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Edited Transcript of FTSV.OQ earnings conference call or presentation 13-Aug-19 8:30pm GMT

Q2 2019 Forty Seven Inc Earnings Call

Aug 20, 2019 (Thomson StreetEvents) -- Edited Transcript of Forty Seven Inc earnings conference call or presentation Tuesday, August 13, 2019 at 8:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Ann D. Rhoads

Forty Seven, Inc. - CFO

* Chris H. Takimoto

Forty Seven, Inc. - Chief Medical Officer

* Craig S. Gibbs

Forty Seven, Inc. - Chief Business Officer

* Mark Chao

Forty Seven, Inc. - Founder & VP of Clinical Development

* Mark A. McCamish

Forty Seven, Inc. - President, CEO & Director

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Conference Call Participants

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* Charles Anthony Butler

Roth Capital Partners, LLC, Research Division - MD, Senior Equity Analyst & Head of Biotechnology Research

* Mark Alan Breidenbach

Oppenheimer & Co. Inc., Research Division - Executive Director & Senior Analyst

* Matthew Kelsey Harrison

Morgan Stanley, Research Division - Executive Director

* Michael Werner Schmidt

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

* Swayampakula Ramakanth

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

* Michael Horowicz

Stern Investor Relations, Inc. - Analyst

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Presentation

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Operator [1]

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Good afternoon, and welcome to the Forty Seven Second Quarter 2019 Financial Results Conference Call. (Operator Instructions) Please be advised that this call is being recorded. Following the formal remarks, we'll open up the call for your questions.

At this time, I would like to turn the call over to Michael Horowicz with Stern Investor Relations.

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Michael Horowicz, Stern Investor Relations, Inc. - Analyst [2]

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Thank you. This afternoon, Forty Seven issued a press release detailing its second quarter 2019 financial results, along with anticipated future milestones and recent accomplishments. This release is available on the Investors section of Forty Seven's website at www.fortyseveninc.com.

Today's call will begin with prepared remarks by Dr. Mark McCamish, Chief Executive Officer of Forty Seven; Dr. Chris Takimoto, Chief Medical Officer; and Ann Rhoads, Chief Financial Officer of Forty Seven. Then we will open this -- the call up for questions. Dr. Craig Gibbs, Chief Business Officer; Dr. Mark Chao, Founder and Vice President of Clinical Development; and Dr. Jens-Peter Volkmer, Founder and Vice President of Research and Early Development are also on the call and will be available for questions.

Before we begin, I would like to remind everyone that the -- that statements we make on this call will include forward-looking statements. These statements are subject to risks and uncertainties that could cause actual results to differ. A description of these risks can be found in our most recent periodic reports filed with the SEC. Any forward-looking statements are made only as of today's date, and we undertake no obligation to update these forward-looking statements to reflect subsequent events or circumstances.

I would now like to turn the call over to Mark.

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Mark A. McCamish, Forty Seven, Inc. - President, CEO & Director [3]

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Thanks, Michael. Good afternoon, everyone. Thank you for joining us today to review our second quarter of 2019 financial results and recent business highlights, which we announced earlier today.

In the second quarter, we continued to build and strengthen our clinical pipeline with important progress across multiple programs. This afternoon, our objective is to provide a recap of the promising 5F9 data we presented in the second quarter and update you on our plans to advance in the registration-enabling trials in Myelodysplastic Syndrome, or MDS and diffuse large B-cell lymphoma, or DLBCL. We will also provide some commentary around the market opportunity in both these indications and how we think 5F9 might complement existing therapies and address outstanding areas of unmet need.

First, however, I want to provide perspective on the growing strength of our business. At Forty Seven, we're focused on developing novel checkpoint therapies to activate macrophages in the fight against cancer. Based on our scientific founder's discovery of the fundamental role that CD47 plays in cancer evasion, we believe we can introduce a new therapeutic strategy for treating a range of oncology indications. We aim to block the CD47 do-not-eat-me signal, and as a result, restore ability of the macrophages to attack and destroy cancer.

Today, our development program for 5F9, our lead anti-CD47 antibody, includes over 10 different clinical trials in a range of solid and liquid tumors and many of which are co-funded or funded by our clinical trial collaborators. Our broader pipeline includes additional programs focused on related or synergistic targets. Based on recent interactions with the FDA, we believe we have potential fast-to-market opportunities in both MDS and DLBCL, and we plan to initiate our first registration-enabling trials in the first quarter of 2020. If successful, we would be in a position to file our first BLA for 5F9 in the fourth quarter of 2021.

