U.S. Markets open in 5 hrs 45 mins

Edited Transcript of DCPH.OQ earnings conference call or presentation 4-Nov-19 9:30pm GMT

Q3 2019 Deciphera Pharmaceuticals Inc Earnings Call

Nov 15, 2019 (Thomson StreetEvents) -- Edited Transcript of Deciphera Pharmaceuticals Inc earnings conference call or presentation Monday, November 4, 2019 at 9:30:00pm GMT

TEXT version of Transcript

================================================================================

Corporate Participants

================================================================================

* Jennifer Robinson

Deciphera Pharmaceuticals, Inc. - VP of IR

* Matthew L. Sherman

Deciphera Pharmaceuticals, Inc. - Executive VP & Chief Medical Officer

* Steven L. Hoerter

Deciphera Pharmaceuticals, Inc. - President, CEO & Director

* Thomas Patrick Kelly

Deciphera Pharmaceuticals, Inc. - Executive VP, CFO & Treasurer

================================================================================

Conference Call Participants

================================================================================

* Arlinda Anna Lee

Canaccord Genuity Corp., Research Division - Analyst

* Christopher Joseph Raymond

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

* Eun Kyung Yang

Jefferies LLC, Research Division - MD & Senior Equity Research Analyst

* Jackson Dean Harvey

Nomura Securities Co. Ltd., Research Division - Research Analyst

* Jessica Macomber Fye

JP Morgan Chase & Co, Research Division - Analyst

* Reni John Benjamin

JMP Securities LLC, Research Division - MD & Senior Research Analyst

* Yue-Wen Zhu

Guggenheim Securities, LLC, Research Division - Associate

================================================================================

Presentation

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

Good day, everyone, and welcome to the Deciphera Pharmaceuticals Third Quarter 2019 Financial Results Conference Call. Today's call is being recorded.

At this time, I would like to turn the call over to Jen Robinson, Vice President, Investor Relations. Jen?

--------------------------------------------------------------------------------

Jennifer Robinson, Deciphera Pharmaceuticals, Inc. - VP of IR [2]

--------------------------------------------------------------------------------

Thank you, Blue. Welcome, and thank you to those of you joining us today to discuss Deciphera's Third Quarter 2019 Financial Results. I'm Jen Robinson, Vice President, Investor Relations at Deciphera.

With me this afternoon to discuss the quarter's results and provide a general corporate update is Steve Hoerter, President and Chief Executive Officer; Matt Sherman, Chief Medical Officer; and Tucker Kelly, Chief Financial Officer.

Before we begin, I would like to remind you that any statements we make on this call that are not historical facts are forward-looking statements reflecting the current beliefs and expectations of management made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Examples of forward-looking statements made during this conference call include the status of, and our expected time lines for, our preclinical and clinical studies and preparations for a potential NDA submission.

Forward-looking statements made on this call involve substantial risks and uncertainties that could cause actual results to differ materially from those expressed or implied by the forward-looking statements, and we cannot assure you that our expectations will be achieved. Such risks and uncertainties include the execution of clinical trials, the timing of data, the actions of regulatory agencies, and those set forth in our most recent quarterly report on Form 10-Q as well as our other SEC filings. We assume no obligation to update or revise any forward-looking statements.

Following this call, a replay will be available on the company's website, www.deciphera.com.

With that, I will now turn the call over to Steve Hoerter, President and Chief Executive Officer of Deciphera. Steve?

--------------------------------------------------------------------------------

Steven L. Hoerter, Deciphera Pharmaceuticals, Inc. - President, CEO & Director [3]

--------------------------------------------------------------------------------

Thank you, Jen, and good afternoon to everyone who's listening on the call and joining via the webcast. I'd like to welcome all of you to our first conference call to provide a general corporate update and financial results.

We have made significant progress across the entire pipeline over the last quarter. Most importantly, we announced positive results from our INVICTUS pivotal Phase III study of ripretinib for the treatment of advanced gastrointestinal stromal tumors, or GIST. These data mark a transformative milestone for Deciphera, representing our first registration-enabling data set, and importantly, strong clinical validation of our proprietary kinase switch control inhibitor platform and the potential for our product candidates to improve the lives of people with cancer.

For people living with GIST whose disease has progressed after treatment with the currently approved drugs, there is an urgent unmet need for new therapies that can deliver effective disease control. We believe ripretinib has demonstrated the potential to transform the GIST treatment landscape and serve as an effective therapy for this heavily pretreated patient population.

Today, we announced that the FDA has granted ripretinib Breakthrough Therapy Designation for the treatment of patients with advanced GIST who have received prior treatment with imatinib, sunitinib and regorafenib. We look forward to our continued very collaborative dialogue with the agency as we work toward our submission of a New Drug Application, or NDA, for ripretinib, which we continue to expect to submit in the first quarter of 2020.

As we ready ourselves for the potential transition from a development stage to a commercial stage company, we are focused on building out our commercial and medical affairs capabilities. We are committed to ensuring that we're well positioned to support the planned launch of ripretinib in the United States, if approved, and we look forward to updating you on these efforts in the coming months.

Beyond ripretinib, we have a diverse and exciting pipeline of wholly-owned oral product candidates spanning all stages of development, and all generated from our proprietary kinase switch control inhibitor platform. These include DCC-3014, rebastinib and DCC-3116.

At the AACR-NCI-EORTC, or so-called triple meeting last week in Boston, we presented updated data from all of our pipeline programs. To review these programs in greater detail, I'd now like to introduce Matt Sherman, our recently appointed Chief Medical Officer. Matt brings over 25 years of experience as a physician scientist in clinical drug development in oncology and hematology, most recently, as Chief Medical Officer of Acceleron. In just a short period of time, Matt has already made important contributions to Deciphera, and I look forward to working alongside him and the rest of the team here as we advance our pipeline.

