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spk09: Good morning, everyone, and welcome to the Cypher Pharmaceuticals First Quarter 2023 Financial Results Conference Call. Later, we will conduct a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. Today's call is being recorded. At this time, I would like to turn the call over to Jen Larson, Senior Vice President of Finance and Investor Relations. Jen?
spk10: Thank you, Operator. Welcome, and thank you for joining us today to discuss DeCyphera's first quarter 2023 financial results. I'm Jen Larson, Senior Vice President of Finance and Investor Relations. With me this morning 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, Margarita Duarte, Head of International, and Tucker Kelly, Chief Financial Officer. Before we begin, I would like to remind you that any statements that we make on this call that are not historical facts are forward-looking statements made pursuant to safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Examples include our expectations of our preclinical and clinical programs, our commercialization of Kinloch, and 2023 guidance. Forward-looking statements involve substantial risks and uncertainties that could cause actual results to differ materially from those expressed or implied by the forward-looking statement, 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.deciphera.com. With that, I will now turn the call over to Steve Herter, President and Chief Executive Officer of Deciphera. Steve?
spk02: Thank you, Jen, and good morning, everyone. Thank you for joining us today as we provide an update from the first quarter, review our financial results, and look forward to the rest of the year. We're off to an exciting start for this catalyst-rich year and have already achieved a number of critical milestones that advance our mission to discover, develop, and commercialize important new medicines to improve the lives of people with cancer. At the January ASCO plenary series session, we presented results from an exploratory analysis from the Intrigue Phase III clinical study of Kenlock using circulating tumor DNA, or CT DNA, from patients with gastrointestinal stromal tumor, or GIST, previously treated with imatinib. Based on these results, which showed a striking benefit for patients with mutations in KIT exon 11 and 1718 treated with Kenlock, We plan to initiate the INSIGHT Pivotal Phase 3 study of Kinloch in this patient population in the second half of the year. In March, we announced the FDA-granted Breakthrough Therapy designation for Kinloch for this population. This designation reflects the potential for Kinloch to offer substantial clinical benefit for this group of second-line GIST patients, and we believe it reflects the opportunity for Kinloch to become the future standard of care in this setting. The need for additional treatment options for GIST patients in the post-imatinib setting was further underscored by Kenlock's inclusion in the National Comprehensive Cancer Network, or NCCN, clinical practice guidelines in oncology as a preferred regimen for second-line GIST patients intolerant to sunitinib. In March, we completed enrollment in the MOTION Pivotal Phase III Study of Vimselfinib for the Treatment of Tenosynovial Giant Cell Tumor, or TGCT, and we expect to report top-line results from this study in the fourth quarter. Together, Kinloch and Vimselfinib have the potential to benefit thousands of patients around the world, with a peak worldwide sales potential of over $1 billion. We look forward to reporting the MOTION study results and initiating the INSIGHT study later this year. Most recently, at AHCR in April, we presented eight posters on our early-stage pipeline, the most comprehensive demonstration of Decipheris research in our company's history. These data highlighted the sustained productivity of our kinase switch control research engine and its proven ability to generate product candidates with first and best-in-class potential. We presented new preclinical data on our ALK inhibitor, DCC3116, in combination with Repretinib in GIST models, and in combination with Incarapinib and Cetuximab in colorectal cancer models that strongly support two new dose escalation combination studies, which we expect to initiate in the second half of this year. We also presented the first preclinical data for DCC3084, a potential best-in-class PanRaf inhibitor that broadly inhibits Class I, II, and III BRAF mutations and BRAF fusions. We announced the nomination of our newest development candidate, DTC3009, a potential best-in-class pan-kit inhibitor, and we showcased our newly announced research program focused on GCN2 kinase, a key target in the integrated stress response pathway. These discovery, research, and early-stage clinical efforts complement our late-stage and commercial programs, which together form a deep pipeline of novel medicines and product candidates supporting our position as a leading, fully integrated oncology company. On today's call, Dan Martin, our Chief Commercial Officer, will share insights on the U.S. commercial performance for the first quarter, and Margarita Duarte, our Head of International, will provide an update on Kinloch's ongoing fourth-line gist launch in Europe. Finally, Tucker Kelly, our Chief Financial Officer, will review the financial results from the first quarter. But first, I'll turn the call over to Matt Sherman, our Chief Medical Officer, to discuss Deciphera's R&D efforts in greater detail. Matt?
