Astex Pharmaceuticals Management Discusses Q3 2012 Results - Earnings Call Transcript

| About: Astex Pharmaceuticals, (ASTX)

Astex Pharmaceuticals (NASDAQ:ASTX)

Q3 2012 Earnings Call

October 30, 2012 4:30 pm ET


Timothy L. Enns - Senior Vice President of Investor Relations, Business Development & Corporate Communications

James S. J. Manuso - Chairman and Chief Executive Officer

Mohammad Azab - Chief Medical Officer

Harren Jhoti - Founder, Chief Executive officer and Director

Michael Molkentin - Chief Financial Officer, Principal Accounting Officer and Corporate Secretary


Boris Peaker - Oppenheimer & Co. Inc., Research Division

Robin Davison - Edison Investment Research Limited


Good day, ladies and gentlemen, and thank you for your patience. You've joined the Astex Pharmaceuticals Q3 2012 Earnings Conference Call. [Operator Instructions] As a reminder, this conference may be recorded. I would now like to turn the call over to your host, Vice President of Corporate Communications and Marketing, Mr. Timothy Enns. Sir, you may begin.

Timothy L. Enns

Thank you, operator. Good day, and thank you for joining us for the Astex Pharmaceuticals 2012 Third Quarter Financial Results Conference Call. With me today are Dr. James Manuso, Chairman and Chief Executive Officer; Dr. Harren Jhoti, President and Member of the Board of Directors; Dr. Mohammad Azab, Chief Medical Officer; Dr. Martin Buckland, Chief Business Officer; and Michael Molkentin, Chief Financial Officer.

In a few moments, Dr. Manuso, Dr. Azab, Dr. Jhoti and Michael Molkentin will deliver remarks on the 2012 third quarter financial results and our business outlook for the year. After prepared comments, we will open the line for questions. Earlier today, we issued a press release with our financial results. A copy of the press release is available in the Investor Relations section of our website at In addition, this call is being webcast and may be accessed via the Investor Relations section of our website. A webcast replay will be available for 30 days.

During the call, we will make projections and forward-looking statements that are based on management's current expectations. Actual results may differ materially from these forecasts and projections due to various factors. There are significant risks and uncertainties in biotechnology research and development. There can be no guarantee that our projects, products or product candidates will progress preclinically or clinically as we expect or that we will ultimately obtain approvals for the indications that we seek.

Moreover, even if our products or product candidates are approved in the future, we cannot guarantee they will be commercially successful. The company's results may also be affected by a variety of factors such as competitive developments, launches of new products, the timing of anticipated regulatory approvals or other regulatory actions, the actions of our strategic partners and collaborators with respect to the products we license or codevelop and patent disputes or litigation.

For additional information and discussion concerning the risk factors that affect the company's business, please refer to the company's filings with the Securities and Exchange Commission. The company undertakes no duty to update forward-looking statements.

In the remainder of the quarter, we will participate in several investor conferences in New York. This will include the Brean Murray, Carret Life Science Summit on November 7; the Lazard Healthcare Conference, November 13 to 14; and the Oppenheimer Healthcare Conference, December 12 and 13. Additionally, we'll also be hosting a research and development day in London on December 14. On a logistical note, if your access to this call or earnings information is impaired due to the extreme challenges the weather is inflicting to the Eastern Seaboard, please contact me or Investor Relations team for assistance in getting the information you need.

I'll now turn the call over to Dr. James Manuso, who will provide highlights of our accomplishments during the 2012 third quarter. Jim?

James S. J. Manuso

Thank you, Tim. Good afternoon, and thank you for joining us for Astex Pharmaceuticals 2012 Third Quarter Conference Call. Before I get started, I'd like to convey on behalf of the entire Astex team, our thoughts are with those of you affected by the storms on the East Coast. Please stay safe.

