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Edited Transcript of DCPH.OQ earnings conference call or presentation 9-Feb-21 9:30pm GMT

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Q4 2020 Deciphera Pharmaceuticals Inc Earnings Call Feb 10, 2021 (Thomson StreetEvents) -- Edited Transcript of Deciphera Pharmaceuticals Inc earnings conference call or presentation Tuesday, February 9, 2021 at 9:30:00pm GMT TEXT version of Transcript ================================================================================ Corporate Participants ================================================================================ * Daniel C. Martin Deciphera Pharmaceuticals, Inc. - Chief Commercial Officer * 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 ================================================================================ * Allison Marie Bratzel Piper Sandler & Co., Research Division - Research Analyst * Andrew Scott Berens SVB Leerink LLC, Research Division - MD of Targeted Oncology & Senior Research Analyst * Eun Kyung Yang Jefferies LLC, Research Division - MD & Senior Equity Research Analyst * Jessica Macomber Fye JPMorgan Chase & Co, Research Division - Analyst * Michael Werner Schmidt Guggenheim Securities, LLC, Research Division - Senior Analyst & Senior MD * Peter Richard Lawson Barclays Bank PLC, Research Division - Research Analyst * Reni John Benjamin JMP Securities LLC, Research Division - MD & Equity Research Analyst * Robyn Kay Shelton Karnauskas Truist Securities, Inc., Research Division - Research Analyst ================================================================================ Presentation -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- Good afternoon, everyone, and welcome to Deciphera Pharmaceuticals Fourth Quarter and Full Year 2020 Financial Results Conference Call. Today's call is being recorded. At this time, I'd like to turn the call over to Jen Robinson, Vice President, Investor Relations. Jen? -------------------------------------------------------------------------------- Jennifer Robinson, Deciphera Pharmaceuticals, Inc. - VP of IR [2] -------------------------------------------------------------------------------- Welcome, and thank you for joining us today to discuss Deciphera's fourth quarter and full year 2020 financial results. I'm Jen Robinson, Vice President, Investor Relations at Deciphera. With me this afternoon to discuss the financial results and provide a general corporate update are Steve Hoerter, President and Chief Executive Officer; Dan Martin, Chief Commercial 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 our expectations for our preclinical and clinical programs, our commercialization of QINLOCK and 2021 guidance. Forward-looking statements made on this call involve substantial risks and uncertainties that could cause actual results to differ materially from those expressed or implied by the forward-looking statements, and we cannot assure you that our expectations will be achieved. Such risks and uncertainties include those set forth in our most recent annual report on Form 10-K as well as our other SEC documents. 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. Good afternoon, everyone, and thank you for joining us on today's call. The fourth quarter caps a landmark year for Deciphera, in which we launched our first medicine, QINLOCK, reported encouraging data from the product candidates in our pipeline and filed the IND for a new product candidate entering the clinic this year. This progress would have been impressive in any year, but I'm particularly proud of our team for accomplishing all this in the midst of the ongoing COVID-19 pandemic. The team here at Deciphera adapted quickly and as a result of their hard work, dedication and patient focus, we achieved the ambitious goals we outlined at the beginning of 2020. This work positions us well for 2021 as we seek to expand the opportunity with QINLOCK and set the stage for our next wave of growth. For QINLOCK, we have 3 specific priorities in 2021. First, we are continuing to execute on the successful launch of QINLOCK for the treatment of patients with fourth-line gastrointestinal stromal tumors or GIST in the United States. QINLOCK has the potential to change the treatment of advanced GIST, and we have made great progress in delivering this important new medicine to eligible patients in the fourth-line setting. Dan Martin, our Chief Commercial Officer, will share the commercial highlights from the fourth quarter in a few minutes. Second, we are committed to expanding the geographic reach for QINLOCK, and we are rapidly advancing our efforts on this front. This past summer, we received regulatory approval for QINLOCK in Canada and Australia and selected distribution partners who are responsible for commercializing QINLOCK in these territories. In China, our partner, Zai Lab, filed the NDA for QINLOCK last summer and have guided to a potential approval in the first half of this year. And finally, we received validation from the European Medicines Agency, or EMA, for the marketing authorization application for QINLOCK in fourth-line GIST, setting us up for a potential EMA approval in the second half of 2021. As we continue our efforts to bring QINLOCK to patients in Europe and around the world, we are very excited to announce today the appointment of Margarida Duarte, Senior Vice President, Head of International. Margarida joins us from Alnylam Pharmaceuticals, where she most recently was Vice President of Commercial, for Canada, Europe, Middle East and Africa. She was responsible for a number of important successful new product launches at Alnylam and brings to Deciphera over 15 years of experience in the global pharmaceutical industry with expertise in commercializing innovative products in the EU and internationally. I know that her deep commercial and operational expertise will be an incredible asset to Deciphera. And I look forward to working with Margarida as we continue our mission to deliver important new medicines to patients. The third focus for QINLOCK is expanding into earlier line of therapy in GIST. In particular, we see significant opportunity for QINLOCK to offer benefit to patients in the larger second line GIST population. In the fourth quarter, we completed enrollment in our pivotal Phase III INTRIGUE study in the second line and are on track for a top line data readout in the second half of this year. Behind QINLOCK, we have a robust maturing pipeline of fully owned programs. During the course of this year, we expect the potential of this pipeline to come into sharper focus. On the call today, Matt Sherman, our Chief Medical Officer, will highlight recent progress from the bemcentinib and rebastinib programs which have both demonstrated strong initial clinical data in their respective potential indications. We expect to share additional data for both programs throughout the year as well as updates on potential pivotal development plans. Matt will also provide more details around the newest addition to our clinical pipeline, DCC-3116, including the Phase I study design and the preclinical data package that supports the potential for 3116. As a novel potential first-in-class ULK kinase inhibitor, we believe DCC-3116 has the potential to benefit the large group of patients with mutant RAS and RAS cancers. I'll now turn the call over to Dan Martin, our Chief Commercial Officer, to discuss the results for the second full quarter of QINLOCK's commercial sales. Dan? -------------------------------------------------------------------------------- Daniel C. Martin, Deciphera Pharmaceuticals, Inc. - Chief Commercial Officer [4] -------------------------------------------------------------------------------- Thank you, Steve. Good afternoon. Today, I'm pleased to report the results of our second full quarter of QINLOCK sales and to provide some color regarding our expectations as we look ahead. We continue to be extremely