Athenex, Inc. (ATNX) on Q2 2021 Results - Earnings Call Transcript
Operator: Good day, ladies and gentlemen, and welcome to the Second Quarter 2021 Athenex Earnings Conference Call. As a reminder, this conference is being recorded. I'd now like to hand the conference over to Tim McCarthy of LifeSci Advisors. Thank you. You may begin.
Tim McCarthy: Good morning, and thank you for joining our conference call. Today, we will provide an update on Athenex' business as well as a review of financial results for the second quarter of 2021. The news release detailing the results crossed the wire earlier this morning and is available on the company's website. A replay of this call will also be archived on the company's website. During the conference call, the company will make projections or forward-looking statements regarding future events, including statements about financial, business and clinical milestones anticipated in fiscal year 2021 and beyond. We encourage you to review the company's past and future filings with the SEC, which identify specific factors that may cause the actual results or events to differ materially from those described in the forward-looking statements. You can find our SEC filings in the EDGAR database at www.sec.gov, or in the Investor Relations section at our website at www.athenex.com. This morning, we are joined by Dr. Johnson Lau, Chief Executive Officer; Mr. Jeff Yordon, Chief Operating Officer; Dr. Rudolf Kwan, Chief Medical Officer; Mr. Randoll Sze, Chief Financial Officer; and Dr. Dan Lang, President of Athenex cell therapy. The management team will be available to answer questions after the prepared remarks. I will now turn the call over to Johnson for introductory comments. Johnson?
Johnson Lau: Thank you, Tim. There were several important developments at Athenex in the second quarter that I would like to cover this morning. I want to discuss the progress we have made with the FDA on oral paclitaxel plus encequidar, the ongoing commercialization of Klisyri as well as the recent Kuur Therapeutics acquisition, which is part of an ongoing plan to build a presence in cell therapy. During the second quarter, we held a Type A meeting with the FDA to discuss the deficiencies that have been raised in the complete response letter we received in February. The FDA encouraged us to continue development of oral paclitaxel for the treatment of metastatic breast cancer. A key topic at the meeting was how we can potentially address the deficiencies raised in the CRL. We are now evaluating the option of conducting a new clinical study and working on the optimal design for such a study that we plan to present to the FDA later this year. We are very conscious, of course, about the capital and time requirements. Ultimately, we hope there is a path that we can agree on that is viable, and there will be some value creation for our stakeholders. Dr. Rudolf Kwan, our Chief Medical Officer, will provide more details later. We continue to believe that oral paclitaxel has demonstrated a very strong and compelling clinical profile and that it offers superior efficacy and safety compared with IV paclitaxel. If approved, we intend to position it as the chemotherapy of choice in metastatic breast cancer. As we consider our strategy for the metastatic breast cancer indication, it is important to remember that we have other programs, evaluating oral paclitaxel in additional indications and in combination with other therapies. This includes our angiosarcoma study, the combination with pembrolizumab study and the I-SPY2 trial. Again, Dr. Kwan will provide more details later. Klisyri or tirbanibulin ointment, ,our first-in-class microtubule inhibitor for the treatment of actinic keratosis of the face or scar, launched in the U.S. in February, led by our partner, Almirall. Almirall provided an update on the launch progress on their most recent earnings call. Their main focus at this point in the launch is on gaining payer coverage in the U.S. to drive sales volume. We are delighted to see that Klisyri continues to gain market share in the ATE market. And that feedback from patients and dermatologists has been positive. Almirall highlighted the need for new therapies like ours given that existing topical therapies associated with significant side effects. We are also pleased to report that Almirall recently received approval from the European Commission to market Klisyri in Europe. This is another important milestone that will bring a new and innovative treatment option to more AK patients. Almirall is preparing for the launch in Europe expected in the second half of this year. We announced in July that we have signed additional license agreements to commercialize Klisyri. Seqirus, a subsidiary of CSL, will market the product in Australia