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Array Technologies Inc
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Good day, ladies and gentlemen, and welcome to the First Quarter 2019 Array BioPharma Inc. Earnings 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. [Operator Instructions]
It would now like to turn the conference over to your host Andrea Flynn, Senior Director, Investor Relations and Corporate Communications. You may begin Ma’am.
Thank you and good morning. This is Andrea Flynn. Welcome to Array BioPharma's conference call to discuss our financial results for the first quarter of fiscal 2019. You can join this conference call on Array's website at arraybiopharma.com.
We're using slides to accompany our remarks today, which can be downloaded from the Investor Relations section of our website, and a replay of the conference call will also be available as a webcast on our website.
I'd like to introduce Array's Chief Executive Officer, Ron Squarer; and our Chief Operating Officer, Andy Robbins; as well as our Chief Financial Officer, Jason Haddock, who will provide remarks today. Dr. Victor Sandor, our Chief Medical Officer, will be available to answer questions as needed.
Before I turn the call over to Ron, I'll remind you of the following Safe Harbor statement. The matters we are discussing today include projections or other forward-looking statements about the future results, research and development goals of Array and its collaborators, and future financial performance of Array. These statements are estimates based on management's current expectations and involve risks and uncertainties that could cause them to differ materially from actual results. We refer you to risk factors discussed in our filings with the SEC, including our annual report filed on Form 10-K for the year ended June 30, 2018, and in other filings Array makes with the SEC. These filings identify important risk factors that could cause actual results to differ materially from those in our projections or forward-looking statements.
Today, we're discussing results related to BRAFTOVI and MEKTOVI in BRAF-mutant melanoma. For reference, the important safety information is provided in the appendix of the slide deck.
I'll now turn the call over to Array's CEO, Ron Squarer.
Thank you Andrea, and good morning to everyone and who's called in. I'm starting on Slide 3, where we'll review our top priorities and value drivers. I’m starting with the U.S. launch of BRAFTOVI + MEKTOVI.
We're very excited to report results from our first full quarter with $14 million in net product sales. We've seen strong demand for BRAFTOVI + MEKTOVI with over 1,300 total prescriptions during the quarter. As a reminder BRAFTOVI + MEKTOVI are written as separate prescriptions, so each time the combination is prescribed there is one prescription for BRAFTOVI and one prescription for MEKTOVI.
We continue to receive positive feedback from the melanoma community and our team is executing a robust U.S. launch of BRAFTOVI + MEKTOVI for patients with BRAF-mutant metastatic melanoma.
There are approximately 5,000 new addressable BRAF-mutant metastatic melanoma patients each year and we currently estimate the existing targeted therapy market for BRAF-mutant metastatic melanoma at over $400 million in net sales annually in the U.S. and over $1 billion globally.
The impressive COLUMBUS data was once again published in a peer review journal with detailed overall survival results published online on September 12 in The Lancet Oncology. I’ll review the data highlights on the next slide. And also in September we were delighted that BRAFTOVI + MEKTOVI received European Commission approval and is available for sale in Europe.
Japan's Pharmaceuticals and Medical Devices Agency has accepted and is reviewing the manufacturing and marketing approval application for BRAFTOVI + MEKTOVI.
And then moving on to colorectal cancer. We're delighted to announce in August that the FDA granted breakthrough therapy designation to BRAFTOVI in combination with MEKTOVI and cetuximab for patients with BRAF, V600E-mutant metastatic colorectal cancer as detected by an FDA approved test after failure of one to two prior lines of therapy for metastatic disease.
Patients with BRAFV600E-mutant metastatic CRC have a mortality risk more than double that of metastatic CRC patients without the mutation and currently there are no therapy specifically approved for this very high-unmet need population.
We are encouraged that breakthrough therapy designation provides us with an opportunity to work closely with the FDA to expedite our effort to bring an important treatment option to these patients in an absolutely critical need.
Now following consultations with the FDA and EMA, we have planned an interim analysis based primarily on confirmed overall response rate and durability of response, which we believe could support an accelerated approval submission with positive results. This interim analysis may also support regulatory submissions in other regions and we anticipate topline results from this interim analysis in the first half of 2019.
We were also very pleased to initiate the ANCHOR CRC trial earlier this month, which is designed to assess the efficacy and safety of the combination of encorafenib and binimetinib and cetuximab in patients with V600E-mutant mCRC in the first-line setting.
Finally, our three non-exclusive immuno-oncology clinical trial collaborations with Bristol-Myers Squibb, Merck and Pfizer continue to advance.
Now on Slide 4, we highlight the results of the COLUMBUS trial that were recently published in The Lancet Oncology. As previously mentioned these results really exceeded our expectations not only in treatment effect size for OS and PFS but also in the tolerability profile.
BRAFTOVI + MEKTOVI is the first targeted treatment to achieve over 30 months overall survival with a remarkable 33.6 months compared to 16.9 months for patients treated within vemurafenib. The combination demonstrated a median PFS of nearly 15 months compared to about seven months with vemurafenib monotherapy.
The vemurafenib median OS of 16.9 months and about seven months of median PFS are both consistent with results from historical trials in which vemurafenib was used as a control, which is an important validation of our results.
Further, the use of post-trial immunotherapy was consistent with other published pivotal trials of BRAF plus MEK-inhibitors in advanced BRAF-mutant melanoma. Now with 18 months of additional follow-up relative to the initial publication of the COLUMBUS results the safety and tolerability profile of the combination remained generally consistent with the prior report.
