Athenex's (ATNX) CEO Johnson Lau on Q2 2019 Results - Earnings Call Transcript

About: Athenex, Inc. (ATNX)
by: SA Transcripts
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Earning Call Audio

Athenex, Inc. (NASDAQ:ATNX) Q2 2019 Earnings Conference Call August 7, 2019 8:00 AM ET

Company Participants

Tim McCarthy - MD, LifeSci Advisors, LLC

Johnson Lau - CEO

Jeff Yordon - COO

Rudolf Kwan - CMO

Randoll Sze - CFO

Conference Call Participants

Kennen MacKay - RBC Capital Markets

Chad Messer - Needham & Company

Yale Jen - Laidlaw & Company

Peter Lawson - SunTrust Robinson Humphrey

Kevin DeGeeter - Oppenheimer and Company

Ling Wang - JPMorgan

Matt Kaplan - Ladenburg Thalmann


Greetings and welcome to the Athenex Second Quarter 2019 Earnings and Clinical Data Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions]. As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host Tim McCarthy of LifeSci Advisors. Please go ahead, sir.

Tim McCarthy

Good morning and thank you for joining our conference call as we provide an update on Athenex's business and a review of financial results for the second quarter 2019.

The company issued two separate news releases earlier this morning, detailing the top-line Phase 3 results for oral paclitaxel and Encequidar in metastatic breast cancer as well as the second quarter results. Both are available on the company's website and the replay of this call will also be archived onsite.

During the course of this conference call, the Company will discuss top-line data from clinical studies, make projections or forward-looking statements regarding future events, including statements about financial and clinical milestones anticipated in fiscal year 2019 and beyond. We encourage you to review the Company's past and future filings with the SEC, specifically the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2019, which identifies specific factors that may cause the actual results or events to differ materially from those described in the forward-looking statements.

You can find our SEC filings in the EDGAR database at or in the Investor Relations section at our website at

This morning, we're joined by Dr. Johnson Lau, Chief Executive Officer; Mr. Jeff Yordon, Chief Operating Officer; Dr. Rudolf Kwan, Chief Medical Officer; and Mr. Randoll Sze, Chief Financial Officer.

With that, I'll turn the call over to Johnson for introductory comments.

Johnson Lau

Thank you, Tim. Hello and welcome.

I'm pleased to provide an update on Athenex second quarter operating results and very importantly to able to share with you today the positive top-line results achieved in our Phase 3 trial of oral paclitaxel and Encequidar also known as Oral Paclitaxel in metastatic breast cancer.

Our Chief Medical Officer, Dr. Rudolf Kwan, will discuss the results in a few minutes. But the highlights are that of our Phase 3 study successfully met its primary endpoint showing a statistically significant and clinically meaningful improvement versus IV paclitaxel.

We also saw evidence of potential benefits in terms of progression free survival as well as overall survival. Taken together with Oral Paclitaxel's improved safety profile which had lower incidence of neuropathy compared to IV paclitaxel, we believe, if approved, we will have a new class of anti, oral anti-cancer drugs with the differentiated and competitive profile.

The successful outcome in this trial is a potentially transformative event for Athenex. We're currently analyzing the full dataset, but we believe that we are supporting for an NDA filing in metastatic breast cancer. We plan to request a pre-NDA meeting as soon as possible and plan to present the data at a major upcoming scientific meeting.

Before we provide more details, we'd like to express our thanks to all the patients who participated in this important study as well as their families. Your participation is essential to our progress in developing treatments for cancer with improving outcomes.

We'd also like to thank the commissions, investigators, nurses, and other healthcare practitioners, as well as our colleagues here at Athenex, who work diligently to advance this product and make this study a success. By demonstrating a benefit over conventional IV paclitaxel, we now have conclusive evidence from a large randomized study that our technology allows for optimal therapeutic levels of drug exposure. We've all discussed the delivery and the results of this is better outcomes for patients.

Furthermore, the strong safety profile for oral paclitaxel that we have demonstrated in numerous studies have again been reaffirmed. These positive results serve as a validation for our Orascovery which we believe will establish a new paradigm in the use of oral anti-cancer drugs for cancer treatments. We believe the results have implications not only for oral paclitaxel and Encequidar but for our important Orascovery program.

To add to the body of clinical evidence that our Orascovery technology is working, and highlight the potential value of our pipeline of oral chemotherapy therapies at effective therapeutics for range of cancers. We're working to expand the indications for Oral Paclitaxel and to explore more combination therapies with immuno-oncology drugs and biologics.

An important advantage of our technology is that by achieving better tolerability of standard chemo therapies delivered orally, combination with immuno-oncology and targeted anticancer treatments can potentially be optimized. This way it should be possible to achieve greater therapeutic benefits compared to current combination treatments and especially to build upon our potential benefit on progression free survival and overall survival.

We also continue to advance other clinical candidates such as oral docetaxel and oral Irinotecan. In parallel with other activities Oral Paclitaxel and Encequidar, we are preparing to file an NDA for tirbanibulin ointment previously called KX2-391, our Src Kinase/tubulin polymerization inhibitor for treating Actinic Keratosis with our partner Almirall, supported by a very strong clinical data package, including positive Phase 3 results that we announced in March this year.

So assuming all goes to plan, we expect to be filing two NDAs on our most advanced clinical candidates by early 2020.

We have also made significant strides in terms of building out our sales and marketing capabilities to support the launch of this proprietary drug under our new Athenex oncology brand which Mr. Jeff Yordon, our President and Chief Operating Officer, will discuss.

We're also pleased to announce today that we are raising our guidance for product sales in 2019. We are now forecasting that product sales this year will increase by between 30% to 35% year-over-year from $56.4 million we reported in 2018. This is compared with previous guidance of 25% 30% year-over-year growth.

To conclude, Athenex is rapidly making progress on all fronts and we are continuing to invest in our future. Our drug development platforms have been further validated by continued positive clinical data in late-stage studies. Notably this morning's announcements for Oral Paclitaxel and Encequidar in metastatic breast cancer which put us in a very strong position for advancing multiple potentially successful therapies in the future.

As we expand our global clinical and manufacturing infrastructure and bring our proprietary trust to market, we believe, we will be in position, to deliver substantial growth and maximum value for our stakeholders.

I will now turn the call over to our Chief Medical Officer, Dr. Rudolf Kwan, to provide an overview of the Phase 3 data and other updates on our clinical pipeline. Rudolf?

Rudolf Kwan

Thank you, Johnson.

We are very excited to announce today that Oral Paclitaxel and Encequidar met the primary endpoint showing significant improvement over IV paclitaxel in a Phase 3 pivotal study in metastatic breast cancer. This represents an important milestone in the development of a new class of oral anti-cancer drugs.

As Johnson mentioned, we are now moving ahead towards our first NDA submission from our Orascovery platform.

