Event Date: 09/23/2009 Company Name: Dendreon Event Description:UBS Global Life Sciences Conference Source: Dendreon For more event information and transcripts, visit EVTS UBS Global Life Sciences Conference
MANAGEMENT DISCUSSION SECTION
Company Representative: Good afternoon, and thank you again for attending the 2009 UBS Global Life Sciences Conference. My name is Tuan Tusan [ph] and I'm happy to be your host for this session. Our next presentation is from Greg Schiffman, who is the Chief Financial Officer of Dendreon Corporation. Immediately following the presentation there will be a breakout session in the Julliard Room, directly one floor below. Thank you.
Gregory T. Schiffman MBA, CPA, Chief Financial Officer, Senior Vice President: Thank you very much. We're very pleased to be able to present here today at the UBS Life Science Conference and we'd like to thank the team at UBS for inviting us to their event. This presentation will include forward-looking statements that are subject to risks and uncertainties and to find out more about Dendreon Dendreon's specific risks and uncertainties, please reference our SEC filings. So Dendreon is the bio-tech company with a specific product focus in the area of Oncology. More specifically, we're looking to bring a first in class product to market. A product that's harnessing a patient's immune system to fight their cancer. Based on the clinical data that we have, we see some real strong advantages to this approach. First, you get a survival benefit with a very favorable safety profile. We'll talk about more of this in the presentation. Our lead product candidate is PROVENGE, or generic name of sipuleucel-T. It's for men with castrate-resistant prostate cancer that's metastasized. It's based on a platform technology, and the platform has the potential to address several other indications, bringing the same benefits; short duration of therapy and a very favorable side effect profile. We're headquartered in Seattle, Washington and our manufacturing facility is actually not that far from here in Morris Plains, New Jersey. We're also in the process of establishing manufacturing facilities in Atlanta, Georgia and Orange County, California. We currently have approximately 270 employees, and we're well financed with a balance sheet that positions us to be able to move forward in the pre-commercial activities that we're performing today. So the products that we're looking to bring to market are, for the first time ever, harnessing a patient's immune system to fight their cancer. We refer to these products as Active Cellular Immunotherapies, or ACI. The lead product being PROVENGE uses prostatic acid phosphatase as the targeted antigen. By changing out the targeted antigen, we're able to go after other indications. So if you look at our pipeline of products, PROVENGE is certainly the one that's the most advanced. We've run several Phase III studies and are currently in the process of amending our BLA based on the IMPACT data, which we received earlier this year. We've run a study that was in earlier Phase. It was androgen dependent, so people that have not yet failed androgen therapy. A trial called P-11, where we're able to show a delay in mean time and PSA doubling time of about 48%. NEUVENGE would be our second advanced candidate. It's been in a couple of Phase I studies, predominantly focused on women with breast cancer but also included patients in ovarian, colorectal and bladder. We have two other antigens, CEA, where the product focus would probably be in colon cancer and CA9 for kidney cancer. And finally, we have one product that is not an Active Cellular Immunotherapy. It's a small molecule that'd be orally available, TRPM8. It's one that we're extremely excited about. I don't think it gets the same level of press as where we're at with PROVENGE, but one we'll give a quick update with regards to where we see that moving forward. So the technology that Dendreon uses is referred to as Antigen Delivery Cassette. [ph] It's a combination of a well characterized and well validated antigen and again, in the case of PROVENGE, prostatic acid phosphatase. You can see that it's fused to a GM-CSF head that serves as an agivent enabling the cells to uptake the antigen about 100 times more effectively than the naked antigen alone. This is really the key IP and one of the key raw materials in the manufacturing of PROVENGE. By changing out the antigen, as we indicated, we can pursue other indications and we think that the results that we've had are validating the base platform and technology and one that excites us about the ability to be able to move forward and offer the same benefits on other indications. We've manufactured the antigen in commercial scale as part of our pre-licensing inspection with the FDA that took place in early 2007. The second key raw material in the product is the patient's own Antigen Presenting Cells. The patients go in for a blood collection, it's known as a leukapheresis. It's a standard blood collection procedure, and those cells are sent to our manufacturing facility. We look to isolate the Antigen Presenting