spk14: Thanks, Steve. We are thrilled with the progress we've made across our clinical and preclinical pipeline so far this year. As Steve mentioned, we are excited by the Breakthrough Therapy designation we received for Kinloch for the treatment of adult patients with unresectable or metastatic second-line GIST. KIT exon 11 mutation and co-occurring KIT exon 17 and or 18 mutations. This designation is a direct reflection of the substantial clinical benefit of Kinloch in this patient population that we observed in the CT DNA analysis from the Intrigue Phase 3 study. Based on the Intrigue CT DNA data and regulatory input, we plan to initiate Insight, a new pivotal Phase 3 study of Kinloch versus student-admitted in this group of second-line GIST patients in the second half of this year. If positive, we believe the results of the Insight Study will support an expanded label for Kinloch in select second-line GIST patients and transform how physicians treat these patients. At the upcoming 2023 ASCO Annual Meeting, we look forward to presenting additional data from the Intrigue Study, including patients that did not have detectable ctDNA, as well as updated overall survival data. In the first quarter, we announced completion of enrollment in the motion pivotal phase three study of Vimseltinib, which we believe will become the second approved product from our switch control kinase inhibitor platform. We are strongly encouraged by the compelling clinical data we have generated, supporting the potential of Vimseltinib to be the standard of care treatment for patients with TGCT not amenable to surgery. The completion of enrollment in the motion study earlier this year puts us on track to read out the top line results in the fourth quarter. We also expect to present updated efficacy and longer-term safety data from the Phase 1-2 study of Vimseltinib in the second half of this year that will continue to support the potential for Vimseltinib to be a best-in-class therapy in TGCT. Turning now to DCC 3116, we presented new and highly promising preclinical data in 3116 in combination with repritinib and GIST models and in combination with angorafibid and subtoxinib and colorectal cancer models at the AECR meeting last month. These data demonstrate that DCC3116 can block angorafenib and subtoxinib-induced ALK activation as well as autophagy flux and BRAF V600E-driven colorectal cancer preclinical models. We also showed that 3116 can block repritinib-induced ALK activation and autophagy flux in just preclinical models. In both cases, these in vitro results extend to positive in vivo efficacy as demonstrated by tumor growth inhibition or tumor regressions in xenograft studies. We expect to initiate a new combination study evaluating DCC3116 plus angorafenib and cetuxenab in patients with colorectal cancer in the second half of this year. Under the clinical trial collaboration and supply agreement, Pfizer will supply angorafenib at no cost. We also expect to initiate the new combination cohort evaluating 3116 with repritinib in the second half of this year. Additionally, we plan to initiate one or more expansion cohorts in the second half of this year in combination with the MEK inhibitors, Tremetinib or Benimetinib, or the KRAS G12C inhibitor, Sularacid. The next program slated to enter the clinic is DCC 3084. We believe that 3084 is a potential best-in-class pan-RAF inhibitor based on its profile as a potent and selective inhibitor of both BRAF and CRAF kinases. targeting all relevant avarin signaling through RAF monomers, homodimers, and heterodimers. ECC 3084 exhibits high permeability, good CNS penetration, tumor tissue accumulation, and a long residency time, providing it with an excellent pharmaceutical profile that we believe will enable more durable efficacy. The strong preclinical efficacy in cancer models driven by RAF or RAF mutations support evaluation of both single agent and combination opportunities. We expect to submit an IND to the FDA in the second half of this year. Finally, I want to highlight the recent preclinical data we presented at AECR last month for DCC3009, a potential best-in-class pan-kit inhibitor. These data demonstrated its ability to potently and selectively inhibit the broad spectrum of known primary and secondary drug-resistant kit mutations in GIST models, spanning exons 9, 11, 13, 14, 17, and 18. This comprehensive in vitro profile also translated to exceptional in vivo results in which DCC3009 exhibited tumor regressions in multiple drug-resistant preclinical GIST models. Like 3084, 3009 also has optimized pharmaceutical properties, showing very high target selectivity and free drug levels to enable exposures needed to suppress the broad spectrum of kidney patients in GIST. We expect to submit an IND to the FDA for DCC 3009 in the first half of 2024. As you can see, we have a lot to be excited about across our portfolio of products with first or best-in-class potential, offering a tremendous opportunity to benefit patients with cancer around the world. I'll now turn the call over to Dan Martin, our Chief Commercial Officer, to provide an update on the U.S. commercial efforts. Dan? Thanks, Matt.
