Allos Therapeutics, Inc. Q2 2008 Earnings Call Transcript

Allos Therapeutics, Inc. (ALTH)

Q2 2008 Earnings Call Transcript

August 5, 2008 4:15 pm ET

Executives

Derek Cole – VP, IR

Paul Berns – President and CEO

Pablo Cagnoni – SVP and Chief Medical Officer

Jim Caruso – EVP and Chief Commercial Officer

David Clark – VP of Finance

Analysts

Lucy Lu – Citigroup

Katherine Kim – Banc of America Securities

Thomas McGahren – Merrill Lynch

Mark Monane – Needham & Company

Glenn Hanus – Needham & Company

Jason Kantor – RBC Capital Markets

Krish Negody [ph] – Rodman & Renshaw

Presentation

Operator

Good afternoon ladies and gentlemen, thanks for standing by. Welcome to the Allos Therapeutic Second Quarter 2008 Results Conference Call. During today’s presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be open for questions. (Operator instructions) As a reminder this conference is being recorded today Tuesday, August 5, 2008.

I would now like to turn the conference over to Mr. Derek Cole, Vice President of Investor Relations. Please go ahead Sir.

Derek Cole

Good afternoon and thank you for joining us on today’s call. Joining me on the call are Paul Berns, President and CEO; Dr. Pablo Cagnoni, Chief Medical Officer; Jim Caruso, Chief Commercial Officer and David Clark, Vice President of Finance.

Following this introduction, Paul will summarize the Company’s second quarter activities. Pablo will then provide an update on our clinical development program. Jim will provide a brief commercial planning update and David will review the Company’s financial results for the first half of 2008.

We welcome your questions following Paul's remarks. As a reminder, this conference call is being recorded and webcast. The call may be accessed live on our Web site and will be available on our event archive for the next several weeks.

Before we begin, please be advised that during the course of this call, we may make forward-looking statements concerning our Company that are not historical facts. These forward-looking statements may include, but are not limited to, statements concerning our future financial performance, our future product development plans, timelines relating to our clinical trials, timelines for regulatory actions, the potential safety and efficacy of our product candidates and our plans related to the potential marketing and commercialization of PDX. Such forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties that may cause actual results to differ materially from those anticipated by the forward-looking statements. Additional information concerning these risks and uncertainties is contained in the Risk Factors section of the Company’s annual report on Form 10-K for the year ended December 31, 2007 and in the Company’s other periodic reports and filings with the Securities and Exchange Commission. The Company cautions investors not to place undue reliance on these forward-looking statements. All forward-looking statements are based on information currently available to the Company on the date hereof and the Company undertakes no obligation to revise or update these forward-looking statements to reflect events or circumstances after the date hereof except as required by law.

I will now turn the call over to Paul.

Paul Berns

Thank you Derek. Good afternoon and thank you for joining us on today’s conference call. It is a pleasure to update you this afternoon on what was a very productive quarter for Allos.

Under Dr. Pablo Cagnoni's leadership, our clinical development organization continued to make important progress advancing the product development of PDX in both hematologic malignancies and solid tumors. We have seven ongoing clinical trials evaluating the potential clinical utility of PDX including PROPEL our Pivotal Phase 2 trial of PDX in patients with relapsed or refractory peripheral T-cell lymphoma.

In April, we completed patient enrollment in the PROPEL trial a full quarter ahead of schedule. In May, we announced interim response and safety data from the first 65 evaluable patients in the trial. We remain on track to report top line results by year end, and after reviewing the trial results, we expect to submit a new drug application for PDX for the treatment of patients with relapsed or refractory PTCL as expeditiously as possible.

Now beyond PROPEL, we continue to advance patient enrolment in our other ongoing PDX trials. In June, we reported encouraging interim data from our Phase I study of PDX in patients with relapsed or refractory cutaneous T-cell lymphoma or CTCL. And additionally, in July we expanded our PDX solid tumor development program with the initiation of a Phase 2 study of PDX in patients with advanced or metastatic relapsed transitional cell carcinoma of the urinary bladder.

Our commercial organization led by Jim Caruso continues to advance our commercial planning and preparation for the potential future launch of PDX, should PROPEL produce positive results and we receive marketing authorization from the FDA. Additionally, we strengthened our balance sheet through an underwritten public offering of common stock which resulted in net proceeds of approximately $65.2 million for the continued execution of our PDX product development and commercialization plan.

In summary, we believe we are making significant progress in executing our corporate business plan including research and development, commercial planning and corporate resourcing. We continue to drive the development of PDX to achieve its therapeutic potential in multiple hematological malignances and solid tumors and look forward to the second half of the year.

I will now turn the call over to Pablo to review the status of our clinical development programs.

Pablo Cagnoni

Thank you, Paul, and good afternoon. I will begin by highlighting recent progress with our Pivotal Phase 2 PROPEL trial. I will then discuss additional advancements in our other clinical development programs before turning the call over to Jim. As Paul mentioned we currently have seven ongoing clinical trials evaluating PDX including our Pivotal Phase 2 PROPEL trial. As a reminder, PROPEL is an international multi-center, open-label single-arm trial designed to evaluate the safety and efficacy of PDX in patients with relapsed or refractory PTCL.

