Celldex Therapeutics Inc (CLDX) 2014 Q2 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Celldex Therapeutics second-quarter financial results. (Operator Instructions). As a reminder, today's conference is being recorded.

I would now like to turn the call over to Celldex. Please begin.

Great. Thank you. Good afternoon and welcome to Celldex Therapeutics' second-quarter 2014 financial results and corporate objectives conference call.

Before we begin our discussion, I would like to direct your attention to slide 2 and mention 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 might cause Celldex's actual results to differ materially from those in the forward-looking statements include those set forth under the headings Risk Factors and Management's Discussion 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 reports on Form 8-K, as well as those described in Celldex's 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 and 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. Anthony?

Thank you, Sarah. Good afternoon, everyone, and thank you for joining us. Joining me today are Dr. Tom Davis, Executive Vice President and Chief Medical Officer; Dr. Tibor Keler, Executive Vice President and Chief Scientific Officer; Chip Catlin, Senior Vice President and Chief Financial Officer; and Dr. Ron Pepin, Senior Vice President and Chief Business Officer.

On our call this afternoon, we will walk you through several recent accomplishments, provide you an update on our clinical programs, review financial results for the second quarter and outline key objectives for the remainder of the year. And, as always, at the close of our prepared remarks, we will look forward to answering your questions.

As we go to slide 3, you can see that 2014 has been a significant year for Celldex. We've made tremendous progress on a number of key programs, most notably our Phase 3 clinical trial of rindo in frontline glioblastoma.

Tom will offer you more detail about the overall clinical program in a few minutes, but I want to take a moment to highlight the ACT IV trial.

As we announced this afternoon, we are very close to closing screening for this study. When all is said and done, ACT IV will enroll 700 patients with EGFRvIII-positive glioblastoma from more than 200 clinical sites across 22 countries.

This is the most comprehensive study conducted by a biotech company in this orphan indication to date and by far the largest trial ever conducted in this subset of EGFRvIII patients with more aggressive disease.

While ACT IV will certainly be important to the future of rindo, given its scope, it will also be an important study for brain cancer field and especially for patients with vIII mutation.

I'm very proud of our team at Celldex for their successful execution and extremely grateful to the patients, families and physicians for participating in the study.

We will also have made considerable progress on ReACT, our Phase 2 study in recurring GBM.

We completed enrollment of Group 1 comprised of the Avastin-naive patients and the first cohort of Group 2C comprised of Avastin refractory patients. We anticipate presenting updated data from ReACT at year-end.

As you know, behind the rindo program, we have built an extensive, step pipeline at Celldex, and as we wait for data from ACT IV, we will advance a number of additional programs to and through key inflection points. You will see clear evidence on this later on the call when Tom reviews the status of our current clinical programs and the initiation of an extensive number of new studies.

Before I turn the call over to Tom, let me hit on a few more important milestones reached in the last quarter and are outlined on slide 4.

We continue to add sites and patients to the METRIC study, our accelerated approval study of glemba in triple-negative breast cancer. The study now spans the US, Australia and Canada.

In addition, we are on track to significantly expand the glemba program into a number of other cancers where glemba's target gpNMB is expressed.

In April, we announced the publication of positive data from the CDX-1401 program in a well respected peer-reviewed journal, Science Translational Medicine, that suggests that this candidate activates a robust immune response to the tumor antigen NY-ESO-1 and made predispose patients better outcomes on subsequent checkpoint therapy.

As Tom will discuss in a few minutes, we have finalized the protocol for the next study of CDX-1401 to further test this hypothesis and are on track to begin the study by year-end.

Turning to slide 5, we've also presented important data from the varli program in June at ASCO. varli continues to meet all our expectations, demonstrating a very favorable safety profile and clear signs of biological and clinical activity that directly support a robust development plan moving forward, particularly in combination regimens.

To that end, in May of this year, we announced our first clinical trial collaboration with Bristol-Myers Squibb to study varli in combination with Opdivo or nivo -- Nivolumab.

This study is well-positioned to initiate on schedule in the fourth quarter, and there are also a number of other varli combo studies in the queue with other collaborators as we continue to advance these programs towards initiation.

Finally, CDX-301 is beginning to play a more prominent role in our pipeline. We are very close to initiating a study in hematopoietic stem cell transplant, and recently the first patients were dosed in an investigator-sponsored study of 301 in Hiltonol in combination with radiotherapy in low grade B-cell lymphomas.

With that, I will ask Tom to dive a little bit more deeply into our pipeline before Chip reviews the numbers. Tom?

Thanks, Anthony.

