Mirati Therapeutics, Inc. (NASDAQ:MRTX) Q3 2022 Earnings Call Transcript

Mirati Therapeutics, Inc. (NASDAQ:MRTX) Q3 2022 Earnings Call Transcript November 8, 2022

Mirati Therapeutics, Inc. beats earnings expectations. Reported EPS is $-3.09, expectations were $-3.48.

Operator: Good afternoon, and welcome to the Mirati Therapeutics Third Quarter 2022 Earnings Call. My name is Jenny, 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 a question-and-answer session. 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, Jenny, and welcome everyone to this afternoon’s call. Joining me on the call today are David Meek, our Chief Executive Officer; Dr. Chuck Baum, our President Founder and Head of Research and Development; Dr. Jamie Christensen, our Chief Scientific Officer, Ben Hickey, our Chief Commercial Officer and Laurie Stelzer, our Chief Financial Officer. We are also joined by our recently appointed Chief Medical Officer Dr. Alan Sandler. Before we begin, 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 September 30, 2022 and recent corporate updates. This press release is available on the Investors section of our website at mirati.com. With that, David I’ll turn the call over to you.

David Meek: Thanks Ryan. And thank you for joining us on the call today. The third quarter was another productive one for Mirati as the team made important progress advancing our strategic initiatives. As a result, we earned the break of realising what could be transformative catalyst over the next several months. First, our PDUFA for adagrasib is December 14 and we are excited by the prospect that people living with non-small cell lung cancer could soon have the opportunity to receive adagrasib. We believe, we made a thorough and compelling application for U.S. approval in our interactions with the agency continues to be very constructive. Second and first line non-small cell lung cancer we expect to share updates and direction across our multi prong development approach this quarter.

This will include more data on the concurrent dosing of adagrasib at 400 milligrams twice daily with full dose pembrolizumab, which is our most advanced adagrasib combination approach in the first line setting. Third, we are on track to topline interim readout of the Sitravatinib Phase 3 SAPPHIRE study by the end of the year. Fourth, we made significant progress advancing MRTX1133 our KRAS G12D inhibitor and plan to file an IND later this quarter. Jamie will say more about the 1133 program in his commentary. With that, I’ll turn the call over to Ben to provide an update on our launch readiness and commercial organization.

Ben Hickey: Thank you David and good afternoon everyone. I’m pleased to report that we are now launch-ready. We have a great €“ 100% customer facing U.S. field force and our commercialization teams are fully trained. I’ll take a few minutes to explain why we are highly confident that we have assembled an effective commercialization organization which can successfully deliver on our commercial goals. First, our U.S. commercialization team has specific and extensive experience in lung cancer supporting multiple launches and includes a fully integrated team of market access, sales and medical affairs supported by a unique digital platform. Second, our commercialization team has a singular and unrelenting focus, delivering adagrasib to the oncologists, HCPs and people living with cancer that we serve.

Third, from a payer perspective, our team has interacted with nearly all of the top plans across the country, receiving positive feedback on a unique profile of adagrasib. We expect to generate broad coverage within the first few months of launch. Fourth, our teams continue to work on market development opportunities such as increasing both testing and identification of KRAS G12C-eligible patients particularly in the community setting, where over 40% of our pivotal study was enrolled. We have also designed a distribution and patient assistance program in partnership with community oncologists, and we believe this program is best-in-class. Importantly, we are also coming to market from a position of strength due to adagrasib’s compelling clinical profile.

We believe the key attributes of adagrasib will drive prescribers to utilize it in their treatment decisions. These attributes include adagrasib’s strong activity, including a 44% response rate and a 14.1 months of median overall survival as demonstrated in the pooled analysis we presented at ASCO, and low treatment related to discontinuation rates. Additionally, the data we presented at ASCO demonstrated that adagrasib has significant activity in patients with central nervous system metastasis, including those with active and untreated CNS metastases, which is estimated to occur in approximately 40% of KRAS G12C patients. We are also seeing compelling clinical data in people with multiple non-lung tumor types, which we believe is important in the mind of physicians.

In summary, we believe that these important, differentiating characteristics, combined with an experienced and focused commercialization organization position us well for market leadership within the KRAS G12 space over the long term, including future opportunities beyond the initial second-line setting. David, I’ll turn it back to you.

David Meek: Thanks, Ben. Before we provide an update on our pipeline, I’d like to take a few moments to discuss the leadership transition we announced today. Dr. Chuck Baum has made the decision to retire next year after nearly 30 years of service to the biopharmaceutical industry and more than 10 years at Mirati. Mirati owes a great debt of gratitude to Chuck, who founded and then led the organization as CEO for 9 years. We would not be in a position today to receive approval for adagrasib and have a broad and innovative pipeline without Chuck’s dedication and vision. Chuck is a pioneer. And his life’s work has positively impacted people living with cancer. He has been a very generous partner and colleague to us all. We thank him for his leadership, which has established Mirati at the forefront of target oncology.

I’m pleased that we will continue to benefit from Chuck’s guidance as he transition to the second quarter of 2023 and will provide on-going strategic leadership as a member of the Board of Directors. Chuck will continue to operate as President and Head of R&D into the second quarter of 2023. This will enable Chuck to oversee several important milestones in the fourth quarter and support a smooth transition of the development organization to Dr. Alan Sandler, who has joined Mirati is our Chief Medical Officer. We’re very delighted to bring Dr. Sandler to the company with 30 years of oncology and drug development experience, including as the Global Head of Oncology Product Development at Zai Lab and late-stage oncology development at Genentech.

