Athenex, Inc.

Good day, ladies and gentlemen, and welcome to the first quarter 2022 Athenics Earnings conference call. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star, then one on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star and zero. And as a reminder, this conference is being recorded. I would now like to hand the conference over to Kaylee Daugherty, Director of Investor Relations. You may begin.

Good morning, and thank you for joining our conference call. Today, we will provide an update on a Phoenix's business, as well as a review of financial results for the first quarter of 2022. The news release detailing the results crossed the wire earlier this morning and is available on the company's website. A replay of this call will also be archived on the company website. During the conference call, the company will make projections or forward-looking statements regarding future events, including statements about financial, business, and clinical milestones anticipated in the fiscal year 2022 and beyond. We encourage you to review the company's past and future filings with the SEC, which identify specific factors that may cause the actual results or events to differ materially from those described in the forward-looking statements. You can find our SEC filings in the EDGAR database at www.sec.gov or in the Investor Relations section at our website at www.athenix.com. Speaking on the call this morning will be Dr. Johnson Lau, Chief Executive Officer, Dr. Dan Lang, President of Athenic Cell Therapy, Mr. Jeff Yorden, Chief Operating Officer, and Mr. Joe Anoni, Chief Financial Officer. In addition to the management team, Dr. Kurt Gunter, Chief Medical Officer for Cell Therapy, will also be available to answer questions after the prepared remarks. I will now turn the call over to Johnson for introductory comments.

Thank you, Katie, and thank you everyone joining our conference call this morning. Eight weeks ago, on our year-end call, we announced our strategic pivot to focus therapeutic development at Affinex on our differentiated NKT cell therapy platform with first-in-class potential. I'm pleased by our team's rapid progress and execution towards building the foundation for what we envision to be an industry-leading franchise. Promising early clinical data demonstrates the potential for our NKT cell therapy platform to be highly competitive and disruptive to both the current and emerging cell therapy landscape. The significant potential long-term value of our NKG technology platform compels us to make this a Phoenix top priority. And our clinical team is advancing both allogeneic and autologous treatments for solid and hematological malignancies. Our two lead programs QR501 and QR502 are progressing well in Phase 1 dose escalation studies. You will hear much more about this from Dr. Dan Liang shortly. On a corporate level, we continue to work to strengthen our balance sheet and streamline our organization by repaying debt with proceeds from monetizing non-core assets, shrinking our global footprint, and implementing several cost-saving initiatives. As an example, last quarter, we raised $40 million from the sale of our Dunkirk facility, which we deployed towards debt repayment and reinvestment in our cell therapy platform. But we are not done. As part of our previous strategy, we built several highly attractive assets and rapidly growing businesses that can now be monetized to extract maximum shareholder value. We have made significant progress and will make an announcement at the appropriate time. We're still targeting a 50% reduction in operating expenses and expect to see the impact of our actions resulting in tangible cost savings throughout the year as we reduce headcount and wind down non-core operations. I'm also pleased to report that we have continued to grow our APD and APS divisions through expanded partnership agreements with Amcure, a leading global biopharmaceutical company, and Ingenus, an emerging generic pharmaceutical company. Mr. Jeff Yoden will provide more details later. In fact, the APD and APS business has been gaining so much momentum as demonstrated in the first quarter, that we are now raising our target sales guidance from 15% to 20% in 2022 to 20% to 25%. We previously reported on our business decision to discontinue further investment in our oil scuffling platform. However, there are still two ongoing oil architectural trials that could bring potential value and will require limited incremental investment. We continue to follow their progress. I would highlight the Phase 2 I-SPY-2 trial, which is expected to read out in the second half of 2022. This study is being conducted by the Quantum Leap Healthcare Collaborative using Oropracotexel in combination with Dostarumab, plus or minus carbopactin in breast cancer patients in a neoadjuvant setting. Meanwhile, we also had ongoing regulatory interactions with MHRA and are submitting responses to questions received regarding use of oropacotexel in metastatic breast cancer in the United Kingdom. We will look for opportunities to advance this program through potential partnerships or other means. Lastly, our first approved proprietary product, Kesiri, for the treatment of actinic keratosis continues to perform well in 2022. Yesterday, our partner Emerald reported that they are making steady gains, achieving a 3.6% market share in a highly generic market and recording over 32,000 prescriptions generated since launch. They have also made progress on increasing the commercial coverage to over 60% and Medicare coverage was granted and has already increased to over 33% coverage. The guidelines for the management of adenine keratosis were recently published in the Journal of the American Academy of Dermatology and Kassiri received the AAD Guidelines Committee's strongest recommendation. I'm extremely proud of our team's focus in executing on our strategic pivot, and I'm highly optimistic about Affinex's ability to transform into a lean and focused business that is competitively positioned in the growing immuno-oncology sector. With that, I'll turn the call over to Dr. Dan Lang to discuss our NKT cell platform. Dan, please go ahead.

