West Coast Editor

Antigenics Inc. is reducing its head count and slowing or stopping work on some programs to reduce the burn rate, while pushing ahead with the personalized cancer vaccine Oncophage against renal cell carcinoma, due to yield top-line Phase III results in the spring.

Garo Armen, chairman and CEO of New York-based Antigenics, noted that the trial is completely blinded and nothing is known yet, but "even if we produce spectacular data in March, it may not [satisfy] the FDA. This is a brand new paradigm of treating disease."

Based on Antigenics' heat-shock protein technology, Oncophage is derived from an individual's tumor and contains the "antigenic fingerprint" of his or her particular cancer. The drug is designed to reprogram the body's immune system to target and destroy only the cancer cells bearing that fingerprint.

Armen told BioWorld Today there may be "a period of time until regulatory clarity is attained," estimating "six to nine months at a minimum" after the kidney cancer data are disclosed in March, and "the market may not reward" Antigenics during the wait.

"It became clear to us three or four weeks ago that we had to take measures," he added, citing analyst opinions and "overall market perception."

New York-based Banc of America initiated coverage of the company in October with a "sell" rating, and Ren Benjamin of Rodman & Renshaw, also in New York, maintained his "market perform/speculative risk" rating later the same month.

"While we believe in the underlying scientific principles of the company's cancer vaccine technology, we continue to advise investors to watch and wait' for the Phase III results before making an investment decision," Benjamin wrote in a research note, predicting volatility in Antigenics' shares as the faithful engage in a "tug of war" with those who are skeptical of the company's approach.

Antigenics' stock (NASDAQ:AGEN) closed Wednesday at $4.83, down 67 cents.

Staff will be reduced from 251 to about 170 employees, causing about $2 million in severance costs by the end of the year but reducing the annual burn rate of about $75 million to about $40 million by the second quarter of 2006.

If data from the 728-patient Phase III study with lead product Oncophage (vitespen, formerly known as HSPPC-96) are positive in March - which also is when the company expects final results from the Phase III trial with the same product against melanoma - Antigenics will pursue partnering and/or financing to bring Oncophage to market while pushing other priority programs.

Although a biologics license application based on the findings to be disclosed in March is "possible," according to Benjamin, the FDA is more likely to insist Antigenics complete a second, confirmatory part of the trial already under way, which would mean a delay in commercialization of about four years.

Oncophage has orphan and fast-track status from the FDA in both indications, and last month the Brain Tumor Research Center at the University of California at San Francisco started a Phase I/II trial with the drug in patients with recurrent glioma.

In October, preliminary findings from a melanoma study not intended for registration showed median survival was improved by more than 61 percent in the Oncophage-treated arm of all patients characterized as having Stage IV M1a status compared to those who received a physician's choice of treatment regimen. Survival was extended to 20.9 months as opposed to 12.8 months. (See BioWorld Today, Oct. 12, 2005.)

If the March news from the kidney cancer trial is bad, Antigenics plans to pursue Phase II trials of Oncophage in combination with chemotherapy and biologics. Those studies will evaluate tumor response in patients with Stage IV disease, which "can give you answers very quickly," Armen said. "We haven't said yet [which conditions will be studied], but they're along the lines of the diseases we've already tackled."

The first investigational new drug application will be filed by year-end to evaluate the drug as a combination therapy in patients with Stage IV disease, and more INDs are expected next year. Data likely will be available within 12 to 18 months of first patient enrollment.

Antigenics plans to submit to the FDA results of tests measuring the potency of Oncophage from the kidney cancer and melanoma trials, proving 96 percent of the drug used in those trials met potency specifications.

Antigenics' funds will continue to be used for development of reformulated Aroplatin, a liposomal formulation of a platinum chemotherapeutic, in a Phase I study against solid malignancies and B-cell lymphoma. As with Oncophage, this trial also is measuring tumor response in Stage IV patients, with data expected in 12 months to 18 months from the start of the trial, which began in late October.

Also ongoing is a Phase I trial with AG-707, a therapeutic vaccine directed at the virus that causes genital herpes, with data expected in early to mid-2007. If the outcome is positive, Antigenics plans to seek a partner for that product.

Preclinical studies with higher-activity Oncophage that is made through an improved process are to be completed by the third quarter of 2006, with trials testing the product in Stage IV patients expected to start in the first half of 2007. Other preclinical research will focus on autoimmune diseases, with a lead compound in that area expected to enter the clinic in the first half of 2007, but the remaining clinical and preclinical or research programs have been either postponed or decelerated.

As of Sept. 30, Antigenics had about $35.8 million in cash and cash equivalents, and about $41.4 million in short-term investments. The third-quarter financial report said the firm had enough to fund operations "into the second half of 2006," but the newer changes will extend that, Armen said.

Antigenics now can go "about a year and a half with our own cash, but we'll be able to tap into the market at some point, hopefully in the next six to 12 months," he said.