Alan is extremely qualified to continue the progress we have made in our pipeline and explore additional opportunities for adagrasib, including our first-line combination strategy. Alan’s depth of medical knowledge, including approximately 18 years as a practicing academic medical oncologist, a key opinion leader and an investigator during his academic career, paired with his experience and proven track record as a clinical leader makes him an ideal successor to Chuck. Alan has extensive experience managing complex R&D programs, and I fully expect that his leadership and industry knowledge will benefit patients, employees and our shareholders. I’ll turn the call over to Alan to share his initial thoughts.

Alan Sandler: Thank you, David, and good afternoon, everyone. I want to start by saying that it’s an absolute privilege to work in a company with such a relentless focus on science and deep commitment to improving the lives with people in need. I share that same passion. Mirati is rapidly ascending leadership in targeted oncology, and I’m thrilled to be joining the exceptionally talented team at Mirati at such a pivotal time. I have a long, personal and professional relationship with Chuck and I appreciate his support and encouragement as I joined Mirati. It will be an honor to work alongside him over the next several months as we navigate through a number of important clinical events, which could prove to be significant catalysts for Mirati.

Looking ahead, I’m excited to assume the role of Chief Metal Officer of Mirati. From my prior experience, I’m intimately familiar with adagrasib and believe it is a best-in-class drug with the potential to make a significant impact on people living with cancer. I look forward to applying my decades of experience towards advancing our robust pipeline of compelling clinical programs, which I believe show great promise. Chuck, I’ll turn the call over to you for an update on our clinical activities.

Charles Baum: Thank you, Alan. Let me begin by expressing my sincere gratitude to all my dedicated colleagues who have worked with me at Mirati over the last 10 years. The opportunity to lead Mirati and bring forward several potentially best-in-class treatment options for people with cancer has been the highlight of my career. I’m proud of the organization’s accomplishments and extremely optimistic about our future. With David at the helm, Alan on board and just a few quarters needed to complete the work I would like to finish, it’s a perfect time for my transition. I will be moving on from my daily operational responsibilities during the second quarter of 2023, but I will continue to be a part of the company’s strategic leadership as a member of the Board of Directors to support, influence and celebrate our future success.

I want to extend a warm welcome to Alan and express how thrilled I am that he has joined Mirati. My personal and professional interaction with Alan over the last 20 years lead me to believe that we are fortunate to have him leading our development organization through the next phase of growth. In fact, Alan and I have been working closely together for the last two years. He knows adagrasib well and has worked extremely well with the Mirati team. I look forward to working with Alan as we advance the pipeline together. With that, I’ll switch gears and begin with discussing adagrasib. Let’s begin with ESMO, where we shared positive results from KRYSTAL-1, evaluating adagrasib as a monotherapy and in combination with cetuximab in people with previously treated KRAS G12C mutated metastatic colorectal cancer or CRC in the third or later lines of therapy.

Feedback from KOLs, investigators and oncologists on our CRC data have been overwhelmingly positive. As we expected, the combination with cetuximab showed a particularly compelling and differentiated efficacy profile and will be our primary approach in CRC moving forward. The combination demonstrated a response rate of 46% and median progression-free survival of 6.9 months. Notably, these results suggest that potential of substantial improvement compared with the current standard of care and are part of the differentiation story for adagrasib. The combination data strengthened our confidence and the potential for accelerated approval in late-line CRC. And we expect to finalize discussions with the FDA about the viability of utilizing this pathway soon.

We are actively enrolling additional late-line CRC patients in the combination of adagrasib plus cetuximab in a Phase II cohort of the KRYSTAL-1 study, which we expect to be part of our supplementary NDA filings seeking approval for this indication. We also have a Phase III registrational study on-going in second-line colorectal cancer patients called KRYSTAL-10, which is comparing the efficacy of adagrasib in combination with cetuximab versus standard of care chemotherapy. The study continues to enroll well with strong interest from patients and physicians, and we expect KRYSTAL-10 to be the basis of — for full-approval in second line and beyond colorectal cancer patients. As we see from these CRC data, adagrasib has the potential to treat people living with multiple tumor types, and we believe this is an important differentiating characteristic for our program.

Moving to lung cancer. We have several important upcoming catalysts. We have an active and on-going dialogue with the FDA as we approach our December 14 PDUFA date. As David mentioned, our interactions with the agency continue to be constructive. Beyond the U.S., we are continuing to advance discussions with the European Medicines Agency on their review of adagrasib’s marketing authorization application. We continue to make progress towards our goal to expand the availability of adagrasib to patients in the European Union. In first-line non-small cell lung cancer, we expect to share key updates across our multipronged development approach. As a reminder, our initial and most advanced adagrasib combination approach in first-line non-small cell lung cancer is the concurrent dosing of adagrasib at 400 milligrams twice daily with full dose pembrolizumab.

The initial data we shared at ASCO give us confidence in the path forward for the combination in the first-line setting. Our Phase II KRYSTAL-7 study evaluating this combination is enrolling well, and we are targeting ESMO immuno-oncology conference in December to share more mature data with a larger number of patients. With these data, we expect to have enough follow-up on a sufficient number of patients to have a better understanding of the safety and tolerability of the combination. These data, along with feedback from scientific advisers and from the FDA will help inform our registrational plans in the first-line non-small cell lung cancer setting. We are finalizing our first-line strategy, and we will provide an update on our next steps at ESMO IO.

