Galapagos - Earnings Call - Q3 2017
October 27, 2017
Transcript
Speaker 0
Welcome all to the audio webcast of Galapagos' Third Quarter twenty seventeen Results. I'm Elizabeth Goodwin, Investor Relations, and I'll be hosting today's event. This recorded webcast is accessible via the Galapagos website homepage and will be available for replay later on today. So that your questions can be included, we request that you call in to the following telephone number, which is also to be found on our homepage. The number is 32 for Belgium, (200) 040-4590 and there's an access code 289-0376.
I would like to remind everyone that we will be making forward looking statements during today's webcast. These forward looking statements include remarks concerning future developments of the pipeline and our company and possible changes in the industry and competitive environment. Because these forward looking statements involve risks and uncertainties, Galapagos' actual results may differ materially from the results expressed or implied in these statements. Today's speakers will be Ono von Astolta, CEO Walid Abhisab, our CMO Piet Vijerenk, CSO and Bart Filius, CFO and COO. Anno, Walid and Pete will go through the operational highlights.
Bart will explain the financial results. Anno will then close with the outlook for 2017. You will see a PowerPoint presentation on screen. We estimate that the talk will take approximately twenty minutes, and then this will be followed by a Q and A session. So with that, I would now like to hand over to Anno to start the presentation.
Speaker 1
Thank you, Elizabeth, and thank you for attending the webcast. Q3 clearly has been a very exciting quarter for us with two new mode of actions showing activity in patients. It is a big complement to our discovery platform. We started this back in February, building our adenoviral library to come up with novel targets. And the JAK1 filgotinib is clearly the first one that made it to the patients, but now with sixteen ninety in idiopathic pulmonary fibrosis and MOR106 in atopic dermatitis, we have three programs where we have shown activity against the novel target that we discovered.
And that's quite unique, and that is the basis of Galapagos and will remain the basis of Galapagos with many more programs to come. In the meantime, filgotinib is continuing its strong path forward with multiple trials, the Phase III trials underway, eight trials already in proof of concept stage and more to come. Cystic fibrosis, very competitive area where Galapagos is pushing ahead together with Epi. We just got the go ahead from the Scientific Advisory Committee from The U. K.
To file for the trials in The U. K. And other countries. And we hope to start dosing the triple study by the end of the year. So exciting times there to come.
All that with a fantastic cash position, 1,200,000,000.0 in the bank. And we are actually preparing for the next phase in the evolutionary model of the company, where after discovery and development, we are now starting to prepare for commercial operations. And we were very pleased to hire Michele Lamanto as our Senior VP, Commercial Operations, and he will be at the basis of creating the commercial operations for Galapagos. So if you look at the filgotinib pipeline, then that is quite a number of different diseases. These are all inflammatory diseases that we believe have a good chance to be treated with filgotinib.
The three main programs where the Phase IIIs are running in rheumatoid arthritis, ulcerative colitis and Crohn's disease are running its course. But then we are now testing it together with our partner Gilead in eight other diseases. So very impressive number, and there's actually more to come. We are preparing more proof of concept studies with filgotinib, so blanketing the whole inflammatory disease area. And Galapagos is clearly much more than just filgotinib.
Here you see the pipeline of molecules that have passed the candidate stage and are now in preclinical Phase I and Phase II. And you see in idiopathic pulmonary fibrosis, where we have at the moment two different mechanisms, the ototoxin sixteen ninety, the furthest advance, and we'll show you the data today. But we also have a number of other new mode of actions, some partnered, some proprietary that are moving forward. Two are in an undisclosed area. We will shed some more light not so far from here, but at the moment we still remain that undisclosed.
In cystic fibrosis, we're preparing for three different triples to move into patients. The first one, as I said, by the end of the year, the other two planned for next year. In our osteoarthritis program, we have a collaboration with Servier, where we are moving ahead with our nineteen seventy two molecule that hits the target at MTS-five. And we are planning a full Phase II study worldwide together with MorphoSys to start next year. And in the meantime, we are awaiting the data for a Phase Ib study.
