ImmunoGen Inc (IMGN) 2005 Q1 法說會逐字稿

Good day everyone and welcome to this ImmunoGen first quarter fiscal year 2005 conference call. Today's call is being recorded. And at this time for opening remarks and introductions, I'd like to turn conference over to the Chairman and Chief Executive Officer, Dr. Mitchel Sayare. Please go ahead, sir.

Thank you. Good afternoon and welcome to ImmunoGen's conference call for our first quarter ended September 30, 2004. With me here is Christopher Missling, our Chief Financial Officer who joined ImmunoGen a little over a week ago.

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

Before I discuss today's release with you, I'd 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 including in our SEC filings which can be accessed from our Web site.

We're delighted to have Christopher join our team. He has prior experience as a CFO at both a public U.S. biotech company and a private European biotech company. He was head of financial planning at Aventis and its predecessor company, Hoechst.

Christopher worked at Deutsche Bank and was an analyst in the healthcare investment banking group of Deutsche Morgan Grenfell, and he has a scientific background, a Ph.D. in chemistry to be exact that should be useful in his evaluation of ways to help take ImmunoGen to the next level.

The addition of Christopher to our team was accompanied by the departure of our former VP Finance, Ginger Lavery. We appreciate the enormous contribution that Ginger made to ImmunoGen and wish her well in her future endeavors.

As you know, our business model is to develop a pipeline of our own products, and to help pay for these programs by selectively outlicensing our TAP technology to other companies. Indeed, we've lots of activities underway in support of our own products, and yet we operated at better than cash flow breakeven this quarter.

To describe some of these activities, let me begin with our compound huN901-DM1. Our clinical department is now running the U.S. Phase I/II study that was formerly controlled by Vernalis.

Our staff is also working closely with the team running the Phase 1 study in the United Kingdom. Since our people have become involved, there has been an increase in the rate of enrollment in both of these studies.

You'll recall that these trials are designed to assess the tolerability of huN901-DM1 in CD56 expressing solid tumors, particularly small-cell lung cancer. In addition to his work on the two studies underway, Bob Fram, our VP clinical, also is working with outside experts to finalize the protocol for a third study with huN901-DM1. This one in the liquid tumor setting.

This trial will be conducted in multiple myeloma and we expect to begin patient dosing in early 2005. The study will be done under the products existing IND which we hold and we'll provide you more details on the study when it's finalized.

As you may recall, earlier this year we announced our decision to bring cantuzumab mertansine back in the clinic now that we have complete ownership of the product, but that clinical testing couldn't begin until 2005 because of insufficient inventory of the product.

I also told you that we would use this time wisely, testing alternative versions of cantuzumab mertansine that might yield better performance in the clinic, and thus be a more successful product for the Company. Well we've done that and lo and behold we found that one of our DM1 related payload molecules, one that our scientists only recently developed, and that we call DM4, provides significantly better performance with the cantuzumab huC242 antibody in multiple preclinical models than the original DM1.

As you can imagine, we've tested a host of our own antibodies and partner antibodies with DM1, and consistently found that DM1 provides outstanding performance. We've now also found that with some antibody targets we can achieve better performance in preclinical models with DM4.

Now, although the chemical difference between DM1 and DM4 is small, and although the antibody we will use is the same one that is in cantuzumab mertansine, the modified product is in fact, a different compound. So it needs a new IND application and a new name. For the moment we'll refer to it as huC242-DM4.

We'll begin testing this new compound in a Phase I study that we expect to begin in mid 2005. And we'll be running this clinical trial ourselves, no partner will be involved, and therefore, no restrictions will be imposed on us regarding the disclosure of our study plans. Expect an update on our plans in the near future.

Our partners continue to make progress with their compounds. As you know, Millennium has a Phase I/II study underway with its TAP compound MLN2704, which targets PSMA, the prostate-specific membrane antigen.

On top of the very favorable findings that Millennium reported from their first Phase I study, they've recently disclosed at investment conferences that's there's been evidence of anticancer activity seen in this second safety study as well. Results include reductions in PSA levels and tumor shrinkage.

Another of our partners, Boehringer Ingelheim continues to conduct multiple studies with its anti-CD44v6 TAP compound, bivatuzumab mertansine, in Europe. So at some point we expect data to be reported on this product, too.

We also expect additional compounds to enter clinical testing beginning with the anti-CD33 TAP we licensed to Aventis. And of course we continue to work with Genentech on its anti-Her2 TAP compound, trastuzumab DM1, and are hopeful that this will advance into clinical testing in the not too distant future.

Our partnerships have enabled us to be cash flow breakeven while we advance our own products, and while the number of TAP compounds in development have expanded.

Speaking of partnerships, in October we announced that another major antibody company, Biogen Idec, licensed the right to use our TAP technology with its antibodies, this time to an undisclosed target. Biogen Idec is the sixth company to purchase access to our technology even though our technology doesn't come cheap.

