Mirati Therapeutics, Inc. (NASDAQ:MRTX) Q2 2023 Earnings Call Transcript

Mirati Therapeutics, Inc. (NASDAQ:MRTX) Q2 2023 Earnings Call Transcript August 8, 2023

Mirati Therapeutics, Inc. misses on earnings expectations. Reported EPS is $-3.04 EPS, expectations were $3.23.

Operator: Good afternoon, and welcome to the Mirati Therapeutics Second Quarter 2023 Earnings Call. My name is Justin, and I will be the operator for today’s call. All lines have been placed on mute to prevent any background noise. After the conclusion of the speakers’ prepared remarks, there will be the question-and-answer session. [Operator Instructions] It is my pleasure to introduce Ryan Asay, Vice President of Corporate Affairs at Mirati. Ryan, you may begin the call.

Ryan Asay: Thank you, Justin, and welcome everyone to this afternoon’s call. Joining me on the call today are Dr. Chuck Baum, our President and Founder; Dr. Alan Sandler, our Chief Medical Officer; Dr. Jamie Christensen, our Chief Scientific Officer; Ben Hickey, our Chief Commercial Officer; and Laurie Stelzer our Chief Financial Officer. I’d like to inform you that certain statements we make during this call will be forward looking. Because such statements deal with future events and are subject to many risks and uncertainties actual results may differ materially from those in the forward-looking statements. For a full discussion of these risks and uncertainties, please review our annual report on Form 10-K and our quarterly reports on Form 10-Q that are filed with the US Securities and Exchange Commission.

This afternoon, we released financial results for the quarter ended June 30, 2023 and recent corporate updates. This press release and accompanying second quarter earnings slide presentation are available on the Investors section of our website at mirati.com. Additionally, this afternoon we also announced the launch of a public offering. This presentation shall not constitute an offer to sell or the solicitation of an offer to buy our securities. The securities described are being offered pursuant to a shelf registration, statements filed by us with the SEC that became automatically effective upon filing. We have filed a preliminary prospectus supplement and accompanying prospectus with the SEC related to the offering. These together with the final prospectus can be accessed on the SEC’s website or the Investors page of our website at mirati.com.

Before we proceed, I’d like to address an important leadership transition within our organization. This afternoon we announced the departure of David Meek and the appointment of Dr. Chuck Baum, as Interim CEO during the transition period, while our Board leads the search for a permanent CEO. With that, it’s my pleasure to introduce Dr. Chuck Baum, the President, Founder and Interim CEO of Mirati.

Chuck Baum: Thank you Ryan and thank all of you for joining us on the call today. On this afternoon’s call I will provide initial remarks, before turning the call over to Alan, Jamie, Ben and Laurie to provide key updates. I’ll then provide some closing remarks before we open the line for questions. I would like to start by thanking David in acknowledging the significant role he played in leading the company. Under David’s guidance the past two years, we have continued to advance our robust R&D pipeline and made a lasting impact on people living with cancer. During this period, we received the FDA approval and launched KRAZATI, becoming a commercial-stage company. I express my and the company’s gratitude for David’s contributions.

I have been appointed the interim CEO of the company. It is both an honor and a weighty responsibility to return to this role. As Founder, President and CEO of Mirati for 10 years, I am deeply committed to our mission, and I will work tirelessly to advance our robust pipeline while pushing the boundaries of novel science and best-in-class capabilities. As we navigate this transition, our mission remains unchanged. We will continue our relentless pursuit of scientific excellence and development of groundbreaking therapies and the improvement of patient outcomes. Our commitment to innovation and patients will remain at the core of everything we do. I am confident in the strength of our team and the wealth of experience we possess. Our focus is on building the capabilities needed to drive long-term sustainable growth of our business.

We have a robust pipeline and innovative programs with one of the most productive drug discovery organizations in the industry. Our focus is on the areas of cancer with large unmet needs, and where revolutionary treatments can have meaningful impact on the lives of patients. Today, we will highlight several important updates, which we believe are very meaningful for Mirati. In first-line non-small cell lung cancer Alan will share an updated data set, which provides clear and compelling support for the rapid advancement of this combination into Phase 3 development in patients with TPS scores of greater than 50%. In our earlier-stage pipeline, Jamie will summarize the promising initial clinical data for MRTX1719, which is our potential best-in-class molecule in the emerging field of MTA-cooperative PRMT5 inhibitors.

In second-line non-small cell lung cancer, Ben will describe how the differentiated profile of KRAZATI, along with the world-class commercial organization, have led to a strong initial launch and the promise of continued growth. Finally, Laurie will share certain details regarding our recent announcement for a proposed public offering along with a summary of our second quarter financial results. I am very optimistic and very excited about the future of Mirati. We are well positioned to create significant value for shareholders while also making a meaningful impact on the lives of people living with cancer. With that, I’ll now turn the call over to Alan.

Alan Sandler: Thank you, Chuck, and hello everyone. I’ll begin on slide 6 by discussing adagrasib, starting with first-line non-small cell lung cancer. My commentary will reflect an updated data cut as of February 28 of this year of cohorts 1a and 2 of KRYSTAL-7, a Phase 2 study evaluating adagrasib in combination with pembrolizumab in first-line patients with non-small cell lung cancer with KRAS G12C mutation. Moving to slide 7. Patient numbers and median follow-up nearly doubled since our prior updated ESMO IO in December 2022. On slide 8, you will see that the baseline patient characteristics were generally consistent across data cuts and subgroups. Let’s now discuss the safety summary covered on slide 9. Overall, the adagrasib plus pembrolizumab combination has been well tolerated with a manageable safety profile.

