Chimerix (CMRX) Q1 2022 Earnings Call Transcript

Chimerix (CMRX 1.25%)
Q1 2022 Earnings Call
May 16, 2022, 8:30 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good morning, ladies and gentlemen, and welcome to the Chimerix first quarter 2022 earnings conference call. I would like to introduce you to your host for today's call, Michelle LaSpaluto, vice president of strategic planning and investor relations at Chimerix. Please proceed.

Michelle LaSpaluto -- Vice President of Strategic Planning and Investor Relations

Thank you. Good morning, everyone, and welcome to the Chimerix first quarter 2022 financial and operating results conference call. This morning we issue two press releases. One, to announce the sale of TEMBEXA to Emergent Biosolutions, and one, announcing our first quarter operating operations.

You can access these press releases in our investor section of the website. With me on today's call, our president and chief executive officer, Mike Sherman; chief medical officer, Allen Melemed; chief financial business officer, Mike Andriole; and our chief technology officer, Josh Allen. Before we begin, I would like to remind you that the statements made on today's call include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and are subject to risks and uncertainties, and other factors. These risks in certain and other factors could cause actual results to differ materially from those referred to in the forward-looking statements.

Please refer to our filings with the SEC for a more complete disclosure of these risks and uncertainties. At this time, I would like to turn the call over to our president, and chief executive officer, Mike Sherman.

Mike Sherman -- President and Chief Executive Officer

Thanks, Michelle. Good morning, everyone. Thanks for joining us. We've had an active couple of months, so let me get right to the updates now.

I'll start with TEMBEXA. This program has been central to our strategy for a couple of reasons. First, we're fulfilling an important need to protect the population from the possibility of a smallpox outbreak, and we've done that with the first treatment approved for all ages, and one that's likely robust even in the face of the inevitable mutations that compromise the efficacy of other treatments. Our ongoing negotiations with BARDA are progressing well to satisfy this first objective.

Second reason TEMBEXA is central to our strategies because it will serve as an important mechanism to fund our ongoing development in oncology. This is of particular value at a time when access to capital within the biotech sector is so challenging. With that in mind, we're excited to announce this transaction with Emergent Biosolutions, the sale of worldwide rights to TEMBEXA. It secures substantial capital to fund our business.

It allows us to focus our execution on the development pipeline, and it positions the asset in the hands of a company that's well suited to maximize its value, we will continue to participate in the milestones and royalties. Emergent a leading biodefense company with substantial experience in working with government agencies to assure the protection of the population's health. In securing the upfront capital with this transaction, we positioned ourselves well to fund our pipeline without the ongoing uncertainty of future procurements, which as you know, can be variable depending on the government's evolving priorities. We continue to control the BARDA contract negotiation to its completion, which we still expect to occur later this quarter.

Following the signing of the procurement contract and closing of the emergent transaction, we look forward to facilitating a smooth transition, particularly, as it relates to the well-established supply chain for TEMBEXA, which emergent intends to continue to utilize. I'll let Mike Andriole, cover the key terms of this transaction in a moment. Suffice it to say, we're very pleased to bring this transaction to fruition as it just makes great strategic sense for both organizations. Let me now turn for a few minutes to ONC201.

We recently engaged several key opinion leaders in the neuro-oncology field who participated in our advisory board supporting the design of our Phase 3 randomized trial in H3 K27M-mutant glioma. That engagement has been a great reminder of both the unmet need in this population and the physician enthusiasm for ONC201 as a treatment. It's the combination of these two factors which drive physicians and patients to seek out this treatment today, and it will continue to be the engine driving enrollment in our Phase 3 trial. In our recent engagement with the FDA to discuss the Phase 3 design and our analytical plans around the Natural Disease History Study, they took the opportunity to provide feedback on potential accelerated approval path.

To be clear, we did not seek formal feedback on that question, as we anticipated those discussions would take place as we completed the safety database and some of the ongoing clinical pharmacology supporting work. In other words, when one would have had a more informed perspective on risk benefit. That being said, their feedback made it clear that an accelerated approval would be more challenging than we previously anticipated. To be sure, the FDA's recent public commentary on the accelerated approval path, particularly within oncology, has certainly not been supportive of single-arm data going forward.

