Hello and welcome to the Arcus Biosciences Full Year/Q4 2023 Earnings Call. My name is Elliot, and I’ll be coordinating your call today. [Operator Instructions]. I’d now like to hand over to Pia Eaves, Vice President of Investor Relations. The floor is yours. Please go ahead..

Hello, everyone and thank you for joining us on today’s conference call to discuss Arcus’s fourth quarter 2023 financial results and pipeline updates. I’d like to remind you that on this call, management will make forward-looking statements, including statements about our cash runway and our expected clinical development milestones and timelines.

All statements other than historical facts reflect the current beliefs and expectations of management and involve risks and uncertainties that may cause our actual results to differ from those expressed. Those risks and uncertainties are described in our annual report on Form 10-K, which has been filed with the SEC.

We strongly encourage you to review our filings. Today you’ll hear from our CEO, Terry Rosen; COO, Jennifer Jarrett; CMO, Dimitry Nuyten; and CFO, Bob Goeltz. We’ll also be joined by our President, Juan Jaen, for questions after the prepared remarks.

During today’s call, we’ll refer to slides in our corporate deck, which can be found on the Investors section of our website. With that, I’ll now turn it over to Terry..

Thanks very much, Pia, and thank you all for joining us today. We’ve really come a long way since our founding nine years ago, and I think it’s fair to say we have evolved into an integrated biopharmaceutical company.

We’ve got seven molecules in clinical development, a broad late-stage portfolio, multiple mid-stage clinical trials, a robust discovery engine, and now something I think new, a line of sight to commercialization.

With $1.2 billion in cash and equivalents in runway into 2027, we’re well positioned to deliver on the promise of the late-stage pipeline that we’ve built. We start three new registrational trials. We’re going to continue to invest in our early-stage programs.

We also have a partnership with Gilead, as well as collaborations with Taiho, Exelixis and AstraZeneca. And I think it’s very fair to say without these partnerships and the resources that these companies provide, we would not be able to execute on everything that we’re doing.

All of our programs target markets that are massive and really are the sweet spots of large pharmaceutical companies. All comer patient populations in lung cancer, gastric cancer, pancreatic cancer and renal cell carcinoma, RCC.

Our funding and partnerships enable us to not only pursue these settings, but to compete and compete effectively and aggressively. We’re really doing what we’re saying we’re doing.

We also continue to build for the long-term with a broad pipeline of potential best-in-class and first-in-class product candidates that will continue to replenish organically with our drug discovery engine.

Today, we have three advanced clinical stage programs, dom plus zim, our FC-silent anti-tigit, it’s very differentiated molecule in our anti-PD-1 antibody, quemli, our small-molecule CD73 inhibitor and AB521, our HIF-2alpha inhibitor, which is as of today known by its generic name, casdatifan or cas.

Dom/zim is in Phase 3 and we expect to initiate Phase 3 studies for both Cas and quemli by early next year. So we have four molecules, all with distinct mechanisms in Phase 3 in 2025. We also have some exciting data sets come in the first half of this year for another molecule, and these really are exciting.

Etruma, that’s our A2 receptor antagonist and it’s [technical difficulty] Gilead believe support further investment in the molecule. We made a lot of progress across all these programs in 2023, presenting two large data sets for dom/zim and two different cancers, and another large data set just last month for quemli in pancreatic cancer.

I want to start today by reviewing these programs and data sets. I’ll spend a few minutes on the recent Gilead partnership updates and finish with some new data for Cas, our HIF-2alpha inhibitor. So starting with our anti-TIGIT program, dom/zim. Our primary competitors in the space are Merck and ROTH.

We have the only FC-silent anti-TIGIT antibody in late-stage clinical development. So with dom’s potentially best-in-class profile, its optimized dosing regimen, as well as a broad development program focused on lung and gastric cancers, we’re really in a very strong competitive position.

Our conviction in dom/zim supported by two data sets that we presented in the last twelve months and are summarized on Slide 9 of our corporate deck.

First, at ASCO last year, we presented data from our randomized Phase 2 ARC-7 study showing a PFS hazard ratio of 0.67 for dom/zim relative to zim monotherapy and first-line PD-L1 high non-small cell lung cancer.

We also presented data from our Phase 2 EDGE-Gastric study where we evaluated dom/zim plus chemo in first-line upper GI cancers at the ASCO Plenary session in November. These data demonstrated impressive six-month landmark PFS rates of 93% in PD-L1 high patients and 77% overall.

This really compares quite favorably to the historical benchmarks for anti-PD-1 plus chemo that are in the 50% to 60% range. Our development program for dom/zim is focused on settings where we have the best chance to be a market leader.

Today we have three Phase 3 trials enrolling, and we expect both STAR-121 and STAR-221, our chemo combo trials in PD-L1 all comers, the first-line non-small cell lung cancer and upper GI cancers, respectively to complete enrollment this year.

In fact, we can share now today that we anticipate STAR-221 will be fully enrolled by the middle of this year. Due to the extremely rapid enrollment of STAR-221 and relatively short OS for the standard of care, we expect STAR-221 to be the first of our Phase 3 trials to read out.

And importantly, with no other Phase 3 trials ongoing with the anti-TIGIT antibodies in this setting, we expect to have a significant first-to-market advantage. Meanwhile, we continue to invest in the expansion of our dom/zim program. We and Gilead will initiate STAR-131, which will evaluate dom/zim plus chemo in perioperative lung cancer.

This is an exciting early-stage and potentially curative setting. We also expect to initiate a four Phase 2 study in a setting outside of lung and GI cancers. Beyond our dom/zim program, today, we’ll be sharing data from the dose escalation phase of our ARC-20 Phase 1b trial of Casdatifan or AB521.

The 100 milligram expansion cohort of ARC-20 enrolled quickly, and it completed enrollment ahead of schedule, November of last year. Later today, we’ll touch on what we’re seeing so far in these data. The competitor here is Merck, with their HIF-2alpha inhibitor, belzutifan, which was just improved for advanced clear cell RCC.

But we believe that Cas has a best-in-class profile, and that’s addressing a very well recognized limitation of belzutifan. What we’ve seen thus far in ARC-20 has given us confidence that our molecule has a superior profile to that of belzutifan. We’re advancing Cas rapidly and are on track to initiate a Phase 3 study early next year.

