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TESARO, Inc. (NASDAQ:TSRO)

Q4 2012 Earnings Call

February 14, 2013, 08:00 am ET

Executives

Lonnie Moulder - CEO

Mary Lynne Hedley - President

Rick Rodgers - EVP & CFO

Analysts

Marshall Urist - Morgan Stanley

Robyn Karnauskas - Deutsche Bank

Jim Birchenough - BMO Capital

Laura Chico - Robert W. Baird

Operator

Greetings and welcome to the TESARO’s Fourth Quarter and Year-End 2012 Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. Slides for today's call are available in the Events and Presentations on the Investor’s page of TESARO’s website at www.tesarobio.com.

Before introducing to TESARO’s speakers, I will read the Safe Harbor statement from the company and describe the context for use of non-GAAP financial measures. This presentation includes forward-looking statements that relate to TESARO’s business and may include non-GAAP financial measures. These statements are neither promises nor guarantees and are subject to a number of risks and uncertainties that could cause TESARO’s actual results to differ materially from those described in these forward-looking statements. These are other risk factors are contained in the press release TESARO issued today and TESARO’s respective file with the Securities and Exchange Commission on June 29, 2012 and future filings with the SEC including TESARO’s Form 10-K for the year ended December 31, 2012.

TESARO is providing this information as of today's date and does not undertake any obligation to update any forward-looking statements. TESARO may refer to certain non-GAAP financial measures that involve adjustments to GAAP figures. These non-GAAP financial measures are not a substitute for GAAP financial measures and are likely to be comparable to non-GAAP information provided by company. TESARO believes non-GAAP measures maybe useful to investors that supplement to, but not as a substitute for the applicable GAAP number.

Now I will turn the call over to Lonnie Moulder, Chief Executive Officer of TESARO. Mr. Moulder?

Lonnie Moulder

Good morning everyone. Thank you for joining us for the TESARO fourth quarter and year-end 2012 conference call and webcast. With me on the call today are, Dr. Mary Lynne Hedley, our President and Chief Scientific Officer and Rick Rodgers, Executive Vice President and Chief Financial Officer.

Before turning the call over to Rick to review the financials for the fourth quarter and year end and Mary Lynne who will review the significant progress we have made with our product candidates, I will provide a brief company and rolapitant update.

We are very pleased with the significant progress we made in 2012 which included the initiation and ramp up of the rolapitant global Phase III registration program for chemotherapy induced nausea and vomiting or CINV. The end licensing of niraparib a potentially first and best in class PARP inhibitor, we will develop for certain solid tumors, the successful completion of an initial public offering, the advancement of TSR-011 into a Phase I/II clinical study and the addition of a number of experienced and talented individuals to our team of passionate associates.

In addition, to being on track to report topline data from the three Phase III trials in the second half of the year for rolapitant, we have rapidly advanced the Phase I/II clinical trial of 011 and today we announced that we intend to initiate a registration program for niraparib by mid-year. We are very excited to be in a position to advance niraparib into a Phase III study at the tail-end of the rolapitant registration program. Mary Lynne will further describe the niraparib program.

Now I will spend a few minutes on rolapitant. As a reminder, approximately 2400 patients will be enrolled in the rolapitant program which consists of two randomized double-blind placebo controlled clinical trials evaluating the efficacy of a single 200 milligram oral dose of rolapitant in patients receiving Highly Emetogenic Chemotherapy or HEC and one clinical trial evaluating the efficacy of a single 200 milligram oral dose of rolapitant in patients receiving Moderately Emetogenic Chemotherapy or MEC.

We believe that rolapitant maybe a differentiated agent when added to the standard of care can prove to control CINV. Rolapitant has as long half life. Data from Phase I clinical trial show that after oral administration rolapitant is rapidly absorbed and slowly cleared. The half life is greater than 120 hours, suggesting that a single dose maybe sufficient to prevent CINV during the five days following chemotherapy that patients are at risk for CINV. This is in contrast to the currently marketed oral NK-1 receptor antagonist which requires three doses per chemotherapy cycle.

