Clovis Oncology, Inc.
Q4 2016 Earnings Call Transcript

Published: 23 Feb 2017

[Operator:]

Good day, ladies and gentlemen, and welcome to the Clovis Oncology Fourth Quarter 2016 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question and answer session and instructions will be given at that time. [Operator Instructions] I would now like to turn the call over to, Ms. Breanna Burkart, Vice President of Investor Relations and Corporate Communications. Ma'am, you may begin.

[Breanna Burkart:]

Thank you. Good afternoon. Welcome to the Clovis Oncology fourth quarter and year end 2016 conference call. You should have received the news release announcing our fourth quarter and year end 2016 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 webcast during the call and will be available in our archives for the next several weeks. The agenda for today's call is as follows

[Patrick Mahaffy:]

Thanks, Breanna. Welcome, everybody. As you know on December 19 of last year FD approved Rubraca tablets as model therapy for the treatment of patients for deleterious BRCA mutations germline and/or somatic associated advanced ovarian cancer, who have been treated with two or more chemotherapies, and selected for therapy based on an FDA-approved companion diagnostic for Rubraca. Rubraca's indication is approved under the FDA's accelerated approval program, and is based on objective response rate and duration of response results from two multicenter, single-arm, open-label clinical trials, Study 10 and ARIEL2 Parts 1 and 2. As with all accelerated approvals, we required to run confirmatory studies. The ARIEL3 maintenance confirmatory study has completed enrollment which we had expected mid-year of this year and the ARIEL4 treatment confirmatory study is open for enrollment. I'll provide some additional details on these trials shortly. But first, I'd like to provide an update on the launch. We are exceptionally pleased with the launch of Rubraca. We're proud of the performance of our entire commercial team, and especially the great work of our field team in education and supporting the oncology community. It is too early to provide meaningful metrics about the launch, but we look forward to providing more details on our first quarter earnings call in early May. I am particularly pleased with our effort to make this drug available as rapidly as we do following its approval. At the time of approval, all of our specialty pharmacy and specialty distributer partners were signed on and ready to go. As a result, we were shipping Rubraca into the distribution channel within hours of the FDA notification. Alright, maybe a few metrics. We had first Rubraca prescription written the day after approval and to-date over 150 different healthcare practitioners have prescribed Rubraca. Dan will provide a bit more color on this, but it was nice to see that in the last two weeks of the year, our team was successful in generating our first sales. This just speaks to how prepared we were when we received the approval over two months prior over PDUFA date. We have had no reimbursement issues to-date and are not aware of anything that suggests we will have any reimbursement issues moving forward. All major pricing component were notified on the day of approval. And as of February 1, 2017, Rubraca is in the Federal Supply Schedule and our 340B contract was also recently completed. In terms of prescribing - patterns to-date, 70% have been from academic institutions and 30% through community based practices. 80% of our prescribers are previous 75% of our volume is being shipped through specialty pharmacies and 25% is being processed through specialty distributors. I should note that in time, we expect a greater proportion of Rubraca prescribing activity will take place at community practices. But we are pleased to see such high adoption out of the gate in the academic institutions that are more familiar with the Rubraca data. Before turning to our ongoing development program for rucaparib, I'd like to provide a quick update on our European filing. We completed our submission last quarter for rucaparib to the EMA for the same ovarian cancer treatment indication we submitted to the FDA. We anticipate an opinion from CHMP in late 2017 and pending a favorable opinion from CHMP, we expect an approval shortly thereafter. Given the timing, we are actively building our European commercial infrastructure. Of course we already have a regulatory and clinical team in place at our office in Cambridge in the UK. Turning now to the rucaparib development program, I'll start first with our two confirmatory trial. Target enrolment in the ARIEL3 Phase 3 confirmatory maintenance study completed in April 2016. We continue to anticipate data from this study in the 2017. I should note that we have not yet been notified by the independent statistician that we have reached the required 70% of events in the mutant BRCA populations, which triggers our analysis of the data. We expect at least normal that we will be able to underline the report data from the trial about two months after we reach the final event. We were planning to let you know next on the Q1 2017 call in early May. Whether or not we have been notified that we have reached the 70% of events in the mutant BRCA population to trigger that analysis. Pending positive data, we intend to submit a supplemental NDA for the second line maintenance indication for advanced ovarion cancel patient within four months of underlining the data. Let's discuss the trial ARIEL3 now. The ARIEL3 pivotal study is a randomized double blind study comparing the effects of rucaparib against placebo to evaluate whether rucaparib given as maintenance therapy in platinum-sensitive high-grade ovarian cancer patients who have received two or more prior lines of platinum-based chemotherapy can extend the period of time for which a response to a prior chemotherapy is maintained. Enrolment in the trial required a partial or a complete response to the most recent platinum-based therapy. Patients were randomized two-one to receive either rucaparib or placebo and the primary endpoint of the study is progression free survival or PFS. Overall survival is the secondary endpoint. The primary efficacy analysis will evaluate in a step down manner. First BRCA mutant patients, including both germline and somatic mutated patients. Second, all HRD positive patients including the BRCA mutated patients. And finally all patients enrolled in the trial including biomarker negative patients. The trial was designed to enroll between 180 and 200 patients with BRCA mutated tumors, out of the 564 patients enrolled in the trial. [Indiscernible] to the tumor genomic status of all patients. However, based on IDMC guidance, we are confident that the 180 patient mark was exceeded. Our belief is that approximately 200 patients in this trial have tumor BRCA mutations. Based