Patients receive 30 milligrams per meter squared of PDX once a week for six weeks followed by one week of rest per cycle of treatment. Patients also receive vitamin B12 and folic acid supplementation. The primary endpoint of the trial is objective response rate either complete or partial response which will be assessed by central independent oncology review. Duration of response is the key secondary endpoint.

All patients involved in the trial will continue to be followed for long-term survival. Notably this is the largest perspective of the designed trial of a single agent in this patient population. Since initiation of the PROPEL trial in August of 2006, we continue to achieve our planned clinical milestones. In April of this year, we completed patient enrollment into trial, a full quarter ahead of schedule with more than 100 evaluable patients enrolled and 31 medical centers participating in the US, Canada and Europe.

In May, we reported interim response and safety data from the PROPEL trial. 29% or 19 of the first 65 evaluable patients involved in the trial experienced a complete or partial response as assessed by independent oncology review. 45% or 29 of the first 65 evaluable patients experienced a complete or partial response as assessed by the PROPEL investigators. Patients were continually valued if they received at least one dose of PDX and the diagnosis of PTCL was confirmed by independent review. The median duration of response for this patient could not be estimated due to the current length of follow up. The most common drug related grade 3, 4 adverse events were mucositis and

thrombocytopenia which were observed in 14% and 23% of patients respectively. Significantly these patients had received a median of free prior treatment of regimens.

Looking ahead, we anticipate reporting top line results from the PROPEL trial by the end of 2008. Following our review of the trial results, we expect to submit a new drug application for PDX for the treatment of patients with relapsed or refractory PTCL as expeditiously as possible. The PROPEL trial is being conducted under an agreement which with the FDA under its Special Protocol Assessment or SPA process. This process allows for the FDA evaluation of the clinical trial protocol intended to from the primary basis of an efficacy claim in support of a new drug application and provides an agreement that the trial design, including trial size, clinical endpoints and data analysis are acceptable to the FDA.

The response rate, duration of response and safety profile required to support FDA approval are not specified in the PROPEL trial protocol and will be subject to FDA review. Beyond PROPEL, we are currently conducting three clinical trials in other hematologic malignances which we expect to provide further insight into the clinical and commercial potential of PDX in this indications.

In June, we announced the presentation of interim data from our Phase 1open-label multi center study of PDX in patients with relapsed or refractory CTCL at the 10th International Conference of Malignant Lymphoma in Lugano, Switzerland. Data were presented on 17 patients including 14 evaluable patients who completed at least one cycle of treatment with PDX at doses ranging from 15 milligram to 30 milligram per meter squared as part of the weekly schedule for two or three weeks followed by a week of rest.

Patients received a median of three prior systemic therapies. Investigator-assessed response were observed in 7 of 14 evaluable patients or 50% including two complete responses and five partial responses. Notably, the responses are observed in all four treatment cohorts. The most common adverse event was mucositis with Grade 2 mucositis observed in seven out of 17 patients and Grade 3 mucositis observed in two of 17 patients. There were no Grade 4 toxicities and no thrombocytopenia above Grade 1.

During the quarter, we also made important progress with our PDX solid tumor development program. We continue to advance patient enrollment in our Phase IIb randomized multi-center study comparing PDX and erlotinib in patients with Stage IIIB/IV non-small cell lung cancer which were initiated in January of this year. In this study, patients will be randomized one to one to either PDX arm or the Tarceva. Phases randomized to the PDX arm will receive PDX as an intravenous push administered in days one and fifteen of a four-week cycle. Initial dose of PDX will be 190 milligram per meter squared, which based on defined criteria may be increased to 230 milligram per meter squared or reduced in 40 milligram per meter squared decrements.

Patients randomized with Tarceva arm will receive Tarceva 150 milligrams per day orally, daily for the four-week cycle. Phases in both arms will receive concurrent vitamin therapy of B12 and folic acid. We are pleased with the progress we’ve made in expanding investigator interest and patient enrollments in this study since its initiation, and based on our current enrollment and enrollment rate, we expect to complete patient enrollment in this study in the second half of 2009.

We also expanded our PDX solid tumor developmental programs through initiation of patient enrollment in a Phase II open-label, single-arm, multi-center study of PDX in patients with advanced or metastatic relapsed transitional cell carcinoma or TCC of the urinary bladder. The primary endpoint of the study is objective response rate which includes complete and partial responses. Secondary endpoints include duration of response, clinical benefit rate, progression-free survival, overall survival and the safety and tolerability of PDX. The study will seek to enroll approximately 41 patients in up to 20 investigative sites worldwide.

We continue to be encouraged by the progress of our PDX development program. Based on PDX as rational design for improved uptake and retention in malignant cells, we believe PDX has potential across multiple indications in both hematologic malignancies and solid tumors and we will continue to evaluate the potential clinical utility in these indications. To conclude our clinical development update, RH1 is a novel small molecule chemotherapeutic agent that we are evaluating in a Phase 1, open-label, multi-center dose escalation study in patients with advanced solid tumors or non-Hodgkin's Lymphoma. We plan to enroll up to 60 evaluable patients in the study with the objective of determining the maximum tolerated dose recommended Phase 2 dose and safety profile of RH1 in this population.