spk05: In the first quarter, we continued to execute on our commercial goals for Kinloch in the U.S. We saw sustained strength in our core brand metrics, including prescriber reach and engagement, product awareness and perception, new prescriber growth, new patient acquisition, and average duration of therapy. And our market research and KOL interactions continue to highlight that Kinloch is firmly entrenched as the clear center of care in fourth-line shifts. During Q1, net product revenue in the U.S. was $24.6 million. This reflects continuation of our strong core business, as well as typical Q1 seasonality dynamics that adversely impacted net revenue during the quarter. Consistent with Q1 of 2022, we saw softer demand in January, followed by a healthy rebound in February and March. Additionally, as was the case last year, we saw a modest inventory reduction from Q4 to Q1 that negatively impacted ex-factory purchases during the quarter. When we look at the Q1 results year over year, we saw positive volume growth driven primarily by a gradually increasing average duration of therapy as the real-world persistency curve continues to mature and more fully reflects the impact patients who receive prolonged clinical benefit from chemo. Although volume growth and price increases were positives year over year, PAP and gross to net created headwinds for Q1 net revenue. Both PAP and gross to net were higher in Q1 of 2023 versus Q1 of 2022. Despite these headwinds to Q1 net revenue, strength in the underlying business, including positive volume growth, enabled a 5% increase in Q1 net revenue year over year. Looking ahead, we expect continued strength in the Kinloch business in the U.S. Our commercial team continues to execute at a very high level, again delivering the highest reach, frequency, and share of voice of any company in the GIST market and maintaining high awareness and positive product perceptions among both academic and community physicians. New prescriber growth has continued at a consistent pace, again driven by community prescribers. We have now had over 900 unique prescribers since launch, with 75% of new prescribers in Q1 coming from the community setting. New patient acquisition trends have also been very consistent, and payer access continues to be extremely positive. Average duration of therapy increased to seven months in 2022, and we anticipate it could ultimately reach as high as eight to eight and a half months at peak. Moving forward, we expect that key growth drivers will include gradual volume growth as the average duration of therapy continues to mature over time, as well as continued net price growth. And despite a higher PAP percentage in Q1 of this year versus Q1 of last year, we continue to expect PAP to fall within our estimated 20 to 30% range throughout the rest of 2023. With Kinloch firmly entrenched as a standard of care in the fourth line setting, irrespective of the mutational profile, We are extremely excited about the potential for Kinloch to benefit second-line patients who harbor exon 11 plus 17 or 18 mutations pending a positive insight study and FDA approval. Our planned initiation of the study in the second half of the year is a key milestone for Dicicra and, importantly, for patients with GIST. There is a significant unmet need for this patient population and, if approved, We believe this additional indication would double the Kinloch peak revenue potential to 350 to 400 million in the U.S. alone. While we continue to execute on our commercial goals for Kinloch in the U.S., we have also begun preparations to launch Vansilfinib in CGCT, pending positive results from the motion trial and FDA approval. We believe the cipher is uniquely positioned to maximize this opportunity given Vansilfinib's potentially best-in-class profile the strong relationships we have established with sarcoma treaters in both academic and community settings, as well as the outstanding team and commercial capabilities that we have built. We believe in SELTINIB will be a strong strategic fit for Decipher's commercial portfolio and will offer life-changing impact for patients living with TGCT. I will now turn the call over to Margarita Duarte, our head of international, to discuss the progress of the Kinloch launch in Europe. Margarita?
