Viela Bio Inc (VIE) Q4 2019 Earnings Call Transcript

Viela Bio Inc (VIE)
Q4 2019 Earnings Call
Mar 25, 2020, 5:00 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good afternoon, ladies and gentlemen. And welcome to the Viela Bio fourth-quarter and full-year 2019 earnings conference call. [Operator instructions] As a reminder, this conference call is being recorded. I would now like to hand the call over to Mr.

Mitchell Chan, chief financial officer at Viela Bio. Please go ahead.

Mitchell Chan -- Chief Financial Officer

Thanks, and welcome, everyone, to the fourth-quarter and full-year 2019 earnings call. The press release reporting our financial results in addition to the presentations for today's webcast are available on the Investor and Media page of our corporate website at www.vielabio.com. Joining me on the call this afternoon are Bing Yao, our chairman and chief executive officer; Jorn Drappa, our chief medical officer; and Bill Ragatz, vice president, head of commercial. As a reminder, we will be making forward-looking statements regarding our financial outlook, in addition to regulatory, product development and commercialization plans and research activities.

These statements are subject to risks and uncertainties that may cause actual results to materially differ from those forecasted. A description of these risks can be found in our most recent Form 10-K on file with the SEC. Similar to many companies in the biopharma sector, we are closely monitoring the coronavirus outbreak, including the associated restrictions on travel and work that have been implemented, as well as its potential impact on our business and clinical trials. The extent to which the coronavirus impact us will depend on the future development, which are highly uncertain and cannot be predicted, including new information, which may emerge concerning the severity of the coronavirus and the actions to contain the coronavirus or treat the impact, among others.

I would now like to turn the call over to Bing Yao, our CEO.

Bing Yao -- Chairman and Chief Executive Officer

Thank you, Mitch. Good afternoon, everyone. Thank you for joining us today. 2019 was a busy and productive year for Viela.

We recently closed initial public offering and announced the acceptance of our BLA for review by U.S. FDA, of our lead product, inebilizumab. Based on strong efficacy and safety results, we believe that inebilizumab, which we studied as the first-line monotherapy in neuromyelitis optica spectrum disorder or NMOSD has the potential to be an important new treatment option for patients who suffer from this devastating and rare neuroinflammatory disease. Beyond inebilizumab, in a brief time since our founding in 2018, our team has made incredible progress by advancing our entire pipeline of diversified product candidates for rare and serious autoimmune disease.

During today's call, we'll be reviewing all our programs in detail. But first, I would like to say a few words regarding the impact of the coronavirus outbreak on our business and operations and how we are dealing with this rapidly evolving situation. At present, we're not yet experiencing significant impact or delays from COVID-19 on our business operations, and if approved, our commercialization plans for inebilizumab in NMOSD. However, in order to prioritize patient health and that of the investigators at the clinical trial sites, we have made the decision to temporarily pause the enrollment of new patients for four weeks in some of our trials.

Although it is too early to tell how impactful this pandemic will be, we're mindful that the circumstances continue to evolve. We have existing supplies of drug products available to continue our ongoing clinical trials. We also have the infrastructure in place that will allow many of our employees to work remote. We are taking the necessary precautions to minimize exposure to the virus, including limiting inessential travel.

Like many of our peers, we have put in place a robust risk mitigation plan to ensure the safety of our workforce, our customers and communities and to deal with possible effects on clinical trials and supply chain. We are monitoring the situation carefully and are following guidance from local and federal health authorities. Please move on to Slide No. 4.

With that introduction, I would like now to discuss our scientific approach and our development strategy. With a deep expertise in autoimmunity and immunology, realized focused on understanding critical pathways that drive our immune conditions, we then develop molecules that target that critical shared pathway. This approach could potentially allow us to identify patients more likely to respond to treatment. It also gives us the opportunity to pursue multiple indications that share the same pathway.

You see on the graphics on your right side in this slide, our clinical assets modulate three pathways. The first one is autoantibody pathway. Second one is a co-stimulatory pathway. Third one is innate cytokine pathway.

Additionally, our research group continues to study and develop molecules for new pathways. Move on to Slide No. 5. This is our pipeline.

Our pipeline is robust with five molecules in development, three in clinical stage and two in preclinical. The biggest near-term milestone is the potential approval of inebilizumab in NMOSD. It would be our first U.S. FDA approval.

Building on the success of NMO trial, we're pursuing a number of life cycle opportunities, including myasthenia gravis, IgG4-related disease and kidney transplant decentralization. Our CMO, Jorn Drappa, is here today, who will discuss those in more details later on. We are also developing VIB4920 fusion protein, designed to bind to CD40 ligand, blocking CD40 ligand and CD40 interaction. It is in development for Sjögren's syndrome and kidney transplant rejection.

Our third clinical candidate is VIB7734. It is currently in Phase 1b multiple ascending dose study. We expect interim data for the second cohort in the first half of this year. In parallel, we are preparing for Phase 2 studies.

