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Executives

Shalini Sharp – Vice President and CFO

Garo Armen – Chairman and CEO

Analysts

Vernon Bernardino – Dawson James

Reni Benjamin – Rodman

Bryan Hares – Private Investor

Ernest Gabriel – Private Investor

Agenus Inc. (AGEN) Q2 2011 Earnings Call July 28, 2011 10:00 AM ET

Operator

Good morning. My name is Tracy, and I will be your conference operator today. At this time, I would like to welcome everyone to the Agenus Second Quarter 2011 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker’s remarks, there will be a question-and-answer session. (Operator Instructions)

Thank you. And I’ll now introduce and turn the call over to Ms. Shalini Sharp, Vice President and CFO. You may begin your conference.

Shalini Sharp

Thank you and good morning, everyone. Welcome to Agenus’ conference call to discuss the financial results for the second quarter and first half of 2011. With me today is Garo Armen, Chairman and CEO.

We hope that all of you have had a chance to review the press release that was issued this morning. During this call, we will review our financial results, as well as provide a corporate update. We will then open up the call to a Q&A session.

But before I continue, I would like to remind you that this conference call will contain forward-looking statements, including statements regarding the company’s cash position, timing of potential income streams and development and commercialization efforts, timelines, availability of data and potential efficacy with respect to products and product candidates of the company and/or its licensees and partners.

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

These statements speak only as of the date of this call and Agenus undertakes no obligation to update or revise the 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 reminder, this call is being recorded for audio replay.

With that, I will now review our financial results for the second quarter and first half of 2011. The company reported net loss attributable to common stockholders of $6 million or $0.05 per share basic and diluted for the second quarter of 2011, compared to a net loss attributable to common stockholders in the second quarter of 2010 of $5.2 million or $0.05 per share basic and diluted.

For the six months ended June 30, 2011, the company incurred a net loss attributable to common stockholders of $12.1 million or $0.11 per share basic and diluted, compared with a net loss attributable to common stockholders of $14.2 million or $0.15 per share basic and diluted for the comparable period in 2010.

The company’s net cash burn, which is cash used in operating activities plus capital expenditures and dividend payments for the second quarter of 2011 and 2010 was $4.2 million and $3.5 million, respectively. The 2011 net cash burn figure primarily reflects the company’s efforts to support the Prophage Series of cancer vaccines.

Cash, cash equivalents and short-term investments were $12 million as of June 30, 2011.

This concludes the financial portion of the call. Garo will now provide a brief corporate update.

Garo Armen

Thank you, Shalini. I would like to begin this call by highlighting the fact that many of the clinical programs that have been under development for several years by us and by our partners are making significant progress and continue to mature.

This is a very exciting time for the company as we could hit as many as eight upcoming milestone events reported in the second half of this year through 2012 and all of which obviously could be great value to us and to our shareholders.

We are excited to be participating in the advancing Immunotherapy field with several steps the potential success in many vaccine candidates utilizing our platform and technology in the advantage of clinics and several are getting very close to potential commercialization.

It is important also note that beyond our saponin platform of QS-21 Stimulon adjuvant and our recombinant common series platform, which is represented with HerpV for the treatment of genital herpes. Agenus is well-positioned with its Prophage series of vaccines prevent it from recent advances in the field of cancer immunology and cancer vaccines.

The FDA approval for Prophage and ponezumab which represents very important immune system modifying drugs, validate the fact that in addition to preventing disease, immune based drugs can be successfully used in the treatment of cancer.

To start, I would like to now give you a brief overview of QS-21 Stimulon adjuvant, which is a part of our saponin platform. Adjuvants are an essential part of an effective vaccine as it enhance the ability of a vaccine to elicit strong and durable immune responses.

Key licensees of QS-21 include GlaxoSmithKline and JANSSEN Alzheimer Immunotherapy, which is a division of J&J. The programs under development by our partners are advancing and data from Phase 3 clinical trials of three vaccine candidates for malaria and [MAGE IIIA] in non-small cell lung cancer and melanoma are anticipated to be released in the second half of this year, as well as during 2012. A Phase 3 vaccine program for shingles continues to rapidly advance in the clinic.

