Harpoon Therapeutics Inc (HARP) 2019 Q4 法說會逐字稿

Good day, ladies and gentlemen, and welcome to fourth-quarter and full year 2019 financial results webcast and conference call. (Operator Instructions) Please note that this call is being recorded. I would now like to turn the call over to Mr. Robert Uhl from Westwicke. Sir, you may begin.

Thank you, operator, and good afternoon, everyone. Thank you for joining us. On the call today from Harpoon therapeutics are Jerry McMahon, President and Chief Executive Officer; and Georgia Erbez, Chief Financial Officer. Following management's prepared remarks, we will be conducting a Q&A session. I will now turn the call over to Georgia Erbez, CFO of Harpoon therapeutics.

Thank you, Robert, and good afternoon. Welcome to Harpoon Therapeutics' webcast and conference call for a discussion of the company's fourth-quarter and full year 2019 financial results and a corporate update.

Before I turn the call over to Dr. McMahon, I would like to remind you that today's call will include forward-looking statements. These forward-looking statements are based on Harpoon's expectations and assumptions as of the date of this call. Each of these forward-looking statements involves risks and uncertainties that could cause Harpoon's clinical development programs, future results or performance to differ significantly from those expressed or implied by the forward-looking statements.

Please refer to Harpoon's filings with the SEC, including its annual report on Form 10-K for the year ended December 31, 2019, which was filed today, and which are also available on Harpoon's website, for information concerning factors that could cause Harpoon's actual results to differ from those expressed or implied in the forward-looking statements discussed on this call.

Except as required by law, Harpoon assumes no obligation to update any forward-looking statements discussed on this call to reflect any change in the expectations even as new information becomes available. I will now turn the call over to Dr. Jerry McMahon, President and CEO of Harpoon Therapeutics.

Thank you, Georgia, and thank you all for joining us on the call this afternoon. I am pleased with the achievement of significant clinical, scientific and operational milestones during the past year. We are committed to realizing the promise of our proprietary T cell engager platform, which we refer to as TriTAC. This T cell activating construct platform is designed to connect and convert a patient's own T cells to kill tumors or other diseased tissues.

[Try near] to optimize the therapeutic index of T cell engagers, and our goal is to bring the successes seen in liquid tumors to solid tumors. We are currently driving multiple products forward for the potential treatment of cancers and the benefit they could provide to patients with limited treatment options.

Some of the key accomplishments for Harpoon in 2019 included the continued advancement of our lead product candidate, HPN424, which is currently in the dose escalation portion of a Phase 1 clinical trial in patients with prostate cancer.

We are also -- advanced our pipeline of three other TriTAC programs, including our second product candidate, HPN536, which entered the clinic in April 2019 for the potential treatment of mesothelin expressing tumors, with an initial focus on ovarian cancer.

We submitted an IND for our third product candidate, HPN217, at the end of last year, and we expect to initiate Phase 1/2 clinical trial for multiple myeloma in the first half of 2020. Submission of an IND and initiation of a Phase 1 trial for HPN328, targeting DLL3 for small cell lung cancer and other tumors is planned for the second half of 2020.

Harpoon also strengthened its financial position in 2019, significantly with our successful initial public offering in February that raised approximately $70.7 million of net cash. As part of our partnering strategy, we evaluate opportunities to enhance our assets at inflection points that can bring the highest value to our shareholders.

As an example of this strategy, in November last year, Harpoon and AbbVie announced an exclusive worldwide development and option transaction for HPN217 targeting BCMA and, in addition, an expansion of our existing discovery collaboration for up to six additional targets. These transactions were a major accomplishment for Harpoon in 2019, and we were pleased to have the opportunity to expand our relationship with AbbVie and to further align our HPN217 asset with a partner in multiple myeloma.

Under the terms of the development and option agreement, Harpoon granted AbbVie an option to license worldwide exclusive rights to HPN217, which may be exercised after completion of a Phase 1/2 clinical trial. This agreement represents a potential transaction value up to $510 million in upfront option fee and milestone payments -- royalties on global commercial sales.