pleased with the QINLOCK launch and with our rapid penetration of the fourth-line opportunity. In Q4, we achieved $19.5 million in total net product revenue including $18.5 million in the U.S., which equates to 26% quarter-over-quarter growth and brings total launch-to-date U.S. net product revenue to $38 million. Prior to the U.S. launch of QINLOCK, we identified 2 primary goals. The first was to rapidly establish QINLOCK as the clear standard of care in fourth-line GIST. The second was to leverage our approved indication to build a strong foundation for a potential second line launch by establishing a broad and diverse prescriber base and by achieving positive product perceptions among QINLOCK users. Based on our strong launch results and multiple key performance metrics, we believe we have made tremendous progress toward these goals since launch. Our recent market research indicates that during Q4, our sales and marketing teams achieved the highest prescriber reach and product share of voice among all companies in the GIST market. In addition, this research showed that despite the challenges of the pandemic, we have rapidly increased awareness of QINLOCK over the last 2 quarters. In fact, among physicians treating late-line GIST patients, awareness of QINLOCK was similar to that of established products that have been approved for the treatment of GIST for many years. Our commercialization efforts resulted in rapid uptake by a broad and diverse prescriber base. We estimate that from launch through Q4, over 350 prescribers from more than 300 institutions have prescribed QINLOCK. During Q4, as expected, slightly more than half of both new and total prescribers came from the community setting. Conversely, slightly more than half of total patients treated during the quarter came from the academic setting, which highlights the fact that the number of patients per physician is higher in the academic setting, consistent with our prelaunch understanding. To date, nearly all of our highest priority accounts and physicians, irrespective of practice setting, have either prescribed QINLOCK or have identified patients for future QINLOCK treatment when those patients progress to the fourth-line. And importantly, our merge research indicates that prescribers have had very favorable experiences with QINLOCK, with users citing both positive product perceptions and high fourth-line patient share. Additionally, our market access team continued to deliver broad patient access to QINLOCK in Q4. Payer coverage for QINLOCK has remained very strong with policies aligned to our FDA label. As expected, the percentage of patients that received free drug under our Patient Assistance Program, or PAP, was slightly higher in Q4 due to the increased affordability challenges that commonly impact Medicare patients late in the year, but fell within our 20% to 30% estimated range. As previously communicated, our PAP percentage in Q1 may be impacted by the Medicare Part D benefit reset that occurs at the beginning of the year, which requires patients to pay for their deductible and their portion of the coverage gap before reaching the catastrophic coverage tier. We continue to expect our PAP percentage to be in the 20% to 30% range on average over the course of the year. Looking forward, we anticipate that our next phase of significant growth will come with our expansion into second-line GIST, pending positive data from Intrigue and subsequent approval. Until then, we anticipate that future quarter-over-quarter growth will moderate and be determined largely by how patient persistency develops in the real-world setting. In the near term, our focus will be on working with existing academic and community prescribers to optimize identification of appropriate patients for QINLOCK, while continuing our efforts to gradually expand our prescriber footprint. Finally, as we look ahead to the entry readout later this year and to a potential second-line approval, we remain extremely optimistic about the potential for QINLOCK to continue to transform the treatment of GIST. We believe high awareness of QINLOCK and positive product perceptions, coupled with a broad prescriber base across both academic and community settings, has established a strong foundation for a successful launch in the second-line setting pending approval. Feedback from just GIST treaters, including just thought leaders, continues to give us confidence that QINLOCK has the potential to establish a new standard of care in second-line GIST. Given the larger patient population in second-line GIST and what we expect to be increased persistency, a second-line approval represents a truly transformative opportunity for QINLOCK and most importantly, for patients with GIST. I will now turn the call over to Matt to discuss the progress of our clinical programs. Matt? -------------------------------------------------------------------------------- Matthew L. Sherman, Deciphera Pharmaceuticals, Inc. - Executive VP & Chief Medical Officer [5] -------------------------------------------------------------------------------- Thank you, Dan. We continue to make great strides across our growing pipeline of novel switch control kinase inhibitors. Let me start with QINLOCK. At the end of last year, we completed enrollment in our Phase III INTRIGUE study investigating QINLOCK in patients with second-line GIST and remain confident in the likelihood of success in this pivotal study. The preclinical profile of QINLOCK demonstrates that as broadly inhibits kit mutations that drive the disease across all lines of therapy. In addition, we have a strong clinical data package, not only with the exceptional results from the Phase III in FICA study in fourth-line plus patients, but also the compelling results in the Phase I study, showing that clinical efficacy continues to improve in patients with second-line through fourth line plus GIST. We believe that QINLOCK may provide significant benefit to just patients in the second-line setting and look forward to reporting top line data from the INTRIGUE study, which we project to read out in the second half of this year. Turning to vimseltinib, our potent selective inhibitor of CSF1R in development for the treatment of tenosynovial giant cell tumor, or TGCT. Patients with TGCT experienced significant disease burden and commonly report multiple symptoms, including pain, limited function, swelling and stiffness. The only approved systemic therapy for patients with TGCT is pexidartinib, which has a boxed warning and is subject to a REMS program due to hepatotoxicity, an adverse event that was thought to be an off-target effect. We believe that vimseltinib has the potential to be best-in-class and to fulfill the unmet medical need for an effective and well tolerated treatment for patients with TGCT. At the Connective Tissue Oncology Society meeting last year, we presented encouraging preliminary results from the ongoing Phase I/II study of vimseltinib in patients with TGCT. The trial is progressing well and we look forward to sharing additional data updates from the study and are planning to finalize and unveil our pivotal development plans later this year. Turning to rebastinib, our potentially first-in-class potent and selective inhibitor of the TIE2 kinase. We are very encouraged by the initial clinical data we presented last year from both the endometrial and platinum-resistant ovarian cancer cohorts in our Phase Ib/II study in combination with paclitaxel. We have reached full enrollments for these cohorts and are continuing to enroll patients into Stage I of the carcinosarcoma and inflammatory breast cancer cohorts. In the other Phase Ib/II study in combination with carboplatin, enrollment in Part 2 stage I of the platinum-sensitive ovarian cancer cohort has been completed, and efficacy and safety evaluation is ongoing. For endometrial cancer, there are limited treatment options after paclitaxel and carboplatinum in the first-line