Thank you, Johnson, and good morning, everyone. This quarter, we continue to build upon our foundational cell therapy platform, clinically advancing our lead candidates toward the goal of creating a differentiated franchise with a particular focus in all genetic NKT cell treatments. Recently, The American Society for Transplantation and Cellular Therapy featured our CURE 502 program in their online magazine, Nucleus, highlighting the potential for allogeneic CAR-NK T cells to be the Goldilocks of cellular therapies, offering the best of T cells in terms of manufacturing and cryopreservation, and the best of NK cells in terms of no risk of graft-versus-host disease. As the Goldilocks of cellular therapies, NKT cells are the ideal cell type, balancing the best of both innate and adaptive immunity to achieve a highly effective off-the-shelf treatment that is lower in toxicity and more accessible to a broader patient population. Ultimately, NKT cells offer significant therapeutic potential to address major challenges of approved CAR-T therapies and other cell therapies and developments. For our phase one anchor study of CURE502, our allogeneic CAR-NKT treatment targeting relapsed refractory lymphoma and leukemia. We recently presented an interim phase one dose escalation data update at ASTCT. The data demonstrated strong efficacy and excellent tolerability in heavily pretreated patients. at early low dose escalation levels. We have so far provided response data from seven available patients, with five patients in the lymphoma cohort. The update includes two additional patients, one with non-Hodgkin lymphoma, the other with acute lymphoblastic leukemia. In the lymphoma cohort, data showed two CRs and one PR or a 60% overall response rate, including two responses in patients who failed previous autologous CAR-T therapy. A six-month complete response rate of 40% was reported, including one ongoing complete response at 34 weeks. Importantly, we're seeing these results at the low doses of 10 million and 30 million cells per meter squared. The safety profile was favorable with no infusion-related reactions, no graft-versus-host disease, no ICANNs, and three cases of mild grade 1 cytokine release syndrome, or CRS. Importantly, data demonstrating CAR-NKT cells forming to the tumors and expanding in peripheral blood are encouraging and support potential for more robust and durable response as we dose escalates. Clinical data from our CURE 501 program in relapsed refractory high-risk neuroblastoma will be discussed in an oral presentation at the upcoming ASGCT conference in Washington, D.C. on May 16th. We will report an interim update demonstrating responses in NKT cell expansion in 12 pediatric patients infused at four dose levels, explored in our Phase I Dose Escalation Study, GeneKit 2. The abstract, issued last week, reports an overall response rate of 25%, or 3 out of 12 responses. Two out of the three responses were seen at dose level 4, or 100 million cells per meter squared, suggesting a dose response. and we observed a durable, complete response persisting for 12 months. Data also supported a highly encouraging safety profile with no dose-limited toxicities or grade 3 or higher side effects related to CAR-NKTs. So far, there was only one case of grade 2 CRS that was easily managed. Cura501 CAR-NKT cells expanded in all patients peaking two to four weeks post-infusion Collectively, these data will provide supporting evidence that our autologous CAR-NKT cells directed against GD2 are safe, can expand post-transfer, home to tumor sites, and produce objective responses in high-risk neuroblastoma patients. Importantly, the analysis found that responses correlated with CAR-NKT area under the curve in the blood, as well as percentage of CD62L positive expression, which are markers for NKT cells that have central memory or stem-like attributes, such as longer persistence. I hope it is clear to you as it is to us that the emerging data are supportive of the key differences between NKT cells and other cell types being explored for oncology therapies. Additionally, as an evolving world leader in NKT cell therapies, we are excited that our pipeline has first-in-class potential, offering the promise of meaningful therapeutic benefits to indications with significant unmet need. Our NKT cell therapy platform has also demonstrated a unique ability of NKT cells to expand active dosing with persistence in blood, tumor, and tissue. a key characteristic that separates NKT cells from other cell types, such as NK cells. The potent anti-tumor activity of our CAR-NKT cells is occurring at doses orders of magnitude lower than the doses needed to achieve clinical efficacy with CAR-NK cell therapies. Coupled with a favorable safety profile, we believe this wide therapeutic window of CAR-NKT cells will enable us to dose escalate and repeat dose to drive deeper and more durable responses. Lastly, inherent NKT cell properties, they represent a key advantage in the treatment of solid tumors, including their natural tropism to home towards tissue and tumors, and the differential ability to kill TAMs, Tumor-associated macrophages and MDSC, myeloid-derived suppressive cells that suppress endogenous anti-tumor immune responses that lead to cold tumor microenvironment. NKT cell killing of TAMs and MDSCs through interactions with CD1V have the potential to help turn a cold tumor into an inflamed immunogenic tumor. Looking ahead to the remainder of the year, our digital abstract was accepted by ASCO for Cura503, our allogeneic GPC3 CAR-NKT treatment for liver cancer. That highlights preclinical data on a new transcription factor supporting our clinical development of a CAR-NKT cell treatment for liver cancer. We plan to file an IMD for Cura503 in 2023 for advanced hepatic cellular carcinoma. We are executing on expanding CD19 CAR-NKT anchor study into a multi-center study to establish recommended phase two dosing, as well as exploring a multi-dose regimen. We are also looking forward to additional updates later this year for CURE502. GENIACAT-2 is currently enrolling patients at dose level five and we are hoping to make a go-no-go decision about a pivotal study and to meet with the FDA about a regulatory path in early 2023 for the indication of high-risk pediatric neuroblastoma. Collectively, our NKT platform continues to support the idea that NKT cells are the Goldilocks of cell therapy, balancing the best of both innate and adaptive immunity and demonstrating excellent safety, promising efficacy and robust tissue and tumor persistence following treatments. And we remain highly encouraged by the promise of our NKT cell platform. I will now turn the call over to Jeff to discuss operations. Jeff?

