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Edited Transcript of IMMU earnings conference call or presentation 30-Oct-19 9:00pm GMT

Q3 2019 Immunomedics Inc Earnings Call

MORRIS PLAINS Oct 31, 2019 (Thomson StreetEvents) -- Edited Transcript of Immunomedics Inc earnings conference call or presentation Wednesday, October 30, 2019 at 9:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Behzad Aghazadeh

Immunomedics, Inc. - Executive Chairman

* Chau Cheng

Immunomedics, Inc. - Senior Director of Investor Relations

* Scott A. Canute

Immunomedics, Inc. - Executive Director

* Usama Malik

Immunomedics, Inc. - CFO & Chief Business Officer

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Conference Call Participants

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* Christopher Lawrence Howerton

Jefferies LLC, Research Division - Equity Analyst

* James William Birchenough

Wells Fargo Securities, LLC, Research Division - MD and Senior Biotechnology Analyst

* Joseph Michael Catanzaro

Piper Jaffray Companies, Research Division - VP & Senior Biotech Analyst

* Kyuwon Choi

Goldman Sachs Group Inc., Research Division - Equity Analyst

* Michael Werner Schmidt

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

* Philip M. Nadeau

Cowen and Company, LLC, Research Division - MD & Senior Research Analyst

* Shanshan Xu

Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst

* Zhen Zeng

Morgan Stanley, Research Division - Associate Analyst

* Varun Kumar

Cantor Fitzgerald & Co., Research Division

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Presentation

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Operator [1]

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Good afternoon, ladies and gentlemen, thank you for standing by. As a reminder, this call is being recorded. Today is Wednesday, October 30, 2019.

At this time, I would like to turn the conference over to Chau Cheng, Senior Director of Investor Relations of Immunomedics.

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Chau Cheng, Immunomedics, Inc. - Senior Director of Investor Relations [2]

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Thank you, John. Before we begin, I'd like to remind everyone that during this call, we will be making forward-looking statements made pursuant to the Private Securities Litigation Reform Act of 1995. Such statements may involve significant risks and uncertainties, and therefore, actual results could differ materially from those expressed or implied on this call. For factors that could cause such differences, please refer to our regulatory filings with the Securities and Exchange Commission.

With us on the call today, with prepared remarks, are Dr. Behzad Aghazadeh, Executive Chairman; and Usama Malik, Chief Financial Officer. Also on the call for Q&A is Scott Canute, Executive Director. Following the prepared remarks, we will open the call up for questions.

Thank you. Behzad?

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Behzad Aghazadeh, Immunomedics, Inc. - Executive Chairman [3]

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Thank you, Chau. Good afternoon, everyone, and thank you for joining us. As noted during our investor event at ESMO, we had a meeting with the FDA in late September to update the agency on our progress in addressing the matters raised in the CRL, gain alignment on the contents of the BLA and review the time line of our resubmission. The meeting with the agency went well as we continued our constructive dialogue. Importantly, there were no changes to our plans that we previously agreed to at the May Type A meeting, and we are targeting the resubmission of the BLA to occur in the late November, early December time frame.

Kudos to our quality and manufacturing teams; we have completed all BLA-related manufacturing operations at Morris Plains and after our scheduled and annual maintenance shutdown, we are already back up and running routine manufacturing operations in preparation for commercial launch subject to approval. I would like to take a moment here to express my gratitude and acknowledge the hard work put forth by our colleagues in getting us to this critical juncture.

Our focus now is on finalizing the BLA resubmission and to be ready for the pre-approval inspection when we resubmit. Since our review is with SEDAR, the FDA has, officially, 30 days to accept the submission before sending us an acknowledgment of receipt letter. However, the FDA has full discretion to accept our filing prior to the expiration of the 30-day period.

In terms of the length of the review cycle, we do not want to speculate on behalf of the agency. Our goal has always been to optimize the approval time line by submitting a high-quality and easily reviewable BLA, while ensuring a structured and well-prepared pre-approval inspection, thus allowing for a streamlined approval process.

Upon resubmission and in anticipation of the potential launch, we will be looking to bolster our commercial capabilities and complement a significant portion of our U.S. commercial infrastructure we have been able to maintain through the creative and productive arrangement with Janssen for Balversa. Given that we've already completed the commercial launch preparation once before, we believe that we're well situated to refresh our plans and expect to be diligently prepared for a successful launch.

Moving on to our rapidly advancing clinical programs, shortly after completing patient enrollment in the ASCENT study in mTNBC, which we expect to have top line readout in mid-2020, we have now also reached target enrollment in the cisplatin eligible cohort of 100 patients with metastatic urothelial cancer, who have progressed after prior immune checkpoint inhibitor and platinum-based therapies in the TROPHY-U01 study.

