Celldex Therapeutics Inc (CLDX) 2011 Q2 法說會逐字稿

Good morning and welcome to Celldex Therapeutics' second quarter 2011 update conference call.

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

Before we begin our discussion, I have been asked to caution listeners that today's speakers will be making forward-looking statements.

Such statements reflect on 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 of the factors that may cause Celldex actual results to differ materially from those in forward-looking statements include those set forward under the headings "Risk Factors," "Management's Discussions and Analysis of Financial Condition and Results of Operations" in Celldex's annual report on Form 10-K, quarterly reports on Form 10-Q and its current review reports on Form 8-K, as well as those discussed in Celldex press releases and filings with the Securities and Exchange Commission.

All forward-looking statements are expressly qualified in their entirety by this cautionary notice.

You should carefully review all of these factors and 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 in 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 turn the call over to Mr.

Anthony Marucci, President and CEO, of Celldex Therapeutics.

You may proceed, sir.

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; Dr.

Tibor Keler, Senior Vice President and Chief Scientific Officer; and Dr.

Ron Pepin, Senior Vice President and Chief Business Officer.

Earlier this morning, we reported our second-quarter earnings and most importantly, announced the finalization of the protocol for our rindopepimut pivotal Phase 3 trial.

We have made great progress in recent months and I speak for the whole Celldex team when I say that this is an exciting time for the Company and we are looking forward to the continuing our execution on our development plans over the coming months.

On today's call, I will discuss our recent activities, then Chip will discuss the financial results for the 3 and 6 months ending June 30, 2011, and finally Tom will outline the Phase 3 rindopepimut study protocol.

Tom will also cover our near-term clinical plans and expectations before we open the call up for Q&A.

At the beginning of the year, we informed everyone that our main focus is on our two main promising late stage clinical oncology programs, as well as initiating our first therapeutic antibody CDX-1127, and our stem cell growth factor program CDX-301, that will be supported by our solid financial position and I am pleased to say that we have made noteworthy progress in each of these areas over the first half of 2011.

Starting with rindopepimut, after discussions with regulatory agencies both in the US and in Europe, we are now ready to initiate rindopepimut in a pivotal program, which we expect will be sufficient for regulatory submission and potential subsequent approval on the Fast Track status in both the United States and in Europe.

As you'll recall, rindopepimut is an immunotherapy that targets the tumor specific molecule called EGFRvIII, a functional variant of the epidermal growth factor receptor, EGFR.

EGFRvIII is a common mutated form of natural EGFR and is presented in multiple cancer types.

Tom will go into greater detail later in the call but our team has worked diligently to design an innovative trial that integrates what we have learned from our previous studies and positions us for success going forward.

The protocol targets enrollment of up to 374 patients across more than 150 sites internationally and we expect to initiate starting enrolling patients by the end of the year.

A Phase 3 trial is, of course, a large undertaking and we have been active in the financial markets to secure the resources to support this trial while continuing to move forward with other promising candidates in our pipeline.

To this end, we conducted a public offering which was oversubscribed and ultimately netted us $33.7 million after expenses.

Again, Chip will go into more detail, but we believe that the overwhelming support for this offering is a strong statement both for the potential of rindopepimut as well as our mid-stage candidates in oncology.

We are also continuing enrollment of [120] (corrected by company after the call) patient randomized Phase 2b study of CDX-011 in patients with GPNMB-expressing advanced, refractory breast cancer patients, which also include triple negative disease.

CDX-011 is a monoclonal antibody-based therapy that targets GPNMB, which is a highly expressed in breast cancers, melanoma, and gliomas.

CDX-011 has been Fast Tracked for the treatment of advanced, refractory or resistant GPNMB-expressing breast cancers.

At our last conference call, we reported that we would be reviewing the accrual to provide an update on a timeline and I am happy to report that we continue to anticipate full accrual by year-end 2011.

The Phase 2b trial will provide critical information that will allow us to design the appropriate pivotal studies, and we are poised to activate subsequent studies quickly with the necessary data.

Additionally, we continue to explore other indications for CDX-011 and seek to evaluate broader collaboration opportunities.

Consistent with our ongoing commitment to prioritize the allocation of resources, the Company has also announced this morning that we have determined that the best path forward for CDX-1307 is to make the candidate available for collaborative development.