Most frequent treatment-related adverse events of the combination are listed on the slide. Importantly, most of these adverse events were low grade and manageable, which led to acceptably low rates of dose reduction and dose interruption of either adagrasib or pembrolizumab. Treatment-related adverse events led to treatment discontinuation of either adagrasib or pembrolizumab in 18% of patients and both drugs in just 4% of patients. This discontinuation rate is consistent with other regimens in the non-small cell lung cancer treatment setting. Let’s now move to slide 10. Combination of adagrasib with pembrolizumab demonstrated low rates of clinically meaningful liver toxicity. Liver enzyme elevation was low and consistent with what was presented at ESMO IO.

Notably, only two patients or 1.4% discontinued the combination due to liver treatment-related adverse events. I’ll now summarize the interim efficacy results in patients with TPS scores of greater than 50%. On slide 12, the efficacy outcomes for the adagrasib plus pembrolizumab combination in TPS greater than 50% are highly encouraging and comfortably see the outcomes of pembrolizumab monotherapy, which is the standard of care for these patients. The confirmed objective response rate in the full analysis set was 63%, again comparing favorably to the benchmark 39% in KEYNOTE-42 and 45% in KEYNOTE-24. Among clinical activity of valuable patients defined as requiring at least one post-baseline scan, the objective response rate was even higher at 71%.

Let’s advance to slide 13. The median progression-free survival has not yet been reached, but is tracking well above first-line non-small cell lung cancer standard of care thus far. Similarly, on Slide 14, median duration of response has also not yet been reached, but is again tracking well above the KEYNOTE-42 benchmark. I will note that the median overall survival remains immature for analysis as of the time of this data cut. Let’s advance to slide 15. In summary, KRYSTAL-7 efficacy and safety data strongly support the advancement of the adagrasib plus pembrolizumab regimen into a pivotal Phase 3 study in patients with TPS scores of greater than 50%. It’s important to note that patients with TPS greater than 50% represent approximately 40% of the first-line KRASG12C mutant non-small cell lung cancer patient population and closer to 50% of the revenue opportunity when accounting for the longer treatment durations relative to patients with TPS scores of less than 50%.

Now we’ll advance to slide 16, which summarizes our Phase 3 study design for adagrasib plus pembrolizumab compared to pembrolizumab monotherapy. The conversion of approximately 150 KRYSTAL-7 sites to the Phase 3 study are underway, which we expect will help us move expeditiously. We expect a primary end point of progression-free survival requiring approximately 500 patients. We plan to have additional discussion with the FDA in the third quarter to finalize the Phase 3 study design. We expect to initiate patient enrollment in this Phase 3 study by year-end. I’ll now discuss our clinical development approach in patients with TPS scores of less than 50% summarized on slide 18. Upon evaluating the updated data cut of KRYSTAL-7 we saw clear signals of clinical activity with adagrasib plus pembrolizumab in the TPS less than 50% patient population.

However, these data suggest that doublet approach will not be sufficient to displace the existing standard of care for these patients, which is the KEYNOTE-189 regimen of carboplatin, pemetrexed and pembrolizumab. However, safety and tolerability profile of the adagrasib plus pembrolizumab combination continues to be favorable, which will potentially enable us to add adagrasib to the KEYNOTE-189 regimen. The Phase 2 KRYSTAL-17 study of adagrasib plus chemoimmunotherapy combination is underway with initial enrollment expected imminently to confirm the optimal Phase 3 approach for patients with TPS scores of less than 50%. We anticipate a decision regarding Phase 3 registrational plans in the TPS less than 50% patient population in 2024 based on the safety and preliminary efficacy data from KRYSTAL-17.

Shifting gears and advancing to slide 20, I will now briefly summarize adagrasib’s potential first-in-class development plans for difficult to treat cancers beyond non-small cell lung cancer. The combination of adagrasib with cetuximab has shown a compelling and differentiated profile in third-line or later colorectal cancer, and we are on track to submit the supplemental new drug application for accelerated approval in the fourth quarter of this year. Our KRYSTAL-10 Phase 3 registrational study in second-line colorectal cancer, evaluating the same combination of adagrasib plus cetuximab versus chemotherapy is on track to complete enrollment this year and we expect to report the final analysis of progression-free survival and interim overall survival in 2024 with plans for regulatory submission based on these results.

In addition, adagrasib demonstrated clinically meaningful activity in other previously treated KRASG12C-mutated solid tumors including pancreatic cancer. We are exploring potential accelerated regulatory approval pathways in these patient populations and we expect to gain clarity on our approach by the end of the year. Finally, I’m pleased to report that we initiated a cohort within the Phase 1/2 study evaluating the combination of adagrasib plus MRTX0902, our potential first-in-class SOS1 inhibitor. I will now provide an update on the recent CHMP opinion related to adagrasib’s conditional marketing authorization or CMA in Europe. The CHMP states that KRAZATI has a positive risk benefit profile but that it does not fulfill certain requirements for a CMA.

