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Zogenix Inc (NASDAQ:ZGNX)
Q1 2020 Earnings Call
May 6, 2020, 8:30 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good day, and welcome to the Zogenix Inc. First Quarter 2020 Financial Results Conference Call. [Operator Instructions]. At this time, I'd like to turn the conference over to Brian Ritchie, Lifesci Advisors. Please go ahead.

Brian Ritchie -- Managing Director

Thank you, operator, and thank you all for joining us this afternoon. With me on today's call are Chief Executive Officer, Dr. Stephen Farr; Ashish Sagrolikar, Chief Commercial Officer; and Chief Financial Officer, Michael Smith.

This afternoon, Zogenix issued a news release providing a business update and announcing financial results for the first quarter ended March 31st, 2020. Please note that certain information discussed on the call today is covered under the Safe Harbor provision of the Private Securities Litigation Reform Act. We caution listeners that during this call, Zogenix management will be making forward-looking statements.

Actual results could differ materially from those stated or implied by these forward-looking statements due to risks and uncertainties associated with the Company's business. These forward-looking statements are qualified by the cautionary statements contained in Zogenix' press release issued today and the Company's SEC filings, included in the Annual Report on Form 10-K and subsequent filings.

This conference call also contains time sensitive information that is accurate only as of the date of this live broadcast May 5th, 2020. Zogenix undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this conference call.

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

Stephen J. Farr -- President and Chief Executive Officer

Thank you, Brian, and good afternoon to everyone joining us on today's call. Before beginning my remarks on the quarter, on behalf of the entire Zogenix team, I would like to extend our sincere gratitude to all the medical personnel and other front line workers putting themselves in the path of this novel coronavirus and working to combat the current COVID-19 pandemic.

Our thoughts are with you and everyone else who's been impacted by this recent pandemic, and we hope you're all staying well. Despite the challenges presented by these unprecedented times, we are confident about our business given the advances we made in our key development programs, our strong financial position and a number of significant opportunities in value-driving milestone events emerging for us over the next several quarters.

First, the review of applications for approval of our lead program, FINTEPLA, for the treatment of Dravet syndrome, continues to advance with the regulatory authorities in the United States and in Europe. In the US, the PDUFA target action date for the NDA is coming up later this quarter on June 25th. Our interactions with the FDA have continued to move forward on multiple fronts, including a recent constructive exchange about our planned risk evaluation and mitigation strategy, or REMS, program for FINTEPLA. Similarly in Europe, we continue to work with regulators and assist them with a review of our submitted Dravet application with a target of turning an opinion by the end of this year. Second, our U.S. commercial team and patient support programs are now in place and well positioned for commercial launch to occur shortly after approval, if granted by the FDA.

In this past quarter, we completed the recruitment of our U.S. commercial team, which has deep refractory epilepsy and rare disease experience. As Ashish will outline shortly, we have been hard at work designing adaptive launch activities to address the evolving circumstances, the medical and patient communities are facing under COVID-19 in order to ensure the most seamless experience possible for healthcare providers, patients and caregivers. We want to reinforce that our open-label extension studies and the expanded access program for FINTEPLA in Dravet syndrome has been able to continue in spite of the challenging circumstances posed by the COVID-19 pandemic. In the US we have further extended the availability of the expanded access program to new treatment centers in response to strong interest from the Dravet community. Currently, there are approximately 530 Dravet patients receiving FINTEPLA in either long-term clinical studies or through the expanded access program.

The durability of the effectiveness of FINTEPLA in Dravet syndrome was recently highlighted at a KOL investor event, in which Dr. Joe Sullivan at UCSF presented updated results from the ongoing open-label extension study, Study 1503. The latest analysis included a total of 330 patients with a median treatment duration of 445 days. FINTEPLA demonstrated sustained seizure reduction in which 62% of patients had at least a 50% seizure reduction and 37% of patients had at least a 75% seizure reduction over the entire study period.

The occurrence of adverse events, or AE, was consistent with data from a previous interim analysis of Study 1503. The most common AEs occurring in more than 10% of patients were pyrexia, nasopharyngitis, decreased appetite and diarrhea. Our investigational therapy continues to be safe and generally well tolerated, and importantly, no cases of valvular heart disease or pulmonary arterial hypertension have been observed.

With these ongoing long-term patient treatment programs and an upcoming PDUFA date in June, we are also pleased to report that we do not foresee the current COVID-19 environment causing supply chain challenges. With our current drug substance and drug product inventory, the capacity to manufacture additional drug product and the long-term stability of FINTEPLA, we have high confidence in our ability to meet the requirements of all ongoing clinical trials, the expanded access program in the United States and Europe and any future commercial demand should FINTEPLA be approved under the current anticipated time lines. As we move forward in this unique operating environment and toward the potential launch of FINTEPLA in the U.S. around midyear, we are fortunate to be supported by a very strong balance sheet.

In March, we successfully completed a $230 million secondary equity offering by allowing us to conclude the first quarter with approximately $420 million in cash and marketable securities and leaving us well capitalized and positioned to execute on our potential launch of FINTEPLA in Dravet syndrome in the coming months.

I now ask Ashish to provide you with some more background on and highlights of our ongoing commercial readiness activities. Ashish?

