Allos Therapeutics Inc. Q3 2008 Earnings Call Transcript

Nov. 6.08 | About: Allos Therapeutics, (ALTH)

Allos Therapeutics Inc. (NASDAQ:ALTH)

Q3 2008 Earnings Call

November 5, 2008 4:15 pm ET

Executives

Derek Cole – Vice President of Investor Relations

Paul Berns – President and Chief Executive Officer

Pablo Cagnoni – Chief Medical Officer

Jim Caruso – Chief Commercial Officer

David Clark – Vice President of Finance

Analysts

Katherine Kim – Banc of America Securities

Lucy Lu – Citigroup

Mark Monane – Needham & Company

Thomas McGahren – Merrill Lynch

Jason Kantor – RBC Capital Markets

Operator

Welcome to the Allos Therapeutics' third quarter 2008 results conference call. (Operator Instructions). I would now like to turn the conference over to Derek Cole, Vice President of Investor Relations.

Derek Cole

Welcome to our third quarter 2008 results conference call. Joining us on today's call are Paul Berns, President and CEO, Dr. Pablo Cagnoni, Chief Medical Officer, Jim Caruso, Chief Commercial Officer and David Clark, Vice President of Finance.

Following this introduction Paul will summarize the company's third quarter activities. Pablo will then provide an update on our clinical development programs, Jim will provide a brief commercial planning update and David will review the company's third quarter financial results.

We welcome your questions following Paul's closing remarks. As a reminder this conference call is being recorded and webcast. The call may be accessed live on our website and will be available in our event archives for the next several weeks.

Before we begin please be advised that during the course of this call we may make forward-looking statements concerning our company that are not historical facts. These forward-looking statements may include but are not limited to statements concerning our future financial performance, our future product development plans, timelines relating to our clinical trials, timelines for regulatory actions, the potential safety and efficacy of our product candidates and our plans related to the potential marketing and commercialization of pralatrexate.

Such forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties that may cause actual results to differ materially from those anticipated by the forward-looking statements. Additional information concerning these risks and uncertainties is contained in the risk factor section of the company's annual report on Form 10-K for the year ended December 31, 2007 and in the company's other periodic reports and filings with the Securities and Exchange Commission.

The company cautions investors not to place undue reliance on these forward-looking statements. All forward-looking statements are based on information currently available to the company on the date hereof and the company undertakes no obligation to revise or update these forward-looking statements to reflect events or circumstances after the date hereof except as required by law.

I will now turn the call over to Paul.

Paul Berns

Good afternoon and thank all of you for joining us on today's conference call. It's certainly a pleasure to update you this afternoon on what was a very productive quarter for Allos. In clinical development organization led by Dr. Pablo Cagnoni continues to make important progress advancing the development of Pralatrexate in both hematologic malignancies and solid tumors. Our lead trial. PROPEL. is a pivotal Phase II trial of Pralatrexate in patients with relapsed or refractory peripheral T-cell lymphoma or PTCL.

Dr. Owen O'Connor, the principal investigator of the trial, is scheduled to report top line results from PROPEL in an oral presentation at the 50th Annual Meeting of the American Society of Hematology or ASH that will take place next month, December 6th through the 9th in San Francisco. Following our review of the trial results, we intend to submit a new drug application for Pralatrexate for the treatment of patients with relapsed or refractory PTCL as expeditiously as possible.

In addition to PROPEL top line data, three additional abstracts describing clinical and preclinical Pralatrexate studies have been accepted for poster presentations at ASH. Dr. Steven Horowitz, the study principal investigator, will present interim data from our ongoing Phase I/IIa open-label multi-center study of Pralatrexate and Jim [Sidabean] with vitamin B12 and folic acid supplementation in patients with relapsed or refractory non-Hodgkin's lymphoma or Hodgkin's disease.