I first want to echo Anthony's comments as we neared completion of screening in ACT IV. This study was a major undertaking, especially in a subset of more targeted population within an orphan disease.

To provide some perspective, the only studies that have surpassed ACT IV in scope have been conducted by major pharmaceutical companies for large cooperative groups, and they have included all patients with GDM, not just vIII positive patients.

Roche's AVAglio study included 921 patients across 120 sites in 23 countries. The Radiation Therapy Oncology Group's 0525 study enrolled 833 patients across 351 sites in two countries, and their 0825 study included 637 patients across 289 sites in two countries. As Anthony mentioned, in total, ACT IV is enrolling 700 patients at over 200 sites in 22 countries.

The ACT IV study was designed to confirm our experience with rindo in three prior Phase 2 studies and to identify a clinically significant survival benefit, including long-term survival of up to six months in patients with minimal residual disease or small tumor burden after surgery. That said, we have overpowered ACT IV to be positive even with a more modest but still clinically meaningful survival benefit, reflecting approximately three months.

We are confident that given the scope and scientific rigor applied to ACT IV that we have positioned rindopepimut as best we can for success.

In total, as you see outlined on slide 6, 700 patients will be enrolled into ACT IV to reach the required 374 patients with minimum residual disease as assessed by central review. As I just said, these 374 patients with minimal residual disease are the patient population for the primary assessments of overall survival.

All patients including patients with disease that exceed this threshold will be included in the secondary analysis of overall survival, as well as analysis of progression free survival, safety and tolerability, and quality of life.

We are very close to closing screening in ACT IV. To date, 4034 patients have been screened, and consistent with prior studies, 30.2% have been EGFRvIII positive. 614 patients have been enrolled to date in ACT IV, and as expected and routinely seen in clinical studies, a significant number of these patients were enrolled in recent months.

In fact, over a third of the patients in this study were enrolled in the last eight months. We expect to close screening in the next several weeks, which will mean we've captured all the EGFRvIII positive patients required to complete enrollment, and when the last patients have screened positive, the study will be listed as closed to recruitment on clinicaltrials.gov.

I do want to note that formal randomization into the study for vIII positive patients occurs after patients complete the required standard of care chemoradiation, which can take between two to three months. When the final patients have formally randomized into the study after completing their prerequisite chemoradiation, we will issue a press release to mark this event likely in late Q4.

As for final data readout, the study is event driven with the event being dead, and we will be able to more accurately predict the timing for final data readout as we progress through interim analyses at 50% and 75% of events. The interim analyses will be conducted by an independent data monitoring committee and are in place to assess the safety and potential futility or success of the study. They will result in a communication of go or no go to the Company based on predetermined hurdles.

They will not provide us with interim data readouts, but their timing will certainly help us better assess when we can expect final data. Right now, we would estimate that the first interim would occur somewhere in the first half of 2015. We will certainly communicate the outcome of these assessments as they occur.

On slide 7, we provide an update on ReACT, our Phase 2 study of patients with relapsed or current EGFRvIII positive glioblastoma who are both naive and refractory to Avastin. Enrollment to group one comprised of 70 Avastin-naive patients and enrollments to the first cohort of Group 2C, Avastin refractory patients, is complete.

Group 2C is designed as a two-stage study evidence of antitumor activity in the first 23 patients will trigger enrollments of an additional 50 patients. The reporting of updated data from Group 1 and a go/no go on full enrollment to Group 2 will occur by year end.

As we await the data and analysis from the rindo program, our commercial team continues their work to prepare for potential approval and launch.

Anthony is going to walk you through these activities. Anthony?

Thanks, Tom. The commercial's team efforts are centered on five key areas as you'll see outlined on slide 8.

First is defining the commercial opportunity in the US, the EU and the rest of the world. The team has completed much of this work, and we have received positive feedback on the rindo product profile from key stakeholders, including physicians, pharmacists and payers.

I will share some of the feedback from these exercises in a moment.

Second is supporting a focused disease education platform by highlighting the significant unmet medical need in glioblastoma, the relationship between EGFRvIII status and poor clinical outcomes and targeting EGFRvIII as a potential therapeutic approach. This work is ongoing through presentations at medical meetings, journal ads and digital media.

The goal here is to ensure that neurosurgeons, neural oncologists and pathologists understand the role of EGFRvIII as a prognostic marker, see it as a potential companion diagnostic target that may change the standard of care for GBM patients and to actively test for EGFRvIII.

Third is the development of a go to market business models and hiring plans for both the US and the EU. We have completed this assessment in the US, and the EU work is well underway. The overarching goal is to have an innovative, highly focused and nimble approach to introduce rindo to our future customers.

