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spk08: Good morning, everyone, and welcome to Decipher a Pharmaceutical's fourth quarter and full year 2023 Financial Results Conference call. 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?
spk01: Thank you, operator. Welcome, and thank you for joining
spk26: us today to discuss Decipher's fourth quarter and full year 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, Matt Sherman, Chief Medical Officer, Dan Martin, Chief Commercial Officer, Marguerita Duarte, Head of International, 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 made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Examples include our expectations for our pre-clinical and clinical programs, our commercialization of Kinloch, and 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 statements, and we cannot assure you that our expectations will be achieved. Such risks and uncertainties include those set forth in our most recent annual report on Form 10-K, 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, .deciphera.com. With that, I will now turn the call over to Steve Herter, President and Chief Executive Officer of Deciphera. Steve?
spk16: Thank you, Jen. Good morning, everyone, and thank you for joining us today as we provide an update from the fourth quarter and full year 2023, review our financial results, and discuss our strategic outlook and planned corporate milestones for 2024. 2023 was a year of significant progress toward our goal of becoming a self-sustaining company with multiple approved medicines. Continued strong Kinloch growth in the U.S. and internationally drove record annual revenue, demonstrating the global capabilities of our commercial organization. With a highly successful Phase III study in TGCT, we expect themself in it to be our second approved medicine. We believe that at peak, Kinloch and Vimseltonet will be able to generate over $1 billion in global revenue. With a long IP runway for both products, we are actively pursuing label expansion opportunities to create further value for patients and for our shareholders. Beyond these late-stage programs, we continue to strategically invest in key earlier-stage programs to help build a sustainable pipeline of potential new medicines to improve the lives of people with cancer. Last month, we outlined our key strategic priorities for 2024. We expect 2024 to be a year of continued growth in Kinloch sales, driven by strong demand both in the U.S. and internationally. Meanwhile, our clinical team is working towards our goal of expanding Kinloch's label based on the ongoing Phase III Insight Study in second-line GIST patients with mutations in Kit, Exxon 11 and 17 or 18, which has the potential to double peak sales. A few weeks ago, we were thrilled to announce the publication in Nature Medicine of the exceptional results from the CT DNA analysis from the Intrigue Study in second-line patients with mutations in Kit, Exxon 11 and 17 or 18, showing that Kinloch provided significant progression-free and overall survival benefit compared to the current standard of care, SUNYTNIT. Publication in one of the world's leading medical journals highlights the clinical importance of this compelling data and serves as strong validation for the ongoing Insight Study. In addition to the Nature Medicine publication, we also recently presented the final overall survival results from the Intrigue Study at the ASCO GI Symposium, which showed that the overall survival rate was similar for both Kinloch and SUNYTNIT and that treatment with Kinloch continued to show a favorable safety profile compared to treatment with SUNYTNIT. We believe that these results demonstrate the strong clinical activity of Kinloch in the second-line GIST patient population studied in Intrigue. For HMSELTNIT, building upon the exciting positive results of the MOTION Phase 3 study in patients with Tennysonovial giant cell tumor, we remain on track to submit the NDA to the FDA in the second quarter of this year and an MAA to the EMA in the third quarter of this year. With the potential approval of HMSELTNIT Insight, we are also exploring potential indication expansion opportunities, including our plan to initiate a Phase 2 -of-concept study of HMSELTNIT for the treatment of Chronic -versus-host disease, or C-GVHD, in the fourth quarter of 2024. In addition, we're making focused investments in our earlier-stage pipeline, which we expect will fuel our future growth. For our ALK inhibitor, DCC3116, our goal is to select a recommended Phase 2 dose later this year and move to our first expansion cohort. For DCC3084, our PAN-RAF inhibitor, we expect to initiate a Phase 1 study in the first half of this year. Finally, for DCC3009, our new PAN-KIT inhibitor, we expect to submit an IND with the FDA in the first half of this year and initiate a Phase 1 study in the second half of 2024. We remain well-capitalized with $352 million in cash at the end of the year and a cash runway into the second half of 2026. I'll now pass the call to Matt Sherman, our Chief Medical Officer, who will provide more detail on our development pipeline. Dan Martin, our Chief Commercial Officer, will then share insights on the U.S. commercial performance and outlook for the year ahead. Margarita Duarte, our Head of International, will provide an update on the progress of the ongoing Kinlock launch in Europe for fourth-line GIS and its continued strong momentum. We'll end with Tucker Kelly, our Chief Financial Officer, who will review highlights from the fourth quarter and full-year 2023 financial results. Matt?
spk10: Thanks,
spk16: Steve.
spk10: Together with our commercial success, we continue to make great strides with our development pipeline that we believe will provide continued growth for DeCypher over the coming years. First, I'd like to start with our recent Kinlock updates. As Steve mentioned, in January, we presented the final overall survival results from an Intrigue Phase 3 study at the ASCO GI Conference. As you may recall, in the Intrigue trial, 453 patients with second-line GIS were randomized -to-one to receive Kinlock or Submitinib. The final analysis included 18 months of additional follow-up based on the data cut in March 2023. Median overall survival in the -to-Treat population was very similar with Kinlock at 35.5 months versus Submitinib at 31.5 months, resulting in a hazard ratio of 0.86. The long-term safety profile was consistent with the primary analysis, showing fewer patients with Grade 3-4 TEAEs and a lower rate of treatment discontinuation due to TEAEs with Kinlock versus Submitinib. We also looked at whether treatment in the second line with Kinlock versus Submitinib had any differential impact on clinical outcomes after third-line treatment. Irrespective of treatment with Kinlock in the second line, the results show that the patient outcomes in the third line were similar. Median PFS on the next line of therapy was 7.7 months for Kinlock versus 7.4 months for Submitinib. These final results for Intrigue demonstrate that Kinlock offers similar efficacy versus Submitinib in the second-line GIS population studied in Intrigue. The Nature Medicine publication last month was another major achievement for Deciphera, showcasing the potentially practice-changing results from an exploratory CT DNA analysis from Intrigue and one of the world's leading medical journals. In second-line GIS patients with KX11 and 17-18 mutations, treatment with Kinlock resulted in a 78% reduction in the risk of disease progression and a 66% reduction in the risk of death compared to Submitinib. Median PFS was 14.2 months for the Kinlock patients compared to only 1.5 months for the Submitinib patients. Median overall survival for Kinlock was not reached versus 17.5 months for Submitinib. Kinlock showed an objective response rate of 44% compared to 0% for Submitinib. Together the data represents a striking clinical benefit to these second-line GIS patients when treated with Kinlock. We're excited that our InSight Pivotal Phase 3 study in the same patient population is now actively enrolling patients. If positive, we believe the results of the InSight study will support an expanded label for Kinlock and significantly improve clinical outcomes for patients based on the precise understanding of their GIST tumors. We are also working hard to get our second potential approved medicine to patients as quickly as possible. We remain on track to submit an NDA-4 VimSultinib for patients with TGTT in the second quarter of 2024 and an MAA in the third quarter of 2024. These filings are supported by the outstanding success of the Phase 3 Motion Study, which achieved its primary endpoint of ORR at Week 25 as well as all six key secondary endpoints. In a disease such as TGTT, the secondary endpoints are critical measures of clinical benefit. These outcomes of how patients feel and function play an incredibly important role in treatment as well as for patients' interest in starting and staying on drug therapy. TGTT can be a difficult chronic condition associated with severe pain, swelling, stiffness, and loss of mobility. All of these can severely limit patients' daily activities and quality of life, including their ability to continue to work or function independently. Without an effective treatment, a TGTT diagnosis can have a profound impact on their ability to lead a normal, active, and healthy life. And we look forward to making this important new medicine available to these patients as quickly as possible. We plan to present results from the EMOTION Study at a major medical meeting in the second quarter of 2024 as well as updated results from the ongoing Phase 1-2 study in the second half of this year. The CIFER remains committed to ensuring that the full therapeutic potential of medicine and product candidates are explored. To that end, we plan to initiate a Phase 2 -of-Concept Study of VimSultinib and chronic GVHD based on its potential as a -in-class CSF1 receptor inhibitor. Chronic GVHD affects 30 to 50 percent of allogeneic to metapoetic stem cell transplant recipients, with an estimated 14,000 prevalent patients in the U.S. There is a significant on-net medical need in this setting, with 50 percent of patients being refractory to treatment with steroids and an overall desire to move towards combination therapy. Inhibiting CSF1 receptor-expressing pro-inflammatory and pro-phibiotic macrophages has been clinically validated for patients with GVHD based on a recent pivotal study with an antibody targeting the CSF1 receptor. As an oral agent, VimSultinib may offer a -in-class CSF1 receptor option as a single agent or in combination with other oral therapies. We expect to initiate a -of-Concept Study by the end of this year, putting us on the path to potentially expand the utility of VimSultinib for patients in the future. Beyond Kinloch and VimSultinib, we remain very excited about the potential for our clinical and research pipeline to fuel Decipher's growth. As Steve mentioned earlier, we expect to select a recommended Phase II dose for DCC3116 in 2024 to move into our first expansion cohort. We also expect to initiate a Phase I study for DCC3084 in the first half of 2024. Finally, we expect to submit an IMD for DCC3009 with the FDA in the first half of 2024 and initiate a Phase I study in the second half of 2024. I will now turn the call over to Dan Martin to discuss our U.S. commercial updates. Dan?