Additionally, interim data from our Phase I open-label multi-center study of Pralatrexate with vitamin B12 and folic acid supplementation in patients with relapsed or refractory cutaneous T-cell lymphoma will be presented as well. If you recall in June of this year we reported encouraging interim data from the study and are pleased to be able to share additional interim data at the ASH meeting. Finally, data from our preclinical study of a combination of Pralatrexate and VELCADE will be presented.

Under the leadership of Jim Caruso our commercial organization continues to advance our commercial planning in preparation for the potential future launch of Pralatrexate, should we receive marketing authorization from the FDA.

In summary, we believe we are making important progress in executing our strategic business plans. We maintain worldwide rights to Pralatrexate for all indications and continue to advance the development of Pralatrexate in multiple hematologic malignancies and solid tumors.

I will now turn the call over to Pablo to review our clinical development programs.

Pablo Cagnoni

As we look forward to the presentation of top line results from our pivotal Phase II PROPEL trial in December at the ASH Annual Meeting, I would like to take this opportunity to review the PROPEL trial design and previously reported data. I will then review recent progress in our other clinical development programs before turning the call over to Jim.

As a reminder PROPEL is our pivotal Phase II international multi-center open-label single arm trial designed to evaluate the safety and efficacy of Pralatrexate in patients with relapsed or refractory PTCL.

Patients receive 30 milligrams per meter squared of Pralatrexate once every week for six weeks followed by one week of rest per cycle of treatment as well as vitamin B12 and folic acid supplementation. The primary endpoint of the trial is objective response rate either complete or partial response which will be assessed by central independent oncology review. Duration of response is the key secondary endpoint.

All patients involved in the trial will continue to be followed for long-term survival. Since we initiated the PROPEL trial in August of 2006, we have achieved the trial's clinical milestones either on time or ahead of schedule. In January, September and December of 2007 we announced in an independent data monitoring committee completed interim analysis of safety data from the first 10, 35 and 65 evaluable patients who completed at least one cycle of treatment with Pralatrexate respectively and recommended that the trial continue per the protocol at each analysis.

No major safety concerns were identified with the DMC. In September 2007 we announced the results of an interim analysis of patient response data exceeded the pre-specified threshold for continuation of the trial which required a minimum of four responses either complete or partial out of the first 35 evaluable patients as determined by independent oncology review.

In April of this year, we completed patient enrollments in the trial a full quarter ahead of schedule with more than 100 evaluable patients enrolled at 31 participating medical centers in the U.S., Canada and Europe.

In May, we reported interim response and safety data from the PROPEL trial. 29% or 19 of the first 65 evaluable patients enrolled in the trial experienced either a complete or partial response as assessed by central independent oncology review. 45% or 29 of the first 65 evaluable patients experienced either complete or partial response as assessed by the PROPEL investigators.

Patients were considered evaluable if they received at least one dose of Pralatrexate and the diagnosis of PTCL was confirmed by independent review. The median duration of response for these patients could not be estimated due to the current length of follow up.

The most common drug related grade 3 or 4 adverse events were mycocitis and thrombocytopenia which were observed in 14% and 23% of patients respectively. Significantly these patients had received a median of three prior treatments or regimens.

The PROPEL trial is being conducted under an agreement reached with the FDA under its Special Protocol Assessment or SPA process. This process allows for the FDA evaluation of the clinical trial protocol intended to form the primary basis of an efficacy claim in support of a new drug application and provides an agreement that the trial design, including trial size, clinical endpoints and data analysis are acceptable to the FDA.

The response rate, duration of response and safety profile required to support FDA approval are not specified in the PROPEL trial protocol and will be subject to FDA review. Beyond PROPEL, we are also evaluating the potential clinical utility of Pralatrexate in other hematologic malignances and solid tumors.

We are currently conducting three clinical trials in other hematologic malignancies which we expect will provide further insight into the clinical and commercial potential of Pralatrexate in these indications.

