Sellas Life Sciences Group Inc (SLS) 2014 Q1 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Galena Biopharma first-quarter 2014 earnings conference call. (Operator Instructions). As a reminder, this conference is being recorded.

I would like to introduce your host for today's conference, Ms. Remy Bernarda, Vice President, Marketing and Communications. Ma'am, please go ahead.

Good afternoon, everyone, and thank you for joining our call today. For those of you listening via telephone, I would encourage you to visit our new, revised website to find additional information on the Company.

During today's discussion, we may make forward-looking statements about our programs. Such statements include, but are not limited to, statements about our commercialization plans and the development progress of our clinical product candidates, including patient enrollment, trial initiations and collaborations. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those identified under Risk Factors in our annual report on Form 10-K and other documents filed with the SEC and available on our website. Actual results may differ materially from those contemplated by these forward-looking statements.

I would now like to introduce the members of management on the call today who will discuss our business. Mark Ahn, President and CEO; Mark Schwartz, Executive Vice President and Chief Operating Officer, who will discuss our commercial business; Brian Hamilton, Executive Vice President and Chief Medical Officer, who will discuss our clinical programs; and Ryan Dunlap, our Vice President and Chief Financial Officer.

Mark Ahn will now begin our discussion with a review of our corporate strategy and key goals for 2014.

Thanks, Remy, and welcome to everyone for our first quarterly conference call. This is our inaugural call, so I'm going to start with a bit of context on the foundation of our strategy and our pipeline.

Three years ago we had one product candidate in a Phase II clinical trial. Led by our mission to develop and commercialize innovative, targeted oncology treatments that address unmet medical needs to advance cancer care, we have now one product in the market generating revenue and three additional drugs in development supported by six ongoing or planned clinical trials.

We group our product pipeline into cancer immunotherapies, our commercial operations and hematology respectively, and we are pursuing four key milestones in 2014 to advance Galena towards our long-term goals. The cornerstone of our pipeline is to develop novel cancer immunotherapies beginning with our lead product, NeuVax.

Our key goal is to complete enrollment in our NeuVax Phase III study in breast cancer a little later this year, and NeuVax is being developed as an adjuvant treatment to prevent cancer recurrence. Of note, of course, metastatic disease is the leading cause of morbidity and mortality in cancer care, and the prevention of recurrence and cancer survivors is a pressing unmet medical need.

Now we currently have four ongoing and planned clinical trials in NeuVax led by the Phase III PRESENT study being conducted under a Special Protocol Assessment or an SPA. We have screened over 2500 patients to qualify the 700 patients for this study, and we are on track to complete enrollment a little later this year.

Our second key goal, however, in 2014 is to complete enrollment of GALE-301, our folate binding protein, our other cancer immunotherapy candidate.

We completed the Phase I in December 2013, and we will be presenting that data at ASCO next month.

We also initiated the Phase II program in January, and we are very pleased to announce that we expect to complete enrollment in this trial ahead of schedule later this summer.

Now leveraging this broad cancer immunotherapy franchise forward, we acquired FDA approved Abstral fentanyl sublingual tablets in March of 2013. We then launched Abstral six months later in the fourth quarter of 2013, and the innovative Abstral formulation delivers the analgesic power and increased bioavailability of micronized fentanyl to provide relief for breakthrough cancer pain within minutes and matches the duration of such pain episodes.

Because of its convenience and efficacy, we expect significant sales growth of Abstral in 2014. Our commercial team has done a terrific job this year, and we expect to continue to see the business grow.

To this end, we recently increased our guidance to $11 million to $15 million of net revenue in 2014, which is our third key goal this year, and we expect the Abstral business to be cash flow positive by the end of this year.

Now Abstral fits our strategic focus for several reasons. First, it generates revenues for the Company. Second, it provides a call point to oncology physicians for future products from our own pipeline at Galena. And, finally, as we now have the infrastructure and core capacity to -- onto which we can add future products, and we're aggressively seeking to add products to this outstanding commercial team.

To further accelerate our pipeline, we added GALE-401 or Anagrelide-controlled release through the acquisition of Mills Pharma in January of 2014. Now we are developing GALE-401 under the expedited 505(b)(2) regulatory pathway, and our fourth goal this year is to initiate the Phase II clinical trial.

I am very proud to say that the team is right on track to start the trial this summer, and if successful, we plan to initiate the Phase III registration study next year. Now while 2013 was a transformational year for Galena, we know that a butterfly is not just a caterpillar with wings. We believe that everything that we have done has continued the fundamental transformation of our pipeline and our core capabilities to provide Galena with an exciting foundation to build value for patients and shareholders.