A total of 402 typical metastatic breast cancer patients were enrolled in the 2:1 ratio of Oral Paclitaxel and IV paclitaxel in the infant to-treat population. Patient demographics were balanced in the two treatment groups. The primary efficacy endpoint was overall tumor response rate confirmed at two consecutive timepoints using RECIST 1.1 criteria. Blinded assessments of tumor response were made by two independent radiologists with an independent adjudicator and the use of a computer algorithm to assign responses. We are pleased to report that our study met its primary efficacy standpoint, showing a statistically significant improvement compared to IV paclitaxel, with an overall response rate of 36% compared to 24% in the intensive treatment analysis.

There was also statistically significant improvement compared to IV paclitaxel based on other analysis on populations excluding non-evaluable patients which would give higher response rates and greater improvements in responses versus control. P values were less than or equal to 0.01 in all analysis.

Importantly, at a cutoff date of July 25, 2019, there were strong trends in both progression free survival and in overall survival that favored Oral Paclitaxel over IV paclitaxel with P values of 0.077 and 0.11 respectively.

There was other benefit in terms of duration of response. More than twice as many patients on Oral Paclitaxel had confirmed responses that serve process 150 days compared to those with confirmed responses of this duration on IV paclitaxel.

As we are still continuing to monitor patients, we expect that PFS and OS trend may continue to improve upon follow-up.

Finally, and in line with our previous studies, Oral Paclitaxel and Encequidar was well tolerated by patients. Compared to IV paclitaxel the Oral Paclitaxel had a lower incidence and severity of neuropathy, only 17% versus 57% in patients on IV paclitaxel. Furthermore break-free neuropathy was observed in only 1% of Oral Paclitaxel patients versus 8% of IV paclitaxel patients. This is a very important result as neuropathy is a major dose limiting side effect of paclitaxel. Mitigating neuropathy with oral dosing will confer a significant potential advantage for our products in the marketplace. As it will allow some patients to stay on treatment longer and potentially improve outcomes.

The safety results also showed a lower incidence of alopecia, arthralgia, and myalgia, in the Oral Paclitaxel group. The incidence of neutropenia was similar in both groups and there were slightly more grade 4 neutropenia and a slightly higher infection rate in the Oral Paclitaxel group. There were also more gastrointestinal side effects in the Oral Paclitaxel group. Overall we are very pleased with the safety profile for Oral Paclitaxel.

Based on the results of these Phase 3 study, other Phase 1, 2 and PK studies and the preliminary results generated in the angiosarcoma sarcoma monotherapy study, we project the profile of Oral Paclitaxel and Encequidar as a new class of oral anti-cancer drugs to have the following characteristics.

First, efficacy profile as monotherapy statistically significant improvement over IV paclitaxel in metastatic breast cancer. Early onset of activity as observed within one to two weeks in angiosarcoma, long duration of response in confirmed responders in metastatic breast cancer, strong trends in better PFS and OS in metastatic breast cancer which may continue to improve over longer follow-up.

Second, improved safety profile, lower incidence of neuropathy, which currently is a major reason to IV paclitaxel and much lower incidence of alopecia, arthralgia, and myalgia.

Third convenience. Oral Paclitaxel does not require IV infusion, the use of intravenous steroids or antihistamines pre-medications, hospital visits, and it can be taken at home.

As we have discussed, we are reserving the full results of the clinical studies for presentation at a major upcoming scientific meeting and we will also submit for publication in the future. We are currently working diligently to complete our NDA submission, so that we may file as soon as possible. As a reminder, we announced in January last year, the FDA previously provide a positive feedback to Athenex that it would accept the results of this one pivotal trial for license application in the U.S. if the primary endpoint is met.

Importantly, this positive pivotal trial results adds to a growing body of clinical evidence supporting Oral Paclitaxel and Encequidar which is characterized by high response rate and a strong safety profile. In addition to the successful study in metastatic breast cancer, we announced today we have also seen promising results with these products in unresectable cutaneous angiosarcoma and in gastric cancer which serve to further validate the potential for our novel regimen to transform the way these cancers are treated.

We are working to develop Oral Paclitaxel for additional indications and exploring potential combinations with biologics, for example anti-PD-1, anti-MCF receptor therapies. Our study of Oral Paclitaxel in combination with Pembrolizumab is enrolling well. We will provide further details as we continue to define our pipeline expansion strategy.

We believe our Orascovery platform will establish a new paradigm for oral anti-cancer drugs. Building upon Oral Paclitaxel, we are looking forward to launching Phase 2 studies for additional Orascovery assets, including oral Irinotecan and oral docetaxel. These studies will broaden our Orascovery pipeline and firmly establish Athenex as a leader in oral chemotherapy.

We also announced this quarter that the FDA allow IND application for the clinical investigation of PT01 also known as Pegtomarginase for the treatment of patients with advanced malignancies. As a reminder, PT01 is a novel biologic product candidate designed to provide a metabolic approach to treatment of cancer through arginine deprivation. We are pleased to advance this program towards the clinic and believe we made Alpha a step forward for metabolic therapies in oncology and other potential combination. We are planning to initiate clinical studies of PT01 soon.

Finally, in June, we announced a major expansion to our global clinical operations, specifically in Europe and Latin America. In Europe, which is the second largest healthcare market in the world, we formed a UK based subsidiary. And in Latin America, we have acquired certain assets of CIDAL Limited, a Contract Research Organization with operations in various Latin American countries. Together these initiatives strengthen our global clinical research and operations and represent an important step in our ongoing strategic effort to expand our development capabilities worldwide, with the potential for increased efficiencies and cost effectiveness across our pipeline development.

Of course the strategic expansion fits into our broader vision of becoming a fully integrated global pharmaceutical company.

I will now turn the call over to our CFO, Randoll Sze, to discuss our financials. Randoll?

Randoll Sze

Great. Thank you, Rudolf.

Product sales for the three months ended June 30, 2019 were $22 million compared with $11.5 million for the comparable period in 2018, an increase of $10.6 million or 92%. This increase was primarily attributable to an increase in 503B product of $6.6 million and increase in the specialty product revenue of $4.6 million, and increase in API sales of $0.6 million.

We received $20 million milestone payments from Almirall. However in terms of revenue recognition it won't be booked as revenue until the second half of 2019.

I want to briefly discuss the legal case regarding Vasopressin. You will recall that the FDA issued a decision in March this year to include Vasopressin on the list of bulk drug substances that are permitted to be components under Section 503B of the Federal Food Drug and Cosmetic Act. Athenex then subsequently forge a lawsuit against the FDA. And in the decision announced last week the court found in favor of the FDA. While we're disappointed by the court's decision, it was not completely unexpected. We continue to believe our Vasopressin product helps to address an important clinical need. So while we will comply with the court and FDA's decision, we have requested a stay of the court's decision and may explore additional action including an appeal.

