Clovis Oncology, Inc.
Q2 2018 Earnings Call Transcript

Published: 3 Aug 2018

[Operator:]

Good day, ladies and gentlemen, and welcome to the Q2 2018 Clovis Oncology, Inc. Earnings Conference Call. [Operator Instructions] As a reminder, this conference call may be recorded. I would now like to introduce your host for today's conference, Ms. Anna Sussman, VP of Investor Relations. Ma'am, you may begin.

[Anna Sussman:]

Thanks, Daniel. Good afternoon, everyone, and welcome to the Clovis Oncology second quarter 2018 conference call. You should have received the news release announcing our financial results, if not, it's available on our website at clovisoncology.com. As a reminder, this conference call is being recorded and webcast. Remarks may be accessed live on our website during the call and will be available in our archive for the next several weeks. The agenda for today's call is as follows

[Patrick Mahaffy:]

Thanks, Anna. Welcome, everybody. Thanks for joining us this afternoon. I'll begin with an update on the U.S. launch of Rubraca in the recurrent ovarian cancer maintenance treatment setting in the all-comers population following its April 6 FDA approval. As you are aware, this expanded our indication into all-comers and earlier line platinum-sensitive recurrent maintenance population, and there is no biomarker testing required for patients to be prescribed Rubraca in this indication. Our commercial team was prepared to launch immediately upon the receipt of the approval, and we are pleased with our entry into the second line maintenance market for ovarian cancer thus far. The ARIEL3 data and the Rubraca label position us well for continued growth, and we are confident in Rubraca's potential in this indication. With the addition of the all-comers and earlier-line indication, we achieved second quarter 2018 net sales of $23.8 million. As noted in the news release, what seems to be the new normal for oral oncolytics, at least in the ovarian cancer space. This does not include the $7.9 million in commercial value provided to eligible patients, primarily Medicare Part D patients as free drug supply through our patient assistance program. This represents approximately 1 quarter of overall commercial supply, up slightly from the 22% reported through the first quarter of 2018. We expect the supply of free drug delivered for our patient assistance program to continue in the mid- to high 20% range for the foreseeable future. As a result of our new label, for the first time in the few quarters, we saw a more substantial increase in our quarter-over-quarter sales. Importantly, over 1/3 of our prescribers in the second quarter were first time prescribers of Rubraca. Obviously, we are pleased to be moving beyond just those prescribers, who have had experience with Rubraca in the earlier and more limited treatment setting. Our job, of course, is to continue to increase sales by positioning Rubraca as the preferred choice among the PARP inhibitors. To fully drive sales, we are also going to have to position Rubraca in the PARP inhibitor class as the best choice to maintain progression-free survival in advanced ovarian cancer. We all recognized that the penetration of PARP inhibitors into the ovarian cancer second line maintenance setting remains on approximately 35% to 40% of eligible patients. This is despite two PARP inhibitors having gained approval in this setting for a year or more. As of now, approximately one third of patients still get Avastin monotherapy maintenance despite multiple data sets from PARP inhibitors, demonstrating very encouraging patient outcomes compared to placebo and the all-comers' platinum-sensitive second line maintenance setting. The remaining approximately one third of ovarian cancer patients, beyond those taking either a PARP inhibitor or Avastin maintenance, still do not receive maintenance therapy at all. While it is evident from our sales that we are beginning to gain share in this group of dedicated PARP inhibitor prescribers, to fully realize the potential of the class, including Rubraca in advanced ovarian, we must increase the number of committed PARP prescribers for all-comers population in order to increase the PARP class share and for us, Rubraca share, in the eligible patient population. While the price and penetration rate is lower than expected, it also demonstrates that no PARP inhibitor has emerged as a clear standard of care and provides us an opportunity and path to establish Rubraca as a preferred choice for these patients. We are well-positioned now to expand this market with what we believe to be the best label data of any PARP inhibitor. As recent evidence, Rubraca received the sole recommendation for both of its approved indications from the largest payer and provider-based pathway in the U.S. for the end of the second quarter. In addition, just last week, we were notified that Rubraca received a recommendation from the largest treatment-based pathway in the United States. As a recent article in Pharmaceutical Commerce stated, clinical pathways in oncology aim to create a useful evidence-based framework to help oncologists make sense to the complex choices available and to help to enforce, where possible, a certain amount of standardization in cancer care. The goal is to focus prescribing efforts favoring those choices that present the strongest clinical evidence as it relates to efficacy, safety and cost-saving opportunities. Clinical pathways committee typically review all of the available up-to-date clinical evidence when devising their pathways protocol. These pathway organizations have an opportunity to review the data for each of the three PARP inhibitors in this indication. And no surprise to us, Rubraca emerged as the sole option in one case and one of two recommended options for patients in the other case. Combined, these pathways cover a broad population of prescribing clinicians in both the academic and community settings, and we are pleased to have seen these endorsements. Let me turn now to discussing our progress in Europe. In Late May, Rubraca was authorized by the European Commission as monotherapy treatment of adult patients with platinum sensitive, relapsed or progressive, BRCA mutated, high-grade epithelial ovarian, fallopian tube or primary peritoneal cancer who have been treated with two or more prior lines of platinum-based chemotherapy and were unable to tolerate through their platinum-based chemo. Very soon after receiving its authorization for the treatment indication, we submitted a variation to the marketing authorization for Rubraca to improve the second line-related maintenance treatment indication directed at the broader all-comers population based on ARIEL3, which was validated by the EMA in early July and now under active review. We anticipate a CHMP opinion for the maintenance indication by year-end 2018, with a potential formal approval in early 2019. It's important to note here for those less familiar with the European regulatory processes, that upon receipt of the first approval, the