Q3 2022 ADC Therapeutics SA Earnings Call
The conference will begin shortly to raise your hand during Q&A you can dial star one one.
[music].
Yeah.
Welcome to the ADC Therapeutics third quarter 2022 financial results Conference call. My name is Catherine and I'll be your operator for today's call. At this time all participants are in a listen only mode. Later, we will conduct a question and answer session. During the question and answer session. If you have a question. Please press star one on your Touchtone phone I will now turn the call over to Amanda.
<unk> Investor Relations manager Amanda you may begin.
Thank you operator. This morning, we issued a press release announcing our third quarter 2022 financial results and business update.
Release is available on the <unk> website at IR Dot ADC therapeutics Dot com under the press releases section.
On today's call, Amit Malik Chief Executive Officer, Doug Martin Chief Medical Officer, and Jen Creel, Chief Financial Officer, who will discuss recent business highlights and review our third quarter 2022 financial results before opening the call for a question.
As a reminder, this conference call may contain forward looking statements.
These statements are subject to risks and uncertainties for additional information concerning forward looking statements and factors that could cause actual results to differ materially from those expressed or implied in these statements. We refer you to the section titled cautionary statement regarding forward looking statements and exhibit 99.2 of our report on form.
6K filed with the U S Securities and Exchange Commission earlier today.
Such statements speak only as of the date of this conference call and we expressly disclaim any obligation or undertaking to update these forward looking statements unless required to do so by applicable law.
Today's presentation also includes non <unk> financial measures.
Non <unk> measures have limitations as financial measures and should be considered in addition to and not in isolation or as a substitute for the information prepared in accordance with Ias Rs.
Should refer to the information contained in the company's third quarter earnings release for definitional information and reconciliations of historical non <unk> measures to the comparable <unk> financial measures.
It is now my pleasure to pass the call over to Amit Malik Amit.
Thanks, Amanda and thank you all for joining us today during the third quarter. We made good progress executing on our strategy. There is a strong sense of purpose and direction across the company and I'm proud of the collective effort, we are putting forward to serve our patients.
I would like to highlight some of our achievements during the quarter, starting with Atlanta net sales in the third quarter were $21 3 million representing 23% growth.
For Q2, the market strong performance was driven by the targeted initiatives, we put in place in the second and third quarters, which began to produce results I will elaborate on this more in a moment.
The development program continues to make progress encouraging safety data from the phase III <unk> trial in second line plus <unk> patients was presented at the society of Hematology oncology Congress in September providing initial evidence of the efficacy and safety of this Atlanta and Rituximab combination.
<unk>.
Actually the geographic expansion of the market during the quarter, we signed an agreement with <unk> for the development and commercialization of <unk> in Europe , and international territories, excluding greater China and Japan.
We received a positive opinion from the <unk> in September and expect a regulatory decision by the end of the year <unk> is making good progress with launch preparations and expect to launch upon the completion of the marketing authorization transfer, which typically takes two to three months after approval.
With the Sobey partnership Mitsubishi Tanabe in Japan, and the overland JV in China, we have commercial partnerships and larger worldwide.
Turning to county for Hodgkin's lymphoma, we believe that the data from the phase II trial demonstrates strong clinical activity and the potential to offer a significant benefit to later line HL patients How's.
However, it became clear to us during our recent interactions with the FDA that the regulatory landscape is evolving more dramatically than we had previously anticipated regarding accelerated approval.
The FDA is now strongly guiding toward an extensive confirmatory phase III study to be well underway before considering accelerated approval as such we are no longer planning to submit our BLA next year, we are pausing material investments in the Hodgkin's lymphoma program as we continue our dialogue with the FDA regarding their guide.
And the potential regulatory path forward.
Joe will elaborate on this shortly.
During the quarter. We also made the decision to discontinue the camby combination with <unk> in solid tumors.
While there were some interesting signals Amit immuno module batori activity that clinical data were not compelling enough for us to move forward, we recognize that the considerable effort required to fully pursue this opportunity may be better suited for a partner with Io development expertise.
