Q3 2024 Coherus BioSciences Inc Earnings Call
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Good day and thank you for standing by.
Speaker Change: Welcome to the Q3 2024, co-hearist biosciences earnings conference call. At this time all participants aren't at this and only moved. After the speaker's presentation, there will be a question and answer session.
Speaker Change: To ask the question during the session, you will need a press star, one-one on your telephone. You will then hear an automated message advising your hand is raised.
Speaker Change: To withdraw your question, please press star 1-1 again.
Speaker Change: Please the advice that today's conference is being recorded.
Speaker Change: I would now like to hand the conference over to your speaker today, Jody Sievers, Head of Investor Relations. Please go ahead.
Jody Sievers: Thank you, Daniel. Good afternoon and welcome to Coherence Biosciences third quarter 2024 earnings conference call.
Joining me today to discuss our results are Denny Lanfear, Chief Executive Officer of Coherus, Bryan McMichael, Chief Financial Officer, Paul Reider, Chief Commercial Officer, Dr. Rosh Dias, Chief Medical Officer, and Dr. Theresa Lavallee, Chief Development Officer.
Speaker Change: Before we get started, I'd like to remind you that today's call includes forward-looking statements regarding Coherence's current expectations about future events.
Speaker Change: These statements include, but are not limited to, the following.
Speaker Change: Expectations for the time that it will take for our labeling and packaging CMO to resume packaging of eugenica and projections about the timing and number of units that it will complete. Projections about the timing and number of units that may be completed by our additional labeling and packaging CMO.
Speaker Change: and projections about future revenues, market share, and expenses.
Speaker Change: All of these forward-looking statements involve substantial risks and uncertainties that are beyond our control and could cause actual results, performance, or achievements to differ from those implied by the forward-looking statements.
Speaker Change: These statements are not guarantees of future performance and are subject to substantial risks and uncertainties, including risks and uncertainties inherent in our manufacturing process.
Speaker Change: and our reliance on third parties that are discussed in our press release that we issue today as well as the documents that we file with the SEC.
Speaker Change: Forward-looking statements provided on the call today are made as of this date, and we undertake no duty to update or revise any forward-looking statement.
Speaker Change: And now, I'll turn the call over to Denny.
Denny Lanfear: Thank you, Jody. Good afternoon, everyone, and thank you for joining us today on the call.
Denny Lanfear: Today we're pleased to share updates from the third quarter of 2024.
Denny Lanfear: Nine months into the year, we continue to first make good progress towards advancing innovative next-generation therapies with the potential to extend cancer patient survival.
Denny Lanfear: And secondly, execute well against our four-part strategy to deliver long-term shareholder value.
Speaker Change: specifically to drive top-line growth, control operating expenses, advance our pipeline, and improve our capital structure.
Speaker Change: While we have done well across each of these four dimensions, we are particularly pleased with the sales performance of the Udenica franchise through the third quarter, so I will focus there first.
Speaker Change: Significantly, Udetica has achieved 100% revenue growth since Q3 2023, reaching $66 million in revenue this quarter.
Speaker Change: This includes a 30% increase from Q2 to Q3 this year as our franchise kicked into high gear, demonstrating that our three presentation franchise options
Speaker Change: And as the on-body, the auto-injector and the pre-filled syringe is working very well and delivering exceptional value to customers.
Speaker Change: Also in Q3, Udenica retained its number 2 position in the market with nearly 30% share.
Speaker Change: Now let me address the Eudenica supply interruption in our overall supply chain strategy for just a moment.
Speaker Change: I'm happy to report to you that based on the updated production schedule, our Labeling and Packaging Contract Manufacturing Organization is resuming final packaging of Udenica this week.
Speaker Change: While this is a few weeks later than previously targeted, it's important to note that now that the CMO is restarting, they plan to process all 13 backlogged lots without further interruption or delay.
Speaker Change: This comprises about 120,000 Udenica units, representing several months' worth of supply, which are expected to be completed over the next five weeks.
Speaker Change: This will allow us to restock the distribution channels as fast as possible, as we expect to ship these final product lots as they are completed, making sure they get to our customers in an expedited fashion.
Speaker Change: Thank you. Thank you.
Speaker Change: Now that we have the schedule, we have started working with our channel partners and customers to understand and model how the restocking exercise will impact Q4 sales and the uptake dynamics.
Speaker Change: Since that effort is just now starting, we do not have a Q4 sales estimate for you today, but plans provide one in early January.