With that, I will now turn the call over to Jim who will provide an update on our commercial planning efforts.

James Caruso

Thank you, Pablo. Based on PDX’s unique mechanism of action, along with the clinical experience to date we believe that PDX has the potential to play a clinically meaningful role in the treatment of T-cell lymphoma patients. At present, there are no pharmaceutical agents approved for use in the treatment of either first line or relapsed or refractory PTCL, and this fond the need for new therapies to treat patients with aggressive T-cell lymphoma.

In the United States, we estimate that peripheral T-cell lymphomas or PTCLs account for approximately 10% to 15% of all cases of non-Hodgkin’s lymphoma and estimate the current annual prevalence of PTCL at approximately 9500 patients. The potential future launch of PDX for the treatment of patients with relapsed or refractory PTCL is a first to market opportunity for Allos. In preparation for a prospective launch, we remain focused on detailed product development and commercialization planning as well as execution. We continue to advance key market research activities such as brand, product, name and positioning market dynamics, customer’s segmentation as well as pricing adoption work. Importantly, in our preliminary market research all participating NHL physicians reacted favorably to the essential independent review response rate of 29% and the 45% investigator response rate reported for the first 65 evaluable patients from the PROPEL trial.

We believe this product profile will support PDX trial use and adoption. We also continue to drive important commercial infrastructure activities such as sales for structure sizing and optimization, customer relations and management systems and are establishing our special free distribution channel which we plan to have in place prior to the potential launch of PDX.

Our objective is to build a high performance oncology sales and marketing organization to help us achieve an appropriate share voice with key treatment decision makers and providers. In our view, US oncology market space is highly scalable with a significant number of PTCL patients treated at large cancer centers as well as institutions. Outside the US, we continue to evaluate strategic partnership opportunities that we believe are in the best interest of our Company, patients, customers and shareholders. Importantly, Allos retains exclusive worldwide rights to PDX for all indications.

With that overview, I will now turn the call over to Dave Clark for our financial review.

David Clark

Thank you, Jim. For the quarter ended June 30, 2008, we reported a net loss of $11.8 million or $0.15 per share. This compares to a net loss of $10.4 million or $0.16 per share for the second quarter of 2007.

R&D expenses for the quarter ended June 30, 2008 were $5.4 million as compared to $4.4 million for the same period last year. This increase was primarily a result of increased clinical trial cost due to our expanding development program for PDX. For the sixth month ended June 30, 2008, we reported a net loss of $23.8 million or $0.34 per share compared to a net loss of $18.8 million or $0.29 per share for the same period last year.

For the six months ended June 30, 2008 net cash used in operating activities was $19.5 million. In May, we closed an underwritten public offering of 12,420,000 shares of common stock at a public offering price of $5.64 per share resulting in net proceeds of approximately $65.2 million.

As of June 30, 2008 our cash, cash equivalents and investments in marketable securities totaled $106.5 million. We expect that our cash used in operations for fiscal year 2008 will approximate $45 million to $49 million, an increase from our prior guidance of $42 million to $46 million. This increase is expected to primarily relate to additional investments associated with our clinical and preclinical development program, pre-commercial scale of the manufacturing and preparations for the potential commercial launch of PDX.

With that I'll now turn the call back to Paul.

Paul Berns

Thank you, David and before we move into the Q&A portion of today’s update, I would like to take the opportunity to thank all of the individuals who have been instrumental in helping us advance our clinical development programs especially the PROPEL trial. We gratefully acknowledge the investigators and patients for participating in the PROPEL trial and for their important role in helping to evaluate the safety and efficacy of PDX for the treatment of relapsed or refractory peripheral T-cell lymphoma, a disease for which there are currently no approved treatments. We believe that PDX has the potential to offer a new treatment option for patients with this challenging disease and look forward to reporting top line results of the trial later this year.

In summary, we are pleased with the advancements we have made in the first half of 2008. We have achieved several significant milestones further advancing our PDX development program in both hematologic malignancies and solid tumors, in particular the initiation of the lung and bladder cancer studies. We believe we have established a strong foundation for continued progress throughout the remainder of 2008 and into 2009, and look forward to updating you on our progress.

With that I will now turn the call over to the operator for your questions. Operator?

Question-and-Answer Session

Operator

Thank you, sir. Ladies and gentlemen, we will now begin the question-and-answer session. (Operator instructions) Our first question comes from the line of Lucy Lu with Citi group. Please go ahead.

Lucy Lu – Citigroup

Great. Thank you. Actually can you just please talk about the advanced or metastatic relapsed transitional cell carcinoma of the urinary bladder? I wanted to understand better in terms of the patient number that falls in this segment, what options they have today and can you talk about in general what the options they have today? What kind of response rate you typically see in the clinical setting, and what’s their survival (inaudible) basically, and lastly how did you decide on the dosing regimen for this study? Thank you.