In addition to the GSK programs, J&J has a QS-21 containing vaccine candidate in Phase 2 trials for the treatment of Alzheimer’s disease. As you may be aware, next year pivotal data from ponezumab, an antibody which targets the beta-amyloid [peptide] may also boom during the next year, which would validate the pathway through which the HerpV vaccine containing QS-21 works.

I’m also pleased to report that during the quarter we announced a license agreement with Integrated BioTherapeutics for the use of QS-21 in the preclinical development of a vaccine against Ebola and Marburg viruses.

The vaccines containing QS-21 address large unmet medical needs and have the potential to be launched in many cases into multi-billion drug opportunities. In total, approximately 15 candidates containing Agenus’ QS-21 Stimulon adjuvant are currently in clinical development. Having favorable data, the first vaccine product containing QS-21 are expected to be launched in the 2013, 2014 timeframe.

We are in the unusual position of having the benefit of working with large pharmaceutical companies who are developing a diversified portfolio of clinical stage vaccines. As we have discussed here, these include four Phase 3 programs.

We have the benefit of these organizations providing their development capacity and after the products are launched, we have the benefit of substantial commercial organizations launching, marketing and selling these products.

It is an extraordinary luxury for a company of our size to be in a position to benefit from the outcome of these successes, which is potentially disproportional to the current value represented by our company today.

I will now discuss our Prophage series of vaccines. We are studying the Prophage Series G in two different settings of glioma. First, newly diagnosed and second, recurrent disease. Glioma is the deadliest form of brain cancer with an average survival of six to 14 months.

During the quarter, data from the Phase 3 – Phase 2 trial of Prophage Series vaccine, G-200 in recurrent glioma was presented at the 2011 ASCO annual meeting.

The key objectives of the Prophage Series G-200 Phase 2 trial were to evaluate the overall survival rate. Safety and of course immunological activity consistent with a tumor specific immune response were also measured.

The primary objective of the trial was to assess the survival rate at 26 weeks, which represents by the way, the average survival time for patients experiencing recurrence of their glioblastoma.

Results from this trial showed that 93% of the patients were alive at more than 26 weeks after surgery and a median overall survival of 11 months or seven to six weeks was obtained.

Importantly, measures of the immune response post vaccination with Prophage Series G-200 demonstrated a significant tumor-specific CD8+ T-cell response, as well as an innate immune responses as marked by significant increase in levels of circulating NK cells. These are the natural killer cells.

Promising all survival was up from this trial support an advancement of Prophage Series G-200 into a randomized Phase 3 trial using a combination of that. We anticipate meeting with the FDA in the fourth quarter of this year and based on this meeting and the outcomes of course and deliberations we plan on advancing G-200 into a randomized Phase 3 trial in 2012.

A Phase 2 trial testing the Prophage Series vaccine, G-100 in patients with newly diagnosed glioma is also actively enrolling. In this trial, G-100 is being used on top of the standard care, which includes Temodar, as well as radiation. It is believed that the efficacy of G-100 could potentially be enhanced during this combination or through this combination regimen.

During the third quarter, at least four additional investigative sites are anticipated to open for patient enrollment and the trial could include up to 10 prominent brain tumor research centers across the U.S. It is anticipated that this expansion would aid in advancing the program more rapidly to a potential late stage trial for regulatory approval.

In addition, Agenus in conjunction with UCSF is also working to initiate a Phase 1 trial testing the Prophage Series of vaccine NP-150 in pediatric brain tumors. The company continues to explore development and commercial partnerships for Prophage Series of cancer vaccines on both global, as well as a regional basis.

Lastly, I will discuss HerpV, our recombinant series therapeutic vaccine candidate for the treatment of genital herpes. During the quarter, David Koelle, a highly regarded doctor in the infectious diseases field, specifically herpes and a professor of medicine in the Division of Allergy and Infectious Diseases at the University of Washington School of Medicine, which is one of the leading centers of these types of diseases in the world, presented Phase 1 data at the BIO International Convention in Washington.

A manuscript on the full data set has been submitted to peer-reviewed journal. According to the centers for disease control, genital herpes affects more than 60 million Americans.