Speaker Change: We've also made significant progress bringing an additional labeling and packaging CMO online in order to expand and further diversify our supply chain.
Speaker Change: Setup and test lots have been completed. Qualification of manufacturing is underway and the requisite regulatory discussions are ongoing.
Speaker Change: Several lots are planned to start manufacturing in December and once the product from this operation is authorized for sale, we will have successfully doubled our labeling and packaging capacity to over 1 million Udenica units annually, consistent with the rest of our supply chain.
Speaker Change: We will be ready to meet the growing demand for Udenica and expect substantial market share increases in 2025 and beyond.
Speaker Change: Now I'll turn the light towards you, approved nasal pharyngeal cancer and our first commercial immuno-oncology agent.
Speaker Change: Lactorsi sales grew 54% quarter over quarter as we continue to execute well against our launch plan.
Speaker Change: Paul Reider, my Chief Commercial Officer, will provide more detail later on our call. So let me just say that we have tremendous confidence in long-term potential for lectorrhizae in the treatment of NVC and as a foundational element of our combination therapy strategies.
Speaker Change: As our pipeline of innovative immuno-oncology drug candidates, let me share why I'm so excited about the opportunities there.
Speaker Change: First, our differentiated and diversified portfolio includes promising tumor microenvironment immunotherapy antibody drug candidates focused on enhancing the innate and adaptive immune responses to enable a robust immunological response and improve outcomes for people living with cancer.
Speaker Change: Second, our targeted development strategy focuses on combinations that have an established proof of mechanism, providing a strong line of sight into target tumor types with the most potential for improving efficacy in the areas of unmet need.
Speaker Change: And thirdly, our joint candidates target large addressable patient populations and attractive market opportunities across several high unmet need tumor types that in turn will drive substantial shareholder value in the upcoming years.
Speaker Change: As far as near-term catalysts, I will let Dr. Theresa Lavallee and Dr. Rosh Dias speak to the detail, but we look forward to reporting on Phase 1 and 2 clinical trials for CHS114 and Tezdozo, respectively, in the first half of 2025.
Speaker Change: Lastly, I'd like to reiterate that disciplined financial management remains a high priority at Coherent.
Speaker Change: And we are now seeing the positive impact from our cost-saving efforts over the last year reflected in our balance sheet, which Bryan McMichael, our Chief Financial Officer, will cover later on this call.
Speaker Change: We are very confident in our ability.
Speaker Change: to create long-term value for our shareholders through both our product portfolio and our competitively positioned pipeline. We are executing well against our strategy and goals for the year and are excited about where our vision can take us moving forward. And with that, I'll turn the call over to Paul.
Paul Reider: Thank you, Denny, and good afternoon, everyone.
Paul Reider: Our dedicated commercial execution in oncology continues to deliver impressive results.
Paul Reider: highlighted by a sixth consecutive quarter of top-line revenue growth for Udenica and strong progress on Lactorsi following its third quarter of commercial launch.
Paul Reider: Total net product revenue for the quarter was $70.6 million, a 21% increase over Q2.
Paul Reider: Q3 Udetica Net Revenue was $66 million, a 30% increase quarter over quarter, and a 100% increase over Q3 2023.
Speaker Change: LaTour's net revenue was $5.8 million in Q3, a 54% increase quarter-over-quarter.
Speaker Change: We reiterate our belief that La Torze will follow a steady revenue ramp in the near term.
Speaker Change: Fueled by New Patient Acquisition
Speaker Change: with Sustained Growth Over Time Driven by Duration.
Speaker Change: as 80% of long-term value is from early line continuing patients.
Speaker Change: which we estimate will take three to four years to fully materialize.
Speaker Change: As I outlined in the Q2 call, there are approximately 2,000 NPC patients that are Lactorse-eligible each year, and early-line patients represent approximately two-thirds of the total eligible population.
Speaker Change: Based on the impressive PFS and OS results from Jupiter-2, early line NPC patients would receive the combination of Lactorse and chemotherapy and are expected to have the longest duration of treatment and greatest therapeutic benefit.
Speaker Change: Therefore, acquiring early line patients are a top priority.
Speaker Change: In Q3, the total number of lactorse-treated patients grew by more than 60 percent.
Speaker Change: And approximately 70% of total autopsy patients are being treated in combination with chemotherapy Indicating we are making strong progress in acquiring our targeted patient population
Speaker Change: It's still too early in the launch to make conclusions on duration of treatment.
Speaker Change: It's based on real-world evidence.
