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Zogenix Inc (NASDAQ:ZGNX)
Q3 2019 Earnings Call
Nov 7, 2019, 4:30 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Greetings. Welcome to the Zogenix Inc. Third Quarter 2019 Financial Results Conference Call. [Operator Instructions] Please note this conference is being recorded.

I will now turn the call over to your host Mr. Brian Ritchie from LifeSci Advisors. Please go ahead.

Brian Ritchie -- Managing Director

Thank you operator and thank you all for joining us this afternoon. With me on today's call are Chief Executive Officer Dr. Stephen Farr; and Chief Financial Officer Michael Smith. In addition Dr. Gail Farfel Chief Development Officer; Ashish Sagrolikar Chief Commercial Officer; and Dr. Joanne Quan Chief Medical Officer of Zogenix's subsidiary Modis Therapeutics will also be available during the Q&A session. This afternoon Zogenix issued a news release announcing financial results and providing a business update for the third quarter ended September 30 2019. Please note that certain information discussed on the call today is covered under the safe harbor provision of the Private Securities Litigation Reform Act. We caution listeners that during this call Zogenix management will be making forward-looking statements.

Actual results could differ materially from those stated or implied by these forward-looking statements due to risks and uncertainties associated with the company's business. These forward-looking statements are qualified by the cautionary statements contained in Zogenix's press release issued today and the company's SEC filings including in the annual report on Form 10-K and subsequent filings. This conference call also contains time-sensitive information that is accurate only as of the date of this live broadcast November 7 2019. Zogenix undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this conference call.

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

Stephen J. Farr -- President and Chief Executive Officer

Thank you Brian and good afternoon to everyone who's joining us on today's call. Late in the third quarter on September 26 we were pleased to announce that we had resubmitted our NDA for FINTEPLA our lead product candidate for the treatment of seizures associated with Dravet syndrome to the FDA. Accordingly we expect to lay out the acceptance for filing by the FDA in the early to mid-December time frame. Assuming the FINTEPLA NDA is accepted for review and if the FDA grants priority review our PDUFA target date could be as soon as the end of the first quarter of 2020. In parallel our MAA for FINTEPLA for the treatment of seizures associated with Dravet syndrome which was submitted and accepted in early 2019 remains under active review by the European regulatory authorities. Over the last several quarters we have been actively engaged with reviewers in Europe to assist in their assessment of our application and advance the process toward a final opinion in 2020.

As the review of these important regulatory submissions advances we continue to collaborate with leading experts to further analyze our clinical data set in order to expand the body of evidence in support of FINTEPLA for the treatment of Dravet syndrome. In October we presented 5 posters at the Child Neurology Society Annual Meeting highlighting new data demonstrating long-term clinically meaningful reduction in convulsive seizure frequency in some of the most vulnerable Dravet syndrome patients those under the age of 6 as well as a pooled analysis of our 2 Phase III clinical trials that show clinically meaningful and profound reductions in generalized tonic-clonic seizures. This type of seizure often causes physical injury to the child as they can fall during the seizure. And it is also a recognized risk factor for sudden unexplained death in epilepsy or SUDEP. Also at the CNS meeting we shared results of a Phase I study recently conducted to assess the potential drug-drug interaction of FINTEPLA and cannabidiol or CBD.

This study shows that the metabole effects of CBD on FINTEPLA are minimal and unlikely to require a dose adjustment to FINTEPLA if the drugs are co-administered. This information will be of importance to physicians when considering concomitant use of FINTEPLA and CBD to treat seizures in patients if FINTEPLA is ultimately approved. Looking ahead to the rest of the year we once again have a strong presence at the upcoming American Epilepsy Society or AES meeting which will take place December 6-10 in Baltimore. A total of 8 abstracts including 3 late-breaker presentations with new data analysis from the Dravet syndrome clinical program have been accepted for presentation at AES. In addition we will be sponsoring a CME Symposium at the conference and we'll again host a scientific exhibit room on the morning of Sunday December 8 to highlight many of the data presentations generated from our FINTEPLA program.