And last for quemli, our CD73 inhibitor, we presented overall survival data in pancreatic cancer from our ARC-8 study at ASCO GI last month. With a large pool of data set, 122 patients, we showed 15.7 months median overall survival for quemli plus chemo, both with and without zim.

This compares to the median OS from historical gem/nap-paclitaxel studies 9 to 11 months in first-line pancreatic cancer. We also conducted a matched Synthetic Control analysis that showed a statistically significant improvement in OS with a hazard ratio of 0.63.

Based on the strength of these data, we’re on track to initiate a Phase 3 pancreatic cancer trial by early next year. With Gilead’s equity investment in January, we had approximately $1.2 billion of cash on hand and we’re really well capitalized to support the breadth of programs that we are pursuing.

At a high level, Gilead’s investment accomplishes two things. First, it provides us with runway into 2027, while enabling us to fund Phase 3 programs for four different molecules. Second, it enables us to fund our pre-commercial activities, and on the other end of the spectrum, to continue supporting our robust discovery engine.

I’d like to turn things over to Jen right now to spend a few minutes on the details..

Thanks, Terry. Gilead invested $320 million by purchasing our stock at $21 per share, which represented an effective premium of nearly 40% to our share price just before the announcement, increasing their ownership to 33%. In parallel, Gilead’s Chief Commercial Officer, Johanna Mercier, joined our Board.

Her addition increases our board membership to three, provides representation commensurate with their ownership, and bring a very experienced commercial perspective to the Arcus board. The investment falls for two dynamics.

One, the expansion of our late-stage clinical development plans and two, the extension of our cash runway into 2027 and through multiple data events. Concurrent with the investment, we made a few strategic portfolio changes related to dom/zim and quemli.

First, for dom/zim, we closed enrollment of our Phase 3 ARC-10 study evaluating dom/zim and PD-L1 high non-small cell lung to focus our resources and capital on areas with the highest unmet need and greatest market opportunities.

A [seminal] [ph] factor that drove our decision was the evolution of the lung cancer treatment paradigm toward increased use of anti-PD-1 plus chemo for patients with PD-L1 high expressing tumors.

Therefore, we believe this segment of the patient population is best addressed by our STAR-121 study, our chemo combination study, and PD-L1 all comer non-small cell lung cancer.

The clinical trial landscape for PD-L1 high lung has also become increasingly crowded with several anti-TIGIT and other investigational therapies, and we were not expected to be first or second in the PD-L1 high chemo free setting.

At closing ARC-10, we are now able to focus our energy and resources on rapidly completing enrollment for STAR-121, which is addressing a much larger market opportunity. We’ll also initiate a fourth Phase 3 study for dom/zim, STAR-121, a potential first-to-market opportunity.

Second, for quemli, we announced that Arcus will be operationalizing and funding a Phase 3 study evaluating quemli in pancreatic cancer. Gilead retains an option to the pancreatic cancer program with the opportunity to pay a premium to their share of the Phase 3 costs in the future.

While Gilead is not co-funding this study, as you might imagine, they are aware that proceeds from the investment will be used to fund the study. I’ll now turn it back to Terry..

Thanks, Jen. Now, I’d like to switch gears to Cas, our HIF-2alpha inhibitor. This year is essentially going to be a coming out for this program as we’re planning to release a lot of new data as well as more information on our future development plans.

We believe that by hitting the HIF-2alpha target harder than Merck’s belzutifan, we can improve outcomes for patients. We’ll discuss the pharmacokinetics and pharmacodynamics that support this thesis in more detail shortly, but I’d like to start with the potential areas for differentiation versus belzutifan.

Belzutifan was recently granted approval of monotherapy in third-line clear cell RCC after just a three-month FDA review process. This really validated the mechanism and highlighted the high unmet need for new therapies in this market.

In Merck’s Phase 3 LITESPARK-005 trial, Belzutifan showed an improvement in PFS over everolimus, with a statistically significant hazard ratio of 0.74, which supported its approval.

While these results are absolutely encouraging, the study reveals multiple opportunities for a new agent to prove upon Belzutifan’s profile and provide even more benefit to patients.

First, on clinical efficacy in LITESPARK-005, Belzutifan had a high rate of primary progression, specifically a 34% PD rate, which was actually higher than that of the everolimus control arm at 22%. This means that over one-third of patients on belzutifan progressed at or before their first scan.

We believe that casdatifan could stabilize tumor growth faster, resulting in a lower PD rate and therefore, longer PFS. Second, with an overall response rate of 21.9% in LITESPARK-005, we believe there is room for improvement. Third, while LITESPARK-005 showed a statistically significant PFS hazard ratio, the median PFS was only 5.6 months.

Cas may result in more durable tumor stabilization or shrinkage, and therefore longer medium PFS. Fourth, and this is an important fourth, we believe there’s an opportunity for a better tolerated combination regimen.

Belzutifan’s TKI partner in earlier line ccRCC studies is lenvatinib, which is perceived, and it’s really is perceived that way, to be less well tolerated relative to other TKIs such as Cabo and Zanza.

Last, we are being very thoughtful in our development strategy for Cas and we’ll focus on settings and combinations where we believe we can be first-to-market or differentiated relative to Belzutifan, and you’ll hear more about this over the course of the year. As you may know, Merck is now projecting that Belzutifan has blockbuster potential.

Given the opportunity, we’re pushing this program as hard as possible. And while our data will be more mature later this year, we want to share as much as possible today to illustrate why we’re so excited about this program. I’ll now turn things over to Dimitry to share new data from our ARC-20 trial evaluating Cas in cancer patients..

Thanks, Terry. I’ll start by turning to Slide 29 of our corporate deck, which shows design of the trial, including both the dose escalation phase and expansion cohorts. The dose escalation portion enroll patients with any advanced solid tumor, while the dose expansion cohorts are only enrolling patients with second-line or later clear cell RCC.

There are three expansion cohorts, each of which will enroll 30 patients. The first evaluated are go-forward dose of 100 milligrams per day and completed enrollment in November.

To satisfy the FDA’s requirement for dose optimization, we are also evaluating a 50 milligram dose cohort and another cohort at a higher dose than 100 milligram in the expansion phase. Enrollment of the 50 milligram cohort is nearing completion.

Collectively, these expansion cohorts will generate a lot of valuable safety data and efficacy data in clear cell RCC patients.

The dose escalation portion employed a three-by-three design, where three patients received 20 milligrams, followed by three patients who received 50 milligrams and then three patients who received 100 milligrams all daily dosing regimens.

