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Arena Pharmaceuticals Inc (NASDAQ:ARNA)
Q3 2019 Earnings Call
Nov 7, 2019, 4:30 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good day, everyone, and welcome to the Arena Pharmaceuticals' Financial Results and Corporate Update Conference Call. [Operator Instructions] Following the prepared remarks, we will conduct a question-and-answer session. [Operator Instructions]

I will now turn the call over to Kevin Lind, Chief Financial Officer of Arena. Please go ahead.

Kevin R. Lind -- Arena Pharmaceuticals, Inc.

Good afternoon, everyone, and thank you for joining us today. We hope you had a chance to review the news release we issued earlier today announcing our third quarter 2019 financial results. Joining me on today's call is Amit Munshi, our President and Chief Executive Officer; and Dr. Preston Klassen, our Head of Research and Development.

Before we begin, I'd like to remind you that we'll make forward-looking statements that involve risks and uncertainties, including statements about our focus, plans, goals, strategy, expectations, R&D programs, regulatory activities, products and operations and those of our collaborators and licensees, and other statements that are not historical facts.

These statements are made in the context of the risks and uncertainties that are discussed in our filings with the US Securities and Exchange Commission, which can be found on the SEC website at www.sec.gov. And include risks related to timing and outcomes of regulatory decisions and discussions; timing of preclinical and clinical trials, including patient recruitment for clinical trials, which is competitive and challenging and may take longer than we project; preclinical and clinical results and the timing of such results, which may not be as expected or sufficient for further development, regulatory approval or commercialization; collaboration and licensing activities; and the amount and allocation of our available financial and other resources. Our actual results may differ materially from our forward-looking statements.

Now I'd like to turn the call over to Amit.

Amit D. Munshi -- President, Chief Executive Officer & Director

Thanks, Kevin, and hi, everyone, and thanks for joining our call today. During our comments today we will provide pipeline updates and conclude with a financial review of the third quarter of 2019.

Arena continues to make exceptionally strong progress on offerings, clinical, operational and financial meeting or exceeding our objectives across the Board. Last week we were pleased to have initiated our Phase 2 ADVISE trial in atopic dermatitis. We believe this is an important first step in the bottling of the therapeutic applications for Etrasimod. We continue to expect to initiate our Phase 2b/3 program in Crohn's disease this year and Preston will provide the additional color on our plans later in this call.

Beyond UC, CD and atopic dermatitis, we expect to further expand etrasimod's utility in additional indications going forward. We believe -- we continue to believe that once a day oral agent of etrasimod's profile offers tremendous promise in the treatment of a broad range of immune-mediated inflammatory diseases. We look forward to sharing our plans on two additional immune medications in the next few months.

With regards to APD418, our preclinical assets for decompensated heart failure, we remain on track to file an IND in the fourth quarter of this year.

I'd now like to turn to call over to Preston to provide a few specific program updates. Preston?

Preston Klassen -- Head of Research and Development

Thanks, Amit. I'll start with our Etrasimod IBD indications. In June, we initiated the global Phase 3 ELEVATE UC registration program in ulcerative colitis, which will consist of two key trials, ELEVATE UC 52 and ELEVATE UC 12 to evaluate the Etrasimod two milligram in subjects with moderately to severely active ulcerative colitis.

Enrollment in ELEVATE UC 52 is progressing nicely and we plan to begin enrollment in ELEVATE UC 12 in the second half of next year 2020. We look forward to sharing additional detail on our progress with the ELEVATE UC program over time. I will note that data from the long-term open label extension of our Phase 2 OASIS trial was presented last month at UEGW in Barcelona.

This extension trial of Etrasimod two milligram of up to 46 weeks demonstrated sustained efficacy in terms of clinical remission, clinical response, and endoscopic improvement among completer patients who achieved clinical remission, clinical response, and/or endoscopic improvement on two milligram of Etrasimod at 12 weeks in the OASIS trial, 75% were still in remission. 93% had sustained clinical response and 77% continued to have endoscopic improvement at 46-weeks of therapy. We believe these data compare highly favorably to other existing therapies in UC.

Turning now to our second IBD indication Crohn's disease, we are rapidly progressing toward the initiation of the Phase 2/3 program by the end of this year. This program will consist of a Phase 2 dose ranging trial with an operationally seamless transition into the Phase 3 portion of the program. I will provide a few comments today about both the Phase 2 and Phase 3 segments of this program. And we will provide additional detail early next year as we get greater experience with etrasimod in that specific patient population.