and New Zealand, and Avir Pharma is our partner in Canada. These new agreements part of the game plan to develop a global presence for Klisyri and to expand access to more patients around the world. Athenex now has strategic partnerships for tirbanibulin in place in major markets, including North America, Europe, Australia, Japan and China. In May, we acquired Kuur Therapeutics. Kuur has developed a potential first-in-class NKT cell therapy treatment for neuroblastoma as well as an allogeneic platform for hematologic and solid melasma disease based on technology licensed from the Beta College of Medicine. In the near term, the acquisition provides Athenex with 2 attractive assets with solid clinical data and potential additional data readouts over the next 12 to 18 months. Importantly, there is also an opportunity to combine allogeneic NKT cells with our TCR-T cell therapy in solid tumors. Acquiring Kuur is a strategically important move for Athenex and consistent with our mission to bring innovative cancer treatments to patients, is becoming increasingly recognized in the medical and scientific communities, their cell therapy holds a promise of being a game changer in the treatment of cancer. Dr. Dan Lang, our President of Athenex Cell Therapy, will provide an update on Kuur and discuss the progress made since we made this acquisition. There's also a management update I want to discuss. We have announced that Mr. Randoll Sze, our Chief Financial Officer, has given us notice that he will be leaving Athenex. Randoll has made a decision to return to the financial sector. We'll be initiating a formal search for a replacement CFO. In the meantime, with Mr. Steven Adams, our Corporate Controller, will take on the role of interim Chief Accounting Officer. Steve has been with Athenex since 2009 and is very familiar with all aspects of our business. The financial function is in very capable hands. Randoll has been a variable member of the team, and I want to thank him for his contributions and wish him well in his next position. Cash at the end of second quarter was $146.7 million. As stated previously, we continue to assess very carefully about how to utilize and manage our resources efficiently and conserve cash. Our current priorities are to maximize the growth potential for our and cell therapy programs while supporting our APS/APD business. Coupled with prudent cash management, we continue to review our financing options opportunistically, as you will learn more from Randoll in a discussion on our financials. We will evaluate all scenarios for our business and remain focused on maximizing value for our shareholders. With that, I will turn the call over to Dr. Rudolf Kwan.
Rudolf Kwan : Thank you, Johnson. Let me provide some more detail on the Type A meeting we held with FDA on oral paclitaxel. We prepared extensively ahead of this meeting and used our time to discuss the deficiencies raised in the CRL. The FDA was supportive and encouraged us to continue to develop oral paclitaxel in metastatic breast cancer. They reiterate that a well-conducted trial may adequately address the deficiencies. As Johnson mentioned, we are thinking carefully about the design of a new trial and want to collect additional overall survival data this year. We expect that we'll be ready to share our proposed trial design with the agency in the fourth quarter. We plan to provide a further update around that time. As Jonathan indicated, we are also prioritizing our oral paclitaxel program in angiosarcoma and intend to discuss a registration pathway with the FDA. We have completed enrollment of 43 patients in our ongoing Phase II trial. As a reminder, we previously reported interim data at ASCO last year that showed complete and partial response rate of 27% and 23%, respectively, in the 22 evaluable patients at the time. Angiosarcoma is a disease with limited treatment options and for which oral paclitaxel has received Orphan Drug Designation. We will provide an update once we have clarity from the FDA on next steps. As to our Phase I study of oral paclitaxel in combination with pembrolizumab study in solid tumors, the dose-finding results from this study will be presented at the ESMO Virtual Conference taking place in September. Our abstract has been accepted for e-poster presentation. We are currently proceeding into the expansion phase of this study for the cohort of lung cancer patients with plans to expand into a second cohort of gastric cancer patients. Lastly, on the I-SPY2 trial, in which oral paclitaxel is being studied in combination with GlaxoSmithKline, dostarlimab and carboplatin for neoadjuvant treatment in breast cancer, this trial is ongoing and progressing well. I would now let Dr. Dan Lang provide an update on our cell therapy programs.