Thank you, Dan, and good morning, everyone. Before getting into the strong quarterly results, I'd like to provide some broad comments regarding the positioning of the franchise for those less familiar with this business segment. Over the past five years, the Phoenix APD APS has grown this business's revenues by leveraging management's capabilities, industry experience, and longstanding relationships that continue to bring new opportunities to the pipeline that add scale and expand margins. As an example of those relationships, we are excited to announce that Athenix and Emcure, through their U.S. injectable company, Avet, have agreed to a comprehensive collaboration in the United States. Athenix will market certain Avet products in the U.S., and the first product was agreed upon recently. Abbott has an extensive portfolio of approved and pipeline products, which will be manufactured in a new FDA-inspected facility in India. The first products should launch no later than Q4 of this year. The recent strategic decision to sell our manufacturing facility in Dunkirk has contributed to significant reduction in overhead, which will continue to improve operating margins. I am also pleased to report that the State of New York has just allowed Immunity Bio, our new 503 contract manufacturer, to utilize the Athenix 503 license for Dunkirk without requiring a six-month registration process. We can now begin to file for the licenses for other states, which is estimated to take between 4 to 12 months. From our vantage point, the business is at an important and promising inflection point, and this first quarter's update exemplifies the opportunity ahead. Now for the quarter. For our APS and APD businesses, sales for the first quarter 2022 were $29 million, up 42% year over year compared with 20.4 million for the first quarter in 2021. We attribute the strong performance in the first quarter to three drivers, the first being resolution of prior supply chain issues that had been impacting our ability to access API Additionally, one of the four new launches is an injectable product that is currently on the FDA and American Society of Health System Promises shortage list, and we were able to take advantage of favorable pricing dynamics when we stepped in to supply the market. Our partner has already manufactured additional inventory, and we will be well-supplied to sell that product. Lastly, revenue from our COVID products increased significantly as a result of the spike in COVID cases during the first quarter. In addition to the four products launched in Q1, and we have an additional eight planned for 2022. Two of the planned new introductions, Pemetrexid and Bortezomib, are very significant products with tentative approvals and will be launched at market formation this month. This time we should allow them to capture significant market share. The sales of Pimetrexid and Protisimab are expected to contribute to increased revenues and margins of the overall business significantly. Athenics Pharmaceutical Division currently markets 29 products with 54 SKUs, and the Phoenix Pharma Solution markets six products and 16 SKUs. We launched Sigamidex free-filled syringes at APS in Q1 and added three new private label codes for paclitaxel. The result of the recent progress is that our business is now stronger than ever with these new products leading to an enhanced product mix with improved margins. We have visibility into persistent and robust growth, and our overall company margins continue to improve. Further product launches by APS and the recent receipt of licenses to ship 503 products are expected to result in stronger 2022 sales and significantly increased growth in 2023. I will now turn the call over to Joe Annone to discuss the financials. Thank you, Jeff.

