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Momenta Pharmaceuticals Inc (NASDAQ:MNTA)
Q4 2019 Earnings Call
Feb 26, 2020, 8:30 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Ladies and gentlemen, thank you for standing by and welcome to the Momenta Pharmaceuticals' Fourth Quarter and Year End Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions]

I would now like to hand the conference over to your speaker today, Patty Eisenhaur, Momenta's Vice President of Investor Relations and Communications. Thank you. Please go ahead.

Patty Eisenhaur -- Vice President, Investor Relations and Communications

Thank you, Lisa, and good morning, everyone and thank you for joining us today for Momenta's conference call to discuss financial results and operational highlights for the fourth quarter and full year of 2019. Today's call is being webcast and will be available for replay on the Investors section of our website at momentapharma.com. Joining me on the call with prepared remarks are Craig Wheeler, President and Chief Executive Officer and Young Kwon, our Chief Financial and Business Officer. Santiago Arroyo, our Chief Medical Officer and Tony Manning, our Chief Scientific Officer will also be available for the Q&A portion of the call. Following our remarks, we will open the call to questions.

Before we begin, I'd like to mention that our call will contain forward-looking statements about our financial outlook, business plans and objectives and other future events and developments, including statements about the timing of regulatory filings, regulatory approvals, and launches of our product candidates and products. The market potential and reception of our products and product candidates; potential competition and revenues for our product candidates; product development strategies, goals, and timelines; development of our product candidates, including design, timing, and goals of clinical trials and availability; timing and announcement of data and results; the use, efficacy, safety, potency, tolerability, convenience, and commercial potential of our product candidates, including their potential as best-in-class agents; hypotheses regarding certain effects of our product candidates in clinical studies; and non-GAAP operating expense guidance, including our anticipated collaborative revenues and restructuring charges. These statements are subject to risks and uncertainties that may cause actual results to differ materially from those projected. These risks and uncertainties include those described in the slide entitled Cautionary Note Regarding Forward-looking Statements included in the presentation accompanying this call and under the heading Risk Factors in our most recent quarterly report on Form 10-Q filed with the Securities and Exchange Commission, as well as other documents that we may file from time to time with the SEC. Any forward-looking statements speak only as of today's date and we assume no obligation to update any forward-looking statements made on today's call.

On the call, we will also discuss fourth quarter 2019 non-GAAP operating expense. Please see the presentation accompanying the call for further information and reconciliation of this measure.

With that, I will now turn the call over to Craig.

Craig A. Wheeler -- President and Chief Executive Officer

Thank you, Patty, and good morning, everyone. For those of you who were able to join us at the JP Morgan Conference, you've got a good view of the fantastic progress our development team made in 2019. Our pipeline, leveraging our biology platform focused on complex immune-mediated disorders is really beginning to show its promise. Excitement is building in the Company as we near several meaningful catalysts coming up this year. These milestones include proof-of-concept results from our two lead programs in MG and ITP anticipated all around the year as well as expected completed enrollment in HDFN by the end of the year.

On today's call, I will start with a quick review of our strategy, then go into more depth on our pipeline programs. Then Young Kwon, our Chief Business and Financial Officer, will discuss our fourth quarter and year-end 2019 financial results. I'll then close with some final comments and we'll open the call to your questions.

Over five years ago, when we formulated our strategy for autoimmune drug discovery at Momenta, we made two strategic choices. The first was to focus our initial research on Fc biology as we felt there was a broad set of opportunities to be mined. The second was to combine this biology with the world-class protein design skills already at Momenta, we have to optimize molecules with class-leading potential as we prepare for the clinic. These choices turned out to be good ones. From that initial effort, we now have three molecules in the clinic, all focused on different aspects of Fc biology, all with preliminary human or animal data that points to their potential to be best-in-class and all that have multi-disease franchise potential. In addition, we have built two new drug discovery efforts based on the protein engineering that went into the design of our initial molecules. Those efforts in Fc multimer technology and in sialylation technology have already yielded their first new development program for our portfolio, M267, our CD38 SIFbody.

As our original strategy began to show its promise, we focused forward toward the clinic with the clinical strategy that is designed to build a robust data set, which will optimize the potential of each molecule and enable us to pursue a broad range of indications for each program. We also made a decision to expand our research efforts to begin exploring aspects of immune biology beyond Fc and already have promising leads that should yield development candidates in the next two years. We are ever more confident in the portfolio we have in the clinic, as well as the potential of our research platforms to fuel pipeline growth for years to come.

2019 was a breakout year for Momenta, as we made meaningful progress across our development pipeline and 2020 prove further evidence of the value of this strategy for investors. For today's clinical update, we'll focus on M254 and nipocalimab, since we expect to report proof-of-concept data on both of them this year. I'll start my program updates with an overview of M254. When we released our promising early data ahead of JP Morgan, it became clear to me that many investors did not have a full understanding of the program, the science behind it, and the potential it holds. I guess this isn't surprising as without any prior data available, it has been living in the shadow of nipocalimab, our FcRn program. However, internally, we have always believed that this program could create as much or more value for Momenta as nipocalimab, given the high unmet need, a potential large multi-indication market, and the lack of direct competition.

What I'd like to do today is to provide a good overview of the program, summarize the data to-date, and highlight the potential it might hold to create significant value for patients and our investors. M254 is a novel drug, which uses IVIg as a raw material. We enzymatically modify IVIg to change the structure of the glycan on the constituent IgG by extending the Fc glycan and terminating them with the sialic acid group. These glycans are sugars located on antibody Fc regions, control their binding to receptors. It has been shown in our laboratories in multiple autoimmune models that properly modified tetra-sialylated IVIg that dramatically enhanced the anti-inflammatory activity of IVIg during [Phonetic] seven to 10 times more potency in the animal models.

