ImmunoGen's CEO Discusses Q3 2014 Results - Earnings Call Transcript

Apr.25.14 | About: ImmunoGen, Inc. (IMGN)

ImmunoGen, Inc. (NASDAQ:IMGN)

Q3 2014 Earnings Conference Call

April 25, 2014 8:00 AM ET

Executives

Carol Hausner - Executive Director, Investor Relations and Corporate Communications

Daniel Junius - President and Chief Executive Officer

Charles Morris - Executive Vice President and Chief Development Officer

David Johnston - Executive Vice President and Chief Financial Officer

Analysts

Adnan Butt – RBC Capital Markets

Simos Simeonidis - Cowen and Company

Whitney Ijem - JPMorgan Chase & Co.

John Newman - Canaccord Genuity

Mara Goldstein - Cantor Fitzgerald

Joel Sendek - Stifel Nicolaus

Jonathan Chang - Leerink Partners

Shaunak Deepak - Jefferies & Company

Andrew Peters - UBS

Jason Kantor - Credit Suisse

Operator

Good day and welcome everyone to the ImmunoGen Third Quarter Fiscal Year 2014 Financial Results Conference Call. Today's call is being recorded. At this time, for opening remarks and introductions, I would like to turn the call over to the Executive Director, Investor Relations and Corporate Communications, Carol Hausner. Please go ahead.

Carol Hausner

Thank you, good morning. At 6.30 this morning, we issued a press release that summarizes our financial results for our quarter ended March 31, 2014, the third quarter of our 2014 fiscal year. I hope you've all had a chance to review it. If not, it's available on our website.

During today's call, we will make forward-looking statements. Our actual results may differ materially from such statements. Descriptions of the risks and uncertainties associated with an investment in ImmunoGen are included in our SEC filings, which also can be accessed through our website.

In our call today, our Chief Executive Officer, Dan Junius, will provide an update on ImmunoGen; our Chief Development Officer Dr. Charlie Morris will discuss our wholly-owned compounds in more depth and our Chief Financial Officer Dave Johnston will discuss our financial results and guidance. Then Dan will review our anticipated events and we will open the call to questions. Dan?

Dan Junius

Thank you, Carol. Good morning, everybody. We are making important progress in our three wholly-owned compounds in clinical testing that's IMGN853, IMGN529 and IMGN289. Here we reported interesting and encouraging data for IMGN853 at AACR, you will hear more about that from Charlie in a just moment. We'll have additional data at ASCO on IMGN853 plus the first clinical data for IMGN529. At the same time, we've also advanced to a number of dose escalations with IMGN289. We expect to report the first findings on this compound in the back half of 2014. While this is going on we are also making good progress with our partners. I am sure you are all aware of Kadcyla where we are seeing good sales development; our launch is taking place in additional countries and progress towards gaining additional indications.

We also had encouraging clinical data for Amgen's AMG 595 reported in oral presentation at AACR. Data on two compounds we have developed for Sanofi, SAR3419 and SAR566658, will both have data presentation at ASCO. And Biotest has expanded BT-062 clinical program to include assessment in two types of solid tumor. While this is going on we continue to expand our technology portfolio to enhance our leadership in ADCs. I'll come back to you on the partner activity and the technology but now I would ask to Charlie to discuss our wholly owned compounds. Charlie?

Charlie Morris

Thanks, Dan and good morning everybody. I'll start with IMGN853 and the data that we have recently reported at AACR. As you know, IMGN853 is folate receptor alpha targeting ADC for a potential treatment for ovarian, endometrial, certain lung and other cancers that highly expresses target. We have reported to you previously that during ongoing Phase I dose escalation we start to seeing activity with IMGN853, a doses of frequent 3.3 mg/kg and higher with doctors being given up after three weeks and then we encountered dose limiting toxicity of 7 mg/kg the DLT being a type of reversible ocular toxicity. We also display with the based on analysis we conducted, we changed the study protocol to using adjusted ideal body weight rather than total body weight in determining patient's size for dosing calculation and that we would recall the data behind these change to AACR. While we reported today AACR with the data showing how we made this decision and the initial impact from tolerability perspective.

Let me compared the pharmacokinetics data from the first cycle of treatment for patients with and without ocular finding, we observed that ocular toxicity occurred in those patients whose IMGN853 plasma level exceeded specific threshold. This means maximum concentration of C max just shy of 150 microgram per milliliter and an area under the curve over the first 24 hours plus dosing of about 2800 of the relevant unit. We also found that when dose was based on the patient's total body it was marked variability between patients and their IMGN853 blood levels even though if they were dosed the same dose level. As a result an overweight patient would be more likely to experience ocular symptoms than the patient of the same weight who happens to be taller. Having seen this we used our clinical PK data, to model over measures the patient size including body service area adjusted ideal body weight. This modeling suggested that dosing according to adjusted body weight approach should have the greatest impact from reducing that PK variability among patients; this in turn would be predicted to reduce the variability in both C max and the Day 1 and area under the curve which would mean we complete more patients still over toxicity threshold. At a time of AACR we have treated six patients took a dose of 5 mg/kg using a adjusted ideal body weight and followed them for longer than the time of which have previously seen ocular symptoms occur. Their PK was consistent with our model and showing up none of them had ocular symptom. In contrast in our previous experience in dosing according to total body weight, ocular changes were seen in four of the patients receiving 5mg/kg, so early data was promising.

