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Immunomedics, Inc. (NASDAQ:IMMU)

F1Q13 Earnings Call

November 9, 2012 10:00 AM ET

Executives

Gerard Gorman – SVP, Finance and CFO

Cynthia Sullivan – President and CEO

David Goldenberg – Chairman, Chief Scientific Officer and Chief Medical Officer

Analysts

Boris Peaker – Oppenheimer

Ryan Martins – Lazard Capital

Ling Wang – Summer Street

Brian Skorney – Brean Capital

Operator

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to Immunomedics, Inc First Quarter Fiscal 2013 Financial Results Call. As a reminder, this call is being recorded. Today is Friday, November 9, 2012. With us on the call this morning are Dr. David Goldenberg, Chairman, Chief Scientific Officer and Chief Medical Officer; Cynthia Sullivan, President and CEO; Gerard Gorman, Senior VP, Finance and CFO.

I would now like to turn the conference over to Gerard Gorman, Chief Financial Officer of Immunomedics. Please go ahead.

Gerard Gorman

Thank you. Good morning and welcome to our earnings call. Thank you for participating in the call and on behalf of Immunomedics, I hope you survived hurricane Sandy safely and with minimal impact to your family, and minimal interruption to your daily routine. This has been and continues to be a very trying time for so many of us living in New York, New Jersey, and the Connecticut tri-state area. Our thoughts and prayers are with those still recovering from the storm.

I will begin with the summary of our current financial condition. Cynthia Sullivan, our President and CEO, will follow with an overview of developments in our business and updates in our key clinical programs. Finally, Dr. Goldenberg will describe our major clinical programs and research plans before we open up the call for Q&A.

Before we begin, I’d like to remind everyone that during this call, we’ll be making forward-looking statements made pursuant to the Private Securities Litigation Reform Act of 1995. Such statements may involve significant risks and uncertainties, and actual results could differ materially from those expressed or implied in this call. For factors that could cause such differences, please refer to our regulatory filings with the Securities and Exchange Commission; most recently, our annual report for the year dated, year ended June 30, 2012.

Now let me start with the financials. I hope everyone has had a chance to review the financial results we released yesterday afternoon. The earnings report is available on our company website at www.immunomedics.com.

We reported total revenues of $1.1 million of both the first fiscal quarter of the year 2013, which ended September 30, 2012 and for the same quarter last fiscal year. Our expenses for this first quarter were in line with our expectations. Total costs and expenses for the current quarter were $8.6 million as compared to $6.3 million for the same period in fiscal year 2012. This resulted primarily from a $2.2 million increase in research and development expenses. Research and development expenses in the fiscal quarter ended September 30, 2012 did not include expense reimbursement that have been received under a collaborative agreement in the prior year. We do not expect to receive any significant expense reimbursements subsequent to September 30, 2012.

The increase in research and development expenses was the primary reason for the larger net loss attributable to our stockholders of $7.4 million or $0.10 per share for the current quarter. As compare to the next loss attributable to our stockholders of $5.1 million or $0.07 a share for the same period last year.

The company has no long-term debt, and as of September 30, 2012 cash and cash equivalents totaled $25.5 million. The rate of cash utilization for the first quarter of our fiscal year was higher than the expected annual cash burn rate due to the historical pattern of paying insurance renewals and certain employee incentive compensation during the three-month period ended September 30.

We believe we have sufficient funds to continue our operations and research and development programs for at least the next 12 months, after taking into consideration a reduction or delay of certain planed discretionary spending if necessary.

This summarizes our financial results for the first quarter of fiscal year 2013. I’ll now turn the call over to Cindy.

Cynthia Sullivan

Thank you, Gerry, and good morning, everyone. Once again, I’m pleased to have this opportunity to discuss our developments in our business, and provide a brief update on our key clinical programs during this past quarter.

Let me begin with discussion related to our business. We continue to work closely with our partners, UCB on the sublicensing of epratuzumab in certain territories. Although at this moment, we cannot communicate details of this progress or provide you with an associated timeline to completion. We plan to continue to work with UCB in identifying a suitable partner.

