Exelixis Inc (EXEL) 2009 Q3 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Q3 2009 Exelixis earnings conference call. My name is Chris, and I will be your operator for today.

(Operator instructions).

As a reminder, this conference is being recorded for replay purposes.

I would now like to turn the call over to Mr. Charles Butler. Please proceed.

Thank you, everyone, for joining us on the Exelixis third quarter 2009 earnings call. Joining me on today's call are, as usual, George Scangos, Frank Karbe and Mike Morrissey, who will review our corporate financial and R&D progress over the quarter and upcoming events in the months ahead.

Before we get started, I would like to note that during our presentation today we will be making certain statements that are forward-looking, including, without limitation, statements related to development plans and goals for XL184, XL147 and 765; expectations regarding our year-end financial guidance, the clinical and commercial potential of compounds in our pipeline, our discovery platform, and the execution of our business strategy.

These statements are only predictions and are based upon our current assumptions and expectations. The actual results and the timing of events could differ materially from those anticipated in such forward-looking statements because of risks and uncertainties discussed in presentation materials, the comments made during this presentation, and the Risk Factors section of our 10-Q for the Quarter Ended October 2, 2009, and our other reports filed with the Securities and Exchange Commission. We expressly disclaim any duty to make any updates or revisions to any forward-looking statements.

Now I'd like to turn the call over to George Scangos.

Thanks, Charles, and thanks to all of you who are joining us today.

We had a productive and successful third quarter. Financially we ended with over $300 million in cash, which is more than we had at the beginning of the year. Our revenues are up, our expenses are down. At the same time, we made substantial progress advancing our clinical and preclinical pipeline of compounds, which we continue to believe is one of the strongest in the industry. We've undertaken broad, aggressive clinical development plans for XL184 in collaboration with Bristol-Myers Squibb and for 147 and XL765 in collaboration with sanofi-aventis.

All of this demonstrates how our partnering strategy is paying off. We brought in substantial cash. We offloaded a lot of expenses. We have great partners who believe in our programs and who are putting substantial resources behind them. The strategy reduces our capital needs and results in the broad and aggressive clinical development of our pipeline. Importantly, we have structured our collaboration so that we receive meaningful commercial participation in all of the compounds in our pipeline.

XL184, which we're codeveloping with Bristol-Myers Squibb, continues to show substantial clinical and commercial progress, and in a few minutes Mike Morrissey will update you on some of the more recent data. I just want to say here that we're implementing a broad development plan for XL184 in multiple indications. As you know, we're conducting a Phase 3 study in medullary thyroid cancer, which is actively enrolling. We also have a comprehensive effort to evaluate XL184 in glioblastoma multiform, or GBM, as both a first and second-line agent. We recently reported an update of our GBM data at the Society for Neuro-Oncology meeting.

Our Phase 1b/2 trial of 184 in combination with erlotinib in patients with non-small cell lung cancer is advancing, and the data continues to look promising. We also have initiated a randomized discontinuation trial, which is exploring the efficacy of XL184 in nine different tumor types. Looking ahead, we anticipate a number of substantive XL184 data presentations at ASCO in 2010.

We have also hit our stride in our collaboration with sanofi-aventis, a partnership focused on developing PI3K inhibitors that was initiated earlier this year. The team has developed a broad Phase 2 program for both XL147 and XL765. These compounds continue to progress in multiple trials. We expect to present the first data from the Phase 1b/2 studies evaluating each of these compounds in combination with other cancer therapies at the EORTC meeting in November. We are pleased with the way these trials have gone and look forward to sharing the preliminary data with them -- with you in a couple of weeks.

Our partnerships have brought in cash and have offloaded expenses. Beyond the financial benefits they provide, our partnerships also are catalysts for advancing broad development programs for 184, 147 and 765. There are hundreds of millions of dollars being put behind these programs now in large, aggressive clinical programs. That's a level of resources far beyond what Exelixis could afford by itself. These resources, of course, further enhance our competitive position.

