Innate Pharma S.A. (IPHA) Q2 2019 Earnings Report, Transcript and Summary

Good afternoon, ladies and gentlemen, and welcome to the Innate Pharma Financial Half Year 2018-2019 Results and Business Update Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. As a reminder, this conference call is being recorded. [Operator Instructions] I would now like to introduce your host for today's conference, Ms. Danielle Spangler, Head of Investor Relations of Innate Pharma. Danielle, you may begin.

Thank you. Hello, everyone and welcome to today's conference call. This morning Innate issued a press release reporting our half year 2019 financial results and business update. The press release and today's presentation are available on the Company's website, as always. Before we start, I would like to remind you that we will be making forward-looking statements regarding the financial outlook in addition to regulatory and product development plans. These statements are subject to risks and uncertainties that may cause actual results to differ from those forecasted. I'd like you to look at slide three, please. Today's call will begin with an executive summary from Mondher Mahjoubi, Chairman of the Executive Board and CEO. We'd also liked to have Dr. Pierre Dodion, our Chief Medical Officer to provide a pipeline update. Unfortunately, he has not able to attend today, due to the strike in Paris. Mrs. Jennifer Butler, Executive Vice President and U.S. General Manager will now provide an update on the U.S. operations and Lumoxiti commercialization. And Ms. Laure-Hélène Mercier, Executive Vice President and Chief Financial Officer and member of the Executive Board will provide an overview of the financials. I'd now like to introduce you to the CEO, Mondher Mahjoubi.

Thank you, Danielle. Good afternoon, good morning, everyone, and thank you for joining the call today. This is an exciting time for Innate Pharma. This year, we turned 20th full year and we celebrated our 20th anniversary. And I would like to start this call by saying big thank you to our employees, collaborators, partners, physicians, patients and other stakeholders, who have supported our research and development ambition in immuno-oncology over the last 20 years and made this anniversary possible. As you may remember Innate Pharma was at its inception focused on helping to pioneer the understanding of NK cell biology. Our expertise in discovering new target and developing differentiated immuno-oncology molecule has evolved to further focus on harnessing the potential of the Innate immune system across the three pillars of the immunity cycle. And I would like to turn to slide number four, which represents the core of our R&D strategy. We pursue immune checkpoint inhibitors, but we also develop antibodies that target tumor antigen, and of course we have a number of antibodies targeting selected pathway in the tumor micro environment. If you move to slide five, you can view our pipeline as of today. And we are very proud and excited that we have been able to build a broad and balanced portfolio of innovative assets, spanning from preclinical to commercial assets, both partnered and proprietary. We strategically partner programs in larger indications, but retain proprietary assets that benefit from our scientific and clinical development expertise and fit with our commercial strategy to build a rare cancer franchise and generate more value, starting with Lumoxiti. And we’ll come back later on these assets we have acquired end of last year from AstraZeneca. So, we have been able to significantly benefit from this business development strategy. And this partnership not only validates our excellence in science, but they represent a major source of revenue for our growth and development. We are proud to say that we have received more than $550 million over the past 10 years through this collaboration, and we are also eligible to receive approximately $5.5 billion in potential future payments from our existing engagement with leaders in the world of biopharma, including AstraZeneca. We are pleased to have such collaboration and as recent payments and milestones have provided us with the strong cash position of €200 million as of June 30, 2019. With these funds, we are able to continue to execute and support our growing and maturing pipeline. 2019 has been a year of execution so far. We have initiated the cohort expansion study with our lead asset in partnership with AstraZeneca, i.e. monalizumab in order to explore the potential of a triplet combination of monalizumab along with cetuximab and in anti- PD-L1 in patients with relapse or metastatic had the neck cancer who have not been exposed to PD-1 blockers. This is a way to develop a chemo-free regimen that could be an alternative to the new stand of care in first-line, which is PD-1 plus chemotherapy. We also have initiated the global open label multi-cohort Phase 2 study called TELLOMAK with our proprietary agent IPH4102. This is a study that is designed to maximize and optimize the potential commercial opportunity in T-cell lymphoma. Sézary Syndrome being the first to market strategy, but there is more potential in cutaneous T-cell lymphoma and peripheral T-cell lymphoma. The Sézary Syndrome cohort may support Innate first BLA finding. Within a year, we have swiftly executed the Phase 1 dose escalation part of the STELLAR study. The STELLAR study is a Phase 1/2 study with our asset IPH5401 that we are assessing in combination with durvalumab and the first safety data will be presented at the upcoming ESMO meeting. We are on track to initiate the cohort expansion to explore the combination of 5401 and durvalumab in two tumor types, non-small-cell lung cancer IO-pretreated and resisting to IO and hepatocarcinoma patients who are IO naïve. We also moved at full speed with our lead technical asset IPH5201, our anti-CD39, and we are on track to file the IND this year, as well as for our anti-CD73/IPH5301, where the plan is to file the IND first half of next year. Last but not least, we started building out our U.S. commercial infrastructure and operation in order to support the commercial transition of Lumoxiti. Lumoxiti, as you know, is the first in class, FDA-approved medicine for the treatment of hairy cell leukemia, one of the rare forms of leukemia. This fits our long-term strategy to grow a commercial franchise that is focused on rare hem indication. And as we approach the second half of 2019 and look beyond to 2020, our efforts to execute our clinical development program will allow us multiple data readouts across the portfolio next year. We remain dedicated to our immuno-oncology, R&D expertise and are focused on providing cancer patients with high unmet medical need with new potential therapeutic alternative. As you may have heard in the intro from Danielle, Pierre was stuck in the traffic because of the strike we had today in Paris. But, he managed to work from the train station to the meeting room here, and I'm pleased to then hand over to Pierre to give you an update on our pipeline. Pierre?