Speaker Change: The majority of early-line patients who have started on loctorazine remain on therapy.
Speaker Change: Overall, the launch is progressing well, and we continue to project that Lactorsi will achieve a dominant market share position in the NPC market that we estimate to be valued at $150 to $200 million.
Speaker Change: In the near term, apprentices remain focused on three revenue drivers.
Speaker Change: driving new patient share through strong HCP and patient identification.
Speaker Change: Ensuring Lactorse messaging is delivered at the time of treatment decision.
Speaker Change: in optimizing the duration of Long-Torsi treatment.
Speaker Change: Now, regarding eugenics...
Speaker Change: Our overarching strategy for Udenica is to maximize the long-term revenue of the franchise, and I'm pleased to report Udenica delivered another quarter of revenue growth, driven by continued strong execution and fueled by three drivers.
Speaker Change: First, the successful commercial launch of Udenica OnBody. Second, Udenica is the only Peg Philgraston brand with three different delivery options.
Speaker Change: to meet the unique needs of providers and patients. And third, broad payer coverage, which opens access to significantly more patient lives.
Speaker Change: Today, Udetica is covered on over 60% of commercial Medicare Advantage and fee-for-service plans in 2024.
Speaker Change: and we anticipate 2025 coverage to be similar, if not better than 2024.
Speaker Change: But despite overall franchise demand declining 3% quarter over quarter due to the temporary supply interruption,
Speaker Change: The 30% increase in Q3 revenue was driven by a 54% increase in demand for on-body, as well as a higher overall net selling price.
Speaker Change: Thank you for your attention. Thank you.
Speaker Change: Regarding Udenica OnBody, we remain pleased with the launch performance to date and customer receptivity continues to be very positive.
Speaker Change: Demand for OnBody in 2.3 is fueled by its differentiated features.
Speaker Change: such as our body's five-minute injection time.
Speaker Change: compared to the 45-minute delivery for Newelast to OnPro.
Speaker Change: In Q3, OnBody accounted for 21% of the franchise scubics, while the pre-filled syringe and auto-injector presentations represented 74% and 5% respectively.
Speaker Change: Regarding market share, Udenica maintained its number two position in the Pegg-Field-Grossom class with 28 percent market share.
Speaker Change: And with respect to the resupply plan that Danny laid out in his remarks.
Speaker Change: The Replenishment Timeline and Quantity set us up to resume generating sales in the late November to early December timeframe.
Speaker Change: Therefore, we are focused on two priorities.
Speaker Change: First, replenishing the distribution channel, and second, working closely with each account to resume eugenic demand, the pace of which is difficult to predict as it could take customers time to reestablish order sets and patient workflows.
Speaker Change: That said, we remain confident that customers will resume Udeneca prescribing in Q4 with demand and market share acceleration in Q1 and throughout 2025.
Speaker Change: as the Udetica franchise remains in a strong competitive position based on our three brand pillars.
Speaker Change: The innovative and differentiated on-body presentation. The only brand with three device options.
Speaker Change: and broad payer coverage, which for 2025 looks to be as good or better compared to 2024.
Speaker Change: With that, I'll now turn the call to Dr. Theresa Lavallee. Theresa? Thank you, Paul, and good afternoon, everyone.
Speaker Change: Now, to discuss our focus on the promise of the Coherence TME Targeted Pipeline for development in combination with ToropalliMAP.
Speaker Change: PD-1 inhibitors have revolutionized cancer care, bringing long-term survival to some cancer patients.
Speaker Change: The limitation of PD-1 inhibitors is that the treatment only works in a minority of patients.
Speaker Change: In tumor types that are classified as hot, such as lung, renal, and bladder cancer, less than half of patients enjoy long-term survival benefit from PD-1 treatment.
Speaker Change: Moreover, there are many tumor types that do not respond to PD-1 inhibitors and these tumor types are classified as cold or immune desert.
Speaker Change: such as pancreatic and colorectal cancer.
Speaker Change: For tumors that don't respond to PD-1 inhibitors, there have been a number of resistance mechanisms characterized.
Speaker Change: And two major ones are myeloid cell and Treg cell suppression of anti-tumor immune response blocking the activity of PD-1 inhibitors.
Speaker Change: Many of these mechanisms have been targeted and evaluated clinically, but have failed due to lack of single-agent activity, toxicity challenges, or not having targeted line-of-sight to indications for proven concepts.
Speaker Change: In the next week at the annual SITSE conference, we will present posters on Casdosa Keytub, our Aisle 27 antagonist that targets myeloid-driven suppression.
