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Edited Transcript of AIMT earnings conference call or presentation 8-Aug-19 8:30pm GMT

Q2 2019 Aimmune Therapeutics Inc Earnings Call

Brisbane Aug 16, 2019 (Thomson StreetEvents) -- Edited Transcript of Aimmune Therapeutics Inc earnings conference call or presentation Thursday, August 8, 2019 at 8:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Andrew Oxtoby

Aimmune Therapeutics, Inc. - Chief Commercial Officer

* Daniel C. Adelman

Aimmune Therapeutics, Inc. - Chief Medical Officer

* Eric H. Bjerkholt

Aimmune Therapeutics, Inc. - CFO

* Jayson Donald Alexander Dallas

Aimmune Therapeutics, Inc. - President, CEO & Director

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Conference Call Participants

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* Charles Cliff Duncan

Cantor Fitzgerald & Co., Research Division - Senior Analyst

* Christopher Joseph Raymond

Piper Jaffray Companies, Research Division - MD & Senior Research Analyst

* Corinne Jenkins

Goldman Sachs Group Inc., Research Division - Research Analyst

* Justin Hayward Burns

RBC Capital Markets, LLC, Research Division - Senior Associate

* Vasiliana Vireen Moussatos

Wedbush Securities Inc., Research Division - MD of Equity Research

* William Clifford Grau

Stifel, Nicolaus & Company, Incorporated, Research Division - Associate

* Zegbeh Claudel Jallah

Roth Capital Partners, LLC, Research Division - Director and Research Analyst

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Presentation

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Operator [1]

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Good afternoon, ladies and gentlemen, and welcome to the Aimmune Therapeutics Second Quarter 2019 Earnings Conference Call. (Operator Instructions). As a reminder, this conference is being recorded.

I would now like to turn the conference over to your host, Mr. Eric Bjerkholt, Aimmune's Chief Financial Officer.

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Eric H. Bjerkholt, Aimmune Therapeutics, Inc. - CFO [2]

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Thank you, Mayne. And good afternoon and thank you for joining us today to discuss Aimmune's second quarter 2019 financial results and recent operational highlights. Today's call will be archived and a replay will be available on our corporate website at aimmune.com.

Joining me on the call today are Dr. Jayson Dallas, President and Chief Executive Officer; Andrew Oxtoby, Chief Commercial Officer; and Dr. Dan Adelman, Chief Medical Officer. After our remarks, we'll open the call for questions.

Before we begin, I would like to remind you that during today's call, we will be making forward-looking statements. These forward-looking statements include Aimmune's expectations regarding the potential benefits of AR101, Aimmune's expectations regarding the potential commercial launch of AR101, including the review period of the BLA and MAA for AR101, Aimmune's expectations on the announcement of results for its Phase II clinical trial for AR201, Aimmune's expectations regarding the timing and outcome of the FDA's APAC meeting, our expectations on the planned timing for the announcement of data from its POSEIDON trial of AR101 and Regeneron's clinical trial of AR101 in combination with dupilumab, Aimmune's expectations regarding its commercial supply of AR101, the expectations regarding the sufficiency of cash resources and ability to access an additional $130 million from the credit facility, and Aimmune's expectations regarding potential applications of the CODIT approach to treating life-threatening food allergies, and the adequacy and quality of supply of AR101.

Risks and uncertainties that contribute to the uncertain nature of the forward-looking statements include the expectation that Aimmune will need additional funds to finance its operations, Aimmune's or any of its collaborative partners' ability to initiate and/or complete clinical trials, the unpredictability of the regulatory process, the possibility that Aimmune's or any of its collaborative partners clinical trials will not be successful, Aimmune's dependence on the success of AR101, the reliance on third parties for the manufacture of our product candidates, possible regulatory developments in the United States and foreign countries and Aimmune's ability to attract and retain senior management personnel.

These forward-looking statements are based on assumptions and are subject to risks and uncertainties that can cause actual results to differ significantly from those projected during the call. Given these risks and uncertainties, you should not place undue reliance on these forward-looking statements.

Please refer to the company's quarterly report on Form 10-Q for the quarter ended June 30, 2019, for some of the important risk factors that could cause actual results to differ materially from the forward-looking statements made on this call. Except as required by law, Aimmune disclaims any obligation to publicly update or revise any information to reflect the events or circumstances that occur after this call. Finally, I'd like to point out that Aimmune's food allergy treatments are investigational and are not FDA approved.

And now, I'll turn over the call to Jayson Dallas.

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Jayson Donald Alexander Dallas, Aimmune Therapeutics, Inc. - President, CEO & Director [3]

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Thank you, Eric. Good afternoon, everyone, and thank you for joining us this afternoon. Today we will provide a recap of our achievements in the second quarter and review our expected milestones for the remainder of the year. Andrew will give an overview of our ongoing commercial preparations. Dan will provide a clinical and regulatory update. And Eric will then review our financial results for the second quarter. And we'll then open up the call for questions.

As we all know, food allergy is an extraordinarily large issue worldwide and has been increasing in incidence and prevalence over the last several decades. In the United States alone, 1.6 million children between the ages of 4 and 17 are affected by peanut allergy and in a recent longitudinal study, it was shown that around a quarter of children studied were admitted to the emergency room each year due to their food allergies.

These statistics paint an unfortunate picture of how peanut avoidance in the real world is very difficult and for most people an ineffective way to manage peanut allergy. Today, I'm pleased to point out that we are approximately 5 weeks from our scheduled FDA advisory committee meeting and potentially months away from having an FDA approval for AR101 for peanut allergy.