We also modeled our alternative dosing schedules. Weekly, every two weeks and so on to identify this schedule that would give patients the most drug exposure while keeping the peaks below those thresholds that we just described. We identified the dosing weekly, for three week, every four out of every four should we achieve the subjective and that now either cohort to our current trial evaluates this schedule and those cohorts are now recruiting. So we are encouraged by where we are with 853, we will report more data for the once every three weeks schedule at ASCO.

The next step of this schedule would be to begin the expansion phase which we expect to occur this quarter. This will provide us information on the efficacy and safety in patients platinum resistant to ovarian cancer or endometrial cancer. This phase will have more restricted patient enrollment criteria including entry requirement for levels of target expression and the number of prior therapies. Once we have data from the modified weekly schedule and we decide to whether or not are likely to provide any additional advantage, we will also look at lung adenocarcinoma with the select to schedule.

And now on to IMGN529. You remember this is our CD37 ADC for B-cell malignancies. There is another reminder it is the same linker and same payload as Kadcyla. In addition, the antibody is designed to enhance efficacy having self killing properties of its own. This product is currently in Phase I testing for non-Hodgkin lymphoma. We are pleased to have an abstract accepted at ASCO; it will be a poster which has been selected for the highlight section. This presentation will cover what we have seen in the clinic debate from both the safety and activity perspective and we will clarify the modification to the administration strategy that we hit previously referenced and now implemented. As we are still in dose escalation we don't expect to have MTD information at that time.

Our third clinical stage offset is IMGN289. The EGFR-targeting ADC has the same linker and payload as Kadcyla and its antibody once again is expected to contribute to efficacy. We have made good progress in the clinic to date. We have been able to advance to number of dose escalations since we started patient dosing in November and believe that we are now after a round where the anticipated threshold for clinical activity. We expect to go first clinical data in the later this year and are optimistic that this expansion cohort should begin accruing patients in the second half of this year.

With that I'll hand back to Dan who is kind of discussing recent progress with our partner and compound and with our technology platform. Dan?

Dan Junius

Thanks, Charlie. Let me start with BT-O62 as we have rights here to opt in on co-development and co-commercialization of this compound with Biotest in the U.S. so as a result we look at this so much differently than how we view our other partner compounds.

The compound itself is a CD138-targeting ADC is the antibody itself is a targeting antibody as opposed to potential therapeutic antibody. And the compound was initially being developed as a treatment for multiple myeloma. There was data actually at ASH that was very compelling in terms of its efficacy when dosed in combination with Revlimid and dexamethasone this trial is ongoing. It is now also being evaluated for solid tumors. There is study that's initiated in Europe for patients with bladder cancer and triple negative breast cancer. This is mono therapy dose escalation study, it was initiated based on some very impressive pre clinical data and we look forward to seeing how that study evolves.

Turning to Kadcyla. Last week Roche reported Q1 sales of 102 million Swiss Frank or approximately $115 million. This compares with sales of $250 million for all of 2013, recall that Kadcyla was first approved in the U.S. in February of last year. From the first quarter sales have reported the U.S. continues to account for the bulk of these sales. Roche indicated that they think there about 43% market penetrations in the second line and later markets in the U.S. But they are also starting to see increased activity x-U.S.; much of this comes from the EU approval that came out late last year. These sales are principally in Germany at this point where government approval is not required prior to launch for placing and reimbursement. There was also launch last week in Japan, another large market so we would expect to see that reflected in sales as we move forward.

With Kadcyla there are number of data presentation expected at ASCO, I think this is a natural evolution with an approved product because there will be a number of physicians sponsored studies that will have data on potential other applications of Kadcyla. In terms of Roche's sponsored study, they will lead to registration filings the next Phase III finding that we would expect would be from MARIANNE in the second half of this year. I am sure you all aware this is for first line HER2-positive metastatic breast cancer patients, data later this year would lead to filing in 2015 according to Roche. There are multiple additional registrations that is behind that. And GATSBY study continues for patients with advanced HER2-positive gastric cancer, data and registration filing would be expected here in 2015. There are two registration studies already underway in early for HER2-positive breast cancer. That would be KAITLIN in the adjuvant setting and KATHERINE for residual invasive disease. There is also a third study in early HER2-positive breast cancer; this is KRISTINE in neo-adjuvant which is schedule to start this quarter.

Other clinical compounds with their partners. Let me start with Amgen's AMG 595. This is an ADC that targets the EGFRvIII, it is currently being evaluated for recurrent glioblastoma. This is a disease with high unmet need; there are very limited options available for these patients today. The first clinical findings were reported earlier this month in an oral presentation at AACR. And they were actually quite encouraging. It was data from dose escalation stage across 24 patients and it being dose escalation I am sure you appreciate that these patients would have gotten varying doses, different levels of target expression, different profile of prior therapies and the like. But that said, there were three patients who had meaningful stable disease. There was one patient with the durable PR and there was one patient with a near complete response that as of the presentation was ongoing for over 90 weeks. And I was told that they presenter indicated that's a relatively rare event in glioblastoma and seemed quite encouraged by it. It did impounded their dose limiting toxicity with thrombocytopenia which is consistent with what we have seen with Kadcyla given that AMG 595 has the same link or payload construct as Kadcyla that's not entirely a surprising event to us.

