Q2 2022 Deciphera Pharmaceuticals Inc Earnings Call
Okay.
Operator: Hello and thank you for standing by.
Operator: Welcome to the Deciphera Pharmaceuticals Q2 2022 conference call.
Good day and thank you for standing by welcome to that if I say around Pharmaceuticals, Q2, 2022 conference calls at this time all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session to ask a question. During the session you will need to press star one.
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Operator: Once again, please press star 1 and 1 if you would like to ask a question.
Operator: Your next question comes from Shea Feeney from Barclays.
And one on your telephone you will then have an automated message advising you had this waste. Please be advised that today's conference is being recorded I would now like turn the conference over to your first speaker today, John Lawson Senior Vice President Finance and Investor Relations. Please go ahead.
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Operator: We will now take our first question.
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Operator: Our first question comes from the line of Daniel Waller from J.P. Morgan.
Operator: Your line is open.
Thank you operator, welcome and thank you for joining us today to discuss the Cyprus second quarter 2022 financial results.
Operator: I would now like to hand the
Operator: Please go ahead.
Shea Feeney: Hi, this is Shea for Peter Lawson.
Ken Larsen Senior Vice President of Finance and Investor Relations with me. This morning to discuss the financial results and provide a general corporate update are Steve <unk>, President and Chief Executive Officer, Dan Martin Chief Commercial Officer, Matt Sherman, Chief Medical Officer, Margherita Duarte head of international and <unk>.
Operator: conference over to your first speaker today, Jen Larson, Senior Vice President, Finance and Investor Relations.
Operator: Your line is open.
Shea Feeney: Thanks for taking the question.
Kelly Chief Financial Officer.
Before we begin I would like to remind you that any statements. We make on this call that are not historical facts are forward looking statements, reflecting the current beliefs and expectations of management made pursuant to the safe Harbor provisions of the private Securities Litigation Reform Act of 1995.
Examples of forward looking statements made during this conference call include our expectation for our preclinical and clinical programs, our commercialization of cannot be 2022 guidance.
Forward looking statements made on this call involve substantial risks and uncertainties that could cause actual results to differ materially from those expressed or implied by the forward looking statements and we cannot assure you that our expectations will be achieved.
Such risks and uncertainties include those set forth in our most recent quarterly report on Form 10-Q, as well as our other SEC filings.
Assume no obligation to update or revise any forward looking statements.
Following this call a replay will be available on the company's website www dot decipher a dot com with that I will now turn the call over to Steve Herbert President and Chief Executive Officer of Decipher Steve.
Operator: Please go ahead.
Daniel Waller: Good morning, everyone.
Shea Feeney: Congrats on the quarter.
Jen Larson: Thank you, Operator.
Daniel Waller: Thanks for taking our question.
Shea Feeney: Just quickly then on consulting, I have to piggyback on there.
Thank you John and good morning, everyone and thank you for joining US today as we provide an update from the second quarter review, our financial results and outline our corporate milestones for the rest of 2022.
Jen Larson: Welcome and thank you for joining us today to discuss Decipher's second, quarter 2022 financial results.
Daniel Waller: A couple of high-level questions, first.
Shea Feeney: Since it's now been another year since ESNA, should we be expecting to see durability data, and kind of what's that expectation there for what we could see?
Daniel Waller: It looks like we've seen a couple of quarters of sluggish revenue in the U.S.
We delivered a strong commercial performance that can lock in the second quarter further entrenching. This practice changing medicine in the United States and building on our very successful initial launch in Germany.
Daniel Waller: Is this market essentially full at peak penetration now?
Daniel Waller: And at a higher level, should we think of this as a run rate going forward?
Steve Herter: Yes.
Resulting in year over year quarter to product revenue growth of 43%.
Steve Herter: Hi, Daniel.
Beyond <unk>, we continue to advance the development of our portfolio of product candidates with first in class and best in class potential.
Jen Larson: I'm Jen Larson, Senior Vice President of Finance and Investor
Steve Herter: Thanks for asking the question about Kinloch performance.
Shea Feeney: And pending the motion data, is there any sense of what the timing is for potential filing or approval, and what the path to filing is?
On today's call, Matt Sherman, our Chief Medical Officer, who will review the progress we have made advancing our clinical stage pipeline.
Jen Larson: Relations.
Shea Feeney: And then just a quick follow-up after that.
And highlight upcoming data milestones from <unk> and DCC 31 16 programs.
Shea Feeney: Sure.
In the second quarter, we opened additional clinical studies the pivotal phase III motion study have impacted it as.
Steve Herter: So, Matt, would you like to take the questions on Vimseltenib and also on motion?
As we focus our efforts on rapidly enrolling this registration enabling studies.
Steve Herter: Yes.
We expect to present updated results from the phase one two study of themselves.
Matt Sherman: Thanks for the question.
<unk> giant cell tumor or <unk> at the ESMO Congress next month, we also announced today that we will present the initial clinical data from the phase one study of DCC 31, 16, our first in class Autophagy inhibitor also at ESMO. This data presentation is the first report from our ongoing phase one study.
Matt Sherman: So, as we know, we'll have another year of follow-up from the initial presentation we had at ESMA last year. So that will provide not only an ongoing drug response rate that's being measured in the study, but the duration of response and treatment duration as well in the study.
Matt Sherman: And that's important because, as we know, in this disease, patients are generally treated for long periods of time.
Matt Sherman: And showing that there's large numbers of patients that can remain unstudied for longer periods of time, that's an important observation to speak to the importance and activity of Vimseltenib in patients with TGCT.
And we're excited that the data was selected for an oral presentation at the corporate paper.
Finally, we anticipate nominating a potential best in class development candidate from our Pan RAF Research program by the fourth quarter.
Jen Larson: With me this morning to discuss the financial results and provide a general corporate
Steve Herter: As we noted in the prepared remarks, we're really excited about the number that we put up for the quarter, reflective of what we believe to be a very stable business here in the U.S., but of course now reflective of geographic expansion and the growth that we're seeing in Europe.
Dan Martin our Chief commercial officer will share more details on the U S commercial performance for the quarter and Margarita Duarte, our head of international who will provide an update on the momentum of catalogs for launch in Europe , including most notably a recent major additional benefit rating Kinloch received in Germany, and the successful post approval paid access.
Dan Martin: Dan, do you want to comment specifically on some of the dynamics that
Dan Martin: we're seeing in the U.S. marketplace?
Dan Martin: Sure.
Dan Martin: Absolutely.
<unk> in France.
Both demonstrate the potential for <unk> to transform the treatment of advanced suggests around the world and underscore the sustained progress of our country by country market access strategy in Europe .
Dan Martin: Thanks, Daniel, for the question.
Last quarter. There were also excited to welcome Kelly, Delaware to our executive team as Chief Business Officer, who joined US from Novartis, where she served as the vice President of business development for the oncology Division.
Kelly brings 20 years of life Science leadership experience to the role and her responsibilities will include developing and leading the <unk> business development efforts as well as supporting corporate strategy initiatives. We're very excited to have Kelly at the site, Brett and I look forward to working with her to drive the company's next chapter of growth ill now turn the call over to Matt Sherman to provide an update on <unk>.
Our R&D efforts.
Thanks, Steve we continue to make excellent progress advancing our clinical and preclinical pipeline.
To provide novel treatment options for patients with cancer.
Let me start with DTC 31, 16, our potential first in class <unk> inhibitor.
We are leaders in exploring <unk> as a broad resistance mechanisms of cancer and 32016 has potential to benefit is let's get the number of cancer patients by targeting the initiating factor we are top three pathway.
<unk> is a potent highly selective switch control inhibitors designed to inhibit <unk> kinase activating across two pathway.
I'll talk to you as a key tumor survival mechanism and a potential mechanism drug resistance of cancer cells.
We've now generated a growing body of preclinical research both in the <unk>.
Currently and with academic collaborators demonstrating the ability of BTC for 2016 to address with pathogen reduced by a variety of our TK rats and map kinase pathway inhibitors, and we have built an industry leading position in targeting this pathway.
DCC $3 16 is currently being investigated in the single agent dose escalation portion of the phase one study in patients with advanced or metastatic solid tumors, the Ras RAF mutation.
We are very excited that it was selected for an oral presentation at ESMO in September as a profit paper, which is intended for original data of superior quality mix. It includes expert discussion.
The first readout will be focused on the overall safety and tolerability profile as well as the covenant with kinetic and Pharmacodynamic markers evaluated in the study.
We expect to demonstrate target engagement through measuring levels of Atg 14, a PD marker ultra inhibition together with the initial PK and safety data. This will allow us to select the recommended dose that we would take forward into multiple combination dose escalation cohorts in the second half of this year.
Based on our preclinical research and the mechanism of action, we do not expect to see single agent activity as monotherapy Phase. One study will include two cohorts in combination with <unk> and <unk> as well as one cohort with the first half and improved K Ras <unk> inhibitor <unk>.
Turning now to themselves or CSF, one receptor kinase inhibitor that we believe has potential to be a best in class treatment for tenants in the OBL janesville tumor or <unk> with.
With one approved treatment available for <unk> patients in the U S and none in Europe remains a significant unmet medical need for a highly effective therapy with a good safety and Tolerability profile, we believe Vince ultimate is well positioned to address this need based.
Based on the initial data from the ongoing phase <unk> study in <unk> patients. The insulting that has shown strong efficacy and durability with an excellent safety profile.
We expect to provide updated results from the phase <unk> study next month and are delighted to have been selected for poster presentation at ESMO.
