Q3 2023 G1 Therapeutics Inc Earnings Call

Yeah.

Good day, and thank you for standing by.

Welcome to the G. One therapeutics third quarter 2023 financial results call.

At this time, all participants are in listen only mode.

After the speaker's presentation, there will be a question and answer session.

Please ask your question during the session you will need to press star one one on your telephone.

We'll then hear an automated message advising your hand is right to.

To withdraw your question. Please press star one again.

Please be advised that today's conference is being recorded.

I would now like to hand, the conference over to your first speaker today, well Robert Vice President of Communications. Please go ahead.

Thank you Teresa and good morning, everyone and welcome to the G. One conference call to discuss our third quarter 2023 financial results and business update.

A press release on these financial results was issued this morning and can be found in the news section of our website she want therapeutics dotcom.

On this morning's call the team will discuss the business overview on the third quarter of 2023, including an update on our clinical programs and our commercial progress in that period, but for sure which is approved and commercially available to decrease the incidence of.

Hemotherapy induced models depression in patients adult patients were administered prior to a platinum etoposide containing regimen or took a chicken containing regimen for extensive stage small cell lung cancer, a Q&A session will follow the prepared comments before.

Before we begin I want to remind you that today's webcast contains forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995 such.

Such statements represent managements judgment as of today and May involve risks and uncertainties that could cause actual results to differ materially from those expressed in or implied by these statements.

For more information on these risks and uncertainties. Please refer to our filings with the Securities and Exchange Commission, which are available from the SEC or on our corporate website any forward looking statements represent our views as of today November one 2023.

Joining me on the call are Jack Bailey, our Chief Executive Officer, Andrew Perry, Our Chief Commercial Officer, Raj Malik Chief Medical Officer, and John <unk>, Our Chief Financial Officer.

I'll turn the call over to Jack.

Thanks, well good morning, everyone and thank you for joining us on the call today.

I'm glad to have the opportunity to discuss our project progress during the third quarter.

We've experienced two quarters of selling into a strong headwind of a national platinum based chemotherapy shortage.

The shortage has been significant and prolonged as you've likely read.

The good news is that it appears to be waning and USDA reports suggest resolution by the end of this year.

Yet despite the chemotherapy shortages kusama has grown quarter over quarter on a volume basis, although due to wholesaler purchasing patterns ex factory sales were slightly down in the third quarter.

As you saw in this morning's press release because of the ongoing platinum shortage. We have decreased our co solid net sales guidance for 2023 to <unk> $44 million to $47 million. While we are disappointed in the impact of the shortage, we remain confident in the opportunity for significant growth as reflected.

By a record month of sales in October Andrew.

Andrew will provide additional color on our commercial results momentarily.

Beyond that continued therapy therapeutic innovation for people diagnosed with triple negative breast cancer is paramount and as we approach the overall survival readouts from our ongoing trials in T. M. D. C. There is palpable excitement among clinicians regarding the potential for trial is likely to improve.

Survival and a significant opportunity for Q1.

Most importantly, all eyes are on the interim overall survival analysis for preserved to our pivotal trial, a trial cyclists and CNBC.

If the results of the interim analysis in the first quarter of next year or positive.

We will work closely with the FDA to expand the indication itself.

We look forward to these results and the opportunity for <unk> to further establish our position as an innovation leader in this setting.

We will discuss each of these topics in order Andrew will cover our recent commercial results Raj will provide an update on our clinical pipeline, including an update on the face and the.

<unk> Phase III trial, John will then provide the financial results for the quarter and remind you of our revenue expense and cash expectations. Finally, I'll be back for some concluding comments with that I'll turn the call over to Andrew Thank.

Thank you Jack I'm glad to be with you today to provide an update on our third quarter of 2023 sales performance and the progress we've made in our commercial execution over recent months despite facing some continuation of the external challenges we described last quarter.

Our goal in Q3 was to continue to expand our quarter over corporate growth.

<unk>, our platform of deeply adult and customer organizations.

<unk> helps to secure growth, even when we face external challenges such as the platinum chemotherapy shortage, which we described on our Q2 call.

I'll discuss some of the factors underlying our Q3 performance to date.

Beginning with sales results, we ended the quarter with 3% bio volume growth compared with Q2.

As discussed on our Q2 call we entered the quarter with the continued impact of well publicized national shortages of both Carboplatin and cisplatin in fact, a recent survey conducted by the National comprehensive cancer network. So that the first week of October 72% of centers surveyed experienced a shortage of carboplatin and 59%.

We're still seeing a shortage of cisplatin.

Customers are managing through it and have dealt with the shortage by substituting chemotherapies swapping out Spartan for carboplatin or reducing cycles in doses.

We have seen these items stabilize somewhat during Q3 and in some cases returned to more normal levels.

While it may impact the fourth quarter to some extent as well FCA report suggests that it should fully resolved by the end of the year.

In terms of the effect on our seller business, let's may have impacted that the number of continuing patients from second quarter on new patients in the beginning of third quarter.

From a volume growth perspective, the impact was similar in size to that in the second quarter.

