Q2 2022 Athenex Inc Earnings Call
Good day, ladies and gentlemen, and welcome to the second quarter 2022, a Phoenix earnings Conference call.
As a reminder, all participants are in listen only mode and the conference is being recorded.
After the presentation there'll be an opportunity to ask questions to join the question queue. You May Press Star then one on your telephone keypad should you need assistance during the conference call you May signal, an operator by pressing star and zero I would now like to hand, the conference over to Kelly Dougherty director of Investor.
<unk> you may begin.
Good morning, and thank you for joining our conference call today, we will provide an update on the Phoenix is does not as well as a review of financial results for the second quarter of 2020 to the news release detailing these results crossed the wire earlier. This morning and is available on the company's website.
Replay of this call will also be archived on the Companys website during.
During the call the company will make projections or forward looking statements regarding future events, including statements about financial business.
Clinical milestones anticipated in fiscal year 2022, and beyond we encourage you to review the company's past and future filings with the SEC, which identifies 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 at our website at.
Www Dot Phoenix Dot com.
Speaking on the call. This morning will be Doctor Johnson Lau, Chief Executive Officer, Dr. Dan Lang President of Athene Excel therapy, Dr. Darrell Cohen, Chief Medical officer of cell therapy, Mr. Jeff Gordon Chief operating Officer, and Mr. Joe <unk> Chief Financial Officer.
Now I'll turn the call over to Johnson for introductory comments. Thank.
Thank you Katie and thank you everyone joining our conference call. This morning.
I'm extremely proud of our accomplishments in the first half of 'twenty to 'twenty two.
We are now raising approximately two 5 million for the rapid execution of three complex deals.
Did you include the sale of <unk>.
Manufacturing facility to immediately file for $40 million.
Do you feel about to be nimble in U S revenues in EU royalties and milestones just got cheap for you $5 million.
We also announced another agreement to sell our China API basis to the.
Capital, which will add an additional $19 million.
For a total of 144 million.
We remain focused on prudent capital allocation and deploy the combined proceeds to reduce debt from 150 million to $57 5 million.
As we discuss the first quarter. We're also continually reduced head count as part of our restructuring efforts and generated additional cost efficiencies.
We continue to target a 50% reduction in operating expenses by year end.
In summary, we remain on track with all you can talk about pockets.
In our financial policies remain unchanged.
We expect to continue to transform and strengthen the company's balance sheet, who is series of asset divestitures. It's what it is.
Most substantial and persistent cost reduction, which is related to the pivot of the company.
So far this year, we have the left with at the company and advancing our pipeline.
We don't yet to finish with the efforts to secure additional cash runway and are continually working on the all the opportunities to leverage.
Access within the organization.
Actively working on these initiatives, which we expect to be announced in due course.
At the same time, we have tremendous progress pivoting the business towards advancing our novel NK T cell therapy platform with potential to become an industry leading franchise.
We are confident.
Even though we do aim to a T cell therapy approach has promised to be disruptive to both the current and emerging cell therapy landscape.
We continue to advance our clinical programs.
In both solid tumors and people, it's a logical malignancies with potential differentiation in safety efficacy and cost offer currently approved car T cell therapy approaches.
Our two lead clinical programs.
You will find for one an autologous G D to targeted car NK cell product for the EV investigational treatment of patients with relapsed or refractory high risk neuroblastoma.
And two O five hold true and allogeneic CD 19 pocketed.
We do sell products 40, investigational treatment of patients with previously treated hematological b cell malignancies.
Demonstrating very encouraging dose response.
<unk> favorable safety and pharmacokinetics in phase one dose escalation studies.
There's been less.
And Darryl colon.
Our new CMO of cell therapy.
We'll provide a more detailed update on our car T cell therapy pipeline shortly.
Last quarter, we raised our product sales growth guidance to 22, 5%.
And I'm pleased to report that our Apd and Aps.
This are performing as expected.
We're currently working on new product launches.
Margin improvements and mix them rising product shortage opportunities.
Mr. Jeff Gordon will provide more details on these initiatives later.
