Q3 2020 Seagen Inc Earnings Call
Good day and welcome to the CE Gen third quarter 2020 financial results Conference call.
All participants will be in listen only mode should you need assistance. Please sucked away conference specialist by pressing the star keep all advice Bureau.
After todays presentation, there will be an opportunity to ask questions to ask a question you May Press Star then one on your Touchtone phone.
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Please note this event is being recorded.
Now I'd like to turn the conference over to Ms., Peggy Pinkston, Vice President of Investor Relations. Please go ahead.
Thank you operator, and good afternoon, everyone I'd like to welcome all of you to suggest third quarter 2020 financial results Conference call with me today are close to Gal, President and Chief Executive Officer Chip wrong Executive Vice President commercial U.S.
Todd Simpson, Chief Financial Officer, and Roger Danzy, Chief Medical Officer.
Accompanying today's conference call, our supporting slides, which you'll find on our website in the investors section events and presentations page.
During our prepared remarks, we'll open the line for questions. We aim to keep this call to one hour until after you limit yourself to one question to give everyone an opportunity to participate in today during our call today.
Today's conference call will include forward looking statements regarding future or anticipated events and results, including the company's 2020 financial outlook anticipated product sales revenues costs and expenses and potential clinical and regulatory milestones included data read outs regulatory submissions and approvals.
Actual results or developments may differ materially from those projected or implied in these forward looking statements back.
Factors that may cause such a difference include the difficulty in forecasting sales revenues and expenses impacts related to the COVID-19 pandemic and the uncertainty associated with the pharmaceutical development and regulatory approval process.
More information about the risks and uncertainties faced by CE. Gen is contained under the caption risk factors included in the company's periodic reports filed with the Securities and Exchange Commission, including the company's quarterly report on form 10-Q for the quarter ended June Thirtyth 2020.
And now I'll turn the call over to clay.
Thank you Patrick and good afternoon, everyone. We continue to make extraordinary progress and I look forward to sharing some of the specifics on our call today I want to start with a few comments about our recent corporate name change from Seattle genetics to see John This new name reflects the evolution of our company, especially over the past year and our expanded.
In global operations, we have brought important new medicines to the market and we're working to bring our three approved drugs to more patients through geographic expansion and new indications at the same time, we continue to advance our pipeline of innovative therapies for solid tumors and humans logical licensees our footprint there has it.
Sales of beyond the Pacific Northwest with CE Gen offices in San Francisco, Canada, Switzerland and across Europe to.
The company has built strong global partnership with Takeda, Stella Genmab and Mark.
CGM, we remain committed to delivering innovative cancer medicines to patients around the world.
With that in mind, the third quarter was highlighted by several notable accomplishments first we reported revenues of $1.1 billion. This included record product sales of $267 million collaboration revenues and included $725 million from the market.
<unk> as well as growing royalties schuchat, we and our partner Astellas reported positive topline results from the past that phase three E. B three or one trial in patients with previously treated metastatic urothelial cancer. The trial was stopped early for efficacy and a pre specified interim.
Analysis. These data are particularly important as we intend to use the trial to support global registration as.
As well as to convert Petsense U.S. accelerated approval to regular approval in this setting.
Additionally, we reported positive results from cohort two of our E b to a one trial, which could support a second U.S. slavish third.
Third to Kaiser was approved in Australia. This followed approvals in the United States, Switzerland, Singapore and in Canada under the FDIC project Orbis initiative, all within the last six months.
Our marketing authorization application in European Union is currently under review by the EMA and we're continuing to build our international infrastructure and capabilities to support that you guys are launching in Europe.
We entered into two strategically important collaborations with Merck covering would you choose a map it doesn't work Lv and two guys.
First we or co develop and co commercialize LP, our antibody drug conjugate in development for breast cancer and other solid tumors. We believe this collaboration will allow us to accelerate and broaden the clinical development of the LD, including in combination with Merck's Keytruda.
In addition, the agreement included upfront and progress dependent milestone payments and Merck acquired a 1 billion dollar equity stake in seizure that closed this week checking.
Second we granted Merck an exclusive license to commercialize to Kaiser in Asia, Latin America, and the Middle East. The two times a collaboration will help us reach more patients globally and benefit from the established commercial strength of one of the world premiere pharmaceutical companies.
Including the stock sales the total potential value of these two deals is approximately $4.5 billion plus royalties on net sales of two guys and global profit sharing for L. B.
Importantly, she generally commercial activities for both drugs in the U.S., Canada and Europe.
Lastly, in the third quarter, we and our partner Genmab presented positive results at ESMO from the pivotal innovative tool for trial in women with recurrent or metastatic cervical cancer together, we plan to submit a biologics license application to ASCII is under the accelerated approval pathway.
Which would position TB as our fourth commercial product.
In addition, we agenda recently amended specifics, but the TB global commercialization plan, whereby CGEN will lead global commercial activities, except in Japan.
We will continue joint decision, making on worldwide strategy and CGEN agenda will co promote TV in the U.S. In addition, CGEN will lead the majority of global operational development activities.
I'm pleased with the progress across our programs even in this time of a global pandemic.
Chip will discuss later in the call a refinement that we're making to our et cetera sales guidance and Todd will provide a few updates on guidance and our financial position following completion of the Merck deal.
As we look ahead in addition to continuing to deliver commercially our strategy is centered on three key priorities.
Testing in clinical development to maximize the potential of the chatroom ads have been Chicago.
Advancing our late stage pipeline, including TV and LD toward gaining approvals for additional commercial products.
And conducting innovative research and development to ensure a robust early stage pipeline of novel therapies, including ADCC and immunotherapy agents.
We plan to discuss our significant efforts across these key areas in more details during our upcoming virtual R&D day, taking place on November 16.