In June, we announced the presentation of interim data from our Phase I open-label multi-center study of Pralatrexate in patients with relapsed or refractory CTCL at the 10th International Conference of Malignant Lymphoma in Lugarno, Switzerland.

Data were presented on 17 patients including 14 evaluable patients who completed at least one cycle of treatment with Pralatrexate at doses ranging from 15 to 30 milligrams per meter squared as part of the weekly schedule for two or three weeks followed by a week of rest.

Patients received a median of three prior systemic therapies. Investigator assessed responses were observed in 7 of 14 evaluable patients or 50% including two complete responses and five partial responses. Notably, the responses were observed in all four treatment cohorts.

The most common adverse event was mycocitis with grade 2 mycocitis observed in seven out of 17 patients and grade 3 mycocitis observed in two of 17 patients. There were no grade 4 toxicities and no thrombocytopenia above grade 1. We are encouraged by this data and look forward to providing an update to this study at ASH.

During the quarter we also made important progress with our Pralatrexate solid tumor development program. We continue to advance patient enrollment in our Phase IIb randomized multi-center study comparing Pralatrexate and [alatenib] in patients with Stage 3b/4 non-small cell lung cancer which we initiated in January of this year.

We are pleased with the progress we've made and expanding investigator interest and patient enrollment in this study since its initiation. Based on our current enrollment and enrollment rate we expect to complete patient enrollment in this study in the second half of 2009.

In July we expanded our Pralatrexate solid tumor development program through the initiation of patient enrollment in a Phase II open-label single-arm multi-center study of Pralatrexate in patients with advanced or metastatic relapsed transitional cell carcinoma or TCC of a urinary bladder.

The primary endpoint of the study is objective response rate which includes complete and partial responses. Secondary endpoints include duration of response, clinical benefit rate, progression free survival, overall survival and the safety and tolerability of Pralatrexate. The study will seek to enroll approximately 41 patients in up to 20 investigative sites worldwide.

In summary, we continue to be encouraged by the progress of our Pralatrexate development program. Based on pralatrexate's rational design for improved uptake and retention in malignant cells, we believe Pralatrexate has potential across multiple indications in both hematologic malignancies and solid tumors

We especially look forward to the presentation of top line data from our pivotal Phase II PROPEL file at the December ASH conference and following our review of the trial results we intend to submit a new drug application for Pralatrexate for the treatment of patients with relapsed or refractory PTCL as expeditiously as possible.

To conclude our clinical development update, RH1 is a novel small molecule chemotherapeutic agent that we are evaluating in a Phase I open-label multi-center dose escalation study in patients with advanced solid tumors or non-Hodgkin's lymphoma. We plan to enroll up to 60 evaluable patients in this study with the objective of determining the maximum tolerated dose, recommended Phase II dose and safety profile of RH1 in this population.

I will now turn the call over to Jim who will update you on our commercial planning efforts.

Jim Caruso

The potential future launch of Pralatrexate for the treatment of patients with relapsed or refractory PTCL is a first to market opportunity for Allos. Currently, there are no pharmaceutical agents or multi-agent chemotherapy regimens approved by the FDA for use in the treatment of either first line or relapsed or refractory PTCL. This emphasizes the need for new therapies to treat patients with aggressive T-cell lymphoma.

According to the medical literature, patients with aggressive PTCL have an overall five-year survival rate of approximately 25 to 30%. WE estimate that PTCLs account for approximately 10 to 15% of all cases of NHL in the United States and has an annual U.S. prevalence of approximately 9,500 patients.

We are excited by our preliminary market research in which 97% of participating NHL physicians reacted positively to the interim 65 patient PROPEL data which demonstrated a 29% response rate as determined by a central independent review and a 45% response rate as reported by PROPEL investigators.

We believe this product profile will support trial, use and adoption of Pralatrexate. We remain focused on preparations for a potential future launch. In addition to pricing adoption work, we are conducting research on product brand name and positioning, market dynamics and customer segmentation. We also continue to drive important commercial infrastructure activities including sales force structure, sizing and optimization and the design and implementation of a customer relations management system.

