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spk02: Good afternoon, everyone, and welcome to the Decipher Pharmaceuticals Third Quarter 2020 Financial Results Conference Call. At this time, all lines are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, please press star 1 on your touch-tone keypad. Please be advised that today's call is being recorded. If you require any further assistance during the conference, please press star 0, and an operator will be happy to assist you. At this time, I would now like to turn the call over to Jen Robinson, Vice President, Investor Relations. Jen?
spk05: Thank you, Operator. Welcome, and thank you for joining us today to discuss Deciphera's third quarter 2020 financial results. I'm Jen Robinson, Vice President, Investor Relations at Deciphera. With me this afternoon to discuss the financial results and provide a general corporate update are Steve Herter, President and Chief Executive Officer, Dan Martin, Chief Commercial Officer, Matt Sherman, Chief Medical Officer, and Tucker Kelly, Chief Financial Officer. Before we begin, I would like to remind you that any statements we make on this call that are not historical facts are forward-looking statements reflecting the current beliefs and expectations of management made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Examples of forward-looking statements made during this conference call include our expectations for our preclinical and clinical programs, our commercialization of Kinloch, and 2020 guidance. Forward-looking statements made on this call involve substantial risks and uncertainties that could cause actual results to differ materially from those expressed or implied by the forward-looking statements, and we cannot assure you that our expectations will be achieved. Such risks and uncertainties include those set forth in our most recent quarterly report on Form 10Q, as well as our other SEC filings. We assume no obligation to update or revise any forward-looking statements. Following this call, a replay will be available on the company's website, www.decyphera.com. With that, I will now turn the call over to Steve Herter, President and Chief Executive Officer of Deciphera. Steve?
spk10: Thank you, Jen. Good afternoon, everyone, and thank you for joining us on today's call. This year has been an incredibly exciting one for Deciphera, a year in which we received regulatory approval for and launched our first medicine, Kinloch, and also made significant progress advancing our pipeline of new product candidates. That we were able to accomplish so much this year, in spite of the challenges of the pandemic, is a testament to the dedication and hard work of the team here at Deciphera and the investigators we work with around the world. We are well positioned for a strong finish to 2020 and eager to continue our mission in 2021. The third quarter marks the first full quarter of results from our ongoing launch of Kinloch in the United States. Kenlock, which was approved by the FDA in May of this year, was designed to address the broad spectrum of mutations that are one of the hallmarks of gastrointestinal stromal tumor, or GIST. In a moment, Dan Martin, our chief commercial officer, will share with you highlights from the launch and outline how we have been successful in establishing Kenlock as the standard of care in our approved indications. We are focused on exploring the full potential of Kinloch to benefit people with GIST, and on today's call, Matt Sherman, our Chief Medical Officer, will review recent data updates from the Kinloch Development Program, which reinforce the potential best-in-class profile of Kinloch in this disease. Our near-term focus for further clinical development remains in the second-line treatment setting, and we are on track to complete target enrollment by the end of this year in the Phase III INTRIG study, in which we are comparing Kenlock to sunitinib in the second line. We believe Kenlock has the potential to play an even broader role in the treatment of GIST, and we look forward to sharing with you our vision for further clinical development in the coming months. One of our goals this year was to expand access to Kenlock for people with GIST outside the United States. To that end, we announced today that we recently submitted a marketing authorization application, or MAA, to the European Medicines Agency. The submission was validated by the EMA last month, which signals the beginning of the formal review process. We look forward to working with the EMA to bring this potential new treatment option to patients in the European Union. We also announced today that we intend to establish a direct commercial presence in key markets in Europe to commercialize Canlock if approved. This nimble organization will be positioned for future expansion as we develop and seek approval for additional decipherer medicines in the coming years. In Europe, we believe the commercial opportunity in GIST is concentrated in the five largest markets, France, Germany, Italy, Spain, and the UK. Within these countries, the treatment of patients with GIST is often centralized at tertiary treatment centers, which we believe allows us to build an efficient and targeted commercial infrastructure. As we lay the building blocks in Europe, We continue to make strides for the commercialization of Kinloch in other areas of the world as well. Over the summer, we received approvals for Kinloch in both Canada and Australia. I am pleased to announce that we have recently entered into exclusive distribution agreements in both of these territories. And in China, our partner, Xilab, filed the new drug application for Kinloch in July, targeting a potential approval next year. We look forward to working with our partners around the world to bring Kinloch to patients with advanced GIST. Finally, we continue to advance multiple clinical stage programs that have the potential to be future approved medicines. Earlier this year, we presented initial compelling data with ribastinib in combination with paclitaxel in patients with heavily pretreated endometrial and ovarian cancers. And later this month, we are excited to present additional clinical data with TCC3014 in tenosynovial giant cell tumor. As our clinical stage pipeline comes into focus, our novel switch control kinase inhibitor discovery platform continues to provide opportunities for future growth. I'll now turn the call over to Dan Martin, our chief commercial officer, to discuss the exciting results for the first full quarter of Kenlock commercial sales. Dan?
