Executives
Monique Greer - Vice President of Investor Relations
Paul L. Berns - President, Chief Executive Officer, Director
James V. Caruso - Chief Commercial Officer
David C. Clark - Principal Financial Officer, Vice President - Finance, Treasurer
Bruce Goldsmith - Vice President, Corporate Development
Analysts
Mark Monane, M.D. - Needham & Company
Charles Duncan - JMP Securities
Jason Kantor - RBC Capital Markets
Joshua Schimmer, MD - Leerink Swann
Arlinda Lee - FTN Capital Markets
Allos Therapeutics, Inc., (ALTH) Q3 2009 Earnings Call November 3, 2009 4:30 PM ET
Operator
Good afternoon ladies and gentlemen my name is Rebecca and I will be your conference operator today. At this time I would like to welcome everyone to the Allos Therapeutics Third Quarter 2009 Earnings Conference Call. (Operator Instructions). I would now like to turn the conference over Monique Greer, Vice President of Investor Relations. Please go ahead ma’am.
Monique Greer
Thanks Rebecca. Good afternoon everyone and thank you for joining us today for our Third Quarter 2009 Financial Results Conference Call. Following formal remarks by management the conference call will be open for questions. With me today are Paul Berns, President and Chief Executive Officer; Jim Caruso, Chief Commercial Officer; David Clark, Vice President of Finance; and Bruce Goldsmith, Vice President of Corporate Development and New Product Planning.
A press release was issued after the market closed today, a copy of which can be found in the Investors Section of our website at allos.com.
Before we begin, please note that during the course of this call we may make forward-looking statements concerning our company that are not historical facts. 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-Q for the quarter ended September 30, 2009 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 Berns.
Paul Berns
Thank you Monique and welcome everyone. It is my pleasure to update you on our recent achievements and milestones. This was a very significant quarter for Allos as we achieved an important corporate milestone by obtaining FDA accelerated approval of FOLOTYN for use as a single agent for the treatment of patients with relapsed or refractory peripheral T-cell lymphoma. FOLOTYN is the first and only drug approved by the FDA for this indication and represents a significant milestone for the T-cell lymphoma community.
The approval of FOLOTYN is a transformative event for Allos representing our first US indication and marks our emergence as a commercial oncology company. As you may recall, the PROPEL trial enrolled its first patient in August 2006. We are pleased to have obtained this approval in just over three years through the disciplined execution of our product development and commercialization plan and consistent achievement of our objectives. The approval is the result of a cross-functional team effort that highlights the breadth and depth of our organization and underscores our commitment to developing and commercializing innovative therapies for the treatment of cancer.
Now aggressive T-cell lymphomas have been a largely ignored group of diseases and we are excited to bring this important new therapy to market. Our goal was to make FOLOTYN available to patients in the United States as quickly as possible. To this end on October 5th we announced the availability of FOLOTYN for commercial sale in the US. As part of our commitment to patients we also established a patient assistance program to provide reimbursement resources for the uninsured, under insured and insured and reimbursement support for healthcare professionals. We are actively preparing for the planned commercial launch of FOLOTYN in January 2010.
Our other recent highlights include the notification from the National Comprehensive Cancer Network, or NCCN, that it has updated their clinical practice guidelines in oncology for non-Hodgkin’s lymphomas to include FOLOTYN as a suggested treatment regimen for patients with second line PTCL. Completion of patient enrollment in the Companies investigational Phase IIb randomized international multi-center clinical trial comparing pralatrexate and erlotinib, or Tarceva, in patients with stage 3B4 non-small cell lung cancer who are, or have been, cigarette smokers who have failed treatment with at least one prior platinum based chemotherapy regimen. The recent initiation of patient enrollment in an investigational Phase II study of FOLOTYN in patients with aggressive relapsed or refractory B-cell non-Hodgkin’s lymphoma; this study is predicated on a preclinical and clinical activity of FOLOTYN observed in B-cell non-Hodgkin’s lymphoma. Then in October we strengthened our balance sheet with an underwritten public offering of common stock, resulting in net proceeds of approximately $93 million. We believe the additional capital resources enable us to operate from a position of strength as we evaluate X-US partnering opportunities.
As part of our ongoing commitment to the T-cell lymphoma community and in agreement with the FDA we plan to conduct two randomized international Phase III trials to advance the treatment of T-cell lymphoma. The first is a randomized trial of maintenance treatment with FOLOTYN in previously untreated patients with PTCL who have demonstrated a response to CHOP or a CHOP-like regimen.
The second trial is a randomized trial comparing FOLOTYN in combination with systemic Bexarotene, or Targretin, versus systemic Targretin alone in patients with cutaneous T-cell lymphoma who are refractory to at least one prior systemic therapy.
Now these trials are part of our strategic lifecycle development plan and are intended to expand FOLOTYN’s commercial opportunity and build additional value for our company through potential expanded indications in both the US and abroad. In addition, we believe that FOLOTYN may have therapeutic activity in a range of other hematologic malignancies and solid tumors. We currently have ongoing studies evaluating FOLOTYN in patients with relapsed or refractory non-Hodgkin’s lymphoma, or Hodgkin’s lymphoma, relapsed or refractory cutaneous T-cell lymphoma, advanced non-small cell lung cancer and bladder cancer.
With the prioritized product development and commercialization plans for FOLOTYN, a solid financial position, and exclusive worldwide rights to FOLOTYN for all indications, we believe we have established a strong foundation for continued progress.
I will now turn the call over to Jim who will review our commercial progress for FOLOTYN.
Jim Caruso
Thank you, Paul. The approval of FOLOTYN for the treatment of patients with relapsed or refractory PTCL is a first to market opportunity for Allos. FOLOTYN was approved on September 24th by the FDA as the first and only therapy for patients with relapsed or refractory PTCL. We have established and exclusive distribution channel that is cost efficient and seamless to the healthcare provider.
