Q3 2021 Athenex Inc Earnings Call

[music].

Good day, ladies and gentlemen, and welcome to the third quarter 2021 authentic Inc. Earnings Conference call. At this time all participant lines are in a listen only mode. Later, we will conduct a question and answer session.

And instructions will be given at that time to ask a question you would need to press Star then one on your telephone as a reminder, this conference call is being recorded I would now like to hand, the conference over to Kelly Dougherty Director of Investor Relations you may begin.

Yeah.

Good morning, and thank you for joining our conference call today, we will provide an update on our Phoenix. So it doesn't map as well as a review of financial results for the third quarter of 2021. The news release detailing the results crossed the wire earlier. This morning and is available on the company's website. A replay of this call will also be archived on the company website during our conference call.

The company will make projections or forward looking statements regarding future events, including statements about financial business and clinical milestones anticipated in fiscal year 2021, and beyond we encourage you to review the companys past and future filings with the SEC, which identify specific factors that may cause the actual results or events.

To differ materially from those described in the forward looking statements you can find our SEC filings in the Edgar database at Www Dot FCC dot Gov or in the Investor Relations section on our website at Www Dot a Phoenix Dot com.

This morning, we are joined by Dr. Johnson Lau, Chief Executive Officer, Mr. Jeff Gordon Chief Operating Officer, Dr. Rudolf Kwan, Chief Medical Officer, and Dr. Dan <unk> President of the Phoenix out therapy.

Steve Adams, Chief Accounting Officer, the management team will be available to answer questions. After the prepared remarks.

I will now turn the call over to Johnson for introductory comments.

Thank you Katie.

There have been several important developments in our Phoenix, New media third quarter I would like to cover this morning I.

I will give a brief update on oral paclitaxel before spending some time discussing our cell therapy programs, where we have had some very positive news.

Beginning with oral Paclitaxel and <unk> in metastatic breast cancer.

October we held a meeting with the U S FDA regarding our new drug application.

Unfortunately, we could not reach alignment with the FDA on the U S regulatory pathway.

I think breast cancer.

After careful consideration we determined that another large randomized controlled study for the metastatic breast cancer indication would not be an optimal use of all resources.

Is that we intend to prioritize the other ongoing studies of oral Paclitaxel, which have shown encouraging results in particular, the combination of anti PD one in all paclitaxel for patients with non small cell lung cancer, who had previously failed anti PD one monotherapy.

Yeah.

And the other programs.

Right.

Ultimately our goes after sort of patients and maximize value for our shareholders.

We will however continue to explore paths to approval for oral paclitaxel in regions outside the U S.

Our record tree team has been in discussions with <unk> regarding a potential filing.

It's before it is a Phoenix policy to make a formal announcement only once the filing has been accepted.

Separately.

It's also been some positive news from the U K regarding a new program called the innovative licensing and FX pathway.

Either.

Which aims to accelerate time to market facility.

Facilitating patient access to innovative medicines.

We have received notice from the ILEC program.

<unk> in combination with oral anticancer medicines.

Accepted into the first stage of this program.

Dr. Rudolf Kwan will expand on this in a few minutes.

And even a part of a Phoenix strategy is to enhance and expand our audio technology platforms.

On diesel front I'm very pleased with the continued positive momentum in our cell therapy programs.

Dr Lang President of Phoenix cell therapy.

A detailed update but there are several positive developments I want to highlight specifically.

Early this year, we acquired at co welfare predicts.

Well I think with a first in class NK T cell therapy technology platform for the treatment of both hematologic and solid malignancies.

One of the two clinical stage assets, we acquired in this transaction is kilowatt FIFO too.

And allogeneic product is being evaluated in the anchor trial.

A phase one study in patients with C. D 19, positive relapsed or refractory lymphoma and leukemia.

There will be an important update on this study a default coming American society of hematology or Ash meeting in December.

The EF slept became public this morning.

And we are pleased to report that all of our key.

Total of five patients there have been two complete responses and two partial responses with the low dose of the infuse engineered NK T cells.

Our clinical program is very encouraged by these data.

And we look forward to providing more details at ash.

Also regarding cell therapy, we received notice from the U S patent and trademark office, allowing patent claims are rung, our NK T cell therapy platform.

Similar claims had already been granted in the EU.

These are the first to be allowed in the U S.

We believe this will boost the protection I run our technology and strengthen.

Phoenix position, it's one of the leaders in the NK T cell therapy.

F. All cause theory, all type of nipple in oil demand.

Our first in class Michael Kaplan inhibitor for the treatment of actinic keratosis of your face or Scott.

It was launched in the U S. In February this year.

By our partner Ambarella.

At September <unk> announced the launch of the theory in Europe.

Following approvals in both the European Union and the United Kingdom over the summer.

The U K and Germany are the first two European countries, where cause theory will be available for prescription.

To be followed by other U countries.

We are very encouraged to see strong execution by Amarillo in making this product available to patients in the licensed territories.

And in the U S. We are pleased to nook and acceleration in script trends after labor day.

As of September 38, Phoenix had cash cash equivalents restricted cash and short term investments of $105 million.

After receiving these C O L earlier this year.

We immediately initiated cash preservation measures.

Which includes significant reduction in our commercialization activities and expenses.

A reduction of our supply chain activities and expenses.

And slowing down of certain clinical programs.

Our current cash run rate is for fourth quarter 2022.

We will look for additional mashes to further extend the runway.

We will continue considering very carefully our powerhouse and overall strategy.

As well as how to optimize the use of our resources.

While pursuing initiatives to unlock value for the long term.

We do not believe before value of our assets is appreciated by the marketplace.

These include the oncology focused small molecule almost couple of your platform.

Our cell therapy business.

The growing royalty and milestone stream, we are generally seeing from considering.

And our specialty pharma business, which the significant property plant and equipment assets.

Our mission continues to be a biotech focused company working to serve patients.

Health care community.

We remain focused on advancing the portions of our pipeline that we believe could transform standard of care and.

And we will continue to explore options to increase the overall value of our business.

I will now turn it over to Dr. Rudolf Kwan to provide R&D updates on our all paclitaxel programs and the <unk> platform.

Thank you Johnson.

As Johnson mentioned.

We announced last month that we held a type a meeting with FDA.

Gus a proposed design for new clinical trial that was intended to address the issues. Our lie in the CRM received oral paclitaxel and <unk> in metastatic breast cancer.

Each was an informative meeting.

And after careful consideration.

We determined that could the knee deploying our resources towards the existing ongoing studies of oral paclitaxel.

As well as our cell therapy programs being top 10-K, T and T C. L T.

Be a better way to maximize the value for all our stakeholders.

Therefore, we do not plan to pursue a new pivotal study in metastatic breast cancer at East high.

As for our oral Paclitaxel poll Grameen angiosarcoma.

We have a meeting scheduled with the FDA later this month to seek their guidance on the potential registration pathway.

We'll provide an update once we have more clarity from the agency.

As well as internal agreement on next steps.

We have completed enrollment in our ongoing phase II trial.

And Joe Sarcoma. He said he sees with limited treatment options and for which although Paclitaxel that's received orphan drug designation.

In September.

We present the phase one dose finding results of a study combining although quite the textile hambro.

Hambro lethal map in solid tumors at ESMO.

But they tell us highly encouraging and demonstrate a promising anti cancer activity for the combination of oral Paclitaxel hambro.

In lung cancer patients, who have progressed on PD, one PDL one therapies.

There were a total of 10 non small cell lung cancer patients enrolled.

Of which each were evaluable for response.

Four of the eight patients achieved partial response.

And for others achieved stable disease.

Notably.

This lung cancer patients have all discontinued the previous checkpoint inhibitor therapy.

Due to progressive disease, so the status of highly encouraging.

S. PD, one PDL, one therapies continue to dominate therapy choices for lung cancer patients.

Our approach with potential to address an unmet medical need for patients that eventually failed PD.

PD, one PDL one therapy.

We are currently post feeding into the expansion phase of this study.

As a reminder, although paclitaxel is also being investigated in combination with Gsk's <unk> Peng carboplatin for Neo adjuvant treatment in breast cancer in the I spy two trial.

This study is progressing well and the data readout is expected to try and teach too.

Lastly, as we can see that the broader or suffer a platform.

As the potential opportunity to participate in the innovative licensing in excess pathway or I lab in the U K.

This is a new program that was established by the Ami calorie and other UK government agencies to efficiently accelerate time.

Time to market.

And facilitate patient access to innovative medicines.

We have received confirmation that the idle lap steering committee.

I wanted the innovative medicine destination.

Namely the innovation passport.