It also is noteworthy that both BMS and sanofi-aventis have entrusted Exelixis to perform the majority of the development activities for all of these programs. As Exelixis has evolved, our expertise has reached from biology to drug discovery and now into mid and late-stage drug development. At each stage, our expertise and efficiency has been recognized by our pharma partners. We're proud to have these opportunities, and we're committed to meet or exceed the ambitious goals that we've set out for ourselves and our partners and by doing so to provide substantial return to our investors.

As we move toward the end of 2009 and into 2010, our key focus is to continue to execute. With our partners, we'll build substantial bodies of data for our lead programs in multiple indications and utilize these data to direct our late-stage development efforts toward the most promising opportunities. With a broad and deep pipeline, we're well positioned to explore additional partnerships that provide compelling near and long-term economic value and help us meet our strategic goals.

Our unique discovery platform has consistently generated high-quality compounds across multiple therapeutic areas and will continue to leverage our discovery and development expertise to advance earlier assets and assess their potential as partnering or development candidates. Of course, we'll also retain our disciplined approach to managing our cost base and making prudent investments in our proprietary development programs.

So with that I'll turn the call over to Frank, who will review our third quarter financial results and provide an update on our progress towards our 2009 financial objectives.

Frank?

Thank you.

As George mentioned, our third quarter financial results are very strong. This is mainly due to our partnering strategy beginning to be clearly reflected in our P&L. We have signed three new partnerships since December last year. These partnerships brought in a substantial amount of upfront cash and provide, over time, an even greater amount of R&D funding. Cash inflows in the third quarter of '09 alone totaled almost $160 million, which consisted primarily of upfront payments and cost reimbursements.

Under our collaborations with Bristol-Myers Squibb and sanofi-aventis, we conduct a large amount of work, for which we carry the expenses on our books but the majority of which are paid for by our partners. For the most part, these expense reimbursements, as well as the amortization of upfront payments, are booked on our P&L as revenue. Consequently, our quarterly revenues have substantially increased.

Our operating expenses in Q3 are slightly reduced compared to Q3 '08, mainly due to strict cost management, and our net loss is significantly lower than in the third quarter last year, which primarily reflects the increase in revenue as a result of our partnering strategy. We ended the quarter with over $300 million in cash, and earlier this week we repaid the first tranche of the GSK loan of about $35 million in cash.

Let me now turn to our third quarter financial results in detail. As a reminder, we are reporting our financial results on a GAAP basis only, and, as always, the complete press release with our results can be accessed through our website at Exelixis.com.

Let me begin with revenues. Revenues for the quarter ended September '09 amounted to $55 million, compared to $29.9 million for the comparable period in '08. The 84% increase from '08 to '09 primarily reflects the increase in revenue relating to our new collaborations with sanofi for XL147 and XL765, BMS for XL184 and XL281, and Boehringer Ingelheim for the S1P1 agonist program. These increases were partially offset by the conclusion of the research term of various collaboration agreements with GSK, BMS and Genentech.

Research and development expenses for the quarter amounted to $60.2 million, compared to $65.7 million for the comparable period in 2008. The decrease from '08 to '09 primarily reflects decreased personnel costs due to our November '08 restructuring, the impact from other cost containment measures initiated in 2008, and the wind-down of discontinued programs, which were partially offset by increased development activities related mainly to XL184.

General and administrative expenses for the quarter were $8.6 million, compared to $8.9 million for the comparable period in 2008. The decrease from '08 to '09 was primarily due to decreased personnel costs, again due to our November '08 restructuring, partially offset by an increase in facility costs.

Let me comment briefly on our collaboration cost-sharing line item. To remind you, this reflects the net impact of the amount due under the agreement with BMS for expenses incurred by BMS on XL184 offset by our spend on XL281. For Q3 '09, BMS' spend for XL184 exceeded our spend for XL281, and we therefore recorded an expense of $3 million.

