EQRx Inc (EQRX) 2021 Q4 法說會逐字稿

Good morning and welcome to the EQRx Fourth Quarter and Full-Year 2021 Financial Results conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session. Please be advised that this conference call is being recorded.

I will now turn the call over to Neil Swami, Head of Investor Relations.

Thank you, operator and good morning everyone. Earlier today, we issued a press release providing an overview of our fourth quarter and full year 2021 financial results ended December 31, 2021, as well as recent corporate progress. A copy of this release and a slide deck to accompany this call are available on the Investor Relations section of our website at investor.EQrx.com.

Joining me on the call this morning are Melanie Nallicheri, President and Chief Executive Officer; Jami Rubin, Chief Financial Officer, and Dr. Eric Hedrick, Chief Physician Executive.

Before we get started, I would like to remind everyone that some of the statements that we make on this call and information presented in the slide deck include forward-looking statements as outlined on slide two.

Actual events and results could differ materially from those expressed or implied by any forward-looking statements as a result of various risks, uncertainties and other factors, including those set forth and our most recent filings with the SEC, and other future filings that we may make with the SEC. You are cautioned not to place any undue reliance on these forward-looking statements, and EQRx disclaims any obligation to update such statements.

I will now turn the call over to Melanie.

Thank you, Neil. Good morning, everyone and thank you for joining us for our first quarterly investor conference call. For those of you following along with the slide deck, I am now on slide three.

As many of you are aware, we launched in EQRx a little over two years ago with a bold mission to improve health for all with great innovative, affordable medicines. At EQRx, we are building a platform to create true access to innovative medicines, where payer and health system partners, what we at EQRx call our Global Buyers Club, drive adoption and ensure broad population access to a large selection of high quality, innovative branded medicines, what we at EQRx call our catalogue of medicines and development at radically lower prices.

I'm proud of our team's performance in 2021 as we met key business objectives, including announcing promising Phase 3 data for our lead oncology programs, advancing relationships with payers and health systems that cover approximately 180 million lives around the world, expanding our management team and board of directors including new directors, Dr. Amy Abernethy and Kathy Giusti, establishing our mission advisory board with world-renowned health care leaders who share in our mission, and transitioning into a public company.

As we move to the remainder of 2022 and beyond, there are three major points we would like you to take away from today's call, which are on slide four. Let me first acknowledge the recent ODAC meeting for sintilimab, which has led to questions about the path forward following lead assets aumolertinib and sugemalimab in the U.S. We have full confidence in our programs, their promising clinical evidence, and our ability to advance them to global regulatory approvals, so we can make them available to patients at more affordable prices. Outside the U.S., we expect our first regulatory submissions for aumolertinib and sugemalimab during the second half of this year. We are continuing to engage with the FDA and we will provide an update on expected regulatory approach and timelines when available.

Second, we continue advancing our Global Buyers Club. The demand for high quality patented medicines at radically lower prices remain strong in the U.S. and around the world. We have not seen any slowdown in our discussion with payers and health systems towards this effort. Our goal remains to have MOUs, or memoranda of understanding with payers and providers that cover approximately 350 million lives by the end of 2022.

Third and importantly, we are in a very strong financial position with no current financing needs or plans. We ended 2021 with $1.7 billion of cash and cash equivalents. We will manage our spend such that we anticipate having cash runway into 2025, and we will be selective and disciplined in how we add to and advance our pipeline.

We will maintain our strong focus on execution across the organization in 2022. I believe progress in the three key areas I outlined will enable us to start delivering proof of our model, where our partners drive adoption and enable population level access to innovative medicines, and we deliver meaningful savings to them, while creating value for shareholders.

With that introduction, I will now turn the call over to Eric, who will discuss on aumolertinib and sugemalimab in greater detail. Eric?

Thank you, Melanie. Let me begin with aumolertinib on slide five. Aumolertinib and sugemalimab is a third-generation EGFR inhibitor intended for the treatment of patients with advanced EGFR mutated non-small cell lung cancer. As many of you are aware, third-generation EGFR inhibitors are currently standard of care for advanced EGFR mutant non-small cell lung cancer and to date, only one such medicine, osimertinib, is approved. Aumolertinib represents not only a potential second medicine in this important treatment class, but also one with a distinct metabolic profile that may provide advantages over currently available EGFR inhibitors with respect to toxicity such as diarrhea and rash.

Aumolertinib has been shown in a Phase 3 trial in the initial treatment setting of EGFR mutated non-small cell lung cancer to provide a clinically and statistically significant improvement in progression free survival. This trial was conducted in China, and is comparable in design to the study that led to the approval of osimertinib in this treatment. Of note, regulatory precedent for approval in this treatment setting is progression free survival.