Then we have programs in atopic dermatitis, a small molecule program that's proprietary to Galapagos in preclinical and then the antibody program with our collaborated MorphoSys that we released the Phase 1b data a couple of weeks ago. Further programs in inflammation and pain are still early, but extremely promising, especially the inflammation program 3,121. I want you to keep that number in your mind because that will be quite exciting when we are going to show the data at a later point in time. Well, with all that information and excitement,
Speaker 2
I'm going
Speaker 1
to hand it over to Valid to talk us
Speaker 2
through our clinical programs. Thank you, Ono.
Speaker 3
So as you can see, filgotinib is really building up a consistently strong profile around safety in rheumatoid arthritis. Here, you see a comparative overview of safety that we showed at our R and D update back in June. I'd like to highlight a few points here. First, you see that we compare filgotinib in the green column with multiple JAKs plus tocilizumab and adalimumab. You should always exercise caution when comparing across studies.
Secondly, you see the patient year exposures involved in the first row. Filgotinib already has an extensive safety database with more than 1,300 patient years in RA. These results that we're showing here are based on the sixteen week safety cutoff from our ongoing DARWIN III study. Consistently across all parameters shown here, filgotinib exhibited a superior safety profile. Regarding thromboembolic events such as DVT or PE in this dataset, I remind you there was only one patient who experienced DVT followed by PE in the study.
This puts the rate of thromboembolic events at a very low level considering the background rate in this patient population. Lastly, I'd like to highlight that at ACR in San Diego, Doctor. Genovese will report on more than seventeen hundred patient years exposure with filgotinib from the same DARWIN III study based on the eighty four week safety cutoff, and we invite you to listen in on his talk there. From the abstract for his talk, you can already see that continued experience with filgotinib reinforces its solid positioning on safety in RA. Moving on to the next slide.
We turn to our ototoxin inhibitor, sixteen ninety. Here, we show data from the proof of concept study FLORA in patients with IPF. IPF is a serious orphan disease with high unmet medical need. On this slide, you can see the steep reductions in plasma LPA levels during the course of the study. This confirms target engagement in patients and is consistent with the results we showed in our Phase I program.
I remind you that FLORA was a double blind, placebo controlled trial in twenty three IPF patients who were naive to treatment. These patients were randomized in a three:one ratio to sixteen:ninety or placebo for twelve weeks. Next slide. Here we see that patients who received placebo lost approximately 90 mL in forced vital capacity after twelve weeks in the study, which is consistent with what has been observed in similar trials. What we were very excited to see is that patients who were randomized to sixteen ninety managed to show no progress of their disease over the twelve week period as evidenced by no loss in FVC.
In fact, the mean change from baseline was an increase of eight mL. Next slide. Using functional respiratory imaging, or FRI for short, a more sensitive technology combining high resolution CT and fluid dynamics, we showed a statistically significant difference between sixteen ninety and placebo, whereby patients on placebo continued to show progression of the disease as evidenced by an increase in airway volume and a drop in airway resistance. In contrast, disease progression appears to have been stopped in patients on sixteen ninety. So these data demonstrate that sixteen ninety is the first ototoxin inhibitor to show promise in patients and IPF.
These exciting results, coupled with a benign safety and tolerability profile, strongly support moving sixteen ninety into late stage development. And with that, I will turn the presentation to Pete Wiegren. Pete?
Speaker 2
Thank you, Walid. During Q3, we also obtained the first patient data with MOR106, our antibody against IL-17C. IL-17C is a cytokine we picked up as a target using our drug discovery platform and together with MorphoSys, we decided to generate an antibody to block the cytokine. So on IL-17C, some work is published and that points to a dual mechanism of action. Meaning when there is IL-17C somewhere in the skin, it will activate Th17 cells and those cells will give more IL-17A and on its own as a direct action as well on the bacteria IL-17C will activate the immune reaction.
So we believe you're the first company and so this is the first in class that we develop in the autoimmune space. IL-17C in our models really behaves as a local amplifier of the immune response. So independent or whether the trigger is Th1 or Th2, IL-seventeen for both of these triggers will locally amplify. So it's an novel mechanism of action with a potential broad application. Next slide.
