Feb 8, 2012
Executives
Charles Butler – Investor Relations Mike Morrissey – President and Chief Executive Officer Frank Karbe – Executive Vice President and Chief Financial Officer Gisela Schwab – Executive Vice President and Chief Medical Officer
Analysts
Eric Schmidt – Cowen and Company Karen Jay – JPMorgan Joel Sendek – Stifel Terence Flynn – Goldman Sachs David Miller – Biotech Stock Research Ryan Martins – Lazard Capital Lee Kelowski – Credit Suisse
Operator
Good day, ladies and gentlemen, and welcome to the Q4 Exelixis Conference Call. My name is (Kim) and I'll be your coordinator for today.
At this time, all participants are in listen-only mode. We will be facilitating a question-and-answer session towards the end of today's conference.
(Operator Instructions) I would now like to turn the presentation over to your host for today's conference, Mr. Charles Butler.
Please proceed, sir.
Charles Butler – Investor Relations
Thank you for joining us this afternoon for our fourth quarter and full year 2011 financial results conference call. Joining me on today's call is Mike Morrissey, our President and CEO; Frank Karbe, our Executive Vice President and CFO; and Gisela Schwab, our Executive Vice President and Chief Medical Officer.
As usual, Mike will start off with a brief overview and then turn the call over to Frank who will review our performance over the financial reporting period, then Gisela will provide a research and development update before the team takes questions. As a reminder, during the course of this presentation, we will be making forward-looking statements regarding future events or the future performance of the company.
Actual events or results of course could differ materially. We refer you to the documents that Exelixis files from time-to-time with the Securities and Exchange Commission, specifically, the company's most recent Form 10-Q filed on October 27, 2011.
These documents contain and identify under the heading Risk Factors, important factor that could cause actual results to differ materially from those contained in any forward-looking statements, including risk related to the potential failure of cabozantinib to demonstrate safety and efficacy in clinical testing, Exelixis' ability to conduct clinical trials of cabozantinib sufficient to achieve a positive completion; the sufficiency of Exelixis' capital and other resources, and the uncertainty of the FDA review and approval process. And with that, I will turn the call over to Mike.
Mike Morrissey – President and Chief Executive Officer
Okay, thank you Charles and thanks everyone joining us on the call today. Fourth quarter of 2011 and the first six weeks of 2012 have been very productive for Exelixis.
We continue to maintain our similar focus on advancing cabozantinib or cabo for short in a rationale, expeditious and cost efficient manner to further our goal to maximize its value for patients, physicians and shareholders. We are executing across all experts of the business including clinical development, manufacturing, business development, and finance.
I'll give a quick overview today to start things off and then Frank and Gisela will follow up with more details in a moment. The key takeaway message is that we have made significant progress throughout 2011 and during the last 10 weeks since our R&D Day in December.
The clinical and commercial opportunity for cabozantinib is both deep and broad. As we highlighted previously, we are seeing objective partial responses per resist in 12 of 13 tumor types to-date, and we've also seen robust tumor reduction of primary and metastatic disease in lymph nodes, visceral organs, the CNS, and more recently, bone.
Our challenge is to maximize the probability of success and ultimately the commercial value of the cabozantinib franchise across the multiple tumor indications in which we have seen activity to-date. As many of you know, metastatic prostate cancer remains the primary focus of our internal clinical development activities.
Metastatic CRPC is a large commercial opportunity and despite multiple recent advances provides ideal opportunities to convert cabo's unique profile into a commercially differentiated product that could potentially bring a range of clinical benefits to patients. Our pivotal trial program in prostate cancer is designed to meaningfully differentiate cabozantinib by quantifying its potential to prolong overall survival and provide rapid and durable relief, reduction of discontinuation of narcotics, and to employ a bone scan response as a pharmacologic marker of cabo's clinical activity.
No currently approved oncology agent in the CRPC space can make these claims and it's our goal to make cabo the first. We planned to achieve this goal by effectively executing our initial pivotal trials in metastatic CRPC, a process that is well underway.
As we announced at our R&D Day in December, we'll currently focus on finalizing the plans for our overall survival trial previously known as 307 study now formally named COMET-1 which stands for cabozantinib, MET inhibition, CRPC efficacy trial. We remain on track to initiate that trial in the first half of 2012.
As discussed at JPMorgan in early January, we initiated the pain palliation study in December of 2011. We referred to this study in the past as the 306 study and we are now formally naming it COMET-2.
