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Edited Transcript of ARQL earnings conference call or presentation 1-May-19 1:00pm GMT

Q1 2019 ArQule Inc Earnings Call

WOBURN May 5, 2019 (Thomson StreetEvents) -- Edited Transcript of ArQule Inc earnings conference call or presentation Wednesday, May 1, 2019 at 1:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Brian Schwartz

ArQule, Inc. - Chief Medical Officer & Senior VP

* Marc Schegerin

ArQule, Inc. - CFO, Head of Strategy & Treasurer

* Paolo Pucci

ArQule, Inc. - CEO & Director

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Conference Call Participants

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* Chad Jason Messer

Needham & Company, LLC, Research Division - Senior Analyst

* David Simms Ruch

SVB Leerink LLC, Research Division - Associate

* George B. Zavoico

B. Riley FBR, Inc., Research Division - Analyst

* Gregory James Renza

RBC Capital Markets, LLC, Research Division - Analyst

* Hartaj Singh

Oppenheimer & Co. Inc., Research Division - Research Analyst

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Presentation

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Operator [1]

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Good day, ladies and gentlemen, and welcome to ArQule's First Quarter 2019 Earnings Conference Call. (Operator Instructions) As a reminder, this conference may be recorded. I would now like to introduce your host for today's conference, Marc Schegerin, Chief Financial Officer. Sir, please begin.

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Marc Schegerin, ArQule, Inc. - CFO, Head of Strategy & Treasurer [2]

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Thank you very much. Good morning, everyone. Welcome to the ArQule investor conference call reviewing operational and financial results for the first quarter of 2019. I'm Marc Schegerin, Chief Financial Officer and Head of Strategy at ArQule.

This morning we issued a press release that reported results for the first fiscal quarter ended March 31, 2019. This release is available on our website at arqule.com. Leading the call today will be Paolo Pucci, Chief Executive Officer of ArQule. Also present from the company are Peter Lawrence, President and COO; and Brian Schwartz, Head of R&D.

Before we begin, please note that we will be making forward-looking statements as defined in the Private Securities Litigation Act of 1995. These statements will include among other things, projections regarding the timing of key events related to ArQule's proprietary pipeline, and financial guidance for 2019. Actual results may differ materially from those projected in the forward-looking statements due to numerous risks and uncertainties that exist in ArQule's operations, development efforts and the business environment, including those factors discussed in our reports on Forms 10-Q and 10-K and other documents filed with the Securities and Exchange Commission.

The forward-looking statements contained in this call represent the judgment of ArQule as of today. ArQule disclaims any intent or obligation to update any forward-looking statement except to the extent required by law. We'll provide an opportunity for Q&A at the end of this call.

I'd now like to introduce the CEO of ArQule, Paolo Pucci.

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Paolo Pucci, ArQule, Inc. - CEO & Director [3]

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Marc, thank you very much. Thank you all for joining us this morning for our first quarter call of the year. I would start by saying that during Q1, we have continued to implement our operational plans, just on track or better than expected. And would like to give you a little bit of an update of those -- that implementation.

So out of the work we have done, I will provide a couple of key updates upfront. In terms of call organization, I will provide an introduction. Then Brian will go in deep in the medical, clinical development update. Marc will go in-depth in the financials. And then we'll open it up for questions.

Given that we have a number of new investors that we have welcomed in the last few months, just a very brief table-setting introduction; we are -- we are pursuing right now 3 strategies that define our efforts for each of the 3 fully owned pipeline candidates that we are pursuing. In BTK-mitigated B-cell malignancies, with ArQule 531, we aim to be first and best in class for this new approach of reversible dual BTK inhibition.

In rare overgrowth spectrum disorders with miransertib, we aim to be first and best in class for Proteus syndrome and PROS as well. In hormone-sensitive solid tumors, with ArQule 751, we aim to be first follower and the next generation in the AKT class. Now the 2 updates upfront, we'll focus on ArQule 531, and I will focus then with a few words on miransertib in rare diseases.

The trial that we are conducting for ArQule 531 in B-cell malignancies, which is a Phase I dose-setting safety and signal generation, particularly in this later stage, has progressed very well. No issues whatsoever in recruiting and we're very, very happy with the way we're working with sites that are participating in this trial.

Briefly on safety, to set the table, on the safety side, as we announced previously, we expanded the cohort number 7. That was 65 milligram QD, and that cohort has now been completed for safety. You will recall that in that cohort, we observed our very first in the trial, dose-limiting toxicity in the form of a rash and that was one of the first 3 patients enrolled. As per the 3 by 3 protocol design, we expanded that cohort.