Additionally, interim results from the patient -- from the initial 35 patient cohort were presented at ESMO 2019 Congress. With an overall response rate of 29% as interim results, along with the adverse events were highly consistent with the previously established clinical activity and safety profile of sacituzumab govitecan or SG and are encouraging relative to standard of care in this setting.

We are pleased to have accomplished these important goals in MUC and look forward to discussing the registration path forward for SG and this important indication with the FDA.

The company has also expanded the clinical development of SG to additional metastatic solid tumors with the newly opened multi-cohort open-label Phase II TROPiCS-03 study, having dosed the first patient with non-small cell lung cancer. This is the first study conducted by the company in which a biomarker will be used to assess whether enrichment for Trop-2 expression may lead to higher responses in certain indications. The primary endpoint of this study is overall response rate, with duration of response and progression-free survival serving as secondary endpoints.

One of our core values is to be patient-centric. People with complex cancers inspire and drive our work every day as we aim to tackle gaps in their care and help improve their lives. Recognizing the critical unmet need for people with TNBC, I'm very pleased that during this past quarter, we also entered into 2 important clinical collaborations to potentially advance SG to earlier lines of breast cancer treatment.

Our collaboration with Roche will develop SG in the frontline setting of mTNBC by combining with Tecentriq. Patients with newly diagnosed mTNBC will be randomized to receive the combination of SG and Tecentriq or Abraxane plus Tecentriq as standard of care. Roche will be responsible for conducting this randomized study.

In our collaboration with the German Breast Group, SG will be evaluated as a monotherapy in a multinational Phase III study in the curative setting and HER2-negative breast cancer. Approximately 1,200 high-risk patients who do not achieve a pathological complete response following standard new adjuvant therapy will be randomized to receive either SG or treatment of physician's choice.

With these 2 collaborations, we now have in place programs that could address virtually every stage of TNBC and across multiple lines of treatment, bolstering our competitive positioning in TNBC and establishing SG as a foundational therapy in this indication.

Finally, as disclosed at the ESMO investor event, we have initiated the preparation of our marketing authorization application in Europe, and the process is ongoing.

Before I turn the call over to Usama for an overview of our financials, let me provide a quick update on the leadership team. On the CMO search, we have been fortunate that shortly after the position became vacant, we identified a strong industry veteran, who has helped us focus our clinical strategy and provide leadership to our clinical and regulatory organization. With our continued rapid and successful progress across our clinical programs, we have paused on our CMO search to focus on the CEO position.

On that front, our objective remains to have a CEO in place as we approach commercialization. And obviously, we will provide you with an update as warranted.

I would be remiss, however, not to mention that we have incredible stability and camaraderie among our senior management team. We are 100% focused on filing and preparing for a successful launch, and we firmly believe we have the right team to get this job done.

And with that, Usama?

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Usama Malik, Immunomedics, Inc. - CFO & Chief Business Officer [4]

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Thank you, Behzad. I will provide top line results on this call and ask everyone to refer to our quarterly filing as well as this afternoon's earnings release for additional details.

Total costs and expenses were $86.8 million for the quarter and $233.6 million for the 9 months ended September 30, 2019, compared to $57.2 million for the comparable quarter and $148 million for the 9 months ended September 30, 2018. The increases were due primarily to additional expenses in research and development and sales and marketing, partially offset by decreases in G&A expenses. The increases in R&D costs were mostly attributed to activities related to preparation for the approval and commercial launch of sacituzumab govitecan in mTNBC as well as expanded clinical development of SG into other indications.

Net loss attributable to stockholders was $94.3 million or $0.49 per share for the quarter ended September 30, 2019, compared to $64.2 million or $0.34 per share for the comparable quarter ended September 30, 2018. Net loss attributable to stockholders was $257.6 million or $1.34 per share for the 9 months ended September 30, 2019, compared to $216.7 million or $1.24 per share for the 9 months ended September 30, 2018.

As of September 30, 2019, we had $36.2 million in cash, cash equivalents and marketable securities. The number of outstanding shares was 192 million, and the fully diluted count was 205 million.

We believe our projected financial resources are adequate to support our clinical development plan for SG, further build out our clinical and manufacturing infrastructure and fund our operations through 2020.

This concludes our third quarter 2019 financial results. Operator, please open the call to questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) First question comes from the line of Jim Birchenough from Wells Fargo.

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James William Birchenough, Wells Fargo Securities, LLC, Research Division - MD and Senior Biotechnology Analyst [2]

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Congrats on the progress during the quarter. A couple of questions. I guess, just first on metastatic urothelial cancer, have you requested a formal meeting with FDA to discuss the regulatory path? And maybe you could make some comments on how you think about breakthrough designation for that indication?

