禮來公司 (LLY) 2006 Q1 法說會逐字稿

At this time, I would like to welcome everyone to the ImClone Systems Incorporated First Quarter 2006 Earnings Conference Call. [OPERATOR INSTRUCTIONS] Thank you.

It is now my pleasure to turn the floor over to your host, Andrea Rabney, Vice President of Corporate Communications.

Ma'am, you may begin your conference.

Thank you, Elsa.

Good morning and welcome to ImClone Systems quarterly earnings conference call.

Today's call has been scheduled to discuss the Company's financial results for the first quarter of 2006, which we announced earlier this morning.

With me today are: Joe Fischer, Chief Executive Officer, Ronald Martell, Senior Vice President of Commercial Operations;

Eric Rowinsky, Senior Vice President and Chief Medical Officer and Michael Howerton, Senior Vice President and Chief Financial Officer.

On the legal note, I must remind everyone that certain information discussed on this call may constitute forward-looking statements within the meaning of the federal securities laws.

Although we believe that expectations reflected in these statements are based on reasonable assumptions, we cannot give assurance that the expected results will be achieved.

We refer you to our Exchange Act filings for factors that could impact the Company.

For forward-looking statements made during this call, the Company claims the protection of the Private Securities Litigation Reform Act of 1995.

It assumes no obligation to update or supplement the statement.

Also today's press release includes a reconciliation of certain non-GAAP financial information to the most directly comparable measures under generally accepted accounting principles.

This press release is posted on our website at www.ImClone.com.

I'd now like to turn the call over to Joe Fischer.

Thank you, Andrea.

And thank you all for joining us today.

This past quarter was a very successful quarter for ImClone Systems.

Erbitux was approved on March 1 for the use in head and neck cancer in the United States and U.S. in-market sales of Erbitux reached the record $138 million, up 14% over last quarter and 58% over the first quarter of 2005.

The FDA approval of Erbitux in head and neck cancer triggered a milestone payment of $250 million from our partner, Bristol-Myers Squibb.

These record sales combined with revenues recorded as a result of this payment led to a very strong quarter for us with a total of $229.6 million in net income, on revenues of $245.1 million and earnings per diluted share of $2.51.

Several other important events transpired during the quarter.

We announced a full patient enrollment has been completed in a number of international registrational Phase III clinical trials of Erbitux, an announcement that Eric will discuss in a moment.

A number of these studies will be coming to maturity in the second half of this year or the beginning of next year, and we eagerly await their outcome.

Also during the quarter, ImClone scored an important victory when an arbiter decided in favor of the Company in its dispute with Merck KGAA over rights to develop and commercialize IMC-11F8 our EGFR targeted fully human IGG1 antibody outside of North America.

The decision is binding and cannot be appealed.

We look forward to initiating later-stage development trials of IMC-11F8 in the second half of 2006 following completion of phase I trials.

As you know from our last financial results conference call during the first quarter, we initiated a process of reviewing our strategic alternatives as a company.

This review was initiated to insure that the Company can benefit from its long-term high-value investments in the short term, realizing immediate shareholder value, while mitigating the impact on profitability associated with the development of Erbitux and our product candidates.

Among the alternatives, the Company may ultimately pursue are mergers sale or strategic alliance.

I would like to emphasize to you that while this process is ongoing, we continue to invest in and grow the Company.

These strategic evaluation efforts require the attention of only a limited group of individuals within the Company and our marketing, drug development, research and manufacturing investments and efforts remain robust.

Indeed, we continue to attract talented individuals through out the organization to support these efforts.

We are very pleased with our results for the quarter and look forward to continuing to execute a program of focused investment during the period in which we are reviewing our strategic alternatives.

This will ensure that we sustain our competitive position and that we are adequately positioned for sustainable long-term growth.

I'm now going to turn the call over to Ron to go over an Erbitux sales update.

Ron?

Thank you, Joe.

I'd like to remind you all that while I will discuss the use of Erbitux in colorectal cancer, head and neck cancer and other tumor types, our field professionals do not promote it in any way other than for its labeled indications.

