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Deciphera Pharmaceuticals, Inc. (DCPH) Q2 2020 Earnings Call Transcript

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Deciphera Pharmaceuticals, Inc. (NASDAQ: DCPH)
Q2 2020 Earnings Call
Aug 4, 2020, 4:30 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good afternoon, everyone, and welcome to the Deciphera Pharmaceuticals Second Quarter 2020 Financial Results Conference Call. Today's call is being recorded.

At this time, I would like to turn the call over to Jen Robinson, Vice President, Investor Relations. Jen?

Jen Robinson -- Vice President, Investor Relations

Thank you, Michelle. Welcome and thank you for joining us today to discuss Deciphera's second quarter 2020 financial results. I am Jen Robinson, Vice President, Investor Relations at Deciphera. With me this afternoon to discuss the financial results and provide a general corporate update are Steve Hoerter, President and Chief Executive Officer; Dan Martin, Chief Commercial Officer; Matt Sherman, Chief Medical Officer; and Tucker Kelly, Chief Financial Officer.

Before we begin, I would like to remind you that any statements we make on this call that are not historical facts are forward-looking statements reflecting the current beliefs and expectations of management made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Examples of forward-looking statements made during this conference call include our expectations for our preclinical and clinical programs, our commercialization of QINLOCK and 2020 guidance. Forward-looking statements made on this call involve substantial risks and uncertainties that could cause actual results to differ materially from those expressed or implied by the forward-looking statements, and we cannot assure you that our expectations will be achieved. Such risks and uncertainties include the potential impact of COVID-19, the execution of clinical trials, the timing of study data, and those set forth in our most recent quarterly report on Form 10-Q as well as our other SEC filings. We assume no obligation to update or revise any forward-looking statements. Following this call, a replay will be available on the company's website, www.deciphera.com.

With that, I will now turn the call over to Steve Hoerter, President and Chief Executive Officer of Deciphera. Steve?

Steven L. Hoerter -- President & Chief Executive Officer

Thank you, Jen. Good afternoon, everyone and thank you for joining us on today's call. Deciphers mission has always been focused on discovering, developing and delivering important new medicines for the treatment of cancer. And in the second quarter, we were proud to announce FDA approval of our first product QINLOCK for the treatment of patients with fourth-line GIST.

QINLOCK was designed and purpose built for the treatment of this disease and is the only approved drug in the post-imatinib setting that offers a clinically meaningful overall survival benefit for GIST patients. The FDA approval and launch of QINLOCK is an important milestone for the thousands of people in the United States facing a GIST diagnosis, and also serves as validation of Deciphers novel approach to designing switch control kinase inhibitors. FDA's approval of the QINLOCK NDA came approximately three months ahead of its PDUFA date, and was reviewed under the FDA's real time oncology review pilot program with priority review. The QINLOCK NDA was also part of Project ORBIS, an initiative of the FDA Oncology Center of Excellence that provides a framework for concurrent submission and review of oncology drugs among participating international health authorities.

As a part of this initiative, we recently announced the approval of QINLOCK, both by Health Canada and by the Australian Therapeutic Goods Administration. Additionally, as we look to further expand access to QINLOCK outside of the United States, we intend to file a marketing authorization application with the European Medicines Agency in the fourth quarter of this year. Finally, last month, we were excited to announce along with our partner the Zai Lab, that the China National Medical Products Administration or NMPA has accepted the NDA for QINLOCK. And earlier today, Zai announced that the QINLOCK NDA has received priority review. Prior to receiving FDA approval, our commercial and medical affairs teams had been working diligently to lay the groundwork and optimize readiness for the commercial launch, because of their dedication and hard work, we were able to ensure that QINLOCK was commercially available through our limited specialty pharmacy network within one week of approval.

During the call today, Dan Martin, our Chief Commercial Officer will share our initial insights into the commercial launch. While we are still in the early days of the launch, we are very pleased with our progress so far, and believe that QINLOCK has the potential to transform the treatment of GIST in the post-imatinib setting. Beyond QINLOCK, we continue to advance our pipeline of novel switch control kinase inhibitors. And Matt Sherman, our Chief Medical Officer will discuss in further detail the progress we've made across our portfolio of product candidates, including our plans to declare a recommended Phase 2 dose for DCC-3014 in tenosynovial giant cell tumor and to present additional data from our Phase 1 study in patients with TGCT later this year.

I'll now turn the call over to Dan Martin, our Chief Commercial Officer, to discuss the exciting results for the first partial quarter of our QINLOCK commercial launch. Dan?

Daniel C. Martin -- Chief Commercial Officer

Thank you, Steve. Good afternoon. Today I'm pleased to share results from Deciphers first partial quarter as a commercial stage company, as well as initial insights regarding the QINLOCK launch. It's important to recall that QINLOCK was approved on May 15th. Therefore, the commercial results and early launch insights I will share counting just 31 selling days over a period of approximately six weeks.

We are very pleased with the results of our first partial quarter of launch. Q2 net product revenue for QINLOCK was $4.8 million. Several important factors contributed to this result. But first, it's strong prescriber demand for QINLOCK. Recent feedback from our sales team, market research and interactions with key opinion leaders, we believe that strong demand was a result of high unmet need in advanced GIST, rapid growth and awareness of QINLOCK. GIST triggers positive perceptions of the QINLOCK clinical profile and FDA label, and the focus and determination of our customer facing teams despite the challenging selling environment presented by COVID-19.

Second, we were very pleased to see significant prescriber breadth and diversity. In this initial six week launch period, there were more than 100 unique QINLOCK prescribers representing more than 90 unique institutions. Approximately 50% of prescribers and 40% of QINLOCK treated patients were from community accounts consistent with our understanding of where GIST patients received treatment. And nearly 80% of these prescribing institutions had no prior experience with QINLOCK on participation in clinical trials or our expanded access program.

