Deciphera Pharmaceuticals, Inc. (DCPH) Q3 2020 Earnings Call Transcript

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Deciphera Pharmaceuticals, Inc. (NASDAQ:DCPH)
Q3 2020 Earnings Call
Nov 6, 2020, 4:30 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good afternoon, everyone and welcome to the Deciphera Pharmaceuticals Third Quarter 2020 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, Investor Relations. Jen?

Jen RobinsonInvestor Relation

Thank you, operator. Welcome. And thank you for joining us today to discuss the Cyprus third quarter 2020 financial results. I’m Ken Robinson, Vice President Investor Relations at decipher. With me this afternoon to discuss the financial results and provide a general corporate update our Steve herder, President and Chief Executive Officer, Dan Martin, Chief Commercial Officer, Matt Sherman, Chief Medical Officer, and Tucker Kelley 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 may 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 Kinloch and 2020 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 and 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 available on the company’s website www.cypress.com.

With that, I will now turn the call over to Steve herder, President and Chief Executive Officer of decipher Steve.

Steve HoerterPresident and Chief Executive Officer

Thank you, Jen. Good afternoon, everyone. And thank you for joining us on today’s call. This year has been an incredibly exciting one for decipher, a year in which we received regulatory approval for and launched our first medicine, Ken lock, and also made significant progress advancing our pipeline of new product candidates that we were able to accomplish so much this year, in spite of the challenges of a pandemic, is a testament to the dedication and hard work of the team here at decipher, and the investigators we work with around the world. We are well positioned for a strong finish to 2020 and eager to continue our mission in 2021. The third quarter marks the first full quarter of results from our ongoing launch of Ken lock and the United States can lock which was approved by the FDA in May of this year, was designed to address the broad spectrum of mutations that are one of the hallmarks of gastrointestinal stromal tumor. Or just in a moment Dan Martin, our chief Commercial Officer will share with you highlights from the launch and outline how we have been successful in establishing Ken lock as the standard of care in our approved indication. We are focused on exploring the full potential of can walk to benefit people with just and on today’s call Matt Sherman, our chief medical officer will review recent data updates from the ken lock Development Program, which reinforced the potential best in class profile of Ken lock in this disease. Our near term focus for further clinical development remains in the second line treatment setting and we are on track to complete target enrollment by the end of this year in the phase three intrigued study in which we are comparing Ken lock to sunitinib in the second line. We believe can lock has the potential to play an even broader role in the treatment adjust. And we look forward to sharing with you our vision for further clinical development in the coming months. One of our goals this year was to expand access to Ken lock for people with just outside the United States. To that end, we announced today that we recently submitted a marketing authorization application or ma to the European Medicines Agency. The submission was validated by the AMA last month, which signals the beginning of the formal review process. We look forward to working with the AMA to bring this potential in treatment options for patients in the European Union union. We also announced today that we intend to establish a direct commercial presence and key markets in Europe to commercialize can unlock If approved, this nimble organization will be positioned for future expansion as we’ve developed and seek approval for additional decypher medicines in the coming years. And Europe, we believe the commercial opportunity and just as concentrated in the five largest markets, France, Germany, Italy, Spain and the UK. Within these countries the treatment of patients with just as often centralized at tertiary treatment centers, which we believe allows us to build an efficient and targeted commercial infrastructure.

As we lay out the building blocks in Europe, we continue to make strides for the commercialization of Ken Locke and other areas of the world as well. Over the summer, we received approvals for Ken mark and both Canada and Australia. I’m pleased to announce that we have recently entered into exclusive distribution agreements and both of these territories and in China, our partner Zeid lab, filed the new drug application for Ken lock in July, targeting a potential approval next year. We look forward to working with our partners around the world to bring Ken lots of patients with advanced chess. Finally, we continue to advance multiple clinical stage programs that have the potential to be future approved medicines. Earlier this year, we presented initial compelling data with Sebastien it in combination with Paclitaxel in patients with heavily pretreated endometrial and ovarian cancers. And later this month, we are excited to present additional clinical data with TCC 3014 in Tennessee synovial giant cell tumor. As our clinical stage pipeline comes into focus, our novel Switch Control kinase inhibitor discovery platform continues to provide opportunities for future growth.

I’ll now turn the call over to Dan Martin, our chief Commercial Officer to discuss the exciting results for the first full quarter of Ken lock commercial sales. Dan.

Dan MartinChief Credit Office

Thank you, Steve. Good afternoon. Today I’m pleased to share results from our first full quarter of Kinloch sales. In q3, we achieve us net product revenue of $14.7 million, bringing total US net product revenue for the first four and a half months of launch to 19 point 5 million. While it is important to remember that it is still early in our launch, we continue to be very pleased with the way the launch has progressed, several important factors contributed to our q3 results.

