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Edited Transcript of STML earnings conference call or presentation 8-Nov-19 1:00pm GMT

Q3 2019 Stemline Therapeutics Inc Earnings Call

New York Nov 17, 2019 (Thomson StreetEvents) -- Edited Transcript of Stemline Therapeutics Inc earnings conference call or presentation Friday, November 8, 2019 at 1:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* David G. Gionco

Stemline Therapeutics, Inc. - VP of Finance & CAO

* Ivan Bergstein

Stemline Therapeutics, Inc. - Founder, President, CEO & Chairman

* Kenneth Hoberman

Stemline Therapeutics, Inc. - COO & Corporate Secretary

* Robert Francomano

Stemline Therapeutics, Inc. - Senior VP & Global Head of Commercial

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Conference Call Participants

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* Boris Peaker

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

* Charles A. Frantzreb

Piper Jaffray Companies, Research Division - Research Analyst

* Edward D. Marks

H.C. Wainwright & Co, LLC, Research Division - Research Analyst

* Jessica Macomber Fye

JP Morgan Chase & Co, Research Division - Analyst

* Matthew Lee Kaplan

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

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Presentation

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Operator [1]

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Good day and welcome to the Stemline earnings conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Ken Hoberman. Please go ahead, sir.

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Kenneth Hoberman, Stemline Therapeutics, Inc. - COO & Corporate Secretary [2]

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Good morning and welcome to today's conference call to discuss our third quarter 2019 financial results. With me on today's call are members of Stemline's executive management team, including Ivan Bergstein, our Chief Executive Officer; David Gionco, our Chief Accounting Officer; and Robert Francomano, our Senior Vice President and Global Head of Commercial. After our prepared remarks, we'll open the call to take any questions.

As a reminder, we may be making forward-looking statements, and forward-looking statements are subject to a number of risks and uncertainties that could cause our actual results to differ materially from our forecast. A detailed description of these risks can be found in the Forward-looking Statements and Risk factors sections of our annual report on Form 10-K for the year ended December 31, 2018, and in our quarterly report on Form 10-Q for the quarter ended September 30, 2019.

With that, I will now turn over the call to Ivan Bergstein, our CEO. Ivan, the floor is yours.

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Ivan Bergstein, Stemline Therapeutics, Inc. - Founder, President, CEO & Chairman [3]

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Thank you, Ken, and good morning, everyone. We remain very pleased with the pace of the ELZONRIS launch and in particular, the uptake of new patient starts we are seeing across the country. Additionally and importantly, we believe there were 2 factors this quarter, which when adjusted for, lead to a notably higher net revenue sale increase quarter-over-quarter, meaningfully narrowing the gap between the net revenue and new patient starts. And I will let Robert Francomano provide more detail on that in a minute.

In parallel, we've made substantial progress to expand ELZONRIS' potential utility and indications within and beyond BPDCN as well as advancing our overall pipeline. For now, I'd like to highlight the CMML opportunity, which we believe is our next indication. We are on track to open the third stage of our clinical trial in CMML in the next few months, which is intended ultimately to support registration.

The rationale for ELZONRIS and CMML is clear. We have presented encouraging clinical data in Stages 1 and 2 of the trial at ASCO and EHA this year. The mechanistic rationale of targeting CD123 makes sense in CMML, and there remains an unmet medical need not only in relapsed refractory patients but potentially also in certain first-line patients as well, opening the door to a focused and targeted development strategy in this aggressive, difficult-to-treat malignancy. Later in the call, I will review our clinical efforts in more detail.

With that, I will now turn the call over to Robert Francomano, our Global Head of Commercial, who will provide further details on the launch. Robert?

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Robert Francomano, Stemline Therapeutics, Inc. - Senior VP & Global Head of Commercial [4]

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Thank you, Ivan. In the third quarter, net sales of ELZONRIS reached a new high of $13.3 million, representing continued quarter-over-quarter growth. As we analyze the business and launch trajectory, and as Ivan already alluded to, we believe there were 2 major contributors that obscured the inherent revenue growth.

