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Re: cjgaddy post# 76711

Sunday, 03/11/2012 11:01:12 AM

Sunday, March 11, 2012 11:01:12 AM

Post# of 345554
3-9-12 Qtly CC Transcript (Q3FY’12 q/e 1-31-12)
((( Orig. transcript from SeekingAlpha.com [ http://tinyurl.com/7evgeyv ], with numerous corrections made. )))
Link to webcast replay: http://ir.peregrineinc.com/eventdetail.cfm?EventID=109508

3-9-2012 Q3 FY’12 Earnings Conf. Call (q/e 1-31-12)
WELCOME & FWD-LOOKING STATEMENTS: Jay Carlson (IR) http://www.peregrineinc.com
Speakers: Steve King, Joe Shan, Robert Garnick, Paul Lytle; Q&A session at end.

CEO Steve King – OPENING COMMENTS:
In Q3, we have continued to make progress in all areas of our business, including clinical development for both our bavituximab & Cotara programs and in our contract manufacturing business, Avid Bioservices. These advancements had set the stage for what we expect will be an exciting rest of 2012, with a number of potential catalysts on the horizon, including data from 7 ongoing clinical trials, results of negotiations around a pivotal trial design for Cotara, and record revenues in our biomanufacturing business, Avid Bioservices. Let me begin by just addressing the most recent news.

This morning, we announced data from our randomized Phase II front-line NSCLC trial, evaluating bavituximab in combination with carboplatin & paclitaxel [CP]. Joe will cover the results in more detail, but just let me say that in our opinion we view the results as encouraging but inconclusive. Based on the fact that by one measure, with actually much better-matched historical experience of CP, we saw difference in progression-free survival, or PFS. Whereas by another measure, which is supposedly more robust but was not consistent with historical experience of CP, we saw very minimal differences in PFS. PFS is a surrogate endpoint for the ultimate endpoint, which is median overall survival [MOS], which does not have the same issues with bias and uncertainty associated with surrogate endpoints. This is also the most important endpoint, particularly in a front-line disease setting. So in no way do these result dampen our enthusiasm for the bavituximab program, it simply means that we now have to wait for MOS from this study to make a judgment on the overall trial results.

In addition, during the quarter, we announced initial data from our randomized Phase II trial of bavituximab in patients infected with genotype 1 HCV. The results from this trial were encouraging, and we believe they warrant further study of bavituximab in HCV patients, as part of a longer dosing regimen with some of the new antivirals that are coming into the market. We are actively seeking a development partner with the resources to advance this program, as we feel that bavituximab holds potential to be part of a better tolerated HCV combination therapy. Joe will discuss these results in more detail.

In addition to the progress in the bavituximab clinical programs, we also continue to make progress in our discussions with the FDA concerning a possible pivotal trial design for Cotara. Rob will go into more detail on those discussions and give his thoughts on progressing the Cotara program.

And, we continue to see good revenues coming through our manufacturing subsidiary, Avid Bioservices. Paul will cover this as part of his financial results discussions.

We believe this is an exciting time for both Peregrine and Avid Bioservices, as more potential clinical milestones for 2012 emerge for the company. As you know, the backbone of Peregrine is our first-in-class technology platforms, which have broad intellectual property estate and remain mostly unencumbered for partnering. We have seen, and are seeing, an increase in interest by potential partners in both the bavituximab & Cotara programs. And while I cannot comment as to the details or status of these discussions, or timing to a partnership deal, what I can say is a number of these companies are in the midst of conducting active due diligence, and in some cases, waiting for additional clinical data. It is our goal to secure regional partners for our bavituximab oncology program, while simultaneously looking for an appropriate partner to advance the HCV and Cotara programs into later stage clinical development.

Looking beyond the bavituximab & Cotara therapeutic programs, we anticipate pursuing opportunities in the areas of medical imaging, and we'll update you on our activities as future milestones are achieved.

Before you hear from the others on the mgt. team, I want to summarize our near-term milestones. By the time we have our next earnings call [~7-12-2012], we anticipate a number of important data points, including unblinding and data reports from our randomized Phase II 2nd-line NSCLC trial and 7 data presentations at AACR, including data from 3 of our clinical ISTs in breast, lung and liver cancer, and an update on our PS imaging agents as well. In addition, we have a number of opportunities for potential presentations at ASCO. Taken together, it is lining up to be an exciting next few months, and we look forward to updating you as we continue to make progress.

JOE SHAN (VP/Clin.&Reg. Affairs) – CLINICAL TRIALS:
Over the last quarter, we've made considerable progress in advancing our bavituximab & Cotara clinical programs. I want to start by providing an update of our bavituximab lung cancer program, which currently comprises 3 clinical trials in NSCLC, a Phase II front-line study, a Phase II second-line study and a Phase 1b investigator-sponsored trial [IST], all expected to yield multiple data points throughout 2012.

