Post by tomsylver on May 10, 2017 9:13:54 GMT
Edited Transcript of TSRO earnings conference call or presentation 9-May-17 8:15pm GMT
Q1 2017 TESARO Inc Earnings Call
Tuesday, May 9, 2017 at 8:15:00pm GMT
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Corporate Participants
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* Jennifer Davis
Tesaro, Inc. - Senior Director of Corporate Development & IR
* Leon O. Moulder
Tesaro, Inc. - Co-Founder, CEO and Director
* Mary Lynne Hedley
Tesaro, Inc. - Co-Founder, President, COO and Director
* Timothy R. Pearson
Tesaro, Inc. - CFO and EVP
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Conference Call Participants
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* Alethia Rene Young
Crédit Suisse AG, Research Division - Research Analyst
* Benjamin J. Adler
Morgan Stanley, Research Division - Research Associate
* Charles Anthony Butler
Guggenheim Securities, LLC, Research Division - Senior Analyst
* Debjit Chattopadhyay
Janney Montgomery Scott LLC, Research Division - MD of Biotechnology
* Peter Richard Lawson
SunTrust Robinson Humphrey, Inc., Research Division - Director
* Robert Driscoll
Wedbush Securities Inc., Research Division - Research Analyst
* Seamus Christopher Fernandez
Leerink Partners LLC, Research Division - MD, Major Pharmaceuticals and Biotechnology
* Srikripa Devarakonda
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Presentation
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Operator [1]
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Good afternoon, and welcome to the TESARO First Quarter 2017 Conference Call. (Operator Instructions) As a reminder, this call is being recorded and webcast.
I'll now turn the call over to Jennifer Davis, Vice President of Investor Relations and Corporate Affairs at TESARO. Please go ahead.
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Jennifer Davis, Tesaro, Inc. - Senior Director of Corporate Development & IR [2]
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Thank you, Andrew. Good afternoon, and thank you for joining us today to discuss our recent business progress and TESARO's first quarter 2017 operating results. With me here today are our CEO, Lonnie Moulder; our President and COO, Dr. Mary Lynne Hedley; and our CFO, Tim Pearson.
Earlier this afternoon, we issued a news release detailing our Q1 results. Please note that this news release and a slide presentation that we'll refer to during this conference call are both available in the Investors section of our website, www.tesarobio.com.
Before we begin, I'd like to remind you that discussions during this conference call will include forward-looking statements. These statements are subject to a number of risks and uncertainties that could cause our actual results to differ materially from those described in these forward-looking statements. We undertake no obligation to update or revise any forward-looking statements for any reason. The factors that could cause actual results to differ are discussed in the press release issued today; and in our SEC filings, including our annual report filings on Form 10-K for the year ended December 31, 2016.
During today's call, we may refer to certain non-GAAP financial measures that involve adjustments to GAAP figures. These non-GAAP financial measures are not a substitute for GAAP financial measures and are unlikely to be comparable to non-GAAP information provided by other companies. We believe non-GAAP measures may be useful to investors as a supplement to, but not as a substitute for, the applicable GAAP number.
I'd now like to turn the call over to Lonnie Moulder, CEO of TESARO. Lonnie?
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Leon O. Moulder, Tesaro, Inc. - Co-Founder, CEO and Director [3]
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Thank you, Jen, and thank you, everyone, for joining us this afternoon.
We are thrilled to be launching ZEJULA in the U.S. and following our recent resubmission of the NDA for VARUBI IV, we are on track to expand our VARUBI franchise later this year. With approval of VARUBI oral by the European commission last month, our international organization is preparing to introduce this important product on a country-by-country basis beginning in June.
In addition, our niraparib expanded access program or EAP has enrolled the first patient in Europe and many more patients are anticipated to begin treatment. We continue to make excellent progress across our development portfolio, highlighted by significant progress in expanding our niraparib clinical development program into several new tumor types and in advancing our immuno-oncology candidates in the clinic. Mary Lynne will speak in greater detail about these programs and our plans later on in the call.
We were particularly gratified by the rapid FDA approval of ZEJULA and the launch is off to a phenomenal start. Based upon specialty pharmacy and specialty distributor data, approximately 500 prescriptions have been issued for ZEJULA by approximately 300 unique prescribers with over 150 of those prescriptions occurring in the first week of May alone. This robust uptake is supported by prescriber enthusiasm for the strong ZEJULA clinical data, which demonstrated an unsurpassed PFS benefit in the gBRCA mutation setting and unprecedented benefit in patients without gBRCA mutations, resulting in a broad indication for women with recurrent disease who responded to their most recent platinum regimen. Immediate inclusion in the NCCN Guidelines, no requirement for documentation of BRCA status prior to prescribing and convenient once daily dosing.
ZEJULA is benefiting from the groundwork laid by the launch of other PARP inhibitors and the recognition by clinicians that the ZEJULA landmark clinical data and approved indication offer women living with ovarian cancer an opportunity to receive benefit from a PARP inhibitor before their disease progresses. The introduction of ZEJULA is the first of 4 planned product launches for TESARO during 2017 and this achievement underlines our broad capabilities to develop and commercialize innovative products, while working in pursuit of our mission to improve the lives of patients living with cancer.
Turning to VARUBI, our experience with VARUBI oral position us well and creates momentum for the planned launch of VARUBI IV, which we expect in mid-2017. A successful launch will allow us to reach the largest part of the U.S. market and over time, extend the use of NK-1 receptor antagonist to the majority of patients receiving chemotherapy regimens such as cisplatin, carboplatin and anthracycline and cyclophosphamide combinations as recommended by the NCCN Guidelines.
With that, I'll turn the call over to our CFO, Tim Pearson, for a review of our first quarter financial results. Tim?
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Timothy R. Pearson, Tesaro, Inc. - CFO and EVP [4]
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Thank you, Lonnie. During the first quarter, approximately 6,300 units of VARUBI were shipped from specialty distributors and specialty pharmacies. As indicated in our fourth quarter call, we believe that approximately 20% of our Q4 2016 unit volume was attributable to purchases made in advance of year-end in the anticipation of a price increase. After adjusting for those estimated purchases, we saw underlying unit growth of approximately 20% quarter-on-quarter, reflecting continued demand as demonstrated by new account orders and increased penetration at key large practices. As Lonnie mentioned, we are looking forward to bringing our IV formulation to U.S. customers shortly.
Turning now to our financial results. For the first quarter of 2017, TESARO reported total revenue of $3.1 million, which included $2.1 million in net product revenue related to sales of VARUBI oral to specialty pharmacy and specialty distributor customers and approximately $1 million in revenue related to license and collaborations.
On January 1, 2017, TESARO implemented the new Financial Accounting Standards Board or FASB, revenue recognition standards update known as Accounting Standards Update or ASU 606, which amended the guidance for accounting for revenue from contracts of customers. As a result, we have revised our fiscal year 2016 quarterly financial statements. Total revenues for full year 2016 were revised upward as a result of the implementation. More information will be available on our 10-Q filing later this evening.
Research and development expenses increased to $66.1 million for the first quarter compared to $52.7 million in Q1 of 2016. The increase was driven primarily by higher cost related to the ongoing trials of niraparib, TSR-042 and TSR-022, the advancement of our early stage immuno-oncology portfolio and increased headcount.
Selling, general and administrative expenses increased to $69.3 million for the first quarter compared to $30.1 million in Q1 of 2016 due to activities in support of the launches of VARUBI and ZEJULA in the U.S. and Europe, increased headcount and higher professional services.
For Q1 of 2017, TESARO reported a net loss of $136.7 million compared to a net loss of $91 million for the first quarter of 2016. As of March 31, 2017, TESARO had approximately $672 million in cash and cash equivalents, which reflects cash utilization during the first quarter of approximately $114 million in line with our guidance.
We continue to expect that our cash and cash equivalents balance would decrease by approximately $110 million to $120 million during Q2. This quarterly estimate excludes a total of $35 million of onetime regulatory milestones related to the approval of ZEJULA in the U.S. and the expected first commercial sale of VARUBI oral in Europe, which we expect to pay during the second quarter.