And second of all our novel PGP pump inhibitor.

In combination of oral anti cancer medicines.

The passport is the entry point for the program.

The next step will be to meet with the groups in the ILS steering group to define the roadmap to facilitate the best approach 40 wrapping all of this discovery platform in the U K.

We will provide further updates when we have more news here.

I will now turn it over to stop at that and then to provide an update on our cell therapy programs.

Then.

We continue to make strong progress on building out and strengthening our cell therapy program and have had a number of positive updates in the quarter.

We believe this portfolio represents a key value driver for <unk> moving forward.

Earlier today, we put out a press release disclosing interim data from our allogeneic CD 19 car NK key clinical trial.

Which were published this morning on the Ash website.

We have treated a total of five patients for <unk>.

Any child cohorts and why.

Indeed, our cohorts.

We are excited to announce that we have observed <unk> and <unk> on a five patients.

<unk> for patients in the initial cohorts.

And once you're on or complete response with incomplete hematologic recovery.

L L cohorts.

These responses were observed following single IV infusions at the very low doses of $10 million.

Car NK T cells per meter square, which are a fraction of the average dose of commercial car T products.

In addition, these patients were heavily pretreated with multiple prior lines of therapy and two responses were seen in patients who failed prior car T therapies.

While we didn't see in vivo expansion in the peripheral blood in the first three patients at the lowest dose.

We did see in vivo expansion of donor derived car NK T cells in the image location at the second dose cohort as long as the patient in the <unk>.

L L cohort at the first dose cohort that peaked at week one.

More importantly, we're able to detect allogeneic car NK T cells in tumor biopsies.

Persist up to five weeks into patients, which support the homing abilities of these car T cells to tissues and tumors.

In the NHL patients with CR we.

We started 2000 full expansion of the patients NK T cells that peaked at week six.

Suggesting be fused allo car NK T cells stimulated and activated the patient's own immune system.

This is an interesting application only in one patient and requires further validation with more patients.

The most common adverse events observed were nausea, and Grace me four hematological toxicity related to input depletion chemotherapy.

The only adverse events attributable to cure a fivefold to grade one solid time, releasing some one patients.

In summary, the <unk> and <unk> out of five patients following a single low dose infusion.

Well tolerated the side effect profile.

Products that is administered in the outpatient setting.

We believe an attractive clinical profile that's emerging.

Well against the commercial autologous products as well as other allogeneic products in development.

We look forward to expanding our current single center study at Baylor to a multicenter study.

Owner to accelerate enrollment and replicate the early promising data in CD, 19, relapsed and refractory lymphoma and leukemia.

I would also like to report that our phase one study testing how high affinity T. Autologous TCR T cell therapy targeting NY ESO antigen in solid tumors has begun screening patients for enrollment.

We are using our own proprietary immunohistochemistry tests to identify high expresses NY ESO in patients with lung cancer.

<unk> cancer.

Neck cancer liver cancer and sarcoma.

Who are more likely to benefit from our NY ESO TCR T cellular therapy.

We hope to present interim data next year at an appropriate medical conference.

Longer term, we're excited about the opportunities for inserting tcr's onto the NK T cells to generate an allogeneic cell therapy approach for solid tumors.

As many of you know in solid tumors represent 90% of the oncology market and there remain significant unmet medical needs.

We believe having an allogeneic approach that allows for cost effectiveness, we keep dosing will be an important element of success to target solid tumors.

We look forward to continuing to innovate and maximize the value of NK T cell platform.

Areas of research focus include additional.

Additional targets, improving persistence and anti tumor activity of NK T cells.

As well as further characterization of healthy donuts and scale up of our manufacturing process.

Lastly, we recently received our first U S allowance on one of our foundational patents on NK T cells.

This patent inclusive pharmaceutical compensation claim that compliance is genetically modified CD 62 positive human NK T cells also express at least one car.

We discovered that under certain conditions.

T South acquired 62 L.

Which is a marker of central memory T cells.

Which has enhanced expansion persistence and antitumor activity and we have designed our manufacturing process.

Rich for CBC takes me to our pop up to car NK T cells.

We believe that this allowance solidifies our already strong IP position and firmly establishes a famous that's one of the leading companies.

T cell therapy.

I will now turn it over to Jeff.

Thank you Dan.

Revenue from product sales increased to $27 million in the third quarter.

That represents an increase of 9% from.

From the third quarter in 2020, and a 26% increase sequentially from the second quarter of this year.

As a reminder, during the full year 2000 and <unk>.

We had approximately $20 4 million.

Non recurring sales due to COVID-19.

We should be able to make up about 16 million of those nonrecurring sales, which actually represents approximately a 14% increase in our base business revenues.

Third through 2020.

These results were achieved despite significant challenges in 2021.

The challenges include.

Covid related impact on manufacturing in both China and India.

Inability to secure shipping options to bring our inventory into the United States.

Shortage of essential materials like stop roofs last files and sort of injuries.

And challenges to purchase and receive.

The central API.

For our products in a timely manner.

With regard to our financial guidance for product sales.

In 2021.

As a result of the challenges just described to you.

Gather with the impact of the non reoccurring sales in 2020.

We now expect revenues declined by 6% to 12% year over year.

We anticipate that most of these challenges will.

It will be much less severe in 2022.

For the new products, we have recently launch we've been able to achieve meaningful market share in a short period of time.

For example.

We are now number one in terms of market share.

Our liquid cyclophosphamide product.

There are a number of factors expected to drive the increase in revenues and the remainder of this year and into 2022.

These include new product introductions.

We have three product launches planned in the third quarter.

And an additional seven planned in 2022.

Two of the planned new product introductions in 2022 are very significant products.

And these will be launch at market formation.

April and May of next year.

The revenues in these two products will enable us to increase revenues and margins.

Both of these products have tentative approvals.

And are scheduled to launch that's happening exploration.

We also have continued sales improvements.

And a few key apd products.

As previously discussed.

Our biggest challenge remains our ability to secure essential components and shipping and both shifts and claims.

In the first half of 2021.

We experienced significant COVID-19 related challenges.

Our Indian supply chain and to a lesser extent in China.

The labor markets and the regions have improved.

We are still seeing delays.

We expect strong increases in revenues and margins in 2022.

And beyond.

Based on a very strong pipeline, particularly for Apd.

Our Phoenix Pharmaceutical division, our Apd currently markets 33 products.

With 64 Skus.

And our Phoenix pharma solution markets five products.

16 screens.

Construction of our facility in Dunkirk, New York is essentially complete.

We have now completely installed the class II ball that will eventually allow us to manufacture our products.

Two large why authorizers have been deliberate in the facility and we expect the Isolator vial filling lines to be delivered in February.

2022.

We have built eight dedicated days to the expanded fiber <unk> business.

We had originally planned to commence manufacturing there in Q4 2021.

However, there were some delays in securing state licenses.

We are now actively going through the licensing process in New York.

And then with the seven largest states.

Therefore, it's likely going to be well into 2022.

Before we can fully take advantage of this new capacity.

The revenues at Aps remain robust and.

And we are selling essentially every unit we can manufacturers.

Attractive margins.

I will now turn it over to Steve.

To discuss the financials.

Thank you Jeff.

Revenue from product sales increased to $27 million.

Third quarter, compared with $24 8 million in the third quarter of 2020, an increase of 9% year over year. This increase was primarily attributable to an increase in fiber <unk> product sales of $2 1 million due to.

The increase in demand for certain drugs used to treat patients hospitalized with COVID-19.

By product sales and contract manufacturing sales each experienced an increase of <unk> 4 million.

These increases were offset by a decrease in apd product sales, resulting primarily from a significant prior year increase in demand for COVID-19 related drugs and for FDA shortage products during 2020, including some significant nonrecurring orders.

License fees and other revenues were $5 3 million for the third quarter 2021, compared to $10 $7 million in the comparable period of 2020.

This decrease was primarily due to the recognition of $5 one.

$1 million and license and royalty revenue from Albemarle for the launch of <unk> theory in the EU in September 2021.

While we recognized $10 4 million and license revenue during the third quarter last year pursuant to a license agreement with our Chinese partner ex ph.

Pharma century.

Cost of sales in the third quarter, 2021, or $25 6 million as compared to $24 5 million for the comparable period in 2020.

The increase was primarily due to an increase in cost of 500 <unk> product sales as production levels increased. Additionally.

Additionally cost of sales related to royalties for license income decreased by $2 5 million from the royalty payments incurred in 2020 on the license revenue for X T H.

R&D expenses for the third quarter of 2021 totaled $17 7 million as compared to $18 4 million for the third quarter of 2020, a decrease of 4% year over year.