As such, Celldex has discontinued the Company-sponsored Phase 2 study of CDX-1307 in newly diagnosed muscle-invasive bladder cancer.

Finally, I'd like to take a moment to welcome Doctor Ron Pepin to our team as Senior Vice President and Chief Business Officer.

Ron is formerly Vice President at Shire and Senior Vice President of Business Development at Medarex.

He worked with many of the people on our management team during his nine years at Medarex, where he completed more than 40 successful global drug development and commercialization transactions.

We are happy to be working with Ron again and are confident that his experience will be extremely valuable to Celldex.

Now I'll ask Chip Catlin to give a quick overview on our second quarter and first half 2011 financial results.

Chip?

Thank you, Anthony.

Celldex reported a net loss of $10.2 million, or $0.27 per share for the second quarter of 2011 compared to a net loss of $9.5 million or $0.30 per share for the second quarter of 2010.

For the six months ended June 30, 2011, Celldex reported a net loss of $20.3 million or $0.58 per share compared to a net loss of $16.1 million or $0.51 per share for the six months ending June 30, 2010.

At June 30, 2011, Celldex reported cash, cash equivalents, and marketable securities of $71.2 million, an increase of $26.9 million from the end of March.

As Anthony touched on earlier, the increase is due primarily to completion of underwritten public offering in May, which resulted in net proceeds to Celldex of approximately $33.7 million.

This includes $4.4 million in proceeds raised when the underwriters of the offering excised in full their over-allotment option to purchase an additional 1.5 million shares of common stock at the public offering price of $3.15 per share.

The increase was partially offset by operational expenses during this quarter.

We believe that the resources and expected cash flows at June 30, 2011 are sufficient to meet estimated working capital requirements and fund planned operations into 2013.

This is a solid position and we are confident in our financial strength and ability to support our Phase 3 study of rindopepimut as well as continue the momentum in our early and mid-stage pipeline.

I will now turn the call over to Tom Davis, our Chief Medical Officer, who will discuss the Phase 3 trial design for rindopepimut and provide an update on clinical activities for the second half of the year.

Tom?

Thanks, Chip.

We previously presented a consistent data package for rindopepimut including a series of promising Phase 2 trials in patients with glioblastoma.

The most recent data from the multicenter Act III study showed a very promising progression free rate at 5.5 months from the start of vaccination compared to expected outcomes for historical controls treated with the current standard of care, including both unmatched patients and patients matched for similar disease and treatment profiles.

These data are consistent with the previous studies ACTIVATE and ACT II.

The consistency of data across these three separate studies is impressive and supports the planned pivotal trial, which will be called ACT IV.

The ACT IV Phase 3 trial will be a randomized, KLH-controlled, double blind study that will enroll approximately 374 patients with newly-diagnosed, resected, EGFRvIII-expressing glioblastoma across 150 academic and large community centers.

We expect 50% of the enrollment to be generated from the US and 50% from Europe, Asia, South America, and the rest of the world.

As Anthony mentioned, we have discussed our plans with both the FDA and EMA and have mutually agreeable expectations for approval.

The primary endpoint will be overall survival, with secondary endpoints of progression-free survival and quality of life.

The control arm will receive KLH, a biologically active compound that will produce a local injection reaction that is consistent with rindopepimut and thus will effectively blind the patients and doctors to the treatment randomization.

We expect that accrual will take approximately two years, at which point we would then follow patients out for survival.

There will be centralized radiologic evaluation and an independent Data Monitoring Committee to minimize bias within the study, and the trial is expected to initiate by the end of this year.

Our primary focus right now is optimizing accrual.

We are working with experienced research groups in North America and Europe to help support this goal.

We also expect to collaborate closely with patient advocacy groups and to utilize social media and other available outlets to ensure the potential trial participants are aware of this effort.

The design and review process for the Phase 3 trial of rindopepimut has been extensive, as many of you are well aware, so it is extremely gratifying to have reached what we believe is a protocol that will generate a robust data set.

Additionally, we believe that over the long term this trial will provide a template for other targeted cancer therapies.

In the near-term, however, we are focused on running a study that will continue rindopepimut on a path towards approval and improved care for patients.

While the pivotal Phase 3 trial for rindopepimut has the spotlight, we're also planning to initiate a number of other trials before year end.

