MorphoSys AG
Q3 2018 Earnings Call Transcript

Published: 6 Nov 2018

[Operator:]

Ladies and gentlemen, welcome to the MorphoSys Quarterly Results Conference Call. Please note that for the duration of the presentation all participants will be in listen-only mode, and the conference is being recorded. [Operator Instructions] Now I would like to turn over the conference over to Alexandra Goller. Please go ahead

[Alexandra Goller:]

Good afternoon, good morning, and welcome to our Q3 2018 conference call and webcast. My name is Alexandra Goller, Associate Director, Corporate Communications & Investor Relations at MorphoSys. With me on the call today are, as speakers, Simon Moroney, our Chief Executive Officer; and Jens Holstein; our Chief Financial Officer. Also with us on the call is Malte Peters our Chief Development Officer for the Q&A session later on. Before we start, I would like to remind you that during the conference call we will present and discuss certain forward-looking statements concerning the development of MorphoSys’ core technologies, the progress of its current Research & Development program and the initiation of additional programs. Should extra conditions differ from the company's assumptions, actual results and actions may differ from those anticipated. You are, therefore, cautioned not to place undue reliance on such forward-looking statements, which speak only as of the date hereof. In the presentation, Simon will start by giving you an operational overview of the third quarter as well as an outlook for the rest of this year. After that, Jens will review the financial results of the third quarter and the first nine months of 2018. The presentation will last about 20 minutes. After the presentation, we will all be available for your questions. You will find the slide deck for this presentation on our corporate website. I would now like to hand over to Simon Moroney.

[Simon Moroney:]