We are also in the process of establishing our specialty distribution channels which we plan to have in place prior to the potential launch of Pralatrexate. Our objective is to build a high performance oncology sales and marketing organization and to achieve the necessary share of voice with key treatment decision makers and providers.

In our view the U.S. oncology market space is highly scalable with a sizable number of PTCL patients treated at relatively large cancer centers and institutions that we believe can be addressed by an appropriately sized sales force.

Importantly, Allos retains exclusive worldwide rights to Pralatrexate for all indications. While we are focused on preparing for a potential U.S. launch outside of the U.S. we will continue to review our strategic partnership opportunities with the intent to selectively pursue those partnerships that we believe are in the best interest of our company, customers and shareholders.

With that update I will now turn the call over to David Clark for a financial review.

David Clark

For the quarter ended September 30, 2008, we reported a net loss of $13.2 million or $0.16 per share. This compares to the net loss of $9.3 million or $0.14 per share for the third quarter of 2007.

R&D expenses for the quarter ended September 30, 2008 were $6.4 million as compared to $4.4 million for the same period last year. This increase was primarily a result of increased clinical trial costs due to our initiation of two new trials for Pralatrexate during 2008.

For the nine months ended September 30, 2008, the company reported a net loss of $37 million or $0.50 per share compared to a net loss of $28.1 million or $0.43 per share for the same period last year. For the nine months ended September 30, 2008, net cash used in operating activities were $30.7 million.

As of September 30, 2008, our cash, cash equivalents and investments in marketable securities totaled $96.4 million. Consistent with our previous guidance, we expect that our net cash use in operating activities for fiscal year 2008 will approximate $45 to $49 million.

With that I will now turn the call back to Paul.

Paul Berns

Before we move on to the Q&A portion of today's call, I would like to take the opportunity to thank all of the individuals who have been instrumental in helping us advance our clinical development program, especially the PROPEL trial.

We gratefully acknowledge the investigators and patients for participating in the PROPEL trial and for their important role in helping to evaluate the safety and efficacy of Pralatrexate for treatment of patients with relapsed or refractory PTCL, a disease for which there are currently no FDA approved treatments.

We believe that Pralatrexate has the potential to offer a new treatment option for patients with this challenging disease and look forward to the presentation of top line results from the PROPEL trial at ASH.

In summary, we are pleased with the advances we have made during the first three quarters of 2008. We have achieved several significant milestones further advancing our PDX development program in both hemo malignancies and solid tumors.

We believe we have established a strong foundation for continued progress and look forward to providing future updates. With that I will now turn the call over to the operator for your questions.

Question-and-Answer Session

Operator

(Operator Instructions). Your first question comes from Katherine Kim – Banc of America Securities.

Katherine Kim – Banc of America Securities

The first is the ASH abstracts which should be available soon. Do you expect to have any incremental or information in those abstracts from the presentations you’re expecting? Or is this just going to be pretty much placeholders?

Paul Berns

I’ll have Pablo speak to that because I think as you know, ASH is a organization like many tier one medical type conferences where the information is embargoed up until the point of which they really buy the organization at the meeting. But to that I’ll have Pablo comment.

Pablo Cagnoni

It’s our understanding that the abstract will be posted online at the ASH website on November 10. I’m afraid because, as Paul mentioned, because of the nature of the embargo placed by ASH on the data we cannot comment on what’s contained in those abstracts.

Katherine Kim – Banc of America Securities

But if they’re going to, can you just say if there’s going to be any incremental information? Not necessarily talk about the data, but just if there’s going to be new things? Or is it going to be just – like, for example, the PROPEL trial, is it just going to be a placeholder showing this interim data that was – the top line data that was announced back in May.

Pablo Cagnoni

There is more data in the abstract than was presented to the press release in May. That’s all I can say at this point.

