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Arqule Inc (ARQL)
Q4Â 2018 Earnings Conference Call
March 07, 2019, 9:00 a.m. ET
Contents:
- Prepared Remarks
- Questions and Answers
- Call Participants
See all our earnings call transcripts.
Prepared Remarks:
Operator
Good day, ladies and gentlemen, and welcome to the ArQule Fourth Quarter and Full Year 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions on how to participate will follow at that time. (Operator Instructions) As a reminder, this conference call is being recorded.
I would now like to introduce your host for today's conference Mr. Marc Schegerin, Senior Vice President and Head of Strategy and Finance at ArQule. Sir, you may begin.
Marc Schegerin -- Senior Vice President and Head of Strategy, Finance and Communication
Thank you. Good morning, everyone and welcome to the ArQule investor conference call reviewing operational and financial results for the fourth quarter and full year 2018. I am Marc Schegerin, Senior Vice President and Head of Strategy and Finance at ArQule. This morning we issued a press release, the reported results for the fourth fiscal quarter ended December 31st, 2018. This release is available on our website at arqule.com. Leading the call today will be Paolo Pucci, Chief Executive Officer at ArQule. Also present from the Company are Peter Lawrence, President and Chief Operating Officer; Dr. Brian Schwartz, Head of R&D; and Rob Weiskopf, Chief Financial Officer.
Before we begin, please note that we'll be making forward-looking statements as defined in the Private Securities Litigation Act of 1995. These statements will include, among other things, projections regarding the timing of key events related to ArQule's proprietary pipeline and financial guidance for 2019. Actual results may differ materially from those projected in the forward-looking statements due to numerous risks and uncertainties that exist in ArQule's operations, development efforts and the business environment, including those factors discussed in our reports on Forms 10-Q and 10-K and other documents filed with the Securities and Exchange Commission.
The forward-looking statements contained in this call represent the judgment of ArQule as of today. ArQule disclaims any intent or obligation to update any forward-looking statement except to the extent required by law. We'll provide an opportunity for Q&A at the end of this call.
I'd now like to introduce the CEO of ArQule, Paolo Pucci.
Paolo Pucci -- Director and Chief Executive Officer
Marc, thank you very much. Thank you all for joining us on the call this morning. I will begin to say that 2018 has been for ArQule, a very productive year and possibly we laid the foundation for further advancement into 2019. As a way of getting everybody organized on how the call will proceed, I'll offer upfront a couple of comments on the strategic scope of our business. A couple of updates, since we last met on the phone. I will then reconcile the achievement of objectives for 2018. I will outline then objectives for 2019. Brian, will elaborate further on the update, I will have provided as well as the status of all of our clinical programs. Rob, will then help us through the reconciliation of 2018 full year, as well as Q4 and provide guidance for 2019. After that, we'll be happy to take questions.
So let me first start to remind everybody on the strategic intent we are pursuing with each one of our programs. We are working in BTK mutated B-Cell malignancies with ArQule 531. And here, we squarely aim to be first and best-in-class in this new approach of reversible dual BTK inhibition in CLL as well as lymphomas. We are also engaged in the rare overgrowth disease spectrums with Miransertib, which is our first-generation AKT inhibitor. And here, we aim and we are first and best-in-class for both Proteus syndrome and PROS, which is a collection of overgrowth disorders. And we work finally in hormone-sensitive tumors with ArQule 751 and to a lesser extent with Miransertib. And here, we aim more modestly to be a possible lower next-generation AKT inhibitor in the class.
Let me now provide just two updates to set the tone of the call. The first relates to ArQule 531. I am glad to report that since the ArQule 531 presentation at ASH last December, we have observed our first C481S CLL patient dose in cohort 7 at 65 milligram QD to respond to ArQule 531. The response was a deep one and in fact the patient experienced an 88% tumor burden reduction after the first scan. This is the second partial response that we observed so far in this trial, but is a very important one because these patients represents the patient population that would be our fast-to-market opportunity with ArQule 531, which would be second and third line CLL patients that have the C48 -- develop the C481S mutation. So we very encouraged that we were very happy to see such a deep response at the higher dose, as we were hoping and to come so quickly.
I have also a second positive update this morning and that relates to Miransertib. For Miransertib, in rare overgrowth spectrum disorder, we have concluded interactions with the FDA, relative to the design of our proposed registrational programs in Proteus and PROS as well. And we plan now to initiate registrational trials in both disorders as soon as possible. This has been a long journey, but finally, we are now in sight of the goal line. As we approach launching registrational trial cohort in both Proteus syndrome and PROS disorders, I would like to take a moment to clarify something that might have been missed by most followers of the Company until this point. That is that the Miransertib opportunity in rare overgrowth disorder has grown larger than we originally anticipated it to be when we started to discuss it three years ago. Three years ago, we focused exclusively on Proteus and along the way and we have presented data to support it, we came to understand that what we have been observing in Proteus syndrome relative to the efficacy of Miransertib could be even to be absorbed in PROS. This makes a big difference commercially for the drug potentially because although, it's true that Proteus syndrome and as an ultra-rare syndrome that affects only few hundred people worldwide, is also true that the totality of rare overgrowth spectrum disorder PROS that we are now targeting with Miransertib, potentially numbers in the thousands of patients.
As I said, therefore, we are launching multiple cohort registrational programs that should allow us to develop Miransertib to its full potential in rare diseases as a pipeline in the drug for having -- as a scope of the therapeutic treatment overgrowth spectrum disorders. Nearly all these disorders I remind you present a dramatically unmet medical need. Brian, will provide a few more comment.