setting and pembrolizumab and lenvatinib in the second-line setting. Beyond second line, treatment is very heterogeneous. In generally office patients, a progression-free survival benefit of only 3 to 4 months with objective response rates of just 10% to 20%. At ASCO last year, we presented encouraging data in 21 patients from the Phase Ib/II study, where we saw a confirmed and unconfirmed response rate of 39% and the clinical benefit rate at 8 weeks of 72%. Although the patients enrolled in this study had received prior paclitaxel therapy and nearly 60% have received more than 3 lines of prior treatment. For the platinum-resistant ovarian cancer cohort, we presented data at ESMO last year. Similar to endometrial cancer, treatment of later line platinum-resistant disease is very heterogeneous and generally office patients with progression-free survival benefit for 3 to 4 months with objective response rates of 15% to 25%. In our study, the combination of rebastinib with paclitaxel had a confirmed and unconfirmed response rate of 38% and the clinical benefit rate at 8 weeks of 88%. Nearly 80% of these patients had received 4 or more prior anti-cancer regimens. We're encouraged by both the safety and efficacy profile of the combination in this heavily pretreated population. Our focus with this program is to continue driving forward as quickly and prudently as we can and assuming continued positive data, we expect to finalize a potential pivotal development plan for rebastinib in combination with paclitaxel in the second half of this year. With enrollment completed in the endometrial and platinum-resistant ovarian cancer cohorts, we are looking forward to providing data updates in these indications later this year. Finally, we continue to be extremely excited about DCC-3116, our potential first-in-class ULK kinase inhibitor designed to treat cancer patients in combination with RAS and MAP kinase signaling pathway inhibition, particularly in patients with RAS or BRAF mutations. I am pleased to announce that we have received FDA clearance for the DCC-3116 IND, and we expect to begin our first-in-human study in the second quarter of this year. The mechanism of action, the DCC-3116 combined with the emerging preclinical data supports broad development in combination with MAP kinase inhibitors. The ULK complex is the initiating factor in the autophagy pathway, a key survival pathway. Mutant RAS and RAF cancers are reported to have high basal levels of autophagy, which these cancers use to maintain nutrient supply and regulate cancer cell metabolism and survival. Cellular studies in mutant RAS and RAF cancers have also demonstrated that treatment with MAP kinase pathway inhibitors can also induce autophagy as a compensatory survival mechanism. As we have previously shared, the preclinical data supports this approach showing the synergistic anti proliferative and anti-tumor activity of DCC-3116 in combination with the inhibition of RAS, MAP kinase signaling in mutant RAS and RAF cancers. This provides us with a number of development opportunities for DCC-3116 in combination with a RAS, MAP kinase signaling pathway inhibitor such as MEK inhibitors, ERK inhibitors or KRAS G12C inhibitors that could potentially establish a new treatment paradigm in RAS and RAF mutant cancers. More than 30% of all human cancers are driven by mutations of RAS and RAF genes, yet these cancers continue to be underserved. We are excited to initiate our Phase I study in the second quarter of this year, which will evaluate 3116 alone and in combination with trametinib approved MEK inhibitor in patients with advanced or metastatic tumors with a mutant RAS or RAF gene. After the safety and tolerability of 3116 as a single agent is determined, the first cohort of the combination dose escalation will open for enrollment. The dose expansion phase will be initiated after the recommended Phase II dose of the combination is determined and will include cohorts for patients with pancreatic ductal adenocarcinoma, non-small cell lung cancer, colorectal cancer and melanoma harboring mutation and the RAS and RAF pathway. We are strongly encouraged by the progress across each of the programs in our pipeline and believe 2021 will be an important year in the development of these assets as we look to making a meaningful difference in the treatment of patients with cancer. I will now turn the call over to Tucker Kelly, our Chief Financial Officer, to review the financial results. Tucker? -------------------------------------------------------------------------------- Thomas Patrick Kelly, Deciphera Pharmaceuticals, Inc. - Executive VP, CFO & Treasurer [6] -------------------------------------------------------------------------------- Thanks, Matt. I'd like to review the highlights for our fourth quarter and full year 2020 financial results. Total revenue for the fourth quarter was $19.5 million, which includes $18.5 million in U.S. net product sales. Consistent with the third quarter, the gross to net adjustment in the fourth quarter was slightly lower than our annualized estimate of 15%. Total revenue for the full year was $42.1 million, comprised of net product sales of $39.5 million, including $38 million in U.S. net product sales as well as approximately $2.6 million in collaboration revenue. Cost of sales for the 3 and 12 months ending December 31, 2020, was immaterial, as the majority of the manufacturing costs related to QINLOCK sales were incurred prior to FDA approval and thus were reported as R&D expands. Until the initial prolonged inventory is depleted and additional inventory is manufactured and sold, cost of sales will not be significant, and we expect the cost of sales will remain immaterial in 2021. Total operating expenses were $82.5 million in the fourth quarter of 2020 compared to total operating expenses of $70.4 million in the same period in 2019. For the full year 2020, total operating expenses were $313.3 million compared to total operating expenses of $225.7 million in 2019. Research and development expenses in the fourth quarter were $52.3 million compared to $46.6 million in the same period in 2019. For the full year 2020, R&D expenses were $199 million compared to $157.6 million in 2019. Selling, general and administrative expenses in the fourth quarter were $30.1 million compared to $23.7 million in the same period in 2019. And for the full year 2020, SG&A expenses were $114.1 million compared with $68.1 million in 2019. We continue to expect that our operating expenses will increase in 2021 as compared to 2020 as we invest in the development of our clinical pipeline, continue to execute on the commercial launch of QINLOCK in the U.S. and prepare for a potential commercial launch in Europe. We ended the fourth quarter in a strong financial position and remained well capitalized with cash, cash equivalents and marketable securities of approximately $561 million, which we expect to be sufficient to fund our operations into the second half of 2022. And with that, I'll now turn the call back over to Steve. -------------------------------------------------------------------------------- Steven L. Hoerter, Deciphera Pharmaceuticals, Inc. - President, CEO & Director [7] -------------------------------------------------------------------------------- Thank you, Tucker. I'm extremely proud of what our team accomplished in 2020, and we expect 2021 to be a year with significant milestones. We look forward to building upon the momentum of the QINLOCK launch by solidifying its position among GIST prescribers and patients in the U.S. while also taking the regulatory and commercial steps necessary to bring hemlock to patients with advanced GIST around the world. On the clinical development front, we expect the readout of the pivotal Phase III INTRIGUE study to potentially expand QINLOCK into the larger second-line GIST population. And we expect significant clinical updates on 2 programs that could support