This immunotherapy approach is very different from our other solid tumor program and we do not see any read through to our other trials. We are committed to prioritizing our preclinical and clinical program and are taking a disciplined approach to resource allocation.
We continue to progress the rest of our pipeline that Joe will give a more detailed update.
A strong balance sheet with $381 million in cash not including $125 million at the types of future milestone related to the European regulatory approval and first EU sales of Neulasta. These milestones combined with our business plan provided an expected cash runway extending into early 2025.
Before I provide some additional details about this in lots of launch I would like to take this opportunity to welcome our new Chief Commercial Officer, Kristin Harrington Smith, and our new Chief Legal Officer, Peter Grant for the company. We are thrilled to strengthen the management team at such a high caliber of talent in particular, Kristin has an impressive commercial.
Background with relevant experience in the <unk> space.
To continue building on the strong momentum.
I would like to thank Jennifer Herron for her many contributions to the company, including building the commercial organization and the launch of the Atlanta, Jennifer will stay with the company through mid December to ensure a smooth transition.
Now I'm going to provide a deep dive into this in lots of launch we are encouraged by seeing lots of strong performance this quarter, resulting from our focus on customer facing execution.
And the new initiatives, we launched in the second and third quarters.
We saw continued progress in Q3 in terms of awareness share of voice in third line plus patient share.
The new initiatives focus on three areas, one health care professionals.
<unk> community practices in network and three patients and caregivers. These initiatives are building momentum in the marketplace and position us well for steady growth in the coming quarter.
First starting with health care professionals, we enhanced our promotional materials with more competitive messaging and additional data and launched a new regional marketing capabilities at the same time, we increased our face to face interactions, which is critical to build awareness familiarity trial and adoption.
Second we saw strong uptake into lots of use with a significant number of new accounts in the community.
At the same time, the number of academic accounts ordering remained relatively stable.
Terms of volume, we're seeing growth from both segments.
The growth in the community and steady growth from academia.
In Q3 for the first time since launch a greater proportion of accounts or anything like that came from the community roughly 60% as compared to 50% since launch in terms of volume historically academic accounts represented approximately 60% of our business, but with the growth in the Canadian segment in Q3 volume by segment is now approximately.
Similarly, a 50 50 split.
As the new key initiatives starting in Q4, we began contracting with community oncology networks. We believe this will help us unlock and important opportunity is roughly half of the community market is served by these networks.
Although GPO contracts will modestly impact our gross to net we believe the upside volume will outweigh the costs.
Lastly, we have increased our multichannel patient education and engagement efforts.
Since the launch of our patient campaign, we've been able to drive a meaningful increase in online awareness interest and engagement, we know that in the third line plus setting patients and caregivers play an integral role in making treatment decisions.
Overall, we are pleased with the significant progress we have made with isn't motto launch in Q3.
Looking forward, we are confident in our ability to continue to grow both the community and academic segments over the coming quarters as we engage healthcare professionals.
The network.
And patients regarding to lots of differentiated product profile.
Now I will turn the call over to Joe to provide an update on our pipeline.
Joe.
Thank you Amit.
Let me start with Simonton in the phase III loaded five study evaluating <unk> in combination with rituximab in patients with relapsed or refractory <unk> and.
Encouraging safety.
<unk> data were presented at the Soho Congress in September showing an overall response rate of 75% and complete response rate of 40%.
Furthermore, we did not observe any safety events materially different from those observed in our prior clinical trials.
These data give us confidence in the feasibility safety and potentially the efficacy of the combination of <unk> and Rituximab.
As the <unk> landscape evolves, we see a significant opportunity for us in monster plus Rituximab in second line patients who are not eligible for transplant or car T.
For patients who are not able to access car T due to location or cost.
In addition, the combination of <unk> plus Rituximab is also being explored in the ongoing <unk> nine trial for first line <unk> patients who are unfit or frail.
This remains an underserved population of patients who are not able to receive the first line standard of care in many cases, we also have the ongoing <unk> seven trial to explore novel combinations us in London, We recently signed a clinical collaboration agreement with IGN Biosciences to evaluate IGN novel bi specific antibody and comb.
