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Merrimack Pharmaceuticals, Inc. (NASDAQ:MACK)

Q4 2013 Results Earnings Conference Call

February 27, 2014 04:30 PM ET

Executives

Geoff Grande - Investor Relations

Bob Mulroy - President and CEO

Eliel Bayever - VP and Medical Director of MM-398

Peter Laivins - VP of Late Stage Clinical Development and Project Leader of MM-398

Bill Sullivan - Chief Financial Officer

Analysts

Daniel Brims - Brean Capital

Rachel McMinn - Bank of America Merrill Lynch

Brett Holley - Guggenheim Securities

Nicholas Bishop - Cowen & Company

Eric Criscuolo - Mizuho Securities

Operator

Good day ladies and gentlemen and welcome to the Merrimack Pharmaceuticals Fourth Quarter 2013 Investor Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. (Operator instructions) As a reminder today’s program may be recorded.

I would now like to introduce your host for today’s program, Geoff Grande, Investor Relations. Please go ahead.

Geoff Grande

Thank you, Jonathan. Good afternoon and thank you for joining us for Merrimack's fourth quarter 2013 investor conference call. Today I'm joined by Bob Mulroy, our President and CEO; Bill Sullivan, our Chief Financial Officer; Peter Laivins, Vice President of Late-Stage Development and MM-398 Project Leader; and Dr. Eliel Bayever, Vice President of Medical for MM-398; and Kathleen Gallagher, Director of Corporate Communications.

Today we will provide an update on the development progress we’ve made across the pipeline, as well as a review of our fourth quarter 2013 financials. Our press release detailing this information, which we issued a short while ago can be found in the investor’s section of our website at www.merrimackpharma.com, as well as slides we are using for our call today. We'll end the formal portion of the call with time for Q&A. This call is being broadcast live and will be archived on our website for six weeks.

During this call, we will be making forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These may include statements about our future expectations and plans, clinical development timelines, the potential success of our product candidates and financial projections.

These statements involve risks and uncertainties which are described in the risk factors section of our most recent Form 10-Q and the other reports we filed with the SEC, which are available online at sec.gov. While these forward-looking statements represent our views as of today, they should not be relied upon as representing our views in the future. We may update these statements in the future; we are not taking on an obligation to do so.

With that, I'll turn the call over to Bob.

Bob Mulroy

Thank you, Geoff and good afternoon. It's a pleasure to update you today on our ongoing efforts at Merrimack. Our goal today is to first provide you with a brief update on our operating progress, followed by a more detailed review of our Phase 3 trial for MM-398 in advanced pancreatic cancer. That trial was expected to read out in the second quarter of this year. We will also review our fourth quarter financials.

For anyone new to the company, Merrimack is an integrated cancer company building novel therapeutics and companion diagnostics to improve the treatment of solid tumors. We are founded on a systems biology discovery platform that drives the efficient discovery of novel targets and the design and development of therapeutic and diagnostic product candidates.

We have developed a leading position in two drug technologies, multi-specific human antibody and third generation nanotechnology that is engineered to improve the tumor specific accumulation and the duration of exposure of broad classes of therapeutic drugs. We believe that all of our technologies have broad applications and opportunities for growth both within and beyond oncology.

Let me touch now on the highlights in the past quarter, for those of you following along on the slides on our website, I'll begin on slide 7. The first highlight of the quarter was the data we generated from our Phase 2 program with MM-121 that strengthened our belief in ErbB3 as a target by supporting our hypothesis on the importance of ErbB3 as a mechanism of resistance and our sense that ErbB3 has a mechanism of resistance [is pervasive] [ph] across solid tumors.

As a reminder, MM-121 is our monoclonal antibody targeting ErbB3 being developed with our partner Sanofi Oncology. Our Phase 2 program was designed as a translational test of a set of pre-specified mechanistically linked and pre-clinically validated biomarkers. Our modeling work suggested that the biomarker profile could be both prognostic and predictive and that the role of ErbB3 span the solid tumor landscape.

