TRACON Pharmaceuticals Inc (TCON) 2017 Q4 法說會逐字稿

Good day, ladies and gentlemen and welcome to TRACON Pharmaceuticals Fourth Quarter 2017 Earnings Conference Call. (Operator Instructions)

During today's call, we'll be making certain forward-looking statements and including statements regarding expected timing of clinical trials and results, regulatory activities, future expenses and cash runaway, and our development plans and strategy. These statements are subject to various risk that are described in our filings we made with the Securities and Exchange Commission, including our annual report on form 10-K for the year ended December 31, 2016 and subsequent quarterly reports on Form 10-Q. You are cautioned not to place undue reliance on these forward-looking statements, and we disclaim any obligation to update such statements.

Now, I'd like to turn the call over to Dr. Charles Theuer, President and CEO of TRACON Pharmaceuticals. Dr. Theur, you may begin.

Good afternoon and thank you for joining TRACON's fourth quarter 2017 financial results and business update conference call. I will begin with an update on our pipeline and recent activities. Following that, our Chief Financial Officer, Patricia Bitar, will review our financial results for the three months and year ended December 31, 2017. Finally, we will conclude by taking your questions.

Let's begin with our lead product candidate, TRC105, which has the nonproprietary name, carotuximab. We have initiated 24 sites in the U.S. as well as sites in U.K. and France in our randomized Phase 3 TAPPAS trial that continues to enroll angiosarcoma patients. As a reminder, the initial TAPPAS sample size of 124 patients is designed to detect an improvement in PFS from four to seven months and allowed us to enroll treatment-naive patients.

Updated Phase 1/2 data presented at the CTOS annual meeting support the Phase 3 TAPPAS trial design and treatment effect assumptions. Notably, PFS was 7.8 months in VEGF inhibitor naive angiosarcoma patients treatment with TRC105 and Votrient and the time on treatment with TRC105 and Votrient exceeded time on treatment of prior chemotherapy in the majority of patients.

In addition, the TAPPAS trial uses and adapt a design that allows for expansion of patient numbers to provide for more than 80% power to detect a less robust treatment effect while preserving type 1 error. We expect to conduct an interim analysis in the second half of 2018 that should provide substantial insight into the progress of the trial.

We believe TRC105 has broad potential and TRACON continues to execute on its tier development strategy to address the indications with a range of market sizes from orphan indications to markets with blockbuster potential. In addition to the pivotal TAPPAS trial angiosarcoma, TRC105 continues to advance in Phase 2 studies in two mid-market indications.

First, last September, we completed accrual of 150 patients into the randomized Phase 2 TRAXAR trial that compares treatment with TRC105 and Inlyta to treatment with single agent Inlyta in patients with clear cell renal cell cancer. Based on the current rate of events of progression or death that defined the primary endpoint of PFS, we expect to report topline data in mid-2018. This updated timing reflects a slower than expected accumulation of events of progression or death.

We expect to perform the final analysis of PFS upon the occurrence of approximately 80 events confirmed by the Independent Central Review Committee, which would provide at least 80% power to detect an improvement in PFS from 4.8 months with Inlyta to 7.7 months with a combination of TRC105 and Inlyta. PFS will also be assessed based on predefined levels of soluble biomarkers, osteopontin and TGF beta-receptor 3, which correlated with response in the Phase 1b portion of the trial.

We also continue to enroll the multi-center Phase 2 trial of TRC105 and Nexavar in liver cancer and reported initial safety and response data at GI ASCO in January 2018. The combination of TRC105 and Nexavar was tolerable and two of the initial eight evaluable patients or 25% achieved partial responses that remain ongoing at this time.

These data are consistent with the partial responses RECIST seen in 5 of 15 or 33% of liver cancer patients treated with the two highest dose levels of TRC105 with Nexavar in the Phase 1/2 trial conducted by the NCI and published in Clinical Cancer Research last year. The response rates of these two trials compare favorably with historical single agent Nexavar pivotal trial data that showed a response rate of 2% to 3% by RECIST.