This morning, we reported data from our Front-line [NSCLC] study [3-9-12: http://tinyurl.com/7m9r6ya ]. This was a randomized trial designed to compare the overall response rate, or ORR, of carboplatin & paclitaxel [CP] with or without bavituximab in patients with untreated Phase IIIb or IV NSCLC. The data reported was based on 83 protocol-eligible patients for the protocol population. ORR, defined as a percentage of patients with objective tumor reduction, as well as progression-free survival [PFS], which is the time until objective tumor progression or death, were determined based on both investigator and independent central assessments of radiographic scans. Now back in December, we reported very preliminary investigator assessed ORR, which at that time was showing a 50% difference in favor of bavituximab. However, after all patients on both arms completed the maximum chemotherapy cycles, and with additional data collection and cleanup, a significant difference was not seen in ORR by either investigator or central assessments. While the primary endpoint of the study was ORR, as this provides the earliest potential sign of antitumor activity, it is a surrogate endpoint and often does not correlate with clinical benefits, particularly in front-line lung cancer. So I'd like to spend a few moments to discuss the next endpoint, PFS. Based on investigator assessments, patients treated with bavituximab+CP show a current median PFS estimate of 5.8 mos. versus 4.6 mos. in patients treated with CP alone, representing a 26% difference. These results are consistent with a prior single arm Phase II study testing the same bavituximab combination in front-line NSCLC patients, which showed a 6.1-month median PFS and with several prior published studies with CP showing approximately a 4.5 mos. median PFS. Based on independent central imaging reads, the current median PFS estimate is 6.7 mos. for the bavituximab-chemo arm and 6.4 months for the chemo-only arm. The differences between investigator and central reviews are expected as investigators have, in addition to the scans, clinical knowledge of the patients. And independent reviewers rely solely on the identified scan. And although independent image review is intended to eliminate investigator bias, at this point it is not clear, which method of determining PFS, if any, correlate with overall survival. We now wait to reach & report on MOS from this trial in the 2nd-half of 2012, which is ultimately the most definitive and meaningful endpoint.

Turning to our 2nd-Line NSCLC trial, you may recall that in October, we completed enrollment of 121 patients in our randomized double-blinded placebo-controlled Phase II trial. This set the stage for the unblinding of trial results and sharing with you the primary endpoint of ORR and potentially PFS when reached in the first half of this year. Our strategy is to pursue this 2nd-line indication in order to gain the fastest potential regulatory approval path

Finally, data from the Lung Cancer IST will be presented at the upcoming AACR Annual Meeting [4-2-2012 http://tinyurl.com/6s3w74z ].

Meanwhile, we continue to explore bavituximab's potential in treating Metastatic Pancreatic Cancer. With over 25 clinical sites with the U.S. and abroad, we are on track to complete patient enrollment and report interim data in 2012 from our 70-pt. randomized Phase II trial of bavituximab with gemcitabine.

Before turning the call over to Rob for an update on Cotara, I'd like to briefly mention our Hepatitis C program. In Dec, 2011, we provided an update from our randomized 12-week Phase II trial evaluating 2 doses of bavituximab+ribavirin vs. pegylated-interferon+ribavirin in treatment naive patients affected with genotype 1 HCV. Analysis of data indicated that both dose levels of bavituximab when combined with ribavirin, appeared safe & well-tolerated with patients reporting fewer side effects than in the interferon-containing arm. We were encouraged to see the combination of bavituximab at both doses tested with ribavirin demonstrated a consistent, gradual viral load reduction in some patients, which was not seen in our prior single agent bavituximab studies, suggesting additive activity when combined with ribavirin. Of interest, more patients achieved the primary endpoint of 12-week early viral response, or EVR, in the lower .3mg/kg bavituximab dose, although robust responses were also seen in patients treated at the higher 3g/kg dose level. While the EVR rate was greatest in the interferon-containing group by the end of this 12-week pilot study, based on the nature of the late EVR development and patients responding to bavituximab, plus ribavirin, a longer-term evaluation is needed to adequately compare the effectiveness of bavituximab versus interferon.
As interferon remains a cornerstone of HCV therapy, we believe bavituximab warrants further investigation in this indication. And as Steve mentioned, we are actively seeking a development partner to continue moving program forward.