I’ll now discuss KRYSTAL-12, our randomized Phase III confirmatory study in previously treated non-small cell lung cancer patients with a KRAS G12C mutation, which is enrolling well worldwide. As a reminder, adagrasib’s Phase II registrational study, Cohort A, was conducted in a heavily pre-treated patient population with 98% of patients having received both prior chemotherapy and checkpoint inhibitor therapy. This is the same patient population being evaluated in KRYSTAL-12 and we would, therefore, expect our performance in KRYSTAL-12 to be consistent with our Cohort A results. Additionally, it’s possible that with the introduction of the tablet formulation, we may see improved tolerability. Based on the clinical data we’ve shared to date and our expectation for KRYSTAL-12, we believe adagrasib will have a strongly differentiated profile in lung cancer, with best-in-class objective response rates, overall survival and penetration of the central nervous system, or CNS.

Adagrasib is the first G12C inhibitor to demonstrate substantial clinical activity in people with active, untreated CNS metastases, which is a large and poorly served patient population. Let’s shift to Sitravatinib, which is being studied in a registrational Phase III study called SAPPHIRE. This study enrolled patients with second or third-line non-squamous non-small cell lung cancer who derived prior clinical benefit following treatment with a checkpoint inhibitor and chemotherapy. The SAPPHIRE study is on track to top line the interim results for overall survival this quarter. We believe this study was well designed and sufficiently powered to demonstrate a positive outcome. We intend to share the top line results in the form of a press release by the end of the year.

Depending on the outcome, we expect to disclose the data at a medical meeting in 2023. If positive, this interim analysis could be the basis for full approval in the U.S. and Europe with regulatory filings in both markets being submitted by the middle of 2023. Sitravatinib has the potential to treat a large number of people with approximately 70,000 patients with second or third-line non-squamous non-small cell lung cancer in the U.S. and Europe. With that, I’ll turn the call over to Jamie for an update on our earlier-stage development pipeline.

James Christensen: Thanks, Chuck. Let me begin by briefly touching on MRTX1133, which is a potent and selective KRAS G12D inhibitor that targets both the active and inactive states of the KRAS protein. In the past, we’ve highlighted our research, emphasizing the importance of maintaining maximum KRAS G12D target inhibition for the full duration of the human dose administration cycles, which has historically been a challenge. In response to these observations, we have emphasized the development of formulation strategies designed to enhance oral absorption and increase durable systemic drug exposure. We’ve made progress and significantly increased our confidence in the ability to achieve sufficient drug concentrations and maximal target coverage in human clinical trials with oral administration.

As a result, we’re prioritizing the IND for the oral formulation of 1133, which we expect to submit by the end of this year. We remain very excited about 1133 and the transformational potential that this compound could have in a large and underserved patient population with G12D mutated cancers. As a reminder, the KRAS G12D mutated cancer patient population is approximately 3 times larger than the G12C patient population. In addition, G12D mutations are highly prevalent in people with pancreatic cancer and colorectal cancer. Now moving on to MRTX1719, our MTA cooperative PRMT5 inhibitor. 1719 is enrolling an on-going Phase I/II clinical trial in patients whose tumors harbor an MTAP gene deletion. This gene deletion represents up to 10% of cancer patients with solid tumors.

We’re encouraged by our early clinical experience, which shows that the pharmacokinetics and systemic exposure are consistent with expectations to achieve therapeutically meaningful drug concentrations based on our preclinically defined targets. We’re also pleased to report that we were granted Fast Track designation for 1719 in the third quarter, which reflects the strength of our preclinical data and the potential for 1719 to address unmet medical needs. Looking ahead, we expect to share initial clinical data for this program in 2023 after we’ve selected a dose and generated sufficient data to demonstrate clinical proof of concept. In addition, our investigational new drug application for MRTX0902, a SOS1 inhibitor was accepted by the FDA, and we’ve recently initiated Phase I clinical trial.

We believe that 0902 has the potential to be used in combination to enhance the activity of adagrasib and is another example of our strategy to maximize the value of adagrasib by pursuing a broad range of KRAS-targeting strategies and indications. We also recognize the potential value of SOS1 inhibition independent of KRAS mutations, including EGFR-mutated non-small cell lung cancer as well as malignancies harboring other non-G12C RAS family mutations. Also, we have recently announced two clinical collaborations, which continue to be an important part of our adagrasib strategy. First, we entered into a clinical collaboration with Aadi Bioscience to evaluate the combination of adagrasib with nab-sirolimus in people with advanced non-small cell lung cancer and other solid tumors harboring a KRAS G12C mutation.

Preclinical models have shown compelling evidence supporting the combination of KRAS and mTOR inhibitors and KRAS mutated cancers. The combination is directed in achieving a deeper and more durable inhibition of the KRAS-dependent signaling pathway and also addressing resistance pathways that may bypass KRAS-dependent and selected tumors. We anticipate that this will result in improved patient outcomes compared to either single agent. Secondly, we entered into a clinical supply agreement with Incyte to evaluate the combination of adagrasib with their oral small one, small molecule PD-L1 inhibitor. Both clinical collaborations demonstrate Mirati’s focus on pursuing adagrasib in combination therapies to benefit people living with difficult-to-treat cancers.

Overall, we’re pleased with the significant progress we’re making across the portfolio. MRTX1133 will be our third IND in the last 12 months. This illustrates the productivity and efficiency of Mirati’s internal discovery engine. We look forward to providing additional updates in the near future. With that, I will hand it off to Laurie.