Our Phase 2 dose ranging study will be branded as the CULTIVATE trial. It will test the safety and efficacy of etrasimod two milligram and three milligram compared to placebo over 14 weeks. The primary efficacy endpoint will be endoscopic response at week 14 and we will be looking at a variety of scales of Crohn's disease activity, including abdominal pain and stool frequency. Approximately 225 patients will be enrolled in this Phase 2 trial.

We selected two-milligram and three-milligram doses for investigation in Crohn's disease based on the knowledge that in ulcerative colitis, we saw a clear dose response in terms of efficacy with two-milligram being superior to one-milligram, but at similar safety and tolerability profile across these two doses. And because moderately to severely active Crohn's disease tends to be a more difficult disease to treat than ulcerative colitis, it makes sense to test two milligrams and one higher dose.

Based on our SAD/MAD work in healthy subjects and very wide safety/tox margins in our largest non-human species, we do not anticipate any rate-limiting safety or tolerability effects at the three-milligram dose. We will use the results from the CULTIVATE trial to select the most appropriate dose for additional pivotal trials in the program.

A critical aspect of this program in Crohn's disease is the operationally seamless transition into the Phase 3 portion with no stoppage in enrollment activities across our global site network. This will enable us to avoid the typical S-shaped curve ramp-up inside activity when the trial is first initiated. We will move from Phase 2 into Phase 3 seamlessly and firing on all cylinders. We will provide more detail on the operational aspects of this transition into Phase 3 later next year.

The Phase 3 portion of the program will consist of two induction trials with rerandomization of clinical responders into a single maintenance trial, which is a typical registrational program used in Crohn's disease to support drug approvals. As we gather operational experience in the CULTIVATE portion of this program, we will provide greater detail regarding the sizing, powering and overall timeline for the pivotal induction and maintenance trials.

We are choosing to focus on an operationally seamless Phase 2/3 programs to afford Arena the opportunity to examine the data from CULTIVATE, make a real-time decision on dose for the pivotal portion of the program, publicly released those results of the data catalyst around mid-year 2021 and still realize the operational synergy inherent to a seamless transition into the pivotal portion of the program.

And finally, I would like to highlight that we recently issued press releases regarding the initiation of two additional Phase 2 dose ranging trials, the CAPTIVATE trial for olorinab in IBS and the ADVISE trial for etrasimod in atopic dermatitis. Those trials are on track to provide data readouts in the second half of 2020.

And now I'd like to turn the call over to Kevin for a review of our financials. Kevin?

Kevin R. Lind -- Arena Pharmaceuticals, Inc.

Thanks Preston. I'll provide a brief review of our third quarter 2019 financial results here, while more detailed results are discussed in our press release from earlier today and in our 10-Q which will be filed this week.

For the third quarter of 2019, revenues were $1.4 million with $800,000 of royalty revenue. In terms of cost, research and development expenses totaled $60.3 million in Q3, including $6.7 million related to non-cash share-based compensation. G&A expenses totaled $20.4 million, of which $6.6 million was share-based comp.

We burned approximately $48 million in cash this quarter. Net loss for the quarter was $72.9 million or $1.46 per share on a basic per share basis. At September 30, 2019, cash, cash equivalents and investments was approximately $1.2 billion and approximately 50 million shares of Arena common stock were outstanding.

Now, I'll turn the call back over to Amit.

Amit D. Munshi -- President, Chief Executive Officer & Director

Thanks, Kevin. We're continuing to make significant progress across the company, delivering on key milestones as we build a world-class company with best-in-class products, relentless focus on execution, a team that can deliver and of course, our strong balance sheet.

We look forward to sharing our exciting milestones ahead, including the upcoming initiation of Crohn's disease program, the initiation of clinical program for APD418. And next year, data on olorinab in IBS pain and etrasimod in atopic dermatitis. I want to thank the entire Arena team for the tremendous effort this year and to our investors for your continued support.

With that, I'll turn the call over to the operator to begin the Q&A session. Operator?

Questions and Answers:

Operator

Thank you. [Operator Instructions] And our first question comes from Patrick Trucchio from Berenberg Capital Markets. Your line is open.

Patrick Trucchio -- Berenberg Capital Markets -- Analyst

Thanks. Good afternoon. So a couple of follow-ups, the first one is, just you mentioned that your expectation is to expand into additional indications going forward. And that -- on etrasimod and you'll share this with us over the next several months. And previously, I believe you've outlined peak commercial sales potential, the etrasimod in the therapeutic areas of liver and dermatology disease at 1.5 billion to 4 billion [Phonetic]. So I'm wondering as you expand the clinical development program to additional indications, should we anticipate the expansion of BMDs disease areas and is this estimation still in line with your thinking for total sales potential and these particular disease areas for etrasimod?