The FDA also let us know it no longer plans to rely on a Natural Disease History study as a comparator due to its inherent limitations. We've had the study underway with the expectation it would be part of the potential submission. And that being said, we plan to wrap it up the study with the patient data we have already in process and will look to publish our findings. Based on FDAs' feedback, this data is likely less meaningful in their decision process, and yet we would still expect to include it in a potential accelerated approval submission.

Let me underscore that we're not throwing in the [inaudible] on a potential accelerate approval pathway, but we need to prepare for the likelihood that the first approval may come with completion of the Phase 3. We also need to prepare for the likelihood that if we do pursue accelerate approval, the FDA will be less likely to allow for certain work to be completed during a rolling submission or as part of a post-marketing commitment, as we had previously expected. Over the last year, we've successfully completed healthy volunteer safety and case studies, improve the liquid formulation for pediatrics, we've evaluated concurrent medication and food effects on pharmacokinetics, and are now evaluating special populations, including subjects with renal and hepatic impairment. That work has all gone very well.

Other work to be performed includes a cardiac safety study, and [inaudible] modeling. These studies extend into the first half of next year, and would be gating items for a submission for accelerated approval. I need to hold off on sharing too many details of the Phase 3 trial design, as we're working quickly to get closer with the FDA on a couple of elements, but I will make a few comments about it. The trial with initiation later this year will enrollH3 K27M-mutant glioma patients, both pediatric and adult, will treat newly diagnosed patients at the conclusion of their standard radiation regimen.

Patients will be randomized to ONC201 or placebo at that time. We're planning on overall survival as the primary endpoint, which of course, if successful, will maximize the value of this agent. We believe this trial can be completed quickly with rapid times to events and including early interim analysis. As we said all along, the strict criteria required for the cohort of patients evaluated to date is not likely the optimal setting for ONC201.

It was defined more to ensure the single-agent activity was isolated, and yet the data is still compelling. As a result, we're really excited about this Phase 3 trial as it deploys ONC201 at a time in the treatment cycle when it's most likely to show maximum benefit to patients. We'll come back with the final design elements powering assumptions and timelines in the coming weeks as we have final alignment with the FDA. Finally, as we highlighted in our release, we terminated our DSTAT program, along with the sale of TEMBEXA, this will reduce our spending, and will give us tremendous focus on the Imipridone Platform and execution there.

With that, I'll turn it over to Mike Andriole to share more about this TEMBEXA transaction and the financial results for the quarter.

Mike Andriole -- Chief Financial Business Officer

Thanks, Mike, and good morning, everyone. I'd like to start with a few comments about the financial implications of the strategic decisions we announced this morning. First, the upfront proceeds from the expected sale of TEMBEXA not only provide financial stability for the foreseeable future, it also shifts the ongoing capital investment in the program to emergent. This taken together with the decision to terminate DSTAT development, meaningfully improves our forward-looking burn rate.

While our normalized burn rate in the most recent quarter was about $20 million, we expect the strategic decisions announced today to revert that burn back to about $15 million per quarter by the end of the year, or about $60 million annually, as we fully focus on the Imipridone platform where we see evidence of clinical activity. That said, we expect the proceeds from the TEMBEXA of transaction to fund the organization into 2026. Between now and then, we'll have the potential for accelerated approval of ONC201, likely interim assessments of the ONC201 Phase 3 randomized control study, and likely the fully mature data from that study. The potential for Capital B, a milestone payments of up to $100 million, if realized, may obviate the need for additional capital through a commercialization of ONC201, if it's ultimately approved.

This deal also removes the year-to-year uncertainty of the government budgeting and procurement process from Chimerix, and places that with Emergent, an organization who has a key competency in that process. It's for that reason that the potential for future royalties in this transaction are also important. There are several scenarios where the market for pandemic preparedness increases in the years to come, and the royalties in this transaction enable Chimerix to meaningfully participate in that growth. We'll earn a 20% royalty on gross profit generated in the US beyond the $1.7 million treatment courses expected in the first BARDA agreement.

Those royalties could be associated with additional volume from a second BARDA contract, or from volumes associated with sales from other sources in the US, including in the event of an actual smallpox outbreak. Of course, the value of those royalties in an outbreak scenario would likely be substantial. Outside of the US, Chimerix will earn a 15% royalty on gross profit, starting from the first sale. And while we don't anticipate international revenue to be immaterial in the near term, we do believe Emergent is well-positioned to maximize the utilization of the product globally, and royalty revenue from international sales may become material in the years to come.

