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Agenus Inc (NASDAQ:AGEN)

Q2 2014 Earnings Conference Call

July 24, 2014 11:00 AM ET

Executives

Jonae Barnes - VP of IR and CC

Dr. Garo Armen - Chairman and CEO

Dr. Robert Stein - CSO

Christine Klaskin - VP of Finance

Analysts

Jason Kolbert - Maxim

Ren Benjamin - H.C. Wainwright

George Zavoico - MLV and Company

Nick Cooper - Edison

Operator

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

Jonae Barnes

Welcome to Agenus conference call to discuss the second quarter 2014 financial results. With me today is Dr. Garo Armen, Chairman and Chief Executive Officer; Dr. Robert Stein, Chief Scientific Officer; and Christine Klaskin, Vice President of Finance. During this call, we will review our financial results, as well as provide a corporate update. We will then open up the call for questions-and-answers.

But I continue, I would like to remind you that this conference call will contain forward-looking statements, including statements regarding the company's potential income stream, research and development and clinical trial activity, the publication of data and potential application of the company’s technologies and product candidates and the prevention and treatment of diseases.

These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially. Reference to these risks and uncertainties is made in today's press release and they are disclosed in more detail in our most recent filings with the U.S. Securities and Exchange Commission.

These statements speak only as of the date of this call and Agenus undertakes no obligation to update or revise these statements. All forward-looking statements are expressly qualified in their entirety by this cautionary statement.

When evaluating Agenus' business and securities, investors should give careful consideration to these risks and uncertainties. As a remainder, this call is being recorded for audio replay.

With that, I will now hand the call over to Christine who will review our second quarter 2014 financial results.

Christine Klaskin

Thank you, Jonae. Good morning, everyone, and thank you for joining us on today’s call. Some of the statements I will be making are also contained in our press release from this morning.

We reported a net loss attributable to common stockholders of $7.8 million or $0.12 per share for the second quarter of 2014, compared with a net loss attributable to common stockholders in the second quarter of 2013 of $11.2 million, or $0.40 per share.

For the six months ended June 2014, we incurred a net loss attributable to common stockholders of $8.5 million or $0.15 per share basis and diluted, this compares to a net loss attributable to common stockholders of $20 million or $0.76 per share basis and diluted for the comparable period in 2013.

The variants from 2014 to 2013 is primarily related to the termination of GlaxoSmithKline’s Phase 3 MAGE-A3 trial in non-small cell lung cancer, which they non-cash valuation adjustment to our contingent liability and also the inclusion of four antibody or new subsidiary.

Cash, cash equivalents and short-term investments were $62.8 million as of June 30. Based on our current operating plan and without any funding for potential corporate transaction we believe we have sufficient financial resources to fund our operations with the middle of 2015.

This concludes the financial portion of the call. Dr. Armen will now provide a corporate update.

Dr. Garo Armen

Thank you, Christine and Jonae. I am very pleased to report solid operational and scientific progress over the second quarter. As you may recall we began the quarter announcing that we signed our first major pharma collaboration in the checkpoint modulator field with Merck, a leader in this fast evolving field.

We believe our Retrocyte display technology has significant competitive advantages over other platform technologies and one of them is the potential to rapidly deliver fully human best in class monoclonal antibody development candidates.

Our platform is being utilized to deliver antibodies for two undisclosed Merck checkpoint targets. This broadens our exposure in the CPM field beyond our six existing target programs. As a result of this transaction we could receive approximately $100 million in milestone payments and additionally royalties on worldwide product sales.

Merck will be responsible for clinical development and commercialization candidates generated under our collaboration. During the quarter we also announced final results from a trial of glioblastoma multiforme or GBM. In this trial newly diagnosed patient treated with our prophage vaccine plus the current standard of care, live substantially longer then what was being reported in this disease with available treatments.