Now let me turn to our recent achievements. Over the last quarter, we made tremendous progress towards our vision of helping patients worldwide defeat their cancer. In June, we presented exciting new data in MDS; acute myeloid leukemia, or AML; DLBCL; and follicular lymphoma or FL at ASCO, EHA and Lugano meetings. In each population, the data showed meaningful clinical activity and importantly, demonstrated, in patients treated thus far with 5F9, that it offers a safe and well-tolerated option, even for patients who are too frail to tolerate standard care therapy. These results, combined with promising feedback from the FDA, strengthen our confidence in 5F9 as a centerpiece of our corporate strategy and provide a strong foundation upon which we can continue to execute.

In a few moments, Chris Takimoto will walk you through these data in greater detail and also provide color around the registration-enabling trials in MDS and DLBCL, which we expect to initiate early next year. Now I want to take a moment to highlight our strategic collaboration with Ono Pharmaceutical, which we announced in July. We believe this partnership is important for several reasons. First, it enables us to expand the development of 5F9 into key global regions, namely Japan, South Korea, Taiwan and the ASEAN countries, while still allowing us to focus our internal efforts on our path to U.S. registration and potentially, to pursue other global partnerships. Second, it allows us to work with a proven leader in the immuno-oncology space who has the unique regional expertise and capabilities to successfully develop and launch a targeted therapy in East Asian markets. In addition to in-licensing and commercializing therapies like KYPROLIS, BRAFTOVI and MEKTOVI, Ono secured the first regulatory approval for OPDIVO worldwide, which makes us confident that they will be able to advance 5F9 rapidly and efficiently.

Finally, it provides additional nondilutive capital for Forty Seven through both an approximately $15.8 million upfront payment and a potential for up to an additional approximately $104 million in future development and commercial milestones, plus tiered percentage royalties on future net sales.

Also in July, we significantly strengthened our balance sheet with a successful follow-on offering that raised approximately $86.3 million in gross proceeds. With this financing, we have sufficient capital to advance our ongoing efforts through the first quarter of 2021 and well beyond critical data readouts from nearly all of our planned and ongoing clinical trials.

Before turning the call over to Chris to provide his perspective on the new 5F9 data as well as next steps in both MDS and diffused large B-cell, I wanted to highlight one participant in this equity raise. As we announced in August, the Leukemia and Lymphoma Society has recently committed to provide up to $6 million of additional funding to Forty Seven, $3 million of which came as an equity investment in our July offering and $3 million of which will be granted upon the achievement of select milestones in our MDS program. LLS has been a long-time supporter of Forty Seven, and we are humbled by their continued trust in our execution capabilities. We are also encouraged by their commitment to MDS in particular. LLS has made MDS a key strategic priority for the foundation, which speaks to the tremendous unmet need in this patient population and reflects the lack of new options approved in this indication, even if other hematologic cancers have been -- have seen significant advancements. We are excited to partner with them on the development of 5F9 and MDS, where we believe we could provide the first disease-modifying treatment in nearly 15 years.

With that, I'd like turn the call over to Chris Takimoto.

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Chris H. Takimoto, Forty Seven, Inc. - Chief Medical Officer [4]

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Thanks, Mark, and good afternoon, everyone. As Mark described, we've made important progress across our clinical stage pipeline. We're working hard to advance our ongoing trials and expand our clinical activities across our portfolio with a goal of quickly and efficiently dosing new medicines to patients.

In June, we were pleased to share important updates from our Phase Ib clinical trial with patients with MDS and AML and from our Phase Ib and Phase II non-Hodgkin's lymphoma clinical trial in patients with DLBCL and follicular lymphoma. While I will focus my comments today on MDS and DLBCL populations, I do want to highlight that we're very encouraged by the new data in both AML and follicular lymphoma, and we continue to view both as meaningful, long-term opportunities for 5F9.

Turning now to MDS. At ASCO, we presented an initial update on our Phase Ib trial of 5F9 in patients with MDS and AML. In addition to demonstrating an excellent tolerability profile, we saw outstanding clinical activity in a broad population of patients, notably in the higher-risk MDS patients treated with 5F9 and azacitidine, we saw an overall response rate of 100% with a 55% of the patients achieving a CR. Importantly, no responding patients relapsed or progressed on the combination regimen and multiple patients showed further improvement in their responses over time.

We approached the agency with these data in hand, and we've received guidance suggesting that a single-arm trial evaluating 5F9 in combination with azacitidine could be sufficient to support an approval in first-line intermediate to very high-risk MDS with primary endpoints of CR plus PR in durability of response. We anticipate needing a sample size of 91 patients with 6 months' efficacy data and 12 months' safety follow-up. We plan to work with the FDA under a Special Protocol Assessment, or SPA, to finalize key parameters for the study. As of now, we expect to take a 2-part approach. We'll expand our current trial, which uses a weekly dosing regimen to 91 patients to accelerate the acquisition of 12 months of safety data; and we'll work with the FDA under a SPA to design a second, new trial using a more convenient 2-week dosing regimen to evaluate the combination in addition -- in an additional 20 -- sorry, 91 MDS patients. Importantly, either study could be registration enabling, increasing the probability of a successful BLA filing.

