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Momenta Pharmaceuticals (NASDAQ:MNTA)
Q4 2018 Earnings Conference Call
Feb. 22, 2019 8:30 a.m. ET


Prepared Remarks:


Good day, ladies and gentlemen, and welcome to the Momenta Pharmaceuticals fourth-quarter 2018 earnings conference call. [Operator instructions] As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference, Ms. Patty Eisenhaur, vice president of investor relations and corporate communications.

You may begin.

Patty Eisenhaur -- Vice President of Investor Relations and Corporate Communications

Thank you, operator, and good morning, everyone, and thank you for joining us today for Momenta's conference call to discuss financial results and corporate highlights for the fourth-quarter and full-year of 2018. Today's call is webcast, and you can view the slides we will be presenting in the investor section of our website at momentapharma.com. Joining me on the call with prepared remarks are Craig Wheeler, president and chief executive officer; and Michelle Robertson, chief financial officer. Young Kwon, our chief business officer; and Santiago Arroyo, our chief medical officer, will be available for the Q&A portion of the call.

Following our remarks, we will open up the call to questions. Before we begin, I'd like to mention that our call will contain forward-looking statements about our financial outlook, business plans and objectives and other future events and developments, including statements about the design, timing and goals of clinical trials and the availability, timing and announcement of data and results; the use, efficacy, potency, safety, tolerability, convenience and commercial potential of our product candidate, including their potential as best-in-class agents; our strategic plans and restructuring resulting from our strategic review; the timing of regulatory filings, regulatory approvals, market formation and launches of our product candidates and products; the market potential and reception of our products and product candidates; potential competition and revenues for our products; development time lines and strategies; hypothesis regarding certain effects of our product candidates and clinical studies; accounting treatment for patient -- for payments from our collaborators; our goals and strategy; our current and potential future collaborations; and non-GAAP operating expense guidance, including our anticipated collaborative revenues and restructuring charges. These statements are subject to risks and uncertainties that may cause actual results to differ materially from those projected. These risks and uncertainties include those described in the slide entitled cautionary note regarding forward-looking statements included in the presentation accompanying this call and under the heading risk factors in our most recent quarterly report on Form 10-Q filed with the Securities and Exchange Commission, as well as other documents we may file from time to time with the SEC.

Any forward-looking statements speak only as of today's date, and we assume no obligation to update any forward-looking statements made on today's call. On the call, we will also discuss fourth-quarter 2018 non-GAAP operating expense. Please see the presentation accompanying the call for further information and reconciliation of this measure. With that, I will now turn the call over to Craig.

Craig Wheeler -- President and Chief Executive Officer

Thank you, Patty, and good morning, everyone. And before I start out, I would like to formally welcome Patty Eisenhaur, our new VP of investor relations. You may know her from her work at Albany Molecular or Watson, and we are thrilled to have her join our team. I'll start today's call with a brief recap of 2018 and then I'll provide an update on our novel drug and legacy programs.

Following my remarks, our CFO Michelle Robertson, will discuss our fourth-quarter and full-year 2018 financial results and reiterate our guidance for 2019. Following closing remarks, we will open up the call for questions. So first, a brief recap. 2018 was a transformational year for Momenta.

At the beginning of that year, we undertook a strategic review with the goal to transform the company from its dual focus on novel drugs in biosimilars to a company primarily focused on the discovery and development of novel drugs to treat rare, immune-mediated disorders. We retained the core of our technical capabilities, while expanding our biology and clinically focused capabilities. The outcome of this review ultimately resulted in a restructuring of our business, which we initiated in October of last year, and that is now substantially complete. Our novel programs showed meaningful progress during 2018, which we discussed at our R&D day in October, with these advances paving the way for us to move into Phase 2, which is now under way.

And I'll discuss the Phase 2 programs shortly. We are grateful for the support of our investors during this transition. And thanks to your support, we completed a $230 million equity financing in December, allowing us to finish the year with a cash balance of $449 million. We now have sufficient capital to fund our novel programs to key proof of concept without any additional significantly dilutive capital raises ahead of POC data expected in 2020.