Thank you very much, Mondher. So, as Mondher mentioned previously, in 2019, we have made very significant progress across our partnered, proprietary and preclinical pipeline. And what I will do now is to provide some additional context around the program that Mondher mentioned and also will to briefly highlight significant events and publication. Moving to slide seven, you have a short description of the mechanism of action of monalizumab, our first-in-class, anti-NKG2A monoclonal antibody that belongs to the category of immune checkpoint inhibitors. You can also notice in the little figure on the right that there are multiple opportunities for a combination of cohorts either with PD-L1, PD-L1 blockers or other molecules in particular of cetuximab. And this brings me to slide number eight. In fact, we have presented encouraging data, evaluating the combination of monalizumab and cetuximab in patients with either relapse or metastatic squamous cell carcinoma of the head and neck, either previously treated with chemotherapy alone or chemotherapy followed by an anti-PD-1 or PD-L1. These data were previously presented at AACR, ESMO and SITC 2018. In particular, they showed response rate of -- an overall response rate of about 27.5% by various criteria with the disease control rate at 24 weeks of so called DCR of 35%. We have also performed a subgroup analysis, which revealed quite interesting durable responses in both the IO-pretreated patient in the middle column, and -- I'm sorry, IO-pretreated patient, right column, and IO-naïve patients in the middle column. Of course, those numbers are relatively small. But nevertheless, the data are very encouraging. We will present updated long-term data from this particular cohort at the upcoming ESMO meeting in a few days in Barcelona. Moving to slide number nine, we are showing here the expansion of the program, starting with the upper right corner and the so-called expansion cohort number 2. This expansion cohort is designed for patients who have received a maximum of two prior systemic regimens in the relapsed or metastatic setting, and who were also exposed to an anti-PD-1 or PD-L1 agent. This makes the so-called IO-pretreated sub-population. This trial is ongoing, and we expect a preliminary data in the first half of 2020. Moving now to the right lower corner and the so-called expansion cohort number 3. This is a cohort that we have initiated in April this year to explore a triple combination of monalizumab, cetuximab, and anti-PDL-1 in the patients with head and neck cancer relapsed or metastatic, but who have not been previously exposed to an anti-PD-1 or PD-L1, i.e., this is the IO-naïve patient population. And this is we think quite interesting development, because as you know, anti-PD-1, PD-L1 therapies are now moving fast in the first line setting. This could potentially be an opportunity for treatment regimen that does not incorporate chemotherapy. And we look forward to seeing data about this cohort in the second half of 2020. So, let's move now to our lead cohort, here is that [ph] on slide 11. So, IPH4102 is a first-in-class humanized cytotoxicity inducing antibody. This antibody is targeting KIR3DL2, which is specifically expressed in T-cell lymphoma. So, this molecule is falling amongst tumor antigen targeting asset. And if you move to side 12, this provides you more precision on the TELLOMAK study that Mondher already mentioned. This study is conducted in different subtypes of T-cell lymphoma and was initiated in the first half of 2019. It's a very exciting compound that this asset has been really advanced by Innate from the preclinical stage now to later clinical stage. Again, this TELLOMAK study is a global multi-cohort study including on the top cohort number one designed for basically Sézary Syndrome