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ImmunoGen Inc. (NASDAQ:IMGN)

F1Q11 (Qtr End 09/30/10) Earnings Call

October 28, 2010 4:30 pm ET

Executives

Carol Hausner - Executive Director, IR and Corporate Communication

Dan Junius - CEO

Greg Perry - CFO

Analysts

George Farmer - Canaccord

Shiv Kapoor - Morgan Joseph

Adnan Butt - RBC Capital Markets

Ling Wang - Brean Murray

Bret Holley - Oppenheimer

Matthew Lowe - JP Morgan

Adnan Butt - RBC Capital Markets

Curtis Wang - Needham & Company

Operator

Good day, and welcome everyone to the ImmunoGen’s First Quarter Fiscal Year 2011 Conference Call. Today’s call is being recorded. At this time for opening remarks and introductions, I would like to turn the call over to the Executive Director, Investor Relations and Corporate Communications, Carol Hausner. Please go ahead ma’am.

Carol Hausner

At 4 o’clock this afternoon, we issued a press release that summarizes our financial results for the quarter ended September 30, 2010, which is the first quarter of our 2011 fiscal year. I hope you have all had a chance to review it, if not it’s available on our website.

During today’s call we will make forward-looking statements. Our actual results may differ materially from the projections made. Descriptions of the risks and uncertainties associated with an investment in ImmunoGen are included in our SEC filings, which also can be accessed through our website.

In our call today, our Chief Executive Officer, Dan Junius, will provide an update on ImmunoGen, and our Chief Financial Officer, Greg Perry, will discuss our financial results and guidance. We will then open the call to questions. Dan?

Dan Junius

Thank you for joining us this afternoon. I want to start just with a remainder for everybody about our business model, as the event for the last quarter provided a pretty good illustration of how this model effect and how we are trying to execute against the model.

In the quarter, it is to develop our own compounds for a proprietary pipeline. At the same time in the context of business development to use that as a means to advance our technology and have it be a source of non-diluted cash.

In this business model and give us a number of ways to generate value for our shareholders certainly through our partner product achievement and for ImmunoGen certainly over the last several years that’s been the most dominant avenue because T-DM1 has gotten as much attention it has and we will talk about that in a moment.

That increasingly we are going to see advancement of our own products we updated that and we will talk about just come out from ESMO and certainly from business development in the last couple of weeks, we have had prominent development there. You are seeing certainly in the last several months how all of this fits together for our business model.

Let me talk a little bit about T-DM1 given that seems to attract the most attention. Since we spoke at our last quarterly conference call, you are all aware that Roche received the reduced file letter from the FDA for third line HER2+ metastatic breast cancer, which is a US event. This was announced in late August. It only affected their regulatory plan in the US.

At the same time and since then, Roche has continued to talk about their commitment to T-DM1 how it is a very strategic product to them. As I said, when we talked to you at the time of that announcement, this is still view to be a technical issue, not a fundamental one, relative to T-DM1.

It did impact the regulatory plan that Roche has for T-DM1 in the US and they now have been forced to look at the first filing for approval for T-DM1, as being in mid 2012 using data from the second line Phase III EMILIA study.

They also modified that study to add overall survival as a core primary endpoint, the other primary endpoint being is PFS, which is it was at the outset. At the same time, they have substantially expanded the trial now to 980 patients, it had previously been 500 and changed just under 600, so a meaningful increase, but not one it’s going to change the availability of the data for filing in mid-2012.

Recall that EMILIA is second line, so it will be filing for second line, but the same time they will be adding third line to give them a broader label. We have indicated they are looking to file for accelerated approval with PFS and then for full approval with OS, but all that is going to be subject to discussion with the FDA.

Now, the impact on us is that, it moves the potential approval, which would have been for third line for the final I should say to 2012 and approval probably into 2013 if the FDA chooses to approve.

Second line filings unchanged. That was always going to be based on data and filed in 2012 with EMILIA study and there has been no change in the EU either in timing or strategy as the second line and beyond was always to be part of a filing to take place in 2012.

The more direct impact on us is the potential approval milestone that we are looking at to receive in fiscal FY ’11, our current fiscal year, obviously gets pushed out to whatever approval would take place post the second line filing. Recall, we had to mentioned that is being an eight figure milestone, but low eight-digits less than $15 million

The start date for any royalties on third-line sales would now come with that subsequent to the filing and again with the potential approval, so that could push out as well, but within our financial plans in the guidance we provided. Our ambitions here on royalties were conservative so, that’s not a meaningful impact on our financials.