Approval of AR101 would mark a significant day for the entire food allergy community as it would be the first-ever FDA approved treatment for any kind of food allergy. In addition to our rigorous preparation for the September advisory committee meeting, which we believe will be an excellent forum to discuss and consider our clinical efficacy and safety data, we look forward to underscoring the potential of AR101 to meaningfully impact the lives of millions of patients and families living with peanut allergy today.

We also continue to work with the FDA to facilitate the review of our Biologics License Application or BLA and we're pleased that the agency has completed all clinical site manufacturing inspections that have been scheduled to date. In the meantime, our organization is focused on ensuring a successful potential launch of AR101. We have made great strides in hiring the right people, both at our headquarters and in the field, to help us deliver on this charge. Our approach to preparedness includes a thorough and thoughtful understanding of the patient, physician and payer communities through our ongoing research, as well as developing an optimal mix of tools and resources to assist the broadest appropriate patient population to start and to stay on therapy.

Andrew will provide more color about our commercial preparations in his remarks, but I will say that from my vantage point, I am extremely confident in our ability to successfully commercialize AR101 in the United States upon its approval by the FDA.

Turning to other updates from the quarter. In June, we shared positive results from our Phase III ARTEMIS trial at the European Academy of Allergy and Clinical Immunology Congress or EAACI in an oral presentation. You will recall that the trial demonstrated safety and efficacy results that were consistent with those seen in our successful Phase III PALISADE trial.

Incidentally, the lead author of the ARTEMIS presentation, Dr. Montserrat Fernandez-Rivas, was named an EAACI 2019 Award Winner for her work on the ARTEMIS trial. At the EAACI meeting, we presented important quality of life data that assessed the psychological burden of living with peanut allergy. We also presented data from an analysis of patients who receive daily treatment with AR101 during the open-label extension of the Phase III PALISADE trial, which showed that these patients experienced clinically meaningful improvements in disease-specific quality of life, as well as continued immunomodulation through daily dosing with AR101 beyond the first year of therapy.

In addition, at the May meeting of the International Society for Pharmacoeconomics Outcomes Research or ISPOR, which is a key payer forum, we presented quality of life data that demonstrated the deep psychological and emotional impact the burden of peanut allergy has on teens. This impact is profound and it is simply heartbreaking that 4 in 10 teens diagnosed with peanut allergy believe that they have a great or very great chance of certainty of dying from accidental exposure, despite the fact that a 100% of those observed in the reports were actively avoiding peanut products.

The unmet need is great and it is real and it is urgent, both in the United States and in Europe where up to 2% of children in many countries are affected by peanut allergy. To that end, we have submitted the marketing authorization application for AR101 to the European Medicines Agency, and we did that in June. The EMEA has recently validated the filing and has begun its review. Based on standard EMEA review timelines, we expect a 12- to 15-month review and potential approval in the EU in the second half of 2020. Dan will give some more insight into the data that I just mentioned when we get to his remarks.

Lastly, we're in a strong financial position with approximately $250 million of cash and investments and potential access to an additional $130 million following approval of AR101 through our credit agreement with KKR. We expect these resources to be sufficient to fund commercialization of AR101 in both the U.S. and Europe and to continue progress on our pipeline programs.

With that, I'll turn it over to Andrew for a commercial update.

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Andrew Oxtoby, Aimmune Therapeutics, Inc. - Chief Commercial Officer [4]

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Thank you, Jason. I'll start by echoing Jason's comments and say how exciting it is to be within months of the first potential regulatory approval of a peanut allergy therapy. To that end, we have been diligently preparing for the potential commercialization of AR101 in the U.S. and we expect to be ready to launch in the fourth quarter of this year. When we think about commercial readiness, we focus on 3 critical areas.

First, research and insight into the patient, physician and payer communities to help us support and communicate effectively with these audiences. Second, the tools and resources necessary to assist patients, physicians and our own field force to help support the successful administration of AR101. And third, having the best people in place to drive our efforts to successfully introduce and grow the use of AR101 over time.

First, let's focus on the patients. We've conducted many, many hours of fundamental market research to understand how peanut allergy, one of the most common food allergies in the United States, affects the lives of patients and their caregivers. Parents speak of the paralyzing anxiety that results from not knowing when or where the next accidental exposure to peanut will occur. The greatest fear of these vigilant parents is something happening when they are not there to protect their child. This fear can result in significant disruption to a family's day-to-day activities and result in children being excluded from social activities and having to sit at separate lunch tables from their friends at school just so that they can eat lunch safely and without risk.

We recently conducted a quantitative survey amongst hundreds of caregivers of peanut allergy sufferers in the U.S. Of those surveyed, 75% said that they had a high interest in seeking a treatment that went beyond avoiding peanuts to protect their child and when shown the clinical profile of AR101, 2/3 of the caregivers expressed an interest in the product if it were approved by the FDA.

For these caregivers, avoidance simply doesn't cut it. We also know that patients with peanut allergy are easily identifiable. Of the estimated 1.6 million peanut-allergic patients between the ages of 4 and 17, 1.25 million are already diagnosed and see a physician an average of 5 times per year for that peanut allergy and other comorbid conditions.

Turning to the allergist community, we have amassed a deep knowledge of the approximately 5,000 practicing board-certified allergists in the U.S., which includes a good understanding of the allergist clinics current level of readiness to administer AR101 as well as his or her willingness to prescribe the therapy upon regulatory approval.

From our research, we know that of the allergists who have indicated a willingness to prescribe AR101 when approved, approximately 1,300 of them or 30% of the total can be characterized as having a clinic setup that is either ready or is on its way to being ready to safely and effectively administer AR101 therapy.