During the third quarter, Astex achieved several significant regulatory, operational and financial milestones. We are extremely pleased that Dacogen received approval in the European Union for the treatment of patients with acute myeloid leukemia that are over 65 years of age and not eligible for chemotherapy. Shortly after the approval, in October, we received a $5 million milestone payment upon the first commercial sale of Dacogen in the EU. Dacogen is the first drug ever specifically approved for the treatment of elderly AML. It's orphan drug status provides 10 years of market exclusivity for this indication in the EU. Astex retains the potential to earn up to $12.5 million in remaining milestones pursuant to the worldwide license agreement. Dacogen is now sold in more than 35 countries and on all continents around the world. Globally, the blended escalating royalty rate structure remains unchanged at 20% to 30% of all net sales regardless of indication or who makes the sale or where the drug is sold. Janssen-Cilag, the Dacogen sublicensee outside of North America, has performed extraordinary work to introduce Dacogen into the EU. We compliment the team at Janssen for its achievement. Naturally, we will keep you informed of Dacogen sales in the EU in the coming months.

In the clinic, we have made a great deal of progress this year. Specifically, in the last few months, many milestones were achieved with respect to both of our prioritized products, SGI-110, the next-generation hypomethylator; and AT13387, our HSP inhibitor.

I will now turn the call over to our Chief Medical Officer, Dr. Mohammad Azab, who will discuss each of our clinical stage programs. Mohammad?

Mohammad Azab

Thank you, Jim. We continue to make steady progress with our 2 prioritized pipeline products as you named them, Jim, SGI-110 and AT13387. As some of you know, SGI-110 is our second-generation subcutaneous hypomethylating agent that delivers decitabine. Decitabine is the active chemical moiety of Dacogen, and SGI-110 delivers the drug in a more sustained fashion due to its resistant to rapid elimination by the enzyme cytidine deaminase.

Earlier this year, we reported preliminary results from the Phase I portion of the acute myeloid leukemia MDS trial in an oral presentation at the American Association of Cancer Research or the AACR meeting. The results demonstrated a nice dose-dependent DNA hypomethylation that we were able to use to demonstrate the biological activity and establish what we call the biologically effective dose or BED. The data also demonstrated a clear pharmacokinetic differentiation of SGI-110 from Dacogen. I'm pleased to report that our abstract for the full Phase I data of SGI-110 has been accepted for another oral presentation, this time at the upcoming American Society of Hematology or ASH meeting in December in Atlanta. At that time, we will update the safety pharmacokinetic, the DNA Line-1 methylation and the clinical responses.

We are now actively enrolling in the Phase II part of the trial in which we are treating both treatment-naive elderly AML and MDS patients in addition to the relapsed/refractory AML population. In the Phase II expansion of the trial, patients are being randomized between the biologically effective dose, or BED, and the maximal tolerated dose, or MTD.

In addition to our hematology program in the MDS and the AML trial, we have now formally started our SGI-110 solid tumor program in solid tumors with another randomized Phase II, this time in platinum-resistant ovarian cancer in combination with carboplatin. This Phase II randomized, controlled clinical trial will evaluate the role of SGI-110 and reversing the epigenetic-based resistance to platinum in ovarian cancer patients. We are on target to initiate another SGI-110 solid tumor trial before the end of the year as we have communicated earlier.

Moving now to our other prioritized pipeline program, which is AT13387. This is a second-generation fully synthetic and potent HSP90 inhibitor. AT13387 is now in 3 Phase II clinical trials. One trial is in gastrointestinal stromal tumors, or GIST, in combination with imatinib. The second trial is in castration-resistant prostate cancer, or CRPC, in combination with abiraterone acetate. And as we announced most recently, in non-small cell lung cancer in combination with crizotinib in patients with ALK translocation.