We have recently communicated that that cohort subsequently cleared and so having cleared cohort 7 for safety, we initiated cohort number 8 and we are already well on the way to dose the 6 patients that are foreseen to be enrolled in cohort number 8 at the dosage of 75 milligram QD. I'm happy also to report that thus far no additional DLTs have been observed in any other patient at any dose level.

Relative to clinical activity, I also have some incremental news to share. We continue to monitor approximately 6 patients that have been dose-escalated from 45 milligram to 65 milligram QD which was possible as soon as the 65 milligram QD cleared for safety. And we're also following approximately 6 patients that have been enrolled and other valuables still in cohort 7 at 65 milligram QD.

Previously, we have reported 2 PRs in this trial and I'm very happy to tell you that both patients continue on the trial and they're confirmed responders. Important is to remember that the first C41S patients that was a responder at 88% shrinkage in the first scan which we announced in the Q4 '18 call just a couple of months ago has since been rescanned and it is a confirmed responder. So we're beginning to see a little bit of durability as well in these responders.

Brian will give more detail in his part. We are very busy collecting right now and compiling data for our mid-June EHA presentation that will occur in Amsterdam at the European Hematology Congress. The dose-dependent effect on clinical activity that we began to detail with our ASH presentation of late last year and the data that at that point in time only included cohort 6 and not cohort 7 which is the one where we [attested] more extensively the highest dose deployed hold and so we can say that as we continue to move higher, we see a dose-dependent effect on clinical activity.

And therefore we're highly confident that we will show significant incremental clinical activity from cohort 7 in the [targetation] population in the -- of CLL C41S-mutated patients in our presentation at EHA. To my knowledge, there will probably be the largest number of C41S-mutated patients CLL that will be presented for a long, long time, I think the only such presentation -- there is no such presentation before the one we are going to give in EHA.

So relative to the data floor and to EHA, let me conclude by saying that the abstract that is made public recently for EHA was filed in February. And it does not include any of the data that we have discussed since during our Q4 call for 2018 and during this call. So you have to consider that the EHA data set will be very rich because you will include all the data that we will have -- be able to gather, compile and QA between mid-February and early June.

So that concludes my introductory remark for 531. Could not be more positive about this drug. I've been 30 years in this business and I have rarely seen drugs perform in this way in a Phase I trial. As a second update, I'm glad to report that although we are fully absorbed by the efforts in 531, current effort, but as well the effort to plan for the next stage trials, we in fact will have an advisory committee at EHA to discuss that with opinion leader from around the world. We have also been focusing on our rare disease strategy with miransertib. Those patients are in their need of therapeutic alternatives, particularly the Proteus patients, because they have none other than surgery.

And I think that is the need in that ultra-rare patient population. It's felt also by our collaborators and the IRBs. And in fact, there were a couple of very speedy reviews by IRBs of sites that will be involved in our registrational program for Proteus and PROS. And so I'm happy to report that we have received already the first conditional IRB approvals. And that puts us closer to initiating those registrational trials.

Brian and I have recently spent a week in Europe visiting the top opinion leaders for CLL as well as some of the key sites for rare disease with miransertib, and we have seen a lot of enthusiasm in wanting to participate in both programs.

So Brian now will give you a more detailed overview of how the clinical development programs are proceeding. Please, Brian.

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Brian Schwartz, ArQule, Inc. - Chief Medical Officer & Senior VP [4]

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Thank you Paolo. Let me start with ARQ 531 which is our potent and reversible dual inhibitor of both wild-type and C481S-mutated BTK. As a baseline, please recall that in the ASH poster, we reported anti-tumor activity with reduction in tumor burden observed in 9 out of 12 patients. Let me -- sorry, 9 out of 20 patients. Let me comment on how the clinical activity is evolving beginning with 2 patients that were previously reported as respondents. Patient number 1; a follicular lymphoma who began in cohort 1 at 5 milligram QD with dose escalated to 15 milligram and then to 45 milligram remains on therapy for 24 cycles, that's almost 2 years and continues as a PR.

Our second responder which we announced in our last call, patient 27, a CLL C481S-mutant patient who was first -- whose first evaluable scan in cohort 7 at 65 milligram QD received a second scan and continues as a confirmed PR. Regarding cohort 7, at the 65 milligram QD dose, a total of 6 CLL SLL patients with documented C481S mutation remain evaluable and have received at least 1 post-treatment scan and disease assessment. This includes the 1 patient already disclosed with the confirmed PR. We plan to provide a more detailed update at EHA which we expect will include more extensive safety data as well as significant incremental clinical activity data.