Moving to the next slide, Slide No. 6. As to our product development strategy, it was centered around targeting disease for which treatment options are limited. Using a shared pathway approach, we can target clusters of indications that share that same pathway.

For example, inebilizumab has the potential to target a number of different new inflammatory disease. VIB4920 has the potential to target the cluster that includes Sjögren's, lupus among a number of other indications. So that is a cluster shown in the light blue. We started with NMO indication, that's because of the high unmet medical need.

NMO is a rare disease with about 10,000 patients in the U.S. We're now expanding inebilizumab in two indications with two to five times the patient size in MG and the IgG4-related disease. For Sjögren's, it is a large indication with no approved therapies. As a matter of fact, Sjögren's is the second largest rheumatic disorder.

There are over 1 million sufferers in the U.S. alone. The estimate for biologics addressable patient population is over 100,000. Next slide.

I would like now to review our lead program, inebilizumab. Please go to Slide No. 8. Inebilizumab is a humanized monoclonal antibody designed to target and deplete CD19-expressing cells.

As shown on the graphics on your left side, there are three possible mechanisms by which this antibody works. First of all, it can potentially reduce autoantibody production and, secondly, can also block antigen-presenting -- B cells is one antigen-presenting cell. Similarly, active B cells can secrete cytokines and mediators, and inebilizumab could have the potential to block that mechanism. As compared with CD20 targeting, targeted CD19 can be more direct and have more rapid action.

That is due to the broader expression of CD19 in B-mediated cells, including plasma cells and plasmablasts. Because of the enhanced antibody-dependent cytotoxicity, there could be deeper depletion of tissue B cells by inebilizumab. Move on to the Slide No. 9.

We are developing this molecule as a potential first-line monotherapy for patients with NMOSD. NMOSD is a severe and rare autoimmune disease, affecting optic nerve and the spinal cord. Patients suffer from debilitating relapse or attacks, which often leads to blindness and permanent paralysis. The burden is tremendous on the patients and their families, care partners and on the healthcare system.

It is a rare disease, the estimate is about 10,000 patients in the U.S., 8,000 in EU and 5,000 in Japan. About 80% of the NMOSD patients have another antibody to aquaporin-4. Move on to Slide No. 10.

Early last year, we announced positive data in our N-MOmentum trial. N-MOmentum was our largest ever trial conducted in NMOSD. The trial met primary endpoint of clinically significant reduction in the risk of attack. Risk reduction was 77% in aquaporin-4 positive patient population.

That's a graph on the left panel of this slide. 87.6% of patients were relapse-free at six months. In the intended-to-treat patient population with both aquaporin-4 positive and negative patient population, there was 72.8% risk reduction versus placebo. At six months, 86.7% were relapse-free.

Slide No. 11. In addition to meeting primary endpoints, the trial met several key secondary endpoints, including reduction of worsening of disability, reduction of MRI lesion and a reduction of NMOSD-related hospitalization. Inebilizumab was the only agent to show a significant impact on the disability endpoint in pivotal trials.

This positive impact, as measured by secondary endpoints, could provide important benefits to patients and offer depreciation from other agents. Slide No. 12. We continue to follow patients in our open-label extension study, a large number of patients 216 out of 230 entered open-label extension.

As of today, still, around 88% of patients remain on the study. Mean time duration is now over two years. Importantly, results from the open-label period is consistent with primary analysis. After one year on inebilizumab monotherapy, 84.4% of patients were free of NMOSD attack.

Slide No. 13. PDUFA date is coming soon. The date is June 11, 2020.

It is exciting time for the company as we await potential first FDA approval. We are proud that our first approval is in a disease in which treatment options are limited. There is a real opportunity to make an impact on treatment paradigm. Slide No.

14. We are ready and well prepared for potential commercial launch. Our field team is in place, including MSLs, market access team and the sales team. We are very pleased with the talent that we have recruited.

Many of them have spent more than 15 years launching products for rare disease or for neurological disease. Our team is fully dedicated to NMO. This is one indication only. This gives us some unique advantage.

Bill Ragatz, our head of commercial, is here with us today to answer questions you might have. Slide No. 15. With that, I'm going to hand the call over to Jorn Drappa, our chief medical officer, to discuss our pipeline in more details.

Jorn Drappa -- Chief Medical Officer

Thank you, Bing. On Slide 14 -- on Slide 16, I'm sorry, I would like to direct your attention toward the broad applicability of targeting the autoantibody pathway by depleting CD19 cells across multiple indications. While there are many opportunities, we have prioritized three indications for clinical studies in the coming years. The first one is myasthenia gravis.

We are in the planning phases of a Phase 3 pivotal study in patients with generalized by myasthenia gravis, and I'll go into a little bit more detail in the coming slides. We are also in the planning phases of a potentially pivotal Phase 2b trial in patients with IgG4-related disease. Both of these potentially pivotal studies are planned to initiate in mid-year 2020. We have submitted the IND and are in the process of filing clinical trial applications in other locales as well.

