ImmunoGen Inc (IMGN) 2002 Q3 法說會逐字稿

Good day and welcome everyone to the ImmunoGen third quarter fiscal year 2002 conference. Today's conference call is being recorded. With us today are Chairman and Chief Executive Officer Dr. Mitchel Sayare and Vice President and Chief Financial Officer Mr. Gregg Beloff. At this time I would like to turn the conference over to Dr. Sayare. Please go ahead sir.

Thanks . Good afternoon, thanks for joining us today and welcome to ImmunoGen third quarter conference call. With me is Gregg Beloff our Chief Financial Officer. At this afternoon we issued a press release that summarizes our third quarter financial results. I hope you all have a chance to review this release if not it is available on the ImmunoGen's website www.immunogen.com. At this time I would like to remind you that during this call we will cover material forward-looking statements and that there are certain risks and uncertainties that may cause our actual results to differ materially from our expectations. Descriptions of the risks and uncertainties associated with in ImmunoGen are included on our website and in our latest filings with the SEC. Before Gregg discusses the financial statements I would like to take a few minutes to review some our recent accomplishments.

In February we announced that Millennium has taken a license to use our proprietary DM1 technology with their MLN591 antibody. The MLN591 targets Prostate Specific Membrane Antigen (PSMA), which is expressed by virtually all-prostate tumors. Millennium has stated its goal is to begin clinical trials this year with the product called, MLN591DM1. We are manufacturing clinical material to support this objective. I want to point out that this license illustrates the power of our multi-target agreement. We have three multi-target agreements one each with Genentech, Abgenix, and Millennium. These agreements can yield a number of singe-target licenses where in each single-target license includes an upfront fee, milestone payments and royalties on sales. These license would also include reimbursement on a fully working cost or in some cases cost plus basis for manufacturing preclinical and clinical material.

This new Millennium includes an upfront fee which was paid at signing and milestone payments that potentially totaled over 40 million dollars plus royalties on product sales and we are being paid for our products manufactured from Millennium. Each license taken by Genentech would include an upfront fee, milestone payments that totaled nearly 40 million plus manufacturing reimbursement and royalties on sales. Similarly each license taken by Abgenix would include an upfront fee, milestone payment, manufacturing reimbursement and royalties on sales. Thus we have in place two sources for single-target agreements our multi-target agreements and our strong business development activities which we also expect to yield additional single-target agreements.

Three top products from single-target agreements are al ready progressing towards the clinic. Genentech has chosen DM1, Millennium's MLN591DM1 and Boehringer Ingelheim's . As you know two additional TAP products are in phase one studies now cantuzumab mertansine also known as huC242-DM1 and huN901-DM1 or BB-10901. Phase one studies with cantuzumab mertansine have explored three different dosing regimen administration once every three weeks, administration once per week, and administration three times per week. It is common with cancer agents to study dosing schedules to assess their affects on safety efficacy and convenience. All these studies have been minor therapies studies conducted with patients that have multiple chemotherapy regimen prior to involvement in our study. The data from the first study the one that assess dosing once every three week were reported at ASCO last year. This study has been completed. Data from the second study conducted in Chicago by Dr. Richard were reported at the AACR, MCI, EORT team meeting in November. This study has reached its stated end points and additional objectives and we believe will be concluding soon. The study that assess three times per week dosing is still under way. Data available from this study will part of a poster presentation at the ASCO that will be held in Orlando later this month. That poster will include data from those from the first and third studies. As usual both conducted at the CTRC .

The other TAP product in the clinic huN901-DM1 or BB-10901 is in dose escalation phase one portion of a phase one two study. The data available from the study will also be presented in a poster at the upcoming ASCO meeting. Consistent with our business plan we are actively developing our own pipeline of products. Preclinical data on our huMy9-6-DM1 were presented in two posters at the recent meeting of the American Academy of Cancer Research AACR in San Francisco. These posters can be viewed on our website in the News and Events section. The posters include animal data that show that huMy9-6-DM1 can cause complete regression of tumors that sustain for the two hundred follow up period of the study. This has well past the point that had any cancer cell survived the treatment that would have cause visible tumor regrowth. In early April MorphoSys announced that it has delivered to us antibodies that met all our success criteria against the cancer target we had provided. This work was done as part of our IGF1 recepture program. The IGF1 recepture is involved in a number of cancer case including breast, lungs, and prostate cancer. As you can see our business model is on track. We are developing our internal pipeline and supporting our programs with cash earned from partnerships with leading company.

I would now like to turn the call over to Gregg to discuss our financial results for the third quarter.

Thanks Mitchel. About a half-hour ago we announced our third quarter 2002 financial results. For the nine-month period ended March 31, 2002, we reported a net loss of 10.2 million dollars, or 26 cents per basic and diluted share, compared to a net loss of 12 million dollars, or 33 cents per basic and diluted share, in the same period last year. The net loss for the nine months ended March 31, 2001 reflects the company's adoption of SAB 101, retroactive to July 1, 2000, which resulted in a cumulative effect of a change in accounting principle charge of 5.7 million dollars, or 16 cents per share.

