TRACON Pharmaceuticals - Q3 2022

Transcript

Operator (participant)

Good day, ladies and gentlemen, and welcome to the TRACON Pharmaceuticals third quarter 2022 earnings conference call. At this time, all callers are in a listen-only mode. After the speaker's prepared remarks, we will conduct a question-and-answer session and instructions will be given at that time. During today's call, we will be making certain forward-looking statements, including statements regarding expected timing of clinical trials and results, regulatory activities, future expenses and cash runway, our development plans and strategy, and the timing and results of our arbitration with I-Mab. These statements are subject to various risks that are described in our filings made with the Securities and Exchange Commission, including our annual report on Form 10-K for the year ended December 31, 2021, and subsequent quarterly reports on Form 10-Q.

You are cautioned not to place undue reliance on these forward-looking statements, and unless required by applicable law, we disclaim any obligation to update such statements. Now I would like to turn the call over to Dr. Charles Theuer, President and CEO of TRACON Pharmaceuticals. Dr. Theuer?

Charles Theuer (President and CEO)

Thank you for joining TRACON's third quarter 2022 financial results and business update call. I will begin with an update on our pipeline and then review our recent activities. Following that, Scott Brown, our Chief Financial Officer, will review our financial results for the three and nine months ended September 30, 2022. Finally, we will conclude by taking your questions. I'll begin with an update on our continued progress with the ENVASARC pivotal trial. We have now enrolled 68 patients with refractory UPS or MFS into ENVASARC, which is accruing at 29 sites in the U.S. and one site in the U.K. Accrual continues to exceed projections, and the completion of enrollment of 160 patients dosed at the 600 mg ENVA dose is anticipated to occur before the end of 2023.

In October, we announced that the DMC reviewed 12 weeks of safety data from more than 20 patients and recommended the trial continue as planned at the 600 mg ENVA dose. We remain on track for the DMC to review interim efficacy data later this year. During the interim efficacy assessment, the committee will apply a futility rule that requires at least one response in 18 patients in each of the two cohorts, monotherapy and combination therapy at the 600 mg ENVA dose. An identical futility threshold was achieved at the interim analysis performed last year in 36 patients who received the 300 mg ENVA dose. At that time, a significantly higher response rate was observed in lighter weight patients, which prompted the DMC to recommend increasing the ENVA dose to 600 mg.

This DMC-mandated interim efficacy analysis occurs following the 12-week CT scan in the 18th patient treated with single-agent ENVA and in the 18th patient treated with ENVA and Yervoy to allow for determination of the preliminary response rate. I note that the interim analysis will assess the preliminary response rate by blinded independent central review. We know that from prior studies of checkpoint inhibitors in sarcoma that responses may take 20 or more weeks to develop, especially in the case of patients treated with two checkpoint inhibitors. Our goal at the time of interim analysis, therefore, is to overcome the futility bar and to report a double-digit preliminary response rate across the two cohorts, irrespective of patient weight, knowing that the preliminary response rate will be based on a maximum of only two scans for many of the 36 patients analyzed and may increase with additional follow-up.

As a reminder, the primary endpoint in each cohort is objective response rate by RECIST confirmed by blinded independent central review, and nine out of 80 objective responses, or an 11.25% objective response rate, defines a level of response that satisfies the primary endpoint of the study to statistically exceed the 4% objective response rate of Votrient, the only approved treatment for patients with refractory UPS and MFS. Therefore, a double-digit response rate at the time of interim analysis would be very meaningful, indicating that we are on track to achieve the primary endpoint of the study. Notably, Votrient is a drug with a black box warning for fatal liver toxicity. Our goal in ENVASARC, therefore, is to demonstrate that ENVA is both safer and more efficacious than Votrient.