On October 5th, only 10 days post approval, FOLOTYN was made available to the medical community in the United States. I am pleased to report that we are very happy with the interest and receptivity of FOLOTYN by healthcare providers and the commercial uptake in the first 30-days of our trade launch.
At this time I would like to provide a brief update on the pricing and reimbursement landscape for FOLOTYN.
As a reminder, we completed market research with third party payers and prescribing hematologist oncologists that tested the pricing sensitivity of FOLOTYN across a broad range of potential price points. Based on our research and analysis we developed a pricing strategy for FOLOTYN for the treatment of relapsed or refractory PTCL. FOLOTYN is administered as an IV injection in an outpatient setting. The recommended dose of FOLOTYN is 30 mg/m2 and is conveniently delivered in a three to five minute injection given once a week for six weeks in a seven-week cycle.
The average wholesale acquisition cost, or LACK price for FOLOTYN is $3,125.00 for the 20 mg vial and $6,250.00 for the 40 mg vial. The cost of FOLOTYN will vary per each patient as it is dosed by the patient’s body surface area, calculated from weight and height and tolerability. FOLOTYN is typically administered until disease progression or unacceptable toxicity.
Our goal is to make FOLOTYN available to patient’s with relapsed or refractory PTCL who may benefit from treatment with FOLOTYN. To this end we have established the Allos Support for Assisting Patients, or ASAP program to facilitate access to FOLOTYN by providing reimbursement resources to uninsured, under insured and insured patients and reimbursement support for healthcare professionals. In addition, through the ASAP program indigent patients who are not eligible for reimbursement may obtain free drug.
Based on our payer reimbursement analysis we believe that approximately 2/3 of PTCL patients are covered by Medicare, 4% by Medicaid and the remainder by private insurance. An important reimbursement milestone and consistent with our indication was the addition of FOLOTYN to the NCCN compendium. NCCN is recognized by the Centers for Medicare and Medicaid services and private payers as a mandate of reference for oncology coverage policy. Managed care medical directors, pharmacy benefit directors, and other healthcare professionals also reference the NCCN compendium when making treatment and reimbursement decisions.
As Paul mentioned earlier, based on FOLOTYN efficacy and safety profile and the clear unmet medical need in relapsed or refractory PTCL the FDA granted accelerated approval for FOLOTYN. We are currently working with the Division of Drug Marketing Advertising and Communications, or DDMAC for review of FOLOTYN educational and promotional materials. Initially this process may take up to 120 days for review of materials to be used in connection with speaker programs, round table events, and the like. During this review period our sales specialists will communicate the brand features and benefits using the FOLOTYN package insert. We expect to have our full promotional programming available for FOLOTYN’s commercial launch in late January.
For those of you who may be new to Allos and the treatment of patients with peripheral T-cell lymphoma oncologists typically employ treatment regimens indicated for non-Hodgkin’s lymphoma, predominantly B-cell and HL. The scientific literature suggests that PTCL is as responsive to traditional anthracycline-based chemotherapy and in a company commissioned market research survey hematologists and oncologists rated a low satisfaction with current therapies for treating patients with relapsed or refractory PTCL. This further emphasizes the high unmet medical need for, and the importance of, new therapies to treat patients with aggressive T-cell lymphoma.
The results of company sponsored quantitative and qualitative market research demonstrate that treating physicians favorably assess the FOLOTYN product profile established in the PROPEL trial. The quantitative market research survey of 143 community and institution based hematologist oncologists who treat PTCL overall response rate complete response rate, duration of response and disease control rate, define as responses plus stable disease, were identified as key product attributes when selecting a second-line treatment for patients with PTCL. We believe the FOLOTYN package insert aligns with these treating oncologists’ priorities and will support the trial use and adoption of FOLOTYN.
Although there have been no comparative trials conducted with FOLOTYN the results of a company sponsored qualitative market research study showed an overwhelming 98% of physicians responded yes when asked if product x, or FOLOTYN, represented an improvement over existing therapies for relapsed or refractory PTCL. In addition, 93% of physicians stated that they would use product x in the second line setting for patients for whom bone marrow transplant is not feasible. When asked how the availability of product x, or FOLOTYN, would change their approach to the treatment of relapsed or refractory PTCL in the second and third line hematologists and oncologists responded that they would increase the number of PTCL patients they treat in the second line by 20% and in the third line by 51%. This suggests that FOLOTYN may help address an unmet medical need and provide and important treatment option for physicians who treat relapsed or refractory PTCL. We believe the commercial opportunity for FOLOTYN is attractive and has the potential for continued growth.
T-cell lymphoma comprises a biologically diverse group of lung cancers that account for approximately 10 to 15 cases of all non-Hodgkin’s lymphoma in the US. According to the American Cancer Society an estimated 66,000 new patient cases of NHL were expected to be diagnosed in the US in 2009. We estimate the incidence of newly diagnosed PTCL to be approximately 5,600 patients. In addition we estimate the overall prevalence of PTCL in the US to be approximately 19,900 patients including approximately 9,850 patients with relapsed or refractory PTCL that are treated, referred for treatment, or referred to a clinical trial.
It is important to note that regardless of whether a patient is being treated with their first, second, or third systemic therapy these patients typically relapse or become refractory to therapy and become candidates for FOLOTYN. Our understanding of this treatment cascade is based on our experience with PROPEL, clinical literature and market research conducted with healthcare providers.
In our view the US market for relapsed or refractory PTCL is scaleable with a significant number of patients treated at large cancer centers and institutions. We believe a significant percentage of market potential is driven by approximately 3,200 physicians and 2,000 key hospital accounts and that the market for relapsed or refractory PTCL is addressable with a targeted US sales and marketing organization.
We are actively preparing for the commercial launch of FOLOTYN. To date we have hired and trained approximately 25 sales specialists on the PTCL disease state and FOLOTYN label. We intend to increase the number of sales specialists to approximately 50 in advance of our planned commercial launch in January 2010.