First, we have continued to see strong prescriber demand for kinlaw in addition to robust month over month sales growth. insights from our recent launch tracking surveys, show strong product awareness message recall, product perceptions and intense prescribe among physicians who have fourth line just patients. Further, a large majority of these conditions indicate they now view Kinloch as the standard of care treatment for these patients. Importantly, these metrics tend to be strongest among physicians who report being detailed by our sales team, underscoring the importance of physician reach and access in this promotionally sensitive disease area. Second, we saw continued new prescriber growth across both academic and community settings. Thanks to the tireless work of our commercial team to navigate the unprecedented and ongoing challenges of COVID-19 the number of new Kinloch prescribers more than doubled during q3 since launch more than 250 just treaters representing more than 200 unique institutions have prescribed kinlaw As expected, while just treaters within academic institutions comprise the majority of our early adopters, our data suggest new prescriber growth is shifting toward the community setting while new academic prescribers grew by more than 80% in q3, new community prescribers grew by nearly 150%. During the quarter, more than 50% of both kinnelon prescribers and Kim mock treated patients came from community accounts. Third, our market access team continued to deliver broad patient access to keylock in q3. We have been very pleased with our progress in security payer coverage for kin lock in patients with fourth line just we’ve also been very pleased with the performance of our channel partners and our Patient Support Center. Finally, the percentage of patients in q3 that received free drug under our patient Assistance Program, or pap was at the low end of our estimate of approximately 20 to 30%. However, we anticipate that the past percentage may be somewhat higher in q4, as it’s not uncommon for patients to experience increased affordability challenges late in the year. Additionally, the fat percentage may be higher. In q1 of next year, given that the Medicare Part D benefit resets on January 1, requiring patients to pay for their deductible and their portion of the coverage gap before reaching the catastrophic coverage tier. Before turning the call over to Matt, I would like to highlight factors that may impact our results over the next several quarters. As I mentioned previously, we expect the majority of our future new prescriber growth to come from the community setting, we’re fourth line just patients are much more widely dispersed and physician awareness and knowledge of just is much lower when compared to the academic setting. Analysis of claims data indicates that community oncologists who treat fourth line just patients may see only one such patient every 12 to 18 months. Thus, while we’re very pleased with the results we have seen in both academic and community institutions today, we recognize that future growth and product awareness and new patients start that’s maybe more challenging, and come more slowly as we work to further penetrate the community setting. And this dynamic may be particularly challenging given the hurdles to physician access created by COVID-19, which we expect to continue as the pandemic persists and potentially intensifies over the next several quarters.

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

Matt ShermanChief Marketing Officer

Thank you. Dan. Kinloch serves as a great example of how we have effectively and efficiently discovered, developed and now commercialized a product generated from our research platform. Well, dance team has been focused on helping fourth line just patient access Kinloch in the US. Our clinical and medical affairs teams have continued to generate and publish additional data and Kinloch in our pipeline programs. as Steve mentioned earlier, our strategic priorities to maximize the potential of Ken lock in Jeff’s and to generate additional clinical data for this program. And for our other development product candidates to reach key value inflection points on the way to potential registrational studies and regulatory approval. For Kinloch, were keenly focused on the completion of the ongoing phase three and treat study. In second lines, yes, the study is on track to reach for enrollment by year end, and we expect to be able to provide additional guidance or any new primary endpoint at that time. We remain confident in the likelihood of successful entry. Based on the strong data we have seen in the phase one and phase three studies. To demonstrate the broad clinical activity in patients with just at the recent esmo virtual Congress, we presented new data and to many oral presentations related to kimata that continue to demonstrate the strong clinical benefit for second line through fourth line plus just patients. The first mini oral presentation provided longer term follow up results from the Invictus study and fourth line shifts that reinforce the exceptional progression free survival and overall survival benefit observed at the time of the initial database lock. The updated data provided an additional nine months of follow up and demonstrated the treatment Kinloch continue to provide clinically meaningful benefit with a PFS maintained at 6.3 months. And importantly, the median OS benefit improved from an initial 15.1 months to an overall survival, there’s now not been reached. In addition, the updated safety findings were consistent with the previous primary analysis results, demonstrating that Kinloch was generally well tolerated.

The second menu presentation as well provided exciting data from the ongoing Phase One study came up in patients with second line to a fourth line plus just who just escalated to 150 milligrams twice daily. And the phase one study, patients were permitted to dose escalate to Kinloch 150 milligrams twice daily after disease progression a 150 milligrams once daily. These data show that across all three patient groups treatment with 150 milligrams twice daily provided an additional clinically meaningful PFS benefit. Comparison of tea is reported in these two distinct periods demonstrated that Kim was similarly well tolerated. Feedback from key opinion leaders on these data has been very positive. And we believe these data have the potential to impact clinical practice. At the upcoming connective tissue oncology society or see TAs virtual meeting, we will be presenting new kinds of data from the Becker’s trial. These days include an oral presentation discussing the extensive heterogeneity of care and pdgfr Alpha mutations, as well as opposed to discussing Kinloch demonstrated activity across all kit and pdgfra Alpha mutations in patients in the interactive study.

