Ariad Pharmaceuticals' (ARIA) CEO Harvey Berger on Q2 2014 Results - Earnings Call Transcript

Aug. 6.14 | About: ARIAD Pharmaceuticals, (ARIA)

Ariad Pharmaceuticals (NASDAQ:ARIA)

Q2 2014 Earnings Call

August 06, 2014 8:30 am ET

Executives

Maria E. Cantor - Senior Vice President of Corporate Affairs and Human Resources

Harvey J. Berger - Principal Founder, Chairman, Chief Executive Officer, President and Chairman of Executive Committee

Edward M. Fitzgerald - Chief Financial Officer, Executive Vice President and Treasurer

Martin J. Duvall - Chief Commercial Officer and Executive Vice President

Timothy P. Clackson - President of Research & Development and Chief Scientific Officer

Analysts

Michael J. Yee - RBC Capital Markets, LLC, Research Division

Cory William Kasimov - JP Morgan Chase & Co, Research Division

Jeremiah Shepard - Crédit Suisse AG, Research Division

Y. Katherine Xu - William Blair & Company L.L.C., Research Division

Andrew R. Peters - UBS Investment Bank, Research Division

Terence C. Flynn - Goldman Sachs Group Inc., Research Division

Michael G. King - JMP Securities LLC, Research Division

Nicholas Abbott - BMO Capital Markets U.S.

Brian Klein - Stifel, Nicolaus & Company, Incorporated, Research Division

Gena Huidong Wang - Leerink Swann LLC, Research Division

Operator

Thank you for holding for ARIAD Pharmaceuticals' Second Quarter 2014 Financial Results Conference Call. [Operator Instructions] Please be advised that this call is being taped at the company's request and will be archived on the company's website for 3 weeks from today.

At this time, I would like to introduce Ms. Maria Cantor, ARIAD's Senior Vice President, Corporate Affairs. Please go ahead.

Maria E. Cantor

Good morning, and thank you for joining us. This morning we report on financial results for the second quarter of 2014. With me on this call are Dr. Harvey Berger, our Chairman and Chief Executive Officer; Ed Fitzgerald, Chief Financial Officer; Dr. Tim Clackson, President of R&D and Chief Scientific Officer; and Marty Duvall, Chief Commercial Officer.

During this call, please note that we'll be making forward-looking statements. These statements are subject to factors, risks and uncertainties, including those that are detailed in our Form 10-K for the year ended December 31, 2013 and other SEC filings that may cause actual results to differ materially from the results expressed or implied by such statements.

Now let me introduce Dr. Berger, with our opening remarks.

Harvey J. Berger

Thank you very much, Maria, and good morning; everyone. Today, we report on our steady progress in the commercial relaunch of Iclusig in the United States and the continued commercialization of Iclusig in Europe.

As we move into the second half of the year, key catalysts for the business include a steady trajectory of Iclusig sales in the U.S. and Europe; conclusion of the Article 20 PRAC procedure in Europe; agreement with the FDA and the EMA on the dose-ranging trial for Iclusig; acceleration of patient enrollment in the pivotal ALTA trial of AP26113, our new lung cancer medicine; progress towards securing a commercial partner for Iclusig in Japan; and lastly, nomination of our next oncology development candidate.

As a result of our successful financing in June, we have extended our cash runway into the second half of 2016, enabling us to fund these priority initiatives. This does not take into account any commercial agreements for Iclusig that may be entered in Japan or other geographies during this time period.

We have several important updates to share with you this morning. Ed Fitzgerald will cover our financials; Marty Duvall, the Iclusig launch; and Tim Clackson, an R&D update. Ed?

Edward M. Fitzgerald

Good morning. For the second quarter of 2014, we reported net product revenue from sales of Iclusig of $11.9 million, an increase of 50% from the first quarter. Of this amount, $7.9 million is from sales of Iclusig in the U.S. while $4 million is from sales in Europe.

In addition, we have reported $1.3 million in deferred U.S. revenue, representing Iclusig inventory on hand at our specialty pharmacy as of the end of the quarter.

Also during the second quarter of 2014, we shipped $2.3 million of Iclusig to patients in France or $16.8 million cumulatively through June 30, 2014.

We will record revenue from these shipments when pricing and reimbursement negotiations in France are completed and our list price is determined, net of any amounts that may be refunded to the health authorities based on the results of these negotiations. We now expect this to occur in the first half of 2015.