We have also initiated a proof-of-concept trial in patients awaiting kidney transplant who are highly sensitized to major HLA antigens. The idea is to test whether inebilizumab, either alone or in combination with VIB4920, another one of our candidates, is capable of significantly reducing titers of these autoantibodies. On Slide 17, a little bit more detail about myasthenia gravis. Myasthenia gravis is a disease that is caused, in part, by all antibodies targeting receptors on the neuromuscular junction.

It has many similarities to NMO in that both diseases are mediated by a pathogenic antibody that results in tissue damage. In the case of myasthenia gravis, these antibodies target either the acetylcholine receptor expressed at the neuromuscular junction or an antigen called muscle-specific kinase. Approximately 85% of cases are positive for the acetylcholine receptor autoantibody, and approximately 8% of patients have other antibodies against muscle specific kinase. We will study inebilizumab in patients with generalized myasthenia gravis.

The trial will enroll approximately 250 patients, and as I said, we plan to initiate the trial toward the middle of this year. On Slide No. 18, a little bit more about IgG4-related disease. IgG4-related disease is a relatively newly defined disease entity.

These were previously known by a variety of different names. The common feature of these diseases is that they are characterized by invasion of plasmablast-like cells into a variety of tissues, which ultimately causes inflammation and subsequent fibrosis. Commonly involved organ systems include the biliary tract, the liver, the retroperitoneum, but virtually any organ system can be involved. Another common feature in this disease is that they are characterized by high levels of IgG4 in the plasma, and the levels of IgG4 tend to correlate with the severity of this disease.

This disease generally affects older people, 60 years or older. And although epidemiological data is very scant, we believe there are approximately 20,000 to 40,000 of these patients in the United States. The current mainstay of treatment is glucocorticosteroids. These are quite effective in reducing disease activity.

However, the disease tends to recur and flare as soon as corticosteroid doses are reduced. And therefore, many patients need to be chronically treated with steroids, which can induce a very substantial drug toxicity. We will test the ability of inebilizumab to prevent flares of disease recurrence in a Phase 2b trial. That, as I said, is planned to be started in middle of this year.

The trial will enroll patients with recently active disease requiring treatment, who are at high risk of disease recurrence. With that, let's move on to some of our other pipeline candidates. On Slide 20, there's a graph depicting the mechanism of action for this molecule. So VIB4920 is a molecule that targets CD40 ligand.

The receptor ligand pair of CD40 receptor, CD40 ligand, is important in three different biological pathways. One is B cell maturation and antibody formation. These occur in germinal centers. The interaction of CD40 ligand expressed on activated T cells, and CD40 receptor expressed on B cells, is critical for germinal center formation.

If you block this, germinal centers cannot form and antibody responses cannot occur. CD40 ligand is also important for dendritic cell activation and for the activation of macrophages or the function of macrophages. CD40 ligand is a well-validated target. First-generation antibodies targeting CD40 ligand have been evaluated in diseases such as lupus nephritis, ITT and inflammatory bowel disease, and initial results look promising.

However, these first-generation molecules had a significant liability that involved thromboembolic side effects. These side effects were mediated by cross-linking platelets -- cross-linking of CD40 ligand expressed on platelets with Fc gamma receptors on neighboring cells. To circumvent this toxicity, we engineered VIB4920, as depicted on Slide 21, to be not capable of engaging Fc gamma receptors. This molecule comprises two Tenascin-3 domains that are mutated to convey the recognition of CD40 ligand, and that it is coupled to a human serum albumin.

So this molecule is not capable of binding Fc gamma receptors, and would, therefore, not be predicted to be settled with the liability of platelet aggregation. And we have verified this in very careful preclinical studies and also in the initial two clinical trials where we have seen no evidence of platelet aggregation or any thromboembolic type of toxicities. On Slide 22, some of the results from our Phase 1b multiple ascending dose study in patients with moderately active rheumatoid arthritis are depicted. This is a busy slide.

However, focus your attention on the left-side panel. This panel depicts a standard outcome measure in rheumatoid arthritis disease activity Score 28 DAS28-CRP. And you see that there is a dose-dependent, rapid and profound reduction in disease activity especially in the two higher doses, 1,000 and 1,500 milligrams. On the right-side panel, I would direct your attention to the second and third row that shows you that approximately three-quarters of patients at the end of the three-month trial period were either in a state of low disease activity or remission.

And that is truly the bar in rheumatoid arthritis that we have to meet today in order to prevent the progression of structural progression of this disease. I would also like to point out to you that we have followed patients out beyond the three-month treatment period, off treatment for another three months and saw the treatment effect was maintained, both with respect to clinical outcome measures, as well as a variety of biomarkers such as the rheumatoid factor titers. The CD40, CD40 ligand pathway is thought to be crucial in a large number of autoimmune diseases. We have decided to prioritize Sjögren's syndrome initially, as well as started a smaller trial in kidney transplant rejection.

