Alder's (ALDR) CEO Randy Schatzman on Q3 2017 Results - Earnings Call Transcript

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About: Alder Biopharmaceuticals Inc. (ALDR)
by: SA Transcripts

Alder BioPharmaceuticals (NASDAQ:ALDR) Q3 2017 Results Earnings Conference Call November 7, 2017 5:00 PM ET

Executives

David Walsey - VP, Corporate Communications

Randy Schatzman - President and CEO

Roger Cady - VP, Neurology

Elisabeth Sandoval - CMO

Larry Benedict - EVP and PAO

Analysts

Tyler Van Buren - Cowen and Company

Brian Abrahams - RBC Capital Markets

Sarah Weber - Piper Jaffray

Difei Yang - Mizuho

Jeh-Fei Lin - Leerink

Danielle Brill - Needham & Company

Matthew Luchini - BMO Capital Markets

Sumant Kulkarni - Canaccord Genuity Inc.

Operator

Good afternoon, and welcome to the Alder Biopharmaceuticals Third Quarter 2017 Conference Call. At this time, all participants are in a listen-only mode. Following the formal remarks, we will open up the call for questions. Please be advised that this call is being recorded at the company's request.

At this time, I'd like to turn the call over to David Walsey, Alder's Vice President, Corporate Communications. Please proceed.

David Walsey

Thank you, operator. Good afternoon and thank you for joining us. Just after the market closed today, we filed our Form 10-Q for the third quarter of 2017 with the Securities and Exchange Commission and issued our financial results and corporate highlights press release, both of which are available in the Investors section of our website at www.alderbio.com.

Today on our call, we have Randy Schatzman, President and CEO; Dr. Roger Cady, our VP of Neurology; Elisabeth Sandoval, our Chief Commercial Officer; Larry Benedict, Executive Vice President and Principal Accounting Officer; and Mark Litton, Chief Business Officer is also with us today.

Before we begin, I'd like to caution you that during today's conference call, we'll be making forward-looking statements regarding future events or the future performance of the company, including statements about possible future developments regarding clinical, regulatory, commercial financial and strategic matters.

Actual events or results, of course, could differ materially, we refer you to the document that Alder files from time-to-time with the SEC and in particular, our quarterly report on Form 10-Q for the quarter ended September 30, 2017 that we filed with the Securities and Exchange Commission today November 7, 2017.

These documents, which are available on the SEC's website, contain and identify under the heading risk factors, important factors that could cause actual results to differ materially from those contained in any forward-looking statements, including, without limitation, risks and uncertainties related to the initiation, conduct and results of clinical trials; the availability of data at the expected time, the clinical therapeutic and commercial value of Alder's drug candidates, risk and uncertainties related to regulatory application, review and approval processes and compliance with applicable regulatory requirements, risks and uncertainties relating to the manufacturer of Alder's drug candidate, Alder's ability to obtain and protect intellectual property rights and operate without infringing on the intellectual property rights of others, the sufficiency of Alder's capital and other resources and market competition.

With that, let me pass the call to Randy.

Randy Schatzman

Thank you, David and welcome everyone to our third quarter of 2017 call. I'll begin today with a review of our third quarter highlights and the positive progress we're making with our lead pivotal-stage product candidate eptinezumab, including a number of key upcoming milestones in support of our BLA filing and approval.

Following my remarks, Roger will discuss our recent presentations at the Congress of International Headache Society meeting in September and the encouraging feedbacks we're hearing from leaders within the migraine community.

Elisabeth will then provide perspective on our target market, commercial approach, eptinezumab's compelling value proposition both for patients and physicians, as well as for our shareholders. Finally, Larry will provide a review over our third quarter 2017 financials.

At the onset, let me say that I'm quite pleased with the progress that we're making with our eptinezumab development program. We remain on track to complete our BLA submission as planned in the second half of 2018.

Our BLA submission will include our successful PROMISE 1 pivotal study in frequent episodic migraine patients for which we reported positive data in June and highlighted the reproducible consistency of eptinezumab's unique clinical profile. As well as our PROMISE 2 pivotal trial in chronic migraine patients. I'm pleased to report that PROMISE 2 is now fully enrolled and will remain on track to announce topline data in the first half of 2018.