Speaker Change: And CHS114, our CCR8 cytolytic antibody that eliminates Treg cell suppression in the tumor.
Speaker Change: immune activation, and a safety profile that lends itself to combination with other agents.
Speaker Change: The translation of the preclinical data showing activity in lung and liver cancer to clinic is encouraging and forwards a strong line of sight for proof of concept.
Speaker Change: We continue to advance CHS114, our cytolytic CCRH antibody, that is designed to overcome the limitations of previous efforts targeting Treg cells.
Speaker Change: selectively targeting of tumor resident Treg cells, avoiding broad Treg depletion leading to autoimmune toxicity, and also depletion of other T lymphocytes leading to decrease in anti-tumor immune activation.
Speaker Change: The CISI poster will expand on the CHS114 Phase 1 data presented at ASCO.
Speaker Change: and support a selective depletion of CCR8 positive Treg cells with an excellent safety profile to date and show immune activation in cancer patients establishing proof of mechanism.
Speaker Change: The clinical study is now in dose optimization in combination with toropalumab and head and neck squamous cell carcinoma. The study is designed to address dose selection and alignment with FDA's Project Optimist and also safety biomarker and efficacy readouts.
Speaker Change: Many solid tumors have a high prevalence of CCR8 positive Treg cells, including immune non-responsive or cold tumors like colorectal and pancreatic cancer.
Speaker Change: The tumor types with the highest prevalence and density of CCR8-positive Tregs are head and neck, gastric, and cervical cancers.
Speaker Change: Advancing the clinical trials with CHS114 and TOR-Alomab is a key aim for 2025, with anticipated data readouts in the second half of 2025.
Speaker Change: I'll now turn the call to Dr. Dias, our Chief Medical Officer. Rosh?
Dr. Dias: Thank you, Theresa, and good afternoon, everyone. Loctorze as the foundational asset of our immuno-oncology portfolio remains the only indicated agent in nasopharyngeal carcinoma with its demonstrated profound survival advantage in first line and strong data in second line and beyond.
Dr. Dias: Perhaps most importantly for further development, with its FDA approval in NPC, it does give us the ability to continue to develop it together with our pipeline across additional tumor types as our foundational PD-1 combination agent.
Dr. Dias: Thank you.
Dr. Dias: We previously articulated our development strategy outside NPC to be formed by three key strategic pillars, which represent an effective and efficient way of resource allocation to optimally develop our IO pipeline.
Dr. Dias: Firstly, combination with our internal pipeline of the very well competitively positioned assets can serve as a key plug.
Dr. Dias: are first-in-class IL-27 targeting antibody, and CHS114, our CCR8 cytolytic antibody.
Dr. Dias: which affords us the opportunity.
Dr. Dias: to further explore the patient benefit of Noctorzi in combination with our own pipeline in tumor types beyond the NPC indications in areas that are underserved by immunotherapy.
Dr. Dias: Secondly, combination with external partner compounds at the discovery or post-discovery stage, which allows us to develop Loctorazine in combination with early-stage development assets in additional tumor types,
Dr. Dias: such as a study in combination with EMB Therapeutics and the Cancer Research Institute where we're providing Loctuzi in ovarian cancer.
Dr. Dias: And thirdly, combination with external partner compounds at the later registration enabling study stage, where again, we're providing Loctorazine for combination with later stage external agents.
Dr. Dias: such as the combination study with the Inovia vaccine and head in net cancer, and also the combination with Junishes BTLA in limited stage small cell lung cancer, which again allows us to develop locked or the in additional human rights with combination partners.
Dr. Dias: For the latter two approaches, whilst we're providing Loctorazid, our development partners bear the development costs of these trials.
Dr. Dias: Let me now take each of these in turn, starting first with our internal pipeline development.
Dr. Dias: Firstly, Cassandra is a key tug.
Dr. Dias: We're developing Cazdozo in two specific indications, non-small cell lung cancer and hepatocellular carcinoma.
Dr. Dias: Both approaches build on very encouraging data sets previously communicated at international congresses, with further data from these trials to be presented at upcoming congresses.
Dr. Dias: For non-small cell, Casdozo has shown monotherapy activity in advanced disease, with both partial responses being observed in squamous cell carcinoma patients, where IL-27 is more densely present and where, arguably, there is a greater unmet medical need.
Dr. Dias: Both responses were also in PD-L1 refractory subjects and in less inflamed tumors.