Specifically in our phase 2 single arm study the median overall survival was nearly two years roughly nine months better than expected. Patients receiving prophage also achieved a progression free survival of nearly 18 months which is about two to three times longer than those on traditional therapies.

These data suggest that the immune response against tumor antigen illustrated by prophage is translating into an extension in survival far beyond what is historically seen in patients with GBM. During the quarter, we also reported further promising results for patients with genital herpes with our therapeutic heat shock protein based HerpV vaccines.

More than half of the patients vaccinated with HerpV in this randomized double-blind multi-center Phase II study developed the robust T-cell response against the herpes antigens in the -- against the herpes antigens in the vaccine. These patients in home are vaccine activated the T-cell response in a significantly statistically significantly greater than 75% reduction the viral load.

Significant reductions in viral load have been associated with reduction in herpes outbreaks and also importantly reduction in viral transmission. We’re very excited with the outcome and look forward to identifying a pathway to regulatory approval for this potentially very important new treatment for genital herpes. And I am also really pleased to say that Agenus was selected for inclusion in the broad-market Russell 3000 index and Russell Global index. The Russell is widely used by investor investment managers and institutional investors for stock index funds.

Being part of the Russell advances our goal of broadening our shareholder base with institutional funds as we have done by the way in the first half of this year with a significant uptick in institutional ownership of our company. We continue to make solid progress advancing our novel checkpoint immune-oncology programs which is our main focus.

Bob Stein will speak more about this in a few minutes. Immuno-oncology was the frontend center at this year’s largest clinical cancer conference ASCO held in June. Our portfolio checkpoint modulators, heat shock protein peptide-based vaccines, and adjuvants place us squarely in the immune-oncology field with both compelling clinical data and sound scientific rationales for single agents and importantly, combination strategies representing real medical halt for patients and their families.

Our objective is to advance Prophage and HerpV with corporate partners and we are currently working towards this goal. We look forward to keeping you updated on our progress as in all of these areas, but I would like to end by mentioning that the portion of the call by commencing on the exciting QS-21 Stimulon milestone that we released this morning.

GSK and Agenus announced this morning that EU regulatory submission of the world’s first malaria vaccine candidate was accepted for review following completion of a successful Phase III trial. This is a significant milestone for us since this is the first QS-21 Stimulon containing vaccine to undergo regulatory review. This vaccine will be the first of its kind and is expected to save the lives of hundreds of thousands of children in Africa annually.

Where approximately 600,000 children die each year from Malaria, the regulatory submission triggered a milestone payment and we are also entitled to receive an additional milestone payment upon approval as well are royalties upon launch. QS-21 Stimulon is being currently evaluated as you know in 16 additional vaccine candidates undergone clinical study and is a potential source of capital for us for the development of our own pipeline particularly our checkpoint modulator product candidates.

And now I am pleased to turn the call over to Dr. Robert Stein, our Chief Scientific Officer for a review of the recent exciting research and development progress at our company. Bob?

Dr. Robert Stein

Thank you, Garo. I’ll begin with an update on our recent studies with Prophase and HerpV which Garo just mentioned and then I will focus on our checkpoint modulator portfolio progress. The Prophase glioblastoma multiforme data are very exciting because they represent a potential advance against this former brain cancer which has such a poor prognosis otherwise. In our Phase II study of our Prophage vaccine add into the standard of care for glioblastoma to meeting overall survival to significantly extended over what is expected to standard of care alone.

In our study, half of the patients live almost two years whereas the expectation with standard of care alone is about 16 months. We believe the Prophage has the potential to play an important role in treating glioblastoma which is the most common primary form of brain cancer. Prophage is an autologous cancer vaccine prepared from each patient’s own surgically resected tumor. The vaccine appears to help stimulate the patient’s immune system to attack the tumor based on our range of mutant proteins expressed by the patient’s tumor.