The first and most quantifiable item was a onetime $406,000 expense related to 340B hospital chargebacks. This onetime anomaly was recorded during the third quarter and was due to a transaction processing delay from one of our specialty distributors. Of this, $350,000 was related to the second quarter sales and the balance attributed to the first quarter. Combined, this represents a $756,000 swing in revenue between the second and third quarters.

The second factor was seasonality related to the timing of treatments. In particular, during the last week of June, we observed a significant number of treatments pulled forward into the second quarter, ahead of the July 4 holiday. While difficult to quantify, we estimate this impact was similar, if not greater to the magnitude of the 340B chargeback factor. Once again, this would lead to a higher net revenue sales increase quarter-over-quarter.

Fueling continued growth moving forward and quite notably, our data suggests there was a greater than 20% increase in new patient starts in the third quarter. We believe that new patient starts is a key metric that not only contributed to third quarter revenue but sets us up for success through 2020. This bodes very well for the future of the brand.

With this in mind, we remain very pleased with the pace of the ELZONRIS launch as it relates to brand uptake and new patient starts seen across the country. As mentioned last quarter, we don't stop here as we see this launch as a marathon, not a sprint. Our efforts must consistently combat misdiagnosis and grow the size of our new patient funnel.

More specifically, as we seek to build out on our base, we have instituted a number of strategies designed to increase the speed and accuracy of a BPDCN diagnosis, not only in hematology and hematopathology, but also within the dermatology and dermatopathology segments where our data indicate the preponderance of misdiagnosis occurs.

In the third quarter, we significantly increased our efforts on the derm and dermpath side. We have implemented a two-pronged approach consisting of nonpersonal promotion via print and electronic media, coupled with face-to-face personal interactions and medical congresses and speaker programs, all designed to raise awareness and change the diagnosis behavior at the regional and local level.

Additional developments. Delivering an environment favorable for both patient and reimbursement includes the recent awarding of NTAP and the assignment of an ELZONRIS-specific J-Code, both of which went into effect on October 1. As a reminder, CMS' awarding of NTAP offers up to $125,000 of additional reimbursement over and above the DRG rate for inpatient infusions of ELZONRIS. This reimbursement is granted to therapies that are deemed to deliver substantial clinical improvement over existing therapies.

Shifting to the outpatient set. And the unique ELZONRIS J-Code makes billing for treatment easier and speeds up the claims processing time. On the private payer side, published policies on ELZONRIS now cover more than 170 million U.S. lives and include key national organizations such as Aetna, Anthem, Humana, Cigna and UnitedHealthcare, just to name a few. We believe that creating a positive reimbursement environment for both patients and the brand will further enhance the value proposition ELZONRIS delivers and generate more patient starts for the foreseeable future.

Before shifting to Europe, I would like to take a minute to address the question that we're often asked. Given that BPDCN is an emerging market and in alignment with several similar launch analogs, the organization had made a strategic decision prelaunch to keep its sales data proprietary. However, sales reporting by our specialty distributors occurred without our authorization, sending mixed messages to the external environment.

We have reminded our valued specialty distributors of this prelaunch agreement, and they have systematically started to shut down reporting. We expect to have all proprietary data releases to end fully at some point before year's end. As you would suspect, this would render these data to be nonreliable.

Beyond the U.S., we are looking forward to potential commercialization in Europe. We continue to build the corporate infrastructure and are readying for a possible approval in mid-2020. Overall, we are very pleased with the pace of ELZONRIS uptake in the marketplace, but note that much work remains to be done, and our commercial and medical affairs teams are well positioned to continue their strong execution.

We are committed to helping patients with BPDCN receive the correct diagnosis and ultimately, obtain the best treatment for their disease. Again, we see ourselves in a marathon but one that we believe we are all well equipped to win.

I would now like to turn the call over to David Gionco, our Chief Accounting Officer. David?

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David G. Gionco, Stemline Therapeutics, Inc. - VP of Finance & CAO [5]

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Thank you, Robert. Our third quarter results can be found in the press release we issued last night, which I will summarize. Stemline ended the third quarter with $174.5 million in cash, cash equivalents and short-term investments, reflecting $11.8 million of net cash expenditures during the quarter.