Thank you, Alex, and also from me a warm welcome to our Q3 call. The third quarter of 2018 was a productive one for us, highlighted by very encouraging progress and therapeutic programs within both our proprietary development and partnered development segments. I will go through the highlights in both areas starting with our proprietary programs. Our most advanced program is MOR208 the Fc-enhanced anti-body and clinical development for b-cell malignancies. You will recall that we are running the L-MIND and B-MIND trials in relapsed refractory DLBCL, and the COSMOS trial in BTK inhibitor refractory or intolerant CLL and SLL. I’ll start with L-MIND, our chemotherapy-free regimen for DLBCL, comprising MOR208 plus lenalidomide. Last Thursday, we were pleased to announce that the abstracts we had submitted on L-MIND was selected for an oral presentation at this year’s ASH conference in December in San Diego. In accordance with ASH rules relating to prior disclosure of conference presentations, we are unable to go into detail here on the new L-MIND data beyond what is in the abstract. Therefore, I will just mention the key points and ask for your understanding that we will not be able to say much more during the discussion. The abstract outlines preliminary safety and efficacy data on all 81 patients enrolled in the L-MIND trial. By the time of the data cutoff on June 5th of this year, the overall response rate was 58%, comprising 33% complete responses and 25% partial responses. Very significantly median PFS was 16.2 months. Median duration of response and median overall survival were not yet reached, but we highlighted the 12-month overall survival rate of 73% and at 12 months there had been no disease progression in 70% of patients. We are pleased to see both ORR and mPFS improving compared to the last data cut-off. We will of course speak to these data in detail at ASH. As a reminder, we have announced an investor event in New York City on December the 5th, at which we will be joined by one of our investigators, and there too, we will be available to speak about the data in as much detail as possible. We hope to see many of you there. We feel very encouraged by the latest data for our plans to seek U.S. regulatory approval on the basis of the L-MIND study. As of now, our plans are unchanged, we expect to have final data from the study available for an appropriate medical conference in the middle of next year and we remain on track to completing a rolling submission by the end of next year, which would allow for a potential approval in mid-2020. This program has the highest priority within the company. Meanwhile, the B-MIND trial of MOR208 in relapsed/refractory DLBCL also continues. B-MIND is a phase 3 study evaluating MOR208 plus bendamustine versus rituximab plus bendamustine in approximately 330 patients with relapsed/refractory DLBCL who are ineligible for high-dose chemotherapy and autologous stem cell transplantation and who have failed prior rituximab-containing therapy. The trial continues to enroll patients and we are currently anticipating completion late next year. The trial includes a planned interim analysis for futility which, depending on when the required number of events is reached, should be conducted within the next six months. The third MOR208 trial is COSMOS. This exploratory study is looking at the safety of MOR208 in combination with either idelalisib that’s cohort A or venetoclax, that’s cohort B in patients with CLL or SLL who have failed or become intolerant to prior treatment with ibrutinib. We reported data from the first cohort at the EHA conference this year and we were very pleased to announce last week that our abstract with first data on 13 patients from cohort B comprising MOR208 in combination with venetoclax has been accepted for a poster presentation at ASH. As published in the abstract, MOR208 plus venetoclax showed generally acceptable safety and tolerability as well as antitumor activity, with all seven out of seven patients who had at least one post-baseline assessment showing a partial response. Overall, we’re very excited about MOR208. We believe that the current L-MIND data suggest it has the potential to transform the treatment of aggressive lymphoma, and that with a chemotherapy-free regimen. We are currently evaluating additional development options and hope to be able to update you on those plans in the coming months. Let me turn now to MOR202, our proprietary anti-CD38 antibody currently in development for the treatment of multiple myeloma. Our phase 1/2a study of MOR202 in multiple myeloma, either alone or in combination with pomalidomide or lenalidomide, is fully recruited. As reported last week, the abstract we submitted on data based on the primary completion of the trial was accepted for an oral presentation at this year’s ASH conference, and we look forward to sharing the study results there. Our partner I-Mab is continuing preparations for late-stage clinical development in multiple myeloma. I-Mab has submitted an IND application to the Chinese authorities for MOR202 and we currently expect that they will start a pivotal trial of MOR202 in that indication in China early next year. We are continuing to evaluate development options of MOR202 in other indications including autoimmune disorders and expect to be able to give you an update on our plans in the near future. I’ll continue with MOR106, an antibody directed against IL-17C. In our half year call in early August, I commented in detail on the exciting license agreement we and our partner Galapagos had recently signed with Novartis. The approval of the transaction by the U.S. antitrust authorities under the Hart-Scott-Rodino Act took place in early September. Thus the upfront payment of €95 million from Novartis to Galapagos and MorphoSys became payable. As a reminder, we and Galapagos are eligible to receive success-based milestone payments of up to approximately €850 million as well as tiered royalties on net sales in the low-teens to low-twenties percent. With the signing of the agreement, all research, development, manufacturing and commercialization costs for MOR106 are being covered by Novartis. Our ongoing phase 2 IGUANA trial in atopic dermatitis patients, which we started together with Galapagos in May, is continuing enrollment. We expect completion around the end of next year. We started a phase 1 bridging study in the third quarter to evaluate the safety and efficacy of a subcutaneous formulation of MOR106 in healthy volunteers and atopic dermatitis patients. We see great potential for MOR106, which is, to our knowledge, the first program against IL-17C in clinical development. While the initial focus is on atopic dermatitis, which is an enormous unmet medical need, we expect to commence clinical studies in at least two other indications in the future, as per our agreement with Novartis. I will turn now to our Partnered Discovery segment. This segment comprises more than 100 programs currently in R&D, 24 of which are in clinical development. As always, it’s far too many to talk about here, so I’ll focus on the most advanced product in this segment, Janssen’s Tremfya, which in July 2017 became the first drug based on our antibody technology to reach the market. Sales of Tremfya in plaque psoriasis are developing nicely. Tremfya seems to be an important asset for Janssen, and is being given the appropriate attention, both in commercialization and in further development. In July, we announced the start of Janssen’s pivotal development program GALAXI in Crohn’s disease and in September, the initiation of a phase 3 trial in pediatric psoriasis patients. These new pivotal studies add to the ongoing development program, which includes two phase 3 studies in psoriatic arthritis and a number of phase 3 studies in psoriasis including the head-to-head study ECLIPSE comparing Tremfya and Cosentyx. We expect results of the ECLIPSE study early next year. We are delighted to see such a broad clinical development program and are optimistic that Tremfya could become a widely used drug. To close this section, in September, we expanded our existing strategic dermatology alliance with LEO Pharma to include peptide-derived therapeutics. This alliance is the first to be based on our proprietary peptide technology. We will use this technology to address target molecules selected by LEO Pharma that might not be addressable with antibodies. Under the terms of the agreement, we will receive R&D and success-based payments for reaching development, regulatory and commercialization milestones as well as royalties on net sales arising from commercialization of any peptide-based drugs developed by LEO Pharma. While LEO will hold all development and commercialization rights in dermatology, we will have an exclusive option to secure worldwide rights to all oncology drugs resulting from this collaboration. To conclude my part, at the end of the third quarter 2018, the MorphoSys pipeline comprised 115 programs spanning discovery to the market. These include one program on the market Tremfya and 29 programs in clinical development. We still expect additional clinical data and potential milestones from several programs up to year-end. As always, we have no control over what our partners communicate, but there is obviously the potential for quite a few results to come. We believe many of these programs have the potential to be major value drivers for MorphoSys. We look forward to updating you on all of these programs in the future. That concludes my operational review, I will now hand over to Jens for his wrap-up of the financials.