Third, I am pleased to share that our market access team has rapidly achieved broad patient access to QINLOCK. Our extensive launch preparations enabled us to deliver our first patient shipment of QINLOCK within days of approval. Additionally, our payer focused efforts have led to broad coverage across both Medicare and commercial payers, including adoption of favorable coverage policies that are consistent with label.

In addition to strong demand, encouraging prescriber breadth and broad patient access, our Q2 results benefited from several additional factors. First, our Q2 revenue included a modest contribution from patients who switch to commercial drug from our expanded access program in the US The US portion our expanded access program was closed in May upon FDA approval of QINLOCK. In addition, as with any oral oncology launch, our Q2 product revenue included the impact of initial inventory build within our network of specialty pharmacies and specialty distributors. Inventory held by our channel partners was in line with our base on hand targets. And we expect this inventory impact to diminish in subsequent quarters.

Lastly, talking of this initial six week launch timeframe, the percentage of patients receiving free drug under our Patient Assistance Program was lower than our estimate of approximately 20% to 30%. However, as we communicated previously, this percentage can vary quarter-to-quarter. And moving forward, we continue to expect approximately 20% to 30% of patients to receive free drug as part of this program.

Before turning the call over to Matt, I would like to provide an update regarding our experience navigating the unprecedented challenges of the coronavirus pandemic, and our expectations regarding potential impact moving forward. As I reviewed on previous calls, the cross functional launch team has worked extremely hard to adapt their launch strategy tactics to a virtual model. This includes developing and deploying, remote detailing capabilities and increasing our investment in digital and other non-personal marketing channels. Our early experience is that while virtual details can be effective, accessing and coordinating the activities of physicians, pharmacists and other critical stakeholders, within large complex healthcare institutions can be quite challenging and can take longer than usual when required to do so remotely. Additionally, our recent market research with GIST prescribers indicate that GIST patient volume remains below pre-COVID-19 levels, and that some GIST treators may consider delaying treatment switches for advanced shift patients due to COVID-19 related concerns.

Lastly, it remains to be seen what impacts millions of people who are newly uninsured due to pandemic related job losses will have on the proportion of patients eligible to receive free drug under our Patient Assistance Program. Therefore, while we are very pleased with GIST treators initial response to QINLOCK, we also recognized the potential of the continued spread of COVID-19 to impact physician access, GIST patient treatment and the rate of uptake for QINLOCK in the near term.

I will now turn the call over to Matt to discuss the progress of our ongoing clinical programs. Matt?

Matthew L. Sherman -- Executive Vice President, Chief Medical Officer

Thank you, Dan. As Dicephera enters transition into a commercial stage company, we've remained deeply committed to [Indecipherable] benefit patients beyond our initial approval in fourth-line GIST and advancing our additional ongoing clinical stage programs to create new medicines for patients with significant unmet medical needs. While our commercial team executes a successful launch, our medical team continues to support the potential of QINLOCK and GIST with a robust publication plan and lifecycle management strategy which includes the potential to treat second line and beyond GIST patients.

In June, results from the pivotal INVICTUS study were published in The Lancet Oncology highlighting QINLOCK significant improvement in progression free survival or PFS compared to placebo as well as it's clinically meaningful improvement in overall survival, along with a well-tolerated safety profile. We also presented additional QINLOCK data from the INVICTUS study, demonstrating positive patient reported outcome results at the ASCO Virtual Scientific program in May and additional clinical benefit for crossover patients at the ESMO World Congress of Gastrointestinal Cancer 2020 on 20th of July.

At the upcoming ESMO Virtual Congress in September, we look forward to presenting additional data from the ongoing Phase 1 studies of QINLOCK and [Indecipherable] study important presentation. The first presentation is titled ripretinib intra-patient dose escalation, following disease progression, provides clinically meaningful progression free survival in gastrointestinal stromal tumor in the Phase 1 study. This presentation focuses on the GIST patients who were enrolled in dose escalation and expansion phases across second, third and fourth line treatment, who received QINLOCK 150 milligrams QD. Patients in the Phase 1 study had the option to be dose escalated to 150 milligrams BID. We will report at the meeting the initial Progression Free Survival or PFS-1 and the subsequent Progression Free Survival or PFS-2 from the date of dose escalation to second disease progression or death from this subgroup of patients who dose escalated to 150 milligrams BID.

The second presentation is titled, Clinical benefit with ripretinib as fourth line or greater treatment and patients with advanced GIST update from the Phase 3 INVICTUS study. This presentation will highlight updated PFS by blinded independence central review, overall survival and safety with a new data cut-off of March 9, 2020, which is an additional nine months of follow up from the data presented at ESMO last year.

Our team at Deciphera continues to be encouraged by the potential for QINLOCK to meaningfully alter the treatment landscape for the spectrum of patients across multiple lines of therapy. While QINLOCK has been well received by fourth-line GIST patients and the treating physicians, we look forward to advancing QINLOCK for the treatment of patients with the second-line GIST, where we believe that could also provide meaningful benefit. To that end, we are pleased to report today that we are on track to complete the target enrollment in the fourth quarter of this year in our ongoing Phase 3 study of QINLOCK, compared to the current standard of ripretinib in patients with second-line GIST. Currently there are 122 sites in 22 countries that have been activated in the INTRIGUE study.

We also continue to rapidly advance our next wave of novel switch control kinase inhibitors. First, turning to DCC-3014, our opponent selective inhibitor, CSF1R, we are on track to select the Phase 2 dose level for treatment of tenosynovial giant cell tumor or TGCT and initiate the expansion collected in this year. We expect to present data from additional patients from the dose escalation portion of the Phase I study at the Medical meeting in the fourth quarter. As you recall, we presented initial clinical proof-of-concept data in three TGCT patients at the Connected Patient Oncology Society or CPOS Annual Meeting last year. And we look forward to sharing additional data later this year.