These results will include updated objective response rate data from the escalation and expansion basically the study longer term safety and initial secondary endpoint data based on patient reported outcomes.
Believe these results will continue to show the consulting that has the potential to become the standard of care drug treatment for patients with TTP non amenable for surgery.
To that end, we continue to open sites and rapidly enroll our phase III registration, enabling motion study and plan to provide an estimate of timing of full enrollment in the coming months.
Matt Sherman: In regard to an update on the Phase III motion study, we do plan to provide an update later this year in terms of an estimate of timing of full enrollment and when we might expect to see results from the trial.
Moving to our preclinical pipeline, we remain on track to nominate a development candidate from our Pan RAF Research program. Later. This year. This program is focused on developing a best in class dual inhibitor of BRAF and <unk> kinases to address an unmet medical need and patients are being class one two and three BRAF mutations as well as BRAF fusion.
<unk> nomination of this development candidate highlights our switch control kinase platform continues to drive portfolio growth through the discovery of innovative new molecules. We're proud to continue to expand our pipeline with potential best in class and first in class product candidates designed to improve the lives of people with cancer.
Matt Sherman: Thanks for Kinloch.
Jen Larson: update are Steve Herter, President and Chief Executive Officer, Dan Martin, Chief Commercial
I'll now turn the call began Martin our Chief commercial officer to provide an update on our U S commercial efforts Dan.
Jen Larson: Officer, Matt Sherman, Chief Medical Officer, Margarida Duarte, Head of International, and Tucker Kelly, Chief Financial Officer.
Dan Martin: We have been really pleased with the launch and having established Kinloch as the clear, standard of care in the fourth-line setting I think is really a testament to a couple of things. One is the significant unmet need that existed prior to Kinloch's launch in this setting and, also the really powerful clinical profile that Kinloch offers to these patients.
Thanks, Matt.
Q2, we continued to execute on our commercial goals for <unk> in the U S. Reinforcing its position as the clear standard of care in fourth line gist, while continuing to expand our prescriber footprint and physician experience with Kinloss.
Jen Larson: Before we begin, I would like to remind you that any statements we, make on this call that are not historical facts are forward-looking statements reflecting the current beliefs and expectations of management made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
Jen Larson: Examples of forward-looking statements made during this conference call include our expectations for our pre-clinical and clinical programs, our commercialization of Kinloch, and 2022 guidance.
Jen Larson: Forward-looking statements made on this call involve substantial risks and uncertainties that could cause actual results to differ materially from those expressed or implied by the forward-looking statements, and we cannot assure you that our expectations will be achieved.
Jen Larson: Such risks and uncertainties include those set forth in our most recent quarterly report on Form 10-Q as well as our other SEC filings.
Jen Larson: We assume no obligation to update or revise any forward-looking statements.
Jen Larson: Following this call, a replay will be available on the company's website, www.deciphera.com.
Jen Larson: With that, I will now turn the call over to Steve Herter, President and Chief Executive Officer of Deciphera.
During the quarter, we achieved $23 7 million and total net product revenue in the U S.
Steve Herter: Steve?
Our key performance metrics continued to reflect strong commercial execution and highly positive product perception. Among jets prescribers. We again delivered excellent results in terms of prescriber reach share of voice and product awareness and importantly, just prescribers in both academic and community studies continue to rate came off very highly across all key product atrophy.
Steve Herter: Thank you, Jen, and good morning, everyone.
Steve Herter: Thank you for joining us today as we, provide an update from the second quarter, review our financial results, and outline our corporate milestones for the rest of 2022. We delivered a strong commercial performance with Kinloch in the second quarter, further entrenching this practice-changing medicine in the United States and building on our very successful initial launch in Germany, resulting in year-over-year, quarter-two product revenue growth of 43%.
Including efficacy safety convenience and payer access.
Also in June we had the opportunity to sit down with many of the leading kols.
Because their experience with their.
Dan Martin: We hear consistently from patients and providers that it's really been a tremendous benefit to these patients who, again, had significant unmet need.
Dan Martin: As a result of that, we were really successful with the launch in penetrating the fourth-line opportunities.
And their feedback was extremely consistent namely that Kinloss has provided tremendous clinical benefit for their patients and that they view it as an indispensable part of their treatment armamentarium and thanks Jess.
Dan Martin: So we do think that the fourth-line opportunity is quite well penetrated. We think that the vast majority of patients who reach the vast majority of patients who reach the fourth-line receive Kinloch.
Dan Martin: And so we believe that looking ahead, while we will, of course, continue to look for opportunities for limited growth within our labeled indication, we've communicated that we think growth opportunities beyond that would have to come from unpromoted off-label uses such as the IPDE or BID use as well as potentially use in earlier-in-line settings. As we've communicated, we think that while that's possible, it's important to always underscore that these are off-label uses.
In Q2, our sales and marketing teams drove strong unit demand volume across all business segments are launched a prescriber base has continued to grow at a very consistent pace quarter over quarter and is now over 700 physicians.
Steve Herter: Beyond Kinloch, we continue to advance the development of our portfolio of product candidates with first-in-class and best-in-class potential.
Dan Martin: So we can't promote those.
Steve Herter: On today's call, Matt Sherman, our Chief Medical Officer, will review the progress we have made advancing our clinical stage pipeline and highlight upcoming data milestones from the Vensultanib and DCC 3116 programs.
Steve Herter: In the second quarter, we opened additional clinical study sites for the pivotal Phase 3 motion study of Vensultanib as we focus our efforts on rapidly enrolling this registration-enabling study.
With the majority of new prescribers again coming from the community setting.
Steve Herter: We expect to present updated results from the Phase 1-2 study of Vensultanib in Tenosynovial Giant Cell Tumor, or TGCT, at the ESMO Congress next month.
Our market access team has continued to deliver excellent payer access with 100% payable claims for on label patients during the quarter and.
And we again saw strong persistency and time on therapy.
As expected the percentage of patients receiving free drug under our patient assistance program or Pap increased in Q2 versus Q1.
That percentage was towards the higher end of our 20% to 30% estimated range. This quarterly trend is very consistent with what we saw in 2021 and is driven by patient affordability challenges that tend to increase as the year progresses due to the Medicare part D drug benefit design.
Consistent with what we saw last year, we expect the percentage in Q3 and Q4 of this year to be at the high end or slightly above our estimated annual range of 20% to 30%.
Breakeven is healthy and we are excited to see the continued progress of the motion study and are looking forward to the possibility of insulting then becoming hyper our second approved drug which would offer substantial operational synergies given our existing sarcoma focused commercial infrastructure.
We have continued to deepen our understanding of the <unk> market opportunity through our market research Kols engagement and analysis of U S claims data.
We believe in something that would be well positioned to penetrate and potential addressable U S market of $850 million, given the high unmet medical need as well as helping them potentially best in class clinical profile.
And this does not include the additional opportunity associated with a significant prevalent treatment eligible population.
The opportunity in Europe , where the unmet need is even greater given that there are no approved therapies for <unk>.
Shea Feeney: I know it's still early days for the Europe launch, but is there any way to add color to what we can expect for the launch in France compared to Germany?
I will now turn the call over to Martin <unk>, our head of international to discuss the exciting results from our second quarter of the commercial launch of <unk> in Europe .
Shea Feeney: And how does that market opportunity compare?
Greta.
Thanks, Sam we are very proud of kinlaw answering to the European market, including our launch in Germany, and the transition to the post approval could access program in France as well.
Shea Feeney: Thank you.
Steve Herter: Thanks for the question with respect to Europe.
Work to ensure this important medicine, Richard the patients around the globe are needed most.
Margarida Duarte: Margarida, would you like to take that?
For the second quarter of 2022, we reported international Kinloch net product revenue of $7 8 million, most of which represents product revenue from Germany and France.
Margarida Duarte: Sure.
These strong results in the second quarter reflects keylock exceptional clinical benefit and demonstrate its growing position into euro p&g's frequent landscape addressing the high unmet needs of patients with <unk>.
We are honored to announce that Kinloch received on June 16, and lead to additional benefits racing in Germany price indication in advance to that.
Margarida Duarte: Just to double check, since my audio is not so good, was the question related to the market opportunity of Germany versus France?
Margarida Duarte: Exactly.
Currently Navios Cheeseman <unk> on this day only approximately 1% of all oncology drugs every ship the highest possible rating.
Jim.
Eric Larson oncology treatments to received is waiting for its lead indication MTR reduce frequent awarded with such recognition.
Reimbursement submission in Germany are known to be one of the most complex and comprehensive abaca submissions in Europe , and I am extremely proud of the dedicated cross functional team that supported this impressive effort.
With the traditional benefits, we have secured a favorable parkman position from a price negotiation perspective, which we believe will result in a successful outcome.
Margarida Duarte: And what we could expect for your France launch.
In France, we are also very well positioned thanks to Ken looks positive ASMR III lighting.
Margarida Duarte: Sure.
And all you achieved by a small number of bar from treatment, which underscores the recognition of the robust clinical value that kinloch brings to eligible patients.
Margarida Duarte: Excellent.
Margarida Duarte: Thank you.
In addition to our ongoing efforts in Germany, and France, we continue to pursue market access for Kinloch in the EU and the U K on the currency by currency basis, and I'm very pleased to share that we have recently submitted our reimbursement application Tonight or access in England and Wales.
Margarida Duarte: So, just to start with, you know, both Germany and France, they are definitely the largest European markets, and this is driven by population and market access considerations.