spk06: Thank you, Steve. Good afternoon. Today I'm pleased to share results from our first full quarter of Kinloch sales. In Q3, we achieved U.S. net product revenue of $14.7 million, bringing total U.S. net product revenue for the first four and a half months of launch to $19.5 million. While it is important to remember that it is still early in our launch, we continue to be very pleased with the way the launch has progressed. several important factors contributed to our Q3 results. First, we have continued to see strong prescriber demand for Kinloch. In addition to robust month-over-month sales growth, insights from our recent launch tracking surveys show strong product awareness, message recall, product perceptions, and intent to prescribe among physicians who have fourth-line GIST patients. Further, a large majority of these physicians indicate They now view Kinloch as the standard of care treatment for these patients. Importantly, these metrics tend to be strongest among physicians who report being detailed by our sales team, underscoring the importance of physician reach and access in this promotionally sensitive disease area. Second, we saw continued new prescriber growth across both academic and community settings. Thanks to the tireless work of our commercial team to navigate the unprecedented and ongoing challenges of COVID-19, the number of new Kinloch prescribers more than doubled during Q3. Since launch, more than 250 GIST treaters representing more than 200 unique institutions have prescribed Kinloch. As expected, while GIST treaters within academic institutions comprise the majority of our early adopters, our data suggests new prescriber growth is shifting toward the community setting. While new academic prescribers grew by more than 80% in Q3, new community prescribers grew by nearly 150%. During the quarter, more than 50% of both Kinloch prescribers and Kinloch-treated patients came from community accounts. Third, our market access team continued to deliver broad patient access to Kinloch in Q3. We have been very pleased with our progress in securing payer coverage for Kinloch in patients with fourth-line GIST. We have also been very pleased with the performance of our channel partners and our patient support center. Finally, the percentage of patients in Q3 that received free drug under our patient assistance program, or PAP, was at the low end of our estimate of approximately 20% to 30%. However, we anticipate that the PAP percentage may be somewhat higher in Q4 as it's not uncommon for patients to experience increased affordability challenges late in the year. Additionally, the PAT percentage may be higher in Q1 of next year, given that the Medicare Part D benefit resets on January 1st, requiring patients to pay for their deductible and their portion of the coverage gap before reaching the catastrophic coverage tier. Before turning the call over to Matt, I would like to highlight factors that may impact our results over the next several quarters. As I mentioned previously, we expect the majority of our future new prescriber growth to come from the community setting, where fourth-line GIST patients are much more widely dispersed and physician awareness and knowledge of GIST is much lower when compared to the academic setting. Analysis of claims data indicates that community oncologists who treat fourth-line GIST patients may see only one such patient every 12 to 18 months. Thus, while we are very pleased with the results we have seen in both academic and community institutions to date, we recognize that future growth in product awareness and new patient starts may be more challenging and come more slowly as we work to further penetrate the community setting. And this dynamic may be particularly challenging given the hurdles to physician access created by COVID-19. which we expect to continue as the pandemic persists and potentially intensifies over the next several quarters. I will now turn the call over to Matt to discuss the progress of our clinical programs. Matt.
spk10: Thank you, Dan. Kinloch serves as a great example of how we have effectively and efficiently discovered, developed, and now commercialized a product generated from our research platform. While Dan's team has been focused on helping fourth-line GIST patients access Kinloch in the U.S., our clinical and medical affairs teams have continued to generate and publish additional data on Kinloch and our pipeline programs. As Steve mentioned earlier, our strategic priority is to maximize the potential of Kinloch and GIST and to generate additional clinical data for this program and for our other development product candidates to reach key value and question points on the way to potential registrational studies and regulatory approval. For Kinloch, we are keenly focused on the completion of the ongoing phase three intrigue study in second-line GIST. The study is on track to reach full enrollment by year end, and we expect to be able to provide additional guidance on the timing of the primary endpoint at that time. We remain confident in the likelihood of success for intrigue based on the strong data we have seen in the phase one and phase three studies that demonstrate the broad clinical activity in patients with GIST. At the recent ESMO virtual congress, we presented new data in two mini-oral presentations related to Kinloch that continue to demonstrate the strong clinical benefit for second-line through fourth-line plus GIST patients. The first mini-oral presentation provided longer-term follow-up results from the Invictus study in fourth-line GIST that reinforced the exceptional progression-free survival and overall survival benefit observed at the time of the initial database lock. The updated data provided an additional nine months of follow-up and demonstrated that treatment with Kinloch continued to provide clinically meaningful