With that, I'll hand the call over to Mary Lynne for an update on our development programs.
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Mary Lynne Hedley, Tesaro, Inc. - Co-Founder, President, COO and Director [5]
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Thank you, Tim. I'll now review each of our development programs and begin with niraparib. Following FDA approval, we are excited to be launching ZEJULA as the first PARP inhibitor to be approved in ovarian cancer that does not require companion diagnostic prior to treatment. Results from NOVA demonstrated the positive and durable treatment effects of ZEJULA in a broad population of patients, regardless of BRCA mutation status. And based on this result, we are now significantly expanding our development program for niraparib to include new clinical trials in ovarian, breast and lung cancer.
We believe that based on clear differences in the chemical and physiochemical properties between PARP inhibitors, the clinical activity of one PARP inhibitor cannot be extrapolated across the class, particularly in patient populations that lack a BRCA2 permutation.
In nonclinical studies, niraparib was shown to be highly permeable. It achieved higher concentrations in the tumor relative to plasma and delivered selective near-complete sustained PARP inhibition and a persistent antitumor effect. One dose of niraparib provides greater than 90% PARP inhibition for up to 24 hours in the tumor and produces tumor regressions where other PARP inhibitors do not. The high permeability of niraparib enables it to overcome the effect of efflux pumps such as PDP, which can cause resistance to other PARP inhibitors.
In clinical studies, niraparib was shown to be highly bioavailable, broadly distributed and slowly cleared. The combination of these effects may be most relevant to producing clinically meaningful outcomes in a broad patient population, where the majority of patients do not have tumors with the BRCA mutation and whose tumors may be inherently less sensitive to a PARP inhibitor.
We believe the treatment benefits with niraparib monotherapy can be expanded to the front line ovarian cancer study and intend to establish our foothold here with PRIMA. PRIMA is a trial designed to assess the activity of niraparib versus placebo control in patients with newly diagnosed Stage 3/4 ovarian cancer, following a response to platinum. Patients are randomized 2:1, niraparib to placebo, and stratification factors include the homologous recombination deficiency or HRD status of the tumor.
Primary endpoint analysis will include a hierarchical step-down approach for progression-free survival, first in patients with HRD-positive tumors. And if the results are statistically significant, we will access PFS in the entire patient population.
QUADRA also another therapy study in niraparib, in the later lines of treatment for ovarian cancer patients, continues to enroll, and we continue to plan for data at year-end.
In addition to niraparib monotherapy, we are quite interested in studying the potential benefit of niraparib in combination with other anticancer agents beginning with the anti-PD-1 therapy. There is certainly more than one hypothesis to support the potential benefit of a niraparib anti-PD-1 combination, including activation of innate cytoplasmic DNA sensing mechanisms that detect breakdown products from stalled replication forks such as those that occur following treatment with the PARP inhibitor. Signaling from this pathway results in up regulation of chemokines, which entice T-cells to traffic into the tumor where they can elicit their cytotoxic effects. Indeed, data are supportive of niraparib's effect on this pathway, including the enhanced tumor infiltration of CD8-positive T-cells. And interestingly, co- treatment with niraparib and anti-PD-1 antibody produces synergistic effects in different mirroring tumor models.
The ongoing Phase II TOPACIO trial is evaluating niraparib in combination with the anti-PD-1 antibody KEYTRUDA in patients who have recurrent platinum-resistant ovarian cancer or triple negative breast cancer. Patients with these tumors have demonstrated low response rates to anti-PD-1 antibody and PARP inhibitor monotherapy, and we hope to improve upon the clinical activity with this combination approach.
Cohort expansion for the 2 tumor types is underway and includes approximately 48 patients in each cohort. We are encouraged by the results that we have seen from this trial and look forward to presenting data from a group of patients at our ASCO investor event and the future medical meeting. We intend to capitalize on the findings from these study and the potential benefit of niraparib and anti-PD-1 therapy in multiple indications.
First, we intend to initiate a Phase III trial of niraparib in combination with anti-PD-1 therapy, in patients with newly diagnosed ovarian cancer as a means to strengthen our position in the frontline setting. In addition, we have had multiple positive discussions with key opinion leaders about our intended study designs for niraparib and anti-PD-1 therapy
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Niraparib and an anti-PD-1 antibody in patients with metastatic non-small cell lung cancer, regardless of PD-L1 tumor expression. Data from this study will inform us as to the optimal population for inclusion in the Phase III, which is currently planned to enroll patients with high PD-L1 expression.
In addition to anti-PD-1, we are assessing the potential of niraparib in combination with bevacizumab. The AVANOVA study, which is being conducted by our ENGOT collaborators is evaluating the combination of niraparib plus bevacizumab in patients with recurrent ovarian cancer.
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We are excited to have received approval of VARUBI oral by the European campaign, our first international approval. And we look forward to bringing this important product to patients in Europe beginning late in the second quarter. Importantly, we've recently resubmitted the NDA for VARUBI IV and pending FDA approval, expect to launch VARUBI IV in mid-2017. These are important regulatory achievements for TESARO, and I am deeply grateful for the hours of work that our teams have provided in support of these products.
Finally, our immuno-oncology programs. We believe, as do many, the combination in immuno-oncology treatments that include antibodies directed to PD-1, TIM-3 and LAG-3 could become a foundation of cancer therapy regimens across a variety of tumor type.
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And the request for accelerated approval. Enrollment is ongoing in the dose escalation stage of our Phase I study of TSR-022, our anti-TIM-3 antibody. And the combination trial of TSR-022 plus TSR-042 is planned to initiate midyear. And finally, we have recently submitted an IND for TSR-033, our anti-LAG-3 clinical candidate. And we are preparing to initiate a Phase I clinical trial through the summer.
As our clinical data package expands and the potential value of combination studies with niraparib and our 3 I/O antibody also grows, we will look forward to sharing with you during what promises to be a very exciting year for our patients, our shareholders and all of us here at TESARO.
And with that, I'll turn the call back to Lonnie.
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Leon O. Moulder, Tesaro, Inc. - Co-Founder, CEO and Director [6]
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Thank you, Mary Lynne. In summary, we are extremely pleased with the initial ZEJULA launch and our progress so far this year. I'll wrap up with a brief summary of our goals for the year. We plan to launch 3 more products in 2017, including VARUBI oral in Europe, VARUBI IV in the U.S. and ZEJULA in Europe. We anticipate multiple niraparib data readouts, including TOPACIO data at our ASCO IR event and at a medical meeting later this fall, plus QUADRA and EVINOVA data in the second half
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Questions and Answers
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Operator [1]
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(Operator Instructions) And our first question comes from the line of Alethia Young with Crédit Suisse.
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Alethia Rene Young, Crédit Suisse AG, Research Division - Research Analyst [2]
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And I apologize but I think you cut in and out, Mary Lynne, in some of your comments. So I may ask something that is slightly redundant but I think the webcast cut out a couple of times, really, online. So first one just kind of on niraparib. I know it's still quite early but maybe just talk about how the doctors are working through the titration and kind of early feedback you've seen on like the kind of safety profile or anything emerging there that's different than what we saw in NOVA. And then just the second one, just if you can kind of talk a little about like what we should expect to ESMO as it relates to TOPACIO and maybe a rough estimate on kind of how many patients we should be getting. Also at ASCO, I think, I've got my questions around, like kind of the title thing and maybe you can address that as well.
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Leon O. Moulder, Tesaro, Inc. - Co-Founder, CEO and Director [3]
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Alethia, on the use of ZEJULA, as you know, although, prescription writing began in April, the product wasn't actually made available until the last week of April. So actually, prescriptions had been filled just for under 2 weeks now. So that would be too early for us to actually discuss any dose modifications. Clearly, from the NOVA study
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Alethia Rene Young, Crédit Suisse AG, Research Division - Research Analyst [4]
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Mary Lynne, Lonnie, we don't -- we can't hear you.