With this preclinical data in hand, we felt confident that this agent had the potential to dramatically improve treatment for the countless patients currently on IVIg therapy. IVIg is a very successful drug, selling over $6 billion annually in the autoimmune disease space. It is widely used as the frontline agent to treat many IgG-mediated autoimmune diseases, but it comes with many shortcomings. First, to be effective, it must be given in high-dose infusions, often required multiple base and an infusion unit for patients. Second, because of the extremely high volume of protein infused, many patients experienced adverse events, giving the product a challenging safety profile. Finally, being a plasma-derived product, IVIg's availability is limited and it's in chronically short supply. With this dramatically enhanced potency, M254 has the potential to offer strong efficacy at significantly lower doses. This has the potential to reduce dosing and infusion times for patients and improved tolerability of the treatment. M254 could also give them supply constraints of IVIg and grow the market as a result.

Our priority, when we entered the clinic was to do a quick proof-of-concept in humans to see if we saw the same efficacy advantages as we have seen in animal models. This trial, which we are currently running, is a multi-part Phase 1/2 clinical trial in idiopathic thrombocytopenic purpura or ITP. We have completed Part A of this study in healthy volunteers and are progressing through Part B, which is evaluating M254 in a single ascending dose cohort of ITP patients, followed by 1,000 milligrams per kilogram of IVIg, which is the standard dose for IVIg in ITP. We shared data from the healthy volunteer cohort at ASH in December of last year, which showed that M254 is well tolerated. Importantly, we also disclosed some interim data from ITP patients ahead of JP Morgan in January. That data was exciting as it suggests that in humans, we may have even more potency than we saw in animal experiments. At all doses tested so far, ranging from 43 milligrams per kilogram to 250 milligrams per kilogram, patients responded to the drug with platelet elevations above the efficacy target of greater than 50,000 per microliter and at least 20,000 increase from baseline. Five of six ITP patients administered M254 responded with one non-responder who did not respond to either M254 or IVIg. While the data set is small, it is promising. Based on those first six patients, we have a response rate of over 80% to-date with potential best-in-class response rate agents targeting ITP.

We normally would not release interim results at this early stage of the trial, but with this data in hand, it is clear we need to modify our development strategy to explore lower doses. We are now expanding Part B's lower dose cohorts to see if we continue to observe consistent signs of efficacy as well as testing to determine that efficacy levels are maintained at even lower doses. It is our goal to have this data in hand to present by the middle of this year at a major hematology meeting. And if the data holds, it's a game changer for the potential of M254. We are also accelerating our strategy to advance this program. First, with the expanded cohorts in Part B of our current ongoing trial, we expect to be able to streamline the design of this four-part trial with the efficacy we have seen continues. Second, we are planning to start Phase 2 trial in chronic -- in the chronic indication, chronic inflammatory demyelinating polyneuropathy or CIDP in the fourth quarter. This indication accounts for 40% of IVIg sales in autoimmunue disease. Third, given the significantly lower volumes enabled by the early potency data we are seeing, we are beginning to look at a subcu delivery for this product, which could be a dramatic administration improvement for many patients on IVIg today.

Now, our team has a long experience with drug development and understands that with only a small sample of patients, there is still a lot to learn about this program. But we are very encouraged by the early data and the promise this program holds, and we look forward to updating you on the results of our expanded lower dose cohorts in Q2, as well as presenting you with our plans for CIDP on our Q2 earnings call.

I'll now turn to nipocalimab, our FcR agent that I know you're all intimately familiar with. Unlike M254, this is a competitive class that has already demonstrated proof-of-concept. Our strategy here is to develop a best-in-class drug built on the foundation of a molecule that we believe have best-in-class property. Our agent is an aglycosylated IgG1 antibody. It was designed to be a very potent binder targeting Fc binding site on the FcRn receptor. This design has worked very well, showing in the clinic that has all of the attributes that we hoped would lead to a best-in-class drug. Our Phase 1 studies have shown that with a single dose, we can achieve maximum IgG reduction of around 85% as well as attain our goal of full receptor occupancy. Nipocalimab has shown strong predictable dose response with good tolerability with higher doses able to maintain IgG reduction from baseline for over one month.

Our multi-dose Phase 1 data cohorts demonstrated that we can maintain full receptor occupancy for sustained periods and our infusion study has shown that we can safely and tolerably administer our 30-milligram per kilogram dose to patients and it's filled at 7.5 minutes. Taken together, these attributes points to a potential best-in-class profile, particularly as compared to the IgG4-based competitors. Our strategy for nipocalimab in the clinic is to build the datasets that allow us to capture the franchise opportunities in autoimmune and even maternal disorders. We have three studies running concurrent to autoimmune indications, myasthenia gravis in the neurology area and warm autoimmune hemolytic anemia in the hematology area and one in fetal-maternal indication, hemolytic disease of the fetus and newborn or HDFM. In the future, we plan to expand into other autoimmune disease areas as well as additional indication in fetal-maternal medicines.

Let me update you on our current trials. The first of our autoimmune studies to read out will be Vivacity-MG, a Phase 2 clinical study in MG. This is a five-arm trial with treatment in four arms and a placebo arm. The trial is designed to allow us to understand the full dosing model and will provide a large safety database, which will hopefully allow us to have a smaller, more focused Phase 3 trial in MG. And I'm pleased to announce today that we achieved our target enrollment in this trial, and we plan to release topline results in the third quarter.