Paul Berns

Sure Lucy, it’s Paul. Thank you for joining us and I think what I’ll do is take your take your – take that in reverse order and have Pablo speak about current treatment options that exist today, speak to some of the decision making that went into our enthusiasm for the evaluation of PDX in this setting and then have Jim answer the question on addressable market size and potential there, so Pablo?

Pablo Cagnoni

Yes. As we decided to start rolling out this ultimate program for PDX last year, we decided to start with a large market opportunity, a small market opportunity in a more niche area. So, that’s why we rolled out the lung program last year and the bladder program this year. Admittedly bladder is a smaller commercial opportunity than lung. However, there are number of reasons why we thought it was very attractive. Number one, there is a lot of historical data about the efficacy of metastatic in patients with bladder cancer. For many, many years the standard treatment for this disease was the MVAC regimen the ‘M’ being methotrexate in the regimen. So, that’s number one. Number two, there is data published with the predecessor PDX called (inaudible) showing a much less important predecessor PDX such as to say called (inaudible) showing a 25% response for any patient with relapsed bladder cancer. Three, the fact that there is nothing approved for patients that failed first time chemotherapy with bladder cancer. The two main options in first line are the MVAC regimen or gemcitabine and cisplatin combination. There are roughly equivalent in terms of efficacy with the (inaudible) combination of being a little bit better tolerated. There is nothing approved in second line. The more recent data that’s available is probably the data with Alimta was published a couple of years ago in Journal of Clinical Oncology showing a response of about 30%. No registration was pursued with Alimta and that we know of, there is no ongoing registration of trial with Alimta. So, response rate in the range of 25% to 35%, it’s an indication we think is solid. In terms of median survival was about six months in patients with relapsed or refractory bladder cancer. And as I said, I think more than looking at a really large market opportunity, we are looking at another niche where we can effectively develop PDX aggressively and hopefully in a relatively short period of time initiated some type of registration [ph] trial in this disease. I will turn it over to Jim now for some commercial comments.

Jim Caruso

Thank you, Pablo. In terms of the market size for new bladder cancer cases on an annual basis, it’s approximately $65,000 to $70,000 based on a number of different third party proof sources. For this particular study, we are looking at second line treatable pool and conservatively we place that number in about the 13,000 to 15,000 patient population. In terms of market size from a dollar prospective as Pablo pointed out because of the lack of branded agents that are approved in this phase, it’s almost exclusively generic generesized if you will from a dollar perspective. And as a result is smaller from a dollar perspective than it would be relative to a premium price branded agent in this phase.

Paul Berns

Lucy, we hope that’s helpful if there is any additional comments or questions certainly happy to take it.

Lucy Lu

That’s great. Thank you.

Paul Berns

Okay. Thank you.

Operator

Thank you ma’am. Our next question comes from the line of Katherine Kim with Banc of America securities. Please go ahead.

Katherine Kim – Banc of America Securities

Hi guys can you hear me?

Paul Berns

Yes, hi Katherine.

Katherine Kim – Banc of America Securities

Hi. So I actually want you to talk about CTCL. Can you just discuss at ASH how many patients will you have data on at ASH, and when do you expect to start a Phase 2 trial and then also if you can provide some reference for a competitive landscape what was the response rate for Gemzar and as I recall Gemzar really didn’t have CR. So can you just put the CRs into prospective? Thanks.

Paul Berns

Sure that’s fine. Why don’t we do this? Why don’t we – why don’t I have Jim talk a little bit about the competitive landscape for a few moments and just list out what you know in the way that I am using that chapter and let you know at least what’s currently is being used as you are aware that there are other agents under development beyond what’s currently approved today. So, perhaps we can get the highlights there. It’s a rather attractive market actually as a natural extension. I am sure you can all appreciate from the PTCL lead registrational effort we have for PDX and it looks rather interesting to expand that into the CTCL sub type as well. So, with that I will have Jim respond and then have Pablo come back to your question.

Jim Caruso

Thank you, Paul. The agents in the space right now ONTAK, Targretin and Zolinza are the three primary agents. There is another product that’s a PET type that is also currently in a Phase 2 registrational program as well. So, there is four agents in this phase. The majority of them being premium price ONTAK at approximately $100,000 but depending on duration of therapy and dose could go significantly north of that. If you look at incidents, there is different data sets suggesting anywhere from 1000 to 2000 or 3,000 patients from an incidence prospective, but what is very interesting is because of the indolent nature of this disease, there’s a significant prevalence population which is estimated at approximately 15,000 or 16,000 to 20,000 patients on an annual basis.

Paul Berns

I think what interesting about that Katherine I just add some additional commentary to Jim’s point is that, this maybe a somewhat of an under appreciated actually clinical opportunity when one looks at PROPEL here. Clearly our initial discussions with our Advisory Board and just other clinical advisors would suggest there’s certainly a strong call to action and need for additional therapies to treat this patient population, even despite the ongoing program that are under registration today or agents that are approved. We were very enthusiastic about our response rate that we saw in the Phase – in the interim Phase 1 trail results which will have Pablo speak to you here.

