Celldex Therapeutics Inc (CLDX) 2017 Q2 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Celldex Therapeutics midyear call.

I would like to turn the call over to Ms. Sarah Cavanaugh with Celldex.

Ma'am, you may begin.

Thank you.

Good afternoon, and thank you for joining us today.

With me on the call are Anthony Marucci, Co-Founder, President, and CEO of Celldex; Dr. Tibor Keler, Co-Founder, Executive Vice President and Chief Scientific Officer; Dr. Tom Davis, Executive Vice President and Chief Medical Officer; Sam Martin, Senior Vice President and Chief Financial Officer; and Dr. Rick Wright, Senior Vice President and Chief Commercial Officer.

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 other factors that might cause Celldex' 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' annual report on Form 10-K, quarterly report on Form 10-Q and its current reports on Form 8-K as well as those described in Celldex' 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, plan and estimate 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 like to turn the call over to Anthony.

Thank you, Sarah.

Good afternoon, and thank you for joining us.

On today's call, we will update you on our clinical programs, outline key milestones for the remainder of the year, and then Sam Martin will review financial results.

As announced in June, concurrent with the retirement of Chip Catlin, we promoted Sam Martin to Senior Vice President and Chief Financial Officer.

Sam has been with us for 8 years and during that time has not only provided us with corporate finance expertise, but with leadership throughout the organization.

The transition has been seamless, and we are happy to have him in this role.

As always, we look forward to answering your questions at the close of the call.

As you saw in our press release this afternoon, regarding our lead antibody drug conjugate program, glembatumumab vedotin, we have reached our target enrollment of 300 patients in the METRIC study and closed screening.

Due to the inherent challenges in recruiting an enriched patient population, especially within an orphan indication, achieving this milestone is a significant accomplishment for Celldex.

We anticipate formally closing enrollment by the end of September, which gives time for eligible patients who have already been screened and identified as having tumors with high gpNMB expression to come on for the study.

We will issue a press release when enrollment is formally completed, again, we believe, by the end of September and would expect data from the study 6 to 8 months after that announcement, so likely Q2 2018.

I do want to take a minute to recognize the physicians who have supported METRIC and, most importantly, the patients who enrolled in the study.

There is a significant amount of clinical research interest in triple-negative breast cancer given the high unmet need and lack of effective targeted therapies.

We believe that glemba's mechanism of action, its unique gpNMB target and the clinical evidence to date will support a differentiated product for patients with triple-negative breast cancer.

If successful, METRIC is a study with potential for registration both in the U.S. and the EU.

Importantly, we plan to seek input from the regulators on the filings as their feedback will be important in prioritizing and defining next steps and the associated time lines.

These filings will be supported by the companion diagnostic and a fully validated commercial manufacturing process.

As we discussed on our 2016 year-end call this past March, commercial manufacturing for an ADC is considerably more involved and more expensive than that of a typical antibody.

And we made the decision to stage the most costly work in these areas, estimated at an incremental $40 million to $50 million spend to begin after we have data in hand.

While this step will extend the time line to complete our regulatory filings, we believe that this is the most prudent use of our funds as we seek to advance our pipeline overall.

That said, we are progressing activities to support commercialization and have made good progress on a number of fronts.

We have successfully established a complete manufacturing supply chain, working with established CMOs to produce the monoclonal antibody intermediate, the drug substance and the drug product at commercial scale.

Further ongoing process characterization studies are defining the critical process parameters that we will need to be established before proceeding the process performance qualification.

We have also worked closely with our preferred diagnostic partner to define the process to transition from a current lab-based diagnostic to a distributable test.

We remain open to the possibility of bringing a partner onboard for glemba who could help maximize the opportunity across multiple indications and geographies and believe the staged approach we have outlined supports this.

glemba is also being evaluated in a Phase II study in patients with checkpoint-refractory metastatic melanoma.

At ASCO in June, we reported clear activity observed in the single agent arm of the study, which Tom will review in detail.

And we are building on these findings by investigating combination cohorts with checkpoint inhibitors and with our own varlilumab.

We continue to expect data from that glemba varli arm in the fall, and we are currently working to complete enrollment of the glemba checkpoint arm of the study.

The current focus of our varli program is the Phase II study in multiple tumor types that we are conducting in collaboration with BMS.

We continue to anticipate completing enrollment across all cohorts of the study by the first quarter of 2018 and will work with BMS to present these results at a medical meeting next year.

We recently shared positive mature data from the Phase I portion of the study at ASCO that showed a good safety profile, ability to turn cold tumors hot and clinical activity in patients not likely to benefit from checkpoint monotherapy.

Tom will discuss this in detail -- more data and more detail.