Net loss attributable to Exelixis for the quarter was $25.4 million, or $0.24 per share, compared to $38.5 million, or $0.36 per share, for the comparable period in '08. The decrease of 34% in net loss attributable to Exelixis from '08 to '09 was primarily due to increases in revenue from our various collaborations, as described above. I would like to note that the decrease in net loss year over year would be significantly larger without certain one-time items in the third quarter of both 2008 and 2009.

Cash and cash equivalents, short-term and long-term marketable securities, and restricted cash and investments totaled $301 million at September 30, '09, compared to $284.2 million at the beginning of the year, which also at the time included investments held by Symphony Evolution.

I mentioned a few minutes ago that we have repaid the first tranche of the GSK loan this week. As a reminder, we had drawn $85 million under a loan facility with GSK, which accrues interest at a rate of 4%. This loan matures in three roughly equal tranches of about $35 million each over three years, beginning in October of this year. We have the option to repay GSK in cash or in stock, at our discretion, and earlier this week we repaid the first tranche to GSK in cash.

Let me finally comment on our year-end financial guidance. We are maintaining our guidance for full-year revenue in the range of $140 million to $170 million, and our expectation to end the year with greater than $200 million in cash remains unchanged, as well. However, we are lowering our operating expense guidance for the full year '09 to $270 million to $290 million.

Let me stress, overall things are very much on track, and this change in guidance mainly reflects continued cost savings throughout 2009, as well as more clarity into the development programs for XL184 and our PI3K assets as a result of the evolving discussions under our collaborations with BMS and sanofi.

With that, I will turn the call over to Mike.

Thanks, Frank.

It's been a busy quarter, and we continue to make great progress in advancing our portfolio across multiple programs and clinical trials. I think it's safe to say that much of the momentum we've built in 2009 is related to our ability to execute the broad development programs for XL184, XL147 and XL765 as part of our collaborations with BMS and sanofi, respectively. This is a strong endorsement from two of our key partners that we bring more than just early-stage compounds to the table. We recognize the strategic and tactical value of these collaborations and continue to leverage them as we move these important assets forward, while also building domain expertise and institutional knowledge that can be applied to our solely owned assets.

With that background in place, I'd like to take a few minutes to highlight our recent data and clinical plans for XL184, XL147 and XL765.

XL184 continues to look like a very interesting compound, with a clear signal of clinical activity in multiple tumor types. XL184 shows compelling data as a single agent in both medullary thyroid cancer and GBM, and we're seeing early encouraging signs of clinical activity in the Phase 1b/2 trial of XL184 in combination with erlotinib in patients with non-small cell lung cancer. The XL184 randomized discontinuation trial is underway and enrolling nicely across multiple indications.

With the progress we're making in our ongoing XL184 trials, we anticipate submitting a broad and deep data set across a variety of tumor types for presentation at ASCO in 2010. The development program for XL184 continues to grow in scope and magnitude, and we're working closely with our colleagues at BMS to advance this important asset in a number of tumor indications.

First, we continue to advance the global Phase 2 trial of XL184 in medullary thyroid cancer and expect to file an NDA for this indication in the second half of 2011. Key data from our ongoing Phase 1 study in MTC patients were presented at the annual meetings of the American Thyroid Association and the European Thyroid Association this fall and underscore the potential of XL184 in MTC. In the Phase 1 cohort of MTC patients, 31 of 34, or 91% of patients, had tumor shrinkage as their best radiographic response; 15 of 34, or 44% of patients, experienced tumor shrinkage of 30% or more on at least one post-baseline scan; and 10 of 34, or 29% of patients with miserable disease had a confirmed partial response.

