Coherus Oncology, Inc. (CHRS) Q3 2026 Earnings Report, Transcript and Summary

Good day, and thank you for standing by. Welcome to the Q3 2026 Coherus Oncology, Inc. Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Carrie Graham. Please go ahead.

Thank you, Heidi. Third quarter earnings conference call. Joining me are Denny Lanfear, Chief Executive Officer of Coherus; Dr. Rosh Dias, Chief Medical Officer; Dr. Theresa Lavallee, Chief Scientific and Development Officer; Sameer Goregaoker, Chief Commercial Officer; and Bryan McMichael, Chief Financial Officer. Before we get started, I would like to remind you that today's call includes forward-looking statements regarding Coherus' current expectations about future events. Actual results may vary significantly, and we undertake no duty to update or revise any forward-looking statements. Please see the press release that we issued today and our quarterly form on Form 10-Q for more information on risks and uncertainties. And now I'll turn the call over to Denny.

Thank you, Carrie, and good afternoon, everyone. Thank you for joining us on our third quarter 2026 earnings call. As you know, we have spent the last few years transforming Coherus from a biosimilars company into an innovative oncology company focused on overcoming immune resistance in cancer. We've made substantial progress in reducing our debt, lowering our operating expenses, establishing LOQTORZI in the market and advancing our clinical pipeline. We've conducted key clinical trials and developed sufficient data to set future development direction for our tagmokitug program and select the go-forward dose. Today, I will discuss 3 strategic alternatives designed to make Coherus a financially self-sustaining innovative oncology company with best-in-class and first-in-class products by the end of 2027. First, the strategic prioritization of esophageal cancer is our focus for best-in-disease for tagmokitug. Second, the structural and financial benefits that flow directly from this prioritization. And then finally, our emphasis on driving LOQTORZI revenues over the next 4 or 5 quarters to a level where they can fully support the company's core cash burn. When we launched tagmokitug clinical program, it was with a clear expectation that we would select the most promising area for continued development. This is exactly what we have done. As we reported on October 28, over the last 2 years, we have explored a wide range of mucosal system cancers from head and neck, esophageal, gastric, colorectal across various lines of therapy to understand where Treg depletion might best be advanced as combination therapy. The emerging data from this very systematic clinical investigation demonstrated that esophageal cancer comprises a best-in-disease opportunity across first and second lines of therapy. Accordingly, going forward, we will be sharply focusing our tagmokitug development efforts there as this provides a substantial number of benefits. First, providing a treatment alternative to patients confronting a particularly difficult cancer with poor prognosis. Second, our integrated approach across first and second-line therapy will seek FDA support for rapid, efficient and affordable development path, leading to accelerated approval. Third, this enables ex-U.S. partnering. Our encouraging interim data in combination with toripalimab and our development efforts focused now enables partnering discussions for ex-U.S. rights. Toripalimab is approved in Europe and other regions for the treatment of ESCC, irrespective of PD-L1 status and is being widely adopted in those markets. Esophageal cancer is the sixth in terms of annual cancer deaths globally, where over 400,000 patients are impacted annually, particularly in Asian countries. Our objectives for ex-U.S. partnering include. One, use of these upfront payments to offset clinical trial expenses and support the accelerated approval process. Secondly, partner funding for ex-U.S. registration trials in their territories, significantly lowering the portion of overall cost that Coherus would need to incur. And third, leveraging the global regulatory constructs such as FDA's Project Orbis for harmonizing approvals across regions to the benefit of all parties. With data and clinical direction in hand, we are now engaging a financial adviser to conduct the tagmokitug partnering process, particularly with companies in countries