In December, we received a $30 million upfront payment, and we expect to receive up to $50 million as a milestone payment upon dosing the first patient in the HPN217 clinical trial, which we expect to accomplish in the first half of 2020.

In addition, the expanded discovery collaboration represents a deal transaction value of up to $1.86 billion and in December, we received a $20 million upfront payment under this expansion deal. The financial resources from these transactions are being put to work to support our clinical development and research programs leading to multiple potential value-creating milestones for our shareholders.

Now let me review some key aspects of our TriTAC technology. And after that, I will describe our clinical development programs. Harpoon's TriTAC technology platform is a novel and proprietary approach to engage T cells. T cell engagers are engineered proteins that physically connect a patient's own T cells to target cells that express specific proteins or surface markers. This results in the activation of T cells unleashing their natural power to kill the target cell by releasing potent cytokines and other factors.

Our current pipeline of product candidates focuses on oncology applications of our technology. Unlike other immuno-oncology approaches like checkpoint inhibitor products, TriTACs do not rely on the existence of tumor-specific T cells or recognition of the tumor cell through a T cell MHC interaction. TriTACs can reprogram any T cell to kill in the absence of MHC recognition and provide an alternative to checkpoint drugs such as PD-1 antibodies.

The first T cell engager, also known as a BiTE or Bispecific T-Cell Engager, was approved in 2014 for the treatment of acute lymphocytic leukemia. However, this first-generation technology is limited by a short half-life and must be administered through continuous intravenous infusion.

With our TriTAC platform, we sought to incorporate the appealing strengths of BiTEs, such as their small size and potent killing activity at low expression levels of tumor antigen, which are ideal for application in solid tumors while improving on the administration limitations of the short half-life.

Our TriTACs are modular by design, consisting of three primary components that perform three different functions: T cell binding, half-life extension, and tumor cell binding. To address half-life extension we utilize a domain that binds transiently to human serum albumin. We utilize single domain antibodies for target binding in human serum albumin binding, which makes our molecules smaller and more flexible than would be possible with larger antibody derived fragments.

Furthermore, these domains are inherently very stable, contributing to a platform that potentially has very little off-target activity and therefore expected to have a therapeutic window that is ideal for applications in solid tumors.

Our TriTAC products are globular proteins that can be formulated in solution and administered to patients by intravenous delivery in about an hour, infusion every one or two weeks. The TriTAC proteins are approximately 50 kilodaltons, or about one-third the size of a typical antibody. We believe the smaller size and shape of TriTACs allows them to diffuse more freely into tumor tissue compared to antibodies.

Our TriTACs are about 75% identical to each other, since the tumor target domain is the only component that varies between different clinical candidates. In addition, our TriTACs use standard methods of conventional antibody-based manufacturing techniques, which avoids the cost and complexity of personalized or cell-based therapies such as CAR-T.

Now let me review where we are with our four pipeline development programs. Our lead TriTAC product candidate, HPN424, targets prostate-specific membrane antigen, or PSMA, for the treatment of metastatic castration resistant prostate cancer.

PSMA is present in 85% to 90% of patients with advanced metastatic prostate cancer. Market research shows us that prostate cancer is the third leading cause of cancer death in the United States. There are approximately 164,000 new cases and 29,000 prostate cancer deaths in the United States each year.

HPN424 is in a Phase 1 clinical trial enrolling patients with metastatic castration resistant prostate cancer. The trial was designed with an initial dose escalation phase, followed by a dose expansion phase. We continue to enroll patients in the dose escalation phase of the trial with the goal of entering an expansion phase of the trial in the second half of 2020.

Preliminary results announced early last year suggested that HPN424 could activate T cells in a manner consistent with tumor target engagement. These data also provided the first clinical evidence that the TriTAC platform has sufficient serum exposure to support weekly intravenous administration. We have continued to enroll patients in the trial and have continued to increase the dose.

We have submitted an abstract with the intent to provide a trial update at the upcoming ASCO Annual Meeting in late May or early June. You can expect the data to include an interim look at the ongoing dose escalation phase of the trial.