Margarida Duarte: Of course, some differences may apply in terms of products, but we believe that with Kinloch, this is where we are going to be the biggest revenue for us.
I will now turn the call over to Tucker Kelly, our Chief Financial Officer to review the quarterly financial results.
Margarida Duarte: I should note that Germany has the largest population, whereas France is so higher EPI, and this should be one of the main differentiators.
Sure.
Thanks, Margaret I would like to review the highlights from our second quarter financial results.
Margarida Duarte: I think it's also important to note that we have been selling in France for some time, and have recently transitioned successfully, I should say, to the post-approval paid access program.
Total revenue for the second quarter was $32 $5 million, which includes $31 5 million in net product revenue pillar and $1 million in collaboration revenue, which includes cannot supply and royalty revenue under our agreement <unk> Greater China.
Margarida Duarte: So, I expect the trajectory to be different versus what we are seeing in Germany since we started from scratch in Germany last January, so early this year.
Shea Feeney: Great.
Shea Feeney: Thank you.
Cost of sales for the three months ended June 32022 was $1 8 million, which included approximately $1 million and cost of net product revenue and cost of collaboration revenue of 800000.
Steve Herter: Thank you.
Operator: We will now take our last question.
Operator: Please stand by.
Cost of sales did not include the full cost of manufacturing the initial prelaunch inventories deplete and additional inventories manufacturer and so we do not expect cost of sales as a percentage of net sales <unk> increased significantly after years of zero cost inventory and commenced the sale of inventories that will reflect the full cost of manufacturing.
Operator: And your last question today comes from the line of Andrew Behrends from SVB Securities.
Operator: Please go ahead.
Operator: Your line is open.
Chris: Hey, thanks for the question.
Chris: This is Chris on for Andrew.
We expect to continue to sell the initial prelaunch inventory at <unk> in the U S. During 2022.
Chris: Just two questions on Vimseltenib.
Chris: Just wondering about how you got to the $850 million number and the assumptions for Vimseltenib and the incident population and TGCT.
Total operating expenses were $76 3 million in the second quarter, a decrease of 19% compared to operating expenses of 94 1 million in the same periods in 2021.
Research and development expenses in the second quarter were $44 9 million compared to $60 million in the same period in 2021.
Selling general and administrative expenses for the second quarter were $29 6 million compared to $32 8 million in 2021.
Cash cash equivalence and marketable securities as of June 30 was approximately $393 million.
In April we added approximately 163 million to our balance sheet through a very successful underwritten public equity offering.
With our strengthened balance sheet, we are well capitalized and believe that our cash together with anticipated product royalty and supply revenue will be sufficient to fund our operations for the next three years into 2020 with that I'll now turn the call back over to Steve. Thank.
Chris: And then, you know, what can we think about for the size-for the additive size to the opportunity for the prevalent population and the EU?
Dan Martin: We can't derive those.
Chris: Great.
Steve Herter: We also announced today that we will present the initial clinical data from the Phase 1 study of DCC 3116, our first-in-class autophagy inhibitor, also at ESMO.
Dan Martin: So those kinds of uses would depend on NC-SCAN listing, for example, but also spontaneous use within the provider setting.
Steve Herter: Thanks, Chris, for the question.
Thank you Tucker today's updates underscore the tremendous progress we have made during the first half of this year. We are proud of the momentum we have been able to sustain across our preclinical clinical and commercial programs. So far this year and look forward to an exciting second half we anticipate a number of important milestones, including the presentation of initial data from the ongoing phase one monotherapy.
Dan Martin: So when we think about growth moving forward, that's really how we think about the key dynamics.
Daniel Waller: Great.
Steve Herter: This data presentation is the first report from our ongoing Phase 1 study, and we're excited that the data was selected for an oral presentation as a proper paper.
Daniel Waller: And then on Europe, when we think
Dose escalation study of DCC 31, 16 at ESMO next month and initiation of three combination cohorts with Mac and <unk> to 12, <unk>, Netherlands continued enrollment of the phase III motion study of <unk> and <unk> and the presentation of updated data from the ongoing phase one two study also at ESMO next month.
Steve Herter: Finally, we anticipate nominating a potential best-in-class development candidate from our
Steve Herter: Pan-RAF Research Program by the fourth quarter.
And finally nomination of a development candidate from our Pan RAF program later this year.
Dan Martin: Dan Martin, our Chief Commercial Officer,
Daniel Waller: about peak Kinloch sales there, how would you compare that, what you expect there, to what you expect for peak sales in the U.S.?
All while we continue to cement our position with <unk> as the standard of care for fourth line gist patients around the world with that operator, I'd now like to open the call for Q&A.
Dan Martin: will share more details on the U.S. commercial performance for the quarter, and Margarida Duarte, our Head of International, will provide an update on the momentum of Kenloch's fourth, mine launch in Europe, including, most notably, the recent major additional benefit rating Kenloch received in Germany and the successful post-approval paid access program in France. Both demonstrate the potential for Kenloch to transform the treatment of advanced jets around, the world and underscore the sustained progress of our country-by-country market access strategy
Dan Martin: in Europe.
Daniel Waller: Should it be similar or are there reasons Europe will be larger or, I guess, smaller too?
Steve Herter: This past quarter, we were also excited to welcome Kelly Deloy to our executive team as Chief Business Officer, who joined us from Novartis, where she served as the Vice President, of Business Development for the Oncology Division. Kelly brings 20 years of life science leadership experience to the role, and her responsibilities will include developing and leading Deciphera's business development efforts, as well as supporting corporate strategy initiatives. We're very excited to have Kelly at Deciphera, and I look forward to working with her to drive the company's next
Thank you as a reminder to ask a question you in its press star one on one on your telephone and wait for your name to be announced once again. Please press star one on one if you would like to ask a question.
Margarida Duarte: Margarita, would you like to take that?
Margarida Duarte: Yes, sure.
We will now take off to ask question. Please.
Standby.
Margarida Duarte: Thank you for the question and thanks, Steve.
Steve Herter: So, Dan, why don't you-if you would like to take the questions with respect to the market opportunity for Vimseltenib, both how we got to the TAM and then the additional question about the prevalent opportunity that we see.
Your first question comes from the line of Daniel <unk> from Jpmorgan. Please go ahead. Your line is open.
Steve Herter: chapter of growth.
Steve Herter: Sure.
Hey, good morning, everyone and thanks for taking my question.
A couple of high level questions first.
It looks like we've seen a couple of quarters. So flattish revenue in the U S is this market essentially full at peak penetration now and Ah ha.
The level should we think of just ask everyone rate going forward.
Steve Herter: I'll now turn the call over to Matt Sherman to provide an update on our R&D efforts.
Margarida Duarte: Let me start by saying that I'm very pleased with the strong launch momentum of Kinloch in Europe, mainly in Germany, and with the progress that the team is making in terms of market access in the first European market.
Dan Martin: Absolutely.
Hi, Daniel Thanks, Thanks for asking the question about Kellogg performance as we noted in the prepared remarks were really excited about the number that we put up for the quarter reflective of what we believe to be a very stable business here in the U S. But of course now reflective of geographic expansion and the growth that we're seeing in Europe , Dan do you want to comment specifically on some of the.
Matt Sherman: Matt?
Dan Martin: Thanks, Chris.
Matt Sherman: Thanks, Steve.
Dan Martin: Appreciate the question.
Matt Sherman: We continue to make excellent progress advancing our clinical and preclinical pipeline as we work to provide novel treatment options for patients with cancer.
Dynamics that we're seeing in the U S marketplace.
Dan Martin: So, as we've laid out in the corporate deck, we have put a lot of effort into sizing the potential opportunity for Vimseltenib, certainly in the U.S. and then extending that globally.
Sure absolutely thanks, Danielle for the question.
Dan Martin: There are about 14,000 to 18,000 patients diagnosed each year with TGCT, but the real question is how many of those are likely to be newly eligible for systemic therapy.
Dan Martin: And so we've done a lot of work not only through the literature, but also through claims data-U.S. claims data.
So we have been really pleased with the launch.
Dan Martin: And multiple workstreams that we've put toward answering these questions have resulted in very similar answers, and so it gives us great confidence in the numbers that we've laid out.
Having established <unk> as the clear standard of care in the fourth line setting I think it's really a.
Dan Martin: And so the first component of the $850 million is made up principally of the 1,300 to 1,400 patients that we see starting on systemic therapy each year. So that's the incident component-incident-treated component.
Dan Martin: The other component- is patients who we can see have failed their first surgery, but may not go on to systemic therapy currently within the treatment paradigm.
Dan Martin: Now, some of those patients may derive benefit from subsequent surgeries, but we know some of them also may just accommodate their lives and deal with the challenges of GCT, because the options for systemic therapy today aren't great.
Dan Martin: We know that the one approved agent, pexidartanib, has some significant A.E. challenges, known hepatotoxicity, box warning, REMS program, extensive liver monitoring, for example.
A testament to a couple of things one is the <unk>.
Dan Martin: And so, many patients today who receive systemic therapy actually receive somatinib, which is off-label.
Significant unmet need that existed prior to kinloch launch in that setting and also.
The really powerful clinical profile that can lock offers to these patients and we hear consistently from patients and providers that it's really been a tremendous benefit to these patients who who again had significant unmet need as a result of that we were really successful with the launch in penetrating the fourth line opportunities. So we do think.
The fourth line opportunity is.
Quite well penetrated we think that the.