Also related to France, according to current French regulations, a product approved in 2013 can be reimbursed prior to the determination of list price up to a maximum of 7 months from the granting of marketing authorization and no later than August 1, 2014.

In the case of Iclusig, reimbursement was set to expire on February 1 of this year but was extended until August 1 by the French authorities.

As of August 1, in accordance with French regulations, new Iclusig patients are not eligible for reimbursement in France until agreement is reached on the list price.

French patients who were on therapy as of July 31 continue to be reimbursed, and we continue to work with French authorities, patient advocacy groups and physicians to make Iclusig available to new patients as well as those already receiving Iclusig.

Our net loss for the second quarter was $56.9 million or $0.30 per share compared to a net loss of $69 million or $0.37 per share for the same period in 2013.

Our R&D expenses decreased by $8.9 million or 22% from the second quarter of 2013 to the second quarter of 2014, predominantly reflecting decreased clinical trial costs as well as decreased manufacturing and other supporting costs related to Iclusig clinical trials.

Our SG&A expenses decreased by $7.9 million or 19% from the second quarter of 2013 to the second quarter of 2014, reflecting a decrease in personnel costs in the U.S. and lower sales and marketing costs.

In June, we raised $177.3 million in net proceeds from the sale of convertible senior notes due in 2019. As of June 30, 2014, cash and cash equivalents totaled $310 million compared to $183 million at March 31, 2014. We now expect that our cash and cash equivalents at December 31, 2014, will range from $230 million to $235 million, sufficient to fund operations into the second half of 2016. This does not take into account, as Harvey said, any commercial agreements for Iclusig that may be entered into during that period.

Let me now turn the call over to Marty to provide detail on Iclusig commercialization.

Martin J. Duvall

Good morning, everyone. Our commercial strategic imperatives in 2014 are to rebuild confidence in Iclusig, position Iclusig as a drug of choice for difficult-to-treat patients with Philadelphia-positive leukemias and maintain patients on Iclusig therapy consistent with its benefit risk profile.

Even taking into account the temporary suspension of Iclusig last year in the U.S. and the ongoing Article 20 review in Europe, our commercial team is succeeding in its efforts. There is no doubt that our second quarter results indicate significant progress to date and promise of strong growth ahead.

First, I'll cover the reintroduction of Iclusig in the U.S. market. Second quarter sales were $7.9 million in the U.S., representing a 70% increase versus the prior quarter. With an estimated eligible patient pool of 1,300 throughout 2014, our penetration of the available market on a weekly basis is already approximately 50%. Through July, approximately 550 U.S. patients have been treated commercially with Iclusig. Of note, we are impacting nearly the same number of patients in 2014 when compared to last year. While aided initially by the success of the single IND patient program in the first quarter, the impact of our U.S. commercial efforts are clear. The U.S. team has successfully expanded the prescriber base to nearly 450 physicians through July of 2014, representing a mix of academic and community prescribers, up from the 300 in the first quarter and on par with the same time period in 2013. In the quarters ahead, our objective will be to continue to expand the prescriber base and to leverage successful physician experience with Iclusig to increase our patient base.

Not unexpectedly, as we work to rebuild confidence in Iclusig, patient demographics by line of therapy has shifted to later lines of treatment. Currently, we estimate that 45% of Iclusig patients have failed only 1 or 2 TKIs. In 2013, this group of patients represented over 60% of Iclusig patients with the shift explained by a lower proportion of second line patients, approximately 15% of Iclusig patients this year versus 30% last year.

Furthermore, with the reintroduction and revised indication for use, the Iclusig patient mix by phase of disease is different in 2014. On a cumulative basis in the U.S., approximately 50% of Iclusig patients have chronic phase disease compared with a higher proportion last year. As noted on the Q1 call, we expect the proportion of chronic phase CML patients to increase in the quarters ahead as physicians learn how to utilize Iclusig optimally in the management of their patients with Philadelphia-positive leukemias.

Importantly, less than 20% of patients treated with Iclusig have a T215I mutation, consistent with physician used in a broad range of Philadelphia-positive patients.

A shift in the dosing of Iclusig has occurred in 2014 with nearly half of patients starting at a dose less than the recommended dose of 45 milligrams daily. The current dosing mix for ongoing patients is approximately 35% each at 45 milligrams and 30 milligrams daily and 30% at 15 milligrams daily.