Now the tip of our spear is an outstanding commercial team, and Mark Schwartz will now discuss our progress in this important area.

Thank you, Mark. Our Abstral business continues to grow, and we remain excited about and committed to the brand. As a reminder, Abstral is a Transmucosal Immediate Release Fentanyl or TIRF product for the treatment of breakthrough pain in opioid-tolerant cancer patients.

As Mark said, we acquired the product last March and have since taken a number of steps to ensure a successful commercial franchise. First, we hired a commercial team with vast oncology and specialty pharmaceutical experience. Second, we established our own manufacturing program. Third, we developed a broad product distribution network. Fourth, we secured broad access and reimbursement support from commercial and federal health insurance entities. And, finally, we implemented a robust patient assistance program.

From the beginning, patient access to Abstral is a critical issue for us. We focused on two key elements -- product availability and product reimbursement. First, patients need to be able to receive the drug once prescribed by their healthcare provider. Our account management team has done an outstanding job in making Abstral available to patients through retail pharmacies nationwide.

Second, ensuring patient access to everyone who can benefit from Abstral is essential. We recognize that these patients are suffering and that the reimbursement system can often be cumbersome, burdensome and difficult to navigate for the patient, the physician and the pharmacy.

We are focused on two areas of the reimbursement process -- Abstral formulary coverage with insurance companies and managed-care organizations, as well as reimbursement assistance for the individual patients. I am pleased to say that we have addressed both extremely well with coverage of almost 300 million lives.

We also implemented our Galena Patient Services program or GPS in March of this year. GPS is a full-service support program designed to enhance patient access to our commercial products. The GPS team works directly with healthcare providers, with pharmacies, with patients and with insurance companies to guide the insurance approval process, making it more efficient for patients to receive insurance coverage for their Abstral prescriptions.

This program had a significant impact in supporting healthcare professionals and our patients while improving our economics. We officially launched Abstral last October and have a full two quarters of sales under our belt. We continue to be encouraged by the very positive reception to Abstral by healthcare professionals, and we are pleased to report that we have increased the number of prescriptions, we have increased the number of healthcare professionals that prescribed Abstral, and increased our revenues quarter over quarter. We expect this trend to continue through 2014 and beyond.

To track public data, we use Wolters Kluwer, which we have found to be more representative of market conditions. In March Abstral had approximately 5% of the branded TIRF market, both in terms of prescription -- prescriptions written and in terms of retail dollars. We are quite pleased with this market share only six months into our selling effort, particularly because we have seen the size of the overall market growth as well over the last year. Wolters Kluwer estimates the current branded market to be approximately $350 million to $400 million.

The team continues to make tremendous inroads with current prescribers, and we are focused on growing our overall prescriber base. We're also encouraged at the number of TIRF REMS registered providers continues to go on a monthly basis. Based on the progress of the business to date, we recently raised our 2014 revenue forecast, which Mark had mentioned in his opening comments, and are optimistic about that our experienced and highly motivated commercial team will meet the goals that we've laid out for the business.

We remain focused on establishing Abstral as the market-leading immediate release fentanyl product.

We have now established a core capability with our commercialization team. We look forward to building on this capability with the addition of future products, both internal and external. And with that, I will turn the call over to Brian Hamilton to discuss our broad development pipeline and potential future products.

Thank you, Mark. I am pleased to recap the tremendous progress we have made with our clinical programs, including increasing both the depth and breadth of our clinical work and discuss our plans over the next several months.

I will start with our immunotherapy program and our lead product, NeuVax.

Our approach to its success is based on the selection of a validated target antigen, a simple off-the-shelf peptide vaccine, and targeting patients in the adjuvant setting who have minimal residual disease after completion of their primary treatment.

We now have two ongoing and two plan trials for our lead immunotherapy agent, NeuVax. As most of you know, NeuVax is a peptide vaccine derived from the extracellular domain of the HER2 protein. This is important because HER2 is a well-validated target for immunotherapy with monoclonal antibodies such as Herceptin in breast and gastric cancers that express high levels of HER2.

NeuVax stimulates an immune response to HER2 by T lymphocytes, including what are known as CD8+ cytotoxic T lymphocytes or CTLs. Once activated by NeuVax, these T-cells search out and destroy HER2 expressing cancer cells with a goal of preventing those cancer cells from growing into a recurrence of the tumor. We think this approach has a greater probability of success than expecting the immune system to destroy large, bulky or aggressive tumors.

