葛蘭素史克 (GSK) 2002 Q1 法說會逐字稿

Good day and welcome to the Corixa Corporation's

first quarter and 2002 earnings call. Today's call is being

recorded. With us today from the company is the director of

corporate communications Mr. Jim DeNike. Please go ahead, sir.

Thank you. And good morning and thank you for joining

us today. I'm Jim DeNike, director of corporate communications at

Corixa and with me today are Dr. Steven Gillis, chairman and CEO

of Corixa and Michelle Burris, Corixa's CFO. Earlier this morning

we issued our first quarter earnings press release and a second

release announcing the results of our recent BEXXAR discussions

with the FDA. If you haven't received these press releases,

copies are available in the news section of Corixa's web site at

WWW.Corixa.com current with this conference call we are also

broadcasting this call through our public web site. The call will

be archived and available for replay later today and replay

information can be found at the end of the earnings press release.

Before I turn things over to Steve and Michelle, I'd like to

remind you that during the course of this call, Corixa may make

projections and other forward-looking statements regarding future

events or future financial performance of the company. Please

note that such statements are just predictions and actual events

or results may differ from the statements made. Please see

documents that Corixa files from time to time with the Securities

and Exchange Commission for information about risks that may

affect the company. All of which are also available in the

investors section of our web site. With that I'll turn the call

over to Steve.

Thank you. Today we'd like to provide an update on

select programs and take you through cork's financial performance

for the first quarter of 2002. Let's start with BEXXAR. As

expected, Corixa and GlaxoSmithKline recently met with the FDA

review staff to discuss our ongoing efforts to bring BEXXAR to

market. In advance of the meeting we submitted to the FDA as part

of the BEXXAR biological license application or BLA detailed

responses to the clinical issues raised in the agency's complete

review letter dated March 12th, 2002.

At the meeting we expressed our belief that BEXXAR merits approval

for the treatment of relapse refectory non-Hodgkin's lymphoma

patients based on the high level of durable responses observed

across multiple clinical studies, pointing out that this level of

persistence independently confirmed disease free survival has not

been demonstrated in clinical trials of other products.

Therefore, we believe that BEXXAR does address a medical need that

cannot be met via administration of previously approved products

in this patient population.

Following these discussions, the FDA continues to question the

clinical benefit of BEXXAR and suggests that such benefit should

be shown in additional prospective clinical studies.

In light of our presentation and given that a second complete

review letter has already been issued, our discussions with the

FDA centered on the most appropriate process for resolution of our

existing differences and opinion.

This approach involves a formal request for dispute resolution

under the Food and Drug Administration modernization act or FDAMA.

As a result of the discussion, we will submit a written request to

appeal the FDA's position as articulated there the complete review

letter dated March 12, 2002. And we will further request a

presentation of BEXXAR data to the FDA's scientific advisors, the

oncologic drug advisory committee, or ODAC. Although no new

information may be submitted as part of a request for an appeal.

If an appeal is granted we could then provide the FDA with

additional information in support of our contention that BEXXAR

meets an unmet medical need over and above that demonstrated by

existing products.

With respect to our assertion that BEXXAR provides a level of

durable response, the FDA also provided guidance to what

additional information must be submitted if an appeal is granted.

If an appeal is granted, the timing of an ODAC meeting would be

dependent upon the receipt and review of additional information

submitted in connection with the BLA. However, a presentation

before ODAC this year remains a possibility, subject again to the

approval of the appeal.

Although the FDA continues to request additional studies to more

carefully assess the true incidents of adverse events and assess

for factors that may correlate with an increased incidence of

adverse events, recalling the meeting the FDA also confirmed that

based on the data submitted to the BLA prior to receipt of the

March 12, 2002 complete review letter, the agency was now able to

sufficiently characterize the safety of BEXXAR in order to permit

an assessment of net clinical benefit.

We will provide further updates regarding the formal filing of a

request for dispute resolution and the regulatory status of BEXXAR

as further information becomes available.

