Athenex, Inc. (ATNX) Q1 2021 Earnings Call Transcript

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Athenex, Inc. (ATNX)
Q1 2021 Earnings Call
May 7, 2021, 8:00 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Welcome to the Q1 2021 Athenex, Inc. Earnings Conference Call. My name is Richard, and I'll be your operator for today's call. [Operator Instructions]

I am now going to call over Mr. Steven Rubis, Senior Director, Investor Relations. Steven, you may begin.

Steven Rubis -- Investor Relations

Good morning, and thank you for joining our conference call. Today, we will provide an update on Athenex's business as well as a review of financial results for the first quarter of 2021. The news release detailing the results crossed the wire earlier this morning and is available on the company's website. A replay of this call will also be archived on the company website. During the conference call, the company will make projections or forward-looking statements regarding future events, including statements about financial, business and clinical milestones anticipated in fiscal year 2021 and beyond. We encourage you to review the company's past and future filings with the SEC, which identify specific factors that may cause the actual results or events to differ materially from those described in the forward-looking statements. You can find our SEC filings in the EDGAR database at www.sec.gov or in the investor relations section at our website at www.athenex.com. This morning, we are joined by Dr. Johnson Lau, Chief Executive Officer; Mr. Jeff Yordon, Chief Operating Officer; Dr. Rudolf Kwan, Chief Medical Officer; Mr. Randoll Sze, Chief Financial Officer; and Dr. Dan Lang, President of Athenex Cell Therapy who will be available to answer questions after the prepared remarks.

I will now turn the call over to Johnson for introductory comments.

Johnson Y.N. Lau -- Chief Executive Officer and Board Chairman Committees: Finance Committee (chairperson)

Thank you, Steve. I will provide an overview regarding our efforts to address the complete response letter for oral paclitaxel and updates on Klisyri performance and the Kuur Therapeutics acquisition before turning the call over to our Chief Medical Officer, Dr. Rudolf Kwan. The top priority remains addressing the complete response letter we received from the FDA for oral paclitaxel at the end of February. Over the past several weeks, the organization worked diligently to collect additional data and perform additional analysis to support our risk reward assessment of oral paclitaxel. We plan to request a type A meeting before end of May and expect the FDA to schedule the meeting within 30 days. In a type A meeting, we hope to better understand the agency's concerns expressed in the complete response letter as well as to align with the agency on the optimal pathway forward required to obtain for approval. We continue to believe both that oral paclitaxel demonstrate that a very strong clinical profile and then it offers superior efficacy and safety compared with IV paclitaxel. If approved, we intend to position it as a chemotherapy of choice in metastatic breast cancer. Klisyri, our first-in-class microtubule inhibitor for the treatment of actinic keratosis, or AK, of the face or scalp, launched in the U.S. in February, led by our partner Almirall. The December approval and subsequent launch of Klisyri represent important milestones for Athenex. Klisyri represents this first propriety Athenex product that the company successfully progressed from discovery through FDA approval. Klisyri represents a significant step forward in the treatment of AK due to its short five-day treatment protocol, proven efficacy and safety profile.

Athenex retains attractive economics around the company's partnership with Almirall for Klisyri. In addition to the $50 million in upfront and additional milestone payments already received prior to the first quarter of 2021, Athenex received a $20 million milestone payment in the first quarter checked by U.S. launch of Klisyri and is eligible to receive up to an additional $45 million in aggregate milestone payments associated with the Klisyri launch and expansion into additional indications. Additionally, the company is eligible to receive sales milestone payments and is eligible to receive tiered royalty payments starting at 15% of annual net sales. On May 4, we announced the acquisition of Kuur Therapeutics in a primary all stock transaction totaling $70 million with an additional consideration of up to $115 million in milestone payments. Kuur has developed an innovative allogeneic NKT cell therapy platform based on technology licensed from the Baylor College of Medicine. The Kuur platform complements Athenex's existing cell therapy program, which is evaluating an autologous high-affinity T-cell receptor or TCR T-cell therapy targeting solid tumors expressed in NY-ESO-1 antigen. The Kuur acquisition was an opportunity to apply an allogeneic approach to our T-cell program in solid tumors.