Earlier this year, we have communicated at the ASCO conference the Phase I data on AT13387, which clearly demonstrated the biological activity, clinical responses were observed and the maximal tolerated dose has been clearly established for this drug as a single agent. These 2 new Phase II trials in prostate cancer and lung cancer are both randomized trials investigating not only the role of AT13387 in combination with the respective agents in these cancers, but also as a single agent. Both trials have an initial lead-in phase to establish the MTD of the drug given in combination with abiraterone acetate in prostate cancer or crizotinib in ALK-positive non-small cell lung cancer. Both trials will also establish the biological activity in the lead-in part of the trial by studying the knockdown or depletion of client proteins, mainly the androgen receptors in the prostate cancer trial and the ALK protein in the lung cancer trial. Achievement of the biological activity will be a prerequisite for us for expanding the trials into the randomized Phase II part. The 2 trials, in our opinion, provides the most comprehensive investigation of an HSP90 inhibitor in the treatment of castration-resistant prostate cancer and ALK-positive non-small cell lung cancer. I'm looking forward to providing you additional updates in our clinical program as these clinical trials progress.

I would now like to turn the call back to Jim.

James S. J. Manuso

Thank you very much, Mohammad, and congratulations to you and the clinical and regulatory staves for your many accomplishments this last quarter.

In addition to the clinical and regulatory progress Astex has made on our internally developed drugs, our partners are advancing company-owned medicines in the clinic. Three Phase I clinical trial programs addressing significant unmet medical needs are being developed by our partners. These oncology focused programs include: LEE011, a CDK4 inhibitor licensed to Novartis; AZD5363, a PKB/Akt inhibitor licensed to AstraZeneca; and JNJ 42756493, an FGFR inhibitor licensed to Janssen.

Productivity in the discovery operations division of our company has been significant. We announced scientific breakthroughs in major publications and the advent of 2 major collaborations. The most recent collaboration with Cancer Research Technology and Newcastle University is focused on drug target biology and translational biology. The other collaboration in epigenetics drug discovery partnership is with the Institute of Cancer Research and Cancer Research Technology Limited. These collaborations have the potential to generate novel compounds for future development, and they make extensive use of our expertise in fragment-based drug discovery.

At this time, Dr. Harren Jhoti, President and Director, will update you on our progress in discovery operations based in Cambridge in the U.K. Harren?

Harren Jhoti

Thank you, Jim. Yesterday, we announced the significant new collaboration with Cancer Research Technology Limited, or CRT, and Newcastle University in the U.K. This drug discovery partnership combines the strength of Astex's fragment-based drug discovery engine Pyramid and expertise in medicinal chemistry with Newcastle and CRTs strength in investigating novel target biology and translational research and biomarkers. This new collaboration built on a previously successful partnership between the 3 groups that was focused on another target, FGFR kinase, the inhibitor of which is now partnered with Janssen and advancing in a Phase I study.

Additionally, in early September, Astex, Cancer Research Technology and the Institute of Cancer Research announced an epigenetic drug discovery collaboration in blood cancer. The collaboration combines Astex's Pyramid discovery platform and the epigenetic drug development expertise in blood cancer biology at the Institute of Cancer Research, or ICR, and the history of successful drug discovery between Astex and the Cancer Research U.K. Cancer Therapeutics Unit at the ICR. This partnership builds on the collaboration of Astex with the ICR and CRT to investigate the cancer target called PKB or Akt. That collaboration led to the discovery of 2 clinical candidates.

The first of these, AZD5363, was taken into Phase I by our partner AstraZeneca in early 2011. And the second of which, AT13148, is being prepared for Phase I clinical trials under our development partnership with Cancer Research U.K.

Our early-stage research has been recognized internationally. We are particularly pleased that our discoveries of novel allosteric modulators, or HCV NS3 and PKM2, two key therapeutic targets, were recently published in major journals. The article on the viral target, HCV NS3, describes how Astex's scientists exploited the novel allosteric pocket to develop first-in-class inhibitors of the HCV NS3 protein. This work is expected to generate a potential drug candidate for HCV patients that could end the clinical trials next year.

The nature article on PKM2 described a novel allosteric mechanism that controls the biology of this key cancer target that is involved in tumor metabolism. We are very proud of the scientific work being done at Astex, and we are pleased that this work continues to be recognized by the scientific community, our academic collaborators and the broader pharmaceutical community.

I will now turn the call back to Dr. Jim Manuso.

