Pfizer Inc. (PFE) Q2 2021 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen, and welcome to the Arena Pharmaceuticals Second Quarter 2021 Update. 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. [Operator Instructions] I would now like turn the conference over to your host Patrick Malloy, Vice President of Investor Relations. Thank you. Please go ahead.

Good afternoon, everyone and thank you for joining us today. We hope you had a chance to review the press release we issued this afternoon announcing our Q2 2021 financial results and key program updates. Joining me on today's call are Amit Munshi, President and Chief Executive Officer; Laurie Stelzer, our Executive Vice President and Chief Financial Officer; Doug Manion, our Executive Vice President of Research and Development; and joining us for the Q&A session will be our Executive Vice President and Chief Commercial Officer, Rob Lisicki. Before we begin, I'd like to remind you that we'll be making forward-looking statements that involve risks and uncertainties about our goals, expectations, plans, beliefs, timing of events or future results, including those risks and uncertainties related to our pipeline, financial projections and the COVID-19 pandemic and its potential impact on our business. Forward-looking statements involve certain assumptions, risks and uncertainties some of which may be beyond our control and could cause actual results to differ materially from these statements. A description of these risks could be found in our earnings press release and our latest SEC disclosure documents. All forward-looking statements are based on information currently available to Arena, and we disclaim any obligation to update these forward-looking statements. Now I'd like to turn the call over to Amit Munshi. Amit?

Thanks Pat, and thanks everyone for jumping on today's call. I presume everyone's had a chance to review the press release we issued this afternoon where we announced some very important updates. I'll provide some initial comments and then Doug will take you through the program updates in more detail, and the ADVISE open label data set, and then we'll hand off to Laurie to walk through the Q2 financial performance. Following the prepared comments, we'll spend the remaining time on Q&A. Before we begin, I'd like to formally introduce our newly appointed Executive Vice President and Head of Research and Development Dr. Doug Manion. Doug comes to Arena with 25 years of executive leadership experience across clinical research and drug development, with companies such as DuPont, Merck GlaxoSmithKline and Bristol Myers Squibb. Most recently, he was CEO of Kleo Pharmaceuticals. Doug's extensive experience, including experience in immunology and in our therapeutic areas will be instrumental as we continue to transform into a sustainable global organization. Turning to Slide 3, if you've been following the Arena story over the course of the past year, you'll know that in early '21, we laid out three strategic principles critical to our long-term growth. First, we plan to selectively and prudently grow our pipeline to support our long-term vision for the business. Second, we will continue to put all the pieces in place to ensure commercial launch success. And third, we continue to advance the build out of our leadership team that will maintain and grow culture for success. As you can see, we're progressing forward on all three of these principles. Turning now to Slide 4, last week, we took an important first step to bolster our mid stage pipeline within our core therapeutic areas with the announcement of our collaboration and option agreements with Aristea Therapeutics. We have a high bar for in licensing and collaboration agreements and over the course of the past year, we evaluated over 200 potential deals. Very few of these opportunities presented to us met our essential criteria; first, small molecules that were well characterized with chemistry and pharmacology; second, alignment within our current therapeutic area focuses of GI, dermatology and in cardiology; and three, limited financial exposure prior to program de risking. The deal with Aristea checks all three of the boxes. RIST4721 is an oral small molecule GPCR CXCR2 antagonist that was originated by AstraZeneca with strong pedigree in chemistry in oncology. As you can see from the slide, RIST4721 enhances our early to mid-stage clinical development pipeline, with a Phase IIb ready asset in palmoplantar pustulosis or PPP, and an opportunity to explore RIST4721s potential in hidradenitis suppurativa or HS and IBD through a couple of small exploratory trials. What is important to note is that this is a fiscally sound deal structure that includes a nominal upfront investment that grants us the option to acquire Aristea and a library of CXCR2 molecules based on the outcome of the Phase IIb PPP study and other supporting trials. Turning to Slide 5, in addition, the pipeline progress we made through the Aristea acquisition, I'm happy to share some important program updates. As most of you are aware, we are studying etrasimod a selective S1P receptor modulator in two global Phase three studies of ulcerative colitis. As we announced in January of this year, we reached full enrollment in our 52 week study, ELEVATE 52 that's that he remains on track for top line data readout in Q1 of '22. Today, I'm extremely excited to announce that our etrasimod ELEVATE 12 or UC 12 has reached full enrollment ahead of expectations. And with that I'll hand it off to Doug to provide additional details on etrasimod and the ELEVATE trial as well as other programs. Doug?