As a reminder, PROMISE 2 uses the same end points that we used in our successful PROMISE 1 pivotal trial in similar end points as our successful Phase 2b chronic migraine trial.

Our submission will also include the results of our ongoing open-label safety study. This open-label safety study is fully enrolled and on track to be completed in the first half of 2018.

We're also on track with key CMC and manufacturing activities supporting our BLA submission, including a PK comparability study to be conducted in 2018 to ensure commercial readiness of supply upon launch.

As we've discussed previously, we estimate that there are approximately $5 million episodic and chronic migraine patients, who are severely impacted by migraine and are currently underserved by preventive therapy. This represents a large market segment that Alder is uniquely positioned to serve.

During the quarter, we participated at IHC, where we delivered seven presentations that provided clinical data and analysis for eptinezumab. This meeting gave us valuable insights on the advantages of eptinezumab, as the first-to-market anti-CGRP infusion therapy for these severely impacted patients.

This feedback, together with our strong clinical trial results, reinforces our confidence in our compelling and distinct commercial advantage with eptinezumab in a unique space, where our infusion approach fits into the existing healthcare landscape, delivery capabilities, and needs.

For now, based on the size of the infusion market and the strength of eptinezumab's profile and the support of feedback we received from the physician community, we've determined that the most prudent use of our limited resources in the near-term is in support of our BLA filing for eptinezumab infusion.

With respect to subcutaneous route of administration, we believe it's potentially an important way to enhance the value of eptinezumab and we will continue our work following our BLA filing. At which point, we will also provide you with an update on our strategy and plan.

Our work indicates that eptinezumab's compelling clinical profile is particularly important to the approximately 3,000 migraine specialists that we have defined as interventionalists, and who we estimate see the highest volume of severely impacted patients.

Because of these patients' profiles, these physicians currently use procedures, including prescribing infusion therapies to manage their patients' acute and preventive needs. They understand the benefits of treatments that enable clinician oversight and control and promote patient adherence. These practices are also set up for buy and bill and procedure reimbursement.

In addition to eptinezumab and consistent with our commitment to building a broad migraine franchise, we continue to event our ALD1910 program. ALD1910 is a monoclonal antibody targeting PACAP-38 or pituitary adenylate cyclase-activating peptide 38.

Like CGRP, PACAP-38 is understood to be a key factor in the initiation of migraine. There will be at a separate pathway from CGRP. We believe targeting PACAP-38 hold significant potential, particularly for people living with migraine who may have inadequate response to agents targeting CGRP or its receptor. We're continuing to advance ALD1910 through IND-enabling studies, which include toxicology studies and GMP manufacturing.

As you likely saw earlier today, we filed an 8-K announcing the Timothy Whitaker; our Chief Medical Officer will step down at the end of the year and will remain available as a consultant through the first half of 2018. This follows a mutual agreement to part ways. We have engaged an executive search firm to assist with identifying qualified candidates. Importantly, we remain on track with respect to PROMISE 2 timing and our BLA filing.

As we discussed in our second quarter earnings call, we're focused on making very efficient use of our capital. We're on track with respect to our cash position and Larry will provide additional insights later on this call.

Importantly, we continue to believe our cash balances will be sufficient to meet our projected operating requirements through late 2018 and early 2019, enabling us to achieve the planned BLA submission for eptinezumab and other key eptinezumab activities.

Overall, we are pleased with where we are and with the progress we're making towards the BLA filings and bringing eptinezumab to market in order to capture the $1.5 billion to $2 billion infusion market opportunity that we see.

Now, I'll turn the call over to Roger to elaborate further on our recent participation at IHC. Roger?

Roger Cady

Thanks Randy. As Randy mentioned, our confidence in eptinezumab's clinical profile and the unique benefits of infusion will rather -- will further reinforce during the IHC when we presented additional data from our PROMISE 1 pivotal trial in episodic migraine to our colleagues, industry partners, international scientists, and clinicians.

Alder sponsored a satellite symposium, which I moderated titled, "Expert perspectives: Migraine Prevention for Highly Impacted Patients," led by nationally and internationally recognized migraine experts, including doctors: Richard Lipton, Merle Diamond and Stewart Tepper.