Dr. Dias: We're taking these data forward in our ongoing trial in the U.S. with the Casdors-Torrey-Palomat combination in advanced disease, which includes key academic centers in the U.S. and is recruiting to plan.
Dr. Dias: For HCC, Casdova has shown encouraging responses in the first line setting when added to the existing standard of care.
Dr. Dias: Atizo, and Bev, with data presented at ASCO GI at the start of this year showing an overall response rate of 38% with three complete responses, an increase from the 27% ORR and zero complete responses communicated a little over a year ago.
Dr. Dias: Again, we look forward to communicating further extended follow-up of these data at upcoming congresses.
Dr. Dias: We're building upon these data with a new study in the U.S. as previously communicated of Casdozo in combination with Torrey and Bev, and we remain on track to open this multinational study later this year.
Dr. Dias: With the relatively low anti-drug antibody rates of TORI, we remain excited about the potential of this particular combination as the current standard of care, ATISO, with BEV, has a high ADA rate that may hinder patient benefit.
Dr. Dias: For CHS114, our primary approach is in head and neck squamous cell carcinoma, a tumor type that is complementary to our existing autopsy indication.
Dr. Dias: where disease linkage is strong and our ongoing trial in the U.S. investigating both monotherapy and combination with TORI continues to recruit to plan. As a reminder, we're aiming to get paired biopsy samples from this study and are planning on increasing our patient number further indication expansion in head and neck.
Dr. Dias: I'm also pleased to announce that we're currently in planning to open a further study with CHS114 in combination with TORI in gastric cancer on the basis of strong disease linkage showing a high prevalence of CCR8-positive Tregs in gastric cancer and the encouraging data from Lenovo presented at ASCA this year with their CCR8 antibody in combination with TORI-Palomad.
Dr. Dias: With the selectivity and potency of our own CCR8, we're excited about the potential of our combination, which will form the first cohort of a study exploring CHS114 with TORI in additional tumor types, and which we're preparing to open in Quarter 1 next year.
Dr. Dias: For our partnership approaches, the studies utilizing the locked tools we previously communicated remain either in StartUp
Dr. Dias: for both the EMB therapeutic combination in ovarian cancer and the combination in head and neck with Inovio, or ongoing as with the Junshi-sponsored multinational study investigating Junshi's PTLA in combination with TORI, TORI alone, or observation in limited-stage small cell.
Speaker Change: And with that, I'll hand over to Bryan McMichael, our Chief Financial Officer. Bryan.
Bryan McMichael: Thank you, Rosh, and good afternoon, everyone. As Denny and Paul shared, it was a strong quarter as we continue to successfully execute on our strategy. Our sharpened focus on oncology is delivering results.
Bryan McMichael: Third quarter 2024 revenues were comparable to Q3 2023 despite the divestiture of non-core products with higher gross profit, lower operating expenses, and lower interest expense.
Bryan McMichael: This past quarter saw continued savings from reduced expenditures and improved gross margins, primarily driven by leased divestitures and lower headcounts.
Bryan McMichael: Cost of goods sold for Q3 2024 was $20.7 million, down $12 million from third quarter last year.
Bryan McMichael: This significant decrease in COGS, coupled with only slightly lower net revenue year over year, led to a 20% improvement in quarterly gross profit, or $8.2 million.
Bryan McMichael: R&D expense totaled $21.7 million, a decrease of $4 million or 15% from Q3 a year ago. Savings in R&D were partially offset by investments in our pipeline.
Bryan McMichael: RMD expenses for the year reflect significant investments in our commercial products and pipeline candidates related to pre-approval costs for expanding supply chain capacity and redundancy, and further de-risking inventory supply through on-shoring manufacturing.
Bryan McMichael: FD&E expense in Q3 totaled $34.7 million, a decrease of $13.5 million, or 28% compared to the prior year.
Bryan McMichael: Interest expense in Q3 was $5.4 million, which reflects a decrease of $4.9 million, or 48% from Q3 last year.
Bryan McMichael: The decline was primarily the result of fully paying off our $250 million term loan during the first half of the year, partially offset by interest on our $38.7 million principal amount term loan and our revenue purchase and sale agreement, both commencing May 8, 2024.
Bryan McMichael: The Q3 2024 net loss was $10.8 million, or $0.09 per diluted share, compared to a net loss of $39.6 million, or $0.41 per diluted share, for the same period in 2023.
