Molecular Partners AG (MOLN) 2018 Q4 法說會逐字稿

Ladies and gentlemen, welcome to the Full Year Results 2018 Conference Call and Live Webcast. I'm Miruna, the Chorus Call operator. (Operator Instructions) And the conference is being recorded. (Operator Instructions) The conference must not be recorded for publication or broadcast.

At this time, it's my pleasure to hand over to Mr. Thomas Schneckenburger, Investor Relations of Molecular Partners. Please go ahead, sir.

Thank you, Miruna. And good afternoon, ladies and gentlemen. Welcome to this presentation of Molecular Partners 2018 full year results. Thanks for all who joined us here in Schlieren even despite this ugly weather conditions, but also a warm welcome to all participants who follow us on the webcast or the conference call.

Today's full year '18 presentation will be held by Patrick Amstutz, CEO of the company; and Andreas Emmenegger, our CFO. With us here in Schlieren is also Michael Stumpp, our COO.

Before we get started, a few logistical details and issues. After the presentation, we will have a Q&A session where we first start with the questions here in the room, and then allow the participants on the phone and web -- phone to ask questions as well. Further, I want to remind you that the conference will be recorded, and you can recall the audio webcast from the web after the event. Finally, after the event, we invite all participants here in Schlieren to a small [Aperol] outside as an energy boost for your return trip.

With this said, I'd like to hand over to Patrick for the formal part of the presentation. Thank you. Patrick?

Thank you, Thomas, for the good and nice introduction. Also a warm welcome from my end for the people dialed in on the webcast, and a special thanks for the crowd here in Schlieren. It's nice to have you here, and it's also especially motivated to have people in person for this webcast.

Today, the title is as every year one can say, Making the DARPin Difference Reality for Patients, and we will look back what we achieved in the last 12 months on our mission to do so. And it was a very rich year for us, and we're looking forward to a very rich 2019.

I'll repeat what Thomas said, with me here is Andreas Emmenegger and Michael Stumpp.

The next slide shows our disclaimer, I will be making forward-looking statements. I will go to Slide #3, that's the agenda and the overview. I will start with the review and the highlights of last year. Andreas will walk you through the financial results, and I will conclude the formal presentation with an outlook of 2019 and beyond. After that, we will open the floor for questions where also Michael will be part of taking and answering questions.

Let's take a step back and look at the highlights of last year. And for those who are not that well into the Molecular Partners story, let me just start with a recap who we are. I'm on Slide #5.

Next slide please. So we're a Swiss biotech and what we do is, we apply our DARPin engine, that's a product platform to develop the DARPin pipeline. And today, we will take some time and I will walk you through all of the 4 programs listed, abicipar, 250, 274 and 310. At Molecular Partners, we deeply believe in teamwork. Inside the company, we have 130 coworkers, but also in our partnerships with Allergan on abicipar and the new partnership, I also welcome, Amgen into the Molecular Partners' family. We are well-capitalized, and Andreas will speak to that. We can reach well into 2020. And with that, we also are financed to buy arms major catalyst.

So with this short introduction, let's quickly go on to the more interesting bits, the highlights, and I will first focus on oncology. Let me start with MP0250 in multiple myeloma. Well, from our ongoing Phase II trial, that's 250 with Velcade, we have now recruited 20 patients. And in the first cohort, we saw a very encouraging activity profile that we now could also confirm in the expansion cohort, and we will talk about that later. The results of this ongoing trial let us to amend the trial, so we are in the process of amending to give even more patient benefits, and we will add a trial where we not only then combine with Velcade, but in the second trial, with a IMiD, likely Pomalyst.

Next to the MM trial, we're working in EGFR-mutated non-small cell lung cancer, the initial cohort is recruiting and we'll have a small update on that. Also the 274 molecule that is targeting HER2-positive cancers is progressing well. We have first cohort completed, we'll give a short update on that. And also talk about 310 where we, not only we're able to move this towards the clinic that we can enter the clinic this year but also on the way there we're joined by our partner, Amgen, that will help us to test many combinations of 310 likely also with their BiTE technology, and I will speak about that later in this presentation.

Also outside oncology, we had an excellent year mainly led by our partner, Allergan, in ophthalmology. The highlight definitely was the Phase III results where we have top line non-inferiority reach of a 12-week injected abicipar over monthly Lucentis. Also the secondary endpoints were a highlight for us, showing that visual acuity and also central retinal thickness support the first claim and show very nicely, how the 12-week injection frequency holds up. While the inflammation rate was a bit higher than expected, we're now looking forward to the results of the MAPLE trial that is testing further optimized material, and we will see those results in the first half of this year. The filing is expected also to happen in the first half of this year, which would lead to a launch in 2020. And the last point on the slide also the start of the DME trial very likely with the further improved material.

On the financial side, a few highlights where we remain in a strong cash position, with CHF 99 million as of December 31. We have now or are collecting the $50 million upfront, so that's not included in the CHF 99 million. This puts us in a situation that we are funded well into 2020, second half of 2020. And keep in mind, a launch of abicipar would put us on track to generate a steady income stream that can then finance our activities in oncology.

Net cash used in operating activities is CHF 42.5 million last year, reflecting a build in R&D. We have an operating loss of CHF 37.4 million and a net loss of CHF 37 million in 2018. The company grew slightly. So our talent base is now 118 and this goes in line with our growth, especially in oncology and clinical development.

So with this, I would conclude the overview slides and go a bit more into the pipeline, into the details of the program. The pipeline chart is a nice overview. You can see 250 in 2 indications but actually in 2 in 3 trials. MP0274, that's the safety trial in HER2 positive cancers, 310 in immuno-oncology towards Phase I with the partnership, Amgen, so the logo of Amgen appears now this year for the first time in our collaboration chart. And obviously, Allergan with abicipar and AMD and DME.

I will start with MP0250. MP0250 is a 4-domain DARPin, you see that with the color. We can joke gummy bears. Each targeting a different target. HSA for half-life, HGF for therapeutic effect as the same as VEGF. The idea behind the molecule is the following. If some cancers are treated with standard of care, that's the cartoon on the right-hand side, they can escape via HGF and c-MET activation of the pathways. Now inhibition of these 2 pathways can restore the standard of care activity and this setting, we are now exploring in 2 indications.