In total, 10 patients were enrolled in cohort 7, the 6 evaluable CLL patients just described; 2 patients, 1 MCL and 1 CLL patient were not evaluable for clinical activity. One DLBCL and another patient of particular interest, the first patient recruited with Richter's transformation who remains on study. Regarding the safety and dose escalation since ASH, ARQ 531 continues to be well-tolerated. As previously reported, cohort 7 was expanded to a total of 10 patients per protocol and subsequently cleared for safety. Consequently, we have been able to do 2 things. Escalate to 65 milligram QD, 5 out of the 6 eligible patients that were on therapy at 45 milligram QD; initiate dosing of an additional 6 patients in cohort 8 at 75 milligram QD of which 4 have already been dosed.

Let me move on to the pharmacokinetic data. This continues to be predictable with the mean plasma half-life which supports QD dosing. The pharmacodynamic biomarkers in cohort 7 continue to demonstrate profound BTK reduction of a 100%. In summary, we are pleased with the progress we continue to make with this trial and specifically the dose-dependent clinical activity that is emerging in the 65 milligram QD dose in heavily pretreated C481S-mutant CLL patients.

Lastly, let me just go through the new data that we are going to present at EHA. This will include 3 groupings of patients. The first group will include safety and some additional clinical activity data of approximately 6 patients who were dose -- who could be dose escalated from 45 milligram to 65 milligram QD. Safety and clinical activity data of 10 patients that have been enrolled in cohort 7 at 65 milligram QD. Included in this group are 6 CLL patients with a C481S mutation, who remain evaluable for response. And finally, initial safety data from the patients that are being enrolled in cohort 8 at 75 milligrams.

With that, let me move on to miransertib in rare overgrowth spectrum disorders. Miransertib is a potent and selective AKT inhibitor. Our objective is to be the first and best in class AKT inhibitor in Proteus syndrome and PROS family of rare overgrowth diseases. This family of diseases is an ultra-rare, very heterogeneous, and patients currently suffer from a dismal quality of life and early mortality. No systemic therapies have been approved for this patient population, and the only current therapy is surgery.

We have 2 main updates for this program. Firstly, we have received our first IRB conditional approvals and hope to enroll our first patient in the upcoming months. Our collaborators at Gemelli Hospital in Rome will be presenting an oral presentation at the [European Society of Human Genetic Conference] in Gothenburg in mid-June where we will highlight primarily our PROS patients. The registration program will consist of 1 protocol divided into 3 cohorts. The first cohort will focus on Proteus syndrome which will enroll at least 10 patients. The second cohort will focus on PROS family of overgrowth disorders, and will enroll at least 20 patients. And the third group will be a signal generation arm that will include patients from either group that do not qualify for cohorts 1 and 2, but otherwise deemed eligible to benefit from therapy.

These cohorts will be open label, and the primary endpoint will be response rate-driven based on objective, measurable criteria. We are currently enrolling additional sites and expect to begin dosing as soon as possible. With regards to our other programs, for ARQ 751, the next generation AKT inhibitor, the signal generation work in oncology continues in the Phase Ib study, and we plan to present data from this study in the second half of the year. For derazantinib, our FGFR inhibitor, our partners Basilea and Sinovant continue to implement their plans respectively for the registrational Phase II trial in intrahepatic cholangiocarcinoma and initiate the clinical efforts in China.

With that summary, I would like to turn it over to Marc to go over the financials.

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Marc Schegerin, ArQule, Inc. - CFO, Head of Strategy & Treasurer [5]

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Thank you, Brian. The company reported a net loss of $10.3 million or $0.09 per share for the quarter ended March 31, 2019, compared with the net loss of $6.5 million or $0.07 per share for the quarter ended March 31, 2018. As of March 31 of this year, the company had a total of approximately $92.2 million in cash, cash equivalents and marketable securities. Revenues in Q1 2019 were $1.3 million compared with revenues of $4.1 million in Q1 2018. Research and development revenue this quarter was comprised of $1.1 million of reimbursable clinical trial cost from our Sinovant licensing agreement and $0.2 million of revenue from reimbursable costs associated with our Basilea licensing agreement.

Research and development expense for Q1 2019 was $7.4 million compared with $5.8 million for Q1 2018. The $1.6 million increase was primarily due to higher outsourced preclinical, clinical and product development cost of $1.2 million and $0.4 million for labor-related and other research and development costs.

General and administrative expense was $4.3 million in Q1 2019 compared with $2.4 million in Q1 2018. The $1.9 million increase was primarily due to higher labor-related costs consisting of $1.3 million of nonrecurring executive retirement costs and $0.5 million of stock-based compensation cost. Our 2019 guidance has not changed, we continue to expect to end the year between $60 million and $63 million in cash, cash equivalents and marketable securities, revenues to range between $3 million and $5 million and a net loss ranging between $40 million and $43 million which translate to a net loss per share of $0.37 to $0.39.