Furthermore, an analysis of historical patient claims data shows us that approximately 70% of all patients ages 4 to 17 with a confirmed diagnosis of peanut allergy are seen by one of these same 1,300 allergists. Therefore a large percentage of diagnosed patients are seen by a relatively concentrated number of allergists.

While over time we will work with the broader population of 5,000 allergists across the country, these data allow us to be very focused at launch by targeting the 1,300 allergists who already see 70% of diagnosed peanut-allergic patients. We also now know these 1,300 allergists cluster into approximately 800 individual allergy clinics, which allows us to have an even more focused effort.

With respect to payers, we've had in-depth meetings with multiple payers since the beginning of the year who together cover 61% of the commercial lives in the U.S. You may recall, we set out to have discussions with payers that cover 80% of commercial lives by launch, so we are well on track to meet and even exceed that goal. We've also conducted additional research with a number of payers of different sizes and configurations, everything from small regional managed care plans to large PBMs. Collectively the payers in our research cover 178 million covered lives.

The key takeaway from both these research as well as from our strategic account directed discussions is that payers immediately recognized the unmet need in the market. The parents with children with peanut allergy would actively seek out AR101 therapy. Beyond the direct benefits to patients and their families, we're also highlighting to payers the potential reduction of other costs within the healthcare system.

Research shows if you are living with peanut allergy, the absence of approved treatment options means that there is a 1 in 4 chance they will end up in the emergency room in any given year. These ER visits can be very expensive. An approved treatment that reduces the incidence and severity of allergic reactions could help to reduce cost through a reduction of the frequency of ER visits. We've also shared with payers our plans to partner with specialty pharmacies to help manage the AR101 experience with the patient, the caregiver, and the allergist.

The feedback that we have received from payers has been positive. This approach will allow patients to either pick up the product at the allergist clinic following their administered dose or to arrange for overnight reliable delivery directly to their homes. In addition to the patient and physician insights about which I spoke earlier, we plan to provide patients and their caregivers with practical and customized solutions to support them, including flexible distribution, reimbursement support services, and comprehensive patient and caregiver adherence support.

For example, during the dose-escalation phase, the first dose of each escalation will be administered in the allergist's office to allow for close supervision, after which point the patient will be sent home with the dose for the next day. The folio of doses for the following 2 weeks will arrive the next day at the patient's home from one of our specialty pharmacies. Once the patient reaches the fixed therapeutic dose stage, he or she will receive a 3-month supply of doses from the specialty pharmacy.

Finally, to support the successful commercial launch of AR101 in the U.S., we have a regional leadership team in place that is busy interviewing candidates to build our field force of 80 individuals prior to approval. The interest in joining Aimmune is very strong. In fact, we've had over 5,000 applications for 80 account manager roles.

At [Technical Difficulty] education support of allergists to ensure that they understand both the clinical profile of the medicine, as well as the logistics that will deliver a positive initial experience with AR101 for both the patient and the physician. We are confident that the current size of the field force is sufficient for launch and over time as we work to drive the market, we will maintain the flexibility to expand the field force as needed.

Finally, let me turn to our commercial progress in Europe. Our filing of MAA with the EMA last month was an important step towards our efforts to commercialize AR101 in Europe. We continue to deepen our knowledge of the individual markets, particularly Germany, France and the U.K., and to staff our organization with professionals in medical affairs, marketing and market access.

For example, we recently hired an experienced general manager and a medical director for the German, Austrian and Swiss markets and we'll be opening an office for our German team in the Munich area in the coming weeks. As we look to AR101 potentially becoming the first approved peanut therapy on the market, we are confident that we can deliver a successful launch based on the unprecedented strength of our Phase III data, a strong desire from patients, caregivers and physicians for an approved peanut allergy therapy, the recognition by payers of the value and need of such an important therapy, and our investments in the resources needed to help support the adoption of and compliance to AR101 therapy.

With that, I'll turn the call over to Dan for a clinical and regulatory update.

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Daniel C. Adelman, Aimmune Therapeutics, Inc. - Chief Medical Officer [5]

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Thanks, Andrew. Starting with our potential FDA approval of AR101, we continue to work closely with the FDA. We are preparing for the advisory committee meeting on September 13 and look forward to the opportunity to discuss the strength of our clinical data in this open forum. As part of its review, the FDA has scheduled and completed 6 clinical site inspections to date and it has also completed an inspection at CoreRx, our contract manufacturing partner.

Following these inspections, we continue to anticipate approval by late January 2020. We've continued to expand our medical affairs team with key new hires in medical education and medical information, and the department is now well staffed to help provide information about oral immunotherapy, including a medical science liaison team deployed in the field that is already interfacing with many allergists across the United States for both onsite visits and group meetings.

With respect to Europe, as both Jayson and Andrew discussed, we submitted an MAA for AR101 to the European Medicine Agencies in June. The MAA submission includes extensive data from the only Phase III clinical trial program to meet the primary endpoints in children and teens with peanut allergy. This program included over 1,200 patients enrolled into the PALISADE, RAMSES and ARTEMIS trials.

The pivotal European Phase III ARTEMIS study, which represents a key component of the MAA submission, reinforced the consistent clinical profile of the AR101 after 6 months of dose escalation and a 3-month therapeutic dosing test. The ARTEMIS trial enrolled a 175 peanut-allergic children and adolescents, ages 4 to 17, from 18 sites in France, Germany, Ireland, Italy, Spain, Sweden and the United Kingdom. Assuming a typical EU review timeline, we expect a 12 to 15 months review.