We'll also be holding an investor update lunch on Monday December 9 at the AES meeting. The event will include a discussion of the new data presented at the AE conference and highlight the evolving evidence of long-term neurocognitive improvements associated with seizure reductions demonstrated in the FINTEPLA clinical studies. The Zogenix team will provide an update on U.S. commercial activities in anticipation of the approval and launch of FINTEPLA in Dravet syndrome. We will also discuss progress on our other FINTEPLA clinical programs. Meanwhile we're taking advantage of the time we have leading up to the potential product launch to study and asses the emerging dynamics currently taking place in the Dravet community through interactions with key stakeholders. We have been participating in targeted discussions with caregivers advocacy groups key opinion leaders and treating community physicians in order to obtain a complete view of the important unmet needs and challenges that patients and their families face daily.

In addition we continue to hold positive and constructive meeting with payers about Dravet syndrome and the FINTEPLA clinical efficacy and outcomes data generated to date. As communicated previously we have also established our specialty pharmacy capabilities to ensure a high level of access and an efficient experience for patients to initiate FINTEPLA therapy. Importantly we continue to experience strong interest and engagement from the Dravet community in both the open-label extension studies and the early access program. In total there are over 420 Dravet patients currently being treated with FINTEPLA across these programs. More than 350 of these patients have now been on FINTEPLA for at least one year and approximately 130 for at least two years. We remain encouraged by the efficacy and safety profile being demonstrated by FINTEPLA in these patients over the long term. Moving to our program for FINTEPLA for the treatment of seizures associated with LGS or Lennox-Gastaut syndrome.

We announced in the third quarter that we completed enrollment for Study 1601 the company's Phase III clinical trial. Study 1601 is a global double-blind placebo-controlled 3-arm trial in 263 subjects between 2 and 55 years of age. We are on track to report top line safety and efficacy data from this trial in the first quarter of 2020. I'd now like to briefly discuss a new Phase II exploratory randomized double-blind placebo-controlled clinical trial on FINTEPLA we intend to initiate in subjects with rare seizure disorders. This will be an international multi-center multi cohort study in subjects with Doose syndrome tuberculosis complex dup15q syndrome CDLK5 deficiency mutations in the PCDH19 gene a mutation in the sodium channel gene that does not meet the diagnostic criteria for Dravet syndrome and finally patients between one and two years of age with Dravet syndrome. The study will benchmark seizure types in each indication for 4 weeks followed by short-term placebo-control period and then a long-term open-label extension. We expect to enroll the first patient into this Phase II study in the first quarter of 2020.

In addition to achieving further progress with our lead FINTEMPLA program on September 9 Zogenix took another major step in its commitment to becoming a leader in developing and commercializing transformative therapies for rare disease patients and their families when we completed the acquisition of Modis Therapeutics. Modi's lead investigational therapeutic candidate MT1621 is a late-stage -- is in late stage development for the treatment of a devastating mitochondrial DNA depletion disorder Thymidine Kinase 2 deficiency or TK2d. While this disease can affect patients of all ages it is more prevalent in infants and young children presenting as progressive and severe muscle weakness that profoundly impairs movement breathing eating and other normal functions. The disease is often fatal and there are currently no approved therapies. MT1621 is an oral fixed-dose combination treatment of deoxycytidine and deoxythymidine that serves as substrate enhancement therapy to restore mitochondrial DNA to overcome deficits caused by the disease.