I'll now turn to a quick recap of the financial results for the quarter. Starting with our statement of operations, the company reported a net loss of $24.8 million or $0.28 per basic and diluted share for the first quarter of 2022, compared with a net loss of $97.4 million or dollars $1.21 per basic and diluted share for the first quarter of 2021. The decrease is mainly due to the recording of the in-process R&D, associated with the [inaudible] transaction in the comparable period last year of $82.9 million. R&D expenses increased to $19 million for the first quarter of 22, compared to $11.9 million in the same period of 21, the main driver of that increase is the ongoing development related to ONC201.

General and administrative expenses increased to $5.6 million for the quarter, compared to $4.1 million for the same period in 2021. Turning now to the balance sheet during the first quarter, we paid the $14 million note payable to the Oncoceutics shareholders associated with the acquisition of [inaudible] in Q1 last year. Importantly, no further payments are due from that transaction until either approval of ONC201 or ONC206 in the US or Europe. Net of that repayment, we ended the first quarter of 2022 with approximately $53.4 million in capital to fund operations.

We expect to receive the upfront payment of $225 million associated with the sale of TEMBEXA to Emergent at closing of that transaction. That closing could take place early as the end of June, or shortly thereafter, dependent on antitrust clearance of the transaction and the finalization of the expected part of procurement contract. Without overview, I'll now turn the call back to Mike Sherman for closing remarks. Mike.

Mike Sherman -- President and Chief Executive Officer

Thanks, Mike. Let me just conclude with a few key points. First, we've secured substantial capital sufficient to deliver our development strategy, and have a partner well-suited to maximize the likelihood of additional capital to come. Secondly, we reduced planned spending and focused our efforts to maximize the speed of our execution on the programs with the highest likelihood of success.

And third, we have a lead program with among the most compelling and internally consistent efficacy data you'll see relative to the depth of the unmet need in H3 K27M-glioma. We're working quickly to initiate the Phase 3 trial, which would be the basis for first approval or as a confirmatory approval following an accelerated approval if we are successful with that path. With that operator, we'll open the call to questions.

Questions & Answers:

Operator

Thank you.[Operator instruction] Our first question comes from the line of Maury Raycroft of Jefferies. Your line is open.

Maury Raycroft -- Jefferies -- Analyst

Thanks for taking my questions. I guess just starting off with TEMBEXA, can you talk about some of the continued gating factors for the BARDA contract for TEMBEXA, maybe start there.

Mike Sherman -- President and Chief Executive Officer

So that negotiation is ongoing. So I need to be cautious in sort of making any commentary about the negotiation, we're pretty far advance, as you can imagine, given the notion that we so expect to be able to close that, or sign that agreement before the end of this quarter. But beyond that, I'm not sure that can add much more until it's done.

Maury Raycroft -- Jefferies -- Analyst

OK. And then, was there anything else that went into the decision to sell TEMBEXA prior to the negotiations finishing? You mentioned that a few reasons. But I just wanted to see if it was due to any uncertainty to contract size.

Mike Sherman -- President and Chief Executive Officer

I think it's fair to say that this decision was clearly informed by the ongoing negotiation, and are the potential risks around future procurements, and so for us, the certainty of this upfront, along with participation in future economics, was attractive. And so the risk profile associated with what we expect that agreement and future potential of that agreement, that risk profile, I think fits better with Emergent and their capabilities, and the certainty of fits better for our strategy.

Maury Raycroft -- Jefferies -- Analyst

Got it. Make sense. And can you talk a little bit about your views on antitrust, and just some of the diligence work that you've done there, and if you see any risk to that?

Mike Sherman -- President and Chief Executive Officer

I'll let Mike respond to that.

Mike Andriole -- Chief Financial Business Officer

Yeah. We don't anticipate an issue there, Maury. Of course, you always have to do the filing and go through the process. But our preliminary work doesn't cause us to expect an issue there.

Maury Raycroft -- Jefferies -- Analyst

Got it. OK. Maybe, last question, just on the feedback with FDA on the accelerated approval path. Did it have anything to do with the number of adults versus number of children in this study? And yeah, I guess I'll leave it at that.

