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OXiGENE (NASDAQ:OXGN)

Q4 2012 Earnings Call

March 12, 2013 4:30 pm ET

Executives

Peter J. Langecker - Chairman, Chief Executive Officer and President

Barbara Riching - Chief Financial Officer

Analysts

Gareth Soloway

Operator

Good afternoon. Welcome to OXiGENE's conference call to discuss year end 2012 financial results and corporate update. Today's call is being recorded and webcast. Participating in today's call are Chief Executive Officer, Dr. Peter Langecker; and Chief Financial Officer, Barbara Riching. Following this introduction, Dr. Langecker will discuss the company's corporate strategies and upcoming events. Ms. Riching will review the company's financial results, and then the company will take questions.

If you have not received a copy of the year end 2012 financial results press release the company issued today, you can obtain one by visiting the company's website, www.oxigene.com. OXiGENE would like to remind everyone that during the conference call, members of the OXiGENE’s management team will make forward-looking statements regarding the company's future plans and anticipated outcomes that involve risks and uncertainties that cause actual results or outcomes to differ materially from those anticipated and discussed on this conference call.

Factors that may cause differences include, but are not limited to, those risks and uncertainties associated with the preclinical and clinical drug development processes, potential business and financial transactions and the ability to obtain additional financing to fund the company's operations.

Please review the risks and uncertainties detailed in the company's annual report on Form 10-K for the year ended December 31, 2011, quarterly reports on Form 10-Q and the company's other filings with the Securities and Exchange Commission.

Now I'd like to turn the call over to OXiGENE’s CEO, Peter Langecker. Please begin.

Peter J. Langecker

Thank you, operator, and thanks to everyone participating in today's call. During the call, I will review the company's progress in the fourth quarter and the full year 2012 and our corporate strategies. Following my comments, Barbara Riching will discuss our financial results for the full year 2012, and then we will open the call for questions.

A few months ago when we reported our third quarter 2012 financial results, we discussed in detail the strategic path forward we intend to pursue for ZYBRESTAT, the clinical programs in ovarian cancer and in anaplastic thyroid cancer, or ATC. Both of these indications represent orphan opportunities and are unmet medical needs.

We noted that while we believe that both ovarian and ATC programs continue to represent significant market opportunities for OXiGENE, we intend to focus our resources on advancing our clinical program in ovarian cancer while exploring options for the registration of ZYBRESTAT in Europe and ATC under the exceptional circumstance marketing authorization.

In the fourth quarter of 2012, we made some significant progress in advancing both these strategies, so I'm pleased to have this opportunity to update you on our accomplishments.

We honed our ovarian cancer clinical development strategy and have advanced discussions with important collaborators in the medical community. These collaborators have shown considerable interest in working with OXiGENE to advance our clinical programs for ZYBRESTAT in combination with anti-vascular therapies, as well as chemotherapy. We believe that this approach, which capitalizes on ZYBRESTAT's excellent combinability potential and complementarily mechanism of action, provides an optimal path forward from a clinical, regulatory and a commercial perspective, and represents cost-effective and clinically relevant strategy for advancing this program.

First is our ongoing Phase II trial of ZYBRESTAT combined with bevacizumab, which is better known as Avastin. This trial, which is called GOG 186I, is being conducted by the Gynecologic Oncology Group, or GOG, under the sponsorship of CTEP of the National Cancer Institute. This is the first study to test an anti-VEGF therapeutic combined with a vascular-disrupting agent in ovarian cancer without including the use of any cytotoxic chemotherapeutic agent. The trial is also in collaboration with Genentech, which supplies the bevacizumab for the trial.

In this study, patients are being randomized into 1 of 2 treatment arms. One arm receives just bevacizumab, and the second arm receives bevacizumab plus ZYBRESTAT. Patients are treated until disease progression or adverse events prohibit further therapy, and the study is expected to enroll 110 patients with advanced platinum-sensitive and platinum-resistant ovarian cancer. And the study is progressing well at over 80 clinical sites that are participating across the United States.