We showed similar growth this quarter across both top 100 on non top 100 customers with 56% of our volume and pulp 100 organizations.

Community clinics and hospitals represent 80% of sales and academic centers represented 20% with the community segment growing a little faster this quarter.

We saw a number of indicators that Oracle seller business continues to build a stronger base of deep adoption during the quarter.

58 of the top 100 organizations order during the quarter compared with 56 in Q2.

And we saw a similar number of customers purchasing more than 100 miles during the quarter.

We brought onboard 56, new accounts since the end of the quarter. We have also added one new top 100 organization, meaning 74 of the top 100 Hopper Costello launched today.

During the quarter, we added two new community contract customers and we estimate roughly 30% of our business is less customer suite.

<unk> agreement.

Our estimate of wholesale of patient share continues to grow although claims data for Q3 are not fully available we estimate patient share of approximately 11% in the offline market, which demonstrates ample opportunity for future growth.

98% of our volume in the quarter was a commercial supply with 2% provided through our patient assistance program.

Our payer mix remained stable, but the majority are covered by Medicare and third party payer reimbursement has remained strong.

Moving into Q4 2023, we're encouraged to see a healthy start for the quarter with continued strong demand in October which was a record month for sales.

As always we will continue to evolve as necessary to achieve our ambitions for casella.

I'll turn the call over to Raj for a pipeline update.

Thanks, Andrew and good morning, everyone. Today, I will review, our clinical work starting with expected timelines for overall survival results from each of our ongoing trials.

First as Jack said, all eyes are on the interim overall.

Overall survival analysis will preserve to our pivotal trial, a trial cyclists and triple negative breast cancer. This.

This trial largely replicates the design of our phase II trial that showed a statistically significant overall survival advantage in both arms for participants receiving charter cyclic prior to standard of care.

Compared to standard of care alone.

The interim overall survival analysis is event driven and based on the current rate of event accumulation.

We remain confident that the analysis will take place in the first quarter of 2024.

The trial meets the interim analysis stopping rule it will be unblinded and G. One of their report the topline results.

If the trial does not meet the interim analysis stopping rule. It will continue to the final analysis expected later in 2024.

Regarding the stopping criteria with respect to the hazard ratio recall that a group two of the phase II study, where patients received <unk> on the day of chemotherapy.

The hazard ratio was <unk> three one.

Based on the size of this study will be able to pick up a larger hazard ratio of approximately zero quite six one at the interim.

So the hazard ratio can be up to approximately two times larger than what we saw in group two of the phase III study and we would still have a positive outcome.

The mechanism of action of <unk> impacts longer term endpoints of overall survival to a greater extent that shorter term endpoints.

Preserving bone marrow and immune system function in addition to enhancing antitumor immunity.

Should allow patients to benefit while receiving trial cyclists and also while receiving subsequent anti cancer therapies following cholla site.

To that end, we have formed new post hoc analyses on our phase III <unk> trial evaluating survival outcomes for patients who did or did not received subsequent therapies. After study treatment and the results are compelling.

We have submitted the results to a medical meeting and look forward to discussing that once they are presented in December.

Second we expect to provide the initial overall survival results from our phase II trial with the antibody drug conjugates attitudes around <unk> in the first quarter of 2024.

Thus far we have shown convincing data that trial cyclist can improve the tolerability of <unk> map.

When administered prior to the ADC trial, the cycle of reduced the rates of multiple adverse events by over 50% compared to the single agent ADC.

Including neutropenia anemia and diarrhea.

In addition to the benefit on Tolerability, we believe that combining charter cyclic substitutes or Matt could also enhanced survival and in doing so provide a path for meaningful improvements and outcomes for people living with triple negative breast cancer.

And third regarding the bladder cancer phase II trial, we announced this morning that we are concluding the trial. Following the next protocol defined analysis of survival later this quarter.

Allowing us to focus our resources on our core areas of TWC and ADC combinations.

We will report the results from this phase II trial in bladder cancer at a future medical meeting.

This is a signal finding study designed to assess the potential additive contribution of <unk> to anti cancer therapy, including combination with immune checkpoint inhibitor or value add alone without chemotherapy in the maintenance phase of the study.

Approximately 30 patients in each arm entered maintenance.

To date, although no meaningful benefit was observed in the overall study we have observed an overall survival trend in favor of <unk> plus <unk> arm in the maintenance phase.

Suggesting a potential additive benefit when used in combination with the checkpoint inhibitor consistent with the immune based mechanism of action of <unk>.

These data will be instructive for future studies in our core areas of focus.

Changing topics to try to cycle in our first approved indication.

We recently presented new real World data show for the first time.

<unk> may improve survival in patients with extensive stage small cell lung cancer.

First our partner sincere presented new data at the ESMO conference. So part two of the randomized placebo controlled phase III study called traces.

<unk> or placebo when combined with chemotherapy in patients with extensive stage small cell lung cancer.

After a median follow up of $14. One months. The median overall survival was 12 months of that charter cyclic group and eight eight months in the placebo group with a hazard ratio of 0.69.