In terms of other partner compounds, there is oral session for SAR3419 and SAR650984, both of those Sanofi compound. You will be hearing at ASCO. We call SAR3419 is a CD19 targeting ADC, what we hear at ASCO, in the oral abstract session is data from the Phase II STARLIGHT trial. This is the trial that assess 3419 as monotherapy for relapsed refractory DLPCO patients. A 650984, this is a CD38-targeting naked antibody so this is not an ADC, a naked antibody that's being evaluated in multiple myeloma.

Data from trial assessing at use and combination with Revlimid and dexamethasone was another study that has been selected for presentation in an oral abstract session. Beyond that for 984 there is also be a poster with updated data from the monotherapy Phase I trial. There was an oral presentation on this at ASH that again showed very encouraging data when they were dosing 984 for advanced patient with multiple myeloma.

So beyond those partnered, so that is the upcoming partner activity. Well, we have also been active and some data at AACR around our technology portfolio. Recall there are three components to an ADC, the antibody, the payload and the linker. We think that our antibody expertise is expressed in a number of compounds that may be most clearly with 984 being a naked antibody that demonstrates our ability to generate antibody as well as our expertise in target selection. We disclosed previously that we have developed a platform of DNA acting payload agent and this is to compliment our existing platform of tubulin inhibiting agent agents. At AACR we have some additional data and this was on the lead agents in this new platform something that we are calling DGN 462. In preclinical model it achieved the desired efficacy while avoiding the late toxicity. The data also illustrate the importance of the properties of the linker. The ADC constructs that we made with DGN 462 on a cleavable linker had a wider therapeutic index than those made with a non cleavable linker. So that again speaks to the importance of linkers as we look at the overall construct and it also leads to additional data that we parted at AACR on another new linker that we have added to our portfolio. This is the linker that we put in the cleavable category, remember that we categorize our linker as being cleavable and non cleavable, and with the specific properties here is when the metabolite and with the payload is cleaved inside the cancer cell and that's the activity it release in the payload in a form that's even more active with this particular linker an animal model in those form with our earlier existing cleavable linkers. So we think that's quite important. At the same time that we are showing this high level of activity, and again pre-clinically it suggest a favorable tolerability, the same tolerability profile that we see with our earlier linkers so it may again extend the therapeutic index.

So I am sure we will have a chance to come back to some of these in the Q&A but in the meantime let me turn it over to Dave to cover our financial results.

Dave Johnson

Thanks, Dan. Since we issued a press release this morning that outline in some detail our third quarter fiscal 2014 results. Let me just review the highlights and then we will discuss our updated financial guidance. Revenue for our third quarter was $6.9 million compared with $25 million in the same quarter of last year. And keep in mind that revenues in the prior year quarter included $11.1 million in amortization of upfront fees from Novartis which were recognized in that quarter due to Novartis taking a license under our 2010 agreement with them. Novartis is taking three such licenses under this agreement with the portion of the upfront of fees recognized as revenue each time one of those licenses is taken. Prior year revenues also included the $10.5 million milestone payment earned from Roche with the approval of Kadcyla in the U.S. in February of 2013. Needless to say this was non-recurring event but market started ImmunoGen beginning to receive royalty revenues from Roche on Kadcyla sales. For example, the current quarter revenues include $2.6 million in royalty revenue on Kadcyla sales made during the quarter ending December 31, 2013. Operating expenses were $44.3 million compared with $26.3 million in the same quarter of last year. One big item driving the year-on-year difference is a $12.8 million non-cash charge to R&D expense related to technology right received and to be received under the collaboration agreement we established for CytomX in January. The balance of the increased in spending reflect expanded clinical program activity, net of our [901] program and an increase in manufacturing batches that were released to partners. As a result, we reported a net loss of $37.5 million or $0.44 per share for the third quarter. This compares with the net loss of $1.4 million or $0.02 per share for the same quarter of 2013 fiscal year. We entered the quarter with $164 million of cash and marketable securities.

As mentioned earlier, we have updated our guidance for the 2014 fiscal year which ends June 30, 2014. We now project revenue to be $60 million to $64 million which is prior guidance to $71 million to $75 million. This reflects changes in projected timing of some partner related events. We now project our operating expenses to be $133 million to $137 million compared to previous guidance of $140 million to $144 million. This is principally due to the timing of spending on some of our pre clinical and clinical programs partially offset by the non cash charge related to our CytomX collaboration. Taking these two together, we project our net loss to be $71 million to $75 million compared to our prior projection of $67 million to $71 million. However, we project our net cash used in our operations to be $56 million to $60 million which is lower than our previous guidance of between $64 million and $68 million. Guidance related to capital expenditure is unchanged to $8 million to $10 million; we are now projecting ending our fiscal year with more cash than previously projected. We now expect to end the year between $134 million and $138 million in cash and marketable securities, compared between $124 million and $128 million as previously projected. We believe that our cash position combined with expected cash flows from royalties and other revenues sources is enough to fund at least our 2015 fiscal year as we continue to invest in the development of our proprietary product pipeline.

And with that let me turn the call back over to Dan.