We believe that rolapitant has a reduced risk for drug interactions. Data from clinical study demonstrate that rolapitant is not an inhibitor or inducer of CYP384. CYP384 is a liver enzyme responsible for the metabolism of a large number of drugs. When a drug inhibits or induces CYP384, it can adversely affect the metabolism of other drugs and also their plasma levels in ways that can be harmful to patients. Our data indicates that rolapitant does not alter the pharmacokinetics of midazolam, a sensitive CYP384 substrate, suggesting that it is unlikely to have an effect on pharmacokinetics of other drugs metabolized by CYP384.

So, in contrast to the currently marketed oral an IV NK-1 receptor antagonist, we believe that administration of rolapitant is unlikely to cause a clinically significant pharmacokinetic interaction with many drugs metabolized by CYP384 and utilized by cancer patients. Rolapitant has a rapid onset of activity, a multi-center randomized double blind controlled Phase II clinical trial reported at last year’s ASCO Meeting in which 454 cancer patients received HEC, the times of first emesis or use of rescue medication for rolapitant versus the control showed rapid onset of activity within a few hours of completing chemotherapy treatment which represents a quicker onset of actions that has been observed with other agents in its class.

Rolapitant has the potential for a reduction in significant nausea. In the same Phase II clinical trials patients in the rolapitant 200 milligram dose group had significantly greater rate of no significant nausea in the overall, the acute and delayed phases than those in the controlled group. This finding suggests a potential improvement over what is provided by currently available anti emetic therapies. This potentially differentiated profile along with our intimate knowledge and experience in the CINV, we feel serve as a basis for enthusiasm for the commercial potential of rolapitant.

I will now turn the call over to Rick to discuss the 2012 financial results. Rick?

Rick Rodgers

Thank you, Lonnie; good morning everyone. Earlier this morning we issued a press release detailing our financial results for 2012. I will highlight some of the financial aspects of the press release. We reported a net loss of $18.7 million for the fourth quarter of 2012 and a net loss of $61.8 million for the year ended December 31, 2012. This compares to a net loss of $9.1 million for the fourth quarter of 2011, and $16.4 million for the year ended December 31, 2011 respectively.

Research and development expenses totaled $15.6 million for the fourth quarter of 2012 and $47.2 million for the full year 2012 compared to $8 million for the fourth quarter of 2011 and $11.8 million for the full year 2011. We expect research and development expenses to increase in 2013 from our fourth quarter 2012 run rate primarily driven by rolapitant’s ongoing global registration trails, initiation of a pivotal Phase III development program for niraparib a PARP inhibitor and continued clinical development of our ALK inhibitor, TSR-011 currently in Phase I/II study.

We recorded $8 million of acquired in-process research and development expense in 2012; $7 million of which related to the second quarter end licensing of niraparib and $1 million related to a fourth quarter development milestone with respect to TSR-011. We have a strong balance sheet at year end with no debt, $125.4 million in cash and cash equivalents.

I will now turn the call to Mary Lynne.

Mary Lynne Hedley

Thank you, Rick. I will be referring to slides that are available on the Investors page of TESARO’s website at www. tesarobio.com. I am pleased to speak to you today about the niraparib Phase III registration program, but first I will provide a brief update on TSR-011, our orally available ALK inhibitor.

Approximately, two weeks following FDA clearance last September of the IND applications for TSR-011, the first cancer patient was involved in the Phase I/II clinical study. We are very pleased with the rapid progress we are making with this study and are now ready to initiate the fourth dose level of the dose escalation Phase of this study.

At this dosage level, we expect to maintain drug plasma levels above the target levels required for inhibition of the ALK protein. Our enthusiasm for 011 is based upon its potency, selectivity and desirable pharmacologic properties as well as the promising results observed in preclinical studies where 011 was found to be more active against the ALK protein than what is reported for crizotinib and FDA approved ALK inhibitor.