second submission is reviewed on a six-month review block. Beyond the benefits of the treatment indication itself, we are pleased that the Rubraca treatment approval enabled a rapid review for the all-comers maintenance indication. Given this timing, we continue to build out our European commercial and medical affairs teams. And we're actively preparing for an early 2019 planned launch. Obviously, the majority of planned hires, including the sales reps, will coincide with reimbursement approval in the individual countries. As a result, the majority of new hires in Europe will occur in 2019 and early 2020, as with any meaningful revenues. Of course, our clinical, regulatory, safety, quality and supply chain teams were already in place in our office in Cambridge in the UK. We have initiated an early access program in a limited number of European countries for rucaparib for treatment and as maintenance therapy in recurrent ovarian cancer to allow access to rucaparib for patients in need until the time the drug is commercially available. Already more than 60 patients have been treated under the rucaparib access program. And as a result of this uptake, we are now expanding into additional European countries. Let me turn now to clinical development. I'll begin with the Clovis-sponsored Rubraca development program for ovarian. ARIEL4 is our confirmatory study in the ovarian cancer treatment setting, which is open for enrollment. This is a Phase III multicenter, randomized confirmatory study of Rubraca versus chemo in relapsed ovarian cancer patients with BRCA-mutant ovarian cancer, whose tumors have progressed after two or more prior lines of therapy. The primary endpoint of this study is progression-free survival. The ATHENA study is part of our clinical collaboration with Bristol-Myers Squibb, and we are sponsoring and conducting this study in advanced ovarian cancer in the first-line maintenance treatment setting. This Phase III study, which initiated during the second quarter, will evaluate Rubraca plus Opdivo; Rubraca, Opdivo and placebo in newly diagnosed patients with stage III/IV high-grade ovarian, fallopian tube or primary peritoneal cancer who have completed platinum-based chemo. The study, with approximately 1,000 patients, includes an all-comers population with a similar step down statistical plan to ARIEL3. Importantly, this study is conducted in association with the GOG in the United States and with ENGOT in Europe, which are the two largest cooperative groups dedicated to treatment of gynecological cancers in the U.S. and Europe. We believe this will facilitate more rapid enrollment in the trial. As an example, GOG recently enrolled 1,100 patients in a front line ovarian cancer study in just 22 months. I spoke earlier about the opportunity to expand the penetration of the PARP class in ovarian cancer. Equally important, and as evidenced by the recent expansion of the clients into breast cancer, is the opportunity to expand Rubraca in the multiple additional tumor indication in both monotherapy and in combination with other agents. We are particularly focused in the short term on the opportunity to expand in the prostate cancer. We have two Clovis-sponsored prostate cancer trials that are actively enrolling patients. The first Clovis-sponsored prostate trial is TRITON2, our Phase II single-arm study, in patients who have a germline/somatic BRCA mutation, who's tumors have progressed after a single line of taxane-based chemo and one or two lines of androgen receptor-targeted therapy in the metastatic castrate-resistant setting. The planned primary endpoints are radiologic overall response rate in patients with measurable disease and PSA response rate in patients without measurable disease. TRITON2 is also evaluating response in patients with other deleterious mutations of genes believed to be associated with DNA repair deficiency, including ATM. If successful, this trial is designed to support a supplemental NDA submission for an accelerated approval in BRCA-mutated, metastatic, castrate-resistant prostate cancer. The TRITON2 is an open labeled study. We are looking forward to presenting initial data from this study at ESMO in Munich in October. I'm pleased to announce that the abstract was accepted as a poster discussion, which will take place on Sunday afternoon, October 21st, and will be followed later that evening by Clovis investor analyst event in Munich. For the poster discussion, we expect to present data on more than 80 patients who are enrolled as of the mid-April enrollment cutoff date, including more than 40 patients with mutations of BRCA. All of these BRCA patients will also be evaluable for a PSA response, and approximately 25 patients are expected to be evaluable for a RECIST response. The majority of the overall population will have at least 24 weeks of follow-up. For the BRCA patients, the majority will have more than 6 months follow-up. The minimum follow-up for all patients will be 16 weeks, which represents 2 scans. We understand that the abstracts for poster discussions will publish on October 19. To make it clear, the number of patients in the abstract is smaller than I've just described to you, given the earlier enrollment cutoff date we used for the abstract and the numbers I have just provided. It's also important to note that while responses have been shown for other PARP inhibitors based on surrogate or composite endpoints, this will be the largest reported population of advanced mutant BRCA prostate cancer patients, given the endpoint of RECIST response. As such, we think this is an important data set for Rubraca and for the PARP class. Based on FDA input, we believe that RECIST response data from TRITON2, if positive, could be used as the basis of a supplemental NDA to support an accelerated approval for Rubraca and mutant BRCA metastatic castrate-resistant prostate cancer. PSA response for the use of supported data. Pending data, we currently expect to submit the supplemental NDA by the end of 2019. Our second Clovis-sponsored prostate study is TRITON3, a randomized comparative Phase III study that includes patients who have a tumor germline or somatic BRCA or ATM mutation, who have progressed on AR-targeted therapy and not yet received chemotherapy in the metastatic castration-resistant setting. The study will compare Rubraca to physician's choice of AR-targeted therapy or chemotherapy. Planned primary endpoint is radiological progression-free survival. And this study could potentially serve as a confirmatory study, so the TRITON2 study data result in an accelerated approval. The ATLAS study is a single-arm Phase II open-label study of Rubraca as monotherapy in recurrent metastatic bladder cancer. This is all-comers population, with no selection based on HRD status. Eligible patients are those who have failed 1 or 2 prior therapies. This study is currently enrolling patients and is designed to potentially support an accelerated approval. Given the fact that bladder cancer is particularly responsive to platinum-based therapy and