We firmly believe that adagrasib should be granted a CMA based on its differentiated profile and have requested a formal reexamination of CHMP’s opinion. With that, I’ll turn the call over to Jamie for an update on our earlier-stage development pipeline.

Jamie Christensen: Thank you, Alan. Today, I’ll highlight promising initial clinical results from MRTX1719, our potentially best-in-class MTA-cooperative PRMT5 inhibitor. This early proof-of-concept clinical data marks an exciting milestone for Mirati. A manuscript characterizing our early experience with 1719 including case studies from our Phase I study has been accepted by cancer discovery and published online this afternoon. Now let’s advance to Slide 22, where I will start by describing unique characteristics and the mechanism of action of 1719. PRMT5 is essential for the growth and survival of normal cells, including a number of bone marrow progenitor cell types. Non-selective first-generation PRMT5 inhibitors indiscriminately inhibit PRMT5 in both normal cells and tumor cells.

This generally resulted in a narrow therapeutic index, dose-limiting hematologic toxicities and low single-digit response rates due to incomplete target coverage. In contrast, MRTX1719 is a differentiated MTA-cooperative PRMT5 inhibitor that is designed to specifically target MTAP-deleted tumor cells, while sparing bone marrow toxicities. 1719 leverages a unique synthetic lethality approach that exploits a key difference in the mesothelioma salvage pathway between normal cells and tumor cells harboring MTAP gene deletions. In non-tumor cells, illustrated in the left panel of the slide, the MTAP-MTAP protein tightly regulates levels of the metabolite methylthioadenosine or MTA. In MTAP-deleted tumor cells illustrated on the right-hand side of the slide, the loss of the MTAP protein results in accumulation of MTA and up to 20-fold higher cellular concentrations compared to non-tumor cells.

This excess of MTA binds the active side of the PRMT5 protein rendering it in a partially inactive state. This creates an Achilles heel that is uniquely present in MTAP-deleted tumor cells the PRMT5 MTA complex. 1719 exhibits a greater than 70-fold selectivity for inhibition of PRMT5-dependent cell survival in MTAP-deleted versus normal cells resulting in a significantly broader therapeutic index relative to non-selective approaches. In preclinical studies, 1719 demonstrated regression in a variety of tumor models harboring an MTAP gene deletion with maximum antitumor activity expected to require near complete inhibition of the target biomarker called SDMA or symmetric dimethylarginine. 1719 does not demonstrate a significant impact on bone marrow or other tissues at dose levels that completely inhibit SDMA and MTAP-deleted tumor cells.

Now let’s move to Slide 23. The MTAP gene is deleted in around 10% of all cancers across a broad range of tumors including non-small cell lung cancer and pancreatic ductal adenocarcinoma with an estimated annual incidents in the US and Europe of greater than 250000 patients. Additionally, the Kaplan-Meier curve on the right indicates that patients with tumors harboring an MTAP deletion have a significantly poor prognosis compared to those without an MTAP gene deletion across a composite of major solid tumors. Now moving on to Slide 24. I will now describe our encouraging activity and clinical experience in heavily pretreated patients in our Phase I dose escalation study. My commentary will reflect a June 13, 2023 data cut. We dose escalated in 100% increments from 50 to 800 mg once daily or QD.

There were 33 evaluable patients for safety across six dose levels and 21 patients evaluable for clinical response, including 18 patients at therapeutic doses at or exceeding 100 mgs. 800 mgs has been defined as the maximum administrative dose for a QD schedule and 600 mgs QD is currently under evaluation as a potential recommended Phase II dose. The emerging preliminary PK results are favorable with a long half-life supporting QD administration and roughly proportional increases in exposure within the therapeutic range. Average exposure at the 200-mg QD dose exceeded the maximal preclinical target efficacious exposure and the 400-milligram QD dose exceeded target exposures by greater than fivefold. In addition, we have evaluated SDMA levels at baseline and day 21 post-treatment tumor biopsies in three patients utilizing immunohistochemistry.

In all three biopsy pairs, SDMA was completely extinguished following a treatment at a dose of 200 mgs QD. Early clinical proof of concept has been achieved with six partial responses including five confirmed and one unconfirmed response, out of the 18 patients evaluable for response at therapeutic dose levels. Responses were observed across multiple dose levels and tumor types including non-small cell lung cancer, mesothelioma, biliary tract tumors, melanoma and malignant peripheral nursing tumor. Importantly, we observed deepening or sustained tumor regression in responding patients over time, which suggests durable clinical benefit. The unconfirmed response I noted in malignant peripheral nursing tumor was observed shortly after data cutoff and has subsequently confirmed.

The ongoing trial remains in the dose escalation phase and dose expansion is underway at several doses. Our experience is early. However, the observation of multiple objective responses across different tumor types is encouraging. Safety has also been encouraging. 1719 has been well tolerated across dose levels to date with no Grade 4 or 5 treatment-related adverse events observed. The most frequently reported treatment-related adverse events were nausea, vomiting and fatigue. The vast majority of these were Grade 1 or 2. Grade 3 treatment-related adverse events were observed in only five out of 33 patients or approximately 15%. Finally, dose-limited cytopenias which were associated with nonselective PRMT5 inhibitors have not been observed for 1719 at any dose level to date.