Gisela will provide additional details on these prostate cancer pivotal trials in a few minutes. As the prostate cancer clinical development program moves forward, a growing body of data for cabo and other tumor types continues to provide a signal of clinically meaningful activity.
Our initial Phase 2 efforts, including the randomized discontinuation trial had successfully identified a wide range of tumor types sensitive to cabozantinib. Since late last year, investigators have made four presentations outside of the metastatic CRPC indication, specifically on differentiated thyroid cancer, metastatic breast cancer, liver cancer, and most recently advanced renal cell carcinoma.
While we focus our internal efforts on metastatic CRPC, we continue to implement our plans to maximize cabo's potential in additional tumor indications through external collaborations, such as our Cooperative Research and Development Agreement or CRADA, NCI’s Cancer Therapeutic Evaluation Program or CTEP. Gisela will again provide brief recaps on the new data outside of CRPC and update you on our progress with CTEP shortly.
In addition, we have used the last two months to collect and analyze key data from the broad range of cabo development efforts in preparation for the 2012 ASCO Annual Meeting in June. Nine abstracts were submitted last week covering CRPC and other tumor indications for cabo.
While we won’t know which abstracts are accepted until mid-March, we’re planning to have a significant presence in Chicago this during with a broad update on cabozantinib covering the latest data in multiple indications. We’ve also continued to execute on the financial side of the business.
In the fourth quarter of 2011, we largely completed our restructuring activities as started early last year. As a result, Exelixis is appropriately sized from a staffing and talent perspective to take cabo through the late stages of development in MTC and metastatic CRPC, while concurrently advancing the range of additional tumor indications and two collaborations.
Alongside the restructuring, we have also completed our PI3K isoform selective discovery collaboration with Sanofi. This move gives us even tighter focus on the cabo opportunity.
Our financial performance has kept pace with the achievements of the cabozantinib development effort. We started 2012 with over $200 million in cash and Frank will provide the details for the quarter and year end in a moment.
From a financial perspective, we see multiple avenues to bring in additional cash in 2012 with milestones from existing collaborations, a capital markets and potential business development activities as viable options to provide additional financial resources to advance our clinical efforts for cabo. It’s been a busy couple of months with the initiation of our first metastatic CRPC pivotal trial, presentation of multiple additional dataset outside of CRPC and continued into progress.
So with that, I’ll turn the call over to Frank to review the Q4 and year end financial. Frank?
Frank Karbe – Executive Vice President and Chief Financial Officer
Thanks Mike. As usual, I will focus my comments on the highlights of our financial performance and refer you to our financial results press release issued earlier today for additional details and our 10-K which will be filed within the next few weeks will of course include additional information regarding our performance in 2011.
So, apart from making a lot of progress with cabo in 2011, as you just heard from Mike, we’re also substantially completed our restructuring activities which we initiated in 2010. At the end of 2011, our headcount was down to approximately 200 employees.
We completed the discontinuation of all development activities other than cabo. We ended most of our collaborations, under which we are still performing work at the beginning of the year.
We signed two more sub-leases for excess space. And we out-licensed our PI3K delta program tomorrow.
These accomplishments are reflected in our 2011 financial results, most notably in a significant decrease in operating expenses, which we accomplished despite a continued expansion of the development program for cabo. Revenues for the fourth quarter were up substantially year-over-year to $93.3 million mainly due to the acceleration of approximately $54 million in deferred revenue as a result of the wind-down of the Sanofi PI3K discovery collaboration in December 2011.
Revenue for the full year also increased substantially to $289.6 million driven primarily by the acceleration of deferred revenue in connection with the early termination of BMS collaboration for XL281 in October 2011 as well as the wind-down of the Sanofi collaboration I just mentioned. Obviously, both of these events significantly reduced our deferred revenue balance, which you will see reflected in our revenue guidance for 2012.
R&D expenses for the quarter were down year-over-year by about 27% to $30.8 million and down 26% to $156.8 million for the full year. Again, I think it is worth pointing out that we are able to accomplish these substantial decreases in expenses despite a significant increase in development costs for cabozantinib.
This truly reflects the impact of our restructuring activities in 2010 and 2011 as well as the termination of some of our remaining collaborations that I mentioned a moment ago. Operating expenses were down year-over-year for the quarter by 24% to $31.7 million and down 28% to $200.1 million for the full year.