Vasopressin is part of the portfolio of the specialty pharmaceutical and 503B products sold by Athenex. We will continue to seek opportunities to add to this portfolio. Our team has a unique commercial expertise in this area and we're confident we can find additional products to drive future growth. And as always our focus remains on our proprietary oncology pipeline which continues to track extremely well.

With respect to our guidance for 2019, we are now forecasting that product sales this year will increase by between 30% and 35% year-over-year from the $56.4 million reported in 2018. Previous guidance was for 25% to 30% year-over-year growth. Importantly this revenue guidance has taken into the court's latest decision in the Vasopressin proceeding and the suspension of operations at our Chongqing API plants. The guidance extrudes license and collaboration fees.

Cost of sales for the three months ended June 30, 2019, totaled $6.9 million, an increase of $7.5 million or 79% as compared to $9.4 million for the three months ended June 30, 2018. This was primarily due to an increase of $5.8 million in cost of sales from the sale of the specialty products, and $1.7 million from 503B and API product.

Gross margin attributable to product sales increased from 17.7% in the three months ended June 30, 2018, to 23.1% in the three months ended June 30, 2019, primarily as a result of change in product mix.

R&D expenses for the three months ended June 30, 2019, were $18.5 million as compared to $26.6 million for the three months ended June 30, 2018. This increase was primarily due to a decrease in licensing fees, clinical operation, and product development, offset by an increase in clinical development costs related to the Arginine and T-cell platforms and increase in R&D related compensation.

SG&A expenses for the three months ended June 30, 2019, were $17.2 million as compared to $12.8 million for the three months ended June 30, 2018. This increase was primarily due to an increase in pre-launch sales and marketing costs of our proprietary products and an increase in general administrative expenses including legal fees and other professional service fees, offset by a decrease in administrative related compensation expense.

Net loss attributable to Athenex for the three months ended June 30, 2019, was $32 million or $0.44 per diluted share compared to net loss of $36.9 million or $0.58 per diluted share in the same period last year.

I want to make a quick point on two further items. The $20 million milestone payment from Almirall and the shares outstanding as these both effect the estimate published by the analysts who currently provide research on Athenex. It appears that to analysts they still had the $20 million milestone payment included in their forecast for the second quarter 2019. Despite that we have communicated to the investor in May that this revenue won't come until the second half of the year. However, we issued 10 -- also we issued 10 million shares in the five transactions we completed in May. And this raised our total outstanding share count to 77.3 million as of June 2019.

For the per share numbers on the second quarter 2019 income statement, we used a weighted average share count of 73.1 million.

Looking at a published estimate, it appears that a couple of the analysts have not yet updated their share outstanding numbers this quarter. Together these factors are affecting the consensus loss per share. But if we adjust for them, our actual results we reported are in line with Street expectations.

At June 30, 2019, Athenex had cash, cash equivalents, restricted cash, and short-term investments of $165.9 million compared to $107.4 million at December 31, 2018. Based on the current operating plan, we expect our cash, cash equivalents, restricted cash, and short-term investments as of June 30, 2019 together with cash to be generated from our operating activities will enable us to fund our operations into the third quarter in 2020.

As we're getting close to the NDA submission, we do plan on spending a bit more on both pre-launch marketing and on our manufacturing infrastructure.

For a more detailed discussion on our financials including results for the six month period ended June 30, 2019, as well as those specific factors that contributed to the changes in line items on our income statement, please refer to the Form 10-Q that was filed with the SEC earlier today.

With that, I will hand the call over to Jeff, to provide an update on our commercial and manufacturing capability.

Jeff Yordon

Thank you.

The positive Phase 3 outcome we announced today is a major milestone in the Oral Paclitaxel and in Encequidar program and brings us a step closer to potential approval of our first proprietary product.

As our regulatory and clinical teams now make preparations to file the NDA, we will continue to expand and optimize our commercial infrastructure and develop the market in anticipation of commercial launch. Our goal is to capture significant market share by establishing Oral Paclitaxel and Encequidar as the chemotherapy of choice for metastatic breast cancer.

As we announced in our May 30 press release, this year's ASCO Annual Meeting served as the form for the launch of our new brand Athenex Oncology and corresponding website, ASCO is the largest gathering of the worldwide oncology community and over its first weekend live had over 1,000 visitors. We were a gold sponsor for the Giants of Cancer Care Awards Ceremony which took place at this year's meeting during which Tim Cook delivered a presentation on behalf of Athenex. Our clinical team led an investigator meeting and numerous other meetings were held with advocacy organizations and innovators ultimately advancing the awareness and interest in Athenex Oncology and our differentiated oncology pipeline.

We were able to gather feedback on our commercialization plans for Oral Paclitaxel and Encequidar for MBC, metastatic breast cancer in one-on-one meetings and through a clinically styled poster session. Most recently to advance our patient centric market readiness plans, Athenex Oncology commercial leadership held separate multi-disciplined advisory councils with experts in the access, distribution, and patient adherence area, and with metastatic breast cancer patients and executive leadership representing many of the best and most respected metastatic breast cancer patient advocacy organizations.

These customer advisory councils along with the 40 plus HCP and MBC KOL advisory councils that were gathered at ASCO will continue to engage with and advice Athenex Oncology as together we shape our unique patient centric approach in preparing for the launch.

We plan to continue building on this momentum throughout 2019 and into next year raising our profile among key audiences to support our pre-commercial efforts.

A key event for us in the second half of the year will likely be the San Antonio Breast Cancer Symposium which takes place in mid-December. We are assembling a team of highly accomplished executives to lead our commercialization efforts.

We appointed Tim Cook as Senior VP of Global Commercial Oncology in 2018. We have since hired our VP of Marketing and Senior Director of Market Access.

There are four other key positions for which we are actively recruiting. Additionally, we will hire the full sales team closer to potential launch when we have identified the exact types of experience and skill sets we'll need.

In parallel with our efforts around Oral Paclitaxel and Encequidar, we are also preparing to submit an NDA for Tirbanibulin formally KX2-391 or KX-01 ointment in the U.S. with our partner Almirall. Tirbanibulin is a novel treatment for actinic keratosis, which as I have said before, represents one of the most underserved therapeutic markets I have ever seen. Almirall will be leading the commercialization efforts for the United States and eventually Europe. Outside of the U.S. and Europe, Athenex retains rights for Tirbanibulin in significant markets such as Japan, Canada, Australia, Israel, and many Asian markets which we plan to access with new partners or directly with our own resources.

In addition to the progress on our pipeline, we are very pleased to report strong year-over-year revenue growth for our existing commercial business. Once again much of this growth was driven by products that experienced significant shortages that we were able to fulfill as well as new product launches.