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Leon O. Moulder, Tesaro, Inc. - Co-Founder, CEO and Director [5]
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Alethia, can you hear us now? Okay, so I don't understand the technology issue that's occurring, but I was saying that prescriptions started being filled after we shipped product, the last
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The early
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Alethia Rene Young, Crédit Suisse AG, Research Division - Research Analyst [6]
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They've cut out again. Hey guys, to follow, we can't hear you.
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Operator [7]
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(Operator Instructions)
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Mary Lynne Hedley, Tesaro, Inc. - Co-Founder, President, COO and Director [8]
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Alethia, are you there?
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Operator [9]
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Our next question comes from the line of Tony Butler with Guggenheim Securities.
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Charles Anthony Butler, Guggenheim Securities, LLC, Research Division - Senior Analyst [10]
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(technical difficulty)
Inhibitors that you think might be related to what you're seeing with chemokines?
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Leon O. Moulder, Tesaro, Inc. - Co-Founder, CEO and Director [11]
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Tony, there seems to be a technical difficulty.
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rectify so we missed part of your question. Would you mind repeating it? My apologies.
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Charles Anthony Butler, Guggenheim Securities, LLC, Research Division - Senior Analyst [12]
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(technical difficulty)
Toward a potential positive outcome in TOPACIO, but I shouldn't get over my skis here. And I guess the second question is again related to TOPACIO and up regulation of PD-L1. Apparently there is some evidence of up regulation of PD-L1 in the present supports. Do you that might also be related to what has been observed with chemokines?
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Mary Lynne Hedley, Tesaro, Inc. - Co-Founder, President, COO and Director [13]
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So, Tony, I'm going to take a crack at this since I only heard about, I don't know, intermittent few words. And I think your question is related to how niraparib might or PARP inhibitors might be activating the path, (inaudible) pathway that activates chemokine expression. And yes, we do see up regulation of PD-L1 with PARP inhibitors and that certainly could play a role and via PARP plus the PD-1 might be synergistic. And certainly in the nonclinical studies, there's also the effect of increasing CD8-positive T-cells coming into the tumor and all of this, of course, we see associated with tumor growth inhibition or (inaudible) regression depending on the model. So our view is that there is evidence for the combined activity in the nonclinical clinical study in which supported moving into the clinical study. And I think at this point all I can say is that we're very much looking forward to sharing the data with you at ASCO and then again and more completely at ESMO. And to address Alethia's questions as she's departed us, probably we'll have about a dozen patients or so.
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Operator [14]
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Our next question comes from the line of Srikripa Devarakonda with Citi.
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Srikripa Devarakonda, [15]
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Just wondering if you can talk about the change in strategy with the TIM-3 PD-1 combination? Earlier you had mentioned that you would likely proceed with an already approved PD-1. So what led to the change in strategy? And also wondering when we can get clarity on the indication that you intend to pursue this combination in and trial design for the combo?
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Mary Lynne Hedley, Tesaro, Inc. - Co-Founder, President, COO and Director [16]
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So the goal has always been to work -- take our 022 antibody and combine it with our 042 antibody and that trial will initiate in the middle of this year. So that's always been the approach. And there's 3 different ways that we think about this, is first to address PD-1 inhibitor resistance. We know one of the resistance mechanism sets appearing in both the clinical and the nonclinical study is the expression of TIM-3. And we know that TIM-3 expression on the T-cell will exhaust it -- will inhibit it proliferation and cytokine secretion even in the presence of PD-1. So the potential is therefore, a combination to now reactivate those T-cells. The second approach is to address tumor-type switch, which don't have any activity associated with PD-1 therapy today. And the thinking behind that might be that they have T-cells infiltrating into the tumor but those T-cells might express high levels of TIM-3 and/or LAG-3 because this is similar to our LAG-3 strategy, and we might be able to address those tumor types by initiating therapy with the combination. And then the third approach would be to take patients who are already treated with an approved, and this maybe what you're thinking, with an improved PD-1 and try to add TIM-3 in an indication where you already have approval but the response rates are generally low and enhance the activity in that population. So one might envision, for example, a lung scenario where
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Leon O. Moulder, Tesaro, Inc. - Co-Founder, CEO and Director [17]
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(technical difficulty)
For new patients and as I said earlier, we only have about 2 weeks of activity with the drug actually being on the market. So having approximately 500 prescriptions at this time. And if I look back at the first quarter -- first full quarter reports from the last 2 PARP inhibitor launches relative to our availability on the market for about 2 weeks but actually, the opportunity to prescribe probably about 4 or 5 weeks, I would go back to my comments. It's just a phenomenal launch. This is one of those very special moments. I think all the enthusiasm we had following the NOVA data is now playing out. We've all been out in the field, interacting with customers along with our field organization and the reception is just so positive. And we look forward to updating you as we have more and more months and quarters behind us.
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Mary Lynne Hedley, Tesaro, Inc. - Co-Founder, President, COO and Director [18]
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So the MSI-high, so our understanding is that Merck has filed for accelerated approval based on sort of a basket study of MSI-high patients. And we anticipate that -- I mean, they just had their PDUFA date extended until June and that's where they'll understand whether or not they'll have an accelerated approval for the overall MSI-high tumor population. They have a Phase III colorectal study in MSI-high patients ongoing and will be looking at that approval letter to see whether or not that colorectal Phase III study will be suitable for full approval of the entire MSI-high tumor population. But worst case, if that, in fact, it does pan out, our goal is to complete enrollment of the small number of MSI-high endometrial patients that we need to seek accelerated approval and submit that before they complete their Phase III trial and get full approval. So they would not block us unless that's have a full approval based on their Phase III study, similar to what you saw with the other two PARP inhibitors and how that played out.
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Seamus Christopher Fernandez, Leerink Partners LLC, Research Division - MD, Major Pharmaceuticals and Biotechnology [19]
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Great. And if I can ask just maybe 2 quick follow-up questions, just to clarify a question that Alethia asked earlier but then blanked out. I believe she asked the number of patients that are likely to be at ESMO. Mary Lynne, I don't know but you kind of were coming in and out on that answer but just, can you clarify that answer on the number of patients that we might see at ESMO with the expanded cohort from the TOPACIO data?
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Mary Lynne Hedley, Tesaro, Inc. - Co-Founder, President, COO and Director [20]
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Sure. I tried to pick that up on Tony's question, but I'll try it again. So about a dozen at ASCO investor event, and I'm going to speculate, about 2 dozen at ESMO.
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Operator [21]
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And our next question comes from the line of Debjit Chattopadhyay with Janney Montgomery.
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Debjit Chattopadhyay, Janney Montgomery Scott LLC, Research Division - MD of Biotechnology [22]
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So I think the bulk of the questions have been answered, but I'm just wondering there was a meaningful general of medicine article from Charlie Swanton group looking at the genomic diversity of non-sponsor lung cancer both ovarian tumors and between tumors, which kind of basically suggests a one-size-fits-all strategy is unlikely to succeed here. So when you start thinking about whether it's a PARP combination or whether it's your IO/IO combinations, how do you plan on screening for patients around to make these studies meaningful?
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Mary Lynne Hedley, Tesaro, Inc. - Co-Founder, President, COO and Director [23]
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Yes. So we don't actually believe that it's the specific genetic mutations that are going to, ultimately, make a population of patients sensitive. While there might be patients with, for example, ATM mutations or BRCA mutations or other types of mutations that would be relevant here, it's probably more related to the overall expression pattern of genes in these tumor types and then in particular, in lungs. If we look at the expression, for example, of BRCA1 and BRCA2, almost 80% of lung cancer patients have very low expressions, ERCC-1, ATM, and there's a very long list. So it's not a mutation per se, it's the actual expression of that gene, which can as you know, be shut out by multiple mechanisms such as epigenetic methylation, for example. In addition, if we just look at the overall chromosome analysis, much like we did with ovarian cancer, there is a publication that indicates that next to ovarian cancer, actually lung cancer has the highest rate of HRD deficiency. So I think it's more of these global mechanisms that will ultimately lead to a PARP inhibitor sensitivity as opposed to individual mutations. And also, remember, we're not ongoing in as a monotherapy, we're going in as the combination therapy approach. And it's not the specific need to have synthetically (inaudible) that ultimately, we believe will lead to the potential benefit of this combination therapy. It's the effect of a PARP inhibitor on this -- in part, on this cytosolic sensing signal that can activate the expression of chemokines and cause the infiltration of CD8 T-cells in the increased expression of PD-L1. So that really doesn't require killing per se by the synthetical lethal approach at high-levels as the tumor.
