Coherus Oncology Inc (CHRS) 2017 Q2 法說會逐字稿

Ladies and gentlemen, thank you for standing by and welcome to the Coherus BioSciences Second Quarter Earnings Conference Call. My name is Katherine, and I will be your conference operator for today's call. (Operator Instructions) As a reminder, this conference call is being recorded.

I would now like to turn the call over to Patrick O'Brien, Senior Vice President of Investor Relations. Please go ahead.

Thank you, Katherine, and good afternoon, everyone.

After close of market today, we issued a second quarter financial results press release. This release can be found on the Coherus BioSciences' website.

Joining me for today's call will be Dennis Lanfear, President, CEO and Chairman; Barbara Finck, Chief Medical Officer; Jean Viret, CFO; Matt Hooper, EVP and General Counsel; and Vladimir Vexler, EVP, Analytical and Translational Sciences.

Before we begin our formal remarks, I'd like to remind you that we will be making forward-looking statements with respect to product development plans, all of which involve certain assumptions, risks and uncertainties that are beyond our control and could cause actual results to differ from these statements. A description of these risks can be found in our most recent Form 10-Q on file with the SEC. In addition, Coherus BioSciences does not undertake any obligation to update any forward-looking statements made during this call.

I would now like to turn the call over to Dennis.

Thank you, Patrick, and thank you all for joining us today.

Today, we'd like to talk about 3 key areas for you. First of all, we'll talk about our product development update, which, of course, will include an update on the CHS-1701 CRL. Secondarily, we will discuss our recently filed IPR for Enbrel, and I'll be joined there by Matt Hooper, the company's General Counsel. Lastly, the company has made very good progress towards our financial goals and those will be presented by our CFO, Dr. Jean Viret.

Now, in terms of the CRL and the development of things there, I would point out that we have successfully completed redevelopment of the immunogenicity assay, including with backup capabilities, consistent with the expectations for higher sensitivity per the FDA's request. This assay is performing as required by the agency. The next step is assay validation, followed by the processing of the sample. We continue to anticipate a meeting with the FDA in Q3-Q4 2017 and scheduling is still pending, but timing will be aligned with BLA resubmission by the end of year as previously guided. We're happy to take additional questions during Q&A on this particular aspect of the complete response letter.

As you recall, the second part of the complete response letter addressed certain manufacturing and process-related requests. I'm happy to update you on progress there. Pursuant to those, we have made very good progress, consistent with our expectations and previous guidance, with respect to certain additional manufacturing and release testing reports and information as requested by FDA. As was indicated previously, we are compiling and correlating clinical data as requested and continue to believe this will be completed prior to [the other efforts]. That is to say, this remains off the critical path. We do not foresee and have not been requested to perform additional process qualification lots or other exercises which would exceed our currently planned timing.

Now, in terms of the next steps for the CRL, we will continue to guide to a late Q4 2017 BLA resubmission. We will inform you upon FDA acknowledgment of the resubmission, which should be 30 days after that date. And as you know, normal FDA review timing for this resubmission is 6 months.

Now, in terms of the 1701 MAA and European update, efforts on the EU and the U.S. filings are progressing in parallel. There are a few factors that are impacting the EMA review schedule and the timing for an anticipated positive opinion. First, certain inspections, which comprise the critical path for the review, are now scheduled for late summer and have been subject to EMA availability and their own scheduling constraints. Secondarily, let me point out that EMA and FDA appear to be taking similar approaches with respect to the immunogenicity study and data. Thus, we are currently harmonizing our approach and data sets globally with the regulators.

Secondly, as previously indicated, we anticipate completion of this harmonization by late 2017. We expect to have further discussions with EMA around timing and we'll update you accordingly. This global harmonization with both health authorities may place the EMA positive opinion in roughly the same time frame as the target FDA approval, but guidance is forthcoming.

Now, in terms of CHS-1420, the company's HUMIRA biosimilar, on the legal front, we've had a very good quarter. As you know, we successfully invalidated 3 AbbVie patents, '135, '680, and '987. We've also had some positive developments with the formulation IP portfolio, which I will cover subsequently.

