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Athenex, Inc. (ATNX) Q1 2019 Earnings Call Transcript

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Athenex, Inc. (NASDAQ: ATNX)
Q1 2019 Earnings Call
May. 9, 2019, 8:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Greetings and welcome to the Athenex First Quarter 2019 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. (Operator Instructions) As a reminder, this conference is being recorded. It is now my pleasure to introduce your host Tim McCarthy. Please go ahead.

Tim McCarthy -- Managing Director

Good morning, and thank you for joining our conference call as we provide an update on Athenex's business as well as a review of financial results for the first quarter 2019. The news release detailing the first quarter results crossed the wire earlier this morning and is available on the Company's website. A replay of this call will also be archived on the Company website.

During the course of this conference call, the Company will make projections or forward-looking statements regarding future events, including statements about financial and clinical milestones anticipated in fiscal year 2019 and beyond. We encourage you to review the Company's past and future filings with the SEC, which identifies specific factors that may cause the actual results or events to differ materially from those described in the forward-looking statements. You can find our SEC filings in the EDGAR database at SEC.gov or in the Investor Relations section at our website at athenex.com.

This morning, we're joined by Dr. Johnson Lau, Chief Executive Officer; Mr. Jeff Yordon, Chief Operating Officer; Dr. Rudolf Kwan, Chief Medical Officer; Mr. Randoll Sze, Chief Financial Officer and several other executives, who will be available to answer your questions after the prepared remarks.

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

Johnson Y.N. Lau -- Chief Executive Officer and Board Chairman

Thank you, Tim and good morning, everyone. 2019 so far has seen a number of major accomplishments for Athenex. We continue to generate positive clinical data, which validate our Orascovery and Src Kinase programs. Positioning the Company for success in the future, we are also making excellent progress, building our commercial infrastructure for our proprietary products. And very importantly, we have also strengthened the Company's partnership with successful equity transaction.

The next major milestone for Oraxol will be our planned announcement in August of the primary endpoint outcome from the ongoing Phase 3 trial in metastatic breast cancer. We achieved target enrollment of more than 360 patients in this trial earlier in the year.

Of note, is that the FDA has indicated that if this study miss its primary endpoint with an acceptable benefit to risk profile, it could be adequate as a single comparative trial to support registration of Oraxol in the US for metastatic breast cancer. If this trial is successful, we believe it will serve as an important further validation for our proprietary Orascovery platform.

To that end, we announced it last Friday data showing very promising early clinical response, including a number of complete responses in an ongoing study of Oraxol monotherapy in patients with unresectable cutaneous angiosarcoma.

The preliminary data show record visible response to all Oraxol monotherapy in the first seven subjects, including three complete responses. The results have positive implications, not only for the use of Oraxol in this difficult-to-treat cancer, but for important clinical program. We have now demonstrated consistent high response rates in variable settings, including in metastatic breast cancer, unresectable gastric cancer and now cutaneous angiosarcoma.

We believe this data provide new and complementary evidence that our Orascovery technology is working and highlight the potential of Oraxol as a effective therapeutic for a range of cancers. Our Chief Medical Officer Dr. Rudolf Kwan will provide more details on this exciting angiosarcoma results.

Together with our partner Almirall, we are making preparations to file an NDA for KX2-391 ointment in actinic keratosis, following the release of positive Phase 3 topline results in March this year. The economics of the Almirall partnership are very favorable to Athenex with development and sales milestone payments that could potentially be in the hundreds of millions of dollars in addition to commercial royalties.

Our TCR-T immunotherapy program is also advancing and we were pleased to report recently the Xiangxue Life Sciences, our partner in China, received notice of allowance from the Chinese authorities on its company-sponsored IND for the cancer, immunotherapy products, TAEST16001. And we understand that this is the first engineered T-cell IND to be allowed by the Chinese FDA. This will be the first clinical candidate to emerge from our proprietary T-Cell technology, which we are developing under Axis Therapeutics joint venture.

On the commercial front, our efforts are focused on investing in the supply chain infrastructure and building out our sales and marketing capabilities to support the launch of our proprietary drugs. Our commercial team is developing a very comprehensive marketing plan that includes establishment of a new brand, Athenes (ph) call Athenex Oncology.

Our business development team is also staying active in discussions as we evaluate different options. As you know, having an integrated commercial business is a key element of Athenex corporate strategy and we believe this will result in us capture maximum value of our pipeline for our investors.

Finally, early this week, we announced a very successful private placement, generating gross proceeds of $100 million. We believe that the funds will position us well to further advance our Phase 3 clinical programs for Oraxol and KX2-391 ointment, support our pre-launch and commercialization efforts, particularly for Oraxol as well as building out our manufacturing infrastructure for our integrated pharma value chain.

We are very grateful for the support of the three leading institutional healthcare investors namely Perceptive Advisors, Avoro Capital Advisors or formerly known as venBio Select Advisor, and OrbiMed, co-participated in this transaction.

I will now turn the call over to our Chief Medical Officer, Dr. Rudolf Kwan to provide an overview of our clinical pipeline and abstracts accepted at ASCO. Rudolf?