Laurie Stelzer: Thank you, Jamie. Let me begin by saying that from a financial management perspective, we continue to utilize our capital in a disciplined manner to ensure we advance our pipeline, invest in innovation and effectively launched products to drive sustainable long-term growth. Now I will walk through our income statement and touch on a few other key financial metrics. Revenue for the third quarter of 2022 was $5.4 million, which was driven by the recognition of a $5 million milestone payment from Zai Lab that was contingent on starting a pivotal clinical study for adagrasib in a second indication in the Zai Lab-designated territories. This compares to revenue of $71.8 million in third quarter of 2021, where we recognized $66.6 million of revenue associated with the transfer of the license and know-how of adagrasib as part of our agreement with Zai Lab and a $5 million milestone payment from BeiGene associated with the start of the first pivotal sitravatanib clinical study in the BeiGene-designated territories.

Research and development expenses for the third quarter of 2022 were $131.1 million compared to $116.1 million for the same period in 2021. The increase is primarily due to an increase in salaries and other employee-related expenses, including share-based compensation expense associated with an increase in head count to support our growing pipeline. General and administrative expenses for the third quarter of 2022 were $60.8 million compared to $35.2 million in the same period in 2021. The increase is primarily due to an increase in commercial readiness costs in preparation for a potential product launch, an increase in salaries and other employee-related expenses, including share-based compensation expense, as we grow our sales, marketing and G&A staff and an increase in facilities and IT costs to support the organization.

Net loss for the third quarter of 2022 was $173.6 million or $3.09 per share basic and diluted compared to a net loss of $80.1 million or $1.55 per share basic and diluted for the same period in 2021. The net loss for the third quarter of 2022 included $9.5 million gain recorded upon the dissolution of MethylGene, which was Mirati’s Canadian subsidiary. We ended the third quarter with approximately $1.2 billion in cash, cash equivalents and short-term investments, which gives us a cash runway well into 2024. During the third quarter, we sold approximately 1.9 million shares of common stock under our ATM facility, which generated net proceeds of $155 million. Please see our press release from earlier this afternoon for additional details about our third quarter 2022 financial results.

David, I’ll hand it back over to you.

David Meek: Thank you, Laurie. Before opening the call for questions, let me conclude by saying how pleased I am with the considerable progress our team has made this quarter. We continue to advance our diversified clinical pipeline and prepare for the potential launch of adagrasib in the U.S. As we close out the remainder of this year and look to 2023, we’re very excited about the prospect of Mirati helping people with cancer and creating value for the stakeholders who enabled that to happen. And thanks to those stakeholders, we are well capitalized, which gives us the ability to further investigate a host of promising clinical opportunities. We remain optimistic that we will be granted approval to launch adagrasib in the coming weeks, and I can assure you that we will do so with vigor.

Fortunately, we benefited from watching and analyzing the KRAS G12C market evolved in the last 18 months as it has been built from the ground up. We have engaged extensively with key accounts and community oncologists, which helped us to formulate what we believe, will be a very effective launch strategy. As you have heard today, we are making solid progress on our key pipeline initiatives, and we are very optimistic and excited about our future. I’ll close by thanking the Mirati team for their individual and collective efforts this quarter. I’m truly proud and grateful to lead such a dedicated and accomplished organization. On behalf of all of us at Mirati, we thank you for your support and interest in the company. With that, Jenny, we’re ready to open the call for questions.

Q&A Session

Operator: Thank you. And your first question comes from Salveen Richter with Goldman Sachs.

Salveen Richter: Good afternoon. Thanks for taking my question. And just with regard to the partnership with Incyte on their oral PD-L1, could you just share what led you to this collaboration and what aspects of the early data gives you confidence here and your thoughts about where this may fit in longer term?

David Meek: Absolutely. But Jamie will take that.

James Christensen: Sure. Yes. I think first of all, we remain very confident in our strategy to combine with pembrolizumab in the frontline setting. And as Chuck mentioned, we’ll be talking about that at ESMO IO. Essentially with the Incyte collaboration, they approached us. They’re very interested in augmenting their PD-L1 oral inhibitor program with a variety of combination strategies. And I think it was easy for us to have a very robust discussion with them about clinical trial design. And essentially, it’s an opportunity for the further development with — of adagrasib in that setting, but essentially driven by Incyte.

Salveen Richter: Thank you.

Operator: And we’ll go next to Tyler Van Buren with Cowen.

Tyler Van Buren: Hey guys thanks very much. Chuck, I’d just like to say a heartfelt congratulations on the many impressive accomplishments you’ve achieved during your tenure at Mirati in your career. You’ve truly made your mark on the KRAS in the broader targeted oncology space, and I’ve enjoyed working with you, and you’ll be missed.

Charles Baum: Thank you.

Tyler Van Buren: With that, I’d just like to ask about the impending KRYSTAL-7 adagrasib-pembro combo data at ESMO IO. What do you guys believe is the upper bound of the acceptable limit of Grade 3 plus LFTs? And on the efficacy side, what response rate do you think would be compelling as we think about the potential to beat pembro chemo in a pivotal trial?

David Meek: Sure, Tyler, I’ll take that. It’s — first of all, thanks for your kind words about Chuck. Just to let you know he’s not going anywhere tomorrow, as I mentioned, so you’ll see him again, trust me. Regarding K-7 and what we expect to see upper bounds and so on, let’s have that conversation about 4 weeks. We’re going to be at ESMO IO in 4 weeks, as Chuck mentioned. And we’ll weigh out everything to you our full strategy for the frontline setting with that, and we’ll get in all those details at as ESMO IO.

Tyler Van Buren: Fair enough. Thank you.

Operator: And we’ll move to our next question from Gena Wang with Barclays.