Let's have a closer look into multiple myeloma. Here, MM cells grow in the bones of the -- bone marrow of patients, and there are a whole range of good treatments to fight these cells. You get usually an IMiD or a proteasome on backbone the first time. Patients then relapse, they get a second-line treatment, a third-line treatment, and in the end, they go up to 6 lines, 7 lines of treatment. The problem is that there is no cure, and the relapse is inevitable. The time to relapse shortens from treatment cycle to treatment cycle and also the depth or the quality of the response goes down. So what we're trying to do is now combine MP0250 because we believe that VEGF, HGF access are very important in this disease. And as such, we could restore activity of drugs. What we're doing in this trial, the first trial, we're running in MM, is we're taking patient from either the PI or the IMiD backbone and then combining Velcade PI with 250 in our initial trial.

And on the next slide, you see the results. On the top part, you see the cohort 1, that -- those are the results that were in the public domain so far. And you recognize, we have 5 out of 8 patients with an objective response. The ones with a little asterisks, they directly progressed on a proteasome inhibitor. So in these patients, the full effect you see here all come from MP0250, while the others were coming from an IMiD backbone, so it could also be the class which that added some activity. So the 3 out of 4 patients, that's what really caused our eyeing, and that led then to the adaptation of the trial that I'll be talking on the next slide.

What we're adding here is patients of the expansion cohort that will be this 9 patients. Please go back. So now I'm on the blue bars. We did not color the bars on disease that's -- that is still building, but you can see from the first initial data, it looks very much in line that these errors will carry on, and they support the claim of above 50% response rate, and this is very supportive of the trials we will want to run going forward. So this is new data, the blue arrows. And over time, we will add the color, so how deep the response was, and we'll also follow how long these arrows will go on.

One arrow to really point out to is the uppermost one, this patient has now been on the trial for far more than a year and is still profiting from the combination of Velcade and MP0250, and he had directly progressed on a proteasome inhibitor. So a very noteworthy patient.

On the next slide, a few words to now our future strategy. So what you see here is first, second-line treatment. You see some patients going transplant, most of them relapse, and then go into these backbone treatments. And what we will be trying to do is in third and later lines, now take patients that were progressing on a proteasome inhibitor, directly combine 250 with the proteasome inhibitor, and now, a new trial for the IMiD patients that we now can then treat with IMiD combination. And this is the new path that we will offer both systems to both kinds of patients that doctors have this choice. And these trials are planned. They are not recruiting as of now, but they will start in this year, and they will kind of supersedes the ongoing clinical trial that will be amended to be the PI-focused trial.

The same concept, the same idea we are also following in non-small cell lung cancer. This is now a solid tumor, and we're talking about a subset of patients. These are the EGFR-mutated non-small cell lung cancers, which are usually difficult to treat if the TKIs don't work anymore. So after Tagrisso failure, that can be after first or second-line, there is no drug approved. And that's exactly why we're testing the combination of Tagrisso with MP0250 in a trial in the U.S. As the summary on my next slide. So we're in this high medical need space where there's no targeted therapy. The patients who have failed, they will have responded to Tagrisso, but will have progressed on Tagrisso, and we will combine or are combining with 250. This is our first U.S. oncology trial. The recruitment of the initial cohort is ongoing. We have 7 patients in this, and so far, no new safety signals to date. We will keep you updated how this is going on the response steps and also on the safety side as we progress into the year.

With that, I will go to our next molecule, MP0274. This is again a 4-domain DARPin. In this case, the target is only one, it's HER2, and we're binding 2 separate type of HER2. You see HER2 in a open and in a locked confirmation on the cell on the lower cartoon, and the DARPin so blocks or locks HER2 and directly induces cell death. This is one of the only molecules with this mode of action. To the right-hand side, you see the cell death, the cell suicide is not induced by the combination of antibodies, Herceptin and PERJETA. And if I then look at how good we are in cell killing potency. Now combined with -- compared to Kadcyla, you see we're almost a 100-fold more potent than this anti-body towards conjugate.

So on the next slide, a short summary. So despite the good HER2 treatments, there is still medical need out there. Also just yesterday, there was a presentation by another antibody that is a more potent Herceptin that has a stronger Fc via back root adding value to patients. Our molecule is differentiated to that because we have no Fc. Our mode of action should help those patients where the Fc or the immune system is not strong enough to fight the tumor. We're in the dose escalation part. We have now recruited and completed the first cohort and are on a dose escalate to higher dose cohorts and we'll keep you informed later in this year when we have more cohorts and more data from this molecule.

With this, I will shift gears a bit, and we'll go to more conceptual work and earlier work. I would like to introduce you to our activities in immuno-oncology 310 and have a few words on the Amgen collaboration. I think, I don't have to point out here how the big success of the immuno-oncology antibodies is these days. But the path is that it only works in a subset of individuals in a subset of indications. To reach more patients that would profit from immuno-oncology, one idea, which has been around quite long is to boost the immune system to get more immune cells active in the tumor. The antibodies that try to do so did not find a good therapeutic window as the toxicity to activation was too high, leading to toxic, systemic toxicity likely hindering local activity in the tumor. And they are active by binding agonistic targets on immune cells, clustering these wherever they see them, and then activating the immune cells that obviously can also attack healthy cells.

We have built a DARPin switch where we now recognize a similar target or the same target but by the simple binding mode does not activate the cells. Only a second DARPin binds a tumor local cluster. If now both DARPins engaged our target at the same time, we see tumor local activation, that's the switch mechanism leading to high activity in the tumor and no activity outside of the tumor. That's the new idea we have. And obviously, we can take different switch molecules or different activators, different localizers.

310 is the first molecule of this toolbox that's highlighted on the next slide. Here you see we're targeting 4-1BB, that's for the stimulating part, activating part, we're targeting FAP, that's for the localizing and clustering part, and HSA for half-life. If you just look at the little picture to the right-hand side, this is a slice of a tumor. And in red, you see FAP staining. And then in green, you see the active T-cells. In the above picture in this tumor, there were some, you see, FAP and some of the T-cells but they are also more globular and not productive.