Moving to Slide 5. We have in place strong ex-U.S. partnerships to maximize the potential of BRAFTOVI + MEKTOVI around the world. Our Europe focused partner with the strong legacy in oncology, and over 1,000 employees dedicated to this therapeutic area including commercial research and development capabilities has made BRAFTOVI + MEKTOVI a top priority for their team.
Ono, a Japanese market leader in immuno-oncology, has a powerful track record of success in developing and commercializing oncology products in Japan, including the first-to-market anti-PD-1 therapeutic Opdivo or nivolumab, and we look forward to their expertise in introducing our products to patients.
Under the agreements with PF and Ono, in aggregate, we stand to receive nearly $550 million in potential milestone payments, and the prospect that over half of future development costs could be offset by contributions from our partners.
In Europe and other territories, PF will deliver royalties on annual combined net sales of BRAFTOVI + MEKTOVI with rates starting at 20% and rising quickly to 35% when sales exceed only EUR 100 million. While in Japan and South Korea, Ono will deliver royalties on annual combined net sales of both products with rates starting at 22% and rising to 25% when sales exceed only JPY 10 billion or approximately $90 million.
So with that introduction I'm pleased to turn the call over to Andy our COO for an update on the recent launch of BRAFTOVI + MEKTOVI in advanced BRAF-mutant melanoma.
Thanks Ron. Moving to Slide 7, we are encouraged by the first full quarter performance of BRAFTOVI + MEKTOVI for advanced BRAF-mutant melanoma with net sales of $14 million.
As Ron mentioned we have fulfilled over 1,300 prescriptions during the quarter. Again to clarify BRAFTOVI + MEKTOVI are written as separate prescription. So, each time the combo is prescribed it is counted as one prescription for BRAFTOVI and one prescription for MEKTOVI.
The vast majority of prescription as we've seen to-date have been for the combination. As expected early adoption has been strongest in academic centers, which is where the majority of metastatic melanoma patients receive care in the United States. We are pleased with how physicians in these centers have embraced our combination therapy and encouraged by the recent demand we have seen recently in some of the larger community oncology practices across the country.
Based on conversations with many of our early adopters, we've seen an interesting dynamic in the marketplace with physicians switching their patients onto BRAFTOVI + MEKTOVI from other targeted combinations. What we've heard is that many of our early patients who are already being treated on these other combo therapies and were simply waiting for FDA approval in order to try BRAFTOVI + MEKTOVI.
Given this dynamic, we expect some of this early up tick will help provide experience for prescribers but likely will not represent a sustained pattern of use especially as BRAFTOVI and MEKTOVI are used more often as the initial targeted therapy for patients.
As a reminder BRAFTOVI + MEKTOVI is the first targeted therapy to demonstrate more than 30 months of overall survival in a Phase 3 study from our own physician interactions as well as from third party audits our sales and marketing messages on overall survival progression free survival and tolerability results from our Columbus trial are resonating strongly with melanoma healthcare providers.
We continue to believe that BRAFTOVI + MEKTOVI offers the best targeted therapy choice for patients with metastatic or unresectable BRAF-mutant melanoma.
Turning to Slide 8. I'd like to provide an update with regards to reimbursement for BRAFTOVI + MEKTOVI. First off, we have seen no unexpected delays from commercial payers. They are well versed in this space and understand the value proposition for BRAF/MEK combination therapy in this patient population as well as the benefits of ROS, PFS and ORR results coupled with our tolerability profile.
Next I'm happy to report that by the end of the first quarter our time to fill metric as measured by our specialty pharmacy network partners was down to approximately three to four days, which means that most patients are receiving their medication rapidly without delays due to reimbursement challenges.
Finally, I'd like to highlight the variety of ways in which we provide assistance to patients in need of our products. We are proud to offer what we feel is best-in-class copay assistance with a $0 copay for eligible patients with commercial insurance.
In addition, for patients who are underinsured or not insured we offer a patient assistance program, which provides BRAFTOVI + MEKTOVI free of charge. We are committed to doing what we can to help every patient who needs our products to receive them with urgency. With that I'll hand it back to Ron.
Thank you Andy and to your team for the exceptional performance we've seen. Moving now to BRAF colorectal cancer on Slide 10. It's the strength of BEACON CRC safety lead-in data that continues to guide our regulatory strategy.
And as mentioned earlier we're delighted to be granted breakthrough therapy designation for BRAFTOVI in combination with MEKTOVI and cetuximab. This designation provides enhanced opportunities for interactions with the FDA as we worked to expedite the development and regulatory review of this important combination.
We've planned an interim analysis and would seek accelerated approval in the U.S. based on positive results. This interim analysis may also support regulatory submissions in other regions and we anticipate topline results in the first half of 2019. Now this timing allows for the subset of patients required for the interim analysis of ORR to achieve an objective response and for the durability of responses to be appropriately evaluated.
On Slide 11, we provide the details of the global Phase 3 BEACON CRC clinical trial just for reference. And now moving to Slide 12, more currently there are no therapies specifically approved for this high unmet need population. The median OS demonstrated by EGFR and chemo-containing regimens for this population is about four to six months.
