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Athenex, inc (ATNX) Q3 2021 Earnings Call Transcript

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Athenex, inc (NASDAQ: ATNX)
Q3 2021 Earnings Call
Nov 6, 2021, 2:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good day, ladies and gentlemen, and welcome to the Third Quarter 2021 Athenex Inc. Earnings Conference Call. [Operator Instructions]

I would now like to hand the conference over to Caileigh Dougherty, Director of Investor Relations. You may begin.

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Caileigh Dougherty -- Director of 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 third 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's 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 the 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 on 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; and Dr. Dan Lang, President of Athenex Cell Therapy; and Steve Adams, Chief Accounting Officer. The management team will be available to answer questions after the prepared to remarks.

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

Johnson Y.N. Lau -- Chief Executive Officer and Board Chairman

Thank you, Caileigh. There have been several important developments at Athenex in the third quarter, that I would like to cover this morning. I will give a brief update on oral paclitaxel, before spending some time discussing our cell therapy programs, where we have had some very positive news.

Beginning with oral paclitaxel and Encequidar in metastatic breast cancer. In October, we had a Type A meeting with the U.S. FDA, regarding our new drug application. Unfortunately, we could not reach alignment with the FDA on the U.S. regulatory pathway in metastatic breast cancer. After careful consideration, we determined that another large randomized controlled study for the metastatic breast cancer indication would not be an optimal use of time of our resources. Instead, we intend to prioritize the other ongoing studies of oral paclitaxel, which have shown encouraging results. In particular, the combination of anti-PD-1 in oral paclitaxel for patients with non-small cell lung cancer, who had previously failed at anti-PD-1 monotherapy, and the other programs in our pipeline.

Ultimately, our goal is to serve patients and maximize value for our shareholders. We will however continue to explore paths to approval for oral paclitaxel, in regions outside the U.S. Our regulatory team has been in discussions with MHRA, regarding a potential filing. As before, it is Athenex policy to make a formal announcement, only once the filing has been accepted. Separately, there has also been some positive news from the U.K. regarding a new program called Innovative Licensing and Access Pathway or ILAP, which aims to accelerate a drug's time to market, facilitating patient access to innovative medicines. We have received notice from the ILAP program that Encequidar, in combination with oral anti-cancer medicines have been accepted into the first stage of this program. Dr. Rudolf Kwan will expand on this in a few minutes.

And another part of Athenex's strategy, is to enhance and expand our other technology platforms. On this front, I'm very pleased with the continued positive momentum in our cell therapy programs. Dr. Dan Lang, President of Athenex Cell Therapy will provide a detailed update, but there are several positive developments I want to highlight specifically. Earlier this year, we acquired Kuur Therapeutics, providing us with a first-in-class NKT cell therapy technology platform for the treatment of both hematologic and solid malignancies. One of the two clinical stage assets we acquired in this transaction is Kuur 502, an allogeneic product that's being evaluated in the ANCHOR trial. A Phase-I study in patients with CD19 positive relapse or refractory lymphoma and leukemia. There will be an important update on this study at the forthcoming American Society of Hematology or ASH meeting in December. The extract [Phonetic] became public this morning, and we are pleased to report that, out of a total of five patients, there have been two complete responses and two partial responses, with a low dose of the infused engineered NKT cells.

Our clinical program is very encouraged by this data, and we look forward to providing more details at ASH. Also regarding cell therapy, we received notice from the U.S. Patent and Trademark Office, allowing patent claims along our NKT cell therapy platform. Similar claims have already been granted in the E.U. But these are the first to be allowed in the U.S. We believe this will bolster the protection around our technology, and strengthen Athenex's position, as one of the leaders in the NKT cell therapy.

As for Klisyri or tirbanibulin ointment, our first-in-class microtubule inhibitor for the treatment of actinic keratosis of the face or scalp. It was launched in the U.S. in February this year, led by our partner Almirall. In September, Almirall announced the launch of the Klisyri in Europe. Following approvals in both the European Union and the United Kingdom over the summer. The U.K. and Germany, are the first two European countries, where Klisyri will be available for prescription, to be followed by other E.U. countries. We are very encouraged to see strong execution by Almirall, in linking this product available to patients in licensed territories. And in the U.S., we are pleased to look in the acceleration in script trends after Labor Day.

As of September 30, Athenex had cash, cash equivalents, restricted cash and short-term investments of $105 million. After receiving the CRL earlier this year, we immediately initiated cash preservation measures, which includes significant reduction in our commercialization activities and expenses, reduction of our supply chain activities and expenses, and slowing down of certain clinical programs.