Fourth is building a global product distribution model integrated with comprehensive patients and provider service programs in support of unencumbered, appropriate and timely access of rindo while supporting an efficient business model. This project is also currently in development.

And finally, we are currently working to establish a detailed payer and health technology assessment or HTA launch plan for both the US and EU.

As I mentioned, we commissioned independent market research to evaluate physician, pharmacist and payer feedback on the emerging rindo product profile and aspects of the EGFRvIII test. The product profile was based upon meeting the OS and PFS requirements set in ACT IV. Our first assessment, which we've shared in the past, surveyed oncologists to treat GBM, key opinion leaders actively involved in GBM clinical trials, and national and regional payers in the United States, the UK, Germany, France, Italy and Spain.

Focusing on physician feedback, as you can see on slide 9, when physician respondents were asked about the likelihood to prescribe rindo upon approval on a scale from 1 to 7 where 1 is least likely to prescribe and 7 is most likely to prescribe, we averaged over a 6. Anecdotal feedback, which is outlined on the right-hand side of the slide, was also positive, both on the data itself and where the drug would fit in the treatment paradigm.

We recently received data from a second larger study across Europe designed to capture more detailed insights.

The primary research assessment included the UK, Germany, France, Italy and Poland with appropriate assumptions to extend findings to the EU-27.

Now on slide 10, you'll see that physicians in Europe generally express a strong enthusiasm for rindo and its anticipated use has been greater than 90% of EGFRvIII positive patients irrespective of resection type.

In GBM, given the aggressive nature of the disease, targeted therapies were seen as having stronger mechanism of action versus broad-based approaches. On the efficacy front, meaningful improvements in OS and PFS remain the gold standard when physicians are assessing therapies for GBM treatment.

If rindo performs as planned in ACT IV, the median incremental survival benefit is viewed as robust and clinically meaningful in GBM.

Finally, why efficacy was identified as a more important product attribute for GBM, physicians assessed rindo's safety profile also in a very positive view.

Payer and pharmacist feedback from both studies was informative and largely echoed the physician feedback with regards to unmet medical need in GBM, as well as rindo's target product profile. The fact that rindo will be accompanied by a diagnostic test is viewed as important and positive feature by payers.

Overall, the US and the EU payer feedback will allow us to profitably build a robust value proposition for rindo in support of timely optimal access and reimbursement.

With that overview, I will hand the call back over to Tom to provide clinical update on the remaining programs.

Tom?

Next up is Glembatumumab vedotin or Glemba on slide 11. In December 2013, we initiated METRIC, randomized accelerated approval study in patients with metastatic triple negative breast cancers that overexpressed the tumor associated marker gpNMB. Our major focus here continues to be on opening sites with the goal of 100 sites across United States, Canada and Australia. We're making steady progress on this front with 73 sites now open for screening.

Plans for the expansion of Glemba into other indications are also moving ahead. The protocol for the Phase 2 study in metastatic melanoma has been finalized, and the study will be initiated by Celldex later this year.

Additionally, assay optimization and validation for the Phase 2 study in squamous cell lung cancer is expected to be completed by year end, and this study will commence soon thereafter.

Finally, we are pleased to announce that we've entered into a cooperative research and development agreement also known as a CRADA with the National Cancer Institute on two additional studies with glemba with room for further development into other indications. As the NCI initiates these studies, we will update on their progress.

Next up for discussion is part of Varlilumab or varli on slide 12. varli is a fully human monoclonal antibody that targets CD27. In June, we presented data from the Phase 1 varli program in two separate poster highlight sessions at ASCO. Results presented included data from the lymphoid malignancy's dose escalation arm and solid tumor expansion cohorts in metastatic melanoma and renal cell carcinoma.

varli was very well tolerated and demonstrated clear biologic activity and promising signs of clinical activity in advanced treatment refractory patient populations, all of which provide the rationale for combination studies with other immune-modulating therapies.

We observe these effects at both low and high doses, but the biological end points in the study suggests that there may be a more potent activation of lymphocytes when they are intermittently exposed to varli. Further, real clinical regression was seen at low doses.

You could think of this using the car analogy. We're constantly revving the engine even when stopped to deplete the fuel. A better approach may be a more judicious intermittent acceleration eventually providing a more consistent progressive effect. We can achieve this with low doses given several weeks apart.

The next set of studies are designed to determine the most efficacious regimens. Based on this mechanism of action and safety profile, we think varli is the optimal candidate for broad-based combination studies with a full range of agents, including immune and molecularly targeted drugs.