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Robert Driscoll, Wedbush Securities Inc., Research Division - Research Analyst [24]
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So just a follow-up on that. And so in terms of the infiltration of HRD acid system and positive CD8 infiltration, is there sort of a benchmark as to how much additional expression do you need to make a cold tumor hot or to rejuvenate, for the lack of a better word, and exhaust this tumor type?
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Mary Lynne Hedley, Tesaro, Inc. - Co-Founder, President, COO and Director [25]
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Not to my knowledge. I don't think there's a specific threshold of how many CD8 cells come into the tumor. And it's not just about quantity, it's always also about quality. So are those CD8 T-cells the right clones? Do they attack the right MHC antigen, for example. A tumor antigen is going to be successful in terms of its strength of expression, its immunogenecy is more the right term. Is it going to create a strong T-cell clone that can actually kill the tumor, so that's #1. #2 does the infiltrating CD8 cells express high levels of just PD-1 or are they going to express high levels of PD-1 and TIM-3 and over time, probably, what happens is, they start out by expressing PD-1 because they know that's a marker that goes up when T-cells become activated. But it's this continual -- it's a temporal thing and over time, the natural mechanisms that these new systems have evolved to shut down these T-cells since the expression in part of TIM-3 and/or LAG-3. So we believe having the ability to increase the T-cell infiltrate is a positive thing, but I can tell you that if you have a 50% infiltrate, whatever that means, you're going to have an effective immune response and effective combination approach as I can tell you that in non clinical models, we've clearly seen an infiltrating T-cell population come in. And we clearly see that the two, niraparib and the PD-1 together, produce effective tumor regressions. So now you translate that to a clinical model and you go and you test patient populations that don't typically respond to PD-1s or even PARP inhibitors that effectively and that would be kind of the resistant patients and the triple-negative patients and you test the theory. And then if you see something positive, you expand. And that's how this all works over time.
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Debjit Chattopadhyay, Janney Montgomery Scott LLC, Research Division - MD of Biotechnology [26]
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And just one last follow-up. In your preclinical models, is there any difference between a sequential treatment versus concurrent treatment, whether it's PARP or PARP plus or PD-1 or any of the I/O, I/O combos?
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Mary Lynne Hedley, Tesaro, Inc. - Co-Founder, President, COO and Director [27]
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We haven't done that specific experiment, and I would say that simplicity usually wins out in the end, especially as one's translating a therapy from a nonclinical to a clinical setting. And if you have to invoke elaborate treatment regimens that, say, 2 days of this and 6 days of this and then 3 days of that. And it ultimately is very, very difficult to actually make those work, and you can imagine why. If we can't even get patients to take one pill a day or twice a day, how hard will it be to do those sort of intermittent regimens. So our goal is to try to provide a simplistic elegant solution to what we see is a population of exhausted T-cells coming into tumors.
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Operator [28]
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And our next question comes from the line of Peter Lawson with SunTrust.
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Peter Richard Lawson, SunTrust Robinson Humphrey, Inc., Research Division - Director [29]
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Do you see drugs when LYNPARZA with BRCA kind of piggybacking off of your broader label and being reimbursed? And then are you also seeing off late use of your own drug outside ovarian cancer?
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Leon O. Moulder, Tesaro, Inc. - Co-Founder, CEO and Director [30]
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I think data is what allows a drug to have an indication, and an indication then ties into any potential prior authorization. So the drugs that have a label that require BRCA testing have a prior authorization that require that the BRCA test be documented. And we know from LYNPARZA and primarily because it's been on the market much longer that the off-label use is rarely outside of BRCA. The off-label use usually comes at maybe a line earlier and perhaps other tumor types -- for those other tumor types and even a line earlier are associated with a BRCA mutation test. And it's premature to consider root BRCA, but we know from our market research and we know from all the clinicians we work with, it's not easy to try and have that drug adjudicated without a BRCA test. So it's very similar to LYNPARZA. So the only way to piggyback would actually be to conduct the trial and for any new PARP inhibitor that's not already under trial similar to ours, our NOVA trial, it won't be possible because ZEJULA is now the standard of care. So there's only one PARP inhibitor in a randomized Phase III trial that could get data in a broader population, and that's it. Your second question, Peter?
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Peter Richard Lawson, SunTrust Robinson Humphrey, Inc., Research Division - Director [31]
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In just the off-label use, do you see or have you already seen the use of the circular?
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Leon O. Moulder, Tesaro, Inc. - Co-Founder, CEO and Director [32]
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That's a good question. From the specialty pharmacy information, you do receive what the diagnosis is. And we know that about 80% of the use to date is ovarian cancer, 10% is the rest of the label, which is fallopian tube for primary peritoneal. So 90% is the label and the other 10% is just listed as other or unknown. So it's just kind of a smattering but clearly, the utilization is focused on target of the label.
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Peter Richard Lawson, SunTrust Robinson Humphrey, Inc., Research Division - Director [33]
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Okay. Just finally on TSR-042. Are you starting to see any form of differentiation from what some of the early data you're seeing versus other PD-1 entry-levels?
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Mary Lynne Hedley, Tesaro, Inc. - Co-Founder, President, COO and Director [34]
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I'm sorry. What was the question?
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Leon O. Moulder, Tesaro, Inc. - Co-Founder, CEO and Director [35]
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Differentiation for 042. We know from the data set we have in hand that it looks like a anti-PD-1 antibody. We have activity, we know what the tolerance profile is. I think the difference that we've brought forward is the dosing regimen because we know in talking to clinicians that patients are on these therapies for a very, very long time. And having to return every 2 weeks or 3 weeks is not ideal. So our regimen is a every 3-week flat dosing regimen for the first several cycles and that's, obviously, a time when any tolerance issues are identified to immuno-oncology therapy. And then after that, we move to an every 6-week schedule, which we think is quite convenient.
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Operator [36]
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And we'll take our last question from Ben Adler with Morgan Stanley.
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Benjamin J. Adler, Morgan Stanley, Research Division - Research Associate [37]
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Most of mine have been asked. Just a really quick one. So you're talking about, about 12 patients at ESMO -- I'm sorry, ASCO for TOPACIO and 24 at ESMO. Do you see any problems presenting at ESMO if you do an initial cut at ASCO? Or will you have additional data there besides just more patient numbers?
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Mary Lynne Hedley, Tesaro, Inc. - Co-Founder, President, COO and Director [38]
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Based on what other people have done, especially even in the space for PARP inhibitors and viewed multiple cuts of data have been presented, I don't anticipate having a problem. And again, I'm just using an estimate, I didn't say 24 exactly, you said it. I said about a couple of dozen at ESMO. I just want to be clear and about a dozen at ASCO. But I don't anticipate a problem.
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Operator [39]
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And I'll now like to turn the call back over to Lonnie Moulder for closing remarks.
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Leon O. Moulder, Tesaro, Inc. - Co-Founder, CEO and Director [40]
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All right. Well, we really appreciate everyone's interest and for hanging in there during the technology programs. Thank you, and we look forward to updating you on our progress in the future. Have a good evening.
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Mary Lynne Hedley, Tesaro, Inc. - Co-Founder, President, COO and Director [41]
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Take care.
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Operator [42]
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Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program, and you may all disconnect. Everyone, have a wonderful day.