Dr. Robert Garnick (Head of Regulatory Affairs)
I'd like to discuss the progress that has been made in on the Cotara program and then to hit my perspectives on today's data announcement on bavituximab. Regarding the Cotara program, over the last several months, as you know, we have continued our dialogue with FDA with specific emphasis on the next development steps that we need to be taking for this novel approach to treating recurrent glioblastoma multiforme, or GBM. Recently, FDA has provided specific feedback to us regarding our proposed trial design and we, in turn, have submitted our responses back to the agency. This is part of a process that continues and we're looking to develop a study for Phase III that has criteria of enrolling a reasonable number of patients, and a study that can be completed in a 2-year time frame or less in this orphan indication. We believe that having an FDA-reviewed protocol for Phase III is critical to advancing our partnering discussions and/or initiating a pivotal trial on our own. From our perspective, these discussions with FDA, to date, had been extremely positive, with the FDA being quite responsive and very helpful. Overall, the process is progressing very well in my opinion, and I believe a properly designed pivotal trial can be agreed upon and that we will be able to continue moving Cotara closer towards regulatory approval.

At this time, I'd like to provide my personal perspective on the [bavituximab] data that was announced. As I'd like to explain, these data in no way impact our enthusiasm for developing bavituximab as a novel anti-cancer agent or the clinical path that we have established. We have been clear that we do not know fully what to make of these results, given the unusually high control arm results. As Joe mentioned, and I will repeat, bavituximab arm data from this trial was in line with our expectations and consistent with the previous data that we've seen in earlier development programs. But what also adds to the confusion surrounding this data is that discrepancy between the 2 types of analysis, which when taken all together really says that we need to wait for the overall survival data, the ultimate endpoint that matters in front-line NSCLC.

CFO Paul Lytle:
Since our financial results for Q3 FY’12 can be found in our press release, I will focus my discussions on a few financial highlights that directly relate to our various sources of capital and our strategy to fund our investments in R&D. Our consistent goal, which we have stated over the last several quarters, is to closely match our financial investments in R&D with our various sources of capital. And by ending the January quarter with an increased cash position of close to $20mm in cash & cash equivalents, compared to $18mm reported at the end of October 2011, we have reached this goal.

An important part of our cash inflows comes from our hybrid business model that includes Avid Bioservices, a revenue-generating business that truly sets us apart from the majority of other biotechnology companies. Avid generated $3.2mm in contract mfg. revenue [CMO] during the current quarter from 3rd-party clients and $12.8mm for the 9 mos. ended Jan.2012. Looking ahead at Avid's pipeline of committed projects, we are revising our guidance for CMO revenues to $14mm-$16mm for FY’12 [May’11-Apr’12], which could represent a record year for Avid. And this is only possible with the long-standing and successful relationships Avid has with its client, including Halozyme Therapeutics, where Avid continues to be an important part of their overall supply strategy. We are looking forward to continuing this mutually beneficial partnership, one that directly speaks to the success of our partners and the dedication of our employees.

In closing, let me say that we are planning for success as we get closer to unblinding data from our 2nd-line NSCLC study and reporting several other clinical data points from our other ongoing trials. And it's important to note that while we always seek other non-dilutive opportunities to fund our future development efforts, it is always prudent to prepare for other ways to fund our operations. In line with this strategy, we will be filing a new shelf-registration statement later today [ 3-9-12: “PPHM files shelf to sell up to $150mm common stock, warrants”, S3: http://tinyurl.com/7dl7pjm ] as a potential measure to assist us at advancing our pipeline of novel drug candidates. We look forward to keeping you updated on our progress.

Q&A: [20:10 mark]

