Oncternal Therapeutics Inc (ONCT) 2006 Q3 法說會逐字稿

Good day, ladies and gentlemen and welcome to the GTx third quarter conference call.

My name is Alicia and I'll be the operator for today.

At this time, all participants are in listen-only mode. We will conduct a question and answer session towards the end of this conference.

[OPERATOR INSTRUCTIONS]

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

At this time, I would now like to turn the call over to Mr. McDavid Stilwell, Manager of Corporate Communications. Please precede, sir.

Thank you and good morning.

On behalf of GTx, I'd like to welcome you to our third quarter 2006 conference call. We released our financial results for the quarter and 9 months ended September 30, 2006 earlier this morning through the news wires. If you do have not a copy of the release and want one, you will find it on our web site at gtxinc.com.

We will have a replay of this call available on our web site until November 16, 2006.

With me today are Dr. Mitchell Steiner, Vice Chairman and Chief Executive Officer; Marc Hanover, President and Chief Operating Officer; and Mark Mosteller, Chief Financial Officer.

Following this introduction, Dr. Steiner will highlight our clinical and corporate developments during the quarter. Next, Mr. Hanover will briefly detail our financial performance for the quarter.

Dr. Steiner will then share with you plans for the rest of the year and make a few closing remarks.

Finally, we'll open the call for questions.

Before we begin, I will remind you that information discussed on this call may include forward-looking statements. And such statements are subject to the risks and uncertainties we discuss in detail on our reports filed with the Securities and Exchange Commission including in our quarterly report on Form 10-Q filed August 9, 2006.

We expressly disclaim any obligation to release publicly any updates to forward-looking statements made during this call.

Now I'll turn the call over to Dr. Steiner.

Thank you, McDavid.

In the third quarter we moved forward with our commercial strategy for ACAPODENE by securing a partnership with Ipsen for European rights.

Also, GTx's clinical programs remain well on track. We have obtained more positive clinical news for our ACAPODENE clinical trials. And we advanced our SARM program by completing enrollment of the Phase II ostarine clinical trial.

We expect that we will be able to report top line data from the ostarine clinical trial later this quarter.

The GTx Ipsen partnership is an important milestone for GTx, allowing us to achieve 3 strategic objectives.

First, we place the responsibility for European commercialization of ACAPODENE into the experienced hands of Ipsen.

Second, we retained U.S. rights to ACAPODENE.

And third, we received sufficient cash through this transaction to provide us the financial resources to fund operations through the first quarter 2008, which is beyond the point when we expect to receive the efficacy data from both of our fifth pivotal Phase III clinical trials.

Ipsen is the right partner for ACAPODENE in Europe.

Ipsen has specific expertise in marketing and sales for prostate cancer indications in Europe. Ipsen's lead drug is Decapeptyl, an androgen deprivation therapy drug for advanced prostate cancer.

With 2005 sales approaching $300 million, Decapeptyl's large share of the European prostate cancer market demonstrates Ipsen's well-established relationships with urologists and medical oncologists.

ACAPODENE 80 milligrams for the treatment of multiple side effects of androgen deprivation therapy, and ACAPODENE 20 milligrams for the prevention of prostate cancer nicely compliments Ipsen's portfolio of prostate cancer products.

In the United States, GTx has begun to lay the commercial foundation for ACAPODENE. Two years ago we hired a Vice President of Marketing and Sales and after receiving our Phase III efficacy data, we intend to build a sales force of 50 to 80 representatives to market ACAPODENE to the approximately 8,000 urologists and medical oncologists who treat prostate cancer patients.

We currently have on staff 5 regional medical scientists, all with urology experience, to work with healthcare providers to better understand high grade PIN and prostate cancer as well as the multiple serious side effects resulting from androgen deprivation therapy.

The GTx, Ipsen partnership has made an important financial impact on GTx. Our cash balance as of October 7, after receiving the upfront payment from Ipsen, was $70.9 million.

I should mention that we may receive additional cash from the partnership between now and the time period we anticipate results from our pivotal Phase III clinical trial. These additional payments from Ipsen may come both as milestone payments and as reimbursement for a portion of our U.S. clinical development expenses for ACAPODENE.

Also, we are engaged in discussions with potential partners for Asian rights for ACAPODENE, which can provide us with more cash from the upfront license payments, milestones, and further offset of clinical trial expenses.

During this quarter, GTx continued to take the risk out of ACAPODENE's clinical development programs. In late August, an independent Data Safety Monitoring Board reviewed the safety data from the Phase III ADT and Phase III PIN clinical trials.