These reductions again mainly reflect the impact of our restructuring activities. The increasing revenues and the decreasing expenses for both the fourth quarter and the full year, we saw that in significant increases to our bottom line.
We are earnings positive for both the quarter and the full year with net income of $46.3 million or $0.35 per share for the quarter and $75.7 million or $0.58 per share fully diluted for the full year. We ended the quarter and the year with cash of $283.7 million, including a tax reimbursement from Sanofi of approximately $7 million received in December, but excluding the $12 million upfront payment from Merck in connection with PI3K-delta deal and excluding a payment of $15.3 million from Sanofi in connection with the wind-down of the PI3K discovery collaboration.
Both of these deals were signed in December, but we did not receive the respective payments until January 2012. Taking into account these payments, we started 2012 with over $300 million in cash.
Let me now turn to our financial guidance for the full year 2012, we expect revenues in the range of $40 million to $60 million. Again, the reduction in revenue as compared to 2011 is mainly due to the reduction in our deferred revenue balance mentioned earlier.
We expect operating expense to remain in line with our 2011 expenses in the range of $190 million to $220 million. And with regard to cash we’re targeting to end the year with at least $200 million, which is based on certain assumptions about cash inflows from new business development activities, milestone payments from the system collaborations, and the potential financing activities, including accessing the capital markets among other things.
And with that, I will turn the call for Gisela.
Gisela Schwab – Executive Vice President and Chief Medical Officer
Thank you, Frank. As Mike said in his upfront remarks, the past few months have been very productive months for the Exelixis' clinical development team.
I'll take a few minutes to provide further details on our work on the CRPC pivotal trial program in the rapidly maturing datasets and indications outside of CRPC and our plans for our CTEP collaboration. Cabozantinib's unique clinical profile allows for strong differentiation and our pivotal trial program in prostate cancer is designed to give us the evidence needed to differentiate the compound commercially and to make a meaningful contribution to the treatment of prostate cancer.
Our planned pivotal trial program is comprised of two studies that we now have named COMET-1 and COMET-2. We continue our detailed planning for COMET-1.
This trial will investigate cabozantinib's ability to prolong overall survival in CRPC patients who have progressed following treatment with docetaxel and abiraterone or MDV-3100. Since R&D Day, we have continued our feasibility evaluation.
And the study is meeting with a high level of interest from investigators and we have identified a large number of sites to conduct the trial. The protocol is fully developed and we are on track to initiate this study in the first half of this year.
As you may recall, COMET 1 will involve 960 patients who will be randomized two-to-one to receive over 60 milligrams of cabozantinib daily or single-agent prednisone. We are projecting rapid enrollment in the study with top line results for COMET-1 in the first half of 2014.
At R&D Day, I outlined our rationale for what we believe cabozantinib has the potential to improve overall survival in this important trial. Our belief is predicated on three points.
First, we are seeing substantial anti-tumor activity across multiple tumor types including the improvement of progression-free survival in the CRPC cohort of our randomized discontinuation trial and the profound effect on progression-free survival in our pivotal medullary thyroid cancer trial. Second, emerging data from our non-randomized extension cohort in CRPC support cabozantinib's ability to significantly reduce circulating tumor cells or CTCs and convert patients CTC count for above five to below five.
As you know, reductions in CTCs in conversion to below five CTC in patients with elevated CTCs and baseline has been correlated with improved survival in prostate cancer and other studies. And finally, pain and anemia have been recognized as important factors predicting for overall survival as shown by (indiscernible) and others years ago and observed in more recent studies including The Cougar 301 study.
Also pain improvement has been associated with improved overall survival in the TAX 327 licensure study for docetaxel as reported by Berthold and others. Our RDT and NRE experience shows that cabozantinib improves pain, narcotics use, and anemia in CRPC patients, as published in ASCO 2011 and AACR-EORTC-NCI in 2011.
As planning and startup activities continue for COMET-1, COMET-2 has been initiated. COMET-2 is the randomized, controlled double-blinded trial that test cabozantinib's ability to deliver a durable pain response in CRPC patients who have progressed following treatment with docetaxel and abiraterone or MDV3100.
We initiated the first site in December of 2011 and additional sites continue to come online. We're targeting a total trial involvement of 246 patients who will be randomized 121 to receive either 60 milligrams of cabozantinib daily or a combination of mitoxantrone and prednisone.
