Celldex Therapeutics Inc (CLDX) 2017 Q4 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Celldex Therapeutics Year-End 2017 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.

You may begin.

Thank you.

Good afternoon and thank you for joining us.

Today on the call, I have Anthony Marucci, Co-Founder, President and CEO of Celldex Therapeutics; Dr. Tibor Keler, Co-Founder, Executive Vice President and Chief Scientific Officer; and Sam Martin, Senior Vice President and Chief Financial 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 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 Factor and Management's Discussion and Analysis of Financial Condition and Results of Operation 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 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 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'd now like to turn the call over to Anthony.

Thank you, Sarah.

Good afternoon, everyone, 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 always, we look forward to answering your questions at the close of the call.

We will start first with glembatumumab vedotin, our lead ADC currently in a company-sponsored studies in both triple negative breast cancer and metastatic melanoma.

As previously disclosed, enrollment in the METRIC study in triple negative breast cancer was completed in August of 2017 with 327 patients on study.

Given the inherent challenges in recruiting an enriched patient population, especially within an orphan indication, achieving this milestone was a significant accomplishment.

We are also really grateful to the physician and patients who participated in the METRIC study and are hopeful that glemba will be able to offer patients, families and caregivers a potential new option and indication where there are so few approved therapies and none that target gpNMB, which is associated with more aggressive form of the disease.

In total, we enrolled patients across 120 sites in the U.S., EU, Canada and Australia.

We were pleased to see that our screening outcomes were consistent with our prior experience.

Approximately 50% of the patients we screened for the METRIC study met the 25% or greater gpNMB threshold.

The primary endpoint of the study is progression-free survival, or PFS, which is defined as the time from randomization to the earlier of disease progression or death due to any cause.

The primary endpoint analysis is based on reaching 203 events and will be assessed by an independent central read of patients' scans.

You may recall, in the Phase II EMERGE study, which was conducted in a later-stage patient population, glemba PFS in a subset of patients with high gpNMB expressing triple negative breast cancer was 3.5 months.

The comparator arm in the METRIC study is Xeloda, also known by the generic name capecitabine, which has a reported PFS of 1.7 to 2.5 months for patient populations similar to METRIC.

We believe glemba is well positioned for success, particularly in these studies that did not select the gpNMB expression, which has been shown to correlate with reduced PFS and survival in breast cancer.

From a statistical perspective, the METRIC study is powered at 85% to detect a hazard ratio of less than or equal to 0.64 for the primary PFS endpoint.

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

The 203rd progression event required for evaluation of the primary endpoint has been reached, and final data cleaning is ongoing in preparation for data lock and analysis.

As we reaffirmed in our filings this afternoon, we remain on track to report top line primary endpoint data from the METRIC study in the second quarter of 2018.

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

Importantly, we plan to seek input from the health authorities on our submission plans as their feedback will be important in prioritizing and defining next steps and the associated time lines.

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

As we have previously discussed, 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 spend of approximately $35 million to begin after we have data in hand.

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

Assuming positive data, we plan to work with the FDA on a regulatory strategy that will support submitting a biological license application, or BLA, in the second half of 2019.

As we have stated in the past, we remain open to the possibility of bringing on a partner for glemba, who could help maximize the opportunity across multiple indications and geographies, and we believe the staged approach we've outlined on the manufacturing and diagnostics supports this.

We have completed a number of important steps to support this work.

We have established a commercial manufacturing supply chain for the monoclonal antibody intermediate, the antibody drug substance and the antibody drug product at commercial scale.

Each of these tests will require process performance qualification, or PPQ, to support the manufacturing portion of the BLA.

We have manufacturing slots identified with our commercial manufacturers, and with positive top line data, we will quickly move forward with PPQ planning and execution.

We continue to work closely with our preferred diagnostic partner on the commercial diagnostic test and plan to meet with the FDA to discuss transition from our current lab-based test and additional activities needed to support a PMA submission by a diagnostic partner in line with the BLA submission for glemba.