On the manufacturing front, work continues on building our New York state funded production plant in Dunkirk, New York, which we continue to anticipate becoming operational in the second half of 2021. Once it is online, we will begin with cGMP commercial manufacturing of our injectable and 503B products and eventually our proprietary oncology products as well. With exterior construction of the plant complete, we're continuing to build-out the 409,000 square foot interior with state-of-the-art equipment to support our needs. We have a strong partnership with the State of New York and are pleased that they've continued to deliver on their financial commitments to building this facility. We look forward to completing construction and bringing this facility online.

Ex-United States, as we previously announced, we continue to await inspection of our current API manufacturing facility in Chongqing, China, following our voluntary suspension of production activities in the second quarter of 2019. We took this decision in order to ease concerns from the Department of Emergency Management of Chongqing after the occurrence of some incidents at other unrelated facilities in the region. We continue to be cooperative with the authorities and hope to reach a resolution as quickly as possible. In the meantime, we've continued selling our existing API inventories to our customers and expect to do so through the third quarter.

Additionally, we believe we have sufficient API inventory to support our ongoing and near-term clinical studies though we have taken steps to secure secondary and tertiary sources as a backup. We will provide an update in due course.

In parallel, we continue to anticipate our new and substantially larger plant in Chongqing commencing production in the first half of 2020.

So to summarize, Athenex continue to execute successfully across all of our strategic objectives with respect to our commercial operations and readiness. We're making huge strides to establish our oncology brand and marketing infrastructure. We're actively developing the market in advance of the anticipated product launch for oral paclitaxel and Encequidar and we expect to hit the ground running the moment the product is approved.

We're also optimizing our global manufacturing capability in order to meet our current and future drug supply needs with the goal of providing a remarkably efficient and self-sustaining pathway to support our future growth.

I will now hand the call over to our next speaker.

Johnson Lau

Thank you, Jeff.

We remain on track to make 2019 a highly significant year for Athenex and our brands which we believe will position the company to be a global leader in oncology. As I said, the positive Phase 3 results we are announcing today for Encequidar and Oral Paclitaxel are potentially transformative for Athenex. We're actively preparing for the exciting opportunity ahead of us in terms of commercialization as well as our expanded capacity to conduct global clinical trials that will help with our development pipeline forward, building substantial value along the way.

We look forward to sharing our achievements with you as we continue to execute our long-term growth strategy. We'd be happy to take your questions. Thank you.

Question-and-Answer Session


Thank you. We will now be conducting a question-and-answer session. [Operator Instructions].

Our first question today is coming from Kennen MacKay from RBC Capital Markets. Your line is now live.

Kennen MacKay

Hi, thanks for taking the question and congrats on the really impressive hopefully practice changing data. This morning, I think getting some pushback from investors on concern that the overall response rate is lower than what we've seen in the Phase 2 trial in Taiwan and that when looked at in a vacuum, the response rate is sort of numerically more in line with some of the trials of weekly IV paclitaxel or Abraxane, I think this is being grossly misinterpreted given this is a vastly different patient population but can you maybe talk a little bit more about the severity of this population? Maybe discuss how these data could be interpreted versus standard of care in the USA such as weekly IV paclitaxel and now paclitaxel or Abraxane then I have a follow-up. Thank you.

Rudolf Kwan

Kennen, thank you for your question. The response rate we saw in this pivotal Phase 3 study is impressive and is also much higher than the control group. The IV control comp of Paclitaxel behaves really that the most literature report in for IV paclitaxel. Bear in mind, the dosing regimen we're using are using the regulatory approved regulatory assessed data. It’s difficult to compare regulatory accessed data versus literature which are not assessed by regulatory.

Now let me emphasize. The way the overall response rate that the FDA would have set is a confirmed overall response rate with two consecutive scans and all these scans was sent to a blinded central lab where they use two not one. Two individual independent radiologists to assess the scan and if there is disagreement among the two readings and third independent adjudicator will access the scan. So this is a very rigorous interpretation of scan on both the IV and the RO arm and they are completely blinded to treatment assignment. That's the only way FDA will accept it.

So the way if you look at the literature, most of the time they'll use one scan, they use two scan, they may use an independent reader but they still will be one not two and not adjudicated. So there's a lot of variability, if you don't use the FDA regulated response.

More importantly the data we are presenting are intent to treat. So basically all the patients randomized in accounted for the IVM oral and it includes patients that dropout because of IV side effects, because of oral side effects, all those are counted. So the value you're seeing are extremely pleasing in my eye and this very well in line with what we see in our Phase 2 NDA publication in literature and really testify the efficiency of the product.

I also want to take the opportunity to say that if you look into our June Press Release in our angiosarcoma the activity of this molecule using the same dosing using a reasonably visible tumor, a very difficult to treat tumor angiosarcoma cutaneous angiosarcoma, we announced that we saw response as early as one to two weeks after treatment. This is a very active comment. And we saw complete response as early as six weeks on the first end. And in our press release, we announced three of the seven already saw complete response. So I have no doubt the response rate of this molecule is very, very high. Kennen did I address your question?

Kennen MacKay

Yes you did. Thank you for the context. Rudolf, I agree. It is incredibly impressive data and just on that same note is there anything you can comment around sort of the number of prior therapies that these patients have seen at baseline when they were enrolled?

Rudolf Kwan

We're still analyzing that. Well I can tell you that both groups are comparable and they are perhaps at this time point, I don't know the actual number [indiscernible] about 20% that does not most have multiple lines of chemotherapy before but those numbers will come out in the AACR meeting when we finish that data because as you saw in our press release, we really have the datas cutting off only in late July. So further analysis are still ongoing.

Kennen MacKay

And maybe just a follow-up on the safety profile that you've mentioned. I've had additional sort of confusion and pushback this morning from investors on the imbalance in rate for neutropenia that was mentioned in the press release, that's obviously an on target effect obviously something that can be managed with growth factor and [indiscernible]. But can you maybe talk about how the growth factor was utilized in the protocol in the study and also maybe whether that just sort of coincided with patients staying on drug treatment for a much longer proportion of time? Thank you.

Rudolf Kwan

Kennen, very, very good question. See we are dealing with a known molecule paclitaxel; we're using it with a new way. Orally, we are changing the PKSU slightly follow all along hypothesizing the PK profile would change dramatically the behavior of these molecules improving the efficacy and lowering certain currently thoroughly dose limiting side effects.

So the traditional wisdom with IV paclitaxel is that we know all the side effects. And we know it costs neuropathy, we know it costs alopecia, we know it lowers twice our comp, we know the effect it has on GI Tract because mostly because these are all turnover target in hair follicles white cell and the GI tract and therefore there's certain already management scheme around and clinicians on the whole manage the neutropenia on the TI side very well using pre-medication GM-CSF, antiemetics, prophylactics, et cetera, et cetera they could not do anything with neutral neuropathy.