These proteins differ from patient-to-patient so the fact that the materials prepared from the patient’s own tumor is very important. Those patients in our study who showed less elevated expression of the checkpoint ligand PDL-1 on the white blood cells, had an even more pronounced response to Prophage. This suggests the combinations of Prophage with checkpoint modulators like PD-1 antagonist might further enhance the efficacy prophage in GBM. We have completed in end of phase 2 meeting with the FDA and it is our goal to advance Prophage in the phase 3 studies with the corporate partner.

Now turning to our therapeutic genital herpes vaccines HerpV, recent data that we reported continued to be quite encouraging, the majority of the 70 patients treated in our trial showed an immune response to our herpes genital after a series of HerpV vaccinations in a booster dose six months with more than half developing a clear and robust T-cell response.

Those statistically significant 75% reduction in viral load observed has a potential to reduce the instance severity and transmission of herpes. An estimated one and six Americans between the ages of 40 and 49 suffer from genital herpes, so this is a major public health issue. There’s currently no care for genital herpes and while available treatments are effective in reducing, shading and mitigating symptoms they need to be taken on a daily or frequent basis.

Our therapeutic vaccine holds a promise of generating more durable responses and the opportunities to lessen the frequency duration in severity of herpes out rigs and to reduce the risk of transmission. Our announcement generated board attentions, as with Prophage this is a program that we’d like to advance for the corporate partner.

Now turning to the fast moving field or checkpoint modulators or CPMs. I would like to prefer a summary of our pipeline with a quick premier. Checkpoints antibodies tumor stats for controlling cellular immune function, acting to stimulate rapid generation of immunity to invents its organisms and the shut off the immune response and or limit the damage with otherwise due to normal tissues.

The big real advances in cancer treatment come from the recent discoveries of how cancer cells can hijack inhibitory checkpoint processes to protect themselves against immune attack. These hijack checkpoint processes served protect cancer from immune attack by inhibiting lymphocytes and other cells are recognized them as abnormal and try to read the body of the cancer.

These recent IT (ph) sizes have let to generate of antibodies that modulate various checkpoint processes to treat patients with various cancers and infectious diseases. The results been achieved they are truly game changing. People with cancers would have just five years ago certainly have come (ph) or now in many cases showing miraculous responses, which often are maintained for a longer durations and in some cases lead to permanent cure.

This is true not only for melanoma but it is now been observed in lung cancer and it is expected to revolutionize the way that cancer patients are treated in the outlook for their long term survival. Combining more than one kind of checkpoint modulator it has produced even more compelling efficacy by more powerful activation of the immune system, but this greater efficacy can be associated with more severe and frequent immune mediate side effects.

Strategies to increase the degree to which the immune system recognizes individuals tumor as non-cell and directs this immune attack as a tumor have the potential to generate equal or greater efficacy while reducing this severity side effects by helping to end the attack more effectively at the tumor.

This is because of process of educating immune system to attack the tumor can lead to more direct recognition of tumor antigens as abnormal and therefore steer the immune system towards the destruction of the tumor. Our heat shock protein based cancer vaccine candidate is one real promising way to bring about effective immuno education and to teach the immune system to recognize or reject the tumors.

There is also need for powerful translational approaches that allow us to better characterize individual patients with respect to their immune system and their cancer. The need for such approaches was highlighted most recently at ASCO where data from CPM programs were key highlight of the conference.

Developing powerful translational approach as well, our better -- our choices of combination is, our checkpoint modulators and other immuno therapeutic interventions and determined whether or not a given course of therapy is on the way to effective tumor control, it needs to be modified. This is especially important because this responses don’t manifest themselves quickly it may take months to even a year to unfold and so it’s very important to understand how to select and modify the treatments appropriately.

To create best in class treatment options in immuno-oncology we need to select the right drugs, directed against the right targets and then carry off the appropriate clinical studies to have the best use of them in the appropriate patients. The deep experience of Agenus and our collaborators in the immuno-oncology field are guiding us as we try these complex waters.