Ashish Sagrolikar -- Executive Vice President and Chief Commercial Officer

Thanks Steve and good afternoon everyone. It is truly an extraordinary time for families and physicians in the Dravet community. It is an exciting time with the availability of new therapy for this underserved patient community. At the same time, COVID-19 has brought about increased challenges to patients, caregivers, and healthcare providers.

On the assumption that FINTEPLA received FDA approval on June 25th, our Zogenix team has been highly focused on delivering on our commitment to patients and their families and healthcare providers to ensure a seamless experience and timely access to FINTEPLA.

As many of the communications and activities in the medical world move online, and the need of telemedicine online tools and solutions grow substantially in response to COVID-19, we have engaged with physicians, nurses from the Dravet community to understand their unique situation and evolving needs.

Based on these discussions we have developed a variety of approaches and processes that include traditional insertion as well as virtual and digital tools. These tools can be used to inform support, provide education, ensure access and deliver FINTEPLA to patients who needed.

Some examples of these initiatives include capabilities for remote engagement. We are augmenting our promotional and product information material and developing online tools to allow for remote information sharing with physicians and their staff as well as the customary in-person visits. Digital HCP education. We have expanded the breadth of our digital education capability for healthcare providers to compensate for the reduced number of medical conferences.

In the first quarter, we launched multiple online medical education programs for which there has been a very high level of initial interest and engagement. Payer awareness and education has continued uninterrupted as we have developed online tools to facilitate these interactions and have been able to reliably conduct these web conferences.

On community engagement, we continue to invest in disease education and awareness and have recently launched the informational caregiver-facing educational tool via website shineforwardwithdravet.com. This was developed in collaboration with the Dravet patient community. And finally, Zogenix Central, our US specialty Pharmacy and Patient Support Services hub is up and running and it's currently supporting part of distribution to patients and families enrolled in our US early access program. As we approach a prospective US launch in Q3, we continue to see strong support for our study data from the physician community as well as significant interest in learning more about FINTEPLA as a potential treatment option from all segments of the Dravet community.

Our US commercial team is now in place. Our patient support programs are now adaptable to assist in this evolving social distance and condition posed by COVID-19. Thus, we are well positioned to launch FINTEPLA when approved as a potentially transformational treatment option for the Dravet community.

And now I will turn it back to Steve for updates on our other pipeline programs. Steve?

Stephen J. Farr -- President and Chief Executive Officer

Thank you very much, Ashish. Let me now move to additional developments from this past quarter. In February, we were very pleased to announce positive top line efficacy data from Study 1601, our global pivotal Phase 3 clinical trial for FINTEPLA in Lennox-Gastaut syndrome or LGS. With its differentiated pharmacology and novel mechanism of action these positive results positioned FINTEPLA as a potentially important treatment option for LGS patients, the majority of whom eventually become refractory to most existing therapies over time.

We're now testing forward to complete a full analysis of Study 1601 and finalize the studies and data required to support on eventual supplemental NDA or sNDA for LGS on the presumption of an NDA approval for Dravet syndrome. We intend to meet with the FDA in the second half of this year to discuss these results and finalize our plan for an sNDA submission.

In regards to potential FINTEPLA indications beyond Dravet and LGS, you will recall in the past quarter that we initiated -- started activities to conduct a Phase 2 basket study to explore the potential for FINTEPLA in several other rare difficult-to-treat epilepsy disorders, including CDLK5, dup15q, Doose syndrome and tuberous sclerosis complex, among others.

With COVID-19 pandemic significantly impacting initiating new clinical studies along with our shared desire to keep patients, their families and frontline healthcare provider as safe as possible, we decided to temporarily pause activities for this Phase 2 trial. This is an important study for us and also for the patient communities. So we are looking forward to reinitiating activities when COVID-19 conditions are [Indecipherable] begin to ease and we return to a more favorable operating environment.

Turning to MT1621 now, our investigational therapy for the treatment of mitochondria disorder TK2 deficiency. As previously noted, enrollment into Study 102, a prospective open-label study involving patients from the retro trial or Study 101 was completed at the end of January. Study 102 is ongoing and enrolled patients are continuing on MT1621 treatment, but on-site assessments for this study are limited until the COVID-19 situation subsides.

In parallel, we continue to advance the requisite non-clinical studies and product manufacturing activities to support an eventual NDA in United States and an MAA in Europe. We recently held an end of Phase 2 meeting with the FDA to discuss Study 101 clinical data and understand the requirements for an NDA for MT1621. Overall, the meeting is very constructive and structured out with prior agency interactions on the program.

An additional meeting with FDA is scheduled for late June to discuss CMC requirements and we will provide an update regarding future plans and regulatory submission time lines for the program, once we receive the official meeting minutes from the FDA. A similar path is ongoing in Europe and we are scheduled to hold a scientific advice meeting with CHMP in the third quarter of this year.

Before handing over to Mike to review the financials, I'd like to recognize and welcome a key new member of our management team, our Executive Vice President, General Counsel and Secretary, Shawnte Mitchell. Shawnte will be leading our legal and compliance functions and we are very pleased to have her on board as a seasoned strategic corporate advisor as we evolve into a global commercial stage company.

With that, let me hand over the call to Mike for his financial review. Mike?

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

Thanks, Steve, and good afternoon, everyone. Today, we issued a press release announcing our business and financial results for the first quarter ended March 31, 2020, and I'll now summarize them. We recognized $1.2 million in revenue during the first quarter of 2020, and this is a result of our March 2019 collaboration with Nippon Shinyaku for FINTEPLA in Dravet syndrome and LGS in Japan. Zogenix recognized no revenue for the corresponding period in 2019.