As a reminder this investigational therapy has received Breakthrough Therapy on rare pediatric disease designations from the FDA and PRIME designation from the European Medicines Agency and holds orphan drug designations for the treatment of TK2d in the U.S. and in Europe. In early October at the annual World Muscle Society congress in Copenhagen we presented key efficacy and safety data from a global retrospective study called RETRO of deoxycytidine and deoxythymidine in 38 pediatric and adult patients with TK2 deficiency. Outcomes from treated patients in this study were compared to a compiled data set of the natural history outcomes of 68 untreated patients. The most important results reported from the RETRO study were survival analysis which demonstrated that the difference in probability of survival between treated patients and untreated natural history control patients was highly statistically significant at a p-value of less than 0.0006. All MT1621 treated patients remain alive. In addition 95% of treated patients have either improved or stabilized responses in the major functional motor respiratory and feeding domains.

A subset of treated patients demonstrated profound efficacy responses in some cases reacquiring previously lost motor milestones including ambulation or the ability to walk breathing independently without mechanical ventilation or other respiratory support and the ability to nourish without feeding support. Safety findings from the RETRO study indicated that MT1621 were generally safe and well-tolerated. The majority of serious adverse events were related to the underlying disease. Two patients discontinued treatment due to asymptomatic increases in liver enzymes that reversed after study discontinuation. We intend to meet with the FDA during the first half of 2020 to discuss next steps for this exciting program and anticipate providing an update regarding future development plans and regulatory submission time lines once we have attained feedback from these discussions.

In conclusion while wait acceptance of an NDA for FINTEPLA in Dravet syndrome and while our MAA remains under active review in Europe we are focused on key commercial preparations to launch in both United States and Europe. We also look forward to the availability of Phase III data in LGS in the first quarter of next year and to initiating the Phase II study for FINTEPLA in multiple rare seizure disorders. We are also very pleased with the recently announced RETRO study results and are preparing to meet with the regulatory authorities on MT1621 in the first half of next year.

With that I'll now turn the call to Mike for his review of the financials. Mike?

Michael P. Smith -- Executive Vice President, Chief Financial Officer, Treasurer and Secretary

Thanks Steve and good afternoon everyone. Today we issued a press release summarizing our business and financial results for the quarter ended September 30 2019 which I'll now summarize. We recognized $0.6 million in revenue in the third quarter of 2019 and this revenue is a result of our March 2019 strategic distribution partnership for FINTEPLA in Japan with Nippon Shinyaku for which we received upfront payments in the second quarter of $15.5 million for the development activities related to FINTEPLA for the treatment of Dravet syndrome and LGS. Total operating expenses for the third quarter were $294 million. Important to note that $249.5 million or 85% of this amount was recorded acquired in-process research and development expense related to the Modis acquisition and MT1621. SG&A expenses for the third quarter ended September 30 2019 totaled $15.8 million which reflects a 43% increase over the third quarter of 2018.

Our SG&A expense increase was driven by continued investment in preparation to prospectively launch FINTEPLA for the treatment of Dravet syndrome in the United States and in various countries in Europe in the coming years. The net loss for the quarter ended September 30 2019 was $290.5 million or $6.75 per share and this compares with a net loss of $42.3 million or $1.08 per share in the third quarter ended September 30 2018. Again keeping in mind that the recorded $249.5 million in-process R&D expense related to the acquisition of Modis and MT1621 is the primary component of those loss amounts. In the first nine months of 2019 net loss was $363.4 million or a net loss of $8.54 per share compared with a net loss of $101.5 million or a net loss of $2.78 per share in the nine months ended September 30 in the prior year with again $249.5 million in-process R&D charge related to Modis being the primary factor in the amount of the loss. We ended the third quarter with cash cash equivalents and marketable securities total $255 million following the use of $175.5 million for the Modis acquisition which occurred on September 6 2019. We remain well capitalized and positioned to execute on our strategic plan to bring FINTEPLA to market as a potential new treatment option for Dravet syndrome and LGS patients and their family and have successfully expanded our late-stage pipeline through the acquisition of Modis and MT1621.

I'll now turn the call over to the operator to begin the Q&A session. Operator can you please provide the instructions?

Questions and Answers:

Operator

[Operator Instructions] Your first question comes from Paul Matteis with Stifel.