Thank you, Amit. And hi, everybody. With regards to the UC 12 study, we anticipate the biologic naive to biologic expose participant ratio will be 60 to 40, which is consistent with the split we saw in the OASIS Phase II UC study. As many of you will do math on the timelines, you will note that the UC 12 data will complete ahead of UC 52. With that in mind, we have developed a plan with our CRO IQVIA to keep the database unlocked, sequestered and the data blinded until both databases can be locked, unblinded and analyzed concurrently, as specified in our statistical analysis plan. I would like to thank the study participants, the clinical investigators and the entire Arena team for their extraordinary efforts that resulted in this study enrolling faster than anticipated. As we said previously, we will read out UC 12 and UC 52 data sets contemporaneously during the first quarter of 2022. As many of you know, we're also investigating etrasimod in the ongoing Phase II/III cultivates study in Crohn's disease. While we previously guided for a readout of sub-study A by the end of this year, we've made the decision to increase the sample size from 50 to 70 participants in order to enhance the veracity of this trial and these data. We believe this additional data will provide a pool data set that will be commensurate with other open label trials conducted with competing products. Importantly, this enhanced data may allow us to make sub-study 1 into registrational study and reduce the overall timeline for this program. Additionally, today, we announced entry into a collaboration with Second Genome to identify micro biomarkers in the CULTIVATE program. Crohn's disease is marked by substantial heterogeneity. So the potential to identify biomarkers associated with clinical response may be important to the ongoing design of the CULTIVATE program. With our target enrollment, moving from 50 to 70 participants and the potential of impact from the COVID-19 Delta variants spreading across multiple countries in Europe. We are projecting that the top line data for sub-study A will read out in Q2 of 2022. Now turning our attention to the etrasimod dermatology programs, in 2020, we began a small Phase II exploratory study in alopecia areata, investigating 2 milligram of etrasimod in participants with moderate to severe disease. Today, we announced that we're broadening the participation, the participant population in the study to include a more moderate patient population and adding a 3 milligram treatment arm with the aim of detecting a dose response in study participants. We believe that by taking the opportunity to execute this amendment now, and should the data be positive, will put ourselves in position to move directly to Phase III. With this protocol amendment, we now expect to read our top line data in the second half of 2022. And finally, I am very excited to present a recent data cut from the open label extension of our Phase II ADVICE study investigating etrasimod in atopic dermatitis. Can we turn to Slide 6 please, the data I'll be walking you through in a moment provide us with even greater confidence in the promise of etrasimod for patients suffering from atopic dermatitis. The open label extension program followed the completion of the 12 week placebo controlled ADVICE study period and a four week washout period. At that point, all of the participants who opted into the OLE which was 85% of the ADVISE study participants who completed the 12 week study received 2 milligrams of etrasimod. When looking at the 16 week data, in the OLE, we were pleased to see a consistent clinical improvement across key efficacy measures with no new safety signals to date through 56 weeks of follow up. Let's move on to Slide 7. I'd like to point out that within each chart, you'll notice the dashed lines across the bottom, which represents placebo rates at week 12 of the ADVISE study. We have extended these placebo rates for the sake of taking a conservative view of the OLE data. Also, we've taken an additional conservative approach when estimating the Delta at the 16 week time point of the OLE as we've applied a non-responder imputation shown by the blue line. As you look across the vIGA, EASI-75 and Peak Pruritis NRS, you'll note the consistent clinical improvement across each efficacy measure at week 16. Further at week 16 of the OLE, we observed a vIGA improvement of 47%. As a reminder, vIGA is the FDA registrational endpoint for Phase III studies in atopic dermatitis. When looking at EASI-75, we observed an improvement of 72% and a Peak Pruritis change of 61%. As you will note and with the appropriate caveats of both cross study comparisons, the data is in the range of approved biologics in a day, as are the relative deltas with placebo rates extrapolated from the initial 12 week period. As you can imagine, we are very enthusiastic about these data. While we're still in discussions with regulatory authorities around the world to establish the final Phase III design and protocol based on the OLE the data presented today, along with the review of the full data set, we've made the decision to anchor our Phase III program to a 2 milligram dose. With regards to timing, we anticipate commencing Phase III study activities in Q4 of 2021. Now I'll turn it back to Amit to highlight our upcoming catalysts. Amit?