Dan Lang: Thank you, Rudolf. Our acquisition of Kuur Therapeutics was part of a major strategic initiative at Athenex to build world-class capabilities in cell therapy. We are excited by the potential of NKT cell technology to improve clinical outcomes beyond what has been achieved by the first-generation CAR-T therapy. We believe our NKT cell technology is well positioned in the cell therapy landscape because NKT cells possess properties and attributes that may prove to be better than T cells or NK cells. Unlike conventional T cells that could cause GvHD, NKT cells don't have the classical TCRs, which render the risk of GvHD minimal. NK cells typically have limited expansion potential following activation and can be difficult to cryopreserve. Conversely, NKT cells have tremendous expansion potential, both in vitro and in vivo, and exhibits excellent stability and functionality following cryopreservation. NKT cells can also hone to tumors and solid tissue, making them an ideal platform to attack solid tumors. Lastly, NKT cells played an important role in propagating and amplifying the immune response by bridging the image and adaptive immune systems. Since announcing the acquisition, there has been a smooth integration of the team and operations, which has benefited from synergies with the existing Athenex cell therapy infrastructure. We have been actively working to convert the Kuur academic INDs at Baylor to meet all regulatory requirements of an industry IND, which will allow us to scale up and expand the current single center trial across multiple study sites and accelerate patient enrollments. The construction of our cell manufacturing facility in Buffalo is complete. We expect to begin running validation batches in the second half of the year with the aim of having the capability to support our Phase I studies. KUR-501 is the autologous cell therapy product currently in a Phase I study in patients with relapsed or refractory neuroblastoma, known as the trial. We have now dosed up to cohort level 4 out of a total of 6 cohorts. We recently presented this data at ASGCT, where we disclosed one complete response, one partial response and 4 patients with stable disease out of the 11 evaluable and heavily pretreated pediatric neuroblastoma patients. KUR-502, our allogeneic product, is being evaluated in a Phase I trial in patients with CD19 positive relapsed or refractory lymphoma and leukemia known as the ANCHOR trial. As we disclosed at the time of the Kuur acquisition, we observed one partial response and one complete response in the first 2 patients treated at the lowest dose level. We will be submitting an abstract on this study, which will include new safety and efficacy data to the ASH annual meeting. The next cell therapy candidate to enter the clinic will likely be KUR-503, another allogeneic product, targeting GPC3 in hepatocellular carcinoma. We plan to submit an IND in 2022. In our TCR-T program, we have initiated our Phase I NY-ESO trial and are expecting to begin enrollment this quarter. The study is testing an autologous high-affinity TCR-T cell therapy and we are screening patients with the NY-ESO-1 antigen, which is expressed on a variety of solid tumors. Because NKT cells can express and kill tumors through engineered TCR transgenes, we are excited about the opportunity to merge our TCRs and NKT platforms and anticipate providing more news on this in the future. In summary, there are significant cell therapy clinical activities ongoing at Athenex, two studies with NKT cells and one with our high-affinity TCR-T. We look forward to generating important clinical data and sharing the transformative potential of our cell-therapy platform with the medical community. I will now turn it over to Jeff.
Jeff Yordon: Thank you, Dan. We generated product sales of $21.4 million in the second quarter compared with $40.2 million in Q2 of 2020. As we called out previously, there was $14 million in nonrecurring revenues sold to other countries in Q2 2020, and that is a major reason for the difference in the sales results between the 2 quarters. In addition, in the first half of this year, there have been significant COVID-related challenges in our Indian supply chain and, to a lesser extent, in China. As a result, we were not able to receive inventory from these regions for a certain period of time. Other issues that are relevant include the fact that the company experienced a higher amount of product sales in 2020 as we started fulfilling demand for certain drugs used to treat patients, hospitalize with COVID and demand for FDA shortage products. The product revenues in the second quarter of last year were particularly high given the COVID pandemic had just started. We anticipate that there will be several factors that will increase product sales in the second half of 2021. These factors include new product introductions, better inventory positions as the COVID pandemic improves in India and China, improvement in shipping options from India and China, potential sales of shortage products, new wave of COVID-related cases will increase sales at both APD and APS, increased capacity in Q4 for APS and continued sales improvements in a few key APD products. Athenex Pharmaceutical Division currently markets 34 products with 61 SKUs and Athenex Pharma Solutions markets 4 products with 16 SKUs. Construction of our facility in Dunkirk, New York is essentially complete. We have built 8 dedicated bays for the expanded 503B business and plan to commence manufacturing there in Q4 2021. Our current capacity at our clearance facility is fully utilized, and these new bays will substantially increase our capacity. I will now turn the call over to Randoll to discuss the financials.