We expect to expand and complete enrollment in our existing MDS trial in the third quarter of 2020, to initiate our second MDS trial in the first quarter of 2020 and to complete enrollment in the first quarter of 2021. This will allow us to file a BLA using combined efficacy and safety data in the fourth quarter of 2021. We're particularly excited about our path forward in MDS. Unlike other hematologic malignancies, which have seen a number of new approvals in recent years, the treatment landscape in MDS has not changed in over a decade. There are just 3 approved therapies available for patients, azacitidine, decitabine and lenalidomide. Of these, only azacitidine and decitabine are approved for higher-risk patients, where they offer a combined CR plus PR rate of just 16% to 17%. As a result, the vast majority of MDS patients choose to forego therapy and receive only supportive care such as blood transfusions and growth factors. For this reason, we believe that a disease-modifying therapy such as 5F9 plus azacitidine could have tremendous potential in MDS. We plan to focus our initial efforts on first-line intermediate to very high-risk patients as defined by the IPSS-R and to expand, over time, into the relapse refractory and lower-risk populations.

Let me now turn to our diffuse large B-cell lymphoma program. At EHA and Lugano in June, we presented new data for 5F9 in combination with rituximab in heavily pretreated patients for whom recently approved therapies are frequently not an option. This includes patients with advanced forms of DLBCL who have failed multiple lines of treatment or who are ineligible for existing options such as CAR-T cell therapy due to advanced age, significant comorbidities or the diagnosis of rapidly progressive disease. As we discussed in June, this was a very different population from that which we treated in our Phase Ib study. On average, the Phase II patients were quite a bit older and 89% of these patients were CAR-T therapy ineligible, meaning that they were generally sicker and more difficult to treat. Even so, we were encouraged by the efficacy data we've reported out, which showed an overall response rate of 45% across all patients treated in the Phase Ib and Phase II portions of our trial, a 29% overall response rate for patients treated in the Phase II portion of the trial and an overall response rate of 38% in the subgroup analysis of the combined Phase Ib and Phase II patients with 3 or more prior lines of therapy.

Importantly, our data also showed similar response rates across multiple DLBCL subtypes, including patients with primary refractory disease and irrespective of the number of prior lines of therapy. Based on these data, as in MDS, we met with the FDA in the second quarter of this year, and we were pleased to receive guidance suggesting that a single-arm trial of 5F9 in combination with rituximab would support an initial filing in heavily pretreated DLBCL with primary endpoints evaluating overall response rate, including PRs and CRs and the durability of response. We expect this trial to enroll approximately 100 patients beginning in the first quarter of 2020, and we expect that we'll be in a position to report interim efficacy results by the fourth quarter of 2020.

Now let me comment briefly on the target patient population for this study. Based upon FDA feedback, we've focused on heavily pretreated DLBCL patients, defined as those who have received at least 2 prior lines of therapy and those who are CAR-T ineligible. We're now working to refine the eligibility criteria for our trial based on clinical and translational data from our Phase Ib and Phase II trials. Our goal is to identify the patient population where we can have the greatest impact based on clinical and laboratory profiles as well as patient medical histories.

As you know, despite recent approvals, there's still substantial unmet medical needs in the refractory DLBCL population. As we've previously described, we believe there are approximately 40,000 to 50,000 DLBCL patients on drug therapy in the U.S. at any given time. Amongst these patients, between 10% and 20% are on later lines of therapy. However, once patients reach the third-line setting, there's a substantial drop off in available treatment options. A majority of patients are ineligible for newly approved CAR-T cell therapies due to medical limitations, rapidly progressive disease and/or an inability to gain access to therapy. Furthermore, even for those who have options available, response rates are typically low, especially in the elderly population. There remains a clear and compelling need for new therapies that can better serve older, more heavily pretreated DLBCL patients, and it is here that 5F9 has the greatest potential as a highly effective, safe and extremely well-tolerated regimen.

Before turning the call over to Ann, let me remind you that we have a number of other milestones expected before year's end, including updated clinical data in MDS and AML, Phase Ib safety and efficacy data in colorectal cancer and Phase Ib safety and efficacy data in ovarian cancer. Together, these upcoming readouts provide opportunities for us to characterize further 5F9 and better define those patient populations in which it offers the greatest benefit. We look forward to providing further updates as we work to accelerate the development of 5F9.

We are also pleased with our continued progress on the FSI-174, which is our anti-cKIT antibody. As a reminder, we are exploring the potential to use this antibody as a novel conditioning regimen for bone marrow transplantation. We are on track for an IND filing by the end of this year. In addition, we plan to present proof-of-concept nonhuman primate data from this program at a major medical meeting in the fourth quarter of this year.

