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Exelixis, Inc. (NASDAQ:EXEL)

Q3 2009 Earnings Call Transcript

October 29, 2009 5:00 pm ET

Executives

Charles Butler – VP, Corporate Communications & IR

George Scangos – President and CEO

Frank Karbe – EVP and CFO

Mike Morrissey – President, R&D

Analysts

Jessica Lee – Goldman Sachs

Eric Schmidt – Cowen & Company

George Farmer – Canaccord Adams

Derek Jellinek – Boenning & Scattergood

Operator

Good day, ladies and gentlemen, and welcome to the Q3 2009 Exelixis earnings conference call. My name is Chris, and I will be your operator for today. At this time, all participants are in a listen-only mode. We will conduct a question-and-answer session towards the end of this conference. (Operator instructions) As a reminder, this conference is being recorded for replay purposes.

I would now like to turn the call over to Mr. Charles Butler. Please proceed.

Charles Butler

Thank you everyone for joining us on the Exelixis third quarter 2009 earnings call. Joining me on today’s call are as usual, George Scangos, Frank Karbe, and Mike Morrissey who will review our corporate financial and R&D progress over the quarter and upcoming events in the months ahead.

Before we get started, I would like to note that during our presentation today, we will be making certain statements that are forward-looking including without limitation, statements related to development plans and goals for XL184, XL147, and 765, expectations regarding our year-end financial guidance, the clinical and commercial potential of compounds in our pipeline, our discovery platform, and the execution of our business strategy.

These statements are only predictions and are based upon our current assumptions and expectations. Our actual results and the timing of events could differ materially from those anticipated in such forward-looking statements because of risks and uncertainties discussed in presentation materials, the comments made during this presentation and the risk factor section of our 10-Q for the quarter ended October 2nd, 2009, and our other reports filed with the Securities and Exchange Commission. We expressly disclaim any duty to make any updates or revisions to any forward-looking statements.

Now, I would like to turn the call over to George Scangos.

George Scangos

Thanks, Charles, and thanks to all of you who are joining us today. We had a productive and successful third quarter. Financially, we ended with over $300 million in cash, which is more than we had at the beginning of the year. Our revenues are up, our expenses are down. At the same time, we made substantial progress advancing our clinical and preclinical pipeline of compounds, which we continue to believe is one of the strongest in the industry. We have undertaken broad, aggressive clinical development plans for XL184 in collaboration with Bristol-Myers Squibb, and for 147 and XL765 in collaboration with Sanofi-aventis. All of this demonstrates how our partnering strategy is paying off.

We brought in substantial cash; we offloaded a lot of expenses. We have great partners who believe in our programs and reporting substantial resources behind them. Strategy reduces our capital needs and results in a broad aggressive clinical development of our pipeline. Importantly, we have structured our collaborations, so that we receive meaningful, commercial participation in all of the compounds in our pipeline. XL184, which (inaudible) with Bristol-Myers Squibb continues to show substantial clinical and commercial progress. And in a few minutes, Mike Morrissey will update you on some of the more recent data.

I just want to say here that we are implementing a broad development plan for XL184 in multiple indications. As you know, we are conducting a phase 3 study in Medullary Thyroid Cancer, which is actively enrolled. We also have a comprehensive effort to evaluate XL184 in glioblastoma multiforme or GBM as both the first and second line agent. We recently reported an update of our GBM data at the Society for Neuro-Oncology meeting. The phase 1b/2 trial of 184 in combination with erlotinib in patients with non-small cell lung cancer is advancing and the data continues to look promising.

We also have initiated randomized discontinuation trial, which is exploring the efficacy of XL184 in nine different tumor types. Looking ahead, we anticipate a number of substantive XL184 data presentations at ASCO in 2010. We have also hit our stride in our collaboration with Sanofi-aventis, a partnership focused on developing PI3K inhibitors that was initiated earlier this year. The team has developed a broad phase 2 program for both XL147 and XL765. These compounds continue to progress in multiple trials. We expect to present a first data from the phase 1b/2 studies evaluating each of these compounds in combination with other cancer therapies at the URTC meeting in November.

