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Stemline Therapeutics, Inc. (NASDAQ:STML)
Q2 2019 Earnings Call
Aug 2, 2019, 8:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good day and welcome to the Stemline Second Quarter Earnings Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Ken Hoberman, Chief Operating Officer. Please go ahead.

Ken Hoberman -- Chief Operating Officer

Thank you. Good morning. Welcome to today's conference call to discuss our second quarter 2019 financial results. With me on today's call are members of Stemline's executive management team, including Ivan Bergstein, our Chief Executive Officer, David Gionco, our Chief Accounting Officer, and Robert Francomano, our Senior Vice President, Global Head of Commercial. After our prepared remarks, we'll open the call to take your questions.

As a reminder, we may be making forward-looking statements. Our forward-looking statements are subject to a number of risks and uncertainties that could cause our actual results to differ materially from our forecasts. A detailed description of these risks can be found on the forward-looking statements and risk factors section of our annual report on Form 10-K for the year ended December 31, 2018, and other reports we file with the SEC.

With that, I will now turn the call over to Ivan Bergstein, our CEO. Ivan, the floor is yours.

Ivan Bergstein -- Chief Executive Officer

Thank you, Ken, and good morning, everyone. We are extremely pleased with the continued commercial progress we are witnessing with ELZONRIS in the marketplace. As a reminder, ELZONRIS is the first and only treatment approved by BPDCN and the first CD123-targeted agent ever approved. And we are very excited with the continued strong uptake and adoption patterns in only our first six months of launch.

With that, I would like to now turn the call over to our Global Head of Commercial, Robert Francomano, who will provide further details on the launch. Robert?

Robert Francomano -- Senior Vice President, Global Head of Commercial

Thank you, Ivan. I'm very pleased to announce that net sales of ELZONRIS for the second quarter were $13 million, representing growth of 157% or more than two and a half times the first quarter. We are particularly happy with this trajectory, as the latter part of the quarter -- and June, in particular -- saw the largest level of sales since our approval.

These robust results continue to reflect the concerted effort of our customer-facing teams in marketing, sales, access and reimbursement, and medical affairs. Our territory managers continue to have numerous effective interactions with healthcare providers and key ancillary staff at all of our targeted institutions to ensure that both the brand ELZONRIS and the deadly disease BPDCN are kept top of mind.

We remain focused on demonstrating the clinical benefit and value proposition of ELZONRIS as the standard of care for BPDCN and ensuring its rightful place in the treatment algorithm. While brand promotional activities continue to grow and have an impact in a multichannel approach, we carry on with our efforts to raise awareness of BPDCN to ensure no patient is missed. The importance of testing for CD123 remains a cornerstone and educating the broader market about the disease are yielding behavioral shifts that seem to be improving the accuracy and speed of diagnosis.

As we track our launch progress closely, we would like to provide some initial launch dynamics that we believe could help provide context around ELZONRIS adoption. We caution you that these are preliminary metrics and could evolve over time.

The number of unique accounts ordering ELZONRIS increased more than 90% over the first quarter, with more than 60% of these orders coming from new institutions. The reorder rate observed was over 80% and continues to be broadly dispersed throughout the country geographically and spans all tiers of our targeted prescriber base. The number of treated patients increased over 100%, with the majority of patients being treatment naïve.

But we don't rest here. We know that we have a significant amount of upside potential and continue to pull levers, aiding in BPDCN diagnosis in the dermatology and dermatic pathology customer segments. Building upon our personal promotion and Congress presence, we now augment our activities with very targeted tactics, including speaker programs which will raise awareness at the local level.

Our second quarter sales suggest a consistent payer mix that remains in line with our pre-launch expectations, with about 75% of patients being covered by Medicare. Further, on the access and reimbursement front, we recently received our permanent J-code for ELZONRIS. This positive development being realized a full quarter earlier than expected makes billing for ELZONRIS easier and speeds up claims processing time in the outpatient setting.

While private payers represent a smaller, but still important, proportion of our patient mix, we have achieved several positive coverage determinations via published policies covering more than 100 million lives from key national payers, such as Aetna, Anthem, Humana, and Cigna, just to name a few. To date, we have not identified any payer coverage or claims issues affecting ELZONRIS reimbursement.