Total R&D expenses for the quarter were $33.2 million, an increase from $24.4 million in the corresponding period of 2019, and this is largely attributed to the increased activity in Study 1601 LGS Phase 2 study, which we just concluded this past quarter, and ongoing open-label extension studies in expanded access programs which was running [Phonetic].

SG&A expenses for the first quarter ended March 31, 2020, totaled $21.3 million, compared to $10.9 million for the first quarter of 2019. The mission for us was the continued investment in support -- preparation with respect to the launch of FINTEPLA for the treatment of Dravet syndrome in the US and in various European countries in the coming years.

I also wanted to call out one additional item in the financials. In the fourth quarter -- sorry, in the first quarter, we received notification from the UK government on the granting of $19.7 million R&D tax credit related to our FINTEPLA development activity for the years 2017 and 2018 that qualify under the UK small and medium-size enterprises R&D tax relief scheme. This $19.7 million was recorded as other income and helped offset the $46.9 million loss from operations.

Net loss for the first quarter ended March 31, 2020, was $25.9 million or $0.54 per share, and this compares to a net loss of $35.2 million or $0.82 per share in the first quarter ended the prior year. We ended the first quarter with cash, cash equivalents and marketable securities totaling $420 million, as Stephen indicated. Again, this includes the $221.7 million in net proceeds that we received in the public offering successfully closed in March. Now this cash amount is not inclusive of the $19.7 million UK R&D tax credit we recognized in the quarter as payment for those funds are forthcoming and in excess of scheme.

With a strong balance sheet, we are confident and have sufficient resources for us to execute on the launch of FINTEPLA in Dravet syndrome in the US and Europe and enabling continued advancement of the development of our key program FINTEPLA for LGS and MT1621 for TK2d.

And with that, I'll now turn the call over to the operator to start the Q&A session. Operator, can you please open up the line for questions?

Operator

Thank you. [Operator Instructions] And our first question today comes from Paul Matteis with Stifel

Paul Matteis -- Analyst

Great. Thanks very much for taking the questions. I have three, if you don't mind. First, on your FDA interaction regarding the REMS, can you just comment on what you proposed and if you've gotten any feedback so far from FDA on the receptivity?

Second, on the 530 patients taking FINTEPLA right now, how many are in the US and Europe? And maybe what's your kind of priority at launch to convert these patients to commercial drug?

And then third, assuming -- or I guess, if the FDA meeting in the second half of this year for LGS goes well and the FDA OK with filing on this study, is there anything left that would be gating for kind of a filing either late this year or early next? Thanks so much.

Stephen J. Farr -- President and Chief Executive Officer

Thanks, Paul. Appreciate your questions. Regarding FDA interactions with the REMS, we first had a telephonic interaction, and then we received the comments on our proposed REMS. Recall we did include a draft REMS -- a proposed REMS in our original NDA submission. So the FDA will provide their commentary back on that.

I guess the most important aspect is to really understand whether or not we have clarity agreement on moving forward with what would be the most essential elements of REMS, which is the echocardiographic testing. And I'm pleased to say that we do have, I think, good concordance between us and the FDA with respect to what needs to happen.

And so patients will be required a baseline echo if they are naive to FINTEPLA. And then they will need to have a follow-up echo during treatment every six months. So that is, as you know, pretty consistent, actually, the same as what we're doing right now in Study 1900, which is our ongoing open-label safety studies. So at least we have that, I think, gotten down right now.

Some of the other comments from FDA were more operational in nature with respect to how we set up and administer and manage the REMS. But -- and I think, as I say, we have good clarity and an agreement with the FDA.

On the 530 patients that are on FINTEPLA, all these are Dravet patients, not LGS but Dravet patients. And I would say roughly they're split 50-50 between United States and Europe. And that's a combination of patients who are either still in open-label extension or, as I said, are part of the expanded access program.

And maybe I'll ask Ashish just to comment in a moment about what he plans to do -- or what we plan to do with respect to getting patients onto commercial product. I'll just then quickly just address your third question, which was around LGS and timing and what's left.

Well, as I said in the remarks, we will be moving forward with a meeting with the FDA in the second half of this year just to really -- doesn't go on exactly what is required for the supplemental NDA. Our working assumption right now is that there are nonclinical elements of that submission, most important being or at least the most -- the one which is on a critical path being a two year contraindication study, which has concluded with the in light portions included. We are doing the histology right now and then moving toward a clinical study report.

There are also a couple of Phase 1 PK studies, which we're enrolling subjects, and they temporarily paused because of COVID-19. So we'll need to complete those studies as well. So if you tie all that together, obviously, depending upon the Phase I trials and how quickly do we get those back up and running, they are small studies and will enroll quickly and conclude quickly once they're up and running. We think that a supplemental NDA sometime in the first half of 2021 is probably our time line right now.

If I address anything else, maybe I'll just ask Ashish to comment very briefly on that commercial question.

Ashish Sagrolikar -- Executive Vice President and Chief Commercial Officer

Thanks, Steve. From the -- for getting the -- these patients to the commercial product, Paul, yes, we do have plans and also the contingencies because of the COVID situation. As you know, we do know who the clinics are where these patients are getting treated. And what we are doing right now is putting individual plans in place, understanding what stage of treatment they are and what is their individual situation. So once approved, we can reach out to them and start working on their individual situation so that they can get transitioned to a commercial product.