Also in these studies, it was observed that 011 was 200 times more potent than crizotinib at inhibiting recombinant ALK L1196M, also known as the gatekeeper mutation. The gatekeeper mutation is the most common resistant mutation detected to-date in patients whose tumors progress while they are being treated with crizotinib.

Once the maximum tolerated dose of TSR-011 is identified in the dose escalation stage of the ongoing study, we plan to evaluate 011 in three parallel cohorts of patients. Those without positive non-small cell lung cancer who have not previously been treated with an ALK inhibitor, those with ALK positive non-small cell lung cancer who have progressed during treatment with an ALK inhibitor and those patients with other tumor types that express ALK.

We look forward to updating you on the progress of the 011 Phase 1, 2 trial and hope to provide further data disclosure at medical meetings later this year.

Turning now to niraparib, our orally active impotent PARP inhibitors. Following our discussions with numerous experts and potential investigators related to possible clinical applications of niraparib and having concluded key regulatory interactions, we have finalized the plans for the initiation of a pivotal Phase 3 randomized, double-blind international trial to evaluate the potential benefit of niraparib compared to placebo on the maintenance of response following completion of a platinum containing chemotherapy regimen in ovarian cancer patients.

I will first review the niraparib Phase 1 data and then describe our initial clinical development plan for this drug. The niraparib Phase 1 study was a typical dose escalation study with cohort expansion. A total of 104 patients were ultimately treated and the initial results which I'm describing here were presented at ASCO in 2011.

Dose levels range from 30 to 400 milligrams with daily continuous dosing. The primary objectives of this study were to describe the safety and tolerability of niraparib and to establish the recommended Phase 2 dose. Overall clinical activity as well as activity and targeted patients was reported. Of 19 evaluable ovarian cancer patients who carried germ line BRCA mutations, the disease control rate was 63%.

Importantly, platinum sensitive patients had similar responses regardless of germ line BRCA status. Patient reported adverse events were primarily grade 1, 2 and included fatigue, nausea and anorexia. Final results from the 104 patients dozed in this trial have been submitted for presentation at an upcoming medical meeting.

We considered several factors prior to selecting the development plan, I will now describe for you. Importantly, a well tolerated dose and schedule consisting of daily continuous dosing with 300 milligrams of niraparib was identified in the Phase 1 study. In addition, the current formulation which consists of three 100 base milligrams capsules administered one-time each day is not overly burdensome for patients.

Our recent focus has been drawn to the identification of an enriched target population and a steady design that was feasible to execute, ideally against the comparative for which data was available to enable us to appropriately size and power our registration study. There are at least two ways to enrich a patient population.

The first is by clinical characteristics. Existing clinical data suggests that patients with high grade serous platinum sensitive ovarian cancer derive clinical benefit, following treatment with PARP inhibitor. The second mechanism for enrichment is via biomarker. Today, there is strong scientific rationale and clinical proof of concept data to show that patients with germ line BRCA mutations respond to the PARP inhibitors.

In addition, public clinical data shows that a relative to a placebo control, treatment with a PARP inhibitor prolong progression for your survival and patients with high grade serous platinum sensitive of ovarian cancer, following the response to a platinum containing chemotherapy regimen.

More specifically, our clinical enrichment strategy focused high grade serous platinum sensitive ovarian cancer patients should enrich for patients sensitive to our PARP inhibitor. There is scientific rationale for this finding. Approximately 50% of patients with high grade serous ovarian cancer are deficient in a type of DNA repair known as homologous recombination or HR.

Some but not all of these patients carry a germ line BRCA mutations. In addition, high grade serous ovarian cancer patients with deficiencies in HR repair are more likely to be sensitive to the effects of platinum. This is because platinum induces a type of DNA damage that requires HR DNA repair.