In tracking patient utilization data, we have seen lower drug discontinuation rates through July when compared to last year. As mentioned previously, we are addressing the current pricing disparity between 45-milligram tablets and 15-milligram tablets and are on track to remedy this by the end of the quarter through a packaging change.

Turning now to EU commercialization and progress in pricing and reimbursement. During the second quarter, with the Article 20 process continuing, commercialization across the geography remained steady in Germany, the U.K., France, Austria, Norway, Switzerland and the Netherlands. Here, revenue grew by approximately 20% for the quarter to $4 million, excluding the $2.3 million in deferred revenue from sales in France during Q2.

In the EU, pending completion of the Article 20 review, use of Iclusig has been skewed to more advanced phase patients and to later lines of therapy compared to the U.S. In the EU, only 25% of Iclusig patients are in chronic phase and only 25% have failed 1 or 2 TKIs.

As a result of the continuation of the Article 20 review until October, pricing and reimbursement timelines have been impacted, changing the likely timing of launches in certain EU countries.

Importantly, we have successfully completed the AMNOG process in Germany and will be selling Iclusig at a modest premium to the second-generation TKIs with full reimbursement based on the already-approved EMA indication.

In France, we continue to provide Iclusig to patients on therapy and anticipate the PNR process to extend into 2015.

In Italy, we are on track with PNR milestones and expect to launch Iclusig later this year.

Promotional launches in Belgium, Sweden, Denmark, Finland, Ireland, Portugal and Spain are expected to take place in the first half of 2015.

As for geographies outside of the U.S. and Western Europe, we are extending commercialization of Iclusig through distribution agreements.

In January, we announced an agreement with STA, Specialised Therapeutics of Australia, as the distributor of Iclusig in Australia. The regulatory application was filed on July 31, 2014, and we anticipate approval and commercial launch in early 2015. The agreement with STA will soon be extended to include New Zealand.

Yesterday, we announced a commercial agreement with Medison as our distributor of Iclusig in Israel. The Marketing Authorization Application for Iclusig is currently under review with the Israel Ministry of Health. We expect marketing approval and commercial launch of Iclusig to occur in Israel in the second half of 2015.

Additionally, we are in the later stages of negotiation regarding an Iclusig distributor for Central and Eastern Europe. With a file pending in Canada and a planned commercial launch in the first half of 2015, we are in the process of distributor selection in that country as well.

Finally, we are making very good progress in establishing a commercial partnership for Japan. When combining the distributors and partners to our own U.S. and EU commercialization efforts, there are clearly strong growth opportunities ahead as we work to reach many more CML patients in 2015 and later.

In closing, I would like to recognize the commercial teams in both the U.S. and Europe for their outstanding work in rebuilding the confidence in Iclusig. Together with our R&D colleagues, we continue in our commitment to leave no patients behind.

Let me turn the call now to Tim.

Timothy P. Clackson

Thanks, Marty; and good morning, everyone. I'd like to provide a brief update on the Article 20 procedure in Europe and recent progress in R&D.

As Marty noted, the Article 20 procedure continues. Earlier this week, we submitted our responses to the PRAC's questions regarding proposed dose modifications after achievements of a response and patient monitoring and details concerning a risk management plan.

We will present at the EMA's Oncology Scientific Advisory Group in September, and following input from that meeting, we expect that the PRAC will complete its review and make final recommendations to the CHMP in October.

Over the past quarter, we have continued to diligently address our post-approval commitments to the FDA on the timetable we agreed with the agency.

This includes the draft protocol for the randomized trial to evaluate lower doses of Iclusig. We very recently received feedback from the FDA on the trial, and the agency has informed us that additional feedback is forthcoming. We'll continue to work with the agency to finalize the design of this new dose ranging trial.

We've also received input from the EMA through the PRAC process, which will be incorporated into the final protocol. We now expect to complete these discussions and have an agreed-upon protocol later this year. We'll provide additional information on the study design and timelines for the trial once the protocol is finalized.