The other event that took place since then was the interim first-line data that was disclosed on T-DM1 at ESMO a couple of weeks ago. The CEO of Roche didn’t equivocate, he called the data stunning. That’s an excellent adjective.

Recall, this is a study that is measuring T-DM1 is monotherapy in one arm and Herceptin plus docetaxel in the other arm, the comments that came out and the data would support that has the T-DM1 arm being at least as good if not better in efficacy, then the existing first-line therapy of Herceptin plus docetaxel, but the emphasis by the presenter at the Presidential Symposium and by ESMO in their release was around the fact that the toxicity is were significantly less than what patients experienced in current first-line therapy.

That was very impressive. This is early data. Its interim data with the cutoff going all the way back to April, but at the same time, the presenter did comment that there was the potential for the overall response rate to increase. She noted that there, where patients that are currently categorized or were currently categorized in the data is having stable disease that had unconfirmed PRs, so there with the potential for those to at same time be reclassified as full PRs.

At the same time, there were other patients with stable disease it could overtime become responders and she did even to mention that to say that was 11 patients with unconfirmed PR so, depending on how that evolves over time that could meaningfully impact the efficacy data seen in the T-DM1 arm.

It was indicated that final data from this study, again this is a Phase II study would be expected in the second quarter of 2011, that data would then include PFS, which is the primary endpoint of the study.

Other clinical information around T-DM1, Roche indicated they expect T-DM1 plus trastuzumab data to be available at the San Antonio Breast Cancer Symposium in December. This would potentially include findings in fist-line use recalled that there was data at ASCO in June around the combination of T-DM1 plus trastuzumab, but it only included patients with second-line and later therapy.

This becomes important because one leg of the first-line Phase III that’s currently underway is T-DM1 is monotherapy versus standard of care, which is Herceptin plus taxane, but the other arm is looking at T-DM1 plus trastuzumab versus the current first-line therapy. This will be informative of what we maybe looking to see, as that Phase III first-line data evolves.

As a final note on T-DM1, I point out that there is currently now a Phase II safety study underway looking at T-DM1 used in the adjuvant/neoadjuvant setting that we were aware of that study with inclintrials.gov, and we have been informed the patient dosing has now begun. There are at least beginning to collect data in that area as well.

Let me talk briefly about the other partner compounds, Sanofi-Aventis just last month, put their third compound in the clinic. This is one has been designated SAR566658. This is a TAP compound. They targets ovarian breast cervical lung and pancreatic cancers. Again a solid tumor target DS6 is one designation for the target and so that now is in the clinic.

The other compound that went in the clinical over the last several months is a naked antibody, the designation here is SAR650984 and this goes after a hematologic malignancies. That along with SAR3419, which continues to be moving through the clinic is expected to go in the Phase II in the second half of next year and this you recall target of non-Hodgkin’s lymphoma, but that brings up to three the Sanofi-Aventis compound in the clinic. They continue to move our technology forward and the technology that they picked up through the collaboration that ended a couple of years ago. We are enthused with what we see taking place with Sanofi.

I would also point out Biogen Idec with their BIIB015 compound also expects moving forward into a Phase II in the second half of next year. Recall that this Cripto target is found on breast and lung tumors.

Biotest with BT-062 is now being evaluated in Phase I, Phase IIa study and this looking at a more frequent dosing schedule, which they have been planning for several time. With our partners, we continue to expect another two to three TAP compounds going into clinic through the end of next year and so we are seeing very good progress on the partner front both in terms of number of compounds in the clinic and where they are in terms of advancing into later stage trials.

Let me now talk about our proprietary pipeline because we have been making some decent progress there as well. At ESMO, we have reported updated clinical data for CD56+ solid tumors, where we are continuing to see encouraging activity and tolerability. Recall that we are now at the stage in the study, where we are focusing on three particular subgroups that would be ovarian cancer and Merkel cell carcinoma and small-cell lung cancer.

For ovarian, we didn’t have any data at ESMO. We are starting to see ovarian patients come into the study, but they were enrolling too late to generate any data to include, but we are nonetheless very pleased to start to see ovarian patients begin to be dosed and had an increasing pace. That’s encouraging what we want to learn more about the potential for 901 with ovarian patients.