As Jayson mentioned, we shared results from the positive Phase III ARTEMIS trial at the EAACI Congress in an all-abstract presentation back in June. The results of the trial largely replicated the results observed in the PALISADE trial and demonstrated that more than half of the patients tolerated 1,000 milligrams of peanut protein after 9 months of treatment.

At EAACI, we presented data from an analysis of patients who received daily treatment with AR101 during the open label extension of the Phase III PALISADE trial. The data from this trial, called ARC004, showed that patients experience clinically meaningful improvement in disease-specific quality of life, as well as continued immunomodulation through daily dosing beyond 1 year with nearly half tolerating a single dose of 2,000 milligrams of peanut protein or over 4 grams cumulatively equal to approximately 16x the observed 125 milligram medium dose of accidental exposures as reported in the MIRABEL study.

A full 2/3 of patients who tolerated less than 1,000 milligrams at the end of the PALISADE trial, increased the amount of peanut they could tolerate after an additional 6 months of daily dosing. In addition, we presented important quality of life data at EAACI and at the ISPOR 2019 annual meeting back in May.

At EAACI, we shared results from 2 studies that assessed the psychosocial burden of living with peanut allergy. Results from APPEAL 2, the first European multi-country qualitative evaluation of the impact of living with peanut allergy, found that living in fear of a potentially failed reaction to peanuts has a significant negative impact on the quality of life of individuals with peanut allergy as well as their families.

At ISPOR, we shared results from a study that measured the burden of peanut allergy. The study of U.S. adolescents with peanut allergy found that more than half of study participants reported a visit to the emergency room or urgent care and one-third required hospitalization as a result of peanut exposure in the prior 12 months. And this was despite the fact that a 100% of those surveyed reported actively avoiding peanut products.

In addition, recruitment for our Phase III POSEIDON trial of AR101 for the treatment of peanut allergy in children ages 1 to less than 4 years old is ongoing. And finally, the Phase II trial of AR101 with adjunctive dupilumab for the treatment of patients with peanut allergy, which is sponsored by Regeneron is also ongoing. This trial hypothesizes that administration of AR101 with dupilumab and interleukin 4, 13 antagonist could accelerate the desensitization process and potentially lead to remission. Of course, we will learn more when the data are readout.

Regarding our egg program, we began screening patients for our Phase II clinical trial of AR201 in hen's egg allergy in July. The Phase II trials is a double-blind placebo-controlled trial in patients ages 4 to 26 diagnosed with an allergy to hen's egg. The trial is expected to enroll approximately 84 patients at 15 clinical trial sites in the United States.

I'll now turn it back to Eric for an update on financial.

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Eric H. Bjerkholt, Aimmune Therapeutics, Inc. - CFO [6]

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Thanks, Dan. We ended the second quarter in a strong financial position with $250 million in cash, cash equivalents and investments compared to $296 million on March 31, 2019. In January of this year, we announced that we had entered into a $170 million loan agreement with KKR of which $40 million was funded as closing and the remaining $130 million is available to draw upon satisfaction of certain borrowing conditions, which include the approval of the AR101 BLA.

We expect that this loan agreement plus cash on hand will provide us with sufficient funds to commercialize AR101 in both the United States and Europe, and progress our CODIT pipeline.

For the quarter end June 30, 2019, net loss was $62.9 million, compared to net loss of $52.6 million for a comparable period in 2018. On a per share basis, net loss for the quarter ended June 30 was at $1.01 compared to a net loss per share of $0.91 for the comparable period last year.

R&D expenses for the quarter ended June 30 were $32 million, compared to $35.3 million for the comparable period in 2018. The decrease was primarily due to lower AR101 clinical trial costs, partially offset by higher regulatory costs related to the AR101 BLA and MAA filings, and higher manufacturing cost for both AR101 and AR201.

G&A expenses for the quarter ended June 30 were $31.2 million compared to $18.6 million for the comparable period last year. The increase was primarily due to additional employee-related costs and external professional services as Aimmune continue to build its infrastructure to support the potential commercialization of AR101.

With that, I'll turn the call back to Jayson.

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Jayson Donald Alexander Dallas, Aimmune Therapeutics, Inc. - President, CEO & Director [7]

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Thank you, Eric. And so to recap, we're within months of a potential FDA approval for AR101 for peanut allergy, which would mark the first therapy ever to receive regulatory approval to treat any kind of food allergy. A really exciting achievement for the entire food allergy community.

We are laser-focused on ensuring a successful commercial launch of AR101, executing on commercial and medical affairs plans that will enable us to bring AR101 successfully to market, shortly following its potential approval. We expect a standard review for our AR101 marketing authorization application in Europe, our AR101 Phase III POSEIDON trial and Regeneron's Phase II trial of AR101 with adjunctive dupilumab ongoing and add depth to our pipeline. The AR201 egg allergy Phase II trial has begun and we remain in a strong financial position.

We are on the cusp of potentially introducing the first-ever treatment for peanut allergy to a patient population that has been desperate for an approved treatment option, a day that could transform millions of lives. We are well prepared and extremely confident in our ability to successfully launch AR101.

As we conclude, I would like to reiterate our gratitude to the many people who have been supportive of us along the way, including our investigators and their staff, our patients and their families, the food allergy advocacy community, the U.S. and European regulatory agencies and our dedicated employees who have enabled such tangible progress in such a short period at this time.

We will now open the call to take your questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions). Our first question comes from Charles Duncan of Cantor Fitzgerald.