benefit, with a PFS maintained at 6.3 months. And importantly, the median OS benefit improved from an initial 15.1 months to an overall survival that has now not been reached. In addition, the updated safety findings were consistent with the previous primary analysis results, demonstrating that Kinloch was generally well-tolerated. The second mini oral presentation of ESMO provided exciting data from the ongoing phase one study of Kinloch in patients with second line through fourth line plus GIST who dose escalated to 150 milligrams twice daily. In the phase one study, patients were permitted to dose escalate to Kinloch 150 milligrams twice daily after disease progression of 150 milligrams once daily. These data showed that across all three patient groups, treatment with 150 milligrams twice daily provided an additional clinically meaningful PFS benefit. Comparison of TEAEs reported in these two dosing periods demonstrated that Kinloch was similarly well-tolerated. Feedback from key opinion leaders on these data has been very positive, and we believe these data have the potential to impact clinical practice. At the upcoming Connective Tissue Oncology Society, or CTAS, virtual meeting, we will be presenting new Kinloch data from the Invictus trial. These data include an oral presentation discussing the extensive heterogeneity of KIT and PDGFR-alpha mutations, as well as a poster discussing Kinloch's demonstrated activity across all KIT and PDGFR-alpha mutations in patients in the INVICTUS study. Kinloch was specifically designed as a drug that can broadly inhibit KIT and PDGFR-alpha mutated kinases, making it particularly suited to address GIST. a disease that is characterized by a broad spectrum of mutations in these kinases. We have also explored Kinloch's utility in the treatment of additional non-GIST indications in the ongoing Phase I study, including systemic mastocytosis, or SM. We have decided, with input from our lead investigators, not to invest in further studies in SM at this time. While we have seen clinical activity in SM and the safety and tolerability were consistent with what we have reported in GIST, Given the overall landscape and the strength of the opportunities we have with Kinloch and GIST and with our other product candidates, we believe it is best to focus our resources in areas in which we're able to have the greatest impact. As we continue to advance our development activities across the portfolio, we are very excited about the potential for both DCC3014, our potent and selective inhibitor of CSF1R, and ribacinib, our potent and selective TIE2 inhibitor. We're developing PCC3014 for the treatment of tenosynovial giant cell tumor, or TGCT, which has significant morbidity for these patients and is driven by a genetic translocation in certain cells within the tumor, causing an overproduction of CSF1, the ligand for the CSF1 receptor. The only approved systemic therapy for patients with TGCT is pexidartanib, a small molecule inhibitor of CSF1R, which is subject to a REMS program due to hepatotoxicity. an adverse event that is thought to be an off-target effect. We believe that DCC34T has the potential to be a best-in-class CSF1 receptor inhibitor and to fulfill the unmet medical need for an effective and well-tolerated treatment for patients with TGCT. In an oral presentation at CTOS later this month, we are excited to present results from more than 20 TGCT patients across multiple dose levels and dose cohorts from the dose escalation portion of the Phase I study. In addition, we are on track to select a recommended phase 2 dose and to initiate the expansion cohort of the phase 1-2 study in TGCT patients. Turning to ribastinib, our potent and selective TIE2 inhibitor, which is currently being studied in combination with chemotherapy. TIE2 is a target primarily expressed in endothelial cells and TIE2 expressing macrophages or TEPs and plays an important role in angiogenesis as part of the angiopoietin TIE2 signaling axis. We were very pleased with the recent data presented at ASCO and ESMO from the two phase 1B2 studies in combination with paclitaxel and with carboplatin. In particular, we presented data showing strong preliminary activity in patients with endometrial and platinum-resistant ovarian cancer in part two of the paclitaxel combination study. Data presented at the ESMO Virtual Congress 2020 in platinum-resistant ovarian cancer demonstrated encouraging efficacy with an objective response rate of 38%, confirmed and unconfirmed, and the clinical benefit rate of 88% at eight weeks in heavily pretreated patients. All patients received prior platinum and taxane-based therapy. 90% of the patients received betacizumab, 62% received a PARP inhibitor, and 31% received immunotherapy. In addition to these data, we presented compelling data from the individual cohort at the ASCO 2020 virtual program showing promising preliminary anti-tumor activity and favorable tolerability with an objective response rate of 39%, confirmed and unconfirmed, and a clinical benefit rate of 72% at eight weeks, also in heavily pretreated patients. We look forward to providing updated results from these ongoing Phase 1b2 studies, as well as additional guidance on our clinical and regulatory plans for Robastinib. Finally, we continue to be excited about the prospects for DC-SAFE-3116, our potential first-in-class alkyl kinase inhibitor designed to treat mutant RAS cancers. We are aiming to submit the IMD in the fourth quarter of this year, but this event may shift to the first quarter of 2021. We are making great progress across each of our programs in our pipeline, and we believe that this is just the beginning of making a meaningful difference in the treatment of patients with cancer and rare diseases. I will now turn the call over to Tucker Kelly, our Chief Financial Officer, to review the financial results. Tucker?