Paul Matteis -- Stifel -- Analyst

Congrats on the progress. I was wondering if there's anything you can tell us about the EMA review and whether or not there have been any surprises and whether or not you've discussed the preclinical animal model conversation that came up with the FDA in the RTF. And then just a couple other quick other ones. I was wondering if you've given any additional FINTEPLA long-term safety data at EMA and if you could comment on that and whether or not it's aligned with last year's AES presentations. And then lastly I just have one follow-up but I'll stop talking for a second.

Stephen J. Farr -- President and Chief Executive Officer

Paul thanks for your questions. With respect to our interactions with EMA we have received our day 120 questions and we're working toward getting our responses to the reviewers by the end of this year. With respect to the questions that we received they were right across the gamut of the sections of the submission clinical and nonclinical and CMC and nothing that was pertained to us having to generate more data. So really nothing surprising I would say in our interactions to date. Gail anything you'd like to add to that?

Gail M. Farfel -- Executive Vice President and Chief Development Officer

Only that the data that we presented to the EMA with regard to your question about long-term safety it's the same set that we have talked about I believe that AES has provided to the FDA.

Stephen J. Farr -- President and Chief Executive Officer

And Paul just again on the long-term safety we will move forward with an analysis of our open-label extension data to satisfy the day 120 safety requirements. So that will be a larger data set with more patients and obviously with longer durations of exposure and we'll be probably reporting that publicly once it's been submitted to the FDA.

Paul Matteis -- Stifel -- Analyst

Okay. Okay. And then on the IST is that something we could see some data from next year? How many patients do you think might be in that? I'm referring to the study in Doose and TSC?

Stephen J. Farr -- President and Chief Executive Officer

Go ahead Gail.

Gail M. Farfel -- Executive Vice President and Chief Development Officer

So that is a company-sponsored trial. And we're -- also we're enrolling across 7 different indications. And the indications will be analyzed individually. So our hope is that we get enough patients in at least 1 of the 7 indications if not more to be able to give an analysis of one or more of the indications late in 2020.

Operator

Your next question comes from Marc Goodman with SVB Leerink.

Marc Goodman -- SVB Leerink -- Analyst

So first of all can you talk about the CBD trial that you presented at the meeting just recently and what type of feedback you got from the physicians? Do they feel like they understand how to use the products together? You mentioned something about having to adjust dosing. What exactly do you think are the learnings that we've got there? That's number one. And then second of all you talked about commercial preparations but would you mind just going through again where we are and what exactly you've done with respect to preparing commercially for the U.S.? And then also talk about some of the payer interactions and whether the pricing that you've kind of hinted at to everybody is OK with the payers and they're kind of giving you positive feedback that that can work.

Stephen J. Farr -- President and Chief Executive Officer

Thank you Marc. I'll address the CBD trial first and then I'll ask Ashish to comment on commercial preparations. So the CBD trial was -- it was a Phase I study in healthy volunteers. It was -- we conducted it in order to be able to get better perspective on whether or not there was a plausible drug-drug interaction between FINTEPLA and CBD recognizing that there are CBD -- there's an FDA-approved CBD product at the market as well as use of artisanal CBD by this patient population. At the time that we conducted this particular study Epidiolex is not available for us to use as part of the trial. So we actually used -- once -- in the study in Canada using a government-approved form of CBD and used that in our trial.

We -- the take home from that is that the CBD while it had a plausible in vitro effect on the metabolism of fenfluramine or FINTEPLA it didn't raise to the level in our Phase I trial in something to worry about with respect to a dose adjustment of FINTEPLA if those 2 products were used together. So the bottom line for us is that if we had a question from a physician about using the 2 products together and whether or not it would require a dose adjustment we could go back and basically say there was no dose adjustment required for FINTEPLA with the concomitant use of CBD. So we think it's a very worthwhile and appropriate study to do to provide that information to physicians who may prescribe FINTAPLA once it's approved. Ashish?