Gena Wang: I also wanted to add, Chuck, that you will be missed. Has been great working with you in the past many years. Also, Alan, we look — welcome on board. We look forward to working with you. So I also have just one question regarding KRYSTAL-7. At ESMO IO, will you be aiming for regular abstract or late-break abstract? And also since the last update in June, all the patients were from the cohort that taking capsules. What percentage of patients from this update will be on tablet?

David Meek: Sure. I’ll jump into that, and I’ll throw it over to Chuck to talk about some of the specifics of that. We’re shooting for late-breaker abstract at ESMO IO and as soon as that’s — when we know more details, we’ll share that with you, Gena, but stay tuned over the next couple of weeks. Chuck will answer the question about tabs and caps.

Charles Baum: Yes. So Gena, all of the recently enrolled patients since our last discussion were on the tablet. And I don’t have the exact percentage for you, but it’s the vast majority of the patients that we’ll report at ESMO IO will be — will have been dosed on the tablet.

Gena Wang: Okay, great. Thank you.

Operator: And moving on, we will go to a question from Jonathan Miller with Evercore ISI.

Jonathan Miller: Thanks for taking my question and congrats from me as well, Chuck. Why don’t I ask about second-line launch actually since we’ve had a bunch of questions on the KRYSTAL-7 data. I’d love to get your sense on testing adoption in the second line. And what proportion of patients you expect in the second line know their KRAS status? Is that still going to be a major limitation on the rate of a launch in the second-line setting?

David Meek: Yes, Jonathan, we’ve looked at this very closely. We continue to look at it closely, and Ben will share some of the details with you.

Benjamin Hickey: Sure. So as you know, testing predominantly occurs at diagnosis. So we think that testing rate today is just over 2/3 or so of the market. So still some room to grow there. And to your point, as they transition, unfortunately, some of these patients progress in second line, we’re seeing over 50% of those patients being identified. So we do think that over half of the market is available today and we expect it to continue to grow almost on a linear basis as both the testing rate has room to grow as well as that patient identification issue in second line. So again, we think it will be — continue to grow, and I think we’ll be launching into a market with momentum, but it will take a little while to fully mature.

Jonathan Miller: Thanks very much. And how about reimbursement in that setting? Do you expect that to be relatively easy to accomplish, given KRAS is already active in the space?

Benjamin Hickey: We spent the last 6 to 12 months engaging with all of the top payers across the country, and they understand our profile very well and understand our efficacy profile in particular, so we do expect to get broad coverage. The rate of adoption, it will take a couple of months, but we’ll be there very quickly and have pretty broad coverage. We don’t see significant issues on that front.

Jonathan Miller: Thanks very much.

Operator: And we’ll go next to Michael Schmidt with Guggenheim.

Michael Schmidt: Hi guys, thanks for taking my question. Yes, maybe another commercial question. With the PDUFA data approaching here in December, how should we think about the potential launch trajectory of adagrasib next year, perhaps relative to the Amgen experience, considering the clinically differentiated profile of the drug? Is there perhaps an opportunity to switch patients from other KRAS inhibitors? Are we thinking more about industry addressing newly diagnosed patients? Thanks so much.

David Meek: I’ll start and Ben will add a couple of things. Let’s not forget, we’re 18 months after the launch of LUMAKRAS. We are the second to market. Being the first to market, you do have a bolus of patients that are quickly available to you, patients that were on an early access program for the launch of LUMAKRAS, immediately moved to commercial drug. So that certainly helps the first mover that patient population will not be available to us. Some of the second third-line patients that were available at launch would not be available to us. Rapid reimbursement will happen, as Ben mentioned, so we expect reimbursement in the first — in the early months of approval, but that’s going to take a few months. So the launch trajectory will be slightly different as a second asset to the market.

But over time, we certainly see uptake of adagrasib and over time, we clearly see market leadership over time. But the launch will be a little bit different than one does see with LUMAKRAS.

Benjamin Hickey: Yes. I’ll just add in that, no, we wouldn’t expect to see a great deal of switching from existing. So we’re really playing in that new to second-line patient population, which is where we’ll be sourcing patients from. So as David mentioned, we don’t expect to see the significant bolus that first-to-market assets have, but more of this linear incremental approach over time with the benefits being realized by the patients and physicians over time.

Operator: And we’ll go next to Mike Ulz with Morgan Stanley.

Michael Ulz: Hey guys thanks for taking the question. Maybe just a follow-up on the K-7 data that we’re expecting at ESMO IO here in a couple weeks or months here. I know you mentioned having sort of sufficient data to get a good read on efficacy and safety. But wondering if you could maybe give us a rough idea of the patient numbers and maybe also the level of follow-up we should expect. Thanks.

David Meek: Mike, what we’re going to share in it is four weeks from now, we’ll certainly share all the details there. It will be more patients than we shared at ASCO and will be longer durations of therapy than what we shared at ASCO. We’re definitely going to have — it will be early data. Let’s not forget that, but it’s to look at safety and tolerability of the combination and really look at the efficacy. In this case, it will be more response rates. But over time, we’re looking at PFS and OS in this patient population. And we’ll have all those details in four weeks.

Michael Ulz: Thanks.

Operator: And we’ll go next to Jason Gerberry with Bank of America.

Jason Gerberry: Hey guys thanks for taking my questions. My question is just — curious on the Incyte press release, there was some commentary about mitigating immune-related adverse events. I’m just curious sort of what you potentially see as sort of the unmet need of going to an oral PD-1 may solve for. Or maybe that’s just language that Incyte chose to use and you don’t agree with. And then also, just the rationale. It seems like you started a new Phase II study looking at KRAS monotherapy sequentially followed by KRAS PD-1 and the TPS greater than 1% patients. So just curious to what extent that may have been driven by anything that was seen with the Amgen study data at World Lung. Thanks.