Amit D. Munshi -- President, Chief Executive Officer & Director

Hi Patrick, this is Amit. Let me see if I can address that in a couple of different ways. With UC, Crohn's and atopic dermatitis, we're already addressing in the next several years by $50 billion of market opportunity, so quite considerable amount of market opportunity. The new indications that we're focusing on, we look for a couple of things. We not only look for market opportunity, we look for therapeutic area fit and we look for a provocative biologic or scientific rationale.

Those are the criteria upon which we make those decisions. At this point, it's a little too early to provide these specific indications, specific guidance. But I will just say that again, the three indications going after today address about $50 billion in the market opportunity and with a once a day novel oral product with the unique profile of etrasimod, we think we're in a fantastic position to capture a substantial amount of market share. So as we start talking about the new indication, we'll provide more color on, about the incidence and prevalence and how we think about our products.

Patrick Trucchio -- Berenberg Capital Markets -- Analyst

So then just if I may, just a follow-up on atopic derm. So we've seen some compelling data on Pfizer's JAK in atopic derm. Clinicians have told us, appears similar to Dupi has an acceptable safety and tolerability profile, its a few years ahead of etrasimod. Then there's some additional JAKs on the way, including topical JAKs. So the questions are, how should we think about etrasimod versus these -- the oral JAKs in atopic derm. Does etrasimod have to demonstrate efficacy on par with these JAKs? Or could safety considerations place etrasimod ahead of the JAKs in atopic derm, even if efficacy is somewhat less compelling?

Amit D. Munshi -- President, Chief Executive Officer & Director

So, without addressing directly the efficacy question, let's just talk about the safety profile. We'll come back to the other piece on atopic derm. As you know, etrasimod safety profile is unlike the JAKs, with the absence of the malignancy risk, the VTE risk, for example, of respiratory infections. So we think that will continue to play out in an indication where that physician communities even more sensitive to safety compared to the gastroenterologist.

So we're moving into a broader range of applications. We're moving into specialties, where dermatologists are even more sensitive to adverse event profile. We think that positions etrasimod quite favorably. I will say that atopic derm as a whole has been undertreated for a very long time. The advent of the biologics starting with Dupixent is a great start. We think orals will fundamentally change that market.

And this is a market that, from a prevalence perspective could be three or four times just in the moderate to severe population -- three or four times what we're seeing with ulcerative colitis and Crohn's. So in a large and growing market population, having multiple modalities, I think it's going to be important. We've seen this in other autoimmune conditions over the last two decades.

The advent of more and more modalities allows physicians to move seamlessly between one to the other, the advent of orals usually gets placed ahead of the biologics. So we fixed some of those patterns to continue. We'll see how the novel -- the newer JAKs and the topical JAKs play out. There's still a lot of room here between here and there. So we're excited about our safety profile. We're excited about the category dermatology broadly, atopic derm specifically. We think etrasimod is uniquely positioned there. So as time goes on, I'm sure we'll spend much more time thinking about the relative profiles.

Patrick Trucchio -- Berenberg Capital Markets -- Analyst

That's helpful. Thank you very much.

Amit D. Munshi -- President, Chief Executive Officer & Director

Thanks, Patrick.

Operator

Thank you. Our next question comes from Jessica Fye from JP Morgan. Your line is open.

Jessica Fye -- JP Morgan -- Analyst

Hey there. Good afternoon. Thanks for taking my questions. Just curious about the ADVISE trial. And given that the primary endpoint for the approval of Dupixent was investigator global assessment, how should we think about the sort of translatability of your Phase 2 endpoint to that endpoint and just the implications for the design of a pivotal trial. Are you going to evaluate IgA as a secondary?

Amit D. Munshi -- President, Chief Executive Officer & Director

Let me hand that off to Preston. Preston, you want to quickly cover that?

Preston Klassen -- Head of Research and Development

Yeah, absolutely. Thanks for the question. So yes, the short answer is we will be evaluating a number of different endpoints that will help give us the appropriate read-through on to Phase 3. And so while the primary endpoint is the percent change in EASI score from baseline to week 12. We will also be looking at IgA and we'll be looking at categorical cuts of the data as well, basically that kind of thing. So it's going to be -- it's typical for Phase 2 dose ranging study, we need to get our first and foremost, good sense that number one, the drug is efficacious as a dose response pick, the dose that we think is best on the basis of efficacy and safety/tolerability and then get inappropriate read-through on to Phase 3. So we think we have talk about on the study design and endpoints to do that.