The safety results of our healthy volunteer trial enabled us to start in ARC-20, our patient trial at a relatively high and pharmacologically relevant dose, and we saw no dose limiting toxicities, allowing us to complete the dose escalation phase with only nine patients.

We subsequently backfilled the 50 milligram dose cohort with three additional patients, resulting in 12-patient data set for this portion of the study. Of the 12 patients, four patients had clear cell RCC. Slide 30 is important and shows data for Cas and Belz on EPO reductions, the peripheral or normal tissue biomarker for HIF-2alpha inhibition.

On the left-hand side, the dotted line shows the EPO reductions reported for the 120 milligram or the approved dose of Belzutifan in clear cell RCC patients. In contrast, Cas achieves the same level of EPO suppression at just 20 milligrams, showing here with a purple line and that is one-fifth of our go-forward dose of 100 milligrams.

This means, that 20 milligrams is roughly equivalent from a PD perspective to the approved dose of Belzutifan and therefore, 100 milligrams of Cas has the potential to achieve a meaningfully greater HIF-2alpha inhibition. On the right-hand of the Slide, you can see that Cas has a linear, almost perfect dose proportional pharmacokinetic profile.

In addition, CAS has a half-life of approximately 21 hours and this enables daily dosing. Slide 31 emphasizes the ideal PK of Cas relative to that of belzutifan, and it explains why belzutifan cannot simply be dosed higher to achieve greater HIF-2alpha inhibition.

On the right for Cas, we show that we increased the dose from 20 to 100 milligrams at steady state and we observe roughly 5 times increase in exposure. By comparison, as you can see on the left, when Belz dose was increased from 120 to 240 milligrams, the drug exposure only increased by about 30% at steady state.

A 30% increase in exposure is less than the typical patient-to-patient variability at any given dose and therefore is not a clinically meaningful increase.

This illustrates why dose is higher than 120 milligrams of belzutifan are unlikely to result in meaningfully better clinical activity, and, in fact, this was demonstrated by Merck in the Litespark-013 trial comparing the efficacies of 120 milligrams and 200 milligrams of belzutifan.

In summary, these data show exactly what we have been predicting, that Cas has a best-in-class PK/PD profile which should result in hitting the target harder and potentially in greater clinical activity relative to belzutifan. Turning now to safety.

On Slide 32, we showed the reductions in hemoglobin levels at various doses of Cas relative to the approved dose of belzutifan. Hemoglobin reductions appeared to plateau at doses above 50 milligrams for Cas, likely due to compensatory mechanisms.

And you can see that 100 milligrams daily of Cas resulted in similar reductions of hemoglobin as belzutifan, despite the fact that we are achieving higher doses, much higher doses of potency corrected drug exposure for Cas. For this reason, we expect Cas’s safety profile to be manageable and not meaningfully different than Belzutifan.

On the next slide, Slide 33, we show the AE profile so far in the dose escalation phase of the study.

Anemia and hypoxia are expected on target toxicities related to HIF-2alpha inhibition, while we are watching very closely that with a median follow-up across all dose levels of the escalation of about 8.8 months so far these rates do not appear to be higher than the rates seen with belzutifan in historical clinical trials.

These data demonstrates that while we believe that we are hitting the target harder, Cas appears to have a similar safety profile to that of belzutifan. So let me tie this together.

We are effectively able to deliver an exposure to Cas that is fivefold greater than that which achieves the same level of inhibition of the peripheral biomarker for HIF2alpha blockade, associated with the approved dose of belzutifan, with no apparent differences in safety profile.

While efficacy was not the objective of the dose escalation phase, particularly given the advanced stage of patients and the difference doses evaluated and the different tumor types included on Slide 34, we do summarize what we observed in RCC patients, specifically clear cell RCC patients.

As I mentioned earlier, there are four patients spread across the three different dose levels we evaluated 20 milligrams, 50 milligrams and 100 milligrams. These are all late-line patients with a variety of prior treatment regimens, including at least one anti-VEGF treatment and one anti-PD-1 treatment.

Three out of four patients are actually fourth-line or later, and for these four RCC patients, two had meaningful tumor reductions just short of 30% and the third patient did not experience any tumor growth for over 14 months and still remains on treatment.

The time on treatment is impressive for these patients in very late-line setting, ranging from 8.5 to 14.5 months, and two of the four patients still remain on treatment. This indicates the potential of very durable effects of Cas, even with monotherapy in a very advanced patient population.

We are also seeing signs of Cas’s ability to bring even aggressive tumor growth under control.

For example, one of the four patients I mentioned, was very heavily pre-treated, had received three prior VEGF-TKIs and an anti-PD-1 treatment, and this patient had stable disease early on with slight increase in tumor volume, not meeting formal progression for RECIST, and after about 18 months, the tumor volume started to come down and now, after about 10 months and still ongoing on treatment, the patient is nearing a response.

I would like to emphasize that while the primary goal of an all comer dose escalation study is to establish the safety profile and assess the pharmacokinetics and pharmacodynamics, we have already seen clear signs of antitumor activity in patients with advanced clear cell RCC, and we believe that tumor shrinkage and the duration beyond one year for patients who have exhausted all available treatment options are very clinically meaningful.

The ongoing expansion portion of the phase is designed to give us a better read on efficacy, and this is already providing clear support for the initial observations in the dose escalation phase. And I would like to make a few comments on the early data of the expansion portion of the study.

The 100 milligram cohort has completed enrollment in November, so we have a mature and rich data set in hand for 30 clear cell patients treated at 100 milligrams of Cas. While these data are still early, we are already seeing glimpses of Cas’s potential for differentiation over belzutifan.

We’ll share the full data set at a medical conference later this year, but we did feel it was important to share some highlights of the data today. First, the majority of patients in the expansion cohort have only had one or two scans, and we scan patients approximately every six weeks, so it’s about one and a half to three months of follow-up.

Nonetheless, even with this very short duration of follow-up, the response rate we are seeing, which includes unconfirmed responses, given how limited the follow-up time is, it’s already in line with the response rate seen for Belzutifan in LITESPARK-005.

We also have a substantial number of patients early on their treatment who have experienced tumor shrinkage but have not yet crossed the formal threshold of 30% to meet a response. But this obviously can happen with longer duration of treatment on future scans.

Secondly, we are seeing a relatively low primary progression rate, and this is the percentage of patients whose best overall response is progressive disease. So these patients have tumor progression on the first scan.