These wins in the private payer segment are just the beginning, as our access and reimbursement team continues to inform and cultivate policy decisions across the United States. We remain very pleased with the strong momentum and launch effectiveness thus far, including the number of prescribing physicians, number of and types of centers ordering, and overall patient starts. The commercial and medical teams continue to work and adapt their launch plans as necessary and are poised for a successful 2019.

As a patient-centered organization, we realize these metrics translate into improving the lives of patients with BPDCN and we will remain committed to driving this positive momentum to ensure all BPDCN patients are appropriately diagnosed and treated. We will continue to support the patient with Stemline ARC, our hub that provides access to ELZONRIS via copay assistance and other valuable patient support tools.

Looking forward to potential commercialization in Europe, we continue to build the corporate infrastructure and have completed Phase 1 of the initial hiring process.

With that, I will turn it over to David Gionco, our Chief Accounting Officer, to review the second quarter financial results. David?

David Gionco -- Chief Accounting Officer

Thank you, Robert. Our second quarter results can be found in the press release we issued this morning, which I will summarize. As Robert highlighted, net sales of ELZONRIS were $13 million for the second quarter of 2019. Stemline ended the second quarter with $103.9 million in cash, cash equivalents, and investments, reflecting $20.5 million of net cash expenditures during the quarter.

For the second quarter of 2019, we had a net loss of $16.8 million. Research and development expenses totaled $10.9 million for the quarter, a decrease of $300,000 compared to $11.2 million for the second quarter of 2018.

Selling, general, and administrative expenses totaled $19 million for the quarter, an increase of $10.4 million compared with $8.6 million for the second quarter of 2018. The increase in SG&A costs resulted from our buildup of a commercial infrastructure to support the launch of ELZONRIS.

The company ended the second quarter of 2019 with 43.9 million shares outstanding.

I will now turn the call back to Ivan to wrap it up.

Ivan Bergstein -- Chief Executive Officer

Thank you, David. As you've heard, the second quarter results, in our view, indicates the substantial commercial opportunity for ELZONRIS in BPDCN. And in addition to that, we believe that BPDCN is just the tip of the iceberg in terms of market potential for CD123 targeting and we continue to look to expand the clinical utility of ELZONRIS into new indications.

In that light, today we announced that a new clinical trial has been granted regulatory authorization to proceed, that being an investigator-sponsored trial of ELZONRIS as maintenance therapy in patients with BPDCN post-stem cell transplant, where we will evaluate the potential utility of ELZONRIS in what may be a long-term setting.

As a reminder, the target of ELZONRIS CD123 has been tied to a number of malignancies, including chronic myelomonocytic leukemia, or CMML, myelofibrosis, or MF, acute myeloid leukemia, or AML, multiple myeloma, not to mention others, such as acute lymphoid leukemia (ALL), chronic myeloid leukemia (CML), Hodgkin's lymphomas, and others, and potentially in some solid tumors and outside of oncology in the autoimmune area. CD123 has also been linked to poor prognosis in several disease settings, including AML and CMML, which in our view justify its more widespread use as a diagnostic in certain heme malignancies across the board.

Clinically, we are currently evaluating ELZONRIS in indications beyond BPDCN, including CMML, MF, multiple myeloma, and AML. Along these lines, ELZONRIS clinical data were presented recently at the ASCO Conference in Chicago and at the EHA Conference mid-year in Amsterdam. Presentations highlighted updated results from ongoing Phase 2 trials in CMML and MF, as well as final results of the pivotal trial in BPDCN.

Additionally, pre-clinical results in systemic sclerosis, an autoimmune disorder in which CD123 positive plasmacytoid dendritic cells, the cell origin of BPDCN, play a role in disease pathogenesis, were presented in the EULAR Conference in Madrid mid-year. This, taken together, we believe highlights the potential clinical utility of ELZONRIS which could bring a wide range of diseases of unmet medical need.

In Europe, our MAA is under standard review and we are preparing to respond to a Day 120 list of questions, as well as for a scientific advisory group meeting. In parallel, our commercial team continues to build out its EU infrastructure in preparation for a potential EU launch in mid-2020.