spk13: Thanks, Max. 2023 was a very successful year for Kinloch and the U.S. with net product revenue growing to $121.5 million, a 25% increase over 2022. In the fourth quarter, U.S. net product revenue was $35.3 million, a 38% increase over Q4 2022. These record results were driven by strong demand in our core, fourth-line business, increasing average duration of therapy, and contribution from unpromoted earlier-line use. In Q4, the percentage of total demand that was fulfilled through our Patient Assistance Program, or PAP, was at the high end of our 20% to 30% expected range, and gross finesse was between 15% and 20%. Looking at 2023 as a whole, consistent with prior years, PAP was between 20% and 30%, and we expect the PAP percentage to be similar in 2024. Gross to net in 2023 was between 15% and 20%, and we expect it to be in a similar range in 2024 as a result of the Medicare inflation rebates required by the Inflation Reduction Act. We expect continued Kinloch revenue growth in 2024, driven by its position as the standard of care and fourth-line gist, potential unpromoted off-label use in earlier lines of therapy based on the physician's decision, as well as increasing average duration of therapy. Further, we expect quarterly revenues this year to follow a similar pattern to what we have seen in prior years, including Q1 seasonality, consistent with industry dynamics. We remain confident in the strength of our business and the potential for another record year for Kinloch in 2024. Now I will turn to the exciting opportunity we see in TGCT with BinSeltanen, our potential second approved medicine. Based on our analysis of US claims data, we believe the total addressable market for TGCT in the US is approximately $700 million, based on the estimated 1,400 treatment incident patients who are diagnosed, receive systemic therapy, and have recently engaged with an oncologist. This US opportunity does not include the estimated 9,000 treatment prevalent patients seen by oncologists or the estimated 1,300 treatment incident patients seen by surgeons. We believe there is a comparable number of patients in the five largest European markets where there are no approved treatments. We recently provided additional insight into the treatment landscape for these 1,400 treatment incident patients in the US that has increased our confidence in the market opportunity and in our commercial team's ability to reach these patients, given our deep experience in GIST. Based on our claims analysis, we believe there is a 70 to 80% overlap in the prescriber base for GIST and TGCT and that we are uniquely positioned to drive awareness and use in both the academic and community settings. We have tested a blinded product profile of BinSeltanen versus Pexadartnib, which is approved in the US but not in Europe, and versus Imantanen, which is commonly used off-label to manage patients with TGCT. The results from the qualitative market research show that BinSeltanen is rated the highest across the key measures of efficacy and tolerability that physicians tell us they view as most important when selecting a TKI to treat their TGCT patients. In the same market research study, 100% of physicians surveyed selected the BinSeltanen profile as their preferred agent for managing patients with TGCT. We are working diligently on pre-launch activities as we prepare to leverage our strong commercial capabilities to launch BinSeltanen rapidly upon approval. I will now turn the call over to Margarita Duarte, our Head of International, to discuss the progress of the Kinlock launch in Europe. Margarita?
spk04: Thanks Ben. We are very enthusiastic about the notable achievements we made in 2023 in our international business, delivering strong results that accounted for more than 25% of the total revenue while laying the foundation for future growth. In 2023, Kinlock generated $37.5 million in international net product revenue, up 33% from 2022, as well as $4.3 million in collaboration revenue from our partner, Zylab in Greater China. For the fourth quarter of 2023, international net product revenue increased 56% from the fourth quarter of last year to $11.4 million, and collaboration revenue was an additional $1.6 million. Last year was a milestone year for Europe, with growth across the entirety of the business, strong price outcomes, significant progress in market access in multiple countries, and a great launch in Italy, which is off to an excellent start. The initial strong results we are seeing in Italy are a testament to the high medical needs, the exceptional KOL advocacies, and the remarkable food innovation ratings granted to Kinlock by the Italian authorities, the highest for a non-juicy disease, which has significantly accelerated the launch in the many Italian regions. Our recent entry in Italy is a good example of the type of opportunity that remains to be unlocked in Europe and underscores the importance of geographic expansion to overall growth in the business. Last month, we announced a new distribution agreement with Genesis Pharma for Central and Eastern Europe to expand the geographic reach of Kinlock to 14 European Union countries with a combined population of 118 million people. Kinlock has already received regulatory approval in all of these countries under the EMA umbrella, which will significantly accelerate the time to commercialization for Central and Eastern Europe. We are also excited to announce that we have submitted for pricing and reimbursement in the Netherlands and continue to advance price negotiations in Spain, France, and Switzerland. Our key growth drivers for 2024 include a continued focus on geographic expansion and open new markets to drive successful launches. We are very pleased by the strength of our execution and we expect our international revenues to continue to grow as reimbursement agreements and approvals are achieved alongside the growth from our initial launch market, positioning Kinlock to reach more patients around the world. Touching on Jim Seltnieck, there is a potable excitement in Europe surrounding the outstanding Phase III motion data, where we believe the number of patients is comparable to the US in the five largest European markets, and the NREC need is higher as there are no approved treatments. We are working hard towards our first initial engagement with HTA agencies early this year, and I look forward to the NIA submission in the third quarter and preparing for the commercial launch. I will now turn the call over to Tucker Kelly, our Chief Financial Officer, to review the fourth quarter and full-year financial results. Tucker?
spk11: Thanks, Margarita. Total revenue for the fourth quarter was $48.3 million, which included $46.7 million in net product revenue of Kinlock and $1.6 million in collaboration revenue. For the full year, total revenue grew 22% to $163.4 million, including net product sales of $159.1 million and collaboration revenue of $4.3 million. Cost of sales in the fourth quarter was $1.8 million, which includes $900,000 in cost of product sales, compared to cost of product sales of $700,000 for the fourth quarter of 2022. For the full year, cost of sales was $3.7 million, including $2 million in cost of product sales, compared to cost of sales of $8.7 million in 2022, including cost of product sales of $2.7 million. As a reminder, in the third quarter of 2022, we completed the sales of zero-cost inventories of Kinlock that had been expensed as R&D prior to FDA approval in 2020. Research and development expenses for the fourth quarter of 2023 were $58.6 million, compared to $48.1 million for the fourth quarter of 2022, and $234.1 million for the full year, compared to $187.8 million in 2022. Selling, general, and administrative expenses in the fourth quarter were $39.1 million, compared to $32.2 million in the fourth quarter of 2022. For the full year, SG&A was $136.5 million, compared to $120.2 million in 2022. We ended the year with cash, cash equivalents, and marketable securities of approximately $352.9 million. In January, we announced that we had extended our cash runway guidance into the second half of 2026, which remains unchanged. With that, I'll now turn the call back over to Steve. Thanks, Tucker.
spk16: We're very excited for 2024 as we continue to drive commercial growth at Kinlock, seek regulatory approval for Vimseltinib in TGCT, and advance our clinical pipeline, including our plans to develop Vimseltinib in GVHD. Building off our momentum in 2023, we're pleased by our late-stage clinical execution and global commercial excellence as we continue our evolution into a self-sustaining company with multiple approved medicines. With that, operator, I'd now like to open the call for Q&A.
spk08: Thank you. As a reminder, to ask a question, please press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. One moment for questions.
spk06: Our first question comes from
spk08: Jessica Fye with JPMorgan. You may proceed.
spk27: Hey, guys. Good morning. Thanks for taking my questions. Two from me. First, what's the latest you're hearing about when doctors are turning to Kinlock for second line gist in the unpromoted real-world use? Is this happening mainly with Kinlock experience treaters who are, you know, otherwise using it for fourth line, or are you seeing any pickup of new prescribers as a result of that type of use? And second, appreciate the details on Vimseltinib. Can you just frame a little bit more how you think about the shape of that launch ramp? Thank you.
spk16: Hey, Jess. Good morning. It's Steve. Thanks for the two questions. I'll ask Dan to take both of those questions, the one with respect to unpromoted off-label use of Kinlock in the second line based on physician decision, and then the expected ramp for a potential themselves-led launch here in the US. Dan?
spk13: Yeah. Thank you, Jess, for the questions. Good morning. So as it relates to your question about Kinlock, as we've noted, you know, it is challenging to measure exactly what and where we're seeing in terms of the contribution of earlier line use. The data sources for us to be able to do that just aren't great. We do believe that it's been a mix of existing and new prescribers, so we really think that it's something that reflects, you know, a broad appreciation for the role of repretinib for patients across lines of therapy and GIST. Of course, I always want to underscore that that's an unpromoted use, so of course, we're not out there promoting that, and it needs to happen spontaneously based on physician decision. With respect to your second question on the launch ramp, the shape of the ramp, you know, we'll have the opportunity to get into more details about launch strategy and expectations as we draw closer to a potential approval, but what we're focused on right now is a significant unmet need that we know exists in the space with patients who are suffering from the significant morbidity of TGCT and what physicians keep telling us, that there's a real opportunity to improve upon the existing therapies. So we look forward to continuing to work really hard to be ready to launch from Sultanib as rapidly as possible pending approval.
spk01: Thank you.
spk08: Thank you. One moment for questions. Our next question comes from Tyler Van Buren with TD Cowan. You may proceed.