1. Charles Duncan (JMP Securities): [8-30-11 coverage init: http://tinyurl.com/3crdwqz ]
I'm with JMP Securities. I want to ask a couple of questions regarding today's news on bavituximab. I know that you don't know, but I'm just wondering if you could speculate on the reason for the high control arms in terms of PFS. I'm wondering if the new diagnostics standard that was implemented in 2010 could help to explain this result?
Joe Shan: Yes, Charles, this is Joe. Are you referring to the new RECIST guidelines?
CD: Yes.
Joe Shan: I think it's difficult for us to say without trying to compare it with the prior RECIST versions, but these are relatively small studies - I think that's probably one of the bigger contributing factors. And when you look at these scans, like I mentioned in my remarks, that the independent readers, while they are more unbiased, they only have radiographs, so they can only read what they have, and so sometimes if there's not clear progression or an event, then patients are censored in the actuarial analysis, like Kaplan-Meier [ ”Kaplan-Meier Method” – see http://cancerguide.org/scurve_km.html ]. So I think that certainly can contribute to numbers that are a little bit outside of what you expect.
CD: And with regard to the PFS inconsistency, could you remind us what type of imaging was employed, was it CT or MRI?
Joe Shan: Yes, these are typically spiral CTs. MRIs are supplemented for certain anatomies.
CD: OK. And then with regard to disease progression or at least with regard to the investigator assessment, how comfortable are you that you've defined that pretty rigorously? And, what have you done to try to eliminate or reduce investigator bias on that assessment?
Joe Shan: Sure. Well, I think certainly, we provide training on RECIST. They all have to be selected before they can participate on the trial. And we've also, in the process of reviewing case report forms, have tried to ensure accuracy of transcription. Now ultimately, even though radiographs are objective, which lesions that are selected by a radiologist, there's some clinical judgment and subjectivity involved. So even at the central read facilities, those radiologists are making determinations of which lesions they're assessing to over time.
CD: And then when you look at your overall response rate for this trial when compare to your single-arm trial, it's a little bit lower. I'm wondering if you could share with us, if you had differences in patient inclusion criteria, and if you know what the % of Stage IV versus Stage IIIb patients were in this trial?”
Joe Shan: The number in each arm was similar to the sample size in our prior single-arm study. I think we did have fewer Stage IIIb’s in this study; I think we only had a handful, so that might partially explain the slightly lower response rates. Plus, I think it's very difficult in a small study like this to really say if it's due to staging; when we start splitting the patients by these different baseline characteristics, the numbers get really, really small.
CD: OK, could just be the luck of the draw. My final question is, if you look at the design & conduct of the 2nd-line lung cancer trial and compare it to the 1st-line trial, I guess it seems like in some ways in 2nd-line you may be able to get a better signal-to-noise. What are your thoughts on that trial with regard to potential confounding variables, particularly given what you know now in the 1st-line trial?
Joe Shan: Well, certainly this was our lead indication all along and, in fact, was the initial study that we discussed with FDA. So this is the one we feel has the potential to be the first regulatory indication. Yes, you're right that there could be a better signal-to-noise, if you will, in your words. The response rates are quite low with the existing chemotherapies. And we believe even a few patients here and there could make a significant % difference. And so, hopefully, we'll see that.
Steve King: Just to add to that, Charles, I think one of the other added features of this [2nd-Line NSCLC] study, of course, is that it's double-blinded & placebo-controlled. So, as the investigators are looking at scans, as well as the central readers, of course, really pretty much all the bias should be taken out of the system by that blinding process. So, that's another thing that is really a significant difference from the front-line study - it should hopefully be a cleaner result from the study; it’s a little bit more robust of a trial design. So I guess, it's just another aspect to that study.
CD: Yes, I agree with you, Steven. And, Joe, 2nd-Line is one that we're kind of hanging our hat on, if you will. Thanks for the added info.

2. Joe Pantginis – Roth Capital Partners: [ http://www.roth.com & https://roth2.bluematrix.com/docs/pdf/BLUE.pdf ]
Guys, I have a more of a face value sort of cut-to-the-chase question, just based on the market reaction today, which sort of views this study as a failure because it didn't meet the primary endpoint of overall response rates. So based on the fact that the primary endpoint wasn't met today, how would you describe, and I know you touched on this in a lot of your prepared comments, how or why should we in the market not view the first-line indication as a dead indication for bavi at this point, and then I have a follow-on for Cotara?
Steve King: The purpose of running the study was to really identify, in part, whether front-line NSCLC is a good target indication for bavituximab. So the goal of the study, the primary endpoint was overall tumor response. We recognize that in any pivotal study in front-line NSCLC, MOS is almost assuredly going to be your endpoint in that study. And so, all along, we knew that the secondary endpoint, PFS, which again is yet another surrogate, was next in line in importance, but really it’s MOS, because as we're thinking about potentially moving this into a pivotal study, then it would be based on those MOS results, not the earlier endpoints. In addition, this is kind of the first inning of a ballgame here, and we've gotten some initial results from the study – we need the most important result that are still up & coming. In addition, we have another IST lung trial combination with the pemetrexed & carboplatin in a front-line setting, so this is just part of the overall strategy in front-line. And then, again, as Joe just mentioned, really the target primary indication is still in 2nd-line NSCLC, and that’s the reason for the more robust trial design in that particular trial. What I'd like to do is ask Rob to share some of his experience, because he's certainly been through many successful development programs; he’s seen the ups & downs that happened during many of those development programs and maybe give a little bit more of his personal experience.
Robert Garnick: I think to really put this in the proper perspective; this is a front-line trial and front-line is for relatively healthy people. It's very hard with a small number of patients to show any real effect in front-line. And certainly, a response rate and PFS, in my view, while they're early reads and you get some information, the fact is that the only endpoint that really counts is MOS and the FDA's pointed that out multiple times. We've seen a great many trials show pretty mediocre response rate results, but have yet gone on to show extremely good overall survival results - I think Herceptin is a great example of that. During the development of Herceptin, if you looked at the Phase II response rate data, you'd be extremely unimpressed compared to what the ultimate results were in survival, certainly in breast cancer. So, I personally don't read a lot into overall response rate data nor PFS and really go for the standard that really counts that's unequivocal and relatively straightforward to measure, which is MOS, and I think we have to wait for those results in order to make any judgment. And on top of that, I'd like to point out that our primary goal is in 2nd-line NSCLC, which is a disease with very low response rates in general, I think about 10% or 11%, and what we're expecting to show there is a real increase ultimately in survival. And, if we see that, that's what we'll take forward into a Phase III pivotal trial. So, I'm personally not at all dismayed or upset or in any way doubt the drug. I think we're 100% behind it, and I think all of you should understand how we're thinking about it. Steve, any other comments?
Steve King: No, I think that's good perspective, because you've seen this quite a number of times now, so you have that additional perspective on the these situations.
JP: That's very helpful. And then my follow-up question for Cotara was, I was wondering, Rob, thanks for the update, can you give any sense of the extent or the tenor of your discussions as to how close we might be to a final agreement?
Rob Garnick: I think we're still working through the agency. We've sent in our responses and they're evaluating those. These tend to be kind of an iterative process. We are trying to balance providing sufficient data in a trial that's enrollable and actually executable in a reasonable time frame. And we have to balance that with FDA's needs to assure the safety & efficacy of the product. It is an orphan indication, and a difficult one from that standpoint. But I think we're making good progress with them. The relationship is very positive & collegial, and it's a back-and-forth game until we're finding into a place where everyone is comfortable.