In addition, we’re making progress with the licensing opportunities for our diverse pipeline of product candidates and platform technologies with multiple companies. And we look forward to reporting these events as they occur. Such licensing opportunities include potential antibody therapeutics in oncology and immune diseases, antibody drug conjugates in cancer and our DOCK-AND-LOCK platform technology.

Moving onto clinical developments, clivatuzumab continues to be our major focus. I am pleased that the Phase Ib trial is presently enrolling patients ahead of schedule, which affirms our belief that there is an unmet need for pancreatic cancer patients, who have received two or more prior therapies.

As of the end of October, we have 15 sites opened and 20 patients enrolled into this clinical trial. As a reminder, this is an open label two arms randomized clinical trial, evaluating yttrium-90 labeled clivatuzumab with and without gemcitabine. As noted in our year-end conference call, we expect to complete the Phase Ib study in the first half of calendar year 2013, and have already begun protocol design and identification of a clinical research organization for the global Phase III clinical trial, which will begin as soon as possible after this Phase Ib has been completed, assuming of course positive outcome and available funding.

Moving onto epratuzumab or CD22 antibody, patient enrollment is ongoing for the two Phase III antibody studies conducted by UCB, evaluating epratuzumab as a therapy for patients with lupus. These are global clinical trials with approximately 284 sites currently enrolling patients. At the American College of Rheumatology Annual Scientific Meeting, which opens today in Washington DC. Lupus investigators will report results from an open labeled single arm extension study in patients with moderately to severely active lupus, who have received continued cycles of epratuzumab therapy.

This presentation will occur on November 11, 2012, and will include long-term efficacy and safety data from patients that had previously enrolled into our ALLEVIATE trials, and then had gone onto the extension arms of those trials.

Based on the abstract that we’re made available to the public, the data showed that we continued administration, epratuzumab maintained improvement in lupus activity over a timeframe of approximately four years. Importantly lower levels of meeting corticosteroid use will also maintain throughout the study.

A second presentation on November 13th will include data capturing clinically meaningful improvements in health-related quality of life of lupus patients that we’re sustained over approximately four years of treatment. Long-term therapy with epratuzumab with notably tolerable days with no new safety concerns identified. These extension studies in addition to the extension trial from UCB’s Phase IIb and I study, could provide important long-term efficacy and safety data in support of potential filings to the regulatory authorities.

For veltuzumab, following the voluntary close to enrolling of the VELVET dose range finding trial on November 10, 2011. Takeda-Nycomed decided to redesign the study protocol, and start a new trial as soon as possible.

The new clinical trial will be conducted with veltuzumab supplied by their commercial scale manufacturers. No efficacy conclusions according to the VELVET protocol can be drawn from the patients treated. Based on the collected clinical data from this study, there are no new clinical safety signals, and no increased clinical safety risk observed to-date.

Subcutaneous administration of veltuzumab is currently being evaluated in the Phase II trial in patients with immune thrombocytopenia purpura or ITP. This trial is conducted by us, and funded by Takeda-Nycomed. ITP is an autoimmune disease in which the immune system attacks blood platelets, resulting in their accelerated destruction and a high-risk of bleeding to the patient.

We’re pleased that an abstract from this study has been expected for an oral presentation at this year’s American Society of Hematology or ASH annual meeting in December. At that same conference, Phase I/II study of subcutaneous injection of veltuzumab as a monotherapy in patients with relapsed chronic lymphocytic leukemia also will be updated in an oral presentation. We’re pleased with the activity of a single agent veltuzumab in this population, in which combination therapy is the standard of care. Of course, it should now be tested in such combinations.

We have other presentations except this at this year’s ASH, which David will discuss now.

David Goldenberg

Thank you, Cindy and good morning everyone. We have really a very busy schedule at ASH this year and now, we have nine presentations involving six of our product candidates at this conference. Besides the two presentations on subcutaneous veltuzumab that Cindy has just mentioned epratuzumab will be the subject of our presentation by the South Western Oncology Group or SWOG of the National Cancer Institute reporting results from its Phase II trial of epratuzumab combined with Clofarabine and Cytarabine in adult patients with relapsed or refractory acute lymphocytic leukemia.