We are pleased with the way these trials have gone and look forward to sharing a preliminary data with them, with you in a couple of weeks. Our partnerships have brought in cash and have offloaded expenses. Beyond the financial benefits they provide, our partnership is also a catalyst for advancing broad development programs for 184, 147 and 765. There are hundreds of millions of dollars being put behind these programs now in large aggressive clinical programs. That’s the level of resources far beyond what Exelixis could afford by itself. These resources of course further enhance our competitive position. It also is noteworthy that both BMS and Sanofi-aventis have entrusted Exelixis to perform a majority of the development activities for all of these programs. As Exelixis has evolved, our expertise has reached from biology to drug discovery and now into mid and late-state drug development. In stage, our expertise and efficiency has been recognized by our former partners. We are proud to have these opportunities and we are committed to meet or exceed the ambitious goals that we set for ourselves and our partners and by doing so, to provide substantial return to our investors.

As we move toward the end of 2009 and into 2010, our key focus is to continue to execute. With our partners, we are the substantial bodies of data for our lead programs and multiple indications and utilize these data to direct our late-stage development efforts towards the most promising opportunity. With a broad and deep pipeline, we are well positioned to explore additional partnerships that provide compelling year and long-term economic value and help us meet our strategic goals.

Our unique discovery platform has consistently generated high quality compounds across multiple therapeutic areas and we will continue to leverage our discovery and development expertise to advance earlier assets and assess our potential as partnering or development candidates. Of course, we will also retain our disciplined approach to managing our cost base, making prudent investments in our proprietary development programs.

So, with that, I will turn the call over to Frank, who will review our third quarter financial results and provide an update on our progress towards our 2009 financial objectives. Frank?

Frank Karbe

Thank you. As George mentioned, our third quarter financial results are very strong. This is mainly due to our partnering strategy beginning to be clearly reflected in our P&L. We signed three new partnerships since December last year. These partnerships provided a substantial amount of upfront cash and provide overtime an even greater amount of R&D funding. Cash inflows in the third quarter of ’09 alone totaled almost $160 million, which consisted primarily of upfront payments and cost reimbursements. Under our collaborations with Bristol-Myers Squibb and Sanofi-aventis, we conduct a large amount of work that which we carry the expenses on our books, but the majority of which are paid for by our partners.

For the most part, these expense reimbursements as well as the amortization of upfront payments are booked on our P&L as revenue. Consequently, our quarterly revenue have substantially increased. Our operating expenses in Q3 are slightly reduced compared to Q3 of ’08, mainly due to strict cost management and our net loss is significantly lower than in the third quarter last year, which primarily reflects the increase in revenue as a result of our partnering strategy. We ended this quarter with over $300 million in cash. And earlier this week, we repaid the first tranche of the GSK loan of about $35 million in cash.

Let me now turn to our third quarter financial results in detail. As a reminder, we are reporting our financial results on a GAAP basis only, and as always, the complete press release with our results can be accessed through our Website at Exelixis.com. Let me begin with revenues. Revenues for the quarter ended September ’09 amounted to $55 million compared to $29.9 million for the comparable period in ‘08. The 84% increase from ‘08 to ‘09 primarily reflects the increase in revenue relating to our new collaborations with Sanofi for XL147 and XL765, BMS for XL184 and XL281 and Boehringer Ingelheim for the S1P1 agonist program. These increases were partially offset by the conclusion of the research term of various collaboration agreements with GSK, BMS and Genentech.

Research and development expenses for the quarter amounted to $60.2 million compared to $65.7 million for the comparable period in 2008. The decrease from ’08 to ’09 primarily reflects decreased personnel costs due to our November ’08 restructuring, the impact from other cost containment measures initiated in 2008, and the wind down of discontinued programs, which were partially offset by increased development activities related mainly to XL184.

General and administrative expenses for the quarter were $8.6 million compared to $8.9 million for the comparable period in 2008. The decrease from ’08 to ’09 was primarily due to decreased personnel costs again due to our November ‘08 restructuring, partially offset by an increase in facilities costs.

