Arvinas - Earnings Call - Q1 2025

Executive Summary

• Q1 2025 delivered a major upside surprise on revenue and EPS driven by accounting impacts from reprioritizing the vepdegestrant program: revenue was $188.8M and diluted EPS was $1.14, far above consensus; management explained the revenue step-up reflects a higher percent-complete under the Pfizer collaboration after removing two Phase 3 combo trials, not underlying commercial sales.
• Arvinas and Pfizer will seek global approvals for vepdegestrant as second-line monotherapy in ESR1-mutant ER+/HER2- mBC; VERITAC-2 met the ESR1-mutant hazard-ratio goal and full data will be presented at ASCO, with an NDA targeted for 2H 2025; two planned Phase 3 combo trials were removed from the joint plan.
• A company-wide restructuring (≈33% workforce reduction) and portfolio reprioritization extend cash runway into 2H 2028; management targets ≈$80M annual cost savings and ~$500M savings/avoidance over 3 years, with ~$10M one-time severance expected in Q2.
• Pipeline advanced: first-in-human ARV-102 (LRRK2) showed ≥50% CSF LRRK2 degradation and good tolerability; KRAS G12D degrader ARV-806 received FDA safe-to-proceed (Phase 1 in 2H 2025); ARV-393 posted strong preclinical combo data in lymphoma.

What Went Well and What Went Wrong

What Went Well

• First-ever positive pivotal PROTAC data: “we have a high conviction that vepdegestrant can be highly competitive as a monotherapy… in the ESR1 mutant setting” and are “on track to submit a regulatory filing”.
• Accounting-driven outperformance: Revenue increased by $163.5M YoY to $188.8M as collaboration revenue recognized stepped up after budget reductions from removing Phase 3 combos; drove operating income of $71.4M and net income of $82.9M.
• Neuroscience validation: ARV-102 achieved brain penetration and ≥50% CSF LRRK2 reduction in humans; management emphasized differentiated biology versus inhibitors and ongoing PD patient SAD dosing.

What Went Wrong

• Combination strategy reset: Both first-line and second-line Phase 3 vepdegestrant combination trials were removed from the joint plan, reflecting evolving treatment landscape, external data and capital allocation constraints.
• Cost actions reflect funding environment: ~33% workforce reduction and ~$10M severance underscore pressure to extend runway; restructuring savings only fully realized by Q4 2025.
• Revenue quality and predictability: Q1 strength was largely a non-recurring accounting impact (percent-complete denominator reduction), not commercial traction; sequential modeling requires caution.

Transcript

Operator (participant)

It is now my pleasure to turn today's call over to Arvinas, Vice President of Investor Relations, Jeff Boyle. Please go ahead.

Jeff Boyle (VP of Investor Relations)

Thank you, and good morning, everyone. Thanks for joining us. Earlier today, we issued a press release with our First Quarter 2025 Financial Results, which is available in the Investor and Media section of our website at arvinas.com. Joining the call today are John Houston, Arvinas' Chief Executive Officer, President and Chairperson, Noah Berkowitz, our Chief Medical Officer, and Andrew Saik, our Chief Financial Officer. Our Chief Scientific Officer, Angela Cacace, was scheduled to join us this morning but had an unanticipated personal event and will not be able to. Before we begin the call, I'll remind you that today's discussion contains forward-looking statements that involve risks, uncertainties, and assumptions. These risks and uncertainties are outlined in today's press release and in the company's recent filings with the Securities and Exchange Commission, which I urge you to read.

Our actual results may differ materially from what is discussed on today's call. I will now turn the call over to John.

John Houston (CEO, President, and Chairperson)

Thanks, Jeff. Good morning, everyone, and thank you for joining us today. As you saw in our earnings release this morning, we have reached an important moment in Arvinas' progress as a company. We recently shared the first-ever positive pivotal data for a PROTAC degrader, vepdegestrant, which we are moving towards filing and registration. In addition, we continue making great progress with our pipeline and shared exciting first-in-human data for ARV-102, our LRRK2 degrader, and excellent preclinical combination data for ARV-393, our BCL6 degrader in hematology. We also recently received a safety proceed from the FDA for ARV-806, our KRAS G12D degrader. We will discuss each of those items on the call today. Noah will review the clinical progress for vepdegestrant, or VEGDEG, and for ARV-102. He will also then review our recent preclinical combination data for ARV-393 and provide an update on ARV-806.

Finally, Andrew will provide a financial overview, including our capital allocation priorities and updated cash runway guidance. However, before we get into our data updates, I'd like to cover three important topics upfront. First, we are making excellent progress towards our filing and registrational plans for vepdegestrant in the second-line plus ESR1 mutant breast cancer. Based on the strong data from the VERITAC-2 study, we have a high conviction that vepdegestrant has the potential to be a best-in-class monotherapy treatment for patients in a second-line ESR1 mutant setting. We are on track to submit a regulatory filing with health authorities in the coming months. We believe there is an attractive opportunity for vepdegestrant as a second-line plus ESR1 mutant treatment in metastatic breast cancer, and we will discuss this opportunity in greater detail after our ASCO presentation in June.

Secondly, we have aligned with Pfizer on the removal of the two phase III combination trials from our joint development plan that were planned for this year. The first of these trials was a combination with a CDK4/6 inhibitor in the second-line setting. Based on recent discussions with health authorities and our observations from other trials involving biomarker-selected populations, we believe therapies will be restricted to patients with ESR1 mutations in the second-line plus setting. With this in mind, we have removed the second-line ITT combination trial, which was planned to initiate in 2025 from our joint development plan. The second trial was the first-line combination trial with Ibrance, Pfizer's CDK4/6 inhibitor, which was also planned to initiate in 2025.

After reviewing the totality of emerging information, including external data results, the evolving treatment landscape in metastatic breast cancer, and long-term capital allocation, we have aligned with Pfizer to remove this first-line combination study from our joint development plan as well. We and Pfizer will continue to evaluate our ongoing combination studies in the second-line plus setting and generate valuable data in metastatic breast cancer to inform our path forward. In addition, Pfizer is adding a vepdegestrant combo cohort to their ongoing phase I clinical trial with their investigational CDK4/6 inhibitor. This trial will be operationalized and funded solely by Pfizer. As these trials complete, we will make data-driven decisions about whether further investment in each of these combinations is warranted. I look forward to sharing additional details in the coming months as our trials continue. The third major topic is our company-wide cost reduction effort.

The recent challenges in the capital markets are prompting us to extend our cash runway and ensure our programs reach data milestones before additional capital is needed. An important step in this process is maximizing our efficiency and reducing our operating expenses wherever possible. We have implemented a restructuring that includes a workforce reduction of approximately one-third of the company, portfolio reprioritization, and overall cost reductions of approximately $80 million annually on a full-year runway basis. Although difficult, the workforce reduction, which will result in streamlined operations across the entire organization, is a prudent decision that we believe will appropriately size the company for future success. We have also reprioritized our research portfolio to focus on assets that have the greatest potential to deliver the most value for patients, physicians, and shareholders.