on data from ARIEL2, we estimate that of the remaining 364 patients enrolled approximately half are HRD positive, and the other half are biomarker negative. It's important to reiterate that these are our estimates and we will only know the final numbers when we see the data. Let's spend a moment on trails of other PARP inhibitors in the maintenance study. You all are aware of the positive trial that we out mid-2016 and then a second trial will be reported at the SGO meeting next month. Those trials demonstrated meaningful benefits in their target population, but in each case and in different ways these target populations were more limited than the population we are addressing in ARIEL3. Importantly, one trial evaluated only women with - by excluding from enrollment any woman who had no measurable disease greater than 2 centimeters. This may not represent a real world population of advanced ovarian cancer patient and may not be reflective of the average patient population mostly you see in practice. The second study, while not limited to patients with low residual disease was limited to women with mutations of BRCA, so will be unable to demonstrate a benefit in either an HRD or biomarker negative population. ARIEL3 enrolled 564 women with platinum-sensitive ovarian cancer, and in contrast, did not limit enrolment to either patients with low residual disease or just to patients with BRCA mutations. As a consequence, we believe only ARIEL3 enrolled the patient population that is reflective of the entire population of ovarian cancer patients treated in clinical practice. An important feature of our statistical analysis plan, is that in addition to evaluating the intent to treat population subscribed above we also have a pre-specified subgroup analysis evaluating progression free survival in the population of women in our trial who has low disease burden or no residual disease upon entry. As a result of this pre-specified secondary analysis, we seek to observe while there are differences in PFS will be seen in patients with low disease burden compared to the broader population. In addition, we will learn at least in the context of this trial the distribution of patients with low disease burden compared to the overall population and of course as already noted we will evaluate mutant BRCA, HRD and finally all platinum-sensitive women with ovarian cancer including biomarker negative patients. This means that ARIEL3, if successful, could lead to a label for maintenance in all platinum-sensitive second line ovarian cancer patients. Turning now to ARIEL4, our confirmatory study and the treatment study, which is open for enrolment. This is our Phase 3 multicenter randomized confirmatory study rucaparib versus chemotherapy in relapsed ovarian cancer patients with BRCA mutations, germline and somatic, ovarian cancer who have failed two prior lines of therapy. Primary endpoint of this study is progression free survival. As we mention frequently, after ovarian cancer, prostate cancer is our next area of focus. Prostate cancer is a high priority indication for us. As a meaningful number of patients with advanced prostate cancer possess mutations of BRCA and other mutations that maybe responsive to rucaparib. There are two Clovis sponsored prostate cancer trials, which are currently open for enrollment. The first Clovis sponsored prostate trial is TRITON2. Our Phase 2 single-arm study inclusive of patients who have a germline or somatic, BRCA, or ATM mutation or other deleterious mutations in HR repair genes who have progressed after receiving one line of taxane-based chemotherapy and one or two lines of androgen receptor targeted therapy in the castrate resistant setting. The planned primary endpoints are radiological overall response rate in patients with measurable disease, and PSA response in patients without measurable disease. Our second Clovis sponsored study is TRITON3. The Phase 3 comparative study inclusive of patients who have a germline or somatic BRCA or ATM mutation. We have progressed on AR targeted therapy, but not yet received chemotherapy in the castrate resistant setting study. The study will compare rucaparib to physicians choice of AR targeted therapy or chemotherapy. Planned primary endpoint is radiologic progression free survival. We're also planning to begin later this year and earlier line studying and castrate resistant prostate cancer and will provide further details as we finalize the design. We were pleased to announce an agreement with Strata Oncology earlier this month to accelerate patient identification and enrollment for the TRITON. The Strata trial was an observational study that provides no-cost tumor sequencing to patients at participating clinical sites. And under this agreement, match BRCA and ATM mutated advanced prostate cancer patients to our TRITON studies. Strata has agreed not to provide similar matching services on behalf of any other Strata collaborator for any other metastatic castrate-resistant prostate cancer clinical trial with respect to patients with the same genetic mutations. We're optimistic that by working with Strata, we will accelerate enrolment in the TRITON studies. In addition to Clovis sponsored prostate cancer studies, we are working in collaboration with the Medical Research Council in the UK. Study rucaparib and what is known as the STRAT-STAMPEDE study a newly-diagnosed castrate-sensitive metastatic tumor BRCA mutant, and BRCA-like prostate cancer patients. The cooperative new study will begin this year. Beyond the ovarian prostate studies I've described, there are several clinical studies in ovarian, breast, and gastroesophageal cancers which are open for enrollment or are anticipated to open shortly. These include Clovis sponsored collaborator sponsored and investigator initiated studies. I'd like to focus on two of these studies to highlight our strategy and approach for the first-line maintenance opportunity in ovarian cancer. In some, we believe there is a greater potential to achieve a curative result with rucaparib combination therapy following first line platinum therapy versus PARP inhibitor monotherapy. The two trails have followed this approach include MITO-25, a cooperative group study evaluating rucaparib plus - evaluating rucaparib versus rucaparib plus [indiscernible] as first-line maintenance therapy for advanced ovarian cancer. The MITO-25 study has planned for enrollment of over 200 patients with mutations of BRCA or HRD signature with PFS as the primary endpoint. The three arms of this study include carboplatin, paclitaxel and bevacizumab, followed by bevacizumab maintenance. Carboplatin, paclitaxel, and bevacizumab followed by bevacizumab and rucaparib maintenance. And then carboplatin and paclitaxel followed by rucaparib maintenance. Beyond the combination there is increasing preclinical and clinical evidence then anti-PD-1 or anti-PD(NYSE