Mike Sherman -- President and Chief Executive Officer

No, no. Their feedback was really quite general, which is one of the reasons why we continue to work on pulling the data analysis together to potentially pursue that path, even though they've highlighted the risk of that is higher than we may have expected previously. So we're going to continue our work, and then we plan on having a follow-up conversation with them in a formal pre-NDA meeting.

Maury Raycroft -- Jefferies -- Analyst

Got it. OK. Thanks for taking my questions. I'll head back in the queue.

Mike Sherman -- President and Chief Executive Officer

Thanks. Maury.

Operator

Thank you. Next question comes from the line of Ed White of H.C. Wainwright. Your line is open.

Ed White -- H.C. Wainwright and Company -- Analyst

Good morning. Thanks for taking my questions and congratulations on signing this deal. You're welcome. Just a question about how the $225 million will be reflected on the income statement.

Would this be a one recorded as a one-time benefit to revenues? Or could it be spread out over time? Or are you still waiting to see how what the accounting treatment for this will be?

Mike Andriole -- Chief Financial Business Officer

Yeah. Ed, it's Mike Andriole. We'll have to complete the work on the accounting treatment before answering that definitively. Of course, my expectation is that it will be recognized as revenue this year in its entirety, subject to there's a scenario, as we disclosed in the press release, where there could be an adjustment either up or down, depending on sort of the final BARDA contract, although we don't expect based on what we know today, there to be an adjustment.

But we would expect all of that to be recognized this period sort of subject to our definitive accounting review.

Ed White -- H.C. Wainwright and Company -- Analyst

OK. Thanks, Mike. And then just on the $25 million potential, the fourth potential $25 million milestone payments. Can you just review what triggers those?

Mike Andriole -- Chief Financial Business Officer

Yeah. They're triggered by the party's exercise of additional options in the agreement. And so you may recall the structure of this agreement, and other similar agreements is that there is a base period followed by a number of additional options to get to the number of treatment courses. Those options are always at risk depending on parties option and into the future.

And so, as they exercise those options, should they exercise those options, that milestone payment would be earned by Chimerix. And so each one is worth $25 million.

Ed White -- H.C. Wainwright and Company -- Analyst

Regardless of the size of the option, I would imagine?

Mike Andriole -- Chief Financial Business Officer

There is a mechanism of getting into the details. There is a mechanism in the agreement where it could technically be higher or lower, depending on if the actual amount of the option is different from what we currently anticipate. But it could actually move in both directions. But we expect that based on the current negotiation to be at or very near the $25 million.

Ed White -- H.C. Wainwright and Company -- Analyst

OK. Thanks, Mike. And just a final question at ONC201, has project Optimus been brought up at all? Can you talk about your thoughts on using the proper dose, the dosing that it would be acceptable for the FDA? Or could they want you to look at other doses? And then also, just as far as the Phase 3 protocol, I know you're going to tell us more about that later. But how are you thinking about the size of the study? Thank you.

Mike Sherman -- President and Chief Executive Officer

So, I'll answer the second part of that, and then let Allen speak to project Optimus. I will hold off on describing the size of the trial. We do think it's all relative, of course, what your expectations are for your typical Phase 3. But I think for in this population, and given the treatment side the fact, this is a trial that we can expect to be able to complete relatively quickly.

We also believe that we can incorporate early analysis that, again, given our anticipated treatment effect, are likely to hit. And so when we provide that update on the specific and in those early analysis, we'll be able to provide the powering assumptions for each of those, and we'll provide that detail to investors as we get that locked up with the FDA in the coming weeks. Maybe Allen can speak to some of the work that we've done on dose and so on.

Allen Melemed -- Chief Medical Officer

Yeah. Thank you, Mike. This is Allen Melemed. Regarding project Optimus, as you know, this has been a project by initiative by Dr.

Peyser and others. Due to concerns that a lot of oncology drugs in phase 3 have been based on the maximum tolerated dose, and in the phase 3 trial, they find that these doses have not been tolerable, and having some safety issues, and ability to give full doses in these patients. And we have had some discussion with the regarding project Optimus. Let me just put a point on the dose that was utilized for ONC201 was not based on an MTD.

We have pretty strong rationale based on where our dose was, and it's a very safe dose, and what we've seen is obviously an effective dose, and we will continue our discussion in FDA regarding how to win in this area.