Rudolf Kwan -- Chief Medical Officer

Thank you, Johnson. A significant announcement form first quarter of the KX2-391 results presented at the American Academy of Dermatology meeting, AAD in March. These studies met the primary endpoint of 100% clearance of AK lesions by day 57 with completely clearance rate as high as 54%,

Both Phase 3 studies are nearing completion of the one year follow-up of patients, who had complete responses. We believe that 391's clean safety profile will confer a competitive advantage over existing therapies AK, which are limited by side effects. In our studies, we have seen that this result in near 100% patient compliance, which dermatologists say is an important factor for evaluating a product variables for their patients. We look forward to providing an update on the regulatory status of KX2-391, following our pre-NDA meeting with the FDA.

Turning to our Oraxol. Our most significant upcoming clinical announcement will be the topline results from our Phase 3 study comparing Oraxol to IV paclitaxel. We have completed enrollment at just over 400 patients in January. We expect to report the outcome of the primary efficacy endpoints, which is a confirmed response rate as assessed by RECIST criteria in August.

Assuming the study miss our expectations, this will be followed as quickly as possible by a pre-NDA meeting request to the FDA. We'll be reserving the full results of the clinical study for presentation at an appropriate upcoming scientific meeting and we will also submit for publication in the future.

In parallel, we are encouraged by the preliminary results from our open label two-part clinical study of Oraxol for treating unresectable cutaneous angiosarcoma, a rare condition for which we have secured Orphan Drug Designation from the FDA. Patients in this study receive Oraxol monotherapy on three consecutive days per week at the same dosing regimen as in our ongoing Phase 3 metastatic breast cancer study.

As Johnson highlighted, all seven patients who to-date have received at least six weeks of Oraxol treatment, which is the time point for the first response assessment appear to be responding very well to therapy. All patients show significant visual improvement of the cutaneous angiosarcoma between one to two weeks of treatment. The early response demonstrate the fast onset of the drug.

Three patients already had complete responses by weeks six or week 12. Consistent with prior studies, Oraxol was well tolerated by patients and in particularly no peripheral neuropathy has been reported. We are pleased to report that this preliminary data met our criteria for advancing to the second part of the study, so we'll continue sending real patients into the full study.

We encourage you to look at the patient images, which are right above on the Investor Relations section of our website. Clearly this rapid clinical response exceeded our expectation for this older and difficult-to-treat patient population. Bear in mind that angiosarcoma is a very rare disease and there's no standard, approved treatment for it. These results, when taken together with the high response rates for Oraxol, which we have shown in metastatic breast cancer, unresectable gastric cancer serve to further validate the potential for Oraxol to transform the way these cancers are treated.

We look forward to completing the study in cutaneous angiosarcoma as the preliminary results indicate that Oraxol may have a significant impact for these patients. We recently presented a pre-clinical data from this program at the American Association for Cancer Research, AACR annual meeting.

We are pleased to report that we'll be highlighting several of our programs at this year's ASCO meeting in end of May beginning of June. Four of our abstracts were accepted for post the presentation during the conference. The first will be on our pivotal program for Oraxol in metastatic breast cancer. The second on our Phase 2 study. The third from our Phase 1 study of Oratecan. And fourth on our Arginine deprivation therapy platform.

Overall, we're very pleased with the presence we'll have at ASCO this year, and we are looking forward to demonstrating the depth and potential of our oncology pipeline.

In terms of a broader update, we continue to move our development pipeline forward both in terms of our ongoing clinical studies and our preparations to bring additional product candidates to IND stage. We are making progress in our combination studies of Oraxol with monoclonal antibody base therapies. Our study at Mayo Clinic is continuing to enroll patients in our Phase 1/2 study of Oraxol, plus pembrolizumab in patients with advanced solid cancers.

We have also completed the third patient cohort in our global Phase 1b study of Oraxol plus ramucirumab in patients with advanced gastric cancer. Having determined the maximal tolerated dose, we are now moving ahead with the expansion phase of the study. We also recently complete our bioequivalence study of Oraxol versus IV paclitaxel, showing equivalence of AUC. We are in the middle of completing a bioequivalence study of a new tablet formulation of Oraxol, which could increase the bio availability further. We look forward to providing further updates on these programs as they progress.

Based on the growing body of clinical evidence, we believe our Orascovery platform will establish a new paradigm in the use of oral anti-cancer drugs for cancer treatments. While our primary focus is on our latest stage programs and preparing potential NDA submissions for Oraxol and KX2-391, we are also planning to launch Phase 2 studies for Oratecan and Oradoxel programs. These studies will firmly establish Athenex as a leader in oral chemotherapy based on our proprietary platform.

With respect to our TCR-T immunotherapy program, in late March, we announced that China's National Medical Products Administration accepted our Chinese partners IND to initiate clinical studies for TAEST16001, the lead product based on the T-cell receptor Affinity Enhanced Specific T-cell, also shortened as TAEST platform in patients with HLA-A*02:01 and NY-ESO-1 positive solid tumors.

We look forward to updates from our partner, Xiangxue Life Sciences regarding clinical development of TAEST16001 in China and to advancing this product in other territories under our joint venture with Xiangxue Life Sciences called Axis Therapeutics. Axis is preparing to request a pre-IND meeting with FDA to gain further guidance and to ensure we have a successful IND submission, and designed a best clinical plan for this novel cell therapy.

Finally I would like to highlight the appointment of Dr. Daniel Von Hoff as Chair of the Scientific Advisory Board of Axis Therapeutics.