Our clinical programs, ARV-102 in neurodegeneration and ARV-393 in hematology, remain on track to deliver important clinical data later this year. Overall, these steps will result in a combination of cost savings and cost avoidance of approximately $500 million over the next three years. The net result of these actions is a change in our guidance to extend our cash runway into the second half of 2028. We believe these significant cost savings and our refined capital allocation strategy, in addition to our strong balance sheet, will allow us to advance our early development portfolio in a timely and efficient manner, as well as ensuring a financially disciplined approach to commercial readiness. Before I continue, I do want to thank all the talented employees who are directly impacted by this decision.

I'm proud of the progress we have made together and want to acknowledge their contributions and commitment to discovering and developing new treatment options for patients with life-altering diseases. We wish the best for these colleagues as they transition to new opportunities. I also want to thank the employees who are continuing the journey with us at Arvinas, as each of them will be instrumental in helping us achieve the ambitious goals we have laid out for the company. I'll now turn the call over to the team to review our recent data and the details from the quarter. I'll return at the end of the call to review the milestones that we anticipate for the remainder of 2025. For now, I'll turn the call over to Noah.

Noah Berkowitz (CMO)

Thanks, John, and good morning, everyone. Together with Pfizer, we were pleased to announce positive phase III results from the VERITAC-2 trial earlier in the first quarter. These data, the first from a pivotal trial with a PROTAC degrader, represent an exciting and validating step forward for our platform. As John mentioned, we are excited to announce that data from the VERITAC-2 trial were selected for a late-breaking oral presentation at the American Society of Clinical Oncology, or ASCO, meeting in late May, and will also be featured in the ASCO press program. The VERITAC-2 abstract has also been selected for inclusion in the 2025 Best of ASCO program in July. This program is important. It's run by ASCO to increase access to clinically impactful research for those who are unable to attend the annual meeting.

Given our plans to present the full data set at ASCO, which imposes an embargo on the presentation, I will only be providing commentary on the information previously disclosed in the top-line data release. In patients with ESR1 mutant tumors, vepdegestrant exceeded the pre-specified hazard ratio of 0.6 and demonstrated a clinically meaningful improvement in progression-free survival over fulvestrant. Additionally, vepdegestrant continued to demonstrate a safety and tolerability profile consistent with our previous studies. We believe vepdegestrant has a best-in-class profile, and our plans to seek global regulatory approvals remain on track. While we are no longer planning new registrational trials for vepdegestrant, we will continue to generate valuable data in our ongoing combination trials, and we welcome Pfizer's addition of vepdegestrant in combination with their CDK4/6 inhibitor to their ongoing phase I trial. I'll now turn to our most advanced neuroscience program.

We have designed investigational oral PROTAC degraders to cross the blood-brain barrier and selectively degrade leucine-rich repeat kinase 2, or LRRK2. LRRK2 is a large multi-domain scaffolding kinase that plays a critical role in effective endolysosomal trafficking. Unlike traditional small molecule inhibitors that only block LRRK2's kinase activity, LRRK2 degraders eliminate the pathological scaffolding function, the GTPase activity, and the kinase activity of LRRK2. ARV-102 is our lead LRRK2 degrader. We believe our LRRK2 degraders are particularly well-positioned to be evaluated in two diseases: Parkinson's disease, or PD, and progressive supranuclear palsy, or PSP. Familial and idiopathic Parkinson's disease have been associated with LRRK2 on the basis of genetics and models of lysosomal dysfunction. PSP disease severity is associated with LRRK2 genetic findings. Additionally, we have published data associating the tau pathology of PSP with LRRK2-mediated endolysosomal dysfunction.

Previously, we have shared preclinical data demonstrating ARV-102's superior target engagement, enhanced potency, and lysosomal pathway engagement when compared to LRRK2 inhibitors. In non-human primates, ARV-102 crossed the blood-brain barrier where it achieved LRRK2-targeted protein degradation in deep brain regions and reduced LRRK2 protein as well as neuroinflammatory biomarkers in cerebrospinal fluid, or CSF. I am now pleased to share with you that we have observed a similar pattern of activity in our first-in-human phase I clinical trial in healthy volunteers. These data were presented last month at ADPD. Our trial evaluated single doses of ARV-102 ranging from 10-200 milligrams and multiple doses ranging from 10 mg-80 mg. We met our objective of 50% LRRK2 reduction in CSF after a single oral dose of at least 60 mg and once-daily repeated oral doses of at least 20 mg. This indicates substantial central LRRK2 protein degradation.

In the phase I clinical trial, ARV-102 was safe and well-tolerated, with no serious adverse events or discontinuations reported after single or multiple doses. ARV-102 also demonstrated dose-dependent median reductions in LRRK2 protein levels compared to baseline in peripheral blood mononuclear cells, confirming target engagement in the peripheral compartment. Taken together, pharmacodynamic changes of LRRK2 reduction in the CSF, reduced biomarker levels in the periphery, and an acceptable safety and tolerability profile support further study of LRRK2 degraders in PD and PSP. That further work is ongoing. Dosing of the phase I single ascending dose cohort in patients with Parkinson's has already begun, and the multiple ascending dose cohort will begin in the second half of the year. We anticipate providing an update on PK, PD safety and tolerability from the phase I SAD cohort in patients with PD later in the year.

The data I've shared demonstrate that we can make orally bioavailable PROTACs that are brain-penetrant. While our lead program is focused on LRRK2 for PSP and PD, our discovery portfolio focuses on additional targets that may be relevant for Huntington's and Alzheimer's disease. We look forward to sharing updates on these in the coming months and years. Turning back to oncology, ARV-393 is our investigational oral PROTAC designed to degrade BCL6, or B-cell lymphoma 6 protein. BCL6 is a transcription factor, a master regulator of multiple cellular processes during B-cell development, including proliferation, survival, and apoptosis. Altered BCL6 activity has been implicated as an oncogenic driver in several subtypes of non-Hodgkin lymphoma, making it a rational therapeutic target. PROTAC-mediated degradation has the potential to overcome the historically undruggable nature of BCL6.

ARV-393 potently and rapidly degrades BCL6 protein with iterative activity, which is critical to overcoming BCL6's rapid resynthesis rate and its sustaining anti-tumor activity. In 2024, we shared preclinical data demonstrating that ARV-393 drives tumor regressions in multiple in vivo models of B-cell-driven non-Hodgkin lymphoma, including large B-cell lymphoma. We are enrolling patients with non-Hodgkin lymphoma in a phase I clinical trial and are on track to share initial data by the end of the year. At AACR this past week, we presented new preclinical in vivo data for ARV-393 in combination with standard of care biologics and chemotherapy, as well as oral investigational small molecule inhibitors. These new data highlight the potential of ARV-393 to drive synergistic anti-tumor activity across multiple aggressive large B-cell lymphoma xenograft models. ARV-393 enhanced tumor regressions when combined with current standards of care, including R-CHOP and various biologics.

