Earnings Transcript for IMMP - Q1 Fiscal Year 2013

Executives: Matthew Lehman – Chief Executive Officer Dr. Sharron Gargosky – Chief Technical Officer Marc Voigt – Chief Business Officer and Chief Financial Officer

Analysts: Zara Lyons – Nomura Securities David Stanton – Nomura Group Steve Morse – HELM Capital Partners Anton Uvarov – RM Capital George Gladstone – Ord Minnett Research [Presentation will be updated soon]

Operator: Thank you. (Operator Instructions) Our first question comes from [Anton] with Ord Minnett. Please go ahead.

Unidentified Analyst: I just wanted to ask a question around the grant from the Saxony Development Bank $3.8 million. Can you tell me how the grant was as far as you qualify for that and significance going forward?

Matthew Lehman: Yes, sure. So I think just a little bit of background. So we have a subsidiary and we have one of our main offices is based on Leipzig, Germany. We worked with one of the manufacturing collaborators in that region. It’s called the Fraunhofer Institute for Cell Therapy and Immunology. So we worked with this for actually to develop management for clinical trials. They are also doing some additional work on some immune monitoring and some additional like our companion screening, where we have to do the screening test for mucin 1 positive tumor. So, we’ve been working with the institute in a number of ways. We were first to award a, this does goes back years, we are awarded a €4.1 million grant to help support some of our initial work in that region and then this is an additional grant that will help support, really a lot of it’s dedicated to the phase II program of additional cancer indications of offering additional manufacturing and immune monitoring testing. So primarily our eligibility for this is basically we’re a development stage company, we’re trying to invest in the State of Saxony, we hire people, it’s very much an economic development program and trying with tract innovative and development stage companies to the region. And yeah, I mean it is competitive, we have to make an application, it was quite an extensive one so we discuss both the merits of the program, the background where we are to date, what we’re trying to do with the money and the way this works practically. They were at the grant and then basically as money expense on the development program it’s kind of reimbursed from the State of Saxony, it’s Saxony Development Bank that administers the funds. Did that answer the question?

Unidentified Analyst: Yes, thank you.

Marc Voigt: Okay, yeah thanks. Good question.

Operator: Thank you. The next question comes from [Violet Zara Lyons] with Nomura. Please go ahead.

Zara Lyons: Good morning it’s Zara Lyons from Nomura.

– Nomura Securities: Good morning it’s Zara Lyons from Nomura.

Matthew Lehman: Good morning, Zara.

Zara Lyons: I just want to – good morning. I just wanted to clarify with the projected loss for 2013, does that include the grant from the Bank of Saxony, please?

– Nomura Securities: I just want to – good morning. I just wanted to clarify with the projected loss for 2013, does that include the grant from the Bank of Saxony, please?

Matthew Lehman: Yeah.

Marc Voigt: That includes the grant. As Matt has explained, the reimbursement of the grant comes over time so we are not drawing down the $3.8 million to start of the project but over time when we spent money, we make applications to get reimbursed. So part of the grants maybe reflected in that loss but obviously huge amount of this grant as well as of the existing first grant of €4.1 million will come over time and the majority we expect in 2014.

Zara Lyons: Thank you. And just a second clarification, did I expect any remit of funds back to then as the technologies commercialized?

– Nomura Securities: Thank you. And just a second clarification, did I expect any remit of funds back to then as the technologies commercialized?

Marc Voigt: No in principal it’s non-dilutive, non-refundable grant.

Zara Lyons: Right. Thank you very much. I’ll get back in the queue.

– Nomura Securities: Right. Thank you very much. I’ll get back in the queue.

Operator: Thank you. The next question comes from David Stanton with Nomura Group. Please go ahead.

David Stanton – Nomura Group: Hi, thanks for taking my question. Just interested in your Phase 2 clinical trials that you in addition to cancer indications. Can you give us – do you ever said publicly what in the cancer indications you’re going for, it’s my first question?

Matthew Lehman: Hi, David. No, so we haven’t made that announcement yet. I mean we have gone through the last several months, I would say lot of background research feasibility. We have been working really at about six or seven different potential cancer types of expression of mucin 1. We expect we will be able to finalize next one to two months. If you just go ahead and talk about we certainly looked at there was couple of criteria looking at, we may choose that. There is really the feasibility of conducting the clinical trials ability to find patients in relatively reasonable amount of time looking a bit on the market side, we’re attracted to unmet medical needs, places where a little bit more of a moderate kind of commercial situation or good competition situation. And certainly if we look at the cancer trend will benefit from products like CVac. So cancer types have sort of demonstrated themselves and better to be reactive to immune approaches, ovarian cancers has been demonstrated to be, as well as disposable (inaudible) of any immune therapy. It looked most times that potential survival time or potential time patients staying with mission because there is time that immune therapies need to really be able to get a full effect and that again looking at the literature and different clinical trials that is certainly several months. So we definitely want to be in mission population that’s hopefully enough, the immune system would be essentially receptive enough to really benefit. Okay. So those are the inspirations going through. And as Sharron mentioned, we have brought some potential people on our clinical team, one of a big part of their unit as well as to help us sort of through some of this to make some final decisions.

