Rigel Pharmaceuticals, Inc. (RIGL) Q3 2018 Earnings Report, Transcript and Summary

Good afternoon, and welcome to Rigel Pharmaceuticals' Financial Conference Call for the Third Quarter of 2018. All participants are in listen-only mode. We will be facilitating a question-and-answer session at the end of today's conference. [Operator Instructions] I would now like to remind you that this call is being recorded for replay purposes from Rigel's website. [Operator Instructions]. And now, I'll turn this conference over to our first speaker, Dolly Vance, who is Rigel's Executive Vice President, Corporate Affairs and General Counsel. Ma'am you may begin.

The financial press release for the quarter of 2018 was issued a short while ago and can be viewed along with the accompanying slides for the presentation in the News & Events section of our Investor Relations page on our website, at www.rigel.com. As a reminder, during today's call, we may make forward-looking statements regarding our financial outlook, our partnering and commercialization efforts and our plans and timings for regulatory and product development. These statements are subject to risks and uncertainties that may cause actual results to differ than those forecasted. A description of these risks can be found in our most recent quarterly report in Form 10-Q on file with the SEC. Any forward-looking statements are made only as of today's date, and we undertake no obligation to update these forward-looking statements to reflect subsequent events or circumstances. At this time, I'd like to turn the call over to our CEO, Raul Rodriguez.

Thank you, Dolly. And thank you for joining us in our third quarter financial call. Also joining with me today are Eldon Mayer, our Chief Commercial Officer; Anne-Marie Duliege, our Chief Medical Officer; and Dean Schorno, our Chief Financial Officer. In reviewing today's agenda on Slide 6, we will provide you with an update on the number of key Rigel objectives since our instance is our last financial quarterly call for the year, I'd like to review our accomplishments for 2018 and discuss what to look forward to in 2019. While we discussed some of these topics during our Analyst Day in early October, we will be able to provide you some additional detail and highlight a couple of recent events that are critical to our long-term success. Now turning to Slide 8, during the third quarter we made significant progress in executing on Rigel growth strategy. In particular, we continue to experience great receptivity and interest for top release from patients and physicians. We had net product sales of $4.9 million in what is the first full quarter of product revenue. This is an excellent achievement by our commercial organization and speaks to the traction we are seeing in the market. Just last week, we signed a significant partnership agreement for the development and commercialization of fostamatinib in Asia. This is a very important milestone for Rigel and will serve as part of the foundation for expanding the global market for fostamatinib. We're happy to give you some additional color on today's call. We also filed a Marketing Authorization Application or MAA in Europe for fostamatinib in adult chronic ITP, another milestone in our global commercialization effort. This application was invalidated and accepted for review by the EU regulators. This is the equivalent of the U.S. New Drug Application or NDA. In our efforts to expand the opportunity for fostamatinib beyond chronic ITP, we're in the process of submitting final revisions to the pivotal Phase 3 trial for fostamatinib in warm autoimmune hemolytic anemia to the US FDA. This will take place in the next few days and we plan to initiate the trial in the first half of next year. In all, great progress with our current commercial opportunity, spending up for global expansion for fostamatinib and setting up for the next indication for this product. Moving on to Slide 9, as we execute on our global expansion strategy, our goal is twofold. First, we want to gain a presence in markets where there are significant financial opportunity; Europe and Asia. The EU is the second largest market for sales of ITP treatments and Japan is the third largest. Second, to do so, we will partner with companies that have significant experience in their local markets and with a proven track record of success. THIS quarter we took two significant steps to execute on these objectives. We signed an exclusive license agreement with Kissei Pharmaceuticals for all indications for fostamatinib in Asia and we submitted and validated the MAA for fostamatinib in Europe, initiating the review process there and we are in active discussions with potential partners for commercialization of fostamatinib in the EU we expect to have a collaboration in 2019. Turning to Slide 10, the Kissei agreement is a milestone event the Rigel. By a way of background, Kissei is an R&D and commercially oriented Japanese-based pharmaceutical company with over 70 years of experience, the share Rigel's mission to bring new drugs to patients with significant unmet medical needs and focus on important specialty medical areas. We think they'll do quite well with this orphan disease indications such as chronic ITP. With this agreement, Kissei gains exclusive rights to fostamatinib in all indications in Japan, China, Korea and Taiwan. They will hold a preliminary meeting with the PMDA, which is Japanese version of the FDA in early 2019. This will be the first step in the approval process of a marketing authorization application for fostamatinib in Japan for the treatment of chronic ITP. Rigel is the beneficiary of what we think is an excellent, committed and right-sized partner for fostamatinib in Japan and Asia. In terms of financials, we will receive an upfront payment of $33 million, actually we received an upfront payment of $33 million. Potential development and commercial milestone of $147 million and as the exclusive supplier of fostamatinib, Rigel will receive a transfer price premium in the mid to upper 20% range based on tiered net sales. And finally and perhaps most importantly, with Kissei we are able to bring fostamatinib to patients in Japan and other important Asian countries in doing so and in so doing it furthering our mission of bringing new drugs to these patients. I will now turn the call over to Eldon for our commercial update on the US commercial launch of TAVALISSE. Eldon?