Data from the phase two I spy two clinical trial of oral Paclitaxel in combination with das settlement, plus or minus carboplatin, new adjuvant locally advanced breast cancer patients.
Expected in the coming months.
We look forward to updating you on this study which was conducted by quantum leap health care collaborate here.
If the trial is positive.
And we graduate from the program.
This means that there is at least an 85% chance of success in the phase III trial.
In that case, we would look to monetize or P. As part of the printing press.
This to create value.
We remain on track with our regulatory interactions with every child, a and are submitting responses to questions received it regarding use of old paclitaxel in metastatic breast cancer in the UK later this quarter.
I'm extremely proud of our team's focus in executing on our strategic pivot.
And I'm highly optimistic about <unk> ability to transform into a lean and focus the business.
It is competitively positioned in a part, though even though oncology so pharmacy sector.
With that.
I will turn the call over to Dr. Tim Lange to discuss our car NK T cell platform.
Please go ahead.
Thank you Jonathan and good morning, everyone.
Our strategic focus remains on advancing our differentiated and versatile car NK T cell therapy platform with potential to overcome the limitations of current immune effector cell therapy approaches.
The therapeutic value of NK T cell stems from the inherent ability to balance the best of both innate and adaptive immunity to achieve a highly effective off the shelf treatment and it's much more tolerable.
That's about to a broader patient population.
This quarter with further strengthens our core foundation of our car NK T cell therapy pipeline.
<unk> advancing our lead autologous.
Allogeneic candidates in both solid tumors and Hematological malignancies.
<unk> 501, our autologous T cell product targeting Jeannie Chu in relapsed or refractory high risk neuroblastoma, we presented interim updates from our phase one dose escalation <unk> two study at the <unk> conference in May.
Trading encouraging data from trials children.
A dose response supported by a 25% response rate was observed with two out of three patients achieving responses at dose level. Four that included a durable complete response persisting for at least 12 months.
Predictors of response included pure fiber, one exposure and <unk> 62 expression.
Richardson, Marc before NK T cells that have central memory or standard like activities.
We are seeing evidence of a dose response.
And as we continue to explore higher doses, we expect to see deeper and more durable responses.
<unk> two is our allogeneic car NK T cell therapy product.
During 2019 for the treatment of relapsed or refractory Hematological malignancies.
Early results from anchor Phase one dose escalation study presented at the 2022 tandem meetings in April and demonstrated encouraging clinical responses in heavily pre treated patients with leukemia and lymphoma at the lowest dose levels up $10 million and $30 million.
Can you just square.
A 60% response rate with two complete responses persisting at least six months was observed in the <unk> cohort.
Claim responses in patients who have.
Obviously experienced a car T cell therapy failure.
Notably we saw no cases of.
Lymphoma cohort.
In the ALLL cohort, one or two patients respond to which was a complete response at six weeks.
And there was re great once Crs reported in two patients.
We are highly encouraged by the wide therapeutic window.
Clinical responses are occurring at the lowest dose levels.
Our ability.
Which offers the potential for deeper more durable responses.
Dose escalation.
Importantly, we saw pure fiber, one insurer fiber to car T cells.
Play a favorable pharmacokinetic profile.
The cell expansion all patients that page to your performance post infusion.
Both sales were detected at tumor sites, including tumor biopsies.
Whole blood and bone marrow.
Data from Jimmy Choo and anchor both support a highly encouraging safety profile.
Any infusion reactions.
Eliminate toxicity.
Neurotoxins study.
<unk> versus host disease, or grade three or higher solid facts limited to clarify the one or two or five well too.
So we now have two phase one clinical trials English durable objective responses were observed which is remarkable in this early oncology drug development program for both solid and Hematological malignancies.
Sure if I wrote three as part of our preclinical program and it's an allogeneic car NK T cell therapy product.
Targeting <unk> three or <unk> three.
And lipoprotein abundantly expressed in hepatocytes, <unk> carcinoma or HCC.
Early preclinical data were presented at Astro last month.
Adding enhanced therapeutic persistence and anti tumor activity with GPC three car NK and T cell expressing that transcription factor That's act III compared to dose expressing IL 15.