Based on data from trials of other checkpoint inhibitors in refractory UPS and MFS, we are targeting a 15% response rate for single-agent ENVA and up to a 30% response rate for ENVA given with Yervoy. Furthermore, we plan to approach the FDA to discuss a BLA filing strategy as soon as we determine nine responses in either cohort. We were very pleased to recently receive Fast Track designation for ENVA in the sarcoma subtypes of UPS and MFS that have progressed on one or two prior lines of therapy based on activity already observed in ENVASARC. This designation holds important advantages that might expedite the development and regulatory review of ENVA. Moving on to our second checkpoint inhibitor, YH001, a potentially best-in-class CTLA-4 antibody we licensed from Eucure Biopharma in October of last year.

In August, the FDA approved our IND to initiate a phase I/II trial of YH001 for the treatment of sarcoma patients, including patients who have not received prior therapy. In October, we initiated the first site in the trial. We expect to dose initial patients in the phase I/II trial using TRACON's product development platform of CRO independent research before the end of this year. Our initial YH001 trial leverages data from two phase I trials conducted by our partner Eucure. These two trials demonstrated the recommended phase II dose of YH001 as a single agent and in combination with the PD-1 antibody toripalimab. Our sponsored phase I/II clinical trial will evaluate a triplet that includes YH001, ENVA, and doxorubicin chemotherapy, as doxorubicin is the current frontline standard of care treatment for sarcoma.

Following the phase I portion of the trial to assess the tolerability of the combination of the ENVA and YH001 doublet, as well as the triplet therapy that includes doxorubicin, we plan to assess the response rate in common and rare sarcoma subtypes to combination treatment, with the intent of demonstrating superior response rates compared to historical data using standard of care agents. In leiomyosarcoma and liposarcoma, we plan to compare the response rate of triplet therapy to the historical 10%-15% response rate of single-agent doxorubicin. In the case of rare sarcoma subtypes like chondrosarcoma and alveolar soft part sarcoma, where chemotherapy is not highly effective, we intend to study the doublet of YH001 and ENVA to assess the response rate compared to the historical response rates with chemotherapy or single-agent checkpoint inhibition.

One of the objectives of this phase I-II trial is to determine the subtypes of sarcoma that best respond to the combination of ENVA, YH001, and doxorubicin. Assuming positive trial results in the ENVASARC Pivotal trial and potential accelerated approval of ENVA, the FDA will require a randomized trial to demonstrate a survival benefit. We expect this phase III post-approval trial will compare single-agent doxorubicin to the triplet combination of doxorubicin with ENVA and YH001, with PFS as the endpoint. This trial would be expected to enroll patients with UPS and MFS, as well as other sarcoma subtypes shown to respond to triplet therapy based on data from the phase I-II trial that I described earlier.

We expect to discuss the design of a frontline trial with the FDA and initiate accrual prior to our planned BLA submission of ENVA for accelerated approval in refractory sarcoma based on data from ENVASARC. The ability for TRACON to commercialize two in-licensed immuno-oncology therapies together in sarcoma is of great strategic benefit. It is important to understand the sales potential in sarcoma with ENVA at parity pricing is not solely the forecasted $200 million in peak annual ENVA revenues expected in the initial indications of refractory UPS and MFS and the $100 million in annual revenue in rarer sarcoma subtypes where the activity of checkpoint inhibition has been demonstrated. Our clinical development strategy is designed to create the opportunity for ENVA to broadly benefit patients with sarcoma in the frontline, adjuvant, and neoadjuvant settings by seeking supplemental indications.

Moreover, we believe TRACON's total sarcoma-driven sales revenue would be significantly enhanced by marketing YH001 and ENVA together as part of a treatment combination in sarcoma. In addition to our two checkpoint inhibition inhibitors, we are pleased that the NCI continues to fund development of our DNA damage repair inhibitor, TRC102. The NCI has initiated a randomized phase II trial assessing TRC102 in Stage 3 non-squamous, non-small cell lung cancer in combination with chemoradiation. The two-arm trial enrolls 78 patients to assess the benefit of adding TRC102 to current standard of care treatment of pemetrexed, cisplatin, and radiation therapy, followed by consolidated durvalumab treatment. The primary endpoint of the trial is PFS, and the trial is designed to detect an improvement in PFS at one year from 56%-75%. Results are expected in 2024.