Jessica Fye -- JP Morgan -- Analyst

Okay. And then can you just explain why you picked the percent change in EC as opposed to the EC90 or EC75 for the primary?

Preston Klassen -- Head of Research and Development

Well, one of the reasons is for the overall sample size and then within the Phase 3 study, it's going to give us enough for the read-through into the categorical, that would be the clinical endpoint, but we didn't think that we needed to be focusing on the categorical endpoint for picking the dose that would work moving forward.

Jessica Fye -- JP Morgan -- Analyst

Okay. And then just maybe putting the JAKs aside, if they're -- for whatever reason, not the right comp for your atopic derm data. What atopic derm drug do you see as sort of setting the benchmark for the kind of efficacy that you're hoping to drive?

Amit D. Munshi -- President, Chief Executive Officer & Director

Let me take that one. Its early days for us, we don't have any data at this point, right. We're speculating. So I'd rather not speculate on the effect size and what we're hoping to get out of the study. What I will say is that oral agents even if they are not quite as good as the biologic in some cases tend to do quite well. And I think the recent Ocasio transaction very clearly demonstrates the value of an oral agent. And in that case had substantially less efficacy than the biologics in psoriasis.

Here I think if we look at our asthma data, which has been published, we look at the Dupixent data also in asthma models we see, we don't feel like we're at in any sort of gap in terms of potential efficacy. So again, a long road ahead, we need to see the data, but we feel quite confident that etrasimod will perform quite well in this patient setting. And you could throw the JAKs into that mix and you can throw the biologics in that mix. I think we've got a really good shot here that could demonstrate something quite exciting.

Jessica Fye -- JP Morgan -- Analyst

Okay, great. If I can sneak one more in just on the financial side with ADVISE starting up, the current trial starting up in the ramp of ELEVATE trials. Are there any comments you can make just to help us kind of model R&D spend or cash R&D spend for 2020?

Amit D. Munshi -- President, Chief Executive Officer & Director

Kevin, do you want to?

Kevin R. Lind -- Arena Pharmaceuticals, Inc.

Yes, we're not going to give guidance on -- thanks Amit. We're not going to give guidance on 2020 today. What we have said and what we'll continue to say is it's going up. I think we've seen a fairly big step up from 2018 to 2019 and with the number of use trials going forward, there will likely be another step up from there.

Jessica Fye -- JP Morgan -- Analyst

Great. Thank you.

Operator

Thank you. Our next question comes from Joseph Schwartz from SVB Leerink. Your line is open.

Julie -- SVB Leerink -- Analyst

Hi, I'm Julie [Phonetic] dialing in for Joe. Thank you for taking our question. My first question is on etrasimod. I was wondering if you could walk us through what you saw in terms of etrasimod's metabolites presented at your AAPS poster. So given the relatively high percentage of total radioactivity, now what is known about the M3 and the M6 and their biological activity? And it seems like some of unknown traces metabolites is about 18.9%. So I was wondering what sort of metabolites that was composed of? And the data that you presented was a single dose, and we're wondering if there are any concerns for buildup of accumulation of these metabolites during your repeat dose?

Amit D. Munshi -- President, Chief Executive Officer & Director

Right. I'll let Preston, take that.

Preston Klassen -- Head of Research and Development

Yes, sure. Thanks a lot. So let's just start off with kind of the high level summary. This is obviously human mass balance study that we presented. It was conducted in the way these studies are conducted, a regular label etrasimod. We recovered a high degree, the amount that you're supposed to recover in terms of making sure we had accounted for the appropriate proportion of drug. And we did find that etrasimod was extensively highly metabolized.

However, because it goes through a number of different routes and we don't have accumulation or build up of what classically termed a major active metabolite. And that's defined in terms of that the parlance is anything that would be 10% or higher. So we have no individual metabolites that was -- that met that criteria, which essentially means we don't have to do additional follow up looking at [Indecipherable] profiles with anyone particular type of metabolite.