For the third quarter of 2019, we had a net loss of $14.9 million. Research and development expenses were $12.3 million for the third quarter of 2019, which reflects an increase of $500,000 compared with $11.8 million for the third quarter of 2018. The higher costs were primarily due to an increased investment as we continue to explore new indications for ELZONRIS.

Selling, general and administrative expenses were $15.4 million for the third quarter of 2019, which reflects an increase of $5.8 million compared with 19 -- $9.6 million for the third quarter of 2018. The increase in costs were primarily attributable to ongoing commercial launch expenses for ELZONRIS. The company ended the third quarter of 2019 with 50 million shares outstanding.

I will now turn the call over to Ivan Bergstein, our CEO, for concluding remarks. Ivan?

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Ivan Bergstein, Stemline Therapeutics, Inc. - Founder, President, CEO & Chairman [6]

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Thank you, David. Again, we remain very pleased with the continued progress Stemline is making, both in the market and with our ongoing efforts to expand ELZONRIS' potential utility both within and beyond BPDCN as well as with the progress we have made with our overall pipeline.

ELZONRIS is currently being evaluated in clinical trials of patients with CMML; MF, myelofibrosis; and AML, acute myeloid leukemia; as well as other CD123 positive diseases and novel regulatory pathways related to this target are also being considered. We expect to report substantial clinical trial data and regulatory updates around these programs by the end of 2020 and possibly before.

Regarding CMML, this program is on track to begin enrolling patients in Stage IIIa within the next few months. As a reminder, we met with the FDA midyear regarding a path forward in CMML and have finalized the protocol. We are opening a new cohort Stage III with an a and b portion of the current study, wherein we will enroll both relapsed/refractory and first-line patients who are likely not to benefit from available therapies.

The rationale for ELZONRIS and CMML is clear. We have generated what we view as encouraging clinical data in Stages I and II of the trial, including an acceptable safety profile and evidence of clinical activity in the form of bone marrow and spleen responses. Notably, we see several parallels between CMML and BPDCN. On the scientific and medical side, CMML and BPDCN share certain features, including genetic alterations and may share a common clonal origin. CMML is believed to be able to transform into BPDCN in some cases, and in our trials, we have enrolled BPDCN patients who had a prior diagnosis of CMML. CMML can present with skin lesions, a hallmark of BPDCN.

Finally, our target CD123 is present on CMML blasts and monocytes as well as on malignant plasmacytoid dendritic cells, the cell of origin of BPDCN found in the CMML microenvironment. We anticipate being able to provide clinical data both in relapsed/refractory and first-line patients though unlikely to benefit from available therapies as well as regulatory updates by the end of 2020.

Regarding myelofibrosis, MF, we are very happy to announce that data from the ongoing Phase I/II trial were selected for oral presentation at the upcoming ASH conference, and we are currently expanding the trial for additional enrollment and to add more sites. The goal here is to further elucidate the activity in relapsed/refractory patients and other patient subsets in order to inform our regulatory strategy, and we expect to provide updates by the end of next year.

Regarding AML. We are implementing a multipronged approach. We have 1 IST that is currently investigating the combination of ELZONRIS with other agents in patients with relapsed/refractory AML, first-line AML patients unfit for chemo and patients with high-risk myelodysplastic syndrome. Also, we are finalizing protocols in patients with subsets of AML that are enriched for CD123 expression or have BPDCN-like features and expect to provide data updates around these programs by the end of next year and possibly before.

In summary, we are very pleased with the continued momentum we are building with ELZONRIS. Moreover, we're excited about the clinical potential of ELZONRIS, and we are looking to build upon our success in BPDCN in the years to come.

With that, I would like to open the call to questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question comes from Jessica Fye with JPMorgan.

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

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Thanks for providing that additional detail on the quarter-over-quarter revenue and onetimers. When I kind of apply the numbers that you were talking about, I think I can get to sort of like a 15% delta between the 2 quarters. Can you help us think about either how overall patients are trended quarter-over-quarter? Or are there any other patient metrics that you can give us besides the 20% new patient growth in the quarter that might help us better understand that kind of revenue trajectory?