I'll now turn the call over to Matt for an overview of recent program updates. Matt?

--------------------------------------------------------------------------------

Matthew L. Sherman, Deciphera Pharmaceuticals, Inc. - Executive VP & Chief Medical Officer [4]

--------------------------------------------------------------------------------

Thank you, Steve. It is truly an honor to have joined Deciphera at this exciting time. Deciphera's proprietary kinase switch control platform has generated robust pipeline of novel kinase inhibitors spending late-stage to preclinical development, all of which are designed to address unmet need in difficult-to-treat cancers.

I am grateful for the opportunity to help advance and shape these programs to deliver much needed novel therapies to patients, and look forward to working alongside such a deeply knowledgeable and impressive team.

I would now like to give an overview and provide an update on our pipeline programs starting with ripretinib. Before we get into the data, it is important to put the GIST population into perspective.

KIT mutations comprise approximately 8% of both primary and secondary mutations. An estimated 4,000 to 6,000 new patients are diagnosed with GIST in the U.S. each year. The majority of which receive imatinib in the frontline setting. Resistance develops, which is generally due to the emergence of secondary mutations in the KIT gene. After imatinib, patients move to treatment with sunitinib in the second-line and regorafenib in the third-line setting. There are currently no approved therapies for patients who have received prior treatment with these 3 drugs. We believe the ripretinib data from the INVICTUS study and the ongoing Phase I study demonstrate potential for ripretinib to transform the post-imatinib treatment landscape.

The INVICTUS study achieved its primary endpoint of improved progression-free survival, or PFS, with a median PFS of 6.3 months in the ripretinib arm compared to 1 month in the placebo arm with a p-value of less than 0.0001. Ripretinib significantly reduced the risk of disease progression or death by 85%, with a hazard ratio of 0.15. For the key secondary endpoint of objective response rate, or ORR, ripretinib shows a rate of 9.4% compared with 0% for placebo with a p-value of 0.0504, which was not statistically significant.

Ripretinib also showed a clinically meaningful improvement of overall survival, or OS, versus placebo, with a median OS of 15.1 months versus 6.6 months for placebo, a hazard ratio of 0.36 and nominal p-value of 0.0004.

OS was not formally tested due to the hierarchy of the statistical plan. Additionally, ripretinib was generally well tolerated and the adverse events in the INVICTUS study were consistent with data from previously presented Phase I results. Grade 3 or 4 treatment-emergent adverse events greater than 5% of patients in the ripretinib arm were anemia, abdominal pain and hypertension, and in the placebo arm, anemia. We believe these efficacy and safety data are highly impressive, particularly the magnitude of benefit observed for overall survival, and suggest that ripretinib's approach of targeting the broad spectrum of mutations known to drive GIST can improve outcomes in the most heavily pretreated patients.

We expect to submit an NDA to the FDA in the first quarter of 2020 for ripretinib for the treatment of patients with advanced GIST. We look forward to actively working with the agency on our goal to deliver this potential treatment option to patients.

Turning to the triple meeting that took place last week. We reported positive updated results from the ongoing Phase I study of ripretinib and GIST patients with a starting dose of 150 milligrams daily. We are very pleased with how the results have matured and with an additional 5 months of data across all lines of therapy and all measures of clinical activity as assessed by the investigator.

In particular, I would like to highlight the data from the cohort of 31 patients in second-line GIST, which is the same patient population that is the subject of our ongoing second randomized Phase III trial INTRIGUE.

Median PFS increased to 46 weeks, confirmed ORR was 19% with a median duration of response of 80 weeks. As you will recall, published data from centrally read pivotal trials for sunitinib, the standard of care in second-line GIST, demonstrated the median PFS of 24.1 weeks and the confirmed ORR of 6.8%.

In addition, the mean ripretinib treatment duration, which includes patients that were dose escalated, increased across all lines of treatment, with the longest treatment duration of 142 weeks. Ripretinib was generally well tolerated, and the updated adverse events were consistent with previously presented Phase I data in patients with GIST. Grade 3 or 4 treatment-emergent adverse events in more than 5% of patients were an increase in lipase level, anemia and abdominal pain. We believe these data, along with the INVICTUS data, continue to support the ongoing INTRIGUE Phase III pivotal study in second-line GIST. We are making great progress activating sites and enrolling patients in this study, and we currently have 92 sites open in 18 countries.

I'd like to spend some time now walking through our other programs beyond ripretinib in GIST. First, DCC-3014 is our orally administered, potent and highly selective inhibitor of the CSF1 receptor or CSF1R. 3014 was designed to selectively bind to the CSF1R switch pocket and has a greater than 100-fold selectivity for CSF1R over the closer related kinases, and has an even greater selectivity for CSF1R over approximately 300 other human kinases.

The 3014 is currently being evaluated in a multicenter open-label Phase I clinical study in patients with advanced solid tumors, including patients with tenosynovial giant cell tumors, or TGCT.

Our initial focus for 3014 is on TGCT. This disease is driven by genetic mutation in certain cells within the tumor, causing an overproduction of CSF1, the ligand for CSF1R. TGCT is a locally aggressive tumor of the synovium, bursa or tendon sheath that has significant morbidity for patients.

The only approved systemic therapy is pexidartinib, a small molecule inhibitor of CSF1R, which was approved in August and is subject to a REMS program due to hepatotoxicity. We believe that 3014 has the potential to fulfill the unmet medical need for a more effective treatment with a favorable safety profile for TGCT patients.