They examined the unblinded safety records of more than 2,700 patients and recommended that GTx continue its plan with both Phase III ACAPODENE clinical trials.

It's worth noting the active ingredient in ACAPODENE, toremifene citrate, has been on the market in a 60-milligram dose since the mid 1990s for the treatment of advanced breast cancer.

Toremifene citrate has a significant safety database containing more than 355,000 patient years use.

As you know, both the Phase III ADT and Phase III PIN clinical trials are fully enrolled. The total number of patients for the Phase III ADT clinical trial is 1,396. And for the Phase III PIN clinical trial is nearly 1,500.

We are on track to see clinical data for the Phase III ADT clinical trial in the fourth quarter of 2007 and for the Phase III PIN clinical trial, in the period from the fourth quarter of 2007 to the first quarter of 2008.

As for our SARM program, clinical development of ostarine has been moving along nicely. Ostarine, as you know, is a first in class molecule. We initiated and fully enrolled a Phase II clinical trial with 120 patients. And we are looking forward to seeing these proof of concepts, comprehensive data from this trial later this quarter.

More specifically, this is a dose binding, double blind, randomized Phase II clinical trial evaluating 3 months of treatment with ostarine in 60 elderly men and 60 postmenopausal women.

This Phase II clinical trial will provide information about the ability of ostarine to build bone and muscle in elderly men and postmenopausal women. And we will also learn more about ostarine's selectivity. That is, its ability to have beneficial effects on certain tissues, such as muscle and bone, without causing unwanted clinical effects like those usually attributed to the natural hormone testosterone, such as hirsutism in women who have normal prostate changes in men.

We are especially proud that GTx continues to be the leader in the development of SARMs ahead of its biotech and pharmaceutical competitors.

As we await results of the Phase II ostarine clinical trial, we are having discussions and meetings with the FDA to explore the regulatory approval path for ostarine for different acute indications.

After both understanding the FDA's position and evaluating the Phase II clinical trial data, GTx feels that it would be able to soon select an acute indication for clinical development.

Then we anticipate initiating a trial for this acute indication, a Phase IIb Phase III clinical trial by the summer.

For the chronic indications, such as osteoporosis or frailty, the required animal study to support longer dosing in humans is nicely on track and currently ongoing.

And now I will turn the call over to Mark for an overview of the financial results from the third quarter. Mark?

Good morning.

The details of our financial results for the third quarter 2006 and the 9 months ending September 30, 2006 are included in this morning's press release and are available on our web site. I will focus on the highlights.

Our third quarter performance was in line with our previously stated expectations. The net loss for the third quarter was $10.9 million or $0.35 per share. Revenues for the quarter were $1.1 million.

This was comprised of $348,000 in net product sales of FARESTON with collaboration income from both Ortho Biotech and Ipsen accounting for the remainder of our revenue.

Our year-to-date net loss through September 30 was $30.8 million. We expect expenses in the fourth quarter to run slightly above the trend of the first 9 months of the year, largely as a result of increased clinical development spending related to our ongoing Phase II clinical trial of ostarine.

We anticipate that our net loss for the full year 2006 will be near the mid point of the range of our previously stated guidance of $37 to $47 million.

As Mitch stated, on October 7 after receiving the upfront payment from Ipsen, GTx had cash and cash equivalents of $70.9 million with no debt and no warrants.

The Ipsen partnership has attractive financial terms for GTx. Aside from the EUR23 million upfront payment, we could receive up to EUR39 million in potential milestone payments, most of which will be paid prior to commercial launch of ACAPODENE in Europe. As well as a graduating percent royalty based on net sales escalating from the teens to as high as the mid 20s depending upon product pricing and sales volumes.

Ipsen will pay all development and market costs for ACAPODENE in Europe as well as product supply and packaging costs.

GTx is responsible for paying all upstream royalties on Ipsen's net sales.

We believe that our cash balance is now sufficient to last us through the first quarter of 2008, beyond the time when we expect to have received our data from our two pivotal Phase III ACAPODENE clinical trials.

If we receive from Ipsen additional cash for milestone payments or reimbursements for ACAPODENE U.S. clinical trial expenses, and or if we receive cash from an Asian ACAPODENE partnership, we will be able to extend our runway beyond the first quarter of 2008.

I have mentioned this before, but I think it's worth noting again. In our 9-year history we have raised approximately $170 million in equity through private round financings, an initial public offering in 2004, and a follow-on offering completed in 2005.

With that capital, we now have strategically acquired FARESTON to give us control of the entire toremifene citrate asset. We have 2 fully enrolled pivotal Phase III clinical trials, a first in class SARM program including ostarine, the first SARM in a Phase II clinical trial. And a robust discovery program that has created a deep pipeline of early stage molecules.