By adding 310, you can see that we activate T-cells, there is many more T-cells, and they also take an elongated shape, showing that they are active. You can see they are active where the FAP is, so the stroma dense rich area, but T-cells also migrate into the tumor to then be directed or activated to kill the tumor. And these data and other data, obviously, really attracted also our partner, Amgen. And for us, a partner makes sense. If you want this is fuel for the engine, but you still have to direct, use the T cells to kill the tumors. And Amgen, with their large knowledge and their big pipeline for T-cell engagers, the molecules which engage T-cells and direct them to the tumor is the perfect partner as these molecules would synergistically work with MP0310. So a true win-win situation. And that's why we started the collaboration with Amgen to now in the clinic test first the DARPin alone for safety but then very fast go into combination trial.

The summary of the deal is on the next slide. So it's a true collaboration. So we will also carry part of the costs going forward. Obviously, as I was just pointing out, Amgen is an attractive partner because they have all the BiTEs and the T-cell engagers in hand, but we are not blocked from also using 310 for combinations with DARPin, and we will also be in the next coming years developing DARPin agents that activate immune system and direct immune cells to tumors. So also there, more news to come in the coming years.

The deal is also attractive on the financial side. We collected a $50 million upfront, plus close to $500 million in open milestones and double-digit tiered royalties up to the high teens.

The next slide points out that this molecule 310, which is in the center of this grid is just one part of our ongoing activity. So we're also looking into other activators, other immune modulators and other localizers. As 4-1BB, FAP will not help all patients we believe for other situations, other combinations make a lot of sense. And there, we are investing our time and effort to also develop those products.

With that, with this preclinical molecule, I will now zoom out and go to the most advanced program, which is abicipar on the next slide, which is the first long-acting anti-VEGF in the eye. It's in the partnership with Allergan. And what we're trying to do here is to capitalize on the anti-VEGF effect but reduce the injection frequency needed. Current drops are given monthly, bimonthly and in a small percentage of patient also every 3 months. The idea of our approach is that we would inject on a fixed dose every patient every 3-month, which would bring a high value to patients as they then know when they will be injected and have much less frequent injections into the eye.

Allergan presented the data on the next slide. They started with the primary end point that were presented in summer, and we were very happy to see that all 3 arms, that's the Q8, so every 8 weeks, Q12, and monthly Lucentis, they all are valuable in over 90% of the patients and we reached a non-inferiority margin with both 8 and 12 weeks versus Lucentis monthly. With even more, rewarding to then see the secondary endpoints where you can see the visual acuity gain on the right-hand that's the top graph is really very much in line between all these arms. So if you get monthly Lucentis or abicipar every 3 months, you will end up with the same vision gain. And then you can call it a biomarker, that's the central retinal thickness or the disease state, you see a saw tooth pattern that was expected. But with every injection, we go back to baseline and can -- with that, ensure that the patient benefit is given despite far less frequent injections. So very encouraging results, very rewarding to see that the DARPin platform can deliver differentiated agents also in Phase III, also in ophthalmology.

On the next slide, the short outlook and the summary. So abicipar has the potential to be the first fixed 12-week anti-VEGF in the eye. The safety side, like the overall safety was comparable like intraocular inflammation while still higher, but where we have 15% versus below 1%. This is very likely linked to the manufacturing process and potential impurities and formulation for Lucentis, they also had actually 18% in their Phase III. And via further optimization are now almost perfect. And as this was known, we have now a further optimized material by Allergan that is currently being tested in the MAPLE trial, and we expect to see the result first half of this year. Again, filing is expected also first half of this year, with the launch in 2020 prognosed by Allergan.

Let me quickly summarize the key messages from what I was just talking to you before and then I will hand over to Andreas. So on the clinical oncology side, we actually have great progress in multiple myeloma. The results led us to a refinement of this strategy and 2 next trials also in non-small cell lung cancer. We have a rather slow startup of the year by starting trials in the U.S. and are now going very fast. And with that, we can see the first results coming our way. 274, we have the first dose cohort completed and now going to higher doses. The strategic collaboration with Amgen was important on the one hand to show that the whole DARPin platform in immuno-oncology holds value and it -- by that validates the DARPin platform, plus brought in something for our activities in MM, but also other research projects and with that kind of the oncology research focus where we're focusing on differentiated therapeutic designs, carrying patient value. And the last point is abicipar where we could show the first fixed 12-week drug in wet AMD, and we're looking forward to the MAPLE results.

With that, I will stop here and handover to Andreas for the summary of the financials.

Very good. Thank you, Patrick. So thanks a lot for being here and on the phone to everyone. So the results I'm presenting now and have been distributed this morning via press release and those deck you have in front of you are still preliminary and so-called unaudited. However, obviously, I do not expect to have any changes on to the published, the audited results, via the annual report in mid-March.

I will run you through the key numbers, most of them are stated in million Swiss francs. And again, you can find details in the release as well in the appendix to the slide deck you have in front of you, and everything is available on our website.

So on Slide #30, key figures, so let me start with them first before I make a bit of a deep dive in some of the numbers. So generally speaking, the numbers are in line with our expectations and the guidance we have provided to the market. And most importantly, and I just repeat again what Patrick was saying, I think we are very well funded with CHF 99 million cash at hand at the end of '18 and no debt, and we added $50 million on top with the collection of the $50 million upfront payment received from Amgen in January. And with that, we are funded beyond the expected launch of abicipar in 2020, which from thereon will be eligible to substantial milestone payments, regulatory milestone payments, sales milestone payments and royalties from thereon. And with that runway, we can capture several miles value inflection points beyond abicipar, meaning our oncology assets, which are fully in our hands, except the 0310 asset, which we just out-licensed to Amgen.

So in '18, we recognized revenues in the amount of CHF 10.4 million, which is close to CHF 10 million less than the year before and to reduce revenue is really a reflection of our strategy to invest and forward integrate into proprietary assets.