Ashish Sagrolikar -- Executive Vice President and Chief Commercial Officer

Yes. So Marc I'll take a few minutes to go through some of the things. From a commercial perspective let's start with your question on the payer interaction. We continue to having a very constructive conversation with payers. And we started familiarizing them with clinical efficacy safety profile. And we have received very positive reception to the outcome data that -- last showed in the trials. Earlier in the year we did initiate developmental outcome models with input from customers which includes payers and all other constitutes here. And we hope to continue having that dialogue in Q4 as well as in Q1 as we prepare for launch. From a preparation perspective as we said earlier the specialty pharmacy operation phase is up and running and our current early access program is being run through that. So we are getting a phenomenal experience of how we fulfill the orders and how do we manage the interaction when we launch -- when we get approval and launch it.

We also have hired individual in market access function which is TE the national accounts who are calling on payers obviously at this point in time and in preparation of kind -- being ready once we are closer to launch to put all the other infrastructure in the ground which includes reimbursement support and all the support that the patients need. We did hire sales leadership earlier in the year they do have a combined more than four years of experience in the epilepsy market. We've also hired a couple of key account managers and we continue to hire them in key areas because as you recall we undertook a very extensive exercise of profiling accounts where the Dravet patients are actually currently being treated. And we are now introducing ourselves and getting to know what the processes are so that when we receive approval and when we launch it we will have a clear path in the process to manage it. Finally on pricing we have not yet finalized the pricing for FINTEPLA.

And we will be talking about disclosing that toward the approval and around the launch time frame. But as we are considering pricing we carefully review a few factors. First is optimizing patient access. Second the size of Dravet syndrome population because that's the indication where we'll be launching it first. Profound -- the third is the profound outcomes that we have seen in the clinical trials that we do believe that it will deliver to patients. And finally the ability for us Zogenix to make a sales plan. And based on the outcomes that FINTEPLA has demonstrated we do believe that it will deliver value to patients payers and the healthcare system relative to other therapies.

Marc Goodman -- SVB Leerink -- Analyst

I mean just lastly on the pricing I realize that you haven't set pricing yet but I'm sure your interactions with the payers are in a range of pricing. And I was just curious if the feedback from them and given the outcomes data you've set them is relatively OK you still feel good about the range that we've been talking about for the past year.

Ashish Sagrolikar -- Executive Vice President and Chief Commercial Officer

At this point in time we do feel good about the range. But as you know we will have -- we haven't clearly had these detailed conversations in terms of specific pricing because as I said earlier we will not be disclosing yet until we receive the approval and around the time of approval and launch.

Operator

Your next question comes from Danielle Brill with Piper Jaffray.

Nirav Y. Shelat -- Piper Jaffray -- Analyst

This is Nirav on for Danielle. I just had a couple. The first one was I was wondering if you've heard any feedback from doctors about any sort of burden that EKG monitoring might cause and if you've done some analysis to see how many of your target prescribers have in-house capabilities.

Stephen J. Farr -- President and Chief Executive Officer

Yes I'll ask Ashish to address that one for you.

Ashish Sagrolikar -- Executive Vice President and Chief Commercial Officer

Yes. So we in our advisory boards and the conversations with the physicians what we have discovered is that doing monitoring is -- for patients with Dravet syndrome is fairly common and there is a lot of testing that goes on. We do realize that when approved if we have to do the monitoring we are putting together infrastructure with our specialty pharmacy but also hub to help them through the process. And to that effect we have conducted multiple workshops and -- meetings with families parents as well as physicians to really think through how we can help them or how we can make the system much more easier to manage. So we feel very comfortable that we now have a plan that we can address with. Nirav can you please repeat your second question about target prescribers?

Nirav Y. Shelat -- Piper Jaffray -- Analyst

Yes. I was just wondering how many of your target prescribers would have in-house capabilities to do the monitoring in-house.