We're also preparing the education that can be done if we are unable to reach them in person through virtual tools, including whatever is the preference of that particular office and of that particular family as we learn about it.

Paul Matteis -- Analyst

Great. Thank you so much for all the color. Appreciate it.

Stephen J. Farr -- President and Chief Executive Officer

Thanks, Paul.

Operator

Thank you. Our next question comes from Marc Goodman with SVB Leerink.

Marc Goodman -- Analyst

Yes. Hey, guys. Two things. One on 1621, you had your meetings. Can you just give us a flavor for, do we need any other clinical trial data? Or is the only thing left just the CMC, which I realize you still want to do another meeting for that?

And then second, maybe you could just give us the flavor for [Indecipherable]. Right now, they are talking to the epilepsy physician community to prepare them. What are they saying these days? Are they seeing new patients? Are they trying new drugs? I'm just kind of curious, in this environment, what you're hearing and how they're acting. Thanks.

Stephen J. Farr -- President and Chief Executive Officer

Thanks, Marc. I'll ask Ashish to address your second question because he's very much out and about collecting information that we've -- that you've asked a question on. And I'll just take the 1621 question first. Obviously, we'll be able to disclose more once we have the final minutes from the FDA. But what I will say and just repeat what I said in the remarks earlier is that everything appears to be very consistent with a prior communication with the FDA. I want to remind you that we do have a clinical study up and running now called Study 102. And we do know that, that study is important for the NDA that will provide further efficacy and, importantly, safety data for patients who are taking MT1621 and its supply -- from our commercial supplier. So that study is ongoing.

And then as I mentioned, patients are continuing to take drug, but they -- some of their studies' visits have been severely limited during this time. So we'll need to get some more clarity about how much information we can generate from that -- from our clinical study. But we'll definitely get to talk more in general about time lines for MT1621 when we have both the minutes from the meeting, which just occurred, as well as the CMC meeting, which is occurring in June. [Speech Overlap]

It's an ongoing trial, and that study will continue to run until the product is basically approved. But -- so it's really how much information do we need to generate prior to submitting the NDA. So that's the piece that we'll be able to talk with more clarity on once we have the offical minutes.

Marc Goodman -- Analyst

Thanks.

Stephen J. Farr -- President and Chief Executive Officer

Thanks, Marc. Ashish?

Ashish Sagrolikar -- Executive Vice President and Chief Commercial Officer

Yes. Thanks, Steve. So what we are doing is right now connecting with the physicians through our profile [while we're] also conducting market research. And one of the first things I would say is, during this entire process in last eight weeks, my respect and our teams with respect and gratitude to these healthcare providers, nurses and the physicians, it's really tremendous. It has grown by bounds. We're really thankful.

And what we have heard is, many of them, depending on the situation and depending on the institutes they are in, have been redeployed to other places and are either seeing patients or continuing to see patients. What we have also seen is a lot of use of telemedicine, and that has really increased. And that also is used not only for continuing the treatment, but also if there are any changes need to be done in dosing or if there are any consultation that needs to be provided for.

In terms of the site visits, depending on the geography where you are, we are seeing some site visits. And the experience that we have is our early access program is continuing and accepting patients. And we have seen certain areas where patients haven't been able to be seen by the physicians and be able to get the procedures in a timely manner. And there is no reason to believe that this will not continue at the time of launch. And as we continue to learn this, we are preparing. Whichever way the restrictions are placed, we will be able to address either the in-person education or through the virtual method, we should prepare them.

Stephen J. Farr -- President and Chief Executive Officer

Thanks you, Marc.

Operator

[Operator Instructions] And our next question today will come from Danielle Brill with Piper Sandler.

Danielle Brill -- Analyst

Hi, guys. Good afternoon and thanks for the question. I have a few. First, just wondering if you could provide a little bit more color on your go-ahead strategy for launch, specifically, how you're thinking about positioning FINTEPLA relative to Epidiolex?

And then in the current environment, I'm just curious how prohibitive your REMS requirement and echo monitoring is? How difficult will that be for patients to get at baseline?

And then finally, in terms of your LGS filing. Sorry, that I don't recall this, but can you remind me why the preclinical tax and PK data are needed for LGS but wasn't required for Dravet? Thanks.

Stephen J. Farr -- President and Chief Executive Officer

Thanks, Danielle. I'll take your last question and then Ashish will have time to refer to -- address your first two. So with respect to the nonclinical studies that we're conducting for LGS, these studies were deferred for Dravet. In other words, FDA indicated to us that we could submit the NDA and gain approval without the information, but they would become a post-market required commitment by us.

With respect to Lennox-Gastaut and the interactions we've had with the FDA, they sort of made it clear to us that because they have already approved numerous drugs for the treatment of LGS, it was appropriate that, that information would be part of the original supplemental NDA submission. So obviously, once we got that information from FDA, we went ahead and started those studies rather than waiting for a Dravet approval because they -- we knew they would be gated toward a supplemental NDA.

So I think that addresses the question both for the nonclinical as well as the Phase I trial. Phase I trials are things like renal impairment, hepatic impairment studies, which are sort of more appropriate for the adult patient population and, I think that recognizes that LGS clearly has an adult patient population as well. So that's, I think, the background behind why these types of studies or this information is required for supplemental NDA for LGS and not required for an NDA for Dravet.