Our fourth clinical stage asset is the CD73 antibody TJ004309 that TRACON is evaluating in a phase I study as a single agent and in combination with the checkpoint inhibitor TECENTRIQ. Completion of data analysis of the clinical trial is expected this month, which triggers I-Mab's option to reacquire TJ004309. As a reminder, I-Mab has indicated the desire to exercise their option to terminate the TJ004309 license following completion of the phase I trial for a payment to TRACON of $9 million. Next, I will provide an update on our legal disputes with I-Mab. As a reminder, I-Mab commenced arbitration in June 2020 after TRACON invoked contractual dispute resolution provisions asserting that I-Mab had breached its contractual obligations concerning both of our agreements entered into in November 2018. I-Mab initiated the arbitration to declare they were not in breach of either agreement.

We filed counterclaims in the arbitration seeking to recover over $200 million in damages from I-Mab based on the alleged breaches. Under the applicable rules of the arbitration, the prevailing party may also be awarded attorney's fees at the tribunal's discretion. In February of this year, arguments for alleged breaches of both of our agreements with I-Mab were heard before an International Chamber of Commerce Arbitration Tribunal under New York law, and the final post-hearing briefs were submitted to the tribunal in late May. On June 2nd, the International Court of Arbitration of the ICC notified us to expect a final decision by September 30th, which was then extended until November 30th. On November 8th, 2022, the tribunal invited the parties to submit an additional limited briefing on two discrete issues by December 9th.

Following that submission, the parties are to agree on a schedule for the respective cost submissions. The tribunal did not indicate when it expects to render its award. However, the tribunal did note they are far along in their deliberations and preparation of a final award. We expect the tribunal to provide their final award in the first quarter of 2023. We therefore are encouraged that the final steps of the arbitration, including a consideration of arbitration costs, are expected soon. The claims under the arbitration are complex. Accordingly, we cannot predict the outcome of the arbitration, and we are unable to estimate the amount of recovery of damages, if any, that may be awarded by the tribunal. Pending results of the arbitration, we continue to meet our obligations under the terms of both agreements. We will promptly provide an update when the tribunal announce their award.

Given the challenging capital markets, the expectation to secure non-dilutive capital from existing and new corporate partners is important. In the meantime, we recently secured capital through another source. In September, we entered into a $35 million non-dilutive long-term debt facility with Runway Growth Capital. $10 million of the $35 million loan was funded upon closing. The additional $25 million available under the facility may be funded upon achievement of certain events and at Runway's discretion. The loan has a 24-month interest-only period, followed by 24 monthly payments of principal and interest. This financing extends our cash runway to support the robust accrual of the pivotal ENVASARC trial, while we await the outcome of the ENVASARC interim efficacy analysis, the binding arbitration with I-Mab, and notification from I-Mab regarding their option to terminate the TJ004309 agreement for $9 million.

As we've noted in the past, we expect to further supplement our cash position through opportunities for non-dilutive capital enabled through our CRO-independent product development platform that we believe positions us as one of the most efficient clinical development organizations. We expect to continue to leverage our platform in two ways to provide for potential non-dilutive capital to TRACON. First, we are evaluating drug candidates whereby TRACON performs clinical trials at a lower fixed cost compared to a CRO, but still at a premium to our costs using a pay-for-performance model. TRACON further benefits by earning a share of the revenue, including sub-licensing fees and our royalties from commercialization. This is an aligned structure we used in the past, for example, with Johnson & Johnson.

Second, we are exploring a franchise model whereby we are paid to share our proprietary capabilities and know-how to enable another company to independently internalize clinical operations and use these new capabilities to avoid contracting with CROs to execute clinical trials. As has been the experience at TRACON, we believe such an investment would be expected to result in substantial time and cost savings for our partner. We believe that over time, our product development platform has earned strong credibility as a compelling solution for companies who wish to become CRO-independent and reap the rewards of conducting trials faster, at higher quality, and at lower costs compared to trials typically contracted to CROs. At this time, Scott will provide an update on our financials.