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Charles Cliff Duncan, Cantor Fitzgerald & Co., Research Division - Senior Analyst [2]

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Congrats on the progress this year. And looking forward to some interesting progress in the near term, I had a quick question regarding the September 13 meeting. I'm wondering if you've received the briefing book yet and irrespective, what are you focusing on when you are conducting the mock panels or what do you anticipate would be the focus of the meeting?

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Daniel C. Adelman, Aimmune Therapeutics, Inc. - Chief Medical Officer [3]

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So, Charles, this Dan. We have not yet received FDA's briefing book. We don't expect it for a little while. The focus of the both our market panels as well as what we anticipate the focus of advisory committee will be evaluation of the efficacy and the safety of AR101 and the overall benefit-risk profile of the therapy and we are diligently preparing for addressing any and all of those questions.

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Jayson Donald Alexander Dallas, Aimmune Therapeutics, Inc. - President, CEO & Director [4]

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And I think, Charles, maybe to add one thing is that, what we expect FDA to be doing and what we have been doing ourselves is to look at the data in as many different ways as we can and cutting it by as many different ways we can think of. So things like age, gender, baseline peanut-specific IgE, skin prick test sites, et cetera. To make certain that every population or subpopulation in our clinical trials has actually benefited from therapy and what we have found so far is that that is indeed true and that's a really encouraging thing for us as we go into the advisory committee.

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Charles Cliff Duncan, Cantor Fitzgerald & Co., Research Division - Senior Analyst [5]

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Okay, that's helpful. And then possibly even taking a look at the overall patients that were in the trials or is that just completely not in this particular BLA?

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Daniel C. Adelman, Aimmune Therapeutics, Inc. - Chief Medical Officer [6]

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So as you are alluding, the trial was conducted in patients ages 4 to 55 years old. The primary analysis population is 4 to 17 and we will be presenting data in the adult patients also. When we look at overall risk-benefit in that population, we also see that it is positive.

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Eric H. Bjerkholt, Aimmune Therapeutics, Inc. - CFO [7]

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It is important to point out though that in that population, we had a hierarchy called analysis plan and the adult population was the first piece of that plan that did not hit statistical significance from an intention to treat efficacy perspective with a P value of 0.07. So that's kind of where we stopped as we went down our hierarchy. But of course, we will present everything that was in our Phase III programs I think that are included in the BLA to the advisory committee.

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Charles Cliff Duncan, Cantor Fitzgerald & Co., Research Division - Senior Analyst [8]

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Okay. One last question regarding the regulatory process. In terms of the recent quality of life data as well as continued immunomodulation now post a year of continued treatment that Dan referred to, how much do you believe that data will play a role in the agencies review for approvability, and then subsequently for payer pharmacoeconomic value calculus, how important is that?

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Daniel C. Adelman, Aimmune Therapeutics, Inc. - Chief Medical Officer [9]

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So Charles, I'll take the first part and I'll hand the second part over to Andrew. I think the agency is going to look at the totality of the data that are provided to them. They're going to look at everything that has been submitted in our BLA and they will take all of that including quality of life into consideration in their ultimate decision. We're confident that we have good, strong data to support a positive decision.

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Andrew Oxtoby, Aimmune Therapeutics, Inc. - Chief Commercial Officer [10]

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It's Andrew. Yes, on the payer front, so in conversations with payers, they have indicated interest in understanding what the profile looks like of this product beyond the awareness as we gather more data moving forward and also in understanding more about the quality of life clearly for the members of different payer plans. The quality of life benefit associated with this product is substantial and so further defining and being able to articulate that is something that they've expressed an interest in understanding further.

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Jayson Donald Alexander Dallas, Aimmune Therapeutics, Inc. - President, CEO & Director [11]

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I think one other comment that is relevant clinically as well as from a payer perspective, Charles, is that we continue to be encouraged as we get more and more data and we know this now from the 18-month dataset and we look forward to seeing it continue when we look at the 2-year dataset, which is coming up relatively soon. And that is the fact that both the benefit and the tolerability and the safety profile of AR101 improves the longer patients remain on therapy. This is completely expected, it's what we observe with other immunotherapies, immunomodulators, as you get into the immunomodulation phase of therapy and it is very encouraging for us to see that this remain true after 18 months of therapy with AR101.

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Operator [12]

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The next question comes from Chris Raymond of Piper Jaffray.

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Christopher Joseph Raymond, Piper Jaffray Companies, Research Division - MD & Senior Research Analyst [13]

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Just a couple. I think I've heard you guys describe now a couple of times this sort of 80-20 rule or I guess in this case 70-30 rule in terms of 70% of the kids are managed by this 1,300 and it looks like roughly 30% of the allergist base that you are targeting. Just kind of curious that 1,000 doc population, I know you mentioned that the -- I think I heard you describe them as having the wherewithal and the desire to use AR101. But is there any -- can you give any more detail or color as to how you measure that, specifically I guess the ability to have these kids coming in with the kind of frequency especially in the up-dosing phase?

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Daniel C. Adelman, Aimmune Therapeutics, Inc. - Chief Medical Officer [14]

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Yes, thanks for the question, Chris. First of all, from a sort of the methodology standpoint, we conducted an analysis. First of all, a large scale qualitative analysis is a survey of hundreds of allergists to understand the profile of their practice and at the same time what their responses were in terms of their eagerness to prescribe a product like this and how the current practice setup compared to that. And then we extrapolated that to be able to say, well, these are the sort of 3 or 4 key variables which then map that level of interest in the level of readiness and we are able to then extrapolate to the broader number of practices based on that.

And in terms of what does that practice setup look like. Well, the sort of the 4S model of framework that we are thinking about which is staffing, scheduling, space and support. And so from a staffing standpoint, clearly there needs to be the appropriate staffing setup, the right mixture of the allergists, nurses and office support to be able to administer the drug as they currently do with aeroallergy shots.