Pablo Cagnoni

I just saw from the report in Lugano, we had 17 patients that had been in trial at that time of those we had. I pick as to date on 14 of them, 7 of those responded and there were two complete responses. Normally that, a couple of things that are sometimes not clear from presentations like that, some of the responses were very fast. There were patients start to receiving two or three dose of PDX. We had responses including patients that had failed in (inaudible) inhibitor which was very encouraging. And we are seeing, this is the Phase 1 study, so they are very heavily – but your patients have already seen some very interesting durability in some of the responders which is very encouraging. I mean of a leading patient is going on this year almost a therapy. So, durability seems to be there. And this is what we are going to have avail at ASH. I can’t tell you the specific number. It will certainly exceed 20, 20 plus patients. And after once we have what we call in this case not the MTD because what we are doing is trying to find their best dose for this particular population. Once we have the clear dose and we have a few more patients in an expanded cohort, our plan is to go and have a discussion with the FDA as to what the next step should be. Obviously the plan and principle would be to initiate a second trial which would be an expanded Phase 2 trial with all Phases and the recommended Phase 2 dose. But first before we do that, we really want to have a good discussion with the agency about the results for this first study.

Katherine Kim – Banc of America Securities

Is it possible that you can you can – of your extended Phase 2 study could be a registrational study, depending – I mean, I know its all depending on Phase 1, but let’s just say you have really good numbers for Phase 1, the responses?

Pablo Cagnoni

It’s conceivable. Our original plan in CTCL was to have a simply publication strategy, right. On the back of the PTCL approval was to publish could result in CTCL and obviously would never encourage (inaudible) used but put that information in the hands of the medical community. The results are looking so good at this point that we are reconsidering that position and after discussion with FDA, we may decide to convert this into registrational path.

Katherine Kim – Banc of America Securities

When do you think that you can meet with the FDA?

Pablo Cagnoni

We don’t have a time line for that and if we did we are not ready to disclose it.

Katherine Kim – Banc of America Securities

Okay, thank you.

Pablo Cagnoni

Thanks Katherine.

Operator

Thank you ma’am. Our next question comes from the line of Tom McGahren with Merill Lynch, please go ahead.

Thomas McGahren – Merill Lynch

Hi everyone. It’s just a follow-up question. I think the CTCL candidates were referring to was the Gloucester HDAC inhibitor, and I was curious how you would compare the two just in terms of tolerability. And then secondly maybe an update on the NHL program what we can look for next?

Paul Berns

Sure Tom, thanks. I’ll have Pablo give you at least our prospective. As obviously there are two very different class of agent, ours being will be things in advance next generation type agent from as we look at it does they targeted to hydrophilic (inaudible) Of course it’s an HDAC inhibitor. Pablo?

Pablo Cagnoni

Yes. I think it’s a little premature to do that. And the reason is most of the safety data we have with PDX is with the dose and schedules that are given to Phases of the CTCL which is a more instance of aggressive schedule for patient with a very aggressive disease. That besides why we are dropping down the dose in the CTCL study, these patients are more handling disease that tend to require a long duration of therapy. And so, we want to make sure we have a dose that’s more appropriate for this patient population. So having said that, we don’t have a large enough safety database of that different dose and schedule to compare with Fc-peptide. I think more important is we are starting to see is the efficacy in the CTCL population with PDX is just seems to efficacy pretty much regardless of the dose. We’ve seen of the out strike in the presentation Lugano segment made very clear, we seem to be having efficacy regards of the dose it’s a responses forward coverts to that trial. I think once we expand the cohort of the recommend Phase 2 dose, we can start establishing the safety profile of PDX at this dose in schedule in this particular population, but I think it’s a little premature to do that.

Paul Berns

I think what’s interesting Tom just to add on to Pablo’s comments are, we clearly are intent us to demonstrate quality, model therapy results in this patient population as Pablo just mentioned. And I think the protocol design is certainly appropriate and we know such given the caliber of investigator repute we had in the world of (inaudible). I think what also is interesting clinically and commercially is the future planning that we are not working through as we think about future combination study. So your comment just strong up – comments that I wanted to make sure was clear in that, we are certainly committed to evaluating PDX not just in the JIM [ph] combination study. I think that was the second part of your question what else maybe you seeing in NHL later this year, at ASH for example, but we plan and are working through privatizing other combination studies that we would look to do in the future, certainly potential to combine with HDAC inhibitors and other agents and other classes which certainly makes sense and we are enthusiastic about that potential as well.

Thomas McGahren – Merill Lynch

Okay, and just any updates on the NHL program?

Pablo Cagnoni

At ASH we will present.

Thomas McGahren – Merill Lynch

At ASH, okay.

Pablo Cagnoni

Yes. We’ll present data and normally for PTCL but also patient of T-cell lymphoma and patients of Hodgkin’s disease from our combination file PDX. We are seeing some very interesting evidence of activity and patients with relapsed or refractory T-cell and Hodgkin’s disease and that we’ll present at ASH.

Thomas McGahren – Merill Lynch

Okay, thanks a lot.

Paul Berns

Thanks Tom.

Operator

Thank you, sir. Our next question comes from the line of Mark Monane with Needham & Company, please go ahead.

Mark Monane – Needham & Company

Good afternoon everybody.