Let's talk about Sjögren's syndrome first. Sjögren's syndrome is the second most common rheumatic disease after rheumatoid arthritis. It's thought to affect well over 1 million patients in the United States, out of whom about 100,000 may be eligible for treatment with a biologic. There is currently no approved treatment for Sjögren's, and really, there's no treatment that works.

There is therefore a large unmet medical need. We have confidence that CD40, CD40 ligand is important in this disease. We know that both the receptor and the ligand are overexpressed in the circulation, but especially in inflamed tissues in patients with Sjögren's syndrome, and we also know from animal models that this pathway is important in this disease. We have initiated a trial in patients with Sjögren's syndrome, a Phase 2b trial, a fairly substantial size, a total of approximately 175 patients.

And traditionally, trials have shorter term focus on patients with high systemic disease activity. We will also study these patients. But in addition to that, we will study patients who have less systemic disease activity but have a high symptom related to dry mouth, fatigue and other subjective symptoms. This trial has started enrolling early this year, and we expect enrollment to occur over the next approximately 18 months, with the caveat that these timelines may shift due to the current COVID-19 situation.

The second trial is a small proof-of-concept study, targeting patients who have received kidney transplant and need immunosuppressive regimens in order to prevent transplant rejection. The current mainstay of kidney transplant rejection is a combination of belatacept and calcineurin inhibitors. This regimen is quite effective. However, calcineurin inhibitors are associated with kidney toxicity, resulting in slow deterioration of kidney function, which is obviously highly undesirable in patients with a recent kidney transplant.

So the objective of this trial is to test the hypothesis that a combination of belatacept and 4920 can be as effective in preventing transplant rejection but associated with less renal toxicity. Finally, on Slide 25, I would like to briefly talk about VIB7734. This is a monoclonal antibody that targets an antigen that is very specifically expressed on the surface of plasmacytoid dendritic cells. Plasmacytoid dendritic cells or pDCs play a multifaceted role in inflammation.

They produce a large amount of cytokines, particularly type I interferons, but also TNF, IL-12, IL-6 and other cytokines. They are also important in activating other cells, such as T cells, neutrophils, macrophages. These cells are thought to be cells in the circulation and in tissues that recognize dangerous signals, such as viral nucleic acids, immune complex and others. And then as they do recognize these immunological danger signals, leads them to produce large amounts of these cytokines, as well as active and autoimmune cells.

However, these cells are also thought to be very important in maintaining a pro-inflammatory state in tissues in patients with autoimmune disease. For example, if you take skin biopsies of patients with lupus skin disease, you can see a tremendous enrichment of pDCs in these lesions. Similarly, when biopsies of patients with autoimmune muscle disease such as myositis, have been analyzed, these pDCs have also been found in large numbers. And they are thought to produce a lot of cytokines and maintain inflammation in these diseases.

And therefore, the hypothesis is that depleting these cells can interrupt this pro-inflammatory cycle. We are currently in the process of conducting a Phase 1b multiple ascending dose trial in patients with lupus skin disease. The trial schematic is depicted on Slide 26. Three cohorts were enrolled.

The first cohort were eight patients with a mix of different autoimmune diseases, including cutaneous lupus, Sjögren's, systemic sclerosis, as well as polymyositis and dermatomyositis. Cohorts 2 and 3 only enrolled patients with cutaneous lupus. Cohort 2 comprises 12 patients. And cohort 3 that was just recently -- where we just recently enrolled the last patient, that comprises 11 patients.

The idea in this study is to test whether VIB7734 not only depletes pDCs in the circulation, which we have already demonstrated in our Phase 1a trial, but also in inflamed tissue. And to that end, the patients with cutaneous lupus will receive VIB7734 and they will get skin biopsies before and after treatment so that we can demonstrate that these cells actually will disappear from inflamed lesions. In addition to that, one of the secondary endpoints is a measure of disease activity in skin lupus, it's by the name of CLASI, Cutaneous Lupus Activity and Severity Index. And so we hope to at least get a directional signal as to whether these lesions will improve over time after treatment with VIB7734.

We will conduct an interim analysis for cohort 2. The results of that are expected in the second quarter of this year. And the final results that also include cohort 3 are expected toward the end of this year. With this, I would like to turn it over to Mitchell Chan, our chief financial officer.

Mitchell Chan -- Chief Financial Officer

Thanks, Jorn. I'd like to refer to you to our press release issued earlier today for a summary of our financial results for the fourth quarter and full year ended 2019 and take this opportunity to briefly review a few items. In 2019, we have received a total of $50 million in license revenue from our partners, $30 million of which was recorded in Q4 from our partner, Mitsubishi Tanabe. As we continue to invest in our pipeline, we invested $105 million in R&D, of which about $20 million was a onetime milestone payment related to our BLA filing of inebilizumab.

Q4 R&D investment grew to $32 million due to our pipeline progress and expansion. For SG&A, we invested $35 million in 2019, which includes our U.S. pre-commercialization investment for inebilizumab in NMOSD. In all, our total operating expenses for 2019 was $140 million, which is a 27% decline versus that of 2018.