There's been continued progress in moving forward trials of Iclusig in other settings. Six investigator-sponsored trials of Iclusig are now open to patient enrollment: a U.S. trial in patients with RET-driven non-small cell lung cancer; a second U.S. trial in non-small cell lung cancer patients with RET complication or FGFR1 amplification; a U.S. trial in patients with medullary thyroid cancer with or without RET mutation; a U.S. trial in endometrial cancer patients with FGFR2 mutation; a French trial in patients with FLT3-positive AML; and the U.K. trial in patients with Philadelphia-positive ALL. There are 9 additional ISTs awaiting regulatory or IRB approval.

Additionally, we are working with several opinion leaders to determine the most expedient path forward for Iclusig in GIST, with the potential for beginning of registrational trial next year.

Moving to 113. The ALTA trial of 113 in patients with locally advanced or metastatic non-small cell lung cancer previously treated with crizotinib is on track with sites open in the U.S. and Europe. We expect to complete full enrollment in the third quarter next year. We'll present updated data from the ongoing Phase I/II trial of 113 at the ESMO conference in September.

With that update, I'd now like to call -- to turn the call back to Harvey.

Harvey J. Berger

Thanks very much, Tim. I'll ask the operator please open the lines to analysts' questions.

Question-and-Answer Session

Operator

[Operator Instructions] The first question is from Michael Yee with RBC Capital Markets.

Michael J. Yee - RBC Capital Markets, LLC, Research Division

Couple of quick questions. First question was the total patients by the end of the quarter seem to be right on with your model and just trying to figure out whether something is wrong with our model and -- versus what consensus are looking at. But very specifically, was there anything unusual with gross-to-net since the revenues seem to be lower than what we're looking for? And more importantly on the trends, do you see net adds accelerating each month sequentially and going through into Q3? Maybe you could just give a little more color on that?

Harvey J. Berger

Yes, from a gross-to-net perspective, we're online with less than 10% in a quarter. That was a little bit higher in Q1. As for patients, keep in mind that the 550 was through July. I'm not sure how much that might make a difference in your model but kind of consider that to be part of it. You may also need to take into account on the single-patient IND some of those patients started earlier, and they've been closer to the end of their treatment. In terms of trends, we are seeing consistent patient adds, and July in particular was a very strong month. So still early days in terms of expanding the prescriber base and increasing the patient pool, but we're encouraged.

Michael J. Yee - RBC Capital Markets, LLC, Research Division

Okay, that's helpful the July comment. And then I know you made some comments about the -- working with the FDA to agree on a new protocol. Can you -- what are the sticking points with the new protocol to look at the lower dose and also an update on trying to move to earlier line patients?

Timothy P. Clackson

Michael, this is Tim. I wouldn't say that there were sticking points with -- we're simply waiting for the complete feedback so that we can finalize and move ahead. We have feedback from the EMA, which was brought into the PRAC process, and that feedback was straightforward. So we simply need to wait for the entirety of the FDA feedback to move ahead. Obviously, we don't know what that feedback is yet.

Michael J. Yee - RBC Capital Markets, LLC, Research Division

Okay. And then on trying to move to earlier patients.

Timothy P. Clackson

That's obviously a very important aim that we have. I think with the full feedback in hand we'll be in a better position to judge the path and time for that.

Operator

The next question is from Cory Kasimov with JPMorgan.

Cory William Kasimov - JP Morgan Chase & Co, Research Division

First of all, on dosing, are you seeing a significant amount of dose titration either up or down? Or like when they start at 15 milligrams, do they move up to the 30 or 45 milligrams? And then as far as correcting for the current price disparity, should we just assume from a modeling standpoint that everything will ultimately be the current 45-milligram price? And then I have a 1 follow-up.

Harvey J. Berger

Yes. So in terms of dose reduction -- thanks for the questions, Cory. So I think what kind of surprised me is the starting dose situation. I kind of mentioned that was 50% at the 45-milligram and then at the lower doses. We are seeing dose reductions. Still early days, of course, in 2014, but we're seeing far more dose reductions than we saw in 2013. It was actually rare to see dose reductions. Not seeing a lot on dose escalations, which may be a good sign for patients started at lower therapies. So on the pricing disparity, we will address and you can assume in your models that your 45-milligram tablet will be priced equivalently to the 15-milligram tablet. I'd built that in, in the fourth quarter. We're on track to make that change in 2000-and -- or in the third quarter here, late in the third quarter. Our long-range strategy, of course, includes a 30-milligram tablet, and the strategy being pricing parity across all 3 of the doses.