Good morning, everyone. On our fourth quarter 2021 call, I indicated that we are in a season of breaking down and building up. Along with that, I outlined two overarching strategies that we have undertaken to strengthen our balance sheet and to pivot the business towards our self-therapy platform. First, the divestiture of non-core assets, and second, the cost reduction opportunities. We continue executing on both fronts, as exemplified by the Dunkirk sale in the first quarter, and we anticipate announcing more results soon on each of these fronts, which we can use to extend our cash runway for at least 18 months. Before discussing our standard financial results, let me first highlight a figure that you could think of as a proxy for evaluating cash burn. This figure is our cash flows from operating activities and continuing operations, and it excludes results from the Dunkirk sale. For the first quarter of 2022, the cash used was $18.5 million. This compares to the cash used in the first quarter of 2021 of $29.7 million and the cash used in the fourth quarter of 2021 of $35.8 million. So, From the fourth quarter 2021 to the first quarter 2022, this represents a quarter over quarter decrease of 48%. Now let's discuss the first quarter financials. I would ask that you please refer to our press release that was issued earlier today for a full summary of our results, but I will highlight the following. Total revenues for the first quarter 2022 or $29.7 million, compared to $41 million for the same period in 2021, which included a $20 million milestone payment from Almirall. Excluding the one-time payment, product sales revenue increased by $8.6 million, or 42% over first quarter 21. R&D expense totaled $14 million for the first quarter, a decrease of $9.1 million or a 39% year-over-year decrease attributed primarily to a reduction in oral paclitaxel development costs. SG&A expenses totaled $14.9 million for the first quarter, and this represents a year-over-year decrease of $5.8 million, or 28%, which was primarily related to decreased oral paclitaxel commercialization expenses. That loss is attributable to a Phoenix for the first quarter of 2022 for $17.4 million or 16 cents per diluted share versus $25.1 million or 27 cents per diluted share in the first quarter of 2021. As of March 31st, 2022, we had debt of $125 million under our senior credit agreement with Oaktree, which we will continue to repay with the proceeds from our asset monetization activities. As of March 31, 2022, Athenics had cash, cash equivalents, and restricted cash of $51.2 million. Finally, we are raising our guidance on our specialty pharma business to a growth of 20 to 25% from the previous 15 to 20% growth. The strong performance of this unit in the first quarter, the earlier than expected New Year's state license, and the attractive pipeline of expected launches have contributed to this decision. I will now turn the call back to Johnson for closing remarks.

Thank you, Joe. And thank you, everyone, for joining us today. Our focus for 2022 continues to be on transforming ePHEMIX into a streamlined, pure-play cell therapy company with a solid balance sheet to provide a runway to continue to deliver exciting data. We are proud of the progress we have made since we announced our strategic pivot and remain committed to delivering on those plans with additional monetization of non-core assets and cutting of operating expenses. We believe that our cell therapy programs will be the main driver of future growth and position us to be a leader in this space. These initiatives continue to set us up for successful value creation and allow us to further execute on our ultimate mission, of bringing innovative treatments to cancer patients. I will now open the call for questions. Operator?