spk12: Thanks, Matt. I'd like to review the highlights from our third quarter 2020 financial results, which includes our first complete quarter of Kinloch product sales. Total revenue for the quarter was $15.5 million, which includes $15.2 million of net product sales of Kinloch and $300,000 of collaboration revenue. Net product revenue included $14.7 million in U.S. product sales, as well as approximately $500,000 in product sales of Kinloch outside the U.S. under early access programs. The growth to net adjustment in Q3 was slightly lower than our prior guidance of approximately 15%. I would note that this adjustment is likely to increase in Q4 and in Q1 as we accrue for anticipated Medicare Part D rebates required for existing Kinloch-treated patients who will reenter the coverage gap in January. Cost of sales for the three months ended September 30, 2020 was immaterial, as the majority of the manufacturing costs related to Kinloch sales were incurred prior to FDA approval and thus were recorded as R&D expense. Cost of sales will not be significant until the initial prelaunch inventory is depleted and additional inventory is manufactured and sold. In the third quarter of 2020, our total operating expenses, excluding cost of sales, were $79 million, compared to total operating expenses of $76 million in the second quarter. Research and development expenses were approximately $49 million, and selling, general, and administrative expenses were approximately $30 million for the third quarter of 2020. We expect our operating expenses will increase modestly in the coming quarters as we continue to invest in the development of our clinical pipeline, the commercial launch of Kinloch in the U.S., and prepare for potential commercial launch in Europe. We ended the third quarter in a strong financial position and remain well capitalized, ending the quarter with cash, cash equivalents, and marketable securities of approximately $584 million, which we expect will be sufficient to fund our operations into the second half of 2022. With that, I'll now turn the call back over to Steve.
spk10: Thank you, Tucker. I'm extremely proud with what our team has accomplished so far this year. We have delivered on our promise to bring an important new medicine to patients with cancer with the approval and successful initial launch of Kinloch in the United States and are now working to bring this novel product to patients with advanced GIST around the world. Meanwhile, we continue to advance the rest of our pipeline based on our novel switch control kinase inhibitor platform, and we look forward to presenting updated data on DCC3014 at the CTOS meeting later this month. Operator, I'd now like to open the call for Q&A.
spk02: As a reminder, ladies and gentlemen, to ask a question at this time, please press star and the number one on your touchstone telephone. If your question has been answered or you wish to remove yourself from the queue, please press the pound key. Our first question comes from the line of Jessica Fye with JP Morgan. Your line is open.
spk03: Hey, guys. Good afternoon. Congrats on the quarter. I'm curious if you can give a little more color about the Kinloch dynamics. For example, is it possible to provide the average number of patients on Kinloch in the quarter and how many were on therapy as of quarter end?
spk10: Yeah. Hi, Jess. It's Steve. Thanks. Good to hear your voice, and thanks for the question. I'll ask Dan Martin, who's on the call, to address your question. Dan?
spk06: Hey, Jess. Thanks for the question. It's a good one. So, really, I think we're just going to remain focused on what we think were the key themes this quarter. We've been really pleased to see the continued strong demand, not only in terms of the numbers themselves, the revenue numbers themselves, but also any number of measures from our various launch tracking surveys. The new prescriber growth that we saw, as well as broad access, we've been really pleased with how payer policies have come into place for Kinloch in the fourth line. And in terms of, you know, specific metrics, you know, our goal is on these calls to provide color that's relevant to convey our launch progress and expectations moving forward. And we'll definitely continue to assess what information to share on future calls to help convey those insights, but we're not sharing specific patient numbers at this time.
spk03: Okay. Maybe if you cannot answer that. I'm curious, with the rapid uptake you're seeing in the community, what percent of Kinloch use you estimate is in fourth line versus potentially earlier lines of therapy?
spk06: Yeah, thank you. Another good question. Before launch, we had done quite a bit of claims analytics to help us estimate just that. And before launch, before we had experience selling our first product in that market, we thought that overall about 30% of just treatment across all lines of therapy occurs in the academic setting, with about 70% broadly distributed throughout the much larger, just in terms of number of physicians and institutions, community setting. At the time, we also thought that that tended to flip a bit with maybe 60% of late-line, fourth-line, or later patients being treated in the academic setting. But interestingly, even then, our analytics would suggest that 40% or so of very late-line patients received care in the community. And what we're seeing, well, before I comment on what we're seeing, I think one other important thought was or one other important question was, with a new product that is highly efficacious and has, you know, a favorable tolerability profile, would more community treaters hold on to those late-stage patients as opposed to maintaining the same referral pattern they had, you know, historically? And so, while we don't, still early days, and we don't have answers to all those questions, what we, yeah, what we are seeing is slightly more than that 40% that we expected to occur in the community setting for late-line GIST. We're seeing slightly more than 50% thus far, which we've been encouraged to see. But like I said in my prepared remarks, I think it's really important. One thing we want to highlight is, and we've said this in prior calls, although the majority of our early adopters were in the academic setting and we've seen some nice growth in early days in the community setting, we expect moving forward, just because of the nature of the structure of the market, that future growth will need to increasingly come from the community setting. And that's a setting where patients are much more widely dispersed, as I mentioned in my prepared remarks. You know, a lot of patients, excuse me, a lot of prescribers in the community setting may treat only one patient every 12 to 18 months with late-line GIST. And so given that and the lower awareness and lower knowledge, we're cognizant of the fact that continued growth, which will depend on our ability to continue to penetrate in that setting, the community setting, may be more challenging and come somewhat more slowly, particularly in light of the ongoing challenges of the pandemic, which I think we all know is likely to persist and perhaps even intensify in the coming quarters. So that's how we're thinking about sort of source of business, you know, just overall and for Kinloch as we look ahead.