[Dan Muehl:]

Thanks Patrick and good afternoon everyone. Our fourth quarter and year-end 2016 financial results are included in this afternoon's press release. I'll review the highlights of our financial results and provide some additional commentary. Let me start with our balance sheet. We ended 2016 with $266.2 million in cash and cash equivalents and available-for-sale securities. In January, we raised net proceeds of $221.2 million through an offering of 5.75 million shares of common stock. Therefore the company has $487.4 million in adjusted cash, cash-equivalents and available-for-sale securities at December 31, 2016 as adjusted for the January 2017 financing proceeds of $221.2 million. Cash used in operating activities was $54.7 million for the fourth quarter of 2016 and $266.7 million for the year. We reported a net loss of $70.7 million or $1.83 per share for the fourth quarter of 2016 and $349.1 million or $9.07 per share for the full year 2016. This compares to $119.5 million or $3.12 per share and $352.9 million or $9.79 per share for the comparable period in 2015. Net product revenue for the quarter for the quarter and the year was $78,000 following the BRCA's approval and launch on December 19, 2016. I will provide some additional color on the launch shortly. Our operating results for 2016 includes a net expense of non-cash impact of $50.6 million related to our 2013 acquisition of lucitanib product rights which we obtained through the purchase of Ethical Oncology Science or EOS. In the second quarter of 2016, we recorded a non-cash impairment charge of $104.5 million to reflect a reduction in the estimated fair value of the intangible asset related to lucitanib recorded as part of the EOS purchase price accounting. This reduction in fair value was the result of our, and our development partners' decision to discontinue the development of lucitanib for breast cancer. We also recorded a non-cash deferred income-tax benefit of $28.4 million associated with this charge. In connection with the acquisition of the EOS, Clovis is obligated to pay additional consideration to the former EOS shareholders. There is certain future regulatory and sales milestones for lucitanib to achieve. The estimate fair value of these contingent payments is recorded as a liability on the company's balance sheet. During the second quarter of 2016, we recorded a non-cash $25.5 million reduction to zero in the fair value of the contingent consideration liability due to a change in the estimated, probability weighted future milestone payments. This reduction is included as a credit to operating expenses in our 2016 results of operations. On a non-GAAP basis, we reported an adjusted net loss excluding these items of $298.6 million or $7.76 per share for 2016. Our fourth quarter R&D expenses totaled $54.5 million and $251.1 million for the full year 2016. This compares to $76 million and $269.3 million for the comparable periods in 2015. The decrease year-over-year is primarily due to decrease development activities for the rociletinib program and to a lesser extent expenses related to the commercialization of Rubraca which had been classified as research and development prior to FDA approval, partially offset by higher expenses related to the rucaparib program. So in general, administrative expenses totaled $12.2 million for the fourth quarter of 2016 and $40.7 million for the year. This compares to $8.2 million and $30.5 million for the comparable periods in 2015. The increase year-over-year is primarily due to higher legal costs, higher selling general and administrative expenses related to the commercialization of Rubraca, which had been classified as research and development prior to FDA approval and to a lesser extent higher personnel costs. Operating expenses for the fourth quarter of 2016 includes share-based compensation expense totaling $10.1 million and $39.8 million for the full year 2016. Now I'll provide some further color on the Rubraca launch from a finance perspective. We're now approved to sell Rubraca in the United States. We distribute our product principally through a limited number of specialty distributor and specialty pharmacy providers. These customers subsequently resell our products to patients and healthcare providers. Separately, we arrangements with certain payers and other third parties that provide for government mandated and privately negotiated rebates, chargebacks, and discounts. Product sales are recorded net of estimated rebates, chargebacks, discounts, and other deductions, as well as estimated product returns known as gross-to-net GTN adjustments. We only recognize revenue on product sales, once the product is resold to the patient or healthcare provider by the specialty distributor specialty pharmacies provider. As we've previously described, we have decided to block third-party sales data for competitive reasons. That said, a small number of prescriptions were recorded while the launch process was getting put in place. These reported sales are also not reflective of our total sales and this should not happen again in the future. Cost of sales for the year ended December 31, 2016 consist of costs associated with the sale of Rubraca. Mainly freight, royalties, and amortization of capitalized acquired intangible license right and milestone payments related to Rubraca. Based on our policy to expense costs associated with the manufacturer of our products prior to regulatory approval. Certain of the costs Rubraca recognizes revenue during the year ended December 31, 2016 were expensed prior to the December 19 - were expensed prior to December 19, 2016 FDA approval. And therefore are not included in the cost of sales during the current period. We expect cost of sales to increase in relation to product revenues as we deplete these inventories and amortize the capitalized, acquired, intangible license rights and milestone payments related to Rubraca. We expect to use the remaining pre-commercialization inventory for product sales through the third quarter of 2017. With the FDA approval of Rubraca on December 19, 2016 all sales and marketing expenses associated with Rubraca are included in selling, general, and administrative expenses and no longer in R&D. This will have the impact of lowering R&D expenses on a comparable period basis from 2016 to 2017. Clinical trial expenses were [indiscernible] composition in 2017 as well with the completion of all rociletinib trials and the winding down of ARIEL2 and ARIEL3 Study 10 for rucaparib. The initiation of TRITON2 and TRITON3 and ARIEL4 will begin to add the higher levels of spending as 2017 progresses. Now, turn the call back to Patrick for some closing remarks and we'll open it up for Q&A.