I'll now turn to our exciting novel programs to cover the latest update and provide an overview of what you can expect this year. I'll start with M281, our FcRn program. In Phase I, this molecule demonstrated best-in-class potency and a very good safety profile. We believe M281 has the potential to show efficacy, safety and dosing advantages across a range of autoimmune diseases.

In addition, because of its demonstrated ability to maintain full receptor occupancy, it may be uniquely positioned in fetal-maternal disease, as well as for supportive therapy in combination with other agents, specifically AAV gene therapy to allow these products to overcome alloantibodies and retain their efficacy. As we described at our R&D day in October, and during our more recent JP Morgan presentation, we have a multi-year strategy in place to capture these compound's full opportunity. Our goals for M281 in 2019 are clear. First, enroll the MG Phase 2 trial, our initial autoimmune indication.

This study should enable us to establish proof of concept for M281 and firmly establish what we believe will be significant efficacy and enhanced dosing in MG. Second, we are working to advance our clinical program in hemolytic disease of the fetus and newborn, or HDFN, our first fetal-maternal indication, which also includes natural history study and historical control analysis. Due to the nature of this disease, the patient population and the high unmet need, this work could potentially lay the foundation for an accelerated approval. Third, we are preparing to initiate our third M281 trial in the second half of this year.

This study will broaden the experience with the molecule and to an additional autoimmune medical specialty and disease area. And finally, we are advancing our process and formulation work to ensure we are ready with a subcu formulation at the time of launch. Already, we have a few updates on our progress. We have commenced our Phase 2 trial in generalized myasthenia gravis.

And as we have shared previously, this trial is a five-arm trial, treating approximately 60 patients. The multidose design will allow us to understand important aspects of dosing levels and frequency in MG, evaluate proof of concept efficacy in MG, as well as provide key information, which will inform dose selection for other autoimmune diseases. Sites are currently coming online, and patients screening is under way. I just returned from our European investor kick-off meeting for this trial, and it is clear, the clinical community is excited to have this molecule in their hands.

Our goal is to rapidly enroll this trial as we work toward top-line data readout in 2020. We have also begun our first fetal-maternal trial for M281. As a reminder, in these diseases, the mother's antibodies cross a placenta and attack the fetus. M281, with ability to maintain full receptor occupancy, is expected to totally block the transfer of antibodies across the placenta, which is affected by FcRn.

It is also expected to lower the mother's antibody levels, providing an extra level of protection for the unborn fetus. This trial will enroll 15 pregnant women with a history of severe HDFN. Sites are opening and identifying prospective patients. We chose HDFN as a lead indication for two important reasons.

First, there's a very high unmet medical need. There are no approved therapies, and current standard of care includes invasive intrauterine transfusions. Standard treatments are also not always available or effective, leading to a 20% rate of fetal mortality and significant morbidity in neonates. Second, in this indication, the health of the fetus can be monitored non-interventionally using Doppler ultrasound at the central cerebral artery.

This is an important consideration in this sensitive population. Prospective patients will be identified by at-risk pregnancies, and infants will be followed for two years after birth. We assess this is going to be a longer trial than other autoimmune indications. The efficacy clinical endpoint is the proportion of patients with live births at or after gestational week 32 without the need of intrauterine transfusions.

Assuming a successful rate of enrollment, we are targeting proof of concept in 2021. We are also currently in our research collaboration with a gene therapy company to explore M281's potential to support dosing of gene therapy. We are working to establish proof of concept in the lab, but do not anticipate any clinical work until we have established single-agent proof of concept efficacy and safety for M281. I'll now turn to M254, our hyper-sialylated IgG program, which, we believe, could transform IVIg therapy.