with a high incidence of esophageal cancer. We'll keep you informed on our progress. Now let me address the structural and financial benefits derived from our strategic prioritization in esophageal cancer. Over the last 2, 3 years, we have pursued a broad development program across several cohorts, indications, more than 120 patients to identify the most promising indication of interest in the go-forward dose. But these objectives have now been both met with the dose indication both identified for FDA discussions over 2027. At the same time and somewhat fortuitously, 2 other concurrent events provide rightsizing and cost reduction opportunities for us. First, our process transfer of toripalimab from China to the U.S. is now complete as of Q3 '26, and the action date for the FDA for the drug product portion of the application is November 30. You may recall the drug substance has already been approved earlier this year. This allows us to reduce the ongoing costs associated with this transfer and approval, which increased the burn over the last 2 years. Second, our transition services agreement with the acquirer of UDENYCA, Intas Accord, is now pretty much wound down, allowing us to further reduce our footprint across the company. These TSA efforts were very labor-intensive for us and artificially inflated our cash burn and were confusing for investors. The confluence of these 3 events, strategic prioritization, wind down the TSA and the imminent manufacturing transfer approval allows us an ideal opportunity to align and rightsized our organization, consistent with the reduced scope of our efforts. Accordingly, we are announcing today that we are implementing projected 30% headcount reduction and intended expense reductions. Our CFO, Bryan McMichael, will elaborate more on this in just a moment. But let me give you just one key metric so you can understand the benefits in context. These rightsizing and prioritizing reductions amount to $6 million to $7 million a quarter, which reduces the quarterly LOQTORZI revenues required to support the core burn from a previously guided $30 million to $35 million a quarter down to $25 million to $30 million a quarter. This positions us to more readily establish a sustainable operating model, allowing us to continue investing in our high-value clinical opportunities with greater financial independence. Next, let me address commercial and revenues, and Sameer will provide more data directly, but I'll just summarize here a few of the key growth drivers. While we continue to make steady progress in penetrating the NPC market, our current share is approximately only 20% to 22%. This means that too many patients are still receiving inferior therapy, and this represents a key growth opportunity for us. Also, the relatively low market share results in quarter-to-quarter volatility and lumpiness when one of the regions get a disproportionate number of patient fluctuations such as discontinuations. This has to be addressed by increasing market share and penetration to damp out this. There is substantial opportunity remaining with about 30% of the patients continuing to receive chemotherapy alone and not benefiting from the LOQTORZI 6-year survival of 64.8 months versus 33.7 months with chemotherapy alone. Over the next year, we'll need to dramatically reduce that 30% share by focusing on identifying these patients and reaching their providers who can then prescribe LOQTORZI in combination with chemo per our label. Given the compelling survival data, this objective appears reasonably within reach over the next 12 months. We also plan to address the 40% of the patients who are being treated with off-label immunotherapies that lack clinical evidence of efficacy. This share is steadily going down, but faster progress is needed here also. Physician reach and education are key here. So HCPs know that we have superior data versus chemotherapy alone in our standard of care. Progress has been made here over the last 3 quarters, and Sameer is going to tell you about that and our strategies to reach these physicians. Finally, our payer strategy is starting to bear fruit as the step edits in place have proven very effective in modifying all prescribing behavior. They make physicians pay attention. So this is a successful strategy we are extending in 2027. With that, I'll now turn the call over to Rosh Dias, MD, our Chief Medical Officer. Rosh?