In summary, FOLOTYN is now available for commercial sale in the United States. Allos sales specialists are educating healthcare providers on the clinical benefits and treatment of FOLOTYN for patients with relapsed or refractory PTCL. PTCL is a first to market opportunity and we intend to maximize the commercial potential of FOLOTYN. We are pleased to bring FOLOTYN to patients with relapsed or refractory PTCL and look forward to establishing a leadership position for this indication.
Now I will turn the call over to Bruce Goldsmith who will provide an update on our clinical development programs.
Bruce Goldsmith
Thank you, Jim. Patients with peripheral T-cell lymphoma have a very poor prognosis and almost always relapse or become refractory to initial therapy. This underscores the urgent need for new therapies to treat patients with relapsed or refractory PTCL. FOLOTYN has demonstrated its efficacy and safety in a PROPEL clinical trial and we believe it will be a welcome addition to physicians as a treatment for second line PTCL. We are very pleased with the prescribing information, or package insert, approved by the FDA which reflects the results of PROPEL our FDA spa approved pivotal trial of FOLOTYN in patients with relapsed or refractory PTCL. The PROPEL trial enrolled 115 patients with relapsed or refractory PTCL, 109 of whom were considered a variable for efficacy according to the protocol. As per the approved package insert the results of the trial demonstrated that 29 of 109 evaluable patients or 27% achieved a response as assessed by an independent central review. The median duration of response was 287 days or 9.4 months. The most common grade 3/4 adverse events were thrombocytopenia, which was observed in 33% of patients, mucositis in 21%, neutropenia in 20%, and anemia in 17% of patients.
At the recent joint ECCO 15-34th ESMO Multidisciplinary Congress held in Berlin Dr. O’Conner at the NYU Cancer Institute and principal investigator of the PROPEL trial presented update analyses of the PROPEL data. We continue to follow up patients currently in the study and we plan to provide updates to the primary and key secondary endpoints at the American Society of Hematology meeting in December.
In May we submitted a request to the NCCN as per their process for the addition of FOLOTYN to the NCCN practice guidelines for peripheral T-cell lymphoma. For those of you who may not be familiar with the NCCN guidelines these guidelines are developed and updated through an evidence-based process with the explicit review of the scientific evidence integrated with expert judgment by multi-disciplinary panels of physicians from NCCN member institutes which include 21 of the worlds leading cancer centers. In early October within three weeks of approval the NCCN updated their guidelines to include FOLOTYN as a second line therapy option for patients with relapsed or refractory PTCL who are not candidates for high-dose therapy. In addition, the NCCN guidelines added FOLOTYN as the first and only single agent recommended for second line treatment of patients who are candidates for high-dose therapy. To date all other listed high-dose therapies are combination chemotherapy regimens. We believe the timely addition of FOLOTYN to the NCCN guidelines reinforces the importance of FOLOTYN for the treatment of relapsed or refractory PTCL and the high unmet medical need that exists.
As previously mentioned, based on FOLOTYN’s efficacy and safety profile and the clear unmet medical need in relapsed or refractory PTCL the FDA granted accelerated approval for FOLOTYN in connection with that approval and in agreement with the FDA we plan to conduct the following trials to advance the treatment of T-cell lymphoma: First a Phase III multi-center randomized clinical study of sequential FOLOTYN versus observation in patients with newly diagnosed aggressive PTCL who have responded following initial treatment with CHOP or a CHOP-like therapy, the primary endpoint will be progression free survival. Patients will be enrolled prior to initiation of the CHOP based regimen. Patients responding with a complete response or a partial response after CHOP based treatment will be randomized 2:1 to FOLOTYN versus observation. In addition, we will conduct a Phase III multi-center randomized clinical study comparing FOLOTYN in combination with systemic [vixeragene] versus systemic [vixeragene] alone in patients with cutaneous T-cell lymphoma or CTCL who are refractory to at least one prior systemic therapy. The primary endpoint will be PFS, response rate will be a secondary endpoint. Prior to initiation of the Phase III study we will conduct a Phase I study to determine the maximum tolerated does of the combination.
As Paul mentioned, these trials are part of our strategic lifecycle development plan and are expected to extend the FOLOTYN development program to a broader T-cell population. We believe these are important trials that may create additional value for the Company through the potential of expanded indications. We plan to conduct these studies globally building upon our network of international investigators who have previously participated in FOLOTYN clinical studies. We plan to initiate these two programs in 2010.
Beyond T-cell lymphoma we are committed to evaluating FOLOTYN both as a mono-therapy and in combination with other anti-cancer agents in a variety of hematological malignancies and solid tumor indications. To date FOLOTYN has demonstrated encouraging clinical activity in patients with relapsed or refractory cutaneous T-cell lymphoma, non-Hodgkin’s lymphoma, Hodgkin’s lymphoma and non-small cell lung cancer. In addition to the PROPEL data at the joint ECCO 15-34th ESMO Congress updated results from a Phase I study of FOLOTYN in advanced non-small cell lung cancer were presented by Dr. Azzoli at Memorial Sloane-Kettering Cancer Center and his colleagues. In this study the optimal dose of FOLOTYN with vitamin supplementation was determined to be 190 mg/m2 Q2 weeks.
The safety profile was consistent with previous studies. Of note, an overall response rate of 10% was observed including two of long duration complete remissions of 26+ and 21+ months with these patients still on therapy. The result of the completed studies of FOLOTYN in non-small cell lung cancer led to the design of our ongoing Phase 2b randomized multi-center international trial comparing FOLOTYN to erlotinib in patients with previously treated Stage 3b4 non-small cell lung cancer who are, or have been, cigarette smokers.
In July of this year we completed patient enrollment in this study. The objective of the Phase 2b study is to assess the treatment effect of FOLOTYN to patient subsets where we believe the agent has the potential to provide clinical benefit relative to erlotinib. The trial enrolled both current and former smokers which will allow us to conduct a number or pre-specified analyses to inform the design of a potential Phase 3 registration trial. The pre-specified analyses will compare the treatment effect of pralatrexate versus erlotinib based on patients smoking status including light versus heavy and current versus former smokers, histologies squamous versus non-squamous, as well as patients that have received pralatrexate versus those who have not. The future development of pralatrexate in this indication will be based on observing a clinically significant treatment effect in one or more of the subsets or the overall population. We will evaluate the results according to the analysis plan and expect to report top-line results from this trial in the first half of 2010. It is relevant to note that we reviewed the design of this study in advance with both the FDA and EMEA.