post-mogamulizumab exposure. And this cohort number 1 could potentially lead to a BLA filing. We did receive Fast Track designation from the Food and Drug Administration earlier this year, and we are working of course closely with the agency. In June this year, at the 2019 International Conference on Malignant Lymphoma or ICML conference, we presented the TELLOMAK study design as well as additional preclinical data, which showed that IPH4102 and chemotherapy in combination enhance the expression of KIR3DL2 and also provide superior antitumor activity. This provides a rationale for testing this combination in patients with peripheral T-cell lymphoma or PTCL. This was further discussed during the webcast that we hosted together with Professor Pierluigi Porcu, Director of the Division of Medical Oncology and Hematopoietic Stem Cell Transplantation at the Thomas Jefferson University in Philadelphia. And a replay of this webcast is available on our website. So, this leads me to the two additional cohorts, the one in pink, in the middle, and the one in yellow at the bottom. Starting with the pink one. This cohort is designed for patients with mycosis fungoides, which is the largest subset of PTCL and in which IPH4102 will be tested as single agent therapy. IPH4102 will also be evaluated in combination with standard chemotherapy in second line PTCL. This is illustrated in the bottom cohort in yellow. IPH4102 in addition strategically fits very nicely into a rare hematology oncology commercial franchise and could have significant synergies with our Lumoxiti commercial strategy. Finally, you will also notice that the trial does include both KIR3DL2 expressor and non-expressor patient for MF and PTCL. I’m now, moving to slide 14. This illustrates the mechanism of action for our second clinical stage for proprietary [ph] or IPH5401. IPH5401 is an anti-C5aR monoclonal antibody with the novel mechanism of action. And we are leading the exploration of this compound as a potential treatment in oncology. We are looking forward to presenting data on this compound at an upcoming scientific conference. And if you move to slide 15, you have there some additional details on the first-in-man study that we are conducting. We have performed dose escalation trial that allowed us to select recommended Phase 2 dose. And we are now ready to initiate this year the expansion cohort, one of which will be in non-small-cell lung IO-pretreated and the other one in hepatocarcinoma IO-naïve. We expect to have a preliminary data in the second half of 2020. Finally, on page 17, a few words on our preclinical pipeline. As you can see, we have an extensive pipeline of innovative immunotherapies that are ranging across all three of our pillars. This pipeline continues to grow. Our discovery engine has gained credibility, certainly due to the partnership with Sanofi and AstraZeneca. I'm very pleased to say that our data on preclinical assets were published in key journals. All these publications may be found on our website, just quickly a publication status report, which just has key assets targeting the immunosuppressive tumor for micro environment IPH5201, which is an anti-CD39 agent and IPH5301 and anti-CD73. These agents are targeting the adenosine pathway. Additionally, our Chief Scientific Officer, Eric Vivier he has been -- is the author of a Cell publication that provides data on the potential first-in-class multifunctional NKp46 in cancer immunotherapy and also importantly Eric made a presentation on these data at the annual meeting of AACR. So, we have done -- what we've done with our clinical program, we'll continue to follow the signs to leverage the knowledge of our partners, academic collaborators and key opinion leaders to generate this kind of insightful data. And I'll hand it over back to you, Mondher.

