ImmunoGen Inc (IMGN) 2004 Q4 法說會逐字稿

Good day and welcome, everyone, to this ImmunoGen fourth quarter and year end fiscal year 2004 conference call. Today's call is being recorded. At this time for opening remarks and introductions I'd like to turn the call over to Chairman and Chief Executive Officer Dr. Mitchel Sayare. Please go ahead, sir.

Thank you. Good afternoon, thanks for joining us today and welcome to ImmunoGen's conference call for our fourth quarter and fiscal year ended June 30, 2004. With me is Ginger Lavery, our Vice President Finance and Treasurer. At 4:00 this afternoon we issued a press release that summarizes our fourth quarter and year-end financial results. I hope you've all had a chance to review it. If not it's available on our website ImmunoGen.com. Before I discuss today's release with you I would like to remind you that this call will include 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 an investment in ImmunoGen are included in our SEC filings which can be accessed from our website. 12 months ago we gave guidance that our cash burn in 2004 would be between 3 and $6 million on an operating basis and that our net loss would be between 11 and 14 million. We're pleased to report that our actual 2004 operating burn was $5 million, so well within the range expected, and that our net loss was 6 million which was better than expected. In a few minutes Ginger will discuss our 2004 financials results in more detail and provide guidance for our 2005 fiscal year. Our favorable financial performance is a direct result of our business model which is to use technology and product out license arrangements to provide us with cash while we develop and advance our own proprietary products. Our out license arrangements also expand the number of products and development that use our TAP technology. This in turn expands the number of opportunities for events that can increase excitement around our TAP technology. As our partners advance their TAP products into Phase I or Phase II, as they report clinical data on our products that use our TAP technology and as we continue to license the TAP platform to more and more partners, both new and existing for use with their antibodies, we thoroughly expect the buzz around ImmunoGen to increase.

In June, our partner Millennium reported findings from the first clinical study with our TAP compound MLN2704 at this year's ASCO meeting. This compound is comprised of our DM1 effecter molecule and their MLN591 antibody which targets the prostate's specific membrane antigen, PSMA, PMS -- PSMA is found on virtually all prostate cancers and may be a potential target for treatment of other types of cancer as well. The results reported at ASCO were from Millennium's first does escalation clinical trial with MLN2704. As you know, in a dose escalation trial the first patients are given a low dose of the study drug and if they tolerate it well a new cohort of patients is given a higher dose of the drug. Dose escalation continues with new groups of patients until dose limiting toxicity is observed or the study objectives are otherwise meant. The panel in this -- the patients in this study all had hormone refractory prostate cancer that had metastasized. The study was designed as a single dose study but while it was underway Millennium applied for and received FDA permission for patients to receive three doses of MLN2704 at 4 week interval unless they experienced dose limiting toxicity. Patients that showed benefit could receive additional doses of MLN2704 at 4 week intervals. Of course, receiving one dose of a product every 4 weeks is like starting the drug de novo every 4 weeks. There's no opportunity to establish steady state levels of the agent in the blood. However, this was a Phase I trial designed to study the tolerability of MLN2704 not it's efficacy and MLN2704 was certainly found to be well tolerated. Dosing was started at 18 mgs per meter squared and was escalated all the way up to 343 mgs per meter squared without the occurrence of enough toxicity to establish a maximum tolerated dose. 343 mgs per meter squares is a big dose for a product that includes a cell-killing agent as potent as DM1. Indeed, this is naked antibody levels of drug.

To put this in context the approved dose of Rituxan is 375 mgs per meter squared. The amount of DM1 delivered at 343 mgs per meter squared is about 3 times the maximum tolerated dose of DM1 were it not attached to an antibody and targeted to cancer cells. And on the subject of toxicity I should note that all of the patients that were started on either the two highest doses in the study, 264 or 343, received at least three doses of MLN2704 and none of the patients in the study discontinued treatment because of adverse events. As I said earlier, this study was designed to assess safety not efficacy but evidence of anticancer activity was reported. Some, though not all, of the study patients had tumors that could be accurately measured and thus could be assessed for changes in tumor size. Four of the 9 patients that received either 264 or 343 entered the study with measurable disease. After treatment with MLN2704 one of these patients had a partial response as determined by standard criteria and two additional patients had stabilization of their disease, pretty remarkable given that they only received MLN2704 once every 4 weeks. All of the patients in the study had their blood drawn weekly so that their PSA levels could be measured. Unlike the target antigen PSMA, which stays attached to prostate cancer cells, PSA is released by prostate cancer cells into the blood. As prostate tumors grow more PSA is released, so a rising PSA level is an indicator of prostate cancer progression.