From a scheduling standpoint, understanding during the week how they would incorporate this into their practice, so would it be certain times during the day or would it be, for example, weekend clinics where they would set themselves up to be able to put children on this product. From a space standpoint, do they have an area, a waiting room, either a common waiting area or a specific individual waiting area they prefer where the child can be there for the prescribed observation period. And then from a support standpoint, what sort of things that need to be in place to make sure that they are able to help talk to the patients and the caregivers so that they understand the need to take the therapy as prescribed and to stay on the products with the up-dosing phase.

So that's what the 4S model is, the framework that we've been thinking through. And as we put together some of the solutions that are going to enable allergist, both in the initial 1,300 cohort, but also beyond that help children to be successful, that's the sort of model what we have in mind.

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Jayson Donald Alexander Dallas, Aimmune Therapeutics, Inc. - President, CEO & Director [15]

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What's also interesting, Chris, is that these tend to be practices where they are already doing relatively high throughput subcutaneous immunotherapy for predominantly aeroallergens. And if you think about that in the initial 6-month period, if you are going for subcutaneous immunotherapy for aeroallergens, you are having weekly visits for injections where they are one-on-one. It's biweekly and so our up-dosing period requires half as many visits in that 6-month period as are required for compared to subcutaneous immunotherapy.

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Christopher Joseph Raymond, Piper Jaffray Companies, Research Division - MD & Senior Research Analyst [16]

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That's great cause, thank you. And, I guess, maybe as a follow-up. So, I guess, as I hear you guys describe this, it seems to me like there is a very receptive market, right, for AR101. But that would -- if you are not paying attention to what you guys are describing and just reading some of the editorials, for example, there was The Lancet piece recently and even The New England Journal letter to the editor, there seems to be at least some degree of resistance to OIT, and it sounds like AR101 sort of gets lumped into that. So, I guess, maybe -- I don't want to put you on the spot, but maybe is this just a loud minority who have seem to get somehow a microphone with respect to this or what's your perspective here as to why these -- we are seeing some of these higher profile, yet limited in number, negative opinions on the whole concept?

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Daniel C. Adelman, Aimmune Therapeutics, Inc. - Chief Medical Officer [17]

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So this is Dan. I don't know what is the motivating factor. I can tell you that some of the things that they are pointing out are not unique at all to oral immunotherapy for food. These are the types of allergic reactions that one typically sees with any immunotherapy product.

Unlike any other drug, this is a drug where you're giving people the very thing that they're allergic to in order to desensitize them. You're going to provoke some allergic reactions. And those allergic reactions tend to happen at predictable times after the dosing. They are generally 99% mild or moderate in severity and they are readily manageable. And this is in contrast to the unpredictable nature and the unpredictable severity associated with accidental exposures.

And so, I'm -- I'd say, I don't really know what the motivating factors are, but I think that allergists who by and large are very comfortable with administering any type of immunotherapy, are going to have no problem managing AR101 desensitization treatments.

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Operator [18]

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The next question comes from Liana Moussatos of Wedbush Securities.

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Vasiliana Vireen Moussatos, Wedbush Securities Inc., Research Division - MD of Equity Research [19]

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Can you tell us the differences between treating patients for egg allergy and peanut? We've heard a lot about peanut and egg is new to us. So can you talk about some differences? And has Regeneron given you any idea about data timing for the combination of AR101 in dupilumab trial?

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Daniel C. Adelman, Aimmune Therapeutics, Inc. - Chief Medical Officer [20]

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So this is Dan. I'll answer the second one first. Regeneron is pretty tightlipped about giving any type of guidance. They are enrolling their study and when it is -- it is an 18-month study and it'll read out whenever they're done. I can't tell you what the date is going to be.

With regard to egg allergy in contrast to peanut allergy. So egg allergy is also a major food allergy, certainly here in the United States and in Europe. It is a –- and it is actually the #1 food allergy in Asia. Unlike peanut allergy where if you are 5 or 6 years old and you're peanut-allergic, you will be peanut allergic for life, whereas -- so about 80% of peanut-allergic children will have it for life. In contrast, with egg allergy, if you are allergic to eggs at 1 or 2 years old, by the time you're 15, 16, 17 years old, you have about an 80% chance of spontaneously resolving.

There are really 2 forms of egg allergy. There's egg allergy to the albumen, the raw egg white, and there's also allergy to baked egg products. And patients who are both raw egg and baked egg-allergic tend to be the more severe and refractory patients. We will be enrolling both groups in our Phase II study and we're going to be looking at the ability of AR201 to confirm meaningful desensitization in either population.

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Jayson Donald Alexander Dallas, Aimmune Therapeutics, Inc. - President, CEO & Director [21]

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And the clinical trial design, Liana, for our Phase II program is almost identical to the Phase II program for AR101. The only subtle difference, as Dan alluded to, is that there are 2 different kinds of egg allergy. And so we do 2 different kinds of food challenge test at entry and at the exit from the study.

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Daniel C. Adelman, Aimmune Therapeutics, Inc. - Chief Medical Officer [22]

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Right.

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Vasiliana Vireen Moussatos, Wedbush Securities Inc., Research Division - MD of Equity Research [23]

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And also I have a question for Eric because you kind of went out when you were talking about cash runway. How long does your cash last?

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Eric H. Bjerkholt, Aimmune Therapeutics, Inc. - CFO [24]

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Well, so what we've said is that between cash on hand and access to the remainder of the KKR cash is, assuming we're approximately correct with our internal forecast, the commercial launch of AR101 in both the U.S. and Europe and the funding of our pipeline as we currently conceive of it, should be covered.