We continue to believe, based on key opinion leader and physician advisory board feedback, that glemba's mechanism of action, its unique gpNMB target and the clinical evidence to date will support a differentiated product in a robust market for glemba.

Again, we look forward to data next quarter and are hopeful that glemba will offer patients, families and caregivers a potential new option in this devastating disease.

Behind the METRIC study, glemba is also being evaluated at Celldex in multi-cohort Phase II study in patients with checkpoint refractory metastatic melanoma.

We presented mature data from the single-agent arm at ASCO in 2017, where we saw compelling activity, including an overall response rate of 11% and a PFS of 4.4 months in a heavily pretreated patients with unresectable stage III or Stage IV melanoma who previously failed checkpoint immunotherapy and BRAF or MEK-targeted therapies.

Importantly, what stood out to us in this study was the waterfall plot, where more than 50% of the patients experience tumor shrinkage, with a number of these patients coming very close to the RECIST responses.

Our goal in the combination cohorts we are conducting is to see if we can tip these patients into formal responses, increasing the overall robustness of the data.

To this end, we have added a number of combination arms, including our CD27 agonist, varlilumab, which reported data at SITC in 2017; with checkpoint inhibitors, which very recently completed enrollment; and with CDX-301, our dendritic cell growth factor, which is currently enrolling patients.

As data emerges, we will be in a position to determine next steps and look forward to sharing this with you.

Moving to varli.

In January, as planned, we completed enrollment across all cohorts in the Phase II study of varli in combination with Opdivo that we are conducting in collaboration with BMS.

In total, the Phase II portion of the study enrolled 139 patients across 5 cohorts in colorectal cancer, ovarian cancer, head and neck squamous cell carcinoma, renal cell carcinoma and glioblastoma.

The primary objective of the Phase II cohorts is objective response rate, except glioblastoma, where the primary objective is the rate of 12-month overall survival.

Secondary objectives include immune profiling of patients and their tumors in evaluating alternative dosing schedules of varli.

Working with BMS, we plan to report data from each cohort at various medical meetings in 2018, beginning this summer.

Moving on to CDX-014, our ADC that targets TIM-1, enrollment is continuing in our Phase I dose-escalation study.

This trial initially enrolled patients with clear cell and papillary renal cell carcinomas.

In January, we expanded enrollments to also include patients with ovarian clear cell carcinoma, a malignancy where TIM-1 expression is also upregulated.

This study includes a dose-escalation portion across 3 separate dosing cohorts to determine the maximum tolerated dose, followed by cohorts of up to 15 patients, each to assess the preliminary antitumor activity as measured by overall response.

Finally, as we close out 2017, we advanced 2 of our pipeline candidates into new studies.

First, we opened enrollment in the Phase II study of CDX-3379 in combination with Erbitux in head and neck squamous cell carcinoma.

CDX-3379 is a human monoclonal antibody designed to block the activity of ErbB3, which is believed to be an important receptor in regulating cancer cell growth and survival as well as resistance to targeted therapies.

It is expressed in many cancers, including head and neck, thyroid, breast, lung and gastric cancers as well as melanoma.

We believe the proposed mechanism of action of CDX-3379 sets us apart from other drugs and development in this class due to the ability to both -- to block both ligand-independent and ligand-dependent ErbB3 signaling by binding to a unique epitope.

This Phase II study is an open-label trial in combination with Erbitux and approximately 30 patients with HPV-negative, Erbitux-resistance advanced head and neck squamous cell carcinoma.

Patients must have been treated previously with an anti-PD-1 checkpoint inhibitor, a population with limited options and a particularly poor prognosis.

The study implies a two-stage Simon design, and the primary objective of the study is objective response rate.

To advance in the second stage, we must observe one objective response in the first 13 patients.

We also initiated a Phase I study of CDX-1140.

1140 is a fully human antibody targeted to CD40, a key activator of immune response, which is found on dendritic cells, macrophages and B cells and is also expressed on many cancer cells.

Potent CD agonist antibodies have shown encouraging results in early clinical studies.

However, systemic toxicity associated with broad CD40 activation has limited their dosing.