Finally, I wanted to provide an update on our legal disputes with Daiichi Sankyo last week, we filed a complaint against Daiichi sankyo for infringement of the newly issued CGEN patent covering the breast cancer drugs in her to this.
This action is separate from the ongoing arbitration over the disputed ownership of certain technology used in energy and other product candidates emanating from our 2008 agreement, we intend to vigorously pursue both legal actions CJ.
She just become a multi product global oncology company is making significant progress across our programs with substantial financial resources, along with growing product sales. We are well positioned to continue building CE Gen to address the needs of cancer patients.
Now I'll turn the call over to Chuck to discuss our commercial activities then Todd will comment on our financial results and guidance after that Roger will discuss our clinical development activities.
Yeah.
Thanks Clay the commercial team built upon the strong momentum established in the first half of the year and delivered solid results in a few three.
We continue to execute our remote work strategies, our enhanced digital marketing focus continues to produce strong interest and engagement with our target customers.
Ill start today with et cetera.
Third quarter sales of $163 million, a decrease of 3% from the third quarter of 2019.
We believe the pandemic is impacting et cetera sales recent claims data and electronic medical records data indicates that new HL diagnosis trends or approximately 15% lower than historic levels.
His phone doctor visits during coded may lead to delays in new diagnosis, which is concerning as this can lead to patients having more advanced stage of disease when first diagnosed.
Additionally, a site of care shift negatively affected gross to net pricing. This quarter. However, despite this we are encouraged that et cetera says maintain market share in its frontline indications as a result of this we are refining our 2020 et cetera guidance to a range of $650 million to $660 million.
Looking ahead recent market research suggests that the five year follow up data from the echelon one trial in frontline Hodgkin lymphoma will be of strong interest to prescribing physicians.
Five year follow up data is an established standard and we expect that Doctor who will appreciate the durable advantage of et cetera.
We look forward to promoting these data after ash.
Moving on to passive we're pleased with our third quarter sales of $62 million, an increase of 8% over the second quarter of this year.
Year to date passive sales were $153 million showing rapid adoption of the products use a strong in both academic and community accounts and breadth of ordering was robust we remain focused on growing market share in our labeled indications.
And finally, our latest product the case in the first full quarter of sales since launch net product revenues were $42 million. We attribute the continued strong adoption of taesa to favorable guidelines placements and rapid inclusion in treatment pathways and strong halo and patient advocacy patients with and without brain metastasis are being prescribed.
And the number of new accounts ordering was robust for the quarter.
Reimbursement coverage for dice has exceeded our expectations and I would like to thank our team that worked so hard to ensure patients have access to this important medicine.
With that I'd like to turn the call over to Todd.
Thanks, Chip and thanks to everyone for joining us on the call. This afternoon today I'll summarize our financial results for the third quarter and year to date I will also comment on the significant financial impact of the new deals with Merck and then discuss our outlook for the remainder of 2020.
Total revenues were $1.1 billion in the third quarter and $1.6 billion for the year to date in 2020.
In addition to product sales of $267 million for the third quarter and $706 million for the year to date. The chip summarized royalty revenues were $36 million in the third quarter and $88 million for the year to date in 2020.
Growth over 2019, primarily reflects sales of et cetera, Despite takeda and to a lesser degree royalties on sales of quality by Roche.
Collaboration revenues were $758 million in the third quarter and $780 million for the year to date in 2020.
This compares to $18 million in $99 million, respectively for the same periods in 2019.
The considerable increase in collaboration revenues in 2020 reflects $725 million in upfront payments received from Merck under our recent lv into kind of the deals.
Cost of sales increased to $78 million in the third quarter of 2020, and a $156 million for the first nine months of the year.
This includes product cost of sales for each of our three brands and the pads of profit share to a sales, which was $29 million in the third quarter and $73 million for the year to date.
In addition to cost of sales includes noncash amortization of acquired technology costs of $6 million per quarter that began with the launch of the Kaizen April and a sub license payment that is owed related to the ties a license agreement with Merck in Q3.
R&D expenses were $218 million in the third quarter and $611 million for the year to date in 2020.
These are planned increases over 2019, and primarily reflects increased investments across our pipeline.
Yes, and the expenses were $128 million in the third quarter and $375 billion for the first nine months of the year in 2020.
These are increases over 2019 and reflect us commercialization of pets seven to Kaiser and our European expansion as we prepare for that to kind of a launch beginning next year.
I want to briefly comment on the profit reported in the third quarter and for the year.
This is the result of recognizing upfront payments totaling $725 billion for Merck in the quarter as collaboration revenue from.
From a tax perspective, we utilized federal net operating loss carry forwards have allowed however, we incurred some state income taxes in states, where we did not have available deferred tax assets.
While these revenues led to a profit for the quarter our longer term growth strategy remains to continue to invest in seeking further labels for commercial drugs and in our pipeline to enable new medicines that can help patients in need.
We are in a very strong financial position, we ended the third quarter with $1.7 billion in cash and investments. This includes $725 billion in upfront payments received from Merck under the lv into kinds of deals and $85 million in prepaid to tie the development expenses.
As part of the Belviq collaboration Merck has also made a 1 billion dollar common stock investment in CE Gen that closed earlier. This week following HSR clearance the stock purchase will be reflected in our year end financials.
I'll now turn to our financial outlook for the remainder of 2020, we are reducing our separate guidance to a range of $650 million to $660 million as chip described this reflects fewer new patient diagnoses, which we believe is due to effects of the covance team pandemic and.
A site of care ship that negatively affected our gross to net margin.
We are increasing our 2020 guidance for royalty revenues to a range of $125 million to $130 million.
This reflects sales of et cetra spiked cadence thats territory and contributions from royalties we receive from Roche.
For policy and from GSK for blend rep.
As a result of the new agreements with Merck 2020 collaboration that revenues are now expected to be in a range of one point.