spk05: Hey guys, good morning. Congrats on the progress during the quarter. Can you guys discuss what else needs to be done to have the VEM Sultanib filing ready for submission next quarter? And related to that, what is your confidence that you will not see a REMS program or a black box morning upon approval?
spk16: Hey Tyler, it's Steve. Good morning. Thanks for the question. So first, we remain very much on track for the filing of the NDA for VEM Sultanib here in quarter two coming up and then the MAA to the EMA in Q3. So it's really just the usual and customary activities as we prepare for that filing that we are engaged in. We remain very confident in the profile of VEM data. As you know, the study achieved the primary endpoint and all six key secondary endpoints and also demonstrated that the drug is well tolerated in the patient population. So we believe we have a very clean and well-characterized safety profile with the drug and continue to have the expectation that there's no reason to expect a REMS program or a black box morning for the potentially fatal hepatotoxicity that is seen with pexadartinib and is believed to be an off-target effect. So we remain on track for the filings and we're excited to bring our potential next approved medicine forward to
spk06: patients. Thank you.
spk08: One moment for questions. Our next question comes from Yun Yang with Jeffries. You may proceed.
spk02: Thank you. So Kim Locke's second line off-label use, is that largely driven by patients who are intolerant to sutan or patients with exon 11, 17, 18 mutations?
spk16: Hi, Yun. Good morning. This is Steve. I'll ask Dan to take the question on off-label use that we're seeing in earlier lines based on physician decision. Dan?
spk13: Yes. Hi, Yun. Good morning. Thanks for the question. So we believe that the two significant events that occurred last year are what's behind the contribution that we've seen from earlier line use, unpromoted earlier line use. So there was the, as you noted, the NCCM listing for patients who are intolerant in the second line, as well as the really exceptional data that was presented and now recently published in Nature Medicine showing the dramatic treatment benefit that repretentive can offer patients with the exon 11, 17, 18 mutation. We think that both of those certainly have increased the noise level. Again, I always score this as something we don't promote, but just through the natural dissemination of this information, the presentation, the publication, certainly have raised the noise level. So it's hard to discern which patient, which bottle is being driven by which of those factors, but we think that both are reflective of real interest in opportunities to use repretentive in patients with GIST. And of course, we think that it's important to note the level of energy that we see around the INSIGHT study and the excitement that we have for a potential approved indication pending a positive study.
spk02: Thank you. And I have one question for Tucker. So APEX in 4Q sequentially, R&D is down slightly, but SGNA is up. So could you give us some guidance on how APEX level would be in 2024 as well as the collaboration revenue line? Thank you.
spk11: Sure. So on the APEX side, it was a little higher sequential as you mentioned in SGNA. There's some one-off items and -of-year items that we think are more exceptional. So we wouldn't expect necessarily to have that bit of on-rate going forward for SGNA. We will have some, for the second half of the year expenses as we prepare for the launch of itself in it as well. And in terms of collaboration revenue, as we've always said, that's composed really of a couple of components. One is the royalty revenue that we get from our collaboration XI. And then secondly, there's often supply revenue. The supply revenue is much more episodic. So some quarters we have it in, some quarters we don't. There was some supply revenues you'll see in the cost of goods line for the collaboration revenue this quarter. And that's difficult to predict. So I think we always try and guide people to focus on the expectation for the royalty revenue. And then there'll be upside quarter when we do have supply revenue coming.
spk21: Thank you.
spk08: Thank you. One moment for questions. Our next question comes from Michael Schmidt with Guggenheim Securities. He may proceed.
spk25: Hey guys, good morning. Thanks for taking my questions. I had one of them seltenev as of your plants in GBHD. And how do you think about potential differentiation of seltenev in GBHD from some of the antibodies like acetalumab? And can you comment about the possible design of your plant phase two study? Will that be in acetalumab? Naive patients? Will you include pre-treated patients? How do you think about that space? Thanks.
spk17: Hi Michael,
spk16: good morning. I'm happy to take the question. So first we're excited about the potential to expand Vim seltenev and its utility beyond TGCT and into a new potential indication in chronic GBHD. And certainly one of the factors that enables us to do that in addition to the strong data we have now in TGCT is the very long IP runway that we have for Vim seltenev with a composition of matter patent that takes us to 2034 plus PTE, which we believe takes us to the end of the decade. And that doesn't include secondary patents for Vim seltenev. So ample opportunity for us to make additional investments in Vim to take it into additional indications. We'll have the opportunity to benefit patients. So in terms of the landscape of GBHD and how we see differentiation at this early stage, first I would just comment that certainly the target CSF1 receptor is now clinically validated in this disease, which is very important. So it's a de-risked mechanism in GBHD. We believe the data that we've generated in TNCG cell tumor demonstrates that we have a very potent and selective inhibitor against the target. And in a disease where the current backbone of treatment is all oral regimens, we believe that an oral agent like Vim seltenev, an oral CSF1 receptor inhibitor, could play an important role as an add-on therapy in addition to a monotherapy in later lines, but as an add-on therapy to current standard of care, whether that be a JAK inhibitor or whether that be a drug like Resaroc as an example. So we haven't yet disclosed full details of our clinical development strategy in GBHD. I'm sure we'll have incremental additional disclosures over time, particularly once we get the phase two study stood up at the end of this year. But we're excited about the potential now to expand the places where Vim can benefit patients.
spk06: Thank you. One
spk08: moment for questions. Our next question comes from Christopher Raymond with Piper Sandler. You may proceed.
spk18: Hey, thanks. Just another question, I guess, on Vim seltenev. And this is on the edge of an opportunity. I know this has come up in the past, but what do you guys see as sort of the go, sort of no-go points to running a study in the adjuvant setting? As you guys even note in your market landscape slide, that's a pretty sizable opportunity. Just any sort of plan there that you guys can articulate. And then maybe a second part of that question is, is there an opportunity or a get a broad label that could be potentially inclusive of the adjuvant setting?
spk16: Thanks. Yeah, hi, Chris. It's Steve. Thanks for the two questions. Really good questions. So, you know, of course, excited about the data from Motion, which will give us this initial label in tinnus and oveal giant cell tumor. As you'll remember, the patient population that we treated in the Motion study is patients who are not amenable to surgery. So it's too early for me to comment on what ultimately FDA will decide as the indication statement or the label for themseltenib in BTT. But we too have heard also from investigators' interest in exploring a role of an inhibitor like themseltenib in other lines or earlier lines of treatment for tinnus and oveal giant cell tumor. So recall, this is a disease that, particularly in the localized form of the disease, is often curable through surgery alone. So we'd probably be speaking about a patient population that would not be amenable to surgery, but potentially could be made amenable to surgery with adjuvant or knee adjuvant treatment. So again, too early for us to comment on any specific plans. But certainly with the evidence that we have now in the patient population that we've studied, it's very clear we have strong activity in this disease with themseltenib. And there may be for us to pursue whether label enabling studies or non-label enabling studies to further characterize the potential of themselves and have to benefit patients here.
spk20: Great. Thank you so much.
spk08: Thank you. One moment for questions. Our next question comes from Andrew Barons with Learing Partners. He may proceed.
spk07: Hi, this is Ken Oncorindi. Thanks for taking the question. So you guys, I think, have been saying that the average duration for Quinlock in the fourth line setting that started to come up, I believe, is about seven months now, increasing potentially up to eight and a half. We're wondering, do you have any color on the penetration in the fourth line where that could be right about now? Thanks.
spk15: Yeah, thanks for the question. Dan, would you like to take that?
spk13: Sure, absolutely. So yes, you had mentioned about the average duration of therapy. In fact, I think that's a really important dynamic to our continued growth as we think about 2024. We look to the continued strength in our fourth line opportunity. We look to a continuing increasing average duration of therapy. And as we've noted in earlier questions, contribution from unpromoted earlier line use. So as we think about the opportunity for 2024, we're looking forward to another potential record year in the US for Quinlock as it relates to penetration in the fourth line setting. As we've said in the past, we feel as though we've done a really good job penetrating that opportunity. And that it's a pretty highly penetrated opportunity as a result of not only a really strong drug at high unmet need and our ability to execute over the last number of years.
spk06: Thank you. One moment for questions. Our next question comes from Brad Canino with Stiefel. You may proceed.
spk14: Morning and thank you. Another question for me on benfeltinib. I want to know how many doses you think you plan to use in the proof of concept study in chronic GVHD? And I'm asking in light of inverse dose response noted for the antibody and the working hypothesis there around allowing for some degree of macrophage function recovery. Thank you.
spk16: Thanks for the question, Brad. Matt, would you like to take that on GVHD?
spk10: Sure. Good morning, Brad. This is Matt. So what you're referring to is the pivotal site is done with axotillumap in GVHD where they tested three dose levels and different sketches as well too. And what they did demonstrate an inverse dose response where some of the lower doses had more efficacy and were much better tolerated than the higher doses. That may be more unique to antibodies. The antibody inhibition of the CSL1 receptor has led to a much more prolonged on target effect and has been difficult in other indications to develop those antibodies clinically. So as Steve said earlier, you know, we're excited about moving forward with our proof of concept study in the second half of this year in GVHD. We haven't yet given the details of the study, but as we get closer to the initiation of that study, we certainly will be speaking to the design of that study and what we expect
spk06: to achieve. Thank you.