Cells within the white blood cells that have been collected. Those are then combined with the fusion protein, or Antigen Delivery Cassette, where it's taken up by the cells. It's processed and broken down into peptide fragments and it becomes expressed on the surface of the cell. And this is the final therapeutic that is then sent back to the physician's office for re-infusion into the patient. The activated cells illicit a T-cell based immune response, which fights the patient's cancer. When we look at the marketplace for PROVENGE, there's about 540,000 men in either androgen-dependent or independent state. Of that, there's about 140,000 that are hormone refractory, or castrate-resistant, and 100,000 that are metastatic. This is the target population that Dendreon will be going after with the label. Our clinical trials were for men with androgen-independent or castrate-resistant metastatic prostate cancer. And so it's a very large target market, and there's a large unmet medical need for these patients. The patients are highly motivated for new treatment options. The only course of therapy for these men at this point is a chemotherapeutic regimen, of which a large percentage of patients do not choose to take because of the side effect profile and the duration of therapy. PROVENGE is a one month, three visits to a physician's office, delivery in terms of the therapy. The side effect profile is flu-like symptoms for one to two days following an infusion. It's these characteristics that have the patients, advocates and physicians to show such interest in our product. For these men, this is a very deadly disease. On average it's about 18 to 20 months survival. D9901 was the primary basis of our BLA submission that took place in December of 2006. It was the first time we've ever had a randomized, double-blind placebo controlled study of an immunotherapy that showed a survival benefit. We did not hit our primary end-point looking at disease progression. However, when we followed the patients for three years, which was predefined as part of the protocol, we saw a strong survival benefit. These would be the Kaplan-Meier curves associated with that study. A couple of key items to pay attention to here, and then we'll move on to our current study impact. Median survival, 25.9 months in the PROVENGE arm. 34% of the patients were alive at the end of three years. We showed a median survival benefit of four-and-a-half months. The IMPACT study was designed consistent with the previous studies. It was, again, randomized, double-blind, placebo controlled; much larger in that it enrolled 512 men with minimally symptomatic metastatic AIPC. We enrolled at about 70 sites. The primary end-point of this study was focused on survival, with a secondary end-point looking at disease progression. We did operate under a special protocol assessment with the FDA. If we look at the Kaplan-Meier curve, we see a lot of similarities with what we saw in D9901. I think that this adds to the strength of the data, the consistency that we've seen in the biologic. So 25.8 months of survival, very consistent with the previous study. At 36 months, there was 32% of the men alive, compared to 34% in the previous study. And the median survival benefit of 4.1 months compared to 4.5 months. Consistency in a biologic and a clinical study is certainly the goal, and we see strong consistency in our two Phase III studies. We did perform multiple sensitivity analysis on the data to understanding the robustness of the findings. The primary model is a Cox model that adjusts for PSA and LDH. We had a P value of .032 and a hazard ratio .775. We looked at the unadjusted log rank, which is a more standard model. You see again, very consistent results with a hazard ratio of .766 and a P value of .023. We also looked at adjusting for whether a patient took chemotherapy and the timing of when he went on to the chemotherapy again you see strong consistency in both the hazard ratio and P value. And finally we evaluated prostrate cancer's specific survival and once again the results were very consistent. When you look at the most adverse events, those that were experienced in greater than 5% of the patients you can see that about half of the patients in the sipuleucel-T arm experienced chills followed by fever, headache and sweating. So the side effects profile is very favorable relative to the standard of care that's offered today. The duration of the therapy being one month versus about 6.7 months on average for standard care today. Much shorter duration therapy. In general these are men that are not in pain, they're living a very high quality life and being able to have a short duration therapy with very favorable side effects fits very strong in terms of the interest of patients in treatments like this. Again as we've indicated I think the data is very strong and very consistent within subpopulations but it's also strong and consistent between the studies. We look at the 36 month treatment arm of PROVENGE, 34% alive in 9901, 02A 32%, and the IMPACT study, 32%. If we look at the median survival benefits, four and a half