TRACON Pharmaceuticals Inc (TCON) 2021 Q2 法說會逐字稿

Good day, ladies and gentlemen, and welcome to TRACON Pharmaceuticals' Second Quarter 2021 Earnings Conference Call. (Operator Instructions) During today's call, we will be making certain forward-looking statements, including statements regarding expected timing of clinical trials and results, regulatory activities, future expenses and cash runway and our development plans and strategies.

These statements are subject to various risks that are described in our filings made with the Securities and Exchange Commission, including our annual report on Form 10-K for the year ended December 31, 2020. In 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 would like to turn the call over to Dr. Charles Theuer, President and CEO of TRACON Pharmaceuticals. Dr. Theuer. You may begin.

Thank you for joining TRACON's Second Quarter 2021 Financial Results and Business Update Call. I will begin with an update on our pipeline and then review our recent activities. Following that, Scott Brown, our Chief Financial Officer, will review our financial results for the 3 and 6 months ended June 30, 2021. Finally, we will conclude by taking your questions.

Our development efforts continue to focus on the pivotal ENVASARC trial. ENVASARC is designed to allow potential approval of envafolimab in the sarcoma subtypes of undifferentiated pleomorphic sarcoma, or UPS, and myxofibrosarcoma, or MFS.

As a reminder, envafolimab is a potential best-in-class PD-L1 checkpoint inhibitor without the risk of infusion reactions that may confer additional clinical benefit by virtue of its convenient and rapidly delivered subcutaneous route of administration.

We continue to make progress with envafolimab and the ENVASARC pivotal trial. First, the Data Monitoring Committee completed its second review of ENVASARC's safety data last week and recommended that the trial proceed as planned following the review of more than 3 months of safety data from the more than 20 patients enrolled into the trial as of May.

The review included data from more than 10 patients enrolled into Cohort A of treatment with single-agent envafolimab and more than 10 patients enrolled into Cohort B of treatment with envafolimab and Yervoy.

Second, in June, we announced that the FDA had granted orphan drug designation for envafolimab in soft tissue sarcoma. The FDA Orphan Drug Division had requested an amended application that included preclinical or clinical evidence of activity of envafolimab in sarcoma.

Given envafolimab has been dosed to over 700 patients, our partners, 3D Medicines and Alphamab Oncology, were able to supplement our application with data from their clinical database, which included patients with alveolar soft part sarcoma, or ASPS, treated with envafolimab in prior Phase I studies.

The data were quite compelling as 2 of 5 patients with ASPS demonstrated confirmed objective responses with duration of response beyond 6 months, while the other 3 patients demonstrated stable disease.

These response rates are consistent with the known activity of other checkpoint inhibitors in this sarcoma subtype. For example, the PD-L1 checkpoint inhibitor Tecentriq marketed by Roche demonstrated partial responses in 37% of ASPS patients treated in a trial sponsored by the National Cancer Institute. Third, we have initiated 26 clinical trial sites and continue to expect the availability of interim ENVASARC efficacy data by the end of this year. The initial DMC mandated interim efficacy analysis occurs upon the 12-week CT scans in the 36th enrolled patient to allow for determination of the preliminary objective response rate.

For the futility rules of the study, there must be at least one response among the initial 18 patients enrolled into each cohort to continue enrollment of that cohort. We expect to summarize the efficacy data from the initial 36 patients by the end of this year in a top line data release that includes the aggregate initial response rate across the 2 cohorts.

Fourth, we expect positive interim efficacy data would be the basis for submitting a request to the FDA for Fast Track designation and/or breakthrough therapy designation, as either designation permits a rolling BLA submission that would facilitate a timely review of a BLA.

Looking forward, we anticipate a second interim efficacy assessment and final response assessment in 2022. And assuming positive data, submitting a BLA for accelerated approval that, if approved, could allow for product launch in the U.S. by the end 2023.

Additionally, we reviewed the design of the [ENVASARC] trial in a poster at ASCO in June. As a reminder, the ENVASARC trial includes 2 cohorts of 80 patients each. One cohort received single-agent envafolimab and a second cohort receives envafolimab in combination with Yervoy.