Late last quarter, we also initiated dosing in the Phase 1 trial of TRC105 in combination with Opdivo with patients with non-small cell lung cancer. Investigators from the University of Alabama Birmingham presented the design of this trial at the World Conference on Lung Cancer on Yokohama in October. Opdivo is approved for the treatment of second-line lung cancer and had an overall response rate of approximately 20% in its pivotal trial.

Endoglin is a TGF beta co-receptor expressed on activated fibroblast and myeloid-derived suppressor cells which has cell types implicated in tumor resistance to immunotherapy. Two recent pre-clinical publications in Nature indicate TGF beta stabling fibroblast and other stromal cells represents a primary means of tumor evasion by promoting T-cell exclusion from the tumor micro-environment. Further, therapeutic co-administration of TGF beta-blocking and PD-1 antibodies reduced TGF beta stabling in stromal cells, facilitated T-cell penetration into tumors, and provokes vigorous anti-tumor immunity and tumor regression.

We have observed encouraging activity of our endoglin antibodies in combination with PD-1 inhibitors in pre-clinical syngeneic mouse tumor models and expect to present our pre-clinical as well as clinical trial data at scientific conferences this year.

In order to broaden our expertise in the checkpoint inhibitor area, I'm pleased to announce we have recently added Dr. Brian Daniels to our scientific advisory board. Dr. Daniels is a leader in the development of Opdivo, the first PD-1 inhibitor approved in oncology while he was at Bristol-Myers and we look forward to his contributions.

Moving on, based on activity observed in pre-clinical models, we continue discussions with pediatric oncologist to design a trial of TRC105 in combination in approved therapeutics in children with neuroblastoma, which could be funded through a cooperative group.

We also continue to evaluate the potential for investigation of TRC105 in AML based on data published in the Journal of Blood demonstrating endoglin expression on the majority of blast from AML patients and activity of TRC105 on AML in mouse models. Neuroblastoma and AML are malignancies with high unmet need that may represent additional development opportunities for TRC105.

In December, we licensed development and commercialization rights to TRC105 outside of ophthalmology in China, Hong Kong, Macau, and Taiwan to Ambrx. Ambrx has offices in both San Diego and Shanghai and has a management team with expertise in oncology drug development in China.

Deal terms included a $3 million upfront payment, up to $140.5 million in development and commercial milestones, and potential royalties from the high single digits to the low teens on net sales of TRC105 in the Ambrx territories. We expect Ambrx to file an IND later this year to initiate clinical development of TRC105 in China.

Turning now to DE-122, the ophthalmic formulation of TRC105. Our partner, Santen, has achieved considerable progress over the past 12 months in the development of this product candidate for the treatment of Wet AMD. On February 10, Dr. Victor Gonzalez presented data from the Phase 1/2 PAVE trial at the Bascom Palmer Eye Institute Conference on Angiogenesis, Exudation, and Regeneration.

The open label, dose escalating, sequential cohort study, assess the safety, tolerability, and bioactivity of a single intravitreal injection of DE-122 at four dose levels in 12 patients with wet AMD refractory to VEGF inhibitors. Enrolled patients have demonstrated persistent or increasing lesion activity despite continuous VEGF inhibitor treatment with the last treatment administered between 30 and 60 days prior to treatment with DE-122.

Treatment with the baseline VEGF inhibitor used prior to study entry was allowed one week following DE-122 treatment. Eight of 12 refractory wet AMD patients demonstrated evidence of bioactivity as evidenced by improved visual acuity or decreased macular edema following treatment with DE-122 and then a single dose of the VEGF inhibitor treatment used prior to study entry.

There were no serious adverse events. And a single adverse event of yellowish deposits in the vitreous considered to be related to DE-122 resolved naturally. Notably, following the evaluation of the safety and bioactivity data from the Phase 1/2 PAVE trial, Santen initiated dosing in the randomized Phase 2 AVANTE study that compares treatment with two different doses of DE-122 combined with Lucentis to treatment with single-agent Lucentis in patients with wet AMD.

We believe there's a substantial opportunity for agents that target essential angiogenic pathways like endoglin to be developed in combination with VGEF inhibitors for wet AMD patients.