Thank you, Raul. I'm pleased to share with you our commercial update including an update on our momentum since the launch of TAVALISSE at the very end of May. Moving to Slide 12, we've been focused on four core strategies thus far; one, build awareness of TAVALISSE in the unmet need in ITP. Two, educate our customers about TAVALISSE clinical utility and labeled indication three, secure adoption across the prescribe base with an initial focus on top-tier physicians in hematology and AHIMA community and four, create, distribution and patient-support infrastructure that enables more seamless access and adoption while providing an overall positive physician and patient experience. We're very encouraged by our results today. TAVALISSE mechanism of action and value proposition is resonating well with physicians and even better than expected and we are seeing initial benefits of that and the TAVALISSE broad indication with the demand across all lines of therapy. TAVALISSE is being used by all customer types. Large hospital clinics, integrated delivery networks or IDMs and both large and small practices. On the access side, regarding that with all of the top 25 payers account for over 90% of covered lives and we continue to receive a positive response from these payers regarding the product, it's ability to address an unmet need with ITP and our attractive pricing model relative to the market and we continue also to see favorable trends of reimbursement. No on to Slide 13; a look at early launch metrics gives us a lot to be excited about. At our recent Analyst Day, I walked through a lot of detail in how we are assessing this at the early stage of launch and today I'd just like to highlight some of the metrics that support our enthusiasm around the launch today. We're seeing demand for product across all lines of therapy including use in first and second lines in the steroid refractory market. To see this broad adoption at this early stage of launch is a very positive indication of physician interests. We're encouraged by reimbursement coverage with 85% to 90% payer approval rate and continue to seek payer wins, notably with several PBMs placing TAVALISSE on formulary for first-line steroid refractory use, which is consistent with the broad indication in label and essentially providing parity access to the oral TPO on the market. The payer mix is shaping up as we planned with about 45% being covered by commercial payers and 55% being covered by government payers and reimbursement is occurring as expected. A key indicator of early success is the number of patients that have remained on treatment after the first month. Although it's still early, we're tracking results over time and are pleased to report that of those eligible for a second month of treatment, 85% of patients continued on TAVALISSE. It's important to keep in mind that TAVALISSE label recommends a three-month trial before discontinuing if playbooks don't increase efficiently. So you expect a portion of those patient to discontinue treatment in the third or fourth month. We are collecting and analyzing data for patients and can report on that in the future and we expect that at least four months of data will be required to evaluate patient persistency beyond the initial two to three month trial period. We are also seeing a prescriber base that continues to grow with approximately 300 patients prescribing TAVALISSE through Q3, based on those with a shift and reimbursed bottle of TAVALISSE. We're seeing good sales force engagement as well. Our current efforts are targeting approximately 3,250 hematologists and hemogs and our sales force is made over 7,000 calls to over 2800 ITP treaters today. We're executing as planned and having success with access to potential prescribers. Slide 14; our distribution network focuses on supporting access to patients in TAVALISSE regardless of provider source, in private practice, hospital outpatient clinics, IDNs or federal accounts such as the VA. Our specialty distributors and specialty pharmacy partners combined are providing good coverage across the US to all provider sources and this distribution model has been received well by community hemogs. We're seeing broad utilization across -- of TAVALISSE across the channels of business. Starting at the top of the slide and working down, through September 30, we shipped 891 bottles from our three PLs of specialty distributors. From the specialty distributors, 319 bottles were shipped to community pharmacies and clinics, including in-office dispensaries also known as IODs and 436 bottles were shipped to specialty pharmacies. Then from the specialty pharmacies, 368 were shipped directly to patients. When combining the 319 shipped to community pharmacies and clinics, with 368 shipped from specialty pharmacies, we had total patient demand of 687 bottles from launch through the end of the third quarter. With regard to our free trial program, through the third quarter, we shipped 63 bottles to patient, which represent less than 10% of total patient demand. This is an offering to patients with a prescription for TAVALISSE that may experience a delay in coverage as they navigate the reimbursement process and pay a requirement. To support patients getting proper access to TAVALISSE, which has the potential to lead to sales, but more importantly, provides patients with a much-needed treatment option without any significant delay. Now on Slide 15, I'd like to review some of our initiatives to maintain launch momentum in Q4 and into 2019. With regard to market access, we have ongoing engagement with the top 25 payers, as well as with regional payers. WE continue to enhance our distribution system and provide ongoing support and exclusion of Rigel One care patient and providers support center. Our physician and customer engagement consists of promotional peer-to-peer speaker programs, which are ongoing as well as medical conferences and medical society meetings at both state and regional levels. The American Society of Hematology Annual Conference in December also known as ASH will be a key meeting for us and will be our first presence of this conference after launch. This will serve as a great opportunity to build awareness and engage with many hematologist and hemogs and we intend to have a strong presence there with many key customer engagement planned. On the efficacy front, we're deepening relations with relevant, patient advocacy groups by aligning on share priorities that mutually benefit each party and continue to establish and maintain effective lines of commission communication with all groups, the patient community care wealth and etcetera. Slide 16, just to recap briefly, all the trends we are seeing to date are headed in the direction that we had hoped. We are seeing strong demand and significant refill activity. We continue to receiving positive response from physicians, payers and patients. We're seen usage across all lines of therapy. There is a good uptake in sales from a broad base of prescribers and community clinics. We have secured good coverage from payers of many recent positive formulary decisions and there have been low abandonment rates, which is driven primarily by Medicare patients due to co-pay, which we had anticipated. I am confident in our ability to continue growing our commercial business and are excited about the receptivity we're seeing in the marketplace. So with that, I'd like to hand the call over to Anne-Marie.