Thank you, Denny. Today, I'm going to talk to you about why we have selected esophageal cancer for future development as a best-in-ease approach. We intend to pursue a second-line esophageal cancer study with both ology, esophageal squamous cell and esophageal adenocarcinoma as reported from our TREGCHECK 102 program in Q2. Firstly, the strength of the signal. Secondly, the high unmet medical need, particularly in the second-line setting where chemo alone is the current standard of care. And thirdly, the opportunity for a fast aftermarket strategy, leveraging FDA designations and development construct. Let me start by addressing the second-line esophageal data and our plans. In this setting, we demonstrated activity in both squamous and adeno histologies at the go-forward dose of 700 milligrams tagmokitug with toripalimab. This includes 9 evaluable second-line esophageal cancer patients, 3 adenocarcinomas and 6 squamous cell carcinomas. The overall response rate data were very promising as we saw 3 confirmed PRs plus 1 unconfirmed PR, that is a 33.3% confirmed ORR and a 44.4% unconfirmed plus confirmed ORR. This activity exceeded the chemo-only benchmark of around 10% ORR in this area of high unmet medical need. Additionally, the clinical benefit rate was 55.6% with 2 patients remaining on treatment for over 5 months and 2 additional patients on treatment that have not yet had their first tumor scan. Importantly, this was a randomized study across the 2 doses with 22 patients treated to date. Of the 300-milligram tagmo dose in combination with Tori, there were no responses and all patients progressed by 4 months. This demonstrates 2 key findings. One, these data show that toripalimab in the second-line setting has limited activity, thereby establishing contribution of effect. Second, it gives confidence in the tagmo go-forward dose of 700 milligrams as it exhibits clear dose-dependent activity. Very importantly, both in terms of response and duration, activity was observed both in patients who are PD-1 refractory and also patients and tumors that are PD-L1 low or negative, meaning that tagmo-tori doublet both rescue PD-1 resistance and also demonstrated activity in cold or PD-L1 low or negative tumors. These data, irrespective of histology informs next steps and provide the opportunity to progress our next study in second-line ESCC and second-line EAC, a similar approach to that taken in the pembrolizumab Phase III KEYNOTE-181 study. Our study will investigate the tagmo-tori doublet versus chemotherapy. Our immediate next step is to meet with the FDA to align on 2 topics; first, the recommended Phase II dose to ensure we have satisfied the requirements of Project Optimus. And second, the second-line esophageal cancer study design and any potential for the data from this next study to support expedited development, including accelerated approval. Let me now review for you again the first-line setting interim data. In our first-line ESCC study, a safety cohort with target enrollment of 12 patients with 700 milligrams of tagmo in combination with tori and cisplatin and 5-FU. We demonstrated an overall response rate of 89% and a 100% ORR in PD-L1 positive patients, including 1 complete response. That is 8 out of 9 of the efficacy evaluable patient population, importantly, with activity irrespective of PD-L1 status. The duration is also notable with 2 patients demonstrating activity for close to 8 months. The safety profile was manageable and acceptable whilst 4 of the 10 safety evaluable patients discontinued due to AEs. This rate was not dissimilar to that seen in the CheckMate 648 study and 50% of the discontinuations were due to cisplatin-related renal toxicity, which we plan to mitigate by topping out cisplatin, oxaliplatin for the future study. In terms of the unmet medical need in first-line ESCC, there are 3 FDA-approved PD-1 chemo combinations for first-line disease, all with a limitation to PD-L1 positive patients only with ORRs ranging from 44% to 59% in PD-L1 positive population. Of course, with the usual caveat of cross-trial comparison, the fact that activity with the tagmo-tori chemo combination was seen irrespective of PD-L1 status and equates to 100% in PD-L1 positive evaluable patients speaks to the potential to improve on the current standard of care. The current SOC in PD-L1 positive disease typically provides a median PFS of around 7 months. And whilst durability is not as yet mature in this cohort, we look forward to continued follow-up for PFS. These impressive first-line data provides us additional confidence in the Treg mechanism across esophageal cancers. We intend to address the first-line ESCC opportunity after we progress the second line as part of our integrated development strategy and commitment to the disease. In summary, these data confirming tagmo clinical activity in addition to the established strong pharmacology previously communicated, support continued advancement and this focus on second-line disease in the esophageal histology represents an area of clear unmet medical need where a chemo-free option will be well appreciated for patients. With that, I'll hand over to Sameer. Sameer?