Notably, ARV-393 monotherapy upregulated CD20 expression, providing mechanistic rationale for synergy with anti-CD20 therapies such as rituximab. Additionally, ARV-393 demonstrated enhanced tumor regressions when paired with targeted small molecule inhibitors of BCL2, EZH2, and BTK, key oncogenic partners of BCL6. These results suggest that ARV-393 may enable highly effective chemotherapy-free regimens, whether in combination with biologics or as part of an all-oral therapeutic strategy. We will present new preclinical data in a patient-derived model of angioimmunoblastic T-cell lymphoma, or AITL, at the European Hematology Association conference in June of this year. This is an orphan indication with high unmet and limited treatment options. We believe this will be the first preclinical data to show human AITL dependency on BCL6. We also plan to present preclinical combination data with an emerging standard of care bispecific antibody in a model of aggressive large B-cell lymphoma in the second half of the year.

Finally, we filed an IND for our KRAS G12D degrader, ARV-806, and recently received a safe-to-proceed letter from the FDA. We anticipate beginning a phase I trial in patients with solid tumors harboring KRAS G12D mutations in the second half of this year. KRAS is a driver oncogene in several major tumor types and is associated with poor prognosis and resistance to standards of care. Our degrader has demonstrated high potency and differentiation from inhibitors and other degraders currently in the clinic. In addition to selectivity in the preclinical setting, ARV-806 demonstrates robust anti-tumor activity through dose-responsive degradation of KRAS G12D in mutated cancers, including pancreatic and colorectal cancers. In preclinical studies, our PROTAC degrader has demonstrated the ability to bind both the active and inactive states of KRAS G12D. ARV-806 will eliminate, rather than inhibit, KRAS G12D with in vitro potency.

That potency can be 30-fold greater than inhibitors and degraders currently in the clinic. In totality, these preclinical data give us confidence, and we intend to show differential biology of our KRAS degraders at a conference later this year. I look forward to updating you on our progress in the coming months. With that, I'll turn the call over to Andrew to review our quarterly financial information.

Andrew Saik (CFO and Treasurer)

Thanks, Noah, and good morning, everyone. I'm pleased to share financial highlights for the first quarter ended March 31st, 2025. As a reminder, detailed financial results for the first quarter are included in the press release we issued this morning. Let me start with the financial implications of the corporate restructuring and the removal of the two phase III combination trials from the vepdegestrant development plan.

The corporate restructuring and associated workforce reduction were difficult decisions to make and are impacting many talented employees. They were, however, necessary to meet our goals of reducing our cost structure and extending our cash runway to support our promising pipeline. The reductions were focused on reducing internal costs without having an impact on clinical stage programs that will drive value over the next several years. We estimate the restructuring will result in a reduction of our ongoing infrastructure costs of approximately $80 million annually, with savings expected to begin to be fully realized in the fourth quarter of 2025. In addition, we anticipate cost avoidance of approximately $350 million-$400 million over the next three to five years as a result of the removal of the two phase III combination trials from the vepdegestrant development plan.

These actions will allow us to continue progressing our promising pipeline without the need for a near-term cash infusion and maintain a strong financial position with a cash runway now into the second half of 2028. I'll now briefly touch on some key financial highlights for the first quarter of 2025. At the end of the first quarter, we had approximately $954 million in cash, cash equivalents, and marketable securities on the balance sheet, compared with $1.04 billion for the year-end 2024. Revenue for the three months ended March 31, 2025, totaled $188.8 million, compared to $25.3 million for the three months ended March 31st, 2024. The increase in revenue was primarily due to the accounting impact of the reduction in the vepdegestrant collaboration agreement's program budget due to the removal of the first and second-line phase III trials from the development plan.

The revenue recognition accounting for this agreement uses the percentage of completion method. As the budgeted costs serve as a denominator in the percent complete calculation, a reduction in that budget compared to the same actual incurred costs resulted in a higher % completion and therefore higher revenue recognized in the first quarter. General and administrative expenses were $26.6 million for the first quarter, compared to $24.3 million for the same period of 2024. Research and development expenses were $90.8 million in the first quarter, compared to $84.3 million for the same period of 2024. The increase of $6.5 million was primarily driven by a one-time inventory charge of $10 million for vepdegestrant, partially offset by lower-than-expected vepdegestrant development costs and an increase in the LRRK2 program of $5.2 million, offset by a reduction in non-specific research and personnel expenses of $3.6 million.

As I mentioned earlier, taking into account the anticipated impact of the restructuring, the reprioritization of the research portfolio and vepdegestrant development plan, and the anticipated launch of vepdegestrant, our updated cash runway guidance is now into the second half of 2028. We believe our efforts are focused on areas that will maximize shareholder value as we move forward, as we move towards important catalysts in the coming months. With that, I'll turn the call back over to John for closing remarks.

John Houston (CEO, President, and Chairperson)

Thanks, Andrew. These actions should offer significant clarity around our focus over the next few years, and it will allow us to hit a number of key data inflection points from our early development programs, as well as the potential commercial launch of vepdegestrant with our partner, Pfizer.

As we progress through 2025, there will also be many opportunities to showcase why our belief in our portfolio is strong. These include data from the VERITAC-2 trial and the late-breaking oral presentation at ASCO in June, the first phase I data for our LRRK2 degrader, ARV-102, in patients with Parkinson's disease, and first-in-human phase I data for our BCL6 degrader, ARV-393. We believe our progress will continue to demonstrate the potential of our PROTAC degraders to add meaningful value for patients, their caregivers, and our shareholders. As we embark on this new chapter, I want to thank you for your continued support. With that, I'll turn the call over to Jeff to begin the Q&A portion of the call.

Jeff Boyle (VP of Investor Relations)

Thanks, John. Before I turn the call over to the operator, I do want to remind you that in order to comply with the ASCO embargo policy, we aren't able to answer questions about the VERITAC-2 data beyond the top-line results reported in our press release on March 11. With that, operator, will you please open up the queue?

Operator (participant)

At this time, I would like to remind everyone that in order to ask a question, you may press star then the number one on your telephone keypad. We will pause for just a moment to compile the Q&A roster. Okay, your first question comes from the line of Michael Schmidt with Guggenheim. Please go ahead.

Michael Schmidt (Senior Biotech Analyst & Senior Managing Director)

Hey, guys. Good morning. Thanks for taking our questions. I just had a few follow-up questions on vepdegestrant. Maybe just help us understand a little bit more on how much of the decision to not advance the CDK4/6 inhibitor combinations was driven by emerging data on the class overall versus specifically the VERITAC-2 result. In the second-line setting, how do you think vepdegestrant will be positioned relative to other oral SERDs and help us understand how much you need to invest in a commercial infrastructure as you potentially may be co-commercializing the product in the U.S. next year? Thanks so much.