Paul Berns

Hi, Mark.

Pablo Cagnoni

Hi Mark.

Mark Monane – Needham & Company

Readings from New York City are very clear and beautiful day which is much less clear however is that classification system that we see in non-Hodgkin’s lymphoma. In the readings we see reference to a number of different uphill [ph] classification, working group classification here at the national the non-Hodgkin’s lymphoma classification project. Maybe you could talk a little bit about which classification system you are using and from the 212 trial results, where you able to enrich the population within the different sub groups for PROPEL trial?

Pablo Cagnoni

Okay, just what you are referring it’s the histology classification Phase in NHL, Mark?

Mark Monane – Needham & Company

Yes.

Pablo Cagnoni

Okay. Yes. I mean there are several but more and more WHO has become the unifying classification for these patients. Using that classification when you they first start to break you break into two large group T-cell and B-cell malignancies within each of those you tend to have malignancies mature and immature malignancies. And so when you look at that group of patients, I think it’s pretty clear what T-cell lymphomas are within the WHO classification, on what’s comprised in their group of patients. From that group, if you want to go back to the 02/07/08 study that you just mentioned, the study had a lot of different patients subsided in it because you would start as a Phase 2 study then you would convert to Phase 1 study to find the right dose and schedule. And so BMP’s outpatients were included in that study. So that might be wide, that was not a PTCL study at the beginning. It’s focused on PTCL at the end after that signals efficacy in those patients emerged. In terms of what we are doing in PROPEL and I think we disclosed it in the past, we agreed on the list of peripheral T-cell lymphoma sub types that will be allowed in PROPEL with the FDA. Okay, and that includes all the classic PTCL sub types including the most common ones which are PTCL NOS [ph] transformed them in blood cell lymphoma and (inaudible) disorder, so those four are the most common one. For those sub-types are included in PROPEL. We have a very clear agreement with the agency as to which ones are going to be.

Mark Monane – Needham & Company:

And will the label include – I know it’s early to talk about label discussions but would you be going for label then for PROPEL T-cell lymphoma in those sub groups or do you think that’s a big enough group that you would be able to get a easy out in general label?

Pablo Cagnoni

The agency agreed that even though PTCL comprise heterogeneous group of diseases. Each of individual sub-types is very rare and so is really not practical or maybe even possible to do studies in each individual sub type. Based on that I’m not going to speculate on the label, but I am confident that since we have agreement on the eligibility criteria for the study that will be reflected in our discussions with the agency around the label.

Mark Monane – Needham & Company

That’s fair enough. Now we saw data from 65 patients and I guess the question is, as Paul outlined earlier, you are looking for 100 or more evaluable patients, is there any way to prognosticate or do you have any if our assumptions or what the next 35 patients would look like, in terms of characteristics from the versus of first 65?

Pablo Cagnoni

I need to be careful and not speculating or disclosing any data from that second batch of patients in the study Mark. We have not made any of those information public. We want to reserve it so we can present it at ASH. So, I’m not going to comment on specifics from the second batch so to speak of second 40 plus patients in the study.

Mark Monane – Needham & Company

Yes, I guess I’m wondering did you use this – did you change the enrollment criteria in anyway or is there anyway –?

Pablo Cagnoni

There were no amendments to the study at that point of any kind.

Mark Monane – Needham & Company

Okay.

Pablo Cagnoni

Okay.

Mark Monane – Needham & Company

Got it. That’s very fair. And then, it’s unusual for a drug to be marketed in both liquid tumors and solid tumors, and maybe you could talk about the commercialization strategy that would be involved given the results we’ve seen to date in the PTCL and CTCL and the upcoming results from your ongoing studies in lung cancer and bladder cancer?

Paul Berns

Mark I’ll ask Jim comment. We are very pleased and I hope you saw this afternoon, very enthusiastic about our product development commercialization activity and productivity of the Company for PDX hematologic malignancies and solid tumors. And we think that we have a pipeline within a compound investment strategy from a development and commercial planning standpoint. So, Jim maybe some additional color there.

Jim Caruso

Sure, hi Mark.

Mark Monane – Needham & Company

Hi.

Jim Caruso

In terms of oncology in general, certainly its scalable space. And the hematologic side of the equation in particular is especially scalable, and we earlier had discussion around both the CTCL, PTCL and B-cell was mentioned. And interestingly enough those three areas in particular if you look at a Venn diagram, they are almost overlapped in terms of B-cell prescribers and then key drivers of CTCL and PTCL in particular almost overlay exactly on top of each other. And the significance there are it’s a small handful of prescribers that drive significant volume or books of business in that area and they are same ones. And so a very direct descriptive and disciplined approach in terms of direct selling as well as other promotional AMP tactical activities and interventions will really allow us to drive significant trial using adoption of (inaudible) on that side of the equation. As you transition over into the solid tumor, part of the equation if you will, obviously we are very excited about our two most recent study initiations both lung as well as bladder and look forward to the initiation of other solid tumor studies as well as we move forward as an organization. And I think the scalability gets a little bit larger there. Obviously there is a larger number of punitions that prescribe in that space, just based on the pure size of the population. So, if you look at NHL in general 60 some odd thousand patients carved up along PTCL, B-cell and CTCL primarily. Lung, even a second and third line treatable pool we are looking at approximately 160,000 patients. So, obviously the number of prescribers is much more significant. Rest for example, even in a second line again a chemotherapeutic treatable pool for second line there well over 35,000 to 40,000 as well. So, significant opportunity there, we would certainly have to consider our commercialization options as we move forward into solid tumor.