For the Merkel cell subgroup of 13 patients, we noted that we had a second complete responses to the patient, who has been disease-free for at least 17 months. This is to go along with the first complete response that patient now has been disease-free for over five years and along with that, we had three patients with clinically meaningful stable disease. Taking the responses and the clinically meaningful stable disease, it’s gotten us to a clinical benefit rate of around 38%.

A good indication of activity. We continue to be drawing Merkel cell patients into the study. We are look to see what more comes forward. Recall, this is a disease with no approved therapies and it’s a very aggressive disease with median survival of under seven months.

We continue to look to have a decision around the pivotal study by the end of this year and recall this is a compound for which we filed and received orphan drug designation in the US and EU over the course of 2010.

The other subgroup that was disclosed at ESMO was on our small-cell lung cancer patients in the study. Here, there have been 26 patients, again we have seen signals of activity despite the fact that we are coming into this particular disease area and that said second-line generally quite a bit later than second-line and like Merkel cell, this is the very aggressive disease once patients relapsed from first line therapy, it’s difficult to address or arrest I should say the progress of the disease.

We have seen one unconfirmed PR and patient with refractory disease in three clinically meaningful stable disease cases and so again certainly indications of activity. This compound received orphan drug designation as well in the US and now it’s finalized in the EU.

We said in the past we want to take a look at 901 in combination and in particular in small cell and this is based both on the attractive tolerability profile that we are seeing us far as well as preclinical data that suggest the opportunity for significant improvement in efficacy, when dosed in combination.

On that basis, we are on the cost of starting the Phase I to randomize study in small cell lung cancer. We initiated our first site this week. This will be first-line therapy for small cell lung cancer. We will dose escalate with a triple combination of 901 plus etoposide and carboplatin and once we established MTD we will then randomize into first-line standard of care today, etoposide and carboplatin in the other arm, where we received that same therapy plus 901. We are very excited to be starting the study.

At the same time, we continue to have our multiple myeloma studies underway. In the monotherapy study, there will be additional data at ASH and we are addressing or assessing our next steps with that study. At the same time, we will have the first data on combination use recall that we have a combination study underway in multiple myeloma looking at 901 in combination with Revlimid and dexamethasone and so that data will some preliminary data from the dose-escalation Phase will be available at ASH as well.

We have other activity in our proprietary pipeline IMGN388 continues to move forward we have reached MTD evaluating dosing every three weeks; we will update a data at EORTC next month. We have talked about IMGN529. This is a compound that we have been developing for certain types of liquid tumors. We expect to report our first preclinical data on this compound in the first half of 2011 with an IND to file sometime around the middle of next year.

Finally, our compound that we are designating for the first time, we are calling it IMGN853. This goes after a target, which is folate receptor 1, in that target found on ovarian and other epithelial malignancies. We will have some preclinical data related to this program next month at EORTC and that’s on track for filing an IND sometime in early 2012. Continued good progress around building a broad and deep pipeline of proprietary programs.

Getting to the last element of generating value to the business model is business development. Again we announced just over a week ago, a collaboration with Novartis that will bring in a substantial amount of cash in the upfront portion of the economics and that will more than offset the impact of the delay in the milestone that we talked about from T-DM1. Greg, will cover in detail our overall financial guidance.

This is an outgrowth of interest that we have been talking about sometime that we’re seeing in our technology from the major players in the pharmaceutical industry. It comes from the fact that there has been data emerging that shows that the technology certainly is validated. Some of the steps that we’ve taken have allowed us to be patient ensuring that we see receive current value for the technology.

We think we have realized that in the Novartis relationship, we are very excited to have them as a partner. We continue to have discussions with others around, whether may be opportunities for us to work together utilizing our technology, but it’s always difficult to predict how those will on folds, so we’ll just have to wait and see.

With that, let me turn it over to Greg to walk you through the financial results for the quarter and our guidance.

Greg Perry

I believe our financials reflect the strength of our business model, which is Dan noted, is to aggressively develop our own compounds to value inflection points and use business development as a way of advancing our technology, while generating non-diluted cash to develop our proprietary pipeline.

Looking at the financials for the quarter, our net loss for the first quarter of 2011 fiscal year was $12.9 million or $0.19 a share. With the first quarter revenue of $3.4 million and expenses of $16.8 million.

