Q4 2019 Earnings Call

Good morning, and welcome to the Rubiales Therapeutics fourth quarter and full year 2019 financial result in strategic update teleconference and webcast.

At this time, all participants are in listen only mode.

Later, we will conduct a question answer session and instructions will follow at that time.

Please be aware that today's webcast is being recorded.

I would now like to introduce the first speaker mourn the loss on Vice President Corporate Communications and Investor Relations you may begin.

Thank you operator, good morning, and thank you for joining us for fourth quarter and full year 2019 financial results and strategic update you may refer to the slides posted to this event within the Investor and media section of our website here with me today, our Chief Executive Officer, Dr. Pablo can yoni.

Keith Medical Officer, Dr., Kristina Coughlin, Chief Scientific Officer, Dr., Lawrence target and Chief Financial Officer Antonio.

As a reminder, the forward looking statements that we make during this call, including those regarding our business goals and expectation for the financial performance of the company are subject to risks and uncertainties that may cause actual events or results to differ additional information concerning risk factors is included in <unk>.

Annual report on the form 10-K, the current report on form 8-K, which we are filing today and other filings that we make with the Securities and Exchange Commission today's comments reflect management's current views, which could change as result of new information future events or otherwise the company has not.

Obligate or commit itself to update forward looking statements, except as required by law before I turn the call over to Pablo I would like to note that we do not intend to begin hosting quarterly webcast conference calls we're doing so at this time given the significance of these strategic update and we thank you for your time Pablo.

Thank you Laurie good morning, I think ever joining us for this important update.

This morning were reported our fourth quarter and for your financial results for 29 team along with this updates announced their reprioritization of our pipeline a red cell therapeutics to focus on oncology and autoimmunity.

This decision allows us to focus on the areas in which our Red platform me off for the greatest potential benefit to patients.

Well the past two years, we have generated and presented exciting preclinical and called you data demonstrating the ability of our red cell therapeutics to both broadly activated immune system and induced tumor specific responses by activating an expanding antigen specific T cells with our artificial under 10%.

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The totality of preclinical data shows our oncology product candidates are highly potent interact rapidly with immune system shrink and in some cases, nearly eliminate tumors and appear to be well tolerated.

Not only do we absorb striking resold in vivo, you'll see mouse surrogates systems, but also in our in vitro studies using human healthy donor peripheral blood mononuclear cells or P.B.M.C.

We believe this data supports the ability of our RC teas to specifically activate expand and induce cytokine production and not the just specific T cells, giving us confidence that this data may be predictive or what we expect to see in the clinic.

[laughter] or this year, our investigational new drug or I N D application for our T X 240 for the treatment of solid tumors was cleared by the U.S. hefty anyway, and we plan to announce when the first patient has been terrorist into phase one clinical trial.

We are working with a superb group of oncologist with experience in the development of cellular therapies and are in the process of initiating clinical trial sites.

Additionally, we plan to fall in R&D for our first APC program or T X three to one a red cell therapeutic designed to expand antigen specific T cells for the treatment of human papilloma virus or H.P.B. policy of cancers by year end.

We recently announced that our state of the yard manufacturing facility and Smithville, Rhode Island was operational nine months ahead of schedule with this capability now in place where well position to provide consistent revpor do simple high quality GMP, great clinical supply for our soon to start oncology clinical trials.

Our team in Smithfield has successfully executed 10 consecutive manufacturing runs in preparation for the I've Gx to 40 phase one clinical trial.

Going forward all of our clinical supply and eventual commercial supply will be manufactured at this facility.

Furthermore, we have the potential to significantly expand manufacturing capabilities, our facility and plan to gain additional investments based on future supply needs.

In addition to the exceptional team assembled in Smithfield, we have strengthened our leadership team by adding oncology and immunology expertise.

Dr. Kristina Coughlin, Chief Medical Officer isn't oncologist, and immunologist with extensive experience, leading clinical development and translational medicine teams with a particular focus and cellular therapy.

Dr. Larry Tarka, it's an internationally recognized distinguished decision scientists with deep expertise in autoimmunity and transformational immunology.

Letting the call <unk>, each provide an update on oncology and documentary programs respectively.

Well, there's increased focus in oncology and ought immunity, we have decided to discontinue the out TX one through four phase one clinical trial for the treatment of phenylketonuria entered deprioritize are rare disease pipeline.