In terms of 1420, we are targeting the BLA filing for late first half of 2018. And in terms of the change of the CMOs, we have now identified an alternative fill-finish facility for CHS-1420 where we have high confidence we'll meet our regulatory expectations. The MAA will occur directly after the U.S. filing. This is primarily because the same drug product CMO is being used to supply both the EU and the U.S. markets. We look forward to the September 12 institution decisions and the Patent Office on our 4 IPR petitions regarding AbbVie's '619 patent covering non-buffered formulations. These decisions are expected to impact ongoing partnering discussions. Also, the PTAB decisions on the '619 IPRs will inform our strategy regarding conduct of an additional human PK study, that is to say which formulation to use in that study.

Let me give you an update on the 1420 formulation. We are successfully advancing complex and robust adalimumab formulation patent portfolio to protect our innovations. We believe our patents will form a competitive advantage against other biosimilars seeking workarounds to the AbbVie patents. Our platform includes both buffered and non-buffered formulations.

In terms of the buffered formulations, we now have 5 issued U.S. patents and 3 more of our patent applications have been allowed and will issue in the coming months. For buffer-free formulations, we now have one issued U.S. patent with 6 additional allowed U.S. patent applications expected to issue soon covering a variety of non-buffered formulations. Four of these allowed applications will issue over the next 3 weeks and are generally directed to various combinations of excipients in a non-buffered adalimumab formulation. All of our published applications and patents are publicly available and can be viewed on the U.S. PTO website.

Now, as previously discussed, the company is prioritizing progress of 1701 and the 1420 filings.

For CHS-0214, the company's Enbrel biosimilar, we are refocusing on the U.S. market and the company's General Counsel, Matt Hooper, will discuss the IPR and that news momentarily. If our overall anti-TNF IP strategy is successful, obviously we could have 2 anti-TNF products in the most attractive market, that is here in the U.S. Let me remind you that clinical program for CHS-0214 has been conducted fully on the auspices of the U.S. FDA.

Now, the company's General Counsel, Matt Hooper, will discuss the Brockhaus IPR news and its implications for 0214. Matt?

Thank you, Dennis.

On Friday, we filed an IPR against U.S. patent 8,163,522. This patent is owned by Roche, but is controlled exclusively by Amgen.

Before I comment on the IPR, I want to just provide a little bit of brief background. As I think you all know, the etanercept protein is a fusion protein that combines the TNFR receptor with the constant region of an IgG1 antibody. This was a follow-on development based on the original discovery of the TNFR receptor, which was discovered and patented by Smith and Immunex, covering the ability to block TNF alpha. These 2 patents are companion patents that are based on the same specification. The '522 patent is directed to a method of making this fusion protein and the '182 patent, which we expect to file shortly, is directed to the fusion protein itself.

Now, as you know, 2 years ago, Kyle Bass and Hayman Capital, under the entity of Coalition for Affordable Drugs, filed an IPR against the '522 patent. And I think a question that would come up is, what are we doing differently here? What deficiencies have we been able to correct in the Bass IPR?

First, I would point out that even Roche, the owner of the patent, admitted that the Bass IPR took a less than rigorous approach. We certainly agree. At a high level, our view of the deficiencies of the original IPR by Bass is that it did not identify the best prior art, which we believe we have. And the Bass IPR entirely failed to address the patent owner's argument that etanercept somehow achieves unexpected or surprising results.

Now, our IPR is fundamentally different in correcting these deficiencies. First, we rely on 2 prior art publications that CFAD failed to capitalize on. The publications that we use in the IPR demonstrate that it was, in fact, entirely obvious to build a fusion protein, like etanercept, using the exact portion of the IgG constant region as described in the '522 patent. That was a failing that the Board identified in Bass' petition and I think we have thoroughly corrected that. Secondly, there was a deficiency in that the Bass IPR failed to address the argument of the patent owner that there were somehow unexpected results in this fusion protein. We have worked with a renowned expert, who's a declarant in our IPR, Dr. Dennis Burton, who's a professor at Scripps Research Institute. Now, Bass failed to challenge Roche's claim of unexpected results, but Dr. Burton has addressed that very thoroughly and breaks those arguments down. We demonstrate that the vast majority of the results that are achieved with this protein are, in fact, exactly what science has expected and the remainder of the data provided by the patent owner are, in fact, based on highly questionable data. We expect the Board will appreciate these essential differences and will adopt the compelling case that we put together here.

Thank you very much, Matt. The company's finances will now be reviewed by Dr. Jean Viret, our Chief Financial Officer. Jean?

Thank you, Denny.