With its most recent FDA approval, Erbitux is now indicated in the United States for use in combination with radiation therapy, in locally or regionally advanced head and neck cancer, and as a single agent in platinum refractory, recurrent, or metastatic head and neck disease, in addition to combination with irinotecan and in monotherapy use in refractory colorectal cancer.

For patients with locally or regionally advanced head and neck cancer, Erbitux, when added to added radiation therapy, has demonstrated the ability to treat the disease and prolong the patient's life.

The most important goal in oncology therapy.

Data supporting this indication have given Erbitux field sales professionals the first approved survival end point for Erbitux, an impressive almost 20-month improvement in survival for those patients receiving Erbitux with radiation.

In the refractory setting, data supporting our new indication come from a response rate study in which Erbitux shrank tumors by greater than 50% in 12% of patients treated.

This means that Erbitux is the only EGFR-targeted monoclonal antibody to demonstrate a survival benefit, have positive data in combination with chemo and radiation, and is the only EGFR monoclonal antibody to consistently produce double digit response rates in colorectal cancer patients who have failed oxaliplatin and irinotecan, and head and neck patients who have failed platinum-based treatment.

While we are pleased with the initial uptake of Erbitux in head and neck cancer during the quarter, given that the indications were granted towards the end of the period, we do not expect to see the full impact until the coming quarters.

Sales for the quarter were nonetheless very strong.

As Joe noted a moment ago U.S. in-market net sales of Erbitux for the first quarter were $138 million.

This compares to $121 million for the fourth quarter of 2005 and $87.1 million for the first quarter of 2005, an increase of 14% and 58% respectively.

It is also important to note that within the first quarter, Bristol-Myers Squibb began using a four-day shipment cycle.

We no longer ship drug on Fridays to safeguard against the potential for product loss associated with the weekend delivery.

To that end, as the quarter ended on a Friday, there were virtually no sales recorded on Friday, March 31st.

As we move forward, and you review data sources such as IMF, be aware that there are no sales on Fridays.

Moving on to specific data by indication, in colorectal cancer, penetration for the first, second and third-plus lines of therapy were approximately 3%, 11%, and 30% respectively during the first quarter.

Compared to the fourth quarter 2005 penetration figures of approximately 4% in the first line, 13% in the second line, and 31% in the third-plus line setting.

Use of Erbitux in all lines of colorectal represented 68% of total usage for the quarter compared with 79% of total usage for the fourth quarter.

On average, Erbitux was used in combination in 80% of metastatic colorectal cancer patients treated in the first quarter compared to 82% for the four quarter of 2005.

In head and neck cancer, Erbitux overall market share was approximately 18% in the first quarter.

Within Erbitux's approved squamous cell carcinoma head and neck indications in combination with radiation therapy for patients with locoregional disease, and as a monotherapy in platinum refractory metastatic disease, Erbitux market share was approximately 11% and 24% respectively.

The first quarter was a strong quarter for Erbitux yet we believe the impact of the new head and neck indications will be far more significant in the coming quarters.

We also look forward to presenting a variety of data on Erbitux at the upcoming ASCO meeting and to the maturation of several important registrational clinical trials over the balance of the year.

I now like to turn the call over to Dr. Eric Rowinsky to discuss our efforts in clinical development and to give you a preview of what data to expect on Erbitux at ASCO.

Eric?

Thank you, Ron.

With an ever-increasing field of targeted therapies, it is essential to understand that the key to successfully developing a compound is good, clinical data and access to clinical trial resources.

In other words, the decision to prescribe cancer drugs as well as reimbursement for these products is progressively becoming data-driven, and quality data-driven at that.

Erbitux is on a path to yield significant result based on data generated from well-designed pivotal trials with clinically relevant end points particularly survival across a broad array of cancers and lines of treatments over the next few years and is well ahead of its potential direct competitors in this regard.

In terms of near-clinical data, we look forward to the presentation of a number of studies at this year's ASCO annual meeting.

These include studies of bearing size in a number of different tumor types.