Thank you, Eldon. Slide 18 I'd like to round out the discussion of our fostamatinib program in chronic ITP by briefly highlighting the regulatory progress we're making. As Raul mentioned in his comments, the EMA review process of our marketing customization application is moving forward. We submitted the application in September and this was accepted for review at the beginning of October. Based on the standard review process and taking into account, the time required to respond to questions, we expect to receive an opinion from the CHMP by Q4 of next year. If we were to receive a positive opinion, we would expect to obtain official approval by the end of 2019. Now on Slide 19, I'd like to turn to our second indications for fostamatinib, which is a immune hemolytic anemia or AIHA. This disease is characterized by lower survival and shorter lifestyle of red blood cells, which become coated with an IgG antibody and then are attacked by the body's own immune system. To reiterate what we have previously said, we're targeting the immune hemolytic anemia for three primary reasons. One, other than steroids, there are currently no options approved in the US specifically for this indication. Two, we're targeting antibody mediated destruction of red blood cell similar to the targeting of antibody mediated baseline destruction in ITP and hence investigating the mechanism of action that we're very familiar with. And third, there is a significant opportunity for this indication in the US and other leading pharmaceutical markets. What is also important is that Eldon and our commercial team have already begun to build an infrastructure for TAVALISSE in the U.S., which we could leverage to potentially enter the market efficiently and effectively. On Slide 20, you will see that a free trial design to immune hemolytic anemia. In the coming days, we will be submitted to the FDA our final revisions to our pivotal trial design, which were based on this agency's recently feedback. Importantly, we're on track to initiate the trial in the first half of next year as planned. This will be a randomized placebo-controlled 24-week trial, which will enroll approximately 80 patients with between autoimmune hemolytic anemia with at least one prior therapy. So this will also have a hemoglobin count of less than 10 grams per deciliter at screening. Turning the Slide 21, the primary endpoint is going to be similar to the one we have used in the Phase 3 -- in the Phase 2 program. We're looking for durable hemoglobin response by week 24, which is defined as a hemoglobin greater than 10 grams per deciliter and greater than 2 grams per deciliter above baseline. We're finalizing how we will define durability of response with the FDA and expect to have all of the requirements in place in the coming weeks. We have a lot of experience recruiting patients with hematologic disorders and plan to leverage all the knowledge we have gained from conducting the Phase 2 trial in autoimmune hemolytic anemia as well as our clinical trials in ITP. This will be of great benefit as we look to achieve a timely enrollment and strong trial execution. We will be conducting the trial normally in North America, but in Europe and possibly in Australia as well if it makes sense. Finally I'd like to mention the three abstracts that have been accepted for presentation at this year's ASH Annual Meeting. We will report extension study data on TAVALISSE in chronic ITP in an oral presentation. Additionally, we have two abstracts of successful poster presentation, once which analyses the prediction of response to fostamatinib in the presence of antibodies to platelet. And then we have the extension study results of the autoimmune hemolytic anemia study that will be presented as a poster as well. Dean?

