Immunomedics' (IMMU) CEO Cynthia Sullivan on Q4 2016 Results - Earnings Call Transcript

| About: Immunomedics, Inc. (IMMU)

Immunomedics, Inc. (NASDAQ:IMMU)

Q4 2016 Earnings Conference Call

August 17, 2016 05:00 PM ET

Executives

Michael Garone - CFO

David Goldenberg - Chairman, Chief Scientific Officer and Chief Patent Officer

Cynthia Sullivan - President and CEO

Analysts

Boris Peaker - Cowen

Nick Abbott - Wells Fargo Securities

Monish Bahl - MHB Capital

Operator

Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to Immunomedics, Inc. Fourth Quarter and Fiscal Year 2016 Financial Results Conference Call. As a reminder, this call is being recorded, today is Wednesday August 17, 2016. At this time, I would like to turn the conference over to Michael Garone, Chief Financial Officer of Immunomedics. Please go ahead.

Michael Garone

Thank you, Michelle. Good afternoon, everyone, and welcome to Immunomedics earnings call. With me today are Dr. David M. Goldenberg, Chairman, Chief Scientific Officer and Chief Patent Officer; and Cynthia L. Sullivan, President and Chief Executive Officer. Following our prepared remarks today, we will open up the call for questions. Before we begin, I would like to remind everyone that during the call, we will be making forward-looking statements made pursuant to the Private Securities Litigation Reform Act of 1995. Such statements may involve significant risks and uncertainties, actual results could differ materially from those expressed or implied on this call. For factors that could cause such differences, please refer to our regulatory filings with the Securities and Exchange Commission most recently on our annual report for the year ended June 30, 2015. We plan to file the annual report for 2016 fiscal year tomorrow.

Now let me start with the financials. First, I'll cover financial results for the fourth quarter ended June 30, 2016. Total revenues for the fourth quarter were $900,000 compared to $2.4 million for the same quarter last year, a decrease of $1.5 million or approximately 63%. The decrease was due primarily to the receipt of $1 million license fee in the quarter ended June 30, 2015, upon attaining a critical development milestone, in accordance with the company's collaboration agreement with the Bayer group as amended and a $600,000 decrease in research and development revenues in the quarter due to fewer government funded research grants. Total cost and expenses for the quarter ended June 30, 2016, were $15.6 million compared to $13.6 million for the same quarter in fiscal 2015, an increase of $2 million or approximately 15%. The increase was due primarily to a $1.4 million increase in research and development expenses, mainly from increased manufacturing costs for antibody-drug conjugates in clinical trials and $600,000 charged cost of goods sold for LeukoScan inventories that did not meet our quality control standards.

Interest expense related to the 4.75% convertible senior notes due 2020 was $1.4 million for both quarters ended June 30, 2016, and June 30, 2015, including amortization of $200,000 debt issuance cost in each quarter. Net loss attributable to stockholders was $15.9 million or $0.17 per basic and diluted share for the fourth quarter and fiscal year 2016 compared with a net loss attributable to shareholders of $12.4 million or $0.13 per basic and diluted share for the same quarter in 2015, an increase of $3.5 million or approximately 28%. The increase was due primarily to the $2 million increase in total cost and expenses and $1.5 million decrease in revenues as described previously. Now I'll move on to annual results for fiscal year 2016. Total revenues for 2016 were $3.2 million compared to $5.7 million for fiscal year 2015, a decrease of $2.5 million or approximately 44%. The decrease was due primarily to $1.2 million decrease in government funded research grants, the receipt of $1 million clinical milestone payment from Bayer in fiscal year 2015 and a $300,000 decrease in LeukoScan sales, due primarily to unfavorable fluctuations in currency exchange rates and lower sales volumes in Europe.

Total cost and expenses for the fiscal year ended June 30, 2016, were $62.2 million compared to $51.9 million for fiscal 2015, an increase of $10.3 million or approximately 20%. The increase was due primarily to an $11.8 million increase in research and development expenses from increased clinical trial expenses and manufacturing costs for antibody-drug conjugates clinical trials and the Phase 3 PANCRIT-1 study in pancreatic cancer, a $900,000 increase in cost of goods sold due to $900,000 write-down on LeukoScan inventory and $200,000 increase in sales and marketing expenses, due primarily to employee-related severance cost and the relocation of the Immunomedics GMBH offices. These incremental costs were offset partially by $2.6 million reduction in legal and professional fees related to the arbitration proceedings with Takeda Pharmaceutical Company Limited, which occurred during fiscal 2015.