Kinloch was specifically designed as a drug that can broadly inhibit kit and pdgfr Alpha mutated kindnesses, making it particularly suited to address just a disease that is characterized by a broad spectrum of mutations in these kinds of We have also explored Kinloch utility and the treatment of additional non just indications in the ongoing Phase One study, including systemic mastocytosis or SM, we have decided with input from our lead investigators not to invest in further studies in SM at this time. While we have seen clinical activity in SM and the safety and tolerability we’re consistent with what we’ve reported and just given the overall landscape and the strength of the opportunities we have with Kinloch and just and with our other product candidates, we believe it is best to focus our resources in areas in which we’re able to have the greatest impact. As we continue to advance our development activities across the portfolio. We are very excited about the potential for both DCC 3014 are potent and selective inhibitors CSF one are investing in a potent selective type two inhibitor.

We’re developing DCC 3014 for the treatment of tennis elbow, giant cell tumor or TGC t, which has significant morbidity for these patients, and is driven by a genetic translocation in certain cells within the tumor, causing an overproduction of CSF one, the login for the CSF one receptor. The only approved systemic therapy for patients with TGC tea is Pepsi darnit, a small molecule inhibitor and CSF one arm which is subject to a rems program due to Cata toxicity and adverse event that has got to be an off target effect. We believe that the PCC 3040 has the potential to be a best in class CSF one receptor inhibitor, and to fulfill the unmet medical need for an effective and well tolerated treatment for patients with tg CT and an oral presentation that see talks later this month. We are excited to present results from more than 22 gct patients across multiple dose levels and dose cohorts from the dose escalation portion of the phase one study. In addition, we are on track to select a recommended phase two dose and to initiate the expansion cohort the phase one to study in TGC t patients turning to adaptive our potent selective type two inhibitor, which is currently being studied in combination with chemotherapy, choose a target primarily expressed and affiliate sales and type two expressing macrophages or testes and plays an important role in angiogenesis as part of the NGO poets anti to signaling axis.

We were very pleased with the recent data presented at ASCO and asthma from the two phase one v two studies in combination with tackle taxall and with Carbo platinum. In particular, we presented data showing strong preliminary activity in patients with endometrial and platinum resistant ovarian cancer. In part two of the tackle of taxable combination study, data presented at the asmall virtual Congress 2020 and platinum resistant ovarian cancer demonstrated encouraging efficacy within the objective response rate. 38% confirmed an unconfirmed and the clinical benefit rate of 88% of eight weeks and heavily pretreated patients. All patients receive prior platinum and taxane based therapy 90% of patients received death facism at 62% received the PARP inhibitor and 31% received immunotherapy.

In addition to these data, we presented compelling data from the individual cohort at the ASCO 2020. Virtual program showing promising preliminary anti tumor activity in favorable tolerability with an objective response rate of 39% confirmed it unconfirmed, and the clinical benefit rate is 72% at eight weeks, also in heavily pretreated patients. We look forward to providing updated results from these ongoing phase one v two studies, as well as additional guidance on our clinical and regulatory plans for basnet. Finally, we continue to be excited about the prospects for DC state 3116. Our potential first in class oak kinase inhibitor designed to treat meeting wrasse cancers.

We’re aiming to submit the ind in the fourth quarter of this year, but this event may shift to the first quarter of 2021. We’re making great progress, of course, each of our programs in our pipeline, and we believe that this is just the beginning of making a meaningful difference in the treatment of patients with cancer and rare diseases. I will now turn the call over to Tucker Kelly, our chief financial officer to review the financial results. Tucker. Thanks, Matt. I’d like to review the highlights from our third quarter 2020 financial results, which includes our first complete quarter of Kinloch product sales. total revenue for the quarter was 15 point 5 million, which includes 15 point 2 million of net product sales pinlock and 300,000 of collaboration revenue. NET product revenue included 14 point 7 million in US product sales, as well as approximately 500,000. In product sales of Kinloch outside the US under early access programs. The gross net adjustment in q3 was slightly lower than our prior guidance of approximately 15%. I would note that this adjustment is likely to increase in q4 and q1 as we improve anticipated Medicare Part D rebates required for existing Kinloch treated patients who re enter the coverage gap in January. cost of sales for the three months ended September 30 2020 was immaterial, as the majority of the manufacturing costs related to Kinloch, sales were incurred prior to FDA approval, and thus were recorded as r&d expense. cost of sales will not be significant until the initial pre launch inventory is depleted, and additional inventory is manufactured and sold in the third quarter of 2020. Our total operating expenses excluding cost of sales were 79 million compared to total operating expenses of 76 million in the second quarter. Research and Development expenses were approximately 49 million and selling general and administrative expenses were approximately 30 million for the third quarter of 2020. We expect our operating expenses will increase modestly in the coming quarters as we continue to invest in the development of our clinical pipeline, the commercial launch of Kinloch in the US and prepare for potential commercial launch in Europe. We ended the third quarter in a strong financial position and remain well capitalized and in the quarter with cash cash equivalents and marketable securities of approximately 584 million, which we expect will be sufficient to fund our operations into the second half of 2022.

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

Steve HoerterPresident and Chief Executive Officer

Thank you, Tucker. I’m extremely proud with what our team has accomplished. so far. This year, we have delivered on our promise to bring an important new medicine to patients with cancer with the approval and successful initial launch of Ken lock in the United States, and are now working to bring this novel product to patients with advanced just around the world. Meanwhile, we continue to advance the rest of our pipeline based on our novel Switch Control kinase inhibitor platform. And we look forward to presenting updated data on GCC 3014 at the seat house meeting later this month.