This may indicate that Cas’s ability – sorry, Cas can stabilize tumor growth early on during treatment, and this will be an important parameter to monitor in the future as it represents an opportunity to prove upon something that was reported for Belzutifan.

In summary, we are very encouraged by these early dose escalation and expansion cohort data, which, while early, have provided an encouraging signal that Cas’s PK/PD profile could translate into greater efficacy in the clinic.

By midyear, we will have a minimum of seven months of follow-up for all 30 patients in the 100 milligram expansion cohort, which should provide a mature look at the overall response rate and we expect to present these data at a medical conference in the second half of the year.

As I mentioned earlier, ARC-20 includes two additional expansion cohorts and we – expect this to also be presented over the next 12 to 18 months. We also expect data from STELLAR-009, our study evaluating Cas together with Zanzalintinib, sorry, also referred to as Zanza, sometime in 2025.

We are full speed ahead to our Phase 3 study and we expect to disclose more on our development plan in the coming months. Terry will outline our other catalysts for 2024, but first, I will turn things over to Bob to discuss our fourth quarter and full year financials..

Thanks, Dimitry. As Terry outlined earlier, Arcus continues to be in a very strong financial position. Our cash as of December 31st, 2023 was $866 million and increased to $1.2 billion after Gilead’s January equity investment.

Importantly, our partnership with Gilead is very capital efficient, because we share the majority of costs for optioned programs 50:50, including multiple Phase 3 studies for dom/zim. Gilead has also committed to pay the $100 million option continuation payment due in July under the collaboration agreement.

So we expect our cash balance at the end of 2024 to be between $870 million and $920 million, and now expect our cash to fund operations into 2027. This guidance excludes other potential opt-in payments and approval milestones from our partners.

Turning to our P&L, we recognized GAAP revenue for the fourth quarter of $31 million, which compares to $32 million for the third quarter of 2023. Our revenue is primarily driven by our collaboration with Gilead, and we are evaluating the impact of the recent amendment on our revenue for 2024 and beyond.

In addition to our partnership with Gilead, we have a partnership with Taiho for dom in Japan.

In the fourth quarter, we received a milestone payment of $14 million from Taiho related to their participation in our STAR-221 pivotal study and will receive another $30 million in the first quarter of 2024 related to their participation in our STAR-221 and STAR-121 pivotal studies.

We are also eligible for additional milestone payments of $10 million in the first quarter of 2025 from Taiho related to STAR-121. Our R&D expenses for the fourth quarter are stated net of reimbursements from Gilead and we’re $93 million as compared to $82 million in the third quarter of 2023.

In the fourth quarter, non-cash stock compensation represented $9 million of our R&D expenses. The increase in the fourth quarter was related to standard of care purchases for our clinical trials.

We continue to expect modest increases in R&D expenses as our Phase 3 studies mature, and spend will fluctuate primarily based on the timing of clinical manufacturing activities and the purchase of standard of care therapeutics for our clinical trials.

G&A expenses were $29 million for the fourth quarter of 2023, compared to $30 million in the third quarter of 2023. Non-cash stock compensation represented $9 million of our G&A expenses for the fourth quarter, and we expect G&A to remain stable for 2024.

For more details regarding our financial results, please refer to our earnings press release from earlier today and our 10-K. I’ll now turn it back to Terry for concluding remarks..

Thanks very much, Bob. Before we open the floor to questions, I’d like to briefly touch on upcoming catalysts for 2024 beyond the ARC-20 data sets that Dimitry highlighted. There’s a lot. This will be another data rich year for Arcus.

For the anti-TIGIT program, we’ll be presenting updated data from EDGE-Gastric, our Phase 2 study evaluating dom/zim plus chemo in Upper GI cancers at ASCO this year. We expect this data set to include updated ORR and PFS data.

We also look forward to announcing the completion of enrollment for STAR-121 one and STAR-221, which will obviously start the clock for potential regulatory filings. We also may share data and insights from ARC-10 at a future medical conference.

As I mentioned earlier, we presented impressive overall survival data from our Phase 1b ARC-8 trial that was evaluating quemli in first-line pancreatic cancer.

Also related to the adenosine pathway, we have two randomized data sets that we expect to share in the first half of the year for Etruma, our A2 receptor antagonist, and we believe these confirm our findings in ARC-8 that adenosine modulation confer profound improvement on overall survival.

So first off, Roche will be presenting data from MORPHEUS-PDAC. This is a randomized study, operationalized by Roche that evaluated Etruma in combination with chemotherapy and atezo, their anti-PD-L1 antibody versus chemo and pancreatic cancer. So, a randomized study that involves Etruma.

Second, we submitted data from the third-line cohort of ARC-9 for presentation at a medical conference. This cohort enrolled 105 patients and evaluated Etruma plus zim plus bev and FOLFOX versus rego, the current standard of care in third-line colorectal cancer.

The presentation will include mature PFS and, importantly, OS data, which we believe are also very supportive of the potential for adenosine modulation when combined with immunogenic chemotherapy to robustly, we mean, robustly, prolong PFS and OS.

So, in conclusion, we’ve covered a lot today, a lot of material, but there’s one thing to take away from today’s call, it’s that Arcus is now fully enabled to execute on its diverse, late-stage portfolio with funding into 2027 and that excludes potential future opt-in payments.

Our portfolio includes six ongoing and planned Phase 3 trials, multiple Phase 1 and 2 studies, and a discovery engine that’s just capable of generating at least one IND per year.

Our trials are focused on huge markets by any standard, lung and GI cancer, pancreatic cancer and RCC, where we’re extremely well positioned to compete with potential first-to-market or best-in-class therapies. We have a lot going on, I think a lot more to come this year.

Thanks for your interest and support for Arcus as we continue to broaden our portfolio of innovative combination cancer therapies, and we’re working to bring these treatments to patients as soon as possible. We’ll now open the floor to questions..

Thank you. [Operator Instructions] First question comes from Terence Flynn with Morgan Stanley. Your line is open. Please go ahead..

Hi, thanks for taking the question. Two-part one for me. Just wondering on Cas, the HIF-2alpha program, Slide 24, the dose expansion data. Can you just confirm what the ORR was? And how many of those were actually confirmed versus unconfirmed? And then the second part of the question relates to a potential Gilead opt-in on this program.