Another ongoing study is the Phase II open label single arm multi-center study investigating FOLOTYN in patients with advanced or metastatic relapsed transitional cell carcinoma or TCC of the urinary bladder. We continue to advance patient accrual and we look forward to presenting the results of this study once the efficacy and safety data are mature.
To continue to build on the clinical and pre-clinical activity of FOLOTYN observed in B-cell non-Hodgkin’s lymphoma we recently initiated patient enrollment in an investigational Phase 2 study of FOLOTYN in patients with aggressive relapsed or refractory B-cell non-Hodgkin’s lymphoma. This single arm open-label multi-centered study will seek to enroll approximately 27 patients in up to ten investigative sites worldwide. The primary endpoint of the study is objective response rate, complete and partial response per International Workshop criteria. The secondary endpoints include duration of response, progression free survival, overall survival, and the safety and tolerability of FOLOTYN.
Before closing I want to share with you that we have multiple abstracts accepted for presentation at the upcoming American Society of Hematology meeting including updated analyses from the PROPEL study and our CTCL program. Specific information on the day and time of presentation of the accepted abstracts will be forthcoming in advance of the ASH meeting.
With that, I will turn the call over to David who will review our financial results for the quarter.
David Clark
Thank you, Bruce. I will review our financial results for the third quarter and year-to-date as well as provide an update for the remainder of 2009.
For the three months ended September 30, 2009 we reported a net loss of $18.7 million or $0.21 per share; this compares to a net loss of $13.2 million, or $0.16 per share, for the third quarter of 2008. For the nine months ended September 30, 2009 we reported a net loss of $50.6 million or $0.58 per share compared to a net loss of $37 million or $0.50 per share for the same period last year.
Net cash used in operating activities together with the $5.8 million license milestone payment upon FDA approval for FOLOTYN was $47.8 million for the nine months ended September 30, 2009. Cash, cash equivalents, and investments in marketable securities as of September 30, 2009 were $84.1 million.
As Paul mentioned, we completed a public offering of our common stock in October which generated net proceeds of approximately $93 million. This financing, together with our existing cash resources, puts us in a strong financial position to: 1. Support the commercial launch and future growth of FOLOTYN 2. Fund our ongoing and planned clinical trials including the two Phase 3 trials which may provide us with expanded indications and additional commercial value. 3. Operate from a position of strength as we evaluate our XUS partnering opportunities.
We reaffirm our prior financial guidance that net cash use in operating activities together with the $5.8 million milestone payment is expected to approximate $65 million to $70 million for the year ending December 31, 2009. These $5.8 million milestone payments were recorded as an intangible asset and in net cash used in investing activities as of and for the nine months ended September 30, 2009 respectively.
With that I will now turn the call back to Paul.
Paul Berns
Thanks, David. This clearly is an exciting time in Allos’s corporate evolution. We have an opportunity to serve patients, their caregivers, and to ensure rapid and widespread access to this important new therapy for patients with relapsed or refractory PTCL. We take this responsibility very seriously and we are committed to working diligently to make this happen.
Additionally, I want to thank our employees for their commitment and tireless efforts. It is their collective passion and dedication to patients that helped bring FOLOTYN to market. Now as we look ahead to the remainder of the year and into 2010 allow me to summarize the key take aways from today’s update.
We will continue to advance our preparation for the planned commercial launch of FOLOTYN for patients with relapsed or refractive PTCL in the US in January. Additionally, we remain opportunistically focused on business development activities outside the US. We believe the PTCL market outside the US is attractive and sizable, particularly in Europe and Asia. We also believe we have a unique asset in pralatrexate for which we retain exclusive worldwide rights in all indications. At the end of the day our intent is to evaluate those partnerships that we believe are in the best interest of our company, customers, and shareholders. We plan to initiate a Phase 3 randomized trial of maintenance treatment with FOLOTYN in previously untreated patients with PTCL who have demonstrated a response to CHOP or a CHOP-like regimen. Also, we plan to conduct Phase 1 study to determine the maximum tolerated dose prior to initiating the Phase 3 randomized trial comparing FOLOTYN in combination with systemic Targretin versus systemic Targretin alone in patients with CTCL who are refractory to at least one prior systemic therapy.
The Phase 3 PTCL and CTCL trials are part of our strategic lifecycle development plan and are expected to extend the FOLOTYN development programs in large T-cell populations. We will continue to advance patient enrollment in the recently initiated Phase 2 study of FOLOTYN in patients with aggressive relapsed or refractory B-cell non-Hodgkin’s lymphoma as well as our ongoing clinical trials evaluating FOLOTYN in hematologic malignancies and solid tumor indications. We expect to report top-line results from our Phase 2b clinical trial comparing FOLOTYN and erlotinib in patients with advanced non-small cell lung cancer in the first half of 2010. And, we intend to submit a marketing authorization application in Europe in 2010 to seek regulatory approval for FOLOTYN for relapsed refractory PTCL.
Additionally, we plan to report on several of our ongoing clinical trials involving FOLOTYN in hematologic malignancies at the upcoming ASH meeting as well as other scientific meetings in the coming months. With a solid financial position, no debt, worldwide rights for all indications and a team of dedicated employees focused on delivering new cancer therapies to patients we believe we have established a strong foundation for continued progress and look forward to providing future updates.
Now we will be happy to take your questions.
Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Mark Monane with Needham & Company.