Second, the Phase 1b/2 trial of XL184 in combination with erlotinib in patients with non-small cell lung cancer has gained significant momentum over the last few months, and we're pleased to see an emerging antitumor signal in this combination in a highly refractory, non-small cell lung cancer population that has previously failed prior single-agent erlotinib therapy. We're obviously not going to be able to say a lot on this topic on the call today, but it's a study that we're tracking very closely, because we believe it has significant potential to address another underserved patient population. We are currently evaluating several MTD expansion cohorts in the Phase 1b component of this protocol and hope to start enrollment in the randomized Phase 2 cohorts evaluating single-agent XL184 and the erlotinib-XL184 combination in the first quarter of 2010.

Third, the XL184 randomized discontinuation trial is designed to examine multiple tumor types, including breast, gastric/GE junctional, melanoma, hepatocellular, small and non-small cell lung, ovarian, pancreatic and prostate cancer. The first patients enrolled in this trial in September, and we're pleased to see a high level of screening and enrollment so far across multiple indications.

Finally, we're pursuing XL184 in GBM in a comprehensive fashion. Our current program is looking at XL184 in both early and late lines of therapy and is evaluating both single-agent and combination approaches. Last Friday at the Society for Neuro-Oncology, or SNO, meeting, we reported encouraging preliminary data from the ongoing Phase 2 trial of XL184 in patients with second and third-line GBM at the starting daily dose of 125 mg. A complete press release and poster can be found on our website.

So far, 18 patients have been evaluated by the IRF data cutoffs, and eight of 14 antiangiogenic-naive patients enrolled at the 125-mg starting dose level have had tumor shrinkage, 50% or more by IRF, including two confirmed partial responses. Just to be clear, this data is very preliminary, as the majority of patients have not had their confirmatory scan analyzed yet by the IRF.

To date, there is no new safety signal observed at the 125-mg starting dose when compared to the 175-mg group. It's too early to accurately gauge the overall tolerability, duration of treatment interruption and the duration of response at the 125-mg starting dose. We're tracking these parameters very closely to ascertain if this starting dose is appropriate for future studies in GBM. We'll be prepared to explore either lower doses or alternative dose schedules, if required, and we plan to initiate our second-line pivotal trial in GBM once we have an optimal XL184 dose for this indication. Most importantly, at this early stage of development we continue to see a high level of enthusiasm from our investigators for XL184 in GBM, and our Phase 2 enrollment continues to be brisk.

We also recently initiated a Phase 1b dose-ranging study of XL184 in combination with temozolomide and radiation therapy in first-line GBM patients. This study will yield important data to help us understand the safety and tolerability of XL184 in the first-line setting and will provide data supporting future development in the medically and commercially important first-line GBM setting.

Based on the current trajectory of these trials, we expect to initiate Phase 3 GBM trials in 2010, once we have a dose locked in for both first-line and refractory GBM patients. Clearly, the XL184 program is a major effort within our R&D group, and we're very excited about the progress that we're making.

I'll next turn to our PI3K program, which is the focus of our collaboration with sanofi-aventis. Many tumor types have molecular alterations resulting in upregulated signaling to the PI3K pathway, which provides a large and compelling market opportunity for therapies that target PI3K signaling. XL184 and XL765 appear to be the most advanced PI3K inhibitors under development in the oncology area, and we believe that the maximum potential of these compounds will likely be realized in combination with other agents. We plan to provide an update on the initial combination data from the ongoing Phase 1b/2 trials at EORTC in November and hope to submit several abstracts on XL147 and 765 at ASCO next year.

Working with sanofi-aventis, we have finalized plans for the first wave of Phase 2 studies in several indications, exploring combination and single-agent strategies for XL147 and 765. We expect to roll out this plan and initiate Phase 2 trials before the end of the year. Additionally, as we advance the Phase 2 programs for XL147 and 765, we are moving forward aggressively with our joint discovery effort to identify novel inhibitors with specificity for alpha and beta isoforms of PI3K.

In terms of our early-stage pipeline, we're on track to advance additional compounds into preclinical development and clinical studies. We expect to file an IND for XL388, a selective mTOR inhibitor, in the fourth quarter. In addition, we hope to advance numerous development candidates throughout the end of 2010 in oncology, where we have multiple candidate programs; inflammation, potentially including inhibitors of the delta and gamma isoforms of PI3 kinase; and metabolic disease, where our potent TGR5 agonists stimulate the release of GLP-1.