[Patrick Mahaffy:]

Thanks David. With our approval, launch, and recent financing we're off to a great start in 2017. And of course we have a very meaningful year ahead of us. We look forward to providing an update on our Q1 call, and the launch of Rubraca in the US and continue to anticipate data from ARIEL3 midyear. This will provide a very robust dataset in a real world population and patients with advanced ovarian cancer and the second-line maintenance setting from phase 3 study. And hopefully, the CHMP opinion before the end of the year followed by a potential approval of rucaparib in the EU shortly thereafter. And we will continue to expand our clinical development program for rucaparib in the other solid tumor studies and a combination with the immune-oncology agent and we look forward to providing additional details during the course of this year. And now, we'll open up the call to Q&A.

[Operator:]

[Operator Instructions] Our first question comes from the line of Kennen MacKay with Credit Suisse. Your line is now open.

[Kennen MacKay:]

Hi. Thanks for taking my question. Pat I just had a question for you on sort of the frontline maintenance ovarian cancer. You mentioned the MITO-25 trial and the sort of end here being over 200. I think as per the presentation the end of sort of 357 which pretty much puts it on par with some of the registrational trials of competitors that are out there looking at the frontline setting. I just wanted to get your perspective if that was something that potentially could be registrational in HRD positive patients? And then also if there were any thoughts about going for a frontline trial in patients but maybe include biomarker negative patients. Similar to ARIEL3 but a line earlier.

[Patrick Mahaffy:]

So MITO-25 is a cooperative group study and so the number of patients enrolled will be determined by that cooperative group. But we certainly have a great dialog with them and in the event which will increase the enrollment and the reach of that, that's certainly feasible. It is looking at HRD, it is not looking at biomarker negative patients and I do not believe that will change in the context of the MITO-25 study. However as I noted, the study that we will sponsor is the combination study in the frontline maintenance setting with the PDL-1 and anti-PD(L)-1 or PD-1 antibody and we'll initiate that study by the end of this year. And the current thinking in that study is that it would be analogous to say the ARIEL3 study or with the local population then do a step down analysis similar again BRCA, HRD plus BRCA and all comers.

[Kennen MacKay:]

Got you. Thank you, Pat. Maybe just one quick follow-up. We saw when prices was - positive data in breast cancer recently. We should hopefully get some data from Pfizer's [indiscernible] later in the year. So just wanted to get a sense of whether or not you had any plans for sort of continuing beyond Ruby in breast cancer?

[Patrick Mahaffy:]

Obviously congratulations to AV and I think that's great news for them and great news for the class. We look forward to seeing the full presentation of the data. We are actively evaluating our path in breast cancer, and particularly triple negative breast cancer. And potentially in a larger population than just the BRCA mutated patient population. One of the dialogues we're having, I'm sure are our whole PARP inhibitor developers are having, trying to figure out where best to consider monotherapy perhaps a more limited population were best to consider the combination with the PD-1 one PD(L)-1 where you could look for potentially a great amount of activity given the potential synergy of these compounds. So that is an active discussion here, but I imagine that we would be describing our plan sometime in the middle of this year.

[Kennen MacKay:]

Thank you very much. Good quarter.

[Operator:]

Thank you. Our next question comes from the line of Tom Schrader with Stifel. Your line is now open.