Turning to Rebastinib, our potent in selective TIE2 inhibitor. We are conducting two clinical phase 1b/2 studies in combination with chemotherapy. One with Paclitaxel and one with Carboplatin. At the ASCO 2020 Virtual meeting in May, we were highly encouraged by the preliminary data presented from the endometrial cancer cohort of Part 2 of the ongoing paclitaxel study, which showed an objective response rate at 29%, and the clinical benefit rate at 72% at eight weeks.

As we announced during our earnings call last quarter, we have also observed more than four responses in the ovarian cancer cohort, which has now advanced to the second stage of Simon Two-stage design. We look forward to presenting the data in the poster presentation from the ovarian cancer cohort from Part 2 of the study at the ESMO Virtual Congress in September. In addition, we announced today, that we will be presenting data from part one of the study of Rebastinib in combination with Carboplatin at the ESMO Virtual Congress. We're also happy to confirm that we are on track to file an IND for 3160, our potential first in class Autophagy Inhibitor, designed to treat mutant RAS cancers in the fourth quarter of this year.

Finally, I wanted to say a few words on the ongoing COVID-19 pandemic. Our studies remain open for a moment and patients continue to receive Investigational Drug as well as appropriate follow. We are committed to supporting our clinical studies sites and contract research organizations to help ensure patients receive care in a safe manner consistent with regulatory guidance.

I will now turn the call over to Tucker Kelly, our Chief Financial Officer to review the financial results. Tucker?

Tucker Kelly -- Executive Vice President, Chief Financial Officer and Treasurer

Thanks, Matt. I'd like to review the highlights from our second quarter financial results, which includes our first partial quarter of QINLOCK product sales. Total net revenues for the second quarter of 2020 were $7.1 million, which includes $4.8 million of net product sales of QINLOCK and $2.3 million of collaboration revenue. We recognized product revenue upon delivery of QINLOCK to our specialty pharmacy and distribution partners, and the second quarter revenue includes net product sales from our first shipments in May following FDA approval. The gross to net adjustment in Q2 was slightly lower than our prior guidance. Please keep in mind the growth to net can vary quarter-to-quarter, and we continue to expect the rate to be approximately 50% going forward. In addition, we recognized $2.3 million in collaboration revenue under our agreement with Zai Lab, including a $2 million milestone payment due upon their submission of a new drug application to the China National Medical Products Administration for ripretinib, for the treatment of adult patients with advanced gastrointestinal stromal tumor.

Cost of sales for the three months ended June 30, 2020 was immaterial. As the majority of the manufacturing costs related to the second quarter of QINLOCK sales were incurred prior to FDA approval, and thus were recorded as R&D expense. Cost of sales will not be significant until the initial pre-launch inventory is depleted, and additional inventory is manufactured and sold.

In the second quarter of 2020, our total operating expenses excluding cost of sales were $76 million, which remain consistent with expenses of $75.3 million in the first quarter of 2020. As we support our commercial launch of QINLOCK, as well as advance the clinical development activities across the pipeline. Research and development expenses were approximately $46.1 million and selling general and administrative expenses were approximately $29.9 million for the second quarter of 2020. We expect our operating expenses will increase in the second half of the year compared to the first half of this year, as we continue to support clinical development of our pipeline and the commercial launch of QINLOCK.

We ended the second quarter in a strong financial position and remain well capitalized to execute in the launch of QINLOCK in US and to fund the development of our exciting pipeline of novel switch control inhibitors. We ended the second quarter with cash, cash equivalents and marketable securities of approximately $632 million, which we expect will be sufficient to fund our operations into the second half of 2022.

With that, I'll now turn the call back over to Steve.

Steven L. Hoerter -- President & Chief Executive Officer

Thank you, Tucker. Before we open the call for Q&A, I'd like to take a moment and thank the entire team here at Deciphera for their impressive focus and hard work over this past quarter. Looking forward, I'm confident, we are well positioned to continue to execute together successfully both in our QINLOCK commercial launch, building on the momentum of our first partial quarter of launch that we reported today, and our remaining promising development programs.

With that operator, I'd like to open the call for questions.

Questions and Answers:

Operator

Thank you. [Operator instructions] And your first question from the line of Chris Raymond from Piper Sandler. Your line is now open.

Chris Raymond -- Piper Sandler -- Analyst

Thanks for taking the question. Congrats on the great number right out of the gate. Just a couple questions. On the QINLOCK revenue number, I think I heard you say that some of that was stocking, but I don't think I heard you guys quantify that. So, I'm just kind of curious if you could provide us some sense of end user demand?

Steven L. Hoerter -- President & Chief Executive Officer

Sure, Chris. So, this is Steve. So I'd be happy to take that. So, yes, we're really pleased with this initial partial quarter of launch that we've reported today and the strong revenues out of the gate. As Dan mentioned in his prepared remarks, which you may have been able to hear, I know there have been some technical issues on the line there. But we did note that one of the contributing factors in addition to strong demand was the usual and customary inventory build that we saw in this first partial quarter of launch. So, we haven't quantified that but we have said that we ended the quarter with what we expected to see in terms of days on hand for inventory.

Chris Raymond -- Piper Sandler -- Analyst

Okay, and maybe just another question here. I think I've seen in previous slides and the way you guys have described the mix of prescribers between community and academic has been sort of 70% academic, 30% community. But I think I heard you mentioned that 50% of prescribers were community based. So, I guess, on that, I mean, a, I guess is that a surprise to you guys especially given that the label is fourth line, and one would expect that to be maybe even more skewed toward academic? But maybe a second part of that is, are you getting a sense that there's some use an earlier lines in the community?