Multiple factors contributed to this decision including.

The unanticipated delays and the objects once before program largely due to continued manufacturing challenges that our CMO.

She's administration of the first dose report TX once before in January our CMO has now produced a single use simple badger BARTEX once before despite having patients available for dosing.

Even with the matches were put in place to correct. The operational challenges, we experienced last summer and early fall, including embedding a rubis oversight team at the CMO site. The CMO continued to underperform.

The second factor contributing to our decision to de prioritize are rare disease pipeline is their hard cost associated with producing chronic high dose therapy for enzyme deficiencies.

It became clear the continued investments required to advanced heart, TX one through four at this point in time would be idea expense or what we believe are more promising programs with encouraging preclinical data in oncology and taught immunity.

Finally, the third factor is the continued momentum of oncology pipeline.

Well, we initially began developing our TX once before we expected to rapidly generate proof of concept data that would all locked the potential of the answer replacement pipeline and give us confidence that administering an engineer red cell to a patient was well tolerated, which potentially would have been extrapolated across the platform.

With a continued delays in New York Gx once before program the likelihood of generating early proof of concept data in the near future is low and this together with acceleration of oncology pipeline does not support continued investment in the program.

Well this may not be the right time to continue to develop into vortex wants to before we believe that objects 134 could provide patience with their well tolerated convenient and effective treatment option to lower funding accounting and allow patients with PK you to enjoy a normal diet.

Future capital investments and continued improvements in manufacturing efficiency together with enhancements to the Red platform may enable us to revisit chronic high dose dependent conditions in the future.

Today, we also provided information on the first patient I was dosed in January as part of the fair Phase one big clinical trial.

Okay next month before administration was well tolerated and there were no reported adverse events.

Beyond safety the results from the first patient work on interpretive will possibly due in part to the low self administered and the sensitivity of the false cytometry I say used to evaluate so circulation into patient.

Unfortunately, we cannot draw any conclusions based on data generated from the single patient dose into trial.

The resulting cost savings expected from the discontinuation of the objects wants to do for clinical trial and that the prioritization of PK, you and other rare disease programs and a reallocation of capital resources and personnel enables us to extend our cash runway into 2022.

And it will give an update on our financial results later in the call.

But focusing on the development of our oncology, notably in pipeline. We believe we have the greatest opportunity to bring lifesaving therapies to patients and to increase shareholder value.

I would now like to turn the call over to Dr., Chris Coldren to provide an update on our exciting oncology pipeline follow up I talked a lot <unk> will provide an update on our autoimmunity programs Chris.

Thank you Pablo.

Well checkpoint inhibitors and other immunotherapy modalities of revolutionized cancer treatment. There are limitations as a class are becoming increasingly evident and new approaches are needed.

Sponsors to checkpoint inhibitors alone our confined to certain tumor type and only a small portion of patients are cured.

The current challenges in immuno therapy are one to induce responses in refractory ore immunologically cold tumors and to increase the rate and duration of anti tumor activity in patients who respond to existing immuno therapy option.

To that end, we designed our T X 240, and allogeneic cellular therapy engineered to broadly stimulate the adaptive and an eight arms of the immune system and generate an effective anti tumor response.

Our tax to 40 expresses hundreds of thousands of copies of four one BB lag in an ideal 15 on the cell surface, which mimics the presentation of these signals in the normal cells fell communication in the immune system.

These two key signals and Synergistically on T cells, and natural killer cells or NK cells.

Leading to both cell activation and proliferation, resulting in tumor cell killing.

We believe that RTL to 40 provides a potentially transformative and differentiated approach to treat immunotherapy naive patients as well as in patients, whose disease has become resistant or refractory to immuno therapies, including checkpoint inhibitors.

[laughter] as Pablo mentioned.

Hi, Andy for RTL to 40 in solid tumors has been cleared by the F.D.A.

We are currently well into the process of initiating our clinical trial sites and we plan to announce when the first patient has been dose in the phase one clinical trial.

Following monotherapy dose escalation, we plan to evaluate our T X 240 in combination with a PD one inhibitor and other immuno therapy.

In addition to solid tumors, we plan to evaluate Rts to 40 in patients with acute myeloid leukemia or AML.