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Ivan Bergstein, Stemline Therapeutics, Inc. - Founder, President, CEO & Chairman [3]

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Yes. Thanks, Jess. The -- yes, it's tough to give more insight into those patients. We continually are trying to look at our data and find out what is available to us to deliver for prime time viewing.

At this point, that's probably the -- where we're going to stop today is with that 20% growth quarter-over-quarter. There are other metrics that we're looking at that we hope to be able to provide at some point down the line, but it's still not mature enough. So I think the 20% over -- the 20% is a pretty good metric, and we're really hanging our hat on that a lot.

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Jessica Macomber Fye, JP Morgan Chase & Co, Research Division - Analyst [4]

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Okay, got it. Maybe a little more easy data for you to get than the kind of patient level data. I think last quarter, you talked about some metrics about reorders and new institutions ordering. Is there any color that you can give on that for the third quarter?

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Ivan Bergstein, Stemline Therapeutics, Inc. - Founder, President, CEO & Chairman [5]

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Yes. In that effort to try to give everybody more details, we've instituted some of that last quarter, and it was the best we had at the time. We've got -- type of data was a little bit deprioritized for us for today because we were able to come up with the 20% number, which we feel trumps all.

So those numbers that we have reported about unique accounts, those trends still exist. I'm not prepared to give you those numbers. I would tell you that the positive trends we saw in the second quarter would be somewhat consistent in the third quarter. So those messages would still be there.

We're very, very happy with the growth of the product, the diversity of sites that are taking on the product, the infusions. It's really quite remarkable to see how this product has been broadly adopted. And those metrics, once again, while I'm not -- I don't have those numbers handy. They would probably confirm this -- compared with similar success as we did in the second quarter.

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Jessica Macomber Fye, JP Morgan Chase & Co, Research Division - Analyst [6]

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Okay, got it. Last one, maybe just a quickie. Can you remind us of the payer mix that you're seeing with ELZONRIS? Is it still 75% Medicare? How much is Medicaid, commercial and cash?

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Ivan Bergstein, Stemline Therapeutics, Inc. - Founder, President, CEO & Chairman [7]

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Yes. It's still roughly 75% of Medicare and the remainder in private payer. Medicaid is a very small, negligible population. It could be one that grows down the line if we see broader uptick in utilization that we've experienced over the past year. But it -- Medicaid is really a small piece of the pie.

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Operator [8]

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Our next question comes from Boris Peaker with Cowen.

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Boris Peaker, Cowen and Company, LLC, Research Division - MD & Senior Research Analyst [9]

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I'd just like to probe a little further on the 340B rebates. Can you comment exactly kind of how it works, how it was calculated? And more importantly, going forward, would you -- do you just take provision on a quarterly basis? Or is it going to be another quarter in the future where rebates from several quarters are going to be rolled into?

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David G. Gionco, Stemline Therapeutics, Inc. - VP of Finance & CAO [10]

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Sure. Boris, this is David. We do estimate 340B reserves on a quarterly basis. And there's a significant effort that goes into analyzing that reserve. We -- for example, we look at factors such as historical chargeback data. We look at the mix of 340B versus non-340B hospitals. We look at similar product benchmarks as well as industry benchmarks.

So there's a significant effort in estimating reserves for 340B chargeback that does take place, and that's our normal process. And we had a situation here where -- look, we're a new commercial company here, and we don't have a lot of historical data. So there's always going to be some potential estimation variability to deal with.

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Boris Peaker, Cowen and Company, LLC, Research Division - MD & Senior Research Analyst [11]

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But in terms of true-ups, that's what I just want to understand, is there going to be, again, we wait maybe a few quarters and there's going to be a big true-up? Or are you going to be now truing up on a quarterly basis so it's ended up being smoothed out?

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David G. Gionco, Stemline Therapeutics, Inc. - VP of Finance & CAO [12]

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We're not expecting any further true-ups. We believe this is a onetime item.

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Boris Peaker, Cowen and Company, LLC, Research Division - MD & Senior Research Analyst [13]

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Great. And my next question in terms of just focusing on ELZONRIS patients. Can you comment at this point kind of what fraction of patients end up getting the drug and then going on to transplant versus those that just stay on drug and nontransplant as well as the duration of treatment or vials per patient in either one of those scenarios?