This is a multicenter open label study using complete remission rate as the primary endpoint. Since there are a few effective therapies for this indication, we’re pleased that these results were selected for presentation. The SWOG study is one of four investigator sponsored trials of epratuzumab in acute leukemia. The largest of these studies will be a randomized Phase III trial in children with relapsed acute lymphoblastic leukemia conducted in Europe by a consortium of pediatric leukemia centers and partially funded by the European Union. Designated as in trial, this study will involve more than 200 sites in about 20 countries and it is expected to enroll over 800 patients, which is the largest study undertaken in this disease to-date.

Epratuzumab is selected in these investigator sponsored trials because of high expression of CD22 in acute lymphoblastic leukemia. We’re supporting these trials by providing and distributing epratuzumab.

Another cooperative group, the newly formed Lymphoma Study Association in Europe will report in an oral presentation results from its Phase II perspective trial of yttrium-90 labeled epratuzumab as a consolidation therapy following a combination of rituximab and CHOP chemotherapy or CHOP in elderly patients with diffuse large B-cell lymphoma.

Diffuse large B-cell lymphoma is an aggressive form and the most common type of non-Hodgkin’s lymphoma with approximately 20,000 new patients diagnosed each year in the United States. Unlike indolent lymphoma, aggressive lymphoma proven to be more resistant to current approved antibody therapies, unless they are combined with chemotherapy such as our CHOP to diffuse large B-cell lymphoma and rituximab plus hyperfractionated CVAD for mantle cell lymphoma.

A significant percentage of patients with aggressive lymphoma were relapse, while became refractory are ineligible for high-dose salvage therapy or stem cell transplant due to an advanced stage chemo resistant disease and/or concurrent co-morbid medical conditions and these elderly patients with diffuse large B-cell lymphoma, who failed our CHOP have a very poor prognosis after disease progression.

Therefore, there is a considerable need for developing better treatment alternatives for these patients. And the results will show how radiolabeled epratuzumab can be applied successfully in this setting.

The European Group had previously demonstrated that two doses of yttrium-90 labeled epratuzumab as a consolidation treatment improved the remission status of four of ten patients from partial response or stable disease to complete response. And at the highest fractionated dosing level, they showed a 100% response rate and over 90% have incomplete responses, which was published in the Journal of Clinical Oncology about two years.

Separately, we are pursuing a novel approach for lymphoma therapy and have received funding support from the Small Business Innovation Research Program of a National Cancer Institute to conduct a multi-centered trial examining the combination of yttrium-90 labeled epratuzumab and unlabeled veltuzumab in relapsed aggressive non-Hodgkin’s lymphoma patients. This is a new therapy concept due to the fact that CD22 recognized by epratuzumab and CD20 recognized by veltuzumab are distinct antigens.

Consequently, anti-CD20 antibodies would not cross block anti-CD22 therapy. If successful, this combination of Radioimmunotherapy with immunotherapy targeting two distinct antigens can represent a new treatment concept for patients with non-Hodgkin’s lymphoma. The current status of results of this multi-centered trial will be reported at this meeting.

Now, in addition to these clinical trials, we have a number of preclinical studies that will be presented at this year’s ASH meeting. The most important is the study of milatuzumab, our anti-CD74 antibody, in acute graft-versus-host disease, which is funded by another research grant from the National Institutes of Health.

Milatuzumab is the first humanized anti-CD74 antibody, currently being developed for the treatment of relapsed or refractory B-cell malignancies, such as non-Hodgkin’s lymphoma, chronic lymphocytic leukemia, and multiple myeloma. In addition to targeting B-cells, milatuzumab also targets other antigen presenting cells, which include monocytes, macrophages, and dendritic cells.

More recent preclinical studies have demonstrated that milatuzumab is capable of modulating human B-cell proliferation, migration, and adhesion molecule expression, for suggesting that this antibody may also be effective in the treatment of autoimmune diseases. Acute graft-versus-host disease is a medical complication following bone marrow or stem cell transplantation. It occurs with white blood cells transplanted from a donor start attacking the recipient’s body, after recognizing the recipient’s body as being far end.

