Deciphera Pharmaceuticals, Inc. (DCPH) CEO Steve Hoerter on Q2 2021 Results - Earnings Call Transcript

Deciphera Pharmaceuticals, Inc. (NASDAQ:DCPH) Q2 2021 Earnings Conference Call August 3, 2021 4:30 PM ET

Company Participants

Jen Robinson - Vice President, Investor Relations

Steve Hoerter - President and Chief Executive Officer

Dan Martin - Chief Commercial Officer

Matt Sherman - Chief Medical Officer

Tucker Kelly - Chief Financial Officer

Conference Call Participants

Daniel Wolle - JPMorgan

Chris Raymond - Piper Sandler

Eun Yang - Jefferies

Charles Zhu - Guggenheim Securities

Srikripa Devarakonda - Truist Securities

Reni Benjamin - JMP Securities

Peter Lawson - Barclays

Arlinda Lee - Canaccord

Operator

Good afternoon, everyone, and welcome to the Deciphera Pharmaceuticals Second Quarter 2021 Financial Results Conference Call. Today’s call is being recorded. At this time, I would like to turn the call over to Jen Robinson, Vice President of Investor Relations, Jen?

Jen Robinson

Thank you operator. Welcome, and thank you for joining us today to discuss Deciphera second quarter 2021 financial results. I am Jen Robinson, Vice President, Investor Relations at Deciphera. With me this afternoon to discuss the financial results and provide a general corporate update are Steve Hoerter, President and Chief Executive Officer; Dan Martin, Chief Commercial Officer; Matt Sherman, Chief Medical Officer; and Tucker Kelly, Chief Financial Officer.

Before we begin, I would like to remind you that any statements we make on this call that are not historical facts are forward-looking statements reflecting the current beliefs and expectations of management, made pursuant to the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. Examples of forward-looking statements made during this conference call include our expectations for our preclinical and clinical programs, our commercialization of QINLOCK and 2021 guidance. Forward-looking statements made on this call involve substantial risks and uncertainties that could cause actual results to differ materially from those expressed or implied by the forward-looking statements, and we cannot assure you that our expectations will be achieved. Such risks and uncertainties include those set forth in our most recent quarterly report on Form 10-Q as well as our other SEC filings. We assume no obligation to update or revise any forward-looking statements. Following this call, a replay will be made available on the company’s website, www.deciphera.com.

With that, I will now turn the call over to Steve Hoerter, President and Chief Executive Officer of Deciphera. Steve?

Steve Hoerter

Thank you, Jen. During the first half of 2021, we continue to execute on our strategic priorities across the company, positioning us for a catalyst-rich second half of the year that will set the stage for the company’s next phase of growth. As our Chief Commercial Officer, Dan Martin, will outline on today’s call, our U.S. commercial organization has rapidly established QINLOCK as the standard of care in fourth-line GIST, which has created a strong foundation for our future expansion into the second-line setting.

In addition, we continue to publish key data updates from QINLOCK studies, which underscore the broad clinical benefit this best-in-class medicine provides in GIST. Outside of the United States, we are making excellent progress with launches now underway in China and Hong Kong. As a reminder, an estimated 30,000 new patients are diagnosed with GIST in China each year, and we look forward to supporting our partner, Zai Lab, as they launch QINLOCK in this important territory. In Europe, where our marketing authorization application is under review, we are building out an experienced commercial organization that is preparing for the expected approval by the European Medicines Agency in the fourth quarter of this year. This focused team will be well positioned to quickly deliver QINLOCK to patients in early launch markets once the EMA approval is secured.

Our next priority for QINLOCK is moving this medicine into earlier lines of therapy for GIST. We have seen the significant difference QINLOCK has been able to make in the lives of patients with fourth-line GIST and are eager to bring that life-changing impact to patients in earlier lines of treatment. We continue to expect to announce top line results from the ongoing Phase 3 INTRIGUE study in second-line GIST, in the fourth quarter of this year. In addition to QINLOCK, we remain focused on advancing our growing pipeline of novel Kinase Inhibitors. In June, we treated the first patient in our Phase 1 study of DCC-3116. This Phase 1 study is investigating the safety and tolerability of our first-in-class ULK kinase inhibitor, first as monotherapy in patients with solid tumors expressing a mutant RAS or RAF gene and then in combination with a MEK inhibitor. We believe we have a leading position in the development of regulators of autophagy for cancer, an approach that holds tremendous potential to help a very large group of patients.

As Matt Sherman, our Chief Medical Officer, will discuss in more detail, we were pleased to announce today an exclusive licensing agreement with Sprint Bioscience for a research stage program targeting VPS34, another important kinase in the autophagy pathway. This research program is complementary to DCC-3116 and builds on their expertise in the science for regulating autophagy and cancer. We are also pleased with the progress we are making with our later-stage clinical development programs. At the upcoming ESMO Congress, we look forward to presenting new data from the Phase 1/2 study of Vimseltinib in patients with tenosynovial giant cell tumor, in addition to data from the platinum-resistant ovarian cancer cohort from the Phase 1b/2 of Rebastinib in combination with paclitaxel. We plan to finalize pivotal development studies for both programs in the second half of the year.

I will now turn the call over to Dan Martin, our Chief Commercial Officer, to discuss the U.S. QINLOCK commercial results from Q2. Dan?

Dan Martin

Thank you, Steve. In Q2, the commercial team continued to execute against our core launch objectives. Since our approval in May of last year, we have established QINLOCK as the clear standard of care in our initial fourth-line indication and have rapidly penetrated the fourth-line market opportunity. Importantly, we have also built broad clinical experience of positive product perceptions among both academic and community GIST prescribers in advance of our planned launch into the significantly larger second-line opportunity. In Q2, we achieved $22 million in total net product revenue globally, including $20.7 million in the U.S. QINLOCK’s performance metrics remain extremely positive as we continue to capitalize on the opportunity for QINLOCK to provide significant clinical benefit in the fourth-line setting. Despite lingering physician access challenges created by the pandemic, our sales and marketing teams continued to achieve high levels of prescriber reach and share of voice.