[Jens Holstein:]

Thank you Simon. Ladies and gentlemen also from my side a warm welcome to all of you and thanks for your interest in the company. As Simon already pointed out, we are very pleased with our performance in the past quarter. Driven by an attractive licensing deal with Novartis for MOR106 and an increasing royalty income for Tremfya, we saw a strong revenue performance in the third quarter. On the back of the MOR106 transaction, we had already increased our financial guidance for the year in July. Given what we have reported today, we indicate that our overall revenue figure is anticipated to be at the upper end of that guidance. The good topline performance has nicely contributed to the bottom line in Q3 too. So all-in-all, our financial results are well in line within the announced guidance. With our cash position that we had strengthened with our Nasdaq listing earlier in the year, we are well positioned to continue the advancement of our proprietary portfolio, in particular to bring our lead program MOR208 toward the market and to set up a commercial structure in the U.S. Let’s now take a closer look at the most important financial figures of MorphoSys for the third quarter. And I would like to start with our P&L statement on page 12. Group revenues totaled €55 million, compared to revenues of €15 million in the third quarter of 2017. The revenue increase was mainly driven by the realization of an up-front payment in the amount of €47.5 million that we received from Novartis in connection with the MOR106 license agreement. As in previous quarters, the contractual royalty reporting from Janssen for Tremfya has not been received yet. Tremfya royalties booked for Q3 2018 were estimated based on public announcements made by Janssen/J&J. Total operating expenses reached €25.3 million. The expenses thereof for research and development were €18 million. General and administrative expenses increased to €5.1 million. In the first quarter of 2018, we introduced selling expenses as a new line item in the profit and loss statement. This was necessary following the rising importance of those expenses in connection with our preparations for the commercialization of MOR208 in the U.S. Those costs have been rather small so far, but are expected to increase in the quarters to come. The line item, cost of sales consists of expenses in connection with services being rendered while transferring projects of the kind of MOR106 to partners. In the first nine months of 2018, cost of sales amounted to €0.9 million. Earnings before interest and taxes came in at €30.1 million in Q3 2018, in comparison to minus €23.5 million in the third quarter of 2017, reflecting in particular the already mentioned up-front payment made by Novartis. Our consolidated net profit after taxes amounted to €30.2 million in Q3 2018, compared to a net loss after taxes of €24 million in Q3 2017. The earnings per share for Q3 2018 reached €0.96, after minus €0.83 in Q3 of the previous year. Let’s move to our segment reporting for Q3 on page 13 of the presentation. In our Proprietary Development segment, we focus on the research and clinical development of our own drug candidates. In the third quarter of 2018, this segment recorded revenues of €48.8 million as compared to €0.2 million in Q3 of 2017. As mentioned before, the revenues include the upfront payment for the license agreement for MOR106 with Novartis. Expenses for proprietary R&D including technology development amounted to €15.9 million, as compared to €29.8 million Euro in Q3 2017. The main reasons for this year-on-year decline in proprietary R&D expenses are reduced expenses for MOR202 development compared to the previous year due to reimbursements from I-Mab as well as an extraordinary negative effect that we had in Q3 of last year following a write off in connection with MOR209. Consequently, the segment EBIT of our proprietary development segment came in at €30.3 million compared to minus €29.8 million in the previous year. In our Partnered Discovery segment, we apply our proprietary technology to discover new antibodies for third parties. We benefit from our partners’ development advancements through R&D funding, licensing fees, success-based milestone payments and royalties. In the third quarter of 2018, revenues amounted to €6.2 million as compared to €14.8 million in Q3 2017. Please be reminded, that our long-term research collaboration with Novartis has ended in November of 2017. Consequently, the EBIT in our Partnered Discovery segment reached €3.8 million as compared to €10.4 million in Q3 2017. Let’s move on to the balance sheet on slide 14. As of December 30, 2018, we recorded total assets of €578.7 million. This represents an increase of €163.3 million compared to year-end 2017. At the end of Q3, we had a cash position of €481.2 million compared to €312.2 million as of December 31, 2017. Please be aware that as we have started to apply IFRS 9 effective January 1, 2018 you now find the liquidity items on the balance sheet under the following line items

