Celldex Therapeutics' CEO Presents at Bank of America Merrill Lynch 2014 Healthcare Conference (Transcript)

| About: Celldex Therapeutics, (CLDX)

Celldex Therapeutics, Inc. (NASDAQ:CLDX)

Bank of America Merrill Lynch 2014 Healthcare Conference

May 14, 2013 7:20 p.m. ET


Steve Byrne – Bank of America Merrill Lynch

Anthony Marucci – President and CEO


Steve Byrne

My name is Steve Byrne. I cover biotech stocks for BofA Merrill. It's my pleasure to introduce Celldex Therapeutics this afternoon. We have Anthony Marucci here, President and CEO; Tom Davis, CFO, is also here; Sarah Cavanaugh, VP of Investor Relations, is also here. Both Anthony and Tom are legacy Medarex folks post the spin 10 years ago. Anthony, over to you.

Anthony Marucci

All right. Thank you, Steve. Thank you everybody for coming. We really appreciate this opportunity to present the Celldex story and how we're proceeding off into the clinic.

Obviously before we get started today, I'd like to remind everyone that we will be making some forward-looking statements. And I refer to our SEC filings where we discuss our risks associated with our business in more detail.

So what I'd like to talk about today in a little bit of detail is all five of the programs which we have now into the clinic. And what we believe we're bringing forth to the industry is a pipeline that is very highly differentiated. And it builds on our philosophy of targeting specific patient populations and having these drugs reach these patients who will benefit most from our product portfolio. These therapies we believe will modify the patient's immune system and which we believe that these kinds of drugs now are changing the landscape in cancer.

So with that, I'd like to briefly run through the five programs with you today, starting with this -- we call this a highlight slide where we're talking about two late-stage product candidates, Rindopepimut, which we call Rindo for short, and Glembatumumab Vedotin which is our ADC product which we call Glemba for short. And we'll go through these data.

Beyond Glemba and Rindo, we have some earlier-stage assets that are making their way through the clinic, the first of which is Varlilumab which is in phase one clinical development in both solid tumors and liquid tumors. We are ready to initiate combination studies this year with this molecule. And as you may have seen earlier this morning, we entered into a collaboration with Bristol-Myers Squibb for their novel target Nivolumab.

Also 1401 which is our antibody-based vaccine is growing in importance in our pipeline, as you'll see with some of the data we'll present. It's an exciting asset that we took out of Medarax when we spun out back in 2005. And there are multiple combination studies for that program that will start this year.

And the fifth product that we'll talk about briefly today is CDX-301 which has completed a phase one study and now is ready to go on to combination studies as well.

What I'd also like you to think of as we're telling the story today is that we really do have an experienced team within this -- within the company, a team that has worked on a number of important assets including the development Ipilimumab back in the early days of Medarax.

Certainly we have a very strong balance sheet, as you can see, at the end of the first quarter. We had $274 million in cash, which is enough to get us through 2016 at this time.

So I would like to talk first about Rindo, what it is, and then we can go through some of the data that we have presented in the past, as well as the other molecules.

So, Rindo for us, it's all about the target. The target is EGFRvIII, which is a highly specific tumor. It's expressed only in tumors and not in normal tissues. So it's really what we believe to be a true oncogene. The target has been validated not only by us but others and is gaining very much of large importance in the GBM [ph] space.

Historically, patients who have had vIII survived around 13 to 15 months, and very few patients survived long term. And we'll show you some of those data both from historical perspectives as well as some consortium data.

We're fairly confident that the 30% expression rate vIII is consistent. And that means that there's about 4,000 patients on an incidence basis [ph] in the U.S. And when you look at the E.U. 27, it's about 8,800 patients. So it's a decent population size for this drug. We have a strong proprietary patent position. We've been granted both fast-track and orphan drug status in the U.S. and in the E.U. as well.

So with that, Rindo is both in a phase three study, which we call ACT IV. It's currently in 220 centers around the world, in 24 countries. And we're looking to complete enrollment of this study in frontline glioblastoma by 2014, in this year.

In addition, we have Rindo in a recurrent study which we call REACT. It's both going after recurrent and refractory GBM patients, so it's a three-arm study. We showed interim data at SNO last year, and we will go over it again today. And we expect enrollment there again in group one to be completed very shortly and then present data at Society of Neuro-Oncology later on.

But let me go over some of the earlier data that we've shown in the past as to why we're very excited.