For the three-month period ended March 31, 2002, we reported a net loss of 6.9 million dollars, or 17 cents per basic and diluted share, compared to in the same quarter last year a net loss of 1.8 million dollars, or 5 cents per basic and diluted share after the restatement for the retroactive adoption of SAB 101. Our total revenues for the three-months ended March 31, 2002 were 1.2 million dollars compared with 1 million dollar for the three months ended March 31, 2001. The 18 percent increase in revenues in the same quarter is attributable primarily to an increase in preclinical and clinical materials we manufactured and delivered to our collaborative partners.

Research and development expenses for the three months ended March 31, 2002 increased 92 percent or 7.2 million dollars from 3.7 million dollars for the same period in 2001. In large part this increase is attributable to a few factors that I would like to take a moment to discuss. First the most substantial increase in research and development expenses related to payments we made in conjunction was certain third party agreement. During the quarter ended March 31, 2002 we entered into several agreements related to antibody production and both DM1 process development and production. These agreements are in addition to the DM1 process developments agreements that we signed in September 2001. These arrangements are in addition to the agreement that we al ready have with Avalon, Inc., Genzyme Transgenics Corporation, MorphoSys AG and, Raven Biotechnologies, Inc. We aggressively pursue these deals because we believe that these agreements will accelerate the development of our own product pipeline, enhance our manufacturing capability and better support our collaborators. Included in the three months period ended March 31, 2002 was 2.2 million dollars worth of expenses related to these agreements.

Second included in research and development expenses for this quarter is a charge of 1.5 million dollars related to huC242-DM1 inventory. As you we have two-phase one clinical trials of huC242-DM1 on going. In the Chicago study GSK reimburses for all clinical material used in the trial. This study has reached its stated end point and additional objectives. We anticipate we will conclude earlier than expected. As a result we believe that we have more huC242-DM1 inventory on hand than GSK will reimburse us for. We instead expect to use the remaining material for the third ongoing study. However, because we paid for the cost of clinical material in that study we have written down the value of the inventory to its estimated realizable value. Finally as planned we continue to strengthen our research and development infrastructure. Our recruitment on the additional high-quality people is essential for the development of our internal product pipeline as well for the support of our collaborators. Consequently, we are pleased to note that our research and development staff increased to 71 at March 31, 2002 as compared to 49 at the same time last year.

Now before handing call back to Mitchel I would like to spend a moment reviewing the financial projection that we gave at the outset of this fiscal year. Growing a successful business takes money because of our investment in developing our internal product pipeline building our research and development infrastructure and enhancing our manufacturing processes and capacity I expect it will come in at the top-end of the range of our estimated 26 million dollars to 29 million dollars in total operating expense. As you know our state of goal is to offset, as much this operating expense is possible with cash that comes into ImmunoGen as a result of milestones achieved by our partners and reimbursement for clinical material that we manufacture for our partners. When we gave our projections we stated that the cash we expected to receive was dependent up on numerous factors in particular timing, of course now all the cash we received will be booked as revenue in the SAB 101. Nonetheless because we didn't make as many reimbursable batches as we had anticipated and the fact that certain milestones have not yet been achieved by our collaborators we expect that we will recognize revenue of between 5 million dollars and 6 million dollars with fiscal 2002 year.

The combination of higher operating expenses and lower than expected cash flow for this fiscal year will result in an increase in our expected cash flow from operation. Consequently, we expect that we will spend on an operating basis between 16 million dollars and 18 million dollars this fiscal year. I would like to emphasize that we have 144 million dollars in cash on the balance sheet and continue to have that comes in from our collaborative dealers. We feel that we have a necessary financial resources to realize the ultimate objective of our company. The commercialization of new therapies for the treatment of cancer.

Thanks Gregg. We have time to take few questions. We ready open the call.

Today's question and answer session will be conducted electronically. If you did wish to ask a question please press the star key followed by the digital one on your touchtone phone. We will come to you in the order that you . We will pause for a moment with number . Our first question today will comer from with Bear Stearns.

Yes hai. Could you tell us when will we see the efficacy part of the data from the phase one to N901 study?

The efficacy portion of the study you mean the phase two portion .

Right.

That has not begun yet. It will begun when reach in the phase one portion and there is still escolating (Phoneti) so it is not clear that when that is going to be completed.

And what is the other dose level that has been reached in the study three for huC242?

We have not disclosed that but it will be disclosed in a couple of weeks at Orlando.

Ok great thank you.

Sure.

Once again that is star one for question. Our next question will come from .

Yes hai good afternoon. Mitchel could you say few words in about the huN901? Can you say how many patients are we going to see data from ASCO for the phase one repetition study there?

I can't I actually don't know the numbers of patients that will be presented on it is one of the, it would one of the insignificant number. But I you know as whether it is specifically value or not probably not but I mean there is quite a few patients and those that are prepare the posture around will be presented. I don't know the number and with in two weeks we will know.