The damage is in the unique position compare to other small biotech companies and to large pharma with our six pre-clinical programs advancing monoclonal antibodies block or activates specific and important checkpoint receptors, GITR, OX40, PD-1, CTLA-4, TIM-3, and LAG-3 this portfolio gives us the opportunity to advance CPM combination that have the potential to one, produce efficacy combined with a better side effect profile to combine powerfully with immuno education approaches, such as cancer vaccines, retail the choices of intervention to the needs of the individual patient to capture efficacy and reduce or avoid side effects.

Agenus, GITR and OX40 AG as antibody program along the leaders within this intensely competitive field GITR and OX40 agonist are expected to amplify specific T-cell responses with potential use for a range of cancers and vaccines also in combination with antagonists such as PD-1 and CTLA-4 antagonists. We believe the combinations of the two mechanisms will work in conjunction with one another and yield improved efficacy.

Targeting PD-1 and CTLA-4 has been demonstrated to take down the tumor shield, while targeting GITR, OX40 has a potential to enhance the immune response. Studying antagonist’s combinations is the next wave of existing research in a strong efficacy’s balance with the reasonable side effect profile, these types of CPM combinations can be individually retail through patients to produce, optimized clinical outcomes.

In closing, I would like to briefly mention our platform technology. We believe that we have a competitive advantage include our talented scientist and the Retrocyte Display technology which allows us to make optimized fully human monoclonal antibodies that have both the correct pharmacologic and pharmaceutical properties.

Well, our work advances with our six-preclinical CPM programs on schedule towards IND filing in 2015 to 2016 there are well over 50 additional checkpoint related proteins to explore and exploit still. Our Retrocyte Display platform will be applied to additional checkpoint related targets to enhance our portfolio. We can take advantage of the unique attributes of Retrocyte Display which attracted Merck as a partner seeking antibodies to their own checkpoint targets beyond the scope of our six programs.

Thank you very much. I’d like to turn the discussion back to over to Garo.

Dr. Garo Armen

Thank you, Bob. As you through our discussion through own efforts and through the efforts of our world class partners like GSK and Merck and additional partners that maybe fourth coming, we remain committed to advancing exciting new immuno therapy product candidates.

In less than three years, immuno therapy has become the most promising paradigm for the future of cancer. We believe that the company, we are uniquely positioned to help create a new generation of immuno therapies and immuno therapy combinations to dramatically improve outcomes for cancer patients. The field is new and we feel that over the last 20 years with all the experience and the tools that we have accumulated we will be able to deliver on this mandate.

We hope that you found this update helpful. And I will now conclude my remarks and turn it over to Jonae.

Jonae Barnes

Yes. Hi operator we can open up the call now for questions-and-answers.

Question-and-Answer Session

Operator

(Operator Instructions) And we’ll take our first question from Jason Kolbert from Maxim.

Jason Kolbert - Maxim

Hi, Garo and Bob. Thank you so much for the update and congratulation on all the progress. Can you just take a few minutes with me and kind of walk me through the dynamics of what happens next with the malaria vaccine and I know that we’ve been modeling -- sorry -- I heard that we’ve modeling a very modest single digit royalty back to Agenus, help me understand the timeline in terms of what Glaxo will do next. And when we think those royalties could actually start translating into revenues back to the company? Thanks.

Dr. Garo Armen

Okay. So as we mentioned Jason, the filing and the acceptance of the filing has trigged a milestone which is modest but in the millions and that milestone I believe has already been paid. In addition to that we will get a milestone when the product is approved by the AEU which is expected to be next year. So presumably upon product launch we will immediately start a growing and getting our royalty stream from them. But because of the target market even though this is a very, very significant indication we expect that our royalties, I don’t know if we’ve made any projections Jonae, but we expect reasonable royalty income from them, that will continue on for a number of years. And there maybe lineage (ph) of us able to monetize on that royalty streams ahead of time.

