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Edited Transcript of DOVA.OQ earnings conference call or presentation 6-Aug-19 1:00pm GMT

Q2 2019 Dova Pharmaceuticals Inc Earnings Call

DURHAM Aug 13, 2019 (Thomson StreetEvents) -- Edited Transcript of Dova Pharmaceuticals Inc earnings conference call or presentation Tuesday, August 6, 2019 at 1:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* David S. Zaccardelli

Dova Pharmaceuticals, Inc. - President, CEO & Director

* Jason Hoitt

Dova Pharmaceuticals, Inc. - Chief Commercial Officer

* Mark W. Hahn

Dova Pharmaceuticals, Inc. - CFO & Secretary

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Conference Call Participants

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* Eun Kyung Yang

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

* Jonathan Miller

Evercore ISI Institutional Equities, Research Division - Associate

* Joseph Pantginis

H.C. Wainwright & Co, LLC, Research Division - MD of Equity Research & Senior Healthcare Analyst

* Laura Kathryn Chico

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

* Matthew Lee Kaplan

Ladenburg Thalmann & Co. Inc., Research Division - MD & Head of Healthcare Equity Research

* Tessa Thomas Romero

JP Morgan Chase & Co, Research Division - Associate

* James Bussel;Weill Cornell Medicine;Professor of Pediatrics

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Presentation

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Operator [1]

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Good morning, and welcome to Dova Pharmaceuticals Second Quarter 2019 Financial Results and Operating Highlights Conference Call. (Operator Instructions)

Before we begin, I would like to remind you that during today's call, statements about the company's future expectations, plans and prospects constitute forward-looking statements for the purposes of Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in the Risk Factors section of the company's annual report on Form 10-K filed with the SEC on March 5, 2019, and quarterly report on Form 10-Q for the quarter ended June 30, 2019, which can be accessed on the EDGAR database at www.sec.gov and other filings that the company makes with the SEC from time to time.

In addition, any forward-looking statements represents speakers' views only as of today. It should not be relied upon as representing the speakers' or the company's views as of any subsequent date. While the company may elect to update these forward-looking statements at some future point, the company specifically disclaims any obligation to do so even if the company's views change. These forward-looking statements should not be relied upon representing the company's views as of any subsequent date to today.

Please be advised that today's call is being recorded and webcast.

I would now like to turn the call over to Mr. David -- to David Zaccardelli, Dova's President and CEO. David, you may begin your conference.

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David S. Zaccardelli, Dova Pharmaceuticals, Inc. - President, CEO & Director [2]

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Thank you, operator, and good morning, everyone. Joining me on the call this morning are Mark Hahn, our Chief Financial Officer; Dr. Lee Allen, our Chief Medical Officer; Kevin Laliberte, our Senior Vice President, Product Development; and Jason Hoitt, our Chief Commercial Officer. In addition, as noted in our press release, we are delighted to have Dr. James Bussel joining us today.

The past few weeks have been incredibly productive and transformative for Dova. We are pleased that in late June, the FDA approved DOPTELET for the treatment of thrombocytopenia in adults with chronic immune thrombocytopenia, or ITP, who have had insufficient response to previous treatment. And on July 16, just 3 weeks ago, DOPTELET was launched commercially for the ITP indication in the United States.

I will discuss in more details regarding recent activity shortly. But before I do, we have a very special guest with us on the call this morning, Dr. James Bussel, Professor Emeritus at Weill Cornell Medicine and a leading global expert in the treatment of ITP, joins us today to discuss his thoughts on the approval of DOPTELET and his view on how DOPTELET changes the treatment paradigm for adult patients with ITP.

Dr. Bussel?

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James Bussel;Weill Cornell Medicine;Professor of Pediatrics, [3]

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Thank you very much.

Just to give you a brief overview of ITP, though, I'm sure that the great majority of you are very sophisticated, ITP has been the classic hematologic autoimmune disease mediated by antibodies against platelets. The biggest development in our understanding in the last 20 to 30 years has been that these antibodies also attack the cells that make platelets megakaryocytes and cause reduced platelet production as well.

Because of the strong effects of thrombopoietin on megakaryocytes, that can help them to evade this damage and nonetheless be able to make platelets, obviously a critical feature in ITP.

This hypothesis or thesis, if you will, has been well proven over now more than 10 years by the use of -- the successful use of thrombopoietic agents in ITP and, as such, has opened a whole new therapeutic pathway for patients, clearly effective in well over 50%, including some of those who are the most difficult to treat.

In the past, we have romiplostim, which is -- requires a subcutaneous injection weekly from a health care provider. The current status is that the FDA does not allow patients to learn to inject themselves at home.

There's also eltrombopag, which is taken once a day by mouth but has very special dietary requirements and means that in order to successfully take that, you have to plan your whole day's eating to have a long stretch of no eating and an empty stomach for it to be absorbed.

Back in 2014, I was the lead investigator and first author in the publication of the Phase II trial of avatrombopag, which is the name for DOPTELET. In that study, our site entered 26 of the 64 patients in a very successful Phase II study because it was so obvious to us how effective it was with the idea that you could take it once a day without any need to seriously consider diet and when you took it. We, therefore, were very excited when it was pursued further in Europe with a very successful and very strongly positive Phase III study and has now become available for patients.

In my experience over -- well over 30 years, when you give patients a choice, would you rather get a shot once a week or take a pill by mouth once a day, the overwhelming majority will choose to take a pill once a day. That choice with avatrombopag is free from the dietary restrictions that can make that difficult for many people. And I, therefore, am very excited about the approval and the fact that avatrombopag will be available to a wide range of ITP patients. Thanks, Mr. Zaccardelli.