The IVIg market is estimated to be a $4 billion-plus market in autoimmune disease. And current treatment brings with it a very high burden for patients because of the large volumes that must be used to show efficacy. A more potent, lower-dose agent could bring better safety, tolerability, patient convenience, lower overall use of resources and possibly higher efficacy than IVIg. Preclinical data show M254 could be seven to 10 times more potent than IVIg.

At our R&D day in October, we outlined our clinical development plan for M254. For 2019, again, our objective is clear: Our goal is to enroll our proof of concept trial in ITP to demonstrate the potency advantage in humans. In January, we dosed our first healthy volunteer in the Phase 1-2 study. This study will enroll approximately 65 subjects, consisting of both healthy volunteers and patients with immune thrombocytopenia purpura, or ITP.

This is four-part study. Part A is a single-ascending dose study in healthy volunteers. Part B is an open-label, single-ascending dose study in ITP patients. Part C is a randomized crossover design, where ITP patients will receive M254 or IVIg first and then be crossed over to the other agents.

In Part C, we'll investigate a high and low dose selected from the dose escalation phase. And finally, in Part D, ITP patients will receive multiple doses of the selected M254 dose. Depending how quickly we will enroll, this program could be our first novel immune program to reach proof of concept, which we expect will occur in the first half of 2020. Lastly, on novels, a quick update on M230, our program in collaboration with CSL.

As a reminder, M230 is a recombinant Fc Multimer that works by antagonizing the activating Fc gamma receptor system and blocking immune complex mediated tissue damage. The Phase I study is ongoing, and CSL anticipate that the study will be complete in 2019. Now let me turn to our biosimilar and complex generics, which we will refer to going forward as our legacy products. I'll start with M923, our wholly owned biosimilar to HUMIRA.

We have initiated discussions with potential commercialization partners for this product candidate. And we'll work with the potential partner to identify a regulatory and commercial strategy, which could meaningfully reduce our share of expenses. Based on our recently executed license agreements with AbbVie, we have secured a U.S. launch date in November of 2023 and had the ability to launch immediately upon regulatory approval.

On M710, our proposed biosimilar to EYLEA, our partner Mylan is currently enrolling patients in the Phase III study for this product, and we expect U.S. market formation in 2023, subject, of course, to positive Phase 3 results, marketing approval and patent considerations. We're currently in the lead for developing this asset. And we believe M710 could bring in significant revenue to support our expanding novel pipeline.

And we look forward to keeping you updated as the trial progresses. With that, I'll turn the call over to Michelle to review the fourth-quarter and full-year results. And then I'll close with some final comments.

Michelle Robertson -- Chief Financial Officer

Thanks, Craig. Good morning, everyone. We reported a net loss in fourth quarter of 8.2 million, compared to net income of 13.8 million in the same quarter last year. The net loss for the fourth quarter of 2018 include restructuring charges of approximately $2.3 million.

Revenue for the fourth quarter totaled 43 million, compared with 65 million for the same period in 2017. Fourth-quarter 2018 revenue included approximately $11 million in product revenue, which was profit-share earned from Sandoz' sales of our Glatopa products. In Q4 2017, we reported product revenue of approximately $13 million from Sandoz' sales of Glatopa. Research and development revenue was 32 million, a decline from 51 million in the fourth quarter of 2017.

The decrease was primarily due to a $15 million upfront payment achieved in the 2017 period related to M230, our partnered program with CSL. This was offset in part by an increase in revenue recognized as part of the Mylan biosimilar collaboration. Fourth-quarter total GAAP operating expenses were 52 million, even compared to the same period in 2017. The fourth-quarter GAAP operating expenses included $2 million in charges related to our restructuring in October and 2 million of stock compensation expense.

Fourth-quarter R&D expense decreased to 29 million when compared to 36 million in the same period in 2017. The decrease was primarily due to reduced R&D expenses for our biosimilar programs. Fourth-quarter G&A expense increased to 22 million, compared to 16 million in the same period in 2017. The increase was primarily due to increased rent expense and corporate costs.