Vast majority of patients who reached the fourth line received kinlaw.
So we believe that looking ahead, while we will of course continue to look for opportunities for limited growth within our labeled indication. We've communicated that we think growth opportunities beyond that would have to come from and promoted off label uses such as the.
Dan Martin: It's not been studied or developed for TGCT. It's used off-label, and we believe largely because of the A.E.
Dan Martin: challenges with pexidartanib.
The ITT or <unk> as well as potentially used in earlier line settings.
As we've communicated.
While that's possible.
<unk> always underscore that these are off label uses so we can't promote that we can't drive those so those kind of maintenance we're dependent on.
Dan Martin: So, we think that the $500 million that we've laid out is sort of a floor, so to speak, to the opportunity in the U.S., because we can see those patients getting systemic therapy today.
<unk> listing for example, but also spontaneous use within within the.
Provider provider setting.
So when we think about growth moving forward.
Really how we think about the key dynamics.
Great and then on Europe , when we think about peak Kinloch sales there how would you compare that what you expect there to what you expect for peak sales in the U S.
Should it be similar or are there reasons, Europe will be larger or I guess smaller too.
Okay, Great and would you like to take that.
Yes sure. Thank you for the question and thanks, Steve.
Let me start by saying that I'm very pleased with the strong launch momentum off can lock in Europe , mainly in Germany, and with the progress that the team is making in terms of market thoughtful seem to hostility in markets.
Margarida Duarte: So, when it comes to our launch trajectory in Europe, I would say it's still early days. We are still learning about launch dynamics and market dynamics, and it's difficult to, know how the trajectory will evolve from here or when we will be fully penetrated in the market.
So when it comes to our launch trajectory in Europe , I would say, it's still early days, we are still learning about once dynamics market dynamics and it's difficult to know how the trajectory really fall from here or when we will be fully penetrated in the market.
Margarida Duarte: So, I would say that we need more time to consolidate learning, also take into consideration, that summer, according to my experience in international markets, is historically a quiet, Europe. So, we need to take that also into consideration.
I would say that we need more time to consolidate learning also take into consideration that summer. According to my experience in international markets, and historically acquired and slow period in Europe , So we need to take that dose into consideration.
Daniel Waller: Okay.
Daniel Waller: Got it.
Okay got it and one more question on the clinical side.
Daniel Waller: And one more question on the clinical side.
Matt Sherman: I'd like to start with DCC3116, our potential first-in-class OAT inhibitor.
Daniel Waller: In terms of the development plans for DCC3116, is there a need to weight the results from, the combination trials to choose the recommended phase-to-dose, or is the recommended phase-to-dose going to be solely based on the dose escalation study?
In terms of the development plans for DCC to all one six.
Is there a need to wait the results from the combination trials.
To choose the recommended phase two dose or is there a recommended phase two dose is going to be solely based on the dose escalation.
Steve Herter: Yeah.
Matt Sherman: Matt, would you like to take that?
Ah study.
Yes, Matt would you like to take that.
Matt Sherman: Thanks, Daniel, for the question.
Matt Sherman: We are leaders, in exploring the role of autophagy as a broad resistance mechanism of cancer, and 3116 has the potential to benefit a significant number of cancer patients by targeting OAT, the initiating factor in the autophagy pathway. DCC3116 is a potent and highly selective switch control inhibitor designed to inhibit the OAT1-2 kinases that activate the autophagy pathway. Autophagy is a key tumor survival mechanism and a potential mechanism of drug resistance, in cancer cells.
Matt Sherman: So, yeah, we're also very excited with the progress that we're making for our potential, first-in-class autophagy inhibitor, DCC3116, in combination with RAF and RAF inhibitors.
Yes. Thanks for the question. So we're also very excited with the progress that we're making for our potential first in class or talk to your inhibitor DCC $3 16.
Matt Sherman: We've now generated a growing body of preclinical research, both independently and with academic collaborators, demonstrating the ability of DCC3116 to address autophagy induced by a variety of RTK, RAS, and MAP kinase pathway inhibitors, and we have built an industry-leading position in targeting this pathway.
Combination with Ras.
<unk>.
Matt Sherman: DCC3116 is currently being investigated in the single-agent dose escalation portion of the Phase I study in patients with advanced or metastatic follicle tumors with a RAS or RAF mutation.
Matt Sherman: And, as you know, we initially, the study is monotherapy for dose escalation, and that, dose level that we'll identify in the monotherapy part of the study will be taken forward in combination with multiple inhibitors in combination.
<unk> inhibitors and as you know.
Actually.
Study as monotherapy for dose escalation and that dose level that will identify the monotherapy part of the study will be taken forward in combination with multiple inhibitors in combination and then once we will continue with dose escalation in combination.
Matt Sherman: We are very excited that it was selected for an oral presentation at ESMO in September as a proper paper, which is intended for original data of superior quality and includes expert discussion.
Matt Sherman: The first readout will be focused on the overall safety and tolerability profile, as well as the pharmacokinetic and pharmacodynamic markers evaluated in the study. We expect to demonstrate target engagement through measuring levels of ACG14, a PD marker of all inhibitions.
Matt Sherman: Together with the initial PK and safety data, this will allow us to select the recommended dose that we will take forward into multiple combination dose escalation cohorts in the second half of this year.
Matt Sherman: And then once we'll continue with dose escalation in combination, and then choose a recommended, phase-to-dose to take forward into expansion cohorts for determining the efficacy of the combination in the study.
Matt Sherman: Based on our preclinical research and the mechanism of action, we do not expect to see single-agent activity as monotherapy.
Matt Sherman: Our Phase I study will include two cohorts in combination with MEK inhibitors, permetinib and butadenib, as well as one cohort with detericid and improved KRAS G12C inhibitor.
Matt Sherman: Turning now to Vimseltenib, our CFS1 receptor kinase inhibitor that we believe has the potential to be a best-in-class treatment for tenosynovial giant cell tumor, or TQCT. With one approved treatment available for TQCT patients in the U.S. and none in Europe, there remains a significant unmet medical need for a highly effective therapy with a good safety and tolerability profile. We believe Vimseltenib is well-positioned to address this need. Based on the initial data, from the ongoing Phase I-II study in TQCT patients, Vimseltenib has shown strong efficacy and durability with an excellent safety profile.
And then choose the recommended phase II dose to take forward into expansion cohorts for determining the efficacy of the combination in the study.
Daniel Waller: All right.
Daniel Waller: Got it.
Alright got it thank you very much.
Daniel Waller: Thank you very much.
Daniel Waller: Thank you.
Matt Sherman: We expect to provide updated results from the Phase I-II study next month and are delighted to have Vimseltenib selected for a poster, presentation at ESMO. These results will include updated objective response rate data from the escalation and expansion phases of the study, longer-term safety, and initial secondary endpoint data based on patient-reported outcomes.
Operator: We will take our next question.
Thank you.
We will take our next question.
Matt Sherman: We believe these results will continue to show that Vimseltenib has the potential to become the standard of care drug treatment for patients with TQCT not amenable to surgery.
Operator: Please stand by.
Please standby.
Matt Sherman: To that end, we continue to open sites and rapidly enroll our, Phase III registration-enabling motion study and plan to provide an estimate of timing of full enrollment in the coming months.
Operator: And your next question comes from the line of Chris Raymond from Piper Sandler.
Matt Sherman: Moving to our preclinical pipeline, we remain on track to nominate a development candidate from our PAN-RAF research program later this year. This program is focused on developing a best-in-class dual inhibitor of BRAF and CRAF kinases to address an unmet medical need in patients harboring Class I, II, and III BRAF mutations, as well as BRAF fusions.
And your next question comes from the line of Chris Raymond from Piper Sandler. Please go ahead. Your line is open.
Operator: Please go ahead.
Operator: Your line is open.
Matt Sherman: Nomination of this development candidate highlights our switch-control kinase platform continues to drive portfolio growth through the discovery of innovative new molecules.
Allie Bradselon: Hi.
Matt Sherman: We're proud to continue to expand our pipeline with potential best-in-class and first-in-class
Allie Bradselon: Good morning.
Allie Bradselon: This is Allie Bradselon for Chris today.
Hi, Good morning. This is al <unk> on for Chris today.
Allie Bradselon: Thanks for taking our questions.
Matt Sherman: product candidates designed to improve the lives of people with cancer.
Allie Bradselon: So, maybe one on Vimseltenib.
Dan Martin: We think the additional $350 million growth opportunity is very real, given we think that, venseltinib could offer a really best-in-class profile, something that patients just don't have access to currently, a real improvement in clinical profile and addressing that unmet need.
For taking our questions.
So maybe one on Amgen Cheltenham.
Allie Bradselon: On the motion trial, I know you're not guiding on your expected enrollment timelines, but, could you maybe qualitatively sort of talk about the level of interest for Vimseltenib you're seeing among prescribers and patients, and how you think that could change after you present data from Cohort B of the Phase I-II, and maybe how that factors into your view of the TAM for the syndication in terms of eligible incident-prevalent TGCT patients.
Dan Martin: Finally, how do we get to those numbers?
Dan Martin: Well, we look in the claims data to understand what, duration of therapy patients seem to be deriving from principally on imatinib. We look to imatinib, and they get about 18 months total time on therapy.
The motion trial, I know youre not guiding on your expected enrollment timelines, but could you maybe qualitatively sort of talk about the level of interest for Vince call Tonight, we're seeing among prescribers and patients.
Allie Bradselon: And then a separate question just on Kinloch.