In CMML, we made significant progress in the second quarter, as we obtained FDA feedback helping us inform the pivotal design of the program in patients with previously treated CMML. In order to support possible registration and additional single arm cohort of patients with previously treated CMML, called Stage 3, we'll be added to the currently enrolling trial. In the first part of Stage 3, or 3a, we plan to assess certain enrichment strategies and efficacy endpoints, such as spleen size reduction and bone marrow response with partial hematologic recovery, for possible conclusion in a confirmatory Stage 3b cohort. We are very pleased with the feedback received from the FDA and we plan to open enrollment of Stage 3 by the end of the year.

In myelofibrosis, as mentioned, ELZONRIS clinical data from our ongoing Phase 2 trial were presented mid-year at the ASCO Conference in Chicago and at the EHA Conference in Amsterdam. This trial continues to enroll MF patients and we expect to provide a further program update later this year.

In additional indications, such as AML and beyond, ELZONRIS in combination with other agents is currently being evaluated in an investigator-sponsored Phase 1/2 trial of patients with AML and high-risk myelodysplastic syndrome. Additional investigator-sponsored trials of ELZONRIS in combination with other agents in patients with subsets of AML that are enriched for CD123 positivity and/or possess BPDCN-like features are targeted to open later this year and in the first half of 2020. Other indications are also under consideration.

We expect to provide periodic clinical and development updates on all of these efforts at various conferences. Beyond ELZONRIS, we are working to move our other pipeline candidates forward and expect further data updates over the next 12 months.

In summary, we again are very pleased with the continued momentum not only on the commercial but on the clinical development front as well. We are excited about the clinical potential of ELZONRIS and are looking to build upon our success in BPDCN in the first quarters of sales.

With that, I would like to open the call to questions.

Questions and Answers:

Operator

Thank you. And if you would like to ask a question, please signal by pressing "*1" on your telephone keypad. If you are using a speaker phone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, press "*1" to ask a question.

And we'll take our first question from Jessica Fye with J.P. Morgan.

Jessica Fye -- J.P. Morgan -- Analyst

Great. Good morning. Thanks for taking my questions. I appreciate the additional launch metrics you provided. Rob, I think you mentioned that June was the largest sales since approval. Does that include July or do you have any insight into July now that that month recently ended?

Robert Francomano -- Senior Vice President, Global Head of Commercial

Yeah. At this point, I think we're going to focus the concentration of metrics on just the second quarter.

Jessica Fye -- J.P. Morgan -- Analyst

Okay. Understood. I guess now that the product has been in the market for several months, do you have any insight into the duration of therapy you're seeing with ELZONRIS in the commercial setting?

Ivan Bergstein -- Chief Executive Officer

Yeah. I think at this point, six months in, what we're realizing in the real-world use of ELZONRIA, it's probably still in alignment with what we saw in the pivotal trial and the L114 trial. So, pretty consistent there.

Jessica Fye -- J.P. Morgan -- Analyst

Okay. Great. And then maybe just a bigger picture question. One of the things we hear from investors is around ELZONRIS is just rapidly penetrating the BPDCN population or whether there may, in fact, be more patients than previously thought and penetration might be still low. As you think about this, what data points do you look to to figure out what the real BPDCN incidence is?

Ivan Bergstein -- Chief Executive Officer

Yeah, I think what we've said repeatedly over the past many months is that we feel the incident population in the U.S. is anywhere from 500 to maybe even 1,000 patients as a starting point. The penetration rate, we're very happy with, especially, as I mentioned in the call, the breadth of adoption across multiple centers and demographic types, if you will. At this point, we feel that the penetration is spot on with where we want to go. We feel we've got a lot of work to do though. There's a lot, as I mentioned in the prepared statements, there's a lot of upside potential in the dermatic pathology and the dermatology community. So, we're tracking the way I think we expected to track at this point.

Jessica Fye -- J.P. Morgan -- Analyst

Great. Thank you.

Operator

And we'll take our next question from Boris Peaker with Cowen.

Boris Peaker -- Cowen and Company -- Analyst

Great. Congratulations, guys, on excellent progress. And my first question is on the BPDCN maintenance study. I'm just curious what fraction of BPDCN patients go on to transplant and how many doses of ELZONRIS do these patients get relative to non-transplant/pre-transplant and how many do you think they would get as maintenance?