Let me give you an update on our financial position and results. Cash, cash equivalents and short-term investments and marketable securities totaled $118.3 million as of June 30, 2017 compared to $174.8 million as of March 31, 2017. Cash used in operation was down 24% to $55.6 million in the second quarter of 2017, as compared to $73.3 million in the first quarter of 2017. We anticipate cash usage of approximately $40 million to $45 million per quarter in the second half of 2017, and $30 million to $35 million per quarter in the first half of 2018 prior to approval.

Total revenue for the second quarter of 2017 was $1.4 million as compared to $14.1 million in the second quarter of 2016. Total revenue for the 6 months ended June 30, 2017 was $1.6 million as compared to $26.4 million for the same period in 2016. Decrease over the same period in 2016 was mainly attributable to the termination of an agreement for CHS-0214 with Shire whereupon Coherus regained rights to CHS-0214 in Europe in the third quarter of 2016.

Research and development expenses for the second quarter of 2017 were $34.5 million compared with $65.5 million over the same period in 2016. R&D expenses for the 6 months ended June 30, 2017 were $88.3 million as compared to $130.9 million over the same period in 2016. Decreases in R&D expenses were mainly attributable to the completion of our Phase III and Phase I clinical studies for CHS-0214 and CHS-1420 in 2016 and a decrease in other development costs for our pipeline products.

General and administrative expenses for the second quarter of 2017 were $23.5 million compared to $11.3 million over the same period in 2016. G&A expenses for the 6 months ended June 30, 2017 were $42.3 million as compared to $22.7 million over the same period in 2016. Changes in G&A expenses were mainly attributable to legal and other professional fees to support intellectual property strategy and personnel-related costs to support our CHS-1701 pre-commercial activities in the first 6 months of 2017.

Net loss attributable to Coherus for the second quarter of 2017 was $55.3 million or $1.08 per share compared to $70 million or $1.72 per share for the same period in 2016.

We will now turn the call to Q&A. Operator, you may open the call to questions.

Thank you, Jean.

(Operator Instructions) Our first question comes from Mohit Bansal with Citigroup.

My question is regarding the meeting you are having with the FDA. Could you help us understand what do you plan to discuss in this meeting with the FDA? And once you file, is it fair to assume that FDA agreed with the assay and the data there and, therefore, you are filing it? And I have a follow-up.

Mohit, I'll let Dr. Vladimir Vexler, the company's Executive Vice President of Analytical and Translational Sciences, offer additional detail. But we think it's very important that we review with the FDA our plan to address all the questions that they raised. We intend to move forward with a meeting or meetings in which we review each of those questions and the company's replies and the work that we have done to satisfy those particular results.

I think that it's fair to say, pursuant to the second half of your question, if the company goes ahead and files a reply with the FDA, we will do so. Having reviewed with the FDA and come to concurrence with them on the results and have received appropriate positive feedback from the agency on that. So that would give us confidence that the FDA is tracking with us as far as those replies. And Dr. Vexler, do you have any additional comments regarding this particular issue for Mohit?

I just would reiterate that we, in fact, have successfully developed the assay which we believe [will be fully in line with] the FDA expectation, as Dennis pointed out. The purpose would be to make sure that we're tracking with the FDA and they accept our assay moving forward.

Great. And one more question, if I may ask, regarding the cash. So you have mentioned a lot of cuts here, but still, if I do the math, from the point you have the cash for, you are still a couple of months short from the point where you could have a potential approval in Europe and U.S. So at this point, I mean, what other options you are thinking about? And then, partnership discussions, could some of that could happen before -- later in the year or early next year?

Yes. I mean, these numbers, obviously, we get control over. So we will use the cash as we see fit. And we're perfectly conscious of the fact that we want to last for at least 12 months, if that's your question.

Yes, we anticipate to have discussions for partnering, particularly after -- if '619 is instituted, that would be an area where we will up our efforts. And depending on the results we have on our small molecule, 131, we'll also expect to have partnering discussions in development there. So we're managing our cash very carefully and we're also managing ways to receive cash.

Our next question comes from Alethia Young with Crédit Suisse.

This is Ellie on for Alethia. Can you give us a little bit more color on the path forward for your HUMIRA biosimilar program? Specifically, when do you expect to start the PK study for your other formulations that are impacted by the '166 patent? I know you mentioned that on '619 IPR, but can you walk us through the potential pathways forward for the program depending on the outcome of this IPR?