Key highlights from the symposium were how current preventative migraine treatments failed to meet the needs of most patients and are limited in safety, efficacy, and tolerability.

Further, over two-thirds of the patients who by national guidelines should be candidates for preventative therapy didn't receive it. And of those patients prescribed preventive therapy, over 80% discontinued within one year due to these limitations.

We also discussed how the current standard for defining successful preventive therapy is a 50% responder rate. This standard has been defined historically by what current therapies and treatments are capable of delivering and not necessarily by what patients need or desire.

Based on my clinical experience, patient preferences is for successful preventive therapy include a greater reduction in migraine days and the ability to achieve control of migraine more rapidly.

Importantly, clinical data from PROMISE 1 highlighted that eptinezumab's infusion responder rate of greater than or equal to 75% are associated with more meaningful improvement in SF-36 scores, which is a validated patient reported tool that measures improvement in the quality of life.

Importantly, the greater than or equal to 75% responder rate translates into significant days of migraine freedom for patients, meaning the patients are not experiencing migraine overextended periods of time. These significant periods of freedom from migraine allow patients to regain control of their lives, pursuing careers, and importantly, their family life.

While attending IHC, we also met with migraine thought leaders to solicit their expert feedback on the attributes that differentiate eptinezumab. Many of the physicians we met with have championed the development of new treatments for migraine dating back to development of treatment of triptan products in the 1990 and currently are involved in most, if not all, CGRP clinical development programs.

Overall, they expressed genuine excitement about eptinezumab's unique clinical profile and the potential to fundamentally change the treatment paradigm of migraine. Because of their experience in treating migraine patients, they understand the significant clinical benefits associated with 100% bioavailability, which can only be achieved through infusion delivery.

By way of comparison, subcutaneous products have bioavailability ranging from 50% to 70% regardless of whether they have receptor or ligand targets. This limits monoclonal antibodies to deliver via the subcutaneous route of administration from achieving prevention as early as one day, and achieving greater than or equal to 75% responder rates by one month and sustain for three months following a single administration.

These key physician thought leaders reinforce the importance of providing treatment that aligns with the therapeutic needs of patients and based on the data, the unique value they believe eptinezumab infusion will provide for their severely impacted patients.

What we're hearing from our migraine specialists/physician advisors is that their patients have been coping with the disease of migraine for many years, often decades. And then eptinezumab's differentiating characteristics may provide meaningful improvement in clinical outcome and to their quality of life.

Further, these physicians believe that most of their patients would find quarterly infusion therapy very desirable for managing their migraines versus having to give themselves subcutaneous injections at home.

Lastly, these physicians note that a quarterly infusion therapy like eptinezumab will provide an opportunity for appropriate medical monitoring of their highly-impacted migraine patients, while at the same time, ensuring adherence to prevent any treatment plans for additional three months.

So, as you can see, our strategy with eptinezumab infusion is supported by meaningful differentiating clinical data as well as scientific and physician expert perspectives.

Elisabeth will now discuss the commercial implication of eptinezumab's differentiating clinical profile.

Elisabeth Sandoval

Thank you, Roger. To start, I want to build on Randy's and Roger's comments regarding why our product profile and delivery give such confidence that we will be a meaningful player in the migraine treatment and prevention space.

As the only anti- CGRP administered by quarterly infusion in development for the prevention of migraine, eptinezumab has the opportunity to address a significant unmet need for severely impacted migraine patients.

We made a strategic decision to pursue an IV mode of administration for eptinezumab and as we continue to interact with physician, our confidence in the value this route of administration have increased. Physicians want therapeutic option, so they are better able to tailor the treatment to the specific therapeutic needs of their patients.

From our market research, we know that 77% of migraine specialists who are interventionalists have previously prescribed IV for their patients' migraine symptoms. And 87% of these patients report they had a positive experience with IV treatment. It's within this physician audience group and for these patients that we believe eptinezumab's IV delivery and clinical performance will have a significant commercial advantage over alternative.

As part of our U.S. commercial planning, we'll look to ensure that eptinezumab IV administration is not limited by migraine specialist infusion capabilities. And currently among our target physician audience group, approximately 65% have been helped IV capabilities.