Based in our internal planning, we are projecting a read out from the trial in the first half of 2014. As you heard from the prostate cancer expert panel at R&D day, pain palliation is an unmet medical need in late-stage prostate cancer.
Among then, we'll previously receive docetaxel, 66% reported pain related to bone metastasis, and 90% noted that it interfered with their enjoyment of life. So, there is a clear opportunity for cabozantinib to meaningfully impact the lives of prostate cancer patients if the trial is successful.
Collectively from a two and COMET-1 provided an opportunity to commercially differentiate cabozantinib and uniquely position it as an anti-cancer agent with demonstrated impact on overall survival and pain palliation. We believe that this will give us a compelling advantage in the crowed and rapidly evolving CRPC landscape.
We are therefore focusing on the execution of the COMET pivotal trials with the aim of irrevocably establishing cabozantinib unique profile in the setting. We've also continue to evaluate the data on lower doses of cabozantinib.
We are closed to completing enrollment in the 40 mg dose cohort of our non-randomized extension cohort and the low dose trial currently underway at Massachusetts General Hospital Cancer Center under Dr. Matthew Smith and fully involved the 40 milligram expansion cohort.
Based on the early data from Dr. Smith's study, demonstrating profound activity at the low dose of 40 milligrams on bone scan response with a greatly improved tolerability profile with no dose reduction suspensions or discontinuation, we expect longer term follow-up data to be consistent with clinical benefit similar to that of observed at higher doses.
I will now speak for a few minutes about the rapidly maturing datasets in our non-CRPC indications. As Mike mentioned earlier, there have been four data update for cabozantinib outside the CRPC indication in the last few months.
These datasets speak to cabozantinib’s broad potential in a variety of indications as well as its differentiated profile. For a brief recap at the American Thyroid Association's Annual Conference in October 2011, Dr.
Maria Cabanillas and co-authors presented data on a cohort of 15 patients with differentiated thyroid cancer. Differentiated thyroid cancer including papillary, follicular, and turtle cell cancer is the most common form of thyroid cancer.
It's in advanced stage as it's typically treated with radioiodine. There is no standard therapy available for patients who fail radioiodine treatment, but tyrosine-kinase inhibitors, including sorafenib has shown responses in approximately 20% to 30% of patients.
Dr. Cabanillas reported a 53% confirmed response rate with cabozantinib and anti-tumor activity was similar in patients who had received prior TKIs, including sorafenib or sunitinib and TKI-naïve patients.
Importantly, tumor responses were durable. At the San Antonio Breast Cancer Symposium in early December, Dr.
Sarah Tolaney of Dana Farber Cancer Institute presented preliminary data from a cohort of 45 patients with metastatic breast cancer participating in the cabozantinib Phase 2 randomized discontinuation trial. This was a heavily pre-treated patient population.
Most patients had hormone receptor-positive disease and had received and failed prior hormonal therapy. Additionally, more than 70% of patients had received prior anti-cyclins.
Of 44 evaluable patients, there were 6 confirmed partial responses for a 14% response rate. 26 patients had stable disease and 9 patients had progressive disease as their best response.
The week 12 disease control rate was 48%. Next, at the 2012 ASCO GI Cancer Symposium in mid-January, Dr.
Allan Lee Cohen of the Rocky Mountain Cancer Center presented positive preliminary data from the hepatocellular or liver cancer cohort of the Phase 2 randomized discontinuation trial. The dataset included 41 patients in the cohort.
The week 12 disease control rate made up of partial responses and stable disease was 68% and evidence of objective tumor regression was observed in 78% of patients. Two patients achieved confirmed partial resist responses during the lead-in phase of the trial and another confirmed response was seen after the patient completed the lead-in phase and moved to the randomized component of the trial.
An additional 32 patients reported stable disease. Importantly, the median progression-free survival was 4.2 months in both sorafenib pre-treated and sorafenib-naïve patients, an encouraging result given the advanced nature of the disease in this population.
And finally, just a few days ago, at the 2012 ASCO GU Conference, Dr. Tony Choueiri of the Dana Farber Cancer Institute presented encouraging data from an advanced renal cancer cohort treated with cabozantinib.
The patient population in this study was heavily pre-treated with 88% having received prior anti-VEGF therapy and 64% of patients having received two or more prior anti-cancer agents. 7 of 25 patients or 28% achieved a confirmed partial response and 13 additional patients had stable disease as their best response.
A 72% disease control rate at week 16 was observed. Perhaps the most intriguing result was the median progression-free survival, which was 14.7 months.