Thanks Doug. If we go to Slide 8 please, with the updates we presented today, you can see the next 12 to 18 months will be both busy and exciting. And looking at Q1 '22, we'll have data from UC 12 and UC 52 contemporaneously, followed by the enhanced and expanded CULTIVATE sub-study A in Q2. In the back half of 2022, our plan is to submit our NDA for etrasimod in ulcerative colitis pending positive data. We continue to work diligently across the organization in support of our NDA including ongoing work in areas such as clinical pharmacology, CMC, quality and regulatory. Also in the second half of '22, we will turn over several important data readouts, including etrasimod and alopecia areata with two and 3 milligrams and the expanded patient population, eosinophilic esophagitis or EoE and data from APD418 and temanogrel in their respective cardiovascular indications. Now I'll hand the call over to Laurie who will take you through the Q2 financial performance. Laurie?

Thank you, Amit. Turning to Slide 9 for key financial measures, research and development expenses for the second quarter totaled $112.5 million, compared to $64.9 million in the same period in 2020. This increase was primarily driven by advancement of our clinical trial programs, as well as an increase in personnel expenses as we staffed to support our program growth. Selling general and administrative expenses for the second quarter totaled $31.9 million, compared to $22.9 million in the same period in 2020. Net loss for the second quarter was $146.1 million, compared to a net loss of $84.9 million for the same period in the prior year. Basic and diluted net loss per share for the second quarter was $2.40 compared to basic and diluted net loss per share of $1.61 for the same period in 2020. Operating cash burn in the second quarter was $93.8 million, compared to $77.8 million in the same period in the prior year. And as of June 30, 2021, cash, cash equivalents and marketable securities were approximately $1.0 billion, compared to $1.1 billion at March 31, 2021. And now I'll turn the call back over to Amit who will make some concluding remarks before opening the call to the Q&A session.

Thanks Laurie. We'll go to Slide 10, please. In looking at Q2 performance, you can see we make continuous - we continue to make significant progress across our entire portfolio. And that now we have a direct line of sight to our Phase III ELEVATE data readout. Overall for the portfolio, we continue to evaluate the market, competitive and regulatory environment and where necessary, adapt our approaches of our science the best chance of providing a clear clinical signal. On atopic dermatitis, we continue to make strong progress and the open label data extension that we presented today gives us confidence in entering our Phase III program. And of course, finally, we continue to maintain a strong cash position. I like to take this opportunity to thank the entire Arena team for the hard work and dedication as we continue to build towards the future of the company. With that operator, let's move to Q&A.

Thank you, sir. [Operator Instructions] Your first question is from the line of Alethia Young from Cantor Fitzgerald. Your line is open.

Hey guys, thanks for taking my question and congrats on the progress with enrollment. Just two for me, one, on the alopecia areata study, I just wondered if you saw anything in the 2 mg that kind of - is informing your decision to kind of move into the 3 mg, any color there would be helpful. And then as you think about the completion of the enrollment of the UC study, are there things in consideration such as staffs being kind of enrolling during COVID that you guys have proactively been doing especially in light of some of the learning maybe from atopic and just wanted to get some color on that? Thank you.

Sure, let me start now. If I miss anything Doug, please jump in. On the AA study we're blinded to the data, so it's not a reflection of 2 milligram? As you know, in atopic derm we did not get a chance to explore the 3 milligram in a Phase II study, so we thought this was the right place and time to take a look at 3 milligrams. Importantly - and just as important as the 2 to 3 milligrams of expanding the patient population in the study. And then the final point, which I'll echo what Doug said in his prepared remarks, is that by increasing the study and making it more robust, we're moving this study from a proof of concept study to a study that could potentially take us directly to Phase III. So the overall program timeline gets get potentially diminished by doing that. So that's really the purpose of - to change that study. In terms of enrollment on etrasimod in ulcerative colitis, as you know, we've maintained a very high degree of touch in the trial. We continue to evaluate every patient every day, every day to entry to ensure that we have the strongest possible integrity of the trial. As I pointed out previously, discontinuation rates, and other interruptions of dosing, et cetera, are well below our pre-planned statistical expectations for the UC study. So we continue to be very positive about where that trial is heading, both in terms of the timelines as well as in terms of data integrity.

That's great. Thank you very much.

Thank you.

Your next question is from the line of Neena Bitritto Garg from Citibank. Your line is open.

Hi, this is Dina on for Neena. I just have a quick question about the ELEVATE UC 12 study. How long will it take for analysis from the ELEVATE UC 12? Will it take a full eight weeks post the last patient visit report that path line data? Thank you.