First, we look forward to the results of two studies that examine variations in dose levels and dosing intervals in the administration of Erbitux including a pharmacokinetic and pharmacodynamic study of Erbitux administered every two weeks in patients with metastatic colorectal carcinoma.

We also expect to see results from the Cancer and Leukemia Group B, or CALGB randomized phase III study examining front-line treatment of metastatic colorectal cancer patients.

In this study, patients were randomized on two occasions, the first occasion they were randomized to receive either FOLFOX or FOLFIRI versus Erbitux and no Erbitux.

Although the accrual goal was set at 2200 patients, the study was terminated after only 238 patients were accrued because of the increasing use of oxaliplatin and the approval of Avastin in the first-line setting.

Albeit small, the study is nonetheless very important as it may give us good insight as to the merits of adding Erbitux to chemotherapy in the first-line setting in metastatic colorectal carcinoma, particularly in a randomized clinical study.

We also expect preliminary results from a large randomized Phase II study in nonsmall cell lung cancer that is designed to select an Erbitux end combined with chemotherapy regimen for future evaluations in the phase III setting by the cooperative oncology group, SCOG.

And we look forward to the presentation of preliminary safety results from several large randomized phase III studies of Erbitux in colorectal, nonsmall cell lung cancer, and head and neck cancers, all of which are fully accrued.

Lastly, we expect results from interesting phase I studies examining the combination of Erbitux and EGFR directed tyrosine kinase inhibitors.

In addition to our Erbitux posters and presentations, we also look forward to presenting preliminary phase I results for our pipeline stage EGFR and VEGFR-2 antagonists to fully human IGG1 antibodies ImClone 11f8 and ImClone 1121b respectively.

For your reference, we have posted the abstract titles of all of our Erbitux and pipeline studies on the investor relations section of our website.

Dates and times of presentations are also being added.

In terms of further near-term clinical results by the end of this year and beginning of next year, we expect to have mature, phase III data with survival or progression-free survival end points in first, second, and third-line colorectal cancer patients and in first-line pancreatic cancer patients.

These registration trials all address significant questions about the impact of the use of Erbitux and are intended to be used to fully support new indications.

For both the colorectal cancer and pancreatic cancer studies, we expect they will yield important information regarding Erbitux's position of strength in an increasingly competitive marketplace and provide us with important benchmarks relative to other therapies both chemotherapeutic and biologic.

I'll now turn the call over to Michael to discuss our financial results.

Michael?

Thanks, Eric.

This morning I'll be providing a brief summary of our first-quarter financial results, including in some cases comments with respect to guidance for the full year.

As you read in our press release this morning, during the first quarter of 2006, ImClone Systems recorded revenues of $245.1 million with operating expenses of 101.5 million resulted in diluted EPS of $2.51.

This performance reflects the continuing global growth of Erbitux as well as the Company's execution of a program of focused investments in support of our products, our manufacturing assets, and our employees designed to sustain competitiveness and longer-term growth.

Revenues for the first quarter of 2006 of $245.1 million compared with 85.8 million in the first quarter of last year.

I'll address each of the four principal components of revenues separately.

Royalty revenue for the first quarter was $60.3 million compared with 36.4 million last year.

An increase of 66%, reflecting strong year-to-year sales growth of Erbitux in the U.S. of 58% and in non-U.S. markets.

License fees and milestone revenues for the first quarter of 2006 were 144.4 million, compared with 24.5 million in the first quarter of last year.

The year-to-year increase reflects the fact that a $250 million milestone was received on March 31st of this year, resulting in a catchup amortization effect of approximately $113 million.

These revenues principally reflect recognition of the milestone payments now totaling $900 million, received from Bristol-Myers Squibb.

As we've discussed in the past, these payments are recognized as revenue, based on the cumulative clinical development spending for Erbitux by both BMS and ImClone as a percentage of total anticipated spending over the life of our agreement.

This cumulative percentage is approximately 48.7% through the end of the first quarter of 2006, compared with 45.1% through the end of 2005 or an increment in the quarter of roughly 3.6 percentage points.

Consistent with our fourth quarter earnings call earlier this year, we continue to expect amortization of license fees and milestones to approximate $250 million for the full-year 2006.