This data may include the number of dose cohorts, the number and features of enrolled patients, the doses explored in the escalation phase at the time of the presentation and preliminary measurement of drug safety, evidence for target engagement, Pharmacokinetics, pharmacodynamics and early evidence of clinical activity. We expect that dose escalation will continue beyond the data provided in the presentation at ASCO and anticipate entering a dose expansion phase in the second half of 2020.

Our second TriTAC product candidate, HPN536, targets mesothelin and entered the clinic in April of 2019. It's being studied initially in

platinum refractory ovarian cancer and, recently, we have added our first metastatic pancreatic cancer patients to this trial. Mesothelin is expressed on malignant cells of ovarian carcinoma, pancreatic carcinoma, mesothelioma, non-small cell lung cancer and breast cancer among others.

While mesothelin has been the focus of some CAR-T efforts, HPN536 is the first mesothelin targeted T cell engager to enter clinical development. Patients receive weekly infusions of HPN536 and the trial is proceeding in line with our expectations. The experience we have gained from HPN424 in prostate cancer has been beneficial in our conduct of the 536 trial, and we expect to provide interim data from the ongoing dose escalation portion of the trial in the second half of 2020.

Our third TriTAC product candidate, HPN217, targets B-cell maturation antigen or BCMA. We submitted an IND for HPN217 in late 2019 and are planning to initiate a Phase 1/2 clinical trial in the first half of 2020 in the treatment of relapsed refractory multiple myeloma. As mentioned before, under the agreement with AbbVie, they will have an option to exclusively license this program upon completion of the Phase 1/2 clinical trial.

HPN328 is our fourth TriTAC product and it targets delta like ligand 3 or DLL3, a protein highly expressed in a majority of small cell lung cancer tumors and other neuro endocrine tumors. We presented preclinical data at the NCI-EORTC AACR meeting in October 2019, demonstrating potent tumor cell killing pharmacokinetic data supporting at least once weekly dosing and supportive safety data in non-human primates. We plan to submit an IND for HPN328 and begin a Phase 1 clinical trial in the second half of 2020.

This past year has been a strong period of pipeline advancement. We are on track to meet our previously stated goal of having four programs in the clinic by the end of 2020. We look forward to providing additional clinical data from alternative product candidate programs over the next couple of years.

We have a unique off-the-shelf platform for T cell engagers that reprogram a patient's own immune cells to treat a wide variety of human malignancies. Our pipeline is well positioned to generate exciting data and drive shareholder value. With that, I'll turn the call over to Georgia Erbez for a discussion of our financial results for the fourth quarter and full year 2019.

Thank you, Jerry. I will provide a brief overview of our financial results here on the call and invite you to review our 10-K filed today for a more detailed discussion.

Revenue for the fourth quarter ended December 31, 2019, was $2.2 million compared to $1.1 million for the fourth quarter ended December 31, 2018. Revenue for the year ended December 31, 2019, was $5.8 million compared to $4.8 million for the prior year. Revenue consisted of a portion of the upfront payment received from our agreements with AbbVie that is related to research and development services performed during the period.

Research and development expense for the fourth quarter of 2019 was $12.7 million compared to $8.7 million for the fourth quarter ended December 31, 2018. R&D expense for the year ended December 31, 2019, was $41.6 million compared to $26.4 million for the prior year.

The increase was primarily due to clinical development expenses and an increase in personnel-related expenses, including conducting preclinical studies, the continuation of clinical trials for HPN424 and HPN536, and manufacturing activities for our four TriTAC product candidates in various stages of development.

General and administrative expenses for the quarter ended December 31, 2019, were $4.3 million compared to $2.2 million for the fourth quarter of 2018. General and administrative expenses for the year ended December 31, 2019, were $4 million compared to $6.1 million for the prior year. The increase was primarily due to an increase in legal fees, consulting and accounting services, and an increase in headcount and other professional services to support our ongoing operations as a public company.

Net loss for the fourth quarter ended December 31, 2019, was $14.3 million compared to $9.7 million for the fourth quarter ended December 31, 2018. Net loss for the year ended December 31, 2019, was $55.6 million compared to $0.4 million for the prior year.