Dan Junius

Thanks, Dave. Let me turn through the events upcoming over the balance of 2014 and then we will be happy to take your questions. It is starting out as an active year and projects to be a very active year for ImmunoGen and exciting one because across our a various development programs where we are at a stage we are going to be getting the data that we need to understand what the potential is for these particular compound. At the same time across the full spectrum of partner compounds we are getting again into an active data generation mode, we are seeing that the licenses that we have taken over the past somewhere in 2013, those may lead to compounds coming into the clinic. We think there is an opportunity for new IND filing. So a very, very active time for the company. I think it is quite exciting for us. Specifically on the ImmunoGen compounds for 853 as note we will have clinical data at ASCO, the data ASCO be on May 31, but those of who you, those trying to build your calendar, we look to start the expansion phase for 853 later this quarter as Charlie said we are enrolling patients under two different dosing regimen, so that will give us some further insight. And we will have updated clinical data in 853 in the second half of 2014. For IMGN 529, we will have first clinical data on ASCO, that will be on May 30, and the expansion phase on that compound should start sometime in 2014. For 289, we are planning to have our first clinical data in the second half of this year and sometime over the course of this year once we determine MTD we will then move into expansion cohort for that particular compound. With partners Kadcyla, we learned about sales development on quarterly basis. We will get insight into further potential for label expansion with MARIANNE data which you hear about in the second half of this year. With the seven other partner compounds in the clinic we will see a quite bit of data from Sanofi at ASCO as I noted we will see the Phase II single agent data on SAR3419 and an oral presentation on June 1 for the CD38 compound 650984 from Sanofi in combination with Rev/Dex, we will hear about that again in oral presentation on June 2. And then we will see some updated data as a single agent. I beg your pardon; oral presentation is the data as a single agent should be on May 30. A combo data would be a poster presentation. But there is also potential for data coming out from our partner across the other major conferences over the balance of the year as ESMO, EORTC et cetera. Beyond those compounds, with clinical data we would hope to gain some insights in our partners plan for development over the course of this year, as I noted there should be the potential for additional IND filings and insight into new compounds with preclinical data and then traditional target license is going out to partners over the course of the year. So a very active 2014 for ImmunoGen.

With that I will turn it over to Carol and we will be happy to take your questions.

Carol Hausner

Thanks, Dan. We are about to open the call to questions. I would like to ask folks to limit their question to one to two per person and shall other one had a chance a question you can then back in the queue. Operator, we are now ready to open the lines for questions.

Question-and-Answer Session

Operator

(Operator Instructions)

Adnan Butt – RBC Capital Markets

Hi, good morning, thanks for taking my question. Two here please. First one on 289. How compelling is the evidence that there is less in tox, and how much discontinuation there with current drugs and does EFR expression pattern changed. That's one on 289 and then on just a general technology question. What is CytomX technology bringing in that ImmunoGen maybe didn't have before? Thanks.

Charlie Morris

Hi, Adnan. It is Charlie. I will take the first part of that and I may have to ask you to repeat the second part of the question. I think this time to date, the skin -- optimism around skin toxicity clearly comes from our preclinical information. And those preclinical studies, the ability of the antibody and therefore the ADC to kill keratin sites was much less than we have seen with currently marketed agents including cetuximab and panitumumab and this also this very different release profile of cytokines in the same model so cytokines contributing significantly to the clinic. Roche part of the toxicity which has been traditionally seen, and as I described before we believe that this relates to a partial -- to only partial on antagonist activity which appears to allow enough signaling for skin cells to be able to resist to be a fact that antibody but enough antagonist activity for that to contribute to efficacy as well as to deliver of the payload. I apologize I shouldn't missed part of the question about EGFR, changing EGFR pattern. Could you -?

Adnan Butt – RBC Capital Markets

Yes, sure, Charlie. First generally how much discontinuation is there with -- due to skin tox at this time with current drug and then does EGFR expression pattern change with treatment?

Charlie Morris

Obviously we haven't presented any data yet, as we mentioned on the call we intend to present data for the end of the year. I think I will leave your interpretation of cytokine we have said that we have escalated a number of dose escalation coming only begin dosing in November. So at this point we have not seen anything which would change our belief in those preclinical data.

Adnan Butt – RBC Capital Markets

Sure, that the question was about current therapies that is already on the market.

Charlie Morris

Well, as I said I mean I think -- the primary aim I think here is thinking about the pattern of skin toxicity, we are all very much aware of this clinical rush in the acne form aspects of Roche which has been seen with the antibodies in TKI. Not only it is not of course -- we are aware that we might run the risk of delivering to the same skin cells toxic payload and maytansinoid. But we believe that the EGFR expression is very different in skin and it tends to be lower antigen density per cell and it is on tumor cell particularly if we look at things like squamous cell carcinoma where you see very, very high expression of EGFR similar what has been described in breast cancer research two and three positive range that Kadcyla is addressing. So we believe that if we can avoid the known skin toxicity around the rash that will enable to us dose levels to have impacted both the antibody and to deliver sufficient maytansinoid for cell kill. With the likelihood that we got to see this yet in the clinic that would not cause any more additional or different types of skin symptoms because we do not believe that there would be enough entry of maytansinoid in skin cell to cause additional damage. And I guess it is a similar construct of thought to now historically we talked about people concerned about the expression HER2 on cardiac cells and Kadcyla. We have not seen reports of cardiac toxicity with Kadcyla. So we believe that it is precedent to believe in that we can see this and with not what we are testing right now. And nothing to date has given cause opposed in terms of dose escalation.