Importantly, in three indications of these four, DTC, breast cancer, and renal cell cancer, we observed individual patients with bone metastases achieving bone scan resolution on cabozantinib treatment and some patients requiring narcotic medication for bone pain associated with the bone metastases, experienced alleviation of symptoms allowing for reductions in narcotic use. So, as you have noted, there are some common threads in this interim datasets that I’ve just described and those include tumor regression that was seen in the majority of patients with numerous observed, confirmed, partial responses and many more cases of stable diseases across multiple tumor types.
Progression-free survival is generally longer than that that would be expected free treated patient populations and it appears to be independent of prior therapy. Continued evidence of cabozantinib's ability to resolve bone metastases as valuable by bone scan emerges across tumor indications.
These findings are consistent with what we have previously seen in our phase 2 CRPC cohort as well as the low dose CRPC trial.
Now to follow-up on the encouraging observations outlined and to maximize cabozantinib's potential in these and other indications, we have CRADA with CTEP as well as our own investigated sponsor trial program. On the CRADA front, remember that this agreement allows us through the CEPT funding mechanism to advance further research in a variety of other areas for which cabozantinib has shown promise, while focusing our own internal efforts on medullary thyroid cancer and CRPC.
In December, the NCI notified its investigative base of the opportunity to work with cabozantinib and began soliciting proposals for studies. We are excited about the high level of interest and the steering committee with CTEP and Exelixis’ leadership has begun to review study proposals.
Two trials have already been approved and will be conducted by the NCI, a single agent study in bladder cancer and a second phase 1 study of cabozantinib in combination with docetaxel in CRPC. We are working on reviewing and approving additional studies and it is our hope to include trials in hepatocellular cancer, renal cell cancer, differentiated thyroid cancer and metastatic breast cancer in the trial roster, along with many other studies.
With regard to our IST program, we have improved 17 clinical trials, two such studies Dr. Smith’s study in CRPC and Dr.
Higgins and Baselga study in breast cancer already actively treating patients and yielding important data. Other studies are moving through the IRB and regulatory process with one trial in chemotherapy-naive CRPC patients and another trial evaluating the combination of cabozantinib and abiraterone being furthest advanced.
So, we expect to see the initiation of a number of trials in the short-term. Now before closing the R&D update, I would like to comment on our progress and our first NDA filings for medullary thyroid cancer.
With FDAs approval of rolling NDA filing, we have initiated the NDA filing in late December of 2011 with the submission of the preclinical section of the NDA and we are on track to complete the filing in the first half of 2012. With this, I would like to turn the call back to Mike.
Mike Morrissey – President and Chief Executive Officer
Hi Gisela, thank you very much. We had a detailed update today, so I simply close the call by thanking all of our employees for their hard work and dedication and then open the call up for questions.
Operator?
Operator
(Operator Instructions) Our first question comes from the line of Mr. Eric Schmidt from Cowen and Company.
Please proceed sir.
Eric Schmidt – Cowen and Company
Thanks for taking the questions. First on the medullary thyroid cancer filing, Gisela, do you have an end of Phase III meeting with the FDA and what is anything would be re-limiting on finishing the role in BLA there, sorry, rolling NDA?
Gisela Schwab
To your first question, yes we had an pre-NDA meeting late last year, during which we obtained agreement from the FDA to initiate a rolling NDA. And regarding the completion of the filing we are on track to complete that in the first half of 2012 with the subsequent section toward the (CM&C) part and the clinical part.
Eric Schmidt – Cowen and Company
Okay. And then on the COMET-1 trial, did I hear you correctly that you are looking not just at Taxotere failures, but 3100 – MDV-3100 failures and Zytiga failures or which patients exactly would be eligible for enrollment?
Gisela Schwab
So, the eligibility is defined as patients who have received and failed prior docetaxel and abiraterone or MDV-3100. And we are not limiting the numbers of prior therapies including also the docetaxel or other agents, but these are the ones that are required.
So, it's Zytiga or MDV-3100.
Eric Schmidt – Cowen and Company
You have to say at least one of those you could have failed both and others?
Gisela Schwab
That is correct, yes.
Eric Schmidt – Cowen and Company
Okay. And what it sounds like the protocol with the FDA is coming along well there.
What is actually rate limiting to enrolling the first patient that you had many IRBs or approvals yet?
Gisela Schwab
For the COMET-1 study?