that approximately 2/3 of patients are HRD, we are hopeful about the potential for Rubraca in this indication. RUCA-J is our Clovis-sponsored Phase I Japanese study now enrolling patients. The study, with safety in PK as primary endpoints, seeks to identify the recommended dose of rucaparib in Japanese patients, which will enable development of the bridging strategy and potential inclusion of Japanese sites in planned or ongoing global studies. Our newest Clovis-sponsored study is the planned Phase II open-label multi-cohort study evaluating the combination of Rubraca and Opdivo in patients with relapsed BRCA wild-type ovarian cancer as well as in patients with locally advanced or metastatic bladder cancer. This study is expected to begin in the second half of this year. We are well aware of the desire to see robust combination results for PARP inhibitors and I/O agents broadly, and for Rubraca and Opdivo specifically. We are pleased to get this study going and hope to have initial data from this study and potentially preliminary data from the ATLAS bladder study towards the end of next year Turning now to collaborator-sponsored studies. There are two additional studies that are part of the clinical collaboration between Clovis and Bristol-Myers Squibb beyond ATHENA that I mentioned previously. There is a Phase III pivotal study in advanced triple-negative breast cancer, which will be sponsored and conducted by BMS. BMS will be expected to describe the trial design at a later date closer to study initiation. The Phase II prostate cancer study, which initiated in late 2017, is sponsored and conducted by BMS. The study will evaluate the safety and efficacy of Opdivo in combination with Rubraca, in patients with metastatic castrate-resistant prostate cancer. And is being conducted as an arm of a larger BMS-sponsored study in a total 300 patients. Importantly, the prostate study is enrolling BRCA, HRD and biomarker negative patients, which will generate preliminary data on the relative benefits of the combination in these distinct and identifiable patient populations. Turning to additional collaborator-sponsored trials, the Phase Ib study, in collaboration with Genentech to evaluate a novel combination therapy of their cancer immunotherapy, TECENTRIQ, or atezolizumab, and Rubraca continues to enroll patients. The trial is now enrolling patient cohorts in triple-negative breast and ovarian cancers. We were pleased to announce in June at ASCO a planned clinical collaboration with Immunomedics to evaluate the combination of Rubraca and sacituzumab govitecan as the treatment for advanced metastatic triple-negative breast and metastatic urothelial cancers. We look forward to updating you on this collaboration as it progresses and me getting better pronouncing that name. To wrap up our clinical development update for Rubraca, there are over 30 investigator-sponsored monotherapy or combination therapy studies in a variety of tumor types approved or underway. Now a few minutes in tracking lucitanib's reintroduction. Lucitanib is our oral potent inhibitor of PK activity of vascular endothelial growth factor receptors 1 through 3, platelet-derived growth factor receptors alpha and beta, and fibroblast growth factor receptors 1 through 3. Lucitanib was a subject of a partnership with Servier established in 2013, where Servier had gained rights to lucitanib worldwide, except for the U.S. and Japan, where we held rights. In partnership with Servier, we evaluated lucitanib in breast and lung cancer based on a hypothesis of activity in FGF receptor driven tumors. The beta from these studies were insufficient to move the program forward and that development was discontinued in early 2016. Until recently, we have said little about lucitanib. Although meant to note that we expected that Servier would return their rights to us. We have received a formal notice of termination from Servier and upon effectiveness of the termination expected later this year, we will hold global rights, excluding China, for lucitanib. Recently, there have been very encouraging data in studies of a very similar drug to lucitanib that inhibits the same 3 VEGF, PDGF, and FGF receptor pathways called LENVIMA, or lenvatinib, in combination with KEYTRUDA. These data represent a validated compelling and alternative hypothesis for the development of lucitanib in combination with a PD-1 or a PD-L1. And a Clovis-sponsored combination study is now being planned. We've also discussed our intention to initiate a study of lucitanib in combination with rucaparib, based on encouraging data of VEGF inhibitors and PARP inhibitors in combination. Each of these studies is expected to initiate no later than Q1 2019. For an updated preclinical overview of lucitanib, please visit the Events and Presentations page on our website. The composition of matter patent for lucitanib does not expire until 2030 in the U.S., and we expected an additional 3 or 4 years of Hatch-Waxman extensions in the U.S., depending on the data of the first potential U.S. approval. Patent protection in the EU with extensions will be similar. We are very enthusiastic about the potential for lucitanib in combination studies based on these data. We look forward to sharing additional details of the development, in clinical development plan for lucitanib over the course of the remainder of the year. Lastly, and importantly, before I turn the call over to Dan, you'll note from our financials that we booked a 20 million reserve in quarter two related to resolving the SEC investigation related to lucitanib that we first disclosed a couple of years ago. We've reached an agreement in principal with the SEC, and the terms of a settlement, that when filed, will enable us to put this chapter behind us. That settlement, in principle, still needs to be approved by the SEC and approved by a federal court before its final. So I cannot give you all the details now. But I can tell you that the settlement would be on negligence-based charges in which we neither admit nor deny the SEC's allegations. As part of that proposed settlement, Clovis will agree to pay penalty a $20 million, and there will be the standard adjunction against future violations with securities laws. Part of this agreement in principle refers directly to me in my capacity as Clovis CEO and President. This also needs to be approved by the SEC and approved by a federal court before it is final. There are several negligence-based allegations to which I will neither admit or deny, but I would pay a civil penalty and be similarly enjoying against future violations of securities laws. There is no proposed officer or director bar. I will continue to service as Clovis CEO and President and as a member of our board. Hopefully this resolution removes any uncertainty and concern over Clovis that this matter has caused investors. While we cannot comment further on this situation, we will report on the settlement when it is approved. And with that, I'll turn the call over to Dan to discuss second quarter financial results.