The trial enrolls patients with UPS and MFS who have progressed on 1 or 2 lines of prior treatment and have not received prior checkpoint inhibitor therapy. The primary endpoint in both cohorts is objective response rate by RECIST, as confirmed by blinded independent central review, with duration of response being a key secondary endpoint.

In each cohort, the demonstration of 9 out of 80 objective responses or an 11.25% objective response rate defines the level of response that satisfies the primary objective of the study, which is to statistically exceed the 4% response rate of Votrient, the only approved therapy for refractory UPS and MFS.

In parallel, our corporate partners, 3D Medicines and Alphamab Oncology submitted envafolimab data from the completed pivotal trial in MSI-high cancer in China as part of an NDA that was accepted for priority review by the Chinese NMPA in January. We believe envafolimab could be approved in China later this year.

We believe dual checkpoint inhibition that includes envafolimab should also be studied in a first-line treatment because a prior study indicated the response rate for dual checkpoint inhibition with Opdivo and Yervoy across all refractory soft tissue sarcoma subtypes was similar to the response rate for first-line chemotherapy.

We therefore expect to begin a new trial of envafolimab and doxorubicin this year to assess safety of the combination. The trial could include a combination of doxorubicin, envafolimab and an antibody to a second target, such as CTLA-4 or LAG-3 as one of our business development priorities is in-licensing another immuno-oncology asset. The clear advantage of this strategy is the potential to market 2 proprietary immunotherapy assets for the treatment of sarcoma patients.

We believe sales of envafolimab in sarcoma could eventually reach $1 billion, which could be further enhanced through marketing a second immunotherapy by TRACON in this indication.

It is important to understand that the extent of our market opportunity in sarcoma with envafolimab at parity pricing is not just the initial $200 million in expected annual revenues in UPS and MFS, but potentially $1 billion as envafolimab could be broadly penetrate sarcoma in the first line, adjuvant and neoadjuvant settings.

If we are able to also license a second immunocology asset that pairs as a combination treatment with envafolimab in sarcoma and also is developed in other cancer indications, TRACON's total potential revenue could vastly increase.

While envafolimab is our most advanced product candidate, we continue to progress 2 other promising clinical stage assets. We expect TRC102 to continue to advance through NCI sponsorship in lung cancer in combination with chemotherapy and radiation therapy.

Data presented at ASCO showed that TRC102 in combination with chemoradiation resulted in a 100% response rate in 15 patients with advanced localized lung cancer, including in 3 patients who had a complete response to treatment. These data compare favorably to the 51% response rate seen in prior trials of chemoradiation therapy for this disease. Imfinzi, a PD-L1 checkpoint inhibitor is now approved as a maintenance therapy for patients with advanced localized lung cancer, whose disease has not progressed following chemoradiation.

We, therefore, believe a randomized trial of chemoradiation with or without TRC102 followed by Imfinzi maintenance is warranted in these patients and expect this concept to advance for CTEP consideration this year. Based on NCI data reported in the publication cancer cell in December 2020 and Phase II data from refractory glioblastoma patients treated with Temodar and TRC102 inhibiting base excision repair with TRC102 is able to induce synthetic lethality in MGMT-methylated patients.

We expect the NCI to report further data this year of the combination of TRC102 and Temodar in an expanded cohort of lung cancer patients. However, we believe the primary focus of further study of the combination is in glioblastoma, where MGMT methylation occurs in approximately 1/3 of cases. We continue to discuss a potential trial of Temodar, radiation therapy and TRC102 in first-line glioblastoma with CTEP investigators.

Our third clinical stage asset is the CD73 antibody, TJ4309, that is being evaluated in an ongoing Phase I dose escalation study as a single agent and in combination with a checkpoint inhibitor Tecentriq.

Data from the ongoing Phase I trial presented at the 2021 ASCO virtual meeting, indicated that TJ4309 was safe and well tolerated as a monotherapy and in combination with Tecentriq. Exposure was dose dependent, and TJ4309 saturated its CD73 target in the blood at all dose levels.