Zero $3 billion to $1.04 billion. This.
This reflects to Merck related items first the upfront payments totaling $725 million received and recorded in the third quarter and second a $250 million stock purchase premium that will be recorded in the fourth quarter related to burks acquisition of $1 billion in our common stock.
As part of the agreement.
This premium reflects the difference between the 200 dollar price per share paid by Merck and our stock price in September when the deals were signed that was approximately $150 per share. Lastly, we are updating cost of sales guidance to a range of $205 million to $225 million. This primarily.
Reflects the sub license fee that I mentioned was recorded in the third quarter as a result of the ties a license to Merck.
Going forward, we will begin to reflect the funding received from Merck to support Lv into ties that development, which will reduce our R&D expenses.
While the collaborations are now up and running the impact of cost sharing as modest this year, but will be reflected in our guidance for next year.
The remainder of our 2020 guidance is unchanged and with that I'll turn the call now over to Roger.
Thanks, Todd and good afternoon, everyone.
Today, I will provide an update on recent progress and key upcoming development activities for our approved products had sales to cause and the interest as well as to sodium EBITDA and the due to some appetite.
I'll start with pad sales, which we are developing in collaboration with the status as Clay mentioned, we recently reported positive topline results from two clinical trials in the metastatic setting so.
First we reported that single agent pad sales significantly improved overall survival in the randomized phase three SB 301 trial in patients with previously treated admitted static urothelial cancer.
Hazard ratio was 0.7 with a P value of 0.001.
In addition, pets have improved progression free survival with the hazard ratio of 0.61, and a P value of less than 0.00001.
We in the status of working closely together on regulatory activities around the world, including submitting the data to FDIC as the confirmatory trial truck count accelerated approval.
Second topline data were released from cohort two of the easy to a one trial in patients who received a PD one PDL one inhibitor and were not eligible for treatment with this patent for metastatic urothelial cancer.
The results showed a 52% objective response rate was 10.9 months median duration of response and safety profile was consistent with the safety provided in the U.S. prescribing information. These.
These patients have a high unmet need as they are old and suffer from multiple co morbidities, including for kidney function and we believe the data from cohort two could support a supplemental DNA to provide them with a new treatment option.
We look forward to sharing the results of these two trials at upcoming medical meeting.
Another key component of our development program is moving had said into first line and aesthetic urothelial cancer for which we have a two pronged approach first we are enrolling a 150 patients randomized to receive either pad sales plus keytruda will passive alone in cohort K of the easy one.
Three trial.
This represents a potential U.S. accelerated approval opportunity insist plant in eligible patients second we are enrolling 760 patients in the randomized phase three mm 302 trial evaluating pet sales plus keytruda compared to platinum containing chemotherapy regimen.
Including CES patent eligible patients.
302 is intended to support a global registration and also serves as a potential consent you tried in the United States.
We are also exploring earliest stages of that of cancer, including muscle invasive disease.
Insys patent in eligible patients had stuff has been incorporated into Mercks ongoing randomized phase three keynote nine of five trial in collaboration with his tennis and we recently entered into an additional clinical trial agreement to evaluate Pat said in another phase three trial. This time for assist patent eligible patients.
With muscle invasive bladder cancer, the details of which will be available soon.
Collaboration with Merck on these two trials significantly accelerates the development of passive in this area of unmet medical needs.
Now move on to kind of where we are making good progress on expanding the development program in breast cancer. We are enrolling the randomized head to climb to trial in first and second line. Her two positive metastatic disease and in agile in breast cancer, we are supporting US co operative group.
That is conducting the randomized compass so to RG trial.
In colorectal cancer. The mountain had filed is evaluating size in combination but has to some AD in third line patients with her two positive metastatic disease. This is intended to support a potential accelerated approval.
Gastroesophageal cancer amounts and the two trial is evaluating to tie that in combination with Trastuzumab Remise Cinemark and Paclitaxel in a phase two slash three study in previously treated second line. Her two positive metastatic patients phase three portion of the study is designed to.
To support potential global approvals more broadly we are evaluating to Kaiser in combination with chemotherapy and test to summit in first line GE malignancies, as well as in Kansas, but so two observations and we will describe these further at our R&D day.
Importantly at the San Antonio Breast Cancer Society meeting in December multiple times abstracts have been accepted for presentation, including additional analyses from hill to climb trial that supported its approval earlier this year.
Turning now to the citrus we continue to advance a clinical development program evaluating its interested lymphoid malignancies to support potential label expansions or inform clinical practice.
We are also planning to evaluate that centrus as an immunomodulatory agents in certain clinical settings, which we will share the upcoming R&D day.
At the American Society of Hematology annual meeting in December we'll present five year follow up data from the echelon one trial in frontline advanced Hodgkin lymphoma. These data are key as they represent an important clinical milestone reinforcing the positive long term benefit of the approved at sepsis test chemotherapy regimen in.
Newly diagnosed stage three and four patients.
I'll move on now to so some appetite.
Late stage AIDC targeting tissue factor available therapies for PMC treated metastatic cervical cancer generally result in low response rate and overall survival is measured in months underscoring the high unmet need in the center.
At the ESMO meeting in September we an apartment Genmab presented results in an oral late breaking session from the innovative to a full trial that evaluated TV monotherapy in women with previously treated recurrent or metastatic cervical cancer.
The data showed a 24% objective response rates with an 8.3 months median duration of response, notably 79% of patients had a reduction in target lesions and responses were generally consistent across subgroups. The most common treatment related adverse events included Ela piece.
If you stack says nausea, conjunctivitis fatigue and dry.
We and Jen Matt plan to Submissibility to DST agent support accelerated approval in this indication and to initiate a randomized confirmatory trial of TV in cervical cancer in the coming months.