Randoll Sze: Thank you, Jeff. I will go through a few key financial updates for the second quarter. Revenues from product sales in Q2 were $21.4 million compared with $40.2 million for the same period last year. As Jeff mentioned, product sales this quarter were affected by a decrease in demand for COVID-19-related drugs compared to last year. In the second quarter of 2020, the COVID pandemic just started, and we also recorded some significant nonrecurring orders of approximately $14.1 million. In the first half of 2021, we also experienced COVID-related challenges in our Indian and China supply chains, affecting the amount of inventories we could receive from our partners in these regions. For the second quarter, we recorded approximately $500,000 of license fees and other revenues, which included royalties received from Almirall on Klisyri sales in the U.S. Cost of sales for the second quarter totaled $19.7 million, down from $33.3 million a year ago. The decrease was primarily due to a decrease in cost of APD product sales, generally in line with the decrease in its revenue. R&D expenses for the second quarter totaled $21.1 million compared to $22 million a year ago. This was primarily due to a decrease in regulatory costs, clinical operations and preclinical operations. The decrease in these items was partially offset by increases in oral paclitaxel and in secular API costs and preparation for product launch, together with increases in drug licensing costs, R&D-related compensation expenses, costs related to 503B and cell therapy development. SG&A expenses for the second quarter totaled $21.2 million, an increase from $17.5 million a year ago. This was primarily due to increases in professional fees and other expenses related to the Kuur acquisition as well as an increase in compensation-related costs and operating costs. These increases were partially offset by a decrease in costs for preparing to commercialize oral paclitaxel as significantly launched activities occurred in 2020 and slowed down upon receipt of the CRL in February 2021. In Q2, we recorded an income tax benefit of $11 million versus an income tax expense of $0.1 million in the same period last year. The tax benefit is in connection with the current acquisition that took place in May. Net loss attributable to Athenex for the second quarter was $34.3 million, or $0.33 per diluted share, as compared to a net loss of $40.5 million, or $0.50 per diluted share, for the same period in 2020. In terms of product sales guidance, as before, we are limiting financial guidance to the existing Athenex product portfolio only. In 2020, we recorded a significant amount of revenues from international customers as a result of the global pandemic. We do not see these revenues as recurring in nature. While at the same time, we continue to expand our product portfolio, we are now affirming the guidance we provided on May 6, 2021, and currently expect that product sales in 2021, excluding any royalties from Klisyri sales to be in line with 2020 levels. As of June 30, 2021, Athenex had cash, cash equivalents, restricted cash and short-term investments of $146.7 million. Since receipt of the CRL earlier this year, we have started putting cash preservation managers in place, which include deferring commercialization-related expenses and slowing down certain clinical programs after we have more CAR-T from the FDA. As a result, we believe our cash will get us into the fourth quarter of 2022. Finally, as Johnson mentioned, I have tendered my resignation as CFO. The past 4 years have been a tremendously exciting period at Athenex. And it has been great to see the company evolve and achieve a number of major milestones. It has been especially rewarding to have played a role in helping to advance and bring to market innovative cancer treatments. I'm very grateful for the opportunity to have worked with Athenex Board and management team as well as all of our investors and corporate partners during my tenure. For further details on our financials, including results for the 6 months ended June 30, 2021, I will refer you to our Form 10-Q to be filed with the SEC. I will now turn the call back to Johnson for closing comments.
Johnson Lau: Thank you, Randoll. As you have heard from the other members of the team, there are a lot of developments at Athenex today and multiple opportunities to create value. We are thinking carefully about our overall strategy and are running scenarios across all of our divisions to determine how best to manage resources. This will be in tandem with careful evaluation of returns on our scientific and business activities. Regarding oral paclitaxel in metastatic breast cancer, we are certainly pleased that the FDA is supportive of our continued development. At the same time, we want to be realistic and recognize that conducting another large multiyear study in breast cancer may not be the best use of capital. We'll continue to work on designing an optimal trial that addresses the deficiencies in the CRL and explore additional pathways. We firmly believe that oral paclitaxel has some compelling clinical profile and can potentially address significant medical needs in multiple indications. We look forward to providing further updates. We will now open the call for questions.
Operator: Our first question comes from the line of Robyn Karnauskas with Truist Securities.
Unidentified Analyst: This is on the line for Robyn. Can you -- I know you mentioned that if it's a large controlled trial, you will have to think about it. But can you maybe provide some more clarity on what the book ends are in terms of how big a trial would you go forward with? And what additional color did you get from the FDA that can help you decide what sort of a trial you would need to design? And as far as the time lines are concerned, is the 4Q settled? Is there any additional communication you might have with the FDA in between now and before you submit the design to the FDA?
Johnson Lau: Rudolf?
