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Celldex Therapeutics, Inc. (NASDAQ:CLDX)

Q4 2012 Earnings Call

March 7, 2013 8:30 AM ET

Executives

Anthony Marucci – Founder, President and CEO

Tom Davis – SVP and Chief Medical Officer

Chip Catlin – SVP, CFO and Secretary

Analysts

Jon Aschoff – Brean Capital

Biren Amin – Jefferies

Howard Liang – Leerink Swann

Boris Peaker – Oppenheimer

Mara Goldstein – Cantor Fitzgerald

Joe Pantginis – ROTH Capital Partners

Richard Everett

Operator

Good morning, and welcome to Celldex Therapeutics Year-end 2012 Results and 2013 Strategic Outlook Conference Call. My name is Janin, and I will be your operator on today’s call.

Before we begin our discussion, I’ve been asked to direct listeners to slide two and caution you that today’s speakers will be making forward-looking statements. Such statements reflect on current views with respect to future events and are based on assumptions and subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such forward-looking statements.

Certain of these factors that might cause Celldex’s actual results to differ materially from those in the forward-looking statements include those set forth under the headings Risk Factors and Management’s Discussion and Analysis of Financial Condition and Results of Operations in Celldex’s Annual Report on Form 10-K, quarterly reports on Form 10-Q and its current reports on Form 8-K, as well as those described in Celldex’s press releases and fillings with the Securities and Exchange Commission. All forward-looking statements are expressly qualified in their entirety by this cautionary notice.

You should carefully review all of these factors and be aware that there may be other factors that could cause these differences. These forward-looking statements are based on information, plans and estimates as of this call, and Celldex does not promise to update any forward-looking statements to reflect changes and underlying assumptions or factors, new information, future events or other changes.

Please be advised that this conference is being recorded and the question-and-answer period will be held at the close of the call.

I would now like to turn the call over to Mr. Anthony Marucci, President and CEO of Celldex Therapeutics. You may proceed.

Anthony Marucci

Good morning and thank you for joining us. I’m Anthony Marucci, President and CEO of Celldex. Joining me on the call today are Chip Catlin, our Senior Vice President and Chief Financial Officer; Dr. Tom Davis, our Senior Vice President and Chief Medical Officer; Dr. Tibor Keler, our Senior Vice President and Chief Scientific Officer; and Dr. Ron Pepin, our Senior Vice President and Chief Business Officer.

2012 was a transformational year for Celldex Therapeutics. We made significant progress in a number of key programs within our pipeline. These accomplishments have positioned 2013 to be a data rich year for the company and our investors. On today’s call, we would like to walk you through the key accomplishments of 2012 and outline our strategic objectives for 2013. We will then provide you with a financial update and close the call with your questions.

Turning to slide three, let’s first talk about our rindopepimut program or rindo as we’d like to call it, a targeted immunotherapeutic in development for the treatment of patients with EGFRvIII positive glioblastoma. As you know, vIII is a true oncogene driving more aggressive disease and worst prognosis for approximately 30% of patients with tumors that are positive for this marker. In 2012, we reported two key datasets for this program at the Society of Neurooncology meeting. First, we continue to follow patients across our three previously completed Phase 2 studies for survival and I am very pleased to report impressive long-term survival rates between 23% and 33% of the patients across these three studies living at three years.

Second, to continue to put this data and potential opportunity for rindo into context, we asked MD Anderson and the Radiation Therapy Oncology Group or RTOG to compile contemporary historical dataset of vIII patients from the RTOG’s 0525 study. This analysis continues to demonstrate that patients with EGFRvIII-positive glioblastoma fare worse than the EGFRvIII-negative patient population as you can see on the bottom of this slide. Importantly, the data provides further confidence in a design of our ongoing ACT IV registration study in newly diagnosed patients with EGFRvIII-positive glioblastoma.

The pivotal ACT IV study continues to actively accruing patients at more than 142 centers around the world. Enrollment is going well with a targeted accrual date at the end of 2013 and a potential for BLA filing in 2015. As we have discussed in the past, there are two event-driven interim analyses built into this study design, the first will occur at 50% of events, which is anticipated to occur in the middle of 2014 and the second is at 75% of events which is anticipated to occur towards the end of 2014.

We are also on track to report our data by year-end for our second ongoing study in rindo called ReACT on slide 4. ReACT is being conducted in patients with recurrent EGFRvIII-positive glioblastoma and is testing rindo in combination with Avastin. The study includes two groups, Avastin naïve patients and Avastin refractory patients. The Avastin naïve portion of the study randomizes patients between two arms, rindo plus Avastin or a blinded control plus Avastin.