Also advancing clinical trials of TV monotherapy in other cancers and in combination with other agents.
Lastly, we are pleased to be collaborating with Merck on the development of LT.
Given our productive relationship on passive and our shared vision of improving the lives of people with cancer I'm confident that the partnership will allow us to accelerate the evaluation of Lv as a monotherapy and as a combination therapy with keytruda.
Our current development program encompasses trials in triple negative and hormone receptor positive breast cancer as well as a basket trial in other live one expressing solid tumors, including lung head and neck, prostate sufentanil gastroesophageal and melanoma.
In closing we are preparing for important presentations at medical meetings in the remainder of Twentytwenty.
Also working diligently to advance our clinical trials and several regulatory applications globally. We look forward to sharing more details about our development activities, including our early stage pipeline and innovative technologies at the upcoming R&D day, now I'll turn the call back over to Claire.
Thank you Roger before we open the line for your questions I'd like to recap some of our key upcoming events first report five year follow up data from the et cetera, you one trial in frontline Hodgkin lymphoma at the Ash annual meeting and advanced multiple clinical trials second.
Continue to establish Pennsaid as standard of care in advanced metastatic urothelial cancer submit applications to extend its use in the U.S. and seek approval globally and advanced the broad development program, including trial in first line metastatic and muscle invasive bladder cancer.
Third we continue the successful U.S. launch to Kaiser work with regulators on the pending submission in the European Union and advanced robust clinical development program.
Fourth submit a delay to sta for accelerated approval of TV in cervical cancer and advanced clinical development in cervical and other solid tumors.
To continue implementing our recent collaboration with Merck, including the co development of LD and lastly host our R&D day in mid November.
Finally, I'd like to close by thanking our employees for their resilience and commitment to our mission to bring therapies to patients. Despite these difficult times that impacted all of our personal and professional lives.
Proud of our progress and collective commitment to the cancer patients we serve.
At this point, we'll open the line for Q that operator, please open the call for questions.
Thank you we will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone.
If you are using the speakerphone. Please pick up your handset before pressing the keys to withdraw your question. Please press Star then too.
As a reminder, we ask that you limit yourself to one question at this time, we will pass momentarily to assemble the roster.
Our first question today comes from Michael Schmidt of Guggenheim. Please go ahead.
Hi, Thanks for taking my questions.
I had one on et cetera. So I was wondering if you could comment some more on on market dynamics. The the mid point of the updated 2020 guidance seems to suggest the possibility of another.
Sequentially decline in sales I was just wondering what are you seeing there in terms of the diagnosis rates and I guess, how you think about those dynamics longer term when we look towards 2021 and maybe if you could also comment on the the new gross to net adjustment. Thanks, so much.
Hi, Michael.
So I'll talk about the market a little bit Todd can talk a little bit of that gross to net so we'll start with some comments look you know our product sales have done really well when you look you know year over year were up.
60%, we're very pleased with all three products I know you asked about et cetera, but we're we're really pleased with helping all of these patients that we do and working very closely with doctors and our drug to really you know their important drugs, but as I'm sure you have seen and everyone have seen their multiple sources.
And I've talked about how cancer care is being affected by cobot, which is incredibly unfortunate for patients you know as a company that really cares about cancer patients. What we don't want to see is something in the not too distant future, where you have a lot of late stage cancer patients that are first coming in rather than a mixture of early.
In late stage cancer patients. So we hope that this current thing about where the market.
Research showing less patients starting.
During this pandemic does not continue and patient do come in to get their cancer therapy, which Dave So badly need now in the middle of this we're very pleased that we have at least maintain and maybe even grown a little market share of the patients that are being treated so we are definitely.
Not losing market share, there's just less patients coming in and we can measure that so we feel good about their market share and we really wish patient get their therapy. So that they don't become really late stage when they first come in so thats really what the dynamics are that's going on with et cetera, Todd would you like to talk about gross to net.
Sure happy to thanks for the question so I'll start off by saying most of this relates to phs utilization.
This is a sizable portion of the et cetera book of business.
In this setting we offer discounts that are approximately 60% so even fair.
Fairly small change in mix of business has an impact on gross to net we've seen this variability in the past and we saw in Q3, its a little hard to pinpoint exactly what's driving it but we did want to call. It out as one of the factors in the quarter.
Great. Thanks for clarifying and congrats on all the good pipeline this quarter.
The next question comes from Cory Kasimov of JP Morgan. Please go ahead.
Hey, good afternoon, guys. Thanks for taking my question wanted to ask about pads have and the relative slowdown in sequential growth that we saw this quarter.
Looking at that does it change your view as to whether there was a bolus or a warehouse effect in earlier quarters are there other factors at play that word sequential growth dropped to a single digits twoq to threeq. Thanks a lot.
Cory Thanks for the.
Question.
Handset launch has been very strong we had a rapid uptake and very strong uptake ahead of where you know.
You and the other analysts had thought we'd be.
For a couple quarters now and.
The.
The rapid integration of passive by oncologist into standard of care for on label use patients has been great and it is not unusual at all at.
At this stage of the success you know six.
A successful launch to see a little bit.
Slowing of growth as you get to a stronger market penetration.
But I can assure you that feedback from the health care professionals has been very positive the use has been both community and academic settings.
We're maintaining our guidance and we really look ahead for big things that pets have that we are certainly working hard at several label expansion opportunities.
We just had our positive to a one and three a one.
We're looking forward to 203, one data, but data we put out very positive cohort two or three a one we have a big development program with in frontline with.
Metastatic urothelial cancer as well as muscle invasive bladder cancer. So there's just a lot going on with asset and that but certainly once again.
This cancer care is being affected by the cobot pandemic and it has created some barriers for customers. You know there are a lot of the customers with pets have our older and a lot of the older people that unfortunately been diagnosed with bladder cancer.