David Stanton – Nomura Group: Understood, thank you. And my second question is on, can you give us an update on manufacturing in terms of how that’s progressing in terms of sites chosen or any other color will be greatly appreciated. Thanks.

Matthew Lehman: Sure. Sharron, you want to discuss out a bit or?

Dr. Sharron Gargosky: Certainly, we have no change in our manufacturing group, since it was spoken, we still have the group in Germany, managing the European contingent. We have the group in Australia managing the Australia – Asia group and of course the U.S. Our primary manufacturer that we’re working with in Australia who is the supplier of our core antigen, we continue to do development work and product and categorization, optimization work with them. So I think overall making still solid stable sequential progress as they would allow manufactures. And they have completed the requirements of comparability such that they all are now qualified by Prima and global standards to make the product CVac for us, for the trial and those comparability trials have been completed like we discussed last quarter I believe. So still making good progress and just very sequential solid headway.

David Stanton – Nomura Group: Thank you.

Matthew Lehman: And I think Sharron maybe just also point along those lines I think a big part of this in addition to let’s say the manufacturing of CVac, the product itself is a lot of the work in the scale up of the actual cell collection centers…

Dr. Sharron Gargosky: Oh, yes, of course.

Matthew Lehman: That we get started around well and building that up. So again basically having the cell collection centers back to the system, we do the inspections and the training and really bring them into both our software and the quality management system and so that’s increasing as well. So that’s one of the key materials of course for CVac.

Dr. Sharron Gargosky: That’s one of the key steps you right for our GMB process and continuing to qualify and verify that those groups do have as you said Matt the right inspections that they pass the quality requirements we have the appropriate training and truly educate on everything we’re doing with this study and product (inaudible) and that’s why – you are right, its excellent that we are just making great progress there globally with our exit all those centers.

David Stanton – Nomura Group: Thank you.

Operator: Thank you. The next question comes from Steve Morris with HELM capital. Please go ahead.

Steve Morse – HELM Capital Partners: Thank you. You have indicated the facility for directors to participate in any shortfall right in allocation of shares under the share repurchase plan but the directors indicated their willingness to participate in the SPP itself upfront?

Matthew Lehman: Yeah, yeah, two questions. Yeah, all the directors will participate in the SPP up to what will be eligible entitlement. Yeah, we look forward to it.

Steve Morse – HELM Capital Partners: Thank you.

Matthew Lehman: Yeah. Okay, thanks

Operator: Thank you. The next question comes from Anton Uvarov with RM Capital. Please go ahead.

Anton Uvarov – RM Capital: Hi, guys, thanks for taking the questions. I’m just interested in your opinion on 2-step immunotherapy study in ovarian cancer from immune systems surrounding that you just presented two weeks ago at AACR. I think the (inaudible) actually goes in recurrent cancer and the high response rate, it makes the point interesting and it was heavily discussed at Asia as well as in the industry, so just any thoughts here and what is it take away?

Matthew Lehman: Yeah, sure. I think Sharron was actually at the conference. Sharron, do you want to talk about that presentation here?

Dr. Sharron Gargosky: Yeah, Hi, Anton, yeah I was there at AACR and honestly I think it got a lot of attention in the media even more so than the meeting. Their approach there has been to take overall tumor lysate, the whole cell and do it DC treatment to patients, on top of other therapies that they were also giving. So they were doing both the DC therapy and other concomitant treatment and then when people still relapsed, then they would check those patients T cells again prime to its just tumor lysate, a little non-specific looking at antigen and tumor directed effects and then infuse the patients with that and that was what the results were reported on. So, I think honestly it’s very early stages, it is interesting, it is looking at a fully targeted type of antigen presentation, you know just taking the entire tumor of any patient and querying and providing it to dendritic cells and T cells, but the consideration of the data that they’re putting out there, that the great safety profile that they sold with the DC treatment very consistent with what we’ve seen and then when patients relapse trying the second attack of T-cell treatment, I think is encouraging. I believe it’s very much in early R&D stages relatively unqualified and uncharacterized. So although interesting and we’ll be keeping an eye on it, I think it’s very early data.

Anton Uvarov – RM Capital: Okay. Thanks, Sharron. And another quick question is, this today’s concept on patients that already enrolled in the kind of study, can you give us a breakdown just is the concept of the patients platform?

Dr. Sharron Gargosky: Most of the patients are predominantly from the United States and Australia because those were our first countries kicking off. Subsequently, the most recent European countries have been Ukraine and subsequent patients. So they are our primary countries. We have other European countries such as Bulgaria, Lithuania and Germany all lining up next. So I hope that the next update, I’ll be able to give you even more exciting news with more countries with the sequential rollout and more enrollment data.

Anton Uvarov – RM Capital: Okay. Thank you guys.

Dr. Sharron Gargosky: No worries.

Operator: Thank you. The next question is a follow-up from [Anton] with Ord Minnett. Please go ahead.