John Houston (CEO, President, and Chairperson)

Thanks. Great question. The first question in relation to is this a decision based on specific information related to vepdegestrant or the class? I think we've had a general discussion with Pfizer as we, as you see, Orserdu in the market as an ESR1 mutant-only drug.

You saw some of the data coming from Immunostrand, which also had a very strong ESR1 mutant-only profile. Clearly, the data we had for Verityk, which we can't discuss in detail, but we have already told you it has strong ESR1 mutant data, but we didn't hit ITT. The general discussion we had with Pfizer was around whether or not in that second-line setting, would the drugs really just be ESR1 mutant-only? We came to the conclusion that's likely to be the case. Therefore, the design of the study that we had was for an ITT combination with a CDK4/6, so we decided we would drop that. I think that's, I think, a logical rationale for dropping that particular study based on the emerging data in the second-line setting of whether or not you're going to have just the ESR1 mutant-only profile overall.

In terms of positioning vepdegestrant, I think, as Noah said, I think, and again, you'll see the data at ASCO, but we believe we've got the opportunity to be the best in class of the degraders in that second-line plus setting. With that, our positioning would be, I think, very strong in terms of our overall data set in terms of tolerability and overall activity. We have very great confidence of actually being, if we get approval and get to the point of launch once we get through the regulatory hurdles, I think we've been in a very strong position for positioning vepdegestrant in that marketplace. I think the third question was commercial investment. Oh, yeah, the commercial investment. Now, clearly, it's a 50/50 [co-co] with Pfizer. We are the lead for that. What we've done is done a very kind of prudent approach to commercial build.

It has been very small. It's all going to be data-driven and the point of approval. Yes, there will be a kind of significant back-end recruitment to get a sales force in place. Right now, our commercial footprint is really, really very small. We also have the ability to have ongoing discussions with Pfizer about the best way to take the molecule forward in a commercial setting, both in the U.S. and commercially. We will be able to update all of you on that as we complete those discussions.

Operator (participant)

Your next question comes from the line of Andrew Berens with Leerink Partners. Please go ahead.

Andrew Berens (Senior Research Analyst)

Hi, thanks. I'm sure you guys have had to make some difficult decisions over the last few weeks. My question is about the future neuro efforts in LRRK2. You did give some color and prepared comments about the role of LRRK2 in neuro diseases, but wondering how much LRRK2 degradation you think is going to be clinically relevant and whether these would eventually be combination approaches.

John Houston (CEO, President, and Chairperson)

I'll hand over to Noah for a specific answer to that. We're very excited by the data we see so far with LRRK2, our first neurodegeneration asset, the first PROTAC in this space, and the first to show brain penetrance as well. The profile we're seeing initially is very exciting. Noah, do you want to add some more color to that?

Noah Berkowitz (CMO)

Sure. Andrew, thanks for the interest in what's a very exciting first neurodegeneration-directed PROTAC for our company. Indeed, we think that there are few opportunities for us to develop this year.

As I outlined earlier in the call, that's because there's both genetics that support it and then also underlying biology in these two diseases that were highlighted, PSP and Parkinson's disease. Your question around how much degradation we want to achieve, the goal right now had been and remains to achieve more than 50% degradation. We don't want to completely eliminate it because there's obviously functional, there's purpose to this protein in terms of endolysosomal trafficking. When there's overexpression, when there's increased activity, you get mistrafficking. That's tightly tied to the pathology of these diseases. We know that on average, Parkinson's disease patients have twice the level of LRRK2 in their CSF compared to age-matched controls. We think it's prudent, therefore, to target something in the 50% range.

So far, we've seen in healthy volunteers that we can achieve that as well as achieve appropriate downstream signaling. We know that it's on target. We think on mechanism. The next thing is to really look at the data from the PD patients in the studies that are ongoing. Okay. Do you think it'll be a combination approach eventually? When you say combination, right now, there really aren't disease-altering drugs that are standard of care. It's just a this may be on top of L-DOPA type of treatment for patients. This is disease-altering. I'm not sure what you mean by combinations.

Andrew Berens (Senior Research Analyst)

Right. I was asking whether you think it'll be on top of standard of care currently.

Noah Berkowitz (CMO)

Yeah, yeah, yeah. On top of standard of care, for sure.

Andrew Berens (Senior Research Analyst)

Yep. Okay. Thank you. Thank you. Yeah.

Operator (participant)

Your next question comes from the line of Ellie Merle with UBS. Please go ahead.

Hi, this is Joseph asking for Ellie. Thanks for taking our question. What is your view on the market size of vepdegestrant in the second-line plus monotherapy setting alone? I have a follow-up.

John Houston (CEO, President, and Chairperson)

You have a follow-up? Do you want to ask it now or?

Sure. How do you think about the cadence of cost reductions from a modeling perspective and in terms of vepdegestrant monotherapy after the VERITAC-2 data? Can you help us think about what milestones you might be entitled to from Pfizer on approval in this setting?

Sure. The first question was related to the market size. Yeah. We've been thinking there's a really significant opportunity in that second-line plus setting. There are 40,000 new patients in the second-line setting every year.

Of that, 40% are ESR1 mutants only, and that's our estimate. Some others estimate around 50%. That's 25,000 new patients in the second-line third space each year. Drugs, as you know, like Orserdu were out in that space, they're probably capturing about a third of that. There's a really significant opportunity there for a good profile of a degrader like vepdegestrant to hopefully capture quite a significant part of that market. We're very excited about the opportunity in that space. The second question, Andrew, I think it was more related to kind of a financial question.

Andrew Saik (CFO and Treasurer)

Yeah, sure. With regard to the restructuring, notifications to employees have gone out this week. The restructuring has begun. As with all restructurings, there's a combination of employee reduction and cost control.

I stated in my prepared remarks that we would have the full impact of the reductions by Q4. We'll obviously start seeing benefit prior to that, right? We're offering our colleagues severance packages that will be paid out in Q2. You won't see a charge in our Q1 financial statements as the notifications went out in Q2. It was a subsequent event for the purposes of our financial statements in the first quarter. For modeling purposes, you can assume that you'll start seeing savings relatively quickly. Q3 will have a significant amount of savings and full impact in the fourth quarter.

Any color?

Operator (participant)

Your next question comes from the line of Derek Archila with Wells Fargo. Please go ahead.

Good morning. This is Simone on for Derek. Thank you for taking our questions. I just had two.

I know you said that for the LRRK2 degrader, you could see 50% degradation. But how exactly derisked is the target, and what can we expect from the SAD cohort in PD patients in 2024 or 2025?

John Houston (CEO, President, and Chairperson)

Noah, do you want to take that?