The programs that we brought in-house from our acquisition of Kolltan last November, CDX-0158, an antibody that targets KIT; and CDX-3379, an antibody that targets ErbB3, both have been successfully integrated into our pipeline.

We continue to expect to complete the Phase I dose-escalation study of CDX-0158 in refractory GIST with data by year-end.

We have also finalized plans for an open-label Phase II study of CDX-3379 in patients with recurrent metastatic head and neck squamous cell cancers who are refractory to Erbitux, also known by its generic name cetuximab.

And we anticipate initiating this study in the fourth quarter of this year.

We also remain on track to complete the dose-escalation portion of the Phase I study of CDX-014, an ADC targeted to TIM-1 in advanced renal cell carcinoma by year-end.

We continue to drive the science behind unique drug candidate opportunities.

From a preclinical perspective, the focus is on CDX-1140, the early stage TAM program we brought in with the Kolltan acquisition and our bispecific antibody programs.

CDX-1140, our fully human antibody targeted to CD40 is the most advanced, and we are on track to initiate the Phase I study later this year.

The TAM program, comprised of the targets Tyro3, AXL and MerTK, was an important driver for us in the Kolltan acquisition and has potentially broad applications in oncology, inflammation and infectious disease.

We expect preclinical data from this program and our growing bispecific program later this year and next year, respectively.

With that, I will now ask Tom to review the glemba program and recent data presentations for glemba and varli in more depth.

Tom?

Thank you, Anthony.

As background for those who might be newer to the Celldex story, glembatumumab vedotin is an antibody drug conjugate, or ADC, that targets and binds gpNMB, a protein that is expressed in a range of cancers.

In breast cancer, gpNMB has been shown to promote the migration, invasion and metastasis of the disease.

It is highly expressed in triple-negative breast cancers, where it is associated with increased risk of recurrence.

As an ADC, glemba is designed to release the potent cytotoxin MMAE upon internalization into gpNMB expressing tumor cells.

Based on positive data from their antibodies EMERGE study, we initiated the METRIC study, a 300 patient Phase II trial of glembatumumab in patients with metastatic triple-negative breast cancers that overexpressed gpNMB.

In this indication, overexpression is defined as greater than or equal to 25% of tumor cells testing positive, as determined by IHC.

The primary endpoint of the study is progression-free survival, or PFS.

Patients are randomized 2:1 to either glemba or to Xeloda, also known by the generic name capecitabine as a comparator.

Xeloda, while routinely used in this patient population given the lack of options, has a limited impact, with a PFS ranging from 1.7 to 2.5 months in the published literature.

The study is event-driven, the event being PFS, which is defined as the time from randomization to the earlier of disease progression or death due to any cause, and the study calls for 203 events for evaluation of the primary endpoint.

PFS will be assessed based on an independent central reading of the tumor-imaging scans.

That said, the sum of the data, including the secondary endpoints of response rate, overall survival, duration of response and safety will be important in assessing clinical benefit.

As Anthony mentioned, we look forward to data likely in Q2 of 2018.

At ASCO in June, we presented mature data from the 62-patient Phase II study of glemba as a single agent in patients with checkpoint refractory metastatic melanoma.

Glemba performed well in the single-agent setting with an 11% response rate, a 52% disease control rate and a median duration response of 6 months in patients with primarily Stage 4 metastatic melanoma who had failed both checkpoint inhibitor therapy and, if appropriate, a BRAF/MEK targeted therapy.

In these patients, who in some cases have failed 3 or 4 prior lines of therapy, there are no drugs available that really offer them a meaningful benefit.

The primary endpoint of the cohort, a threshold of 6 or more objective responses in 52 evaluable patients, was exceeded.

7 of 62 patients experienced a confirmed response and additional 3 patients also experienced the single time point partial response.

Since data were first reported in October of 2016, 1 patient converted from a confirmed partial response to a confirmed complete response, which is truly remarkable in this refractory population.

Median overall survival, or OS, for all patients was 9 months and median PFS for all patients was 4.4 months.

Consistent with previous studies in melanoma and breast cancer, the development of a rash was associated with greater clinical benefit.

Patients with a rash in cycle 1 experienced a higher confirmed response rate of 21%, a more prolonged overall survival with a median of 15.8 months and a more prolonged progression-free survival of 5.5 months as compared to those who did not have a rash.

We intend to conduct exploratory analyses of pre-entry skin biopsies in future trial patients to investigate potential predictions of response to glemba given the intriguing association of rash and outcome.

Pretreatment tumor tissue was available to 59 patients.

All samples were gpNMB positive, and 78% of patients had tumors with 100% of their epithelial cells expressing gpNMB.

Therefore, all patients with metastatic melanoma could be evaluated as potential candidates for treatment with glemba in future studies.

Additionally, published preclinical data suggest that the antitumor activity of MMAE may be enhanced when combined with immune activators or checkpoint inhibitors.