[Alexandra Goller:]

Thank you, Jens. We will now open the call for your questions.

[Operator:]

[Operator Instructions] One moment please for the first question. The first question is from Konstantinos Aprilakis of JMP Securities. Your line is now open. Please go ahead.

[Konstantinos Aprilakis:]

Thanks very much for taking my questions and congrats on the quarter. So Simon, as you mentioned in your prepared remarks, MOR208 demonstrated a highly impressive 16.2 month [Indiscernible] in last week's release. I know you said you won't go into any more detail on the day at this time, but I was wondering if you might comment on how result like that affects the regulatory path forward as you see it considering the vast improvement over both, standard of care and investigational agents in the setting?

[Simon Moroney:]

Yes, thanks Konstantinos. We have -- we actually have Malte on the line as well. He’s not with us here in the room, but he's on the line, and I would hand that over to him actually, Malte?

[Malte Peters:]

Yes, thank you Simon and thank you Konstantinos for the questions. I think it's fair to say that the data that we publish at ASH are considered to be extremely encouraging. We since, we received breakthrough therapy designation from FDA, our interaction with the agency has been extremely collaborative. Actually FDA has demonstrated a great deal of willingness to support MorphoSys to move our program ahead on the regulatory path. And based on these statements, we are optimistic and confident to maintain our timelines that we had communicated earlier, which includes a filing of the 81 patients’ worth of data by the end of 2019, which could lead potentially if all goes well to a regulatory approval in the middle of 2020. So I think in short, our interactions with FDA are extremely positive and based on different action we continue to assume what I just said on the timeline basis.

[Konstantinos Aprilakis:]

Okay, fantastic. And when do you think we’ll hear sort of explicit feedback from the FDA, like minutes from the meetings with the FDA? Is the post ASH investor event a possibility, or would it be after that?

[Malte Peters:]

So, we commonly do not publicly share written minutes as when our FDA interactions. I don’t think any other company does that. We would of course communicate any significant news in our communication between MorphoSys and FDA if you consider that -- that’s appropriate. But other than that, there are too many interactions between MorphoSys and FDA at the moment that we would comment on each of them, right? If you have the breakthrough therapy status, it means that you have a very close communication between the company and the agency and is way too many interactions for us to publicly share. So I think, we can certainly provide you more detail on our data at ASH and also at the Investor event, but I do not foresee that we’ll share minutes or interactions with FDA.

[Konstantinos Aprilakis:]

Okay, fair enough. Thanks very much guys and congrats on a quarter.

[Simon Moroney:]

Thank you.

[Operator:]

The next question is from James Gordon of JPMorgan. Your line is now open. Please go ahead.

[James Gordon:]

Hello. Thanks for taking my questions. A couple of questions please. The first question would be just the PFS estimation approach. So the data and the abstract are very strong to motivate. But one investor question has been in the extent to which it has been estimate of median PFS which could dramatically change if the data matures. Could you just clarify, is this a consistent way that you estimate PFS versus other studies you might be familiar within this field? And is it likely that you’re going to have dramatic change in the median PFS as the data matures?

[Simon Moroney:]

Malte, do you want to take that one?