Although this was not statistically significant due to the size of the trial the hazard ratio in all subgroups favored the trailer cycle.

Operator: Good day, and thank you for standing by.

In addition, we presented four posters at the <unk> quality care Symposium last weekend.

Operator: Welcome to the G1 Therapeutics third quarter, 2023 financial results call. At this time, all participants are in listen-only modes.

Regarding new real world evidence that <unk> can substantially lower the impact of chemotherapy induced model suppression on patients hospitalizations and healthcare resource utilization.

Operator: After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your questions, please press star 1-1 again. Please be advised that today's conference is being recorded.

Importantly, we also reported that based on claims data from Medicare and a novel.

Patients receiving <unk> at a higher survival at six months of 84% compared to 72% for the group that did not receive tullow cycle.

The hazard ratio for the effect on survival with 0.63.

Operator: I would now like to hand the conference over to your first speaker today.

William Roberts: Will Roberts, Vice President of Communications, please go ahead. Thank you, Teresa.

Finally, I'll mention the important recent news that charter cycle has been recommended as a myeloid supportive agent and the updated <unk> small cell lung cancer guidelines for patients with untreated or previously treated small cell lung cancer or undergoing treatment with chemotherapy or <unk>.

William Roberts: Good morning, everyone. Welcome to the G1 conference call. To discuss our third quarter, 2023 financial results in business update. To press release on these financial results was issued this morning. It can be found in the new section of our website. G1 Therapeutics.com. On this morning's call, the team will discuss a business overview on the third quarter of 2023 including an update on our clinical programs and our commercial progress in that period with Cousella, which is approved and commercially available to decrease incidents of chemotherapy induced miles of suppression in patients. Adult patients would administer a prior to apply to them as exercise containing regimen or interpretation containing regimen for expenses to be small cell lung cancer. A Q&A session will follow the prepared comments.

<unk> immunotherapy.

These guidelines provide evidenced based recommendations to practicing clinicians are the management of such patients, which is vital to ensuring appropriate patient access and strong payer reimbursement.

I'll now turn the call over to John for a review of the financial results John.

Thanks, Raj and good morning, everyone as will mentioned all financial results for the third quarter 2023 are available in this morning's press release and will be in the 10-Q, which we expect to file after market close our.

William Roberts: Before we begin, I want to remind you that today's webcast contains forward-looking statements within the meeting of the private securities litigation reform after 1995. Such statements represent management judgment as of today and may involve risk and uncertainties that could cause action results to differ. Materially from those expressed in or implied by these statements. For more information on these risks and uncertainties, please refer to our following with the Securities and Exchange Commission, which are available from the SEC or on-air corporate website. Any forward-looking statements represent our views as of today, November 1, 2023.

Our total revenue for the third quarter of 2023 was $12 $3 million comprised of net seller revenue of $10 8 million in.

License revenue of $1 $5 million.

As mentioned by Jacques Although there was a decrease in net revenue during the third quarter, our vial volume grew by 3% over the second quarter. Despite the continued impact of the platinum shortage.

This disparity is related to the timing of the sales recall that we recognize revenue point of sales to our distributors.

We experienced an increase in patient file demand towards the end of the quarter, but the impact of our sales to the distributor will be reflected in revenue in the fourth quarter, where we've seen our highest gross sales to date in October.

William Roberts: Joining me in the call or Jack Bailey, our chief executive officer, Andrew Perry, our chief commercial officer, Raj Malik, our chief medical officer, and John Umstead, our chief financial officer.

Jack Bailey: With that, I'll turn the call over to Jack. Thanks. Well, good morning everyone and thank you for joining us on the call today. I'm glad they have the opportunity to discuss our project progress during the third quarter. We've experienced two quarters of selling into a strong headwind of a national flattened-based chemotherapy shortage. The shortage has been significant and prolonged as you likely read. The good news is that it appears to be waiting and the FDA reports suggest resolution by the end of this year.

Regarding our layer cycled agreement with EQT Rx in August we received formal notice to terminate the license agreement and to revert the product rights back to us as part of our proposed acquisition by Revolution medicines.

Jack Bailey: Yet despite the team of therapy shortages, Cousella has grown quarter over quarter on a volume basis. Although due to wholesale or purchasing patterns, expactory sales were slightly down in the third quarter. As you saw in this morning's press release, because of the ongoing flattened shortage, we have to crease our Cousella net sales guidance for 2023 to 44 to 47 million dollars.

Both parties have signed a side letter agreement pursuant to which <unk> agreed to pay $1 $6 million to us for the remainder of the costs to wind down the company sponsored later cycle study.

Payment was received during the third quarter.

No milestones have been achieved through September 32023, and as a result of the termination we will not receive any further milestone payments or future royalties from <unk>.

Cost of goods sold for the three months ended September 32023 was $3 $1 million.

Compared to $1 1 million for the same period in 2022.

This difference is primarily driven by an increase in sales volume coupled with a onetime inventory reserve for potential product obsolescence.

Jack Bailey: While we are disappointed in the impact of the shortage, we remain confident in the opportunity for significant growth as reflected by a record month of sales on October.