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Behzad Aghazadeh, Immunomedics, Inc. - Executive Chairman [3]

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Sure, Jim. Thanks for the question. I think we'll refrain from talking about the specific steps and perhaps leave it to the time when we have something meaningful to report on the outcome when any that occurs. But I think we've been always pretty transparent about this being a formal interim analysis that would be potentially the basis of a breakthrough dialogue with the FDA. And at ESMO, as you recall, we presented the data and did discuss that we would be awaiting a longer follow-up period to have the maturity to go to the FDA, but I think you have precedents to perhaps estimate roughly when that might occur.

In terms of the registration -- okay.

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James William Birchenough, Wells Fargo Securities, LLC, Research Division - MD and Senior Biotechnology Analyst [4]

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(inaudible)

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Usama Malik, Immunomedics, Inc. - CFO & Chief Business Officer [5]

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Go.

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Behzad Aghazadeh, Immunomedics, Inc. - Executive Chairman [6]

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No, I was just going to say the registration path, I think, is sort of somewhat well-trodden if it's acceptable to go within a single-arm accelerator approval. This is a pivotal study that was designed to potentially serve that purpose and would then be followed with a confirmatory study that would be discussed with the FDA.

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James William Birchenough, Wells Fargo Securities, LLC, Research Division - MD and Senior Biotechnology Analyst [7]

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And then just on pre-commercial plans. Can you maybe speak to what proportion of the sales force you retained and whether you've made offers to remaining reps you'll require? And maybe a bit of timing around when you start training those reps, that sort of thing?

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Behzad Aghazadeh, Immunomedics, Inc. - Executive Chairman [8]

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Yes, I think -- I mean, the short answer is, by and large, we maintained our entire commercial sales force team, the entire sales rep team. And there has been very modest turnover. So when and if we backfill them, would be sort of as we get closer to it. But by and large, the Balversa relationship allowed us to maintain our entire presence in the field. And obviously, they are well prepared and ready to launch.

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James William Birchenough, Wells Fargo Securities, LLC, Research Division - MD and Senior Biotechnology Analyst [9]

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Just a final question, just on, I guess, the Type A meeting and then the more recent meeting with FDA. Was there any discussion of the ASCENT study? And given the timing for top line data by midyear, any comment from FDA suggesting interest in that prior to ruling on the BLA.

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Behzad Aghazadeh, Immunomedics, Inc. - Executive Chairman [10]

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No, the short answer is in neither conversation did the ASCENT topic come out, and there was never an indication that, that would be a rate determining and gatekeeping event that they'd be looking forward to. It's mostly related to just the CMC review, and the dialogue is focused on the CRL items.

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Operator [11]

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Next question coming from the lineup of Varun Kumar from Cantor Fitzgerald.

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Varun Kumar, Cantor Fitzgerald & Co., Research Division [12]

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Good afternoon, everyone. First, for urothelial cancer, congrats on completion of enrollment for Cohort A. I was curious about the chemo ineligible cohorts with what's the current status and how should we think about the readout related to chemo-eligible patients?

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Behzad Aghazadeh, Immunomedics, Inc. - Executive Chairman [13]

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Sure. So the chemo ineligible patients continues to accrue patients. It is a slower accruing cohort because those patients do go on to receive various therapies that disqualify them from an enrollment criteria standpoint. It is, however, just an exploratory arm and does not impact the Cohort A or the 100-patient cohort that we just announced would be the basis of a dialogue with the FDA and potentially serve as a basis for an extended approval. This cohort of ineligible patients do not read into that at all and the time line can be disjoined and disconnected.

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Varun Kumar, Cantor Fitzgerald & Co., Research Division [14]

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Behzad, maybe one last question on the triple-negative breast cancer. Given the third line, you guys are filing; data confirmation study, ongoing. I understand you have AstraZeneca partnership, which I think the trial has not initiated. It's supposed to be in frontline. And then there are some other collaborations with PARP. But I was just wondering what's the -- like how aggressive you guys are trying to pursue this frontline indication? And when should we expect some meaningful data update from the frontline triple-negative?

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Behzad Aghazadeh, Immunomedics, Inc. - Executive Chairman [15]

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Sure. So obviously, the front line and the combo is of high interest to us, but in both instances, the partners run the trial and govern the time line. We are responsible for supplying the drug. And so we will certainly meet our end of that, but we can't really control the time line. It's in their hands.

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Usama Malik, Immunomedics, Inc. - CFO & Chief Business Officer [16]

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I think I'll add one more thing, Varun. I think we've talked about this in the past. All of our clinical collaborations are with partners who have an infrastructure in place and can conduct the trials on their own. That's one criteria. The other one is that we are in non-exclusive agreement. So as you can see from the Roche agreement, we are very much focused in looking at opportunities in frontline settings in combination with PD-1s, and we'll continue to explore those opportunities with various partners moving forward as well.