[Malte Peters:]

Yes. I can take that one. Thank you, James for the question. So first of all to our methodology that we apply. So we apply a standard methodology to calculate our median PFS. It’s the same methodology that is used by Novartis, Roche, Pfizer and any other companies. And the PFS estimates are realistic estimates of where the median progression-fee survival will end up at conclusion of the study. So the number you see is not very positive, it’s not very negative, it’s actually right in the middle of where we believe we will end at the completion of the study. So I think we use a very common standard methodology to compute our median PFS and it gives you the most realistic number that is available. The other comment I would make is that -- and if you look at the median PFS numbers that we have published over the last year, I think we have published on cut-offs in six months interval. The median PFS number has gone up. So that’s indicates in our opinion that’s the robustness of the data increases and the probability that this is somewhere close to where we will end up at the final data evaluation is fairly high. So I think that’s what I would say to this point to your question. I hope I could answer your question to some extent.

[Malte Peters:]

Yes. That was very helpful. Thank you. And then, just two other quick questions please. One was, in terms of what we’re going to see ASH versus the abstract, they’re not asking for its disclosure now, but I believe the abstract with the June cut-off. Is it will be the same June cut-off? And is there anything incremental that would be at the presentation be on the ASH detail versus what was in the abstracts is the second question?

[Simon Moroney:]

Yes. And maybe – let me just handle that. James, as per the ASH regulations I understand that we’re actually not allowed to disclose what we’re – precisely what we’re going to release at ASH. And we can’t say at this point whether what you’ll see at ASH will be exactly what’s in the abstract or whether will something subsequent to the abstract. So unfortunately we can’t elaborate on that at this point.

[James Gordon:]

Thank you. And third and final question was, I noted within the release a change in personnel in terms of U.S. the lady who was going to lead U.S. Commercial, was Jennifer Herron, and I’ve seen that she is departing after pretty short tenure with the company. Are you able to provide any color around that in terms why just a short tenure? And should we – could we read anything into that?

[Simon Moroney:]

Yes. We can’t say much, James. Jennifer left to pursue other opportunities and unfortunately we can’t go into details. We wish her well. Unfortunately these things can happen. But I think important to point out is that her departure has absolutely no impact whatsoever on our plans to commercialize MOR208 in the U.S. or elsewhere for that matter. And I have to say, we’re absolutely delighted to have Jim Hussey who stepped in as Acting President. Jim is someone who has many years of commercializing – many years experience with commercializing cancer drugs in the U.S. We’ve actually been working closely with him now for some time. And he has happily stepped into to fill the gap and ensure what’s turned out to be absolutely seamless continuity since the departure of Jennifer. So from that point of view we are happy with the way things are going, and as I said, no change in plans for MOR208.

[James Gordon:]

Okay.

[Malte Peters:]

Thanks for the questions.

[Operator:]

The next question is from Gary Waanders of Bryan Garnier. Your line is now open. Please go ahead.

[Gary Waanders:]

Hi, there. Simon, if I might just follow-up on the question about commercial strategy and U.S. activities. I wonder if you could tell me whether in your discussions with clinicians ahead of any regulatory filing what has been their perspective on the use of 208 with lenalidomide compared to say the CAR-T approaches. Have they given any steer as to what their potential preferences might be?

[Simon Moroney:]

Yes. Let me start with that, Gary, many thanks for the question and then I’ll actually ask Malte to comment as well because he has many discussions with the clinicians. Yes. The -- I think the reception of the data has been very good, very strong, particularly the progression-free survival in this very sick patient population, the clinicians that we’ve interacted with have been very encouraged by what they’ve seen. And that is actually one of the drivers behind some of the other plans we are making from MOR208 at the moment to take it into other settings. We’ve talked about earlier lines of DLBCL for example, that’s being to a large extent catalyzed by the enthusiastic response we have seen amongst the clinical community. But Malte, do you want to add anything regarding the potential of 208 versus some of the competing programs out there?