This work provides the foundation to support further clinical development of cure five or three.
Our GPC three car T cell therapy product expressing <unk> in patients with HCC.
As the fourth leading cause of cancer related deaths worldwide.
<unk> represents an area of significant unmet medical need that we hope care Pavel <unk> can successfully address.
From a biological standpoint, we know that NK and T cells are different than other cells being explored for use in cell therapy, namely NK cells and T cells.
Beginning to appear that this could be translating into a more persistence expansion and better safety and their colleague from NK T cells.
Collectively our maturing clinical data continue to reinforce a differences between car NK and T cells, and NK cells and T cells.
And we remain highly enthusiastic that our pipeline with first in class potential offers the promise of meaningful therapeutic benefits to indications with significant unmet medical need.
We're also exploring opportunities for collaborations where our NK T cell therapy approach has the potential to overcome limitations, such as Clos efficacy and access and other therapeutic indications.
Lastly, I'm excited to introduce our new Chief Medical officer for cell therapy, Jarrod Cohen, who has taken over leading clinical development clinical operations and regulatory affairs.
Dr. Cohen gets a hematologist oncologist with over 25 years of oncology clinical research and drug development experience in both solid tumors and similar to logical malignancies.
His proven leadership at top tier pharmaceutical companies, but the comp was accompanied by extensive experience in the clinical development of <unk>.
Form filings on CLA, and NDA and subsequent global regulatory approvals of several new cancer drugs over the past decade.
His experience will help position us for success as we advance our investigational NK T cell therapy pipeline in the clinic.
We are pleased to welcome downtown Phoenix, and look forward to working with them to bring this much needed products closer to regulatory approval.
With that I will now turn it over to Daryl and make a few more remarks and discuss the next steps for our clinical trial programs.
Sure.
Thank you and good morning, everyone I am truly excited to have joined our Phoenix at this pivotal time as a company strategically focus its efforts on becoming a global leader in NK T cell therapy for patients with hematologic malignancies, but also for patients with solid tumors.
My interest in our Phoenix was driven by the novel therapeutic potential of combining the unique intrinsic biology of NK T cells with a tumor antigen targeted approach of chimeric antigen receptors to create a disruptive innovation that could better address the challenges and enable the transition of immune effector cells.
Therapy to the treatment of patients with advanced solid tumors. This.
This has already been evidenced in early phase one clinical trials as Dan just summarized which is both impressive and predictive of a high probability of technical success for both <unk> hundred one and Claire 502.
Our clinical development program supports the investigation of autologous and allogeneic NK T cell therapy options for both hematologic malignancies and solid tumors.
The potent anti tumor activity without dose limiting toxicity of our car NK T cells is occurring at dose levels that are orders of magnitude lower than those needed to achieve clinical efficacy with car NK or car T cell therapies.
This in turn enables us to safely dose escalate and even repeat treatment cycles to drive deeper and more durable clinical responses.
Looking ahead first for <unk> 501.
Enrollment of additional patients into the phase <unk> two study at the two highest dose levels dose level, five or $300 million clarify one sales per meter squared is ongoing and dose level fix or 1 billion <unk> 501 cells per meter squared as planned.
We hope to make a go no go decision soon thereafter about whether to move forward to a pivotal registration directed study based on the totality of safety pharmacokinetic Pharmacodynamic and anti tumor activity results.
As for <unk> hundred two expansion of the single Center Phase one anchor study into a multi center phase one anchor two study is ongoing.
And it's on track for activation this fall carrying the possibility of reporting additional results shortly thereafter.
And we continue to evaluate the possibility of investigating higher greater than $100 million Kerr five O two sales per meter squared dose levels as in the <unk> two study as well as a multiple dose regimen within the same lymphoma depletion timeframe in the hopes of safely enhancing the frequency and durability of clinical responses in this.
Heavily pretreated b cell non hodgkin lymphoma, or acute lymphocytic leukemia patient population.
Lastly, we still plan to file an IND for <unk> hundred three and 2023 for the investigational treatment of patients with advanced GPC three expressing a pat of cellular carcinoma.