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Varun Kumar, Cantor Fitzgerald & Co., Research Division [17]

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And the AstraZeneca study, is that still on track to be initiated by end of this year?

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Usama Malik, Immunomedics, Inc. - CFO & Chief Business Officer [18]

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We did not specify a time line, but we expect that the study will be coming up in the near future.

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Operator [19]

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Next question comes from the line of Paul Choi from Goldman Sachs.

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Kyuwon Choi, Goldman Sachs Group Inc., Research Division - Equity Analyst [20]

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I have 2 questions. The first is commercial, and with regard to your promotion of the J&J FGR. I guess, can you maybe comment on where your sales force is with regard to penetrating accounts that might overlap for your TNBC launch right now? And what is -- what have your learnings been with regards to potentially getting sacituzumab govitecan into these accounts, next year?

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Behzad Aghazadeh, Immunomedics, Inc. - Executive Chairman [21]

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Yes. Let me think take a shot at that, and if Usama has more to add. Certainly, in the community setting, often solid tumors are treated by the same physicians. So I think with respect to building rapport and relationship with the reps, with those physicians in the community setting, I think there's a tremendous amount of overlap. And obviously, we're not discussing sacituzumab with them. So there's really no direct discussion on our drug. But I think just the sheer fact that we're building the relationships are going to be quite helpful, if and when we reach that point of commercializing our own drug, which -- and as you know, the Balversa relationship ends by the end of the first quarter. So we'll be really ready to go immediately, and as of 1st of the year, we will be able to promote our drug in conjunction with that as well. So there's really no hindrance that prevents us from getting to those physicians with our reps. I don't know if there's more to add, Usama?

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Usama Malik, Immunomedics, Inc. - CFO & Chief Business Officer [22]

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I think that covers most of it. Paul, you may remember from discussions late last year, as we were in commercial planning then, that we expect that split between community and academic is about -- it's right down the line. And so it's very important that our sales reps have had the opportunity to really get to know the community setting this year, establish call points, establish those relationships because it will completely dovetail into our own commercial launch once our reps are up and running on the training for sacituzumab govitecan.

So it was a creative deal, and we expect that it will pay dividends on multiple fronts.

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Kyuwon Choi, Goldman Sachs Group Inc., Research Division - Equity Analyst [23]

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Great. Then on the clinical side, I was wondering if you could maybe put a little more fine point on what your timing expectations are for potentially starting a IO plus sacituzumab govitecan trial in bladder?

And then, particularly in light of some of the competitive data presented at the recent ESMO meeting, do you have a view as to whether you'd want to focus on a direct combination out of the gate or think about sequencing as you lay out your trial design?

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Behzad Aghazadeh, Immunomedics, Inc. - Executive Chairman [24]

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Yes. So the IO combination is certainly something that is very top of mind for us, also in the urothelial setting, and we obviously saw the data you're referring to, and given that our drug has shown activity, obviously, very small numbers, but nevertheless, in a line after EV and given the toxicity profile should, on paper at least, it looks like we should be combinable with the checkpoints, we have every reason to believe that our data should also improve as we go up in line of therapy and maybe get to frontline.

I think the safety profile of our drug was quite different with EV. So it will be interesting to see whether that yields any differential profile and advantages.

With respect to thinking about going in a later line, we don't really see a need. I think these patients will -- can respond to one or the other therapy, and it will probably, in the commercial setting, be a very customized approach based on the patient profiles. And it is certainly our intent to be quite competitive from a positioning standpoint, but I think the physicians will ultimately make the choice based on what is the most suitable regimen for the individual patient that presents.

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Kyuwon Choi, Goldman Sachs Group Inc., Research Division - Equity Analyst [25]

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Oh sure. Actually, my question was with regard to with -- what I meant by sequencing was, whether you would see using an ADC as a debulking agent followed by IO therapy? Or would you think about using both drugs simultaneously? That's what I meant by sequencing.

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Behzad Aghazadeh, Immunomedics, Inc. - Executive Chairman [26]

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I see, yes. No, and thanks for the clarification. We haven't seen too much evidence of debulking with an ADC versus before the IO, but we will certainly be curious to see as the field evolves and in dialogue with the FDA, what is the optimal path. But I think from a pragmatic standpoint, just given the dosing regimen of an ADC and the mechanism versus the IO, I personally, at least at this point, would think that you would go and combine and rather than do it in sequence debulking followed by -- but it's certainly something to also further explore.