Manufacturing revenue for the first quarter of 2006 was 19.3 million compared with 11 million in the first quarter of last year.

These revenues consist of sales of Erbitux to our partners for commercial, as opposed to clinical, use.

The increase in 2006 reflects higher volume purchases by BMS this year as well as for the first time, sales to Merck of product intended for commercial use.

During the first quarter of 2006, purchases by BMS totaled 16.6 million including a 10% premium over cost, and purchases by Merck totaled 2.7 million, with no premium.

The selling price to our partners in 2006 is based on manufacturing costs, which are essentially equal to the costs in 2005.

Collaborative agreement revenue for the first quarter of 2006 was 21.1 million, compared with 13.8 million in the first quarter of last year.

The increase principally reflects higher reimbursement for clinical materials and royalty expenses by our partners.

These revenues reflect reimbursements from our partners for contractually defined clinical regulatory and marketing expenses or approximately 3.7 million in the first quarter of this year, Erbitux supplied for use in clinical trials, approximately 8.8 million in the first quarter of this year, and reimbursement for royalty expenses approximately 8.6 million in the first quarter of this year.

For the quarter such reimbursements totaled approximately 13.2 million from Bristol Meyers and 7.9 million from Merck.

Now, turning to expenses.

Total operating expenses for the first quarter of 2006 were 101.5 million, including 1.9 million of stock option expenses recognized under FAS 123R, compared with 61.5 million in the first quarter of last year.

We continue to expect total stock option expenses for the full year to be approximately $10 million.

Research and development expenses for the first quarter of 2006 were 33 million, including 0.8 million of stock option expenses, compared with 21.2 million in the first quarter of last year.

The year-to-year increase reflects costs to produce clinical supplies of Erbitux, which as mentioned, are reimbursed as a component of manufacturing revenue, higher occupancy costs, increased head-count related expenses, and efforts in support of our non-Erbitux pipeline.

We now expect these expenses to approximate $135 million for the full-year 2006, including approximately 3.1 million of stock option expenses.

Clinical and regulatory expenses for the first quarter of 2006 were 15.1 million, including 0.3 million of stock option expense, compared with 9.4 million in the first quarter of last year, reflecting higher clinical trial expenses in 2006 associated with Erbitux and the Company's pipeline.

As indicated on our fourth quarter earnings call, we continue to expect these expenses to approximate $90 million for the full-year 2006, including approximately 1.3 million of stock option expenses.

Marketing, general and administrative expenses for the first quarter of 2006 were $18 million, including 1.1 million of stock option expense, compared with 17.6 million in the first quarter of last year.

As indicated on our fourth quarter earnings call, we continue to expect these costs to approximate 80 million for the full year, including approximately 5.2 million of stock option expenses, although management will continue to pay careful attention to keeping administrative expenses to the minimum levels required to support our growth.

Royalty expenses on a gross basis were $20.1 million in the first quarter of 2006, compared with 12.6 million last year.

The year-to-year increase reflects higher quarterly sales.

Approximately 8.6 million of the expenses in 2006 were reimbursed in the quarter and are reflected as a component of collaborative agreement revenue yielding a net royalty expense to the Company of 11.5 million.

These expenses reflect obligations which relate to certain Erbitux license agreements with respect to intellectual property.

The gross royalty obligation on U.S. sales of Erbitux will decline from 12.25% to 9.25% beginning in the second quarter of this year resulting in a net royalty burden of 4.75% of sales for the balance of the year after taking into account Bristol's 4.5 percentage point reimbursement.

For the first quarter of 2006, cost of manufacturing revenue was $15.4 million reflecting essentially full costs of manufacturing, that is, substantially all previously expensed materials have been sold through to our partners, unlike the first quarter of 2005.

Now, in terms of the Company's profitability, we realize that the recognition of the accelerated impact of the receipt of the 250 million milestone in the quarter, as well as the recognition of stock option expenses for the first time may make period-to-period comparisons of the Company's performance difficult.

For example, as reported operating income in the first quarter of 2006 was 143.6 million compared with 24.3 million last year.