The primary endpoint for this Phase II study is median progression-free survival, and we're looking for an increase of median progression-free survival from 50% to 65%, which would represent a meaningful increase. Secondary endpoints, of course, includes safety, overall survival and objective responses by treatment.

The patient enrollment for this trial is proceeding on target, and we are about 2/3 of the way to completion. We've been pleased to report that 2 -- safety interim analysis that happened, performed by the GOG. And in each case, the study's safety data monitoring committees -- committee has recommended that the trial proceed to full enrollment and completion. We expect the further interim analysis to determine if the trial should stop or continue to full enrollment. That will be conducted somewhere in the second quarter of 2013.

OXiGENE will remain blinded to the -- as to the data from this interim analysis based on the information provided by the GOG. We also anticipate that the study will complete its overall enrollment by the second half of 2013 and that the preliminary results from this trial will be available in the first half of 2014. Following that analysis, we anticipate being in a position to consider advancing to a pivotal trial or requesting an end-of-Phase-II meeting with the FDA to discuss possible Phase III pivotal study designs. If these plans remain on track, we should conceivably embark -- we could conceivably embark on a potential path to an NDA filing in the second- or third-line ovarian cancer setting in the 2016, 2017 time frame.

And as we have noted before, we believe that there's a strong scientific rationale for combining these 2 anti-vascular treatment modalities, and there's a compelling preclinical and Phase I data actually that supports this approach. Both Avastin and ZYBRESTAT target the vasculature, but they work very differently and in complementary ways. We believe that as a VDA, ZYBRESTAT has a specific antitumor mechanism that -- because it targets the established vasculature that supplies blood to the tumor and so targets the core of the tumor to deprive it of oxygen that it needs and the nutrients that it needs to grow.

Avastin, on the other hand, is designed to target the newly forming vasculature that forms on the outside of the tumor as tumor growth occurs. And one way to think about the difference is that anti-VEGF agents like Avastin work from the outside in, whereas VDA, ZYBRESTATs, works from the inside out. Combined, we believe that they will result in a more significant reduction of blood flow that can starve and kill the tumor than with each drug alone.

The second clinical strategy in ovarian cancer [indiscernible] that we are exploring would involve the combination of ZYBRESTAT with a tyrosine kinase inhibitor, Pazopanib. Pazopanib, which is marketed by GSK under the name of Votrient, targets VEGF and other growth factors associated with vasculature and is indicated for the treatment of patients with advanced renal cell cancer and soft tissue sarcoma. We would like to support conducting a Phase Ib/II trial on patients with advanced ovarian cancer with a combination of ZYBRESTAT and Pazopanib, which was proposed to us by a publicly funded European cancer research organization.

We believe that medical and scientific rationale from combining these 2 complementary approaches is very strong. We're working with this organization's researchers to design a clinical trial that could enroll up to 80 patients in 3 arms, 1 arm with ZYBRESTAT alone, the second arm with Pazopanib alone, and the third arm of the -- the 2 drugs combined, dosed every 3 weeks. The endpoint of this trial would be to determine the correct dose for the combination, tumor blood flow reduction, progression-free survival and the relationship between progression-free survival and response to tumor blood flow reduction.

Ideally, we would like to work with our potential partners for the study to initiate this trial in the second half of 2013, with a possible final read-out in 2015, which would lay the foundation for a go, no-go decision about a potential pivotal program using this particular drug combination down the line. We're currently exploring external funding for this study with the goal of establishing a collaboration that would obviate the need for OXiGENE to fund -- to finance the study.