These are a Phase 2 study of rindopepimut alone and in combination with Avastin in recurrent or refractory glioblastoma, a Phase 1 study of CDX-1127, Celldex's first therapeutic antibody program, in solid tumors or hematologic cancers.

CDX-1127 is a fully human monoclonal antibody targeting CD27.

This study is expected to initiate in the fourth quarter.

And a Phase 1 trial testing CDX-301, an immune and stem cell growth factor, in healthy subjects.

This trial will be performed in collaboration with a leading academic institution, which we can identify once a final contract is in place.

Our first priority is to develop this molecule for hematopoietic stem cell transplant, where it has demonstrated improvement of immune cell reconstitution in preclinical in vivo models.

The study is expected to initiate in the fourth quarter.

With that, I'll turn the call back over to Anthony.

Thank you, Tom.

So as you heard from Tom, we have honed in on the programs and trials that we believe will best maximize our resources, both from a human and financial perspective.

I am pleased to look back on the milestones we set out to achieve a year ago and see them coming to fruition and I look forward with great confidence that we will continue to execute on our strategy to maximize the output of our unique technology platform and pipeline and our experienced scientific and clinical development teams bringing them forward.

I thank you for your time this morning.

We look forward to updating you again on our continued progress and the overall strategic initiatives, and at this time we will welcome your questions.

Operator?

(Operator Instructions) Jonathan Aschoff.

I was wondering will there be absolutely no GM-CSF in the control group for the rindo trial and will there be a fraction of the KLH?

Can you help me understand the relative KLH amounts?

Sure.

Tom, can you take Jonathan through that?

Sure, Jonathan.

Yes, as we mentioned before, we are not planning to use GM-CSF in the control arm at all.

And we have certainly discussed that with the regulators, who agreed that that is reasonable to do.

And we will be using a lower dose of the KLH.

Currently the vaccine contains approximately 500 micrograms, and we will be using only 100.

So that's even nice --

(multiple speakers) To blind the study, and we think that dose will work effectively in that setting.

We do have experience with that dose, and it looks like it will work well.

OK, so that definitely gives the same sting or reaction that the 500 gives?

Right.

It's the KLH that drives that reaction.

Okay.

With the accrual of 011 by the end of the year, does that still allow ASCO '12 data or might that not be?

I think it still allows ASCO data, that's what we're planning for, ASCO '12.

Okay.

And how about the cost of the Phase 3 now that you've nailed down the parameters?

We still believe it's going to be around $40 million to $50 million, Jonathan.

So we haven't changed on the estimates that we gave prior.

Excellent.

But that's really nice to hear about the no GM and the one-fifth the KLH.

That's huge.

Thanks.

Mark Monane.

Thank you for that nice review.

Congratulations on your progress.

Thank you, Mark.

It's a very nice sunny day in the East and I assume that you're -- which [leads] to my question, I assume that you had sunny conversations with the FDA that allows you to move into a Phase 3 trial, but I also noticed that you didn't seek SPA status.

Could you go over some of the strategy and your thoughts on why you decided not to seek a SPA for this [trial]?

Sure.

I'll let Tom handle that one.

Good question, Mark.

You know, of course, the regulators always suggest that an SPA can provide some confidence moving forward of what their expectations are, but we had very frank discussions with the FDA around that.

And it was clear that with a fairly straightforward randomization as we are doing, the regulators could agree to the design, but also at the end of the day the statistics will be driven by the outcome and it did not seem that the extra time involved in an SPA would gain us that much more confidence in the outcome.

So right now, we are planning to start the study as soon as we can and get things moving, but there will be ongoing interactions with the regulators.

As you know, the protocol needs to be submitted and we'll be able to ask informal questions about the statistical design as we move forward.

So we are very comfortable with an ongoing working relationship with the FDA in an absence of an SPA.

Okay.

That was helpful.

Thanks for sharing that.

And on CDX-301, Tom, could you -- it sounds like this could be a very big program that there could be many uses for CDX-301 in a variety of settings.

Could you go over again what your early development plans are and what you think you'd be learning from that to take it to the next step?

So CDX-301 is a molecule called Flt3-ligand.

It has been in the clinical before under development Immunex.

