Celldex Therapeutics Inc (CLDX) 2015 Q2 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Celldex Therapeutics' second-quarter financial results conference call.

(Operator Instructions)

As a reminder, this conference is being recorded.

I would now like to introduce your host for today's conference, Sarah Cavanaugh. Please go ahead, Ms. Cavanaugh.

Thank you and thank you all for joining us. Before we begin our discussion, I'd like to 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 and Celldex's annual report on Form 10-K, quarterly reports on Form 10-Q and it's current reports on Form 8-K, as well as those described in Celldex's other filings with the SEC and its press releases.

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 has not promised 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 the call. I'd now like to turn the call over to Mr. Anthony Marucci, co-Founder, President and CEO of Celldex. Anthony?

Thank you, Sarah. Good afternoon, everyone and thank you for joining us. Joining me are Dr. Tom Davis, Executive Vice President and Chief Medical Officer; Dr. Tibor Keler, co-Founder, Executive Vice President and Chief Scientific Officer; Mr. Chip Catlin, Senior Vice President and Chief Financial Officer; and Dr. Richard Wright, Senior Vice President and Chief Commercial Officer.

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

First as one would imagine, we have a marked increase in interest in the RINTEGA program from patient, their families and their physicians since presenting data of the Phase 2 ReACT study in recurring glioblastoma last fall at SNO and again this May at ASCO. These data have demonstrated in even one of the most challenging disease settings, recurrent brain cancer, that RINTEGA can generate remarkably frequent and robust immune responses against EGFRvIII, and that this response strongly correlates with meaningful clinical activity across multiple endpoints. Importantly we saw no side effects in this these studies.

The primary endpoint of the study was met, progression-free survival at six months, but most importantly we observed a statistically significant overall survival advantage with a hazard ratio of 0.53, and a p-value of 0.02 in the per protocol population. Even at ASCO in June, this was beginning to translate into long-term survival for a number of patients, something not seen in highly aggressive EGFRvIII positive glioblastoma with twice as many patients on the RINTEGA arm alive at 18 months compared to the control arm.

The emergence of this tale in the survival curve is consistent with an immunotherapy treatment effect. The advantage of RINTEGA therapy extended across multiple other endpoints including longer progression-free survival, high objective response rate and reduced steroid requirements. Glioblastoma patients normally experienced swelling in the brain that can cause neurological problems which often requires high levels of steroids further impacting the patient's quality of life.

In the ReACT study, 44% of those patients on the RINTEGA arm were able to stop steroids more than two months compared to 21% on the control arm. In fact 33% of the patients on the RINTEGA arm were able to stop steroids for more than six months, and half of those patients were able to stop it for more than a year versus 0% on the control arm for either point in times.

Based on these data we believe RINTEGA has the potential to provide meaningful benefits to patients, a sentiment echoed by a number of leading physicians who treat patients with this disease. We continue to follow patients for survival and look forward to presenting mature overall and long-term survival data at the Society of Neuro-oncology Annual Meeting this November.

The ReACT results mirror what we have seen in earlier RINTEGA studies conducted in newly diagnosed patients, supporting our belief that RINTEGA will be an important treatment option for all patients with EGFRvIII positive glioblastoma. To that end, the Phase 3 Act IV study in patients with newly diagnosed EGFRvIII positive glioblastoma moved steadily closer to the finish line in Q2.

In June we reported that the independent Safety and Monitoring Committee recommended continuation of the Act IV study. This analysis included an assessment of utility, safety and efficacy and was pre specified as 50% of events which are (inaudible).

According to our model, the second interim which will be conducted at the 75% of events, should occur later this year or early next year. We at Celldex are acutely aware of the significant unmet need in glioblastoma which is even more pronounced in patients who are EGFRvIII positive, and are meeting as many of these requests as we can through our compassionate use program.