This was primarily due to a decrease in costs of clinical operations oral paclitaxel product development.

And medical affairs and preclinical operations.

The decrease in these R&D expenses was partially offset by increases in cell therapy development costs drug licensing costs related to licenses for specialty drug products and increases in cost of other product development.

SG&A expenses for the third quarter of 2021 totaled $22 8 million as compared to $22 2 million for the third quarter of 2020, an increase of 3%.

This was primarily due to increases in operating costs, including insurance.

Cost.

<unk> fees compensation related cost and.

And site preparation costs relating to the manufacturing facility in Dunkirk, New York as well as the change in fair value of contingent consideration.

These were partially offset by a decrease in cost related to commercializing oral paclitaxel as significant prelaunch activities occurred in 2020 and slowed upon receipt of the CRO in February 2021.

Net loss attributable to Phoenix for the third quarter was $36 1 million or 33 cents per diluted share as compared to a net loss of $36 8 million or <unk> 44 cents per diluted share for the same period in 2020.

In terms of product sales guidance as before we are limiting financial guidance to the existing a phoenix product portfolio only.

As discussed by Jeff We are revising guidance for 2021, and now expect full year product sales will decline by between 6% and 12% year over year.

As of September 30th 2021, and Phoenix had cash and cash equivalents of $73 6 million restricted cash of $16 5 million.

Short term investments of $14 9 million for a total of $105 million.

As Jonathan mentioned, we're looking for additional opportunities to extend our cash runway beyond Q4 2022.

For further details on our financials, including results for the nine months ended September 32021, I would refer you to our Form 10-Q filed with the SEC.

I will now return the call back to Jonathan.

Thank you Steve.

We'll now open the call for questions.

Thank you.

To ask a question you will need to press Star then one on your telephone to withdraw your question. Please press the pound key.

Please standby, while we compile the Q&A roster.

Our first question comes from the line of Jonathan Miller with Evercore ISI. Your line is now open.

Hi, guys. Thanks, so much for the question and congrats on the progress with with anchor I'd like to focus my questions on the NK platform. If that's all right.

There's an emerging theme.

In Nanjing and gene edited car around cell persistence that we keep hearing about but the persistence data in the abstract it Dan.

But that you talked about during your prepared remarks wasn't super clear.

Or you can have more persistence data in the full poster and do you expect this to matter as much for an NK T product, where there's also a feed forward mechanism to adaptive immune system versus a car T product, where San Francisco is really critical.

To impact.

Dan.

Thank you Jonathan for the question, so you're right NK T cells or tissue and Timna trophic. So.

Expect to see more rapid egress of the NK T cells from the periphery into the tissue like the.

Tumor or lymph node, so what we see in the peripheral blood NK T cells may not represent what's actually happening in the patients.

Because this is.

You want to NK T cell infiltrates.

The tumor and as you know.

And actually we saw in tumor biopsies.

Infiltrate into tumors.

Up to several weeks after that person infusion so what.

What you know what.

What is what you see in the peripheral blood in terms of NK and T cells may not represent whats actually happening clinically and in fact in our first dose cohort three.

<unk> NHL patients, even though we didn't see in vivo expansion off of NK T cells, we saw one pier one CR so.

It needs to be more work to better characterize the PK of the cells, but.

I'm not sure what we had learned from the first generation car T PK and persistence, yes could.

Could be extrapolated into the NK T cell because it's very unique biology.

Lastly to your question about you know the.

The adaptive immunity.

Interesting to point out that in one patient we saw 2000 full expansion of the patient's own NK T cells, which suggests that the allo infuse NK T cells were able to stimulate and propagate the immune system the immune system of the host the patient's own NK and T cells.

So that's a very interesting observation.

One patient so we need to replicate that and hopefully we can validate that in more patients that we enroll.

Yeah. Thanks, so much it makes sense.

The other thing that I wanted to ask about is something that I've been curious that now for a little while and you and others have discussed the potential for NK cell therapies to actually benefit from being more mismatched to the patient because they've been K negative regulation from HLA.

And then as if this is a validation of the idea that you can do an allo therapy using NK based platforms.

<unk> is that effect is it worth selecting for us. It is an important enough that it will be a major driver of response or efficacy and does it suggest that the ideal usage of NK based products might require some HLA genotyping and like a library of donor products or is that overcomplicated.

Okay.

Right.

That's a good question, Jonathan maybe I'll ask our Chief Medical officer on the cell therapy division to comment on that.

Okay, Yes, thank you for that question.

I think the honest answer is we don't really know how important HLA will be.

We're not attempting to match match, a priori right now, but we're certainly collecting the information and we will examine.

What the level of matching means in terms of responses safety and pharmacokinetics and pharmacodynamics, but we don't have all those answers now.

Now we do however believe it's very important to properly characterize our donor is not necessarily for HLA about working with our colleagues at Baylor College of medicine.

We have identified certain donor.

Marketers engine gene signature patterns that predict.

Good NK T cell products. So we are focusing on that aspect I'm planning to a priori select the best owners in that way.

That makes sense. Thank you.

Thank you our next.

Our next question comes from the line of Kennan Mackay with RBC capital markets. Your line is now open.

Alright, Thanks for taking the question maybe for Johnson or for Rudy can you speak to plans for global finally outside of the U S for a rockfall in metastatic breast cancer did you did I think you mentioned the strategy in the U K.

And beyond that I'd like to ask on the data from the CD 19 directed.

Car T cell.

This is core fiber true is that correct or.

This product slightly different anyway, but that would go beyond establishing proof of concept for the entry of T cells.

Clearly efficacy significant efficacy but.

At the same time that can be said for a number of other CD 19 directed therapies.

Where ultimately do you see.

T cells coming into a potential treatment paradigm and what our next steps for this program. After this demonstration of early efficacy. Thank you.

Thank you.

Tenant you have two questions. The second question is on NK T, which is a continuation of the last discussion. So why don't we answer the second question Dan do you want to address the question relates to NK T.

Sure. Thank you for the question, Kevin So to your question about.

Basically you know 39 hands, you know relatively competitive area and where does it get T cell fit in I would say that obviously business is very promising early data for responses to Prs <unk> out of five patients, but I also like to point out that we're seeing that these responses at the low.

Dose.

Cohort one times 10 to seven per meter square that as long as three times tenants per meter square so.

The total number of South African people think it's a fraction of what the average dose right now that's being used for the first generation car T therapy. So there's.

Probably a bit of room for improvement and optimizing on the dose. We believe that we can have about you know putting a wide therapeutic window for our NK and T cell therapy.

So we look forward to <unk>.

Salary that clinical involvement.

What our clinical profile pans out at the highest higher doses.

In terms of where does this fit in longer term I would say that because the very unique property of NK and T cell to holding onto tissues.

A tumor a lymph node it really amendment southwell.

To be positioned as a therapy for solid tumors.

We already have a high affinity TCR targeting NY ESO in phase one development. So one potential extension of this program would be to insert a TCR onto the NK T cell platform, which will allow us to go after solid tumors with an allogeneic technology that could.

Allow for repeat dosing, which we believe could be a very important element of success. When it comes to treating solid tumors. So I hope I answered your questions there Kevin.

Yes.

Hello.

On the MTA cheese before we jump over to Rockville.

But were seeing was that the.

The lower it goes or the second.

And can you maybe talk to what was going on I'm not patient at all I know is the only grade one but would be interested in that thank you.

Yes, so it was a great one.

Saar in the a L. L. A patient at the lowest dose of one times 10 to seven per meter square. This.

One is the self limiting.

Crs observation and did not require any treatment.

That's all we have right now we may provide more information.

<unk> conference.

In December.

Kevin just want to highlight a little bit further with regard to the fact that the fact that we're using a very small fraction of the cells using copy to demonstrate efficacy in conjunction with the fact that this can be low G&A Geneva in terms of using <unk>.

So all this actually is a transformational with regard to the.

Approach based on the cell therapy using our platform.

In fact that we have proven that it has.

Good therapeutic.

Therapeutic.

Index with regard to this group patient you said indication done this platform I E.

Actually rather clinically and then at the same time, if we can extend to other molecular pockets.

Surface, where good platform to jump start the approach in terms of children of Tencent base on NK T therapy.

Any further questions on NK T.

Tenants before thank.

Thank you.

We talked about with us.

Right right right I encourage you to two such sulfur to monitor the evolution and the data that updated.

The data we can present at ash.

People the first part of your question Ross.