Interest expense related to the convertible notes was $5.5 million for fiscal year 2016, including $700,000 for the amortization of debt issuance costs compared to $2.1 million interest expense for fiscal year 2015, including the amortization of $300,000 debt issuance costs, an increase of $3.4 million or approximately 162%. The increase is due to the fact that the convertible notes were issued at February 2015; therefore, fiscal year 2015 contains interest for part of the year, while fiscal 2016 contains interest for the full year. An income tax benefit of $5.1 million was recorded for the current fiscal year, as a result of cash proceeds received from the sales of portion of our New Jersey State net operating losses and research and development tax credits due to the New Jersey Economic Development Authority Technology Business Tax Credit Transfer Program. There were no comparable sales in the previous year.

Net loss attributable to stockholders was $59 million or $0.62 per basic and diluted share for fiscal year 2016 compared to net loss attributable to stockholders of $48 million or $0.51 per basic and diluted share in fiscal year 2015, an increase of $11 million or approximately 23%. The increase was due primarily to increased research and development costs, interest expense and lower license fee revenue, which were offset partially by the income tax benefit received and lower legal and professional fees as described earlier. Cash, cash equivalents and marketable securities were $50.6 million as of June 30, 2016. We plan to spend approximately $42 million to $44 million during fiscal 2017. Based on this projection, we believe our current funds are sufficient to continue operations and budgeted research and development programs for at least next 12 months.

Our key research and development programs for the next 12 months include preparations for Phase 3 confirmatory trial of sacituzumab govitecan in triple-negative breast cancer, preparations for commercial manufacturing of sacituzumab govitecan for the continuation of the Phase 2 study of sacituzumab govitecan in certain select solid cancers and the continuation of Phase 1 trial of IMMU-114. We are pursuing strategies licensing for collaborations agreement as a potential source of financing to initiate the Phase 3 confirmatory trial of sacituzumab govitecan in triple-negative breast cancer to manufacturer the IMMU-132 sacituzumab govitecan for Phase 3 and commercial supplies and to fund other research and development programs continuing or planned beyond fiscal 2017. That summarizes our financial results for the fourth quarter and fiscal year 2016. Before turning the call over to Cindy, I would like to take a moment and share my excitement in joining the Immunomedics as CFO. With valuable assets like IMMU-132, I strongly believe the company is on the cusp of making great strides in our scientific and corporate development. My Immunomedics colleagues share my enthusiasm for the future. I'm looking forward to working with Cindy, David and the rest of the leadership team to execute our business strategy and bring IMMU-132 to patients with triple-negative breast cancer and other difficult to treat solid cancers expeditiously.

With that, I'll now turn the call over to Cindy

Cynthia Sullivan

Thank you, Mike, and good afternoon, everyone. Before I begin, let me take this opportunity to welcome Mike to our company. As I stated in our press release announcing his appointment, Mike brings with him strong financial, strategic business development experience and a proven track record across multiple different industries and we look forward to his contribution as a member of our management team. So following our success in applying for breakthrough therapy designation or DTD for IMMU-132 in metastatic triple-negative breast cancer or TNBC, which we believe is the first time the FDA had granted such designation in this indication, we have received guidance for a potential accelerated approval application for IMMU-132 in this patient population during a BTD follow on meeting with the regulatory agency.