Yeah, so as Doug pointed out, as folks will do the math and the trial timing may look earlier than UC 52. The data are intended to be analyzed together. So the end of the study would expect the normal time period in terms of analysis, but it also important to remember that the last patient out is really dependent on whether patients enroll in the OLE or not. So we'll know more about exactly how tight the timing is between two studies as we get towards the end of the - end of patient exposure, and we get the last patient out on study. So stay tuned. We're excited about where we're at with this and really pleased that the teams were able to execute on UC 12 in the middle of a COVID pandemic. Thanks for your question.

Your next question is from the line of Chris Howerton from Jefferies. Your line is open.

Fantastic. Thanks so much for taking the questions and super excited for the UC data too. So I guess maybe the question for me primarily is around what is the design of the CULTIVATE study? I'm feeling a little confused around the sub-study A, what sub-study 1 is and kind of how you see that becoming potentially registrational? And if you're willing to take a follow up question for me, I'm also curious what the status is of the extended release formulation is for etrasimod is, you have more clinical programs going on and more dose selection work going on, how does that layer into your thinking? Thanks.

Yeah. Thanks for the question. The design of the CULTIVATE study starts with sub-study A. As you know that's a study that does not have a placebo control. It's just 2 and 3 milligrams. By expanding that study to 70 patients, we're able to get a pool of data set that's comparable to competitive products. We've done open label studies and moved directly on to registrational trials. So it really gives us the same size data set, and the robustness. And on top of that, we've got this collaboration on the biomarker side, which will help inform the overall program in time. The sub-study 1 was designed as a dose finding study between 2 and 3 milligrams in a placebo control setting. And at this point, should the sub-study A readout in line with our expectations, we would be in a position to power sub-study 1 to be the first to pivotal trial. So previously, we've contemplated sub-study 1 being a dose finding study and then moving to two large Phase III trials. In this case, we'd be able to power out the sub-study 1, if that makes sense.

That does. Thanks Amit.

Yeah. And then the second question on the ER formulation, we continue to make good progress across the extended release. As you know, we've done some initial work on liquid formulation, so really try to pinpoint the exact curve we wanted to generate. And now what we're doing is we're looking across 2 and 3 milligrams and looking at broad range of potential formulations to begin to mimic that initial curve. So that work is ongoing and it's an iterative process. And we look at multiple different formulation methods, and there's a concentric circle between - concentric circles between being able to really identify the right formulation and developing new intellectual property. So as we've said before, the role of extended release is to both extend and expand the role of etrasimod, extend the intellectual property life and being able to expand into new indications. And so that work is ongoing and consistent with what we've said before. We hope to bridge that into the dermatology programs over time.

Okay, that's cool. Thanks Amit.

Thank you.

Your next question is from the line of Jessica Fye from JP Morgan. Your line is open.

Hey, guys, good afternoon. Thanks for taking my question. I guess first, given what's become a bit of an extended timeline for sub-study A, can you comment on where enrollment stands in the study just to give us a kind of a little progress update? How close are you to the originally planned 50 patients?

Sure. So we don't comment on details of any study's enrollment. We are spot on where we expect to be on that study. But with Doug's arrival and taking a look at the competitive set, evaluating our regulatory potential path forward, we've made this change so that we can begin to move the overall program faster forward, so that's really the objective here.

Okay, so with Doug's arrival that's the reason why it's just happening now that you're deciding to enroll 70 patients and this wasn't a call you were able to make earlier.

No, we were working on this earlier and working through regulatory implications. As you know, working through regulatory implications isn't the fastest process in the world. So we were already working through this prior to Doug's arrival and Doug's judgment here is extremely important with his broad range of expertise, really gave us confidence that we were making the right decision here.

Great and just last one for me, do you see pool safety data from sub-study A on an ongoing basis, maybe on a blinded basis? And given that the 3 milligram is - would be part of that pool data, anything you can comment on safety so far?

Sure. So the safety is evaluated in a blinded fashion by external parties and the SMBs. And we haven't seen anything that would make us question our decision to go from 2 to 3 milligrams at this point.

Great, thank you.

Thanks Jessica.

Your next question is from the line of Chris Shibutani from Goldman Sachs. Your line is open.

Great, thank you very much. Two questions, one on the current CULTIVATE study. Could you help us a little bit understand the patient characteristics background in the way that you have helped us to understand the UC program? And to get a sense whether any of the modification and enrollment from 50 to 70 patients there is taking any features of patients' exposure to biologics into account?

Yeah, Hey, Chris, thanks. Yeah, there's no real difference in the additional 20 or so patients who will be adding to study from the original 50. As you know, working moderate to severe Crohn's. There's some very clear defined guidelines in terms of the patients we want in that study. And it's consistent with what everyone else has studied. I think this is the challenge in Crohn's broadly, which is, it's a narrow subset. Crohn's, as you know, has a lot of heterogeneity as Doug pointed out, and these studies are all designed to evaluate a very narrow subset of patients consistent with what other competitive products have seen. So Doug, Rob, anything to add to that?