While recent experimental BRAF inhibitor containing triplet regimens reported median OS of 9.1 to 9.6 months, as mentioned, the median overall survival from the BEACON CRC safety lead-in have not yet been reached at the time of the analysis. At which point the overall survival data were fully mature through 12.6 months. The observed overall survival rate was 62% at 12 months. The related ORR benchmarks in this patient population range between 4% and 8% with experimental BRAF-containing triple regimens demonstrating ORR rates of 16% to 21%.
And as I mentioned earlier, we reported a 48% confirmed ORR from our BEACON CRC triplet safety lead-in at World GI this summer. Now related medium PFS benchmarks in this patient population fall between 1.8 and 2.8 months with recent experimental BRAF-containing regimens demonstrating around four months medium PFS. And for context, the Array triplet median PFS results of eight months already exceeds expected median overall survival for the control arm of our study based on historic results in this patient population.
I’ll note that Array has not conducted head-to-head studies comparing encorafenib + binimetinib against other the BRAF/MEK combination therapies. And these data come from separate Phase 3 and Phase 2 studies. And of course, I’ll issue our standard caution about making cross trial comparisons. These trials were conducted under varying conditions and results may not be directly comparable.
Now on Slide 13, looking at the safety lead-in, overall survival curve presented at World GI. You can see that the data are fully mature through 12.6 months with no censoring prior to that point. The median overall survival was not reached and the observed survival at 12 months was 62%. We do look forward to sharing updates on this dataset in this population at an upcoming scientific meeting.
Moving to Slide 14, we provide updated detailed response rates results here which were consistent with prior analysis of the safety lead-in patients. And on Slide 15, we showed tumor response by patient in the safety lead-in as presented at World GI over this summer. 27 out of 28 patients with a post baseline assessment showed tumor regression and none showed RECIST-defined progression as their best response.
This is in contrast to the inset graph which depicts tumor response by patients in the irinotecan and cetuximab treatment arm of the SWOG dataset, which is similar to the control arm of the randomized portion of the BEACON CRC. As we can see in the inset, the majority of patients showed significant tumor progression as their best response.
Moving to Slide 16, we show the number of months each safety lead-in patient has been on therapy, the rows in teal show patients who’ve had one prior regimen and the rows in light blue show patients who have had two prior regimens. The rows with an arrow denote patients who are still on treatment at the time of the data cut off.
And as you can see, the majority of responses were observed at the first or second tumor assessment at six or 12 weeks. These results are unprecedented for this patient population, key safety data for the BEACON CRC safety lead-in are shown on Slide 17.
Now moving to Slide 19, we detailed the design of the new ANCHOR CRC trial, which was posted to ClinicalTrials.gov earlier in the month. ANCHOR CRC is an international trial designed to assess the efficacy and safety of the combination of encorafenib, binimetinib and cetuximab in patients with BRAFV600-mutant metastatic CRC in the first-line setting.
Essentially this trial is similar to the triplet arm of the BEACON CRC trial but in patients with metastatic to BRAF CRC in the first-line setting. The trial was designed in partnership with top global CRC key opinion leaders and we are excited by the potential that we believe this combination therapy has to offer these patients.
Next on Slide 20, we show the global colorectal cancer market. On the left side, it's estimated approximately 10% to 15% of advanced colorectal patients have activating BRAF mutations. On the right, we can see that over 220,000 individuals unfortunately succumb to colorectal cancer each year across the U.S., Europe and Japan. It is important to point out that BRAF CRC addressable patient population is even larger than the size of a population of patients with BRAF melanoma, which as I mentioned earlier we currently estimate at over $400 million net sales annually in the U.S. and over $1 billion globally.
Now I'm going to turn the call over to Jason to review our financial highlights.
Thank you, Ron and good morning everyone. Slide 22 outlines our select financial performance for the first quarter of fiscal 2019. And I encourage you to read our full consolidated financial statements and MD&A contained in our 10-Q, which was filed with the SEC this morning.
We reported revenue of $56.9 million for the quarter compared to $35.4 million for the prior quarter. Our revenue depiction has been updated to incorporate our product revenue and combines our collaboration milestone and licensing revenues. I'm pleased to report for the first quarter net product revenue for BRAFTOVI and MEKTOVI of $14 million. Net revenue from product sales, as recorded net of estimated rebates, chargebacks, discounts, fees and vouchers, these gross to net adjustments represented 19.8% of gross product sales for the first quarter.
Our collaboration revenue for the quarter was $31 million, which includes $15 million milestone payment from Pierre Fabre related to the European Commission approval of BRAFTOVI and MEKTOVI, as well as Loxo regulatory milestone as the RET program advances.
Finally, our Novartis reimbursement revenue is $11.9 million for Q1, which is down $3.7 million from prior quarter due to the activity of the underlying studies and meeting certain reimbursement limits as mentioned last quarter. As we move down to our operating expenses, we now have cost of goods sold related to our product revenues of $0.2 million, which represents 1.4% of net sales.
Our percent of net sales in subsequent quarters will modestly increase as the initial launch inventory was mostly expensed prior to approval. Our research and development costs were $55.6 million for Q1, which is down $8.8 million from last quarter. Decrease in R&D expense was primarily driven by lower activity on Novartis transition studies which was partially offset by activities related to the BEACON CRC trial.
Selling, general and administrative expense for the first quarter was $24.9 million, which was $5.6 million higher than last quarter, primarily driven by commercialization activities. This brings our reported loss from operations for the first quarter of fiscal 2019 to $23.7 million compared to $48.1 million in the previous quarter.