With that, I'll now turn the call over to our Chief Operating Officer, Mr. Jeff Yordon for an update on our commercial operations. Jeff?

Jeffrey Yordon -- Chief Operating Officer President-Athenex Pharmaceutical Division

Thank you, Rudolf. Athenex continues to make important strides in building our commercial and supply chain infrastructure, with the goal of becoming a fully integrated global pharmaceutical company. Our strategy is to commercialize our proprietary products beginning with Oraxol internally in the United States and in other territories upon regulatory approval. To that end, we've expanded and we'll continue to optimize our commercial infrastructure throughout 2019, well in advance of our ontology products entering the market.

Our immediate goal will be to establish Oraxol as the chemotherapy of choice for patients with metastatic breast cancer and capture significant market share as quickly and efficiently as possible before looking to expand into additional cancers, where taxanes comprise the foundational treatments.

We've been conducting substantial brand-building for our oncology platform, which we're branding as Athenex Oncology. Our strategy is to build a significant brand awareness at ASCO where Athenex Oncology will host our own exhibit booth for the very first time. Having a larger presence at this important oncology meeting is a timely opportunity to continue raising our profile among potential prescribers of Oraxol and showcase the potential of our Orascovery technology and development pipeline. As Rudolf mentioned, we'll have four posters to discuss with our booth visitors, so we're looking forward to a really good meeting.

This is part of our broader market development effort to build deeper relationships with future prescribers, hospital and clinic administrators, KOLs, payers and advocacy groups ahead of the anticipated product launches.

We're establishing a solid go-to-market strategy guided by quantitative and qualitative market research. Our research conducted with industry experts and KOLs suggests Oraxol will be launched into a market where oncologists are looking for a more effective safer and more convenient method to deliver the 2 million doses of paclitaxel.

It's important to understand that inroads to many of these audiences have already been established through our APD subsidiary, which markets a significant amount of oncology products and we're excited to expand our offerings to these call points to now include our proprietary products. We've also made several important strategic hires with expertise in the areas of oncology marketing, reimbursement and KOL relations. We're in the process of completing our organizational design in order to optimize our commercial leadership team as well as developing the competitive landscape and preliminary forecasts.

We were very pleased to report strong revenue growth for the existing commercial business in the first quarter. Much of this was driven by products that experienced significant shortages that we were able to fulfill as well as new products where we captured good market share. Products launched in the first quarter had an emphasis on oncology and we continue to make substantial inroads into the oncology market prior to the launch of Oraxol.

APD currently markets 29 products with 54 SKUs, APS markets six products with 16 SKUs, and we're looking ahead, we expect to launch an additional six to eight products in 2019 and we should be able to capitalize on additional shortage of products through Q2. Vasopressin will continue to be a major contributor to Q2 revenue, while we await resolution regarding its status on the FDA's 503B API bulks list. In fact, in Q1 alone, Vasopressin revenue came close to surpassing all of 2018 revenue for this product.

We are focused on the near term of KX-01 and we'll continue to work closely with Almirall on this important launch. We are very excited about the probable market expansion of this product in a very large market that is currently very much under-served by current products. As a reminder. KX-01 is indicated for the treatment of actinic keratosis and this is a huge market throughout the world. Athenex has retained the rights to significant markets like Japan, Canada, Australia and many Asian markets. And we look to build these markets with new partners.

On the manufacturing front, we've completed the exterior construction work on our New York State funded biopharma production plant in Dunkirk, New York and we've begun working on the interior. Once operational, which we anticipate in the second half of 2021, we will begin with cGMP manufacturing of our injectable and 503B products and eventually commercial production of our proprietary oncology products as well.

Similarly, once our government-funded API manufacturing facility in Chongqing China commences production in 2020, it will be used to provide drug supply to support our ongoing clinical trials as well as our commercial products upon regulatory approval and launch. The increase in Polymed's capacity will enable them to also significantly increase their commercial revenue and APD has signed agreements with new partners to develop finished product, utilizing Polymed's API. This enables Athenex to secure profits on both finished products and on API.

It can't be overemphasized how important it is for Athenex to completely control their own destiny. The completion of these two facilities makes us totally independent in both manufacturing and API, and will give us unlimited flexibility and the absolute lowest cost possible.

So to summarize, we are continuing to execute successfully across all of our strategic objectives with respect to our commercial operations. We're building our commercial brand and infrastructure and actively developing the market in advance of anticipated product launches in oncology. We're continuing to grow revenues from our APD and APS business segments focusing on new product offerings. We're also optimizing our global manufacturing capability in order to meet our current and future drug supply needs, providing a remarkably efficient pathway to support our continued growth.

With that, I'll turn the call over to Mr. Randoll Sze to discuss our Q1 financials in greater detail.

Randoll Sze -- Chief Financial Officer

Thank you, Jeff. I will now go through our first quarter financial results. Firstly, I will talk about our revenues, which comprised product sales, partnership revenues and others.

In terms of product sales, we are on track to meeting our guidance that was communicated to the Street in March. Product sales for the three month ended March 31, 2019 were $25.2 million compared with $12.6 million for the three month ended March 31, 2018. An increase of $12.6 million or approximately 100% year-over-year. The increase was driven by a $6 million increase in specialty product sales, a $5 million increase in 503B product sales and a $2.1 million increase in API product sales.