We ended 2019 with $155.1 million in cash and cash equivalents compared to $89.5 million as of December 31, 2018. Net cash provided by financing activities for the year ended December 31, 2019 was $71.4 million, primarily comprised of $70.7 million in net cash proceeds received from our initial public offering in February 2019.

Net cash used in operations for the year ended December 31, 2019, was $69.3 million. For 2020, we are estimating cash operating expenses and capital expenditures of approximately $60 to $70 million.

The cash balance at the end of 2019 includes the $50 million upfront payment received from AbbVie in December associated with the development and option agreement for HPN217 and the expansion of the existing discovery collaboration. Under the terms of the agreement, we expect to receive up to another $50 million payment, which will be triggered upon the first patient dosed with HPN217.

We anticipate the payment will be recognized in our quarterly income statement over the next 10 to 12 quarters. As a reminder, while we will recognize the cash payments from AbbVie as quarterly revenue as required by GAAP. The quarterly revenue is not actual cash received in the period and does not offset cash expenses incurred in the period. With that, I will now turn the call back over to Jerry.

Thank you, Georgia. I am very pleased with the tremendous progress Harpoon has made during the past year, the momentum with which we have entered into 2020 and the exciting potential for all of our product candidates and the proprietary TriTAC platform. Two of our product candidates, HPN424 and HPN536, are in the clinic, and two more, HPN217 and HPN328, are expected to begin clinical trials this year. Our financial position is strong, and we have the resources in place to advance our pipeline.

Before we jump into Q&A, let me quickly (technical difficulty) our anticipated near-term milestones. For HPN424 or Phase 1 dose escalation portion of the clinical trial is ongoing, and we submitted an abstract with the intent to present interim data at ASCO during the second quarter of 2020.

For HPN536 the Phase 1/2 trial is continuing to enroll patients in the dose escalation portion of the trial. We intend to present preliminary data from this trial by the end of 2020. For HPN217, we expect to dose the first patient in the Phase 1 trial in the first half of this year, which will trigger a $50 million payment from AbbVie. For HPN328, we are planning for an IND submission, followed by initiation of a Phase 1 trial in the second half of 2020. So, with that, operator, we are now ready for questions.

(Operator Instructions) Jonathan Chang, SVB Leerink.

Hi, guys. This is David Ruch on for Jonathan. Thanks for taking our question and congratulations on the progress. First question from us is with regard to HPN424, how are you thinking about the benchmarks for response rate and progression-free survival in this late-line setting of prostate cancer?

Thank you for the question, this is Jerry McMahon. So, we of course look towards previous treatments in late-stage prostate cancer and realize that these patients, of course, have various features that make it difficult to assess clinical activity in a traditional way.

However, what we do follow, and what we feel is very relevant is the time on study for patients of which we feel reflects disease progression. We feel PSA levels as another marker of disease and, of course, evaluation of resist in measurable disease in a subset of cancer patients. These have been the traditional hallmarks of clinical activity assessment in this late-stage patient population.

Got it. Thank you. Second from us, any additional clarity on the registrational strategy for 536 in terms of the different subpopulation's of ovarian cancer? And have you seen any trends with the study enrollment to date that have helped inform this strategy?

You know, it's a little early to strategize a regulatory path for the various diseases where this product could be used. Clearly our focus initially is in ovarian cancer, and our goal really is to establish a dose where we believe clinical impact can be observed in this particular disease.

We hope that that dose also translates into clinical benefit for pancreatic mesothelioma, non-small cell lung cancer and breast cancer. But that would have to be proven in the clinic. And of course, having multiple diseases to go after with this product gives us many different potential paths towards registration.

But we're still in the early phases of our clinical trials, trying to establish a proof-of-concept dose. And until we get there, we really can't strategize our regulatory strategy at this time.

Great. And then just one more logistical question. For 328 will this study be primarily in patients with small cell lung cancer? Or do you potentially expect to enroll other tumor types? I know you mentioned neuro endocrine on the call earlier in the prepared remarks?