Our current projected cash run rate is through fourth quarter 2022. We will look for additional measures to further extend the runway. We will continue considering very carefully, our priorities and overall strategy, as well as how to optimize the use of our resources, while pursuing initiatives to unlock value for the long term. We do not believe the full value of our assets is appreciated by the marketplace. This includes the oncology focused small molecule Orascovery platform, our cell therapy business, the growing royalty and milestone stream we are generating from Klisyri and our specialty pharma business, which includes significant property, plant and equipment assets.

Our mission continues to be a biotech focused company, working to serve patients and the healthcare community. We remain focused on advancing the portions of our pipeline, that we believe could transform standard of care, and will continue to explore options to increase the overall value of our business.

I will now turn it over to Dr Rudolf Kwan to provide an R&D update on our oral paclitaxel programs and the Orascovery platform.

Rudolf Kwan -- Chief Medical Officer

Thank you. Johnson. As Johnson mentioned, we announced last month that we held a Type A meeting with FDA, to discuss a proposed design for new clinical trial that was intended to address the issues outlined in the CRL we seek for our oral paclitaxel NDA in metastatic breast cancer, it was an informative meeting, and after careful consideration, we determined that, presently deploying our resources toward the existing ongoing studies of oral paclitaxel, as well as our cell therapy programs in CAR, NKT, and TCRT would be a better way to maximize value for all our stakeholders. Therefore, we do not plan to pursue a new pivotal study in metastatic breast cancer at this time.

As for our oral paclitaxel program in angiosarcoma, we have a meeting scheduled with the FDA later this month, to seek their guidance on the potential registration pathway. We will provide an update, once we have more clarity from the agency, as well as internal agreement on next steps. We have completed enrollment in our ongoing Phase II trial. Angiosarcoma is a disease with predetermined options, and for which oral paclitaxel has received orphan drug designation.

In September, we presented Phase I dose finding results of a study combining oral paclitaxel with pembrolizumab in solid tumors at ESMO. The data was highly encouraging, and demonstrated promising anti-cancer activity for the combination of oral paclitaxel and pembro in lung cancer patients, who have progressed on PD-1/PD-L1 therapy. There were total 10 non-small cell lung cancer patients enrolled, of which each were evaluable for response. Four of the eight patients achieved partial response, and four others achieved stable disease. Notably, these lung cancer patients had all discontinued previous checkpoint inhibitor therapy due to progressive disease, so these datas are highly encouraging. As PD-1/PD-L1 therapies continue to dominate therapy choices for lung cancer patients, our approach would potentially address an unmet medical need, for patients that eventually failed this PD-1/PD-L1 therapy. We are currently proceeding into the expansion phase of this study.

As a reminder, oral paclitaxel is also being investigated in combination with GSK's dostarlimab and carboplatin for neo-adjuvant treatment in breast cancer in the I-SPY2 trial. This study is progressing well and the data readout is expected 2022.

Lastly, as we consider the broader oral discovery platform, there is a potential opportunity to participate in the Innovative Licensing and Access Pathway or ILAP in the U.K. This is a new program that was established by the MHRA, and other U.K. government agencies to efficiently accelerate a drug's time-to-market and facilitate patient access to innovative medicines. We have received confirmation that the ILAP steering committee has awarded the Innovative Medicine designation, namely the Innovation Passport to Encequidar, our novel PGP pump inhibitor, in combination of oral anti-cancer medicines. The Passport is the entry point for the program. The next step will be to meeting with the groups in the ILAP steering group, to define the roadmap to facilitate the best approach for developing the Orascovery platform in the U.K. We will provide a further update, when we have more news here.

I will now turn it over to Dr. Dan Lang, to provide an update on our cell therapy programs. Dan?

Daniel Lang -- President, Athenex Cell Therapy

We continue to make strong progress on building out and strengthening our cell therapy program, and have had a number of positive updates in the quarter. We believe this portfolio represents a key value driver for Athenex moving forward.

Earlier today, we put out a press release disclosing interim data from our allogeneic CD19 CAR NKT clinical trial, ANCHOR, which were published this morning on the ASH website. We have treated a total of five patients, four in the NHL cohort and one in the ALL cohort. We are excited to announce that we have observed two PRs and two CRs out of five patients. Two PRs and one CR out of four patients in the NHL cohort, and one TRI or complete response with incomplete hematological recovery in the ALL cohorts. These responses were observed, following single IV infusions at the very low doses of 10 million and 30 million CAR NKT cells per meter square, which are a fraction of the average dose of commercial CAR-T products. In addition, these patients were heavily pretreated with multiple prior lines of therapies and two responses we're seeing in patients who failed prior CAR-T therapies.