When taken together, the apparent complete inhibition of SDMA in patient tumors, favorable safety profile, lack of dose-limiting cytopenias and early evidence of clinical activity, provide clear differentiation from nonselective first-generation PRMT5 inhibitors. These data also highlight a significant opportunity to introduce a novel and meaningful therapeutic approach to the significant population of patients with MTAP-deleted cancers in need of new treatment options. The 70-fold selectivity and pharmaceutical properties of 1719 also support its potential as both a first-in-class and best-in-class opportunity. Finally, I’ll briefly summarize our potential development approach for 1719. First, our goal is to identify a recommended Phase II dose this year.

The development interest for Phase II cohorts and beyond include pancreatic cancer, non-small cell lung cancer and mesothelioma. In addition, emerging signals from our ongoing Phase I study and Phase II basket cohort will inform additional indications for prioritization. As we’ve already provided significant updates on other programs today, I’ll provide a very brief update on MRTX1133, our potent selective and potentially first-in-class oral KRAS G12D inhibitor. The Phase I/II study continues to enroll well with strong interest from both patients and investigators. 1133 has the potential to provide a transformative treatment option for the large and underserved KRAS G12D patient population. We remain excited about the future of the program and look forward to providing an update in the first half of 2024.

Overall, we are pleased with the significant progress we’ve made across our portfolio. Now with that I’ll turn the call over to Ben for our commercial update.

Ben Hickey: Thank you, Jamie and good afternoon, everyone. I’m delighted to share the very strong results we achieved during our second full quarter since the launch of KRAZATI. The commercial performance and execution were very strong and we are thrilled with the positive impact we are making reaching more patients in need of treatment. We continue to gain market share and our efforts are also expanding the size of the market. Our product launch continues to gain momentum and we witnessed robust demand for KRAZATI, as we generated $13.4 million of net product revenue in the second quarter. Included in this figure was $11.7 million of commercial KRAZATI sales and $1.7 million of KRAZATI sales for use in third-party clinical studies.

The differentiated efficacy profile has resonated well with health care providers and patients alike. We estimate that KRAZATI achieved new-to-brand share within the mid-40% range among second-line patients, not previously treated with a KRAS G12C inhibitor, highlighting the rapid and broad adoption across both academic and community settings. As of the end of the second quarter, we had reached the vast majority of target accounts which constitute approximately 90% of the market potential. In addition, KRAZATI has already been prescribed in 90% of the top 100 accounts. We are targeting patients who are naive to a KRAS G12C inhibitor, who have recently progressed to the second line. These patients constitute approximately 75% of our new-to-brand patients, with the remainder coming from later line with therapy.

From a reimbursement, access and coverage perspective, we are pleased with our rapid progress as our access and medical teams have achieved broad unrestricted coverage, with minimal access barriers for patients. We estimate over 90% of patients are covered and payer feedback has been positive based on the clinical value of KRAZATI. Additionally, our patient services have been well received, with patients able to obtain drug in an average of only four days of an oncologist’s prescription, which is significantly ahead of analogs closer to two weeks. Feedback from oncologists, office staff and importantly patients has also been extremely positive. Importantly, for those oncologists who are familiar with KRAZATI, but have yet to prescribe intent to prescribe is approximately 80% and knows with experience of using KRAZATI, intend to continue to prescribe is similarly high.

Our key messages centered around, a 44% response rate, 14.1 months of median overall survival and low treatment-related discontinuation rates are resonating well. Additionally, data showing KRAZATI’s activity in patients, with central nervous system metastasis has been favorably received by physicians. The recent Journal of Clinical Oncology publication, reflects that KRAZATI is the only G12C inhibitor that have proven efficacy in previously untreated CNS METs. In addition KRAZATI is the only KRAS G12C inhibitor added for the NCCN guidelines for patients with CNS METs. Looking ahead, we believe that significant opportunity remains to grow our market share in the second-line setting by increasing the depth of our prescriber base, and increasing depth of use and expanding the addressable market.

Our team continues to focus on increasing both testing and identification of KRAS G12C-eligible patients, particularly in the community setting. We now estimate that KRAS G12C testing at time of lung cancer diagnosis, is in the mid-70% range and we are working to further increase these testing rates. There is also a meaningful opportunity to better identify patients with a KRAS G12C mutation, at the local account level in the electronic medical record system. The US KRAS G12C unit volume grew at over 20% on an annual basis and we expect this type of linear growth to continue throughout 2023. In conclusion, KRAZATI is well positioned to become the market-leading product in a growing KRAS G12C market. I’ll now turn the call over to Laurie, for a financial update.

Laurie Stelzer: Thank you, Ben. As Chuck mentioned, today we launched a proposed underwritten public offering to sell $250 million of shares of our common stock and to certain investors that so choose, prefunded warrants to purchase shares of common stock. We also expect to grant to the underwriters of the offering, a 30-day option to purchase up to an additional $37.5 million of shares at the public offering price, less the underwriting discounts and commissions. The offering is subject to market and other conditions and there can be no assurance as to whether or when the offering maybe completed or as to the actual size or terms of the offering. Our ending cash and investments balance as of June 30, 2023 was approximately $780 million.