Adnan Butt – RBC Capital Markets

Thanks, Charlie. And Carol I do have a question on CytomX but I can come back to that later if unless you let me just have that one.-

Dan Junius

I will get to the analysis on the table. In terms of whether this CytomX technology potentially do for us. I guess I think in a couple of areas, one for that target that we have chosen to avoid with our existing technology our tubulin inhibitors because of expression on healthy tissue that was potentially problematic. This would allow us to pursue those targets with our existing technology. As I noted in the prepared comments, we also are moving along with our technology with a DNA acting agent and here there maybe even a more intense application of CytomX technology. For everyone's benefit recall the CytomX technology is the ability to mask the binding region of antibody and the mask is released only in a cancer cell environment due to some proteases that are released, extra cellular with the cancer cell. So you have a potential, very specific application or targeting with this mask to antibody using CytomX technology, and given a DNA acting agent is less discriminate in terms of cells is going to kill tubulin inhibitor, it may afford this opportunities to look at diseases that -- you go out with a more aggressive cytotoxin than we have with our tubulin agent because the DNA acting agent is more important than our existing portfolio. And again it may let us go a target where there is expression in similarly to what we have reference with tubulin inhibitors whether it is expression and healthy tissue as well. So it is very interesting. We have been impressed with the preclinical data, we are working intensely with CytomX on the elements to the cross license to bring compounds forward both on our behalf and on theirs and we will see where it goes.

Operator

And we will now move on to Simos Simeonidis from Cowen and Company.

Simos Simeonidis - Cowen and Company

Good morning and thank you for taking the questions. Question for Charlie first. You talked about the 853 newest data we have seen, can you give us an idea of how the efficacy and the safety profile which is improved now may compared to and decides nearly approve drug ovarian cancer in Europe?

Charlie Morris

I think it is really quite early for that kind of comparison. Clearly they have completed some much larger studies. As we have said remain in dose escalation and we intend -- I think we will get much more detailed information on efficacy as we begin to progress through the dose expansion cohort, I think on the critical thing to think about though is the size of the population that we are addressing because there is clearly -- although we are not sure quite how many of the patients which are addressed by having the maximum so the effect on the end side test overlap with the higher expresses of the fully receptor, what we do now is there approval is in a pretty narrow population I think it is not 10% to 15% of the varying comes population. In our hands the expression, three plus and that I feel varying comes in group is about 50% to 60%. So I think we are looking to address the broader population. We are obviously encouraged that we have seen as we have previously reported single agent activity. And I think you will see a little bit more about relationships between pharmacokinetic and activities we get to ASCO. And that I think will also further clarify some of the decision that remain and trying to get dose right. So I think it's early for that type of commentary. It is good for them that they have that European approval but I think right now the overlap is relatively small. And doesn't really change any of our plans for moving and pressing for forward with 853.

Simos Simeonidis - Cowen and Company

Okay, great. And second one for Dan. Dan, Kadcyla, certainly got out of the gate with the great start in first of couple quarter. The last three quarters, even though we have seen good progress x-U.S. in the U.S. the growth has been less than your first quarter, the last few quarters' growth was I think Q-over-Q 14%, it was negative last quarter and this quarter it was 11% approximately in the U.S. Do you -- are you concerned that there might be flattening or plateauing at Kadcyla sales in the U.S.?

Dan Junius

I am not. I think you have to come back to the fact that all the feedback that we hear and not that we are out serving docs on a regular basis, Simos, but the feedback from the doctor is that this is a great drug. They like the fact that it has a very beneficial impact on patient work while being minimally disruptive to their life. We still are in relatively early days here with a somewhat narrow indication or narrow label I should say relative to its potential. So I think that there is a tendency to scrutinize very early on and microscopically examine quarter-to-quarter but I think you have to give this a little bit a time to get a real better understanding to its potential. I think the MARIANNE data is going to be very important. We will see how expansion goes in Europe and other jurisdiction but the potential for Kadcyla is so significant that when I think of people to be expressing concern given its therapeutic profile it just seemed to be misplaced.

Operator

We will now go to Cory Kasimov from JPMorgan.

Whitney Ijem - JPMorgan Chase & Co.

Hi, this is actually Whitney Ijem on for Cory this morning. Two quick questions. First on the revenue guidance. Can you give us any more granularity on the changes in partner activities that you mentioned? Whether what they are or may be what's driving some of those changes?

Dave Johnson

Sure. I am not going to say whose the partners are but nature of the change is anticipated activities in terms of either taking a license or reaching a milestone, a clinical milestones that's sort of thing. So these are things that we don't anticipate gone away. They are just -- the timing of them slipped out from anticipated being in the later part of our Q4 fiscal year into the early part of our 2015 fiscal year.

Whitney Ijem - JPMorgan Chase & Co.

And then on the terms of the update on the proprietary program that ASCO, can you give us any more detail in terms of what we should be expecting on patient numbers or cycles of therapy duration anything like that.