The Avastin refractory portion of the studies are single arm analysis where patients who have progressed after receiving Avastin are treated with both rindo and Avastin.

As would be expected, we are also making preparations for product launch. As we prepare for these efforts, we recently commissioned a third-party market assessment to gather feedback on rindo from oncologists and key opinion leaders. We were very pleased with these results, and as you can see on slide five, where respondents were asked about their likelihood to prescribe rindo upon approval on a scale from one to seven where one is the least likely to prescribe and seven is the most likely to prescribe. We averaged over a six score on this question. Anecdotal feedback which is also outlined on the right hand side of the slide was also positive, both on the data itself and where the drug would fit into the treatment paradigm. We have also conducted similar analyses with payers and are confident rindo will be well positioned from a reimbursement perspective.

Next up on our pipeline, the CDX-011 on slide six, which will enter a study design to support accelerated approval starting in the second half of 2013. As most of you know, we presented positive final results from our Phase 2b EMERGE study at the San Antonio Breast Cancer Society Symposium in December, including clinically meaningful improvements in overall survival, progression-free survival, response rates and disease control rates and patients with breast cancer that overexpress GPNMB.

In breast cancer, there is a marked correlation between overexpression of GPNMB and poor outcomes, including time to metastases and death. This is particularly true in triple negative breast cancer. Based on these results, and a supportive meeting with the FDA in late December, we will be initiating a pivotal accelerated approval study in patients with triple negative breast cancer that also overexpress GPNMB in the second half of 2013.

I’m now going to ask Dr. Tom Davis, our Chief Medical Officer to walk you through the details of this next study. Tom?

Tom Davis

Thanks, Anthony. Based on our discussion with the FDA and with breast cancer experts and specialists, we believe we have a well-defined approval path ahead of us for CDX-011 in breast cancer. As Anthony mentioned, the next step is the initiation of a clinical trial suitable to support accelerated approvals in patients with triple negative breast cancer that also overexpress GPNMB. Specifically, as outlined on slide seven, we expect this trial to be a 2:1 randomized study accruing approximately 300 patients.

We spent a good deal of time carefully considering the appropriate comparator arm. There’s no clear standard of care for metastatic triple negative breast cancer patients. Different centers use different drugs in differing sequences as patients progress through their disease course. We wanted to be sure that we selected a comparator that most physicians would be comfortable with and one that would support rapid trial accrual. We’ve designed a direct comparison study at CDX-011 versus capecitabine, also known by the trade name Xeloda. The study will be conducted in patients with metastatic triple negative breast cancer with GPNMB overexpression whose tumors are resistant to anthracycline and taxane.

As you’ve heard before, GPNMB overexpression is defined as 25% of tumor cells testing positive. Capecitabine is approved for early line therapy of metastatic disease where it has some short-lived activity with a response rate of around 15% and a median progression free survival of three to four months. As this will be an accelerated approval study, the primary endpoints will be overall response rate and progression free survival.

With the trial size of 300 patients, we should be able to confirm with confidence our response rates to CDX-011 of 30% or PFS benefit of 2.25 months, a hazard ratio of 0.64 at 80% power. By including 300 patients, we can use a 2:1 randomization and also apply to registration if we have positive results for either endpoints. To increase our confidence that CDX-011 can achieve this effect, the trial will include an interim analysis based on the first 80 patients.

We’ve had enthusiastic feedback from investigators and the breast cancer community about the emerged results. And there is a high level of enthusiasm for the return of CDX-011 to the clinic, which will support strong enrollments. We intend to include approximately 75 to 100 academic and community centers across North America into the study and anticipate accrual to take about 18 months. Final readout could occur within nine months of accrual completion. With positive results, this would position us for a BLA filing in the late 2015-2016 timeframe.

While we will follow patients for an overall survival in the study targeting accelerated approvals, we also plan to sequentially initiate a Phase 3 study in all patients with metastatic breast cancer that overexpress GPNMB. This study could both confirm full approval and expand the treatment indications. The details of this study will depend on initial results from the accelerated approval study that we would anticipate that it would begin prior to results reading out from that accelerated approval study.

With this, I will now turn the call back over to Anthony.

Anthony Marucci

Thanks, Tom. Next up on slide eight is CDX-1135, our complement inhibitor. In the near-term, we are anticipating enrolling our first patient in a pilot study of CDX-1135 in Dense Deposit Disease and orphan kidney disease in children and young adults. The FDA and IRB have approved the pilot study and Drs. Richard Smith and Carla Nester are actively screening patients for the study out at the University of Iowa. Dr. Smith is a widely recognized expert in DDD. He is the Director of Molecular ENT and Renal Research Laboratories at the University of Iowa that maintains the largest Dense Deposit Disease patient database in the world, which will be instrumental in the approval of this study.