advancement into registration enabling studies. Finally, we look forward to initiating the first-in-human study for a potential first-in-class product candidate addressing one of the largest unmet needs in oncology. We believe 2021 will be another exciting year in our company's journey to bring important new medicines to patients. Operator, I'd now like to open the call for Q&A. ================================================================================ Questions and Answers -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- (Operator Instructions) Our first question will come from the line of Jessica Fye from JPMorgan. -------------------------------------------------------------------------------- Jessica Macomber Fye, JPMorgan Chase & Co, Research Division - Analyst [2] -------------------------------------------------------------------------------- I was hoping you could elaborate a little bit on the comment you made about future quarter-to-quarter growth moderating and being determined by patient persistency. Is that moderating growth you alluded to the result of substantially penetrating the incident fourth-line GIST opportunity? Where do you think you are in terms of penetration of this setting? -------------------------------------------------------------------------------- Steven L. Hoerter, Deciphera Pharmaceuticals, Inc. - President, CEO & Director [3] -------------------------------------------------------------------------------- Jess, it's Steve. Just before I turn it over to Dan, who can provide some color. I think as we said in the prepared remarks, we're really pleased with how the launch has gone so far and that we've really rapidly established QINLOCK as the standard of care in the fourth-line setting. And as Dan noted in his prepared remarks, we do expect growth to moderate going forward. But Dan, would you like to provide some more color on that? -------------------------------------------------------------------------------- Daniel C. Martin, Deciphera Pharmaceuticals, Inc. - Chief Commercial Officer [4] -------------------------------------------------------------------------------- Sure. Absolutely. Thanks, Jess, for the questions. Yes, a couple of questions there. So if I don't quite hit on everything, just let me know. So when we talk about the phrase growth will moderate, like Steve said, we've just been extremely pleased with the performance of the team, the ability to rapidly penetrate the fourth-line patient population despite the challenges of the pandemic. And as Steve mentioned, it is clear that we have established QINLOCK as the clear standard of care in fourth line just across both academic and community settings. And therefore, while we achieved 26% quarter-over-quarter in Q4, we would expect quarter-over-quarter growth to slow. And the point about, well, to slow until we achieve the second line expansion pending approval. And the point that we made about the persistency is that we're about 7 plus months, I guess, 2 quarters into launch. And so as we've mentioned previously, on previous calls, that data is still maturing. So we'll be bringing -- we plan to bring forward some additional color on persistency as we move forward. But that will be really important to see how that develops in the real-world setting. A number -- any number of things could impact how persistency develops in the real-world setting, including efficacy, tolerability, patient mix is important, both by line of therapy and by performance status. And then there's also nonclinical considerations such as the cumulative, emotional, financial and administrative burdens on the patient during their cancer journey. So these are the things that we'll look to see how they play out and impact persistency over time in the real-world setting. -------------------------------------------------------------------------------- Jessica Macomber Fye, JPMorgan Chase & Co, Research Division - Analyst [5] -------------------------------------------------------------------------------- Got it. And maybe just one more. If you could elaborate on the -- you have helpful data about sort of the number of prescribers and the mix there. I'm curious how many prescribers have written QINLOCK to more than one patient? -------------------------------------------------------------------------------- Daniel C. Martin, Deciphera Pharmaceuticals, Inc. - Chief Commercial Officer [6] -------------------------------------------------------------------------------- Yes. It's a good question. I don't have that figure off the top of my head. There's certainly a good portion that have written for more than one patient, but there is a significant number of our prescribers who have only written for one because they've only had one. Keep in mind that, as we've described, these patients are rare, in general, late-line GIST patients and particularly outside of the academic setting they're extremely rare and very sort of diffuse and thinly dispersed. So a significant portion of our prescriber base would have only prescribed one because that's how many patients they've had so far. -------------------------------------------------------------------------------- Operator [7] -------------------------------------------------------------------------------- Our next question will come from the line of Chris Raymond from Piper Sandler. -------------------------------------------------------------------------------- Allison Marie Bratzel, Piper Sandler & Co., Research Division - Research Analyst [8] -------------------------------------------------------------------------------- This is Allison Bratzel on for Chris this afternoon. So one, just on earlier-line use. I guess, just some of our just survey work has indicated that, that most cannot use is on label in fourth-line plus patients, but there is some detectable use in earlier-line patients, particularly among docs in the academic setting. So just wondering if you have any color on that dynamic now that you're a couple of quarters into launch. So just -- could you talk to that and if some earlier line use could be contributing to growth throughout 2021? -------------------------------------------------------------------------------- Steven L. Hoerter, Deciphera Pharmaceuticals, Inc. - President, CEO & Director [9] -------------------------------------------------------------------------------- Yes. Thanks for the question, Allison. I'll ask Dan to take that. Dan? -------------------------------------------------------------------------------- Daniel C. Martin, Deciphera Pharmaceuticals, Inc. - Chief Commercial Officer [10] -------------------------------------------------------------------------------- Yes. Thank you, Allison. It's a good question. And we did see the survey that you guys did. And generally speaking, we thought it was relatively consistent thematically with what we've said before and what we saw in Q4. We've said before that while it's challenging to assess with certainty the use by line of therapy when we sort of triangulate with the available data sources we have, we feel strongly that the significant majority of use that we've seen is in the fourth-line setting consistent with label. And there has been some earlier line use, but again, significant majority in the fourth-line. And we've said before that it's tough to know what the future holds. What we do know is that there's a lot of things that drive use in the real world setting, of course. There's availability of data. We can't promote, of course, to any of that earlier line data. I probably should have started wit my typical disclaimer that we always -- all of our promotion, all of our commercial efforts are targeted toward our labeled indication, and so what's in the label, what's in payer policies, what's in guidelines. And to this point, most of all of that is aligned pretty consistently to our approved indications. So hard to say. But that's why we've provided the color we have around