spk03: Got it. Thank you. And if I can sneak in one more for Steve. In prepared remarks, I think you alluded to a broader potential for Kinloch and GIST. And it kind of sounded like you weren't solely talking about Second Line. So can you elaborate on what you meant there?
spk10: Yeah, thanks, Jess. It's a good question. And we're very committed with Kinloch to fully exploring the potential of the drug in GIST. even beyond where we're now currently standard of care on the fourth line, as Dan was describing, and also beyond the intrigued study in the second line setting. We know we have a very active drug in this disease, and we think there may well be other places where we could explore the drug's utility. We're not ready to share details about that vision and that strategy. We'll do that over the course of the coming months, but we are fully committed to conducting further clinical study of this drug in GIST.
spk05: Got it. Thank you.
spk02: Our next question comes from the line of Chris Raymond with Piper Sandler. Your line is open.
spk04: Hi. Good afternoon. This is Allison Brathelon for Chris. Thanks for taking the question. So first, one on the Kinloch dynamics. I think last quarter you called out a slight revenue benefit from Kinloch inventory build. just hoping you could provide any color on whether there is any inventory impact this quarter or even just directionally help us understand how the magnitude or direction of any inventory impact in Q3 compares to Q2. And maybe a similar question on new commercial patient ads from the expanded access program and how that played into the Q3 revenue number.
spk10: Yeah, thanks for the questions, Allison. I'll ask Dan Martin to take both of those.
spk06: Yes, thanks, Allison. Good questions. So the first one related to inventory build. Inventory build was not a significant contributor to our Q3 revenue performance. And then on the EAP front, as we've shared previously, there were a number of patients who converted from our EAP program to commercial product at the time of approval. And our Q3 revenues did include, continue to include, a modest contribution from those patients, but we haven't provided specific numbers. But yes, Q3 did include a modest contribution from those patients who were still on therapy.
spk04: Okay, thanks. And maybe just one more on some of the data you had at ESMO, specifically the data on Repretinib from the Phase I, the interpatient dose escalation, that was really supportive of treating patients past progression and updosing them to the BID dose, and really the later line patients seeing a nice benefit on PFS2. So just hoping you could maybe talk to how that compares with the early launch experience and your messaging for Kinloch. and basically how willing are physicians to treat past progression in those later line GIST patients.
spk10: Dan, would you like to take that?
spk06: Sure, absolutely. So good question, yes. We mentioned that data a number of times. I think that's really interesting data. We've also said previously, though, that you know, how a drug is used in the commercial setting is impacted by any number of factors. And as it relates to the BID dosing, you know, first I'll want to underscore that we are entirely focused on launching Kinloch in the fourth line, you know, consistent with our label. And that goes for indication. It goes for the recommended dose in our label. But we've seen a small number of prescriptions for BID but the vast majority has been at the 150 QD. And, you know, when I say a lot of things contribute to how a drug gets used in the commercial setting, you know, one of them that's really important is payer policies. And, you know, we've been really pleased to see the payer coverage come along really nicely for Kinloch. But those policies have very much been consistent with label, including from the dose perspective. So, While certainly interesting data and certainly our KOLs tell us there's interest in it, from a commercial point of view, it's been a pretty modest contribution to revenues to date.
spk04: Got it. Thank you.
spk13: And our next question comes from the line of Peter Lawson with Barclays.
spk02: Your line is open.
spk07: Hi, guys. This is Waleed on for Peter. Congrats on the great quarter, and thank you for taking the questions. Just had a couple questions here. I was wondering if you could provide any sort of details on the Kinlock usage this quarter. Are you seeing any potential off-label use in earlier lines of GIST? And then a question on the upcoming data for TGCT at CTOS. I'm wondering if you could set expectations as to what you would be considering to be positive results from that study.
spk10: Sure, Waleed. Steve, thanks very much for the question. So, maybe what I'll do is take the TGCT question first and then ask Dan to take the first question that you had. So, with respect to 3014, as Matt mentioned in his prepared remarks, we're looking forward to having additional data from the Phase I in just over 20 patients be presented in an oral presentation at the Connective Tissue Oncology Society Conference that are coming up in a couple of weeks. As you know, this phase one study is a dose escalation study. So what you can expect to see is data from a variety of different dose cohorts, doses and schedules of 3014 in patients with TGCT. What we do know is that our drug 3014 is very potent and very selective against the target. This is a disease, as you know, that's driven by a genetic translocation that results in overproduction of the ligand for the receptor. So based on the biology and based on our knowledge of the mechanism, we would expect to see 3014 have activity in this patient population, as we previously reported at CTOS last year. So we're looking forward to presenting the data here coming up in a couple of weeks. And as Matt mentioned, we remain on track to get to a recommended phase two dose and also to open the expansion cohort. Dan, would you like to take Waleed's question related to off-label use?