Q1 2017 TESARO Inc Earnings Call
Tuesday, May 9, 2017 at 8:15:00pm GMT
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Corporate Participants
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* Jennifer Davis
Tesaro, Inc. - Senior Director of Corporate Development & IR
* Leon O. Moulder
Tesaro, Inc. - Co-Founder, CEO and Director
* Mary Lynne Hedley
Tesaro, Inc. - Co-Founder, President, COO and Director
* Timothy R. Pearson
Tesaro, Inc. - CFO and EVP
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Conference Call Participants
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* Alethia Rene Young
Crédit Suisse AG, Research Division - Research Analyst
* Benjamin J. Adler
Morgan Stanley, Research Division - Research Associate
* Charles Anthony Butler
Guggenheim Securities, LLC, Research Division - Senior Analyst
* Debjit Chattopadhyay
Janney Montgomery Scott LLC, Research Division - MD of Biotechnology
* Peter Richard Lawson
SunTrust Robinson Humphrey, Inc., Research Division - Director
* Robert Driscoll
Wedbush Securities Inc., Research Division - Research Analyst
* Seamus Christopher Fernandez
Leerink Partners LLC, Research Division - MD, Major Pharmaceuticals and Biotechnology
* Srikripa Devarakonda
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Presentation
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Operator [1]
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Good afternoon, and welcome to the TESARO First Quarter 2017 Conference Call. (Operator Instructions) As a reminder, this call is being recorded and webcast.
I'll now turn the call over to Jennifer Davis, Vice President of Investor Relations and Corporate Affairs at TESARO. Please go ahead.
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Jennifer Davis, Tesaro, Inc. - Senior Director of Corporate Development & IR [2]
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Thank you, Andrew. Good afternoon, and thank you for joining us today to discuss our recent business progress and TESARO's first quarter 2017 operating results. With me here today are our CEO, Lonnie Moulder; our President and COO, Dr. Mary Lynne Hedley; and our CFO, Tim Pearson.
Earlier this afternoon, we issued a news release detailing our Q1 results. Please note that this news release and a slide presentation that we'll refer to during this conference call are both available in the Investors section of our website, www.tesarobio.com.
Before we begin, I'd like to remind you that discussions during this conference call will include forward-looking statements. These statements are subject to a number of risks and uncertainties that could cause our actual results to differ materially from those described in these forward-looking statements. We undertake no obligation to update or revise any forward-looking statements for any reason. The factors that could cause actual results to differ are discussed in the press release issued today; and in our SEC filings, including our annual report filings on Form 10-K for the year ended December 31, 2016.
During today's call, we may refer to certain non-GAAP financial measures that involve adjustments to GAAP figures. These non-GAAP financial measures are not a substitute for GAAP financial measures and are unlikely to be comparable to non-GAAP information provided by other companies. We believe non-GAAP measures may be useful to investors as a supplement to, but not as a substitute for, the applicable GAAP number.
I'd now like to turn the call over to Lonnie Moulder, CEO of TESARO. Lonnie?
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Leon O. Moulder, Tesaro, Inc. - Co-Founder, CEO and Director [3]
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Thank you, Jen, and thank you, everyone, for joining us this afternoon.
We are thrilled to be launching ZEJULA in the U.S. and following our recent resubmission of the NDA for VARUBI IV, we are on track to expand our VARUBI franchise later this year. With approval of VARUBI oral by the European commission last month, our international organization is preparing to introduce this important product on a country-by-country basis beginning in June.
In addition, our niraparib expanded access program or EAP has enrolled the first patient in Europe and many more patients are anticipated to begin treatment. We continue to make excellent progress across our development portfolio, highlighted by significant progress in expanding our niraparib clinical development program into several new tumor types and in advancing our immuno-oncology candidates in the clinic. Mary Lynne will speak in greater detail about these programs and our plans later on in the call.
We were particularly gratified by the rapid FDA approval of ZEJULA and the launch is off to a phenomenal start. Based upon specialty pharmacy and specialty distributor data, approximately 500 prescriptions have been issued for ZEJULA by approximately 300 unique prescribers with over 150 of those prescriptions occurring in the first week of May alone. This robust uptake is supported by prescriber enthusiasm for the strong ZEJULA clinical data, which demonstrated an unsurpassed PFS benefit in the gBRCA mutation setting and unprecedented benefit in patients without gBRCA mutations, resulting in a broad indication for women with recurrent disease who responded to their most recent platinum regimen. Immediate inclusion in the NCCN Guidelines, no requirement for documentation of BRCA status prior to prescribing and convenient once daily dosing.
ZEJULA is benefiting from the groundwork laid by the launch of other PARP inhibitors and the recognition by clinicians that the ZEJULA landmark clinical data and approved indication offer women living with ovarian cancer an opportunity to receive benefit from a PARP inhibitor before their disease progresses. The introduction of ZEJULA is the first of 4 planned product launches for TESARO during 2017 and this achievement underlines our broad capabilities to develop and commercialize innovative products, while working in pursuit of our mission to improve the lives of patients living with cancer.
Turning to VARUBI, our experience with VARUBI oral position us well and creates momentum for the planned launch of VARUBI IV, which we expect in mid-2017. A successful launch will allow us to reach the largest part of the U.S. market and over time, extend the use of NK-1 receptor antagonist to the majority of patients receiving chemotherapy regimens such as cisplatin, carboplatin and anthracycline and cyclophosphamide combinations as recommended by the NCCN Guidelines.
With that, I'll turn the call over to our CFO, Tim Pearson, for a review of our first quarter financial results. Tim?
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Timothy R. Pearson, Tesaro, Inc. - CFO and EVP [4]
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Thank you, Lonnie. During the first quarter, approximately 6,300 units of VARUBI were shipped from specialty distributors and specialty pharmacies. As indicated in our fourth quarter call, we believe that approximately 20% of our Q4 2016 unit volume was attributable to purchases made in advance of year-end in the anticipation of a price increase. After adjusting for those estimated purchases, we saw underlying unit growth of approximately 20% quarter-on-quarter, reflecting continued demand as demonstrated by new account orders and increased penetration at key large practices. As Lonnie mentioned, we are looking forward to bringing our IV formulation to U.S. customers shortly.
Turning now to our financial results. For the first quarter of 2017, TESARO reported total revenue of $3.1 million, which included $2.1 million in net product revenue related to sales of VARUBI oral to specialty pharmacy and specialty distributor customers and approximately $1 million in revenue related to license and collaborations.
On January 1, 2017, TESARO implemented the new Financial Accounting Standards Board or FASB, revenue recognition standards update known as Accounting Standards Update or ASU 606, which amended the guidance for accounting for revenue from contracts of customers. As a result, we have revised our fiscal year 2016 quarterly financial statements. Total revenues for full year 2016 were revised upward as a result of the implementation. More information will be available on our 10-Q filing later this evening.
Research and development expenses increased to $66.1 million for the first quarter compared to $52.7 million in Q1 of 2016. The increase was driven primarily by higher cost related to the ongoing trials of niraparib, TSR-042 and TSR-022, the advancement of our early stage immuno-oncology portfolio and increased headcount.
Selling, general and administrative expenses increased to $69.3 million for the first quarter compared to $30.1 million in Q1 of 2016 due to activities in support of the launches of VARUBI and ZEJULA in the U.S. and Europe, increased headcount and higher professional services.
For Q1 of 2017, TESARO reported a net loss of $136.7 million compared to a net loss of $91 million for the first quarter of 2016. As of March 31, 2017, TESARO had approximately $672 million in cash and cash equivalents, which reflects cash utilization during the first quarter of approximately $114 million in line with our guidance.
We continue to expect that our cash and cash equivalents balance would decrease by approximately $110 million to $120 million during Q2. This quarterly estimate excludes a total of $35 million of onetime regulatory milestones related to the approval of ZEJULA in the U.S. and the expected first commercial sale of VARUBI oral in Europe, which we expect to pay during the second quarter.
With that, I'll hand the call over to Mary Lynne for an update on our development programs.