And if I addressed your question appropriately, then I'll hand over to Ashish.

Danielle Brill -- Analyst

Yes, you did. Thank you.

Stephen J. Farr -- President and Chief Executive Officer

Thank you.

Operator

And our next question...

Ashish Sagrolikar -- Executive Vice President and Chief Commercial Officer

[Indecipherable]

Operator

Oh, I'm sorry. Go ahead.

Ashish Sagrolikar -- Executive Vice President and Chief Commercial Officer

I wanted to just answer the first question. So Danielle, in terms of positioning, I think one of the things that we have heard and that know from the community as well as the physician is the transformational efficacy of FINTEPLA plus the durability of its effect. And that is something which is what we will be talking about because that's what is supported by the key data when it is approved. And we believe that -- and this is what we know, there is a significant unmet need in the market. And what we heard from the clinicians as well as the patient community is that they really truly wanted to try the product and would like to have this kind of option available to them when it is approved.

In terms of launch and the REMS requirements, with what we have seen so far in this current situation in last eight weeks is that we have been able to onboard patients in our early access program, as I said earlier. And we believe that this will be the case as we go into the launch. Now has it happened everywhere? No because it depends on the restrictions of different sites. And we are preparing for this in terms of educating. And our medical team is actually educating cardiologists on this and so is the commercial team so that we will have created there an extension help facilitate, identify the echo centers which are closer to patients home so that it will become easier for them to go through the process, not only in terms of getting baseline but also the repetitive vehicles [Phonetic]. I hope that answers the question.

Danielle Brill -- Analyst

I guess I just have one clarifying question. When I asked about the positioning -- I guess, when you think about the addressable population, are you going to try to capture Dravet patients that are naive to FINTEPLA and Epidiolex? Are you thinking about Epidiolex failures? I'm just wondering how you're thinking about the patients that you'll target at launch.

Ashish Sagrolikar -- Executive Vice President and Chief Commercial Officer

Yes. No, I think based on the clinical data, we do believe that this therapy, FINTEPLA, will be impactful for all the Dravet patients who are currently needing either a change in therapy or if they are needing -- or they are looking for seizure freedom or more seizure reduction to achieve the higher quality of life. So we will be offering this and educating about the therapy to all the physicians who see the Dravet patient and let them make the choice based on the data along with the patient if it is the right therapy for them. And as you know, epilepsy and Dravet 5 syndrome is a polypharmacy, and people do use multiple therapies. And we do believe that FINTEPLA will have a place in that therapeutical -- therapeutic armament when we launch it.

Danielle Brill -- Analyst

Got it. Thanks for clarifying.

Stephen J. Farr -- President and Chief Executive Officer

Danielle, just one thing I'd like to add to what Ashish just said. I think it was reflected in the data presented by Dr. Sullivan a few weeks ago at a KOL investor event, is that we are seeing a very impressive durability, in fact, of FINTEPLA. I mean the study data that Dr. Sullivan presented showed really the same level of seizure reduction and seizure control in an open-label extension over a long period of time, up to two years, in the analysis that he presented compared to what we saw in our randomized control trial. So it's not just the data from our randomized-controlled trials, which people and sort of physicians are impressed with, it's the durability of that effect, which appears to happen over a long term.

Danielle Brill -- Analyst

Got it. Thanks. That makes perfect sense. Thanks to you.

Stephen J. Farr -- President and Chief Executive Officer

Thank you, Danielle.

Operator

Thank you. Our next question comes from Neena Bitritto-Garg with Citi.

Neena Bitritto-Garg -- Analyst

Hi. Thanks for taking my question. My first question is about Study 2 in the patients who are kind of going through that second cut of data in Dravet syndrome. When can we expect to get kind of initial data from that data set? And also, are those patients included in the 530-patient number that you've cited in terms of the number of patients who are currently on drugs?

And then I have just kind of a broader question about post approval once you're launching the drug. What are some of the other stuff that a patient is going to have to go through in order to get on drug? So understanding that they will have to go through the baseline echo, but what else will they have to kind of -- what other steps will they have to take before they can get on drug? And what can be done remotely versus kind of in a face-to-face office setting? Thanks.

Stephen J. Farr -- President and Chief Executive Officer

Thank you, Neena. I'll address your first question, and then Ashish can address your second question. I can come back if -- on that one as well. With respect to Study 2, just to remind everyone, Study 2 is currently a blinded study that we're using for -- to support an application of an NDA in Japan. We are currently enrolling patients into that study in Japan. There's no other sites open for that trial right now, at least for the randomized controlled portion of the trial. So we expect top line data from Study 2 occurring in the second half of this year. Those patients are actually part of -- with the 530, excluding Japanese subjects, which are just, I think, 10 or so, maybe more than 10, between 10 and 15, they are not included in 530. But the patients who are from Europe, the United States who are part of Study 2 aren't included in that number.

Does that address the question, Neena?

Neena Bitritto-Garg -- Analyst

Yeah, that's great. Thank you.

Stephen J. Farr -- President and Chief Executive Officer

Great. Over to you, Ashish.