[Malte Peters:]

Yes. I can maybe add a couple of thoughts or maybe a couple of comments that we are typically hearing from investigators. Of course I cannot so speak much about the investigators opinion about the CAR-T cells because not too many investigators have actually an opportunity towards to administer CAR-T cell transplant to a patient as you know, but what we are hearing from our investigators is that, particularly the facts of the chemo-free nature of MOR208 in combination with L-MIND is considered to be an extremely positive feature of our possible treatment option. It also means that being chemo-free our regimen might be of particular important for elderly patients and for patients who are too ill, too sick to tolerate any very toxic regimens like high-dose chemotherapy or autologous stem cell transplant. And last but not least, our treatments is also very easy to administer, right. So there’s no waiting time, nor turnaround time until patients have access to the CAR-T cells. So I think these are the key features that we are hearing commonly from investigator. So we feel fairly confident that MOR208 and combination with lenalidomide could be a truly another chemo-free opportunity for very ill patients.

[Gary Waanders:]

Thanks for that. And if I might just also ask about B-MIND; there was -- in the comments there was a suggestion that the interim analysis might be within six months depending on events. Could you give us any details about what events are particular required for that -- to trigger that futility analysis please?

[Malte Peters:]

Yes. If I can take the question -- yes, if I can take the question, Simon. So, we typically would not like to share any details of the protocol. I don’t think we have done that in the past. The interim analysis is built in the protocol. I think all I can say is that the interim analysis will not allow us to stop for success, but it will allow us to stop for futility under certain conditions and I don't want to go into the statistical detail of the protocol at this point. We are quite on track with the study. There’s excitement about the possibility of combining MOR208 with another agent, bendamustine in this case and obviously the fear is interested in signing out its MOR208 which eventually be better than with rituximab in this patient populations.

[Gary Waanders:]

Thanks for that.

[Operator:]

The next question is from Anastasia Karpova of Kempen. Your line is now open. Please go ahead.

[Anastasia Karpova:]

Good afternoon and two questions if I may. With the data you have in hand, when do you expect to be able to guide the markets more concretely on the further expansion strategy for MOR208 development? And then second, in regards to B-MIND and L-MIND as well, do you think that’s the observed efficacy is specific to lenalidomide or IMiD combination or should we at least mechanistically hope to see something of the same magnitude, not exactly but of the same magnitude in combination with bendamustine?

[Simon Moroney:]

Thanks Anastasia. Those sounds like two more you, Malte.

[Malte Peters:]

Yes. Happy too, Simon. So first of all for the further expansion of the program I would like to refer to our Investor event that’s coming up on December 5. We have actually fairly concrete plan in frontline DLBCL. We also have plans in other indolent lymphoma entities and we will update all of you on that date what these plans are. To your second, I think at this point it’s too early to really make that comparison. Obviously, we are also highly interested in the question you asked. It’s a very relevant question. But first of all, to B-MIND, for the B-MIND case we are still blinded, so we have no idea which patients receive which treatment. And the median duration of response – sorry, the median duration of treatment for B-MIND -- for the B-MIND patient is very short. So, it’s not really possible at this moment to make that comparison, but eventually I think you hit the nail on the head. This is going to be a very exciting question to see what is really the best combination partner and is there any difference between lenalidomide and bendamustine as combination partners to 208. But at this time it’s a bit early to speculate on that.

[Simon Moroney:]

Maybe if I can just add one point to that. When asking and it’s a good question about the importance of lenalidomide, one thing to keep in mind is that the protocol calls lenalidomide treatment to discontinue after 12 months. And of course, we have a lot of patients now and increasing number who are still on treatment beyond 12 months and those patients obviously are only getting antibody. They’re not getting lenalidomide any more. So I think that something that one should keep in mind as well when one thinks about just how much of a contribution is coming len in this combination.

[Malte Peters:]

Yes. That’s an excellent point, Simon, and Anastasia you will see – you will be excited to see the PFS curve at ASH and it will provide more details to what Simon just said. So about China, that was a very good additon, yes.

[Anastasia Karpova:]

And maybe is to follow-up quickly, given that most of the patients receive for -- there is a proportion of patients that receive MOR208 as a monotherapy later in the trial. Would you consider exploring maintenance to be reflected in the label somewhere down the line?

[Simon Moroney:]

Malte?