Jason Kolbert - Maxim

Garo, thank you and that’s great and I understand that. What I am really trying to understand is, how do we translate this into the product actually being launched, where it’s really needed in the Sub-Sahara African population and is there an approval dynamic there that has to happen after the European approval just what is that dynamic like?

Dr. Garo Armen

Okay. I am understanding Jason, is that the approval in Africa will be expeditious obviously once that you validate this application by putting its stamp on it. But it has to be done country-by-country but we believe that because of the important show this disease and the availability of the product, the local governments will not be holding this up for an extended period of time. Now Bob, if you would like to add any color on this?

Dr. Robert Stein

Yes. Thank you. Jason a couple of thoughts, one is that I think the biggest significance of this beyond milestone and royalties is the profound impact human public health in Sub-Saharan Africa as you point out. Literally this has the potential to save many hundreds of thousands of children’s eyes each year. We also see that it is significant because it is the first vaccine with our QS-21 as the foundation adjuvant that going for approval. And this is the tip of the iceberg with regard to GSK’s portfolio of vaccines containing QS-21, and this really validates QS-21 as an effective adjuvant platform, and it’s tested in 16,000 children in this particular study alone. And it has been tested in well over 30,000 people in their ongoing Shingles studies. So it is an indicator of things to come for QS-21. And then with regard to the rate at which this may become deployed in Sub-Saharan Africa, there is a pre-existing distribution system that’s being used for vaccination of children funded by the Gates Foundation and others, and which this may be than it may have a more rapid uptake than you might have expected that had to be totally built out from scratch. The general idea of the potential magnitude of the commercial side of this is by looking at the hepatitis vaccine sales.

Jason Kolbert - Maxim

Well, the hepatitis vaccine sales recently, when we talked about hepatitis, we always talked about big numbers, right? I’m just laughing at the Gilead’s launch and their numbers last night. Just one last question, because I know there are probably other analysts in the queue. Can you talk a little bit about what the next steps are in glioblastoma, particularly when we start talking about the checkpoint inhibitors, and you have this very dynamic portfolio with GITR, OX40, TIM-3, LAG-3, PD-1, CTLA-4; how fascinating to look at a combination trial that’s only going to enhance that we could say, or do you think the data is now good enough to try to begin going forward with a pivotal trial?

Dr. Garo Armen

Let me just give you a preface and then I want to ask Bob to get into the details. So with the publication and the announcement we made on the final study and analysis, we have seen a considerable level of interest by potential partners which wasn’t there before. So we are now in the process of defining our strategy, our next points, but suffice it to say, the next steps with glioblastoma will be in connection with a partnership, who will be able to bear the cost of the next steps in the context of trial that will result in registration. But your question Jason, was a little multifaceted because they’re may be different approaches to how we may be able to do this particularly in light of our checkpoint pipeline, and let me turn it over to Bob to address that.

Dr. Robert Stein

Thank you Garo. So Jason, I think it’s a very good question. My look at the data which has been quite hard and critical is that even though our study in newly diagnosed GBM is a single arm open-label study. It does look as if the addition of prophage to standard of care is extending the overall survival and progression free survival, and is also especially encouraging when we look at the tail of the Kaplan-Meier curve which looks to be fairly longer duration survival in a number of patients. So I believe that the product if studied in a phase III double-blinded standard of care controlled trial, would demonstrate sufficient efficacy for registration, in that context alone. I do believe that adding PD-1 inhibitor on top of it might enhanced efficacy that broadly are in the subset of patients that we believe we have a way to identify. And so we will be in the context of partnerships exploring all those options. Now question raises interesting possibilities because we have our own PD-1 program as well.

Jason Kolbert - Maxim

Guys, thank you so much for the update, and we just want to wish Jonae all the best of luck in her future endeavors.

Operator

We’ll take our next question from Ren Benjamin from H.C. Wainwright.