The results from this study the AENEAS trial, were presented last year's ASCO meeting. We believe that the results establish the efficacy and safety of aumolertinib and represent a key component of the comprehensive data package that we intend to use for regulatory submissions.

In addition, we've conducted a PK study in an ethnically diverse population, demonstrating the insensitivity of aumolertinib to ethnicity. In the second half of this year, we plan on initiating a randomized, multiregional, U.S.-led clinical trial, evaluating the clinical comparability between aumolertinib and osimertinib, with a third study arm assessing the potential clinical benefit of the addition of chemotherapy to aumolertinib in the first line metastatic treatment setting.

This study, designed to enroll a diverse and inclusive patient population, will address the applicability of the results of the pivotal Phase 3 study to current medical practice, will assess potential tolerability and safety differences between these two third-generation EGFR inhibitors, and will provide an important -- or evaluate an important question regarding the optimal use of EGFR inhibitors in the treatment of this disease.

Based on this package of data, as well as our commitment to ongoing development, we're continuing to engage with various regulatory authorities around the world regarding potential filing for approval.

In the UK, we have received Innovation Passport designation for aumolertinib from the MHRA. This provides us an opportunity for a coordinated review amongst agencies and an expedited review process. Of note, in the UK approximately 45,000 cases of non-small cell lung cancer are diagnosed each year. The Innovation Passport designation recognizes the degree to which non-small cell lung cancer represents a significant public health issue in the UK, and the need for new cost-effective medicines in the treatment armamentarium. Based on the nature of discussions with regulators outside of the U.S., we anticipate our first submissions in this second half of this year.

In the U.S., we are continuing to engage with the FDA regarding a potential filing for aumolertinib. Our goal is to address areas of emphasis for the agency with respect to the use of ex-U.S. single-country data for approval in the U.S., and as Melanie noted, we will provide an update on a regulatory approach and timelines when available.

I'll now turn to sugemalimab, our other lead program on slide six. Sugemalimab is a monoclonal antibody inhibiting PD-L 1, the key component in the immune checkpoint pathway. As most of you are aware, this class of medicines has had a profound impact on the treatment of a number of malignancies, and has transformed the management of non-small cell lung cancer. Along with this, unfortunately, there's been a significant economic impact on health care systems and patients around the globe.

The ex-China rights to sugemalimab were obtained from our partner CStone Pharmaceuticals in 2020. And an important factor in our decision was not only the parent quality of this antibody, but also the breadth of development that had been pursued by CStone. We believe that CStone has conducted in some ways the most inclusive non-small cell lung cancer development program within the therapeutic class.

Two Phase 3 studies exemplify the breadth of development. In stage four disease, the Phase 3 GEMSTONE-302 trial demonstrated both progression free and overall survival advantage for sugemalimab in a population that was not restricted by histology, or PD-L 1 one expression status.

In January, we announced that sugemalimab in combination with chemotherapy had demonstrated a statistically and clinically significant overall survival improvement in this patient population, including patients with both squamous and non-squamous histology. Of note, the overall survival finding was based on a pre-specified Alpha-controlled analysis, which is an important regulatory consideration.

In the stage three disease maintenance setting, the Phase 3 GEMSTONE-301 trial demonstrated a clinically and statistically significant progression free survival benefit, the primary endpoint of the study in a population and included patients treated with either concurrent or sequential modes of chemoradiotherapy. An event-driven pre-specified analysis of overall survival is expected in the first half of next year.

The inclusion of patients who would receive sequential chemoradiotherapy is of particular importance, because there's no currently FDA approved maintenance option for these patients, estimated to be approximately 40% of stage three patients currently treated in the U.S.

As with aumolertinib, the majority of development of sugemalimab thus far, including both Phase 3 trials in non-small cell lung cancer has been conducted in China. While it is our belief that these trials establish the efficacy and safety of sugemalimab in non-small cell lung cancer, we recognize that additional data may be required to address the applicability of these results to a population representing the diversity of the U.S. and current practice standard that includes an immune checkpoint inhibitors.

To this end, we intend to initiate a U.S.-led randomized clinical trial that is intended to provide comparative data for sugemalimab with other immune checkpoint inhibitors in this diverse and inclusive population of non-small cell lung cancer patients. We expect to initiate the study in the second half of this year.

Based on these packs of data, as well as our commitment to ongoing development, we're continuing to engage with various regulatory authorities across the globe around potential filings for approval in both stage four and stage three non-small cell lung cancer.