Ed White -- H.C. Wainwright and Company -- Analyst

OK. Thanks, Allen.

Operator

Thank you. Next question comes from the line of Naureen Quibria of Maxim. Your line is open.

Naureen Quibria -- Maxim Group -- Analyst

Thank you. Congratulations on the TEMBEXA deal, and thanks for taking my questions. Yes, the first one is on TEMBEXA, I was just wondering if you could comment on how the deal or negotiations came about with Emergent, who approached whom, or did you approach the [inaudible]?

Mike Andriole -- Chief Financial Business Officer

Hi, Naureen, it's Mike. We've had sort of on and off conversations about their interest for a while. But hose did not accelerate until more recently into what I'd say were sort of true conversations about their interested. It's obvious, it fits within their portfolio, you know, really, really very well.

It's not competitive with other agents in their portfolio, given this is a treatment for a potential smallpox outbreak. And yet, they've got other agents in their portfolio that leverage their government contracting capability and their biodefense strategy. And so fits very well, not a surprise they were interested in this asset. And as Mike Sherman said earlier, the value of substantial upfront capital, particularly in this market, and the certainty that provides in developing, and commercializing our portfolio has made a lot of sense for us, and the ability to continue to participate in the long-term upside if all of those options are ultimately exercised is also important for us for all the obvious reasons.

So good deal dynamics between the two, and I think we'll be the start of a good partnership on that program.

Naureen Quibria -- Maxim Group -- Analyst

Alright. That makes sense. Thanks. So let me switch over to ONC201.

I'm just curious regarding the natural history study. You've a sense of what might have changed the FDAs' mind from requesting a study initially, and now it seems like they won't be relying on that for it's regulatory decision. So you know why the switch?

Mike Sherman -- President and Chief Executive Officer

I don't know if I have a great answer for that. Honestly, I'll let Allen maybe add to it. There are certain elements of any natural disease history study that there are inherent weaknesses and in what you can conclude from those, and yet there is substantial literature about in history is of the FDA asking for those, and evaluating those as part of their consideration. So that was all known upfront.

So it's not 100% clear why they would view this differently. That [inaudible] said, I do think that we would still provide that analysis as part of a potential accelerated approval submission. We continue to believe that would be supportive. We have no reason to believe that the findings from that work would suggest anything other than what we had previously expected, that responses are rare or ever occur in this population.

So I think it can still be helpful. But we're going to limit our investment in that work based on their feedback.

Naureen Quibria -- Maxim Group -- Analyst

Right. OK. There's one more.

Allen Melemed -- Chief Medical Officer

Can I just add?

Naureen Quibria -- Maxim Group -- Analyst

Yeah. Please. Go ahead.

Allen Melemed -- Chief Medical Officer

I do think there's been somewhat more of a shift in FDA regarding the utilization of phase 2 similar trials for approvals, that as you probably have heard, with the [inaudible] kinase inhibitors in [inaudible] malignancies. There's been the PD-L1 that you've seen with the phase 3 trials and the neurologic disease [inaudible] last year. So I think it's more of an FDA change. Again, when you look at ONC201, we still believe that this is a very high unmet need disease in an area where there aren't any many treatment options.

And we believe that there's still an active and effective agent with ONC201.

Naureen Quibria -- Maxim Group -- Analyst

Yeah. That makes sense. Thank you. So when you anticipate filing now? Are you able to guide to that or?

Mike Sherman -- President and Chief Executive Officer

Well, we did say that there was an expectation previously that some of the work that we have ongoing, we described some of the like [inaudible] in my commentary, that some of that could be submitted as part of or during a rolling submission. And so I think it's more likely that a complete submission would be required with all of those things ready for when you pull the trigger on that submission. And as such, those studies will be finishing up in the first half of next year. So it would follow that.

That's the best guidance I can give.

Naureen Quibria -- Maxim Group -- Analyst

Got it. Yeah, that's actually helpful. Thank you. That's all from me.

Operator

Thank you. Next question comes from the line of Soumit Roy of JonesResearch. Your line is open.

Soumit Roy -- JonesResearch -- Analyst

Hi, everyone. Congratulations on the TEMBEXA deal, and thank you for taking the question. [Inaudible] if you have any plans on the use of the $225 million in terms of if you're going to acquire new assets, and whether it's oncology, any color would be appreciated.