As was also called out at this year's TCT and CIB MTR tandem meetings.
Allogeneic car NK T cells offer the potential to be the goldilocks of cellular therapies.
Namely the best of T cells in terms of manufacturing, including proliferation post activation and cryopreservation as well as memory and persistence.
Coupled with the best of NK cells in terms of tissue lymph node tumor tissue homing and avoiding graft versus host disease without the need for TCR gene editing.
I am, particularly enthusiastic by the outpatient off the shelf potential of NK T cell based therapy as well as its potential for improved safety efficacy and accessibility over other existing immune effector cell treatment options I will now turn the call over to Jeff to discuss company operations, Jeff. Thank you Daryl.
And good morning, everyone.
At a high level.
Our businesses and our strong group.
Last quarter.
The new partnership with <unk> and.
And it's an injectable company asset.
We have already added first three product from this collaboration.
We expect to launch them later in the year.
Additionally.
We have also identified the next one.
From this collaboration.
We'll be launching in 2023.
The majority of these products have.
<unk> markets.
Currently generates annual sales of approximately $40 million per year.
The study will have much larger markets with annual sales exceeding $400 million each.
We believe that these launches can be a significant growth driver.
For our business.
Another important update.
Is that we have signed a partnership with <unk> pharma.
A company focused on inject.
This deal will allow us.
To significantly improve gross margin.
On our Acs business.
We are also licensed another significant product.
For myeloma pharmaceutics.
Which is expected to launch in Q4 2022.
Our team also has.
Several other meaningful opportunities to launch products currently on the FDA shortage list later in the year, which have historically been a revenue and margin will generate.
Fourth vintage.
Annuity via our new <unk> contract manufacturer.
Has this new York State license in place.
And is actively filing for licenses and the other state.
Now for the quarter.
For our Aps and <unk> businesses.
<unk> for the second quarter, 2022, or $25 8 million.
One 6% from $24 million for the second quarter in 2021.
Broadly speaking.
We finished the first half out of our plan.
Well.
Okay.
And cash flow positive.
Year to date revenues for Apd and Aps are up 48% versus the first half of 2021.
We launched Pemetrexed and Bortezomib.
Market formation.
In may and are capturing revenue in both of these products.
These products are expected to contribute significantly to.
The increased revenues and larger.
Of the overall business, though we do anticipate increased competition in the second half of this year.
More generics enter the market.
In addition to the product launch.
Sure.
We aim to launch an additional eight products in 2022.
Which includes the new products with both <unk> Milo and <unk>.
<unk> pharmaceutical division currently markets 31 product with.
With 57 Skus.
And as <unk> pharma solutions.
Markets six Butler.
And 16 SKU.
We continue to take active steps to strengthen our business.
Improved margins.
Diversify our product mix.
And our efforts are paying off.
2023 promises to be an even stronger year based on our pending <unk> launches and expansion into the other states in our Acs business.
I will now turn the call over to Joe.
To discuss the financials.
Thank you and good morning, everyone.
We continue on our season of breaking down and building back up I am pleased to report that we are delivering on the plan that we outlined on our fourth quarter call to divest noncore assets and reduce operating expenses.
In the second quarter, we sold a <unk> royalty streams for $85 million and along with the first quarter Dunkirk sales were $40 million, we have in total raised $125 million.
On the sale of assets during the first half of 2022.
Continuing on that plan at the start of the third quarter, we announced the agreement to sell our China API business for $19 million and we will continue to keep you informed as we execute on more strategic transactions during the remaining months of 2022.
We have used these proceeds to reduce our debt balance from $150 million at the end of 2021 down to $57 5 million at the end of June 2022, with more reductions to follow.
In parallel cash burn remains top of mind, so I want to again highlight a figure that you can think of as a proxy for this metric.
This figure is our cash flows from operating activities and continuing operations.
This number excludes results from the Dunkirk sale to close CRE royalty sale and the planned sale of the China API facility, which on to our second quarter results as already reported under discontinued operations.
For the second quarter of 2022, the cash use was $18 3 million. This compares to the cash used in the second quarter of 2021 of $34 million, which represents a year over year decrease of 46%.