Bryan McMichael: The non-GAAP net loss was $1.7 million, or $0.01 per diluted share in Q3 2024, compared to $26.9 million, or $0.27 per diluted share in the same period in 2023.
Bryan McMichael: Cash, Cash Equivalents, and Investments in Marketable Securities were $97.7 million as of September 30, 2024, compared to $117.7 million at year end.
Bryan McMichael: The direct impact of the temporary supply interruption on net revenue will primarily be realized in Q4 earnings, while the impact on cash will primarily lag to Q1 2025 due to payment terms with customers.
Bryan McMichael: Today we are reducing the high end of our expected range of combined R&D and SG&A expenses for 2024, which is now $250 million to $260 million. This guidance includes approximately $30 million of stock-based compensation expense and excludes certain business development activities.
Bryan McMichael: With that, I'll turn the call back over to Denny for closing remarks.
Denny Lanfear: Thank you, Bryan.
Denny Lanfear: Year to date, as we continue to execute on our four-part plan to deliver shareholder value. I want to thank our commercial team for their outstanding results and our manufacturing team for their hard work and progress on our supply interruption issue.
Bryan McMichael: While together we have accomplished a lot, there is more to do as we strive to bring innovative therapies to cancer patients and extend their survival.
Bryan McMichael: I'm now happy to turn the line open for questions.
Speaker Change: As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced.
Bryan McMichael: To withdraw your question, please press star 1 1 again.
Bryan McMichael: In the interest of time, we ask that you please limit yourself to one question and one follow-up.
Bryan McMichael: Please stand by while we compile the Q&A roster.
Bryan McMichael: Our first question comes from Kripa Devarakonda with Truist Securities. Your line is open.
Speaker Change: Hello, this is Alex Ksenakosan for Kripa.
Alex Ksenakosan: Congrats on the quarter. We're all excited to see the supply chain is getting up and running. I actually have a question on Casdo and Tory in the second line lung.
Alex Ksenakosan: which has gotten some attention. What are your expectations for the trial, given some of the failures that we've seen from some of the competition, with some high-profile ADCs in the area have performed as well as some people would have liked? And what's the outlook from your team on seeing responses in both squamous and non-squamous histologies? Thank you.
Speaker Change: Great, thanks for the question Alex. I'll let Dr. Rosh Dias, our Chief Medical Officer, answer that one for you and then we'll let Dr. Lavallee add to it. Rosh?
Dr. Dias: Thanks, Alex, for the question. So.
Speaker Change: For non-small cell lung cancer specifically, I think what we're seeing is that we're building upon some nice data sets that were previously communicated. We have demonstrated that we have seen a couple of monotherapy partial responses. Obviously, that's rare, particularly in PD-L1 refractory subjects.
Speaker Change: and previously, and also in terms of patients who have less inflamed tumours. So that's the real observation that we're taking forward.
Speaker Change: and we're encouraged by.
Speaker Change: Thank you.
Speaker Change: The study that we have ongoing right now is a staged design, so we're proceeding very measurably in terms of what we would like to see. The bar in second line is actually pretty low.
Speaker Change: The standard of care is dosetaxel alone, typically, in second line with a pretty low overall response rate. So, I think, you know, we're really following the science and we'll see how these results pan out.
Speaker Change: Depending on how we go, we plan to move forward subsequent to this with a phase 3 study looking at the combination versus the, again, standard of care dose taxil.
Speaker Change: Theresa, do you have any additional comments? Yeah, just to add that as we're looking broadly across the lung cancer subtypes, as well as lines of therapy, the monotherapy responses were in second and third line.
Speaker Change: So I think really focusing on that subset where we've seen a signal to limit it to second and third line and squamous.
Speaker Change: really makes a lot of sense. And from a biology standpoint, when we think of the way that CAS-dose Akita really got IL-27 as a target, became of interest with showing that in response to infection,
Speaker Change: that IL-27 was important to dampen the immune response in barrier tissues, such as lung. The squamous is.
Speaker Change: lung cancer is more akin to an infection since the incidence is more common from smoking Whereas adenocarcinoma is more common due to mutations
Speaker Change: So in these later lines of therapy, it might be a way to really enrich for greater activity.
Speaker Change: We still think looking earlier in lung cancer could be also of keen interest across the histology subtypes since IL-27 expression is high across all lung cancer. Thank you, Alex.
Alex Ksenakosan: Thank you.
Speaker Change: Thank you. Our next question comes from Igal Lachamovitz with Citi. Your line is open.