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Operator [27]

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Next question coming from the line of Michael Schmidt from Guggenheim.

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Michael Werner Schmidt, Guggenheim Securities, LLC, Research Division - Senior Analyst & Senior MD [28]

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Maybe one more around the BLA resubmission, Behzad. Can you maybe talk a little bit about some of the things that they're doing in preparing the manufacturing facility for the reinspection by the FDA to ensure that, that all goes over well?

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Behzad Aghazadeh, Immunomedics, Inc. - Executive Chairman [29]

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Scott, do you want to answer?

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Scott A. Canute, Immunomedics, Inc. - Executive Director [30]

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Yes, sure. Happy to talk to that. The biggest thing we're doing for -- to prepare for the pre-approval inspection, and keep in mind, we've had our overall quality improvement plan in place, really, since last year, I mean, we enhanced it significantly, obviously, as a result of the CRL and have been implementing it consistently and very effectively. Since that point in time, as Behzad said, in any conversations we've had with the FDA right now, they've not asked us or encouraged us to change our plans, just to continue to do more of what we're doing, and that's exactly what we've done.

The biggest thing in terms of pre-approval inspection readiness is to ensure that we're in substantial compliance with CGMPs and implementing that plan. So we will be ready for pre-approval inspection when we refile the BLA.

There's some logistical things you have to do with people who've been through this before, but the predominant thing is that you've got a good sound operating environment with a good quality system in place, which is where we're at today.

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Behzad Aghazadeh, Immunomedics, Inc. - Executive Chairman [31]

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I was going to say from an infrastructure standpoint, there's really nothing that we need to do. The building is there. The operations are up and running. You just have to be in manufacturing mode in general if you want to see people in action and motion. And obviously, as I said, we are back in manufacturing mode and making drugs. So we'll be ready when they visit.

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Michael Werner Schmidt, Guggenheim Securities, LLC, Research Division - Senior Analyst & Senior MD [32]

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Okay, perfect. And then just on the planned frontline study in triple-negative breast cancer with Tecentriq. I mean, just wondering, I guess, if you could -- you have some market insights, maybe to what degree Tecentriq has been adopted now in triple-negative breast cancer treatment and also whether the study will look at PD-L1 indications only or look at an outcomes patient population?

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Usama Malik, Immunomedics, Inc. - CFO & Chief Business Officer [33]

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So on the Roche study, just to set the stage again. This is SG plus Tecentriq against Abraxane plus Tecentriq. It is a stage study. So there's -- it's [simultaneous] -- 2 stage study with interim markers that need to pass into the next stage. It's a -- the primary endpoint is response rate with a secondary endpoint of duration of response. Did I miss the particular question?

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Behzad Aghazadeh, Immunomedics, Inc. - Executive Chairman [34]

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The question was on PD-L1 positivity.

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Usama Malik, Immunomedics, Inc. - CFO & Chief Business Officer [35]

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It is -- and it is -- in the initial cohort, we are going after or the design is for a PD-L1 positive cohort, although we expect to, over time, expand it to an all-comers population as well.

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Behzad Aghazadeh, Immunomedics, Inc. - Executive Chairman [36]

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With respect to the question of the standard of care now, I think it is -- I don't have specific data. So -- but my understanding is that is in the U.S. predominantly being adopted now. But I assume it's ramping, but I think it will be considered standard of care.

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Operator [37]

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Next question coming from the line of Phil Nadeau from Cowen and Company.

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Philip M. Nadeau, Cowen and Company, LLC, Research Division - MD & Senior Research Analyst [38]

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First, a 2-part question on ASCENT. Results from second line therapies at ESMO suggested maybe 3-month PFS in the control arms in metastatic triple negative breast cancer. Any reason the PFS would not be replicated in the control arm of ASCENT?

And the second part of that question is PTC and Blueprint recently said the FDA requested top line data from ongoing kind of confirmatory Phase III trials for those agents. Does that, at all, give you pause about the need for top line data from ASCENT for the FDA?

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Behzad Aghazadeh, Immunomedics, Inc. - Executive Chairman [39]

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Thanks, Phil. If I caught your question right, the first one is about whether our control arm would -- if there's reason to believe that it would do better than 3 months; you were referring to the control arm specifically?

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Philip M. Nadeau, Cowen and Company, LLC, Research Division - MD & Senior Research Analyst [40]

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Yes. Yes, the control arm specifically. Is there any reason why we can't take that data from ESMO and apply it to your trial as the likely results from your control arm as well from those trials and suggested that (inaudible) control?