QINLOCK awareness and familiarity among targeted GIST treaters remain extremely high. And prescribers from both academic and community settings continue to cite strong QINLOCK performance across all key product attributes. In Q2, we continued to expand our prescriber footprint. Since launch, over 450 physicians representing more than 400 institutions have prescribed QINLOCK. As expected, while academic physicians made up the majority of our earliest adopters, most of our new prescriber growth is now coming from the community setting. We are pleased with our progress within community practices, not only as it relates to our current fourth-line launch, but also as it relates to our planned second-line launch as we expect community prescribers to play an even larger role in earlier lines of therapy.

Overall, we believe our success to date across both academic and community settings reflects QINLOCK’s highly differentiated clinical profile and proven patient benefit and is historically difficult to treat disease. Regarding duration of therapy, the real-world persistency that we see for patients who have received QINLOCK continues to be similar to what we saw in the INVICTUS study, consistent with our pre-launch expectations. As we have shared previously, we expect the average time on therapy to eventually be longer than the median, based on experience from our clinical trials, in which some patients remained on therapy for extended periods.

We continue to monitor the impact that the COVID pandemic is having in oncology broadly and just specifically. Recent data from IQVIA show that the pandemic’s negative impact on diagnosis visits has persisted into 2021. IQVIA now estimates that this has negatively impacted total oncology prescriptions by 21% through the first half of the year. Regarding GIST patient volume, claims data continue to show an approximate 10% decline in new patient starts in earlier lines of therapy over the past year. Assessing the impact of COVID is challenging, particularly given that we lack a pre-pandemic baseline for comparison. However, taken together, these data suggest that COVID may be having an impact on the volume of GIST patients progressing to fourth line treatment.

One of our core objectives is to optimize patient access to QINLOCK, and we were very pleased to see excellent payer coverage continued during the quarter with policies aligned to our FDA label. Regarding the percentage of patients receiving free drug under our patient assistance program or PAP, we saw an increased trend in Q2 versus prior quarters. For the quarter, the PAT percentage was at the high end of our estimated range of 20% to 30%. This trend appears to be driven by increased patient affordability challenges that result from the Medicare Part D drug benefit design. It’s important to keep in mind that Medicare patients who receive free drug under a company’s patient assistance program must remain within that program through the end of the calendar year. Therefore, although projecting PAP in future quarters is challenging, we expect to see higher PAP levels persist in Q3 and Q4, potentially exceeding our estimated range.

As we look ahead, preparations are underway for our planned second line launch, pending FDA approval. We are extremely optimistic about the significant potential for QINLOCKin the second-line setting, driven by a larger estimated patient population and anticipated longer duration of therapy. Our enthusiasm regarding QINLOCKs potential to positively impact a broader population of GIST patients is widely shared by just treaters, underscoring the recognized need for an improved second-line treatment option. In market research, just thought leaders and community oncologists have consistently shared their desire to use QINLOCK in the second-line, pending FDA approval. To date, QINLOCK has had a profound impact on the treatment of patients with GIST, and we believe the success we have seen in our initial fourth-line indication provides a strong foundation for QINLOCK in the future. We look forward to building on that foundation and to helping even more patients of GIST by expanding into the second-line setting, pending positive data from INTRIGUE later this year and subsequent approval.

I will now turn the call over to Matt to discuss the progress of our clinical programs. Matt?

Matt Sherman

Thank you, Dan. This quarter was marked by impressive progress expanding our pipeline of exciting novel kinase inhibitors. I’d like to start today by discussing our newest clinical program, DCC-3116, which we believe to be a first-in-class ULK kinase inhibitor in development for the treatment of mutant, RAS and RAF cancers. In June, we achieved an important milestone dosing the first patient in the Phase 1 first-in-human study. DCC-3116 is designed to inhibit autophagy, an important process in which sales recycle components to generate energy.

Autophagy is often upregulated in cancer cells due to stressed damage caused by anticancer treatments. DCC-3116 is designed to suppress autophagy by inhibiting the ULK kinase, the initiating factor in the top key pathway. The clinical development plan for DCC-3116 will focus on documented RAS and RAF cancer mutations, which utilize a topic the tumor growth and survival. Assuming positive results in the dose-escalation phase, expansion cohorts in combination with trametinib, a commercially available MEK inhibitor are currently planned in multiple tumor types. We are continuing to explore other combination partners for DCC-3116 pre-clinically, and we expect to evaluate it in combination with other inhibitors with the RAS map kinase signaling pathway beyond that.

Our research team has generated additional exciting preclinical data with DCC-3116 in combination with approved targeted oncology agents in multiple tumor types, demonstrating potentially broad applicability of targeting autophagy to ULK in addition. We look forward to sharing some important work at an upcoming medical meeting. Our enthusiasm for the potential of autophagy as an important targetable pathway in oncology does not end with DCC-3116. As Steve mentioned, we in-licensed the exclusive rights to a research stage program targeting VPS 34. The VPS-34 program complements our robust internal research programs in growing pipeline and enhances our efforts to explore the potential for regulating antophagen cancer. Together, Deciphera’s ULK and VPS-34 programs represent a comprehensive approach to addressing the clinical role of autophagy in cancer with the potential to benefit a very large number of patients.