Katherine Kim – Banc of America Securities

OK. And then, for PROPEL, beyond the response rates and the duration of response, what other parameters should we be focused on?

Pablo Cagnoni

Well, those are the two key end points of efficacy as you mentioned, so the primary endpoint of the study as you know is overall response rate and I think you should focus on the response rate. You should focus on the number of complete responses in this study and the durability of those responses. All that in the context of the safety of PROPEL compound considering the population that was treated in the study which as we mentioned several times, was a very heavily pre-treated group of patients with PTCL.

All this has to be put into context of that group of patients. They’re heavily pre-treated, therefore, the safety of PROPEL as well has to be put in context and the efficacy has to be put in that context as well. But I think you hit of the two key efficacy endpoints. I will just add that safety is the other key part of that.

Katherine Kim – Banc of America Securities

So, in your earlier comments when you talked about physicians looking at the interim data and being excited about it. Is there any other things that they’re as particularly excited about besides the two – what we just talked about?

Paul Berns

Well, that’s a great question. When we presented to a group of high prescribing NHL clinicians who specialize in peripheral T-cell lymphoma as well as the number of key opinion leaders, the priorities in terms of rank of importance would be your overall response rate, your complete response rate, your duration of response, your adverse event profile and then also, interestingly enough, dosing.

So those would be the key elements that these clinicians looked at, and they – the data specifically that they reviewed was that data that was presented to top line interim data, if you will, that we presented back in May. I will tell you that 97% of them said that the data was very favorable and perceived it to be positive which 3% were neutral to okay. So the data was received, as you would expect, very, very well.

Katherine Kim – Banc of America Securities

Okay and then, just final question. On TCC, when do you expect to have some preliminary data from that trial?

Pablo Cagnoni

In the bladder study we will probably have data some point next year. We have not given any guidance beyond that at this point, Katherine.

Operator

Your next question comes from Lucy Lu – Citigroup.

Lucy Lu – Citigroup

I just wanted to know if you could provide us with some color on the timing and the sale of the commercial infrastructure of the potential future line PDX? And how this may be impacted by the cash reserves at hand as a near term financing climate?

Paul Berns

I think we’ve been public that our expectation is to have a potential launch in the back half of 2009. Currently we are, as you would expect, preparing with your standard pre-launch marketing types of elements in terms of competitive analyses, market intelligence, understanding of disease state as well.

Our market research both qualitative and quantitative to have a better understanding of market dynamics and those inputs that impact brand decisions such as market landscape, etc. Doing pricing sensitivity work, forecast validation work, messaging, physicianing, and then your standard market preparation as it relates to medical education of providers and payers on the unmet need, on treatment challenges of peripheral T-cell lymphoma and then profile T-accounts, and then your infrastructure related elements as well.

I can share with you that we’ve had – which is typically the case when you have a novel, exciting, new oncology technology there is a great deal of excitement within the industry especially on the commercial side. And so we have a pretty extended queue, both for your sales specialist, additional marketing support, medical liaisons, etc., your managed care teams.

Because of the excitement around the technology that this compound has not only in our first to market mover position with peripheral T-cell lymphoma, but as Pablo has discussed, in the past, obviously, the opportunity that exists for us in both hematologic malignancies such as CTCL and D-cell as well as the unique nature of this compound for its potential activity in solid tumors as well.

Lucy Lu – Citigroup

I just wanted to see if you could focus more about how the marketing activities could be impacted the cash at hand and the current financing climate in the near term?

David Clark

We do have a good cash position. Our total cash position as of September 30, was $96.4 million, and if you recall, we completed a secondary offering in May which resulted in net proceeds of $65.2 million. So based upon our current product development and commercialization plan, part of those which was with Jim was speaking to, we currently have at least 12 months of cash on hand. We disclosed that in our 10-Q which we’ll file today. But as a matter of corporate policy, we just simply don’t provide guidance on our future financing plans.