All that and we still have $70 million in the bank.

We are proud of what we have achieved and we believe there are few other biotechnology companies who can make such a statement.

I will now turn the call back to Mitch.

Thank you, Mark.

Before closing, I want to give a perspective of where we are in the life of our Company.

GTx now stands approximately 12 months away from receiving pivotal Phase III data from our ADT clinical trial, which we expect to have in the fourth quarter of 2007.

We anticipate receiving pivotal Phase III efficacy data from our Phase III PIN clinical trial at the same time or very shortly thereafter by the first quarter of 2008.

We are already preparing for our NDA filings with these 2 indications. And our commercialization plans are also moving nicely ahead.

We eagerly anticipate these results.

Later this quarter, we expect to announce top line results of ostarine's Phase II clinical trial.

This is an exciting time for GTx. And I am proud of all that our employees have done in helping us achieve our milestones and our objectives.

Operator, we are now ready to take questions.

[OPERATOR INSTRUCTIONS]

Your first question comes from the line of Joel Sendek with Lazard Capital Markets. Please precede, sir.

Thanks.

Question on ostarine. I'm wondering if, a couple of questions on it. If you can give us further feel for when exactly you'll get the data? Is it going to be right at the end of the year? Or maybe could it be in the next couple of weeks?

And then what are your decision points with regard to - what should we look for from that data in order to think about whether the next step will be a Phase IIb or a Phase III?

Thanks.

Thank you, Joel.

The first question is when can we exactly anticipate the data. And what I will do is just tell you what, where we are in the data acquisition process.

The last patient completed the trial October 20. So the trial is completed. The database is being locked down and queried as we speak, as they say in the vernacular, scrubbed down.

And we are anticipating data from that process sometime toward the end of November. And we're hoping that we can make an announcement before, sometime either late November, first week of December.

So that's all based on what happens with the CRO and the database, which is out of our hands. But at least the things that are in our hands, which is completing the trial and getting the information to the CRO and to our data management group, that is going on as we speak now.

So that's the good news.

Okay?

In terms of what to expect from the trial, one of the reasons we did this is because when you have a first in class molecule that has the ability to treat so many different muscle wasting and bone loss indications, the first thing you have to do is try to understand the most that you can about the molecule.

In particular, if it truly is a muscle wasting drug and a bone loss drug, then you want to be able to see in men and women that you're able to build lean body mass and that you're able to increase bone mineral density.

If you do those 2 things, and you're able to pick a dose in both men and women, it gives you the ability with confidence to go forward into a Phase IIb, III.

Now having said that, the other part of the equation is making sure that we have a good understanding of the regulatory pathway for each of these indications.

One of the things that I have learned is that even though the key opinion leaders are excited and probably more excited than we are in some cases about the potential unmet needs that this drug can fulfill. You've got to get grounded on what the FDA is going to require to for approval.

So based on that what we want to do is very deliberately and very carefully have these discussions with the FDA, which are planned and have been arranged during this same period of time while we're waiting for the data to come back from our CRO.

So the goal would be, Joel, that we'd be able to announce at the time of the data or shortly thereafter which indication we're going to go into.

Now to take it one step further, when - if you think about well are you going to do a Phase IIb or are you going to do a Phase IIb slash III? Well I'll give you an example.

If we pick an indication that is either a great unmet need like cancer wasting. Well you can see how you can quickly move to a Phase IIb, III.

Likewise if you pick an indication such as anorexia of aging, rehabilitation for example after hip surgery or knee surgery in elderly patients, you can see how our Phase II data would nicely mix. Because after all, the patients having a knee replaced or hip replaced is the same age bracket as the men and women that are currently in our Phase II trial.

So we would have the affect size. And we'll be able to pilot the trial accordingly as you move forward.

So I'm just trying to give you a flavor for what we're up against in a nice way because I'm pretty excited about it. But you can see why we want to wait 'til we see the data and we have those discussions with the FDA. And why we really do feel that this would be a Phase IIb slash III depending on the indication.

And just to clarify, your meetings, your discussions with the FDA will be subsequent to the data release?

The meetings with the FDA, because the FDA is the FDA, some are going to be before the data release. And then maybe one or two after the data release. At least that's what we think at this point.

What we have firmed up is several calls and several meetings with the FDA before the data release. And that was because we set that up a while back.

Okay, great. Thanks a lot, Mitch.

Your next question comes from the line of Eric Schmidt with Cowen & Company. Please precede, sir.

Good morning.