We're encouraged by feedback we are receiving from several top thought leaders in the community that in anticipation of eptinezumab approval, are already initiating plans to build out new or expand existing IV capability.

Additionally, we're looking at multiple options to enhance IV access for physicians and patients beyond in-house capabilities. These include relationships with contracted companies that specialize in turnkey capabilities within a practice, freestanding IV centers, and hospital options.

We anticipate IV capabilities and options will continue to grow within neurology as new IV treatments, particularly for [Indiscernible] are launched. We will be prepared at launch to ensure that IV access is not limitation to eptinezumab uptake and success for physicians or patients. No matter geographic locations or site of service.

In summary, we're confident in eptinezumab's compelling value proposition, both for patients and physician, as well as our shareholders. And we continue to believe eptinezumab infusion will be a competitively differentiated product offering at launch.

We see multiple inherent advantages associated with our infusion procedure, which are reinforced by eptinezumab's clinically validated characteristics to-date. Given our target physician and patient population, we believe that as the first and only company to launch with an infusion therapy will have a significant advantage in a distinct market, which Alder can own, and which as Randy noted earlier, we believe is $1.5 billion to $2 billion opportunity.

As we look ahead, we know there is a lot of work to be done on the commercial front, and our team is working diligently to ensure commercial readiness and anticipation of eptinezumab approval.

And with that, I will turn the call over to Larry.

Larry Benedict

Thanks Elisabeth. During the third quarter of 2017, our eptinezumab program drove a significant portion of our operating expenses, this also included an increase in general and administrative activities to support a commercial readiness activities.

As always, we are focused on prudent spending in making very efficient use of our capital and our results reflect those efforts. We ended the quarter with $340.9 million in cash, cash equivalents, short-term investments, and restricted cash compared to $224.5 million as of June 30th, 2017.

Cash balances included $151.5 million in net proceeds from a public offering in July. Our period-over-period operating results are detailed in this afternoon's press release and 10-Q filed with the SEC.

Briefly, in the third quarter R&D expenses were $52.2 million, G&A expenses were $8.2 million, and our net loss was $59.6 million or $0.92 per share. These figures represent increases over the same period last year, and reflect our commitment to advance the eptinezumab program and position the company for commercialization. As a result of our conservation efforts, our third quarter results also reflect lower operating expenses in net loss when compared to the second quarter of 2017.

Going forward, we will continue to see some variability in our expenses quarter-over-quarter and we'll continue to see a significant portion of our financial resources committed to the eptinezumab program and G&A expenses in support of building out our commercial readiness activities as we advance towards our BLA submission and product launch.

Importantly, we continue to believe our cash balances will be sufficient to meet our projected operating requirements through late 2018, early 2019 and enable us to achieve the planned BLA submission for eptinezumab and other key eptinezumab activities.

Now, I would like to turn the call back over to Randy.

Randy Schatzman

Thank you, Larry. We remain on track to report PROMISE 2 data in the first half of 2018 and submit our BLA in the second half of 2018. We're confident, we are well-positioned to transform the treatment of migraine and meaningfully improve patients' lives, particularly those patients that are most severely impacted by their migraine.

With that, we'll now open the call to your questions.

Question-and-Answer Session

Operator

[Operator Instructions]

Our first question is from Tyler Van Buren with Cowen and Company. Your line is now open.

Tyler Van Buren

Hi, good afternoon guys and thanks for taking the questions. I guess my first question; I just want to focus on onset of action. Clearly, we've seen a lot more data presented since the PROMISE 1 results, and especially more recently at IHC, you guys looked at the 50% response rate, which is a pretty robust endpoint and saw that nice delta one day that continued out through the quarter?

What have we seen with the monthly regimens in terms of 50% response rates and when they really peak out, and how do you think potential delta there with FD versus the subcus might inform physicians treatment that decisions once available?

Randy Schatzman

Thanks for that question Tyler. Let me sort of tease this up and I will turn it over to Roger to comment on the clinical practice attributes of this. I think, as you said, what's been very clear to us, is the bioavailability that FD infusion brings to the table allows that 100% access of drug into the system to suppress the biology very, very rapidly.