Our ongoing pivotal Phase III PRESENT trial is enrolling women with breast cancers that had initially spread to the local lymph nodes and expressed a low or moderate level of HER2 referred to as 1+ or 2+ expression and who are, therefore, not eligible for treatment with Herceptin.

These breast cancer survivors have no evidence of disease after completing their initial adjuvant therapy. The endpoint of the PRESENT study is disease-free survival with the goal of preventing recurrence of these breast cancer patients. PRESENT is currently in its final stage of enrollment. We have now identified, screened and consented enough patients to enroll the requisite 700 patients this year.

We're excited to approach this milestone and grateful to our staff, the investigators and the courageous women who have volunteered for this study. We also have two concurrent investigator-sponsored trials to study NeuVax in combination with Herceptin. The first is enrolling 300 HER2 1+ or 2+ patients who are node positive or high risk node negative.

This trial is a clinical collaboration between Galena, Genentech/Roche and The Henry M. Jackson Foundation. We're really excited about this trial for two reasons. First, Genentech also chose to support this trial, adding validation to the prospects for NeuVax. Second, the trial gives NeuVax two shots on goal for patients who express low to intermediate levels of HER2:

first with our monotherapy as used in the PRESENT trial and second in combination with the monoclonal antibody Herceptin. We expect this trial to finish enrollment next year with a primary endpoint of disease-free survival at two years.

The second trial, as we announced last week, will investigate the combination of NeuVax and Herceptin in a subset of HER2 high expressers or HER2 3+ patients. This marks the first dedicated study in HER2 3+ patients for NeuVax and an expansion of the potential patient population. Based on trial data from a Phase IIa study, the combination of Herceptin, plus the CTL-eliciting HER2 derived peptide vaccine, virtually eliminated recurrences.

Of note, Dr. Beth Mittendorf from the MD Anderson Cancer Center has received grant funding for this study from the Department of Defense, which demonstrates the increasing interest in its approach to stimulate the immune system to prevent the recurrence of breast cancer.

We also have a collaboration with Dr. Reddy's, who will be running a Phase II trial in gastric or stomach cancer in India. This is important as another potential indication for NeuVax because stomach cancer is one of the leading causes of cancer deaths in several areas of the world, most notably Japan and other Asian countries.

We are supporting the efforts of Dr. Reddy's to initiate this trial this year.

To close out our discussion on our immunotherapy assets, we also have GALE-301, our folate binding protein or FBP for short. GALE-301 is another peptide vaccine that also stimulates T lymphocytes to recognize and destroy FBP-expressing cancer cells, and is administered after standard of care therapy to prevent recurrence.

FBP is expressed at high levels on most endometrial and ovarian cancers. As announced in January, we completed the Phase I portion of this trial at the end of last year and initiated our Phase II program.

We are pleased to announce that the trial has enrolled ahead of schedule, and we expect the Phase II trial to be fully enrolled this summer. The data on the immune response to the vaccine in the Phase I trial will be presented at the upcoming ASCO meetings that run from May 30 to June the 3.

I will end my discussion with the latest addition to our pipeline and one that we are extremely excited about, GALE-401 or Anagrelide-controlled release. GALE-401 will be developed for the treatment of very high platelet counts in patients with a family of diseases that are collectively called the myeloproliferative neoplasms.

Our Phase II trials will be studying patients with these conditions, including polycythemia vera, chronic myelogenous leukemia and essential thrombocythemia or ET. Patients with these disorders have extremely high platelet counts, which can cause strokes and heart attacks. Whereas the normal platelet count is 150,000 to 400,000 per microliter, these patients may have platelet counts well over 1 million.

The currently available immediate release formulation of Anagrelide has proven effective at reducing the high platelet counts, but is associated with many adverse side effects such as severe headaches, palpitations and diarrhea that limit the number of patients who derive benefit from the drug. These side effects have been shown to be related to the peak blood levels of Anagrelide.

Phase I studies have shown that the controlled release formulation reduces the peak blood levels of the drug, which may reduce these side effects, but still preserve efficacy. We plan to initiate a Phase II proof-of-concept trial in the middle of this year in approximately 20 patients with high platelet counts due to these myeloproliferative neoplasms. The trial will measure the safety and efficacy as defined by a reduction in platelet counts.