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Ivan Bergstein, Stemline Therapeutics, Inc. - Founder, President, CEO & Chairman [14]

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Yes. At this point, we are tracking some patients that we have an intimate knowledge of because of our field efforts with both the territory managers and our -- and medical science liaisons. It's difficult to talk with any certainty about what that is pointing to as it relates to percentage of patients moving on to stem cell transplant or even treatment durations for that matter.

We're not getting that level of granular data at this point. So what we've been telling everybody over the past several months is that right now, there would be no reason to believe that the percentage of patients moving on to stem cell transplant or treatment durations would be anything different than what we saw in the 0114 trial.

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Boris Peaker, Cowen and Company, LLC, Research Division - MD & Senior Research Analyst [15]

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Great. And my last question -- or maybe on CMML in the pivotal study. What do you think you need to show clinically for approval?

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Ivan Bergstein, Stemline Therapeutics, Inc. - Founder, President, CEO & Chairman [16]

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Yes. So the study has 2 stages, IIIa and IIIb. And it's very, very reminiscent of our BPDCN study, which is why I think we feel very comfortable. We have a great relationship with the FDA. We feel this is kind of a regulatory path 2.0 for us with the FDA in that in the first -- in BPDCN, as I may refresh everyone's memory.

The gold standard end point for approval according to the FDA at the time for aggressive leukemia types of diseases like BPDCN was complete response, but they were open to additional end points if we could demonstrate that they were tied to clinical benefit prospectively. So -- and they allowed us to do this kind of without missing a step in the context of our ongoing study.

We were able to confirm a clinical complete response while generating additional data. They agreed. They allowed us to then formally introduce it as the primary end point in the confirmatory stage, and we were successful there.

Very similar type process here in that new end points are being introduced into CMML by us. Only this time, we have the advantage of a major thought leader, major consortium paper, all basically saying that CMML is no longer considered a myelodysplastic syndrome solely. It's really a myelodysplastic/myeloproliferative and really suggesting that other end points than ones other than historically used solely for MDS should be used in CMML. So we've been able to leverage this.

Again, with BPDCN, we were kind of charting the territory really. In this case, we're relying on major papers and consortium to make the case. They were very receptive to introducing additional end points above and beyond ORR into the Stage IIIa, which would allow us to continue to make forward progress rather than go off and do a study on the side and come back. This allows us forward progress in the IIIa, look at some of these novel end points that typically tied to proliferative-type cases like spleen reduction size or bone marrow response with partial hematopoietic recovery, symptom scores, things like this.

And in the context of the IIIa, really collect this data and hopefully, at the end of that, show that one or more of these elements do indeed tie to clinical benefit. Clinical benefit is not explicitly defined, but it's something that when you see it, you know what it is. And then the idea would be to go to the FDA and say, "Look, these additional end points that we were interested in do indeed tie to some elements of clinical benefit and here's why," similar as to what we did with BPDCN. And hopefully, that would allow us to formally introduce not just ORR, but some of these others into the confirmatory part of Stage III, which would be IIIb, and hopefully lead to registration.

Now the primary focus is relapsed/refractory CMML. These are very, very sick patients, really no therapies available for these patients that are particularly active. The median overall survival in these patients is 6 to 7 months. So it's a dismal situation. The bar is very, very low. We've already shown what we believe is very encouraging signs of activity in the form of bone marrow responses and spleen responses in these patients.

And we'll also be enrolling first-line patients as well because there's a crop of first-line patients who really are not thought to benefit from available therapies. And these are patients who have more of the proliferative type of CMML. So it will give us our first experience with first-line patients.

And I want to remind you, in BPDCN, our relapsed/refractory data were good, but these are very, very sick patients. And then when we started to treat first-line patients, our response rate shot up dramatically, and we really saw the drug perform in first-line treatment-naive patients.

In CMML, I just -- I always have to try to remind people when they say, "Well, how does your CMML data compare to your BPDCN data?" It's apples and oranges, the CMML or relapsed/refractory sick patients and the data we talked about most in BPDCN's first-line. So it's apples and oranges, but now we're going to have an opportunity to treat first-line CMML patients in parallel, and we're going to look forward to and expect some exciting data coming out of that as well.