Noah Berkowitz (CMO)

Sure. I'm not sure I caught the second part, but to the first one. Yeah, to do with SAD, right, how derisked. In general, when you say derisked, I guess that could focus us on what are some of the liabilities associated with that target, right? We do know that there are findings with type 2 pneumocyte enlargement or proliferation that could be associated with collagen deposition in the lung. We also know that there's some vascularization seen within the—and these are all with inhibitors, right? Vascularization seen in the proximal tubule in the kidney.

There's some typing going on in the background. Whoever's doing that, if you can pause, please. Thank you. That's known, and that's been a challenge for inhibitors. For reasons that we have our own hypotheses, and it's probably too much to go into on the call right now, we have seen minimal evidence for the type 2 pneumocyte enlargement. We have associated the much-reduced pneumocyte proliferation that we observe with our degrader, rather than what's observed with inhibitors. We associate that with a different profile of protein deposition in the alveoli. We think that we have a differentiated profile when compared to inhibitors. We're tracking patients in the meantime in our study. We look at diffusion capacity in the lung, and we're measuring renal function on an ongoing basis. So far, things have been safe to proceed.

In terms of your second question, that had to do with the SAD cohort expectation, but I'm not sure what you meant by the expectation there in terms of timing or results. Results. What type of results can we expect to see? What could we see? As I mentioned earlier, PD patients have twice the level of LRRK2 protein levels in the CSF and presumably in deep brain regions compared to healthy volunteers. We would expect in our SAD and our MAD studies, we can recapitulate what we saw in healthy volunteers. We could see now at higher baseline LRRK2 levels degradation that's achieving greater than 50% reduction, which is our target.

Then on top of that, because they also have neuroinflammation and other signs of neuronal fragility or that neuronal death, we can capture some signals of this with 28 days of treatment in the MAD study. We are looking at biomarkers, and we would hope that we can see that signal in the MAD.

Thank you.

Your next question comes from the line of Akash Iwari with Jefferies. Please go ahead.

Hey, this is Manoj in for Akash. Just one question. Will you need any overall surveillance data trend for vepdegestrant regulatory submission, or what's the expected timeline for market entry there? Just one more on, are you considering any partnership for neuro programs there? Thanks.

Going back to that—I'm sorry, just going back to that first question, could you repeat that in terms of regulatory funding?

Any overall surveillance trend for regulatory submission?

Oral what?

Overall survival data trend.

Oh, overall survival data. I'm sorry. Yeah. Overall, we can't really talk about our data beyond what has been shared in our top-line results. We recommend that you join us at ASCO to hear the presentation. Certainly, in answer to your question about how that impacts submissions, ultimately, regulators generally want to see that there are no adverse overall survival findings when one looks at EFS, which is a surrogate for OS. It's something that is there. There just isn't any companies don't power for OS when they submit.

John Houston (CEO, President, and Chairperson)

The second question you asked about neuroscience and partnering. Clearly, as we move forward in the space, both in PSP and Parkinson's disease, we've always said that this would be an area that could lend itself to having a strategic partner.

These would end up being certainly in the Parkinson's area, quite significant-sized trials. Right now, we're in a good position to be able to move our program forward to significant data inflection points, and we'll review potential partners at that point.

Yep. Thanks.

Operator (participant)

Your next question comes from the line of Jonathan Miller with Evercore ISI. Please go ahead.

Jonathan Miller (Managing Director of Biotech & Pharma Equity Research)

Hi, guys. Thanks for taking my question. I'll do one more on vepdegestrant, maybe since we haven't spoken about the first-line potential there. You were a little more vague about the rationales for not proceeding with the atirmo phase III. Is your expectation that next-gen estrogen receptor-directed therapies are not going to be relevant in first-line in general, or is this more to do with vepdegestrant's profile, or more to do with atirmo's profile, or the data that you've seen in the combination so far?

Maybe I guess I'll start with that. Then secondly, on the BCL6 program, how much data in NHL patients can we expect to see in the next handful of releases, and would you expect to be able to show ORRs or at least meaningful efficacy data that will allow us to comp to other recent NHL datasets?

John Houston (CEO, President, and Chairperson)

Yeah. Great questions. I'll take the first one, and Noah can take the second one. Certainly, big decisions like this around going forward or not with a first-line study, they don't happen overnight. I've been in lots of discussion with our colleagues at Pfizer. I suppose the genesis of the final decision was Pfizer looking at basically our press release from our VERITAC-2 data, where we say that we've hit ESR1 mutant only, but we haven't hit ITT.

Now, without going into the data, if you just take that as the opening gambit, it probably started a conversation around, do degraders work against wild type, either in the second-line setting, which is a reasonable question. I think Pfizer then took it to the next level, which is, do they work in the first-line setting? I'll give you their view. We believe they do. We believe that vepdegestrant will work very effectively in the front-line setting. For several years, we've talked about the difference between first-line and second-line disease. In the second-line disease, probably around 40% of the patients have ESR1 mutations that basically give them an endocrine sensitivity. And around 60% of the patients have tumors that have wild type and other driving mutations that are largely endocrine insensitive.

Our hope with the second-line trial was that we'd be able to capture whatever endocrine-sensitive group of tumors that are in that broader ITT net. In reality, what you saw is that we missed the ITT, which is telling you that there's not as many endocrine-sensitive tumors in that space. However, in the first-line setting, we believe it's a very different story. We believe that maybe ESR1 mutations represent maybe only 5% of what you see in the first-line setting. The vast majority of the tumors would be wild type. Most significantly, we believe that those would be endocrine-sensitive and therefore available to be tackled by a drug like vepdegestrant or Orserdu. That's our belief. It still is. We're in a partnership with Pfizer.

I think they want to have more mature data, not just from our internal programs and datasets, but also the external world. They want to see what's going to happen with Giredestrant, the Roche degrader, which is in the first line. If that comes out and it's positive in the first-line setting, that's going to be a great signal for all the therapies. Camizestrant, as well. Again, interesting data coming out from SERENA-6. More mature data there could also influence it. Of course, as our data matures overall, I think Pfizer also wants to see our current atirmociclib vep combo mature in terms of that dataset also. There are a number of different things that Pfizer would like to see in terms of maturity of data, both our internal data and the external data. As I say, we're in a partnership.

Good partners can look at two different datasets and two different scenarios and maybe come out with different options. We are going along with this decision from the team to opt out of the first-line study. We move on. Basically, we've taken the money that was targeted for that study that's now out of the budget. It allows us to plan to fund the rest of our portfolio, which is a very exciting portfolio in a more aggressive way. As data matures, if Pfizer comes back to us and says, "They actually do want to do a first-line study," we could assess that at a later date. Right now, that is not in our plan, and we move on. BCL6.

Noah Berkowitz (CMO)

Regarding BCL6, we're early in the dose escalation, but we've shared that we expect to share results later in the year. I don't think we can offer more guidance than that right now. Think of it as several cohorts.

Jonathan Miller (Managing Director of Biotech & Pharma Equity Research)

Do you expect to be?

Operator (participant)

Sorry for the—

Jonathan Miller (Managing Director of Biotech & Pharma Equity Research)

Did you hear that?