Maybe, Terry, you could just remind us the mechanics of how that type of a decision would work in terms of how little or how much data you would provide to Gilead, and then how long they have to make a decision? Thank you..

Thanks, Terrence. So, on the first question, we didn’t share a specific ORR intentionally. Actually, 70% of the patients have only had one or two scans, so we will wait till the second half of the year to give that number. But we’re seeing a number of responses.

And, in fact, then there’s double-digit patients that are stable disease with tumor reduction that may convert to response. The second part, with respect to Gilead opt-in, we have defined very specific criteria together with them.

We haven’t shared those exactly, but if you look at what we’ve described in general for the relationship that opt-in occurs when we’ve generated proof-of-concept data. So you can draw your own conclusions as what’s coming later this year.

And our belief is that, they’re very excited about the molecule in the program, but we’ll see what they actually decide. I’ll make one last final point. That is a program that we obviously wouldn’t mind taking forward ourself.

And we also have had plenty of inbound interests from other companies that might see a strategic fit with the rest of their portfolio..

We now turn to Peter Lawson with Barclays. Your line is open. Please go ahead..

Great. Thanks for the update. Thanks for all the information.

On Cas, is that able to reduce the number of fast progresses you were talking about? And are you seeing any complexity in recruiting patients for HIF-2alpha plus Zanza both two non-approved drugs, if that in any way you think affects the patients you get to see?.

So we actually have had a number of discussions on that topic. We do not see that we’re going to be, while we’ll define for the rest of the world, the future development strategy. We’re going into settings that we think makes sense, including with Zanza. And we also, in parallel, will be exploring combination with Cabo.

So we’ll have both of those under our belt, but we feel very good about our ability to enroll. And keep in mind, we’re not planning, obviously, in the context of this question, to be going after monotherapy at this point. And so we’ll be going against a standard of care that doesn’t involve Belzutifan.

And we feel like very well positioned to execute on those trials. And, in fact, a huge degree of excitement.

We’ve already had a first ad Board meeting, and the enthusiasm for both HIF-2 as a general mechanism from what investigators have seen with Belz, as well as their anecdotal experience, which is now starting to get to be substantial with Cas, makes the field very exciting.

So we actually expect very rapid enrollment, as we’ve seen already for this molecule..

Got you.

And then just on the rapid progresses, are you seeing that or a reduction in that run?.

Yes. So if you look at LITESPARK-005, which was a Phase 3 study for Belzutifan, and you can look at what the primary progression rate was in that study and were lower than that. We talked to investigators about LITESPARK-005. The primary progression rate, which was relatively high, was a thing that stuck out for them.

The results overall were very encouraging, but I think that’s one thing that they would love to see improved upon, was the primary progression rate and just the number of patients that just blew right through Belzutifan treatment. So, like I said we’re seeing a lower number than that.

We think it’s another opportunity to improve upon Belzutifan, and there’ll be more to come on that later in the year..

Perfect. Thank you so much..

We now turn to Kaveri Pohlman with BTIG. Your line is open. Please go ahead..

Good evening. Congrats on the progress and thanks for taking my questions. For 521 dose expansion data, the ORR that you provided, can you tell us or provide any color on how pre-treated these patients were compared to the LITESPARK-005 trial? And the trial, I believe, excludes patients with prior HIF-2alpha treatment.

But do you think higher exposure could make these patients respond to 521?.

So, Dimitry, why don’t you talk a little bit about the treatment of those patients in the expansion study?.

Sure. Yeah, thanks for the question. So regarding the prior treatments, the inclusion criteria for the expansion cohort allow for patients in a slightly earlier setting than in the dose escalation phase. So in the dose escalation phase, we required people to have exhausted all reasonable treatment options.

And therefore, third or fourth-line was what we expect. In the expansion cohort, we are still seeing a fairly similar profile of pretreatment. And that’s something we think is, let’s say, what we are expecting. It also puts our early efficacy observations in a positive daylight.

Many patients in the expansion cohort also had two or three prior VEGF-TKIs, and they all are required to have PD-1. So if I summarize it, we do allow slightly earlier-stage patients, second-line and beyond, where in the escalation phase, it would have been third-line and beyond. But overall, so far, the prior treatments are very, very similar.

As to the Belzutifan question, it is an interesting question. It is something I think worthwhile thinking about. However, including patients now with Belzutifan prior treatment, I think will make it really hard to interpret the data, because one reason could be that patients did not respond, because the target wasn’t hit hard enough.

There could be complete, let’s say, resistance for HIF-2 targeting. I think that looking at the Belzutifan data, if you look at the primary progression rate, a number of those patients presumably would have been hard to get under control. Dose might benefit, but patients – there could definitely be patients who have resistance to HIF-2alpha targeting.

So I know it’s not a simple answer. I think for a clean efficacy signal right now, that’s why we are excluding prior HIF-2 treatment, because it’s too complicated. And one patient who progresses on Belzutifan would not be the other patient.

So that would have to be explored in a more detailed setting, where you really capture the detail of prior treatment..

Okay, that’s helpful. And –.

Because our existing [technical difficulty] prior lines of treatment in that expansion cohort, I can’t give you the exact numbers that is not in front of me. So 4 of the 30 were second-line. So it was a minority of the patients in that arm. Nine were third-line, and then the remainder, so that’s 19 were fourth-line or later..

And then there lot of those numbers, as a reminder..

Well on our reminder on LITESPARK-005. Again, the Phase 3 study for Belz, the inclusion criteria was one, two, three prior lines. So patients with more than three prior lines were excluded from that study..

Go ahead, Kaveri.

Did you have a follow-up?.

I just have, if I can ask another question for MORPHEUS-PDAC study.

Can you tell us what you’re expecting in terms of efficacy, especially OS? And whether you expect Etruma to perform better or worse than Quemli? And if outcomes from this trial could change anything for your plans to initiate a Phase 3 trial for Quemli?.

So, Kaveri, it doesn’t change anything. And what you’ll see is, the OS data I’ll just say, they’re going to be similar to what you saw for ARC-8. Now, there’s two interesting components, that was actually they have a gem-abraxane control arm in the study.

So it’s randomized, our study as you know, we conducted that synthetic control analysis, which gave us great data. The thing about ARC-8 is that, it’s a larger end. But on the other hand, the MORPHEUS study has the randomized end – randomized arm and they both point to the same answer.

So, to me, that’s the big takeaway, as you have two studies that affect adenosine in two different ways. But bottom line are removing the effects of adenosine. They’re both producing what we would say, are pretty profound effects on overall survival, which is, to us, very important.