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David S. Zaccardelli, Dova Pharmaceuticals, Inc. - President, CEO & Director [4]

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Thank you, Dr. Bussel, very much for your insightful review of the importance of DOPTELET and how it fits into the current treatment paradigm for ITP and for participating in the call today. Really appreciate it. We are equally excited about the impact, we believe, DOPTELET will have on the treatment of ITP.

Now let me outline the agenda for the rest of today's call as follows.

First, I'll begin by highlighting the recent FDA approval of our sNDA for DOPTELET for the treatment of ITP and our ongoing launch efforts, including some very early achievements from the field.

I'll then move to recent updates related to our first approved indication for DOPTELET, the treatment of thrombocytopenia in adult patients with chronic liver disease who are scheduled to undergo a procedure, or CLD, including the expanded co-promotion agreement with Salix, the recent European approval for CLD and a review of commercial metrics for the second quarter of 2019.

I will then provide an update on the progress of our ongoing Phase III clinical program for chemotherapy-induced thrombocytopenia, or CIT, for which we expect to announce top line results in the first half of 2020.

Finally, I will quickly discuss our overall financial outlook and global partnering strategy before turning the call over to Mark to review the company's financial performance for the second quarter and our strong cash position. After that, we will open the call up for questions.

The FDA approval in late June of DOPTELET for the treatment of ITP was transformative moment for Dova and especially for patients with ITP. Gaining this approval from the FDA was the highlight of an eventful period for Dova as we continued to build on our significant progress towards becoming a leader in the treatment of thrombocytopenia.

As a reminder, the FDA approval of DOPTELET for ITP was supported by safety and highly statistically significant efficacy data from a pivotal Phase III clinical trial and 2 Phase II clinical trials for DOPTELET in patients with ITP. The Phase III clinical data were highlighted in the British Journal of Hematology publication in September 2018 with ITP -- additional ITP data presented at several scientific congresses this year.

We believe there remains a significant unmet medical need for ITP patients, particularly to address the burden of treatment, and we believe DOPTELET is well-differentiated alternative to current treatments available for patients with ITP.

This differentiation for the ITP indication is grounded in 4 unique and clinically important ways. First, DOPTELET is the only oral TPO receptor agonist approved for use in adult patients with ITP that does not have a boxed warning for hepatotoxicity, which is designed to [mention] the products with serious or life-threatening risk. And as a result, DOPTELET does not require routine monitoring of liver function test.

Second, DOPTELET is the only oral TPO receptor agonist approved for use in adult patients with ITP that is conveniently taken with food and does not have any food-type restrictions, including limits on calcium intake.

Third, DOPTELET as an oral tablet does not require a weekly visit to a health care professional's office to receive a subcutaneous injection.

And finally, DOPTELET has a proven efficacy profile with 66% of patients achieving a platelet count over 50,000 by day 8 of therapy and platelet counts that were maintained in the target range during the 6-month treatment period in the Phase III clinical study.

While TPO receptor agonists are commonly used to treat ITP, factors such as the need for weekly subcutaneous administration, monitoring for potential liver toxicity and stringent dosing restrictions with regard to the timing of meals and types of food, each of which represents a significant barrier to compliant and effective TPO receptor treatment.

As mentioned, DOPTELET is an oral tablet conveniently taken with food, and thus we believe its lack of dietary restrictions make it well suited to fit more easily into a patient's lifestyle rather than disrupting it. Dietary restrictions for other oral TPO approved for use in ITP require taking the other oral TPO product 1 hour before or 2 hours after any meal. And if more than 50 milligram of calcium is consumed, then the restrictions increased to 2 hours before and 4 hours after a meal, which, as you can imagine, can be incredibly inconvenient and disruptive to a patient's life.

Keep in mind a 50-milligram calcium threshold can be exceeded by a slice of American cheese, one cup of broccoli and even many types of bottled water.

As a reminder, treatment of ITP represents a significant opportunity in a well-established market. The estimated U.S. prevalence of ITP is approximately 60,000 patients with an estimated TPO receptor agonist market size of approximately $1 billion in the U.S. Based on our market research, we believe there is a demand for more ITP therapies, particularly oral options with a preferred safety profile and increased dosing convenience for adult patients. We believe physicians are interested in having a broad range of treatment options due to the impact of existing therapies on their patients' daily lives.

It's also important to highlight the ITP patient population is diverse. A particular treatment for one patient with ITP may work while it may not be effective for another patient. And further, over time, patients may experience a treatment failure and need to move on to a different treatment option, thus leaving patients resigned to coping with the frustrations of managing the daily burden of their treatment as well as their disease. That is why it's so critical for patients and physicians to have multiple treatment options available to them.

We believe there is a sizable ITP population available for Dova to address quickly. I would highlight that currently, patients receiving TPO receptor agonists only average about 8 months of use before needing to change therapies for several possible reasons. These include managing food restrictions, lack of an adequate response, frequent visits to a physician's office that may become inconvenient for the patient and physicians pausing therapy to assess durability of response.

With these dynamics in the market, we believe there's a sizable patient population for DOPTELET to address.

Now moving to our commercial strategy. Starting with the sales force, as we discussed previously, we have now strategically focused Dova reps exclusively on serving the ITP market and have also modestly increased the size of our sales footprint to approximately 60 territories. The newly hired members of the sales team are very experienced and bring on average 20 years of industry experience with 10 years in the hematology/oncology space.

With DOPTELET now launched for ITP, our sales reps are calling on approximately 6,000 health care providers, primarily hematologists, oncologists in both the community and academic setting. These physician offices represent approximately 96% of the ITP patient population for DOPTELET. As such, we believe our sales force is well sized to call on and educate the physicians caring for adult patients with ITP in the U.S.

