ImmunoGen Inc (IMGN) 2003 Q3 法說會逐字稿

Good day, everyone. Welcome to the ImmunoGen thrid quarter fiscal year 2003 earnings release conference call. Today's call is being recorded. With us is the Chairman, and Chief Executive Officer, Dr. Mitchel Sayare and the Vice President and Chief Financial Officer, Mr. Gregg Beloff. At this time I will turn the call over to Mitchel Sayare. Please go ahead, sir.

Thank you and good afternoon. Thanks for joining us today and welcome to ImmunoGen's conference call for our third quarter ended March 31st. With me is Gregg Beloff, our Chief Financial Officer.

At 4:00 this afternoon, we issued a press release that summarizes our third quarter 2003 financial results. I hope you've all had a chance to review this release. If not, it's available on our website, www.immunogen.com.

I'd like to remind you that during this call we'll cover material that involves forward-looking statements and that there are risks and uncertainties that may cause our actual results to differ materially from our expectations. Descriptions of the risks and uncertainties associated with the investments with ImmunoGen are included on our website and latest filings with the SEC.

As you know, in late January we concluded that it was not in the best interest of ImmunoGen to interest into a revised agreement with GlaxoSmithKline on Cantuzumab Mertansine. We have since received the return of the product rights and completed negotiations with GlaxoSmithKline on outstanding invoices. We are now meeting with other companies who are potential licensing partners for this product. While it would take time to conduct necessary duediligence and additional time to develop the full license agreement, I am very optimistic that we'll gain a partner for Cantuzumab Mertansine and this important product will follow into Phase II.

At one time Cantuzumab Mertansine was the only TAP product in clinical testing. Now three other TAP products have advanced into the clinic. One developed slowly by ImmunoGen, huN901-DM1 and two developed by companies that licensed our TAP technology MLN 2704 by Millenium and bivatuzumab mertansine by Boehringer Ingelheim. HuN901-DM1or BB-10901, as it's called by our partner British Biotech, is being tested in two clinical trials with different dosing regimens. In the U.S., patient enrollment is under way in the Phase II portion of the Phase 1-2 study. This is a disease defined study so the patients enrolled must have relapsed Small Cell 1 Cancer. Since this is a narrower population than the phase 1 portion, British Biotech is adding additional clinical centers to supplement the two existing centers, the CTRC in San Antonio and ND Anderson in Houston.

Additionally, enrollment is under way in a phase 1 study using an accelerated dosing regimen conducted in the United Kingdom. We expect both of these will be completed within the next 12 months or so.

There have been no announcements from Millennium or Boehringer Ingelheim related to their clinical studies with their TAP products and because there are confidentialality aggrements with these companies, there's nothing new I can report here. An abstract, submitted by Millenium, on preclinical findings with MLN 2704 was accepted by the American Association of Cancer Research. This abstract can be found on that organization's website, aacr.org. The AACR annual meeting was scheduled to be held in Toronto in April but because of the SARS outbreak it was moves to Washington, D.C. in July, so the full presentation has not yet been made.

We're making good progress with our huMy9-6-DM1 program and expect to file it in the first half of '04 and making progress with our IGF-1 receptor antibody. Several are studying our antibody in their animal models, which further expands the support behind the compound.

So we have products moving forward in clinical evaluation and products moving forward in preclinical and research studies. We are working with our existing partners and other companies to expand our partnership opportunities. All in all, I'm very optimistic about ImmunoGen and our TAP technology and working hard here on a number of fronts.

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

Thanks, Mitch.

About a half hour ago we announced our third quarter 2003 financial results. For the three month period ending March 31, 2003, the Company reported a net loss of 4.6 million or 11 cents per basic and diluted share compared to a net loss of 6.9 million or 17 cents per basic and diluted share in the same quarter last year. For the quarter ended March 31, 2003, the Company reported a loss of 3.1 million or 31cents per basic and diluted share compared to a net loss of 10.2 million or 26 cents for basic and diluted share in the same period last year. Total operating expenses for the three month period ended March 31, 2003 were 8.2 million as compared to 9.3 million for the same period last year. Included in total operating expenses for this three month period ended March 31, 2003, was R&D expense in the amount of 6.3 million as compared to R&D expense of 7.2 million in the same period last year. Other income increased to $2.2 million in the quarter ended March 31, 2003 as compared to 1.3 million in the same period in the prior year.