For the fourth quarter of 2018, our non-GAAP operating expense was $47 million, within the range of previously provided guidance of 45 to $55 million a quarter. Our non-GAAP operating expense is defined as total operating expenses, less stock-based compensation, less restructuring cost and less collaborative reimbursement revenues. Finally, we ended the fourth quarter with $449 million in cash, cash equivalents and marketable securities, compared to 282 million at the start of the quarter, reflecting 230 million of gross proceeds from our December 2018 financing. Turning now to our guidance for 2019.

We are reiterating the guidance we provided in November for non-GAAP operating expense of between 45 and 55 million on a quarterly basis. We do expect fluctuations in cost quarter-to-quarter, as our studies get under way and patients are enrolled. As a reminder, non-GAAP operating expense is defined as total operating expenses, less stock-based compensation, less restructuring costs and less collaborative reimbursement revenues. Now I'll turn the call back over to Craig for closing remarks.

Craig Wheeler -- President and Chief Executive Officer

Thanks, Michelle. Well, as you can tell, we've hit the ground running in 2019. We have three autoimmune clinical trials now under way and anticipating to start the fourth later this year. Opening sites and enrolling patients is a core focus for us this year as we aim to demonstrate that we have a best-in-class FcRn antibody in M281 and highlight the potential benefits of sialylation and SIFbody platforms provide in M254 and M230, respectively.

I'd like to thank our employees for their exceptional effort in getting these important studies under way. We have a lot to be excited about and remain committed to aggressively executing our plans to drive our novels and -- novel and legacy programs forward and creating value for our investors. Thank you again for joining us, and I'll turn the call over to the operator to get the Q&A under way. 

Questions and Answers:


[Operator instructions] And our first question comes from the line of Derek Archila with Stifel. Your line is now open.

Derek Archila -- Stifel Financial Corp. -- Analyst

Hey, good morning guys. Thanks for taking the questions. I just have a couple here. So Craig, maybe first on the subcu dose, can you maybe just give us kind of a little update to where you guys are currently? And I don't know if you kind of mentioned on the call whether we would get an update sometime in 2019 on the subcu dose.

And then on the second question, so I know you put out some data at the Society of Maternal-Fetal Medicine on M281. And just I want to really understand kind of how important fully blocking the FcRn and why that's so important in these indications and whether, again, this whole group of indications really requires that specific blocking. And then lastly, on M254, just want to get a sense of -- there's all these different parts to the study. Could we see potential data in 2019 for maybe, like, Part B of the study? I don't if you're going to provide data kind of piecemeal or you're going to wait until the full top-line readout for all parts.

Craig Wheeler -- President and Chief Executive Officer

Thanks, Derek. I'll take the first one. I'll turn the second one on the blocking of the FcRn on the placenta over to Santiago who's here with us, our chief medical officer. Then I'll come back and take the third one.

So first on the subcu dose, as we said, our goal is to have subcu ready for commercial launch. And so we are actively developing it. We already done proof of concept. It looks like we will be able to get a very effective formulation there, so we're not concerned technically about the formulation.

However, we do not intend to introduce it in our current Phase 2 trials. We would look at doing some kind of comparability once we understand the dosing. We think it's more important right now to truly understand all the dosing elements of the program, and that's what that Phase 2 MG trial is designed to do. So we'll have that subcu ready, and we'll introduce it clinically later on in the program.

Your second question was on the -- how essential is to get full receptor blocking for fetal-maternal, and I'll turn it over to Santiago.

Santiago Arroyo -- Chief Medical Officer

Yes. This is Santiago Arroyo, chief medical officer. It is critical to block the passage of alloantibodies from the mother to the fetus. And we have not -- as we have shown before, that shows that the passage is totally blocked by M281.

The placental study that we presented recently in the maternal-fetal meeting was done with the help of Dr. Nanovskaya in the University of Texas, and this is a non-placental -- model is a human placental model. And basically, what we use is M281 in the model. And we showed that the passage of the antibodies through the placenta is impair by administering M281.