Yes.
Many are going in and getting therapy as you can see from our our sales, but not everyone is going so I don't think its what the what you said is the warehousing or any of that stuff, we don't desktop or we see chip would you like to give a little color on what were seeing it.
Yes, absolutely clay thanks.
Good comment the total number of ordering accounts was up in Q3, I think there's some some additional opportunity left in our label, obviously and we are gaining traction with regard to our virtual outreach efforts and has as far as face to face interactions with our sales team is there increasing month to month.
Okay. Thank you guys appreciate it.
The next question comes from Kennen Mackay of RBC capital markets. Please go ahead.
Hi, Thanks for taking the question.
Two questions one quick one on on pads have wondering.
You're getting a sense of what the.
Duration of use is currently in sort of the real world.
Being in a position third discontinuing largely due to progression or or.
Adverse events and then also on pipe at wondering if you're seeing any off label use especially in combination with keytruda.
Separately.
Hoping you could give us a little bit of detail on some of the regulatory interactions Youve had a round.
TV it seems like the.
Optimism, there's maybe a little bit higher and little bit more upbeat with the regulatory quite a little bit more solidified here. Thank you.
Okay.
They're very effective use of one question to ask for three I compliment you on that.
Our.
No. Okay. So when you think about had seven duration.
Our first trial that we got approval and we have our label on had somewhere between five and six.
You know months of treatment and so.
It was.
You know.
Our private six cycles, I should say, but you know.
We that's what we.
Have approved now if you saw our tool one data which is cohort two.
Which is the is really second line third line that came out that we don't have approval for yet that was a duration in that trial of over 10 months with about 10 and a half months. So it could be different as you go up and as we see things in the future. So that's what we've reported base that clinical trial.
We're not at this point reporting on duration of use there. It's certainly those data certainly lag as we assess and we watch them and we see what happens.
Months of follow up.
And as we move into earlier lines of treatment like I said until two or two this is going to change. So we will see how that goes no off label use.
And.
Combination with Keytruda, our data are really good there, but that's not something that we don't promote to it and no I don't think we hear a lot about it because there there's a lot of different trials that we have now I mean, we hope that most patients are going on trials that we have with the combination.
And the third thing is on the regulatory interactions and TV no is inappropriate for us to give you specifics on that at this point Im sufficed to say that we have a lot of effort going on with TV right now and looking to we're working with our partner Genmab on this we're trying to get.
All our i's dotted and t's crossed and see if we could get a great package to regulators, but the specifics of the interactions are something that we do not want to discuss that because I think.
Actual with FDA. Thank you.
Thank you.
The next question comes from Salveen Richter of Goldman Sachs. Please go ahead.
Good afternoon can you provide color on the two Kaiser launch how the drug is being used in the treatment paradigm. If there have been any hurdles to adoption here and at what data we should expect from the hurt Q climb trial at San Antonio.
Right. So we we.
We are very excited about to tide. I mean is this is a really great for us.
We feel that we had a.
It's very early in this launch, but we're really pleased with the progress and the access that we have had with health.
Health care professionals has been real.
Really good despite this challenging time with Carbonite team.
The level of awareness of this drug an uptake in both community and academic settings has been great.
Data has been.
Our data that supports to Kaiser in both patients with brain Mets and with visceral disease with operating metric that both.
Docs are using it for both types of patients and lead our activity with LSW and PFS is really great.
Great Honor, David Brain Mets is really on precedented so.
That's important maybe Roger you could make some maybe some other comments on selbins budgets.
Sure. Thanks Clay.
So as you know have to climb was presented at San Antonio last year, and we presented follow up data focusing on.
Brain Mets.
At ASCO and intact, we continue to present data at ESMO and some other meetings.
And the reason for this is because her to climb as a very rich trial. You know it was designed as an elegant design.
Great execution, and there's a lots of information that that.
News no to provide in order to inform people about the value of of two cat note.
In that circumstance, so without getting into any specifics and I will continue to present.
More data from her to climb at San Antonio with the with the purpose of informing folks about about two.
Catherines value in various groups and so on.
Thank you.
The next question comes from Matthew Harrison of Morgan Stanley. Please go ahead.
Hi, Thanks for taking the question. This is Carter on for Matthew So.
So just another question on at sectors demand dynamics, you guys mentioned that the diagnosis rate is down.
Yes from baseline and so we're just wondering if if.
Yes.
Additionally, beyond that is it possible that that the change in sales is partially due to conversion slowing to the first line and maybe the aggregate share is flat.
And all of them and so we you know we're not <unk> we're.
We're not worried about this I'm more worried quite frankly as a cancer biologist I'm worried about patients you're not doing well with cancer and so that's something that I really worried about at at some point and I just don't want to you know make too much out of losing a you know a small percentage of a sales based on the pandemic.
And so that's something that you know where we take now you you asked about the five year data and that's something for Ashworth. We're excited to do that you know five year data in and the problem is is you know standard of care you know the gold standard and you know that's that's what the Doctor will want to see because you know in Hodgkin look.
Lola It is unlike most cancers it's.
Has a percentage of patients at high person that are sure and it sure does a definition that <unk> Hughes as you know you have note in your disease free survival for five years and you have no evidence of disease, and and you know anybody with cancer, who knows when they're told they have cancer and then five years later you told you.
Have no cancer to live in your life is a great day, and that's one Doc say, you're cured by that definition and so everyone wants to hear that that has never been diagnosed with cancer. So we believe our five year date is important and doctor have been asking for it and that's something that we look forward to to discussing and then we can say here's the difference in care rates and.
I actually have sure by that definition, and you know and and look at the you know the whole the whole dataset, which includes safety and and other things so.
We're excited I need it.
Why would anybody want to get bleomycin, and you know all the the lungs, starting in lung toxicity associated with that you know is.