In the UK, again, sugemalimab have is received the Innovation Passport designation from the MHRA signifying the need for additional cost-effective medicines for non-small cell lung cancer in the UK. Based on the nature of the discussions with the MHRA and other regulators outside of the U.S., we anticipate filing our first submissions for sugemalimab in the second half of this year.

In the U.S., we are continuing to engage with the FDA regarding potential filings for sugemalimab for both stage four and stage three disease. As with aumolertinib, our goal is to address areas of emphasis for the agency with respect to the use of ex-U.S. single-country data for approval. And as previously noted, we will provide an update on our regulatory approach and timelines when available.

Additionally, sugemalimab has received breakthrough designation from the FDA for extranodal NK/T cell lymphoma, a non-Hodgkin lymphoma subtype with significant unmet medical need. We expect the submission in the U.S. for ENKTL in 2023.

And with that, I will turn the call back to Melanie. Melanie.

Thanks, Eric. Turning to slide seven, we believe our portfolio in total will address around 20% of the $500 billion in specialty drugs spent for oncology and immune inflammatory diseases. We currently have more than 10 ongoing programs, five of which are in the clinic. These other clinical stage programs include nofazinlimab, a PD-1 also known as EQ-176 for solid tumors currently being studied in a Phase 3 multiregional clinical trial to liver cancer; lerociclib, a CDK 4/6 inhibitor for hormone receptor positive for two negative breast cancer studied in Phase 2 multiregional clinical trial for metastatic breast cancer. EQ-121, a highly selective JAK-1 inhibitor for immune inflammatory diseases being studied in a multiregional Phase 1 study in rheumatoid arthritis, and in multiple Phase 2 studies in China, in atopic dermatitis, ankylosing spondylitis, and rheumatoid arthritis.

We also continue to enter into early stage R&D collaborations with leading drug engineering companies. Last year, we entered into drug engineering collaborations with five of the leading drug discovery platform companies, including Exscientia, AbCellera, Relay Therapeutics, Absci and Evotec. We are leveraging the different computational platform approaches for small molecule protein antibody-based drug discovery to create new molecules from scratch. We believe these collaborations provide a capital efficient way to build our pipeline, and will provide sources of revenue in the future.

Now on slide eight, as we grow and evolve our portfolio, we continue to evaluate our programs against a strict set of criteria. In an effort to maintain cash runway into 2025, we will selectively add or advance a pipeline program if it addresses a drug class of high cost burden to patients and society and delivers meaningful value to the members of the Global Buyers Club; it takes aim at these areas where there are known clear and causal mechanisms of action, and we are therefore convinced that we will have the potential to demonstrate equal or superior clinical data to existing therapies; it is patent-protected with sufficient patent runway in the class, and we have the opportunity to capture a significant share of the market.

Slide nine highlights the progress we have made in assembling our Global Buyers Club. We have already entered into MOUs or memoranda of understanding, with leading payers and health systems around the world that provide some form of health insurance coverage to more than 180 million people, including CVS Health, the National Health Service in England, Geisinger, and a number of West-based health plans including several Blue Cross Blue Shield plans.

As I mentioned, the demand for high quality patented medicines at radically lower prices remains strong among payers and health systems in the U.S. and around the world. We aim to provide a market-based solution to address the rising cost of drugs. Our goal remains to have partnerships or MOU with payers and health systems that provide coverage to approximately 350 million lives by the end of 2022. We have started to convert our existing MOUs into pre-commercial contracts, and expect to continue to make progress throughout the rest of the year.

In 2021, we entered into a strategic collaboration agreement with Abdul Latif Jameel Health to commercialize aumolertinib and sugemalimab, if approved, in the Middle East, Africa and Turkey to potentially provide millions of people across these geographies with access to affordable new cancer treatments. ALJ health brings extensive regulatory and commercial expertise in these regions. We look forward to keeping you updated on our progress assembling our Global Buyers Club.

I will now turn the call over to Jami.

Thanks, Melanie. I am now on slide 10. A summary of our fourth quarter and full-year 2021 financial results can be found in the press release that we issued this morning. More detail is included in our 10-K filing, which we will file later today.

We ended 2021 with $1.7 billion in cash and cash equivalents, which as Melanie has mentioned, puts us in a very strong position. We plan to take a disciplined approach with respect to our use of capital and manage our cash such that we have cash runway into 2025. For this year, we expect our cash outlays to be $400 million or less, a change from our previously announced range of $350 million to $500 million in operating expenses. We anticipate that our financial position will enable us to grow and thoughtfully shape our portfolio and allow us to get through significant developments and commercial milestones.