Now for 2018, let's reconcile some of the highlights or in some of the achievements. First of all, for the Company overall. For the Company overall, we partnered Derazantinib in February with Sinovant Sciences and later on in April with Basilea Pharmaceutica. And as of now, the drug is entirely in the hands of our partners and it will produce for us milestones and royalties assuming that everything proceeds as hoped. We also strengthened ArQule capital structure and in July, we had the successful and oversubscribed $70 million public offering. Finally, as a recognition of the process that the Company has made and the improvement in market capitalization, we regained listing in June to the Russell 2000 Index and in December to the NASDAQ Biotechnology Index.
Let's move on to projects specifically now. ArQule 531 in mutated B-Cell malignancies. We recruited on schedule the Phase 1 trial and commenced recruitment of cohort 7 in Q4 of 2018. We also had numerous presentations during the year. The most important presentation were in June at EHA and in December at ASH. And also, we published together with our collaborators at Ohio State University. In August, we published in Cancer Discovery foundational clinical paper -- preclinical paper that includes ArQule 531 chemical and crystal structure. The totality of these presentations and publications, I would say makes ArQule 531, the best peer-reviewed and the best published reversible BTK inhibitor to date.
Moving on Miransertib in rare overgrowth spectrum disorder. Here as well, we have a few achievement to remind you of. In September, we achieved Fast Track Designation by the FDA. We presented at ASHG several sets of data that are supportive of further development and were part of our discussions with the FDA. And we maintain in fact with the FDA constructive dialog that led us to the point where we are today of having a clear understanding of what would be agreeable registrational protocols for Proteus syndrome and PROS.
Moving onto ArQule 751. In 2018, we completed the dose escalation and we select 75 milligram QD for next phase dose and we commenced the Phase 1b/2. Derazantinib, although, we partnered that we had some remaining obligations to our partners in the way of transferring the drug to them, those were as well as timely and to do -- to wishes of our partner. And this is important because Derazantinib, it could be the enabler of future non-dilutive cash inflows for us. This is the 2018 summary and as you could see, it's a very, very dense but very productive year for us. And that sets us up for 2019.
And let me illustrate the key goals that we are aiming for that year -- for this year. For ArQule 531, we plan to establish a recommended Phase 2 dose and rapidly commence expansion cohorts at that dose. We also plan to present additional Phase 1 data this summer at the major conference. For Miransertib in rare overgrowth spectrum disorders, we plan to initiate registrational cohorts as I described before. One in Proteus syndrome and one in PROS family at the minimum. With the patient numbers and endpoints having been agreed with the FDA. And Brian, will give you some details about patient numbers and endpoints later on.
For Miransertib and more importantly ArQule 751 in AKT pathway driven hormone-sensitive cancers, we plan to continue doing ongoing trial and present data as it becomes available. Please note that although Miransertib is progressing now decisively in orphan diseases with a broader program than originally anticipated, we are bringing nonetheless to completion the ongoing Phase 1b part of the trial in endometrial cancer. So that we can add to the body of data available to us to assess both of our AKT inhibitors in rare disease as well as in oncology.
Now, let me turn the call to Brian, who beginning with 531 will give you more details.
Brian Schwartz -- Chief Medical Officer
Thank you, Paolo. Let me start with ARQ 531, ARQ 531 is a potent reversible dual inhibitor of both wild-type and C481S-mutated BTK. As a baseline please recall that in the ASH poster, we reported that anti-tumor activity with reduction in tumor burden was observed in nine out of 20 patients. Four of the five lymphoma patients experienced tumor shrinkage ranging from 27% to 58% including one PR in a follicular lymphoma patient who began at 5 milligram and was dose-escalated to 15 milligram and then 45 milligram and remained on therapy after 70 weeks.
Four of the five BTK refractory heavily pretreated CLL patients in the highest cohorts experienced tumor shrinkage. Since ASH in the BTK inhibitor refractory patient group, we have observed our first partial response in a C481S-mutated CLL patient who experienced an 88% reduction in tumor volume at the first scan. This was the first patient with a C481S-mutant BTK mutation enrolled in cohort 7 at 65 milligrams QD, who had failed three prior regimens, including Acalabrutinib. Regarding the safety and the dose escalation since ASH, ARQ 531 continues to be well tolerated. However, one patient in cohort 7 at the 65 milligram experienced a grade 3 rash, which according to the protocol was a dose limiting toxicity.
To put this in context, rash is a side effect associated with multiple TKIs and has been reported with other BTK inhibitors. This patient specifically, who was on multiple concomitant medications, including a BTK inhibitor also experienced a rash on prior earlier lines of therapy. Cohort 7 has been expanded for protocol, two additional patients at 65 milligrams have cleared and we are eagerly awaiting the third patient to clear. At this point, we would be in a position to dose escalate beyond 65 milligram QD, as well as dose increase all the patients who are on 45 milligrams to 65 milligrams. Pharmacokinetic data continues to be predictable with a half-life that supports QD dosing. Pharmacodynamic biomarkers in cohort 7 continue to demonstrate profound BTK -- Phospho-BTK reduction of 100%.
In summary, we are very pleased with the progress we continue to make in this trial and specifically with the dose dependent clinical activity that is emerging at the higher dose levels in second and third line C481S-mutant CLL patient population. In the two months that followed the ASH presentation, we observed further clinical activity, which corresponds with preclinical modeling and emerging PK and PD data. With increasing dose above 30 milligram QD, we observe a more than dose proportional increase in exposure. In an upcoming abstract, will include the data that was available as of mid-February. As mentioned, we are planning for this summer a follow-on presentation that will include all data available at that time.
Let me now transition to Miransertib in rare overgrowth spectrum disorders, where miransertib is a potent and selective AKT inhibitor. Our objective is to be first and best-in-class AKT inhibitor in Proteus syndrome and PROS family of rare overgrowth diseases. This family of diseases is ultra-rare, very heterogeneous and the patients currently suffer from a dismal quality of life and in some cases, early mortality. We are not aware of any other effective or disease modifying treatments. Since we last reported, we have been in contact with the FDA and submitted a proposal for a registration program in Proteus and PROS.