3. Edward Nash – Cowen & Company: [ http://cowen.com/Research.html , Mr.Nash: http://tinyurl.com/6t4wqls ]
You've actually addressed one of my questions, which was could you give me an example of potentially when we've had a drug where we've seen questionable overall response rates or progression-free survival, but we've ended up seeing great overall survival, and you used Herceptin as an example, and maybe if there's another one you that could throw out there, that would be great. And then I just wanted to also know have you run this through your SAB and what kind of advice had they been kind of saying? Is it just a matter of just wait, let's go through and just wait and we'll see what the overall survival looks like at the end of the day? And then, my last question, which is the last one is, I realize that, obviously, overall survival could still be successful, but I kind of use the comparison with HepC where we have RVR & EVR that kind of give us some indication as to what the ultimate FDR is going to look like. So are ORR & PFS just not really good markers at the end of the day, it really isn't giving us anything? Or is it that they usually are helpful and it's just that we have to wait and sometimes they don't pan out, but overall survival still wins?
Steve King: We're all in agreement that after spending hours & hours pouring through the data, the site reads vs. the central reads and everything else, we all just really came to the conclusion that, well, we just really can't make a firm judgment based on these surrogate endpoints. And basically, it's just now, let’s see what the survival data looks like and will that be more indicative of the signs of difference in PFS’s we saw on the site reads or will it be more indicative of the lack of difference we saw on the central reads? And ultimately, that will be born out in the most important endpoint. And so I think everybody's in agreement, our advisors, everyone we worked with. And at the end of the day, we all came to the same conclusion. As far as the other examples of drugs that haven't shown good [surrogates]. Typically in NSCLC, there hasn't been a great correlation between particularly tumor response rates and MOS. As Rob said, you can learn some things from tumor response rates and from PFS, but a lot of times they just don't end up working out in the end. And I think for some of the same reasons we saw in this trial is, there is some subjective nature to those sorts of measurement, and as much as you try to control them, there's still people involved in this, and it's a complex business when you get down to the way it's evaluated. So I think if you look at some of the other 2nd-Line NSCLC studies, typically when we see small studies you see these the same sorts of variability’s and the lack of correlation between those early endpoints and eventually MOS. And Joe, I don't know if you want to add a little bit more to that.
Joe Shan: Sure. I think your analogy of the RVR, EVR, SVR, those are very consistent results, they’re all directly measuring viral load. So I think those have demonstrated to correlate with the SVR. And, in fact, is itself a surrogate but an accepted endpoint for HCV cure. Now in cancer, of course, response rates are shrinking tumors, which originally, I think, was to measure cytotoxic chemotherapy activity. But correlating that with time-to events and progression-free survival, how long it takes before patients progress again, those are very different ways to look at endpoints. So I think that that's one major factor why response rates and PFS, neither of those necessarily correlate with overall survival. And certainly, we have a new targeted agents that don't work by this dramatic cytotoxic effect and so we do not see dramatic response differences.
Steve King: I think each type of cancer is going to be a little bit different story. Obviously, in NSCLC that may not be in good correlations whereas other particular indications there could be a better correlation. So, when we look at the data, it's just been pretty inconsistent and, again, as Rob said earlier, you can learn something. It's really the overall survival that's going to be your guidepost.
Robert Garnick: And just to add another point, in terms of the response rate, I mean, there are a lots that, Iressa for example, was approved, which had actually pretty impressive overall response rates, and it was given the accelerated approval based on that, and then when the actual pivotal trials were done in Iressa, it showed no overall survival benefit and FDA recommended pulling it off the market. So I've seen this go both ways. And again, you would like to see, what you'd love to see is a direct linear coloration between response rate & PFS and MOS, but most of the time doesn't work out that way. And that's why FDA really believes that overall survival is the most appropriate endpoint for judging the value and benefit of these products we would provide to the patients. So there are a lot of horror stories, I could go to a 100 of horror stories of drugs that had early development issues. A good example was Avastin failed as a monotherapy and I think everyone questioned why would this drug ever work if it didn't work as a monotherapy agent, given the mechanism of action that Avastin was designed and expected to have. And yet when it was combined with chemotherapy, it showed really stunning results in colorectal cancer. So again, drug development is all about designing your studies properly and giving the product the best opportunities and seeing where the data actually takes you. So it's kind of the perspective that I have and, hopefully, it provides some value to you.