I have asked Dr. Dan Lang, our President of Athenex Cell Therapy to join us on the call today. Dan will provide additional details on Kuur and the associated opportunity in a few minutes. Our specialty pharma business, APD and APS continue to perform well. We now believe there is a compelling opportunity to grow this business further. Our cGMP facility in Dunkirk, New York is nearing completion. Once this becomes online, it will expand our capacity. Given the complete response letter, we are taking initial actions to manage our resources efficiently and conserve cash. Once we have further clarity from the FDA with the regulatory pathway, further actions will be taken to prioritize and invest our resources effectively and efficiently to create value for shareholders. As investors may appreciate, we are an experienced and pragmatic team and are actively evaluating multiple scenarios for our business to maximize shareholder value during this uncertain period. Given what we know to date, our current priorities are to bring oral paclitaxel to a successful regulatory outcome and to advance our cell therapy programs while supporting our APS/APD business. We are balancing disparities against prudent cash stewardship, and we seek to extend our cash runway. Randoll will provide more details in his discussion of the financials.

I will now turn the call over to Dr. Rudolf Kwan.

Rudolf Kwan -- Chief Medical Officer

Thank you, Johnson. Despite our disappointment regarding the CRL, we are working diligently to address the CRL and to fight forward for oral paclitaxel. Let me begin by providing some detail on how we plan to respond to the CRM. For the past several weeks, the team and I have been working to develop our response to the FDA. Our preparation include developing additional analysis in collecting additional data to address the agency's questions and concerns in the CRL. Additionally, as part of our preparation, we have engaged several advisors and consultants, including regulatory and biostatistics advisors to assist us. We are finalizing our meeting request submission package. Our plan is to submit a type A meeting requests by the end of May, and expect to accept the type A meeting by the end of the second quarter. We continue to be hopeful that we can reach an agreement on a path forward that addresses the FDA concerns outlined in the CRL. We will provide an update regarding the outcome of our FDA meeting and possible next steps to the investor community when available. We continue to advance oral paclitaxel programs, including cutaneous angiosarcoma and oral paclitaxel in combination with pembrolizumab and the I-SPY2 program where oral paclitaxel is being studied in combination with GSKs Dostarlimab for neoadjuvant treatment in breast cancer.

Our program in cutaneous angiosarcoma continues to progress well. Oral paclitaxel has received orphan drug designation for this indication and we plan to request a meeting with the FDA to discuss the regulatory path forward. We will provide an update on the discussion when regulatory clarity becomes available. The dose finding portion of our Phase I combination trial of oral paclitaxel in combination with pembrolizumab is complete. The clinical trial varies oral paclitaxel plus pembrolizumab in advanced solid tumors. We expect to present those finding data later this year. We are currently proceeding into the expansion phase of the study for a cohorts of lung cancer patients with plans to expand into a second cohort of gastric cancer patients. In terms of clinical trial presentations, we are presenting three abstracts at ASCO in June. The first abstract pertains to a phase one study of oral docetaxel in metastatic prostate cancer. The second abstract is on PK interaction of Encequidar on dabigatran and the third abstract on a sub-analysis of tumor response by molecular subtype from the Phase III study of oral paclitaxel in metastatic breast cancer.

I will now turn the call over to Dan Lang.

Daniel Lang -- Senior Director, Corporate Development President, Axis Therapeutics Limited

Thank you, Rudolf. On May 4, we announced the acquisition of Kuur Therapeutics, the leading developer of allogeneic CAR-NKT cell therapy. The acquisition of Kuur bolsters Athenex's existing cell therapy program. We have been looking for a potential disruptive technology for almost a year and we have spent significant time evaluating several technologies in cell therapy that could be synergistic with our TCR technology. I would like to walk you through what drew us to this innovative platform technology. While Kuur's first-generation autologous CAR-T approach has generated compelling clinical safety and efficacy, there remains several limitations including extended manufacturing time, patient to patient variability, costs, and relative mix data on solid tumors. We believe one of the key elements of success for a leading cell therapy company in the future will require an off the shelf allogeneic approach. We believe a course NKT cell technology could be a transformative platform that could lead for current first-generation cell therapies. We believe the NKT cell is an ideal cell type to be developed as an allogeneic cell therapy. NKT cells have low graft versus host disease risk because they don't have the classical TCRs. NKT cells have two important anti-tumor effects. They have direct type of toxic effects on tumor cells like NK cells. In addition, through their interactions with dendritic cells, NKT cells can recruit and activate NK cells and T-cells through the release of cytokines, thus further propagating the cascade of the immune response. Our goal is to first demonstrate that NKT cells are safe by utilizing an autologous approach.