Mike Andriole -- Chief Financial Business Officer

Hi, Soumit, it's Mike Andriole. I think, our focus is on ONC201, and the Imiprodone platform, as we've said continuously, we're always evaluating sort of external innovation Is just part of our normal business process. And we'll be smart about, if we see assets, if, or when, and how to pull them in. One of the advantages of this transaction is in a market where cash has probably never been more valuable in terms of a premium uncertainty and the runway.

There are some increasingly distressed assets in the market. And I suspect over the course of the year there's going to be more distressed assets in the market given the environment for smaller midcap biotech that we find ourselves in today. So having substantial cash balance to work with is helpful in that environment. And yet we're also very, very focused on making sure that we get ONC210 to the finish line.

We feel we've got a responsibility to make sure that we get what we believe to be an active agent to the finish line, and get it to patients who desperately need it. So we're balance those two objectives, as we evaluate the external market. But certainly there's the opportunities and business development this year for those who have access to capital are more meaningful than they've been in a while.

Soumit Roy -- JonesResearch -- Analyst

Excellent. That's really helpful. And also last question is, could you give us any color on the reason behind this type combination? What led you to that point? Any mechanistic understanding? Or some bandwidth? Or anything like.

Mike Sherman -- President and Chief Executive Officer

Actually, I didn't hear that questions, Soumit. Can you repeat that?

Soumit Roy -- JonesResearch -- Analyst

The reasoning behind why you terminated the DSTAT program. Mechanistic understanding or something that?

Mike Sherman -- President and Chief Executive Officer

Yeah. Well, I appreciate that question because it gives me an opportunity to be really clear about that. That drug, I think is a promising drug. Nothing has changed our view with regard to the safety profile, or the potential for efficacy there.

As you know, we had challenges in rolling our trials. So it was as much about looking at our portfolio, identifying which assets we had the most definitive evidence on activity. And then focusing our efforts there, I expect that context will look for opportunities to continue to develop that agents in any number of indications.

Soumit Roy -- JonesResearch -- Analyst

Thank you.

Operator

Thank you. Next question comes from the line of David Nierengarten of Wedbush Securities. Your line is open.

David Nierengarten -- Wedbush Securities -- Analyst

Hey, thanks for taking my questions. First off, did you, or have you share, or have you shared any of the natural history study data with the FDA prior to these discussions? And the second question is, could you remind us, typically, what is the overall survival of patients post-radiation with the H27 mutation? And finally, when you think about a potential Phase 3 design, with the placebo control, are there any concerns about recruiting with a placebo arm? And obviously, it's a difficult disease to treat. I know there aren't any approved treatments, but patients might be seeking alternative therapies. Thanks.

Mike Sherman -- President and Chief Executive Officer

I'll answer part of that. And then I think between Allen and Josh, the second question is on survival and placebo we can address that. So we did not provide any data from the natural disease history analysis we have. In fact, we were going to subject that data to a blinded, independent central review.

And so that's why I made the comment earlier that we have no reason to believe or anything that we would see anything different than what we previously expected from that data. So this is more of a general commentary from the FDA. And frankly, just maybe part of the other, there are few reasons why the FDA could have provided the feedback on kind of risks associated with accelerated approval. One of those is that they certainly want to have Phase 3 trials up and running.

And so their emphasis was to focus on getting that trial up and running, and so that they could have confidence that it would be executed. And perhaps as a byproduct of these discussions, that will position us more strongly as we go back to talk about an accelerated approval, that there's likelihood and evidence that's the trial it's going to be done in a timely manner. So anyway, let me hand it off to Allen and Josh maybe to speak to the discussions we've had, both with the advisory boards on the trial design and survival expectations.

Allen Melemed -- Chief Medical Officer

Now, let me start. It's Allen Melemed, and tag it off to Josh. We have some of these conversations with numerous leaders in this area, and discuss the best design for this, assuming that FDA would require our survival, and with discussions on almost all of the investigators, we just felt that the best design would be a placebo controlled trial in the upfront setting post-radiation. This way you can control all variables.

I think the concern would be is that if you did not have this control, that patients could start a study and then come off without if they are not in a placebo controlled area. Numerous drugs have been, and studies have been done as a placebo control in similar disease were not exactly [inaudible] with evidence in a patients with glioma, so it has been done in the past. Now, I'll just pass it of to Josh for other comments on that.