4. George Zavoico (MLV): [ 2-8-10 coverage init: http://tinyurl.com/yech7gz ]
Thanks for the update and the analysis - Rob, in particular, I think your viewpoints and experiences have been very helpful in helping us understand the results. I just have a couple of follow-on questions regarding the front-line trial. First of all, would you comment a little bit on the size of the trial. It seems to me that because it was such a small trial, a couple of outliers could have skewed the results in either direction, in either the investigator review or the central review. And #2, was there any imbalance in the patient demographics that you might be able to speak to in terms of one group having more 3B’s vs. IVs, for example?
Joe Shan: We’ve tried to look at the major subgroups, again, to address the question, the size of the trial. It is relatively small but I think it's right in the range for Phase IIs if you just kind of canvas what other people run. In fact, it might even be a few more patients in each arm. But again, Phase IIs are designed signal-seeking and at the time we felt, though, sufficiently powered to see some dramatic differences in ORR. When we do try to look at imbalances, we're not seeing any significant imbalances in age or tumor burden or even the stage of disease. There's just too few patients in each group to really draw any conclusions.
GZ: OK. And just I think I know the answer to this but just to be sure, this is the PFS data so and it is median, and the numbers for the months, that's pretty firm now. In other words, half the patients have gotten to their progression, right, so those numbers are not going to change with further analysis, is that correct?
Joe Shan: They are actually still subject to some slight changes. There are patients still on the trial on both arms. And because of some censoring events [ie, Kaplan-Meier Method] that might have occurred early, I think these patients could make some small differences in the final numbers. I think it's going to be in the same ballpark.
Steve King: One of our goals is at one of the medical conferences coming up is to be able to really give the full in-depth view of the data from the study and kind of the outcome and be able to present at one of those events.
GZ: Sure, and I agree with everyone that ultimately, it's the overall survival that will really inform the program going forward. I have a question regarding Avid, and congratulations on the growth of Avid revenue. This has been somewhat cyclical in nature, your revenue stream. But now it appears that you're getting more customers, more clients and it seems to be a little bit more, or hopefully maybe it's getting to the point where it's not going to be quite so cyclical as you grow the business. Can you comment a little bit as to where you see going forward the cyclicality or the potential cyclicality of that business?
Steve King: You're right. I think the business has become much more consistent. It's primarily because of the fact that our customers have been very successful, and I think Paul mentioned Halozyme has done quite well and they're obviously expanding the potential utility of their drugs with their collaborations with Baxter & Roche. And we have a European client that is now finishing up their Phase III and hopefully will moving their product to the market. And really it's that commercial production which allows you to sort of smooth out the wrinkles, if you will. From the qtr-to-qtr variability, there will always be some of that's just based on the timing of release of lots and the fact that each lot represents a significant bit of revenue, anywhere from $.5mm to sometimes $2mm. But I think it really is the success of the clients; I think we'll see that, hopefully, continue into the future here as they're successful and we bring in new players into the facility as well. So yes, we're actually quite excited about Avid and the future of the business and the ability to grow that. And it's an alive and well business. It's doing quite well, and they will make great progress there.
GZ: I'm glad to hear that and it certainly fits into Paul's hybrid model for keeping the capital at a comfortable level. Thank you very much gentlemen, I look forward to AACR and the overall survival results.