That's we're doing in the GINAKIT2 phase one neuroblastoma trial. This is a CAR-NKT targeting GD2, which is vitally expressed in neuroblastoma. In January of 2021, Kuur disclosed that out of 10 evaluable patients, one complete response and one partial response have been observed. Side effects were well tolerated. Additional data from the GINAKIT2 phase one trial will be presented at the American Society of Gene and Cell Therapy Conference on May 14. The second clinical program CAR-NKT targeting CD-19 is being studied in the ANCHOR trial. This is an allogeneic program in that these cells came from a healthy donor. The ANCHOR trial is a Phase I study in adult patients with relapsed and refractory lymphoma and leukemia. Out of two evaluable patients, one CR and one PR have been observed at the lowest dose level of 1 times10^7 cells per meter square. The Athenex cell therapy program began two years ago with a joint venture with XLife Sciences to evaluate an autologous affinity-enhanced TCRT targeting NYE-SO in solid tumors. The future exciting opportunity revolves around that ability to transfuse TCRs onto the NKT cell platform to address the unmet medical needs of solid tumors. Not only does this acquisition bolster the Athenex cell therapy platform, but it also allows us to leverage the preclinical, clinical and manufacturing resources already present within Athenex to further advance current pipeline assets. While our company continues to work on advancing oral paclitaxel to the finish line, the acquisition of Kuur illustrates our commitment to the Athenex cell therapy program and to unlock value for our shareholders.

I will now turn the call over to Jeff.

Jeffrey Yordon -- Chief Operating Officer President, Athenex Pharmaceutical Division

Thank you, Dan. I will provide an update on current developments within our infrastructure and supply chain and the existing commercial business. The Athenex specialty pharmaceutical business generated product sales of 20 million in the first quarter. COVID-19 spike in the fourth quarter had a negative impact on our first quarter results. The impact was manifested by hospitals ordering excess inventory in Q4 2020 to be better prepared for the pandemic and the significant spike in COVID cases in India causing long delays in receiving inventory from our partners. The biggest contributors to sales growth recently have been products such as Dexmedetomidine, Azithromycin, Piperacillin and Tazobactam and Levothyroxine. We also recently launched a room-temperature-stable Cyclophosphamide, which has significant advantages over competitive products. Athenex Pharmaceutical Division currently markets 34 products with 61 SKUs and Athenex Pharma Solution markets six products and 19 SKUs. Construction of our facility in Dunkirk, New York is nearly complete. The facility will serve the commercial needs for our specialty pharmaceutical business. Beginning in the fourth quarter of this year, we plan to commence manufacturing of 503B products in a portion of that facility. The equipment for this expansion of our APS business is already in Dunkirk and we are now working to hire a team to operate the equipment. In Chongqing, our manufacturing facility will complete all validation activities in the second quarter. The plants should be ready to commence manufacturing in Q3 of 2021.

We continue to take a hard look at the opportunities available to grow these businesses. Our analysis identified a range of products of particular interests and we are acting on these products. Currently, Athenex Specialty Pharmaceuticals relied on partnerships as a source of new products. The next logical step is to develop our own products so that we own the ANDAs allowing us to launch products at market formation and substantially increasing our margins. We will also be adding to our product line oral oncolytics, which allows us to take advantage of the existing relationships we have in oncology market. Developing and launching proprietary products will continue to be the cornerstone of Athenex's strategy. Our manufacturing facilities, tactical know-how as well as deep relationships provide a scale advantage to our specialty pharma business. We continue to look for opportunities to leverage these competitive advantages in a way that will unlock value for our stakeholders.

I will now turn the call over to Randoll.

Randoll Sze -- Chief Financial Officer

Thank you, Jeff. I'll go through a few key financial updates for the first quarter. Revenue from product sales in Q1 increased to $20.4 million, a year-over-year increase of 10%, primarily attributable to an increase of sales of 503B products. API product sales increased by $0.8 million. These increases were offset by a decrease of $2.3 million in APD sales. For the first quarter, we recorded $20 million of license revenues pursuant to the 2017 Almirall License Agreement upon the launch of Klisyri in the U.S. and $0.5 million related to the upfront fee pursuant to the Second Amendment to the 2011 PharmaEssentia License Agreement. Cost of sales for the first quarter totaled $16.4 million, down from $19.6 million a year ago. The decrease was primarily due to the $2 million royalty payment to Hanmi incurred in 2020 on the license revenue from Xiangxue. R&D expenses for the first quarter totaled $23.1 million, up from $17.2 million a year ago. Increase was primarily due to an increase in pre-launch product development costs and preclinical operation cost. This was partially offset by decrease in clinical study and patient costs on oral paclitaxel after completion of the Phase III study as well as decreases in regulatory, API development and 503B development costs. SG&A expenses for the first quarter of 2021 totaled $22.1 million, down from $25.7 million a year ago. This was primarily due to decrease in cost of preparing to commercialize oral paclitaxel as significant pre-launch activities occurred in 2020 and slowed upon receipt of the CRL in 2021.