Thank you, Rosh. Third quarter net sales were $14 million, representing 3% quarter-over-quarter growth and 25% year-over-year growth. While sequential growth fell short of our 10% to 15% target due to slower new patient starts in a few territories, underlying drivers of long-term growth remain stable. Nationally, growth in accounts purchasing LOQTORZI for the first time was in line with the second quarter. Patient discontinuation rates were also consistent with prior quarters and duration of treatment continued to increase gradually. Based on a detailed assessment, we believe demand fundamentals remain strong and that localized patient flows in select territories tempered growth this quarter. Our long-term goal is to achieve a dominant market share in the NPC space by displacing suboptimal chemotherapy only and off-label IOs. We have made significant investments to achieve these objectives. Due to the rare nature of NPC and patient flow dynamics, these efforts will take time. That being said, recent market research revealed positive leading indicators of demand and strong physician sentiment. We surveyed both academic and community oncologists to assess their perceptions of LOQTORZI and to help inform our view of future demand. The results were encouraging. 75% of surveyed oncologists now view LOQTORZI as the standard of care in NPC compared with fewer than 35% who hold a similar view for off-label IOs. This represents a significant favorable shift in opinion towards LOQTORZI since the last survey in early 2026. We believe this shift is driven by our focused promotional efforts on the LOQTORZI superiority story. In addition, 57% of oncologists are now aware of a 6-year overall survival data. Recall that this data demonstrated a near doubling of survival with LOQTORZI plus chemotherapy versus chemotherapy alone. We are pleased to have achieved this level of awareness within 3 quarters of the data being available. To convert these favorable physician perceptions into accelerating demand, we are focused on 3 priorities. First, our field team remains focused on using claims-based alerts to identify physicians who use chemotherapy alone. About 1/3 of eligible patients still receive chemotherapy alone, and our educational efforts are geared towards minimizing the use of this suboptimal treatment. Second, we're now collaborating with large clinical organizations to identify patients who are not receiving LOQTORZI per the label and per the NCCN guidelines. We are then working to educate physicians within these partnered organizations on the superior survival benefits of LOQTORZI. And third, we are partnering with major national and regional payers to establish a preference for LOQTORZI in eligible NPC patients. Where these payer partnerships are already in place, our share of addressable patients is approximately double the national average. We are now expanding these payer partnerships with the goal of covering a majority of U.S. covered lives. We've previously guided that we would achieve a $15 million quarter in 2026, and we expect to achieve that guidance in Q4. Longer term, we remain on track to reach peak market share by 2028, consistent with our prior projections. I'll now pass the call to Bryan McMichael, our Chief Financial Officer.