According to published reports, the number of stem cell transplants continues to increase with more than 20,000 transplantations from donors performed annually worldwide. In 2006, the estimated number of stem cell transplants reported in the United States to the Center for International Blood and Marrow Transplant Research was 6,100 of which 3,800 were related donors and 2,300 were from unrelated donors.

It’s important to appreciate that the global incidence of acute graft-versus-host disease ranges from 26 to 35% in recipients of fully matched sibling donor grafts and from 42 to 52% in recipients of matched unrelated donor grafts and it is a major cause of non-relapse mortality. Two year non-relapse mortality in patients with grade-3 and 4 graft-versus-host disease is more than 50%.

Current therapy for acute graft-versus-host disease is suboptimal, especially for patients who do not respond to corticosteroids with an estimated two year non-relapse mortality of 73% in refractory patients. So prevention and treatment of graft-versus-host disease is truly a major and important challenge.

Given that both recipient and donor antigen presenting cells play a critical role in initiating graft-versus-host disease, we initiated a preclinical study to evaluate the therapeutic potential of Milatuzumab for this disease by affecting recipient and/or donor antigen presenting cells. We are pleased that results from this study have just been published online in the journal biology and of blood and bone marrow transplantation.

We’ve shown in an experimental model that Milatuzumab controlled graft-versus-host-disease very effectively without impairing protective T-cell immunity that is essential for anti barrel and graft-versus-leukemia effects following stem cell transplantation from a donor. Based on these encouraging results, we had filed an IND with FDA to undertake an initial small clinical trial to evaluate the safety and efficacy of milatuzumab for the control of this challenging disease. We have already identified an interested clinical site and are now engaged in preparing to implement this study, and we hope very soon.

But last, yet most important that I believe will be presentation I plan to make at ASH on new results pertaining to the mechanism of action of epratuzumab in autoimmune diseases, particularly lupus. While our clinical studies and those conducted by our partner, UCB, have been encouraging, how epratuzumab works to induce a remission in patients with moderate-to-severe lupus has been challenging to answer.

We know that in contrast to rituximab and others anti-CD20 antibodies, B-cell depletion is not the key mechanism since only about 45% of circulating B lymphocytes are destroyed by epratuzumab. In contrast, over 90% being destroyed by rituximab.

Based on our early results, we postulated that B-cell modulation, not B-cell killing, plays an important role in epratuzumab’s effects in patients. We believe that not fully depleting circulating B-cells, let’s patients retain a better immunological status in terms of infections, and therefore may be a safer therapy.

Now, we are more confident that epratuzumab has a unique mechanism of action, which also could explain why is it more effective in patients at the mid-doses given and less so at the lower and higher doses. And without going into great elaboration of what will be shown, we basically found that we are able to decrease or down regulate not only CD22 on B-cells, but other antigens that are very critical in maintaining or invoking an immune response, particularly CD19, CD21, CD79B, and others that are related to what we call the B-cell antigen receptor complex.

We believe this mechanism is quite different than with those antibodies like rituximab that kill the cells and in that way reduce or down regulate these BCR targets. So, these studies we believe give us important leads as to predicting, which kinds of antibodies maybe effective in autoimmunity and what the right dosing might be, as well as to now design next generation what we call bispecific antibodies again CD22, CD20, and even CD74 for the improved therapy of autoimmune diseases.

In closing, we think that the multitude of presentations at this year’s ASH Conference as well as our other clinical advances, are reflection of our success and the prowess of our research and development programs. The enthusiasm of our investigators to share the results with the scientific and medical community attending this international conference is greatly appreciated, and is a validation of our unique and extensive product pipeline.

I would like to thank you for joining us today. And we will now take your questions. Conference operator, please begin the Q&A session.

Question-and-Answer Session

Operator

(Operator Instructions) Our first question comes from Boris Peaker from Oppenheimer. Your line is open.

Boris Peaker – Oppenheimer

Good morning. Can you hear me?

David Goldenberg

Yes.