Expense wise, we spent CHF 47.8 million, which is 4% or CHF 2 million more than the year before. This includes non-cash effective share-based compensation and pension costs in the amount of CHF 5.3 million. This resulted in an operating loss of CHF 37.4 million compared to CHF 25.8 million last year, and realized a small positive financial profit of CHF 400,000, which was the same last year and we generated this from U.S. dollar money market investments and that help to overcompensate the challenging negative interest environment in -- on the Swiss franc.

Bottom line, a net loss of CHF 37 million versus CHF 24.4 million last year. And in terms of cash flow, a negative operating cash flow of CHF 42.5 million versus CHF 40 million the year before. And again, cash balance strong CHF 99 million and now in between an additional $50 million on top with the collection of the upfront payment of Amgen.

On moving to Slide 31, the waterfall chart basically saying -- showing the P&L in a different manner. Total revenues, CHF 10.4 million and then the split into R&D and G&A expenses, CHF 37.4 million and CHF 9.5 million. Negative EBITDA of CHF 36.5 million minus depreciation, amortization, CHF 900,000 gives an EBIT -- operating loss of CHF 37.4 million.

I move on to Slide 32, balance sheet. Again, this as in the past, it looks pretty much simple and very much dominated by cash. What has changed compared to the last year is that we have CHF 49.3 million receivable from Allergan, that was the case end of the year. Meanwhile, we collected that. So that turned into cash.

Amgen.

Amgen, excuse me. Thank you, Patrick. Of course, Amgen. And that turned into cash. And on the liability side, a strong equity base is close to CHF 92 million. And one that is striking out that's the contract liability Amgen. It's not a true liability. With the change of the IFRS 15 standard, that's the way we have to label it. But as to the past terms, before we introduced this new standard, these are deferred revenues. In German, we call them also (foreign language) So these are not true liabilities. They will be recognized over time in this year and next year and will become non-cash effective revenues in the profit and loss account. I think that's worth adding so that we understand what it means. So it's not a liability. So we have 0 debts in the balance sheet as a company. And then we have some other assets and other liabilities as part of the normal working capital management.

I move on to Slide 33, accounting revenues. So this is the evolution over the last 5 years. And again, as I stated initially and I just want to repeat that, so that is a reflection of our strategy to invest into our own asset and to forward integrate and we as management, entrepreneurs and also major shareholders ourselves, we are very much convinced that the only and the right way to build substantial company and add value for patients and shareholder in the long run.

And having said this, in some instances, of course, it makes sense to work together with a competitor, but also hungry partner like Amgen and Allergan, and the deal we stroke with Amgen is a reflection of that with our lead immuno-oncology asset. And we think, together with Amgen, we can -- together with Amgen, can add more value for all stakeholders. And that fee, the $50 million upfront fee, again, collected in January, that will be P&L-wise. So income-wise will be recognized in the period from December last year, that's why we have the CHF 0.9 million in the accounting revenues, pro rata over the period until end of Q3 next year. So there will be every month roughly CHF 2.3 million in terms of non-cash effective revenues from now until end of Q3 2020. And the other CHF 9.4 million in revenues, that's coming from previous collections from the discovery alliance with Allergan, and that's the recognition we made in 2018.

With that, I move on to Slide 34, expenses. The same, say, chart over 5 years. So they have been developing in line with our expectations and plans and believe me, we are, I think, we have been demonstrating since our inception 13, 14 years ago, that we have a very tight cost control and investment control. And they have been going up, obviously, as a reflection of our progress of the pipeline with more closely clinical trials. And last year, we spent/invested CHF 48 million. The main cost drivers were investments into pre-clinical and clinical development of MP0250 in several indications, in MP0274 and also MP0310, which is now being co-developed with Amgen. And then some personnel-related cost, obviously, that's a big cost driver, as always. And then there's also some non-cash effective cost in terms of share-based payments and pension costs in the amount of CHF 5.2 million.

With that I move to Slide 35 and that might be of the one which is of most interest for you all is the guidance for this year. And we are setting up our organization for growth. The positive progress of the pipeline gives us the confidence to do so. And so far in 2019, we plan to invest CHF 70 million to CHF 80 million, of which around CHF 7 million are non-cash costs. So that's about CHF 30 million or 60% more than last year, that's a substantial increase. The main drivers for this quite sharp increase are threefold. We -- about 40% of the CHF 30 million are related to the progress and additional clinical trials in multiple myeloma and non-small cell lung cancer. About 40% are related to the start of Phase III material manufacturing of MP0250. The good trend indeed of current trials give us the confidence to do so. And around 20% is related to the increase personnel as a function of the increased personnel. These are hiring more people as well as research activities to move more drugs, hopefully, into clinical trials over the next years.

On top of that, we expect about CHF 3 million for capital expenditures mainly driven by the -- by lab equipment here in our building. And more than outside of the expense guidance, I cannot give you more guidance because all the terms with our partners are not disclosed, so I cannot give you guidance on when possibly and how much milestones will be -- should be coming or could be coming from our partners. So the guidance is focused on the expense side for the time being.

And as a matter of fact, this guidance is subject to the progress, and we keep you updated if there's a change over the next quarters.

With that, I hand back to Patrick to give you more flavor to what we are planning to do this year and the years beyond.

Thank you, Andreas, for this very comprehensive presentation and walking us through the numbers. I will now end with a short summary of what we're doing and outlook into 2019.

So let's shortly wrap up and this is going to Slide 37. Here, just a reminder of where all these molecules come from. And the success in 2018 shows that we can develop these molecules, but they don't come from nowhere but they actually come from our DARPin library. So what our researchers here in Schlieren are doing every day, they are selecting to give in target-specific DARPin modules, the individual DARPins that they then build together to new therapeutic, potential new therapeutic entities that can open a novel therapeutic design space. That's shown in the middle of this picture that we can work through many different designs and then select the winning ones, and for example, MP0310 in this immuno-oncology area.

