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OxiGene, Inc. (NASDAQ:OXGN)

Q2 2008 Earnings Call Transcript

August 4, 2008 2:00 pm ET

Executives

Michelle Edwards – IR

Richard Chin – President & CEO

James Murphy – VP and CFO

John Kollins – SVP & COO

David Chaplin – Head of R&D and Chief Scientific Officer

Analysts

Terence Flynn – Lazard Capital Markets

Alan Leong – Biotech Stock Research

Operator

Good day everyone and welcome to the OxiGene second quarter 2008 earnings call. Today's call is being recorded. At this time I would like to turn the call over to Michelle Edwards.

Michelle Edwards

Thank you. Good morning and welcome to OxiGene's conference call. My name is Michelle Edwards and I'm part of the IR team at OxiGene. Today's call is being recorded and webcast. With me from the company are our President and CEO, Dr. Richard Chin; our Chief Operating Officer, John Kollins; our Chief Scientific Officer, Dr. David Chaplin; Chief Medical Officer, Dr. Patricia Walicke; and Chief Financial Officer, James Murphy.

If you've not received a copy of the accompanying press release for today's call, you can obtain one by visiting the company's Web site or calling OxiGene's receptionist at 781-547-5900.

I'd like to remind everyone that during the conference call, members of the OxiGene management team will make certain forward-looking statements regarding the company's future plans and anticipated outcomes that involve risks and uncertainties that may cause the actual results or outcome to be materially different from those anticipated and discussed on this conference call.

Factors that may cause such differences include but are not limited to those risks and uncertainties associated with the preclinical and clinical drug development processes. Please review the risks and uncertainties detailed in the company's annual report on Form 10-K for the year ended December 31, 2007, quarterly reports on Form 10-Q, and the company's other filings with the Securities and Exchange Commission.

Now, I'd like to turn the call over to OxiGene's CEO, Dr. Richard Chin.

Richard Chin

Thank you, Michelle. On behalf of OxiGene, I'd like to thank everyone for participating in today's call. After some brief introductory remarks, I'll turn the call over to Chief Financial Officer, Jim Murphy, who will review the financial highlights from the second quarter, and then to Chief Operating Officer, John Kollins who will provide an update on the clinical and corporate events of the quarter.

This quarter, we have continued to progress our clinical and pre-clinical programs and we have been particularly encouraged by the increased attention to the vascular disrupting agent by the medical community and the pharmaceutical industry as evidenced by the interest we've received at ASCO and other conferences this quarter.

As many of you know, vascular disrupting agents or VDAs represent a distinct new class of anti-vascular therapeutics that have utility for cancer, neurovascular ophthalmological diseases, and other conditions in which abnormal vascular growth and development play an important role in disease pathophysiology.

VDAs are distinct from anti-angiogenic drugs and as we've been the first in the field to show, it appears that they can be safely combined with anti-angiogenic drugs and the combination may deliver in half therapeutic benefits vis-à-vis with single-agent therapy.

Looking forward, we anticipate increasing momentum and complexity in our clinical program. And accordingly, we recognize the need to maintain tight focus on our corporate goals and objectives.

To this end, I have recently promoted John Kollins, who as you know is a very experienced executive, to the role of Chief Operating Officer. I'm very happy to say that he has already been adding great value in his new role.

John will be updating everyone in a few minutes on the clinical and corporate highlights. But first, let me turn the call over to our CFO, Jim Murphy, who will provide the financial highlights. Jim?

James Murphy

Thanks, Richard. I'd like to review the financial results we reported earlier today for the quarter ended June 30, 2008.

The company reported a net loss for the second quarter of 2008 of $7 million or $0.25 per share compared with a net loss of $5.4 million or $0.19 per share for the same period in 2007. For the six-month period ended June 30, 2008, the net loss was $12.5 million or $0.44 per share compared to a net loss of $9.3 million or $0.33 per share for the comparable period in 2007.

The increase in loss for both the three and six-month periods was driven primarily by a higher level of clinical development activities including the continued enrollment of both the Zybrestat pivotal registrations trial in anaplastic thyroid cancer and the Phase II trial of Zybrestat in combination with standard chemotherapy and bevacizumab for the treatment of non-small cell lung cancer, as well as the management of other ongoing clinical trials and drug development activities.

At June 30, 2008, we had cash, cash equivalents, and marketable securities of approximately $18.3 million compared with approximately $28.4 million on December 31, 2007.

Now for an update on our corporate and clinical programs, I'll turn the call over to John Kollins, our Chief Operating Officer.

John Kollins

Thanks Jim. First, with respect to corporate activities, I'm pleased to report that we've made significant progress in both corporate development and partnering initiatives. As we sit here today, I'm quite confident of our ability to substantively meet our objectives in this area and I'm looking forward to further updating you in the near future.

Second, and I'm mentioning this because we've had a couple of inquiries, the company held its annual meeting on July 23 and all proposals that have been set forth in the proxy were approved by shareholders. You can find details in the Form 10-Q that we'll be presently filing with the SEC.