While we didn't see in-vivo expansion in the peripheral blood in the first three patients at the lowest dose, we did see in-vivo expansion of donor derived CAR NKT cells in the NHL patient at the second dose cohort, as well as the patients in the ALL cohort at the first dose cohort that peaked at week one. More importantly, we're able to detect allogeneic CAR NKT cells in tumor biopsies, that persisted up to five weeks in two patients, which support the homing abilities of these CAR NKT cells to tissues and tumors.

In the NHL patient with a CR, we saw 2000 full expansion of the patients NKT cells that peaked at week six, suggesting the infused Allo CAR NKT cells stimulated and activated the patient's strong immune system. This is an interesting observation, only one patient and requires further validation with more patients. The most common adverse events observed were nausea and grade 3-4 hematological toxicities, related to lymphodepletion chemotherapy. The only adverse events attributable to cure 502 was grade one cytokine release syndrome in one patient.

In summary, we have two PRs and two CRs out of five patients following a single, low dose infusion, a well-tolerated side effect profile, and a product that is administered in the outpatient setting. We believe an attractive clinical profile is emerging, that stacks up well against the commercial oncologist products, as well as other allogeneic products in developments. We look forward to expanding our current single center study at Baylor, to a multi-center study, in order to accelerate enrollment and replicate these early promising data in CD19 relapsed refractory lymphoma and leukemia.

I would also like to report that our Phase I study testing our high affinity autologous TCRT cell therapy, targeting NY-ESO antigen in solid tumors has begun screening patients for enrollment. We are using our own proprietary Immunohistochemistry tests to identify high-expressers of NY-ESO in patients with lung cancer, breast cancer, head and neck cancer, liver cancer and synovial sarcoma, who are more likely to benefit from our NY-ESO TCRT cellular therapy. We hope to present interim data next year, at an appropriate medical conference.

Longer term, we are excited about the opportunities for inserting TCRs onto the NKT cells to generate an allogeneic cell therapy approach for solid tumors. As many of you know, solid tumors represent 90% of the oncology markets, and there remains significant unmet medical needs. We believe having an allogeneic approach, that allows for cost effective repeat dosing, will be an important element of success to target solid tumors. We look forward to continuing to innovate and maximize the value of anti-T-cell platform. Areas of research focus include, additional targets improving persistence and anti-tumor activity of NKT cells, as well as further characterization of healthy donors, and scale up of our manufacturing process.

Lastly, we recently received our first U.S. allowance on one of our foundational patents on NKT cells. This patent includes a pharmaceutical composition claim, that comprises genetically modified CD62L-positive human NKT cells, that also express at least one CAR. We discovered that under certain conditions, NKT cells acquire CD62L, which is a marker of potential memory T-cells, which has enhanced expansion, persistence and anti-tumor activity, and we have designed our manufacturing process to enrich for CD62L positive CAR NKT cells. We believe that this allowance solidifies our already strong IP position and firmly establishes Athenex as one of the leading companies in NKT cell therapy.

I will now turn over to Jeff.

Jeffrey Yordon -- Chief Operating Officer

Thank you, Dan. Revenue from product sales increased to $27 million in the third quarter. That represents an increase of 9% from the third quarter in 2020 and a 26% increase sequentially from the second quarter this year. As a reminder, during the full year 2020, we had approximately $20.4 million in non-reoccurring sales due to COVID. We should be able to make up about $16 million of those non- reoccurring sales which actually represents approximately a 14% increase in our base business revenues compared to 2020. These results were achieved despite significant challenges in 2021. The challenges include, COVID related impact on manufacturing in both China and India, inability to secure shipping options, to bring our inventory into the United States. Shortage of essential materials, like stoppers, last files and some injuries and challenges to purchase and receive essential APIs for our products in a timely manner.

With regard to our financial guidance for product sales in 2021, as a result of the challenges just described, together with the impact of the non-reoccurring sales in 2020, we now expect revenues to decline by 6% to 12% year-over-year. We anticipate that most of these challenges will be much less severe in 2022.

For the new products we have recently launched, we've been able to achieve meaningful market share in a short period of time. For example, we are now number one in terms of market share for our liquid cyclophosphamide product. There are a number of factors expected to drive the increase in revenues in the remainder of this year and into 2022. These include new product introductions. We have three product launches planned in the third quarter, and an additional seven planned in 2022. Two of the planned new product introductions in 2022 are very significant products, and these will be launched at market formation in April and May of next year. The revenues on these two products will enable us to increase revenues and margins. Both of these products have tentative approvals and are scheduled to launch at patent expiration. We also have continued sales improvements and a few key APD products.

As previously discussed, our biggest challenge remains our ability to secure essential components and shipping on both ships and planes. In the first half of 2021, we experienced significant COVID related challenges in our Indian supply chain, and to a lesser extent in China. The labor markets in the regions have improved, but we are still seeing delays. We expect strong increases in revenues and margins in 2022 and beyond, based on very strong pipeline, particularly for APD.