Operator, I’d now like to open the call for q&a.

Questions and Answers:

Operator

First question comes from the line of Jessica fi with JP Morgan.

Jessica FyeJ P Morgan — Analyst

Hey, guys, good afternoon. Congrats on the quarter. I’mcurious if you can give a little more color about the Kinloch dynamics. For example, is it possible to find the average number of patients one can lock in the quarter? And how many were on therapy as a quarter run?

Steve HoerterPresident and Chief Executive Officer

Yeah, hi, Jess. Let’s see. Thanks. Can you hear your voice? And thanks for the question. I’m gonna scan Martin, who’s on the call to address your question then. Hey, Jess, thanks for the question. It’s a good one. So really, I think we’re just going to remain focused on what we think are the key themes. This quarter, we’ve been really pleased to see the continued strong demand, not only in terms of the numbers themselves, the revenue numbers themselves, but also any number of measures from our various launch tracking surveys. The new prescriber growth that we saw as well as broad access, we’ve been really pleased with how payor policies have come into place for for Kinloch in the fourth line. And in terms of you know, specific metrics, you know, our goal is on these calls to provide color that’s relevant to convey our launch progress and expectations moving forward. And we’ll definitely continue to assess what information to share on future calls to help convey those insights. But we’re not sharing specific patient numbers at this time.

Jessica FyeJ P Morgan — Analyst

Okay, maybe if you can be Can I answer that? I’m curious with the you know, rapid uptake you’re seeing in the community? What percent of can last use you estimate is in fourth line versus potentially earlier lines of therapy?

Steve HoerterPresident and Chief Executive Officer

Yeah, thank you. Another good question. You know, before launch, we’ve done quite a bit of claims analytics to help us estimate just that. And that, and before launch, before we had experienced selling our first product in that market, we thought that overall about 30%, of just treatment across all lines of therapy occurs in the academic setting, with about 70%, you know, broadly distributed throughout the much larger just in terms of number of physicians and institutions, community setting. At the time, we also thought that that was that tended to flip a bit with maybe 60% of lateline for offline or later, patients being treated in the academic setting. But interestingly, even then, our analytics would suggest that, you know, 40% or so of have very lateline patients receive care in the community. And what we’re seeing, go Well, before I come in and what we’re seeing, I think one other important thought was or one other important Question was with a new product that is highly efficacious and has a, you know, a favorable tolerability profile. Would more community treaters hold on to those late stage patients as opposed to maintaining the same referral patterns they had, you know, historically. And so, while we are still early days, and we don’t have answers to all those questions, what we yet what we are seeing is slightly more than that, you know, 40% that we expected to occur in, in the community setting for lateline. Just we’re seeing slightly more than 50% thus far, which we are encouraged to see. But like I said, in my prepared remarks, I think it’s really important. One thing we want to highlight is we’ve said this on prior calls, although the majority of our early adopters were in the academic setting, and we’ve seen some nice growth in early days in the community setting, we expect moving forward, just because of the nature of the structure of the market, that future growth will need to increasingly come from the community setting. And that’s a setting where patients are much more widely dispersed. As I mentioned, in my prepared remarks, you know, a lot of patients, excuse me, a lot of prescribers in the community setting may treat only one patient every 12 to 18 months with lateline. Jest. And so given that the lower awareness and lower knowledge, you know, we’re cognizant of the fact that continued growth, which will depend on our ability to continue to penetrate not setting the community setting, maybe more challenging, it comes somewhat more slowly, particularly in light of the ongoing challenges of the pandemic, which I think we all know, is likely to persist and perhaps even intensify in the coming quarters. So that’s how we’re thinking about sort of source of business. You know, just overall and for Ken lock, as we look at.

Jessica FyeJ P Morgan — Analyst

Got it. Thank you. And if I can sneak in one more for Steve, in prepared remarks, I think you alluded to a broader potential for Ken lock in just and it kind of sounded like you weren’t solely talking about second line. So can you elaborate on what you meant there?

Dan MartinChief Credit Office

Yeah, thanks, Jess. It’s a good question. And we’re very committed with Ken lock to fully exploring the potential of the drug and just even beyond where we’re at now currently standard of care on the fourth line, as Dan was describing, and also beyond the entry study, in the second line setting, we know we have a very active drug in this disease. And we think there may well be other places where we could explore the drugs utility. We’re not ready to share details about that vision. And that strategy will do that over the course of the coming months. But we are fully committed to conducting further clinical study of this drug and just

Jessica FyeJ P Morgan — Analyst

Got it. Thank you.

Operator

Our next question comes from the line of Chris Raymond with Piper Sandler. Your line is open

Chris RaymondPiper Sandler — Analyst

Hey, good afternoon. This is Alison Brasil. On for Chris. Thanks for taking the question. So first, one on McCulloch dynamics. I think last quarter, you’ve called that a slight revenue benefit. From Kinloch inventory belt. So just hoping you could provide any color on whether there is any inventory impact this quarter, or even just directionally help us understand how the magnitude or direction of any inventory impact and q3 compares to q2 and maybe a similar question on a new patient or new commercial patient adds from the the expanded access program and and how that played into the the q3 revenue number.