Eric Schmidt – Cowen and Company
Yes.
Gisela Schwab
We are identifying sites are now moving through the selection of sites we are anticipating that this study will begin enrolling patients in the first half of 2012.
Eric Schmidt – Cowen and Company
So, is the protocol finished?
Gisela Schwab
The protocol is complete yet.
Eric Schmidt – Cowen and Company
Thanks a lot. Congrats on the progress.
Gisela Schwab
Thank you.
Operator
The next question comes from the line of Karen Jay from JPMorgan. Please proceed.
Karen Jay – JPMorgan
Hi, this is Karen Jay in for (Craig Heatter), thanks for taking my questions. I just have a few.
First on the XGEVA panel, could you give me a comment on what you thought of the discussions or whether or not there are any takeaways or lessons learned for cabo?
Mike Morrissey
XGEVA panel.
Gisela Schwab
The XGEVA panel I think clearly this is very fresh from this morning, I think clearly the takeaway that we heard was that end point is such in the trial design is seemed agreeable, however, the magnitude of effect on the primary endpoint for denosumab was not sufficient, and it was not reported by evidence of other clinical benefit such as progression-free survival or overall survival. And so forth or symptom alleviation and if for that reason and in view of the safety profile in the panel voted 12-1 to essentially not approve the indication.
Now with respect obviously to cabozantinib, we are looking at a very different profile from that denosumab, cabozantinib has a much broader activity profile. It affects tumor cells as well as bone component such as osteoblast and osteoclast.
We've seen in our extensive program clear signs of anti-tumor activity with very marked effects on progression-free survival, now in two separate indications in MTC and in prostate cancer. We're seeing tumor regression as I described earlier.
And we're certainly also seeing in very rigorously assessed studies the alleviation of bone pain and that concurrently with narcotic discontinuation or reduction. So, a very different picture from what was described this morning, and so I think with that in mind certainly our clinical trial program as it is planned now is not affected at all by this order panel's position.
We are focused on COMET-1 and COMET-2 as the highest priority as we those along, at a lower priority we have in the plans also an earlier line of therapy study, but that is not imminent.
Karen Jay – JPMorgan
Okay, thanks. And my second question is for Frank, the following timeline for MTC it’s possible that you could have approval this year, later this year.
Is there any commercial factored into your operation expense guidance or MTC?
Frank Karbe
Yes, there are some commercial cost factored into our expense, but I would characterize it as minimum and yeah, it’s very, very little.
Karen Jay – JPMorgan
Okay, thank you.
Operator
Your next question comes from the line of Joel Sendek of Stifel. Please proceed.
Joel Sendek – Stifel
Hi, thanks. I had a follow-up for both of those.
So, with regard to the panel today, does it change at all your expected endpoints on the 306 study because it's really -- they've spent a long time talking about clinical benefit and survival. So, can you comment a little bit about that and then I have a question for Frank after that.
Mike Morrissey
Yeah, Joel, it’s Mike. Let me just be clear here.
So, the 306 study that’s you mentioned has been on the back burner and a low priority for us for some time now and that will be the case as we continue to move forward. Again our main focus is going to be on the COMET trials to be able to show clinical benefit, in terms of both potentially survival as well as pain relief, narcotic reduction etcetera in the COMET-1 and COMET-2 trials.
So, 308 its been backbone for a while and that it will say there.
Joel Sendek – Stifel
Okay. It’s actually for Frank, I guess I know that came out from the meeting today anyway, the focus on safety I mean they spent the majority of the time talking about O&J.
In that regard, since you have its very compelling studies going on of 40 milligrams, you know, how you potentially use that data within the current phase 3 program? Can you do that at all on or are you convinced that 60 milligrams is the right dose?
Gisela Schwab
Yeah. We feel quite good about the 60 milligram dose and that it's certainly based upon the fact that we have quite substantial information from our OTD study and the NRE study were patients reduced to 60 milligram and above 50% of patients reduced from 100 milligram to 60 milligram and they were able to maintain pain response and activity.
And subsequent dose reductions were much less frequent. Now I think its very encourage that at 40 milligram we see such nice effects on bone scans as Matthew Smith and others have described and presented at OTD from the dose ranging study.
So, should a patient on 60 milligram have to dose reduce they will be able to be expose to a still active dose and I think with that we are in a ideal spot for the dose going forward.
Joel Sendek – Stifel
Okay. Thank you.