[Dan Muehl:]

Thanks, Patrick, and good afternoon, everyone. Our second quarter 2018 financial results were included in this afternoon's press release. I'll review the highlights of our financial results and provide some additional commentary. Product revenue is $23.8 million for Q2 2018 compared to Q1 2018 revenues of $18.5 million, a 28% sequential quarterly increase. This compares to $14.6 million in Q2 2017 revenue or a 62% quarterly increase year-over-year. The supply of free drug provided through our patient assistance program totaled $7.9 million in commercial value during the quarter and $13.4 million for the first half of 2018. This represents approximately 25% of overall commercial supply for the quarter. Most of these patients are on Medicare Part D plans. With the increase in the current and anticipated percentage of patient assistance program commercial value, not realized as revenue, results from an increase primarily in the percentage of Medicare and Medicaid patients treated with Rubraca, which is now approximately 40% of our total patient population, from what was previously around 30% with our prior narrow treatment label. We expect the percentage of overall commercial supply of free drug to continue in the mid- to high 20% range for the remainder of 2018. Turning now to our balance sheet. We ended the first quarter of 2018 with $682.2 million in cash, cash equivalents and available-for-sale securities. In April 2018, we raised a total of $385 million net through offerings of common stock and convertible debt. Cash used in operating activities was $110.2 million for Q2 2018 compared with $69.1 million for Q2 2017. Cash used in operations in Q2 2018 includes drug product supply cost of approximately $45 million and milestone payments to Pfizer of $58 million, related to our recent U.S. and EU product approvals. Drug product supply cost will decrease to approximately 10 million for the remainder of 2018 as we transition to a new manufacturing facility anticipated to be operational in late 2018. We will incur final capital costs for the new manufacturing facility of approximately 8 million in late 2018 as well. We are very pleased with the progress of the new facility and anticipate the qualification of new supply will be completed in 2019. This new facility will support anticipated future drug supply needs for Rubraca, and we'll do so at a substantially lower cost than our current drug supply. We will have greater control and the reduction of lead times for products. Also, we will gain redundancy in our API production by adding a location in China in 2019. After our current production campaign is completed and paid for in early 2019, we expect drug supply costs will be lower in aggregate in 2019 compared to 2018. Milestone payments for product approvals will also be lower and would be limited to 15 million, pending approval for the EU maintenance indication. We reported a net loss of 101.2 million or $1.94 per share for Q2 2018. This compares to 175.4 million or $3.88 per share for Q2 2017. Excluding certain non-GAAP expenses related to the SEC and legal settlement losses, we reported an adjusted net loss of 81.2 million or $1.55 per share for Q2 2018 compared to 58.4 million or $1.29 per share for Q2 2017. Our Q2 2018 R&D expenses totaled 52.7 million compared to 33.1 million in Q2 2017. R&D expenses will continue to increase as our planned clinical studies and development activities progress. Selling, general and administrative expenses totaled 44.9 million for Q2 2018 compared to 36.1 million in Q2 2017. SG&A expenses will also continue to increase in support of our commercial activities related to Rubraca in the United States and Europe. Now I'll provide some further color on the Rubraca from a finance perspective. Revenue has recorded net of estimated rebates, chargebacks, discounts and other deductions as well as estimated product returns. These gross to net adjustments totaled approximately 10% of gross revenue for Q2 2018. Gross to net adjustments are expected to be in the high single or low double digits as a percentage of gross revenue for the remainder of 2018, assuming the distribution and payer mix remain consistent. Our distribution mix for the quarter was approximately 62% specialty pharmacy and approximately 38% specialty distributor. And our payer mix was 56% commercial, 39% Medicare and 5% Medicaid and other. Cost of sales for the second quarter was 5.2 million or 22% of product revenue. We expect cost of sales percentage to increase slightly for the remainder of 2018. Now I'll turn the call back to Pat.

[Patrick Mahaffy:]

Thanks, Dan. We're at strong momentum building here at Clovis, with several meaningful activities underway for the remainder of the year. We're enthusiastic about the opportunity that all-comers maintenance cycle provides us to market Rubraca to a much larger population of ovarian cancer patients. I would look forward to continuing our commercial progress in the second line maintenance treatment facility. We are pleased to have received an EU authorization from Rubraca in the treatment setting in the second quarter and are now under review for a broad maintenance treatment indication. And with the six months review plot, anticipate a CHMP opinion on the maintenance setting before the end of 2018. Our robust prostate cancer development program is well underway enrolling patients, focused in particular on mutations of BRCA with a potential path to accelerated approval. And we look forward to showing you the first look at initial TRITON2 data at ESMO in October. As I said earlier, I'm pleased to announce that the abstract was accepted as a poster discussion, which will take place on Sunday afternoon, October 21st, and will be followed by a Clovis investor/analyst event in Munich that evening. Our ATLAS bladder study is opened for enrollment, and we hope to demonstrate Rubraca's activity in that all-comers patient population. Our combination studies of Rubraca and Opdivo, either through our clinical collaboration with Bristol-Myers Squibb or our Clovis-sponsored studies, are planned or underway, including the Phase III studies in ovarian and breast cancer and Phase II studies in advanced prostate cancer, bladder cancer and non-BRCA ovarian cancer. We are very enthusiastic about our new clinical development program for lucitanib in combination with a PD-1 or a PD-L1 and in combination with Rubraca, expected to begin no later than early next year and look forward to discussing this program much more over the course of the year. With that, I'll be happy to answer any questions you may have.

[Operator:]

[Operator Instructions] And our first question from Kennen MacKay with RBC Capital Markets. Your line is now open.

[Kennen MacKay:]

The quick question is a question on process, and to Pat, you've mentioned some sort of conversations with the FDA forming the basis for the way you were thinking about an accelerated approval pathway for the TRITON2 data. I was wondering if you could maybe elaborate a little bit on sort of the conversations you have had with the FDA there? And then when sort of the next interactions could be? And just so I'm thinking about this correctly, in terms of submitting this sNDA by the end of 2019, is that really to sort of increase the number of patients that are RECIST-evaluable to sort of levels that we've seen other programs gain accelerated approval based on?

[Patrick Mahaffy:]

Yes, that's a reasonable expectation for this. These were not in formal conversations with the FDA. They're limited notes from the meeting we had prior to the initiation of TRITON2. And the FDA acknowledged that data from TRITON2 could be acceptable as the basis of an accelerated approval as long as we have a sufficient number of patients who are RECIST-eligible for evaluation for a RECIST response. So this means, in particular, that they have to have some evaluable tumor to evaluate for a RECIST response. PSA response would be seen as supportive, but PSA response alone would not be sufficient to get an accelerated approval. We've been pleased as we've enrolled TRITON2 that the percentage of patients, of the BRCA patients, who are mutant BRCA, is at least half. And we are optimistic based on the increasing enrollment we see in that trial, that we'll be able to hit the deadline that I described in the written comments.

[Kennen MacKay:]

And then just one other question, sort of elaborating on that. You've mentioned potential to submit an sNDA in back half '19 for BRCA positive prostate cancer. What about the non-BRCA patients within this trial, patients with other HRD mutations beyond BRCA? Is that something that you could sort of explore here? And then also sort of a follow-up question, as to whether patients with BRCA mutations either do sort of more poorly or do better on other therapies such as taxane chemo? Or if we know anything about their response to androgens?