One key part of the strategy is to enroll additional patients with metastatic TNBC into the current single arm Phase 2 study. As per FDA guidance, our goal is to enroll a total of 100 accessible patients, which we plan to complete in the fall of this year. This enrollment timeline allows us to have at least six months of patient follow-up in order to obtain confirmed response rate and matured duration of responses for an accelerated approval application, estimated to be submitted to the FDA by the middle of calendar year 2017. The additional patients will receive repeated cycles of IMMU-132 at the dose of 10 mg/kg on days one and eight of each 21-day treatment cycle and be assessed radiologically for treatment response in accordance with RECIST 1.1 criteria. Results from this study, including overall response rate, duration of response, which will be confirmed by independent centralized and blinded groups of radiologists will further be used to support the clinical requirements for an accelerated approval application to FDA. The entire Phase 2 population of about a 100 assessable patients will then be identical to the patients to be enrolled in the planned Phase 3 confirmatory trial, which I'll talk about in a minute.

Assuming everything goes according to plan, it's possible that IMMU-132 will be available to fill the unmet need of patients with metastatic TNBC in 2018. Another key aspect of our strategy is the launch of Phase 3 confirmatory trial in patients with relapsed or refractory TNBC planned for the end of 2016, which means that by mid-2017, which is the estimated time of submitting the accelerated approval application, this confirmatory trial will be well underway, in terms of patient enrollment. While the single-arm Phase 2 study is using IMMU-132 produced by us at our headquarters in Morris Plains, New Jersey, the Phase 3 confirmatory trial will use materials supplied by our contract manufacturing organizations or CMOs. To this end, we've been proceeding with the production and validation of IMMU-132 at commercial scale. An engineering run has been completed and we're in the process of testing the comparability of Phase 2 and Phase 3 material. This activity is also critical to the planned submission of an accelerated approval application in mid-2017.

We're completely cognizant of the substantial infrastructure and resources required to develop the full potential of IMMU-132 as a solid cancer therapeutic, either as a monotherapy or in combination with other agents. Therefore, we're committed to partnering this promising asset to a party that not only has the wherewithal to conduct multiple clinical trials in oncology indications, but also shares our enthusiasm in pursuing a wide range of solid cancer types. With the assistance of an outside advisory group, our efforts to complete a licensing arrangement for IMMU-132 are continuing, and we're pleased with the interest we've received. So now moving on to IMMU-130, we’ve completed patient enrollment into the expanded Phase 2 study, evaluating various doses and dosing schedules in patients with metastatic colorectal cancer. Earlier dose-finding studies have resulted in a dose of 10 mg/kg on days one and eight of a 21-day treatment cycle for future clinical studies. One Phase 3 design under consideration includes evaluating IMMU-130 in patients with metastatic colorectal cancer who have received two or more prior therapies.

You may recall back in September 2013, we announced the beginning of a three-year grant from the U.S. Department of Defense totaling more than $1.6 million to evaluate milatuzumab as a treatment for patients with lupus. Our application passed a very rigorous peer-review process to win this award. In fact, out of the 29 applications, just in the lupus category, we were one of the two winners selected. The funding from the Department of Defense has allowed us to launch an open-label Phase 1b study of subcutaneously administered milatuzumab in patients with systemic lupus erythematosus at the Cedars-Sinai Medical Center in Los Angeles, California, under the direction of Dr. Daniel Wallace, a world-renowned authority in autoimmune diseases. First results from an initial cohort of ten patients with moderate lupus disease activity but not severe flares were presented this past June at the 2016 Annual European Congress of Rheumatology in London, England.

With regard to epratuzumab, after the termination of the licensing agreement with UCB effective March 26, 2016, we began the process of transitioning all materials back to us. Once this process has been completed, we will be in a better position to examine all options to maximize the value of epratuzumab for all indications. I should also remind you that epratuzumab continues to be studied in a Phase 3 randomized control trial in children with acute lymphoblastic leukemia supported by a European trial group that won funding from the European Union. Now before I hand the call over to David, let me quickly report on the status of the 2 reported class-action cases that have been filed in the United States District Court for the District of New Jersey. Both cases arise from the same alleged facts and circumstances and seek class certification on behalf of purchasers of our common stock between April 20, 2016 and June 2 and 3, 2016, respectively.