Moving on to our other programs, we were excited to present data from both the QINLOCK, kinase and clinical studies at this year’s ASCO annual meeting. For QINLOCK, we presented an exploratory analysis of our INVICTUS Phase 3 study showing that dose escalation of the QINLOCK 150 milligrams BID after progression on 150 milligrams QD, can offer substantial additional clinical benefit with a tolerable safety profile. These data were published in the peer review journal of the oncologist just last week.

As the body of data supporting QINLOCK’s efficacy and safety continues to grow, we are pleased with this potential to offer clinically meaningful benefits for GIST patients in multiple settings of the disease. For the ongoing INTRIGUE Phase 3 study comparing QINLOCK to sunitinib in patients with second-line GIST, we remain optimistic that the top-line data expected in the fourth quarter this year will demonstrate significant clinical benefit for these patients. We believe that the exceptional results of the INVICTUS Phase 3 study showing a median PFS of 6.3 months with fourth-line plus GIST patients receiving chemo as well as the Phase 1 data strongly support the likelihood of success in INTRIGUE.

Plan for the fourth quarter, we are excited to initiate the Phase 1b/2 of QINLOCK in combination with binimetinib, a commercially available MEK inhibitor to address one of the potential resistant mechanisms post-imatinib GIST. As we stated before, the goal of this new study is to see whether we can deepen and prolonged initial responses by combining broad addition with QINLOCK with an addition of the MEK kinase pathway using a MEK inhibitor for patients with fostamatinib GIST. We have also been studying Rebastinib, our selective TIE2 inhibitor in 2 Phase, 1b/2 study utilizing a Simon 2-stage design in combination with paclitaxel and in combination with carboplatin. For the carboplatin study, we presented preliminary data from the dose-escalation phase at ESMO last year and have been evaluating the combination of three tumor-specific expansion cohorts. While we have seen additional clinical activity in the carboplatinum expansion and a tolerable safety profile, we have not seen the level of clinical activity that we believe is necessary to continue in development this time and have decided to focus our resources for Rebastinib paclitaxel combination.

We continue to generate informative data in the paclitaxel study, and we look forward to sharing updated data from the platinum-resistant ovarian cancer cohort at the ESMO Congress in September. The data will include updated safety and efficacy data on the full cohort of patients in the second stage, including progression-free survival, which we believe is the key indicator of clinical activity in this difficult-to-treat patient population. Based on the published literature single-agent typotaxin in platinum-resistant ovarian cancer is expected to be approximately 3 to 4 months. We look forward to presenting these updated results at ESMO next month.

We plan to finalize pivotal development plans for Rebastinib in combination with paclitaxel in the second half of this year. Finally, we are excited to share updated data for Vimseltinib which we believe to be the best-in-class inhibitor of CSF1R for the treatment of tenosynovial giant cell tumor at this year’s ESMO Congress in September, along with guidance on our pivotal development plans for this program. At ESMO, we expect to present updated safety and efficacy data from the ongoing Phase 1/2 study in approximately 50 TGCT patients. We look forward to the continued progress of these programs, each of which has the potential to make a meaningful difference in the lives of patients and fulfill current unmet medical needs.

I will now turn the call over to Tucker Telly, our Chief Financial Officer, to review the financial results. Tucker?

Tucker Kelly

Thanks, Matt. I’d like to view the highlights from our second quarter financial results. Total revenue for the second quarter was $23.6 million, which includes $22 million in net product revenue with QINLOCK. Net product revenues for the second quarter of 2021 include U.S. sales of QINLOCK of $20.7 million and ex U.S. sales of QINLOCK of $1.3 million. The gross to net adjustment in the second quarter was significantly below our annualized estimate of 15% and we expect it to be more in line with our 15% estimate in future quarters. Collaboration revenue in the quarter was $1.5 million, which includes commercial supply and royalty revenue under our agreement with Zai Lab for Greater China.

The cost of sales for the 3 months ended June 30, 2021, was $1.3 million, which included $400,000 in cost of net product revenue for QINLOCK product sales and $900,000 in cost of collaboration efforts. As we have said previously, we expect the cost of net product sales in the U.S. will remain immaterial through at least this year and would not expect, the cost of sales to be significant until the initial pre-launch inventory is depleted and additional inventory is manufactured and sold.

Total operating expenses were $94.1 million in the second quarter of 2021 compared to total operating expenses of $76 million in the same period in 2020. Research and development expenses in the second quarter were $60 million compared to $46.1 million in the same period in 2020. Selling, general and administrative expenses in the second quarter were $32.8 million compared to $29.9 million in the same period in 2020. We continue to expect that our operating expenses will increase modestly this year as we invest in the development of our clinical pipeline, executing the commercialization of QINLOCK in the U.S. and prepare for potential commercial launch in Europe. We ended the second quarter in a strong financial position and remain well capitalized with cash, cash equivalents and marketable securities of approximately $451 million, which we expect to be sufficient to fund our operations into the first half of 2023.

With that, I will now turn the call back over to Steve.

Steve Hoerter

Thank you, Tucker. We continue to make important progress across our strategic priorities in 2021. While our focus has been on establishing QINLOCK as the standard of care in fourth-line GIST around the world, we are excited as we prepare to report the top line results from the INTRIGUE study in Q4 of this year. If successful, these study results will enable filings around the world and dramatically expand the potential for QINLOCK to benefit patients with GIST. Our progress in this most recent quarter has demonstrated the strength of our pipeline beyond QINLOCK. We have successfully initiated the Phase 1 study of DCC-3116 and we look forward to sharing new data and finalizing pivotal development plans for Vimseltinib and Rebastinib later this year.

Operator, I’d now like to open the call for Q&A.

Question-and-Answer Session

Operator

And thank you. [Operator Instructions] And our first question comes from Jessica Fye from JPMorgan. Your line is now open.