Scott Brown (CFO)

Thank you, Charles, and good afternoon, everyone. TRACON's research and development expenses were $4.1 million and $10 million for the three and nine months ended September 30, 2022, respectively, compared to $2.7 million and $8.1 million for the comparable periods of 2021. The increase in both periods was related to robust enrollment in the pivotal ENVASARC trial. General and administrative expenses were $2.3 million and $12 million for the three and nine months ended September 30, 2022, respectively, compared to $4.2 million and $12.9 million for the comparable periods of 2021. The decrease in both periods was due to lower legal expenses as the arbitration hearing is now complete. We expect G&A expenses to remain relatively consistent for the remainder of the year.

However, there may be increases to the extent we must expend additional legal fees in connection with enforcing and collecting any arbitration award from I-Mab. Our net loss was $6.4 million and $22.1 million for the three and nine months ended September thirtieth, 2022, respectively, compared to $7 million and $21 million for the comparable periods of 2021. Turning to the balance sheet at September thirtieth, 2022, our cash and cash equivalents totaled $17 million, compared to $24.1 million at December thirty-first, 2021. We expect our current capital resources to be sufficient to fund our planned operations into mid-2023. With that, I will turn the call back over to Charles.

Charles Theuer (President and CEO)

Thank you, Scott. As you have heard, our corporate strategy is proceeding as planned. Allow me to recap four key events. First, this month, we expect to complete the TJ004309 phase I trial, permitting I-Mab the opportunity to exercise their stated desire to terminate the agreement for a payment to TRACON of $9 million. Second, this year, we expect to report the DMC interim efficacy assessment for the two ENVASARC cohorts dosed with 600 mg of envafolimab. Third, in the first quarter of 2023, we expect to report the arbitration panel's binding decision, including potential damage awards regarding our legal disputes with I-Mab.

Fourth, we also expect to further leverage our unique product development platform to provide TRACON non-dilutive capital in exchange for enabling companies tired of being beholden to CROs, potentially benefit from our capabilities and realize for themselves the substantial time and cost savings we enjoy at TRACON. As Scott indicated, our current cash runway extends into mid-2023 and past each of these expected upcoming key milestones. Thank you for your time and attention, and we are now available to answer your questions.

Operator (participant)

Thank you. As a reminder, to ask a question at this time, please press star one one on your touchtone telephone. Please stand by while we compile the Q&A roster. Our first question comes from the line of Joel Beatty with Baird. Your line is now open.

Joel Beatty (Biotechnology Equity Research Analyst)

Hey, great. Thanks for taking the questions and congrats on the update. My first question is on the interim analysis from the ENVASARC trial coming up later this quarter, what information could we get? Will it just be a go/no-go decision, or can we learn more about whether we're seeing the goal of the double-digit response rate?

Charles Theuer (President and CEO)

Joel, thanks for the question. Yeah, the interim analysis, I think both those are key expectations that investors should expect. First is to exceed the futility threshold, which requires a single response in each cohort among the first 18 patients. Also, we expect to report an aggregate response rate with the expectation being that a double-digit response rate will be perceived by management as very encouraging, given that's basically the endpoint of the study is a very low double-digit response at 11.25%. Knowing that that will be reported as a preliminary response, and I think that's such an important concept that, you know, many of these patients have had two scans. They get scanned at 6 weeks, and they get scanned at 12 weeks.

We know from prior studies of checkpoint inhibitors that many patients will have decreases in tumor burden at six and 12 weeks, but it may not reach that threshold of 30% that defines an objective response. Seeing that we have responses by central review in the double-digit range based on the limited data we have in those 36 patients is what we would perceive as very positive, and that would be our goal in terms of being able to report that, you know, before end of the year at that interim assessment.

