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spk01: Ladies and gentlemen, good afternoon or good morning. My name is Jula Neugebauer, Senior Director in Best Relations with Nostrosis, and it's my pleasure to welcome you to our third quarter 2021 Financial Results Conference call. Joining me on the call today are Jean-Paul Kress, Chief Executive Officer, Sang Lee, Chief Financial Officer, and Malte Peters, Chief Research and Development Officer. Joe Horvath, U.S. General Manager, will be available for the Q&A session. Before we begin, I'd like to remind you on slide two that some of the statements made during the call today are forward-looking statements, including statements regarding our expectations for the commercialization of our products and our development plans, impact of COVID-19 on our business, and expectations for the compounds in our pipeline, as well as the development plans of our collaboration partners. These forward-looking statements are subject to a number of risks and uncertainties that may cause our actual results to differ materially, including those described in Morphosis 20S, an annual report, all for the year ended December 31st, 2020, and from time to time in other SEC documents, Morphosis. It is important to keep in mind that our statements on this webcast speak as of today. On slide three, you will find the agenda for today's call. Jean-Paul will begin with an overview of the third quarter and will give an outlook. Malte will provide an update on our development pipeline before turning the call to Zhang for a summary of our third quarter 2021 financial results. Following these prepared remarks, we will open the call for your questions. With that, I now hand the call over to Jean-Paul.
spk02: Thank you, Jan. Welcome everyone and thank you for joining us today. Before I start, I would like to welcome Joe Horvat to this call. Joe is our U.S. General Manager and has been instrumental in leading our commercialization efforts and building momentum since joining the company mid-year. I would also like to thank Roland Vandeler, whom we announced earlier this week will be departing, for his efforts in strengthening the foundation of our commercial operations. Moving to slide five. With the ongoing launch of Monjuvi, important concerning data for Pellabrasib, and the execution of multiple pivotal studies, we are making significant progress on our vision to become a leader in hematology oncology. On slide 6 now. Monjuvi net sales of $22 million for the third quarter increased by 22% compared to the previous quarter. The growth was driven primarily by the map. A greater proportion of second-line patients are now treated with Monjuvi, which over time will increasingly result in a longer duration of therapy. We also saw a broadening of the prescriber base and a high penetration in the community setting. Roughly 70% of orders are coming from the community setting while still maintaining a consistent foothold in the academic setting. Looking more closely at demand, more than 850 accounts have ordered Monjuvi since launch. During the quarter, we received orders from 500 accounts. Over 70% of these accounts were repeat orders, which is an increase from the previous quarter. Enthusiasm for Monjuvi by physicians continues to build. This is supported by our 3-year data from our L-mine trial, which demonstrated a median overall survival of 33.5 months, which means at 4 years, 42% of patients were still alive. Prescriber enthusiasm is also supported by real-world evidence data for the tafacitamab-lenalidomide combination. showing comparable or even longer overall survival compared to other systemic therapies, which we look forward to sharing at ASH. As we approach the end of the first full year on the U.S. market, we are encouraged with the future growth potential of Monjovi as we gain more traction from second-line patients. Importantly, we remain confident that Monjuvi can become a backbone therapy and partner of choice in B-cell malignancies. We are also excited for Monjuvi to expand its geographic footprint and provide broader access for patients. Last quarter, we received conditional approvals in the EU and Canada with our partner Insight, and we are happy to have started to receive the first royalty payments from ex-US markets. Moving to slide 7, we are also making great progress advancing our technical programs. We are very excited about the collaboration which is currently being studied in myelofibrosis in a pivotal study, Manifest 2. If approved, we believe this product has the potential to generate more than $1 billion in sales. We are excited for the upcoming ASH annual meeting, where we will share new data with additional patients from the Manifest Phase 2 trial. The data confirms earlier data cutoffs, and increase our confidence in Pell Abrasive and the probability of success. For Felsartamab, our anti-CD38, we recently announced encouraging early proof-of-concept data in autoimmune membranous nephropathy, and we dosed the first patient in a new Phase II trial for Felsartamab in IgA nephropathy. We believe our next-generation EZ-H2 inhibitor, CPI-0209, has exciting potential and optionality in certain solid and hematologic oncology indications. In summary, we are focused on executing our strategic priorities, and we continue to make significant progress. With that, I will turn the call over to Malte for an R&D update. Malte, please. Thank you, Jean-Paul.
