Peter Langecker - CEO
Barbara Riching - Director, Finance & CFO
OXiGENE, Inc. (OXGN) Q3 2012 Earnings Call November 8, 2012 4:30 PM ET
Good afternoon. Welcome to the OXiGENE’s Conference Call to Discuss Third Quarter 2012 Financial Results and Corporate Update. Today's call is being recorded and webcast. Participating in today's call are Chief Executive Officer, Dr. Peter Langecker and OXiGENE’s Director of Finance, and Chief Financial Officer, Barbara Riching. Following the introduction Dr. Langecker will discuss the company's corporate strategies and upcoming events. Ms. Riching will review the company’s financial results and then the company will take questions.
If you have not received a copy of the third quarter 2012 financial results press release, the company issued today, you can obtain one by visiting the company website www.oxigene.com. OXiGENE would like to remind everyone that during the conference call, members of the OXiGENE’s management team will make certain forward-looking statements regarding the company's future plans and anticipated outcomes that involve risks and uncertainties that may cause the actual results or outcomes to be materially different from those anticipated and discussed on this conference call.
Factors that may cause such difference include but are not limited to those risks and uncertainties associated with the pre-clinical and clinical drug development process, potential business and financial transactions and that believe to obtain additional financing to fund the company's operations. Please review the risks and uncertainties detailed in the company's annual report on Form 10K for the year ending December 31, 2011, quarterly report on Form 10Q and the company's other filings with the Securities and Exchange Commission.
Now I would like to turn the call over to OXiGENE’s CEO, Peter Langecker.
Thank you operator and thanks to everybody participating in today's call. During the call, I will review the company's progress in the third quarter 2012 and our corporate strategies. Following my comments, Barbara Riching will discuss our financial results for the third quarter 2012 and then we will open the call for questions.
During the course of this year, we have worked hard to determine the strategic path forward for our ZYBRESTAT clinical program in ovarian cancer and in anaplastic thyroid cancer or also called ATC. We believe that both our ovarian and ATC programs continue to represent significant marketing opportunities for OXiGENE.
We have evaluated the clinical significance of the data that we have generated to-date in both programs and the financial resources we would need to advance these programs to the next inflection points, the regulatory processes we would need to undertake and our options for establishing new and continuing alliances that would help to support our progress.
We have also spoken at lengths to potential pharmaceutical partners and to the investment community about both programs. We continue to hear strong interest in vascular disrupting agents with a promising class of anti-cancer therapeutics and we've also heard strong interest expressed especially from our ovarian cancer program which represents potentially much larger commercial opportunity than anaplastic thyroid cancer.
Our internal enthusiasm for pursuing development of ZYBRESTAT in ovarian cancer has grown significantly during this year, both from a scientific point of view as well as a commercial and potential partnering point of view. This enthusiasm is supported by our belief that we can achieve significant progress in the events of ovarian cancer indication comparatively rapidly and with relatively modest investment of capital.
Over the last several months as we’ve explored ways to advance our ATC program, we've grown and excited by an opportunity that we've identified that could represent a more cost effective and rapid path to approval and marketing of ZYBRESTAT in ATC in Europe than by pursuing a lengthy and expensive Phase III registration trial in the US. We believe we can capitalize on the strategy while we continue to explore how we might obtain the resources to conduct a Phase III study that would be consistent with this special protocol assessment that we recently completed with the FDA.
In the next few minutes, I would like to share our current thinking with you about how we intend to take advantage of both these ovarian cancer and ATC opportunities. One of our most important strategic decisions made last year was to focus on advanced ovarian cancer indications for which the medical need is urgent and current treatment options are limited or ineffective. We've discussed in the past that our meaningful markets, intellectual properties and regulatory incentives that make pursuit of orphan indications attractive especially for smaller companies with limited financial resources.
Our two leading clinical programs in ovarian cancer and ATC are indication for which ZYBRESTAT has received orphan designation from the FDA; these two programs received the bulk of OXiGENE’s focus over the last years. We believe that both programs are worthy of advancements for further investments. There are however, important differences between them and then how they are viewed by potential funders and potential partners and these differences have shaped our thinking about how to proceed.