spk11: Thanks, Dan. We are very excited with the continued launch momentum of Kinloch in Europe, and I am pleased to share that we are off to an excellent start in 2023. For the first quarter, international net product sales were 8.6 million, up from 5.4 million in the prior year, and driven primarily by continued strong growth in demand in Germany and France. These results reflect the strength of our launch, and I'm very proud of the hard work of the entire Decipher team to bring the first treatment option to fourth-line GIST to patients and physicians in Europe. In Germany, I am pleased to announce that we successfully concluded our price negotiations, and our final negotiated list price per month of €18,400 demonstrates the high value that Kinloch brings to GIST patients in Germany. The final negotiated price for Kinloch is only 15% lower than the initial price of 21,500 euros that we launched at in 2022 during the free pricing period, underscoring Kinloch's best-in-class profile in fourth-line GIST and the significant unmet needs for patients in this setting. In France, we continue to successfully grow Kinloch sales under the post-approval paid access program as we make good progress in our price and reimbursement negotiations. Last year, the French National Authority for Health strongly supported the reimbursement of ClinVac by granting an unanimous ACMR-3, which is only achieved by a small number of orphan treatments, which we believe provides a strong foundation for successful pricing discussions. For England and Wales, we remain committed to working with NICE towards a positive outcome for advanced yeast patients. And we are in discussions with the agency for a rapid review following their recommendation against reimbursement of Kinloch based on cost effectiveness, which is not uncommon. Additionally, we have made significant progress advancing our access discussions in Spain and Italy, and I am thrilled to share we expect to be in a position to launch Kinloch in Italy in the coming months. Since our European launch last year, we have achieved strong reimbursement ratings for Kinloch in multiple markets, most notably in Germany, where reimbursement submissions are notoriously complex and where Kinloch was awarded a major additional benefit, the highest possible rating, which is extremely rare. Building upon our progress there and in France, we look forward to continuing our work to establish Kinloch as a standard of care for fourth-line Gs in Europe. I will now turn the call over to Tucker Kelly, our Chief Financial Officer, to review the first quarter financial results. Tucker?
spk04: Thanks, Margarita. Total revenue for the first quarter of 2023 was $33.4 million, which includes $33.2 million of net product revenue of Kinloch and $200,000 of collaboration revenue, compared to the $29.2 million of total revenue, including $28.8 million of net product revenue of Kinloch, and $400,000 in collaboration revenue for the same period in 2022. Collaboration revenue this quarter was comprised of product loyalty revenue under our agreement with Zai. Loyalty revenue in Q1 was impacted by sales rebates Zai provided to distributors in China for product that was purchased prior to a price reduction following the inclusion of Kinloch in China's national reimbursement drug list in January 2023. Cost of sales were $500,000 in the first quarter of 2023 compared to cost of sales of $400,000 for the first quarter of 2022. In the first quarter, total operating expenses were $86.7 million compared to operating expenses of $76.1 million in the same period in 2022. Research and development expenses for the first quarter of 2023 were $54.8 million compared to $47.4 million for the same period in 2022. selling general and administrative expenses for the first quarter of 2023 were $31.4 million compared to $28.3 million for the same period in 2022. We continue to expect quarterly operating expenses to increase modestly for the remainder of 2023, driven by additional clinical activities across our pipeline. In January of this year, we raised $143.7 million in gross proceeds through a very successful public offering, further strengthening our financial position and expanding our cash runway into 2026. As of March 31st, 2020-23, cash, cash equivalents, and marketable securities were $426.3 million. With that, I'm now turning the call back over to Steve.
spk02: Thank you, Tucker. We are proud of the significant progress we have already made this year and look forward to an exciting second half of 2023 with the announcement of top-line results from the Phase 3 Motion Study, initiation of the Phase 3 Insight Study, initiation of multiple combination cohorts for DCC 3116, and the filing of an IND for DCC 3084. As evidenced by our robust presentations at AACR, our proven discovery engine continues to generate new product candidates with first and best-in-class potential, which we expect to fuel our future growth. With that, operator, I would now like to open the call for Q&A.
spk09: Thank you. Ladies and gentlemen, to ask a question, you will need to press star 1-1 on your telephone. and wait for your name to be announced. To withdraw your question, press star one, one again. Please stand by while we compile the Q&A roster. And our first question coming from the line of Tyler Van Buren with Cowan-Elonis Open.
spk01: Hey guys, good morning. Great to see all the progress. Thanks for taking the question. For Kinloch, can you just speak about what you're seeing commercially in the second line following the NCCN guideline update. And I know it came late in Q1, but is this something that you expect to impact U.S. sales in Q2 and beyond? Thank you. Yeah.
spk02: Hi, Tyler. Good morning. It's Steve. Thanks for joining for the call. So, yes, we were pleased to see in the first quarter the NCCN update their treatment guidelines and list Kinloch as a preferred treatment option for patients with GIST in the second line who are intolerant to Sinitinib. And it's really just too early for us to see any impact in our data. That's something we'll certainly continue to monitor. And on future calls, we'll provide updates as warranted based on what we see in the data.