And there are lot of patients that are experiencing 16 or more migraines per month. They are living with four or five every week, and for them this immediate onset of action, I think, is very key for them. And I think that is one of the attributes that stands out for eptinezumab versus the competitor programs that are out there. Maybe I can ask Roger to comment a little bit on his experience on why that's really meaningful for patients.

Roger Cady

Yes, I'm happy to do that Randy. I mean, I think our results with the early onset, what you're talking about episodic or chronic migraine is very unique in the field. Basically, what we see despite, which biology you're talking about is that we have a 50% reduction in the prevalence of migraine starting day one.

And what that means for patients, as Randy just pointed out, if you're having chronic migraine with 16.5 days per month that's reduced down to less than eight literally within that first day, following infusion, and if it's the same -- and it's exactly the same if we're talking about episodic migraine in terms of a percentage. What we see with competitors very often is of the comparing change in placebo. And that's a far cry from, basically, establishing the efficacy within that first day being able to carry it all the way out through three months.

Tyler Van Buren

Great. That's helpful. And I guess the second question would be on looking at potential retreatment of PROMISE 1. Clearly, we saw results out to six months or after two quarterly treatments and we saw another step up in efficacy once the patients received that second quarterly treatment.

Will we eventually see retreatment after -- data for retreatment after the third and fourth cycle, potentially going out to 12 months? And do you think there could be a potential for additional benefit there as we look out for patients being treated through that whole year?

Randy Schatzman

Yes, I recall, Tyler, this PROMISE 1 study is a one-year study. So, patients that are enrolled in that will get four total administrations of eptinezumab, one quarter apart. The data that we've described so far has been essentially -- that primary endpoint at the end of the first quarter. Also, some data on the six-month end point and as you mentioned, there does look like there is a step up in efficacy with that second dose. And some time in the future, we'll have the opportunity to present what we call dose three and dose four at a medical meeting that's up coming. But right now, the study is actually still ongoing and we don't have that data yet.

Tyler Van Buren

Great. Thanks for taking the question.

Operator

Our next question is from Brian Abrahams with RBC Capital Markets. Your line is now open.

Brian Abrahams

Hi, thanks for taking my questions. I guess the first question on pricing reimbursement. I'm just wondering as you sort of continue to build your market research, if you might be able to talk a little bit about how the payment structure might differ for the IV versus the subcu CGRP setting?

And to what extent -- I guess what's the right way to think about how to interpret what likely be your competitors pricing the subcu ahead of your launch, as it relate to how you guys think about pricing?

Randy Schatzman

Yes, Brian, I'm going to ask Elisabeth to jump in and provide some insights on that.

Elisabeth Sandoval

So, Brian, it's early for us in discussions with payers and to comment on payer and reimbursement strategies. There are differences in how drugs were delivered -- which are delivered via procedures are reimbursed versus drugs that are taken at home such as oral or the subcus.

With that said, we believe that payers are going to recognize the importance of the value proposition that eptinezumab will deliver and that's primarily focused on, as Randy and Roger just described, which is that early day one preventative benefit have greater than or equal to 75% responder rates within the first month. And also greater than or equal to 75% responder rates that are sustained out to three months just following one administration.

Brian Abrahams

Got it. And then maybe Elisabeth follow-up for you as well. With one of your competitors recently announcing the likely use of a priority review voucher, which could potentially change the cadence of launches within the CGRP space. I'm just wondering to what extent having maybe this via two-handed market at the start might influence your commercial positioning and how contracting might evolve in the space?

Elisabeth Sandoval

Well, we'll have to see that. Now, again, it's early for us in terms of payer perspective. We're very confident, though in our ability to compete in this market and to establish what we think will be a very strong value proposition.

A couple of things, first of all, this is a very large underserved market, and we believe, really importantly that eptinezumab delivered via infusion really serves a separate market segment.

So, going back to some of Randy's comments earlier, we're focused on market segments with approximately 3,000 physicians that are essentially predisposed and/or more likely to treat their patients with procedures. These physicians also have the largest number of severely impacted patients. And taken together, we see this is a very distinct commercial opportunity and offering in the separate segment.

Brian Abrahams

Okay, make sense. One more question and I'll hop back in the queue. Can you maybe talk about your optimal timeline for bringing in a new Chief Medical Officer such that they can come up to speed on the programs and spearhead to BLA filing in order to maintain your current time lines?