Cory William Kasimov - JP Morgan Chase & Co, Research Division

Okay, great. And then the follow-up is on patient distribution. You indicated that using chronic phase patients is currently at up about 50%. And I have in my notes that it was 60% in the first quarter. So I know you said you expect chronic use to grows, so you just expect -- is this just really a short-term effect?

Harvey J. Berger

Yes, and sorry for the confusion. I didn't notice that. So the Q1 comment was exactly as you say, and that was the non-sIND patients. So it kind of early days on the newer patients, patients naive to Iclusig in 2014. So the number I quoted here on this call is more of a cumulative view of patients through 2000 -- through the second quarter, including both the single-patient IND and the new patients. Hope that helps.

Operator

The next question is from Jason Kantor with Crédit Suisse.

Jeremiah Shepard - Crédit Suisse AG, Research Division

This is Jeremiah filling in for Jason. Regarding the flat pricing that you spoke about, how exactly will you carry that out in terms of packaging? And is it something that you'll be able to carry out in the EU as well?

Harvey J. Berger

Good question, Jeremiah. Thanks for that. And this will be addressed through a packaging change. With the trends that we're seeing, particularly around the 15-milligrams daily use, we want to address that and make it convenient in terms of the distribution of the bottle. So we will be introducing a 30-count 15-milligram tablet bottle. So that's the way we intend to accomplish that in the U.S. in the 30-milligram 30-count bottle once we complete all the necessary steps from a bioequivalence and stability perspective, and we're on track to do that next year. It is a little more challenging as you're speculating from an EU perspective, given that we've started the process of pricing and reimbursement in July, and we're kind of working through ways in which we can maximize that in the future.

Jeremiah Shepard - Crédit Suisse AG, Research Division

Okay. And I just have one quick follow-up. In terms of the pricing negotiations in France, for example, in Q1 you mentioned that it should be completed by year end of this year, and now you're saying the first half of next year. This is -- I'm assuming this is only from the slight delay, the 2-month delay in the PRAC decision. But is this something that's -- is that solely just due to the PRAC delay? Is this something that could follow through to on that -- kind of that meaningful delay to all the other countries?

Harvey J. Berger

Yes. So in -- good question. In the case of France, this is purely of interest in having a final SmPC in both our hands and in the French Transparency Commission. So the 2 are directly linked, and that's what causing the delay in France; and a very similar type mechanism across those other countries that I mentioned.

Operator

The next question is from Katherine Xu with William Blair.

Y. Katherine Xu - William Blair & Company L.L.C., Research Division

Marty, you said the discontinuation rates during the second quarter was lower. I'm just curious, did you mention the number?

Martin J. Duvall

Thanks, Katherine. I didn't mention the number. It is kind of early days. And of course, we'd like to follow this a little bit longer and see that it correlates with lower dosing, but still early days and would be a little speculative at this point in time.

Y. Katherine Xu - William Blair & Company L.L.C., Research Division

So it was lower than the 24% that we observed in the first quarter, which included the sIND people? Or is it lower than the trend of 18% that we saw last year?

Harvey J. Berger

Yes, sorry for interrupting. So the view that we're providing is really in aggregate 2014 year-to-date versus the aggregate of 2013 in that early comment on discontinuation rates.

Y. Katherine Xu - William Blair & Company L.L.C., Research Division

Okay, great. Another question to Tim. You designed these kinase inhibitors and, eventually, the patients will progress [ph]. And I'm just curious, from your developmental perspective, do you think it makes sense to combine the TKIs with some immunotherapy form of agents to go forward with? Does it make sense? And do you have plans for those?

Timothy P. Clackson

Katherine, I couldn't hear whether you're asking about combinations of 2 different TKIs or TKIs with other [indiscernible] --

Y. Katherine Xu - William Blair & Company L.L.C., Research Division

Yes, combo -- yes, combination of TKIs with immunotherapy of some form. Does it make sense and whether you have plans for it?

Timothy P. Clackson

Yes. I think that's a clear and interesting direction to think about. It's something that given our TKI franchise and platform it's something we're very actively thinking about. We obviously do not have at this point any immuno-oncology program ourselves, but it's a clear direction that you can see in -- for the lung cancer and many of the other areas that we're looking at. So no plans to talk about yet, but we're certainly very aware of that in our long-range plan.

Operator

The next question is from Andrew Peters with UBS.