Yes. I mean, the protocol evolution for that trial is still active and in discussion. The focus will be in small cell lung cancer for sure, but we are entertaining going into other tumor types where we believe DLL3 is expressed, so --. But that our intention is to move forward with a small cell lung cancer-oriented trial, but also have some flexibility to treat other patients that might express this target.

Awesome, thank you so much for the clarity there.

Thank you.

Mike Ulz, Baird.

Hey guys, thanks for taking the question and congrats on all the progress as well. I just had a few questions on HPN424. And maybe you can just give us a sense of where you are in the dose escalation currently. And if I remember, I think last year at the initial update you were through the fourth cohort. So just curious where you are currently? And then if you can overlay that with what you think the therapeutic range is and how far into that are you at this point? And then I have a follow-up.

Yeah. So, we haven't specifically disclosed to date where we are. What we did mention last August is we spent last year -- spent some time evaluating the use of steroid dexamethasone to mitigate mild CRS symptoms when patients were first being given this product. And at that time in August, we were treating our seventh cohort.

So, what I can say today, of course, moving into a potential medical presentation in the middle of this year, is that we've exceeded that cohort and we continue to move the dose up and have really done a very good job mitigating this first dose effect that one sees with T cell engagers.

So that's all I can say at this point. Obviously, we're going to have a nice dataset describing doses and patient cohorts when we hopefully give our medical conference presentation, but that's all I can say at this point.

Got it. And then maybe in terms of the dose expansion, you mentioned maybe starting that later this year, but you also mentioned continuing to dose escalate past ASCO. So maybe just big picture, if you can talk about how you're thinking about selecting that dose for the expansion. Thanks.

Yes. Might be worth just describing the trial concept in general. So, the goal of the dose escalation in any study is to determine the maximum tolerated dose, and that's usually dictated by dose-limiting toxicities. So, if one were to achieve a maximum tolerated dose by increasing the dose, the expansion cohort, if one was to observe efficacy, would be driven off of a dose that was obviously safe enough to proceed.

At this point, we have no way to know whether we will achieve an MTD by ASCO. And so therefore, we would anticipate, if we do not get to a maximum tolerated dose, which is our expectation, that we would continue the dose escalation past Asco.

Again, we may get to a point in the trial, and this is our expectation, that we're seeing a sufficient efficacy to warrant an expansion cohort to explore a particular dose and regimen that is not being dictated by the achievement of a maximum tolerated dose. In that scenario, that expansion cohort then would be triggered, and we would continue to dose escalate above that dose because we were not limited at that point.

But yet, there was enough reason to believe that there was evidence of clinical activity to warrant testing a patient population at a particular dosing regimen. So, what's nice about this protocol is we have lots of flexibility to do expansion cohorts and escalations to generate quite a bit of data that could be used to guide our decision into future regulatory studies. So that's really what's going on in this particular trial at this point. Is that helpful?

Yes. That's helpful. Thank you.

Yigal Nochomovitz, Citigroup.

Hi Gerald, thank you very much for taking the questions. If I could just go back to one of the earlier ones on the benchmarks for 424 and maybe ask the question a bit more specifically. In terms of how you're thinking about proceeding with development of this asset, could you speak a bit about how you see the bar for success there in terms of a go/no-go decision? What would you like to see ideally on PSA responses and resist responses to feel good about taking the asset forward into dose expansions and then into subsequent studies? Thank you.

Yeah, I think if you look at the history of development in late-stage prostate cancer, it became very clear to us and to others that disease progression is the most likely endpoint to support a registrational strategy in this particular disease. So the most informative, I think, endpoint for any trial will be how long has the patient been on study.

Remember, this is a weekly therapy, patient would continue to receive therapy on a weekly basis until disease progression, because that would align to a potential regulatory path. That being said, any ancillary data to support a direct anti-tumor effect, either by PSA declines or by resist or both, would be supportive of that particular patient who is on study progression-free.

So, I think the primary focus will be keeping the patient from having disease progression, which ultimately would lead to lethality, but then to have some supportive ancillary data related to PSA declines and resist if you could measure it. Remember in this disease, only about 20% of patients are resist evaluable. So not every patient will have an ability to assess that. But that being said, this is a trial which will measure all of those potential parameters to assess clinical benefit.