We have wonderful news for patients. The FDA responded to our proposal with minor comments that have been addressed in our final draft protocol. We are pleased to report that we are now positioned to commence a registration trial in both Proteus and PROS syndrome. This will be the first such program to be launched. To remind our listeners, Proteus syndrome is caused by a gaining function, somatic mutation in AKT1 gene. The PROS syndrome consist of a family of diseases, but all have a gain of function mutation in the PIK3CA gene and include diseases such as Klippel-Trenaunay syndrome, CLOVES, megalencephalies, infiltrating facial lipomatosis and many others.
We would like to express our appreciation to the patients and families, who have participated in the Miransertib programs thus far and all our scientific collaborators. The registration program will -- is one protocol divided into a number of different cohorts. The three important cohorts include, the first cohort will focus on Proteus syndrome and will enroll at least 10 patients; the second cohort will focus on PROS family of overgrowth disorders and will enroll at least 20 patients; the third cohort at the suggest of the FDA will be signal generation and will include patients from either group, who did not qualify for cohorts 1 and 2, but may otherwise benefit from treatment.
These cohorts will be open label and the primary endpoint will be response rate driven, based on objective measurable criteria using predefined imaging. We are currently enrolling additional sites and expect to begin dosing as soon as possible. The signal generation work for Miransertib and ARQ 751 in oncology continues with the aim of prioritizing one of these two compounds by late 2019. We have substantially completed the -- finally, we have substantially completed the transfer of Derazantinib Phase II registration trial to Basilea and I'm pleased to read the announcement relative to the successful futility analysis that they conducted.
Now, I would like to hand over the call to Rob, who will provide financials for Q4 and end of year 2018.
Rob Weiskopf -- Chief Financial Officer and Treasurer
Thank you, Brian. Turning now to the financials for the quarter ended December 31st, 2018, the Company reported a net loss of $8,487,000 or $0.08 per share, compared with a net loss of $7,760,000 or $0.09 per share for the quarter ended December 31st, 2017. The Company reported a net loss of $15,482,000 or $0.16 per share for the year ended December 31st, 2018, compared with a net loss of $29,203,000 or $0.39 per share for the year ended December 31st, 2017. At December 31st, 2018, the Company had a total of approximately $99,558,000 in cash, equivalents, and marketable securities.
Revenues for the quarter ended December 31st, 2018 were $2,941,000, compared with zero for the comparable 2017 quarter. Research and development revenue for the quarter ended December 31st, 2018 consisted of $93,000 from our February 2018 Sinovant licensing agreement and $2,848,000 from our April 2018 Basilea licensing agreement. Revenues for the year ended December 31st, 2018 were $25,764,000, compared with revenues of zero for the prior year. Research and development revenue for the year ended December 31st, 2018 consisted of $5,946,000 from our February 2018 Sinovant licensing agreement, $18,549,000 from our April 2018 Basilea licensing agreement and $1,269,000 from a non-exclusive license agreement for certain of our library compounds.
Turning to expenses, fourth quarter 2008 (ph) research and development expenses were $8,850,000, compared with $4,721,000 for the fourth quarter of 2017. Fiscal 2018 research and development expenses were $28,710,000, compared with $19,468,000 for fiscal 2017. The $4.1 million increase in research and development expense in the fourth quarter of '18 compared with the fourth quarter of '17 was primarily due to higher outsourced preclinical, clinical and product development costs of $3.5 million and $0.6 million for labor and related costs. The $9.2 million increase in research and development expense in 2018 was primarily due to higher outsourced preclinical, clinical and product development costs of $8.5 million and $0.7 million from labor and related costs.
Fourth quarter 2018 general and administrative expenses were $2,739,000, compared with $1,849,000 for the fourth quarter of 2017. General and administrative expenses for fiscal 2018 were $10,753,000, compared to $7,551,000 for fiscal 2017. The $0.9 million increase in general and administrative expense in the fourth quarter of 2018 compared with the fourth quarter of '17 was principally due to higher consulting and professional fees of $0.4 million and labor and related costs of $0.5 million. The $3.2 million increase in general and administrative expense in 2018 was principally due to higher consulting and professional fees of $2.1 million and labor and related costs of $1.1 million. Turning now -- we anticipate that our cash, cash equivalents and marketable securities on hand at December 31st, 2018 financial support from our license agreements and our loan agreement will be sufficient to finance our operations into 2021.
Let me now turn to financial guidance for 2019. ArQule expects revenue to range between $3 million and $5 million; net loss is expected to range between $40 million and $43 million and net loss per share to range between $0.37 and $0.39 for the year. ArQule expects to end 2019 with between $60 million and $63 million in cash, equivalents and marketable securities.
With that, I'd like to hand the call back to Paolo.
Paolo Pucci -- Director and Chief Executive Officer
Thank you, Rob for the overview. And operator, we are ready to take questions, if there is any in the queue.
Questions and Answers:
Operator
Certainly. (Operator Instructions) Our first question comes from Jonathan Chang with SVB Leerink. Your line is now open.
Jonathan Chang -- SVB Leerink -- Analyst
Good morning and thanks for taking my questions.
Paolo Pucci -- Director and Chief Executive Officer
Good morning.
Jonathan Chang -- SVB Leerink -- Analyst
(multiple speakers) on 531, so I'll preface my questions by saying, I may have missed some of the details on the prepared remarks, but can you provide any additional color on the patient responding to 531, has this patient received only once again at this time. And how many patients have been evaluated at this time in cohort 7?
Paolo Pucci -- Director and Chief Executive Officer
At this point in time, this is the one patient for whom we have a scan and had received prior year three lines of therapies as Brian had mentioned, that's all we have for now. Brian, was that correct?
Brian Schwartz -- Chief Medical Officer
Correct. So Jonathan as per protocol, we enrolled actually the first-four, two lymphomas, two CLL patients. We'll give more color obviously at the next update and then with -- and then expanded the cohort subsequently.