This was partially offset by an increase of general and administrative costs related to increase hiring professional fees, IT costs and other operational costs. Net loss attributable to Athenex for the three months ended March 31, 2021, was $25.1 million or $0.27 per diluted share as compared to a net loss of $19.4 million or $0.24 per diluted share for the same period in 2020. As of March 31, 2021, the company had cash and cash equivalent of $48 million, restricted cash of $16.5 million and short-term investments of $123.2 million. As the result of the CRL, we have taken initial steps to conserve cash and we identified several opportunities for cost savings. One opportunity is Athenex Oncology, where launch expenses can be pushed out until we have greater clarity on possible approval and path forward. An additional opportunity exists to reduce capital expenditures as well as certain non-core R&D and C&D cost. Considering these various adjustments and based on our current operating plan, we now expect our cash and cash equivalent can fund our current operation into the second half of 2022. In terms of product sales guidance, the company is limiting financial guidance to only the existing product portfolio, which excludes any proprietary products until meaningful sales data from the proprietary product, Klisyri, become available. In 2020, the company recorded a significant amount of revenues from international customers as a result of the global pandemic. However, the company does not see these revenues as recurring in nature. The company continues to expand its product portfolio. The company is affirming the guidance it provided on March 1, 2021, as it currently expects its product sales in 2021, excluding any royalties from Klisyri, to be in line with the 2020 levels.

I will now turn the call back to Johnson.

Johnson Y.N. Lau -- Chief Executive Officer and Board Chairman Committees: Finance Committee (chairperson)

Thank you, Randoll. We'll now open the call for questions.

Questions and Answers:

Operator

[Operator Instructions] And our first question in line comes from Umer Raffat from Evercore ISI.

Umer Raffat -- Evercore ISI -- Analyst

This is Umer. Maybe one for Rudolf and Johnson. You elaborate on what additional data collection and analysis are going for the oral paclitaxel regulatory pathway? For the additional data, does that mean some more data from the Phase III breast cancer trial or from other trials that have U.S. sites? And for the additional analysis, does that include the sub analysis that you're going to present at ASCO or some kind of population PK analysis?

Johnson Y.N. Lau -- Chief Executive Officer and Board Chairman Committees: Finance Committee (chairperson)

Thank you. Rudolf?

Rudolf Kwan -- Chief Medical Officer

Yes. Thank you for the question. Our additional data collection and analysis are to address the FDA concerns in the CRL and these include data-related neutropenia-related sequelae, the primary endpoint of objective response rate conducted by the BICR and additional risk mitigation strategies to improve toxicity. Regarding to the ASCO question, in ASCO, we'll be providing molecular subtypes data regarding to the O11 study and that data are not new to the FDA. So that is not part of the analysis in the submission.

Operator

Our next question in line comes from Kennen MacKay from RBC Capital Markets.

Kennen MacKay -- RBC Capital Markets -- Analyst

Just wondering if you could help us, have you had any conversations or exchanges with the FDA since the CRL, just to clarify some of the feedback from the CRL? I know that was certainly a question last time we had spoke. And then secondary to that, we had seen obviously Odonate walk away from their oral paclitaxel, docetaxel or [Indecipherable] paclitaxel after the FDA had asked for an additional trial there, additional data there. Just wondering if that's something that could even be on the table here or what differences do you see between the trial that they ran and their FDA feedback perhaps versus the situation that you're in?.

Johnson Y.N. Lau -- Chief Executive Officer and Board Chairman Committees: Finance Committee (chairperson)

Thank you, Kennen. Rudolf?

Rudolf Kwan -- Chief Medical Officer

Yes. Kennen, first question. We are waiting to talk with the FDA on the CRL based on the meeting request. So we have no additional exchange yet as we speak. So the next exchange will be at the timely meeting, which we shall be requesting. Regarding the Odonate, we...

Johnson Y.N. Lau -- Chief Executive Officer and Board Chairman Committees: Finance Committee (chairperson)

Rudolf -- Kennen, it's our company policy that we do not comment on other companies' products, and certainly everyone can have their own interpretation. We have our interpretation, but we have a company policy that certain aspects we'll not be making comments. And hopefully you can understand, Kennen.

Operator

Our next question online comes from Jonathan Chang from SVB Leerink.

Jonathan Chang -- SVB Leerink -- Analyst

First question, I guess, just to follow up on the previous questions. Do you have any thoughts on next steps for Oraxol? How do you think about the different scenarios that could play out and whether or not you would proceed with the development of the program?