We'll turn now to our second product candidate, TRC102. TRC102 is a novel, small molecule inhibitor of the DNA-based excision repair pathway that is intended to reverse resistance to certain chemotherapeutics. Based on positive safety PK and efficacy data of the combination of TR102 and Temodar, which were presented at ASCO last year, the NCI continues to enroll patients with ovarian, lung and colorectal cancers, which were the tumor types that responded to treatment in the Phase 1 trial.

An additional Phase 2 NCI-sponsored trial of TRC102 and Temodar in patient with glioblastoma has completed the first stage of accrual. In additional, the dual arm Phase 1/2 trial consisting of a Phase 2 cohort of TRC102 with Alimta in patient with mesothelioma and a Phase 1 cohort of TRC102 with Alimta and Cisplatin in patient with solid tumors is also enrolling.

Finally, our collaborators at Case Western are dosing patients in the Phase 1 trial with TRC102 in combination with chemotherapy and radiation therapy in patients with lung cancer. As part of these studies, we will assess patient tumor samples to determine whether preclinical data showing the glycosylate expression is associated with tumor sensitivity to TRC102 can be validated in the clinic.

Moving on to TRC253, our candidate for treating prostate cancer that we in-licensed from Janssen. We are studying TRC253 in a Phase 1/2 trial to assess the safety, determine its recommended Phase 2 dose, and assess response by PSA levels. In the Phase 2 portion of the trial, we will incorporate circulating tumor DNA testing in order to allow for biomarker directed therapy of patients who have progressed following treatment with an androgen receptor inhibitor.

We expect to complete the Phase 1 dose escalation portion of the trial by mid-2018 and presented details of the Phase 2 trial design at GU ASCO earlier this month. The Phase 2 design includes two [PERLA] cohorts of prostate cancer patients resistant to Xtandi or apalutamide treatment, one cohort with the F877L mutation and one cohort with another basis for resistance.

As a reminder, if Janssen asks to reacquire the asset prior to or following completion of the Phase 1/2 trial, TRACON will be entitled to received $45 million opt-in payment in addition to up to $137.5 million in potential milestones and a low single-digit royalty on any sales.

In addition to TRC253, the Janssen transaction also brought TRC694, a novel, small molecule potent inhibitor of NF-kappa B inducing kinase or NIK as intended for the treatment of patients with hematologic malignancies including myeloma. TRACON has an exclusive license to TRC694 and Janssen retains the right of first negotiation should we decide to partner the asset. We continue to perform IND enabling studies with TRC694 and expect to file an IND in 2019.

As you can see, we remain very active on the development front and look forward to a highly productive 2018 with multiple potential [bio-enhancing] events including a number of key pipeline related milestones.

Importantly, we continue to achieve our progress in a cost-effective manner by leveraging the TRACON product development platform that is managing our international Phase 3 TAPPAS trial for TRC105 and angiosarcoma without significant cost or complexities associated with outsourcing to a global CRO. We believe that Janssen licensing agreement provides validation of our drug development model and we continue to evaluate additional assets that can leverage our product development platform for the benefit of TRACON and its shareholders.

From a financial perspective, we believe that our existing cash resources will fund currently planned operations into Q3 2018 and will be sufficient to deliver final data form the randomized Phase 2 TRAXAR renal cell cancer trial, allow transition to the Phase 2 portion of the Phase 1/2 trial of TRC253 in prostate cancer, and support planned manufacturing activities at Lonza for TRC105.

In addition, available financing from our agreement with Aspire Capital provides flexibility to further extend our cash runway.

At this time, I would turn the call over to Patricia Bitar, our Chief Financial Officer, who will provide an update on our financials.

Thank you, Charles, and good afternoon, everyone. TRACON reported no collaboration revenue for the three months ended December 31, 2017 and $8.8 million for the year ended December 21, 2017 compared to $6 million and $3.4 million respectively for the comparable period of 2016. The increase in full year 2017 collaboration revenue compared in 2016 was primarily attributable to a $7 million milestone earned upon Santen's initiation of their Phase 2 AVANTE trial in July 2017.