[Tom Schrader:]

Good afternoon. Congratulations on all the progress. Pat as you start to screen and enroll patients in prostate cancer. Do you have an updated sense of how many are going to qualify? How big is the target population relative to the whole population? And does it change with line of therapy, does it change depending on whether you are before or after chemo?

[Patrick Mahaffy:]

What we observe and what has been published are different. I mean it's a range of numbers. But what I think ever body agrees is that BRCA mutations and ATM mutations although there is somatic and germline are pretty poor prognostic factor for prostate cancer patients. And as a consequence of, if you look at germline BRCA mutations and newly diagnosed non-metastatic prostate cancer. The incidents of patients with BRCA mutations is somewhere between 2% and 4%, so it's relatively low. By the time those patients become castrate-resistant prostate cancers and have metastatic disease. The numbers describe that they are combination of those two mutations including both somatic and germline are between 20% and as high as 30% of those men who in fact have those mutations. So while the population of newly diagnosed patients with [indiscernible] are smaller as a percentage of the CRPC patient, it actually gets to be a pretty meaningful percentage. Somewhere between a quarter or a-third.

[Tom Schrader:]

Is that your data or is that - that's higher than the published data I've seen.

[Patrick Mahaffy:]

There are some published data. It has to be for instance one of our investigators in New York has been evaluating - doing next-gen sequencing on all of their prostate cancer patients. And then his specific institution which may have a slightly higher percentage because of the location, it's 25% to 30%. That's two years of data for his patient population.

[Tom Schrader:]

Okay. Perfect. Then quickly on ARIEL3. You're going to report data differently than your competitor in terms of where somatic BRCA patients go. Do you think that will get right sized in the label, such as the labels for the two drugs will report the same thing or you are kind of stuck with your endpoints forever? Is that a problem or is that not a problem just your thoughts?

[Patrick Mahaffy:]

Well, you do kind of look at your endpoints. That's life in the industry. But first of all, as it relates to activity and germline mutations versus activity in somatic mutations. In the treatment setting in our own NDA, the response rate for somatic mutated BRCA and germline mutated BRCA was exactly the same. In the PFS data presented from the trial you're alluding to for the patients with germline mutations and somatic mutations for getting the control on there is some different system they control on. But on the drug arm, the somatic mutated patients and germline mutated patients again had effectively exactly the same progression free survival. So first of all - I don't think - I think its fine that we have done it this way. And certainly we'll evaluate it and subset analyses of germline versus somatic. But I don't think it's going to have an impact. But I have something to add just as the competitor you mentioned is seeking to go well beyond BRCA mutations and go for an all platinum-sensitive ovarian cancer maintenance indication in the - for patients that had two or more prior therapies that's the design of and the intent of ARIEL3. So I kind of wish them well in their efforts to get the all comers population, because I think it gives us a good opportunity as well.

[Tom Schrader:]

But do you think the final drug labels. Everything will be broken out or you will be reporting different groups that maybe aren't so clear or you'd have to explain. Is that the expectation?

[Patrick Mahaffy:]

Well again, it is a limited impact commercially in the event we were to get all covers and they get all comers and they get all comers. I don't think it's going to be hard for physicians to make apples to apples comparison of them saying they - if they do break it out by subset population, which they probably will in the clinical section, section 14. I would imagine they will, if they show germline for that company and germline in somatic for us but they are both good numbers, I don't think it matters. If they show HRD for them including somatic, then it's a good number and we show HRD remembering the way our analysis is done. As its HRD for us, including all of the BRCA mutated patients, I think that's fine. I think and of course, it is all comers, it's all comers. So I'm not so worried about it, I think that there is going to be over time a desire on the part of the community to call a definition of HRD that is going to be relatively commonly applied. That's the feature of our study versus their study that is I think somewhat different that's just about the inclusion of somatic in one definition of HRD and the inclusion of somatic in germline is our definition of HRD. Obviously we'll disaggregate that so people can evaluate those two separately. But the question is whether people are going to be confused about should we use this test or that test or can I use this test so that grows. Market is tend to kind of clean these things up over a period of time.

[Tom Schrader:]

Okay. Perfect. Thanks a lot folks.

[Operator:]

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

[Terence Flynn:]

Hi. Thanks for taking the questions. Maybe just another one area of three. Pat in your prepared remarks you were talking about low disease burden versus high disease burden. Is there any data out there from any prior trial suggesting differential activity in these two patient populations with PARPS or is that just something that you want to explore further given the disease burden?

[Patrick Mahaffy:]

It's a great question. There are a ton of data because there are a ton of studies and [indiscernible] or its competitor studies. It is - a maxim or a truism in oncology that patients who have less disease or lower disease burden tend to do better on therapies than those who have a higher disease burden, so it feels a little bit intuitive to me; equally important and more data driven. They didn't present the data but in the Study 19 publication they stated that patients who had received a complete response had a better outcome on Study 19 than patients in that trial who had a partial response. But they didn't quantify with a different SWATs [ph]. So there is a data point that says those are lower disease burden, complete response is better but it is not accounted to - it hasn't been published so I can't quantify for you. But I think given that dataset and given just a general belief about lower burden disease patients doing better, I think it will be a really interesting analysis that we're planning to do to answer that question in a really robust way.