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Mary Lynne Hedley, Tesaro, Inc. - Co-Founder, President, COO and Director [5]
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Thank you, Tim. I'll now review each of our development programs and begin with niraparib. Following FDA approval, we are excited to be launching ZEJULA as the first PARP inhibitor to be approved in ovarian cancer that does not require companion diagnostic prior to treatment. Results from NOVA demonstrated the positive and durable treatment effects of ZEJULA in a broad population of patients, regardless of BRCA mutation status. And based on this result, we are now significantly expanding our development program for niraparib to include new clinical trials in ovarian, breast and lung cancer.
We believe that based on clear differences in the chemical and physiochemical properties between PARP inhibitors, the clinical activity of one PARP inhibitor cannot be extrapolated across the class, particularly in patient populations that lack a BRCA2 permutation.
In nonclinical studies, niraparib was shown to be highly permeable. It achieved higher concentrations in the tumor relative to plasma and delivered selective near-complete sustained PARP inhibition and a persistent antitumor effect. One dose of niraparib provides greater than 90% PARP inhibition for up to 24 hours in the tumor and produces tumor regressions where other PARP inhibitors do not. The high permeability of niraparib enables it to overcome the effect of efflux pumps such as PDP, which can cause resistance to other PARP inhibitors.
In clinical studies, niraparib was shown to be highly bioavailable, broadly distributed and slowly cleared. The combination of these effects may be most relevant to producing clinically meaningful outcomes in a broad patient population, where the majority of patients do not have tumors with the BRCA mutation and whose tumors may be inherently less sensitive to a PARP inhibitor.
We believe the treatment benefits with niraparib monotherapy can be expanded to the front line ovarian cancer study and intend to establish our foothold here with PRIMA. PRIMA is a trial designed to assess the activity of niraparib versus placebo control in patients with newly diagnosed Stage 3/4 ovarian cancer, following a response to platinum. Patients are randomized 2:1, niraparib to placebo, and stratification factors include the homologous recombination deficiency or HRD status of the tumor.
Primary endpoint analysis will include a hierarchical step-down approach for progression-free survival, first in patients with HRD-positive tumors. And if the results are statistically significant, we will access PFS in the entire patient population.
QUADRA also another therapy study in niraparib, in the later lines of treatment for ovarian cancer patients, continues to enroll, and we continue to plan for data at year-end.
In addition to niraparib monotherapy, we are quite interested in studying the potential benefit of niraparib in combination with other anticancer agents beginning with the anti-PD-1 therapy. There is certainly more than one hypothesis to support the potential benefit of a niraparib anti-PD-1 combination, including activation of innate cytoplasmic DNA sensing mechanisms that detect breakdown products from stalled replication forks such as those that occur following treatment with the PARP inhibitor. Signaling from this pathway results in up regulation of chemokines, which entice T-cells to traffic into the tumor where they can elicit their cytotoxic effects. Indeed, data are supportive of niraparib's effect on this pathway, including the enhanced tumor infiltration of CD8-positive T-cells. And interestingly, co- treatment with niraparib and anti-PD-1 antibody produces synergistic effects in different mirroring tumor models.
The ongoing Phase II TOPACIO trial is evaluating niraparib in combination with the anti-PD-1 antibody KEYTRUDA in patients who have recurrent platinum-resistant ovarian cancer or triple negative breast cancer. Patients with these tumors have demonstrated low response rates to anti-PD-1 antibody and PARP inhibitor monotherapy, and we hope to improve upon the clinical activity with this combination approach.
Cohort expansion for the 2 tumor types is underway and includes approximately 48 patients in each cohort. We are encouraged by the results that we have seen from this trial and look forward to presenting data from a group of patients at our ASCO investor event and the future medical meeting. We intend to capitalize on the findings from these study and the potential benefit of niraparib and anti-PD-1 therapy in multiple indications.
First, we intend to initiate a Phase III trial of niraparib in combination with anti-PD-1 therapy, in patients with newly diagnosed ovarian cancer as a means to strengthen our position in the frontline setting. In addition, we have had multiple positive discussions with key opinion leaders about our intended study designs for niraparib and anti-PD-1 therapy
(technical difficulty)
Niraparib and an anti-PD-1 antibody in patients with metastatic non-small cell lung cancer, regardless of PD-L1 tumor expression. Data from this study will inform us as to the optimal population for inclusion in the Phase III, which is currently planned to enroll patients with high PD-L1 expression.
In addition to anti-PD-1, we are assessing the potential of niraparib in combination with bevacizumab. The AVANOVA study, which is being conducted by our ENGOT collaborators is evaluating the combination of niraparib plus bevacizumab in patients with recurrent ovarian cancer.
(technical difficulty)
We are excited to have received approval of VARUBI oral by the European campaign, our first international approval. And we look forward to bringing this important product to patients in Europe beginning late in the second quarter. Importantly, we've recently resubmitted the NDA for VARUBI IV and pending FDA approval, expect to launch VARUBI IV in mid-2017. These are important regulatory achievements for TESARO, and I am deeply grateful for the hours of work that our teams have provided in support of these products.
Finally, our immuno-oncology programs. We believe, as do many, the combination in immuno-oncology treatments that include antibodies directed to PD-1, TIM-3 and LAG-3 could become a foundation of cancer therapy regimens across a variety of tumor type.
(technical difficulty)
And the request for accelerated approval. Enrollment is ongoing in the dose escalation stage of our Phase I study of TSR-022, our anti-TIM-3 antibody. And the combination trial of TSR-022 plus TSR-042 is planned to initiate midyear. And finally, we have recently submitted an IND for TSR-033, our anti-LAG-3 clinical candidate. And we are preparing to initiate a Phase I clinical trial through the summer.
As our clinical data package expands and the potential value of combination studies with niraparib and our 3 I/O antibody also grows, we will look forward to sharing with you during what promises to be a very exciting year for our patients, our shareholders and all of us here at TESARO.
And with that, I'll turn the call back to Lonnie.
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Leon O. Moulder, Tesaro, Inc. - Co-Founder, CEO and Director [6]
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Thank you, Mary Lynne. In summary, we are extremely pleased with the initial ZEJULA launch and our progress so far this year. I'll wrap up with a brief summary of our goals for the year. We plan to launch 3 more products in 2017, including VARUBI oral in Europe, VARUBI IV in the U.S. and ZEJULA in Europe. We anticipate multiple niraparib data readouts, including TOPACIO data at our ASCO IR event and at a medical meeting later this fall, plus QUADRA and EVINOVA data in the second half
(technical difficulty)
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Questions and Answers
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Operator [1]
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(Operator Instructions) And our first question comes from the line of Alethia Young with Crédit Suisse.
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Alethia Rene Young, Crédit Suisse AG, Research Division - Research Analyst [2]
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And I apologize but I think you cut in and out, Mary Lynne, in some of your comments. So I may ask something that is slightly redundant but I think the webcast cut out a couple of times, really, online. So first one just kind of on niraparib. I know it's still quite early but maybe just talk about how the doctors are working through the titration and kind of early feedback you've seen on like the kind of safety profile or anything emerging there that's different than what we saw in NOVA. And then just the second one, just if you can kind of talk a little about like what we should expect to ESMO as it relates to TOPACIO and maybe a rough estimate on kind of how many patients we should be getting. Also at ASCO, I think, I've got my questions around, like kind of the title thing and maybe you can address that as well.
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Leon O. Moulder, Tesaro, Inc. - Co-Founder, CEO and Director [3]
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Alethia, on the use of ZEJULA, as you know, although, prescription writing began in April, the product wasn't actually made available until the last week of April. So actually, prescriptions had been filled just for under 2 weeks now. So that would be too early for us to actually discuss any dose modifications. Clearly, from the NOVA study
(technical difficulty)
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Alethia Rene Young, Crédit Suisse AG, Research Division - Research Analyst [4]
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Mary Lynne, Lonnie, we don't -- we can't hear you.