spk04: We have made great progress across our pipeline in recent months. Last week, we highlighted our presence at ASH conference in December. We are proud to be able to share data from our two late-stage assets, Monjovi and Pellabrasip, in two oral presentations as well as multiple posters. For Pelabrasib, we will share the latest data from the Manifest Phase 2 trial, including updated data for the primary endpoint spleen volume reduction 35 at week 24 for the combination arm 3 with ruxolitinib in frontline myelofibrosis. Importantly, this data confirms the previous data presented at ASH 2020. giving us further confidence in pilabrasib and specifically in the probability of success for our phase 3 manifest 2 study. We are also excited about some new and previously unpublished data on the disease modification potential of pilabrasib and specifically how pilabrasib differentiates from ruxolitinib. We will present data for the retrospective real world data study Remind 2. Data presented at the SOHO conference earlier this year showed that the tafacetamab and lenalidomide cohort was associated with longer oral survival versus a pooled data set of other systemic therapies, BR and R-GMOX. Our oral presentation at ASH will now show all comparator groups and include Polar-BR, R-square, and CAR-T cell treatments, and we look forward to sharing the data with you. We are excited about Pelabrasip for the treatment of patients with myelofibrosis, and we believe it has first-in-class and best-in-class potential. Pelabrasip impacts the four major hallmarks of myelofibrosis, and we believe it has the potential to become the standard of care. Pelabrasip has shown a strong response rate in combination with ruxinitinib, achieving a spleen volume reduction in 67% of first-line myelofibrosis patients. We intensified our personal interactions with key opinion leaders in the field and received very positive feedback on the data and the compound. We are making great progress to ensure operational excellence for the execution of the ongoing Phase III study, and we are seeing the results of the measures we have implemented. We added additional CROs, improved the interaction with investigators, and expanded the number of countries and sites. With all activities in place, we expect to report top-line data from this study in the first half of 2024. Now moving to Monjuvi. We have two pivotal Phase III studies ongoing, expanding the clinical development to patients with front-line DLBCL and patients with relapsed refractory indolent lymphoma. For FrontMind, we are doing very well in terms of enrollment. Investigators are excited about the study, and we are well underway adding additional sites in the United States to satisfy investigator and patient interest. In late August, Minjuvi, the brand name of Tafacitamab outside of the US, was granted conditional marketing authorization by the European Commission for the treatment of adult patients with relapsed or refractory diffuse large B-cell lymphoma who are not eligible for stem cell transplant. Two days earlier, Minjuvi received conditional approval in Canada. In both jurisdictions, our partner Insight is responsible for the commercialization. We are very excited that the European Commission followed the FDA in approving Trafacetamab in combination with Lanalidomide based on compelling data from the Elmine study, supported by our real-world data package. We also made considerable progress with Felzatamab in autoimmune membranous nephropathy, or AMN, a disease with significant unmet medical needs. The M-PLACE study evaluating selzatamab in patients with AMN is fully enrolled and the antibody has shown proof of concept for this indication. The data that we shared at Kidney Week recently demonstrated that selzatamab can rapidly and significantly reduce anti-PLA2R antibody titers in difficult to treat patients with anti-PLA2R positive membranous nephropathy. While it is still early to appreciate the full effect on proteinuria, we are encouraged to see the first patients with a drop in proteinuria already as early as six months after the initiation of treatment. Last month, we also dosed the first patients in the Phase II IGNAL trial in patients with IgA nephropathy, another autoimmune disease affecting the kidney. Dosing of the first patients with IgA nephritis is an exciting milestone for Morphosis physicians and also patients as we are broadening our development program for Fezatomab. We believe Fezatomab could have great potential as a targeted therapy for patients with autoimmune renal diseases with limited treatment options. As you can see, we expect to deliver a steady flow of late-stage clinical data over the next several years, which have the potential to change treatment paradigms in several oncology and autoimmune indications. We are very excited about this progress and the potential of our pipeline. With that, I now turn the call over to Sung for a review of the financials.