spk09: Thank you. One moment, please, for our next question. And our next question, coming from the line of Yunyang with Jeffrey, ceiling is open.
spk12: Thank you. So in the U.S., understand that in the first quarter this year, there were increases in growth net discount as well as the patient assistance program. So based on that and the sales growth, is it reasonable to assume that patient volume growth is somewhere around like a mid-single-digit percentage year-over-year? And the second question is to Tucker. On R&D, first quarter R&D is higher than fourth quarter last year, and obviously you completed the enrollment in the Phase III motion trial. So how should we think about the R&D run rate for the remainder of the year? You mentioned the modest topics increase, but do you think R&D is supposed to go down quarter over quarter from first quarter? Thank you.
spk02: Yeah, Ian, thanks for the two questions. Let me kick us off first with respect to Kinloch and just make a couple of global comments, and then I'll ask Dan to comment on the U.S. business, and then Margarita, perhaps you'd like to offer some additional color on the business outside of the U.S. So our view of the quarter is we had a really strong quarter of Kinloch revenue, very solid performance. Dan will comment on the U.S. dynamics that we see in the quarter. But the fundamentals, I would say, remain very solid here in the U.S. And, of course, outside of the U.S., we continue to prosecute additional pricing and reimbursement negotiations to unlock market access in additional territories, which we think will continue to fuel future growth. So we're looking forward to seeing how the balance of the year unfolds, but I would say the fundamentals remain very strong. Dan, do you want to offer some additional comments?
spk05: Yeah, absolutely. Hi, Yoon. Thanks so much for the question. So as Steve mentioned, we're really pleased with the underlying business and the strength that we continue to see in that underlying business. Q1 is always a little bit tricky as it's not uncommon to see some of these seasonality dynamics that I described in the prepared remarks. But in terms of the underlying core business, we saw continued strength in all of our key metrics, including, really importantly, new prescriber growth, new patient acquisition, average duration of therapy, payer access, and so on. And so, overall, you know, definitely pleased with the progress. Despite the headwinds that we noted that relate to net revenue, we were able to grow net revenue 5% year over year. We have decided there are things that impact volume growth month to month, quarter to quarter. So we plan to look at that, to evaluate that, to communicate on that with a somewhat longer timeframe rather than quarterly. But I think, you know, we hope we've provided enough detail for you to appreciate the strength of the underlying business and the direction that we're headed.
spk02: Great. Thanks, Dan. Margarita, do you want to comment on the European and international dynamic?
spk11: Sure. Thanks, Steve. So, just start by saying that it's very exciting to see the strength of the launch in the first markets in Europe and to also see the strong reimbursement ratings that we have achieved so far, as well as all the progress that we are making with regards to market access to unlock new countries, which will allow future launches. So, actually, geographical expansion is going to continue to be a strong growth driver in Europe. And I would also say that the continued strength of the current business in the countries where we have already access, like Germany, like France, will also continue to play a key role in the success of Kinloch in Europe.
spk04: Yes, Tucker, on your question with regard to OpEx, you're right. So OpEx overall grew about 4% quarter over quarter in Q1. As I said in the prepared remarks, we would expect overall OpEx to kind of modestly increase through the balance of the year. As you noted, R&D increased in the quarter. G&A actually was down a little bit. So it was a more sizable increase, about 14% quarter over quarter for R&D. We wouldn't expect it to be that high going forward in the balance of the year. And as you look at the Q, you'll see that most of that was due to additional expense around Kinloch on the R&D front. So it won't be quite as high overall for R&D, but we would expect the balance of the growth over the year to be within or even in one month as well.
spk09: Thank you. Thank you. And our next question coming from the lineup, Michael Schmidt with Guggenheim. Your line is open.
spk13: Hi, good morning. This is Paul. I'm for Michael. Thanks for taking our questions. I have two. The first is on Kinloch and potential guidance. So, you know, given some of the progress you've made in market access for Europe, do you have any plans to provide sales guidance At some point this year, is that more of a 2024 and beyond possibility? And then secondly, just on the 3009 program, just wondering how you're thinking about the opportunity or future regulatory path given the potential evolving landscape in GIST with Kinloch moving ahead in Exxon 11 in 17-18 and other approaches that are also in development for second line. Is a head-to-head, again, student sort of likely to remain that second line strategy, or are you considering other lines of GIST? Thank you. Hi, Paul.