At the urging of a number of our investigators and key opinion leaders in the field, we've entered into discussions with the regulatory authorities on the significance of the ReACT data that we presented at ASCO. As we have said a number of times, the ReACT study was not a typical approval package for the FDA, and hence we were cautious about our expectations given the exploratory nature of the study and the small study size.

That said, we felt we had an obligation to patients to pursue all potential avenues given that this patient population, which historically has done poorly, we're seeing an extremely rare survival benefit. RINTEGA's breakthrough designation was enabled a robust back and forth with dialogue with CBAR on the ReACT study and RINTEGA program overall.

Based on the discussions to date, we believe the most likely scenario for filing for approval for RINTEGA in the US and Europe will be upon receiving data from the Act IV study. With that data in hand, we would then provide the ReACT data as supportive in nature and a filing and apply for approval across all lines of therapy.

While we have consistently received positive feedback from CBAR on the ReACT data set, when we apply for breakthrough designation and in our follow-up discussions to date, CBAR has guided us that the small sample size would be a potential concern for them if we were to file. While this was a surprise to us, we certainly are disappointed particularly for patients.

That said, our discussions with the FDA have been fruitful. We are actively working with them to ensure all parts of our license application meet the expectations and hopefully reduce the time for review. These interactions are especially focused on the manufacturing activities and the companion diagnostic. With the progress made in these areas, we are confident that all the requirements activities associated with the ability to apply for licensure will be completed in line with receiving Act IV data.

We are also in a step fashion planning for a potential launch under the leadership of Dr. Rick Wright who was promoted to Senior Vice President and Chief Commercial Officer in August. Rick brings significant global experience to commercializing novel therapeutics for both orphan diseases and more prevalent indications which will be important to Celldex given the breadth and depth of our pipeline.

He was responsible for developing global business strategy and building the infrastructure required to support commercialization of our cancer immunotherapy pipeline as a whole, but certainly the focus is now on RINTEGA. This focus is echoed as an appropriate throughout the organization as a whole. We are actively executing on all necessary steps to prepare for the filing so that if a process can be completed and expeditious as possible when the Act IV data become available.

At the same time, we continue to make significant progress advancing each of our candidates in our pipeline. For glembatumumab vedotin program, we have approximately 100 sites open in the METRIC study, a registration trial in triple negative best cancer. The study currently spans the US, Australia and Canada.

Trial expansion into EU is underway and we anticipate that we will open enrollment in up to 50 sites in the EU beginning in early 2016. Based on our current projections, we believe enrollment will be completed in the second half of 2016.

Enrollment is also active in the Phase 2 study of glembatumumab vedotin in metastatic melanoma and plans for additional studies with collaborators in squamous cell lung, uveal melanoma and pediatric sarcoma are well underway.

The Varlilumab program has grown considerably with four combination studies now actively recruiting patients, including two that were initiated this past quarter, one with combination with sunitinib in metastatic clear cell renal cell carcinoma and one with ipilimumab in metastatic melanoma.

Early in Q2, Tibor and his team presented pre-clinical data supporting Varli's combo with PD-1 inhibitors at AACR demonstrated that a Varli anti-PDL1 combination induced a potent immune mediated effect that resulted in changes in the tumor micro environment.

Importantly, this combination increased the ratio effector T cells to regulatory cells which is considered an important indicator to beneficial response to immunotherapy. This work directly supports our clinical trial collaboration with both Bristol Myers-Myers-Squibb and Roche. The varlilumab, nivolumab study is progressing well and the Roche study is on track to begin by year end as we had previously guided.

Finally, Oncothyreon led study of varlilumab on Oncothyreon's MUC1 vaccine ONT-10 in breast and ovarian cancer is fully enrolled. Additional Varli combination studies are in the queue, and we will update you as these initiatives -- as they begin. Overall we feel very confident that we have built a significant development program for Varli that should support robust product profile across multiple indications and in combination with a variety of different mechanisms. We think 2016 should be an exciting year for Varli with multiple data readouts.