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Behzad Aghazadeh, Immunomedics, Inc. - Executive Chairman [41]

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Yes. I think that anything with a 3 handle on it would represent probably an upper limit of what I think our control arm should deliver. In fact, I think the studies you're referring to at ESMO were in a healthier line setting. I think the Merck study had 60% of patients first-line metastatic for the second line. It could be a little off there, but our patients are at least second line plus. So you're sort of at a line, and I think there's good evidence and literature to support that you should expect that the signal to actually marginally deteriorate versus the control arm they reported in that study.

And the other, I think you might be referring to the [ASI] poster, again, which was strictly second line only. And again, so I would think, on the one hand, it was a retrospective study, not a randomized controlled study, but on the other hand, it was pretty well conducted by an organization that has a vested interest in studying their product pretty closely. And I think in that setting, again, you're talking about generally, on average, perhaps as healthy or healthier population than the ones that we would have.

So I think from our standpoint, we would think that, again, 3 months is sort of an upper limit and perhaps something around that is what we should see in the control arm. We'd be surprised if it would be substantially better, but obviously, we wouldn't know until we get to the unblinding.

With respect to the news from the company you referred to. I think the situation does appear to me quite different. And to answer the question directly, no, it does not give me any pause whatsoever. The difference, I think, is that our safety profile is very well-established now. So the FDA is going on a tremendous set of patients to make sure that we're not doing harm. But perhaps equally importantly, our efficacy data was a basis of an accelerated approval and breakthrough designation dialogue with the FDA. And once we presented the data, once it matured and it really recapitulated the early data they saw and given that standard of care in this setting is pretty well established, I think from the FDA standpoint, our efficacy was pretty well documented in our data that we presented. And in fact, we -- again, as we previously discussed, had a label in hand, subject to the CMC piece and ultimately, obviously results in a CRL.

So I don't think there are ongoing questions around whether our data warranted accelerated approval. From their standpoint, obviously, the FDA has to review the resubmission, and it's their purview to take another look at anything they choose to. That, I think, is quite different, perhaps to the situation that you're describing, where I think the sort of the leading up to the filing dialogue was perhaps not quite as robust. Again, I'm not -- obviously, not as close to that situation as I am with this one. But I think we had extensive dialogue before our submission, during the review and certainly, since the review with the period of the CRL. And I don't think one should read into one versus the other. Having said that, once we submit and the FDA chooses to ask questions, we'll be ready to answer them. And again, I don't want to speak on behalf of the FDA. So I'll leave it at that.

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Philip M. Nadeau, Cowen and Company, LLC, Research Division - MD & Senior Research Analyst [42]

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That's helpful. Then one last housekeeping question on the financials. The R&D expense was bumped up pretty significantly quarter-over-quarter. Is this a run rate that we should apply going forward? Or were there onetime issues in this quarter that suggest the run rate would be less in future quarters?

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Behzad Aghazadeh, Immunomedics, Inc. - Executive Chairman [43]

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Usama can perhaps go into the detail, but I think just holistically, on the one hand, ASCENT's wrapped up. And so from an enrollment standpoint, now we do have ongoing -- the trial continues until we read out, but eventually, sometime in next year, actually we'll go on from an interim standpoint. That expense will, however, stop ramping up.

On the other hand, we do have the metastatic breast study beginning to take shape, followed by a couple of new programs that we've launched. From a trajectory, specifically, I don't think we will directly guide to the R&D ramp or change, but Usama, is there more color we can provide?

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Usama Malik, Immunomedics, Inc. - CFO & Chief Business Officer [44]

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Yes. So I think we also discussed this end of last quarter, there's a number of onetime expenses related to the CRL from this year that we don't expect will carry into the following year. However, as Behzad mentioned, today, a number of things are getting lumped into the R&D expense, given that we're a pre-commercial company, including manufacturing expenses.

As it pertains to our clinical development programs, you're quite familiar that we've ramped that up quite a bit this year. On the manufacturing side, there's a number of onetime items, as I mentioned, in relation to the CRL that would drop off. And then on the sales and G&A side, you can expect, as we move into 2020, there may be some incremental changes there.

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Operator [45]

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Next question coming from the line of Shanshan Xu from Berenberg Capital.

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Shanshan Xu, Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst [46]

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For your TROPiCS-03 solid tumor basket trial, maybe could you remind us what is the cutoff of the Trop-2 expression that we announced in non-cell? And with this cutoff, what percentage of patients in second, third line non-small cell can you capture? And I have one follow-up.

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Behzad Aghazadeh, Immunomedics, Inc. - Executive Chairman [47]

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Yes, Shanshan. We have not disclosed the cutoff levels, but it is a study that has gradations of cutoffs, and we're trying to sort of zero in a part of the trial conduct, what would be an appropriate cutoff, if there is such a thing as an enrichment strategy, that makes sense.