Biogen Idec paid us a million dollars upfront and has agreed to pay us milestone payments potentially totaling 42 million plus royalties on sales. Biogen Idec also compensates us for research and manufacturing done on its behalf, terms we have with our other partners that have become a significant source of cash flow for us.

Speaking of cash flow, Christopher will now discuss our first quarter 2005 financial results. Christopher.

Thank you, Mitch.

For the three-month period ended September 30, 2004, our net loss was $2.5 million, or 6 cents per share, compared to a net loss of $4.1 million, or 10 cents per share, for the same period last year. Our net loss was lower this quarter than in the same quarter last year because our revenues were higher.

Revenues for the three month period ended September 30, '04, were $9.0 million compared to $3.9 million for the same period last year. The first quarter '05 revenues include research and development support fees and from our collaboration with Aventis of $4.1 million, compared to $1.2 million for the same period last year.

We started receiving R&D support fees from Aventis on September 1, 2003, so we received the funding for only part of the quarter last year.

The first quarter 2005 revenues include $2.9 million in reimbursement for manufacturing clinical materials for our partners, compared to $1.9 million for the same period last year. The first quarter 2005 revenues also include $1.5 million of license fees and milestones payments compared to $646,000 for the same quarter last year.

Our total operating expenses for the three month period ended September 30, '04, were $11.8 million, as compared to $8.4 million for the same period last year. Our first quarter 2005 operating expenses include $2.5 million in costs of clinical materials reimbursed, as compared to $1.8 million in the same period last year.

Also included in the first quarter '05 total operating expenses were research and development expenses of $7.9 million, as compared with $4.8 million in the same period last year.

We had $94.6 million in cash and marketable securities on June 30, 2004, and $95.0 million on September 30, 2004. So our cash position was actually slightly higher this past quarter.

In fact, our cash flow from operations was a positive $857,000 for the first quarter '05. We continue to have no debt.

The agreement with Biogen Idec was signed after September 30, so the 1 million upfront payment received is not included in our first quarter results. As Mitch noted, our financial performance is a direct result of our business model, to develop our own product and help fund our product programs by selectively outlicensing our technology. Mitch.

Thanks Christopher.

As you probably are aware, our agreement with Biogen Idec was widely reported by the media in part because they're now the sixth major company to license our TAP technology after testing it internally. Biogen Idec joins Aventis, Genentech, Boehringer Ingelheim, Millennium, and Abgenix as a partner.

These partnerships contribute to the validation of our technology. They also expand the number of TAP compounds in development that add to the body of data on our technology.

Obviously they also can provide ImmunoGen with substantial milestone payments and royalties. This leaves us with the internal resources needed to make independent decisions about our own products, their design and their development that we believe will lead to great success for ImmunoGen.

I'll now open the call to questions.

Thank you. The question-and-answer session will be conducted electronically. If you do wish to signal for a question you may do so by pressing the star key followed by the digit one on your touch-tone phone. Once again, that is star one on your touch-tone phone to signal for any questions. And if you are using a speakerphone today, please make sure that your mute function is turned off to allow your signal to reach our equipment. We will come to you in the order that you signal and take as many questions as time permits. Once again, star one for questions. And we'll pause for a moment. Once again that is star one on your touch-tone phone to signal for any questions. And once again, that is star one on your touch-tone phone to signal for any questions. And if you are using a speakerphone today , please make sure that your mute function is turned off to allow your signal to reach our equipment. Our first question will come from David Muno, First Albany Capital.

I was wondering if you could give us some more color on the DM4 compound, how it compares with DM1, if it's more potent broadly across a number of cancers, and if this is a product that you might be able to partner out to, for new partnerships or if it would fall under agreements that you already have, if those partners would be able to have access to it? Thanks.

Sure. Well, DM4 is, this is Mitch. DM4 is different in the presence of a couple of methylene groups in the side chain that we use to attach the maytansinoid to the antibody. And because it's on the payload side of the disulfide bond it makes the DM1 compound, or it make the maytansinoid no longer DM1 but DM4.

Its activity, what we've seen, I can speak more specifically about C242. What we've seen there is an improvement in the performance by increases in efficacy with little change in the toxicity profile, at least in preclinical studies. Now our expectation is that that will hold in the clinic as well and is our justification for going forward with it.

Most of our partners would have access to DM4. We've tested a number of different antibodies, including some of our partners' antibodies with DM4 and compared them to the results with DM1, and as I said, I mean, in some cases DM4 improves performance, and interestingly in some cases it doesn't.

And, so you know, these antibody drug conjugates depend both upon the properties of the payload and the properties of the antibody, not just the binding properties of the antibody but other properties as well to deliver a potency.

I don't think that DM4 represents the basis of a separate business. It is very much part of what it is that we offer to companies in developing these license arrangements. As I said, we've done six of those deals, and I expect to do more in the future.

In terms of the potency, is it the speed in which it's inducing apoptosis, or the, how many cells that it's affecting?

I don't think we have an answer to that question. It, you know, I suspect the number of cells that are affected is completely dependent upon the antibody, or not completely, but much more dependent upon the antibody than it is the payload. But I think that we're just not prepared to give that sort of critical analysis. I mean eventually this stuff will be published, and you'll be able to review it at that time.