Operator (participant)

—moment.

Noah Berkowitz (CMO)

Yeah. Do we expect we would share where we are in terms of safety and efficacy within any data that we may come up with?

Jonathan Miller (Managing Director of Biotech & Pharma Equity Research)

Do you expect to be in the active dosing range? Would you expect to be reaching dose levels that are where you want them to be from the perspective of the level of degradation you're expecting to drive efficacy?

Noah Berkowitz (CMO)

We may be. Yes.

Jonathan Miller (Managing Director of Biotech & Pharma Equity Research)

All right. Thanks so much.

Noah Berkowitz (CMO)

Sure.

Operator (participant)

Your next question comes from the line of Tazeen Ahmad with Bank of America. Please go ahead.

Tazeen Ahmad (Managing Director)

Okay. I have a few questions as well.

I think a few minutes ago, you had talked about the market opportunity for these VERITAC-2 patients that were positive in this study. You mentioned that for Orserdu, one-third of the 25,000 patients are on that drug. Does your market data give you any feedback about what the profile of those one-third of patients are? Is there anything different about the other two-thirds that could make vepdegestrant potentially more attractive for patients? Can you just provide any color on the remaining Pfizer milestones you expect to realize from here on out? Are there any specifically related to the KAT6 collaboration? The last one, I'm sorry if I missed this, but are you still planning on exploring vepdegestrant in first-line metastatic breast? Thanks.

John Houston (CEO, President, and Chairperson)

First-line? First-line. Oh, first-line. Yeah.

First of all, yeah, in terms of the patient population in the second-line, yeah, we think based on our assessments and some of the other external data, 40,000 new patients in that second-line setting, which we believe, as I said before, 40% are ESR1 mutant. In that second-line plus overall setting, that are ESR1 mutant only, that's probably 16,000-25,000 patients that are then available. I think Orserdu has done remarkably well to capture a significant number of those patients. I think there's a growing opportunity in that market to have more effective drugs in there. I think it's a growing space. Yeah, we think, as I said before, a really significant opportunity. We also believe there's a very good opportunity to have a very targeted launch into that space.

There's probably around 6,000 oncologists that drive 70%-80% of the prescriptions in this space. We can also target this prescribing population, I think, very effectively. I think, yes, a really significant, exciting opportunity. As it relates to KAT6 and general milestones in Pfizer? Yeah. With regard to the Pfizer agreement, we are entitled to a milestone on first approval. I do not believe we've disclosed the exact amount of that. I won't disclose it now. We are entitled to something. I think you asked a question specifically regarding KAT6. There's certainly nothing in the contract specifically regarding KAT6. No, it would be related to the first approval, which would be obviously vepdegestrant. The final thing you asked was, I think, do you see any opportunity to test out vepdegestrant in the first-line?

My answer, I mean, clearly, the decision we've made right now with Pfizer is not to go forward in the first-line setting. We've also said that from an Arvinas perspective, we think vepdegestrant would do well in that first-line setting. Let's see how data matures over the whatever period of time the data needs to mature. As I said earlier, right now, we move on. The money that we had sequestered for that first-line study is now going to get moved to other parts of our portfolio. We are very excited about those opportunities as well.

Operator (participant)

Your next question comes from the line of Peter Lawson with Barclays. Please go ahead.

Peter Lawson (Managing Director and Biotech Equity Analyst)

Great. Thank you. Thanks for taking the questions. Just a couple of questions on the commercialization. Vepdegestrant, have you kind of worked through the size of the salesforce you need?

Your comments just around vepdegestrant in first-line, does the Pfizer partnership preclude you from going off and finding a different partner to run that first-line study? If you could walk through kind of that process of potentially rekindling for a first-line study.

Noah Berkowitz (CMO)

Yeah. Starting off with the size of the salesforce, as I mentioned, it's going to be a fairly targeted, I think, financially prudent approach that we'll be taking. Obviously, in a 50/50 setting, whatever we do, Pfizer will match in the U.S. Six thousand oncologists where we can target, which drive that 70%-80% of prescriptions. I think we're going to have an effective but appropriately sized salesforce to hit there. In terms of other partners, absolutely not. No. We're in a partnership with Pfizer. We're very pleased with the partnership we've had with Pfizer over the last years.

They've been very supportive. Good partners can also have different views. That is, right now we've got a different view about the first-line setting. We agree overall with the decision. We'll see what happens as data matures for Pfizer. As I said, right now, we take the money that we had sequestered for that, and we move it into other things in our portfolio. I think that's going to be a big value driver for Arvinas.

Peter Lawson (Managing Director and Biotech Equity Analyst)

Gotcha. Thank you. Then just on the KAT6 combination, is that under the same kind of profit share terms of agreement with Pfizer, or is that a separate entity?

John Houston (CEO, President, and Chairperson)

In one sense, yes, because vepdegestrant is everything they do with vepdegestrant, everything we do with vepdegestrant is in that partnership. KAT6 is wholly owned by Pfizer.

In that scenario, as we've talked about before, we wanted to profile vep against a whole series of different potential combinations. We're actually excited to see Pfizer putting vep into that KAT6 study. They're paying for it. If it works out well, we'll get the benefit through the vepdegestrant of that.

Peter Lawson (Managing Director and Biotech Equity Analyst)

Great. Thanks for taking the questions.

Operator (participant)

Your next question comes from the line of Paul Choi with Goldman Sachs. Please go ahead.

Paul Choi (Healthcare Equity Research Analyst)

Hi. Thank you. Good morning, everyone. Thanks for taking the question. I just want to ask if you have any sort of gating items or any remaining things to do prior to scheduling your pre-NDA meeting. Will that come presumably post-ASCO here?

Just some clarity on the color of when you plan to meet with FDA would be helpful as part of your second half of this year filing timeline. My second question is just on the LRRK2 program in Parkinson's, just sort of when the next sort of data update could potentially be expected from that program. I think the early data that you presented looked interesting and promising. Just curious sort of what timelines the next dataset might be. Thanks for taking our questions.

John Houston (CEO, President, and Chairperson)

Thank you. Noah, do you want to take a look?

Noah Berkowitz (CMO)

Sure. We have met with the FDA for the pre-NDA meeting. We feel that we are clear to move forward. That is why we have conveyed in the prepared remarks that we are moving ahead with our submission enthusiastically. Regarding LRRK2 next datasets, we have said that we will share information later this year.

Even though we said that we'll start the MAD in the second half, I'm not sure if we can squeeze in those data at any meaningful conference by the end of the year. We expect that we'll be sharing data from the SAD portion of the PD phase I. No naming at the conference yet.

Paul Choi (Healthcare Equity Research Analyst)

Okay. Thank you very much.

Your next question comes from the line of Tyler Van Buren with TD Securities. Please go ahead.