[Patrick Mahaffy:]

Okay. First, as it relates to other deleterious mutations of other HRD genes, I would focus you on the BRCA population. We are enrolling patients with, I think, it's 13 or 14 other genes that are related to or could be related to DNA repair deficiency. I think what we're seeing in its early days is that the best opportunity here appears to be in BRCA, all to be further described in Munich. And secondly, the NF patients required, in any given mutation, can really only be achieved unless we vastly expand the trial in the BRCA-mutated patient population. And then as to your question about do BRCA patients, how do they do on other therapies, there aren't great data for BRCA patients with prostate cancer, specifically on AR-directed therapies or on taxanes. Our experience thus far, in dialogue with clinicians, is there are a lot of evidence. First, we're told they did really poorly on AR-directed therapies, and then we were told by another group that they did about the same. So I'd say we don't know. I do know that they must progress pretty rapidly through the various treatments available to them because BRCA mutations appear to be a pretty poor prognostic predictor for prostate cancer patients, given that diagnosis maybe 1% or 2% of patients are mutant BRCA. And by the time you get to a castrate-resistant metastatic population, the percentage of those patients who are mutant BRCA is in the 15% to 20% range. So there's a great enrichment for these BRCA-mutated patients. And I would say empirically, that suggests they really don't do better or that well on alternative therapies.

[Kennen MacKay:]

Okay. Got you. And I guess, from your conversations with the FDA, just wanted to see, is the focus only on ORR? Or does PFS also sort of come into play there, even if we don't need survival or a controlled trial?

[Patrick Mahaffy:]

The requirement for an accelerated approval on a single-arm study, in general, are limited to kind of 3 primary buckets

[Operator:]

And our next question comes from Peter Lawson with SunTrust Robinson Humphrey.

[Peter Lawson:]

Just on TRITON2. How are you thinking about of the prostate patients?

[Peter Lawson:]

Just on TRITON2. How are you thinking about of the prostate patients? What do you view as success?

[Patrick Mahaffy:]

Yes. We thought about this a lot. And I'll tell you, I'll give you my opinion or our opinion, and then I'll talk a little bit about how that was confirmed kind of independently by an advisory board we have at ASCO. So my own view is given that these men would have expected to see as a population around a 15% response rate on their most recent therapy, which would have been a taxane-based chemotherapy, I think that if our response rate was 25%, something that started with a two, I think we have a very realistic chance of an approval, particularly, as I said, if the duration was good, and if the safety profile is consistent with what we've seen with rucaparib so far, which is it's a well-tolerated drug. If that number started with a three, I think the odd's getting very, very good. I'll remind you that there are no approved therapies for these men having been through their taxane-based chemo. And then, the third number I've used is if it started with a four, I think that would be heroic. I think to ask for a lot more than that, I mean, would be delightful, but heroic, given the number of therapies these men have been through at the stage of their disease. When we had the ad board for our prostate advisers, prostate cancer advisers at ASCO, we asked the question, "What would be great?' And they said a 40% PSA response would be incredible. And it's an interesting thing to note that they said PSA response. I mean, kind of reflects the difference between what's required to achieve a regulatory standard and what's used in clinical practice. We have been made clear to that FDA requires a RECIST response for us to have the possibility of an accelerated approval. These men may be scanned to look for bone growth, tumor growth in the bone. But for the most part, by the time they're at this stage of development, they're looking at symptoms, symptomatic release and a PSA response as kind of a basis of clinical success or progression.

[Peter Lawson:]

And then just a couple of questions, I guess, for Dan. Just around the step up in patient assistance program, why that's happened? And if there's any kind of stocking order that we should be thinking about in that number today?

[Patrick Mahaffy:]

I'm going to take a crack at why the percentage of Medicare patients increased, if that's kind of what you're asking. That is, correct?

[Peter Lawson:]

Yes.

[Patrick Mahaffy:]

I think it reflects on the demographics of the population in the new label. When we were limited to the mutant BRCA treatment indication, tragically, many women with these BRCA mutations are going to be diagnosed with ovarian cancer in their 30s, or 40s or 50s, well before they're eligible for Medicare. As we now have a label that has expanded to the 75% of women who do not have BRCA mutations, we are just going to see a higher proportion of women who are Medicare eligible because they're over 65.

[Dan Muehl:]

And Peter, did you say, ask about stocking related to that?

[Peter Lawson:]

Yes. Is there anything kind of onetime that we should be thinking about inventory stocking?

[Dan Muehl:]

No. As you've seen, we've spent quite a bit on drug supply in the first half of the year. So if you look at the fulfillment of the patient assistance programs, that's separate from our revenue. So we have a vendor that actually supplies all of that product to the patient assistance program. So it's not caught up in our normal distribution channel. So there's no stocking per se from a revenue point of view, [indiscernible] separately. And it's not really that consequential within our total drug supply situation at this point.

[Operator:]

And our next question comes from Tazeen Ahmad with Bank of America. Your line is now open.

[Tazeen Ahmad:]

Pat, just wanted to follow up with something you said on your prepared statement about having your abstract accepted for poster discussion at ESMO. Just so that I understand a little bit better, how does that selection process work? Is there also the opportunity to present as an oral? And why wouldn't that be an option for you guys?

[Patrick Mahaffy:]

Well, I can stand outside the arena and give a little presentation, but I don't think it's going to get the attention. I would have liked it if we had been accepted for an oral presentation. There's no doubt about it. I will also say that there's a great amount of effort to get those oral presentations, a great amount of submissions being presented and submitted to ESMO. And I think what may have happened here is just, as I noted in those prepared remarks, the NF patients in the trial and abstract was relatively smaller than the NF patients that we'll ultimately report on, given the time line between the cutoff date for the abstract and the cutoff date for the presentation. And it may have just been too small to feel like it was sufficient for an oral presentation. I will say that there is a discussion at this meeting, and there will be an opportunity for dialogue around the poster itself. And there will be no difference in the amount of data that are presented in that poster or in an oral presentation. The data sets will be the same. And I think it actually is going to get exactly the same amount of attention as if it was an oral presentation, by both the clinical committee, and frankly, I think, by Wall Street. So yes, I would have preferred an oral presentation. I'm not totally surprised we didn't get it, given the NF patients in the abstract. We do look forward to the presentation in Munich.