To this end, as Anthony outlined, we entered into a clinical trial collaboration with Bristol-Myers Squibb to evaluate the safety, tolerability and preliminary efficacy of Opdivo, the trade name for Nivolumab, and varli. We continue to make progress preparing for this study and remain on track to initiate it by year end.

While Celldex and BMS are sharing development costs, Celldex will take the lead in conducting the study. In June, we also announced the clinical trial collaboration agreement with Oncothyreon on a combined clinical trial of ONT-10, a therapeutic vaccine targeting the tumor-associated antigen MUC-1 and varli. This study will provide important immunological data for ONT-10 and varli in patients with breast, liver and cancer and will be run and funded by Oncothyreon.

The protocol for the Phase 1/2 study of Varlilumab and Yervoy with the additional use of CDX-1401 in NY-ESO+ patients was recently finalized, and this study remains on track to begin recruiting patients by year-end.

Multiple efforts are ongoing to finalize designs and plans for a number of additional Phase 2 studies of varli, and we'll provide an update on these studies as they get closer to initiation.

Moving on to CDX-1401 on slide 13, I just mentioned the combo study with varli. The inclusion of CDX-1401 in this study is the direct result of the long-term qualifications who went on to subsequent checkpoints inhibitor therapy after completing the Phase 1 study of CDX-1401.

These data were published in the science journal Translational Medicine, and while the ends were small, the effect was striking. Of six melanoma patients that went on to receive Yervoy after completing treatment of CDX-1401, four had objective responses and one complete response.

In addition, two non-small cell lung cancer patients who received an investigational agent that blocks PD-1 signaling within two months of discontinuing CDX 1401 were also reported to experience partial responses.

We look forward to more fully exploring these observations in this next study.

Finally, the CDX-1401, the NCI-sponsored Phase 2 study of CDX-1401 and CDX-301 in patients with metastatic melanoma is open to enrollment.

This brings us to CDX-301 on slide 14, a potent hematopoietic cytokine that stimulates the expansion and differentiation of hematopoietic stem cells and dendritic cells. The investigator-sponsored Phase 1/2 study of intratumoral injection of CDX-301 and Hiltonal in combination with low-dose radiotherapy for patients with low grade B-cell lymphomas has initiated, and the first patients have been treated. We anticipate the preliminary data from this interesting study will be presented this fall.

As previously guided, we also remain on track to initiate a pilot study of CDX-301 alone and in combination with Mozobil in hematopoietic stem cell transplantation in the third quarter.

This concludes our clinical program updates, and I'll now turn the call over to Chip to review the financials for the second quarter.

Thank you, Tom. I am now on slide 15. For the second quarter of 2014, Celldex reported a net loss of $28.3 million or $0.32 per share for the second quarter of 2014 and $58.2 million or $0.65 per share for the six months ending June 30, 2014, as compared to a net loss of $19 million or $0.24 per share and $36.3 million or $0.47 per share for the comparable periods in 2013.

All R&D expenses were $24.1 million in the second quarter of 2014 and $51.2 million in the six months ending June 30, 2014 as compared to $15.1 million and $29.2 million for the comparable periods in 2013. The increase in Celldex R&D investment was primarily due to the continued correction of our late-stage critical development programs, rindopepimut and Glembatumumab vedotin, and the continued expansion of the varli program.

G&A expenses were $48.1 million in the second quarter of 2014 and $9.4 million for the six months ending June 30, 2014 as compared to $3.4 million and $6.5 million for the comparable periods in 2013. The increase in G&A expenses was primarily attributable to higher personnel-related expenses and rindo and glemba commercial planning costs in 2014.

At June 30, 2014, we reported cash, cash equivalents and marketable securities of $252.4 million compared to $274.2 million as of March 31, 2014. The decrease was primarily driven by our second-quarter net cash burn of $26.8 million, offset in part by a one-time payment of $5 million from BMS.

We expect that our cash, cash equivalents and marketable securities will be sufficient to fund operating expenses and capital expenditure requirements through 2016. As of June 30, 2014, we had 89.4 million shares outstanding.

I will now turn the call over to Anthony to close.

Thank you, Chip. As you can see, with a busy first half of the year behind us, we will now be turning into an even busier second-half supported by the initiation of multiple new studies and data readouts by year-end for ReACT.

To summarize on slide 16, in the coming weeks and over the second half of the year, we anticipate completing the following milestones: closing a screening in the enrollment of the final patient in ACT IV and for the ReACT study the recording of data from Group 1 and a go/no go on whether or not to continue enrollment of additional patients in Group 2C for the ReACT study.

Continued site activation and enrollment of metric will also be a key activity.