We mentioned on the call that we expected our 2023 operating expenses to be close to 30% lower than that of 2022.

We have continued to recognize these savings and as an update we now expect our 2023 operating expenses to be at least 30% lower than that of the prior year.

Andrew Perry: Andrew will provide additional color on our commercial results momentary.

Jack Bailey: Bionnet continued therapeutic innovation for people diagnosed with triple-negative breast cancer is paramount. And as we approach the overall survival readouts from our ongoing trials in TMDC, there is helpable excitement among clinicians regarding the potential to try to spike with to improve survival and a significant opportunity for G1. Most importantly, all eyes are on the interim overall survival analysis for a preserve too, a pivotal trial of trial of trial of cyclists in TMDC.

Our research and development expenses for the third quarter of 2023 were $8 8 million compared to $19 $1 million for the third quarter.

Our selling general and administrative expenses for the third quarter of 2023 were $16 8 million compared to $24 4 million for the third quarter of 2022.

This reduction is primarily related to decreases in expenses associated with commercialization activities personnel costs Medical affairs activities.

Regarding our cash position, we ended the third quarter with cash cash equivalents in marketable securities of $94 4 million.

Jack Bailey: If the results of the interim analysis in the first quarter of next year positive, we will work closely with the FDA to expand the indication of Pacelle. We look forward to these results in the opportunity for G1 to further establish our position as an innovation leader in this setting. We will discuss each of these topics in order.

Compared to 145.

$1 million as of December 31, 2022.

Finally regarding revenue and cash runway guidance for 2023.

As Jack mentioned as a direct result of the impact of the ongoing platinum based chemotherapy shortage extending from the second quarter through the third quarter of 2023, we've adjusted our net product revenue guidance for 2023 to a range between 44% and $47 million.

Andrew Perry: Andrew will cover our recent commercial results.

Rajesh Malik: Raj will provide an update on our clinical pipeline, including an update on the PMDC phase three trial.

John Umstead: John will then provide the financial results for the quarter and remind you of our revenue, expense, and cash expectations.

Based on the Fda's ongoing reporting we continue to expect the shortage in this quarter.

Jack Bailey: Finally, I'll be back for some concluding comments with that.

There is no change to our 2023 gross to net expense percentage estimates, we now anticipate a year end cash cash equivalents in marketable securities balances in the range of <unk> $75 million to $80 million and based on the foregoing. We now believe that our cash runway currently takes us beyond the third quarter of 2024.

Andrew Perry: I'll turn the call over to Andrew. Thank you, John.

Andrew Perry: Godspeed, with you today to provide an update on our third quarter, 2020-23 sales performance, and the progress that made in our commercial educational recent months, but by facing some continuation of the experimental challenges we described last quarter. Our goal in Q3 was to continue to expand our quarter over quarter growth by broadening our platform of deeply adult and customer organizations. The strategy helps to secure growth even when we face external challenges to stop challenges the platform chemotherapy shortage, which we described in our Q2 call.

With that I'll turn the call back over to Jack for some closing comments Jack. Thank you John Raj, Andrew well I also want to recognize the cancer community. We are thankful for the opportunity to be part of your recovery journey.

We continue to be encouraged with the mounting real world evidence confirming the benefit of Costello to patients and hospitals.

Andrew Perry: I'll discuss some of the factors underlying our Q3 performance today. In the beginning with sales results, we ended the quarter with 3% by the volume growth compared with Q2. As discussed in our Q2 call, we end the quarter with the continued impact of well-publicized national shortages of both carbon-flatten and cis-flatten. In fact, the recent survey conducted by the National Comprehensive Cancer Network showed that as of the first week of October, 72% of centers surveyed expeditions for shortage of carbon-flatten and 59% were still seeing a shortage of cis-flatten.

And the support of organizations like <unk> is a recent small cell lung cancer guideline update recommending consult with juice.

Andrew Perry: Customers are managing through it and have dealt with the shortage by self-stitching teamotherapies, swapping out cis-flatten for carbon-flatten, or reducing cycles and doses. We have seen these outcomes stabilize thumb-bought during Q3, and in some cases, returned to more normal levels. And while it may impact the fourth quarter to some extent, as well, FDA reports suggest that it should fully result by the end of the year. In terms of the effect in our Q2 call, this may have impacted the number of continuing patients from the second quarter on new patients in the beginning of their quarter.

As you heard from Andrew we remain confident in its potential and its initial indication of extensive stage small cell lung cancer as the leading indicators of growth showed continued progress.

Importantly, we accomplished quarter over quarter volume growth in the face of the ongoing platinum chemotherapy shortage.

And while we have a clear path to profitability with casella in its first indication our focus is on driving therapeutic innovation in triple negative breast cancer and building our position as a leader in this space.

We're executing on our clinical pipeline to help clarify the future potential for trial the cycle.

And in combination with anti cancer drugs, including Adcs.

Most importantly, if the interim analysis of the phase III <unk> trial planned for the first quarter of next year is positive we intend to meet with the FDA to discuss filing an NDA to expand the use of <unk> to this indication as quickly as possible.