Ashish Sagrolikar -- Executive Vice President and Chief Commercial Officer

Thanks, Steve. So Neena in terms of the patients starting on the therapy, what we believe right now is that all the Dravet patients who have been identified and diagnosed will be eligible for the therapy are being seen by a hematologist. And many of them are either induced with [Technical Issues] the situation with the COVID. And if they have to do the remote, all that consultation and if they think that it is the right choice, those visits can happen remotely.

I think the only place where a patient will have to physically go somewhere to do something is the echo, which is part of our REMS program. And putting a caveat, we don't know what the scanner room [Phonetic] looks like. Once that echo is done, that report goes to the physician, and if they prescribe the product, all the support that we need to provide to the office as well as the families through our hub and the shipment of the product, all of that can be handled remotely.

So we feel confident that even if the situation stays in some of the areas, if we are able to support and if the patient is able to get the echo, we will be able to handle the other steps that are needed because there are not many other steps or the [Indecipherable] that the patient has to go before taking the drug. Does that answer your question?

Neena Bitritto-Garg -- Analyst

Yeah, that's great. Thank you.

Stephen J. Farr -- President and Chief Executive Officer

Thank you Neena.

Operator

Thank you. Our next question comes from Yatin Suneja with Guggenheim.

Yatin Suneja -- Analyst

Hi guys, thank you for taking my question. Just a couple. Following up on Danielle's questions earlier on the market. Have you been able to identify patients that might have discontinued Epidiolex given that, that drug has been on the market for a while? Can you provide some color on your -- some of the [Indecipherable] that you might be doing in order to make sure you have those patients longer on the [Indecipherable] drug? And I do have a follow up.

Stephen J. Farr -- President and Chief Executive Officer

Ashish, would you like to take that?

Ashish Sagrolikar -- Executive Vice President and Chief Commercial Officer

Yes, let me answer that. Yes, I will take it. Sorry. So let me say, in terms of knowing the patients, we do know that there are physicians who have tried Epidiolex on patients. And in some cases, [Indecipherable] to departure from the clinical trial. It may not have worked for them, and they are looking to try another product. So we do know that all the epileptologists will have patients like that. So we will be calling on them and making sure that they know about FINTEPLA. And if they choose to use it, it's available for them, and we support them toward the -- toward them getting the product. Does that answer your question?

Yatin Suneja -- Analyst

Yeah. That's helpful. And then in terms of the long-term compliance, I think the data that you recently presented showed about an 83% compliance for Darvet patients. What's your expectation would be in the real-world setting once the drug is commercially available? And how should we think about the compliance in Lennox-Gastaut? Should there be any difference relative to what we saw in Dravet?

Ashish Sagrolikar -- Executive Vice President and Chief Commercial Officer

I'll answer on the Dravet side. And what we know is based on the early access program that if the therapy has worked, and if it is giving better results, the patients stays with the product. And we are hopeful that it will translate at the time of the launch and beyond the launch. So I think that's one data that we have, which I would say would be the best surrogate that I have at this point in time. With LGS, we do need to see what the long-term data looks like, and we won't be able to comment on that at this point in time.

Yatin Suneja -- Analyst

Got it. And just the final question is on the pricing front. Any feedback that you have received from payers on the pricing range that you have talked about in the past? Like how are they receiving that? Thank you.

Ashish Sagrolikar -- Executive Vice President and Chief Commercial Officer

So we are -- as said earlier, we will be talking about the pricing at the time of the launch. And our discussions with the payers have been about the access, but also with clinical profile of FINTEPLA, which includes the rapid profound durable [Phonetic] outcomes, but also the rare patient population. And the feedback we have received so far has been very positive. And we are continuing to do these conversations as we speak in preparation for the launch, but also we will continue then beyond the launch.

Yatin Suneja -- Analyst

Okay. Thank you.

Stephen J. Farr -- President and Chief Executive Officer

Thank you, Yatin.

Operator

And our next question comes from Serge Belanger with Needham & Company.

Serge Belanger -- Analyst

Hi, good afternoon. Just a couple of questions from me. Previously, you discussed the ongoing FDA interactions regarding the REMS and label discussions. Can you provide an update on the CMC component review and whether the FDA has resumed their approval inspections, and if that could be a regular next step to approval in late June?

Stephen J. Farr -- President and Chief Executive Officer

Thanks, Serge. We don't think that CMC is going to impact the timing of the PDUFA decision during the 25th. As you know, the FDA is not traveling right now. They did restrict international inspections. But the good news from -- at least from our perspective is that in lieu of the non-site inspection, the FDA has decided to conduct a virtual pre-approval inspection. So, and the drug manufacturing in the United Kingdom that was going to be inspected has submitted documentation to the FDA for their review. That is currently ongoing. And the timing of it is certainly consistent with supporting a PDUFA date on June 25th.

Serge Belanger -- Analyst

Great. Second question was about when we could see additional data from a Phase II Lennox-Gastaut trial? Is that still expected in December at the epilepsy meeting? Or could we see it before then?

Stephen J. Farr -- President and Chief Executive Officer

As we mentioned earlier, we're doing a full data analysis currently. So we anticipate that it's likely that, that data would be at the American Epilepsy Society by the end of the year. So nothing between now and then, I think, is the best assumption to use.

Serge Belanger -- Analyst

Okay, thank you.

Stephen J. Farr -- President and Chief Executive Officer

Thank you.

Operator

And next will be Jason Butler with JMP Securities.