They tried to do something with alopecia. Again a typical side effect in terms of the Lehman population we're talking about. So our data shows that when we give paclitaxel orally, the profile changed dramatically in we are able now to control what they cannot control which is neuropathy, neuropathy is painful, is chronic and is the number one dose limiting issue with paclitaxel. And we actually have the benefit on alopecia. None of that is as you say on target side effect on the white cell count, neutropenia surprisingly pleasantly surprisingly to us, that's really not much difference in the overall neutropenia compared to growth.

Although there on target activity seems to keep a higher incidence of a grade 4, more severity, and most oncology will correlate that with activity and I think our data probably adds further evidence that maybe the case and certainly the better question about the overall side profiles including GI probability, including neutropenia, including neuropathy alopecia everything together is whether they are clinically manageable. And as I said before, we actually deal with a couple of those that are not clinically manageable right now currently. And the other because we are doing ITT analysis any clinically unmanageable side effect whether it be GI, whether it be neutropenia, are accounted for in the duration of response, in the survive -- progression free survival in the primary outcome for overall response rate. So my answer to you is look at the efficacy data. That gives you an idea whether those clinical side effects are manageable or not.

But more interesting scientifically, Kennen, more interesting scientifically now we are showing a completely different profile. Why is the neuropathy reduced so significantly is because of the PK we have rationale for it? Why is the alopecia lower, I don't know is to be growing the same as GI tract, why is the GI tract somewhat increased. Is it because we didn't use IV steroids, is it because we don't use antiemetic, but alopecia is lower.

So if something curious happening and more interesting enough, what is happening with those jointing arthralgia, myalgia which are much less. So these are lot of question we need to ask and we hope to bring back to the community as we are taking the data and understand these differences more.

Kennen MacKay

Thank you, Rudolf. I just had sort of one quick sort of follow-up to something you'd mentioned but I think to your point looking at the rate of adverse events and severe adverse events in the context of months on treatments or adverse events per week, I think would be incredibly helpful since patients are sitting on therapy for such a more significant amount of time. On the adverse events that you've mentioned you mentioned sort of the lack of Antiemetics. I was just wondering if you could comment on the GI toxicity imbalance a little bit more. My understanding is that there were some changes as it relates to standard of care CIND therapies in Antiemetics that are really hard to practice with IV Paclitaxel. Can you maybe talk about how that was integrated into the Oraxol arm and then final question and I'll get some others jump in the queue. But just wondering if you could give us a ballpark perspective on what percentage of patients still remain on therapy in each arm and sort of how mature that CFS and OS data that was in the press release is should we anticipate that this maybe could deepen into P under 0.45, P under 0.5 in the future. Thanks so much for taking the questions and congrats again.

Rudolf Kwan

Kennen, very good question and it shows that you have been following us very closely. So thank you. Indeed when we start a study, we want to define the profile scientifically. And we did ask -- we did feel in the protocol for the IVR everyone take pre-medications as prescribed normally which usually increased almost 100% will include IV steroid, IV antihistamines H1 and H2, and IV antiemetics maybe RO anti-diarrhea in some center as well. And in the Oraxol arm, we forfeit them to do it until so there's no prophylactic but they only allow it once they have the side effect.

So in the first half of the study, we certainly collect more side effect on the GI tract side effect and it does show up when we analyze a interim analysis, so we amend the protocol, we do encourage antiemetics prophylactic and we do put in specialized many of the anti-cancer chemotherapy, put in aggressive diarrhea treatments once they have diarrhea. So that regimen is received very well by the doctors and the patients. And I think it does show up in our analysis we will complete that analysis when we present the full set of data and it’s certainly in my view contribute to even better outcome.

Your question about the progression free survival and overall survival is a very interesting one. I think there were confusions in the past regarding whether response rate correlate with progression free survival or overall survival. And for a long time, there has been some disconnect in the literature. I think you did a wonderful job in clearing that house that there were misreporting in certain literature that indeed overall response rate do and should correlate mostly with survival. And I think our study actually supports that.

Now the study was obviously not designed to show progression free survival or overall survival, it's not powered to do that. If there is statisticians in the audience or you know or most of you actually are very good in statistics, you will immediately calculate that with a 360 to 400 patient we have 402 at the moment a 2 to 1 randomization is really not ethically power to show survival. No I think intended to show survival. So the strong trend we are seeing in both is extremely pleasing.

Your question is how many patients are still on treatment on both arms. I think I alluded to the fact that in looking at progression free duration, the responders we have two-and-a-half times more than the IV arm for those who stay longer than 150 days which is after almost like the half day end of the 19th to 21 week the response period. So indeed you're right that a lot more Oraxol patients deal under treatment than IV and for that reason, I would expect the trend that we are seeing the strong trend that we are seeing may continue to improve.

Kennen MacKay

And Rudolf just on that point just clarifying it of the disclosed 402 patients. Can you give us any perspective of how many CFS events have been recorded so far and how many OS events have been recorded so far is it -- are we talking about sort of 100 or are we talking about 50. Thanks. Thank you again.

Rudolf Kwan

I don't have that number with me right now. We do have the curve and we use the Kaplan-Meier curve to look at the statistics. So they have censured the subject i.e. that quite a lot of patients still have not reached that end point. And as I alluded to more most of them are on Oraxol. So the data is not mature.

And your question is how likely is it become mature, how quickly it will come very quickly we'll get an answer to that. But more importantly we want to take the strong trend to the FDA and ask them to guide us what will be a regulatory acceptable time point to make that cut because you know it's an open-label study we could make the cut on an ongoing basis and we'll be accused of multi analysis and we don't want to jeopardize the good outcome that this may bring us. So we want to consult with the FDA and work with the FDA on what's the appropriate time point to cutoff for progression free survival for overall survival and so stay tuned.


Thanks. Our next question is coming from Chad Messer from Needham & Company. Your line is now live.

Chad Messer

Great. Good morning and thanks for taking my question and let me add my congratulations on this very important positive results, impressive particularly the very low incidence of neuropathy. Rudie, is it possible to comment on what sort of dropout for adverse event or dose reduction kind of rate looks like between the two arms?

Rudolf Kwan

We're still looking at that. I can tell you broadly that the two groups are overall roughly similar. And as I addressed to Kennen earlier on focus on the strong efficacy we sell is based on intent to treat. Everybody is accounted for any clinically meaningful efforts that need to be managed by drop of those withdrawal will be all accounted for. If you have those withdrawal or those holding that lead to lower response rate this will be albeit account for dose response reduction that does not lead to a lower response rate. Really it's not it doesn’t matter, it is not clinically meaningful. So I would encourage or focus on the strong efficacy data which is based on intensive treatment therefore account for any clinically unmanageable adverse events.