While PSA level is not an acceptable end point for FDA approval it does provide clinicians with incite in to whether or not a drug is having an effect. 9 patients received 264 or 343 milligrams per meter squared of MLN2704. 2 of these patients had a sustained reduction in their PSA level of more than 50% and 2 additional patients had their PSA levels stabilize after receiving a MLN2704. While little information is available on individual patients the clinician who reported the study described the experience of 2 patients in some detail. One is a patient that a partial response by standard criteria. He was also one of the patients that had a greater than 50% drop in his PSA level. At the time of the ASCO presentation this patient had been in the study for 46 weeks getting treatment with MLN2704 once every 4 weeks with no sign of disease progression or significant toxicity. We're hopeful that he's continuing to do well but we won't know until the final study results are reported. The other patient described in some detail was the one that experienced dose limiting toxicity. This patient had previously been treated with docetaxil and with mitoxantrone plus prednisone. He was started on MLN2704 at 343 mgs per meter squared. After his first dose he experienced uncomplicated febrile neutropenia, his dosage was reduced to 264 and he continued to receive multiple treatments with MLN2704 until his cancer finally started to progress again 26 weeks after his first dose. Boehringer Ingelheim is continuing to conduct studies with bivatuzumab mertansine in Europe so we expect data will start coming from these studies at some point in the future. Aventis is continue to make substantial progress with the compounds they licensed from us and we continue to expect the IND for the anti CD33 TAP, the one for acute myeloid leukemia, to be filed later this year and for patient dosing to begin shortly thereafter.

Genetech continues to do pre-clinical work with Trastuzumab-DM1and Genetech, Millennium and Abgenix all continue to reserve antigen targets so they can test our technology with their antibodies. So a lot's going on with our partners and a lot's going on here. We've gained control of our proprietary compound, huN901-DM1, from former partner Vernalis(ph) and we now hold the product IND. We've assumed control of the Phase I/II study that's running in the U.S. We're working to expedite the completion of the study such as by expanding the number of study sites. Vernalis continues to be responsible for the Phase I study they initiated in the U.K. They too are looking for ways to expedite it's completion. In July we hired Dr. Robert Fram, a superb oncologist with significant experience in drug development to head our newly formed clinical department. Bob's first priority has been to get a study up and running to assess the clinical utility of huN901 DM1and CD 56-positive hematological malignancies particularly multiple myeloma. We'll provide your with more information on the study design and study centers when the plans are finalized. As we reported preclinical data supportive of huN901 DM1 for the treatment of multiple myeloma were published by Ken Anderson's group at the Dana-Farber in the Journal Cancer Research in June. Another of Bob's top priorities is develop -- is to develop the clinical program for cantuzumab mertansine which we will share with you as soon as it's finalized. As you know Phase II testing of cantuzumab mertansine can't start until the first half of 2005 because we've had to produce antibodies for use in the clinical -- clinical materials.

We have been using this time to test potential tweeks to the products design that could further improve its performance in the clinic. Tweeks related to the use of 1 of the modified versions of DM1 that we have in our portfolio of effector molecules. We expect to have the data we need to make the decision on the product's design within the next couple of months. We'll then provide you with more details on our study plans and update you on the design of the product of the changes made. Ginger will now discuss our 2004 financial results and provide guidance for 2005. Ginger.