As we indicated on our ITP approval call, the wholesale acquisition price, or WAC price, of DOPTELET for both ITP and CLD has been adjusted and is now similar to other TPO receptor agonists used to treat ITP. Based on extensive research and feedback from payers in both the Medicare and commercial segments, we believe at this price market access and pricing will not be a barrier to uptake.

We will also continue to have both patient assistance and co-pay programs to support patients and their ability to access DOPTELET.

While we launched into the ITP space just 3 short weeks ago and it's still incredibly early in the launch, I wanted to give you some specifics from these initial days.

To date, greater than 2,600 sales calls have been made by our ITP team, reaching and educating over 2,100 health care professionals on DOPTELET for the treatment of ITP. We have already seen prescriptions for ITP patients written, paid for and shipped. Further, prescription and shipment numbers from these early days of launch have exceeded our internal expectations. We are extremely encouraged by this early uptake and believe it represents a positive first step towards our goal of making DOPTELET the preferred TPO receptor agonist for the treatment of ITP in adult patients.

With regard to payers, we have communicated with over 75 plans or PBMs since approval, sharing information on DOPTELET's approval in ITP and updated pricing information. These 75 plans represent more than 90% of all covered lives.

For launch, the market access team's strategic priority is focused on the top 30 plans across commercial, Medicare and Medicaid, representing an estimated 70% of total covered lives. They have had over 25 in-person clinical and business presentations since approval with payers representing approximately 50% of the covered lives.

Given the early stage of launch, we are not providing any additional metrics for ITP at this time. We plan to monitor the launch to determine most appropriate metrics, the best -- that best provide real insight into our progress. Once determined, we are committed to providing these metrics on a future call.

Now moving to CLD. As we mentioned on the ITP approval call, we strategically expanded our partnership with Salix. In addition to gastroenterology, colorectal surgery and proctologys segment, Salix now has the exclusive right to co-promote the CLD indication for DOPTELET to the hepatology and interventional radiology segments. We will continue to pay Salix a commission on a percentage of net sales in these specialties, which is expected to be in the mid-30s. In addition, the co-promotion agreement has been extended by 1 year until September of 2023. Salix remains a critical component of our overall commercial strategy, and we believe the expansion of our partnership with Salix and the impact of our pricing change will continue to increase the use of DOPTELET in adult patients with CLD.

Now for metrics for the second quarter for CLD. First, net product sales for DOPTELET were $3.5 million for the quarter. Inventory held by specialty pharmacies in Dova's network decreased from March 31, 2019, to June 30, 2019, by approximately 17% or $450,000 as we believe our network of specialty pharmacies have -- may have anticipated their inventory would be exchanged at the time of ITP approval due to the CLD-specific labeling, as we previously discussed.

For prescriptions in the second quarter that have gone through the adjudication process with payers, 77% of those prescriptions were approved. On average, the time to decision for a referral was 7.4 business days in the quarter. While the approval rate is down somewhat from prior quarters, it is important to note that a few large payers instituted payer restrictions in the second quarter based on DOPTELET's prior price relative to the competition.

With the new WAC price, we have begun addressing this issue with payers and anticipate the restrictions will be removed in the second half of 2019. We have already seen a few payers either remove the restrictions or not institute them since we lowered the WAC price.

In summary, we were pleased that prescriptions written for CLD increased approximately 7% in the second quarter as compared to the first quarter. However, as a result of restrictions instituted by certain payers, actual shipments to patients remained fairly constant from Q1 to Q2, while the decrease in channel inventory adversely affected our net revenue in Q2. With the change in WAC price for DOPTELET, we believe we have removed the competitive pricing concerns, and going forward, we anticipate that payer restrictions for DOPTELET will be removed.

Also, we were pleased the European Commission recently granted marketing authorization for DOPTELET for the treatment of severe thrombocytopenia in adult patients with CLD who are scheduled to undergo an invasive procedure. The marketing authorization applies to all 28 European Union member states plus Iceland, Norway and Liechtenstein. The European marketing authorization is another significant milestone for Dova.

Next, I'll discuss our continued progress in our Phase III, randomized, double-blind, placebo-controlled trial that is evaluating the efficacy and safety of DOPTELET in subjects with non-hematologic tumors receiving chemotherapy who developed CIT.

We have continued to progress enrollment of the 120 required patients and are on track to announce top line results in the first half of 2020. As a quick reminder, CIT is a serious complication in cancer patients undergoing cytotoxic chemotherapy for the treatment of various tumors. Currently, with no approved drug therapies for CIT, treatment includes chemotherapy dose reduction or a chemotherapy cycle delay, either of which may adversely affect clinical outcome of the patient's cancer treatment. In some cases of CIT, administration of platelet transfusion occurs with approximately 125,000 transfusions administered every year to patients with CIT. In the U.S., there are approximately 765,000 patients annually that receive chemotherapy. Among those patients, roughly 93% have solid tumors with approximately a 10% incidence of thrombocytopenia in this patient population. Based on these facts, we estimate that the addressable CIT market to include approximately 71,000 patients annually in the U.S.

Assuming the use of DOPTELET in at least 3 courses of chemotherapy for each patient, that results in over 200,000 potential treatment uses in the U.S.

The study dose of DOPTELET in CIT is 60 milligrams a day for 5 days before and 5 days after a course of chemotherapy, which, if priced at the current level, equates to approximately a $2 billion market opportunity in the U.S. We believe DOPTELET has the potential to fill an important unmet medical need for patients experiencing CIT and represents a significant market expansion opportunity for DOPTELET.