spk10: Thank you, Malte. We're pleased to share our financial results for the third quarter of 2021. Moving to slide 15, Manjubi sales in Q3 2021 were 18.6 million euros, reflecting 22% growth quarter-over-quarter, excluding the impact of FX. As Jean-Paul mentioned earlier, we received additional regulatory approvals of Menjuvi outside of the U.S. and recorded 82,000 euros in royalty revenue from our partner, Insight. With Menjuvi royalty revenue becoming a regular item in our P&L going forward, it's important to note that Morphosis provides the commercial and clinical supply for ex-U.S. utilization at an agreed upon rate. the revenue from this supply is recorded in the licenses milestones and other category in our top line and the exact same amount is subsequently recorded in cost of sales yielding a zero gross margin on ninjubi supply sales moving to slide 16 total revenues for the third quarter of 2021 were 41.2 million euros compared to 22 million euros for the same period in 2020. Total cost of sales was 7.5M euros in the third quarter of 2021 compared to 3.7M euros for the third quarter of 2020. Cost of sales specific to Manjubi US product sales was 3.6M euros in the third quarter of 2021. Turning to operating expenses, R&D expenses in the third quarter were 64.4 million euros compared to 34.2 million euros in the same period of 2020. The growth primarily reflects the inclusion of R&D expenses from Constellation since July 15, 2021, and the increased investment to support the advancement of our clinical stage programs. Selling expenses were slightly down at 32.4 million euros in the third quarter compared to 32.9 million euros in the third quarter of last year. G&A expenses in the third quarter were 19.4 million euros compared to 13.3 million euros for the third quarter of 2020. The increase was driven by the inclusion of Constellation's G&A expenses as well as transaction-related costs. For the third quarter of 2021, we reported a consolidated net loss of 112.8 million euros compared to a net loss of 65.3 million euros in the third quarter of 2020. Turning to the balance sheet, we ended the third quarter of 2021 with cash and investments of 1.13 billion euros compared to 1.24 billion euros as of the end of 2020. In the third quarter of 2021, we recorded significant amounts in our balance sheet related to the Constellation and Royalty Pharma transactions. A high-level overview of the accounting for these transactions is provided on slide 18. Specific to the Royalty Pharma transaction, we recorded a financial liability in the amount of 1.2 billion euros for the future royalty and milestone payments owed to Royalty Pharma. The measurement of the financial liability is initially at fair value and subsequently based on the effective interest method. TrimpIO royalties and any potential royalties from Gantanerimob and Otillimob, milestones for Otillimob, and future net sales of Collaborative and CPI 0209 will be recorded as revenue on the MRFOSIS income statement. It's important to note that there will be no cost of sales amount recorded in the Morphosis income statement for the revenue share that is passed on to Royalty Pharma. As we have completed some financially complex transactions with Royalty Pharma and Insight in the previous year, we have included slides 23 and 24 to help the investment community better understand the ongoing impact of these transactions to our income statement. This view excludes the TrampBio royalties since that is being passed on to Royalty Pharma and excludes the effect of the 50-50 U.S. profit share with our partner Insight. The result is a P&L that connects net profit or loss more closely with cash generation or utilization. Turning to our guidance for 2021 on slide 19. We are reiterating our guidance that was updated in July this year, following the close of the consolation and royalty pharma transactions. We expect group revenues in the range of 155 million to 180 million euros. As mentioned previously, we will continue to record from FIA revenues, and this is reflected in the guidance range. Moving to operating expenses, We expect 2021 operating expenses to be in the range of 435 million to 465 million euros, which include expenses for consolation as of July 15, 2021. The range also includes one time transaction related costs of 36 million euros. We anticipate R&D expenses to comprise between 52% to 57% of operating expenses, excluding the one-time transaction-related costs. With that, we would like to open the call up for questions. Operator?
spk08: Ladies and gentlemen, we will now begin the question and answer session. If you would like to ask a question, please press the 01 on your telephone keypad now. you will be advised when to ask a question. If you change your mind and wish to withdraw your question, please press the zero and two. Artificients are requested to only use handsets when asking a question. The first question has come from Josh Report at SVB Learing, Q9 is now open.