Our Phase 1 trial showed that 100% of the valuable patients receiving HerpV with QS-21 demonstrated a statistically significant CD4+ T cell response to HSV-2 antigens. In addition, 75% of these patients also demonstrated a CD8+ T cell response. I would like to note that list of both of these types of immune responses is the first of its kind achievement in herpes therapy.

(Inaudible) is the first to demonstrate that each had 14 complex survival antigens when used in antigen-specific T-cell response in humans.

Recent advances in therapeutic vaccines and immune-based products have helped validate that harnessing the power of the immune system could have far-reaching implications for diseases that have been historically very difficult to treat such as genital herpes.

Our company is currently defining a Phase 2 development program for HerpV, which is anticipated to include measuring a reduction of viral shivering in patients which is expected or which is regarded rather as a very important surrogate for clinical outcomes.

We hope that you found this update to be helpful. I will now conclude my remarks. We are now ready to open the call to Q&A.

Question-and-Answer Session

Operator

(Operator Instructions) Your first question comes from the line of Vernon Bernardino with Dawson James. Your line is now open.

Vernon Bernardino – Dawson James

Thanks for taking my question. Hello everyone. Just regarding the MAGE A3 data, I’m just wondering how and when will GSK announce the data and will all three be announcing at the same venue? Then lastly, who would Agenus received a milestone payment upon the announcement or is that when final data are announced?

Garo Armen

I will let Shalini to answer the question about the timing of the MAGE A3 data announcement, as well as any milestones associated with that program.

Shalini Sharp

Good morning, Vernon.

Vernon Bernardino – Dawson James

Good morning.

Shalini Sharp

So the timing of the data announcements from the MAGE A3 programs would be by the end of 2012 and there are two MAGE A3 vaccines that are in Phase 3 clinical trials for GSK right now. One is for adjuvant non-small cell lung cancer. The other is for adjuvant melanoma. So both of those would be by the end of 2012 and we do not yet know exactly in what forum those announcements will take place from GSK. Certainly, closer to the time, we will work together with them to coordinate our PR activities around these announcements.

In terms of milestone payments, our arrangements vary from partner-to-partner, but none of our agreements call for milestone payments upon announcement of Phase 3 data. So there would not be any milestones associated with that event.

Vernon Bernardino – Dawson James

Great. Thanks. If I could ask another question. How about the timing and what sort of data can we expect from the HerpV peer-reviewed journal publication?

Garo Armen

The HerpV paper has been -- in fact two papers have been submitted to peer-reviewed journals and we expect that they will be published as companion papers if you will. And I think that certainly will have happen by the end of the year and as the papers are in the review process and by and large all the questions are in the process of being answered.

Vernon Bernardino – Dawson James

I have another question but I’ll get back into queue. Thanks for taking my questions.

Operator

Your next question comes from Reni Benjamin with Rodman. Your line is open.

Reni Benjamin – Rodman

Hi. Good morning, guys, and thanks for taking the question. I guess maybe just starting off on QS-21. I mean, clearly the MAGE A3 platform or set of vaccines, the data for that will be coming out Shalini mentioned quite late in 2012. But the malaria vaccine I think will be coming out this year.

Can you give us an update on that and at least to me, it seems like this would be a very important proof of concept of validating event for the company, even if, let’s say the market size is somewhat limited. Can you talk a little bit about your thoughts regarding the next data point in the QS-21 program?

Garo Armen

Sure. I mean, one thing that I’d like to comment on is you maybe aware that we have restrictions on what we can and cannot say about specific timing of events as per our agreements with our licensees and partners.

Now, with the comments about the MAGE A3 program, the data they have announced, so we have the freedom to say this because they had made this announcement as recently as last week I believe that they expect data by the end of 2012. They haven’t said when it will be exactly, but they have said it will be by the end of 2012.

So it could be mid year, it could be at the end of the year but we’re not in possession of exact timing of that. With regard to the malaria program, I will refer to Shalini because, once again we have some restrictions as to the timing of things, but please.

Shalini Sharp

So, Reni, on the malaria program you’re quite right that the data is anticipated by the end of this year, beyond that, I don’t believe we have liberty to comment any more specifically on the timing. One other thing actually, just to go back to a question that Vernon had asked about milestones from GSK. I had forgotten to remind you all that we did do an agreement with GSK back in 2006 when we transferred our manufacturing technology know how to them and under that agreement, as we announced at the time, we had three milestone payments of $1.75 million owing to Agenus in December every other year.