Moving to MELACINE. As we announced in February, ODAC endorsed

our proposed design for a second phase three clinical trial for

our melanoma vaccine MELACINE. Following our presentation to the

panel in February.

We proposed a trial design that would evaluate MELACINE vaccine

versus observation in HLA 2 and/or HLAC 3 positive , stage two

melanoma patients following surgery. Included in the

presentations were results from a southwest oncology group trial,

SWOG 9035 that demonstrated MELACINE vaccine was effective in

prolonging relapse resurvival, with a P value of 0.005 and overall

survival with a P value of 0.003. Compared to observation in

patients who expressed HLA 2 and/or HLAC 3. The panel agreed that

the proposed second phase three trial with overall survival is the

primary end point. In addition to the supportive data from the

first phase three trial, swab 9035 would be acceptable for

approval of MELACINE vaccine. With respect to partnerships, we

remain very active in our pursuit of strategic collaborations that

will allow us to extend the potential reach of our programs. New

partnerships in quarter one of this year included a license

development and commercialization agreement with Beaufour Ipsen

group for our AnergiX MG technology, for the development of

products to treat myasthenia gravis, a chronic auto immune neuro

muscular disease that causes varying degrees of weakness of the

skeletal muscles of the body.

A cross-licensing agreement with Beckman Coulter in which Beckman

Coulter has granted Corixa a sub license to its proprietary MAC

[tesimer] Technology for use in preclinical research.

Also under the agreement Corixa has granted Beckman Coulter a

license to certain patented technology which Beckman Coulter

intends to use in the development of MAC [tesimers] for auto

immune disease diagnostics.

Corixa will receive royalty payments on any sales of products

developed using the licensed technology. A collaboration with the

advanced diagnostic and cellular systems division of ortho

clinical diagnostics. A Johnson and Johnson company, to develop

molecular diagnostic tests for breast cancer based on several of

Corixa's proprietary genes that have originated from our ongoing

discovery programs.

And a license and supply agreement with Rhein Biotech for the use

of Corixa's synthetic adjuvant, RC529 by Rhein Biotech.

At this time I'd like to turn the call over to Michelle Burris who

will discuss our financial performance.

Thanks Steve. Good morning everyone. For the

first quarter of 2002, we reported total revenue of 15.6 million,

compared with total revenue of 13.5 million for the prior year

period. The net loss applicable to common stockholders for the

first quarter was 176.9 million. Now that includes a goodwill

impairment charge of 161.1 million. That compares with 42.6

million in the first quarter of 2001. That 42.6 million includes

an intangible amortization of 14.4 million.

Diluted net loss per common share for the first quarter of 2002

was $4.25 compared with $1.05 in the prior year period. If you

look at the P&L from an operating perspective and you exclude the

acquisition related charges such as the intangible and the

deferred compensation amortization and the one time goodwill

impairment charge, the net loss applicable to common stockholders

for the first quarter of 2002 was 14.3 million. And the net loss

for the first quarter of 2001 was 19.1 million.

The net loss per common share for the first quarter of 2002 was 34

cents compared to 47 cents for the first quarter of 2001.

Effective January 1, 2002, we adopted the statement of financial

accounting standards, No. 141, business combination and the

standard No. 142, goodwill and other intangible assets. These

require use of nonamortization approaches to account for the

purchase of goodwill and intangibles. And in accordance with the

transition provision of the statement 142, an evaluation of

goodwill and other intangibles was conducted as of January 1,

2002. There was no indication of an impairment at that time.

In addition, however, the statement states that interim

evaluations should be conducted whenever there's an indication of

a potential impairment. And we experienced obviously a decrease

in the value of our common stock subsequent to receiving the March

12th, 2002 FDA complete review letter regarding BEXXAR. As a

result, goodwill and certain other intangibles were then evaluated

for impairment and a charge of 161.1 million was recognized.