AML cells are known to inhibit the differentiation and function of NK cells, thus decreasing their cytotoxics potential.

The resulting NK cell dysfunction is thought to contribute to disease progression and am out.

Furthermore, it has also been observed that NK cell function, both during and after treatment is linked to the response to therapy underscoring the role of NK cells in this setting.

And our preclinical studies are T X 240 induces both activation and proliferation of NK cells supporting the clinical evaluation and the setting of relapsed or refractory AML.

Once initial safety data have been generated in the phase one trial Archie X 240 could be evaluated in the post to matter poetic transplant setting.

Where the NK population could contribute to the graph persons leukemia effect of the transplant.

We expect to provide an update on the timing of the ammo program at a later date.

Ultimately the goal in the R. T X 240 clinical development program is to improve antitumor activity and overcome resistance to immuno therapy in patients with both solid tumors and hematologic malignancies.

I'd like to now turn to our second approach in oncology RTL three to one our first artificial antigen presenting cells program.

In contrast to our T X two fortys broad immune system stimulation, our T X three to one targets a specific antigen in this case, the human papilloma virus 16, or HPV 16.

Well a number of different therapeutic modalities are under development to activate and expand endogenous T cells that target a particular antigen and be though to date. These approaches in general have had limited efficacy.

To address this clinical need and HPV induced cancers, we developed our T X three to one which expresses an H.P.B. peptide antigen fountain MH C class one along with four one BB like again and I all 12 on the cell surface.

As we have shown in our preclinical studies with human P.B.M.C. When these three signals are expressed and delivered simultaneously on the surface of a red cell therapeutic Archie X three to one promote antigen specific T cell expansion.

You know kind production inside a little activity, resulting in killing of tumor cells.

Importantly, using m. RBC three to one our murine surrogate RCT, we have preliminary preclinical evidence of epitope spreading.

Epitope spreading means that the murine RCT is able to not only generate an effective immune response to the selected target antigen, but two additional tumor antigens as well, creating a broader anti tumor immune response.

Thus, we are able to induce anti tumor immunity and our surrogate murine models.

We had planned to present these data next month at the annual HCR meeting.

We plan to share these data at the rescheduled meeting or via another conference.

We're very excited about these preclinical data because they suggest our T X three to one may address two key limitations of other antigen specific immuno therapies, including car T cell therapy.

First our T X three to one significantly activate and expands a response against multiple tumor antigens through epitope spreading.

Therefore tumor antigen loss would not be an anticipated resistance mechanism to our T X three to one.

This is in contrast to the car T therapy is where antigen loss has been a major resistance mechanism.

Efforts in our translational studies in this trial will seek to define the immune response and epitope spreading in both the tumor and periphery and the patients treated in our phase one clinical trial.

Second.

Our T X three to one may more effectively control the expansion of tumor specific T cells and is that's expected to have better Tolerability, then that which has observed with effector cell therapies, including car T.

Current treatment options for relapsed and refractory HPV driven cancers are limited and we expect to be able to offer patients a therapy that induces potent and highly specific immune stimulation with better Tolerability, we plan to file and I Andy for our T X three to one by the end of 2020.

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Taken together, our two distinct approaches in oncology to both broadly stimulate the immune system and induce a tumor specific immune response through antigen specific T cells may dramatically change the cancer treatment landscape and improve the long term outlook for patients.

I would now like to turn the call over to Dr., Larry target Chief Scientific officer to provide an update on our auto immune programs Larry.

Thank you Chris over the past two decades considerable progress has been made in the treatment of autoimmune disorders. As a result, many patients enjoying improved quality boy.

However, despite treatment successes available therapies for auto immune diseases have significant limitations because typically these therapies need to be administered on a chronic lifelong basis.

Just as importantly, many treatments failed to provide adequate benefit to patients and many patients diseases will eventually progress despite continued therapy.

Furthermore, these existing treatments are associated with side effects that include cardiovascular disease opportunistic infections cancer and in some cases, even severe in fetal reactions to the therapy itself.

Well the triggers of most auto immune diseases remain unknown. It is generally understood that auto immunity is the result of a loss of tolerance to one's own antigens in cells.

Accepted model of disease assumes a background genetics susceptibility, which when triggered by an environmental event leads to a loss of tolerance with the resultant breakdown of immune regulatory mechanisms such as T cell mediated immune suppression in.