Johnson Y.N. Lau -- Chief Executive Officer and Board Chairman Committees: Finance Committee (chairperson)

Thank you for the question, Jonathan. Certainly, we now have a complete response letter from FDA. It will be essential for us to do our best to provide additional analysis, provide additional data to try to address FDA's concern so that we can move forward. We are hopeful that this is going to happen very soon, hopefully before the end of the second quarter. In the meantime, we have programs that explore the potential of oral paclitaxel in other indications. In particular, were programs that were active in cutaneous angiosarcoma as well as the use of oral paclitaxel in combination with immunotherapy. They are also actively being pursued right now. As a team together, Dr. Kwan, myself and our entire team, we have firm belief that oral paclitaxel is an important addition to the arsenal of drugs for patients with cancer. And we are pushing forward as hard as we can and as diligently as we can to ensure that we provide the information to satisfy FDA's concerns.

Jonathan Chang -- SVB Leerink -- Analyst

Got it. And second question, can you discuss the rationale behind the Kuur acquisition and further investment into your cell therapy efforts? I'm also curious to know how the Kuur acquisition impacts your existing TCR cell therapy efforts?

Johnson Y.N. Lau -- Chief Executive Officer and Board Chairman Committees: Finance Committee (chairperson)

Certainly, before I turn it to Dr. Dan Lang to share our philosophy and also what we have seen, let me highlight the fact that I think there were a lot of questions with regards to the timing, with regards to doing such a transaction. Let me emphasize that Athenex is trying to develop the best cancer therapy for patients. We have been developing different strategies with regard to creating value for our stakeholders. And then the rationale behind with regards to timing, with regards to how we actually evaluate, and also to take this opportunity, I will refer this to Dr. Dan Lang to address the question.

Daniel Lang -- Senior Director, Corporate Development President, Axis Therapeutics Limited

Sure. Thank you, Johnson. Jonathan, so we actually embarked on evaluating different technologies that could really augment our current TCRT program. When we did an analysis on what are the key elements of success for a future leader in cell therapy, we believe that having an off-the-shelf allogenic approach is a very critical element. Current generation of CAR-Ts have interesting efficacy and safety data that are helping patients, but they also have their limitations considering the long manufacturing time, the costs, patient-to-patient variability and other limitations that I'm sure you're aware of. So over the past nine months, we've been spending a lot of time looking at different technologies and companies to try to bring in, to bolster and enhance our currency TCRT program. And we really believe current therapeutics is one of those transformative technologies that could help us leapfrog current first-generation CAR T therapies. And when you ask a question on how does this complement our current TCRT program. One could put a TCR onto the NKT cell platform, which could allow us to have an off-the-shelf allogeneic approach to address the unmet medical need for solid tumors. So I hope that answers your questions, Jonathan.

Johnson Y.N. Lau -- Chief Executive Officer and Board Chairman Committees: Finance Committee (chairperson)

Jonathan, we look at is, obviously we can express the engineered TCRs on the NKT cells and that very active and targeting the tumors with the appropriate case antigens. And also that, if this is the case, then with NKT cells, this will be an allogeneic product and there might be other current T-cell based therapies. And I hope that this addressed your questions, Jonathan.

Operator

Our next question online comes from Robyn Karnauskas from Truist Securities.

Robyn Karnauskas -- Truist Securities -- Analyst

More on the new acquisition a little bit. Can you just give us some updated, I know the abstracts are out, but how many patients are we actually going to get next week? I know I think it's 11 patients in the abstract. And then second, could you give us some color on the stable disease, the characterization of the stable disease patients? Like how far out could we get for these patients from durability? And then the other question was on cash. It was just a little confusing. Cash I think previously guided the cash for 2022, but with this acquisition, when it completes, it's going to tie up a lot of cash. How are you thinking about need for capital and how you're going to manage cash going forward? And I have a follow-up.

Daniel Lang -- Senior Director, Corporate Development President, Axis Therapeutics Limited

Sure. Thank you, Robyn, for the question. Relating to the GINAKIT2 neuroblastoma study, Dr. Heczey is going to present at the ASGCT conference on May 14 with additional information. So I don't want to pre-empt his presentation, but it's going to provide additional information to the 11 patients that we have enrolled in the study. We really cannot discuss further information on the data ahead of the ASGCT conference because of the embargo. The longest duration of response that we have so far in the study is about six months. And then in terms of the cash question, I would defer to either Johnson or Randoll.

Johnson Y.N. Lau -- Chief Executive Officer and Board Chairman Committees: Finance Committee (chairperson)

Randoll, do you want to comment on the cash position and the confidence that we are going to be able to execute on all fronts based on our current projections? Randoll?