So with that, I will turn the call over to Ann to review our financial results for the second quarter of 2019.

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Ann D. Rhoads, Forty Seven, Inc. - CFO [5]

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Thanks, Chris. In July, we fortified our financial position with a successful follow-on equity financing, resulting in gross proceeds of approximately $86.3 million. With this capital, we believe we are sufficiently funded to support our planned operations and capital expenditures through the end of the first quarter of 2021, which is beyond anticipated interim data readouts for almost all of our ongoing clinical trials, while also investing in our earlier-stage pipeline. We're humbled by the continued support of our existing shareholders and excited to welcome new investors to Forty Seven as well.

We ended the second quarter of 2019 with cash, cash equivalents and short-term investments of $99 million compared to $139 million as of December 31, 2018. This does not include the gross proceeds of $86.3 million from our follow-on financing that closed in July 2019 or the upfront payment of approximately $15.8 million we will receive as part of our collaboration with Ono.

Turning to our second quarter 2019 income statement. During the second quarter, we incurred $18.8 million in research and development expenses compared to $13.6 million for the same period last year. This increase in R&D expenses was primarily driven by a $3.2 million increase in third-party costs related to advancing our current clinical programs for 5F9 and associated contract manufacturing cost as well as $1.1 million increase in our preclinical and discovery program costs related to our immuno-oncology efforts.

General and administrative expenses were $5.1 million for the second quarter of 2019 compared to $3.4 million for the second quarter of 2018. This increase in G&A spending was largely due to an $800,000 increase in personnel-related costs driven by an increase in headcount, a $600,000 increase in accounting and consulting expenses incurred with our connection -- incurred in connection with our operating as a public company and a $200,000 increase in directors and officers insurance expense. Our net loss for the quarter was $23.2 million or $0.74 per share compared to a net loss of $16.7 million or $2.52 per share for the second quarter of 2018.

With that, I'll now turn the call over to the operator for questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) And our first question comes from the line of Matthew Harrison with Morgan Stanley.

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Matthew Kelsey Harrison, Morgan Stanley, Research Division - Executive Director [2]

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Two for me. I guess first, Chris, maybe, you could just comment on the ovarian and colorectal combo studies and just how we should be thinking about your ability there to be -- to a cohort of patients where you think you're at an effective dose, and we can get a good idea what kind of efficacy you might be able to achieve with that combination? And then the second question is just around patient population. And maybe you could talk a little bit in more detail for the pivotal DLBCL study. What sort of work you're doing right now? And when you'll be able to give up clarity on what sort of a final patient population looks like?

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Operator [3]

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Speakers have you muted your phone?

(technical difficulty)

Ladies and gentlemen, please standby. And we are live.

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Mark A. McCamish, Forty Seven, Inc. - President, CEO & Director [4]

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Sorry. We somehow got cut off. This is Mark McCamish. We were just trying to interface with Matthew Harrison on 2 questions. We got the first question, which Chris elegantly answered and you didn't hear anything of it. So let me go back and make sure that Matthew is still there. And the first question, Matthew, was on the ovarian and CRC. The second question, we did not hear.

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Matthew Kelsey Harrison, Morgan Stanley, Research Division - Executive Director [5]

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Yes. Can you hear me?

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Mark A. McCamish, Forty Seven, Inc. - President, CEO & Director [6]

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Yes.

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Chris H. Takimoto, Forty Seven, Inc. - Chief Medical Officer [7]

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Yes.

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Matthew Kelsey Harrison, Morgan Stanley, Research Division - Executive Director [8]

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Okay. Great. So the second question I was just asking broadly on, can you talk about the work that you're doing related to patient populations for the pivotal DLBCL study. And what sort of the time line for that work is? And when you think you'll be able to tell everybody what the patient population you've settled on and sort of the criteria you used to establish that?

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Chris H. Takimoto, Forty Seven, Inc. - Chief Medical Officer [9]

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Sure. So Matt, let me address your question about the ovarian and colorectal cancer programs. So as we've mentioned previously, we anticipate sharing results from our colorectal cancer combination trial with cetuximab and our ovarian cancer trial with avelumab in the fourth quarter of this year. We have mentioned in these programs that we have seen some degree of activity, but I think the key message that we have today is that the company's really focused on the 2 indications that we updated you on earlier that is MDS and DLBCL, and that's really where the major focus of our company is at the present time.

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Mark A. McCamish, Forty Seven, Inc. - President, CEO & Director [10]

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And DLBCL patient population?