And how do you think that could change after you present data from cohort b of the phase one two and maybe how that factors into your view of the Tam for further syndication.
In terms of.
<unk> incident and prevalent.
<unk> patients and then a separate question just on Kinloch.
Allie Bradselon: I think you mentioned the IPDE DID dosing as a potential growth driver in the U.S. this, year.
I think you mentioned that IPD tid dosing as a potential growth driver in the U S. This year could you just kind of talk to any changes you've seen.
Allie Bradselon: Could you just kind of talk to any changes you've seen since the MCCN just practice guidelines, update in January?
Since the end CCN just practice guidelines update.
Allie Bradselon: I think it was a little too early for you to say too much on trends last quarter, but, just wondering if you have any updates now six months after that MCCN update.
I think it was a little too early for you to take too much on trends last quarter, but just wondering if you have any updates now at six months after that Mtc update thanks.
Allie Bradselon: Thanks.
Steve Herter: Great.
Matt Sherman: I'll now turn the call
Steve Herter: Allie, thanks very much for the questions that you posed.
Dan Martin: That's what we see in the claims data today.
Great. Thanks, very much for the questions that you've closed so we'll take those in order and then what I would suggest Matt maybe you'd like to take the question about motion about enrollments and any potential impact of data presentation at ESMO next month on the trajectory of enrollment and then Dan Martin, perhaps you'd like to take the question with respect to the total addressable.
Steve Herter: So, we'll take those in order.
Steve Herter: And what I would suggest, Matt, maybe you'd like to take the question about motion and, about enrollment and any potential impact of data presentation at ESMO next month on the trajectory of enrollment.
Dan Martin: over to Dan Martin, our Chief Commercial Officer, to provide an update on our U.S. commercial efforts.
Steve Herter: And then, Dan, Martin, perhaps you'd like to take, then, the question with respect to, the total addressable market and how we think about the opportunity in tenosynovial giant cell tumor for a potential best-in-class inhibitor like vensteltonib.
Dan Martin: That's not to say venseltinib or a better option, a best-in-class option, might not offer more time on therapy, but that's what we use for the buildup to that TAM.
And how do we think about the opportunity in Centerville giant cell tumor for a potential best in class inhibitor like themselves and then Dan you could also take the question with respect to off label use.
Steve Herter: And then, Dan, you could also take the question with respect to off-label BID use that we, see in the U.S. And thanks, Steven.
So that we see in the U S.
Steve Herter: Thanks, Ali, for the question.
Thanks, Stephen Thanks for the question so going back to the first question you had about themselves and they've been the motion study. So yes, we're very pleased with the progress that we have currently enrolling the phase III motion study and as we've noted before this is a global study in about 40 sites.
Matt Sherman: So, you know, going back to the first question, you had about Vimseltinib in the motion study.
Matt Sherman: So, yes, we're very pleased with the progress that we have currently enrolling the Phase III motion study. And as we've noted before, this is a global study in about 40 sites targeting 120 patients randomized to Vimseltinib or placebo.
120 patients randomized to <unk> or placebo.
Matt Sherman: And we're also, you know, as we announced today, we'll be providing an update on the Phase I-II, study at ESMO next month.
Sure.
We're also.
Today, we'll be providing an update on the phase one two study.
Matt Sherman: And this is additional follow-up and enrollment from our previous update at ESMO last year.
No next month and this is additional follow up and enrollment.
Matt Sherman: And so we look forward to reporting both the dose escalation cohort in the Phase I study as well as the expansion cohorts in the Phase I study.
Our previous update ESMO last year, and so we look forward to reporting both the dose escalation cohort in the phase one study as well as the expansion cohorts in the phase one study and also as you know there are two expansion cohorts cohort.
Matt Sherman: And also, as you know, there are two expansion cohorts. Cohort A was in previously untreated patients, and cohort B were in the patients who had been previously treated with specific CFF1 inhibitor such as texidartanib or other antibodies to the receptor.
Was in previously untreated patients in cohort B, we're in the patients who had been previously treated with specific CSF, one receptor inhibitor such as taxi Gartner.
Antibodies to them.
The receptor.
Matt Sherman: So, with that presentation next month at ESMO, we do expect that there will be continued enthusiasm for enrollment in the motion Phase III study.
So with that presentation next month at ESMO, we do expect that there'll be continued enthusiasm for enrollment in the motion phase III study and as we've noted we're committed to open up sites.
Matt Sherman: And as we've noted, we're continuing to open up sites, but currently open globally in the U.S., Canada, Europe, and Australia.
Currently opened globally in the U S, Canada, Europe and Australia.
Dan Martin: Dan?
Dan Martin: And hi, this is Dan.
And Dan Thanks, Alex for your questions I'll, just continue off of what Matt said as it relates to the Tam.
Dan Martin: Thanks, Matt.
Dan Martin: Thanks, Alec, for your questions.
Dan Martin: In Q2, we continued to execute on our commercial goals for Kinloch in the U.S., reinforcing its position as a clear standard of care in fourth-line GIST while continuing to expand our prescriber footprint and physician experience with Kinloch. During the quarter, we achieved $23.7 million in total net product revenue in the U.S. Our key performance metrics continue to reflect strong commercial execution and highly positive product perceptions among GIST prescribers.
Dan Martin: We again delivered excellent results in terms of prescriber reach, share of, voice, and product awareness. Importantly, GIST prescribers in both academic and community settings continue to rate Kinloch very highly across all key product attributes, including efficacy, safety, convenience, and payer access. At ASCO in June, we had the opportunity to sit down with many of the leading GIST KOLs to discuss their experience with Kinloch. Their feedback was extremely consistent, namely that Kinloch has provided tremendous clinical benefits for their patients and that they view it as an indispensable part of their treatment armamentarium in advanced GIST.
Dan Martin: In Q2, our sales and marketing teams drove strong unit demand volume across all business segments.
Dan Martin: Our launch-to-date prescriber base has continued to grow at a very consistent pace quarter-over-quarter and is now over 700 positions, with the majority of new prescribers again coming from the community setting.
Dan Martin: Our market access team has continued to deliver excellent payer access with 100% payable claims, for unlabeled patients during the quarter.
We view the progress that is being made with the motion study is really confirming really very supportive of the way that we've laid out the market opportunity as you'll recall, we've broken that into a couple of components. One is the opportunity that relates to currently treated.
Dan Martin: I'll just continue off of what Matt, said as it relates to the TAM.
Dan Martin: You know, we view the progress that is being made with the motion study as really confirming, really very supportive of the way that we've laid out the market opportunity. As you'll recall, we've broken that into a couple of components.
Dan Martin: One is the opportunity that relates to currently treated patients, which are claims analyses, which suggest somewhere in the order of 1,300 to 1,400 patients currently receiving, actively receiving systemic therapy for TGCT.
Patients, which are claims analyses.
Dan Martin: And we again saw strong persistency and time on therapy. As expected, the percentage of patients receiving free drugs under our patient assistance program, or PAP increased in Q2 versus Q1. The PAP percentage was toward the higher end of our 20 to 30% estimated range. This quarterly trend is very consistent with what we saw in 2021 and is driven by patient, affordability challenges that tend to increase as the year progresses due to the Medicare, Part D drug benefit design.
Dan Martin: Consistent with what we saw last year, we expect the PAP percentage in Q3 and Q4 of, this year to be at the high end or slightly above our estimated annual range of 20 to, 30%.
Suggests or somewhere in the order of <unk> hundred 4800 patients currently receiving actively receiving systemic therapy for <unk> and then an additional component, which can be a growth opportunity for us.
Dan Martin: And then an additional component, which could be a growth opportunity for us given the patients who recur after their first surgery but may not go on systemic therapy today given what we believe to be, you know, concerns over the available, you know, options.
Given the patients who recur after their first surgery, but may not go on.
Stomach therapy today, given what we believe to be.
Dan Martin: So, taking together that $850 million opportunity that we see in the U.S., just based on the incident population, not including what we think is a meaningful prevalent population, then of course the opportunity in Europe.
Dan Martin: So, taken together, $850 million in the U.S. driven largely or entirely on what we see in terms of an incident opportunity.
Concerns over the available options, so taken together that $850 million opportunity that we see in the U S. Just.
Just based on the incident population not not including what we think is a meaningful prevalent populations and then of course the opportunity in Europe . So.
Chris: We haven't sized or laid out exactly how we think about the opportunity for the prevalent population.
Dan Martin: Turning to Vimseltenib, we are excited to see the continued progress of the motion study and are looking forward to the possibility of Vimseltenib becoming Deciphera's second approved drug, which would offer substantial operational synergies given our existing sarcoma-focused commercial infrastructure.
Dan Martin: So, we obviously watch the motion progress with great interest and feel as though it's really supportive of the way we've laid out the opportunity in the U.S. and globally.
Dan Martin: We have continued to deepen our understanding of the TGCT market opportunity through our, market research, KOL engagement, and analysis of U.S. claims data.
We obviously watch the motion.
Dan Martin: We believe Vimseltenib would be well-positioned to penetrate a potential addressable U.S, market of $850 million given the high unmet medical needs as well as Vimseltenib's potentially best-in-class clinical profile. And this does not include the additional opportunity associated with a significant prevalent treatment-eligible, population or the opportunity in Europe where the unmet need is even greater given that there are no approved therapies for TGCT.
Progress with great interest and feel as though it's really supportive of the way we've laid out the opportunity.