Rudolf Kwan: Yes. Thank you for your questions. It is premature to discuss the timing of the scope -- of the study until we have the chance to agree with the FDA. I think that will determine what it is. I would say that the FDA basically reiterate the request of the proposal for a well-conducted study, and the focus is on safety. So before -- between now and the fourth quarter, we intend to submit a proposal and have the FDA input. So once we have that input, we will disclose the design. Does that answer your question?
Unidentified Analyst: Yes, it does. And then one follow-up question. So what -- how many patients of data will we see at ESMO and what sort of duration they would be on? Can you maybe provide any color on what to expect at ESMO?
Rudolf Kwan : Yes. We completed 40 – enrollment of 43 patients. And of course, not all of them would have completed the study at the time of ESMO. So will you expect to see a lot more than 22 patients represent in ESMO but not quite the full 43 patient subset.
Operator: Our next question comes from the line of Umer Raffat with Evercore ISI.
Umer Raffat: I have 3 quick ones, if I may. First, I guess, why not do an aggressive refiling? It sounds like you have to run a trial anyway. So why not do that in the context of various decisions FDA has been making in other divisions? Secondly, for this well-conducted study you do have in mind, do you think you could have interim data in second half next year? And I ask because the febrile neutropenia signal was all in the first 8 or 12 weeks from what I recall. So wouldn't you have that very fast? And then finally, I feel like there's a regulatory reason to run a study, but then more importantly, there's a commercial reason to run the study, too, whereby you could establish yourself against sort of the true competitor in the market, which is capecitabine. And I wonder why not run a midsized trial versus capecitabine, not just for regulatory reasons, but really to solve for the ultimate issue, which is commercial positioning.
Johnson Lau: Thank you, Umer. Rudolf?
Rudolf Kwan: Umer, can you repeat your first question?
Johnson Lau: The first question is whether we should consider a more aggressive refiling of the NDA instead of current discussion with FDA.
Rudolf Kwan : Umer, certainly, we are looking at all options. What we reiterate that the FDA is very encouraging and supportive of development in the breast cancer indication. They also reiterate the request for a new study in the U.S. So we take all those into consideration. And certainly, aggressive refiling is still one thing that we'll consider, but it's -- we have to consult with the FDA as to whether that will be acceptable to them. So I think that's all I can say at this time point. Regarding the timing of the second quarter, you're absolutely correct that the more serious febrile neutropenia that occur early, and we believe we have addressed that issue in the pivotal study, although the FDA would like, please, specify study in the U.S., and that's what we will be carefully looking at. So timing, it will depend on the ultimate design, but certainly that important safety signal is correct in occurring in the early part of the study. Regarding the commercial aspect, certainly having a study in the U.S., as the FDA indicated they want, it certainly would have in the eventual commercialization. Does that answer your...
Umer Raffat: I guess would you have data from this study you have in mind in second half '22?
Rudolf Kwan : I think it's too early to define that study. It depends on the design that is acceptable to the FDA. And certainly, depending on the scope and the design, there could be interim results, but I cannot really go more into that until we have an agreement with the FDA.
Umer Raffat: I guess maybe asked a different way, the complete response was back on March 1. And it was very clear that it's heading towards some sort of a trial for submission. And what I'm trying to figure out is, have we lost time, should we not have initiated a midsized randomized trial in second quarter instead of having to wait for FDA to tell us whether single arm is acceptable or not. And I say that because that type of midsized randomized trial was likely very relevant, not just for regulatory but also commercial. And it would have answered all these questions.
Rudolf Kwan: I think it's easy to consider different alternatives. I think the question is where to go to an agreement with the FDA what is required. On the one hand, we explore a more aggressive refining with our new study. On the other extreme, one could interpret the FDA want a repeat of a Phase III program. So it is a dialogue that we -- ongoing with the FDA. Sufficient to say that I think we have a bit more clarity as to what the FDA focus on, which is safety, and they have not -- and they have focused on repeating it's a well-conducted study in the U.S., and that is what we are working towards with them. So I would not speculate whether we lost time or gained time or whether we have the -- what way to go retrospectively. Does that help?
Johnson Lau: Umer, let me add some color here. Your questions are very good with regard to overall strategy, but it's always important to remember that we are working very closely with FDA with respect to regulatory authorities and working closely with them is actually a very important approach that we are adopting. We respect their opinion, and we are working with them together to resolve the differences in the interpretation of the data. And certainly, I mean, there are a range of studies that we can provide. And then for some of the best-case scenario, certainly, we'll have some safety signal already by the second half of next year that I think is the case in case FDA accept our sort of most ideal study design. And I think that hopefully answers your question, Umer.