In principle restoration of peripheral tolerance should provide patients with the C for alternative to non specific immune suppression and potentially the cure of their disease.

We engineer Red cell therapeutics to express specific auto immune disease associated antigens, either within or on the cell surface to take advantage of how the body normally maintain self tolerance, thereby retraining the immune system to no longer C D cell antigens as foreign.

In addition, we have the ability to express immune modulating cytokine enzymes for inhibitory signals, which may have the potential to enhance the tolerant janick effects of RC cheese.

We believe RC piece can be designed to more specifically marginally complex counter regulatory immune responses and enable greater efficacy with lower toxicity potentially providing treatments for a number of diseases and in some cases potentially even cures.

Our preclinical data suggest that red cell therapeutics, expressing surface bound antigens or capable blocking immune responses to those antigens potentially inducing tolerance, which is the ability to prevent ongoing responses without a need for continued immunotherapy.

In preclinical studies using models of central nervous system inflammation and auto immune diabetes, we achieved successful modulation of immune responses by expressing the relevant antigens on RC cheese.

We believe that induction of tolerance as possible from many other antigens with similarly expressed on RC cheese.

We continue to learn more about our platform. We're now focusing on t. cell mediated auto immune diseases and are pursuing type one diabetes, along with a number of other undisclosed programs.

We are earlier in the development of our autoimmune pipeline, then oncology and expect to provide an update on our progress in the future.

I would now like to turn the call over to Andy O <unk>, Chief Financial Officer to provide an overview of our fourth quarter and full year results.

Andy.

Thank you Larry.

Our net loss for the fourth quarter of 29 seen was 44.5 million or 56 cents per share compared to 27.2 million worth 35 cents per share in the fourth quarter of 2018.

In the fourth quarter of 29 seen Rubiales invested 30.5 million in R&D, specifically towards enhancing our novel rent platform and towards expanding and advancing our product pipeline as compared to 16.5 million in the fourth quarter of 28.

This year over year increase was driven primarily by 3.9 million an incremental R&D program spend related toward phase one be clinical trial for our tier 134 and towards preclinical and I'd, enabling activities for our lead oncology programs, including our checks to 40.

In addition, 6 million an incremental R&D spending was driven by increased R&D headcount.

Moving to larger facility and purchasing lab supplies to support expanded research activity.

Contract research and development costs increased by 3.3 million and R&D stock compensation increased by 0.8 million.

<unk> expenses were 14.9 million during the fourth quarter of 29 theme as compared to 12.6 million for the fourth quarter up 28 seen higher costs were primarily driven by a 1 million increase in personnel and facility costs due to increased headcount as well as increases.

Professional fees and infrastructure costs to support the company's growth.

Now turning to our full year financial results.

Net loss for the full year, 2019 was 163.5 million or $2, an eight cents per share compared to 89.2 million or $2.27 per share for the full year 2018.

In 2019, we invested 112.4 million and R&D towards developing our rent platform and towards expanding in advancing or product pipeline compared to 51.8 million for the full year 2018.

This year over year increase was largely due to an additional 31.8 million in R&D personnel contract research and development facilities and lab supplies and 23.7 million in R&D program spending including cost related to the Archie X 134 phase one big clinical trial.

As well as preclinical and R&D, enabling activities for our lead oncology program, including our tier 240, R&D stock compensation increased by 5.2 million in 2019.

During the 12 month of 29 team DNA expenses were 57.2 million as compared to 39.9 million for the same period in 2018 higher costs were primarily driven by an 8.5 million increase in stock compensation and 8.8 million increase and personnel costs professional.

<unk> to support our growth and to operating as a public company.

Now moving to our cash position.

As of December 31st 2019, our cash cash equivalents, an investment totaled 283 point threemillion as compared to 404.1 billion as of December 30, Onest 2018, providing verbiage with a cash runway into 2020 to.

This represents a shift from our prior cash from my guidance of mid 2021, due to cost saving measures and reallocation of resources.

I don't think from our decision to focus on oncology and autoimmunity. During the year, we used 110.4 million of cash to fund operations and 40.7 million to fund capex, including work related to the Buildout of our Smithfield, Rhode Island manufacturing facility.