spk07: Thank you very much for taking the question, and congratulations on the progress with the integration. One for Malta, one for Jean-Paul, and maybe one for Sam. Malta, first on Manifest 2, Do you plan to have an interim look at that study and when might that occur? And then, Jean-Paul, now you've bedded in your combined company. Could you give us a sense of what assets are potentially partnerable and what assets or geographies are pretty much off limits that you're committed to retaining? And then, Sung, lastly, do you expect consensus to track to what are for the time being called your ABC income statement or to IFRS. I'm just wondering how you see the various agencies and consolidators guiding, at least setting things up in consensus. Thanks.
spk04: So, Jeff, let me start with the first question. What I would like to say is that we are seeing good progress with where we are with MUNIFES II in terms of enrollment. I refer to the measures we are putting in place to accelerate the operational excellence and improve on the operational excellence of the trial. I would prefer not to make comments on specific statistical details as it can have the potential to impact the integrity of the trial. And FDA typically does not encourage sponsors to publicly comment on this. So I would prefer not to give any details on, you know, what we're doing in terms of interim analysis. Okay.
spk02: And Jeff, hi. Thanks for the question. This is Jean-Paul. the potential of partnering for our assets. It's pretty clear, we've been very clear on our focus on our late-stage assets. Montjuvi, we have the deal with Insight for this. For Pellabrasive, you might recall that we have the whole rise worldwide, so we have a lot of opportunity. Right now, we really believe we should retain all the geographies and all the rights. We're not contemplating partnership yet. We think we have enough with the pivotal trials going on and the manifest one to bring and raise and create value until we decide later. But so far, we are not working on any partnership for this major asset for us, major opportunity. For the mid-stage assets, which are respectively Zartama, and CPIO 209, we think that following the data and the progress we are making, we could potentially partner those assets. and make sure that that would help us to keep the focus on the later stage assets and also generate some funding, which will obviously help us keep our balance sheet in a great shape. So we're working on that, but at the same time, we stay very determined on the progress on the data, as Malte mentioned, for those mid-stage assets. But we have a lot of functionality. I should end by saying that there is interest on those assets by some strategists and we'll keep you posted.
spk07: Great, thank you.
spk10: And Jeff, on your third question on the consensus, It's my hope and desire that the sell side will model us as demonstrated in the orange highlighted column, the A minus B minus C column, because this is more reflective of how Morphosis will generate cash and utilize cash with respect to net income. There are some complications that happen below the line, and that is with two specific line items on the income statement. That's finance expense and finance income. And I think it would be very difficult for the sales side to try to predict how FX movements impact the liabilities on our balance sheet with regard to Insight and Royalty Pharma. Also, there's interest rate charges to those liabilities. And then, of course, there's items that are booked there as a result of a deviation from our LRP. So that is something the sell side would not have any great visibility into. So for all those reasons, I hope people would start modeling to the orange highlighted column.
spk07: Great. Thanks, Simon.
spk00: Thanks, Jason.
spk08: The next question is coming from Jason Butler at JMP Security. The line is now open.
spk00: Hi. Thanks for taking the questions. First one on Manifest 2. Malta, can you just expand on your comments around improving the interactions with Investigator and the operational excellence of the trial conduct? I guess now that you're running the trial, are there aspects of the design that you're considering amending or trial conduct in general? And then... Second question on felzortimab. You know, clearly there's a lot of opportunities for the candidate. Can you just walk through, in addition to following the biology, how you're thinking about prioritizing indications and, I guess, you know, broadly, you know, therapeutic areas? Thank you.
spk04: Sure, Jason. Thanks. I will answer question one first. So for Manifest 2, we have made significant changes in the conduct and in the operational excellence of the trial. And I think I spoke about this at the last quarterly call and highlighted that already during the due diligence that we performed for the consolation assets, we were aware of several areas that would benefit from, you know, our expertise and certain improvements. So we have really intensified our interaction with key opinion leaders. We have expanded the number of countries. We have significantly expanded the number of sites. And we are already seeing turnarounds in terms of how quickly enrollment functions. We have also significantly improved our interaction and choice with clinical research organizations, CRO, because there was clearly room for improvement, and we have made some very, I would say, smart changes that also already shows benefits. With respect to the design changes, I had spoken last time about increasing the sample size to 400. That was a measure of caution, increasing the probability of success to get a positive trial on both endpoints, on the primary and the key secondary endpoint. But beyond that, we do not plan to conduct any further changes with respect to the design of the trial.