So as you can see on this slide, this is an overall survival Kaplan-Meier curve based on the three studies that we have done in the past called ACTIVATE, ACT II and ACT III. And as you can see here, if you look at the four and five-year survival rate, we're looking at 18% and 14%, respectively, which is fairly good. And you could see that the tail has been built on this overall survival slide, which is very encouraging. When you look at the historical controls here, you can see that very few patients get beyond two years, and certainly none get to four years.

So we like what this drug is doing. We're seeing immune responses fairly quickly. We're seeing a good separation at the PSS level, and certainly at the survival level, the spread gets even wider, and then we keep building that sale [ph]. So we're very impressed with what we've seen on this data so far and certainly a 14% survival rate of five years is extremely encouraging to us.

With that, we needed to get some additional studies that are outside of our control while the phase three study is going on. So we asked the RTOG, the Radiation Therapy Oncology Group, to pull the data from a study that they ran during the same time we ran the ACT III study. So this was a large registration study that was on a global basis. And they wound up pulling 142 patients out of that study for us.

And we wanted to answer the question which was, if you have a resection or you don't have a resection, if you're vIII, doesn't matter. And historically we've said that if you -- whether you had a resection or not, it didn't matter. You tended to do worse if you were vIII. And if you look at these three groups, the end of 142, whether you had a resection or not, you're surviving 15 months, all the way over to the exact match on the n=29, these are people that had a resection, have gotten to 5 out of 28-day regimen, you survive 16 months. So we think that conclusively this study proved that no matter if you had a resection or you don't, if you're a vIII patient, you don't do very well.

And then when you match that up against the ACT III data, we see a median survival of 21.8 months, you see that there's a very large separation here as well. So this gave us a lot of comfort that we were on the right track and moving forward with the ACT IV study. Beyond that, we wanted to look and see if we would have an effect in the recurrent setting.

So this is interim data that we presented from the REACT study in group one at the Society of Neuro-Oncology meeting this past November. Now group one patients are recurring patients who have progressed from their upfront therapy, but they're also patients that now have not seen Rindo nor Avastin. So this was the randomized portion of our study and it's a look at Rindo plus Avastin versus Avastin alone.

And you could see here that, on the first 40 patients that we've shown, we have a PFS benefit three-seven [ph] versus two months. We have an overall survival benefit of 12 months versus seven-nine [ph]. And then you look in that third row, the comparison of how this -- these patients that are vIII that have had Avastin on our study did versus the population as a whole when Avastin's filed for its approval study of 2009. And again it shows up that if you are vIII, you're not doing very well. And this is what this study has shown.

At SNO later on this year we'll show the full 70 patients from the data set. And again we'll see if this data holds up, which we think is pretty impressive at this point.

What we also saw here is what we've been seeing historically, that if you make a good tighter [ph] and from our perspective, a very good tighter [ph] is one to 12,800, if you make these high tighters [ph], the correlation here is that the patients tend to do better clinically. Eight out of the 18 patients who have what we defined as high tighters [ph] have a six-month survival of 100%. And those patients, the 10 out of 18 that had a less than a high tighter [ph] by our definition still did very well. They had a 64% 10-month survival, with a median of around 10-1/2 months.

So this all fits very, very well into how we think of the biology of the tumor. Where you get high tighters [ph], you tend to get vIII out of the cells, and the patients tend to do better. And this was in the recurrent setting.

Beyond Rindo and these two studies, the second program that we're talking about Glembatumumab. It's an antibody drug conjugate that's looking -- has a fully human antibody that's conjugated, that targets gpNMB. And it's used in the Seattle Genetics' toxin and linker attached to it. gpNMB is a very attractive for us that is -- because it's associated with the ability of the cancers to abate and metastasize. We've also seen correlated reduced time to progression. And it actually has expression and multiple indications, which we'll touch on briefly.

We have run two studies now in breast cancer. The first was an all-comer study. And the second study we did was we call the MERGE where we're looking at different expression levels of gpNMB both in the overall breast population and then in the triple-negative patient population.

And you could see here on the red box, this is the data from the triple-negative that were also high-expressors. And by definition, high-expressors were those patients whose tumor expressed more -- greater than or equal to 25% of their tumor. And you could see that the response rate here was very good 33% versus a zero for the investigator's choice. The disease control rate was 75% versus 25%. And we had a PFS in overall survival advantage in this study. Now the ends were small, but still when you look at the survival data, it's statistically significant at 0.003.

So the next study for us is the METRIC study where we're going to take this triple-negative population and we're going to perform a randomized study on an accelerated approval basis. It will be 300 patients randomized two-to-one, Glemba versus Capecitabine, with the primary endpoints being response rate or PFS. And this study started last December, and we expect to complete approval of the study by mid-2015.