So the last of those payments actually would be coming at the end of 2012 and December of 2012. So that’s not linked to the Phase 3 data announcement, but it is related to the GSK agreement. And then furthermore, beyond 2012 when there would actually be filings in major markets for approval and initiations of new late-stage trials, depending on who the partner is, there are milestones associated with those types of events, just not with the Phase 3 data announcement.

Reni Benjamin – Rodman

Okay. And then just regarding any thoughts you may have regarding the data that we may see with malaria, is it -- given that QS-21 is an adjuvant, is it a humungous leap of faith that if the malaria trial shows a significant boost in immunological activity that one would see the same thing in both melanoma and non-small cell lung cancer or is it vastly different given that one in an infectious disease versus something in cancer?

Garo Armen

Okay. So let me address this issue. There are obviously confusions out there about all of these issues and I’m glad that you asked this question. As you -- some of you may be aware, GSK as a company heavily invested in the field of adjuvant systems, which they denote with the acronym AS. If you look at, for example, public disclosures, they have a number of adjuvant systems as described by AS1, AS2, AS4, AS15 and so on.

Now, these adjuvant systems have been perfected over a long period of time, perhaps the last 15 years or so. And they have been perfected based on their ability to activate a powerful immune response both an antibody-mediated immune response but in many cases also a T-cell mediated immune response.

So the trials that have been done earlier trials and the fine tuning of this process of adjuvant systems has been based on optimizing immune response. For example, it is demonstrated that MAGE A3 vaccine does demonstrate or does have a powerful immune response to that target.

So to answer your question more specifically, Reni, the immune response is not specific to the disease. It is specific to the adjuvant system and the target. And thereby, the fact that the malaria vaccine will demonstrate a proof of principle is a strong vote of confidence, of course from an efficacy standpoint, not just from an immune response standpoint but an efficacy standpoint that QS-21 contained vaccines can achieve clinical outcomes.

Reni Benjamin – Rodman

And you bring up, I think a very interesting point regarding GlaxoSmithKline and their investment in adjuvant. Correct me if I’m wrong, I believe they acquired Corixa way back when for primarily their adjuvant platform as well.

Are you seeing or I’m seeing many requests regarding the QS-21 platform and I guess where I’m going with that is, are you actively seeking out new partnerships or getting inbound calls regarding this asset for you guys?

Garo Armen

The answer is yeah. We do get and as evidenced by our recent announcement of a third partner, we do get inquiries about this. And certainly, recent advances in the field of cancer immunotherapy, cancer vaccines and vaccines in general have sparked a fair amount of interest in the field.

Reni Benjamin – Rodman

Okay. And then just regarding the Prophage Series, I guess, I’ll ask the question this way. Can you sum up for us, just take us through the main milestones for the company that we should be looking for towards the end of the year, data presentations, you obviously mentioned publications of the HerpV vaccine but can you just maybe sequentially take us through what we should be monitoring?

Garo Armen

Certainly, so in terms of our glioma program, the recurrent disease program was presented at ASCO. We would expect that would also come in the form of a publication. And as I mentioned earlier, we will be having discussions with our advisors and the FDA in the second half of this year and based on those deliberations make a decision on taking the program to a pivotal Phase 3 trial.

Secondly, in the newly diagnosed patients, we’re in active enrollment. As I remarked, more centers are coming on board. This is a single arm trial as well but if patients do approach the two-year mark and if a significant number of patients in the trial seem to approach the two-year mark and go beyond it, many of the experts in the field and many of the clinical, as well as corporate advisors have made it clear to us that that would be attention getting even though it’s a single arm trial, the outcome for this disease is reasonably well defined. All patients die and all patients die within a reasonable short period of time.

So as the trial advances, we expect that our investigators in the second half of the year will provide updates at various conferences, which is what we have done in the past as well. With regard to potential other Prophage programs, we are trying to focus now our attention to making sure that we go on a path for approval.

As you recall, we had a set back a great number of years ago for unfortunate reasons with our renal cell carcinoma program, not because the vaccine wasn’t active but because the trial was a very long trial and the definitions of certain patient populations changed on us, not by us but by external experts that definition changed.