significantly penetrating the fourth-line opportunity rapidly and that we think as a result of that, growth is likely to moderate quarter-over-quarter moving forward until we reach the second-line setting pending approval. -------------------------------------------------------------------------------- Allison Marie Bratzel, Piper Sandler & Co., Research Division - Research Analyst [11] -------------------------------------------------------------------------------- That makes sense. And maybe just one more, a follow-up from -- I think last quarter, you had indicated that there might be a little bit of the BID dosing, especially based on the data you had last year, at ESMO, showing interpatient dose escalation is supportive of treatment past progression. So just hoping you could talk to any updates on those trends and maybe where or how you're thinking about that strategically in terms of getting that data perhaps added to the label or NCCN guidelines? And how that plays into the longer-term QINLOCK GIST strategy? -------------------------------------------------------------------------------- Steven L. Hoerter, Deciphera Pharmaceuticals, Inc. - President, CEO & Director [12] -------------------------------------------------------------------------------- So maybe what I'll do first, Allison, to just comment on the BID data and then ask Dan to talk a little bit about what we actually see in the marketplace and what sort of things would need to happen for that sort of use to be more common, despite the fact that, of course we can't promote to it. So as you referenced at ESMO last year, we reported data from the Phase I study. And in the Phase I study, physicians had the opportunity to dose escalate patients to 150 BID upon progression. And as we shared at ESMO last year, the data that we see in PFS2, so the second progression-free survival interval is really quite compelling relative to the PFS1 the patients experienced on the study. In the INVICTUS study. So the study that served as the basis for our approval, a similar approach was allowed where physicians were able to dose escalate their patients to 150 BID. And we're still analyzing those data but we anticipate being able to present those in the context of a medical meeting at some point in the future. So we think this is a meaningful finding. We don't view either set of data as being label enabling. And maybe, Dan, do you want to comment just on what we're seeing commercially and what sort of factors would play into the ability of physicians to use this despite the fact that we can't promote to it. -------------------------------------------------------------------------------- Daniel C. Martin, Deciphera Pharmaceuticals, Inc. - Chief Commercial Officer [13] -------------------------------------------------------------------------------- Yes, absolutely. Thank you. Steve, it's a good question. And we've -- we continue to see -- or I should say, we continue to see in Q4 what we've spoken to before, which is we have seen some BID dosing, but it's been a small portion of the overall use, a large majority of our uses of the 150 QD labeled indication. And the same drivers really impact a off-labeled dose that drive an off-labeled data use. Number one, we don't promote the BID data. We're limited, of course, to promoting our labeled dose. And then guidelines and payer policies, which, to this point, continue to be aligned with our labeled dose. So it's not a surprise to us given those considerations that the large majority of use is consistent with the 150 QD. -------------------------------------------------------------------------------- Operator [14] -------------------------------------------------------------------------------- Next question will come from the line of Michael Schmidt from Guggenheim. -------------------------------------------------------------------------------- Michael Werner Schmidt, Guggenheim Securities, LLC, Research Division - Senior Analyst & Senior MD [15] -------------------------------------------------------------------------------- I had a pipeline question about DCC-3116. I may have missed it, but could you remind us what the patient population will be in the initial Phase I study? Is it all commerce? Or will they be already selected for certain RAS, RAF mutations? -------------------------------------------------------------------------------- Steven L. Hoerter, Deciphera Pharmaceuticals, Inc. - President, CEO & Director [16] -------------------------------------------------------------------------------- Yes, Michael, it's Steve. Thanks for the question. Matt, would you like to take that? -------------------------------------------------------------------------------- Matthew L. Sherman, Deciphera Pharmaceuticals, Inc. - Executive VP & Chief Medical Officer [17] -------------------------------------------------------------------------------- Yes. Thanks for the question. Yes. So in the first-in-human study for DCC-3116, which is our novel first-in-class gene inhibitor. The servey was conducted as a 2-part study. So the first part will be a dose escalation part of this study. And that will be in all-comer solid tumors, but they will be selected for a mutation in the RAS, BRAF pathway. And that will be followed by the second part of the study, we'll be selecting homogeneous patients with specific tumors, pancreatic ductal adenocarcinoma, non-small cell lung cancer, colorectal cancer and melanoma. And those patients will also be RAS or BRAF mutation positive. -------------------------------------------------------------------------------- Michael Werner Schmidt, Guggenheim Securities, LLC, Research Division - Senior Analyst & Senior MD [18] -------------------------------------------------------------------------------- Understood. And then mechanistically, is this a drug that might have single agent activity? Or should we really think about this as a combination drug with other RAS pathway inhibitors? -------------------------------------------------------------------------------- Steven L. Hoerter, Deciphera Pharmaceuticals, Inc. - President, CEO & Director [19] -------------------------------------------------------------------------------- Yes. Michael. -------------------------------------------------------------------------------- Matthew L. Sherman, Deciphera Pharmaceuticals, Inc. - Executive VP & Chief Medical Officer [20] -------------------------------------------------------------------------------- Yes. So we believe that this drug would be best developed in combination with other signaling pathway inhibitors and initially targeting the RAS, MAP kinase pathway. -------------------------------------------------------------------------------- Operator [21] -------------------------------------------------------------------------------- Our next question will come from the line of Eun Yang from Jefferies. -------------------------------------------------------------------------------- Eun Kyung Yang, Jefferies LLC, Research Division - MD & Senior Equity Research Analyst [22] -------------------------------------------------------------------------------- So regarding ripretinib, aside from just, you have orphan drug designations for other solid tumors like GBM and astrocytoma. And in Phase I expansion, cohort you have or have you been enrolling multiple tumor types. So can you give us an update on other solid tumors aside from GIST? -------------------------------------------------------------------------------- Steven L. Hoerter, Deciphera Pharmaceuticals, Inc. - President, CEO & Director [23] -------------------------------------------------------------------------------- Yes, Eun, it's Steve. Thanks for the question. And your question goes back to the Phase I study. And we provided an update on this on the Q3 call, where we talked about the variety of expansion cohorts and what the status of those were. And so at that time, as we discussed, we had completed enrollment and a number of