These cases concern the company's statements in press releases, investor conference calls and SEC filing beginning in April 2016 that the company would present updated information regarding its IMMU-132 breast cancer drug at the 2016 ASCO conference in Chicago, Illinois. The complaints allege the statements were false and misleading in light of the June 2, 2016 report that ASCO had canceled the presentation because it contained previously reported information. The complaints further allege that the statements resulted in artificially inflated prices for our common stock and that the company and certain of its officers are thus liable. As of today, service of the initiating papers in these actions has not been made on the company. We believe that the allegations and the class-action complaints are without merit and intend to defend the lawsuits vigorously. However, there can be no assurance regarding the ultimate outcome of these lawsuits. While it's not possible to determine the outcome of these matters, the company believes that the resolution of all such matters will not have a material adverse effect on its consolidated financial position or liquidity.

So now let me turn the call over to David.

David Goldenberg

Thank you, Cindy. Good afternoon. Let me begin by discussing our progress with IMMU-132. In May of this year, we provided an update of the efficacy of sacituzumab govitecan in advanced patients with triple-negative breast cancer or TNBC who failed multiple prior therapies. We have since increased our enrollment in this population and have updated our results, both in terms of confirmed objective responses as well as survival. We are preparing these results for submission for publication. So although I cannot share any numbers, I am gratified that the impressive results of the past are continuing. Thus confirming that IMMU-132 contributes importantly to the management and outcome of these patients. We also plan to present the data at a breast cancer conference later this year, unless our publication appears earlier. As Cindy has noted, we are currently enrolling additional TNBC patients to fulfill part of the requirements from the FDA for an accelerated approval application. We expect to have a total patient enrollment of at least 100 with metastatic disease who have relapsed after at least 2 prior therapies before the end of this year. We are well along to reach this target.

In addition to triple-negative breast cancer, we are also enrolling patients with metastatic urothelial cancer into the ongoing Phase 2 single arm study. You may recall, earlier this year, we reported a very encouraging confirmed objective response rate of 50% in 14 assessable patients with relapsed or refractory metastatic urothelial cancer. If these results continue to be as robust with more patients enrolled, we hope to pursue the same regulatory strategy as in triple-negative breast cancer. We are completing our trials in patients with non-small-cell lung cancer and with small-cell lung cancer, and we believe that our results are improving as compared to our reports at ASCO in June. But it is still too early to determine survival data. We are pleased that tumor shrinkage and disease stabilization have been observed in patients with adenocarcinoma and squamous cell carcinoma, the 2 major subtypes of non-small-cell lung cancer who had failed previous anti-PD-1/PD-L1 checkpoint inhibitor therapy. Since immune checkpoint inhibitor therapy is becoming the new standard of care in non-small-cell lung cancer, we believe it is important to show that there is no cross-resistance between these agents and IMMU-132 in this major disease.

Therefore, once we complete the follow-up of patients who are still being treated, we will consider other trial opportunities, perhaps even in combination with an immune checkpoint inhibitor.

Let me now move on to 2 of our earlier pipeline products, milatuzumab and IMMU-114. You may wonder why we are interested in pursuing lupus, given many prior failed therapies, including UCB's disappointment with epratuzumab in this autoimmune disease. Our decision is driven by science, in particular, our understanding of the mechanism of action of milatuzumab. Like epratuzumab, milatuzumab is also a B-cell targeting antibody. However, its target, the CD74 receptor, also was present in other antigen-presenting cells, which include monocytes, macrophages and dendritic cells. It has been reported that CD74 is a cellular receptor for the proinflammatory chemokine macrophage migration inhibitory factor or MIF and that binding of MIF to CD74 initiates a signaling cascade resulting in inhibition of proliferation and survival. Macrophage migration inhibitory factor is widely expressed by immune cells, particularly macrophages, and is known to play a role in autoimmune disease. So it is plausible that its receptor, CD74, is also a target for autoimmune disease therapy.

Indeed, our preclinical studies have demonstrated that milatuzumab prevented graft-versus-host disease, modestly inhibited B-cell proliferation and enhanced factors underlying lymphocyte recruitment. It also reduced the interferon alpha production and stimulated peripheral blood mononuclear cells from healthy donors and from lupus patients. These preclinical results suggest that milatuzumab may be effective in the therapy of autoimmune diseases, either alone or in combination with other agents. Our clinical rheumatology collaborator from Cedars-Sinai Medical Center in Los Angeles, Dr. Wallace, presented results from the first 10 enrolled lupus patients. These patients were subcutaneously injected with 250 milligrams of milatuzumab once weekly for 4 consecutive weeks and were allowed to continue with their background lupus medications during study. Disease activity was assessed by accepted lupus evaluation criteria such as BILAG 2004 and SLEDAI every 4 weeks until week 24. Already at this first planned dose level, there was evidence of treatment efficacy with suppression of disease activity extending 24 weeks in most patients.