Thank you.

We will now begin the question and answer session. You may press star then one on your telephone keypad. You will hear a tone acknowledging your request. If you are using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press a star, then two.

We will pause for a moment as callers join the queue. The first question comes from John Miller with Evercore.

Please go ahead.

Hi, this is Jessica on for John Miller. Do you have any more clarity on what the bar is for CUR 501? as a go or no-go this year. You've spoken about a rapid possible path to approval for this program. Do you have any more clarity on what would be required? Thank you.

Dan? Sure. Thank you, Jessica, for the question. As you know, the, you know, GD2 antibodies, they generally have a response rate of about 30 percent. And their pathway for approval is through a single arm a pivotal study of about 70 to about 100 patients. Because this is a pediatric open indication with very terrible prognosis, we believe a similar bar, something with a 30-plus percent response rate that's durable, a regulatory pathway, we're hoping it will be similar to the GD2 antibody, a single-arm pivotal study with about 70 to 100 patients, might get the FDA approval. Obviously, the FDA is the final decision maker on the regulatory pathway. That's why we are looking forward to discuss with the FDA in terms of our pathway. In terms of our bar on go, no-go decision, since we already saw two out of three responses at dose level four, which is 100 million cells per meter squared, if we maintain that kind of a response rate at high doses, I think that will give us confidence and conviction that this will be successful in a pivotal study and benefit patients in the long run.

Thank you.

The next question comes from Kevin DeGieter with Oppenheimer. Please go ahead.

Hey. Thanks for taking our questions. Dan, on 503, can you just walk us through what the rate limiting steps to TZI&D are and perhaps, you know, if it's not too early, some colors, whether we should think about that as being a potential first half 23 or more likely second half 23 event? Yeah.

So, Kevin, thanks for the question. The digital abstract that we submitted will describe a new transcription factor, F3, BATF3, that we're going to incorporate into the 503 construct. This transcription factor makes the NKT cells very potent, and also they persist longer. As a result of this discovery, we actually filed patents around it. And once that's done, we're now currently doing the pre-IND enabling studies to file the IND. Currently, we're guiding to 2023. As the year progresses, we'll have more precision as to whether it's going to be, excuse me, first half or second half. But we'll, you know, provide update when we have a better color in terms of the specific timing. And your second, your follow-up question relates to, sorry, remind me, Kevin.

So, actually, you kind of jumped ahead of me here, but I guess our follow-up question really is on ASGCT, just sort of a reminder of, you know, sort of when the cutoff or, you know, abstract submission was and sort of some perspective as to the scope of additional data that might be available in the presentation next week.

Yeah. Yeah. So, all the data is in the abstract. We have data on 12 patients. Again, three responses, two of the three responses were in DL4, one PR, and one CR that lasted for over a year. We don't expect to have additional data by the time of ASGCT, which is only a couple weeks, you know, actually next week, May 16th. So that's all the data we have. Kevin.

Great. And if I can actually just slip in one more. And then maybe for Johnson & Johnson. like if there's a positive feedback from MHRA, kind of what happens after that, you know, strategically? I mean, it's, you know, do you then, you know, take that feedback and, you know, potential path to market and go to regional partners? I mean, I'm just trying to kind of appreciate in the absence of a clearer pathway for larger markets, how to think about the strategic value of that feedback.

Right. Kevin, we in general, as you know, do not comment on regulatory communications. But suffice to say, let me emphasize to you the procedure involved with regard to discussion with regulatory authorities like the UK MHRA. We announced that we file to MHRA, I think, in fourth quarter, like November last year. And then usually after a certain period of time, they'll provide the feedback and then The feedback usually will consist of a number of questions and then we'll then have communications with them and then with the questions and the requests, we'll then sort of amend the application and answer the questions and we submit for them to evaluate again. We are in active and constructive discussion with MHRA right now. And certainly, we will not be able to comment until we have a more definitive timeline with the discussion. And I hope you can understand that these are regulatory discussions, and in general, one should not comment on our active discussion with the MHRA.