the cohorts, the melanoma cohort at that stage was still enrolling, and that's data that we will continue to evaluate. But our focus going forward continues to be on exploring the potential for ripretinib or QINLOCK to benefit patients in GIST. -------------------------------------------------------------------------------- Eun Kyung Yang, Jefferies LLC, Research Division - MD & Senior Equity Research Analyst [24] -------------------------------------------------------------------------------- Okay. So I guess, so we are not going to be expecting data from the non-GIST tumors anytime soon, correct? -------------------------------------------------------------------------------- Steven L. Hoerter, Deciphera Pharmaceuticals, Inc. - President, CEO & Director [25] -------------------------------------------------------------------------------- That's right, Eun. Exactly right. Our focus is on GIST . We'll continue to follow the data that we've collected from the Phase I expansion cohort, specifically in melanoma and we'll update folks on when the time is right. But the focus for development going forward is in GIST. -------------------------------------------------------------------------------- Eun Kyung Yang, Jefferies LLC, Research Division - MD & Senior Equity Research Analyst [26] -------------------------------------------------------------------------------- And then in terms of a second-line GIST, so certain is going to go generic in the U.S. and EU this year and next. So is there an example or examples that you can share with us where generic drugs did not impact new superior drug in cancer settings? -------------------------------------------------------------------------------- Steven L. Hoerter, Deciphera Pharmaceuticals, Inc. - President, CEO & Director [27] -------------------------------------------------------------------------------- Yes. Thanks for the question. So it's Steve. I'll take that. And then, Dan, if you have any additional color you'd like to add, please feel free to jump in. So as you know, the INTRIGUE study is a head-to-head study. So it's QINLOCK versus sunitinib. And as we've discussed previously, we would expect that sunitinib in that study would demonstrate a PFS in the range of 5.5 to 6 months. And we believe that you would need to demonstrate a 2- to 3-month improvement over that for the outcome to be clinically meaningful. So in other words, QINLOCK would need to demonstrate a 2 to 3-month improvement over sunitinib for that to be viewed as clinically meaningful. Given that this would be a head-to-head study versus the current standard of care, we don't believe that the fact that sunitinib could be going generic, it would have any meaningful impact on physician's willingness and interest in using a better treatment option for their patients with GIST. Dan, you have anything else that you'd add to that? -------------------------------------------------------------------------------- Daniel C. Martin, Deciphera Pharmaceuticals, Inc. - Chief Commercial Officer [28] -------------------------------------------------------------------------------- I would just add that when we think about the different stakeholders, from physicians, as Steve mentioned, to payers and patients, like Steve said, for physicians, but I would also add for payers, historically speaking, the gold standard has been in assessing different product alternatives has been head-to-head comparison in a large randomized Phase III trial. And so if INTRIGUE is positive, which, to our knowledge, would be the first and only positive Phase III head-to-head study in GIST. We believe that puts us in a really good position. And then from a patient perspective, we will continue to do what we always do, which is everything we're permitted to do with -- in line with relevant laws and regulations to prevent costs from being a barrier patient access to QINLOCK. So overall, we're very confident that irrespective of generic suiting that pending INTRIGUE, QINLOCK really has a great opportunity to again, transform the standard of care. -------------------------------------------------------------------------------- Eun Kyung Yang, Jefferies LLC, Research Division - MD & Senior Equity Research Analyst [29] -------------------------------------------------------------------------------- And then I have a last question, a quick question to Tucker. So do you anticipate approval in China? Would you actually book that approval milestone at once since -- first of the second quarter of this year, for China? -------------------------------------------------------------------------------- Thomas Patrick Kelly, Deciphera Pharmaceuticals, Inc. - Executive VP, CFO & Treasurer [30] -------------------------------------------------------------------------------- Sure. Yes. Thanks for the question. So I think what we've heard from Zai and their public disclosures, they are expecting a potential regulatory decision in the first half. We have not provided any breakdown of the additional clinical or pre-approval milestones that we have under the collaboration agreement. But in the past, certainly, when we have had milestones that have hit, we typically booked those in the quarter in which they were achieved. -------------------------------------------------------------------------------- Operator [31] -------------------------------------------------------------------------------- Our next question will come from the line of Andrew Berens from SVB Leerink. -------------------------------------------------------------------------------- Andrew Scott Berens, SVB Leerink LLC, Research Division - MD of Targeted Oncology & Senior Research Analyst [32] -------------------------------------------------------------------------------- Congrats on the quarter. I also have a question on your comments regarding the persistency going forward. Since there's nothing approved in the fifth line, are you seeing patients come off of therapy because they're going on something else? Or are they dying? Or are patients staying on therapy beyond progression? Then I have a follow-up on the old inhibitor. -------------------------------------------------------------------------------- Steven L. Hoerter, Deciphera Pharmaceuticals, Inc. - President, CEO & Director [33] -------------------------------------------------------------------------------- Yes. Thanks, Andy. Dan, do you want to take that? -------------------------------------------------------------------------------- Daniel C. Martin, Deciphera Pharmaceuticals, Inc. - Chief Commercial Officer [34] -------------------------------------------------------------------------------- Sure. Thanks, Andy. So as we said recently, it's just a little early to be able to provide color on what we're seeing with persistency. I think we've been, what, just over 2 months -- sorry, 2 quarters now. And so the data that we have to evaluate that is still maturing. And we've said, we understand how important that is to everyone's models and certainly intend to bring some -- bring forward some additional color when we have it. So as you know, I've started talking a bit more in terms of persistency of late as opposed to average duration of therapy because persistency, as you know, is the percentage of patients that remain on therapy over time. And with any product, some patients come off early and some patients stay on for an extended period. So we'll just have to see how all that shakes out in the real-world setting, given the factors I mentioned before, including mix by line of therapy and patient performance status and some nonclinical considerations, all of that. So more to come as we feel like we -- that data is sort of sufficiently ready for prime time. -------------------------------------------------------------------------------- Andrew Scott Berens, SVB Leerink LLC, Research Division - MD of Targeted Oncology & Senior Research Analyst [35] -------------------------------------------------------------------------------- Okay. But