Dense Deposit Disease is caused by uncontrolled activation of the alternative pathway of complement. The complement activation can lead to progressive kidney damage and failure. CDX-1135 has been shown to inhibit the complement cascade in both C3 and C5 levels and has shown clear biological activity, both restoring renal function and reversing kidney damage in animal models of Dense Deposit Disease. And normalizing complement activity in early human clinical studies.

This pilot study will be conducted in a small number of patients to evaluate safety, and design an appropriate dosing regimen for further clinical development. Since we expect to see disease control in these patients, the endpoints of the complement control and early reversal of kidney damage can trigger a modestly sized registration study. We’ve already discussed these plans with the FDA in a pre-IND meeting and have their agreement with these principles. We expect to report our preliminary data by yearend.

This brings us to slide nine and CDX-1127, our fully human monoclonal antibody specific for CD27 and is designed to have two potential therapeutic mechanisms. In preclinical models, 1127 was shown to activate immune cells that can target and eliminate cancer cells and solid tumors and to directly kill or inhibit the growth of CD27 expressing lymphomas and leukemias.

We recently completed the solid tumor arm of a dose escalation Phase 1 study of 1127 and CDX-1127 was well tolerated at all dose levels tested. Following a review of the clinical data from these patients, an expansion cohort will be enrolled in 2013. We continue to enroll patients in the dose escalation portion of the lymphoma and leukemia arm and also plan to initiate an expansion cohort of this arm in 2013. We expect to report data from both arms of this program in the second half of the year.

Rounding out the clinical pipeline, we have two additional programs to discuss on slide 10, CDX-301 and CDX-1401. 301 is a Flt3 Ligand, a stem cell mobilizer and dendritic cell growth factor. Last month in an oral presentation at the American Society of Blood and Marrow Transplantation, we announced final results of our dose escalating Phase 1 study of CDX-301 in 30 healthy volunteers in collaboration with Rockefeller University. The Phase 1 study evaluated seven different dosing regimens of 301 to determine the appropriate dose to further develop based on safety, tolerability and biological activity.

The data from the study were consistent with previous clinical experience, and demonstrated that 301 was well tolerated, and can effectively mobilize hematopoietic stem cell populations in healthy volunteers. Based on the safety profile and the increases observed with CD34 positive stem cells and dendritic cells, we plan to initiate a pilot study in hematopoietic stem cell transplant by the end of 2013. We also intend to advance a collaboration with the cancer immunotherapy network funded by the NCI on a Phase 2 combination study of CDX-1401 with CDX-301. 1401 is a novel antibody-based targeted immunotherapy being evaluated as the treatment for patients with melanoma and other cancers that are known to express the tumor antigens NY-ESO-1, which is expressed in a wide variety of cancer cells, but not at significant levels in normal tissues.

In October of last year, we announced positive results from a dose escalating multi-center Phase 1 study that evaluated three different doses of CDX-1401. The study identified a well tolerated and immunogenic regimen that was able to generate significant cellular immune responses and achievements for NY-ESO-1 vaccine. We also saw stable disease in 13 patients and significant tumor shrinkage in two patients. Our goal is that this regimen will progress into a study in melanoma by yearend.

Before I hand the call over to Chip to review the yearend financials, I do want to note the fact that in February we completed an oversubscribed $103.5 million offering. We were pleased with the level of support both from current shareholders and new names to the stock including many of you joining us on the call today. I want to thank you for your support, and look forward to working with you in what we believe should be a very exciting 2013. Chip?

Chip Catlin

Thank you, Anthony. For the year ended December 31, 2012, Celldex reported a net loss of $59.1 million or $1.02 per share, compared to a net loss of $44.8 million or $1.13 per share for the 12 months ended December 31, 2011. This is primarily due to increased R&D expense. R&D expense in 2012 increased by $15.0 million, compared to 2011, and was primarily a result of increased later stage clinical trials cost of $14.3 million in 2012 related to the rindo program.

G&A expenses increased by $0.8 million to $10 million in 2012, compared to $9.2 million in 2011 primarily due to increased personnel related expenses and rindo related commercial planning costs in 2012. At December 31, 2012 Celldex reported cash, cash equivalents and marketable securities of $84 million.