We also in the last year, and this was not a topic of the presentation today, but, really, reorganized how we do research, and that's a nice overview of Pamela Trail. Our new CFO likes this -- I can call it the wheel of innovation here, where we have prime and activate, that will be the 310 molecule. I spoke about ideas of how we can directly engage immune cells to hit targets, so nothing there yet but more to come. Then we have direct tumor cell killing, that will be MP0274, but also, DARPin drug conjugates might be a way forward. We can modulate the tumor microenvironment and something in between 310 but also 250, as you are seeing, we can break resistance and obviously combine all of that with unblocking agents such as PD-1 antibodies.

I think this nicely shows that we have in our focus in oncology, we have different areas in oncology where we are building key knowledge that will help us to innovate with novel therapeutic designs going forward and build a rich pipeline for ourselves but also for potential partnerships.

This leads me to the overview of the investment case. I just spoke about the DARPin engine and research, how we are doing that. I spoke about our advanced balanced clinical portfolio with abicipar, the first 12-week dosed anti-VEGF in wet AMD; the progress in multiple myeloma of 250 but also then in non-small cell lung cancer in MP0274 in Phase I, and that we have this organizational focus on forward integration and growth that we can, at one point in time, really progress through the whole value chain.

As we will not be able to do all of this alone and we -- as Andreas nicely pointed out, our focus is patient value, we will also be able to enter into partnerships with other pharmas but also with academic institutions, with clinics to help us bring forward these molecules, and we are well financed and on track towards a steady income with the abicipar launch that might be as early as 2020.

So I think all in all, we're really on track to move Molecular Partners into the next growth phase, and we are very excited with the pipeline we have in the clinics and additional excitement on the preclinical assets.

I will close the presentation with an outlook, what can we expect in 2019. Players are the same, abicipar, BLA filing in H1 2019, DME starts and also the MAPLE results, all of that gearing toward launch in 2020. These time lines were communicated by Allergan, so we will not be able to comment on them.

MP0250, we have the ongoing trial in MM that we, today, updated with a few patients, well, we continue to do that, but, more importantly, amended to become a PI-focused trial. We'll start a new one with the IMiD combinations to really be able to offer both backbones, a good combination partner. Further, we are looking forward to then share the interim results of the non-small cell lung cancer trial, and obviously, all these trials will carry on into 2020.

On MP0274, we have the safety and interim efficacy we are heading towards this year.

310, we'll see first-in-human activity and then, ideally, next year, the combination trials, where we really want to unlock the value in collaboration with Amgen.

And on the research side, this is a constant endeavor to bring forward new DARPin candidates and establish novel therapeutic designs.

And to recap from Andreas, we're well funded into the second half of 2020 to reach these key milestones going forward.

With this, I want to thank Andreas for the presentation, all the audience here in Schlieren and on the phone. And we'll open the floor for questions. Thank you.

Thank you, Patrick. We are ready to take your questions, and we would like to give the participants here in Schlieren the opportunity to ask their question first, if there are any. And yes, please use the little microphone so that the participants on the web can view as well. I bring you (inaudible).

I have, actually, 3 questions. The first one relates to the Amgen deal. And according to the deal, Amgen can choose 3 combinations or indications, and you can keep this these MP0310 for other indications. Can you now out-license other indications or you are allowed to do these other options in-house? And then second question relates to financials. This is, how should we think about OpEx going forward? Is CHF 70 million, CHF 80 million now the new level or will it increase later or into what extent? And then the last question on strategy. So with this new [CSO, one you showed to the slide] with the strategy, do you still focus on validated targets that failed in the clinics or do you also evaluate new targets?

I think I'll take first question and then hand over to Andreas for second, and then I or Michael can take the third question. So the first question was about the Amgen deal and how it is structured, then I can quickly talk about what those 3 combinations mean. So Amgen can do more than 3 combinations, but we will co-fund 3. So they can do many more, but after the 3, our kind of co-funding obligation is done and they can do an additional 5 or 6, whatever they want, but it's on their cost. So -- and there we're talking mostly about combinations, less indications, so it's trials to be run. Having said that, we have retained the right to do combinations of 310 with our pipeline. So if we have T cell engaging DARPin to target x, we can do that combination in the clinics. We don't regain rights to 310, we can run the combination trials. So we could not out-license 310 again. What we could do is we could out-license the T cell engaging DARPin. And then it will be a combination between 2 licensing partners, but that would be covered. So we can run combination trials. And the way we think of this if 310 should become the new backbone, the new PD-1 of the system that everybody needs to have access to. We still have access to 310 for our combination. So that was, for us, important as we believe to activate the immune cells in the tumor will be key and will help many of our approaches, and that door now is still open. That was the key we wanted to reach there. I'll then maybe just quickly take the strategy question and then hand over for the financial one. So on strategy, you're absolutely right. So in the beginning, we focused on very validated targets. And I would say with VEGF and HGF, especially VEGF, I mean, that was clinically validated, commercially validated, and there was no question mark. HGF was less validated. That was in Phase III, but there was activity known. But there, I think, we're back to pioneering a bit of the new mode of action. 310 was FAP, I would say, Phase I, II; 4-1BB also Phase I, II. So we're going earlier. But at the moment, what I would say, we will work mostly on targets that have shown some level of clinical activity. And I think this is one of the pillars of our strategy that's in oncology, because there's so many targets known and DARPins allow new therapeutic designs, we can take a bit less therapeutic target risk and bring value at a bit lower risk than others because we don't have to innovate on the targets but on the therapeutic design. Having said that, in the future, if we would find the target that would profit from our therapeutic design that has to be done with DARPin, why not? If it is a mono-targeting agent, if you could do it with an antibody, I guess, that's more the antibody space where you would actually then follow the therapeutic design of the antibody. So we're trying to differentiate more and more over the therapeutic design and then less on the novel target. And I think that's a strength of our strategy to be able to take less risk but still have very high value to patients. I will hand over to -- yes.

So in terms of expense this year, so I think one can -- must assume that the cost will further go up also after this year. Our planning assumption is we progress the pipeline in terms of, of course the trials could become larger, there's more indications to come in. And the more we progress, the more expensive it becomes. So one should really assume in the models that the costs go further up. We'll give, I mean, more granularity in the course of this year, for the years after, but I think right now, I would say at least CHF 10 million, CHF 20 million more for 2020. Then the years after also very much depend on how much forward integrating we want to go with oncology, whether we do a full-fledged Phase III or a pivotal Phase IIb alone, together with a partner. So there's a lot of variability in [progressing]. Planning assumption is we increase expenses because we progress our pipeline.