Finally to wrap up the pipeline, CDX-1401 has been included with the Varli/ipi combination study and will be administered to patients who are NY-ESO-1 positive. It's also being studied in a number of external collaborations including an NCI-sponsored Phase 2 study with CDX-301 in metastatic melanoma which is enrolling patients currently. Like Varlilumab, CDX-1401 and CDX-301 also has potential to be developed as a combination product candidate with other immuno-oncology agents in multiple settings.

We are also conducting a pilot study of CDX-301 for the mobilization of transplantation of allogeneic hematopoietic stem cell in patients with hematological malignancies undergoing hematopoietic stem cell transplantation. This study is exploring the utility of CDX-301 alone and in combination with Mozobil and is enrolling up to 18 recipient donor pairs. We're anticipating have additional data for this study early in 2016.

Finally we remain on track to file an IND for CDX-014 by year end and look forward to initiating clinical trials next year in renal cell carcinoma and potentially other TIM-1 expressing tumors during 2016. As you may recall CDX, CDX-014 is a fully human monoclonal antibody drug conjugate that targets T cell immunoglobulin and [MUC] 1 or TIM-1, a molecule that is upregulated in several cancers including renal cell and ovarian carcinomas.

It is associated with kidney injury and the shedding of the endodomain, and is a predictive biomarker for tumor progression. That said it has very restricted expression in healthy tissues making it a promising target for antibody mediated therapy. Additionally as with many of our pipeline assets, there are also many opportunities for CDX-014 in combination therapies.

In summary we believe we are assembling an innovative and valuable immunotherapy pipeline that demonstrates our commitment to bringing novel medicine to patients for treating of devastating diseases.

With that I will turn the call over to Chip to review our numbers. Chip?

Thank you, Anthony. Net loss was $32.4 million, or $0.33 per share for the second quarter of 2015, compared to a net loss of $28.3 million, or $0.32 per share for the second quarter of 2014. Net loss for the six months ending June 30, 2015 was $62.5 million, or $0.65 per share, compared to $58.2 million, or $0.65 per share for the comparable periods in 2014.

Research and development expenses were $26.5 million in the second quarter of 2015 compared to $24.1 million for the second quarter of 2014. R&D expenses were $51.6 million for the six months ending June 30, 2015, compared to $51.2 million for the comparable periods in 2014.

As of June 30, 2015 we reported cash, cash equivalents and marketable securities of $34 million compared to $359.8 million as of March 31, 2015. The decrease in cash, cash equivalents and marketable securities was primarily driven by our second-quarter net cash burn of $25.8 million. We expect that our cash, cash equivalents and marketable securities will be sufficient to fund operating expenses and capital expenditure requirements through 2017.

However, this could be impacted by our clinical data results from the RINTEGA program and their potential impact on our pace of commercial manufacturing and the rate of expansion of our commercial operations. As of June 30, 2015, Celldex had 98.5 million shares outstanding.

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

Thank you, Chip.

First half of 2015 was a very busy time for Celldex with multiple major milestones accomplished for RINTEGA and a considerable expansion across every single program in our pipeline. We are continuing this momentum in the second half of the year and look forward to keeping you up to date as we go forward on our progress. With that review, Operator we are now ready to take the calls and questions.

(Operator Instructions)

Chris Marai, Oppenheimer.

First, let's maybe touch base with the rindo update. With respect to that, are you looking to undertake in any way a rolling NDA submission following that top line data readout from Act IV?

Well we certainly are in active discussions with the FDA around the requirements for approval and next steps. Certainly based on the ReACT data, upon which we achieved breakthrough designation, we have been able to initiate very active conversations around multiple components of the ultimate package.

We wouldn't be starting a formal rolling BLA until we had a full data set in order to submit, but clearly we'll be in a very good position when that time comes to have a complete package and we believe that could lead to a fairly rapid approval in this particular setting.