So in September, we released as part of a press data, the Phase 1b patient data. So we did an SED in healthy volunteers, then went over to 24 patients in three different cohorts. So patients got four weekly infusions in a dose escalating mode. So what we saw was very, very nice efficacy data in the sense that we saw a fast onset of action. And at the top dose after the last infusion, we once saw that the activity remains visible for over two months.
And secondly, more than eighty percent of the patients showed a fifty percent improvement of the disease score. So over 2018, we together with MorphoSys will start up a Phase II study IV and in parallel develop a subcu formulation in Phase I allowing us to bridge into a late stage subcu program for IL-17C. Let's now move to CF, where as you all know, we are developing multiple triples and the plan is to bring three triples into patients over the coming twelve months. So on this slide, I've depicted them again. In gray, you see how the dual platform of Vertex compares in our in vitro assays And for each of our triples, in fact, we expect a significantly stronger activity compared to the dual platform of Vertex.
So the first one that will move into patients is 22, 22, 27, 37, 2451. During Q3, we went for scientific advice to MHRA, discussed with them our design for the first into patient study, discussed with them all our preclinical and clinical data, and they agreed that we can move forward now and submit the trial application in the coming days. So the second triple that will move to patients is one with 22, 22, 27, 37 and 3,067. So that triple currently, we are doing we've completed the dual in healthy volunteers. In Q4, we will move and do the triple in healthy volunteers.
And then early next year, this will move into patient. And then finally, 3,221 is a new C2 type of compound, and that will move into Phase I in Q4 as well. If you now look to the patient studies, we have in total six studies on the books. So Albatros is a Phase II study where we dose two thousand two hundred and twenty two on top of Libido in G5-1D patients. And those data will readout over the coming weeks.
So also the second Phase II study, which is a mono study of 2,222 in delta-five zero eight patients, we will have all the data around year end. Then the first triple is in fact two thousand seven hundred and thirty seven on top of Orkambi. We've got approval in the countries where we have submitted and that study has started in the meanwhile. And then you see the first of our fully in house triple, so 02/1951, we will file the application in the coming days and then start that study. 3067 base first triple will move into patients early next year.
And then the triple based on 3221 will move later second half of next year into patients as well. So that's the overview of our CF patient study up to now. Then in Q3 as well, we've moved forward in the field of osteoarthritis. There 1972 effect during Q3, Servier took the option on the rights on this program ex U. S.
We own all of The U. S. Rights. In the meanwhile, we had a Phase Ib study running in The U. S.
In that study, we've included for the first time patients, we've included for the first time female adults. And third is that we have extended the typical dose range beyond the age of 65 because most of the OA patients we want to test in Phase II will be around that age. So those data as well, that study is fully recruited and that study will read out early next year and will allow us to move them in Phase II. That will be a Phase II proof of concept study we will do together on a global scale with CeraVeil kicking off early next year. So it's a compound blocking RMTS-five, which is as well one of those novel targets we have discovered in our platform.
And we as well believe we are the first oral compound now moving into the clinic in Phase II against RMTS-five. And with this, I've done the overview of the clinical studies, and I hand over to Bart for the operational highlights. Thank
Speaker 4
you, Pete, and good afternoon, everyone, in Europe. Good morning in The U. S. I'll take you through a couple of slides on the financials for those of you to be tracking the company. They look familiar to you in terms of setup and formats.
First, let's talk about the cash position and the cash burn. At the September, we were in a comfortable position of €1,200,000,000 of cash coming from December at €980,000,000 as you see on this slide. As a reminder, we did a follow on offering of €350,000,000 in April, which is the big driver for the increase obviously in the first nine months. There is a currency translation effect. I've shown this also at the June, one to euros as we keep a part of our cash position roughly 20% in dollars for future dollar expenses.
But those are translated in euros. So this is unrealized, but those are translated in euros in our balance sheet and flow through our P and L to the tune of €25,000,000 in the first nine months. Then we get to the actual cash burn, which is almost €90,000,000 This is increasing quarter on quarter, reflecting the many programs that we are running that have just been described by Walid and by Pete, and reflecting also the increase in expenses that will continue for a little while longer as these trials get broader and the patient inclusion especially on filgotinib is also increasing. So €89,000,000 for the first nine months, anticipating for the full year to be at the lower end of our previous guidance. The guidance was 135,000,000 to 155,000,000 so we anticipate to be at the lower end of that range.
