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Celldex Therapeutics, Inc (NASDAQ:CLDX)

Q2 2014 Earnings Conference Call

August 6, 2014 04:30 PM ET

Executives

Sarah Cavanaugh - VP of IR and CC

Anthony Marucci - President and CEO

Dr. Tom Davis - EVP and CMO

Dr. Tibor Keler - EVP and CSO

Chip Catlin - SVP and CFO

Dr. Ron Pepin - SVP and CBO

Analysts

Jonathan Aschoff - Brean Capital

Bret Holley - Guggenheim Securities

Mara Goldstein - Cantor Fitzgerald

Biren Amin - Jefferies

Joe Pantginis - ROTH Capital

Gena Wang - Leerink Partners

Christopher Marai - Oppenheimer

Stephen Bozak - WBB Securities

Operator

Good day ladies and gentlemen and welcome to the Celldex Therapeutics Second Quarter Financial Results. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. If anyone should require operator assistance during the conference, please press star then zero on your touchtone telephone. As a reminder, today’s conference is being recorded.

I would now like to turn the call over to Celldex. Please begin.

Sarah Cavanaugh

Thank you. Good afternoon and welcome to Celldex Therapeutics second quarter 2014 financial results and corporate objectives conference call. Before we begin our discussion, I would like to direct your attention to Slide 2 and mention that today’s speakers will be making forward-looking statements. Such statements reflect on current views with respect to future events and are based on assumptions and subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. Certain of the factors that might cause Celldex’s actual results to differ materially from those in the forward-looking statements include those set forth under the headings Risk Factors and Management’s Discussion and Analysis of Financial Condition and Results of Operations in Celldex’s annual report on Form 10-K, quarterly reports on Form 10-Q, and its current reports on Form 8-K, as well as those described in Celldex’s press releases and filings with the Securities and Exchange Commission.

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

Please be advised the question-and-answer period will be held at the close of the call.

I’d now like to turn the call over to Mr. Anthony Marucci, President and CEO of Celldex Therapeutics. Anthony?

Anthony Marucci

Thank you Sarah. Good afternoon everyone and thank you for joining us. Joining me today are Dr. Tom Davis, Executive Vice President and Chief Medical Officer; and Dr. Tibor Keler, Executive Vice President and Chief Scientific Officer; Chip Catlin, Senior Vice President and Chief Financial Officer and Dr. Ron Pepin, Senior Vice President and Chief Business Officer.

On our call this afternoon, we will walk you through several recent accomplishments, provide you an update on our clinical programs, review financial results for the second quarter and outline key objectives for the remaining of the year. And as always at the close of have prepared remarks we will look forward to answering your questions.

As we go to slide three, you can see that 2014 has been a significant year for Celldex. We have made tremendous progress on a number of key programs most probably our Phase III clinical trial of Rindo in front line glioblastoma.

Tom will walk you in more detail about the overall clinical program in a few minutes, but I want to take a moment to highlight the ACT IV trial. As we announced this afternoon, we are very close to closing screening for the study. When all of this is said and done, ACT IV will enroll 700 patients with EGFRvIII positive glioblastoma from more than 200 clinical sites across 22 countries. This is the most comprehensive study conducted by a biotech company in this orphan indication to date and by far the largest trial ever conducted in this subset of EGFRvIII patients with more aggressive disease.

While ACT IV will certainly be important for the future of Rindo, given its scope it will also be an important study for brain cancer field and especially for patients with vIII mutation.

I am very proud of our team at Celldex for their successful execution and extremely grateful to the patients, families and physicians for participating in the study. We will also have made considerable progress on ReACT, our Phase II study in recurrent GBM.

We completed the enrollment of Group 1 comprised of the Avastin naïve patients and the first cohort of Group 2C comprised of Avastin refractory patients. We anticipate presenting updated data from ReACT at year end.

As you know, behind the Rindo program, we have built an expensive stealth step pipeline at Celldex and as we wait for data from ACT IV we will advance the number of additional programs to and through key inflection points. You will see clear evidence on this later on the call when Tom reviews status of our current clinical programs and the initiation of an extensive numbers of new studies.

Before I turn the call over to Tom, let me hit on a few more important milestones reached in the last quarter and our outline on slide 4. We continue to add sites and patients through the metric study, our accelerated approval study of Glemba in triple negative breast cancer. The study now spans the U.S., Australia and Canada. In addition, we are on track to significantly expand the Glemba program in to a number of other cancers where Glemba’s target GPNMB is expressed.

In April, we announced the publication of positive data from the CDX-1401 program in a well-respected peer-review journal Science; Translational Medicine that suggests that this candidate activates the robust immune response to the tumor antigen NY-ESO-1 and may pre-disclose patients to better outcomes of subsequent checkpoint therapy. As Tom will discuss in a few minutes, we have finalized the protocol for the next study of CDX-1401 to further test this hypothesis and are on track to begin the study by year end.