spk02: It's Steve. Good morning. Thanks very much for the question. So let me take the first question that you had with respect to Kenlock and guidance, and then I'll ask Matt to address your question with respect to 3009. So first, in terms of guidance for Kenlock overall, both for the base fourth line business based on the initial indication and the Invictus study, and then also the Insight study going forward in the second line, We, earlier this year, as you'll recall, provided some peak revenue guidance for the brand. And what we saw, the contribution being of the second-line opportunity on top of the fourth-line opportunity here in the U.S. So we see at peak in the U.S. $350 to $400 million peak revenue opportunity with those two indications combined. And that, of course, excludes opportunity outside of the U.S. And the reason we've excluded a view on that up until now is because we don't have clear line of sight to what the average net selling price is going to be in Europe as we're still in the middle of pricing and reimbursement negotiations in key markets. Now, we had some good news today, certainly, that we disclosed with respect to our German price, and we're very encouraged to see that price and the recognition of value for the brand and the benefit that it offers to patients. but it's really too early for us to provide guidance in the nearer term, just given some of the uncertainties around where we might end up on price in other territories.
spk14: Matt? Thanks, Steve, and hi, Paul. In regards to your question about our new development candidate, DCC3009, a pan-kit inhibitor, of course we're very pleased with the activity we have with Kinloch in the fourth-line setting, and now with the emerging data that we're able to show by the ctDNA analysis for Kinloch, in the second-line patients who harbor the exon 11 plus 17 or 18 mutation. And again, in that line of patients, in that subgroup, a very strong activity. Of course, there's other opportunities in the GIST space for a pan-kit inhibitor, such as 3009, and that can be another one to therapy, either as a single agent or also as potential combination therapy. So as we get closer to filing the IND, we look forward to sharing more about our development plan with that molecule.
spk13: Great. Thanks so much.
spk09: Thank you. And our next question coming from the line of Bradley Canino with Stateful. Your line is open.
spk07: Good morning. Two on your pipeline. First, for the Pan-RAF, you unveiled this molecule at the same medical meeting where there was a lot of emerging clinical data sets of several Pan-RAF molecules that were met with, I would say, indifference by the market as reflected by the valuations of those companies. So I want to know, what did you see in those data that point to defined and valuable development paths? And then for your PAN kit, was the decision to advance this molecule based on any additional data from the INTRIG study that has not yet been published or presented? Thank you.
spk02: Yeah, Brad, thanks for the two questions. Let me take the PAN kit question, the 3009 question, then I'll ask Matt to comment on 3084 and the PAN-RAF inhibitor. So we're excited to make the disclosure at AACR about 3009 as a broad spectrum inhibitor with really exquisite selectivity and very favorable pharmaceutical properties. We have, as you know, a lot of experience developing drugs in GIST. We have, I think, treated the largest number of patients on clinical study with GIST of any biotechnology or pharmaceutical company. And along with that comes a lot of additional data that we have access to from patients enrolled on those studies. So in its totality, that expertise that we've built, both in research as well as in clinical development, has been brought to bear as we think about 3009 and its potential to benefit patients with this disease. So we'll continue to leverage that expertise, both from a research perspective as well as from a development perspective, as we try to raise the bar for patients with GIST and bring 3009 forward to, we hope, offer benefit to patients beyond where Kenlock currently plays a role in that disease. Matt, would you like to cover up on 3084?
spk14: Yes. Hi, Brad. So in regards to 3084, we do feel really good about the activity that we've been able to demonstrate both in vitro and in vivo studies. And as you know, we've developed this molecule as a pan-rap inhibitor with really excellent pharmaceutical properties trying to optimize the physiochemical properties of on-target binding, residency time, accumulation in tumor cell, CNS penetration, solubility at gastro-pHs that allow access to the tumor. So taken together, we do feel that this molecule has properties that may exceed the existing drugs on the market and surrounding the other drugs in development as well, too. And the activity that we've been able to demonstrate across all classes of mutations for RAF
spk09: know also further our confidence and ability to be able to develop this uh this drug in various instant way thank you one moment for our next question and our next question coming from the line of friendly renny benjamin with jmp securities your line is open hey good morning guys thanks for taking the questions um maybe just to start off you know we we got the negative nice opinion i would love to kind of hear
spk03: You know, kind of what the dialogue is, you know, at this point, and when do you think the UK might, you know, kind of enter the picture again as you evaluate the European opportunity? And just while we're thinking international, can you just talk a little bit about the expectations, ex-US, ex-EU? How is the launches in the other countries going?