Yes. I think that the '619 IPR will determine which formulation we take forward. As you know, we have disclosed that we have developed a number of formulations, both buffered and non-buffered. So the company would not disclose which formulations it will proceed with under the scenario in which '619 is not successful for strategic and competitive reasons. However, clearly, if the '619 IPR is successfully instituted, that would weigh significantly on our selection of a PK study to proceed with. You can also factor into your thinking that PK studies take approximately 6 months to execute and to report back, so that puts it within the time frame of the filing out in the end of the first half of 2018, but forgive us for not giving greater color on our actual strategy for pursuing with this for competitive reasons.

And our next question comes from Morgan Williams with Barclays.

So first, on the etanercept IPR that you filed, the '522 patent, so how do you explain kind of the shifts in thinking on the etanercept IP estate? I know previously you'd said that you wouldn't challenge the patents but instead wait on the outcome of the Sandoz district court trial. Since that trial is scheduled for early next year, is there a reason that you think the District Court is not the most prudent path to take in terms of overturning these 2 patents?

And then, secondly, on the 1701 EMA data request, you alluded to a similar frame of mind at the FDA. Is it the same assay that's being questioned? And kind of on that same point of thinking, is the filer that could have potentially prompted the FDA to request additional analysis, also -- do they also have a pegfilgrastim filing in the EMA?

Morgan, let me take the last one first pursuant to 1701 EU MAA versus U.S. and then I'll let Matt Hooper talk about issues regarding the timing and the approach of the 0214 Brockhaus IPR. Although I would just state clearly that I do not believe we have offered guidance previously that we would not challenge Brockhaus. I think we've always reserved that right.

Pursuant to 1701 though, we -- in having our communications with the regulators, it became clear that the regulators are seeking harmonization in a number of areas across the Atlantic. Whether it is inspection of facilities or other things, they seek to be, I think, in somewhat step with each other. The issue is, is that if you develop information for one set of regulatory authorities, it's very easy for the other set of regulatory authorities to request that additional information. So I think it's less an issue of the regulators in the EU questioning the results of any study, but if you do additional analyses, they very reasonably would want to be updated on those analyses and take a look at it. And so that's really just the long and short of it on both sides.

Maybe Vladimir wants to offer a few more comments. Vlad, anything further on this?

No. I think, Dennis, you pretty much summed it up. It all went really well.

So we think that the Europeans have a slightly different orientation towards a number of things, whether it's pharmacokinetic studies or antigenicity studies or whatever, but we wouldn't read too much into it other than they would just like -- each agency would like to see what the other agency is doing. They tend to stay together.

Now, pursuant to 0214, the Brockhaus IPR and so on, Matt Hooper can address your question there. Matt?

Morgan, so when the IPR filed by Bass was filed in 2015, we saw the non-institution decision in early 2016 and we wanted to kind of keep our eye on that and understand the issues around that patent with -- obviously with an eye toward the potential for mounting a challenge. I don't -- as Dennis said, we never said we would or would not.

But in terms of, sort of, the why now? The strategic thinking around that is -- probably goes to a deeper layer on our strategy than we're prepared to disclose, but we just felt that the time was appropriate to mount that challenge. And we believe we've done so very effectively.

Yes. Morgan, the other comment I would make is I think that we've gained increased proficiency with IPRs as time has gone on. Certainly, we were successful with the '135 IPR with AbbVie. And I think that we've watched IPRs that have been successful and not successful -- we're very well aware of, I think, how the patent office looks at these. So as Matt said, there's a variety of reasons, most of which are confidential and strategic, why we did this now, but we've kept a close eye on the U.S. Enbrel market. We were very careful to retain rights to that market when this asset was out-licensed globally to Baxter, to Baxalta. And so I think it's a case really of an appropriate timing and strategy coming to fruition, just as we do with our other filings and regarding the HUMIRA formulations and so on.

Our next question comes from Ian Somaiya with BMO Capital Markets.

This is Steve on for Ian. On the Enbrel biosimilar overall global strategy there, can you just help us understand the differences between Enbrel and HUMIRA biosimilars in terms of manufacturing costs and margins and any other key factors that you briefly alluded to in the 8-K following -- getting back the rights in Japan?

Yes. So it -- Dr. Barbara Finck, the company's Chief Medical Officer, can comment subsequently on how Enbrel and HUMIRA are slightly different in terms of the various therapeutic markets that they address.