Let me comment briefly on our collaboration cost-sharing line item. To remind you, this reflects the net impact of the amount due under the agreement with BMS for expenses incurred by BMS on XL184 offset by our spend on XL281. For Q3 of ’09, BMS’ spend for XL184 exceeded our spend for XL281, and we therefore recorded an expense of $3 million. Net loss attributable to Exelixis for the quarter was $25.4 million, or $0.24 per share compared to $38.5 million, or $0.36 per share for the comparable period in ‘08. The decrease of 34% in net loss attributable to Exelixis from ‘08 to ‘09 was primarily due to increases in revenue from our various collaborations as described above. I would like to note that the decrease in net loss year-over-year would be significantly larger without certain one-time items in the third quarter of both 2008 and 2009.

Cash and cash equivalents, short-term and long-term marketable securities, and restricted cash and investments totaled $301 million at September 30th, ‘09 compared to $284.2 million at the beginning of the year, which also at that time included investments held by Symphony Evolution. I mentioned a few minutes ago that we have repaid the first tranche of the GSK loan this week. As a reminder, we have drawn $85 million under a loan facility with GSK, which includes interest at a rate of 4%. This loan matures in three roughly equal tranches of about $35 million each over three years, beginning in October of this year. We have the option to repay GSK in cash or in stock at our discretion. And earlier this week, we repaid the first tranche to GSK in cash.

Let me finally comment on our year-end financial guidance. We are maintaining our guidance for full-year revenue in the range of $140 million to $170 million, and our expectation to end the year with greater than $200 million in cash remains unchanged as well. However, we are lowering our operating expense guidance for the full year ’09 to $270 million to $290 million. Let me stress, overall, things are very much on track, and this change in guidance mainly reflects continued cost savings throughout 2009 as well as more clarity into the development programs for XL184 and all of PI3K asset [ph] as a result of the evolving discussions under our collaborations with BMS and Sanofi.

With that, I will turn the call over to Mike.

Mike Morrissey

Thanks, Frank. It’s been a busy quarter and we continue to make great progress in advancing our portfolio of cross-multiple programs in clinical trials. I think it’s safe to say that much of the momentum we have built in 2009 is related to our ability to execute the broad development programs for XL184, XL147, and XL765, as part of our collaborations with BMS and Sanofi respectively. This is a strong endorsement from two of our key partners that we bring more and just early-stage compounds to the table. We recognize the strategic and value of these collaborations and continue to leverage them as we move these important assets forward. We are also building domain expertise and institutional knowledge that can be applied to our solely-owned assets.

With that back on in place, I want to take a few minutes to highlight our recent data and clinical plans for XL184, XL147, and XL765. XL184 continues to look like a very interesting compound, with a clear signal of clinical activity in multiple tumor types. XL184 shows compelling data as a single agent in both Medullary Thyroid Cancer and GBM, and we are seeing early encouraging signs of clinical activity in the Phase 1b/2 trial of XL184 in combination with erlotinib in patients with non-small cell lung cancer. The XL184 randomized – its continuation trial is underway and rolling nicely across multiple indications. The progress we are making in our ongoing XL184 trials, we anticipate submitting a broad and deep data set across a variety of tumor types for presentation at ASCO in 2010.

The development program for XL184 continues to grow in scope and magnitude and we are working closely with our colleagues at BMS to advance this important asset in a number of tumor indications. First, we continue to advance the global phase 3 trial of XL184 in Medullary Thyroid Cancer and expect to file an NDA for this indication in the second half of 2011. Key data from our ongoing phase 1 study in MTC patients were presented at the Annual Meeting of the American Thyroid Association and the European Thyroid Association this fall can underscore the potential of XL184 in MTC. The phase 1 cohort of MTC patients, 31 of 34 or 91% of patients had tumor shrinkage as their best radiographic response, 15 of 34 or 44% of patients experienced tumor shrinkage of 30% or more on at least post baseline scan, and 10 of 34 or 29% of patients with miserable disease had a confirmed partial response.

Second, the phase 1b/2 trial of XL184 in combination with erlotinib in patients with non-small cell lung cancer has gained a significant momentum over the last few months, and we are pleased to see an emerging tumor signal in this combination in a highly refractory non-small cell lung cancer population that has previously failed prior single agent erlotinib therapy. We are obviously not going to be able to see a lot on this topic on the call today, but it’s a study that we are tracking very closely, because we believe it has the potential to address another underserved patient population.