Thus, we're excited about our progress to date in advancing our pipeline towards commercialization.

I would like now to hand the call over to Ryan Dunlap who will summarize the key financial highlights for the Company.

Thank you, Brian. Good afternoon, everyone. We are very pleased to report that net revenue from Abstral sales for the first quarter of 2014 was $2.2 million, which represents an increase of 65% from last quarter. We have seen significant growth in both prescription demand, as well as a significant decline in our gross to net deductions quarter over quarter.

This decline in our gross to net deductions is the result of early success realized from a rollout of the GPS Patient Assistance Program we launched in March that Dr. Schwartz discussed earlier. We expect that trend to continue as the program gains traction.

Gross margin, excluding out intangible amortization, was 85% in the first quarter of 2014, and that's up from 80% we reported last quarter with the 85% being more in line with normal margins that we would expect moving forward.

Our overall operating loss was $11.8 million for the first quarter of 2014 as compared with $6.6 million for the same quarter of last year and $12.4 million for the fourth quarter of 2013. Our expenses have been primarily driven by the ramp-up of enrollment in our NeuVax Phase III trial, as well as the startup costs related to the launch of our Abstral operations.

From a cash flow perspective, we invested $8 million in operating activities this quarter and $2 million in acquiring GALE-401. On the other hand, cash and cash equivalents balance was $52.4 million at the end of the current quarter, and that's up $4.6 million from the $47.8 million we reported at the end of 2013.

Lastly, I just want to reiterate our guidance for 2014. As mentioned before, we currently expect net revenue of between $11 million and $15 million and expect operating cash burn to be between $30 million and $32 million for the full year of 2014.

These numbers are based on our expectation that Abstral operations will breakeven by the end of 2014, become increasing accretive in 2015. We also expect research and development expenses to decline as we move from the enrollment phase to the monitoring period of our NeuVax Phase III trial.

So, with our strong cash position and increasing revenue, we are well resourced to meet the goals that the team have laid out for you.

Now with that, I would like to turn the call back over to Mark Ahn for closing remarks.

Thank you, Ryan, and to the team. As you have seen, we have had significant progress on meeting the goals and milestones that the Company outlined in 2013 and are right on track to meet and exceed our 2014 goals.

We believe we are doing the right clinical trials. We are pursuing the right molecular targets and addressing the right patient populations. We've worked hard to balance our clinical pipeline with other assets including Abstral to drive near-term revenue and GALE-401 to accelerate the depth, breadth and pace of our pipeline.

To get where we are today would not have been possible without the exceptional leadership and steadfast commitment from the entire team, as well as our partners, and for this, I'm very, very grateful. Thanks to everyone on the phone for your interest and your consideration for Galena, and I am now happy to open the call for questions.

(Operator Instructions). Joe Pantginis, ROTH Capital Partners.

Thanks for taking the question, and congratulations on the Abstral early launch. A few questions, if you don't mind.

So, since Abstral still is in its early days, I was just curious based on all the initiatives you have that Mark was describing, what do you consider some of the potential headwinds that you still have for Abstral?

Thanks, Joe, and thanks for the question. As you said, I think we have made significant progress to date. I think there is nothing -- I think I would look at it as there is nothing significant or nothing that we haven't anticipated in terms of rolling out. I think it is executing the business plan that we have.

We have got a couple of competitors out there in the marketplace, of course, no secret to that, but I think there is room for all of us, and I think that we can gain parity in the market share. I believe we have the best product out there, and I believe we have a very -- an excellent team, a great salesforce, an experienced salesforce we put in place.

I think the fact that the product has been proven as a market leader in the EU is a good indicator that if we just stick to our game plan and keep working hard that we can gain a very competitive share.

Okay. No, that's helpful. Thanks. And maybe just a couple of follow-ups with regard to NeuVax.

With regard to all the screening that you conducted, obviously, you are looking at various immunological parameters and HLA subtypes. What do you think in all the screening that you conducted were the rate limiting steps?

Thanks for the question. As you point out, the HLA requirement for the study is a key driver in that only about 50% of the populations express the requisite HLA type, and some of it has been the expression of HER2 on the tumor.

So, we have a requirement for the HER2 1+ and 2+, which is about 50% of tumors. So, those have been the major drivers for the large number of patients required to be screened for the study.

Okay. NO, that's fair. Thank you. (multiple speakers).