Athenex Pharmaceutical Division or APD currently markets 33 products with 64 SKUs and Athenex Pharma Solution markets five products and 16 SKUs. Construction of our facility in Dunkirk, New York is essentially complete. We have now completely installed the Class II [Indecipherable] that will eventually allow us to manufacturing our products. Two large lyophilizers have been delivered to the facility and we expect the isolator vial filling line to be delivered in February of 2022. We have built eight dedicated bays for the expanded 503-B business. We had originally planned to commence manufacturing there in Q4 2021. However, there were some delays in securing state licenses. We are now actively going through the licensing process in New York and then with the seven largest states. Therefore it's likely going to be well into 2022, before we can fully take advantage of this new capacity. The revenues at APS remain robust and we are selling essentially every unit we can manufacture, at attractive margins.

I will now turn it over to Steve to discuss the financials.

Steven Adams -- Interim Chief Accounting Officer

Thank you, Jeff. Revenue from product sales increased to $27 million in the third quarter compared with $24.8 million in the third quarter of 2020, an increase of 9% year-over-year. This increase was primarily attributable to an increase in 503-B product sales of $2.1 million, due to increase in demand for certain drugs used to treat patients hospitalized with COVID-19. API product sales and contract manufacturing sales, each experienced an increase of $0.4 million. These increases were offset by a decrease in APD product sales, resulting primarily from a significant prior year increase in demand for COVID-19 related drugs and for FDA shortage products during 2020, including some significant non-recurring orders.

License fees and other revenues were $5.3 million for the third quarter 2021 compared to $10.7 million in the comparable period of 2020. This decrease was primarily due to the recognition of $5.1 million in license and royalty revenue from Almirall for the launch of Klisyri in the E.U., in September 2021. While we recognized $10.4 million in license revenue during the third quarter last year, pursuant to license agreements with our Chinese partner XPH and with PharmaEssentia.

Cost of sales in the third quarter 2021 were $25.6 million as compared to $24.5 million for the comparable period in 2020. The increase was primarily due to the increase in cost of 503-B product sales, as production levels increase. Additionally cost of sales related to royalties for license income, decreased by $2.5 million from the royalty payment incurred in 2020 on the license revenue for XPH.

R&D expenses for the third quarter of 2021 totaled $17.7 million as compared to $18.4 million for the third quarter of 2020, the decrease of 4% year-over-year. This was primarily due to a decrease in costs of Clinical Operations, oral paclitaxel, product development and Medical Affairs and preclinical operations. The decrease in these R&D expenses was partially offset by increases in cell therapy development costs, drug licensing costs related to licenses for specialty drug products, and increases in cost of other product development.

SG&A expenses for the third quarter of 2021 totaled $22.8 million as compared to $22.2 million for the third quarter of 2020, an increase of 3%. This was primarily due to increases in operating costs, including insurance, IT costs, professional fees, compensation-related cost and site preparation cost relating to the manufacturing facility in Dunkirk, New York, as well as the change in fair value of contingent consideration. These were partially offset by a decrease in costs related to commercializing oral paclitaxel as significant pre-launch activities occurred in 2020 and slowed upon receipt of the CRL in February 2021.

Net loss attributable to Athenex for the third quarter was $36.1 million or $0.33 per diluted share as compared to a net loss of $36.8 million or $0.44 per diluted share for the same period in 2020.

In terms of product sales guidance, as before, we are limiting financial guidance to the existing Athenex product portfolio only. As discussed by Jeff, we are revising guidance for 2021 and now expect that full-year product sales will decline by between 6% and 12% year-over-year.

As of September 30, 2021, Athenex had cash and cash equivalents of $73.6 million, restricted cash of $16.5 million and short-term investments of $14.9 million for a total of $105 million. As Johnson mentioned, we are looking for additional opportunities to extend our cash runway beyond Q4 2022. For further details on our financials, including results for the nine months ended September 30, 2021, I would refer you to our Form 10-Q filed with the SEC.

I will now return the call back to Johnson.

Johnson Y.N. Lau -- Chief Executive Officer and Board Chairman

Thank you, Steve. We will now open the call for questions.

Questions and Answers:

Operator

Thank you. [Operator Instructions] Our first question comes from the line of Jonathan Miller with Evercore ISI. Your line is now open.