For the first half of 2022 cash use totaled $36 $8 million were down 42% from the $63 8 million in the first half of 2021.
Now lets review the second quarter financials.
I would ask that you. Please refer to our press release that was issued earlier today for a full summary of our results I will highlight the following.
Total revenues for the second quarter 2022 were $31 5 million compared to $20 7 million for the same period in 2021.
Product sales revenue increased by $5 4 million or 26% over second quarter 2021.
R&D expenses totaled $13 1 million for the second quarter, a decrease of $7 6 million or 37% year over year attributed primarily to a reduction in oral paclitaxel development costs as well as other operational costs.
SG&A expenses totaled $17 2 million for the second quarter, a decrease of half a million dollars or 3% as compared to $17 6 million for the prior year quarter, which was primarily related to decrease oral paclitaxel commercialization expenses net losses attributable to <unk> for the second quarter.
2022 were $32 2 million or 28 per diluted share versus $34 3 million or <unk> 33 per diluted share in the second quarter of 2021.
As of June 32022, Phoenix had cash cash equivalents and restricted cash of $36 million.
Finally, we are reiterating our guidance on our specialty pharma business to a growth of 20% to 25% with strong performance in the first half of the year and our attractive pipeline of new launches, including <unk> and Miller gives us confidence in this range I will now turn the call back to Johnson for closing remarks.
Thank you Joe and thank you everyone for joining us today.
This year, we're effectively executing the transformation of <unk> into a streamlined pure play cell therapy company with an extended cash runway.
We continue to explore additional opportunities to monetize non core assets and reduced operating expenses.
We believe that our differentiated cell therapy programs have the potential to become market leaders in <unk>.
Poised to deliver shareholder value.
Allowing us to further execute on our ultimate mission of bringing innovative treatments to cancer patients.
I will now open the call for questions.
Operator.
Thank you we will now begin the question and answer session to join the question queue. You May Press Star then one on your telephone keypad.
Here atone acknowledging your request.
You are using a speakerphone please pick up your handset before pressing any keys to withdraw. Your question. Please press Star then Q, we will pause for a moment as callers join the queue.
Our first question comes from Jonathan Chang of SBB Securities. Please go ahead.
Hi, everyone. Thanks for taking the question. This is vessel on for Jonathan just wanted to ask could you provide some additional detail on the status of expanding the anchor study to multiple sites and could you also provide some insight on what we can expect in the next update from that study.
Yeah.
Sure.
So first question I may have referred us to Dan the precedent of a cell therapy group.
Sure. Thanks for the question so as we.
As discussed before we're in the process.
Expanding our current anchor study into into a multicenter study.
And our targets to expand it to eight to 10 sites.
Our current.
Projection is that we are going to have an update on the anchor study either around ash or our first quarter 2023.
Got it.
Thank you for asking the question and we are very excited with our data from the anchor study.
Our next question comes from Omar <unk> of Evercore. Please go ahead.
Hi, guys. This is actually John Millar on.
Let's start with the debt balance that you cited in your prepared remarks with $57 million include proceeds from the China API business or was that at the end of the second quarter and sort of Relatedly are you still planning on divesting the oral paclitaxel programs and will you wait for readouts or a regulatory process to sell that or can you give us a sense.
Sense of whats your expectations are for that program.
With regard to your first first question Joe.
Yes regarding the first question and thank you for that.
Question there. The 57 five was at the end of the second quarter. So that does not include the sale or proceeds from the China sale.
With regard to your question, we consider right now we're trying to streamline the company into a pure play in cell therapy. So therefore, non all noncore asset will be will be.
Considered to be non core and for oral Paclitaxel, we have the I.
I spy two data coming either before the end of the year second half of this year, which you said in the next few months, we are trying to be opportunistic and try to unlock the value of our oral Paclitaxel program.
To fulfill our shareholders, but certainly we are considering the oral paclitaxel program to be non call. So therefore, we're trying to monetize it as much as we can.
Great that makes perfect sense, maybe then im on a cell therapy can we talk a little bit about manufacturing for NK T cells, especially given lower dose that youre expecting to get.