Unity, our global multi-center Phase 2 study exploring nipocalimab in HDFN was the first clinical application of FcRn inhibition in fetal-maternal disorders. Our antibody's ability to maintain full receptor occupancy enables what we believe to be total blockage of pathogenic alloantibodies and autoantibodies from passing through the placenta from the mother to the fetus. This study is enrolling well and we expect top -- to report topline data from this study in 2021.

In the third quarter of 2019, we launched Energy, which is our third nipocalimab study and our second autoimmune indication, warm autoimmune hemolytic anemia. This study utilizes an adaptive Phase 2/3 design, which provides us with the flexibility to incorporate learnings from our proof-of-concept results in MG. We currently have clinical sites active in both the United States and Europe and will be enrolling patients over the course of the year. Importantly, Momenta is the lead FcRn inhibitor targeting this indication and nipocalimab has been granted fast track and orphan drug designation by the FDA for warm autoimmune hemolytic anemia. We expect to report topline data from this study around the end of 2021.

These trials, if successful, will provide the foundation for a broad label and a best-in-class profile and we are working to build a winning FcRn franchise with nipocalimab. There is enormous commercial opportunity here and I look forward to updating you on our next milestones in this program, results from our Phase 2 trial in MG in Q3.

One final note, we have disclosed to you in the past that our manufacturing partner for this product is WuXi. We and WuXi are paying close attention to the coronavirus situation in China, but I did want to reassure you that we have at least a six-month supply of drug on hand for all of the ongoing trials and WuXi is up and running. We do not anticipate any significant impact on this program.

I'll now turn to our newest program in our development portfolio, M267, our CD38 targeting SIFbody. In January, our executive team reviewed the preclinical data package and they officially nominated M267 as our next development program, which our Board Science Committee has ratified. This is the first program from our SIFbody research platform to reach the development stage. As a reminder, our SIFbody platform combines multiple Fcs with an antibody against known targets. The goal is to enhance the antibody's effective function to increase cell killing potencies through ADCC, ADC and CDC. Our initial experiments with the platform have shown that in cellular and animal models, this increase in potency is significant as we demonstrated in previously released data on CD38 and CTLA-4-targeted SIFbodies. Those early data and the unmet need of parents in CD38-driven diseases led us to develop this program as our first SIFbody. As a reminder, CD38 is a target on plasmacytes, immune system cells responsible for generating autoantibodies and autoimmune disease and m-proteins in multiple myeloma. With many therapies, inefficient engagement can limit efficacy and in many patients lead to drug resistance. Preclinical data suggests this CD38 SIFbody maximizes engagement of the Fc gamma receptor and complement systems and has the potential to be a best-in-class therapeutic for the management of plasmacyte-mediated diseases such as multiple myeloma, AL amyloidosis and other rare autoantibody-mediated diseases. So, we believe this program represents another high-value opportunity with franchise potential, including some interesting possibilities in both oncology and autoimmune diseases. This designation at the [Phonetic] development program means that we are increasing our investments in the program to refine a development-ready cell line and finish the last preclinical toxicology studies needed to enter the clinic. We're now initiating those R&D-enabling studies for this program and plan to have it ready to enter the clinic in 2021. I look forward to updating you on this program as it moves forward.

For completeness, just a few comments on other activities we have under way. With regard to our M230 Fc multimer program with CSL, CSL is currently running a Phase 1 clinical program to evaluate the safety and tolerability of M230 in healthy volunteers. CSL is introducing a subcutaneous formulation for the Phase 1 program this year and we'll update you on the progress of this program when we have more information to share. On the research front, other programs are advancing and we hope to be able to update investors on the depth of our research pipeline possibly later in the year.

With that, I'll now turn the call over to Young Kwon to review our fourth quarter and year-end 2019 financial results. Young recently assumed the Chief Financial Officer function in addition to his role as Chief Business Officer. We've benefited greatly from his leadership and we're thrilled to have someone with his strategic vision guiding us in this capacity. Young?

Young Kwon -- Chief Financial and Business Officer

Thanks very much, Craig, and good morning, everyone. Before diving into our fourth quarter 2019 financials, I would like to touch briefly on a few financial updates and provide a quick reminder about how our product revenue relates to our corporate strategy. To begin, in December, together with Sandoz, we entered into a settlement agreement with Nashville General Hospital resolving all pending litigation relating to Enoxaparin Sodium Injection, an FDA-approved generic version of LOVENOX, which we developed together with Sandoz. As part of this agreement, Momenta agreed to pay an aggregate of $35 million to plaintiffs. Also, in December, we completed a follow-on offering of 16.7 million shares of common stock, including the full exercise of the underwriters option to purchase additional shares at a public offering price of $15.50 per share. Net proceeds from the financing were $244.2 million, which importantly provides capital through our key proof-of-concept readouts upcoming.

Finally, you'll recall we formally had a large presence in the complex generics and biosimilar space. From this business, we held onto two legacy programs, GLATOPA and M710, a biosimilar to EYLEA. GLATOPA's revenue stream currently provides non-dilutive funding to our portfolio and M710 is our sole remaining biosimilar in clinical development with Mylan. So, even though we are not really in this business any more, these programs remain important to our strategy and that they do and will continue to provide us with capital to fund the developments and eventually the launches of our novel drug candidates.

Now, with regard to the Company's financials, product revenue for the fourth quarter totaled $7.9 million compared with $10.8 million for the same period in 2018. The decrease was primarily due to continued competition on GLATOPA. R&D revenue for the fourth quarter totaled $0.3 million compared to $32.1 million for the same period in 2018. The decrease was primarily due to $28.4 million of revenue recognized in the fourth quarter of 2018 related to Mylan's upfront payments and lower reimbursement revenue for GLATOPA expenses in 2019.