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Leon O. Moulder, Tesaro, Inc. - Co-Founder, CEO and Director [5]
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Alethia, can you hear us now? Okay, so I don't understand the technology issue that's occurring, but I was saying that prescriptions started being filled after we shipped product, the last
(technical difficulty)
The early
(technical difficulty)
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Alethia Rene Young, Crédit Suisse AG, Research Division - Research Analyst [6]
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They've cut out again. Hey guys, to follow, we can't hear you.
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Operator [7]
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(Operator Instructions)
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Mary Lynne Hedley, Tesaro, Inc. - Co-Founder, President, COO and Director [8]
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Alethia, are you there?
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Operator [9]
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Our next question comes from the line of Tony Butler with Guggenheim Securities.
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Charles Anthony Butler, Guggenheim Securities, LLC, Research Division - Senior Analyst [10]
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(technical difficulty)
Inhibitors that you think might be related to what you're seeing with chemokines?
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Leon O. Moulder, Tesaro, Inc. - Co-Founder, CEO and Director [11]
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Tony, there seems to be a technical difficulty.
(technical difficulty)
rectify so we missed part of your question. Would you mind repeating it? My apologies.
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Charles Anthony Butler, Guggenheim Securities, LLC, Research Division - Senior Analyst [12]
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(technical difficulty)
Toward a potential positive outcome in TOPACIO, but I shouldn't get over my skis here. And I guess the second question is again related to TOPACIO and up regulation of PD-L1. Apparently there is some evidence of up regulation of PD-L1 in the present supports. Do you that might also be related to what has been observed with chemokines?
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Mary Lynne Hedley, Tesaro, Inc. - Co-Founder, President, COO and Director [13]
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So, Tony, I'm going to take a crack at this since I only heard about, I don't know, intermittent few words. And I think your question is related to how niraparib might or PARP inhibitors might be activating the path, (inaudible) pathway that activates chemokine expression. And yes, we do see up regulation of PD-L1 with PARP inhibitors and that certainly could play a role and via PARP plus the PD-1 might be synergistic. And certainly in the nonclinical studies, there's also the effect of increasing CD8-positive T-cells coming into the tumor and all of this, of course, we see associated with tumor growth inhibition or (inaudible) regression depending on the model. So our view is that there is evidence for the combined activity in the nonclinical clinical study in which supported moving into the clinical study. And I think at this point all I can say is that we're very much looking forward to sharing the data with you at ASCO and then again and more completely at ESMO. And to address Alethia's questions as she's departed us, probably we'll have about a dozen patients or so.
(technical difficulty)
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Operator [14]
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Our next question comes from the line of Srikripa Devarakonda with Citi.
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Srikripa Devarakonda, [15]
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Just wondering if you can talk about the change in strategy with the TIM-3 PD-1 combination? Earlier you had mentioned that you would likely proceed with an already approved PD-1. So what led to the change in strategy? And also wondering when we can get clarity on the indication that you intend to pursue this combination in and trial design for the combo?
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Mary Lynne Hedley, Tesaro, Inc. - Co-Founder, President, COO and Director [16]
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So the goal has always been to work -- take our 022 antibody and combine it with our 042 antibody and that trial will initiate in the middle of this year. So that's always been the approach. And there's 3 different ways that we think about this, is first to address PD-1 inhibitor resistance. We know one of the resistance mechanism sets appearing in both the clinical and the nonclinical study is the expression of TIM-3. And we know that TIM-3 expression on the T-cell will exhaust it -- will inhibit it proliferation and cytokine secretion even in the presence of PD-1. So the potential is therefore, a combination to now reactivate those T-cells. The second approach is to address tumor-type switch, which don't have any activity associated with PD-1 therapy today. And the thinking behind that might be that they have T-cells infiltrating into the tumor but those T-cells might express high levels of TIM-3 and/or LAG-3 because this is similar to our LAG-3 strategy, and we might be able to address those tumor types by initiating therapy with the combination. And then the third approach would be to take patients who are already treated with an approved, and this maybe what you're thinking, with an improved PD-1 and try to add TIM-3 in an indication where you already have approval but the response rates are generally low and enhance the activity in that population. So one might envision, for example, a lung scenario where
(technical difficulty)
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Leon O. Moulder, Tesaro, Inc. - Co-Founder, CEO and Director [17]
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(technical difficulty)
For new patients and as I said earlier, we only have about 2 weeks of activity with the drug actually being on the market. So having approximately 500 prescriptions at this time. And if I look back at the first quarter -- first full quarter reports from the last 2 PARP inhibitor launches relative to our availability on the market for about 2 weeks but actually, the opportunity to prescribe probably about 4 or 5 weeks, I would go back to my comments. It's just a phenomenal launch. This is one of those very special moments. I think all the enthusiasm we had following the NOVA data is now playing out. We've all been out in the field, interacting with customers along with our field organization and the reception is just so positive. And we look forward to updating you as we have more and more months and quarters behind us.
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Mary Lynne Hedley, Tesaro, Inc. - Co-Founder, President, COO and Director [18]
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So the MSI-high, so our understanding is that Merck has filed for accelerated approval based on sort of a basket study of MSI-high patients. And we anticipate that -- I mean, they just had their PDUFA date extended until June and that's where they'll understand whether or not they'll have an accelerated approval for the overall MSI-high tumor population. They have a Phase III colorectal study in MSI-high patients ongoing and will be looking at that approval letter to see whether or not that colorectal Phase III study will be suitable for full approval of the entire MSI-high tumor population. But worst case, if that, in fact, it does pan out, our goal is to complete enrollment of the small number of MSI-high endometrial patients that we need to seek accelerated approval and submit that before they complete their Phase III trial and get full approval. So they would not block us unless that's have a full approval based on their Phase III study, similar to what you saw with the other two PARP inhibitors and how that played out.
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Seamus Christopher Fernandez, Leerink Partners LLC, Research Division - MD, Major Pharmaceuticals and Biotechnology [19]
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Great. And if I can ask just maybe 2 quick follow-up questions, just to clarify a question that Alethia asked earlier but then blanked out. I believe she asked the number of patients that are likely to be at ESMO. Mary Lynne, I don't know but you kind of were coming in and out on that answer but just, can you clarify that answer on the number of patients that we might see at ESMO with the expanded cohort from the TOPACIO data?
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Mary Lynne Hedley, Tesaro, Inc. - Co-Founder, President, COO and Director [20]
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Sure. I tried to pick that up on Tony's question, but I'll try it again. So about a dozen at ASCO investor event, and I'm going to speculate, about 2 dozen at ESMO.
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Operator [21]
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And our next question comes from the line of Debjit Chattopadhyay with Janney Montgomery.
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Debjit Chattopadhyay, Janney Montgomery Scott LLC, Research Division - MD of Biotechnology [22]
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So I think the bulk of the questions have been answered, but I'm just wondering there was a meaningful general of medicine article from Charlie Swanton group looking at the genomic diversity of non-sponsor lung cancer both ovarian tumors and between tumors, which kind of basically suggests a one-size-fits-all strategy is unlikely to succeed here. So when you start thinking about whether it's a PARP combination or whether it's your IO/IO combinations, how do you plan on screening for patients around to make these studies meaningful?
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Mary Lynne Hedley, Tesaro, Inc. - Co-Founder, President, COO and Director [23]
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Yes. So we don't actually believe that it's the specific genetic mutations that are going to, ultimately, make a population of patients sensitive. While there might be patients with, for example, ATM mutations or BRCA mutations or other types of mutations that would be relevant here, it's probably more related to the overall expression pattern of genes in these tumor types and then in particular, in lungs. If we look at the expression, for example, of BRCA1 and BRCA2, almost 80% of lung cancer patients have very low expressions, ERCC-1, ATM, and there's a very long list. So it's not a mutation per se, it's the actual expression of that gene, which can as you know, be shut out by multiple mechanisms such as epigenetic methylation, for example. In addition, if we just look at the overall chromosome analysis, much like we did with ovarian cancer, there is a publication that indicates that next to ovarian cancer, actually lung cancer has the highest rate of HRD deficiency. So I think it's more of these global mechanisms that will ultimately lead to a PARP inhibitor sensitivity as opposed to individual mutations. And also, remember, we're not ongoing in as a monotherapy, we're going in as the combination therapy approach. And it's not the specific need to have synthetically (inaudible) that ultimately, we believe will lead to the potential benefit of this combination therapy. It's the effect of a PARP inhibitor on this -- in part, on this cytosolic sensing signal that can activate the expression of chemokines and cause the infiltration of CD8 T-cells in the increased expression of PD-L1. So that really doesn't require killing per se by the synthetical lethal approach at high-levels as the tumor.