spk02: Yes, and there was a question on CELSA as well. I'll start and you can add on the science. For CELSA-CAMAB, in theory, because of the mode of action of an anti-CD38 in autoimmune diseases, which is targeting the long-living plasma cells, which should, in theory, give an advantage versus rituximab, which targets earlier B cell stages. we have the potential to address many autoimmune diseases. The criteria for selection, and that's what we applied for our current two investigational trials in nephrology, are a mix of unmet need, market size, and competitive stage. So if you take, for instance, if you were to ask us, why don't you do a study in Mycenae gravis? Well, we could, in theory. We think it would work. But this is a busy space. There are already a couple of agents being investigated, but we don't exclude it. So we started with our nephrology indications because there are few agents being explored, especially in AMN. And it's a very high NMET need. These patients end up with end-stage renal disease and sometimes transplants, which we think we can really help the NMET need here. Walter, do you want to add anything to that?
spk04: No, I think you summarized it very well. Maybe one slight addition here on the AMM patients, as Jean-Paul said, we really focused on patients who have very limited treatment options. And that means patients who have high autoantibody titers or patients who have progressed on previous immunosuppressive treatments. So these patients are notoriously difficult to treat and we are seeing, as you have seen in the poster maybe, we are seeing very encouraging results both on the level of autoantibody titers as well as on proteinuria levels. So we consider this very positive and encouraging data and we are super happy that we could start a second trial in IgA nephritis. And then John-Paul summarized it really well. There are multiple other options in other autoimmune diseases where autoantibodies play a role. But I think we have focused really on, you know, two of the most pressing and best proof-of-concept indications.
spk02: And I would maybe just, thank you, Malte, I would add on the Pela comment to remind you that all eyes will be on Earth's ash. with the very important abstract. We have three abstracts on PILA there, especially including one on the combination arm number three, increasing our confidence for the phase three trial, which is very important. So more to come pretty soon at ASH.
spk00: Thank you.
spk02: Thanks.
spk08: The next question is coming from Rosie Turner at BoxLive. Your line is now open.
spk03: Hi, thank you very much for taking my questions. Just two, if I may. Firstly, sorry, another follow-up regarding on 3 and data at ASH. It's probably just me, but I'm slightly confused as to what data we'll get that's going to help with the read-across to manifest 2, just because I think the primary and secondary endpoints for manifest 2 are 24-week data. And we've obviously already seen, admittedly, very strong data from collaborative in the manifest original trial, as you've shown in your slide, for 24 weeks. So presumably this is going to be kind of duration of screen response data, which is going to be kind of much longer term. But maybe you can kind of help me understand that a bit better. And then just secondly, regarding selling expenses, Why were they down year on year, and is this going to be a kind of sustained decrease, or is this something that you expect to kind of come back in 2022? Thank you.
spk02: Okay, so thanks, Rosie. Malte will take the first question and then the second one.
spk04: Yeah, so, Rosie, what we are going to show at ASH is a new data cutoff, which comes precisely one year after the last data cutoff. So that means a couple of things. First of all, we have roughly 23 or 24 more patients included in our analysis. For the primary endpoint spleen volume reduction, every single patient of the 80-something patients have reached the 24-week time point. So this is a fairly mature data set, which is likely not going to change much, so it's it can be considered a fairly final data set and that's why it's so important and we spoke about this and what's so encouraging for us is that this data set confirms the earlier data cutoff, which was less mature. So in summary, we really have gained more confidence, and we are more confident in terms of how Manifest 2 would pan out in terms of probability of success. So you see more patients. All patients in Arm 3 having reached the 24-week milestone, and you see longer duration of response data. So that's going to be the best of the ASH presentations.
spk10: And, Rosie, on your question on the selling expenses year over year, they're just down slightly. They're almost flat. We did go up sequentially, and that's just a phasing phenomenon that's happening. But I would say outside of that, there's nothing extraordinary happening with the Q3 selling expenses.
spk03: Great. Patrick, thanks very much.
spk10: Thank you.
spk08: The next question comes from James Gordon at J.P. Morgan. Your line is now open.