Further, there was evidence of clinical activity in both PD-1 treatment naive and refractory cancer patients following treatment with TJ4309 given with Tecentriq. We are developing TJ4309 in collaboration with I-Mab Biopharma through one of our 2 strategic agreements with them, one for TJ4309 and one for a pipeline of bispecific antibodies.

In the TJ4309 agreement, we are responsible for the regulatory and clinical development of TJ4309 in the U.S. and Europe. Following the completion of the Phase I trial, which is expected in 2022, I-Mab has the right to terminate the agreement for a payment of $9 million.

For the license agreement, if I-Mab elects to license as that term is defined in the agreement, TJ4309 to a third-party in any region outside China, Macau or Taiwan, we are entitled to receive escalating portions of non-royalty and royalty payments.

These range from a high single digit to a mid-teen percentage of non-royalty consideration, as well as a double-digit percentage of royalty consideration depending on the phase of development we complete under the TJ4309 agreement.

As we have noted in the past, in March 2020, I-Mab issued a press release announcing a strategic partnership with KG Bio, whereby KG Bio received what the press release described as a right of first negotiation for exclusive rights to commercialize TJ4309 in multiple Asian, African and Middle Eastern countries for up to $340 million in potential payments to I-Mab. We believe that based on the KG Bio transaction, TRACON has enticed to receive a payment under the TJ4309 agreement, although I-Mab has disputed that this payment is due.

The dispute is being heard before an International Chamber of Commerce arbitration tribunal seated in New York City and will be arbitrated under New York law, with the hearing set for February 2022.

In February 2021, I-Mab sent us a notice reporting to terminate the TJ4309 agreement, which, as I mentioned, would result in I-Mab owing us a prespecified termination fee of $9 million. However, I-Mab does not have an option to terminate the TJ4309 agreement without cause until the ongoing Phase I clinical trial is complete as that term is defined in the agreement.

And therefore, TRACON responded by disputing the basis for I-Mab's reported termination. In March 2021, I-Mab filed a lawsuit in the Delaware Court of Chancery seeking an order of specific performance requiring TRACON to comply with I-Mab's reported termination notice.

The lawsuit was stayed in May and subsequently, this matter was included in the dispute for the arbitration tribunal, which we'll be hearing this matter in February 2022, along with our claim with respect to the bispecific antibody agreement. Pending the resolution of the dispute, we continue to perform our obligations under the terms of both agreements.

Moving on. In the second quarter, we enhanced our senior management team with 3 new hires. Dr. Brenda Marczi was appointed as Senior Vice President and Head of Regulatory Affairs. She was recently Vice President of Regulatory Affairs at Ferring, where she oversaw all U.S. regulatory activities, including the BLA filing for Ferring's bladder cancer gene therapy that received both fast track and breakthrough designation. Her appointment complements the appointment of Dr. Dongliang Zhuang as Vice President of Statistics and Biometrics; and Mr. Ya Huang as Executive Director of Statistical Programming. With these appointments, we have assembled a highly experienced team to lead the filing for the expected envafolimab BLA.

From a business development perspective, we continue to evaluate and pursue additional external clinical-stage assets which would complement our pipeline this year in order to leverage our CRO independent product development platform and second-generation immuno-oncology targets are of particular interest.

We believe our product development platform will continue to allow us to establish key new partnerships that will drive significant long-term shareholder value. Additionally, in September, ForbesBooks will publish the book Unnecessary Expense: An Antidote to the Billion Dollar Drug Problem that is offered by TRACON senior management and is now available for preorder on Amazon. The book details the advantages of TRACON's CRO independent product development platform and profit share deal structure that provides for rapid and high-quality development of novel drug candidates.

We believe our platform serves as a compelling solution for companies who wish to access the U.S. pharmaceutical market and retain a substantial share of their products' profitability.

In July, we raised approximately $13.5 million in net proceeds in an underwritten common stock offering. With the capital raise, we estimate that our cash runway now extends into 2023. This provides us with a cash runway for more than a year passed initial interim ENVASARC efficacy data expected at the end of this year and pass expected final ENVASARC data expected in 2022.