Margarida Duarte: I will now turn the call over to Margarita Duarte, our Head of International, to discuss
Margarida Duarte: the exciting results from our second quarter of the commercial launch of Kinloch in Europe.
In the U S and globally as it relates to your second question IPD.
Dan Martin: As it relates to your second question, IPDE, yes, so as you'll recall, the guidelines were updated in January of this year to include IPDE after patients have progressed on QT.
Yes, so as you'll recall the guidelines were updated in January of this year to include RPE after patients have progressed on QD.
Dan Martin: This is always underscore and off-label use, so not something that we're out there actively promoting.
This is always underscore an off label use so not something that were out there actively promoting.
We've always heard real kols interest in the IPD data and they view that as a.
Dan Martin: We've always heard real KOL interest in the IPDE data, and they view that as a really interesting data, and that means, you know, as underscored by the listing in the NCCN guidelines, view it as a really important treatment option in what becomes essentially fifth line.
Really interesting data in.
As underscored by the lifting of the NCC guidelines here. It is a really important treatment option and what becomes essentially fifth line.
Dan Martin: And we do see some of that use.
And we do see some of that use I think it's still a bit early to know where the trends will go over time because again.
Dan Martin: I think it's still a bit early to know where the trends will go over time because, again, you would expect the dispersion of awareness of that data and potential use of that data to look differently than our launch because, again, we can't promote that data.
You would expect the dispersion of awareness of that data and potential use of that data to look differently than our launch because again, we can't promote.
Dan Martin: But And so therefore, we continue to see the vast majority of use of the QD dose, but it is, something that we're watching with interest, and we'll see how that unfolds in the coming quarters.
That data but.
And so therefore.
We need to see the vast majority of use at the QD dose.
But it is something that we're watching with interest and we'll see how that unfolds in the coming quarters.
Steve Herter: Thank you.
Margarida Duarte: Margarita?
Operator: We will take our next question.
Chris: The math is a little bit different.
Margarida Duarte: Thanks, Dan.
Operator: Please stand by.
Margarida Duarte: We are very proud of Kinloch's strong entry into the European market, including our launch, in Germany and the transition to the post-approval paid access program in France.
Operator: Your next question comes from the line of Bradley Canino from Stiefel.
Dan Martin: But clearly, an $850 million opportunity in the U.S. without considering the approximately 8,000 estimate that we provided for prevalent, and then in Europe where there are no approved agents, so really the unmet need is even higher.
Thank you.
Thank you.
We will take our next question please standby.
Your next question comes from the line of broadly Camino from Stifel. Please go ahead. Your line is open.
Operator: Please go ahead.
Dan Martin: And we believe that there's no reason to believe the EPA is different, so in Europe versus the U.S.
Operator: Your line is open.
Bradley Canino: Thank you, and congrats on the quarter.
Thank you and congrats on the quarter two from me here on Kim Mark do you have any updated timing for the NCC and meeting schedule to potentially take action on the second line Gist data and then on the ORC inhibitor, you've disclosed your enrolling any metastatic solid tumor patients with documented Ras and <unk>.
Bradley Canino: Two for me here.
Bradley Canino: On Kinloch, do you have any updated timing for the NCCN meeting schedule to potentially, take action on the second line GIST data?
Bradley Canino: And then on the ALK inhibitor, you've disclosed you're enrolling any metastatic solid tumor, patient with a documented RAS, NF1, or RAF mutation, but based on the centers you've chosen and perhaps physician perception of the types of patients that might benefit from autophagy inhibition based on the case reports with hydroxychloroquine in the literature, would you expect an over-enrollment or a bias towards a particular solid tumor organ type in the dose escalation phase?
<unk> RAF mutation, but based on the centers, you've chosen and perhaps physician perception of the types of patients that might benefit from Autophagy inhibition based on the case reports with hydroxychloroquine and literature would you expect an over enrollment or a bias towards a particular solid too.
Oregon type in the dose escalation phase thank you.
Margarida Duarte: As we work to ensure this important medicine reaches the patients around the globe who, need it most.
Bradley Canino: Thank you.
Dan Martin: So, taken all together, it's not hard to imagine a billion-dollar-plus, opportunity globally for venseltinib in this space.
Margarida Duarte: For the second quarter of 2022, we reported international Kinloch net product revenue, of $7.8 million, most of which represents product revenue from Germany and France. These strong results in the second quarter reflect Kinloch's exceptional clinical benefits, and demonstrate its growing position in the European GIST treatment landscape, addressing the high unmet need of patients with fourth-line GIST.
Margarida Duarte: Kinloch's submissions in Germany are known to be one of the most complex and comprehensive, evidence submissions in Europe, and I am extremely proud of the dedicated cross-functional team that supported this impressive effort.
Steve Herter: Yeah.
Chris: Got it.
Yes, Hi, Brian It's Steve Thanks for the question. So I'll take the first question with respect to the NCC on guidelines and then ask Matt to comment on the Phase one study with DCC 31, 16, So we know that the <unk>. The next scheduled meeting for the just for sarcoma panel is coming up in early September at September 30.
Margarida Duarte: We are honored to announce that Kinloch received, on June 16th, a major additional benefits, rating in Germany for its indication in advanced GIST. This is an extraordinary achievement, and on this date, only approximately 1% of all, oncology drugs have received the highest possible ratings. Kinloch is the first orphan oncology treatment to receive this rating for its lead indication, and the only GIST treatment awarded with such recognition.
Margarida Duarte: With the many traditional benefits, we have secured a favorable starting position from, a price negotiation perspective, which we believe will result in a successful outcome.
Tucker Kelly: I will now turn the call over to Tucker Kelly, our Chief Financial Officer, to review the
Steve Herter: Hi, Brad.
Chris: Thank you very much.
Margarida Duarte: In France, we are also very well positioned, thanks to Kinloch's positive AFMR3 rating, a rating only achieved by a small number of orphan treatments, which underscores the recognition of the robust clinical value that Kinloch brings to eligible TIS patients.
Tucker Kelly: quarterly financial results.
Steve Herter: Thank you.
Margarida Duarte: In addition to our ongoing efforts in Germany and France, we continue to pursue market access, for Kinloch in the EU and the UK on a country-by-country basis, and I'm very pleased to share that we have recently submitted a reimbursement application tonight for access in England and Wales.
And so we would expect that that would be.
Likely where the panel.
An opportunity to consider a submission of the entry data to evaluate that of course as you know this is arne.
<unk> linked sort of process. So we don't have any insight as to what might be on the agenda for that meeting or if they will be reviewing the data from intrigue at that meeting, but that would be the next opportunity. We believe for the panel to review the data and then potentially take any action they choose to take.
Tucker Kelly: Tucker?
Steve Herter: It's Steve.
Steve Herter: I will now hand the call back for closing remarks.
Pat you want to comment on the phase one.
Tucker Kelly: Thanks, Margarida.
Steve Herter: Thanks for the question.
Steve Herter: Great.
Tucker Kelly: I'd like to review the highlights from our second quarter financial results. Total revenue for the second quarter was $32.5 million, which includes $31.5 million in net, product revenue of Kinloch and $1 million in collaboration revenue, which includes Kinloch supply and royalty revenue under our agreement with Zylab for Greater China. Cost of sales for the three months ended June 30, 2022, was $1.8 million, which included, approximately $1 million in cost of net product revenue and cost of collaboration revenue of $800,000.
Yes, hi, Brian Thanks for the question.
Steve Herter: So I'll take the first question with respect to the NCCN guidelines and then ask Matt to, comment on the phase one study with DCC 3116.
Steve Herter: Thank you very much, and thank you to everyone for joining us on today's call and for, your continued interest and support of Decipher.
Tucker Kelly: Cost of sales will not include the full cost of manufacturing until the initial prelaunch, inventory is completed and initial inventory is manufactured and sold. We do not expect cost of sales or the percentage of net sales of Kinloch to increase significantly, after we have sold all zero-cost inventories and commenced the sale of inventories that will reflect the full cost of manufacturing. We expect to continue to sell the initial prelaunch inventory of Kinloch in the U.S, during 2022.
Steve Herter: So we know that the NCCN, the next scheduled meeting for the GIST or sarcoma panel is coming, up in early September.
Steve Herter: We look forward to keeping you updated on our continued progress, and look forward to seeing some of you at ESMO next month.
Tucker Kelly: Total operating expenses were $76.3 million in the second quarter, a decrease of 19% compared, to operating expenses of $94.1 million in the same period in 2021. Research and development expenses in the second quarter were $44.9 million compared to $60, million in the same period in 2021. Selling general and administrative expenses for the second quarter were $29.6 million, compared to $32.8 million in 2021.
Steve Herter: It's September 13th.
As you know we are conducting the phase one first in human study of <unk> in patients with solid tumors, who harbor mutations in the Ras RAF.
Steve Herter: And so we would expect that that would be likely where the panel at least would have, an opportunity to consider a submission of the ENTREAD data and to evaluate that.
Steve Herter: Of course, as you know, this is an arm's length sort of process, so we don't have any insight, as to what might be on the agenda for that meeting or if they will be reviewing the data from ENTREAD at that meeting.
Steve Herter: But that would be the next opportunity, we believe, for the panel to review the data, and then potentially take any action they choose to take.
Steve Herter: Matt, do you want to comment on the phase one?
Pathway and the studies being done at a number of phase one sites across the country and these are all experienced phase one investigator shift.
Matt Sherman: Yeah.