Dan MartinChief Credit Office

Thanks for the questions. Alison, Celeste and Martin to take both of us. Yes, thanks, Alison. Good questions. So the first one related to inventory build inventory build was not a significant contributor to our q2 revenue performance. And then on the EAP front, as we’ve shared previously, there were a number of patients who converted from our EAP program to commercial product at the time of approval, and our q3 revenues did include continue to include a modest contribution from those patients, but we haven’t provided specific numbers. But yes, q3 did include a modest contribution from those patients who were still in therapy.

Chris RaymondPiper Sandler — Analyst

Okay, thanks. And maybe just one more on the some of the data you had as mo specifically the data on repetitive from the phase one, the interpatient dose escalation that was really supportive of treating patients patients progression and up dosing them to the to the big dose. And really the later line patients seen a nice benefit on PFS, too. So just hoping you could maybe talk to how that compares with with an early launch experience and and your messaging for Kinloch

Steve HoerterPresident and Chief Executive Officer

And basically how willing are physicians to treat past progression in those later life, not just patients? damage looks like that. Sure, absolutely. So good question. Yes. We mentioned that data a number of times. I think that’s really interesting data. We’ve also said previously, though, that you know, how a drug gets used, and the commercial setting is impacted by a number of factors. And as it relates to the big dosing, you know, first of all, I want to underscore that we are entirely focused on launching Kinloch in the fourth line, you know, in in consistent with our label, and that goes for indication, it goes for our recommended dose in our label. But we’ve seen a small number of prescriptions for b iD, but the vast majority has been the 150. Qd. And, you know, when I’d say a lot of things contribute to how a drug gets used in the commercial setting, you know, one of them that’s really important is payer policies. And, you know, we’ve been really pleased to see the payer coverage come along really nicely for kin lock up, but those policies have very much been consistent with label, including those from the dentist perspective. So while certainly interesting data and certainly rk well tell us there’s interest in it. From a commercial point of view, it’s been a pretty modest contribution to revenues today.

Chris RaymondPiper Sandler — Analyst

Got it. Thank you.

Operator

Our next question comes from the line of Peter Lawson with Barclays. Your line is open.

Peter LawsonBarclays — Analyst

Hi, guys. This is a lead on for Peter. Congrats, them great quarter and interview taking the questions. Just had a couple of questions here. I was wondering if you could provide any sort of details on the Kinloch usage this quarter? Are you seeing any potential off label use in earlier lines of just? And then? And then a question on the upcoming data for for GGC, TG ctfc toss? wondering if you could set expectations as to what you would be consideringto be positive results from that study?

Steve HoerterPresident and Chief Executive Officer

For religion adopt that see, thanks very much for the question. So maybe what I’ll do is take the TGC question first, and then ask Dan, to take the first question that you have. So with respect to 3014, as Matt mentioned in his prepared remarks, but we’re looking forward to having additional data from the phase one in just over 20 patients be presented in an oral presentation at the connective tissue oncology society conference here coming up in a couple of weeks. As you know, this phase one study is a dose escalation study. So what you can expect to see is data from a variety of different dose cohorts to doses and schedules of 3014. in patients with TGC T. What we do know is that our drug 3014 is very potent and very selective against the target. This is a disease as you know, that’s driven by a genetic translocation results in overproduction of the the ligand for the receptor. So based on the biology, and based on our knowledge of the mechanism, we would expect to see 3014 have activity in this patient population, as we previously reported at CES last year. So we’re looking forward to presenting the data here coming up in a couple of weeks.

And as Matt mentioned, where we remain on track to get to a recommended phase two dose, and also to open the expansion cohort. Dan, would you like to take Well, these question related to off level use? Sure, absolutely. So as I similar as I mentioned a moment ago, you know, we of course, are not out promoting anything other than our label indication. And the payer policies that we’re seeing come online, have very consistently been aligned with our labeled indication. It is difficult we’ve shared before, it’s difficult to estimate the proportion of patients who may be receiving can lock in earlier lines of therapy, frankly, because the data sources are imperfect. But what we are seeing in the data that we have is that a significant majority of Kinloch patients have been fourth line or fourth line plus, on the you know, that’s not surprising to us again, because, again, the point about payer policies being consistent with label and then again, You know, we’re not out promoting that that data. So you know, the large majority consistent with the fourth line indication.

Peter LawsonBarclays — Analyst

Got it. Thanks for taking the questions.

Operator

Our next question comes from the line of Yun Yang with Jeffries, your line is open.

Eun YangJefferies — Anlyst

Thank you. So the first question is enough for ages three intrigue, data data timeline. So based on what you saw in phase one in second line for the practice a PFS and certain SR compare Fs, when do you think you would expect to see the data once you finish the enrollment by end of this year?