To give you a sense of how Xeloda has done in other studies in triple-negative -- this is a good barometer for us, because when we look at the response rates, what we're expecting in this study, we're expecting a 15% response rate for Xeloda and a four-month PFS. And when you look at these two studies that have over 500 patients in it in total, the percentage of response rate is in that ballpark that we assume to be the number. When you look at the PFS number, we projected four months. And here you're seeing a range of 1.7 to 2.5. So we really think that we've looked at this and done a good job in preparing what the parameters would be.

So beyond the -- beyond Glemba and Rindo, Varli is our third asset that's in the clinic. Varli is important because it's an immune-modulating targeting CD27. So this is the other side of the T cell, where it induces activation and proliferation of human T cells when you combine it with T cell receptor co-stimulation. So it's been shown that also in liquid tumors, CD27 has a high expression rate as well. So in solid tumors, you're looking for the immune activation and in liquid tumors you have that dual effect of the activation plus some potential direct killing.

We believe that this drug can be combined with many different assets, chemos, vaccines, like Rindo and 1401, checkpoint inhibitors and other immune modulators. So this is a pretty versatile asset for us.

We've just completed the solid tumor expansion and dose escalation and we completed the dose escalation in the chemo [ph] arm, we've seen an excellent safety profile with this drug with minimum toxicities. And we don't believe that it'll overlap with other immunotherapies as we do combination studies.

From our phase one we saw an increased level of serum IT 10 [ph] levels unexpectedly. We also knocked down T regs [ph] by about 50%. We also saw increased NK cells from this without seeing any real evidence of T cell depletion. So obviously we think that this is a very, very good drug going forward.

We did see anti-tumor effect at the CIPC [ph] meeting that we presented in November. We had one refractory patient in non-Hodgkin's lymphoma, had a fairly aggressive tumor. She had progressed through five other therapies in an 18-month timeframe. She got on to Varli, saw a complete response after the third treatment, and has been in remission now for over a year with no evidence of the disease coming back. So obviously we'll update this data at ASCO next month, and then we're looking to start some combination studies beginning in the second half of the year.

To touch briefly on the collaboration with BMS, we will be doing a phase one/two study of Varli in combination with Nivo. We think the study will be up to 200 patients, and we believe it will start in the fourth quarter of this year. The indications we're looking at are non-small cell lung, metastatic melanoma, ovarian, colorectal, and squamous cell head and neck. The terms of the deal, as you can see, we're going to share development costs. Celldex will conduct the study. And obviously we'll look through BMS for their expertise as well.

They paid us a one-time $5 million payment. And BMS waived future milestones to Varlilumab as part of the restructuring of the Medarex agreement that we entered into in 2007. And they also reduced the royalty rates for Varli.

The deal will be exclusive to PD-1, so to Nivo, for this combination, going forward. But we do have the freedom to work outside of PD-1. So if we want to do a PDL-1 Ido [ph] or anything else, we can certainly do that.

Additional studies that we will do outside this collaboration will include Varli in combination with Yervoy in metastatic melanoma. It may include a portion of the study where we would add 1401 for those patients that are NY-ESO positive, and then also a phase one study of Varli plus BRAF inhibitor which we believe would also get a checkpoint thereafter. So there's a number of studies that we'll be doing with Varli this year as well.

The fourth program, again I'm trying to go quickly, is 1401. It's an antibody-based dendritic cell vaccine, which is, like I said, was the technology we took out of Medarax. Interestingly, we finished up a phase one study about a year and a half ago. The study showed some good immune responses in some of the patients. It was very well-tolerated, showed evidence of clinical benefit with significant stable disease and measurable tumor shrinkage. But these patients then went on to get a checkpoint inhibitor, and this is the -- where we've seen really how these drugs will work together.

So eight patients progressed. They were all NY-ESO positive patients. Six of them were melanoma patients, two of them were non-small cell. Of the six that went on to get Yervoy, we saw four frank [ph] responses, three PRs and one complete responses. And historically, it didn't have a lot of complete responses. So we know the end is small, but certainly we're really happy to see that these results came about.

In the non-small cell arm, both of these patients where NY-ESO positive again, but they're also PDL-1 negative. So you wouldn't expect them to respond to a checkpoint inhibitor. And of those two patients, we had two frank PRs there as well.

So of the eight patients, we had six responses, of which one was a complete response. So going forward this year, we plan on doing combination studies with 1401, as I already said, with Varli, in a Yervoy study, but importantly also with the 301 and metastatic melanoma, which is an NCI-sponsored study, so we can not burn as much money as we want to going forward.