Boris Peaker – Oppenheimer

I have a couple of questions, maybe one on quickly on the UCB discussions. I understand that you can give us specifics in terms of timeline, but could you maybe comment in terms of what the key partner criteria are that you’re looking for? And how many candidates there are at the table from the partnership side in this discussion?

David Goldenberg

Let me respond to that. We cannot really divulge how many candidates are in discussions with UCB, but we can say that generally where a part or that can complement UCB’s capabilities in marketing, sales and distribution on a worldwide basis, would be the logical candidate. And so the company has to add some value of course in various geographical areas and being able to present and support an autoimmune disease agent just as lupus.

So, I believe these are the basic criteria. And of course if I would be able to speak for UCB, which I can’t would be a company that has the marketing and financial with regard to give proper credit to the product. We’re working closely with UCB to make sure that the candidates that are before them are screened properly and we can then come to hopefully a joint decision as to who will do best for the product.

We’re very excited that the results that Cynthia just reported about the trials with the epratuzumab might make this and we have done this for a leading product in this dismal disease. And in order to give the patients the proper support, one needs to of course consider the very best companies that could distribute market and educate the public and the physicians about it.

I think, it’s very critical to appreciate for the first time, that this product seems from the trials that we just discussed, although there are small numbers, but reduced the requirement on steroids. Corticosteroids are a travesty for patients who require them long-term in terms of all the side effects, including the destruction of the kidneys with time. So if we can clearly maintain the effects of reduction and then the removal of the need for corticosteroids, this would be a tremendous contribution for the epratuzumab patients and that the Phase III trials bear these results out.

Boris Peaker – Oppenheimer

Thank you for that explanation. My next question is on epratuzumab and this is I think probably directed to Cynthia. You mentioned in terms Phase III start pending positive outcomes something going on Phase Ib, and I just wanted to understand what you mean by positive outcome, because in the way I see it, it’s hard to see how the study did fail certainly from the efficacy perspective based on its design between the two arms?

Cynthia Sullivan

I think when we’re talking about positive outcome, it’s not only of course safely and trying to figure out whether or not we need the low doses of gemcitabine with labeled antibody, but we also are looking for an impact in terms of overall survivals. So when we are getting these patients after at least two prior therapies, they’re looking at a median survival of something like three or four months. And we want to make sure that this protocol allows these patients to come in to at least two cycles of therapy to see if we can make an impact in terms of adding to that dismal survival rate.

We have to make it clear too. We are not abandoning front-line patients. We are looking towards patients with two prior therapies as may be a faster route to market and ultimately we will then look at second line and of course first-line with this agent. But I think it makes a lot of sense in this population to take this on; this will be fewer patients, the regulatory requirements will be considered a fairly low bar. So our approach is to just sort the question out with regard to combination of Jam and then move forward into our Phase III design with or without depending on the outcome from this study.

David Goldenberg

If I can add something to that, that we were criticized by many of you and others. So if why we would take on such a small population, that’s so limited and restricted as people at the end of their lives with pancreas cancer after failing or relapsing with two or more therapies and our experience now is quite different.

In the history of Immunomedics, I do not know of any trial that has accrued as quickly and as successfully as this particular trial in this class of patients. So what tells us that there is a great need that there are patients that are doing well, reasonably well after two with more prior therapies and are very enthusiastic but that is they are at physicians to put them into this trial and so we’re ahead of schedule. We’re very pleased with the reception and the fact that this is an indication where there’s a great need and the cooperation by the clinicians that are (inaudible).

Boris Peaker – Oppenheimer

This is very helpful. Thank you. And my last question for you I think this is probably for you, Dr. Goldenberg. You mentioned in terms of pertuzumab mechanism of action I think certainly scientifically it is very exciting and I just was wondering what about the possibility of some kind of a B-cell feedback cycle, specifically that one could argue that Rituxan primarily wipes out B-cells and so that may trigger the body to mature more B-cells, while if you just partially eliminate them and you don’t trigger some of these feedback cycles, I mean is that a reasonable rationale or is that something that guys have considered as part of the mechanism and as the advantage of epratuzumab?