Umer Raffat: That's very helpful, that's very helpful.
Johnson Lau: Yes, yes.
Umer Raffat: So there's a path for second half next year data.
Johnson Lau: There is a path. But then the key thing right now is that I think we -- as you know, we are always very conservative. We will only share data and opinion once with the agreement FDA is premature for us to make any comment until we have a good communication. And certainly, to be respectful to the regulatory authorities' opinion and work together with them is always the most important component in terms of making sure that the drug that we have is safe for the population and it's helpful to patients. I think we need to really be respectful.
Umer Raffat: Makes sense.
Johnson Lau: Yes. I also want to add, one more component is that on the last question by Robyn about the ESMO. I think that Robyn was also asking with regard to the combination study in terms of extract in the -- to be presented at ESMO in -- the combination study. I think that Rudolf mentioned the study on angiosarcoma. Rudolf, do you want to highlight with regard to the other study that -- on the combination study that Robyn probably was asking about?
Rudolf Kwan: All right. Thank you, Johnson. And sorry for really thinking about the other study. So the study for the pembro study, the presentation in ESMO will include all the initial dose expansion cohort. And that is up around 20-odd patients altogether. So you expect to see all the safety and activity data from that initial cohort. And as we indicate that study, we have gone into the expansion cohort of the first indication of lung cancer, and we are currently planning for the second cohort of gastric cancer. So all those initial cohort -- initial safety escalation, data on safety and activity will be presented in ESMO.
Johnson Lau: Allow me to add some more color. Obviously, one quick question will be whether we’re going to provide data with regard to whether any of these patients were previously anti-PD-1 nonresponders. Certainly, those data will be analyzed, and it will be presented in the ESMO meeting as well with regard to whether the combination of oral paclitaxel with anti-PD-1 will have any efficacy in those patients who previously fail to respond to anti-PD-1 monotherapy. I hope we answered the questions to both Umer and Robyn. Thank you.
Operator: Our next question comes from the line of Kennen MacKay with RBC Capital Markets.
Kennen MacKay : Really very sad to hear about the resignation. Maybe can -- just help me understand what the goal of the second Phase III trial is. It sounds sort of simple on the surface, but I'd love to understand your impression on whether the FDA's request is for an additional study to understand Oraxol's neutropenia profile when it's managed with U.S. supportive care, i.e. essentially requesting you to run the same trial, but in the U.S. with U.S. supportive care in line with U.S. guidelines or whether the goal is to determine whether a better risk/reward profile can be achieved versus that, which was achieved in the Latin American Phase III trial, which I think could result from sort of a narrowed patient population or entry criteria. And obviously, there's a spectrum of patient sensitivities and risk of severe neutropenia. So potentially just utilizing some biomarkers for recruitment or ultimately a label, be it age or comorbidities or medical history, which could delineate a patient population that might be at lower risk for severe neutropenia or febrile neutropenia. Can you maybe just sort of help on which of those 2 scenarios your understanding of the FDA's requested or if it's something else altogether?
Johnson Lau: Rudolf?
Rudolf Kwan: Kennen, the best interpretation we have from the CRL letter and from the Type A meeting, is that the focus of the FDA is in safety data from a U.S. population from a study that is well conducted. So I think that is where we are generally -- afford a generally optimal design to address that. Does that help?
Kennen MacKay: Okay. Sounds maybe more like the sort of former that they're asking for just an understanding of what the safety looks like when it's managed with U.S. standard of care and rigorous supportive care.
Rudolf Kwan: I think it would be my interpretation of the intent in the U.S. population, which basically means using the U.S. medical practice, which they -- because the study did not include any U.S. center of the study. I guess that is the kind of supportive safety data they are looking for. And that is what we are trying to design a study to help them to -- in the data.
Kennen MacKay: Understood. And would it be possible to include either as a subgroup or the stratification of enrollment, a portion of patients who would be anticipated to be at lower risk of severe neutropenia? Or are there any biomarkers upfront that could enable enrollment of those patients? I only ask because that could provide sort of a backup shot on goal, if there is still febrile neutropenia in patients at high risk of neutropenia, then that could potentially provide a pass-to-market in patients who are potentially lower risk, again, if the risk/reward is advantageous for those patients. And again, obviously, we know the efficacy is supportive of that.