Moving to slide 11, I would like to reiterate today's key takeaways and summarize the multiple milestones we are expecting in 2022. As you heard during the call today, these include our first regulatory submissions outside the U.S. for aumolertinib and sugemalimab, the initiation of our first comparative studies, and growing our Global Buyers Club where we expect to have MOU in place with payers covering approximately 350 million lives. We will also provide an update on our regulatory approach and timelines in the U.S. when available.

Let me now turn the call back over to Melanie.

Thanks, Jami. In closing, I would like to thank all of the passionate employees at EQRx for your hard work in getting us to this point and preparing us for the year ahead. I would also like to thank all of our partners and shareholders for your support. We can now go ahead and turn the call back over to the operators so we can take questions. Operator?

Thank you. We will now begin the question and answer session. (Operator Instructions)

Our first question comes from Akash Tewari from Jefferies. Your line is open.

Hey, guys. So I may have a few, if I may. So what's been your recent interactions with the FDA on amo and sug regulatory submissions? Should we assume the FDA will require you to run head-to-head studies in order to file? And if so for both assets, what's the design length and cost of those studies that your team is envisioning?

Additionally, given a major theme in the Lilly AdComm was a lack of unmet need or in a crowded drug space, can you give us some more color on why your team is competent on regulatory approval in Europe?

And then maybe one just kind of stepping back, you've previously talked about how EQRx is modeled to get drugs on the market for substantially less than traditional drug development, maybe at a cost of $300 million to $400 million per product. Given the FDA's recent pushback on the use of Chinese data and the cost of in-licensing later stage assets, what would be some other routes by which EQRx could still get on the market at a lower cost than traditional drug development? Thanks so much.

Thank you, Akash. I'll ask Eric to answer the first two of your questions.

Okay. Yes, thanks Akash, for the questions. Regarding the FDA discussion, your question around the necessity to do head-to-head or directly comparative studies, as we've stated, it's our plan to do these types of studies. I think the genesis of this plan though maybe it's a little bit different than just responding to an FDA question. Part of our model, if we're going to be developing new drugs and established therapeutic classes, it's on us to ensure that the drugs are as good or better than the -- the other model medicines and those classes currently supported. Our model for adoption certainly always has been to do directly comparative studies and I think that's what we've spoken about. In applying these studies for a regulatory purpose, that's the intent as well.

Now, you asked about design length costs of these trials. I think it's difficult to give you precise answers on those until we've engage with the FDA around the specific design of those studies, and that's certainly our intent. And when we've accomplished that we'll provide some updates.

And I'll answer your second question as well, which is around our confidence outside of the U.S. I think it's important to understand that the opinions that have been expressed by the FDA don't necessarily reflect the opinions or policy decisions for regulators outside the U.S. We've had continuing discussions with regulators outside of the U.S. and our confidence is really based on how those conversations are proceeding.

Thank you, Eric. Akash, with regards to your third question on the cost to develop an EQRx molecule, we are assuming that on average, and of course, there are slight variations depending on the indication and where exactly we are studying and what the exact design is of a drug, but in general, we are assuming a range of $250 million to $350 million. So a little bit lower than the range that you had provided or assumed.

The important thing here is that, as I said earlier, we are focusing in areas where we believe we have a good understanding of the mechanism of action, we have a really focused and efficient path to development, leveraging our modern development organization, and so we are very much focused on staying within this envelope.

Now, the studies that Eric just described has always been assumed to be part of our approach. And Jami can give you a sense for what's already baked into our assumptions for expenses for this year in the coming years.

Yes, I would just add, thanks, Melanie, that -- that, Akash, we had announced back in January the two comparative trials, one for amo and one for sug and we already incorporated the cost of those additional trials into our guidance. So with respect to our guidance today, $400 million in cash outflows that already incorporates what we believe the cost will be generating these additional comparative trials.

That's helpful. If I just make a follow-up on one question. Given Lilly said it might take them eight years, which I think they were just being kind of flippant, would it be fair to say that any theoretical study would be kind of two years long?

Yes. Sorry, guys, this is Eric. Thanks. I think that's an important question. Unfortunately, in the ODAC discussion, we sort of didn't get to the discussion of what type of trial would address FDA concerns. And I think the concern that the FDA have is same that we have, is the same that physicians have, if a new medicines entering the fray and establish therapeutic class, how do we assure everyone that the clinical outcomes have been established in that class aren't going to be sacrificed, right?