Dan Junius

I think public -- ASCO is about six weeks away. I think you will get more information at that point. For 529, it is really about where we are in terms of dose escalation and update on things that we have previously indicated in terms of the initial both signals of activity but some other fact that we have to overcome. And with 853, the focus is really going to be on again PK relationships to the activity that we are seeing to date. So I think it will become clear hopefully as we finalize those ASCO posters.

Operator

And our next question will move to John Newman from Cannacord.

John Newman - Canaccord Genuity

Hi, guys, good morning. Thanks for taking my question. I had a sort of two part question. The first one is, if you can comment at all obviously you can't promote here but if you can comment in all qualitatively as to whether or not you are seeing off label use of Kadcyla in frontline HER2-positive metastatic breast cancer and then also in terms of the MARIANNE study, I am curious as to what the trial protocol allows for in terms of dose reduction in the arm containing two biologic agents and which one of the agents can be reduced or if both can reduced than one. Thank you.

Dan Junius

It is a question that's probably more appropriate-- properly directly to Roche given that in terms of any off label used outside of the second line and later in metastatic that would be something that they would see -- I guess I would just say anecdotally my understanding is that some of that given reimbursement is getting tougher and tougher. And in terms of MARIANNE protocol again, that's under the -- it is under the control of Roche and wouldn't have any comment on that.

Carol Hausner

I can send what they have reported but that would come from them. So I can send that to you.

Operator

And we will now move on to Mara Goldstein from Cantor Fitzgerald

Mara Goldstein - Cantor Fitzgerald

Great, thanks for taking a question. I just had a question on 853 I think if I go back to probably around the R&D meeting where the discussion around activity level for 853 and looking for possibly 20% or for continuation and ovarian cancer and I am wondering if given the change the dosing and what you are seeing is that still the case?

Dan Junius

I think thresholds for determining what we would see to be proven concept is not really going to change. I think historically we tended to suggest that something north of 30% is likely to be up significant interest for further progressing I think that would remain true. The aim of changing dosing is really to maximize that opportunity for patients. The variability that we saw dosing on a total body weight basis, there are some patients that were unable to continue dose which they have been assigned. We think more patients will be able to continue with that dose. So none of the ambition around the product changes in fact that gets enhanced because you know now with the intend here is to have -- and might add few patients as reasonably possible with the ocular symptoms but there is many patients it is possible of both thresholds for activity and I think it has been a purposeful and to date worthwhile process of trying to get it right. So none of the -- so none of the strategic intend to change what we do.

Mara Goldstein - Cantor Fitzgerald

Okay, thank you. And if I could just ask the quick financial question. Just looking from the change in the revenue guidance is all cash as opposed to just recognition of cash.

Dave Johnson

No. The change in revenue guidance is -- for example when you recognize licenses it is simply amortization of upper cash we have already received.

Mara Goldstein - Cantor Fitzgerald

So how much is then changing guide, is all the changing guidance essentially recognition of cash already received or is it portion of it?

Dave Johnson

It is a portion of it.

Mara Goldstein - Cantor Fitzgerald

Okay and are you able to share what that is?

Dave Johnson

No. We are not getting into those specific details. But I think what you can determine out of that is the fact that our cash usage is actually down and the fact that our -- that our handy cash balance is also up. And the only really non-cash expense we have added is the $12.8 million for CytomX. It is fairly easy not to exercise to determine that the majority of is in non-cash revenue.

Operator

And with the next question we will now move to Joel Sendek from Stifel Nicolaus.

Joel Sendek - Stifel Nicolaus

Thanks. I just have a couple of housekeeping things. So just following from the last question. If we back out the CytomX piece from the R&D number would that be the kind of annualizable run rate that you are on. It was actually cash R&D spent.

Dave Johnson

Well, if you took -- well obviously the impact, the short answer is it depends. And it depends on sort of the clinical success that we see in our expansion cohorts with our three internal products. So as you can imagine if we see activity and that's going to lead to further slightly larger trials and that leads to more clinical expenses in terms of the pure research side I think it is pretty much annualized.

Joel Sendek - Stifel Nicolaus

Okay and then as far as the -- I know you guys had a ton of data at AACR so I am wondering when the abstracts for ASCO come out? I know you are working on the posters now but when the abstracts come out, is there a possibility that it will see any additional data or is it going to be old stuff as far as when you submitted those abstracts as far as the proprietary countdown?

Charlie Morris

I think what we want to do with our -- with the presentation is to try to have the most updated information that we can bearing in mind that involves a certain amount of work to bring data and cleaned up and everything else. So I think you should expect to see things more updated than up here in the abstract though obviously there is always slight and ability to make it absolutely real time but we will try to keep people as up to date as we can.

Joel Sendek - Stifel Nicolaus

Just to clarify, I was wondering if what is in the abstracts themselves will be old relative to AACR.

Dan Junius

I think the answer it would be different because the abstracts for ASCO intend to address different questions and ones that at AACR so five to nine for example we haven't previously presented any data. And we consciously obviously working with our investigators and the abstract to office try to address different questions with AACR posters and the ones that we are directing with ASCO poster. So I think it is different day to rather than sort of new or older data.

Operator

And our next question will come from Michael Schmidt with Leerink Partners.

Jonathan Chang - Leerink Partners

Actually this is Jonathan Change stepping in for Michael. Thanks for taking the question. My first question with regard to BT062. Could you walk us through the rationale for testing 062 and triple negative breast cancer and ovarian and bladder cancer? And then may be you remind us what the preclinical evidence was for pursuing these specific indications? And then maybe more picture toss with timeline and catalysts are for 062?