Ivan Bergstein -- Chief Executive Officer

Yeah. So, as you recall, in our trial in first-line patients, Stages 1, 2, and 3, there was about a little less than half the patients, or 45% of patients, went to transplant. Real-world commercial, we don't have that level of visibility yet but that's kind of our estimate to the extent that that reflects the real world, which is a meaningful number. Even if it's on the high side, a meaningful number certainly.

The regimen itself, I don't have the protocol in front of me and, certainly, we'll make that public and it'll be listed on clinicaltrials.gov, I'm sure, in the coming weeks. But it is a less dose-intense regimen, so rather than five days every three weeks, it's I believe every three days and then the frequency moves from, I believe, four weeks to five weeks. So, it's spread out but also, presumably, can be given over many months and potentially many years.

Boris Peaker -- Cowen and Company -- Analyst

And what about pre-transplant? Do you have a sense of how many, relative to other patients, these get?

Ivan Bergstein -- Chief Executive Officer

I didn't quite follow that question.

Boris Peaker -- Cowen and Company -- Analyst

Before these patients go on to transplant, how much drug do they get relative to the non-transplant patient?

Ivan Bergstein -- Chief Executive Officer

So, again, just looking at our trial, which is really the only metric we have right now, as you may recall, there was a median of about four cycles in the first-line setting for patients in our trial. So, to the extent that that reflects real world -- it may or may not reflect real world, we'll have to see -- but that is a data point.

Boris Peaker -- Cowen and Company -- Analyst

Great. And just a question on AML. Just what is your regulatory strategy? Because at one point you guys discussed potentially MRD-positive to MRD-negative conversion as a possible regulatory endpoint. Do you have any feedback on that from the FDA or any other kind of maybe endpoints or thoughts you had on this indication?

Ivan Bergstein -- Chief Executive Officer

Yeah. I mean, that turned out to be an extremely difficult endeavor because the assays around measuring MRD haven't been 100% agreed upon. A lot of these MRD patients are now opting for transplant rather than clinical trials and a number of these MRD patients actually relapse relatively quickly and are no longer eligible for the study. So, there have been some technical, logistical challenges around that study itself.

We do have data that we believe is encouraging but we decided to focus more on AML patients in the relapse refractory setting, largely, who have enriched CD123 expression or have features similar to BPDCN, things like this. Subsets of AML which we believe might be more apt to respond well to a CD123-targeted agent. We think that's a very rational approach, as we have early pre-clinical data that indicates the drug's activity against target-dense AML cells. So, the science makes sense.

We do have a study that is enrolling now at Dana Farber which is an AML/MDS study where we're combining our agent with other agents. The other thing in AML, given the flurry of approvals in AML, is the ability to potentially combine with some of these other approved agents and get ELZONRIS into the mix, into the combination mix in AML.

Boris Peaker -- Cowen and Company -- Analyst

Great. Thanks for taking my questions.

Operator

We'll take our next question from Matt Kaplan with Ladenburg Thalmann.

Matt Kaplan -- Ladenburg Thalmann -- Analyst

Hi. Good morning, guys, and congrats on the initial commercial launch here. Looking very good. Just to follow up on Jessica's question in terms of the second quarter results and the revenues for ELZONRIS, can you give us a little bit more detail in terms of what you believe drove the strength in the quarter in terms of the rapid uptake of ELZONRIS that we're seeing?

Robert Francomano -- Senior Vice President, Global Head of Commercial

Yeah. I think that it's really a multi-pronged aspect that has driven that. And I'll bring it back to our disease awareness campaign that we started, I believe, in 2017. That laid the foundation for a strong uptake in utilization at launch and bringing about the awareness and having the prescribing public and the pathology community really thinking about BPDCN. As an ultra-orphan disease, it's our job to make sure that this disease doesn't get forgotten or left outside the mind of the prescribers.

So, I think building upon a successful disease awareness program, then followed up with just a very rigorous call pattern, not only with our sales teams but our regional account directors, our medical science liaisons, everyone that's facing the customer is very integrated in our approach. And so we are having the ability to be in these key centers of all levels, not only our high and elite centers but also the medium and the lower tier centers, and be there all the time. And that keeps the disease and ELZONRIS at top of mind. And it really works that simply.