When we look to revenues, the increase in revenues for the first

quarter of 2002 compared with the prior year period. The

difference was primarily due to collaborative agreements with wide

[inaudible] Vaccines, GlaxoSmithKline, Beaufour Ipsen and Zenyaku

Kogyo.

At the end of the quarter, Corixa had approximately 95 million

dollars in cash, cash equivalents and investments. This amount

does not include any of the 75 million available under the equity

line of credit from B and Y capital market.

Steve.

Thank you. We're encouraged by our progress in the

first first quarter and look forward to continued success

throughout the rest of the year. Thank you for joining us today.

If you have any questions, I'll be happy to address them now.

Operator will you please open the call to questions at this time. +++ q-and-a

Thank you. The question and answer session will be

conducted electronically. If you would like to ask a question you

may do so by pressing the star key followed by the digit 1 on your

touch tone telephone. Again, if you would like to ask a question.

That's star 1 on your touch tone telephone.

We'll pause for a moment to assemble our roster. We'll take our

first question from Tom [Scheider] With GTM.

Good morning. Can you give us any detail on the

second MELACINE trial, how big, how long?

The precise size of the study is currently being

negotiated between ourselves and the two cooperative groups that

are likely to conduct the trial. That is the southwest oncology

group or SWOB and the East Coast oncology group, or ECOG.

The cooperative groups have committed to a very rapid accrual for

the study. And opening a very large number of sites to the study.

Nevertheless, with overall survival as the primary end point, we

believe that this is probably a five to six year proposition.

Okay. Thank you.

We'll go to you're Ron [Warber] With SG Cowen.

I was curious, can you give us a sense here to the

extent you can as to the major issues with the agency. Is it a

question of unmet medical need here given that Zevalin's in the

market, and/or is it a question of safety needs for more safety

data regarding adverse events here in the case of BEXXAR?

I think as we stated in our release today, with

respect to safety, submission of our latest safety update to the

BLA prior to the receipt of the March 12th complete review letter

has placed the agency in a position where they do believe that

they can adequately assess the safety of BEXXAR. So the issue now

I believe turns to efficacy and whether the product in fact meets

an unmet medical need. Given the approval of Zevalin, as well as

the approval of, prior approval of Rituxan in this indication.

It is our contention that in fact BEXXAR does, given the high

level of durable response that is seen across multiple clinical

trials and which has not been seen with other products in this

indication.

Is it possible to explore with them sort of

perhaps getting a more focused label? [Inaudible] The patients

who clearly showed a clinical benefit that has not been shown with

Zevalin so far.

Again, I think BEXXAR has been tested in relapse

refectory non-Hodgkin's lymphoma patients, including patients who

have the additional diagnosis of transformation or transform low

grade non-Hodgkin's lymphoma. That's the identical population in

which Zevalin has been tested and for which certain label

indications have been granted.

Okay. And then could you give us an update

regarding the loss with IDEC, perhaps some timing, what's the

strategy going forward with that?

As we stated in our last conference call, the

lawsuit continues. We really don't anticipate legal resolution

for at least an 18 month to a two-year period. And if there's any

news regarding that that is of import we will obviously announce

it. But so far there has not been.

And finally it's going to take 45 days for you to

get a responsive appeal request. Can you give us a sense as to

when are you planning on filing that request?

We're putting that request together as we speak.

When we lodge it with the agency, we will let you know. And we

just simply will let you know that it's approximately a 45 daytime

clock to their decision. And obviously once we receive their

decision we'll also let you know.

Okay. Thanks, Steve.

Again, ladies and gentlemen, to ask a question it's

star 1 on your touch tone telephone.

We'll go next to Mark Monane with Needham & Company.

Good morning. Please, a couple questions here.