However, if we eliminate the catchup effect of the milestone amortization, as well as the FAS 123R expenses from this first quarter's results, the Company achieved operating income on a non-GAAP pro forma basis of $32.8 million, or an increase of 35% versus last year, even with significant investments in research, development, and clinical.

I ask that you visit our Web site to review a reconciliation between non-GAAP and GAAP measures of these components of our income statement.

The effective tax rate for the first quarter of 2006 and the estimate for the full year is approximately 13%.

This tax rate is clearly different from the 25% rate that we guided on our fourth quarter earnings call, and this reflects the fact that the Company released a portion of its deferred tax asset valuation allowance.

This was done as a result of events that transpired in the first quarter, including the receipt of the milestone.

The impact of the release resulted in a benefit to tax expense of approximately $99.5 million, which was recognized in the first quarter of 2006.

The combination of both these items, the release of the valuation allowance and the lower rate, resulted in a net tax benefit in the first quarter of 2006 of $80.3 million.

Basic shares outstanding used in the calculation of earnings per share averaged 83.6 million on the first quarter of 2006, up from 83.3 million in the first quarter of last year.

Diluted shares of 91.8 million include approximately 6.3 million shares underlying the Company's $600 million of outstanding convertible debt as well as in the money and unexercised stock options.

As a result of all these factors, and as previously mentioned, the Company achieved net earnings per diluted share of $2.51 for the first quarter of 2006, compared with net earnings per diluted share in the first quarter of last year of $0.33.

However, to provide investors with a clearer picture of the Company's growth versus last year, we have also provided in our earnings release a pro forma non-GAAP earnings comparison.

Specifically excluding the effects of the release of the valuation allowance, non-GAAP diluted earnings per share would have been $1.43 in the first quarter of 2006.

In closing, I'll make a few observations in terms of capital spending and our cash position.

Capital spending for the first quarter of 2005 was approximately $16 million and is expected to approximate $50 million to $60 million for the full year.

We ended the quarter with cash and marketable securities of approximately $991 million and no shares were repurchased by the Company during the first quarter of 2006.

That concludes our prepared remarks, I'd now like to open the call for questions.

Elsa?

Thank you.

The floor is now open for questions. [OPERATOR INSTRUCTIONS] Our first question comes is coming from Michael King with Rodman & Renshaw.

Please go ahead

Good afternoon and congratulations.

Actually, good morning and congratulations.

I was just wondering, Ron, if you could maybe give us a little more color on Erbitux?

Did you experience any kind of increase in duration of use during the quarter, anything you could speak to there?

I'm not unhappy with the number, but I'm just trying to figure out how we got there given there wasn't a lot of market share shift in colorectal or head and neck.

Certainly, Mike.

Good morning.

In specifically in colorectal, we did not observe an intraquarter increase in the duration of therapy on average for a patient.

And that continues to be at around the 14 week to 16-week range for an average patient with colorectal disease.

In head and neck, I think the picture is still a little unclear there as you really have two distinctly different dosing schedules for locoregional disease and metastatic recurrent or refractory.

So I think that market needs to mature a little bit more.

What we certainly did observe was a significant increase in uptake in the head and neck space.

And again, with the introduction or the approval being with really only one full month within the quarter, the sales force certainly gained a lot of traction in this space within that month.

Okay.

And then just a quick follow-up with regard to IMS.

I mean, it's really not going to affect -- I would imagine that product is just not shipped on a Friday.

There's probably a double shipment on Monday or something?

There's got to be some kind of a make up.

I would really only see this having much of an impact on a quarter that ends on a Friday, correct?

That is, that theoretically is correct.

And that's what we've observed from buying patterns through the quarter.

We specifically wanted to point, though, that because the quarter did end on a Friday, that that catchup, if you will, was not made until the following Monday or Tuesday.

But the oncology clinics quickly assimilated to this new process and their patterns for prescribing and ordering fall into the four-day cycle now.

Great.

Thank you.

Thank you.

Our next question is coming from May-Kin Ho with Goldman Sachs, please go ahead.

Hi.