Is something that we're trying to get away from and I think our five year data will go toward that you know as far as R&D day, we have an outline the specifics of what you're gonna here and all the data, but we're gonna cover if I was gonna say three things, we're gonna cover 90 day, our existing products and how we're expanding them and their.
Use uhm are late stage products and the excitement with those and then earlier stage products using you know all sorts of our innovations to really guide you a little bit and we're not gonna cover every single one of our early stage prop the programs because we're not going to be on.
Virtual R&D day she'll all day long, but we're gonna pick some highlights of some of the programs and we're really we're really jessup about doing the R&D that.
Great. Thank you.
The next question confirm that cast me can I think the Americans. Please go ahead.
Hi, This is Greg Harrison after just thanks for taking a question.
So how does the cash influx from Merck affect your capital allocation strategy with respect a business development emanate or internal R&D I know you've had previously said that wasn't earmarks for any specific purpose, but just wondering if you had an updated view nephew would use it to take advantage of any.
Opportunities you're seeing in this environment.
Yeah, Todd I think I can talk to an address is but it <unk> what I will say is that we're just delighted to be working with Merck, they're just such a fantastic organization and you know <unk>.
Well well see Jen has grown and really done a lot of working on three drugs approved and we'll have more approved in the future and I'm looking forward to that we still can learn a lot from a company as successful and powerful and global as Mark. So I'm really excited with this with the whole deal that we've done with the two deals.
<unk> would you like to address the question sure. Thanks for the question. So I guess when it comes to capital allocation, while I won't give the.
Ossific percentages, what I can speak to is what we're focused on M. Probably the number one priority for the company right now is to drive et cetera paths of into Kaiser into your major blockbusters block blockbuster.
I'm sorry, excuse me the next priority would be you know fighting drugs four five and six.
And we think we've got a great stable of assets within our portfolio that Kim hopefully deliver on that and then the third is continuing to be leaders and the innovation around 86 and the other technologies that we're developing within our research teams. So that's generally what we're focused on them I think now have.
A capital position that we have no after the the third quarter license fees from work and then the fourth quarter stock purchase with just closed a few days ago put those in incredibly strong financial position to really nowhere execute on those.
You would also asked about M&A and I think you know our our history with M&A is good the cascading acquisition a few years ago I think it was a testament to that and that brought us a really best in class first in class tyrosine kinase inhibitor targeted to her too and I think if we can continue to fine off.
Attunity like that you know will will continue to put dish ourselves to successfully been went on emanate transactions.
Great. Thanks, a lot guys.
Your next question comes friend, Andrew Barons F. S. P. B Leerink. Please go ahead.
Thanks, Uhm cut Roger can I get your run through the design of the because of the address breast trial. The plan then I guess.
Soon part of the African food would be related to C. N F activity what percentage of early breast cancer patients have seen as much as a side of relapse.
Sure. Thanks, Thanks, So Chris and Andy So.
As I indicated earlier.
The U S comes with with the Alliance is running a child Compass D and essentially what it is sort of conceptual level is it's an evolution of the cats from trial. So it's taking patients who receive neo adjuvant therapy and do not achieve a pathological.
<unk> response.
And the design is to randomize patients in that circumstance, which is <unk> siler was used in the cats from trial randomize them, two cats, either alone or kept silent cabinet.
Obviously, we have generated data with Ketsana plus two cabinet in the mid aesthetic space, we found that very exciting and we started.
<unk> to get into a combination admitted static disease. So I think the whole thing. So the <unk> puts together nightstand flows and you'll write the outcome one of the one of the endpoints will be looking at the frequency of development of buying a chance to seize and it is one of the <unk> outstanding science of accounts that was <unk>.
Reported with the kept side of the trial. So that is part of the focus but obviously, it's also a general disease control approach.
Okay. Thank you very much I appreciate it.
The next question <unk> sorry. Please please go ahead.
Hi, This is shut it off artino. Thanks for taking a a question. So just quickly on the lawn just cause I. It has been a very strong I'm. So far so could you come in about the patient breakdown if they have visibility into.
The second line versus sterilant pause panel, so picking the way that we thought three minutes.
So thank you for the question you know, we're we're not gonna get into the exact patient breakdown.
It's it's something that you know internally, we try to track as best as we can but we can give you a little color on you know basically has how how's it going out there to the Doc chip, maybe you would like to give them a short little color commercially and Roger feel free after check if you'd like to give a little color. Just the you know the clinic in in <unk>.
You know what what are you doing out there.
Okay. So so takahe, so it's been very well received and the market. The team is actively promoting to the full breadth of the label, which includes patience with and without brame, that's we're seeing increasing uptake and both of these populations.
Yeah, and I think to add from the from the technical side.
What what we've been able to do is to continue to provide information to prescribe as in positions to understand just how valuable to kinds of is both in the non brand medicine Bandmates sitting.
And does a huge amount of enthusiasm. It you know it addresses section unmade need uhm and the combination of you know a a T. K I together was chest choose a mab uhm and the chemotherapy, that's well understood and is part of standard of care is something that physicians can readily.
<unk>. So I think we've we've bought a very important medicine forward that is making a difference in patients lives and obviously for my development perspective, you'll notes that most of our recent at childhood had been added to C. T. Dot Gov have in fact included two kinds of so we're interested in developed.
Seem to kinda wherever we think we can make a difference and so it goes beyond breast cancer to potential and gastric cancer potential and colorectal cancer and we are just about to initiate a basket child looking at her to alterations, including mutants in patient such as lung cancer. So we have a lot of <unk>.
<unk> and this drug that it can bring value to oldest these these diverse groups of patients.
Okay.
That's very helpful. Thanks.
The next question is from K often Oppenheimer. Please go ahead.