Thanks, Sameer. I will start off today by discussing Coherus' liquidity, plans for managing cash burn and the advantages of the organizational rightsizing we announced today, including cost reductions and expected savings. At the end of Q3 2026, we had $83.6 million in cash, cash equivalents and investments, which is down $21.7 million from $105.3 million at the end of Q2. This change reflects an expected reduction in cash burn. The use of cash in operations for Q3 was $34 million, which is a 43% decline from the quarterly average in the first half of 2026. As we signaled on the last earnings call, the slowdown in cash burn was primarily due to a significant reduction in cash being used to pay down TSA payables and accrued liabilities associated with the divested biosimilar business. As announced previously, during Q3, we paid off our $38.7 million term loan using the proceeds of a new $55 million term loan that closed during the quarter. This refinancing contributed a net $11.5 million in cash to the balance sheet. As Denny outlined, the strategic prioritization will yield significant benefits to further reduce burn. Once implemented, we expect a sustainable reduction in recurring costs of $6 million to $7 million per quarter on average and expect to achieve most of this rate of savings within 2 quarters. These savings will come primarily from an approximately 30% reduction in headcount from about 140 to 100 FTEs, which will take place this month. While these reductions will come from across the organization, we are preserving substantially all the commercial organization as we prioritize driving the growth of LOQTORZI sales. Consistent with our strategic prioritization, we plan to achieve savings by deprioritizing certain tagmokitug indications. Once successfully executed, these actions would help to extend the cash runway and reduce ongoing core costs, which comprise all the noncash costs of the business other than development costs. This lowers the quarterly LOQTORZI revenues required to cover these core costs from $30 million to $35 million as we previously guided to $25 million to $30 million per quarter. Coherus recently received the revenue report in connection with the UDENYCA divestiture. Only a modest audit adjustment would be required to reach the earn-out threshold for the first $37.5 million milestone as the reported net sales came very close to meeting the threshold in the first earn-out period. As permitted under the purchase agreement, we are exercising our audit rights and other contractual rights, and we will thoroughly review the reported results. As a reminder, we will get the report on the second $37.5 million milestone after Q1 2027. Without considering the potential benefit of the cost reductions, the payment of the milestone or proceeds from ex-U.S. deals, our cash runway is less than 12 months from the date of the 10-Q we filed today. As such, that quarterly report included going concern disclosures to reflect this. As the -- on the expense side, we had another strong quarter reducing costs versus the same quarter in the previous year. As covered by Sameer, LOQTORZI revenues were $14 million, up 3% from the prior quarter. While we remain optimistic about the future growth trajectory of LOQTORZI, the lumpiness experienced this quarter was greater than we anticipated. So we're revising the range of our revenue outlook for the year to $54 million to $57 million. Turning to expenses. R&D expense from continuing operations for Q3 2026 was $22.6 million, down from $27.3 million in the third quarter of the prior year. The decreases were primarily due to reduced headcount, lower infrastructure costs and lower clinical trial and R&D manufacturing costs. SG&A expense from continuing operations was $21.2 million in the third quarter, which is down from $24.9 million in Q3 2025. The decreases were primarily due to lower headcount, decreased operating costs resulting from Coherus completely exiting the biosimilar business in 2025. For the full year 2026, we reiterate the expectation that combined OpEx will be between $170 million and $175 million. With that, I hand the call back over to Denny.

Thank you, Bryan. Let me summarize first with respect to our molecule, tagmokitug, and then I'll review the strategic plan for you. We've now shown we have the right drug at the right target in the right disease to advance development in esophageal cancer. These results exceed benchmarks in first line, expanding on current chemo IO options and second line address the high unmet need with a chemo-free option. Esophageal cancer is the sixth most fatal cancer worldwide. In the U.S., approximately 18,000 cases will be diagnosed each year, 16,000 people will die of the disease. Our immediate next steps are, first, to follow up with discussions of interested parties, both in the U.S. and ex-U.S. We're initiating these discussions. Secondly, align with the FDA on dose trials and development strategy and options for expedited development. Now regarding the strategic prioritization, as Bryan described, we're rightsizing the organization to align with our sharpened focus, thereby reducing costs. We're going to drive the commercial sales towards core burn breakeven as quickly as possible in 2027. And we'll pursue nondilutive funding options, including ex-U.S. partnering transactions. Operator, we're ready for the questions.

[Operator Instructions] Your first question comes from Paul Jeng from Guggenheim.

I appreciate all the details on the call today. For tagmo, can you expand a little on how you're thinking about the potential regulatory path in the second-line setting? Is this a trial perhaps where you could use PFS or even ORR as an interim for accelerated approval within a Phase III? And how strong is the precedent for combining esophageal squamous cell carcinoma with EAC in this setting?

Thank you, Paul. I'll let Dr. Lavallee, our Chief Development and Regulatory Officer, address that. Theresa?

Yes, there is a clear path and it's commonly done. Many of the pembro studies included both histologies. The FDA recognizes esophageal cancer with 2 histologies as a disease. So there is clear precedence with KEYNOTE-181 being the most noteworthy and most similar. Secondly, the FDA has shown even with the recent approval with ORIC-104 last accelerated approval last week that ORR thicker with durability is an endpoint that could be discussed. So that is what we plan to go with a plan to them showing a randomized study against chemotherapy, which is the only available agent for these patients, particularly in the PD-1 refractory or PD-L1 low patient population and discuss the accelerated approval based on that and then what the confirmatory study would look like either as a seamless study or a stand-alone second study.