Clearly, we have a lot on our plate. We have the right team, the right strategy and the right culture to take advantage of the many opportunities we'll address moving forward.

We have a full docket of 13 presentations at the upcoming EORTC meeting that will take place next month, and we're already starting to plan numerous abstracts for submission to the 2010 ASCO meeting. Our annual R&D Day, which is scheduled for December 2 in New York, will be a great opportunity to pull everything together for the range of R&D activities we have ongoing, and we hope you will be able to join us either in person or on our webcast. It's clear that we have much to share with our investors and the medical community as we close out 2009 and move into 2010.

So with that, I'll turn the call back to George.

Okay. Thanks, Mike, and thanks again to those of you who've joined us this afternoon.

I think we're in a great position now for growth and success, and we're going to keep pressing ahead and continue to execute on our strategic plan. I believe that the Exelixis story is one of the most compelling in the biotechnology industry. We have several leading compounds in advanced clinical development. XL184 is supported by a major clinical development effort across numerous tumor types. The clinical PI3K programs are supported by a broad Phase 2 effort in multiple large indications.

We have quality partnerships that we believe will lead to the successful development of our compounds. Importantly, Exelixis currently is performing the majority of the clinical work on our lead compounds. This combination, the financial commitment and expertise of pharma companies, coupled with the speed and efficiency of Exelixis, is an exciting combination that allows us to maximize the therapeutic and commercial potential of our compounds in the most efficient way.

I do want to remind everyone that although we focused discussion on these three compounds that there are currently 12 compounds that have been generated by Exelixis that are in clinical development, as well as several more in preclinical development and lead optimization. The pipeline is progressing well, and we'll present data on several compounds at the upcoming EORTC meeting.

So the potential for upside for us is substantial. We continue to leverage our unique discovery platform that has consistently generated high-quality compounds across multiple therapeutic areas. We expect that this platform will continue to generate early-stage assets for proprietary development or partnering, fueling our continued growth and opportunity over the long term. We're in active discussions with a number of companies and fully expect to sign additional collaborations as we move forward.

As always, I want to thank all of our employees whose hard work and dedication have made all this progress possible, so thanks to everyone here at Exelixis.

And with that we will conclude the call, and we'll be happy to open it up for questions at this time.

(Operator instructions).

Our first question comes from the line of Jessica Li. Please proceed.

Thank you for taking my question. So it's a question with regard to your recent results on XL184 in GBM. So if I read the data correctly, it looks like for the 125-mg arm the discontinuation rate due to AE is 17%. Is that correct, and do you think that discontinuation rate is high enough for you to consider a lower dosage?

I think the package of data that we updated at SNO last week highlights the clear sign of clinical activity we see with XL184 at the 125-mg dose in second and third-line GBM patients. The safety and tolerability parameters are continuing to be evaluated. The N, total number of patients, that were discussed at SNO is relatively small. As I mentioned in the script, we are looking very closely at tolerability, at the frequency and duration of interruptions, and, most importantly, the duration of response with 184 at that dose.

So this is all in progress, and we're really focused primarily on expanding that data set. We've also recently amended the protocol to do much more aggressive adverse event management and much more rapid dose reduction, as needed, from the standpoint of emerging adverse events to be able to potentially widen that window. And that amendment is now going forward.

We're also prepared, as I mentioned in the script, as needed, to explore either lower doses or alternate dosing regimens. So it's really a matter of refining and fine-tuning the dose and the manner by which we dose patients in this indication, and I think we're on track to do that pretty well right now.

Great. Thank you.

Okay.

Our next question comes from the line of Eric Schmidt. Please proceed.