Overall, mean total BILAG and SLEDAI scores decreased markedly, with both measures still decreased at week 24. All patients showed improvement in at least one body system, predominantly in the musculoskeletal and mucocutaneous systems. Subcutaneous injections of milatuzumab appear to be safe and well tolerated, with most patients reporting only mild to moderate adverse events, which were mainly injection site-related or flu-like reactions and were managed with support of medications. No patient had to delay or discontinue his or her scheduled treatment due to the adverse events. These results will be updated at the lupus 2016 meeting at the end of September by Dr. Wallace. Based on these early results, we have expanded the study into a randomized, double-blind, placebo-controlled trial to confirm the activity of milatuzumab in this population and have received approval from the Department of Defense for an increased budget to support the expansion. 30 patients are now being enrolled and randomized to receive once weekly for 4 weeks milatuzumab injections at 150 or 250 milligrams or placebo. Patients will be followed for disease activity for at least 12 weeks. Responding patients may be eligible for one course of retreatment, again, followed by 12 weeks of follow-up. Patients who showed a response will be followed for up to 1 year to assess duration response.

Our goal, of course, is to assess in this controlled but small trial whether milatuzumab shows a therapeutic potential for the management of patients with relapsed moderate systemic lupus erythematosus.

The other pipeline product that I want to mention today is IMMU-114, which binds to an immune response target called HLA-DR, located on the cell surface of certain white blood cells. This receptor is involved in presenting foreign objects to the immune system in order to elicit an immune response. HLA-DR is an attractive immunotherapy target because of its significantly higher expression than CD20 or other typical B-cell restricted markers involved in immunity or in lymphoid malignancies. IMMU-114 is an interesting antibody because we intentionally created it as an IgG4, having learned that first-generation anti-HLA-DR antibodies were IgG1 and were hampered by limiting toxicity, such as severe infusion reactions, thought to be related to complement-dependent cytotoxicity or CDC. As an IgG4 antibody, IMMU-114 does not function by the usual effector cell activities of antibodies, such as CDC and antibody-dependent cell-mediated cytotoxicity or ADCC and is therefore expected to be less toxic to patients.

Our preclinical safety studies in canine lymphoma and monkey models showed only mild injection site reactions. Furthermore, since IMMU-114 lacks CDC and ADCC, it does not rely on an intact immune system for its cytotoxicity, but exerts activity via cell signaling survival pathway. For additional safety and convenience, we have developed a subcutaneous formulation for IMMU-114 to be administered to patients by rapid injection. This anti-HLA-DR antibody is being evaluated in a Phase 1 first-in-man study as a monotherapy for patients with advanced, relapsed, refractory non-Hodgkin lymphoma or chronic lymphocytic leukemia. Updated results from this study were presented at the July 2016 Pan Pacific Lymphoma Conference in Hawaii by Dr. Deborah M. Stephens from the University of Utah in Salt Lake City, Utah. 22 patients with a median of 2 prior therapies had been enrolled. All 22 had failed rituximab or other anti-CD20 antibody therapies. Overall, 10 of 16 assessable patients or 63% had evidence of treatment response of either stable disease, partial response or complete response. Most of these responses were of short duration so we have amended our protocol to allow for periods of longer therapy with IMMU-114. As expected, subcutaneous injections of IMMU-114 were well tolerated by patients with only local skin reactions at the injection sites, which were all mild to moderate and transient. In fact, this antibody has so far lacked toxicity so the maximum tolerated dose has not been established.