[Tazeen Ahmad:]

And then on your plan for the sNDA being filed by the end of next year, you're giving yourself a wide time line here, is that because certain steps remain and it will take that long? Or realistically, do you not expect to file towards the earlier part of '19 and then more likely be towards the end?

[Patrick Mahaffy:]

I think I'm comfortable with the guidance we've given. It's driven by patient enrollment timelines. And then the fact that we want those patients to have enough time to deliver a response, so that's a minimum of two scans for every patient enrolled. And then obviously, we have to prepare and submit the NDA. If there were any events, enrollment, timeline, et cetera that could cause us to bring that forward somewhat, of course, we would do that. But as of August 1, 2018, that timeline feels realistic to me.

[Tazeen Ahmad:]

And then maybe one quick question on commercial. You talked about one third of scripts are from first time prescribers of PARPs, but for those doctors that have used other PARPs already, can you share with us any feedback from the sales force on whether those physicians were primarily previously LYNPARZA users or Zejula users? And what is the main reason they're choosing to prescribe Rubraca?

[Patrick Mahaffy:]

Yes. I want to first clarify something, and then I'll answer the question. About one third of those prescribers we had in Q2 were new prescribers for Rubraca. Many of them had already prescribed either LYNPARZA or Zejula, I don't have that exact breakdown. But these are not all first time prescribers of any PARP inhibitors, they were first time prescribers for Rubraca. I think a couple things are happening. One is for those who have experience with Rubraca, it is a drug that has performed well in the hands of the clinical community and in their eyes and in patients who have used it. So we're not surprised that those who adopted us in the narrower indication are enthusiastic about now using it. And in the expanded indication, we were told, prior to approval, by many of our physicians that, for now, we were using one of LYNPARZA or Zejula maintenance because they were approved, but when you're approved, we're going to use Rubraca. So I think that's manifesting itself in the marketplace. For those who may not have had experience with Rubraca, I think that this is a tribute to the good effort by the sales and MSL team to describe the data from ARIEL3 and the legal data now with the maintenance indication and get them to understand that given the quality of these data and the results that ARIEL3 delivered, they need to explore Rubraca beyond just committing to one of either Zejula or LYNPARZA. And I think that exploration is going on now in the field. I don't believe there is a standard of care. There are, no doubt, going to be some physicians that are going to say, in particular, [indiscernible] LYNPARZA, "We've had good experience with LYNPARZA, I'll just keep using it." But these physicians are pretty receptive to trying something new. And I hope and believe that our reps are pretty persuasive about why they should try something new.

[Operator:]

Thank you. Our next question comes from Gena Wang with Barclays. Your line is now open.

[Gena Wang:]

I would just follow one question on the revenue part. For this quarter revenue, just wondering, is the growth of over $5 million of the last quarter is mainly driven by the maintenance patients?

[Patrick Mahaffy:]

Yes, it is mainly driven by the maintenance patients.

[Gena Wang:]

And then for these for maintenance patients...

[Patrick Mahaffy:]

You can kind of say it's actually more than mainly driven by the maintenance patients, it's substantially driven by the maintenance patients.

[Gena Wang:]

And then for these maintenance patients, I don't know if you can share with us what percentage of patients are new to the PARP inhibitors and what percentage actually switched from the other PARP inhibitors.

[Patrick Mahaffy:]

As I noted, about 1/3 of our prescribers were new prescribers to Rubraca, but many of them had experience with either LYNPARZA or Zejula. I don't have a number at hand, I'll just say I think the majority of our new prescribers have already had experience with LYNPARZA and Zejula. We'll try to get that number, but I don't have that at hand.

[Gena Wang:]

And then just another question regarding TRITON2 trial. Pat, you also mentioned the response rate about 25%, that would be impressive. What is your thoughts on actual duration of a response? And then also I know that you only look at the RECIST response, but what kind of a PSA response you think you have to hit in order, would not have, will be supportive for the RECIST response?

[Patrick Mahaffy:]

Yes. In terms of duration of response, I think for these later line patients, 5 or 6 months would be a hurdle. If we get over that hurdle, I think, would be sufficient, given the late line that this represents for these men. So I think 5 or 6 months duration would be sufficient. Again, that's an opinion. Hopefully, an informed opinion by other drugs in front of FDA and approved by FDA. But I think that seems about right. Your second question was about the percentage of, about the PSA response. I would say the numbers I gave are equally valid for PSA response. They're supportive, meaning sort of the similar PSA response

[Gena Wang:]

Okay. And then just one last question, regarding the number of your patients. So how many patient data do you think it will be compelling enough to go to FDA to ask for accelerated approval?

[Patrick Mahaffy:]

FDA recently approved KEYTRUDA again in cervical cancer on 78 patients at a 14, 1-4, percent response rate. So I think the healthy you get to 100, the better off you are, but I think FDA has shown their willingness to consider a lower number. We have not yet had a dialogue informed by data from TRITON2 with FDA. And I would imagine that would take place over the next couple of quarters.

[Operator:]

Our next question comes from Jing He with Gabelli.

[Jing He:]

So Pat, if you compare TRITON2 and 3 design with Study 8 of olaparib, which is tested in combo versus ZYTIGA model, I'm just wondering how to think about their data and the combo strategy.

[Patrick Mahaffy:]

We're intrigued by the combo strategy. I think the study you're referencing is olaparib-abiraterone versus abiraterone alone that was presented at ASCO, correct. So certainly intriguing data. 142 patients is a scary number, and allows you to overinterpret it. 70, 72 patients on either arm. And as you may recall, the overall benefit looked good at about 13 months versus at about 8 months progression-free survival, 13 versus 8.5, something like that. When you got into the subgroups, particularly with ones that are some level most exciting, non-BRCA kind of wild-type patient, your end got pretty small. It was about 35 patients, and the trend was there but it's obviously not anywhere statistically significant. So it's hard to overinterpret it. I think what struck us is the safety. You had a real imbalance on serious cardiovascular events, including deaths, of around 10% on the combination arm versus just one patient, so whatever 1 out of 72 is, on abiraterone alone. That's a worrying number. Particularly this was earlier line prostate cancer than, and therefore, these men would expect to have multiple therapeutic options and time ahead of them. It also was notable that the 30% of the patients on the combination withdrew from therapy. And that's, oncology, we expect to see patient withdrawals. 30% is a really high dropout rate, and it has to be reflective of either the physicians' experience with the combination, the patients' experience with the combination of both. So while I am supremely interested in combination, I'll remind you that we're doing one right now. We're colleagues with Bristol, we're enrolling one right now in combination of Opdivo in an all-comers population of prostate cancer. I don't think, in our dialogue with investigators, is off along these lines. I don't think that the abiraterone combination has been validated yet. I think there's a lot of questions in that data set.