Jen RobinsonInvestor Relation

Yeah, University. Thanks very much for the question. That’s a great question. as Matt mentioned in his prepared remarks, we’re looking forward to getting to completion of enrollment and intrigued here by the end of the year. And when we get to a completion of enrollment in the study, our intention at that time is to be able to share more detail about the timeline for the study carried out. As you know, from our phase one experience, in the second line cohort, we we’ve seen a very robust PFS, and that patient population that we’ve studied have close to 11 months of PFS. And when you look at the Sutent labeled one would expect to PFS in the range of five and a half months to six months. So it’s premature for us at this stage to talk about when we think the study will read out. But certainly as we get to full enrollment here before the end of the year, which is our target will then be in a position to share more grades.

Eun YangJefferies — Anlyst

And then as you move into second line with the in trade study. So once it’s approved in second line, do you expect to use the report and even fourth line will be dramatically reduced? Or do you think there is a there is a potential that in some patients who practice Could it be recycled in the fourth line?

Jen RobinsonInvestor Relation

So you’re gonna see it, I’ll ask Dan, to address that here in a second. You know, his beautiful team and Dan have done a ton of market research and speak to clinicians all the time about their view of recruitment and Ken lock in the treatment of this disease as the treatment paradigm evolves. And then I think what’s also relevant here, in a way are the data that we presented it as Mo, where we just escalated patients to 150 D ID and saw additional meaningful benefit by treating patients beyond after progression with a higher dose of the drug. So it seems clear that we’re pregnant has the potential of least to be a real backbone of treatment for patients and for patients to receive prolonged benefit from the drug in that context. But Dan, maybe you want to comment further about how you see the market evolving in a world of a positive intrigue readout and how physicians may evolve the treatment approach and paradigm. Sure, absolutely. So you know, what we hear from our caol is certainly real interest in seeing Kinloch, get to that second line setting. They all tell us that that’s where they see, you know, the principal use for Kinloch, and they’re really excited to see the results of intrigue as a result, as you expect. Um, you know, there’s there, when we look through the claims data, when we talk to our Cowell’s, we don’t see a dramatic amount of retreatment. In the space, as you know, there’s some data for madness, with retreatment. But, you know, we just we haven’t seen a ton of that. And so it remains to be seen whether or not retina komak would be looked at as a valuable option and retreatments setting. As we said before, there’s a lot of there’s a lot of things that go into how a drug will be used, obviously data that gets generated out things appearing guidelines, payer policies and the like. So it’s still a bit early for us to have a good sense for that. But definitely what rk will tell us as they’re looking forward to potentially having Kinloch available in the second one,

Eun YangJefferies — Anlyst

The last question is on the market, the commercial strategy. So, you know, Steve, on your prepared remarks, you are preparing to launch in a list of major European countries. But emerging markets are like really a big opportunity for new therapies. So I want to ask you outside the US and, you know, major European countries and zylab territories, what are your plans for commercial strategy for pregnant? Thank you.

Steve HoerterPresident and Chief Executive Officer

Thank you. That’s a good question. So as you know, you referenced that we have our collaboration with Zai in Greater China that NDA has been filed Then there’s the potential for action on that application next year. And of course, we also announced today that we’re working through a couple of distributors in other territories, so specialized therapeutics in Australia and other Pacific Rim countries. And then we also announced our distribution agreement with medicine for Canada and Israel, beyond those territories. However, you know, our approach to commercial point of view would be to take a similar approach that is to work through distributors, in key territories and enrolled will start to make our way around the world, you know, with Ken lock in terms of making sure that patients have access to it in a commercial setting upon approval. And that is something that we’re committed to so we’re looking forward to continuing to identify partners in the right priority territories as we seek to make the drug available further.

Eun YangJefferies — Anlyst

Thank you.

Operator

Next question comes from the line of Michael Schmidt with Guggenheim Your line is open.

Michael SmithGuggenheim — Analyst

Hey, guys, this is Charles Xu on from Michael Schmidt. Thanks for taking the question and congrats on the strong quarter, a couple on DCC. For the tg CCT, I fully understand that you and others have highlighted the market opportunity for TGC t as an annual 1300 patients or so at least for the diffuse type with a much larger prevalence given its long, long lethal on that front. However, what’s your sense of how many patients are truly candidates for pharmaceutical intervention relative to the current role and potential cure rates of a sir surgery even repeat surgery and or radiation?

Steve HoerterPresident and Chief Executive Officer

I Charles it Steve, thanks for the question. With respect to 3014. As you know that the target indication for us for 3014 and tg CT is for patients that are not amenable to surgery. And we know that as a reference, there are about 1300 new patients in the US each year with a diffuse form of the disease. And these are patients with a high recurrence rate who generally at some point in the course of their disease, I think the estimates are between 30 and 50% of those those patients have recurrence. But at some point those those patients as we understand that run out of surgical options to manage their disease, and then would become candidates for a systemic therapy. So that is the population we’re targeting. We also know that their patients with a localized form of the disease that are also not amenable to surgery, for whatever reason, and then also would be candidates for drug therapy for systemic therapy.

Michael SmithGuggenheim — Analyst

Got it makes sense. And Iand I guess also based on the research you’ve done so far around taxi, darknet and other off label drugs, such as a magnet for this disease, what’s your sense around a potential treatment duration in these patients? And is it possible to convert these patients, I guess, from previously unimaginable to serve surgery into eligible patients for potentially curative surgery?