We are currently evaluating several MTD expansion cohorts in the phase 1b component of this protocol and hope to start enrolment in the randomized phase 2 cohorts evaluating single agent XL184 and the erlotinib XL184 combination in the first quarter of 2011. Third, the XL184 randomized continuation trial is designed to examine multiple tumor types including breasts, gastric and GE junction, melanoma, hepatocellular, small and non-small cell lung, ovarian, pancreatic and prostate cancer. First patient enrolled in this trial in September and we are pleased to see a high level of screening enrolment so far across multiple indications.

Finally, we are pursuing XL184 in GBM in a comprehensive fashion. Our current program is looking at XL184 in both early and late lines of therapy and is evaluating both single agent and combination approaches. Last Friday, at the Society for Neuro-Oncology or SNO meeting, we reported encouraging preliminary data for the ongoing phase 2 trial of XL184 in patients with second and third line GBM, starting daily dose of 125 milligrams. A complete press release and poster can be found on our Website. So far, 18 patients have been evaluated by the IRF, data cutoff, and 8 of 14 [ph] antiangiogenic naïve patients enrolled at the 125-milligram starting dose level that had tumor shrinkage of 50% or more by IRF, including two confirmed partial responses.

Just to be clear, this data is by preliminary as the majority of patients have not had their inflammatory scan analyzed yet by the IRF. To date, there is no new safety signal observed at the 125-milligram starting dose when compared to the 175-milligram group. Too early to accurately gauge the overall tolerability, duration of treatment interruption and the duration of response at the 125-milligram starting dose. We are tracking these parameters very closely to ascertain if this starting dose is appropriate for future studies in GBM.

We will be prepared to explore either lower doses or alternative dose schedules if required, and we plan to initiate our second line pivotal trial in GBM once we have an optimal XL184 dose for this indication. Most importantly, at this early stage of development, we continue to see a high level of enthusiasm from our investigators for XL184 in GBM and our place to enrolment continues to be brisk.

We also recently initiated a phase 1b dose ranging study of XL184 in combination with Temozolomide and radiation therapy in first line GBM patients. This study will yield important data to help us understand the safety and tolerability of XL184 in the first line setting, and we will provide data supporting future development in the medically and commercially first line GBM studies. This is on the current trajectory of these trials, we expect to initiate phase 3 GBM trials in 2010 once we have a dose locked into first line and refractory GBM cases. Clearly, the XL184 program is a major effort within our R&D group, and we are very excited about the progress that we are working.

I will next turn to our PI3K program, which is the focus of our collaboration with Sanofi-aventis. Any tumor types have molecular alterations resulting in upregulated signaling to the PI3K pathway, which provides large and compelling market opportunity for therapies target PI3K signaling. XL184 and XL765 appear to be the most advanced PI3K inhibitors under development in the oncology area, and we believe that the maximum potential of these compounds will likely be realized in combination with other agents. We plan to provide an update on the initial combination data from the ongoing phase 1b/2 trials at EORTC in November and hope to submit several abstracts on XL147 and 765 at ASCO next year.

Working with Sanofi-aventis, we have finalized plans for the first wave of phase 2 studies and several indications exploring combination and single agent strategies for XL147 and 765. With the rollout of this plan and initiate phase 2 trials before the end of the year. Additionally, as we advance the phase 2 programs for XL147 and 765, we are moving forward aggressively with our joint discovery efforts to identify novel inhibitors with specificity for alpha and beta isoforms of PI3K.

In terms of our early stage pipeline, we are on track to advance additional compounds in the preclinical development and clinical studies. We expect to file an IND for XL388, that’s for the mTOR inhibitor in the fourth quarter. In addition, we hope to advance numerous development candidates throughout the end of 2010 in oncology where we have multiple candidate programs, inflammation, potentially including inhibitors of the delta and gamma isoforms of PI3-kinase and metabolic disease where our potent TGR5 agonist stimulate the release of GLP-1.