Before I turn the call over to Mark, I want to quickly discuss our financial position and ex U.S. partnering status.

We believe that Dova has sufficient cash reserves and available access through current debt financing and the existing partnership with Fosun to fund our business through top line results of CIT and beyond. Most importantly, we are keenly focused on achieving profitability, and if sales ramp in line with our expectations, we believe, we could achieve positive cash flow within the next 1 to 2 years.

As a reminder, outside of the U.S., we intend to partner with companies that are experts at commercialization in their respective territories to market DOPTELET. We are in ongoing discussions with numerous potential partners in multiple territories, and we'll provide updates as these discussions progress further. These partnerships could provide additional upfront payments, milestones and royalties from licensing DOPTELET outside the U.S. to increase our cash position and financial strength to fund the business, including potential additional development programs. As mentioned on previous calls, we will continue to evaluate opportunities for in-licensing products and programs that may be complementary to our pipeline and corporate strategy.

With that overview, I will now turn the call over to Mark to present a financial view for the quarter. Mark?

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Mark W. Hahn, Dova Pharmaceuticals, Inc. - CFO & Secretary [5]

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Thanks, Dave, and good morning, everyone. Let me begin today with the operating results.

For the second quarter of 2019, Dova reported net product sales of $3.5 million. As a reminder, we recognize revenue using the sell-in methodology when products are delivered to our specialty pharmacy partners.

While channel inventory decreased toward the end of the second quarter, it's important to note that all the inventory in the channel was packaged and labeled for the CLD indication. This inventory will be returned to Dova for destruction and replaced on a dollar-for-dollar basis with product appropriately labeled for both the CLD and ITP indications.

Cost of sales for the first quarter were $0.4 million, which consists of the cost of inventory, royalty payments and certain distribution and overhead costs. Cost of sales has been running at approximately 13% of net sales over the last several quarters, and we expect that percentage to increase in the short run as we work through our existing inventories.

R&D expenses were $4.5 million in the second quarter of 2019, which was consistent with R&D expenses for the second quarter of 2018.

SG&A expenses were $15.5 million in the second quarter of 2019 compared to $18.6 million for the same period in 2018. This decrease was largely driven by Dova having the full complement of sales force for most of the second quarter of 2018, while our ITP sales team largely started with the company late in June and early in July 2019.

We had a net loss of $17.1 million for the second quarter of 2019 compared with a net loss of $19.7 million for the second quarter of 2018.

During the second quarter, we entered into an amended and restated loan agreement with Silicon Valley Bank in order to refinance the $20 million debt facility we entered into with SVB in April of 2018. In early Q3 of 2019, we borrowed an additional $10 million under the new facility. The new facility also provides us access to additional capital. In addition to the $10 million we drew in Q3, we have the ability to draw up to an additional $20 million in the aggregate and up to 2 tranches upon the achievement of certain regulatory and commercial milestones upon specified dates. The new facility is currently in an interest-only period, which extends to August 2020 and will automatically extend to May 2021 if the additional draws are made.

On June 30, 2019, we had $76.8 million in cash and equivalents. After giving effect to the $10 million draw I just mentioned, on a pro forma basis our cash balance is $86.8 million. We believe this cash will support our operating activities for at least the next 12 months, allowing us sufficient resources to complete the CIT study, including readout of top line data in the first half of 2020.

We believe the potential additional borrowings under the new facility will provide supplemental runway if drawn. Additionally, within the next 12 months, we expect to receive a milestone payment upon the achievement of certain regulatory milestones by our partner in China, Fosun Pharmaceuticals.

Furthermore, as Dave mentioned, we are in discussions with numerous potential commercialization partners in Europe, Japan and other territories. We believe potential upfront and milestone payments from any such ex U.S. partnerships could further enhance our runway.

And now I'll turn the call back to Dave. Dave?

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David S. Zaccardelli, Dova Pharmaceuticals, Inc. - President, CEO & Director [6]

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Thanks, Mark. Before we open the line to questions, I just want to conclude by highlighting our key priorities.

Moving forward, we are focused on: executing the successful launch for DOPTELET in the ITP indication; supporting the continued growth of the CLD indication; progressing enrollment in the CIT trial to generate top line data in the first half of 2020; obtaining partnerships in Europe, Japan and other territories for DOPTELET; and maintaining a strong balance sheet.

With the incredible progress we have made over the recent months, I continue to believe Dova has the people, product and resources necessary to deliver novel therapy to patients in need and create significant value for shareholders and increase our leadership in the treatment of thrombocytopenia.

With that, I'd like to open the lines for questions. Operator?

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question comes from the line of Eun Yang with Jefferies.

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Eun Kyung Yang, Jefferies LLC, Research Division - MD & Senior Equity Research Analyst [2]

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I have a couple of questions for Dr. Bussel and as well as the company. So Dr. Bussel as well as the company. So Dr. Bussel, in the last 12 months or so, there are 2 new drugs approved for ITP, DOPTELET and Tavalisse. So how -- can you talk about how you would utilize those drugs in your patients? And the second question is if a patients are not responding to one of the 2 TPO-mimetics, would you use another TPO-mimetic in the -- those patients?

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David S. Zaccardelli, Dova Pharmaceuticals, Inc. - President, CEO & Director [3]

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Okay, Dr. Bussel...

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James Bussel;Weill Cornell Medicine;Professor of Pediatrics, [4]

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In regard to the first question, I have been very involved in the development of Tavalisse or fostamatinib. I believe that it definitely has advantages and has a different mechanism than does -- then do the TPO agents. However, I would be surprised in the United States at least if avatrombopag or DOPTELET was not chosen before fostamatinib, unless there was a very compelling reason to use one or the other.