Participating similar studies in advanced cancer patients. So the spectrum of patients that are enrolled in these are once we would be typically eligible for our phase one trial that failed prior therapy, but in this particular case also carry these mutations.
Matt Sherman: Hi, Brad, and thanks for the question.
Matt Sherman: And so, you know, as you know, we're conducting the phase one first in human study of 3116, in patients with solid tumors to harbor a mutation in the RAS pathway.
Matt Sherman: And the study's being done at a number of phase one sites across the country, and these, are all experienced phase one investigators who have participated in similar studies in advanced cancer patients.
Matt Sherman: So, you know, the spectrum of patients that are enrolled in these are ones who would be, typically eligible for a phase one trial that failed prior therapy, but in this particular case also carry these mutations.
Matt Sherman: I don't expect there'll be any bias to any particular tumor types, but more provide the, opportunity for patients who have failed prior therapy to enroll onto the phase one trial.
There will be any bias and in particular.
Tumor types, but more provide the opportunity for patients who have failed prior therapy.
Bradley Canino: Great.
Steve Herter: Thank you very much, and have a great rest of your day.
I'll answer this phase one trial.
Bradley Canino: Thank you.
Operator: Thank you.
Operator: This concludes today's conference call.
Yes.
Operator: Once again, if you would like to ask a question, please press star 1 and 1 on your telephone, keypad.
Operator: Thank you for participating.
Great. Thank you.
Thank you once again, if you would like to ask a question. Please press star one on your telephone keypad.
Operator: We will now take our next question.
We will now take our next question please standby.
Operator: Please stand by.
Operator: You may now disconnect.
Okay.
Operator: Your next question comes from the line of Renny Benjamin from JMP Securities.
Operator: Speakers, please stand by.
Your next question comes from the line of Reni Benjamin from JMP Securities. Please go ahead. Your line is open.
Operator: Please go ahead.
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Operator: Your line is open.
Operator: To raise your hand during Q&A, you can dial star 1-1.
Renny Benjamin: Hey, good morning, guys.
Renny Benjamin: Thanks for taking the questions.
Hey, good morning, guys. Thanks for taking the questions, maybe just starting off with 3116.
Renny Benjamin: Maybe just starting off with 3116.
Renny Benjamin: You know, Matt, you mentioned that you don't expect to see any monotherapy activity, so, kind of outside of safety, what are the other metrics that you're looking at that help you, you know, to advance the program in the best way possible?
Matt You mentioned that you don't expect to see any monotherapy activity. So kind of outside of safety what are the other metrics that you're looking at that help you to advance the program and the and the best way and the best way possible.
Renny Benjamin: And just related to that, about how many patients' worth of data, you know, should we be expecting, to see?
And just related to that about how many patients worth of data should we be expecting to see.
Renny Benjamin: Thanks, Reni, for the question.
Yes.
Matt Sherman: And we're really looking forward to the oral presentation, as we know, at ESMO next month.
Thanks for any further question and we're really looking forward to the oral presentation as we know that ESMO next month.
Matt Sherman: The abstract was selected for a proffered paper, which is usually limited to, you know, very high-quality abstract submissions, and they'll also be followed by a discussion as well, too.
Sure Ike was selected for a proffered paper, which is usually limited to very high quality abstract submissions and there'll also be followed by a discussion as well too. So we look forward to that.
Matt Sherman: So we look forward to that next month.
Matt Sherman: And you know, this will be from the monotherapy dis-escalation cohorts in the study.
Next month.
This will be from the monotherapy dose escalation cohorts in the study and.
Matt Sherman: And you know, in this context, the presentation will not only focus on the safety of 3116, in these cohorts, but importantly also on the pharmacokinetics and the pharmacodynamics that were measured in this trial.
In this context, the presentation will not only focus on the safety of <unk> hundred 16 in these cohorts, but importantly also on the pharmacokinetics and pharmacodynamics that were measured in this trial and as we've noted previously the inhibition of the target.
Matt Sherman: And as we noted previously, you know, inhibition of the target kinase, of kinases measured, by decreases in ATG14 phosphorylation will be a key pharmacodynamic measure that we can look forward to presenting some data on next month.
As of kinase as measured by decreases in Atg <unk> formulation will be a key pharmacodynamic measure that we can look forward to presenting some data on next month's so taking the totality of the safety of the PK exposure and inhibition of the target.
Matt Sherman: So taking the totality of the safety of the PK exposure and inhibition of the target proteins, in the autophagy pathway, we look forward to sharing a very comprehensive package next month.
Proteins in the Autophagy pathway.
Look forward to sharing a very comprehensive package.
Renny Benjamin: And will that, will those metrics be measured from plasma, or do you have tumor biopsies?
Months.
And will that will those metrics, we measure it from from plasma.
Renny Benjamin: How should we be looking at that?
Do you have tumor biopsies.
How should we be looking at that.
Matt Sherman: Yeah, the initial data for inhibition of ATG14 is done in peripheral blood mononuclear cells.
Yes. The initial the initial data for inhibition of <unk> has done in peripheral blood mononuclear cells. They are obtained through.
Matt Sherman: They're obtained throughout the study for patients on a trial.
The study for patients on the trial.
Matt Sherman: So that will be part of the initial presentation in September.
So that would be part of the initial presentation in September in terms of number of patients that we haven't we haven't provided a specific number of patients won't be presented in the presentation, but the study is designed as a three plus three state design. So you might think through that the number of patients per cohort.
Matt Sherman: In terms of number of patients, you know, we haven't provided a specific number of patients, that will be presented in the presentation, but the study is designed as a 3 plus 3 study design.
Matt Sherman: So, you know, you might think through that the number of patients per cohort is in that, range of patients.
Renny Benjamin: Got it.
A range of patients.
Renny Benjamin: And just switching gears to Vimselta, you know, I know we've had prior updates, obviously, but, you know, in this case, I think, just to confirm if I'm thinking about this correctly, the dose expansion cohorts, this might be the first time that we're seeing them.
Got it.
And just switching gears to himself I.
I know we've had prior updates.
Obviously, but.
In this case.
Zinc just confirm if I'm, if I'm thinking about this correctly the dose expansion cohorts this might be the first time.
Renny Benjamin: Can you just reconfirm?
We're seeing them can you can you just reconfirm it seems like from the dose escalation.
Renny Benjamin: It seems like from the dose escalation part of the study, we should be seeing an update, on follow-up and how long, you know, the durability of response, but the dose expansion, we might be getting first-time response rates as well?
Part of the study we should be seeing an update on follow up and how long the durability of response, but the dose expansion, we might be getting first time response rates as well.
Matt Sherman: Yeah, no, it's, yeah, so good question.
Matt Sherman: Let me just sort of walk through what the update will be on, also, that's my next, next, month.
Yes, yes. So good question, let me just sort of walk through what the update will be on also at ESMO next.
Matt Sherman: So, you know, first, the initial part of the study was dosage, dose escalation part of, the study, using three different cohorts of Vimselta NIP, dose levels of Vimselta NIP, and that enrolled 32 patients.
Months, So first the initial part of the studies.
Escalation part of the study using three different cohorts of himself to nib dose levels of unfortunate and that enrolled 32 patients. We did provide we can provide the full enrollment of 32 patients.
Matt Sherman: We did provide, we did provide the full enrollment of 32 patients at ESMO last year, but those, patients now are, have much longer follow-up, obviously, a year more follow-up, and so there will be an update on those initial 32 patients, and then in the two expansion cohorts, cohort A was the expansion cohort of patients who were previously untreated, similar to the, enrollment for the Motion Phase III study.
At ESMO last year, but those patients now are have much longer follow up obviously, a year or more follow up and so there'll be a update on those initial 32 patients and then in the two expansion cohorts cohort was the expansion cohort in patients with previously untreated similar to the enrollment.
For the motion Phase III study.
Matt Sherman: That is fully enrolled with 46 patients.
That is fully enrolled with 46 patients we.
Matt Sherman: We had initially had efficacy last year at ESMO, but not all the patients were efficacy, valuable, just because of their duration on the study, and now we have all those patients available for efficacy, and then cohort B is the cohort that's currently enrolling, and those are the patients who've been previously treated with specific CFS1 receptor inhibitor, and we have 13 patients of 20 who are currently enrolled into the cohort B, and so we'll also be providing an update on that cohort as well next month at ESMO.
We had initially had efficacy.
Last year at ESMO, but not all the patients were efficacy evaluable just because of their duration on the study and now we have all of those patients available for efficacy and then cohort B is the cohort. That's currently enrolling in though are the patients who've been previously treated with specific CSF, one receptor inhibitor and <unk>.
We have 13 patients of 20, who are currently enrolled into the cohort b and so we'll also be providing an update on that cohort as well as next month.
Matt Sherman: Terrific.
Perfect great. Thanks for that and then just finally, you guys raised some significant capital.
Tucker Kelly: Cash, cash equivalents, and marketable securities as of June 30th was approximately $393 million. In April, we added approximately $163 million to our balance sheet through a very successful, underwritten public equity offering. With our strengthened balance sheet, we are well capitalized and believe that our cash, together with anticipated product, loyalty, and supply revenue will be sufficient to fund our operations for the next three years into 2025.
And what was considered to be one of the worst biotech markets in quite some time and so congratulations on that could you comment a little bit on what primarily drove that investment.
Our investors most focused on consultative visits something about the pipeline any sort of commentary there.
Steve Herter: With that, I'll now turn the call back over to Steve.
Renny Benjamin: Great.
Yes, Brian it's Steve Thanks for the question.