Question on sales of Erbitux again.

If you just look at colorectal cancer sales, how does it compare to the last quarter?

Because I'm trying to figure out when you talk about 68% of the usage in colorectal, you don't mean 68% of sales, do you?

It means -- hi, May-Kin.

This is Ron.

Hi.

In fact, that's a great question.

For clarification what I mean is 68% of patients that are on Erbitux.

It closely approximates sales, but it's not a one to one.

But it's about 68% of all patients that were on Erbitux within first quarter were colorectal compared to 79% in the fourth quarter.

And to further provide some clarity around those numbers, it doesn't mean that the colorectal market declined by 11%.

In fact, what we saw as you might expect, is that the growth of the Erbitux market in head and neck, as well as some other indications, or other tumor types, provided with the expanded use of Erbitux as a whole.

But if you let's say take the total sales in the U.S. of the two quarters and multiply by that percentage, it looks like colorectal is flat and I'm trying to see whether that's true or not.

It does appear that within the first quarter of 2006, that Erbitux use in colorectal has plateaued for the first time since the fourth quarter of 2004.

The market share numbers, as you might expect, 1 percentage point in variability in this market doesn't really reflect a change within this market.

But what it probably does mean is that within the first quarter, we experienced a plateauing in the colorectal space.

And would you think that for the rest of the year, we're going to see a plateau until we actually get the data from the other studies?

Well, I think that's obviously a question that we're keenly interested in.

And if we look back to the last time we observed a plateau was in the fourth quarter of 2004, that plateauing extended to about the middle of the first quarter of 2005 and then we experienced another reacceleration of growth that was a nice extended period through the first quarter of this year.

And that also was not driven by any new introduction of data in the colorectal space.

So the question will be, is there a change in the type of patients that will be progressing like, say on Avastin from the first or second line that will create a new uptake for Erbitux or will this be a marketplace that will need some additional data, either from ASCO this year or from the three phase III survival trials that Eric spoke to earlier in either the first, second, or third-plus line setting.

So we see some opportunities potentially for catalysts within the colorectal space.

Okay.

Thank you very much.

Thank you.

Our next question is coming from Steve Harr with Morgan Stanley.

Please go ahead.

Yeah.

Just wanted to, a couple questions here.

First off, Eric, as you look at the CALGB study is this going to be response rate data or will you have progression-free survival, and overall survival data as well to present to us?

The response rate data we do know will be presented as well as progression-free survival and overall survival at this time.

I anticipate that it's a possibility, but it's the CALGB that's really managing these data.

So I really can't speak for them at this time.

Okay.

And then on the I'm sorry on the colorectal market share again, Ron, your assumption again is that this has plateaued here for a period of time and the growth of this year will be head and neck cancer until they get more data?

Is that a fair assessment?

Good morning, Steve.

I certainly anticipate the head and neck market to grow over the coming quarters.

That I'm pretty certain about that.

We've seen a very positive uptake in the head and neck market, rapidly within a month or so period of time.

And we're quite confident that this market space is eager to learn more about this data and apply it to its patients.

Again, if you look at the numbers that we observe there, about 11% market share in combination with radiation in about 24% as a single agent that we think we have an opportunity to significantly grow this market.

I think in the colorectal market, we'll have to observe over the course of this quarter, to see if it's much like the last plateau that we observed and it's not until you see sort of this turnover of patients from the previous lines of therapy, and if that will yield additional new patients to be treated or if in fact if this marketplace has settled into its prescribing habits, and will need additional data to drive that.

I think we'll need to see another quarter or so here to really get a good handle on that.

And then one last question, Eric, for you on the data you're showing on the Q2-week dosing interval.

What, when might you go forward with a larger data set and what do you think would be necessary to get that type of dosing incorporated into your label or at least compendium listing for reimbursement?

Steve, the study that will be presented will be a largely a feasibility study with some activity data, particularly in patients with colorectal carcinoma but a monotherapy study.

Because the drug is largely utilized in combination, I think we are going to go forward and we are going forward with combination studies that feature every two-week dosing schedule.

And these studies are actually beginning at the present time in earlier disease settings such as second-line.