In addition, the company drew down a second tranche of 25 million in June 2019 from our 75 million loan agreement, which leaves a third tranche of 25 million that can be drawn by June 2020 subject to the satisfaction of certain financial covenants I would now like to turn the call back over to Pablo.

Thank you Andy.

Sure I've heard we have a number of exciting activities planned for this year across her oncology and audience programs, where we believe our red platform could have the greatest opportunity for patients as well as her shareholders.

Looking ahead of this year, our focus will be on the following.

Initiating clinical development for our first oncology product candidates are TX to 40 for the potential treatment a solid tumors.

Delivering GMP product from our own manufacturing facility to support near term oncology trials.

Finally, going I, indeed far second oncology product candidate and first a b C. R. T X three to one for the treatment of patients with HPV positive tumors by year end and advancing the discovery efforts for our seat cheese, focusing on the treatment of autoimmune disorders, including type one diabetes.

With a streamlined strategic focus experienced team are fully owned and operational manufacturing facility and cash runway that takes us into 2022, we are well positioned to execute again this priorities and bring this potentially life saving therapies to patients. Thank you for joining us today.

We'll now open the line for questions operator.

Thank you ladies gentlemen to ask a question you need to press star one on your telephone.

To withdraw your question press the pound key.

Please standby will be compiled acuity roster.

Our first question comes from Michael Yee with Jefferies. Your line is open.

Hey, guys. Good morning, and thanks for the question I mean, I guess there are two positive take away that you question that you positive takeaways are your ability to make your own drug now and you don't rely on the CMO should that doesn't hold things up and I guess the cancer timelines will almost come around the same time as PK you show.

That's a that's not much of a delay go forward, but if that's the case I guess my two questions are number one on T.K. you can you at least make a comment as to what timelines you looked at or what time points you looked at the shells and whether they are around for weeks at least for weeks, maybe just makes him comment on on any info.

Commission gathered in PK you.

And then the second question is on to 44 oncology, maybe shed some light on at least some estimated time lunch for doshi and getting some patients and then presumably at least confirm you do believe log data. This year, maybe talk some of that thank you.

Thanks, Mike Good morning, ER. So let me take the first question, which was a about the object one three for a program.

So as I mentioned in my prepared remarks, due to the low dose themselves and the fact that our flow cytometry tasks underperformed under real life conditions I I don't believe the results are interpretable in any way other than a positive which is this is the first time that an engineer red cell manufactured by.

Dr has been given a true to <unk> patient and administration was well tolerated and no adverse events were reported I think that's a really important read through for the rest of the platform that was one of your questions rehab, which was is going to be safe when administered and we can say that youve won.

Right it.

Beyond that.

And you might recall that we had this conversation before that I've always had been very remiss to problem is that we would have an interpretation of the data base on a single patient treated so because of that together with a lower goes in this and this patient together with the.

Poor performance of the flow I don't think we're going to go any further because of interpreting that data. Let me know a couple of comments about the objects to 40, and then I'll hand, it over to crews Coughlin, our CMO for four additional color.

First of all we're delighted to this was our second I N D and for the second time Guy and he was clear in 30 days by the FDA, which we've taken some very positive sign from the perspective, a good quality pockets, where we submitted and the confidence that the FDA has and the quality of that Packers regarding the timing. It you could imagine we're now ready.

To provide clear guidance, yet, but let me hand, it over to Chris for some of this additional color on this on this program.

Thanks, Pablo Yeah, we're well on our way to opening our sites for the RTL to 40 trial, we're working with a fantastic group of oncologist, all with cell therapy experience and many of whom I know personally and I've worked with in cell therapy trials very recently in my previous roles.

These centers have been Handpick, there's an established clinical trial infrastructure here for cell therapy.

And we expect to successfully deliver on this trial.

It'll start with a monotherapy dose escalation, we are planning to develop and A.M.L. as well followed by a combination development and as Pablo mentioned look is updates later on the timing.

Okay. Thank you yes.

Thank you. Our next question comes from Michael Schmidt with Guggenheim. Your line is open.

Hey, guys. Thanks for taking my questions I heard a question on the RTL to 40 on Phase. One study maybe first can you help us understand how the how the dose and so the plan a dose ranges in this phase one study maybe compares to.