We expect our enhanced balance sheet will increase the impact of important 2021 milestones and provide capital to execute clinical trials of potential new drug candidates we may add to our pipeline.

At this time, Scott will provide an update on our financials.

Thank you, Charles, and good afternoon, everyone. TRACON's research and development expenses were $3.1 million and $5.4 million for the 3 and 6 months ended June 30, 2021, respectively, compared to $2.2 million and $4.2 million for the comparable periods of 2020. The increase was related to enrollment in the pivotal ENVASARC trial in 2021. General and administrative expenses were $6.1 million and $8.8 million for the 3 and 6 months ended June 30, 2021, respectively, compared to $2.1 million and $4 million for the comparable periods of 2020.

The increase was related to legal expenses for the now state Delaware case and ongoing arbitration with I-Mab. Importantly, we expect Q2 of 2021 to be the high point for G&A expenses this year. Our net loss was $8.9 million and $14 million for the 3 and 6 months ended 2021 respectively, compared to $4.5 million and $8.5 million for the comparable periods of 2020.

Turning to the balance sheet. At June 30, 2021, our cash, cash equivalents and investments totaled $25.6 million compared to $30.4 million and $36.1 million at March 31, 2021 and December 31, 2020, respectively. With the net proceeds of approximately $13.5 million raised in July, we expect our current capital resources to be sufficient to fund our planned operations into 2023.

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

Thank you, Scott. To recap, we continue to execute our clinical development plan around our lead product candidate, envafolimab, and have made substantial progress in the ENVASARC pivotal trial. We have now completed each of the 2 DMC safety reviews and expect to complete the initial interim efficacy assessment and summarize top line data prior to year-end.

We believe the ENVASARC trial provides a potential fast-to-market opportunity to deliver envafolimab to sarcoma patients in significant need of a new therapy as expeditiously as possible. Importantly, we believe our recent capital raise will be sufficient to fund the company into 2023, which is more than a year of following expected initial interim ENVASARC efficacy data and pass expected final ENVASARC data, which could demonstrate the potential for envafolimab to rapidly transform the standard of care for refractory sarcoma patients.

We also continue to expect to leverage our unique product development platform and profit share deal structure to further enhance our pipeline and leverage our ability to execute clinical trials at low cost and thereby avoid the unnecessary expense of CRO conducted clinical trials.

We look forward to providing further updates in the coming months 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. Thank you for your time and attention.

And we are now available to answer your questions.

(Operator Instructions) Our first question comes from the line of Maury Raycroft of Jefferies.

Congrats on the progress. Maybe first question is just I think on the first quarter call, you said that you plan to have all 25 sites open for ENVASARC by the end of 2Q. And so I'm just checking to see if you have opened all the remaining sites. And is there anything else you can say on enrollment and maybe discontinuation rate or safety at this point?

Sure, Maury. I appreciate the question. Yes. So we've been opening sites as we speak. We actually have 26 sites initiated which is actually our target for the entire study. I will say more, there has been a lot of interest at some sites that were not initially included in the 26. So you actually might see some more sites come on beyond that. But right now, we've opened 26 sites. Our goal is 25. We did open 26 so far. And in terms of accrual, we're on track with respect to having 36 patients in this quarter, which would then allow the interim efficacy analysis to be delivered by end of this year.

In terms of safety, I can tell you that we've had now 2 safety reviews. There were no comments with respect to changing the study protocol at either the 3-week or 12-week period after enrollment of the 20th patient. I would say, in general, we've seen envafolimab as expected to be well tolerated as a single agent. And also, I would say it's been very well tolerated with Yervoy as a dual checkpoint inhibitor strategy.

Okay. That's helpful. Are you seeing any difference on the profile versus, I guess, with potentially some benefit on colitis or even [ISR's new guidance]?

Yes. I would say just overall, both as a single agent, Maury and in combination with Yervoy, both cohorts, it's been a very tolerable regimen. I won't get into specific details other than to say, as expected, envafolimab as a single agent and also with Yervoy, that's been a very tolerable drug.

Got it. Okay. That's helpful. And then, together -- sorry, go ahead.

No, I appreciate the question, yes. Go ahead.