So, as we get more and more into the discussions and we continue to demonstrate the value proposition of EZONRIS and the importance of CD123, we continue to make strong inroads. And I'll say it again -- we feel that we're just at the base of this opportunity. The dermatology and the dermatic pathology is really another key area that we really started to focus on and we think that's going to help not only keep the momentum but hopefully exceed what expectations are.

Matt Kaplan -- Ladenburg Thalmann -- Analyst

Okay. That's helpful. And then in terms of you mentioned market expansion opportunities, and specifically CMML and myelofibrosis as kind of leading the charge there, can you give us a sense in terms of maybe the timeline for CMML and executing on that Stage 3 part of that study that's ongoing?

Ivan Bergstein -- Chief Executive Officer

Yeah, sure. We're, again, anticipating opening that study to enrollment by the end of the year. We think 3a will transition into 3b. That will likely require touching base with the FDA with respect to how we're going to leverage the 3a results to inform 3b but then seamlessly move into 3b, where we're estimating the entire Stage 3 program, 3a plus 3b, could be a two- to three-year study. But there may be ways to accelerate that. It'll be open label and things like this, as I'm sure we'll be able to provide updates of some sort along the way.

Matt Kaplan -- Ladenburg Thalmann -- Analyst

Okay. That's helpful. And then just a couple more. In terms of the ex-U.S. opportunity, the expansion opportunity for BPDCN, how are you guys thinking about that kind of commercial opportunity for ELZONRIS in BPDCN ex-U.S.?

Robert Francomano -- Senior Vice President, Global Head of Commercial

Yeah, I think we've said in the past that we feel the opportunity is very similar to what it is in the U.S. So, we feel the incident rates are all the same. Obviously, a little bit of a larger population in the European Union if you look at sheer size. But we feel the opportunity is just as lucrative for ELZONRIS. What we are seeing pre-launch is that there is a significant awareness of BPDCN and CD123 in the European Union and this is a byproduct of really the disease awareness program that we've focused on in the U.S. It's had a significant spillover effect. So, we're very bullish with the opportunity for the European Union and we see it as something that's very similar to the United States as it relates to incident size of the opportunity.

Matt Kaplan -- Ladenburg Thalmann -- Analyst

Great. And then last question. I guess, given the recent approval of an XPO1 inhibitor, what are your thoughts now on your program and how you can drive that forward given that recent approval?

Ivan Bergstein -- Chief Executive Officer

Yeah. Well, first, we think that's a very encouraging development. Certainly validates the target commercially. And we think there's a lot of versatility in a XPO1 inhibitor. As you know, we're looking at solid tumors now. The approval was in a heme malignancy. We'd like to get through our dose escalation, identify an optimal administration schedule and dose, and really I think that would give us a platform to then pick and choose where we want to go. If we see a signal of interest and an indication where a regulatory path makes sense for us, we'll certainly consider pursuing that. And then there's obviously some options in heme. So, we like where we are. We're really the only other game in town with respect to an XPO1 inhibitor.

Matt Kaplan -- Ladenburg Thalmann -- Analyst

Great. Thanks for taking the questions, guys, and congrats again on the quarter.

Ivan Bergstein -- Chief Executive Officer

Thanks.

Operator

And we'll take our next question from Joe Catanzaro with Piper Jaffray.

Joe Catanzaro -- Piper Jaffray -- Analyst

Hey, guys. Congrats on the nice quarter here. Just a couple of questions from me. I'm wondering if you have any idea or could tell us how many patients that -- what percent of patients that initiated treatment in 1Q received treatment in 2Q?

Robert Francomano -- Senior Vice President, Global Head of Commercial

I don't know if we have a significant number to be able to give you at this point. If you go in alignment with the treatment durations that Ivan had mentioned a little while ago and what we saw in the 014 trial, you'd see, obviously, new patient starts ramping up and you'd have patients that bridge both quarters. At this point, though, I don't think there's a specific number we can offer.

Joe Catanzaro -- Piper Jaffray -- Analyst

Okay. Okay. Are you guys seeing any use outside of BPDCN in these early days?

Robert Francomano -- Senior Vice President, Global Head of Commercial

We're not aware of any use outside of BPDCN at this point.

Joe Catanzaro -- Piper Jaffray -- Analyst

Okay. Got it. And then maybe just following up on the ex-U.S. opportunity, I see that you guys initiated a global extended access program. I'm wondering if you have any comments around the early experience there, whether you've seen any requests for drug outside of the U.S. thus far.