James S. J. Manuso

Thank you very much, Harren. Do convey, again, our appreciation to the discovery operations scientists on their achievements during the third quarter of 2012. In addition to the many advances in our clinical, regulatory, scientific and partnered programs, we remain disciplined and focused financially. In the third quarter, we recognized royalty revenue of $17 million and ended the quarter with almost $130 million in cash and marketable securities. This makes our balance sheet one of the strongest amongst our peers.

At this time, I will turn the call over to Michael Molkentin, our Chief Financial Officer. Michael will provide details on our 2012 third quarter financial results, and he will also provide us an update on financial guidance for 2012 and 2013. Michael?

Michael Molkentin

Thank you very much, Jim. The company reported a net loss for the 2012 third quarter of $1.8 million or $0.02 per basic and diluted share compared with a net loss of $1.1 million or $0.01 per basic and diluted share for the same prior year period. The company also reported net income for the 9 months ended September 30, 2012, of $3.7 million or $0.04 per basic and diluted share compared with a net income of $5.3 million or $0.08 per basic and diluted share for the same prior year period. Please recall that the acquisition of our U.K. discovery operation was completed during July 2011. That subsidiary's results are fully included in our 2012 third quarter operating and financial results, but they are not reflected for the entire third quarter in the same prior year period.

Total revenues for the 2012 third quarter were $17.2 million compared with $16.9 million for the same prior year period. Total revenues for the 2012 third quarter include royalty revenue of $17 million compared with $16.6 million for the same prior year period. Our royalty revenue is earned pursuant to a worldwide license agreement for Dacogen and is generally recognized when received. Total operating expenses for the 2012 third quarter were $26.6 million compared with $20.1 million for the same prior year period. The primary reasons for the increase in total operating expenses for the 2012 third quarter, when compared with the same prior year period, are the consolidation of research and development and general and administrative expenses related to the acquisition of Astex Therapeutics Limited that was effective July 20, 2011, increasing research and development activities for our programs associated with SGI-110 and AT13387, an increase in the amortization of intangible assets and the recording of an impairment charge associated with the write-down of an intangible asset.

For the 2012 third quarter, the noncash expense for amortization of intangible assets was $1.9 million compared with $1.5 million for the same prior year period. The noncash impairment charge of intangible assets was $7.4 million for the 2012 third quarter, while there was no similar charge for the same prior year period, while stock-based compensation expense, also a noncash charge, was $885,000 for the 2012 third quarter compared with $858,000 for the same prior year period.

Included in our 2012 third quarter net loss is a $2.6 million gain on sale of investments related to the disposition of an equity position we held in another entity. We had no similar gain for the same prior year period. In addition, the 2012 net loss includes an income tax benefit of $5.5 million compared with an income tax benefit of $2.4 million for the same prior year period. The income tax benefit for the 2012 third quarter was primarily due to the recognition of a tax benefit associated with the amortization of deferred tax liabilities resulting from the acquisition, a change in the U.K. tax rates and the utilization of a foreign research and development tax credit related to the U.K. subsidiary. The company continues to report a strong financial position. At September 30, 2012, we had nearly $130 million in unrestricted cash, cash equivalents and current and noncurrent marketable securities compared to approximately $121 million at June 30, 2012.

Reflected in today's news release is the company's revised financial guidance for 2012, in addition to the initial guidance for the 2013 calendar year. Selected comments on our 2012 financial guidance include: the royalty revenue guidance, as previously reported, remains unchanged at $70 million for 2012; annual development and license revenue has been increased to $12 million, reflecting the inclusion of the $5 million milestone earned, resulting from the first commercial sale of Dacogen in the EU during our 2012 fourth quarter; we have reduced our anticipated research and development expenses for 2012 from our previous guidance of $65 million to a revised $61 million for the year. This reduction is primarily driven by the timing of anticipated expenses related to the multiple Phase II clinical trials for SGI-110 and AT13387 that are currently ramping up; the noncash charges related to the amortization and impairment of intangible assets is anticipated to be approximately $15.5 million for 2012; general and administrative expenses have been increased modestly from our previous guidance of $15 million to a revised $15.5 million for the year; our estimated income tax benefit has been revised to $10.5 million for 2012. Considering the impact of the operational initiatives influencing our revised financial guidance, we are now forecasting net income of $4 million for the year, an improvement from the net loss previously guided to. Total operating expenses include various noncash charges such as amortization and impairment charges, stock-based compensation expense and depreciation that are estimated to total approximately $20 million for 2012, which, when considered with our revised annual net income guidance, should position us to be operationally cash flow positive for the year.