And so far as the Etruma versus Quemli, we’ve had that question in mind for some time. At this point, we’ll still say, other than in some very specific settings, where there may be known non-CD73 mechanisms for adenosine formation from adenosine triphosphate, we would say, we’ll hold judgment as to which might be better.

You can make rationale for both. De novo, if you forced me to pick one, I would still go with CD73 inhibition, with the idea being that if you could block the formation of something versus have to reverse the actions of something, that tends to be better, but that will play out at over time.

But I think by the time the big take home message is by the time you see these three data sets combined, I think it’s going to read very positively on adenosine modulation as a mechanism that has a meaningful role, particularly in the context of immunogenic chemotherapy as a standard of care where there’s headroom for improvement..

That’s very helpful. Thank you..

Thank you..

Our next question comes from Jonathan Miller with Evercore ISI. Your line is open. Please go ahead..

Hi guys. Thanks for taking the question. I would love to ask about HIF-2 time to response and maybe some context about how ORR could evolve from here? Obviously you’re talking about already breaching a similar level to LITESPARK and hinting that you would expect ORR to be mature by mid-year.

But – what’s the – to your expectation, what’s the evolution from here to there? How much more ORR would you expect to see in later scans A? And then relatedly, given linear PK up to 100 milligrams in the escalation cohort so far, do you expect that 50 milligrams could also show differentiation versus marker, could you put a little bit of that dose optimization in context for me as well?.

Jonathan, great questions. So let me start with the first one that gets a little bit to your kinetics. So that’s all anecdotal to-date, but let’s first put a line in the sand, LITESPARK-005 is roughly 3.8 months median time to response.

The way things are looking, if you played around with the numbers, it looks like at least at the outset, that we’re doing perhaps better than that, and we’ll see how that plays out. And obviously that leads to the opportunity for deeper response, longer PFS, those are as you know, those really aren’t independent variables.

So hitting the target harder at the outset may be driving kinetics that are known to be not particularly fast. Although we have seen a couple of later patients having dramatic tumor reduction after multiple scans.

On your second question, even though we didn’t say anything about it in the script and it’s even earlier, what I’ll tell you is the 50 milligram cohort, it’s almost fully enrolled, so that’s going to be another 30 patients.

And honestly, if you just took a look, and not even all the patients have had a single scan yet, but it actually looks pretty good.

And the kinetics, that’s where I would tell you on the first group of patients that have had scans, and so I want to get as you know I couldn’t get ahead of the skis, because I tend to be pretty transparent with what we’ve seen. But the first group of patients are seeing some pretty significant reductions.

And so, feeling optimistic both about the kinetics and we’re looking hard at 50 is clearly more than pharmacologically relevant. And it does look like on the early efficacy readouts that’s playing out as we stated, 20 milligrams was essentially giving the same effect as the approved dose of Belzutifan on the PD marker.

And the 50 milligram dose, certainly if you didn’t know any different and it was labeled 100 from what we’ve seen, you would say it fits right in. But that’s way too early to say that’s how it’s going to play out..

Makes sense. And then one more also on the escalation side of things. Obviously, only a very few of those patients were RCC patients.

Could you tell us about some of the other indications in that escalation set, where you might have seen clinical activity?.

Yeah. So it was a mix of tumor types. And so I’d say that it really wasn’t anything I’d say in the other tumor types, and they’re all patients that have seen multiple prior lines of therapy. We did have two patients with RCC, so not clear cell, but non-clear cell RCC.

And interestingly, one of those patients has had a nice response and is still on treatment. So not a 30% tumor reduction, but they’ve been on treatment for many, many months and continues to be on treatment. So it seems to indicate that the drug has activity in non-clear cell RCC as well..

Okay, makes sense. Thank you..

Thanks, Jonathan..

We now turn to Yigal Nochomovitz with Citigroup. Your line is open. Please go ahead..

Yeah. Hi, Terry and team. Did you say what the doses were for the two RCC patients that showed the tumor reductions? Just short of 30%? And then I have another question on Phase 3..

Why don’t you go ahead, Jennifer?.

Yeah, I believe one was the 100 mg dose, and the other, I think, was the 20 mg, if I remember correctly..

Yes, [inaudible], because out of the four patients, you had all covered. But I think Jen got that right. Definitely one was 100, and definitely the other one was either 20 or 50. They’re probably looking while we speak..

Okay. And then the – it’s also –.

Yeah remains [technical difficulty]..

Okay. And then at this point, as far as what you would do for the Phase 3 dose, I mean, you finished the dose expansion for 100 milligram first. But doesn’t mean that that’s going to be the base case for Phase 3, right? I mean, you could go with 50. You also said you’re evaluating a higher dose up to 200, although I don’t know what that is.

So what’s the base case for Phase 3? Or that’s still TBD?.

The base case is 100. And it really comes down to, Yigal, unless we see something dramatic from any of the – either of the other arms, which obviously are being done to support the – that we’ve got the optimal dose from ultimately a regulatory standpoint.

We felt that if you look at the Merck’s data and you look at what they’ve achieved, and you look at their waterfalls and you look at their kinetics that once we’d established that fivefold increase over matching the peripheral PD marker, that we felt like you should be maximizing the response in the tumor.

So it’s a practical call, as you know, oftentimes when you – and it’s unusual more unusual in cancer, but when you have a very safe drug, at some point, you say, just from a practical standpoint, makes sense.

But if we see something in these other expansion cohorts that would cause you to feel like there was something different, we would consider doing something alternatively. But right now we’re on a trajectory to that 100 milligram dose. The other thing that’s nice about safety profile is appearing very clean..

And yeah so it’s starting. Just to clarify, [technical difficulty] posture responses one was 100 mg and one was 50 mg..

Okay, got it. And then you mentioned LITESPARK-005 a bunch of times. So obviously that was versus everolimus.

So but for Phase 3, I’m assuming you’d want to go up against Belzutifan, but I don’t know, is that a right assumption?.

Yeah, so the thing – and once we describe exactly what we’re doing. So we’re not going to be going into that same monotherapy setting. So we’ll actually be going in a setting where Belzutifan wouldn’t be the standard of care, and we will go against the standard of care, and we’ll say a little bit more about that as the year goes along.

But that was part of the strategy when we considered what would be the best places to go first..

Okay. All right, understood. Thank you..