And then the other question I had was just on -- we noticed on ct.gov, that 2 new Phase IIs posted by 3D, one is in solid tumors and then the other one is in biliary tract cancers. And just wondering if you can provide any more insight into the strategy behind those studies? And if they could factor into TRACON's development plans? And will they be enrolling any patients in the United States?

Yes. No, I think -- great question, Maury. I think -- so the biliary tract cancer trial, I think is relevant for the following reason. So they are currently enrolling a trial in biliary tract cancer in China. And they have orphan drug designation for biliary tract cancer designation in the U.S. So we expect that they'll probably have a readout on that trial in China maybe in a year or 2 years. And I think on that clinicaltrials.gov posting that you mentioned, their -- I think the initial startup date is roughly in the time period where you would expect final data from the Chinese study. So we don't think it will have a major impact anytime soon with respect to a U.S. label. And I think it will be important to see what the data is coming out of China initially in order to assess the impact of the U.S. potential plan trial.

Our next question comes from the line of Jason McCarthy of Maxim Group.

This is Joanne Lee on the call for Jason McCarthy. For my first question regarding the positive DMC review announced last week. Just wondering if you could comment on whether you guys saw any differences observed in terms of safety and tolerability between the subset of patients treated with envafolimab in a single agent capacity versus those treated with the combination of enzyme Yervoy?

Joanne, thanks for your question. Yes, I would just say in both cases, the drug as a single agent or in combination with Yervoy was very well tolerated. I would also mention that, as expected, when you're receiving 2 checkpoint inhibitors rather than one, you're going to see some more adverse events with respect to Yervoy's known side effect profile. And that was expected and given it was expected, didn't change with respect to how the protocol is being implemented.

Great. And can you just shed some color on when we might potentially be expected to see additional data readouts with respect to your TRC102 platform?

Sure. Yes. So I think with respect to TRC102, I think in fourth quarter, we'll see the NCI present data from a study that's been ongoing for a couple of years, which is a study of TRC102 and Temodar in patients with solid tumors. It was initially a Phase I study, but based on activity seen in ovarian cancer, colorectal cancer and lung cancer in the Phase I portion, they enrolled 3 separate expanded cohorts. And they've reported already in the colorectal cancer cohort, which is actually very nice data to help really confirm the fact that MGMT methylated patients seem to be particularly sensitive to Temodar plus TRC102. And that was the data published in cancer cell last year. That corroborated data we had in GBM from earlier in 2019. This year, before end of the year, I would expect to report data on the lung cancer cohort of treatment with Temodar, TRC102. So that's the data I expect to see. I'm not sure which conference, but I do expect to see those data this year.

Congrats on all the progress.

Thank you, Joanne.

Our next question comes from the line of Ed White of H.C. Wainwright.

So just a question on the TJ4309 arbitration and the impact on SG&A expenses. What were the legal expenses? If you could break those out? And you said that the second quarter should be the high point of the year. Do we expect to continue to see litigation expenses throughout the year, and this is the highest quarter? Or how should -- or do they go away? How should we'd be thinking of that?

Yes. Thanks, Ed. Yes, so to answer your first part, we haven't broken them out, but you could assume increase from last year. The majority of that would be related to legal expenses in Q2. And then going forward, we expect Q3 and Q4 to be more similar to Q1 because the majority of those expenses were due to the Delaware lawsuit. And since that was stayed, we won't have expenses for that going forward. And the ongoing ones are just related to arbitration as they were in Q1.

Okay. And how should we be thinking about arbitration? It sounds like it's a timing matter and a question of $9 million. It seems as if they do want to get out of the agreement, in which case they would owe you $9 million according to the contract according to you guys. Is that the end of it? Or is there a chance that you can continue to develop past Phase 1?

Yes. So with TJ4309, Ed, as we mentioned in the call, there's a revenue sharing provision with respect to any deal that I-Mab does around TJ4309 prior to terminating the agreement. And for instance, we believe that the deal they did with KG Bio has triggered a payment under that stipulation in the agreement. But then at some point for instance, at the completion of Phase I, they do have the -- they are entitled to terminate the agreement. And if they serve a termination notice that's valid at that time, we will obviously respect that. And until that time, we would expect to be part of any revenue sharing deals that they would do, including the previous one they did with KG Bio.