As I mentioned, we've grown increasingly enthusiastic about ZYBRESTAT’s therapeutic and commercial potential as a treatment for advanced ovarian cancer, we believe that several promising clinical strategies to pursue in this indication that have their roots in the outstanding combinability of ZYBRESTAT and the mechanism of action with other therapies that could represent near tern inflection points that are deserving off OXiGENE’s increased focus and resources.
I will describe them briefly for you. The first one is a Phase II trial called the GOG 186I that is currently being conducted by the Gynecology Oncology Group. In this study, patients are being randomized into one or two treatment arms; one arm receives bevacizumab which is an anti-VEGF antibody and the second arm receives bevacizumab plus ZYBRESTAT. There is no chemotherapy involved which is really a ground breaking concept; patients are treated until disease progression for adverse events effect for the therapy. This study is being done in collaboration with Genentech who supplies the bevacizumab, and also Avastin for the trial at the National Cancer Institute. This study is expected to enroll 110 patients with advanced ovarian cancer and this trial is ongoing and progressing well at over 80 clinical sites in the US that are participating across the United States.
The primary endpoint of this Phase II trial is progression-free survival and that presents the time point when patients may have to resume ZYBRESTAT and chemotherapy because of increase of tumor burden. Secondary endpoints to safety overall survival and objective response by treatment; it is our hope that by adding ZYBRESTAT to bevacizumab we can prolong the progression free survival of these patients in a meaningful way. There is a strong scientific rationale for combining these two anti-vascular treatment modalities and compelling preclinical data that support this approach. In the near-term, we will learn how this combination compares clinically to the use bevacizumab alone and in advanced ovarian cancer patients and it has been long established that blood vessels, tumors differ greatly in structure and function from those to normal tissues, despite these abnormalities, the tumor’s ability to grow, spread and survive is dependent on its ability to establish and maintain the function of blood vessel network. Antiandrogenic agents from such as bevacizumab [act] primarily by interfering with new blood vessel formation vascular disrupting agents such as bevacizumab act by specifically damaging the established blood vessels.
It is believe that these two approaches are likely to be complimentary. Pre-clinic data support the [rational] and when the two therapies are combined with pre-clinical studies, there was a significantly greater tumor response in tumor model then what was achieved to the (inaudible) in treatments. For example, bevacizumab plus ZYBRESTAT led to tumor growth delay of 13 days in this model compared to six days to eight days for either along.
In August of 2012, we also announced that a pre-specified interim analysis of 25 patients in the GOG study indicated that the only one of this patients have experienced protocol specified serious adverse events and therefore the trial should continue to full enrollment. If the trail is clinically successful in terms of strong tumor progression, we believe that this combination of vascular targeting agents without the use of has toxic tumor ZYBRESTAT chemotherapy agents could provide patients a period of potentially less side effect leading treatment for the ovarian cancer.
We anticipate that the data safety monitoring for the study will perform and plan interim analysis in the first half of 2013 with the only announce able outcome from that whether the study should continue or not. In the patient enrollment and the study remains on track, the final statistical analysis of the data from this trail is anticipated in the second half of 2013.
Assuming a positive outcome from this trial and analysis we hope to be in a position to work with the GOG (inaudible) and take on the design of a potential pivotal registration trial in the syndication that could lead to an NDA filing maybe in the 2016-2017 timeframe.
Another initiative in ovarian cancer would build on the positive clinical results seen in prior clinical studies using ZYBRESTAT in conjunction with carboplatin, paclitaxel in patients with platinum-resistant ovarian cancer. Results from our Phase 2 study were presented at ASCO and the final data was published by Professor Gordon Rustin and his team at the Mount Vernon Cancer Center in the UK in January 2011 in issues of Annals of Oncology.