<unk> for patients with relapsed refractory b cell non Hodgkin's lymphoma.
Our clinical team is focused on the successful execution that we've seen lots of trials and we look forward to keeping you updated on our progress.
Moving on to <unk> in Hodgkin lymphoma, following a pre BLA meeting in September we had a type C meeting with the FDA in late October at that meeting it became clear to us that the regulatory landscape is evolving more dramatically than we had previously anticipated with regard to the process and timing to seek accelerate.
Is it approval, although we believe our data show that <unk> has a positive benefit risk profile in late line patients.
<unk> has now given strong guidance and for them to consider an accelerated approval path.
A randomized confirmatory phase III study must be well underway and the idea was fully enrolled at the time with any BLA submission for <unk>.
Means that we will not submit the BLA for <unk> next year as we estimate that it would take at least two years to fully enroll a randomized confirmatory phase III study.
We are engaged with the FDA.
In an ongoing and constructive dialogue regarding the guidance and the potential regulatory path forward. At this time, we are pausing any material investments in the Hodgkin lymphoma program, we will be evaluating options for <unk> with a disciplined and strategic approach to resource allocation.
Regarding the combination study of <unk> in solid tumors, we observed evidence of immuno module Tory activity and the desired impact on the ratio of T effector T regulatory cells. However.
Clinical data were not compelling enough for us to move forward.
Given the resources needed to fully explore the signal we decided it would be better not to pursue this opportunity on our own but rather to explore potential partnerships I would like to remind you that this study employed a unique approach to enhance immune activation by targeting specific intra tumor T cells.
<unk> prioritized, our other solid tumor programs moving forward.
<unk> for which the PPD will have a direct effect on the cancer cells.
As for the rest of the solid tumor portfolio, we are progressing with the phase one trial of <unk> hundred one targeting CAG. One as you may remember CAG. One is expressed in a variety of solid tumors, including platinum resistant ovarian cancer and prostate cancer.
Escalation is proceeding and we expect to have an indication of the safety and Tolerability.
As well as any early signals of antitumor activity in 2023.
Moving onto <unk>, one targeting axle with phase one B trial is ongoing as a reminder, the study has a monotherapy arm, including patients with actual gene amplification in a combination arm with gemcitabine in patients with sarcoma.
Our goal is to determine the optimal combination dose as well as the dose as a single agent either of which could be used in an expansion cohort.
We are also using this opportunity to optimize the assay to detect actual expression on the surface of tumor cells in order to identify appropriate patients.
Lastly, we are completing IND, enabling work for two preclinical solid tumor programs.
<unk> 701 targets <unk> and will be evaluated in neuroendocrine malignancies in collaboration with the National Cancer Institute.
<unk> is our optimized second generation PBT based ADC targeting <unk>, a validated target in metastatic prostate cancer.
We plan to enter the clinic with both of these programs next year.
I would also like to share that initial data showing encouraging clinical activity from the phase one two study of <unk> 602 targeting CD 22 for patients with relapsed or refractory acute lymphoblastic leukemia has been released as an ash abstract from MD Anderson.
Additional details will be disclosed in an oral presentation at ash, we continue to work with MD Anderson to optimize the dose and schedule for <unk> 602.
With that I will turn the call over to Jim to give a financial update Jan.
Thank you Joe and good morning, everyone.
At September 30, we had cash and cash equivalents of $381 million as compared to $377 million as of June 32022.
We received the upfront payment of $55 million from Sylvia in Q3.
Based on our business plan and expected milestones from Sidoti and healthcare royalty partners. We continue to expect the cash runway that extends into early 2025.
Potential near term milestone payments from those agreements include a $50 million milestone give some sobey upon European regulatory approval is in line and third line Dl Bcl and a $75 million milestone from our healthcare royalty partners agreement for the first EU commercial sale.
During the quarter, we entered into a strategic transaction with owl rock and Akshay can refinance the Deerfield convertible notes that were due in may 2025, and pushed the term of our debt obligations out to 2029.