Thanks, Mitch. I'm going to spend a few minutes taking you through our 2004 financial results. And then I will provide guidance for our 2005 fiscal year. For our fiscal year ended June 30, 2004 we reported a net loss of $5.9 million or 15 cents per basic and diluted share compared to a net loss of $20 million or 48 cents per basic and diluted share for our 2003 fiscal year. The marked reduction in our net loss for 2004 is principally due to $13.6 million of research funding we earned since September 1, 2003 as part of our collaboration agreement with Aventis. We also made more clinical material on behalf of our partners in 2004 than we did in 2003. For our fourth quarter ended June 30, 2004, we reported net income of $302,000 or 1 cent per basic and diluted share. In contrast for the same quarter in 2003 we reported a net loss of $6.9 million or 17 cents per basic and diluted share. As we discussed in our press release our profitability for the fourth quarter of 2004 was primarily due to the timing and amount of revenue we earned in that quarter and should not be considered indicative of future quarterly results. Our fourth quarter revenues were 9.3 million in 2004 compared with 1.3 million in 2003. Our 2004 fourth quarter included $4.4 million of research funding from Aventis and $3.5 million of reimbursement for clinical materials made on behalf of our partners. Our 2003 fourth quarter predated our collaboration with Aventis so there was no funding from Aventis in that quarter and we recorded 900,000 of clinical material reimbursement. Our fourth quarter operating expenses were 10.6 million in 2004 compared to 8.7 million in 2003. Our cost of clinical materials reimbursed was $2.9 million in 2004 compared with $800,000 in 2003. As of June 30, 2004 we had 94.6 million of cash and marketable securities. We continue to have no debt.

As Mitch noted our strong 2004 financial performance reflects our business model. It reflects the impact of our partnerships and it reflects our own care with our cash. In 2003 our operating burn rate was $21.9 million, which is relatively modest by industry standards. In 2004 it was $5 million. Of course, part of the decrease from the 2003 level was our receipt of the $12 million up-front payment from Aventis in August, 2003. However, even without this payment, our cash burn was down significantly in 2004. For our 2005 fiscal year, we expect our burn rate will be between 10 and $13 million. This expectation is based on assumptions regarding our own activities and it is based on assumptions regarding the activities of our partners over whom we have less control. However, it does show that even with our plans to initiate our own clinical trials for both huN901 DM1 and cantuzumab mertansine, we expect our burn rate in 2005 will remain modest relative to our cash position. In 2003 our net loss was 20 million. For 2004 we gave guidance that it would be between 11 and 14 million. Our actual net loss was 5.9 million primarily because our expenses for materials were less than anticipated. In 2005, we expect our net loss will be between 17 and $20 million, again this estimate includes assumptions about our own activities as well as those of our partners.

Thanks, Ginger. Currently two clinical trials are underway with huN901 DM1, Millennium is finishing up the MLN2704 study reported at ASCO and has a second study underway that examines a weekly versus every 2 week dosing regimen. Boehringer Ingelheim has multiple Phase I studies underway in Europe. Aventis is advancing the compounds they licensed from us toward the clinic and is expected to file the IND for the anti CD 33 TAP for AML this year and multiple partners, including Genentech, are testing our TAP technology in their pre-clinical models. In our 2005 fiscal year we plan to start a clinical trial with our own huN901 DM1 in hematologic malignancies, provide support to the 2 studies already underway with this compound and begin our cantuzumab mertansine clinical program. We also expect to provide technical support for partner compounds already in clinical testing and partner compounds advancing into clinical testing. Consequently we've established our own in-house clinical department to manage our own programs and be a resource to our partners. We've strengthened our regulatory development, we have expanded manufacturing related functions including process development, production and quality control. We're bringing on two new GNP manufacturing suites to supplement our two suites already in place making clinical great product and, of course, we're continuing our licensing activities to establish additional partnerships and our research to create additional products for our pipeline. We feel the coming year will be an exciting one for ImmunoGen and our shareholders. And now I think we can take questions.

Thank you, sir. Today's question and answer session will be conducted electronically. If you'd like to ask a question please signal by pressing a star key followed by the digit one on your touchtone telephone. If you are using a mute button please make sure your mute button is turned off to insure that our equipment can read your signal. We will come to you in the order that you signal and we'll take as many questions as time permits. Again that is star, 1 on your touchtone telephone to signal us with a question and we'll pause for a just a moment to assemble our roster. We'll take our first question from Brian Rye with Janney Montgomery Scott.

Thank you. Hi, Mitch, how are you.

Good Brian, how you doing.

Doing fine. Just a quick question to followup on you all regaining the IND to N901 from Vernalis and assuming control of the Phase I/II trial here in the U.S. Is there a point in time in which you might also assume control of the European study or is that going to be with Vernalis for the duration and then maybe just a little more flavor on where it stands if it's going to be another couple of months before that trial here in the U.S. can finish or just sort of -- sort of some more color there?