Steven L. Hoerter -- President & Chief Executive Officer

Yes. Thanks, Chris. That's a great question. So, I'll ask Dan Martin, to take both of those questions for you.

Daniel C. Martin -- Chief Commercial Officer

Yes. And I hope you're able to hear me OK? How's the audio? All right. Okay?

Chris Raymond -- Piper Sandler -- Analyst

Yes.

Daniel C. Martin -- Chief Commercial Officer

So, apologies for any audio challenges previously. So, just to clarify the first part of your question, academic versus community. So, what we said previously, is that overall, about 70% of GIST treatment happens in the community setting, about 30% in the academic setting. Now to your point, when you look at fourth line, the later you go in the line of therapy that switches a bit as you might expect, as patient's treatment options dwindle, and you get more referrals in the academic setting. However, we've always thought in the fourth line still probably anywhere from 30% to 40% of GIST treatment was happening in the community setting. And so consistent with that, what we just shared in my prepared remarks was that about 40% of our QINLOCK treated patient volume is coming from the community, about 50% of the prescribers which you can do the math and the patient's per prescriber is a little bit heavier in the academic setting, as one would guess. So, really pretty consistent with what we expected.

With regard to your second part of your question, earlier lines of therapy. It's a good question. We're really pleased with the way the first partial quarter has gone. Of course, all of our focus is on optimizing the launch of QINLOCK in the fourth line. So all of our promotional efforts, all of our materials, etc, are all consistent with our FDA approved indication. That said, we recognized that some physicians may have an interest in using QINLOCK in earlier lines of therapy. It's really challenging to estimate the proportion of patients who may be receiving treatment in earlier lines, that the data sources that are available are imperfect, and often don't provide a very clear or reliable picture. So, at this time, I'm still very early on launch, it's really difficult for us to determine how much use if any, was off label.

Chris Raymond -- Piper Sandler -- Analyst

Okay. Thanks very much.

Operator

Thank you. Your next question is from the line of Eun Yang from Jefferies. Your line is now open.

Eun Yang -- Jefferies -- Analyst

Thanks very much. So, I just want to ask you again about the second quarter sales. So, the consensus was less than 1 million. And then you came at 4.8. So, can you talk about how much of your sales actually benefited from inventory as well as, do they expand, are the patient switching to commercial?

Steven L. Hoerter -- President & Chief Executive Officer

Yes, Eun, it's Steve here. So, Dan covered some of that in his prepared remarks, but Dan maybe you could provide Eun with a little bit more color in terms of factors that contributed to the strong performance in this first partial quarter.

Daniel C. Martin -- Chief Commercial Officer

Yes, absolutely. Thanks, Steve. Good question. So, again, it's really important, I think. I want to reiterate that. There were a number of factors that we think contributed to our initial strong result and primarily, that's strong physician demand for QINLOCK also really encouraging prescriber breadth and diversity. And importantly, very rapid gains toward broad patient access so those are the primary drivers. Additionally, just to provide some additional color. We outlined in my prepared remarks that there was some contribution to the Q2 revenue from conversion of US patients from our Expanded Access Program to commercial product. We have not given specific details on our EAP. What I can say is that program in the US is now closed, as is typical upon FDA approval.

And then as it relates to inventory build, what we can share is that, it's typical for any oral oncology launch in our first partial quarter to have some contribution of revenues tied to an initial inventory build. However, as Steve mentioned in his answer to a prior question, the teams did a great job managing inventory throughout the quarter. And the inventory held by our channel partners was very consistent with our days on hand targets. And we would expect the contribution or the impact of that initial inventory build to diminish in subsequent quarters.

Eun Yang -- Jefferies -- Analyst

Thank you. And have you actually seen QINLOCK usage in earlier lines -- earlier lines than fourth line?

Steven L. Hoerter -- President & Chief Executive Officer

Yes, Dan, would you like to address that question?

Daniel C. Martin -- Chief Commercial Officer

Sure, we know this is certainly an area of interest, but as I mentioned to the prior question, in my answer to the prior question. First and foremost, we are focused on the fourth line launch and all of our promotional efforts are toward that. We've recognized some physicians may have interest in using QINLOCK in earlier lines of therapy. The fact remains it's challenging to estimate, especially this early on and launch what proportion of patients may be receiving treatment in earlier lines, if any, because the data sources are just imperfect to do that and often don't provide a clear or reliable picture. So at this time, it's just difficult for us to determine how much use if any is in earlier lines of therapy.

Eun Yang -- Jefferies -- Analyst

Okay. And I have a last question, so in ripretinib in the past you are looking at other solid tumors, key driven tumors in the expansion cohort. So is there any update on what types of tumors you may pursue?

Steven L. Hoerter -- President & Chief Executive Officer

Yes, Eun it's Steve, thanks for the question. So Matt referenced in his prepared remarks that we're really pleased to see some of the Phase 1 data be accepted as a mini oral presentation coming up at ESMO. So this is the GIST cohorts from the Phase 1. As you noted, there are a number of other expansion cohorts, signal seeking cohorts that we had as part of the Phase 1. And we don't have a further update for you at this time on today's call.

Eun Yang -- Jefferies -- Analyst

Thank you.

Operator

Next question, from the line of Peter Lawson from Barclays. Your line is now open.

Peter Lawson -- Barclays -- Analyst

Hi. Thanks for taking my questions. Just on the TGCT data in 4Q. I mean, what should we expect to see a number of patients, any metrics we should be thinking about for that data?