Our losses lower due to our first quarter sales revenue and earned milestones related to BRAFTOVI and MEKTOVI European approval. Other expenses for Q1 totaled $1.1 million, which represented $2.1 million decrease from Q4, largely driven by last quarter's change in fair value of our notes payable.
Net loss for Q1 was $24.8 million or a loss of $0.12 per share, compared to $52.4 million or a loss of $0.25 per share for Q4. The decrease in net loss was primarily driven to the new product revenue from BRAFTOVI and MEKTOVI and earned milestones.
Finally, we closed the quarter with the balance of $415 million in cash, cash equivalents and marketable securities, which does not include the $15 million milestone from Pierre Fabre referenced earlier, which would bring a pro forma cash balance to $430 million. As we have guided, our cash burn over the past quarters has increased as we've progressed our proprietary programs and launch BRAFTOVI and MEKTOVI.
Excluding non-recurring items, our burn rate for Q1 was approximately $40 million. We expect our quarterly burn to increase slightly from this level as we continue to progress our proprietary clinical studies, execute our commercial activities and close out the Novartis transition studies.
With that, I'd like to turn the call back to Ron.
Thank you, Jason. Nice to include commercial revenue in our report today, I’d like to just conclude the presentation before Q&A to summarize our top priorities and value drivers on Slide 24. We remain focused on the commercialization of BRAFTOVI + MEKTOVI and BRAF-mutant melanoma and are encouraged by the results from our first quarter following the U.S. launch with $14 million in net product sales.
We've seen strong demand for BRAFTOVI and MEKTOVI with over 3,300 total prescriptions during the quarter. And we continue to receive positive feedback from the melanoma community and our team continues to execute a robust U.S. launch for patients with BRAFTOVI – with BRAF-mutant metastatic melanoma. As Andy stated earlier, we'll continue to caution that these results are just from our first full quarter of launch and there are dynamics early in our launch that may or may not repeat.
So it's important to wait a few quarters before building a trajectory and likely wait even longer for robust information on duration of treatment. And next the regulatory process continues to advance outside the U.S. with the recent BRAFTOVI + MEKTOVI approvals in Europe in September and the Japanese marketing decision currently under review.
Further, we expect the additional opportunities that are CRC breakthrough therapy designation provides to interact with FDA will help us to bring forward the potential approval of these two products in BRAF-mutant CRC following consultations with the FDA and EMA. We have planned an interim analysis based primarily on confirmed overall response rates and durability of response which we believe could support an accelerated approval submission with positive results.
This interim analysis may also support regulatory submissions in other regions. And we anticipate top line results from this analysis in the first half of 2019. We're also pleased to have initiated the ANCHOR trial in the first-line BRAF metastatic CRC setting. We're very excited about the prospects for our launch and the programs we've described today and look forward to providing additional updates over time.
But at this time, I will open up the call to Q&A.
Thank you. [Operator Instructions] And our first question comes from Chris Shibutani from Cowen. Your line is now open.
Thank you. Good morning and congratulations on a solid strong first quarter the launch. If I could just get to some of the more of the underlying dynamics, particularly, interested in your comments about switching, Andy, you mentioned about how to a certain extent, is this being driven primarily by physicians based on efficacy profile? Is there an aspect of the tolerability that seems to be applied here? You also implied that you don't expect this to necessarily continue. If you could just comment a little bit more about the underlying components of some of the switching dynamic and what the pacing will be like?
Sure, Chris. Thanks for the question. Well, the first thing I'll say is pretty much everything we know is based on anecdote, since we don't get prior lines of therapy through any of our data feed. So this is based purely on conversations with prescribers. But from the aggregate of those conversations, our best estimate is that it's driven primarily by tolerability.
So these are patients who have BRAF-mutant metastatic melanoma who have been prescribed a different BRAF/MEK combination and for likely tolerability challenge reasons on that combination, they're choosing to move those patients onto BRAFTOVI + MEKTOVI. That's not certainly the case in every situation, but in aggregate, we think that's probably driving most of that behavior.
As I said before, certainly with a product introduction, you have the potential to assist or help those prescribers in situations where they have patients that are struggling to maintain their therapeutic index on other combinations. But as we move forward, we are hopeful that BRAFTOVI + MEKTOVI becomes the targeted therapy combination of choice for first-line or first targeted therapy patients in the setting, and so the switching dynamics will reduce just based on that dynamic.
The only thing, I'll add, Chris, this is Ron, is that switching of a patient on a cancer therapeutic that is responding is quite unusual and so it's really a complement to our profile, that based on the very powerful efficacy data we published in terms of this very long OS, PFS and response rate, that physicians essentially are willing to undertake something that is quite unusual, even though it may initially be driven by a need to address certain tolerability issues and yes, from the anecdotal information we have, I agree with Andy's comments that we would anticipate that physicians would seek to avoid problems in the future taking advantage of what they perceived to be a very strong activity profile.
And then just two follow up additional questions on – given the upside to the initial launch here, is there any inventory component that we should be aware of? And secondly, any potential off-label use, given the fact that we have had such strong BRAF colorectal data, your competitors have other tumor type indications approved? Thanks.
Thanks Chris. This is Andy. To the inventory and the channel dynamics, I would say, no, there's nothing unusual about that. Obviously, at the very beginning of the launch, there were stocking by our channel partners, but that flew through pretty quickly based on the performance and we don't see anything like that going on any longer. The second question was related to…
Off-label use not for melanoma?