Jonathan Miller -- Evercore ISI -- Analyst

Hi, guys. Thanks so much for the question and congrats on the progress with ANCHOR. I'd like to focus my questions on the NK platform, if that's all right. There is an emerging theme in non-gene edited CAR around cell persistence that we keep hearing about but the persistence data in the abstract Dan and the stuff that you talked about during your prepared remarks wasn't super clear. Are you going to have more persistence data in the full poster and do you expect this to matter as much for an NKT product, would it also a feed forward mechanism to adaptive immune system versus a CAR-T product where self-persistence is really critical to impact?

Johnson Y.N. Lau -- Chief Executive Officer and Board Chairman

Dan?

Daniel Lang -- President, Athenex Cell Therapy

Sure. Thank you, Jonathan, for the question. So you're right, NKT cells are tissue and tumor traffic [Phonetic]. So, we expect to see more rapid egress of the NKT cells from the periphery into the tissue, like the tumor or lymph node. So what we see in the peripheral blood for NKT cells may not represent what's actually happening in the patients because this is, you want NKT cells to infiltrate the tumor. And actually we saw in tumor biopsies these cells infiltrating the tumors up to several weeks after the first infusion. So what is -- what you see in the peripheral blood in terms of NKT cells may not represent what's actually happening clinically and in fact, in our first dose cohort for our three NHL patients, even though we didn't see in vivo expansion of the NKT cells, we saw one PR and one CR. So there needs to be more work at better characterize the PK of these cells. But I'm not sure what we have learned from the first generation CAR-T, PK and persistence could be extrapolated into the NKT cell because it's very unique biology.

And lastly, to your question about the adaptive immunity, it's interesting to point out that in one patient we saw 2,000 full expansion of the patient's own NKT cells, which suggests that the allo-infused NKT cells were able to stimulate and propagate the immune system of the host, the patient's own NKT-cells. So that's a very interesting observation. It happened in one patient. So we need to replicate that. And hopefully, we can validate that in more patients that we enrolled.

Jonathan Miller -- Evercore ISI -- Analyst

Yeah. Thanks so much. It makes sense. One of the thing that I wanted to ask about is something that I've been curious is that now for a little while, you and others have discussed the potential for NK cell therapies to actually benefit from being more mismatched to the patient because of NK negative regulation from HLA as this is a validation of the idea that you can do Allo therapy using NK-based platforms. How important is that if that, does it worth selecting for? Or is it important enough that it will be a major driver of response or efficacy? And does it suggest that the ideal usage of NK-based products might require some HLA genotyping and like a library of donor products? Or is that over complicated?

Daniel Lang -- President, Athenex Cell Therapy

That's a good question, Jonathan. Maybe I'll ask Kurt, our Chief Medical Officer on the Cell Therapy division to comment on that.

Kurt Gunter -- Chief Medical Officer for Cell Therapy, Head of Regulatory Affairs

Okay. Yeah. Thank you for that question. I think the honest answer is, we don't really know how important HLA will be. We're not attempting to match a priority right now, but we're certainly collecting the information and we will examine what the level of matching means in terms of responses, safety and pharmacokinetics and pharmacodynamics. But we don't have all those answers now.

Now, we do however believe it's very important to properly characterize our donors, not necessarily for HLA, but working with our colleagues at Baylor College of Medicine, we have identified certain donor markers and gene signature patterns that predict good NKT cell products. So we are focusing on that aspect and planning to a priority select the best owners in that way.

Jonathan Miller -- Evercore ISI -- Analyst

That makes sense. Thank you.

Johnson Y.N. Lau -- Chief Executive Officer and Board Chairman

Thank you.

Operator

Our next question comes from the line of Kennen MacKay with RBC Capital Markets. Your line is now open.

Kennen MacKay -- RBC Capital Markets -- Analyst

Hi. Thanks for taking the question. Maybe for Johnson or Rudy, can you speak to plans for global filings outside of the US for Oraxol metastatic breast cancer? Did you -- did I hear you mentioned a strategy in the UK? And beyond that, I would like to ask on the data from the CD19 directed CAR-NKT cell, I ask, this is KUR-502, is that correct? Or is this product slightly different? Anyway that data go beyond establishing proof of concept for the NKT cells, it's clearly efficacy -- significant efficacy. But at the same time, that can be said for a number of other CD19 directed therapies. So where ultimately do you see NKT cells fitting into a potential treatment paradigm? And what are next steps for this program after this demonstration of early efficacy? Thank you.

Johnson Y.N. Lau -- Chief Executive Officer and Board Chairman

Thank you, Kennen. You have two questions. The second question is on NKT, which is a continuation of the last discussion. So why don't we answer the second question first. Dan, do you want to address the question relates to NKT?