Just to put some context, Joe, about 200,000 women will be newly diagnosed with breast cancer this year in the US, and the -- because of the personalized nature of NeuVax in terms of both being HLA, HLA-A2/A3-restricted and HER2 1+/2+. Our patient population is about 30,000 to 40,000 of those 200,000 women. So, clearly it is a -- we have to have the right patients and it is a targeted therapy and -- but it's a -- obviously, it's still -- remains a large fraction of high risk patient population.

Got it. And then just with regard to the -- I guess the ISPs or collaborative studies, I guess where does the new DoD study fit into potentially building the NeuVax profile, and then the higher -- I am sorry -- the 1/2+ Herceptin combination that you are doing in collaboration with Roche, I just wanted to make sure I heard you correctly with regard to where that study stands.

So these are both Phase II studies, and the advantage of the DoD study or the 3+ study is that is the first opportunity to expand into a population of patients that has been available for treatment with Herceptin, but there is good data to suggest that by using the combination of Herceptin and NeuVax that one will potentiate the immune response. Plus, we will have two shots on goal for killing the tumor cells.

As for the -- and that study will be started sometime later this year. The other study in the 1+/2+ is really very similar to the PRESENT trial, except that it has a much broader group of patients that are qualified for that study, including the node negative population.

So, again, it is an expansion of the opportunity for NeuVax and additional support on a data set to support the indication.

Thanks for the added color, guys.

Boris Peaker, Oppenheimer.

My first question is also a NeuVax. You have some regional deals in place. I am just curious if any other deals are possible, or you are anticipating any time in the near future, or do you think you will have to wait until the readout from the trials to do any additional deals?

So, the answer is yes, we are working very hard on a number of deals with the -- so, let me just back up for second. With the development of our full commercial capability, we firmly believe that our long-term future with NeuVax is such that we will commercialize the product in the United States or at least be a very key player with NeuVax in the United States from a commercial point of view.

So, that in many respects changes the nature -- a little bit the nature of how we are conducting our partnering discussions, and as you can see from the two deals we put in place, we have been very strategic about looking for a partner on a regional basis, looking for a partner that can offer a strategic opportunity, a strategic advantage, and as recently announced with Dr. Reddy's, part of the relationship is Dr. Reddy's is running the Phase II gastric trial for us.

So, yes, we are in active discussions, and we are being selective about looking for the right partner, and whether it is -- again, a strategic selective regional deal or a more broader geographical deal is still in the works.

Okay. And the -- for the DoD grant, I am just curious, does it cover the full cost of the Phase II trial, and how long do you anticipate the trial to last, just a timeline until the readout?

The DoD grant covers most of the costs. We have to provide some of the operational costs and, of course, NeuVax and the adjuvant, but most of it is covered of the 100-patient trial and the neoadjuvant 3+ setting is covered by the grant.

Got it. My last question is just about the scientific rationale in the 3+ setting, so the combination of NeuVax plus Herceptin. I thought that basically the highest pressures are more likely to be immune tolerant to the antigen and, therefore, that was the rationale for NeuVax going into 1+/2+ and not the higher expressers. And so I am just curious what the rationale here is, particularly in combination with Herceptin?

Just to be clear, this is the first trial with HER2 3+. The rationale for the program to date has been that the adjuvant HER2 3+ was approved in November of 2006 for Herceptin. So, the focus by the developers at that time was to focus on the unmet need, which was 1+/2+. So this really creates a new frontier, and it is a frontier -- remember we are focusing on patients who do not achieve a CR with neoadjuvant therapy.

So, the rationale, if you will, is based on the combination study that we have already seen in 1+/2+, having a synergy or a synergistic improvement of therapy of combining Herceptin, plus NeuVax in the 1+/2+ setting. The hope is, of course, with this study is that we will see the same kind of synergy in the neoadjuvant setting in the 3+ as well. And this has, obviously, not been studied before, and we see it as a step forward. Because these are patients who are using Herceptin today, but they don't get a complete response prior to their resection.

In your prior study, you had a negative correlation at the higher-end of HER2 expression, so I'm just curious --?

No, the HER2 3+ patients were not -- there were a few patients prior to the approval of Herceptin, and they were basically redacted from the study. So, we don't know one way or the other if NeuVax is effective monotherapy in HER2 3+ patients. We simply don't know.

Okay. Well, thank you very much for taking my questions.

Absolutely.

Mara Goldstein, Cantor Fitzgerald.

Just some clarification, if you don't mind. When you say that in PRESENT trial, all patients will be finished screening this year, do you mean that all patients will have received treatment?