Thanks for taking our questions. Thank you.

The next question comes from Robin Karnoskis with Truist Securities. Please go ahead. Hi, guys.

Hi, guys. Thanks for taking my question. Just starting with 502, can you just walk me through, like, what are your plans for how high you really want to dose up? And then, as you're seeing, a lot of the players in this space are really thinking about trying to do therapy that gets around lymphodepletion. Do you think with NKT cells that's possible? Thanks.

Thank you, Robin. So, you know, currently we're at the second dose level of 30 million cells per meter squared. And, you know, we're already seeing very robust response rate that, you know, compares very favorably against the approved CAR-Ts because these cells are very potent. We, you know, and they have a very favorable safety profile. Again, that's why we believe that we have a wide therapeutic window that allows us to dose escalate and drive, you know, deeper and more durable responses. So we're going to follow the data. Our next level, dose level three, would be 100 million cells per meter square. So we'll decide, we'll follow the data and let the data inform us as to what's the best dose going forward. The other thing I'd like to mention is that because these are allergenic cells, we have the benefit of pulling the lever on repeat dosing. which you saw from other competitors in the space that they're able to drive deeper and durable response with repeat dosing. So something like giving two or three doses after the first LD is potentially something that we'd like to explore. So your second question relates to LD Can you repeat that again, please, Robin?

Yeah, I mean, it's sort of going along the line. So for repeat dosing, which is where the field is going, a lot of people are talking about how you ultimately don't want to have lymphodepletion, or you want to reduce the burden of lymphodepletion. So just sort of thinking about what's the strategy? If you're going to do repeat dosing, how quickly can you get in front of the FDA to request that? Because that takes time. And then For lymphodepletion, what are your thoughts and how you're, you know, exploring alternatives to Flucide if you're going to go for that approach?

Yeah, great question, Robin. So because of the intrinsic biology of NKT cells, we believe part of the mechanism of action is for the NKT cell to activate and propagate the host immune response. If, you know, if when we do more qualitative studies and when we see that is a very important contributing factor for the, you know, how anti-T cells are killing tumors. We will consider, and we actually have recommendations from our SAB, that we may want to take away the fludarabine. As you know, it's very toxic to T cells. And if, you know, if we believe that the host immune response is actually playing a very integral part in killing the tumor, you know, we may want to, you know, explore the idea of taking away the fludarabine and just having a cyclophosphamide for LD. That will really differentiate us from other competitors in the space. Not only are they using LD, they're using enhanced or intensive LD where they're adding an additional chemotherapy to really wipe out the host immune response. So we have an interest and desire to simplify the regimen LD if the data supports it. And also this will really make this therapy a very effective easily tolerated. Hopefully, we can expand access to the community hospitals because this is an outpatient 10-minute infusion therapy, and if we have a simplified LD regimen, it will make it even more competitive.

Okay, great. Thanks.

The next question comes from Jonathan Chang with SBB Securities. Please go ahead.

Good morning. Thanks for taking my questions. First question, on CURE501, the autologous CAR-NKT program, what are your longer-term plans for this? Is the focus for the platform on the allogeneic efforts, or are the autologous efforts also part of your long-term plans?

Dan? Thank you, Jonathan, for the question. Because this was our first in-human study, testing NKT cells as a cell therapy for cancer. We started out, um, you know, taking baby steps, uh, testing the NKT cells in an autologous setting. Once we know that it's safe and efficacious, then we, you know, take more, took more risk and study NKT cells and in the allogeneic, um, setting for 502. Going back to 501, because this is a pediatric, you know, um, Orphan indication, there are only about 1,500 cases a year. And we're seeing robust responses in an autologous setting. We believe that this will be a competitive product by itself in the pediatric neuroblastoma landscape as an autologous cell therapy treatment for these patients that really have no alternatives. Longer term, As a potential label expansion strategy, if a GD2 CAR NKT proves to be efficacious and safe, we can consider putting the GD2 CAR onto the NKT cell platform as an allogeneic approach from donors because there are other cancers that also express GD2, for example, small cell lung cancer. which is relatively a large market compared to the pediatric neoblastoma market, we can put the GB2 onto CAR-NKT and introduce an allogeneic approach because small cell lung cancer, it's really hard to treat. It's a solid tumor. So far, the approved CAR-Ts or other CAR-Ts have had mixed results in generating meaningful efficacy because a lot of the autologous approach, you cannot give more than one dose. But with the allogeneic approach where you can pull the lever on giving multiple doses, I think that's going to be potentially important in generating meaningful efficacy for a small cell lung cancer. But that's down the road, and we will be prioritizing getting the autologous approach 501 approved first for pediatric neoplastoma and then explore taking the GD2 into an allogeneic setting. I hope that answers the question, Jonathan.