Paolo Pucci -- Director and Chief Executive Officer
Yeah. Remember that these patients gained quick -- it was one of the early recruits in late last year. We scan every couple of months, so we are two months away from last year December.
Jonathan Chang -- SVB Leerink -- Analyst
Understood. So if I heard you correctly, this was the first evaluable patient?
Paolo Pucci -- Director and Chief Executive Officer
Yeah. This was the first evaluable CLL mutated patients of the two that we have in that cohort. Yes.
Jonathan Chang -- SVB Leerink -- Analyst
Got it. And then you certainly also have emphasized on this call and previously, the importance of getting patients in an earlier line CLL patient population versus the data you presented at ASH. Any color on just generally how enrollment is going currently in terms of finding patients within an early line patient population?
Paolo Pucci -- Director and Chief Executive Officer
So it's interesting that the first patient to respond with a deep response, I would say, is only three lines of therapy not six or seven, as we had seen before. And I think the median now is round about five to six point something. So that kind of speaks to the discussion we have had before, that is important to recruit patients that more closely respond to the profile that we would aim in a registrational trial, second and third line. The quality of the patient measured by prior line of therapies is improving. It's a little behind there to discuss ability to recruit, if you put in the context of a much larger trial because we're still recruiting single number patients, but we are encouraged by the fact that as soon as we needed to deploy the three -- plus three module for cohort 7, three patients were very quickly recruited on. We also still have a mix between CLL, C481S-mutated and a lymphoma patients. But we're not seeing issues recruiting at this point in time.
Jonathan Chang -- SVB Leerink -- Analyst
Got it.
Paolo Pucci -- Director and Chief Executive Officer
This is state-of-the-art update for us. So you will see -- let me talk about what Brian mentioned, so that everybody understands it. You will see a shell for a congress come out in the next couple of months. That shell will have pretty much data as we are discussing now. Okay, so that's what Brian was saying. So then when we get to summer, we will have another April, May, kind of some of June -- March, April, May and the piece of June data, so another three months of data. So there will be a few additional scans in the final data set. So we're looking forward to that update this summer.
Jonathan Chang -- SVB Leerink -- Analyst
Got it.
Paolo Pucci -- Director and Chief Executive Officer
But highly encouraged to see 88%. Let me put it perspective, the only clinical paper that mentions responder in a C481S patients that we don't know how many prior line of therapies that patient had. He might have had none, is in the GDC paper, in the Genentech paper and that patient responded with a tumor shrinkage of only 51%. So for us to see the second ever patient responding to know that the patient had received a prior irreversible BTK inhibitor and to see such a deep shrinkage. It was very encouraging. Now obviously, next step for those patients is to see how durable is going to be.
But let me talk a little bit about durability. The other patients out of the 20, also we have recruited so far, that is patient number one, that we reported as a responder is the lymphoma -- we reported that patient as a responder in the ASH presentation, that patient is still on therapy. So that makes me hopeful at least by looking at that, although it's a lymphoma in another CLL that once we see a response there -- response is durable. And we have also Brian, approximately patients at 45 that are waiting to be escalated to 65. Those are -- the future is getting clearer and more positive.
Jonathan Chang -- SVB Leerink -- Analyst
Right. No, but definitely. Thanks very much for the clarity. A couple more, if I may. As you've spoken in the past about potentially dose escalating beyond cohort 7. How are you thinking about this currently?
Paolo Pucci -- Director and Chief Executive Officer
So we are thinking about it as -- ideally, we would like to have three buckets of data available to us if possible in summer time. We would like to have our first bucket of data that is the patients that are at 45 that we hope to escalate to 65, that they will have a certain set of information because these would be patients that have been long on the drug. So we have long-term safety that is highly unusual to have in a Phase 1 study and we will see if moving them yet one more notch up in dose generate even better therapeutic outcomes. So that's one bucket of data.
Then we will have these expanded cohort 7 data that is fewer patients -- there is another six patients or so. So about eight patients there, about six patients here. And then, if this cohort 7 clearance and we are one patient that way at this time, then at that point in time given that all we have observed so far is rash and remember as Brian said, these patient had already developed a rash on one of the prior three therapies that might include a irreversible inhibitor. Then you might have that bucket of data.
Now if we are able to get cohort 8 bucket of data that's going to be a really very initial, so we're not going to have a lot more data on that cohort, than we have on cohort 7 right now. But if there is no plan of the -- in looking at cohort 7, at cohort 8, we will do it. What needs to be very well understood during this call is, if we go to a cohort 8, it doesn't mean that we stop other things. Everything proceeds -- will proceed in parallel. So you will have now rather than one cohort after the other you will have these three streams of data proceeding in parallel and converging toward a end of Phase 1, the season for next phase recommended dose.
What you don't see and we don't discuss on the call, but you should keep in mind is that we are already working for clinically at -- lay the foundation for combinations as well. As we discuss, the combination strategies stagnating that we will discuss later in the year, but we are doing the work on a couple of very interesting combination both in CLL and lymphoma, and you can imagine what those combination agent might be. I hope that clarifies.
Jonathan Chang -- SVB Leerink -- Analyst
Great. That's helpful. And sorry, just one last one. I don't know if I heard you correctly, you mentioned you're expanding cohort 7?
Paolo Pucci -- Director and Chief Executive Officer
Cohort 7 is expanded as per protocol because the protocol calls that once you have a DLT in, the rash was adjudicated as a DLT, then, you add three more patients and if those three patients clear with no additional DLT then you automatically can escalate to the next cohort. Now, cohort 7 was intended to be the last of our cohorts. And you were asking, we can see the cohort 8 and the answer that I just gave a little bit more complex. To give a straighter answer is, yes, we will consider cohort 8, if cohort 7 clears nicely and we are one patient away from that goal.
Jonathan Chang -- SVB Leerink -- Analyst
Got it. Thank you very much for taking my questions.