We also saw in our modeling work that the mechanism of ErbB3 resistance was not exclusive to other singling mechanisms. In other words, as a mechanism of resistance and not a driving oncogene, ErbB3 and 121 have the potential to identify and restore median or better responses in patients who do not respond well to current standard-of-care therapies thereby meeting a significant medical need.

Slide 8 summarizes the top-line data we released over the past quarter in the treatment of platinum-resistant ovarian cancer and metastatic ER positive breast cancer. In these studies the same two pre-specified biomarkers identified a subset of patients that showed evidence of clinical benefit supporting our hypothesis around ErbB3.

We’re excited about the data from 121 Phase 2 program and have submitted multiple abstracts to the ASCO Annual Meeting, presented full data from the ovarian, breast and lung cancer studies including the complete biomarker analysis.

Looking ahead for 121, we expect to announce top-line results from the neoadjuvant triple negative breast cancer study of 121 in combination with paclitaxel in the second quarter of this year. And we will be completing the biomarker analysis on the lung cancer studies reported last year.

With respect to next steps, we are actively working with our partner Sanofi to develop, plan and prepare for the further development of 121 and are committed to communicating our plan to you as soon as possible.

Moving on to MM-111 on page 9, MM-111 is our bispecific antibody designed to inhibit the signaling complex created with ErbB3, a heregulin and HER2 [bind] [ph] together. In 2013 we announced the launch of a Phase 2 trial in gastric cancer. The data from our Phase 2 MM-121 study increased our confidence in ErbB3 as a target and the important role that ErbB3 plays in resistance across solid tumors. As a result we are modifying our MM-111 Phase 2 gastric study based on that learning to increase the odds of success and the overall robustness of the trial.

As laid out on slide 10 we have decided to focus our resources solely on the traditional HER2 positive population. By increasing the number of patients in this population, we will prosecute a more robust trial with increased statistical power. We believe this to be the most efficient and fastest path to a robust proof-of-concept for MM-111.

As we amend the study to focus on one arm we will also be adding a second independent primary objective to compare PFS between the experimental and comparator arm in a biomarker positive population. Given MM-111’s mechanism to target heregulin driven tumors, we will be making heregulin high patients our biomarker positive patient population. We still believe there is an opportunity for MM-111 in the moderate HER2 population and intend to pursue this group of patients in the future in a separate study.

We expected the amended Phase 2 gastric study to read out in 2015.

In other news for the quarter on slide 11, in December we presented Phase 1 data on MM-302 at the San Antonio Breast Cancer Symposium, that appear to indicate potential PFS benefit in anthracycline naive patients when treated with MM-302 as a monotherapy.

Also exciting, we presented imaging data supporting the use of our diagnostic imaging technology to measure the variability of drug accumulation in individual tumors. We believe that drug accumulation and retention is a critical variable in the assessment and delivery of treatment options and we are pleased to be making progress developing the tools that help physicians make the best decision.

This is encouraging news not just for MM-302, but for our whole nanotherapeutic platform. The imaging diagnostics we’re developing will support the future development of MM-398, 302, 310 and other nanotherapeutics in the future.

We intend to focus on MM-302 in one of our future conference calls as we prepare to launch our Phase 2 later this year. The final highlight of the quarter is that we entered a business development deal with Actavis. The deal includes a profit share on a group of specialty pharma products that can utilize our expertise in liposome manufacturing.

The first product in the collaboration is a generic version of Doxil. We’re excited to be working with Actavis to help meet a significant medical need, supply a hard to make short supply product and the opportunity to generate revenue to help fund our future R&D. We look forward to updating you on the progress of the collaboration in the future.

Now I’d like to turn the call over to Eliel Bayever, Vice President and Medical for MM-398 who will provide an overview of MM-398 in advanced pancreatic cancer.