Fourth quarter total GAAP operating expenses were $95.5 million compared to $52.5 million for the same period in 2018. The fourth quarter GAAP operating expenses include the $35 million Nashville General Hospital settlements. Fourth quarter R&D expense increased to $38.3 million compared to $28.7 million in the same period in 2018. This was primarily due to an increase in manufacturing and clinical trial costs for nipocalimab and M254, offset in part by lower personnel costs following the Company's workforce reduction in the fourth quarter of 2018 and a reduction in lease costs. Fourth quarter G&A expense increased to $58.9 million compared to $21.5 million in the same period in 2018. This was primarily due to the $35 million settlement agreement with Nashville General Hospital related to Enoxaparin Sodium Injection. For the fourth quarter of 2019, our non-GAAP operating expense was $86.9 million. As a reminder, our non-GAAP operating expense is defined as total operating expenses, less stock-based compensation, less restructuring costs and less collaborative reimbursement revenues. Finally, we ended the fourth quarter of 2019 with $545.1 million in cash, cash equivalents, and marketable securities compared to $449.4 million at the start of 2019. The increase here is reflective of our December 2019 common stock financing offset by our spend.

Turning now to our guidance for 2020. We are reiterating the guidance we provided in January that we expect full-year non-GAAP operating expense in the range of $220 million to $240 million. And with that, I'll turn the call back over to Craig for closing remarks.

Craig A. Wheeler -- President and Chief Executive Officer

Thanks. And I think we're going to -- I think we're going to do questions and not do closing remarks [Indecipherable], sorry.

Patty Eisenhaur -- Vice President, Investor Relations and Communications

No worries. Craig, you can do your closing remarks now. You have a conclusion.

Craig A. Wheeler -- President and Chief Executive Officer

Okay, thanks. All right, thank you. And just to recap, this is a very exciting time for Momenta. We are well capitalized to fund our programs to key proof-of-concept readouts, including several key milestones this coming year. We expect to report updated proof-of-concept ITP data from our Phase 1/2 study at M254 in the second quarter. We expect to report topline proof-of-concept results from the Vivacity-MG, our Phase 2 study of nipocalimab in MG in the third quarter. And we plan to initiate an additional Phase 2 study at M254 in CIDP in the fourth quarter. And finally, we plan to initiate IND-enabling studies of M267, our new CD38 SIFbody development candidate, and we'll continue leveraging our platform technologies to identify additional opportunities available. We look forward to keeping you updated on all these programs. And thank you again for joining us and I'll turn the call over to the operator to get Q&A under way.

Questions and Answers:

Operator

Thank you. [Operator Instructions] Our first question comes from the line of Robyn Karnauskas from SunTrust Robinson. Your line is open.

Robyn Karnauskas -- SunTrust Robinson Humphrey -- Analyst

Hi, guys. Thanks for taking my question and congratulations on the progress. I guess first question is on 254. So, originally you thought that you dosed up higher in your initial analysis preclinically in that you'd have maybe a more potent drug. I know you are dosing down. Just to make sure I got this correctly that even at the low dose, like the 48 mgs per kg that you saw equivalent efficacy to IVIg across multiple doses. So it didn't look like there was a dose response. Help me understand like as you dose down, like why you think that is the difference between preclinical analysis and the clinic and how well you think you can go. And then the second question on that is like, how does that translate for the market opportunity of the drug being that is equivalent and then maybe it's much lower dose? Help me understand what that means for you as far as market uptick. Thank you.

Craig A. Wheeler -- President and Chief Executive Officer

Sure. Thanks. And it's -- that's a complicated question and I'll try to give you a first brush on that and I'll turn that back over to Santiago to talk about exactly how we're going after this. So we saw efficacy in five of six patients. So, that was patients all doses and we did see one patient who did not have, probably termed as a response. Remember, responder here is over 50,000 with at least a 20,000 increase and that patient didn't respond on IVIg and didn't response here. We do think that at some point we can look at higher doses to look at improved efficacy. However, in a disease like ITP, where there was such dramatic variability in IVIg, it's probably not the place where we're really going to be able to do that time with a very large number of patients and so that's why [Indecipherable] thinking about as multi-dose in CIDP going forward there. I think biologically we do understand some aspects of the mechanism here and Santiago will talk about how we're going out after that in the clinic. But we are encouraged -- there are obviously many differences between animals and humans, but we're encouraged so far from what we've seen in humans, is that we're continuing to see hitting that efficacy benchmark at the lowest dose and so, hopefully, we'll continue to see that lower, which will make it much better for patients the lower we go.

Santiago, maybe you can pick it up from there and talk a little bit about how we're going after this.

Santiago Arroyo -- Senior Vice President, Development and Chief Medical Officer

Yeah, I'm -- basically from what you were saying, we are going to add -- we are already adding some more patients into Part B. We will at some point decide what we're going to do with Part C and Part D and we will be starting a CIDP study with multiple dosing at the end of the year. The data that we've seen until now suggests that there is a good response with very small doses of our product compared to IVIg and that actually relates to the preclinical data we saw before. It's actually better in some cases. Again, as Craig was saying, the variability of the data is significant, we already knew that, and that's why we needed to get a few more patients to try to understand this better to be able to propose new dose or add dose for the CIDP study.

Robyn Karnauskas -- SunTrust Robinson Humphrey -- Analyst

Great. And one more if I may. So, for your subcu 281, you mentioned it again in your slide deck, can you just give us an update as far as where you are at in development and once you get your data in third quarter, how quickly could you begin a subcu trial to remain competitive for people who would want a subcu with the competitive landscape? Thank you.