Following recent financings as of February 28, 2013 Celldex had cash, cash equivalents and marketable securities of approximately $189 million, providing a financial runway through 2015. As of December 31, 2012 Celldex had approximately 64.4 million shares outstanding. As a result of our recent financing transactions, we now have 80.6 million shares outstanding.

With that, we will now open the call to your questions. Operator, we are ready for our first question.

Question-and-Answer Session

Operator

Thank you. (Operator Instructions) The first question is from Jonathan Aschoff of Brean Capital. Please go ahead.

Jon Aschoff – Brean Capital

Thank you, good morning and thanks for the update.

Anthony Marucci

Thanks, Jon.

Jon Aschoff – Brean Capital

Taking that further, I would like to know how Xeloda monotherapy performs in triple negatives?

Tom Davis

Xeloda has been around for sometime Jonathan, this is Tom talking. It’s been tested in multiple studies, and of course, the numbers bounce around quite a bit. There are some studies that look specifically at triple negative patients in that first second line setting, and those results generally come in between 10% and 20%. We are predicting that there will be about a 15% response rate in the patients treated with Xeloda, and that they will progress in approximately in three to four months.

Now in some cases, of course, patients maybe better or worse than that, but the key components of this study design is going to be the difference in outcome not necessarily the fixed number as to how the control arm does.

Jon Aschoff – Brean Capital

Okay. And – thank you. Any guidance you can provide on how you are thinking about the pricing of rindo and even CDX-011 since you said that you had discussions with payers?

Anthony Marucci

Yeah. So for rindo we’re are looking at some of the newer therapeutics that have come out over the past few years plus what’s already being paid for in GBM such as Avastin. So our models would look at anywhere between $80,000 and $100,000 for rindo, and for 011 we’re looking at least the last two drugs that have been approved as ADCs which are in the range of between $90,000 and $100,000.

Jon Aschoff – Brean Capital

Thank you. And lastly, is there any R&D guidance that we may have given the financing with – for 2013?

Chip Catlin

Well, I can give you a cash burn forecast Jonathan. We’re looking at $65 million to $70 million cash burn in 2013, that’s upfront about $54 million, $55 million in 2012 really being driven by the late stage trials that we’re running in rindo plus this accelerated approval study that we’re initiating later this year in 011.

Anthony Marucci

We’ve guided that we’ll have enough cash to get through 2015 Jonathan.

Jon Aschoff – Brean Capital

Okay.

Anthony Marucci

As rindo completes its Phase 3 studies, you can see those numbers come down a little bit more over the next few years.

Jon Aschoff – Brean Capital

And there will be no stratification in this 011 trial, correct?

Chip Catlin

We’re not planning any specific stratification, no.

Jon Aschoff – Brean Capital

Thanks a lot guys.

Anthony Marucci

Thank you Jon.

Operator

The next question is from Biren Amin of Jefferies. Please go ahead.

Biren Amin – Jefferies

Yeah, thanks for taking my questions guys. So I guess I’ll start with 011, what’s the rationale for choosing Xeloda in the comparator arm given EMERGE, you chose to go with investigators choice of chemotherapy? Thanks.

Tom Davis

Well, certainly a good question. As I implied earlier, we spend a lot of time thinking about the best setting to test the drug. The EMERGE study, of course, was treating patients who were really end stage, they were very heavily pretreated, and we’re quite impressed to see any kind of response, especially the 30% response rate was in the sub-population. However, the progression free survival was quite short, the patients were quite sick, and we felt that repeating that kind of study would be challenging and less reliable rather than moving earlier in the disease course.

By comparing with Xeloda, we’re specifically treating patients in the first or second line treatment for metastatic disease. These patients won’t be heavily pretreated, they won’t have seen multiple courses of taxanes. So we think we should see significantly higher response rates and an even better PFS than we saw in those end stage patients. And of course, we can pretty accurately predict the outcome with Xeloda. We probably recognized in the EMERGE study that we had a better outcome for the control patients who were treated with investigators choice than we expected There’s a lot of data on what happens with Xeloda at this point, and I think we’re pretty confident that the design will work.

Anthony Marucci

Also Biren, it’s the drug that when we went out to talk to investigators in the site, there was a drug that they would use as a control and that was important to us if we want to approve the study in a timely manner.

Tom Davis

And the comparator. So, we are very confident around the capecitabine control.

Biren Amin – Jefferies

And with regards to your interim for this accelerated pivotal, what are your assumptions or what are your expectations for interim for 011? Thanks.

Tom Davis

The enrollment for the 011 study?

Biren Amin – Jefferies

Well, as far as from a response rate standpoint, what are you hoping to see at interim from a response rate for 011?