months, 3.3 in 02A and 4.1 months in IMPACT, on average about four months of survival. This consistency in placebo-controlled Phase III studies really adds strength to the data that we've gotten from the IMPACT study. So as we look at the conclusions from the IMPACT study, we'd say that this is the first time you've ever seen an immunotherapy demonstrate an overall improvement in survival for cancer. It's a breakthrough first in class product. It has a highly favorable benefit to risk profile with most common adverse events being fevers, chills and headache. Short duration of therapy and it has the potential to creating a new paradigm in treating of advanced prostate cancer. More importantly I think the results from this as well as the results from our Phase I NEUVENGE, which used the HER2/neu antigen is validating the potential to apply this platform across multiple cancers bringing the same therapeutic benefit. It really has the ability to revolutionize how cancer is treated. From a regulatory status we had a positive FDA Advisory Panel meeting that was held March 2007 where 13 of the 17 members of the Advisory Panel felt that PROVENGE had met the regulatory requirements for approval and all 17 felt that the product was safe. The FDA concurred that the BLA contained data showing the survival benefit. And they've agreed that positive analysis based on survival from the impact study would be sufficient for licensor probation. We received those results earlier this year. We presented the final analysis of those results at AUA. And at this point we're actively in the process of amending our BLA and we expect to file an amended BLA in the fourth quarter of this year which would enable upon, should the drug be approved, the potential to begin commercializing in the first half of next year. We own worldwide rights to the product. We're looking to commercialize the product directly in the U.S. and we're looking for a partner for outside of the U.S. So a few reasons that we can this approach, one, it's a very targeted sales force going after approximately 5,000 oncologists and 3,000 urologists. So a sales force structure of a total of 125 people should be able to service this customer base. The product is extremely easy for both patients and physicians. When a patient is diagnosed and a script is written you'll call up a call center. It will give them three dates that he's going to go in to have blood draws, and three days that he goes in for a physician visit. The physician is notified of the date that he'll be arriving. The product arrives to the physicians office and is infused typically over a 30-minute to one hour period. We indicated our manufacturing facility; the facility that we will begin commercialization with is in Morris Plains, New Jersey. We build out 25% of that facility and it's been reviewed by the FDA in 2007 as part of our pre-licensing inspection and that's what we would intend to begin commercialization with. As soon as we receive positive news from the study we've been aggressively moving forward to build out the rest of the New Jersey facility. We would expect to see substantial completion of construction in April of 2010, following which we need to go through our validation processes, submission of a SBLA to the FDA and then their inspection process to enable us to be able to utilize the additional capacity that we're bringing on board. In addition as soon as we receive the positive news we were in a position to be able to sign leases in both Atlanta, Georgia as well as Orange County, California for additional capacity. This gives us broad geographical coverage, which is important as we look at the logistics associated with this, dramatically eases the process of getting the products to our manufacturing sites. These are facilities that we can build up fairly quickly and the cost of building these is relatively inexpensive compared to traditional biologics. These facilities range between 50 to $80 million to completely build out including all of the equipment as well as infrastructure. It can be build out in a period of about 12 to 14 months following which you need to go through your validation process then a FDA inspection. So the timeline to build out is very short. And the cost of capital in terms of the actual capital investment is very small relative to a traditional biologics. We'd expect additional capacity from these facilities coming on board in the second half of 2011. We have two ongoing studies with PROVENGE. The first is a P07-1 NeoACT and this is actually looking at PROVENGE in very early phase. It is a NEOadjuvant study for patients that they've just been diagnosed with prostate cancer prior to having primary therapy. These patients will go in, have a treatment of PROVENGE and a month later have a prostatectomy. It enables us to both look at the prostatectomy specimen as well as peripheral blood. The intent is getting a much better idea of the mechanism of action for PROVENGE. The second study has enrollment criteria very similar to what we had in our IMPACT study. All patients will get active drug however they will get it with