And finally, patients with HR repair deficiencies are very sensitive to PARP inhibitors. Collectively then, we would expect that in the high grade serous ovarian cancer population, platinum sensitivity could be a [heart winner] of PARP inhibitor sensitivity and that data is on the next slide. And this randomized blinded multicenter clinical study patients with platinum sensitive high grade serous ovarian cancer and an ongoing response to platinum were treated with either a PARP inhibitor or placebo to determine the effect of treatment on progression free survival.

PFS and placebo treated patients with 4.8 months versus 8.4 months for patients treated with PARP inhibitors for a hazard ratio of 0.35. The consistency of the fact was analyzed by relevant subgroup the known germ line BRCA status patients trended towards an increased treatment effect, in this population to hazard ratio with 0.1.

These data strongly suggests that the population of patients with high grade serous platinum sensitive ovarian cancer represents populations that meets our enrichment criteria for a registration study. In addition of placebo controlled study and the maintenance study represents an opportunity in which a PARP inhibitor may demonstrate clinically meaningful benefit to patients.

TESARO intends to initiate a Phase 3 registration study in patients with high grade serous platinum sensitive relapsed ovarian cancer. We will enroll two independent cohorts into the study. Germ line BRCA mutation carriers and non-germ line BRCA mutation carriers for a total of 360 patients. The study will be a double-blind placebo controlled international study randomized two to one niraparib to placebo and patients will be continuously treated with placebo or 300 milligrams niraparib until progression.

The primary outcome of this study is progression free survival. Secondary endpoint includes patient recorded outcomes, chemotherapy free interval and overall survival. A schematic of the trial design is available for review. Here you can see the patients with high grade serous ovarian cancer who are platinum sensitive as defined by their front line platinum containing regimen are eligible for the study following relapse entertainment other response to a subsequent line of platinum containing chemotherapy.

Within eight weeks of attending this response, patients will be placed in either the germ line BRCA or non-germ line BRCA cohorts and be randomized to receive either 300 milligrams niraparib or a placebo control. Progression will be monitored at defined times and determine by central review.

With this design we are able to independently assess the affect of niraparib in both the germ line BRCA and the non-germ line BRCA patients while maximizing operational efficiencies.

In conclusion, niraparib was found to be well tolerated at maximum tolerated doze of 300 milligrams daily provided on the continuous basis.

Early signs of clinical activity were observed in the study. Data from this phase 1 study in addition to other published clinical data demonstrate the clinical level of activity of part inhibitors in the platinum sensitive high grade serious ovarian cancer patient population regardless of germ-line BRCA mutation status. Finally as compared to placebo treatment with the PARP inhibitor prolonged progression free survival in patients with high grade serious ovarian cancer and in ongoing response to a platinum containing regimen. Building on these clinical trial results TESARO intends to initiate a Phase 3 registration study of Niraparib versus placebo in patients with high grade serious relapsed platinum sensitive ovarian cancer and in ongoing response to platinum based chemotherapy. We look forward to updating you as the year progresses and with that I will turn the call back over to Lonny.

Lonnie Moulder

Thank you Mary Lynne. In conclusion for 2013 TESARO anticipates that we will announce top line results for the three Phase 3 pivotal trials evaluating oral rolapitant for the prevention of CINV. Advanced clinical development of rolapitant intravenous IV formulation in order to support a future submission for registration concurrent with the approval of the oral formulation, initiate the Phase 3 pivotal trial of NIRAPARIB as a potential maintenance therapy for ovarian cancer patients, and advance the TSR 011 development program and to find a strategy for the next phase of clinical development. I would now like to open up the call to questions. Operator?

Question-and-Answer Session

Operator

(Operator Instructions) Our first question is from [John Rover] of Citi.

Unidentified Analyst

So this is a question relating to help us understand, we know there's a lot of different BRCA carrier mutations, are you selecting any of them sort of all comers or are there specific mutations that you are going to be selecting for and then any idea I mean it sounds like the study is going to be testing as you said both BRCA carriers and BRCA non-carriers. Is the BRCA mutational status really what's key here or is it really has to do with the home office or combination deficiency status and can you, is that easily identified. Thank you.