Johnson Lau: Rudolf?
Rudolf Kwan: Oh, sorry. Indeed -- Kennen, it's a very good question. Indeed, that's what we are looking at -- with additional analysis, subgroup analysis, and that will all be put into the planning of our proposal to the FDA. So we certainly, take all those considerations in our current additional analysis.
Kennen MacKay: Got it. And maybe just one final question. Obviously, we had talked a little bit about sort of backup shots on goal, as I mentioned. With that in mind, what are sort of the next steps for the angiosarcoma program? Can that Phase II trial be expanded into a potentially registrational trial? And have you talked to the FDA yet about a path forward in angiosarcoma?
Rudolf Kwan: That's exactly what we intend to seek input from the FDA on a path forward. Bear in mind, angiosarcoma is a treatment -- is a disease that has no approved treatment as we speak, and it's a very aggressive therapy. And it is not a common, it's a rare disease, Orphan Drug indication. So 43 patients is not a small number. So we intend to talk with the FDA what will represent an approvable package for an indication. So we will be talking with them.
Kennen MacKay: Got it. And -- apologies, go ahead.
Johnson Lau: Kennen, I just want to add some color here. Obviously, you have heard what Rudolf is trying to communicate to everybody with regard to the fact that the current discussion with FDA was positive. FDA was encouraging us to further develop a value in light of profile of what we have. But certainly, we have to address the concerns. Now if the concern is safety then the study design is only focused on safety. So therefore, to end back on doing a study without having a good communication, FDA will not be an ideal situation. It's always nice to have an agreed study design, hopefully not a big one and then that actually will allow us to accelerate the path going forward with FDA together. Now in relation to that, Rudolf also mentioned that there's an alternative path with regard to angiosarcoma. So how to balance these two in such a way that we can satisfy FDA's concern at the same time, giving the product the best half forward for approval? I think that we are in a very interesting position. We have more than one path and then we have multiple opportunities, and we're trying to make the right decisions so as to use the capital and time efficiently to -- for this product to be available to patients. I think that summarized actually in a different way, Rudolf's comments. Kennen?
Kennen MacKay: Absolutely. Totally understand. And maybe just a follow-up on the sort of the Orascovery platform. Several years ago at your R&D Day, you had talked a little bit about some next-generation PGP pump inhibitors that could even improve on what we've seen within plus oral paclitaxel. Could you maybe talk about sort of where those are in development in terms of, again, sort of a next-generation Oraxol potentially moving into the clinic? And looking forward to hearing more.
Johnson Lau: Thank you. Kennen, let me address the question. So with regard to the oral paclitaxel, the next generation is dual inhibitor inhibiting both the P-glycoprotein as well as the intestinal 384 enzyme. So therefore, it’s more sort of designed for oral docetaxel in which docetaxel is a 384 substrate, the 384 substrate. With regard to oral paclitaxel, we do have a tablet formulation, which we can load more of the paclitaxel in the tablet ongoing. The pharmacokinetic studies already completed, and the data will be presented at the appropriate time. Where we stand right now is that we have the cash flow formulation ready and is doing very well. And we believe the profile looks really, really good. And again, the further development of oral paclitaxel will be more in line with the tablet formulation. Where is cell for oral docetaxel, which we already shown very good Phase I data, that one will be a perfect substrate when we are going to study our second generation, which were paid extension up to 2034, 2035. I mean I think that is the path forward in terms of developing the first and second-generation PGP pump inhibitor. I hope I answered your question, Kennen.
Operator: Our next question comes from the line of Kevin DeGeeter with Oppenheimer.
Kevin DeGeeter: Yes, I'll try to keep this surfaced. Maybe one for Dan. Dan, can you talk a little bit about the KUR-50 -- I guess, it's program into moving towards IND kind of how you're thinking about target product profile there? And just a little bit more with regard to -- from a structure and profile standpoint, how similar, dissimilar contract is to the 2 clinical stage programs, if your license is part of -- or that you acquired as part of the acquisition?
Johnson Lau: Dan?