Craig A. Wheeler -- President and Chief Executive Officer

Sure, let me tap on that. So we -- as we announced earlier, we believe we have already gotten proof-of-concept and we know we have a subcu, which is actually performing really well so far. Our intention is to be able to introduce that in the bridging study in parallel with our Phase 3 study. So, that's all on track. We have no concerns at all in terms of our ability to get there at least to the data at this point. So, it's looking quite good, and our intent is to run a parallel bridging study to our MG trial once we actually understand dosing.

Robyn Karnauskas -- SunTrust Robinson Humphrey -- Analyst

Great, thank you.

Craig A. Wheeler -- President and Chief Executive Officer

Sure.

Operator

And our next question comes from the line of Eric Joseph from J.P. Morgan. Your line is open.

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

Good morning, thanks for taking the questions. A couple from myself both on 254. Can you comment on any immunogenicity findings when you did the healthy volunteer or ITP study portions so far? Appreciating that these are just with single doses only, I guess -- and might be limited in terms of information, how are you thinking about the potential for the development of neutralizing antibodies to hypersialylated IgG over time?

Craig A. Wheeler -- President and Chief Executive Officer

Sure. I'll turn that to Tony.

Anthony Manning -- Chief Scientific Officer

Yeah. Thanks, Craig. Thanks for the question, Eric. Because M254 is derived from natural polyclonal IgGs from humans and because the sialic acid that we add to the molecule is naturally occurring, we wouldn't anticipate that we would have any significant immunogenicity issues and actually it turns out it's technically pretty hard also to actually measure that because you're administering normal human IgG to humans who have normal human IgG. So, there is a few technical challenges too.

However, given that, we have not in any of our preclinical studies seen anything suggesting that there would be any immunogenicity issues. So, something we're going to have to keep an eye on as we move forward, but at this stage, we're feeling very, very confident.

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

Got it. And maybe just a follow-up here on the CIDP opportunity. It would seem like the indication might be a little bit more variable in terms of severity and responsiveness to IVIg and trying to think about the read through potential from the initial ITP data that you're actively pursuing so far, can you talk a little bit about the -- how tight the relationship is between autoantibodies and CIDP symptoms? And as you look to down-dose with 254, is there any risk of losing some of the competing activity of IGs that might be essentially behind IVIg's mechanism of activity?

Craig A. Wheeler -- President and Chief Executive Officer

Yeah, thanks. I'll start here and then I'll turn it over to Santiago to talk about our thinking about CIDP. It's an interesting question because there is variability of IVIg in all the diseases that it's treating. That's actually not uncommon in autoimmune diseases. But I would say it's going to be hard-pressed to have more variability in CIDP than IVIg shows in ITP. We showed a slide at J.P. Morgan of the measured variability of performance of IVIg, it's all over the map in terms of responses, which is why everybody uses the standard efficacy response.

In CIDP with multiple doses, we'd expect to get more stable at least in the intra-patient-patient variability. We think it's actually quite an interesting area for us to go in, because of the multiple mechanism that drives CIDP. Santiago, maybe you can talk a little bit about how we're thinking about going into. We haven't yet disclosed the full design of our trial, but I think, Santiago can give you a good idea of our thinking there.

Santiago Arroyo -- Senior Vice President, Development and Chief Medical Officer

Yeah, we will go over our design, our firm plans in the next call in the next quarter. IVIg is standard of care for CIDP. It works well. There is a significant amount of placebo effect in IVIg -- in CIDP trials and the effect size tends to run between 60% and 70%. So, it's not an easy study to do. There is also issues on dependency on IVIg, how many patients are dependent or not. So, we are just now working through how to do an efficient, likely short but informative study on CIDP, knowing and understanding that variability. And that would be -- our objective is to try to reduce as much as possible the patient variability at entry to basically enrich the population to a more responder population. And again, we'll give some more clarity on that in a few months.

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

Great. Thanks for taking the questions.

Craig A. Wheeler -- President and Chief Executive Officer

One thing to emphasize here is we are doing in this study a Phase 2 first, just because we want to make sure we understand if we're going to the Phase 3.

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

Got it. Understood. Thanks for taking the questions.

Operator

Our next question comes from the line of Derek Archila from Stifel. Your line is open.

Bill Grau -- Stifel -- Analyst

Hi, Bill on for Derek. Congrats on a great 2019 and thanks for taking our questions. Just a couple on M281. Can you briefly talk about sort of the differences in dosing between the indications for M281 and sort of what mechanistically in those indications drives those differences in dosing? And then our second question, I think, yesterday, Alexion disclosed that they're discontinuing their anti-FcRn Affibody program. Assuming they focus on the syntimmune monoclonal antibody, can you just sort of talk to the differences and similarities between nipocalimab and the syntimmune asset? Thanks.

Craig A. Wheeler -- President and Chief Executive Officer

So I'll take the first one on differences in dosing and then I'll pass it back to Tony to talk about the differences between our antibody design and syntimmune. The dosing is fairly straightforward. I mean, we're doing dosing -- dose ranging in autoimmune disease using our multiple arm MG trial, which we announced we have completed enrollment in [Indecipherable] my comments today, and we started an adaptive trial design to be able to take advantage of that using those doses out of the Phase 2 trial in hemolytic anemia.

Dosing is profoundly different in fetal-maternal disorder and that's because in fetal-maternal disorder, what's really, really critical is blockage of transport of the IgG's non-reduction in antibodies. That's a side effect. We do reduced antibodies that are alloantibodies that could protect the fetus, but the main mechanism is blocking the passage of those and to do that, you need to retain full receptor occupancy. So we actually use a higher dose every week in fetal-maternal to make sure that we can keep full receptor occupancy there and that's the reason for the differences.