Eliel Bayever

Thank you, Bob. I’m happy to provide you with a review of MM-398 our novel nanoliposomal product containing the known active cytotoxic Irinotecan and some background to the ongoing Phase 3 study of MM-398 in pancreatic cancer called NAPOLI-1. NAPOLI is not fully enrolled, as the target enrolment of 405 patients was reached in August last year. In October, at the fourth and final [inaudible] Board meeting, it is recommended to continue the study unmodified.

On slide 13, you see the nano encapsulation of MM-398, it is designed to remain intact in the blood stream for much longer than the free drug that it can be delivered more efficiently to the tumor targets. Once it is delivered into tumor mass there is local activation of the pro drug Irinotecan to the active form SN-38 which results in longer periods of exposure which is believed to be a critical driver of efficacy.

Much of this activity is thought to be enhanced by the tumor associated macrophages which are particularly abundant in pancreatic cancers.

Slide 14 shows the active ongoing translation research and Merrimack supporting these concepts. For example two posters will be presented at the upcoming American Association for Cancer Research at the Annual Meeting in San Diego in April this year, describing our progress in developing drug deposition imaging predictive biomarkers for MM-398 and another two will show increased activity of MM-398 versus conventional Irinotecan in a number of pre clinical models of different cancer types including Ewing’s sarcoma, squamous and small cell lung cancers.

Additionally, a poster showing differential effects of MM-398 in Irinotecan on hypoxia markers as measured by FAZA PET scanning was presented last year at the fall AACR meeting.

Moving to slide 15, we believe one of the potential benefits of MM-398 may be its ability to stay in the tumor cell longer. We have preclinical data demonstrating this higher and longer exposures of drug in tumor as predicted. Preliminary data and modeling suggests that the AUC or area under the curve could be an important variable with respect to efficacy. Here we see that the increase in AUC is particularly large, particularly as compared to other nano particles such as Abraxane.

On slide 16 we look at the ongoing clinical development program for MM-398. Today, we are focusing on our Phase 3 pancreatic program.

On slide 17, with MM-398 mechanisms and background, let's now turn to the pancreatic cancer landscape. This is a particularly devastating cancer where up to three quarters of the patients will die in the first year. Diagnosis is often late, once the disease has already disseminated and patient’s health deteriorates very quickly making impressive treatment difficult.

Overall survival of some of the more common treatments of pancreatic cancer are shown. In the post-gemcitabine setting where we are testing MM-398 NAPOLI there are no proved therapies except for 5-fluorouracil. The published studies summarized in the slide had demonstrated that the median survival on treatment can vary between 3 to 6 months.

It is our belief that with a successful large randomized control trial in the post-gemcitabine setting, the ongoing Phase 3 study NAPOLI-1 we would have the opportunity to establish a new standard of care for these patients.

Slide 18 shows the Kaplan-Meier survival plots of the Phase 2 single agent, single arm study as reported recently in the British Journal of Cancer. 40 patients similar to those being studied in NAPOLI were treated with single agent MM-398.

This study achieved its primary end point with a 75% three months overall survival. In addition 25% of patients survived longer than 12 months. The median overall survival was 5.2 months, all promising preliminary results for the single agent in patients where gemcitabine had failed. Together with these findings we were encouraged to move to the rapid development of the current Phase 3 study after discussions with regulatory agencies.

With that I will now turn the call over to Peter Laivins who will discuss the design with statistical analysis for the Phase 3 study.

Peter Laivins

Well thank you Eliel. Moving on to slide 19 and the design of our global Phase 3 registration trial, the trial was designed as a pair-wise comparison of MM-398 alone or in combination with 5-FU leucovorin versus a common control of 5-FU. The study was not powered for comparison of the two experimental arms and it employs different dosing regimens for MM-398 either as a 120 milligrams per meter squared in every three weeks, it’s a single agent, or 80 milligrams per meter squared every two weeks when in combination with 5-FU.

You will recall that we launched the study as a two arm trial and then amended it to include the combination arm based on the interest of clinical investigators. So in effect, the NAPOLI-1 program is really two studies in one design and each regimen may be suitable for different patients based on the efficacy and toxicity profile of each arm. MM-398 received orphan designation from both the FDA and EMA and both agencies have reviewed the protocol. And since the primary endpoint is overall survival if one or both regimens meet the endpoint we should be in a position to file an NDA and MAA shortly thereafter.