Andrew R. Peters - UBS Investment Bank, Research Division

First question is on kind of the growth in the prescriber and number of patients. They seem to track pretty well in terms of new patients coming from new prescribers. I was wondering if you have any kind of detail on existing prescribers and having more than 1 patient per doc and if you're seeing any kind of growth there? Or would you expect growth just coming from expansion of the prescriber base? And then just on the 15-milligram pricing issue, would you expect kind of an inventory build out ahead of the launch of kind of the new bottles? Or is that something that you think the specialty pharmacies are pretty aware of?

Harvey J. Berger

Yes, thanks. And I'll address the second question first because it's an easy one. But since we only have 1 specialty pharmacy, there will be absolutely no stocking of the new packaging. So we don't have to worry about that particular complication. In terms of your question on the prescriber base, it's really a little bit of both. I think you're doing some good math there. We certainly, in the early days, growing the prescriber base is key. But then as you mentioned, it's increasing our market share, so to speak, within physicians who have adopted Iclusig. So as we reflect back on the first half, the emphasis being on widening that prescribing base, we're accomplishing that very well. Now it's a matter of leveraging the successful experience we know physicians are having with Iclusig here during the reintroduction to build the confidence and build their individual patient pool. So it's really a two-fold approach. But we would like to see more depth per prescriber and expect to see that as our commercialization efforts proceed.

Operator

The next question is from Terence Flynn with Goldman Sachs.

Terence C. Flynn - Goldman Sachs Group Inc., Research Division

The first one I have is just with respect to your current right around 50% penetration. Could you just walk through that again and maybe any thoughts on where you guys think that can go over time? And then second question I had was with respect to your cash guidance. So I know it's now going to $230 million to $235 million by year end. I think back in February you said $60 million to $70 million. If I add on the convert, $177 million, I think there's a delta of about $10 million. I was just wondering if that's all due to the European pushout or if there's something else I'm missing them in my math.

Harvey J. Berger

So, Terence, I will handle the first question. So the math is fairly straightforward, and it goes as follows. The 1,300 patients over a 12-month period yields x patients available per month. And what we're tracking on a weekly basis is that weekly number and the number of new patients that we achieve. So that's where we get the 50% penetration number, and we're monitoring that over time. Your question about where can that go over time. My interest is in the denominator increasing as well as the numerator increasing. So I think I'd have to put it in that perspective. Long-term, of course, we'd like to move back, changing that 1,300 number back into 3,500 eligible patients and increasing the numerator in both cases. But it's reasonable to expect that, under the current label with the 1,300, we can continue to improve our market share on a weekly and monthly basis.

Edward M. Fitzgerald

And Terence, this is Ed. In response to your question about the cash guidance, the other piece to take into account is that we paid off early a bank term loan that we had in place in the second quarter, and that was $8 million.

Operator

We'll move to the next question. We have Mike King with JMP Securities.

Michael G. King - JMP Securities LLC, Research Division

I just -- I wanted to come back to maybe a little bit of a bigger picture discussion about future Iclusig growth. And just -- it just sounded to me from the description, Marty, that the majority of the use is going to be in sort of blast patients or Philadelphia-positive ALL, where durations are shorter. So just that's sort of the first part of a 2-part question. And maybe you can talk a little bit about what the average duration is on therapy right now. And then longer term, short of a trial that you're still discussing with FDA, what do you think creates an inflection point? Or is it just going to be a continued sort of the "3 yards and a cloud of dust" kind of approach to Iclusig uptake?

Martin J. Duvall

Yes, good analogy. So from a bigger picture -- from your perspective on the patient pool that we're getting now, yes, I think the way you're characterizing it if we look at chronic phase and other patients if our kind of -- if our shift has occurred, then we're more likely getting patients who are not going to be on the drug as long. So as confidence builds and positive experiences occur, which we know will happen with our drug, we'll move up and penetrate more chronic phase patients that can accumulate over time and build the revenue. I think that's all part of the inflection point that we're trying to achieve. Again, it's -- I think it goes back to the question before on the 2-pronged strategy of expanding the prescriber base and then improving the market share on a per-patient setting. So continued updates of the PACE data will have an impact. Continued updates of the Phase I data will have an impact as we look at very positive trends on duration of therapy in chronic phase patients. Hope that helps.

Operator

The next question is from Phil Nadeau with Cowen and Company.