What you plan for the our tier 134 program and then also I guess you confidence level in those doses producing that side effects, maybe based on preclinical data.

Barton Michael Thank you for the question, let me make a couple of comments and then I'll hand, it over a short chief scientific officer to comment on some of the managers. So some of their biomarkers that we're going to implement into 240 program.

The doses in the objects to 40 are as Weve discussed before that doesn't oncology in general we predict are going to be lower starting center Kettering area and that's an important point.

Because one of the reasons or the decision I. We took today is that high cost Oh manufacturing large quantities themselves potentially for treatment effect. If you don't know area. So.

That's a really important point that I want to I want to highlight the second part is.

We suggested to the FDA certain starting dose and after a discussion with the agency. We settled starting goes that is as you can imagine for an aggregate as does a little bit over the last side, but still were very positive about where we ended up with the starting dose for this study and about our ability to escalate that goes reasonably.

The most important thing in oncology, though and you and I had this conversation before is.

The fact that architects to 40 is intended to be administer and rapidly interact with the immune system with different components of the immune system, such as T cells and NK cells and those cells will then traffic to the tumor and deliver the therapeutic effect on in fact, that's exactly what we've seen in animals, we've seen how does rapid and.

Dramatic expansion of effector T cells and others snowed in this plane and then those cells migrate to the tumor and they deliver very strong therapeutic effect any vivo models. So let me hand, it over now to Larry to comment a little bit farther on some of the Pharmacodynamic studies that were going to do as part of your LTX reported clinical program.

Great. Thanks Pablo.

The problem mentioned the key in this study is not necessarily going to be.

Clinical effect, it's going to be the pharmacodynamic effects of the drug and as such and again. Its Paphos mentioned, we're going to be looking at effects on the target cell population T cells and NK cells will be looking for expansion of T cells and NK cells in the blood, we'll be looking for activation by itself surface markers and potentially in vitro assay is a cytotoxicity.

And really importantly, Ross can be looking at tumor biopsies, because obviously, that's where the action is we expect to have a T cells. It NK cells recruited into the tumors and activate tumors, we'll be able to compare tumor biopsies pre therapy with tumor biopsies post therapy, a critical comparison and through a variety of means including.

Looking at T cell receptor repertoire, as we'll be able to understand whether we've increased the commonality and diversity. If the response to tumors and as I mentioned assessing T and NK cell activation.

Thank you Larry.

Great. Thanks, and then maybe just one follow up so with led the RPX to 40, it's something we're one would expect seamless connectivity or if it's really a position as a coffee nation.

Partner for something like a PD one inhibitor.

Chris Why don't you commented that yes. So we're taking a look at both of these in the phase one trial, we do anticipate monotherapy activity potentially and some of the solid tumors and then yes, we do plan to take a look at this as well in combination with 31 inhibitor.

Okay, great. Thank you.

Thank you. Our next question comes from Jonathan Chang with S. easily rank your line is open.

Good morning, Thanks for taking my ordering.

First question No continued manufacturing challenges at the CMO is one of the reasons for de prioritizing PK you.

Can you provide this any additional color on what these challenges were and what the lessons are off your own manufacturing process and the oncology applications.

[noise], yes, the Jonathan so.

As I mentioned in my prepared remarks.

Since weve doors that patient and we announced that our CMO has been unable to successfully manufacturer batch of projects wants to do for 10 minutes situations.

That's despite of a number of actions that we though that we put in place. The late summer early fall. When we had initial challenges from that facility that led to us embedding a team having a number of meetings.

With that with the CMO, a management team and try to implement some solutions, which we did that led to some successful runs which allowed us to an issue of the clinical trial and then followed by by additional failures. They're more recent failures had to do with a number of factors for example for materials management or require less.

Last minute procurement activities to keep runs in progress and sometimes.

To the Detriments over specific run of the process duration changes as a result, there was talk out issues. For example, some operational inefficiencies that impacted process flow. So there's been a litany of problems or other CMO.

So the second part of your question is what gives me confidence well first of all your thoughts about lessons learned I tell you that mean lessons. We've learned is when you are trying to manufacturing a complex biologic that nobody has ever done before you have to control your own manufacturing.

I think we made that decision very early in the journey of this company, we make that decision a month after going public and.

I think you might have been the best decision wherever made as an organization.