Dan Junius

Hey, Jonathan, it is Dan. Again this is being advanced by our partner so it is partner data versus our. But some preclinical data. And Carol, if you recall when that was published?

Carol Hausner

We are watching only last year.

Dan Junius

So this year ago when the preclinical data was published around I think it was four different solid tumor indications so it was bladder cancer, it was prostate, it was triple negative breast, and it was pancreatic. And I think if -- and we can point you to that afterward that if you haven't had to access that data but I think what you will find is -- and again it is preclinical but it was quite compelling to suggestion of activity being seen in each one of those indications. So that's the underline rationale because the initiative to move and offer that clinical data into clinical studies was based on that and the process took them until early this year to get those studies established and begin dosing patients. With that your question around timeline, it is just going to be function of dose escalation expansion cohort and what the data shows. And it is just too early since they are only dose escalating. The only caveat I give is that since they do have model therapy data in multiple myeloma, it gives them some advantage with respect to starting dose. So you don't necessarily have all of the early low doses before you are getting into a therapeutic range. So that may compress the timeline a little bit to move through a Phase I study and those indications.

Jonathan Chang - Leerink Partners

Okay. Thanks. And just a second question on your DNA alkoloiding payload, DGN462. If you could just generally compare that to a tubulin binding payload, what are the differences and the advantages of each? That would be helpful. Thanks.

Dan Junius

That there is may be two -- I'll focus on two primary differences. The tubulin inhibiting agent will kill a cancer cell or disrupt the cancer cell that will lead cell death by preventing the cell from dividing. So it has -- I call it discrete mechanism that is only applicable in cells when they are undergoing cell division. That's important because you can look at targets as you are evaluating applicability for the technology. You can look at targets where there maybe some degree of expression on healthy tissue provided that either the level of expression and/or the nature of the cell is such that it is not going to be dividing, and you can accept that level of expression. The great example for that is HER2. HER2 is expressed on a variety of healthy tissue outside of blood cancer where it applied with Kadcyla but you have not seen toxicity, you have not seen issues with healthy tissue up any meaningful level with Kadcyla despite that expression of HER2. When you move over then look at our DGN42, there what you have is a an indiscriminate killer, from in terms of cell killer so you don't have the luxury of looking at expression across a range of healthy and cancerous cells and say I can apply this and not have the same degree of concern about healthy tissue expression you would go into it with the assumption that you are going to adversely affect healthy tissue and so therefore the relative degree of expression is going to play much more prominently in target selection. I reference CytomX; CytomX technology may afford us an advantage of using that as a means of avoiding the potential risk of healthy tissue expression in utilizing our IMGN technology. But otherwise without that type of mechanism you are going to have to be very cautious about what the target selection is and what the level of expression would be relative to healthy tissue expression. The other differentiator is that our IMGN family of which DGN42 is the lead indication is significantly more potent than our tubulin inhibitors. So as we think about dosing, we are thinking about the number of dimensions there, we would expect to be dosing patients at a much lower level with an IGN oriented compound than we do with tubulin based compound we wouldn't need the level of material, the level of dosing to be able to get a reasonable level of activity.

Operator

And our next question will come from Shaunak Deepak from Jefferies.

Shaunak Deepak - Jefferies & Company

Good morning guys I just have a few questions on Kadcyla. First, I was interested in your thoughts on the recent [Nice] decision on Kadcyla, and I was just curious if the 20% discount on Japanese pricing was in line with your expectations? Finally, I was hoping you would be able to provide a little bit of an update on reimbursement in pricing in Europe beyond UK and Germany?

Dan Junius

Shaun, it is Dan. Again, these are elements controlled by Roche. I'll give some thoughts on it but the interactions between regulators and reimbursement authorities and are taking place with Roche. As it relates to the decision with Nice in the UK and I am sure everyone saw it but Nice came out with a negative recommendation based on quality and life years for Kadcyla. And I don't know when you said that was expected or unexpected given where Nice is come out on a number of therapies, it becomes part of the process. I know that Roche in a quote that I saw expressed significant disappointment so but it is probably just early in the process of moving things through and I would expect there will be active discussions about how they can come with, an approach that will receive the endorsement from Nice. There is an alternative mechanism to reimburse patients in the UK today. And so I don't know that it shuts off the avenue of access to Kadcyla for UK patients. The discount in Japan, the 20% discount, again I don't know that's necessarily unexpected, they do-- Japan does look at the U.S. as a reference pricing and so I think that the 20% discount isn't doesn't strike me as being severe but that obviously came out of discussions between Roche and the authorities in terms of what was going to be acceptable in Japan. So and we will -- there is going to be more coming out around on reimbursement as they move to other jurisdiction, they will have just have to learn over the course of the coming quarter how that takes place and will impact introduction of Kadcyla in a lot of other jurisdiction.

Operator

And we will now move on Mathew Roden from UBS.