Unknown Analyst

This is Jeff Chen [ph] in for Phil. I just wanted to ask in terms of the patient mix. I think you gave some numbers for the second line. I was wondering if you can give further insights on the third line and fourth line patient usage.

Harvey J. Berger

Yes. So I alluded to approximately 15% second line, 30% third line. So that incorporates the 45% that I mentioned upfront. So the remainder of the patients would be fourth line plus, so 55%. So that's the current mix. I'm just thinking through to the previous question, the other inflection point, of course, is PRAC and opening up markets in Europe and, of course, some of these other distributor agreements. That's going to significantly help the revenue run rate. So it's really flipping the light switch on in other geographies not only -- I was a little more hyper-focused on U.S. and U.S. penetration in my answer.

Unknown Analyst

Okay. And I know it's maybe a little early at this point, you're still talking to the PRAC. Do you have a sense of what the label might look like then moving forward?

Martin J. Duvall

I think, Jeff, the most likely changes are -- which we expect are strengthening of the safety recommendations. And we would certainly expect there to be introduction of dosing recommendations -- dose-reduction recommendations analogous to what we have in the current U.S. label. That's certainly the focus of the remaining questions that we just answered this week, specifically, detailed data on the dose-reduction information we have to date and proposals for monitoring to accompany those reductions. So those are the main things we would expect.

Operator

The next question is from Nick Abbott with BMO Capital Markets.

Nicholas Abbott - BMO Capital Markets U.S.

Tim, in terms of just -- obviously, the data that you showed at ASCO were rather impressive. I wonder if you can just elaborate a little on the discussions you had with experts, perhaps what they envisage as a registration trial. And then do they view the data as compelling enough that they want to use inclusive of labeling GIST?

Timothy P. Clackson

So the discussions you mentioned, Nick, is obviously still ongoing. There's certainly enthusiasm for the data that we've seen so far, which of course, are still preliminary in that we only have a certain number. There are several potential directions in which we could go, including, for example, challenging in the [indiscernible] area, which is a completely unmet medical need and which many of the patients that we treated so far represent. I think it's early days to really know exactly which direction in which we will go. Sorry, can you remind me what the last part of your question?

Nicholas Abbott - BMO Capital Markets U.S.

Whether they feel the data is compelling enough that they want to use the drug off label?

Timothy P. Clackson

Obviously, it's not appropriate for me to comment on what they think or on off-label approaches. But I can point out as a matter of fact that we are aware of some cases of that happening, for example, the anecdotal patient experience which we shared at the JPMorgan conference. And so we're aware that it's happening. Clearly, we need to obtain robust clinical trial data to support the use of Iclusig in GIST. And we are very enthusiastic to move forward as soon as we can. We just want to make sure that we get the right feedback and from all regions. For example, there's a diversity of opinion in the U.S. and Europe. We want to make sure we collect that before moving forward.

Nicholas Abbott - BMO Capital Markets U.S.

Did you say there is a diversity or if there is a diversity?

Harvey J. Berger

I want to say that -- no, we want to make sure that we have a complete view of -- for example, the trial we've done so far is U.S. investigators only. So we want to make sure that we've got a global view.

Nicholas Abbott - BMO Capital Markets U.S.

Okay. And maybe 1 follow-up, and that's -- I know obviously the investigator-initiated trials that there clearly were some hiccups in enrollment. But as you look at the trials that you described, what should we be looking out for in terms of time -- potential timing for the first data from those trials?

Harvey J. Berger

I think it's a little bit early to know because many of those trails are just restarting or starting after the clinical hold that many of them were on. We would certainly hope to see data from those trials next year. And also obviously ASCO has a conference this midyear -- next year and could be an interesting data point. Obviously, we can't make commitments at this stage. There are also specialty conferences during the year. There's a lung cancer conference earlier in the year than ASCO. Those are all potential points. We can't guide to specific times. As you know in many of these settings, you can often see an interesting result early because we're talking about a targeted therapy and a situation where we know what success looks like. So there is the possibility of having interesting data with just a few patients. But again, those trials are in many cases just really ramping up. I should add, Nick, that we would expect that those -- several of the trials will certainly -- some of the trials which are in the hematological area could be given an update at the ASH conference. And as you probably know, abstracts for ASH were just submitted. The deadline I think was yesterday. So that will clarify over the next few months.