Now comments on our 2013 financial guidance. Annual royalty revenue is initially targeted at $60 million. The reduction from 2012 is based on the expectation of lower Dacogen product sales in the U.S. as orphan drug exclusivity expires during the year, partially offset by incremental royalty revenue expected from increased Dacogen product sales occurring primarily in the EU as J&J enhances their selling and marketing efforts in the European market. Though we anticipate the potential of earning additional development and license revenue from our partnered programs during 2013, we do not guide to such revenue due to the general uncertainty around and timing of milestone achievements and payments. We are forecasting an increase from 2012 of our anticipated research and development expenses for 2013 to approximately $67 million. The increase from the prior year reflects the continuing ramp-up of the 4 Phase II clinical trials related to our SGI-110 and AT13387 development programs. The noncash charge related to the amortization of intangible assets is anticipated to be approximately $8 million for 2013. General and administrative expenses are expected to decrease modestly from the prior year to $15 million, and our estimated income tax benefit is forecasted at $8 million. Considering the impact of the operational initiatives influencing our financial guidance for 2013, we are initially forecasting a net loss of approximately $22 million, keeping in mind that this forecasted net loss does not reflect any anticipated development and license revenue that may result during this period nor does it speak to our cash flow status for the year. Noncash operating charges for 2013 included in total operating expenses are currently estimated to total approximately $12 million.

This concludes the review of our financial results for the 2012 third quarter and comments on our updated annual financial guidance for 2012 and our initial annual financial guidance for 2013. I will now turn the call back to Dr. Manuso for closing comments.

James S. J. Manuso

Thank you very much, Michael. As we reported, Astex achieved major clinical, regulatory, scientific, collaboration and financial milestones during the third quarter of 2012. And we're very well positioned to capitalize on the progress we have made thus far. There is now certainty regarding the continuing role Dacogen will play with respect to our financial health in the years ahead. Revenues deriving from Dacogen sales worldwide and potential milestone payments from partners will permit us to advance our prioritized clinical programs. We do not plan to raise money in the markets for the foreseeable future. Medicines in the hands of partners have the potential to yield significant milestone payments and royalties in the near term and thereafter. Collaborations with some of the world's foremost research centers will permit us to replenish our pipeline of novel compounds for many years to come. We're very pleased with the progress that has been made at Astex, and we work to bring valuable drugs to patients in need around the world.

Before closing, I want to compliment our clinical and scientific teams for their multiple accomplishments. Thank you all. Dr. Harren Jhoti, Dr. Mohammad Azab, Dr. Martin Buckland, Michael Molkentin, Tim Enns and I are now ready to answer your questions. Operator, we'll take questions at this time, please.

Question-and-Answer Session


[Operator Instructions] Our first question comes from Boris Peaker of Oppenheimer.

Boris Peaker - Oppenheimer & Co. Inc., Research Division

I have a couple of questions. On the Dacogen front, in your communication with the European partner, what are the expectations for peak sales or rate of adoption or any kind of qualitative or quantitative comments that you can make at this time?

James S. J. Manuso

Well, at this point, we've not organized our guidance relative to the ramp-up on the one hand and peak sales on the other. We do expect to reconnoiter with our partners at Janssen in order to be much more specific as time passes. Given the fact that, as you know, we did receive a $5 million milestone payment from Janssen as a result of the first commercial sale in the EU, so we're very confident that they are aggressively seeking to integrate the drug into the channels in the EU. As we know more, Boris, you will, but at this point, we're simply not in a good position to comment on the ramp-up or peak sales. What we have said, of course, is that we do expect more than sufficient royalty revenue next year given the current uncertainty as to exactly when the orphan drug designation for Dacogen and MDS in the EU lapses. Michael, would you like to comment on this at all, please?