Joel Beatty (Biotechnology Equity Research Analyst)

Very great. Yeah, that's helpful. A follow-up question on the arbitration. It was mentioned that over $200 million in damages is being sought from I-Mab. Could you discuss what, if anything, I-Mab is seeking from TRACON as part of the arbitration?

Charles Theuer (President and CEO)

The arbitration's interesting in that, you know, I-Mab initiated the arbitration. What happened in terms of sequence of events, we invoked the dispute resolution provisions in the actual agreements we had with them in each of the two agreements. In response to that, I-Mab initiated arbitration to ask the panel to declare they were not in breach of either agreement. That's what their claim is to claim that they're not in breach. You know, our counterclaims were much more detailed and specific. With respect to each agreement, we claim breach. With respect to the TJ004309 agreement, we claim that they had done a deal with a company in Korea, KG Bio, in March of 2020, that triggered a payment to TRACON under the revenue share obligations of that agreement.

With respect to the Bispecific Antibody Agreement, that was a detailed strategic transaction whereby I-Mab was obligated to nominate two bispecifics to TRACON annually for each of five years to a total of ten, of which we would take one to two per year up to a total of five into the clinic. We learned that prior to our agreement, unbeknownst to us at that time, they had signed a deal with another Korean company for bispecifics at that time, and that was relevant with respect to their ability to perform with respect to the agreement. Those are our counterclaims around those breaches, one of each agreement, and the damages around those counterclaims, as noted in the script and in our filings, is over $200 million in damages.

Joel Beatty (Biotechnology Equity Research Analyst)

Got it. Thank you.

Charles Theuer (President and CEO)

Thank you, Joel.

Operator (participant)

Thank you. Our next question comes from the line of Ed White with H.C. Wainwright. Your line is now open.

Ed White (Managing Director an Senior Biotechnology Analyst)

Good evening. Thanks for taking my questions.

Charles Theuer (President and CEO)

Pleasure.

Ed White (Managing Director an Senior Biotechnology Analyst)

The first question I have is actually for Scott. Scott, the R&D expenses were up about 40%, sequentially. I'm just curious if there's anything one-time in nature in there or if this is going to be the sort of base run rate going forward, as you move through the ENVASARC trial.

Scott Brown (CFO)

Hi, Ed. Thanks for the question. Yeah, I was thinking back, but I think it was last quarter that I gave you the response that we would expect in the low $3-$3.5 on R&D, and we're, you know, hit $4.1 this quarter. I mean, the real reason for that was we had enrollment that was much higher than we expected in ENVASARC. I mean, this is probably the upper limit is what I would expect going forward. You know, it'd probably be a little bit lower, but this is on the upper end of what I would expect on R&D.

Ed White (Managing Director an Senior Biotechnology Analyst)

Okay. Thanks, Scott. Then another question, just with your cash runway that you mentioned into the middle of 2023, does that include any more of the $25 million of that you have left on your debt facility?

Scott Brown (CFO)

It doesn't, no. Just the $10 that we drew at closing.

Ed White (Managing Director an Senior Biotechnology Analyst)

Okay. The other question I had was just a big picture strategic question. When you have mentioned, you know, the outlook now for trying to use your product development platform as a CRO alternative for others, either you running the trials or franchise it. Has there been any interest from outside companies as of yet? Is this something we should consider to see deals announced in 2023 or 2024? Is it really too early to tell?

Charles Theuer (President and CEO)

No, I'd appreciate the question. Yeah, we've had interest on both of our offerings in that regard. You know, one offering is we call pay for performance, where we're willing to do the trial in lieu of a CRO, take on that responsibilities, but we do it in a pay for performance meaning we get paid based on accruing patients, not just on sitting on our hands and collecting project management fees. We can do it at a lower cost than a CRO, and we can do it more quickly because we have no incentive to delay the trial the way a CRO does by being paid, frankly, for an activity.

