Agenus Inc.
Q2 2013 Earnings Call Transcript

Published: 26 Jul 2013

[Operator:]

Good day, ladies and gentlemen. And welcome to the Agenus Q2 Earnings Report Conference Call. As a reminder, today's conference is being recorded. At this time, I would like to turn the conference over to Jonae Barnes, Vice President of Investor Relations and Corporate Communications. Please go ahead, Ms. Barnes.

[Jonae Barnes:]

Thank you, Tracie, and good morning, everyone. Welcome to Agenus’ conference call to discuss the financial results for the second quarter 2013. With me today is Christine Klaskin, Vice President of Finance. Dr. Garo Armen, Chairman and CEO of Agenus cannot be us today, as he is undergoing a hospital waist procedure. We expect that Dr. Armen will make a full recovery. We expect that he will back to work in early August. During this call we’ll update. We will not be hosting a Q&A session today. But before we continue, I would like to remind you that this conference call will contain forward-looking statements, including statements regarding the company’s potential income stream, development and commercialization efforts, timelines, availability of data and potential efficacy and market potential with respect to products and product candidates of the company and its partners. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially. Reference to these risks and uncertainties is made in today’s press release and they are disclosed in more detail in our most recent filings with the US Securities and Exchange Commission. These statements speak only as of the date of the call and Agenus undertakes no obligation to update or revise the statements. All forward-looking statements are expressly qualified in their entirety by this cautionary statement. When evaluating Agenus’ business and securities, investors should give careful consideration to these risks and uncertainties. As a remainder, this call is being recorded for audio replay. With that, I will now turn the call over to Christine who will review our financial results for the second quarter 2013.

[Christine Klaskin:]

Thank you, Jonae. Good morning, everyone, and thank you for joining us on today’s call. Some of the statements I'll be making are also contained in the press release issued this morning. The company's net loss attributable to common stockholders for the second quarter of 2013 was $11.2 million or $0.40 per share, compared to a net loss attributable to common stockholders of $7.1 million or $0.31 per share for the same period in 2012. For the six months ended June 30, 2013 our net loss attributable to common stockholders was $20 million or $0.76 per share compared to a net loss attributable to common stockholders of $551,000 or $0.02 per share for the six months ended June 30, 2012. As a result of various corporate transactions, net loss for the six months ended June 30, 2013 increased compared to the net loss for the same period in 2012, primarily due to revenue generated in 2012 from one-time payments received and to $6.2 million of non-recurring non-cash charges in 2013. In the first quarter of 2013, the company's preferred stock restructuring which reduced the dividend requirements for Series A-1 preferred securities resulted in a non-cash deemed dividend of $2.9 million. In the second quarter of 2013, the company retired its outstanding $39 million 8% senior secured convertible notes due August 2014 resulting in a non-cash loss on extinguishment of debt of $3.3 million. In the first quarter of 2012, revenue of $13.4 million was generated primarily due to one-time payments received to an extended agreement with GlaxoSmithKline and to a license of non-core technologies. Cash and cash equivalents were $13.4 million as of June 30, 2013. Based on our current plans and activities we expect sufficient financial resources to fund operations into 2014, while we continue to seek opportunistic and non-diluted financing opportunities. This concludes the financial portion of the call. Jonae will now provide a corporate update.

[Jonae Barnes:]