James Christensen: Sure. This is Jamie again. So regarding your first question on the commentary and the Incyte press release, I would just say that this is a way that Incyte is really positioning their molecule. They really believe that the flexibility around an oral and the shorter half-life is a way to kind of mitigate potential immune-related AEs. But I think if you look at all of Incyte’s press releases and positioning around this molecule, they’ve used consistent language throughout, and I don’t think this especially applies to adagrasib in any way. So I think that’s the first answer. I think on the second question regarding sequential administration of KRAS inhibitors with pembrolizumab, I think — or other immune checkpoint inhibitors.

Our focus remains concurrent administration. We do believe that there’s a clear path forward with concurrent administration. We do believe that there’s a mechanism-based interaction between KRAS and its ability to essentially affect some of the cells in the immune microenvironment and the ability to co-administer with a drug that affects immune checkpoints is, in our mind, a clear advantage, and this remains our strategy moving forward. As mentioned a couple of times on the call, you’ll get a good picture of that at ESMO IO this year.

Operator: And we’ll go to our next question from Maury Raycroft with Jefferies.

Maury Raycroft: Hi, thanks for taking my question. You talked about the potential to get the adagrasib approval before December 14. Can you provide more specifics on where you’re at with discussions with FDA? I guess, particularly, do you have a draft label in place? And does it include any specifics on CNS activity? And have you had a light tech overview meeting?

David Meek: Sure. What I would say is we remain very confident in the approvability of the NDA. We don’t think it’s appropriate to get into the — or disclose the details of the conversations of the recent interactions we’re having with the agency. The conversations are productive. They’re constructive and more details will come out as soon as we have them, but we remain optimistic about the approvability.

Maury Raycroft: Got it. And as far as the label goes, is there anything — do you have the CNS data in the label? Can you comment on that?

David Meek: Yes, we’re not going to get into the specifics of the FDA interaction to this time.

Operator: And we will move on to a question from Eric Joseph with JPMorgan.

Eric Joseph: Hi, good evening. Thanks for taking the questions. I’m just wondering whether, I guess, given the CodeBreaK 200 update with LUMAKRAS at ESMO, where data sort of underperformed the Phase II performance. I’m wondering if there are any read-throughs in your view to your Phase III KRYSTAL-12 study. Also curious to know whether you’ve had any feedback from physicians on sort of the evolving efficacy profile of LUMAKRAS and whether that kind of represents an opportunity for differentiation with the launch of adagrasib. Thanks.

Charles Baum: Yes. So I think importantly, we pointed out during the call, that our patient population from Cohort A and K-12, KRYSTAL-12 were identical. And just to point out that if you look at the patient population for CodeBreaK 100, if you just look at those patients that had IO plus chemotherapy that the response rate there and the PFS looked very similar to what was seen in CodeBreaK 200. So we do think actually that the data from 100 was predictive of what would happen in 200 is just that the patient population was different. So we don’t expect, in our case, for there to be any difference between those patient population since we’re studying all patients in our studies were administered both chemotherapy and IO checkpoint inhibitor therapy before coming on to our trial.

David Meek: And regarding the physician reaction as to where adagrasib would fit in the armamentarium of physicians, when they do need a KRAS G12C inhibitor. It’s been a really good third quarter for us as we’ve rolled out more data actually began at ASCO. And then the data that we’ve shared, the competitive landscape, the more of the profile that physicians have seen with adagrasib, as Ben had mentioned, with the response rates, CNS activity, median overall survival data that we shared at ASCO, colorectal cancer data that was shared at ESMO, the totality of this data has been very encouraging, the feedback. All of us have spent a lot of time with customers, and the feedback has been very positive for us. So physicians are anxious to have another product to be able to treat their patients. So we’re excited about the upcoming opportunity to present that to physicians.

Operator: And we’ll go next to Ben Burnett with Stifel.

Benjamin Burnett: Hi thank you very much. I wanted to ask a question just on the on-going NDA review. Regarding the change of adagrasib, the formulation change from capsule to tablet, did you — have you disclosed how many patients or what level of patient data with the tablet that you submitted to the FDA that’s being reviewed as part of this NDA?

David Meek: Ben, we’ve not disclosed that information regarding the tablet formulation. But what I can say is the tablet formulation is in the NDA and that’s the formulation we expect to have approved.

Operator: And we will move on to Andrew Berens with SVB Securities.

Andrew Berens: Hi, thanks for the questions, and my congrats to Chuck for reaching the milestone. I guess another on the commercial LUMAKRAS. You mentioned in the prepared comments that you learned a lot on the LUMAKRAS launch, which I think most degree has been more sluggish than many had anticipated. Wondering if you could give us some color on what you think was going on and what you plan to do differently. And then I just have a follow-up question, too, after that.

David Meek: Sure, Andrew. Ben will take that first question.

Benjamin Hickey: Sure. I’ll just start with the — we’ve very intentionally built an organization around the — our customers and the micro markets that we see. So that’s coming across access, medical and our sales representatives. So we really think that we’ve hired a best-in-class team and a differentiated team. Secondly, we really do believe we’ve got a differentiated product. And then specifically, as it pertains to the account dynamics, we’ve been out there for a while and really spent a lot of time. Keep in mind that our study over 40% of the patients were actually enrolled from the community. So we’ve spent a lot of time in the community centers and really understanding the patient flow and where the genetic marker occurs in the electronic health system or if it doesn’t, and who in the office is responsible for that role.