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Chris H. Takimoto, Forty Seven, Inc. - Chief Medical Officer [11]

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Yes. And then to your second question about the DLBCL patient population. As you're likely aware, we have a very extensive translational component to the study, and we are looking at these patients with -- in our DLBCL population specifically to look at both clinical and laboratory markers that may help us select a patient population for further focus. And at the present time, these activities are underway. And we anticipate -- you asked about when we would likely be able to share more information there, so we would anticipate that some point in 2020, we would actually be able to share more specific details about that program.

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Mark A. McCamish, Forty Seven, Inc. - President, CEO & Director [12]

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And Matt, this is Mark. We're encouraged by the initial transitional work that we believe will inform us on patient selection. And as Chris mentioned, we're in that process now. We're going to be starting that trial in the first quarter. So obviously, we'll have to have the inclusion criteria developed and laid out prior to that, and that'll be in the next few months this year.

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Operator [13]

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And our next question comes from the line of Michael Schmidt with Guggenheim.

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Michael Werner Schmidt, Guggenheim Securities, LLC, Research Division - Senior Analyst & Senior MD [14]

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Maybe just a follow-up -- maybe a bigger picture follow-up question on sort of the general positioning in DLBCL, and it sounds like you're still finalizing the exact patient selection criteria. But just -- how should we think about the (inaudible) in terms of annual patients that might be treatment candidates in DLBCL initially based on a pivotal study?

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Mark A. McCamish, Forty Seven, Inc. - President, CEO & Director [15]

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Michael, thanks, this is Mark McCamish. Let me just start with that and maybe Craig can refine it in terms of patient numbers. As you know, the DLBCL is a fairly large patient population overall. And then as you begin to have the treatment and the failures, that population is being more defined as we go forward. What we see is a high unmet medical need. And just to reflect back, recall as we're moving in this area, what we were trying to search for is a quicker strategy for early registration. Now FDA is always guiding companies towards randomized controlled trials. And if we have a randomized controlled trial, we can go to earlier-line patients and go with combinations for comparison.

For a single-arm trial, what we got was guidance from them to avoid some of the medications, which will either receive approval or recently received approval in this patient population. And so for using a single-arm trial for earlier approval, they guided us to heavily pretreated second-line, including CAR-T ineligible. So we explored the CAR-T ineligibility in our Phase II portion, learned a lot about that in terms of the types of patients that are there. And there's clearly a group of patients that are progressing very rapidly, that actually progressed before even getting the therapeutic dose.

Remember, we have a priming dose of 5F9 and then the first therapeutic dose and some of those progress quite rapidly. So obviously, those patients do not add to the overall response rate that's there. So we're using the clinical criteria as well as the translational criteria that we're finalizing now to identify that patient population. And we shared with you, in slides previously, and these slides are still on the web, where we looked at Phase Ib patients, Phase II patients and then a group that we called greater than 3 prior lines, and we're kind trying to -- guiding you all towards that response rate we saw in the greater than 3 prior lines.

And that's what we've focused on in terms of the inclusion criteria as well as the translational medicine data to have that patient population. And recall that this again is our first step in, and we've got multiple opportunities to advance in earlier lines of treatment with combinations. As you know, we're working with Acerta with acalabrutinib, we're working with Genentech with atezolizumab, we're also doing ongoing studies with combinations of chemo that will get us to earlier lines of treatment. So this first indication is just to get in the door. And let me turn over to Craig for other thoughts.

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Craig S. Gibbs, Forty Seven, Inc. - Chief Business Officer [16]

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Sure, Michael. Michael, I'm sure you're aware, there's probably about 90,000 to 95,000 DLBCL patients in the U.S. And at any given point in time, about half of them, about 48,000, are on treatment. And if you start getting into the treatment experienced patients, over 9,000 are on second line and a little over 7,000 are on third line and beyond, and we're really focused on that second line and beyond population. The real unmet needs in that patient population includes patients that are ineligible for CAR-T therapy. This could be because they're elderly, because they have comorbidities, that means they wouldn't be able to withstand some of the side effects and toxicities associated with CAR-T.

It also includes patients who have rapidly progressive disease, who can't wait around for an adoptive cell therapy, which takes several weeks to implement. And finally, patients who don't have access, whether it's for geographical or economic reasons. The other unmet need in this population, particularly patients in third and later lines of therapy, there's -- with the current therapies even some of the new emerging therapies, there's a big drop off in response rate when you go from beyond second line to beyond third line. So those are the patient populations we're targeting.

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Michael Werner Schmidt, Guggenheim Securities, LLC, Research Division - Senior Analyst & Senior MD [17]

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Understood. And then I think you did mention a potential interim efficacy analysis in the design of the study. Just wondering if you could share sort of I guess the (inaudible) is that a utility analysis or certain (inaudible) trying to hit in that in that interim analysis?