Daniel Wolle

Hi, this is Daniel for Jessica Fye. Thanks for taking our question. In your prepared remarks, you have described the impact of COVID on new patient starts as well as free drug use. Do you have any new insight on whether COVID has an impact on duration of therapy and how does that make you kind of evolved over the last year and into second – first half of 2021? That’s my first question. Second question is the addressable fourth line market seems smaller than we had previously anticipated. As we approach INTRIGUE data readout and think about the second line opportunity, what gives you the confidence that the same will not be true for the second line opportunity? And last question is, maybe can you set the stage for us that the Phase 1b/2 study of Rebastinib in platinum-resistant ovarian cancer settings in terms of what we can see patient number wise as well as number of scans? Thanks.

Steve Hoerter

Great, Daniel. It’s Steve. Thanks for all the questions. So we will try and take these somewhat in order. Maybe what I will do first is take your second question, which relates to the performance in the fourth line and then I’ll ask Dan to talk a little bit about the COVID impact to the extent, you can add some additional color and then I’ll ask Matt to take the platinum-resistant ovarian cancer cohort question, the data that’s coming up here next month at as well, which we’re excited about. So, first, with respect to your question on the fourth-line opportunity, I think I’ll just start by reiterating what I said and Dan said in the prepared remarks, which is that we are really pleased with the launch performance in the U.S. to date and how this sets the stage, as you pointed out, for the second line INTRUIGUE study, which is due to read out in quarter four. So we think having established the drug as the standard of care in this fourth-line indication with – largely with community docs now, as Dan outlined in his prepared remarks, with a large fraction of new prescribers coming from the community really sets the stage now for us to move into the second-line with the readout of the INTRIGUE study later this year and then filings that would flow from that. I think with respect to the demand dynamics that we see in the fourth line the underlying drivers of demand in this fourth line indication remain the same as we talked about on the quarter one call. So we noted on that call that the next big leg up in growth, we thought was going to be coming from the second-line indication. And that’s really driven by two factors. One is just the larger number of patients that we see in the second line. And as you know, we estimate the treatment eligible number of patients in the second line in the U.S. of being at about 2,000 patients. And the second driver in the second-line, we believe, is going to be related to duration of treatment. So, those are the two factors really to look to as we think about the second line opportunity, pending the INTRIGUE readout. Dan, would you like to take the COVID question? And then, Matt, just as a reminder, the platinum-resistant ovarian cancer cohort question for ESMO.

Dan Martin

Yes, absolutely. Thanks for the question, Daniel. So just to clarify, we did note that we continue to track the impact of COVID and try to assess what impact it’s having on oncology broadly and just specifically. And what I mentioned, just to make sure I’m clarifying is that some of the data that we look at points to potential impact to new patient starts in earlier lines of therapy over the last year of approximately 10%. And I think you asked about Pat. We haven’t spoken specifically to COVID-impact on Pat. Pat was increased in Q2 as we talked about at the high end of our range. And because of the way path works, where patients who enter that program have to remain in the program for the balance of the calendar year, we expect that higher levels of path may persist into Q3 and Q4, potentially above the estimated range that we’ve provided, but I didn’t tie that into COVID specifically. And then lastly, are we able to discern any impact of COVID on duration? And the short answer to that is no, we have not. We continue to be really pleased with the persistency that we’re seeing in patients who received came off from launch. As we noted, it’s developed as we expected and looks a lot like what we saw in the INVICTUS study.

Matt Sherman

And hi, Daniel, this is Matt. Let me pickup the question about the Rebastinib data in platinum-resistant ovarian cancer that we plan to update at next month’s ESMO meeting. As you remember, it was a year ago that we presented the first part of the two-stage Simon design and the expansion cohort for platinum-resistant ovarian cancer at the ESMO meeting 1 year ago. And at that time, we had 24 evaluable patients and we reported 9 of the 24 having a response or a protective response rate of 38%. And that was early in the study. So we now have completed for enrollment in the expansion cohort and we have 33 evaluable patients. And now not only an update on the objective response rate, but we will also be able to provide the progression-free survival in this cohort of patients. So, we look forward to providing that data next month.

Daniel Wolle

Thank you very much.

Operator

And thank you. And our next question comes from Chris Raymond from Piper Sandler. Your line is now open.

Chris Raymond

Hey, thanks. I wanted to just explore maybe what I think I heard from Dan to the last question. Dan, I think you had mentioned last quarter that fourth line GIST was already well penetrated, which I think inferred no quarter-on-quarter growth. But U.S. growth, as my math goes, it looks like it was 7% on the revenue line. And I think I heard you say there were some patient starts in earlier lines of therapy. So maybe can you just clarify, is that what’s driving the growth there or is there some other – and I think I also heard you guys talk about a gross to net benefit? Can you maybe break out what’s driving that growth, if it’s not increased penetration in the fourth line? And then the second question is on the intra-patient dose escalation data at ASCO. Last time we did a check, which was pre-ASCO we didn’t really see any indication of docs doing that. Maybe can you just broadly talk about how if you are seeing any anecdotal use employment of that? Is the data resonating with docs? Just sort of any color sort of on that data you could provide? Thanks.

Steve Hoerter

Hey, Chris. It’s Steve. Thanks for the question. Dan, would you like to take both of Chris’ questions there?