Thank you, Pierre, for this overview of our preclinical and clinical development pipeline. Now, I would like to shift to the commercial asset, Lumoxiti. As I said, an FDA approved medicine for the treatment of relapsed/refractory patient with hairy cell leukemia. The acquisition of Lumoxiti end of last year, accelerated our strategy to transition the Company to commercial stage organization, and of course, gives us the opportunity and the ability to build U.S. commercial infrastructure and eventually, of course, expand from there to other geographies as -- such as Europe, for example. Our long-term goal is to build a rare cancer franchise that in the future will be able to provide revenues to continue to support our R&D initiative and grow our pipeline. I would like now to introduce our U.S. General Manager, Jennifer Butler to provide an update on the U.S. operation and the Lumoxiti commercial transition. Jennifer?

Thank you, Mondher. So, please refer to slide 19 and 20 for this part of my presentation. Since I've joined in March, we've made much progress in building out the U.S. commercial infrastructure and operations. The U.S. headquarters will be in Rockville, Maryland, just north of Washington, D.C. We now have nearly 20 U.S. employees, which means we've hired more than two-thirds of our U.S. team and we intend to be fully staffed by the end of the year. Let me shift back to Lumoxiti specifically as kind of depicted on slide 19. There are approximately 1,000 new cases of hairy cell leukemia in the U.S. every year, and about a third of those patients fall within Lumoxiti label. And as we've stated before, Lumoxiti is the first new available treatment in 20 years for relapsed and refractory patients who received at least two prior systemic therapies. I wanted to note that we will -- during Q4, our Innate sales reps will begin meeting directly with physicians and accounts. And we intend to have fully transitioned all physician-facing activities from AstraZeneca by the annual ASH meeting, which will be at the beginning of December. And by the end of the year, we expect to have three MSLs and 10 sales reps in total. And I would note that as we prepare for this commercial transition, when working in rare diseases, whether in oncology or other therapeutic areas, there's an increased need to ensure we're finding those patients and their physicians that are aware of Lumoxiti as a new treatment option. Now, moving to slide 20. Just looking at kind of this build out here. We continue to work closely with AstraZeneca during the transition, as noted in the bottom left, and leverage their commercial insight. We look forward to gaining our own insights on this patient population and implementing a fit to purpose commercial model to further enhance penetration. Therefore, we'll be strategically reaching out beyond the hairy cell leukemia centers of excellence across the United States, and executing the right marketing and sales next to identify these HCL patients and prescribers. We have also started to establish a presence with patient advocacy groups, such as the hairy cell leukemia foundation, as well as other key opinion leaders. I guess, from a personal standpoint, I wanted to say that we have a dedicated and experienced commercial team that is truly excited to be part of Innate Pharma’s mission to provide new treatment options to patients fighting cancers, starting with Lumoxiti. We continue to remain on track for the timelines laid out at the time of the deal for the full transition of Lumoxiti to Innate from AstraZeneca by mid-2020. And I know we're looking forward to a great kickoff meeting at ASH in which we’ll be establishing kind of Innate’s commercial presence. So, Mondher, with that, I will turn it back to you.