Other initiative in ovarian cancer would combine ZYBRESTAT with a taxane paclitaxel in a weekly dosing schedule. This study would build on the positive clinical results seen in prior clinical studies, including a Phase II trial using ZYBRESTAT in conjunction with carboplatin and paclitaxel in patients with platinum-resistant ovarian cancer. These results from this previous Phase II trial were presented at ASCO in 2009, and the final data were published by Professor Gordon Rustin and his team at the Mount Vernon Cancer Centre in the U.K. in January 2011 issue of Annals of Oncology. These results showed a response rate of 25% in 11 out of 44 patients in the platinum-resistant ovarian cancer population and an additional 11%, or 5 out of 44 patients with unconfirmed responses on computer MCT [ph], and paclitaxel and ZYBRESTAT were added to the carboplatin therapy. The Phase II study of ZYBRESTAT in combination with weekly paclitaxel in platinum-resistant ovarian cancer, which we would like to conduct, capitalizes on the emerging use of paclitaxel as a standard of care following platinum-based therapy in the U.S. and Europe for a number of different tumors, including advanced ovarian cancer. OXiGENE has generated very encouraging preclinical data combining ZYBRESTAT and paclitaxel for which we have also filed substantial intellectual property. We will also have clinical data using ZYBRESTAT on a weekly basis, so it appears very compelling to test this particular combination clinically. This planned placebo-controlled trial would be designed to enroll about 120 patients in 20 to 25 clinical sites. Patients would have second- or third-line advanced ovarian cancer and no response or progressive disease within 6 months of the last platinum dose. Dosing would be weekly paclitaxel plus or minus ZYBRESTAT until progression, and our target date to begin this study's subject, to the availability of financial resources, is in the second half of 2013, with a final read-out anticipated in 2015, which would provide the basis for a go, no-go decision for a pivotal registration trial at that time. We're also talking with a potential collaborator about conducting this trial and are also exploring -- currently exploring other funding options for this trial.

We believe that pursuing these 3 strategies of combining ZYBRESTAT with chemotherapy or with other vascular-targeting agents would provide some meaningful near-term data readouts, which could indicate potential routes to registration over the next several years. Ovarian cancer represents a multibillion-dollar global market opportunity and remains a significant unmet medical need, which is why the government and the pharmaceutic industry continue to invest considerable research dollars to find more effective treatments for this disease.

As we have discussed in the past, we're also pursuing an exceptional circumstance approval for ZYBRESTAT in anaplastic thyroid cancer in the European Union. This strategy could take advantage of the EU's marketing authorization process for ultra-rare indications without the need for additional clinical trials in ATC. This process provides for a conditional and exceptional approval for medical products for seriously debilitating or life-threatening diseases. It has been applied to situations where the benefit and risk balance is positive, where there's an unmet medical need and where the benefit to the public health of making this therapy available to patients outweighs the fact that there is not a comprehensive data package for an approval at the -- and regulatory filings.

Since 1995, when this procedure was implemented, there have been numerous drugs, especially in the oncology field, that were granted their first European marketing authorizations through this regulatory pathway, such as Glimec, Yondelis, Taxotere, Zegerid, Velcade, Foscan, Campath and many others. We intend to pursue this strategy of seeking exceptional approval for ZYBRESTAT for ATC in Europe based on our existing 400-plus patient safety database and the treatment results, in particular the 23% and 26% rate of 1-year survivors in our Phase II studies within ATC, including the FACT trial. If we are successful in pursuing the exceptional approval strategy, we could be in a position to market the product in Europe potentially in the 2015, 2016 time frame.

European approval for ATC might also enable approvals in mutual recognition states with the European Medicines Agency, such as Australia, Canada, Japan, New Zealand and Switzerland, as well as potential filings in other countries such as Eastern European states, known as EFTA states; Israel, South Africa, Korea and other countries.

We are in a process of requesting scientific advice from 2 repertoire countries in EU, which we expect to obtain in the first half of this year. We would anticipate then pursuing scientific advice from the EMA for ZYBRESTAT in the EU and would expect to receive that in the second half of the year. The potential EMA submission for an EU Marketing Authorization Application in anaplastic thyroid cancer could take place in the second half of 2015.

As always, we remain committed to exploring all available opportunities to advance our pipeline of vascular-disrupting agents with the goal of bringing important new therapeutics to patients with serious unmet medical needs. Over the last few months, we have had extensive interactions with the financial community during the JPMorgan conference in San Francisco and more recently at the BIO CEO Conference in New York and elsewhere. We are encouraged by what we believe is considerable interest in our programs within the investment community and a recognition of the significant value in our portfolio of therapeutically differentiated and commercially valuable product opportunities. We remain grateful to the medical community for supporting our programs and to the patients and the families who have participated in our clinical trials. We look forward to keeping everybody informed in our process and progress, and we appreciate the ongoing support of our friends and investors.