Right. So clearly, we've trained our teams to avoid promoting any off-label. And it is everything that we do with our customer-facing employees to highlight the benefits of the combination and BRAF-mutant advanced or metastatic melanoma. But just from the data feeds, we do see sporadic use particularly in colorectal cancer, which we imagine is driven based on the strength of the BEACON safety lead-in data that's been presented at scientific conferences.
Great, thanks. That’s helpful. I’ll get back in the queue.
Thank you. And our next question comes from Anupam Rama from JPMorgan. Your line is now open.
Hi guys. Congrats on the launch and thanks for taking the question. On BRAFTOVI and MEKTOVI, could you provide some anecdotal details on sort of account penetration into your top-tier accounts, the rate of picking up new prescribers and maybe any comments on repeat prescribing rates from physicians? Thanks so much.
Yes, so Anupam, thanks for the question and for your comments on the strength of the launch. It's early, Andy did mentioned that we do – we expect concentration of activity in the institutional setting and the academic setting where most of these patients are treated. And so we are seeing that dynamic as well. I think it is early to sort of comment on some of these early metrics. And so those are probably more appropriate to look at over time.
Great, thanks for taking my question.
Great, thank you.
Thank you. And our next question comes from Peter Lawson from SunTrust Robinson Humphrey. Your line is now open.
Andy and Ron, congrats on the quarter. And just the off-label use, how big a fraction of revenues was that? I know you're not promoting, but is there any way you can kind of help break that out for us? And just anything you can say around the academic versus community settings, the use and how that's fair and where you think you're going to get biggest penetration?
Thanks Peter. Look, on off-label, I'll reiterate again, obviously, definitely not promoting. But as I've mentioned, this is an extremely high unmet need population, which is why we're so anxious to get the products approved, while we pursued an accelerated approval or interim analysis approach with its readout expected in the first half of 2019, saving quite a bit of time off what would have been the normal path. But in the meantime, I think, that all we can really say is that it's a – it remains a very small number of patients, certainly compared to the melanoma component. And we will just keep working to get the products approved. Now on some of the other dynamics, Andy, if you'd like to comment?
Yes, Peter, just on the academic versus community, I think, what we said during our prepared comments obviously holds here. Melanoma as a disease for metastatic melanoma patients, the majority of those patients still get their care in the U.S. at academic centers, which is unlike larger solid tumor indications, breast, lung, prostrate, where you typically see them in the community setting more than in the academic setting.
So it's not surprising that from a product launch perspective, the academic physicians who see the bulk of these patients are most knowledgeable about the data, they're most willing to try the new products on their patients and then in the case that we describe even try to switch patients onto the new therapies as soon as they are available. During the sort of second half of the quarter, if you will, we are encouraged by the uptick that we started to see in some of the larger community oncology practices throughout the country.
And we're hopeful that those trends will continue, based on how the academic physicians that will become early adopters have started to become advocates for the product to win conversation with other community colleagues.
Okay. Just maybe a follow up on that switching components really interesting. Just is there anything you need to do to help the physicians with the transition to the patients due to that switching?
So, Peter, it's Ron. We are certainly not positioning or promoting the product as a product for switching. We are promoting, in fact, on the excellent activity that we’ve demonstrated and the tolerability profile. And so this isn't something that we are driving per se.
As I said, it is unusual and essentially a complement to the situation. You can imagine that most of this and it's all anecdotal, right, we don't have detailed data on this. You can imagine this is occurring at some of the more, let’s call it, Elite institutions that are more in the habit of sort of experimentation. But this is, as I said, driven by the – that kind of type of physician and a type of patient that we described.
And we do think it will work its way out over time. And that's one of the uncertainties as we look forward to additional quarters is how long will this continue, how much of a patient base will remain and that maybe exposed to other therapies that could cause this type of side effects. So we'll track that carefully over time. And it is, as I said, a complement, but on the other hand, you would expect shorter duration of treatment from these patients. And so we'll have to study this dynamic carefully, very hard to predict.
And as we said earlier, it will take a while before we can begin to estimate the duration of our treatment, which we suspect or predict will be an important feature of our commercial story.
Great. Thanks for taking the questions.
Thank you. And our next question comes from Jim Birchenough from Wells Fargo Securities. Your line is now open.
Good morning, gentlemen. It’s Nick on for Jim this morning. Congratulations on the strong launch, too. Maybe just starting with melanoma, I was surprised when I read the editorial that went along with the COLUMBUS publication Lancet Oncology. And the editorial list that was speculated on the head-to-head trial wouldn't really be much different between the three different combinations, speculating they show similar activity. I noticed I received honorary from both Roche and Novartis, which was interesting. But as you discussed the data in the field, the people look at this editorial and take it seriously? Or do they see that it – that the conclusions really are not supported by the data?
So that's a – there's a lot to say on this topic. Thanks for raising it. So you look, the first thing I'll say is we always caution that when doing head-to-head comparisons these are different studies. And so there is some care there. That's less of a concern when it comes to tolerability profiles, perhaps more so in trying to equate individual activity measures with decimal point accuracy.
But what I can tell you is that, generally speaking, the community is quite confident that certainly BRAFTOVI + MEKTOVI are no worse in terms of activity and many, of course, believe that there is both – there is a strong evidence that they may have some differentiation.