Ren Benjamin - H.C. Wainwright

Thanks for taking the questions and congratulations on the progress. I guess, just one follow-up from Jason’s question regarding the GSK announcement. Garo, you mentioned that the milestones already in place so, is that the lion share of the 3 million in revenues that was accounted for in the second quarter?

Dr. Garo Armen

I don’t believe were they accounted for it, but Christine, you would be in a better position.

Christine Klaskin

There are several items in that $ 3 million number.

Ren Benjamin - H.C. Wainwright

Can you help me understand the $3 million number and so…

Christine Klaskin

There’s actual revenue received and then there’s also some -- we have deferred revenue on the balance sheet that were amortizing over time. It’s also come into that number. And they were also included in our subsidiaries as well.

Ren Benjamin - H.C. Wainwright

And so just going forward this milestone that Garo mentioned in a couple of millions, we can expect that to hit the P&L, this is because it’s the third quarter, and then should we be expecting the amortization of these deferred revenues going forward for the remainder of the year?

Christine Klaskin

Yes.

Ren Benjamin - H.C. Wainwright

Okay, and I guess another question just one of the programs that I know you guys have started but didn’t mention on the call the Uruguay Prophage program, could you give us some color as to how that’s progressing and what the progress has been?

Operator

And it appears that our speaker Garo has disconnected and he will hopefully be dialing in shortly. And Garo is back on.

Dr. Garo Armen

Sorry about that we had a total communication mishap here but please if there was another question, please repeat the question having beyond what you’ve asked third party.

Ren Benjamin - H.C. Wainwright

Just regarding Uruguay Prophage study, could you provide any color on that ongoing study.

Dr. Garo Armen

Okay. So there is really not much to report and part of that is related to the fact that as you because of the rapid changes and advances in the field standard are changing as well very rapidly. And so we are reevaluating our position in terms of how we are going to move portfolio forward but let me have tell you a little bit more a visionary statement on what the plans are going forward.

Dr. Robert Stein

So as Garo referring to Uruguay alone is no longer looking the optimal standard care for melanoma patients and so we’re looking at modifying the protocol to take into account with the standard of care has suddenly shifted to be PD-1 plus CTLA-4 blockade. So in the, can’t talk to that trial but we’re looking at modified protocol design.

Ren Benjamin - H.C. Wainwright

Got it, okay. And I guess just regarding your programs and kind of upcoming conferences even preclinical data, can you give us a sense should we be expecting any preclinical data at any upcoming conferences.

Dr. Garo Armen

Just to be correct, the issue with all these programs is that our antibodies are directed against the human targets, we have lots of data with human cells studies in culture some of that is for our own purposes and with competitive advantage to keep those data to ourselves at this point and the models are generally directionally informative but not really a great value for the specific antibody programs and the six targets were working on it very well validated. So our main focus is just getting through and get them into the clinic and then will provide data

Ren Benjamin - H.C. Wainwright

Okay. And I guess just one sort of broad base question regarding, there quite a few programs, quite few companies all targeting a lot of the same targets, how do you envision sort of the future of your platform versus someone else’s platform that’s targeting the same exact targets, is it really going to be differentiated by the potential combination with the proprietary cancer vaccine or is there something else that’s in the landscape that will might be missing.

Dr. Garo Armen

I think you are right it is a very intensively attacked area by many companies. We have several advantages in that space I think we have a best in class platform for generating optimized antibodies that have not only the right pharmacologic properties but the right pharmaceutical properties which it will help them speed through development eventual commercialization. Two, we have the full spectrum of the six most important targets at this point and it’s going to be much more doable for us to combine them in different ways than it will be for many of the competitors that are in the full space. Three, we didn’t have the opportunity to use on top of our new education strategies and this is clearly turning out to be important. The big thrilling news at [indiscernible] is that when combined check point together you get really amazing efficacy we also get pretty scary side effects and learning to aim the immune response so that you can get to the same level attack on the tumor without as much attack on normal tissue is going to become increasingly recognizes important and I think that there is the beginning of the ground stalled interest again in cancer vaccines which will allow that immune education to turn more effectively.