Paul Berns

I can share with you we have a lot of experience on the commercial side of the equation and we are very judicious and with appropriate targeted spend we generate a lot of intelligence and a lot of data just based on our history of launching these types of compounds.

Lucy Lu – Citigroup

Excellent. And my last question is regarding operating expenses. Would you expect fourth quarter R&D expenses to decline relative to the current quarter given that the PROPEL study is going to be finished?

David Clark

We do actually expect that our fourth quarter R&D expenses will slightly increase as we look to continue enrollment with our lung trial and our bladder trial which we started in 2008 and also as we look to potentially advance other trials earlier in the first half of 2009. So we do expect R&D expenses to slightly increase in the fourth quarter.

Operator

Your next question comes from the line of Mark Monane – Needham & Company.

Mark Monane – Needham & Company

You’ve done a nice job in the past talking about other orphan agents or agents used like [Aranon] and Zolar with response rates that were deemed acceptable to the FDA. Can you talk about duration of response and how we should think about this in terms of what would be acceptable to – what would be good in terms of the clinical trial results and what would be advantageous to physicians when the physicians when and if they are making choices about treatment options for this disorder? Have you done market research for this?

Pablo Cagnoni

So when you look at the previous approvals in a similar space in patients with relapsed or refractory hematologic malignancies and drugs have been approved ion the basis of Phase II single run trials, as you mentioned, the response rates in those trials have ranged from 22 to maybe 32% in the number of approvals for the last ten years.

The durability of those responses depended on the disease, obviously, and they ranged for brief responses, in some cases in the leukemia trials, although some of those patients were censored because they underwent transplant to more prolonged duration response in patients who [inaudible] disease. We think that PTCL, since it's a heterogeneous disease will probably fall between those two extremes, from very brief duration responses in acute leukemia to much longer in indolent cases.

What would I consider positive or a good result? I think anything over two to three months of median durational response is probably a good outcome. As we discussed earlier, we did not have that data ready for release in May. But anything over that, I think, would be considered good results. In addition to that, I think what commissions wants to see when they look at results of a trial like this is the possibility of really prolonged responses in at least a small percentage of patients. So not only the median is important, but the fact that some of the patients have really prolonged durational response; it’s going to be a key point.

Finally, let me just make a distinction when the results are presented that there’s two different ways to look at this. One is durational response and the other one is duration of treatment. Duration of treatment is obviously another key important – even though it’s not a formal endpoint of the study, it's another important piece of data.

As you probably remember from the design of PROPEL you cannot be a responder before the end of cycle one which is seven week cycle of therapy. Therefore, when you look at the median duration of response and duration of treatment, they’re going to be slightly different because of that fact and that should be kept in mind.

Mark Monane – Needham & Company

Could you explain to us again how often patients are surveyed during the trial and can you talk about that?

Pablo Cagnoni

Yes. For instance in PROPEL are the first assessment of responses at the end of cycle one. Each cycle of therapy is six weeks with a week of rest, so at the end of week seven, the patient is assessed for response and then patients are assessed every cycle after that; so cycle one, three, five, seven, nine, so on.

Paul Berns

The only other thing I would add, Mark, to Pablo’s comments regarding this topic is that anything greater based on the heavily pre-treated peripheral T-cell lymphoma patients, anything greater than three months was really perceived in a very positive manner in terms of three months of duration.

Mark Monane – Needham & Company

And in terms of the thrombocytopenia or the mycocitis, can you comment on is this the right dose of B12 and folic supplementation? Is there a dose response that might be more advantageous going forward or in the real world? Or is this level one that we expect to see generally with anti-folic therapy?

Pablo Cagnoni

The vitamin B12 folic acid supplementation regimen that is in PROPEL is similar to the one that we’ve used for ALIMTA in all the trials and is similar to what we’ve used in other PDX trials. I can’t comment on whether there’s a better supplementation regimen. We haven’t done any comparison and none of the studies have included a different supplementation regimen, Mark, so, I can’t comment on that at this point.