The major contributor for the year-on-year decline is due to the $143 million acquisition of in-process R&D in 2018. Together with our other income, our operating loss for 2019 was $86 million, which is a 55% decline versus prior year. This translates into a pro forma net loss per share of $1.70 or a GAAP net loss per share of $7.02. For 2020, we expect our total operating expenses to increase by about a third, which is primarily driven by the addition of five new clinical trials through the expansion of our R&D pipeline.

With that, I'd like to hand it over back to Bing.

Bing Yao -- Chairman and Chief Executive Officer

Thank you. As you have just heard, it is a productive and important time at Viela. We accomplished a tremendous amount in 2019. We are anticipating several important near-term milestones, including Viela's first potential product approval.

I'm incredibly proud of our team, without whom this level of progress would not have been possible. With that, I would like to open the call to questions. Operator?

Questions & Answers:

Operator

Thank you. [Operator instructions] Our first question comes from Seamus Fernandez with Guggenheim. Your line is open.

Seamus Fernandez -- Guggenheim Partners -- Analyst

Great. Thanks for the questions, and congrats on all the progress. Appreciate the updates on the coronavirus. I did notice that the majority of your trials have actually been -- at least the trials that were started last year, most of them are listed as fully recruited.

So in terms of what you're doing to kind of manage the trials that are ongoing, can you just update us on your confidence that those trials can continue to operate successfully for the patients that have been recruited? And the second question, you haven't talked about the one trial that you started, the 75-patient trial in RA. Can you just update us on the RA trial for 4920 that was initiated in December? It also looks like it's fully recruited, so just wanted to get a sense of what you're testing there. And then the final question is for Jorn. Jorn, as we look forward to the cutaneous lupus data, can you just help us understand the sort of the primary endpoint as we think about that, relative to the kinds of secondary endpoints that we could realize there.

And maybe you could just give us your thoughts on Biogen's 059 asset, maybe just compare and contrast the BDCA 2 mechanism versus ILT-7. Thanks so much.

Mitchell Chan -- Chief Financial Officer

Thanks, Seamus. I think all three questions is likely to be filled by Jorn. But maybe the first one, can we actually operate effectively given the circumstances? We can start with that question first, Jorn?

Jorn Drappa -- Chief Medical Officer

Yes, thanks. So first of all, both the Sjogren's trial and the rheumatoid arthritis MIDORA trial have begun enrollment late last year and early this year, respectively. So they have not been fully enrolled. They have actually just started enrollment, so with a total of, I think, eight patients or so across these two trials, or 10, have been enrolled.

We have made the decision in the interest of the safety of study participants, as well as site personnel, as well as to respect scarce resources at many clinical trials that has to temporarily pause recruitment in both of these trials, both the MIDORA and the Sjögren's for four weeks, at which time we'll reassess and we'll reassess this very carefully, not just across the board, but according to the geographic locale. As is typical in both of these trials, the initial sites that came on first are located in the United States, and some of them are in areas that are quite impacted by the coronavirus pandemic. And so we'll have to watch this carefully. We did not feel it was appropriate in this situation to ask patients to come for randomization visits to medical centers where they could be potentially put at risk and also where resources and protective measures are scant at this period of time.

We've made a couple of other accommodations for patients that are currently participating in our clinical trials, including the open-label study for inebilizumab, as well as these couple of handful of patients that were in the Sjögren's and RA trials. And these follow closely the FDA guidance, which was just recently released, that suggests that increased flexibility with respect to virtual visits, telephone follow-up, enabling local labs rather than central labs, etc. So we've been doing all of these things, and we'll just have to watch the situation very carefully and see how the situation evolves.

Mitchell Chan -- Chief Financial Officer

The second question was in regards to the MIDORA trial, Seamus, regarding the 75 patients recruitment in RA, what the expectation of that trial is, Jorn.

Jorn Drappa -- Chief Medical Officer

So for the MIDORA trial, the purpose of that trial is really to identify the optimal dose and dosing schedule for 4920. We've seen in the Phase 1b trial that the treatment effect was maintained for quite a long time after administration of the last dose since trial, so we followed patients out to six months. And the follow-on trial will ask questions, so how many doses do we actually need to give? And how far can we stretch the dose interval? So that is the primary objective of this trial. We were initially expecting to enroll this trial over approximately 12 months.

We now, obviously, since we have temporarily paused enrollment, need to reassess what to do then and update the timelines as we go.

Mitchell Chan -- Chief Financial Officer

And the last question is in regards to VIB7734, what the expectations are when it comes to Phase 1b cohort 2 and how that potentially compare and contrast to the Biogen 059 data.

Jorn Drappa -- Chief Medical Officer

Right. So expectations for the Phase 1b first. So the name Phase 1b implies is that the primary objective is safety. So that is the primary endpoint.