And so we haven't seen anything that indicates, anything other than the fact that the vast majority, if not all of the clinical activity of the drug comes from the parents etrasimod. So this is not a situation like if the case with ozanimod, drug is ingested and then in fact, most of the clinical activity comes from metabolites that themselves have very different PTA profits from the original parent. That is not the case of etrasimod, we're very confident that we understand half life of the drug, how it's metabolized. Frankly, that the past factor we have multiple metabolic pathways, means that the likelihood of having a significant drug-drug interaction is lowered. And so we're really encouraged by -- so far. So there will not be any kind of late in the game changers, if you will, in terms of what we think about the profile of the compound as we move forward.

Amit D. Munshi -- President, Chief Executive Officer & Director

Let me add, this is Amit. Let just add just one more piece of color. I think this is just further evidence of the decades in long research that was done around the GPCR targets. As you know, etrasimod is the beginning of a whole family of compounds in the S1 P modulation that we have internally, again based on this decades long research. Again, it's a homegrown product. We understand exactly what we were going to see in the human mass balance. We're really pleased we saw exactly what we expected. And again, unlike some of the competitive products, which are really academic compounds or two compounds, this is -- this product really stands on its own.

Julie -- SVB Leerink -- Analyst

Okay, great. Thank you. That's very helpful. And then my second question is also on etrasimod. I was wondering if you could provide us some updates on the CULTIVATE study in Crohn's disease. Given that both UC and CD could be seen by similar physicians, will you be able to elevate -- to leverage your ELEVATE studies and lessons, insights learned to expedite the enrolling of CULTIVATE?

Amit D. Munshi -- President, Chief Executive Officer & Director

So, Preston, do you want to take that?

Preston Klassen -- Head of Research and Development

Yeah, sure. Short answer is yes. We are establishing a global site network in UC, the ELEVATE program of approximately 450 sites, and again cross over 40 countries and we will be leveraging many of those sites or the majority of those sites for the Crohn's program we may end up adding additional sites for Crohn's. As you well know, both UC and Crohn's are very competitive and difficult to enroll. And so we want to make sure that we're availing ourselves of every opportunity.

So we're likely over time to develop that global network even further for Crohn's disease. But there will be overlap in terms of the site. And then in terms of how we go about operationalizing site activity and the trial overall. Absolutely, we're developing a variety of innovative approaches to patient identification and enrollment at the site level and intend to lever those along with our CRO partner across -- into the Crohn's disease program.

Julie -- SVB Leerink -- Analyst

Okay, great. Thank you. And then if I could just squeeze one more question, I have a quick question about the patients are aiming to enroll in the ADVISE trial. Could you provide some clarity on like baseline characteristics, such as average EASI score and will we be assessing etrasimod in combination with topical corticosteroids as well?

Amit D. Munshi -- President, Chief Executive Officer & Director

Yeah, in terms of the -- it will be in patients who have not had an adequate response to topical steroids. And so will not be used during that treatment period, because they've already had shot at it and it hasn't worked. And then in terms of the -- it's basically the moderately to severely active atopic dermatitis. It's not mild at this point. And so we're not necessarily going into full inclusion, exclusion criteria disclosure at this point, but it's a fairly standard patient population in terms of the kinds of patients you see enrolled in these programs across Phase 2 and 3.

Julie -- SVB Leerink -- Analyst

Okay, great. Thank you. That's it from us.

Operator

Thank you. Our next question comes from Kennen MacKay from RBC Capital Markets. Your line is open.

Justin Spitzer -- RBC Capital Markets -- Analyst

This is Justin on for Kennen. Thanks for taking the question and congrats on the progress so far this quarter. I was wondering if you could share with us the sort of feedback that you've been getting from the sites in the ELEVATE-52 trial, given your sort of tailored boots on the ground approach there, and how that's impacted your thinking on the CD enrollment?

Amit D. Munshi -- President, Chief Executive Officer & Director

Yeah, Preston, do you want to take that again?

Preston Klassen -- Head of Research and Development

Yeah, sure. Absolutely. Again, its reasonably early days but we're really excited with the progress that we've made. Again, we're not going to be sharing on a call by call basis specifics around enrollment, but we are -- things are working the way we have planned at this point.

And so, and, as I mentioned, there's always an S-shape kind of ramp up curve activities as you get sites on board. And just to point back and harking back to my comments around Crohn's, that's why we are focusing on our operation with seamless transition from Phase 2 to Phase 3 for that program. But bottom line is that we're really encouraged with what we've seen today. Very encouraged with the amount of interaction we have with the sites again, a big philosophical aspect of our how we're approaching this, as we want to lean it to own as a sponsor, own the site relationships. We have established a field-based team of healthcare professionals, MSPL RMAs to interact predominantly at the PI, a principal investigator level and a separate field team of clinical fellow educators to interact at both at the clinical study coordinator level and other study fact.