Dan Martin

Yes, sure. Absolutely. Thanks, Chris. I appreciate the question. So, with respect to the performance and the 7% quarter-over-quarter, when we think about the story for this quarter, we think about it in terms of demand and then things that impact PAP and gross to net. And that’s how we try to sort of out the story of the quarter. As it relates to demand, things are basically unchanged, consistent with what we’ve communicated previously which is that all of our data sources continue to suggest that QINLOCK is highly penetrated in the fourth-line opportunity. And because of this higher share, that’s why we’ve said, as you noted, that we expect the opportunity for demand growth to be limited until our planned second-line launch. We did benefit quarter-over-quarter from lower gross to net, as Tucker mentioned. That was a component as well. And then importantly, the PAP piece, we saw, particularly as we exited the quarter a bit of an increase in that PAT percentage, and we attribute that to the Medicare Part D drug benefit design and how patients now that they’re in that program, they need to stay in that program. That’s how the program works. And that’s why we spoke to expecting potentially higher PAP in Q3 and Q4 as well. So I think those are the major brush strokes. And then for IPDE, it’s a good question. So as Matt said, we’re really pleased that we continue to grow the sort of base of data for QINLOCK broadly. But you are right, so far, as we said on prior calls, we have not seen a lot of use of IPDE. We see some. By the way, as always, I should mention that we don’t promote this data given that it’s an off-label regimen. And so we do see some payer coverage currently is a bit inconsistent. Some claims get paid for some don’t. And so it is rather minimal at this time. So pretty consistent with what it sounds like you are seeing in your survey.

Chris Raymond

If I can ask a follow-up on that, I mean, you guys did take a almost 5% price increase, I think before the quarter began. Was there some impact from that that we should be thinking about as we model?

Steve Hoerter

Yes, Chris, so it’s Steve. That’s right. We did take a 4.9% price increase as of July 1. So that’s the price increase that we’ve taken, which is really in line with what we’ve seen with other oral oncolytics. So that, as Dan just outlined, there were a variety of different factors, of course, that contribute to overall performance. And Dan just spoke to a couple of them that we thought we wanted to highlight for quarter two, but there are a whole variety of factors, including price that play into the balance of the year.

Chris Raymond

Okay, thanks.

Operator

And thank you. And our next question comes from Eun Yang from Jefferies. Your line is now open.

Eun Yang

Thank you. So, based on – Steve, based on your comments and the clinical data that we have seen to-date, do you think it’s fair to say that in the U.S., at least, the second line GIST opportunity would be about 4x greater than fourth line? And second question is for Matt, so in Phase 3 INTRIGUE trial, you guys are allowing certain dose reduction in the event of a toxic effect. So, can you comment on what percent of patients on certain group had dose reduction and how they may compare to Pfizer’s Phase 3 study for certain in second line? And the last question is to Tucker, are you planning to, at some point, are you planning to breakout royalty revenue from Zai Lab from the collaboration revenues? Thank you.

Steve Hoerter

Hi, Eun, it’s Steve. Thanks for the question. So before I turn it over to Matt and then Tucker, let me take your first question. And really it’s just to reiterate what I said to the question from Daniel earlier in the call earlier in the Q&A, which is the way that we think about the second line opportunity relative to the fourth line opportunity is really driven by those two factors that we have talked about very consistently. One is about the epidemiology, so the number of patients that we see in the second line and we believe there are about 2,000 new patients that are treatment eligible in the U.S. each year. And then the second component of that is really going to be about, duration of treatment, how long patients are staying on therapy. We think those are going to be the two biggest differences and drivers relative to the fourth line opportunity. Matt, would you like to take the question about INTRIGUE?

Matt Sherman

Sure. Hi Eun, it’s Matt. So yes, we have our ongoing Phase 3 study comparing ripretinib QINLOCK to sunitinib in the second-line setting in this head-to-head comparison. As you know, we fully enrolled the study as of the end of last year. We remain blinded to the data, not only to the treatment of Simon, but to how patients have done on the study in terms of dose reductions or other modifications per treatment arm. So, once we have the top line results, which we are planning to have this in the fourth quarter this year, we will be able to make those comparisons compared to the indication – the labeled indication of sunitinib in that setting.

Tucker Kelly

Great. And Eun, it’s Tucker. I will answer your last question on the collaboration revenues. At the moment, we don’t have any intention to breakout the various components of collaboration revenue, which include the clinical or commercial supply that we have with Zai as well as now here in Q2, the initial royalty payments. And then in other quarters, we had milestone payments. So, it’s all at the moment related to the Zai collaboration, but we haven’t broken out the various components other than at times where we have to say a large milestone payment, but this quarter does include both commercial supply and initial royalty payments.

Eun Yang

Thank you.

Operator

And thank you. And our next question comes from Michael Smith from Guggenheim Securities. Your line is now open.

Charles Zhu

Hey, good afternoon everybody. This is Charles Zhu on for Michael. I guess one commercial question first before I shift over to the pipeline, but how much line of sight do you have into the number of second line patients currently present at the accounts where you have a commercial presence off of your fourth line label. And given the overlap in your experience thus far in fourth line, I guess how should we think about the potential launch trajectory and market opportunity, assuming INTRIGUE is successful? Thanks.

Steve Hoerter

Yes. Thanks, Charles. It’s a great question. Dan, would you like to take that?

Dan Martin

Yes, absolutely. Thanks for the question. So we have been really – I’ve been really pleased with our ability to reach treating – just treaters despite the ongoing challenges of the pandemic, it’s tough to launch a drug in the pandemic, of course, but the team really did a great job pivoting just prior to launch and finding ways to leverage both remote virtual, but also in-person interactions when possible. And as a result of that, we have been able to reach the vast majority of our targets. And those targets aren’t just current fourth-line treaters, we target GIST treaters broadly because it’s hard to know which one is going to have a fourth line patient and when. So we have reached quite a number of GIST treaters. We do also work to identify and be mindful of where patients in earlier lines are out there so that when they do progress to fourth line, we are able to capitalize. So, we have – we feel like we’ve got a really good feel for the GIST market now being out there as long as we have. And then we think it sets up great for a second-line launch. I mean, one of the things that we are really excited about is the progress we have made in the community setting. I noted in my prepared remarks that the majority of our new prescribers are now coming from the community. And we think that’s great because they are likely to play an even larger role when we get to second line. So, we think the progress we have had in the fourth line has been great and right in line with our expectations and we have got a nice foundation set for our successful second-line launch pending approval.