Turning to slide five, we have also presented important data from the Varli program in June at ASCO. Varli continues to meet all our expectations, demonstrating a very favorable safety profile and clear signs of biological and clinical activity that directly supports our robust development plan moving forward, particularly in combination regiments.

To that end, in May this year, we announced our first quarter clinical trial collaboration with Bristol Myers Squibb to study Varli in combination with Opdivo or Nivolumab. This study is well positioned to initiate on schedule in the fourth quarter and there are also a number of other Varli combo studies in the queue with other collaborators as we continue to advance these programs towards initiation.

Finally, CDX-301 is beginning to play a more prominent role in our pipeline. We are very close to initiating the study in Hematopoietic stem cell transplant and recently the first patients were dosed in an investigator sponsored study of 301 and Hiltonol in combination with radiotherapy in low-grade B-cell lymphomas.

With that, I will ask Tom to dive a little bit more deeply into our pipeline before Chip reviews the numbers. Tom?

Tom Davis

Thanks, Anthony. I first want to echo Anthony’s comments as we near completion of screening in ACT IV. This study was a major undertaking, especially in the subset of more targeted population within an orphan disease. To provide some perspective, the only study that have surpassed ACT IV in scope to be conducted by major pharmaceutical companies for a large cooperative groups. And they have included all patients with GBM not just vIII positive patients.

Roche’s AVAglio study included 921 patients across 120 sites in 23 countries. The Radiation Therapy Oncology Group’s 0525 study enrolled 833 patients across 351 sites in 2 countries and their 0825 study included 637 patients across 289 sites in two countries. As Anthony mentioned, in total, ACT IV is enrolling 700 patients at over 200 sites in 22 countries.

The ACT IV study was designed to confirm our experience with Rindo in three prior Phase II studies. And to identify a clinically significant survival benefit including long-term survival of up to six months in patients with minimal residual disease or small tumor burden after surgery. That said we have overpowered ACT IV to be positive even with a more modest but still clinically meaningful survival benefit reflecting approximately three months. We’re confident that given the scope and time to [indiscernible] applied to ACT IV that we have positioned Rindopepimut as best we can for success.

In total, as we see outlined on Slide 6, 700 patients will be enrolled into ACT IV to reach the required 374 patients with minimal residual disease as assessed by central review. As I just said, the 374 patients with minimal residual disease and the patient population for the primary assessment of overall survival. All patients including patients with disease that exceed this threshold will be included in a secondary analysis of overall survival as well as analysis of progression-free survival, safety and tolerability, and quality of life.

We’re very close to closing screening in ACT IV. To date 4,034 patients have been screened and consistent with prior studies 30.2% have been EGFRvIII positive. 614 patients have been enrolled to date in ACT IV, and as expected and routinely seen in critical studies a significant number of these patients were enrolled in recent months. In fact, over a third of the patients in this study were enrolled in the last eight months. We expect to close screening in the next several weeks which will mean you have captured all the EGFRvIII positive patients required to complete enrollment and when the last patient is screened positive the study will be listed as closed to recruitments on clinicaltrials.gov.

I do want to note that formal randomization into the study for v3 positive patients occurs active patients complete the required standard of care chemo radiation, which can take between two to three months. When the final patients have formally randomized into the study after completing their pre-requisite chemo radiation we will issue a press release to mark this event likely in late Q4.

As for final data readout this study is event driven with the events being dead and we will be able to more accurately predict the timing for final data read out as we progress through interim analysis at 50% and 75% events. These interim analysis will be conducted by an independent data monitoring committee and are in place to assess the safety and potential utility or success of the study. They will result in communication of go or no go to the company based on predetermined hurdles.

They will not provide us with interim data readouts, the defining will certainly help us better asses expected final data. Right now we would estimate that the first interim would occur somewhere in the first half of 2015. We will certainly communicate the outcome of these assessments as they occur.

On Slide 7, we provide an update on ReACT our Phase 2 study of patients with recurrent EGFRvIII positive glioblastoma who are both naïve and refractory to Avastin. Enrollment to Group 1 comprised of 70 Avastin naïve patients and enrollments for the first cohort of Group 2C Avastin refractory patients is complete. Group 2C is designed as a two stage study evidenced of anti-tumor activity in the first 23 patients will trigger enrollment of an additional 50 patients. The reporting of updated data from Group 1 and the go no go on full enrollments to Group 2 will occur by yearend.

As we wait the data and analysis from the Rindo program our commercial team continues their works to prepare for potential approval and launch. Anthony is going to walk you through these activities. Anthony.

Anthony Marucci

Thanks Tom. The commercial team efforts are spread on five key areas as you will see outlined on Slide 8. First is defining the commercial opportunity in U.S., the EU and the rest of the world. The team has completed much of this work and we have received positive feedbacks on the Rindo product profile from key stake holders including physicians, pharmacists and payers. I will share some of the feedback from the slides in a moment.