Ashish Sagrolikar -- Executive Vice President and Chief Commercial Officer

It will depend on where they are located. If it's there at the institute or a hospital they will have that in-house capability where they can just take them down the hall or other floor. But what we feel comfortable is in terms of the target population of where you have epilepsy centers I would say almost 30% to 40% of them would have that capability in the initial stages. And as we get into the community settings we will be working to help how do we manage the entire process.

Nirav Y. Shelat -- Piper Jaffray -- Analyst

Got it. Last question is just a quick follow-up on a previous question that was asked. In regards to pricing specifically in your interactions with payers or any market research you've done have you seen any indication one way or another of how adoption might be impacted if it is -- if FINTEPLA is priced at a significant premium to Epidiolex?

Ashish Sagrolikar -- Executive Vice President and Chief Commercial Officer

Nirav given the sensitivity and when the -- what comes to the price it will be difficult to comment on that at this point. But when we look at the overall value the feedback we have gotten on the value that we provide from the clinical as well as outcome perspective has been very positive. And I think that's what I would be comfortable saying at this point in time.

Operator

Your next question comes from Jason Butler with JMP Securities.

Roy Buchanan -- JMP Securities -- Analyst

It's Roy in for Jason. We had a few about the Modis acquisition. I think when you announced the acquisition you're still detailing the commercial opportunity. Do you have any updates you can share on that? And then the single escalating dose PK trial anything you've learned from that trial as yet? And then the last question can you share any timing about plans for discussions with the EU regulators for MT1621?

Stephen J. Farr -- President and Chief Executive Officer

Roy thanks for your questions. I'm going to ask Joanne to address those for you.

Joanne Quan -- Chief Medical Officer

Sorry could you repeat the first question? You had several questions there. I just want to make sure I understood.

Roy Buchanan -- JMP Securities -- Analyst

Yes. Sorry. Let me do it quickly. The commercial opportunity you guys were still working on it I think when you announced the acquisition anything you can share around that?

Joanne Quan -- Chief Medical Officer

Yes. I'll have Steve Farr address that.

Stephen J. Farr -- President and Chief Executive Officer

Yes. I'll address that one and then Joanne I think you have 2 clinical questions that you want me to -- we're still obviously working on that right now with respect to the commercial opportunity. But we have data that shows that from looking at equity financial data there's anywhere between 650 and 2500 patients in United States that could suffer from this disorder. We're doing work now from a more bottoms-up approach to get a better number on that. That work is ongoing. We continue to -- so we'll do that next year as we conclude the clinical development. So we do think that this is one of the disorders where as a drug becomes available there's more awareness about the drug and the disease itself. We're likely to see an increase in the number of patients who are diagnosed with TK2 deficiency. And Joanne do you want to -- go ahead Roy.

Roy Buchanan -- JMP Securities -- Analyst

The PK trial anything you've learned from that that you can share with us and then just plans on timing for discussions with the EU regulators?

Joanne Quan -- Chief Medical Officer

So the PK trial has been completed although we are still analyzing the data. So we've not released that just yet. In terms of discussions with regulators. I think Steve mentioned earlier that we're planning to meet with the FDA in the first half of 2020 and then EMA discussions to follow that so a bit later than that in the year.

Operator

[Operator Instructions] Your next question comes from Yatin Suneja with Guggenheim.

Yatin Suneja -- Guggenheim -- Analyst

A question on the commercial front. Would you anticipate any sort of EEG or MRI confirmation for the diagnosis for Dravet? Or do you think just the clinical diagnosis is enough for the drug to be prescribed? And could you maybe remind us if that was one of the requirements for the clinical trials that you've conducted to screen Dravet patients?

Stephen J. Farr -- President and Chief Executive Officer

Thanks for your question. No. It's simply a clinical diagnosis. And that's exactly what we use in our Phase III trial. So with no differences to what we did in our Phase III trial relative to the way in which Dravet is diagnosed in the broader patient population.