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Operator [17]

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Our next question comes from Matt Kaplan with Ladenburg Thalmann.

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Matthew Lee Kaplan, Ladenburg Thalmann & Co. Inc., Research Division - MD & Head of Healthcare Equity Research [18]

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Congrats on the quarterly results. I guess a question for Robert. Just wanted to dig in a little bit in terms of your programs with respect to making sure our patients are correctly diagnosed and whether it's at a derm level, a derm setting or in the [EM OX] setting and helping you to identify these patients and get them into treatment.

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Robert Francomano, Stemline Therapeutics, Inc. - Senior VP & Global Head of Commercial [19]

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Yes. Matt, there are quite a bit of tactics that we have pushed out over the past several months to address this. Our data, quite some time ago, revealed, and I mentioned this earlier today on the call, is that we -- our data shows that most of the misdiagnosis comes from that patient that presents to the dermatologists with skin lesions and doesn't get the proper diagnosis and maybe not even a biopsy. But when they do get biopsy, then that tissue sample gets to the dermatopathologist, they're not really looking at CD123 the way they need to.

So all of the programs that we do, both in medical affairs and in marketing with the selling teams, with the reimbursement teams, really, as a company, focused on bringing about the awareness of CD123 and the importance of it. Not only in BPDCN, but we also remind people that CD123 is a prolifically expressed marker. And so we want to elevate the importance of that so people think of it more top of mind.

So everything we do there is in interactivity with labs, with dermatopathologists, with reference labs, and so it's pretty encompassing and every faction of the commercial and medical effort is focused on that right now. That's the key to our success down the line is -- and that's where we can make the biggest impact is right there at the site of diagnosis.

So what aids us as well is the fact that we have a CD123-directed therapeutic in ELZONRIS. That alone spawns more interest in assessing for CD123. So we're really still at the early stages of this. And to go more specifically to one of the points you made is how do we interact with EMRs and how do we get alerts and how do we proactively find a patient that may have BPDCN because perhaps we get an alert that CD123, born '56, show positive in an alert system and we can mobilize a team to go there to help with the diagnosis. These are things that we're doing.

The team has done quite honestly an exquisite job in putting comprehensive programs together and answer this need. So they went and took place this quarter. I just want to remind everybody that it is going to take some time to change the diagnostic behavior. Misdiagnosis has been going on for many, many years. And we're doing our best to enact tactics and approaches that will change this behavior quickly, but it will take some time.

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Matthew Lee Kaplan, Ladenburg Thalmann & Co. Inc., Research Division - MD & Head of Healthcare Equity Research [20]

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Okay, that's helpful. And I guess a question for Ivan. Thank you for the detail on the CMML study. Can you give us some more detail with respect to the dosing regimen in CMML and how we should think about that as an indication? Is that an indication similar to BPDCN where patients are driven to transplant? Or is this an indication where patients will stay on ELZONRIS potentially longer periods of time?

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Ivan Bergstein, Stemline Therapeutics, Inc. - Founder, President, CEO & Chairman [21]

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Yes, sure. So the regimen is slightly less dose-intense. It's the same dose that being 12 micrograms per kilogram per day. But rather than 5 days in a row that we use in BPDCN, it's 3 days. And the cycle frequency is a little bit lighter than it is in BPDCN. BPDCN is a very, very aggressive disease, where skin lesions kind of grow in front of your eyes from day to day. And CMML a little bit more indolent.

So we've decided to give it a slightly less dose-intense regimen. And actually, we believe the safety profile has been stellar in CMML and may be benefiting from that, but it doesn't appear to be detracting from the activity. So we think we have the optimal regimen there.

In terms of getting patients to transplant, historically, it's been very, very difficult to get CMML patients to transplant. That is -- that has been the therapeutic goal. But the problem is many CMML patients are middle age to elderly, have a lot of comorbidded situations. And it's just been very, very difficult to get those types of patients to transplant.