Thank you, Anne-Marie. Starting on Slide 25, here are some of the financial highlights from the quarter. First, let me remind you that we recognize revenue using the selling methodology when our products are delivered to our specialty distributors. For the third quarter of 2018, 649 bottles were shipped our specialty distributors resulted in $6.1 million of gross product sales. 610 of those bottles were shipped to patients and in clinics, while 39 of those bottles remained in our distribution channel at the end of the quarter. As of September 30, a total of 204 bottles remained in our distribution channels. We reported net product sales in TAVALISSE of $4.9 million, which was recorded net of estimated discounts, charge-backs, rebates, returns, co-pay, assistance and other allowances of $1.2 million our gross to net adjustment. Progressing on to the next slide, our cost of product sales was approximately $69,000 or about 2% of net product sales. We reported total cost and expenses of $29.2 million in the third quarter of 2018 compared to $18.8 million for the third quarter of 2017. This increase was primarily due to their personnel costs for commercial and medical teams as well as third party costs related to our commercial launch of TAVALISSE. We expect quarter-over-quarter increases in our total costs and expenses as we initiate our pivotal trial in autoimmune hemolytic anemia, advance our early stage R&D programs and continue to invest in our commercial life of TAVALISSE. We reported a net loss of $23.8 million or $0.14 per share in the third quarter of 2018 compared to a net loss of $17.7 million or $0.14 per share in the third quarter of 2017. On to the next slide. We ended the third quarter of 2018 with cash and short term investments of approximately $116 million. As Raul described, we're extremely excited about our collaboration with Kissei that we announced last week. While we plan to more fully describe the details and accounting for this arrangement with our fourth quarter results, let me highlights some of the key financial elements of our collaboration with Kissei. During the fourth quarter, we received $33 million upfront payment from Kissei. We expect a substantial portion of this $33 million upfront payment to recognized as revenue in the fourth quarter of 2018 and deferred revenue recognition of approximate 10% of this upfront payment into the future. Our agreement also provides for potential milestone payments totaling $147 million of which approximately two thirds are related to development milestones and one third related to sales milestones. Additionally, as the exclusive supplier of fostamatinib Rigel will receive transfer price payments in the mid to upper 20% range based on net sales. With this $33 million upfront payment from Kissei, we expect our cash runway will now extend into the first quarter of 2020 and provide for our continued commercial costs along with the expansion of certain clinical programs. I'll now turn the call back to Raul.

Thank you, Dean. On Slide 28, I'd just like to reiterate what a remarkable year this is been for Rigel and frankly I hope we have quite a number of like this in the future because it's been a great one. Most importantly, we received approval for TAVALISSE in adult chronic ITP in April. We then build a sales organization and launched the product May. And the initial fraction on the product has really been excellent. We're really happy about that. We've made excellent strides in advancing the global strategy for fostamatinib with acceptance of the MAA for fostamatinib in Europe and just signed a partnership agreement with Kissei for fostamatinib in all the indications in Asia. And in consultation with the FDA, we designed the pivotal Phase 3 trials for AIHA. So with these achievements I think we are really well-positioned for 2019. While we hope to achieve this, we hope to continue to drive revenue for TAVALISSE in the U.S. and provide the product to chronic ITP patients. We plan to establish a European partnership and potentially even see approval for fostamatinib in Europe and we expect that Kissei will be able to move forward with fostamatinib in Asia as planned and we hope to initiate the pivotal Phase 3 trial in AIHA sometime in the first half of next year. So really quite a lot to look forward to. So with that, I will turn the call over to operator for your questions.