[Jing He:]

That's very helpful. And also for the free drug use, I'm just wondering when would you expect it to stabilize or you expect to see a ceiling? And at what level? Like, 30%?

[Patrick Mahaffy:]

We are doing our best to, within reason, put some restrictions on this. And I think 30% feels, from what we know right now, as, if it's not a ceiling, it's a light picture on the ceiling. I mean, it should be pretty close. And so hopefully, we're getting there.

[Jing He:]

And lastly, on retreatment. I'm just wondering what percentage of patients have previously treated by a PARP? And could you provide some color on physician feedback, like, at what point would they consider retreatment?

[Patrick Mahaffy:]

Yes. So right now, our peak percentage of patients that had, prior to rucaparib, had a PARP inhibitor, was, I think, 42% or 43%. We're now at around one third of patients, still have had a prior, our most recent chart on it shows that about one third of patients have had a prior PARP inhibitor. I do think that number made the claim still as the majority of our patients become second line maintenance. I think that was perhaps influenced by the fact that we had two maintenance drugs approved and we had the third line treatment indication. So I suspect that will change a little bit, maybe go down a little bit. I think the overall willingness of the clinical community to consider retreatment with the PARP inhibitor is very high. I'm pretty sure I mentioned this on the live call, so this will be redundant. But we took a survey of about 14 clinicians at one of our ad boards, ovarian cancer ad boards at ASCO. And it was one of these where everybody could vote on their phone. So it wasn't one person influencing it, everybody was voting real time. And of the 14 clinicians there, 13 said, without limitation, they would retreat with a PARP inhibitor. And the only one that had a limitation was one that said they would do it as long as the patient had gone up because of tolerability issues, not because of progression. So I would say that both the evidence from our own usage patterns and this, admittedly, unscientific survey, suggest that the willingness of the community to consider retreatment is pretty high.

[Operator:]

Our next question comes from Cory Kasimov with JPMorgan. Your line is now open.

[Cory Kasimov:]

Pat, I have two for you. I guess, first one from a commercial point of view. You talked about in your prepared comments how the PARP class currently only has about one third share of the maintenance market and then another one third was Avastin and then another one third, they just aren't treated. Can you talk about the dynamics of why you believe the PARP class currently sits at that level? And I can't imagine its lack of awareness at this point. So you find that more docs are ordering biomarker test than you would have expected? Or is there something else going on there?

[Patrick Mahaffy:]

Yes. And to be clear, Corey, I said it's about 35% to 40%, not to quibble who are getting a PARP inhibitor. Interestingly enough, when you break that down by BRCA and non-BRCA, it is a higher percentage of BRCA patients. It's probably 45% to 50% of BRCA patients, who are getting a PARP inhibitor in the maintenance setting. And 30% to 33%, something like that, whatever would make up the difference, that are getting it who are non-BRCA. I think what we have to do, and we're three months into this, we've been a little surprised at this dynamic. And that despite two other companies marketing PARP inhibitors, it hasn't changed that much. And I think it may be that, initially, you go with those who you know are going to be likely to prescribe, the academic centers, those experiencing clinical trials for a second drug approval, those who are already prescribing a PARP inhibitor to kind of gain share, but you would expect that through podium activities, through publications, through speakers programs. The word would get out more forcefully to either other academic centers who were participants in trials or more likely the community setting. And I think that the infringe practice of Avastin, which was probed in 1407, is something that is hard to go with in yet. And the way Avastin is used is primarily in patients who are treated with a platinum doublet, you add Avastin during the treatment setting, but maintain the amount of Avastin afterwards. And it's just pretty common practice. We have sort of two choices here. One is to consider growing apart in Avastin. And frankly, I think if you look at the maintenance period on Avastin, the benefit is about three months versus the non-Avastin arm for trial, maybe four months. And we've seen better than that with our own trial. The other thing is to consider, as we hear from many clinicians, that they'll keep a patient on Avastin but add a PARP inhibitor. And because the drugs combine well, they don't have synergistic tox. That maybe a direction to consider in the Avastin setting. For those who are not getting therapy, there's going to be multiple reasons why they may not, it could have been tolerability, as platinum is giving more of a break. It could be a physician desire and a patient desire to have a drug-free interval. A lot of the things we're talking about here, and I think our competitor colleagues hopefully will think about it too is, driving the message to this community that says, "Look, with these new reagents, we are making real progress for making ovarian cancer a more chronically manageable disease." But to make it at least chronically manageable, you have to consistently manage it. Meaning, you have to intervene. These breaks allow tumor growth, tumor growth requires chemo or Rubraca, but we have weapons now that can pretty meaningfully extend the period of progression-free survival, which is a direction we need to go if you're going to make this more chronically manageable. So we know and are considering a lot about our messaging. It's evident that we and our colleague competitors have got to get to this broader community of prescribers. We have two goals for that. One is getting prescribers who created their own algorithm that says, I only use the maintenance in BRCA patients, or in younger patients, elderly patients, whatever it is, to consider the encompassing data, in our case, from ARIEL3 that says the all-comers really benefit from the drug, irrespective of age, any other limitation. And then secondly is to get to that group of PARP skeptics, or those who have not had experience with PARP inhibitors, to begin considering use in women, they would otherwise take a wash and wear approach to. So we clearly are reacting to what I described to you in the written text and have put and are putting programs in place to do exactly what I've described.