spk09: Hello, James Gordon from JP Morgan. Thanks for taking the questions. A couple of questions, please. One was on juvie uptake, so encouraging comments on repeat orders and second line patient use. Can you quantify at all? Can you give us a split of what percentage use is now coming from second line? And do you have any sense of what percentage of patients who started getting the therapy commercially are still on therapy? Second question was on 1GV competition. So we recently had some ASH abstracts come out, and the CD3, CD20s are still looking pretty good in relapsed refractory DL-BCL, and they're going to be filed next year. So any thoughts about how the patient population, those who will be used versus 1GV, are they going to be directly competing, or is it different? Felser, the IGNAS study that you started that was encouraging, but what's the path to market there? So when is the earliest that might actually be able to come to market? And would that be the same sort of patients as CD38 or different? And then final one, was it really helpful at the back of the presentation if we call it ABC reporting? But are you now going to put that in the release every time when you report? So will we get that at the time you report or will that only come out in the presentation going forward?
spk02: Thank you, James. Four questions. So first thing first, I'll give a high note on your Monjuvi commercial questions at the beginning and Joe will elaborate. You know, first of all, we like the momentum we are building. We continue to engage and educate HCPs in our long-term data. As I mentioned in my prepared remark, there is growing enthusiasm on those data, and we expect continuous growth. In terms of the circumcline share here, we are actually leading the circumcline space, and we have increasing numbers of patients which is so important that we discussed several times for duration of treatment. We have some patients actually over a year of treatment And that's great to see that we are really filling in again. We are the only approved second line compound, and we leave the space here. And as I said several times, there is a disconnect between real life and clinical trials. We have shown in our L-MIND trial that we have data. beyond three years, four years, actually. But in real life, we are talking more in months, because it's not a clinical trial. The good news here is that we are working towards engaging and educating on those data, and we see progress being made. So we think that time will really play a big role here. But Joe has been spending a significant amount of time in the field, and he will have some comments here.
spk06: Yeah, James, thank you for that question. As Roland mentioned, or sorry, as Jean-Paul mentioned, I've been spending quite a bit of time in the field, whether it's large academic settings or smaller community settings, large community accounts right across the US. And the physicians continue to respond very favorably to that 3 year data. That was presented at and other conferences and your question as it relates to repeat orders. As we reported on slide 6. Through Q3, we've had more than 850 accounts that have ordered since launch. That continues to grow. When we look at repeat orders, in Q3, we had greater than 500 accounts ordered, with approximately 70% of those accounts representing repeat orders. So we continue to make good progress, and this is reflected by the enthusiasm of the HCPs and the increasing accounts and reorders. And as Jean-Paul mentioned, as it relates to the percentage of second lines, Jean-Paul did allude to the fact that we do have leading share in second line as we continue to penetrate more. And again, this is based on the robustness of the data and our ability to get out and see physicians.
spk02: Great. So the other question here, the question was on SELSA and IGNAT, IGNAT trial. Malte, do you want to take that?
spk04: Yeah, I think it's a little early to speak about details on the path to market. I think we are, at this moment, we are super happy about where we are. We are seeing good traction from both indications. We want to take a moment really in the middle of the year to evaluate the data in both indications and then make a good decision of how we can move forward in terms of registration activities. We have some thoughts already, but we want to really look at the entirety of the data in both indications and then make an informed decision that's data-driven. of how we will get this approved. So I think stay tuned a little bit. We will update you, of course, as soon as we know more. But at this point, we are really focusing on corroborating the proof-of-concept data and also executing on our IGN Fridays data.
spk10: James, with regard to your question on the continuation of this alternative income statement view, yes, the answer is we will absolutely continue to provide it going forward. I think it's essential to look at the business this way given the two collaborations or arrangements we have with Insight and Royalty Pharma. I think the yellow column would be much more meaningful to anyone looking at morphosis. In terms of timing of this, given it's the first time we're sharing information like this, I think that's still in discussion as to the timing and other areas or disclosures this might appear in. But we thought initially this was a good venue, putting it in the earnings slide deck. But let us get back to you in terms of timing and whether this would appear in other disclosures. Thank you.