But there are important other objectives in this trial. The most important is to really demonstrate proof of mechanism. So ask the question, can we effectively deplete pDCs in inflamed tissues and at what dose? So that's the biomarker question. And then there is a very exploratory analysis of a clinical endpoint, which is the CLASI, the Cutaneous Lupus Area and Severity Index.

The trial is definitely not designed or powered to give a definitive answer here, but we hope to at least get a directional signal that lesions start to improve after giving VIB7734.

Mitchell Chan -- Chief Financial Officer

Thank you so much, Seamus.

Seamus Fernandez -- Guggenheim Partners -- Analyst

Thanks very much.

Mitchell Chan -- Chief Financial Officer

Thank you. Next one is Jeff Hung from Morgan Stanley. Jeff?

Jeff Hung -- Morgan Stanley -- Analyst

Thanks for taking the questions. So following up on -- you're saying that you paused enrollment in some of the trials for four weeks. So which specific trials have you paused enrollment besides the Sjögren's and RA? And I guess what is your current thinking for studies that are about to begin? And along the same lines for 7734, have all the patients in cohort 2, have they all been enrolled?

Jorn Drappa -- Chief Medical Officer

To start with the last question first, yes, the enrollment of the 7734 study has now completed. With respect to which studies have been impacted, so the two currently enrolling studies were the MIDORA RA study and the Sjögren's study. So enrollments of new randomizations into these studies have been paused, as I said, for four weeks initially, and we'll reassess after that. There were two transplant trials.

One is the desensitization study, that had, in fact, not started enrollment yet, as well as the 4920 transplant rejection prophylaxis study. That also, after the protocol, have not been enrolling yet. We have also decided to delay screening and enrollment for those two trials as well until we have a greater degree of clarity on the risk versus benefit and the possibility of restarting trials. And I might add that even if we hadn't done this step proactively, we are hearing from many study centers that they, in fact, currently do not allow clinical research, except with very few exceptions.

So even if we have proactively decided that, our hand, as well as that of our peers in the industry, would have been forced in any event.

Jeff Hung -- Morgan Stanley -- Analyst

And then for inebilizumab, can you talk about the interactions you've had with payers? And what confidence do you have that patients won't need to step through Rituxan first?

Mitchell Chan -- Chief Financial Officer

Great question. Bill, would you mind?

Bill Ragatz -- Vice President, Head of Commercial

Yes. Thanks, Jeff. We've obviously been having ongoing discussions with payers around how exactly they're going to position this product. And I think that the value that inebilizumab has with the primary and secondary efficacy endpoints, along with the proven results from the trial in both in terms of safety and efficacy, the dosing interval, gives us strong confidence that we will not be forced to step through rituximab.

Obviously, this still has to play out. Price will actually make a difference there as well, too, but we are not expecting that in our launch scenario.

Mitchell Chan -- Chief Financial Officer

Thank you, Jeff.

Jorn Drappa -- Chief Medical Officer

Great. Yes. And that is...

Mitchell Chan -- Chief Financial Officer

Yes.

Jorn Drappa -- Chief Medical Officer

Sorry, go ahead.

Mitchell Chan -- Chief Financial Officer

Next on the call is going to be Paul Choi from Goldman Sachs. Paul, you're on.

Paul Choi -- Goldman Sachs -- Analyst

Thanks, Mitch, and good afternoon, everyone, and congrats on all the progress. My first question is a commercial one for either Bing or Bill. Can you just comment on sales force hiring, where you are ultimately thinking about with regard to the size of the sales force and with regard to targeting either centers of excellence or MS treating centers? And what does that imply in terms of patient coverage as you launch in inebilizumab here in 2020? And then I have two clinical questions as follow-ups.

Mitchell Chan -- Chief Financial Officer

OK. Bill?

Bill Ragatz -- Vice President, Head of Commercial

All right. Sounds good, Paul. Thanks for the question. In regards to sales force, our sales forces are all fully staffed already.

That includes our MSL team, our market access team and our sales team. We've been able to hire a very experienced team. They average over 15 years of experience and have exposure to both rare diseases and neurological diseases overall. So we feel we're in very good position from a sales force perspective.

As far as coverage goes, when we're looking at the territories and how we set this up, we looked at the overall universe of who is currently prescribing NMOSD drugs, particularly the ISDs, the immunosuppressant drugs, and built the sales force around that. So we will be covering both the academic centers, which will be more the primary focus but also the community doctors who are also currently riding along with those who are seeing significant patients. So our coverage should be good for all of the existing patients, and we feel that it will be on par with our existing and potential future competitor.

Paul Choi -- Goldman Sachs -- Analyst

OK. Thanks for that.

Mitchell Chan -- Chief Financial Officer

Yes. Paul, you have follow-up questions?

Paul Choi -- Goldman Sachs -- Analyst

Yes. Thanks for that. OK, so two clinical questions. First, on 7734.