So I think that's the discussion that we need to have; what type of trial design will provide that assurance, not only to regulators, but to patients and providers? And I think if you think of a study in that context, the design features become a matter of discussion. It's not as simple or default to a huge non-inferiority type of study design. But again, these are the issues that we'll have to hush out with -- with regulators in our discussion.

Perhaps just one thing to add, Akash. If we want these studies to add to our understanding of how the results that have already been generated, can apply to U.S. medical practice, but of course, they need to fit into a certain envelope in terms of time. Second, I would say and I know Dr. [Paskers] previously commented on this, we also need to be thoughtful about how we're using the most "valuable" resource that we have and that resource is patience.

So conducting an eight-year-long study with a 1,000 or more patients, I don't really think that that achieves that goal. So we're hoping, of course, that we're going to be at the lower end of that spectrum.

Thank you. Our next question comes from Chris Shibutani with Goldman Sachs. Your line is open.

Good morning. Thank you. A question about really just understanding how this dynamic on costs and your plans. Let me pressure-test the fundamental business model here, and to invoke some of your own vocabulary, you talk about the rising costs of drugs and offering radically lower prices. And what we're seeing is that the demands of developing drugs are probably in a post ODAC were becoming more burdensome, and just the cost of developing drugs are greater.

So can you frame for us how you're thinking about how when you finally get to that point, offering these drugs, and that journey to expense all of these development, will that impact the fundamental delivery of the business model you're envisioning? And then I have a more specific question to follow.

Yes. Hey, Chris, thank you for the question. So first of all, I want to just frame this in the context of what's often talked about, the large costs. And depending on who you ask, or whether you use the Tuft's numbers or other numbers, people quote numbers that are, it takes a billion to bring a drug to market, it takes $3 billion, $3.5 billion; the numbers are, of course, large. But as you know, they are burdened by the cost of failures. So one of the key and fundamental pieces in our business model is to make sure that we choose well from the get-go.

And so, as you know, we are really proud of the team that we've built here at EQRx, in particular, the people that we lovingly call our drug hunters, so the people who can really assess when we in license a new molecule, or when we work with our drug engineering partners, that wasn't new molecule needs to look like. That is fundamentally important because we believe that we therefore have a greater chance of success more often than not. Meaning, we believe our success rates are in the 50%-plus, 50% to 70% range. That is fundamentally important, because that means we don't need to burden the cost of our programs, and then therefore, ultimately, the prices with the cost of these failures.

Secondarily, as I mentioned, a moment ago, we are looking to develop, including if we have in-licensed programs and pay milestone payments, et cetera, we are looking to be in that envelope of $250 million to $350 million. And if that works, and we are launching into multibillion dollar markets, even at a reasonable assumption of share, that means that over a number of years, and that's why it's so important that we say we have enough patent runway left in the class, we have the potential to make several billion dollars of revenue.

So if you take that cost relative to the revenue potential, that return profile is incredibly attractive. And that's how we go about -- that's how the business model works from an economic point of view.

And Chris, I would just add, in terms of how you think about our model, and how you think about building our model, we expect it, as Melanie said, our R&D expenses should conceivably be lower, because conceivably, we should have much lower failure rates. But the other big component to our cost structure is that we are not planning to build a conventional sales force, we're not going to have a lot of feet on the ground. We are relying on our payer partners to drive adoption of our drugs, what we call a pull-through model which is novel, and that should lead to a much more streamlined cost-efficient cost structure.

So again, we are not burdened by a legacy cost structure. And over time, as we get to steady state, we expect that we will have operating margins that are in the 30% or higher range comparable to other large cap pharma companies.

Got it, thank you. And then a more specific question, you know, post ODAC, if you scrutinize maybe the takeaways from that meeting, something really foundational continues to resonate, and that is addressing unmet needs. And so a question on sugemalimab. The pursuit of patients and studying in stage three disease appears to be quite critical in terms of aiming for that to address unmet needs. Can you be specific about how the design of your clinical study will be able to meet that objective?

Yes, Chris. This is Eric, thanks for the question. I think the importance of the stage three study, the Phase 3 study that was already designed conducted, has met its primary endpoint is that patients -- this is a disease maintenance study. So patients have to have at least stable disease after receiving chemoradiotherapy. There's two ways to give chemoradiotherapy. One is concurrently to give everything together; the other is sequentially, you give one after the other.

It's important to remember that the only approved maintenance therapy right now in the U.S. in the stage three maintenance setting is when patients get concurrent chemoradiotherapy. If you look at what actually happens in U.S. practice, about 40% of patients don't get that mode, they get the sequential mode.