Overall revenue for the three months ended March 31, 2019 decreased as compared to the $37.8 million in the same period in 2018. The decrease was primarily due to a decrease in licensing revenue. The $25 million licensing revenue recorded in the first quarter 2018 was the result of an upfront payment from Almirall, relating to our strategic partnership on KX2-391. There was no corresponding payment from Almirall in the first quarter this year.

Cost of sales for the three month ended March 31, 2019 totaled $19.9 million, an increase of $8.6 million or 76% as compared to $11.3 million for the three month ended March 31, 2018. This was primarily due to an increase of $6.2 million cost of sales from the specialty products and $2.4 million cost of sales from 503B and API products.

The decrease in gross profit and gross margin was primarily due to the absence of licensing revenue in the interim period. R&D expenses for the three month ended March 31, 2019 totaled $24.5 million, an increase of $3.2 million or 15% as compared to the $21.3 million for the three months ended March 31, 2018. This was primarily due to an increase in licensing fees and pre-clinical development activities.

SG&A expenses for the three month ended March 31 2019 totaled $15.2 million compared to $13.1 million for the three month ended March 31, 2018. This was primarily due to an increase of $2.6 million related to the pre-launch costs of our proprietary drugs, offset by a decrease of $0.5 million in G&A expenses.

Net loss attributable to Athenex for the three months ended March 31, 2019 was $35.2 million or $0.53 per diluted share compared to a net loss of $7.3 million or $0.12 per diluted share in the same period last year.

We had cash, cash equivalents and short-term investments aggregating $71 million in March 31, 2019 compared to $107 million at December 31, 2018.

As Johnson mentioned at the beginning of the call, earlier this week, we closed a private placement in which we issued 10 million shares of common stock to three institutional investors, namely Perceptive Advisors, venBio and OrbiMed at a purchase price of $10 per share for gross proceeds of $100 million to Athenex.

In addition, we expect we will be getting a milestone payment of $20 million from Almirall in the second quarter of this year. However, in terms of revenue, this won't get recognized till a bit later.

Based on the current operating plan, we expect our cash and cash equivalents as of March 31, together with the proceeds that we have recently raised from the private placement and cash to be generated from our operating activities will enable us to fund our operations through at least the next 12 months.

We are reaffirming the product sales guidance that we communicated to the Street earlier this year, which is a 25% to 30% increase in 2019 from the $56.4 million we reported in 2018. As mentioned in March, our guidance going forward excludes any estimates for licensing revenues and collaboration fees. For a more detailed discussion on our financials, including those specific factors that contributed to the changes in line items on our income statement, please refer to the Form 10-Q that was filed with the SEC earlier this morning.

With that, I'll now hand the call back to Johnson for closing remarks. Johnson?

Johnson Y.N. Lau -- Chief Executive Officer and Board Chairman

Thank you, Randoll. I believe we are in a very fortunate position for company of our size, to be preparing two potential NDA submissions simultaneously over the coming months. We are delighted to have built a capital efficient infrastructure and secure adequate resources that enable us to deliver significant value to our shareholders with each milestone achievement, while at the same time continuing to advance our earlier programs as part of our long-term growth strategy.

We remain on track to make 2019 a highly significant year for Athenex and our brands, which we believe will position the Company as a global leader in oncology.

Finally, regarding our Board of Directors, as Athenex evolves, it is important that we have the leadership in place with the skill set base most appropriate for our stage of business.

In March and April, we were very pleased to appoint Dr. John Vierling, Ms. Stephanie Davis, Mr. Jordan Kanfer and Mr. John Koh to our board. Together, these very accomplished individuals bring expertise in medicine, finance and capital markets, and corporate governance to Athenex. We also announced the departure of Mr. Song-Yi Zhang and Mr. Sheldon Trainor from our board, and I want to take this opportunity to thank them for their contributions.

For the next earnings call, we should be in a position to share our Oraxol Phase 3 outcome and we would like to encourage you to stay tuned with us.

With that, I will conclude the presentation and open the floor for Q&A. Thank you.

Questions and Answers:

Operator

Thank you. At this time we will be conducting a question-and-answer session. (Operator Instructions) Our first question is coming from Kennen MacKay of RBC Capital Markets. Please go ahead with your question. Kennen, your line is live. Do you have a question today?

Kennen MacKay -- RBC Capital Markets -- Analyst

Sorry. Thank you. Thanks for taking the question and congrats on the progress. Johnson, your commentary in your opening remarks around Oraxol's FDA approval of the Phase 3 is positive and clinically meaningful, excuse me. Felt a little bit different than in the press release about a year ago detailing FDA feedback on the regulatory path forward. Can you help us understand if there's been any additional FDA feedback or meetings recently or if I'm reading into language too much there?

And then secondly, I was just wondering if you could sort of set the record straight on pill burden using the 205 milligram per meter squared Oraxol dose that's going on in the Phase 3 breast cancer study as well as the recent cutaneous angiosarcoma data that you just released?

And Rudolf, to your commentary on the new tablet formulation, can you help us understand maybe how that would change absorption and maybe how much that could reduce the pill burden as well as what it would take to get that approved? Could that be the formulation that you launch with or would that sort of become the formulation potentially a year or so down the line? Thanks so much and looking forward to the next earnings call. Thank you.

Johnson Y.N. Lau -- Chief Executive Officer and Board Chairman

Thank you. Kennen, Rudolf will address all your questions.