Second is supporting a focused disease education platform that highlights the significant unmet medical needs in glioblastoma. The relationship between EGFRvIII status and four clinical outcomes and targeting EGFRvIII as a potential therapeutic approach. This work is ongoing through presentations at medical meetings, journal ads and digital media.

The goal here is to ensure that neurosurgeons, neuro-oncologists and pathologists understand the role of EGFRvIII as a prognostic marker, sees as a potential companion diagnostic target that may change standard of care for GBM patients and to actively test for EGFRvIII.

Turning to the development of a go-to-market business model and hiring plans for both the U.S. and the EU. We have completed this assessment in the U.S. and the EU work is well underway. The overall goal is to have an innovative highly focused and nimble approach introduced Rindo of smart future customers. Fourth is building a global product distribution model, integrating with comprehensive patients and provide service programs and support unencumbered appropriate and timely access of Rindo while supporting an efficient business model. This project is also currently in development.

And finally we’re currently working to establish a detailed payer and health technology assessment or HTA launch plan for both to U.S. and EU. As I mentioned we commissioned independent market research to evaluate physician, pharmacists and on the emerging Rindo product profile and aspects of the EGFRvIII set. The product profile was based upon meeting the OS and PFS requirements set in ACT IV. Our first assessment which we have shared in the past surveyed oncologists to treat GBM, key opinion leaders actively involved in GBM clinical trials and national and regional payers in the United States, the UK, Germany, France, Italy and Spain.

Focusing on physician feedback, as you can see on slide nine, when position respondents were asked about the likelihood to prescribe Rindo upon approval on a scale from 1 to 7, where 1 is least likely to prescribe and 7 is most likely to prescribe. We averaged over 6. Anecdotal feedback which is outlined on the right had side of the slide was also positive, both on the data itself and where the drug would fit in the treatment paradigm. We recently received data from a second largest study across Europe designed to capture more detailed insights. The primary research assessment included the UK, Germany, France, Italy and Poland with appropriate assumptions to extend findings to the EU27.

Now on slide 10, you will see that physicians in Europe generally expressed a strong enthusiasm for Rindo and anticipated using it in greater than 90% EGFRvIII positive patients irrespective of resection type. In GBM, given the aggressive nature of this disease, targeted therapies were seen as having a stronger mechanism of action versus broad based approaches. On the efficacy front meaningful improvements in OS and PFS remain the gold standard when physicians are assessing therapies for GBM treatment.

But Rindo performed as planned in ACT IV and meeting incremental survival benefit is viewed as robust and clinically meaningful in GBM. Finally, while efficacy was identified as a more important product attribute for GBM, physicians assessed Rindo safety profile also in a very positive view.

Payer and pharmacists feedback from both studies was informative and largely echoed the physician feedback. With regards to unmet medical need in GBM as well as Rindo’s target product profile. The fact that Rindo will be accompanied by a diagnostic test is viewed as important and positive feature by payers.

Overall the U.S. and EU payer feedback will allow us to profitably build a robust value proposition for Rindo in support of timely optimal access and reimbursement.

With that overview, I will hand the call back over to Tom to provide clinical update on the remaining programs. Tom?

Tom Davis

Next up is Glembatumumab Vedotin or Glemba on slide 11. In December 2013, we initiated METRIC, a randomized accelerated approval study in patients with metastatic triple negative breast cancers that over-expressed the tumor associated marker gpNMB. Our major focus here continues to be on opening sites with the goal of 100 sites across the United States, Canada and Australia. We are making steady progress on this front with 73 sites now open for screening.

Plan for the expansion of Glemba into other indications are also moving ahead. The protocol for the Phase II study in metastatic melanoma has been finalized and the study will be initiated by Celldex later this year.

Additionally, assay optimization and validation for the Phase II study in squamous cell lung cancer is expected to be completed by year end and this study will commence soon thereafter. Finally, we are pleased to announce that we have entered in to a Cooperative Research and Development Agreement, also known as CRADA with the National Cancer Institute on two additional studies with Glemba with room for further developments into other indications. As the NCI initiates these studies, we will update on their progress.

Next up for discussion is Varlilumab or Varli on slide 12. Varli is a fully human monoclonal antibody that targets CD27. In June, we presented data from the Phase I Varli program in two separate poster highlight session at ASCO.

Results presented included data from the lymphoid malignancies, dose escalation arm and solid tumor expansion cohorts in metastatic melanoma and renal cell carcinoma. Varli was very well tolerated and demonstrated clear biologic activity and promising signs of clinical activity in advanced, treatment-refractory patient populations, all of which provide the rationale for combinations studies with other ending modulating therapies.

We observed these effects at both low and high doses, but the biological endpoints in this study suggests that there may be a more potent activation of lymphocytes when they are intermittently exposed survival. Further, real clinical regression was seen at low doses.