I think I understand the impact of the Ipsen deal on your balance sheet and your cash runway requirements. But maybe one of the Marks could talk about the impact on your P&L, how the milestones will be amortized and with any offsets you might see to R&D?

I can address that, Eric, first of all thanks for being on the call.

The, just to kind of give you a few points of recognition. The full-year amortization of the Ipsen will be about $6 million, which is about $1.5 million per quarter.

So, and that's based on the fact that we're looking at a 5. Basically we've amortized it over a 5-year window.

So that's one key point.

The other thing to keep in mind is the recognition in September was really only for September 7 through September 30, which is about 24 days. So it wasn't a full month.

So that kind of gives you a flavor for the amortization long-term and the amortization just for this initial part of the transaction.

Okay. Will there be much of a change to what you recognized on R&D, Mark?

Oh, good question. Eric, right now no to that. But as it's sort of part of the overall agreement where we will have an offset to the burn to that R&D pocket once we've achieved certain that we paid for, certain thresholds.

So there are certain conditions that have to be met. And hopefully that will be seen in late '07.

Okay. And is that in terms of the comment you made earlier about that you may receiving additional milestones and offsets, are those I guess related to your achieving that threshold or other things as well?

Yes. It's actually a combination. So there's 3 components to the transaction.

One was the upfront payment. The second component of the transaction was the milestone payment, which I mentioned in my comments a minute ago, EUR39 million.

So in today's currency another $50 million if you convert it today.

And that money will come all before launch of ACAPODENE in Europe. So there's no sales milestones, there's no post launch milestones to speak of. It's predominantly all going to take place upon approval and one or two before approvals.

So that's essentially where we are with our milestone payment. And that's the other cash that we would see.

So if you translate that back - go ahead.

The third one is offset at the cost.

Correct. But if you translate back the milestone payments.

So let's just say we had some ADT result. So obviously, hopefully, we could be able to see some of that milestone payment maybe before we hit our 33108 point. Okay, as an example.

As it relates to the third component, the offset of the burn, so there we have clinical trial expenses. We have to hit a certain point that we pay for, then they come in and we'll pay above that threshold point.

And that, I believe, also could take place as late as - I mean as early as late '07 to sometime in early '08. And all of that will sort of be, will continue to allow us to push our runway further out.

Again, that doesn't speak to the fact that if we're able to secure an Asian partnership in this window of time we could actually extend this runway significantly further beyond that first quarter of '08.

Got you, that's helpful.

Mitch, could you just comment on what sort of event rate you're seeing the ACAPODENE ADT trial? And whether that's consistent with the powering assumptions?

Yes. I think the best way to say that is that for both the PIN trial and for the ADT trial we're following the event rates on an ongoing basis. And so far the event rates show that we're on track and we're just staying the course.

And that's based on hitting our assumptions and the power of the study. So at this point we're on track.

Great.

Thanks for taking my questions and congrats on all your accomplishments.

Thanks.

Your next question comes from the line of Gene Mack with HSBC Securities. Please proceed.

Thanks for taking the question.

Just a follow-up on ostarine, assuming that you would get the data let's say before December 31, what might be the first full aberration of that data? What conference might you be thinking about, if any?

You mean for a scientific presentation later you mean?

Yes.

Yes. So there are several meetings that this kind of data can be presented. The main ones that we would focus on are going to be the ones related to endocrinology, the bone loss, osteoporosis, as well as the cancer conferences because of the cancer wasting.

What we do anticipate in doing we say top line is we want to give you comfort that you'll see the statistical significance of the doses for lean body weight in both males and females. To give you a sense of bone mineral density and bone market changes, whether or not we're affecting fat.

Because as you know testosterone can decrease fat, which is a good thing, as you increase lean body muscle, mass.

And then the other thing of course is, is ostarine selective? So we have to give you an indication whether in men we're affecting prostate and whether in women we're affecting the skin or hirsutism, which is the unwanted hair growth that occurs, for example, with testosterone.

Finally - I'm sorry.

No.

Finally the other important point is to understand better the safety of the drug and in particular when I say safety is as most anabolic agents you want to understand of any liver function issues. And then any lipid issues because again going back to the former testosterone products.

So you'll have a good sense of the scientific data. Hopefully before you take off for your Christmas break.

Okay. And actually you sort of started to get into the next question I had, which was on the safety data. And my sense is that we're going to see LFT, ALT. And I guess clinical evaluation of unwanted hair growth, is that how that works?

What you'll see, for example, yes. The answer is yes. So you're going to see all the chemistries, all the hematology of course. You'll see the effects specifically on liver.