Thank you, Christine. During the first half of 2013 we made significant progress and I’m pleased to report the following highlight. Enrolments began for the 222 patients randomized Phase 2 study of Prophage Series G-200 vaccine in combination with Avastin to treat glioblastoma multiforme or GBM in adult patients. The study is sponsored by a cooperative group of the NCI. We completed enrollment for the Phase 2 randomized, double-blind, multicenter study for HerpV, a recombinant therapeutic vaccine candidate for the treatment of genital herpes in HSV-2 positive subjects. The study is testing the biological efficacy of the HerpV vaccine as measured by effect on genital viral shedding. Positive Phase 2 data for the Prophage Series G-100 trial, a newly diagnosed GBM were presented at the American Association of Neurological Surgeons Annual Scientific Meeting. I’m pleased to report that Prophage Series G-100 plus the standard of care showed a 146% increase in progression free survival and a 60% increase in overall survival as compared to historical control of standard of care alone. Our debt level has been significantly reduced. We eliminated our outstanding $39 million, 8% senior secured convertible notes due August 2014. These notes were exchanged for cash, series of common stock and a revenue interest in QS-21 Stimulon partnered program. In addition, we entered into two separate $5 million debt transaction. Our total debt obligation outstanding has been reduced to $10 million, which is easier to manage and is much more attractive for this company. As we turn our attention to the second half of the year and into 2014, we anticipate that we will see continued progress and momentum. During this period the two Phase 3 GlaxoSmithKline MAGE-A3 cancer vaccine program, the treatment of melanoma and non-small cell lung cancer are expected to deliver Phase 3 readout, while the results are not yet known. We believe that there are number of reasons why these trials are different from other cancer vaccine studies. Number one, those vaccines contain QS-21 Stimulon, which is one of the most powerful adjuvants to activate an immune response. Two, those studies enrolled the target population with cancers overexpress MAGE-A3 which is a cancer-specific antigen that the GSK vaccine targets. Three, the study has enrolled patients who are earlier in their disease stage. This is the ideal stage of cancer seemed most appropriate for treatment with a cancer vaccine when use just a single agent for treatment. 1,300 patients were enrolled and in the non-small cell lung cancer study 2,270 patients were enrolled, making this the largest non-small cell lung cancer study conducted to date. I would like to point out that patients in these studies have had the tumors fully resected and treatment options available to them in this adjuvant setting are limited. We believe that a therapeutic vaccine that showed efficacy with a good safety profile could represent a paradigm shift for both doctors and patients in helping to prevent or delay recurrence of cancer. In addition to the upcoming GSK Phase 3 MAGE-A3 data read-outs in melanoma and non-small cell lung cancer, we anticipate that there could be longer term efficacy data from GSK Phase 3 RTS,S program for the prevention of malaria. Over 15,000 children were enrolled in this study and a previously reported Phase 3 study hit their primary and secondary endpoint. As you may be aware, we are entitled to receive milestone payments as GSK QS-21 Stimulon containing programs advance as well as royalties on net sales for at least 10 years after commercial launch of the first prophylactic and their first therapeutic product. Some of the indications have separate time slots as the final royalty payment period. All of our QS-21 Stimulon containing programs, with the exception of HerpV, are funded entirely by our partners. These programs benefit from their financial development and sales and marketing resources. QS-21 Stimulon is a unique proprietary asset which represents a significant and unusually diversified value driver for our company. It is currently being studied in 19 clinical programs development. There is an extraordinary advantage for a company of our size to be in a position to benefit from the potential success of much larger established companies. Next, as I mentioned earlier, our HerpV randomized double blind, multi-center Phase 2 trial individuals infected with HSV-2 is fully enrolled and preliminary data results are expected during the fourth quarter of 2013. I would like to note that HerpV is currently the most advanced therapeutic vaccine in clinical development for the treatment of genital herpes. This study is evaluating the efficacy of HerpV vaccine by measuring viral shedding before and after vaccination. Key opinion leaders have helped to design the HerpV Phase 2 study and HSV-2 experts believe that a reduction in viral shedding, the driving force behind the spread of genital herpes should be an important surrogate for clinical benefit defined by reduction of disease outbreaks. HerpV contains QS-21 Stimulon and 32 HSV-2 derived immunogenic antigens. It was designed with the intent of treating a broad population of HSV-2 infected individuals. We believe that if HerpV is ultimately shown to be safe and effective in late stage trials, it has true blockbuster potential. Finally, I am pleased to report that we are making significant progress with appropriate series programs for the treatment of GBM. Enrollment began for the randomized study of Prophage G-200 vaccine in combination with Avastin for the treatment of surgically resectable recurrent GBM. Patients are actively being screened. The trial is expected to enroll 222 patients in treatment centers across the United States and it’s the largest brain tumor trial ever funded by the National Cancer Institute and the largest vaccine study ever conducted with Avastin. We believe this trial represents a major milestone in efforts to develop effective vaccines for people living with brain tumors. The significant commitment to this trial from the NCI also reflects the emerging promise of vaccines as potential treatment options for millions of people with different forms of cancer. Separately from the NCI trial, a Phase-2 G-200 recurrent GBM study has been completed and the final data set is in the process of being prepared for publication in a peer-reviewed medical journal. We expect that this data will be published this year. In addition, a Phase 2 trial testing for Prophage series G-100 vaccine in patients with newly diagnosed GBM is ongoing and positive preliminary data was presented at the AANS Meeting in May. In this trial, G-100 has been used as a standard of care which includes temozolomide and radiation. It is believed that the efficacy of G-100 could potentially be enhanced through this combination of adjuvant. Analysis of G-100 data showed a median PFS of 17 months. These results compare favorably to the progression-free survival reported with the standard of care alone, which is 6.9 months. Median overall survival, which is the primary endpoint for the trial, in patients treated with G-100 is currently 23.3 months. For the standard of care alone, median overall survival is 14.6 months. The majority of enrolled patients in the trial are still being followed and it is expected that PFS and OS will continue to mature as more data are collected. We anticipate that we will have an update to the study around the end of this year. I would like to note that Agenus was founded in 1994 for the purpose of revolutionizing the way patients with cancer and infectious diseases are treated by harnessing the power of the body’s immune system. We remain steadfast in this pursuit. The exciting clinical data reported at this year’s ASCO with separate experimental immunotherapeutic across multiple cancers has substantial increased conviction than immunotherapy will play a critical role in the treatment of the disease going forward. We believe that Agenus technology platform, both the Heat Shock Protein and Saponin Platforms are well positioned to participate in a new generation of an immunotherapy-based treatment that has the potential to dramatically improve the way patients are treated in their cancer disease outcome and quality of life. This is a very exciting time for the company. The five key milestones that we expect during the second half of this year and into 2014 are the following

[Operator:]

Thank you. Ladies and gentlemen, this concludes the conference call for today. We thank you for your participation. You may now disconnect your lines and have a great day.