You can think of this using a car analogy. We’re constantly readying the engine even when stops deplete fuel. A better approach maybe a more judicious intermittent acceleration potentially providing a more consistent progressive effect. We can achieve this with low doses given several weeks apart.

The next set of study is designed to determine the most efficacious regimens. Based on this mechanism of action and safety profile, we think Varli is the optimal candidate for broad-based combination studies with a full range of agents, including immune and molecularly targeted drugs.

To this end, as Anthony outlined, we entered into a clinical trial collaboration with Bristol Myers Squibb to evaluate the safety, tolerability and preliminary efficacy of Opdivo, the trade name for Varlilumab and Varli. We continue to make progress preparing for this study and remain on track to initiate it by year-end. While Celldex and BMS are sharing development costs, Celldex will take the lead in conducting this study. In June, we also announced a clinical trial collaboration agreement with Oncothyreon on a combined clinical trial of ONT-10, a therapeutic vaccine targeting the tumor associated antigen MUC1 and Varlilumab.

This study will provide important immunological data for ONT-10 and Varli in patients with breast and ovarian cancer and will be run and funded by Oncothyreon. The protocol for the Phase 1/2 study of Varlilumab and Yervoy with the additional use of CDX-1401 in NY-ESO+ patients was recently finalized and this study remains on track to begin recruiting patients by year-end.

Multiple efforts are ongoing to finalize designs and plans for a number of additional Phase 2 studies of varli and we’ll provide an update on these studies as they get closer to initiation.

Moving on to CDX-1401 on Slide 13, I just mentioned the combo study with varli. The inclusion of CDX-1401 in this study is the direct result of the long-term follow up with patients who went on to subsequent checkpoint inhibitor therapy after completing the Phase 1 study of CDX-1401. These data were published in the science journal Translational Medicine. And while the end was small the effect was striking. Of six melanoma patients that went on to Yervoy after completing treatment of CDX-1401 four head objective responses and one complete response.

In addition, two non-small cell lung cancer patients, who received investigations that block CD1 signaling within two months of discontinuing CDX-1401, were also reported to experience partial responses. We look forward to more fully exploring these observations in this next study.

Finally for CDX-1401, the NCI sponsored Phase 2 study of CDX-1401 and CDX-301 in patients with metastatic melanoma has opened to enrollment.

This brings us to CDX-301 on Slide 14. A potent hematopoietic cytokine that stimulates the expansion and differentiation of hematopoietic stem cells and dendritic cells. The investigator sponsored Phase 1/2 study of intratumoral injection of CDX-301 and Hiltonol in combination with low-dose radiotherapy for patients with low-grade B-cell lymphoma has initiated in the first patients who have been treated.

We anticipate the preliminary data from this interesting study will be presented this fall. As previously guided we also remain on track to initiate a pilot study of CDX-301 alone and in combination with Mozobil in hematopoietic stem cell transplantation in the third quarter.

This concludes our essential program updates and I will now turn the call Chip to review the financials for the second quarter.

Chip Catlin

Thank you Tom. I am now on Slide 15. For the second quarter of 2014, Celldex reported a net loss of $28.3 million or $0.32 per share for the second quarter of 2014 and $58.2 million or $0.65 per share for the six months ending June 30, 2014, as compared to a net loss of $19 million or $0.24 per share and $36.3 million, or $0.47 per share for the comparable periods in 2013.

R&D expenses were $24.1 million in the second quarter of 2014 and $51.2 million for the six months ended June 30, 2014, as compared to 15.1 million and 29.2 million for the comparable periods in 2013. The increase in Celldex's R&D investment was primarily due to the continued progression of our late-stage clinical development programs, rindopepimut and glembatumumab vedotin, and the continued expansion of the varlilumab program.

G&A expenses were $48.1 million in the second quarter of 2014 and $9.4 million for the six months ending June 30, 2014, compared to $3.4 million and $6.5 million for the comparable periods in 2013. The increase in G&A expenses was primarily attributable to higher personnel-related expenses and rindo and glemba commercial planning costs in 2014.

At June 30, 2014, we reported cash, cash equivalents and marketable securities of $252.4 million compared to $274.2 million as of March 31, 2014. The decrease was primarily driven by our second quarter net cash burn of $26.8 million, offset in part by a one-time payment of $5 million from BMS. We expect that our cash, cash equivalents and marketable securities will be sufficient to fund operating expenses and capital expenditure requirements through 2016. As of June 30, 2014, we had 89.4 million shares outstanding.

I will now turn the call over to Anthony to close.

Anthony Marucci

Thank you Chip. As you can see with a busy first half of the year behind us we will now be turning into an even busier second half supported by the initiations of multiple new studies the data readouts by yearend for ReACT.