spk02: James, I realize you had a question of Montjuvi future competition and I don't want to skip that. You know, I mean, we really, as I said, focusing on growing the momentum on our compound and our regimen, Montjuvi land. And again, you know, we are the only ones in second line. Of course, it's a competitive space, but in some ways also we could leverage the fact that there will be more and more combinations based on Montjuïc in the future. We are, as you know, exploring a bi-specific combination with Xemcar. We're not excluding any other combinations. It's part of our backbone strategy. It's a matter of fact that we are talking to other companies for potential combinations with, you know, why not another bispecific but other modalities as well. And that's going to be very important because if we are at the core, as a backbone, that will mean in the future more prescriptions, more sales. So we know it's a competitive space, but we know the strength of our regimen and our assets could be the base for more competitions in the future, for more backbone combinations in the future.
spk08: As a reminder, if you have a question for our speakers, please press zero now to enter the queue. The next question is coming from at Citi. Your line is now open.
spk05: Hi. Can you hear me? Yes. Yes, we can. Great. Thanks for taking my questions. So most of them have been answered, but just quickly first on . The question is more from a reimbursement perspective. Now, given the proposed Medicare reforms, particularly regarding the design redesigning of the Part B program, where manufacturers will be on the hook for 20% of the cost in the catastrophic coverage phase, and the plant sponsors now 60% versus 15% earlier. Now, assuming this is implemented, can you comment on any potential impact on the combination drug, Celebracid plus Jacify? I know this is all early stage, but would love to know how do you think about this. Then, one person... Is the 82,000 royalty revenue on Monjuvi, is that a gross number or a net number? I mean, is it after factoring your payaways to Zencore? And then if I can follow up on the selling expenses, how should we think about this line going forward, at least until before you get ready for Alibrasib launch? And so I just wanted to clarify on your phasing comments. Does that relate more to the general administration expenses or even for the selling expenses?
spk02: Okay. Thanks, Vineet. I'll start by your question. First and foremost, the more we speak to paywalls, and we've been speaking to most, if not all, relevant paywalls in these years in myelofibrosis over the last couple of months. there is a very high unmet need in this disease. Remember that there is almost one standard of care only out there, and only 50% of the patients are being addressed by this standard of care for several reasons, one being toxicity or high anemia, which compound on the anemic status of the patients to start with. So there is a high unmet need, and when we presented our data the manifest one phase two data that are going to be disclosed at ASH to a group of KOLs, they all were very, very impressed. So the feedback is very strong and they are telling us that we are leaving the space in terms of a potential new standard of care in combination. I'm saying all that because that's going to determine the value proposition of the regimen and the compound, in combination potentially in monotherapy as well later. So long story short, we have the basis with the strength of our data to establish a very strong proposition towards a new standard of care, and obviously a value-based proposition, which is the the base for any reimbursement or pricing discussion in the future. And we have time to do that. Remember that we have a couple of years to prepare for shaping the market and making sure that we address any concerns in potential concerns with the payers. But again, the money is so high that there is room for us to play in this market in a very competitive way. And then Sam will address your finance questions.
spk10: Yes, you had a question on the royalty revenue from sales of we put those in our top line at gross. And then the amount that we have to pay to our partner is recorded in cost of cost of sales. I think you also had a question on phasing. When I was addressing Rosie's question, it was specific to selling expenses. And Vinay, I don't know if you broke up in the middle of the questions.
spk05: No, that's fine. That's helpful. And I just wanted to just follow up on the selling expenses. How should we think about this line going forward? at least until, you know, before you get ready for Pelabrasib launch?
spk10: Oh, yes. Well, you know, we've spoken before. There's some synergies here. We have a field team here, and there could be an 80 percent overlap in terms of myelofibrosis and DLBCL. So, of course, we're going to realize synergies from our infrastructure today. Could something incremental be added in the future? You know, we're going to keep all options open at this point.
spk08: Thank you. If I am a reminder, if you would like to ask a question, please press zero and one on your telephone keypad. We have no more further questions coming in, so I will then back over to Julia Neugebauer to wrap up today's call.
spk01: Ladies and gentlemen, this concludes today's conference call. If any of you would like to follow up, the Investor Relations team is available for the remainder of the day. Once again, thank you for joining our call. Have a good day and goodbye.
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