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.