In regard to your second question about using one TPO agent if another doesn't work, the data very much surprised me when it came out that it seemed like, yes, you could use one, and if it didn't work, using another in the setting of 2 would have a 50% chance of success. Avatrombopag and eltrombopag bind apparently to the same place on the thrombopoietin receptor. So if a patient used romiplostim and it didn't work, the literature strongly -- the published work strongly supports trying and -- one of the other agents. In this case, we're talking about avatrombopag. If somebody had used eltrombopag and it didn't work, the data again might surprise me, but we would not expect avatrombopag to necessarily work much better, although it is possible given that on a milligram per milligram basis, it appears to be stronger than eltrombopag. Thank you.

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Eun Kyung Yang, Jefferies LLC, Research Division - MD & Senior Equity Research Analyst [5]

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And then I have a couple of questions for the company. So David, in terms of partnership, is it likely -- I'm talking about ex China. Is it likely depend upon CIT data in the first half of next year? And then also for the CIT indication Phase III data, is this sufficient to apply for approval in Europe as well?

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David S. Zaccardelli, Dova Pharmaceuticals, Inc. - President, CEO & Director [6]

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With regard to our partnerships outside the U.S., as mentioned, we have very active, ongoing discussions with potential partners now. We don't believe it's necessarily impacted by having the CIT results. We think that with now the ITP approval in the U.S. and our upcoming discussions in Europe with regard to the ITP pathway, as well, of course, the CLD approval in Europe and -- is adequate to progress that. And we've had very good enthusiasm from partners not only in Europe but in other parts of the world including Asia. So we're quite enthused about that. It's just a matter of making the best informed decision and progressing those discussions which we'll keep you definitely informed.

With regard to CIT, I guess, in Europe, we will continue that conversation. We were very focused on making sure that what we were doing was satisfactory in the U.S. We believe that the study would be supportive in Europe, but we will have those conversations in the coming quarters with the European regulators.

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Operator [7]

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Your next question comes from the line of Anupam Rama with JPMorgan.

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Tessa Thomas Romero, JP Morgan Chase & Co, Research Division - Associate [8]

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This is Tessa filling in for Anupam this morning. Perhaps one for both the doctor and the team. In the early innings of the DOPTELET launch year in the first few weeks in ITP, can you please comment on what you're hearing from the field about the range of severity that DOPTELET is expected to be used in, i.e. how refractory are patients or how many prior lines of therapy have they seen? And then maybe related to this, what is your expectation on how this could trend in the next 6 to 18 months of the launch?

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David S. Zaccardelli, Dova Pharmaceuticals, Inc. - President, CEO & Director [9]

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So Tessa, I'll give you my perspective and then Dr. Bussel can add any color. I think that we're -- as you know, we're extremely early in the launch, just 3 weeks. We are continuing to get information from the field, a lot of the breakout as to what types of patients and who is being prescribed more specifically, what we don't have. We think that, as I mentioned in my remarks, that patients come from different sources, maybe patients who are newly diagnosed patients who may have already been on treatment with another TPO receptor agonist. It can come from multiple different directions. And that's what we are currently seeing very early on but have really no more color on that.

With regard to the future, we're very encouraged in these early days of the uptake. But again, it's very early. It's just 3 weeks. And so we will continue to monitor that and look forward to providing you additional color on the next quarterly call.

I don't know if, Dr. Bussel, you wanted to add anything to that with regard to the types of patients and refractory patients and what patients would be using DOPTELET.

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James Bussel;Weill Cornell Medicine;Professor of Pediatrics, [10]

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Sure. One of the things the ASH guidelines is strongly highlighting, the ones that are going to come out soon but have been already presented and even published through the December 2018 meeting, is not to use steroids for too long. In effect, what that's going to do is going to push what we could call second-line agents to be used earlier, even in the second and third month of ITP. I think that like anything, it will take familiarity with prescribers who want to use this.

But given that it's been known for a while and given that it has advantages, as I said previously, over other agents, I think it will be used across a wide variety of patients, from ones who maybe received steroids for 1 or 2 months all the way to people who have been refractory to other therapies. And I would anticipate that many people would gradually switch over because of the appeals of how it can be tolerated. The main thing, I think, at the moment is there's not a lot of long-term experience with it, so it may take prescribers and/or patients a little while to get comfortable with using it. But I think the uptake is going to be substantial.

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Operator [11]

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Our next question comes from the line of Laura Chico with Wedbush Securities.

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Laura Kathryn Chico, Wedbush Securities Inc., Research Division - SVP of Equity Research [12]

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I have just a couple here. But first, for Dr. Bussel, I guess among your current ITP patients, who do you see most likely being the best candidates for DOPTELET? And conversely, what patients would not be good DOPTELET candidates in your view?

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James Bussel;Weill Cornell Medicine;Professor of Pediatrics, [13]

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Dave, is it okay if I answer?

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David S. Zaccardelli, Dova Pharmaceuticals, Inc. - President, CEO & Director [14]

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Yes. Sure. Yes, please.

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James Bussel;Weill Cornell Medicine;Professor of Pediatrics, [15]

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As far as best candidates, I think anybody who's closer to diagnosis is likely to respond better than somebody who's had ITP for a number of years and been very difficult to treat. As I indicated, I think more and more patients will get TPO agents earlier, and that will certainly include avatrombopag, meaning while they're still newly diagnosed in the first 3 months and certainly early persistent from 3 to 6 months.