Steven L. Hoerter -- President & Chief Executive Officer

Yes. Hi, Peter, it's Steve. So maybe I'll start off answering that and then Matt, please feel free to add some additional color to that. So as Matt noted in his prepared remarks, we have a couple of milestones, important milestones coming up for the 3014 program for the balance of the year. One of those is to declare a recommended phase two dose. The other is to open an expansion cohort in patients with TGCT. And then as Matt noted, we also intend to provide data from the Phase 1 at a medical meeting coming up in the fourth quarter of the year. So I think, we haven't guided specifically to a number of patients that you can expect to see data on. As you know, at CTOS last year, we reported initial clinical proof-of-concept in the first three patients that we had treated. So we'll have data updates on some of those patients and, of course, additional patients. But tough for us to specify at this time exactly what number to expect. But, of course, what we're going to be looking for as we go through the data and accumulate the data is what is the optimal dose going forward? How does that compare an early data with what we see from the other approved agent pexidartinib for this disease for TGCT. So stay tuned for more to come at the end of the year. Thanks, Peter.

Peter Lawson -- Barclays -- Analyst

Perfect. Thank you so much. And then, just an update on how things are moving for ASM and when we could see the next data, just any updated thoughts around Systemic Mastocytosis?

Steven L. Hoerter -- President & Chief Executive Officer

Sure. So I'm happy to address that. So its somewhat similar, I think, to Eun's question, earlier. Matt noted in his prepared remarks that we will have data at ESMO from the GIST expansion cohorts from the Phase 1. So for the first time, we're going to be reporting on the subset of patients that dose escalated to 150 BID in that study. So we'll be reporting on the PFS 1, so the initial interval of progression free survival for those patients. And then upon dose escalation, we then capture PFS 2. So we'll then also report for that subset, the PFS 2 data. So, on today's call I don't have any further update in terms of the other expansion cohorts from the Phase 1.

Peter Lawson -- Barclays -- Analyst

Okay. Thank you so much. Thanks for taking the questions.

Operator

Thank you. Your next question from the line of Michael Schmidt from Guggenheim. Your line is now open.

Michael Schmidt -- Guggenheim -- Analyst

Hey, guys. Thanks for taking my questions and congrats on the launch as well from me. Maybe a question around competitive dynamics and just QINLOCK obviously benefits from a broad label that doesn't specify a certain genotype, but there is obviously overlap to some degree with A bucket. I was just wondering if you could comment on, what do you see in terms of PDGFR alpha for to the positive patients that might have been treated with QINLOCK in the second quarter and how you see the competitive dynamics evolving there?

Steven L. Hoerter -- President & Chief Executive Officer

Yes, thanks Michael. So it's Steve, maybe I'll start off and then turn it over to Dan as well, who can comment on what we've seen in the second quarter and also what we've seen in the extensive market research that we've done. But maybe just to tee that up a little bit. We've talked for a number of months now, probably starting back at the JP Morgan conference in January about the market research that we've done based on the INVICTUS data and with that target product profile, getting reactions from physicians to the profile as they evaluate the treatment options for their patients with gastrointestinal stromal tumor.

And what we've heard very consistently is with those randomized data in a broad spectrum of patients. So irrespective of mutational status, that physicians really value, a, the fact that we have randomized data. But b, the fact that we -- the drug offers based on INVICTUS, such as striking benefit in terms of progression free survival and also a clinically meaningful improvement in overall survival. And all of that against the backdrop of what is a very well tolerated drug.

So our expectation based on the data is that QINLOCK or ripretinib really has the potential to be best-in-class for this disease based on the INVICTUS data. Now, as you point out, in a competitive marketplace where there's one other recently approved agent with avapritinib with a narrow label, as you point out, for the exon 18 driven part of the disease, I think what physicians are now internalizing is that the negative VOYAGER trial that reported out a couple of months ago and what that means for them as they think about options for patients certainly puts the data from INVICTUS in context. But, Dan, maybe you want to comment further on what we're seeing and hearing in terms of this subset of patients that has exon 18 driven disease?

Daniel C. Martin -- Chief Commercial Officer

Sure. Just a couple of thoughts on both parts of the question, I mean, the only thing that I would add to Steve's answer as it relates to the profiles. We continue to do research and we've been doing research now that were launched and what comes back consistently is just very, very strong positives for the QINLOCK profile. And, one of the things that I've been pleased to see is that GIST traders are increasingly understanding how QINLOCK is differentiated from other products in this space, including avapritinib's much more narrow profile, as Steve just pointed to.

As it relates to PDGFR alpha, one of the things that we're really fortunate to have is a very broad indication. And so all of the payer policies that we're seeing going into place, they are agonistic to mutation and so we don't -- there's no reason for us to really collect or track data on the mutation profile of QINLOCK treated patients, because it's not commerce drug. So we've always viewed QINLOCK as Steve mentioned best-in-class and potentially standard-of-care product in the post-imatinib setting. And that it's inclusive of patients of all mutation types, including wild type for that matter.

Michael Schmidt -- Guggenheim -- Analyst

Okay, great. Thanks. And then a question on DCC-3014, I know you talked about the Phase 1 update later this year. I was just wondering how we should think about the potential development path forward longer term in TGCT? Should we think about maybe a single arm approval strategy here based on the Phase 1B dose expansion cohort? And I guess what would the regulatory bar be here? Do you need to exceed pexidartinib for example? Or what level of efficacy would you get confidence for example, that you could win in a randomized controlled studies? Maybe just some high level thoughts on the path to market here longer term?

Steven L. Hoerter -- President & Chief Executive Officer

Yes. Thanks, Michael. So that's a good question. Matt, would you like to take that?