spk08: One moment for questions. Our next question comes from Renny Benjamin with Citizens JMP. You may proceed.
spk19: Hey, good morning, guys. Thanks for taking the questions and congratulations on the progress. Maybe just to start off, Steve, can you give us any sort of color on the inside study and how that's progressing? Have you kind of hit all the trial sites? Are they all kind of open? Are you still ramping that up? Any sort of color as to how that's progressing because that seems to be key in terms of unlocking the second line, you know, just opportunity.
spk23: And then just
spk19: as a follow up with Vim Seltenib, you know, you're following the NDA and MAA. Any chance that we could get some sort of a priority review or is the base case scenario a standard review, you know, both in the US as well as Europe? And, you know, how long does it take in Europe, you know, just to get the
spk16: decision? Yeah. Hi, Ren and Steve. Good morning. Thanks for the great questions. So first for insight, you know, as you're aware, I should first note that we published the results from the analysis of intrigue in Nature Medicine last month. So really exciting to see the data in such a top tier journal and the noise that that analysis has generated both with the presentations at ASCO and now with the publication of Nature Medicine has been a real wind in terms of building enthusiasm for the ongoing insight study. So we continue to make really good progress in getting sites open, actively screening and enrolling patients in that study. And the enthusiasm from investigators is really palpable. I think they're really excited not only about the data that's been published and presented so far from the analysis of intrigue, but just also the potential to be part of advancing how second line gist is treated based on insights into a patient's tumor using circulating tumor DNA. So drawing a simple tube of blood in order to understand a secondary mutation status. That is an aim or a goal, I think, that the field and thought leaders in the field are really excited about and their participation in the insight study, we believe, will help us to achieve that goal of demonstrating prospectively this outsized benefit of kinlock versus sunitinib in the selected patient population. So we continue to be moving forward very much on schedule and on track with the insight study and we'll have further updates, I'm sure, over the coming quarters on our progress with that specific study in second line gist patients. Your second question was related to themseltonib and what our expectations are in terms of regulatory review and timing. And your specific question was with respect to whether we may enjoy priority review with the application. So it's too soon for us to comment on that and certainly the FDA will make that determination as to whether or not the application qualifies for priority review. As you may remember, the enlivened study in the application for pexadartinib was reviewed by FDA with priority review status. So that certainly is the precedent, if you will, in this disease. So we're looking forward to our ongoing and continued productive dialogue with the FDA as we prepare to file here in the second quarter and we'll, of course, make appropriate disclosures at the right time in terms of whether that is a priority review or a regular review at the FDA's discretion. And then in terms of the European review process, that, as you may remember, is a lengthier process so we would expect that that will take potentially longer than the FDA review. But as we get into our further dialogue with the EMA, we may be able to cast a timeline as to when we might expect action on the application once it gets filed. But we remain super excited about the profile of the drug. The motion data are very clear and compelling and we're looking forward to delivering our second potential approved medicine to patients. Right.
spk19: And then if I could just have a follow-up regarding benzaltinib and what could ultimately be involved in pre-launch activities, is this something that we should just be, just given the overlap, I think that Dan mentioned in the call, is this something that could just be as easy as kind of dropping it into the bag of sales and they're sort of off and running, or are there significant pre-launch activities that need to be conducted given this market?
spk16: Yeah, I'll ask Dan to comment on the pre-launch activities, but you're right, Ren. We believe there's 70 to 80 percent overlap in terms of the prescriber base, so a really meaningful opportunity both in the U.S. as well as in Europe for meaningful synergy with our existing commercial organization. Dan, do you want to comment further on pre-launch activities?
spk13: Yes, absolutely. Thanks, Ren, for the question. So we think that investment in market development or pre-launch activities is really important. Our focus will be on disease education largely to make sure that all potential treaters of TGCT are thoroughly educated on how common TGCT is and the burden that these patients deal with. This is a really debilitating disease. It's something that isn't a lethal disease, of course, but it is one that can be very locally aggressive and really have a significant impact on how patients feel and function. We want to really paint that patient picture, bring that to light, raise that awareness. So certainly that coupled with our med affairs organization and data from our studies, all of this will be part of making sure that prior to launch physicians appropriately know the information that they need. And then as Steve mentioned, at launch, yes, we think there's tremendous synergy. We think we're really uniquely positioned to take advantage of both the opportunity in GIST with Kinlock and the opportunity in TGCT with himself.
spk19: Perfect. Thanks for taking the questions, guys. Good luck.
spk08: Thank you. And as a reminder, to ask a question, please press star 1-1 on your telephone. One moment for questions.
spk06: Our next question comes from Peter Lawson with Barclays.
spk08: He may proceed.
spk09: Great. Thank you so much. Thanks for taking the questions. I guess two, firstly, just on the seasonality and how we should think about that for the US versus ex-US, as we've invested model out 2024 revenues. And then just moving into GVHD, just your thoughts on differentiation as well around safety and potentially efficacy versus an antibody and the ability to combine with other regimens in that GVHD space. Thank you.
spk16: Hi, Peter. Thanks for the two questions. So I'll ask Dan and Margarita to comment on expectations for the year broadly in 2024 and our expectation of the usual seasonality patterns. And then I'll ask Matt to take your second question with respect to themselves and GVHD.
spk13: Dan, do you want to go first? Sure. Absolutely. Hi, Peter. Good morning. Thanks for the question. So as we noted on the call, we feel really excited and pleased with the progress that we've made. I'll speak to the US specifically in the fourth quarter delivering $35.3 million net product revenue, which was a 38% -over-year increase for the full year 2023, $121.5 million, which is a 25% -over-year increase. So we feel really pleased with that. And as we look to 2024, we think some of the core drivers of our recent success will continue to be the core drivers of what we expect to be another record year for Kinloch, specifically strengthen our core business, increasing average duration of therapy, and then as noted earlier, contribution from unpromoted earlier line use. So when we take a step back and look at the year as a whole, those are sort of the themes and the reason for our excitement. As we think about just the quarter to quarter pattern, we wanted to note that we would expect a pattern similar to past years, which reflects some seasonality dynamics, specifically as it relates to Q1, very common in the industry to see a strong quarterly buying pattern at the end of the year that can potentially impact Q1, as well as some early in the year sort of post-holiday demand seasonality or demand would expect this year to also play out true to form is the PAP dynamic, which we typically see a lower PAP percentage in the early part of the year with a gradual increase throughout the year. So those are some of the moving parts that we wanted to note. Margarita?
spk04: Sure. So regarding XQS, I mean, let me start by saying that we are delighted with the launch, how it's going and the strong revenue growth from last quarter, which was driven by strong performance in existing markets, but also the contribution from the launch in Italy. So I would say that as we continue to successfully advance our price and reimbursement and launch in new markets, we expect Kinlock to continue to grow in international. It is always difficult to predict when new markets will open given the different reimbursement processes and different timelines in each market. But assuming we get there, I expect this to happen more toward the second part of 2024. So another thing to note is that while we expect future growth, we cannot exclude quarter over quarter variability. So we have seen this in the past and we may see this again in the future. So I would say all in all, geographic expansion is a key focus for us in 2024. Kinlock is well positioned for growth
spk03: and
spk04: the
spk03: recent deal with genesis for central and distant Europe is also a good example of the type of transactions that you can expect from us in the future.
spk16: Great, thanks, Margarita. Matt, do you want to take the Zimzaltenib question?
spk10: Yes, so hi, Peter. Yes, so in regards to the question about Zimzaltenib and TGCT, I'm sorry, and breast versus host disease and our ability to be able to differentiate this, you know, we do remain very excited about our plan to initiate our proof of concept study in the second half of this year. And also we have a very large database of safety based on Zimzaltenib and TGCT, both from the motion phase three study as well as from the phase one two study. And GVHD is a chronic disease and particularly with the skin and joint involvement, there can be severe limitations of patients mobility and the antibody therapy would have to be given intravenously every two weeks. So for a chronic disease such as GVHD, that's a pretty significant burden on patients. So one of the major features of using Zimzaltenib as an oral agent will be to combine with other oral therapies. As you know, the standard care now consists primarily of oral agents, whether it's a JAK-2 kinase inhibitor or the ROCT inhibitor and on the back of the steroids as well too. And so our ability to differentiate from an antibody is pretty significant with Zimzaltenib in our phase study.
spk09: Thank you. Is there any way from, I guess, preclinical data to see any differentiation of an oral drug versus an antibody? If you think that could drive differences in efficacy or durability or safety?
spk10: I think most of the preclinical data just speaks to the role of macrophage in the pro-fibrotic manifestations of the disease. And that's particularly important in several organs, as I mentioned, particularly the skin because these patients can have pretty severe sclerotic skin lesions and even joint contractions. And also particularly in the lungs as well too. And fibrosis is one of the major organs that currently does not accept the current regimens for GVHD. So the role of macrophages and those particular organs could really be a benefit for Zimzaltenib disease.
spk09: Great. Thanks so much.
spk08: Thank you. I would now like to turn the call back over to Steve Porter for any closing remarks.
spk17: Yeah, thank you for joining us on today's call and thanks
spk16: for your support. We look forward to keeping you updated on our continued progress here at Decipher during the course of the year. Hope you have a great day.