And I think it's too early to know definitively what portion of the non-small cell population we expect to capture with different cutoffs. What I would say is that we're very early in the screening, and I did mention that we had one patient already treated. It's too early to extrapolate from our internal statistics, what that might represent as a total portion, but we'll certainly be able to provide that, hopefully, in the future quarters as we update the progress on that trial.

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Shanshan Xu, Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst [48]

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Great. And also for the urothelial data you presented at ESMO, I noticed that the grade 3 and 4, especially grade 4 diarrhea adverse event rates are actually numerically higher than that in the previous triple-negative breast cancer patients or HER2-negative HR-positive breast cancer patients. Is there any explanation for that? Or is it very difficult to arrive at a conclusion due to the cross-trial comparison?

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Behzad Aghazadeh, Immunomedics, Inc. - Executive Chairman [49]

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Yes, I certainly think the latter applies breast versus urothelial dealing with a substantially different age difference between triple-negative, generally younger ladies; urothelial, we're talking about older man, but I would have be hesitant to draw cross-trial comparisons. One thing we did note at ESMO was the higher levels of neutropenia versus prior urothelial data that we've presented, and we're actually looking into that because there was an unusually large genotypic enrichment in the population that is predisposed of the patient to neutropenia, when treated with [TCAM] based agent. And that is a really oddly high proportion. I think the numbers quoted was something in the 70%, 80% of our patients had that genotype. As actually some of the other numbers close to 50%, where you would expect something in the high teens to be more representative of the general population. But that is the only sort of anomaly that we internally observed. I don't think we internally thought that diarrhea rates were dramatically different and perhaps it's more a cross-trial comparison/small numbers.

We didn't have any discontinuations, though, due to diarrhea, which is always an important metric to understand the severity of the condition. The only discontinuations were generally due to the neutropenia, and that was 3 patients of our cohort. And again, we're looking into this enrichment of the genotype to explain the higher levels that we observed there.

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Operator [50]

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Next question coming from the line of Chris Howerton from Jefferies.

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Christopher Lawrence Howerton, Jefferies LLC, Research Division - Equity Analyst [51]

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Great. I think, frankly, most of them have been asked at this point. But I'm just curious what the internal thinking is with respect to the Trop-2 companion diagnostics and how you expect that to fit into the treatment paradigm in the commercial setting in the future.

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Behzad Aghazadeh, Immunomedics, Inc. - Executive Chairman [52]

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Yes, Chris, thanks for the question. I don't think -- it's really too early to know. Frankly, we don't know if Trop-2 enrichment ultimately yields fruits. Certainly, in the breast setting in triple-negative and metastatic, the ER-positive HER2-negative setting, we don't expect that the companion diagnostic would be relevant where Trop-2 levels generally in breast are considered very high, almost uniformly to these patients express have Trop-2 levels. That also applies, generally, in urothelial. In non-small cell and other tumor types, we have reason to believe that it's perhaps a more heterogeneous population with respect to Trop-2 levels. And in that setting, if enrichment actually does yield better results, would we expect to have a companion diagnostic, but it's really too early to know to what extent and how that would work in the end.

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Christopher Lawrence Howerton, Jefferies LLC, Research Division - Equity Analyst [53]

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Sure. Okay, that's fair. And then, obviously, you disclosed that first non-small cell patient was dosed in that trial. Any other color you can provide us on the other tumor types and perhaps those that you internally are particularly excited about?

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Behzad Aghazadeh, Immunomedics, Inc. - Executive Chairman [54]

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Yes, Chris, I might remind you that we designed this study a little bit in making it a 2-stage trial where the lead indication, non-small cell, will inform whether enrichment yields beneficial outcome. And after that initial stage, would we then expand into 2 other tumor types, head and neck and kind of cervical -- gynecological, yes. But that is as a second stage. Beyond that, we just probably look forward to providing the first cohort in the non-small cell update when we reach a meaningful number of patients to talk about.

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Operator [55]

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Next question coming from the line of Joe Catanzaro from Piper Jaffrey.

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Joseph Michael Catanzaro, Piper Jaffray Companies, Research Division - VP & Senior Biotech Analyst [56]

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So just a couple of quick ones for me. So if I remember correctly, at the ESMO event, it sounded like one of the gating factors to refiling was awaiting some last bit of QC data. So just wondering if you have those data in hand now. And then would you expect to have one last meeting with the FDA ahead of refiling? And if so, is that meeting already scheduled?

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Behzad Aghazadeh, Immunomedics, Inc. - Executive Chairman [57]

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Yes. Thanks, Joe. So with respect to the data, it's not so much one last bit of data, but there's just ongoing data that comes in, and it goes right into the BLA. Our project plans are quite extensive and almost down to the day with respect to when data comes in and where it goes, and we've had data coming in all along since we started this BLA writing. And the good news is everything has come in as we would have hoped it comes in. And we certainly hope that the balance of the data as it continues to come in will equally be supportive, and we have no reason to believe that it wouldn't be.