I'm hoping to get information back before we announce it'll be related to HDL and cholesterol. So we hope to be able to announce on that.

And then PSA, which is a market for prostate. So we want to be able to announce on that.

We do what's called a sebum analysis, which is looking at skin oil secretions. We'll be able to announce on that.

And then hirsutism and some of these other ones, I'm pretty certain we'll be able to announce on that at the same time if not shortly thereafter. Because my goal is to get top line stuff, which to me is get the muscle, fat, and bone information and some key safety information so everybody can go home for the break.

And then over the next quarter after that through the scientific meetings begin to share with everybody the specifics of each of the things that we measured. But also to give you comfort in the indications that we're going after.

How definitive will the PSA readings be based on the duration of dosing that these folks will, or that the men will have had? Will you be comfortable that doesn't affect prostate?

Yes. I mean if you asked me, and again I haven't seen the data and it still hasn't come out. But if you ask me what I'm going to predict, I'm going to be predict that you may even see if not a neutral PSA reading you may even see a decrease in PSA.

And the reason for that is our drug is a partial agonist, slash antagonist of the prostate.

And so I can tell you from the multiple ascending dose study in which we treated as high as 30 milligrams, this is equivalent to almost 200 testosterone patches a day. For 14 days we didn't see an effect on prostate in elderly men.

So and so, and that was 14 days. You can argue well 14 days is not enough time. But I can promise if you give a urologist, I can promise you if you can elderly patient that much testosterone, 14 days, you're going to see that PSA go up.

So I think 3 months of treatment and seeing the PSA stay the same or lower gives you a good indication it's going exactly what you think.

Now let me also add that we have other SARMs from this class that we have actually developed for a BPH drug. And we have data in endocrinology that, The Journal of Endocrinology that shows that some of these drugs like [prosturin] have the ability to shrink prostate like fludimide, which as you know is an anti-cancer drug, or an anti-androgen, leaving the muscle and bone alone.

So we're pretty excited about our SARMs.

Gene?

Hello?

Your next question comes from the line of Lucy Lu with First Albany. Please proceed.

Hi, thank you.

I guess also a follow-up question on the Phase II trial of ostarine. I'm wondering if you can describe these patients that are in the trial?

Besides the fact that they are elderly and postmenopausal, are they healthy? Or do they meet certain criteria for either frailty or sarcopenia? That's the first one. Thanks.

Great question, Lucy.

The answer is that what we tried to do is try to mimic the quote trials that we would be doing in a Phase IIb slash III setting.

So for example we chose postmenopausal women. And in that gamut of postmenopausal women, you're going to have those that are osteopenic, those that are osteoporotic, and those that are normal.

So we purposely just let all comers come in. All they needed to do was be postmenopausal.

And if you look at clinical trials of postmenopausal women, they tend to break them into 2 groups. Either a high-risk group, like women that have had a previous fracture and when I say fracture being a [pretribial] fracture. And then just everybody that comes off the street.

So our goal was rather than restrict at this point, let's understand better at this point what effects we're having on muscle and bone.

In men, we did have a bone, excuse me. We did have a body mass index limit. Because we wanted to make sure that as much as possible all the elderly men looked similar. But nonetheless the only requirement we asked for there is that they were older than 60 years of age.

And again, the beauty of that is you can go back and look at testosterone levels. You can look at other factors that these patients coming into baseline factors that patients coming into the study that will help us better as look ahead to the Phase IIb, III.

So your challenges are do you restrict your Phase II now or do you get a more comprehensive look at what your drug is doing in each of these groups?

Now the danger there, which we do not think we're going to see this because in the Phase I multiple setting dose study you had basically the same inclusion, exclusion criteria for elderly men. Is that you may not see anything because you're looking at a group of patients that are not in that group that, quote, requires treatment.

We're confident that's not the case because we saw efficacy in our 2-week Phase I multiple setting dose in both healthy young men, which we didn't expect, and the elderly men, which we expected.

So I think this drug is really a bone agent and a muscle agent. And one of the peculiarities of this drug that we saw in our animal models is unlike other drugs that we tested, it had the ability to overshoot muscle.

What that means is that a lot of times when you give an anabolic agent to an animal, it will only bring - and they are castrate animal - it will only bring the muscle back to where it was before, never overshoots. So in other words back to baseline before castration.

Our drug, for whatever reason, has the ability to shoot beyond that. And we've never seen a plateau.

So that's why it gives us confidence that whether you're dealing with healthy young volunteers or in this case in our Phase II setting, elderly men and women, we should see the effects on muscle. And we should see the effects on bone.