Microtubule-depolymerizing cytotoxic agents such as MMAE have been shown to convert tumor-resident tolerogenic dendritic cells into active antigen-presenting cells.

This presents a great opportunity for us to build on the positive monotherapy results in melanoma and possibly augment the treatment effect.

Enrollment has completed in the glemba and varli combination arm of the Phase II study, and data from this portion of the study are expected this fall.

Enrollment continues in the glemba plus checkpoint inhibitor arm in patients who failed prior checkpoint therapy, a population with limited treatment options.

There's been a lot of investigator enthusiasm for this study given the lack of treatment options for patients who progress after checkpoint therapy.

And if glemba can convert nonresponders to responders, it would be an important clinical advancement.

Moving on to the next program.

In collaboration with BMS, we presented updated data from the Phase I portion of the varli/Opdivo study in an oral presentation at the recent ASCO meeting.

Varli is a fully human monoclonal antibody that binds to and activates CD27, a critical co-stimulatory molecule in the immune activation cascade.

Varli is thought to be -- work primarily by stimulating T cells, an important component of a person's immune system, to attack cancer cells.

36 patients with Stage 4 heavily pretreated disease were enrolled in the Phase I portion of the study, of which 80% had either colorectal or ovarian cancer and most were also PDL1 negative at baseline, meaning they are unlikely to respond to a checkpoint inhibitor alone based on past experience.

The primary objectives of the Phase I portion of the study was to evaluate the safety and tolerability of the combination, which was well tolerated at all varli dose levels tested without any evidence of increased autoimmunity.

Notable disease control was observed across multiple dosing regimens that is stable disease or better for at least 3 months.

Three partial responses were observed, including a patient with PDL1 negative, MMR proficient colorectal cancer, that has continued to a near complete response and is ongoing.

We also observed a partial response in a patient with squamous cell head and neck cancer with low 5% PDL1 expression and another in a patient with PDL1 negative ovarian cancer.

A treatment-associated increase of PDL1 and tumor infiltrating lymphocytes was observed, particularly in patients with ovarian cancer.

In a subgroup analysis of 13 patients with paired baseline and on-treatment biopsies, only 15% were PDL1 positive at baseline compared to 77% during treatment, a statistically significant finding.

Patients with increased tumor PDL1 expression also showed an increase in tumor-infiltrating CD8 T cells.

And importantly, these increases were correlated with better clinical outcome.

The Phase II portion of the varli/Opdivo study is enrolling patients across 5 indications, targeting 18 patients with colorectal cancer, 54 with ovarian cancer, 54 with head and neck squamous cell carcinoma, 25 with renal cell carcinoma and 20 with glioblastoma.

The Phase II portion of the study includes ultimate varli regimens using intermittent dosing to address the potential concern that continuous dosing may lead to immune cell exhaustion.

The primary objective of this portion is overall response rate for all cohorts except glioblastoma, where the primary objective is the rate of 12-month overall survival.

Enrollment is complete in the colorectal and glioblastoma cohorts, and we believe we will complete enrollment across the remaining cohorts in the first quarter for 2018.

There's certainly other programs progressing across our pipeline, which Anthony discussed.

I'm more than happy to answer questions on these programs during the Q&A.

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

Thank you, Tom.

In the second quarter of 2017, net loss was $28.6 million or $0.23 per share compared to a net loss of $32 million or $0.32 per share for the second quarter of 2016.

Net loss for the 6 months ending June 30, 2017, was $62.8 million or $0.51 per share compared to $66.6 million or $0.67 per share for the comparable period in 2016.

Research and development expenses were $50.8 million for the 6 months ending June 30, 2017, compared to $53.2 million for the comparable period in 2016.

General and administrative expenses were $13.8 million for the 6 months ended June 30, 2017, compared to $17.1 million for the comparable period in 2016.

As of June 30, 2017, we reported cash, cash equivalents and marketable securities of $154 million compared to $167 million as of March 31, 2017.

The decrease was primarily driven by second quarter cash used in operating activities of $28 million, partially offset by the $8.7 million of cash received, net of transaction expenses paid from the sale of common stock under the Cantor sales agreement.

We expect that our cash, cash equivalents and marketable securities at June 30, 2017, combined with the anticipated proceeds from future sales of common stock under the Cantor agreement, are sufficient to meet estimated working capital requirements and fund planned operations through 2018.

However, this guidance assumes that we elect to pay the Kolltan contingent milestones, if any, in stock rather than cash.

At June 30, 2017, Celldex had 127.4 million shares outstanding.

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

Thank you, Sam.

Before we move on to Q&A, I want to first review the upcoming milestones discussed on the call today.

First for glemba.