We believe that CDX-1140 has unique properties relative to other CD40 agonist antibodies.

Its agonist activity does not require cross-linking through Fc receptor interactions, allowing more consistent and controlled immune cell activation.

Also, we observed strong synergy with CD40 ligand that may potentiate the agonist activity near activated T cells in lymph nodes and tumors.

Finally, CDX-1140 had a remarkably good safety profile while demonstrated potent immune activation in our preclinical studies.

This Phase I study, which is expected to enroll up to approximately 105 patients with recurrent, locally-advanced or metastatic cancers is designed to determine the maximum tolerated dose during the dose-escalation phase and to recommend doses for further study in a subsequent expansion phase.

During a dose-escalation phase, patients will receive CDX-1140 at dose levels ranging from 0.01 mgs per kg to 3.0 mgs per kg once every 4 weeks until disease progression or intolerance.

The expansion phase is designed to further evaluate the tolerability and biological effects of selected doses of CDX-1140 in specific tumor types.

This program is advancing nicely, and we think we're in good position to initiate combination cohorts later this year.

Behind these programs, we continue to advance our anti-KIT program.

We anticipate manufacturing and IND-enabling efforts for CDX-0159 will be completed this year and will enter the clinic in 2019.

We also continued to advance the TAM program, comprised of targets Tyro3, AXL, and MerTK, which has potentially broad applications in oncology, inflammation and infectious disease and our growing bispecific antibody program.

With that, I will ask Sam to report on the financials, and then we will outline the milestones for 2018 and open up the call for questions.

Sam?

Thank you, Anthony.

For the fourth quarter of 2017, net loss was $3.8 million or $0.03 per share compared to a net loss of $32.3 million or $0.30 per share for the fourth quarter of 2016.

Net loss for the year ended December 31, 2017, was $93 million or $0.72 per share compared to $128.5 million or $1.27 per share for the comparable period in 2016.

As a result of the tax reform passed in 2017, we recorded a noncash income tax benefit of $19.1 million during the fourth quarter of 2017.

Research and development expenses were $96.2 million for the year ended December 31, 2017, compared to $102.7 million for the comparable period in 2016.

General and administrative expenses were $25 million for the year ended December 31, 2017, compared to $36 million for the comparable period in 2016.

As of December 31, 2017, we reported cash, cash equivalents and marketable securities of $139.4 million.

We expect that our cash, cash equivalents and marketable securities at December 31, 2017, combined with a $6.1 million in net proceeds from the sales of common stock under our Cantor agreement from January 1, 2018 through February 28, 2018, and the anticipated proceeds from future sales of common stock under our Cantor agreement are sufficient to meet estimated working capital requirements and fund planned operations through 2019.

This could be impacted by our clinical data results from the METRIC study and their impact on the pace of commercial manufacturing and the rate of expansion of our commercial operations.

At December 31, 2017, we had 138.5 million shares outstanding.

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

Thank you, Sam.

As you can see, 2017 was a significant year for Celldex with advancement across our entire pipeline.

Before we move on to Q&A, let's review the milestones for 2018.

First, for glemba.

We look forward to reporting top line primary endpoint data from the METRIC study in triple negative breast cancer in the second quarter.

In the ongoing melanoma program, we completed enrollment in the checkpoint combination cohort in January and recently initiated the combination cohort of CDX-301, which we hope to complete enrollment by the end of the third quarter of 2018.

For varli, we anticipate reporting data at various medical meetings over the remainder of the year.

If all goes as planned, we would expect to report the ovarian, colorectal and renal cell cohorts in the summer and the head and neck and GBM cohorts in the fall.

For CDX-3379, we plan to complete enrollment in the first stage of the study by the end of the third quarter.

For CDX-014 and CDX-1140, we will continue to execute across both of these Phase I studies over the remainder of the year and hope to be able to report data -- next steps later on this year.

With that review, I thank you for your time.

And operator, we are now ready to open the call for questions.

(Operator Instructions) Our first question is from Mara Goldstein from Cantor Fitzgerald.