Thank you. [Operator Instructions] First question comes from Kyung Yang from Jefferies. Your line is now active.

Thank you. So Kissei partnership, it's a full oral indications of for fostamatinib. So if the partner also interested in IgA nephropathy?

Thank you, Kyung. Yes, the partnership with Kissei includes all potential indications for fostamatinib, ITP of course, AIHA and also IgA nephropathy. As you know, we may have discussed in earlier calls, IgA nephropathy is a sizable indication in the U.S. in Japan with a prevalence rate maybe 9X that in the U.S. So a substantial burden on the healthcare system in Japan and they have the right to move forward with that as well.

Okay. And then just a quick question on this $33 million payment. Is it going to be booked for fourth quarter?

Hi Kyung. We expect about 90% of the $33 million to be recorded as revenue in the fourth quarter and then the last 10% will be deferred into the future the timing of which is a bit uncertain right now, but the majority of it will be in the fourth quarter.

Okay. And the last question is protocol looks great. I don't know if you can comment on what you're seeing in October so far?

Hi Kyung. It's Eldon here. We're not going to give any specifics, but I can tell you that we're pleased with the trend that we're seeing in early Q3. Prescriber count continue to increase. We're beginning to see more repeat prescribers and patients with more than one prescription fill. We continue of course as I say to receive good physician, excuse me, good feedback from physicians as well as from payers through the sales force and other channels and we continue to gain access over time and refine our targeting base. So overall lots of good signs going forward and we'll have some specifics of course in the future for you.

At the Analyst Day event, I think you had kind of indicated that at the physicians whoever prescribed it so far, they may want to wait to see how their patients are responding to TAVALISSE before they're prescribing additional patients. Is that what you are seeing through October as well?

Yes, we continue to see that. So we are adding prescribers and we do as I mentioned see more patients on therapy, but we have a lot of physicians who are -- have one patient on drug and we want to see how that patient does before they are adding. However, we do also see a number of prescriptions with excuse me, physicians with two and more patients on therapy. So we are beginning to see that as well.

Okay. Thanks very much.

Thank you. Our next question comes from Anupam Rama, JPMorgan. Your line is open.

Hey guys. Thanks for taking the question and congrats on all the progress on the TAVALISSE launch as well as the broader pipeline. Just a quick one for me, once you get the final regulatory sign offs here for AIHA Phase 3, what are the gating factors to initiating that study and how much site overlap should we be expecting from the Phase 2 source study as well as the PIT study in ITP, thanks so much?

So in terms of site overlap from the Phase 2 study, in autoimmune hemolytic anemia I will certainly be using the site that have been familiar with the program and continuing to use some of them, but we plan to enroll -- to open a large number of site and will go much beyond the Phase 2 program into the site.

I think there is going to be substantial overlap in enrolling sites across Europe and the US I think.

Okay. Okay. Great. Thanks for taking my question.

Thank you. Our next question comes from Do Kim from BMO Capital Markets. Your line is now open.

Good afternoon. Thanks for taking my questions. I was hoping if you could provide some additional background on the ITP market in Asia on the patient size and the use of people patients and other therapies and how that may differ from the US and Europe and if Kissei will need to run additional clinical trials with Asian patients before filing?

Thank you, Do. I'll handle that one. So the prevalence rate for chronic ITP is comparable in most of the countries around the world including Japan, a roughly a third the population of the U.S. So the prevalence rate is about a third of the U.S. and you may recall we said 65,000 is the number of adult chronic ITP patients in the U.S. So I've seen estimates about 30,000 and as low as 25,000. So it's 25,000 to 30,000 is a number of patients adult chronic ITP patients in Japan. It's treated fairly similarly except not as much rituxan use. That's I think the biggest difference between the market there and the market here. In terms of size of the revenue size with some of our partners, potential partners in Japan that told us, it about 125 million in revenue that's substantially smaller than the U.S. in terms of dollar revenue because the pricing is a bit lower than it is in the US for these treatments, primarily driven by the two [indiscernible] agents. Of the two, the oral version is substantially higher than the injectable product. So both are approved there and so it's an attractive markets overall. I've see and the 125 probably doesn't include all the off label products that are used that are not generic as well. So it might be a little bit higher than that. So very attractive market in Japan. Kissei is very well positioned to execute on this specialty market that is really their sweet spot and we couldn't have asked for a better partner. We were absolutely delighted to have them on board. They’ve been very eager to move forward with that obviously and obviously we were able to conclude this deal successfully well ahead of our expectations.