Mark Monane, M.D. - Needham & Company
It is 5:00 here and it is already quite dark and that is something new for us on the East Coast. Speaking of being in the dark I think a lot of patients and physicians who had experienced PTCL which is refractory therapy really had not treatment options and now there is obviously something new. So, my question has to do with what efforts are you planning in order to increase the physician awareness? Jim was nice enough to go over some market research, but I’m guessing, talking about specific programs. This, unlike Humera, which I know you have a lot of experience with, where there is already a marketed product and this may be another new product which has some advantages, this is something totally new. So, maybe you could talk about what efforts you all have to allow for earlier than expected sales or frontline sales to get patients on other incentive programs? Are there various strategies for wholesalers who could get the drug into the marketplace so physicians could start using it?
Paul Berns
In terms of the distribution channel, I believe that was one of the last elements of your question, we have established an exclusive distribution channel which quite frankly is very cost efficient for us, saves us significant expense and at the same time was developed in such a way where it is transparent to the healthcare providers and end users in terms of their standard of typical ordering process. So, we are very pleased in the distribution channel, which quite frankly was up and running approximately ten days post our PDUFA approval.
In terms of what we’re currently doing now, as I mentioned earlier as an accelerated approved drug we do work within the guidelines of DDMAC. It may take up to 120 days for them to review the content of the tactics that we have built out as part of our execution for our launch plan. It does not necessarily mean that we would not receive elements of those materials back prior to the 120 days.
I think when you look at how we currently address the situation we obviously planned for both, an accelerated approval and a full approval, so we have launch plans in place for both. We are currently, from an execution perspective, we have identified key healthcare providers, and institutions that we really believe treat the bulk of the PTCL population. As you would expect the 25 trained specialists that we currently have in play are in contact and connecting with those healthcare providers to communicate the clinical benefits of FOLOTYN for relapsed or refractory PTCL and we are executing on our strategic brand platform.
You brought up a good point in terms of early programming. Keep in mind that our medical affairs group is implementing a wide variety of CME programming; in fact you will see at ASH multiple programs. We have two large satellite symposia that will take place at ASH that I believe will be of interest for those participating clinicians, obviously you are welcome to attend that as well, as we continue to work through for the commercial team content and elements for our tactical execution post our commercial launch towards the end of January.
In addition, we continue to source for the second phase of our sales force organization, this expansion from 25 to 50 as we mentioned before, we are very, very pleased with the first 25 and with the second 25 that we have in the queue. These are all seasoned oncology specialists that have track records quite frankly and history of success and we have a high degree of confidence in their capacity to get this product to those patients who will benefit from its treatment.
As you move further downstream in terms of other elements, I think for any oncology drug the transition from the clinic out into the marketplace is very, very important and we will lever the key opinion leadership. One of the benefits of the PTCL space is that its very scalable and I mentioned the identification of those key healthcare providers and the approximate 2,000 institutions and 3,200 academic centers, if you will, or 3,200 clinicians located in and around those academic centers that drive that business.
This study, PROPEL, took place at the key PTCL attachment centers in the US and those are the whose who peripheral T-cell lymphoma and they understand the drug and they really understand the benefits that this provides. To your point, we will lever that understanding of FOLOTYN and they will help communicate the benefits out to rank and file institutions as well as the community as well.
The only other comment that I will mention is compliance programming will be very important for any oncology drug and so in addition to unique patient starts it’s very important to maximize that opportunity for that patient; work hand in hand with the healthcare professionals to maximize the duration of treatment for the patient.
So, not only do you look for number of unique patient starts, we’ll have programming in place to really support the optimization of the duration of that treatment, so each patient will maximize the benefit of this drug.
Mark Monane, M.D. - Needham & Company
That was very helpful and my follow up question for Paul and Jim and for the team and that is I understand you are not going to give us guidance going forward for sales of the product, but in your experience is there an oncology product that is on the market today, or maybe even a product in inflammatory diseases, that you see more than another therapeutic area, that you see might be congruent to the opportunity in terms of refractory disease and its new indication and new drug on the market that we can think of, or at least you are modeling to, going forward.
Paul Berns
Well it is interesting Mark and to follow up I will have Jim add his commentary as well and Bruce if he wishes, but there isn’t a direct comparator to this from an analogue or benchmarking standpoint. This is a true first to market new opportunity that is clearly relapsed refractory disease in other cancer population, but in a very aggressive population in NHL, in this case peripheral T-cell lymphoma, obviously you would, as I know many of you appreciate over the course of the handful of prior quarters we have done a significant and expansive amount of market research and benchmarking as we have built our plans for FOLOTYN in this lead indication.
So, everything is case specific, there is never a perfect analogue. Certainly there are proprietary models that we’ve built with in puts from various compound launches that have taken place in the marketplace that have helped certainly inform the way that we’ve built our P&L, if you will, for the commercial launch and planning of the commercial success that we believe that we will realize for the brand. As Jim indicated, we are very pleased frankly with how the first month of initial commercial uptake and trial use of adoption of the drug has been and we believe that that will build as we further scale that commercial organization leading up to the commercial launch in January.
Jim, are there any more additional comments that you would want to add to that?
Jim Caruso
I mean obviously, Mark, you would look at other agents that have been indicated for hematologic malignancies. The ones that come to mind you have VIDAZA, TREANDA, Velcade, Dacogen, Revlimid, which I think are all appropriate.
Mark Monane, M.D. - Needham & Company
Thanks very much for the added information; we’ll look forward to the ASH meeting.
Operator
Your next question comes from Charles Duncan with JMP Securities.
Charles Duncan - JMP Securities
I have a question about the pricing of FOLOTYN. I am wondering, I know that you’re having some good feedback early on, but I’m wondering in terms of the scenario analysis you did with regard to pricing could you give us some sense of the elasticity of that price demand curve, at least theoretically and have you had any specific commentary regarding the pricing or do people really understand the pharmaco-economic benefit of FOLOTYN?