Anthony, on the screen rate that you just discussed for glemba, is that rate consistent with what you're seeing in melanoma and the rate between what you saw in -- from METRIC in triple negative versus what you're seeing in the glemba studies and melanoma at that 25% threshold or above?

And to the extent that it is, do you think that really represents sort of the reasonable to the effects (inaudible) with the prevalence of gpNMB-enriched population would be for METRIC?

Well, for the melanoma, if you remember, Mara, the expression rate is so high, we're not even using the diagnostic in those studies.

Because in melanoma, it's in 85%.

In the EMERGE study, we reported that the expression level of 25% or greater was around 40%.

And in this study, it was actually or approximately 50%, so it's a little bit higher.

I guess, as we go through the data, we'll look at higher expression levels as well.

But we think 25% was a good level to work from this side.

Okay.

And if I could just also ask, some of the activities that are underway just around manufacture and companion diagnostic, understanding obviously that diagnostic is not necessarily an issue for CDX-014, but the work that you're doing towards that, is there anything that was really leveragable towards CDX-014 given that, that's also an ADC?

No, I think it's the same thing.

I mean, each one of these antibodies have their own steps to go through.

We're going through the validation steps now, which are the most expensive.

But I think all the work that we've done for glemba has already been applicable to the early work we've done for 014.

Okay.

And if I could just also ask, you gave an outline on when you expect the data to emerge, or be presented, rather, on varli.

But in terms of go-forward decisions, will those -- will that be announced after you have all the different cohorts?

Or will you do it on a more of a real-time basis?

Or your partner will do it on a more real-time basis?

We'll try to do it on a real-time basis, but I think we need to really take a big look at all the data.

But I -- as the cohorts are spread out, we can certainly make decisions based on that.

Our next question is from Boris Peaker from Cowen.

My first one is on glemba.

I'm just curious, since you have to wait until the second half of '19 to file due to manufacture and companion diagnostic development, just curious, will you have overall survival by then?

Or how close do you think you'll be to having overall survival by then?

We should have a lot of the overall survival.

But to know if we have all of it at that point, it's hard to tell at this point in time.

We'll know more during our midyear call, Boris.

Got you.

And also, another question on glemba, I'm just -- as investors do their work ahead of the METRIC study readout, I'm curious, what can we extrapolate from the single-agent data in melanoma to the breast cancer versus similarity or between tumor types, gpNMB expression?

Or anything else between these 2 different tumor types?

I think it's very different, Boris.

Because in melanoma, the expression level of gpNMB is so high that pretty much all the patients have some really high levels of gpNMB.

I just think it's different, and I wouldn't try to correlate the 2.

And I'd add -- this is Tibor.

I'm just going to add, sensitivity to the MMAE component is also quite different between these different indications.

Got you.

And lastly, on the timing.

And you mentioned that the METRIC study readout in 2Q.

I'm just curious, do you think it's more likely to be in the early or later part of the quarter?

2Q is the best we can do at this point, Boris.

Our next question is from Seamus Fernandez from Leerink Partners.

This is Rich Goss calling in for Seamus.

Just with regards to the top line results for the METRIC trial, how much detail should we expect in the press release?

And do you expect the OS curves to be mature enough to report any data on this endpoint in the initial presentation?

No, we don't expect the OS curves to be mature enough at this point.

What we'll do is give the top line data on PFS, any response rate, safety results and what have you.

Okay.

Great.

And then with regard to the Phase II trial for varli plus Opdivo, can you give us a sense as to the efficacy thresholds that you're looking to either meet or surpass in order to move forward in each of the tumor types that you're looking at?

This is Tibor again.

So the protocols have defined some thresholds based on the expectation with single-agent nivo in the various cohorts.

And so obviously, with the various different indications, they are at different levels of response.

Those are protocol-defined based on the information that was available at that time.

They're not necessarily the criteria that would be used exactly with regards to the next steps.

Does that answer your question?

Sure.

And then just lastly, you mentioned the possibility of bringing a partner onboard to commercialize glemba.

How important is it that you find one prior to approval?

And would you be able to launch on your own, if necessary?