This is Doug. Only to say that, yeah, we've kept the inclusion criteria as it is. We've just expanded the sample size. So we have more veracity with the data set on which we're basing our decisions. But the hope would be that we can be bullish in terms of the next phase of human experimentation.

Got it and then the follow up would be on advise atopic dermatitis. You gave us a snapshot of a work that you did in July. I think previously, you've said that you'd be doing a more fuller presentation of the data sometime in the back half of this year, should we still anticipate that and roughly when and that would be helpful to get insight.

Yeah, so the data that we presented today is a relatively fulsome set. We'll continue to evaluate the open label data over time. We expect to present this data in an upcoming medical conference and we're working through that now. So this will get presented in a forum. But as I think you can see from the data just gives us additional confidence that the outcomes that we're seeing here, even with the elevated placebo rates we saw in first 12 week are actually quite robust and in line with other agents. So again, consistent with the safety profile of the etrasimod being a once a day oral, not having the liabilities of JAK inhibitors and being able to deliver efficacy that's in the range of the approved biologics. We're incredibly excited about where this is heading and we think there's a substantial market opportunity in front of us.

And just to be clear the word anchor on 2 milligrams, does that mean that 3 milligrams is not part of the go forward AD plan or is it predominant?

Yeah, so it's not part of the Phase III plan. That's correct.

Great, thank you.

Your next question is from the line of Joseph Schwartz from SVB Leerink. Your line is open.

Thanks very much. Maybe I'll ask about your new collaboration with Second Genome to analyze patient responses in CULTIVATE. What's the null hypothesis there? Is it that patients who are more dysbiotic have worse responses to etrasimod or need higher doses? And what do you do with the findings that you uncover? Will you report them along with the top line CULTIVATE data? Would you expect to enrich enrollment in Phase III, just talk a little bit more about your plans there?

Sure. Joe, so let me start and I'll then hand it off to Doug. The reason to do this is really the heterogeneity that Doug pointed out and to the extent we can begin to really understand the impact of etrasimod. We've talked extensively before about etrasimod's role beyond just migration of T-lymphocytes. We've talked about activity on tight junction protein [ph]; we've talked about activity on the innate immune system. And so we're really excited to see where these biomarkers come out. Doug you want to lend some more color on it?

Yeah, just to say that we all know that dysbiosis is an important feature here. I think there is not a lot of literature on the quantification dysbiosis. So we're not going in with a priori notion of what that's going to turn up other than we'll do exploratory studies to see if there is a cut point in terms of response rates that might predispose us then to stratify or enrich and the Phase III program. And having done work in the Crohn's space a lot it is an extremely difficult population to homogenise. So if we can find any biomarkers that could help to predict who's going to respond better, I think it's going to significant chance to the likelihood of success in Phase III.

Okay, thanks. And then can I just ask about your dose selection and how you're thinking about dose selection for Phase III in atopic derm? It sounds like you're settling on two mgs of the high dose, is that right? And can you give us some of your thoughts around, where - is two, does two really seem like the top end of the dose response curve? It seems like at first you thought that and then you were considering going higher. So if you can just give us an update on your latest thoughts there. That'd be great.

Sure. So let me answer that question by handing off to Rob to talk about the data we presented today and how it stacks up competitively. And why we're excited to anchor the Phase III program on to 2 milligram. Rob can you shed a little bit of color on what these numbers look like relative to the competitive set.

Yeah. Thanks Amit. I'll be happy to. Good afternoon, everyone. Pleasure to join you. When we looked at the open label extension data, we're able to compare that to all of the approved drugs and the drugs that are currently in Phase II, Phase III. When you look at that data, you see a response across all domains and all endpoints that is in line with what you would see with just success, right, cross trial comparisons, different time points, all those caveats. But when you look at the response, it's in line with what's actually being seen with JAK inhibitors. Given that the response is so robust and continues to improve over time and there's no safety signals that have been observed through 56 weeks of exposure. We're confident that 2 milligrams is sufficient dose for this particular TA based on the profile of the molecule and the responses that we see.

Thank you.

Your next question is from the line of Jason Gerberry from Bank of America. Your line is open.

Hey, this is Sean for Jason. Thanks for taking up the questions. Maybe first one, just a quick follow up on the enrollment of the size for the sub-study A. Can you confirm whether the 20 additional patients, are they evenly split between the 2 milligram and the 3 milligram?