Yes.

Okay.

Initiated treatment, Mara. They still stay on treatment for three years time.

Right. No, no, I meant initiated treatment. Okay, that's very helpful. Thank you. And that's all 700?

Yes, ma'am.

Do you have a sense yet of what the split is US versus ex-US?

Not yet. It's a global study in about 130 sites in 15 countries. We have clearly have identified, screened, typed and consented more than enough patients. The question is now that we have got to push them all the way through their standard of care, which would include for the audience the surgery, the chemotherapy and radiation, and then we start, as you know, we start initiating them afterwards. So, what we are going to do is we will probably end up having more than the 700 at the end of the day.

Right.

But right now we don't know the mix, but it definitely is a global study, and we will be represented regionally in North America, Western Europe, Eastern Europe and Israel.

Okay. And can you just remind me -- I know, obviously, it's a study for women who are at risk for recurrence, but does it include or exclude BRCA patients?

It's inclusive. It's not an exclusion criteria.

Right, okay. And can I ask a question on FBP, if you don't mind? Can maybe you talk about the trial and the product in the context of yet another candidate that targets folate that has shown not to be successful in clinical trials in gynecological cancers -- I'm referring, obviously, to Endocyte's experience last week -- and just talk about that as a target and what we should be thinking of?

The basic approach to cancer immunotherapy has largely been targeted at therapeutic effects of tumors that have not responded adequately to other treatments and especially those with metastatic disease. So this is a bit of an uphill battle for the immune system, which is very good at killing target cells, but it really is best in the situation where there is a small or very low tumor burden to target.

So, what we are targeting is patients who have no evidence of disease after their primary therapy, as Mark just suggested, with surgery, adjuvant chemotherapy, adjuvant radiation therapy. So, we think that we are in a much better position to have a positive effect because of the strategy. Plus, we're using -- we are targeting these very specific, well-described antigens with a very simple peptide immunization approach. So, I think between those things that we just have a better strategy than historically has been around.

Okay. All right. And if I could just maybe sneak one more question in there, and it's more administrative oriented regarding to the outstanding investigations and legal issues. Is there any update that we should be thinking about there?

Absolutely, Mara. I would love to talk to you about this in the audience. But as we have an internal investigation ongoing, it wouldn't be appropriate for me to comment before they complete their work.

That said, our IRP, our focus is -- continues to be to raise awareness of the work that is going underway by the team. Our focus is to move our pipeline forward and on the -- on that I just want to make sure that the audience is very, very clear that we have adequate insurance to cover corporate issues like this, and our balance sheet is completely focused on building our commercial capabilities and advancing our pipeline.

So, from the resourcing and resource standpoint, we are obviously -- a few of us are distracted by this. We are looking forward to the committees -- the work to be completed and for us to provide this to the administrative folks so that they can promptly deal with this matter.

Okay. And you have not been given any update in terms of what the timing might be like when they complete their investigation?

Well, it's an independent review, so we don't influence their timing. But we are hoping that it is sooner than later, of course.

Okay. Thank you. I appreciate it.

Absolutely.

Ted Tenthoff, Piper Jaffray.

I appreciate the update on mechanism with respect to folate bonding. That's helpful. I have just a couple of housekeeping questions at this point. Specifically, Ryan, can you imagine what the gross to net was, is and where the target is for Abstral?

Absolutely, Ted. Thanks for the question. So, our gross to net deductions were approximately 50% this quarter, which is down significantly from last quarter, and that's primarily due to the success we have had in the Galena Patient Service program. We do expect that trend to continue, and I would say by the end of 2014 we would expect to see that more in the range of the 30% to 35% gross to net deductions.

Okay. That's helpful. Good. And you mentioned, too, if I may ask just on the R&D side, you said that that would start to decline with a monitoring phase. Do you mean after you have completed enrollment of the pivotal study, or when do you expect the R&D to come in a little above?

Most of the R&D expenses for the Phase III, Ted, are in the enrollment phase. So, as we complete the enrollment phase and we move to the monitoring phase, we do expect a fairly significant reduction to those R&D costs.

For example, like Mark mentioned, we have screened over 2500 patients in finding the 700 for our trial. So, when that enrollment period is done, obviously, the screening activity stops, and we move to the monitoring phase. Does that answer your question?

Yes, so, maybe more into 2015 or even in the back half of this year?

The back half of this year.

Okay. Great. Super helpful. Thanks so much.

Echo He, Maxim Group.