In addition to refinancing the existing convertible debt.
We're pleased with an equity investment I blew out.
Deerfield also accepted equity as part of the exchange of the convertible notes.
Turning to the P&L.
Net sales were $21 3 million for the third quarter 2022, and license revenue was $55 million for the third quarter.
Looking forward, we expect our GPO contracting to negatively impact our gross to net starting in Q4 by approximately two to three percentage points.
Despite this impact we see the GPO contracts.
Important opportunity to drive volume growth in the community over time.
Cost of product sales was $1 3 million for the quarter compared to <unk> 5 million for the same quarter in 2021.
The increase was primarily related to impairment charges in connection with manufactured product intermediates that did not meet our specification.
Please note that the specification issues did not and are not expected to impact the company's ability to supply commercial product.
R&D expenses were $42 million for the third quarter 2022, compared to $37 million for the same quarter of 2021.
R&D expense increased for the quarter due to continued investments in our pipeline.
Selling and marketing expenses were relatively stable at $17 million for the third quarter 2022 versus 2021.
Lower share based compensation expense was offset by an increase in expenses for this is in line for launch and ongoing commercial efforts.
G&A expenses were $20 million for the quarter compared to $17 million for the same quarter of 2021.
G&A expenses increased for the third quarter 2022, as compared to the same quarter in 2021, primarily due to costs related to the recent CEO transition and higher share based compensation expense.
Net loss was $51 million for the third quarter compared to a net loss of $72 million for the same quarter of 2021.
Our diluted net loss per share was <unk> 65 in the third quarter compared to a net loss per share of <unk> 93 for the same quarter of 2021.
Adjusted net income.
Sure that exclude certain items described in the press release issued earlier today with $10 million for the third quarter compared to an adjusted net loss of $46 million in the same quarter of 2021.
Adjusted net income per share was <unk> 13 for the third quarter compared to an adjusted net loss per share of <unk> 59 in the same quarter of 2021.
The decrease in net loss and adjusted net loss for the quarter ended September 32022, as compared to the same period in 2021 was primarily due to higher product and license revenue, partially offset by the increase in operating expenses.
In addition, net loss decreased for the third quarter of 2022 as a result of lower charges arising from changes in the fair value of our warrant obligations and derivatives.
Partially offset by the loss on extinguishment of the Deerfield credit facility and higher interest expense.
With that I will turn the call back to Amit for closing remarks.
Thank you Joe and Jen to conclude we are pleased with the progress in the third quarter and we remain focused on executing on our key objectives going forward.
We are well positioned leader in the ADC space with unique capabilities from discovery to commercialization in over a decade of experience.
We have a validated technology platform as we launch a rich pipeline of Hematological and solid tumor program and an innovative toolbox to develop next generation assets with novel antibody construct and payloads. We look forward to keeping you updated on our ongoing progress now.
Now the team will be available for questions operator.
Thank you we will now begin the question and answer session. If you have a question. Please press star one on your Touchtone phone if youre using a speakerphone you may need to pick up the handset first before pressing pressing any numbers. Once again, if you have a question. Please press star one on your Touchtone phone. Please standby, while we compile the Q&A roster.
Our first question comes from Gregory <unk> with RBC. Your line is open.
Yes. Thank you for taking our questions. This is Sudan on for Greg.
So first Gen I wanted to.
Ask you.
Based on the.
The gross to net impacts that you are mentioning the two 2%.
Net.
Specifically for this year for 2022 is that extended to 2023 as well.
Just wanted to get more insight into how youre looking at that and how that's going to also have a positive impact with the community.
Outreach that that May bring and then secondly for Joe just wanted to.
Kind of.
As more details on the <unk> meeting.
You guys have with the type C meeting and how that.
Kind of transpired.
Okay.
Nick.
The decision to potentially start the confirmatory enrollment is that something thats still on the table.
To get the filing potentially onboard in the next.
Two to three years and then for me I just wanted to.