Then to the P and L, revenues healthy increase of 64% to €106,000,000 over the first nine months. Really two drivers on one hand there is milestones in blue here on the slide that is cash income that has been generated over the first nine months. But the main increase is the recognition of deferred revenues. So these are revenues that have been from a cash point of view generated when we signed up with Gilead in 2016, early twenty sixteen. But the recognition thereof in proportion of the cost that we are making is going over the entire development period.
So this is something that you've seen before, but is driving a big chunk of the increase compared to the first nine months of last year. Then in operating expenses, as a result, we see the same evolution, so an increase there as well, mainly on the development front as there's more and more programs in late stage development and the programs around filgotinib get more and more mature. So we're almost at €100,000,000 now over the first nine months in development and total expenses on the company are closing to €170,000,000 over nine months. Net results are a combination of the two above, so increase in revenues, but also an increase in expenses. The operational evolution on the slide here is €14,000,000 negative.
So that's the combination of those two drivers that I was referring to before. There are two other comparators that are important in our numbers if you compare this to the first nine months of twenty sixteen. One is the non cash financial asset adjustment that we had as a result of the Gilead deal. I've explained it quite a few times on the phone, but this is in the numbers as a positive in 2016 and obviously nonrecurring in 2017 for €57,500,000 And then there's the FX fluctuation, the translation effect that I was describing previously for €22,000,000 that is also negatively affecting our net results, bringing the total net results to €85,000,000 negative. So all in all, in line with expectations on our perspective.
And with that, I hand it over back to Onno. Thank you, Bart.
Speaker 1
If we go to the outlook, it's clear that our programs are on track and are delivering filgotinib in a number of different inflammatory diseases, the CF triple combo going into patients, sixteen ninety going in a late stage program in idiopathic pulmonary fibrosis, amorphosis in atopic dermatitis, MOR106, very interesting program as well. And of course, our osteoarthritis program, 09/1972, which will go in a Phase II, of which Galapagos will run the full Phase II study in The U. S. More proprietary clinical programs moving forward, and we will announce more data on that at a later stage. And at the meantime, we have initiated building the commercial organization.
So all in all, I'm very pleased with how things are going in the company, both on the science side as well as on the development side. And this is all backed by a solid balance sheet, so we can actually finance the programs to what they need and make the best choices to get the most value for the shareholders long term. With that, I'll turn it back to Elizabeth for the Q and A. Thank you.
Speaker 0
All right. Thank you, gentlemen. That concludes the presentation portion of our audio conference call. I'd now like to ask the operator, Celia, to connect us to any callers who may have questions for our team.
Speaker 5
Thank you. We'll go first to Brian Abrahams with RBC Capital Markets.
Speaker 6
Hey, thanks very much for taking my questions and congrats on all the continued progress. First question is on MOR106.
Speaker 2
I was wondering if
Speaker 6
you could maybe expand on any new learnings that you have on the IL-17C mechanism and really where you see the most potential for differentiation there given kind of the competitive bar and where this could be novel? And also curious if you could talk a little bit more about the status of the subcu form, any estimates for the frequency, volume, viscosity or needle size for administration there? And then I have a follow-up after on CF. Thanks.
Speaker 2
Okay. Thank you, Brian, for the question. MOR106. So we're MOR106 broadly in a number of animal models of inflammatory conditions. It really continuously pops up only in those disease model where a local epithelial process is ongoing.
So that is in the different skin models then skin diseases pops up as a very promising option for a therapy. We've done psoriasis studies and our models scored excellently, but there the bar is quite high, so we will not move there immediately. Atopic Derma is the second as well in different models shows very nice results. Haven't gone yet or didn't see a model yet where we can fairly compare it to prelim ups of today. So we haven't done a comparison.
But this is completely novel. And in fact, it works independently of the pathways. And that's where we think it could have a broad application. Asthma is on our agenda, of course, but we will announce further studies the moment we engage on them. But it's more the fact that it's a local amplifier.