Paolo Pucci -- Director and Chief Executive Officer
No problem. Thank you.
Operator
Thank you. And our next question comes from Chad Messer with Needham & Company. Your line is now open.
Chad Messer -- Needham & Company -- Analyst
Great. Good morning. Thanks for taking my questions.
Paolo Pucci -- Director and Chief Executive Officer
Good morning, Chad.
Chad Messer -- Needham & Company -- Analyst
Congrats on these exciting updates this morning.
Paolo Pucci -- Director and Chief Executive Officer
Thank you.
Chad Messer -- Needham & Company -- Analyst
Can you just remind us for 531 where we are in the dose escalation based on the preclinical data you had with safety and efficacy? Are we up -- at the high range of where you predicted to be? I know 7 originally was where we are going to stop.
Paolo Pucci -- Director and Chief Executive Officer
Yes. I mean, we are pretty much there and as Brian said, the exposures become more than those proportional this time. Brian, I don't know if you want to add anything?
Brian Schwartz -- Chief Medical Officer
I mean, Chad with all these agents, it's difficult to know in different species where the top end of the safety margins lie. But if we look at the good PK, the semens (ph) we currently achieving now in cohort 7, we are not far away from the safety margin we saw in other species.
Chad Messer -- Needham & Company -- Analyst
Okay. Understood. We can't continue to look for...Â
Paolo Pucci -- Director and Chief Executive Officer
So, retrospectively, Chad, if you look at the range of doses, I mean it's probably useful to remind that. We have started with 5 milligram once a day QD. Correct, Brian? And we are now at 65. So, it is a very, very broad range from cohort 1 to cohort 7. And for those people that are new to the story, and I have 30 plus people in this call it seems. Let me also remind you that we started at such a low dose because, we did not have a healthy volunteer study at the time. And so, not having that data in discussion with -- and having a potent drug in discussion with the regulatory agency, it was deemed best to start at that low 5 milligram dose. Just to give people -- the new people on the call perspective.
Chad Messer -- Needham & Company -- Analyst
Okay. Great. And I also don't want to, in anyway, overshadow the progress you're also reporting with Miransertib today with the regulatory update. You mentioned that the primary endpoint is going to be response driven and on pre-defined imaging. Just wondering if that's something you're still working out or was that pretty well laid out in the proposal that you have sent to FDA?
Brian Schwartz -- Chief Medical Officer
So Chad, that's pretty much worked out. For the Proteus syndrome patients, we will be using a photographic tool in a pre-defined way to determine response. For the PROS syndrome, we will be using something similar to what was used in Neurofibromatosis with volumetric MRIs with observing a pre-defined change and using a responder analysis. So, there is a cut-off. Patients will either be defined as responders or non-responders based on the change in the size of the lesions either on photography for Proteus or on volumetric MRIs for PROS.
Chad Messer -- Needham & Company -- Analyst
All right. Very exciting to have that worked out. Most certainly, sounds like -- certainly like doable endpoints.
Paolo Pucci -- Director and Chief Executive Officer
Yeah. And Chad to help our current and potential investors, we are preparing a presentation that we will likely upload in next couple of months on our website that will give a good overview of the disease. It will be a very good introduction to the overgrowth syndrome category, so that people can run the diligence and really get -- convince on their own that this really could be a low stand-alone rare disease company with few dozen patients as a potential target eventually. So, we will come around and discuss once it is ready.
Chad Messer -- Needham & Company -- Analyst
All right. Great. Thank you.
Paolo Pucci -- Director and Chief Executive Officer
Sure.
Operator
Thank you. And our next question comes from Jotin Marango with Roth Capital. Your line is now open.
Jotin Marango -- Roth Capital -- Analyst
Good morning. Congrats on all the progress.
Paolo Pucci -- Director and Chief Executive Officer
Thank you, Jotin. Good morning,
Jotin Marango -- Roth Capital -- Analyst
I will pivot and focus on the AKT orphan program a little bit, because I mean it sounds like it's moving to a registrational stage now?
Paolo Pucci -- Director and Chief Executive Officer
Yes.
Jotin Marango -- Roth Capital -- Analyst
So we have spoken about the prevalence in Proteus before in our calls. What are your estimates or thoughts about PROS, since this is now suddenly a tangible add-ons to the story even though it's complex, because it's composed of multiple disorders?
Paolo Pucci -- Director and Chief Executive Officer
So Jotin, Marc has been doing most of the work to strike out the epidemiology in the other diseases. So, he'll take the -- he will give the answer. Marc?
Marc Schegerin -- Senior Vice President and Head of Strategy, Finance and Communication
Yes, please. Hi, Jotin, how are you? Yeah. We've done a lot of work internally to tease apart this fairly complex spectrum of disorders. There are several diseases, which in the past were named for the most part after the doctors who discovered them. But, once the genetic cause of this constellation of diseases was better understood or relating to the PIK3CA gene which codes as for PI3Kinase. It was much more obvious that these diseases are actually very closely related and could therefore be treated along that a common pathway.
So, some of these diseases include relatively more common one, such as Klippel-Trenaunay, others that are a little bit less common such as infiltrating facial lipomatosis and others that are in the middle. There is a group of diseases that in past have been given various monikers of megalencephaly, but these are groups, if you were to put them in a Venn diagram would overlap substantially. Also CLOVES is -- CLOVES is an acronym for the different signs and symptoms of the disease and its presentation. It is also a fairly well documented and relative to all these diseases, relatively well understood and documented disease.
In terms of the epidemiology, collectively these things clearly number in the thousands. Some of the diseases individually though, at least in terms of specific patient reports, in other words, identified patients in the literature, number in the hundreds. So KTS or Klippel is probably thousands of patients that have been identified in the, call it developed world, most of identified patients are identified in the developed world for obvious reasons, actually.