Okay. And just a question on enrollment. So you have a nice time line there. I was just wondering with the 26 centers sites and maybe more have anything been impacted by the Delta variant? And do you expect to see any kind of impact to them before you get -- reach full enrollment?

Yes, it's a great question, Ed. Yes, I would say right now, we haven't seen a significant impact of COVID. I'd say whether it was COVID alpha or COVID delta. And I would say that because these are sarcoma patients that have very few treatment options that need therapy. And so the centers have been used to dealing with COVID restrictions in terms of how we space our patients in the waiting room, for example. But they have to continue to treat these patients. And so I don't think we've seen a major impact, either COVID Alpha during the initial portion of start-up for ENVASARC or even more recently COVID Delta. It just hasn't come up with investigators. I haven't specifically asked about it, but it just hasn't even come up on investigator calls as an example. That said, we'll keep a close eye on things. But right now, it hasn't been an issue. We have protocol guidelines to allow patients to be vaccinated on study, and we encourage that. So we're doing everything we can to protect patients as well.

Our next question comes from the line of Matthew Cross of Alliance Global Partners.

I had 2 quick questions related to ENVASARC. First, I'll kind of ask a different question directed at enrollment building on these guys. I was curious to get some additional granularity given that you stated both this week and I think back in June that at least 10 patients per arm or at least 20 patients total have been analyzed for safety in ENVASARC. So that's, I guess, just over half of that 36 patients that you ultimately for this first interim. Curious if the similarity in terms of numbers between those 2 safety updates over a couple of months, it seems like the differentiating factors is the time for follow-up but now that's through 3 months. I was just hoping we could break that down a little bit. Have more than, I guess, that number if we say 20-plus been enrolled, but simply not followed for the 3 months. That's been most recently alluded to in the safety analysis? Or should we expect kind of a bolus of patients to be enrolled imminently to support the 36 patients that you're hoping to get by the end of this quarter.

And then secondly, I just wanted to clarify, related to the interim efficacy assessments that these are effectively futility determinations more or less, I would imagine, if ORR is above 11% for either arm at either of these readouts, and then we'll start with the first, obviously, that would in my view be essentially a positive indicator for the outcome of the full trial, but I'm imagining that you would not be -- that wouldn't be sufficient to file or that you wouldn't take data on 36 patients to the FDA for an approval.

Thanks, Matt, for questions. So just to clarify on the safety review, these are mandated reviews by the protocol such that they occur at specific time points after enrollment of the 20th patient. So to be clear, we've been a little far more than 20 patients as of the current date. And we've done that. So that allows us to then present the interim efficacy data on 36 patients by year-end given the 3-month delay in getting all the scans for those patients.

So to be just crystal clear, 20 patients were enrolled as of May. And once the 20th patient enrolled, 3 weeks after that patient was enrolled was the first DMC safety analysis. 12 weeks after the 20th patient was enrolled was the second DMC safety analysis. So it's done on the 20 patients enrolled with a fixed time period between that patient enrolling and then aggregating all the safety data from the treatments that they have received.

So to be clear, patients have been enrolling since May after 20 patients were in to the point where we can confidently project that we'll have 36 patients in this quarter for which we'll have efficacy data that will allow us to then do the first interim efficacy assessment and report those data publicly.

With respect to the efficacy analysis, as I alluded to in the script, the futility rule is again specified by the protocol that we have to have at least one confirmed response in the first 18 patients who have had at least 3 months of scans within each of the 2 cohorts in order to continue that cohort.

As you pointed out, the efficacy bar to continue enrollment is different from the primary endpoint goal, which is an 11% response rate. The only way we would terminate this trial early would be if we achieve the 9 anticipated responses minimum bar, before we enroll 80 patients. And then only in that case, would it be after we discuss those data with the FDA. So for example, we have 9 responses, just say for sake of argument in 40 or 50 patients which obviously would meet the bar of the study because 9 of 80 is an 11% response rate, then we could think about approaching the FDA. So that will be determined in real time.