Sorry, Mitch. I guess I didn't catch you correctly. So you're saying the postmenopausal women, do they already have a fracture or they never had a fracture?

In this group did not have a fracture.

Okay, and then there's never been treated with either SARMs or other drugs? I mean I'm just asking that.

That is correct. Now they were on estrogen replacement. We let them stay on their estrogen replacement.

So in other words, some of these women are already on estrogen for I guess postmenopausal symptoms. But having said that, my understanding is there was not a large number of women in the study that were on estrogen.

Okay. All right. Thank you very much.

And let me just add, Lucy, that remember the placebo groups are in both these trials as well.

Right, okay. All right, thank you.

Your next question comes from the line of Howard Liang with Leerink Swann. Please proceed.

Thanks very much.

Mitch you mentioned there was a pro-protocol interim safety review. Was there a futility efficacy announcement at the same time?

Yes, thank you Howard. And thank you for being on the call.

The question is for the ADT and PIN trials, the Data Safety Monitoring Board will review safety and theoretically efficacy data for these trials.

Their charter at this point only allows them to look for safety.

So and they've done that 3 times. There is not a built in futility analysis at this point. The statistical planning, because of the fact that we're getting to the end here and we need to begin to put that in place. And we've already put that in place in both trials in an overview, does not tell the Drug Safety Monitoring Board or the Data Safety Monitoring Board to stop.

In fact the FDA has said that unless there's a safety issue, they do not want the study stopped. So we have to complete it to the - finish it for example the full 3 years for PIN even though we're allowed to file an efficacy, if we see efficacy sooner.

From a safety standpoint they want these trials to keep moving on.

But from an efficacy standpoint there is not a futility analysis built in by the Data Safety Monitoring Board.

Great. On the ostarine trial, I don't know if you've talked about this, but which doses are you testing? How many doses are you testing?

A second question is what is and how are you evaluating whether it's selective or not?

Okay, so the first question is what doses are you testing?

In a Phase I multiple ascending dose study, we tested doses as high as 30 milligrams, which I mentioned earlier is about 150 plus patches of testosterone. So it's a whopping dose.

And we went down as low as 1 milligram.

And that was in a multiple ascending dose study. So we may have overshot, it may have been too much anabolic stuff.

So what we did then in the Phase II setting, we dropped a dose down to the top dose being 3 milligrams, 1 milligram, 0.3 milligrams, and also 0.1 milligrams versus placebo.

So really, as you can see, the MAD helped us with dose finding. And now the Phase II helps us with dose finding.

And it appears to be a very potent molecule and it's not surprising. For example, estrogen replacement is 0.625 milligrams.

Synthroid is like 0.1 milligrams.

So these hormonal therapies, even if they're non steroidal, are very potent agents. So those are the 4 doses that we tested.

In terms of your question about, and we did it both in men and women. Because the other question that came in mind was whether there'll be gender differences in dose response.

So I won't be able to answer that 'til we see the data. But we wanted to make sure. For example, what if a man needs 3 milligrams to receive the same efficacy endpoint and a woman needs 0.1?

Okay, so we'll see how that goes.

In terms of the safety assessment, which is really and another way of saying it, the selectivity assessment, we are measuring a whole bunch of things to help us understand that.

In particular you have to ask the question in women what are going to be the selectivity endpoints that are going to make us be able to? And we have a selective age in women.

Well the answer is you want to be able to show that you're not affecting skin and that you're not affecting skin for acne and skin for abnormal hair growth, scientifically termed hirsutism.

And we have a hirsutism scale and we are measuring sebum in these women. And the sebum is unaffected, which is what we saw in our MAD Phase I in elderly men and healthy men. And there's no change in hair pattern.

Then for women that's wonderful. Then you get the anabolic and bone activity without some of those unwanted effects.

In men, the number one unwanted effect would be any affects on prostate.

So we are measuring PSA. We are doing symptom scores, AUA symptom scores and trying to get a good handle on that.

If you're able to show that you're not affecting prostate in men and you still have - and not affecting skin in men, which means in men it's the opposite. You're worried about losing hair.

So if it doesn't have a skin effect sort of like Proscar. It shrinks prostate but it also stops hair loss.

So same thing here, if you're able to show that shrinking prostate and you're not stimulating and creating a DHT, you may have a beneficial effect on hair.

So we're measuring sebum from skin and we're measuring PSA in this 3-month trial to help us get a better understanding selectivity.

On the randomization, is it equal randomizing to the 5 groups? So it's 12 patients per each group?

That is correct.

Okay. Great. Thank you very much.

Thank you.

[OPERATOR INSTRUCTIONS]

Your next question comes from the line of Aaron Reames with A.G. Edwards. Please proceed.