Rudolf Kwan -- Chief Medical Officer

Kennen, the first question regarding the FDA input. The FDA -- we are waiting for additional FDA interaction based on the Phase 3 data. So the input that we have received that we are communicating is essentially the same as we -- what we communicated before. So there is no need to read too much into any perceived differences.

Regarding the pill burden, it's a very interesting question that we have often been asked about that the fact that we are taking apparently quite a number of capsules required for the Oraxol regimen. Just to recap, our dosing regimens three days in a row for every, which means we -- the patients need to only take their oral administration three days out of seven every week.

Some of the comments generally related to some competitors who may be requiring -- maybe a few pills once every three weeks, for example, and but generally, you need to remember our dosing regimen is monotherapy, which means for treating the cancer, they only need to take Oraxol three days in a week. A lot of the other competitors are generally developing in combination, which will account for the add-on therapy, when you do combination, which means the molecule itself doesn't work as monotherapy in that indication.

So when you add on, the total pill burden actually is the aggregate of whatever you give, plus whatever else you add on and in the case of cap size being for example is a PIV dosing regimen every day for majority of patients that translate into maybe five to seven pills, twice a day, which is considerably more, if you think about it taking on a daily process. So the -- really the crux of the issue is that patients tolerate our pill dosing regimen.

And when we announced the angiosarcoma data, which is using exactly the same dosing regimen as our metastatic breast cancer. Angiosarcoma occurs in a much older patient population. Look at our photos in our press release, patient one of them was 93, one was 82 and I can tell you in our other patients, a lot of them are over 70s and over 80s. And those patients tolerate the dosing regimen extremely well to the point they achieve complete response and continuing treatment.

So from my perspective, our dosing regimen and pill burden is not an issue in terms of tolerance.

Now regarding your last question about the new tablet formulation, we have been developing new tablet formulations that in pre-clinical data has generated significant better bioavailability. The two potential benefits of this is the tablet will be better pattern protected in terms of the tablet formulation itself. And also, it will if the pre-clinical data can be translated into clinical finding, which we are completing right now, we will reduce to a even lower pill count. I hope that answers your question.

Kennen MacKay -- RBC Capital Markets -- Analyst

Maybe could you just help us understand sort of the range of pills that we're talking about here Just translating that to sort of 205 milligram per meter squared to sort of the average volume of a patient are we talking sort of 16 capsules or 20 capsules. Very clear that we're not seeing tolerability issues here, but just trying to again understand sort of the pill burden be Oraxol and maybe what it could be with the tablet formulation?

Rudolf Kwan -- Chief Medical Officer

Absolutely. In the average body size of what we are studying clinically, the average pill burden is around 10 to 13 capsules, a size zero capsule, the smaller size of the capsule size. So we have not encountered any major tolerance issue at all in any of our clinical studies.

Kennen MacKay -- RBC Capital Markets -- Analyst

That's it. Thanks again for setting the record straight and really looking forward to August.

Operator

Thank you. Our next question is coming from Chad Messer of Needham & Company. Please go ahead with your question.

Chad Messer -- Needham & Company -- Analyst

Great. Thanks for taking my question and let me add my congratulations on all of the progress. Very encouraged by the recent angiosarcoma data from Oraxol. It really looks like you guys have a better paclitaxel here sort of broadly. Wanted to know, assuming positive data and regulatory success with breast cancer, what your thoughts on regulatory strategy are to get a broader label? What do you think you need to do? Because I think this is shaping up to be a product that could be used in a lot more than breast cancer. Thank you.

Rudolf Kwan -- Chief Medical Officer

Chad, thank you for the questions. Rudolph here. Let me try to answer your question. I think we have consistently maintained that by changing IV paclitaxel from IV to ROD (ph). The much optimized PK profile in terms of lowering the Cmax and maximizing the duration within the therapeutic range can fit into the mechanism of how paclitaxel works in dividing cancer cells, which is they have to be onboard when the cancer cells are dividing to act. So the longer they stay onboard, which our Oraxol formulation can deliver, can translate into better efficacy.

And we are starting to see in all the studies we have done in monotherapy breast cancer, in add-on with ramucirumab in gastric cancer and now in angiosarcoma, that hypothesis is beginning to be proven. So in that sense, once we establish Oraxol in any indication, let's say breast cancer, it's logical to think, it will be better than oral paclitaxel in any other indication that IV paclitaxel is being used.

Now how to get that regulatory approved, to be quiet further discussion with the FDA. So from our perspective, since we have two clear path to a quick registration as monotherapy in metastatic breast cancer and as an orphan drug in angiosarcoma, and we are following on that with add-on therapy with gastric cancer and also with checkpoint inhibitor. So we're going to take those to individual regulatory authorities and ask them how many indications they need to give us an oral IV paclitaxel indication. So stay tuned.

Chad Messer -- Needham & Company -- Analyst

All right. Great. Thanks. Looking forward to that data in August.

Rudolf Kwan -- Chief Medical Officer

Thank you, Chad.

Operator

Thank you. Our next question is coming from Yale Jen of Laidlaw & Company. Please go ahead.