Andrew Peters - UBS

Hey, guys it's actually Andrew Peters in for Matt this morning. A couple of quick questions. The first one just on expectations for data later this year for 289, as most should we expect more of a safety update or are we going to see some kind of early data? I know that it's unlikely that most patients will have seen MTD yet? And secondly, just a question on AMG 595, if you could just kind of compare that, or how is it different than AVT 414? I know there they have a bit of a broader development plan looking at solid tumors, as well as glioblastoma. Is there a rationale for doing that? Or have you spoken with Amgen on why they're limiting it to glioblastoma so far?

Dan Junius

As I said we announced that we do open the Phase I in November, we are going through dose escalation I think, we will certainly will be planning to provide an update on safety and obviously if we are seeing -- say it I think you can fully expect us to want to share it. But already would be an safety update, hopefully able to demonstrate to that, we have been able to escalate through without significant skin issues which I think has been one of the primary focus. I think we may be attempt TV by that time. So may be some additional information but it is a dynamic situation and obviously there is more than one meeting in the second half of the year. The AORTC triple meeting so exactly which meeting we still just need to exactly workout but we plan -- we fully expect to submit something so that we at least to begin to tap some data during this fiscal year, this calendar year. And Andrew your question around 595, now we are getting into partner strategy in the like and that's something, we can't go beyond what Amgen has said and frankly although we have heard from Amgen publicly as what was disclosed at AACR, so that's not that path that would be appropriate for us to go down.

Andrew Peters - UBS

Okay. In terms of any differences between 414 and 595, is that also in that same bucket?

Dan Junius

Yes, when you get into comparing -- now it even goes beyond comparing a non partner compound to a partner's compound. I think I would want them to be responding to that as opposed to me saying anything about it.

Operator

And our final question will come from Jason Kantor from Credit Suisse.

Jason Kantor - Credit Suisse

Hey, great, thanks for taking my question. On 853 just a couple of things, one I guess how confident are you that the new dosing strategy will get a -- do away with the ocular toxicity, it seemed like from the AACR poster, you're still kind of very close to the exposure where you're seeing ocular toxicity? And then also I think in the past you've spoken of possible accelerated approval paths in ovarian cancer. Do you think that actually exists in the U.S. just given other company's experiences with the FDA, and the need to come up with some survival data for approval?

Charlie Morris

Jason, it is Charlie. Yes, in terms of ocular tox, I think the key thing here is I don't think it is going to go away okay. I think we would be willing in the face of highly active drug we would be willing to accept a certain degree of symptoms. But I think the problem with the previous dosing strategy was that it was becoming unpredictable that is going to get it. So here I think what we are doing is we are able to exercise control and I think you saw the date of that say, actually you are right that we were pushing up against line but having not seen any ocular toxicity we have actually said well we should go one dose higher, see if we can get more in and see what happens there as well and then decide which is the right level on which to go forward. So I think the key message I think from there is that if you use total body weight we feel four out of ten in that 5 mg/kg dose because some patients were over dosed frankly. And if you use the adjusted idea of body weight you get predictability and therefore less ocular tox, now it is matter of just finding that balance between the two and that's what we continue to strive to do. So I think it has to date achieved what it was set out to achieve. I think one thing to -- the note of caution on the day through AACR is that the range of body weight of patients in that cohort was actually relatively narrow compared to what we have seen previously so obviously we were highly encouraged by what we had seen but perhaps they haven't tested a particularly heavy overweight patient or particularly underweight patient during that particular cohort. So there is more to learn but we are very pleased with where we are so far. In terms of ovarian cancer, it is always data depended and I think yes if we saw some kind of dramatic response I think there is always a conversation to be had with the agency but we are also well aware that that's been tough without overall survival let alone progression free survival in the past. I think we should also bear in mind that we have to begin see activity in endometrial carcinoma which I think is clearly a highly unmet need with if any product is indicated for it must be very old product. So that's something that we have already could have an accelerated path. So we don't close anything also at the moment. I think the main message from us that we will always look out for that opportunity. Clearly, we would like to transition to being a company in a typical development and the commercial company at the earliest opportunity and we will continually look out for the opportunity to do that.

Dan Junius

Jason, just if I could add to Charlie's comment. As I think about what's been done in developing these dosing strategy, I applaud Charlie and his team, I think it has given us an important new tool, they were applying looking at 853 and the dosing strategy, recall also we are looking at weekly dosing which has just come out some of the same work. And may afford us both the opportunity to calibrate dosing around high tox and what's acceptable while having higher exposure to patients that may have a significant impact on efficacy. So I think it's going to be very important there. It is also I think is provided us an insight that may have application as we think across the entire portfolio. It is not clear, we are not ready to make a statement that this is the dosing methodology that they will use uniformly but for a compound and have certain PK profile, I think it would be appropriate and gives us something -- a sharper instrument as opposed to a very blunt instrument that in hindsight is what we were using with the dosing schedule given the parameters of 853. So I think it is -- we have to learn more but it has the potential quite frankly to be a very important insight that will significantly enhance our ability to succeed in some of these compounds.

Operator

And with that I would like to turn the call back over to Carol Hausner for closing remarks.

Carol Hausner

Great. Thank you everyone for your interest in ImmunoGen and if you have any subsequent questions, please don't hesitate to call. Have a very great day.

Operator

And that concludes today's conference. Thank you for your participation.

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ImmunoGen (IMGN): FQ3 EPS of -$0.44 misses by $0.16. Revenue of $6.87M (-72.5% Y/Y) misses by $6.41M.