The payback for TRACON is we still make a profit because we can do trials at such a low cost, but we also share in the revenue, which further aligns us with our partner to see the drug move quickly through the clinical trial process. We have a lot of interest in that model. You know, we do carefully select what we would take into our portfolio around that model. We wanna be excited by the molecules. We do have a high bar on that, but we're evaluating several opportunities in that regard. The second opportunity is really what we call giving the keys to the kingdom to a partner, and that's a franchise model. You know, imagine a company had our capabilities with respect to executing clinical trials.

The amount of money they could save is incredible. I'll give you an example. We feel we do trials at about a third the cost of a CRO. I mean, you know what a phase three trial costs to do with a CRO. Imagine that cost was a third, and that's what would be enabled if a company actually received the keys to the kingdom from TRACON, and we taught them how to do trials themselves. The amount of money they would save on a per-trial basis would be incredible. We do have interest there also. I think there also we need to pick our partner very carefully.

I would say in general, in terms of what you can think about with respect to TRACON strategically, would be for us to execute a franchise model partner and a pay-for-performance model partner, one per year of each of those models for the next several years would be our goal. It would help us in terms of gaining capital into our company. It would help our partners incredibly by freeing them of the shackles of the CRO reimbursement system. It would actually help the entire ecosystem by moving more good products through the clinical trial process more quickly.

Ed White (Managing Director an Senior Biotechnology Analyst)

Great. Thanks, Charles. Perhaps my last question, if I could just ask on TRC102.

Charles Theuer (President and CEO)

Yeah.

Ed White (Managing Director an Senior Biotechnology Analyst)

Did I hear you correctly stating that you think you'll have data from the NCI trial in 2024? If that data is positive, what are the next steps that the company will take?

Charles Theuer (President and CEO)

Yeah, great question. Thanks for asking. So TRC102, we feel is a little bit underappreciated asset at TRACON, but it's a, you know, it's in the class of DNA damage repair inhibitors, which I think people understand could be very, very valuable in terms of additional therapies to build on chemotherapy and even IO therapy. If we see positive data for that phase II study, we would plan to move that forward immediately into a pivotal trial, and likely TRACON would sponsor that trial using its own independent product development platform. That could be a very important therapy for patients because it'd be a frontline lung cancer, localized lung cancer trial that would combine TRC102 with standard of care therapy.

Basically, it would be repeating the phase II study going on currently just with a larger sample size, as a phase III trial. Expect that we would take that over and run that as a phase III as a pivotal study for approval of TRC102.

Ed White (Managing Director an Senior Biotechnology Analyst)

You had expected data from the NCI in 2024?

Charles Theuer (President and CEO)

Sorry, yes. We do expect 2024 from the NCI, which is noted in the ClinicalTrials.gov posting as well.

Ed White (Managing Director an Senior Biotechnology Analyst)

Okay. Thanks, Charles.

Charles Theuer (President and CEO)

Thank you, Ed.

Operator (participant)

Thank you. Our next question comes from the line of Soumit Roy with JonesTrading. Your line is now open.

Soumit Roy (Biotech Research Analyst)

Hi, everyone. Thank you for providing all the updates. Quick question on if you are going to look at the mutational status of these patient for ENVASARC or other like sarcoma trials like MDM2 or P53 or CDKN2A to get a sense if responders and non-responders are specifically falling into having these mutations.

Charles Theuer (President and CEO)

In ENVASARC, we're looking at biomarkers from archival tumor specimens, Soumit. I'd say the markers we're more focused on are the markers we're focused on. To answer your question, we are looking at markers for the ENVASARC pivotal trial with respect to archival tumor specimens. I would say the majority of specimens or markers we're looking at are more of the immuno-oncology flavor, for instance, tumor mutational burden, PDL1 status as examples. You know, we could look at additional markers that you mentioned, including MDM2. They're not as high on their priority list in the sense that they haven't correlated as well with response to immune therapy. You know, we do have the broad ability to interrogate the archival tumor tissue as we see fit and can do additional analyses.