As far as compendium listing, I think we're definitely interested in going forward there.

We'll just have to see what the data holds.

And, Terry, just one last question on this the cash position.

You have 870 million at the end of the year.

You got a $250 million cash payment but you only ended the year with 990 million.

Was the cash flow from operation a negative 130 million this quarter or did I miss something?

Certainly, there was a lot of cash that went out the door in the first quarter, but I mean you've got the numbers right.

But there's nothing unusual there.

Basically just, you see the expenses for the first quarter.

And really just funding the operations of the business have resulted in that position.

And I presume a pretty decent increase in working capital there as well?

We continue to manufacture inventory and there are fluctuations certainly in the receivables from our partners, but certainly nothing different in the actual way that the business is being managed

Great, thank you.

Thank you.

Our next question is coming from David Witzke with Banc of America Securities.

Please go ahead.

Hi, this is Will Sergeant standing in for David Witzke.

I had a quick follow-up on Steve's question earlier on the CALGB boarded study.

I was wondering, Eric, if you could comment on what would be a clinically meaningful benefit in that study that would potentially have some applicability to 40% of first-line CRC not on Avastin?

Well, you know, I think the CALGB study is definitely a small study.

There's no doubt about it. 238 patients, but we will, but the first time we'll see in a randomized trial a really how this drug performed.

You know, to really demonstrate a statistically significant increase in overall survival and progression-free survival, that's not only statistically significant, but clinically relevant, it would take a major feat of the drug.

You know, you would need, you would actually need a survival increase that's greater than 50%.

And, you know, this, we have to really think about the power of the study, which is obviously small.

However, I think we could definitely see trends in overall survival and progression-free survival, given this, given the size of the study that are consistent with increases in response rate.

And I think that it is plausible and also statistically feasible to see increases in response rates that are clinically relevant.

So, you know, I think that this is going to sort of give us the first glimmer of what we could expect down the road in some of our trials that will come to fruition, which will be larger trials, sized appropriately and also really utilizing very relevant clinical end points.

So, you know, it's going to be very difficult to see, and I hope we do see, statistically significant increases in survival and progression-free survival, but you know, I think even the best possible agent that one would think, given the powering of the study, that would be a great day for us here and for our patients, per se.

So, you really have to take into mind the small size of this study.

Okay.

Thank you, that's helpful.

Is there an update on the EGFR negative results?

There will be some posters on the implications of EGFR immunohistic chemistry at ASCO but as far as our formal EGFR negative study, that will not be presented at ASCO this year.

And so we're still expecting that first half of this year?

We are expecting those data.

The study right now is currently, we're anticipating increasing the size of that study.

We will be discussing this with the regulatory authorities.

I do not anticipate that that study will be presented this year, that is, in 2006.

That's our pure EGFR negative study.

All right.

Wonderful.

Thank you very much.

Thank you.

Our next question is coming from Jim Reddoch with FBR.

Thanks for taking my question and a couple of sort of digging a little deeper on head and neck kind of questions.

The first one is when you report 18% market share and then you broke that down a little bit into 11%, sounds like locoregional and then 24% in the metastatic, is the 18% the blended version of those two?

And the second question is, the 11% locoregional, which is Erbitux plus radiation therapy, does that also include chemotherapy or use with platinum or is that still post platinum?

And I apologize if you said this before, but it just went kind of quickly.

Thanks.

Good morning, Jim.

This is Ron.

Indeed, the 18% is basically a blended rate for all use of Erbitux in head and neck.

And there are some, if were you to do the math and had the numerator, denominator here, you'd see the 11% and 24% don't actually average to the 18%.

As you might expect there are some use, minor use, of Erbitux outside of indication.

That said, you are correct both on the 11% and the 24% that the 11% is specifically in combination with radiation and locoregional disease and 24% is monotherapy and refractory disease.

You're also correct in that in that 11%, the vast majority of that use is with radiation.

However, we are also aware of some use of Erbitux chemotherapy and radiation in that 11%.

But the vast majority is according to indications.