Charles Zhu

Makes sense. And maybe one for Matt, I think, so looking at autophagy, there is a lot of literature out there that describes how autophagy can play a role in their immunization in addition to its mechanism alongside the RAF-MEK-ERK pathway. I guess, how would you characterize your interest on that front in terms of clinical study? And are there any sort of particular, I guess, valuable biomarkers that could indicate an increased tumor reliance on autophagy to a big immune system? Thanks.

Steve Hoerter

Hey, Charles. It’s a great question. Matt, why don’t you guys go ahead, please?

Matt Sherman

Yes. Hi, Charles. So yes, thanks for the question. It’s really interesting, and I can spend a minute talking about some of the near findings of both the role in autophagy in immune surveillance. First, we are very excited about the initiation of our Phase 1 study of 3116, our old kinase inhibitor that we announced last month to have a first-in-human study underway now. And we will be progressing with a single agent for safety of 3116 followed by combination initially targeting combination with mutant RAS and RAF cancer, so targeting the MAP kinase pathway for the initial combination study. Well, I think you referred to in your question is some recent published data, it’s also very exciting by showing that in the subset of non-small cell lung cancer patients who have a comutation of a RAS mutation plus the LKB 1 mutation. This occurs in about 20% of non-small cell lung cancer patients. They are highly resistant to PD-1, PD-L1 checkpoint blockade. So, in comparison to the 30% or greater response rates that PD-1 agents can provide to non-small cell lung cancer patients, if they co-mutate or carry the KV 1 mutation as well, they have less than 10% response rate. The study of this being published showing that by inhibiting the oral kinase in tumor cells in that population, it can restore immunoresponsiveness and allow for responsiveness to checkpoint inhibitors such as a PD-1 PD-L1 pathway. So, that provides potential opportunities for us in the future in terms of combination studies.

Charles Zhu

Got it. Thanks for taking the questions.

Operator

And thank you. And our next question comes from Robyn Karnauskas from Truist Securities. Your line is now open.

Srikripa Devarakonda

Hey, guys. Thank you so much for taking my questions. This is Kripa on for Robyn. So, I had a question about the ex-U.S. expansion opportunities both in fourth line and eventually in second line just your EMA approval is still on track for fourth quarter and you talked about launch in China and Hong Kong. First, can you talk to us about any potential impact of COVID on the commercial preparedness in EU, especially given how different the situation seems to be amongst the different countries? And then looking beyond regions where you either have approval or where you expect approval, any color on expansion strategy? Are there other geographies where you think it will be easy to penetrate and would be meaningful markets? Thank you.

Steve Hoerter

Yes. Thanks, Kripa. It’s Steve. Thanks for the great question about our progress outside of the U.S. So, let me try and address the questions that you posed. First, as you all know, we, of course, have the approval in the U.S., the approval in Canada as well as Australia. And now we have added to that the Zai approval and their territory in Greater China and China and Hong Kong specifically. And we expect that we will see additional territories come online, additional approvals that will come both from the Zai territory and also as you noted, from outside of the Zai territory, specifically our EU approval, which we expect in quarter four of this year. So, we have made really good progress in terms of starting to build our organization in Europe to address the opportunity there. And our focus is, as I have mentioned before on prior calls, really on the early access markets. So, as you may know, in certain markets, we have the opportunity to price freely in others, it requires a negotiation on price and on reimbursement. And so, as a result, market access can take some time, particularly in Southern Europe, where it can take substantially longer in some cases. But we are making very good progress, not only in attracting the right talent, building the team, but also getting the work done as we prepare for that potential approval in Europe at the end of this year. And then we will build in relevant territories across the EU as we get market access, so that will very much be a staged approach to both the build as well as to the launch as we get market access and have the opportunity to deliver on revenue. So, with respect to expansion strategy, there really are two key areas of expansion strategy for QINLOCK and the first, as we have talked about previously is about moving the drug into an earlier line of treatment. That’s the basis for the INTRIGUE study, which we have spent a lot of time talking about. And the second, as you addressed is about geographic expansion. So, our focus as a company, in addition to, of course the U.S. launch here for fourth line and looking to the second line launch is really about Europe and that really is where our focus is. So we are trying to go where the largest market opportunity is to try to capture that ourselves in other territories as we have already demonstrated in Australia and in Canada, we will work through distributors to access those markets.

Srikripa Devarakonda

Great. Thank you very much. If I can ask one more question, this is more to do with, as you treated multiple patients now, you have a couple of quarters, not sure how much analysis you are doing with a mutational background of patients that are being treated with QINLOCK. Is it comparable to INVICTUS trial? Are you seeing any differences in the mutational background of responders in particular?

Steve Hoerter

Yes. So, it’s a really good question. And unfortunately, we don’t have good access to that sort of data from patients who are being treated in a commercial setting. What we would expect based on the size of the INVICTUS study and where we enrolled those patients is that the commercial experience is consistent with what we saw in INVICTUS, where we saw very broad activity of the drug irrespective of mutational background. And I think Dan’s comments earlier about persistency and duration of treatment tracking pretty closely to INVICTUS that is something we have access to. I think that suggests to us that in the real world setting that we are seeing a very similar patient population to what we treated in INVICTUS and the drug is behaving very similarly.

Srikripa Devarakonda

Great. Thank you so much.