Thank you so much for taking my questions. First one, with the PRESENT trial is completing enrollment later this year, where would you like to give a educated guess on the time that you would have interim data delivered? That would be I guess later 2016 or just --? (multiple speakers) reasonable?

So, the interim analysis, if we look at the Phase II data as a marker, Echo, when the median hit roughly 14 months is when they hit -- they would get the requisite number of events, if you will, to hold an interim analysis, which, as you know, is a safety and futility analysis.

If that were -- the way that it all susses out basically is end of year or early next year timeframe if it matches the Phase II. Although, obviously, that is just one marker, and node positive patients on a general -- in general have about a 25% recurrence over the three years time. However, 75% -- if you're going to have a recurrence with one of these survivors, they tend to have -- 75% of them have a recurrence within two years.

So, it's a more rapid or steeper route, unfortunately, to recurrence. So, we will continue to monitor this, of course, very closely.

Is that your end of the study? It is set by the time, right? (multiple speakers) year follow-up, right?

So, Herceptin is approved in the 3+ setting -- in adjuvant 3+ setting for HER2 3+ patients with a 36-month progression free survival. Here, of course, we are looking at a disease-free survival of 36 months as the primary endpoint.

Right. So, I would say like maybe in sometime 2016 you would have half of the patients already finish that 36-month follow-up period. Would that be reasonable to conclude that?

Yes.

Okay. So at the time, you have half of the patients finish those follow-up period, would that be any data and be analysis at the interim?

It will remain blinded to the Data Safety Monitoring Board. Now we don't have a Fleming-O'Brien type stopping role in the analysis. It is simply a safety and futility -- now, of course, the charter -- per the charter, they can opine, of course, on the results, but we wouldn't expect them to break the blind unless we had an untoward safety signal or did not meet the futility threshold.

Okay. Got you. Got you. And the second question is about Abstral. I know you are enrolling those trials, too. Does that trial serve a good marketing factor and increasing the enrollment patient or prescription numbers? And, also, when would the trial be concluded, and would that be a fact of your revenue growth?

This is Mark Schwartz, Echo. So, the registry trial is called the RELIEF study. It is a post-marketing patient survey based study. It is a clinical study, and so our goal with this study is to really gather data on how Abstral is being used, how the patients are responding to it and essentially how the outcome of patient use and their perception of their satisfaction with it.

It is proceeding well. We have a number of sites up and running, and we continue to enlarge the trial, enlarge the number of sites and add patients to it. But really it is a clinical study for an aftermarket knowledge and to inform us on the use and the outcome of the product. We would expect that there would be some publications out of this trial when we are done.

What is the conversion rate after people enrolled in that registration study and that will continue to be on the prescription?

We are not tracking that specifically, but I would expect it to be consistent with the usage of Abstral in general. The trial is set up so that the patient is prescribed Abstral, and then once they are prescribed Abstral, they are then enrolled on the study, assuming they meet all the criteria. And so it is really meant to track parallel to the patient's normal care that they are given by the doctor and essentially understand the outcomes of the normal care.

So, in that regard, I think we would see the same usage patterns we would expect if they were not on the study.

Okay. I got you. Last question is about R&D and the sales and marketing expenses. You are talking about -- you probably -- the R&D expenses would decline later. But you're going to have this Anagrelide CR trial starting to enroll Phase II and Phase III next year. And would that be partially offset or maybe make up the part of decline from the enrollment of NeuVax trials? And, so, in that sense, maybe the year-over-year total R&D expenses would be -- wouldn't be declining, right? That's (multiple speakers).

No, thanks, Echo. This is Ryan. Total R&D expenses will decline. The decline in the R&D expenses related to the NeuVax trial will far outweigh the relatively low cost we anticipate to spend on the Anagrelide or the GALE-401 trial by a long shot, actually, yes.

All right. That make sense. And SG&A expenses, you would expect quarter over quarter increase from here, right?

No, we expect them to remain relatively stable. As Mark mentioned, we have got adequate insurance coverage to deal with the matters at hand. We expect Abstral net revenues to continue to increase, and then again with the decrease in the R&D expenses, we get back to that full year expectation of between $30 million and $32 million a quarter.

Okay. I got you. Alrighty. That's all my questions. Thank you so much.

Rahul Jasuja, Noble Capital.