These compared with revenues of $3.1 million and expenses of $15.8 million in the same period last year. With the increases in expenses in the current quarter principally due to our increased investment in our proprietary programs. We project that our net loss for our total 2011 fiscal year will be between $60 million and $64 million.

While we are increasing this spend on our own compounds, we project our cash used in operations in our 2011 fiscal year will be less than $4 million. This reflects the power of selectively out-licensing our technology to generate non-diluted cash to fund our product programs and reflects the impact of the Novartis collaboration, which we established after the close of the quarter.

We expect to end the year on June 30, 2011 would between $106 million and $110 million in cash and marketable security. We believe this is sufficient to fund our operations well into the second half about 2013 fiscal year.

We’re focused on aggressively advancing our own compounds of value inflection points and we remain opened the partnership that create value long-term while providing an important source of non-diluted capital in the near-term.

Turn back to Dan.

Dan Junius

Thanks, Greg. Let me just ramp-up before we get to the Q&A by talking about what we see taking place of the balance at this quarter and then through 2011. Clearly, with the breath and increasing depth of the pipeline that leads to awful lot of information. We certainly have had an active so to the fourth calendar quarter this year with data on T-DM1 and 901 at ESMO. We will have data on IMGN388 EORTC as well as preclinical data on IMGN853 EORTC.

Then at [ASH] will have both monotherapy and combo data on IMGN901 and our partner [BO test] we’ll have data on BTO62 at ASH as well. The final data event would be the San Antonio Breast Cancer Symposium where there will be at a minimum the combination data on T-DM1 plus trastuzumab and potentially other data on T-DM1.

In terms of the events, the T-DM1 adjuvant study has already begun. As I noted will be starting our small-cell lung cancer combination study very shortly and we also looked to have the Merkel cell carcinoma pivotal decision sometime before the end of this year. We’ve already seen I think a major event from a business development standpoint and we’ll just have to see how that if unfold.

All of that leads to what I expect to be a very active and exciting 2011 for Immunogen. We’ll have clinical data on our existing critical compounds of 901 and 388. That will lead us to be talking about strategy for those two compounds as well as what the plans are for IMGN529 which will have some preclinical data early in the year and the may be you’re looking for an IND filing and initiation of clinical testing.

We should also have expanded preclinical data around the IMGN853 compound and I mentioned that target folate receptor 1 and then with business development we could have further activity either on the technology platform or on product candidates because we’re I think that we’re looking at the full spectrum of opportunities from in terms of business development.

On the partner side, again an opportunity for very active year certain T-DM1 or is the opportunity for further data and further direction coming from Roche on that compound, 3419 in the Biogen BIIB015, we’ll have data we would expect over the course of the year as would the Biotest compound and potentially the new compounds from Sanofi.

For both Biogen compound and 3419, there should be a looking for Phase II to start over the course of the year and then we would look to see two to three additional tap compounds coming into the clinic from our partners over the course of 2011, which along with the IMGN529 would put us in position of having as many as 12 compounds in the clinic by the end of 2011.

At the same time, seeing a number of those compounds moving into Phase II. So, while it would be home it doesn’t not quite half of that would potentially be in Phase II or later studies by the end of next year. From the company's standpoint that’s a pretty exciting position to be in.

So, I’ll stop at that stage and turn it back over to Carol who can give you the guidelines for questions.

Carol Hausner

Great, thanks, Dan. We’re about to open the call to questions. We do ask you to limit your questions one to two per person until everybody had a chance to ask questions. You can then comeback on the call if we have additional questions at that time, if there is time. Operator, we are now ready to open the call to questions.

Question-and-Answer Session

Operator

Thank you Ms. Hausner. The question-and-answer session will be conducted electronically. (Operator Instructions). We’ll go first to George Farmer with Canaccord.

George Farmer - Canaccord

Dan, can you go into the thought process regarding 901 and Merkel cell? What is driving your Phase III decision or registration trial decision? When do you think you would have data from that program? Also, regarding the responses that you see in Merkel cell, you mentioned there were two CRs and some stable disease. Were there any PRs or is this antibody - is it kind of an all-or-nothing response in these patients?

Dan Junius

Yeah, George, I don’t think it’s necessary all of our nothing although I guess from a projector response rate that is something of what we’ve seen thus far because with the 13 patients we’ve reported on it was two CRs and then three cases of stable disease. So, but again you’re dealing with 13 patients so, it’s difficult at this stage to extrapolate and draw very broad conclusions.