Great. And then with respect to CMC and any biomarker analysis or a diagnostic, how far are you along in those, could you remind us?

Sure, Chris, this is Tibor.

We've made great progress on both of those fronts. So CMC we're already manufacturing at commercial scale and working through all of the validation efforts required for the license applications.

Similarly for the diagnostic, we have very good relationships with our diagnostic partners and feel that we're in great shape for filing separately for the PMA as required for the diagnostic.

Okay, great.

And if I may, one more on Varli. When might we see some of that data from the Phase 1/2 whether in combination with sunit or ipi? Thanks.

So Chris, as we previously predicted, we should have data by the end of next year. We're very pleased with how things are going with the Nivo combination, but again we are very dependent on Bristol regarding what we can say there. However the sunit data should likely be available at the end of next year.

Okay. Thank you.

Boris Peaker, Cowen.

On RINTEGA, anything specific that the FDA pointed out as reasons not to file on the ReACT data? I'm wondering was it the imbalance between the arms? Was it only the size of the study? I'm just curious given the unmet medical need in this indication.

Sure, Tom Davis again.

The trial was designed as an explorative study and the sizing clearly from the outset had fairly limited power. Ultimately that is the concern that the results of the study could be induced by chance. And hence they have always been resistant to approval based on small randomized trials with overall survival as one of the endpoints. That really is the primary concern. And they would have liked to see a larger data set to confirm these results.

We're still in discussions with them around possibilities moving forward. We do believe that these data are significant, as we've mentioned before. Key investigators agree with that. And as a supplemental indication, potentially after filing the Act IV data, we still think that the recurrent population is a possibility.

But at this point you said that even though you're in discussions with them, is there any kind of path forward to even consider filing on reACT or is it clear and conclusive that we have to wait for Act IV to readout before an official filing will take place?

There's a fairly significant back and forth with the FDA around this issue. We've not had any definitive answer at this point. But again, I think they are looking for more than just what we have in ReACT right now.

We'll continue to talk with them.

Okay.

And then in terms of thinking forward upon Act IV results. If Act IV let's say unfortunately fails, would you then be in a position to file anything? Or would you have to run essentially if you wanted to move to second line, to move for filing a second line, would you have to essentially run another study in that setting?

Well of course we don't expect that to happen, but if it should, we likely would need another confirmatory study. There are several possibilities that we could pursue in that setting. But certainly, a positive outcome from Act IV would be most reassuring for this particular program.

Great.

And my last question on CDX-1127, could you -- I know you have multiple collaborations ongoing, any particular timeline when we'll see some initial results?

More than likely, Boris it'll be around ASCO. But, again, we would have to talk to the collaborators.

Okay, great. Well thank you very much for taking my questions.

Joe Pantginis, ROTH Capital Partners.

Maybe with RINTEGA, can you describe a little more with regard to your current compassionate use program, and how a patient could go about getting on that?

Well certainly based on the data there's been a great deal of interest, Joe, around both recurrent patients and upfront patients receiving RINTEGA. Obviously our resources are not unlimited and we have a program for investigators who participated in previous studies to refer patients in and where possible we can provide support, but there are still limitations.

More importantly though we are planning some additional studies looking at new combinations with RINTEGA and different scientific questions. And we hope to be able to put patients on trials rather than providing compassionate use before too long.

That's helpful, thank you.

And, Tom, with regard to Act IV, the question is patients -- all the patients in this study, what is the average time on study? Can you provide or go back and remind us what the enrollment rates looked like? Were most of the enrollment towards the end of the study or what did the slope of the curve look like?

Well certainly accrual accelerated over time and the highest accrual rate was in the second half of the trial. So yes, most of the patients were accrued in the second half of the study. And ultimately the average follow up is not that different from the close to the end of the trial itself. I can't give you a specific number around that.

Okay.