In terms of the real prevalence, that of course is a little bit unknown, since there are no treatments for a lot of these various severe conditions, other than surgical amputation of the affected limb or digit or what have you. And the diagnosis is fairly -- it's not always very accurate in certain community settings. There's probably a tremendous under diagnosis and honestly, the importance of an accurate and timely diagnosis is not that high, when you don't have an effective treatment for that -- for the disease. So, we hope to change all that, but clearly, there is a huge market out there in a very, very high unmet need for these -- primarily children who are suffering from these conditions.
Jotin Marango -- Roth Capital -- Analyst
And Marc, when it comes to the recruitment of these patients, are there pockets where they are primarily referred to untreated. So basically, how far do you have to go in terms of getting centers in order to cover a good portion of the actual prevalence?
Marc Schegerin -- Senior Vice President and Head of Strategy, Finance and Communication
Absolutely. So, there's two parts to that question. The first one is that the actual prevalence of the disease is uniformly dispersed. So, there's no ethnic -- it's a pan-ethnic condition and all of these conditions arise from a spontaneous mutation drilling during early embryological development. So that the prevalence is spread, unlike some other rare genetic diseases that track in families et cetera, like FAD or TTR amyloidosis, so it's spread. However, the actual treatment of these patients because of referral, upon referral, upon referral tends to cluster in the most academic specialty centers. That's true in the US, but it's also true we've seen in Europe. So there is a clustering of the patients in terms of where they are being treated not, where they're being born or where they live, but where they're being treated in the PIE academic centers both in the US and the EU. And since we've been working on these conditions now for several years, we've developed relationships with the KOLs and the treating physicians at these academic centers, starting with the NIH, but also many other centers in the US and EU and Australia. And so we have a bit of insight into where these patients are and how to reach them in terms of trial recruitment for the next phase.
Paolo Pucci -- Director and Chief Executive Officer
And Jotin, -- go ahead, go ahead.
Jotin Marango -- Roth Capital -- Analyst
No, lastly for Marc or Brian. You mentioned Paolo that with the protocol, you're aiming at 10 plus patients on one cohort and 20 plus on the PROS. So what's your estimate -- sort of having seen the prevalence of these patients, what is your estimate about development timetable here in terms of recruitment for this cohort. And then how long you will see the protocol treatment until the imaging endpoints?
Brian Schwartz -- Chief Medical Officer
So very good question. It's rarely hard to determine how long accrual will take. However, I will say we have a real wonderful relationship with the advocacy groups who have provided us for example over 30 names of potential Proteus patients. How many actually qualify and get onto the study would be very difficult and hard to know. We anticipating based on the work, the feasibility work that we've done that it will take about a year to enroll the Proteus patients and we following them for a minimum of a year. So the last patient will be followed for a year before we do the primary analysis.
For PROS, as Marc mentioned, in most big pediatric centers have these overgrowth and vascular disordered clinics, and the numbers are actually quite big. Once again, it will all depend on the criteria laid out in the protocol with -- which is primarily related to the imaging criteria for these patients. But once again, we're anticipating about a year to enroll the 20 PROS and about a year to follow-up before we'd be ready to run the final analysis.
Paolo Pucci -- Director and Chief Executive Officer
Yeah. The good thing is that we don't have to stop what we're doing. Correct, Brian, and start the whole new process of the new trials, Right?
Brian Schwartz -- Chief Medical Officer
Correct.
Paolo Pucci -- Director and Chief Executive Officer
So you might want to describe how we're going to move seamlessly from the current trial into the next.
Brian Schwartz -- Chief Medical Officer
So basically Jotin, very much like the PD-1 inhibitors did with our open new cohorts, we will just be opening within the current trial, multiple cohorts that we will enroll into.
Paolo Pucci -- Director and Chief Executive Officer
Yeah. So when you look more precise time horizon Jotin, you're looking at up to 12 months from now to recruit and then depending on when we are able to recruit the last patients another 12 months in order to have the data. This said, there are things that happened in between. One thing is that we have a designation by the FDA, that allows us to go back to them anytime for interactions. So at anytime, they can take decisions. If the evidence is very compelling, they could take decisions at anytime. And we will certainly solicit those decisions if the evidence is compelling.
In addition, also on the regulatory front, we are in the process of collecting additional data from our compassionate side that has really spread out around the word because if the evidence continuous compelling, then we have the opportunity to file for a breakthrough designation, which will very much be top of mind for me in the business plan. It's a process that has just started and therefore I have mentioned it formally in our objectives, but it's something that it's top of mind for us.
Last thing I want to say is, although, we are starting a formal registrational trial, we are going to try to continue to have however many patients we can, wherever they might be in the world provided that the physician that he is asking on the patient behalf for our help, fulfills the requirement of our global named patient compassionate use. The only thing we would ask of our compassionate use request is, is that, if there is the opportunity for them to be enrolled in the trial, they do that rather than receive drug as compassionate, but we will try not to leave any by their behind.
Jotin Marango -- Roth Capital -- Analyst
Thank you for all the extra nuance and congrats again.
Paolo Pucci -- Director and Chief Executive Officer
Thank you, Jotin. See you in LA.
Operator
Thank you. And our next question comes from Matthew Cross with Jones Trading. Your line is now open.
Matthew Cross -- Jones Trading -- Analyst
Hi, guys. Good morning and congrats on the positive new developments from 531 and Proteus PROS.
Paolo Pucci -- Director and Chief Executive Officer
Good morning. Thank you.
Matthew Cross -- Jones Trading -- Analyst
Had a couple of questions here on both of those programs. So at this point you've laid out quite well I think how the 531, 7th cohort expansion will play out, but wanted to also ask a bit more about this other bucket of patients who will be dose escalated from the lower dose level cohorts. You mentioned dose escalating those that were at 45 milligrams who are ongoing in the trial, but was also curious about both how many of these you would expect at this time are suitable to do so. And also as of your ASH data, I believe you had two patients still ongoing at the 30 milligram dose. And would you consider pushing up a few of these patients who are more than one dose level below 65 milligram to that level as rapidly as possible and as tolerated?