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Chris H. Takimoto, Forty Seven, Inc. - Chief Medical Officer [18]

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So in terms of the study, both when it initiates and when we would have data to present, again, we're targeting the first quarter of next year for starting the DLBCL population under the new eligibility criteria, and then we would anticipate actually having data to present from that study and towards the end of 2020 in terms of an early public presentation of the data.

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Michael Werner Schmidt, Guggenheim Securities, LLC, Research Division - Senior Analyst & Senior MD [19]

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Okay. And then following up on Matt's question, just the combination studies that you're doing in ovarian and colorectal in combination with avelumab and cetuximab, respectively. I guess how should we think about those? It's sounding like potentially the solid tumor indications may be a lower priority at this point or did I understand it correctly?

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Mark A. McCamish, Forty Seven, Inc. - President, CEO & Director [20]

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I think Michael, we have to really focus on where we're at. We did go to this fundraising component to get the secondary. We have pathways forward with MDS and diffuse large B-cell. We really have to prioritize in that area. That being said, we're still continuing to bring those trials to fruition and be able to share that data with you by the end of the year and that will then color how we look at it for additional approaches. Recall, we've talked about the initial regional partnership with Ono, which we're very pleased with. We'll continue to have discussions with a global partner, and that global partner can inform us about how much we can expand our efforts beyond the single-arm trials that we're focused on now.

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Operator [21]

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And our next question comes from the line of Martin Auster with Crédit Suisse.

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Unidentified Analyst, [22]

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This is [EK] speaking on behalf of Marty. I just have 2 questions. The first question has to do around CAR-T ineligible patient population that FDA guided towards you studying 5F9. And is this something that could potentially actually make it to the label that will definitively say this drug is for CAR-T ineligible patients, therefore, precluding competitors such as [Poly] and MorphoSys from being -- from treating this patient population? Maybe perhaps is it from a reimbursement perspective, where though a doctor can select for this -- from one of these drugs, but it won't be reimbursed, something to that degree?

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Mark A. McCamish, Forty Seven, Inc. - President, CEO & Director [23]

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Thanks, [EK]. Let me start on that and see. In that situation, the earlier discussions with FDA, we're focusing on us pushing into a single-arm trial approach. They've been suggested that the CAR-T ineligible patient population would be an interest to them, although it was ill-defined, and no one had used CAR-T ineligible previously. So they asked us to have that as an inclusion criteria for our Phase II and then define how physicians classify them as CAR-T ineligible. Now we did that experiment and found a variety of responses within that CAR-T ineligible population.

But in our follow-up meeting with the FDA, wherein we were discussing the trial design and the numbers of patients, we basically defaulted to greater than second line heavily pretreated, including CAR-T ineligible. So since it's including, but not exclusively CAR-T ineligible, it's unlikely it would be on the label as only for CAR-T ineligible. So in that sense, what we're trying to do is use that term, but also then say how are they ineligible, but not restricted to CAR-T ineligible because based on the Phase II data, we feel that, that would be more restrictive. So it is more inclusive than CAR-T ineligible and will define how physicians describe CAR-T ineligible patients.

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Unidentified Analyst, [24]

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Okay. And just one last question. Since you are going to be expanding a couple of the cohorts into Q2 weekly dosing as opposed to the weekly dosing that you already updated on. Can you kind of elaborate on what's giving you guys comfort around that you're not going to be compromising any type of efficacy by moving to this more prolonged dosing regimen? Or is there any PK/PD models that you established that maybe you can provide further color on or anything to that degree?

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Mark A. McCamish, Forty Seven, Inc. - President, CEO & Director [25]

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Sure. So this is MDS, specifically. We're already with Q -- 2-week dosing for lymphoma. And with MDS and AML, we do have access to bone marrow and actually blast cells. So we're able to quantitate the receptor occupancy in those cells, so it is actually fairly straightforward, particularly compared to any solid tumor component where access is an issue. And we've done various models around that in terms of the receptor occupancy based on PK. So we're pretty confident that going to every 2 weeks, we'll meet the receptor occupancy necessary for efficacy. And we're using the weekly dosing that we're continuing right now, as Chris mentioned, to accumulate patients for longer-term safety follow-ups.

And if you're dosing every week, that safety follow-up is very applicable to dosing half as much every other week. And so we're continuing that primarily to speed up the potential for the applications when we're using the second part, which is the 91 patients and that'll be treated every 2 weeks. So it's a nice way to ensure we've got complete data. We're quite confident from the PK receptor occupancy data that the every 2-week dosing will be adequate, but we're using the weekly dosing to accumulate the 12-month safety data necessary for the file.

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Operator [26]

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And our next question comes from the line of Mark Breidenbach with Oppenheimer.