differing concentrations of the immunizing antigen. Again, it's helping us better understand and characterize the mechanism of action for PROVENGE and its biologic activity. And depending on the result, this could have the potential of improving the cost of goods sold if you find that you can actually use less antigen in the manufacturing of the product. NEUVENGE is the other study that we've moved forward in our Active Cellular Immunotherapy pipeline. It uses the HER2/neu antigen. And as I said, the primary patients for this were women with metastatic breast cancer that had failed multiple forms of therapy including Herceptin. They were progressing at the time of entering the study. The intent was one, to be able to show that you could get a T-cell based immune response specific to the antigen. But in addition, we looked anti-cancer activity and in 22% of the women who were progressing and had failed all forms of therapy up to that point in time, you showed prolonged disease stabilization and in the best case for almost up to two years. It was well tolerated with a side effect profile very similar to PROVENGE and it has the potential not just in breasts; we did include all comers and you had patients with blood or ovarian and colorectal also. And so we believe that this would have the potential for the four indications. Finally, Trp-p8 is an orally available small molecule product that we're moving forward. [ph] It went into the clinic this year. Trp-p8 is a CAT ion selective ion channel based product that the Trp-p8 is only found expressed in normal tissue. However, when you look at cancer tissues, it's over expressed in a majority of cancerous tissues. So we think that it is one that you can target very well and activation causes calcium to flow in the cells, creating cell apoptosis. So if we look at where Trp is over-expressed in cancers, it's over-expressed in all prostate cancers as well as BPH, but it's over-expressed in a majority of breast, melanoma, colorectal and lung cancer. We currently have a Phase I trial underway, looking at D3263, our molecule. It's a Phase I dose escalation being handled at a single institution. It's taking all patient population with advanced solid tumors. The intent is looking for a maximum tolerated dose, assessing safety, with secondary objectives looking to characterize pharmacokinetics and some preliminary assessment of anti-tumor activity. It went into the clinic earlier this year, and it's an active study at this point in time. From a financial basis, we finished last quarter with just under $290 million in cash and cash equivalents on the balance sheet. We're expecting to spend approximately $150 million in total for this year, and if we look at a year-end balance, we expect to finish the year with approximately $200 million in cash. The cash usage this year is about $70 million more than what we've had in our prior two years. The increase in cash usage is really being driven by purchase of raw material, the key raw material being the antigen, where we're investing about $20 million; capital expenses associated with building our New Jersey facility; and, finally, expenses associated with increase in head count and pre-commercial activities being driven with the potential to see PROVENGE commercializing in the first half of next year. So if we look at the investment opportunity for Dendreon, we see that this has the potential to be the first-to-market active immunotherapy. It really is as first-in-class product. We're looking to file a BLA amendment in the fourth quarter of this year. This is a major or a Type 2 amendment. It would have a six month PDUFA clock. Approval, if it would be coming, would be happening in the first half of next year. At that point we would be ready to begin commercialization. We've got data that demonstrates a significant survival benefit, with a very favorable safety profile relative to the alternatives available today. We've seen extremely strong physician and patient interest, as well as patient advocacy groups supporting this product. They're looking for better and well-tolerated therapies. This is exactly what the patients have been requesting. We've got strong commercial potential. We own 100% of the worldwide rights for this product. We're looking to partner ex-U.S. We will commercialize in the U.S. We think that, that has a large upside potential for shareholders. We have the opportunity to expand PROVENGE into both earlier and later stages of the disease but most importantly we think we validated the antigen delivery cassette platform and have the potential to move that platform forward. We will be hosting an Analyst's Day tomorrow which will be webcast. It will begin at 8:45. We'll be rolling out some of the commercial plans that we have as well as discussion about the pipeline and how we intend to progress forward with that. So for those that are interested it will be webcast live so you can listen in to that. We appreciate your time today. Thank you very much for your interest.
PRR Price at posting:
11.5¢ Sentiment: Buy Disclosure: Held
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