Jim Caruso
That is a great question. First, for background, when you do this type of pricing sensitivity work you identify the product as a product x and you have attributes associated with the product. Then the clinicians or participants provide a value to that product profile. Then you introduce different price points along the spectrum, or a range of pricing and I will tell you with both clinicians, physicians where we really emphasize and force them to make an assumption that their patients would not have availability for a co-pay, which would be unusual, it was relatively inelastic and it would also be true for your third-party payers as well. So, you could take a range, and we talked about this range before in this kind of $70 to $140,000.00 range and we tested different price points and it was relatively inelastic. So, you reach a certain point and then you start seeing some discount in terms of intent to prescribe; so, percentage of utilization starts to go down at a certain point and a graph, if you will, and at that point you make a decision as to the optimal price. That was the process we went through; it was a rigorous process. Clearly the drug was perceived to be highly inelastic.
In terms of feedback to date, obviously we are only 30-days into this and quite frankly we have not had a push back of any type at this point. Now, it is early and I am sure you will see reimbursement forms be put in a suspended category, ultimately going back to the clinicians office to dot an “I” or to cross a “t” as everybody learns how to fill out the reimbursement forms appropriately, but at this particular point in time we remain very comfortable with the pricing strategy and the third party intent to reimburse certainly from a CMS for Medicaid, Medicare, as well at those top 31 payers that essentially own 85% of the commercially ensured lives in the US. So, we remain very confident and to date the feedback has all been good.
Paul Berns
I think the recognition and these are standard programs in investment companies made to support patients and clearly we do in the base of the mission that we have, but I think the ASAP program we spoke to earlier, as Jim commented, is an important tactical tool that really supports the physicians office, the treaters if you will in this case, and the management as is standard the case for injectable oncology agents and so we believe we have a well designed well betted benchmarked program to support the reimbursement that leads of the offices in getting drugs to patients.
Jim Caruso
I think it is also, as I mentioned earlier, our commitment to get FOLOTYN to those patients, indigent patients as well, that will also benefit from treatment from a health economics perspective, which you mentioned earlier, there is a very low need for supportive care with FOLOTYN, immunity based physicians as well as academic physicians are very comfortable with prescribing cytotoxic use of this type and they are also very comfortable with the adverse events and when you talk to third party payers as well, they understand that there are currently premium priced, single agents being prescribed in line one through four and beyond that are off label with limited real clinical data for the treatment of these patients and they are reimbursing those drugs because of the high unmet medical need. So, when you think about the orphan disease nature of the PTCL population, the high unmet medical need, the fact that you are the only, first and only FDA approved drug, you have this clinical story around the highly pretreated patient population and the fact that FOLOTYN achieved clinically meaningful responses with this manageable safety profile I mentioned, you factor in the supportive care, health economic element, our patient support that Paul had mentioned in terms of our commitment to patient access via ASAP programming, as well as the Allos commitment as Bruce had made to maintaining our leadership role in T-cell lymphoma with these two additional post marketing studies, both for CTCL relative to Targretin as well as the CHOP sequential study as well.
Charles Duncan - JMP Securities
It seems like a pretty full commercial package. If I could ask a question of, in terms of expenses going forward, could you give us a sense of the R&D and SG&A factor? I know that it is tough to gauge timelines for initiating additional studies, but can you tell us what you expect for call it 12-months from now in terms of R&D spend and SG&A?
David Clark
We are not going to provide guidance for 2010 at this time. I think for R&D we do have the post marketing approval studies that we plan to initiate in 2010 that will drive some R&D expense, but until we see the patients enrollment setting the ramp up we are not going to provide guidance for 2010 yet on R&D.
I think for SG&A you look at the second half of 2009 and that is somewhat representative as we speak of the sales force and move into 2010 that is somewhat representative of what you’ll see in 2010 moving forward with SG&A and as we ramp up for the commercial launch in January 2010 it will obviously build as we move into 2010.
Paul Berns
Just to complete that thought the two additional post marketing commitment trials that we spoke of today were programs and we reiterated this in the past; I want to make it very clear to people that these two expanded potential indications in these trials were programs that in fact we had bedded with the input of outside KOLs and were part of our strategic lifecycle development plan for FOLOTYN in T-cell lymphoma beyond the initial indication of relapsed refractory PTCL.
So, said another way, when we come to that natural point of time of the year where we provide financial guidance, as Dave just spoke to you, and cash use for 2010, when we do our year-end conference call next year, it is important for you to know strategically these programs were contemplated in the context of the build out of the strategic lifecycle plan for this asset.
Said another way this isn’t new to the plan. We were fortunate to work with the FDA to have them understand the value to move this field and advance the art and the treatment of this disease and so the value of moving FOLOTYN into an upfront maintenance therapy and a sequential trial and the expansion into a broader T-cell to include CTCL were both contemplated in that P&L. So we are very comfortable with what we think is a prioritized level of investment going forward and one that we believe has the potential to yield greater returns.
Charles Duncan - JMP Securities
Paul, that is not only the concept or the strategy, but also the scope of those studies?
Paul Berns
Yes.
Charles Duncan - JMP Securities
Okay good. Thanks for the added color.
Operator
Your next question comes from Jason Kantor with RBC Capital Markets.
Jason Kantor - RBC Capital Markets
I am wondering a couple of things. You said that you are very happy with the commercial uptake. Maybe you could just give us a sense of how many patients are being treated currently and also you mentioned that there is about 9,800 relapsed refractory patients in the prevalence pool; I am wondering how many of those you specifically identified or perhaps how many of those are at clinical sites that were involved in PROPEL and might represent something like low hanging fruit in terms of patients that you don’t really have to go out and work so hard to get in the first six months of the launch.
Jim Caruso
With my boss here I never say that something is easy to get. Obviously, to your point, we have identified those academic centers through a wide variety of research and tools to identify those centers where they treat a larger number of peripheral T-cell lymphoma patients. Obviously we mobilize around those opportunities and those sites would represent the low hanging fruit. They have patients that are moving through clinical trials, or they are moving through or burning through multiple lines of therapy, transitioning in and out of peripheral T-cell lymphoma therapies, so we have identified those institutions that treat a significant number of PTCL patients. To your point, they would in fact represent low hanging fruit.