Tom Davis

Well, our expectation would be a response rate of 30%. Again, we could see something even higher than that. You’re probably familiar with BDM1 which had a very good response rate early in the disease course. So, we’re expecting to see 30%-plus. We saw greater than 30% in those end-stage patients I referred to earlier.

Biren Amin – Jefferies

Okay. And Anthony, maybe could you discuss any partnership updates on 011? Thanks.

Anthony Marucci

Yeah, Biren, I mean, we continue to talk to partners about 011 and other programs as well. But as I’ve said repeatedly, if it’s the right deal for us to do we’ll do it. If not, we move it forward. And our intentions are to move this forward into this accelerated approval path and get it to commercialization.

Biren Amin – Jefferies

Okay. And then I guess just one last question on 1135. I guess you’re going to start the pilot very soon. What do you hope to see that would allow the company to expand the trial and add additional patients and pursue a potential registrational filing with those pilot studies? Thank you.

Tom Davis

It’s Tom again. One of the key features with 1135 is that it specifically targets C3 and we believe Dense Deposit Disease is a pure C3 abnormality-driven disease. There are very clear abnormalities that we can follow, specifically C3 levels which go down markedly when the alternative pathway is overactive as well as renal function and ultimately the renal pathology.

There are these very specific dense deposits that are apparent when you look at the kidneys under a microscope that of course is where the name comes from. But the study will be designed to look at basically all three of those endpoints. If we can normalize C3 levels, then we know that 1135 is doing what it’s supposed to do and if that end result sees an improvement in renal function, we’ll be confident that we’re controlling the disease and ultimately if on a kidney biopsy, we can see the deposits are disappearing, then we should think that we really have a very potent drug for these patients and those results will all be available. Within three to six months of first treating a patient we see those kind of results, then I think we’ll be talking to the FDA about next steps.

Biren Amin – Jefferies

Great, thank you.

Anthony Marucci

Thanks, Biren.

Operator

The next question is from Howard Liang of Leerink Swann. Please go ahead.

Howard Liang – Leerink Swann

Thanks, very much. Just maybe to follow-up on the question on 1135, so I was interested in your comments that you have spoken to the FDA about what might be appropriate end point for a registration study, can you elaborate on that? Specifically, the reversal of the complement is that, and also improvement in kidney function, what will those be measured by?

Tom Davis

Well, even before we file the IND for this study, we wanted to speak to the FDA both about the requirements to work in children with kidney disease, as well as what it would take long term in order to get the drug approved. Committing to an ultra-orphan disease like this, you want to be sure that there is a reasonable path forward. And they were very helpful, they always adhere to. First, they like to know that your drug is taking care of the biology and second, that there is a clinical benefit to patients.

So, from their perspective, as I described earlier, being able to normalize C3, so these patients have very low C3 levels because the C3 is being chewed up. If you are stopping that complement activity and C3 comes back to normal, that’s effectively proving that your biology is accurate. But ultimately is that helping patients? Well, if you can salvage kidneys either through normalization of proteinuria or normalization of creatinine levels, then that’s very reassuring. But then if on pathology, you can show that you’ve actually eliminated the deposits, you sort of have the full package. You’re taking care of the primary cause of disease and the children are getting better.

Howard Liang – Leerink Swann

Okay. Going back to 011, I don’t know if I misheard, did you say that BLA is targeted for 2016, maybe you can talk about why would it take 2016 to file?

Anthony Marucci

Well, we think in late 2015, Howard, just to be conservative we had early 2016 in there as well. But we’ll just remind you that we targeted an 18-month accrual in the EMERGE study and we want them do it in 14 months. We’re just using ranges here. We’ll know better of how we’re accruing in the first few months of the study. So, we just want to be conservative and look to beat that timeline when we’re done.

Howard Liang – Leerink Swann

Okay. And for the confirmatory study, I think what you said you would do it in all patients with GPNMB over-expression that and of how you would make that decision to move forward to that study?

Tom Davis

Of course, it’s always good to get full approval through a confirmatory study, but optimally, you would like to be able to expand your ultimate indication as well. We are very focused now on the triple negative patients with high expression because that’s where we saw the best results within EMERGE. But the data on those with high expression and HER2-positive or hormone receptor-positive disease was also quite impressive for us. So, we think that’s a logical expansion, the comparator arm, the different treatments are all going to be somewhat different if we’re taking the full complement of breast cancer patients. But I think with the preliminary results from this trial, we’ll be better able to design a specific study in more advanced patients and will be confident that with the survival end point, we could get full approval and also a larger market.