With that I'd like to turn the call over to Q&A. Operator, please feel free to open the line for 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 Jonathan Chang of SVB Leerink.

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David Simms Ruch, SVB Leerink LLC, Research Division - Associate [2]

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This is David Ruch on for Jonathan. First question. Could you help set investor expectations for the EHA data in terms of the activity signals you'll be looking for? And how are you thinking about efficacy benchmarks in the faster market patient populations?

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Paolo Pucci, ArQule, Inc. - CEO & Director [3]

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So for the efficacy overall I go back to what I just say, we're highly confident that we'll show significantly incremental clinical activity, particularly from cohort 7 where -- which is the highest dose that we have tested so far if you exclude cohort 8, but cohort 8 is just beginning. So that's what we are expecting to show. We're highly confident that the clinical activity will be very interesting for investors as well as for the scientific community frankly. I know that this is an investors call, but we're talking about fairly high science as well, the 2 things go hand in hand obviously and they'll connect at EHA.

So we're looking forward to see everybody at EHA. We are also preserving the data set, so EHA because the totality of the data set, we believe will be highly informative for both investors and the scientific community. As far as the benchmark, it's not so clear to talk about benchmarks. Jonathan has recently published 1 where we -- some work in his newest release where he quotes two opinion leaders, if I remember well, that were talking about benchmarks. Those [benches] are sensible. The benchmarks depend on what we'll do next, so let's talk about what we might do next.

We may pursue second and third line CLL mutated patients. Second line as we described before would be patients that have received ibrutinib progress with the mutation, had seen venetoclax, received venetoclax or a combination thereof and were intolerant. Or third line there will be patients that have received venetoclax or combination of thereof, the mutation and have progressed. So in that case the natural benchmark will be whatever will have been seen in the previous line of therapy, right? That will be venetoclax and the benchmark will be somewhat below in terms of response rate what venetoclax has shown in that setting.

Obviously you have to differentiate for side-effects, you have to differentiate for this patient being more tested in a way and spent than they will be in second line et cetera, et cetera. If you are instead looking at what we could be doing in Richter's transformation, if we were to find a signal in Richter's transformation, well, that's a much easier benchmark because essentially most studies don't even -- ongoing, don't even include those patients which are consider among the hardest to treat and the one for which there is -- yes, the therapeutic need.

So that's as much as we can say. Obviously as our plans for the next steps get formed up, as we have discussion with regulatory authorities, we'll be more informative about the benchmarks we'll pursue which will ultimately be enshrined in clinical trial to pursue.

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David Simms Ruch, SVB Leerink LLC, Research Division - Associate [4]

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Great. And just one more from me. You previously guided to cohort 8 as being the final dose cohort for the Phase I study. Could you just talk a little bit more about why you believe this is the case and your reasons for confidence that you're closing in on a recommended Phase II dose?

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Paolo Pucci, ArQule, Inc. - CEO & Director [5]

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So first I need to correct your statement, sorry. It's not the final cohort, it's the last cohort that we are dosing. So not final, but last cohort that we are dosing. We add -- we could go to cohort 8 because cohort 7 cleared for safety and the number of other boxes checked, we will observe these patients. We're very young in the observation of these patients. Cohort 8, I have to be very specific, has not been cleared for safety yet. Hopefully will be cleared. Once that cohort is cleared, then we will look at the totality of our data and see what we do -- if that is going to be the last cohort or otherwise.

At the minimum if you assume that cohort 8 gets cleared for safety, it will help us identify a range -- a dose range. And so your question gives me the opportunity to clarify something. Cohort 7 at 65 milligram QD has already shown to be safe and has already shown to be efficacious and has already shown that 65 milligram is very much in line to what we had expected. Obviously if we were to present out of the cohort 7 patients that Brian detailed, more efficacy, along the lines of the 1 patient that we have already declared, the C481S patient that we declared to be a responder a couple of months ago that has been rescanned and continues a responder, well, then the cohorts that are on the dosage would look a very viable one to bring forward. But we have -- as I said, the data is developing, what we see so far is developing positively and we'll have to look at the data in its totality. We'll begin to do that at EHA.

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Operator [6]

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And our next question comes from Gregory Renza of RBC Capital Markets.

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Gregory James Renza, RBC Capital Markets, LLC, Research Division - Analyst [7]

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Yes, Paolo, I just wanted to get your view on how you are thinking about business development with respect to 531 as the cards are turning over there, but also as you comprehend your fuller portfolio of miransertib et cetera? And how have your views essentially been informed over time as the data directionally is heading in the right direction?