Terrific. Thank you, Jennifer. I'm really excited and the entire leadership team is very supportive and looking forward to this transition by the end of the year. I would like to briefly add that this is a unique situation actually, in which the agreement with AstraZeneca is allowing us to leverage their commercial infrastructure and knowhow while we establish our own. Being that hairy cell leukemia affects the small number of patients, it allows us to build our own commercial footprint in the U.S. to later be able to leverage it for other assets, such as IPH4102, if approve it in the future. Great endeavor, and again looking forward to the ASH meeting. It is now my pleasure to introduce Innate Pharma's CFO, Laure-Hélène Mercier, who will give an overview on our financial results. Laure-Hélène? Laure-Hélène Mercier: Thank you, Mondher, and good day, everyone. So, you can refer to slide 22 and 23. I will start as usual with by far one of our key metrics, our cash position. Our cash, cash equivalents, short-term investments and financial assets, including non-current financial instruments amounted to €200.3 million as of the end of the half year. In the first half of 2019, we received €65 million as a remainder of the payment associated with the AstraZeneca agreement signed in October ‘18. This position also takes into account the aggregate of €21.5 million payments due to our partner and licensees Novo Nordisk and Orega, as a result of the ‘18 deal. As a reminder, we ended the fiscal year 2018 with €202.7 million. Hence, the underlying cash burn excluding the multiple payments to and from partners was €49 million during the first half of the year. We are pleased with our cash runway, which is about two years. This is based on our current pipeline and development plans that cover on the critical path for each of our programs. We expect the burn rate to continue to increase as we are growing and maturing pipeline, but at a less aggressive rate. We will continue to examine our clinical development programs to maximize the value of our pipeline and potential future market opportunities, and we will be diligent to ensure we maintain a reasonable spend and flexibility in our cash allocation. Going now to the P&L, for the sake of time, I will only comment the main and most significant lines. You have very detailed press release that you can refer to for more information. So, on the revenue line, our revenue and other income amounted to €59.2 million and mainly result of revenue from collaboration and licensing agreements, with the remainder being the research tax credit. As usual, revenue from collaboration and licensing agreements mainly relate to the spreading of payment, which is by Innate Pharma in the context of the AstraZeneca agreement, of which €24.3 million is for monalizumab and €22.5 million for IPH5201. I remind you that this has no impact on cash, this is an accounting trading of those accounts. Please also note that the recognition of IPH52 is almost completed [indiscernible] of IPH5201 is almost completed with 5 million remaining and that are expected to be recognized in the second half of ‘19. With regard to monalizumab, we still have €81 million to be recognized with an estimated horizon in ‘21. Hence, we think about the revenue line in the first half of 2019 as exceptional, especially with regard to the recognition of the IPH52 upfront in the very short period of time. And again, I remind you that it's non-cash item. Revenue from invoicing of research and development costs for the period was €4.4 million compared to €0.2 million the year before. It relates to our agreements with AstraZeneca for IPH52 and IPH54. Now, going to expenses. Operating expenses for the first half of ‘19 amounted to €46 million compared to €38 million for the first half of ‘18, 80% relating to R&D. R&D expenses increased by €4.3 million to €36.6 million and primarily related to activities, without surprise, for monalizumab IPH4102, IPH5401and IPH5201. In the first half of ‘19 subcontracting costs have mainly been stable, as many of our clinical programs were transitioning, resulting in lower cost for mona, IPH41 and IPH54, based on R&D cost new one, in relation to Lumoxiti for regulatory purposes, and our other technical program. Increase in R&D costs are mainly related to the increase in amortization of monalizumab following the payment Novo Nordisk and the stuff of amortization of IPH52 and Lumoxiti. You should expect to see a larger increase in R&D in the second half of ‘19 due to the fact the [indiscernible] for IPH41 and the expected cohort expansion for IPH54. Turning quickly to G&A. General and administrative expenses increased by €3.7 million to €9.3 million for the period, and most notably personnel expenses including compensation, but also share based payment. Share based payment is a non-cash item. Advisory and consulting expenses also increased. We expect to continue to see an increase in G&A as we expand internationally and hire more talent in addition to our commercial expenses in relation to Lumoxiti going forward. Now quick look to this new line item that you can see under operating expenses, the net income from distribution agreements. As you know, this new line is due to the agreements with AstraZeneca. It relates to the Lumoxiti net global inflows and outflows received from and paid to AstraZeneca. As a reminder, so AstraZeneca, as you all know, is currently in charge of all commercial aspects of Lumoxiti and is considered as principal. And the distribution agreements we recognize for the first half of 2019 a net loss of €3.8 million in the context obviously of the launch of the drug. As a reminder, through the 2019 transition, we have a cost sharing agreement with AstraZeneca. To give you a bit more of a flavor around how we are seeing the cost structure, the one we foresee is low double digits which will support the commercialization of Lumoxiti, but also more importantly, the implementation of a commercial infrastructure and a global cross-functional operation. Our goal here, and I'm speaking for Lumoxiti is to become cash neutral in about two years. We remain focused on having a disciplined approach to capital allocation to support the appropriate investments that will enter the long-term success of Lumoxiti. Our global strategy remains to invest in our science and clinical pipeline, and bring new treatments for cancer patients. With that, I will now turn the call back to Mondher.