[Terence Flynn:]

Okay. And do you know at this point the relative percentage of those two groups in ARIEL3 or you're blended to that data?

[Patrick Mahaffy:]

We're binded to every damn thing in that trial; so we don't know at all. It's interesting, I've had physicians tell me that they think it's 25% to 35%. I do know that when the data we're presented for that trial at ASMO, when asked the question, the principal investigator was asked, how many patients were excluded and he said only 7% failed to enroll in that trial because of that exclusion criteria. And obviously I'm sure that's fact. The only thing that's relevant is all of the investigators knew about that exclusion criteria and were therefore not yet start to enroll the patients who they knew from their prior scan, had a pretty meaningful, had a greater than two centimeter lesion. So I don't know what percentage of patients were voluntarily not enrolled or start to enroll in that trial because the physician had already effectively prescreen them.

[Terence Flynn:]

Okay, got it. And then maybe just one on financials; I might have missed it but are you guys giving expense guidance this year or is that something that again you're going to comment at this point just given where you are in the launch?

[Patrick Mahaffy:]

Yes, we're not going to comment at this point further.

[Terence Flynn:]

Okay, thanks.

[Operator:]

Thank you. And our next question comes from the line of Tazeen Ahmad with Bank of America.

[Tazeen Ahmad:]

Hi, good afternoon, thanks for taking my questions. Pat, maybe just one on some early indications of the launch? And your label, BRCA has indicated for years in ovarian cancer patients who have been treated with two or more chemotherapy. Based on the feedback that you think getting - you know, how many doctors for example, start-off patients right away by giving them a chemo-doublet versus separate chemotherapies?

[Patrick Mahaffy:]

We don't capture as of yet those data. So I'm not able to give you a quantifiable number. I do know that the wording of the label has generated questions from clinicians or representatives of course; point to the clinical data in Section 14 which is in patients who have had more than two prior chemotherapies were also aware that physicians; we are aware anecdotally physicians who have enrolled patients who have had two or more prior chemotherapies. It's interesting we're starting to collect a reasonable amount of data for [indiscernible]. And their performance in used patterns and were wetting those data now, I'll describe them to some extent only as a methaphor, not to predict anything for us. But you see that there has been a pretty promiscuous use of limperza [ph] in earlier lines of therapy and there has been a reasonable amount of limperza used in indications beyond ovarian. And I think what's really emerging is an awareness that a top inhibitor with good published data is going to have a great likelihood of success in on-track beyond those with ovarian cancer as long as their mutant bracket, Obviously all of us are exploring that in clinical trials but we do see some news already in our own experience and physicians who have start to treat and then allowed to - women with indications, they are patients I should say with indications beyond ovarian cancer. Interestingly enough, we're already seeing a reasonable number of patients and given this mutation, this is a sad truth who actually have active disease; both having breast cancer and ovarian cancer at the same time.

[Tazeen Ahmad:]

Okay, thanks for that color. And then maybe another question about data; after it's going to be presenting its solo two results in detail. I guess whatever the results are, would you say that those could be interpretable as flows through - you know, what would be your view of what maintenance results with limperza would look like relative to what BRCA would look like? And BRCA and potentially beyond BRCA?

[Patrick Mahaffy:]

Well, first of all I take them at their word and I try to run the community that support it, that the data for [indiscernible] in the germline mutant population is extremely encouraging and I'm sure that's the case. I'm absolutely not surprised that an active PARP inhibitor is going to do far better than a placebo in maintenance setting in patients with ovarian cancer; we've seen those days in Study 19, we saw those data in Nova and we are confident we will see them in Solo 2 and I'm optimistic that we will see them [indiscernible] in Aerial 3. I don't know the magnitude of effect either for the Solo 2 study or for Aerial 3 obviously; what I do think is that the always tell the story far better than the median and the ratio for Study 19 for that purpose is 0.18, that's awesome. The hazard ratio for Nova in the analogous population was 22.7, also awesome. And I think what we're learning is the PARP inhibitors and I believe this will be true or I hope this will be true are highly active in the maintenance study and overtime physicians who may find it more difficult to compare the efficacy of these agents will be making decisions beyond just efficacy as they can't see a meaningful difference but to the tolerability and safety of the product. And obviously I hope out of Aerial 3 we see not just a robust efficacy story but an equally robust safety and tolerability story.

[Tazeen Ahmad:]

Okay, thanks.

[Operator:]

Thank you. And our next question comes from the line of Debojit [ph] with Jennie. Your line is now open.

[Unidentified Analyst:]

Thanks for taking the question. So as you move towards the checkpoint inhibition combos, is there a correlation between disease burden and mutational burden and hence the likely response and either triple negative or ovarian cancers?