Clearly, we have a lot on our plate. We have the right team, the right strategy, and the right culture to take advantage of the many opportunities we will address moving forward. We have a full docket of 13 presentations at the upcoming EORTC meeting that will take place next month, and we are already starting to plan numerous abstracts for submission to the 2010 ASCO meeting. Our Annual R&D Day, which is scheduled for December 2nd in New York will be a great opportunity to pull everything together for the range of R&D activities we have ongoing, and we hope you will be able to join us either in person or on our webcast.

It’s clear that we have much to share with our investors and the medical community as we close out 2009 and move into 2010. So with that, I will turn the call back to George.

George Scangos

Okay. Thanks, Mike, and thanks again to those of you who joined us this afternoon. I think we are in a great position now for growth and success and we are going to keep pressing ahead and continue to execute on our strategic plans. I believe that the Exelixis’ story is one of the most compelling in the biotechnology industry. We have several leading compounds in advanced clinical development. XL184 supported by a major clinical development effort across numerous tumor types, the clinical PI3K programs are supported by broad phase 2 efforts in multiple large indications. We have quality partnerships that we believe will lead to the successful development of our compounds.

Importantly Exelixis currently is performing the majority of the clinical work on every compound. This combination, the financial commitment and expertise of pharma companies coupled with the speed and efficiency of Exelixis is an exciting combination that allows us to maximize therapeutic and commercial potential of our compounds in the most efficient way. I do want to remind everyone that although we focus discussion on these three compounds, that there are currently 12 compounds that have been generated by Exelixis that are in clinical development as well as several more in preclinical development and lead optimization. The pipeline is progressing well and we will present data on several compounds at the upcoming EORTC meeting. So, the potential for upside for us is substantial.

We continue to leverage our unique discovery of platform that is consistent; we generated high quality compounds across multiple therapeutic areas. We expect that this platform will continue to generate early stage assets for proprietary development or partnering, fueling our continued growth in opportunity over the long term. We are in active discussions with a number of companies and fully expect to sign additional collaborations as we move forward. As always, I want to thank all of our employees whose hard work and dedication have made all this progress possible. So, thanks to everyone here at Exelixis.

And with that, I will conclude the call, and we will be happy to open up for questions at this time.

Question-and-Answer Session

Operator

(Operator instructions) Our first question comes from the line of Jessica Lee. Please proceed.

Jessica Lee – Goldman Sachs

Thank you for taking my questions. First question with regard to your recent results on XL184 in GBM. So, if I read the data correctly, it looks like for the 125-milligram arm, the discontinuation rates due to AE a 17%, is that correct, and do you think that discontinuation rate is high enough for you to consider a lower dosage?

George Scangos

I think the package of data that we updated at the SNO last week highlights the clear sign of clinical activity we see with XL184 at the 125-milligram in second, third line GBM patients. The safety and tolerability parameters are continuing to be evaluated. The n total number of patients that were discussed at SNO is relatively small. As I mentioned in the script, we are looking very closely at tolerability, at the frequency and duration of interruptions and most importantly the duration of response with 184 at the dose. So, this is all in progress, and we are really focused primarily on expanding that data set. We have also recently amended the protocol to do much more aggressive adverse event management, and much more rapid dose reduction as needed from a standpoint of emerging adverse events to be able to potentially widen that window, and that amendment is now going forward. We are also prepared. As I mentioned in the script as needed to explore either lower doses or alternating dose regimen. So, it’s really a matter of refining and fine-tuning the dose and the manner by which we dose patients in this indication, and I think we are on track to do that pretty well right now.

Jessica Lee – Goldman Sachs

Great, thank you.

George Scangos

You bet.

Operator

Our next question comes from the line of Eric Schmidt. Please proceed.

Eric Schmidt – Cowen & Company

Thanks for taking my question. Just another question on 184 in GBM, I guess for Mike, do you now think there is enough data to suggest that the drug is more active in Avastin naïve patients, and if so, how does that frame your thinking about future pivotal trials?