To summarize on Slide 16, in the coming weeks and over the second half of the year, we anticipate completing the following milestones. Closing the screening and the enrollment of the final patient in ACT IV and for the ReACT study the reporting of data from Group 1 and a go or no go on whether or not to continue enrollment of additional patients in Group 2C for ReACT study. Continued site activation and enrollment of METRIC will also be a key activity. We also anticipate the initiation of the following studies by year end.

A Phase II study of Glemba in patients with metastatic melanoma quickly followed up by the initiation for a second Phase II in squamous cell lung soon thereafter. A Phase I/II combination study of Opdivo and Varli, the Phase I/II study of Varli and Yervoy for CDX-1401 in NY-ESO positive patients and a pilot study evaluating CDX-301 alone and in combination with Mozobil and Hematopoietic stem cell transplantation later in Q3.

Finally, we will continue to support the ongoing investigator sponsored Phase I/II study of CDX-301 and B-cell lymphomas and MTI sponsored Phase II combination study of CDX-1401 and CDX-301. With that review operator, we are now ready to open the call for questions.

Question-and-Answer Session

Operator

(Operator Instructions). And the first question is from Jonathan Aschoff of Brean Capital. Please go ahead.

Jonathan Aschoff - Brean Capital

I was wondering the unconfirmed PR with the renal cell patient at ASCO on 1127 is that a confirmed PR now?

Tom Davis

Hi, Jonathon this is Tom here, yes that is confirmed so that patient continues to response.

Jonathan Aschoff - Brean Capital

And Rindo recap date in late ’14, do you mean SNO or after the SNO conference.

Tom Davis

We are targeting the SNO conference, it’s too early to refer back on where things stand, but that would be our expectations.

Jonathan Aschoff - Brean Capital

Okay, two more. The Bristol still returned its data from the 1127 PD-1 trial will or will not be released or is it already clear to them that, that’s immaterial to Celldex?

Tom Davis

Yes it probably would be immaterial to Celldex.

Jonathan Aschoff - Brean Capital

And I think lastly, when you first said at the end of last year, greater than 450 for ACT IV did you have 700 in mind, I just think that they hired and I was thinking?

Tom Davis

Well Tom again. That’s a critical element and the total number is the potential patients who meet the minimal residual disease criterion. So our estimates suggested greater than 450 but we didn’t provide a specific guidance and so we were more confident. At this point we are very confident with that 700 number, it will be approximately 712 needed in the study.

Operator

The next question is from Bret Holley with Guggenheim Securities. Please proceed.

Bret Holley - Guggenheim Securities

I am just wondering the commercial front with Rindo with the service you’ve done, I am just wondering if you explored kind of the sensitivity analysis to the OS benefit. I think I said six month benefit they’d be highly enthusiastic and I am just wondering if you have explored like I said, like kind of a range of benefits and where there might be a cut off in sensitivity to or enthusiasm of patients using Rindo in VIII positive glioblastoma?

Anthony Marucci

So Brett this is Anthony. We did the sensitivity based on three to six months and the range sensitivity was we said greater than 90% at six months it was in the high 70s, low 80s even at three months, so we thought that the range was fairly hot.

Bret Holley - Guggenheim Securities

And then I guess one question I had is in the combo trials for Varli that you are planning, Tom, if you could mention the possible -- intermittent dosing of Varli would be possibly better and I am just wondering how you are incorporating that potential treatment paradigm into your plans for the combo trials.

Tom Davis

So that’s a standard. Any new combination needs to be tested with a dose escalation in some cases it can be quite a brief dose escalation but integral to the design will be a low middle and high dose and which is already studied. We know from our pharmacokinetic analysis that at the low doses of 0.1 milligram per 1 kilogram or 0.3 milligrams per kilogram, the half-life (Ph) with Varli is such that the drug will clear the circulation within the one to two weeks.

So by dosing every two to three weeks at that dose level, we should be able to provide that on off signaling type process that I described. And of course escalating up to higher doses, we will be saturating the receptor continuously at 3 milligrams and 10 milligrams. So we can have relatively large cohorts somewhere in the range of 6 to 10 at each of those dose levels and looking both within studies and across studies to determine whether it’s a low dose or the high dose appears to be more effective.

Bret Holley - Guggenheim Securities

I am guessing obviously whether there is any difference in tumor types and I guess the preclinical work that you’ve done I mean is there difference in hematologic versus solid tumors for example. I could imagine that use of certain combinations will be appropriate for intermittent dosing in certain tumors and then others that might be more appropriate to just go at it with a heavy hammer. So do you have any perspective on that?

Anthony Marucci

Single mechanism of action which focuses very much on activating immune system. And much of what we described has been based on the biologic and immunologic readouts from these studies with low intimating dose appears to provide a strong activation. Hematologic malignancies where we dual mechanisms both the immune mechanism and the direct ADCC effects to be perfectly reasonable as you imply to expect that the higher doses would be valuable, in fact there you may need a combination of the two high dose to initially induce and then converting to a lower intermittent dose to perpetuate the immune response.