And so, if unmet need is defined by the availability of approved therapies, that's certainly a significant population that currently doesn't have an approved therapy. And if you look at the results of the study, the PFS, the benefit applies to both populations. And so I think that is what's important to consider in terms of meeting an unmet need with the design of the study.

Great, thank you so much.

Our next question comes from [Shots] with JPMorgan. Your line is open.

Great. Thanks so much. Just I'll ask all the questions upfront here. Maybe coming back to that -- that stage three versus stage four dynamic, would you pursue, I guess, a stage three approval alone if there were a cleaner pathway there, and let's just say the FDA requirements for the larger population required a data set that's going to take significant time to complete? Or does the model kind of really require a broad lung label to make the most sense?

Then my second question was on the head-to-head studies you've planned for later this year. And the answer might be you don't have clarity, full clarity from the FDA, but are you envisioning these predominantly as U.S. studies, or do you think you'll be able to enroll at least a portion of these studies ex-U.S.? I'm trying to get my hand's around I guess your thoughts around the difficulty of enrolling kind of a U.S.-centric study, just given the number of approved agents out there as well. I'll stop at those two and just have one financial one after that.

Yes, Chris, thank you. Eric and I will tag team this. Eric?

Yes. I think the tag team part's on stage three question. So I think it's premature at this point in our discussions with FDA and other regulators about specific indications or labeling, right. Certainly, there is a population within the stage three program, the population, some population that study that might fit an unmet need definition. But that study is done as a whole study inclusive -- in an inclusive population. And if what we're really interested in is reflecting the use of these medicines in an inclusive or representative population, you could argue that our stage three study represents that, right.

So I think at this point, it's almost too early to ask answer your question. We believe that these stage three -- these Phase 3 studies, including stage three, and stage four, are well-conducted, well-designed studies that have met their primary endpoint and thus establish safety and efficacy. And so the primary point of discussion with the regulators is the approval of safe and effective medicines, right. If there are other conditions, other data that need to be brought forth, to support those approvals, that's what we need clarification on.

But to answer your question a little bit more specifically, I don't think that we're going in with an intent of approval only in the subpopulation. I think that we will discuss the entirety of our lung program in terms of establishment of safety and efficacy and whatever data might be required to support them.

Yes, and Chris, with regards to the question, what does the model require, as you know, the larger the spend in the current drug class, the larger the potential impact we can have when our partners create and support the adoption of those medicines. So that's one of the reasons why it was important for us to have this breadth in lung cancer.

Having said that, as you also know, that's about 50% of the PD-1, PD-L1 market. So even if we weren't going to get approval at the same time, for each of these stages, there is a lot of value that we're bringing to our partners.

And then lastly, as we add to it, not just aumolertinib, but other medicines that we have in development that we're bringing onto the platform to our partners to generate savings for them and allow them to create broader access for cancer patients to these medicines. That all adds up and that's how we think about the model.

Perfect. Great, and just my follow-up was just a -- okay.

Sorry, Chris, I was just -- if it's okay, I was going to get to your second question, unless you're --

Perfect, yes. No, okay.

Yes, you asked about the head-to-head studies and ability to accrue those in the U.S. versus other parts of the world. We're designing these and thinking of these as U.S.-led studies. I think it's possible that other parts of the world could contribute to these studies.

In terms of the ability to accrue early studies in the U.S., we are confident that we can do that. And I just wanted to make the point, again, that these studies are really intended to show that our medicines, right, can be adopted at a minimum with no sacrificing patient outcomes, and possibly, if you address a component of financial toxicity, you can improve certain clinical outcomes. And so, I think that's important to remember.

There's one way to think of these studies in sort of a blinders on scientific way and think that they might not be accruable. But I think these issues we're trying to address, including issues of financial toxicity are real issues in clinical practice. And therefore investigators are interested in addressing that and participating in these studies.

And, Chris, as you know, this is the kind of data that we rarely see. And so we've heard from a lot of people that they're really excited that we want to go out there and create that -- that evidence without reference to another currently used product or products. And so we believe that there are many in our industry, many different stakeholders, both the clinicians that Eric just mentioned, but also all of our partners. That gives them a lot of additional confidence to use an EQRx medicine instead of what they might be using today.

Great, thanks so much. And then my question is just a quick clarification on the cash burn. I guess is the update largely tied to this milestones and maybe pre-commercial spend on these leads two assets or their other reprioritizations in the portfolio as well as I guess as we think about where you were in January versus today.

Yes.