Mike Morrissey

Hi, Eric. That was in the data we had at ASCO and the update on the 175-milligram daily dosing group at SNO. That was certainly one conclusion as you can draw based upon the response rate etcetera in that setting. We are continuing to explore both the antiangiogenic naïve and antiangiogenic pretreated populations as part of this phase 2. And as more data comes in, we will be able to make, I would say from distinctions about what direction we go in relative to that letter population. So, it’s work in progress, more data, more patients, I think we need to be able to explore, but that’s certainly is what we are doing right now.

Eric Schmidt – Cowen & Company

A question for George on partnerships. You referenced having multiple additional assets that you might partner and being in multiple additional partnership discussions, and in the past, you kind of flied for us where your highest level of interest is, I am thinking, for example, you know, you gave us a heads up on the PI3K collaboration or their assets that are more partnerable [ph] right now might be better off in clever hands in your own and you would like to highlight.

George Scangos

Sure, Eric. Yes, absolutely right. We did like both the BMS on XL184 and XL281 and then the Sanofi collaboration on the PI3K. At this point, we have several assets, some in early clinical developments, some in preclinical development that have gotten interest from multiple companies. We also have substantial interest from companies in our capabilities, drug discovery capabilities, some of our translational medicine capabilities, biology capabilities. So, we are in a number of discussions right now, and I could lay out for you many different permutations, because our discussions going around a single asset, our TGR5 molecule that Mike alluded to have garnered amazing level of interest I would say in the pharma industry. We have other assets in diabetes, so whether we sign a sign a single collaboration around TGR5 or broader diabetes for example, collaboration, we are having both of those discussions, and we will see how they pan out. The same is true for information. We have a number of interesting compounds coming for that are potentially potent anti-inflammatory; we are having some discussions there. And of course, we have our early clinical oncology compound, 228 and 888. We will have data on 228 at the EORTC meeting coming up. We have a very nice selective mTOR inhibitor coming forward. All of those have garnered interest in various combinations. So, other than that, I can’t be more specific, now that I can give you virtually any combination of those.

Eric Schmidt – Cowen & Company

Certainly starts like it. Thanks George.

George Scangos

Okay.

Operator

Our next question comes from the line of George Farmer. Please proceed.

George Farmer – Canaccord Adams

Hi, thanks for taking my question. My correct question on the non-small cell and cancel trial, it was 184 and Tarceva, are you holding the erlotinib dose constant, while changing the dose of 184, or they both being interchanged simultaneously. And secondly, in the randomized portion of the trial, why would you do the study 184 versus the combo as opposed to, say a best supportive care control.

George Scangos

I have the first, and I will give you very kind of high level summary on these different topics and questions. On the first question around the dosing, we had a pretty comprehensive phase 1b component to the dose range finding efforts, looking at varying both the XL184 and erlotinib combination I won’t go into detail. The actual amounts and those kinds of things, but it was one that we wanted to look at very carefully to really maximize our chance of success there, and we are taking MTD expansion cohorts forward with numerous patients to really get a good experience of what’s happening there. So, we have the best dose going forward. On the second question about looking at activity in the phase 2 part of that phase 1b/2 protocol, the question is really addressed to ask for outright activity of either XL184, which based upon the biology and the pathways involved in that stage if not small cell lung cancer, a potent net VEGF, our two inhibitors might have single edge activity by itself versus the combination of an EGFR inhibitor and excel wide for it. So, we weren’t – the phase 2 component of this is not powered to show a strong, say best of fact, that’s really to show a single agent activity in the context of a phase 1b/2 trial, second phase 2s or other trials based on the results from this trial. It could go in that direction, but it’s not designed to answer that question right now.

George Farmer – Canaccord Adams

And do you think you will have randomized data by ASCO?

George Scangos

We are certainly very motivated to push that trial forward, and it certainly a major focus for us. So, we are certainly aiming for that.

George Farmer – Canaccord Adams

Okay. And a quick question on 388, the mTOR inhibitor, is that a rapamycin lookalike or is it something novel?

George Scangos

No, it’s definitely something novel with the small molecule direct inhibitor of TORC1 and TORC2 complexes. Very, very nice package, beautiful pharmacodynamics, and pharmacology with the compounds. So, it’s one that we are very excited to take forward, and that we own solely in terms of that compound as well.

George Farmer – Canaccord Adams

I am sorry, you said that was a TORC inhibitor, is that differentiated from mTOR?