Yes. One quick follow-up. So obviously, you had very compelling data in the frontline setting as well. So just curious on how you think about the gating factor for initiating a frontline study. Is that something you could do in parallel with the second-line study, perhaps staggered somewhat? Or would that really be contingent on having a positive outcome in the second-line setting first?

Great question. Theresa?

And they definitely could go forward at the same time, the FDA would be enthusiastic about that because they like to see a commitment to the disease and with their push with project FrontRunner to move things earlier. Obviously, we prioritize second line given the complexity of contribution of effect in the first line and the size and length of the study in the first line. But given the activity that toripalimab has established in that disease and our objective of moving immunotherapy into earlier line settings, we'll continue to explore ways to develop and get more data in that disease type.

Your next question comes from Jay Olson from Oppenheimer.

Congrats on the new sharpened focus. Maybe just to follow up on the frontline opportunity. Recognizing that you're prioritizing second-line ESCC, you did have 8 of 9 confirmed responses in the front line. And I think I heard you say that you would continue building that data set. Can you just talk about what level of evidence would be required to preserve that frontline opportunity and push forward there? And then if I could ask one follow-up financial question. From the current $14 million quarterly base for LOQTORZI, what are some of the commercial pushes and pulls that could give you the leverage that you need to get to the new $25 million to $30 million quarterly LOQTORZI revenue threshold?

Thanks, Jay. So I'll let Dr. Lavallee take the question regarding frontline and your keen observation that was 8 out of 9 responding patients, quite impressive response rate. So Theresa, why don't you do that and then Sameer will follow up with the $14 million. Go ahead.

Yes. For that first line, I think we need 3 things to have a further conversation with FDA. The first being finish the enrollment in ORR, I know we all enjoy that early readout, but I remind people all the time that durability and CBR and PFS are important. We're pleased to see it trending in the right direction, but going to FDA with a frontline study with ORR only would not lead to the most productive conversation, having 22 patients in the second-line study and having randomized data really enables a productive and robust discussion about advancing development, particularly in an expedited fashion. But we obviously wouldn't take advantage of the opportunity in a meeting to discuss opportunities in first line to get their thinking while we get more data there and durability.

Thanks, Jay. So we'll have Sameer address the issue of moving up from the $14 million and the pushes and pulls as you put it, to move it up, at least past the $15 million that we are projecting for next quarter. Sameer?

Yes. Thank you, Jay, for the question. So obviously, our immediate goal is to exceed $15 million for the guidance. But more importantly, longer term, we want to maximize the opportunity. As Denny mentioned, we have a lot of upside here for the brand. There's too much chemotherapy alone going on, about 30% of patients are getting chemotherapy alone and too much KEYTRUDA and off-label IOs going on. So what are we doing about it, right? So we have a significant strong physician support to help us drive LOQTORZI utilization. But what's getting in the way is a typical rare disease dynamics and patient flows, which are relatively slow. And then the other thing that's getting in the way is just habit, right? There's too many physicians who agree to use LOQTORZI, but 6 months later when the patient shows up, they don't remember to use LOQTORZI. So what we're doing about it is twofold. Our representatives are driving in from the bottom up, educating physicians. The other thing we're also doing is 2 main initiatives. We're working directly with large clinical organizations and large academic centers and working from the top down to identify patients, put them on LOQTORZI. Second thing we're doing is partnering with payer organizations to put preferences in place for LOQTORZI for utilization for label. And when we put those 2 steps in place, we believe that we can accelerate demand in the coming quarters.