So we’ll be doing a range of studies in different indications and trying to answer the questions you’re asking. But I do think that the biology is going to be very interesting as this Phase 2 program progresses.

Bret Holley - Guggenheim Securities

And then my last question, high level of enthusiasm kind of in the investor community about the potential for Yervoy and hematologic cancers. And given the fact that you actually seen one patient was incredibly high activity with varli. Are you thinking about that potential kind of avenue with that combination with Yervoy and Varli?

Tom David

Well certainly the response in the Hodgkin’s patients has led us to continue developing single agent in Hodgkin’s disease and a modest increase in size within different Phase 1 study. Yes we actually have been thinking about potential combinations, we are in discussions with Bristol around potential alternatives there. But at this point we’re not really able to discuss in any detail.

Operator

And the next question is from Mara Goldstein with Cantor Fitzgerald. Please proceed.

Mara Goldstein - Cantor Fitzgerald

Just a follow up on the ACT IV study, I thought I heard you say that you would expect that in the first interim to occur sometime in the first half of 2015. And would that be 50% of events, is that what you’re referring to?

Tom David

Exactly that’s the 50% interim.

Mara Goldstein - Cantor Fitzgerald

And does that include a utility analysis in that interim?

Tom David

It does, both in activity and utility analysis.

Mara Goldstein - Cantor Fitzgerald

And then just secondarily, if you could just ask an update on METRIC -- not METRIC rather more glemba and in terms of these other development programs? Will you be able to use the same sites and so with that enhanced site enrollment or site opening rather?

Tom David

Comparing glemba with varli, knowing that we’re working in melanoma in both heading, is that what you have in mind?

Mara Goldstein - Cantor Fitzgerald

No I am sorry, I was referring to glemba and these additional indications, as you look at starting trials in melanoma, lung cancer and you already got 70 plus sites open for METRIC.

Tom David

Yes we certainly can use the same sites, there would be just different investigators at the specific sites but the fact that we’ve already been the through the process of contracting approvals for one study will make it much easier to approve another study.

Mara Goldstein - Cantor Fitzgerald

And just on this on the CRADA with the NCI in uveal melanoma. Could you just sort of walk us through why that particular indication are you finding that gpNMB is very well expressed in uveal melanoma versus metastatic melanoma?

Tom David

Uveal melanoma is somewhat different disease from traditional metastatic melanoma and it’s characteristically is much more difficult to treat. We will particularly intrigue from our previous studies where we did see evidence of tumor shrinkage in patient with uveal melanoma which quite impresses the investigators who felt that it was worthy of pursuing in that specific indication. So as described we have interest investigators and we’re very pleased to be able to collaborate with NCI around this effort.

Operator

And our next question is from Biren Amin with Jefferies. Please go ahead.

Biren Amin - Jefferies

I have several on ACT IV, I think the company was previously expecting the first to occur at yearend 2014 versus I guess today’s guidance of first half 2015. Is there a read through into the event rate as far as how events are accruing in the trial? Thanks.

Tom David

What that means is that it’s taking us longer to get the events that could partly be related to what I mentioned about majority of accruals occurring in the last study. So there is hardly an impact there. But it certainly also means that events are little slower than we originally expected which I am not going to discuss at this point. There are several possible causes for that.

Biren Amin - Jefferies

And Tom how are you defining utility for the first center?

Tom David

Well there is a utility threshold defined by a Kaplan–Meier analysis look at the hazard ratio there. We’ve not only announced this specific threshold, but as the 50% were to be declared would effectively have to be a completely negative study.

Biren Amin - Jefferies

And then in your prior statements I think you were assuming six months estimate for OS. Why do you believe that you can achieve that say with a three month OS, especially given your final primary analysis is going to be based on 374 events?

Tom David

You probably know the calculations is actually based on a hazard ratio. So when we talk about those median survival numbers it’s somewhat deceptive. The calculation looks at the entire curve, both early and late differences between the control and the treatment arms. So, ultimately the hazard ratio of up to 0.79 would be able to detect a difference of three months at the median but it could also be positive if that median difference is even less.

So when we talk to physicians about this, we certainly include a little more detail around the net effect and as we’ve discussed before, we actually do expect the effect to be greater at the tail end of the curve, where very few of any VIII positive patients survive past three or four years that our curve has suggested up to 10% of patients could develop that long.

Biren Amin - Jefferies

And I guess a last question on Varli. Do you have any updated on the T cell lymphoma growth that you start enrolling earlier this year?

Tom Davis

So we are accruing to the T cell lymphoma group, it’s a rare disease so there are certain challenges that we have expanded to studies in incorporated sites that we think would be more effective after accruing those patients. At this point, we are not predicting exactly when we will have the total group accrued but we do believe that we will able to talk about it within the next 12 to 18 months.

Operator

And the next question is from Joe Pantginis with ROTH Capital. Please go ahead.