Compared to other cell therapies, which are obviously this has been an issue for the industry. In general are you going to be able to complete in the later stage development with your existing capacity and can you talk about what's your capacity needs are going to be would you anticipate those capacity needs to be as you do late stage development for multiple programs and get towards commercialization.
Sure Dan.
Thank you for the question Jonathan So as a reminder, our NK and T cells.
In the.
Sure fiber to a thousand gig approach.
So we're taking these anchor T cells from healthy donors, and we have said and we continue to feel very confident that we can manufacture several hundred doses from one manufacturing run.
So this really allows us to.
Benefiting from the economies of scale and have a much.
Lower cost of goods compared to the current autologous car T.
To answer questions directly on the capacitive manufacturer, we do not have alright, we don't see any constraints right now.
To get to that.
Several hundred doses there are certain things that we need to optimize on the manufacturing process. For example, closing some open staffs into close into closed manufacturing steps as well as working on our automated fulfillment finished but these NK and T cells.
Proliferate and expense.
Credibly well and.
Perhaps like the halftime.
Doubling time actually I should say 24 to 36 hours so.
We believe that this AT&T is going to be able to support only the clinical study.
In the pivotal study, but as well as on commercialization and it will continue to do more work to get to that point in terms of optimizing the process for manufacturing as well as some.
That's why we're scaling up to several hundred doses. So that's work that is ongoing.
Thanks, very much I'll also ask I'll also take this opportunity to ask our Chief Medical Officer.
So therapy Daryl.
<unk> to comment on his confidence level with regard to our current.
Manufacturing is supporting all the clinical studies Daryl.
Yes, no. Thanks, Jonathan.
But yes.
Yes, we are certainly.
Well aware of the need to align our clinical development and our manufacturing capabilities as we move forward.
As fast as possible.
Good news is that we are in close communications with our manufacturing facilities are aware of our clinical development plans.
We're aware of their manufacturing plants.
And so far we've not had any delays in either area.
Due to a lack of coordination.
Our next question comes from Matt Kaplan of Ladenburg.
Aman. Please go ahead.
Hi, Good morning, guys. Thanks for taking the questions.
Just wanted to stay on the shelf therapy.
Programs with 501, you mentioned continuing to enroll at higher dose levels.
When do you expect to have some additional data on the higher dose levels and then you also mentioned with respect to that program.
Thinking about Registrational study decision when when should we have.
More visibility to moving into potential Registrational study for 501.
Thank you for your question Daryl.
Yes.
Yes. Thank you for your question.
Keep in mind. This is a single institution study of a very rare.
Rare disease, so you might imagine.
Enrollment is challenging but it is progressing slowly but surely.
With that as background. We are hopeful we can at least enroll the next dose level in the coming months and make a go no go decision shortly thereafter.
The good news is we are learning a lot as we are proceeding most notably that.
The CD 62 L positive NK T cells are the ones that seem to be associated with response those as Dan has mentioned previously.
Our associated with.
Memory and persistence.
They tend not to exhaust and we're also learning that these cells are.
Recruiting the hosts endogenous.
NK T cells and immune system and they are indeed getting into the sites of disease.
<unk>.
Yes every sign points to a positive forward decision, but we want to make sure we get to a dose that's going to cover the variety of patients with a variety of disease burdens moving forward. So.
Again, we hope in the coming months, we should be able to release more data and hopefully.
To get to a go no go decision sometime next year.
Okay. That's helpful. And then and then with respect to cure a five O Ray where are you on the IND, enabling studies, there and when should we expect that to move into the clinic.
Dan.
Sure Hi, Matt. Thanks for the question so for fiber III presented.
Preclinical data on this new construct which.
Shows that the batch <unk> transcription factor has very potent.
In fact on the NK T cells in terms of anti tumor activity as well as persistence, even better than IL 15, So we're working diligently to.
To take this into an IND filing we're doing all of the Lora the IND.
IND, enabling studies right now and we are currently targeting and filing the IND first half of 2023, and hopefully be able to enroll patients shortly thereafter.
I'd also want to comment on your first question a little bit just as a reminder, <unk> study we already have three.