Research and development expenses were $4.6 million for the fourth quarter and $19.4 million for the year ended December 31, 2017 compared to $4.8 million and $21.6 million respectively for the comparable period of 2016. These decreases were primarily the result of decreased manufacturing expenses related to TRC105 in both of the 2017 periods.

General and administrative expenses were $1.7 million for the fourth quarter and $7.6 million for the year ended December 31, 2017, essentially flat when compared to $1.9 million and $7.9 million respectively for the comparable periods of 2016.

Our net loss was $6.6 million for the fourth quarter and $19.1 million for the year ended December 31, 2017, compared to $6.3 million and $27 million respectively for the comparable periods of 2016.

Turning to the balance sheet, at December 31, 2017, our cash, cash equivalents and short term investments totaled $34.5 million compared to $44.4 million at December 31, 2016. During December, we received a $3 million upfront payment from Ambrx in connection with the licensing agreement previously discussed. We continue to expect our capital resources to be sufficient to fund our currently planned operations into quarter three 2018.

And with that, I will turn the call back over to Charles.

Thank you, Patricia. As we noted, we expect a number of potential value creating milestones over the next nine months. For TRC105, we anticipate topline Phase 2 TRAXAR trial results in renal cell cancer in mid-2018 and expect the key interim analysis to determine the final study size of the pivotal Phase 3 TAPPAS trial in angiosarcoma in the second half of 2018.

For TRC253, we expect to advance into the Phase 2 portion of the Phase 1/2 trial of prostate cancer by mid-2018. We look forward to providing further updates regarding our upcoming key milestones and remain confident that we have the right strategy in place to deliver on our development and business plans for the benefit of patients and shareholders.

With that, we will be happy to answer your questions.

(Operator Instructions). Our first question comes from Chad Messer with Needham & Company.

Let me just start with TRC253. Now, they've got some visibility on the end of the Phase 1 portion and what Phase 2 looks like. Any guidance on about how long that might take and I probably knew this at one time, but can you remind me what the clock or gating factor on Janssen is to make that licensing decision?

Hi, Chad, appreciate the question. Yes, so with 253, it's a Phase 1/2 trial and we expect to be through with Phase 1 by mid this year. We expect to be through with Phase 2 by roughly mid-2019. Now Janssen can opt-in and [we're] part of the asset at any time up until 90 days after the completion of the Phase 2 trial and that opt-in period -- or that opt-in payment I think as you would recall is $45 million and [so with] after milestones and also royalty due.

Okay, great. And then on 694, now that's just the first negotiation they have there. Is that any time period or should I just think of that as this asset is yours should you ever choose to outlicense it there, at the front of the line?

I think the -- you hit the nail in the head there, Chad, yes. This is a wholly-owned TRACON asset, we're very excited by it. We have -- expecting the [clinic] in 2019 and should we decide to partner with Janssen at the front of the line to your point and has a right to first negotiation, but it's a very different deal than the 253 opt-in clause.

Yes, I know very exciting. And then maybe one for Patricia. Can you just remind us what you have available should you needed it or want it from Aspire?

Sure. So the agreement with Aspire was up to $21 million and we have sold them about a million dollars in stock to date.

Okay, about 20 [less]. All right, great. Thanks, guys. Thanks for taking my questions.

Your next question comes from Maury Raycroft with Jefferies.

Hi, this is [Michelle] on for Maury. We're just wondering -- we're just wondering when you're looking -- well I guess when Santen is looking at the Phase 2 study, how are they going to be able to tease out in treatment-naive patients, where the benefit is coming from since that study will be a combination?

Right, yes -- so yes, the Phase 2 study does a lot of treatment-naive patients to come on to the trial, but it is a randomized trial. So they have three arms, they have patients receiving Lucentis only and then patient receiving Lucentis with the low-dose of DE-122 and Lucentis and the high dose of DE-122.