George Scangos

Yes, TORC1, TORC2 is the mTOR complex.

George Farmer – Canaccord Adams

Okay, right.

George Scangos

Complexes, yes.

George Farmer – Canaccord Adams

Okay, great. Thanks very much.

Operator

Our next question comes from the line of Derek Jellinek. Please proceed. Mr. Jellinek, your line is now open.

Derek Jellinek – Boenning & Scattergood

Hi, thanks for taking my question. Just a quick follow-up if I could on 184, back to you Mike, on the updated data we got in the 18 evaluable patients, (inaudible) given prior antiangiogenic therapy, we got the response in patients that were naïve there?

Mike Morrissey

Yes, you are kind of cutting out. Could you repeat that please?

Derek Jellinek – Boenning & Scattergood

Sure. On the updated 184 data we got in the 18 patients, of those 18 patients, did any of them receive prior antiangiogenic therapy, and if so, what was the response in that patients, because I believe the data we got was only in patients that were naïve?

Mike Morrissey

Yes, in the data that was presented at SNO and that data is again available on our Website, the poster and the press release, there were numerous patients who have been treated previously with antiangiogenic therapy, I believe there were 4 patients in the waterfall that were analyzed by the IRF and have documented tumor shrinkage in that waterfall.

Derek Jellinek – Boenning & Scattergood

Okay. And what was the median average daily dose?

Mike Morrissey

Yes, we don’t have that data available at this time to be able to share with you.

Derek Jellinek – Boenning & Scattergood

Okay, and then quickly just on the PI3K inhibitors, you said you are going to have the combo and monotherapy trials hopefully commencing before year-end, any idea of indication there?

Mike Morrissey

Yes, absolutely. You know, we have a full phase 2 plan that we are ready to roll out around the EORTC timeframe. At the EORTC itself, we will have four presentations and posters on the existing phase 1b/2 combination trials, and then the phase 2 program will be announced and rolled out in that same timeframe. So, I would say, stay tuned and we will get that going.

Derek Jellinek – Boenning & Scattergood

Okay, great. Thanks. And quickly just for Frank, in the quarter, with the 140 upfront from Sanofi, was that amortized over four years at 875 roughly a quarter, and looking at your contract line of popup, I am trying to figure ambling ahead in Q4, it looks like you are basing your guidance that wasn’t really adjusted upwards. There’s a better probability of being it down quarter sequentially. Maybe kind of give us a little more insight into the breakout of that revenue in that quarter. Thanks so much.

Frank Karbe

So, to your first part of the question, $140 million upfront payment from Sanofi is amortized over four years. Now, how did it hit all of our P&L? Remember that amortizations of upfront payment comes through on the license revenue line, not the contract revenue line. So, you would see on that line. On the contract revenue line on the other hand, you would see revenue in association with cost reimbursements and those are pretty substantial on the Sanofi agreement as well.

Derek Jellinek – Boenning & Scattergood

Thanks so much, and once again going into Q4, it seems like it’s going to be going down sequentially, is that correct?

Frank Karbe

I can’t really comment on that. What I suggested, look at the year-to-date revenue that we have and compare that to the guidance that we have given, and again, the guidance remains unchanged, and I think you will get an idea where our quarterly revenue might come up. But one thing I will add that the positive impact from our new collaborations with BMS and Sanofi clearly is going to last for a while, because we are amortizing these upfront payments of several years, and we expect to receive cost reimbursements under these collaborations for several years.

Derek Jellinek – Boenning & Scattergood

Right. Okay, thanks for taking the questions.

Operator

As a reminder, ladies and gentlemen, please press star one to ask your question. There are no further questions at this time.

George Scangos

Okay. There are no more questions. Let me just remind everybody. We will have several presentations at the upcoming EORTC meeting in Boston in November. On December 2nd, we will have our R&D Day in New York, which we will present a detailed overview of all of our R&D activities as we have for the past few years. So, we are looking forward to both of those events. I thank everybody again for your attention during the call today, and with that, we can sign off. Thanks a lot.

Operator

Thank you for your participation in today’s conference. This concludes the presentation. You may now disconnect. Have a good day.

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