Daniel Lang -- President, Athenex Cell Therapy

Sure. Thank you for the question, Kennen. So to your question about basically CD19 is relatively competitive area and where does NKT cell fit in? I would say that, obviously, this is very promising early data four responses, two PRs and two CR Level 5 patients. But I want also will like to point out that, we're seeing that these responses at the lowest dose cohort of 1 times 10 to 7 per meter square, as well as 3 times 10 to 7 per meter square. So, the total number of sales [Phonetic] that we're infusing is a fraction of what is the average dose right now that's being used for the first-generation CAR-T therapy. So there is quite a bit of room for improvement and optimizing on the dose. We believe that we're going to have a put a wide therapeutic window for our NKT cell therapy. So we look forward to accelerate the clinical involvement, see what our clinical profile pans out at the highest -- higher doses.

In terms of where does this fit in longer-term? I would say that because the very unique property of NKT cells to home in on to tissues, whether it's a tumor or a lymph-node, it really lands the South quite well to be position as a therapy for solid tumors. We already have a high affinity TCR targeting NY-ESO in Phase 1 development. So one potential extension of this program would be insert a TCR on to the NKT cell platform, which will allow us to go after solid tumors with an allogeneic technology that could allow for repeat dosing, which we believe could be a very important element of success when it comes to treating solid tumors. So I hope I answered your questions there, Kennen.

Kennen MacKay -- RBC Capital Markets -- Analyst

Yeah. Just follow-up on the NKTs before we jump over to Oraxol. The CRS that we're seeing, was that at the lower dose or the second dose? And can you maybe talk to what was going on in that patient at all? I know there is only Grade 1, but would be interested in that. Thank you.

Daniel Lang -- President, Athenex Cell Therapy

Yeah. So it was a Grade 1 CRS saw in the eight outpatient at the lowest dose of 1 times 10 to 7 per meter square. This was a sub-limiting CRS observation and did not require any treatment. That's all we have right now. We may provide more information at the ASH Conference in December.

Johnson Y.N. Lau -- Chief Executive Officer and Board Chairman

Kennen, just want to highlight a little bit further with regard to the fact that the fact that we're using a very small fraction of the cells that are using CAR-T to demonstrate efficacy in conjunction with the fact that this can be allogeneic in terms of using donor cells. All this actually is a transformational with regard to the approach based on the cell therapy using our platform. The fact that we have proven that it has a good therapeutic index with regard to this group patient is an indication that this platform is actually rather clinically and then at the same time, if we can extend to other molecular targets, this can surface where we -- good platform to jump-start the approach in terms of similar cancer based on NKT therapy.

Any further questions on NKT, Kennan, before I move on to the --. Thank you.

Kennen MacKay -- RBC Capital Markets -- Analyst

No. We can talk more at ASH.

Johnson Y.N. Lau -- Chief Executive Officer and Board Chairman

Right, right, right. I would encourage you to monitor the evolution and the data that that is an update data we are going to present in ASH.

First part of your question, Rudolf?

Rudolf Kwan -- Chief Medical Officer

Kennen, thank you for your question. We believe oral paclitaxel is a useful drug for oncology patients and the regulatory interaction with the UK MHRA is actually a natural extension of the already completed Phase 3 program in a metastatic breast cancer and it will allow us to extract value of our Phase 3 investment, potentially in other geographic areas. We are pleased that the UK regulators are considering the merits of encequidar in combination of chemotherapy. So we are -- as we stated earlier, we are not going to comment on the filing until filings in regulatory authorities has been updated, which is our practice. So I'll leave at that. I hope I answered your question.

Kennen MacKay -- RBC Capital Markets -- Analyst

Yeah. Thank you, Rudolf.

Johnson Y.N. Lau -- Chief Executive Officer and Board Chairman

Thank you.

Operator

Our next question comes from the line of Yale Jen with Laidlaw and Company. Your line is now open.

Yale Jen -- Laidlaw & Co. -- Analyst

Good morning and thanks for taking the questions. And I also going to focus on the NKT cells for the first question, which is that, what's the current plans in terms of additional dose expansion for the study? And another one follow-up to that is that, at least in theory, do you see any reason that NKT cell could be less -- could be safer, I should say, compared maybe to the CAR-T, particularly in terms of CRS and are they in your logical sort of toxicities? Then I have another one follow-up.

Johnson Y.N. Lau -- Chief Executive Officer and Board Chairman

Yeah. Thank you. Dan?

Daniel Lang -- President, Athenex Cell Therapy

Sure. The ANCHOR study for KUR-502 is a 3x3 dose escalation design starting at the lowest dose of 1 times 10 to the 7 per meter square. The next dose cohort 3 times 10 to 7 and then the last dose cohort is 1 times 10 to the 8 per meter square. So that is the design and we already have one patient with NHL in the second dose cohort.