Keep tracking events at this point, which I think is the question you're getting at, when would we expect to actually achieve the second interim analysis and final analysis? (multiple speakers) Still look to be very consistent with what we've described before where we would have the second interim into this year early next year and the final analysis could extend out to the end of next year.

Got it, got it.

And then maybe one last quick question on Varli, other types of combos that are exciting to you that you might be considering?

Certainly a lot of possibilities out there, a lot of interesting programs. We're particularly interested of course in combining it within our own pipeline and where we have an established collaboration with the National Cancer Institutes and we're exploring some possibilities, including Varli, along with 301 and 1401 in different settings.

Thanks a lot, guys.

Seamus Fernandez, Leerink.

A couple of quick ones. Can you remind us what the statistical cutoffs are for in terms of the trial design? So at the 50% versus the 75% and then what the cutoffs would be at the final analysis? And if you could provide hazard ratios along with that, that would be very helpful.

And then the second question, as we look forward to the pace, should Act IV succeed either at the second interim analysis or the final analysis, how should we think about timing to commercialization from that point? It sounds like it'll be relatively rapid, but just wanted to know what kind of support you're getting from the agency as you seek to work towards commercialization. Thanks a lot.

Tom here, I'll answer your statistical questions and then hand it over to -- Richard Wright wants me to answer the development question as well.

The statistics around the study are based essentially on P values for the interim analyses. So the first interim analysis which is based on 50% of events, would have required the data to have a P value of 0.003 or better in order to be kicked out for efficacy. Now that translates to a range in hazard values but essentially it has a value of 0.5 to 0.55 would have had a high likelihood of achieving that P value.

For the second interim analysis, the required P value would be 0.018, which relates again to a range in hazard ratios with something approximately 0.65 would be adequate. For the final analysis, essentially a P value of 0.044, or a hazard ratio of up to 0.79 would be adequate for positive outcome therein.

When it comes to the commercialization path, obviously the time to be able to file a BLA and achieve licensure is variable as we said earlier. We do believe that we're well on the path to assuring success of a BLA based on ongoing discussions with the FDA.

But after we do have a definitive data package, we probably would be able to file approximately three to six months thereafter. And of course there is the six to eight month review time required for approval. But I can assure you that our commercial team are dedicated to launch as soon as possible once we have a license.

Great. And if I can a quick follow up. Aas we think about not commercialization but ongoing R&D spend typically, what would be the -- are there other areas beyond GBM where we could envision rindo getting utilized?

My understanding is, is rindo would be fairly isolated to just the GBM patient population. So I'm more asking what ongoing spend might be necessary? And if Act IV succeeds, do you envision getting a label that would be supportive of the overall patient population, or would a study be necessary in the recurrent setting to establish a broad label? Thanks.

Well certainly good question. It's very clear in our hands that V3 is reliably expressing glioblastoma, our assay seems to be quite reproducible with about a third of patients will test positive, both in the upfront and recurrent setting.

The data in other tumor types is more variable and we've not been able to reliably reproduce the other data that are out there. So we don't completely rule out the possibility of extending into other diseases, but currently we're not planning along those lines until we can be confident of expression patterns.

And the other question was on would this -- would the Act IV study, if successful, could ReACT or would ReACT make it as part of a potential label or would the label at least if Act IV were successful, be brought and include recurrent GBM, as well as the front line setting?

So we do believe that if we were to file, would be able to file for all V3 positive glioblastoma patients regardless of the disease setting. The ReACT data should be supportive of supplemental BLA in that setting, so we would simultaneously get the entire population.

Of course that's our goal and we believe that's very reasonable. And that would be our approach to the regulators. But we are again in discussions, when we have final Act IV data we'll be able to ask that question definitively.

Perfect, thanks so much.

(Operator Instructions)

Biren Amin, Jefferies.