Josh Allen -- Chief Technology Officer -- Analyst

Yeah. Thanks for your question, David. I would agree with Allen there. Not exactly in the same space, but certainly in a number of the randomized placebo controlled trials have been conducted in CNS tumors.

So between the precedent, their [inaudible] has been held to help us grapple with these issues. We've certainly been mindful about how we balance ethics and the need to approve this trial expeditiously. I'll [inaudible] back to your second question with regards to survival expectations. Of course, this is one of the focuses that was put in for the natural disease history that's been discussed on this call, while the results of that aren't available, I think the literature largely supports that the prognosis of these patients are similar to, or worse than [inaudible] So if you're looking for a benchmark, I think you can look to that in addition to the emerging literature in [inaudible] disease.

And the only other comment I would add on to what Mike said for your question on dialog about [inaudible] natural history is that, while we have not shared results from that study to date, we have had a dialog with the agency in the past on the natural history of this indication in view of the available literature thought leader consensus, as well as treatment guidelines that are available for quite a series of [inaudible], all of which led to an agreement that available therapy in the recurrent setting for this disease is palliative. So well, no specific data from our study, a fair amount from that to help form that framework.

David Nierengarten -- Wedbush Securities -- Analyst

OK. Thank you.

Operator

Thank you. Next question comes from the line of Troy Langford of Cowen. Your line is open.

Troy Langford -- Cowen and Company -- Analyst

Hi. Thanks for taking our questions, and congratulations on TEMBEXA deal. I just have one question on TEMBEXA first. So just given that you all can still receive royalties on profits made on TEMBEXA from contracts outside the US, can you just talk a little bit about who would lead those regulatory submissions or negotiations? So would you all do that? Or would Emergent mostly lead those conversations? And then I have a follow-up after that.

Mike Andriole -- Chief Financial Business Officer

Yeah, Emergent. Emergent will lead all regulatory interactions after closing both in the US and outside of the US.

Mike Sherman -- President and Chief Executive Officer

The nuance to that is that we would be working with them closely during the transition period and so facilitate that. So I think there's a period where which they would own it, and lead it, and yet might be relying on our team to support it.

Troy Langford -- Cowen and Company -- Analyst

OK. Great. That helps a lot. And then on ONC201, specifically the randomized Phase 3 study, I know you can't, I don't really want to talk a lot about the details of the study, but do you think there's any possibility that you could enroll patients with tumors with other than the does with midline, from the midline location? And then I guess in terms of interactions with the FDA, do you think, or do you already have a meeting planned to discuss the trial details? Agency?

Mike Andriole -- Chief Financial Business Officer

I'll start with the latter question. We did already have the discussion on the details, and we're following up on a few of the open items from that. So we expect to have closure on that relatively soon, and those interactions can be informal. I'll let Allen speak to the approach around tumor location, and Josh chipped in.

Allen Melemed -- Chief Medical Officer

Yeah, I think one of the key inclusion criteria would be the presence of the [inaudible] with identification. And we will be, at least at this point, planning to be a little more open regarding location and plan to evaluate patients in that prospective.

Troy Langford -- Cowen and Company -- Analyst

Great. That is a lot. That's all for me. And thanks so much for answering our questions.

Operator

Thank you. There are no further question at this time. And I would like to turn the call back to Mr. Mike Sherman for closing remarks.

Mike Sherman -- President and Chief Executive Officer

I just thank, everyone, again for joining the call. Look forward to providing additional updates. Have a good day.

Operator

[Operator signoff]

Duration: 43 minutes

Call participants:

Michelle LaSpaluto -- Vice President of Strategic Planning and Investor Relations

Mike Sherman -- President and Chief Executive Officer

Mike Andriole -- Chief Financial Business Officer

Maury Raycroft -- Jefferies -- Analyst

Ed White -- H.C. Wainwright and Company -- Analyst

Allen Melemed -- Chief Medical Officer

Naureen Quibria -- Maxim Group -- Analyst

Soumit Roy -- JonesResearch -- Analyst

David Nierengarten -- Wedbush Securities -- Analyst

Josh Allen -- Chief Technology Officer -- Analyst

Troy Langford -- Cowen and Company -- Analyst

More CMRX analysis

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