We have those patients beyond the data cutoff for the poster in ESMO. So, we want to continue to see what happens there. We’re having discussions with KOLs around the disease around what they’re seeing with one of the digest with their input is. At the same time, actually we also we won’t have much of the look, but we do want to get into the clinic with the small-cell lung cancer study and get a few patients dosed and see if there is anything that we ought to anticipate out of that.

So, I’m encouraged that we’re seeing the activity that we are in a disease as difficult as Merkel cell. I also encouraged that a decision is going to be, its going to can take into consideration what frankly was and I think the data has been disclosed to one point so, pretty compelling combination preclinical data around 901 in small cell and the characteristics of small cell our share with Merkel cell. So, all of those factored in.

We also want to be looking at the CMC path at the same time. So, there are a number of factors that put together to be able to make an informed decision around where we go with 901, but I think that we should have a bias to being aggressive here.

George Farmer - Canaccord

Just for clarification, the T-DM1 data that’s going to be at San Antonio with pertuzumab. Did you say that that was a comparative study because I believe that trial started off as just a single-arm trial?

Dan Junius

No, I think let me tell you where the confusion came in is not – it’s single arm study. The incremental data that we would hope to see and it’s our hope I don’t know it’s not been suggested by Roche or Genentech it'd be there, but it would include first-line patients, that’s a population that was not included in the data disclosed to the ASCO.

Where the confusion may come in is in reference to the first line Phase III, which does include a randomized, it’s got basically three arm is The-DM1 versus current standard care and it’s T-DM1 plus pertuzumab versus current standard of care. That’s the Phase III study, that’s the Phase II for what data would be updated at BCS.

Operator

We will take our next question from Shiv Kapoor with Morgan Joseph.

Shiv Kapoor - Morgan Joseph

I have a few questions related to business development and just financial statements. First, I want to understand how you come to your 2013 fiscal year. You have enough cash until then. What kind of expense and revenue projections are inherent in that sort of guidance? In other words, what’s the ongoing cash burn for the company is currently?

Greg Perry

Yeah, Shiv, this is Greg. I think quite a more simple way to look at that is now our current guidance is to have the cash balance of between $106 million and $110 million at the end of fiscal year ‘011. If you look at last year the company burned about $40 million of cash and so if you that is the proxy going forward that gives you just under three years where the cash. So, that basically gets you into that.

Greg Perry

What we plan just because they want again get the emphasis on developing our own compound. We do expect to see some increase in expenses going forward but we expect to see that match by increasing revenue to keep us at that net level.

Shiv Kapoor - Morgan Joseph

Does this guidance include any additional business prospects, any additional business development either on technology or the product side?

Greg Perry

Yeah, there is Shiv. As we generally do there is some modest expectation around business development deals. So, they remained some modest expectation for [BB] cash in this forecast.

Shiv Kapoor - Morgan Joseph

Just a clarification, Dan, you mentioned you’ve already seen some major business developments possibility unfold. Were you talking about Novartis or is there something that you haven't announced yet?

Dan Junius

No, I was referencing Novartis. Novartis was not the only conversation that we’ve been having. I will come back and say we’re being -- demanding may be too stronger the term, but I can’t what we’re looking to ensure that we get fair value from both an economic standpoint and we are cognizant into our non-economic terms and conditions that are also have a value component to them as well. So, the point being we’re not joining to do every deal that we possibly can. We want to do deals that are right for the company in every respect.

Shiv Kapoor - Morgan Joseph

Sorry, this will be my last question on the same topic. Because this deal that you did with Novartis, you did not necessarily contribute targets from your site? These were targets coming from Novartis. Other potential competing deals were also similar to that. They are not necessarily competing with what - a different deal that you might do with another company might not have anything to do with what Novartis just did?

Greg Perry

Shiv, this is Greg. I mean in fact basically our licensees are exclusive to a target generally and so by definition prospective partners will be looking at different target.

Operator

We’ll take our next question from Jason Kantor with RBC Capital Markets.