David Goldenberg

Well, I think it’s a wonderful suggestion and it needs these comparative studies with regard to repopulation, which is what you’re suggesting and we’re sort of, we’ve done a lot of work on this and we’re going to publish soon on this what we found as well as presented at ASH, but I will say despite that we’re really at the beginning. This is a whole new concept and I’ll throw a word out there that we have induced, its trogocytosis.

It’s a wild word, which means that you’re removing something from one cell and you are putting it onto another cell and it is fascinating that we’re now seeing that these B-cells that are involved in antibody production, immunity, and talking to T-cells down-regulate and the question is how do they down-regulate the CD22 or CD19 and the others. And trogocytosis means that it takes a part of the membrane that has these markers and puts it on another cell.

And we’re fascinated with this phenomenon because we’re now learning what does mean to put it on another cell and how does this in some way result in preventing or decreasing the immune response and in other situations increasing the immune response. So when I mentioned that this gives us an idea on how to develop the next generation of autoimmune disease therapeutics, I am very serious about that because it in many ways explains why our bispecific antibodies of 20, 22, 27, 74, and so on behave differently than when you simply mix the antibodies and see how they work.

And so to me, it opens up a whole new field of science, which I hope will give us a better class of more effective therapeutics in autoimmune disease and I think there will also be implications in the management of the B-cell lymphomas and leukemias that also express these B-cell markers.

Boris Peaker – Oppenheimer

Thank you very much for that lengthy explanation and for taking my taking my questions.

Operator

Thank you. Our next question comes from Brian Skorney from Brean Capital. Your line is open.

Gerard Gorman

Hello Brian?

David Goldenberg

Maybe we should go on to someone else.

Operator

Thank you. Our next question comes from Ryan Martins from Lazard Capital. Your line is open.

Ryan Martins – Lazard Capital

Hi, thanks for taking the questions. Maybe just to start out with some questions on clivatuzumab. Did I hear you say, what is your expected median overall survival for third line pancreatic cancer patient?

Cynthia Sullivan

It’s roughly three to four months, when they have received at least two prior therapies.

Ryan Martins – Lazard Capital

Okay. And just I guess, David talked to your comments earlier about the increasing need in these patients, just related to that with the landscape could potentially change in the next few months, there’s couple of big data readouts, one being obviously a vaccine. How, I mean how do you expect to incorporate any of those results assuming you eventually decide to go into Phase III in a third line patient composition because obviously that could change, maybe at least somewhat impact the course of the disease?

Gerard Gorman

Well, many of the patients that come to us have failed prior therapies with 5-FU and gemcitabine and many of them have had FOLFIRINOX. So it’s not expected that they will be responsive after they’ve proven to relapse after those prior therapies. I think in our trial, we’re going to have to randomize to a control which would be best available therapy that the physician or investigator will select.

And that will be of a regimen that may contain one of the prior therapies given, but not necessarily. So, I think what we basically are saying that if we can show an improvement in survival over whatever is the standard therapy that would be giving actions to our therapy, that should suffice from a regulatory perspective, and therefore, improving the outcome of patients with advanced pancreatic cancer.

Ryan Martins – Lazard Capital

Okay. Just on the veltuzumab, will we see that data presented at some point?

David Goldenberg

Which veltuzumab data?.

Ryan Martins – Lazard Capital

The trial that was stopped, I guess?

David Goldenberg

The trial with Takeda’s trial, that’s just small number of patients that – and I don’t know if there’ll be any efficacy data for a small number because they weren’t follows long enough to see that. I think Cindy said that the only kind of data would be available are safety data, and there is no surprising toxicities, and so I don’t know if there’s enough time as well numbers of patients to see any efficacy, but Cindy you maybe you want to address that.

Cynthia Sullivan

No, the disclosures wrapped around development study to-date have included the 11 patient that received trial medication. The trial was closed then on November 9 or so 2011. And those patients were followed then for 12 months post therapy. Takeda has reported that they can make no efficacy conclusions according to the protocol for the (inaudible) trial and they are going to prepare an abbreviated study report. So, I don’t think expectations with regard to disclosures of efficacy would be appropriate.

Ryan Martins – Lazard Capital

And with the sub-Q veltuzumab being at – I know you alluded to the fact that you could use it maybe in combination, I mean, what kind of drugs do thing you could potentially combining veltuzumab with?