Great. Thank you.

Sure.

And we'll go next to Jason Kantor, WR Hambrecht.

Hi. Thanks for taking the call. Two quick questions. I missed a little bit of your description of DM4 but are the release kinetics, that is, the kinetics of the link at all altered in this, and if so how, and also you mentioned your list of collaborators, and Genentech's been pretty quiet for quite some time. Can you confirm that they still are actively pursuing DM1 conjugates?

Let me begin with that. Yes, we can confirm that they're still pursuing actively the development of DM1-based conjugates with Herceptin or with Her2 antibodies. Unequivocally I can say that.

We have not disclosed the more specific elements of the behavior, the pharmaco kinetic or other behavior of the DM4 system but, Jason, as you know, the way that we attach, the way that we create our disulfide bond is with an arm of the maytansinoid, and it's that arm that we have modified with the addition of a couple of methylene groups. The result is we would predict there would be a change in the way that dysulfide bond behaves in reducing environments.

But to go into more depth than that I think would be, you know, we have a patent application that's, you know, been filed, and we'll eventually publish this stuff when we feel comfortable with it, but suffice to say that in some but not all cases it improves performance. We find that DM1 is superb as a payload with certain antibodies, and DM4 is better with others. And, again, it's antibody dependent.

When we do deals like the Biogen Idec deals, and other deals, we usually obtain antibodies from those companies ourselves and test them in-house with the DM1 payload and others that we have on hand. And so we're feeling pretty comfortable that with our inventory of payload molecules, based on the maytansinoids that we can equip virtually [and the] antibody with the appropriate payload kinetics.

Thank you.

Sure.

As a reminder to our audience if you do wish to signal for a question you may do so by pressing the star key followed by the digit one on your touch-tone phone. If you are using a speakerphone today, please make sure that your mute function is turned off to allow your signal to reach our equipment. And we'll pause for a moment for additional questions. We'll go next to Brian Rye, Janney Montgomery Scott.

Thanks for take my question. Good afternoon, Mitch.

Hi, Brian.

A couple quarters ago, you talked about certainly in light of the business model working as well as has been and the healthy balance sheet that ImmunoGen currently possesses, maybe looking to expand the breadth of the Company's, I guess, operations and maybe looking at some noncancer, considering some noncancer indications for the antibody-based therapies. And I was wondering if you have any additional thoughts on that, if that's still something that's being considered?

It certainly is something that is being considered. I mean strategically, the question becomes does ImmunoGen expend all of its resources directed at the implementation of this technology platform or does one broaden.

As some of the issues that surround an answer to that question include such things as manufacturing, commercial manufacturing, for example, of our own products, as you know, you know, to create a commercial manufacturing facility one has to start way, way, way in advance of the approval of that product, without even knowing for certain whether the product will be approved.

And so those sorts of answers to those sorts of questions compete with, well, do we use all this cash that we have on hand to acquire other technology and so forth. So as sort of a long-winded answer to a very brief question, I would say that we're still looking at a number of different ways that we might make use of that cash, which includes but is not limited to a broadening of the technologies that we have in house that we're pursuing.

Appreciate the thoughts. Thanks, Mitch.

Gary Molinar, private investor.

Thank you. Actually, part of my question's been answered, but I'd like to get more specific with regard to either Aventis' drug or the Her2. Is DM4 a consideration rather than the DM1?

Good question, Gary. Let me say that Genentech has rights to DM4, but as to whether or not they're using DM4 or DM1, I think you have to ask them. We're, that's really all I can say about that.

With the CD33 compound, this is, here we're up against, you know, a partner disclosure issue. That decision has been made with CD33 but I am not permitted to disclose it.

Suffice to say that there will come a time very early next year when, or very soon, in any event, where a patient will be dosed with the compound, and at that time we'll certainly disclose what the compound is.

Thank you, Mitch.

And we'll return to Mr. David Muno for a follow-up.

Great. Thanks for taking my follow-up. Just wondering if you could discuss whether you're going to plan to present or submit data for the ASCO meeting from either in-house programs or with any of the partnered products? Thanks.

Sure. We have a little over a month to decide that, and I think that we can't speak about our partners. Our partners do what our partners want to do, insofar as disclosure at ASCO, EORTC, ACR, or anywhere else. And we haven't yet decided whether or not there will be data at ASCO.

We have a little while yet before we have to make that decision based on the deadline for submission. So, but, you know, there's no doubt the next conference call we'll be able to speak one way or the other on that issue.

Great. Thank you.

Sure.

And that will conclude today's question-and-answer session. I'd like to turn the conference back to Dr. Sayare for any additional or closing comments.

Well thank you very much. I want to thank each of you for participating today and I look forward to talking with you in the future. Let me remained you that our annual shareholders meeting is next Tuesday and we'd love to have you come at 10:00 right here to Cambridge, Massachusetts to take a visit and to look at our facility. Anyhow, thank you very much for your attention today.

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