Thank you for taking my questions.

Most of everything that I wanted to ask has already been discussed. But I was wondering if you could give us a little bit more color around the upper ranges of the R&D reimbursement that Ipsen could provide to GTx?

For example, does it cover predominantly all Phase IV studies that would be chosen to be conducted? Or if you could give us some color around that I'd appreciate it.

Sure. This is Mitch.

Let's take a step back. First of all, it depends. If the United States trials are going to be used for filing in the EMEA and the answer is that's what we're all expecting. Then there is a proportion of offset for ADT and potentially a portion of offset for the PIN that Ipsen will pay so they can use those trials to file in the EMEA.

If there are any trials that are required, whether it's Phase IV commitment or whether it's additional Phase I or II, peculiar for the EMEA, then Ipsen will pay 100%. It won't be GTx's issue.

If GTx has to run additional trials in the United States and Ipsen needs them for their filing or uses them for their filing, there will be an offset again.

If we do some trials in the U.S. or Phase IV in the U.S. that Ipsen does not use, then we pay 100%.

Okay, fair enough.

And then you had mentioned on the sales reps you're going to add in the U.S. you had mentioned a range of 55 to 80. And once again can you provide us a timeframe in which you would start to add them?

Sure, Aaron. This is Mark. First of all, we mentioned that we were looking to hire sales reps ranging from 50 to 80 sales people. So the plan is and is that we will, once we have our data, we'll then go ahead and start ramping this process up.

I think it's really, really important though you should know, and we have mentioned this now in several of our calls and certainly we talk to our investors about this cause I think it's critically important.

We were fortunate to hire a gentleman back almost 2 years ago from GSK who actually launched Avodart. And who has experience in marketing and sales in Europe as well as in the U.S.

And so the opportunity to have been able to bring that quality of an individual into the Company and to have him a part of our discussions and commercialization strategy and labeling and all these efforts over the last couple of years has been instrumental and very, very beneficial to the Company in planning ahead.

So when you look at the, a couple of things. You look at the fact that he has the capability. He's done it before. He's going to go ahead and know when we're going to step on the accelerator to put into motion the 50 to 80 sales people.

That's number one.

We're constantly working on the models right now to figure out the specific amount. But we're giving you a range today.

And the other thing I think is important for you to know that about a year and a half ago we brought in 5 regional medical scientists. So these are all very well educated people specifically in the space of urology who are talking to the urology physicians about PIN, about prostate cancer, and about the multiple side effects of ADT.

So that kind of gives you a flavor for what we've been doing and where we're going.

Okay. And then I guess can you just provide us with an update on any activities that you may be aware of with the diagnostic, high grade PIN test and any progress that may be made I guess along those lines?

Yes. So just by way of background, the PIN market is about 230,000 new patients a year. And that's based on the concept that the PSA cutoff is now at 2.5 nanograms per mil.

There are approximately 1.1 million men out there that have been told they have biopsy proven high grade PIN. And there are approximately 15 million men out there that haven't had any reason to come to the urologist for a biopsy that harbor high grade PIN.

We have been working with 5 diagnostic companies to come up with a urine based or blood based non-invasive PIN test. And I'm happy to report that 3 of these companies have provided some data to GTx that looks pretty good.

One of these companies in particular it looks pretty exciting. It's a company called Macroarray Technology. They have presented their work at 2 major meetings last year. One is the - excuse me - the AACR and ASCO.

And they have recently told me that they have submitted a paper and that it's been accepted for publication in clinical cancer research. And the test right now is in a polyclonal antibody stage in which they're able to recognize the protein with an ELIZA based test.

The next step is to create a monoclonal ELIZA, which takes up to like 6 months to 12 months. And then at that point you've got yourself an ELIZA test with PIN. And what you need to do is to validate that going forward in your PIN market.

And we have, as you know now, with 1,500 patients in our Phase III we're going to be able to provide Macroarray and quite frankly the other diagnostic companies, blood and urine from these patients over 3 years, to help them validate going forward.

I'm still; I still hope that this diagnostic test will become available very close to the time that we anticipate launching for PIN.

But at this point now all I can say is that some good work has been done. And we've gone from just the concept and potentially having some markers to having a real touch and feel type diagnostic product that could be on the market.

Okay. And then the last question I had going back to ostarine.

So I just wanted to make sure that from your standpoint you feel that you're going to have enough clarity from the agency to know exactly what type of registration and trial design will be needed dependent upon what indication you're going after with just a couple of meetings following the data?

Or I guess why wouldn't you look at potentially getting an SPA within that context as well since there's some areas that may not be as well defined as far as what's required?