And do you think Kissei will have to run additional clinical trials in the Asian population?

Oh, thank you for reminding me answer that question. Typically the answer to that is yes, but I think that we're going to leave for them to have the discussion with the PMDA first and then they'll tell us about that.

Okay. Great. And a question on AIHA, the Phase 3 trial, would you consider the primary endpoint while for that trial less stringent than it was for ITP and should we expect since it is a similar endpoint with the Phase 2 should we expect the same high response rate? And what kind of placebo response should we expect in that trial?

So we're not making any parallel between the ITP program and the autoimmune hemolytic anemia program. Currently we're finalizing our formal definition of the endpoint with the FDA and we will report on it at another time. In terms of the placebo patient population, we are taking into account into based into our design of the program.

But we'll provide further information a bit into the future after this is finalized with the FDA.

Okay. And just on enrollment, what was the pace of moment you were seeing toward the end of the Phase 2 study and would you expect that to accelerate in the Phase 3 for you to reach your first half 2020 enrollment completion target?

We were seeing approximately one to two patents per site overall of enrollment given that this is such a rare indication and we expect to see the same in the Phase 3 trial and hence we'll size the number of upside accordingly.

Okay. Thank you. Thank you for taking my questions.

Thank you, Do.

Thank you. Our next question comes from Chris Raymond from Piper Jaffray. Your line is now open.

Thanks guys. So just a quick question on, at your R&D day, I think you talked about over 40% of use of TAVALISSE being in first or second line steroid refractory patients. Just wondering if maybe you can sort of describe if there's a trend since then or give an update as to where that number might be at this point? And maybe talk about where you think that number might go over time? Do you think it go much higher and I think you were saying at the time, that was a bit of a surprise. So any sort of color there will be great.

Yeah hi Chris. This is Eldon. And let me just say before I address your question that one of the things that nice is about the analysis of how our products are being used as I did mention of course it's being used across all lines of therapy, but we're seeing that following all therapies including steroids, TPO agents, both of the TPO agents, rituxan etcetera according to the data that we're gatherings. So we're seeing pretty broad usage and I did want to characterize this. Overall we're very pleased with the trend that we're seeing there but and while we're encouraged by this broad adoption, these data should be considered directional given the limited sample size of the data. And I just wanted to speak to that a little and why it is limited. As a reminder we have visibility into the specialty pharmacy channel, which represents roughly half of our total demand and so a portion of that come through Rigel One care, where we have some visibility into the treatment history. So it's a portion of a portion of our demand data. So we don't plan to report that level of detail in the future. However, we will continue to monitor it and report on overall trends, we do observe. So although I can't give you a specific number on that today, I can tell you we are pleased with the trends that we're seeing there overall and we're going to continue to look at this. It's just we want to accumulate more data there and then see how it goes. So hope that answer your question.

Yeah fair enough. Thanks so much.

Thank you. Our next question comes Justin Kim from Cantor Fitzgerald. Your line is now open.

Good evening, everyone. Thanks for taking the question. Just maybe a couple for me. Can you tell us at what stage the company might have sufficient commercial experience to provide guidance for 2019? I think four quarters were mentioned earlier, sort of a benchmark for understanding, how patients are coming on and potential off?

Hi this is Dean. So from a guidance perspective, this was our first full quarter. So we're looking -- we want to continue to analyze data as Eldon said, as Raul said. We haven't decided whether we will provide guidance or not, but as we head into the end of the year, we'll make that determination and we'll update you then.

Okay. Great. And then maybe just piggybacking off maybe the question beforehand in terms of the bottles that are shipped and where they are placed, is that going to be a regular update or maybe if it is, is that a January event or quarterly call then?

So I'll take that. So we will continue to provide data for example we said there are 204 bottles in their distribution channel. Eldon walked us through kind of the details of the distributions channel. We'll continue to provide certainly there are 204 bottles in that number in the distribution channel. And then we'll from time to time provide the level of detail that Eldon described.

Okay. And then maybe just one on AIHA, without going into too much detail, could you describe what size of patient data sets might be available at the meeting to present it?

You mean at the ASH meeting?

Yes.