These are early yet encouraging results with a new antibody and new target for the therapy of hematological cancers. We hope to present encouraging preclinical results on another form of IMMU-114 at a future medical meeting. As I mentioned earlier, we also have early laboratory evidence that IMMU-114 has a potential for the therapy of autoimmune diseases, which will be considered once we complete our ongoing trials in patients with non-Hodgkin lymphoma and chronic lymphocytic leukemia. Finally, I would be remiss if I did not share my enthusiasm for our own immuno-oncology strategy and progress with you. I'm not an advocate of modifying a patient’s own lymphocytes ex vivo and then reinfusing back for an individualized T-cell immunotherapy. Instead, we have been pursuing a T-cell redirecting therapy strategy, whereby we try to direct the patient's circulating T-cells to the sites of cancer by having a bispecific antibody that targets both the tumor cells and the patient's circulating T-cells. We are not yet in the clinic with our own novel constructs, but all of our preclinical animal studies already described in two publications show considerable promise for the therapy of advanced solid cancers, such as pancreatic and gastro cancers growing in mouse models.

One novelty we introduced is combining this therapy with alpha-interferon, which in this system activates the T-cells and we believe enhances the therapeutic effects, at least in the animal models we are studying. Interferons have been used for decades in cancer therapy but have shown considerable toxicities, such as flu-like symptoms. We believe we can adjust this to overcome the toxicities, reduce the side effects of T-cell retargeting, such as cytokine storms that can provide severe toxicities and yet remain effective in the immunotherapy of advanced solid cancers. This is because we believe we have now novel cancer targeting antibodies for these bispecific antibody constructs.

I must admit this is a challenging project, but it has exciting prospects for new directions in immuno-oncology, especially in a difficult area of solid cancers where even the exciting current immune checkpoint inhibitors have only affected a portion of patients, but with durable treatment results in several cancer types. Therefore, this is an area of true opportunity for novel approaches, and we of course, believe that our ADC product candidates may also have potential for combinations with immunotherapy.

This concludes our prepared remarks. We will now open for questions. Thank you.

Question-and-Answer Session

Operator

Thank you. [Operator Instructions] Our first question comes from the line of Boris Peaker with Cowen. Your line is open. Please go ahead.

Boris Peaker

Great. Good afternoon. I guess I'll start with the 132 partnering since that's of high interest to investors. I just want to kind of get a sense with plans to start a Phase 3 confirmatory trial in late 2016, as you mentioned, what is the time line for potential partners to submit their term sheets so that you have enough time to analyze them and close the deal in 2016?

David Goldenberg

Well, before Cindy answers it, let me take the prerogative of saying we already have term sheets and we're working to receive others, but it's premature to make any decisions.

Cynthia Sullivan

Yes. I think our plan is that we've been - and it's a good question. To have a partner on board before we commence the confirmatory Phase 3. We can handle now the additional patients coming into the single arm Phase 2 to finish up that enrollment, but we do realize that we're going to need the additional help through a partnership to get that Phase 3 confirmatory moving. We haven't got it to any specific timelines. We have only said that our plan is to initiate that at the end of this year.

Boris Peaker

Got you. And also just in terms of what you are thinking of partnership, you’ve mentioned some initial promising data for 132 outside of breast cancer sort of some of your epithelial, small-cell and non-small cell, just curious for the partner for 132, is there going to be specific obligations to commit to and develop the drug in other areas in these other indications on a certain timeframe or is it mostly going to be just focus on commitment on the breast cancer side?

David Goldenberg

Well obviously, we can’t get into specifics of what we're talking about to different parties, but I can say from my perspective, a party would be attractive that has the enthusiasm and interest that we have in multiple indications and we hope we can pursue them as quickly as the date we generating now supports. We are continuing seeing excellent results in urinary bladder cancer, and if this continues, as I said in my remarks, we will try the same procedure with FDA, namely seeking breakthrough therapy designation in urothelial cancer, which would obviously give us an opportunity for accelerated approval applications in the future.

In a non-small cell and small-cell lung cancer, we've enrolled the population that we feel is important to make the first assessment of the potential. We're still evaluating responses. Fortunately, patients are still in ongoing therapy and so it's premature to give survival data. But so far, I'm encouraged that 132 will have a place in the management of these two very important diseases and it's also of interest to me to determine what kind of combination therapies may be appropriate for non-small cell and small-cell lung cancer and we have active studies preclinically addressing this at the present time.