Thank you, Jon –.

We now take from Salveen Richter with Goldman Sachs. Your line is open. Please go ahead..

Hey, thanks. This is [Matt] [ph] on for Salveen. Maybe just following-up on that last question.

Could you share any additional details at this point on the Phase 3 design forecast? And then secondly, you cited the changing treatment paradigm in first-line PD-L1 high lung cancer away from Ketruda mono as the reason for discontinuing ARC-10 and shifting to 121.

I was just curious if you could share any details on what data this shifting trend is based on and why you believe this is happening now? Thank you..

Thanks for the two questions. This is – and I’m going to walk and chew gum at the same time, since those are two different programs. So what I’ll comment is, you can think about RCC from a standpoint of both development, the need, ultimately commercialization. It’s – there’s multiple lines where you can think of going.

And so, we would probably move up a bit from where that third-line population was. And you could think about patients that have received anti-PD-1 and or TKI. So you’d be – you wouldn’t have Belz’s standard of care. We feel like that’s a great place to go.

Insofar as your question about ARC-10 and the strategy there, so clear – let me give a couple of points on that. So clearly, like with many therapies, and particularly in cancer, it’s one of those places where obviously there’s a Goldilocks spot. But physicians do, and patients tend to be more focused on efficacy than safety, within reasonable bounds.

And I think as time goes along and physicians become both more comfortable with the liabilities of a therapy, how to administer it, as well as a conviction about the real efficacy.

That’s what’s happened in a very continuous way in this high PD-L1 population, going from anti-PD-1 alone and increasingly to anti-PD-1 plus chemo, particularly in a more healthy patient population or with a patient with a bulkier, more rapidly progressing tumor.

We think that’s only going to be more enhanced, particularly with a molecule like dom, which we’re already seeing from a study, for example, like EDGE-Gastric, that essentially doesn’t bring any additional side effect liability on top of anti-PD-1 plus chemo.

So we think that that’s going to further cannibalize that particular approach to treating that population. So we do feel that STAR-121 best addresses that population with the best opportunity to become the standard of care for all comers.

What I’ll also say, from a biological standpoint, I think one of the important things is you move like down the spectrum from toxic agents, beta-tubulin inhibitors, to things that are – you very much understand the biology. What you really want to start thinking about is less the organ that you’re treating than the biology that you’re treating.

And we do feel and the biology that supports anti-TIGIT is a couple of things. At the highest level, CD155 is a bad thing. If you’ve got CD155, what’s CD155 is doing is, And what CD155 is doing is it’s keeping you from getting all of the mileage that you might otherwise out of anti-PD-1, because anti-PD-1 relies on CD226 to get its full efficacy.

And so when you have CD155 engaging that CD226, you’re losing part of what you might otherwise gain. And that’s the whole rationale.

And now what’s being borne out clinically behind anti-TIGIT and why we feel like the best place to go for anti-TIGIT is where you already know that anti-PD-1 works, and that PD-L1 all comer population with chemo is absolutely right down the middle of the fairway for where you want to go with a molecule like dom..

Helpful. Thank you..

We now turn to Robyn Karnauskas with Truist. Your line is open. Please go ahead..

Hi, team. All right, several questions. Thinking about the 200 milligrams of Cas, do you think there’ll be a diminishing limit of returns if you actually – but do you think you could push the efficacy up higher? What are your thoughts on 200 milligrams? Second question is about the other one.

How is different from Zanza? And third might be, do you think you could leapfrog? You know, how you cut ARC-10 and you did a different trial? Leapfrog into frontline with 521? Is there a strategy there, and how do you incorporate your own 801 into that process? There’s a lot going on there, but maybe you can take those at once..

So – the second question, what was that Zanza question? What was 801?.

Yeah, the other compound..

The 801 – so for 801 how is it differentiated from Zanza? I know it’s just AXL only. And could you incorporate that with your clinical trials going forward, right. So you’re doing all these Zanza clinical trials. The second question would be 200 milligrams of Cas.

Like what do you think is going to happen there? Are you pushing a limit already? Do you think you get greater efficacy? And third would be, could you leapfrog ahead giving your Phase 1, 2b trial and go into first-line RCC, because you’ve done brilliant things in the past by cutting things off and like skipping ahead of other people, giving the knowledge you have to get first-line indication versus refractor indication.

Thanks..

Great. So I’ll start with the 200 milligram and I’ll be brief on that.

We do think that’s probably overdosing, but we want to see it, because we’ll also – it’ll give us some additional safety data if we do go higher, does it do anything else on the other physiological roles of HIF-2alpha, but we do think that the 100 milligram dose is really hitting the target hard enough.

But we’ll see what we learn from 150 or 200 milligrams.

Juan, you want to take the 801 questions?.

Yeah, sure. Zanza, as well as Cabo, is primarily a VEGF-TKI. It inhibits AXL with both molecules with decreased potency. But the clinical activity and it’s really generally accepted to be the result of VEGF inhibition.

So the 801, we believe, is going to be a more surgically effective inhibitor of AXL, but probably not the first thing you would reach for in the context of RCC, where the rush on we primarily to go after a VEGF-TKI..

So the place where we see AXL going are things like STK11-mutant non-small cell lung cancer. And by the way, on 801, since you ask about it, I might as well call out a bit. We have completed the healthy volunteer dosing. PK profile and safety profile look really good.

So this is, in our minds, the first molecule that has the selectivity to really test the AXL hypothesis. So we’re very excited about that molecule.

Jen, you want to comment or Dimitry on the 521 leapfrogging into a frontline setting?.

Yeah, sure. Definitely –.

Yeah, sure. I can comment –.

Go ahead, Dimitry..

So we are considering all options and we could leapfrog into the first-line. We could leapfrog into the adjuvant setting, but we really want to make sure we select a setting for the first registrational trial that is a mix of different factors. It has to have the data, let’s say, safety and early efficacy data to support it.

It has to be a sweet spot when it comes to competitive timelines to Merck, there’s other considerations about timelines to readout. A first-line trial is an interesting market opportunity. But, for example, the bar in first-line is higher than in second-line. The time to readout is longer, of course, in first-line than in second-line.

So we are considering all these different options and we’ll make a decision and communicate that in the near term future what our first opportunity would be that we pursue, but it’s a factor of multiple factors..

Great and –.