Get a question in on the <unk> launch and just kind of or just mostly on the business development side of things how looking at building into the.
Earlier stage pipeline that we have and then also how the development of the.
Early stage pipeline that we're expecting could dictate how this development is looked at going forward next year. Thanks.
Hi, Greg This is John Thanks for the question I'll start out with the question that question so for year to date 2022.
Been in the general range for gross to net deductions that we would expect for a drug an infusion drug in this late line population.
As I mentioned in the prepared remarks.
Starting in Q4, so really effective October one we are starting the GPO contracting and we do think that thats going to modestly impact the gross to net about two to three points and that'll be from Q4 onwards. So you would expect that also in 2023, and we really see this as something thats going to help us to drive incremental volume.
Going forward in the community so a net positive for the company.
I'll pass it over to Joe now.
Hi, This is Joe Cammarata I'll answer your question about <unk> over the years, we've interacted with the FDA several times and we were working on a good plan for accelerated approval based on phase II data with a follow on confirmatory study as a reminder.
<unk> is very active in late line Hodgkin lymphoma patients. We had an overall response rate of 70% and complete response rate of 30% in patients who had failed some AD sale permanence and half of them had relapsed after.
After stem cell treatments. So we had a very important population of patients here.
What happened in the last year is that the regulatory environment has changed very significantly.
Specifically with regard to the approach to regulatory to accelerated approval and at our most recent meeting in October .
<unk> cleared that.
The requirements for the phase III confirmatory trial have changed FDA told us that the trial would need to be well underway and ideally fully enrolled at the time of the BLA submission, which is a different kind of a plan.
And then what we had been working on.
And the last several years.
We paused our investments in order to move forward, we're going to have to assess the trial requirements at the time, the feasibility to cost to patients the endpoints et cetera and evaluate.
That that's an opportunity for.
Foreign investment relative to the rest of what we have in our portfolio. So.
A change in their requirements has led us to consider.
A change in how we move forward.
Thanks, John and Joe.
Yes, with regards to our pipeline.
Do really have.
A pretty rich pipeline we have.
901, 601, and 602, which are currently in phase one trials and then we have 212 and 701, which will move into the clinic next year. So by next year, we will have five different phase one programs.
And in addition.
Pretty robust research platform, where we have been doing a number of investments to expand our platform.
Both in terms of novel antibiotic construct but also in terms of drugs.
Including novel payloads beyond our <unk> platform.
So we're always going to explore given that you have we don't have infinite resources.
How we prioritize what we decided to report our own and where we decided to collaborate so.
I think that will increasingly be a part of our strategy to sort that out, but we're lucky that we have such a rich pipeline and such a differentiated research platform.
Thanks, and congrats on the quarter again.
Yes. Thank you.
One moment for our next question.
Our next question comes from Brian Chen with JP Morgan.
Hey, guys. Thanks for taking my question.
So one on your contracting with that community networks can you give us a better sense of how desks.
Find your contracting worked out that well if those network potentially it gives you a nash of our competitors.
This contracting offering more about ease of access to those who want to get on the truck.
And then lastly on expenses.
Can you give us a sense of.
Where are you where you stand in terms of the run rates.
Given <unk> is now on on Paul Thank you.
Yes, Thanks, Brian .
So first of all with regards to contracting with the community networks.
We do think Thats puts us in a place which is at least at parity I mean, there are other competitors that were already contracting before the community and we werent at potentially even in advance of the terms that we've given but we think it was important for us to be able to.
Copy overall committed network just to give you a sense the four biggest GPO.
Cover roughly half of the total community accounts in the country. So it's a big part of the overall community opportunity.
And as with any contract that you do with <unk>.
To open up the Canadian opportunity, there's a fixed component and a volume based variable component and so.
It's what leads to the range of 2% to 3% in a way if we get to the higher end of that range.
Because we've driven even higher volume in those accounts.
Which would be a good thing we believe that.
Contracting with committed accounts just opens up the opportunity more through the access of patients and drive a lot of educational initiatives.
Yes, we think it's very important for us to remain very competitive in the DRP sales space.