Chad Messer

Yes, understood. That's a high bar that you're measuring that response rate against, I guess that. So in your sort of printed comments in the press release, you mentioned metronomic dosing and investigating maintenance therapy for Oraxol. Can you comment on that a little bit more?

Rudolf Kwan

Yes. I think, yes, I have been saying several times that the fact that the patients stay on Oraxol for such a long time is very surprising. We have patients staying on well over the 300 days one year, two year. And it does raise a question since we can give it orally, think of it this way currently IV Paclitaxel most clinicians will give a course. They give it a course for two different reasons because of the convenience side of the IV or rather inconvenience. And secondly because of the worry about neuropathy before you opt to so maybe trials which maybe 16 weeks and they usually stop. There are only a few clinicians that would want to continue and there will only be a few patients who will accept continuous infusion for a year or two. However in our program, we certainly have seen that tolerability over the long-term does not appear to be an issue.

And therefore it does open up the question can we even consider metronomic dosing. We have to identify dosing but even at the current dose it seems to be tolerable over the long-term -- over many, many months and therefore is there a use in continuing suppressing the tumor growth in metronomic dosing that's number one. And number two, how do we leverage that to turn some of the targeted and immunotherapy which have -- which generally have impressive response rate but don't necessary always have a good long-term survival rate. If we combine the two and will lead to even better outcomes in survival. Does that make sense, Chad?

Chad Messer

It does. I appreciate that and congratulations again.

Johnson Lau

Chad and Kennen, you asked a question on the response rate ITT. Please bear in mind that ITT is the most stringent criteria in terms of assessing the population and we are delighted to see that we actually have a very good P value based on ITT.

If you allow me to refer you to the third paragraph of the press release noting that when we based on ITT analysis, the P value was already 0.01. But please refer to our next comment which we said that Oral Paclitaxel also show statistically significant improvements compared to IV paclitaxel based on other analysis. In fact all other analysis on population excluding non-evaluable patients which a lot of the other studies may want to use but we -- since we fulfill the most stringent criteria we then would like to stop but disclose all those data when appropriate. But we also bracket which would give a higher response rate with P values less than 0.01 or equal to in all analysis.

What I would like to emphasize is that no matter how you analyze the data, our data is very positive.


Thank you. Our next question is coming from Yale Jen from Laidlaw & Company. Your line is now live.

Yale Jen

First of all I add my congratulations to the very outstanding data and a great job you guys have done. So a lot of question has been answered. So I have probably a few here. The first one is just follow-up what Johnson's comment in terms of some other analysis which you have the P value less than 0.01, I know you want to have a more sort of pristine data to be presented at a medical conference but still is there any other sort of general comments you could have on those data, what kind of analysis generally what kind of analysis those are?

Johnson Lau

I think it will be obvious that one would do a close look of the find analysis, one would exclude subjects that not wearable when they go in. And the simple reason is very simple. When you have a central radiological lab there will be a couple of patients, where the radiologist, independent radiologists may disagree with the investigator on the assessment. So in our analysis we took that all into our account, those protocols specify one if they don't have a lesion to improve upon, then those patients according to protocol would be excluded. So all those analysis then the analysis per protocol what we consider as additional analysis and as you know that once you use the protocol defined approach it will increase the response and increase the separation between the two arms. So that's what we are alluding to. I'm afraid you have to go to a major conference to hear the details.

Yale Jen

Okay, great. Thanks.

Rudolf Kwan

Yes, let me emphasize again that when you look at certain data in the past, they may not be ITT base. And I have to first off be clear that once we see ITT analysis showing statistically significant value, I think all other analysis will dilute the impact with regard to how much we actually can show the value that we are providing to patients. And all this analysis are interesting, exciting but they are little bit more secondary once you hit the ITT and for those additional value, we're going to provide them in upcoming scientific meetings. But we want to ensure that whenever we present those in accordance with the regulatory expectations and this is the principle that we are sorting. Once we've got very good results, we want to make sure whatever we do compliance with regard to the most stringent criteria as mandated by the regulatory authorities.

Johnson Lau

Let me add to that. It's also very important now that we fulfill what the FDA told us to achieve which is a primary end point 0.45 and we obviously met that nicely. And more importantly once we saw the amazing trend in overall survival which not many breast cancer study for [indiscernible] purpose conduct or use. That is a question that we would like the FDA to answer as when would they recommend us to do the tough half or indeed whether in their eyes -- whether the trend is good enough and there's no need to chase out the P value for secondary endpoint. So that is a question we want to focus on. I think we already fulfill what the FDA want and the question is how do we really nail down the icing on the cake.

Yale Jen

Okay great. That's very helpful. I appreciate the colors there. Maybe just to reiterate, I'll just confirm that you have said earlier which mean -- which is that the treatment naïve versus treatment experience that you say that roughly 20% of multiple lines of therapy would that potentially suggest probably over 70%, more than 70% or greater that are treatment naïve or that just too early to say?

Johnson Lau

As I said I don't want the exact numbers, so I am giving you a guesstimate here and it may not be when we do the final cut and final outcome they may differ a little bit but my guess is that at least 80% of patients have received previously second line or third line treatment. But that is a guess. So I would like to quantify.

Yale Jen

Okay. Maybe a last question here. Probably -- this is probably for Jeff -- Jeffrey. Given the data set and given the -- we can probably handicap that this job potentially would get approved. And so in terms of a commercial preparation at this point could you give a little bit more color what's your work might be over the next 12 or 18 months before potential launch?

Jeff Yordon

Yes, Jeff is happy to answer this question. We are well advanced to prepare for commercialization. We already hired the leader of the marketing team. We are already in preparation. We have been very active in the ASCO in June this year. We have already evaluated the how to approach in terms of the marketing effort. We even actually start to categorize our potential clients or oncologies into different groups in terms of how to focus our efforts, in terms of the marketing sort of message. So we are well in advance with regard to preparing for the success of the Phase 3 result. We will be very active in parallel with the regulatory filings in preparing for the launch. In fact we're confident that we can launch the drug the day after the approval.

Yale Jen

Maybe just one more quick question here. What is the European strategy at this point and again thanks a lot and congrats on the outcome.

Jeff Yordon

Yes, thank you very much. We are delighted to see positive results. When you see positive results obviously we will continue to explore the best strategy in terms of advancing the program. As you'll recall Dr. Kwan's team was able to secure with the UK health authorities, the image outlay with regard to promising innovative medicine definition.

We also have already opened an office in Europe in terms of helping us to evaluate and explore the best option. Both we've got with regards to regulatory approval as well as marketing assessment. So obviously with this data which was only available in the last 48 hours, I'm quite sure you can understand that we'll be in active discussion with various regulatory authorities.