[Patrick Mahaffy:]

Lindsey, do you want to answer that? I would like to answer that.

[Lindsey Rolfe:]

Sure. There certainly is a correlation between mutational burden and HRD. So high HRD patients, tumors tend to have higher mutational burden. I mean you are so there is a correlation between disease burden and mutational burden and I'm not aware that I don't know.

[Unidentified Analyst:]

Great. And then thanks for the color earlier, color on the different - the disease burden and enrollment criteria between the novel and the solo 2 study but how do you think you could detail if the absolute numbers are different because you know, the trials are with enrolling different patients and do you think the physicians and the community setting with latch onto this or like you said a few minutes ago, it's all about the hazard ratio?

[Patrick Mahaffy:]

Well, again I don't know the data we're going to see and I don't know what data ultimately we're going to end up in the label for either based on the Solo 2 study for AstraZeneca or based on the Novo study for Tsaro [ph]. So it's a little bit difficult for me to speculate. I think that we will all interpret our data based on what is in the package insert and particularly the indication statement and what's in the clinical section, Section 14. The normal rule in these things is that everyone is going to have advantage whether it is in safety or whether it is an hazard ratio, whether it is in a subset or whether it is in data at the media. You and we and everyone is want to try to figure out how to put our best foot and how others will put their best foot forward. So I will tell you I'm confident we'll have a competitive agent with a competitive data set, but I don't know what hours will be a. I certainly don't know what the label core our competitors will be a. It is a little hard to answer that with any degree of specificity.

[Unidentified Analyst:]

One must follow-up, if I may, so given the influx of data that we expecting both in the frontline minutes in the second line as well. You think - how do think positions are likely to sequence the parks or those first to market become important in this setting. Thank you so much for taking my questions.

[Patrick Mahaffy:]

Can I make sure I understand your question? Earlier line use make a difference, is that what you mean?

[Unidentified Analyst:]

No. Given that there is also solo one and then there is the data coming out from [indiscernible] next year both in the frontline minute's settings. So given that these drugs are probably going to get approved in the frontline maintenance, as you get approved and secondly minutes, how do think positions are likely to sequence the parks it all parks look the same in terms of the data?

[Patrick Mahaffy:]

Again, I don't know that they will all look the same but that differentiation is perfectly - is imperfectly evident yet because we don't have the data sets for ARIEL 3 [ph] or the labels for the other to pick sequencing of the PARP-inhibitors is going to be really interesting emerging field and it is going to be critically important to learn more about this with real evidence of activity or lack of activity in the clinical setting because PARP-inhibitors are going to become such an important part of cancer therapy and multiple tumor types. What we don't know for sure is whether it is easy to use a PARP-inhibitors immediately after a prior PARP-inhibitors. However, the data we have a suggests that is not likely to be uniformly successful. The reason for that is we are continuing to learn from the analysis of our data that a primary cause of the failure on a PARP-inhibitors is the development of reversion mutations effectively causing a meeting BRCA patient to become a wild type tranXXXI and therefore no longer as vulnerable to a PARP-inhibitors. But the picture is far more interesting than that. What we don't know is whether the addition of for instance, if you ultimately progress on monotherapy PARP-inhibitors, if the accommodation of a PARP-inhibitors with the PDL one would mitigate some of that resistance. We are aware of an emerging data set of another targeted therapy that when added to patients who have failed on their most recent PARP-inhibitors restores responsiveness in a large percentage or racial percentage of those patients. So the amount of learning we in the community have to do and will do over the course of the next several years, as we think about getting maximum PARP-inhibitors effect to patients through multiple lines of therapy is large, but the motivation to do so is high. I think we're going to see over the course of the next couple of years a good conversation emerging about not only when you can sequence a part but how best to sequence a PARP-inhibitors. So while I don't have an answer, I am actually fairly competent now that while monotherapy might not pets be the best idea, that our community of investigators and developers will find good positive ways to consider sequencing and maintaining good effective part benefit through multiple lines of therapy.

[Operator:]

Our next question comes from the line of Peter Lawson with SunTrust Robinson Humphrey. Your line is now open.

[Peter Lawson:]

Just thinking about how being used. When do you think you'll get a better understanding second line versus third line. It seems like it is too early at the moment to ascertain that.

[Patrick Mahaffy:]

I think it is a little too early. We don't capture those data perfectly. I have a feeling that the better way for you to capture it is to do market survey work that can give you an independent source of information about how it is being used. I suspected that you shouldn't do that now just because it is too early, but I think we're all going to have a better sense of how it is being used and whom it is being used over the next couple of quarters.

[Peter Lawson:]

Got you. Thank you. When is a you can tell us about the Road and SGA - SG&A spending. How much of that cost has been reclassified just to help smooth the model out?

[Patrick Mahaffy:]

For Q4 you mean?

[Peter Lawson:]

Yes, for Q4 or anything you can tell us for Q1 that would be great.