Maybe I'll just add, we increase expenses based on success of our pipeline, which then will be a very good thing. We have another question here in the room?

Just 4 questions or 4 areas. The question is, first, on abicipar. So the MAPLE trial is coming out. What would you consider a positive trial? Is that, in particular, focused on the intraocular inflammation? Then the second area is on partnerships. Could you give a little bit flavor how the sort of day-to-day practice is with the Amgen? How's the working relationship there with Amgen with -- together with Molecular Partners? Then also with the first-in-human, does that trigger a milestone payment? And then, finally, on collaborations. Maybe some people might be surprised in the market because the I/O is an earlier stage, where you have an asset that is further developed with MP0250. That's also an asset that, in the future, with also the clinical trials, will be something that you'll be considering. When do you consider actually then looking for partnership for that? What will be for you to trigger, let's say, to look for a partner? And then the third area is a little bit on the organizational focus. You're not really in oncology, but with your, actually, technology platform, you could also look into areas like inflammation. And so what do you do with these sort of things that spin out of your platform? And then, finally, just on the well financed until 2020. As Andreas already said, there's a lot of moving parts there, but one could assume probably with abicipar in the market and milestones coming in, that you could also reach breakeven or profitability shortly after the 2020 period. So the question, is that a viable assessment?

Okay. So maybe I'll give it a start with partnerships, organizational focus, hand over to Michael for abicipar and Andreas for the financing situation. Let me start with the partnership and what the kind of working relationship towards first demand. So one part which was, for us, very important is to not lose any momentum now. So we are still driving towards first demand. So we have actually all the -- kind of the pen in hand until we have those first patients, selected a safe dose, and then the handover actually happens for the combination trials. And so this gives us some time to really build a very good relationship with Amgen. On the business side and also on the strategic side, this is well established through the deals, through the negotiations. And now the technical teams, the research and development teams have time to work together, hand in hand. They know each other very well from the due diligence. It was a very deep due diligence. They looked into the program, up, down, back, forth, manufacturing, toxicology, you name it. So all the interactions are in place, and I think, now, we can really start the working relations, and it is phased over a handover period. So that's what I like, that we will not lose any time, momentum via the handover. And this was important for us but also important for them as the value for them is really the combination trials. You did also touch on the question on MP0250 and partnerships. MP0250, if you want to, in our philosophy, really maximize patient value, we're still finding out where the patient value is. And the indications we're doing, so we have multiple myeloma, we have non-small cell lung cancer, and we're looking into a range of other indications. And as we don't know exactly how this positions itself, it is almost too early to find a partner or partners to move that forward. So we will keep that a bit longer until we know what we want to do. And depending on where we hit and what is the best way forward, where we are in our evolution, we can then decide what makes more sense, bring it forward alone, share it, license it out. It will also depend on what the other molecules in the pipeline are doing. Then to the organizational focus. So I think for us, what we found is -- actually, 2 years back, is that we needed to focus on 1 therapeutic area to prove that the platform can deliver novel therapeutic designs and also strengthen the oncology, in our case, core that we would do meaningful designs. And I think this is an ongoing process. I wouldn't say we're fully there yet, but I think we have put everything in place. But we now build a core strength, the competence that we recognize when a design is better than another, that we are competitive on a global basis. And as soon as we are heading there and have reached that, I think we can then also branch out again. And you mentioned the spinout, the spin-off and there's many different ways one could do that. And you mentioned totally, rightfully the DARPin platform, in no means, is limited to oncology. But a lot of the learnings from oncology are useful for other therapeutic areas. Let's say, the systemic half-life, long half-life, low immunogenicity, multi-targeting, all this knowledge is useful. And keep in mind, we're in immuno-oncology. And immuno-oncology, very close to immunology, and a lot of those concepts, which we will now learn about, can also be applied outside oncology. So I even see a synergy there, and I'm very excited that the work we're doing now is almost setting us up for a future growth stage once the core strength is given. The forum is totally open, can range from a collaboration with a large pharma, it could be even a joint venture, it could be a spinout or we set up a new therapeutic focus area in Molecular Partners. That, I'll leave all open, but the question is very nice to answer as it really points to the strength of the platform. Thank you. I will hand over to Michael for abicipar.

Yes. Thanks for the question. I think if I'm correct, you asked about abicipar and maybe what would constitute a success. And, of course, we have the same question, that's the question of Allergan. Me, personally, I'm looking for a strong improvement, which I would say about twofold. So the percentage inflammation in the Phase III studies was around, I think, 5 -- 15.1%, 15.7%. So around 8%, that would be already great. If you look at the totality of data, I think it would be also good to look at the severity. So Allergan reported about 3% to 4% severe, so we can bring this even down further beyond the twofold. Probably in the range of 1% to 2%, it would be awesome. And I think with this, you can really go forward and launch.

Thanks, Michael. And on the finance question, Andreas.

Yes. That's -- the question is spot-on. And I think we are in the nice position that this could be possible, that we could see profitability with a launch of abicipar, of course, then depending on the size of the milestones and then the royalties coming in. It depends on the sales and revenues Allergan is generating, and again, the cash coming to us. However, having said this, this doesn't mean this can be -- it is, will or could be, on a steady basis, profitable, because we want to forward integrate, invest more money into our pipeline. So it could be but no guarantee that this will be on a steady basis and because that's not -- this, of course, ultimately that's the goal to generate sustainable profitability for everyone, for all stakeholders, but there's a long way to go. And also, we want to bring our own assets forward, ideally, at some point also, in ourselves to bring one or the other drug to the market. And that is expensive. That's when we will be profitable when we reach that with our own product.

Okay. I think then we can open the discussion to the participants on -- of the web. Yes. Operator, we're ready to take questions from the call.

The first question from the phone comes from Ken Cacciatore with Cowen and Company.