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Robert Driscoll, Wedbush Securities Inc., Research Division - Research Analyst [24]
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So just a follow-up on that. And so in terms of the infiltration of HRD acid system and positive CD8 infiltration, is there sort of a benchmark as to how much additional expression do you need to make a cold tumor hot or to rejuvenate, for the lack of a better word, and exhaust this tumor type?
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Mary Lynne Hedley, Tesaro, Inc. - Co-Founder, President, COO and Director [25]
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Not to my knowledge. I don't think there's a specific threshold of how many CD8 cells come into the tumor. And it's not just about quantity, it's always also about quality. So are those CD8 T-cells the right clones? Do they attack the right MHC antigen, for example. A tumor antigen is going to be successful in terms of its strength of expression, its immunogenecy is more the right term. Is it going to create a strong T-cell clone that can actually kill the tumor, so that's #1. #2 does the infiltrating CD8 cells express high levels of just PD-1 or are they going to express high levels of PD-1 and TIM-3 and over time, probably, what happens is, they start out by expressing PD-1 because they know that's a marker that goes up when T-cells become activated. But it's this continual -- it's a temporal thing and over time, the natural mechanisms that these new systems have evolved to shut down these T-cells since the expression in part of TIM-3 and/or LAG-3. So we believe having the ability to increase the T-cell infiltrate is a positive thing, but I can tell you that if you have a 50% infiltrate, whatever that means, you're going to have an effective immune response and effective combination approach as I can tell you that in non clinical models, we've clearly seen an infiltrating T-cell population come in. And we clearly see that the two, niraparib and the PD-1 together, produce effective tumor regressions. So now you translate that to a clinical model and you go and you test patient populations that don't typically respond to PD-1s or even PARP inhibitors that effectively and that would be kind of the resistant patients and the triple-negative patients and you test the theory. And then if you see something positive, you expand. And that's how this all works over time.
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Debjit Chattopadhyay, Janney Montgomery Scott LLC, Research Division - MD of Biotechnology [26]
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And just one last follow-up. In your preclinical models, is there any difference between a sequential treatment versus concurrent treatment, whether it's PARP or PARP plus or PD-1 or any of the I/O, I/O combos?
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Mary Lynne Hedley, Tesaro, Inc. - Co-Founder, President, COO and Director [27]
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We haven't done that specific experiment, and I would say that simplicity usually wins out in the end, especially as one's translating a therapy from a nonclinical to a clinical setting. And if you have to invoke elaborate treatment regimens that, say, 2 days of this and 6 days of this and then 3 days of that. And it ultimately is very, very difficult to actually make those work, and you can imagine why. If we can't even get patients to take one pill a day or twice a day, how hard will it be to do those sort of intermittent regimens. So our goal is to try to provide a simplistic elegant solution to what we see is a population of exhausted T-cells coming into tumors.
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Operator [28]
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And our next question comes from the line of Peter Lawson with SunTrust.
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Peter Richard Lawson, SunTrust Robinson Humphrey, Inc., Research Division - Director [29]
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Do you see drugs when LYNPARZA with BRCA kind of piggybacking off of your broader label and being reimbursed? And then are you also seeing off late use of your own drug outside ovarian cancer?
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Leon O. Moulder, Tesaro, Inc. - Co-Founder, CEO and Director [30]
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I think data is what allows a drug to have an indication, and an indication then ties into any potential prior authorization. So the drugs that have a label that require BRCA testing have a prior authorization that require that the BRCA test be documented. And we know from LYNPARZA and primarily because it's been on the market much longer that the off-label use is rarely outside of BRCA. The off-label use usually comes at maybe a line earlier and perhaps other tumor types -- for those other tumor types and even a line earlier are associated with a BRCA mutation test. And it's premature to consider root BRCA, but we know from our market research and we know from all the clinicians we work with, it's not easy to try and have that drug adjudicated without a BRCA test. So it's very similar to LYNPARZA. So the only way to piggyback would actually be to conduct the trial and for any new PARP inhibitor that's not already under trial similar to ours, our NOVA trial, it won't be possible because ZEJULA is now the standard of care. So there's only one PARP inhibitor in a randomized Phase III trial that could get data in a broader population, and that's it. Your second question, Peter?
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Peter Richard Lawson, SunTrust Robinson Humphrey, Inc., Research Division - Director [31]
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In just the off-label use, do you see or have you already seen the use of the circular?
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Leon O. Moulder, Tesaro, Inc. - Co-Founder, CEO and Director [32]
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That's a good question. From the specialty pharmacy information, you do receive what the diagnosis is. And we know that about 80% of the use to date is ovarian cancer, 10% is the rest of the label, which is fallopian tube for primary peritoneal. So 90% is the label and the other 10% is just listed as other or unknown. So it's just kind of a smattering but clearly, the utilization is focused on target of the label.
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Peter Richard Lawson, SunTrust Robinson Humphrey, Inc., Research Division - Director [33]
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Okay. Just finally on TSR-042. Are you starting to see any form of differentiation from what some of the early data you're seeing versus other PD-1 entry-levels?
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Mary Lynne Hedley, Tesaro, Inc. - Co-Founder, President, COO and Director [34]
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I'm sorry. What was the question?
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Leon O. Moulder, Tesaro, Inc. - Co-Founder, CEO and Director [35]
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Differentiation for 042. We know from the data set we have in hand that it looks like a anti-PD-1 antibody. We have activity, we know what the tolerance profile is. I think the difference that we've brought forward is the dosing regimen because we know in talking to clinicians that patients are on these therapies for a very, very long time. And having to return every 2 weeks or 3 weeks is not ideal. So our regimen is a every 3-week flat dosing regimen for the first several cycles and that's, obviously, a time when any tolerance issues are identified to immuno-oncology therapy. And then after that, we move to an every 6-week schedule, which we think is quite convenient.
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Operator [36]
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And we'll take our last question from Ben Adler with Morgan Stanley.
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Benjamin J. Adler, Morgan Stanley, Research Division - Research Associate [37]
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Most of mine have been asked. Just a really quick one. So you're talking about, about 12 patients at ESMO -- I'm sorry, ASCO for TOPACIO and 24 at ESMO. Do you see any problems presenting at ESMO if you do an initial cut at ASCO? Or will you have additional data there besides just more patient numbers?
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Mary Lynne Hedley, Tesaro, Inc. - Co-Founder, President, COO and Director [38]
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Based on what other people have done, especially even in the space for PARP inhibitors and viewed multiple cuts of data have been presented, I don't anticipate having a problem. And again, I'm just using an estimate, I didn't say 24 exactly, you said it. I said about a couple of dozen at ESMO. I just want to be clear and about a dozen at ASCO. But I don't anticipate a problem.
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Operator [39]
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And I'll now like to turn the call back over to Lonnie Moulder for closing remarks.
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Leon O. Moulder, Tesaro, Inc. - Co-Founder, CEO and Director [40]
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All right. Well, we really appreciate everyone's interest and for hanging in there during the technology programs. Thank you, and we look forward to updating you on our progress in the future. Have a good evening.
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Mary Lynne Hedley, Tesaro, Inc. - Co-Founder, President, COO and Director [41]
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Take care.
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Operator [42]
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Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program, and you may all disconnect. Everyone, have a wonderful day.