We now expect our 2023 net cash burn to annualize within a range of $560 million to $580 million. Looking ahead, we are committed to evaluating ways to increase operational efficiencies across the organization and we intend to reduce our 2024 cash burn rate by cutting spend that doesn’t negatively impact our highest value drivers. I will now walk through our income statement and touch on a few other key financial metrics. Please see our press release, from earlier this afternoon for additional details about our second quarter 2023 financial results. Revenue for the second quarter of 2023 was $13.7 million, which was driven by $13.4 million of KRAZATI sales and $0.3 million of license and collaboration revenues. This compares to revenue of $5.4 million for the second quarter of 2022 primarily due to a $5 million milestone payment earned from Zai Lab for the first pivotal clinical trial of adagrasib for the first indication in China.

The gross-to-net discount in the second quarter continued to be within our expected range of 20% to 25%. Cost of product revenue for the second quarter of 2023 was $1 million. A substantial portion of the inventory sold during the second quarter were manufactured prior to the FDA approval, and therefore, were expensed to research and development prior to 2023. Research and development expenses for the second quarter of 2023 were $124.2 million, compared to $128.3 million for the same period in 2022. The decrease was primarily driven by a reduction in clinical development costs for sitravatinib, as we completed enrollment in the SAPPHIRE Phase 3 clinical trial in the second quarter of 2022, and a decrease in share-based compensation. These decreases were partially offset by increases in our earlier-stage clinical development programs, such as MRTX1133 and an increase in salaries and other employee-related expenses to support the advancement of our portfolio.

Selling, general and administrative expenses for the second quarter of 2023 were $75.5 million, compared to $54.2 million for the same period in 2022. The increase was primarily due to an increase in head count-related costs including share-based compensation and salaries and commercial-related costs to supporting the marketing and sales of KRAZATI. Net loss for the second quarter of 2023 was $176.9 million, or $3.04 per share basic and diluted compared to a net loss of $176.4 million, or $3.18 per share basic and diluted for the same period in 2022. These results include non-cash expenses including share-based compensation of $39.4 million and depreciation and amortization of $1.1 million. With that, I’ll turn the call back to Chuck for closing remarks.

Chuck Baum: Thanks, Laurie. In conclusion, I want to express my gratitude to our dedicated team for their relentless pursuit of scientific excellence and their commitment to improving the lives of people living with cancer. I also want to extend my appreciation to our shareholders for their continued support, which has been crucial to our success. On behalf of all of us at Mirati, thank you all for joining us today and for your unwavering support for our mission. We are very excited about the future of Mirati and the potential to make a significant impact in the fight against cancer. With that, Justin, we are ready to open the call for questions. Please proceed.

Q&A Session

Operator: Thank you. [Operator Instructions] And our first question comes from Michael Schmidt with Guggenheim.

Michael Schmidt : Hey, guys. Thanks for taking my questions. And Chuck, I guess, welcome back in the CEO seat at least for now.

Chuck Baum : Thank you.

Michael Schmidt : I had a question on the lung cancer update. So the planned Phase 3 in the TPS above 50% patients obviously makes a lot of sense to us. I was wondering if you think there’s an opportunity for accelerated approval with an ORR end point on the project frontrunner for the study? And then the follow-up question would be on the TPS less than 50% patient population. It obviously sounds like you’re shifting towards a triplet combination strategy. Perhaps help us understand if there were any learnings from the KRYSTAL-7 study in that patient subset. Was that data consistent with what you’ve seen previously in October? And how should we think about the KRYSTAL-17 study in terms of the data that you want to see to make a Phase 3 decision in that patient population? Thanks so much.

Alan Sandler : Yes. Hi. This is Alan Sandler. I’ll answer that question. And so let’s — we’ll go bit by bit. The first one was the potential use of an accelerated approval with the Phase 3 study of yes pembrolizumab versus pembro and adagrasib. As you know the FDA has started to talk more about utilizing Phase 3 studies as opportunities for accelerated approval. It’s something we’ve considered, but we — it is a high bar number one, but also the fact is that there’s a certain time commitment that is involved in a study and increased complexity when conducting a study in that manner. And at this time we’re choosing to go towards a more traditional approach using a progression-free survival which will allow us we believe to get it to patients as quick as possible.

The other aspect — I think you had two questions related to the less than 50% population. And yes, KRYSTAL-7 did provide some learning’ along the way. There were clear signals of clinical activity with the combination of adagrasib and pembrolizumab in this setting, but the data suggested that the doublet approach wouldn’t be sufficient to go head-to-head with the triplet combination of chemotherapy and pembrolizumab. We did however, have some early correlative analyses of co-mutations and TPS which may help to be informative for our subsequent evaluation of a Phase 3 study in the less than 50% population, which also prompted us to believe that the addition of chemotherapy in the less than 50% population will be important. K-17 will help us address that by adding adagrasib to chemotherapy and pembrolizumab.

And we’ll — after evaluating both safety and early efficacy from K-17 we should be able to have a decision perhaps in the first half of next year regarding plans — further plans, in the less than 50% population.

Operator: And our next question will come from Tyler Van Buren with TD Cowen.