Turning now to our drug development programs, the past quarters are results from all three of our VDA drug development programs being presented and well-received in clinical scientific meetings.

A couple of highlights, the results presented at ASCO in June from the Phase Ib-Zybrestat combination study with bevacizumab or Avastin in advance cancer patients were of particular interest because they suggested that the combination of these two anti-vascular agents which are very different yet complementary in mechanisms resulted in; one, prolonged tumor blood-flow inhibition; two, encouraging signs of clinical activity; and three, good tolerability and safety even with full-strength dosing of both drugs.

Now, this last point is unique because today, combinations of anti-angiogenic drugs studied in clinical trials have typically proven too toxic to permit full-strength dosing of both agents. Many oncologists with whom we’d spoken are very interested in employing polypharmacy anti-vascular therapy to more effectively deprive tumors of blood supply than would be possible with single-agent therapy. And to this end, they're excited about combining VDAs such as Zybrestat with anti-angiogenic drugs.

So, our ongoing Phase II trial in first line non-small cell lung cancer which we initiated in the first quarter fully built on the results of the Phase Ib Zybrestat lab study that I just described. This is a randomized and controlled study which evaluates standard first line non-small cell lung cancer therapy, bevacizumab plus carboplatin, paclitaxel, chemotherapy with and without Zybrestat.

We've had very positive feedback about this study and therapeutic approach from our investigators and as well as key opinion leaders in the lung cancer field, and our clinical development team is working hard to translate this enthusiasm into rapid enrollment on the study. As many of you are aware, non-small cell lung cancer represents one of the largest markets within the oncology field and there is a high unmet need for new drugs that can improve patient’s survival and outcome.

Zybrestat is as well being evaluated in the pivotal registration study under a special protocol agreement with the FDA as a treatment for anaplastic thyroid cancer or ATC, a highly lethal and rapidly progressive malignancy for which there is no effective treatment. In the future, we will be referring to this study as the FACT [ph] trial, the acronym FACT stands for fosbretabulin, the use-end name of Zybrestat and anaplastic cancer of the thyroid.

During the past quarter in the FACT study, we continued to enroll patients and initiate trial sites in multiple countries. We've now initiated over half of the approximately 40 plants trial sites in the United States, Eastern and Western Europe, India, Russia, and the Middle East and we anticipate initiating substantially all of the remaining sites in the current quarter.

As we near the conclusion of the start-up phase of the study in which our primary focus has been first getting sites and investigators up running and in the position to enroll patients, we’re shifting the focus of our activities to patient enrollment initiatives. We plan to provide an update of progress as we get further enrollment and (inaudible) from the entire network of clinical sites with further enrollment data from this first ever large scale study in ATC, we’ll be able to more accurately project future enrollment and if necessary, adjust to refine any of the study milestones.

While on the topic of ATC, I should also mention the data from the previously completed 26-patient Phase II single-arm Zybrestat monotherapy study in ATC were recently presented at the 11th International Head and Neck Conference in San Francisco. While this was a single-arm study, observations with respect to patient survival time, percent achieving stable disease, and duration of stable disease were highly encouraging.

With respect to safety, the Zybrestat was well-tolerated. These results are consistent with results observed in earlier Phase I and II studies in which Zybrestat demonstrated clinical activity against ATC including a durable complete response with monotherapy in a highly pretreated patient with advanced disease as well as against other types of refractory thyroid cancers.

Based on the overall clinical results achieved today with Zybrestat and ATC, and thyroid cancer, we continue to be very optimistic about the prospects for success with Zybrestat in the ongoing pivotal registration study.

The third ongoing Zybrestat oncology study is the single-arm Simon [ph] two stage designed study of Zybrestat plus the chemotherapeutic agents carboplatin and paclitaxel in platinum resistant ovarian cancer. There is a very high unmet need for new and effective treatments for platinum-resistant ovarian cancer as the therapeutic options for these patients are currently quite limited.

The therapeutic options that are available currently are basically second line chemotherapeutic agents and at best, they deliver only modest efficacy in the 10% to 20% response rate range and that efficacy is often gained only at a cost of significant toxicity that can detrimentally affect the patient’s quality of life.

In the ongoing Zybrestat study in this population, we continue to see very encouraging clinical activity which may, along with pre-clinical and earlier clinical results in ovarian cancer, support initiating a pivotal registration study or studies in platinum-resistant ovarian cancer as the next step in ovarian cancer. We anticipated that updated data up from the current study will be presented by the principal investigator, Dr. Gordon Rustin, who’s a well recognized gynecological oncologist in an international medical meeting in October and that will be in a position to report final results from this study in the first half of 2009.

Moving to topical Zybrestat for ophthalmological indications, we’re currently working to refine the overall plan and strategy for this program which if successful, could yield a breakthrough treatment for patients suffering from a variety of ophthalmological diseases and conditions characterized by abnormal neovascularization. As we finalize our plans, we’ll provide further updates.