Well, to answer your first question, insofar as the U.K. study is concerned, we do not at this time anticipate taking control of that study. We expect that Vernalis will take the study to completion and we'll take control of the results but not the study itself and insofar as what's happening in the Phase II study in the U.S., you know, that's moving forward albeit it's a challenging process to find patients that, you know, that fulfill all of the criteria. Specifically that they're relapse but not refractory. And that they don't progress so fast as they typically do with small-cell lung cancer such that we have ample time to assess them once they've had the -- had the drug. So, you know, we're making progress. But it's just not at the rate that we hoped it would be, but we're trying to counterbalance that by, you know, other -- other possibilities including expanding the study to more sites.

That sounds great and again congratulations on a great quarter.

Thank you.

We'll take our next question from Derek Tang with Needham & Co.

Good afternoon, Mitch.

Hi, Derrick.

Thanks for taking my questions. I was wondering, first, if you could make a couple comments on the PSMA expression profile. Is there any other tissues or cells that PSMA might be expressed other than the prostate?

It's a very interesting target that is thought to be, or it's often seen associated with neovasculature associated with tumors and thus makes it a candidate to be used as a target for tumors other than prostate. So it can occur in the neovasculature associated with other tumors other than prostate.

Great. Okay, thanks. And also have you told us what the royalty rate will be on the PSMA product from Millennium.

No, we've not disclosed royalties on any of our -- on any of our relationships. We have indicated that milestones will be in the 40 or $40 million plus range and that there are also fees associated with manufacturing for our partners but we've not given any indication of what royalty rates are.

So you can't even ball park that?

That's correct.

Okay. And I was not very familiar with the small-cell lung cancer trial study and I was wondering if you can just briefly go over what those two trials are? That will be very helpful.

Sure. Both studies were initiated by Vernalis. The first one to be initiated was a Phase I study here in the states that they undertook, dosing patients once a week for 3 weeks followed by a 2 week hiatus and then more dosing if there was clinical benefit or at least no DLTs and that had a -- once NTD was reached has a Phase II portion which is what they're in now. The Phase I data from the Phase I portion of that trial were reported at EORTC last year in Frankfurt. The other study initiated and continued to be carried out by Vernalis is rather interesting. It's dosing patients 3 days in a row, once a day for 3 days in a row, with a 18 day hiatus between doses, trying to see if -- what happens if you -- will they tolerate -- will patients tolerate the drug better or worse if it's given in that format and that's under dose -- and Phase I's right now under dose escalation. I say all of the studies -- both of the studies used patients in the Phase I portions that are relapsed and refractory so these are very fast progressing patients with small-cell wide spread metastatic disease and so -- just a point of information to draw a distinction from that from the Phase II patients which are relapsed but not refractory.

Okay. And those -- those are the two studies that you have retained control in the state -- here in the states.

The Phase -- the U.S. study is the one that we're controlling. Vernalis continues to run the once a day for 3 days study in the U.K..

Okay. I got it. Thanks very much.

Sure.

Once again, that is star, 1 on your touchtone telephone to signal with a question and we'll pause for just a moment.

It appears -- it appears that there's a lot of people on vacation so we're sort of short on the list today. But please forward your questions if you have any.

And again that is star, 1. And we'll go next to Jason Kantor with WR Hambrecht

It's actually Michael (inaudible) in for Jason but we wanted to ask are you guys pushing ahead for additional conjugation or an additional conjugation deal this year. Are you guys really kind of shifting the model toward advancing the clinical programs forward much more so than another deal?

No, no, we think we can do both so not only are we putting more emphasis on our internal products, but we're also very much planning on doing one or two partnerships this year.

Great.

With new -- new or existing players.

Okay.

Any further questions, sir?

No, we're good.

Thank you. There appear to be no further questions, Dr. Sayare. At this time I'll turn the conference back over to you for any additional or closing comments.

Well, I appreciate those of you who interrupted your vacation to come listen to ImmunoGen's conference call and for those who didn't interrupt their vacation I guess the question is why are you on vacation, but, again, many thanks for -- for tuning in today and if you have any questions don't hesitate to give me a call, or our IR department. Thanks again and take care.

That does conclude today's conference. Thank you for your participation. You may disconnect at this time.