So we expect and we don't see any systemic side effects in fact, so it should be a very safe way of inhibiting inflammatory responses in the skin broadly. And so atopic derm is the first of what we tackled on. Then the status on the subcu. So we are currently running the tox with on the subcu formulation we have developed, and that will move into Phase one next year. And then as soon as we have the data from that, we will inform you.
But we are confident that we will have a patient friendly system to administer locally as a subcu this drug in the future. Thank you.
Speaker 6
Got it. That's very helpful. Thanks. And then just one other question on the CF program. It sounds like you have clearance and regulatory buy in to proceed with the triple combo.
Wondering if you could talk a little bit more about sort of the nature of the discussions that I guess regulatory comfort in testing multiple new drugs together and how this might apply kind of going forward, best ways to assess the safety PK and follow-up of the long acting metabolite that you've seen with 2,451? And how you guys are thinking about the design of that study? How we should think about what the next specific steps would be for that initial trial? Thanks so much.
Speaker 2
On CF, indeed, as you point out, bringing three novel compounds together is not an easy task. It is a complex task. And so we spent most of the time explaining them the data we had, the tox coverage we had, the way you calculate safety margins, the similarities between single component tox and the combo tox studies in the package. And as such, they felt comfortable that we now move into a patient study. They did not give any comment on the long acting nature of the metabolite that was discussed extensively, but that did not seem for them, I think, an issue at the moment.
So no, it was a very constructive meeting focusing on what patients really need, and these are novel triple treatments. And we have one of the promising there, they were very supportive of us moving forward into a combo study, which will be triple agent study, high dose in patients. And we'll disclose the full nature as soon as that is coming online. Thank you.
Speaker 6
Thanks again and congrats again on all the progress.
Speaker 5
We'll go next to Dane Leone with BTIG.
Speaker 7
Hi, thank you for taking the questions and congratulations on all your progress. So could I follow-up actually on the last question? From here to get the triplet study started, what are the remaining steps to get the trial up and running? And can you just remind us of the different trial sites and the general logistics of the study?
Speaker 2
Okay, thank you. So it will be a multi country study. So we're now finalizing based on the input from the meeting, the protocol addressing what they really thought was for the most important, making that clear in the text. And so it's a clinical trial application, which we then expect we will get approval quickly. That's our experience in general, if you discuss those complex trials upfront with the authorities, if they see major issues in the package, they make it clear, doesn't make sense neither for them, neither for us that we submit a trial application for them to turn it down, because according to them, major things are missing.
So we discussed that and everything what's needed is there. And so we are finalizing that text, we'll submit it and then that will get approved, we hope, somewhere in November, so that we can start this study this year. These are the steps. And so we'll have two, three countries in Europe involved in the studies probably.
Speaker 7
And how do you think about I guess two follow ups on that. How do you think about the study design and the data generation that will come from this study and how that would be applicable to potential U. S. Study? And then after this first triplet study that you're planning to run, is AbbVie then in charge of the next steps, the next clinical steps in the program?
Speaker 2
So okay, so what we'll do is a proof of concept study and there will be separate cohorts for the homozygous and the het minus patients. And then as soon as we have done proof of concept, because then that's the proof of concept of our in house triple, we will do a Phase II dose range of study. And at that moment, probably we will need to decide whether it's a 3,067 based or a 02/1951 based study, but that will then be based on the data. And we will do that study. And then it depends a little bit on how the regulatory landscape pans out.
If it's the classic way, if it's a Phase III, then normally AbbVie will perform the Phase III. So second question relates to The U. Part of the program. We have an open IND for 2022, 2022, and we will open the other INDs next year. So we will, after this proof of concept, open studies in The U.
As well. Thank you.
Speaker 7
Okay, great. And if I could squeeze in one last more actually on filgotinib. That program is expanding quite rapidly after great data competitively and some developments that seem to work in your favor quite recently. I was curious as the indications keep building for what you're looking at with filgotinib, Does all do all these new indications that you're starting to lay out still fall in the master agreement with Gilead? Or are there potentially different economics as you continue to build out different indications of interest under that program?
Speaker 1
Thank you. This is Ana. I'll take that question. Yes, this was all in the master agreement that we agreed with Gilead. We agreed to pay 20% of all further development costs actually kept to a max.