Slide 20 describes the planned statistical analysis for NAPOLI-1. On the left panel, we show the powering assumptions for the trial. Note that the study had adequate power to detect both statistically and clinically meaningful results in each paired comparison against the control. But as is common for Phase 3 trials rather than comparing a single estimate such as the median overall survival and month we performed an analysis of the entire Kaplan-Meier survival curve for each arm. This is described by the hazard ratio of overall survival. So in the middle panel we present the corresponding hazard ratios for overall survival which are 0.5 and 0.67 respectively for the combination and monotherapy arms.

The significant test which we will perform is called The Bonferroni-Holm method which specifies that for significance on a single arm the p value must be less than 0.025; for significance on both arms one must be less than 0.025 and the other less than 0.05. We do not pre-specify which arm must be lower than 0.025, either one can be.

On slide 21, we describe three potential outcome scenarios for the study. While we are still blinded to the results I would like to walk you through these possibilities. In scenario one with a robust result where one or both study arms meet the primary endpoint we would move quickly to file the NDA and put commercial efforts into full gear. In scenario two where the analysis shows the evidence of a clinically relevant benefit or without meeting the statistical objectives we would review the findings with the FDA and clinical investigators to determine whether there was still an opportunity to file for approval based on these results.

Naturally this scenario require a very careful analysis of the reasons why we missed our p value and depend upon the magnitude of the clinical benefit observed. In scenario three where no clinical benefit is observed we would reassess the MM-398 program based on the findings of the exploratory translational science protocol for NAPOLI-1. Our deposition diagnostic imaging program and the ongoing investigator sponsored trials. Regardless of scenario, our communication plan is to issue a top-line press release in Q2 followed up by publication of potential presentation of detailed results at an upcoming medical conference.

Thank you and now I’ll turn the call over to Bill Sullivan, our CFO to discuss our Q4 financials.

Bill Sullivan

Thanks Peter and good afternoon everyone. Our fourth quarter 2013 and full year 2013 financials were included in our press release, which was distributed a short while ago. Net loss for the fourth quarter of 2013 was $32.3 million and consisted of $7.8 million in revenue, $36.1 million in operating expenses and $4.1 million in other expenses.

The $7.8 million in revenue primarily consisted of expense reimbursement and amortization related to our partnership on MM-121 with Sanofi. $30.1 million or 83% of the operating expenses consisted of research and development programs. Of this $20.9 million or 69% relates to expenses on our sixth clinical stage programs.

The rest $9.2 million related to stock compensation expenses, pre-clinical expenses and general expenses, not directly related to clinical stage programs. The remaining $6.0 million or 17% of operating expenses consisted of general and administrative expenses.

The $4.1 million loss from other expenses relates primarily to interest expense from Merrimack’s term loan with Hercules in convertible senior notes issued in July of 2013. Approximately $2.0 million of this interest expense is imputed non-cash expense primarily related to the convertible feature of our senior notes.

Turning to our balance sheet, cash and cash equivalents and available-for-sale securities decreased $27.3 million during the fourth quarter of 2013. As far as our financial guidance, Merrimack expects significant unrestricted cash and cash equivalent and available-for-sale securities as of December 31, 2013 for $155.2 million, interest income, and Sanofi reimbursement, to be sufficient to fund operations into 2015. In the event that Merrimack obtains favorable results from NAPOLI-1 Merrimack expects that anticipated additional expenses in 2014 related to the commercialization of MM-398 would be offset by cash received from potential collaboration opportunities.

At this point, I will turn it back over to Geoff.

Geoff Grande

Thank you, Bill. A quick mention that we will be presenting at a few investor conferences over the next few months, including next Monday, March 3rd, at the Cowen & Company 34th Annual Healthcare Conference in Boston, and in May, The Bank of America Merrill Lynch 2014 Healthcare Conference in Las Vegas, and the UBS 2014 Global Healthcare Conference in New York City.