Yeah, we'll continue to randomize 2 versus 3. Correct.

Got it and I guess I'm curious your thoughts as to exploring micro biomarker, a lot of that data so far on - at least on microbiome as a treatment modality is mainly on ulcerative colitis. Maybe can you talk about how - like of what those data sets are to exploring micro biomarkers for Crohn's disease? And if not can you compare and contrast micro biomarker versus microbiome as a treatment modality for IBD?

Yeah, let me hand that off to Doug.

Sorry. Thank you for the question. So we're open minded. So we'll look first and foremost at the impact of our treatments on dysbiosis in the Crohn's disease setting, but also look to see what the baseline dysbiosis status was and to see whether or not there's indicators of individuals who actually have better improvement than others in terms of their Crohn's disease symptomatology.

Yeah. I'd just add one more thing, which is we're not discussing treatments against the microbiome; we're just looking at biomarkers in the microbiome as it relates to SNP modulation. And we think, to Doug's point, if we can create more homogeneity in the patient population that combined with the larger data set will allow us to be far more expeditious, and fiscally prudent in designing the remainder of the program.

And curious if you're able to find a plan in terms of what patients respond to your therapy? How response that you trust are better as an opportunity for you to decide a more robust file, perhaps with a smaller data set, because you're enriching certain population, they're more likely to respond, just curious thinking about maybe later stage trial design and timeline for market, that sort of question.

Sure, yeah. We won't get into the timelines on this, but Doug, if you want to take the first part of that question.

Yeah, again, thank you for the question. The two edged sword with enrichment, of course is if you need some biomarker to stratify, then you would need to validate that biomarkers. So we're not hell bent on the idea that one must do that, we'd still prefer to take an all comers approach, although if there's a way for us to enrich for individuals who have a greater likelihood of benefiting from our drug, we'll certainly do so. And always, our goal here is to try to have the most efficient Phase III clinical trials as possible in terms of time and cost and the number of patients necessary to get to a result that could help us convince regulators to approve the drug for that indication. So we're doing everything that we can to try to expedite the medicinal value of the trails involved in that setting.

Got it and maybe just one last question from me on AD, thanks for the updates with the OLE data and appreciate the trending up of the EC score, and also the IGA score. So I'm just curious is that if any thoughts as to what is driving the increase in benefits over time, is it durational therapy? Is it because you no longer have those protocol compliance that may have - interfere with your ability to interpret the efficacy data in the placebo control part? Or do you have any sort of AD natural history cohort that sort of address whether there might be an evolution of placebo rate over time.

Yeah. I think the most important striking finding that we had from the ADVICE double blind portion was that there was no plateau of effect. We made that point earlier in the year across and we've looked at as a patient by patient basis, we continue to see increase from eight weeks to 12 weeks, with no plateau of effect. So looking at 16 weeks was an important point for us. Recall that these patients were all washed out for four weeks before - we put back on 2 milligrams of etrasimod. So from that perspective it's cleaner ways, you can look at in open label study, to look at the effect size for etrasimod, and at 16 you can see - at 16 weeks you can see, again, a very robust response.

Awesome, thanks so much for the color. Thank you.

Thanks to you. Appreciate it.

Your next question comes from the line of Joseph Stringer from Needham. Your line is open.

Hi, everyone. Thanks for taking our question. Going back to the alopecia trail, you're adding the higher remake dose here. Just curious if you can expand a little bit on sort of the expanded patient population subtype, is that - how should we think about that? Is that based on potentially disease severity and baseline SALT scores and is that expanding into additional subtypes here? That stratified are possible in 2 mg and 3 mg arms. Thank you.

Yeah, so yeah, we would stratify for 2 and 3 milligrams. The idea here is to give more alopecia areata patients as opposed to [indiscernible] patients, so we could address a broader subset. Recall also that we're treating for 24 weeks in this study, and we're talking about resident T-lymphocytes being cytotoxic at the hair follicle. So having sufficient time to be able to make an impact here has everything to do with being able to have that 24 week treatment period. So yes, we're looking at about 2 to 3 milligrams and expanding more to alopecia areata as opposed to [indiscernible] patients, so we'll get a broader subset of patients. And based on that, we think the expanded stuff here will allow us to make a more informed decision about how to move to Phase III.

And Amit, just to add, so we're going down to a SALT score at entry of 25 or more, 25 to 95, up from 15 to 95. And at the end of the day, with the added enrollment, we should have an even split between placebo 2 milligrams and 2 milligrams for approximately 26 or 27 patients per arm.