We obviously -- we've had one, which was bridge transplant, and that was a great outcome. And certainly, that would be an outcome we'd be very, very happy with. Alternatively, this therapy can be given long term. As you know, we had 1 or 2 patients in the clinical trial going out past 1.5 years. I think there was 1 patient out 3 years. So certainly, either outcome is possible.

I think it will largely be patient dependent, how old is the patient, how sick is the patient performance status, are they a transplant candidate, et cetera. But time will tell. And if they're first-line versus relapsed/refractory obviously is a major factor as well.

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Matthew Lee Kaplan, Ladenburg Thalmann & Co. Inc., Research Division - MD & Head of Healthcare Equity Research [22]

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Okay, great. And then one more question on CMML. Do you think this study could also suffice for approval in Europe? And then secondly, can you give us an update on your plans for myelofibrosis MF?

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Ivan Bergstein, Stemline Therapeutics, Inc. - Founder, President, CEO & Chairman [23]

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Yes, sure. Yes, our plan in CMML is to add -- we're adding sites now. There's a lot of interest from the last conference. And now we've met with a lot of CMML KOLs. We know virtually all of them, a lot of interest internationally. So yes, we expect to add a couple of European sites, and we would look to file both in the U.S. and Europe.

In myelofibrosis, as folks continue to dig into the data, they get more excited. First of all, it's not another JAK inhibitor, it's a completely novel mechanism of action, CD123. Again, as people dig into the data, and we kind of did a deep data dive for our ASH filing and lo and behold, it was accepted for an oral presentation. There's a lot of stiff competition there, and Robert has an experience in myelofibrosis as well. So we feel that it is well within our comfort zone in this disease.

What we like about it is we're seeing activity in the spleen, which is kind of the gold standard end point that the FDA makes decisions around. So we're seeing activity where you would want to see activity. We feel like there's a lot of optionality here. There's the relapsed/refractory population as a whole. But as we're expanding the study and expanding the sites, we're also starting to look at certain subsets of interest such as patients with thrombocytopenia.

As you may know, some of the JAK inhibitors often have to be dose-reduced or even withheld in the setting of thrombocytopenia, which is a potential entry point for us because we have had some good success with patients who are thrombocytopenic, and then we have not had to dose -- or withhold doses or lower our dose. So I think that's one area of interest we're going to pursue over the next year.

The other is, we're learning that there's a subset of myelofibrosis patients that have elevated monocytes. This is very interesting because CMML is a disease of high monocytes. So we know our drug is very active in CMML. Here, we have a kind of a subset of MF that looks a lot like CMML with these high monocytes. The monocytes in CMML or CD123 are positive.

The other thing is that this is -- those patients appear to have a particularly poor prognosis in MF and other drugs don't work -- don't seem to work particularly well. So that opens up a potential novel regulatory path coupled with scientific rationale. So that one we're -- we have our eyes on. And then we've seen interesting activity in that subpopulation. We want to continue to double down and look at how the drug fares in that population because that might open a novel pathway as well.

We're also in our MF study moving forward and CMML and AML, all of our studies. We plan to introduce a validated CD123 assay that we're working on with vendors, which will be very helpful to kind of nail down -- would CD123 enrichment be another pathway? And we'll look at that in really all of our diseases moving forward. There may be subsets of MF patients or CMML or AML that are high CD123, that are particularly sensitive to drug, and that would be great. We've opened up a pathway there.

And all these studies really have a dual purpose. They're indication specific, but also, the more data we can gather for the drug being active in CD123-high patients for multiple indications, the more our case for a target-based label is there. So these studies all have that dual purpose.

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Operator [24]

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(Operator Instructions) Our next question comes from Joe Catanzaro from Piper Jaffray.

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Charles A. Frantzreb, Piper Jaffray Companies, Research Division - Research Analyst [25]

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This is Charles on for Joe. I just wanted to ask if you could provide any commentary on the waiting of patient starts throughout the quarter given that some patients were drawn into Q2 because of the July 4 holiday where patients start, therefore, more weighted towards the end of the quarter.

And my second question was about commercialization in the EU and whether you could provide a bit more detail there on the filing status with the EMA. What the next steps are and whether or not you would be prepared to commercialize on your own in the EU?