I know you've laid out your timelines for cohort 2 and cohort 3 over the course of this year, which contain a mix of patients with systemic lupus and without, but when can we expect data from cohort 1? And how does that inform your plans to go forward across other indications beyond lupus? And the second question is just on the Phase 3 for MG. Have you reached agreement with the FDA on the clinical plan? And if so, what are sort of the -- if not, what are the remaining gating factors? Thank you.

Jorn Drappa -- Chief Medical Officer

So to start with 7734, so just as a reminder, so the first cohort was this mixed cohort. That was the lowest dose, which we didn't expect to be fully saturating the target. So that really the sole objective for this first cohort was safety in a dose escalation kind of scheme. The second and third cohorts only comprised skin lupus patients, so all of these have a before and after skin biopsy and will have the pDCs and other biomarkers analyzed.

So the objective there is beyond safety. It's also biomarker, as well as a directional signal on clinical efficacy. And then with respect to the myasthenia gravis, yes, we have filed the IND. We've received minor comments back from the agency.

There is general agreement on study design, endpoints and other key elements of the study design. So we do not expect any areas of disagreement.

Paul Choi -- Goldman Sachs -- Analyst

Great. Thanks, Jorn.

Mitchell Chan -- Chief Financial Officer

Next we have is Chris Shibutani from Cowen. Chris, you're on.

Chris Shibutani -- Cowen and Company -- Analyst

Great. Thank you, Mitchell. I think you're sharing with us this open-label extension data for the first time going out beyond the time period that was required for regulators. Maybe could you just highlight, in particular, any observations that you saw either in terms of the efficacy profile or the safety dimension between the groups, particularly who have received the extended dosage.

And then second, just to clarify, were there any differences in the discontinuation rates between the drug study population versus the original placebo control group?

Jorn Drappa -- Chief Medical Officer

Can I just clarify that? Are you referring to the inebilizumab open-label extension trial?

Chris Shibutani -- Cowen and Company -- Analyst

Yes, correct. That's right. Yes. I think the slide today, if I'm not wrong, introduces follow-up periods now up to 365 days, which is extended versus previous data disclosures.

So just making sure that we understand any key takeaways that you have in terms of what that data is.

Jorn Drappa -- Chief Medical Officer

Right. So I think key takeaways are that the safety profile remains unchanged, so we have not really seen any new safety signals that would raise any concern. The second key takeaway is we have seen a very low number of additional attacks. So as you saw from the published randomized control period, even in the treated group, there were a few attacks.

They occurred by and large early on after initiation of treatment. We see them beyond the randomized controlled period as patients are on inebilizumab for a longer time that we see virtually no new attacks occurring. So it seems like over the patients, by and large, stabilize with extended treatment with inebilizumab. Safety-wise, again, no new signals.

We have a little bit more data now on the trajectory of immunoglobulin titers. That's an expected class effect. That is seen with basically all B-cell depleting therapies, and we see a slow decline in IgG levels. But there had only been one patient that actually has reached a level of IgG that could be classified as hypogammaglobulinemia.

And in all others, there's a slow decline. We're following this obviously very closely, but it's not dissimilar from what is seen with other B-cell depleting therapies.

Chris Shibutani -- Cowen and Company -- Analyst

OK. Great. And then some very quick housekeeping questions relevant to COVID-19 impact. Should we assume, because you're not saying anything, that you do not anticipate any issues in terms of manufacturing or supply of the drug for your commercial launch? And number two, you would not anticipate that there would be any risk to timelines relative to the FDA's review with your June 11 PDUFA reiterated? Are both of those quite intact and protected from any COVID-19-related issue?

Bing Yao -- Chairman and Chief Executive Officer

Yes. In terms of the FDA timeline, we did not receive any information to indicate there will be a delay, so we continue to prepare for our commercial launch. As for the product, we think we have adequate supply already in here. We are also putting in place mitigation plans to make sure that our supply chain is working, and we're working with the FDA on those things.

Chris Shibutani -- Cowen and Company -- Analyst

Great. And finally, just take a stab, European partnership. Any update there? Thank you.

Bing Yao -- Chairman and Chief Executive Officer

Yes. As we communicated earlier, for us, we want to launch inebilizumab in the U.S. ourselves, and sales group on location is preparing for that. For ex-U.S., it's partnering.

So we are -- for EU, European countries, we'll continue to discuss with potential partners. So that discussion is ongoing.

Chris Shibutani -- Cowen and Company -- Analyst

Right. Thanks.

Mitchell Chan -- Chief Financial Officer

Next, we have Heath Duncan from Guggenheim. Heath, you're on.

Unknown speaker

Hey, guys, thank you for taking my question. Just a couple of questions on inebilizumab. And first, following up on the last question that Chris asked, can you maybe remind us where you are with preapproval manufacturing inspections with regard to inebilizumab? Is that done? If you can comment there. And then also comment on your expectations for the label.

How should we think about the black box, if any? And then I do have a follow-up.

Mitchell Chan -- Chief Financial Officer

OK. So first question, Bing, with yield, and the second one will be with Jorn.