Great, thanks for taking our question.

Thank you.

Thanks Joe.

Your next question comes from the line of Yatin Suneja from Guggenheim Partners. Your line is open.

Hey, guys thank you for taking my question, just two for me. First on CULTIVATE sub-study did you take a look at - or were there any analysis of the data that led you to increase the sample size or you just increased based on - like without looking at the data? That's the first question.

Yeah, we're blinded to the data. So we made this decision based on having a data set that would allow us to really think about sub-study as a pivotal study. That was the driver. We're, again, we're blinded to the data.

Okay. And then with regard to the UC 12, can you talk about how the patient mix might be looking between the biologic naive unexposed patient and how would that compare to 52?

So 52, we announced 70-30 split. This is trimming closer to what we saw an OASIS, which is about a 60-40 split.

Okay, got it and just to confirm, you will be analyzing these data sets together both UC 12, even though that one most likely will be sort of done before 52.

Yeah, Doug, do you want to just expand on that?

Yeah, so they'll be analyzed contemporaneously. So we will do at the same time. So the plan would be to actually keep the database unlocked for UC 12 until a time where approximate to when we're going to walk the database with UC 52. And then run the analyses on each of the studies at the same time and then subsequently do pooled analysis as will be needed for the ISS and the IC of the NDA submission to the US FDA.

Okay, helpful. Just one final question, maybe on the expenses side, could you give an update on how the expenses are going to ramp up for the second half or for the rest of the year and maybe in 2022?

So Laurie do you want to take that?

Yeah, certainly, we haven't given guidance for '21 or '22 yet on cash burn. But what I can tell you is we did have a $214 million cash burn in the first half of '21. And then obviously, we have increasing patient enrollment in all of our studies and advancement in all of our studies, so we would expect somewhat.

Got it, thank you so much.

Thanks Yatin.

Your next question comes from the line of Prakhar Agrawal from JonesTrading. Your line is open. Hi,

Hi, thanks for taking my question. My first question is on ADERM Phase IIIa trail. Just wanted to clarify if there are any other changes in the Phase III trial that we should expect compared to ADVICE to minimize the high placebo effect that you saw in the Phase II? Secondary it's more on commercial in our conversations with KOLs suggests that Symposia. Bristol Myers, SNP that recently launched has been limited to treatment refractory UC patients. I know there's still a long way to go, but you just wondering if you had any thoughts on the implications of [indiscernible] and their pricing in UC to how you're thinking about your commercialization strategy. Thank you.

Sure. So let me - let's start with the commercialization question. Rob, do you want to take that please?

Yeah. I'm happy to. Thanks. Amit. It's early. Their approval was May 27. So we're looking at just a few weeks of data where they've been in market, their relative access within the market is pretty limited. So right now for most payers are limited behind other agents. I think another consideration is the price stands out a bit in the UC market. It's 90,000 per year. That's much higher than competitive choices and other therapies. The other piece too is that there is - one of the key differences between the work that they did and the work that we're doing is to try to generate and demonstrate value for the molecule for payers prior to launch. That's the GLADIATOR study. So my assumption would be they're engaged with payers right now and they're negotiating. So their access is very limited to a small group of patients, which is why you're likely hearing that from OLs.

I'm sorry. Can you repeat the first part of the question again?

Yeah, on the Phase III ADERM trial, any other trial design changes compared to ADVICE that we can expect?

Yeah, so what we said in the Phase III program is, we have a substantial amount of moderate patients in the Phase II study, and we'll be looking for more of a contemporary split between moderate to severe atopic derm patients closer to 50-50. If you recall, we were thinking at 3%, moderate, at baseline, so we're looking for more moderate to severe patients, and so be a much more contemporary split in the modest of your population.

Thank you.

Thank you.

Your next question comes from the line of David Hoang from SMBC. Your line is open.

Hey, thanks so much for the update and taking my question. So I just a couple. Can you talk a little bit about the GLADIATOR study in moderate patience? So what's the status of that, any relevant updates for that one? And are there - is there a timeline towards top line data?

So for GLADIATOR that study is enrolling and we expect to have top line data to carry approval studies and we expect to have top line data shortly after approval, as Rob pointed out to really work with the payers on that with that data set to really drive greater payer access. So it's still ways down and the study is enrolling now.

Okay, thanks. And then just quickly, I know you folks have commented on a few different ways, but I kind of wanted to ask the question in terms of atopic derm Phase III, it sounds like you're pretty confident in 2 milligram dose, but as you see more 3 milligram data from Crohn's and alopecia areata. Is it possible that kind of influences your thinking and you may be open to any type of protocol and then it's the 2 to 3 milligram arm or again is 2 milligram the dose that we all really should be looking at here?