Adnan Butt - RBC Capital Markets

Hi, this is Adnan on Jason’s behalf. A couple of questions on 901. In terms of the go or no go decision, can you remind us if you'll seek any regulatory feedback, or is that basically a KOL, and what kind of results do you see type of decision? Basically what will help you decide that you’re going to the next stage? Number two, in terms of Phase I/II small-cell lung cancer trial, can you remind us again how many patients, how many sites, and what’s your threshold for deciding to go from Phase I to Phase II? Is that basically safety, or some kind of response rate as well?

Dan Junius

Let me get to the second question first. There is no necessarily threshold point for decision. The Phase I is one we randomized. So, absent something that we see in the dose escalation it says it would be unwise to continue to study once we get to MTD, we will then flip over into randomized and that would constitute to Phase II. We’re looking to recruit 40 think about still 60 just put him wrong. So, once we get to that the randomization we would get 40 into the triple arm. So, standard of care plus 901 and 20 into the controller. We’re looking to have probably the neighborhood of six or seven sites upon running for that study.

Carol Hausner

Including US?

Dan Junius

Yeah, including a couple outside the US.

Now, your earlier question around Merkel cell we already have had discussions with regulators, but that was in the context of the application of morphine drug. We got some feedback there. We will continue to look for additional input, we have enough to understand how that would factor into go no goal. We may need some additional input to refine study design, but I think we’ve got enough and the feedback that we received from the EU regulators not from the FDA was that they appreciate that Merkel cell is a very rare disease and they’ve expressed some flexibility around study design mostly from an absolute scale standpoint because they find it to be potentially self defeating to demand a large scale study to achieve a high level of statistical significance for what is a relatively small patient population with a very significant need.

Adnan Butt - RBC Capital Markets

If I could just ask a follow-up on the small-cell lung cancer trial. Can you give an estimate on how long it might take you to get to an MTD before you start randomization to the competitor arm?

Dan Junius

A lot of factors coming to play there, I mean how quickly the site get up how quickly do they enroll. I would like to think that by middle of 2011 and also when your dose escalating run with the problem that as you get through a cohort you then have to wait until those patients get through a full cycle before you can move onto the next one as you’re looking for any issues of toxicity. So, dose escalation can be a little slow.

That said, may be sometime around the middle of next year through the end of the third quarter which should be true dose escalation and into the expansion Phase. I encouraged that we have a site initiated may be we get patients in quickly and all this becomes a function of recruitment at individual sites, I think having the six or seven sites in place will be will help quite a bit.

One other point, we don’t have to start at the lowest dose given that we do know something about dosing of 901, it gives the opportunity start at little bit higher in dose which tends to accelerate the dose escalation process.

Operator

We’ll take our next question from Ling Wang with Brean Murray.

Ling Wang - Brean Murray

I have a follow-up question on 901. I was wondering when should we expect to see the initial readout for 901 and ovarian cancer in a Phase I expansion trial?

Dan Junius

Ling, it’s relates to what while we’ve brought some ovarian patients in and we seem to be now have solid to what was a little bit of an impediment around recruiting. We have to wait and see how many patients we do bring and I’m optimistic there.

Once we get to a decent number of patients we’ll look for what the next opportunity is I’d say certainly not later than ASCO and if we recruit enough patients and it’s worth getting at it earlier we look for an earlier opportunity, but it’s going to be function of quickly we continue to bring patients into the study.

One advantage there versus what we just talked about at the combination study given that we are at the expansion Phase we do have the dosing in place and so we can essentially enroll patients as quickly as we can screen them and confirm CD56 the presence of the target and we can get them into the study.

Ling Wang - Brean Murray

How many sites are you using for the expansion study?

Dan Junius

The expansion Phase is open at about six or seven sites. Two of them are heavily focused on ovarian so, and as I say that’s been very useful in breaking that logjam.

Operator

We’ll take our next question from Bret Holley with Oppenheimer

Bret Holley - Oppenheimer

I’m wondering about your expectations for the 901 combo Revlimid data. Is there sort of a mechanistic rationale for potential synergy there? How should we think about that going into that data?

Dan Junius

I don’t know for it’s so much mechanistic I think that while there are a number of therapies that are out today for multiple myeloma in that they all at some point patients relapse, but the issue I think we look at pre-clinically was we were looking at another mechanism of action, and we’ve looked at the full range of existing therapy, and found that the activity in [Rev/Dex] in combination with 901 offered very strong activity and also it was likely to lead to overlapping toxicities.