Soumit Roy (Biotech Research Analyst)

You mentioned the higher rate of enrollment. Are you seeing it broadly or specific sites are enrolling better? Do you see enrollment completion ahead of time, or is it maintaining at year-end 2023?

Charles Theuer (President and CEO)

Yeah, thanks for the question. No, we are seeing very broad accrual across multiple sites, which we're very encouraged by. Based on the current level of accrual, we will beat the projected accrual, which was at the end of 2023. We'll continue to monitor that to try to give a more specific date on expected complete accrual. Right now, I'd say we're well ahead of schedule, which would put us sometime in the second half of 2023, but ahead of the initial projection, which was the end of 2023.

Soumit Roy (Biotech Research Analyst)

Currently, how many patients have been enrolled so far? Sorry if I missed it.

Charles Theuer (President and CEO)

Sure. No. We've enrolled 68 patients. You know, our last update, I think we had updated the street at 36 patients, and that was at the end of July, and we're at 68 patients now in mid-November. We're seeing accrual of about, you know, roughly 30 patients in about a quarter every three to four months. You start doing the math, you know, that's about 90-100 patients a year as an example, when we had estimated it would be about 80 patients a year. You know, we're ahead of accrual by about that factor.

Soumit Roy (Biotech Research Analyst)

Thank you.

Charles Theuer (President and CEO)

Thank you, Soumit.

Operator (participant)

Thank you. As a reminder, to ask a question at this time, please press star one one on your touchtone telephone. Our next question comes from the line of Robert Hazlett with BTIG. Your line is now open.

Robert Hazlett (Managing Director and Equity Research Analyst)

Sure. Sorry, having connection difficulties. My apologies for this. Maybe you touched on this, Charles. If you did, my apologies. As we get the interim efficacy data, will we see data that emerges between for both arms, or will we see collective data in terms of the both arms together?

Charles Theuer (President and CEO)

Hi, Bert. Appreciate your question. Yeah. Our thought is that we don't want to, if you will, bias patients who may be assigned to an arm that if there's a high response rate reported, would say, "Well, I don't wanna be in the study because I didn't get the arm I wanted." Expect there would be an aggregate response rate. I think that's the best way to preserve the integrity of the trial.

Robert Hazlett (Managing Director and Equity Research Analyst)

Makes sense. Thank you.

Charles Theuer (President and CEO)

Thank you, Bert.

Robert Hazlett (Managing Director and Equity Research Analyst)

Just one with regard to the arbitration hearing.

Charles Theuer (President and CEO)

Yeah.

Robert Hazlett (Managing Director and Equity Research Analyst)

With regard to arbitration, I know the word binding, and we've talked about this, I think, offline, but I'd love just a little bit more clarity. The word binding has permanence. Is there any appeals process? In terms of the award timing, assuming award... So payment for other compensation might be rendered one way or another. Thanks for that.

Charles Theuer (President and CEO)

Sure, Bert. Yeah. This is binding arbitration, which is recognized internationally. Based on the award, we expect that I-Mab will pay the award. You can confirm the award in a U.S. court as a further kind of legal process, and we've been told that it's standard procedure that a U.S. court will confirm an international arbitration award in almost every case. In terms of the ability of our opponent to pay, you know, based on the balance sheet, we don't see that as an issue and, you know, despite, if you will, the large amount of damages that we are requesting based on the tribunal. Sorry, Bert, you're a little scratchy. Does that answer your question?

Robert Hazlett (Managing Director and Equity Research Analyst)

It does. Thank you very much. Look forward to the data update and the results of the hearing. Thank you.

Charles Theuer (President and CEO)

Thank you, Bert.

Operator (participant)

Thank you. I'm currently showing no further questions at this time. I'd like to hand the conference back over to Dr. Theuer for closing remarks.

Charles Theuer (President and CEO)

Well, I'd like to thank our listeners and also the analysts for the questions. We appreciate them and look forward to updating you at the next quarterly call. Have a good day.

Operator (participant)

This concludes today's conference call. Thank you for participating. You may now disconnect.