Jason Butler -- Analyst

Hi. Thanks for taking the questions. I had two. First, in terms of your dialogue with European regulators, any comments you can make about how you think about the frequency of ECO requirements there versus where you think you have alignment with FDA in the U.S.?

And then secondly, on the basket trial, can you give us any insights into what sites would need to see before they would consider reopening or enrolling patients? And given the formal study here, are there any changes that you're considering for that trial in terms of further realignment of the target patient population? Thanks.

Stephen J. Farr -- President and Chief Executive Officer

Hi, Jason. Just first on the EMA and discussions around the risk management plan, the RMP in Europe. Yeah, we're currently responding to questions around that. So I can't provide any more clarity on that. But of course, our hope is to ensure that we have good alignment between what we need to do in the United States and what we need to do in Europe.

On the basket study, we decided to -- for us to pause on that because we were getting sites up and running, and we felt that even if we got sites running getting patients enrolled into the trial would have been difficult. And then there were other sites which were currently not activated or, indeed, we did not have an IRB approval. So we just decided that at this juncture, like many companies trying to initiate clinical studies, it is most appropriate to just step back and wait for this current situation to ease before we go back in and get sites up and running.

Your question about do we think about modifying the design? That is something that we have thought about internally, considering to think about internally, in other words, to sort of prioritize some of the syndromes in the basket study ahead of others. We haven't made any decisions on that right now, but it's certainly something we have considered and will consider.

Jason Butler -- Analyst

Okay, thanks for taking the question.

Stephen J. Farr -- President and Chief Executive Officer

Thank you Jason.

Operator

Thank you. Our next question comes from Difei Yang with Mizuho Securities.

Difei Yang -- Analyst

Thanks good afternoon. Just one quick clarifying questions on the REMS. So Steve, you talked about doing cardiograms once every six months. I recall earlier, maybe you have talked about, say, if the patient is normal, how long -- if they're normal for how many cardiograms then once every six months monitoring can be further reduced?

Stephen J. Farr -- President and Chief Executive Officer

Yeah. I think that's a question that we will certainly try to address with the FDA at some point, post approval. And I think there's a desire to collect more information in the REMS program before, and there will be any relaxation on the -- on having an echo every six months. And so I think that's something that we'll discuss at a later point rather than now, Difei. Going into the launch we -- as I said, we'll have the REMS where it will be baseline echo followed by requiring one every six months thereafter.

Difei Yang -- Analyst

Okay, thank you.

Stephen J. Farr -- President and Chief Executive Officer

Thank you.

Operator

Thank you. [Operator Instructions]. Our next question comes from Tim Lugo with William Blair.

Lachlan -- Analyst

This is Lachlan [Phonetic] on for Tim. Thanks for taking the questions. I had a few I may. Just first of all, building on the prior questions. Do you have a sense of how many patients have failed or discontinued Epidiolex for one reason or another, and what therapies they are moving to after that?

And then another one, in the recent presentation of the Study 1503 data, it seems to suggest that a lot of patients found, I think, [Indecipherable] in the 0.3 mg/kg to 0.5 mg/kg per day dose range. Is that at all surprising to you? And does that make you think about dosing at other indications or even future dosing in the current indications any differently? And finally, do you after the results presented in Sunflower syndrome, is that something you're looking at for further development?

Stephen J. Farr -- President and Chief Executive Officer

Yes. Thanks for your questions. In terms of finally patients that have failed Epidiolex is clearly something which is very difficult to ascertain. All we can do is really just look at the clinical experience, sort of assess it from there. And perhaps Ashish will have a comment or two to make about that as well once I finish addressing your other questions.

The one around 1503 and the dose there, actually, the median dose that we've seen in our open rate extension is about 0.45 milligrams per kilogram. So in other words, 50% below are that and 50% are above that. It doesn't really change our working assumptions around dosing for any other epilepsies. This is a dose that will be titrated to optimum effect and appropriate safety. So the fact that we are seeing, I think, very good efficacy at a dose which is lower than the maximum dose, we think, is very compelling. And -- but it does not change the way that we think about dosing in other epilepsy syndromes.

And then with respect to Sunflower syndrome, very good results generated by Dr. Thiele and her investigating peer group study.

She is actually enrolling more subjects into that study right now. So we're anxiously looking for that, and then we'll make a determination on whether we do something more formal in Sunflower syndrome at that point.

Lachlan -- Analyst

Thanks.

Stephen J. Farr -- President and Chief Executive Officer

Thank you.

Operator

Thank you. Our next question comes from Michael Higgins with Ladenburg Thalmann.

Michael J. Higgins -- Analyst

Hi guys, thanks for taking the questions. One for Ashish. Ashish, any launches you're watching as a proxy for how's yours going to go and how you can adjust accordingly? And Steve, concerning what we've witnessed here with COVID in the last few months, any changes to your business development outlook, either more aggressive or less aggressive given how that's changed the field out there?

Stephen J. Farr -- President and Chief Executive Officer

Ashish, you take the first question. And Mike, maybe you could take the business development question after that.

Ashish Sagrolikar -- Executive Vice President and Chief Commercial Officer

Thanks, Steve. Michael, thanks for the question. And let me just clarify. When you say launch it as a proxy, you mean in this COVID situation, did I get that right?

Michael J. Higgins -- Analyst

Yeah. Any similar launches you're looking at that you can gauge how to adjust yours?