And then the last program is 301. So this is a potent hematopoietic cytokine. This is all -- this is the old slippery [ph] ligand program from Immunex. We brought the trial back. We made the manufacturing product for this drug and we did phase one last year which again showed very good comparability to the old drug.

This program now is going into multiple combination studies starting in 2014, one in combination with Mozobil for hematopoietic stem cell transplant. And then obviously there's also an intratumoral injection of 301 in combination with Hiltonol, which is a TLR3 [ph] compound, again in B cell lymphomas. So again, lots of work going on.

And as you can see, sort of projective pipeline slide, the items are highlighted here in purple, these will be the new studies that we're going on for this year. So we have five drugs in the clinic. You'll see not only that Glemba will add the metastatic melanoma and the squamous cell lung cancer program. But with Varli, now with the deal with BMS, we can do three -- do a program with Nivo outside of the collaboration, we have combination with Yervoy in 1401 on target to go, and then the third one being a BRAF inhibitor followed by a checkpoint. And these are just the programs that we have ongoing now.

But 1401 and 301 can also see additional expansion studies ongoing. And again, as I said, the $274 million that we have on the books certainly will fund these studies and others.

So in closing, for the milestones this year, with Rindo, we're looking to complete those studies, both the frontline and registration study. We're looking to complete accrual this year. And starting next year we'll have data read-outs on that study. With the REACT study, we plan on completing the group one in time for the SNO presentation in November.

For Glemba, continue to the accrual of METRIC, which I said earlier we're looking to complete accrual in the first half of 2015, with data in the second half of the year on this accelerated approval study, and then initiate additional studies in melanoma and squamous cell lung.

Varli, complete the phase one study, which we are on our way to doing. And then initiate additional combination studies that we're talking about.

And for 1401, certainly support the phase two study for the combination of 1401 and 301. And then also do additional studies with 301 with Mozibil and also other combinations.

Thank you for your time, and I'm ready for having questions if anybody has any.

Question-and-Answer Session

Steve Byrne

Any questions for Anthony?

For the five products that are in the clinic, how would you rank them with respect to market potential? I know they're at different levels of clinical development, but how do you look at them with respect to potential?

Anthony Marucci

Market potential for a drug like Rindo I think would be very good because there's really nothing out there right now. I mean Temozolomide still is the standard of care front. Avastin's fate still needs to be resolved as far as recurrent setting. I mean their frontline data did not meet the data points. But in recurrent it's still the drug of choice. So I think that, from a market perspective, Rindo has a real opportunity to both gain access quickly and get revenue quickly, because it is in both studies with the standard of care.

For Glemba, I think the market opportunity is much wider only from the standpoint that we think it has a benefit in both breast and as well as melanoma and squamous cell lung. But those need to be proved out in those studies.

And then Varli I think has a lot of potential opportunities. But again it's early. So again we don't know if it's, you know, what combinations it'll work with. We think it'll work very well with the checkpoints. We think it'll work very well with the vaccine. But that still remains to be seen. So I think from a market opportunity, I would say Varli would have the largest potential opportunity, but it's also the earliest of the three drugs in question.

Steve Byrne

Does it make sense to take your CD27 target on Varli and put it on a bio-specific antibody?

Anthony Marucci

Sure. We're looking into that.

Steve Byrne

With a tumor antigen on the other side?

Anthony Marucci

Sure. Tibor, our Chief Scientific Officer, and his team are working on such a thing now.

Steve Byrne

And on Glemba, was it -- is it biologically logical that the efficacy was greater in high expression in triple-negative versus just high expression alone? Is there a biology behind it?

Anthony Marucci

Yeah. The high expression overall was 33% in the triple-negatives, 32% in the overall. I think from a standpoint of expression level itself, that was higher in triple-negatives. And so because there's a higher need in triple-negatives, that's the logical first study for us to go after.

Steve Byrne

And when you think about checkpoint inhibitors to combine Varli with, Ido [ph] was one of the considerations, and how do you look at those? Is it logical that one might be a better choice than another?

Anthony Marucci

I think right now we're just scratching the surface of these molecules. And I think that it would be good to try as many combinations as you can. I mean I think in the next three to five years, a lot of these are going to shake out, and it may be that one combination works best in a certain indication over the other, I think, you know, I could see multiple targets, multiple products being part of a regimen for a particular cancer.

Steve Byrne

Are you picking up any peripheral neuropathy with Glemba that would be similar to what was observed with Adcetris?

Anthony Marucci

The same toxicities that you'd seen with Adcetris, we've seen the same in our trials. So we think it's the toxins [ph].

Steve Byrne

Any questions?

All right. Thank you very much.

Anthony Marucci

Thank you everybody. Appreciate it.

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