So there really is some operational challenges that we’ve spent a lot of time with that we think that we can help try and effect. And keep in mind that with our over 100-person field team, we’re really kind of doubling the noise and promotion in the space and bringing KRAS G12C even more to the top of mind. So we think with those additional efforts, we’ll continue to see the market opportunity grow over time. And hopefully, we really think that, that aggressive is a really competitive agent in that market.

Andrew Berens: Okay. And then just a question on the on-going 400-milligram BID second-line cohort. Just wondering how far along that is in enrollment. And I just wonder confirmation you still think that’s going to be a Phase IV commitment at this point.

David Meek: So regarding the enrollment, we haven’t disclosed where we are with enrollment with that specific trial. Regarding post-approval commitments, I don’t think we’re prepared to have that conversation at this time as well. I think upon approval, assuming any post-marketing requirements, we’ll share those details.

Operator: And we will go next to Yigal Nochomovitz with Citigroup.

Yigal Nochomovitz: Hi, great. Thank you very much for taking the question. I just had a question on KRYSTAL-12 and then an unrelated follow-up on PRMT5. So on KRYSTAL-12, I think Chuck said your — you said it’s enrolling well worldwide. Wondering if you could say specifically what the percent enrollment was in KRYSTAL-12 at the time when you submitted the NDA for adagrasib. And the reason I ask is I’m sure you guys saw that earlier today, another company, ADC Therapeutics indicated for the FDA to consider accelerated approval pathways that they want to see that the confirmatory Phase III is well underway and ideally fully enrolled at the time of the filing. Thank you.

David Meek: Yes, I’ll take that question. That’s a pretty clear one. What I can say is our trial, KRYSTAL-12 was underway prior to our NDA being submitted. It was well underway when our NDA was accepted. The FDA is very aware of where KRYSTAL-12 is in enrollment. And we have met the bar substantially enrolled. So we do not see that as an issue for approvability for adagrasib, KRYSTAL-12.

Yigal Nochomovitz: Okay. Got it. And then this one is probably for Jamie. Jamie, so with respect to 1719, the PRMT5 inhibitor, can you comment on the — how it’s different potentially from the Amgen drug, AMG 193, from a biochemical’s perspective as well as how you’re planning to develop the drug differently versus Amgen’s strategy? Thank you.

James Christensen: Sure. Yes, it’s a little bit hard to read through to Amgen as they have not disclosed the chemical structure of their molecule, to my knowledge. We have been following the patent literature and otherwise. I would just say with regard to 1719, we are very comfortable with the degree of selectivity for MTAP-deleted tumor cells versus non-MTAP-deleted cells. That includes normal cells. So we have a 70-fold-plus ratio of selectivity. And when we model that out with regard to the clinical pharmacokinetics and peak to trough ratio, we believe that it’s very likely we would be sparing PRMT5 in normal cells. I think, as you know, one of the key issues for first-generation PRMT5 inhibitors that don’t discriminate for the MTA binding and PRMT5 that there are mechanism-based toxicities, a lot of myelosuppression, neutropenia and thrombocytopenia, anemia and other issues that are encountered.

And we do not anticipate to encounter those for that reason. Then finally, you noted the development path for the drug versus Amgen, I would just suffice to say that we are interested in a lot of key MTAP-deleted cancers where the deletion is common and where genomic testing is available. That includes non-small cell lung cancer, pancreatic cancer and a number of smaller indications where we believe there might be a fast-to-market strategy if the response rate should hold up. Our preclinical data is suggestive that this can be a mechanism of action where you do see tumor response or cytoreductive activity, we would like to leverage that certainly during our development program.

Operator: And we will go next to Silvan Tuerkcan with JMP Securities.

Silvan Tuerkcan: Yes thank you very much for taking my question. I have a question regarding kind of comments made by Amgen. So far, the LUMAKRAS has been prescribed to 3,700 patients, and they estimate there’s roughly 7,000 in the second-line non-small cell lung cancer available. So in my eye, I view the penetration fairly good. So how would you, say, going forward now you could influence or kind of tip the hand in the new patients that come in, telling doctors to pick adagrasib versus LUMAKRAS in these new patients, given that, that’s already a fairly high penetration in the second-line non-small cell lung cancer patients? Thank you.

David Meek: Sure. Ben has that question.

Benjamin Hickey: Sure. I think just on — it’s important to get definitions correct here. So there are 7,000 patients who are new to second line. When you look at the entire second line plus market, that’s 12,000 to 13,000 patients. So that’s the market that Amgen launched into with the 12,000 to 13,000. Now over time, that market it’s closer to really the 7,000 as patients get treated, and they will likely only get treated once with the KRAS inhibitor. So while they have launched into that and the 3,700 really comes from that larger pool, the majority of the opportunity moving forward will be in that 7,000. But again, that whole — that 3,700 was being pulled from a much larger market.

Operator: We will go next to Evan Seigerman with BMO.

Unidentified Analyst: Hi guys, this is on for Evan. Thanks for taking my question. So you had mentioned on call a focus in adagrasib on the opportunity in the community setting. How are you thinking about the community versus the academic setting? And we were just wondering what you’re seeing in the market or hearing from physicians and what this means for potential market segmentation.