Oh, Hey, Thanks for taking my question, it's related to certain two kinds of events I was wondering if you could please elaborate on the timing of the results that we should expect from mountaineer and also when you expect to hear back from the D N a on your.
<unk> M. A a filing and maybe if you could comment on your commercial <unk> commercialization plans for to Kaiser in Europe. Thank you.
Sure. Thank you. These are all really good questions uhm.
With mountaineer, we are we are still a rolling and so we usually don't give guidance like timing, while we're finishing enrolling so we're working very hard on it.
Our data with incredibly strong that we presented at Edinburgh last year, we met with regulators. We we got a line on how best to go forward in a in a in a pivotal trial, we're executing upon that and and trying to get.
That all done and make sure not only you enroll the patient, but you need to watch the patients because you need to get duration and stuff and so it is an important thing to to to do.
This is a trial that we intend to try to get approval for her to positive colorectal cancer. So that's something we're working hard at.
There's certainly a lot going on it is not something that we give the specifics of it's not really appropriate for us to discuss any specific interactions with E Bay on <unk>. We are approved in five countries and do a <unk>.
<unk> corbis. The we're very excited about that you know the labels are really good lay.
Labels that we have through these five.
Countries and.
Roger can talk about that and.
I think it's good and and the last thing I'll answer before maybe Roger wanted to talk a little bit E M, a and what's going on.
Is is commercial and he you.
Nope, we are we kept the commercial right for two guys who knew we have built out a lot. There we have a great leader in Toronto, Patsy, we hired from Bristol, but even celgene for a long time before that and he was in charge of European operations ahead 6 billion dollar sales under.
<unk> his watch and he is very talented and he has a great team, we have country managers and all the major countries, Germany, and France, and the Nordics and and you know, Spain, and Italy and everywhere. So we're we're really excited to kick that off in a big way in first.
Thing, though we have to is is finish a lot of work with E. M. A and then and then you just start providing this drug the patients in need across greater Europe. So that's something that we will be doing and look forward to and and reporting on that too to wall Street. Roger do you want to talk a little bit about uhm.
Yeah sure. So so the the whole project almost I think gives you a good insight into how regulators have been doing to cast and that it's really was it's been a remarkable journey to and pretty rapid time achieve approvals in these diverse countries with pretty hominine.
This label so that's a a lot of regulatory scrutiny and oversight of about program and we're very pleased with the results. We can comment on specifics is that you made but obviously the process is is in motion and you know, we we will wait for the for that process to.
Play out and <unk>, we'll see where the M N dance.
Great. Thank you very much.
The next question is from Stephen Lily ask people. Please go ahead.
Yeah, good afternoon, and thanks for taking the question I know there was a couple of questions previously on et cetera guidance, but just wanted to just make sure that.
The updated guidance I guess doesn't contemplate the introduction of timber elysium have at all and the relapsed refractory setting and I guess.
How did you think about the introduction of bad agent going into next year I know that you guys have developed some pretty interesting data in combination with P. D. One already.
But just kind of wondering how you think the intro of <unk> and the relapsed refractory setting impacts the business if at all in 2021. Thanks.
Yeah. So.
<unk>.
Around for Awhile and I'm very pleased that.
P D. One checkpoint can work in patients with your appointment Hodgkins lymphoma. So we are all about doing the best for patients. We can you know as we look at our commercial representation with our six labels with ADCETRIS the treatment and the relapsed refractory resetting is.
A small components of what we sell to the frontline hospital appointment frontline T seller poma are substantively larger as a component that but we were doing and and so.
Pember was already been introduced in relapsed refractory. So it's been selling out there and you know whether it when you re locked refractory whether you are you, saying ADCETRIS often the patient's also get Pembroke and if you're using pan-broil patients will also still get et cetera, and as you pointed out there's a lot of fantastic data that.
We have combining P. One with ADCETRIS. That's you know, we think even better for patients and relapsed refractory then either using each agent alone and it is you know lifted it empty. She enter doctors can get reimbursed to that so when you think about a whole the whole package there we could get.
It is you know a minder it would have a minor impact if any what we're doing in 2021. So you know the focus is really mainly on frontline and then we have some other exciting new clinical trials with et cetera said, we'll talk about them at the Rd day.
Understood.
Thank you.
The next question is from <unk>. Please go ahead.
Oh, thanks for squeezing the it and congratulations on the healthy balance sheet and potentially three new product cycle.
So my question is kind of a follow up to.
To the mountain near study. So so we know that the single arm portion of the study was pretended last year and.
And now it's been converted to kind of a random my to arm city. So just trying to understand how you can analyze that basically go over all the <unk> city to it to it randomized study and also just curious about the single age.
Orange Catnip are could the trial at four am single, Ethan youth and there'll be laughed at factory setting as well.
So I'll turn it over to Roger to clarify some of the things that you discussed Roger sure.
So so thanks for the question and you're right that it is a it is a randomized trial. The main purpose of having the to cabinet mono therapy is to define the contribution of two cabinet to the combination was trastuzumab and the way. The childhood is designed is that patients can get to cabinet.
And then if they do not respond we can actually add interest to some <unk>. So we can build on that initial monotherapy and and back in the the chance to Smith. So it's an important part of you know, making the case that the combination of to cabinet and chest choose med is important to patients in <unk> in a has a.
Hi response rate in this population, but I I I don't think our expectation is that this is going to be informative for monotherapy used it's really a contribution of components question there'll be trying to answer.
Got it thanks for the clarification I appreciate it.
Next question is from George Farmer at BMO capital markets. Please go ahead.
Hi, Thanks for <unk> squeeze me in as well why talk uhm, a bit more about Pat seven and the slowing growth at least two two of a Q3, you know the pandemic spin around for awhile and.