So ideally, when the patients are treatment naive or previously treated with a VEGF inhibitor, we'll see that the combination arms will outperform the control arm of Lucentis only. And as I look in general at Lucentis' pivotal data, there will clearly be patients who are naive and about third of those patients that have great benefit from Lucentis as a single agent. And there, we may not further benefit that patient that has for instance three-line visual improvement but that is the minority of patients, about a third of them. The other two-thirds of VEGF naive patients with AMD that started on Lucentis, he'll have either a mild improvement or no improvement whatsoever.

And so the majority of treatment-naive patients definitely need enough therapy in order to recover vision and so I think it will be useful to have those treatment-naive patients involved and you will be able to compare between the three arms with the expectation of seeing a treatment effect in that group of patients.

Okay, thank you. And then can you also talk about the new paper that talked about the 105 mechanism and specifically maybe on the crosstalk between endoglin and the VEGF receptor-2 and why maybe your approach, the anti-endoglin approach might provide potency that would be needed to potentiate anti-VEGF angiogenesis effect?

Yes, no, I appreciate the question. We've known from in vivo perspective and animal models and also cellular perspective that TRC105 potentiates VEGF inhibitors. But there was a recent paper from the [Blob] Lab at Duke University that really provided a mechanistic explanation for why we do potentiate VEGF inhibitor so nicely in these preclinical models.

And what that group showed is that endoglin actually facilitates VEGF receptor phosphorylation in response to binding the ligand VEGF. And that if we target endoglin TRC105, we can obviate the potentiation that endoglin naturally gives to VEGF phosphorylation -- VEGF receptor phosphorylation and then further that endoglin stabilizes VEGF receptor on the cell membrane. And that if we bind endoglin, we destabilize the VEGF receptor and it is internalized in the [greater] lysosomes which prevents further VEGF signaling.

So it has built a -- TRC105 has both [the] short-term to acutely decrease signaling to the VEGF pathway but also longer term effect to actually downregulate the receptor content on the cell surface. So, it's a really nice publication that kind of completes the package, if you will, from a molecular basis of the cellular data we've seen for several years.

Our next question comes from Alex Schwartz with Stifel.

Congrats on the data this past quarter. I'd like to continue with DE-122. So in your data in refractory wet AMD patients, looking at the data you had some patients that have pretty profound improvement in best-corrected visual acuity. Can you just help with the data and context a little bit more, because stable disease -- or rather not having vision worsening meaningful on VEGF refractory patients or is it really improving best-corrected visual acuity scores, kind of what is meaningful in this patient population and maybe you can just elaborate more in any particular aspect that (multiple speakers) Santen to launch the next trial?

Sure, I appreciate the questions. So, these Phase 1 patients much like an oncology Phase 1 trial, these are patients at their end-stage with -- they're on VEGF inhibitors just because there's nothing else to do for the patients unfortunately. But despite that, they have persistent evidence of AMD, in most cases just persistent fluid in the macula.

And so in that patient population, they're on there VEGF inhibitor, they get a dose of our drug and then they get whatever VEGF inhibitor they want coming on to trial. And in that case many times the rods and the cones may not be salvageable. And even if you improve the macular edema, you may not improve the vision, which is very different than for instance the treatment-naive patients or the patient that may not get the maximum improvement from the VEGF inhibitor that would come into a Phase 2 trial where the vision is recoverable. If you go, the rods and cones are still there and transduce light and then you can see if you get rid of the edema.

So, that's why in the refractory Phase 1 trial to see an improvement in vision is miraculous in a sense. It's something you wouldn't expect and to see it is really an encouraging sign. But the more, I think, reasonable (inaudible) that you look for is seeing decreases in macular edema which in this patient population is probably the best you're going to get in most cases.

So, Santen was very encouraged as are we to see the decreases in macular edema in the majority of patients, but again are on chronic VEGF inhibitor therapy that basically hasn't worked in them. So, that was a very positive [attribute] for this study and that is why they remained very enthusiastic about moving into the Phase 2 portion, the randomized AVANTE study.

Okay, no, thank you for the additional context, that's helpful. And then --

Sure.