Andrew Perry: From a volume growth perspective, the impact was similar in size to that in the second quarter. We show a similar growth across both 1,100 non-top 100 customers, with 56% of our volume and 1,100 organizations. Community clinics and hospitals represent a 80% of sales, and academic standards represent a 20% with the community segment growing a little faster of a score. We saw a number of indicators that our Costella business continues to build a stronger base of deep adoption during the quarka 58 of the top 100 organizations order during the quarka compared to 56 and Q2 and we saw a similar number of customers purchasing more than 100 miles during the quarka.

Thank you for your time. This morning, we will speak again in this format on the fourth quarter 2023 earnings call and we'll see what the fall and winter Investor and medical meetings with that I'll close the call turn it over to Q&A. Operator would you. Please remind our listeners how to ask a question.

Thanks.

Can you ask a question you will need to press star one on your telephone and wait for your name to be announced soon.

Your question. Please press star one again.

Standby, while we compile the Q&A roster.

Andrew Perry: We brought on boards 56 new accounts and since the end of the quarka we have also added one new top 100 organizations, meaning 74 of the top 100 have ordered Costella launched today. During the quarka we added two new community contract customers and we estimate roughly 30% of our businesses with customers who have a volume agreement. Our estimate of costella patient share continues to grow and although claims data for Q3 are not fully available, we estimate patient share of approximately 11% in the first line market which demonstrates ample opportunity for future growth.

Our first question will be from Gil Blum from Needham <unk> Company. Your line is now open.

Hi, good morning, everyone and thanks for the updates.

Maybe first one here on the upcoming interim so for the <unk> study.

Help me understand.

Would there be sufficient data not just to stop for efficacy, but also that the stop for futility. Thank you.

Hey, Joe This is Rob, yes, I mean, we will.

It's really an efficacy interim analysis based on O'brien Fleming boundary, but yes, if that was futility that DMC certainly has that prerogative to stop the trial.

Andrew Perry: 98% of our volume in the quarka was in commercial supply with 2% provided through our patient's assistance program. Our pair of mixed remains stable with the majority covered by Medicare and third party peer reimbursement has remained strong.

Okay.

And maybe on the.

Andrew Perry: Moving into Q4 2023, we're encouraged to see a healthy start for the quarka with continued strong demand in October, which was a record month for sales.

Context around the <unk> guidelines are more familiar with <unk> guidelines, but maybe you can help us understand what that could mean for casella.

Rajesh Malik: As always, we will continue to evolve as necessary to achieve our ambitions for the quarka on that time to call over to Raj for a pipeline update.

Yes. Thank you.

These guidelines are obviously put together by well respected clinicians.

Rajesh Malik: Thanks Andrew and good morning everyone. Today I will review our clinical work starting with expected timelines for overall survival results from each of our ongoing trials. First, as Jack said, all eyes are on the interim overall overall survival analysis for preserve to our pivotal trial of child is likely in triple negative breast cancer. This trial largely replicates the design of our phase two trial that showed a statistically significant overall survival advantage in both arms for participants receiving child is likely prior to standard of care compared to standard of care alone.

Academic clinicians who are very influential in their own clinics and in their own right and but their own clinical trial experience. So we're very encouraged to see that additional support from hospital coming through I think it cements our position.

An emerging standard of care in extensive stage small cell. So we were excited to see that result come through and it can only strengthen our.

Promotional efforts on our support from payers for reimbursement.

Alright, and then last one on <unk>.

Dynamics.

For the upcoming quarter.

In small cell lung cancer.

Patients avoid therapy during the holidays as it is with Bangalore.

Rajesh Malik: The interim overall survival analysis is event driven and based on the current rate of event accumulation, we remain confident that the analysis will take place in the first quarter of 2024. If the trial meets the interim analysis stopping rule, it will be unblinded and G1 will report the top line results. If the trial does not meet the interim analysis stopping rule, it will continue to the final analysis expected later in 2024.

No.

Initiatives will trade year immediately so you are received.

Yes, so small cell is considered an emergency.

Diagnosis, so when patients present and are diagnosed they would be treated immediately prior to the recommendation of the physician.

Alright, thanks for taking all of our questions.

Gil.

Thank you.

Rajesh Malik: Regarding the stopping criteria with respect to the hazard ratio, recall that in group two of the phase two study where patients received child cycle on the day of chemotherapy, the hazard ratio was 0.31. Based on the size of this study, we'll be able to pick up a larger hazard ratio of approximately 0.61 at the interim. So the hazard ratio can be up to approximately two times larger than what we saw in group two of the phase two study and we would still have a positive outcome.

One moment.

Yes.

Our next question comes from Dane Leone with.

R J.

Your line is open.

Hi, Thanks for taking the questions and congrats on the progress. The primary question that we've been receiving recently in the <unk>.

Morning off of.

The result is whether.

Your team feels there is overlap in some of the higher volume.

<unk> et cetera.

Sure.