Randy Schatzman

Yes, we're not going to -- we're going to take whatever time is necessary to get the best candidate to bring in-house. I think as I outlined in my comments, the good news here is that Tim remains an employee through the end of the year, will continue as an important advisor for us on into 2018, until we're able to fulfill his chair. And as such, we think we've got great coverage there.

Brian Abrahams

Perfect. Thanks so much.

Randy Schatzman

Thank you, Brian.

Operator

Our next question is from Charles Duncan with Piper Jaffray. Your line is now open.

Sarah Weber

Hi. This is Sarah on for Charles. Two quick questions from me. First -- I'm sorry, if I missed this earlier, is there any color you can provide on the PROMISE 2 baseline characteristics and whether these were in line with your expectations on the prior Phase 2b?

Randy Schatzman

Yes, maybe I will ask Roger to comment on that.

Roger Cady

Sure. Happy to do that. Basically, I just want to remind you that PROMISE 2 is fully enrolled and we expect our topline data in the first half of 2018. And it's predicated really on the Phase 2b study in terms of inclusion/exclusion criteria and same end points. And at this point, we are confident that we will see similar results between these two studies.

Sarah Weber

Okay.

Randy Schatzman

And -- I was going to say and emphasizing the targeted patients that will be enrolled in this is identical to what we did in our large Phase 2b study.

Roger Cady

Right, the inclusion/exclusion criteria are essentially the same in these two studies. We're looking at the same demographic as well in terms of who is going to be enrolled in these studies and who is enrolled in these studies.

Sarah Weber

Great. Thanks. And just one follow-up. Have you guys done market research around medication-overuse headache patients, specifically? And if so, any specific insights on the clinical need or a size of this opportunity within the chronic migraine market?

Randy Schatzman

So, I'll ask Elisabeth to touch base on that.

Elisabeth Sandoval

Yes, Sarah, so we're obviously very, very involved in understanding the full spectrum and scope of the market. We certainly recognize the impact and the value that potentially medication-overuse headache patients have in this market. And most importantly, their high unmet need as it relates to current therapies and treatments.

We're not going to comment further on how we see that, all is to say that, this is just another example of subpopulation, if you will, where we -- again, as we look to the value that eptinezumab infusion therapy and the uniqueness of its clinical profile and delivery could bring to the market. We see that patient population also as, potentially, a group that could benefit from that profile.

Sarah Weber

Great. Thank you.

Operator

Our next question is from the Difei Yang with Mizuho. Your line is now open.

Difei Yang

Hi, good afternoon. Thanks for taking my questions. Just a few quick ones. So, if we look at PROMISE 1 data, it's clear there are a small percentage of patients who are super responders to the drug. So, I'm just curious if there is any common traits that are shared by these patients? And if somehow you can predict, which patients are likely to respond extremely well?

Randy Schatzman

So, I'm going to ask Roger to shed light on that.

Roger Cady

Well, thank you for your question, and we certainly have been looking into that and we've observed the same things that you have. We did have excellent efficacy with our first infusion. We saw this in terms of 50% responders and the 75%, and even a group of people who had [Indiscernible] response, meaning they had no migraine the entire month.

The encouragement that I think that you're noting and that we've certainly observed is that with the second infusion, we saw that it's really deepening of that response in all of our responder groups, especially, the high responders as you point out, the greater than 75% responder group, and even this 100% responder group intended to grow with that second infusion. So, this is something we will look forward to as we further analyze the data.

Difei Yang

Thank you. And then we were just talking about those three -- those four potential results from those two doses, would you give us rough time line guidance on when should we expect it?

Randy Schatzman

As I said, the study is still ongoing. Obviously, we want to analyze that data and move forward and we would present it as soon as possible at one of the upcoming medical meetings. I don't know -- we haven't made a plan yet on specifically, which one this data will go into at this point in time.

Roger Cady

Randy, let me just add a little bit, and I guess to the first question. In terms of who's responding to this, it is really the profile of the patient that we've been trying to describe. A person who gives this infusion, sees his rapid response, and really the day following infusion that is sustained and built on as they go through the three-month period of time. And now we are seeing this even with further with the second infusion.