Operator

And thank you. And our next question comes from Reni Benjamin from JMP Securities. Your line is now open.

Reni Benjamin

Hey, good afternoon guys. Thanks for taking the questions. I guess maybe just with the rebastinib program you mentioned you are not moving forward with carboplatinum. Can you talk a little bit about what led to that decision? Was it more on the efficacy side, more on the safety side? And as we think about sort of the new data that we’re going to get or updated data we’re going to get at ESMO given that it’s only – whatever it is, 7 more patients than what we have seen before, maybe 9 more patients than what we’ve seen before, is it fair to say that, you know what, you have a pretty good idea as to the efficacy and safety here and there likely is a path forward or will you be going through the same sort of decision-making process as to whether or not you want to move that program forward?

Steve Hoerter

Yes. Thanks, Reni for the question about the rebastinib program. And as I noted, we are excited to share the data from the PROC cohort coming up here next month at ESMO. Matt, would you like to address the question that Reni asked with respect to carbo versus paclitaxel and the safety profile of the drug relative to activity?

Matt Sherman

Sure. So, hi, Reni, it’s Matt. So yes, just to go back, so as you know, rebastinib are potent selected inhibitor the TIE2 kinase. And TIE2 is expressed on endothelial cells and as well as androgenic macrophages. And inhibition of TIE2 can block those macrophages as well as tumor angiogenesis. We did preclinical studies a while back and we noticed that paclitaxel in these tumor models could promote angiogenesis and increase the number of TIE2 expressing macrophages within the tumor cell. So that’s on the basis we’re using rebastinib, a carboplatinum with paclitaxel and show that we could have this antitumor response. We move that forward into the phase – in the combination Phase 1/2 trial. In addition, because carboplatin is also a very common backbone therapy in oncology, we decided to extend that observation into a clinical trial in combination with carboplatin. But as we announced today, the activity we saw there while the combination was safe, we did see activity in these cohorts of patients, it do not meet the level of evidence for us to proceed into further development, and we’ve discontinued the carboplatinum trial. In regard to what we plan to present at ESMO next month, as I said earlier, we have the full enrollment of the expansion cohort of the planning resistant ovarian cancer patients and not only updating the objective response rate, but still looking at the progression-free survival for these patients now that they’ve been on for quite a long period of time, will be very informative to inform us moving forward in this indication.

Reni Benjamin

And as we think about the finalization of the pivotal programs at the end of this year, how should we be thinking about the timing as to when those pivotal programs might initiate? And would you need to meet with the FDA ahead of that for the regulatory buy-in of the structure of the pivotal programs before starting?

Steve Hoerter

Reni, it’s a really good question. So, I think there are really two pieces of information for us to consider moving into a pivotal study. One, as we’ve just talked about, is getting the data presented and evaluating the data and understanding how the drug performs in the relevant indication, and you’re exactly right. The second is to make sure that we have good regulatory input as we think about a potential design of a pivotal study for the program. So those would be the two key steps. So, we’re looking forward to getting the data out there as Matt referenced coming up next month. And then we’ll be in a position, as we’ve noted here in the second half to start to talk about what a pivotal program could look like.

Reni Benjamin

Got it. And then a final question for the new asset, VPS34, can you talk a little bit about, I guess – is there – what the overlap – biological overlap might be with ULK or how the two molecules at one point may find themselves in a combination study, if that works biologically? And I guess separately, did you guys utilize the switch control kinase inhibitor platform that you have to try to find drugs that might target VPS34 or was this sort of something that came out of the blue or from your own BD development pathways?

Steve Hoerter

Yes. Thanks for the question, Reni. So let me start off, and then I’ll turn it over to Matt, just to talk about the two ways that we’re targeting autophagy and how they’re differentiated. But the first, let me just say that we’re really excited to announce today the licensing of this research stage program targeting VPS34 from Sprint. And this really builds upon not only our interest but also our expertise in targeting this pathway for the potential treatment of cancer. And as you referenced, we have a first in-class program targeting ULK, which we’re excited now to have that Phase 1 study underway and to be actively enrolling patients. And as we have been evaluating the pathway, looking for potential additional targets to pursue, VPS34 certainly was a target that we’ve been tracking and so we’re excited to have brought a program in, which would advance substantially in the internal work that we might have otherwise done. But Matt, why don’t you talk a little bit, if you would, about the difference between targeting bulk versus VPS34?

Matt Sherman

Hey, Steve, did I lose you? You guys didn’t hear that.

Operator

Yes. Matt, we are having hard time hearing you.

Matt Sherman

Okay, can I continue?

Operator

Yes. If you can start from the beginning - I would start from the beginning and Reni, thank you for your question, so its ULK verses VPS34.

Reni Benjamin

Correct. And I didn’t hear anything. I – it like completely cut off, Matt, I’m sorry.

Matt Sherman

Okay. No, I’m sorry. Can you hear me now, Reni?

Reni Benjamin

Yes, totally.

Matt Sherman

Okay. Yes. So let me just go back and add my excitement about the VPS34 opportunity that we recently in-licensed from Sprint Bioscience. And as Steve was saying, this will allow us with to build a leadership position in the use of treatment of cancer with autophagy inhibitors. While we’ve indicated before that the old kinase is the initiating factor for autophagy, VPS34 works at a different node, is involved in endosome vesicular trafficking of recycling cargo within these autophagosome for regenerating energy. We have regenerating of energy that becomes a survival mechanism for tumor cells and distressed with the treatment with anti-cancer therapy. And I was also noting that the recently published work by group in the Luxembourg Institute of Health along with the Karolinska Institute show that VPS34 inhibition could restore immune cold tumors to inflamed tumors with increases in chemokines and tumor T cells and killer NK cells, sensitizing these tumors to checkpoint inhibition with PD-1, PD-L1 blockers. So taken together, this really can provide a great opportunity for patients who otherwise have tumors that are not responsive to checkpoint blockade.