With regards to expenses.
At this point, we're still confirming yes, we've had a lot of positive momentum.
And our pipeline.
Bianca can be but we're currently still <unk>.
Firming, our cash runway into early 2025.
Great maybe just one question a follow up so.
Maybe on a broader level.
Related to the accelerated approval.
Path in oncology.
Can you give us a better sense of how the agency is thinking about.
Just a requirement in general to get the accelerated approval.
Yes.
Is it because more.
After an unmet need now is now.
Somewhat change in the Hodgkin space or do you think that the requirement is more applicable to.
All cancer types across.
Sure.
Yes, Hello, Brian This is Joe I really can't.
Speculate about the.
The changes I mean, there had been public statements by FDA by the Commissioner there have been articles written by the head of the.
The division of oncology about the accelerated approval pathway.
But but it's really not I cannot.
Only referred to those public public comments that are that are available.
Okay.
The position is still holds that accelerated approval is an area.
It's supposed to be.
And opportunity for patients to have access to drug sooner rather than later because it was a medical need I don't think that's really changed I think what's changed is us.
Fda's stated.
That they are interested in.
And having the confirmatory studies as they told us.
Somewhat more progressed at the time they review the dossier, that's what they told US and I think I made that statement also publicly.
Great. Thank you thanks, Joe.
Youre welcome.
Number four our next question.
Our next question comes from Boris <unk> with Cowen Your line is open.
Great couple of questions for me first maybe on the Atlanta can you talk about any changes in inventory during the quarter that may have impacted the results.
Yes, we're not aware of any inventory changes. So we believe this is demand driven.
<unk>.
Got it and do you have some kind of an internal estimate based on has been launched a label like what fraction of your target market have you penetrated so far.
It's hard to estimate because as you can imagine the data sources with just a small disease like this aren't precise I mean, directionally, we can honestly tell where we're gaining on every metric we're gaining share we're gaining a competitive share of voice in our awareness, which is one of the big issues, we had particularly in the community earlier in the year, which just really improves so I'd say all of our.
Our kind of launch metrics are improving we believe theres still.
Good good amount of potential to continue to grow.
Got it and lastly, Sonya.
Genentech announced BLA filing for policy and frontline VLCC also is based on our Polaris trial. So if approved I'm curious how do you see that impacting sort of locked in I guess other drugs in relapsed refractory <unk>.
Yes, I think it's an opportunity frankly I think.
If overview just a car Ts are moving earlier lines I think it actually opens up the space even more for us in the third line plus setting I actually think in a way.
The third line setting is getting less competitive even though the <unk> is getting more competitive overall, so we see as a positive position is rarely cycle through the same therapy in multiple lines of therapy. So it probably moves.
Frontline, it's unlikely that that same patient will get policy and subsequent lines. So we think it's a great opportunity for us and lots of obviously we have.
Very good risk management profile with a mono therapy too I think beyond our current indication. We also see opportunity in combination obviously, we're studying it with rituximab in the front and second line setting.
But also with a number of novel agents. You may have seen also we announced a clinical collaboration with IGN to look at locker with thereby specific so we think there's a lot of potential for longer as a monotherapy in our current indication, but also in combination in earlier lines.
Great. Thanks for taking my questions.
Thank you.
And number four our next question.
Our next question comes from Kelly <unk> with Jefferies. Your line is open.
Alright. Thank you for taking my question. My first question is why.
What are the key launch metrics to follow up on the long term for example, like our new locations. In addition.
Promo and.
How have they evolved since launch and also any noticeable change in Q3.
And lastly, how do you think about the growth trajectory going forward. Thanks.
Yes, Thank you Kelly.
Since our launch metrics and again I would just say the reason we don't disclose numbers is more because the sample size of the data we get our directional so theyre good for trends and as.
As you mentioned since the launch we look at a number of different things.
One thing we look at as awareness of our products, both aided and unaided and while we got two relatively high levels of aided awareness earlier launch unaided awareness was really far below competitors at the beginning of this year, that's really improved particularly in Q2 and Q3, we saw real we've seen improvements in our unaided awareness.