Bing Yao -- Chairman and Chief Executive Officer

Yes. In terms of product manufacturing, I actually recall that our product is manufactured by AstraZeneca. We have since cleared the inspection by the U.S. FDA.

Jorn Drappa -- Chief Medical Officer

With respect to the second question, so it's premature to talk about the label as we have not received the red-line label yet from the agency. We have and we will continue to advocate for a label that's based on the results of the clinical study, right? So it is primary endpoint and it met several key secondary endpoints, and that is what we expect to see reflected in the label. I do not see any reason why we should expect a black-box warning.

Mitchell Chan -- Chief Financial Officer

And do you have a question on for Bill? Back to you.

Unknown speaker

Yes, I have a follow-up. I mean, just can you maybe talk a little bit about the size and scope of the IgG and MG trial. And I think Jorn did mention that for the MG, you are thinking of recruiting about 250 patients. Will that just be AChR positive, or are you thinking about the lead or the negative patient? And how the powering will be, will it be just on AChR positive or not? And then with regard to the IgG4, I didn't catch if you said how many patients are you planning to enroll.

Could you maybe also comment on how you're defining that disease? Because some of the competitors out there have put out a number, which is probably a lot larger than what you are estimating. So just help us understand how you're defining the IgG patient population. Thank you.

Jorn Drappa -- Chief Medical Officer

So let's start with myasthenia gravis. So we will study both AChR positive, as well as not positive population. Total number is about to 250, as I said. With respect to the IgG4-related disease, we're using the newly implemented CAR and EULAR diagnostic criteria to define this patient population.

Mitchell Chan -- Chief Financial Officer

Does that answer your question?

Unknown speaker

Yes.

Mitchell Chan -- Chief Financial Officer

OK. Thank you. We have Ram from H.C. Wainwright.

Ram?

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

Thanks so much for taking my questions. I think the first one I would like to ask is probably for Bill. I was just wondering if you guys had kind of thought through any specific modifications to sales and marketing strategy or ways to overcome the possibility that perhaps your sales force might not be able to engage in face-to-face promotional activities, depending on how long the coronavirus pandemic-related crisis were to last in the United States.

Bill Ragatz -- Vice President, Head of Commercial

Yes. Great question. Thank you for it. Clearly, the overall objective of our launch isn't going to change at all.

We believe we have a strong argument to be a first-line therapy in NMOSD and used in a lot of patients, so and that's not going to change. And right now, it's really too early to understand the impact here, knowing that it is very different across the regions. We are looking at this. We will be tracking this over time and making sure we do have contingency plans.

So our how might change a little bit, but what we need to accomplish will remain the same.

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

OK. Fantastic. And then just a couple of clarificatory points regarding enrollment statuses and timing-related issues on the clinical development side. Can you confirm that all cohorts in the Phase 1b 7734 trial have been fully enrolled or if it's only been cohorts 1 and 2?

Jorn Drappa -- Chief Medical Officer

No, I can confirm that all three cohorts are fully enrolled there.

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

OK. And then the kidney transplant desensitization study with inebilizumab, can you just remind me what you said about whether or not you are expecting to delay initiation of that study or not?

Jorn Drappa -- Chief Medical Officer

That study had not yet randomized the patient screening. Some sites were up and screening was in progress. And yes, we have decided to delay randomization and screening for the study.

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

OK. And then just a question for Mitch, I guess. Can you comment on what you expect 2020 R&D spending to potentially look like relative to your previous expectations prior to the emergence of the pandemic crisis? Just a qualitative sense would be fine, but just looking for some sense of what impact the R&D spending is likely to see from potential changes in timelines, pausing of randomizations relating to the pandemic. Thank you.

Mitchell Chan -- Chief Financial Officer

Yes, great question. So as Jorn kind of mentioned, we voluntarily paused for four weeks at this moment in time. And as everyone could appreciate, with this pandemic that's going on, it's premature to really assess the impact on 2020 because I think we are gathering new information on a day-to-day basis. I think at this moment in time, it will be unwise of us to comment.

We need to continue to gather information. So I think overall, as I kind of mentioned on the call, the operating expenses, we do expect it to increase by a third, with the vast majority contributed to R&D, but we have not provided additional guidance on the R&D spend due to the impact of the pandemic at this moment.

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

OK. Thank you very much.

Mitchell Chan -- Chief Financial Officer

I do not see any other calls or questions on the call right now. So maybe with that, I will close up our earnings presentation and Q&A. Thank you.

Operator

[Operator signoff]

Duration: 60 minutes

Call participants:

Mitchell Chan -- Chief Financial Officer

Bing Yao -- Chairman and Chief Executive Officer

Jorn Drappa -- Chief Medical Officer

Seamus Fernandez -- Guggenheim Partners -- Analyst

Jeff Hung -- Morgan Stanley -- Analyst

Bill Ragatz -- Vice President, Head of Commercial

Paul Choi -- Goldman Sachs -- Analyst

Chris Shibutani -- Cowen and Company -- Analyst

Unknown speaker

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

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