Tyler Van Buren: Hey guys. Good afternoon. Thanks for update. This is a more exciting call, than I think people were anticipating. My question is on MRTX1719. At first glance looking at the responses in the Cancer Discovery publication, it looks like the depth of responses are around 30% to 50%. Did you expect the depth of tumor reduction to continue to increase at consistently higher doses and with longer follow-up? And ultimately do you view 1719 as a monotherapy or a combination agent in a large indication like lung cancer?

Jamie Christensen: Yeah. Thanks Tyler. This is Jamie. I’ll take that question. I think your question is a very good one. And it’s something we’re paying very close to — attention to. I think something important to consider for this study is it’s been ongoing for a bit over a year. We have some experience at the lower doses for a number of scans. But as we get up to the 400 and higher doses, most of those patients only have a single scan. And I think in addition to that, we kind of note that, if we look at the 100- and 200-mg dose levels these are where patients may have two or more scans. First of all, the six responses we’ve seen, four of those have occurred as cycles two, three or beyond. And then secondly, a number of those responses or even stable diseases continued to deepen during that period of time.

And together that really suggests that, our data set may not be fully mature when it comes to response rate. So again, we will keep a close eye on that. And I have forgotten your second question. Could you repeat it for me, please?

Alan Sandler: Combo.

Laurie Stelzer: Final is combination….

Jamie Christensen: Oh, yeah, combination yeah.

Tyler Van Buren: Yeah. Monotherapy combination like lung cancer.

Jamie Christensen: Right. So I think if you look at our experience is I mean, it so far we have two out of three responses in mesothelioma. We have one out of two in non-small cell lung cancer for many of the other indications we have an N-of-1. So we’re still gathering that. Our Phase 2 approach will be initially monotherapy in the Phase 2 setting. And we have cohorts designed with clear futility stopping rules and clear expansion rules. And if we should hit response rates of 30% to 35%-plus with a six-month, duration of response or more we believe that accelerated approval is possible in indications like non-small cell lung cancer pancreatic cancer and mesothelioma in second line and beyond indication. Also we’re using the opportunity to see responses in our study to prioritize further combination work. So although, we do believe that there is a possible accelerated path here, we’re really not going to hesitate to evaluate combinations as well.

Operator: And our next question will come from Jay Olson with Oppenheimer.

Jay Olson: Hey, congrats on all the progress and welcome back Chuck. Thank you for taking our question. We had a question on the updated KRYSTAL-7 results. Can you just help us understand why the data cutoff was in February and maybe qualitatively comment on any more recent results you may have seen and if we should expect additional updates from KRYSTAL-7 this year? And then I had a follow-up if I could.

Alan Sandler: Sure. Again this is Alan. I’ll take that. So, the February cutoff was chosen because it was approximately six months after the August, which we felt would provide us with additional patients and additional duration of follow-up which of course it did. Additionally, there are plans to consider additional data analysis and submission for medical symposium perhaps later this year. So that will be another opportunity to update the data.

Jay Olson: Okay, great. Thank you. And then congrats on the initial clinical efficacy for 1719. Can you talk about the duration of follow-up that you’ve observed for patients in the therapeutic dose range? Is 800 milligrams the top dose? And also can you just talk about how many prior lines of therapy the patients failed? And how many have had non-small cell lung cancer?

Jamie Christensen: Sure. Yes there was a wide variety of different types of patients on the study. And prior lines of therapy ranged between two and six and median is over three for prior lines. The sorry could you repeat the–

Jay Olson: Lung cancer.

Jamie Christensen: The lung cancer was one out of two. So, we’re still building an experience there and duration of follow-up. So, I think this varies by dose. So, our first active dose level is 100. Those patients that have stable disease or partial response remain on therapy. And for those patients we’re over 30 weeks. Then for the 200-mg dose level we started of course a bit after. Those patients have also not progressed unless they had an initial progressive disease. Those patients have been on over 20 weeks. And then we have a more nascent experience at 400 and US about 800. So 800 was defined by protocol as the maximum administered dose. We saw two Grade 2 intolerable adverse events of vomiting and fatigue. So, we’ll not be going back to that dose level but we will be pursuing 600 through the DLT or dose-limiting toxicity evaluation period.

If we make it through that, we will be looking at expanding that as a potential recommended Phase 2 dose. So, bottom-line is median follow-up varies by dose level and this is something we’ll have to let mature over time.

Operator: And our next question will come from Gena Wang with Barclays.

Gena Wang: Thank you for taking my questions. Also Chuck welcome back and looking forward to working with you at least in the meantime. One question regarding the slide 12, I have several clarification questions. I know there are many different response rate here 63 59% 71%. And also in the footnote you have a 74%. Could you give us the denominator of at least the February 2023 update 63%, 71%, and also the 74%?

Alan Sandler: Hi, this is Alan. I’ll be happy to walk you through that. So, let’s recall that the starting number of patients are 56 patients. That is the full analysis set. There were 35 responses overall. So, that’s your 63%. Then the clinical activity evaluable patients that represents 49 patients overall. And again with that 35 responses had a response rate of 71%. Now, how we got there the 56 patients included three patients who were ineligible due to one patient being a G13C another patient with atrial fibrillation and then another patient who suffered a stroke and anemia. Although since they received therapy they were included in the FAS, the full analysis set. If you remove those patients, that’s a response rate of 66% out of 53 patients.