In February 2003 we finalized all outstanding financial matters with GlaxoSmithKline. Included in other income for this most recent three months is 1.4 million of net gain on this final financial settlement. We ended the quarter with a strong cash position of $1 million 9.8 million. I'm very comfortable with this position and I believe we have the necessary financial resources to continue the successful development of our TAP technology. We continue to carry out our stated business model with the goal to offset cash burn with cash flow that we received from our outlicense collaborations. This fiscal year in addition to the margins that we received on the manufacture of clinical material for our collaborators, we have received milestone payments from Millennium and Boehringer Ingelheim . These milestone payments not only signify progress on behalf of our collaborators, but also provide us with the cash to apply towards the development of our own internal pipeline.

Finally, our Board has authorized our repurchase of 4.1 million shares of common stock and continue this share repurchase program. Through March 31, 2003 the Company repurchased 3 million 619,062 shares of its common stock at a total cost of $10.9 million.

I'd now like to turn the call back over to Mitch.

Thanks, Gregg.

We've time to take a few questions but first we received several questions in advance from institutional and retail shareholders and I'd like to spend a few minutes answering these. Indeed, I encourage you to send us your questions so we can address them in our quarterly calls and I also encourage you to call us. We want to provide you with answers in a timely way if we can, rather have you speculate using inaccurate or incomplete speculations, although I do admit that speculation is more fun.

Moving on now to the questions received, I was requested to provide my view on where ImmunoGen will be twelve months from now? Between today and May 4th I believe we will have accomplished a lot. First ,we expect to have more data including more clinical data on TAP products developed by us on our partners. Second, we expect to have more TAP products in or about to begin clinical testing, and here huMY9-6-DM1 comes to mind. Third, we expect to have more partnerships not only around Cantuzumab Mertansine but other agreements for use of our technology, as well. Fourth, we expect that our technology will have gained considerable attention in the scientific and investment community and we'll have accomplished this while retaining prudent control of our burn rate.

A second question that frequently gets asked is, "On average how many single drug partnerships do we expect to have each year for the coming years?" The short answer is as many as possible. Realistically the number of partnerships we achieve is influenced by partner factors rather than ImmunoGen goals. These factors include the number of antibodies or potential and existing partners have available for assessment. Whether we have commitments for those targets with other companies, whether these antibodies are quantitatively specific for cancer cells, the level of resources the other company is investing into the generation of product candidates for cancer, as well as how well their antibody works with their technology. I think a reasonableable estimate over the coming years is an average of one or two new partnerships per year, some more, some less.

And that brings me to a question about expectation for new ImmunoGen drugs entering the clinic. At this point we disclosed only two, huMY9-6-DM1 and the IGF-1 receptor antibody. We expect them both to advance into clinical testing. Others are in the works and we'll disclose them when they're at an appropriate stage for disclosure.

We've also been asked when we'll have sufficient Cantuzumab Mertansine begin Phase II studies. We is a-DM1 and an antibody producing cell line, so production of clinical material is not an issue. However, as we said before, we won't initiate Phase II evaluation of Cantuzumab Mertansine without a partner in place to commercialize it.

We've been asked whether we plan to partner huMY9-6-DM1 or advance it ourselves. HuMY9-6-DM1 is currently wholly owned by ImmunoGen and we are advancing it to the IND filing. Whether it remains wholly owned or we partner it depends on which option offers the biggest return, and to understand that, let me spend a couple minutes how we make decisions about licensing our products.

Central to this is our determination of whether our return to ImmunoGen is greatest if we outlicense the product or if we simply retain all the rights to it. To calculate the return we project the anticipated revenues to ImmunoGen if we keep all the rights versus the anticipated revenues if we outlicense the product, and the latter includes upfront and milestone payments, manufacturing margins, royalties, and so forth. We also project the anticipated costs to ImmunoGen if we keep all the rights. The products development costs, marketing costs and so forth and versus the anticipated costs if we outlicense it. The revenues and costs for each scenario or projected by year, adjusted for risk and discounted back to present value. So huMY9-6 to be commercializationed by ImmunoGen, but depending on the deal terms it may make more sense to license it so we continually determine which is best for ImmunoGen and its shareholders. Everything is based on which gives us the greatest return.

The final question relates to the status of our programs to further expand our portfolio of effecter molecules. I'm disappointed that we haven't yet unveiled a new product candidate that uses our [taxane] platform. But the [taxane] platform has moved forward more slowly than I would have liked because of our need to carefully watch our burn rate during these challenging times. Of course, we can change the resources allocated to our [taxane] program in the future as we continue to assess the anticipated return on our various programs. So those are the questions I have in front of me.

I'll now start taking questions from our callers. Are we ready to open the call to questions?