Paul Berns

I think Mark we are very committed as we’ve said in the past and I think Jim and Pablo have done a fantastic job from a planning and preparation standpoint. I think about the near-term commercial opportunity in potential that exist assuming a positive outcome with PROPEL as we look to commercialize in the PTCL market and enter the malignancy opportunity, but even looking forward into solid tumors we are a highly committed organization to build and scale up for an appropriate return to our shareholders and investors in the US market place as a self sustained commercial medical organization and we maintain that commitment as we go forward.

Mark Monane – Needham & Company

That was fair. And then just a financial question for David, please, from Glenn [ph]

Glenn Hanus – Needham & Company

Do you have any option rate securities or other liquid securities and I have a curious question about your current share capital?

David Clark

Okay. The answer is no. We do not have any option rate securities, we only invest in high-grade corporate notes and money market accounts.

Mark Monane – Needham & Company

And what’s the current – what share count should we consider the most current in terms of looking at the share capital?

David Clark

Sure. As of June 30, 2008, our shares outstanding are 80.7 million.

Mark Monane – Needham & Company

Thank you team for the added information.

Paul Berns

Bye Mark, thank you.

Operator

Thank you, sir. Our next question comes from the line of Jason Kantor with RBC Capital Markets, please go ahead.

Jason Kantor – RBC Capital Markets

Great. Thanks for taking my call. What a great progress, my question is on the new earned guidance, it implies that it really, really big I think sequential step up in the second half of the year, where should we see that coming in terms of R&D or G&A, manufacturing and is that something that’s going to be spread out over the two quarters or is that backend loaded in the fourth quarter?

David Clark

Hi Jason, it’s actually going to be reflected probably in each P&L line. I think with our solid tumor development program and starting bladder in July and then also as laid out in the press release also in pre-scale of the manufacturing activities and then also in the SG&A line we are going to some key investments and preparing for the potential commercial launch of PDX. So, I can tell you will see it – you’ll see increases in each line in the back half the year.

Jason Kantor – RBC Capital Markets

And how much that is going to be one time versus how much of that should we consider that year end number to be really a run rate going into 2009?

David Clark

Yes, you will see some one time investments especially I think as you look at pre-commercial scale for manufacturing, in that sense as we think about a potential launch in the second half of next year, we are making those key investments in manufacturing to now make sure not only for the NDA build up the launch having proper investments made here in the second half.

Jason Kantor – RBC Capital Markets

And I may have missed it because I wasn’t on for the first few minutes but what can you say about how the enrollment is going in the lung cancer trial and also do you have any better understanding of why there were such a big discrepancy between the investigator-assessed responses and the independent responses in your interim analysis?

Paul Berns

Sure I’ll have Pablo speak to that. We were – again very, very pleased with the response rate and as Jim mentioned in the preliminary market research were done certainly the physicians involved in the market research today have been very pleasantly surprised with and pleased with the data both on the central review and the investigator review but Pablo why don’t you speak to Jason’s comments.

Pablo Cagnoni

So, the first one – let me first answer the lung cancer trial is going very well. It’s what we consider ahead of schedule and during the first part of the call we gave guidance that we expect to complete enrollment in the second half of 2009, and we will continue provide updates in future calls. Regarding PROPEL, the difference between the investigator-assessment response and the central assessment response it can distributed to couple of different factors, one of which is the fact that under IWC which is a criteria that is been used for response in the PROPEL study, six target lesions have to be selected. Those lesions have been measured in assessment time point and depending on how those regions do you come up with PRSTR [ph] or stable disease. One of the issues here is that since the central reviewers are completely blinded to the investigators assessment, they can pick and I’m sure happens in many cases different target lesions. So, when you do that you can come up with 45% tumor reduction, they can come up with the 53%. I would score about 50 or you score at the stable disease. So, that’s one of the key issues. Another factor is that sometimes investigators do around responses and that happens. Under the study, they will have to provide measurements or they have the provide investigators only have to provide whether they think it’s a PDS TPR or CR. And I suspect in some cases they are rounding some of the responses up a little bit, and the third factor is probably related to the fact that lot of these patients have skin lesions, which are being photographed and measured by the independent central reviewers. In some cases I seen the investigators are looking at the clinical appearance of those lesions and making judgment calls, so they think the lesions are better and by better in some cases they mean the patients responding while the actual signs of the lesion is not changing and therefore the central reviewer will score them stable disease. When you combine those three factors you come up with a difference which by there way if something maybe 16% is a little bit more than some people expected, I truly didn’t know what to expect and those diseases are very complex disease to asses to get – in fact the patients have normally visual disease, lymph nodes but also skin lesions. But in almost every study you are always see a difference between investigators has no response and central review of responses.