Last week, at the triple meeting, we presented Phase I data of 3014 from 7 dose cohorts across 36 patients with advanced solid malignancies. The data demonstrated dose proportional exposure for 3014 that was associated with an increase in plasma, CSF1 and IL34 levels, a rapid and sustained reduction of CD16 positive monocytes in peripheral blood and substantial decreases in CD163 positive macrophages in tumor. 3014 has been generally well tolerated and most treatment-emergent adverse events were Grade 1 or 2. The most common treatment-related adverse events greater than or equal to 10% were fatigue, diarrhea and nausea. Grade 3 or 4 treatment-related adverse events occurred in 4 patients, which were an increase in AST, an increase in lipase, an increase in amylase and colitis. There were no related serious adverse events.

Dose escalation evaluation is ongoing to determine a recommended Phase II dose for advanced solid tumors in TGCT. Currently, we have not reached the maximum tolerated dose for 3014.

We look forward to presenting preliminary Phase I data from a small group of initial TGCT patients at the upcoming Connective Tissue Oncology Society, or CTOS, Annual Meeting in Tokyo, Japan.

Turning now to rebastinib, our potent small molecule designed to inhibit TIE2 kinase expressing macrophages or TEMs. TEMs are known to promote tumor angiogenesis, invasiveness, metastasis and immunotolerance. Rebastinib is currently being evaluated in the Phase Ib/II study in combination with paclitaxel, and also in the Phase Ib/II study in combination with carboplatin. The Phase Ib/II study of rebastinib -- the Phase Ib/II study of rebastinib in combination with paclitaxel in patients with advanced and metastatic solid tumors is an open-label, multicenter study designed to evaluate the safety, tolerability and pharmacokinetics. Data reported at the triple meeting was from Part I of the study, which enrolled 43 patients, including 24 patients from the rebastinib 50-milligram BID cohort and 19 patients from the 100-milligram BID cohort. Exposure to rebastinib was disproportional when given in combination with paclitaxel and mean circulating angiopoietin 2 levels increased with exposure to higher doses of rebastinib indicating TIE2 inhibition.

Importantly, the Phase I data demonstrated encouraging preliminary antitumor activity in both dose cohorts, with objective responses seen across a heavily pretreated patient population, including patients with prior exposure to paclitaxel. Most patients received more than 3 prior treatments. And the median number of prior therapies was 4.5. Confirmed and unconfirmed responses were seen in 8 patients, including 3 ovarian, 2 breast, 2 carcinosarcoma and 1 peritoneal mesothelioma. 5 of these responses were in the 15-milligram BID dose cohort and 3 were in the 100-milligram BID cohort. 7 of these 8 responding patients had prior therapy with paclitaxel or docetaxel.

Rebastinib in combination with paclitaxel was generally well tolerated with similar frequency of treatment-emergent adverse events between the 2 dose cohorts. Most treatment-emergent adverse events were consistent with the first-in-human study of rebastinib are known to be associated with paclitaxel treatment.

Part II of the study is ongoing and is a Simon 2-stage design with 4 expansion cohorts in triple-negative breast cancer, inflammatory breast cancer, ovarian cancer and endometrial cancer. The recommended Phase II dose is 50 milligrams BID. We are encouraged by the early signs of activity in the study, and look forward to providing additional updates in the future.

Finally, earlier this year, we announced the addition of DCC-3116 to our pipeline. 3116 is a potential, first-in-class small molecule designed to inhibit autophagy by selectively targeting the ULK1 and 2 kinases. This family of kinases initiates autophagy and provides the potential for a targeted approach by selective inhibiting autophagy in RAS mutant cancers. Autophagy is a cellular pathway that has been shown to be upregulated in mutant RAS cancers and mediates resistance to inhibitors of a RAS signaling pathway.

Preclinical data presented last week at the triple meeting showed that 3116 is a potent, selective and tight binding inhibitor of the ULK kinase.

Subject to favorable investigational new drug enabling studies and submission and activation of an IND application with submission expected in the middle of 2020, we intend to develop 3116 with a potential treatment of mutant RAS cancers in combination with MAP kinase inhibitors.

In summary, we, at Deciphera, are excited to have an extensive pipeline of potentially paradigm-shifting molecules, spanning across various stages of development. While we are proud of the progress we have made with ripretinib as we near the expected NDA submission for the treatment of advanced GIST, we remain focused on the opportunities at hand in 3014, rebastinib and 3116 as well as other discovery programs that we have not yet disclosed.

I will now turn the call over to Tucker to review the financial results from this quarter.

--------------------------------------------------------------------------------

Thomas Patrick Kelly, Deciphera Pharmaceuticals, Inc. - Executive VP, CFO & Treasurer [5]

--------------------------------------------------------------------------------

Thanks, Matt. Let me take just a minute to discuss a few highlights from our third quarter 2019 financial results.

First, following the positive top line results for INVICTUS, in August, we completed a very successful follow-on public offering that raised approximately $432 million in net proceeds, money which will help us fund our expected transition to a commercial company and support the continued development of our expanding pipeline of novel switch control inhibitors.

With the net proceeds of the public offering, we had cash, cash equivalents and marketable securities of approximately $635 million as of September 30, 2019, which we expect will be sufficient to fund our operations and CapEx requirements into 2022.

In the third quarter of 2019, our total operating expenses were $58.4 million, an increase of $10.4 million from the second quarter of 2019.

Research and development expenses were $40.4 million, and general and administrative expenses were $18 million for the third quarter.

We expect our expenses to continue to grow over the coming quarters as we continue to build our commercial organization and expand our clinical development activities.