And then just finally, financially, real quickly, I’m wondering like if the guidance on operating expense, you should consider that to be conservative, look at the 4Q run rate, if you back out the restructuring charge, it's only $38 million. Obviously there you're going to be depending on these additional clinical trials.
It would seem to me that associated at the high end of 220, it seems kind of high to me. Can you comment on that?
Frank Karbe
I’d say that the guidance is a guidance that’s a range that we feel comfortable with. We feel comfortable that we can meet.
And there is a lot of moving pieces here of course. Keep in mind that the 301 study and the 203 study as of winding down in 2012.
That COMET-1 and COMET-2 will start up. On top of the remaining expenses of the ongoing studies we already have.
The bottom line is, we feel comfortable with the guidance and that’s where we expect to come out.
Joel Sendek – Stifel
Fair enough. Thank you.
Operator
The next question comes from the line of Terence Flynn of Goldman Sachs. Please proceed.
Terence Flynn – Goldman Sachs
Hi, thanks for taking the question. Just one question on the COMET-1 study first, I was wondering if you can provide us what the design with respect to the powering assumption and then number two, just on your timing for data in the first half of 14.
I mean looking back it looks like this Zytiga trial took I think like three to four years to complete. And so I know you guys are going slightly later have a patient population, but what gives you confidence I guess that the trial will indeed wrap-up in the first half of '14?
Gisela Schwab
Sure. Thanks for the question.
So, regarding your first question around the statistics, the studies planned to enroll 960 patients its two-to-one randomization. We are applying in HR 0.75 for a 25% reduction in risk of death.
And for that we need about 570 or so events. We are planning an interim analysis at two-thirds of the events.
And with regard to the timing, obviously this is a sizable study and we are planning to got up to 200 sites and enroll of the study on a worldwide basis. Now the Cougar study actually involved rather quickly and so we hope to replicate that within about a year or so.
And what is interesting is that in the space right now there is not much competition in terms of other studies ongoing and we can see that on the interest of investigators, who are taking great interest and participating in the COMET-1 study.
Terence Flynn – Goldman Sachs
And so I mean what would you expect for the placebo arm survival then?
Gisela Schwab
We are assuming in the placebo arm disease almost survival time in the late patient population of seven months. That was derived from in part from the Cougar study also, where a patient was on treatment with abroad for about eight months and then at an overall survival of 15 months.
Terence Flynn – Goldman Sachs
Okay, thanks. Can I ask you one question about the ASCO data, not sure how much you can share, but with respect to the NRE data that were going to see there.
Can you give us any sense of additional data we’re going see beyond just bone scan response at ASCO this year?
Gisela Schwab
I guess it’s a little bit earlier. At this point we can’t really comment on that.
Terence Flynn – Goldman Sachs
Okay. Thanks a lot.
Operator
Your next question comes from the line of David Miller of Biotech Stock Research. Please proceed.
David Miller – Biotech Stock Research
Hi, thanks for taking my questions. In the assumptions you made for your cash guidance, can you does this specifically assume a partner for cabozantinib or is the partnering things are you talking about there for some of your drugs?
Frank Karbe
Let me clarify this, so our financial outlook is based on the number of assumptions, which some, but not necessarily all are expected to occur. And as you alluded in my prepared remarks there is a assumption include potential BDs activity, milestone some existing partnerships and potential financing activity, which include things such as monetizing our partner pipeline or accessing the capital market.
So, subset of these, but not necessarily all of these we expect to occur.
David Miller – Biotech Stock Research
Okay. And so when you're talking about BDs, you're talking about business development for cabozantinib.
You're talking business development for some of other drugs?
Frank Karbe
That comment refers to both. But obviously the most valuable asset that we have is cabozantinib.
David Miller – Biotech Stock Research
All right. I want to follow-up on Terence’s question about the placebo arm survival.
Can you walk through again, how you got seven months for the post (Abi) or MDV population?
Gisela Schwab
So, let me just clarify the post Taxotere post (Abi) or MDV population with no restriction on other prior therapy.
David Miller – Biotech Stock Research
Okay
Gisela Schwab
It’s a late line of therapy right. The way we arrived at seven months the survival, estimated survival time was just looking at the Cougar experience and when you look at the patient population on our abiraterone they were a treatment for about eight months.
And then the overall, median overall survival was roughly 15 months so that give you a seven months data from end of treatment on the drug to death.
David Miller – Biotech Stock Research
Okay. I get that.