spk06: Sure, absolutely. So similar to as I mentioned a moment ago, you know, we, of course, are not out promoting anything other than our labeled indication. And the payer policies that we're seeing come online have very consistently been aligned with our labeled indication. It is difficult. We've shared before. It's difficult to estimate the proportion of patients who may be receiving Kinloch in earlier lines of therapy, frankly, because the data sources are imperfect. But what we are seeing in the data that we have is that a significant majority of Kinloch patients have been fourth line or fourth line plus. That's not surprising to us, again, because Again, the point about payer policies being consistent with label, and then again, you know, we're not out promoting that data. So, you know, the large majority consistent with the fourth line indication.
spk07: Got it. Thank you for taking the questions.
spk13: Our next question comes from the line of Yun Yang with Jefferies. Your line is open.
spk01: Thank you. So the first question is on the Phages of Intrigue data timeline. So based on what you saw in Phase 1 and second line for the PRATNIP PFS and SUTEN historical PFS, when do you think you would expect to see the data once you finish the enrollment by the end of this year?
spk10: Yeah, hi, Eunice. Steve, thanks very much for the question. It's a great question. As Matt mentioned in his prepared remarks, we're looking forward to getting to completion of enrollment in Intrigue here by the end of the year. And when we get to a completion of enrollment in the study, our intention at that time is to be able to share more detail about the timeline for the study to read out. As you know from our phase one experience in the second line cohort, we've seen a very robust PFS in that patient population. that we've studied of close to 11 months of PFS. And when you look at the SUTENT label, one would expect a PFS in the range of five and a half months to six months. So it's premature for us at this stage to talk about when we think the study will read out, but certainly as we get to full enrollment here before the end of the year, which is our target, we'll then be in a position to share more.
spk01: Great. And then as you move into second line with the integrated study, So once it's approved in the second line, do you expect the use of Repratinib in the fourth line to be dramatically reduced, or do you think that there is a potential that in some patients, Repratinib could be recycled in the fourth line?
spk10: Yeah, you know, Steve, I'll ask Dan to address that here in a second, you know, because the team and Dan have done a ton of market research and speak to clinicians all of the time about their view of Repretinib and Kinloch and the treatment of this disease as the treatment paradigm evolves. And I think what's also relevant here, in a way, are the data that we presented at ESMO where we dose escalated patients to 150 BID and saw additional meaningful benefit by treating patients beyond after progression with a higher dose of the drug. So it seems clear that Repretinib has the potential, at least, to be a real backbone of treatment for patients and for patients to receive prolonged benefit from the drug in that context. But, Dan, maybe you want to comment further about how you see the market evolving in a world of a positive intrigue readout and how physicians may evolve the treatment approach in paradigm.
spk06: Sure, absolutely. So what we hear from our KOLs is certainly real interest in seeing Kinloch get to that second-line setting. They all tell us that that's where they see the principal use for Kinloch, and they're really excited to see the results of Intrigue as a result, as you would expect. When we look through the claims data, when we talk to our KOLs, we don't see a dramatic amount of retreatment in this space. As you know, there's some data for imatinib with re-treatment. But, you know, we haven't seen a ton of that. And so it remains to be seen whether or not ripretinib, Kinloch, would be looked at as a valuable option in a re-treatment setting. As we said before, there's a lot of things that go into how a drug will be used. Obviously, data that gets generated how things appear in guidelines, payer policies, and the like. So it's still a bit early for us to have a good sense for that, but definitely what RKOLs tell us is they're looking forward to potentially having Kinloch available in the second line.
spk01: Great. And the last question is on the market, the commercial strategy. So, you know, Steve, on your prepared remark, you are preparing to launch in at least a major European countries. But emerging markets are like really a big opportunity for new therapies. So I want to ask you, outside the U.S. and major European countries and ZY Lab territories, what's your plan for commercial strategy for the pregnant? Thank you.
spk10: Yeah, thank you. And that's a good question. So as you know, you referenced that we have our collaboration with ZY in Greater China that NDA has been filed. And there's the potential for action on that application next year. And, of course, we also announced today that we're working through a couple of distributors in other territories, so specialized therapeutics in Australia and other Pacific Rim countries. And then we also announced our distribution agreement with medicine for Canada and Israel. Beyond those territories, however, you know, our approach from a commercial point of view would be to take a similar approach, that is to work through distributors in key territories And we'll start to make our way around the world with Kinloch in terms of making sure that patients have access to it in a commercial setting upon approval. And that is something that we're committed to. So we're looking forward to continuing to identify partners in the right priority territories as we seek to make the drug available further.
spk01: Thank you.
spk02: Our next question comes from the line of Michael Schmidt with Guggenheim. Your line is open.
spk09: Hey, guys. This is Charles Zuon for Michael Schmidt. Thanks for taking the question, and congrats on the strong quarter. A couple on DCC for the TGCCT. I fully understand that you and others have highlighted the market opportunity for TGCCT as an annual 1,300 patients or so, at least for the diffuse type with a much larger prevalence given it's nonlethal. On that front, however, what's your sense of how many patients are truly candidates for pharmaceutical intervention relative to the current role and potential cure rates of surgery, even repeat surgery and or radiation?