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

--------------------------------------------------------------------------------

Steven L. Hoerter, Deciphera Pharmaceuticals, Inc. - President, CEO & Director [6]

--------------------------------------------------------------------------------

Thank you, Tucker. We've made significant progress across the company and across the pipeline over the last few months and are preparing for what will be an exciting year ahead. We remain on track to submit the ripretinib NDA in the first quarter of next year for the treatment of patients with advanced GIST, and we continue to drive forward with rapid site opening and patient enrollment for our INTRIGUE study, where we're comparing ripretinib to sunitinib in patients with GIST who have received prior treatment with imatinib.

The rest of our clinical stage pipeline is now coming into view, and we look forward to advancing these programs and providing additional meaningful updates in the year ahead.

Before opening the call for questions, I'd like to thank the patients, their caregivers and the physicians who have participated in our clinical trials, and the amazing team here at Deciphera for their hard work and dedication to making a difference for patients.

With that, operator, I'd like to open the call for questions.

================================================================================

Questions and Answers

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

(Operator Instructions) Your first question comes from the line of Jessica Fye from JPMorgan.

--------------------------------------------------------------------------------

Jessica Macomber Fye, JP Morgan Chase & Co, Research Division - Analyst [2]

--------------------------------------------------------------------------------

I had a couple. First, are there any remaining deliverables on the manufacturing side that are gating for the filing of ripretinib? And if so, can you talk about what they are?

And then second, for Tucker, you mentioned that OpEx would continue to grow. Can you think of -- can you help us think about how do you -- you had a project that kind of help us think about the magnitude of growth. I'm assuming most of it is R&D driven.

--------------------------------------------------------------------------------

Steven L. Hoerter, Deciphera Pharmaceuticals, Inc. - President, CEO & Director [3]

--------------------------------------------------------------------------------

Jess, it's Steve, I'll take the first part of the question and then turn it over to Tucker to address the other question that you asked.

There's a lot of work ongoing across the company, really, as we prepare for the NDA, and that's really across each and every one of the modules, including CMC. So there's not anything specific that I would call out on CMC that would stick out as a gating item. There's really work across all of the modules that the team is preparing for that filing to go in, in Q1 of 2020.

--------------------------------------------------------------------------------

Thomas Patrick Kelly, Deciphera Pharmaceuticals, Inc. - Executive VP, CFO & Treasurer [4]

--------------------------------------------------------------------------------

Jess, this is Tucker. On the financial side, what I'd say is that the third quarter obviously included both the completion of INVICTUS as well as the ramping up on INTRIGUE, which is a larger study than INVICTUS. So those clinical costs will carry over, particularly on INTRIGUE, into the next few quarters in 2020, as well as the continued development of the other pipeline assets. So rebastinib and 3014 will have increased expenses, particularly with rebastinib as we move through Part I and into Part II of those combination studies with paclitaxel and carboplatin.

So you're right that a lot of the increase in spend going forward will be on the R&D side. In addition, we are scaling up to meet the potential commercial requirements of having a sales force in commercial infrastructure. So those will hit on the G&A side. And we'll be judicious but ready in terms of hiring sales force at the appropriate time.

--------------------------------------------------------------------------------

Jessica Macomber Fye, JP Morgan Chase & Co, Research Division - Analyst [5]

--------------------------------------------------------------------------------

Okay, great. And then just the last one on the Expanded Access Program, will that be open to patients who have seen any number of prior therapies for GIST or just those who have seen 3 prior lines of therapy? And I'm wondering if you can talk about how many centers you plan to include in the extended access.

--------------------------------------------------------------------------------

Steven L. Hoerter, Deciphera Pharmaceuticals, Inc. - President, CEO & Director [6]

--------------------------------------------------------------------------------

Yes. Thanks, Jess, for the question on the EAP. So we're excited to get that open. So we expect that we'll have over 150 patients globally on that EAP. That's what we're planning for. In terms of sites, we would expect in the U.S. somewhere in the range of 20 sites, and we're planning on globally around 20 -- over 20 different countries that would participate in that EAP.

In terms of eligibility for the EAP patients, of course, need to have locally advanced unresectable or metastatic GIST and have received prior treatment with at least 2 prior FDA approved therapies.

--------------------------------------------------------------------------------

Operator [7]

--------------------------------------------------------------------------------

Your next question comes from the line of Chris Raymond from Piper Jaffray.

--------------------------------------------------------------------------------

Christopher Joseph Raymond, Piper Jaffray Companies, Research Division - MD & Senior Research Analyst [8]

--------------------------------------------------------------------------------

I just wanted to clarify on one of the questions that you just answered from the last question. Question about -- just on Breakthrough Designation status for ripretinib. So I think I heard you say, Steve, that you're going to submit all the modules at the same time. So I think last time I heard you guys talking about it, there was an option for doing a rolling submission. So should we assume that, that's -- that you're not going to do that? It will be a regular submission?

--------------------------------------------------------------------------------

Steven L. Hoerter, Deciphera Pharmaceuticals, Inc. - President, CEO & Director [9]

--------------------------------------------------------------------------------

Chris, thanks for the question. So you're right, with Fast Track Designation, which we disclosed earlier in the year, that provided us with an option of initiating a rolling submission. And so on the call today, we're not changing our guidance or providing any additional color around that. We'll work with the FDA now with Breakthrough Therapy Designation for ripretinib to get the file in as expeditiously as possible. And our guidance remains that we would have that file completed in quarter 1 of 2020.

--------------------------------------------------------------------------------

Christopher Joseph Raymond, Piper Jaffray Companies, Research Division - MD & Senior Research Analyst [10]

--------------------------------------------------------------------------------

Okay. So it could still be a rolling submission, is that correct?