[Patrick Mahaffy:]

In Q4, the change the request of what went to SG&A versus Road within the 3 million range.

[Operator:]

Our next question comes from the line of Steven Breazzano with Piper Jaffray & Company. Your line is now open.

[Steven Breazzano:]

How long do think it will take from the data release of AERIAL3 to get on the guidelines and maybe what needs to happen for that to occur? Thank you.

[Patrick Mahaffy:]

I don't know. The guidelines require far more than a press release from sponsor, but an actual publication to be considered for guideline. If our data are robust and at the same time that will be drafting the supplemental NDA, will be drafting a paper. I note with admiration that the nova data were published in the New England Journal at the same time they were presented at - that was in about four months-ish of their release of the data. I'm not guaranteeing that we will hit that same timeline, but I hope we do. If they are robust, I would imagine we would seek to get an - relatively short period after that based on this robust they Phase 3, 564 person study.

[Operator:]

We have time for one more question. It will be from a Cory Kasimov with JPMorgan. Your line is now open.

[Cory Kasimov:]

So Pat, along the lines of comparing across parks as we all continue to evaluate the evolving profile of this class of drugs coming can you talk about - other potential point of differentiation that you see on a molecular basis things like while availability, being brain penetration, things like that. Might that have a difference going forward?

[Patrick Mahaffy:]

Yes. Obviously, bioavailability is kind of addressed by you reducing. So your dosing makes bioavailability sort of irrelevant. We have good viability for an - as to brain penetration, nobody has presented any clinical evidence that they have a better or worse brain penetrant. That will emerge over the course of the treatment particularly as we get into treatment of tumor types where brain meds are far more common. I would say for instance a lung cancer or breast cancer are good examples of indications were those data are going to be far more relevant, and they are today in either ovarian cancer or prostate cancer for example. It is not that it occurs but it is a real issue and breast and lung cancer as you are aware. Those data will emerge but the only data that matters is clinical data. I think that we should be really careful as a community not to over interpret or even really try to interpret very imperfect preclinical data at a time when all of us are generating real clinical data. I think we all need to get to the point where every company presents its response rate did in the treatment settings we can determine if there is a difference. We obviously look forward to presenting the aerial three data to determine if there is a difference in all of the populations we are testing. We are all going to go into other tumor types and determine whether in other tumor types differences and efficacy emerge. Safety will be real issues for this type of compound especially as we all seek in the maintenance setting or in a long-term treatment setting to generate much more almost chronic use. Those signals will emerge, and they do emerge through experience and through clinical studies. Highly related to for instance safety and tolerability. Is the ability of each of these agents to combine with very attractive combination partners most notably an anti-PD one - and a (inaudible). So there is a lot to emerge in the setting. None of which can be predicted from preclinical studies now because they can only be answered in the clinical setting. That is why we are so proud of the treatment indication we have and the label underlying it of the studies we have run and the data that I hope we generate and Shirley relatively quickly from aerial three and ultimately, our - as monotherapy and in combination. All of these areas are going to be able to be places where you can compare clinical data, ability and safety combined ability and over the course of the next period of years not months and agent may emerge as the standard of care and the best in class. Nobody here can be Napoleon and crown themselves. We have to earn it in clinical studies, and we are seeking to earn it in the clinical studies we are running. What we see is a good balance of tolerability and efficacy with our drugs that excites our clinical investigators that excites our combination partners to continue to explore the use of the drug.

[Cory Kasimov:]

Okay. Lastly, it is good to hear that reimbursement has been spent so far. But curious though if the labels and of being somewhat similar to each other you are looking across the different 36 - PARPs, given anticipation appears could look to more aggressively try to manage costs via how they position the formularies given the number of similar drugs in the space? We really haven't seen this in oncology, but we hear whispers it could have an. Are you at all concerned about it in the PARPs

[Patrick Mahaffy:]

Not really. If it was going to happen immediately, it would be happening now in the anti-PD one, - we have seen no evidence of that. We're kind of in metrics are little similar. Several competing compounds where so far, trial design is going to be more relevant to outcomes yet been any proven difference of efficacy on these compounds. And yet, that hasn't happened. Part of the reason for is what we got too early. There are going to be safety differences. There are going to be different hazard ratios in comparative studies. They're going to be advantages, I would imagine that every data set so I think it is going to be a little bit difficult in the short term for that to occur. I worry about a lot of things, but that is not my number one worry.

[Operator:]

Thank you. Ladies and gentlemen, that concludes today's question-and-answer session. I would now like to turn the call back to Ms. Breanna Burkart for any closing remarks.

[Breanna Burkart:]

Thank you everyone for your interest in Clovis today. If you've any follow-up questions, you may reach me at 303-625-5023 or you may reach Anna at 303-625-5022. This call will be accessed via a replay of our [e-mail] beginning in about one hour and will be available for 30 days. Thank you again and have a good evening.

[Operator:]

Ladies and gentlemen this concludes today's conference call. Thank you for participating. You may all disconnect. Everyone have a great day.