Just one quick question now related to NeuVax. I think last year you guys reported on using a monitoring based on CTC, circulating tumor cells. I found that really interesting that you had some data that you presented in a small number of patients where you found reduction in CTCs and the corresponding increase in CD8 clone recognizing E75 antigen. Now is that program part of the Phase III, and then could you add some color on that?

Yes, thank you, Rahul. So, for the audience to reiterate, there was a poster paper that was presented at the so-called [SITSY] conference last year in looking at the so-called circulating tumor cells by a CellSearch assay. The broader data out there both in the metastatic setting and in the adjuvant setting shows that the micrometastases in what we consider otherwise patients in remission, of course, form the basis of these recurrence patterns. And in the 26 patients that were followed, 20 of them after NeuVax therapy were able to be driven down to a zero circulating tumor cells. And so we know that their presence and their increased presence is associated with recurrence both in the frontline setting, as well as in the adjuvant -- in the metastatic setting.

So the idea very much akin to HIV or HCV is we can get those patients down to in those cases pCR negative and in the case of this specifically would be CTC zero or negative, then those patients -- those 20 patients who reached zero, none of them had a recurrence.

So, of course, this sparked interest in the correlative science, and in fact, those CTC levels are being measured as part of the Phase III study. So we will have that data at the end to see if NeuVax continues to knock down these circulating tumor cells, and we can use this quantitative approach, if you will, to measure the drug's effectiveness.

So, Mark, are these patients when they visit, is the CTC monitoring and the corresponding CD8 expansion, is this happening on a regular basis or not?

Yes.

The measurements?

Yes.

Okay. (multiple speakers)

We're only bringing in patients per standard of care. So they come in once a month, for example, in the loading dose phase and then once every six months for their boosters, and all these patients are scanned on an annual baseline and then on an annual basis. And that's -- to the prior question, that's what's driving the cost of this trial. Because everybody gets scanned, tight and HER2 tested, and that, of course, drives a lot of expense, even though we end up only putting in 700 of the 2500. And by a country mile, that's the biggest driver of cost in this trial so far.

Great. Thanks. That's all I had.

Chad Messer, Needham & Company.

Thanks for taking my question. We have covered a lot of ground. You had mentioned that Abstral increased both prescriptions and the number of prescribers. I was wondering if you could give a little more color on basically the number of prescriptions per prescriber you are seeing -- you are seeing a lot of repeat prescriptions from prescribers?

And then, also, have you gained any new insight on who is taking Abstral from a patient basis? Are these patients that have tried other breakthrough pain products and been dissatisfied, or are they mainly patients getting their first breakthrough pain product?

Chad, a number of questions there. We are seeing both an increase in the number of prescriptions of Abstral and an increase in the number of physicians that are prescribing Abstral, so I think that's what your question was.

As I said, we have hired a very, very experienced sales force. They come out of the oncology and the specialty pharmaceutical side, and we have focused very hard on trying to increase both the breadth and the depth of Abstral prescriptions. And, so, that combined with the GPS, that is really, I think, beginning to significantly lower the burden for the healthcare practice to get the patients on drug and get the reimbursement, we are beginning to see essentially Abstral expand in all the different dimensions.

So, was that -- I think that's what you asked for?

Yes, a little more subtly whether you are seeing strong re-prescriptions from individual prescribers, and then, also, I had a second question on whether you were gleaning who these patients were in terms of are they patients that have tried other breakthrough pain products, or is Abstral generally the first thing they're getting?

So we do see a consistency of prescribing such that those folks that are -- those folks that are writing Abstral seem to continue to write Abstral. We don't see what appears to be physicians writing Abstral for a month or so and then dropping off. And, so, I think as we expand our prescribing base, we maintain the folks that are writing. We continue to add new writers to that base.

And so I think we're building a very solid base moving forward of folks that write, like the product, their patients like the product, they keep coming back to it, and they continue to write moving forward.

In terms of the number of patients, I think it's a mixture. We don't have -- that's a little harder to point to. There is no real hard data, but I think anecdotally from what we can tell, there is clearly a number of new prescriptions that are written, and we do see a number of folks that are turning over. I mean I can tell you anecdotally that my discussions in the field clearly indicate people -- doctors are always looking for the best medicine for their patient, and Abstral is a very good drug. And I think a lot of folks, once they try it, like it.

All right. Thanks for the added color.

So, I just want to say thank you very much to everyone. This has been our first quarterly call. We really appreciate your interest and consideration. We look forward to keeping you abreast of our progress as we move along, and thank you very much for your time today.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program, and you may all disconnect. Everyone, have a great day.