Randoll Sze -- Chief Financial Officer

Yes. Sure. Thank you, Robyn, for your question. So our latest cashflow guidance has actually accounted for expenses associated with advancing our cell therapy programs, including the Kuur platform. And ever since we received the CRL, we have been very cautious and we have been thinking very carefully about how to manage our resources efficiently and effectively. And we've been trying to conserve cash until we have more clarity on the path forward for oral paclitaxel. So we've been actively evaluating multiple scenarios for our business to maximize shareholder value during this uncertain period. So our current priorities are to maximize the growth potential for our [Indecipherable] platform and our cell therapy programs. And at the same time, we're continuing to support APS and APD business. So we're balancing these priorities against prudent capital allocation as we seek to further extend our cashflow beyond near-term catalysts. Hopefully, that addresses your question on our cashflow.

Robyn Karnauskas -- Truist Securities -- Analyst

Yes. And then on manufacturing, obviously I know for allogeneic it's a little cheaper, but even so these are expensive therapies. What is the current status of your manufacturing ability for these new CAR-NKT cells, and is someone else manufacturing for you? Do you have it in-house?

Daniel Lang -- Senior Director, Corporate Development President, Axis Therapeutics Limited

Sure. Thank you, Robyn. So for both of the Phase I clinical programs, the GINAKIT2 neuroblastoma and the Phase I program the ANCHOR study for CD19 positive relapsing refractory lymphoma, both of those studies are supported by the GMP Baylor cell manufacturing facility in Houston. And we're actually -- in addition to that, we're actually building our own cell manufacturing facility in our Buffalo headquarter, which will be up and running and be able to support a Phase I program in, probably in Q4 this year. So we have a current GMP out of Baylor to support the additional patient enrollment, which will continue to happen. And then we'll have a backup facility in a Buffalo headquarter that will come online in a few months.

Operator

Our next question online comes from Kevin DeGeeter from Oppenheimer.

Kevin DeGeeter -- Oppenheimer -- Analyst

I want to follow up on Kuur as well. Really interesting transaction. If I understand the GD2 program at this point, this is an autologous construct. Just any general thoughts you have in terms of continued investment in autologous or should we think about that program for neuroblastoma transitioning into potentially an allogeneic? And any timeframe you can provide with regards to when we may see some updated data from ANCHOR?

Daniel Lang -- Senior Director, Corporate Development President, Axis Therapeutics Limited

Sure. In terms of the autologous approach for the GINAKIT2 study, this was embarked upon a couple of years ago, and the goal at the time was to show that it's safe and efficacious to use NKT cells as a cell type for adaptive cell transfer. So whether we are going to invest into an allogeneic program in the future, we haven't made that determination yet. But suffice to say, because of the NKT cell low graft versus host disease, that positions itself as a very ideal allogeneic approach. I would think that we're going to invest additional resources into the allogeneic approach in the future. Going back to the GD2 for neuroblastoma, because it's an orphan drug disease, an autologous approach is OK because there are very few patients. I think there will be only about 1,500 patients a year in this disease state. In terms of the accrual for ANCHOR, our plan is to expand the current single center study out of Baylor into a multicenter study that will help accelerate accrual of patients in this very important allogeneic CD19 CAR-NKT study.

Kevin DeGeeter -- Oppenheimer -- Analyst

Great. And then, as we think about, building on the last question of manufacturing, any meaningful royalty stack or other components that evolve as you think about building out a financial model and think about net economics?

Daniel Lang -- Senior Director, Corporate Development President, Axis Therapeutics Limited

There's royalty that we would owe to Baylor once the product is commercial, but there is no other warranty that we would have to pay during the R&D process. As part of the transaction that Johnson described, there are $115 million of milestone payments, but those are really based on clinical and regulatory success and hitting those milestones. So those are not what I would consider to be royalties.

Johnson Y.N. Lau -- Chief Executive Officer and Board Chairman Committees: Finance Committee (chairperson)

To go further Kevin is that this transaction, we are delighted to see that all the shareholders and also Baylor College, they do have a lot of confidence in us, that the transaction in terms of upfront payment were basically a stock based sort a transaction. So therefore it didn't impact our balance sheet at all. And then we're delighted to receive their confidence working in us. Going forward, the royalty that we owe our data is such a small percentage, very, very small percentage, and the overall economics remain to be very attractive.

Operator

Our next question line comes from Chad Messer from Needham.