If you'd like to ask a question, at this time press star 1 on your touch tone telephone. We'll pause for just a moment to given a chance to signal. Our first question from Jason Kantor with W.R. Hambrecht.

Could you all clarify a bit what the money was from Glaxo and why there was money that exchanged hands there. You said previously money wasn't going to exchange hands. With regard to your [taxane] program. Could you give us an idea of trying to control the burn rate? What amount of money and what sort of progress didn't occur that could have occurred that put the resources to work and how do you see that moving forward and how much of a priority is that?

Jason, this is Gregg. I'll handle the first part of the question and turn it over to Mitch for the second part. With respect to the GlaxoSmithKline, it wasn't a question of money changing hands more than it was settling outstanding debts. We owed them for certain things, they owed us for things. If you'll recall, we experienced quite a bit of inventory in the third quarter of last year. When all the dust settled and we walked away, we booked as other income $1.4 million.

And so that question and so far as [taxane] is concerned, Jason, we, in our budgeting which begins July 1, decided that we would limit the amount we were spending because we wanted to achieve a certain burn rate and we weren't certain of what revenues were going to be like over the course of the subsequent twelve months. Although we didn't cut back entirely our efforts on the [taxane] and DC 1 through DC 4 reflecter molecules, we did focus on other development programs at ImmunoGen. Feeling that the demand is greatest for the DM 1 effecter molecule and from our partners and, excuse me, from our internal uses so my disappointment stems from the fact we weren't able to apply the level of resources. We are in the throws of budgeting for the new year beginning July 1st.

And the Taxane may get more priority. Its simply a matter of competition for resources. There's no systematic issue related to the tax-anes or anything else just figuring out how to use what are confined resources.

Thank you.

As a reminder press star 1. Next to Edward, private investor.

A thaus thank you for taking my call. One question [ INAUDIBLE ] a multitarget deal, do you anticipate generating any cash from that partnership over the next fiscal year? Not this one, but next?

You're talking about the fiscal year beginning this July?

Yeah.

You know, when I gave what's ahead for the next twelve months, I didn't include cash coming from that Genentech or Abgenix. That's not to say there won't be. We are not counting on a payment from x-millions of dollars to fund our taxane program, for example, if that's what you're getting at. We are not in the position to describe what we expect to get from Genentech and Abgenix because frankly, we don't know. If and when Genentech goes back into the clinic or into the clinic with the receptive based antibody or Abgenix goes forward and takes a license for an antibody they are working on for DM1, presumably we'll have money coming in from those two partnerships, but for the moment, we don't. Let me say it's not entirely without payments. We do make materials for both of those companies for which we are reimbursed, but there have been no milestone payments for each company in the recent past and making no statements as to whether we expect any for the next twelve months.

And I would like to add one thing which as Mitch mentioned competition for resources. Certainly, one of the places we've chosen to allocate our resource is in support of our partners so we continue to work with all of competition for resources. One of the places we've chosen to allocate our resource is in support of our partners so we continue to work with all of our partners including Abgenix and Genentech in terms of transferring technology and continuing to develop but as Mitch pointed out, what they choose to do and ultimately what triggers milestones is theirs and not ours.

Thank you, Mitch. Glad to hear that the business model has not changed.

No, it hasn't changed. And the good news is we have the money that we need to weather periods in which there isn't a lot of cash flow coming in because it takes these companies longer than we had hoped to go forward with a given product.

And a follow-up from Jason Kantor with W.R. Hambrecht.

Thank you. Your revenue from partnerships has come down, I assume primarily because of the Glaxo arrangement, is that correct or a level we should see going forward or just because this is a part of your revenue line and shouldn't take any predictive value out of the results this quarter.

I would say both and I know that's a bit of a confusing answer. In part you're right. We are not manufacturing as much material as we had because we don't manufacture on behalf of Glaxo any more. These revenues do tend to be lumpy because we manufacture in advance of needs in the clinic. As you know recruitment and enrollment and other factors which dictate the speed at which a clinical trial proceeds are unpredictable. And so I wouldn't draw too much -- or wouldn't take too much away from how much revenue we get in a quarter. It really is more indicative of how another collaborator is asking for material or projecting clinical needs. It's going to go up and go down and better to look at it over a year's period than a quarterly basis.

Okay. Thanks.

So it appears if this is correct, that there are no other questions. I think maybe it's because we preempted those questions with the -- by trying to answer them before they were asked and we were successful so I think we're done. Andy?

Thank you. This does conclude today's conference. Thanks for joining us today. You may now disconnect.