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Ivan Bergstein, Stemline Therapeutics, Inc. - Founder, President, CEO & Chairman [26]

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Yes. I think it's fair to say that the patient starts were more initiated in the second half of the quarter. As it relates to the European Union commercialization where we're poised to commercialize there, we have the -- we fully have the capability and knowledge of -- to go there and do this. We have a small team on the ground right now that has been working tirelessly to prepare the market and prelaunch initiatives to ensure that if an approval does come in mid-2020, that we are ready to capitalize on the approval.

That said, a lot of the work is preparing the medical, marketing and payer aspects to the launch. What's critically important to us, of course, is in those key markets. And the EU4 and EU5 is substantially securing good price points and good reimbursements. And I will tell you that from where I sit right now, we -- I'm very happy with the progress I see for the European market.

So at this point, things are on track from where we sit. We remain very confident what that opportunity is. And remind you that we feel the opportunity and the totality of Europe is just as good as the opportunity that we have in the United States, and we would -- our data shows that there's probably a similar incident rate of BPDCN per 100,000 patients, so more people. So yes, so those activities continue to go. We're judicious in how we go there, but we are poised for success.

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Operator [27]

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Our next question comes from Yi Chen with H.C. Wainwright.

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Edward D. Marks, H.C. Wainwright & Co, LLC, Research Division - Research Analyst [28]

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This is Edward Marks on for Yi. I appreciate you taking the questions. Just 2 quick clarifying ones for me. Just sort of elaborating on that previous question. Just wondering if -- I apologize if I missed this earlier. When do you expect to start generating revenues in the EU? Would that then be in the second half of next year?

And then also around the treatment cycles, I know you mentioned that you don't have that granularity yet. But I'm wondering if in the future, you'd be able to have that data available and if you would be willing to talk about that on potentially future earnings calls.

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Ivan Bergstein, Stemline Therapeutics, Inc. - Founder, President, CEO & Chairman [29]

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Yes. So from a revenue perspective, I'll just remind everybody that, obviously, there's many different markets within the European market. So if we were to get -- if we were to get an approval sometime in the mid of 2020, reimbursement for commercialized products takes place at varying rates.

Traditionally, and I'll speak in just very generalities, and generalities here is typically, you'd see Germany come on first with quicker reimbursement mechanisms than maybe France, Italy, Spain. And we have a very specific launch sequence that we are adhering to, which maintains pricing integrity of the asset as well as going into markets that have very friendly reimbursement environments.

So when the revenue comes, I will tell you -- and automatically, you have -- France and Germany are free of -- free pricing markets that generally, you'll start to see more revenue sooner rather than later. So at this point, I think what our launch would demonstrate was that we'd probably take on a traditional launch sequence in the European Union, likely with Germany coming on first, probably France, second. And then that's pretty typical for this space.

So once again, what I'd like to caveat there is that if we were to get approval in say, June of 2020, that doesn't mean that we have immediate reimbursement throughout the land there. It's going to come on country by country. So that hopefully answers your first question.

As far as the treatment cycles, yes, well, I think we want to be able to give as much direction to all of you folks as we can stand by. And so if there's anything we've seen over the last 9 or 10 months is that we are getting more and more information, we are able to implement more analytics that allows us to offer information to you folks with greater precision and confidence. And that's the path I think we're going to have to try to stay on wholeheartedly. I would like to be able to give you more so that you can execute your jobs the way you need to do that. So as it becomes more reliable, we'll certainly take the decision to see what we can release.

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Operator [30]

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Thank you. And this concludes today's question-and-answer session. I will now turn the conference back over to Mr. Ivan Bergstein.

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Ivan Bergstein, Stemline Therapeutics, Inc. - Founder, President, CEO & Chairman [31]

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Thank you, operator. Here at Stemline, we are driven by a mission to help improve the lives of patients with cancer. I would like to take this opportunity to thank all of the patients, physicians, health care professionals and all of the outstanding employees at Stemline for their dedication and passion in making a difference in patients' lives. Thank you all for joining us on the call this morning.

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Operator [32]

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Thank you, everyone. This concludes today's teleconference. You may now disconnect.