Chad Messer -- Needham -- Analyst

Sure appreciate you getting around to my questions. Could you just start with Oraxol? I know we've talked about this a bit, but if I remember correctly, one of the FDA concerns or one that surprised me, that it was a bit worried about what a concern over adjudication of the data, that there was somehow a bias. So just wondering, specifically, if that's something you think you can address with this additional data? If that's something you can comment on. And as a follow-up to that, you guys have a really extensive clinical program going on, not just with Oraxol with other oral chemotherapies. Just wondering if there are any sort of lessons learned from this incident about, whether it's the collaborator network or trial design or anything that's existing or future plan studies that you think needs to change to sort of stay out of the way of this sensitivity that the FDA, or at least this division of the FDA appears to have?

Johnson Y.N. Lau -- Chief Executive Officer and Board Chairman Committees: Finance Committee (chairperson)

Thank you, Rudolf?

Rudolf Kwan -- Chief Medical Officer

Chad, thank you for the question. We feel strongly the PICL analysis, the question the FDA regarding the primary endpoint is problematic from the FDA perspective. In the sense that the PICL is the industry scientific standard for open label study. So we believe we have a very strong casing argument and we intend to get external validation of their position and position it back to the FDA. Regarding to the other indications for the oral discovery platform, certainly we are a lot more strategic and we certainly take our experience from the Oraxol metastatic breast cancer going forward. So for angiosarcoma program, for example, we will be consulting with the FDA early on using the orphan drug status for the I-SPY2 program is a collaboration with Glaxo and also QuantumLeap, which we leverage extensively external input in the U.S. on that and the companies of [Indecipherable] obviously, we are all conducting very much in large centers in Mayo clinic. So we hope that those programs will take those lessons we have learned into those programs. I hope that answers your question, Chad.

Johnson Y.N. Lau -- Chief Executive Officer and Board Chairman Committees: Finance Committee (chairperson)

Chad, Johnson here. Just to add a bit further, as an organization, we firmly believe that FDA is a very good government agency. And then it's a slight pullback when they're providing feedback, we should take them seriously and learn from them as well. So in this context, I think that they have related questions. They are not really a source of saying that we are doing is not right. What we have to do is to show as much data as possible to convince the government agency. a very fair government agency, that we have been doing it correctly. Now with regard to your question, whether we've learned something from FDA on this occasion, we will be able to avoid certain sensitivities going forward. The way that we look at it is that we are always learning. And then for FDA to be able to share with us their concern and guidance would lead to directions. We're taking them very seriously in all of our planning, for all our programs going forward, to ensure that whatever data we provide is up to the highest standard as requested by FDA. So either way, we are working very closely with FDA and we intend to work with FDA to resolve all the concerns as well as the differences in opinions so that going forward, we'll be able to enjoy a more smooth path going forward. Thank you.

Operator

Our next question line comes from Matt Kaplan from Ladenburg Thalmann.

Matt Kaplan -- Ladenburg Thalmann -- Analyst

Just wanted to focus on the Kuur Therapeutics acquisition, very interesting transaction. I guess more from the point of view of safety and tolerability of the CAR-NKT platform. Can you talk a little bit about the conditioning regimen that's currently being utilized for these patients and what are your thoughts, I guess, kind of going forward and potentially the pre-conditioning regimen?

Johnson Y.N. Lau -- Chief Executive Officer and Board Chairman Committees: Finance Committee (chairperson)

Thank you. Dan?

Daniel Lang -- Senior Director, Corporate Development President, Axis Therapeutics Limited

Sure. Thank you, Matt, for the question. So for the lymphodepletion pre-conditioning regimen, it's the standard that has been used for the current cell therapy field, which includes cyclophosphamide and fludarabine. In terms of the safety and tolerability that we've seen so far, we saw one grade two CRS in the GINAKIT2 study, which is a neuroblastoma study, out of 11 patients. So obviously, small numbers, but that's about 10%. And I think that compares very well against the current first generation CAR-T programs, which have a higher CRS rates. In addition to that, in the ANCHOR study we have enrolled two patients so far and reminding you that that's an allogenic program, and we currently have not seen any graft versus host, any CRS or neurotoxicity. So safety so far appears to be pretty good and well tolerated. And I think you asked an additional question, whether we can maybe ameliorate or reduce the burden of lymphodepletion. That's certainly a question that we'll like to explore at some point later in time, but currently we don't want to confound the Phase I with too many questions then make it very hard to interpret the data. Thank you.