Steve HoerterPresident and Chief Executive Officer

Yes, it’s a good question with respect to the potential for new adjunctive treatment in this disease contexts. And there who knows there may well be a role for CSF one or inhibition in such patients to shrink tumors to make them potentially resectable. Whereas perhaps prior to treatment that might not have been resectable. So that I think remains an open question. You know, this is a disease category, where there just haven’t been systemic treatments until the approval of exodar. nib last year. And what we continue to hear from physicians is that they have concerns about using pecs in their patients and in fact, patients have concerns about about using packs as a result of the blackbox warning for hepatic toxicity and the rems that is associated with that. So we believe there remains a significant medical need for a drug that is effective and well tolerated in the treatment of this disease. And I think part of our task assuming continued success is going to be to to ensure that we’re able to access access patients at the right time and their disease course for a systemic treatment like ours.

Michael SmithGuggenheim — Analyst

Got it makes sense. Thanks for taking the questions and congrats again on the strong quarter.

Operator

Our next question comes from the line of Ren Benjamin JMP securities, your line is open.

Reni BenjaminJMP securities — Analyst

Sorry about that. Congratulations, guys on a great quarter. Thanks for taking the questions. Can you provide us maybe a little bit more color on the commercial plans in the EU? I maybe I missed it. But how many people are we talking about? Are there is there going to be a centralized of Salesforce just any sort of idea as to how that how that build out will occur. They occurred just based on by country by country approval, any sort of color there.

Steve HoerterPresident and Chief Executive Officer

Yeah, I ran, it sees I’d be happy to take your question about Europe. As I mentioned in the prepared remarks, we think the majority of the opportunity is in the five largest markets as you’d expect. And we don’t have any reason to believe that the the prevalence of just or the incidence of just in Europe, as a percent of population is any different than what we see in the US. So based on that, we think across the five largest markets, they’re probably between four and 6000 patients with just that are diagnosed each year. So as we think about our bills in Europe, it will very much be a staggered bill based on market access. So as you know, when each of these markets are generally single payer markets, and so depending on the country, a manufacturer like us would have to go through pricing and reimbursement negotiations. And sometimes that can take a matter of a few months. And sometimes that can take as long as a year. So depending upon, you know how long that process takes to get to a price and ticket to reimbursement in the system, that would then be the trigger for us to consider a bill related to that country. As I also mentioned in the prepared remarks around, you know, we our estimate is that these patients tend to be treated centrally at tertiary centers. So there’s probably an opportunity here as we look at it for us to build more of a hub model across Europe where we’d have the majority of our headcount sitting at a regional center, within a field based personnel in key markets. And so I’m sure as we get to a potential approval in Europe, which is, you know, the filing is now gone in, it’s been validated. So we think that the earliest potential action on the application could be by the end of next year. So as we get closer, I’m sure we’ll be sharing some more detail about how we used to build and what we see in terms of numbers. But it’s certainly going to be a staggered build. And we’ll of course, continue to be thoughtful about what the size of that organization ends up looking like to access the opportunity

Reni BenjaminJMP securities — Analyst

Got it? And then I think it was Matt, he might have mentioned that, you know, the the FM opportunity is, is you guys are no longer investing in that. Can you talk a little bit, I guess about, you know, was it was it because enrollment was kind of tough for you, we’re not seeing the kind of efficacy that you were you were hoping for? And ultimately, you know, will we see based on the patients that you have enrolled, you know, what the data look like? Or it really doesn’t make any sense to, you know, to that photograph?

Steve HoerterPresident and Chief Executive Officer

Yeah, thanks for the question ran. And as we’ve been saying for a number of months, now, even well, over a year, our real focus of development for Ken lock over pregnant is in jest. And as Matt Novick and his prepared remarks, we have seen modest clinical activity in the fewer than 20 patients that we treated in that SM cohort. But we didn’t see sufficient activity to warrant further development in this disease. And that’s particularly given the context of the evolving treatment landscape in SM and frankly, the compelling investment opportunities that we see in other parts of the portfolio, not only and can lock over pregnant, but also in our other clinical stage assets as those start to really come into focus. And so as a result, we’ve decided to focus our investment resources, but people in dollars in other areas for now, I’m sure in the when the time is right at some sage will publish the data from the SM cohort. I don’t have any specific details I can share with you at this time. Right. Got it. And then just one final one regarding behind the 43116. I think I heard it right that it was shifted to the first quarter anything, you know, is just you guys are gonna have enough to focus on right now or did anything kind of pop up that’s making you have to make that shift. Now we remain really excited about 3116. You know, this is targeting the initiating factor and a tapa G, which is thought to play a role in breast cancer. So really large patient populations and significant tumor types like lung and bladder cancer. So we remain really excited about about the program, the team has been working cold hard to advance us to file the end. This is a goal that we have for the end of the year. That was our initial milestone. And as Matt indicated, this is a goal that we have for the end of the year. That was our initial milestone. And as Matt indicated that there’s a possibility that this shifts into quarter one, but this is really just a function of of timing being an end of year sort of a goal. But we’ve remained really excited about the program and very focused on it.