I should mention, in addition to that, of course, we have a suite of other translational activities that are being measured in these patients to support mechanism of action, including cytokine changes, T-cell activation and other parameters that would also be used to support whether or not the, let's say, clinical activities associated with a mechanism of action since the only drug these patients are being given is our drug.

There's no combination here. So, any of the activities we observe in these patients, we can attribute directly to our mechanism of action. So, it's a long answer, but it's a complicated disease.

All right, understood. But so just in terms of specific numbers, I guess it's -- you're saying it's a bit early for you to put forth specifics as far as what might be a threshold level of response rate and things like that. Would you prefer just to see how the data evolves?

You know, typically most physicians would argue in this disease a patient who stays on study greater than three months is good, a patient who stays on study greater than six months is very good. And if that patient is also associated either with PSA declines or with some shrinkage of measurable tumors, that would support the notion that that patient is deriving clinical benefit.

But given that this is an escalation study and not a efficacy oriented study, it's hard to put a percentage on it, but that is the type of data that we're looking to generate to support further advancement of this product. Is that helpful?

Very, very helpful. Thank you. And then, I had a technology question. So, you're doing once weekly dosing now, as I understand it, across the programs. What does the technology allow? What is the potential, rather, for the technology potentially to extend to say once every two weeks. Do you have that ability with the platform? Or is that another level of development?

Yes. We think, based on the data that we see emerging from both these programs, that it's very feasible to think of either HPN424 or 536 being dosed either weekly or possibly every two weeks. But because we're still measuring the exposure and, of course, measuring the efficacy, it's hard to know which is optimal. But conceptually, the platform could be used either way.

We would hate to not allow the patient to derive as much benefit from the product as possible in this first clinical trial. But later if we felt that the benefit could be maintained by moving to a once every two week regimen the platform could support it. But it's still too early to make a call on what the ultimate frequency would be. But it's not unreasonable, based on what we're seeing with the platform, of either being once every week or once every two weeks. But we can't say that with surety at this particular time.

All right, understood. Thanks very much, very helpful.

Asthika Goonewardene, SunTrust.

Hi, guys, thank you for taking my questions, and I appreciate all the progress updates here. So, maybe going back to discussing the expectations for 424 at ASCO. Totally appreciate that the therapeutic window here for 424 is really broad. So, it's kind of hard for you to -- may be hard for you to answer this.

But maybe could you give us some sort of clarity as to how many of the cohorts that you will be presenting at ASCO are in that what you feel, Jerry, is a real therapeutically relevant dose range? I don't know if that's something you will be able to answer right now?

Well, I think we said last August that we were approaching a very wide or large range of potential therapeutic benefits. So, it's hard to know because the preclinical assessment of products like this is not precise enough to predict the potential therapeutic benefit here. And it's very difficult because we don't have benchmarking from other products to be able to attempt to do this.

But that being said, we've tried to estimate this, and we believe that the therapeutic range could be in the hundreds of nanogram per kilogram per week to the microgram per kilogram per week. So that broad range is all we can say at this particular point. So that's the best we can do in terms of that precision.

We also know based on some early work with a PSMA BiTE that there was not an MTD achieved by continuous IV infusion. That doesn't mean an MTD doesn't exist for a PSMA targeting T cell engager. But again, we have no precedent yet that there's any limitation to the dose.

So, at this point, not knowing the limitation and not knowing with precision the efficacious dose, we continue to push the dose up and evaluate the product empirically until we get to a dose that we feel has sufficient clinical activity to warrant moving into an efficacy-oriented trial. So that's our thinking at this point. Okay?

Got it. Okay. Well, just thinking about the entry criteria for this, obviously it's metastatic castration resistant prostate cancer patients here. But given that you do have a lot of patients who might cycle through a couple of the novel hormone therapies in the metastatic setting, you might get a patient pool that is some pre-chemo and some post-chemo.

I'm wondering if you could maybe give us a color on what your expected mix of the patients are. And also, how do you think a prior chemo in the metastatic setting would impact the efficacy of a T cell engaging asset like this?