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Paolo Pucci, ArQule, Inc. - CEO & Director [8]

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Yes, you'll -- so Greg, excellent question. As we have shown in the past, we are always open for business for business development. Peter who's joining us today on the call, he's always by the phone and he takes the calls and we discuss with people. We are just a little bit selective in that we have one guiding principle that the partners we might end up working with need to help us to do incrementally more than we would have been able to do on our own considering our capital resources as well as importantly our organizational resources. If you follow that principle, then 751 in hormone-sensitive tumor is likely the drug where we would most benefit from embracing a partner.

Miransertib in rare diseases is actually something that we believe we could pursue on our own, and if anything a partner would come and play at a later time when one will want to expand geographically as much as possible commercial reach for the drug. 531, we are just fine doing on our own for now. As you could see we made good progress. We have a partner quite frankly, we have a partner in the James at Ohio State that help us guide us through the last 4 years I would say because this is a preclinical project that we share with them since 4 years ago. And they have provided to us that [hematoma] oncology expertise that we don't really have in our DNA because we were mostly during our 30 years of career on solid tumors. So a partner for 531 would have to be somebody that brings additional hematoma oncology expertise and would allow us to expand dramatically if the EHA data begins to give that sense, the program.

But for now we are -- so in that framework Peter takes the calls that come in. But for now we are counting on our own forces, our own organization, which however small has proven to be effective in the past and our own capital resources that quite frankly right now are sufficient to the operational plans I have in front of me for this year and the very early part of next. I hope that informs -- that gives you an answer of at least what the mindset is. Obviously I cannot go into more specifics.

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Gregory James Renza, RBC Capital Markets, LLC, Research Division - Analyst [9]

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That's great. That's very helpful. I really appreciate that. And just one quick one on the miransertib program, just to put a finer point -- I know it is somewhat of an extended but rapid the time line if you will on that the potential enrollment and developing the time on drug, I'm just curious with respect to that thing on generation cohort, would that be something that would see faster in Rome just as by nature of the filtering an exclusion of patients to find in the first registrational cohorts? And would that -- we potentially see data from that first and maybe just more generally how you would think about the data disclosures certainly in these open-label trials as those progress?

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Paolo Pucci, ArQule, Inc. - CEO & Director [10]

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Brian will answer that.

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Brian Schwartz, ArQule, Inc. - Chief Medical Officer & Senior VP [11]

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I think you bring up a really good point. See in our discussions with the agencies because of the large heterogeneity of the disease and the fact that they wanted a very hard endpoint, we would be excluding potentially a large number of patients that could benefit. So the FDA asked us almost to take each patient as a single case study so that once the drug gets approved, please God, physicians will be able to try and match up different baseline signs and symptoms to follow with the drug. So for example, in that expanded cohort, we would look at multiple endpoints and be able to help the physician in that expanded group look for specific endpoints to assess drug efficacy. In addition, quality of life, as you know is also really important and pain and other softer measurements, and that expanded cohort will give us the ability to pool the Proteus, the PROS and the expansion cohort and get sufficient data to evaluate quality of life with the standard quality of life tools. So it's really twofold, the sort of pick up all the heterogeneous groups that don't qualify for a hard measurement, and then to try and get as much data on safety and quality of life as we could.

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Paolo Pucci, ArQule, Inc. - CEO & Director [12]

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As for an optimal generation, we are still open for business although in more selectively with our compassionate use program. We know that if there is a family with a child affected by this disorder somewhere in the interior of Brazil is highly unlikely, and we have 1 as a matter of fact, or in the mountains of Peru, and we have another 1 there as well, it's hard for us to ever reach them with the clinical trials, even with the arm 3. And we believe we have an obligation to do the best we can, if there is a sponsor physician, reach those patients with some hope through our miransertib. So we are still open for business for that -- for -- and that will also continue to generate hopefully important signals for this -- for the use of miransertib in Proteus and PROS.

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Gregory James Renza, RBC Capital Markets, LLC, Research Division - Analyst [13]

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Great. Really appreciate it, and I look forward to EHA.

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Paolo Pucci, ArQule, Inc. - CEO & Director [14]

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As well. See you there.

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Operator [15]

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And our next question comes from Chad Messer from Needham & Company.

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Chad Jason Messer, Needham & Company, LLC, Research Division - Senior Analyst [16]

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And you got me very excited for EHA this year.