I think ones who might not be as good candidates could be ones, which will be true for any thrombopoietic agent, who were at very high risk of thrombosis if their platelet counts go up, ones who have antiphospholipid antibodies who've had a thrombosis in the past who have strong family history of thrombosis, something like that. People use thrombopoietic agents in those patients but are a little bit more conservative and cautious and may add aspirin as soon as the platelet count goes up.

Finally, as I mentioned previously, we don't know if people who not only don't respond to romiplostim but don't respond to eltrombopag will be able to be treated with avatrombopag, and we'll have to wait for the data to see. But in reality, that's a pretty small fraction of ITP patients who would not be good candidates.

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Laura Kathryn Chico, Wedbush Securities Inc., Research Division - SVP of Equity Research [16]

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That's very helpful. And then I guess one more question on CIT and CLD. First, CIT. David, I'm wondering if you can just kind of step through a little bit more detail how you're deriving that estimate of about 70,000 CIT patients in the U.S. market. And then on CLD, it looks like -- you mentioned the adjudication rate dropped down versus the prior quarter. I guess I'm also seeing, if my math is correct here, it looks like the number of new prescribers in the quarter dropped versus the first quarter. Any color as to the implications of the Salix team taking over? Or was this purely driven by reimbursement issues?

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David S. Zaccardelli, Dova Pharmaceuticals, Inc. - President, CEO & Director [17]

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Yes. Thanks, Laura, for that excellent question. I'm going to have Jason, I think, talk to both of those points.

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Jason Hoitt, Dova Pharmaceuticals, Inc. - Chief Commercial Officer [18]

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Yes. Thanks, Laura. It's great questions. So the way we get to the 71,000 is from CDC data that highlights the number of outpatient chemotherapy patients each year in the U.S. We get the 765,000 number. Based on our own market research, we estimate that about 85% of chemotherapy is given in the outpatient setting. Oh, I'm sorry, that 765,000 includes the 85%. It's 650,000 or so from CDC. So with the 85% outpatient, if you include the inpatient chemotherapy, that gets you to the 765,000.

Roughly, from the American cancer study, 93% of cancer patients have solid tumors. So that gets you the solid tumor number.

And then a recent publication showed that among patients with solid tumors, you see a 10%-or-so incidence of severe thrombocytopenia in those patients, which then gets you to the 71,000 annual patients in the U.S.

So that's where the math comes from. I think we have those references in our corporate slide deck that's on our website, but we're happy to go into more detail with you at a future time, if you'd like.

And then with regard to the CLD question, we did see the number of prescribers drop -- the number of new prescribers drop in June specifically. I think it's a -- it was a combination of a couple of factors. As I mentioned on our last earnings call, we continue to see the trend for prescriptions and business coming from repeat prescribers grow. So the number of repeat prescriptions that we saw in Q2 was, as a percentage of our business, higher than in any previous quarter. And I think the reason you did see new prescribers fall somewhat is in large part due to the operationalization of some step edits with the major plans in the second quarter.

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James Bussel;Weill Cornell Medicine;Professor of Pediatrics, [19]

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Jason, could I add something?

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Jason Hoitt, Dova Pharmaceuticals, Inc. - Chief Commercial Officer [20]

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Sure.

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James Bussel;Weill Cornell Medicine;Professor of Pediatrics, [21]

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I would like to just say something about chemotherapy-induced thrombocytopenia just to make sure everybody understands this.

When you give chemotherapy, it typically will most attack rapidly dividing cells, usually in the bone marrow and also in the GI tract. When it does that, your white count, your platelet count fall, and this creates an issue. You don't want to give platelet transfusions just to support giving the next round of chemotherapy. You wait until the count gets to, depending on the protocol, usually 75,000 or 100,000. If that's delayed, and that means you wait an extra week or even longer, then you lose efficacy of your chemotherapy because the cancer has more time to recover as well. I think 10% of solid tumor chemotherapy is a reasonably conservative estimate, and these agents, as have been shown by 2 different studies from Memorial Sloan Kettering and 1 from China, argue that you can give these in a new way, meaning give them continuously through chemotherapy, and have a great effect on giving on-time chemotherapy and not dose reducing. If that holds up in the clinical setting, that could translate very easily into better survival.

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Jason Hoitt, Dova Pharmaceuticals, Inc. - Chief Commercial Officer [22]

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Thank you, Dr. Bussel.

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Operator [23]

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Your next question comes from the line of Jonathan Miller with Evercore.

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Jonathan Miller, Evercore ISI Institutional Equities, Research Division - Associate [24]

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Congrats on all the progress in the ITP launch. I guess before we get into ITP too much too quick, now that you have a CLD approval in EU, are ex U.S. deals more of a focus than they've been in the past? I know you've been looking at these continuously, but the opportunity to launch immediately, does that make that more of a focus? And then secondly, I know you said that the 6,000 hemo/oncs serve about 96% of the ITP market as a whole -- ITP market in the U.S. Is that the whole ITP market or just the TPO-RA prescribers? And is there a possibility that additional prescriber groups will turn out to be important like what happened with the CLD launch?

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David S. Zaccardelli, Dova Pharmaceuticals, Inc. - President, CEO & Director [25]

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Thanks, Jon, for the questions. Let me -- maybe I'll speak to the first on CLD and then have Jason expand on the sales in ITP.

With regard to CLD, yes, as you pointed out, of course, we do now have approval in Europe. We had ongoing discussions prior to that approval. Clearly, with the approval, it strengthens those conversations. We also purposely wanted to get the U.S. readout on ITP and the approval, which, as you know, occurred, which, again, strengthens the conversations and the opportunity, we believe, in Europe and the possibility for approval there. And as I mentioned, we're looking forward to speaking with the regulatory group in Europe in the coming couple of months. So with all of that, we are, again, strategically making sure that we have an increasing position in our conversations to optimize the potential for DOPTELET outside the U.S.