aside from the BID option, are some patients staying on longer even after they progress? -------------------------------------------------------------------------------- Daniel C. Martin, Deciphera Pharmaceuticals, Inc. - Chief Commercial Officer [36] -------------------------------------------------------------------------------- That's hard to know because what we see from our side is just whether or not the patient is getting the product. What we don't see from our side when there is a physician determination of progression. So that's just really hard for me to answer. And like I said, we'll bring forward additional color on how long patients are staying on therapy as that data matures. -------------------------------------------------------------------------------- Andrew Scott Berens, SVB Leerink LLC, Research Division - MD of Targeted Oncology & Senior Research Analyst [37] -------------------------------------------------------------------------------- Okay. And then on the ULK inhibitor, I was just wondering, are there any concerns about the impact of the drug in the CNS, where autophagy is an important part of amino acid homeostasis, I know you guys had a special investor, but I just don't remember whether the drug crosses the blood-brain barrier, and if that's a concern or not? -------------------------------------------------------------------------------- Steven L. Hoerter, Deciphera Pharmaceuticals, Inc. - President, CEO & Director [38] -------------------------------------------------------------------------------- Yes. Thanks, Andy. It's a great question. Matt, do you want to take that? -------------------------------------------------------------------------------- Matthew L. Sherman, Deciphera Pharmaceuticals, Inc. - Executive VP & Chief Medical Officer [39] -------------------------------------------------------------------------------- Yes. Thanks, Andy, for the question. So yes, no, we don't -- we do not have concerns. So the drug was designed to be a potent selective inhibitor of ULK kynase but to avoid CNS exposure. So we look forward to beginning of the Phase I study. -------------------------------------------------------------------------------- Operator [40] -------------------------------------------------------------------------------- Our next question comes from the line of Peter Lawson from Barclays. -------------------------------------------------------------------------------- Peter Richard Lawson, Barclays Bank PLC, Research Division - Research Analyst [41] -------------------------------------------------------------------------------- Maybe a question for Dan. Just any sense of kind of off-label use or the degree of off-label use in GIST? -------------------------------------------------------------------------------- Daniel C. Martin, Deciphera Pharmaceuticals, Inc. - Chief Commercial Officer [42] -------------------------------------------------------------------------------- Sure. Thanks. You mean with QINLOCK or generally? -------------------------------------------------------------------------------- Peter Richard Lawson, Barclays Bank PLC, Research Division - Research Analyst [43] -------------------------------------------------------------------------------- With QINLOCK, please. -------------------------------------------------------------------------------- Daniel C. Martin, Deciphera Pharmaceuticals, Inc. - Chief Commercial Officer [44] -------------------------------------------------------------------------------- Yes. So as we've shared previously, the data that is available to assess use by line of therapy is limited. It's got challenges with it. So we do our best to triangulate that and estimate that. But it's definitely imperfect data. And what we've said is that a significant majority of the use, we believe we're confident is fourth line, consistent with our indication, which is, of course, the only way we promote QINLOCK. We've said that there has been some earlier line use, but the significant majority has been fourth line, consistent with our indication. -------------------------------------------------------------------------------- Peter Richard Lawson, Barclays Bank PLC, Research Division - Research Analyst [45] -------------------------------------------------------------------------------- Got you. And then the ULK inhibitor, so 3116, when could we see the initial data from that? So I guess that's for Matt. -------------------------------------------------------------------------------- Steven L. Hoerter, Deciphera Pharmaceuticals, Inc. - President, CEO & Director [46] -------------------------------------------------------------------------------- Yes. Peter, it's Steve. So I'll take that. It's a good question. So as Matt mentioned a little bit earlier and as we've talked about previously, we don't expect to see monotherapy activity with the ULK inhibitors. So really, what we're trying to drive to as quickly as we can as we get into the combination portion of the study that Matt described in his prepared remarks. So we don't have specific guidance as to when we might be able to report data it certainly won't be this year in 2021. But as we have visibility to what the potential timing might be, we'll, of course, update investors at that time. -------------------------------------------------------------------------------- Operator [47] -------------------------------------------------------------------------------- Our next question on the call will be from the line of Ren Benjamin of JMP Securities. -------------------------------------------------------------------------------- Reni John Benjamin, JMP Securities LLC, Research Division - MD & Equity Research Analyst [48] -------------------------------------------------------------------------------- Congratulations on the quarter. Maybe just in terms of market penetration, can you maybe just give us a sense, do you have an idea as to how much of the fourth-line market you guys have penetrated? I guess I'm trying to get a sense of was it so rapid that it was pretty steep and we're kind of -- the future growth moderating is more because we're getting closer to plateau? Or we came up, sort of, steep, but then we still got a decent way to go, at least in fourth-line? And then I just have a follow-up. -------------------------------------------------------------------------------- Steven L. Hoerter, Deciphera Pharmaceuticals, Inc. - President, CEO & Director [49] -------------------------------------------------------------------------------- Yes, Ren, it's a good question. Dan, do you want to take that? -------------------------------------------------------------------------------- Daniel C. Martin, Deciphera Pharmaceuticals, Inc. - Chief Commercial Officer [50] -------------------------------------------------------------------------------- Sure. Thanks, Ren. I think you're -- the first interpretation is consistent with what we intend to communicate. So the team has just done a fabulous job executing despite the pandemic, and as a result, it's rapidly penetrated the fourth line patient opportunity. By any measure, we're pretty -- it's pretty clear that we've established QINLOCK as the clear standard in the fourth line now across both academic and community settings. And so that's why, given that, that's why we've communicated that we anticipate quarter-over-quarter growth to moderate until we're able to reach that next phase of significant growth being the second-line setting pending approval. -------------------------------------------------------------------------------- Reni John Benjamin, JMP Securities LLC, Research Division - MD & Equity Research Analyst [51] -------------------------------------------------------------------------------- Got it. That makes sense. And just -- I know I've asked this before, I just want to know if there's any new thinking behind the European launch. From my notes, it's a staggered