So, Tony, you want to talk about the difference between the IgG4s and the IgG1?

Anthony Manning -- Chief Scientific Officer

Yeah. So just -- I won't pass any sort of judgment per se on what we think about other people's molecules. The data will speak for itself. But I think that we need to recognize that there are some design features that we included in 281 that others didn't use. So we believe that was very important to eliminate all potential for factor function of our antibody. So once we bind FcRn to not damage any FcRn-bearing cells, so we use the IgG1 agly scaffold, which is the devoid of any interaction with the Fc effector system.

Others who generated antibodies used another scaffold, the IgG4 scaffold, which has been commonly used in the past, which has less potential to interact with the effector system, but it's not devoid of it and so ALXN1830 is an IgG4 scaffold antibody. And if you just look at the safety data so far, which includes headaches and which includes only a modest reduction in IgGs in the 50% to 65% range and a once-weekly IV dosing. I think all those things at least have suggested to me that the IgG4 scaffold may bring with it some characteristics that are going to limit the ability of these antibodies to really fully occupied receptors and fully blocks the mechanism.

So, I think from our perspective, we're very happy with how M281 is performing. It's performing based on the design that we had for the molecule. And I think the tolerability profile to-date and they shift our occupancy and the IgG lowering, we're very, very confident will translate into a good clinical profile.

Bill Grau -- Stifel -- Analyst

Great, thank you.

Operator

Our next question comes from the line of Stacy Ku from Cowen. Your line is open.

Stacy Ku -- Cowen -- Analyst

Hi, thank you for taking my questions and congratulations on the progress. I have a few. First, given the positive proof-of-concept and potentially 20x plus potency shown for M254 so far, can you help us understand what you're thinking currently in terms of what size, scope, and type of IVIg supplier you might use if commercialized? And then I have two follow-up questions.

Craig A. Wheeler -- President and Chief Executive Officer

Sure. Thanks. Well, obviously how much IVIg we need depends upon what the minimum dose is and so we're paying close attention to that. Already with what we see in there, we know we don't need massive, massive supplies in terms of a high percentage of the global supply. So, it means, obviously, we could work with one of the major suppliers and that may be very good partnership for us or alternatively, we could work for one of the smaller suppliers.

I'm going to let Young Kwon comment just briefly because Young's leading our business and corporate development efforts just to give you a sense of what we've seen so far.

Young Kwon -- Chief Financial and Business Officer

Sure. Thanks, Craig. Absolutely. I mean, as Craig said, I mean, the lower the dose that we're able to achieve with 254 in ITP and CIDP, the better off that we are, and we do believe that we will be able to access supply from one of the variety of different IVIg players that are out there. As you can imagine, there has been quite a bit of interest based on the initial interim ITP data that we've released and that's something that we are certainly thinking as it relates to path forward and our primary goal is to secure supply to support the later clinical studies and commercialization. So, we're actively thinking about the right kind of business arrangement to obtain that supplies.

Stacy Ku -- Cowen -- Analyst

Helpful. And so, just a few questions for 254 and 281. As we await full details for the CIDP study, could you maybe comment on the patient population, given common misdiagnosis of CIDP? What measures could be put in place to account for the baseline heterogeneity of CIDP patients and symptomatology? And just a follow-up on the subcutaneous formulation, I'm wondering what kind of bridging studies if any would be necessary to have a subcu available for M281 at launch for MG.

Craig A. Wheeler -- President and Chief Executive Officer

Sure. Thanks for that question. Those are both in Santiago's wheelhouse and so I'll turn those right back to him.

Santiago Arroyo -- Senior Vice President, Development and Chief Medical Officer

Yeah, Stacy, we are -- as I mentioned before, we are working on that how we can design that type of trial with the low number of patients, short that will provide real data on efficacy and proof-of-concept. We are still not there. We will be able to talk about that in the future, but we're still not there. I feel that there are several issues on how to develop that study. In general, many people have done a very long and very costly studies. We are trying to do something hopefully a little bit better.

On the subcutaneous formulation for 281, our plan to bridge our data is we'll use our DLP [Phonetic] multi-study, then we'll do a Phase 1 healthy volunteer study and we will discuss with the FDA. They need not to do a patient study to release the data. It will all depend on the -- our understanding of the safety of the drug, the safety of the subcutaneous formulation and of the efficacy and also the understanding of the relationship between IgG reduction and efficacy.

So, if for example, the reduction of IgG has a good relationship with the efficacy and the subcutaneous formulation is very well tolerated, we believe that it's possible to make a case with the FDA to get potent formulation approved and on label without the need of our patient study.

Stacy Ku -- Cowen -- Analyst

That's really helpful. Thank you.

Craig A. Wheeler -- President and Chief Executive Officer

Just to add to what Santiago said around the study design and the timing, we expect to update the CIDP strategy, including elements of what the study will look like on our Q2 earnings call.

Stacy Ku -- Cowen -- Analyst

Thank you.

Operator

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

Danielle Brill -- Piper Sandler -- Analyst

Hi, guys, good morning. Thanks for the questions and congrats on the progress. I have a few as well on M254. So, I understand that you're expanding enrollment to better understand response variability, but can you provide some more color on what the inconsistent responses look like? Did you see variability in like time to response, the magnitude, and durability? Or -- any color would be helpful. And then I have a couple of follow-ups.