Rajesh Malik: The mechanism of action of trial and cyclic impacts longer term endpoints like overall survival to a greater extent than shorter term endpoints. Preserving bone marrow and immune system function in addition to enhancing anti-tumor immunity should allow patients to benefit while receiving trial and cyclic and also while receiving subsequent anti-cancer therapies following trials. Like them.

Two where some of the newer small cell lung cancer studies are being run.

With specific reference I think to maybe the <unk> studies.

Within the Delphi program is there is there any color you can provide us.

Where you think some of the utilization might have dropped.

Maybe beyond.

Or or utilization, maybe inhibiting a bit of momentum or the ability to penetrate deeper at some of these academic centers or is that the entire headwind in margins driven by patent base shortage. Thank you.

Rajesh Malik: To that end, we have performed new postdoc analyses on our Phase 2 TMBC trial, evaluating survival outcomes for patients who did or did not receive subsequent therapies after study treatment and the results are compelling. We have submitted the results to a medical meeting and look forward to discussing them once they are presented in December.

Thanks, I see the headwind is driven by the platinum based shortage.

We've yet to pick up any noticeable impact of any clinical trial programs on our demand.

Rajesh Malik: Second, we expect to provide the initial overall survival results from our Phase 2 trial with the antibody drug conjugate Tacitus and Upgobotican in the first quarter of 2024. Thus far, we have shown convincing data that Chalicellit can improve the tolerability of Tacitus and Up. When administered prior to the ADC, Chalicellit reduced the rates of multiple adverse events by over 50% compared to the single agent ADC, including utropina, anemia, and diarrhea. In addition to the benefit on tolerability, we believe that combining Tralicellititus and Upgobotican could also enhance survival and in doing so provide a path for meaningful improvements in outcomes for people living with triple-negative breast cancer.

Any segment of customers.

Thanks.

Thank you for your question.

Yes.

Our next question comes.

On a palm Rama.

Rajesh Malik: And third, regarding the bladder cancer phase 2 trial, we announced this morning that we are including the trial while in the next protocol defined analysis of survival later this quarter.

Rajesh Malik: Allowing us to focus our resources on our core areas of TNBC and ADC combinations. We can report the results from this Phase 2 trial and bladder cancer at a future medical meeting. This is a signal-finding study designed to assess the potential additive contribution of Chalicellitit to anti-cancer therapy, including combination with the immune checkpoint and better availability of alone, without chemotherapy in the maintenance phase of the study. Approximately 30 patients in each arm entered maintenance.

Rajesh Malik: Today, although no meaningful benefit was observed at the overall study, we have observed an overall survival trend in favor of the Tralicellit plus a VeliMav arm in the maintenance phase, suggesting if potential additive benefit, when used in combination with a checkpoint inhibitor, consistent with the immune-based mechanism of action of Tralicellit This data will be instructive for future studies in our core areas of focus.

Yes.

Maybe I can talk from a clinical data perspective, and then Jack can talk about timing so.

Obviously, we're looking for the survival data, which we expect.

The early data in 2024, so that in the first quarter I should say and that will really give us directionally.

Rajesh Malik: Changing topics to Tralicellit in our first approved indication recently presented new real-world data show for the first time that Tralicellit may improve survival in patients with extensive dates most of the lung cancer. First, our partner Simseer presented new data at the asthma conference from part two after randomized placebo-controlled phase 3 study called traces, with Tralicellit or placebo, were combined with chemotherapy in patients with extensive states while cell lung cancer. After a median follow-up of 14.1 months, the median overall survival was 12 months in a Tralicellit group and 8.8 months in the placebo group with a hazard ratio of 0.69.

Whether this is something we would want to pursue then ill leave it to Jack for the timing, yes. Thanks, Troy, Yes, I mean, it's going to obviously depend on the readout itself, but we will certainly look for different avenues. If the data is compelling to be able to pursue that so I would just say stay tuned and let's see what the data shows.

Okay, great. Thanks for that color and then just one more I guess logistical question.

Can you just provide any more color on the onetime inventory reserve for potential product obsolescence that you referred to in the press release issued this morning, and I apologize if you mentioned it in the prepared remarks and I missed it.

No. Thanks, Troy So what it is obviously, we had mentioned lowering our guidance, we're taking a conservative approach in how we look at our inventory reserves, it's a onetime noncash impact to the P&L and obviously something we'll continue to monitor but we feel like there was a conservative approach toward at this point in the balance sheet.

Rajesh Malik: Although this was not statistically significant due to the size of the trial, the hazard ratio in all subgroups favored the Tralicellit group. In addition, we presented four posters at the Asco-quality Care Symposium last weekend, providing new real-world evidence that Tralicellit can substantially lower the impact of chemotherapy induced malicepression on patients, hospitalizations, and healthcare resource utilization.

Okay, great. Thanks for taking our question.

Thank you for your questions and I am showing no further questions. At this time I would now like to turn it back to Jack Bailey for closing remarks.

Rajesh Malik: Information. Importantly, we also reported that, based on claims data from Medicare and Inovalan, patients receiving child cycle at a higher survival at six months of 84%, compared to 72% for the group that did not receive child cycle. The hazard ratio for the effect on survival was 0.63.

