CR011 breast cancer and melanoma programs in the first half of 2010.

We will also continue to put our priority on the ongoing advancement of the Phase II ACT III study of CDX-110 in GBM with Pfizer and are currently working with Pfizer on the design of a randomized, controlled study for CDX-110 in GBM.

We will continue to advance the Phase I novel combination study of CDX-1307 in epithelial cancers and intend to initiate a Phase II study of CDX-1307 in bladder cancer towards the end of the year.

In June of this year we filed an IND for a Phase I/II study for our third clinical proprietary program, CDX-1401, in multiple solid tumors and expect to initiate this study shortly.

Lastly, we will continue to focus on driving internal research to fuel our sustainable pipeline for the future and anticipating filing at least one new IND in 2010 resulting from our business development activities over the last year.

As previously announced, today's call will be our last quarterly results conference call.

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

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

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

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

In summary, we are pleased with our recent progress on our key objectives and look forward to continuing to update you throughout the year on our further achievements.

I'd like now to open the call for your questions.

Francine?

We will now take questions from the audience.

(OPERATOR INSTRUCTIONS) Your first question comes from the line of Mark Monane of Needham & Company.

Good morning and thank you for the review of the current state.

Congratulations on your progress.

Good morning, Mark.

Thank you.

Could we talk about -- is there any way to look into the looking glass, peer into the looking glass to see the state of the Phase II trial in GBM?

I know you announced that it would be a single arm study.

Do we have any -- can you provide us with any guidance when we might see data from that anticipated study?

Well Mark, you know we transferred the IND over to Pfizer back in May so it's completely in their control and we would believe that the data announcement from that study would be at an appropriate conference, so my guess is that would be at ASCO.

Oh, okay.

Got it.

And the EGFRvIII is present on a number of other tumors.

Do you have -- and I think -- and tumors that may even be bigger in terms of the market size and the unmet need.

Do you have any update about Pfizer's plans to pursue trials or Celldex -- is Celldex have an opportunity to start trials in this area?

How does that work?

Hi Mark, this is Tibor.

Hi Tibor.

We are working together with them at looking at all of the opportunities beyond GBM.

I can tell you that there's a lot of interest in performing that and we're establishing the plan currently as to where the best opportunity would be to expand beyond that.

Very fair.

And then more of a philosophical question.

You have, with the combination of CuraGen, both programs of naked antibodies.

You also have programs with powered antibodies and you also have all these neat immuno stimulants.

How are you thinking about mixing and matching or developing the different programs given the plethora of different platforms you have at the Company?

That's a great question, Mark.

Tom here, Tom Davis.

Hi Tom.

Hi.

You know obviously they have fairly advanced clinical data with the lead program, CR011, and as they reported at ASCO, there is evidence of significant tumor shrinkage in patients with melanoma and patients with breast cancer, including triple negative breast cancer subtype that has a particularly poor prognosis.

That said, it's clear that when we get final data from those Phase II studies, we should be able to make a fairly straightforward decision on taking this forward as a single agent with a clear response rate endpoint, something that the FDA has acknowledged, signified is a clinical benefit.

They've certainly approved drugs based on single arm studies with response rate endpoints.

It might require a little fine tuning moving forward but that's I think the most exciting part about the current CuraGen pipeline.

The second drug in their pipeline, CR014, is a very similar molecule and we would consider moving that forward in a similar fashion, testing it in cancers, specifically ovarian and renal cancer, to determine whether it also could have single agent activities.

The other component, the unlabeled antibodies in both CR011 and CR014 could also be transformed into unlabeled antibodies, which would have a somewhat different expected activity profile but then the ones earlier in their pipeline as well all could be used by themselves, could be used in combination with other immune stimulators and there's certainly data with other TLR agonists similar to the ones we have that when you combine them with antibodies you can potentiate their effects.

You can generate response rates in cancers.

So we would be exploring both single agent and combinations there.

And then of course with our own internal pipeline, many of them, many of our internal agents will work best when combined and we've already achieved some success in combining agents with 1307 along with three different adjuvants, I think that something that (inaudible) on before.

At this point we really are interested in moving forward with the most direct approval strategy that we can.

There's a backup for each of these programs.

We'll be able to test them in combination as well.

It does lead to a fairly elaborate development program and we understand some limitations in our resources, but with that in mind, we will be focusing on collaborations with either partners, perhaps NCI, the National Cancer Institute, who is eager to help out with promising programs, in order to make sure that we can fully explore the potential for all these programs.

Thanks very much for that information.

We'll look forward to the conference calls around key sentinel events.

Thank you, Mark.

Our next question comes from the line of Joe Pantginis of Merriman Curhan Ford.

Hi guys.

Good morning, thanks for taking the question.

Two quick questions, first on 1307 you said obviously you were looking to get into Phase II here.

Is the design still up in the air or can you add any further color?

Obviously you've gained a lot of interesting information from the Phase I presented at ASCO, so I'm specifically alluding to the question of what kind of combinations are you looking at with regard to GM CSF and other TLR based therapies?