However, I would say one of the prime differences in terms of these 2 products is that ENBREL is administered weekly and HUMIRA is administered biweekly in roughly the same amounts. So you use -- roughly about half as much HUMIRA as you do Enbrel. And therefore, you have an inherent COGS disadvantage that's built into an Enbrel biosimilar. Secondarily, it's arguably easier to produce a monoclonal antibody like HUMIRA in cell culture than it is a fusion protein, which is a much more novel, non-natural construct. So the Enbrel process, because of the nature of the fusion protein, it's simply more difficult to make.

Pursuant to your point about Japan and the COGS there, Japanese reimbursement policy was such that it made it more difficult to make a profitable enterprise out of Enbrel in Japan and, to a lesser degree, Europe. However, the U.S. is certainly a lucrative market for both of these molecules, for both HUMIRA and Enbrel, and therefore a very attractive market, right, which is why we retained it ourselves. So we don't think that COGS is an issue in the U.S. with Enbrel. And we also think that there is an advantage of having both an Enbrel biosimilar and a HUMIRA biosimilar together if our intellectual property strategy is successful.

Barbara, could you just comment briefly on the therapeutic differences between Enbrel and HUMIRA?

Right. So I think it's important to think about having the ability to have 2 of these products in the U.S. market. They are sort of different when you think about their use therapeutically. Enbrel and HUMIRA both work in rheumatoid arthritis, psoriasis and psoriatic arthritis, but HUMIRA has the additional indication of inflammatory bowel disease, Crohn's and ulcerative colitis and a number of other indications.

In the primary use and such as in RA, because people go to a bio -- not biosimilar, biologic early on, they try to choose one that has low immunogenicity and fewer side effects, and that's Enbrel. But as you get into more severe diseases or, for long periods of time, some people then stop responding, you have to transfer them over to another TNF inhibitor, and that's usually HUMIRA. So for some indications, you'd start with HUMIRA. In other indications, you'd start with Enbrel because of its decrease in terms of immunogenicity and adverse events. But it's very nice to have both in the bag because you can then be available when it's time to switch people or to have new starts on each of these indications.

Hope that's helpful.

Great. Yes. No, that's very helpful. If I could just ask a quick follow-up, a housekeeping question on IPR. Does any context or ruling related to the Bass IPR have any impact on how this new one will proceed in court? Or is it basically hitting the reset button and getting a clean slate to proceed with the arguments that you've made in the new IPR?

Steve, it would be the latter. It's a complete reset.

(Operator Instructions) And our next question comes from Tyler Van Buren with Cowen and Company.

Just the first one was just a point of clarification on the 1701 manufacturing process that's ongoing, and good to hear that you made progress. I guess -- and you mentioned that's off the critical path. Maybe just a little more clarity with respect to when we could get resolution of that? Is it something that will be resubmitted along with the immunogenicity assay and data and we'll just have to wait for a final potential approval? Or could we potentially hear of a resolution prior to resubmission or prior to approval? And what's kind of the gating items there?

Tyler, first, we would resubmit the entire application together, that is the immunogenicity component plus the process/analytical manufactured component. They would both go in together and they would be reviewed as a whole and the package would be dealt with at the FDA in that context.

The point that we were making earlier is that the process and the analytical part of the questions that came up in the response letter were less time-consuming actually to deal with and address than the analytical portion. With the analytical portion, you've got to first successfully redevelop the assay, then validate it, then process the samples, generate a report, QC the data and then submit. So that takes a little longer period of time, so that's the critical path time diver. And the point that we are making is, within that time frame, we can straightforwardly address the additional analytical reports, analyses and things that the FDA asked us about. And so those are -- I think we've characterized those earlier as reasonably straightforward and straightforwardly addressable. So that's what we intend to do. That's really what we're going to do.

I think -- for your insight, I think probably keeping an eye on our progress with the immunogenicity assay and the data, it's probably more straightforward. And as you point out, we're happy to report today that the redevelopment of the assay is now complete. It's performing as the FDA requested. So we're moving on to validation. So that's sort of putting the big one behind us and we feel good about that.

Okay. That's helpful. And just a follow-up or a final question on the 0214 program and the Brockhaus IPR strategy. It was very helpful to hear that on the call. Assuming that, I guess, both of these IPRs are successful, can you just give us an understanding of if there's any hurdles that are remaining or if you guys would be free to launch? Or what else we should take into consideration there?

Yes. That's a good question. I'll let Matt Hooper, our General Counsel, address that. Matt?