Michael Molkentin

No. I think you framed it correctly because the difficulty at this point in time, at this early stage in the game, is to really -- it's difficult to forecast with a high degree of confidence what the future looks like from a peak sales perspective. So I think we will modify our guidance as we get better information from the licensees and that information will be communicated and updated in our quarterly calls.

Boris Peaker - Oppenheimer & Co. Inc., Research Division

And could you comment -- I guess, maybe it's an extension of the same question. In terms of the royalty transition in U.S. and as the new royalties will come on, I guess, how long and what are your expectations for U.S. royalties for Dacogen?

James S. J. Manuso

Well, at this juncture, we know there is a probability of the drug going off orphan designation in the U.S. in May of next year. We don't have final statements from FDA as to whether or not there's an outside possibility of the orphan designation being extended based on the pediatric AML trial to November. Obviously, as soon as we know, we'll let everyone know. That clearly would have a major bearing on the revenue base for next year. But at this juncture, we just don't know when those curves are going to cross. Clearly, the longer the drug has orphan designation in the U.S., or alternatively, to the extent that Vidaza remains ungenericized, that might have a bearing as well on the extent to which ASI can continue to sell the branded drug going forward. So there are a number of uncertain variables here, Boris, and again, we just don't have the firm answers on that. What we have said of course is that at this juncture, we do, on a conservative assumption, assume that royalty revenue for the year will be off by about $10 million compared to our guidance for this year. We expect 2013 maybe $60 million. So as we get greater clarity vis-a-vis the crossover, we'll update that in real time. But we just can't say more than that at this point. However, I want to be very clear about our being quite sanguine relative to our being in a position of taking care of all of our expenses going forward very comfortably.

Boris Peaker - Oppenheimer & Co. Inc., Research Division

Okay. And my last question is a development question. You recently continued development of MP470 after some initial efficacy, which I actually think could congratulate you on making such a quick decisive action. So I guess my question then is specifically regarding 13387. Do you have a similar threshold in mind and particularly in the prostate cancer setting where there's quite evolving dynamics going on at this time?

James S. J. Manuso

All of our trials are designed that way. But I'll pass that along to Mohammad.

Mohammad Azab

Yes, Boris. I mean, that's an excellent question. We do, in the design of our trials, have both stated thresholds in certain endpoints and the protocol and other thresholds that are more subtle because they are concerning the biological activity of the drug in terms of the, for example, for the specific example of 13387, it is the downregulation or knockdown of the client proteins that we would like to see to confirm basically the biological hypothesis of the activity of the drug. So these thresholds, as I said, have been formulated both of the protocols and in our plans of assessing the biological activity of the drug. For SGI-110 also we have very clear thresholds, both from in terms of the -- some of the clinical data but also on the biology in terms of the levels of hypomethylation we get and also the levels of re-expression of some of the tumor suppressor genes and the cancer [indiscernible].

James S. J. Manuso

And Mohammad, perhaps you could comment on way in which you design trials generally.