Speaker Change: Hi guys, this is Asik Anteagal. Thanks for taking my questions. I wanted to ask a couple on the Udenica situation.
Speaker Change: Can you give us some clarity on when Udemica will be available in the commercial channel again? My understanding is that the production will start this week, but I'm wondering when inventory might see some restocking.
Speaker Change: And can you give us a sense for how accounts have managed without Udemica? Were they using other products or was there maybe enough products on the shelf at the hospital level where they didn't necessarily feel any particular impact? Nicole, that would be helpful. Thank you.
Speaker Change: Thank you so much for the question. We're certainly happy to be putting the supply interruption behind this, and I'll let Paul make some comments for you with respect to availability on the shelves and the customers hanging with us. Paul?
Paul Reider: Yeah, thanks for your question.
Paul Reider: So we're expecting, you know, sales to resume in the late November, early December timeframe. So, you know, we'll have product beginning in our 3PL at that time. And then based on the anticipated demand from customers, we expect a very robust
Speaker Change: replenishment in the supply chain to occur over the course of that time, late November, through December, and then beyond. We also expect customer demand to resume. But as I mentioned, you know, the pace at which
Speaker Change: You know, we're going to have to watch as customers start to reintegrate Udentica into the workflows. However, I can tell you...
Speaker Change: that my confidence has been bolstered over the last few days
Speaker Change: conversations that we've had with customers.
Speaker Change: who were using Udenica prior to the supply interruption and who have given us assurances.
Speaker Change: that they will resume Udenica prescribing as soon as it's available. So I think we're going to start seeing, you know, sales coming back again late November, early December with demand accelerating by the end of the year and into 2021.
Speaker Change: And, you know, that confidence by the customers.
Speaker Change: continues to be bolstered by
Speaker Change: You know, the fact that we've got an innovative and differentiated on-body device.
Speaker Change: We're giving customers the three presentation options, and we've got broad payer coverage. And those three things are of high value to the market.
Speaker Change: So that demand for Udenica that was there prior to the supply interruption is there today as we come out of that. So we're feeling very, very bullish and confident coming out of this period of time.
Speaker Change: Now,
Speaker Change: You asked me about how the accounts managed.
Speaker Change: without Udenica. It's a good question. You know, two ways. Number one, if they were to access product
Speaker Change: that we had in the channel to be able to bridge them, you know, during that time, then there was really very minimal impact for them.
Speaker Change: Because that's the only product available other than on body, or they would have gone to a competitive Pegfograstom brand. As I mentioned, all indications that we're hearing is that they're going to be coming back to us upon resupply.
Speaker Change: Thanks for the thoughtful question.
Speaker Change: Thanks very much.
Speaker Change: Thank you.
Speaker Change: Our next question comes from Michael Nadelkovich with TD Cowan. Your line is open.
Michael Nadelkovich: Hi, thanks for taking my question. I have a follow-up on the Casdozo trial in late-line lung cancer.
Michael Nadelkovich: The dose of TACS will response rate...
Michael Nadelkovich: especially in early trials and especially in subgroups based on histology. It's kind of a moving target. Could you give us a little more detail on maybe a response rate that you think is a good benchmark or maybe a trial that you have in mind as a decent benchmark as it relates to those attacks and perhaps the threshold that you have in mind for the combo? Thanks.
Speaker Change: Rosh, do you want to take that?
Rosh Dias: So Dose-Taxel or Dose-RAMI is typically the second line standard of care. Typically what you see, as you say, is around a 12% overall response rate in second line. So we will be looking for an increment over that. I won't go too deep into the stats, but this will essentially be a standard.
Rosh Dias: Simon two-stage design. So we'll be, we have certain thresholds that we would like to meet at different stages.
Rosh Dias: But in answer to your specific question, Michael, the baseline dose tax or ORR that we're looking at is around the 12% mark.
Speaker Change: Very helpful, thank you.
Speaker Change: Thank you.
Speaker Change: Our next question comes from Douglas Tsao with HCW. Your line is open.
Douglas Tsao: Thank you.
Douglas Tsao: Hi, good afternoon. Thanks for taking the questions. I guess just to follow up on Udenica, I'm just curious, so you'll be selling again at the end of November. At what point do you think you'll be able to meet all demand in the marketplace?
Speaker Change: Thanks for your question, Doug. I think that's a great question. We have scheduled some 120,000 units.
Speaker Change: to be produced in five weeks.
Speaker Change: So, that's prior to the end of the year, and I think that's several months' production. So, I would say within, oh, three, maybe five weeks, we'll have all this product into the market. So, it's moving very quickly on the resupply.