Also a recap of the clinical milestones we anticipate in the near term, in Q2 we expect top line data from our Phase 3 study of MM-398 in pancreatic cancer, and our Phase 2 study of MM-121 in triple negative breast cancer. At ASCO, we anticipate the presentation of full biomarker data for our Phase 2 program of MM-121. We also expect to initiate Phase 2 studies for MM-302, MM-151 and MM-141 this year.

With that Jonathan, we’d like to open up the line to questions.

Question-and-Answer Session

Operator

(Operator Instructions) And our first question comes from the line of Geoff Meacham from JPMorgan. Your question please?

Unidentified Analyst

Mike in for Geoff. Thanks for taking the question. Just wondering with Phase 2 121 triple negative breast cancer data coming up soon, can you give us an idea of how we should think about that study and what your expectations are? Thanks.

Bob Mulroy

Thanks for the question Mike, this is Bob. I think the triple negative breast cancer study is part of a neoadjuvant test we did with 121, which I would say is part of a exercise to see effectively how early ErbB3 may be activated in patients and whether you can increase the effect of neoadjuvant care on patients.

We put out results for the first part of that study in ER positive patient population. And I think our hope would be first the patients will be probably something similar to that, with the triple-negative breast cancer population. But again, if you go back to the translational aspect of the program, really trying to get a sense of what is the prevalence of ErbB3 activation in that population and that prevalence - this key study is going to drive a lot of the overall sort of end points.

Unidentified Analyst

Got it. And then just on 121, next step for that program and kind of give us a sense of how are you thinking about that? Would you go forward in breast and ovarian simultaneously or could you sort of prioritize one over the other?

Bob Mulroy

So, we are actively engaged with our partner Sanofi and in discussions over the best path forward. We obviously had a lot of data from the lung, the breast and ovarian setting. And there is a detailed analysis of those [tests] [ph] that’s going on. And we’re making plans, our expectation is that as soon as possible, we will get out those plans.

Unidentified Analyst

Great. Thanks.

Operator

Thank you. Our next question comes from the line of Daniel Brims from Brean Capital. Your question please?

Daniel Brims - Brean Capital

Thanks for taking my question. First, with the -- have you released what the 5 biomarkers are and will you be using those when looking as a subset analysis in 141 and 111?

Bob Mulroy

Yes, we have released the 5 biomarkers, they have been published and they have been out in the past days they are R&D days I should say and in different conferences. It’s made up of essentially three of the receptors EGFR, HER2 and HER3 and a couple ligands, heregulin and betacellulin for 121. So we’ve been clear about what those are. We’ve not released information on a specific - two biomarkers [and cut points] [ph] that emerged from the statistical analysis of 121 studies to-date.

With respect to our other molecules they’re designed to treat other patient populations. In the case of 111, we’ve been sort of clear from the outset that it was designed for patients who had high HER2 status, at least 200,000 receptors or more. The design modifications we’re making for the 111 study are to focus on the higher set of HER2 expressers, those patients who have essentially 800,000 receptors and more, expressed.

And then with respect to the drug, it’s designed to target a specific trimer that forms in the presence of heregulin, so heregulin serves as a pretty good marker. So we’ve been clear about that since we have talked about the drug in all our publications. And so those markers for 111, we’ve already talked about and specified for drug. For MM-141, that’s little bit of a different animal. It’s really designed to treat patients with IGF pathway dependencies and it has a component of reaching over to the early pathway just based on a mechanism of feedback that we saw there. So, its likely path forward is more around markers of the IGF pathway as we go but we have not been specific about that yet.

Daniel Brims - Brean Capital

Okay. And with the filing for 398, how -- I mean how fast do you expect to get that out, should one or both arms be successful?