To your point, we’re pleased with what we’re seeing from the community as well and so I believe over time not only will we see usage at these academic centers, I believe and it is clearly demonstrated by the market research and advisory boards etc… you are going to see increased juice out in the community as well where you have providers that typically may refer a patient after one or two lines of treatment to a colleague within their practice or potentially a colleague up the street or to an institution.
Quite frankly the market research demonstrates with the availability of a single agent like FOLOTYN and its product profile that they would more often than not hold onto that patient, treat the patient with FOLOTYN prior to referring to a clinical trial and/or to an academic center.
In terms of guidance, I do want to reiterate that we are very pleased with the interest and the receptivity of FOLOTYN for healthcare providers and our overall commercial progress to date. We are very pleased with that and in terms of additional data I would say the unique patient starts and the unique number of healthcare providers initiating therapy are all very good signs.
Jason Kantor - RBC Capital Markets
I mean are the PROPEL sites, do they represent 5%, 10% of that prevalence pool that is out there, because you only need like 1,000 patients and you are already over $100 million in sales.
Jim Caruso
What we typically see for the larger institutions, they typically range anywhere from about 50 to 250 PTCL patients. Hopefully that is additional color that will be helpful for you.
Jason Kantor - RBC Capital Markets
Okay and then on the SG&A side, the 11 and something million that you had spent this quarter, is that all kind of we should be borrowing off that answer, but is there something 1x or strange in that? Also, how are you recognizing that $5.8 million milestone?
David Clark
The $5.8 million milestone payment upon FDA approval was recognized as an intangible asset; that will be amortized over the patent life. The FDA line we do have some 1x in sales and marketing costs as we prepare for the launch, but we do have the ramp up from the 25 reps to the 50 reps in January, so that would add to the SG&A number in the third quarter.
Jason Kantor - RBC Capital Markets
Okay, thank you.
Operator
Your next question comes from Joshua Schimmer with Leerink Swann.
Joshua Schimmer, MD - Leerink Swann
Paul you mentioned you are evaluating international partnership options. What is it that you are looking for in an offer that you haven’t found yet and are you looking for a partner that is going to help offload some developing costs for the new indications that you are exploring?
Paul Berns
These are proprietary dialogues that are taking place with these parties, so I’m not going to get into specifics. I think more from a general standpoint the capabilities that the Company would naturally be reviewing and looking for are those that have already, would certainly be helpful from that perspective, is a company that has had a historical track record of success from a regulatory and clear clinical development perspective in those key markets, clearly in commercial success in marketing in supporting the payer process in these XUS regions of the world as well and certainly HE malignancies as well as solid tumors.
I think the view would be that we would look to evaluate the counter-party interest that is coming to the Company and looking at those capabilities in companies that could stand both HE malignancies and solid tumors, so as not to necessarily have multiple potential partners as we evaluate those opportunities and creating administrative issues in that context.
That would be, in a perfect world, just broad brush items that one would want to consider, but I think the long an short of is that from our perspective, and here again I won’t speak to you about any particular conversations that are ongoing with these parties. I think what we want we want to do and that has always been our strategic intent was to 1. Focus our company on gaining US approval for FOLOTYN which we’ve done and 2. on the heels of that continue to advance our XUS clinical development and regulatory strategies for both Europe and Japan which we continue to do and we are on track with the plans that we set over two years ago in that context as part of our global CD&T effort.
The bottom line is there isn’t an artificial time point set in place, but rather we feel that this is an opportunity on the heels of the US approval now to engage in this thoughtful dialogue with the counter party interest we have and look to evaluate, as we said earlier, those partnerships that we believe are just in our best interest for the Company and for our shareholders and that certainly has to deal with hypothetical terms of those potential partnerships as well as our diligence view of their ability to execute and drive value in those regions of the world.
Joshua Schimmer, MD - Leerink Swann
Then in the PDX lung cancer study for against Tarceva, do you have a sense what percent of the patients are current smokers, what percent of patients have had prior, what percent of patients are squamous versus adeno at this point, or what would your expectations be if you don’t have that data?
Bruce Goldsmith
We are actually going to report top line results from the lung cancer study in the first half of 2010 and although the study is not a blinded study we have maintained the statistical integrity of the study by not delving into the database either from patient demographics in terms of baselines or in terms of safety and efficacy outcomes. Therefore, in order to continue to preserve the integrity we have not reported that and we will be intending to report that in the first half of 2010 when the top line results come out. I think in terms of speculation of those patient populations we have enrolled a patient population of prior smokers and the patient numbers will allow us to conduct a number of pre-specified subsets and in fact that is the intent of the study, is to allow us to look at those subsets to help prospectively define the Phase 3 strategies, either one or multiple that come out of these different subsets or of the overall population. So, I think it’s premature to speculate about what those patient demographics look like.
Joshua Schimmer, MD - Leerink Swann
Thanks.
Operator
Your next question comes from Arlinda Lee with FTN Capital Markets.
Arlinda Lee - FTN Capital Markets
Congratulations on getting the NCCN guidelines so quickly. I was hoping you could maybe talk a little bit about what that means for reimbursement uptake and timelines and also what the category b controversy, or why did you guys get that designation and what effect that might have.
Jim Caruso
I will address some of that and then I will hand it over to Bruce to handle some component of it a well. The answer is that we are actually very pleased with not only the outcome with NCCN, but how quickly we were placed on the NCCN suggested treatment guidelines. Obviously the 2a for low-dose single agent was as we had anticipated and quite frankly we were very pleased to learn that we are added to the guidelines as an option for high density treatment as well, even in the 2b category just the addition is a significant win. Because, essentially what the guidelines are saying and these are experts in the field in treatment of peripheral T-cell lymphoma and when you look at that high density line up of suggested treatment options they are all combination chemotherapies with three to five cytotoxic agents that are incorporated into the treatment for peripheral T-cell lymphoma and then you have FOLOTYN as a single agent listed along with those very powerful combination chemotherapies. So, we were very pleased to have that designation.