To your next question related to potential safety vis-a-vis other modalities based on T-cell and NK cells, we believe there is a potential for NKT cells to be proven to have a lower CRS rates. I would draw your attention to the GINAKIT2 study, which is our 501 -- KUR-501 program in pediatric neuroblastoma and in that particular trial where we have enrolled 11 patients so far. We only saw one Grade 2 CRS and -- because we are giving very, very low doses, only 10 million to 20 million cells so far, we believe that these cells are not causing the kind of cytokine release syndrome that compared to the first generation CAR-Ts that required hundreds of millions of cells. So that remains to be determined, but we're very hopeful that over time we're going to have a better safety profile vis-a-vis a T-cell based technologies.

Yale Jen -- Laidlaw & Co. -- Analyst

Okay, great. Maybe I have one more follow-up questions here, which is for the considerate [Phonetic] cells at this moment, basically, there is two. First one is that, do you know the reimbursement status in the United States? And secondly, is that, the -- in terms of the revenue line that on the licensing part, you have the revenue from -- does that include any sales royalties on there or simply just the licensing fee? And thanks.

Johnson Y.N. Lau -- Chief Executive Officer and Board Chairman

Let me answer the question. With regards to the reimbursement, our partner, Almirall, is working very hard to get into the reimbursement scheme. And according to their webcast, I mean, they anticipate that the Medicare reimbursement should be in line online around a year after the approval. So they are working very hard on that and please refer to their webcast because at a charge-off sales and marketing in the US.

Now, with regard to revenue line, yes, there are other milestones in addition to the royalty. And then we have indicated in the past that the milestones consist both the development milestones, as well as sales milestones, when we achieve certain sales -- target sales we will also receive additional milestones. And then at the same time, we have other development milestones, and this is in addition to the royalty. I hope I answered your question.

Yale Jen -- Laidlaw & Co. -- Analyst

Sure. And -- yes. And thanks for that. Appreciate it.

Johnson Y.N. Lau -- Chief Executive Officer and Board Chairman

Thank you, Yale.

Operator

Thank you. [Operator Instructions] Our next question comes from the line of Matt Kaplan with Ladenburg Thalmann. Your line is now open.

Matthew Kaplan -- Ladenburg Thalmann -- Analyst

Hi. Good morning and thanks for taking the questions. I guess, just to continue on NKT. Can you talk a little bit about where you are in terms of manufacturing the allogeneic product? And how it potentially differentiates and add some benefits from a QA-QC point of view differentiated from CAR-T platform from manufacturing perspective?

Johnson Y.N. Lau -- Chief Executive Officer and Board Chairman

Thank you. Dan?

Daniel Lang -- President, Athenex Cell Therapy

I'll ask Kurt Gunter to answer that question, if I may?

Johnson Y.N. Lau -- Chief Executive Officer and Board Chairman

Good.

Kurt Gunter -- Chief Medical Officer for Cell Therapy, Head of Regulatory Affairs

Yes. Well, thank you for the question. Now, there are several aspects of manufacturing that, we believe provide a significant advantage for NKT cells. For one thing with -- since NKT cells Type 1, which we use, have an invariant T cell receptor, they will not cause graft-versus-host-disease. And so, there is no need for us to perform any type of gene editing during the manufacturing. This makes for a simpler process and reduces the potential for genotoxicity and chromosomal breakage. Also, we naturally expand the NKT cells by stimulating them with a synthetic glycolipid, they recognize -- their TCRs recognize glycolipids and in combination with certain cytokines, the cells have very significant expansion potential. And so, that appears to be a very robust process in that respect. So those are two advantages of the manufacturing that we intend to carry through with.

In terms of expansion, we get almost up to -- over 10,000-fold expansion. We've made enough from our first healthy donor to run our entire Phase 1 program from one healthy donor and we have lots of plans to optimize the process going forward. I think I'll stop there in the interest of time, but it is a very interesting subject and we're paying very close attention to manufacturing and CMC issues.

Matthew Kaplan -- Ladenburg Thalmann -- Analyst

All right, great. Thank you. That's very helpful. And then just on Oraxol. Can you talk about potential path forward? What you're thinking right now? Maybe it's premature given you have met with the FDA. But for the angiosarcoma indication given the unmet need there.

Johnson Y.N. Lau -- Chief Executive Officer and Board Chairman

Rudolf?

Rudolf Kwan -- Chief Medical Officer

Matt, we certainly believe Oraxol is a good oncology drug. There three programs that are ongoing with Oraxol. The first one is the angiosarcoma which we have completed enrollment. And we have a meeting scheduled with the FDA later this month to discuss the path forward. And given that we have already received an orphan drug indication for that indication, once we got a clear guidance from the FDA about a path forward, we will make an announcement. So you can stay tuned on that one.