And then I was just want to make sure is that in your powering assumptions you said two-to-one randomization and HR or for COMET-1, 960 patients two-to-one randomization and HR of 0.75, 575 events and interim at two-thirds and what was the power percentage?
Gisela Schwab
The power is 90%.
David Miller – Biotech Stock Research
Okay, great. Thank you very much.
These are my questions.
Gisela Schwab
(You bet).
Operator
Your next question comes from the line of Ryan Martins of Lazard Capital. Please proceed.
Ryan Martins – Lazard Capital
Hi. I wanted to find out what are your thoughts on the updated Alpharadin data that we saw at the ASCO GU Meeting.
And what do you think could be any kind of impact on enrollment globally and also potentially on overall survival for the 307 trial?
Gisela Schwab
So, regarding the Alpharadin data, I can’t really comment any further. You seem the data at the conference and that is what the extent of knowledge we have in the data.
And your second question again can you repeat that?
Ryan Martins – Lazard Capital
Just what your thoughts on the Alpharadin being available and its impact on enrollment in the 307 trial and potentially the overall survival?
Gisela Schwab
So, I think clearly the 307 study starting up imminently and Alpharadin is not even filed to my knowledge, so it will take a little while. We hope to involve the study quickly, and the study will be enrolled globally, so that the availability, I think, of Alpharadin will not be giving everywhere.
And besides it's in the 307 study is set in the late line of therapy to patients could have received prior Alpharadin if that was the choice of the investigator. And subsequent therapy should not confound as much as when you conduct a study in the earlier line of therapy?
Ryan Martins – Lazard Capital
Thanks. And are you planning on requesting or have you already requested a priority review for cabo and MTC?
Gisela Schwab
That would be requested at the time of filing and then the FDA would come back after the review – the initial review within the first 25 days to indicate whether they consider this a priority review.
Ryan Martins – Lazard Capital
Thanks. And Frank one last one for you, which is can you remind us what the debt is that is outstanding?
Frank Karbe
Yeah, there is $80 million outstanding under the Silicon Valley bank term loan facility. And then there is about $91 million outstanding currently under the Deerfield note.
Ryan Martins – Lazard Capital
Okay, thanks.
Operator
(Operator Instructions) Your next question comes from the line of Lee Kelowski of Credit Suisse. Please proceed.
Lee Kelowski – Credit Suisse
Great, thanks for taking my question. So, just to be clear on the enrollment timeline for COMET-1, its sounds like it hasn’t changed very much.
So, does that mean that the full dataset for MDV-3100, you don’t think that’s going to impact the enrollment timeline for COMET-1? And then on COMET-2 in terms of data reporting out in first half 2014, does that mean that any pain data will wait for the OS secondary endpoint?
Gisela Schwab
So, regarding, the question of an MDV-3100 impact on COMET-1, as I described the eligibility allowed for prior treatment with MDV-3100 and so shouldn’t really impact our enrollment in the study. And then the second question was sorry with respect to…
Lee Kelowski – Credit Suisse
COMET-2 in terms of whether the pain endpoint would be – would put out first or whether that would come at the same time as the OS secondary endpoint?
Gisela Schwab
We are estimating right now that they good to report out about concurrently it might come a little bit earlier the pain readout, but in about that timeframe in early 2014.
Lee Kelowski – Credit Suisse
Okay. And so, does that mean that enrollment for that trial is going to take longer than COMET-1, I am just trying to understand the timing on that seems like it could be quicker given the size?
Gisela Schwab
The size is smaller with 246 patients, but it is a different patient population. We are requiring obviously for patients to have moderate-to-severe pain, which is a proportion of the patients in that line of therapy.
It’s not totality of the patient. And the study is also quite intention that it collects very stringently pain and narcotic use and so it puts some burden on the patient as well as sites to collect the data stringently, which is very important for pure outcome.
And for that reason we are not going out to so many size, we are going to up to 40 size, not 200 size in order to enrollment study.
Lee Kelowski – Credit Suisse
Okay, thank you.
Operator
At this time, there are no further questions in the queue. And I'd like to turn the call back over to Mr.
Mike Morrissey.
Mike Morrissey – President and Chief Executive Officer
Okay, thanks again for joining us today. I appreciate your time and your feedback and we’ll look forward to seeing you all on the road.
Okay, bye now.
Operator
Thank you for your participation in today’s conference. This concludes the presentation.
You may now disconnect. Have a great day.