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Mark Alan Breidenbach, Oppenheimer & Co. Inc., Research Division - Executive Director & Senior Analyst [27]

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Just a couple, both really focused on DLBCL program. Maybe you can comment on what you're seeing as the benchmark you would need to beat in the population you're targeting. Thinking back to the zumo -- sorry, the SCHOLAR-1 retrospective analysis, the responses rate weren't that far out of line with the response rates you've seen in your Phase II cohorts. So I'm wondering if you have a benchmark that you're internally seeing you need to clear for product registration?

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Mark A. McCamish, Forty Seven, Inc. - President, CEO & Director [28]

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All right. So on first, let me take a shot, and I'm looking at Chris, he'll kick me under the table on this. So basically, as you quote, the SCHOLAR-1 is important, but as a reminder, the duration in that was very, very short, like the overall survival was something like 6 months. But the duration of response for SCHOLAR-1 in these patient populations is quite short. So the hurdle is not just ORR, which is a combination of PR and CR, but it's durable ORR. And we've had, had discussions with the agency around that. We tried to clarify statistically what the lower margin would be, and we've had those discussions.

And again, we feel that the data we've provided to you previously on the enrolled patients, when we looked at the greater than 3 prior lines, and I know that we're not going to be using greater than 3 as our inclusion criteria, but in all of the evaluation for this, that greater than 3 prior lines had an overall response rate of 38%, and we think that, that's in the ballpark of what we'll be using in these patient population and duration is going to be key. So I think the SCHOLAR-1 gives you a good baseline characteristic, with very short durations.

And then you've seen from the polatuzumab data and MorphoSys data as they go to beyond second line, their overall response rate falls off quite a bit as well. So it just gives you some guidance, but recall, it's going to be a combination of response rate and durability. Chris, you want to refine that?

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Chris H. Takimoto, Forty Seven, Inc. - Chief Medical Officer [29]

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Yes. No. I think that's really the key point. I think the only thing I would add is that if you actually look at the polatuzumab data and actually look at the subset analysis of patients that have had 2 or more prior lines of therapy before going on that study, the overall response rate there was 35%, so down from their overall population. And we are seeing better than that in our patients with similar lines of therapy. So I think that those set up very good benchmarks for going forward.

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Mark Alan Breidenbach, Oppenheimer & Co. Inc., Research Division - Executive Director & Senior Analyst [30]

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Okay. That's helpful. And just not to harp on this point, but I was wondering, in the definition of CAR-T ineligible patients, would the considerations solely focus on medical reasons for CAR-T ineligibility? Or would you also include socioeconomic factors that would prevent a patient from being able to go for CAR-T treatment?

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Mark A. McCamish, Forty Seven, Inc. - President, CEO & Director [31]

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I think that both are key in this situation. Again, we're providing the data to back up what CAR-T ineligibility is. From our experience, in that CAR-T ineligible population, there is a subgroup that are progressing quite rapidly. And those are patients who -- by the time you get them enrolled and then you get your first priming dose, they can have already progressed, and those are the patients that are very challenging to deal with.

And so one of the things that we're looking at, of course, in the inclusion criteria and the protocol itself is washout time. We were pretty liberal with this before with our first study. It was 2 weeks so they could've been on a prior protocol and then 2 weeks later be enrolled, and we're looking at that as well. And it's not just the CAR-T ineligible that's rapidly progressing that -- within a week, they're already progressed. So those are -- just to give you an idea of the patients that we're looking at, and we think that we've got a reasonable handle on it.

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Operator [32]

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And our next question come from the line of Tony Butler with Roth Capital.

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Charles Anthony Butler, Roth Capital Partners, LLC, Research Division - MD, Senior Equity Analyst & Head of Biotechnology Research [33]

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Just really 2 questions. One is, the sites that you open up or -- for the expanded studies or the new studies, if you will, for either MDS or DLBCL. Do those -- are those only in the U.S.? And is -- do they include EU? That's number one. And number two is, what's your thought about AML going forward? You said you're still interested. I get that, but does that just place AML in the back burner for a period of time? And then if I may sneak in, again, the solid tumors that we'll see later this year, does that, regardless of whatever the outcomes are, given that your plates are pretty full with these 2 registration studies, do those also move to the back burner?

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Mark A. McCamish, Forty Seven, Inc. - President, CEO & Director [34]

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Mark Chao will step in here and help on the MDS, and then we'll go from there.

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Mark Chao, Forty Seven, Inc. - Founder & VP of Clinical Development [35]

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Yes. So thanks, Tony. I'll answer 2 of the 3 questions and then again reiterate back to Chris for the third. So for the first question in terms of the sites for both the expansion for MDS and DLBCL, currently our ongoing studies are primarily in the U.S. We do have a site in the United Kingdom. I think for the expansions we're primarily focused on U.S.-based accrual, but there is a possibility, given the fact that we want to accelerate time lines to go ex-U. S. and that -- again, we're looking at which countries to go into. But I think primarily it's been a U.S.-based focus. And we want to make sure -- ensure that physicians in the U.S. -- because we anticipate that's where approvals going to be first to have a maximum amount of experience, but certainly want to extend the ex-U. S. market. I think your second question in regards to AML, again I'll reiterate what Chris mentioned. We're highly encouraged by that data, again the ASCO, EHA data again with 14 patients showed a 69 -- around a 60% response rate with some initial intriguing duration.