A question on FDA discussions with RINTEGA. With regard to the timelines, can you think of a situation where a Phase II trial has shown positive data on OS and the Company and the sponsor are running a robust Phase III trial design and FDA doesn't allow a sponsor to submit a BLA? Because when you look back I guess at some examples like Onyx, which was able to submit on Phase II response rate data and other situations, it seems that FDA has been more lenient in other examples.

Biren, we do think that this is a unique situation in that it was a small randomized trial with a PFS six endpoint. So essentially for a randomized comparison on a time to event endpoint, it was under powered. That's essentially the only way you can design a Phase II randomized trial of this sort.

If it were a response rate endpoint or another surrogate endpoint, the data might have been adequate to file for accelerated approval. But based on the current structure with that PFS and a secondary OS endpoint, again, the FDA are just concerned that the result could be by chance and would like to see a confirmatory data set. So we certainly feel that the Act IV data could be confirmatory, and if Act IV is positive, we certainly would be filing for the entire indication.

Okay. And with regards to the Varli, I may have missed this because I joined the call late, but when would we see data on the combination trial with Nivo?

So the trial is going very well at this time. But again we are subject to an agreement with Bristol as to when we could release data. So we are discussing when data might be available. The earliest would be the middle of next year, but it more likely will be longer than that unless Bristol agrees.

Got it, thank you.

David Nierengarten, Wedbush Securities.

I did have one question. If the -- or has the FDA taken a look at the interim Act IV data? Do they have access to the unblinded data set there? Thanks.

No they have not, David.

Okay, great. Thank you.

Steve Brozak, WBB Securities.

This is [Ahmed] for Steve Brozak today at WBB.

Thank you for taking the question, but I have a question around Avastin. RINTEGA at this point has shown significantly more benefit for patients than Avastin ever has. And you guys probably know better than I do, is approved on much less data with much less survival benefit.

So how do you guys compare and contrast the Avastin the approval in GBM versus what's going on with you at the FDA RINTEGA? And how is this playing into your overall strategy with FDA, if at all, with regard to what you're doing and what they're saying?

Well certainly good question. And the clinicians who have used both drugs certainly agree that the data from ReACT are very compelling considering the dismal nature of the disease.

However, the requirements for approval, particularly accelerated approval, are for surrogate endpoints like response rates. And Avastin of course was approved based on a fairly significant response rate in disease where responses are rarely seen.

We could talk for some time whether or not they're true responses or not, but they did appear to provide patient benefit and that really was the basis for the FDA approval, accelerated approval based on a surrogate response rate. There has not been a study showing whether there's a survival benefit with Avastin and many people point out that's a limitation to that approval.

However, in our discussions with the FDA, it's very clear that our survival data could not serve for approval because, for accelerated approval, because overall survival is not a surrogate for overall survival. It's rather a definitive endpoint and they would have to consider accelerated approval for ReACT.

So it's a complicated discussion around regulations and precedent. It is ongoing, but right now, we're not planning to file a BLA based on ReACT just because of their initial response.

And of course in 2009 when Avastin was granted approval, it almost seems like a different era for the FDA back then. But I had to ask because it seems as if the data here is just overwhelmingly in favor for the use of this in treatment. But thank you very much for the response.

Sure, no it's a good question. Let me just add that the Avastin approval in glioblastoma was a supplemental approval.

So that's what I'm referring to here where ReACT could serve for supplemental approval but not primary approval for a drug. That's certainly what happened with Avastin, was approved in other indications and when it showed activity with response rates in glioblastoma, the data would then justified approval.

Excellent, thank you so much.

Thank you. I'm showing no further questions. I would now like to turn the call back to Anthony Marucci, President and CEO of Celldex, for closing remarks.

Thank you, Operator, and thanks to everyone today for joining us at this late hour. We appreciate your time, enjoy the last weeks of your summer and we look forward to catching up with you during the rest of the year. Thank you.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude today's program, you may all disconnect. Everybody, have a wonderful day.