See Robyn, though, I [technical difficulty] since you asked about that, I would like to emphasize the point of your question. Conceptually, though, is really good one. HIF-2alpha is going to end up being really important. I think that’s why Merck has started to call it out as blockbuster. AB521 barring some weird, unforeseen thing, it’s a drug.

And so the real question is, how do you fully exploit that? And if you ask me about our portfolio, it’s definitely something that, as we aggressively move towards this first study, we want to look at very hard, how do you expand the footprint of the HIF-2alpha program? That’s a really huge opportunity.

And we actually think because it’s so hard to get a good molecule, you’re not going to have anyone come in with a better molecule than us. So, we feel we’re going to end up better than Belz, and it’s – there’s not going to be commodity here..

And I’d like to thank Dimitry for making me feel not so bad pronouncing all these names. So Zanza worked for me, Cas worked for me. Thank you very much, Dimitry. Appreciate it..

My pleasure. Absolutely..

I’m told that Cas is Cas, not Cas too. That’s what I’ve been told. So –.

I’ll work on that, Terry. I’ll work on that..

And I can’t tell the difference..

We now turn to Daina Graybosch with Leerink Partners. Your line is open. Please go ahead..

Hi guys. Thanks for the questions. I have three on Cas getting into the PK/PD data. First, on Page 31, where you show the area under the curve. I recall initially talking about the value proposition for Cas that you expected a much higher absolute area under the curve.

But what I see here with the 100 milligrams is pretty similar in range to the 120 and 240 milligrams for Belzutifan. So I wonder if you can talk to that that you’re ending up in the same range. And then on pharmacodynamics, you have two different pharmacodynamic readouts here.

First is the percent EPO change on Page 30, and then the percent hemoglobin or the absolute change in the hemoglobin on Page 32.

Which of these PD readouts do you believe is more correlated to what you expect in efficacy? And if I look at the hemoglobin, you’re sort of in range of belzutifan, and you’re modestly higher or looks to be modestly higher in percent EPO? So my final question is, how much better efficacy do you expect to drive with these similar to modest increases in pharmacodynamic markers versus belzitufan? Thanks..

Thanks, Daina. So I’m going to tie it together. So I think the key point, I’m going to define what’s better PK and what’s better PD. So PD, as you know, encompasses everything, tissue penetration, potency differences, pharmacokinetic differences.

So the PD readout what we’re saying, and we think this is the value proposition, no question, is that at 20 milligrams of AB521, you’re getting the same horsepower. And let’s use EPO as the marker that you get out of the approved and used dose of belzutifan. Now the PK advantage has nothing to do with an AUC relative to belzutifan.

The PK advantage is that when we go to fivefold higher doses than the dose that gives you that equivalent activity on the PD marker, we get fivefold higher exposures. So if there’s more water to be squeezed out of the activity stone, we’re hitting that with fivefold the equivalent PD dose of belzutifan. So that – that’s the value proposition.

The PK advantage is that you can go higher from that maximal effect with respect to hemoglobin or EPO, we don’t look at either of those, per se, as something that’s predictive of, more or less predictive of the activity in the tumor setting..

Can I state it back? So you’re hitting it fivefold more dose than what gets you to the pharmacodynamic marker.

And you believe that will give you a much better efficacy, even though neither of these pharmacodynamic markers with fivefold greater dose really had that much more effect than Belzutifan?.

That is correct. But not only is it correct, that’s what’s predicted, and that’s what – that’s the difference between the physiological maximal HIF-2a – as you know, as you know, HIF-2 is a transcription factor, so it regulates a hundred things. Its effect on EPO has nothing to do with what’s going on in the tumor.

So we know going in that basically you’re going to max out HIF-2 in the – or EPO inhibition. And so that just becomes a marker for how hard are you hitting this thing? And then the fact that we can go 5x, what you can get out of the Merck molecule is what makes us feel good about hitting the tumor harder..

That’s very helpful. Thank you..

Thanks, Daina..

We now turn to Li Watsek with Cantor Fitzgerald. Your line is open. Please go ahead..

Hi there. This is [Rosemary] [ph] on for Li. Thank you so much for taking our questions. So, to start with, casdatifan, do you happen to see any dose response when it comes to toxicity, the safety profile? And do you have concerns for greater side effects when you go above 100 milligrams? And then one question on your TIGIT programs. Sorry, go ahead..

No, go ahead. You finish your questions..

[Technical difficulty] so the question for TIGIT. So you said you plan to show some data from the ARC-10 trial, which was discontinued. So you have any color on when this could be and what kind of data we would expect, and would it potentially impact any thinking around the trials that you still have going on? Thank you..

Thanks. So the dose response, to be clear, the 20 milligram dose that we used is our lowest dose, is already pharmacologically relevant. As we noted, you’re seeing essentially a maximal effect on EPO suppression at that point.

So I would just say, with three patients on each of the doses, with 6 on the 50, we wouldn’t say that we see any meaningful differences, nor do we expect that.

And similarly, because of what we know, and this just gets back to how I was answering Daina’s question, there’s either feedback mechanisms or other non-HIF-2 mediated ways that EPO is produced. And so you hit this maximal effect on that endpoint, which to-date has been the primary side effect and is very manageable. So that is the anemia.

That’s a correlate of that EPO suppression. And basically, that’s been very manageable. So at this point, we don’t have any expectations that going higher will induce any more of a liability, and we certainly haven’t seen it hit the 100 milligram dose. The other place where we’re keeping a close eye is, in fact, on hypoxia.

That has to do with HIF-2 inhibition in the lung. Again, that may also be something that’s maxed out. It’s normal physiology. It’s something that we’re paying attention to. Some of these things may also be dependent on individual patients, particularly when you think about EPO, if there are patients that have compromised kidney function.

But to-date, we haven’t seen anything of concern, and we’ll just see what happens when we go to a higher dose. And certainly on those initial 30 patients, nothing that we’ve seen to-date has caused us concern. And to make the point, we have not yet seen a DLT. On the anti-TIGIT ARC-10 data, that’s just something we’re considering.

We haven’t made a decision on that. But if we did do that, the idea would be that we would do a cut of the data and a cleaning of the data when we would extrapolate that, we would have mature PFS minimally.

And at this point, with the data that we have in hand from our other studies, it wouldn’t affect any of the studies that were – it would not be decision-making data. Thanks for the questions..

Thanks, Terry..

Ladies and gentlemen, this concludes our Q&A and today’s conference call. We’d like to thank you for your participation. You may now disconnect your lines..