I just had a couple of questions. First, I'm going to start with abicipar, and you started touching on it a bit briefly about the potential for your funding into H2 2020 without any milestone payments. But could you give us any specifics, if there are milestone payments around filing or acceptance or approval and then launch? Maybe give us a sense of what we can expect as that progresses from Allergan, what might be actually coming into you in terms of payments. Then also, in terms of your involvement in the manufacturing refinement and purification, how involved is the team in trying to solve this? And are you already working on another formulation even beyond what we're going to see in MAPLE? We all understand that this is a ongoing process. It took Lucentis and EYLEA few generations to get better and better. So just wanted to know to what degree we're still trying to optimize this program even beyond MAPLE. And then lastly, on non -- on 0250 non-small cell lung, is there any way -- as we wait for the interim results, can you help us set a baseline of what would be interesting, acceptable or clinically meaningful as we await the disclosure there?

Ken, it's Andreas. Thanks for the question. So I take the first one. So just to repeat, this is maybe what all of you have seen in other slides, not today. Overall, we have 360 million milestones outstanding with the abicipar collaboration, with Allergan, plus we are entitled to double-digit growth, starting double digit up to the mid-teens, and that's the official language we are allowed to use. Out of the 360 million milestone payments, 210 million are eligible up until approval of -- in the 2 indications, wet AMD and DME. And 150 million are -- we are eligible upon reaching certain sales milestones. So one has to divide first into wet AMD and DME. And you can assume, wet AMD is a bit larger than DME. And then, again, make the division in terms of approval milestones into the 3 regions, U.S., Europe and Asia. So wet AMD will be the one that should be launched, as per communication of Allergan, in 2020. The sequence of the regions, we don't know, so it could be U.S., Europe or Asia. So -- but I think in -- on the back of the envelope, one can really assume, if abicipar goes to the market, we should be able to collect plus/minus CHF 100 million every year from the launch and then thereafter, from milestone payments and/or royalties, assuming the drug goes on the market, obviously. I think it's a very substantial number, as I just stated, so that will be very element for us and gives us then extremely lots of flexibility to even more forward integrate with our proprietary assets.

Thanks, Andreas. And I will hand over to Michael for -- as our abicipar expert.

Thanks, Ken. I have two microphones now, so I hope you can hear me well. Your first question was about how involved we are, and the second question is about how much is ongoing. Let me start with the second one. I think as in every big company, if you have a successful product, of course, you will invest. And the thinking is, of a life cycle of a product, I think our patents will last into the early 2030s. So we are looking into a time frame of another 12 years. So, of course, there is a lot ongoing. It gets probably harder and harder if you have a very good purity to make it even better, but why stop? I think you and everyone else would want to go until you have reached the final purity. So there is a lot ongoing. As to the precise involvement, I cannot give you too much details. Generally, we are involved when it's DARPin generic, so relevant for every DARPin, but the more specific it gets, of course, the partner has to do more (inaudible), which, I think, all I can say here. You had another question on the non-small cell lung cancer. And as you have mentioned, Patrick, so we had a bit of delay in setting up the study. This was in the first half of 2018. The second half then, we got around all the contracts in all the sites. And now we are looking at the first handful of data. The target was always that, basically, every response counts. Imagine these patients has nothing but chemotherapy. Chemotherapy certainly comes with a lot of side effects. So basically, every response counts. And in terms of a magnitude, it would be great to have maybe something around 1/4 of patients responding. That would be really good. And in terms of duration, we should definitely go into the range of months. It's a bit difficult to say for it depends on the overall response and the duration and, of course, the side effect profile, and we will certainly update once we have a little bit more data to share with you.

The next question from the phone, yes, we have another question, comes from Umer Raffat, Evercore ISI.

I thought we'll spend a minute digging into the -- your lung cancer trial design and the strategy there, with a focus, perhaps, on the subpopulation. And my question was, so we saw Roche do an Avastin plus TKI and EGFR mutants, could you remind us what we learned there and what specific EGFR subtypes fared better, one? And then two, we know Lilly has a ramucirumab trial coming up, again, and EGFR mutants, and they're going for [select upside]. And I'm curious your thoughts and expectations there. And then with those two in -- sort of in the background, what specific EGFR mutations are you screening for an ongoing Phase II trial? Is it T790 only or is there additional subtypes as well that you're looking at?

Thanks, Umer. Great question there. It would even be better if we have Andreas Harstrick here, our CMO. He is, unfortunately, traveling. And he was at Lilly, and he ran the ramucirumab program. So he already knows even more. So in brief, and maybe I don't know all the studies so well, Roche studied Avastin and erlotinib, Tarceva, so this was especially in the Japanese patients, a successful study. However, the learnings were that then you'd select for this T790M mutation. It's a very highly prevalent mutation, especially in our Asian patients. They have about prevalence of 40% higher than here in the west. And that's why our protocol basically focuses on these patients. However, we have a slightly different definition. We take all patients who progress on osimertinib, Tagrisso, a drug that AstraZeneca has a supply agreement with us. And this means, basically, all these patients had to be originally diagnosed for T790M. However, now it's the time where we want to learn. So if there are other mutations coming up, we will learn. And then based on this knowledge can refine our future trials. For now, it's really osimertinib progression as an inclusion criteria, which probably means they all have the T790M mutation. But meanwhile, they could have shown other mutations. They are not so frequent, but we will certainly learn that we have the sequencing in place. And once we go forward, we are hopefully learning whether there is something we can use as a predictive biomarker going forward. Patrick, anything to add so this was...

No, just to rephrase or recap. I think what we're doing is we're including all that have progressed on Tagrisso. We're analyzing the mutational status of these patients. Some might have different -- or we're quite sure there's different ways to escape. There's also the c-MET amplification that has been shown. And at the moment, we're not defining kind of this as an in or exclusion criteria, but with the data in hand, we will [can then] to kind of analyze patient by patient and find out in which subgroups would we have the best effect. This can then guide our future development strategy. That's why also to the question of Ken before, what is -- kind of what are we looking for, so this trial will hopefully inform us how best to further develop the drug, and I think that's the most prudent thing to do, not to think you know everything but to run the experiment, learn from the experiment and then focus on the things you believe can really go to the market.