Mary Lynne Hedley

I think I will be answer to all of them in the order you ask them, but if I forget one let me know. So related to the BRCA status, we are not individually identifying specific BRCA mutations to enroll in the cohort. If the patients considered to be germ-line BRCA, i.e. have a pathogenic mutation, they will be included in the germ-line BRCA cohort. Secondly I actually agree with you. I think its probably more relevant that the patients have deficiency in homologous recombination DNA repair and that's what ultimately makes them sensitive to platinum and therefore potentially sensitive to a PARP inhibitor and so therefore we anticipate that the results from both of these independent cohorts would be positive.

Unidentified Analyst

And how do you define the HR deficiency?

Mary Lynne Hedley

We are not specifically identifying patients who have HR deficiencies, patients with high grade serious ovarian cancer who are platinum sensitive are already enriched for HR deficiencies about 50% of those patients will have HR deficiencies as defined by TCGA. So for this particular reason we think using the clinical characteristics alone is enrichment enough and the clinical data has been published in this particular maintenance study of (inaudible) as well.

Unidentified Analyst

So final question, just, I mean your HR status can also maybe predictive of potential activity in other tumors. Is there a way to identify HR deficiencies? Is that some kind of mutational (inaudible) that you can do easily or is that more challenging?

Mary Lynne Hedley

That’s a great question. The hypothesis today would be that platinum sensitivity and other tumors may in fact predict for HR deficiencies, but there is no test that we know off today that can efficiently recognize the combination, mutation that maybe required to (inaudible) functional HR deficiency (inaudible).

Operator

Our next question comes from Marshal Urist of Morgan Stanley. You may begin.

Marshall Urist - Morgan Stanley

So, first question for me, just on the Niraparib trial design. So just to be clear, just wanted be that in clarity. So the definition of response is does it have to be PR or better stable disease or better, and does it have to be kind of after a certain number of cycles. And then second question on that was just what was the FDA discussion in terms of, is there, do they have a view or is there a different kind of PFS hurdle and the two various subsets and then finally, can you give us a sense of what was the conversation around overall survival in this population given that it's been a question of obviously other agents in this setting?

Mary Lynne Hedley

So the first question was related to I believe how patients would enter the study whether they have a PR or stable disease and after how many cycles. So the patients would have a PR or CR coming into the maintenance study and they would have that after either usually at this stage of patient it’s about four to six cycles of chemotherapy. But we would require at least four. So the second question I think our second and third were related to our discussions with FDA around PFS and overall survival and whether there will be a difference in PFS required between the two cohorts.

So obviously we don’t discuss the specifics of our conversations with the FDA related to PFS I will just direct to you what they publicly stated on numerous occasions and that is that the magnitude of the delta between the controller and Niraparib on prolongation of PFS and then of course the overall risk benefit profile will be key to their assessment of whether or not there is two clinical benefits provided to patients in this study. Related to overall survival again the discussion was we don’t discuss all of those details, but most of our discussions really focused on using PFS as an endpoint and on measuring PFS effectively.

Marshall Urist - Morgan Stanley

Just switching to rolapitant just had a question on the IV formulation. Can you just give us a little bit more detail on where that development program stands? My recollection was I think the goal was to have the Phase I trial kind of up and going right now and just wanted to get a better sense of where that is and what the timelines look like?

Mary Lynne Hedley

So you are right that was intent although we realized that the FDA is not going to require an IND versus and IND amendment for the IV formulation. So that gives them adequate time to review the data. So we will be submitting that this year, and initiating the clinical trial this year.

Lonnie Moulder

And remember Marshal the strategy that was outlined for the IV has the IV submission for approval going in at about the time of the oral approval. So the submission for the IV at the time of the oral approval and we have time to do all the work between now and then.