Yes, well, let's go down that path, there's 2 paths, right?

The first path is going down a pathway that the field has already been paved or the road has already been paved.

So if you go after osteoporosis, you don't really need an SPA. You can go back and look at the guidelines from 1995. And as long as you do what they tell you to do there and you look at the precedent, clinical trials that have been approved, you can feel pretty good that you're doing at least what the FDA wants for that kind of drug.

However, for some of these other indications that nobody else has paved a path you're absolutely right. That when you enter a Phase III program, you probably would be in good shape to get an SPA, a special protocol assessment.

So that all the issues that made the issues are discussed.

With that said, we're talking about for a Phase IIb slash III, you have an opportunity there to have a discussion with the Agency. And based on the data to do your next trial with the Agency.

And our goal here is over the next few weeks and certainly by the time we announce this is the path that we're going to take. We're going to feel pretty comfortable about at least the range of what the FDA is going to expect from us going forward with this kind of product.

We've already had some of these discussions. And I will tell you it's amazing to me how different these endpoints that are required by the FDA are for these different indications. And that's perfectly fine. The Company just has to make a decision which of these they're going to be the best way to market and also the best patient population that will benefit from this drug.

So we hope to give you more clarity. And when we do, it's going to be based on the fact that we think this is an achievable regulatory pathway given our drug.

And the reason I say it that way, there are some things like frailty that no one has a drug approved for frailty.

And what is the definition of frailty? The definition of frailty is wasting, muscle wasting and bone loss in elderly patients.

So you may be able to get on the market by just creating an osteoporosis drug. And having muscle endpoints and you sort of back up into that endpoint.

So these are some of the ways that you can move in that direction. But on the other hand, having an SPA for some of the more bold ones would make a lot of sense.

So we're working on this, as you can tell Aaron. And we hope to give some clarity as we go forward.

Thank you for taking my questions.

Thank you.

Your next question is a follow-up question from the line of Gene Mack with HSBC Securities. Please precede, sir.

Gene?

Hello. Sorry about that. Thanks for taking a follow-up question.

Somehow you got cut off. And I apologize.

That's no problem. No problem.

I just wondering, not to end the call on sort of a weird note, but any conversation for J&J you care to enlighten us on?

Yes, so - no that's not a weird note at all. I mean we're so [expletive] excited about our SARM program. And that ostarine at the time we did a deal with J&J was a twinkle in our eye.

As you know J&J only has, as part of our relationship, andarine as specific backups.

J&J's a great partner. They're a good partner. But they're a large pharmaceutical company. And we've been able to because, we're able to make decisions quickly and not make quick decisions without the information.

So we've been able to move ostarine from literally the animal studies all the way into a Phase II with data going to be available literally in a couple of weeks or more at the most.

So we feel pretty comfortable that our SARM program is doing what it's supposed to do.

Now back to J&J, we've been - we've just entered some discussions with J&J to try to understand what we're going to do together given now that ostarine has taken this leap.

And anything is possible because what we're trying to do is maximize our SARM asset so that if we do want to partner with somebody other than J&J we could. And that, and ostarine has already proven itself going forward so that we now have a lead compound that has lead product andarine.

So it really kind of changes the dynamics right now. And we are having internal discussions at GTx. We're discussing it with J&J. And what we hope we'll do is what's best for our shareholders going forward as we think about how exciting ostarine has been for us. And how much excitement ostarine has generated both in the large biotech and the large pharmaceutical space.

And it's amazing to me, Gene, how these large pharmaceutical companies that have been in this space of osteoporosis are now saying to themselves we need to get to the muscle wasting space. And that if you're into bone space almost natural for you to move into the muscle space. Because muscle plus bone will give you a better drug as you move forward.

So it's no surprise that these are the kinds of companies that have been in dialog with us and anticipating the data.

So I expect that we'll be a catalyst after we see the ostarine data that will push us into direction there will be even more clarity on the partnerships that we will have with our SARM program. Excuse me, moving forward.

So if I read the body language, is there potentially an ultimatum out there for J&J in light of the fact that you seem to be in renewed discussions and using ostarine as ...

I wouldn't call it an ultimatum. I just think that this is one - this is a rare case that GTx is in the driver's seat. And I want to take advantage of it.

Okay, fair enough. Thanks.

At this time there are no questions in queue. I would now like to turn the call over to Dr. Steiner for closing remarks.

Thank you operator.

I would like to thank you all for those that are - I would like to thank you all for your interest in GTx. And we look forward to updating you all on our future progress.

Thank you again for joining us on today's call.

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