Yale Jen -- Laidlaw & Company -- Analyst

Great. Thanks a lot and I add my congratulations to the progress. Maybe just a little bit follow-up on angiosarcoma. I understand that the IV paclitaxel also being used at least in real life for treating the conditions. So is there any sort of comparison, which I understand it's sometime apple and orange, but some comparison to see what potential benefit Oratecan so far has shown and maybe that's some sort of the clinical comparative analysis at this point?

Rudolf Kwan -- Chief Medical Officer

Yeah, you're correct. Clinician do use IV paclitaxel and it certainly works. But for the patient population, which are in the 80s and 90s, they don't tolerate IV chemotherapy well. And very often they cannot -- (inaudible) feel so even they take IV chemotherapy. So the data from those publications that we got are sometimes variable for prospective published studies -- from prospective studies. (inaudible) really rare indication. So most studies are small. You're talking about maybe 20% to 40% response rate.

And the striking feedback from the angiosarcoma experts that are doing this study and the standard -- it has the most patients in US is (inaudible) and they are the major contributor to this program and a feedback from the PIs basically, they have never seen such a fast response and such a fast getting to a complete response. Out of the first seven patients, all of them, they can see a visual improvement within a week or two. That is very, very unusual. And three of the patients -- two of them have already achieved a complete response by week six, the first scan endpoint. So those are the unusual features and of course all the patients are responding to some degrees extraordinary.

Yale Jen -- Laidlaw & Company -- Analyst

And what will be the size for the -- patient size for the current study? And I understand maybe there's other follow-up discussion you will -- you may have with the FDA, but at least the size of the study so far?

Rudolf Kwan -- Chief Medical Officer

This study is designed to enroll 25 patients. So we announced we have enrolled 10 patients so far. It's a very rare disease. So it may fluctuate a bit, but the fact that we only start the study since the end of December last year. In the last four and five months, we already enrolled 10 patients testified to their inflow system of the investigator in putting any patients they see into the program. So we look forward to a fast enrollment.

Johnson Y.N. Lau -- Chief Executive Officer and Board Chairman

Yale, Johnson, here. Also --

Yale Jen -- Laidlaw & Company -- Analyst

Hi.

Johnson Y.N. Lau -- Chief Executive Officer and Board Chairman

Please also notice that the response rate even though the size is small, it's very high. And our complete response was already up certainly in three patients. And the other four patients are still on the drug, which means that there can still be more better response rates to come. So therefore, I will encourage you to look at our (inaudible) is a confirmation that our product is working. In fact, across the software spectrum of different indications, including metastatic breast cancer, gastric cancer and also angiosarcoma by now. And I think the consistent demonstration of good efficacy with very good therapeutic ratio or benefit to the patient. I think it's important for most, if not all, regulatory authorities when they assess our products. I think this is a very important message for you to take home.

Yale Jen -- Laidlaw & Company -- Analyst

Okay great. Thanks a lot. Maybe just a one quick follow-up question so. It's a housekeeping question. So a couple of those. First of all, the first quarter -- 1Q '19's operating expenses is higher than the previous quarter. Should we consider the first quarter as the potential space for to be analyzed for the full year in the operating expense side?

Randoll Sze -- Chief Financial Officer

Hi. This is Randall. To address your question, no -- the answer is no. You shouldn't use that as a reference for the rest of the year. And I think I might as well just take the opportunity just to reiterate to the investor and also to the Street. Obviously, we're not a EPS or a margin story at the moment. What you see from some of the financial numbers is, we're trying to putting the resources to have our supply chain and our commercial infrastructure in place.

So this is in light of our launch of our products -- our proprietary products, once the drug gets approved as mentioned by Johnson and Jeff earlier on the call. So there are actually a lot of intangible values of what we are doing, they are not currently reflected in these numbers. So hopefully that has addressed your questions.

Yale Jen -- Laidlaw & Company -- Analyst

Appreciate that. And the second one is the $20 million you anticipate to receive next quarter or the current quarter. Would that be amortized and if so, what will be the sort of rough range and how would you think about?

Randoll Sze -- Chief Financial Officer

Sure. So the $20 million that I just spoke about on the call is a licensing fee from Almirall. So in terms of the cash, it's going to be a cash payment. So in terms of the payment, it's going to be -- we're expecting it to be in our bank account by end of this quarter, i.e., June 30. But in terms of revenue recognition, it won't get reflected in our P&L until later this year. So it won't be amortized. So once it gets recognized, it's going to be the entire $20 million is going to be recognized right away, but it's just a matter of timing.

Yale Jen -- Laidlaw & Company -- Analyst

Okay. Maybe the last one. What's the share outstanding for the first quarter of this year in terms of -- in other words EPS or earning per shares anticipated?

Randoll Sze -- Chief Financial Officer

Sure. That's actually a very good question because as of March 31, we're looking at approximately 67 million shares. But with the recent private placement where we issued another 10 million shares, I think on a pro forma basis, we're looking at approximately 77 million shares right now.

Yale Jen -- Laidlaw & Company -- Analyst

Okay. Great. Thanks a lot. I appreciate it.

Operator

Thank you. Our next question is coming from Matt Kaplan of Ladenburg Thalmann. Please go ahead.

Raymond Wu -- Ladenburg Thalmann -- Analyst

Hi. This is Raymond filling in for Matt. Congrats on the quarter. Great progress. We just -- some questions have been asked, but just want to be thorough. Do you have any update perhaps on the rest of the pipeline, Oradoxel, Oratopo or Eribulin patients?