So we also have the opportunity through recent arrangements to explore some of the by specific aspects which in some cases be important. And last pieces that is not just about having the right targets and the right compound is about doing the right clinical studies and we believe we have a very deep and real insight into the interaction between the immune system in cancer it will capitalize on in our translation approaches and innovative early development approaches.

Operator

And we’ll take our next question from Thomas Yip from MLV and Company.

George Zavoico - MLV and Company

Hi Garo its George Zavoico with MLV. Couple of quick questions regarding the GSK malaria vaccine, getting down that was detailed who actually will be the customer in Africa, will it be who will be government or pharmaceutical companies or will it demand on the country.

Dr. Garo Armen

That sounds like cost dollar routine, who will be the customer.

George Zavoico - MLV and Company

Moves on second, it is unfair.

Dr. Garo Armen

That will be the customer and [indiscernible] and others will participate in funding part or subsidizing part of it.

George Zavoico - MLV and Company

But the vaccine will be delivered to the patients through who and government or who is going to

Dr. Garo Armen

There is consortium that comprises over who and local entities as well as [Indiscernible] and those will be the ultimate parties responsible for the delivery as other vaccines are. I mean the vaccine, malaria vaccine will be administered in a regular schedule along with other vaccines that I routinely administer.

Dr. Robert Stein

It’s a profound public health issue and will be heading through the mechanisms that are in place to make sure that those therapies are prophylactic interventions are available to patients and people in the areas.

George Zavoico - MLV and Company

And the same year organization is also in terms of the price.

Dr. Garo Armen

That’s going to be a part of a negotiation between GlaxoSmithKline as well as the [indiscernible] And I think that negotiation George has been going on for some time now, but it hasn’t been publically disclosed.

George Zavoico - MLV and Company

Okay. And the vaccine if you just can give perfect the population between infants and young children, this submission includes both, right?

Dr. Garo Armen

Yes.

George Zavoico - MLV and Company

Okay, good. A question about the HerpV, Bob you mentioned that the decrease viral load of 75% in the population that had a response, what’s the range did you have some patients that had complete loss of viral load, no viral load or is it more tighter standard navigation around that 35%.

Dr. Robert Stein

I don’t think it is clearing virus entirely from anybody in the study that we will get, its closer to tighter variation, that’s a pretty good reduction, but we don’t see anybody being completely clear to the viruses study.

George Zavoico - MLV and Company

And you mentioned that reduces the risk of transmission and other complications I would imagine that it’s quite a significant reduction in risk but transmission are still possible though.

Dr. Robert Stein

That’s an inference because studies have been published recently which show that if you’re viral so it’s there still long time people believe that viral shedding influence the chance of transmission because there is some true recognize even when you don’t have visible outbreaks there are still viral shedding, but as the viral shedding is less than tend to look forward viral particles as sample that is associated with reduced transmission.

So it’s clearly not a binary event, it’s just reduces the chance of transmission.

George Zavoico - MLV and Company

Okay. And you wouldn’t be going forward with substantial reduction in risk that provides considerable economic and health benefits.

Dr. Garo Armen

We are looking for partners who would like to take it forward based on the data we’ve generated.

George Zavoico - MLV and Company

Okay. Final brief question, regarding the GBM you mentioned roughly in combination with PD-1, most of the development and as you said has been in other indication melanoma primarily lung cancer what is the experience with this checkpoint inhibitors in GBM to date that you are aware of?

Dr. Garo Armen

[Indiscernible] before Bob answers the question, you may be aware that Merck for example has 30 trials going on right now, testing their PD-1 molecule across a variety of indications.

Dr. Robert Stein

We can do that.

Dr. Garo Armen

Right. So the evidence is rapidly emerging, remember that three years ago the only gains in town was Yervoy and there was a widespread belief that Yervoy was going to be only active in melanoma and that one of the reasons was because melanoma is a immunologically so called responsive tumor so you have one agent and presume to be active to in one indication.