And then thank you for the question. We believe oral Paclitaxel is that used boats up for oncology patients and the regulatory interaction with the U K and Vitale is actually a natural extension of the already completed phase III program.

Let me say that cancer and they will allow us to extract the value of our phase III investment potentially in other geographic areas.

We are pleased that the U K regulators are considering the merits of the handset with all in combination with chemotherapy.

So we are as we stated earlier, we are not going to comment on the.

Five.

Filings with Egfr cheese has been upset that we teach our practice so how would you set up that.

I Hope I answer your question.

Yes, Kevin.

No.

Thank you.

Our next question comes from the line of Yale Jen with Laidlaw <unk> Company. Your line is now open.

Good morning, and thanks for taking the questions and also going to focus on the 10-K T cells.

For the first question, which is that what the current plan in terms of the additional dose expansion.

For the study and another one follow up to that is that the.

In theory.

Do you see any reason that NK T cells could be less.

It could be safer.

Say compare maybe to the car T.

Hmm.

Particularly in terms of Trs and.

And the other neurological toxicities.

And then I have another model.

Thank you Dan.

Sure the anchor study for purified below to.

Three by three dose escalation design, starting at the lowest dose of one times 10 to seven per meter square. The next dose cohort three times 10 to seven and then the last dose cohort is one times 10 to the eight per meter square. So that is the design and then you know we already have one patients with NHL.

In the second dose cohort.

To your.

Next question related to potential safety vis vis other modalities based on T cell and NK cells. We believe there is a potential for NK T cells to be proven to have a lower.

Crs rate I would draw your attention to the <unk> two study, which you saw kicked off cycle, one pure fiber one program.

In pediatric neuroblastoma and in that particular.

While we're we'd have enrolled 11 patients so far we only saw one grade two crs.

Because we are giving very very low doses only 10 to 20 million cell. So far we believe that these.

<unk> are not causing the kind of cytokine release syndrome that.

Compared to the first generation car T that required hundreds of millions of cells. So that remains to be determined but we're very hopeful that overtime, we're going to have a better safety profile that would be the T cells.

<unk> technologies.

Okay, Great maybe I'll ask one more follow up questions here, which is for the Clinton right.

Itself at this moment.

Basically it has two parts first one is that.

Do you know the reimbursement status in the United States and secondly is that the in terms of the revenue line.

On the.

On the licensing part you have to that.

Revenue.

Does that include any sales royalties on their or simply just the licensing fee.

Thanks.

Let me answer the question.

With regard to the reimbursement all partner Emerald is working very hard to get into the reimbursement scheme and according to via webcast.

We anticipate that the Medicare reimbursement should be inline.

In line online around a year after the approval. So we are working very hard on that and Pisa referred to there.

The webcast because at a charge off.

Sales and marketing in the U S now.

With regard to revenue line, yes, there are other milestones in addition to the royalty and then we have indicated in the past that the milestones consists both the vet and milestones as well as that sales milestones.

When we achieve certain cells.

Pakistan.

We will also receive additional milestones and then at the same time, we have all the milestones and this is in addition to the royalty.

I Hope I answer your question.

Sure.

Yes.

I appreciate it thank you yeah.

Thank you.

Remind me to ask a question you will need to press Star then one on your telephone.

Our next question comes from the line of Matt Kaplan with Ladenburg Thalmann. Your line is now open.

Hi, good morning, and thanks for taking my questions I guess.

Continue on the NK T can you talk a little bit about where you are in terms of manufacturing.

The the allogeneic.

Our product and how it potentially differentiate and add some.

Benefits.

From a QA QC point of view differentiated from the car T platform for many factoring perspective.

Thank you Ed.

Oh.

The chart on page or answer that question if I may.

Kurt.

Yes, well thank you for the question.

Now there are several aspects of manufacturing that we believe provide a significant advantage for NK T cells.

For one thing with since NK T cells type, one, which we use.

Having invariant T cell receptor.

They will not cause graft versus host disease, and so there's no need for us to perform any type of gene editing during the manufacturing.

This makes for a simpler process.

And reduces the potential for Gino toxicity and chromosomal breakage.

Also we naturally expand the NK T cells by stimulating them with.

A synthetic glycolipid they recognize they're tcr's recognized like Olympics.

And in combination with certain cytokines the cells have a very significant expansion potential and so that appears to be a very robust process.

Process in that respect.

So those are two advantages.

Of the manufacturing that we intend to.

Carry through with it.

In terms of expansion when we get.

Just up to over 10000 fold expansion we've made.

Major enough from our first healthy donor to run our entire phase one program from one healthy donor and we have lots of plans to optimize the process going forward I think I'll stop there in the interest of time, but it is a very interesting.

Interesting subject and we're paying very close attention to manufacturing and CMC issues.

Alright, great. Thank you that's very helpful. And then just on Iraq small.

Can you talk about a.

Potential path forward, what Youre thinking right now maybe it's premature given you haven't met with the FDA, but for the angiosarcoma indication given the unmet need there.

Linda.

And we certainly believe Uh huh alright so.

Uh huh.

Good.

Oncology drop sleep.

Three programs.

Ongoing with Rx so.

The first one is the angiosarcoma, which we have completed the enrollment and we have a meeting scheduled with the FDA later this month to discuss the path forward.

Given that we have already received.

Often.

Indications are that indicate for that indication.

Once we got a clear guidance from the FDA about a possible it will make an announcement. So you can't stay tuned on that one.

We have two other programs that are also ongoing.

One is the one that we announced and has more recently the combination with the anti PD one.

The.

Catch you the combination program, where we.

We saw in the phase one study that in.

H update for lung cancer patient in non small cell lung cancer patients, who had previously called Kras Wild one anti PD one.

All of them has sold responds.

All other blue.

Stable disease.

Very encouraging for us.

Open up the expansion cohort to look.

Sure.

That Heidi consisting signal so we hope to have some.

B cell so once we get the enrollments going.

But program that's ongoing in the U S is a long running high spy two program and we are in that program in combination with the GSK saw style of map and also with <unk>.

Combination with Carboplatin too.

<unk> in the U S for the new adjuvant treatment of breast cancer and desktop.

He is enrolling well and we hope that they will finish that study and have some we saw.

Some timing trying to 'twenty two.

So we are keeping an eye open on the opportunity for us.

Our XO and given that all of those co brands.

And tidy primarily in the U S.

We hope to have.

But the reception of the data.

40 sleep program going forward.

Uh huh.

I wonder if they prefer that to your first question.

From Europe from your question I can understand that you are asking with regard to D. You show.

QA QC batch release.

Features required for cell therapy, which all the infrastructure in Phoenix will be more than capable to support all this going on which you saw the benefit of the ocular therapeutics program within a Phoenix now.

Sure that the second part of your question is related to the recent.

Concerned from FDA with regard to the chromosomal break Asia or the.

We arrangement and the fact that Oh.

Our cell therapy approach that we are not using gene editing I think that should not be a concern and obviously the first part will be the cost involved and certainly is a L. B.

Of course, it won't be far less than the standard autologous cell therapy procedure.

We hope we answered your questions.

Thank you Johnson that added color is very helpful.

Thank you Matt.

Thank you.

Last question comes from the line of Gil Blum with Needham <unk> Company. Your line is now open.

Hello, everyone and thanks for taking our question just a quick one on 62 hour positivity.

And the car T program.

Could you provide maybe a little more context as to the benefits of having a <unk> 62 hour positivity from what I remember, it's an NK.

Cell marker that assists with mortality of sales, but if you could provide a little bit more color that would be helpful.

Oh.

Alright.

Sure I can take that so we have demonstrated.

In a preclinical model that.

It is important to our positive cells have enhanced expansion part.

Assistance and anti tumor activity. It's also a marker for a more of a memory like NK T cell population. So we have demonstrated in the <unk>.

Vivo models that these cells perform better than the ones that are negative for CD 62, now and that's why in our manufacturing process, we select for the city to our positive cells that would have better activity and persistence in the in vivo.

Alright.

Thanks for taking our question.

Thank you.

Thank you there are no further questions I will now turn the call back to Johnson Lau for closing remarks.

Thank you everyone for joining us today now that we have make a decision about the U S regulatory pathway of oral paclitaxel in metastatic breast cancer.

Next is able to fully focus on all the progress.

We look forward to updating you on progress in our own coffee program in angiosarcoma in combination with Penn boosted them at.

Our data from I spy two.

As well as a regulatory update from Europe soon.

We will also continue to be enthusiastic about the potential of cell therapy program.

And at the same time, a Phoenix continues to explore strategic opportunities that will allow us to unlock shareholder value.

We appreciate your attention and interest and look forward to pull without providing more updates in the coming months.