Good question, Joe.

As we presented at ASCO, the combination of 1307 with GM and two TLR agonists, TLR7/8 and the TLR3 agonists, Resiquimod and Hiltonol, certainly looks very potent in early data.

We've completed accrual to that particular cohort and are planning to talk more about the experience there later this year, most likely at the Society of Biologic Therapy meeting here in Washington in October.

We're still waiting to hear back from them officially if and when we'll be presenting that.

And when we can talk about that data we clearly can spell out the rationale for our Phase II program, but I think what we've already talked about publicly certainly suggests that we're getting very good immune responses with the 1307 regimen and we are seeing quite a few patients who develop stable disease, despite the fact that their tumors have been growing quite rapidly before.

We're particularly excited about the bladder indication because that particular tumor does express Beta hCG with a high frequency but also because there's not a lot of accepted standard therapies for those patients, which would allow us to use the 1307 regimen earlier in the disease course when the patients likely have not seen as much chemotherapy and their immune system is better able to respond to the vaccine.

We definitely are very interested in that indication and later in the year we'll be in a better position to talk about specifics of designs as we can talk more about the regimen at the Society of Biological Therapy meeting.

Thanks Tom and if I could just follow up with a quick business question.

I know this is still pretty much a work in progress with Medarex and Bristol-Myers but obviously you've had the option, multiple options to access the Medarex technology for antibody discovery.

I was just wondering if you have any comments on if you had any discussions or any color around Medarex/Bristol at this point.

We haven't had any discussions around it, Joe.

Okay.

Thanks Anthony.

Sure.

Your next question comes from the line of Robert Ertsey.

Hi good morning.

Thank you for taking the call.

I have a question about the regulatory pathway for CDX-110.

The FDA in the past has approved cancer drugs based on Phase II data in situations where the cancers are aggressive and there were no good treatment options.

I was wondering if you or Pfizer or both of you have had discussions with the FDA on this regulatory option and if you could provide any background on that.

Certainly.

I can assure you that both we and Pfizer are actually communicating both with the FDA and with international regulatory authorities.

As you suggest, some drugs clearly can be shown to work in single arm Phase II studies, in some cases large randomized Phase IIs are necessary.

Specifically in glioblastoma I think the FDA has made their position fairly clear.

If you're looking in newly diagnosed patients who have minimal residual disease whose tumor has mostly been resected, you do need to have a randomized study looking at a progression-free survival endpoint.

That said, you could do a large Phase II study and if the difference is significant, if your drug actually significantly prolongs PFS to the point where a modest size Phase II study could show that, you would have data that the FDA would certainly consider very seriously.

So in our discussions with Pfizer and the FDA we're trying to get a better sense of exactly what kind of benefit we can expect from CDX-110 and how that would impact trial designs.

The question earlier about when you'll see data from the ACT III study is an important one.

We need to see the data as well in order to know exactly how to design the next randomized study.

That's the process we're going through now and as soon as we do have the numbers, as soon as we have a very specific plan forward, working with Pfizer I think we'll be able to share that with you more publicly but right now we really are waiting for data just as you are.

Okay, thank you.

And one more question if I may, sort of back to the future kind of question.

The generic or follow on biologics legislation is progressing through Congress and I think the House just approved the legislation a couple of days ago and it's going up to the Senate.

And the question specifically is regarding Rotarix.

That product will be going off patent in three years, I believe, in 2012.

Right.

I was wondering if you have started planning or looking at the issue of how to position your version of Rotarix, which passed Phase II successfully under the sponsorship of the previous company, AVANT, how to position that strain as a follow-on biologics three years from now, given the size of the market that's close to a billion dollars.

By the end of 2009 it should be closer to $2 billion by 2012.

Robert, this is Chip Catlin.

I'll try to answer your question.

As you know we licensed that product out the GlaxoSmithKline years ago and I think that really is their call on how they move forward on protecting that product from follow-on biologics, so that product really is in their hands now and they'll have to answer that question.

But it's going off patent in 2012 and at that point the license agreement is terminated, if I understand it correctly.

Correct, but they still have a right to market the product.

That's correct, with regard to Rotarix, but my question is regarding a follow-on or a generic biologic.

In other words, you have a strain which has passed Phase II and at that point there's no more patent protection for Glaxo in 2012.

Would you consider taking the strain that you have and positioning it as a follow-on biologic?

That's difficult to answer.

I'd have to go back and look at our agreement with GSK and see what rights we may have.

But again, I can't really answer that question today.

Okay.

All right, good.

Thank you very much and congratulations again on the progress that you've made.

Thank you, Robert.

There are no more questions.

I will turn the call over to Mr.

Marucci for closing remarks.

Thank you Francine and thanks to everyone for joining us today.

We're looking forward to seeing many of you at the upcoming events and reporting to you throughout the year as we continue our programs and moving our progress forward.

Have a good day.

This concludes our call today.

You may now disconnect.