Johnson Y.N. Lau -- Chief Executive Officer and Board Chairman Committees: Finance Committee (chairperson)

To add a bit further, Matt. With our background, in fact, my background was also immunology. I will be delighted to share that based on our review of the data and the biology of NKT cells, we will be planning to explore the option of reducing the DP conditioning. And there's a possibility that we are going to be able to, in certain circumstances, to eliminate majority of DP conditioning. And that is one of the attractive points of the program, which got us very excited. I just wanted to share with you what we are currently thinking, Matt.

Operator

Our final question comes from Umer Raffat from Evercore ISI.

Umer Raffat -- Evercore ISI -- Analyst

Thanks a lot for the follow-up question. I want to clarify that the additional data collection for the paclitaxel program does not include additional data from the other U.S. trials that you're running. And for the Kuur acquisition, could you maybe share some thoughts on the durability of the allogeneic COVID-19 program? And is there any technical barrier for redosing?

Johnson Y.N. Lau -- Chief Executive Officer and Board Chairman Committees: Finance Committee (chairperson)

Thank you. For the first part of the question, Rudolf, do you want addressed, whether the additional data like angiosarcoma data that you're going to incorporate in our response?

Rudolf Kwan -- Chief Medical Officer

The current planning, we are obviously collecting data as we speak in all the studies, including safety data from all the other studies and efficacy data from the angiosarcoma. Nevertheless, the meeting with the FDA focused on the complete response letter, and we will definitely respond with additional data if they ask that question. But right now the focus is on the complete response letter.

Johnson Y.N. Lau -- Chief Executive Officer and Board Chairman Committees: Finance Committee (chairperson)

With regard to your second question on the allogeneic approach and the data, Dan?

Daniel Lang -- Senior Director, Corporate Development President, Axis Therapeutics Limited

Sure. So for the ANCHOR study, we had two patients enrolled and we have two responses. The first patient with the PR, his initial response was about three months, and then the second patient with a CR, his response so far is it's about six months. And I think you had another question related to the ANCHOR study, which I forgot. Can you repeat that please?

Umer Raffat -- Evercore ISI -- Analyst

Barrier for redosing for this allogeneic study?

Daniel Lang -- Senior Director, Corporate Development President, Axis Therapeutics Limited

Oh. Yes. No, that's a great question because with the allogeneic approach, redosing becomes more of a reality, which is certainly a limitation for the first generation CAR-T. Re-dosing has been done in the past, in the Autologous GINAKIT2 study. In fact, I think there were two patients that received, redosing in a GINAKIT2 neuroblastoma study, and we are planning to do the same thing with the redosing or testing the hypothesis of the ability to redose these patients in the ANCHOR study. We want to gather more single dose data first. So far, we won't have two patients. So once we gather more single dose data, we'll explore and maybe potentially amend the trial so that we can allow for redosing. So one idea could be for a patient that have a stable disease, can we turn that SD into a PR with a redosing? So these are all things that are on the drawing plans, and hopefully we'll be able to report more details once we make a decision.

Johnson Y.N. Lau -- Chief Executive Officer and Board Chairman Committees: Finance Committee (chairperson)

To add further, is that both from a scientific perspective, the feasibility and technicality, and also the market potential, redosing is certainly something that is well within the scope of what we can do. I hope that we addressed your question.

Operator

We have no further questions at this time. I'd like to turn the call over to Johnson for closing comments.

Johnson Y.N. Lau -- Chief Executive Officer and Board Chairman Committees: Finance Committee (chairperson)

Thank you all for joining us today. We continue to work toward clarity from the FDA on oral paclitaxel while supporting our cell therapy program and the APD, APS businesses. Our goal is to continue to allocate capital efficiently while executing on opportunities to unlock value for our shareholders. We look forward to updating everyone again this summer. Thank you for participating in this call.

Operator

[Operator Closing Remarks]

Duration: 55 minutes

Call participants:

Steven Rubis -- Investor Relations

Johnson Y.N. Lau -- Chief Executive Officer and Board Chairman Committees: Finance Committee (chairperson)

Rudolf Kwan -- Chief Medical Officer

Daniel Lang -- Senior Director, Corporate Development President, Axis Therapeutics Limited

Jeffrey Yordon -- Chief Operating Officer President, Athenex Pharmaceutical Division

Randoll Sze -- Chief Financial Officer

Umer Raffat -- Evercore ISI -- Analyst

Kennen MacKay -- RBC Capital Markets -- Analyst

Jonathan Chang -- SVB Leerink -- Analyst

Robyn Karnauskas -- Truist Securities -- Analyst

Kevin DeGeeter -- Oppenheimer -- Analyst

Chad Messer -- Needham -- Analyst

Matt Kaplan -- Ladenburg Thalmann -- Analyst

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