Could you -- you gave a lot of important information here. Could

you briefly summarize maybe in sixth grade language for me what

the next steps are concerning the BEXXAR application. I

understand you had the meeting with the FDA and ODAC panel

scheduling. Can you talk specifically on a time line what you

expect the next step is. And a second question if you would to

back up a little bit give us some overview, what do you see as the

role of radio isotopes and antibody therapy in non-Hodgkin's

lymphoma now that we know more about Rituxan and the Zevalin

experience.

Let's back up to your first question. We haven't

released today that we have definitive information on the

appearance of BEXXAR before an oncology drug advisory committee.

Let me just make that again clear. What we are announcing is what

we intend to do with respect to the BEXXAR filing. And a route, a

potential route to a timely presentation of BEXXAR before the

oncology drug advisory committee. And that route, given the fact

that we have been issued a second complete review letter or, yeah,

a second complete review letter, is to request an appeal of that

second complete review letter through formal dispute resolution.

We will request that appeal. The agency will have between 30 and

45 days to respond to that. If that appeal is granted, the agency

has provided us with some guidance as to what additional

documentation we need to submit to our BLA. The agency would then

review that documentation and if the appeal has been granted,

afford us an opportunity to present BEXXAR in front of an oncology

drug advisory committee. We believe that this is the most

expeditious route to that presentation.

And have you filed the appeal at this time, or do

you have a time in your mind when you're going to file the appeal?

We have not filed the appeal at this time. We are

putting together that documentation as we speak. And that appeal

should be filed shortly. And as I said when it is filed we will

let you know.

And then after the FDA receives the appeal, they

have, they have 30 to 45 days to respond. And then after that do

you expect another letter and then you'll make the formal appeal

in front of ODAC, or is that covered in the first appeal?

It's covered in the first appeal. We will then have

an opportunity to file some additional data to the BLA. The

agency will have the opportunity to review those data. And then a

determination will be made regarding the potential timing and

appearance before ODAC.

That was very helpful. Could you back up, Steve

and give us more of your thoughts about the role of immuno therapy

and with the radioactive isotope associated with it. What do you

think the role now is in non-Hodgkin's lymphoma?

Just speaking from the perspective of BEXXAR and the

clinical data that we have presented or has been presented and

published multiple times, BEXXAR provides a radio immuno therapy

as a result provides a level of response that has not been seen

with other modalities of therapy, with the exception, perhaps, of

allogeneic bone marrow transplantation. Allogeneic bone marrow

transplantation, however, comes with considerable morbidity and

considerable mortality. Therefore, radio immuno therapy and

BEXXAR, specifically, we believe has a significant medical

clinical benefit.

The reason it does is that non-Hodgkin's lymphoma is extremely

radio sensitive as a tumor. Radiation does an excellent job of

killing those lymphoma cells. The use of radio immuno therapy in

a tumor setting where the tumor itself is insensitive to radiation

doesn't make a lot of sense. But in diseases like non-Hodgkin's

lymphoma it makes perfect sense.

Okay. That's very helpful. Thanks for going

through that. One more question. You have a number of excellent

vaccines that you've mentioned that are under development. Do you

have another moment, please, to update us on the PVAC and Her-2neu

vaccine programs?

Just a couple of words about PVAC. We submitted to

the agency a protocol for another study in the United States.

That's a randomized control, clinical trial of PVAC, looking at

different durations of therapy in mild to moderate patients, based

on the fact that the product has a very benign safety profile.

The agency is comfortable with that protocol. We have

manufactured product which has now passed all specifications and

we're in the process of shipping drugs to clinical sites for the

initiation of that study. We have two additional studies that

have been -- that are being conducted in Brazil and the

Philippines and we stated that we'll have more news on those

studies later on this quarter.

Now, with respect to the Her-2neu vaccine clinical trial, pilot

study being conducted by Corixa, that study continues to accrue

patients. When it's finished, we'll have some information on

that. And I think we can look forward in the coming quarters to

additional information regarding some of the other tumor vaccine

programs that are being pushed forward as a result of

collaborations either with SmithKline in the setting of prostate

cancer, breast cancer, colon cancer and ovarian cancer or in the

setting of lung cancer with Japan Tobacco and Zambon.