Robert Francomano -- Senior Vice President, Global Head of Commercial

I think, as you would expect, these programs are always met with open arms and certainly we've continued to get requests for early access for several years now. The program has really just been initiated. It's been out there and now that we have a little momentum in the European Union, we would expect the early access requests to start to come in a little bit more freely over the next many, many months. But at this point, it's really just in its infancy.

Joe Catanzaro -- Piper Jaffray -- Analyst

Okay. Got it. Thanks for taking the questions and congrats again on the quarter.

Operator

And we'll take our next question from Ram Selvaraju with H.C. Wainwright.

Ram Selvaraju -- H.C. Wainwright -- Analyst

Hi. Thanks very much for taking my questions. Can you hear me?

Ivan Bergstein -- Chief Executive Officer

Yes.

Ram Selvaraju -- H.C. Wainwright -- Analyst

Okay. So, first and foremost, I wanted to ask if you can provide us with the following metrics. How many patients are currently on therapy and how many are currently awaiting, sort of onboarding to therapy, meaning they're far down the reimbursement/approval process, and if you think you might be in a position to provide those metrics on an ongoing basis going forward?

Robert Francomano -- Senior Vice President, Global Head of Commercial

I think that's a level of detail we're not prepared to go into at this point. And just as a reminder, it's very difficult to track the exact number of patients given how the product is distributed throughout the United States. So, at that point, it's really hard for us to answer that question.

Ram Selvaraju -- H.C. Wainwright -- Analyst

Okay. You mentioned the reorder rate of around 80%. Do you anticipate that this might rise in the future? If so, what do you think the maximum level is that it could rise to at sort of steady state?

Robert Francomano -- Senior Vice President, Global Head of Commercial

Hard to answer that as well. We deal with a very rare disease here so these numbers sometimes can take large swings from quarter to quarter. At this point, I think the importance of the reorder rate is showing, in my mind, a transition from inpatient to outpatient, which is a good metric to understand the transition of the patients. So, we're happy to see those numbers. And then, of course, the reorder rate shows continued utilization of the product, demonstrating good efficacy. And then the reorder rate, even on a third dynamic, is showing the confidence in the product that patients are continuing to be diagnosed with BPDCN and still the treating physician is electing to put them on ELZONRIS. So, these are three key attributes that one metric demonstrates.

Ram Selvaraju -- H.C. Wainwright -- Analyst

Okay. And then just some more granularity on what you anticipate to be the logistical and quantitative impact of the receipt of the J-code. What specifically might be, for example, some logistical hurdles that were present prior to your receipt of the J-code that are unlikely to be a factor going forward? How important is the receipt of the J-code to the future acceleration of the launch?

Ivan Bergstein -- Chief Executive Officer

The J-code is of significant importance because it certainly gives us an avenue for reimbursement specific to ELZONRIS. And that provides a significant amount of reimbursement coverage. Now, as many people may be aware, every product that gets launched in this space has a temporary J-code and reimbursement is triggered through the temporary J-code. And most sites, if not all sites, know how to use that temporary J-code but there's still some trepidation in the human psyche that causes pause for certain people. What this does is it takes that pause out of the mix and gives people even greater confidence that the treatment will be reimbursed. And what we also reported a little while ago was that we haven't even seen any reimbursement hurdles even with temporary J-codes. So, at this point, what this does is it allows for a speedier claims process. It also, once again, gives much more credit to ELZONRIS from a reimbursement standpoint, which we feel will, especially in an outpatient community setting perhaps, give more confidence for prescribing of the asset.

Ram Selvaraju -- H.C. Wainwright -- Analyst

Okay. Great. And then I just wanted some clarification. I think you had talked earlier about what the average duration of therapy was in terms of number of cycles and the current treatment paradigm. But can you give us a sense of what the number of cycles might look like in the maintenance therapy setting?

Ivan Bergstein -- Chief Executive Officer

We don't know yet. The study has just freshly been authorized. But certainly the protocol allows for two years for some patients and more than two in others. So, it could be significant. But we'll have to see how the study plays out.

Ram Selvaraju -- H.C. Wainwright -- Analyst

Okay. This is just a technical question. What does a clock stop extension mean? You mentioned this in the press release relating to the European regulatory review.