(Operator Instructions) Our next question comes from the line of Nick Abbott of Wells Fargo.

Great. Congrats on the progress, Charles. And if I place a preorder for the book, can I get the first question next quarter?

I'll let you buy one for every family member and relative.

Okay. Fair enough. So really, just in relation to that last question, and just to make sure I understood your answer clearly is, you do see a potential opportunity for an early filing. In relation to that, can you talk about securing supply of commercial enva in the U.S.? And also, presumably, you intend to reference the safety data that's been submitted to the regulatory body in China?

Yes. Great questions, Nick. I think -- so with respect to the commercial production, our partners in China and Alphamab is really the commercial production partner. They're in the process of producing commercial scale for the anticipated launch in China. They filed for approval in January, the -- or excuse me, December, they got priority review in January.

So we expect they'll be approved this year, and then that will launch -- actually the commercialization partner in China is Simcere, which has a large commercial sales force there already.

So we would expect to use the product that they will produce for commercial sales from China as part of our commercial, if you will, supply the appropriate time, which, again, is late 2023 as the early projected launch period. So that will, I think, is a big advantage for us because it should already be commercially available in China well in advance of when we would market and need supplies in the United States. So that's, I think, an important consideration. And then -- I'm sorry, your second question was about the..

About the safety database...

Yes, sorry, BLA filing, yes, so actually that's a great question. We're actually discussing that internally that there is an incredible safety database available in our patients with those 700 -- excuse me, our partners with those 700 patients with the drug as a single agent, some with chemotherapy as an example. That said, our new Head of Regulatory, Brenda Marczi, has made it clear that you don't have to necessarily include every patient data point from studies done outside your IND in order to successfully file a BLA. So we're discussing what would actually be the optimal BLA filing package. And because we have orphan drug designation, especially, we may not need to, for instance, include every safety data point from trials done outside of our IND.

So that's something that stay tuned on that discussion. But I think it's an important point that we're discussing in light of our new Head of Regulatory, Brenda Marczi, who has a lot of experience filing and interacting with the FDA around these types of questions.

Okay. And then just going back to Alphamab. Has that facility being subject to an FDA visit and review?

Yes, you could assume it hasn't been FDA inspected with respect to -- it hasn't been a basis for filing for approval. I would say without breaching confidentiality, has been expected by international regulatory authorities. So I could tell you that, Nick. And we remain confident of their ability to produce commercial supplies for us as well.

Okay. Terrific. And then in terms of the second immunotherapy asset, you're considering. Can you provide any commentary about how far along you are in securing that asset? And also, you kind of mentioned that you might want to use that for the dox combo trial starting this year, which clearly would need to have an IND approved in the U.S., I'm assuming or at least be IND ready unless you consider adding that on later.

Great point, Nick. Yes. So we're looking at several assets at this time, and we've been in discussions with several companies for a prolonged period of time. I would say our goal still remains to get 1 or 2 deals done this year. To your point, it could be that it's an IND-ready asset, whereby we'd still do an initial safety trial before combining, for instance, with enva and dox. So if that's the case, we could do the enva/dox initial combo and then add that on in a little bit later time frame.

Some assets that may already, for instance, have clinical data, whether it's open U.S. IND or an IND for instance, in Australia could more logically plug straight into a combination trial with dox and enva. So I think there are potential assets on the board that in both those categories, Nick, and we're excited to continue those discussions with the hope of licensing 1 or 2 more assets this year.

Okay. Perfect. And then next one for me. It sort of builds on the previous conversation. Do you wish that you just sort of given 4309 back and collected the $9 million. I know there's not a -- I mean, I'm assuming you have the option to do that. Obviously, I-Mab doesn't have a contractual right to do there. Or do you feel like that the potential payments you can get if they enter into additional commercial collaborations are considerably -- a considerable value and perhaps what you think those -- that might be?