Yes, we'll be willing to launch on our own.

As far as a partner goes, we're be looking more outside of the U.S. for a partner.

I think that's where that would be most beneficial to us.

But yes, we would launch without one.

Our next question is from Joe Pantginis from H.C. Wainwright.

Couple of questions.

First, on glemba.

Besides the PPQ things that you discussed, what other background activities surrounding, say, commercial workup are you doing in the background?

You're referring specifically to manufacturing?

Or...

No, more on the -- for the commercialization standpoint.

Well, so we've done the commercial workup on markets and what have you, Joe.

We've done all the launching, preclinical -- having the access work and what we need to do.

And the pricing, that still needs to be worked on.

But mostly, the stuff that we need to be able to at least preliminary do, to launching, we're already done with.

And then on the manufacturing side is more of the validation months.

Got it.

Got it.

And maybe this is a question for Tibor.

Not sure if you can answer just yet until the data releases, but with regard to varli, do you have anything to share regarding the alternative dosing strategies, the types of dosing you're looking at and some of the rationale behind it?

Sure, Joe.

So we said in 2 different regimens that were based on dosing strategy that did not provide continuous exposure to varli.

That's really based on the theoretical perspective that's hitting these costimulatory molecules in an off-type setting, may be better than a continuous exposure.

And essentially, the 2 different alternative regimens either provide a high dose with a longer duration between doses or a low dose with, therefore, a shorter duration between doses.

Got it.

And my last logistical question, if you don't mind.

With regard to the cash guidance, I know you mentioned the incremental spend that you're waiting for with regard to manufacturing for the ADC.

How much is it part of or not part of your cash guidance?

Or is it basically sort of partially included in your budgeting?

It's included, Joe.

Our next question is from Tony Butler from Guggenheim Securities.

Anthony, there are really 3 questions.

The first is, and forgive me, I may have just missed this.

In Q2, in METRIC, will you give top line or as much information as you can?

I'm trying to understand the robustness.

Or will you hold back -- let's assume the trial is positive for PFS for the moment.

Will you hold back for and provide data more importantly at a medical meeting that may occur in the second half of the year?

Yes, Tony, I think we'll give as much data as we possibly can, knowing fully well that more data will come up at the medical meetings.

But we'll give as much top line as we can on the call, and then obviously, there'll be more information to share at a medical meeting.

Second question is around the open-label study for glemba plus 301 and the failed checkpoint cohorts.

And what I'm asking here is, often times, in failed checkpoint cohorts, you'll find where tumor may progress or where there may be no more therapy benefit with, say, Keytruda or Opdivo.

And then the question -- maybe sometimes, therapy stops, you could then retreat, you actually get regression again, sort of a head fake or pseudo-progression, if you will.

So the question is how are you actually evaluating those patients who have failed checkpoint therapy just to make sure that the addition of -- the combination is really having an effect?

Well, from what we've seen and the protocol is that they wouldn't have failed just one checkpoint.

In a lot of cases, they failed both Opdivo and the combination with Yervoy.

They would have failed pembro.

So we think that they've already failed the checkpoints on multiple occasions before they get onto our study.

Perfect.

And then finally on the Phase II varli-Opdivo collaborative trial.

The key here is are -- is there some decision on appropriate biomarkers in that study that you're looking at to subdivide those particular cohorts, be it tumor mutation burden, PD-L1, et cetera?

So this study is designed with really extensive biomarker analysis, and certainly, that's something we're paying a tremendous amount of attention to.

And it's being used to, at least, understand potentially differences between patients who benefit versus those who don't.

So we're certainly putting a lot of effort into that to address those questions specifically.

At this time, I am showing no further questions.

I would like to turn the call back over to Anthony Marucci, CEO, for closing remarks.

Thank you, operator.

And thank you, everybody, for joining us today.

We appreciate your time and support, and we look forward to keeping you updated throughout 2018.

And as always, we welcome your questions at any time.

Please get home safe with those snowstorms.

Thank you, everybody.

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

This concludes the program.

You may now disconnect.