Thank you.

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

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Good day, ladies and gentlemen, and welcome to the third quarter 2021 our Phoenix, Inc. Earnings Conference call. At this time all participant lines are in a listen only mode.

Later, we will conduct a question and answer session and instructions will be given at that time to ask a question you will need to press Star then one on your telephone.

As a reminder, this conference call is being recorded I would now like to hand, the conference over to Kelly Dougherty Director of Investor Relations you may begin.

Good morning, and thank you for joining our conference call today, we will provide an update on our Phoenix. So it does not as well as a review of financial results for the third quarter of 2021.

A news release detailing the results crossed the wire earlier. This morning and is available on the company's website. A replay of this call will also be archived on the company website. During the conference call. The company will make projections or forward looking statements regarding future events, including statements about financial business and clinical milestones anticipated in the fiscal.

Year, 2021 and beyond we encourage you to review the Companys past and future filings with the SEC, which identify specific factors that may cause the actual results or events to differ materially from those described in the forward looking statement you can find our SEC filings in the Edgar database at Www Dot FCC Dot Gov.

Or in the Investor Relations section on our website at Www Dot the Phoenix Dot com.

This morning, we are joined by Dr. Johnson Lau, Chief Executive Officer, Mr. Jeff Gordon Chief Operating Officer, Dr. Rudolf Kwan, Chief Medical Officer, and Dr. Dan <unk> President of the Phoenix out therapy and.

Steve Adams, Chief Accounting Officer, the management team will be available to answer questions. After the prepared remarks.

I will now turn the call over to Johnson for introductory comments.

Thank you Katie.

There have been several important development instead of Phoenix in the third quarter that I would like to cover this morning.

I will give a brief update on oral paclitaxel before spending some time discussing our cell therapy programs, where we have had some very positive news.

Beginning with oral Paclitaxel and <unk> in metastatic breast cancer.

October we hope.

The meeting with the U S FDA regarding our new drug application.

Unfortunately, we could not reached alignment with the FDA on the U S regulatory pathway in metastatic breast cancer.

After careful consideration we determined that another large randomized controlled study for the metastatic breast cancer indication.

Not be an optimal use of all resources.

Instead, we intend to prioritize the other ongoing studies of oral Paclitaxel, which have shown encouraging results in particular, the combination of anti PD, one and old paclitaxel for patients with non small cell lung cancer, who had previously failed anti PD one monotherapy.

Yes.

And the other programs in our pipeline.

Ultimately all goes after sort of patients and maximize value for our shareholders.

We will however continue to explore paths to approval for oral paclitaxel in regions outside the U S.

Our regulatory team has been in discussions with <unk> regarding a potential filing.

That's before it is a Phoenix policy to make a formal announcement only once the filing has been accepted.

Separately.

It's also been some positive news from the U K regarding a new program called the innovative licensing and FX pathway.

ILEC.

Which aims to accelerate time to market facility.

Facilitating patient access to innovative medicines.

We have received notice from the <unk> program.

<unk> in combination with all anti cancer medicines.

The accepted into the first stage of this program.

Dr. Rudolf Kwan will expand on this in a few minutes.

And even a part of a Phoenix strategy is to enhance and expand our audio technology platforms.

All this upfront.

With the continued positive momentum in our cell therapy programs.

Dr Lang President of Felix cell therapy will provide a detailed update.

But there are several positive developments I want to highlight specifically.

Early this year, we acquired it crew welfare predicts.

Well I think that's with a first in class NK T cell therapy technology platform for the treatment of both hematologic and solid malignancies.

One of the two clinical stage assets, we acquire in this transaction is pure FIFO too.

An allogeneic product is being evaluated in the anchor trial.

A phase one study in patients with C. D 19, positive relapsed or refractory lymphoma and leukemia.

There will be an important update on this study and the full coming American society of hematology or Ash meeting in December.

The abstract became public this morning.

And we are pleased to report that all off a total of five patients there have been two complete responses and two partial responses with the low dose of the infuse engineered NK T cells.

Our clinical program is very encouraged by this data.

And we look forward to providing more details at ash.

Okay.

Also regarding cell therapy, we received notice from the U S patent and trademark office, allowing patent claims are run our NK T cell therapy platform.

Similar claims had already been granted in the EU, but these are the first to be allowed in the U S.

We believe this will push the protection I run our technology and strengthen your Phoenix position as one of the leaders in the NK T cell therapy.

Yeah.

S focused theory, all type of nibbling ointment.

Our first in class Michael Kaplan inhibitor for the treatment of actinic keratosis of your face or Scott.

It was launched in the U S. In February this year.

By our partner Emera.

In September <unk> announced the launch of the theory in Europe.

Following approvals in both the European Union and the United Kingdom over the summer.

The U K and Germany are the first two European countries, where per series will be available for prescription.

To be followed by all the EU countries.

We are very encouraged to see strong execution by MRO in making this product available to patients in the licensed territories.

And in the U S. We are pleased to nook and acceleration in script trends after labor day.

As of September 30 <unk>.

Phoenix had cash cash equivalence restricted cash and short term investments of $105 million.

After receiving these C O L earlier this year, we immediately initiated cash preservation measures.

Which includes significant reduction in our commercialization activities and expenses.

The reduction of our supply chain activities and expenses in.

A slowing down of certain clinical programs.

Yeah.

Our current projected cash runway is through fourth quarter 2022.

We will look for additional measures to further extend the runway.

We will continue considering very carefully our powerhouse and overall strategy.

As how to optimize the use of our resources.

While pursuing initiatives to unlock value for the long term.

We do not believe before value of our assets is appreciated by the marketplace.

These include the oncology focused small molecule or a couple of your platform.

Our cell therapy business.

The growing royalty and milestone stream, we are generally seeing from considering.

And our specialty pharma business, which the significant property plant and equipment assets.

Our mission continues to be a biotech focused company working to serve patients and health care community.

We remain focused on advancing the portions of our pipeline that we believe could transform standard of care.

And we will continue to explore options to increase the overall value of our business.

I will now turn it over to Dr. Rudolf Kwan to provide an R&D update on our all paclitaxel programs and the <unk> platform.

Thank you Johnson.

As Johnson mentioned.

We announced last month that we held a type a meeting with FDA to discuss a proposed design for a new clinical trial that was intended to address the issues our lie in the C. R. L received.

Plex, Texel and <unk> in metastatic breast cancer.

It was an informative meeting.

And after careful consideration.

We determine that could the knee deploying our resources towards states. This thing ongoing studies of oral paclitaxel.

As well as our cell therapy programs, a top 10-K T and.

And T C L T.

That's a way to maximize the world for <unk>.

All our stakeholders.

Therefore, we do not plan to pursue a new pivotal study in metastatic breast cancer at this time.

That's for all oral Paclitaxel poll Grameen angiosarcoma.

We have a meeting scheduled with the FDA later this month to seek their guidance on the potential registration pathway.

We'll provide an update once we have more clarity from the agency.

As well as internal agreement on next steps.

We have completed enrollment in our ongoing phase II trial.

Angiosarcoma is that he sees with limited treatment options and for which all paclitaxel as a risk.

<unk> orphan drug designation.

In September.

We presented phase one dose finding results of a study combining all across the textile or.

Hambro litho map in solid tumors at ESMO.

The data was highly encouraging and demonstrate a promising anti cancer activity for the combination of oral paclitaxel Pembroke in.

In lung cancer patients, who have progressed on PD, one PDL one therapies.

There were a total of 10 non small cell lung cancer patients that road.

Of which each were evaluable for response.

Four of the eight patients achieved partial response.

And for others achieved stable disease.

Notably.

These lung cancer patients have all these countries previous checkpoint inhibitor therapy.

Due to progressive disease, so the status of highly encouraging.

S. PD, one PDL, one therapies continue to dominate therapy choices for lung cancer patients.

Our approach with potential to address an unmet medical need for patients that eventually failed PD.

PD, one PDL one therapies.

We are currently post seething into the expansion phase of this study.

As a reminder, although paclitaxel is also being investigated in combination with Gsk's Costello map and Carboplatin for Neo adjuvant treatment in breast cancer in the I spy two trial.

This study is progressing well and the data readout is expected to try and teach wanted too.

Lastly, as we consider the broader or suffer a platform.

As a potential opportunity to participate in the innovative licensing in excess pathway or I left in the U K.

This is a new program that was established by the <unk> and other UK government agencies to efficiently accelerate our trucks tied.

Time to market and facilitate patient access to innovative medicines.

We have received confirmation that the idled up steering committee wanted the innovative medicine destination.