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Paolo Pucci, ArQule, Inc. - CEO & Director [17]

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Well, Chad, the data has -- if you look at our presentations, we present the 531 3 times. All of them are congresses last year. I think we said (inaudible), went to EHA and you were at EHA and went to ASH, then we gave 1 update only and then it's natural for us to go to EHA. And we're confident that the data will continue to look incremental. There is another month-and-a-half of data we need to collect in the Phase I trial obviously so that it's important, but, yes, we are excited about going to EHA as well, Chad. Sorry for that, let's go on with your question, please.

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Chad Jason Messer, Needham & Company, LLC, Research Division - Senior Analyst [18]

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Yes, I was just wanting for the one patient, the responder with the C481S mutation, you said it was a confirmed [CR]. I just wonder if you can disclose whether that response was deepening or is that something I'm going to have to wait for Amsterdam for?

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Paolo Pucci, ArQule, Inc. - CEO & Director [19]

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Yes, it will be in the presentation. We wanted to disclose that patents because obviously having disclosed it as a response -- as a responder, I think it's only fair that we also update on the status of that responder having disclosed that patient already. If had been non-confirmed responder we would have updated just as well because we think it's fair to do so given that the information on that patient was out. Turned out to be a responder. More details we'll provide in the presentation.

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Chad Jason Messer, Needham & Company, LLC, Research Division - Senior Analyst [20]

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Okay. Great, and then just on the miransertib...

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Paolo Pucci, ArQule, Inc. - CEO & Director [21]

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Brian, you want to add anything?

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Brian Schwartz, ArQule, Inc. - Chief Medical Officer & Senior VP [22]

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Yes. No, Chad, I mean just to remind everyone, in our last call we said there was a reduction in 88% of the size of that patient's lymph nodes and that continues to be in the same top of range.

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Chad Jason Messer, Needham & Company, LLC, Research Division - Senior Analyst [23]

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Okay. Great. And then just on miransertib, you commented that you've got some additional sites you're working with there. What is the target number of sites for that and what's the sort of geographical spread?

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Brian Schwartz, ArQule, Inc. - Chief Medical Officer & Senior VP [24]

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So the geographical spread is U.S.-focused because they have a network of hospitals, and then a number of countries in Europe and Latin America -- and really focused where there are centers of excellence treating. For example, in Italy, in Rome, in France, in Dijon, in Spain around Barcelona, so to focus on the centers of excellence and then to draw on the experience in the U.S. of the vascular normally geneticist that have a -- are forming a consortium at pretty much all the big pediatric hospitals in the U.S.

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Paolo Pucci, ArQule, Inc. - CEO & Director [25]

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Yes. And Brian and I, Chad, as we were saying, we were in Europe for about 10 days for 531, and for miransertib. I have to say 531 is fairly self-explanatory to everybody. You go to a top CLL opinion leader in Italy, Germany, or France, you show the data, they get it, no problem. It's easy to understand strategy, it's a very exciting scientific endeavor for them given that they're kind of tired working with the third, the fourth irreversible inhibitor. And they're more interested in, okay, what comes after those, and that's the dual inhibitors.

For miransertib, it's a little bit more mixed because some sites really fitted very well to the endeavor that we have in front of us. Some other site where Brian and I were very hopeful didn't fit nearly as well as we had hoped because they were mostly sites for surgery. And it turns out that some of those sites might have the patients, but we would have to organize a referral system so that those patients who get treated, because oftentimes the sites where the surgeons are perform don't have the extended team that would care for a patient holistically in a clinical trial. So in some sites, we have work to do. It's still a little bit early to give a specific number of site, but I would say that no fewer than -- 15?

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Brian Schwartz, ArQule, Inc. - Chief Medical Officer & Senior VP [26]

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We have 15 sites, yes.

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Paolo Pucci, ArQule, Inc. - CEO & Director [27]

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Yes, so no fewer than 15 to be precise right now it will be the answer.

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Chad Jason Messer, Needham & Company, LLC, Research Division - Senior Analyst [28]

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Okay. Great.

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Paolo Pucci, ArQule, Inc. - CEO & Director [29]

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But Chad, they might be spread because you'd have 3 sites in Italy; 2 sites in Australia; 1 site in Peru; 1 site in Brazil. So it's a significant logistical endeavor that we have in front of us. I don't want to sugarcoat.

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Operator [30]

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(Operator Instructions) Our next question comes from George Zavoico of B. Riley FBR.

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George B. Zavoico, B. Riley FBR, Inc., Research Division - Analyst [31]

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So you mentioned -- first question about the 531. You mentioned that you've got a 100% BTK reduction I guess in cohort 7. So obviously in cohort 8 you've got it as well. Are you thinking perhaps the duration of 100% reduction in activity will add to efficacy or just some sort of pharmacokinetic limit that you think will be sufficient for optimal efficacy?