Speaker Change: So, Denny, so by the beginning, so...
Speaker Change: while the fourth quarter will...
Speaker Change: you know sort of be obviously impacted by the first quarter hopefully you'll sort of be back up and running and do you think it will take any time?
Speaker Change: given the fact that customers had to come up with sort of contingencies or do you think that you know once you get back to to full supply you'll be sort of
Speaker Change: you know, sort of back to normal, so to speak.
Speaker Change: Yeah, well...
Speaker Change: Once again, I think that resupplying the channels, in particular the distributors, will be occurring in December, certainly into January, but I'll let Paul comment a little further on your follow-up question about just how things shake out going forward from there in Q1.
Paul Reider: I think will be ultimately dependent upon decisions that each of the different practices make, you know, on how they're going to treat each patient. In other words, if they've had to start a patient on another therapy,
Paul Reider: during the supply interruption.
Paul Reider: They're going to have to make a decision as to whether or not they're going to switch that patient to Udenica, which requires some operational burden on the account's behalf. They've got to re-verify the insurance, and it requires some work. I think that some accounts have signaled their intention to do that.
Paul Reider: which means the pace of demand acceleration returning will be faster. I think there's other accounts that are going to just not disrupt the patient's treatment and let them run and then we'll be getting all new patients.
Paul Reider: So I think those are the dynamics that we're gonna be monitoring.
Paul Reider: Most importantly, just we want to ensure a very
Paul Reider: smooth and easy transition with each account.
Paul Reider: so that we can get, you know, our demand to be at or even greater levels.
Speaker Change: that we had prior to the TSI. Thanks, Paul. Doug, I think it's important to keep in mind that Udenica demonstrated six consecutive quarters of growth.
Paul Reider: including a 30% increase from Q2 over to Q3.
Paul Reider: And, as Paul pointed out, this was largely driven by our very well differentiated on-body device, our three presentations, and our strong coverage.
Paul Reider: Those conditions existed before the supply interruption, and they will drive the recovery of our market share after the supply interruption. So as Paul and Katie were fairly bullish on that, hard to predict the exact trajectory and acceleration, but these customers are coming back to us.
Speaker Change: Have you had any any customers that have indicated that they're going to you know purchase in less volume just as they diversified their supply chain because of the disruption?
Paul Reider: Go!
Speaker Change: Okay, great. That's good to hear.
Speaker Change: Thank you.
Speaker Change: Thank you. As a reminder, to ask a question, please press star 11 on your telephone.
Speaker Change: Our next question comes from.
Speaker Change: Bryan Chang with J.B. Morgan, your line is open.
Bryan Chang: Thanks for taking our call this afternoon. On restocking, do you expect an even restocking across three of your Udenica formulation, or is there a priority given to pre-filled syringe over on-body or vice versa? And I have a quick follow-up, thank you.
Bryan Chang: Thank you. Thank you. Thank you.
Speaker Change: Paul, you want to take that one?
Paul Reider: Sure thing. Thanks for your question, Bryan. Yeah, we're going to follow kind of a sequential restocking flow. OnBody is going to come in first, followed by pre-filled syringe, then auto-injector. So it'll come in that order, and of course now we'll be working with each account on their ordering for each of the SKU, respectively.
Bryan Chang: So it'll occur sequentially. Once we get past the initial, then everything will be in the channel. It'll be continually resupplied and
Bryan Chang: And then I'll just follow the steady state as prior.
Speaker Change: Okay, and that's very helpful and then maybe just one more on your contingency plan
Speaker Change: that you discussed during the shortage.
Speaker Change: Do you have to reimburse patients who have to switch over to other treatments and you know given that they may have to purchase from other suppliers?
Speaker Change: And generally, no.
Speaker Change: Okay, thank you.
Speaker Change: Thanks, Bryan.
Speaker Change: Thank you. This concludes the question and answer session.
Speaker Change: I would now like to turn it back to Dennis Lanfear for closing remarks.
Dennis Lanfear: Thank you very much, Daniel, and thank you all for joining us today on our call.
Dennis Lanfear: As you can see, we continue to make very good progress with our Eugenica franchise in Q3.
Bryan Chang: We look forward to continuing that on the other side of supply interruption in Q1. And we will keep you updated on all the progress on our IO pipeline, our tumor microenvironment agents, and so on. And lastly, we'll see you at Citi.
Speaker Change: Thank you, Daniel.