I would just add, Jay, that our market share is about 22%. So 20%, 22%. So there's ample opportunity to grow. We definitely have to encroach on the 30% for the chemo-only patients. But also there's 40% of other IO, which we have to pursue. We believe that will primarily growth will come from the steps. To the other point, though, that Sameer just made, it's very important in the community that they convert those chemo-only patients to chemo plus LOQTORZI. So those patients get the full benefit of the 6-year survival. And we have found that they're very receptive to that when we talk to them about it.

We will take our next question. Your question comes from Mike Nedelcovych from TD Cowen.

I have 2. My first is on tagmokitug and specifically the combination with pasritamig. Were any patients dosed with that combination? And if not, will it be deprioritized before it started?

All right. Hold on. Mike, hold on to that. Let me get to that one first. And then I'll let Rosh take care of that, and then we'll hope for your second question. Go ahead, Rosh.

So for the pasri study, actually, we've initiated the study already. So there are a couple of sites that have initiated in screening already. So that is a priority that we are continuing. And the important point here is that this is in conjunction with the T Cell Engager. So that's -- again, we talked about the fact that it's first in disease, first in combination with T Cell engager. So yes, we're progressing that.

Just on that point, Mike, I think it's very interesting. Dr. Lavallee may have additional comments on the tumor microenvironment remodeling and some of the other things we've seen and how that might apply to other TCE undertakings. Theresa, do you want to comment?

Yes. The data that we've shared on the TREGCHECK program has shown removing immune suppressor cells, bringing the CD8s in and really potentiating an immune response. So I am particularly enthusiastic about a T Cell engager combination given that the challenge or the magnitude of benefit of those agents has been a lack of T cells and the Treg being present. So we are incredibly excited about that. We were excited to see on Saturday that J&J presented combination data with pasri and their PSMA-CD28 showing really nice safety and an ability to potentiate the PFA response. So we have our benchmarks, and we look forward a few day in this combination dosing patients.

Theresa, how does that bode for other similar TCE studies if the safety is borne out with pasritamig in prostate?

I think I'll be very, very busy with looking at all the options.

Okay. Mike, did you have a follow question?

Awesome. No, that answers it. We'll look forward to hopefully seeing some data from that cohort at some point in the future. My other question actually relates to casdozokitug. I guess I was just curious if you could clarify, I assume it's not being deprioritized per se. Presumably, you're waiting for the HCC data before making a go/no-go decision. If that's right, can you share with us what is the benchmark in your mind to support continued investment behind casdozo?

Well, I can handle the first part of that, and I'll let Dr. Dias handle the second part. No, no, no, casdozokitug has not been deprioritized. It's maturing nicely. I think that we've recently said, I think that it has shown, I think, very strong dose response differentiation. It's at the response is maturing. And so we'll probably have some additional insights on how that's going and have more to say about that sometime perhaps Q1, early part of the year. But it just is taking time for it to develop a bit. But when you have a situation where less than half of the patients have a sufficient number of scans, you just have to wait. With respect to the benchmarks, I'll let Dr. Dias talk about that, Rosh?

Yes, Mike. I'll just mention 2 points. So first of all, I'll reiterate that what we have seen so far is dose-dependent activity, right, with casdozo. The second point is that this data does take a little bit of time to mature. You'll recall that from our prior study, casdozo/atezo/bev, the first data set that we reported an ORR of 27% which over time went up to 38%. And also there was 0 CRs in the initial cut, which went up to 5 CRs in the final cut. So we do anticipate that similar pattern with the current study. I think if we see an initial ORR that matches our prior data, we'd be happy because the important point is that we have to see the data mature and deepen and increase with time. So I think that's what we're looking for at a minimum in our initial study. And of course, the safety profile that's consistent, which was very consistent with the atezo bev alone previously.

We will take our next question. Your question comes from Charles Wallace from H.C. Wainwright.

This is Charles on for RK. So I guess maybe for me, what specifically makes the second-line esophageal cancer setting, the fastest pathway to market? And when do you expect to have the meeting with the FDA? And at this point, what have you discussed with the FDA on this program?