David Goldenberg

Well, in CLL, there are large number of drugs that are now being studied in combined with rituximab, and so whether these are kinase inhibitors or they are other small molecules, we would have to discuss which approach would be best at this point in development of many of these competitive agents. But the first challenge for us was; does CD20 antibody subcutaneous veltuzumab have any evidence of activity as a monotherapy, which is a terribly challenging question because most physicians don’t want to give a monotherapy to their patients.

And we were pleased that within this study that we saw about 83% of the patients that were given monotherapy and these are patients who relapsed after several courses of therapy in CLL at either a partial response or stable disease. So we that’s active and now the question is that how do we take forward in the combination therapy and I think it’s premature for me on this call to review our development plan, but clearly there are a lot of interesting agents that are being used, there is a lot of excitement around the proton kinase inhibitor is another such kinase inhibitors and it would be very interesting to see how some of these would work in combination with a very simple subcutaneous repeated injection of veltuzumab.

Ryan Martins – Lazard Capital

Okay. Thanks. And then I think you referred to a publication that veltuzumab, was there any impact at all on protective B-cells in those studies?

Gerard Gorman

No. There was not. It had to do with migration and affecting certain subpopulations of B-cells.

Ryan Martins – Lazard Capital

Okay. Thanks. And then just finally touching on what you mentioned was the epratuzumab mechanism of action presentation at ASH. Is there going to be or should we expect to see any correlation with infection rates given obviously would be the ultimate outcome I guess of...

Gerard Gorman

Well, the mechanism of action studies are studies that involve specimens from normal individuals from patients with lymphoma and lupus patients. It’s all ex vivo, in vitro work and it’s not to correlate with infection. The correlation with infection comes from the clinical studies that were performed, the ALLEVIATE trials from Immunomedics or the ongoing or the completed trials from UCB, the Phase IIb trial and if I remember the results, which are being presented at ACR, the extension studies clearly show that there is no safety increase, no safety concerns compared to placebo growth.

Ryan Martins – Lazard Capital

Okay. I guess my question was related to clinical studies and it’s beyond infection rates you’ve seen in your studies so far, the completed ones, I guess, rather just to the other competitors out there, is that mechanism of action burn out and what you see in the clinical data, just to be honest?

Gerard Gorman

Well, the mechanism of vaccine is not related in any way to the safety issues of infections. The mechanism of action will probably explain something which is bothered lost people, then why is it that the 360 milligram per meter square weekly dose is better than the 720 milligram per meter square weekly dose, so are better than the lower dose and that was also seen in our lymphoma trial. And frankly this kind of bell shape curve is known from other antibody studies also. But this sort of was always an observation, but no one until now really could explain scientifically why there is a difference.

And I think if you could wait to ASH, I will tell you why, and I can’t do it now because it wasn’t in the abstract and the restrictions of ASH do not allow me to jump the gun and tell you our explanation for it. But I feel very confident that the studies I’m talking about involving is still the cytosis effect and so on and down regulation of certain. We’ve seen differences at different doses and that explains why the middle dose is more effective than the higher dose.

Ryan Martins – Lazard Capital

Okay. Thanks. Appreciate that and look forward to the ASH presentation.

Operator

Thank you. (Operator Instructions) And our next question comes from Ling Wang from Summer Street. Your line is open.

Ling Wang – Summer Street

Thank you for taking my question. So far the clivatuzumab program, the Phase I/II program, is my understanding correct that you wanted to see weathered addition of the low dose gemcitabine will improved over survival of the patients in order to make a decision of what will be used in the Phase III trial?

Cynthia Sullivan

That’s correct, Ling. In our pre-clinical work, we demonstrated in most models, the combinations of gemcitabine and radiolabeled antibody was better than either one of those components by itself. However, when we looked at increasing the amounts of gemcitabine in part two of our initial Phase I/II clinical trial in newly diagnosed patients, we didn’t see an improvement as we increase the amount of gemcitabine. So we were requested by FDA to do this small study to determine if gemcitabine adds to the combination with the radiolabeled antibody. So the design for this Ib is about 25 patients will be enrolled into one of two arms, radiolabeled antibody by itself versus radiolabeled antibody plus low-dose gemcitabine.