Thank you. Thank you all, Laure-Hélène. I would now like to take this time to review the upcoming news flow over the next 18 months and invite you to move to slide 24. In a nutshell, and for the remainder of the year, we will have safety data from the Phase 1 dose escalation study testing IPH5401 in combination with durvalumab presented at the ESMO end of this month, as well as an update, a long-term update from the cohort 1 of the 203 study that we published last year at ASCO, combining monalizumab with cetuximab in head and neck cancer. That's in the short-term. We will also find the IND for IPH5201 as well as the BLA for Lumoxiti in the EU regulatory submission. Finally, as you've heard from Jen, ASH is going to be a defining moment for the commercial organization and the launch of our commercial team. So, we’ll have Innate Pharma first present at such a meeting and we will provide an additional update on Lumoxiti. For 2020, you can expect preliminary data from the IO-pretreated cohort in head and neck cancer test in monalizumab and cetuximab to be presented in the first half of next year, and the IND filing for IPH5301. That's essentially the highlight of the first half of the year, next year. In the second half of 2020, we’ll have multiple readouts across our pipeline, which include A, the outcome of the first stage analysis of the PTCL and the MF cohorts of the TELLOMAK study. Remember that we have the KIR3DL2 over-expression and non-over-expression parallel cohort and will have stage 2 analysis performed in next year. The second readout will come from the triplet combination of monalizumab, cetuximab and in anti-PDL-1. We will have preliminary data from that expansion cohort, which I remind you is assets in the efficacy and the safety of this triplet in patients with relapsed/refectory head and neck cancer who have not been exposed to PD-1 blocker. As you can see, we continue to have a very robust and dynamic pipeline. And we look forward to sharing more update with you in the near future. So, now, if you turn to page 25 and in summary, I'd like to leave you with three key takeaways. First of all, this has been a fantastic year, but the year of execution mainly. And in particular, we have made significant progress across our partners, proprietary and pre-clinical pipeline. Number two, we continue to make great progress in building out the U.S. commercial infrastructure and operation, and we look forward to update you on these in the near future. Last but not least, we have a very strong financial position that will enable us to continue to invest in our pipeline. With that, I would like to thank you all for joining the call. And I will now turn it back to the operator to take your questions. Thank you very much.

Thank you. [Operator Instructions] Your first question comes from the line of Sean Lee of H.C. Wainwright. Please go ahead. Your line is open.

Good morning, guys. And, thank you for taking my questions. My first one is on the timelines for the Sézary cohort of the TELLOMAK study, since -- from the -- it sounds that that could potentially be your first product approval, or independently developed product to be approved?

Yes. Thank you. Good morning. I’ll just repeat the question to make I'm sure everyone got it. It's about the timing for the BLA filing for IPH4102 in the Sézary Syndrome for mogamulizumab, that's right?

The timing for the results as well as potential filling.

Okay. Then, I hand over to Pierre Dodion to provide you with a more detailed answer.

Yes. Thank you for the question. As we have indicated, we anticipate the first results of actually all cohorts, including the one that you're mentioning the because 2021, I think that in terms of having full detailed results that will be supportive of a potential BLA, that may take a little bit more time. We have announced previously that we would go to file a BLA at some point in 2022, all these data subject to some situation depending on the status of it, how will actually take place?

Thank you, Pierre. I would like to add maybe just for the sake of clarity here that this is a 60-patient, single arm cohort, where the primary endpoint is not just response rate, but also duration of response, progression-free survival, and of course, quality of life. And as you know, not only this is a quite rare disease, but actually, we want to make sure that we have mature data. So, it's not just about presenting the response rate. I think, the signal we've seen from the Phase 1 is quite powerful and about the mechanism of action, the level of activity of the drug. But we need to make sure that we have mature data that will satisfy the FDA and hopefully other agency about the requirement for filing and approval.

I see. Thanks for the additional color. That was very helpful. Now, my second question is on the upcoming Lumoxiti filing in the EU. So, what’s still needed to be done for that part? And what are your commercial plans?

So, what needs to be done, you mean, in terms of regulatory filing, that’s kind of business as usual. Of course, we're working with our partner AstraZeneca with this filing, and we will go through the normal process of review by the agency, expecting approval within the classic timeframe, i.e. between 9 and 12 months. So, we expect to have approval in Europe, if everything goes well in the second half for next year. For the commercialization of Lumoxiti in Europe, we are working on the business model we would like to implement, knowing that in Europe, you have the challenge of having different mechanism and system for reimbursement. So, we'll adjust and adapt the business model according to the regulatory but also reimbursement landscape with of course focus on the larger countries. But, we are also making sure that the patients who need to have access to the drug will have access to the drug within a very specific early access program.

And your next question comes from Graig Suvannavejh from Goldman Sachs. Please go ahead. Your line is open.

Great. Good morning from New York. And congratulations on the progress made so far, and thanks for taking my questions. I've got two, at least right now. The first one really has to do with the commercialization aspects and the transition between AstraZeneca and Innate. So, maybe the first question I have is, can you -- and maybe this question is specifically for Jennifer. Jennifer, if you can describe kind of what those interactions are like in this transition period? I mean, obviously, there's a -- at one point in time that it will be 100% Innate, but could you maybe give us some color on what the dynamic is between the interactions between the two companies, at least at this point in time, and how those -- how that has gone so far?