<unk> patients.
<unk> seen responses I'm wondering if the response in dose level four is a CR persistent for about 12 months.
So we have now two outlets, we can respond to title III patients at dose level, four and thats very encouraging because.
<unk> two antibody that got approved.
Also it has about a 30% response rate and a big medium duration of about six months. So we believe that a similar kind of pivotal study where they did 75 to 100 patient studies in a single arm.
Pivotal study could potentially gain regulatory approvals so.
We are seeing that time responses. We just wanted to make sure that we are optimizing the dose and we look forward to be able to make a go no go decision when we have the data. Thank.
Thank you Matt.
Okay. Thanks, Thanks, Thanks Neal.
Added color.
Yeah.
Once again, if you have a question. Please press Star then one.
Our next question comes from Yale Jen of Laidlaw <unk> co. Please go ahead.
Yeah.
Good morning, and thanks for taking the questions.
My first question here is that.
What is the go toward the end of the year in terms your debt level.
Sure.
Production.
Okay Joe.
Yes. Thank you for the question Yeah.
Hi.
As you can imagine we look at that as kind of on a case by case basis. So we're not targeting a specific goal per se, but let me answer your question.
Our directly.
So as you know as you can following us we've been executing on a number of strategic transactions as those transactions.
Our announced.
We'll discuss with the expected proceeds are and as a draw to a close.
Work with our creditors on reducing the debt levels, but also continuing to fund R&D as we transition to the cell therapy business.
So we do look at it on it while we have an overall plan, we do look at it and adjust that plan on a case by case basis as these transactions come to fruition.
Okay.
Yes.
Yes to ask further into that is that.
And understand that I mean, we certainly would like to reduce the debt level working closely with our colleagues in the oaktree to achieve this objective, but at the same time, we need to make sure that the operation is smooth and then there is a lot of value to be extracted the effect at the Apd and Aps to assist at growing at 27, 5%.
And then the first year.
The first half of the year was performing very well some color with regard to the fact that there is a lot reaching six value and I would like to ask.
So your question further by asking Jeff to give a quick comment with regard to the.
The current status with regards to will be abuse protection of the second half of the year.
Jeff.
Yes.
The second half of the year, we're going to launch at least eight additional products.
We think some of these products are significant they're high margin and we're going to be at market formation.
Half of them.
Sure.
The only reason we are being just slightly hesitant is that we expect on some of the big products that we just launched that there'll be additional generic competition. So we are anticipating.
Very good growth in the second half.
And we will revisit our.
Sure.
Our projections in terms of guidance at the end of the third quarter.
So we hope they will.
Question for both of our English, yes, yes. Thank you.
No problem and actually that was my second question really is that would be in the second quarter. The margin was roughly 10% and do you anticipate.
A potential margin expansion and I assume that's because of the.
However, new products and maybe with higher margin.
Am I correct that in general in that regard.
Yes, that's correct.
Yeah, correct its products at market formation.
Products that have a bigger barriers to entry.
Our part of it we also anticipate some shortage products.
Where the margins are higher so thanks for the question Neil.
No problem and maybe the last question Yale by bold one.
You have the.
The dose expansion or.
Escalation.
Tessa.
Pay between the doses that.
You will have a break.
In terms of assessing the safety and and others.
Before you move to the next one or you can do that more continuously.
Daryl.
Yes, no we can certainly do that continuously.
The primary dose limiting toxicity observation period is 28 days.
Patients are being enrolled in sequential fashion.
In general we can.
We're monitoring that in real time. It is an open label study in close connection with the investigator so we should be able to make.
Go no go decisions to the next dose level in real time, and so we've done previously.
Okay, Great. That's very helpful again thanks.
Rod I appreciate that.
The best of luck.
Thank you.
This concludes the question and answer session I would like to turn the conference back over to Dr. Johnson Lau for any closing remarks.
Thank you everyone for joining us today, we will continue executing on our transformation and we will provide you with another update next quarter. Thank you.
This concludes today's presentation. Thank you once again for your participation you may disconnect.
Yeah.
[noise].
Yes.
Yeah.