And so I'll give you some examples, especially since you introduced the entire sort of slate of options. In our COLUMBUS Phase 3 trial, we did and we're the only product BRAF inhibitors who had head-to-head comparison versus encorafenib versus vemurafenib. And this was essentially to address the combination rule in our trial and in a lower dose than it's used in the combination.
We did demonstrate a very low p value in that comparison. So there is evidence there that we do have some strength when compared to at least one BRAF inhibitor out there. Of course, we did increase the dose of our RAF inhibitor by 50% when combining with the MEK and that is another sort of point of rationale for why there might be something special going on here. But I will say that if the community is generally more comfortable assessing our tolerability profile across trial. We know the tolerability is – can be heavily correlated with outcomes and that – if patients are not able to take their drugs at full dose or need to discontinue, they don't get the benefit.
And so as a result, that maybe one of the factors that drives the performance that we've demonstrated in the past. So, look, there is – maybe the last thing, I would say, and we've said it before and we'll say it, again, is that our – we use vemurafenib as a control and vemurafenib performed almost identically in all pivotal trial with BRAF/MEK combinations, BRAF melanoma, both or I should say on median OS and on median PFS and on response rate, which at least gives some indications that the patient populations were comparable or relevant. And so that's our view.
And over time, there'll be experience and over time we'll also be able to demonstrate sort of, in real world, duration on therapy. Just lastly, on – in terms of a feel and being in the marketplace, this is not something that we hear about. This editorial has not come up almost at all. But thank you for raising and giving us an opportunity to at least explain the rationale for how we see the landscape.
Okay, thanks. And maybe a question with – hopefully, a shorter answer for you. But in terms of the current sales, can you break out for us the switch versus new stock?
Yes, I think it's difficult for us to do that because we don't have perfect information from the data about every patient categorized into switch or naive to targeted therapy. So it's probably hard for us to pin that down precisely. I think what we've said is a significant number of the patients in the first quarter of launch fall into this switching dynamic. But beyond that, it's probably hard for us to give you statistics.
Okay, thank you. And then a couple on colorectal cancer. Has the BEACON running data been submitted for publication?
So we have published it in different forms over time. And we will – at the last publication of summer, we haven't reached median and so we've suggested that at an upcoming scientific conference we'll be providing an update. I hope that addresses the question. So we presented response…
Sorry, Ron. I was meaning for like a peer-reviewed publication with the new idea that perhaps it could lead to a compendial listing that we're almost heading to.
Yes, I think we haven't announced that, but to kind of where your thought process is going, I think, it would not be a terrible assumption to assume that Array would look to figure out a way to publish those data, but we haven't announced whether we've done that or not and what our timing or strategy is on that. And ultimately, the top line results from the interim analysis are going to be most compelling and certainly could lead to various parties seeking to provide recommendations based on that or the data that we provide between now and then.
Sure. And then on that, Ron, have you noted what the number of patients is required for the interim analysis?
So we've not – what we have said is that it is a robust portion of the Phase 3 trial that we believe this is an absolutely critical regimen to make available. And then we do want to speed up the path, but we do not want to take any risks. At this point as the safety lead-in data has exceeded our expectations, you could call the Phase 3 trial maybe overpowered. The interim is powered in a very healthy manner because there's no good reason to take a big risk there. And as I said, based on allowing time for responses to occur, and then for those responses to be deemed durable, we will have top line results in the first half of 2019.
Okay. And then just last one from me and that is, I know it's a small number of patients, but were any of the patients in the lead-in, did they become eligible for metastasectomy?
Victor, would you like to comment on that, if possible?
I don't know definitively, but I believe the answer to that is no, that, that was no tone of the things that the patients were generally later stage patients and were not being treated in that context.
So not like.
Okay, thank you.
Alright, thank you.
Thank you. Your next question comes from Eun Yang from Jefferies. Your line is now open.
Thank you, hello.
Hi, Eun how are you?
Good, thank you. So you know the first full quarter on market BRAFTOVI + MEKTOVI really exceeded expectations. So I want to ask you, from your first to full quarter experience, did they exceed your expectations? Or do you categorize as in line with your expectations?
So I think, we can say that the net sales that we've reported and the sort of volume of patients and prescriptions that we've spoken about today did exceed our expectations. And so the only thing that we will continue to do is caution that there are dynamics in the launch quarter that may or may not repeat that we have this, as I sort of refer to it as a flattering phenomena of switching, sort of a complement to the profile of the drug. But it makes it difficult to predict exactly how that's going to play out over the coming quarters. So the answer to the question is, we are very pleased with the uptake of the product, but caution on sort of setting a trajectory this early in the launch.
Sure. And then if I heard you correctly, you guys have mentioned the gross-to-net discount in the quarter was 19.8%. Would they continue or do you expect it to increase or decrease from that point?
I think generally speaking, we are saying that we think it will decrease over time. There is certainly quickstart-type activities that are more sort of – that have a bigger effect early in the launch and when the volumes smaller so that should decrease over time.
Okay. And the last question is on ANCHOR trial, it's a new trial. It's a Phase 2, but do you – does that mean you're planning to start the first line registration trial at some point?
So I think you are referring to the ANCHOR trial.
Yes.
And so I think what we are comfortable saying is that given precedence in the landscape regulators today, if successful. We would certainly approach regulators and discuss a path to market. And so – and what is a very high unmet need population, I think, there is certainly value in that.