spk08: Thank you for your participation.
spk06: You may now disconnect. Thank you. Thank you. Good morning everyone
spk08: and welcome to Decipher Pharmaceuticals' fourth quarter and full year 2023 financial results conference call. 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?
spk01: Thank you, operator. Welcome and thank you for joining us today to
spk26: discuss Decipher's fourth quarter and full year 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, Matt Sherman, Chief Medical Officer, Dan Martin, Chief Commercial Officer, Marguerita Duarte, Head of International, 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 made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Examples include our expectations for our preclinical and clinical programs, our commercialization of Kinloch, and 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 statements, and we cannot assure you that our expectations will be achieved. Such risks and uncertainties include those set forth in our most recent annual report on Form 10-K 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, .decipher.com. With that, I will now turn the call over to Steve Carter, President and Chief Executive Officer of Decipher. Steve?
spk16: Thank you, Jen. Good morning, everyone, and thank you for joining us today as we provide an update from the fourth quarter and full year 2023, review our financial results, and discuss our strategic outlook and planned corporate milestones for 2024. 2023 was a year of significant progress toward our goal of becoming a self-sustaining company with multiple approved medicines. Continued strong Kenlock growth in the U.S. and internationally drove record annual revenue, demonstrating the global capabilities of our commercial organization. With a highly successful Phase 3 study in TGCT, we expect Vimseltonet to be our second approved medicine. We believe that at peak, Kenlock and Vimseltonet will be able to generate over $1 billion in global revenue. With a long IP runway for both products, we are actively pursuing label expansion opportunities to create further value for patients and for our shareholders. Beyond these late stage programs, we continue to strategically invest in key earlier stage programs to help build a sustainable pipeline of potential new medicines to improve the lives of people with cancer. Last month, we outlined our key strategic priorities for 2024. We expect 2024 to be a year of continued growth in Kenlock sales, driven by strong demand both in the U.S. and internationally. Meanwhile, our clinical team is working towards our goal of expanding Kenlock's label based on the ongoing Phase 3 Insight Study in second-line GIST patients with mutations in KIT, exon 11 and 17 or 18, which has the potential to double peak sales. A few weeks ago, we were thrilled to announce the publication in Nature Medicine of the exceptional results from the CT DNA analysis from the Intrigue Study in second-line patients with mutations in KIT, exon 11 and 17 or 18, showing that Kenlock provided significant progression-free and overall survival benefit compared to the current standard of care, Sunitinib. Publication in one of the world's leading medical journals highlights the clinical importance of this compelling data and serves as strong validation for the ongoing Insight Study. In addition to the Nature Medicine publication, we also recently presented the final overall survival results from the Intrigue Study at the ASCO GI Symposium, which showed that the overall survival rate was similar for both Kenlock and Sunitinib, and that treatment with Kenlock continued to show a favorable safety profile compared to treatment with Sunitinib. We believe that these results demonstrate the strong clinical activity of Kenlock in the second-line GIST patient population studied in Intrigue. For himself, building upon the exciting positive results of the Motion Phase III study in patients with Tennesonovial Giant Cell Tumor, we remain on track to submit the NDA to the FDA in the second quarter of this year and an MAA to the EMA in the third quarter of this year. With the potential approval of the Sunitinib Insight, we are also exploring potential indication expansion opportunities, including our plan to initiate a Phase II Proof of Concept Study of the Sunitinib for the treatment of Chronic Graff-Vs. Host Disease, or C. gVHD, in the fourth quarter of 2024. In addition, we're making focused investments in our earlier stage pipeline, which we expect will fuel our future growth. For our ALK inhibitor, DCC 3116, our goal is to select a recommended Phase II dose later this year and move to our first expansion cohort. For DCC 3084, our Pan-Rap inhibitor, we expect to initiate a Phase I study in the first half of this year. Finally, for DCC 3009, our new Pan-Kit inhibitor, we expect to submit an IND with the FDA in the first half of this year and initiate a Phase I study in the second half of 2024. We remain well capitalized with $352 million in cash at the end of the year and a cash runway into the second half of 2026. I'll now pass the call to Matt Sherman, our Chief Medical Officer, who will provide more detail on our development pipeline. Dan Martin, our Chief Commercial Officer, will then share insights on the U.S. commercial performance and outlook for the year ahead. Margarita Duarte, our Head of International, will provide an update on the progress of the ongoing Kinlock launch in Europe for fourth-line GIST and its continued strong momentum. We'll end with Tucker Kelly, our Chief Financial Officer, who will review highlights from the fourth quarter and full-year 2023 financial results. Matt? Thanks, Steve.
spk10: Together with our commercial success, we continue to make great strides with our development pipeline that we believe will provide continued growth for DeCypher over the coming years. First, I'd like to start with our recent Kinlock updates. As Steve mentioned, in January, we presented the final overall results from an Intrigue Phase III study at the ASCO GI Conference. As you may recall, in the Intrigue trial, 453 patients with second-line GIST were randomized -to-one to receive Kinlock or Sudnitnip. The final analysis included 18 months of additional follow-up based on the data cut in March 2023. Median overall survival in the -to-Treat population was very similar with Kinlock at 35.5 months versus Sudnitnip at 31.5 months, resulting in a a hazard ratio of 0.86. The long-term safety profile was consistent with the primary analysis, showing fewer patients with Grade III-IV TEAEs and a lower rate of treatment discontinuations due to TEAEs with Kinlock versus Sudnitnip. We also looked at whether treatment in the second line with Kinlock versus Sudnitnip had any differential impact on clinical outcomes at the third-line treatment. Irrespective of treatment with Kinlock in the second line, the results show that the outcomes in the third line were similar. Median PFS on the next line of therapy was 7.7 months for Kinlock versus 7.4 months for Sudnitnip. These final results for Intrigue demonstrate that Kinlock offers similar efficacy versus Sudnitnip in the second-line GIST population studied in Intrigue. The Nature Medicine publication last month was another major achievement for Deciphera, showcasing the potentially practice-changing results from an exploratory CT DNA analysis from Intrigue and one of the world's leading medical journals. In second-line GIST patients with Kit-Exon 11 and 1718 mutations, treatment with Kinlock resulted in a 78 percent reduction in the risk of disease progression and a 66 percent reduction in the risk of death compared to the patient. Median PFS was 14.2 months for the Kinlock patients compared to only 1.5 months for the Sudnitnip patients. Median overall survival for Kinlock was not reached versus 17.5 months for Sudnitnip. Kinlock showed an objective response rate of 44 percent compared to 0 percent for Sudnitnip. Together, the data represents a striking clinical benefit to these second-line GIST patients when treated with Kinlock. We're excited that our InSight Pivotal Phasor E-Study in the same-patient population is now actively enrolling patients. If positive, we believe the results of the InSight study will support an expanded label for Kinlock and significantly improve clinical outcomes for patients based on the precise understanding of their GIST tumors. We are also working hard to get our second potential approved medicine to treat patients as quickly as possible. We remain on track to submit an NDA for themselves and for patients with TGCT in the second quarter of 2024 and an MAA in the third quarter of 2024. These filings are supported by the outstanding success of the Phase III Motion Study, which achieved its primary endpoint of ORR at week 25 as well as all six key secondary endpoints. In a disease such as TGCT, the secondary endpoints are critical measures of clinical benefit. These outcomes of how patients feel and function play an incredibly important role in treatment decisions as well as for patients' interest in starting and staying on drug therapy. TGCT can be a difficult chronic condition associated with severe pain, swelling, stiffness, and loss of mobility. All of these can severely limit patients' daily activities and quality of life, including their ability to continue to work or function independently. Without an effective treatment, a TGCT diagnosis can have a profound impact on their ability to lead a normal, active, and healthy life. And we look forward to making this important new medicine available to these patients as quickly as possible. We plan to present results from the emotion study at a major medical meeting in the second quarter of 2024 as well as updated results from the ongoing Phase I-II study in the second half of this year. The CIFAR remains committed to ensuring that the full therapeutic potential of medicine and product candidates are explored. To that end, we plan to initiate a Phase II -of-concept study of Vim-Sultanib and Chronic GVHD based on its potential as a -in-class CSF-1 receptor inhibitor. Chronic GVHD affects 30 to 50 percent of allogeneic hematopoietic stem cell transplant recipients, with an estimated 14,000 prevalent patients in the U.S. There is a significant unmet medical need in this setting, with 50 percent of patients being refractory to treatment with steroids and an overall desire to move towards combination therapy. Inhibiting CSF-1 receptor expressing pro-inflammatory and pro-fibroidic macrophages has been clinically validated for patients with GVHD based on a recent pivotal study with an antibody targeting the CSF-1 receptor. As an oral agent, Vim-Sultanib may offer a -in-class CSF-1 receptor option as a single agent or in combination with other oral therapies. We expect to initiate a -of-concept study by the end of this year, putting us on the path to potentially expand the utility of Vim-Sultanib for patients in the future. Beyond Kinloch and Vim-Sultanib, we remain very excited about the potential for our clinical and research pipeline to fuel CIFAR's growth. As Steve mentioned earlier, we expect to select a recommended phase two dose for DCC-3116 in 2024 to move into our first expansion cohort. We also expect to initiate a phase one study for DCC-3084 in the first half of 2024. Finally, we expect to submit an IND for DCC-3009 with the FDA in the first half of 2024 and initiate a phase one study in the second half of 2024. I will now turn the call over to Dan Martin to discuss our US commercial updates. Dan?