5. Stephen Dunn – LifeTech Capital:
[ LifeTech Capital (div. of Aurora Capital LLC), Boca Raton/NYC - http://LifeTechCapital.com
Analysts:
• Stephen M. Dunn, Sr. Managing Director Research
• William D. Dawson, Senior VP Research ]

All my questions have been answered except for one. If we look back, the control arm notwithstanding, if we look back at the results we've seen across all the trials, the results almost always match equivalent trials using Avastin+Chemo as the various agents. If we don't see anything tremendously outstanding vs. control arms, is there a possibility that you would ultimately file this as a non-inferior against Avastin? And if so, could you describe what benefits bavituximab would have over Avastin, vis-a-vis safety or whatever? You have different mechanisms of action, but there are similarities as well. So, is there a way of dealing with the pseudo-biosimilar strategy, if the data comes out ambiguous?
Steve King: I can start the ball rolling and I’ll get some inputs from both Joe and from Rob. My viewpoint on this is that absolutely, the results have looked similar in many cases to prior Avastin studies. And in fact, we've, in many cases, really been following the Avastin pathway in some of these trial designs and patient numbers we've been running. The goal is really to see where this drug does shine. It has a different mechanism of action from Avastin. We think we'll have different effects. I think some of the interesting things that come from running the number of studies we are is you start to see maybe some of those areas where you potentially have some benefit, whether it be from a safety standpoint where we don't see some of the, if you will, the side effects that you see with anti-angiogenesis agents across the board, like hypertension, some of the bleeding problems. In addition, I'll let Joe address, but in one of our ongoing ISTs have also seeing some new areas where different drug combinations may be possible with bavituximab that you just can't run with the anti-angiogenesis agents. So, our goal is to show this is a unique drug with its own indications and its own side effect profile. Maybe it will be used safely in some indications where Avastin couldn't be potentially. But in the end, I think they’re just different types of drugs with different mechanisms and that will eventually come through in the clinical development. In some ways it's been comforting that the results have been so similar to Avastin, because, obviously, that's become quite a successful drug and although it itself has had a setback here or there, it's still a phenomenally successful commercial agent. So, Joe, I'll turn it over to you if you want to expand.
Joe Shan: Steve’s already touched on this, we're still running these studies, but so far we're not seeing some of the sort of anti-angiogenic class effects, toxicities such as the bleeding, wound healing impairment, kidney issues and hypertension, and such. So that certainly could be one advantage. Now as far as the non-inferiority, we really haven't discussed that sort of pathway. As Steve mentioned, we're trying to figure out where bavituximab works the best, and it may not been in any indications where Avastin was actually approved. So I think we really need to kind of push forward and try to find the right way to use bavituximab.
Steve King: And now, before I turn over to Rob, one of the things that came up, for instance, is running an IST in combination with Sorafenib and in the partnering discussion they were particularly intrigued by the fact that we were able to significantly up to this point to be able safely give bavituximab with Sorafenib [1st IST Ph1/2, Bavi+Sorafenib vs. Liver Cancer, open-label, n=56, UTSW, note: Sorafenib=Bayer's Nexavar http://www.nexavar.com , http://clinicaltrials.gov/ct2/show/NCT01264705 ] because that's a significant issue with the anti-angiogenesis drugs because of some overlapping toxicities. So, by running all these studies, you start to kind of tease apart where the differences are and where the similarities are, and I think that gives us a great opportunity for development. Rob, I don't know if you want to add anything to that?
Rob Garnick: I think it [Bavi] is somewhat similar to Avastin and it's certainly the kind of broad spectrum mechanism of action with respect to, in case of Avastin, anti-VEGF or seeking to combine with VEGF as a neo-vascularization preventative agent vs. being able to bind phosphatidylserine in any number of cancer cells. So, both of them have a lot of kind of broad-spectrum similarities. And I agree with Steve and with Joe, that what we really want to do is find where bavituximab has the greatest benefit. And that may not be in a place where Avastin is currently approved. Given that the drug has potentially a good safety profile and it certainly seems to be very active, so it's really a question of finding the right indication through the studies that we're doing, and then to move aggressively & definitively towards an approval in that indication. So I think that's really the kind of drug-dev. program that we're envisioning.