So, Graig, you said, you have two questions. This is the first question and I will…

That’s correct. This is the first one.

And the second question?

The second question actually relates to Lumoxiti itself and how that -- if you could maybe describe how -- with some color, what that commercial uptake is looking like. I realize, it's a relatively small product with a very small patient population. It doesn't seem that we'll get sales visibility, but maybe some color on how you think that's going?

Thank you, Graig. These are two great questions. I'm going to start with the second one, to provide some color, and then hand over to Jen to complete and answer the first question. As you all know, hairy cell leukemia, basically there has been no innovation for the last 25 years, and Lumoxiti is the first drug approved since the mid-90s, when the purine -- adenosine has been established as a standard of care. So, clearly, there is a treatment paradigm to change and to establish a new standard of care that AstraZeneca has done a great job starting. And of course, our goal is to, in this handover, make sure that we continue into that same direction and make sure we educate the community about this innovative therapeutic approach and the benefit it provides for patients. I think, the good news is that we are seeing really interest from the community about this new drug, and of course, patients benefit from it. But clearly, it may take time, before we generate real world data and before we have enough follow-up and enough maturity of the market to really provide a solid answer. What we can say is that penetration in this market today is great. I think, we provide a terrific new opportunity for patients to get durable complete responses. Just remember, the data that were presented already at ASH, and we will update you with the new data by the end of the year. But, clearly, the rate of complete response, durable complete response and the rate of negative minimal residual disease really made the difference. I'll ask Jen to provide more color on the market penetration so far, and of course, the collaboration with AstraZeneca on the different aspects of the marketing of the asset.

Thanks, Mondher. Yes. Maybe just to round out and kind of close that as it relates to the color commentary for the launch. I think, exactly that point is that -- I made a comment during my prepared remarks regarding really looking about the need to find patients that are kind of outside the centers of excellence. I think, that's an insight, obviously, that we think will help kind of increase penetration over time, relative to where some of the initial sales were. And I think also to what's inferred in my comments regarding kind of a sales and marketing mix is that we think that we can also kind of increase penetration by looking at different types of marketing and digital and social tactics that I think are particularly necessary when you're dealing in a rare disease category. And I think that, again, what puts in a really good position is that we really are going to approach the market with a rare oncology view than just a hem oncology view. And I think that's the difference. And so, I think that we've -- obviously, excited to see Lumoxiti and the guidelines, we're seeing these kinds of early wins. And obviously, we want to see kind of increased gain from here. You're asking about the commercialization aspects, and maybe I think I'll describe it in really two ways. First, let me just say that the collaboration between my commercial team and AstraZeneca is quite exquisite. It's incredibly warm. They want to really see Lumoxiti succeed on behalf of hairy cell leukemia patients. We have weekly calls at a senior leadership level too. And if you think about it, if you take a step back, AstraZeneca still will hold rest of world rights, we're still collaborating in the EU. The U.S. transition is going incredibly well. Actually next week, as I mentioned, our MSLs will be starting field transition. So, just as it relates to -- we're working in house to have a lot of hard work in house and doing this transition. The transition in the field is actually very short. We're really trying to reduce customer disruption. That’s our number one priority, reduce customer disruption. So, MSLs, really in the next six weeks, the reps will transition, a very, very short transition in the field in November. And as I mentioned by ASH, we will kind of fully embrace the customers and from a field facing standpoint. There are some additional works in the back end, we mentioned 2020. That has to do with almost back office things, distribution pharmacy and hub. So, so far, really, it's been -- I've worked in a lot of collaboration, and this has been an incredible -- it truly is a collaboration. So hopefully that provides some commentary about the commercial aspects and the interaction so far.

Okay. Thank you very much. Maybe I could have a follow-up just on that. Are you guys in a position to say how many patients have actually been treated with Lumoxiti? And what that experience is like so far?

Actually, the straight answer is, no. It's been in the hands of AstraZeneca and they do not communicate on the commercial performance for Lumoxiti in general. And, we will be in a position to provide such guidance when we will take over because clearly next year we will have transparent -- not transparent, actually, we'll share with you actually where we are in terms of our penetration, essentially, in terms of number of patient, yes, you're right. But, the number of cycle, number of vials, et cetera, are the metrics that we cannot completely control.