spk13: Thanks, Matt. 2023 was a very successful year for Kinloch and the US, with net product revenue growing to $121.5 million, a 25% increase over 2022. In the fourth quarter, US net product revenue was $35.3 million, a 38% increase over Q4 2022. These record results were driven by strong demand in our core fourth line business, increasing average duration of therapy, and contribution from unpromoted earlier line use. In Q4, the percentage of total demand that was fulfilled through our patient assistance program, or PAP, was at the high end of our 20 to 30% expected range, and gross net was between 15 and 20%. Looking at 2023 as a whole, consistent with prior years, PAP was between 20 and 30%, and we expect the PAP percentage to be similar in 2024. Gross net in 2023 was between 15 and 20%, and we expect it to be in a similar range in 2024 as a result of the Medicare inflation rebates required by the Inflation Reduction Act. We expect continued Kinloch revenue growth in 2024, driven by its position as the standard of care in fourth line GIST, potential unpromoted off-label use in earlier lines of therapy based on the physician decision, as well as increasing average duration of therapy. Further, we expect quarterly revenues this year to follow a similar pattern to what we have seen in prior years, including Q1 seasonality, consistent with industry dynamics. We remain confident in the strength of our business and the potential for another record year for Kinloch in 2024. Now, I will turn to the exciting opportunity we see in TGCT with BinFeltanen, our potential second approved medicine. Based on our analysis of US claims data, we believe the total addressable market for TGCT in the US is approximately $700 million, based on the estimated 1,400 treatment incident patients who are diagnosed, receive systemic therapy, and have recently engaged with an oncologist. This US opportunity does not include the estimated 9,000 treatment prevalent patients seen by oncologists or the estimated 1,300 treatment incident patients seen by surgeons. We believe there is a comparable number of patients in the largest European markets where there are no approved treatments. We recently provided additional insight into the treatment landscape for these 1,400 treatment incident patients in the US that has increased our confidence in the market opportunity and in our commercial team's ability to reach these patients given our deep experience in GIST. Based on our claims analysis, we believe there is a 70 to 80% overlap in the prescriber base for GIST and TGCT and that we are uniquely positioned to drive awareness and use in both the academic and community settings. We have tested a blinded product profile of BinFeltanen versus Pexadartinib, which is approved in the US but not in Europe, and versus Imatinib, which is commonly used off label to manage patients with TGCT. The results from the qualitative market research show that BinFeltanen is rated the highest across the key measures of efficacy and tolerability that physicians tell us they view as most important when selecting a TGI to treat their TGCT patients. In the same market research study, 100% of physicians surveyed selected the BinFeltanen profile as their preferred agent for managing patients with TGCT. We are working diligently on pre-launch activities as we prepare to leverage strong commercial capabilities to launch BinFeltanen rapidly upon approval. I will now turn the call over to Margarita Duarte, our head of international, to discuss the progress of the Kinlock launch in Europe. Margarita?
spk04: Thanks Ben. We are very enthusiastic about the notable achievements we made in 2023 in our international business, delivering strong results that accounted for more than 25% of the total revenue while laying the foundation for future growth. In 2023, Kinlock generated $37.5 million in international net product revenue, up 33% from 2022, as well as $4.3 million in collaboration revenue from our partner Zylab in Greater China. For the fourth quarter of 2023, international net product revenue increased 56% from the fourth quarter of last year to $11.4 million, and collaboration revenue was an additional $1.6 million. Last year was a milestone year for Europe, with growth across the entirety of the business, strong price outcomes, significant progress in market access in multiple countries, and the launch in Italy, which is off to an excellent start. The initial strong results we are seeing in Italy are a testament to the high in net medical needs, the exceptional KOL advocacies, and the remarkable food innovation ratings granted to Kinlock by the Italian authorities, the highest for non-juvenile disease, which has significantly accelerated the launch in the many Italian regions. Our recent entry in Italy is a good example of the type of opportunity that remains to be unlocked in Europe and underscores the importance of geographic expansion to overall growth in the business. Last month, we announced a new distribution agreement with Genesis Pharma for Central and Eastern Europe to expand the geographic reach of Kinlock to 14 European Union countries with a combined population of 118 million people. Kinlock has already received regulatory approval in all of these countries under the EMA umbrella, which will significantly accelerate the time to commercialization for Central and Eastern Europe. We are also excited to announce that we have submitted some pricing and reimbursement in the Netherlands and continue to advance price negotiations in Spain, France, and Switzerland. Our key growth drivers for 2024 include a continued focus on geographic expansion and open new markets to drive successful launches. We are very pleased by the strength of our education and we expect our international revenues to continue to grow as reimbursement agreements and approvals are achieved alongside the growth from our initial launch market, positioning Kinlock to reach more patients around the world. Touching on Jim Seltnieck, there is a potable excitement in Europe surrounding the outstanding phase three motion data where we believe the number of patients is comparable to the US in the five largest European markets and the NREP need is higher as there are no approved treatments. We are working hard towards our first initial engagement with HTA agencies early this year and I look forward to the NIA submission in the third quarter and preparing for the commercial launch. I will now turn the call over to Tucker Kelly, our Chief Financial Officer, to review the fourth quarter and full year financial results. Tucker?
spk11: Thanks Margarita. Total revenue for the fourth quarter was $48.3 million which included $46.7 million in net product revenue of Kinlock and $1.6 million in collaboration revenue. For the full year, total revenue grew 22% to $163.4 million including net product sales of $159.1 million and collaboration revenue of $4.3 million. Cost of sales in the fourth quarter was $1.8 million which includes $900,000 in cost of product sales compared to cost of product sales of $700,000 for the fourth quarter of 2022. For the full year, cost of sales were $3.7 million including $2 million in cost of product sales compared to cost of sales of $8.7 million in 2022 including cost of product sales of $2.7 million. As a reminder, in the third quarter of 2022, we completed the sales of zero cost inventories of Kinlock that had been expensed as R&D prior to FDA approval in 2020. Research and development expenses for the fourth quarter of 2023 were $58.6 million compared to $48.1 million for the fourth quarter of 2022 and $234.1 million for the full year compared to $187.8 million in 2022. Selling, general and administrative expenses the fourth quarter were $39.1 million compared to $32.2 million in the fourth quarter of 2022. For the full year, SG&A was $136.5 million compared to $120.2 million in 2022. We ended the year with cash, cash equivalents and marketable securities of approximately $352.9 million. In January, we announced that we had extended our cash runway guidance into the second half of 2026 which remains unchanged. With that, I'll now turn the call back over to Steve. Thanks Tucker.
spk16: We're very excited for 2024 as we continue to drive commercial growth of Kinlock, seek regulatory approval for Vimseltinib and TGCT and advance our clinical pipeline including our plans to develop Vimseltinib in GVHD. Building off our momentum in 2023, we're pleased by our late-stage clinical execution and global commercial excellence as we continue our evolution into a self-sustaining company with multiple approved medicines. With that, operator, I'd now like to open the call for Q&A.
spk08: Thank you. As a reminder, to ask a question, please press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. One moment for
spk06: questions. Our first question comes from Jessica Phi with
spk08: JP Morgan. You may proceed.
spk27: Hey guys, good morning. Thanks for taking my questions. Two from me. First, what's the latest you're hearing about when doctors are turning to Kinlock for second line gist in the unpromoted real world use? Is this happening mainly with Kinlock experience treaters otherwise using it for fourth line? Are you seeing any pick up of new prescribers as a result of that type of use? Second, appreciate the details on Vimseltinib. Can you frame a little bit more how you think about the shape of that launch ramp? Thank you.
spk16: Hey Jess, good morning. Thanks for the two questions. I'll ask Dan to take both of those questions. The one with respect to unpromoted off-label use of Kinlock in the second line based on position decision and then the expected ramp for a potential themselves at launch here in the U.S. Yeah,
spk13: thank you Jess for the questions. Good morning. So as it relates to your question about Kinlock, as we've noted, it is challenging to measure exactly what and where we're seeing in terms of the contribution of earlier line use. The data sources for us to be able to do that just aren't great. We do believe that it's been a mix of existing and new prescribers, so we really think that it's something that reflects a broad appreciation for the role of Repretinib for patients across lines of therapy in gist. Of course, I always want to underscore that that's an unpromoted use, so of course we're not out there promoting that and it needs to happen spontaneously based on position decision. With respect to you, our second question on the launch ramp, the shape of the ramp, you know, we'll have the opportunity to get into more details about launch strategy and expectations as we draw closer to a potential approval, but what we're focused on right now is a significant unmet need that we know exists in the space with patients who are suffering from the significant morbidity of TGCT and what physicians keep telling us, that there's a real opportunity to improve upon the existing therapies. So we look forward to continuing to work really hard to be ready to launch from Sultanib as rapidly as possible pending approval.
spk01: Thank
spk06: you.
spk08: Thank you. One moment for questions. Our next question comes from Tyler Van Buren with TD Cowan. You may proceed.