We also anticipate the initiation of the following studies by year-end: a Phase 2 study of glemba in patients with metastatic melanoma, quickly followed up by the initiation of a second Phase 2 in squamous cell lung soon thereafter; a Phase 1/2 combination study of Opdivo and varli; the Phase 1/2 study of varli and Yervoy plus CDX-1401 in NY-ESO positive patients; and a pilot study evaluating CDX-301 alone and in combination with Mozovil in hematopoietic stem cell transplantation later in Q3.

Finally, we will continue to support the ongoing investigator-sponsored Phase 1/2 study of CDX-301 in B cell lymphomas and the NCI-sponsored Phase 2 combination study of CDX-1401 and CDX-301.

With that review, operator, we are now ready to open the call for questions.

(Operator Instructions). Jonathan Aschoff, Brean Capital.

Congrats on the progress. I was wondering, the unconfirmed PR with the renal cell patient at ASCO on 1127, is that a confirmed PR now?

Hi Jonathan, Tom here. Yes, that is confirmed. So that patient continues with a response.

Great. Thank you. And rindo recap data in late 2014, do you mean SNO or after the SNO conference?

We are targeting the SNO conference. It's too early to have heard back on where things stand, but that would be our expectation.

Okay. And two more. Bristol, does Bristol still determine if data from the 1127 PD-1 trial will or will not be released, or is it already clear to them that that is immaterial to Celldex?

Yes, it probably would be material to Celldex.

And I think lastly, when you first said at the end of last year of greater than 450 for ACT IV, did you have 700 in mind? That just seemed a bit higher than I was thinking.

Well, Tom again. The critical element in the total number is the percentage of patients who meet that minimal residual disease criterion. So our estimates suggest a greater than 450. We didn't provide a specific guidance until we were more confident.

At this point, we are very confident with that 700 number. It will be approximately 700 total meeting in the study.

All right. Great. Thanks, guys.

Bret Holley, Guggenheim Securities.

Thanks for taking the questions. I'm just wondering on the commercial front with rindo, with the service that you've done, I'm just wondering if you explored kind of a sensitivity analysis to the OS benefit? I think, as said, versus the six-month benefit, they'd be highly enthusiastic. And I'm just wondering if you explored, like I said, kind of a range of benefits from where there might be a cutoff in sensitivity to or enthusiasm about patients using rindo in vIII positive glioblastoma?

So, Bret, this is Anthony. We did the sensitivity based on three to six months, and the range sensitivity was --- we said greater than 90% at six months. It was in the high 70s to low 80s even at three months. So we thought that the range was fairly high.

Okay. All right. That's encouraging. And I guess one question I had is in the combo trials for varli that you are planning, Thomas, you mentioned the possibility the intermittent dosing of varli would be possibly better. And I'm just wondering how you are incorporating that potential treatment paradigm into your plans for the combo trials?

So, as a standard, any new combination needs to be tested with a dose escalation. In some cases, it can be quite a brief dose escalation. But integral to the design will be a low, middle and high dose in the majority of these studies.

We know from our pharmacokinetic analysis that at the low doses of 0.1 milligrams per kilogram or 0.3 milligrams per kilogram, the half-life with varli is such that the drug will clear the circulation within one to two weeks. So by dosing every two to three weeks at that dose level, we should be able to provide that on/off signaling type process that I described.

And then, of course, escalating at the higher doses, we will be saturating the receptors continuously at 3 and 10 milligrams. So we can have relatively large cohorts somewhere in the range of 6 to 10 at each of those dose levels and looking both within studies and across studies determine whether the low dose or the high dose appears to be more effective.

And I'm guessing, obviously, whether there's any difference in tumor types, and I guess the preclinical work that you've done, is there a difference in hematologic versus solid tumors, for example? I could imagine that certain combinations would be appropriate for intermittent dosing and certain tumors and then others it might be more appropriate to just go at it with a heavy hammer. So, do you have any perspective on that?

Well, of course, in solid tumors, there's a single mechanism of action which focuses very much on activating the immune system, and much of what we described has been based on the biologic and immunologic readouts from these studies where the low intermittent dose appears to provide a strong activation.

In hematologic malignancies where we have dual mechanisms, both the immune mechanism and the direct ADCC effect, it would be perfectly reasonable, as you imply, to expect that the higher doses would be valuable. In fact, there you may need a combination of the two: a high dose to initially induce cell kill and then converting to a lower intermittent dose to perpetuate the immune response.

So we will be doing a range of studies in different indications and trying to answer the questions you are asking, but I do think that the biologies can be very interesting as this Phase 2 program progresses.