This also share of voice, we look at just how competitive are we in terms of reaching physicians and we've maintained a competitive share of voice.
The other thing we look at of course is our third line plus patient share, which again is directional, but where we're increasing share steadily.
The last thing we look at the account level performance. So we look at we track every account in the country and look at how we're doing where we're gaining or losing.
What I can tell you as we.
We continue to grow we continue to have steady growth in the academic.
Segment overall.
Roughly stable number of ordering accounts.
The community was more dramatic we saw.
A very strong growth in the community in this quarter and a fairly large increase in the number of ordering accounts. So.
What that translates into is whereas before we used to have roughly 60% of our accounts.
I'm, sorry, 50% of our accounts in the community right now 60% of our ordering accounts for the community and the volume you used to be only about 40% from the community now its about 50% of our total volume. So it's a pretty dramatic shift given that the academic segment is still growing right now and it's growing.
At a nice steady clip if I think about going forward.
Further penetrated into the academic segment given that we drove awareness.
And uptake very early in the launch so almost a year and a half ago and so we think we're going to have steady growth in that segment, but we're a little bit more mature into the launch whereas in the community segment, because our unaided awareness is low and access started to open up really starting in Q2. That's also when we got the J code and other <unk>.
Back in May.
Rudy opportunity started opening up in Q2 and into Q3.
We've obviously drove a much more robust growth and while we continue.
To believe that we're going to continue to grow while it's likely to be more moderate than the growth. We saw in Q3 in the community segment.
Super helpful.
Ill follow up.
Mentioned the cash runway now extends into 2025, Kevin in your pipeline progress and at the same I'm Sharon I think near term, we will conduct a constant reduction of R&D and SG&A in 2019.
Yeah, we think we'll have.
Roughly similar cost I would say.
I think thats, what I would model I mean.
As I said, we have a pretty rich pipeline. So although <unk> costs are projected to go down we will next year, how five assets into the clinic.
And really interesting.
I would say investments that we're making on the research area as well in terms of novel antibiotic construction payload. So we think we're going to have a roughly stable cost base given the evolution and honestly the progress that we're making in the R&D side of things.
Great. Thanks, good morning.
Thank you good morning.
Number four our next question.
Our next question comes from Matthew Harrison with Morgan Stanley . Your line is open.
Hi, This is Chris on for Matthew I have two questions. The first question is on <unk>.
Given the phase one results in the Ash abstract published recently how are you viewing this.
Net income as a priority.
And the second question is on <unk>.
Did the FDA point of how much enrolment is necessary for the confirmatory phase III trial. Thank you.
Thank you this is Joe yes.
The response rates as cited in that abstract are very intriguing and so our plan is to do what one would normally do in this situation optimize the dose and schedule and that's what we're doing with MD Anderson It took a while to actually.
To actually get to a dose.
That looks like.
It could be moving forward, so thats, where we are now.
We have to expand the population now in that that dose and make sure that it is optimal.
But we're very we're very interested in this.
And as his MD Anderson and I'll, just point you to the yet to the presentation, where there'll be more data.
So very promising very important areas adult <unk> can.
Can be treated but there are a lot of patients who still relapse.
So we're looking forward to continued.
Data.
Development there.
With regard to <unk> I will tell you. The FDA was very specific with us they said that.
We would like your confirmatory phase III trial to be well underway and ideally fully enrolled at the time of the submission thats pretty clear guidance.
And that's the.
The main reason for a reevaluation of the time and cost and future opportunity for the program.
Thank you.
Youre welcome.
Again, ladies and gentlemen, if you have a question or a comment at this time. Please press star one on your Touchtone telephone.
Okay.
And im not showing any further questions at this time I will turn the call back over to Amit for any closing remarks.
Yes. Thank you all for joining our call today and thank you. So much for your continued support we look forward to keeping you updated on our progress have a nice day everyone.
Ladies and gentlemen, this does conclude today's presentation. You may now disconnect and have a wonderful day.
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