We have two other programs that are also ongoing. One is the one that we announced in ESMO recently. The combination of the anti-PD-1, the KEYTRUDA combination program, where we saw, in the Phase 1 of the study, that in each of the variable lung cancer patient, non-small cell lung cancer patients, who had previously progressed while on a anti-PD-1, for them has saw response and the four other were stable disease. This is very encouraging for us and we have opened up the expansion cohort to a lot to confirm that highly interesting signal. So we hope to have some results once we get the enrollment going.

Then the third program that's ongoing in the US is a long-running I-SPY 2 program and we are in that program in combination with the GSK Dostarlimab and also with combination with carboplatin in the arm 2 in the US for the neoadjuvant treatment of breast cancer. And that study is enrolling well and we hope that they will finish that study and have some result sometime in 2022. So we are keeping an eye open on the opportunity for Oraxol and given that all those programs were either entirely or primarily in the US, I think, we hope to have better reception of the data for this program going forward.

Johnson Y.N. Lau -- Chief Executive Officer and Board Chairman

Matt, I want to add a little bit further to your first question, I think from your question, I can understand that you are asking with regard to the usual QA-QC batch release procedures required for cell therapy, which are -- the infrastructure in Athenex will be more than capable to support all this going on, which is the benefit of the Kuur therapeutics program within Athenex.

Now, I'm quite sure that the second part of your question is related to the reason concerned from FDA with regard to the chromosomal breakage or the gene rearrangement, and the fact that in our cell therapy approach, we are not using gene editing. I think that should not be a concern. And, obviously, the third part will be the costs involved and certainly, is allogeneic. The cost involved will be far less than the standard autologous cell therapy procedure.

We hope we answered your questions, Matt.

Matthew Kaplan -- Ladenburg Thalmann -- Analyst

Thank you, Johnson. That added color is very helpful.

Johnson Y.N. Lau -- Chief Executive Officer and Board Chairman

Thank you, Matt.

Operator

Thank you. Our last question comes from the line of Gil Blum with Needham & Company. Your line is now open.

Gil Blum -- Needham & Company -- Analyst

Hello, everyone, and thanks for taking our question. Just a quick one on CD62L-positivity and the CAR-NKT program. Could you provide maybe a little more context as to the benefits of having CD62L-positivity? From what I remember, it's an NK cell marker that assists with motility of sales. But if you could provide a little bit more color, that would be helpful?

Johnson Y.N. Lau -- Chief Executive Officer and Board Chairman

Dan or Kurt?

Daniel Lang -- President, Athenex Cell Therapy

Sure, I can take that. So, we have demonstrated in a preclinical model that CD62L-positive cells have enhanced expansion, persistence and anti-tumor activity. It's also a marker for more of a memory-like NKT cell population. So, we have demonstrated in vivo model that these cells performed better than the ones that are negative for CD62L and that's why in our manufacturing process we select for the CD62L-positive cells that would have better activity in persistence in the in vivo.

Gil Blum -- Needham & Company -- Analyst

All right. Thanks for taking our question.

Johnson Y.N. Lau -- Chief Executive Officer and Board Chairman

Thank you.

Operator

Thank you. There are no further questions. I will now turn the call back to Johnson Lau for closing remarks.

Johnson Y.N. Lau -- Chief Executive Officer and Board Chairman

Thank you, everyone, for joining us today. Now that we have made a decision about the US regulatory pathway of oral paclitaxel in metastatic breast cancer, Athenex is able to fully focus on other programs. We look forward to updating you on progress in our Orascovery program in angiosarcoma in combination with pembrolizumab, our data from I-SPY 2, as well as our regulatory update from Europe soon. We will also continue to be enthusiastic about the potential of cell therapy program. At the same time, Athenex continues to explore strategic opportunities that would allow us to unlock shareholder value.

We appreciate your attention and interest and look forward to providing more updates in the coming months. Thank you.

Operator

[Operator Closing Remarks]

Duration: 58 minutes

Call participants:

Caileigh Dougherty -- Director of Investor Relations

Johnson Y.N. Lau -- Chief Executive Officer and Board Chairman

Rudolf Kwan -- Chief Medical Officer

Daniel Lang -- President, Athenex Cell Therapy

Jeffrey Yordon -- Chief Operating Officer

Steven Adams -- Interim Chief Accounting Officer

Kurt Gunter -- Chief Medical Officer for Cell Therapy, Head of Regulatory Affairs

Jonathan Miller -- Evercore ISI -- Analyst

Kennen MacKay -- RBC Capital Markets -- Analyst

Yale Jen -- Laidlaw & Co. -- Analyst

Matthew Kaplan -- Ladenburg Thalmann -- Analyst

Gil Blum -- Needham & Company -- Analyst

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