We are very active. It is a priority for the company and -- to progress that. As we talked about today, it's important for our continued incoming milestones can -- increasing our cash position and our overall strategy. So I think you will see continued progress in 2019 on that front for sure. And as I mentioned, we'll keep you updated as we progress.

And now Jason, you want to talk about the second question?

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Jason Hoitt, Dova Pharmaceuticals, Inc. - Chief Commercial Officer [26]

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Yes, sure. Thanks for the question, Jon. So when you look at the 6,000 HCPs that we're covering with our roughly 60 salespeople, that covers 96% of the ITP addressable patient population for DOPTELET. So this primarily comes from an analysis of claims database. And if you look at the total ITP treating universe, it's about 8,000 HCPs. But when you remove those physicians that really only treat front line with steroids and/or IVIG, you get 6,000 physicians that treat in the second line, which is reflective of the label for DOPTELET for those patients who have had an insufficient response to previous treatment. So I would anticipate that, as Dr. Bussel mentioned, we have the opportunity to gain patients in second line and beyond regardless of what they've been treated with previously provided that they had an insufficient response. So those 6,000 HCPs that we mentioned represent the 96% of the ITP patient potential in second-line treatment and beyond.

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Jonathan Miller, Evercore ISI Institutional Equities, Research Division - Associate [27]

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Great. That makes sense. I guess then one follow-up on ITP sales force. You mentioned that the SG&A relative to last year could be down because the sales staff was hired at the end of the quarter. In the past, you had said you were repurposing existing sales staff, and so I was wondering what proportion of the ITP sales force you've currently got is old CLD sales folks that are getting repurposed versus new hires. And are you done building out that sales force at this point?

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Jason Hoitt, Dova Pharmaceuticals, Inc. - Chief Commercial Officer [28]

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Yes, it's a great question, Jon. So right now, we have a handful of territories left to fill. Of the roughly 60 territories that we got or 60 sales professionals that we've got, 17 are from the previous sales force, many of whom have previous hema/onc experience. And the remainder are folks that we've recently recruited into Dova that come from a hematology/oncology background with about 10 years of experience coming from commercially successful companies like Novartis Oncology, Celgene, Amgen, et cetera.

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Operator [29]

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(Operator Instructions) Our next question comes from the line of Matt Kaplan with Ladenburg Thalmann.

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Matthew Lee Kaplan, Ladenburg Thalmann & Co. Inc., Research Division - MD & Head of Healthcare Equity Research [30]

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I guess for Dr. Bussel first. With respect to DOPTELET, how are you thinking about its use in terms of switching patients that you currently treat from other TPOs to DOPTELET? When would you do that? Or is that kind of a patient-driven decision? And how that happens?

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James Bussel;Weill Cornell Medicine;Professor of Pediatrics, [31]

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I'm very big on individualizing care. And most patients, if they've been on something and it's working well, may not very much want to switch. But for example, somebody, let's say, started on eltrombopag -- this is just a random example. Somebody started on eltrombopag when they were 15, and they were coming home every night to dinner, so they could eat dinner at 6, not eat after dinner, and take eltrombopag at bedtime, and that would work well in terms of the dietary restrictions. Now maybe they've grown up, they're 17, they're doing a lot of "teenager things," they're not eating at home at 6 o'clock every night, they have trouble managing and finding an eating free time, maybe they go out for drinks, all those things. Those are patients I might switch.

If somebody says, it's annoying but I can handle it, and I'm doing fine, that's okay, and some people might like getting shots once a week. Maybe their sister is a nurse or a friend of theirs who's an EMT lives down the block, and therefore those people might say, I know what's going on here, it's working, I'm comfortable, I don't want to take a risk by changing and having something new happen that I'm not aware of even though it sounds good. So I think it's going to be a very individual thing. But I think we already know that a reasonable number of patients will gradually change over time.

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Matthew Lee Kaplan, Ladenburg Thalmann & Co. Inc., Research Division - MD & Head of Healthcare Equity Research [32]

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And in terms of the de novo patients, how do you think about in terms of the percentage of patients that, say, are coming off of steroids that you would pull DOPTELET first versus the other?

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James Bussel;Weill Cornell Medicine;Professor of Pediatrics, [33]

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Again, the way I would handle that, I give the patient a choice. And because there is very many therapies now available, it's not reasonable to list every single one and go through every single immunosuppressive agent and et cetera. So I kind of talk about the pros and cons of splenectomy, rituximab and a TPO agent. And depending on the patient's preference, they could choose one or the other of those. And I would usually go with their preference, although I would guide it if there were special factors that would make things not favorable, let's say, for one of the options. For example, if somebody has low immunoglobulin levels, taking their spleen out is more risky, and they'd have a greater chance, we believe, of developing a serious, life-threatening or life-taking infection. So I would probably not want them to do a splenectomy. Again, that's just one of many examples.

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Matthew Lee Kaplan, Ladenburg Thalmann & Co. Inc., Research Division - MD & Head of Healthcare Equity Research [34]

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And then just switching gears a little bit. In terms of coverage and access reimbursement now, can you guys -- where are you in terms of -- for ITP and CLD across the board for DOPTELET?