And so we are really doing a lot to make sure that we own how we talk with the sites and what we do to encourage them and help them. And it's very much a customer focused kind of launch, if you will, approach to conducting a clinical trial. We're excited with what we've seen so far.

Justin Spitzer -- RBC Capital Markets -- Analyst

Great, thank you very much.

Operator

Thank you. Our next question comes from Alethia Young from Cantor Fitzgerald. Your line is open.

Eileen Maysek -- Cantor Fitzgerald -- Analyst

Hi guys. It's Eileen on for Alethia thanks for taking our questions and I have two. So first, can you talk about your expectations for Etrasimod Phase 3 Truenorth data, which is going to read out in the middle of next year. And what do you think will be the most relevant race through to your own UC program from both the clinical and commercial perspective?

Amit D. Munshi -- President, Chief Executive Officer & Director

Yes, this is Amit. Let me take that, take a stab at that. I think it's really difficult on Truenorth to get a good sense of where that's going to end up. And I think it's for one very important reason, as you will recall, their endpoint is the three domain modified mail score and excluding physician global assessment and we never saw that data from their Phase 2 trial. So, going back in time, it's really difficult to draw a line from their Phase 2 to Phase 3. So, I think that's a question better asked of them in terms of what's the read through from Phase 2 to Phase 3, what is their expectation, what is their underlying powering assumptions. So in the absence of that, it becomes very difficult to predict an outcome of a Phase 3 trial or even to begin to guess where it's going to end up.

Eileen Maysek -- Cantor Fitzgerald -- Analyst

Okay. So can you talk a little bit about the potential rates through there?

Amit D. Munshi -- President, Chief Executive Officer & Director

I mean, look again...

Eileen Maysek -- Cantor Fitzgerald -- Analyst

What would you be like looking for from their data?

Amit D. Munshi -- President, Chief Executive Officer & Director

I mean, I think -- well, we think the drug is effective. In terms of its activity, we think it's active. We're going to be looking at the safety profile and seeing what's consistent with what they've seen in their Phase 1 and Phase 2 trials with the AD conduction abnormalities out in time. So we are looking very carefully at their safety and how they report that out. And they probably won't report that at a top line, so we'll probably have to wait until a medical conference. Assuming they get the powered assumptions right and, they are powered appropriately and had right inclusion, we expect that to be a drug to be active. So outside of that is anybody's guess simply because they never showed us anything out of their Phase 2. That's a read through their Phase 3.

Eileen Maysek -- Cantor Fitzgerald -- Analyst

Okay. Thanks. And then separately, so given your strong balance sheet with over $1 billion cash, so how are you thinking about deploying capital at this point? Is there anything you could do to salary, current timelines, but more resources, are you sort of more focused on creating a broader pipeline at this point?

Amit D. Munshi -- President, Chief Executive Officer & Director

I think from a strategic perspective, the things Preston talked about with not only the number of sites we have in ELEVATE but the sites we'll have over time on ELEVATE and CULTIVATE and the Phase 3 programs and all the on the ground resources, I think we're already doing what you had mentioned, which is we're focusing on enrollment, we're focusing on timed enrollment and we're putting the resources where it matters, in terms of our programs. So that, that's kind of how we're thinking about it.

Eileen Maysek -- Cantor Fitzgerald -- Analyst

Okay. Thank you very much.

Operator

Thank you. Our next question comes from Jason Butler from JMP Securities. Your line is open. Please check that your line is not on mute.

Thank you. And we will move on to our next question from Joel Beatty with Citi. Your line is open.

Shawn Egan -- Citi -- Analyst

Hi, guys. This is Shawn Egan on for Joel. Thanks for taking my questions. I think most of mine have been addressed, but maybe just kind of two quick ones. For ADP418, I see you're filing your IND this year, is the expectation that that'll be in the clinic next year? And then as a brief follow-up, do you have any timelines on, your Phase 2 ADVISE trial will be up on clinicaltrials.gov?

Amit D. Munshi -- President, Chief Executive Officer & Director

Preston, you want to take those?

Preston Klassen -- Head of Research and Development

Yeah, sure. In terms of foreign aid, the answer is yes. So probably IND and be in the clinic next year, I'm sorry, be in clinic next year. And then the clinicaltrials.gov filing posting for ADVICE will be up pretty shortly.

Shawn Egan -- Citi -- Analyst

Great. Thanks for the update guys.