At this point, I would like to ask our Chief Financial Officer, Barbara Riching, to review our financial results.

Barbara Riching

Thanks, Peter. For the year ended December 31, 2012, the company reported a net loss of $8.1 million, or $5.48 per share, compared with a net loss of $9.7 million, or $10.37 per share, for fiscal year 2011. The difference in results between the years was due primarily to a reduction of $1.8 million in R&D expenses and $0.7 million in G&A expenses in 2012 compared to 2011, and a restructuring charge of $1.2 million in 2011. These reductions in expenses were partially offset by a non-cash gain of $2.2 million in 2011 resulting from a change in the fair value of warrants. Additionally, the 2012 period includes 156,000 in revenue recognized under the terms of the company's agreement with Azanta, which was entered into in December 2011 to provide access to ZYBRESTAT for the treatment of patients with ATC on a compassionate use basis in Europe and Canada. The decrease in operating expenses in the 2012 period was primarily the result of the conclusion of a number of the company's clinical projects and restructuring plans implemented in 2011 in order to allocate the company's resources more effectively as it pursues the advancement of its highest valued clinical assets.

At December 31, 2012, OXiGENE had cash and restricted cash of approximately $5 million compared with approximately $10 million at December 31, 2011. During the year ended December 31, 2012, the company issued approximately 294,000 shares of common stock to Lincoln Park Capital under the terms of the November 2011 purchase agreement for net proceeds of approximately $2 million and issued 178,000 shares of common stock through the company's "At the Market," or ATM agreement, with MLV & Co. for net proceeds of approximately $1.3 million.

Additionally, the company issued another 304,000 shares of common stock with the ATM agreement for gross proceeds of approximately $1.5 million in January and February of 2013. All of the per share and share amounts reported here and in the company's press release reflect the effect of the 1:12 reverse stock split that became effective on December 28, 2012.

Peter J. Langecker

Okay. Thanks, Barbara. Now I would like to ask the operator to open the call for questions, please.

Question-and-Answer Session

Operator

[Operator Instructions] The question is from Gareth Soloway of InTheMoneyStocks.com

Gareth Soloway

Just a quick question in regards to progressing further in regards to cash and in cash on hand. You mentioned a collaborator as a possibility for one of your trials going forward. Do you have a specific name for us or just something in the works?

Peter J. Langecker

Like we have done in the past, we've worked with the -- of course, we're working with CTEP and the NCI. And one of the discussions that we have ongoing is actually with regard to one of the programs with the Gynecologic Oncology Group. It's very early, and we don't know whether that's going to be fruitful and what the outcome is. And we've, in the past, worked with the Cancer Research UK with -- for some of the clinical trials, Phase II trails in ovarian cancer in particular. And obviously, we're talking to this entity also.

Gareth Soloway

Okay. Is there any thoughts about -- or any interest in signing on to partner with a bigger pharma company to progress the trials, all the trials possibly, or bring in any extra cash?

Peter J. Langecker

Yes. There's an interest, and we are actively pursuing -- talking to companies. We went at -- we were at the BIO International Conference, and we were at the Bio Conference in New York. And so we have -- and we have an ongoing BD effort that works on talking to these companies. But I think there's a more general shift in the way Big Pharma looks at companies. They tend to want to see more definitive data from the clinical trials, and I think that's what we're working on, to kind of generate that kind of data that would then in turn generate the kind of interest by Big Pharma.

Operator

There are no further questions at this time. I'd like to turn the call over to Mr. Langecker for any closing remarks.

Peter J. Langecker

Well, thanks again for your participating in today's call. Thank you to Barbara for preparing the 10-K and all the numbers that we presented today; and our people, Jane Green, in particular, who helps us with corporate communications and putting the script together. And hopefully, we provided the kind of information that our investors and interested parties are looking for. Thank you very much.

Operator

Ladies and gentlemen, thank you for your participation in today's conference. This concludes the program. You may now disconnect. Have a wonderful day.

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