So, we are looking into the profile of this patient quite diligently and I can tell you that this is what we're seeing so far.

Difei Yang

Yes. Thank you. So, this is my last question. With regards to -- on the commercial front. Since it's IV infusion and I -- have you done market research with regards to the potential co-pay profile of the patients?

Elisabeth Sandoval

Again, as we mentioned earlier, it's early for us in discussing any of our market research as it relates to payer and/or reimbursement. I'll just say though that we are very aware of all the components and the important elements that we'll play into patient access as it relates to payer reimbursement strategies. And we'll update as we have more information.

Difei Yang

Thank you.

Operator

Our next question is from Paul Matteis with Leerink. Your line is now open.

Jeh-Fei Lin

Hi. This is Jeh-Fei Lin on for Paul. Congrats on the progress for the quarter. I really have just two questions, if you perhaps remind us on your assumptions empowering for PROMISE 2? And then give us, I guess, could you perhaps comment on your updated thoughts, well, for a subcu formulation?

Randy Schatzman

So, I'm sorry, can you clarify on the last question what you want?

Jeh-Fei Lin

Just like your updated thoughts and comments on like -- of a subcu formulation? Now, that the data is out?

Randy Schatzman

Yes. Okay. So the power assumptions on PROMISE 2, PROMISE 2 is extremely well powered for the primary and all of the key secondary end points, probably even more so than PROMISE 1 was. You'll recall that we've got 350 patients approximately in each of the dosing groups and the placebo, which gives a great power.

On the subcu formulation, yes, as we've mentioned earlier, the eptinezumab infusion is something that over time we've had an opportunity to really understand the magnitude of what this opportunity is and we've got pretty excited by that.

And so in our mind, the things to do first is to launch an IV formulation for eptinezumab infusion, get that in the hands of the physicians, get them to understand the promising benefit that it has.

And then some time later with the lifecycle management and some future studies bring along an alternate route of administration that would be another option for those physicians and those patients that already understand what the benefits of infusion are.

Roger Cady

Randy, I might add just a little bit to this. Because in meeting with our key opinion leaders and having Advisory Board, what I'm hearing is a great deal of enthusiasm about having an IV. They see this as very unique for a segment for those highly impacted migraine patients, and they are looking forward to having that alternative in their [Indiscernible] if you will.

Jeh-Fei Lin

Great. Thanks for taking our questions.

Operator

Our next question is from Danielle Brill with Needham. Your line is now open.

Danielle Brill

Hi, thanks for taking my questions. I was just wondering if you could give us an update on your plans for submission in Europe, or you wait till you secure a partner before you submit there. And then can you just remind us on when we may see neutralizing antibody data, and do you think that could be important for product differentiation? Thanks.

Randy Schatzman

Well, let me comment on submission in EU. Obviously, we have been ongoing consultation with the EU in terms of what they will require for a submission. Our plan pivotal set of studies that we will file in the states, we believe at the end of the day will be adequate for Europe, but we'll continue those discussions.

In terms of looking at autoantibodies to eptinezumab, that's something that previously we reported in both the proof-of-concept study and The Lancet Neurology paper, we're about 10% to 14% in number.

And we said in one of our earlier quarterly call that the early data from the Phase 2b suggested that it was planned by similar with that. So, we're actually not expecting anything new in the pivotal studies that we're running today. And again that's a data since the studies are still ongoing that we have yet to compile and will be presented at an upcoming medical meeting. It's probably sometime next year.

Danielle Brill

Okay, great. Thank you.

Operator

Our next question is from Matthew Luchini with BMO Capital. Your line is now open.

Matthew Luchini

Hi, great. Thanks for taking the questions. Two from me. So, I guess -- well I've heard a couple of times, it's too early to talk about payers; I'd love to hear maybe just your general thoughts about value-based reimbursement. You've talked a lot about how eptinezumab's -- the 75% responder rate is a really differentiating feature, and if you would be receptive to maybe looking at response rate to one month or three months or something like that, just maybe a general level?

And then following up on the CMO transition. I get that Tim will be on through the end of the year, but I just wanted to know if you could provide some additional color on how we should be thinking about, I guess, with PROMISE 2 fully enrolled, the studies just kind of going. But how we should be thinking about sort of the day-to-day operational functions in his -- with Tim now stepping out as we enter 2018? Thanks.