Thanks for taking my question. Just another question on 184 in GBM, I guess for Mike. Do you now think there's enough data to suggest that the drug is more active in Avastin-naive patients, and, if so, how does that frame your thinking about future pivotal trials?

Well, that was -- yes, hi, Eric -- that was -- in the data set we had at ASCO and the update on the 175-mg daily dosing group at SNO that was certainly one conclusion that you could draw based upon the response rate, etc. in that setting. We're continuing to explore both the antiangiogenic-naive and antiangiogenic pre-treated populations as part of this Phase 2, and as more data comes in we'll be able to make, I would say, firm decisions about what direction we go in relative to that latter population. So it's a work in progress. More data, more patients I think we need to be able to explore, but that certainly is what we're doing right now.

Okay, question for George on partnerships. You referenced having multiple additional assets that you might partner and being in multiple additional partnership discussions, and the past you've kind of flagged for us where your highest level of interest is. I'm thinking, for example, you gave us a heads up on the PI3K collaboration. Are there assets that are more partnerable right now or might be better off in collaborators' hands than your own that you'd like to highlight?

Sure, Eric, you're absolutely right. I mean, we did flag both the BMS collaboration around 184 and 281 and then the sanofi collaboration around the PI3K. At this point we have several assets, some in early clinical development, some in preclinical development, that have gotten interest from multiple companies. We also have substantial interest from companies in our capabilities -- drug discovery capabilities, some of our translational medicine capabilities, biology capabilities.

So we're in a number of discussions right now, and I could lay out for you many different permutations, because there are discussions going around around a single asset. Our TGR5 molecule that Mike alluded to has garnered amazing level of interest, I would say, in the pharma industry. We have other assets in diabetes, whether we sign a single collaboration around TGR5 or a broader diabetes, for example, collaboration. We're having both of those discussions, and we'll see how they pan out. The same is true with inflammation. We have a number of interesting compounds coming forward that are potentially potent anti-inflammatories. We're having some discussions there.

And, of course, we have our early clinical oncology compounds, 228 and 888. We'll have data on 228 at the EORTC meeting coming up. We have a very nice selective mTOR inhibitor coming forward. All of those have garnered interest in various combinations. So other than that I can't be more specific now. But I can give you virtually any combination of those.

Certainly sounds like it. Thanks, George.

Okay?

Yes.

Our next question comes from the line of George Farmer. Please proceed.

Hi. Thanks for taking my question. Mike, I had a question on the non-small cell lung cancer trial with 184 and Tarceva. Are you holding the erlotinib dose constant while changing the dose of 184, or are they both being interchanged simultaneously? And, secondly, in the randomized portion of the trial, why would you do the study 184 versus the combo, as opposed to, say, a best supportive care control?

Yes, the first -- I'll give you very kind of high-level summary on these different topics and questions. On the first question around the dosing, we had a pretty comprehensive Phase 1b component to the dose range finding effort, looking at varying both the XL184 and erlotinib combination. I won't go into detail on the actual amounts and (inaudible), those kinds of things, but it was one that we wanted to look at very carefully to really maximize our chance of success there, and we're taking multiple MTD expansion cohorts forward with numerous patients to really get a good experience of what's happening there so we have the best dose going forward.

On the second question about looking at activity, in the Phase 2 part of that Phase 1b/2 protocol, the question is really addressed to ask for outright activity of either XL184, which, based upon the biology and the pathways involved in that stage of non-small cell lung cancer, a potent MET/VEGFR2 inhibitor might have single-agent activity by itself, versus the combination of an EGFR inhibitor and XL184. So we weren't -- the Phase 2 component of this is not powered to show a strong, say, PFS effect. It's really to show single-agent activity in the context of a Phase 1b/2 trial. Second Phase 2s or other trials based on the results from this trial could go in that direction, but it's not designed to answer that question right now.

And do you think you'll have randomized data by ASCO?

Well, we're certainly very motivated to push that trial forward, and it certainly has been a major focus for us, so we're certainly aiming for that.