Joe Pantginis - ROTH Capital

You spent a lot of time with Rindo in the frontline setting. I was just wondering if you could add some more with regard to the ReACT study. Now, specifically, I am not looking to put words in your mouth but maybe if you can benchmark a little bit a potential with regard to response rates in both the naïve and the Avastin recurrent setting with regard to response rates in survival that might lead to an accelerated path.

Tom Davis

Well if you know Joe, the response rate that we saw in preliminary refractory group was approximately 15% which is a very respectable response rate in this patient population. But the difficulty of course with glioblastoma is that there is a certain amount of subjectivity in calling responses and we have [indiscernible] that issue. The trial is designed so that we continue to see a response rate tuned (Ph) to that we would expand a larger group and I do believe at the end of the day that we will have a clean 15% response rate that might be adequate to take to the FDA.

As far as survival goes, that’s a much more important endpoint in the randomized portion in Group 1. That is a small randomized portion with only 35 patients per arm. So if we were to meet this significance -- we would have to see a fairly significant difference. We’re recognizing that these patients only survive six to nine months; a difference of three to four months could probably be shown to be significant in this design. For the FDA, this significance is a very important endpoint whether or not Group 1 would be adequate for approval though is hard to predict because again it is quite a small study. We will be looking all the data and come up with comprehensive package and talk to the FDA to see if it’s adequate assuming we see that kind of data.

Joe Pantginis - ROTH Capital

Sure, sure. And if I could just switch gears to Varli for a second, I guess obviously there is so much excitement around these checkpoint inhibitors and immune activators and what have you. So I want to talk a little bit about safety profiles for quite as long time now whether their checkpoint inhibitors of the cancer immunotherapy or the vaccines or what have you, you know there has always been some -- if you want to call it a slow burn about some underlying concern even if it’s just minor about immune related adverse events.

So with that said, I wanted to get a sense of first, the patients on the Varli study right now how long are the long is patient is being treated for and do you get any feedback from the field specifically the medical community about any underlying concerns whether they’ve happened or not yet about immune related side effects?

Tom Davis

Well you certainly touched on a critical question from our perspective with most of the other activating approaches, immune related events have been seen predominantly in liver but elsewhere and that’s been seen with single agent treatment. Varli to date used as a single agent has not generated any clear evidence of immunity or immune related adverse events with one exemption, we did see one patient who may have had exacerbation of asthma, but that’s not typically considered to be the typical immune related adverse event you see with these programs, it’s not been seen with other checkpoint inhibitors or activators. So we are not quite sure what to make of that.

But essentially in the clinic we have no evidence of significant immune activation against itself and have such a great confidence that it’s safer and what’s been seen with other activators. We have done studies looking at the combination in animals, there we’ve not seen evidence of immune related adverse events and that gives us a confidence we will meet the combination studies we’ve described, but of course at the end of the day it’s the clinical data that will be most important.

Joe Pantginis - ROTH Capital

Sure. And then just to follow-up on that, just coming out of ASCO how long has treatment period been so far?

Tom Davis

We have treated patients for close to a year at this point. So they certainly have had prolonged exposure to Varli in some cases.

Operator

(Operator Instructions). The next question is from Gena Wang of Leerink Partners. Please go ahead.

Gena Wang - Leerink Partners

Follow up to previous question, just wanted to know for the rindo V ACT data, when you enroll, when you trigger additional 50 patients will you make announcements for that?

Tom David

Yes, when that addition is made we would announce expansion and of course we’ll be presenting the data behind it.

Gena Wang - Leerink Partners

And then switching gears, asking one financial question. Given increasing number of programs ongoing. Just wondering could you provide a rough R&D spending breakdown between various programs including rindo, glemba and varli.

Tom David

Well I would imagine as rindo completes the accrual that number will start leveling off and decreasing but there will still be spend, ‘15 and ‘16. Varli the program there will potentially increase higher if the accelerated approval study is positive and then would have to do the accelerated in the full Phase 3. But a good deal of cash loss that we spent on Varli as we spend on additional programs and expansion there. But it will be slightly offset by half the cost of the BMS collaboration being picked up by BMS, so that’s my thought.

That’s basically the breakdown there and then some dollars obviously being spent on the 1401 combination, 301 and then new programs coming online in ‘15.

Operator

The next questioner is Christopher Marai with Oppenheimer. Please go ahead.

Christopher Marai - Oppenheimer

The first maybe on glemba, I was just wondering if you could give us some color on the accrual in that METRIC study, where you stand right now? What your expectations for completion of enrollment are with respect to timeline? And then maybe how you’re looking at enrollment in the metastatic melanoma trials there. How many patients will those studies enroll?

Tom David

Trials start out slowly, clinical trials that has never really hit the ground with [indiscernible] accrual and that’s primarily because it takes time to get all the clinical sites open and we will announce the study is open accruing when the first patient comes in, subsequent six to eight months, most of the sites open up. So we’re still at the point where the sites are beginning to open. That said we’re seeing accrual ramp up as we would expect it to and we’re still predicting completion of accruals approximately at the middle of next year, but our ability to predict that will be much more accurate as we get close to that timeframe.