Peter Laivins

Thanks Daniel, this is Peter Laivins. Clearly it’s going to depend on the data. And in the scenario that you mentioned which is one or both arms being successful, we would move as quickly as humanly possible to get the drug filed. We can’t be specific about the actual time it would take because that’s going to really depend on how that data looks and the extent to which we need to understand it, analyze it, and prepare it.

Daniel Brims - Brean Capital

Okay. Thanks guys.

Operator

Thank you. Our next question comes from the line of Rachel McMinn from Bank of America. Your question please?

Rachel McMinn - Bank of America Merrill Lynch

Yes, thanks, a couple of questions. Just on the Sanofi partnership Bob, it sounds like you are not really in a position to make specific comments until you finish up your discussions with Sanofi but I did notice in their recent earnings deck that they are really only listing 121 as a breast cancer drug. So, is it all in the table that like these other indications, they are just a on starter or am I kind of over interpreting the slide deck?

Bob Mulroy

I would say that there are active discussions underway with our partner, the Sanofi Oncology in terms of all the different indications we may pursue. And I don’t think that indications they put out in some of their slide decks are representative of the development path for 121 yet. So, but we hope in the relatively near future to be a little clear about what we think is the right development path for 121 in a joint statement.

Rachel McMinn - Bank of America Merrill Lynch

And are you able to kind of go through some scenarios with us, is this something that’s going to be really kind of surprising or just follow on the data, I mean I think we’ve talked about potentially going into Phase 3 in select populations but I just, I don’t know if you can provide any more details than you’ll wait and see?

Bob Mulroy

I think the one thing I can say, we can’t talk about specific indications today but when we designed the Phase 2 we were hoping to leave it such that any Phase 3 we pursue would be in a stratified population, based on the biomarkers. And I would say that any trial we pursue in the future will be in the biomarker positive population regardless of whether it’s breast, ovarian or lung or other. I think that hypothesis, we feel very strongly about from the outset. And we feel the data we have has reinforced our sense that - of our ability to identify patients who have an ErbB3 dependency and that is the patient population where 121’s benefit will be restricted to.

Rachel McMinn - Bank of America Merrill Lynch

Okay. And then just quickly on the NAPOLI study, have the events, just the number of requisite events that actually occurred yet or are you very, very close to that? And can you speculate on, just given where the event rate is today, does that tell you anything about the assumptions that you’ve made for the control arm, does that give you more conviction or maybe this doesn’t tell you anything?

Peter Laivins

Hi Rachel, again Peter Laivins. Thanks. I guess you’ve got several parts to your question. I think on the first one, we’re not able to communicate anything about the conduct of the trial with respect to when certain criteria events. However, we are very comfortable talking about the expectations for the top-line data in the second quarter, so that should be very helpful for you.

And I think your other comment about what does it mean about the control arm and so on and so forth, I think it’s really just prone to speculation, I think the best thing to do is just let’s wait for the data, see what we learnt there.

Rachel McMinn - Bank of America Merrill Lynch

Okay. Thanks.

Operator

Thank you. Our next question comes from the line of Brett Holley from Guggenheim Securities. Your question please?

Brett Holley - Guggenheim Securities

Yes. Thanks for taking the question. I was just a little bit curious about 121 and your comments on the biomarker positive patients responding poorly to standard of care. I guess, I’d just love to have a few additional thoughts on that, so why is, if ErbB3 is not a driver mutation necessarily would that drive the patients to respond poorly to standard chemotherapy, I guess I’m a little bit of caught in dissonance with that?

Bob Mulroy

I guess the general question and there is probably a lot more detail we get into behind it. But what our biology model showed was that ErbB3 can be a mechanism of resistance, it was a way of avoiding therapy. And that pathway could be activated in response to therapy. And so it’s not a traditional driver of cell division, but it’s a cell survival and often associated with metastases so it’s sort of part of the progression of cancers.