These results showed a response rate of 25% in 14 out of 44 patients in the platinum-resistant ovarian cancer population and an additional 11% or five out of 44 patients with [uncontrolled] responses on CT scans when paclitaxel and ZYBRESTAT were added to the carboplatin therapy. The results of this earlier study provide a strong foundation for pursuing the clinical program of ZYBRESTAT with (inaudible) based therapy in patients with advanced ovarian cancer which would be a Phase 2 study of ZYBRESTAT in combination with weekly paclitaxel sponsored by OxiGene.
Use of weekly paclitaxel is currently gaining ground among clinical oncologists for platinum-resistant ovarian cancer patients. OxiGene has generated a very encouraging preclinical data combining ZYBRESTAT and paclitaxel for which we have also filed substantial intellectual property.
We also have clinical data using ZYBRESTAT on a weekly basis so it appears that very compelling to test this particular combination clinically. This planned multi-center controlled trial would be designed to enroll 120 patients in a one-to-one randomization and have primary end points of progression free survival with (inaudible) in terms of safety overall survival objective response and CA125 response rate which is tumor marker for the ovarian cancer.
Our target date to begin the study subject to availability of course of financial resources is in 2013 with a final read out anticipated in 2015 assuming positive results this trial could indicate a development path we put in a registration trial and we believe we could secure funding conducted.
We believe that pursuing these strategies of combining ZYBRESTAT with chemotherapy or with other vascular targeting agents would offer the opportunity to establish important clinical validation for ZYBRESTAT added benefits and provide some meaningful near-term data readouts that could indicate potential [routes] to registration over the next several years.
In addition, we believe that encouraging data from any of these studies would increase the potential to find a large pharma partner for ZYBRESTAT and our discussions with potential pharma partners, this point of view has been reinforced.
The more encouraged we have become about the feasibility of pursuing ovarian cancer and securing both financing and potential partners for this program, the more we have realized that we cannot pursue both the anaplastic thyroid cancer and ovarian cancer with the same figure and resources.
ATC as we have discussed before is an indication for which we have the most compelling data suggesting an overall survival benefit. As we have been previously reported in our terminated Phase 2B 3 study, the addition of ZYBRESTAT to the carboplatin, paclitaxel, regimen resulted in more than doubling of the one year survival rate.
ATC is a rare and highly lethal cancer with a worldwide incidence of fewer than 12,000 cases per year. We've worked diligently over the past year to explore how to advance this program towards registration. We foresee widespread support from the worldwide clinical oncology community and from the patient community and we recently succeeded in completing the special protocol assessment process with the FDA for this planned FACT 2 trial, Phase 3 study, which we randomize 300 patients with ATC to treat the carboplatin or paclitaxel with get carboplatin and paclitaxel with or without the addition of ZYBRESTAT.
Although, we believe that ATC represents more than $250 million opportunity for OxiGene and the clinical results today have been compelling mounting a pivotal program in such a rare tumor type is a very challenging undertaking. It would involve more than clinical sites around the world, it would require tens of millions of dollars to conduct them which requires as much as four years to five years to complete. To be realistic, the pharmaceutical industry has low interest in this extremely rare indication and as does the financial community, while our efforts over the past year have been diligent, we've been unsuccessful in securing funding for our ATC program and/or in finding partner willing to invest time or money in such a small indication.
We have however, been successful in establishing a partnership with Azanta, the European pharmaceutical company to handle compassionate use request for ZYBRESTAT for patients with ATC, who have no other treatment options. Current EU regulations allow for reimbursement of the drug supplied under these conditions and those funds have Azanta and OxiGene to offset the expenses of the program.
In addition, these compassionate use requests have opened up the regulatory and commercial strategy path that could enable OxiGene to obtain marketing authorization for ZYBRESTAT in Europe for ATC based on existing clinical data and the demonstrated significant unmet medical need as shown by the compassionate use request.
This pathway could potentially lead to European approval sooner than we would have been able to achieve by a Phase 3 trial. This strategy would take advantage of the EUs marketing authorization process for (inaudible) indications this process provides for conditional and exceptional approval from medicinal products for seriously debilitating or life threatening diseases and has been applied to situations where the benefit and risk balance is positive where there is an unmet medical need and the benefit to the public health of making a therapy available to patients always the fact that there is not comprehensive data package for regulatory filing.