Paolo Pucci -- Director and Chief Executive Officer
I mean if the medical staff here and our physicians judge that a patient can be escalated, then they will escalate them, no question about it. The limit to escalation we have right now is 45, because that is the cohort that protocol has cleared, as soon as cohort 6 clears, there is a number of patients that the physicians are very eager to escalate. And I don't know about the 3, but the total number today is round about 8 patients.
Brian Schwartz -- Chief Medical Officer
Of this CLL patients, the 30 milligram and the 45 milligram cohort, they still -- they all on going as of the last February 15th update.
Matthew Cross -- Jones Trading -- Analyst
Great. Sure. And then, Brian, I appreciated the breakdown here on the cohorts you are looking to enroll in the Proteus, PROS registrational trial with these two arms dedicated to patients in each indication group, but was hoping to get a bit more clarity on this third group of patients, who don't meet the criteria for the core Proteus or PROS arms. Could you kind of go into which criteria would disqualify them from entering these first two groups, but still allow them to participate in the third one, rather than being excluded altogether?
Brian Schwartz -- Chief Medical Officer
So there were a number of factors that we really want to consider because we've only got a small number of patients for our response analysis. The criteria for coming into cohort 1 and 2 in terms of imaging are relatively strict. So for example, we believe that the disease grows most rapidly in children. So over a certain age, let's say, a patient is 19 years old with Proteus, he would fit into bucket 3. Other criterias, a lot of them have had amputations, so the certain lesions may not be valuable, but we've may be able to evaluate the disease using other treatment modalities.
And then the FDA really wanted to get a good feel for safety in a slightly broader population, as well as the individual effect on quality of life in a bigger group. So this extra cohort gives you the ability in terms of a secondary or tertiary analysis to not only look at 10 or 20 patients, but to look at 60 odd patients when you run, for example, quality of life, pain and other secondary endpoints.
Paolo Pucci -- Director and Chief Executive Officer
Hello?
Matthew Cross -- Jones Trading -- Analyst
Sorry, apologize I just have self muted. I was -- wanted to follow-up just a little bit sorry, I could confirm there on the fact that last cohort, you would expect to be quite large relative to the other two, in making these quality of life assessments. Is that fairly you said I guess if I heard correctly about (multiple speakers)?
Brian Schwartz -- Chief Medical Officer
That is about 20.
Matthew Cross -- Jones Trading -- Analyst
Okay.
Brian Schwartz -- Chief Medical Officer
16 total. So, as I said, approximately 25 is what we thinking would come into the trial in the timeframe.
Paolo Pucci -- Director and Chief Executive Officer
So let me add a couple of unscientific words. We are with these diseases in uncharted waters and we are together with some more scientific collaborator drawing the map for these uncharted waters. And so the discussion with the regulatory agency was let's give either two of the parts, as much flexibility as necessary to make decisions on the basis of the data and let's produce this data in a way that is conducive to scientific decisions. That's the spirit in a way of the program.
And there is a very good by now understanding of Proteus syndrome endpoints included. There is a good understanding for some of the other overgrowth and there is things that have yet to be learned. Now the beauty of putting that cohort is that as we will learn these things, the data will be producing such a way that they can be the subject of a regulatory discussion. And that's unlike some of the effort we have had so far that we are primarily meant to bring therapy to patients that really were on their last chance, right.
Matthew Cross -- Jones Trading -- Analyst
Got it. No it's a very creative design for kind of tracking out the path yourselves in this indication and then glad to see the regulators are on board with it. So looking forward to a productive 2019 as well. Thanks, guys.
Paolo Pucci -- Director and Chief Executive Officer
All right. Thank you.
Operator
Thank you. (Operator Instructions) Our next question comes from Hartaj Singh with Oppenheimer & Company. Your line is now open.
Hartaj Singh -- Oppenheimer & Company -- Analyst
Great. Thank you. Thank you all for the questions. And I really appreciate the very granular update Paolo, Brian, Marc. I just had two questions, one is a kind of a general question and One, just on a housekeeping question. The general question is, Brian, there's been quite a lot of changes last year or two years in leukemia and lymphomas, you've got in leukemias, venetoclax now out there. You got, I think your data just presented at a recent conference on venetoclax in combination with various other therapies in leukemias where BTK is also in combination therapies. You've got CARTs in lymphoma.
So my question is, as you're going forward with the experience you have with the 20 patients, how you're thinking about aside from your goal fast-to-market strategy, how are you thinking of the different patient cohorts? And then would you stratify, do some kind of risk stratification just to be able to risk mitigate the next stage of clinical trials. And I just got a quick housekeeping question after that. Thank you.
Brian Schwartz -- Chief Medical Officer
So thanks, Hartaj. You bring up something that's we've been working on together with OSU in a number of other collaborators. As the treatment changes, we are now pre-clinically and hopefully in the next year we will present some really interesting data, looking at combinations with a BTK -- with a Bcl-2 inhibitor, as well as exploring the avenues for combinations with CARTs and bispecific antibodies is a very strong rationale to use BTK inhibitors in the exact (ph)compensating that you're talking about. And we believe from the early data that we've seen even though it's preclinical, they also have differentiating features between the early preclinical data we're seeing versus other BTK inhibitors, which could help us move in that regard. But looking at the development plan you correct is, we're looking at the fast-to-market as single agent in second, third lines who failed BTK -- BTK inhibitor, a Bcl-2 inhibitor who are not eligible for a Bcl-2 inhibitor, as our fast-to-market. And then our expansion strategy will definitely include a combination with a Bcl-2 inhibitor.