Ivan Bergstein -- Chief Executive Officer

Yeah. It just means you're requesting more time. Sometimes questions or analyses that you may not have necessarily anticipated are asked at the 11th hour and one would rather take the time to put together a strong response than try to prematurely accelerate something that's not quite ready.

Ram Selvaraju -- H.C. Wainwright -- Analyst

Okay. This is just a technical financial question. Can you just clarify for me the basis for the difference between the net loss number for the second quarter and the cash utilization number?

David Gionco -- Chief Accounting Officer

Yeah, sure. The primary reconciling items relate to non-cash stock-based comp expense that's recorded in our statement of operations. And offsetting that is we provide payment terms to our customers. So, for example, the sales that we record in the first quarter are not necessarily all -- the cash is not received in the first quarter, it's received in the second quarter. So, there's a payment term issue there.

Ram Selvaraju -- H.C. Wainwright -- Analyst

Okay. Great. And then just two quick questions for Ivan on the pipeline. Firstly, you mentioned CML, not CMML, just for clarification, as a potential indication for CD123-targeted therapy. But I wanted to clarify whether you anticipate that this would be an arena you might pursue specifically with ELZONRIS or if you might revert to -- I don't know to what extent this is still in memory -- but you had another clone that at one point you had been studying pre-clinically -- if you might revive that or if ELZONRIS is really going to be the targeting modality for CML, specifically, going forward?

And then, lastly, if you could maybe highlight some of the potential advantages of your specific RET inhibitor relative to the other compounds that are currently in development targeting this mechanism. Thank you.

Ivan Bergstein -- Chief Executive Officer

Yeah, sure. So, CMML, as you know, we are pursuing aggressively in a pivotal program that we're looking to initiate after FDA feedback. CML, with one M, is also of interest. CD123 has been tied to CML. It's been tied to TKI-resistant CML. It's been tied to the stem call of CML, which is a difficult cell to tackle. And we actually have generated pre-clinical data going back a few years that we've previously presented at conferences with ELZONRIS activity in CML, TKI-resistant CML. So, it's something that's kind of always on our to-do list and drawing board and it's just a matter of priorities and you can't do everything. But we do view CML as a very nice opportunity, potentially in combination with a TKI or in TKI-resistant. Again, we have some pre-clinical data to back that up. When and if we would move to the clinic on that, we'll have to see, but we view that as one of kind of our next tier of priorities.

With respect to the RET, we think it's a very attractive, rationally designed molecule. Very potent. And we're actually starting to play with the molecule on our own to kind of differentiate it from the others that are out there. There's some preliminary indications that it may have some novel features with respect to resistance to other RET inhibitors or hitting mutations that others may not. So, we're in the process of kind of teasing this out pre-clinically. And what we really want to do is get into the clinic and treat a variety of patients and really create a pathway for this. But we think there's enough information around this molecule to get folks and ourselves very excited that we have a very interesting molecule on our hands that we'll be able to move forward.

Ram Selvaraju -- H.C. Wainwright -- Analyst

Okay. Thanks very much for answering all these questions and, again, congratulations on an excellent quarter.

Ivan Bergstein -- Chief Executive Officer

Thank you.

Operator

And at this time, this concludes today's question-and-answer session. I'll turn it back to today's speakers for any additional or closing remarks.

Ivan Bergstein -- Chief Executive Officer

Thank you, operator. 2019 is an important year for Stemline as we work to execute on our strategic priorities. I would like to take this opportunity to thank all of the patients and doctors, as well as the outstanding employees at Stemline for their dedication and passion in making a difference in patient lives. Thank you all for joining us on the call this morning.

Operator

And this concludes today's call. Thank you for your participation. You may now disconnect.

Duration: 37 minutes

Call participants:

Ken Hoberman -- Chief Operating Officer

Ivan Bergstein -- Chief Executive Officer

Robert Francomano -- Senior Vice President, Global Head of Commercial

David Gionco -- Chief Accounting Officer

Jessica Fye -- J.P. Morgan -- Analyst

Boris Peaker -- Cowen and Company -- Analyst

Matt Kaplan -- Ladenburg Thalmann -- Analyst

Joe Catanzaro -- Piper Jaffray -- Analyst

Ram Selvaraju -- H.C. Wainwright -- Analyst

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