Mainly the innovation passport to end cyclical our novel PGP pump inhibitor.

In combination of oral anti cancer medicines.

The passport is the entry point for the program.

The next step will be to meet with the groups in the ILS theory group to define the roadmap to facilitate the best approach 40 wrapping all of this discovery platform in the U K.

We will provide further updates when we have more news here.

I will now turn it over to Dr. <unk> to provide an update on our cell therapy programs.

Then.

We continue to make strong progress on building out and strengthening our cell therapy program and have had a number of positive updates in the quarter.

We believe this portfolio represents a key value driver for <unk> moving forward.

Earlier today, we put out a press release disclosing interim data from our allogeneic CD 19 car NK key clinical trial.

Which were published this morning on the Ash website.

We have treated a total of five patients floor in the NHL cohorts.

In the ALLL cohorts.

We are excited to announce that we have observed GPRS and <unk> on a five patients.

<unk> for patients in the NHL cohorts.

And once you are or complete response with incomplete hematologic recovery.

L L cohorts.

These responses were observed following single IV infusion at the very low doses of $10 million million car NK T cells per meter square, which are a fraction of the average dose of commercial car T products.

In addition, these patients were heavily pretreated with multiple prior lines of therapy and two responses were seen in patients who failed prior car T therapies.

While we didn't see in vivo expansion in the peripheral blood in the first three patients at the lowest dose with.

We did see in vivo expansion of donor derived car NK T cells in the NHL patient at the second dose cohort as long as the patient in the <unk>.

L L cohort at the first dose cohort that Pete that weak one.

More importantly, we're able to detect allogeneic car NK T cells in term of biopsies.

Our system up to five weeks into patients, which support the homing abilities of these car NK T cells to tissues and tumors.

In the NHL patients with a CR with solid 2000 full expansion of the patients NK T cells that peaked at six.

Suggesting the Skus allo car NK T cells stimulated and activated the patient's own immune system.

This is an interesting application only in one patient and requires further validation with more patients.

The most common adverse events observed were nausea, and grade three four hematological toxicity.

Related to input depletion chemotherapy.

The only adverse events attributable to cure a powerful team was grade one solid time, releasing one patients.

In summary, the GTR and <unk> out of five patients following a single low dose infusion a.

A well tolerated side effect profile.

On a product that is administered in the outpatient setting.

We believe an attractive clinical profile that's emerging.

That stacks up well against the commercial autologous products as well as other allogeneic products in development.

We look forward to expanding our current single center study at Baylor to a multi center study in order to accelerate enrollment and replicate these early promising data.

19, relapsed and refractory lymphoma and leukemia.

I would also like to report that our phase one study testing, Ohio, <unk> T autologous TCR T cell therapy targeting NY ESO antigen in solid tumors has begun screening patients for enrollment.

We are using our own proprietary immunohistochemistry test to identify high expresses NY ESO in patients with lung cancer <unk>.

Breast cancer head and neck cancer liver cancer, and sarcoma, who are more likely to benefit from our NY ESO TCR T cellular therapy.

We hope to present interim data next year.

Medical conference.

Longer term, we're excited about the opportunities for inserting tcr's onto the NK T cells to generate an allogeneic cell therapy approach for solid tumors.

As many of you know solid tumors represent 90% of the oncology market.

There remains a significant unmet medical needs.

We believe having an allogeneic approach that allows for cost if that test we keep dosing will be an important element of success to target solid tumors.

We look forward to continuing to innovate and maximize the value of NK T cell platform.

Areas of research focus include.

Additional targets, improving persistence and anti tumor activity of NK T cells as.

As well as further characterization of healthy donors and scale up of our manufacturing process.

Lastly, we recently received our first U S allowance on one of our foundational patents on NK T cells.

This patent includes a pharmaceutical compensation claim that compliance genetically modified CD 62 positive human NK T cells also express at least one car.

We discovered that under certain conditions.

<unk> South acquired 62 al.

Which is a marker of central memory T cells.

Which have enhanced expansion persistence and anti tumor activity and we have designed our manufacturing process.

Rich will take you through our positive car NK T cells.

We believe that this allowance solidifies our already strong IP position and firmly establishes a CMS that's one of the leading companies.

T cell therapy.

I will now turn it over to Jeff.

Thank you Dan.

Revenue from product sales increased to $27 million in the third quarter.

That represents an increase of 9% from.

From the third quarter in 2020, and a 26% increase sequentially from the second quarter of this year.

As a reminder, during the full year 2021.

We had approximately $20 4 million.

Non recurring sales due to COVID-19.

We should be able to make up about 16 million of those nonrecurring sales, which actually represents approximately a 14% increase.

Business revenues.

<unk> to 2020.

These results were achieved despite significant challenges in 2021.

The challenges include.

Covid related impact on manufacturing in both China and India.

Inability to secure shipping options to bring our inventory into the United States.

Shortage of essential materials, like stoppers last vials and syringes.

And challenges to purchase and receive.

The central API.

For our products in a timely manner.

With regard to our financial guidance for product sales.

In 2021.

As a result of the challenges just described to you.

Gather with the impact of the non reoccurring sales in 2020.

We now expect revenues to decline by 6% to 12% year over year.

We anticipate that most of these challenges will.

It will be much less severe in 2022.

For the new products, we have recently launched we've been able to achieve meaningful market share in a short period of time.

For example.

We are now number one in terms of market share.

Our liquid cyclophosphamide problem.

There are a number of factors expected to drive the increase in revenues and the remainder of this year and into 2022.

These include new product introductions.

We have three product launches planned in the third quarter.

An additional second planned in 2022.

Two of the planned new product introductions in 2022 are very significant products.

And these will be launch at market formation.

April and May of next year.

The revenues are at least two products will enable us to increase revenues and margins.

Both of these products.

Native approvals.

And are scheduled to launch that patent exploration.

We also have continued sales improvements.

And a few key apd products.

As previously discussed.

Our biggest challenge remains our ability to secure essential components and shipping both ships and planes.

In the first half of 2021, we experienced significant COVID-19 related challenges.

Indian supply chain and to a lesser extent in China.

The labor markets and the regions have improved.

We are still seeing delays.

We expect strong increases in revenues and margins in 2022.

And beyond <unk>.

Based on a very strong pipeline, particularly for Apd.

Our Phoenix Pharmaceutical division, our Apd currently markets 33 products.

64 Skus.

And our Phoenix pharma solution markets five products.

And 16 screens.

Construction of our facility in Dunkirk, New York is essentially complete.

We have now completely installed with class II ball that will eventually allow us to manufacture our products.

Two large lyophilize yours have been deliberate in the facility and we expect the Isolator vial filling lines to be delivered in February.

2022.

We have built eight dedicated days for the expanded fiber <unk> vessels.

We had originally planned to commence manufacturing there in.

Q4 2021.

However, there were some delays in securing state licenses.

We are now actively going through the licensing process in New York.

And then with the seven largest states.

Therefore, it's likely going to be well into 2022.

Before we can fully take advantage of this new capacity.

The revenues that EPS remain robust and we are.

Selling essentially every unit, we can manufacturers at attractive margins.

I will now turn it over to Steve to.

To discuss the financials.

Thank you Jeff revenue from product sales increased to $27 million in the third quarter compared with $24 8 million in the third quarter of 2020, an increase of 9% year over year.

This increase was primarily attributable to an increase in fiber <unk> product sales of $2 1 million due to.

Increase in demand for certain drugs used to treat patients hospitalized with COVID-19.

By product sales and contract manufacturing sales each experienced an increase of <unk> 4 million.

These increases were offset by a decrease in apd product sales, resulting primarily from a significant prior year increase in demand for COVID-19 related drugs and for FDA shortage products during 2020, including some significant nonrecurring orders.

License fees and other revenues were $5 3 million for the third quarter 2021, compared to $10 $7 million in the comparable period of 2020.

This decrease was primarily due to the recognition of $5 one.

$1 million and license and royalty revenue from El morale four.

The launch of <unk> theory in the EU in September 2021.

While we recognized $10 4 million and license revenue during the third quarter last year pursuant to a license agreement with our Chinese partner ex ph.

With farm essentially.

Cost of sales in the third quarter, 2021, or $25 6 million as compared to $24 5 million for the comparable period in 2020.

The increase was primarily due to an increase in cost of 500 <unk> product sales as production levels increased <unk>.

Additionally cost of sales related to royalties for license income decreased by $2 5 million from the royalty payments incurred in 2020 on the license revenue for X T H.

R&D expenses for the third quarter of 2021 totaled $17 7 million as compared to $18 4 million for the third quarter of 2020, a decrease of 4% year over year.