Howard Liang – Leerink Swann

So, I was interested – so I think you have to start a study -confirmatory study before you file for accelerated approval, but I think you just said you also wanted to get some results from the current study before you start the next one, I guess when would you start the confirmatory study?

Tom Davis

Well, strictly the FDA likes to be sure if you will start the study before they give approval. So, their stand has been that before they approve the drug you should have the trial going. From our perspective, the sooner the better; we just want to be sure that the statistics are clear. So, once we’ve completed the interim analysis which as I mentioned will be after 80 patients, then we’ll be able to design the study and move forward.

Howard Liang – Leerink Swann

Okay, great. Thanks very much.

Anthony Marucci

Thank you, Howard.

Operator

The next question is from Boris Peaker of Oppenheimer. Please go ahead.

Boris Peaker – Oppenheimer

Good morning. My first question is around the 011, your PFS target of 2.5 months, is that based on if the agency want to see survival for full approval as well?

Tom Davis

Hi Boris, Tom here again. The 2.25-month benefit was actually defined by standard the FDA gave us. That’s what they would require for accelerated approval. At a much larger progression free survival, I think they would very seriously consider a more definitive approval status, but we would have to talk to them when we actually have numbers. From their perspective, overall survival still is the gold standard and for full approval that’s what they would want to see.

Now, we might be able to get a significant overall survival difference from this accelerated approval study, but it’s not designed around accelerated approval. So, the chances of that are less than the chances that we would succeed on response rate in PFS.

Anthony Marucci

And remember Boris, it’s an neither/or; either we hit the ORR benefit or the PFS benefit. So, it’s an neither/or.

Boris Peaker – Oppenheimer

I see. And based on what you know from the EMERGE study, how many patients do you think you’re going to have to screen for this Phase 3 to enroll 300 subjects?

Tom Davis

Well, our data for EMERGE would suggest that within the triple negative population about 40% will test as high expressers. So, you never quite get the full complement, but we’re thinking that the triple negative patients out there at this stage of disease, somewhere up to 40% of the patients should be eligible for the study.

Boris Peaker – Oppenheimer

Okay, that’s helpful. And my last question is on the ReACT study, just curious what you see as the minimal threshold of significance for Avastin naive, I guess as well also Avastin refractory patients to define the study or each group of the study as successful?

Tom Davis

So, Tom, again, let me first start with the refractory population. As it stands right now, when you look at studies of experimental agents in patients who have progressed through Avastin, there’s very low response rates with a very short PFS and OS. I mean there are always patients who are exceptions in some studies, look better than others, but clearly a response rate in the 15% range would look pretty impressive in that population and similarly a progression-free survival that’s extending beyond four months, I would think would give the physicians some confidence that you had an impact.

For the Avastin naive patients, we of course would be comparing to the data from Avastin by itself. Those data suggest a response rate of about 28% with no complete responses. The PFS and OS are not well defined because a randomized study has not yet been done in the refractory setting, but the general consensus is that a progression-free survival of 46 months, overall survival of six to nine months would be the best that you’d expect. So, we’d be hoping that the arm treated with rindo would be able to exceed that. As you can tell from the study, it’s a randomized Phase 2. It doesn’t have power for a definitive answer. So, we’re looking from ReACT for an initial indication of what we can expect. And then we’d have to either expand ReACT or start a second randomized study for approval.

Boris Peaker – Oppenheimer

Okay. So, just to confirm, if even say statistical significant improvement in the ReACT study in the Avastin naive patients, sounds like you don’t think that that in and of itself would be pivotal and that another study would be required?

Tom Davis

Well, we...

Boris Peaker – Oppenheimer

Is that correct?

Tom Davis

We would need more patients. So, whether that was done by expanding the trial or starting a second study in those naive patients, we do think that a reasonable dataset of randomized patients would be important.

Boris Peaker – Oppenheimer

Right.

Anthony Marucci

Remember, Boris, the Avastin got approved on an 85-patient single arm study. So, we don’t have to accrue that many more patients.

Boris Peaker – Oppenheimer

Okay. And if that was part – was that always part of the design of the ReACT study, the ability to kind of expand enrollment in order to make it a pivotal if necessary in this subgroup?

Tom Davis

Yes, if we see a signal we have always intended to expand the study. We certainly would want to speak with the regulators first to make sure that everything fell into place that that’s – that’s the first and certainly has been used in the past and has been successful.

Boris Peaker – Oppenheimer

Okay, well thank you very much for taking my questions.

Anthony Marucci

Thank you, Boris.

Operator

The next question is from Mara Goldstein of Cantor Fitzgerald. Please go ahead.