And I guess my last question is there's a high level of enthusiasm in the investor community about the potential for nivo in hematologic cancers. And given the fact that you've actually seen at least one patient with incredibly high activity with varli, are you thinking about that potential avenue with that combination with nivo and varli?

Well, certainly, the response in the Hodgkin patients has led us to continue developing single agents in Hodgkin's disease and a modest increase in size within the current Phase 1 study.

Yes, we have absolutely have been thinking about potential combinations. We are in discussions with Bristol around potential alternatives there, but at this point, we're not really able to discuss them in any detail.

Okay. Fair enough. Thank you very much.

Mara Goldstein, Cantor Fitzgerald.

Thanks for taking the question. Just a follow-up on the ACT IV study, I thought I heard you say that you would expect that first interim to occur sometime in the first half of 2015? And will be at 50% of events, is that what you're referring to?

Exactly. That's the 50% interim.

Okay. And does that include a futility analysis in that interim?

It does both in activity and a futility analysis.

Okay. And then just secondarily, if I could just ask an update on METRIC, not METRIC rather more glemba in terms of these other development programs? Will you be able to use the same sites, and so would that enhance site enrollment or site opening rather?

Comparing glemba with varli, knowing that we're working with melanoma in both settings, is that what you are implying?

No, I'm sorry. I was referring to glemba in these additional indications as you look at starting trials in melanoma, lung cancer, and you have already got 70 plus sites open for METRIC.

Well, yes, we certainly can use the same sites. There would be just different investigators at the specific sites, but the fact that we have already been through the process of contracting and approval for one study will make it much easier to approve another study. Absolutely.

Okay. And just on this --- the CRADA with the MCI in UVL melanoma, could you just sort of walk us through why that particular indication are you finding that GPMB is very well expressed in UVL melanoma versus metastatic melanoma?

It's a good question. UVL melanoma is a somewhat different disease from traditional metastatic melanoma, and it characteristically is much more difficult to treat. We were particularly intrigued from our previous studies where we did see evidence of tumor shrinkage in a patient with UVL melanoma, which quite impressed the investigators and felt it was worthy of pursuing in that specific indication.

So, as described, we have interest from investigators and were very pleased to be able to collaborate with NCI around this effort.

Okay. Thanks.

Biren Amin, Jefferies.

Thanks for taking my questions. I have several on ACT IV. I think the Company was previously expecting the first interim to occur at year-end 2014 versus I guess today's guidance of first-half 2015. Is there a read through into the event rate as far as how events are accruing in the trial? Thanks.

Well, so, of course, what that means is that it's taking us longer to get the events. That could partly be related to what I mentioned about the majority of accrual occurring in the last third of the study. So there is partly an impact there. But it certainly also means that events are a little slower than we originally expected, which I'm not going to discuss at this point. There are several possible causes for that.

And Tom, how are you defining futility for the first interim?

Well, there is a futility threshold defined by a Kaplan-Meier analysis. Just look at the hazard ratio there. We've not formally announced the specific threshold, but at the 50% for it to be declared futile, it would effectively have to be a completely negative study.

Okay. And then your prior statements I think you are assuming six months estimate for OS. Why do you believe that you can achieve that, say, with a three-month OS benefit, especially given your final primary analysis is going to be based on 374 events?

Well, as you probably know, the calculation is actually based on a hazard ratio. So when we talk about those median survival numbers, it is somewhat deceptive. The calculation looks at the entire curve, both early and late differences between the control and the treatment arms.

So ultimately the hazard ratio of up 2.79 would be able to detect a difference of three months at the median, but it could also be positive if that median difference was even less.

So when we talk to physicians about this, we certainly include a little more detail around the net effect, and as we've discussed before, we actually do expect the effect to be greater at the tail end of the curve where very few, if, any vIII positive patients survived past three or four years. But our curve has suggested up to 10% of patients could live out that long.

Okay and I guess a quick last question on varli. Do you have an update on the T-cell lymphoma group that you start enrolling earlier this year?

So we are accruing to the T-cell lymphoma group. It's a rare disease, so there are certain challenges. But we have expanded the study to incorporate sites that we think will be more effective at accruing those patients.

At this point, we're not predicting exactly when we'll have the total group accrued, but we do believe that we'll be able to talk about it within the next 12 to 18 months.

Great. Thanks.

Joe Pantginis, ROTH Capital.

Thanks for taking the question. You spent a lot of time with rindo in the front-line setting. I was just wondering if you could add some more with regard to the ReACT study?

Now specifically I'm not looking to put words in your mouth, but maybe if you can benchmark a little bit of potential with regard to response rates in both the naive and the Avastin recurrent setting with regard to response rates and survival that might lead to an accelerated path.