spk10: Hi, Charles. It's Steve. Thanks for the question with respect to 3014. As you know, the target indication for us for 3014 and TGCT is for patients that are not amenable to surgery. And we know that, as you referenced, there are about 1,300 new patients in the U.S. each year with a diffuse form of the disease. And these are patients with a high recurrence rate who generally at some point in the course of their disease, I think the estimates are between 30% and 50% of those patients have recurrence But at some point, those patients, as we understand it, run out of surgical options to manage their disease and then would become candidates for a systemic therapy. So that is the population we're targeting. We also know that there are patients with the localized form of the disease that are also not amenable to surgery for whatever reason. And that also would be candidates for drug therapy, for systemic therapy.
spk09: Got it. Makes sense. And I guess also based on the research you've done so far around pexidartanib and other off-label drugs such as imatinib for this disease, what's your sense around a potential treatment duration in these patients? And is it possible to convert these patients, I guess, from previously unamenable to surgery into eligible patients for a potential curative surgery?
spk10: Yeah, it's a good question with respect to the potential for neoadjuvant treatment in this disease context. And who knows, there may well be a role for CSF1R inhibition in such patients to shrink tumors to make them potentially resectable, whereas perhaps prior to treatment, they might not have been resectable. So that, I think, remains an open question. You know, this is a disease category where there just haven't been systemic treatments until the approval of pexidartinib last year. And what we continue to hear from physicians is that they have concerns about using PEX in their patients. And in fact, patients have concerns about using PEX as a result of the black box warning for hepatotoxicity and the REMS that is associated with that. So we believe there remains a significant other medical need for a drug that is effective and well tolerated in the treatment of this disease. And I think part of our task, assuming continued success, is going to be to ensure that we're able to access patients at the right time in their disease course for a systemic treatment like ours.
spk09: Got it. Makes sense. Thanks for taking the questions, and congrats again on the strong quarter. Thanks, Charles.
spk02: Our next question comes from the line of Wren Benjamin with J&P Securities. Your line is open. If your phone's on mute, please unmute.
spk08: Sorry about that. Congratulations, guys, on a great quarter. Thanks for taking the questions. Can you provide us maybe a little bit more color on the commercial plans in the EU? Maybe I missed it, but how many people are we talking about? Is there going to be a centralized kind of sales force? Just any sort of ideas to how that build-out will occur, or will they occur just based on as by country by country approval, any sort of color there.
spk10: Yeah, hi, Rand. It's Steve. I'd be happy to take your question about Europe. As I mentioned in the prepared remarks, we think the majority of the opportunity is in the five largest markets, as you'd expect. And we don't have any reason to believe that the prevalence of GIST or the incidence of GIST in Europe as a percent of population is any different than what we see in the U.S., So based on that, we think across the five largest markets, there are probably between 4,000 and 6,000 new patients with GIST that are diagnosed each year. So as we think about our build in Europe, it will very much be a staggered build based on market access. So as you know, each of these markets are generally single-payer markets, and so depending on the country, a manufacturer like us would have to go through pricing and reimbursement negotiations, and sometimes that can take a matter of a few months, and sometimes that can take as long as a year. So depending upon how long the process takes to get to a price and to get to reimbursement in the system, that would then be the trigger for us to consider a bill related to that country. As I also mentioned in the prepared remarks, Ren, our estimate is that these patients tend to be treated centrally at tertiary centers, So there's probably an opportunity here as we look at it for us to build more of a hub model across Europe where we'd have the majority of our headcount sitting in a regional center within a field based personnel in key markets. And so I'm sure as we get to a potential approval in Europe, which as you know, the filing is now gone in, it's been validated. So we think that the earliest potential action on the application could be by the end of next year. So as we get closer, I'm sure we'll be sharing some more detail about how we view the build and what we see in terms of numbers. But it's certainly going to be a staggered build and we'll, of course, continue to be thoughtful about what the size of that organization ends up looking like to access the opportunity.
spk08: Got it. And then I think it was Matt who might have mentioned that the SM opportunity is you guys are no longer investing in that Can you talk a little bit, I guess, about, you know, was it because enrollment was kind of tough or you were not seeing the kind of efficacy that you were hoping for? And ultimately, you know, will we see, based on the patients that you have enrolled, you know, what the data looked like or it really doesn't make any sense to, you know, to move that forward at all?
spk10: Yeah, thanks for the question, Ren. And as we've been saying for a number of months now, even well over a year, our real focus of development for Kinloch or Repretinib is in GIST. And as Matt noted in his prepared remarks, we have seen modest clinical activity in the fewer than 20 patients that we treated in that SM cohort, but we didn't see sufficient activity to warrant further development in this disease. And that's particularly given the context of the evolving treatment landscape in SM, and frankly, the compelling investment opportunities that we see in other parts of the portfolio, not only in Kinloch or Repregnant, but also in our other clinical stage assets as those start to really come into focus. And so as a result, we've decided to focus our investment resources, both people and dollars, in other areas for now. I'm sure, you know, when the time is right, at some stage, we'll publish the data from the SM website
spk08: cohort I don't have any specific details I can share with you at this time right got it and then just one final one regarding the IND for 3116 I think I heard it right that it was shifted to the first quarter anything you know is it just you guys are you know have enough to focus on right now or did anything kind of pop up that's making you have to make that shift
spk10: No, we remain really excited about 3116. You know, this is targeting the initiating factor in autophagy, which is thought to play a role in mutant breast cancer. So really large patient populations and significant tumor types like lung and fatty cancer. So we remain really excited about the program. The team has been working hard to advance us to file the IND. This is a goal that we have for the end of the year. That was our initial milestone. And as Matt indicated, this is a goal that we have for the end of the year. That was our initial milestone. And as Matt indicated, there's a possibility that this shifts into quarter one. But this is really just a function of timing being an end-of-year sort of goal. But we remain really excited about the program and very focused on it.