Now in the last two to and half years data generated suggest that you have multiple agent PD-1 PDL-1 are amongst them and anybody PD-1 and PDL-1 and you’re seeing activity across different cancers that were not believed to be immunologically sensitive, historically, such as lung cancer, such as bladder cancer and on and on and on. So when you talk about data being generated, it’s really work in progress and it’s happening on a real-time basis.

Dr. Robert Stein

And the companies that have clinical stage CPMs are starting to explore them in setting a brain cancer. It’s clearly not one of the larger indications as not where they are going first is their main focus. But in our studies, looking at the effects of our prophage vaccine in newly diagnosed glioblastoma multiforme, we did see that all of the patients with tumors of various subset of the group study, that all those that were studies show an elevation of the ligand for PD-1, called PDL-1 on their peripheral blood monocyte and correspondingly on tumor infiltrating macrophages. And if we segregate patients to look at those who have the highest levels of PDL-1 expression, they seem to have less of an interval response to prophage in those with lower levels of expression. And we know independently from data that were presented at ASCO that just the level of PDL-1 expression and peripheral blood monocyte isn’t a prognostic indicator in its own right. So it suggest to us that if we were to combine the PD-1 blockade with the immune-education strategy that prophage represents, we might take those patients with the higher levels of expression of PDL-1 and convert them to having a better response to prophage. So there is lots of rationale for it. It’s something we would like to include in the further exploration of prophage in GBM with the partner.

George Zavoico - MLV and Company

Okay, that provides a -- through a lot of rationale. It’s good, it’s very interesting data.

Robert Stein

Yes, it really is interesting. Every piece is but -- brain cancers can also express PDL-1 and sometimes PDL-2. There is also the immunosuppressive hijacking mechanism going on. And that’s another place for this may have a useful, quite intriguing.

Operator

(Operator Instructions) We will go to our next question from Nick Cooper with Edison.

Nick Cooper - Edison

This a quick question about your HSP platform. I know that you are very much focused on the checkpoint inhibitors, but given the curve graph and success in trials with your HSP, you are looking at ways at which you can monetize it further, I don’t know what most of you have had in chest from pharmaceutical point of interest in licensing technology that either it’s a possibility that you could further monetize the HSP vaccine platform?

Dr. Garo Armen

When you say monetize, what do you mean?

Nick Cooper - Edison

Generate more valuable from the vaccine so that you’ve got -- so what I mean is whether or not somebody else may use your platform to develop another treatment, we can suppose to be another virus for example, and then on the banker side you can earn royalties, milestones et cetera.

Robert Stein

I think that’s a good question, Nick, because I know that herpes results, what we see is several interesting things. We can clearly evoke a very strong T-cell response against antigens that we incorporate into the vaccine mix. And in this particular case they were against herpes simplex virus II peptides. But that same approach could be utilized for other viruses that are of medical significance and some obvious ones have come to mind, things like HPV or CMV. And those have a very good presence for suggesting that that approach might work, and we would love to take what we’ve learned in the context of HerpV and have it applied more broadly to bring progress against major illnesses. We are about to find a partner that is interested in taking that approach with us.

Nick Cooper - Edison

And I suppose, also potentially on the -- as a therapeutic vaccine for all cancers -- to sensitize the immune system to certain content and to the antigens.

Dr. Robert Stein

Absolutely.

Operator

(Operator Instructions) It appears there are no further questions. At this time, Ms Barnes, I would like to turn the conference back over to you, for any additional closing remarks.

Jonae Barnes

Great, thank you for joining us today. I would like to remind listeners that a replay will be available approximately two hours after the call through midnight Eastern Time. The replay number is 416-915-1035 and the access code is 49971. The replay will also be available on the company's Web site approximately two hours after the live call. Thanks again for joining us.

Operator

And this does conclude today’s conference. Thank you for your participation.

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