And just maybe to clarify in general on cash burn, is your cash burn is largely tied to the existing portfolio or is it also envisioned, I guess, additional in licensing or clinical assets that could be added to the portfolio? So it's a two-parter there. Thanks.

Yes, sure, Chris. All excellent questions. So first of all, we are almost done with our first quarter, we're towards the end of March. So we have a really good sense for our spend. Secondly, we have mapped out our activities for the year. And we feel really comfortable with $400 million or less, and some of the items that you mentioned, of course, are part of all of that as we think about our portfolio and potential for reprioritization and potentially pushing some launch costs out, et cetera. But that all is, is part of our thinking. I think the most important message we're trying to leave today is that we have control of our spend and we have a ton of flexibility.

And with respect to business development and building our portfolio, again, we are in a very fortunate position to have a lot of cash and we intend to continue to build out our portfolio. At the same time, we are going to be disciplined in the way that we do that and we will be thoughtful about the decisions that we make around our portfolio. Might that mean right reprioritizing some early stage assets or accelerating some upgrading our portfolio if we see an asset that we makes sense, and will help with our Global Buyers Club, we will do that. But that is essentially the difference is that, we really understand what our standards and we have control.

Chris, let me just be really clear what the majority of what in our assumed spend is on development and on bringing in additional assets, but we are going to be really selective. We already have a large portfolio today and so it's not about the numbers. We're going to be really selective, we're going to pick and choose where it makes sense and where we believe that we can bring in something that can bring value to the Global Buyers Club, and do so in areas of high spend, where we believe that we have a potentially winning molecule as in the equally good or better sort of definition that we -- that we always use.

Great, thanks so much.

Our next question comes from Percher with Nephron Research. Your line is open.

Thank you. A couple of questions on the commercial side of the model. Melanie, you made a comment on no slowdown in buyers club interest and obviously targeting 350 million lives. I know you're looking at long-term alignment in the MOUs and partnerships. But what do you think is the key proof point for the buyers club? Is it visibility into approval on launch? Is it expansion of the portfolio that helps you drive that buyers club having more relevance for the payers? Or ultimately, does it come down to pricing on launch and making good on your promise?

Yes, Eric, thank you. It's a number of things. So first of all, it is of course, the commercial impact that we can have or the economic impact that we can have. So from a pure savings point of view, we are aligning incentives with them and that, as you know, is not typical for our industry. Typically, those two forces sort of push against each other by offering radically lower prices, were essentially allowing our partners to take the brakes off. And rather than trying to control spend to say, "Okay, well, now we can create much broader access." So from that point of view, we are both -- both sides and ultimately and most importantly, the patient is benefiting from greater pull through from greater adoption. So that's a core part and pieces of the model.

Having said that, it is more than that and these partnerships that we've created, we're really working as a team. And what our partners have understood is that they play a key role in enabling our model. For instance, those partners that provide us access to claims data or to EHR data, that's data that we can use directly in the development of our drugs, it makes us a lot more focused and allows us to be a lot more clear on how to set up a development program.

Or as Jami just described a moment ago, when they're helping us with a pull through, and we do not need to put as much spend into sales and promotion, as is typical today in the big sort of biopharma model. And so it's the ability also to be more in control that many of these payer partners and health system partners like.

And maybe following up on the comment on the pull model, can -- and this may be a question for Jami, can you provide any commentary that links the target lives for the buyers club with your expectations of market penetration and share? And do you ultimately expect that this alignment around pull provides more value or more share relative to simply having coverage?

Yes, absolutely. And the way we believe this works is as follows. When you have the push model, right, then essentially the way it works as you need lots of -- you need lots of people to push on lots of physicians, and then you get a proportion of uptake there and it's sort of scattered, if you will. This is much more of a focused way of going about it, where we think about this as a partner who's truly motivated because they have -- they win by essentially replacing every high unit cost with a lower unit costs, they have an incentive to pull that through.

So we expect that we're going to get a lot more adoption and therefore higher market share from those partners that we have true partnerships with. Of course, our medicines will be available once they are approved to anybody who wants to be use -- buy them, but we believe that the pull through to in the market share is going to be relatively higher.

And so if you assume that that's mechanistically, how it's going to work, then if you put some numbers around that, there are about 4.4 billion people who are insured in the world, that's the entire world. There are about 1.2 billion of those in the OECD countries. That is our initial, call it addressable market. That's our target markets, where we know health systems and payers are looking for a solution and that's where we're having conversations.

And I guess that begs the question of the 350 million you're targeting for the end of the year, do you have a view on U.S. versus ex-U.S.? And it sounds like what you're saying is the U.S. -- for the ex-U.S. opportunity you're going to be significant -- I guess we're going to see a much lower pricing differential relative to other models. So how do you think about the global piece here?