Okay. And a quick question on 388, the mTOR inhibitor. Is that a rapamycin look-alike or is it something novel?

No, it's definitely something novel with the small molecule direct inhibitor of TORC1 and TORC2 complexes, very nice package, beautiful pharmacodynamics and pharmacology with the compound, so it's one that we're very excited to take forward, and that we own solely in terms of that compound, as well.

I'm sorry, you said that was a TORC inhibitor. Is that differentiated from TOR?

Yes, it's a -- TORC1/TORC2 is the mTOR complex --

Okay, right.

-- complexes, yes.

Okay, great. Thanks very much.

Our next question comes from the line of Derek Jellinek. Please proceed. Mr. Jellinek, your line is now open.

Great, thanks for taking my question. Just a quick follow-up, if I could, on 184, back to you, Mike. On the updated data we got in the 18 evaluable patients, were any of those patients given prior antiangiogenic therapy? We got the response in patients that were naive. Are you there?

Yes, you're kind of cutting out. Any -- could you repeat that, please?

Sure, no worries. So on the updated 184 data we got in the 18 patients, of those 18 patients, did any of them receive prior antiangiogenic therapy, and if so what was the response in that patients? Because I believe the data we got was only in patients that were naive.

Yes, in the data that was presented at SNO and in the -- and that data is, again, available on our website, the poster and the press release, there were numerous patients who were -- who had been treated previously with antiangiogenic therapy. I believe there were four patients in the waterfall that were analyzed by the IRF and have documented tumor shrinkage in that waterfall.

Okay. And what was the median average daily dose?

Yes, we don't have that data available at this time to be able to share with you.

Okay. And then quickly just on the PI3K inhibitor, you said you're going to have the combo and monotherapy trials hopefully commencing before year-end. Any idea of the indication there?

Yes, absolutely. We have a full Phase 2 plan that we are ready to roll out around the EORTC time frame. At the EORTC itself we'll have four presentations or posters on the existing Phase 1b/2 combination trials. And then the Phase 2 program will be announced and rolled out in that same time frame. So I would say stay tuned and we'll get that going.

Okay, great. Thanks. And quickly, just for Frank, in the quarter, was the $140 million upfront from sanofi, was that amortized over four years at 875 roughly a quarter? I'm looking at your contract line to pop up. I'm trying to figure out going ahead in Q4 it looks like you're basing your guidance and it wasn't really adjusted upwards. There's a better probability of it being a down quarter sequentially. Maybe kind of give us a little more insight into the breakout of the revs in that quarter. Thanks so much.

Sure. So the first part of the quarter, $140 million upfront payment from sanofi is amortized over four years. Now, how does it hit our P&L? Remember that amortizations of upfront payments come through on the license revenue line, not the contract revenue line. So you would see it on that line. On the contract revenue line, on the other hand, you would see revenue in association with cost reimbursements, and those are pretty substantial under the sanofi agreement, as well.

And once again -- thanks so much -- and once again, going into Q4, it seems like it's going to be going down sequentially? Is that correct?

I can't really comment on that. What I suggest you're doing is look at the year-to-date revenue that we have and compare that to the guidance that we've given, and, again, the guidance remains unchanged, and I think you'll get an idea where our quarterly revenue might come out.

Okay.

But one thing I will add, that the positive impact from our new collaborations with BMS and sanofi clearly is going to last for a while, because we're amortizing these upfront payments over several years, and we expect to receive cost reimbursements under these collaborations for several years.

Right. Okay. Thanks for taking the questions.

(Operator instructions).

There are no further questions at this time.

Okay. If there are no more questions, let me just remind everybody, we'll have several presentations at the upcoming EORTC meeting in Boston in November. On December 2 we will have our R&D Day in New York, at which we'll present a detailed overview of all of our R&D activities, as we have for the past few years. So we're looking forward to both of these events. Thank everybody again for your attention during the call today. And with that, we can sign off. Thanks a lot.

Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect. Have a good day.