Ashish Sagrolikar -- Executive Vice President and Chief Commercial Officer

Yes. Well, so we are basically -- as you know, the situation is quite unprecedented globally and even in our country. We are looking at what the other companies are doing at this point in time in terms of preparing for the launch because FDA hasn't stopped updating the current list.

So as we are seeing more approvals coming in, we are watching closely in terms of what is happening.

What we are also doing is talking to physicians and talking to caregivers, and understand where they are coming from and how they are adjusting to this evolving situation, including that from the peers. And what we believe is that based on this, I would say, one of the thing is doing this virtual education, and if we are forced to go that route, I think we feel very well prepared. Because we have tools, the physician have tools and the patients and the caregivers have tools, because during the last eight weeks, I think there has been kind of a dry run of using the telemedicine and also using all these remote tools, not only for education, but also for consulting patients.

And I think we can piggy back on that and use that when we receive approval and we prepare for launch. Also that's the preparation and that's the process that we are looking at. Thanks for the question. Mike?

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

Yeah sure, thanks Ashish. Yes, so Mike, a good question. I think in the kind of near-term horizon, the landscape changes that COVID-19 put upon the industry mostly affect the opportunities in a number of them. We may get to see more opportunities from a business development perspective because the key competition for most business that are partnering opportunities asset acquisition pipeline-filling opportunities is really the licensed store or the other side that has the assets, ability to take it forward independently or not. That's kind of probably the first question that they ask themselves and typically, the number one competitor that a business development group that's focused on [Indecipherable] the portfolio has.

I would say we are pretty disciplined about keeping active in the space. And we're very happy with our base stage portfolio of programs that we've got good ideas that are launching going to U.S. and Europe. And anything that we do is going to be principally focused on not in any way materially misdirecting our ability to focus on our people. So it would be complementary, if we are -- but we're always looking at something that we're always keeping our eye on. And there are opportunities to fill up assets at different stages that are really good opportunities because of the current situation. We look for those and look to execute on them, provided that, again, materially it doesn't affect our capacity at all from a resources and operational perspective to really hit on the things that are most important for the Company, and we think [Indecipherable] which are the product and getting the other two base stage programs over the finish line.

Michael J. Higgins -- Analyst

Appreciate it. Thanks guys.

Ashish Sagrolikar -- Executive Vice President and Chief Commercial Officer

Thank you Micheal.

Operator

And our next question comes from Paul Matteis with Stifel.

Paul Matteis -- Analyst

Hey, thank you for taking the follow up. Real quick, Ashish's comments on you know, anticipating no restrictions for any patients in Dravet just reminded me of a question I had. I think in your study, an exclusion criteria was a trace regurgitation finding on echocardiogram. And I thought that, that excluded something like 20% of patients from one of the Phase IIIs. Would you expect that to be something that would contraindicate a patient to FINTEPLA?

Ashish Sagrolikar -- Executive Vice President and Chief Commercial Officer

We do not.

Paul Matteis -- Analyst

Great, thank you.

Stephen J. Farr -- President and Chief Executive Officer

Thank you. And Paul, just because as we've indicated, trace regurgitation is essentially a physiologic finding. And it was obviously in our clinical trial where we were looking at various grades of regurgitation, and we wanted to start the study with an absence. But as we've talked about before, there was a lot of back and forth between or oscillations between trace and absent. In fact, several of the subjects had initial trace regurgitation upon enrolling to our trial or consideration enrollment into our trial actually had a subsequent echo before being formally involved, where [Indecipherable] in absence. So we do know that trace regurgitation should not be a condition to exclude a patient from FINTEPLA therapy.

Paul Matteis -- Analyst

Yeah, understood. Thanks so much.

Stephen J. Farr -- President and Chief Executive Officer

Thank you.

Operator

Thank you. And that does conclude the question-and-answer session. I'll now turn the conference back over to Dr. Stephen Farr for any additional or closing remarks.

Stephen J. Farr -- President and Chief Executive Officer

So thank you, operator, and thank you to all of you for joining us on today's call. We're obviously extremely pleased to share the progress we've made during this past quarter in advancing the development of FINTEPLA in multiple indications and also in expanding our footprint as a Company focused on providing therapeutic solutions for rare diseases.

Excited to continue to provide updates as we look ahead to potential approval and commercial launch of FINTEPLA for Dravet syndrome in the coming months. So thank you all again for joining us on today's call, and enjoy the rest of your day. Goodbye.

Operator

[Operator Closing Remarks].

Questions and Answers:

Duration: 62 minutes

Call participants:

Brian Ritchie -- Managing Director

Stephen J. Farr -- President and Chief Executive Officer

Ashish Sagrolikar -- Executive Vice President and Chief Commercial Officer

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

Paul Matteis -- Stifel, Nicolaus & Company -- Analyst

Marc Goodman -- SVB Leerink -- Analyst

Danielle Brill -- Piper Sandler -- Analyst

Neena Bitritto-Garg -- Citigroup -- Analyst

Yatin Suneja -- Guggenheim Securities -- Analyst

Serge Belanger -- Needham & Company -- Analyst

Jason Butler -- JMP Securities -- Analyst

Difei Yang -- Mizuho Securities -- Analyst

Lachlan -- William Blair -- Analyst

Michael J. Higgins -- Ladenburg Thalmann -- Analyst

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