Yes, so to answer the first question, there are about 300 million insured lives in the U.S. and whether it's connected to the second part of your question, typically, what we see is, there's a much, much higher price in the U.S., and therefore there is a proportionately larger amount of revenues that comes from the U.S.

In our model, where the pricing corridor, if you want to call it that, is much narrower, in other words, the pricing differential may not be as large, it's not the same price, but it may not be as large, the relative importance of other regions of the world increases. And so that's one of the reasons why we're so excited about our NHS, population health partnership MOU, because that's 65 million people right there. If you look at Europe, geographically defined, that's close to 500 million lives in Europe alone. And so these are very large markets. And so for us, they're very attractive.

What's the exact proportion? Is it going to be 50/50, 60/40, 40/60? I don't think I would know that yet. But we're equally focusing on the different parts of the -- of the OECD countries.

Very helpful. Thank you.

Our next question comes from [Steve] with Cowen. Your line is open.

Thank you, and congratulations on all the progress that the company's made over the last couple years. I have three questions. First, you reiterated the filings for the two lead assets in the second half of this year. But with the second half only a quarter away, I'm wondering if you can narrow the filings to a quarter. And what does the expected filing depend on? So that's the first question.

Second question is just to be clear, and apologies if it already has been made clear, and I didn't catch it, but have you had conversations with FDA post the [Tibot] AdComm? The release says that you are continuing to engage with FDA, but it's unclear whether you've engaged since the AdComm.

And then the last question is that you suggested the momentum of enrolling further members into the Global Buyers Club continues. Can you share with us what sorts of questions they have asked about the two lead programs? And what is the reaction to the path forward and have any lives been lost or not one because of the situation in the U.S.? Thank you.

Thank you, and we are going to start, Steve, with Eric and then I'm going to answer your third question. Okay.

Yes. Thanks, Steve. In terms of the filings, the reason we're saying second half is that we're still in the process of actually preparing the filings and getting clarifications on the specific conditions. And so at this point, we can further narrow it down but at the point where we can we will. Sorry. Hopefully that was semi satisfying.

Yes. In terms of the FDA, we don't really think about our discussions and the continuation of those discussions relative to the ODAC. So I would say that we are in a sequence of meetings and requests for meetings, that hasn't been affected by the ODAC. So we're going more by our discussions between the FDA and less reactive to ODAC, and we're in a fairly typical sequence of meetings that will continue.

Actually, Steve, I'm going to add one more thing to the second -- to the answer to the second question, and then go to the third. I do want to stress one thing and I do think that came out very clearly in the ODAC, which is the message by the agency to seek the dialogue. And as you can imagine, especially for a company like ours, that's new, that's trying very different things, we are still a young company, but as early as we had something into in our portfolio that we could speak to the agency about, we sought that dialogue, because we thought it was really important. And that's what Eric is alluding to. It's been really a continuation of a dialogue that has started quite a while ago.

With regards to the third question, yes, thank you for asking, for that very clear question. We have actually added to our Global Buyers Club since we announced 180 million. As you know, we've said we're not going to announce every single one of the partners that we are adding. So you are not going to see us say we're now we are at 183 million, at 187 million. We're going to give you sort of the big moves when we have added multiple additional payers and health systems to it but we have added to the Global Buyers Club.

The nature of the discussion, and in particular, you asked about aumolertinib and sugemalimab is, of course they want to -- wanted to understand how we interpret that meeting. And what we have shared with them and I think this came hopefully became clear today, number one, it was Innovent Lilly's ODAC for sintilimab map. And there are important differences, that are technical differences between sintilimab and sugemalimab, both in terms of the breadth of the indications that we're covering, both in terms of the breadth of the pathologic subtypes that we're covering with sugemalimab, as well as the breadth of expression status that sugemalimab covers. And then importantly, as Eric mentioned, we already have achieved one overall survival endpoint, and we're expecting the second on stage three -- in the stage three indication.

And then, again, I just want to be really clear, there are clearly things that we agree with and we haven't started to agree with them on February 11, the day after the ODAC, but we've built the company around it. The company's name, EQ alludes to equal access, equity, equitable access, it's really about access for all and that's why the mission is to improve health for all. So the diversity and inclusivity piece is something that we've built the entire company around, and it's something that's really near and dear to our hearts and something that we will deliver on.

Thank you.

Thanks.

Thank you. And I'm showing no further questions at this time. This concludes today's conference call. Thank you for participating. You may now disconnect.