Thank you very much for the update.

We'll go next to [inaudible] With Citadel.

Could you give us a little bit more color on what

has changed in terms of the FDA's line about the safety package

and why they think now that they can do more, sort of have a

safety analysis, where previously maybe they thought they

couldn't?

Honestly I think that's a better question for them

than it is for us we submitted two our BLA as required a safety

update. That filing was received by the agency prior to their

issuance of the complete review letter. Perhaps it was received

at a time point where it was insufficient time for them to look at

it in detail before issuance of the complete review letter.

Nevertheless, in the document that we filed to the BL and the

presentation we made to the agency at our meeting, it was our

contention that the safety profile or the safety database was in

fact adequate to provide a determination of safety and it appears

from the agency's tone that they now agree with that.

Were they able to glean any more insight during

your meeting with them that they previously had not gained on the

safety database?

Whether three gained additional insights or simply

became more comfortable with the analyses we conducted, I don't

know. To a certain extent I'm not sure that it matters, given

that they have now stated that they feel they can draw an adequate

safety profile with BEXXAR such that they can determine whether

the product has a net clinical benefit.

So the basis for request for additional studies

then has to do with the questions about efficacy or is that --

I think at this point in time the issue is whether

or not BEXXAR provides or addresses an unmet medical need. And we

have stated clearly we believe it does. Even in the face of

Zevalin's approval, based on the high level of durable response,

which has not been seen with any other product or any other

modality, save allogeneic bone marrow transplantation in this

patient population.

Great, thanks.

We'll take a follow-up question with you're Ron

[Warber] With SC Cowen.

Thanks again. Steve, turning back to the

information you'll need to submit to the agency after an appeal is

granted, can you characterize that in some way and then perhaps

comment whether you have that information on hand at this point?

I think that the information that should an appeal

be granted that we would need to file falls into two categories.

One is simply all of the case record forms that are specific to

patients who have long standing durable responses, we're in the

process as we speak, even though obviously an appeal has yet to be

made, nor has it been granted, of converting those CRS to an

electronic format such that that filing can be made. As well as

any other documentation that we want to file to the BLA that

speaks to the level of durable response that is seen or isn't seen

with other treatment modalities. And some of that information can

obviously be gleaned from published literature. Some of that

information can also be gleaned from discussions with clinical

sites who have tested other modalities and would actually have

access to primary data to support whatever it is they've

published. Those are the two pots of information. And

technically, again according to the regulations, we're prohibited

from filing that information because we've been issued a complete

review letter, once the appeal is asked for. So when the appeal

is asked -- when we file the appeal, we can't add anything else to

the BLA. And we made a specific point of filing to the BLA our

arguments, if you will, or our thoughts that addressed all of the

clinical issues raised in the FDA's complete review letter of

March 12, 2002, in advance of our meeting with the agency.

So do you feel you still have more work to be done

in that regard, or what you're saying is it's complete now at this

point?

We will -- if the appeal is granted, we will be in a

position to file that information readily.

And then turning to Europe, can you give us an

update on your discussions with did EMEA and how do you think the

recent FDA decision is going to impact those discussions?

I think the European theater is obviously a

different one. We're proceeding with discussions with the

European agency based on the BEXXAR BLA that's been filed in the

United States. We're proceeding to move forward with filing in

conjunction with our collaborator, [Amersham] Health. Those

discussions are proceeding well. And we expect to make such a

filing hopefully later on this year.

So you don't think you'll need to do any more

trials then.

The only study that we know we will have to do prior

to approval of the product in Europe would be some type of a

bridging study or an equivalence -- a small bridging study to

compare [Amersham] Products because they will be doing the radio

labeling in Europe with product that has been used in the prior

clinical trials which generated the data for which approval will

be requested.

Okay. And then where is [Amersham] Stand in their

manufacturing capability?