Okay. Thanks for that. Maybe one last follow-up just on TELLOMAK. Are there -- what are the types of things you can do in terms of patient enrollment in that study? Are there things that you can do to kind of move timelines along with regards to the speed of enrollment of that study, particularly in Sézary Syndrome?

Thanks for that. I got to provide -- me and Pierre to go back to that specific question, I tried in my answer earlier to highlight the need not only to enroll patients, but also to follow up and to have enough follow-up for progression-free survival in particular and duration of response. I'm Pierre to maybe give more color on the clinical operation aspect and what we are doing in order to expedite the enrollment while we are again, trying to keep loose long follow-up that we need for the primary endpoint of the study.

Yes. Thank you, Mondher. It's coming down to excellence in the clinical operations and more specifically make sure that we identify the largest pool of patients that is a geographic -- as you know for many, many indications that is the half, such geographic distribution differences. For example, in our case, the prior exposure to model is important to consider. So, again, we are looking very, very carefully where we can maximize the number of paid research prior exposure. The other aspect is to -- is the adequate balance between number of sites and recruitment per site. Of course, we could increase the number of sites, we beyond what is conventional, but then as you know, I'm sure very well, the number of patients per site is becoming very, very small, they have questions about -- they investigate fully on the top of the study, about data quality, et cetera, et cetera. So, what I'm seeing here is that it's really a question of selecting the proper site, making sure that they are fully trained and they know perfectly the protocol and more importantly, that they have access to the kind of patients that we are looking for.

Thank you. And your final question comes from the line of Martial Descoutures from Oddo. Please go ahead. Your line is open.

My first question is on your decision to co-fund the monalizumab Phase 3. Could you give us more details on the decision, and is it a decision for all the Phase 3 program or maybe for specific indications? And my second question is on the financial side, Laure-Hélène, could you come back on the cash burn stated in the next 12 months, including the Lumoxiti launch TELLOMAK Phase 2 and so? It will be really helpful.

Thank you, Martial, for your questions. Two great questions. I'm going to start with the first one. The decision to co-fund the development of monalizumab for its registration purpose is a decision that covers all registration study that will be performed. However, there is a cap as you may know and the level of contribution of Innate Pharma is limited to 30%, and cap it anyway; and B, will be basically financed by the milestones we will receive when those Phase 3 will be initiated. So, it's not just head and neck or one indication in particular, it's all indications. But it's limited in terms of breakdown between Astra and Innate Pharma in this cap. That's for the first question. And of course, the decision has been always a strategic decision that will allow us to be in the driver's seat to continue to impact and drive the -- clinical development and the of course, lifecycle management of monalizumab. But not only that, we will of course share profit in Europe for all indications, including the ones that we may not have been able to co-fund, given that the cap has been raised. So, this is the first question. The second one, about the cash burn, Laure-Hélène will give you more color on the question. Laure-Hélène Mercier: I think, what we can say is that on the cash burn increase, it’s going to continue to increase as you see our pipeline growing in that way. But if you look in the past, basically, the underlying cash burn, so without exception that has doubled over the last three years. So, you should continue to see an increase, but at lower pace. So, let's say that, especially on the R&D part, you should see in the second half of ‘19 an increase. And in 2020, based on the current pipeline, and on the current development that we have, we should have a much, much lower increase compared to the past years. That said, obviously, it's not taking into account the discussion that we might have with our partner, notably around the decision that we just made for funding and how it's going to develop in 2020.

Thank you. I would now like to hand the call over to Mr. Mahjoubi for closing remarks.

Thank you. Just to say that we are very excited with the progress we've made in 2019, very excited by the collaboration that we have established with our partners, in particular AstraZeneca. The clinical development program is being implemented and we'll deliver. As I said, essentially 2020 will be a year of multiple readouts, but in the same time, it will be the year where we will, for the first time, be on the commercial stage promoting and commercializing Lumoxiti in the U.S. And finally, as Laure-Hélène just said, this cash position that we have in the two years runway is something that of course is very, very comfortable in terms of investing in our pipeline, investing in our key assets, and having those in addition to any essential milestone payment that we may have in the future. With that said, I would like to thank everyone and wish you a wonderful day. Thank you.

Thank you. That does conclude our conference for today. Thank you for participating. You may all disconnect. Speakers, please stand by.