And can you say how many doses are we going to see data from how many?

You will see doses you will see data from all of the doses that has been administered. They have escalated several times.

Ok thanks very much.

We will take our next question from Carol Werther with Adams, Harkness.

Hai. Mitchel could you just update on how many partnership do you think you might sign before the end of the fiscal year? If any and also are you having a meeting at ASCO?

Well the later question is easier than the first question Carol. The answer is no I mean we will be happy to meet with you or anybody else at ASCO but there is no organized break out like there was last year. We are at variety of different stages in talking to new partners or potential partners for single-target deals and our multi-target partners Genentech, Abgenix, and Millennium are at various stages of testing of undisclosed TAP products that they have developed. We expect to get single-target license arrangements from each of those two sources. But we have not given guidance to how many or when those partnerships are today.

Ok thank you.

Sure.

We will go next to with Stephens Inc.

Yes hai this is question for Gregg or Mitchel. Can you give us any guidance on if you expect any more of these one-time charges as far as research and development goes for the rest of the year?

We don't expect for the rest further for the rest of this fiscal year to see anything like this. In fact we as I stated earlier we gave guidance that we will come at the top-end of our range with respect to research and development or operating expenses.

Ok thank you.

You are welcome.

Sapna Srivastava with JP Morgan.

Hai this is Sapna.

Hai Sapna.

I am sorry.

I am sorry we didn't get any of that. I am extremely sorry we didn't hear your question. Possibly you are closer to the phone or.

Sorry to interrupt you this is operator. Madam can you take up your hand set.

Can you hear me now?

Now we can hear you.

Sorry about that. Just two questions one is on ASCO which day are you presenting on ASCO and secondly the product of Millennium, could you give us a little bit of understanding on what the would be, would be it in the first half of the year or the second half of the year and what kind of trial are you expecting to see?

On the first question on Sunday the lung cancer study will be presented in poster session and on Tuesday the following Tuesday is when the study three of the huC242 will be presented. Actually we can't give you very much information about the Millennium product. It is their product and it is under their control and of course they get the disclosed information not us. We can that they themselves has disposed it that they expect to be in the clinic this year with that product and we can also say that we are manufacturing clinical material for them to be used in clinical trial. But beyond that we have no we are not able to disclose anything.

Ok thank you.

Once again as a reminder to our audience, if you do wish to ask a question please press the star key followed by digital one on your touchtone phone. Our next question will come from Brian Rye with Raymond James.

Good afternoon Mitchel.

Good afternoon Brian.

Just a quick question on huMy9-6-DM1 it was one on you can update us on the projected timeline if you are going to be any more clinical presentation of data or at some other plan before the clinical trials get under way?

That was for N901 I am sorry.

I am Sorry Sorry huMy9-6-DM1.

huMy9-6-DM1 this is our starting product it will we are pushing forward as quickly as possible. We don't actually know when more data will become available to be publicly available on that product. We will push in to get it into the clinic next year. Something very much we very much want to achieve. I don't know when data will be put out. I mean is in December of 2002. And frankly I honestly don't know what there was that structure or not.

Ok thanks Mitchel.

We do have a follow up.

Have you identified any other preclinical drug candidate?

We have Carol I think one receptor we were very excited about. We now have antibody direct against every receptors that looks like visible product candidates and we also expect that one to forward as rapidly as we can. We have one more product candidate that we have identified but we haven't gone public yet, but we will go public this year. Talking about that showing and by public I mean showing the kind of animal data that we have shown for the huMy9-6 products.

And just for the IPS1 receptor do you think you might have an I and D ready next year also?

Yes that is what we are pushing for.

Ok thank you.

John Weber with SG Capital.

Yes hai Mitchel could you you are currently producing materials for two products and have potential for three more this year into the clinic, I was just curious how much manufacturing capability do you have and how many antibodies can you actually handle production for?

We are actually manufacturing quite a bit more than you described we manufacture clinical for Genentech for their lead DM1 TAP for Millennium as you correctly pointed out for for arrangement with British Biotech and for arrangement with GlaxoSmithKline. So actually five of our partners are actually receiving clinical product and we have ample capacity to provide clinical grade material for clinical trials to more partners than that. You know the real issue is commercial scale manufacturing and we have a pilot plans we don't have a commercial scale manufacturing facility. You could imagine however, that is the market size will rate when we make some adjustments but perhaps we could use some commercial manufacturing in this facility as well. So we are well equipped to provide course for partners and for our own pipeline of products to manufacture.

Ok thank you.

My pleasure. We only have time for one more question.

Our final question comes from .

Hai Mitchel. In your last presentation you said that I am going to ask you again about doses collection on the you said that you have seen patients receiving up to 540 milligram per square meter in the three week period, have you tested high doses in that?

That is a very good question and since we are only two weeks away from ASCO. I would prefer to leave it put other than talking about that here but there will be information about that I promise in the future.

Ok thanks a lot.

Please listen, thank you everybody for participating in the call and I will look forward to talking to you next quarter.

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