spk08: Terrific. Thanks for taking the questions, and congrats. Thank you.
spk02: Thank you. And our last question comes from the line of Arlinda Lee with Canaccord Genuity. Your line is open.
spk11: Hey, good afternoon, folks. It's Ben Shim for Arlinda. And congrats on the great quarter. Many of my questions have already been answered. I kind of have a high-level question for you. For the benefit of us outsiders, can you walk us through how on a day-to-day basis, you're getting more penetration in the community setting, and how is it different in the pandemic environment? And to what extent can you communicate the potential for earlier lines of treatment? Since you guys are already there, can you kill two birds with one stone, as it were? And I have a couple other follow-ups.
spk10: Yeah, thanks for the question, Ben. I'll ask Dan Martin to take that first part of your question, and we'll come back for your follow-ups.
spk06: Yeah, hi. Thank you. Good question. So really the crux of our effort to penetrate the community setting is just being incredibly highly targeted and leveraging our analytics strength to identify where are the physicians who are most likely to have a late-line, fourth-line GIST patient. As I mentioned before, You know, patients are much more widely dispersed. It's much more diffuse in the community setting. And so making sure that you are spending your sales and marketing efforts in the right place is critically important. And so, of course, in addition to communicating all the things that we do, you know, irrespective of the setting, communicating the best-in-class profile, communicating the fact that, you know, it's the only approved agent for the fourth line, et cetera, You know, really making sure that we are laser targeted in our efforts is critically important. Now, as it relates to COVID-19, this is an ongoing challenge. I think it is for just about every company. It's an ongoing challenge because of any number of reasons. Patient, you know, the data continues to show that, you know, broadly patient numbers remain somewhat depressed in oncology. and there's a lot going on at these provider institutions. One of the things that is a challenge is virtual fatigue. I think a lot of people can appreciate the sort of virtual fatigue that happens, and so we continue to invest in training and resources for our field force to make sure that they are having the most robust and engaging conversations with physicians about Kinloch and about their on-label patients. So, you know, there's no magic bullet, no magic potion here. A lot of it is just, you know, continuing to work every day and the team has done a fabulous job, a fabulous job navigating that. But, you know, as we think about moving further and further into the community setting and with the ongoing pandemic, which may, you know, intensify in the coming quarters, you know, it is something that we are cognizant of and think that you know, continued growth in those new patient starts may be a bit more challenging and come a bit more slowly. So I hope that answers your question. I missed the second part of your question, and I wasn't sure if that was a commercial one or not. You mentioned something about second line?
spk11: Yeah, to what extent can you communicate or may you communicate the potential for earlier lines since you guys are already there and not having to go back?
spk06: When you say already there, you mean at the physician, with the physician?
spk11: At the physician level, yeah.
spk06: Oh, okay. Sure. So the answer is we can't, not promotionally. The data on second line, you know, the KOLs are obviously already aware of that data from the publications and such, really excited about it, and really looking forward to intrigued results and the potential results. movement of Kinloch up in the, you know, order of therapy. But from a promotional perspective, we stick to the labeled indication.
spk11: Gotcha. Okay. That makes sense. And maybe a question for Tucker. Can you give us some color when the accrued pre-launch inventory will be worked through at, let's say, current run? Sure.
spk12: Yeah, absolutely. As you notice, we did have a little bit, when you'll see the financial results in the earnings release and then the queue, there was a little bit of COGS expense in this quarter, but it'll be a number of quarters before we work off the pre-launch inventory that we've already expensed as R&D.
spk11: Okay, that's very helpful. I think you guys mentioned something. Was there any material changes in pair mix for the quarter? I'm sorry if I missed the question or the statement.
spk06: I can take that. This is Dan. No, no material change that we've seen in Paramix.
spk11: Okay, great. Thanks very much, and congrats on the quarter.
spk10: Thank you, Ben.
spk02: Thank you. I'm not showing any further questions. I'll now turn the call back over to Steve Porter for closing remarks.
spk10: Great. Thank you, Bridget. I appreciate that. And thanks to everybody on the call for joining us on the call today and for your continued support. We're looking forward to keeping you all updated on our continued progress with Kenlock as well as with the balance of our development programs.
spk13: Have a great evening, everyone. Ladies and gentlemen, this does conclude the program. You may now disconnect. Everyone, have a great day.
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