Paolo Pucci -- Director and Chief Executive Officer
And we are also interested in possibly three as a potential combination partner. There is a quite a bit of work that's going on. I just can -- I can put it in our objective to say present preclinical data with this, this, this and that other current standard of care. I can put it out because it's not in my hands, it's with our collaborators, but I should hope that there will be in the next 12 or so months, some publications on the results of the preclinical work that is going on because we are seeing some of those results as we go. Then it takes a little bit of time to finish it, to prepare it for publications, that will be up to our collaborators. And then you had an housekeeping -- you had an housekeeping question.
Hartaj Singh -- Oppenheimer & Company -- Analyst
Yeah. And Paolo actually, just one quick follow-up to this the granularity Brian that you gave, which is that, do you think that the ability to move up and down the dose with the reversible BTK with 531 that you can actually that gives you an advantage with irreversible inhibitors that are going, that are trying these combination therapies that are proved right now. Does that, you think going forward that gives you an advantage and that's what kind of stimulates the KOL community to want to work with the reversal?
Paolo Pucci -- Director and Chief Executive Officer
At this point you have to speculate Hartaj.
Brian Schwartz -- Chief Medical Officer
MD Anderson, Hartaj, I think MD Anderson did some really neat work with their front line combination with both venetoclax and ibrutinib. And the mutations, even though you give the two together, when they progress you can start to see the different resistant mechanisms come through as well. So I think some people will move the therapy forward. I still think there will be a place and then hopefully, a irreversible inhibitor, we won't be susceptible to, we will work with those -- if those mutations which shouldn't emerge that setting occur. So we may have a benefit in certain regards. We presented a little bit of data in the Cancer Discovery paper. Clearly, this drug has some differences in terms of signaling when compared to ibrutinib which may give us some advantages as well in combination with the therapies you mentioned.
Hartaj Singh -- Oppenheimer & Company -- Analyst
No. That's great, Brian. That's great, Paolo. I love it, the data is just great and keeps on trending in the right direction. Just housekeeping (multiple speaker).
Paolo Pucci -- Director and Chief Executive Officer
Yeah. Exactly, that's what I keep on telling people, so far we have had four, five updates. In every update, there has been some incremental positive. It's just that we started at 5 milligrams, so it took time.
Hartaj Singh -- Oppenheimer & Company -- Analyst
Yeah. No, no, Paolo, that makes sense. Marc, just quick question, housekeeping. When you're thinking about, I know you've given the kind of like the burn rate, where you can go with the cash on hand. In 2018, you increased your burn or your OpEx roughly about $1 million per quarter from Q-to-Q, is that the way to think about in 2019 or just take the fourth quarter and kind of carry that forward. I mean I'm not looking for fantastic granularity, but just some...
Paolo Pucci -- Director and Chief Executive Officer
I think the two years are not easily comparable for a number of reasons. I mean if you take our fixed cost base, we are not renting anymore office, so the office space we have is what it is, but we have a few more people. We have brought down -- in order to survive and to finance the development of a pipeline, we have brought down our fixed cost structure to 30 some people. And now with all these trials going, we had to hire a few more people. So we are rebuilding in a way the Company, so that we can function appropriately.
And then the other reason why you can't really compare one year to the other is because we have taken out with the licensing to Basilea and Roivant, the most expensive variable cost item of last year that was the FGFR inhibitor. So I wouldn't compare -- I wouldn't extrapolate, I would just stick to the guidance and kind of you can think that some of the costs are going to creep up in the later part of the year, as the trial started, but that wouldn't compare year-to-year. I would just stick to the guidance. Yeah.
Hartaj Singh -- Oppenheimer & Company -- Analyst
Yeah. So that helps a lot. Thank you Paolo.
Paolo Pucci -- Director and Chief Executive Officer
Yeah. I think we change our variable cost base. We are going to try to keep our fixed cost base in check, because it's never easy to raise capital. By the way, the guidance includes $2.5 million milestones that we have received from one of our partners in the meantime. Remember that when we out-licensed to Sinovant, there was a two step milestone. One we receive at signing and one we would do to receive after certain objectives have been met and they have been met. Correct, Rob? So, we got the $2.5 million in the bank?
Rob Weiskopf -- Chief Financial Officer and Treasurer
Yes.
Paolo Pucci -- Director and Chief Executive Officer
So, that will get us the $63 million actually Hartaj. So, I think, the simplest answer is look at the guidance for '19, assume that the cost will increase on a quarterly basis from Q1 to Q4. And then keep an eye on expansion of 531. At the moment 531 kicks into expansion that will transform to some extent our variable cost base. And that will likely have before the same happens with 751 in oncology.
Hartaj Singh -- Oppenheimer & Company -- Analyst
Great. Thank you so very much. Thank you all.
Paolo Pucci -- Director and Chief Executive Officer
You're welcome.
Operator
Thank you. And I'm showing no further questions in the queue at this time. I'd like to turn the call back over to Marc for any closing remarks.
Marc Schegerin -- Senior Vice President and Head of Strategy, Finance and Communication
Thanks, everyone for joining the call. This concludes the session.
Paolo Pucci -- Director and Chief Executive Officer
Thank you.
Operator
Ladies and gentlemen, thank you for your participation in today's conference. This does conclude your program and you may all disconnect. Everyone, have a great day.
Paolo Pucci -- Director and Chief Executive Officer
Bye-bye.
Duration: 69 minutes
Call participants:
Marc Schegerin -- Senior Vice President and Head of Strategy, Finance and Communication
Paolo Pucci -- Director and Chief Executive Officer
Brian Schwartz -- Chief Medical Officer
Rob Weiskopf -- Chief Financial Officer and Treasurer
Jonathan Chang -- SVB Leerink -- Analyst
Chad Messer -- Needham & Company -- Analyst
Jotin Marango -- Roth Capital -- Analyst
Matthew Cross -- Jones Trading -- Analyst
Hartaj Singh -- Oppenheimer & Company -- Analyst
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