Paul Berns

And then the other comment that I would add from the market research in terms of assessing value to clinical attributes for this patient population, obviously we want the right balance between efficacy and adverse events. But, typically, your adverse event profile fall further down in terms of your priority rankings for these oncologists.

Mark Monane – Needham & Company

Yes, that was helpful. You reviewed that before. And then, finally, how many people now at the Allos? Have you made any recent additions to the executive team or to the core teams and what’s the optimal number going forward into 2009?

Paul Berns

Clearly as we’ve laid out we’ve been very clear about this in the design of the product development commercialization strategic plans for Pralatrexate focusing on PROPEL as a lead registrational effort. So we clearly intend as we’ve reviewed again today and we’re excited about the opportunity of building our own commercial medical affairs organization in the U.S.

We believe that this – that we are the cusp of perhaps realizing great potential in ultimately serving the end user, the patient, with this agent downstream, and we feel like we’re in a great position to provide an indelible benefit to patient hopefully later in the process. Having said that, we continue to, as you would expect on an interim basis, review our strategic plan, look at the required headcount that we need. I will tell you that I think we’ve demonstrated to date that we're a fairly judicious organization.

I think frankly our size is one of our greatest competitive advantages with the functional and leadership skills of the individuals that we have added to the organization over the last couple of years. We'll continue to be, I think thoughtful about continuing to build up the organization and frankly speaking not getting out in front of ourselves. Said another way we will scale it appropriately, but I think once again one of our greatest attributes is to maintain a flat, nimble organization and make sure that we do not become top heavy.

I don't have a specific number in mind to give you only because we continually look to review as part of our strategic planning opportunities where we think PDX, Pralatrexate, can add value to other [inaudible] patient populations and as we gain data from the studies that we're investing in, I think that will inform us.

But we believe that we will be in a very efficient organization as Jim alluded to from the commercial side of the business and we've accounted for as, David spoke to, looking forward in our statement where we believe we have a minimum of 12 months of cash looking forward. That's in anticipation of all of the strategic commercial planning and scale up work that we've reviewed with you today.

Operator

Your next question comes from Thomas McGahren – Merrill Lynch.

Thomas McGahren - Merrill Lynch

Hi just a few quick questions for the [CT Sealcone] program is the data at ASH going to be updated data concerning additional patients you previously put out data on the first 17 patients or will it be presentation on those patients?

Pablo Cagnoni

There will be data on additional patients presented.

Thomas McGahren - Merrill Lynch

Will it be all 56 patients in the trial?

Pablo Cagnoni

No the trial of [Sealacone] patients will give an interim analysis of what we have at that point.

Thomas McGahren - Merrill Lynch

Okay and regarding the abstract on the preclinical data, the same combination with VELCADE, what are you thinking about in terms of going forward with going forward with maybe VELCADE or other combinations?

Pablo Cagnoni

So as you know the treatment of patients with non-Hodgkin's lymphoma particularly B-cell is mainly combination therapy. So we are doing a fair amount of preclinical work to try to investigate different potential combinations for Pralatrexate and the VELCADE data that was generated over in O'Connor's lab we thought that it was very exciting and it was certainly worth reporting at ASH.

Whether that will be the first combination we take into the clinic, we are in the process of evaluating different potential options and that trial is going to be one of those that we contemplate.

Paul Berns

I think kind of the problem with why we're and I think you heard Dr. O'Connor mention this at his poster presentation, but there is a lot of excitement giving the prospective view that we share with our advisors and investigators that are looking at potential combinations, to Pablo's comments, and we think that PDX has potential to form interesting multiple foundations with multiple potential therapeutic combinations in the future which are clearly worth exploring as we look to advance the clinical and commercial utility of Pralatrexate. Rather exciting time.