Yatin Suneja -- Guggenheim -- Analyst

Got it. And then just another question on the phase -- on the new Phase II trials in rare disorders or rare seizures that you are going after. Can you maybe help us understand like how are you sort of trying to prioritize the indications? Or is it there a particular type of seizures that you're going to go after? And how can you expedite the development in other -- or epilepsy outside Dravet and Lennox-Gastaut?

Stephen J. Farr -- President and Chief Executive Officer

Yes. I think the purpose of the Phase II trial is signal seeking study where we also want to see how the drug performs in a variety of rare seizure disorders and relatively an individual study to do more of a basket approach. So really the outcome we're looking for in this study is to see where the drug works effectively and then consider what the next steps would be thereafter.

Yatin Suneja -- Guggenheim -- Analyst

Got it. And then final question on the P&L. Maybe if you can help us model the expenses going forward. How do you think the R&D is going to shape up given that both -- the Lennox-Gastaut trial will sort of conclude sometime early next year?

Stephen J. Farr -- President and Chief Executive Officer

Mike do you like to address that question Mike?

Michael P. Smith -- Executive Vice President, Chief Financial Officer, Treasurer and Secretary

Yes. Sure. So Yatin you're speaking for the immediate future and we can give you some qualitative color on that but the guidance specifically as yet for financials for next year. But the -- one thing to keep in mind is that our -- probably our most expensive study right now is a combined set of studies where we're allowing patients to continue on therapy in our open-label program where we have over 400 patients being treated in an ongoing basis. Now some of those patients are going to shift out as the -- if we are able to get approval. But LGS program will not be eligible to get approval next year so we'll have some of those expenses continuing and in some substance fashion but we are going to have a drop-off of our currently operating global Phase III and -- right out of some of the Dravet patients. So I don't see it going up too much or down next year is kind of the qualitative guidance that we give at this point.

Yatin Suneja -- Guggenheim -- Analyst

Okay. And then can you clarify the exact cash that you have? I mean I see in the balance sheet there is about $25 million in escrow. Is that money going to go away? Or is that just parked right now?

Michael P. Smith -- Executive Vice President, Chief Financial Officer, Treasurer and Secretary

So that's related to some true-ups related to the transaction but it could stay or it could go away. I mean there's currently an offset liability with respect to that on our balance sheet. So from an accounting perspective we're assuming it's not going to go into our pocket. But we have $250-plus million as of 9/30 2019.

Operator

Your next question comes from Serge Belanger with Needham & Company.

Tian Sun -- Needham and Company -- Analyst

This is Tian on for Serge so I just had a couple. So in terms of FINTEPLA I think the NDA submissions are upcoming. How confident are you that the FDA will accept it by mid-December and getting a priority review? And has there been any feedbacks or updates from the FDA whether you still need to conduct the additional study I think it was in the RTF earlier? And then in terms of the quality of life benefit that you saw in Study 1 and 1504 in DS patients. So given these data is there any plan to perhaps potentially target neuro behavior indication in the future? For example ASD and things like that.

Gail M. Farfel -- Executive Vice President and Chief Development Officer

This is Gail. So we have -- we did resubmit in late September and we are looking forward to hearing shortly if the FDA is going to accept the filing. We expect that to be late November or very early December. We are hopeful that we will be eligible for priority review. With regard to the toxicology study that was requested in the Refusal to File letter we met with the FDA in a Type A meeting several months ago and came to agreement that that study was not required for the resubmission. And then your last question about quality of life data our current focus is to look at other epileptic encephalopathies to -- as we talked about the signal seeking Phase II study that we are beginning to look for signal of strong efficacy in one of those diseases. We currently don't have a target of looking in the broader neurobehavioral landscape but you bring up a good question.

Operator

Your next question comes from Tim Lugo with William Blair.