Yeah. So the Phase III program, its two milligrams we reserve the right to go back and look at 3 milligrams in a separate set of studies. But the 2 milligrams is what will go on the Phase III. And as you saw from the data that was presented, the 16 week data, the effect continues to increase, we're seeing a very safe product out to week 56. And we're seeing rates of EASI-75, IGA and the Peak Pruritis score that are in line with the market leader. So we're doing that with a once a day oral, so we feel very good about where that 2 milligram is coming out. And as you can imagine, we spent a lot of time with excellent advisors, staring at this open label data. And it's been very encouraging to hear from experts in the field about this data and how it validates 2 milligrams. As I pointed out on a previous question from the ADVICE portion, we saw that acceleration of effect from week eight to 12 and so continuing that lack of plateau really takes us out to 16. And, and so that delta feels very comfortable for us in terms of being able to think about Phase III program.

Okay, understood. Thanks so much for taking my questions.

Thank you.

Your next question is from to line up Jason Butler from JMP securities. Your line is open.

Hi, thanks for taking the questions. Two for me, first, do you have any data for etrasimod that looks specifically at a direct impact on microbiome? And I get that you're not trying to show that, but have you ruled out that you don't have a direct impact on the microbiome? And then secondly, looking past the UC study readouts, are there ancillary clinical studies, preclinical work or CMC work that could become rate limiting to an NDA submission? Thanks.

Yeah. Doug, do you want to take the first part of that, and I'll take the second part.

Sorry, could you repeat the first part again?

Have you ruled out that etrasimod has a direct impact on the microbiome? If you're looking at what the indirect impacts on the microbiome treatment would be, have you just ruled out that you don't have a baseline effects directly in the gut?

So we believe from our preclinical models that we do not, but that's one of the things that we'll be exploring more intensely in the human studies with the collaboration that we just announced with the Second Genome.

Okay, and then the second part, looking past the UC studies, there's nothing rate limiting. We've been working for well over a year on making sure the clean form and quality systems necessary as well as the CMC are all in place toward the NDA. So there's nothing rate limiting beyond getting the studies completed.

Okay, great. Thanks for taking the questions.

Your next question is from the line of Kennen MacKay from RBC Capital Markets. Your line is open.

Hey, thanks for squeezing me in and great to hear about the UC 12 recruitment completion, big congrats there. Doug, maybe another question on that 2 milligram dose in AD just wondering what the drivers were behind that decision to move forward with that? Did that just converge versus 1 milligram over time or really sort of, again, what the driver was there? And separately, just thinking about the 3 milligram dose in alopecia areata, are there any disease ideologies or biology there that dictate that higher dose? Or is that sort of just a result of following the data? Thanks and looking forward to that UC data. Thank you.

Thanks. Thanks for the question. So yeah, we feel very comfortable with the 2 milligram dose in the larger populations in which we're currently testing and most importantly, all the work that we're doing in UC. We have margins we feel there's reason to probe 3 milligrams in more refractory diseases like Crohn's and alopecia areata. And we'll see what those results show both in terms of efficacy and safety and make the right decision in terms of dosing moving forward for those indications. And as Amit already stated you never say never. So if in fact we see that 3 milligrams in select indications is in safe and more effective. And we think that the ability for us to probe it in diseases like atopic dermatitis and by the way, the regulatory agencies have a lot to say about that then we'll proceed in consultation with that.

I'm showing no further showing questions at this time. I would now like to turn the conference back to Amit Munshi.

Great, thank you, everybody, for being on the call today. As you see, we continue to make significant progress across the portfolio Overall, we continue to evaluate market competitive and regulatory environments and as necessary adapter approaches to shorten the overall timelines for programs and get really our science the best chance of providing a clinical signal that's really important to us. And we think the changes we continue to make on these studies are all designed to really accelerate the overall programs. We're excited about anchoring on 2 milligrams for atopic derm, given the 16 week data we presented today. And I'd like to just conclude again by thanking the Arena team for their incredible hard work and dedication across the portfolio. But specifically call out the ELEVATE team at Arena for being able to really in the face of a lot of external and noise around the pandemic being able to execute these studies in a way that's ahead of schedule as well as maintaining strict data integrity. So thank you again, for everyone jumping on the call, and look forward to continued conversations.

Ladies and gentlemen, this concludes today's conference. Thank you for your participation. Have a wonderful day. You may all disconnect.