The study is a -- is pretty definitive from their data and it goes along with the receptor occupancy data we have across people in the studies.

Craig Wheeler -- President and Chief Executive Officer

Yes, this is Craig. The only thing I'll add is just the thing to remember in fetal-maternal medicine is that you don't need a large antibody dose, especially in the early trimesters. The fetus is very small and the antibodies can be very damaging, and that's why we feel receptor occupancy is critical there. I'll take your third one on our intent on 254 in the study.

You're correct, it's a four-part study. We anticipate that the true proof of concept will be established in Part C, the third part of that study. We haven't made a final decision on if we're going to disclose anything early, but the rate that we're trying to get this enrolled, I think you should anticipate that we will probably wait until the Part C. Although if we see really exciting results in the Part B, we may come out.

But it's very small number because we're doing a dose ranging in Part B to be able to note those who's taking forward in a larger population in Part C. So most likely, we will wait until we have Part C results.

Derek Archila -- Stifel Financial Corp. -- Analyst

OK, great. Thanks guys.


And our next question comes from the line of Danielle Brill with Piper Jaffray. Your line is now open.

Danielle Brill -- Piper Jaffray -- Analyst

Hi, guys. Good morning. Thanks for the question. So I guess, quickly, you're planning to disclose another program next year or this year.

I'm wondering when we will get an update on that. And then in terms of enrollment for MG, wondering -- you're activating sites now or as they open for enrollment, what are your expectations around recruiting patients there? And then I have one other quick question.

Craig Wheeler -- President and Chief Executive Officer

Sure, sure. So I'll take the first one and then I'll turn the enrollment question over to Santiago. So on the first one, I would expect that you would see a disclosure from us on that program some time in the -- probably the third quarter, early third quarter, but that's probably roughly our time lines right now in terms of announcing that second autoimmune indication. On enrollment of MG, I'll turn it over to Santiago.

Santiago Arroyo -- Chief Medical Officer

Yes. We have several sites already opened, both here in United States and in Europe. And we are hoping and expecting to start to have patients in very soon. Our aim is to be able to recruit the study within this year.

And our operational study is pretty aggressive, so we believe that it will be certainly possible.

Craig Wheeler -- President and Chief Executive Officer

And I'll just add from my perspective that I was actually with Santiago at our kickoff meeting in Europe. And I can tell you that the sites that I met over there are quite excited to have the program and also seem to be quite large. I see large volumes of patients. So I think we have a good prospects for enrolling the trial there.

Danielle Brill -- Piper Jaffray -- Analyst

OK. Great. And then I've talked about this with Young before, but we encountered a lot with investors still focused on the albumin effects of the drug. And we had an expert that was saying that there's two distinct bindings sites for albumin and FcRn, so that it shouldn't be a class effect.

Can you just clarify why you think it's related to the potency and if the two binding sites are distinct?

Craig Wheeler -- President and Chief Executive Officer

So yes, I mean, we have talked extensively the fact that there's two distinct binding sites. There's an albumin binding site on the Fc receptor and there is an Fc binding site. They are separate binding sites on the receptor. What we have seen in animal models, as well as on our clinical data is that if we are binding directly over the Fc site, we are not binding at all over the albumin site.

But it appears, and we saw this in our animal models as well, is that there is some inhibition of albumin binding when you have an Fab bound to block the Fc binding site. And we think it's a class effect because our other competitors in the antibody space have talked about low levels of albumin drops. And they can't get as much binding as we can get, so we think it's a class effect. We think it's an antibody effect.

And so we're not overly concerned about any differentiation for a molecule. We also do not believe that the levels of albumin reduction that we're seeing will be a problem clinically. And the trial Santiago has designed, and we've talked about this on -- in the MG trial, our goal is to be at once monthly with a 30 milligram per kilogram dose. And if you look at our single-dose ascending data, you do see a slight decline in albumin, but it stays within a level of range of normal.