In terms of reimbursement, it is very significant. Obviously CMS leans on NCCN as their primary designate, if you will, for reimbursement treatment decisions so with 66% of our estimation, if it’s 66% of PTCL patients part of Medicare and approximately 4% part of Medicaid that is obviously very significant for us and is a big win.
I think your community providers will review the NCCN guidelines and will be very, very encouraged with the status of FOLOTYN and the designation of FOLOTYN and give them great confidence that they can prescribe this agent for their own patients as well.
Bruce Goldsmith
To delve a little bit further into the NCCN guidelines I would refer you to the update that came out which is version 3 2009 and in fact relapsed or refractory disease is split into to different categories, those candidates for high does therapy and those patients who are non-candidate for high-dose therapy and both recommend suggested treatment regimens and as Jim just highlighted, when you look at the recommendations for suggested treatment regimens for second line therapy all of those high-dose therapy regimens combine, again, multiple agents.
So, I think what the category 2b reflects is that while there is not a uniform consensus, and this is according to the NCCN guidelines, there is no disagreement that they should be listed as an effective therapeutic option for those patients and I think we are very pleased that, and it reflects in fact, the strength of the clinical data coming out of the PROPEL data not only the overall clinical response and response rate that we’ve seen, but also the duration of response at 9.4 months, which again, was reflected in our package insert.
I think the listing of a single agent comparison to multi-agent highly toxic chemotherapy agents, which as you know, again, don’t have a proven track record of substantial outcomes, and as we have shown before and have physician feedback have limited value for treatment of these patients. So, I think the listing in that high-dose therapy arm really does reflect the unmet medical need for all patients with relapsed refractory diseases.
Of course referring to the category 2a listing we are, again, very pleased and I think that reflects the consensus of the NCCN that as second line therapy FOLOTYN represents a significant treatment option for these patients with high unmet medical needs.
Arlinda Lee - FTN Capital Markets
Thanks very much for the clarification.
Operator
Your last question is a follow up question from Jason Kantor with RBC Capital Markets.
Jason Kantor - RBC Capital Markets
You made a comment about filing an MAA in Europe in 2010. I am wondering if this is based on any kind of updated guidance from the EMEA for whether or not you have basically have the go ahead that the PROPEL trial is file able or is that just your anticipation? I am also curious what exactly, what kind of incremental data are we going to be seeing at ASH? It seems like you pretty much presented it all at the FTA meeting and I am wondering what else we could possibly see.
Bruce Goldsmith
We continue to follow patients and even at the discussion at ODAC we noted that certain patients continue on therapy, or for those patients who don’t continue on therapy those patients remain in remission and so we are continuing to follow those patients just as a diligent and per protocol follow up for those patients; that is one piece of it. In addition, we believe it is imperative for physician education to continue to explore the PROPEL database to fully describe both the efficacy and safety expectations that physicians can utilize for understanding how to effectively utilize FOLOTYN in treating patients in the second line setting and also in highly relapsed refractory patients.
I think as good diligence from looking at the PROPEL clinical data that is what we will continue to do and we are not prepared at this time to release any additional data, but we look forward to doing that at ASH and we will update, as we pointed out, both the primary endpoint of overall response rate, as well as the secondary endpoints of duration of response.
In response to your question about the MAA, essentially we continue to engage both physicians in Europe as well as looking at the external regulatory consultants and global experts in the field of pursuing regulatory approval in Europe and based on that feedback, and based on the strength of the PROPEL data, we believe that we can have very productive discussions with the EMEA in terms of utilizing PROPEL, as well as having a very substantial discussion regarding our post marketing commitment studies in the US. Obviously the approval in the US, as well as the very strong US package insert, and the validation of the PROPEL data by the FDA review gives us a very substantial point of discussion with the EMEA. So, based on all of the collective discussion we have had we believe it is imperative to have a full discussion with the EMEA and bring the PROPEL data, as well as our post marketing studies, for their consideration in pursuing an MAA.
Jason Kantor - RBC Capital Markets
To be clear they haven’t given you any guidance that, you know the MEA you met with them, they haven’t decided that this is okay to file, you are just hoping that it will be?
Paul Berns
This is our standard practice, we just don’t comment on the status of those proprietary discussions that take place with the regulatory authorities, but clearly as Bruce has laid out we are following the plan that we have spoken to in the past and to move forward now on the heels of the approval to bring to full force and review the full data set, which we have not done, as we said, historically and to bring the full P&T program in T-cell lymphoma that Bruce just spoke to in the context of the full regulatory process that we want to review with them.
We feel as if we are very well prepared to engaged and have those next rounds of discussions. Here again, it is our intent then therefore to make that submission, as it is the case with all submissions with a regulatory authority, one receives the appropriate feedback and makes appropriate decisions going forward. Clearly we believe that we are tracking along accordingly to have these updated next set of meetings and then move forward with this intent for the application.
Jason Kantor - RBC Capital Markets
Great thanks.
Paul Berns
In summary, just allow me to here again review for you that we are very excited about the prospects for helping patients and building value for our shareholders. We look forward to our planned commercial launch of FOLOTYN for patients with relapsed or refractory PTCL in the US in January and growing the market over time. We plan to initiate the two Phase 3 studies that will extend the FOLOTYN development program to a broader T-cell population and we look forward to reporting top line results from our solid tumor clinical trial with FOLOTYN in advanced non-small cell lung cancer in the first half of 2010.
We intend to submit, as we just discussed, an MAA for relapsed refractory PTCL next year and additionally we continue to evaluate potential partnership opportunities outside the US. We look forward to updating you on our progress along the way and seeing you at upcoming investor conferences and at ASH in New Orleans in December.
Thank you for joining us this afternoon. Have a wonderful evening.
Operator
Ladies and gentlemen that does conclude the conference call for today. If you would like to listen to a replay of today’s conference please dial 303-590-3030, or toll free 1-800-406-7325 using access code 4169927. We thank you for your participation. (Operator Instructions).
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