launch. It's likely going to be your end weighted in terms of hiring the sales force and the like. Is that still the case, Steve? Or is there more of an active BD effort going on? Have things changed in your thinking as the application has been validated? -------------------------------------------------------------------------------- Steven L. Hoerter, Deciphera Pharmaceuticals, Inc. - President, CEO & Director [52] -------------------------------------------------------------------------------- Yes. So it's a great question, Ren. So as you point out, the MAA has been validated by EMA, that occurred last year. And so we're targeting the second half of this year. That's when we believe that the European Medicines Agency could take action on the application. We also announced today that we've now hired Margarida Duarte, Senior Vice President, International -- Head of International. And she is going to now be taking on the role of building the nimble organization that we're hiring in Europe to be ready for a potential launch across that territory. I think it's important to note, and you alluded to this, Ren, that the launch will, of course, be staggered just by virtue of the fact that we have to wait for pricing and reimbursement negotiations to be completed in each and every country where we anticipate launching or introducing the drug. So the territory where we would expect to be launching first is likely to be Germany where we don't have to go through pricing and reimbursement negotiation at least initially. But then for the rest of the territories, if you take Southern Europe, for example, Spain and Italy, we would expect the hiring associated with those territories as well as the launch to come at some point later, it could be 12 to 18 months after approval, just depending on the pace of those negotiations with the authorities. -------------------------------------------------------------------------------- Reni John Benjamin, JMP Securities LLC, Research Division - MD & Equity Research Analyst [53] -------------------------------------------------------------------------------- Got it. And if you let me sneak one in for Tucker. The inventory -- we keep talking about COGS and how it's immaterial until the inventory is used up. When do you think that inventory will be used up? And can you just remind us what the COGS should go to? -------------------------------------------------------------------------------- Thomas Patrick Kelly, Deciphera Pharmaceuticals, Inc. - Executive VP, CFO & Treasurer [54] -------------------------------------------------------------------------------- Yes. Thanks, Ren, for the question. So we haven't provided any long-term guidance on what we think the cost of goods will be for QINLOCK. What we have said is what we competed today, which is for the moment, it remains material. And that we think for the balance of the year of 2021, that it should remain at a very low level. So not this year. And stay tuned, we'll try and update you as we get more understanding about when we'll have a larger cost of goods for the product. -------------------------------------------------------------------------------- Operator [55] -------------------------------------------------------------------------------- And our last question will come from the line of Robyn Karnauskas. -------------------------------------------------------------------------------- Robyn Kay Shelton Karnauskas, Truist Securities, Inc., Research Division - Research Analyst [56] -------------------------------------------------------------------------------- Congratulations on the -- all the hard work on the launch. So 2 questions. This one first one maybe a silly one. So as you continue to touch more doctors in the community setting, in the academic setting and you talked to them about the treatment of GIST, have you got any supportive or anecdotal data points that support, suit in second-line PFS of around 5 to 6 months. So is it supportive? Just anything anecdotal would be helpful as you're talking to doctors. And the second question on 3116. So Amgen, obviously, their KRAS could be approved very shortly. And there's a lot of oncology designs -- have been adaptive trial designs quickly -- quick path to market, quickly being able to see what kind of combinations work best. Have you thought about exploring any -- an adaptive trial design for 3116, given the space is very competitive, and there could be certain combinations that work best? -------------------------------------------------------------------------------- Steven L. Hoerter, Deciphera Pharmaceuticals, Inc. - President, CEO & Director [57] -------------------------------------------------------------------------------- Yes. Thanks, Robyn. It's Steve. So let me take the first question, and then I'll ask Matt, if you'd like to take the second question about 3116. And then your question about combinations are adaptive trial designs going forward. So first, with respect to what we would expect to see from Sutent, nothing has really changed on that front. So as you know, in the label, the PFS for Sutent in the second-line is at 5.6 months. And we -- when we were designing INTRIGUE spent a lot of time with investigators and thought leaders trying to understand what the best estimate was to use for Sutent's PFS in the second-line setting. And all of those thought leaders and investigators all coalesce around 6 months as being the right estimate to use. So we haven't learned anything new on that front, certainly not from anecdotal conversations with individual physicians that change our view that 6 months is the right estimate to use, and that was the basis for our design than of the INTRIGUE study. So Matt, do you want to take the second part of that question about 3116? -------------------------------------------------------------------------------- Matthew L. Sherman, Deciphera Pharmaceuticals, Inc. - Executive VP & Chief Medical Officer [58] -------------------------------------------------------------------------------- Yes. So thanks, Robyn. It's a really good question. And so first, to start off, we're going to combine 3116 with an inhibitor, trametinib and the MAP kinase pathway. And we look forward to evaluating the data, and we'll be able to make a determination whether or not most move forward to registration. And certainly using a novel adaptive design gives companies the ability to just expand the current cohorts of patients perhaps as they see a high level of activity, and that's the data that could be brung forward to regulatory authorities. But in addition to, there may be other combination partners that 3116 can be combined with, and we've started to generate some of that data as well, too. So it could go beyond the MAP kinase pathway in combination. -------------------------------------------------------------------------------- Operator [59] -------------------------------------------------------------------------------- And I'm not showing any further questions at this time. So I'd turn the call back over to Steve to give any closing remarks. -------------------------------------------------------------------------------- Steven L. Hoerter, Deciphera Pharmaceuticals, Inc. - President, CEO & Director [60] -------------------------------------------------------------------------------- Great. Thanks, Victor. Thanks to all of you for joining us on this afternoon's call and for your continued support of Deciphera. We look forward to keeping you all updated on our continued progress, not only with the QINLOCK launch but also as the balance of our development programs really come into focus this year and we provide some meaningful further data updates. Hope you'll have a great evening. Thanks again. -------------------------------------------------------------------------------- Operator [61] -------------------------------------------------------------------------------- Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.