In melanoma and lung studies, our design to explore gpNMB expression in those diseases and correlate with outcomes as such the trials sites to accrue approximately 50 to 100 patients.

Christopher Marai - Oppenheimer

With respect to some of the new promising therapies in those indications, I am wondering how do you think that’s going to impact potential accrual in those studies. And then of course are you wondering or I am wondering actually if you are pending on potentially pursuing combinations of glemba with some other modules very compound to future particularly melanoma and lung cancer. And when those might start?

Tom David

There is a lot of activity both in melanoma and squamous cell lung cancer at this point, so it’s a prominent activity with checkpoint inhibitors. But the real focus for development there is on early stage patients who have had impact immune system and hope that you can produce long-term remissions.

As far as we’re concerned glembatumumab has potential to induce significant tumor reductions even in refractory patents that’s clearly what we saw in our previous studies. So our focus with this product would be in refractory patients, fourth line where there is still plenty of opportunities to approve patients and ultimately to get approval that reduces activity. So while you’re right some people consider crowded spaces, the specific positioning of glemba is such that there is still a very good opportunity and we don’t expect any problem in accruing and our investigators have certainly reassured us all that.

We do believe that glemba can induce immunologic type cell, so you’re to combine it with new modulators is fairly attractive. I think we do need to get some initial data on outcome in melanoma and lung cancer but next step would be to combine it with our own agents. I think Varli would be an obvious combination for us to pursue. And also combine it with checkpoint inhibitors and other agents that we take advantage of any data we can generate.

Christopher Marai - Oppenheimer

And then just finally with respect to 1401, there is a combination study with Dacogen in AML and MTS. I know that’s a sponsors study. But is that something that we may see data at ASH potentially?

Tom David

You are right that is an investigator-initiated study, where it collaborates with the folks in Rochester. It’s just beginning. So no, we’re unlikely to have data at the end of this year. It’s probably on a similar timeframe for all the studies where we’re talking about it again 2015.

Operator

The next question is from Steve Bozak with WBB Securities. Please go ahead.

Stephen Bozak - WBB Securities

My most questions have been asked but I want to go to slide 9 which is fascinating, the Rindo slide in terms of what the prescribers are likely to look at. On the universe that you went after, can you give us some kind of a feedback color as to what kind of a universe you are looking at as potential subscribers. Because obviously you are talking about the number of clinicians is probably significantly manageable and I have one follow-up question after that. So how does this slide related to the universe of prescribers, specifically in the United States?

Anthony Marucci

Well I don’t imagine that the prescribers here were mostly KOLs and PIs that are really how do we involved in this space. We went to experts both here and abroad so these were people that were very familiar not only with Rindo and Avastin and Temozolomide but other agents they are currently in the clinic and have been in clinic. So to see what they’re seeing as far as efficacy and safety was really impressive on their part.

Stephen Bozak - WBB Securities

Okay. So to rephrase, then you are looking at the high degree of comfort they have should see a significant trickle down or it should see a significant reinforcement to other potential prescribers without too much force or that…

Anthony Marucci

Right. And then also remember the drug is in combination with temozolomide and it still has a good 85% of the market, so the uptake there again is going to be pretty robust.

Stephen Bozak - WBB Securities

Last question then. I noticed that the UK acceptance is off the charts here and they are usually the most conservative and obviously they are always looking cost constraints and such. Can you tell me why they are close to a 100% in terms of on the KOL acceptance side and I will jump back in the queue.

Anthony Marucci

Well I think they just saw the benefit of survival and progression as well as the early uptake of titers now as we have been saying all along. In our previous studies, we’ve seen separation pretty early; we’ve seen higher response as far as immune response rates go and that has correlated to extended PFS and extended survival.

Then obviously the tail that they’ve seen from our prior studies is pretty impressive as well. So I think taken all that in together, they felt that with the disease is aggressive as this to see these kind of results is pretty impressive on it from their perspective.

Stephen Bozak - WBB Securities

Well, great I look forward to your execution on this, it is an impressive slide. Thank you.

Anthony Marucci

Thank you.

Operator

I’m not showing any further questions in the queue. And I’d now like to turn the conference back to Anthony Marucci. Please go ahead.

Anthony Marucci

Thank you Operator, and thanks everyone for joining us on the call today. We look forward to keeping you up to date throughout the rest of the year with our programs but as always we welcome your questions at any time. So please enjoy the last few weeks of the summer and have a great evening. Thank you.

Operator

Ladies and gentlemen, thank you for participating in today’s program. You may now all disconnect and have a great day.

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Source: Celldex Therapeutics' (CLDX) CEO Anthony Marucci on Q2 2014 Results - Earnings Call Transcript
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