Mohammad Azab

Well, I mean, if I just -- I mean, I say that's kind of the right way of designing trials. We always try to -- in addition to putting a threshold, is that we always -- especially when an agent is kind of in a new area and we do have a biology -- or biological mechanism of action, we do try to verify early on in the trial that both we are hitting the target, we have the biological activity confirmed and we have early evidence of clinical activity before we expand the trial. So as you would notice, when we announced the design of our trials, most of them are randomized Phase II trials that will have a proper investigation of the agent. But in the lead-in part of that to the randomization, we always look at the biology, the safety especially when we're looking at in the context of a combination. So these things will be sorted out first in an initial relatively smaller number of patients, and after that, once we confirm all of these endpoints, we will expand into the larger randomized, to get a more definitive proof of concept. Because I think -- I mean, one of the problems of -- in drug development in general, a lot of people would do a trial and at the end of the day, do not really be able to answer any question, "Well, did it really work or not?" And I think that, to me, that's not the definitive proof of concept, the Phase II trial. And we tried to design trials with the help, of course, with our collaborators, scientific community and key opinion leaders. We try to design our trials in order to have clear thresholds in the protocols and also in the way the numbers, in terms of the power for the drug, the number's being calculated so that we have enough patients to achieve what we want to achieve so that, at the end of the day, we can make a very clear determination whether this is a drug that will go forward to Phase III and registration or this is a drug that we would like to stop. It is similar in a way to what we did with amuvatinib or MP470 as you've noted earlier.


[Operator Instructions] Our next question comes from Robin Davison of Edison Investment Research.

Robin Davison - Edison Investment Research Limited

I have a couple of questions, really, on AT13387. Obviously, the 2 studies, the initiatives are very interesting. The prostate cancer one, what I'm just wondering, first of all, is the patients that you're recruiting or intent to recruit will be -- would've had Docetaxel? Obviously, the label is likely to change for abiraterone and Zytiga before long. And I think totally, we have some patients only receiving it pre-Docetaxel earlier in their disease already off label. And I just wanted to have a bearing in your thinking.

Mohammad Azab

Yes, Robin, that's a good question. We have anticipated that development so actually the study protocol allows for patients to enter the trial regardless of whether they received Docetaxel before or not, as you have rightly stated. It's currently only approved as Zytiga or abiraterone. It's only approved thus for chemotherapy. But as you already probably know, the application is already submitted in the U.S. for trial has been positive for patients prior chemotherapy. So we expect that also to be available and approved. So when we were designing the trial, we are allowing patients to be eligible regardless of whether they got chemotherapy or not.

Robin Davison - Edison Investment Research Limited

Okay. The second one really relates to the non-small cell lung cancer study. I wondered if you quickly sort of take me through what you're trying to show in this because its an interesting design with obviously its 3 parts. You're looking to show efficacy of both with crizotinib banding, crizotinib failure, it would seem. Is that right?

Mohammad Azab

Close. I mean, the original, as you well noted, is in 3 parts and we're trying -- because we're trying to answer kind of 3 different questions. The lead-in part is basically just to get to the MTD and the combination and the biological activity where we're getting pre and post material from the patients to look for the depletion of the client protein, so that's the first part of the first question. Once the drug passes that hurdle, we are going to 2 parts, basically, in combination with crizotinib versus continuing crizotinib in patients who are still either responding or stable in crizotinib. And for those who are progressing onward on crizotinib, we're randomizing them between single agent or the combination. So each part of the trial answers the different question relating to the role, really, of HSP90 inhibitor and ALK. As you certainly know, there has been a lot of data that the ALK patients are quite sensitive to HSP90 inhibition. But so far, there hasn't been a relatively large trial that addresses whether that could be in crizotinib -- early in crizotinib, crizotinib naive or crizotinib resistant or whether that needs to be in single agent or in combination. We are not looking at crizotinib naive, by the way. This is patients who already have crizotinib but had not progressed.

Robin Davison - Edison Investment Research Limited

Okay, right. Is it correct that the Parts B and C run concurrently. They're not sequential?

Mohammad Azab

No. They are run concurrently, you're right. Yes, just to clarify, Part B and C concurrently but Part A is sequential like we have to go through Part A first before opening Part B and C.


As there are no further questions in queue, I'd like to turn the call back over to Dr. Manuso for any closing comments.

James S. J. Manuso

Well, thank you very much for participating in today's call. Again, we're very pleased with our progress, appreciate the support of our shareholders and wish all who find themselves living in or presently visiting the East Coast to be in good health and safety. Thank you very much.


Thank you, sir. And thank you, ladies and gentlemen, for your participation. That does conclude your program. You may disconnect your lines at this time. Have a great day.

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