Steve Herter: Thank you, Tucker.
Renny Benjamin: Thanks for that.
Steve Herter: Today's updates underscore the tremendous progress we have made during the first half, of this year.
Renny Benjamin: And then just finally, you know, you guys raised some significant capital in what was considered to be, you know, one of the worst biotech markets in quite some time.
I think interest certainly in the company continues to be built around the strong commercial franchise that we now have in Kinloch ingest, which as we reported today and we're seeing really nice revenue growth based largely on the geographic expansion as our successful launch in Europe unfolds. So I think interest is really anchored around having a company that's generating meaning.
Renny Benjamin: And so congratulations on that.
Steve Herter: Can you comment a little bit on what primarily drove that investment?
<unk> revenue.
And behind that of course, as we just talked about and answered some of your questions. We have a really robust portfolio of either potentially first in class or best in class product candidates that have some meaningful data updates coming this year and have the potential to drive future growth for the company and all of that is of course anchored by.
Steve Herter: What, you know, are investors most focused on in Celtinib?
Steve Herter: Is it something about the pipeline?
Steve Herter: Any sort of commentary there?
If you will that I really productive research platform that has the potential to generate additional novel product candidates. So we think the profile of the company is unique in the space and we think that was in part why we saw the strong investor interest that we saw earlier this year and we're now very well positioned with runway into 2025 to continue executing.
Steve Herter: Yeah, Ren and Steve, thanks for the question.
Steve Herter: You know, I think interest certainly in the company continues to be built around the strong commercial franchise, that we now have in Kinloch and GIST, which as we reported today, you know, we're seeing really nice revenue growth based largely on the geographic expansion as our successful launch in Europe unfolds.
Steve Herter: So I think interest is really anchored around having a company that's generating meaningful revenue. And behind that, of course, as we just talked about in answer to some of your questions, we have a really robust portfolio of either potentially first-in-class or best-in-class product candidates that have some meaningful data updates coming this year and have the potential to drive future growth for the company.
Steve Herter: And all of that is, of course, anchored by, if you will, a really productive research platform, that has the potential to generate additional novel product candidates.
Steve Herter: So we think the profile of the company is unique in the space, and that was in part why we saw the strong investor interest that we saw earlier this year, and we're now very well positioned with runway into 2025 to continue executing on our plans.
Steve Herter: We are proud of the momentum we have been able to sustain across our preclinical, clinical, and commercial programs so far this year and look forward to an exciting second half. We anticipate a number of important milestones, including the presentation of initial data, from the ongoing phase one monotherapy dose escalation study of DCC3116 at ESMO next month and initiation of three combination cohorts with MEK and K-RAS G12C inhibitors, continued enrollment of the phase three motion study of Imfelpinib and TGCT, and the presentation of updated data from the ongoing phase one two study, also at ESMO next month.
Steve Herter: So we're very excited about the position that we're in and the opportunity to drive further growth.
On our plans. So we're excited about the position that we're in and the opportunity to drive further growth.
Renny Benjamin: Terrific.
Terrific. Thanks for taking the questions.
Hey, Ron.
Okay.
Steve Herter: And finally, nomination of a development candidate from our PANRAC program later this year.
We will now take our next question please standby.
Steve Herter: All while we continue to cement the position of Kinloch as a standard of care for fourth, line GIST patients around the world.
Steve Herter: Thank you.
Yes.
Your next question comes from <unk> <unk> from Barclays. Please go ahead. Your line is open.
Hi, This is Jerry on for Peter Lawson, Thanks for taking the question.
Renny Benjamin: Thanks for taking the questions.
Steve Herter: Thank you, Ren.
Congrats on the quarter.
Just quickly then on Hilton head to piggyback on there.
Since has now been another year since as last we'd be expecting to see durability data and kind of what's the expectation there for what we could see and putting the motion that is any sense of what the timing is for potential filing or approval path to filing and then just a quick follow up after that.
Steve Herter: Thank you.
Sure. So Matt would you like to take the questions on themselves.
And then also on motion.
Operator: We'll now take our next question.
Yes. Thanks for the question. So as we know we will have another year of follow up from the initial presentation. We had at ESMO last year. So that will provide not only an ongoing objective response rate that's being measured in the study, but the duration of response and.
Treatment duration as well and then study and Thats important because as we know this disease patients are generally treated for long periods of time and showing that there is large numbers of patients that can remain on study.
For longer periods of time, I think will be important.
Observation to him to speak to the importance.
Activity of <unk> in patients with <unk>.
In regard to an update on the phase III motion study that we do plan to provide an update later this year in terms of an estimate of timing of full enrollment and when we might expect to see results from the trial.
Great. Thank you. Thanks for Ken Lock I know, it's still early days for the Europe launch, but is there any way to add color to what we can expect for the launch in France compared to Germany, how does that market opportunity compare thank you.
Yes sure. Thanks for the question with respect to Europe , or Youre right. It would you like to take that.
Okay.
Sure just to double check my Aldi is not so good last a question related to that market opportunity of Germany versus Brent.
Exactly.
Expect for Air France launch.
Sure excellent. Thank you so just to start with both Germany and France. They are definitely the largest European markets and this is driven by population Mycotoxins considerations of course, some differences may apply in terms of products, but we believe that with kinloch seasons, where we are going to be.
<unk> revenue for Us I should note that Germany is the largest population for France is so higher ASP and this should be one of the main differentiator.
I think it's also important to note that we have been selling in France for some time and have recently transitioned successfully I should say to the post approval paid access program. So I expect the trajectory to be differences versus what we are seeing in Germany for instance package from scratch in Germany.
Last last January so earlier this year.
Great. Thank you.
Thank you.
We will now take our last question.
Please standby.
And your last question today comes from the line of Andrew Barron from SBB Securities. Please go ahead. Your line is open.
Hey, Thanks for the question this is Chris on for Andrew.
Just two questions on themselves.
Just wondering about how you got to the 850 million number.
And the assumptions for themselves and they are in the incident population in <unk> and then.
What can we think about for the size for the additive side to the opportunity for the prevalent population and the EU.
Great. Thanks, Chris for the question. So Dan why don't you if you'd like to take the questions with respect to the market opportunity for themselves. Both how we got to the Tam.
And then the additional question about the prevalent opportunity that we see.
Sure absolutely. Thanks, Chris I appreciate the question so.
As we've laid out in the corporate deck.
We have put a lot of effort into sizing the potential opportunity for <unk>.
Certainly in the U S and then extending that globally.
There are about 14 to 18000 patients diagnosed each year.
With <unk>, but the real question is how many of those are likely to be.
<unk> eligible for systemic therapy.
And so we've done a lot of work not only through the literature, but also with your claims data.
U S claims data and multiple work streams that we've put toward answering these questions have resulted in very similar answers and so it gives us great confidence in the numbers that we've that we've laid out and so the first component of the $850 million.
Made up principally of the 13% to 1400 patients that we see starting on systemic therapy each year. So that's the incentive component incident.
Treated component.
The other component.
His patients who we can see have failed.
Surgery, but may not go on to systemic therapy.
Currently within the treatment paradigm now some of those patients may be.
You may derive benefit from subsequent surgeries, but we know some of them also may just accommodate their lives.
Deal with the challenges of GCT, because the options for systemic therapy today aren't great.
No that.
The one approved agent exit art nib.
<unk> has some significant.
AE.
Challenges.
Known pattern toxicity.
Box warning Rems program extensive liver monitoring for example, and so.
Many patients today, who receive systemic therapy.
Actually receive imatinib.
Which is off label if not been studied.
In our developed for PCT.
As off label and we believe largely because of the challenges with <unk>. So.
We think that the 500 million that we've laid out is sort of.
A floor so to speak to the opportunity in the U S. Because we can see those patients getting systemic therapy today, we think the additional $350 million growth opportunity.
<unk>.
Is very real given we think that <unk> could offer a really best in class profile something that patients just don't have access to currently a real improvement and address the improvement and clinical profile and addressing that unmet need.
Finally.
How do we get to those numbers, while we look at the claims data to understand what duration of therapy patients seem to be deriving from principally on Imatinib, we look to imatinib when thinking about 18 months total time on therapy. That's what we see in the claims data today that is not to save himself nib.
A better option and best in class option might not offer more time on therapy, but thats, what we use for the buildup to that Tam so taken together $850 million in the U S.
Driven largely or entirely on the what we see in terms of an incident opportunity.
We haven't.
<unk> are laid out exactly how we think about the opportunity for the prevalent prevalent population.
Math is a little bit different.
But clearly.
$850 million opportunity in the U S without considering the approximately 8000.
Estimate that we provided for prevalent and then in Europe , where there are no approved agents. So really the unmet need is even higher and we believe that there is.
There is no reason to believe the IP is different so in Europe versus the U S.
Taken all together, it's not hard to imagine a $1 billion plus opportunity globally for himself in that business in that space.
Got it thank you very much.
Thank you I will now hand, the call back for closing remarks.
Great. Thank you very much and thank you to everyone for joining us on today's call and for your continued interest and support of just like for we look forward to keeping you updated on our continued progress and look forward to seeing some of you at ESMO next month. Thank you very much and have a great rest of your day.
Thank you. This concludes today's conference call. Thank you for participating you may now disconnect speakers. Please standby.
Operator: As a reminder to ask a question, you will need to press star 1 and 1 on your, telephone and wait for your name to be announced.
Operator: Please stand by.
The conference will begin shortly to raise Johan during Q&A, you can dial star one one.
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