And the clinical activity of valuable those are patients who had to have both received treatment and had a follow-up scan for evaluation and that excluded five patients that did not have a scan. And two of the three patients I mentioned that were ineligible. The G13C patient did go on to receive a scan in separate progressive disease. So, that 71% would actually be 73% if you included that ineligible G13C patient. So I believe, I covered your question. Let me know if that’s true.

Gena Wang: Yes. There’s another response is 74%?

Alan Sandler: It would be 73%. One more response would be one fewer in the denominator.

Operator: And our next question will come from Salveen Richter with Goldman Sachs.

Unidentified Analyst: Hey thanks. This is Matt on for Salveen. Congrats on the updates. When could we see more mature PFS data for the TPS greater than 50% population? And how confident are you this will be clinically meaningful? And then could you just discuss the appropriate benchmark here more broadly? In particular is direct comparison to KEYNOTE-24 fine for all end points including OS? There has been ongoing debate around this. Thank you.

Alan Sandler: Sure. Again this is Alan. I’ll take those two questions. So, the PFS, the next opportunity will be coming later this year as I had mentioned. And we’ll have plans to submit to a medical symposium later in the year. So there’ll be a follow-up. And we are quite confident that we will be able to see that this progression-free survival continues to maintain. We’ve done some internal scenarios where we’ve run them with various analysis of how it may turn out to be with the PFS moving forward with all those patients that are currently censored. And again it seems to support very nicely that that PFS will be maintained with additional follow-up. Now the second part of the question related to the benchmark. And so number one the benchmark is pembrolizumab.

And there is a wealth of data of single-agent pembrolizumab in the literature both 24, 42, then there’s also real-world evidence data when you look at subsets as well of the KRAS-mutant patients. So there’s a whole wide range of opportunity to establish what the standard of care is. We plan on taking the totality of the data and looking at that as the control. In either way of looking at it, whether you look at KEYNOTE-24, KEYNOTE-42 or the real-world evidence that suggests maybe the G12C patients do slightly better. In all of those scenarios, we are comfortably ahead of what that projected PFS to be. We’ll put that together and use that as our standard of care and our benchmark moving forward for the Phase III study.

Operator: And we have a question from Jonathan Miller with Evercore.

Jonathan Miller: Hi guys. Thanks for taking the question and good to have you, Chuck. I guess on the PRMT5 paper I — is this paper all we’re going to see this year from this early data? Are you planning on presenting this at a medical meeting? And I ask specifically because I noticed you didn’t give a full safety table for instance and you didn’t make mention of like LFTs that caused one patient to discontinue. So, I’m just trying to get a sense for overall tolerability for that and if we’ll see a full presentation at a medical meeting this year. And then maybe just a housekeeping question. Can you give any color on the requirements for EU approval that weren’t met? What — were they responding to something in trial design or something beyond that?

Jamie Christensen: All right. I’ll take part one. And I think as you know, we’ve guided to a MRTX1719 disclosure this year. We essentially consider this a high-level top line disclosure and are not actively planning an additional disclosure until 2024. However, we continue to look at data as we move forward. And as soon as we have mature enough data to make a difference we would have an opportunity to present at a medical meeting, but likely in the 2024 time frame. With regard to safety, we generally say that this drug has been well-tolerated at dose levels up to 800 mgs that the number of grade three adverse events is only 15% study, no grade four or grade five events. The most common adverse events have been fatigue, nausea and diarrhea.

Again most of those are grade one or two and then certainly the nausea and diarrhea have been very well-controlled with co-meds when they need to be. But generally the grades are low and they don’t require co-med intervention. We have seen, I think you mentioned ALT. We’ve seen one patient with an ALT in the grade three range and that patient essentially I believe interrupted and stayed on study. So we are overall very encouraged by the overall safety profile of dose intensity. In fact, we have very few dose interruptions or dose reductions at these dose levels up again, up to 800 so far.

Ben Hickey: This is Ben. I’ll take the CHMP question. So just as a reminder a CHMP, conditional marketing approval was — the filing is based upon a single-arm study. And the CHMP actually indicated that the available data showed that we had a positive benefit-risk. However, we believe that a negative opinion could be based on the fact that there is an existing conditionally approved KRAS inhibitor. In addition, there was results from a competitor, which showed potentially underwhelming pivotal results, which we believe could be — could have been part of the extrapolation there. From our standpoint we are very — we have filed for a reexamination. We will have the results of that in the next four months. Additionally the K-12 study is enrolling well and we look forward to the readout of that pivotal study in the first half of 2024. And that was always going to be the study that we would base our pricing and our launch plans off of.

Operator: And we have a question from Jason Gerberry with Bank of America.

Jason Gerberry: Hey guys, thanks for taking my question. Just wanted to follow-up ahead. So it sounds like you’re meeting with FDA to finalize your Phase 3 design for the TPS greater than 50%. So I guess I’m just curious, sort of, what are going to be the key talking points? Is this largely procedural, or are there elements of the design that you need to buy-in such as what your comparator is or the PFS end point? And then I guess my follow-up to that is a question of like commercial relevance if you go with the KEYTRUDA monotherapy comparator. It sounds like probably half the market uses the KEYNOTE-189 regimen half uses KEYTRUDA monotherapy. So just kind of wondering if your results are ultimately going to get benchmarked against KEYNOTE-189 in that segment of patients? Thanks.