Marshall Urist - Morgan Stanley

And so what sort of change in the FDA view given it is sort of single dose to single dose comparison and just wanted to get sense of sort of what change from here, I guess what change from your initial expectation and then second if we think what is required are you guys still comfortable that you could do a sort of the study and then kind of a bigger if needed a bigger safety study and still hit that timeline?

Mary Lynne Hedley

Yes, all of your questions, we still anticipate starting the [BE], we still anticipate doing the BE study bridging to the oral and then doing on sort of a safety bridging study, so nothing has changed in that regard and as I said we will be starting the clinical study this year and submitting an IV IND versus an IV IND amendment is somewhat of an administrative issue. It’s really that they want the entire package to review together versus having to piggy back on the oral IND which is what we were hoping to do.

Operator

Thank you. Our next question comes from Robyn Karnauskas of Deutsche Bank. You may begin.

Robyn Karnauskas - Deutsche Bank

Just a couple around the design of the Niraparib trail. So can you talk a little bit about when do you think we could possibly see a final outcome and can there be an interim analysis and along that line can the trial hit in one subset first versus in the second subset?

Mary Lynne Hedley

Yeah. And so obviously it’s probably premature to provide guidance on when we would expect the trial to be over, but I do think its certainly possible that we could anticipate results from the non-germ line BRCA patients prior to the germ line BRCA patients, and I think we would leave it at that. There is no defined interim analysis. I think the results will be based on the number of PFS events that we think are relevant to identify the treatment effects but again it would likely happen just based on our enrolment expectations in the non-germ line BRCA patient population personally.

Robyn Karnauskas - Deutsche Bank

That's helpful and can you talk at all about the (inaudible) you used to design the trial specifically I think in the non-BRCA population?

Mary Lynne Hedley

Right, so the powering was done based on the New England Journal of Medicine Paper that has been published using another PARP inhibitor versus placebo control on a very similar setting, there of course they did not dissect out; they didn't base enrolment on the germ line BRCA status. So what data we have is of course the hazard ratio for the known germ line BRCA patient populations and using sort of that calculations, we did an assumption, an estimate of what the hazard ratio would be for the non-germ line BRCA patients, we take out the germ line BRCA patients and that was how we powered our study.

Operator

Our next question is from Jim Birchenough of BMO Capital. You may begin.

Jim Birchenough - BMO Capital

Just a follow-up on the niraparib Phase 3, is all the alpha allocated to the combined group or can you focus on the BRCA for us and then retain all the alpha for the non-BRCA, how does that work?

Mary Lynne Hedley

That's a great question and in fact that's one of the key reasons we designed the study the way we did. Each cohort is independent and so each cohort has its own alpha. So we talk about the two sided test so each cohort will be tested at an alpha 0.05 and that allows us to preserve the opportunity to let's say the non-germ line BRCA population doesn't work. It still allows us to look at the germ line BRCA is it an alpha 0.05, so we thought, this design allowed us the best opportunity to have very positive outcomes and sort of had our back turn away. So we do believe based on the data that's already been published that we should see a positive outcome in the non-germ line BRCA patient population. Again this case has the [data] of p-value of 0.05 two sided but we also have that opportunity in case its negative to detect positive outcome in the germ line BRCA patient population at the p-value 0.05 two sided.

Jim Birchenough - BMO Capital

And then just on the earlier comments on potential best in class PARP, we get the question quite often on comparing the niraparib to the BioMarin PARP and other PARP inhibitors, so there seems to be a lower potency against PARP relative to the bottom rate compounds so can you address how you overcome that you to have a dose that's equally effective or best in class?

Mary Lynne Hedley

Yeah, so I guess there are two issues I would point out, the first is that I don't think there is anybody really has a clear understanding of what is important to measure in terms of potency and a measure of potency in vitro that translates to a clinical benefit, let's just say. So you may have the best binder in the world from a potency perspective but that may not be the right activity to measure to correlate with clinical benefit. So that’s just the first statement.