Yeah, that's helpful. Thank you. And second question, what are the other non-core assets that you could monetize to support the cell therapy pipeline? And beyond monetization of these non-core assets and cost cutting, Are there other avenues being considered to extend your cash runaway?

Right now, remember that when we built the business to support the launch of Oral Packet Haxel, we did build the API, the supply chain, and also through the supply chain, special farmer, And also, we have other assets with regard to the product in the market, including Casiri. They are all being developed together to support the growth of Favinex. Right now, the focus of the company is to focus on cell therapy. And therefore, the non-cell therapy related assets can all be considered as non-core assets. And we are in the process of addressing all these other non-core areas of our assets. And certainly, I mean, our approach is to try to be non-dilutive for the shareholders at the same time to reduce the debt and cutting costs. And by doing it this way, we'll be able to extend the cash runway and to allocate resources to support the main focus of the company. And that's what we are doing right now.

Got it. Thanks for taking the questions. Thank you.

Once again, if you have a question, please press star then 1. The next question comes from Yale Jen with Laidlaw & Co. Please go ahead.

Good morning, and thanks for taking the questions. In terms of our CURR 502, What should we anticipate for the update, the future update at ASH regarding potential size of the patients and any other aspects?

Sure. Yeah. So just to level set, the current 502 study is a single center study conducted at Baylor College of Medicines. We got our IND approved, a company sponsor IND approved back in March, and we're working currently very hard to stand up other sites to expand and accelerate clinical enrollment. We're not providing guidance as to how many patients we're going to have by year end, but be assured that this is a high priority to enroll more patients from different centers to hopefully replicate a very promising data that we have shared with all of you so far.

Okay, that's helpful. Maybe two quick ones. First one is the, in terms of the cholesterol, given the growth in terms of the growth in the market penetration, do we anticipate any revenue toward Phoenix later this year and maybe one more quick follow-up after this.

Yes, we do start receiving royalty after the initial sales from Alpana Emerald every quarter. And then, as I indicated already, the K3 product is penetrating into the market relatively well and a little bit exceeding our expectations. Right now, the product is already endorsed by the AAD with the highest recommendation for adenine keratosis, and it's also covered by Medicare Part D as well.

Okay, last one is similar to an earlier question, which is that if the I-SPY2 outcome is positive, what could be the next step in terms of leveraging that information? And thanks.

Thank you for asking this question. I think obviously the I-SPY-2, if the results are very positive, we are very excited. And the good part is that for the I-SPY-2 as well as the other study going on, in conjunction with Anti-PD-1, they do not require significant capital input from FINEX at this point, which is very good for us. Obviously, there will be a potential value to be unlocked from iSpy2 if it's positive. And obviously, we would like to see data before deciding on the next steps. What we can commit is that we will not invest in a big way on a phase three trial to get this done on our own. We will certainly be working closely with our partners in both the anti-PD1 collaboration for the non-small cell lung cancer as well as iSpy2 to look for opportunities to unlock value, and this can include partnerships or collaboration. And obviously, we could explore in other ways to realize the value for this asset for our shareholders.

Okay, great. Thanks a lot. I appreciate it. And the best of luck.

Thank you. Thank you, Yao.

This concludes the question and answer session. I would like to turn the conference back over to Dr. Johnson-Lau for any closing remarks.

Thank you, everyone, for joining us today. And this concludes our call today. Thank you.

Ladies and gentlemen, this concludes today's presentation. Thank you once again for your participation.