They're in the process as we speak of generating

that manufacturing -- putting that facility together. It's

roughly a 12 to 18 month process. And they've been at it since we

signed our agreement.

Okay. Thank you.

Once again to ask a question press star 1 on your

touch tone telephone.

Bernard Levine with [BVL] bio medical investments.

Good morning, Steve and Michelle. I'd like to

ask. You mentioned durable responses in the sub set of

non-Hodgkin's lymphoma this is the transformed non-Hodgkin's

lymphoma?

No this is not in a sub set. This is the total --

this is an analysis of the percentage of patients there the entire

patient population. So what we're saying is that if you look at

the entire patient population that has been treated with BEXXAR

across multiple studies and that patient population is relapse

refectory non-Hodgkin's lymphoma, including patients who have the

diagnosis of transformation, the level of durable response that we

see following BEXXAR administration we believe is much higher than

the level of durable response that has been seen with any other

product that has been approved in this indication.

If I'm not mistaken, I think you presented some

slides on that point. I saw them on the computer some time ago,

comparing your durable responses with the Zevalin responses, which

showed a huge difference in your favor. Is that correct?

That's correct. Those data, however, were limited

to complete responses.

Now, would you describe a durable response? How

long does the patient remain without recurring disease? And is

this a durable response for complete responses or also for partial

responses?

We think the most compelling data, clinically, is

obviously durable complete response. But we will obviously --

should we get to the advisory panel, we will be making the

argument of overall durable response or progression free survival,

which most people believe is the same, measuring the same thing.

One of the few benefits that I can think of to the protracted

regulatory and clinical experience of BEXXAR is that the product

has been in man for a long period of time. So therefore we have

the opportunity to have in our hands data from patients who were

treated a long time ago. And many of the durable complete

responders we're talking about are out four years or more,

following administration of the drug.

Without recurrence?

Correct. Which is what we believe to be

significantly different than any other product that has been

approved in this indication, including retuxin, including Zevalin.

Therefore it's our argument that this product provides an unmet

medical need or answers an unmet medical need.

May I ask, why would you think that BEXXAR would

have such a greater effect on durable complete responses as

compared to Zevalin? What is there in the two drugs that would

rationalize such a difference?

Well, one issue may well be the method of how BEXXAR

is administered. Being administered on a patient specific dosing

regimen, based predominantly on the clearance of radio labelled

antibody from the patient and actually having that data in advance

of calculating the dose of the drug. It could be more accurate

dosing.

And if I may, one last question, you talked about

the cancer vaccines. Can you give us a little more color on when

you expect to announce some results with or what you're doing with

the cancer vaccines, particularly prostate, lung leukemia and so

on?

I think over the next few quarters it will become

clear what the progress is in those areas. It's been our practice

not to announce plans for I and Ds and even filings for I and Ds

instead announce when patients have actually been injected with

study drugs. We are however on a course that should result in I

and D filings in a lung cancer vaccine clearly this year. And

also in a Her-2neu vaccine manufactured by GFK containing a Corixa

adjuvant also this year. And again, you will hear about that when

patients are dosed.

Prostate?

Prostate cancer vaccine is currently being

manufactured in Belgium and pending its successful manufacture, it

too will enter clinical trials.

One last question, the tuberculosis vaccine,

what's the status of that?

The TB vaccine is currently a high priority issue

for both ourselves and for Velaxis SmithKline. That product as

well is being manufactured in our Hamilton Montana facility. Once

again, when it is produced and released, it should be the subject

of an I and D filing. That is also -- that work is also being

supported with a challenge grant from the national institute of

[allergene] And infectious disease. When patients are injected

you'll know about it.

Thanks a lot.

It appears there are no further questions at this

time.

Thank you all very much for attending this morning's

conference call. We look forward to providing you continued

updates as the news warrants. Thank you again.

That concludes today's conference. We thank you

for your participation. You may now disconnect.