Okay, thank you very much and congrats.
Thanks, Eun.
And our next question comes from Stephen Willey from Stifel. Your line is now open.
Yeah, good morning and congratulations on the progress. Andy I know you kind of spoke qualitatively about the inventory contribution here in the quarter, but just wondering if you can quantify at all, I think, maybe according to math it doesn't look to be much more than a couple of million bucks, but just kind of curious if I'm within a ballpark range there?
Yes, and so, again, we're not quantify it per se, but I would say that your math doesn't sound far off from what we know. I would say that there is no special dynamics. We have a limited specialty pharmacy network. We also distribute through wholesalers. So we don't have dozens and dozens of channel partners that have lots of inventories ruled away.
So we turn really quickly, and we don't have any dynamics, either at the beginning or the end of the quarter that would be out of line with what you would look for in small molecule or oncology product at these prices.
Understood. And I think you mentioned in your comments that you do not get prior lines of treatments regarding prior patient history through your data feed. So does that then, I guess, presume that you don't necessarily know whether or not the majority of patients you're treating have seen or have not seen prior IO, and I guess, at this point, do you anticipate that most of these scripts that are going to be and will be written in kind of a post-IO environment?
Right, so the shortest answer to your question is yes, we don't get perfect information about their historical treatment in the aggregate. The longer answer is, we spent a lot of time talking to customers, and especially the ones we know are prescribing, actually we talk to the ones who aren't prescribing, too, to try to change that dynamic. But the ones who are prescribing, we ask them lots of questions about their patients and how their patients are doing. And are there differences in patients that have received PD-1 prior versus simply naive to systemic therapy patients.
So we feel like we get a good qualitative picture of how many patients are in which bucket of our own patients. We also look at third-party audits who go out to melanoma treaters and ask them questions about their patient population. And we still see about a 50:50 split in the first line setting for I/O versus targeted therapy.
So we do believe in the future, certainly our goal is to be the initial targeted therapy of choice, whether it's two naive systemic therapy patients or in the second line after I/O. But we are not in the business of trying to convince melanoma physicians that they should use BRAFTOVI and MEKTOVI instead of Opdivo or Keytruda. But when they make the decision to use targeted therapy, they should use BRAFTOVI and MEKTOVI, hopefully that helps a little.
And Steve, the only thing I'd add to what Ron has said, we're -- the I/O landscape is well evolved now, and so essentially what I'm saying is there's plenty of available patients that are now coming off of I/O, unfortunately these patients will progress. And as Andy said, we haven't seen – we haven't changed our position on this dynamic that is going to be balanced between I/O and targeted agents.
We also don't yet know if it matters. Our current assumption is that it's not likely to matter, whether we are seeing patients first or second, there will be some patients who don't make it to future lines, unfortunately, but that's not a large number. Over time, we'll know if it matters. But that's why this duration question is so important something we don't have more insight into, unfortunately, only after several quarters.
Got it and then just lastly, with respect to ANCHOR. Can you maybe just kind of speak to the extent that the design of that trial may or may not have been informed by regulators? Or was that just you looking at the competitive landscape of BRAF/MEK label expansion into other tumor types and thinking that was kind of the right patient number and the right trial design?
Thanks, Steve, yes, I think we looked at – we took all the available information into making that decision. Certainly, looking at precedence and regulatory behavior as well as consulting with the leading experts in the world before embarking on it. And it's a situation where the quality of the result will determine the path forward. So thanks for that – thanks for those questions.
Thank you. And our next question comes from Ed Tenthoff from Piper Jaffray. Your line is now open.
Great, thank you very much and thanks for speaking with me. I have lots of good questions here. And my congrats, too, on the first commercial quarter, very nice launch. Couple of questions if I may. Firstly, with respect to Pierre Fabre, what can you tell us about kind of their prep for launch in Europe? And how is that market different than what we're seeing in the U.S.?
Yeah, Ted hi good morning, thanks for calling in. So, we have some sort of fresh insight on that, we just spent some time with them sort of around the ESMO meeting. We always knew that they had a very large presence with [indiscernible] market oncology products throughout Europe and much of the world. But what we're really pleased with is that they have taken this as an opportunity from what we understand to even upgrade talent even further. And so we are pleased with what we're seeing in terms of the people we are meeting and what we're hearing.
So here is the story, the story is that there's a lot more melanoma in Europe than there is in the U.S. So first of all, population and second epidemiology, especially in northern Europe. And so, while prices in Europe tend to be lower than those in the U.S., the volume there is going to be very, very important. Now from what we gather and they've made fairly limited public statements, as they do appear to be launching in a normal sequence where there are certain markets that are free pricing markets like Germany, that you might expect them to have activity early.
And then over time and unfortunately it's over a long period of time, they sequence in through various markets with an eye towards, the basically pricing and reimbursement dynamics and price indexing and whatnot. But there is tremendous enthusiasm there. And currently, as we've said, we estimate sales of just one of the MEK/RAF combinations currently available on the market are estimated about $400 million net sales in the U.S., but more than that ex-U.S. So about $600 million additional in that sales ex-U.S. to get to a total of $1 billion globally.
So yes, Europe is going to be important, and we are pleased to have a company that's got this very solid presence through all member states and has the infrastructure and the capability know-how, and more importantly, it's very dedicated to making this a success.