Thomas McGahren - Merrill Lynch

Okay and then just lastly regarding the LUMP lung program what would be a rate limiting step for partnering tat program? I guess you're not going to complete enrollment I guess until the back half of '09, is it possible that it could be partnered before then or after positive safety data?

Paul Berns

I think just historically if you look back at historical partnership with other products in the solid tumor environment just maybe narrow the focus a bit, it's certainly not uncommon to have seen historical partnerships post Phase II study results and certainly there's enough history there that we can all point to.

I think as we lay it out in our strategic approach that we maintain an open opportunistic view with regards to the inbound interest that certainly organizations have expressed in learning more about Pralatrexate's potential.

That includes all facets from the hematological malignancies as well as solid tumor potential for Pralatrexate. Having said that I think we have a well vetted product developing commercialization plan for PDX in solid tumors. Obviously the lung cancer program is an exciting one.

And I don't think there is any reason for us to rush into that necessarily from a partnering perspective, but at the same token our position has always been, Tom to your comment, we will look, to listen, to see and understand the attributes and potential contributions of other parties as we think about global development frankly for Pralatrexate

Operator

Your next question comes from Jason Kantor – RBC Capital Markets.

Jason Kantor – RBC Capital Markets

Thank you, couple of question, one on the financial guidance. It looks like you burned through only about $26 million to date this year if you net out the cash situation in Q2, so to get to your $45 to $49 million, unless I'm doing the math wrong, it looks like you have to nearly double the burn in the fourth quarter. So I guess is that correct? What are those costs and would that be a new run rate going into '09?

David Clark

So year to date through Q3 we've used $30.7 million in cash used in operations, so our guidance is 45 to 49. So really, if you look at Q4 that would sort of -- if you do the math there that equates to a guidance of 14.3 to 18.3 for the fourth quarter.

And I think as we look at that guidance some of that spend relates to one time manufacturing expense as we scale up manufacturing for a potential launch in the second half and then also looking to ramp up some commercialization investments as we look to a potential launch.

So, I think some of those expenses in the fourth quarter are one time and obviously as we just move into that fourth quarter we'll see some also increases in R&D expenses as I spoke to earlier.

Paul Berns

I was just going to say this reiterates, David's point, I wouldn't look at the fourth quarter in a vacuum in the context of letting that guide you to what potentially the future cash use needs would be for 2009. That would at this point be misleading to do so. We'll certainly give that guidance at our fourth quarter year end conference call.

Jason Kantor- RBC Capital Markets

And would this spending all run through he P&L or is some of this like the manufacturing, something that is going to get amortized over some period or show up in cost of goods later?

David Clark

For now it'll hit our P&L until when and if we get a product approved. Until we do that those expenses would run through our P&L.

Jason Kantor- RBC Capital Markets

And then one last question on the regulatory path so I assume you get this all tracked in and looked the data at hand. So based on the data that you've already seen have you essentially made the decision to file the NDA or is there some data that you internally are still waiting on to make that decision formally?

Pablo Cagnoni

We are in the process of reviewing the data and we are still in process of collecting data from the study quite honestly. This is an ongoing study; patients are still on drugs and we are still following them and new assessments of response continue to be performed.

So what we've said all along it is that we'll present the data, the top line data at ASH And after that we'll continue to clean up the data and our intention is to file an NDA as soon as possible after that.

Operator

(Operator Instructions). I show that there are no further questions at this time please continue.

Paul Berns

All right thank you operator and to conclude today's call, I would like to summarize our three key corporate operating principles, certainly first, focused on excellence in innovation and development and execution of our clinical programs. Second we proactively evaluate opportunities to grow our business through potential product acquisition, partnership and other strategic initiates.

And third lead with ethics and integrity to ensure quality business decisions that create value for our patients, employees and stockholders. As always we appreciate your participation and look forward to keeping you apprised of our progress in the months ahead. Have a good day.

Operator

Ladies and gentlemen, this concludes the Allos Therapeutics' third quarter 2008 results conference call.

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