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Jason Hoitt, Dova Pharmaceuticals, Inc. - Chief Commercial Officer [35]

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Yes. It's a great question, Matt. And obviously, our discussions with payers are ongoing. I think as Dave mentioned in his prepared remarks, we've shared information on the approval and the price change with 75% of the PBMs and plans that represent 90% of covered -- over 90% of covered lives in the U.S. Our market access team's strategic focus is on the top 30 plans that represent greater than 70% of covered lives in the U.S. But as some anecdotes coming in, we've seen some large plans, the Medicaid plans and others, that had previously implemented step edits such that a patient that was prescribed DOPTELET would have to fail Mulpleta before getting DOPTELET.

We've seen those steps removed in these early days of launch as a result of the adjusted WAC price and our conversations with payers. We've seen one large PBM that had planned to implement a step ultimately remove that before implementation as a result of these discussions. And largely, we've seen a number of plans -- each decision is plan specific, but we've seen a number of plans add DOPTELET in a -- in one fashion or another while they're working through their P&T review.

We've seen other plans put it in a non-formulary position, which doesn't mean that we wouldn't have access. It just means that a physician needs to state medical necessity in order to gain access. So it's a spectrum, but largely what we're seeing in these early days, we're incredibly pleased with how plans are reviewing it, their response to the clinical profile and overall their reaction to the adjustment that we took in WAC price to ensure that price and market access wasn't a barrier to patients receiving a drug that they need.

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Matthew Lee Kaplan, Ladenburg Thalmann & Co. Inc., Research Division - MD & Head of Healthcare Equity Research [36]

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Okay. That's very helpful. And then in terms of just gross-to-net right now, how should we think about that given the price change?

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Mark W. Hahn, Dova Pharmaceuticals, Inc. - CFO & Secretary [37]

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Yes. Matt, this is Mark. Great question. So I think -- let me take a step back and walk back in time. I think as we were talking in previous quarters, people are gravitating around 40%, maybe a little higher than 40% range for the CLD indication at the old price. I think you should expect, for CLD, that to come down a bit. But for ITP, I think it could be even lower. And part of the reason for that is if you think about the profile of the patients, when you have a CLD patient, each individual patient, if they're on Medicare, could hit the donut hole or, if they're on commercial insurance, could have a substantial copay.

When you look at ITP, because of the clinicity and the repeat of dosing, they'll -- if they're a Medicare patient, they'll go through the donut hole early on in therapy. So the later ones will be subject to that rebate. And likewise, with commercial patients, maybe the early prescriptions there'll be some copay associated with it. But later on, they'll hit their out-of-pocket maximums, and those would flow through without any copay assistance from us. So you should expect the ITP gross-to-nets to be lower than the CLDs.

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Matthew Lee Kaplan, Ladenburg Thalmann & Co. Inc., Research Division - MD & Head of Healthcare Equity Research [38]

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Okay. That's very helpful. And then in terms of competition in the CLD market, has lusutrombopag responded to your price cut? Or it's not the case?

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David S. Zaccardelli, Dova Pharmaceuticals, Inc. - President, CEO & Director [39]

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No. Not to our knowledge. So we will monitor that very closely. But at the moment, we have a substantially less -- or a lower WAC price than they.

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Matthew Lee Kaplan, Ladenburg Thalmann & Co. Inc., Research Division - MD & Head of Healthcare Equity Research [40]

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Great. Well, congrats on the progress.

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Operator [41]

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Your next question comes from the line of Joe Pantginis with H.C. Wainwright.

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Joseph Pantginis, H.C. Wainwright & Co, LLC, Research Division - MD of Equity Research & Senior Healthcare Analyst [42]

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And I think my questions might be for Dr. Bussel. Dr. Bussel, good to speak with you again. I'm curious. First, my -- I guess my first question is going into a little more of the weeds for a potential ITP addressable population and then going a little more macro after that. How many ITP patients might have compromised liver metrics to start and then could be patients for initial DOPTELET treatment based on sort of hepatotoxicity components in competitive labels?

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James Bussel;Weill Cornell Medicine;Professor of Pediatrics, [43]

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That's a little bit of a catch 22 answer because if they have abnormal liver test, typically they may not have ITP but may have thrombocytopenia in the context of liver disease or, let's call it, secondary ITP. The percentage of patients who would fit that, I think, would depend a lot on the geography and local epidemiology. There's an article from USC back in 2006 that suggests that they saw a relatively high percentage of those patients because they reported on hundreds of them. I have never seen very many of those. I would say less than 5% in my practice. So it may depend a lot on where you are and who you see.

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Joseph Pantginis, H.C. Wainwright & Co, LLC, Research Division - MD of Equity Research & Senior Healthcare Analyst [44]

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No, that's helpful. And then my more macro question is -- and you did talk to these a little bit during your answers earlier. And that's regarding the ASH guidelines that are being finalized for this year. How do you see these guidelines really driving prescribing habits, especially to the point that this is such a heterogeneous disease?

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James Bussel;Weill Cornell Medicine;Professor of Pediatrics, [45]

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My impression is that -- and again, this is just my impression because I don't think there's great data, though people have tried to publish on this. My impression is that the people who really know ITP probably won't pay too much attention. And I heard Jason, he gave you some statistics on who's doing the treatment, et cetera. I would say the majority of treaters by far are not that ITP savvy. So those people, I think if there's a question, will go to the ASH guidelines and follow them because that will give them a level of confidence and safety, if you will, for them in what they do. So I think it'll have a substantial effect but not an amazing universal effect.

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Operator [46]

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We have no further question at this time. I will now turn the call back to the presenters.

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David S. Zaccardelli, Dova Pharmaceuticals, Inc. - President, CEO & Director [47]

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Thank you, operator. And I just want to close by thanking Dr. Bussel for joining us today and providing his insights as a world expert in ITP, and thank everybody else for joining the call, and we look forward to updating you on future calls. Thanks.

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Operator [48]

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