Yes, it's a good question, Nick. I think the disputes are around 2 agreements, the TJ4309 agreement and the bispecific antibody agreement. And our position is to respect the agreements to respect the contractual requirements and obligations in the agreement. And that's going to be our position going forward, and we'll continue to move in that direction. To your point, I think that if you think on a pure business standpoint, just from TJ4309, it's -- yes, you could potentially terminate and take $9 million, but it wouldn't be a legal termination. So given there's a dispute already going on with that agreement, and also the bispecific agreement, we just didn't feel that was the right course of action for our company.

Okay. And last one for me, Charles. On the base excision repair inhibitor, given this resurgence of interest in synthetic lethality, I'm kind of surprised that there's not been more interest, inbound interest in companies wanting to add what is a clinical asset with an known safety profile or the alternative that you've not looked to bring in an asset to pair with base excision repair inhibitor?

No, it's a good question. I mean I think we really want to see what TRC102 I think what will really distinguish the asset is randomized data. And I do feel good about what will happen this year with respect to TRC102 being advanced into a randomized trial in advanced localized lung cancer that will definitively prove whether it's active or not.

I think we've had very encouraging single-arm data but we need randomized data. I think those data will then elevate the profile of that asset, both with respect to external potential partners, but also internally in terms of how we prioritize the asset. So I think to your point, it's an undervalued asset, but I do think the wheels are turning, which will generate data that could make it much more appreciated by external -- potential external partners.

Our next question comes from the line of Soumit Roy of JonesTrading.

Soumit, you might be on mute.

I was on mute. The first one is on the enva and dox, and apologies if I missed that point. Are you planning to start the frontline trial this year? And are you -- and another one is on the burn and the financial guidance you're thinking cash into 2023, but it looks like you're burning about $28 million to $30 million a year. And you're also considering in license further I/O assets. So are there any milestones we should be modeling in, in our model?

Sure, Soumit. Yes. So with respect to your first question about enva and dox, yes, we do expect to see that trial open this year with respect to enva dox. And again, it could be a third agent in there as well for Nick's question. But the initial study of enva/dox first line, would you expect to initiate sites this year. I think there's a lot of interest in that trial, I will say, from initial sites that are part of the ENVASARC trial, a lot of them would like to be part of a frontline trial.

And those would be subtypes of sarcoma beyond UPS MFS to be clear. And so that's definitely something of keen interest to investigators. With respect to spending, I think, as Scott pointed out, we expect the peak in G&A to be this year related to the -- there's now state Delaware Chancery Court case. And then following that, in quarter 3, quarter 4, we'll see the spend be more similar to quarter 1. And so we've taken that into account to project the current cash position to get us to 2023.

Now you did mention we are looking for new assets, but we're looking for new assets, we're looking to do it in a way that leverages our product development platform with CRO independent research that would be consistent with the prior agreements whereby we haven't paid significant upfronts, and we haven't paid significant milestones, but what we give our partners is that really, really beneficial profit share on the back end and our motivation to move their product forward very quickly.

So really, the cost when we think about a new asset is the cost of actually doing the trial. And that brings in play what we have in terms of capabilities here in our special sauce, so to speak, is our ability to execute trials. To do a 30-patient trial, we estimate the cost is about $3 million, and that's spent over about 8 quarters. So when you start breaking that down, you're talking about incremental spend that's almost immaterial with respect to our overall cash expenditures.

So we can still license assets in, employ our platform do Phase I and early stage development without a significant spend in terms of the burn. I would point out that we're not including any nondilutive capital that could come in, as we discussed earlier, for instance, from partners opting to terminate current agreements around TJ4309. But even without those non-diluted capital payments, we're confident of our position to get into 2023. And I know a lot of companies couldn't make that statement, Soumit, but again, it plays in the fact when you're CRO independent and you have really no significant manufacturing responsibilities because those are done by your partner, your developmental costs become incredibly -- or developmental expenses become incredibly low.

(Operator Instructions) There are no further questions at this time. I will now turn the call over back to Dr. Charles Theuer, President and CEO of TRACON Pharmaceuticals for closing remarks.

Thank you, everybody, for your attention and for your questions. We look forward to speaking to you again next quarter. Stay safe.

This concludes today's conference call. Thank you again for participating. You may now disconnect.