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Brian Schwartz, ArQule, Inc. - Chief Medical Officer & Senior VP [32]

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I think, George, as we've mentioned before, we look at 3 separate things. Our PK which we've exceeded now at the 65 milligram comfortably that we know -- that based on the preclinical models we work. The second thing is we always wanted to make sure that we got a 100% BTK knockdown. And the [SA], we've always said the SA has a little bit of variability. In this last cohort, it's very strong, the knockdown. But we saw a good knockdown from a few cohorts earlier as well. But this one, it is looking as complete knockdown. I think the third piece which will guide the dosing now is the efficacy and that will go through with everyone around EHA.

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Paolo Pucci, ArQule, Inc. - CEO & Director [33]

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Yes. Another rationale for cohort 8 is it's purely clinical. And it is in the reminder we gave people today about having recruited and being treating the first Richter's transformation patients. We are well aware and so are the sites that we -- in outside trial that we work with, that we're tackling a monster there. Richter's transformation is a very bad condition for which there is not much available these days. And you can imagine that it's worthwhile prudently and we didn't reuse this. For us to try to get to a dose that might help us not only address the more common B-cell malignancies that are treated by these kind of inhibitors, but also those were the -- there has been failures. And the drug was selected among a number of drugs that we had as candidate for IND 4 years ago together with Dr. Byrd of Ohio State to have a profile in terms of kinase inhibition profile that might have utility for those kind of harder to treat malignancies. And now we are beginning to test that profile at doses that we judge are becoming relevant.

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George B. Zavoico, B. Riley FBR, Inc., Research Division - Analyst [34]

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That leads to my second question about Richter's transformation. You have 1 patient in so far with that condition. What are your plans or what are the hurdles you have to reach and cross over to be able to expand into more of Richter's patients? And would that be an expansion of the current trial? I imagine it would be.

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Brian Schwartz, ArQule, Inc. - Chief Medical Officer & Senior VP [35]

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So as you guys are aware, as soon as we get to the recommended Phase II dose, we'll expand into a number of cohorts based on OS use published data in Cancer Discovery, we saw efficacy in Richter's -- in the Richter's model. So we always wanted to test it. We were lucky enough to get a Richter's transformation patient in the Phase I dose escalation portion, and we'll share that data with you. But you're right, George, the hurdle for Richter's transformation is relatively low in the -- even in first or second line setting, and it could be a potential fast-to-market strategy as the survival is really short, the progression-free survival is really short in the [deck] patient population. So it's another potential fast-to-market opportunity behind our lead opportunity, the C481S-mutant group.

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George B. Zavoico, B. Riley FBR, Inc., Research Division - Analyst [36]

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And I imagine that Richter's patient failed ibrutinib or even second line or third line?

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Brian Schwartz, ArQule, Inc. - Chief Medical Officer & Senior VP [37]

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So he transformed, he was on -- he was in a number of therapies including ibrutinib for his CLL and then transformed and received R-CHOP and then progressed and then came onto the study.

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Paolo Pucci, ArQule, Inc. - CEO & Director [38]

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So that gives me the opportunity to say that although we are positive on the data right now, as of today, as of this minute, as it does developing. And our update today faithfully reflects what we have seen up to today. We remain here as well with some challenges. And one of the challenge is that the patients that are being recruited in the trial, being a Phase I trial, are still relatively heavily (inaudible). So we are probably -- as I've said in calls before, we're seeing -- any safety signal that we are seeing needs to be put in the context of those patients being spent physically through a number of (inaudible) therapies and being fixed forwards and such lines. And any efficacy that we are seeing also needs to be seen on the light -- in the light of the drug having to overcome a greater hurdle to show efficacy that we would normally have to overcome in a properly recruited trial with very strict inclusion [criterias]. But it's an opportunity for signal generation as well. And if the drug is stronger, he will come through.

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George B. Zavoico, B. Riley FBR, Inc., Research Division - Analyst [39]

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Very heavily treated patient clearly. And my final question, quick question, for the miransertib cohorts 1, 2, what's the age range that you're enrolling patients? How low were you going in age? How young?

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Brian Schwartz, ArQule, Inc. - Chief Medical Officer & Senior VP [40]

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So for Proteus syndrome, it's 2 to 18 because based on the NIH data, that's when the growth of the CCTNs have been well-documented. And then for PROS disease, it's 2 to 30 because that is based on the PROS studies conducted before.

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Operator [41]

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And our next question comes from Hartaj Singh of Oppenheimer.