Besides generating a new manufacturing process and a new product for us to carry it forward, we have fairly extensive history with what we would expect this molecule to do and our initial development will focus on a Phase 1 study in healthy volunteers, where we hope to be able to document very similar biologic effects to what was previously seen and to identify the appropriate dose for our molecule.

At that point, we can explore Flt3-ligand in the stem cell harvest scenario.

It's clear that we can generate large numbers of medical stem cells using Flt3-ligand and then can test it in both the allogeneic and autologous medical stem cell transplant scenario.

That is to suggest there are many other possibilities.

I can openly say that many different investigators from different medical fields have approached us with great interest in this molecule.

So we are looking forward to expanded Phase 2 development in other settings, such as recovery in extensive burns and also recovery from transplantation in the graft recipient.

So I think it's a very exciting molecule with many possibilities moving forward.

Thanks.

Then the last question is for Anthony and Chip.

Could you, again, review the cash use for 2011 and 2012 going forward?

And on a concrete basis, how many people now at the Celldex Therapeutics, and then importantly, it seems to have shifted.

The Company is really moving more towards the development stage, Company as you move molecules along to late stage testing with the Phase 3 starting and clearly the (inaudible) is pretty exciting.

I'm sure there's going to be some more next steps there.

Can you talk about what the optimal number and the people going forward?

Sure.

So we have approximately 100 people in the Company now, Mark.

The funding going forward will be used for the clinical programs we discussed this morning, rindo, 011, 1127, and then as more clarity comes around the 301 program, we'll choose the fields that we want to operate while letting the investigators work in the fields outside of our core competencies.

The kinds of people we have within the Company, I believe we told you in the past, that we do have people that have brought programs to commercialization, completing Phase 3 development, most recently Ipilimumab while we were at Medarex, most -- some of our colleagues came from Medarex in recent years.

Then we also have a clinical team that in part came from Bayer.

During their time there and they have a lot of clinical experience developing programs from their prior experience there.

What about the use of cash going forward?

Can you talk about that?

I know Chip made the reference, but I didn't get -- if you can get a little more concrete -- that would be helpful.

Yes.

So the use of cash, like I said, will be for rindo, 011, 1127, and 301 and that's where our main focus is going to be.

As you know, we also have the infrastructure in-house to develop antibodies from manufacturing.

We have the preclinical unit in-house that we can do all the preclinical testings.

So we think that we can get a lot of mileage out of cash we have and bring forward these programs deep into development.

And of course, we will always seek to do the right kind of business development deals on our programs going forward, too.

So that will be a --

I'm sorry, I'm not being concrete enough.

What will be the burn going forward?

Oh, the burn going forward.

I'm sorry.

Chip, do you want to handle that one?

Sure.

Mark, so as Anthony stated or I stated in the discussion earlier, the current cash balance we have will get us into 2013, in the first half of 2013.

So we're very confident on that and that does not assume any business development transactions with any of our programs.

So that's sort of where we are at the moment.

Thanks very much for that information.

We'll look forward to the presentations and the trial initiation.

Thank you Mark.

Steve Brozak.

Well, congratulations on the new developments here and going forward.

I have two questions and I'm not going to ask specific scientific questions.

It's more tactical questions because obviously the markets have been under siege.

And yesterday is an example of how large pharma is under siege in the form of one of your former partners there, Pfizer.

I just want to reiterate one item and I'd like you to just walk me through it here.

Pfizer basically discontinued the program with you not based on any scientific evidence, but based on their business modeling decisions, which haven't really worked out too well as far as their market cap is concerned.

But you're in a unique position now, that a Company of your size has got over-cited into a program that frankly, would be the envy of probably just about any biotech or pharmaceutical company out there.

Is that an accurate statement?

And as much color as you choose to add or not add would be appreciated.

Yes, Steve.

This is Anthony.

Look, like I said, Pfizer came back to us and said it wasn't part of their strategic priority, which is fine.

They are a much, much larger company than we are and they have a number of different therapeutic areas that they work in.

We like the program.

When we licensed the program out to them, we got great economics for it and when we got it back, as we told everybody in September and November of last year, we were ecstatic to get the program back.

And we're looking forward to taking this into Phase 3 and everything is falling into place for us.

So I'm not really concentrating on what Pfizer did or did not like about it.

I'll talk to you about what we like about it.

We think the program is very good.

We know the -- it's helping many, many people with brain cancer and that's what we're looking forward to do is getting this over the goal line and helping out those patients.