All great questions, Charles. Dr. Lavallee, could you address those 2 issues, why second line the fastest and where we are with the FDA?

Yes. So it's clear that second-line esophageal cancer is a high unmet medical need and reading the most recent approval in second-line ESCC with tislelizumab. And if you read the FDA comments, on their approval. They discussed how underserved these patients are repeatedly. And one of the criticisms in that approval package was that they had not tested in PD-1 refractory diseases. And given that PD-1 was established that this would be limited availability to any patient in the U.S. But given the unmet medical need, it's still going to get approved. So I mean just in reading their writing their perspective of this disease. In second-line EAC, there's really nothing approved. So these patients have chemotherapy as an option. They're clearly very sick as we saw in our study, the overall survival in this patient population is about 8 months. So in terms of following up on a compelling signal where we've shown contribution of effect, we have 22 patients in the randomized study with an ORR and importantly, several patients with stable disease out about 8 months on treatment. So that enables the conversation as well as the powering of the study for what we would need to see in a randomized study to really go forward with the FDA on regulatory approaches. So that makes it streamlined fast. We know the drugs. We can talk about contribution of effect. We've had a Type B meeting with FDA to align on our Project Optimus randomized cohort that we just presented. The next 2 meetings that my team is working on immediately and plans to meet with the FDA early in 2027 are get the recommended Phase II dose buttoned up. And the second meeting is a Type B meeting to discuss development in esophageal cancer.

So activity in both histologies, squamous and adeno patients that are progressing very rapidly, unmet need with no real therapy other than chemotherapy and are going really to positively impacting patients' lives.

And one more thing, sorry, that I just want to add because there's a lot of chatter about applicability to U.S. medical practice. We have U.S. patients in the study, and U.S. patients that are part of the benefiting patients. So I think that really sets with meeting many of the FDA's requests for how to go forward in the disease.

[Operator Instructions] We will take our next question. The question is from Brian Cheng from JPMorgan.

Just building on the previous question here. As we think about the guided development path in second-line ESCC for tagmo and tori, how should we think about the potential setup of a study? I know that you recently talked about KEYNOTE-181 as comparable here. Is that a fair comp to think about accelerated trial here? And also any color on what kind of response metric and also the size of the study that you need?

Theresa, do you want to take that for Brian?

Yes. So the next study we're looking at is a randomized study against chemotherapy. So with both histologies looking across PD-L1 subtypes, and that's what we would want to refine with them as a Phase II study with an opportunity for accelerated approval on thicker ORRs, the blinded independent central review ORR with a duration of 6 months. So currently, chemotherapy is at 10% and the 6 months like we said, the median OS is around 8 months. So 6 months is a pretty healthy look. And I think doubling that to tripling that would be adequate, but those will be the conversations we'll have. I'll be able to answer specifically following an FDA regression.

Theresa, for Brian's benefit, when do we think we'll have those discussions? When do we think the package will go in? And when do you think we'll get something to say?

So we're actively working on it with it trying to have the meeting in the first quarter. So I mean, clearly, submitting at the end of this year, early next year, 60-day clock tells you March time frame is what we're looking at. And in terms of KEYNOTE-181, I just want to point out a couple of things about the Phase III KEYNOTE-590, the first-line esophageal study also combined pathology, so not unheard of. The 181 did fail in the PD-L1 below 10 and also failed in the EAC histology. So we're not looking to repeat that study. We're looking to go beyond that study and also treat patients who have progressed on frontline immunotherapy. But it has been commonly done and accepted by FDA in multiple lines of treatment.

There seems to be no further questions. I will hand back for closing remarks.

Thank you, Heidi. Thank you all for joining us today on our Q3 call. We will be at Guggenheim tomorrow. We'll see you there. We'll also see you in Jefferies in London. Thank you.

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