Importantly from that point on we did everything we could to accelerate having our own manufacturing facility fully operational as we deliver that almost a year ahead of schedule. The reason why I have confidence is that's a team that I know personally we recruited all their key individuals.

And that team has now conducting 10 consecutive successful runs and as Jim you're ready and ready to go. So I'm confident that can deliver solid for our T X 240, and I'm confident we will not have the same manufacturing challenges that we had one.

Got it thank you and just second question.

Why not wait until their data available at the next dose level before de prioritizing.

The challenge there. This is a really difficult decision Jonathan as you can imagine and a lot of effort on investment I went into this and with the arrival of sovereign a few months ago, we really revitalized yard TX one through four clinical program to the point that we had patients ready to go.

Oh, we couldn't manufacturers cells to continue to trial I think continued to wait to make thought decision would appetite would have been at the expense of investments in oncology and autoimmunity and while these are really difficult decision to make at some point in situations. Like this you have to decide that enough is enough and you have to stop.

Certain activity be able to invest on something that we are convinced as much higher potential eight to deliver a important clinical results to patients and potentially to great about your shareholders as you and I discussed in the past, we believe I believe that the biggest opportunity for the spot from as you know College you note immunity.

As a result of bad debt.

Difficult as it was I'm convinced this was the right time to make this decision and I'm convinced as is the right decision for the company.

Got it thank you.

Thank you. Our next question comes from Matthew Harrison with Morgan Stanley. Your line is open.

Oh, Thanks, good morning to from me I could be for.

You know given the operational blade <unk>. This year now given the progress made internally wine on which to manufacturing more 134, and turn on where you're going on.

Yes, it's an excellent question Matthew the reason why.

We decided not to do that a would've been an additional delay.

You can't just transfer manufacturing.

Immediately from one place to the other and included in that I would have required an idea amendment because it's a different manufacturing facility. The original lines you Fortyx once before was filed with a certain manufacturing facility. So I think that would have created an additional delay.

And still and ER and rest of the near term army whatever requires significant capital investments to continue to increase the capacity to manufacture once before for which the dose is much higher than four to 40.

And you said you added Paulo.

Yeah, Yeah. So I guess the second thing is on you know as we think about oncology can you just talked to US what you view as proof of concepts from those initial studies what that data may look like et cetera. Just said, we have some idea of what youre looking forward to establish proof of concept.

Oh, sorry, let me have Chris, Scotland, calling it sounds that Chris so probably the most critical parameter that we're going to look at initially are the mechanistic effects of the drugs is as Larry mentioned earlier.

I'm understanding if the drug is is doing what we expected to do the T cells of the NK cells.

I have been activated and are proliferating and the patient we expect this to occur rapidly.

We also expect Pharmacodynamic effect last.

Oh for some prolonged period of time and ultimately as we see in our animal model, we see tumor shrinkage and we expect to see that initially in the patience with solid tumors.

And when we move into the human to logic malignancies will be dosing the drug right there where the I'm also Saar, we expect to see I'm blast counts decreased.

And similarly, when we move into combination with PD. One I've. We expect these are two agents to act synergistically.

Let me just as ER emphasize one point.

As you know, what's your extreme forties and agonist right.

Two different signals on the same sell for won't be lying out 15, TP. Both very powerful agonized are we going effect on T cells and NK cells. As a result of that I think we have a reasonable expectation that there will be a single agent activity did you early data, we're going to see as Larry and crews have highlighted from.

On a biomarker data, we're going to put in place and Thats a T cell expansion activation NK cell expansion activation, both in the periphery and through tumor biopsies, but I think there's a reasonably high probability that we'll see a single agent activity when it comes for clinical efficacy in certain tumor types Matthew.

Okay. Thanks Bernard.

Yes.

Thank you. Our next question comes from Jessica Fye with JP Morgan Your line is open.

Hey, guys. Good morning, Thanks for taking my questions I'm following up on one of the earlier questions do you have TMB supply of Rdx to 40 ready to start dosing in the phase one and it's not one will you have thought.

Hi, Good morning, just Oh, no watch as you know the shelf life projects to 40 is approximately 45 day. So we can store it.

We have an effort as we discussed before on prior preserving a red cell therapeutics about airports is moving very rapidly, but we're not ready to provide guidance on one that's going to be ready. We have conducted as I mentioned earlier now 10 consecutive successful runs our facility is ramping up and ready.