And it recovers much more quickly than the IgGs because of the production level of albumin. So on a -- if we can achieve that once monthly dose and, currently, we don't even think there will be a transient drop in the albumin levels below the lower level of normal. And so we see nothing clinically. We have not seen any concern from the regulators.

But this is certainly not showing signs of edema and the types of things that you would see in hypoalbuminaemia. And so overall, we're pretty confident this is going to be a manageable or nonissue for us.

Danielle Brill -- Piper Jaffray -- Analyst

Thanks, Craig, appreciate the clarification.


And our next question comes from the line of Eric Joseph with JP Morgan. Your line is now open.

Eric Joseph -- J.P. Morgan -- Analyst

Hey, guys, thanks for taking the questions. Craig, I guess, in your opening remarks, you commented on IVIg being a $4 billion market. I'm just wondering if you have a sense of how much of that uptake is in on-label indications, like ITP and CIDP versus sort of "off label" and whether you see any strategic advantage or competitive advantage to developing 254 for a sort of off label not yet indicated -- indication with -- for IVIg with 254? And I guess, secondarily to that, wonder just how you kind of look at the -- I guess, the competitive landscape of the level of innovation taking place currently in the IVIg space.

Craig Wheeler -- President and Chief Executive Officer

Sure. Let me start off and just give a quick view of the market that we're looking at. Then I'm going to turn it to Young to talk about IVIg and -- on off label and the marketplace evolving. We look at the way IVIg is used today as a market that's $4 billion today, that is inconvenience and difficult for patients, that is supply constrained and that is probably put because of those factors further back in the treatment protocol and it should be because of its efficacy.

So we actually view broadly as the patient being able to both capture and expand the potential market for an IVIg-like products in the autoimmune space. I'm going to turn it over to our Chief Business Officer, Young Kwon, who can talk a little bit about the -- where IVIg is used and how we see this versus the other innovations that are happening in the IVIg space.

Young Kwon -- Chief Business Officer

It's Young Kwon here. I think, in terms of the label indications for information, CIDP, obviously, is the largest of those. It is hard to get kind of good data on the proportion of this sort of $4-plus billion sales in the autoimmune segment there, specifically driven by CIDP and the other label of autoimmune indication, such as MMN and ITP. However, I think, as Craig pointed out, there's a pretty significant supply constraint.

And certainly, as our data clarifies and we have the opportunity to show a significant potency increase, we think that'll certainly help alleviate those issues. I think, regarding the kind the strategy going forward, I mean, we are looking at kind of two different aspects of the strategy for the advancing of product. One is to go into an indication, like CIDP, where the path is pretty well tried for IVIg and look for either non-inferiority or kind of better efficacy, depending on the kind of potency we're able to achieve. And we think that the advantage there is that there's a pretty good size of market opportunity that we can tap into.

Alternatively, there are also advantages to going after an indication where IVIg is used and reimbursed and with evidence of efficacy, but it doesn't have an FDA label because that may enable us to do a study where we can go against placebo or another control. So we're very actively thinking about those options. And it really will be clarified as we kind of advance through development this year and get the readout next year.

Craig Wheeler -- President and Chief Executive Officer

And I guess, the final port -- point of your question was what -- how do we see the competitive advancements in terms of what other people are doing in the IVIg space. And we think there are -- obviously, because of the burden of treatment, there is lots and lots of activity in terms of trying to get more convenient dosing or shorter dosing intervals. However, the innovation that we're seeing out there still is kind of putting a band on what is a very, very high volume of drug delivery. And we think that, compared to it, we can get to what we've seen in animal model of seven to 10 times more potent compared to that kind of efficacy, which will be a very short infusion.

We think that the innovations that the IVIg players are doing, say, will -- are not as good as what we will be able to get if we can show the same thing we showed in animals.