--------------------------------------------------------------------------------

Steven L. Hoerter, Deciphera Pharmaceuticals, Inc. - President, CEO & Director [11]

--------------------------------------------------------------------------------

Yes, we're not providing any further detail in terms of whether it would be a rolling submission or not a rolling submission.

--------------------------------------------------------------------------------

Christopher Joseph Raymond, Piper Jaffray Companies, Research Division - MD & Senior Research Analyst [12]

--------------------------------------------------------------------------------

Got it. Okay. And then just on the INTRIGUE study. So we just recently learned that your competitor, avapritinib second-line COMPASS trial was pushed back pretty meaningfully. And I know it's early days, but just curious, have you gotten any early feedback from your enrolling physicians with respect to potential dynamics there? I mean one should assume that that's perhaps a plus in terms of enrollment dynamics, but just kind of curious if you've gotten any early feedback.

--------------------------------------------------------------------------------

Steven L. Hoerter, Deciphera Pharmaceuticals, Inc. - President, CEO & Director [13]

--------------------------------------------------------------------------------

Yes. So we've been really pleased with the pace of getting INTRIGUE up and running. As you know, we haven't had any competitive trial dynamic up until now. And as you point out, it looks like we won't have a competitive trial for the foreseeable future. As Matt mentioned in the prepared remarks, we have 92 sites now open. We expect to open over 100 sites for that study. We're active in 18 countries. And we're really pleased with the pace, both of how we're opening sites and also the pace of enrolling patients on the study.

As you would expect, and we would expect, based on the very positive INVICTUS results that we released in August of this year, there is a considerable amount of enthusiasm for the data in that fourth line, fourth-line-plus setting, and we believe that will translate meaningfully into enthusiasm for both patients as well as investigators thinking about the INTRIGUE study as an option in the second-line setting.

So still a little early to tell what that pace of enrollment is going to look like, but as you point out, by virtue of the fact that we were ahead anyway of Blueprint in getting a second-line study up and now the fact that they won't have a second-line study, it's smooth sailing ahead for us, at least in our view, in terms of getting that study enrolled, generating the data and then reporting results.

--------------------------------------------------------------------------------

Operator [14]

--------------------------------------------------------------------------------

Your next question comes from the line of Michael Schmidt from Guggenheim Securities.

--------------------------------------------------------------------------------

Yue-Wen Zhu, Guggenheim Securities, LLC, Research Division - Associate [15]

--------------------------------------------------------------------------------

This is Charles Zhu on for Michael Schmidt. Congrats on all the progress. First one on INTRIGUE. I see on clinicaltrials.gov that PFS is the primary endpoint with ORR and OS as secondaries. I'm wondering the degree to which plans for INTRIGUE's OS assessment is similar or different than that of INVICTUS as well as the potential for complication given patients coming off Sutent could effectively cross over by accessing commercial and off-trial ripretinib in later lines of therapy.

--------------------------------------------------------------------------------

Steven L. Hoerter, Deciphera Pharmaceuticals, Inc. - President, CEO & Director [16]

--------------------------------------------------------------------------------

Yes, Charles, it's Steve. Thanks for the question, which is a good one. You're right, of course, PFS is the primary endpoint. It's not a study in which we allow crossover, given that there is an approved therapy currently in the second-line setting. And I think you're also right in suggesting that it would be challenging in the second-line setting, given the availability of subsequent therapies for ripretinib in that setting to demonstrate an overall survival benefit. But nonetheless, OS is a secondary endpoint in the study. We look forward certainly to getting patients on study and enrolling the study, generating the data, and then we'll report the data when they're available.

--------------------------------------------------------------------------------

Yue-Wen Zhu, Guggenheim Securities, LLC, Research Division - Associate [17]

--------------------------------------------------------------------------------

Okay, great. And correct me if I'm wrong, but I also think INTRIGUE does not allow for dose escalation on BID upon progression. And with that in mind, how might physicians feel about potential dose escalation in second line just assuming INTRIGUE is successful given INTRIGUE doesn't explicitly study it, but you'll have data for it in the Phase I as well as, I guess, kind of from INVICTUS in fourth line?

--------------------------------------------------------------------------------

Steven L. Hoerter, Deciphera Pharmaceuticals, Inc. - President, CEO & Director [18]

--------------------------------------------------------------------------------

Yes. Thanks, Charles, for the question on dose escalation. So you're right, in the Phase I study, and we just provided the update that Matt described in his prepared remarks, at the triple meeting in Boston last week and, of course, you're familiar with the INVICTUS data where dose escalation was also allowed for patients. We're -- it's still in the early days for us in terms of our analysis of those data and what the potential implication might be for how physicians ultimately might want to use this drug assuming it's approved, whether it be in the fourth-line setting or the second-line setting. So I think this is really just the beginning of the drug development journey for us with this product. Clearly, a highly active drug in GIST in the fourth-line setting. I think the Phase I study across second, third and fourth-line also clearly shows the drug is highly active in those lines of therapy. And I think the challenge ahead for us and for the clinical community is going to be to determine going forward, how will this drug, in what setting and at what dose, meaning does dose escalation demonstrate a prolonged benefit for patients. We'll have to sort through that, I think, in the coming years ahead as we've continued to expand our understanding of the use of this drug in GIST.

--------------------------------------------------------------------------------

Yue-Wen Zhu, Guggenheim Securities, LLC, Research Division - Associate [19]

--------------------------------------------------------------------------------

All right. Makes sense. And last one from me. What's your view on the potential -- your view as well as any feedback you've gotten from KOLs, your investigators, for the potential of ripretinib rechallenge in fourth-line GIST if a patient has already received it in earlier line, especially if such patient weren't previously dose escalated?