So with that respect our expectation was that if someone had activated ErbB3 the hypothesis would be that they would likely to be a poor responder to standard-of-care, they have essentially an [inaudible] or built in ability for cells to survive in the presence of chemotherapies or targeted therapies. And that this mechanism wasn’t, it’s not like the traditional mechanisms where we continue to sub-divide breast cancer into there is HER2 and then there is ER positive, we have triple negative. This is a mechanism that actually spans and this actually occurs on top of those other mechanism, which makes it different from the way we thought about oncology in the past. So we have been pursuing something a bit different; it’s mechanism resistant so it doesn’t have the characteristics of a traditional oncogene, which I understand makes it difficult to put in context relative to how we viewed oncology data historically, but from our perspective going in our hypothesis about this as pervasive across cancers as being a mechanism of resistance to standard-of-care. Having seen that occur in both the breast and ovarian in two different patient populations, on two different standard-of-care therapies with very different treatment histories based on the same biomarker profile. Our confidence that we can identify these patients who have this built in resistance mechanism and our confidence that 121 can address it, is higher as of this day. And I think a lot of your question will be answered, hopefully more fully when we're able to talk about the complete dataset at ASCO.

Brett Holley - Guggenheim Securities

Yes. That was very helpful. And then a question about 398 and the comment that if you had a positive outcome your census would go up, I think that's obvious, but in conjunction with that you said that it’s possible be offset by collaborations or partnerships. Are you talking specifically about 398 potential partnerships, geographic partnerships or are you talking generally about partnership in that comment?

Bob Mulroy

I think in that comment, we were specifically talking about 398 and that we are in discussions for various geographic collaborations to license - more traditional licensing and partnership deals for our partners to develop and market our product in specific territories of the world. But more broadly a question, we are in conversation about a full range of products across our pipeline that are currently in the clinic and some that are not [Unclear] in the clinic. And we are expecting in 2014 to execute collaborations on multiple products in our pipeline.

Brett Holley - Guggenheim Securities

Okay. Thanks a lot Bob.

Operator

Thank you. Our next question comes from the line of Nicholas Bishop from Cowen & Company, your question please?

Nicholas Bishop - Cowen & Company

Hi, thanks for taking the question. First one is on the amendment to the 111 trial. I didn't quite catch what it is that you’ve learned that gives you confidence that the combination study with trastuzumab is the right arm to focus on rather than the single agent study in the population with the clear [lack of human] [ph] options, just can you review that again?

Bob Mulroy

Sure. Nick, this is Bob. Probably to be a little more specific, so the original design was actually testing 111 in two different patient populations. And it’s basically a 120, 130 patient trial we’ll be looking at total patient population in this study in the 60 patient range and then you divide among the control and the active component with 111, right. So you’re going to get sort of -- you are testing two populations and you’ll get a relatively low power on that result.

So with the 121 data that we’ve seen which gives us the context for the potential role of activity of ErbB3 which we talked about a little bit earlier. Our confidence is higher that that’s real and so what we’re looking to do is focus all that 120 that 120 patient resources into one of the arms and it’s an arm that we feel very comfortable about because it’s the set of patients that we’ve treated in the Phase 1 study, those traditionally HER2 positive patients which were accessed in our Phase 1 exploratory dose ranging studies and then the combination studies that followed.

And so we’re basically [inaudible] we believe we’ve seen evidence of some activity there, that’s all that patient population, let’s put a whole set of patients behind that hypothesis. It’s also a patient population that’s very well identified in the clinical settings of the world so they know who the HER2 patient populations are and so make it - the trial and arm that we can enroll the fastest and get to a proof-of-concept as soon as possible.

So the basic learning was rather than do two exploratory smaller arm studies in two different patient populations it’s focus and get a higher confident cancer in one patient population.

Nicholas Bishop - Cowen & Company

Okay. And in the non-traditional arm had you enrolled many patients at this point prior to the amendment?

Bob Mulroy

So again, to Peter’s comment earlier, we don’t talk about specifics of arm enrolment or rates there, but we had enrolled patients and - but feel that the right thing to do is still to focus on an arm that’s going to give us an overall more robust result going forward.