Finally, with OXi4503, our second-generation VDA, we've completed the initial portion of the Phase I study in patients with advanced solid tumors and are undertaking some further dose ranging and determination work under a protocol amendment. As reported in the ASCO meeting in June, the OXi4503 shows tumor blood flow inhibition effects in patients and as well has demonstrated encouraging clinical activity.

Given OXi4503’s unique mechanism of action, we believe that selecting appropriate tumor types for further development maybe quite important with this drug. To that end, we’ve been undertaking supportive preclinical studies to help rationally inform future clinical development efforts with the drug.

Over the next several months, we’ll be presenting what we think are some very exciting OXi4503 preclinical data. Based on these data, we think OXi4503 has the potential to deliver significant benefits over current therapies for patients with specific or certain types of tumors. We’re looking forward to providing more detail about our plans for developing this exciting drug candidate.

In conclusion, we've made solid progress in all drug development programs as well as well as in our business initiatives. In my new capacity as Chief Operating Officer, I’m looking forward to continuing to work with the OxiGene team to help further accelerate that progress.

Richard Chin

Thank you John. With that, I’d like to open the call up for your questions.

Question-and-Answer Session

Operator

Thank you. (Operator instructions) Now we'll go first to Terence Flynn with Lazard Capital Markets.

Terence Flynn – Lazard Capital Markets

Hi, good morning. Thanks for taking the questions. First off, I’m just wondering if you are going to reiterate your guidance of interim data from the ATC trial in mid 2009 or if you think, given where we stand on a number sites and enrollment, that that might slip into later 2009.

Richard Chin

I’ll address that question and I'll ask John to further comment. At this point, we are still looking at enrollment data and we’re not in a position to make any changes to that timeline. John, do you want to –?

John Kollins

Yes. I forgot. I think that, as I've come on kind of stepped into the COO role, one of the things I’m doing is working with the team, looking closely at all the goals. To the extent there’s data that drives any adjustments, we need to get our hands around that data and make adjustments accordingly. But at this point, we don’t see a need to do that.

Terence Flynn – Lazard Capital Markets

Okay, great. And then just on the topical formulation, what do you guys think in terms of the number of months of additional preclinical work that might be required before you can actually get this thing into man? What are your kind of latest thoughts there? I know you said you’d update us at a later time, but can you just give a sense of perhaps how much additional pre-clinical work do you have left?

Richard Chin

That question of preclinical work done – we're making sure that we have the optimal strategy for adjusting to this very large market. So, at this point, we won’t be giving specific items, but what I think is that there's a lot of the excitement both among physicians as well as potential partners for ophthalmology program.

John Kollins

And just to amplify on that a little bit, Terence, I think it’s not really a question of how much more clinical or preclinical development we do. It’s really a question of what’s the best overall drug development strategy for that program that lets us get as much data pre-clinically in order to best inform us in the clinic and there’s a variety of options there and we’re getting expert input into how that strategy unfolds.

Terence Flynn – Lazard Capital Markets

Okay. Great, thanks so much for taking the questions.

John Kollins

Sure.

Operator

Thank you. (Operator instructions) We’ll go next to Alan Leong with Biotech Stock Research.

Alan Leong – Biotech Stock Research

Yes. Following up on the last questioner, how’s the penetration data looking for the ocular tablets versus the eye drops?

Richard Chin

The penetration data is looking very good. When you say tablets, I think you’re asking about the mini tabs that turns into a gel?

Alan Leong – Biotech Stock Research

Yes.

Richard Chin

They’re both looking quite good.

Alan Leong – Biotech Stock Research

And then, before earlier in the year, you talked about moving forward – continuing to move forward with the drug candidate out of Baylor University but I’m curious if maybe with your new – with having a more – talking about focus, well that’s just kind of put on the back burner [ph] for now.

Richard Chin

I’m not exactly sure which molecule you’re referring to. We do have a program at Baylor which may be – that I can't comment on – and several molecules that do look quite interesting.

David Chaplin

Yes, I can comment on that and clearly as of last year, we developed the 4503 and everything else at the VDA program. We fixed our focus to a couple of areas in terms of looking at drugs which will activate under certain conditions and also some anti-metastatic agents. And again, we’re taking those compounds through to a – lead compounds with in vivo activity. No decisions yet have been made to take those into a clinical setting.

Richard Chin

Now, those programs are very efficient in terms of how much they cost, so they don’t deferred a lot of resources away from our main programs. Now having said that, one of our – the most important thing that we’re focusing on is keeping our cash utilizations as low as possible and making sure that we put the resources towards our most important projects.

Alan Leong – Biotech Stock Research

Okay. Well, I look forward to talking with you all soon, and just on a final note, congratulations to John.

John Kollins

Thank you.

Operator

Thank you. And with no further questions in the queue, I’d like to turn the program back over to Dr. Chin for any additional or closing comments.

Richard Chin

Thank you. So, if there are no further questions, I’d like to thank our listeners for your support. Our goal is to bring out truly outstanding innovative drugs to patients and we’re making very good progress toward that goal. Thank you.

Operator

That does conclude today’s conference. You may disconnect your lines at this time.

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