--------------------------------------------------------------------------------

Steven L. Hoerter, Deciphera Pharmaceuticals, Inc. - President, CEO & Director [20]

--------------------------------------------------------------------------------

Yes. Thanks, Charles. Good question. In this setting, in GIST, certainly, physicians are quite familiar and used to rechallenge with imatinib as an example. And given the broad spectrum inhibitory profile of ripretinib really addressing all of these relevant mutations that drive this disease, I suppose it's not outside of the kind of the realm of possibility that we may be able to pursue a similar path, generate the data, of course, but pursue a similar path with ripretinib and explore the potential for patients to benefit with the drug upon rechallenge or retreatment.

We still need to, of course, understand that better, generate data in that context and see what sort of benefit the drug might offer. So still a little bit early. As I said, we view this as the initial set of steps in developing this drug in this disease. And we think there are future opportunities, certainly, for us to explore, whether it be related to dose escalation or whether it be related to retreatment, as you point out.

--------------------------------------------------------------------------------

Yue-Wen Zhu, Guggenheim Securities, LLC, Research Division - Associate [21]

--------------------------------------------------------------------------------

Congrats again on all the progress.

--------------------------------------------------------------------------------

Steven L. Hoerter, Deciphera Pharmaceuticals, Inc. - President, CEO & Director [22]

--------------------------------------------------------------------------------

Yes. Thanks, Charles.

--------------------------------------------------------------------------------

Operator [23]

--------------------------------------------------------------------------------

Your next question comes from the line of Eun Yang from Jefferies.

--------------------------------------------------------------------------------

Eun Kyung Yang, Jefferies LLC, Research Division - MD & Senior Equity Research Analyst [24]

--------------------------------------------------------------------------------

Question on second-line GIST for ripretinib. So Sutent in Phase III showed a PFS of about 24 weeks, but some other published papers show PFS of about 36 weeks, which is still lower than what you've recently shown, 46 weeks for ripretinib. So I want to ask you what's your powering assumptions for sunitinib in Phase III INTRIGUE.

--------------------------------------------------------------------------------

Steven L. Hoerter, Deciphera Pharmaceuticals, Inc. - President, CEO & Director [25]

--------------------------------------------------------------------------------

Yes, thanks, Eun, it's Steve, I'll take that question. So we, of course, have spent a lot of time over the last couple of years working with expert thought leaders in the field to understand how the disease is treated and to understand the contemporary view of sunitinib and what one might expect in terms of progression-free survival in the second-line setting.

You're right, we often point to, of course, what's in the label, the FDA-approved label, for sunitinib, which is the 24 weeks of PFS that you referenced and then also some smaller studies out there that have, of course, different PFS rates. And so as we've explored this and discussed the topic with the experts who treat the disease, the very consistent feedback that we've received is that, yes, 24 weeks is still the relevant mark in terms of what one would expect with Sutent in the second-line setting in this disease.

You've also noted, of course, the Phase I, which we updated last week at the triple meeting in Boston, where we showed in the cohort of second-line patients now a PFS of 46 weeks, which is an improvement, a substantial improvement, actually, over the last data disclosure with ripretinib in that setting. So we remain very confident in our design and the underlying powering for the INTRIGUE study. As I noted earlier, we are looking forward to continuing to enroll patients and then to generate the data and report it out once we have that data generated. But I don't have any additional set of powering assumptions that I can share with you at this time beyond what we've already disclosed.

--------------------------------------------------------------------------------

Eun Kyung Yang, Jefferies LLC, Research Division - MD & Senior Equity Research Analyst [26]

--------------------------------------------------------------------------------

Okay. And then 3014. So CTOS, you guys mentioned some more group number of patients with the TGCT. In the study, in the data, would we be able to see a response rate that could be comparable to what (inaudible) has shown, 38%?

--------------------------------------------------------------------------------

Steven L. Hoerter, Deciphera Pharmaceuticals, Inc. - President, CEO & Director [27]

--------------------------------------------------------------------------------

Yes. Thanks, Eun, for the question on 3014. So as you pointed out, what we reported last week at the triple meeting was the Phase I in the solid tumor patient population. And so we're looking forward at the CTOS meeting, the Connective Tissue Oncology Society Meeting in Tokyo, which is coming up already next week. We'll be reporting for the first time, data with 3014 in a small number of patients with tenosynovial giant cell tumor. And so included in that data set will be patients who, of course, are evaluable for safety, but also patients who are evaluable for efficacy.

I'd just point out that this is an initial small number of patients. We, of course, look forward to enrolling the expansion cohort that's open for that study and generating even more data in additional patients with 3014, and we hope to report out on a more complete full data set over the course of 2020. But yes, next week, you can look for data that would include response evaluable patients.

--------------------------------------------------------------------------------

Eun Kyung Yang, Jefferies LLC, Research Division - MD & Senior Equity Research Analyst [28]

--------------------------------------------------------------------------------

Okay. Last question is on rebastinib. So at the triple meeting, you showed about 21% response rates -- response rate at 50 milligram BID recommended Phase II dose. But is there any kind of response rate that you have in mind that could determine go, no go decision for the program?

--------------------------------------------------------------------------------

Steven L. Hoerter, Deciphera Pharmaceuticals, Inc. - President, CEO & Director [29]

--------------------------------------------------------------------------------

Yes. So we have certainly, for rebastinib, we have these 4 expansion cohorts that we're enrolling. And we outlined those in the poster that we presented last week, and maybe what I'll do is turn it to Matt. He can provide some additional color on those expansion cohorts and the decision that we'll make then for further expansion of the expansion cohorts, assuming certain criteria are met.