This this notion that cancer care has been affected certainly didn't look that look that way when pads that was launched them very very strongly what do you do you see any other dynamics that might be happening. There. If if you think the market might be tapping out uhm is there is it a mixture of that duration anything else that you could provide would be helpful.
<unk>.
Yeah. Thanks George.
I think that the Doc just took this drug up very well, we got it out there to you know a good chunk of the marketplace and.
Duration is fine, it's what we expected and you know we've been.
What are we expected from our clinical trials here like I said cohort too it's almost double the duration by just getting one level earlier and treatment. These patients with bladder cancer you know one of the big things. When you look historically, it's like you know the number of the first line a second line third line they'd just dramatically dropped off historically.
Cause there's not a lot of the drugs to treat these patients and the patients. Unfortunately succumb to the disease and and that's a bad thing and you know pass that really is something that it really brought great who've been great results to these patients and the patients are largely older. They're they're a lot of them are in there <unk>.
<unk> getting bladder cancer.
You know at the early part of the pandemic I guess people were still coming in didn't know, but as as pandemic has worn off a lot of the older patients are are nervous about going into the dark and so we don't think that we're seeing anything more than that this isn't some warehousing or other things in a you know I don't we don't think it's Daft snapping.
Interested in fact, they're incredibly interested in Pat said and very excited in our frontline and muscle invasive.
Oh, and we're in the future either do not muscle basic to so you know you don't remember our launch with only right at the end of the year at the end of December So you know it's.
<unk>, you know, where we think we're where we.
Almost better than what we expected with past seven we think that drug is doing really well and will continue to do well and expand and have more labels that we go to the future.
Okay. Thanks Clay.
The next question is from <unk> JMP security. Please go ahead.
Hey, good afternoon, guys. Thanks for taking the questions. After seeing the day that we feel pretty confident about T v's prospects and and I'm kind of curious you know higher thinking about the strategy for T V going forward, whether it's expanding another indications early the lines are combinations can you give us some colors.
How that's going to move forward and the timing for that.
Sure. Thanks for and thanks for the questions I appreciate it so with T. V. You know the first data set we have out there is the single agent given inpatient set have relapsed cervical cancer and that is it also prognosis cervical cancer.
And relapse cervical cancer is I mean, you're super awful and it is it's something that we were excited to be able to bring T. V forward and you look at the data with chemotherapy and even checkpoints.
Hemo therapy, you look at the data with taxes and other things and you see like 8% to 12% response rate and then you look at the data with checkpoints.
Could you would approve 14% one four <unk>.
Percent and in fact, that's only in P. D. One hi, Pete.
P and and all patients it was even less and so when we come in with our data. It's the best data that we've seen in this type of patient population you know relapse cervical cancer. So it is you have to put that in context for what else people can treat with him. So I look at this and say Wow if we.
Can have these data <unk> what can we do if we combine it with a checkpoint or any of these other agents and and so I'm very hopeful that we can get to a higher response rates by doing some innovative clinical trials. So that we can provide.
Hope for these patients and tools and for doctors and I think the combination is probably gonna be worth and win probably gonna went out with the best data with combination and our <unk> Adc's work really well with checkpoints and we've shown that over and over so we're excited to pursue that study that.
And.
You ask the question about other cancer types. You. We are certainly looking at that it's too early to make comments on that we're focused mainly on the cervical aspect could we are looking more broadly as well and so I think T. V is something that you. It is if you asked me you know we have three commercial drugs.
<unk> T V is.
Something that I think is in line to be our fourth commercial drug idiot, obviously, we need to submit to gain approval, but that's right in line to be our first commercial drug and and I think right behind that and you have a great day to set with L V and a great partnership with work now and.
Oh, let me someday it could be our fifth fifth Dragon worry, we're really excited to just keep on going and.
Making drugs, an expanding each of the drugs that we have with multiple labels and trying to help cancer patients.
Thanks for taking my question <unk>.
The next question comes from <unk> Sandburg. Please go ahead.
Thank you very much for taking my question two quick ones for pets. Since I was wondering you're running a trial E V. One O three cohort H N J and my surgeon basic.
Uhm.
Ah bladder cancer I'm wondering if you were to record data soon and have that tries going in time.
And then also can provide a bit color on the opportunity for for now muscling basically I know you talked about really are happy for that you. All your values opportunity I missed the second part is <unk> what was it I just didn't hear Ya.
I think.
I'd color Ah now muscle your basic bladder cancel opportunity that the house has the planning going thank you gotcha.
Gotcha, Okay. Roger can you happen to talk about the bladder cancer questions for shifts yep. Thanks for the question. So you know E. B one O. Three trial has it has multiple codes probably the most important of which is cuddled K.
Which is R accelerated approval passable within metastatic assistant azrael patients combined with Keytruda, but you're right. We are in fact prior to us entering into these agreements with milk and milk are offering us the opportunity to move pets is fast into Messin basic disease Uhm, we we.
Do have signal seeking cohorts, so they've been rolling well, we can comment on timing for that but I can tell you. The child continues and obviously when we have that data nope, we will share. It just from you know a general sort of medical scientific perspective.
You know naked for Stavely expressed at a high level across all of these different disease States. So you know as a as a hypothesis I think it's reasonable for us to put forward that that easy will be active pets. It will be active as it is in metastatic disease, we expect activity and must have been <unk>.
A disease and then to answer your question about numbness invasive disease, which also has meaningful unmet need yes. We are continuing to work on our plans, we just not ready to share them at this point, but we you know we have done some some preclinical work and when we have a plan that we can ship <unk>.
<unk>, we will bring it forward.
Thank you very much.
This concludes our question and answer session I would like to turn the conference back over to management for any question on that.
Okay. Thank you operator, and thanks to everybody for joining us this afternoon be well.
The conference is now completed thank you for attending today's presentation you may now disconnect.