This was primarily due to a decrease in costs of clinical operations oral paclitaxel product development.

And medical affairs and preclinical operations.

The decrease in these R&D expenses was partially offset by increases in cell therapy development cost drug licensing costs related to licenses for specialty drug products and increases in cost of other product development.

SG&A expenses for the third quarter of 2021 totaled $22 8 million as compared to $22 2 million for the third quarter of 2020, an increase of 3%.

This was primarily due to increases in operating costs, including insurance.

Costs professional fees and compensation related costs and.

And site preparation costs relating to the manufacturing facility in Dunkirk, New York as well as the change in fair value of contingent consideration.

These were partially offset by a decrease in costs related to commercializing oral paclitaxel is significant prelaunch activities occurred in 2020 and slowed upon receipt of the CRO in February 2021.

Net loss attributable to Phoenix for the third quarter was $36 1 million or 33 cents per diluted share as compared to a net loss of $36 8 million or <unk> 44 cents per diluted share for the same period in 2020.

In terms of product sales guidance as before we are limiting financial guidance to the existing a phoenix product portfolio only.

As discussed by Jeff We are revising guidance for 2021, and now expect full year product sales will decline by between 6% and 12% year over year.

As of September 30th 2021, and Phoenix had cash and cash equivalents of $73 6 million restricted cash of $16 5 million and short term investments of $14 9 million for a total of $105 million.

As Jonathan mentioned, we're looking for additional opportunities to extend our cash runway beyond Q4 2022.

For further details on our financials, including results for the nine months ended September 32021, I would refer you to our Form 10-Q filed with the SEC.

I will now return the call back to Jonathan.

Thank you Steve.

We will now open the call for questions.

Thank you.

Ask a question you will need to press Star then one on your telephone to withdraw your question. Please press the pound key.

Please standby, while we compile the Q&A roster.

Our first question comes from the line of Jonathan Miller with Evercore ISI. Your line is now open.

Hi, guys. Thanks, so much for the question and congrats on the progress with with anchor I'd like to focus my questions on the NK platform. If that's all right.

There's an emerging theme.

In Nanjing and gene edited car around cell persistence that we keep hearing about but the persistence data in the abstract it Dan.

Stuff that you talked about during your prepared remarks will be super clear.

Or you can have more persistence data in the full poster and do you expect this to matter as much for an NK T product, where there's also a feed forward mechanism to adaptive immune system versus a car T product, where yourself assistance is really critical to impact.

Dan.

Thank you Jonathan for the question so you're right.

T cells are tissue or tumor <unk> so <unk>.

We expect to see more rapid egress of the NK T cells from the periphery into the tissue like the.

Tumor or a lymph node so what we see in the peripheral blood NK T cells may not represent what's actually happening in the patients.

Because this is.

You want to NK T cell infiltrates.

The tumor and as you know.

Actually we saw in two months.

Biopsies.

Infiltrate into tumors.

Up to several weeks after their first infusion so.

You know what.

What you see in the peripheral blood in terms of NK and T cells may not represent whats actually happening clinically and in fact in our first dose cohort three.

<unk> NHL patients, even though we didn't see in vivo expansion off of NK T cells, we saw one pier one CR so.

It needs to be more work to better characterize the PK of the cells, but you know.

I'm not sure what we have learned from the first generation car T PK and persistence could.

Could be extrapolated into the NK T cell because it's very unique biology.

Lastly to your question about.

The adaptive immunity.

Interesting to point out that in one patient we saw 2000 full expansion of the patient's own NK T cells, which suggests that the allo infused NK T cells were able to stimulate and propagate the immune system the immune system of the host the patient's own NK and T cells.

So that's a very interesting observation.

One patient so we need to replicate that and hopefully we can validate that in more patients that we enroll.

Yeah. Thanks, so much it makes sense.

One other thing that I wanted to ask about is something that I've been curious is that now for a little while and you and others have discussed the potential for NK cell therapies to actually benefit from being more mismatched to the patient because they've been K negative regulation from HLA.

As if this is a validation of the idea that you can do an allo therapy using NK based platforms.

Important is that effect is it worth selecting for us. It is an important enough that it will be a major driver of <unk>.

Sponsor efficacy and does it suggest that the ideal usage of NK based products might require some HLA genotyping and like a library of donor products or is that overcomplicated.

Okay.

Right.

That's a good question, Jonathan maybe I'll ask our Chief Medical officer on the cell therapy division to comment on that.

Okay, Yes, thank you for that question.

I think the honest answer is we don't really know how important H L. A will be.

We're not attempting to match match, a priori right now, but we're certainly collecting the information and we will examine.

What the level of matching means in terms of responses safety and pharmacokinetics and pharmacodynamics, but we don't have all those answers now.

Now we do however believe it's very important to properly characterize our donors not necessarily for HLA, but working with our colleagues at Baylor College of medicine, we've identified certain donor.

Markers engine gene signature patterns that predict good NK T cell products. So we are focusing on that aspect I'm planning to a priori select the best owners in that way.

That makes sense. Thank you.

Thank you our next.

Our next question comes from the line of Kennan Mackay with RBC capital markets. Your line is now open.

Alright, Thanks for your question.

<unk> Johnson or for Rudy can you speak to plans for global finally outside of the U S for a rockfall in metastatic breast cancer did you did I hear you mentioned the strategy in the U K.

And beyond that I'd like to ask on the data from the CD 19 directed.

Car T cell.

This is core fiber true is that correct or.

This product slightly different anyway, but that would go beyond establishing proof of concept for the NK and T cells.

Clearly efficacy significant efficacy but.

At the same time that can be said for a number of other CD 19 directed therapies.

Where ultimately do you see.

T cells into a potential treatment paradigm and what our next steps for this program. After this demonstration of early efficacy. Thank you.

Thank you.

Tenant you have two questions. The second question is on NK T, which is a continuation of the last discussion. So why don't we answer the second question Dan do you want to address the question relates to M. P T.

Sure. Thank you for the question, Kevin So to your question about.

Basically you know say the 19, it's Brett you know relatively competitive area and where does that get T cell fit in I would say that obviously business very promising early data for responses to Prs <unk>. Another five patients, but I also would like to point out that we're seeing that.

These responses at the lowest dose.

Cohort one times 10 to seven per meter square that as long as three times, 10% per meter square so.

The total number of south debris and few thing it's a fraction of what the average dose right now that's being used for the first generation car T therapy. So there is you know.

Probably a bit of room for improvement and optimizing on the dose. We believe that we're going to have about you know putting a wide therapeutic window for our NK T cell therapy.

So we look forward to accelerate the clinical involvement.

What a clinical profile pans out at the highest higher doses.

In terms of where does this fit in longer term I would say that because the very unique property of NK T cell to home in on to tissues.

A tumor a lymph node it really lends itself well to be positioned as a therapy for solid tumors.

We already have a high affinity TCR targeting NY ESO in phase one development. So one potential extension of this program would be to insert a TCR onto the NK T cell platform, which will allow us to go after solid tumors with an allogeneic technology that could.

Allow for repeat dosing, which we believe could be a very important element of success. When it comes to treating solid tumors. So I hope I answered your questions there Kevin.

Yeah.

Yes.

On the <unk> piece before we jump over to Rockville.

But were seeing was that it.

But lower dose or the second dosing.

And can you maybe talk to what was going on I'm not patient at all I know is the only grade one but would be interested in that thank you.

Yes, so it was a great one crs Saar in the a L. L. A patient at the lowest dose of one times 10 to seven per meter square.

This was a self limiting.

Crs observation and not requiring a treatment.

That's all we have right now.

We may provide more information at the Ash conference.

Sandra.

Kevin just want to highlight a little bit further with regard to the fact that the.

The fact that we're using a very small fraction of the cells using car T to demonstrate efficacy in conjunction with the fact that this can be low G&A Geneva in terms of using donor cells. All this actually is a transformational with regard to the.

Approach based on the cell therapy using our platform.

The fact that we have proven that it has.

Good therapeutic.

Therapeutic.

Index with regard to this.

<unk>, you said indication that this platform.

Sexually valid clinically and then at the same time, if we can extend to all the molecular pockets.

Surface, where we good platform to jump start the approach in terms of shipment of cancer based on NK T therapy.

Any further questions on NK T.

Tenants before thank.

Thank you.

Talk about us.

Right right right I encourage you to two such sulfur to monitor the evolution and the data that an updated data were presented at ash our.

People the first part of your question what else.

And then thank you for the question, we believe oral paclitaxel is that useful for oncology patients.