What we would like to share with you is that is highly unusual for you to see very positive data based on ITT. At the same time having strong trend in both PFS and OS and then I think that those will be important attributes for our clinical and regulatory teams to discuss with various regulatory authorities. And we expect that we'll be well received and we expect that we'll be getting a lot of encouragement and directions with regard to how to get this important medicine for patients with metastatic breast cancer to help them as soon as possible.


Thank you. Our next question today is coming from Peter Lawson from SunTrust Robinson Humphrey. Your line is now live.

Peter Lawson

Thanks for taking the questions. Just a couple of quick questions. Rudolf, I may have missed this but what the discontinuation rates for both arms and then what do you think the discontinuation rate could be for like weekly paclitaxel?

Rudolf Kwan

Peter, very good question. The disconsolation rate is actually less important than when do they discontinue at what time and the reason. So those are actually part of the -- I think if we were only looking at the response rate endpoint that is one question. But all those are combined in the progression free survival. So the fact that you're seeing a difference in favor of Oraxol, a strong trend in that tells you the discontinuation. What including discontinue because of progression of disease. What favor Oraxol, so I would leave it at that. I'm afraid you have to join me in the Saturday meeting.

Peter Lawson

And just remind us again on the cash runway versus this increased guidance on revenue, how long does cash last?

Randoll Sze

Sure. I've just mentioned on the earnings call, the latest revenue guidance actually is taking into account the latest situation with regard to Vasopressin and our API plan in China. Even with -- even on the assumption that we're not getting any additional revenue from Vasopressin and API for the rest of the year we will still be able to raise our revenue guidance from the originally announced range which is 25% to 30% up to 30% to 35% year-over-year growth.

And with regard to our cash runway, I would say thanks to the three investors namely Perceptive, Avoro, and OrbiMed, who are putting $100 million into private placement that we did in May. We actually had a pretty healthy cash or I would say balance sheet situation by June 30th. So we're looking at $165 million cash in our bank account as well end of second quarter and that will get us into the third quarter 2020.

Peter Lawson

Great. Thank you. And then just back to I guess Rudolf, just on -- could you walk us through the reasons why you think PFS and survival could improve over time?

Rudolf Kwan

Good question, Peter. The reason is that we have a lot of sense that the patients at this time point the events are still being -- the patients are still ongoing, all right. When they census because they are still ongoing and we could not determine the eventual outcome event rate right and most of them on Oraxol. So if that's safer the Oraxol growth if you look at in the direction. Does that answer your question?

Peter Lawson

Yes, that helps. And I guess also just a quick question around safety, I mean it's encouraging safety profile do you think patients would swap from IV chemo just because of the back of -- because of the safety profile and remind us again why you are also doing say quality of life studies?

Rudolf Kwan

I think -- I think it’s very interesting. It reminds me that in the angiosarcoma study when we released the first patient get into the study is an elderly individual angiosarcoma who feels to have IV chemotherapy. And therefore was only agreed to take part in the trial with oral. And he achieved fantastic results and he stayed on the treatment for a long time, really a long time. So there are a lot of patients especially patients who are aversive to intravenous infusion and the burden of it that will no doubt would want to try oral instead of IV.

Now how are we going to position in terms of quality of life? And it's quite obvious. Oral and IV have a completely different profile in terms of quality of life. In our case it's clearly that you avoid hospital visits to be at home, think of the hospital visit on his home, go to IV Infusion Center, you -- it hasn’t how far you leave away from the center. Some catchment areas are really vast area and the patient has to come perhaps the day before even be driven the day early morning to go to the infusion center get there but can’t stand, make sure they are suitable to get the infusion, receive the infusion and stay until they finish the infusion and feel comfortable and be taken home.

Most of those by the IV infusion would not allow a patient to drive home, so it’s a whole day event. It’s not at least a half day. For somebody who may be working, we're talking about younger age group have breast cancer. Some -- one of our patient for example has she is a tool guy and she really took part in oral therapy and should continue with her job taking the tool group to visit places because she can't think of medication without that if she were on the IV treatment. She would have to give up her job. So there pile of interest in adults will help to bring to the attention of the community. But on top of that, you're quite right. We are planning also to perform formal quality of life studies as well. So we will discuss that once we have a firm plan. Thank you, Peter.

Peter Lawson

Thank you and then just final question Johnson, just how should we think back kind of the read-through for the rest of the pipeline, do you think that the gastric data could be an easier hurdle or Irinotecan as we move through to other read-throughs to other molecules in the pipeline?

Johnson Lau

Certainly Peter, we are thrilled to see the results. In fact if everybody allows me to remind you read-through our press release paragraph 3, paragraph 4 and paragraph 5. You’re now talking about a new class of drug which we shown better efficacy based on ITT. We also emphasized in paragraph 3 that if you use some other analysis excluding non-evaluable patients, the response rate will be higher and even the delta will be bigger and also that a drug is more effective and with much a better duration of response as we mentioned in paragraph 3.

And in paragraph 4, we're showing strong trend in both PFS and OS and also in paragraph 4, we emphasize that we still have the higher proportion of patients still on Oral Paclitaxel when the outcome of data was only on week 22 and you expect that we have more patients on Oral Paclitaxel. The improvement in PFS and OS that is very highly that trend will continue to improve which we mentioned in paragraph four.

In paragraph five, this is also on top of being a very effective drug also much safer. Bear in mind that if you look at some other text things including those Avoro [ph] contributed text things the high, the very severe neuropathy that was an increase of five types of this severe neuropathy when they compare with IV paclitaxel. When we compare with same IV paclitaxel, we have one-eighth of the severe neuropathy. If you didn’t assume that is comparable, you can see that we have close like to 40 times differences in terms of being safer with respect to the most important side effect that limits the use of the drug. So we are very excited now.

Obviously our top priority right now is to ensure that we behave ourselves in terms of only releasing data in a way that is susceptible to regulatory authorities. We will present that data in upcoming scientific meetings and obviously you'll be very logical you'll also very excited with regard to all the products in our pipeline and we shall be more than happy to expand and also to continue sort of exploring all the other drugs in our pipeline. In fact it already validates and also derisks all the products that we have in our pipeline.


Thank you. Our next question is coming from Kevin DeGeeter from Oppenheimer and Company. Your line is now live.

Kevin DeGeeter

Hey, great. Thanks for taking my questions. And Johnson, I want to follow-up on that kind of last comment specifically can you walk us through today as to how to think about a read-through of the de-risking for the platform as it applies to the other specific chemotherapy programs that you have in development specifically which combinations is it docetaxel, is it Irinotecan, if you think are -- you sort of have the cleanest read-through from kind of a PK pharmacology perspective based on its really strong data we saw in breast cancer with Oral Paclitaxel?

Johnson Lau

Thank you for your question. I think the first one that's very obvious is that for Oral Paclitaxel, I think that with a successful Phase 2 results with positive results based on ITT. I think there is a lot of de-risking already with the first product Oral Paclitaxel. Now we disclose in our R&D day before we also observed very good profile of oral Irinotecan as well as oral docetaxel and those are also sort of showing a profile that's very much in line with regard to our expectations.