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Hartaj Singh, Oppenheimer & Co. Inc., Research Division - Research Analyst [42]

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I apologize if you might have -- just you might have addressed these questions already, so I apologize. One is, Paolo, Brian, I know that post-ASH we had talked about you'd had the first scan done, you had 9 patients at that time with significant tumor shrinkage. You're planning on the second scan in the second quarter. Can you just walk us through a little bit of just how you -- sort of how that works? How many more patients you're scanning in that second quarter? How much more duration you are seeing? And what portion of that will make (inaudible)? And then I just have a follow-up question on just what you're thinking about in terms of dose expansion?

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Paolo Pucci, ArQule, Inc. - CEO & Director [43]

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So we have indeed updated, but let me repeat for everybody, cohort 7 specifically at 65 milligram QD, and I'm reading from my script, the total of 6 CLL SLL patients all with C481S mutation remain available and they have received at least 1 post-treatment scan and disease assessment. This includes already the confirmed PR and that's as much detail as we provided today in our script (inaudible). So go ahead, Brian.

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Brian Schwartz, ArQule, Inc. - Chief Medical Officer & Senior VP [44]

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So in addition to those 6 (inaudible), we will present the entire cohort will incorporate the Richter's patient, another DLBCL and MCL, and the patient who we declared to have the DLT. In addition to that, the patients who were on 45 milligram that we presented at ASH, who had been dose increased and will all have received a disease assessment, we now scanning the long-term patients every 6 months, so some of the really long-term patients may miss the scan between -- I think there's only risk of 1. Every other one will have at least another scan in the data set, but the majority will receive at least one scan.

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Paolo Pucci, ArQule, Inc. - CEO & Director [45]

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And I think that that's whatever we will have been able to QA, by the time of the presentation, we'll present. What will have not been QAed we will not present.

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Hartaj Singh, Oppenheimer & Co. Inc., Research Division - Research Analyst [46]

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Great. That's fantastic. I mean EHA and ASH are going to be both very exciting this year for you all. The second question I had was just in terms of I think that ASH had also given some color around the number of prior therapies, I mean you were seeing very heavily pretreated patients -- 7 lines I believe the CLL patients (inaudible) with lymphoma, and then you'd also talked about maybe how you could address about getting into a third line kind of setting. Is that something that you'll look to do in the dose expansion that you could stratify patients by the line they'll -- of that they're getting of treatment and so you'll get more data again, to identify more fast market opportunities?

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Brian Schwartz, ArQule, Inc. - Chief Medical Officer & Senior VP [47]

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I think these 2 things, Hartaj, as we've moved through the trial, there are some patients that are now third line, so a little bit better patients have come in. But the vast majority are on numerous lines of therapy. The second thing is -- there's 2 things; one, you would always like to get much earlier patients, but if that data in the later setting looks really good, we would have to discuss with KOL how we deal with prior lines of therapy, and how we deal with when they got the prior -- how far away from ibrutinib the patients were -- oral ibrutinib the patients were treated. But in -- our current feeling is that the earlier we can get the patients, the greater likelihood we're going to see higher clinical efficacy.

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Hartaj Singh, Oppenheimer & Co. Inc., Research Division - Research Analyst [48]

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Yes. No, that makes sense, Brian. Then just my last question is in terms of whether at EHA or at ASH there have been some therapies, more recently approved venetoclax, maybe you might even see some patients might be getting some form of CAR-T or something, would you break that out so that we'll see aside from the regular standard of care, we could also see responses by patients who are on some of the more newer approved therapies?

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Brian Schwartz, ArQule, Inc. - Chief Medical Officer & Senior VP [49]

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Yes, we will be able to say some of that in the EHA poster for sure. You're always limited in how much you can actually say in those quick presentations, but we will try and give color on that. I must say CAR-T, we haven't seen any patients that have gone through CAR-Ts. I think we've seen 1 or 2 box specifics, but no one with CAR-T. And then as illustrated in the ASH poster, we've seen a fair number with prior venetoclax. So it's a real mix right now, Hartaj. My experience in dealing with these type of trials, as clinical data come, so it's easier to convince investigators to treat patients earlier in an earlier setting, so I think it's going to come quite nicely.

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Hartaj Singh, Oppenheimer & Co. Inc., Research Division - Research Analyst [50]

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Great update. Looking forward to EHA.

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Paolo Pucci, ArQule, Inc. - CEO & Director [51]

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You're welcome.

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Operator [52]

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And at this time I have no other callers in the queue for questions. I'd like to turn the call back over to Marc for closing remarks.

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Marc Schegerin, ArQule, Inc. - CFO, Head of Strategy & Treasurer [53]

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Thanks very much. That concludes today's call. Thanks, everyone, for joining.

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Operator [54]

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Ladies and gentlemen, thank you for your participation in today's conference. You may disconnect. Everyone, have a wonderful day.