-- if another if I may, can you talk more about your responses in liver cancer patients? So, I would assume that a response rate and PR would correspond to improve overall survival, but are there any historical data you can point to about how a PR corresponds to OS improvements either through your data or may be meta-analysis or maybe the few patients in Nexavar trials or recent Cabo trials that achieved the PR response, maybe how did their OS looked like that achieved a PR relative to the rest of the trial population?

Yes, it's a great question, Alex. The problem is these trials have so few responses, you almost don't even have a sample size sufficient to categorize responders versus non-responders. You had a 2% response rate in the pivotal study with Nexavar. So it's -- I assume they probably have better OS, but when the sample size is that small, it's hard to prove that.

And even the Cabo trial, I mean the response rate in that trial, the second line I think was roughly

4%. So, the data don't exist right that correlate response of survival, but I think the real reason is the responses are so few and far between which is, again, why we're so encouraged with the data we presented and that the NCI presented to date.

Okay, very good. And just a follow-up, any expectation on when we might see the next round of HCC data and how many patients will we see?

Yes, no, the Phase 2 portion enrolls 21 patients and we expect to present that publicly at GI ASCO in 2019.

Our next question comes from Jim Birchenough with Wells Fargo.

This is [Nick] on for Jim. Thanks for a very comprehensive update. In terms of the TRAXAR trial, you mentioned that you will be looking at osteopontin and I think it was TGF-beta receptor 3 expression. What proportion of patients do you expect a positive for those biomarkers and is there a clear cut-off as what defines positivity or is this something that you're investigating?

Hi, Nick, great question. Yes, so for purposes of stratifying the PFS with respect to those biomarkers, our general approach will be to use the median value and to see if patients with higher levels than the median had superior PFS has -- had initial way to a priority -- see if there's a true statistical correlation. You know beyond that though, we'll do more exploratory analysis to see if there is a better cut-off to your point that will be more appropriate for a Phase 3 study.

Yes. And if you think about if it's a positive outcome, it appears though Inlyta use is decreasing, Cabometyx use is increasing, is it worth looking at the safety of TRC105 with Cabometyx to give you the option perhaps of doing that combination?

Yes, it's definitely something we talked about, Nick. If Cabometyx becomes standard first-line TKI of choice combined with that would make sense, especially from a commercialization standpoint. That said, the first-line trial would take a long time to read out. And so we still do think that Inlyta may still be the preferred companion VEGF inhibitor for our therapy.

So for instance if Cabo stays first line or goes first line standard of care, if Inlyta remains the second line or second standard of care or the second VEGF TKI you use in the disease, that's still might be a nice pairing for us just because the PFS readout would not take forever to deliver and the trial could be executed in a more a lower -- a shorter timeframe. So we continue to set landscape but we still think combining with Inlyta could be a potentially productive Phase 3 strategy, mainly for a time to complete trial perspective.

Okay. And then on then on HCC, did I hear you correctly saying that the two partial responses you reported at the ASCO GI are still ongoing?

They are Nick at this time, yes, both patients.

And can you remind me what's the duration of those responses now?

Yes, there are roughly -- one patient roughly [passed] half a year of therapy and the other patients probably roughly passed three months of therapy in general terms and then -- yes.

And as -- are you looking exploratory biomarkers there to try and identify who may get a response?

We absolutely are, Nick. We're doing the exact same panel that we did in the renal cell protocol which is kind of a standard panel that we use routinely in our sponsored trials that we do with Duke University.

Okay. And then I noticed you started the Opdivo combo trial in lung cancer, can you comment on how many patients you treated or -- when do you expect to able to determine the recommended Phase 2 dose of 105?

Sure, yes, it's a very rapid Phase 1 dose escalation. So, we expect to be able to deliver the recommended Phase 2 dose in a very short time or even actually to have the majority of the trial enrolled by end of the year and be able to report substantial numbers of patients in the Phase 2 portion for -- viable for response by end of this year.

Our next question comes from Bert Hazlett with BTIG.

A couple of just trial design questions, I guess. With regard AVANTE and DE-122, could you remind us of the dosing regimen that you're using in combination with Lucentis and then are you enriching that trial in any way with regard to patient selection?