However, now we are concentrating on how do we get to the finish line and I think glioma offers that opportunity for us. In addition to glioma, as you know, Eculizumab got approval. And scientifically and clinically Eculizumab in combination with Prophage Series offers a very, very attractive synergistic capacity. And so we are exploring, obviously, it takes two to agree on something like this but we are actively exploring the possibility of doing combination trials where one may see a remarkable result in late stage patients.

So the emphasis of the company has shifted from doing long-term trials in earlier stage patients because those are too risky, given the time element involved to being able to do trials in later stage patients, particularly given the availability of new tools, approved tools that make our vaccines potentially more enabling in late stage patients. So combination trials and a pivotal trial in glioma are major areas of emphasis for us now.

With regard to HerpV, as you remarked, we do expect the publications to be out, certainly in the second half of this year. Also very importantly we’ve already met with experts in the field, the top people in the field and decided that it makes very high sense for us to take this program forward because of the unprecedented immunological results that we saw in the Phase 1 trial.

And the endpoints for the Phase 2 trial are very well defined as per the agreement by all of the -- consensus of all of these top experts. So the thought is if we show success with these endpoints, viral shivering to be specific, then the clinical outcomes would be very much more certain.

So working on that, the paper is coming out, but working on making that trial a reality so that we can initiate that trial sometime by the middle of next year is a very high priority and a very important milestone for us. And additionally, as we talked about the MAGE A3 milestones, as well as the Alzheimer’s milestones and the malaria milestones.

Reni Benjamin – Rodman

I think just one final question regarding the QS-21 royalties and milestones. And what -- is it safe to assume or maybe you can provide some color, just regarding the markets that the vaccines are addressing. Is it safe to assume that, if these three indications do hit their endpoints and are eventually approved that the royalty stream coming in would at least get you to cash flow neutral to potentially cash flow positive?

Garo Armen

I think that’s a very prudent question. As you know, our company has done a very good job of tightening both in operating and yet pursuing programs with a very modest annual budget. Our burn rate is around $15 million and if you do the arithmetic with these programs. For example, should the MAGE A3 program be successful, it will be a game changer for our company. We would become profitable very quickly because of the dollar amount that these royalties represent.

We have said publicly that our royalties depending on the product range from the low single digits to mid single digits and some of the earlier products are close to the high end of that range. And if you assume that the MAGE A3 program for non-small cell lung cancer will be addressing nearly 400,000 new cases a year between the U.S. and Europe alone and that MAGE A3 over expresses represent somewhere between 35% to 50% of that market very conservatively you can come up with a target market of 130, 140,000 patients a year.

And if you assume a penetration of a certain percentage of that, given the fact that particularly there are no approved drugs for these patients, so that’s another point of misunderstanding out in the marketplace and I had even physicians confused about this.

These are patients in the adjuvant disease setting. The standard of care for them is surgery and waiting. They are not treated with drugs. So, these drugs will be addressing a major unmet need and have no competition with other pharmaceutical products. So, if one assumes a realistic penetration based on the target market and add up the numbers it means a very significant income for us.

Reni Benjamin – Rodman

Okay. Thank you very much and congratulations on the progress.

Operator

Your next question comes from the line of Vernon Bernardino with Dawson James. Your line is open.

Vernon Bernardino – Dawson James

Hi. Thanks for taking my follow-up question. Regarding Prophage, this maybe a little bit on somewhat of a tangent. But regarding the use of vaccine (inaudible) in newly diagnosed glioma patients and the enrollment of the patients in the Phase 2 trial with Prophage on your G-100. Just wondering, I know standard of care is Temozol + radiation. But just wondering with the enrollment use -- are your investigators seeing and it is still off label, that is Avastin in the use of newly diagnosed glioma.

Are they seeing any difficulty enrolling those patients because standard of care is part of the design of the Phase 2 trial and your ideas on the future design and discussions with the FDA in newly diagnosed patients?

Garo Armen

Okay. So the answer is no to your question because remember we enrolled 19 patients from one center. Now we will have -- we have been opening up those to additional centers, so we don’t really anticipate any issues with that.