Craig A. Wheeler -- President and Chief Executive Officer

Sure. Thanks. So we actually determined that we weren't going to start talking about the individual variability mostly because the data set is so small, we really couldn't interpret it. So, that's one of the reasons that we're actually expanding cohorts to make sure we see consistent efficacy as well as going to lower doses. When we started digging deeper into it, that's why I showed the slide at J.P. Morgan. The variability is so high and it's not really studied [Indecipherable]. So, we realized before we start trying to make any kind of adjustments some of us need to have bigger data sets and that's why we just talked about basic efficacy. It's looking quite good, but it's really too -- it's premature to start talking about the details in terms of what we're seeing in individual patient.

Danielle Brill -- Piper Sandler -- Analyst

Got it. And Craig, how confident are you that regular IVIg would be in at the doses you tested so far? And then also just to clarify, are you no longer looking at the 500 milligram and 1,000 milligram dose cohorts for 254? Thanks.

Craig A. Wheeler -- President and Chief Executive Officer

Sure. So let me pass that over to Santiago, just talk about how we're thinking about that dose cohorts, and I think either Santiago or Tony can also answer what we do know, what has been shown with IVIg, so we can just tell you what's the conflict there. There is not a lot of data, but we can tell you what we have seen. So, Santiago, why don't you go first and then Tony?

Santiago Arroyo -- Senior Vice President, Development and Chief Medical Officer

Yeah. I mean, we still haven't made a decision about the 500 and 1,000, and most likely 1,000, we'll not do it. 500 is still a possibility. On the efficacy of lower those of IVIg, there is really very, very little data. I mean, we know that it's at least one study that shows that 500 has much less efficacy than one gram per kilo. So that looks like this is certain. Most physicians actually for the acute treatment of ITP, they use between one grams and two grams directly. And there is really not good data at very low doses. The belief from physicians that we discussed is that they don't work, but we don't have any immediate evidence from that.

We -- there is a small trial with a lot of issues in that trial that shows that the effect of progressive doses, increasing doses of IVIg is also very modest like starting with 0.2 grams per kilo doesn't give you much of an effect, but there is nothing naturally lower than that of 0.2 grams per kilo.

Danielle Brill -- Piper Sandler -- Analyst

I see. Got it. Thank you. Thanks so much for the questions.

Craig A. Wheeler -- President and Chief Executive Officer

Yeah, I guess let me expand on one aspect to that for folks here is that, because we have been getting asked, remember we're setting our product versus IVIg, which is standard-of-care. And sadly I regret [Phonetic] there's not much data, but I would imagine with a $6 billion market and a high burden that if there were efficacy and the kind of potency we're seeing at lower doses of the IVIg, suppliers would have to figure that by now. But there really isn't that much data out there, which would suggest [Indecipherable] that there's not a lot of response to these lower doses.

Operator

Our next question comes from the line of Douglas Tsao from H.C Wainwright, your line is open.

Douglas Tsao -- H.C. Wainwright. -- Analyst

Hi, good morning. Thanks for taking the questions. Just maybe starting with nipocalimab in terms of the subcu and the sort of bridging work that you're going to be doing, do you think there is -- are you going to -- is your plan to largely replicate the dosing regimens that you perform with the IV formulation? And do you sort of by avoiding going into human trial sort of missed the opportunity to potentially explore dosing regimens that are opened up by the subcu formulation?

Craig A. Wheeler -- President and Chief Executive Officer

Doug, Thanks. I'll take a first crack at that and if there's any more that my team wants to add on that. We are going to be looking at the subcu pretty extensively in our preclinical models, as well as in the bridging study to understand it. What are our multi-dose trial Phase 2 and the MG trial is doing is really helping us understand the behavior of the disease at different levels of antibody reductions and how long we can maintain that reduction. So, by doing the data between that, we'll be able to understand, I think, pretty well dosing that we're seeing in subcu. We may require additional work, we find good opportunities to change the dosing. But I'll turn it back to you Santiago to make any comments you have.

Santiago Arroyo -- Senior Vice President, Development and Chief Medical Officer

I mean basically what we're doing with the Phase 2 myasthenia gravis study is trying to develop a road map of what is the relationship between IgG and reduction of -- or an improvement of efficacy. So once we have that, it will be very easy to apply those -- that knowledge to dosing and to specifically a patient-friendly dosing with subcutaneous formulation. You know we will dedicate a lot of time thinking how we can dose with a very small subcutaneous dose patients and there are many ways to do that. This is early stage. We first need the road map. We'll have it soon. And then from that, we will decide on what will be the best dose -- subcutaneous dose schemes to test.

Douglas Tsao -- H.C. Wainwright. -- Analyst

Okay, great. And then in terms of the wAIHA study, I think you said that it was an adaptive Phase 2/3 design. What are you looking to learn to apply for the registration component of that study?

Craig A. Wheeler -- President and Chief Executive Officer

Sure. Well -- I'll let Santiago give any details there, but it's an adaptive trial design to basically -- so look, it's just -- we're blinded to it. It's allowed us to look at the utility as one of the arms or both of the arms. It will happen close to full enrollment of the trial, not close to the end, but full enrollment, but it just allows us to concentrate on patients in one arm if one arm is showing no efficacy, because we didn't have the full results of our MG Phase 2, and so we started with what we thought was likely to be our dose based on the data we had and the dose which was higher. Santiago, do you want to just talk about the dosing strategy in that file?

Santiago Arroyo -- Senior Vice President, Development and Chief Medical Officer

Yeah, I mean, as you know we have two doses, 30 milligrams per kilo every two weeks and every four week. The adaptive design is basically -- is still being one of those arms in case there is utility. And we will be blinded, so we'll not be able to announce anything about that.