Now coupled together with the fact that the PK prediction and also the clinical prediction with the Oral Paclitaxel how the way we want to be. There's no doubt that our Encequidar is actually working very nicely and together I think the risk or the subsequent projects in a very nice way. We'll also share with the investment community that we also have the tablet formulation to follow it's certainly right now the discussion is more with regard to the fact that when it happen, it will be better, the effect that the Encequidar is going to work is already confirmed. So I think all this coupled together will sort of give you the impression obviously impressed me that the projects are substantially de-risk.

Kevin DeGeeter

Great. And then maybe just two more and then that'll be it for me. And one with regard to CMC preparation around Oral Paclitaxel can you sort of remind me kind of where that stands and is it sort of CMC that maybe gating factor in terms of timeline to submission or is it just discussion with FDA with regard to the clinical side? And then my other question was just around ex-U.S. partnering particularly for Oral Paclitaxel, your specific question is do you think this is the dataset that gives you the opportunity to capture full value or do you think you want to see a little more mature data for example from the gastric study before maybe moving aggressively for partnering in certain ex-U.S. jurisdictions?

Johnson Lau

Thank you for your question. With regard to your question on CMC, we have been working very diligently to ensure that all our efforts are with regard to the successful preparation for the registration of the drug as well as marketing are all in parallel. So I'm delighted to say that all these CMC efforts are in parallel with the clinical studies to support the success of the program.

Now I’m also delighted to say that on top of being having one plan on the CMC, we have plan B and plan C. So therefore we have been working diligently to ensure that there are no factors that could derail our successful application or submission application for approval. And there will also be no affect that that would deter our successful launch based on commercialization efforts. So the vertical integration has been completed, In a way we also have product plans to ensure that the launch will be a success.

Now with regard to pandering, partnering allow me to say that I mean I don't think that is appropriate for me to make a comment apart from saying the fact that we can launch ourselves, so therefore if we see good opportunities obviously we shall be more than happy to anything. We have five additional identities that we have to ensure that we create the best return for our stakeholders. But sufficed to say that we are not at the mercy of a partnership, we will be able to either work with a very good partner or we can launch it ourselves.


Thank you. Our next question is coming from Ling Wang from JPMorgan. Your line is now live.

Ling Wang

Thank you. Congratulations on the great data. A lot of questions are being asked. I wanted to get your thoughts on the timing for present the data at a future medical conference. Would you wait for the PFS or OS data to become mature to present the data? Or you might present the data sooner than that?

Rudolf Kwan

I think the sequence of presenting the data with number one to the FDA and get some guidance onto where -- when they would recommend cutoff for PFS and for the OS. We are very close. So I think recommendation from them will be important.

Then the second would be presentation at major conference and it will occur soon. We -- whether the data PFS and OS will come in timing the follow-on data will really depend on the FDA we will continue to collect the data but we would want to make the definitive cut in collaboration in guidance by the FDA. So it may come together, it may depend.

Johnson Lau

Ling, another way to look at we already fulfill our mutual agreement with U.S. FDA that we already met our primary endpoint. So therefore the data with regard to primary endpoint can come out whenever we feel that is appropriate time to prepare the product launch.

With regard to PFS and OS, those were not required. And I'm delighted to see this potential upside surprises. And certainly I will encourage you to think about this as not required as our mutual discussion agreement with U.S. FDA this represents potential upside and we are hoping to see this very soon.

Ling Wang

I see. Can you remind us with regard to your communication with the FDA. My understand is that the hitting the primary endpoint of response rate was be sufficient for the conditional approval and with the PFS, OS trained to support for approval is that a correct understanding?

Rudolf Kwan

Actually they do not even meet the PFS and OS, those are additional. What they request is a ORR, overall objective response rate that defined in the protocol to reach statistical significance and that the -- and that we use ITT to do the P value. So we achieved that because it is a single study. So they asked us to use the ITT to use the P value. So we achieved already what they have asked for. The PFS and OS is a nice additional though support that they -- I would think that will make them even more pleased with the data.

Ling Wang

Got it. That's great. And lastly can you remind us the status of the trio of Oroxylin in combination with KEYTRUDA and when we might see some data from there and what might be your further plans for pursuing the combination of this drug with the IO therapies?

Rudolf Kwan

The study is already underway and all I can say is recruiting well and is being performed in three sites in Mayo Clinic and they seem to be and growing fast that we do not need additional sites. And we will communicate the results as soon as they are available. So be patient on that one.


Thank you. Our next question is coming from Matt Kaplan from Ladenburg Thalmann. Your line is now live.

Matt Kaplan

Hi. Thanks for taking the questions. I just wanted to follow-up a little bit on the PFS and OS. I guess given the trial design was not covered for showing PFS and OS. Can you give us a sense in terms of the kind of numerical delta that you're seeing in terms of the initial trends in favor of Oral Paclitaxel and I guess secondly have you hit the median curve for PFS and OS in either of the arms?

Rudolf Kwan

Matt, thank you for the question. Indeed if you look at the three end points we already achieved the primary endpoint of ORR, so that's nailed down. But bear in mind ORR is a surrogate endpoint approved by the FDA and recommended for use for breast cancer. And then, if the next one that they would like is PFS but really goal standard for all oncology studies accepted by the FDA is overall survival.

So I would say that now that we achieved the primary endpoint of the overall response rate really the focus should be on the overall survival. And we are very pleasantly surprised that we got such a strong trend even at this early stage. So I would encourage you to check with your dietician to imagine that such a small study 2:1 randomization to achieve such a P value, we are probably not talking about days of difference or weeks of difference or perhaps may not be a few months of difference. So do the homework and work it out and you -- we hope the result will surprise us.

Matt Kaplan

All right. And then just a follow-up on Kevin's question in terms of CMC has any of the activity at the Chongqing plants will that have any effect in terms of CMC for the Oraxol filing being yet?

Johnson Lau

That was actually an event and really to us it was happening to a chemical plastic plant. Unfortunately what happened was that when you have something like this, then the government would like to be more cautious we do have auto supply in fact more than one. So we should have no impact they got to the CMC advancements.


Thank you. We reached the end of our question-and-answer session. I would like to turn the floor back over to management for any further or closing comments.

Johnson Lau

Thank you for your time. And we are delighted to see that we have very positive results with our Phase 3 study and that we can share with you today and we'll continue be pushing the program to ensure that this drug will be available to patients, in view [ph] of this new therapy as soon as possible. Our team will continuously be looking very diligently to ensure that this structure will be helping patients very soon. Thank you for your time.


Thank you. That does conclude today’s teleconference. You may disconnect your lines at this time and have a wonderful day. We thank you for your participation today.