Alan Sandler: Great. This is Alan. I’ll take the first half of the question the meeting with the FDA. So I think it’s probably a combination of procedural and also just an open dialogue with the FDA. There were some early discussions when we were there on another topic where they had stated that pembrolizumab would be an appropriate standard of care control arm. But what we’d like to do is meet with them again have that formalized the discussions regarding the control arm with pembrolizumab also PFS as a primary end point as well. And we’re confident that we should have a very fruitful discussion with them and agreement on both key points. And I’ll have — Ben is going to discuss the commercial aspect.

Ben Hickey: Yes, from a commercial standpoint, the standard of care in the greater than 50% population is pembrolizumab monotherapy. It constitutes over 60% of the current use. From an attractive — the standpoint — attractiveness standpoint, a chemo-free regimen is highly sought after by both physicians and patients. So we believe actually that the targeted approach with the long tail of an IO combination will be very attractive to the market. And we hopefully look forward to a successful study and bring it to the market.

Operator: And we have a question from Ben Burnett with Stifel.

Ben Burnett: Great. Thanks so much taking our question. Just one on KRYSTAL-7 and the results. Congrats on the improved efficacy profile you’re seeing in the PD-1 high patients. I wanted to just ask about — there was a slide that mentioned liver-related adverse events that led to discontinuations that looked pretty low. But I was wondering if you could maybe give just a little color on what adverse events led to the dose reductions described on slide 9 I believe. And I guess, was there any trend in dose reduction by PD-L1 status, or is that pretty much kind of broad?

Alan Sandler: All right. So this is Alan, again. So, first — last question first. There was no difference based on levels of PD-L1 expression. As far as the discontinuation rates or interruptions, no one particular TRAs stood out. There’s a number that — there were a few different events such as perhaps the GI with diarrhea or vomiting. And there were a wide range of ones that had low levels of discounts associated with it, no other one that really stood out.

Operator: And we have a question from Mike Ulz with Morgan Stanley.

Mike Ulz: Hey, guys. Thanks for taking the question. Maybe just a follow-up on the Phase 3 frontline lung study in patients with TPS greater than 50%. You’re proposing roughly 500 patients there. Just curious based on your estimates how long it might take to enroll that number of patients?

Alan Sandler: Yes. This is Alan again. We think that enrollment probably will be in the range of about two and half to three years. And yes, that will be expedited. We’d like as a result of the transfer of the Phase 2 to the Phase 3 and being able to activate sites quickly.

Operator: And our next question comes from Yigal Nochomovitz with Citigroup.

Yigal Nochomovitz: Yes, hi. Thanks for taking the questions and great to see you back in the CEO role at least temporarily Chuck. With regard to the greater than 50% cut of the market for the frontline trial, just wondering a few things. Can you just talk about how you’re getting confidence on the PFS as a primary end point? I believe the FDA has been on record saying they want to see OS for IO therapies. And then obviously there’s a big data point coming in the competitive landscape with Roche’s day one trial for TIGIT in the PD-L1 greater 50%. What type of flexibility might you have to adapt the trial if that hits and the standard of care in frontline were to rapidly change? Thank you.

Alan Sandler: So, two questions. The first one we’ll talk about PFS. Again, we’re certainly confident that PFS that we’re seeing will be maintained overall, as I’ve mentioned a little bit earlier. The comment about whether or not the FDA will require OS, of course it’s going to be something that we’ll be talking with them – speaking with them this quarter. I will say that as you recall in the second-line study, PFS was accepted as a primary end point and primarily because of the known entity of crossover and second-line therapy. Although, there’s not necessarily formal crossover in this study. In frontline patients, the opportunity since they live so much longer, the opportunity for subsequent lines of therapy can certainly impact the overall survival or detecting a difference between survival.

So that will be our discussion with the FDA based on that. We will of course, look at overall survival in the study as well. The second part of your question related to the impact of other potential agents that may have positive studies down the road such as say TIGIT. Basically we – in essence that impact is – does not actually occur with a positive study. It only – the impact only happens when there’s been a formal approval not even accelerated approval but a full approval of an agent. We believe that once our study has started and we’ve agreed with – the FDA has agreed in principle that should be able to go as is and not have to be changed midstream.

Operator: And we’ll take a question from Evan Seigerman with BMO.

Evan Seigerman: Hi, thank you so much for taking my question. Thank you [indiscernible] on the call. A bigger-picture question from my perspective. You talked about optimizing your investments to maybe reduce the cash burn. Can you be a little more granular and help us understand how you prioritize what’s important versus what maybe you would like to take this.

Laurie Stelzer: Yes, hi, it’s Laurie. We’re continuing to evaluate our expense base looking for ways to be more efficient with our capital. We’ll continue to do so. We’re committed to reducing the burn as we go into 2024. And so we will be looking across the organization but with a focus on ensuring that we do not have expenses as it relates to the most value-driving programs and parts of the organization. So – but I can’t go into more detail today.

Chuck Baum: All right. So thanks everyone for joining us on the call today. We appreciate your interest in Mirati, and look forward to sharing additional updates with you in the future. Thank you.

Operator: Well, thank you. That does conclude today’s conference. We do thank you for your participation. Have an excellent day.