David Meek: Sure. We’re going to a community, academic setting. We’re actually focused on both. So it’s important the academic centers, that’s where a lot of clinical trials are conducted. It’s where a lot of the key opinion leaders are. In the community setting, you have that, plus you have a lot more of the patients that are in the community setting. In second-line non-small cell lung cancer, the majority of the patients are in the community setting. So we are focused on both at this time, as Ben mentioned in his comments, 40% of our patients in the Cohort A trial, the registration trial were from the community setting. So it’s good that the community physicians, a number of them already have clinical experience, and we have other on-going clinical trials within the community setting as well because that’s where the patients are.

So we’ve got that surround-sound approach, if you will. It’s not just the academic setting it’s also a heavy reliance on the community setting because that’s where the patients are. Ben has a comment to make, too.

Benjamin Hickey: Yes. I think the only thing I’d add to that is in the community, we’re also treating across tumor types as well. And as we think about the data that Chuck mentioned now that we presented in CRC and in pancreatic and pan tumor data, we continue to see differentiated efficacy there. So we think that is a really robust part of our differentiation story moving forward, both in the monotherapy as well as combination so across tumors.

Charles Baum: A good point because in the community setting, physicians they treat all tumor types. They’re not as specialized as the economic centers are.

Operator: And we will go next to Jay Olson with Oppenheimer.

Jay Olson: Hi, thanks for taking the question. And I’ll add my congrats and well wishes to Chuck. Curious about any thoughts you could share on the combination of LUMAKRAS plus SHP2 inhibitor and how that may impact your expectations for adagrasib plus SHP2 and when we might expect to see data from that study. And I have one follow-up, if I could.

David Meek: Sure. It’s David here. I would say we’ve got an on-going study with a SHP2 with Novartis. That trial is underway. Novartis is leading the way with that program. And we’ll look forward to sharing the data when it becomes available sometime — yes, it’d be sometime next year. Sorry, I said Novartis instead of Sanofi.

Jay Olson: Okay. Great. I guess, can you also comment on the potential for adagrasib plus chemotherapy in first-line non-small cell lung cancer and whether or not that could be a registrational approach?

David Meek: We’ll get to that next month at ESMO IO when we talked about the holistic frontline strategy. We’ll talk about our multipronged approach to the frontline setting, so four weeks from now.

Operator: And we’ll go next to Swapnil Malekar with Piper Sandler.

Swapnil Malekar: Hey thank you for taking my question. Although you’ve alluded to in the past, like given the importance of the combination approach of adagrasib and pembro in the frontline setting, just wondering if there is any specific data that has been generated to see that the tox that was associated with LUMAKRAS and pembro is not a class effect of KRAS inhibition and that adagrasib is differentiated.

David Meek: Jamie will take that.

James Christensen: Yes, this is Jamie. First of all, I think we do not believe this is a class effect. Again, we’re moving forward with the combination, and we’ll be talking about that more in the future. And I’d say there are a few reasons to believe that this is not a class effect. One is if you look at historical combinations with immune-checkpoint inhibitors and tyrosine kinase inhibitors, it’s very clear that there are some agents that are readily combinable. Our own sitravatinib and cabozatinib and others are readily combinable. Same drugs in class, pazopanib, sunitidib, other drugs like crizotinib, unfortunately not. So I think it’s hard to say that the TKIs are a class effect when you see that particular observation.

I think point number two is we could point to the differentiated physiochemical properties of drugs like adagrasib and some of the competitors. And one thing to note about adagrasib is the kind of KI to KN act ratio is probably a best in class. That means adagrasib has low intrinsic reactivity and a lot of its binding affinities through noncovalent means. That means we’re likely to avoid off-target issues. The second physiochemical property, I think, noticed the peak-to-trough ratio in terms of pharmacokinetics, we don’t see a large variation in Cmax exposure to Cmin exposure. So it’s likely we don’t see high levels of drug and tissue that are disproportional over the dose interval. We do think that, that’s another way we might be able to avoid any, for example, hepatotoxicity.

So yes, bottom line, I don’t think this is a class effect. I think there are several reasons to believe both based on historical development of drugs as well as the physiochemical properties of ada.

David Meek: Thank you Jamie. We have time for one more question, Jenny.

Operator: And we’ll go to Kalpit Patel with B. Riley Securities.

Kalpit Patel: Yes hey good afternoon. Thanks for taking the question. Maybe first, just to be clear on one of the previous questions that was asked. Can you confirm that based on any recent communication with the FDA that the agency is not requiring you to fully enroll KRYSTAL-7 before potentially granting approval by the PDUFA date?

David Meek: Yes. First, let me say, I think you mean KRYSTAL-12, which is our confirmatory trial. So yes, we can confirm that.

Kalpit Patel: Okay.

David Meek: I think the situation today — I think that’s a different situation. I can’t speak for that company. I could just speak for us.

Kalpit Patel: Okay. Fair enough. And then I think previously, there was some talk about maybe a potentially accelerated approval path in certain subpopulations in the frontline setting, particularly the STK11 co-mutation patients. Maybe how is that plan shaping up? Is that still on the table? Or are you leaning towards a full complete Phase III trial instead?

David Meek: We really look forward to having that conversation in four weeks at ESMO IO because it’s all — that’s certainly part of our multipronged approach to investigating in the frontline setting, where we see a tremendous opportunity potential for adagrasib. So we’ll get into those details at ESMO IO. And hopefully, you all can join us in Geneva for that conversation. So thanks for joining us this afternoon, everybody. We really appreciate your interest in Mirati, and we look forward to sharing additional updates with you here in the coming weeks.

Operator: And so this concludes today’s call. Thank you for your participation. You may now disconnect.