And a quick follow-up, if I may, just lots on the pipeline and partnered drugs, but I wanted to ask about 200 and just sort of anything latest on that program?
Yes, thanks for the question because as you can see, we're razor focused on BRAFTOVI and MEKTOVI and getting this launched, right, and getting the second indication, which we've said it has a larger addressable population and really much less competition of choice. But there is, of course, a lot going on at Array. We are progressing this MEK PD-1 collaborations. We are progressing 382 in three different populations pancreatic, ovarian and in patients of any tumor who progressed on a PD-1.
We expect next year to have insight into how those are looking. We haven't nailed down exactly how we're going to report that. But over time, as we see what's happening, we'll let folks know. But I will tell you, it's a great opportunity to emphasize that Array has gone through a transition and is back in the research business, that in fact, we do expect our first Array invented cancer molecule in 2019 and more to come after that.
So we're really building a pipeline of Array invented for Array oncology products. And we really look forward to that. And the timing couldn't be better. We'll continue to progress our commercial business in melanoma, build a whole new horizon in colorectal. And then be in a position to talk about brand-new franchises going forward as we take a look at things that are progressing in our pipeline. So thanks for that question, Ted.
Thanks for the update. Look forward to seeing you at our conference. Thanks Ron.
Great, oh yes, indeed and so we are almost at the top of the hour, we will take one more question if there one.
Thank you. And our last question comes from Michael Schmidt from Guggenheim. Your line is now open.
Yeah, excuse me I was on mute. Thanks for squeezing me in. Alright, a quick one on the ANCHOR trial. You said that the resort of this study will sort of determine your next steps in front line colorectal. I was just wondering, I think the primary endpoint is overall response, right, just wondering what the bar here is over current standard of care? And how you will make that determination? And then a follow-up on -- just one on the BRAF melanoma market. I was just wondering how you expect the use of BRAF/MEK inhibitors in the adjuvant treatment setting to potentially impact the overall market in the metastatic setting. Thank you.
Michael, thanks for that. Let me take the adjuvant question first and then I think Andy perhaps can talk about the current environment in first-line BRAF colorectal. But so we do see now that both I/O and targeted agents are options in the adjuvant setting. We certainly are also considering also how we might generate data in that population ourselves.
But right now, the view is in the U.S. that it would seem that I-O will dominate in the adjuvant setting for a number of reasons, including sort of their tolerability profile. The important thing is that after a sufficient amount of time has passed some say six months, some say a year, those patients will be considered naive, and essentially whatever they received in the adjuvant setting would not be a consideration about what they would receive in the metastatic setting.
And so you sort of hit refresh there and you can almost think about it as a different disease. So that's been our view. That continues to be our view as we spent time with melanoma care also around the world.
Now in terms of the sort of environment currently in this high unmet need first-line BRAF colorectal population, Andy?
So, Michael, as you're probably aware, the first-line metastatic colorectal cancer is dominated here in the U.S. by a backbone of bevacizumab with some chemotherapy, FOLFOX or FOLFOXIRI if you're an aggressive treater. Around the world. It's a little bit variable.
You may see Erbitux come into the first line setting in combo with chemo. But if we stick in the U.S., there is not really a great historical data set of prospectively defined BRAF-mutant patients and how they perform. We do know that the BRAF mutation is a poor prognostic for colorectal cancer patients and that they have shorter overall survival than wild type BRAF patients. But trying to put together a clinical trial design that's randomized, against the standard of care, which is not homogenous, globally and you don't know how it performs. There's a lot of variables that you have to go through to design a trial and you might be walking down 400, 500 or 600 without real knowledge of how the control arm is going to perform. So we think it's a better way to go to run the ANCHOR trial, if it has the result that we expect it could have, we believe, as Ron said before, it could be an interesting discussion with regulators around the world. And if it doesn't, then at least we know how our active arm in potential Phase 3 trial would perform, which removes some of the variability of trying to design that randomized study.
Perhaps it goes without saying, but maybe worth mentioning that, of course, the results we've seen in second and third line have been impressive and the response rate is considered an important measure high unmet need population. So what we observed is that while we saw overall, about a 50% response rate in segment third line BRAF colorectal patients compared to historic sort of norms of mid-single digits. In the second line, we saw around 60%.
And so we don't know yet about first-line, but we think the larger the first line is somewhat obvious. First, there is the possibility of greater activity and benefit to patients, from a point of response rates, PFS and maybe OS. But really the idea is there are not good options and we want to see if we can create data that helps to support use in the earliest possible settings. So that's the logic.
Go it. Yeah, that makes sense. And when do you think you might be in a position to potentially make a Phase 3 go decision for the front line setting?
Right, so we are going to take a look at the data. And I think what we're suggesting is, with good results, with, for example, high tumor shrinkage rates that are durable, we're going to approach regulators at that point and see where we are. And there are – there is plenty of sort of recent precedence out there to predict what might happen when you have a very active product in that type of setting.
Well, thank you so much. Congrats on all the progress and good luck for the next quarter.
Great. Thank you so much. And with that we're going to close the call. Really thrilled to present a strong launch data. I'd like to thank our employees here at Array for their creativity, commitment and strong sense of urgency that continues to fuel our success. I just want to thank our patients, partners and shareholders for their continued confidence and support. And we will now close the call. Thank you all very much.
Ladies and gentlemen, thank you for your participation on today's conference. This does conclude our program, and you may all disconnect. Everybody, have a great day.