Hi. This is Frances Ong for Tyler. First question, are you still confident in Pfizer's commitment to the partnership to commercialize vepdegestrant in the second-line ESR1 mutant setting? Are you in any discussions to reevaluate the details of the partnership, such as selling the asset to Pfizer for royalties?

Then my next question is, where do you envision the KAT6 combo in the treatment paradigm could potentially serve as a backbone treatment?

John Houston (CEO, President, and Chairperson)

Yeah. Thanks for the question. Noah can take the second one. No, all of the interactions we have with Pfizer on vep and the planning for regulatory filing, the NDA, getting ready for hopefully an approval and potential launch are all full blast. The joint teams are laying out significant plans, as you'd expect, for a launch that could be at some point next year, both from a global setting and from a U.S. setting. All of that's going forward well. As I said before, we think there's a significant opportunity. In terms of the change, there's no ambiguity. There's a change there overall in terms of the broader scope of what we initially had as a collaboration with Pfizer.

When we started off, we were hoping for monotherapy first-line adjuvant, which is quite a significant opportunity. Right now, we're going to be very focused on making vep the best ESR1 mutant degrader in that second-line plus setting. I think, as I said earlier, we wait to see how data matures for Pfizer over whatever period of time. We move on. We move on in terms of making sure that we can get the best launch possible once we hopefully get an approval and develop an ESR1 mutant-only profile in that second-line, third-line opportunity. It's clear that physicians are looking for additional options in that space. We believe vep will provide that. We look forward to moving it forward. Yeah, there's no change in the game plan with Pfizer.

Noah Berkowitz (CMO)

Regarding the KAT6 question, in the prepared remarks, you've heard us mention that while there are no registration trials planned for vepdegestrant, we continue to produce data from ongoing studies. In fact, there is a new study, as it were, that will start. We're adding vepdegestrant to KAT6. I think it's well premature to project what that can lead to because it's simply a phase I study. I think it just demonstrates that we're looking to combine vepdegestrant as we march into the second-line space with other drugs to explore combinations that can bring more value to patients. We'll have to wait to see those results.

Thank you so much.

Operator (participant)

Your next question comes from the line of Kripa Devarakonda with Truist Securities. Please go ahead.

Kripa Devarakonda (VP of Biotechnology Equity Research)

Hey, guys. Thank you so much for taking my question. I have a couple of questions.

First, for ARV-393, I know you're currently enrolling phase I trial. Just wondering how easy it has been to enroll patients. You do seem to have a lot of centers open. Also, based on the recent preclinical combo data that you presented at ASCO, are you getting a better sense of where you think the drug and the combinations might fit in the landscape? Just a question on your FDA communications. With some of the changes happening at the FDA, is there any concern in terms of delayed timelines for meetings or review processes? Thank you.

John Houston (CEO, President, and Chairperson)

Yeah. I'll take the second one first, and then Noah can talk about 393. Clearly, there's a lot of external changes that we're monitoring in this space and certainly with the FDA.

From an Arvinas perspective, we have noticed no delay and no impact with our interactions with the FDA, which is great. Obviously, we're going to continue to monitor that. As we've seen in the press, some other companies have had maybe a different experience. So far, so good with us. Like I say, we'll monitor that going forward. Noah, 393.

Noah Berkowitz (CMO)

Yeah. 393. I think we could say that while the study began last year, enrollment was slow at the beginning. This is a phase I study. By nature, it's slow. It was, I think, a bit slow last year. There's a lot of enthusiasm. We see that we can generate a backlog of patients now. It's enrolling steadily.

In terms of where 393 can fit into the landscape, certainly, depending on the data that we generate, there's the possibility of it being monotherapy. We'll have to see what the overall benefit risk is as monotherapy. What we're quite enthusiastic about from the preclinical models that we've shared recently is its ability to combine with many other drugs, particularly with bispecifics, and particularly because it also seems to increase CD20 expression, which could create a real synergistic opportunity.

Kripa Devarakonda (VP of Biotechnology Equity Research)

Thank you.

Noah Berkowitz (CMO)

Sure.

Operator (participant)

Your next question comes from the line of Yigal Nochomovitz with Citigroup. Please go ahead.

Yigal Nochomovitz (Director of Biotech Equity Research)

Hi. Great. Thank you very much for taking the questions. I have three questions. The first one is, given the combo with the CDK4/6 and the vepdegestrant, have you or Pfizer produced any preclinical work that would support that combo?

Could you discuss the rationale for that combo on a scientific medical basis? Second question is, we haven't talked much about supply chain. Could you just review the structure and geographic location for the manufacturing supply chain for vepdegestrant as well as where the IP is domiciled? The last question, John, you gave a very comprehensive answer with respect to the rationale for Pfizer stopping the front-line study. I'm just wondering if the factors related to the novel, novel combo with the atirmo, as well as the potential to do or need to do a forearm study, perhaps to tease out contribution of components, was a relevant factor in that decision or not? Thank you.

John Houston (CEO, President, and Chairperson)

Thanks, Igal. The first one, did we do any preclinical work with KAT6 and vepdegestrant? I think the answer to that is no.

I think the rationale is really related to the fact that Pfizer is very excited by the profile of KAT6. I do think they see the potential of the combination with vepdegestrant enhancing potentially what they see with KAT6 and positioning vepdegestrant and KAT6 as being a really strong combination. Noah, anything you'd add to that?

Noah Berkowitz (CMO)

Yeah. Just some experience with fulvestrant that looks attractive. So that would be one of the reasons.

John Houston (CEO, President, and Chairperson)

In terms of supply chain, Pfizer is accountable for the supply of vepdegestrant. That's based in Ringaskiddy in Ireland. We haven't had any supply chain issues. I think you asked a question about where does the IP reside. That resides here with us. Yeah. With the U.S., with Arvinas. A really interesting question, Yigal, the novel, novel with the atirmo composition of components.

I'm sure that has factored into some of the thinking. The broader view I gave is maturation of data, the external environment. I'm sure that's part of the rationale that Pfizer wants to see our current atirmo vep data mature. That's in the second-line setting. They want to see what that looks like overall. I'm sure that has factored into the broader decision-making around datasets and changing landscape. Yeah, great questions. Thank you.

Yigal Nochomovitz (Director of Biotech Equity Research)

Okay. Thank you very much.

Operator (participant)

Your next question comes from the line of Evan Siderman with BMO Capital Markets. Please go ahead.

Malcolm Hoffman (Senior Biopharma Equity Research Associate)

Hi. This is Malcolm Hoffman on for Evan. Thanks for taking our question. Thinking about the LRRK2 degrader again, I know Biogen just announced today that enrollment in their phase II study is now complete with results in 2026.

I just wanted to ask how you are starting to think of the competitive positioning for your degrader versus others and what your confidence is that yours could be differentiated versus slightly more advanced programs. Thank you.

John Houston (CEO, President, and Chairperson)

Noah, do you want to take that?