Since 1995 when this procedure was implemented there have been a number of drugs especially in the oncology field that were granted their first marketing authorization such as Taxotere which is Docetaxel, (inaudible), Trisenox and Gleevec, and then six other compounds.
So ZYBRESTAT and ATC would seem to meet the criteria for exceptional approval in the US. In EU, we have supported non-clinical and pharmaceutical information plus clinical data showing this one year survival benefit importantly through the compassionate use program that we have now data demonstrating compassionate treatment of patients in several countries in the EU.
We intend to pursue the strategy of seeking exceptional approval for ZYBRESTAT in Europe. If we are successful we could be in the position to market the product in Europe potentially by 2015 and after five years once the marketing application gets (inaudible) it could be reviewed for an unlimited period. This strategy would be relatively low cost for the company and likely would not require external funding for additional resources.
With a potential to pursue a European exceptional approval for ATC based on existing data, we believe it is not in our best interest in conducting the FACT 2 trial at this time, instead we will seek something to advance our ovarian program. We pursue the (inaudible) in ATC and we continue to invest at a lower level and early stage of program in (inaudible) syndrome in EML with OXi4503, our second generation BEA. We are in the process of putting these strategies in place and we look forward to keeping at least of our first big [progress].
Looking ahead to the remainder of 2012 and 2013, we anticipate several milestones that are in line with the strategies. Before the end of 2012, we expect to have initial results from the first quarter patient treated in the invested readers sponsored Phase 1 of OXi4503 and acute myeloid leukemia which has been conducted at the University of Florida in collaboration within leukemia lymphoma society.
We anticipate interim analysis from the GOG or [Hering] campus study in the first half of 2013 with a final analysis of the data in second half of 2013. The first quarter of 2013, we also anticipate receiving scientist advice from the National Advice with regard to the marketing authorization for ATC in Europe, it’s something we can secure adequate funding we would also anticipate conducting the additional trails in ovarian cancer that I described earlier.
Another possible early 2013 milestones is the potential initiation of the phase 2 study in patient will be neuroendocrine tumors or NET and carcinoid syndrome, carcinoid syndrome associated with metastatic carcinoid and neuroendocrine tumors is increasing in incidents more rapidly that any other cancer. That treatment it can be a drug surgery or ambulation techniques are not successful for us. For patients it provides only temporaries systematic relief. There is a worldwide interest among the key opinion leaders in finding new therapy approaches to neuroendocrine tumors and often cancer indications with significant unmet medical needs are compelling scientific basis for using ZYBRESTAT combined with other systemic treatments such as the metastatin analogue to disrupt blood flow to infuse tumor necrosis and reduce production of well validated dialogues with mediators such as serotonin which are associated with the most severe and debilitating symptoms of this disease.
Our plans for financing the events available to conduct the single arm open label Phase 2 study with ZYBRESTAT and 20 patients with NET and carcinoid syndromes whose clinical symptoms persist despite maximum metastatin analog therapy. Positive results from the study could provide the pathway through a registration program, and we believe that NET is represented therapeutically and commercially valuable opportunities supported by the fact that our IP projection for ZYBRESTAT can be an indication to extend into the years 2021.
Last but not least, I would like to mentioned that for several years now we have an ongoing collaboration with Baylor University in Waco, Texas that has been ongoing on the background with relatively little cost to us, and as part of our mediating program several structurally different classes of (inaudible) branding agents were synthesized. Among those is a (inaudible) compound called Benzosuberone with some of the analog symptoms of having significantly higher activity against a broad spectrum of cancer cells including prostate, breast, colon and other tumors with low [pacamona] concentrations.
These compounds would make very interesting payloads for antibody linked targeted therapies, and we are working with Baylor University and potentially other parties to expand on this research and we own the worldwide rights to them. It is a very interesting field in cancer research that is currently gaining significant momentum and we are very excited to see how many years of effort and funding in this space to potentially come to fruition.