Boris Peaker

Got you. Would that be in the partner that would actually be submitting to the FDA, because if you are going to get a partner in the next several months, you're not going to be in a position to submit for accelerated approval on these indications. So would that fall into the partner’s obligation then?

David Goldenberg

Well. I think it's premature to talk about who has different obligations under terms that we haven't discussed. So I think we're going a little too speculative at that point to respond to your answer.

Boris Peaker

Great. And just my last question since I've taken up a lot of your time is in terms of San Antonio Breast Cancer Symposium, how many patients worth of data do you plan to present in breast cancer?

David Goldenberg

Quite frankly, we have submitted an application and I can't remember how many, but it's sufficiently more than we've ever done before, and it's not because I don’t want to say, it's just that I don’t want to give you the wrong number. I'm focusing really now on publishing our results, and if they are published, we probably won’t present it in San Antonio.

Operator

Thank you. And our next question comes from the line of Jim Birchenough with Wells Fargo Securities. Your line is open. Please go ahead.

Nick Abbott

Hi, good afternoon. It's Nick in for Jim this afternoon, he's traveling. So just I'd like to clarify when you say the start of the Phase 3, does that imply the first patient in before the end of the year?

Cynthia Sullivan

Yes, we would define start as first patient first visit. That's correct.

Nick Abbott

Okay. And then for the manufacturing then. So the contract manufacturing organization will supply the Phase 3 and commercial product, but at some point, do you intend to hand over paying for that to the partner? How much product can you pay for upfront as it were for the first, the planned Phase 3 trial without a partner, are you able to cover a third of it or a fourth or a half?

Cynthia Sullivan

Right. What we will actually manufacture is about three clinical lots until the end of this year in addition to the engineering run, which is more than enough material for the confirmatory Phase 3. And the plan is to then, through a partnership, have the partner take over the continued commercial manufacture throughout all of 2017. So assuming that accelerated approval application gets filed sometime mid-2017, by the end of '17, which would basically be the review period for FDA, we would have sufficient material to actually launch in that indication.

Nick Abbott

Okay. I understand. So they could really stockpile commercial material then and that's their responsibility?

Cynthia Sullivan

That's correct. That's correct.

Nick Abbott

And then I know that you're not going to comment on patients above and beyond the 60 triple-negative patients we've seen. But I think the last progression-free survival data was somewhere like 80% mature at 5.6 months. I'm assuming that has not really changed. Therefore, survival at 14.3 months with 40% maturity, can you at least kind of comment, perhaps even directionally, on for those 60 patients or the 58 patients, is that 14.3 months still a good number or should we look for a higher number?

David Goldenberg

Well, you're putting me on the spot, and I will just say that the article we prepared will be pleasantly better in numbers than any of those that you just mentioned.

Nick Abbott

Okay. That's very helpful. And then to further put you on the spot, David, for the urothelial indication, obviously, the initial response rates are striking to say the least. Do you have feedback from FDA on just how many more patients worth of data they would like to see prior to entering a discussion or is that left to your judgment?

Cynthia Sullivan

I do not have any official response, but I have some informal discussions where I feel confident that the numbers will not be higher than we submitted for the triple-negative breast. So I think it's partly a function of the results. And if we can continue with the results the way they are now, I don't think we need a very large number of patients. A critical point, let me finish, is not only response rate, but durability of response. And for that, we need to wait a good period of time because thank god for the patients, most of them are still in response.

Nick Abbott

Okay. Can you just remind me what that number was for the TNBC?

David Goldenberg

It was in the 50 range.

Nick Abbott

Okay. I would imagine that given the striking nature of the results, you're having no problems recruiting additional patients to that trial?

David Goldenberg

The interesting part is there is recently a PD-L1 antibody approved in urinary bladder cancer and we're starting to see more patients who have relapsed or have failed after an immune checkpoint inhibitor therapy. So I think this makes it even more interesting because as in the case of non-small-cell lung cancer, we have seen a good number who have failed an immune checkpoint inhibitor therapy and then respond to our IMMU-132. So I hope we will see the same result. And I see no reason why we won't in urinary bladder cancer, but it's still early because the approval was just a short few weeks ago for PD-L1 therapy.