Thank you operator, and as always I look forward to keeping all of you updated on our progress. Thank you for joining us today will be in touch. Thank you.

Thank you for your participation in today's conference. This does conclude the program and you may now disconnect.

Rajesh Malik: Finally, I'll mention the important recent news that child cycle has been recommended as a mileage supportive agent in the updated ASCO Small Sun Lung Cancer Guidelines for patients with untreated or previously treated Small Sun Lung Cancer for undergoing treatment with chemotherapy or chemo immunotherapy. These guidelines provide evidence-based recommendations to practicing clinicians on the management of such patients, which is vital to ensuring appropriate patient access and strong payer reimbursement.

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John Umstead: I'll now turn the call over to John for a review of the financial results. John? Thanks for asking. Good morning, everyone. As we'll mention, full financial results for the third quarter of 2023 are available in this morning's press release, and will be in the 10Q, which we expect to file after market close. Our total revenue for the third quarter of 2023 was $12.3 million, comprised of net-to-seller revenue of $10.8 million, and license revenue of $1.5 million.

John Umstead: As mentioned by Jack, although there was a decrease in net revenue during the third quarter, our vital volume grew by 3% over the second quarter, despite the continued impact of the platinum shortage. This disparity is related to the timing of the sales. Recall that we recognize revenue at the point of sale to our distributors. We experienced an increase in patient file demand towards the end of the quarter, but the impact of our sales to the distributor will be reflected in revenue in the fourth quarter, where we've seen our highest growth sales today in October.

John Umstead: Regarding our later cycle agreement with EQRX, in obvious, we received formal notice to their intent to terminate the license agreement and to avert the product rights back to us as part of the proposed acquisition by Revolution Medicines. Both parties have set sign-to-side letter agreement pursuant to which EQRX agreed to pay $1.6 million to us for the remainder of the cost to wind down the company-sponsored layer-side whip study. The payment was received during the third quarter.

John Umstead: No milestones have been achieved through September 30th, 2023, and as a result of the termination, we will not receive any further milestone payments or future roll-toes from EQRX. Cost of goods sold for the three months ended September 30th, 2023, with $3.1 million compared to $1.1 million for the same period in 2022. This difference is primarily driven by an increase in sales volume coupled with a one-time inventory reserved for potential product obsolescence.

John Umstead: We mentioned on the call that we expected our 2023 operating expenses to be close to 30% lower than that of 2022. We have continued to recognize the savings and as an update, we now expect our 2023 operating expenses to be at least 30% lower than that of the prior year. Our research and development expenses for the third quarter of 2023 were $8.8 million compared to $19.1 million for the third quarter of 2022.

John Umstead: Our styling general and administrative expenses for the third quarter of 2023 were $16.8 million compared to $24.4 million for the third quarter of 2022. This reduction is primarily related to decreases in expenses associated with commercialization activities, personal calls, and medical affairs activities.

John Umstead: 30s.

John Umstead: Regarding our cash position, we ended the third quarter with cash, cash equivalence and marketable securities of $94.4 million, compared to $145.1 million as of December 31, 2022. Finally, regarding revenue and cash runway guidance for 2023. As Jack mentioned as a direct result of the impact of the ongoing climate-based chemotherapy shortage, extending from the second quarter through the third quarter of 2023, we adjusted our net product revenue guidance for 2023 to arrange for $24.47 million.

John Umstead: Based on the FDA's ongoing reporting, we continue to expect the shortage to end this quarter. There is no change to our 2023 growth to net expense per cent adjustments. We now anticipate a year in cash, cash equivalence and marketable securities balance in the range of $75.8 million. And based on the foregoing, we now believe that our cash runway currently takes us beyond the third quarter in 2024.

Jack Bailey: With that, I'll turn the call back over to Jack for some closing comments.

Jack Bailey: Jack. Thank you, John, Raj, Andrew, and Will. I also want to recognize the cancer community. We are thankful for the opportunity to be part of your recovery journey. We continue to be encouraged with the mounting real-world evidence, confirming the benefit of Coast Salah to patients and hospitals and the support of organizations like Asco, through their recent small-cell lung cancer guideline update, recommending Coast Salah's use. And as you heard from Andrew, we remain confident in its potential and its initial indication of extensive stage small-cell lung cancer as the leading indicators of growth show continued progress.

Jack Bailey: Importantly, we accomplish quarter over quarter of our vine growth in the face of the ongoing platinum team of therapy shortage. And while we have a clear path to profitability with Coast Salah in its first indication, our focus is on driving therapeutic innovation in triple-negative breast cancer and building our position as a leader in this space. We are executing on our clinical pipeline to help clarify the future potential for trial cycle and in combination with anti-cancer drugs, including ADCs.

Jack Bailey: Most importantly, if the interim analysis of the Phase III PNBC trial planned for the first quarter of next year's positive, we intend to meet with the FDA to discuss filing an SNDA to expand the use of Coast Salah to this indication as quickly as possible.

Jack Bailey: Thank you for your time this morning.