Yes, so the doses -- Santen hasn't released the exact dose per se, Bert. It's Lucentis' sham injection, Lucentis in a low dose of DE-122 and then Lucentis in a high dose of DE-122, but I don't believe Santen has released the exact dose levels. The drugs given on a monthly injection basis basically obeys Lucentis schedule. So you get a -- as you're getting your standard dose of Lucentis, you just get the dose of DE-122 under the same anesthetic, which is your standard paradigm for the way these combination trials are performed.

In terms of enriching for patients per se, there's no biomarker enrichment per se. It's taking patients that -- including treatment-naive patients with wet AMD as defined by strict criteria into the trial and then treat them with one of the three -- into one of the three arms.

Okay, thank you for that. And shifting then to the Opdivo plus 105, could you -- I think you described this before but could you discuss a little bit more about the rationale for choosing -- I think they're PD-1 naive patients, I think that's the patient group you're looking at versus maybe PD-1 refractory patients?

Sure. Great question, Bert. Yes, so currently the way the protocol is written, we are currently enrolling PD-1 naive patients that otherwise would get Opdivo on label and instead of that, they get Opdivo plus TRC105. That said, there's definitely interest in adding a second parallel cohort in the Phase 2 portion that would be Opdivo refractory and that's something we're definitely considering at the current time.

Okay, thanks. And then just quickly could you describe the gating items for considering 105's move into neuroblastoma or AML as you described something that's being thought [of]?

Sure. Yes, I mean neuroblastoma it's really being driven through interactions with cooperative groups that would really push these trials forward. I mean they're great cooperative groups that really emphasize new treatments for pediatric oncology patients like the Children's Oncology Group as an example. So those are the kind of groups that you can interact very productively to really advance therapies for children in need.

With respect to AML, we're having discussions around really what best population to address and also what the best potential combination agent to address whether it be an anti-metabolite therapeutic or whether it be a more intense chemotherapeutic baseline regimen that we'd add TRC105 onto. So those discussions are ongoing as we speak.

Our next question comes from Matthew Cross with JonesTrading.

I was encouraged to see the early response results back in January from the Nexavar combination study confirming some of the NCI work and I was hoping you could provide some details on how the Ambrx partnership may begin to play a role in that program, given the significant liver cancer population in those geographies? I guess specifically I'm curious on the split between -- in terms of clinical involvement and expense for TRACON versus Ambrx and how contingent you'd say that might be on the current Phase 1/2 results.

Sure. No, I appreciate the question. Yes, I mean the main focal point of our interest in working with Ambrx company as you've experienced in China would be to advance the drug and indications where the population is not as available in the U.S. as it is China, and the poster child for that paradigm would be liver cancer.

With respect to our goal with Ambrx this year is to file an IND and they could potentially join the Phase 3 angiosarcoma trial, which is one opportunity for advancing TRC105 but we're not -- if you were counting on that as necessary to complete the trial. I think with respect to liver cancer, we look at that as a really great opportunity to conduct the global study in China and the U.S. with the majority of patients being attributed to China, given the increased prevalence there. And that would offload significant cost for TRACON as well and would potentially [continue] to a global approval.

What's the gating for moving that forward? What we're looking for in our current Phase 2 multicenter study is to see a response rate that's similar to what the NCI reported, which is -- if we see a 20% rate of TRC105 in Nexavar, we'd be very encouraged, given again its expected 2% response rate in this population. So those are general gating parameters with respect to advancing into the Phase 3 global study.

Got it, okay. And then I guess would it be the IND or would there be another -- given the number of milestone payments you have as part of that agreement setup, what would you kind of look for as the next milestone that may trigger one of those?

Yes, we haven't disclosed exactly what milestones trigger to what clinical event, but clearly the developmental stage milestones is part of the deal, which is roughly $10 million, the $140 million that are still unrecognized at this time.

And I'm not showing any further questions at this time. I'd like to turn the call back to Charles for closing remarks.

Great. Well, thank you very much for the time and interest and the great questions. Have a nice day and we look forward to speaking with you again soon.

Ladies and gentlemen, that concludes today's presentation. You may now disconnect and have a wonderful day.