[Malte Peters:]

Yes. We have not gone into the maintenance discussions with the authorities at this point. The protocol request that’s the lenalidomide has stopped after 12 months and MOR208 is continued until progression. So in a way, we have build in already a kind of maintenance treatment. And whether this will be specifically mentioned in the label, I can't really speculate at this point.

[Anastasia Karpova:]

Great. Thank you a lot.

[Operator:]

We currently have no questions coming through. [Operator Instructions]. Follow-up question from Gary Waanders, Bryan Garnier. Your line is now open. Please go ahead.

[Gary Waanders:]

Hi. Thanks for taking follow-up. It was actually to change track a little bit and talk about MOR103. I wonder if you had any further guidance as to when that might progress and how that might progress with GSK? Thanks.

[Simon Moroney:]

Thanks, Gary. The short answer is no. We’re encouraged by what GSK has said about the program, highlighting it, noting in particular, the very beneficial effect on pain in these patients. So it seems to be a program that GSK is prioritizing. The next step we hope would be transition into a Phase 3 study, but we’re not sure that that will be the next trial and we haven’t had an update from GSK.

[Gary Waanders:]

Many thanks.

[Operator:]

The next question is from Danielle Brill of Piper Jaffray. Your line is now open. Please go ahead.

[Danielle Brill:]

Good morning. Thank you for the question. I’m just curious what your thoughts on potential accelerated U.S. approval in comp with lenalidomide. This is an indicated for DLBCL, I just curious is there a precedent for this?

[Simon Moroney:]

Malte, is that one that you can take?

[Malte Peters:]

Yes. I can take that. So the short answer is there’s no precedence for this. Of course this was clear also to the FDA. They mentioned it to us in our further interactions, but they also were quite clear that they are willing to set a precedent, if our data continue to look like they look. So that’s I think the shortest possible answer here. We are aware of testing new waters here of getting on new territory here. But the fact that FDA has granted breakthrough therapy for this particular combination indicates that the agency is truly willing to consider the study as a basis for an approval. So I think it’s a good signal that we receive breakthrough therapy status and yes despite that we -- the fact that we have a new territory here in front of us, we are quite confident at the moment.

[Danielle Brill:]

Thank you. And then, just to clarify, did you say that we could expect an update at ASH on – I know you said future development plans, does that include commercialization strategies?

[Simon Moroney:]

Yes. Let me – I think what Malte was referring to Danielle was clinical development plans. We’ll update you as much as we can about our commercial plans as well. We’ll take that opportunity in New York in early December really to give you as comprehensive of the picture as possible about our intentions and plans for the 208 program.

[Danielle Brill:]

Perfect. Thank you.

[Operator:]

The next question is from Zoe Karamanoli at RBC. Your line is now open. Please go ahead.

[Zoe Karamanoli:]

Thanks for taking my question. Just a follow-up on MOR208, Simon, given the impressive data on MOR208 so far, has this now changed your approach for the EU and would you perhaps now try to apply for prime designation and perhaps pursue and expedite regulatory approach there as well?

[Simon Moroney:]

Yes. Thanks Zoe. Again I’ll hand this over to Malte. I think one of the things we need to keep in mind is that the regulatory environments in the U.S. and Europe are quite different. And that will obviously has a bearing on what’s doable, what’s approvable in these two jurisdictions. But Malte maybe you can elaborate a little bit.

[Malte Peters:]

Yes. Thank you, Simon. So it’s an excellent question Zoe, thank you for that. We are in the process of approaching EMA for a discussion. So when we go in the first or second quarter of next year we will present of course our L-MIND data. We deliberately stack out all our interactions between FDA and EMA by little bit so that we can embark already when we speak for EMA on some experience and some feedback from FDA that typically helps. And your question with related to prime, that may be a possibility, but I would say at this moment we will hold off on that until we have had an opportunity to actually talk to the European agency and to await their guidance of what they suggest as next step. So, we are little behind deliberately by approximately one year, I would say in Europe and we would have more to say about this, I would say, in the first or second quarter of next year.

[Zoe Karamanoli:]

Thank you. And just a follow-up from that. You still looking into your options whether you will try to commercialize yourself or try to find a partner. Is that right?