Operator

The next question is from Brian Klein with Stifel, Nicolaus.

Brian Klein - Stifel, Nicolaus & Company, Incorporated, Research Division

Just a quick one on the pipeline. In regards to 113 at ESMO just wanted to get a sense of how much data we'll see on brain metastasis? And if you're viewing the penetration into the brain as the key differentiator for 113 versus other second line ALK-targeted agents?

Harvey J. Berger

Brian, I would certainly say that it's a very strong point for the drug based on the data that we've seen so far. We're not in a position to directly compare data with other agents, but we're certainly very enthusiastic about the data that we've seen so far and as are the investigators that have worked with the agent. And we've, as you know, taking care to present all the data we have in patients who came on to the trial with brain mets. So we'll have a general update on the trial at ESMO. It will be based on the later data cut than ASCO. So there'll be further time on trial data, response data; it will be a general update. There won't be a specific targeted update just on brain mets, but the data in general will be updated. So it will give further clarity to the already I think fairly compelling data that we presented at ESCO.

Brian Klein - Stifel, Nicolaus & Company, Incorporated, Research Division

Great. And then just a quick question on Iclusig. In regards to the second line patients, is there a particular frontline agent that the patients are -- or majority of the patients have been used prior to going on to Iclusig?

Harvey J. Berger

Yes, great question, Brian. And it's really early to be talking about that type of thing since the number of patient is small. But there's clearly a reason -- we see dasatinib, quite honestly. I think it's positioned and thought of as maybe the most potent of the newly patients for -- drugs for newly diagnosed patients. And we also know there's some data coming out of the decision trial that really speaks to T215I mutations as a potential Achilles' heel for dasatinib in the frontline setting. It's also a once-a-today, second-generation product. So there's a lot of reasons why there might be a fit there, but really speculating on rather thin data.

Operator

The next question is from Howard Liang with Leerink Partners.

Gena Huidong Wang - Leerink Swann LLC, Research Division

This is Gena Wang dialing for Howard. So for your 3 investigator-sponsored RET trials, could you provide some more color in terms of dosing across all 3 trials and then the trial progress and anticipated timing for data readout?

Harvey J. Berger

Well, so let me first clarify that there are -- well, there are -- yes, there are 3 RET trials. One of them is in medullary thyroid cancer and then 2 trials in -- that will allow RET-positive non-small cell lung cancer patients in. I addressed the possibilities of data readouts really in one of my earlier answers. It's too soon to know, and it's specific to each individual trial. But many of these trials are just getting started or restarted from the hold. So I wouldn't want to comment on behalf of the investigators at this point. There certainly is the possibility for some kind of data readout next year, but beyond that, I can't say. The dosing in general is at 30 milligrams as a starting dose, but I -- there may be specific differences for each trial that I can't elaborate on that at the moment. I'm just -- I'm recalling all the details. But in general, it's a 30-milligram dose. The question of dosing has really been addressed on a trial-by-trial basis and has been subject to discussions between the investigators and the relevant regulatory agency.

Gena Huidong Wang - Leerink Swann LLC, Research Division

I see. So I have a follow-up question regarding finance. So for cost of goods sold, seeing that this quarter is quite high, it's about 20% compared to last quarter, which is 11%, I'm just wondering if there is any change here.

Edward M. Fitzgerald

The current quarter's cost of goods sold includes a provision for excess inventory. We evaluate on a quarterly basis by looking out at long-term demand and supply trends and doing evaluation at to the level of current inventory. So the current period includes a provision for excess inventory that may not occur on a quarterly -- quarter-by-quarter basis.

Gena Huidong Wang - Leerink Swann LLC, Research Division

I see. So how should we think long-term, what kind of range would be a reasonable?

Edward M. Fitzgerald

I think we've guided in the past to cost of goods sold in the low single-digit range. And I think that's continuing to hold at this point in time.

Operator

We have no further questions at this time. I'd like to turn the call back over to Dr. Berger for closing remarks.

Harvey J. Berger

Thanks very much. I'd like to thank everyone for joining our call this morning, and we look forward to seeing you at many of the upcoming healthcare conferences starting in September and then ESMO and ASH, which will be very important meetings for us from a medical and scientific perspective. Thanks again.

Operator

Thank you, ladies and gentlemen. This concludes today's conference. Thank you for participating. You may now disconnect.

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