Amit D. Munshi -- President, Chief Executive Officer & Director

Thank you.

Operator

Thank you. And our next question comes from Jim Birchenough from Wells Fargo. Your line is open.

Jim Birchenough -- Wells Fargo -- Analyst

Hi, guys. Thanks for taking the questions and congrats on all the progress. I guess first just on atopic dermatitis, could you maybe go through the lines of evidence that give you confidence in that indication? You mentioned biologic rationale as one of the drivers of where you go with etrasimod. So maybe if you could speak to the role of S1P modulation in sequestration of Th2 cells or what are the different lines of evidence that really give you confidence in that indication?

Amit D. Munshi -- President, Chief Executive Officer & Director

Pardon me, Preston, do you want to grab that?

Preston Klassen -- Head of Research and Development

Yes, sure. So, there is a number of different lines of evidence. Obviously, we know that eosinophils, sorry, the lymphocyte and eosinophils are part of the general pathophysiology and that at a high level it's more of a Th2 profile. And that's essentially what S1P modulation impacts trafficking around both activated CD4 to be a positive T cells and we're learning more about the eosinophil aspect of this as well. And then very clearly, we do reduce a Th2 cytokines profile. So, all of that kind of makes sense on paper.

When you actually look at preclinical investigation, fingolimod as an example, it's had a number of publications around animal models for a variety of dermatologic conditions, models of those conditions. And so we've taken a look at all of that work. We've also got early clinical results of our own in terms of etrasimod with both pyoderma gangrenosum, a very, very brief exposure to some patients that we had initiated and then pulled back on as an ultra rare condition. Once we knew that we were going forward in IBD, it didn't make as much sense to continue a full arm program in PG. But when we did take a look at the handful of patients that have been treated, we saw good results. We've also taken a look at a handful of patients with extraintestinal manifestations of ulcerative colitis from the OASIS trial and seeing we thought we're reasonable. That's all very anecdotal in terms of the clinical evidence with etrasimod and not a direct readout on atopic dermatitis, but nothing in the mix here has given us reason to think that the overall mechanism of action of S1P modulation combined with the pathobiology of atopic dermatitis, doesn't suggest that we have a really good shot at showing some clinical efficacy.

Jim Birchenough -- Wells Fargo -- Analyst

Great. And then maybe just if I could squeeze in a question on olorinab, what -- could you speak to what the hurdle is there? How high a hurdle are you setting for yourselves? Is Linzess kind of the -- what you need to kind of approach or maybe speak to what we should be looking for in terms of the hurdle you're going to set there?

Amit D. Munshi -- President, Chief Executive Officer & Director

Yeah, this is Amit. Let me take that. So, as you know, Linzess and the activity on Linzess has been around a two point change on the AAPS scale. They had about 50% of patients hit the 30% threshold. And importantly, Linzess is restricted to IBS-C. So what's exciting here is that we've activity potentially an IBS-C and IBS-D where we can go after a broader part of the marketplace. And so, we're seeing activity that's about twofold back from our Phase 2a data. So we think we're in the ballpark maybe a little bit north of where the differences on the AAPS scale. But I think importantly we'll be able to go after multiple parts of disease. Preston, do you want to add any color?

Preston Klassen -- Head of Research and Development

Yes, just to point out it's a classic Phase 2b dose ranging study. So this is -- we're exactly at the point you would expect to be at right now. Our 2a work was in quiescent Crohn's. So there has been a different patient population than IBS, although we think that the underlying pathobiology as pain associated with quiescent Crohn's and IBS is in fact very similar, certainly pre-clinically it is. And so, this is really a test to confirm that we've got good biologic activity that translates into efficacy and figure out exactly what dose we need to be having. So it's immature to say the amount that we think we'll see. What we do know, and Amit mentioned that when you look at the delta in terms of pain scores, albeit across different diseases [Indecipherable] IBS. The delta in pain scores we saw was really significant, clinically. And so if we can show something like that in IBS, it's going to be really fantastic.

Jim Birchenough -- Wells Fargo -- Analyst

And then maybe just a follow-up to that, if you're successful in the Phase 2 work, what's the plan going forward? Is this something you'd look to partner? How do you think about the commercial -- the best way to leverage this commercially?

Amit D. Munshi -- President, Chief Executive Officer & Director

Are you speaking about leveraging the olorinab commercially?

Jim Birchenough -- Wells Fargo -- Analyst

Yeah, yeah.