Yeah, I can give a little bit here. So, these are all, as I mentioned, very late-stage cancer patients who are coming onto study with progressive disease. They either have rising PSA or they have radiographic progression or both, before they come onto study. So that is the nature of the population we are treating.

About half of the patients have previously seen chemotherapy, and you might expect those patients to fare worse if they're coming onto our study after they have failed chemo. And I can give you that approximately the median number of therapies that our patients receive before they come onto our study is about six. Obviously, hormone therapies were some of the earlier therapies that these patients received. So, this is the population we're treating in this first study with this product.

We might expect patients who have previously received chemo to slide downhill faster, obviously, because they may have advanced disease that required intervention with chemo. But nonetheless, we think that patient population is useful for this dose escalation phase of the trial.

I think when we get to the expansion phase of the trial, we're going to have to assess the best patient population to elaborate the efficacy. But for this portion of the trial, which is primarily safety, secondarily pharmacology, and thirdly clinical activity, we really wanted to make sure that we treated a wide variety of patients since 85% to 90% of the patients with this disease are expressing PSMA. So, from a target point of view, this is still a very relevant patient population. So, is that helpful?

Yeah, very helpful. Thank you. I really appreciate that.

Okay.

Last one, if I can -- I had just one more here. It's going to be a little bit more -- we have to see how things play out. But in the instance, if ASCO follows the same path as AACR, and they might either postpone or, even worse, if ASCO might be canceled due to, obviously, the coronavirus going on right now, would you consider a -- press releasing any of the data? Or how can we expect you to adapt to that in terms of the data release for the investment community?

Yeah. No, it's obviously something that we're playing out some scenarios. Obviously, we don't have any specific plan at this point. We've submitted, we think, is a very nice abstract for presentation. I think our intention is to provide an update on the trial in some form in about the same timeframe if we were not able to specifically present at the Clinical Oncology meeting.

But I think our intention is to provide the trial update and the data that we have in some appropriate form. But we haven't, of course, decided how or specifically when we would do that. But this is our goal. Our intention is to provide an update on the trial, whether or not we have the ability to present at ASCO or not. Okay?

Okay. Well, I hope you guys get to make that ASCO presentation. I hope to be there for it too. Thanks for all the clarity, guys.

Okay.

(Operator Instructions) Zegbeh Jallah, Roth Capital Partners.

Thank you. this is Zegbeh. Jerry, just had a quick question. It was nice to hear that you may or may not reach the MTD for 424 by ASCO. We sure all know it's a positive and could be a potential for improved efficacy. But just wanted to get a general sense as the competitive landscape evolves, like (technical difficulty) it's about 424's competitive positioning or either (technical difficulty) think that Amgen is going to have some data as well from their program soon?

Yes. As you pointed out, the competition is pretty limited in -- for PSMA engagers. Both Amgen and ourselves have programs in the clinic. At this point, I don't believe there are any other PSMA targeted T cell engager programs there.

Amgen, as you know, had some data related to their BiTE program that was presented last year that gave some early potential proof of concept to targeting PSMA for late-stage prostate cancer and that, of course, is very encouraging for us. They have brought forth a BiTE with an FC fusion to increase serum half-life, which is in contrast to what we're doing, as you know, with binding to human serum albumin.

We initiated our trial, we believe, before them, but they are probably moving forward with their trial as well. So, I would expect that both Amgen and Harpoon might be presenting some early data this year if there's an opportunity to do so. But I don't have any other guidance around that. Other than the fact that I know they're in early dose escalation as we are.

Thank you. And then just a quick follow up here or a confirmation. Georgia, can you just comment on how much of the $50 million payment from AbbVie following the initiation of the 217 study will be recognized during 1Q '20?

The amount that we recognize is based on the entire program budget, which we expect to be over the next 10 to 12 quarters. And our best estimate right now is that it is -- the best way to recognize that is on a straight-line basis.

Perfect. Thank you so much.

Debjit Chattopadhyay, H.C. Wainwright.