It showed actually beyond simply being addictive in these pre-clinically were synergistic. So, I think that without knowing necessary how that relates to the mechanistic question, someone other than me would have to answer that, it's certainly was encouraging to see that level of activity.

Operator

We’ll take our next question from Matthew Lowe with JP Morgan.

Matthew Lowe - JP Morgan

I was just wondering if you know the survival assumptions and the powering assumptions built into the EMILIA study.

Dan Junius

No, I’m sorry could you ask that again I didn’t quite hear that.

Matthew Lowe - JP Morgan

I was just wondering if you know the survival assumptions and the powering assumptions built into the EMILIA study.

Dan Junius

I don’t know we know that. Carol? (Inaudible) close by Roche met so we don’t have an information though we’ve had some questions around some of the studies, unfortunately we just don’t know.

Matthew Lowe - JP Morgan

My second question is do you know how long, roughly, a Phase II adjuvant study should take to run?

Dan Junius

No, how many patients, have you indicated how many patients are looking at in the adjuvant, neoadjuvant study.

Carol Hausner

(Inaudible).

Dan Junius

We can take a peak at that, Matt. Again, they haven’t generally they will put it’s (inaudible) that go in generally that will suggest an endpoint, but you often it’s an endpoint that’s it’s well out there and doesn’t necessarily reflect what the real expectations are.

Yeah, we’ll look that up and if we find it what we’re still on the call here will be do that.

Operator

(Operator Instructions). We’ll go next to a follow up from Jason Kantor with RBC Capital Markets.

Adnan Butt - RBC Capital Markets

Just on the change in the EMILIA study trial, do you know if Genentech has met with regulators to get that? Last question is, in terms of the milestone received from Novartis, how does recognition for that take place? Thanks.

Greg Perry

If I could I'll jump and answer when you say the milestone I believe what you’re referring to the $45 million upfront and from a P&L standpoint we’ve assume kind of a modest amortization over some eight years, I believe it is, in our forecasting. However, there is the change in accounting and so we are working through that we’ll be working through that with our auditors in terms of how to treat revenue associated with these multi-product agreement and so that could very well change. Going forward, it could result in the longer amortization period to that $45 million or shorter period it’s a better early to determine.

Dan Junius

Greg, I think I’m right stand the guidance that we’ve given is under the old rules given that we’ve just on how to apply the new rules at this point.

In terms of your first question is the unfortunately the answer to that is to I don’t know as well. This is recently as just a week or two ago, they indicated they would be discussing with the FDA that proposed the changes around the EMILIA trial, but there has been no further items as to whether they’ve had that meeting or what came out of the Agency.

Operator

We’ll go next to Mark Monane with Needham & Company.

Curtis Wang - Needham & Company

Hi, this is [Curtis Wang] for Mark Monane for him the questions. I’m sorry if things have been discussed before. In regard to the EMILIA trial is Roche expect to have the market bring application in later [2012]. Is that a (inaudible) do you think the all loss arrived data will also be available at that time?

Carol Hausner

We couldn’t quite hear you.

Dan Junius

I know if you are on the speaker phone or if you can move back in the speaker that was unintelligible. So, just can you take another shot at that please?

Curtis Wang - Needham & Company

My question is regarding to EMILIA trial. Roche expect to file for market application in later 2012, do you think it is going to be solely based on PFS data or do you think overall data will also be available at that time?

Dan Junius

The comment that they’ve made is that the submission in 2012 and that would be both from the US and in Europe would be on PFS. Because PFS is an acceptable endpoint in Europe and it would be submitted -- now again this is what they want to talk to the agency about and it would be PFS in US for accelerated approval with OS should then be confirming study.

That’s how there’re trying to ensure that they covered the full scope of where the Agency might have an interest is by continuing to use PFS as one of the primary endpoints, but in adding less we would have the study underway and that day with the passage of time would mature and be available to confirm whatever they had with PFS.

Curtis Wang - Needham & Company

Just a follow up, do you know if the trial is designed to show just (inaudible) inferiority or is designed to show superiority?

Dan Junius

Don’t know, that’s not been disclosed.

Operator

That concludes today’s question-and-answer session. I’d like to turn the conference back over to Ms. Hausner for any additional or closing remarks.

Carol Hausner

Thank you very much. I’d like to thank everyone for their interest. If you have additional questions give me a call at 781-895-0600 and wish you a good evening.

Operator

This concludes today’s conference. We thank you for your participation.

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