Nicholas Bishop - Cowen & Company

Okay. And just to remind you that there are many focusing on that - are they herceptin failures, the second line right?

Bob Mulroy

Yes. So they’ve essentially progressed on herceptin treatment and we’re looking to reverse that resistance.

Nicholas Bishop - Cowen & Company

Right, got it. Okay so then just a couple of quick ones on back on 121, is it clear at this point that Sanofi has committed to moving into a Phase 3 trial or is there a discussion of maybe additional Phase 2 trials or any kind of comment you can make about that?

Bob Mulroy

Nick, I think as I said earlier, we’re actively engaged with our partner and sort of the planning of next steps and we’ve agreed that we’ll mutually announce what those next steps will be hopefully as soon as possible.

Nicholas Bishop - Cowen & Company

Okay. And just lastly on 141, do you have a sense of what sort of indication you are pursue in Phase 2 with that molecule?

Bob Mulroy

So we’re currently in the transition stages out of the monotherapy Phase 1 work we’ve done; we’ve started combination work with 141. So with that currently underway we are in the stages of making sure that we see the combinations we’d like to see, safety before we specifically publicly get out into what indication we’re going to pursue. As far as the year in terms of rollout the first study we’re going to rollout in Phase 2 from that group of Phase 1, our biology products would be the 302, Phase 2 study, which we’ve talked about, is going to be in essentially the patient who progressed on T-DM1, that are HER2 positive so the patient population we tested in the monotherapy in Phase 1. With 151, we specified that that will be the next one out and that will be in the colorectal cancer space in combination with Irinotecan, and 141 I think will have the opportunity over the months ahead to get more specific as we see more of the combination in Phase 1 data unfold.

Nicholas Bishop - Cowen & Company

Okay. Thanks a lot.

Operator

Thank you. Our next question comes from the line of Eric Criscuolo from Mizuho . Your question please?

Eric Criscuolo - Mizuho Securities

I’m just filling in for Peter today. On the MM-111 redesign study, how much if at all did that delay expected development timelines for that drug?

Bob Mulroy

So we don’t expect the amendment to actually delay the study at all. Essentially what we’ll be doing is with the amendment place we’ll just stop enrolling in the second arm of the study, the study that was studying the non-traditional HER2 population so that the traditional arm, it’s controlled and the active arm will continue enrolling and so we don’t expect any delay, we still expect that data to report out in 2015.

Eric Criscuolo - Mizuho Securities

Got you. And on the investigator sponsored studies for 398, is there any expected data that could be coming out, that we could be looking for or is everything - has everything kind of been reported already and you are just kind of waiting for this Phase 3 data to come out?

Peter Laivins

Hey, Eric, it’s Peter Laivins, with respect to the investigator sponsored trials; two of the trials we [are doing] [ph] sarcoma and the glioma trials are at very early stage; we’re just initiating now. However it’s not an investigator sponsored trial, but we are reporting the, what we call the [inaudible] trial feasibility result at AACR that was abstracts we referred to in the earlier presentation. That information will come [inaudible].

Eric Criscuolo - Mizuho Securities

Got you. And lastly, on I guess R&D spend expected in 2014. Can you give us any sense of the pacing of that or any color on how it would be weighted or amounts given that you kind of have a lot of 398 study is kind of waning now and all these other kind of early stage candidates are moving forward?

Bill Sullivan

Hey, Eric it’s Bill, as far as our financial guidance, at this point we are just saying that we have cash runway into 2015 at this point. We are not getting into the specifics of 2014 R&D spending. Certainly as we go through the year we are going to continually assess and make adjustments as corporate events happen, but at this point again we are not providing guidance.

Eric Criscuolo - Mizuho Securities

Got you. Thank you.

Operator

Thank you. This does conclude the question-and-answer session. I would like to hand the program back to management for any closing comments.

Geoff Grande

Great. Well, thank you everyone for joining us. We look forward to updating you again next quarter.

Operator

Thank you, ladies and gentlemen for your participation in today’s conference. This does conclude the program. You may now disconnect, good day.

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