Matthew L. Sherman -- Executive Vice President, Chief Medical Officer

Sure. Thanks, Steve and this is Matt. Thanks, Michael. Can you hear me? Okay, I just want to make sure the audio is coming through clearly. There was some trouble earlier with the storm passing overhead. So it's very, very good question. Let me just start with saying, we look forward to the updates at the end of this year, as we said, we'll be able to talk about the recommended Phase 2 dose, the initiation of an expansion cohort, and also to update folks at a medical meeting in the fourth quarter of this year for further data in the TGCT patients in the ongoing Phase 1 study.So if we think about further development, we can use as the benchmark the pexidartinib development when it was approved last year, in August by the FDA. And at that time, they conducted a 120 patient study randomized one-to-one to placebo. And based on objective response rate every 25% of 38%, 39% were able to receive full approval, despite also having a pretty significant safety profile with a blackbox warning on the label and the requirement for REMS program for patient enrollment on to treatment. So, using that sort of as a benchmark for development we think that safer drug potentially at 3014 has the ability on preapproval on TGCT patients. It also should be noted that the CHMP had a negative opinion for pexidartinib in the EU. So again, speaks to the safety profile that was shown with the pexi.

Michael Schmidt -- Guggenheim -- Analyst

Okay. Great. Well, thanks for taking my questions and congrats on the launch again.

Steven L. Hoerter -- President & Chief Executive Officer

Yes. Thanks, Michael.

Operator

Thank you. Your next question is from the line of Robyn Karnauskas, SunTrust. Your line is now open.

Nicole -- SunTrust Robinson Humphrey -- Analyst

Hi, this is Nicole [Phonetic] on for Robyn, SunTrust Securities. Thanks for taking our questions. So really quickly, can you remind us what's in the profile and what the overlap is in KIT & PDGFR alpha mutants between ripretinib and sunitinib? And then also, I'm not sure if I missed this, but how many prescriptions were filled or how many patients received drug in the second quarter?

Steven L. Hoerter -- President & Chief Executive Officer

Yes. Hi, Nicole. It's Steve. Thanks for the question. So maybe I'll take the second question first, and then I'll just ask Matt, if he'd like to briefly outline the spectrum of activity of ripretinib relative to sunitinib based on what we've previously published in cancer cell, for example, last year. But specifically for this question about number of scripts and number of patients, so we haven't disclosed that on today's call. That's not one of the launch metrics that we'll be sharing externally on a quarterly basis.

But as Dan said in his prepared remarks, and then in response to the questions that have come up so far, certainly we're very, very pleased with the launch. It's a reflection of strong demand, which spans not only physicians and patients being treated in the academic setting, but also very importantly, we believe the use of the drug in the community setting it's a real indicator that we're following very closely. And we're very pleased to see the breadth of utilization so far. So Matt, do you want to take that first question?

Matthew L. Sherman -- Executive Vice President, Chief Medical Officer

Sure. So the question as I understand is speaking about the activity of ripretinib in the second line setting compared to the historical data for sunitinib, which is approved now for the second line. So, we did present at the triple meeting last year, the data from the Phase 1 study where we looked across 142 patients in second line, third line and fourth line patients. And so, going down on the second line patients, we had a progression free survival of 10.7 months in that study with a 19% objective response rate. And while it's across study comparison, sunitinib in its pivotal study had about a 5.6 month progression free survival with a 7% objective response rate. So that gave us the reason to believe for initiating the INTRIGUE study. As you know the INTRIGUE study is our randomized Phase 3 study comparing reprinted to sunitinib. And as we highlighted today as well too, our INTRIGUE is completing enrollment of that study by the end of this year.

Nicole -- SunTrust Robinson Humphrey -- Analyst

Okay. Great. Thanks so much.

Steven L. Hoerter -- President & Chief Executive Officer

Thanks Nicole.

Operator

Thank you. Your next question from the line of Ren Benjamin from JMP securities. Your line is now open.

Reni Benjamin -- JMP Securities -- Analyst

Hey, good afternoon guys. Thanks for taking the questions and congratulations on a great start to a launch. Maybe my first question a little bit having to do with a broad kind of ex-US strategy. Steve, you've got approvals in several kind of distributor based sort of delivery in those countries. You now have China the NDA being accepted. Can you just kind of take us through your latest thoughts on how the timing of when you think these revenues from the ex-US launch may start contributing to your P&L and how you see that unfolding?

Steven L. Hoerter -- President & Chief Executive Officer

Yes, Ren it's Steve. Thanks for the question. You broke up a little bit, but I think I got the guess of the question in terms of ex-US strategy and timing for any future potential revenues. So first, maybe we can just broad strokes kind of talk about where we are globally in terms of our regulatory strategy. Obviously approved here in the US, excited about the early days of the launch and looking forward to continuing to get out and educate physicians about QINLOCK or ripretinib as we drive further utilization of the brand here in the US.

As we've noted previously, we now have of course approval in Canada and in Australia. This was part of Project ORBIS. As you know Ren, and as we've talked about previously, our strategy in those two territories specifically is very likely to be a distributor approach, where we retain rights to the products but we partner with a local distributor that's able to help navigate the pricing and reimbursement process. And then of course, get the product to patients physically and also engage with physicians and share with physicians the data to support the product. Both of those territories for both Australia and Canada, there can be a somewhat lengthy pricing and reimbursement process. So these are territories that are very different from what we experienced here in the US where we price a product and then launch it immediately, of course, educating and working with insurance companies. But in these other single payer markets, there's quite a bit of negotiation of work that has to be done in submitting data to HTA bodies and then getting a price approval. So difficult from where we are now Ren, to project when we might see revenues from those territories. It's certainly at some point further off in the future.