So that means that some doctors have actually felt enabled to use it off label in terms of making it this triple combination of Erbitux plus chemo plus RT?

We certainly are aware of some individuals doing that.

But I'd like to point out to be very clear that we don't promote it that way and that the vast majority is according to indication.

Sure.

What's the prevalence number you have in head and neck?

Thanks.

The prevalence number.

About 45,000 patients.

Okay, great.

Thank you.

Thank you.

Our next question is coming from Geoff Meacham with J.P. Morgan.

Please go ahead.

Hi.

Thanks for taking the question.

Just a quick follow-up on Jim's question.

Can you just, housekeeping-wise, give us the head and neck market share for the third and fourth quarter of last year?

Good morning, Jeff.

This is Ron.

We unfortunately are not really able to provide that information.

As you might expect with this growing and evolving marketplace that there isn't a clear answer for the market share.

So we feel comfortable in giving the first quarter market share and we'll be able to provide additional visibility based upon that as we move forward.

But unfortunately, I really can't provide you with the third or the fourth quarter share.

Okay.

And then any updates on the chemo, radiation, the plus or minus Erbitux study?

I guess this is the RTOG study?

We talked a little bit about that in the last quarter.

I'm not sure what the status is there.

Geoff, hi.

This is Eric.

That study has opened up in the latter half of '05.

Sidestar getting online.

Usually these things, particularly with RTOG and some of the other cooperative groups, really take about six months.

I don't have the, to get fully online and certainly rolling in an exponential fashion, which they will, the study is accruing and it's accruing as expected.

Okay.

Thank you.

Operator, Elsa, we have time for one more question.

Thank you.

Our last question is coming from Michael King with Rodman & Renshaw.

Please go ahead.

Thanks for taking the follow-up.

Can you talk about strategy for 11f8, do you guys expect to develop that yourselves, or is that subject for negotiation prior to the commencement of more advanced clinical trials?

Hi, Mike, it's Michael Howerton.

Let me just review what contractually what we can do and Eric and Ron can certainly chime in on the opportunities.

As a result, of the arbitration decision that Joe discussed earlier, that basically reaffirms our contention all along that in Bristol's territories, that 11f8 is subject essentially to the same terms, mainly that it -should it be developed, it must be developed by and with Bristol and promoted by and with Bristol.

Outside of Bristol's territories, ImClone is free to do with it what we will, including develop it independently or partner it.

We had previously said before the arbitration began, that we saw 11f8 outside the U.S., outside of North America as a business development opportunity and certainly at least initially our development program is going to assume that that continues.

So I don't know, Eric, if you want to talk about the development.

Yeah.

Michael, we'll be presenting some data, actually, near final data of our phase I trial at ASCO which focuses on two schedules, both of which seem quite feasible from a pharmacokinetic and toxicological standpoint.

That's a weekly and an every other week schedule.

We're near done with that study.

And obviously, we are now really considering and writing combination studies.

And because we have validation in the phase I trial, as well as in the laboratory, the agent really does look like Erbitux.

The binding is very similar, the efficacy is very similar in animal models.

We think it will have Erbitux-like activity, fully human.

We are actually contemplating jumping ahead to disease-directed randomized trials.

What about hypersensitivity, Eric?

Thus far, no evidence of hypersensitivity, Michael.

Mike, this is Ron.

From a commercial perspective, we really have viewed this compound all along, as Michael Howerton stated, as a business development opportunity and then potentially as a line extension opportunity and we've kept our ability sort of, the arrow and the quiver as it related to [indiscernible].

I think now, based upon the data that they presented, you know, our urgency to bring this to market, domestically as a potential, you know, comeback to a competitor, has been greatly reduced.

I think based on the data that we've observed to date, that urgency associated with from our standpoint, probably isn't heightened at this point.

Thank you.

That concludes our call for today.

And I'd like to thank everybody for joining us.

If you have any other additional questions, please don't hesitate to call the Corporate Communications Department.

Both Stefania and I will be available at 646-638-5058.

Again, thank you.

Thank you.

This does conclude today's teleconference.

You may disconnect your lines at this time and have a wonderful day.