Reni BenjaminJMP securities — Analyst

Terrific, thanks for taking The questions and Congrats.

Steve HoerterPresident and Chief Executive Officer

Thank you.

Operator

Thank you. And our last question comes from the line of our Linda Lee with Canaccord genuity. Your line is open.

Linda LeeCanaccord genuity — Analyst

Hey, good afternoon, folks that it’s Ben Shin for Linda and congrats on the great quarter. Many of my questions have already been answered, I kind of have a high level question for, for you for the benefit of us outsiders, can you can you walk us through how on a day to day basis for getting more penetration in the community setting? And how is it different in the pandemic environment? And what extent can you communicate the potential for earlier lines of treatment? Since you guys are already there? Can you kill two birds with one stone as it were? I have a couple of problems. Yeah, thanks for the question that I’ll ask Dan Martin, to take that first part of your question that we’ll come back to your follow us

Steve HoerterPresident and Chief Executive Officer

Thank you. Good question. So the really the crux of our effort to penetrate the community setting is just being incredibly, highly targeted, and leveraging our analytics strength to identify where the physicians were most likely to have a late line. fourth line, just patient. As I mentioned, before, you know, patients are much more widely dispersed, as much more diffuse in the community setting. And so making sure that you are spending your sales marketing efforts in the right place is critically important. And so, of course, in addition to communicating all the things that we do, you know, irrespective of setting, communicating the best in class profile, communicating the fact that it’s the only approved agent, for the fourth line, etc, you know, really making sure that we are laser targeted in our efforts is critically important. Now, as relates to COVID-19, this is an ongoing challenge, I think it is for just about every company, it’s an ongoing challenge, because of any number of reasons. patient, you know, the data continues to show that, you know, broadly, patient numbers remain somewhat depressed and oncology. And, you know, there’s a lot going on at these provider institutions. You know, the one of the things that is a challenge is virtual fatigue, I think a lot of people can appreciate the sort of virtual fatigue that that happens. And so, you know, we continue to invest in in training and resources for our field force to make sure that they are having the most robust and engaging conversations with physicians about about Kinloch and about their on label patients. So, you know, there’s no magic bullet, no magic potion here. A lot of it is just, you know, continuing to work every day, and the team has done a fabulous job, a fabulous job navigating that. But, you know, as we think about moving further and further into the community setting and, and with the ongoing pandemic, which may, you know, intensify in the coming quarters, you know, it is something that we are cognizant of and think that, you know, continued growth in those new patients starts maybe a bit more challenging and come a bit more slowly. So, I hope that answers your question. I missed the second part of your question. And I wasn’t sure if that was a commercial one or not the second line, what,yeah, what what came to what extent can you communicate? Or may you communicate to potential for earlier lines? Since you guys are already there and not having to go back? When you say rd there, you mean, at the physician with the physician, the hysician level?

Dan MartinChief Credit Office

Yeah. Okay. Sure. So, the answer is we can’t not promotionally the data on second line. You know, the K wells are obviously already aware of that data from the publications and such, really excited about it, and really looking forward to retrieve results. And the potential movement of kin lock up and, you know, order of therapy, but from a promotion perspective, we we stick to the labeled indication.

Linda LeeCanaccord genuity — Analyst

Gotcha. Okay, that makes sense. And maybe a question for Tucker. Can you give us some color? When the accrued pre launch inventory? We’ll be working through it.

Steve HoerterPresident and Chief Executive Officer

Okay. Can’t run.Without me. Sure. So.Yeah, absolutely.If you notice, we did have a little bit when you’ll see the financial results in the earnings release, and then the cue that there was a little bit of cogs expense in this quarter, but it’ll be a number of quarters before we work off the pre launch inventory as we’ve already expenses, r&d. Okay, that’s very helpful. Well, I think you guys mentioned something was already material changes in pair mix for the quarter. I’m sorry if I missed the question or the statement. I can take that as Dan net No, no material change that we’ve seen.

Linda LeeCanaccord genuity — Analyst

Okay, great. Thanks very much, and congrats on the quarter.

Operator

Thank you. And I’m not showing any further questions. So I’ll now turn the call back over to Steve quarter for closing remarks.

Steve HoerterPresident and Chief Executive Officer

Great. Thank you, Bridget. I appreciate that. And thanks to everybody on the call for joining us on the call today and for your continued support. We’re looking forward to keeping you all updated on our continued progress with Ken Locke as well as with the balance of our development programs. Have a great evening, everyone.

Operator

[Operator Closing Remarks]

Duration: 56 minutes

Call participants:

Jen RobinsonInvestor Relation

Steve HoerterPresident and Chief Executive Officer

Dan MartinChief Credit Office

Matt ShermanChief Marketing Officer

Jessica FyeJ P Morgan — Analyst

Chris RaymondPiper Sandler — Analyst

Peter LawsonBarclays — Analyst

Eun YangJefferies — Anlyst

Michael SmithGuggenheim — Analyst

Reni BenjaminJMP securities — Analyst

Linda LeeCanaccord genuity — Analyst

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