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Vasiliana Vireen Moussatos, Wedbush Securities Inc., Research Division - MD of Equity Research [25]

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Is that like 2 years?

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Eric H. Bjerkholt, Aimmune Therapeutics, Inc. - CFO [26]

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That's like fully covered.

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Operator [27]

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The next question comes from Zegbeh Jallah of Roth Capital Partners.

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Zegbeh Claudel Jallah, Roth Capital Partners, LLC, Research Division - Director and Research Analyst [28]

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I just had a couple of questions here. So you mentioned that 6 clinical site inspections had been done in addition to an inspection of CoreRx. And I so wanted to know if you anticipate any additional inspections.

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Jayson Donald Alexander Dallas, Aimmune Therapeutics, Inc. - President, CEO & Director [29]

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It's Jayson. It's hard to know, FDA can, of course, do additional inspections, if they would like to. These are all the inspections that they have thus far informed us about. And there are no findings in those inspections that we think will impact either the likelihood or the timing of approval.

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Zegbeh Claudel Jallah, Roth Capital Partners, LLC, Research Division - Director and Research Analyst [30]

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Okay. And then just a follow-up to that. In terms of commercial or commercial capabilities or production there, I just kind of want to know, do you anticipate running into any issues or what are your production capabilities? And how quickly can these products get to patients?

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Andrew Oxtoby, Aimmune Therapeutics, Inc. - Chief Commercial Officer [31]

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So we are manufacturing our commercial lots, as we speak. In fact, we've already started releasing some of the lots and we'll have product available if and when we get approved by the FDA. And as we said, we'll be launch-ready in the fourth quarter. And that, of course, includes availability of product.

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Daniel C. Adelman, Aimmune Therapeutics, Inc. - Chief Medical Officer [32]

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Yes. Maybe to be a bit more specific, we think it'll take us 2 to 3 weeks to get product to patients once we've got approval.

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Zegbeh Claudel Jallah, Roth Capital Partners, LLC, Research Division - Director and Research Analyst [33]

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Perfect. And then just the last one here. In your discussion with payers, are you running into issues where they feel like married to what ISPOR published or you think they're not really referencing that in their conversations?

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Eric H. Bjerkholt, Aimmune Therapeutics, Inc. - CFO [34]

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Well, let me start by saying, no, they're really not referencing it at all in conversations. And just to add a little bit of perspective to the ISPOR report. So first of all, we were deemed cost-effective at both 150K per quality level and 100K per quality threshold as an output of the report.

To sort of put that in some sort of context, we looked at a recent Bernstein analysis that said that 20 out of 76 products that they had looked at across 24 different therapy areas, only 20 of those 76 were actually deemed cost-effective by ISPOR. So getting to the point where the ISPOR considers your drug to be cost-effective at those thresholds is a very uncommon and unusual thing. And so to be deemed cost-effective as an output of the report was encouraging.

Now that said, payers are focusing on that in any of our conversations. And as I look at the other aspects of that report, what I think was interesting was that ISPOR was talking about the fact that immunotherapy needed some -- to be specific, talked about promising, but inconclusive evidence ratings. And so we said from the very beginning, as did most people involved in the food allergy sphere, that the report itself was premature. And they seem to have sort of reinforced that by some of their conclusions by saying that it was still something where they needed to see some additional evidence.

And so we also provided, I should add, some information in confidence that was relating to some of the longer-term effects that Jayson and Dan alluded to earlier. And those were data and information they chose to not include in their model and were actually excluded. And so had they included that, then it would have been interesting to see if they would reach some of those same conclusion.

So summary statement is, we're pleased that we're considered to be cost-effective because that's something that rarely happens when products are being evaluated by ISPOR. And at the same time, it's not something that payers have been bringing up in conversations with us.

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Operator [35]

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The next question comes from Kennen MacKay of RBC Capital Markets.

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Justin Hayward Burns, RBC Capital Markets, LLC, Research Division - Senior Associate [36]

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This is Justin on for Kennen. Thanks for taking my question. Just sort of as you generate more of the extended maintenance dosing data out beyond one year, I was wondering how much of a focal point you expect that to be at the Advisory Committee Meeting in September? And additionally, how much of those data you've been detailing with payers and what are sort of some of the feedback that has been there? Thank you.

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Daniel C. Adelman, Aimmune Therapeutics, Inc. - Chief Medical Officer [37]

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Sure. So the rules of the game with the AdCom is that we really can only discuss data that have been presented in the BLA. And so we do have extended safety data that have been submitted to the BLA and we will include those in our conversations with the Advisory Committee. We're just not allowed to present data that hasn't already been reviewed by FDA.

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Eric H. Bjerkholt, Aimmune Therapeutics, Inc. - CFO [38]

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In terms of the conversations with payers, as we mentioned earlier, the profile of the product seems to improve over time and the data looks more and more interesting with subsequent readouts. The payers are interested in seeing that, but also because of the fact that they're interested in understanding what our solutions are to help patients stay on the therapy.

And so we've been talking with them about what it means to go through the up-dosing period, but then also the importance of staying on through the therapeutic dose and beyond so that patients can start to realize the benefits that come from the therapy and staying on longer and longer. And so it's -- they've been encouraging and obviously as the data becomes more available, we'll have further conversations about that.