[Cory Kasimov:]

And my second question is I wanted to go back and confirm something on TRITON2. Did you say the primary analysis is only going to be for BRCA patients? Is that how you're going to kind of present the data at ESMO and submit it next year?

[Patrick Mahaffy:]

No. It's a little more nuance than that. There's Cohort A, which is BRCA patients; Cohort B, which is ATM patients; and Cohort C, which is a group of patients with, I forgot the number, Cory, 12 or 13 other genes associated with DNA repair deficiency. We'll report data for each of the cohorts at ASCO. But by far, the largest cohort is the BRCA-mutant population. So it is by far the most interpretable. And second, I would say, given the FDA dialogue, given what we're seeing in the data sets, I think and believe our best opportunity for an accelerated approval is in that BRCA-mutated patient population.

[Cory Kasimov:]

That's segmented, you will break it out by the response rate for the BRCA-mutant patients?

[Patrick Mahaffy:]

We will.

[Cory Kasimov:]

And then can you just remind us what percent of prostate cancer patients have the BRCA mutation?

[Patrick Mahaffy:]

There's varying publications on this. If you include germline and somatic, it's probably, I mean, the range is as low as 12% and as high as 20%. So 12% to 20%.

[Operator:]

Thank you. Our next question comes from Terence Flynn with Goldman Sachs. Your line is now open.

[Terence Flynn:]

Maybe just a follow-up. You mentioned that further growth here in the U.S., I guess, is contingent on growing the PARP prescriber base. I guess as we think about the other inputs into potential revenue generation, so you think about the treatment duration and also market share, maybe just help us think about those as we think about it, this. If you're going to be taking a longer time growing the prescriber base, how do we think about the other 2 drivers potentially?

[Patrick Mahaffy:]

So when we, we most recently looked at duration when we had a little bit more mature data on the treatment indication, and we were at 5.7 or 5.8 months average duration in the treatment setting. This, of course, is women who enrolled with growing tumor. So the expectation of the drug immediately is higher than for the maintenance setting. On the other hand, it's limited to the BRCA patients, where you would expect to get the most significant benefit. We don't have any duration data based on the maintenance launch. In the trial, the average duration was 8.5 to 9 months on Rubraca. Normally, you discount that by 10% to 20%. So I would hope that we would get to the 7- to 7.5-month range of median duration based on the experience we have in the all-comers population in ARIEL3. In terms of market share, obviously, we think we're beginning to take share. I think it's a little too early for us to describe what share we have in pricing. I think there's been a little too much focus on some people saying we have this share, and some people have this share, and another person have this share. It's just, to me, it's just noise to you guys. We, obviously, are committed to gaining, and I think begun to share in this population. But I think that I want us all to move beyond the zero-sum game of share and the dedicated prescribers and to grow both the number of prescribers and the number patients those prescribers treat, who are eligible for maintenance therapy, who get maintenance therapy. So we're committed to both. But I think we're going to get there, Terence. I mean, I'm pretty optimistic that the story we have to tell, and frankly, I'll say that the clients had to tell is a powerful one. We just got to get through some infringed practice.

[Terence Flynn:]

Okay, that's helpful. And so I guess if you look at kind of the Street estimates for 2019, I mean, how do you think about these three variables relative to the 2019 estimates?

[Patrick Mahaffy:]

We have not given guidance. We don't feel ready to give guidance, so it's a little hard for me to reflect on those estimates without effectively giving guidance. We will plan to give guidance as we feel comfortable that we understand the dynamics of our sales growth. And at a minimum, as I've said before, we'll do so at JPMorgan in January next year.

[Terence Flynn:]

Okay. And maybe just the last one on TRITON2. Anything different on safety or tolerability relative to what you've seen in ovarian thus far?

[Patrick Mahaffy:]

No, not all. If anything, and we'll see this in the abstract, it maybe that the incidence of myelosuppression is a little bit lower. And that is still a small in, but it is true that these men will have had fewer [indiscernible] difficult regimens compared to the women in later line ovarian cancer. So it's not entirely surprising that they may tolerate it a little bit better than in the ovarian setting.

[Operator:]

And our next question comes from Steven Breazzano with Evercore ISI.

[Steven Breazzano:]

Most of mine have been asked. But can I just ask about the potential impact of SOLO-1 on the second line indication going forward?

[Patrick Mahaffy:]

Yes. We look forward to seeing the SOLO-1 data. I understand it's going to be at ESMO, which is great. So ESMO should have a lot of news, hopefully, good news for PARP inhibitors. I don't think it's going to have a meaningful impact, and certainly it's not going to have a meaningful impact in the short-term. We know it's limited to germline BRCA patients, so SOLO-1 is not an all-comers population, and they don't have an analogous Phase II Study 19 in their pocket to throw in front of the FDA and say, can we just have all-comers? So they're not going to get all-comers, they're going to get germline BRCA, maybe germline/somatic, if they get lucky, but it will probably be germline BRCA. My own view, and as confirmed by dialogue and not formal market research, but dialogue I've had with a lot of clinicians. It is consistent with what I said earlier about the attitude of our prescriber population in ovarian cancer about retreating with the PARP inhibitor. And again, I can give you opinion. But my opinion is, if a woman gets, for instance, olaparib in frontline maintenance and does well on it, but does ultimately fail, not only will she go again on platinum, as she did in her first treatment regimen, but I believe she'll go on PARP inhibitor maintenance for her second maintenance regimen. It doesn't mean there will be some who don't follow that path, but I suspect that's going to be the more formal path that is taken, as people consider how that's, going back to the phrase I used before, to turn this disease into a more chronically manageable disease. And so I think retreatment with a PARP inhibitor is going to be a part of that process.

[Operator:]

And I'm not showing any further questions at this time. I would now like to turn the call back over to Anna Sussman for any further remarks.

[Anna Sussman:]

Great. Thanks, Daniel. We thank everyone for your interest in Clovis Oncology today. If you have any follow-up questions, you can reach me at [phone] and Breanna at [phone]. This call could be accessed via a replay of our webcast at our website, beginning in about an hour and it will be available for 30 days. Again, we appreciate your interest and time. And thank you, and have a good evening.

[Operator:]

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