Now with respect to China. As we noted today, the application submitted by Zai Lab, who is our partner for Greater China, they anticipate they receive priority review as we discussed today, and as they disclosed this morning. And they believe that the timeline for a potential approval could be about 12 months. I think that was their experience with Zejula. Unlike the system here in the US, there isn't a prescribed action date by which time the NMPA has to take action on the application. So there is some uncertainty in terms of when they may take action. And then when of course, Zai then would be able to start commercializing can lock in China specifically.

Now, as Matt also noted, and we noted in the press release, the next significant regulatory milestone for us is going to be filing the marketing authorization application to the European Medicines Agency. And we further refined our guidance today to say that we'll be making that filing in quarter four. So one of the things we haven't disclosed yet is what our go-to-market strategy is going to be for Europe. And so, as we get closer to that filing and at the right time then we'll disclose exactly what our go-to-market approach is going to be for the European Union.

Reni Benjamin -- JMP Securities -- Analyst

Got it. That's very helpful. And then just maybe switching gears to 3116. I know you'll be filing the IND. But can you maybe just give us a little bit more color on how we should be thinking about this asset and how we should be thinking about the development of this asset going forward? Should we be focusing on particular tumors [Technical Issues] model or any sort of color you could share?

Steven L. Hoerter -- President & Chief Executive Officer

Sure. So maybe I'll start off and then I'll turn it over to Matt. So, we're really excited about 3116. This is our potential first in class ULK inhibitor targeting the autophagy pathway, which we know is an escape pathway for mutant RAS cancers. And as you know, we plan to file an IND before the end of the year for that program, making it the next program coming out of our research organization. But Matt maybe you want to offer some additional color on how you're viewing the potential development path for 3116?

Matthew L. Sherman -- Executive Vice President, Chief Medical Officer

Thanks, Steve. So, as we indicated today, we are very excited about the opportunity to develop 3116 as ULK inhibitor, first-in-class inhibitor of autophagy. The development path of this, as we indicated would be in the concerning of mutant RAS cancers. Mutant RAS cancers represent proximately 30% of all human cancers, and particularly represented in pancreatic cancers are fairly intractable cancer by many targeted therapies, as well as significant number of patients with the lung cancer and additional patients with colorectal cancer. So, if you think about the development, there would be potentially those indications. And we look forward to sharing more details once we've further -- once we move further along with the IND filing.

Reni Benjamin -- JMP Securities -- Analyst

Perfect. Thanks for taking the questions and congratulations.

Steven L. Hoerter -- President & Chief Executive Officer

Thanks, Ren.

Operator

Thank you. So, your next question from the line is Andrew Berens from SVB Leerink. Your line is now open.

Andrew Berens -- SVB Leerink -- Analyst

Hi, thanks. Congrats on the results for the quarter. So, if I ask some of the topics you already addressed with a power outage I had to dial back-in. I was wondering if you guys are getting patients that have failed sutin, but not gotten [Indecipherable] yet. And then also just wanted to get a color on whether or not you're seeing a warehouse of patients that were awaiting a novel GIST drug?

Steven L. Hoerter -- President & Chief Executive Officer

Yes. Thanks, Andy. Both are really good questions. I'll ask Dan Martin, if he'd like to address those?

Daniel C. Martin -- Chief Commercial Officer

Yes, absolutely. Thanks, Andy. Appreciate the questions. So, first question was about earlier line patient. So, we are laser focused, of course, on promoting the drug and optimizing the launch in fourth line. So, all of our efforts and materials and messaging and whatnot are, of course, on label with the fourth line indication. That being said, we do appreciate that there may be some physicians who may have some interest in using QINLOCK in earlier lines of therapy. However, it's really challenging to estimate the proportion of patients who may be receiving treatment in earlier lines. The data source is available, just they're imperfect and often don't provide a clear or reliable picture. So, it's still certainly early days and at this time, it's difficult for us to determine how much use if any, is off label.

Regarding your question about whether or not there was sort of a bolus of prevalent patients. Another good question. We've communicated previously that we did not expect there to be a significant bolus of prevalent patients in this setting given how late line the setting is, how sick some of these patients are? And frankly, again, being quite early days, tough to assess. What I would say is that we are thrilled with the early experience of QINLOCK in the marketplace, the prescriber demand and breadth and diversity of prescribers. So, really pleased with that. And we did mention also, I don't know if you've heard it before, given the power outage experience, but we did also mention that a couple other factors contributed to the Q2 revenue. One was a modest impact of conversion of US patients in our Expanded Access Program to our commercial drug. Another was consistent with any oral oncology launch, particularly one with a partial first quarter inventory -- initial inventory build, so impact of initial inventory build. And then, thirdly, a lower than anticipated utilization of our Patient Assistance Program. We have previously estimated 20% to 30% came in bit lower than that, but we continue to expect that estimate to hold true moving forward.

Andrew Berens -- SVB Leerink -- Analyst

Okay, I appreciate all the color and then I think Peter asked you guys about the SM data that on the Q1 call, you said they are presented by year end? Are you still planning to present that, I wasn't really clear on your answer to that?

Steven L. Hoerter -- President & Chief Executive Officer

Sure. Thanks for the question, Andy. So, what I noted in my response to Peter's question is that we have some data from the Phase 1. As Matt noted, from the GIST cohorts that has been accepted as a mini oral presentation at ESMO. So, this is looking at the patient's who dose escalated to 150 BID and looking at PFS 1, as well as PFS 2 for that cohort. So, we don't have on today's call any further update with respect to other cohorts from the Phase 1.

Andrew Berens -- SVB Leerink -- Analyst

Okay. Is that SM cohorts still enrolling or what is the status of it?