Reni Benjamin

Got it. Thank you, guys very much for taking the question.

Operator

Thank you. And our next question comes from Peter Lawson from Barclays. Your line is now open.

Peter Lawson

Hi, thanks for taking the question. Just on the Phase 3 INTRIGUE in 4Q, just the level of detail that we’re seeing in the release of data and do we get kind of subgroup analysis? And just your thoughts on how the control arm could be behaving.

Steve Hoerter

Peter, it’s Steve. Thanks for the question. So in terms of what you expect from the top line, I think probably the best guidance is to think about what we previously presented as top line from the INVICTUS study when we reported that out. So I imagine it will be a relatively fulsome top line, providing the key information to investors about the study. I wouldn’t expect that readout of top line, however, to have subgroup analyses and a deeper analysis that would likely take some time. So I think that’s the best way to think about what to expect from top line results. In terms of the study itself, we’re really pleased with the fact that we’ve, of course, gotten to full enrollment last year. The study conduct has been great, and we’re looking forward to get into the top line report out. As you know, we’re blinded to the studies. So we don’t have visibility to how things are progressing arm by arm. We know, in aggregate, of course, how events are accumulating, which is how we’re able to provide guidance on when the study may report out. But as I said, we don’t have any other color because we don’t have any additional insight into specifics on the study given that we are blinded.

Peter Lawson

Okay. And then, just as we think about ESMO. So robust in ovarian, what’s the bar for you to move forward with that?

Steve Hoerter

Yes. So I think as Matt mentioned in his prepared remarks – and Matt, feel free to amplify that, if you’d like. We would expect that single agent paclitaxel will deliver a progression-free survival on this patient population of somewhere in the order of 3 to 4 months. So we haven’t guided to a specific bar, Peter, but I think what we would need to see is something that’s substantially different from what we would expect to see with single agent paclitaxel.

Peter Lawson

Perfect. Thank you. And then just final question, just on TGCT at ESMO kind of what should we expect to see at the level of detail around that initial efficacy data?

Steve Hoerter

Sure. Matt, would you like to provide some additional detail on what you expect there? I know you covered some of this in – I think, in your prepared remarks.

Matt Sherman

Sure. No, thanks. And thanks, Peter, for the question. So as we noted, Vimseltinib is our selective and potent inhibitor of the CSF1 receptor and now in development for treating the patients with TGCT. And we’ve had very rapid enrollment into the Phase 1/2 study. So 4 – just as a reminder, the study was designed with both an escalation phase into expansion cohorts, the first expansion cohort in treatment-naive patients, and second one previously-treated patients. So now we fully enrolled the expansion cohort with 32 TGCT patients as well as fully enrolling the treatment-naive patient cohort with 40 patients, and we’ll be able to report ASCO’s data on approximately 50 patients from both the escalation and expansion phases at the ESMO meeting next month. And just as a note, this 50 patients is more than double the 22 patients that we were able to report on at CTOS last year.

Peter Lawson

Perfect. Thank you so much.

Operator

Thank you. And our next question comes from Arlinda Lee from Canaccord. Your line is now open.

Arlinda Lee

Great. Thanks for taking my questions. I had a couple, can you – sorry, so on Vimseltinib at ESMO, the 50 patients are going to include both the CSF1-naive and experienced. And then, can you maybe clarify a little bit on the INTRIGUE second line. You mentioned that you have just the aggregate information at this point. Can you maybe talk about what proportion of patients do you think have exon 13/14 mutation, and then maybe what your assumptions are for efficacy, I think you – with sutent being in the 5.5 to 7 month expectations, I’m wondering what your assumptions are? Thank you.

Steve Hoerter

Arlinda, it’s Steve. So let me take the second part of your question, and then I’ll ask Matt just to address the sunitinib question. So first, with respect to INTRIGUE, we are blinded to the study. So we don’t have visibility to things such as mutation status or profile of the patients that are being enrolled in the study. Now that isn’t something that we have visibility to. And with respect to our assumptions about how ripretinib may perform in the study is really driven by what we’ve seen in the Phase 1 study with ripretinib where we saw an impressive PFS rate in the cohort of second-line patients. In terms of what you expect from sutent in that same study, we anchor, of course, to what’s in the label for sutent, which was about 5.5 months. So we’ve – we expect that sutent would perform in the 6 month range in terms of PFS. So that’s how we think about the efficacy part of the story potentially coming from INTRIGUE. Matt, would you like to take the Vimseltinib question with respect to ESMO?

Matt Sherman

Sure. So just to go back for the escalation phase of the study, we did not limit it to treating-naive patients, so it was a mix of both treatment – pre-treated patients with a CSF1 inhibitor or treatment-naive patients. And that’s the 32-patient cohort that we’ll be able to report on to our efficacy. In addition to that, we enrolled a treatment-naive cohort of 40 patients, and that will also be part of the efficacy valuable data set that we’ll present at ESMO. The treatment – the previously treated patients cohort is still enrolling, and we’ll have an update on enrollment but at safest time from that group of patients.

Arlinda Lee

Okay, great. Thank you very much.

Operator

And thank you for that question. I’m showing no further questions. I would now like to turn the call back over to Steve Hoerter, President and CEO, for closing remarks.

Steve Hoerter

Great. Thank you. Thanks, everybody, for joining us on today’s call, and thank you for your continued interest and support of Deciphera. We look forward to keeping you updated on our continuing progress for the balance of 2021. Hope you all have a great evening. Thank you.

Operator

This concludes today’s conference call. Thank you for participating. You may now disconnect.