Noah Berkowitz (CMO)

Sure. Yeah. So thanks. We certainly look ahead at the Biogen-Denali partnership enthusiastically. We think it's validating to some degree. Validating for an inhibitor that doesn't get brain penetration and does not even deliver significant inhibition in the brain. Therefore, with the degrader that gets significant brain penetration and can lead to more than 50% degradation, eliminating all functions of LRRK2, not just the kinase activity, we think that puts us in a very competitive spot. We are looking forward to those results. If it's successful, then I think there'll be a lot of enthusiasm for this program.

If their study is the phase III program fails, but it has some directional data that support it, there's also going to be quite significant enthusiasm. Overall, we just do not believe that inhibitors get you there. The fact that you'll see our continuous updates from our studies to see the benefits from the degrader.

Malcolm Hoffman (Senior Biopharma Equity Research Associate)

Appreciate it, guys. Thank you.

Operator (participant)

Your next question comes from the line of Li Watsek with Cantor Fitzgerald. Please go ahead.

Li Watsek (Director of Equity Research)

Hey, guys. Thanks for taking our questions. Maybe a BD strategy question. Are you open to bringing in maybe external assets just given your balance sheet? You got three earlier assets in the pipeline. Maybe talk a little bit about your conviction and development strategy there. It sounds like you're going to have some data later this year where you'll be making some decisions then.

Then second, maybe just for the KAT6 combo, when should we expect to see the data? What would be the bar that you have to hit given it's an early phase I trial? Can you clarify, is it going to be in the ESR1 mutant patients, or it's going to be in all comers? Thank you.

John Houston (CEO, President, and Chairperson)

Yeah. Noah can tackle the KAT6 and that part of it. In terms of the BD strategy, I think overall, we have always been out there looking at opportunities to supplement certainly our technology. As we go forward, if there was an asset out there that complemented our lead programs, I think we'd be open to that. Obviously, our genesis as a company has been a platform-based company. We're very proud of that. Our portfolio is replete with really exciting degraders.

Yeah, if there was a significant opportunity to get an asset that complemented that, I don't think we'd have any issue with that. If there was another subset in there, I can't remember what the subset of the question was. Yeah.

Noah Berkowitz (CMO)

Regarding KAT6, again, just to frame this study, this is a phase I study. That's just very exploratory. There are no timelines associated with it. We haven't even dosed the first patient yet. It's really shared in the spirit of that we'll continue to look for nice combinations that can be practice-informing and continue to expand the attractiveness of our already potentially best-in-class Vepdegestrant in the second-line setting. That would be the case with this KAT6 combination also. It's Pfizer's wholly owned drug. We don't call the shots there in any way.

We're just looking to see what we can generate with that combo. Right now, the thought is for all comers.

Li Watsek (Director of Equity Research)

Okay. Thank you. Sure.

Operator (participant)

Your next question comes from the line of Jeet Mukherjee with BTIG. Please go ahead.

Jeet Mukherjee (VP and Biotechnology Analyst)

Great. Thank you for taking the question. Was wondering if you've thought about potential NCCN guideline inclusion for some of your vepdegestrant CDK4/6 data to support combination use, just given some of the notable PFS data you had shown at San Antonio 2023, and thereby allowed doctors to use a CDK4/6 off-label in combination with vepdegestrant in the second-line setting. My second question was just around your G12D degrader. Can you maybe talk about how that compares to Astellas' degrader and some of the perhaps subpar efficacy and safety it had shown last year at ESMO? Thanks.

John Houston (CEO, President, and Chairperson)

Noah, do you want to take that?

Noah Berkowitz (CMO)

Sure. The second one was about G12D. The first was NCCN. Oh, NCCN. Yeah. Look, we continue to generate or we're going to be sharing the maturation of our combination datasets. We will—this will be discussed with the commercial and medical affairs team about how to best share this information and be as practice-informing as possible. I do not want to get ahead of myself and speak about NCCN guidelines. Overall, we would share whatever physicians need to make the best decisions, though obviously, we're seeking a monotherapy label. That is the only way we will be marketing the drug for monotherapy use. Regarding the G12D degrader, I think I had mentioned in the prepared remarks that we've seen that we have 30 times the potency of some other inhibitors and degraders in the space.

One of the challenges for a leading degrader in this space is the hepatotoxicity, or I guess, as evidenced by transaminitis that has been seen, that may be limiting in the dosing of that drug. In our case, we do not believe that this will be a limitation for our drug, ARV-806. Of course, we are just starting our dosing of patients in the second half of this year.

Jeet Mukherjee (VP and Biotechnology Analyst)

Thank you.

Operator (participant)

Your next question comes from the line of Sudan Loganathan with Stephens. Please go ahead.

Sudan Loganathan (Managing Director)

Hi. Good morning. Thank you for taking my questions this morning. I wanted to kind of dig deeper into the details for the ESR1 mutant patients again that are naive to treatment. I believe you mentioned earlier in the call about approximately 5% of ESR1 mutant is in the first-line setting.

Is vepdegestrant with the monotherapy design actually going to be well-positioned to be more of the standard of care, even also in the first line that kind of demonstrates this ESR1 mutant as well? Or will there be some additional trials or anything else that needs to be done there? With the total of about 40%, I guess, of second-line patients that have ESR1 mutant, is that only specific to first-line patients that were treated on CDK4/6 inhibitors or also other treatments as well? Thanks.

John Houston (CEO, President, and Chairperson)

Yeah. Just for clarity, in the second-line setting, we believe around 40% of the patients have tumors that have ESR1 mutant profiles. That offers up a potential of 40,000 patients that could be amenable to a drug like vepdegestrant. That's exciting. That's a great opportunity. In the first-line setting, it's different.

There's maybe only about 5% of the patients have tumors that have ESR1 mutation. The rest have wild type. The biggest difference we believe is wild type in the second-line setting is probably endocrine insensitive. Wild type in the first-line setting is endocrine sensitive. There's a significant opportunity there. Our belief is that if vep was in that setting, it would do well. We have made this joint decision with Pfizer not to go there. We move on to other things. In the second-line setting, where we still see a significant opportunity, we'll be seeking approval for a drug in that setting and ideally then launching into that second-line setting along with our partners, Pfizer. Significant opportunity there.

As I said before, we wait to see what the maturing information is in the first-line setting, both from the point of view of our data, but also the data coming from other companies.

Sudan Loganathan (Managing Director)

I appreciate it. Thank you for the clarity there.

John Houston (CEO, President, and Chairperson)

Thank you.

Operator (participant)

That concludes our Q&A session for today. I will now turn the call back over to John Houston. Please go ahead.

John Houston (CEO, President, and Chairperson)

Thank you, operator. Thank you, everyone. We gave you a lot of information today to digest. It remains for me just to say that we're incredibly confident about the future direction of the company. You'll be hearing more from us with additional updates through the year. Thank you very much for your time this morning.

Operator (participant)

Thank you, everyone. That concludes today's call. You may now all disconnect. Have a nice day.