There is competition with Avastin in the clinical trial setting but Avastin is not widely used in first line patients. I believe the first set of results I expected on Avastin in first line patients sometime next year and we hope that our enrollment will be completed by then. So, we should not have that as a handicap.

Vernon Bernardino – Dawson James

Thanks for answering my complicated question. Thanks.

Operator

Your next question comes from the line of [Bryan Hares of Private Investor]. Your line is open.

Bryan Hares – Private Investor

Hi, Garo.

Garo Armen

Hello.

Bryan Hares – Private Investor

During ASCO, you had an interview with Dr. Parsa and Dr. Testori. And Dr. Parsa talked of getting funding for Phase 3 with four different consortiums, American Brain Tumor Association, National Brain Tumor Society, NCI and Accelerated Brain Cancer Cure. How is that developing, is that going to be our avenue of funding for Phase 3?

Garo Armen

Okay.

Bryan Hares – Private Investor

Or you’re going to need to go to partner that?

Garo Armen

Sure. Okay. Let me answer that question. As you know, we had a meeting or they had a meeting with the consortium. They presented the concept of a trial and the consortium was very enthusiastic about it. However, there is a, however, because whenever you work with consortiums, the collection of data and the record keeping and so on and so forth become critical because, as a commercial entity we need to make sure that everything is up to industry and regulatory standards and consortiums tend to be more interested in research, as they should be.

So, we are communicating with the consortium and their representatives because there’s genuine interest to do this. And question that will be resolved hopefully in coming months will be who does what and who pays for what?

So should we agree on doing a trial with the consortium? There’d be no reason to do a trial with the consortium unless we think there is a regulatory outcome that’s a possibility out of it.

Should we come to terms with it? It’s reasonable to expect that they will be underwriting some of the costs and in order to be able to inject industry standard processes and procedures, we would be underwriting some of it as well. But suffice it to say that if we do this with a consortium and come to terms, the overall costs of doing a trial would be significantly lower for us.

Bryan Hares – Private Investor

Good, good. And my next question goes back to HerpV. And it’s great that you have a robust innovation of the T-cell response in both the CD8 and CD4 and the Phase 2 is going to be concentrating on viral shedding. But my question is, how does viral load the amount of virus factor into this, are you seeing a decrease in viral shedding and viral load in the Phase 1?

Garo Armen

Okay. So we haven’t looked at it, Bryan, in the Phase 1. The objective of Phase 1, I mean there were some anecdotal cases that were explored and those results are sort of one-off situations. However, viral shedding according to the University of Washington Virology center people and other experts in the field, is the best and the most accurate surrogate for the number of break outs.

And so the number of break outs or the frequency of break outs would be ultimately the endpoint for regulatory consideration. But for example a fellow like [Larry Kori] who is now the President of (inaudible) Hutchinson has said publicly and privately that viral shedding is the most deduction in viral shedding days is the most important surrogate for predicting clinical outcomes.

And the reason we’re going to do this ahead of a potential Phase 3 trial is because if we see a viral shedding reduction of 30% to 50%. The clinicians and the industry regard this as being very significant and so once you see that in a let’s say 60% trial and this trial will be very quick, very, very quick, once you see that then you paid the way to do a randomized Phase 3 trial.

Bryan Hares – Private Investor

Now when you say very quick, like a year?

Garo Armen

18 months from the day it starts.

Bryan Hares – Private Investor

I didn’t understand, 12 months?

Garo Armen

No. 18 months from the day…

Bryan Hares – Private Investor

Okay.

Garo Armen

… that enrolling patients and that 18 months is a conservative estimate, it could be quicker.

Bryan Hares – Private Investor

I see. Okay. Good. My other question is ipilimumab got approval and we also know that it got a black box approval of basically 13% give or take, get an autoimmune response with the treatment of ipilimumab and its various things like ulcerative colitis Crohn’s type complications.

If you were to do a trial with ipilimumab and let’s say hypothetically it’s in the melanoma setting, would you target that trial more towards a stage 1 and 2 and stay away from stage 3 and 4?

Garo Armen

No. We would do stage 4, actually, a very good question. We would do stage 4, in spite of the black box warning, this product is likely to be, in spite of the pricing and the black box warning, it’s likely to be widely used only because there is nothing for these patients. There is nothing prior to ipilimumab that has shown a survival benefit and even though the survival benefit is modest, this is a very important drug, clearly a very important drug.