Jim Caruso

And Jason I think it’s important to note that the PROPEL investigators are really whose who of NHL treaters as well as opinion leadership certainly in the United States and throughout the world. And the fact that based on their experience in clinical observation believe that nearly one and two patients have some form of response either partial or complete is very, very compelling and we believe will be significant in terms of future crow [ph] use an adoption of PDX out of the clinic and in the commercial world.

Paul Berns

I think that’s right. So, the summary – that’s the summary take away Jason. I think support for everybody that to hear on this is we believe when you look at both those assessments the central independent review which I think is a very important assessment that clearly goes in front of the FDA. We think that carries significant amount way and I know Pablo and the rest of the team were very comfortable with the quality of that assessment. So from a clinical regulatory prospective, we have great confidence in that assessment and the process in which were running that assessment, and then from a clinical commercial prospective to Jim’s point, we believe the 45% carries a very important clinical commercial weight in the hands of the prescribers in the future.

Jason Kantor – RBC Capital Markets

Is it possible that those central reviews responses could improve among the 65 that have already been reviewed or does is that the final assessment of those patients?

Jim Caruso

Everything is possible. The data that we decided to release for those first 65 patients was pretty much sure. So I would not expect any major changes in those numbers.

Jason Kantor – RBC Capital Markets

Thank you.

Operator

Thank you, sir. Our next question comes from the line of Krish Negody [ph] with Rodman & Renshaw. Please go ahead.

Krish Negody – Rodman & Renshaw

Hi, thanks for taking my question. I would like to ask about the lung cancer trial specifically what the background therapy was in these patients who enrolled? And what are histological breakdown in these patients?

Paul Berns

I am sorry, your first part of your question broke up a little bit if you could repeat it.

Krish Negody – Rodman & Renshaw

The first part was I was asking about the background chemotherapy. These patients who started enrolling from January ’08 right? So just wondering on what kind of biologics these patients were on prior to entering the trial and what is the histological breakdown, how many patients have (inaudible) adeno?

Paul Berns

Yes, all I am going to say about the lung cancer trial that it is enrolling very well. We are ahead of schedule and will complete enrollment in second half of next year. I am not going to comment on any details in the patient characteristics for ongoing trial. It’s an ongoing randomized trial. We are going to treat it with as much statistical integrity and overall data integrity as we can. So, I’m not going to comment about any detail. The study is open to Phase in the trails first line of platinum containing chemotherapy that receive up to two prior regimens based on patterns of care in the countries that we are conducting the trial. I’m not expecting any surprises, so I’m not going to comment about the ongoing trial.

Krish Negody – Rodman & Renshaw

Just one more question in related topic. With Alimta clearly seeing not being affective in (inaudible), what’s your opinion about PDX in squamous histology and lung cancer? Would PDX face the same kind of handicap on treating patients with squamous histology?

Paul Berns

It’s a good question. I don’t think we have enough data to answer it at this point. As you know, it took for Alimta to do a lot of trials including the large first line trial to come up with those data. Although there were some signals in that direction in the second line trial versus (inaudible) that was conducted years ago. I can’t quite answer it. What I can say though is that PDX and Alimta are very different drugs. We tend to be putting the same sentence because both are antipolis. As you very well know Alimta is predominantly TS inhibitor with some (inaudible) and very weak and we presented it ATL [ph] last year very weak DHFR vision, while PDX is a pure DHFR inhibitor more prudent in every other DHFR inhibitor. So, I mean they both antipoli [ph] but at least hypothetically there is no reasons to believe that they will have the same pattern across for systems.

Pablo Cagnoni

Yes. I don’t think you can draw those conclusions across physicians at this point at all.

Krish Negody – Rodman & Renshaw

I was just curious. So, you can’t say anything about pivoting assumptions or the delta in comparison with power in this trial?

Paul Berns

Well the trial is – I mean there is a question of power is not completely relevant because it’s a randomized Phase 2 trial. I mean it’s a 160-patient study and the idea was to do this trial as quickly as possible to get a very clear estimate of the difference between these two drug in terms of efficacy, so and then we can design a well-powered Phase 3 trial to try to get PDX for this indication. So, because of that I don’t think it’s appropriate to comment on the power of the studies since this is not intended for that purpose.

Krish Negody – Rodman & Renshaw

Okay, thanks very much.

Paul Berns

Welcome.

Operator

Thank you, sir. And at this time there are no further questions, I would like to turn the comments back over to Paul Berns for any closing remarks.

Paul Berns

All right. Thank you operator, and to conclude today’s call, I would like to summarize our three key corporate operating principles. First, our focus on excellent innovation in the development execution of our clinical programs, second proactively evaluate opportunities to grow our business through potential product acquisitions, partnerships in other strategic initiatives. And third, meet with effects and integrity to ensure quality business decisions that create value for our patients, employees and stockholders. As always, we appreciate your participation and look forward to keeping you apprized of our progress in the months ahead. Have a good day.

Operator

Ladies and gentlemen, this concludes the Allos Therapeutic second quarter 2008 results conference call, you may now disconnect. Thank you for using ATT Teleconferencing, have a pleasant day.

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