For the METRIC study, we believe we will formally close enrollment by the end of next month after we allow all eligible patients in the screening queue to come on study.

The study is event-driven.

And as we see more events emerge, we will be able to predict timing for data with greater accuracy.

But it's estimated to be about 6 to 8 months from enrollment completion, so likely Q2 of 2018.

We also expect data by year-end from the glemba/varli combination in checkpoint refractory metastatic melanoma and will continue to enroll patients in the glemba checkpoint combo in the same indication.

For varli, we are expected to complete enrollment across all cohorts in the Phase II portion of the varli/Opdivo study in the first quarter of 2018.

And as we have done in the past, we will work with BMS to present data from the study at a future medical meeting.

For CDX-0158, we are continuing to enroll patients to the Phase I dose-escalation study and refractory GIST and plan to report data from this study by the end of the year.

Additionally, we anticipate initiating a Phase II study of CDX-3379 in patients with recurrent or metastatic head and neck squamous cell cancers who are refractory to Erbitux in Q4 this year.

And finally, we expect enrollment to be completed in the Phase I dose-escalation study of CDX-014 in renal cell carcinoma by the end of the year, and we are excited to bring CDX-1140 to the clinic later this year.

So as you can see, we have been very busy in this first half of the year and expect a number of milestones over the second half with our number of trials completing enrollment and providing data to share with you.

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

(Operator Instructions) Our first question comes from the line of Tony Butler of Guggenheim.

This is Allen Cha on for Tony Butler.

I have a couple of questions regarding the checkpoint refractory melanoma trial.

So first of all, can you give us a little more color on how the enrollment is going in the Opdivo/glemba combo arm in the trial, (inaudible) when you expect the enrollment to complete and how long you expect the wait to be before the first data readout?

Secondly, what do you think is responsible for the correlation between the presence of rash in cycle 1 of response rate?

Do you think this is an off-target effect that might limit dose escalation?

And lastly, were there any additional PR to CR conversions since the last update or just the 1 additional conversion that you announced?

Sure, Tony (sic) [Allen].

Happy to answer those questions.

So the checkpoint inhibitor combination with glemba is actually occurring very actively at this point in time.

We're happy with how things are going.

We do expect to be able to complete accrual by the end of the year and would expect data at an appropriate conference next year.

As far as the rash and outcome goes, we do note that gpNMB is very highly expressed in the normal tissues of the skin.

So it's not surprising to see what we think is an on-target effect, like rash, in these patients.

There does appear to be some correlation with the pharmacokinetics.

So we do think it's an appropriate pharma-dynamic marker in these patients to predict outcome.

We have reported the 1 patient who after really quite some length of time converted from a PR to CR.

As mentioned, we presented that at ASCO.

At this point in time, that is the only patient that we've seen fully convert to a CR, but there are other patients ongoing on treatment.

(Operator Instructions) Our next question comes from the line of Mara Goldstein of Cantor Fitzgerald.

Just more a housekeeping item.

But as it relates to the candidates that came in from Kolltan given the advancement over the last couple of months, should we be thinking about any milestones that are due for those candidates and at what juncture would they be due?

So Mara, this is Anthony.

We don't see any milestones being due in the next few months, maybe sometime in '18.

Okay.

And if I could just ask another question, if you don't mind.

So you laid out sort of the activities that you've been undertaking on behalf of manufacturing for glemba, understanding obviously that you sold that process down.

But by the time you have outcome for the METRIC study, which assumed is sometime in the second quarter of 2018, how far along in that continuum?

Because I think last time the company spoke about it publicly was this incremental $40 million to $50 million investment, which you weren't fully going to commit to.

But how far along on that curve are you now, if at all?

Mara, we haven't hit the larger portions yet, but we're certainly making preparations for it.

The monies that we are spending have been budgeted in this year.

So those monies are being spent.

And again, we have not hit that larger portion yet, but those can be triggered once data is happening.

And if I can just ask another question on this.

So assuming for a moment that the data -- that METRIC reads out, and it's a positive data study, you then have to obviously complete the path to get an NDA file, one of which is CMC.

So what would -- how long is that process relative to how long it would take you to put the data component together?

Well, once we have data from the trial, Mara, we're predicting that it would take approximately 3 months to 6 months to put together the formal clinical package.

But of course, there are other components involved in the BLA filing as well.

So Mara, we'll know a lot more as we get closer and closer and have this conversations with the FDA.

Thank you.

And at this time, I'm showing no further questions.

I'd like to turn the call back over to Mr. Anthony Marucci for closing remarks.

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

As always, we welcome your questions at any time.

So have a good evening, and we look forward to catching up with you soon.

Ladies and gentlemen, thank you for your participation in today's conference.

This does conclude the program.

You may now disconnect.

Everybody, have a great day.