We remain committed to bringing important therapies to patients with serious unmet medical needs. We believe that our pipeline of vascular disrupting agent represents a valuable arsenal of therapeutically differentiated and commercially valuable product opportunities. Our concentration on small (inaudible) indications is consistent with the strategy of focusing on programs that represent meaningful clinical breakthrough for patients that represent significant commercial opportunities for our company and near term value creating events for our investors.
Our ability to execute on our programs of course completely depends on having sufficient funding for these, and in this we are certainly not alone. We are developing stage company without significant revenues. We believe that our pipeline of vascular disrupting agent represents a valuable arsenal on value product opportunities but it is critical that OxiGene as a development stage company retains its ability to attract investments to fund these programs and the regulatory activities.
This is what the company's Board of Directors is expecting us to do, and it is our obligation towards our shareholders to pursue these programs with a goal of bringing our products to market and to increase shareholders value. We believe that remaining a NASDAQ listed company is of great value to the company and our shareholders and as such we intend to take steps to retain our NASDAQ listing. As we have previously announced we are currently not making plans with regard to the requirements to maintain a minimum share price of $1 per share, and we need to remedy that preferably before the compliance date of December 2012, and it is our belief that there's really only one way to achieve this and that is a rigorous stock split. This rigorous stock split will require the approval of the majority of outstanding shares to become effective, with approval of the Board of Directors of OxiGene, we have begun this process.
Last but not least, I want to thank the patients and families who have participated in our clinical studies. For their support, I want to thank the doctors, nurses and support staff at the many clinical sites that continue to participate in our clinical studies. and we look forward to keeping everybody informed of our progress and we appreciate unending support of our friends and investors.
Now I would like to ask Barbara Riching to review our financial results.
Thanks, Peter. For the three months period and September 30, 2012, the company reported a net loss of 2.2 million or $0.13 per share, compared with a net loss of 3.5 million or $0.25 per share for the three months period in 2011. The decrease in the net loss in the three months ended September 30, 2012, as compared to 2011, was primarily due to one-time restructuring charge of 1.1 million in 2011.
For the nine months ended September 30, 2012, the company reported a net loss of 6.4 million or $0.38 per share, compared with a net loss of 7.3 million or $0.74 per share for the nine months period in 2011. The difference in results for the comparable nine months period was due primarily to reduction of 1.5 million in research and development expenses in 2012 as compared to 2011, and a one-time restructuring charge of 1.1 million in 2011, partially offset by a non-cash gain of 2.2 million in 2011, resulting from a change in the fair value of warrants.
Additionally, the 2012 period includes a 0.1 million in revenue recognized under the terms of the company’s partnership agreement with Azanta entered into in December 2011 to provide access to ZYBRESTAT for the treatment of patients with anaplastic thyroid cancer on a compassionate new space in Europe and Canada.
The decrease in operating expenses in the 2012 period was primarily the result of the conclusion of the number of companies clinical projects and restructuring plans implemented in 2011 in order to focus the company’s resources of pursuing the advancement of its highest value clinical assets and to release its cash utilization.
At September 2012 OxiGene had cash and restricted cash of approximately 6.3 million compared with approximately 10 million at December 31, 2012. During the nine month ended September 30, 2012 the company issued approximately 2.7 million shares of common stock including (inaudible) capital under the terms of the November 2011 purchase agreement for net proceeds of approximately 2.1 million and 1.8 million shares of common stock to the company’s after market agreement with [MLB & Co.] for net proceeds of approximately 1.1 million.
Thanks Barbara. Now I would like to ask the operator to open the call for questions.
(Operator Instructions) At this time we are not showing any questions. I would like to turn the call over to Mr. Peter.
Thanks again all of you for participating in today’s call. As we move towards our upcoming milestone, we look forward to providing further updates. Thank you very much.
Thanks again to all of you for participating in today's call. As we towards the upcoming milestones, we look forward to providing further updates. Have a great day.