--------------------------------------------------------------------------------

Matthew L. Sherman, Deciphera Pharmaceuticals, Inc. - Executive VP & Chief Medical Officer [30]

--------------------------------------------------------------------------------

Yes. So again, thanks for the question. So as we indicated, we'll be moving forward into the part 2 of the study with the 4 expansion cohorts, as I mentioned, in triple-negative breast cancer, inflammatory breast cancer, ovarian cancer and endometrial cancer. And in those patient populations, it's a Simon 2-stage design, where we'll be enrolling the first group of 18 patients. And if there is more than 4 responses in the group of 18 patients, we then move into the second stage of the Simon 2-stage design to enroll up to 33 patients. And so it's based on those numbers that will have a point estimate for the response rate in those 4 different indications.

--------------------------------------------------------------------------------

Steven L. Hoerter, Deciphera Pharmaceuticals, Inc. - President, CEO & Director [31]

--------------------------------------------------------------------------------

And I would just add to that, Eun, that we're certainly encouraged by the early signs of efficacy with the combination, and look forward to generating more data and more homogeneous patient populations in those expansion cohorts that Matt referred to.

--------------------------------------------------------------------------------

Operator [32]

--------------------------------------------------------------------------------

Your next question comes from the line of Christopher Marai from Nomura Instinet.

--------------------------------------------------------------------------------

Jackson Dean Harvey, Nomura Securities Co. Ltd., Research Division - Research Analyst [33]

--------------------------------------------------------------------------------

This is Jackson Harvey on for Christopher. I was just curious about 3014. Could you provide some more color around the AST elevations? Did they have anything in common with pexidartinib as far as you can tell?

--------------------------------------------------------------------------------

Steven L. Hoerter, Deciphera Pharmaceuticals, Inc. - President, CEO & Director [34]

--------------------------------------------------------------------------------

Yes. Jackson, it's Steve. Thanks for the question on 3014 and the AST elevations. I'll turn it over to Matt to address that.

--------------------------------------------------------------------------------

Matthew L. Sherman, Deciphera Pharmaceuticals, Inc. - Executive VP & Chief Medical Officer [35]

--------------------------------------------------------------------------------

Jackson, so again, thanks for the question. And as you noted, with this class of agents, one can see elevations in certain liver enzymes, so particularly AST and ALT can be elevated. And in part, that's due to a decreased clearance of these enzymes within the liver due to the targeted nature of the products against the CSF1 receptor.

Now in pexidartinib's case, though, there was a number of patients that went on to -- in addition to having elevations of liver function enzymes, there was frank hepatotoxicity that was reported in their Phase III ENLIVEN study and across their program as well, too. So that maybe represents a different type of toxicity beyond the benign elevations of liver function tests.

--------------------------------------------------------------------------------

Jackson Dean Harvey, Nomura Securities Co. Ltd., Research Division - Research Analyst [36]

--------------------------------------------------------------------------------

Great. Got it. And as you think about possible registration studies, do you anticipate having to do head-to-head studies with pexidartinib?

--------------------------------------------------------------------------------

Steven L. Hoerter, Deciphera Pharmaceuticals, Inc. - President, CEO & Director [37]

--------------------------------------------------------------------------------

Yes. Thanks, Jackson, for the question. Too early for us to tell really exactly what the design of a registration study might be, whether it could be a single-arm study, whether it could be a randomized study like the ENLIVEN study versus placebo or a head-to-head versus pex. It's not clear to us that we would need to do a head-to-head versus pexidartinib. But still a little early for us to comment on what future development paths might be. We look forward to presenting the data next week and then to generating further data in additional patients with TGCT.

--------------------------------------------------------------------------------

Operator [38]

--------------------------------------------------------------------------------

Your next question comes from the line of Ren Benjamin from JMP Sec.

--------------------------------------------------------------------------------

Reni John Benjamin, JMP Securities LLC, Research Division - MD & Senior Research Analyst [39]

--------------------------------------------------------------------------------

Congrats on the -- on all the progress. I guess, beyond GIST, can you talk a little bit about your strategy for SM? Do you anticipate initiating an ISM trial? How are you making the decisions there? And I guess, related to that, when might we see an update from the SM cohort or the glioma and nonsmall cell lung cohorts of ripretinib?

--------------------------------------------------------------------------------

Steven L. Hoerter, Deciphera Pharmaceuticals, Inc. - President, CEO & Director [40]

--------------------------------------------------------------------------------

Ren, it's Steve. Thanks for the question and on SM specifically. So as you know, this was an expansion cohort, is an expansion cohort in the Phase I study, and we've been working really hard to get patients on study. It's not -- to be frank, not been the easiest cohort for us to enroll. We think we've made some good progress recently. And we would hope and expect to have a data update during the course of 2020 once we have a critical mass of patients enrolled, and they've been on therapy for the necessary period of time to evaluate for response. So look for data in 2020. We don't have any further comment or guidance at this time until we generate those data on what a further development path might look like.

--------------------------------------------------------------------------------

Reni John Benjamin, JMP Securities LLC, Research Division - MD & Senior Research Analyst [41]

--------------------------------------------------------------------------------

Got it. And then just regarding ripretinib. What are your thoughts regarding combination studies in GIST? Is it -- it seems like mechanistically that it should work out perfectly, but maybe the side effect profile is overlapping. Just any sort of thoughts you might have regarding that going forward.