6. David Musket (ProMed Mgt.) [“1996 Mr. Musket co-founded ProMed Management, an investment firm which controls a family of healthcare funds…” http://www.bizjournals.com/boston/stories/2008/03/10/story3.html?page=all ]
Just to clarify, the data you reported today is on all 86 on the ITT protocol, right?
Joe Shan: No, actually we reported on the protocol analysis, this is on 83 patients.
DM: OK. So maybe you can help us understand - with all the disclaimers you've already provided about overall response rate, I'm not going back to ask you to do that again, but can you help us understand a little bit about the dropout here, the 26% vs. the 39% on the ORR that we had in December versus the 23% & 26% that we heard about today?
Joe Shan: So those, again, are based on local reads and when we reported in December, we had recently completed an enrollment, meaning that the last patients had just began the study, and so they were still very early in their treatment cycles. As patients continue getting chemotherapy cycles, they have an opportunity to achieve a response, so that, over time, explains some of the differences. Also over time, as the doctors evaluate some of these patients, there are changes in the scans sometimes that render an initial lesion that they're tracking, not to be a reliable read lesion, so they would go back and actually take them out of the assessment and maybe use another lesion, if available. So that also can affect the responses over time. Overall, there was a net of change of a couple of patients in each arm and that's how they came together. We already touched on the nature of the study being a relatively small size study, each patient is a couple of percent.
DM: And the 3 patients that dropped out?
Joe Shan: The 3 patients that dropped out actually were all on the chemotherapy arm. As it turns out, they were not properly staged that entry and they were not Stage IIIb or 4.
DM: Thank you, that’s very helpful. So, now just trying to, I guess, prepare for not running down the same path again, we're expecting to get ORR data on the 2nd-Line [NSCLC] trial sometime mid-year?
Steve King: Yes, the next upcoming milestones: we have some data presentations at the AACR and the unblinding of the 2nd-Line study. Probably around the same time period we'll also have PFS - if you look historically it's been in the range of about 3 mos. or so with chemotherapy alone, usually a little bit less. Since we completed enrollment in October, there's the possibility that we’ll around the same time period have the ORR data as well as the PFS there, because these patients are really just in much worse shape than they are in the front-line setting, where tumor response rates are generally less than 10%. And, again, median PFS is around 3 mos. and even MOS is not a whole lot longer than that.
DM: So this ORR data [2ndline NSCLC] that we're going to have, just to prepare us in advance, is that going to be independent reads or just from the investigators again?
Steve King: That will be from both. Now, keep in mind, that in this study, the trial was double-blinded & placebo-controlled. So unlike the front-line study, where the physicians know what the patients are getting at the time of doing the scans and the evaluations and determining patient treatment, in this study they want know which of the arms of the study the patients are on.
DM: Are you saying, you expect will have both the investigator data and the independent reads?
Joe Shan: Correct. Yes. Before we unblind treatment, we want to get all of that.
DM: Great, which is obviously different than what we had in December?
Joe Shan: Right.
DM: OK, that's great. So that should help eliminate this potential confusion at the time?
Steve King: Yes, the 2nd-Line study was really designed to be part of a registration package; we worked with the FDA on this, and it’s part of eventually two confirmatory studies that potentially could lead to licensure. So, just a little more robust trial design. Of course, those kinds of trials are more expensive as well, but we do think it’s a very robust study and it’s one we've been ourselves the most anxious to see probably of all the studies we're running.
DM: Exactly that's what I'm trying to say is, if we can avoid the confusion, it would be great so we can actually try to get a little bit more interested. So we'll probably get both the ORR & PFS, you think, around the same time and sometime before mid-year?
Steve King: Yes, I think that's our anticipation.
DM: Fantastic. And, you said you filed a shelf, is that what you did? Did I hear that right at the end of your call today?
Paul Lytle: Yes, we did file a registration statement today on Form S-3.
DM: How big?
Paul Lytle: That's for $150 million. And our goal is really to plan for success here and having an effective shelf in place allows us to plan for success. Obviously, our goal is to look at potential partnerships as we move forward to help fund these bigger Phase III studies that we're anticipating based on promising data. But we want to be prepared internally to have an additional vehicle in place; assuming you can't determine when and the time frame of a potential partnership. So we just want to make sure we're taking prudent measures internally to prepare ourselves for success, and in a shelf that will last 3 years, once it’s declared effective.
DM: Well, I don't want to push it, but if you want to go even further here. I mean, certainly you can imagine people will be saying this is adding insult to injury to the extent that you were even considering selling stock at these prices? So do you either want to go so far as to say that that's not something you would do in this time frame until we get a little farther downstream with some of your clinical trials?
Paul Lytle: Obviously, we're not pleased with selling stock at any price range where we're sitting today. But, the ultimate goal is to make sure and ensure that we can advance our program into the clinical milestones that we think can add a lot of value to our company here and to add value to shareholders. We did end the quarter with close to $20mm in cash & cash equivalents, so I don't think there's any immediate pressure to sell stock in the open markets. But again, over the last several years, we've been able to closely match the amount of capital that we've raised with the resources that we've spent on our pipeline, and the worst thing we want to do is not get down to a cash position that makes us vulnerable.

MR. KING’S CLOSING COMMENTS:
I'd like to thank you all again for participating in today's conference call. We look forward to keeping you updated on our clinical progress and upcoming data presentations over the coming months until we have our next quarterly conference call. Thank you very much.

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