George Gladstone – Ord Minnett Research: Yeah. This is George Gladstone from Ord Minnett. Just wondering what you see the key catalyst for the share price over the next couple of years as you head towards the development of CVac?

Marc Voigt: Excellent sort of question, good question. In the certainty, they make it and certainly if we look out over the next year, I think the Phase results 2 in ovarian cancer the CAN-003 trial will be immune monitoring results coming in the third quarter and then the final clinical results on PFS coming and then the first look at OS survival coming in the fourth calendar quarter this year, that’s probably the bigger items let’s say in the next nine to 12 months. If you look out over a little bit of a longer term obviously it gets a little bit hazier but I do believe and this is you try to express a lot talk about the company. It’s actually our manufacturing platform in the distribution capacity in the logistics and software and all of these in the regulatory license. We’ve had and I do believe that’s going to be a real key value driver for this company to help the future. I believe that’s the platform that will be able to set us in a good situation for potentially partnering CVac in the future appropriate time just to be clear that there is nothing eminent on the size but these are conversations we do have ongoing the quality, consistency of manufacturing and the ability to scale this up and the ability to put agreement with the regulators on manufacturing specifications, I think is a very, very important asset of the company. Of course this allows us to develop CVac, it allows us to do additional clinical trials but I think it is very important potentially being able to hurtle this product in the future. And then along those lines I also see and again something I talked a bit, I do believe that manufacturing platform not expertise in this area, also puts in a good situation again at the right times and time look at building out product pipeline as well, so deepening our pipeline in addition to CVac, there is many interesting ideas early on development and I think we have a lot of expertise being able to take scientific ideas, early clinical trials and put them in the proper development programs to really bring growth on the manufacturing side. It’s hard to give like really specific catalysts if you will, but I do believe I look out over the next few years, our expertise in that manufacturing side is what’s going to be driving the value and potential exciting things in the future.

George Gladstone – Ord Minnett Research: Great, thanks.

Operator: Thank you. (Operator Instructions) And my apologies, it does look like Anton with Ord Minnett does have one final question. Please go ahead.

Unidentified Analyst: Yeah, look its (inaudible).

Matthew Lehman: Okay.

Unidentified Analyst: Hey, just on timing of this (inaudible).

Matthew Lehman: You’re right.

Unidentified Analyst: You’ve got $25 million in the bank, looks like you’re spending – was it again $12 million, say $15 million, say just under $20 million a year, so you go behind 18 months worth of cash there. We are going to rise when the same process where it is new?

Matthew Lehman: Yes, no, I mean that’s a very fair question, it’s one that a number of shareholders have asked. I think it comes down to just, a couple of really key things. I mean, one is, we are a development stage company, I don’t – despite yes we do have some news coming later in the year, we have some interesting trial results. Reality is I don’t know what the market is going to be like at that time, I think we’re pretty (inaudible) the directors, we think it’s very important that we maintain a reasonable cash balance. And a company like ours it does allow us to make the right decisions, when we need to make the right decisions. I’ve been with a lot of companies, I’ve seen a lot of companies with product test. Test if you will or test the market too much and it becomes very difficult when you start compromising yourself and you starting making compromise, too many compromised decisions, sorry, I do want to avoid that. I think having good cash balance is important for any developing biotech company. More approximate and I think it’s important, we do have this, we’ve been awarded this brand in Germany. It’s about $5 million worth of non diluted funding, we do have to close from that, we also do have – having as Marc was discussing, we do pay for an advance and they get reimbursed. I think that’s a great opportunity for us to really expand up the CVac franchise if you will and I think we should take advantage of it. So, but we are going to have to be able to fund that program as well. So, I think that’s such really, if you look at the most approximate reason for the timing, I would say that’s it.

Unidentified Analyst: Thank you. Marc, just one quick follow-up.

Matthew Lehman: Yeah.

Unidentified Analyst: It’s the reason why you didn’t tap the U.S. market as well?

Matthew Lehman: Well, again because of the share prices, it is lower than last somebody raised capital, that something we discuss a lot about. I mean the main reason we go to our current shareholders is because the share price is low and I do want to have our current shareholders if they have the first bite of the apple if you will. I do believe and again made the remark earlier, I would express, I do believe there will be individuals or other institutions that would be able to pick up a shortfall. I do believe we’ll be able to raise the requisite amount of capital we need, but we do want to make sure the shareholders have that early – the first chance here and a lot of our shareholders have been with us for three years, five years, some of them 10 years. And, I think looking where the share price is, that’s an important thing for us.

Unidentified Analyst: All right. Thanks.

Matthew Lehman: Yup.

Operator: This does conclude the question-and-answer portion of our conference. I will now turn it back over to Mr. Lehman for closing remarks.

Matthew Lehman: Yeah, again, well thank you. I appreciate people and again thank our shareholders for the support. Just to remind everyone so that May 10 is the closing for the SPP, the share purchase plan and I’ll just say thanks in advance for the ongoing support and we’re excited about the rest of the year and looking into the future of the company. Thanks and good day.

Operator: Ladies and gentlemen, thank you for your participation on today’s conference. This does conclude our conference for today. You may now disconnect your line.