Okay.

I'll follow up on that goal line thing.

Now you brought on a person with more than 40 BD transactions under their belt, Ron Pepin from Medarex.

Can you, you mentioned that you bulked up your team.

It's not that just you bulked up your team, you've got, again, solid BD transactions.

Could you give us an example of what you're looking at in terms of -- because you're not just a one-drug, one-protein, one type of Company, you're a platform Company.

And obviously, the markets have been taken down, but there's still a disparity in terms of your trading price.

Can you talk about what you believe the market will start to recognize as far as you start to do deals?

I think as we start to do deals, though, like I said, we've always wanted to signal to the market that we do not want to be a royalty Company.

We want to hold on to the economics of any program we have for as much as we can get.

And that's why we like to structure deals where we maintain economics either through ownership or collaborative combinations.

So that's what we've always been looking to do.

And Ron has that experience that he's done in the past at Medarex, especially, where we worked together.

He did a number of outstanding deals there including the BMS deal and the Pfizer deal with the antibody programs that they have.

So our goal is to hold onto economics, whether it be by country, by region, or what have you.

And that's where we believe our investors as well as our patients will benefit the most.

So basically, in reiteration of everything you stated this morning, everything that you've got right now with the FDA signal allows you to go forward with the program, hold on to the economics until the time of your choosing, and based on previous results, come back with a new concept platform.

Is that so much a wrap-up?

Absolutely.

Great.

I look forward to the next conference call and your continued progress.

Thank you gentlemen.

(Operator Instructions) Boris Peaker.

I just wanted to have -- just a few additional follow-up questions on the ACT IV study.

You mentioned that there's going to be 150 sites across US and ex-US and it breaks down about 50/50.

How does that compare to prior studies, ACT III, being the most important example?

And in that context, how does the standard of care vary across the countries included in the trial?

Tom, would you like to take that question?

Sure.

The Act III study accrued approximately 81 patients just in the United States with 31 active centers accruing.

We certainly will be focused on the centers that accrued effectively into that study to help us with the North American accrual, but there will be quite a few additional centers in the United States as well as Canada, that we believe will drive accrual for us.

We've looked very closely at the standard of care across the rest of the world.

That's obviously an important question.

And we're quite confident that throughout Western and Eastern Europe, comparable standards can be found.

We will be selecting the centers carefully to make sure that they'll be able to provide quality data that the regulators will expect.

But after some fairly extensive work so far, we are quite comfortable that number of 150 and that those centers will all be actively contributing to the study and providing good quality data.

As you can imagine, it's a big effort.

We are geared up now to move forward with it and are quite comfortable with the plan overall.

I see.

Now, what if we look at the patients themselves, international versus US?

Are there observable differences in genetics of brain tumors, like MGMT Methylations, [P-10], MGM2 mutations, all those factors?

It's a complicated question.

The reality is most of the molecular data have been generated in North America.

But certainly, the Europeans have done fairly extensive work as well, and there appears to be a consistency across those populations.

We are looking at study sites in Asia and South America, scientifically, we believe that it's pretty much an identical disease throughout the world.

But we will be collecting tissue along the way in order to answer some of the questions you are asking.

I see.

And based on the number of trial sites, the 150 sites you plan on including in the study, do you have a sense of how long it would take to complete enrollment in this trial?

Well, certainly by looking specifically at sites and how fast we think they can accrue with that number of sites, we should be able to complete accrual, get 374 patients in approximately two years.

The big variable always is the different regulators that are involved in different countries and how long it takes to bring each country and each site up, so it's possible some sites will take longer to come online.

But we certainly should be able to compensate in that situation by adjusting site numbers.

It's impossible to predict accrual in these studies, but we think the two years is reasonable and we will do everything we can to meet that deadline.

I see.

That's very helpful.

I guess most of the other questions have been asked already.

Thank you very much.

Thank you Boris.

At this time, there are no further audio questions.

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

Marucci for closing remarks.

Thank you, Operator, and thank you, everyone for joining us today.

As always, we'll look forward to keeping you updated throughout the year, which we believe will be a very busy one, and we'll certainly update everybody as time goes on.

We thank you for your call this morning.

Thank you for your participation in today's conference.

This concludes the presentation.

You may now disconnect and have a great day.