spk05: Hey guys, good morning. Congrats on the progress during the quarter. Can you guys discuss what else needs to be done to have the Vim Sultanib filing ready for submission next quarter? And related to that, what is your confidence that you will not see a REMS program or a black box warning upon approval?
spk16: Hey Tyler, it's Steve. Good morning. Thanks for the question. So first, we remain very much on track for the filing of the NDA for Vim Sultanib here in quarter two coming up and then the MAA to the EMA in Q3. So it's really just the usual and customary activities as we prepare for that filing that we are engaged in. We remain very confident in the profile of Vim Sultanib based on the motion data. As you know, the study achieved the primary endpoint and all six key secondary endpoints and also demonstrated that the drug is well tolerated in the patient population. So we believe we have a very clean and well characterized safety profile with the drug and continue to have the expectation that there's no reason to expect a REMS program or a black box warning for the potentially fatal hepatotoxicity that is seen with pexadartinib and is believed to be an off-target effect. So we remain on track for the filings and we're excited to bring our potential next approved medicine forward
spk06: to patients. Thank you.
spk08: One moment for questions. Our next question comes from Yun Yang with Jeffries you may proceed.
spk02: Thank you. So Kim Locke's second line of labor use, is that largely driven by patients who are intolerant to Sutin or patients with exon 11, 17, 18 mutations?
spk16: Hi Yun, good morning. This is Steve. I'll ask Dan to take the question on the off-label use that we're seeing in earlier lines based on physician decision.
spk13: Dan? Yes, hi Yun, good morning. Thanks for the question. So you know we believe that the two significant events that occurred last year are what's behind the contribution that we've seen from earlier line use, unpromoted earlier line use. So there was the, as you noted, the MCCM listing for patients who are intolerant of Sutin in the second line as well as the really exceptional data that was presented and now recently published in Nature Medicine showing the dramatic treatment benefit that repretentive can offer patients with the exon 11, 17, 18 mutation. We think that both of those certainly have increased the noise level. Again, I always score this is something we don't promote but just through the natural dissemination of this information, the presentation, the certainly have raised the noise level. So it's hard to discern which patient, which bottle is being driven by which of those factors but we think that both are reflective of real interest in opportunities to use repretentive in patients with GIST and of course we think that it's important to note the level of energy that we see around the INSIGHT study and the excitement we have for a potential approved indication pending a positive study.
spk02: Thank you. I have one question for Tucker. So OPEX in 4Q sequentially R&D is down slightly but SGNA is up. Could you give us some guidance on how OPEX level would be in 2024 as well as
spk11: a little higher sequentially you mentioned in SGNA. There's some one-off items and end of year items that we think are more exceptional so we wouldn't expect necessarily to have that bit of on rate going forward for SGNA. We will have some for the second half of the year expenses as we prepare for the launch of itself in it as well and in terms of collaboration revenue as we've always said that's composed really of a couple of components. One is the royalty revenue that we get from our collaboration XI and then secondly there's often supply revenue. The supply revenue is much more episodic so some quarters we have it in some quarters we don't. There was some supply revenues you'll see in the cost of goods line for the collaboration revenue this quarter and that's difficult to predict so I think we always try and guide people to focus on the expectation for the royalty revenue and then there'll be upside in quarters where we do have supply revenue coming.
spk21: Thank you.
spk08: Thank you. One moment for questions. Our next question comes from Michael Schmidt with Guggenheim Securities. He may proceed.
spk25: Hey guys good morning. Thanks for taking my questions. I had one of them seltenev as of your plans in GBHD and how do you think about potential differentiation of seltenev and GBHD from some of the antibodies like acetalumab and can you comment about the possible design of your plant phase two study. Will that be in acetalumab naive patients? Will you include pre-treated patients? How do you think about that space? Thanks.
spk17: Yeah Michael good
spk16: morning. I'm happy to take the question. So first we're excited about the potential to expand them seltenev and its utility beyond TGCT and into a potential indication in chronic GBHD and certainly one of the factors that enables us to do that in addition to the strong data we have now in TGCT is the very long IP runway that we have for them seltenev with a composition a matter patent that takes us to 2034 plus PTE which we believe takes us to the end of the decade and that doesn't include secondary patents for them seltenev. So opportunity for us to make additional investments in them to take it into additional indications we'll have the opportunity to benefit patients. So in terms of the landscape of GBHD and how we see differentiation at this early stage first I would just comment that certainly the target CSF1 receptor is now clinically validated in this disease which is very important so it's a de-risked mechanism in GBHD. We believe the data that we've generated in tennis and ovial giant cell tumor demonstrates that we have a very potent and selective inhibitor against the target and in a disease where the current backbone of treatment is all oral regimens we believe that an oral agent like themselves in an oral CSF1 receptor inhibitor could play an important role as an add-on therapy in addition to a monotherapy in later lines but as an add-on therapy to current standard of care whether that be a JAK inhibitor or whether that be a drug like Reziroc as an example. So we haven't yet disclosed full details of our clinical development strategy in GBHD. I'm sure we'll have incremental additional disclosures over time particularly once we get the phase two study stood up at the end of this year but we're excited about the potential now to expand the places where VIM
spk08: can One moment for questions. Our next question comes from Christopher Raymond with Piper Sandler. You may proceed.
spk18: Hey thanks. Just another question I guess on Benseltonib and this is on the adjuvant opportunity. I know this has come up in the past but what do you guys see as sort of the go sort of no-go points to running a study in the adjuvant setting? As you guys even note in your market landscape slide that's a pretty sizable opportunity. Just any sort of plan there that you guys can articulate and then maybe a second part of that question is is there an opportunity or a chance that you get a broad label that could be potentially inclusive of the adjuvant setting?
spk16: Thanks. Yeah hi Chris it's Steve. Thanks for the two questions. Really good questions. So you know of course excited about the data from OCEAN which will give us this initial label in tennisinoveal giant cell tumor. As you'll remember the patient population that we treated in the motion study is patients who are not amenable to surgery. So it's immaturely for me to comment on what ultimately FDA will decide as the indication statement or the label for themseltonib in BTT. But we too have heard also from investigators interest in exploring a role of an inhibitor like themseltonib in other lines or earlier lines of treatment for tennisinoveal giant cell tumor. So recall this is a disease that particularly in the localized form of the disease is often curable through surgery alone. So we'd probably be speaking about a patient population that would not be amenable to surgery but potentially could be made amenable to surgery with adjuvant or knee adjuvant treatment. So again too early for us to comment on any specific plans but certainly with the evidence that we have now in the patient population that we've studied it's very clear we have strong activity in this disease with themseltonib and there may be opportunity for us to pursue whether label enabling studies or non-label enabling studies to further characterize the potential of themseltonib to benefit patients here.
spk20: Great thank you so much.
spk16: Thank
spk08: you. One moment for questions. Our next question comes from Andrew Barons with Learing Partners. He may proceed.
spk07: Hi this is Ken on Prindy. Thanks for taking the question. So you guys I think have been saying that the average duration for quinlock in the fourth line setting has started to come up with about seven months now increasing potentially up to eight and a half. We're wondering do you have any color on the penetration in the fourth line where that could be right about now?
spk15: Thanks. Yeah thanks for the question. Dan would you like to take that?
spk13: Sure absolutely. So yes you had mentioned about the average duration of therapy. In fact we think that's a really important dynamic to our continued growth as we think about 2024. We look to the continued strength in our fourth line opportunity. We look to a continuing increasing average duration of therapy and as we've noted in earlier questions contribution from unpromoted earlier line use. So as we think about the opportunity for 2024 we're looking forward to another potential record year in the US for quinlock as it relates to penetration in the fourth line setting. As we've said you know in the past we feel as though we've done a really good job penetrating that opportunity and that you know it's pretty highly penetrated opportunity as a result of not only a really strong drug at high unmet need and you know our ability to execute over the last number of years.
spk06: Thank you. One moment for questions. Our next question comes from Brad Canino at Stiefel. You may proceed.
spk14: Good morning and thank you. Another question from me on benselton. I want to know how many doses you think you plan to use in the proof of concept study in chronic gbhd and I'm asking in light of the inverse dose response noted for the antibody and the working hypothesis there around allowing for some degree of macrophage function recovery. Thank you. Yeah thanks for
spk16: the question Brad. Matt would you like to take that on gbhd?
spk10: Sure. Good morning Brad. Yeah this is Matt. So yeah so what you're referring to is the pivotal site is done with axotillumap in gbhd where they tested three dose levels in different schedules as well too and what they did demonstrate an inverse dose response where some of the lower doses had more efficacy and were much better tolerated than the while old-fashioned drugs and antiseptic has been relaxed as well. I've been testing all these other robotics, all of the layers here as well within the entire receptor has led to a much more prolonged target lament and it's been difficultin the Dr. indications to develop those antibodies clinically. So as Steve said earlier, we excited about moving further with our proofof concepts study in the second half of this year and We haven't yet given the details of the study, but as we get closer to the initiation of that study, we certainly will be speaking to the design of that study and what we expect
spk06: to achieve. Thank you.
spk08: One moment for questions. Our next question comes from Renny Benjamin with CitizensJMP. You may proceed.