spk02: Sure. Good morning, Ren. Thanks for the two really good questions. I'll ask Margarita to comment on the NICE development and our progress there for England and Wales. Margarita?
spk11: Sure. Thanks, Steve. So let me start, Remy, by saying that since our launch last year, we have achieved some of the best possible reimbursement ratings in Europe, if not the very best, which was the case in Germany. So, when it comes to NICE, NICE has a specific way of decision making when it comes to new treatments, which is based on cost effectiveness outcomes. This is not uncommon for new treatments, especially when no comparative treatment is available to experience difficulties. So, we were offered the opportunity for a rapid review. which happens when NICE believes the open issues can be solved and we remain confident we will be able to resolve the outstanding questions enabling launch in England and in Wales in the future. So I would say this is, you know, currently the discussions we are having with the agency and we remain confident that we will be able to, you know, to turn around the current situation with NICE.
spk02: And then, Ren, I think the second question that you had relates to, generally speaking, outside of Europe, outside of the U.S., how are we thinking about the opportunity in those territories? And I would just offer that we continue to make really good progress. We have a distribution partner for Australia, New Zealand, and other territories in the Pacific Rim. We have, of course, our XI collaboration, and I'll come back to that in just a second. We have a distributor partner in also for Canada and for Israel, and we continue to evaluate other opportunities outside of the U.S. where we can bring Kenlock to patients and realize opportunity for the company going forward. In the quarter, as Tucker mentioned in his prepared remarks, the good news is that the drug is now on the national drug reimbursement list in China, so we expect to see over time that be a contributor to our overall royalty revenue and the collaboration revenue that we've reported on It's a substantial market. Zai is going to have additional data from their experience in the clinic with Ken Locke and Chinese subjects coming up at the ASCO conference. And we believe that China will continue to contribute overall to our financial performance as a company. But we saw some headwinds in the quarter just based on the rebates that Zai had to provide to distributors in China associated with the national drug reimbursement listing in that country. So We'll continue our work to find markets outside of the U.S. where we can continue to introduce the product to patients and also to generate revenue for the company.
spk03: Got it. And just maybe switching gears real quick to Vimseltonib, assuming that the trial is positive, can you talk a little bit about what kind of pre-commercial activities have been initiated? I think Dan in his prepared remarks mentioned that you've already started some pre-commercial activities. Any color there. And then, you know, again, assuming that it's positive is when I think you guys will really focus, you know, on the pre-commercial activities. What kind of activities, you know, could we expect more by the end of the year or early next year, including an expansion of the sales force?
spk02: Yeah, thanks for a great question on them before I flip it over to Dan. Let me just say that we continue to be really excited about and how it is benefiting patients with the data update that we had as well. Last year clearly shows the potential for them to be best in class for the treatment of patients with previously reported. what we see is the prescriber overlap in the U.S., which we think is quite high, and we've also outlined what we see as the market opportunity in the U.S. for Vimseltinib. And the fact that physicians, when we test blinded product profiles, they continue to select Vimseltinib as the blinded profile that they would prefer to use for the treatment of their patients. So we're excited to get to the data readout here coming up in Q4 for the motion study, and we think that the rapidity of the enrollment in motion also underscores the unmet need in this population globally, both in the U.S. as well as in Europe. Dan, maybe you want to comment specifically on some of the early commercial activities.