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Jayson Donald Alexander Dallas, Aimmune Therapeutics, Inc. - President, CEO & Director [39]

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And the thing that's intriguing for us at the moment, both clinically and of course the payers is, given that we've already seen clinical evidence of immunomodulation of 18 months, most notably in the reduction in the skin prick test size, is that how long do we have to treat these patients before, if it happens some of them start going into clinical remission. And that's something that we'll see as we continue to follow this cohort over time. That is of course extraordinarily interesting to all involved.

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Operator [40]

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Our next question comes from Evan Seigerman of Credit Suisse.

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Unidentified Analyst, [41]

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This is [Adrian] on for Evan. Thanks for taking my question. I was wondering if you could provide any more color on what sort of cofactors you've seen in the totality of the AR101 data and is the expectation that we should expect a label with that either identifies or highlights these cofactors?

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Daniel C. Adelman, Aimmune Therapeutics, Inc. - Chief Medical Officer [42]

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So the – I'm assuming you're referring to the cofactors that are associated with some of the systemic allergic reactions. If that's the case, we certainly have identified those in our protocol because they are not unique to oral immunotherapy with a food product, but are rather the same cofactors that you see for every other form of immunotherapy.

And I don't know that we will certainly engage in conversation with the FDA. I don't know whether it will be in the label or if it is just part of the general knowledge and understanding of the allergy community.

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Jayson Donald Alexander Dallas, Aimmune Therapeutics, Inc. - President, CEO & Director [43]

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And when we think about indication, something I said earlier is really important and that is that however, we cut the data, every population who was treated in our clinical trial program benefits. And so our expectation is that there shouldn't be any limitation on the indication.

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Operator [44]

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Our next question comes from Paul Choi of Goldman Sachs.

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Corinne Jenkins, Goldman Sachs Group Inc., Research Division - Research Analyst [45]

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This is Corinne Jenkins on for Paul. We are just wondering, as you approach the commercial launch, if you've given any thought on partnerships or any sort of other like some partnering basically?

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Daniel C. Adelman, Aimmune Therapeutics, Inc. - Chief Medical Officer [46]

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So we've been very clear that our plan is to commercialize ourselves in the United States. And I think we've given it a little bit more color today to show that we are very ready to do that and continue our build out. With regards to other geographies, we are indeed open to partnerships, we have had some external interests over time. I think our hurdles are quite high because we want to make certain that the launch prep in these countries gets the attention it needs and we certainly wouldn't want to do a partnership that puts AR101 into an existing field force that hasn't been built specifically to launch into the allergist community.

And so what we're doing in Europe specifically at this point is initiating the own -– our own build out of a commercial organization. And if at some point, it's a partnership deal that really does make sense and that addresses our unique need to be tailor-built for allergist, then we would be happy to entertain that.

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Corinne Jenkins, Goldman Sachs Group Inc., Research Division - Research Analyst [47]

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Thanks. And then on the POSEIDON trial, the pediatric trial, can you just give us an update on how enrollment is progressing and how we might think about timing, especially for supplemental filing?

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Jayson Donald Alexander Dallas, Aimmune Therapeutics, Inc. - President, CEO & Director [48]

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So the study began enrolling patients and we continue to open study centers throughout the United States. And we anticipate that the study will be fully enrolled by probably the middle of next year sometime.

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Operator [49]

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Our next question comes from Derek Archila of Stifel.

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William Clifford Grau, Stifel, Nicolaus & Company, Incorporated, Research Division - Associate [50]

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Bill on for Derek. Can you guys just quickly give us some color on what your expectations are for real world adherence once you've launched? And then do you have any thoughts on how physicians might handle patients who go off therapy and then decide they want to return therapy? Will they have to start the up-dosing over again or will they be able to just start back on maintenance?

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Jayson Donald Alexander Dallas, Aimmune Therapeutics, Inc. - President, CEO & Director [51]

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I'll take the first bit. This is Jayson and I'll have Dan answer the second bit. So in terms of real world utilization and side effects, I think you're getting a little bit at how many patients are going to be successful through the up-dosing. We know in clinical trials, it was 8 out of 10 or 80% of patients. It's worth noting that in our clinical trials that we are so far presented data on that we did not allow the concomitant administration of antihistamines, nor did we allow the concomitant administration of PPIs or H2 blockers to reduce gastrointestinal events.

And additionally, we had some fairly tight guidance around up-dosing and trying to keep to about 2 weeks at each of the up-dosing levels. And all of those things will make a difference to the up-dosing period to be severity and occurrence of GI side effects and those mild allergic reactions that Dan talked about earlier.

So we anticipate that in the real world the data should be very similar to the clinical trials or potentially maybe even a little bit better. We'll have a better answer for that when we actually get the POSEIDON data because in the younger children, we are allowing the concomitant use of antihistamines to just really in a clinical trial setting see the difference that that makes.

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Daniel C. Adelman, Aimmune Therapeutics, Inc. - Chief Medical Officer [52]

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And as for the question about stopping and restarting, we have specific guidances we've built into our clinical protocols on how to adjust the dose based on how many days of missed dosing one had. And we have real -- I mean, we have empiric data on the success of that. We intend to include that in our proposed package insert. And those obviously will ultimately be the subject of discussions with the FDA as to how they show up in the package insert.

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Operator [53]

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I am showing no further questions at this time. I would now like to turn the conference back to Mr. Jayson Dallas.

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Jayson Donald Alexander Dallas, Aimmune Therapeutics, Inc. - President, CEO & Director [54]

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Thank you, Mayne, and thank you, everyone, for joining us this afternoon. We look forward to providing you with further updates on our progress in the future. And have a great evening, everyone.

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Operator [55]

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Ladies and gentlemen, this concludes today's conference. Thank you for your participation and have a wonderful day. You may all disconnect.