At the ASH meeting we'll report on the extension of -- the extension trial of patients in the Phase 2 trial, which will be less than 10 patients.

Okay. Great. Thanks so much.

Thank you. [Operator Instructions] The next question comes from Yigal Nochomovitz from Citigroup. Your line is now open.

Yes. Hi. Thank you for taking the question. On the free drug that you mentioned, what is the trend expected to be there and will you expect them to convert to revenue-generating over time thanks.

Yeah hi. This is Eldon again here. We've been tracking this metric in two different ways. One is looking at the bottles and one is looking at the patient, the number of patients, the number of bottles. The number of bottle as I mentioned is below 10%. Number of patients is below 15%. So we don't see any really trend there. We don't see it increasing or decreasing. These are of course early data. So again directional I think that goes without saying, but we're just not seeing any seeing any trend there that we can comment on at this early point. But of course, as I mentioned before, we'll continue to monitor and tell you what we see. We are seeing them convert over to pay prescriptions. I don't have specific number for you there, but I can tell you that we are seeing that and it's consistent.

…which is really the objective of it to make sure that we don't lose valuable patients that might benefit from the product and providing them for say a three month, so that they get coverage in that period of time. So we're delighted some of them are converted.

Okay. And then I think Eldon you mentioned that there may be a portion of patients that by the third or fourth month of therapy, would discontinue if they don't get a sufficient recovery. What are the expectations there in terms of a percent may discontinue? Is it similar to what you expect in the clinical trials or is there a different view for the commercial picture for that?

Yeah it's a great question. The real world clinical experience can often be different than the clinical studies and I think we're just -- on that, we're just going to need to accumulate data over time as I mentioned. We have built visibility on this on half of our business at this time. So we're accumulating data. We'd like to accumulate at least four months of data until we can provide additional metrics on how that's looking. I wouldn't want to make any projections at this point.

And we need enough of a volume of patient to say something we can't base that just on a small number of patients. We would like to be a little confident on that, but it's a very -- it's a critical question.

I can tell you anecdotally and we do stay in touch with our sales force and we hear information at various meetings and advisory boards and through the medical affairs team and we're hearing positive feedback genuinely on the clinical response overall and the tolerability of the drug. Physicians seem to be comfortable with AA profile or have their protocols of how to manage diarrhea and monitoring the blood pressure and liver function. So that hasn't been a barrier to prescribe and we don't hear anything that concerns us actually to the contrary.

Okay. And then, sorry I just had one more question. Okay. Thanks. So on the AIHA on the final point about defining the durability, is that just a thought in the eye and crossing the T's on the final definition or is there some more conceptual gap between you and what the FDA would like to see and how that's defined? Can you just clarify a little bit, thanks?

No, there is no gap. It's actually going to the finalization of the definition.

So it is just crossing the eyes, starting the eyes and crossing the T's.

Okay. Like how many visits they have to be above a certain level, is there something like that? Is that just you're working out for.

Yes.

Okay. Great. Thank you.

Thank you. Our next question comes from the Eun Yang from Jefferies. Your line is now open.

Thank you. And in the press release, you said that you guys are in active discussion for a European partnership. So do you expect that partnership to come before approval?

We really can't give greater guidance than that. We're comfortable that we will have a partnership in place in 2019, but exactly when that's the case. I really can't give greater granularity at this point and also in terms of predicting the exact month of the approval itself is a little dicey. So one relative to the others is cumulatively doubly dicey. So we're comfortable that the partnership is 2019 and we are hopeful that the approval is also 2019.

Okay. And then 147 milestone payment from Kissei. What's the current breakdown between development and commercial?

Yeah so, two thirds is development and one third is commercial.

Okay. Thanks very much.

Thanks. Pleasure. Take care.

Thank you. And now I'll turn the call back to Raul for closing statement.

Great. Well, thank you for your questions. We appreciate all your interest in the company. It really has been an amazing year for the company and we're really delighted that we were for the first time been able to get an approved product on to the market and provide it to the patients. That's really the mission of the company and something we really are very proud of. And we're also proud that we're seeing some good rewards in terms of revenue and update on that investment and we have a lot more coming. So it's been an exciting year. Thank you for your support this entire year. Next year is going to be even greater. Have a good day.

Thank you ladies and gentlemen for participating in today's conference. This concludes today's program. You may all disconnect. Everyone have a great day.