Second statement related to I guess looking at PARP inhibitors and potency in the clinical setting. We know that the dose limiting toxicities associated with PARP inhibitor are mechanism base. Right, these are primarily mild depression. And so if you have a more potent PARP inhibitor, we would still anticipate that the therapeutic window would stay the same. So your activity level versus your level where you get DLTs, whatever that multiple is, we would anticipate to be the same between different PARP inhibitors. It's just the more potent ones, assuming all else is equal in terms of add me and [DMTK]. The more potent PARP inhibitor could potentially be administered at a lower dose.

Jim Birchenough - BMO Capital

And then just a final question on the 011, now that you are at a dose level where you would expect in addition of ALK, are these patients that are being rolled, can you tell us anything about them whether they are crizotinib naïve experience, whether you are enrolling any patients that might have brain [meds]. Just trying to get a sense of what opportunity you might have this year to provide data that distinguishes you from other ALK inhibitors?

Mary Lynne Hedley

Our tile design and the dose escalation phase does not require our patients to have ALK, the ALK fusion. When we get to the cohort expansion phase, that’s when patients are required to have ALK fusions. Our intent was to move quickly through the dose escalation phase because of course the earlier doses we don’t anticipate are going to be particularly helpful to ALK positive patients. So, at this point in time, we have not enrolled in ALK positive patient. Now that we're at a targeted level that it seems reasonable to do so we would feel better about encouraging clinicians to enroll those types of patients in the study.

Operator

Our next question is from Chris Raymond of Robert W. Baird. You may begin.

Laura Chico - Robert W. Baird

Congratulations on advancing Niraparib. Just wanted to ask briefly do you have a sense of what proportion of the high grade ovarian cancer patients that remain platinum sensitive upon relapse. Will this be a difficult cohort to enroll.

Mary Lynne Hedley

Well we are using the assumptions that we can’t (inaudible) we think it’s certainly a very doable trial. If you look at the publication that exists with a similar trial design, they were able to complete that study in about 15 to 18 months. So all these oncology studies are somewhat difficult to enroll, but we certainly feel that we have the backing from the (inaudible) that we need, interested investigators and a precedence that suggest we can complete the trial in a reasonable period of time.

Laura Chico - Robert W. Baird

That’s very helpful. I was just wondering if I don’t know if you can give any more additional color. But was there anything particular about the attributes of the drug or your results to date that really gave FDA the confidence to allow you to jump ahead to the pivotal Phase III design.

Mary Lynne Hedley

Well here I have to complement Merck because they really and of course the (inaudible) the drug on. They really did a stellar job in the Phase I dose escalation study. Phase I studies nowadays are often not just limited to dose escalation, but include a cohort expansion in patients populations that you think could benefit and so at the end of that “Phase I study” a 104 patients had actually been treated and many of those at the dose that is recommended for further development. In addition Merck had a few ongoing studies, we have about 40 patients from those studies with doses of drug and exposure that allow us to feel confident and clearly the regulatory agency, to feel confident that we have identify the right dose and schedule and it is in fact well tolerated. So that we can move forward into the Phase III study.

Laura Chico - Robert W. Baird

Okay, great. I guess one final question if I may just essentially you didn't mention Merck. Can you just remind us maybe some potential milestones that might occur now with the advancement of phase III?

Mary Lynne Hedley

Yeah, beyond what is in our filings, we don't really provide any additional information. We have late stage development milestones and of course the typical royalties and sales milestones you might be expecting, so I will just correct you there for any additional details.

Operator

Thank you. I am showing no further questions at this time. I would like to turn the conference back over to Lonnie Moulder for closing remarks.

Lonnie Moulder

Thank you everyone for your participation today. We look forward to our next call. Have a great day.

Operator

Ladies and Gentlemen, this concludes today's conference. Thank you for your participation. And have a wonderful day.

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