It could go to initiated clinical for objects to 40, so I'm confident we're gonna have supply.

Okay, one we have that.

The manufacturing is going to be initiated we're basically conducting a series of runs a almost continuously to be ready to start a clinical trial as soon as sites are open.

I see okay.

Thanks for the 240 trial will that be single dose escalation or will patients get multiple doses from I'll start and also curious at what time point post treatment, a you're gonna be taking a biopsy.

Let me comment at the first part and then I'll ask Chris to come in the second no. It's not a single dose study is that standard.

All the oncology dose escalation study, but its continue dosing until I was in any other oncology trial, either progression or an adverse event requires you just job dosing so as not as continue dosing, Chris you want to comment on timing for the biases sure. Thanks, Pablo following the animal data, where we've seen a couple.

All of doses of Archie execute 40 and do.

Tumor.

Changes, we'll be taking the post treatment biopsies. After he does a second or third dose I'm in the Trialing and again these will be compared to the free dose biopsy to take a look at some of those effects in the tumor.

And so how far how long after the initiation of treatment.

So the overall.

Yeah, each of the doses will be given every six weeks and so the biopsies will be taken after that first dose and after the second.

After the first desktop is okay.

And then just bigger picture.

It seems like over the past year show you weren't talking too much about the auto immune platform is that just coming back into focus because you're moving away from rare disease or is there a reason that you can't see more excited about that vertical again.

Oh, Great question I'm going to ask Larry to make a couple of comments here, but first let me let me answer your question about the past year.

I personally have been very interested and excited noted immunity from the beginning it was one of the key reasons why I came to me because I.

I think that over the past 12 18 months a as you can imagine there's been a lot of competing pairs in the company. We were trying to get the first ever a clinical trial for this modality off the ground. We were building a manufacturing facility and because of the impact potential impact a in oncology, we were generating a lot of pick one.

Nickel data in oncology and I wanted to accelerate that part of the pipeline as much as possible.

I think with their recruitment of Larry which was a deliberate decision is a world of expert and tolerance induction I thought it was important to have somebody like him and the organization really.

Refine our auto immune tolerance induction strategy. So when his arrival and he is now how to little bit of time. Today again, we are really reprioritizing as part of the sat for autoimmunity, because honestly I think it's the two areas with this platform has the biggest potential Larry.

Her comment no. Thanks Pablo.

Just a one of the reasons that so attractive being excited me about joining rupee us was because of the incredible potential not only in oncology, but also in auto in quantity and there's been a as Pablo mentioned a lot of the efforts and recently have been devoted to getting the oncology program.

[noise] into the clinic and now we have the opportunity to do the same thing in auto immunity Theres, a wealth of preclinical data from our own work in other work up by other investigator showing the potential of modulating auto immune responses by putting antigens on red blood cells, and I'm really excited that were a big going to be.

<unk> efforts to do that in a variety of T cell mediated diseases, and hopefully being in the clinic very soon.

Thank you.

Okay. That's going last financial question for Andy just when we think about that cash runway you provided how much of the burn between now and that into 2022 timeframe will be opex versus Capex and does that runway assume you take down the third 25 million dollar tranche.

So Oh I'll answer your last question first or whether we take down that tranche or not we will have a cash runway into 2022.

Regarding capex now that are Rhode Island facility is operational you're going to see a significant drop and capex and but those funds you'll see go towards.

R&D programs, including as well as the 240 trial ramps up and as we file three to one you'll see not only R&D programs funding a ramp up but.

R&D in total I think you'll see be slightly higher than last year.

Thank you.

Thank you and I'm showing no further questions at this time I turn the call back over to Pablo can yoni for closing remarks.

Oh, Thank you operator, and thank you everybody for joining US today, we have I think it very exciting year in progress. We are looking forward to announcing what we read the first patient Geotext reported clinical trial, we will file our second oncology and do you answered I'd overall for TX three to one later this year.

Here.

We have now fully operational GMP manufacturing facility that will provide a clinical trial material for all our oncology programs going forward and we look forward to updating you on the advancements and tolerance induction autoimmunity pipeline. So with that I will conclude our call. Thank you very much everybody for joining.

Hey, guys today.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.

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