Eric Joseph -- J.P. Morgan -- Analyst

Got it. That's helpful. A follow-up, if I could. Just wondering if there are -- how should we be thinking about updates with potential new candidate development from the hyper-sialylation and SIFbody platforms, whether there are opportunities and have indications that are guiding your development and whether we should anticipate a candidate being nominated in the foreseeable future.

Craig Wheeler -- President and Chief Executive Officer

Yes. Our goal as a company is to nominate early development candidates as quickly as possible from these platforms. We are already in discussions with potential partners on these programs. I think the way you think about how we're prioritizing development is that, for our own portfolio, we are prioritizing things that would be in the autoimmune space and autoimmune indications.

But we also see, particularly with the SIFbody program, potentially, a very, very interesting programs on the oncology space. And so we're looking at partnerships in the oncology space. On the sialylation platform, we have some very exciting data. And we're actually looking at a number of different strategic options for those programs.

So I think you would probably find us more likely to be talking to them -- about them in the context of a partnership. We generally, for our own portfolio, don't really start talking about things until we get closer to the clinic in terms of specific molecules. But if we can succeed on some of those partnership, we'll talk about them much earlier.


[Operator instructions] And our next question comes from the line of Bill Maughan with Cowen. Your line is now open.

Bill Maughan -- Cowen and Company -- Analyst

Hi. Good morning. Thanks for taking the question. Just to expand on an earlier answer.

We know that the M281 trial, the earlier trial that showed albumin reductions, that finding was entirely a lab finding and not symptomatic. What should we be looking in the going-forward trials in terms of if they were to become symptomatic, where would that show up? And then finally, in terms of HUMIRA partnership, other than broadly maximizing value, sort of what are you looking for in a deal balancing cash upfront versus royalty to share in the future success of the program?

Craig Wheeler -- President and Chief Executive Officer

I'll take the first question and turn it over to Young for the second question on HUMIRA. On albumin, quite honestly, we don't expect to see anything symptomatic with the data we have seen. If you were to see symptomatic hypoalbuminaemia, you typically would see it first with significant edema. That's what you see.

I mean, this disease, when you see -- the patients with this is typically associated with liver or kidney disease. And so they have all sorts of other different sequelae as well. But that's what you typically see as edema.

Young Kwon -- Chief Business Officer

And Bill, it's Young here. On your question about the HUMIRA deal structure, in terms of the product, HUMIRA is going to be the largest selling biologic for biosimilars come in, in 2023 or so. And so I think there's kind of a balance between our objective. Having a share of the value downstream is certainly helpful to the long-term value creation in terms of providing cash flow to the company and, call it, the midterm.

However, we certainly would, I think, value and maybe even prioritize kind of early and near-term milestones in order to help kind of continue to capitalize the company as we pursue both these studies that we're conducting now, as well as the studies in Phase III that we hope to enter, pending positive clinical readouts. So it's kind of a mix. I think that, obviously, if there was a great upfront that was kind of fully capturing the value, we would look heavily at that and maybe prioritize that. But I think the way it's going to look is there's going to be a sprinkling of upfront milestones and royalties.


And ladies and gentlemen, this concludes today's Q&A session. I would now like to turn the call back over to Craig Wheeler for any closing remarks.

Craig Wheeler -- President and Chief Executive Officer

Sure. Thank you, and I'll just speak briefly. Thank you very much for attending the call. We always appreciate the questions and look forward to keeping you updated as this exciting year evolves.

Thank you, everybody.


[Operator signoff]

Duration: 38 minutes

Call Participants:

Patty Eisenhaur -- Vice President of Investor Relations and Corporate Communications

Craig Wheeler -- President and Chief Executive Officer

Michelle Robertson -- Chief Financial Officer

Derek Archila -- Stifel Financial Corp. -- Analyst

Santiago Arroyo -- Chief Medical Officer

Danielle Brill -- Piper Jaffray -- Analyst

Eric Joseph -- J.P. Morgan -- Analyst

Young Kwon -- Chief Business Officer

Bill Maughan -- Cowen and Company -- Analyst

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