The regulatory interaction with the U K N Vitale is actually a natural extension of the already completed phase III program.

I suspect that sensor and it will allow us to extract value of all phase III investment potentially in other geographic areas.

We are pleased that the U K regulators are considering the merits of.

And second of all in combination with chemotherapy.

So we are as we stated earlier, we are not going to come in on the.

Filing until filings with Egfr cheese has been upset that which is our practice. So how would you set up that.

I Hope I answer your question.

Yep.

Yeah.

Thank you.

Our next question comes from the line of Yale Jen with Laidlaw <unk> Company. Your line is now open.

Good morning, and thanks for taking the questions and also going to focus on de NK T cells.

For the first question, which is that what the current plan in terms of the additional dose expansion.

For the study.

Another one follow up to that is that the.

In theory.

Do you see any reason that NK T cells could be less.

It could be safer.

Say compare maybe to the car T.

Particularly in terms of Trs and.

Are there any logical sort of toxicities.

Then I have another model.

Yeah. Thank you Dan.

Sure the anchor study for purified below two three by three dose escalation design starting at the lowest dose of one times 10 to seven per meter square. The next dose cohort three times 10 to seven and then the last dose cohort is one times 10 to the APE per meter square so that it is.

The design them.

Already have one patient with <unk> in the second dose cohort.

To your.

Next question related to potential safety vis vis other modalities based on T cells NK cells. We believe there is a potential for NK T cells to be proven to have a lower.

Crs rates I would draw your attention to the generic two study, which is a cute cycled one pure fiber one program.

In pediatric neuroblastoma and in that particular.

While we're we'd have enrolled 11 patients so far we only saw one grade two crs.

Because we are giving very very low dose is only 10% to 20 million cell. So far we believe that these cells are not causing the kind of cytokine release syndrome that.

Compared to the first generation car T that require hundreds of millions of cells. So that remains to be determined but we're very hopeful that overtime, we're going to have a better safety profile of these would be the T cell based technologies.

Apologies.

Okay, Great maybe I'll ask one more follow up questions here, which is for the Clinton.

Itself at this moment.

Basically just two first one is that well do you know the reimbursement status in the United States and secondly is that the in terms of the revenue line.

On the.

On the licensing part you have the revenue does that include any sales royalties on their or simply just the licensing fee and thanks.

Let me answer the question.

With regards to the reimbursement all partner Emerald is working very hard to get into the reimbursement scheme.

According to via webcast.

<unk> anticipates that the Medicare reimbursement should be.

In line online around a year after the approval so they're working very hard on that and Pisa referred to there.

The webcast because at a charge off.

Sales and marketing in the U S.

Now with regard to revenue line, yes. There are other milestones. In addition to the royalty and then we have indicated in the past that the milestones consist both the vet and milestones as well as sales milestones.

When we achieve certain.

It was a soft pocket sales.

We will also receive additional milestones and then at the same time, we have all the milestones and this is in addition to the royalty.

I Hope I answer your question.

Sure.

Yes.

I appreciate it thank you.

Thank you.

Reminder, to ask a question you will need to press Star then one on your telephone.

Our next question comes from the line of Matt Kaplan with Ladenburg Thalmann. Your line is now open.

Hi, good morning, and thanks for taking my questions I guess.

To continue on the NK T can you talk a little bit about where you are in terms of manufacturing.

The the allogeneic.

Our product and how it potentially differentiate and add some.

Benefits.

From a QA QC quite a few differentiating from the car T platform for many factoring perspective.

Thank you Dan.

Oh.

The chart on care to answer that question if I may.

Kurt.

Yes, well thank you for the question.

Now there are several aspects of manufacturing that we believe provide a significant advantage for NK T cells.

For one thing with since NK T cells type, one, which we use.

Having invariant T cell receptor.

They will not cause graft versus host disease, and so there's no need for us to perform any type of gene editing during the manufacturing.

This makes for a simpler process.

And reduces the potential for Gino toxicity and chromosomal breakage.

Also we naturally expand the NK T cells by stimulating them with.

A synthetic glycolipid they recognize our TCR is recognized like of lipids.

And in combination with certain cytokines the cells have a very significant expansion potential and so that appear appears to be a very robust process.

Process in that respect.

So those are two advantages.

Of the manufacturing that we intend to.

Hi carry through with it.

In terms of expansion we get.

Just up to over 10000 fold expansion we've made.

Major enough from our first healthy donor to run our entire phase one program from one healthy donor and we have lots of plans to optimize the process going forward I think I'll stop there in the interest of time, but it is a.

Very interesting subject and we're paying very close attention to manufacturing and CMC issues.

Alright, great. Thank you that's very helpful. And then just on Iraq and Al can you talk about a potential.

Potential path forward, what Youre thinking right now maybe it's premature given you haven't met with the FDA, but for the angiosarcoma indication given the unmet need there.

Rudolf.

Yeah, and we certainly believe.

All right so.

Uh huh.

Good.

Oncology trial Threep.

Three programs.

Our ongoing with our XO.

The first one is the angiosarcoma, which we have completed the enrollment and we have a meeting scheduled with the FDA later this month to discuss the path forward.

Given that we have already received.

Often.

Indications indicate for that indication.

Once we got a clear guidance from the FDA about a possible it will make an announcement. So you can stay tuned on that one.

We have two other programs that are also ongoing.

One is the one that we announced in test more recently the combination with the anti PD one.

The.

Catch you the combination program, where we.

We saw in the phase one study that's in.

H update you wherewithal lung cancer patient in non small cell lung cancer patients, who had previously cold breath, while on the anti PD one.

For them is so response in the fall.

Stable disease is very encouraging for us that'd be up open up the expansion cohort to look to.

Yeah.

That Heidi consisting signal.

We hope to have some hum.

Our results once we get the enrollment going.

But program that's ongoing in the U S is a long running high spite your program and we are in that program in combination with the GSK pulsatile of math and also with combination.

Combination with top of collapsing the two.

In the U S for the new adjuvant treatment of breast cancer and desktop.

Is enrolling well and we hope that they will finish that study and have some we saw some timing trying to 'twenty two.

So we are keeping an eye open on the opportunity for us.

Our XO and given that all of those co brands.

And tidy or primarily in the U S.

We hope to have.

But the reception of the data.

40 sleep program going forward.

Uh huh.

They prefer that to your first question.

I think from Europe from your question I can understand that you are asking with regard to D. You show a QA QC batch release procedures required for cell therapy, which all the infrastructure in Phoenix will be more than capable to support all this going on which you saw the benefit.

The appeal of Therapeutics program within Phoenix now.

I'm quite sure that the second part of your question is related to the recent.

<unk> from FDA with regard to the chromosomal breaker Asia or the <unk> gene rearrangement and effect at.

Our cell therapy approach that we are not using <unk> I think that should not be a concern and obviously the first part will be the cost involved and certainly is a L. B.

Of course, it Walter will be far less than the standard.

Pollack this cell therapy procedure.

We hope we answered your questions.

Thank you Johnson that that added color is very helpful.

Thank you Matt.

Thank you.

Last question comes from the line of Gil Blum with Needham <unk> Company. Your line is now open.

Hello, everyone and thanks for taking our question just a quick one on 62 hour positivity.

And the car T program.

Could you provide maybe a little more context as to the benefits of having a <unk> 62 hour positivity from what I remember, it's an NK.

So marker that sits with mortality of sales, but if you could provide a little bit more color that would be helpful.

They then all correct.

Sure I can take that so we have demonstrated in.

The preclinical model that.

It is important to our positive cells have enhanced expansion persistence and anti tumor activity. It is also a marker for a more of a memory like.

And K T cell population. So we have demonstrated in vivo model that b cell performed better than the ones that are negative for CD 62, now and that's why in our manufacturing process, we select for the city to our positive cells that would have better activity.

Systems in the in vivo.

Yeah.

Alright.

Thanks for taking our question.

Thank you.

Thank you there are no further questions I will now turn the call back to Johnson Lau for closing remarks.

Thank you everyone for joining us today now that we have make a decision about the U S regulatory pathway of oral paclitaxel in metastatic breast cancer <unk> is able to fully focus on all the progress.

We look forward to updating you on progress in a couple of program in angiosarcoma.

In combination with Penn boosted them at.

Our data from I spy two.

As well as a regulatory update from Europe soon.

We will also continue to be enthusiastic about the potential of cell therapy program.

And at the same time, a Phoenix continues to explore strategic opportunities.

Allow us to unlock shareholder value.

We appreciate your attention and interest and look forward to pull it out providing more updates in the coming months.

Thank you.

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