Amit D. Munshi -- President, Chief Executive Officer & Director

Yes, so we look, we'll -- again the data will be the data. We're excited. We think the biology is spot on as Preston pointed out. Having another product that has applications potentially in IBS-C, IBS-D and importantly in IBD pain puts us squarely in a GI sales force bag, right. So as you know a lot of companies that have launched their first drug and part of the short -- short the launch thesis is because there's not much behind it. You can't continually put pressure in the marketplace by putting additional product in the therapeutic area. We're in a very unique situation between the etrasimod and olorinab. We have the opportunity to have five different GI indications and that sets us up really well for success long-term. So assuming the clinical trials pan out the way we hope they do, it really sets us up a very nice picture for the company long-term.

Jim Birchenough -- Wells Fargo -- Analyst

Great, thanks for taking the questions.

Amit D. Munshi -- President, Chief Executive Officer & Director

Yeah. Thanks, Jim.

Operator

Thank you. And our next question comes from Alan Carr from Needham. Your line is open.

Alan Carr -- Needham -- Analyst

Hi, thanks for taking my questions. I continue on Jim's a little bit there in terms of commercial strategy. What is your long-term plan there in terms of US and ex-US and the extent to which you might partner in? And also, I guess, looking at earlier in your pipeline, what is the latest on your efforts behind your cardiovascular drug [Indecipherable]? Are you working on anything? But before that, earlier stage and what's the latest time relationship with Beacon Discovery? Do you all still have ties to them? And any expectations of them to deliver any drugs for you in the future? Thanks.

Amit D. Munshi -- President, Chief Executive Officer & Director

Thanks, Alan. Alan, your first part of your question was that focused on olorinab or just generally on a corporate basis from a partnership?

Alan Carr -- Needham -- Analyst

Etrasimod and olorinab.

Amit D. Munshi -- President, Chief Executive Officer & Director

Great, thank you.

Yes, so our game plan right now is to retain US and European rights. We don't have any intention of partnering out these markets. We think partnerships are highly value destructive long-term to shareholders. And most importantly they're -- they don't allow us to actually build a company. We have a generational opportunity here with combination of the team we have in place, the infrastructure we've built, the quality of these fantastic assets and of course the balance sheet and we find ourselves in a great position to really go off and build a company here. And that's our aim.

So and again, I think we've got the right ingredients to do that. And the partnership is not in the equation. In terms of the long-term pipeline and cardiovascular, we've mentioned that we have additional cardiovascular targets in our pipeline and we'll prosecute those over time as our cost of capital continues to improve. And we continue to having a bandwidth to execute. One thing is we're very, very conscious of as making sure that we don't get too far ahead on areas that then potentially impact our bid, execute on the ELEVATE program, CAPTIVATE program, et cetera, and the ADVISE program. So this is about time and scale as we bring things forward.

We're in an incredible position to have additional compounds sitting on our shelf today. And we have access to certain things at a Beacon over time as well. So we have good relationship with Beacon. They continue to be a contract research organization for us in a lot of scientific inquiry around our existing pipeline. And we have certain limited right of refusals in certain areas of things that they're working on. So we'll spend more time talking about Beacon and our long-term pipeline over time, but we really have no shortage of things to work on. It's really quite remarkable.

Alan Carr -- Needham -- Analyst

All right, thanks for taking my questions.

Amit D. Munshi -- President, Chief Executive Officer & Director

Thanks, Alan.

Operator

Thank you. And I am showing no further questions from our phone lines. I'd now like to turn the conference back over to Amit Munshi for any closing remarks.

Amit D. Munshi -- President, Chief Executive Officer & Director

Great. I just want to thank everyone for being on the call today. We look forward to continuing to update you on our progress. We've got quite a few exciting things happening between this year and next year and I look forward to continuing the conversation. Thanks everyone.

Operator

[Operator Closing Remarks]

Duration: 42 minutes

Call participants:

Kevin R. Lind -- Arena Pharmaceuticals, Inc.

Amit D. Munshi -- President, Chief Executive Officer & Director

Preston Klassen -- Head of Research and Development

Patrick Trucchio -- Berenberg Capital Markets -- Analyst

Jessica Fye -- JP Morgan -- Analyst

Julie -- SVB Leerink -- Analyst

Justin Spitzer -- RBC Capital Markets -- Analyst

Eileen Maysek -- Cantor Fitzgerald -- Analyst

Shawn Egan -- Citi -- Analyst

Jim Birchenough -- Wells Fargo -- Analyst

Alan Carr -- Needham -- Analyst

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