Operator: We will speak again in this format on the fourth quarter 2023 earnings call and we'll see you at the fall and winter investor and medical meetings.

Operator: With that, I'll close the call, turn it over to Q&A operator, which you please remind our listeners how to ask a question. Thank you. To ask a question, you will need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. You stand by where we compile the Q&A roster.

Gil Blum: Our first question will be from Gil Bloom from Native and Company. Your line is open. Hi, good morning, everyone. I'm thanks for the update. Maybe the first one here on the upcoming interim for the TNBC study just to help me understand, would there be sufficient data, not just the stop for efficacy, but also the stop for futility? Thank you. Hey, Gil, this is Rajesh. Yes, I mean, we will, it's really an efficacy intro analysis based on a Brian Fleming boundary, but yes, if there was futility, the DMC certainly had that be rather to stop the trial.

Gil Blum: Okay. And maybe on the context around ASCO guidelines, I'm more familiar with the ANCC and guidelines, but maybe you can help us understand what that could mean for Kucela. Yeah, thank you. You know, these guidelines are obviously put together by well-respected clinicians, academic clinicians who are very influential in their own clinics and in their own right and with their own clinical file experience. So we're very encouraged to see this additional support from ASCO coming through.

Gil Blum: I think it commands our position as an emerging standard of care and extensive safe small cell. So we were excited to see that results come through and it can only strengthen our promotional efforts and our support from pairs for reimbursement. All right.

Gil Blum: And maybe the last one on dynamics for the upcoming quarter. And small cell lung cancer, like patients avoid therapy during the holidays, is this a thing or, you know, physicians will treat you immediately as you are received. Yeah, so a small cell is considered an emergency diagnosis. So when patients present and are diagnosed, they would be treated immediately for the recommendation of the physician. All right. Thanks for taking all of our questions. Thank you, go. Thank you. One moment.

Dane Leone: Our next question comes from Dame Leon with RJF. Your line is open. Thanks for taking the questions and congrats on the progress. The primary question that we've been receiving recently in this morning off of other results is whether your team feels there's overlap in some of the higher volume use centers of Castella to where some of the newer small cell lung cancer studies are being run with specific reference, I think, to maybe the Tarlata map studies within the Delphi program.

Dane Leone: Is there any color you can provide of where you think some of the utilization might have dropped maybe beyond or utilization, maybe inhibiting a bit of momentum or the ability to penetrate deeper at some of these academic centers, or is the entire headwind more driven by platinum based storage? Thank you. Yeah, thanks. I see the headwind is driven by the platinum based shortage. We've yet to pick up any noticeable impact of any clinical five programs on our demand, any segment of companies. Thanks. Thank you for your question.

Anupam Rama: Our next question comes from Anupam Rama with JP Morgan. Your line is open. Hey guys, thanks so much for taking the question.

Anupam Rama: On your cash position of good till 3Q24, does that assume that the interim OS on preserve to hit or does it assume that you're going to go to the final analysis later in the court? Yeah, next year. Thanks so much. So we provided guidance that we would get through past Q3 and that does not include any expectations from a team to see read out. Got it. Thanks so much for taking the question. Thank you.

Troy Langford: Our next question is from Troy Langford with TD Collin. Troy in line is open. Thanks for taking our questions and grabbing all the progress in the quarter.

Troy Langford: I just have two quick questions. First, with respect to the phase 2 to Adele Lee combo, a result expected next quarter, how quickly do you all think you could initiate additional studies related to that combination? Should the data look positive? Yeah, okay, maybe I can talk from a clinical data perspective and then Jack can talk about timing. So obviously we're looking for the survival data, which we expect the early data in 2024, so that in the first quarter I should say.

Troy Langford: And that will really give us directionally whether this is something we would want to pursue. And then I'll leave it to Jack for the timing. Yeah, thanks Troy. Yeah, I mean, it's going to obviously depend on the read out itself, but we will certainly look for different avenues if the data is compelling to be able to pursue that. So I would just say stay tuned and let's see what the data shows.

Troy Langford: Okay, great. Thanks for the color.

Troy Langford: And then just one other more, I guess, logistical question. Can you all just provide any more color on the one-time inventory reserve for potential product off the lessons that you will refer to in the press release this year this morning? And apologies if you mentioned it in the prepared remarks and I missed it. No, thanks Troy. So what it is, you know, obviously we had mentioned lowering our guidance. We're taking a conservative approach on how we look at our inventory reserves. It's a one-time non-cash impact to the PNL. And obviously something will continue to monitor, but we feel like it was a conservative approach for this plan to balance it.

Troy Langford: Okay, great. Thanks for taking our question. Thank you for your questions.

Operator: I am showing no further questions at this time.

Jack Bailey: I would now like to turn it back to Jack Bailey for closing remarks. Thank you operator. And as always, I look forward to keeping all of you updated on our progress.

Jack Bailey: Thank you for joining us today. We'll be in touch. Thank you.

Operator: Thank you for your participation in today's conference.

Operator: This does conclude the program and you may now disconnect. Thank you.