--------------------------------------------------------------------------------

Steven L. Hoerter, Deciphera Pharmaceuticals, Inc. - President, CEO & Director [42]

--------------------------------------------------------------------------------

Yes. Thanks, Ren. So for ripretinib, specifically, and thinking about combination therapies, recall that we've never reached an MTD with this drug in the Phase I study. And as we talked about earlier on the call, we have a number of patients who, in fact, have dose escalated to 150 BID, and the drug appears to be very well tolerated in that context as well. So we think, in fact, that ripretinib is uniquely positioned as an agent that has a really good therapeutic index and may well be a good combination partner with other agents, whether targeted or nontargeted agents.

And so we're not ready at this time to talk about what potential combinations might look like. But certainly, it's something that's on our radar. I referenced earlier that this is the beginning of what we think is going to be a very lengthy and productive journey as we explore the potential role for this drug in the treatment of GIST and potentially other tumor types. And whether that be as monotherapy or combination, we're committed to exploring all of those avenues and seeing how this drug may be able to most optimally benefit patients across a variety of different lines of therapy and in different settings.

--------------------------------------------------------------------------------

Reni John Benjamin, JMP Securities LLC, Research Division - MD & Senior Research Analyst [43]

--------------------------------------------------------------------------------

Great. And just one final one, regarding a commercial sales force. Can you just give us your kind of latest thoughts on how big it should be? Will you be ready to start selling as soon as you get approval and kind of where you are right now in the hiring process?

--------------------------------------------------------------------------------

Steven L. Hoerter, Deciphera Pharmaceuticals, Inc. - President, CEO & Director [44]

--------------------------------------------------------------------------------

Yes. So we've been really pleased with the team that we've been able to attract to Deciphera to fill all of the roles across the commercial organization and the medical affairs organization. These are all folks that have a deep oncology experience, many of them have deep experience launching oral oncolytics in the U.S. market. And so we're really thrilled with the quality of the team. We're doing a lot of work right now to think through and finalize what our go-to-market strategy is going to be specifically for the field sales organization. And so it would be premature for me to comment specifically on what a final number might be. I can give you a range. We would expect to see somewhere in the range of 40 to 60 sales representatives in the U.S. on the medical affairs side. We have now filled the entire MSL team, and again, an absolute -- absolutely fantastic group of folks that we have in the MSL organization, and that team is already trained and prepared and out speaking with the physicians about GIST, about the disease and management of the disease. So the team is working really hard across all functions to make sure that we're prepared, as I've mentioned in my prepared remarks, for a potential approval next year. And we're committed to doing everything in our power to have all the right people hired and trained and ready to go so that when the FDA acts on the application, and assuming approval, we're ready to get this drug out to the broader group of patients who are in need of it.

--------------------------------------------------------------------------------

Operator [45]

--------------------------------------------------------------------------------

(Operator Instructions) Your next question comes from the line of Soumit Roy from Jones Trading.

Mr. Roy, your line is open.

--------------------------------------------------------------------------------

Steven L. Hoerter, Deciphera Pharmaceuticals, Inc. - President, CEO & Director [46]

--------------------------------------------------------------------------------

Operator, maybe we should go to the next caller. I'm not sure if Soumit maybe is on mute or had to step away.

--------------------------------------------------------------------------------

Operator [47]

--------------------------------------------------------------------------------

Your next question comes from the line of Arlinda Lee from Canaccord.

--------------------------------------------------------------------------------

Arlinda Anna Lee, Canaccord Genuity Corp., Research Division - Analyst [48]

--------------------------------------------------------------------------------

Congrats on the Breakthrough Designation. I had a question about any data that you might have been able to glean from the PDGFR patients from the GIST study and if that might give you any read-through to that efficacy.

--------------------------------------------------------------------------------

Steven L. Hoerter, Deciphera Pharmaceuticals, Inc. - President, CEO & Director [49]

--------------------------------------------------------------------------------

Yes, Arlinda, it's Steve. Thanks for the question with respect to the PDGFR-alphas. Are you referring specifically to the patients in the INVICTUS study?

--------------------------------------------------------------------------------

Arlinda Anna Lee, Canaccord Genuity Corp., Research Division - Analyst [50]

--------------------------------------------------------------------------------

Yes.

--------------------------------------------------------------------------------

Steven L. Hoerter, Deciphera Pharmaceuticals, Inc. - President, CEO & Director [51]

--------------------------------------------------------------------------------

Yes. So as you know, looking at the patient demographics, we had relatively few patients, PDGFR-alpha patients enrolled. We only had, I think, it was 3, a handful of them really in the ripretinib arm and none in the placebo arm. So we don't have any real conclusions that we can draw from those data. We haven't yet broken out data by subgroup. So it really doesn't offer us any help or guidance.

I think with respect to SM, the key question will be generating data in that specific population. As I noted earlier, we're committed to enrolling that cohort and generating the data and presenting those data in 2020. So I'd say, stay tuned on SM. Let us get some patients on study, generate some data in those patients, and then we look forward to presenting it next year.

--------------------------------------------------------------------------------

Operator [52]

--------------------------------------------------------------------------------

I'm showing no further questions at this time. I would now like to turn the conference back to Steve Hoerter, President and CEO. Please go ahead, sir.

--------------------------------------------------------------------------------

Steven L. Hoerter, Deciphera Pharmaceuticals, Inc. - President, CEO & Director [53]

--------------------------------------------------------------------------------

Great. Thanks. I'd like to thank all of you for joining us today on the call. Thanks for your interest and continued support. We're looking forward to an exciting close to the year this year and then in 2020, generating additional data from our pipeline and preparing for the launch potentially of our first therapy ripretinib.

Thank you, and have a great afternoon.

--------------------------------------------------------------------------------

Operator [54]

--------------------------------------------------------------------------------

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