Ling Wang – Summer Street

Okay. So based on the progress of this Phase I/II trial now, should we expect Phase III trial to be initiated in the second half of next year or -?

Cynthia Sullivan

That’s our plan based on the accrual that we’re seeing right now it’s accruing much faster than we had expected that we plan to propose our protocol design and identify a CRO for Phase III clinical trials during the first half of 2013 and then kick that program off during the second half.

Ling Wang – Summer Street

Great. Thank you.

Operator

Thank you. Our next question comes from Brian Skorney from Brean Capital. Your line is open.

Brian Skorney – Brean Capital

Hey, good morning, guys. Thanks for taking the question. It looks like an exciting 2013 ahead. I guess my first one would be on the veltuzumab RA study, I know we’ve talked a little bit about the strategy behind stopping the VELVET trial and think about a new protocol. It’s interesting that the FDA approval has come so recently upon that announcement of the redesign. I mean how should we think about this new study, I know it’s not a protocol that’s posted yet, but is this taking into account potential patient population changes for kind of an IV disease modifying drugs compared to the oral now available?

David Goldenberg

Well, I really don’t think that is the key issue. I think the key issues we’re in an age of personalized medicine and the question is can we in a Phase II trial which is really what is planned, identify markers or disease constituents that will predict which patients will do best with a anti-CD20 therapy.

There have been a number of papers in the literature related to rituximab that make certain assertions like that, FC Gamma III more genetic markers and certain antibodies in other blood markers. And I think we need to understand that in the context of our agent to better define the population for the Phase III trial. So that’s one important issue. It isn’t the only issue.

And another issue that’s very important is I’ll be very frank with you it’s hard to determine what the optimal dose of our subcutaneous veltuzumab is because from the lymphoma studies we’ve done and published and from the ITP studies, it’s hard to say that there is a need for increasing the dose. Our 80 milligram absolute dose subcutaneously and ITP given twice two weeks apart had the same response rate as when we have 320 milligrams per dose. And so a dose response is not clear.

Now in ITP, it’s easy because you can see the platelets come back to normal values very quickly. Rheumatoid arthritis is more complicated. Will circulating B cells being depressed by veltuzumab be an indicator of efficacy? And we’re not sure that’s true because we think that the behavior of B cells in synovial joints and in other sides of the body may be more important criteria for evaluating not only the response but the most important fact is the durability of response. So these are many of the factors that we’re taking into consideration in this are in the next trial.

Brian Skorney – Brean Capital

Do you think we might anticipate that there will be some stratification based on baseline characteristics in the Phase II trial going to what you said might be the first issue?

Gerard Gorman

So I think what we’re going to do is capture the data. We’re going to take patients with all characteristics and then self analyze them to see which may be the most important. And of course we’re going to address this question that I mentioned what is the optimal dose, just because in ITP and in lymphoma, we had as good results at the lowest doses which shows this is a very important agent.

And don’t forget Rituximab is given 360 milligrams per meter square or weekly times four and we’ll be giving doses in the lymphomas of 80 milligrams per meter square and getting a higher CR rate than has been reported that for Rituximab. So we know it’s a very important molecule, but how is that going to translate in RA in terms of durability, should we think of more is better over a longer period of time or can we give a lower dose and may be repeat it to see whether or not we can get durable responses. These are the questions that almost important to me and I think are also important to (inaudible) to try to answer in a Phase II trial.

Brian Skorney – Brean Capital

All right. Thank you very much.

Operator

Thank you. That’s all the time we have for questions and answers today. At this time, I’d like to turn the conference back to Cynthia Sullivan for closing remarks.

Cynthia Sullivan

We’d like to thank you all very much for joining the call this morning and your continued interest which has clearly demonstrated by these great questions today. On behalf of the entire management team, I’d like to thank you for your support and your interest in Immunomedics and wish you a good day. Bye-bye.

Operator

That does conclude today’s conference call. You may now disconnect. Thank you and have a great day.

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