Well, as you know, Joe, the response rate that we saw in the preliminary refractory group was approximately 15%, which is a very respectable response rate in this patient population. The difficulty, of course, with glioblastoma is that there's a certain amount of subjectivity in culling responses. You have to be sensitive to that issue.

The trial is designed so that if we continue to see a response rate similar to that, we would expand the larger group. And I do believe at the end of the day, if we have a clean 15% response rate, that might be adequate to take to the FDA.

As far as survival goes, that's a much more important end point in the randomized portion in Group 1. That is a small randomized portion with only 35 patients per arm. So, if we're to meet statistical significance, we'd have to see a fairly significant difference. We are recognizing that these patients only survive six to nine months. A difference of three to four months could probably be shown to be significant in this design.

For the FDA, statistical significance is a very important end point. Whether or not Group 1 would be adequate for approval though is hard to predict because again it is quite a small study.

No, understood. Thank you.

We'll need to look at all the data and come up with a comprehensive package and talk to the FDA to see if it's adequate assuming we see that kind of data.

Sure, sure. And if I could just switch gears to varli for a second. I guess obviously there's so much excitement around these checkpoint inhibitors and immune activators and what have you. So I want to talk a little bit about safety profiles.

For quite a long time now whether they are checkpoint inhibitors or the cancer immunotherapy or the vaccines or what have you, there's always been some --- if you want to call it a slow burn about some underlying concern, even if it's just minor about immune-related adverse events.

So with that said, I wanted to get a sense of, first, the patients on the varli study right now, how long are the longest patients being treated for, and do you get any feedback from the field, specifically the medical community, about any underlying concerns whether they've happened or not yet about immune-related side effects?

Well, you certainly touched on a critical question from our perspective. With most of the other activating approaches, immune-related events have been seen predominantly in liver but elsewhere. And that's been seen with single-agent treatments. varli to date use as single agents has not generated any clear evidence of order immunity or immune-related adverse events with one exception. We did see one patient who may have had exacerbation of asthma, but that's not typically considered to be the typical immune-related adverse events you see with these programs. It's not been seen with other checkpoint inhibitors or activators. So we're not quite sure what to make of that.

Essentially in the clinic, we have no evidence of significant immune activation against itself and as such are quite confident that it's a safer drug than what's been seen with other activators. We have done studies looking at the combination in animals. There we've not seen evidence of immune-related adverse events, and that gives us great confidence moving into the combination studies we've described. But, of course, at the end of the day, it's the clinical data that will be most important.

Sure. And then just to follow up on that, just coming out of ASCO, how long has the longest treatment period been so far?

We have treated patients for close to a year at this point, so they certainly have had prolonged exposure to varli in some cases.

Great. Thanks a lot, guys.

(Operator Instructions). Gena Wang, Leerink Partners.

Thank you. I am actually dialing in for Howard Liang. A follow-up to a previous question. Just wanted to know for the rindo ReACT data, when you enroll --- when you trigger additional enroll additional 50 patients, will you make an announcement for that?

Yes. When that decision is made, we would announce expansion, and of course, we will be presenting the data behind it at SNO.

Sure. Okay. And then switch gears asking one financial question. Now given increasing number of programs ongoing, just wondering could you provide a rough R&D spending breakdown between various programs, like including rindo, glemba and varli?

Well, I would imagine as rindo completes the accrual, that number will start leveling off and decreasing, but there will still be spend going into 2015 and 2016.

With varli, the program there will potentially increase higher. If the accelerator approval study is positive, then we would have to do the accelerator between the full Phase 3. But a good deal of the cash will also be spent on varli as we spend on additional programs and expansion there. But it will be slightly offset by half the cost of the BMS collaboration being picked up by BMS for outside costs.

So that's basically the breakdown there. And then some dollars obviously being spent on the 1401 combination, the 301 and then new programs coming online in 2015.

Thank you.

Christopher Mare, Oppenheimer.

Thanks for taking my question. But, first, maybe on glemba, I was just wondering if you could give us some color on the accrual in that METRIC study, where you stand right now and what your expectations for completion of enrollment are with respect to the timeline? And then maybe how you're looking at enrollment in the metastatic melanoma/lung trials there, and how many patients will those studies enroll? Thanks.

So all clinical trials start off slowly. I don't think there's a clinical trial that has ever really hit the ground with tremendously robust accrual, and that's primarily because it takes time to get all the clinical sites open. We will announce this study is open and accruing when the first patient comes in, but of the subsequent six to eight months, most of the sites open up.