Hi, guys, this is Aaron on for Debjit. Thanks for taking the questions. So, I just wanted to piggyback on Zegbeh's question. So, at the ASCO presentation, what kind of data could we expect to see that might solidify the conviction that 80 hours is the optimal half-life to balance CRS and efficacy, as opposed to a longer half-life or a shorter half-life?

Yeah, I think exposure is not the way to look at the effect on the safety issues as it relates to CRS. CRS is triggered when the systemic levels of cytokines increases to a point where clinical symptoms can be observed. We see this in the initial treatment of patients with our product and then it goes away. And we can use steroids like dexamethasone to mitigate those initial symptoms to allow patients to have continuous exposure.

It really doesn't have much to do with the serum half-life. In fact, many people believe CRS is driven off of a Cmax phenomenon, at least the folks in leukemia lymphoma. So, the total exposure, and that is the maintenance of a drug in circulation, probably doesn't have an effect upon any of the CRS safety issues.

But we want the exposure in patients so that we can allow the drug to diffuse into the tumor bed, find T cells engage with tumor cells. And we don't want to have to, as in the case of a continuous IV, keep replacing the drug and allowing the patient then to only come into the hospital every week for about an hour is a much more patient friendly mechanism.

But I don't think it has anything to do with the CRS therapeutic index or per se, it's more about convenience and being able to maximize the penetration of the drug into the tumor bed. Is that helpful?

Yeah. Yes, it is, thank you. So, in the PR, you guys talked about the expansion cohort that you're expected to initiate in second half of '20. So, does that mean that you have a handle on the recommended Phase 2 dose or expected Phase 3 dose and the management of the CRS issue?

Well, two questions there. So, one, we think we've managed CRS issues well, at least to date, by using steroids initially and then doing what's called a taper, or by using what we call step dosing where we can treat patients at a lower dose in the absence of dexamethasone and then increase the dose. So, from the viewpoint of managing CRS complications, we've done a very good job at that, and we continue to do a good job managing that.

I think the other aspect here relates more to the expansion criteria. And we've always seen the expansion cohort as a way to amplify and study a particular dosing regimen that we believe has clinical benefit, that may or may not be the dose we would take into a potential Phase 2 study, because we may not be limited in dose by tissue specific safety issues, which are very different than CRS, which is more mechanism-based safety issues.

So, for instance, if we don't see that there's a problem related to a particular tissue outside of the tumor, for instance, and yet the CRS is managed well, we would want to continue to move the dose up. Because, as you can imagine, we have a lot of room to increase the dose given that we started in the nanogram per kilogram per week range.

That being said, if we have evidence of clinical activity, which is our hope and expectation, we'd want to be able to study that in a more homogeneous population in an expansion study. So that's the way we're thinking about the expansion study at this point -- is that it wouldn't be limited necessarily by an MTD which would dictate a Phase 2 dose, but we would want to study a more homogeneous population for efficacy at a particular dose and regimen.

Okay. And one last quick question. Is there any chance that you can use any of the learnings from 424 to accelerate the dose escalation? Or if you guys have perhaps started at a higher dose with 536?

It's a very good question. I think to some extent, the starting dose is dictated by FDA guidelines in the United States. So, that is probably not an area where we believe we could make any advances. However, we have learned a lot from our initial 424 trial that already has been translated to the 536 and now 217 protocols that allows those trials to move potentially much faster than what we're doing with 424 since we had to spend last year doing a lot of learning.

So, you're right, we have translated a lot of those learnings forward. And some of those learnings have resulted in negotiations with the FDA for protocol design improvements that we didn't have when we first started the clinical trial with 424.

So, the answer is yes, we have been making quite a bit of improvements in terms of protocol design and flexibility because of all the learnings from the first product. And that's being translated into all of the other three programs. So, I think we can expect potentially those programs to go much faster than the first one.

Great. Thank you. That's very helpful.

That concludes the Q&A session. I will now turn the call over to Mr. Jerry McMahon for closing remarks.

Okay. Well, thank you all once again for joining our call today. If you have any additional questions, please feel free to contact us. Have a good evening, everyone.

This concludes today's conference call. Thank you, everyone, for joining. You may now disconnect. Have a great day.