Mara Goldstein – Cantor Fitzgerald

Thank you very much. And just a couple of questions, the first is just on the Phase 3, the CDX-011 Phase 3 trial, is that – will that be able to support an application in Europe and I am just curious as to the interim analysis that you mentioned at 80 patients, is that safety look and efficacy or both and it’s not related all to events or number of events?

Tom Davis

Okay, some complex questions. First, the Phase 3 study for 011 certainly would be definitive randomized Phase 3 that we would expect would be adequate for approval here in Europe and most anywhere else that we chose to submit. Now from our perspective, the accelerated approval study that we’ve been talking about could also support approval in Europe.

We do intend to speak with the EMA to obtain formal scientific advice and our hope is the result of that would be that we could get accelerated approval in both settings and then the pivotal Phase 3 study would provide full approval in both settings. Now both the regulations and terminology is a little different in Europe, but I do think we’re well-positioned to get approval in about the same timeframe in both geographic areas.

The interim analysis is based on 80 patients that basically means 80 events that we will need to look at these patients and follow them for a response and based on that, there will be futility analysis, so the study could stop early if we’re not on track to see, thus we’re hoping that it’s a pivotal trial, we wouldn’t be able to do an activity analysis early, it won’t be blinded to us. So, it’s again, not a traditional large blinded Phase 3 for full approval, it’s an accelerated approval study. But after those 80 patients, we think about nine months in, well that’s a good chance of whether or not we’re on track.

Mara Goldstein – Cantor Fitzgerald

Okay, but so that would be for futility, but it would not be for early stoppage then?

Tom Davis

The formal statistical analysis is just for futility, yes.

Mara Goldstein – Cantor Fitzgerald

Okay and on the larger GPNMB expression study with the full complement of all comers in that, would that also be study based on similar end points, or would you go for NOS endpoint at that point?

Tom Davis

Well, the confirmatory study would need to be OS, again the FDA standard for full approval is survival and they would want that trial to provide OS data. It would be sized for overall survival. That said, there could also be early looks that might accelerate the process, but that’s the tradition and that’s basically what the FDA recommended in our meeting.

Mara Goldstein – Cantor Fitzgerald

Okay. All right and just lastly, I am assuming that PFS is measured by either growth of existing lesions or emergence of new lesions?

Tom Davis

Well, we used RECIST 1.1 criteria which include those, yes.

Mara Goldstein – Cantor Fitzgerald

Okay, thanks.

Anthony Marucci

Thank you, Mara.

Operator

(Operator Instructions) The next question is from Joe Pantginis of ROTH Capital Partners. Please go ahead.

Joe Pantginis – ROTH Capital Partners

And taking the question. Not to belabor a particular point, I just wanted to make sure, and maybe it’s a rhetorical question at this point, with regard to the either/or, ORR or PFS for the 011 study, I just want to make sure that this is linking up with your FDA discussions and this was something that the FDA was okay with?

Tom Davis

Yeah, hi, Joe. We certainly discussed co-primaries with the FDA and they agreed. This is something that they have seen many times and are comfortable with and drugs have been approved with the either/or approach. It’s basically a concept of sharing the alpha, you assign different parts of your alpha error to the specific endpoints and then they can be free-standing approvable endpoints.

Joe Pantginis – ROTH Capital Partners

Okay. That’s helpful, thanks. And then just two other teasing questions here to tease out the study. I’m assuming that these ORR response rates are all going to be central reads?

Tom Davis

That’s a good assumption, yes.

Joe Pantginis – ROTH Capital Partners

Okay, good. And then lastly, with regard to measuring the GPNMB threshold, are you using the same 25% number and also are you going to be using the same diagnostic in the study?

Tom Davis

So, we certainly did the preliminary cut at 25% where we thought the results looks very good. Subsequent to that we’ve spoken with an assortment of different experts and are working with potential partners for the diagnostic down the line. And at this point, it looks like that 25% cut-off is as good as anything else we would use and it’s fairly simple and straightforward to do. So we will be relying on that in this accelerated approval study. And again, we’ve spoken with the FDA, the diagnostic people were there and they agreed with this plan.

Joe Pantginis – ROTH Capital Partners

Okay. And, if I could just sort of switch gears quickly to 1127, I know this is a lot of details around this topic, but maybe you could just give a global view of assuming the data are encouraging towards the end of the year. You obviously have a potentially differentiated profile with say Yervoy of Ipilimumab and also like the PD-1 inhibitors, especially as I view it on the safety side. So, based on like I said encouraging data at the end of the year, hopefully, what is your potential wish list for this drug?