Tyler, if we can get past these patents in the IPR, I think the -- any remaining hurdles are entirely manageable. I think you're going to go into the patent dance. You're going to potentially see some peripheral patents because that's just -- that's the game. That's the way it's being done right now. But for the most part, this is a significant impediment that, once removed, would clear a path.

Yes. I would just say there's one or 2 process things that we have sidestepped, as is our custom, as you've seen us do with 1701 and other products. We have our own formulation, intellectual property already that does not bear upon Amgen's formulation. So we're clear there. This isn't a product that has big formulation barriers like the HUMIRA product, which -- that's the primary battlefield there. Of course, it's formulation. I agree with Matt. It's a relatively clear field after these 2 patents are addressed.

It's somewhat different. Amgen embraced a somewhat different blocking strategy than AbbVie did where Amgen has -- basically, it's 2 very large patents which comprise the obstruction, whereas AbbVie erected barriers with many, many patents to jump over.

Okay. That's helpful. And maybe just a follow-up, and I apologize for it being kind of a loaded question, but maybe just some brief comments on the Supreme Court review of the IPR process, given that you guys clearly have a very unique perspective and a lot of experience with it?

A lot of experience with it.

Tyler, I have to confess, I have no idea how the Supreme Court is going to handle this issue. And all I can think about is the complexity of a decision that would somehow undo the IPR process. How that would apply? Would it be retroactive? Would there be some kind of a grandfathering? I mean, a lot of -- there has been a lot of changes in conduct based on IPR decisions that have come down successfully. I -- it's hard to understand exactly how the Supreme Court is going to deal with this issue, so I'd just basically say, yes, we're declining from second-guessing the Supreme Court, but watch carefully.

And we have time for one more question, and that question is from Chris Schott with JP Morgan.

First one is just a commercial question as we think about the TNF -- just interested on your view on the biosimilar Remicade uptake thus far in the U.S. I think Pfizer, on this -- on their call last week, talked about it's been more difficult to secure commercial access to the product relative to expectations. As you think about just the opportunity once you get through the IP for 1420, does that factor in at all? There's one follow-up after that.

Yes. So I'm going to decline to comment substantially on that. We're focused primarily, as you know, on the intellectual property, but suffice it to say that all the payers we have talked to regarding 1420 have expressed a fair amount of enthusiasm for that product getting on the market. And I would be cautious about drawing parallels between the Remicade marketing situation, which is an unfeasible product and so on, and the HUMIRA product, which I think is a very different one. But please go ahead with your second question, Chris.

Sure. And just -- I want to follow up an earlier question. Just to the extent that the '619 IPR is not instituted, is there still a pathway for a 2019 launch? I know you've got that -- much different formulations in process. Or at that point, would we be thinking about something more in the early 2020s, if -- again, in that scenario where it's not instituted?

Chris, it's Matt. I think that the scenario for the 2 -- 2019 launch is still intact. We're looking for easy kills in the IPR. In the absence of that, we are going to attack these patents in District Court. We think the invalidity arguments that can be raised can be effectively advanced in District Court litigation and we're prepared to do that. But we see the IPR as an efficient first attempt to clear a hurdle in a very efficient and cost-effective manner that doesn't require costly litigation. So I...

Yes. And Chris, I would add that we'd be happy to revisit that question on the other side of September 12 and see where we are in the '619 IPR and how things look at that point.

With no additional questions, I would now like to turn the call back over to Mr. Lanfear for closing comments.

Thank you very much and thank you all for joining us on the call this afternoon. We're happy to report I think we made some very good progress this quarter pursuant to the CRL for 1701. The assay is up in place. It's running like the FDA wants.

The other part of that, the process and the analytical portion, I believe, is also well in hand. We continue to make good progress on the intellectual property aspects of our business, particularly with the anti-TNF, the invalidation of the '135 and the other patents. I think it was a substantial milestone. The intellectual property for the formulations continues to go forward.

And then, lastly, we've made very good progress on the financial side of the business. We've lowered the burn effectively from Q1 to Q2 from $76 million to about $55 million. We're in good position to lower it further for Q3 and Q4 and into 2018, as we focus on the 1701 approval midyear next year.

Thank you all for joining us and we will look forward to chatting with you all again on the call. Bye-bye.

Ladies and gentlemen, thank you for participating in today's conference. This concludes today's program. You may all disconnect. Everyone, have a great day.