And if we get above that max then further contribution of the 20% will be taken out of a future late stage milestone that we expect from Gilead at some point.
Speaker 7
Okay. Thank you.
Speaker 5
We'll go next to Phil Nadeau with Cowen and Company.
Speaker 8
Good morning. Congratulations on the progress and thanks also for taking my questions. Just one follow-up on the cystic fibrosis trials. I know you mentioned that there'll be separate cohorts for homozygous and hep men patients in the studies. Can you give us some sense of some more sense of the design?
So how long will the patients be dosed for? How many dose levels will be tested? And will all patients be given the triple? Or will there some patients in trial being given some subset of the candidate?
Speaker 2
It's a proof of concept. Thank you for the question. It's a proof of concept. So all patients will get access to the triple therapy, but in separate cohorts and we will include typically two dose levels so that we have an idea, an early view on whether we quickly pick up dose response. So normally, we expect to see quite solid signal both on sweat and on FEV, so that will be the endpoints.
And patients will be dosed for four weeks in this proof of concept study. Thank you.
Speaker 8
Great. And in the past, you've guided to data from this study around midyear twenty eighteen. Is that still your expectation now that you've been through consultation with the regulators?
Speaker 2
Yes, that's correct. That's still the plan.
Speaker 8
Thank you. Great. And then one last question for me on filgotinib. We've seen great data from other JAKs in atopic dermatitis. It doesn't seem like that's an area that Gilead is planning to do proof of concept studies.
Is that correct? Is filgotinib not going to be investigated in atopic dermatitis? And And if so, why is that?
Speaker 3
Well, thanks for the question, Phil. So yes, I mean, I think we always look at these data and evaluate and react to what's happening out there. I think there's good reason to believe that filgotinib, like other JAKs, should work on this, and this will be part of our evaluation as to whether we want to test it going forward. So that's where we are today.
Speaker 8
Okay. So no decision has formally been made, yes or no?
Speaker 3
There's no decision now to start the study, no. But it's on the radar screen, as you can imagine.
Speaker 8
Okay. Great. Thanks for taking my questions and congratulations again.
Speaker 3
Thank you.
Speaker 5
We'll go next to Christopher Marai with Nomura Instinet.
Speaker 9
Yes, hi, good morning. Thanks for taking the questions. I was wondering if we could quickly touch upon +1 690 and IPF. You studied it over twelve weeks, if I recall earlier in the FLORA study. I was wondering if you had further follow-up or a long term extension study for from FLORA and when you might share that data?
And then secondarily, if you can maybe comment on any potential toxicities you'd be looking at with longer term dosing of autotoxin inhibitors. Some of our checks have suggested that there's some CNS side effects that might crop up later in dosing after longer term dosing of the avataxin. So we'd love to hear your commentary on that and remind us of the path forward there.
Speaker 3
Well, thanks, Kurt. This is Walid. I'll take this call to this question. So at the time when we conducted FLORA, we had the tox package that would allow us to dose So as a result, we did not have a longer term extension for that trial.
In the trial, we have seen no signs of any CNS side effects that would be of concern to us. Now since then, we have conducted the preclinical package that would allow us to dose chronically. And again, I can confirm in those studies, we see, again, nothing that would make us concerned about CNS toxicity.
Speaker 9
Okay. Thank you.
Speaker 5
We'll go next to Matthew Harrison with Morgan Stanley.
Speaker 10
Great. Good afternoon. Thanks for taking the questions. I have two. So first, on MOR106, can you just talk about what the path forward there is?
What kind of studies we should expect next? And what sort of timeline we can think about? And then can you just confirm in terms of when you went for scientific advice on the CF program? Are there any monitoring or longer follow-up or any conditions that they placed related to the long lived metabolite? Thanks.
Speaker 2
Thank you, Matthew, for the questions. I'll take them. So first on MOR106, so we've no longer tox coverage. And so the next study will be a dose range of Phase II study, IV dosing, but will dose every other week, not weekly, every other week or with bigger intervals. And that study will start quickly.