Rudolf Kwan -- Chief Medical Officer

Yeah, certainly. As we have been announcing, we obviously preparing for the Phase 2 study design for Oradoxel and oral -- Irinotecan. So both compound, we announced that we have identified the dosing regimen that we are designing on for Phase 2. And those designs are in progress and once we initiate a study, we will give further updates. Oral Topotecan is the study that's also ongoing and that study is recruiting as we speak. So when we have the results, we will communicate.

Raymond Wu -- Ladenburg Thalmann -- Analyst

Okay. That's great. And --

Johnson Y.N. Lau -- Chief Executive Officer and Board Chairman

(inaudible) is concluding that for a company of our size is highly unusual that basically every product in our clinical pipeline, they are advancing. And with a small company of our size and we are already preparing two NDAs, while at the same time advancing the earlier stage programs, you can imagine that from time to time, we need to look into the resources we have versus the priorities that we have and certainly there's no doubt that we have to put priority into advancing the Phase 3 products into NDA submission to launch a product.

And therefore from a resources commitment purposes that Randoll just mentioned as well as the resources for the R&D program, we have to ensure that we are going to achieve the objective for the short term vis-a-vis to get the NDAs submitted and products approved as well as advancing the earlier stage program. And therefore from time to time, there will be some adjustments. But suffice to say, these are very nice headaches and we would like to have this headache rather than having problems of our clinical pipeline. And I think this is a very good summary of either way to address your question.

Raymond Wu -- Ladenburg Thalmann -- Analyst

That's definitely helpful, yeah. You guys have a lot on your hands. So it definitely helps with the fabrication. So yeah, that's the only question I have. So thanks a lot, yeah.

Johnson Y.N. Lau -- Chief Executive Officer and Board Chairman

Thank you.

Operator

Thank you. Our next question is coming from Peter Lawson of SunTrust Robinson Humphrey. Please go ahead.

Peter Lawson -- SunTrust Robinson Humphrey -- Analyst

Thanks for taking my questions. Just on the product revenue guidance and it was reiterated. Any changes in the underlying dynamics that we should be thinking about and any changes in thoughts around that possible outcome on the court rulings such as around Vasopressin?

Jeffrey Yordon -- Chief Operating Officer President-Athenex Pharmaceutical Division

Yeah, Peter. This is Jeff. There's really no changes in the guidance. We feel comfortable with that. There was a hearing on the Vasopressin. The conclusion is still up in the air. We should know something next month. But you know certainly, we know for sure that we'll be selling the product through this quarter and potentially next quarter. So it will contribute meaningful revenue each day that it goes on.

Peter Lawson -- SunTrust Robinson Humphrey -- Analyst

Got you. Thank you. And then is there any -- can you provide any guidance around the license, coverage of revenues what do you think of that? May fall out. Any help around modeling that for the rest of the -- there's the $20 million payment from Almirall that's kind of later this year?

Johnson Y.N. Lau -- Chief Executive Officer and Board Chairman

Peter, Johnson here. Obviously, we're in -- it would be logical to assume that we're in active discussion with a lot of potential partners. But as you can imagine, this type of discussions, I mean we should not be pushing hard and it takes time. The objective was to get the maximum value for shareholder and we are -- we should not be being pushed into sort of second and deadline for us. So therefore with regard to this line of revenue, we would like to have the flexibility and not providing any guidance. And suffice to say, our objective is to provide the maximum return for our shareholders. I think that will be our motive.

Jeffrey Yordon -- Chief Operating Officer President-Athenex Pharmaceutical Division

Yeah. Let me add that we give guidance on things that we think we can control. These are not controllable at this point. Something could happen at any time. So as it happens, you will be the first to know.

Peter Lawson -- SunTrust Robinson Humphrey -- Analyst

Great. Thank you. And then just on the Oraxol Phase 3 readout, wonder if you could walk us through what we could potentially see in the press release and I presume it's going to be ahead of the next earnings call and what we're going to see presented at a conference?

Rudolf Kwan -- Chief Medical Officer

We will definitely articulate the topline results as promised by -- in August. However, the details of those results is likely we communicated to the FDA first. Of course, we'll have a pre-NDA meeting with the FDA and at the same time, and at appropriate scientific forum, we're still figuring out which is the most impactful meeting for that kind of important data. And certainly, we intend to fully publish the result in a reputable journal.

Johnson Y.N. Lau -- Chief Executive Officer and Board Chairman

So Peter as you can imagine that we need to communicate to our shareholders, investors, at the same time, we need to target correctly in terms of planning the appropriate data release that will coincide with the launch of our products to ensure the maximum impact or effect when we are launching our products. So there's a balance, but suffice to say when we can release data to ensure that you're confident, we'll release appropriate data to inject confidence to our investors and the analysts at the same time, are keeping certain data that will allow us to get the excitement when we launch our products.

Peter Lawson -- SunTrust Robinson Humphrey -- Analyst

Great. Okay. Thanks for taking the questions. Appreciate it.

Johnson Y.N. Lau -- Chief Executive Officer and Board Chairman

Thank you.

Operator

Thank you. Our next question today is coming from the line of Kevin DeGeeter of Oppenheimer & Co. Please go ahead.