Lachlan Brown -- William Blair & Company -- Analyst

This is Lachlan. You mentioned that in some of your sort of precommercialization work you've been doing you've been looking at the changing dynamics in the Dravet market. Could you provide any more color on that? And then second of all you mentioned you've got I think it was 130 patients that have been on FINTEPLA for greater than two years. Can you provide any update on what you're seeing with those patients the durability of efficacy? And is there I guess other plans to publish that data or release it in some capacity?

Stephen J. Farr -- President and Chief Executive Officer

Yes. We will certainly be publishing more data. But right now our focus clearly has been supporting the NDA and the MAA applications and in particular providing more safety data to the NDA as part of the day 120 update. So we will intend of course moving forward publishing the data with respect to both long-term efficacy as well as long-term safety in the future. I think at a high level we're very pleased with what we're seeing. Coming out of our long term studies there's really no change in conclusions from what we've already discussed and presented at the AES conferences. So -- yes but we will certainly be providing those updates once they're available. Ashish address the commercial question?

Ashish Sagrolikar -- Executive Vice President and Chief Commercial Officer

Yes. Lachlan I think you quite frankly pointed out that there is a lot of changes in the Dravet market. And the Dravet community is undergoing significant dynamism. Two years ago there were no indicated therapies. Now there are 2. And when FINTEPLA is approved there will be 3 by middle of next year. And we do expect that as more therapies are coming in the market I think physicians will have more confidence but also be able to control the seizures with either of the products or the combination of the products. I think the -- what underlying fact here is that with the 2 therapies coming on and what we are hearing from not only the physicians but patients and the community is there is a significant unmet need even having 2 products in the market at this point in time in terms of having a satisfactory seizure control. And there is a need for different therapies because as you know it doesn't work for everyone. So we do feel really confident that when we launch it I think we will have a good reception in terms of healthy patients who are suffering from Dravet. Hope that answers your question.

Operator

Your next question is a follow-up question from Paul Matteis with Stifel.

Paul Matteis -- Stifel -- Analyst

I just wanted to ask one quick question on the long-term safety data. During some past calls you've reiterated that through just interim looks you haven't seen any instances of valvulopathy or pulmonary hypertension. I was wondering if you were in a position to reiterate that this evening or if the next kind of look or data analysis is being specifically done for regulators so you were more reluctant. Any color would be great.

Stephen J. Farr -- President and Chief Executive Officer

Yes. We're happy to reiterate what we said all along so no incidence of valvulopathy or pulmonary arterial hypertension.

Operator

We've reached the end of the question-and-answer session and I will now turn the call over to Dr. Stephen Farr for closing remarks.

Stephen J. Farr -- President and Chief Executive Officer

Thank you very much operator and thank you all for joining us on today's call. We're extremely pleased with the progress we made this quarter with FINTEPLA in both Dravet syndrome as well as LGS and also our MT1621 program in TK2 deficiency. Looking forward to ending this year with a successful AES meeting and we hope many of you will be able to attend and see our posters there and obviously attend our Investor Day as well. So thank you all again for joining us on today's call. Enjoy the rest of the day. Goodbye.

Operator

[Operator Closing Remarks]

Duration: 45 minutes

Call participants:

Brian Ritchie -- Managing Director

Stephen J. Farr -- President and Chief Executive Officer

Michael P. Smith -- Executive Vice President, Chief Financial Officer, Treasurer and Secretary

Gail M. Farfel -- Executive Vice President and Chief Development Officer

Ashish Sagrolikar -- Executive Vice President and Chief Commercial Officer

Joanne Quan -- Chief Medical Officer

Paul Matteis -- Stifel -- Analyst

Marc Goodman -- SVB Leerink -- Analyst

Nirav Y. Shelat -- Piper Jaffray -- Analyst

Roy Buchanan -- JMP Securities -- Analyst

Yatin Suneja -- Guggenheim -- Analyst

Tian Sun -- Needham and Company -- Analyst

Lachlan Brown -- William Blair & Company -- Analyst

More ZGNX analysis

All earnings call transcripts

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