So we are finalizing protocols there. We will submit and then keep that off early next year. So that will keep us busy full of twenty eighteen. We'll
Speaker 4
be more
Speaker 2
than 100 patients as well, so we'll be quite large study. And in the meanwhile, as I said before, so we have a subcu formulation ready that's in preclinical tox right now and that will move into Phase one. First of the PK and eventually we'll do some multiple dosing patients as well, so that those data come together with the outcome of the dose ranges and then see whether we can move to Phase three immediately. On CF Scientific Advice, no, they have not implied any long term monitoring that was a we do what is required to do in the field of CF. We follow-up the patients as we have done before in the Phase one and there was no question to add any extra measures there.
Thank you.
Speaker 5
We'll go next to Adam Walsh with Stifel.
Speaker 7
Good morning, guys. This is Neil on for Adam. On MOR106, could you guys just given the differentiated safety profile, could you guys just share some color on how you think it fits within the current treatment paradigm?
Speaker 2
Well, in vutomac as a vaccine, there is no reason why we think there should be any restriction currently on patients we can include. So we don't see any restrictions there. How clinically this will pan out and compared to Dupi, that's a bit early. But from what we've seen or by the fact that we haven't seen anything, let's say, clientele, we feel comfortable that safety will not be a limiting factor for MOR106 as well. If you look to how and where IL-17C works, it's if you do the paperwork, it's one of the safest targets we have ever seen.
So we are quite comfortable that if efficacy pans out as was in the first study, we will have a high rate of efficacy combined with an excellent safety and hope that, that will be a competitive profile. Whether we can be combined with Dupi or not, that still needs to be worked out. Thank you.
Speaker 5
We'll go next to Anastasia Karpova with Kempen.
Speaker 11
Afternoon and thank you for taking my questions. Three, if I may. Initially, on IPF program, can you update where you are in the discussions with the regulators considering phase two, phase three trials? And did you consider to do combination or monotherapy as well? And do you need to do any bridging studies to open up the IND in The US given that the trial, the floor was conducted in Europe?
The second trial, question is regarding Albatros. Given that Vertex Phase three in a similar population did not demonstrate improvement in FEV1, in contrast to Phase two trial, have your expectations for efficacy signal in the Albatros changed? And what do you expect to learn from there? And finally, what magnitude of biomarker movements would you consider compelling in the OA trial that is reporting early next year?
Speaker 3
So this is Wahid. I'm going to take the IPF question first and then turn it over to Pete. So regarding the IPF, we will initiate a placebo controlled study on top of the standard of care in the 2018. As this study design has already been discussed previously with both the FDA and EMA. In addition, we will be discussing additional studies with both agencies in order to complete our registrational programs.
And specifically, whether we need to do any bridging before we go to The U. S, the answer is no. We can go straight in The U. S. With the package that we have now.
Speaker 2
Pete? Okay. Thank you, Arastasiya, for the question on CF. So we designed the Phase II study on top of Leidico, hoping to see a sweat chloride signal and an FEV signal. Clearly, that was based on the Phase II results of projects, which were positive.
And in meanwhile, their Phase III is negative. I think anything we can show there in terms of efficacy illustrates that at least we will have a very active twenty twenty two, twenty twenty two compound. But we should not hope for extreme high activity because if the larger study fails, the window to see clinical efficacy is probably limited there, but we are still hopeful that both Svet and FEV will read out in a positive way there. That's for Albatros study. Then OA, so what is new there, as I said, is we, for the first time, include female patients
We've extended age range and as well we've dosed not two weeks, but four weeks. The biomarker signal in the healthy volunteers was still in an ascending phase while we were stopping the study. So we hope that we now as well see where the maximal effect is in terms of the biomarker and hope that within one month, in fact, we should see the maximal efficacy in plasma. So it will be the same biomarker, but over the dose range and for longer and then both in males and females. So that should give us nice complementary data to then move further into Phase II.
Thank you.
Speaker 11
Thank you.
Speaker 5
We'll go next to Nick Nguyen with Citi.
Speaker 12
Hi, guys. Thanks for taking my questions. I've got three, please. The first one is how does the development of $1,690,000,000 impact your planned cash burn for next year? And has it changed the scale of the commercial organization that you're building?