Now, in terms of the side effects, such as those that you mentioned like Crohn’s disease and other autoimmune reactions, the skilled physicians who are well prudent in understanding what this drug does and how it does it can manage that very well now. Because there are protocols established where you can immediately intervene and reduce the risk associated with these episodes.

What is not finalized from our perspective is what dose of the product do we -- does one use in connection with or in combination with a vaccine? Could we potentially use a lower dose? Yeah, we can potentially use a lower dose because as you may know, the inventor of ipilimumab has published a number of papers that suggest that ipilimumab in the absence of any ongoing immune response does not really do anything. So you must have an immune response for this product to work and the fact that it works as a single agent means that there’s an ongoing immune response in a certain percentage of these patients.

Now, if we can augment that and improve that immune response with the use of our Prophage Series of vaccines then one would expect to have better outcomes. So that will be the logic behind it and also, we have done some preclinical studies with CTLA-4 blocking agents and those studies have produced very favorable response results for the combination of the two.

Bryan Hares – Private Investor

Thank you very much, Garo.

Garo Armen

Thank you.

Operator

(Operator Instructions) Your next question comes from [Ernest Gabriel] he is a Private Investor. Your line is open.

Ernest Gabriel – Private Investor

Hi, Garo. Two questions regarding sanofi pasteur. Number one, they took the Acambis 4 over from Acambis. I was wondering, I haven’t seen anything where they’ve moved into a Phase 2 trial even though their Phase 1 seemed to be pretty successful. Do you have any -- can you give us any information on that?

Garo Armen

I think there needs to be clarification because this drug has -- is no longer being developed. So with the merger of Acambis and/or acquisition of Acambis with Sanofi, they’ve reevaluated their priorities and this has not been one of their priorities.

Ernest Gabriel – Private Investor

Okay. Thank you. Second one is Sanofi just came out with a new flu vaccine for type B flu in children. Is there any QS-21 in that?

Garo Armen

No. We have not worked so with Sanofi towards the development of any of their vaccines. So they do not contain. The partners that were mentioned are those which I mentioned, GSK, J&J, Pfizer, Elan Consortium and IBD.

Ernest Gabriel – Private Investor

Okay. You just finished your second Phase 2 for RCC. Do you have plans to resubmit to the EMEA at the end of the year?

Garo Armen

Okay. So if we have plans to submit by the end of the year, the answer is no. Do we have plans to submit or resubmit that remains an open question, it’s a question of resources and a local partner, local partner meaning a European partner that will undertake this responsibility of resubmission, re-submission of this sort is likely to be a $3 million deal.

Are we in a better position for reconsideration now than we were prior to the last submission? The answer is yeah, unequivocal yeah. But it’s a question of resources, not just money but also human resources and also the presence of a local partner. So this will be considered at some point but it is not in our near-term milestone radar screen.

Ernest Gabriel – Private Investor

Okay. Thanks. The last question is have you made any progress with a Russian partner?

Garo Armen

Yeah. The answer is yeah. We have stopped talking about it because I think people are tired of hearing about it, to be frank. But is that program yet the answer is no. We’ve had an unsolicited inquiry from a Russian partner. If you have been following the Russian landscape, there is a reemergence of interest in Russia in biotechnology and becoming players in the healthcare pharmaceutical field.

There’s a lot of activity by some local entities that didn’t exist a few years ago but they have been formed with the backing of the Russian government. So one of those entities approached us and said, you have an approved product, would you consider licensing this and so we are discussing this.

Ernest Gabriel – Private Investor

Thank you. At the moment has no question.

Operator

There are no further questions at this time. I turn the call back over to the presenters for any closing remarks.

Shalini Sharp

Thank you. I’d like to remind listeners that a replay will be available approximately two hours after the call through mid night Eastern Time on January 28, 2012. The replay number is 855-859-2056 or international 404-537-3406. The access code is 84271486. The replay will also be available on the company’s website approximately two hours after the live call. If you have additional questions after today’s call you may call us at 800-962-AGEN or 2436. Thank you.

Operator

This now concludes today’s conference call. You may now disconnect.

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