So we're still at the point where these sites are beginning to open. That said, we are seeing accrual ramp up as we would expect it to, and we are still predicting completion of accrual approximately the middle of next year. But our ability to predict that will be much more accurate as we get closer to that timeline.

The melanoma and lung studies are designed to explore gpNMB expression in those diseases and correlate with outcome. As such, the trial decides to accrue approximately 50 to 100 patients.

Okay. That's great. With respect to some of the new promising therapies in those two indications, I'm wondering how do you think is going to impact potential accrual in those studies. And then, of course, are you wondering or I'm wondering actually if you are pending on potentially pursuing combinations of glemba with some other modulatory compounds in the future, particularly in the melanoma and lung cancer settings and when those might start?

It's a very good question. There is a lot of activity both in melanoma and squamous cell lung cancer at this point. Certainly prominent activity with checkpoint inhibitors. But the real focus for development there is on early-stage patients who have intact immune systems in the hope that you can produce long-term remissions.

As far as we're concerned, Glembatumumab has potential to induce significant tumor reductions, even in refractory patients. That's clearly what we saw in our previous studies. So our focus with this product would be in the refractory patients third or fourth line where there's still plenty of opportunity to accrue patients and ultimately to get approval if we do see significant activity.

So while you're right, some people consider these to be crowded spaces, the specific positioning of glemba is such that there is still a very good opportunity, and we don't expect any problems in accruing, and our investigators certainly reassured us of that.

Okay. And then are you ---

We do believe that glemba can induce immunologic type cell death, so your suggestion to combine it with immunomodulators is clearly attractive. I think we do need to get some initial data on outcome in melanomas and lung cancer, but an obvious next step would be to combine it with our own agents. I think varli would be an obvious combination for us to pursue and also to combine it with checkpoint inhibitors and other agents that would take advantage of any immunity we can generate.

Great. Thanks. And just finally with respect to 1401, you know there's a combination study with Dacogen in AML and MDS. I know that's been an investigator-sponsored study, but is that something that we may see some data for at ASHE potentially?

You're right. That is an investigator-initiated study. We're pleased to be able to collaborate with the folks in Rochester. It is just beginning. So no, we are unlikely to have data at the end of this year. It's probably on a similar timeframe through other studies where we've been talking about it at the end of 2015.

Great. Thanks for taking my questions, guys.

Steve Brozak, WBB Securities.

Hey, good afternoon and thank you for this update. Most questions have been asked, but I want to go to slide 9, which is fascinating, the rindo slide in terms of what the prescribers are likely to look at.

On the universe that you went after, can you give us some kind of a feedback color as to what kind of a universe you are looking at as potential subscribers? Because obviously you're talking about the number of clinicians is probably significantly manageable, and I have one follow-up question after that. So how does this slide relate to the universe of prescribers specifically in the United States?

Well, I would imagine that the prescribers here were mostly KOLs and PIs that are really heavily involved in this space. We went to experts both here and abroad, so these were people that were very familiar not only with rindo and Avastin and temozolomide but other agents that are currently in the clinic and have been in the clinic. So to see what they had seen as far as efficacy and safety was really impressive on their part.

Okay. So to paraphrase, then you are looking at the high degree of comfort they have should see a significant trickle-down or should see a significant reinforcement to other potential prescribers without too much force or without too much (multiple speakers)?

Right. And then also remember the drug is in combination with temozolomide, and tem still has a good 85% of the market. So the uptake there, again, is going to be pretty robust.

Okay. Last question then. I noticed that the UK acceptance is off the charts here, and they are usually the most conservative, and obviously they are always looking at cost constraints and such. Can you tell me why they are close to 100% in terms of on the KOL acceptance side, and I'll jump back in the queue.

Well, I think they just saw the benefit of survival and progression, as well as the early uptake of titers. As we've been saying all along in our previous studies, we've seen separation pretty early. We've seen higher response as far as immune response rates go, and that has correlated to extended PFS and extended survival.

And then obviously, the tail that they've seen from our prior studies is pretty impressive as well. So I think taking all that in together, they felt that with the disease as aggressive as it is, to see these kind of results is pretty impressive from their perspective.

Well. Great. I look forward to your execution on this because it is an impressive slide. Thank you.

Thank you, Steve.

I'm showing no further questions in the queue and would now like to turn the conference back to Mr. Anthony Mariucci. Please go ahead.

Thank you, operator, and thanks to everyone for joining us on the call today. We look forward to keeping you up-to-date throughout the rest of the year with our programs, but as always, we welcome your questions at any time. So please enjoy the last few weeks of the summer, and have a great evening. Thank you.

Ladies and gentlemen, thank you for participating in today's program. You may now all disconnect, and everyone have a great day. Thank you.