The second one is, are we still expecting a futility analysis and milestones for the selection study in Q4 this year? And thirdly, what do the milestone payments look like with regard to the CF program with the initiation of the triple combination over the next few months? Thank you.
Speaker 4
Hi, Nick. It's Bart speaking. Let me take a couple of those questions. Maybe first on 1690. So indeed, if we're expanding the program into registrational trials next year, we will anticipate that the cash burn next year will go up.
I said that previously, I think, on other calls as well already. I will give precise guidance by the time we get to the full year results in February. But one should expect indeed a meaningful increase in cash burn compared to this year, driven by on one hand filgotinib is accelerating and on the other hand, 1690 is adding to that as well and CF is continuing. In terms of commercial, indeed, we have decided and stipulated that we want to be the sole owner of this drug, including the commercial opportunity. So Michele Manto joined us to build out the commercial organization in our company, is also looking at the opportunity in IPF and evaluating our options there for commercialization of the drug as well.
Then secondly, your question was on the UC transition. We anticipate that in the 2018. And indeed there should be some financial compensation associated with that as well. And then thirdly, on CF, your milestone, a question on CF. I think you've seen several announcements of milestones all to the tune of, let's say, 10,000,000 over the past twelve months for different trial initiations.
And as this program continues with additional Phase 1s, but also with some of the more advanced patient studies, you'll see a couple of more announcements coming up to that same level. So no major, major increases suddenly, but there will be some smaller milestones from AbbVie associated to development in the CF program.
Speaker 12
Great. Thank you.
Speaker 5
We'll go next to Peter Wilford with Jefferies.
Speaker 13
Hi. Thanks for taking my questions. I think I've three little ones left. Firstly on 1972, I wonder if you could just confirm, are the dose levels the same as those in the prior Phase one? Or are you investigating different doses?
Then a similar vein question in CF. You mentioned there were two dose levels that were going to be studied over four weeks. Given the dosing work that's been done perhaps is more extensive with the corrector onetwo thousand two twenty two and I guess a little bit more is known about 2,451. Is the plan to just to flex the dose of one of the correctors? Or is the plan to have a low and a high dose of all three components as part of that triple?
And then finally, on 1690, you mentioned a little bit about the fact you were going to do a Phase III combo trial or Phase IIIII combo trial, I guess, first in the 2018. But actually, just discuss when you've had the discussion with the regulatory authorities about that, what duration of dosing the regulators are looking for in an IPF pivotal study? And also what endpoints they'd like to look at in that combo study? Thank you.
Speaker 2
Okay, Peter. Thank you. I'll go first on September. So the dose levels indeed are the ones we have tested before in as part of the Phase one. So we'll have now one hundred, two hundred and three hundred milligram doses evaluated for one month.
And as we did show we did choose to go lower because we did not have a dose with a suboptimal biomarker response. So that's why we decided to explore as part of the study the lower end here to really see where we pick up a dose response on the biomarker, but it is within the safety exploration as what we've done before. Then more on dosages for CFs. So we will escalate one we will keep fixed two out of the three components in the combo and have one component, which will have a lower and a high dose included there. But it's not going to be the triple high dose and then for each of the three, a lower dose, no, we will keep two of them constant and only very one.
Thank you. Over to Walid.
Speaker 3
And I'll take the question on 1690. This is Waleed. So regarding the study in the double blind placebo controlled study that we that I discussed, the duration of dosing will be one year long. And this will be there will be also a long term open label extension that the patients can roll into and be followed for longer term for safety as well as we can monitor efficacy as well. With regards to endpoints, we will be looking at the usual primary endpoint of change in FPC, annualized rate.
But also, we will be looking at other major events, hospitalization, death, the usual and the functional endpoint of six minute walk test. But the primary will be the forced vital capacity change.
Speaker 13
Great. Thank you.
Speaker 5
And we have no further questions at this time.
Speaker 0
Okay. I think that we've had a great question and answer session this morning and so we'll wrap it up with that. I look forward to seeing many of you at our IR event at NACFC in Indianapolis on the November 2 and also at ACR the week after. You can reach out to me directly for more details on that. Our next financial results webcast will be on the 02/23/2018 when we present our full year 2018 results.
So we thank all callers today for their support and participation. Thank you very much. Bye bye.