I think obviously, when we look at AML and we're looking at rapid path to approval, we do know that venetoclax has been approved and certainly, that's been used and -- which is a great option for physicians. And when I think looking at strategies of how we can impact the AML landscape just given that agent and others, so I think we're still looking -- in our program, we're certainly looking at subpopulations, certainly an unmet need are patients that don't respond to venetoclax, and there's some emerging data coming out there in terms of certain mutational subsets and also patients who failed venetoclax. We know it's not a curative regimen so patients ultimately relapse and in that relapse refractory setting, there is no treatment option, so that again could represent a fast path to approval. So I think we're still interrogating that data. Again, looking at where we potentially develop, again with a core focus in MDS and DLBCL, but certainly -- there are definitely upside opportunities, particularly in AML. And then I'll defer again back -- the solid tumor question back to Chris as well.

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Mark A. McCamish, Forty Seven, Inc. - President, CEO & Director [36]

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And just maybe -- just to add on to what Mark is saying, we're still enrolling AML patients and MDS patients in that trial so that gives you an idea that we're still quite interested in the AML side. Chris?

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Chris H. Takimoto, Forty Seven, Inc. - Chief Medical Officer [37]

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And then Tony your third question was how we prioritize the solid tumor programs. And again, these are ongoing studies, and we are going to be data-driven, but very clearly, I think when you look at the strong signals that we're seeing of activity in diseases like MDS as well as the clear registration path forward, those are very clear the -- clearly, the highest priorities for the company. And so that's really where our major focus, we anticipate, will remain on DLBCL and MDS.

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Mark A. McCamish, Forty Seven, Inc. - President, CEO & Director [38]

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And again, it gets back to the partnering strategy as well, always from the beginning, these are large populations, some upon which we wouldn't be able to commercialize ourselves and a global commercial partner would be able to be able to weigh in here. Obviously, there are real needs in the colorectal area not much available, so obviously the data coming out would be important to do that. But we also have to be respective of our resources and be able to plan appropriately and make sure we're successful in our first filing and that would be, of course, the priority.

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Operator [39]

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(Operator Instructions) And our next question comes from the line of Swayampakula Ramakanth with H.C. Wainwright.

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Swayampakula Ramakanth, H.C. Wainwright & Co, LLC, Research Division - MD of Equity Research & Senior Healthcare Analyst [40]

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This is RK from H.C. Wainwright. Most of my questions have been asked, but I just have a question on one of your partnerships that's with Acerta. How should we think about that triplet investigation in DLBCL? How does that program go along with what you're doing with the doublet in the CAR-T-ineligible population?

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Mark A. McCamish, Forty Seven, Inc. - President, CEO & Director [41]

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Let me take a shot and then Craig can jump in. So in this situation, RK, acalabrutinib has shown some efficacy, but relatively short duration. So AstraZeneca sort of are very interested in whether they -- the combination would be of benefit based on the science surrounding that. We are quite interested in the fact that we want to go to earlier lines of treatment as well and how do you drive that forward. It's going to be key component because again, the initial approval is just a foot in the door. How do we begin to expand that? And so we're evaluating various partnerships to do so. And in this sense, this is fully funded by a sort of -- AstraZeneca as well. So it's a nice way for us to evaluate potential for getting to earlier lines of treatment with that combination. And that's pretty much the focus.

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Mark Chao, Forty Seven, Inc. - Founder & VP of Clinical Development [42]

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Might also, this Mark here, add that one of our core strategies in combinations as we've mentioned has been combination with either chemotherapy or small molecules that seem to have synergy without regulating "eat me" signal, so we think this may be part of the strategy that extends beyond our azacitidine experience and other types of chemo into certain small molecules, and again we're quite excited to test that clinically.

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Operator [43]

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Thank you. And I'm not showing any further questions on the phone line. So I'd now like to turn the call back to Mark McCamish.

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Mark A. McCamish, Forty Seven, Inc. - President, CEO & Director [44]

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Thanks, Chris, and thank you for all for participating in this and saving time to joining us today despite our technical difficulties. We also really want to express our thanks for your continuous support for Forty Seven. We look forward to updating you again soon and at this point, we'll end the call. Thanks everybody.

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Operator [45]

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Ladies and gentlemen, thank you for participating in today's conference. This does conclude today's program. You may all disconnect. Everyone, have a great day.