Nick Abbott

Great. And you opened the door to my next question, which is going back to lung. Obviously, there was quite a discrepancy between the initial response rate and confirmed response rate, I believe, that was last thing you said. And I think in your prepared comments you indicated that, that is now higher, but can you provide some guidance at least on the response rates in those that have seen or failed the PD-1 inhibitor versus those that have not?

David Goldenberg

You mean, how many responded with that failed PD-1 or...

Nick Abbott

Yes, so maybe an update on what the confirmed overall response rate is and then for those two groups of PD-1 failures.

David Goldenberg

I believe I'm remembering this right. I want to give you an answer and I want to coach it by saying, I believe I'm correct. When we reported this at ASCO, there were four patients who showed shrinkage, I think out of 12 that were being evaluated after PD-1 or PD-L1 failure. And I can say that two of the four with shrinkage are confirmed PRs at the last analysis. And I have to again caution that, that's my recollection. I don't have the data in front of me, but I remember at the time of ASCO that there were two that converted from shrinkage, one partial response to confirmed responses.

Nick Abbott

Okay. So would it be reasonable to assume that a path forward in lung would be in PD-1 failures?

David Goldenberg

Well, I'm looking at that very carefully. I would like to get the indication for patients who have failed at least two prior therapies, chemotherapies or including patients who have failed a prior checkpoint inhibitor therapy. I believe that we will have encouraging data. I can't say it will be sufficient at this point because not only is response - I feel response is not as important, frankly, as duration of response and overall survival. And I think we'll - so far, I'm encouraged with the survival data.

The prospect really is, I believe, because of IMMU-132's mechanism of action as a DNA inhibiting agent that we should look to combination therapies. And some of the agents that are used frontline in non-small-cell lung cancer and even in small-cell lung cancer have shown in animal studies that were performing at least combinatorial effects and in some cases synergism.

So if preclinical animal studies are predictive, I would think that we should do the same in patients in the future and not really just say whether or not a monotherapy with IMMU-132 should be used as second, third or fourth line therapy in non-small-cell lung cancer. But in order to establish its promise, we're doing this monotherapy throughout - in patients who have failed most of the therapies, now including immune checkpoint inhibitors.

Operator

Thank you. And our next question comes from the line of Monish Bahl with MHB Capital. Your line is open. Please go ahead.

Monish Bahl

Thank you. Just two quick questions. One is, last quarter you announced a special consultant to the CEO. Is that person still on board and can you talk about their role within the company? And two, the second question is around the events around ASCO, has that impacted the timing of a partnership or has that been muted? That would be great. Thank you.

David Goldenberg

Well, with regard to the first question, the answer is yes. I find him very valuable with a lot of experience and knowledge of introducing and building a pipeline as well as interaction with other companies in the, particularly, the area of licensing. And the second question is with regard to ASCO. I believe it's behind us now. Most of the companies that I know of have experienced this at one time or another in their own history. Appreciate that it had nothing to do with the quality of the data and therefore, we're just moving on.

Cynthia Sullivan

So, I'd like to clarify a little bit there. You're talking about consultant and we actually have two things going on. So you know that we've announced the - Dr. Barer's advisory role to David. And then in addition to that, we have an advisory group, an independent group who is working on with business development activities specifically related to IMMU-132 and partnering. So I just wasn't sure which consulting group you were referring to there.

Monish Bahl

Okay. I was talking about Dr. Barer, but I think you've answered that.

Cynthia Sullivan

Yes, the doctor is still on board, yes.

Monish Bahl

But is that consulting group that you've engaged, they're in charge of the partnership with regard to 132, correct?

Cynthia Sullivan

That's correct.

Operator

Thank you. And I'm showing no further questions at this time. And I would like to turn the conference back over to Ms. Cynthia Sullivan for her closing remarks.

Cynthia Sullivan

So thanks very much for joining us on the call this afternoon. And on behalf of the entire management team, I'd like to thank you for your continued support and your interest in Immunomedics. Have a nice evening.

Operator

Ladies and gentlemen, this does conclude today's program and you may all disconnect. Everyone, have a great day.

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