Randy Schatzman

Yes. Let me answer the second question first, Matt and then I'll turn it over to Elisabeth to comment on the reimbursement thoughts. In terms of Tim, as you reiterated, I think so well is that he remains as an employee. He will be an important advisor for us and I think that that lands continuity in terms of what we're doing.

But let me emphasize, we've got an internal very talented team of clinicians and people in clinical, along with a group of key external advisors that they are just going to make this all seamless for us. And as we have said earlier, everything is on track today. There is no impact on our value for eptinezumab, the upcoming reporting of PROMISE 2 data, or the filing of that BLA. So, Elisabeth?

Elisabeth Sandoval

Yes, Matt. Again, it's early for us and I'm not going to comment further on how we're thinking about payer or payer strategy. We recognized the important role, again, that the payers are going to play -- supporting patient access and we are working on our value outcome strategy. And if and when we have anything further to report or discuss, we will communicate accordingly.

Matthew Luchini

Okay, fine. Thanks for taking the questions.

Operator

[Operator Instructions]

Our next question is from Sumant Kulkarni with Canaccord. Your line is now open.

Sumant Kulkarni

Hi, thanks for taking my questions. The first one is assuming the product is approved, how soon after the approval can we expect the widespread reimbursement infrastructure to be actually put in place for the product to be used commercially?

Randy Schatzman

So, let me just comment on that, and that is I mean, obviously, as Elisabeth said it's still early days. But let me make the point that we've been trying to make all along in that. One of the exciting things that we have found is we have continued our deep dive into the positive characteristics that the infusion brings to the table.

And one that we think is important here, and that is, it moves right into a structured environment, where infusion is already a day-to-day mode of treatment for these patients in these -- what we call the interventionalists headache treaters offices.

And in addition, they're already set up for approval in reimbursement in those offices for the various things that they do administer and this is just basically going to piggyback on that and draft on that bare wind.

Sumant Kulkarni

And then on the legal proceedings, it looks like in the Q; you filed a response on October 24th. Knowing that you're not commenting specifically about the case that you have, what are the average time lines that the European bodies could take to address that? And in the U.S. short of filing and declaratory judgment, what are some of your options that you might have on Teva?

Randy Schatzman

Yes, okay. So, in IP in terms of timing in the Europe, we did file and we're on track. These, as you know, can take months to 18 months to be on the EU. So, -- and I will say just to reiterate that we're confident in our freedom to operate and we'll keep you updated as appropriate.

Sumant Kulkarni

Sure. And my last one is actually a little bit of a calculation-type question. I just wanted to understand the logistics behind the process by which you arrive at your $1.5 billion to $2 billion intravenous market. Given the payer environment in the U.S. seems to be changing, how often are your internal assumptions kind of keyed into changes like that?

Randy Schatzman

Elisabeth?

Elisabeth Sandoval

So, we've estimated the value of this is driven by several analytical and end market research projects that -- for which we deduced this value. In terms of the payer environment, we take into consideration all aspects of it in terms of payer, price, access, value, sizes; it's a multifactorial, if you will, analysis and assessment.

I'm more confident -- I just want to -- I'm sorry, I just want to reiterate we're confident in the value of this separate market segment and our ability to achieve it and capture it.

Sumant Kulkarni

Thank you.

Operator

And we have a follow-up question from Difei Yang with Mizuho. Your line is now open.

Difei Yang

Thanks for taking my follow-up. Just to circle back to the IT -- IP litigation. So, if everything goes well, the drug could be on market in the U.S. midyear 2019 -- sometime in 2019. What is the worse -- what if, in the hypothetical scenario, where no resolution on the IP was completed by then, what would happen?

Randy Schatzman

Yes, so we're not going to speculate sort of on timing and outcomes on this. We're going to aggressively prosecute all of our rights and define our freedom to operate, we're confident in that. And as Mark [ph] said, we'll keep you [Indiscernible] his as we go along. We have good confidence that we'll be where we need to be.

Difei Yang

Okay. Thank you.

Operator

Thank you. And I'm showing no further questions. Ladies and gentlemen, thank you for participating in today's conference. You may all disconnect. Everyone, have a great day.