spk19: Hey, good morning, guys. Thanks for taking the questions, and congratulations on the progress. Maybe just to start off, Steve, can you give us any sort of color on the insight study and how that's progressing? Have you kind of hit all the trial sites? Are they all kind of open? Are you still ramping that up? Any sort of color as to how that's progressing, because that seems to be key in terms of unlocking the second line, just opportunity.
spk23: And then just
spk19: as a follow-up with Vim Selteneb, you're filing the NDA and MAA. Any chance that we could get some sort of a priority review, or is the base case scenario a standard review, both in the US as well as Europe? How long does it take in Europe just to get the decision?
spk16: Yeah, hi, Ren, it's Steve. Good morning. Thanks for the great question. So first for insight, as you're aware, I should first note that we published the results from the analysis of intrigue in Nature Medicine last month. So really exciting to see the data in such a top tier journal. And the noise that that analysis has generated, both with the presentations at ASCO and now with the publication in Nature Medicine, has been a real tailwind in terms of building enthusiasm for the ongoing insight study. So we continue to make really good progress in getting sites open, actively screening and enrolling patients in that study. And the enthusiasm from investigators is really palpable. I think they're really excited not only about the data that's been published and presented so far from the analysis of intrigue, but just also the potential to be part of advancing how second line GIST is treated based on insights into a patient's tumor using circulating tumor DNA. So drawing a simple tube of blood in order to understand a secondary mutation status. That is an aim or a goal, I think, that the field and thought leaders in the field are really excited about. And their participation in the insight study, we believe, will help us to achieve that goal of demonstrating prospectively this outsized benefit of Kenlock versus Sunitinib in this selected patient population. So we continue to be moving forward very much on schedule and on track with the insight study, and we'll have further updates, I'm sure, over the coming quarters on our progress with that specific study in second line GIST patients. Your second question was related to Thimseltinib and what our expectations are in terms of regulatory review and timing. And your specific question was with respect to whether we may enjoy priority review with the application. So it's too soon for us to comment on that, and certainly the FDA will make that determination as to whether or not the application qualifies for priority review. As you may remember, the ENLIVEN study and the application for Pexodartinib was reviewed by FDA with priority review status. So that certainly is the precedent, if you will, in this disease. So we're looking forward to our ongoing and continued productive dialogue with the FDA as we prepare to file here in the second quarter. And we'll, of course, make appropriate disclosures at the right time in terms of whether that is a priority review or a regular review at the FDA's discretion. And then in terms of the European review process, that, as you may remember, is a lengthier process, so we would expect that that will take potentially longer than the FDA review. But as we get into our further dialogue with the EMA, we may be able to better cast a timeline as to when we might expect action on the application once it gets filed. But we remain super excited about the profile of the drug. The motion data are very clear and compelling, and we're looking forward to delivering our second potential approved medicine to patients. Right.
spk19: And then if I could just have a follow-up regarding Vimseltinib and what could ultimately be involved in pre-launch activities, is this something that we should just be, just given the overlap, I think that Dan mentioned in the call, is this something that could just be as easy as kind of dropping it into the bag of sales and they're sort of off and running? Or are there significant pre-launch activities that need to be conducted, you know, given this market?
spk16: Yeah, I'll ask Dan to comment on the pre-launch activities, but you're right, Rand. We believe there's 70 to 80 percent overlap in terms of the prescriber base, so a really meaningful opportunity both in the U.S. as well as in Europe for meaningful synergy with our existing commercial organization. Dan, do you want to comment further on pre-launch activities?
spk13: Yes, absolutely. Thanks, Rand, for the question. So we think that investment in market development or pre-launch activities is really important. Our focus will be on disease education largely to make sure that all potential treaters of TGCT are thoroughly educated on how common TGCT is and the burden that these patients deal with. This is a really debilitating disease. It's something that isn't a lethal disease, of course, but it is one that can be very locally aggressive and really have a significant impact on how patients feel and function. We want to really paint that patient picture, bring that to light, raise that awareness. So certainly that coupled with our med affairs organization and data from our studies, all of this will be part of making sure that prior to launch physicians appropriately so know the information that they need. And then as Steve mentioned, at launch, yes, we think there's tremendous synergy. We think we're really uniquely positioned to take advantage of both the opportunity in GIST with Ken Locke and the opportunity in TGCT with himself in it.
spk19: Terrific. Thanks for taking the questions, guys. Good luck.
spk08: Thank you. And as a reminder, to ask a question, please press star 1-1 on your telephone. One moment for questions.
spk06: Our next question comes from Peter Lawson with
spk08: Barclays. You may proceed.
spk09: Great. Thank you so much. Thanks for taking the questions. I guess two. Firstly, just on the seasonality and how we should think about that for the US versus ex-US as an investor's model out 2024 revenues. And then just moving into GVHD, just your thoughts on differentiation as well around safety and potentially efficacy versus an antibody and the ability to combine with other regimens in that GVHD space. Thank you.
spk16: Hi, Peter. Thanks for the two questions. So I'll ask Dan and Margarita to comment on expectations for the year broadly in 2024 and our expectation of the usual seasonality patterns. And then I'll ask Matt to take your second question with respect to them, Seltzer and GVHD.
spk13: Dan, do you want to go first? Sure. Absolutely. Hi, Peter. Good morning. Thanks for the question. So as we noted on the call, we feel really excited and pleased with the progress that we've made. I'll speak to the US specifically in the fourth quarter delivering $35.3 million in net product revenue, which was a 38% -over-year increase for the full year 2023, $121.5 million, which was a 25% -over-year increase. So we feel really pleased with that. And as we look to 2024, we think some of the core drivers of our recent success will continue to be the core drivers of what we expect to be another record year for Kinloch, specifically strength in our core business, increasing average duration of therapy, and then, as noted earlier, contribution from unpromoted earlier line use. So when we take a step back and look at the year as a whole, those are sort of the themes and the reason for our excitement. As we think about just the -to-quarter pattern, we wanted to note that we would expect a pattern similar to past years, which reflects some seasonality dynamics, specifically as it relates to Q1. Very common in the industry to see a strong quarterly buying pattern at the end of the year that can potentially impact Q1, as well as some early in the year sort of post-holiday demand seasonality or demand softness. Of course, the other factor that we've noted in the past and would expect this year to also play out true to form is the PAP dynamic, which we typically see a lower PAP percentage in the early part of the year with a gradual increase throughout the year. So those are some of the moving parts that we wanted to note. Margarita?
spk04: Sure. So regarding XQS, let me start by saying that we are delighted with the launch, how it's going, and the strong revenue growth from last quarter, which was driven by strong performance in existing markets, but also the contribution from the launch in Italy. So I would say that as we continue to successfully advance our price and reimbursement and launch in new markets, we expect Kinlock to continue to grow in international. It is always difficult to predict when new markets will open given the different reimbursement processes and different timelines in each market. But assuming we get there, I expect this to happen more toward the second part of 2024. So another thing to note is that while we expect future growth, we cannot exclude quarter over quarter variability. So we have seen this in the past and we may see this again in the future. So I would say all in all, geographic expansion is a key focus for us in 2024. Kinlock is well positioned for growth. And the recent deal with
spk03: Genetis for Central and Eastern Europe is also a good example of the type of transactions that you can expect from us in the future.
spk16: Great. Thanks, Margarita. Matt, do you want to take the Dempselt in the question?
spk10: Yeah. So hi, Peter. Yeah. So in regards to the question about Dempselt and the TGC, I'm sorry, and breast disease and really to be able to differentiate this, you know, we do remain very excited about our plan to initiate our proof of concept study in the second half of this year. And also we have a very large database of safety based on Dempselt and TGCT, both from the motion phase three study as well as from the phase one two study. And GVHD is a chronic disease and particularly with the skin and joint involvement, there can be severe limitations of patients mobility and antibody therapy would have to be given intravenously every two weeks. So for chronic disease such as GVHD, that's a pretty significant burden on patients. So one of the major features of using Dempselt as an oral agent will be to combine with other oral therapies. As you know, the standard of care now consists primarily of oral agents, whether it's a JAK-2 kinase inhibitor or the ROC-2 inhibitor and on the back of the steroids as well too. And so our ability to differentiate from an antibody is pretty significant with Dempselt and TGCT in our phase two study.
spk09: Thank you. Is there any way from, I guess, preclinical data to see any differentiation of an oral drug versus an antibody? If you think that could drive differences in efficacy or durability or safety?
spk10: I think most of the preclinical data just speaks to the role of the macrosage in the pro-fibrotic manifestations of the disease. And that's particularly important in several organs, as I mentioned, particularly the skin, because these patients can have pretty severe sclerotic skin lesions and even joint contractions. And also particularly in the lungs as well too. And fibrosis in the lungs is a drug that's subliminal. It's been a major organ that currently does not set itself to treatments of current regimens for GVHD. So the role of macrophages and the macrophages in those particular organs could really be a benefit for Dempselt's Iniculus disease.
spk09: Thanks so much.
spk08: Thank you. I would now like to turn the call back over to Steve Porter for any closing remarks.
spk17: Yeah, thank you for joining us on today's call. And thanks
spk16: for your support. We look forward to keeping you updated on our continued progress here at Decipher during the course of the year. Hope you have a great day.
spk08: Thank you for your participation. You may now disconnect.
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