Dan Lang: Sure. Kevin, thanks for the question. So for GPC3 CAR, NKT, we are planning to submit an IND sometime in 2022. And the target profile of the drug that we're looking for is hopefully, that will serve a balanced risk/reward benefit for these patients that have very little options for treatments. As you know, some of the first-line and second-line treatments are really undesirable and the clinical efficacy is really suboptimal. And liver cancer is a very large indication primarily outside the U.S. So once we have more information on the preclinical data, which is still ongoing, we'll be able to provide more information about the target profile of this product sometime next year.
Kevin DeGeeter: And the other thing you highlighted substantial abstract submission for ASH in December. I just want to clarify that, that was for ANCHOR and just more generally, how should we think about number of patients and scope of that potential update.
Dan Lang: Sure. So yes, the abstract that we have submitted to ASH is for the ANCHOR study. As a reminder, this is an allergenic CD19 CAR-NKT cell. When we acquired Kuur back in May, we had disclosed that out of the 2 patients that were enrolled so far at the lowest dose of 10x7 per mile square, out of these 2 patients, we saw one PR and one CR. So Kevin, expect to see more patient data at ASH, and we’re excited to present the safety as well as the efficacy of the ongoing clinical experience that we have so far.
Operator: Our next question comes from the line of Yale Jen with Laidlaw & Company.
Yale Jen: Just I have 2 here. The first one is you mentioned that you will combine the TCR-T and the NKT platform together, I'd just like to get a little bit more color in terms of what specifics you are thinking of.
A - Johnson Lau: Dan?
Dan Lang : So thank you for the question. So as you know, we have an high-affinity TCR that targets the NY-ESO antigen that is expressed in a number of different cancers, including lung cancer, head and neck cancer, triple-negative breast cancer. So one scenario could be for us to combine the TCR that we have against NY-ESO with the NKT cell platform. So that we would have a allogeneic approach targeting NY-ESO. And that we'll be able to -- we can test that in a solid tumor indication. Well, we already have some preclinical in vitro and in vivo data to show that these NKT cells could perform quite well when you insert a transgene that has the TCR sequence income. And that we've been able to show that these NKT cells or the TCRs are able to kill tumors, both in cell lines and also in vivo. One other thing I'd like to kind of remind everybody is that NKT cells have a great ability to hone to tissue, primarily tumors, in particular, liver. In humans, it's estimated up to about 10% or 50% of NKT cells are residents within the liver.
Yale Jen: Okay. Great. That's very helpful. Maybe one more question here is that you are about to start the TCRT-ESO-A2 trials in this quarter. Could you give us a little bit more color in terms of the study design and any other color related?
Dan Lang: Sure. So this is a Phase I study, primarily looking for safety. This is a high-affinity TCR target against NY-ESO and it's an autologous T cell approach. Since we already have some clinical data from our partners, we're actually starting at a very high dose at 1 billion cells in our first cohorts. And then I think the mix dose is $3 billion and then going to $10 billion. And we are looking to enroll patients with the NY-ESO antigen for which we have developed a proprietary IHC study -- IHC test to enrich for those patients as well as those patients that are -- that have an HLA-A2 subtype. There are 5 different solid tumor indications that we're going after, and they include lung cancer, head and neck cancer, synovial sarcoma, triple-negative breast cancer as well as -- one last one is the liver cancer.
Yale Jen: Okay. Great. And I assume you were looking for the signals as well when -- kind of one point of the study. Is that correct?
Dan Lang: Absolutely. Yes. There will be, obviously, correlative studies relating to PK, both in the blood and hopefully in the tissue as well as the traditional scans and imaging that you would expect for a Phase I study of this nature.
Operator: Thank you. Ladies and gentlemen, this concludes our question-and-answer session. I'll turn the floor back to Dr. Lau for any final comments.
Johnson Lau : Thank you everyone for joining us today. We’ll continue to work with the FDA on a viable path forward for oral paclitaxel in metastatic breast cancer. At the same time, we are working on an additional path for oral paclitaxel through an Orphan Drug Designation. With the compelling clinical profile demonstrated by this drug candidate, we are also excited by the progress seen in the ongoing study of oral paclitaxel in combination with pembrolizumab. Our cell therapy programs are advancing nicely, and we look forward to sharing more clinical data in upcoming scientific meetings. On the commercial front, Klisyri has already received regulatory approvals in both the U.S. and Europe. We have established partnerships in all key geographic areas around the world, which will bring – help bring this variable therapy to more patients in need. We appreciate your attention and interest and look forward to providing more updates in the near future. Thank you.
Operator: Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.