Craig A. Wheeler -- President and Chief Executive Officer

And if you remember from our Phase 1 data, what we said from our Phase 1 data is we think that 30 mgs per kg monthly is -- has got a decent probability of being our target dose on autoimmune disease. So that's how we get to 30 milligrams every other week just because we didn't have that data in hand from the Phase 2 yet.

Douglas Tsao -- H.C. Wainwright. -- Analyst

Okay, great. Thank you so much.

Santiago Arroyo -- Senior Vice President, Development and Chief Medical Officer

The way to see the two doses is that 30 milligrams every four gives you a reduction of [Indecipherable] between 50% and 70%, 30 milligrams every two weeks gives you a reduction of IgG between 65% and 75% or so. This is broadly speaking. So, we basically are trying to understand two different IgG reduction on branches.

Operator

[Operator Instructions] Our next question comes from the line of Yanan Zhu from Wells Fargo Securities. Your line is open.

Yanan Zhu -- Wells Fargo Securities -- Analyst

Hi, thanks for taking the questions. So first, a very quick one on M254. How many patients worth of data should we expect at the second quarter update?

Craig A. Wheeler -- President and Chief Executive Officer

Sure. So what we're doing is we're expanding the cohorts that we've already tied to lower dose cohorts and then going lower the number. So, the number of patients will depend on the data we see. You may see double the number of patients, but it's not clear yet because we're just still kind of tie to it with what we see, what doses we have to go to and where we need to expand. Santiago, do you want to add anything to that?

Santiago Arroyo -- Senior Vice President, Development and Chief Medical Officer

No, nothing else. I mean, as I said, difficult patients to find and we're working through it.

Yanan Zhu -- Wells Fargo Securities -- Analyst

Got it. And then a question on the nipocalimab MG study. With the enrollment completed, I'm wondering, would you be able to talk about the kind of a baseline characteristics and the background treatment in terms of whether your patient population are similar or not similar to the trials that competitors have reported? If that's [Speech Overlap]

Craig A. Wheeler -- President and Chief Executive Officer

Sure. I'm going to turn that to Santiago to answer.

Santiago Arroyo -- Senior Vice President, Development and Chief Medical Officer

Yeah, we haven't done that analysis on our data by inclusion criteria -- but what we know about the inclusion criteria of competitors, we are pretty much doing the same or going to the same population that other people are going. These are patients that have moderate to severe myasthenia gravis. They are already treated with either corticosteroids and/or immunosuppressants. And so, it doesn't differentiate a lot from other populations that other companies are looking for. But I don't have a specific [Indecipherable] patient population.

Yanan Zhu -- Wells Fargo Securities -- Analyst

Got it. Lastly on the HDFN program, just wondering the study doesn't have a control arm, given it's a high unmet need. But do you have natural history data to inform what kind of outcomes can be expected if the patient -- if these patients aren't -- weren't treated with nipocalimab? And related to that, what is the power of the study with 15 patients to detect a meaningful change on the primary endpoint? Thanks.

Craig A. Wheeler -- President and Chief Executive Officer

Sure. And I'll take that and that's pretty straightforward. We're in a severe population. And so we are continuing to gather [Indecipherable] data. It's important we do these trials in uncontrolled settings. But the population that we're admitting on average has five intrauterine blood transfusions and has close to a 20% infant mortality rate and high infant morbidity with infants in NICU. And so, the endpoints here are pretty profound. Obviously, if we can have no intrauterine transfusion, a higher percentage of healthy live births and reduction in costs after, there's a very powerful difference in these patients by being able to prevent transfer of antibodies. And so, it shouldn't -- it's not an ambiguous [Indecipherable].

Yanan Zhu -- Wells Fargo Securities -- Analyst

Got it. And as the trial is ongoing, would you have the ability to communicate data with FDA? Or do you -- or would you rather wait until all 15 patients' data has been collected? Thanks.

Craig A. Wheeler -- President and Chief Executive Officer

We have the ability to communicate with the FDA at our discretion.

Yanan Zhu -- Wells Fargo Securities -- Analyst

Got it. Thank you very much.

Santiago Arroyo -- Senior Vice President, Development and Chief Medical Officer

I wanted just to confirm. We are doing two studies. One is the treatment study, which is 15 patients. And we are also doing an observation on natural history study, which we are trying to include 15 patients. Both of them are undergoing and both of them are improving. So we'll have that natural history study in addition to our previous data that we have collected with several databases across the world in centers of excellence, which provide us a good understanding of what is the natural history of the disease in that severe patient population.

Yanan Zhu -- Wells Fargo Securities -- Analyst

Got it. Very helpful. Thank you.

Operator

We have no further questions in queue. I'll turn the call back to the presenters for closing remarks.

Craig A. Wheeler -- President and Chief Executive Officer

Okay. Thank you very much operator. And I'd just like to thank all of our investors for participating in the call today and we look forward to keeping you updated on the fantastic progress we're making and we'll talk to you all in the next quarter. Thank you. [Operator Closing Remarks]

Duration: 61 minutes

Call participants:

Patty Eisenhaur -- Vice President, Investor Relations and Communications

Craig A. Wheeler -- President and Chief Executive Officer

Young Kwon -- Chief Financial and Business Officer

Santiago Arroyo -- Senior Vice President, Development and Chief Medical Officer

Anthony Manning -- Chief Scientific Officer

Robyn Karnauskas -- SunTrust Robinson Humphrey -- Analyst

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

Bill Grau -- Stifel -- Analyst

Stacy Ku -- Cowen -- Analyst

Danielle Brill -- Piper Sandler -- Analyst

Douglas Tsao -- H.C. Wainwright. -- Analyst

Yanan Zhu -- Wells Fargo Securities -- Analyst

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