spk05: Yeah, absolutely, Ren. Thanks so much for the question. So as I mentioned in the prepared remarks, we really think that Decipher is uniquely positioned to take advantage of this opportunity, and that speaks to a number of things, not the least of which is what we believe to be a likely best-in-class profile for DeltaNed. And then in addition to that, as you know, we've been working really closely with sarcoma treaters in the academic setting and community setting for quite some time now and really built tremendous relationships with them. And importantly, we've also built real, I think, best-in-class capabilities to commercialize rare tumors really successfully. We've done that, demonstrated that with GIFT, and we are now in the process of getting ready to port over those capabilities to TGCT. So we're in the relatively early days of building up that engine, identifying the team, laying out launch plans, thinking through how we will extend the capabilities that we built for GIST to TGCT. We likely wouldn't be expanding the Salesforce. First of all, we don't think it's going to require a major expansion. One of the things we've talked about previously is the synergy that this second product provides. But whatever incremental ads we may make will come a bit down the road, and we'll certainly speak to those when we get there. But as we get closer to launch, there will certainly be a lot of educational aspects that go on. And it's not just the commercial team that will be very engaged in this. Obviously, the MetAffairs organization will be as well. So Lots going on, very exciting time, and more to come.
spk03: Great. Thanks for taking the questions.
spk09: Thank you. And as a reminder, if you'd like to ask a question, please press star 1-1. And our next question coming from the line of Andrew Behrens with SVB Security. The line is open.
spk06: Hi. Thanks. Sorry if this was asked previously, but I came in late. Maybe a question for Matt. I was just wondering, there's a trial ongoing with a CSF1R drug in GVHD, and I was just wondering if you guys think the class has potential there and if you thought about potentially moving VIM into that setting.
spk14: Hi, Andy. Yeah, no, it's a great question. Of course, you know, our focus today has been on the TGCT patient population for VIMSultanib, you know, which we believe can be a best-in-class CSF1 receptor. inhibitor in that group of patients, you know, based on the Phase 1-2 data that we last updated at ESMO in September last year, and of course now with full enrollment of the Motion Phase 3 Pivotal Study and the readout for top-line results. But of course, you know, for any product, we are certainly alert and aware of potential life cycle management and other indications. As you mentioned, graft-versus-host disease has been a disease where CSF1 inhibition has shown activity. So, of course, as we think through our entire program, there will certainly be other opportunities that we can share with you in the future.
spk06: Okay. Thank you.
spk09: Thank you. One moment, please, for our next question. And our next question coming from the line of Peter Lawson with Barclays. Your line is open.
spk08: Hi. Good morning. This is Shae Feeney on for Peter Lawson. Thanks for taking our question. One from our team here is how we should be thinking about the contribution of being incorporated into the NCCN guidelines for the rest of 2023. Appreciate that you can't promote off-label use, and it's a bit early to tell progress from 1Q so far, but maybe how we could think about it for the rest of the year and whether we should be expecting that the guidelines would be updated to reflect clinical data for the benefit in Exxon 11 1718 subgroup, and maybe any sense of physician sentiment around using it ahead of in-site data. Thank you.
spk02: Yeah, hi, Shay. Thanks for the great questions with respect to the guidelines. As I mentioned earlier at the top of the Q&A, you know, we were pleased to see the NCCN incorporate Kinloch in the treatment guidelines for second line as a preferred regimen for patients who are intolerant to Simit-Mib. You're exactly right. That's not a use given that it's off-label. that we can or will promote to. So we'll continue to monitor the market dynamics over time and try to understand whether we're seeing utilization, spontaneous use here in the U.S. as a result of that guideline listing. And to the extent we see breaks in the trend, then we'll certainly report that and provide additional color on a go-forward basis. It's really difficult for us to predict, as we sit here today, what use, if any, might occur as a result of the compendia listing with the NCCN. For the 11, 17, or 18 use in the second line, based on the data we reported at the ASCO plenary series earlier this year, and now the subject of the insight study, which we expect to kick off later this year, the NCCN, of course, can make updates to the guidelines at any time. So we'll be curious to see to what extent the NCCN decides to make guideline updates based on those data. As Matt mentioned in his prepared remarks, there will be a reprise of those data presented at ASCO in June, at the end of this month, in June. And we look forward to that data presentation and also to seeing if there are any additional changes that occur in the treatment guidelines.
spk09: Thank you. And I'm showing no further questions at this time. I would now like to turn the call back over to Mr. Siphard for any closing remarks.
spk02: Great. Thank you very much. Thanks, everyone, for joining us on today's call. Thank you for your continued support, and we look forward to keeping you updated on our continued progress here at Decipher. Have a great rest of your day.
spk09: Ladies and gentlemen, that does conclude our conference for today. Thank you for your participation. You may now disconnect.
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