The next question comes from James Quigley with JPMorgan.

So one on MP0250 in myeloma. In the expansion cohort, 2 patients are no longer on treatment. Just interested to know why they're not in treatment, what happened there and also if there's any correlation as to the reason why they're no longer on treatment with the -- with cohort one and the patients you've regressed there. Then also on MP0250 in myeloma. You've had over a month now since these data have been presented at ASH. What's the feedback now from KOLs? And how are they thinking along the lines of trying to reignite responses to Velcade versus using other therapies after progression of Velcade, given that there's such a [roster] of therapies in the pipeline for myeloma? And then the third one on abicipar. MAPLE time lines now first half, is there any chance that you get MAPLE before filing? And could the MAPLE data then form part of the file for abicipar?

Thanks, James. This is Michael. I'll start and Patrick can follow up. So let's go first to the multiple myeloma question. Yes, you rightly saw that 2 out of the new patients are no longer in treatment. We have not disclosed any of the details. We may do that at a conference, but first of all, we want to have the data set a bit more mature. It's always the combination of either toxicity or disease progression, and I don't think we know exactly what -- let's first glean the database, lock the data so that we can speak about it and see whether there is any trend. Obviously, one of the patients was taken off trial very early, so this is probably beyond any efficacy could have been measured. So it must have been probably more toxicity. And we will disclose this as soon as we have a complete picture. Talking about ASH, and I think you were even there in person, so we had meetings with, I think, 6 or 10 U.S.-based multiple mye specialists. By and large, they are all very enthusiastic. They have commented that they would really exactly support what we are doing, the strategy with 2 separate studies. And Robert Orlowski from MD Anderson, it was also early December in our R&D Day, gave a nice presentation. Maybe the webcast summary is still available. I think what it focuses on is basically there is a geographic split. Some countries prefer the image-based treatment in this line, so we would get more patients from that pretreatment. And others are still more in favor of Velcade. There are a number of reasons, including reimbursement and treatment preferences. So the best thing now is to do both studies, compare the results. When we have that, I guess, in a year from now, we have a solid database to compare the two and then take a reasonable and rational decision. Is there a preference to go for one or the other one? And again, the totality of data efficacy, safety, recruitment speed and maybe also preference of the investigators, this will take then -- will be taken into account for our decision. The third one on abicipar. I don't know what Allergan is planning, but if they have the data from MAPLE in time, they would certainly consider to include this in the filing. I'm not sure they would do it because it's not a Phase III-type study. So first and foremost, they would have to get approval based on CEDAR and SEQUOIA. Those were the Phase III studies. But in my personal opinion, it certainly helps to have a MAPLE submission included so that you can say, "Look, this is the status of the data." But again, I don't know what Allergan is doing. Patrick, anything else to add?

I'll just add maybe one word to the MM trial. Obviously, we're here gathering patients third to sixth, seventh lines. Some of these patients are in very poor state, unfortunately, and are not responding to anything anymore. And so some of these patients just shows you a response also to our combination. They might have been responders in an earlier line. Just to point out that, obviously, we don't have a very focused patient population in this initial trial, and we will learn more about that going forward.

The next question comes from Anastasia Karpova with Kempen.

Two questions, quickly. In regards to your Pom and MP0250 study, would that include patients who are relapsing on Pom-based combinations, so broadly IMiD-based combinations? And then for 274, in your initial screening, do we see predominantly breast cancer patients or a broader range? And if you could indicate what would be an interesting efficacy signal in the initial data update, that would be great.

Anastasia, this is Michael. Would you mind repeating the first question? I think there was a breakup. I'm not sure I fully got it.

I think I got 1.

Okay. So for the second trial with MP0250 in myeloma that will go in combination with Pom, would that be conducting in patients coming off Pom or any other IMiD, specifically?

Now I heard you right. So -- yes, so the combination will be with Pom, and this is in patients coming from, let's say, equally strong IMiD. So we allow patients to come from either Revlimid, which is lenalidomide, or another one, but we also exclude something where we think it's not strong enough. So some geographies, for example, use thalidomide.

Maybe to follow up on that. How would you single out the efficacy of MP0250 in combination with Pom and patients coming from lenalidomide, given that Pom has reasonable single agents efficacy in that population?

Yes. This is addressed in the study design, so basically, we have a main cohort where they come from Pom going to Pom 250, but then there is a secondary cohort where we also study this if you like crossover. But you're exactly right, that's one of the tricky parts of this. How would you deal with the Pom-len? But I think there's good literature data and people know how strong this effect will be.

I'll just add that this makes the study a bit larger and obviously then a bit slower than the other trials. So absolutely spot-on with the question.

For the 274 question, we allow patients who have -- diagnosed with HER2 overexpression. So this can include breast cancer patients, but we have also seen patients of other pathology. And so we are very excited to see more patients outside breast as long as they are HER2 overexpressing, they can participate in our study.

Some indication on what our results could look like. I think we have nice benchmarks of other anti-HER2 agents out there, and we will need to benchmark against those. So I think that's the best, to think about that like that.

The next question comes from Zoe Karamanoli, RBC Capital Markets.

Most of my questions have been answered. Just 1 follow-up on the non-small cell lung cancer. Perhaps, can you now share when we could expect to see some initial safety and efficacy data from this trial?

Zoe, this is Michael. Thanks for the question. Yes. It's a bit difficult in oncology because the study is ongoing and we are recruiting patients. So we cannot exactly know. We actually don't know when this will be the case. We will certainly try to submit to one of the big lung cancer conferences in the course of this year, and maybe we can also have an earlier update in one of our, say, quarterly updates. But it depends on the data and then whether we can submit for one of the conferences and get an abstract there. So it's not too precise what I can say as of today, certainly in 2019.

Are there any further questions?

There are no more question from the phone, sir.

Good. Then I would thank everyone also participating in a very lively and very good Q&A. Thanks for that. It was a pleasure to present here today. And the people here in Schlieren are welcome to a little [Aperol] and some after Q&A discussions. Thanks, everyone, and goodbye.