[Simon Moroney:]

Yes. That something that we’re still looking at; I think we’ve communicated rather clearly what our plans are for the U.S. that we intend to commercialize ourselves there. Ex-U.S. we would probably look to commercialize in conjunction with the partner just precisely what our level of involvement would be – remains to be determined depending on the partner and the type of deal that we would close there. But certainly right now highest priority for us is to get it right in the U.S.

[Zoe Karamanoli:]

Thank you very much.

[Operator:]

The next question is from [Indiscernible]. Your line is now open. Please go ahead.

[Unidentified Analyst:]

[Indiscernible]. Just a quick on to you mentioned autoimmune diseases as a potential indication, so maybe you can quickly share with us how your seeking has evolved overtime whether an oncology or indications of the table now and whether you in principle only would do larger trial with a partner also on a standalone basis? Thank you.

[Simon Moroney:]

Yes. Let me start there and I’m sure Malte will have some comments to add as well. The initial setting obviously was multiple myeloma., We’ve concluded that is at least in the Western world an intensely competitive space not just because of the other anti-CD38 antibodies but based on what's happening with other modalities as well. And we’ve decided that the smart thing there is not to continue ourselves in that indication. We have of course the partnership with I-Mab for China and that will continue. But we do see opportunities outside of cancer. And let me just backup one step and say, actually other solid tumor trials of CD38 antibodies have not done terribly well so far. So I think the jury is still out as to what extent CD38 antibodies are going to play a role in cancer outside of multiple myeloma. We actually see some opportunities in autoimmune disease based on the fact that CD38 antibodies MOR202 in particular are very effective plasma cell depletors, okay. And obviously 202 having been in the clinic and been shown to be generally safe and well tolerated gives us a good starting point. I think we’re not yet ready to talk about precisely what indications we would precede in, but we have some pretty firm plans that we will share with you at some stage in the not too distant future about how we’d like to go ahead with MOR202 and autoimmune disease. Malte, have I left anything out there?

[Malte Peters:]

No, I think you’ve summarized it very well. No, nothing to add from my position.

[Unidentified Analyst:]

Just on point of partnering or standalone?

[Simon Moroney:]

Yes. At this stage, there is interest of course in this approach in CD38 antibodies in general. What we’ve found is that based on our partnering discussions in multiple myeloma over the last whatever 18 months or so, I think their community at large recognizes that that’s a very competitive space. And that certainly put some of the partners that we spoke to off, but we would never rule out the opportunity to do a partnering deal if the terms and conditions are right for us. The Chinese deal with I-Mab I think is a brilliant one. They are a fantastic partner, a real up and coming company in a geography where we are clearly not going to play a role on our own. So that’s I think an absolute win-win deal and a nice example of those kinds of things we may try and do in the future. So it really depends on the opportunity that comes along [Indiscernible] but we wouldn’t exclude it.

[Unidentified Analyst:]

Thank you.

[Operator:]

[Operator Instructions] We have no further questions coming through. So I will now hand back over to Dr. Simon Moroney to wrap up today’s call.

[Simon Moroney:]

Thank you. And to wrap up, we’re well on track to achieving or exceeding our goals for this year. And the big picture, the company is in inflection point as the late stage development of MOR208 takes us ever closer to being a commercial entity with our own sales organization in the U.S. With MOR208 based on all the data we’ve seen so far we believe we have a very promising drug candidate. We very much look forward to the upcoming ASH conference where we’ll present the latest data in detail. We continue to work diligently on the setup of our U.S. commercial capabilities, assuming smooth progress on both the developments and regulatory fronts. We hope to be on the market in mid-2020 subject of course the regulatory approval. Our other programs are also making good progress and we believe they have the potential to further strengthen our overall product offering. We’re in good financial shape to continue our plans during the remainder of the year and beyond. And finally as a reminder, we look forward to your participation either in person or via the webcast at our Investor and Analyst event on December of 5th of this year, 10 o’clock Eastern Standard Time in New York.

[Alexandra Goller:]

That concludes the call. If any of you would like to follow up, we are in the office for the remainder to the day. Thank you for your participation on the call and good bye.

[Operator:]

Ladies and gentlemen, the conference is now concluded and you may disconnect your telephone. Thank you for joining. And have a pleasant day. Good bye