Tom Davis

Well, I certainly agree with what you said. From our perspective, the fact that this agonist antibody, an antibody that’s activating an immune response and does not cause autoimmunity or toxicity does make this an exciting approach. From our perspective, it could well combine beautifully with the checkpoint inhibitors, the drugs that take the foot off the brake.

Certainly, with this Phase 1 study, we are looking for safety, we are looking for a dose, we are looking for clear biologic activity and certainly paying attention to what happens to the patient’s disease. But at the end of day, we would be planning an expanded Phase 2 development going into next year that could include both single agent development as well as combination development. But from our perspective, really a safe and biologically active profile is our greatest ambition for the Phase 1 study.

Joe Pantginis – ROTH Capital Partners

Thanks a lot guys.

Anthony Marucci

Thanks Joe.

Operator

The next question is from Richard Everett. Please go ahead.

Richard Everett

Hi gentleman. I have a couple of questions relating to CDX-1135. Has 1135 been considered as an adjunct therapy in immunocompromised patients that are fighting infection. It seems that boosting the C3 and C5 complement activity would significantly improve patient outcomes in elderly patients or immunocompromised patients with severe or life threatening infection, and also, are there any other potential indications being considered for 1135?

Tom Davis

Again, a good, but complicated question. 1135 has broad effects in inhibiting complement activity, as I mentioned it can normalize C3 levels but it’s actually doing that by preventing complement breakdown or inhibiting the pathways. There are settings where this could actually improve immunity, but there are also concerns that we may actually be reducing immunity using 1135. You can certainly think of it as being similar to Solaris.

We may see some opportunistic infections but we don’t think we are going to have a worse profile than Solaris has. That said, I think there are broad range of possible indications where this could be used, complement plays a role in many diseases. Our initial focus is certainly on a specific C3 mediated disease and that’s why we like in deposit disease that all of the C5 mediated diseases may also be responsive to 1135, and once we have a clear proof-of-concept and ideally a clear path to approval, we’ll then be able to expand into these other arenas.

Operator

Next we have a follow-up from Mara Goldstein of Cantor Fitzgerald. Please go ahead.

Mara Goldstein – Cantor Fitzgerald

Oh, thanks very much for taking the follow-up question. It is on actually 1127 and just on the expansion cohort, can you remind us what the criteria was to go to expansion cohort for this trial?

Tom Davis

Well, the trial was designed with a fair amount of flexibility around that endpoint. We basically wrote into the protocol the ability to initiate 15 patient expansions based on doses or populations of interest. So critical to that is to see the comprehensive data from the solid tumor patients that does include fairly elaborate flow cytometry and immunologic data and then based on that, to pick what we think is the most promising approach and the disease is most likely to respond and to gain additional experience there. So these expansions would be designed to give us more information that would allow us to design an appropriate Phase 2 study to follow.

Mara Goldstein – Cantor Fitzgerald

Okay.

Tom Davis

We are going to be able to make these decisions within the next month or two and as we’ve suggested we’ll have data from them by the end of the year.

Mara Goldstein – Cantor Fitzgerald

Okay. Thank you.

Anthony Marucci

Thanks, Mara.

Operator

Next is – at this time we have no further time for questions and I would like to turn the conference back to Mr. Anthony Marucci. Thank you.

Anthony Marucci

Thank you, Operator. And thanks everyone for joining us today. I want to close the call by directing you to the final slide number 11, our 2013 milestones.

To recap, 2013 will be a very busy year for Celldex. We intend to continue our focus on maximizing the accruals for the ACT IV rindo third registration study with the goal of completing accrual by the end of the year. We complete the ReACT window Phase 2 program and the data from both arms also by the end of the year. Initiate a pivotal accelerated approval study for CDX-011 in metastatic triple negative breast cancer in the second half of the year. Initiate a pilot study of CDX-1135 in Dense Deposit Disease with data expected by yearend, enroll the expansion cohorts for 1127 with data expected in the second half of the year, and finally, we’ll initiate a study of 301 in transplant settings once we complete our discussions with the FDA on next steps. And we hope to collaborate with the NCI funded CITN Group on a Phase 2 combination study of 1401 and 301.

So we look forward to progressing development across our broad pipeline which turns out to be a very busy year. We’ll continue to have multiple opportunities to update you on our progress, but as always we welcome your questions at any time. So thank you for your time today and have a great day.

Operator

Ladies and gentlemen, thank you for your participation in today’s program. This does conclude the conference and you may all disconnect. Everyone have a good day.

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Source: Celldex Therapeutics' CEO Discusses Q4 2012 Results - Earnings Call Transcript

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