With respect to how long it's going to go, it's almost down to the finish line. So we've -- the project plan and the time that we've communicated, essentially provide for all the data to be in QC-ed and wrapped up, cross-linked and all the things that need to happen by the regulatory before it gets -- then you get to push the send button. It is quite an extensive undertaking. That happens even on the back end when all the data is in.

And with respect to your second question, I apologize, can you...

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Joseph Michael Catanzaro, Piper Jaffray Companies, Research Division - VP & Senior Biotech Analyst [58]

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The meetings on the FDA.

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Behzad Aghazadeh, Immunomedics, Inc. - Executive Chairman [59]

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Oh, whether we're going to have additional meeting. I think we're in ongoing dialogue with the FDA, where specifically, we won't obviously comment on whether we will have additional dialogue, but I think it's -- with breakthrough designation, you're afforded the opportunity to have the dialogue.

On the other hand, I think there's been a lot of communication already that's occurred and quite a lot of clarity and...

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Scott A. Canute, Immunomedics, Inc. - Executive Director [60]

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Yes. No, that's absolutely right, Behzad. I mean, they've been -- the FDA's made themselves extremely available to us to communicate when we needed to. They've been very collegial. Everything's gone well, and we won't communicate specifics on individual meetings interactions, but they're available if we need to. Right now, we feel very good about where we're at.

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Joseph Michael Catanzaro, Piper Jaffray Companies, Research Division - VP & Senior Biotech Analyst [61]

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Okay. And then one quick follow-up here. So what should we expect around your communications to The Street around the reinspection? We've seen some other companies' press release that the inspection has happened and some even have communicated the outcome of that reinspection. How are you guys thinking about that? And what should we expect?

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Behzad Aghazadeh, Immunomedics, Inc. - Executive Chairman [62]

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Joe, I think talking about specifically the outcome of the inspection is probably a bridge too far, just given past experience and the ongoing dialogue. I think you would expect us to provide meaningful updates, in particular when we file, and obviously, any decision. And anything that happens in between would probably not really be of relevance or importance that would be right to the level that we deem it to be disclosable or necessary to disclose. Obviously, if that were to occur, we would certainly do that. But I think giving a play-by-play would not be something that we'd be all that excited doing. I don't think it's all that conventional to do that, to be honest with you. But certainly, we will make sure that we do what is appropriate and necessary.

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Operator [63]

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Next question coming from the line of Matthew Harrison from Morgan Stanley.

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Zhen Zeng, Morgan Stanley, Research Division - Associate Analyst [64]

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This is Zhen on for Matthew Harrison. My first question is following the question regarding reinspection, do you expect to communicate with investors pre or post the inspection?

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Behzad Aghazadeh, Immunomedics, Inc. - Executive Chairman [65]

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Yes, I think it's actually exactly the same question. So I'll try and answer exactly the same way. The short answer is no, unless there's a material update we need to provide, we would not anticipate giving a play-by-play.

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Zhen Zeng, Morgan Stanley, Research Division - Associate Analyst [66]

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Okay. And second question is how do you plan to report the TROPiCS-03 study? When would be the first time we would expect to look at the response data from that study?

And two is do you think there is a potential to better Trop-2 enrich the label? Or would you have to run these specific Phase IIIs?

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Behzad Aghazadeh, Immunomedics, Inc. - Executive Chairman [67]

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With respect to the timing, I think we would look to the appropriate medical venue. We've just opened and treated the first patient. So I think it would be really premature to talk about when we expect to present that data. Frankly, it all depends on how quickly or what the level of Trop-2 patients are that meet the criteria to enroll. But once we have a better handle on it, we'll be certain to provide that visibility.

And it's probably even more immature or premature to talk about whether the label -- what the trial design would look like and what the label would look like in non-small cell. I think all of that is really the basis of the study that we're conducting in order to establish whether it makes sense to have a Trop-2 biomarker strategy in non-small cell lung and the other tumor types that we're looking forward to study. It's really premature for us to make any statements beyond that.

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Operator [68]

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There are no further questions. At this time, I would like to hand the conference back over to Chau Cheng for his closing remarks. Chau Cheng?

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Chau Cheng, Immunomedics, Inc. - Senior Director of Investor Relations [69]

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On behalf of the entire leadership team, I'd like to thank you all very much for joining us this afternoon. We look forward to updating you in the future on our ongoing progress.

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Operator [70]

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That does conclude today's conference call. You may now disconnect. Thank you, and have a great day.