Kevin DeGeeter -- Oppenheimer & Co. -- Analyst

Hey, good morning, guys. Thank you for taking my questions. Two questions on Oraxol, if I may, then a follow-up question as it pertains to the commercial organization. I think you called out in the prepared comments that you've moved into the expansion cohort for the combination gastric study cancer. Can you confirm what dose level you move forward with? Was it the Cohort 3 dose or Cohort 2?

And then just separately as we sort of begin to kind of building on Peter's line of thought is, you begin preparing for how to think about the Phase 3 breast cancer data in August. How should we think about the peripheral neuropathy rates for IV paclitaxel once every three weeks kind of in a contemporary population? A lot of the data that's out there in the literature without dosing regimen is -- it is a little dated at this point. So if you could kind of help us maybe think about how to benchmark that metric would be helpful.

Rudolf Kwan -- Chief Medical Officer

Kevin, good questions. The gastric cancer study we completed the Cohort 3 and we have not articulated what dose we have not made public, but I can tell you the dosing regimen we have chosen is actually interesting enough the same, that's what we're using metastatic breast cancer and angiosarcoma, that seems to be the most optimal dosing regimen for Oraxol so far. So that will be -- actually we round it down to 200 milligrams per meter square three days a week.

The second question is on the neuropathy data. Of course, I'm the one who have been seeing that you can only compare (inaudible) incidents within the same study because there are different ways of collecting adverse event incidents. When you do it across different studies, it is difficult to compare. What I can tell you is that, we have consistently seen very low neuropathy rates in across all studies, including a Phase 1 studies on Oraxol. So I would be very surprised if we do not see a clear differentiation with IV paclitaxel in the Phase 3 study.

I'd leave the commercial question to Jeff.

Kevin DeGeeter -- Oppenheimer & Co. -- Analyst

Thanks, Rudolf. That's actually extremely helpful. And Jeff, I just want to kind of talk a little bit about preparation for Oraxol. Appreciate the prepared comments and I guess our assumption is that the call point for Oraxol is principally a medical oncologist, then it's kind of -- can you help us think about the current level of interaction of your commercial team with -- medical oncologists fall kind of I guess at the academic and community level with the injectable portfolio and how that all sort of evolved as we move to a potential launch of Oraxol in the next kind of 18 months or so?

Jeffrey Yordon -- Chief Operating Officer President-Athenex Pharmaceutical Division

Sure. A great question. And let's make sure we all understand that the profile of the sales representative that we have now is their predominant background was in proprietary sales. Some of them in fact had never really sold generics before, so they are quite experienced in proprietary. About 70% of our pipeline earn collagen products and particularly in the clinic, we have to actually talk to physicians, it's not just a pharmacist statement (ph) We are in the 28 comprehensive cancer centers every day. And I should add that last year the number one unit product in all of ecology, which is Zofra or Ondansetron was on shortage. And for nine months, we were the only supplier of that product. So we really endeared ourselves to the market. I would say that the infrastructure is in place, that were we to get good news in the next three to six months, we would have to hire about 50 more people and we'd be ready to launch the product.

Kevin DeGeeter -- Oppenheimer & Co. -- Analyst

Great. That's extremely helpful. Thank you for taking each of my questions.

Rudolf Kwan -- Chief Medical Officer

Thank you.

Operator

Thank you. Our next question is coming from Jack Hu of Deutsche Bank. Please go ahead with your question.

Jack Hu -- Deutsche Bank -- Analyst

Thank you. Actually (inaudible) I apologize if this question has been asked. With the new funding in place, do we have a new guidance for the cash burn for this year? Thank you.

Randoll Sze -- Chief Financial Officer

Oh, sure. Yeah, We actually touched upon this on our prepared -- during our prepared comments. So with the cash that we've just raised from the private placement, obviously together with our existing cash balance as of March 31, also with the cash coming in from our operating activities, we're currently looking at something at least for the next 12 months, we should be fine.

Jack Hu -- Deutsche Bank -- Analyst

Thank you.

Operator

Thank you. At this time, I would like to turn the floor back over to management for any additional or closing comments.

Johnson Y.N. Lau -- Chief Executive Officer and Board Chairman

Thank you for all of your time and as discussed earlier, very soon, we -- before the year -- probably before the next earnings call, we will be in a position to share our Oraxol Phase 3 outcome. And we would like to encourage you to stay tuned with us. And with that, I would like to thank you again for your time. And this will close the -- will be the closing of this conference call. Thank you.

Operator

Ladies and gentlemen, thank you for your participation. This concludes today's conference. You may disconnect your lines at this time and have a wonderful day.

Duration: 62 minutes

Call participants:

Tim McCarthy -- Managing Director

Johnson Y.N. Lau -- Chief Executive Officer and Board Chairman

Rudolf Kwan -- Chief Medical Officer

Jeffrey Yordon -- Chief Operating Officer President-Athenex Pharmaceutical Division

Randoll Sze -- Chief Financial Officer

Kennen MacKay -- RBC Capital Markets -- Analyst

Chad Messer -- Needham & Company -- Analyst

Yale Jen -- Laidlaw & Company -- Analyst

Raymond Wu -- Ladenburg Thalmann -- Analyst

Peter Lawson -- SunTrust Robinson Humphrey -- Analyst

Kevin DeGeeter -- Oppenheimer & Co. -- Analyst

Jack Hu -- Deutsche Bank -- Analyst

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