Steven L. Hoerter -- President & Chief Executive Officer

Yes. We don't have any further update at this time on the cohort. As we've talked about, previously, this has been a cohort for us that has been really challenging to enroll. As you know, from last year, we talked about how we had amended the protocol to start to treat patients at 150 BID. But it's been a tough going for us. So, we don't have any -- at this time any further update for you on that cohort.

Andrew Berens -- SVB Leerink -- Analyst

Okay. All right. Thanks for the questions. Appreciate and congrats again.

Steven L. Hoerter -- President & Chief Executive Officer

Thank you. Thanks, Andy.

Operator

Thank you. Your next question from the line of Ben Chan [Phonetic] from Canaccord. Your line is now open.

Ben Chan -- Cannacord Genuity -- Analyst

Hi. Thanks for taking my question and congratulations on launch this quarter. A couple of companies have remarked that the virtual formats of some of these medical meetings like ASCO has made it hard for the company to get the word out for product launches. And I'm just wondering if you agree with that, and maybe if you could rank order, some of the challenges that you might see out there that might be headwinds toward getting the launch trajectory up and going? Thanks.

Steven L. Hoerter -- President & Chief Executive Officer

Yes. Thanks, Ben. It's a great question. We started talking about the potential impact of COVID-19 on the Q1 call. And now that we're of course in the middle of the launch, Dan would be in a good position to offer some additional color. He had some in the prepared remarks, but I'm sure he can share some additional color in terms of what we're seeing, what our experience has been so far and what the challenges may be ahead in terms of being able to engage with physicians in a promotional discussion given COVID-19. Dan?

Daniel C. Martin -- Chief Commercial Officer

Sure, absolutely. As it relates to virtual details, what our experience has told us so far is that virtual details can be -- they can be very effective. The challenge is when you're trying to coordinate the activities of many diverse stakeholders via physicians, pharmacists and other key stakeholders in these large complex healthcare institutions, doing that when you're able to walk in live and spend the day in the facility is one thing. But when you have to coordinate all of that remotely with often one-off virtual engagements, it can be challenging. And it can frankly, it's not that it can't be done, it can and we are but sometimes it can take a bit longer than normal. So, it's just something to keep in mind as it relates to consideration for ramp trajectory, that sort of thing. But, we've been -- I really want to underscore again, how pleased we've been with physician, GIST prescribers reaction to QINLOCK, to the profile to the all the data into the FDA label.

So, when we are able to get in front of the right folks via the virtual means, it's been a very effective means. It just does create some challenges beyond that. I pointed to in the prepared remarks that someone we've done extensive launch market research and with GIST prescribers and some of that we've asked questions about expectations for COVID moving forward or the impact of COVID moving forward, and some of them have noted that overall patient volume as a result of COVID, GIST patient volume is still somewhat below pre-COVID-19 levels. And that some physicians would even consider delaying some late line switches as a result of COVID related concerns. So, those are some of the things that we've got our eye on and we'll continue to monitor as it relates to COVID-19 challenges.

Ben Chan -- Cannacord Genuity -- Analyst

Okay, great, I wish you the best of luck in tackling those. I just have another quick follow-up or two. Can you comment on the amount of inventory that flowed into prepaid from R&D prior to approval? Is that where it's going to be coming out of going forward until you actually start incurring cost of goods?

Daniel C. Martin -- Chief Commercial Officer

That's right, I can take that one. Up until the time of approval, all of the materials that we use for commercial products are expensed through R&D. Once we reached approval, we would then start to capitalize that so you'll see some initial capitalization inventory on the balance sheet now, but it will be quite some time before we start to have a higher and more normalized rate of cost of goods, given the expense prior to approval.

Ben Chan -- Cannacord Genuity -- Analyst

Okay. So that's going to be guess a tricky modeling item going forward. The last question I had is, I think you remarked that, it could take as long as 12 months for Zai to get approval in China? Can you refresh and remind us about what the financial milestones would be upon approval and thereafter?

Steven L. Hoerter -- President & Chief Executive Officer

Yes, Tucker, you want to -- would you like to take that question?

Tucker Kelly -- Executive Vice President, Chief Financial Officer and Treasurer

Sure. So we haven't specifically provided the breakdown of the individual milestones. We've talked about the aggregate for a commercial and development based milestones. We did announce obviously today that these filing itself has a $2 million milestone payment, which we recognized in the second quarter, but we haven't given specifics on what a future milestone for a commercial approval might be.

Ben Chan -- Cannacord Genuity -- Analyst

Okay, fair enough. Thanks very much. And good luck to you guys.

Steven L. Hoerter -- President & Chief Executive Officer

Thank you.

Operator

Thank you. Your next question from the line of Eun Yang from Jefferies. Your line is now open.

Eun Yang -- Jefferies -- Analyst

Thank you for the follow-up question. So the Phase 3 INTRIGUE study patient enrollment completion in fourth quarter, do you have any expectation for the timeline for the data? Looking at clinicaltrials.gov you still missed primary completion date of the June 2021, so I just want to ask you if that is still in line with your expectation? Thank you.

Steven L. Hoerter -- President & Chief Executive Officer

Yes. Hi, Eun, it's Steve. Thanks for the question. You're right, that time to study completion that you referenced in clinicaltrials.gov of June of 2021 was what we had put up on clinicaltrials.gov when we first loaded the study up. So what we said, as Matt noted in his prepared remarks is that, we're pleased with the pace of enrollment. We're pleased of course, with the site openings that we've seen and we intend to complete enrollment in the study at the end of the year. And when we achieve that milestone of getting to target enrollment, we'll then provide some additional color on when we might expect to see data from the study. I think we'll have additional information that will give us a better read on what the timeline could be for a read out. Of course, it's an endpoint in the study, that's in the time to event analysis to PFS endpoint. So you have to wait, of course, for the events to accumulate based in part on the pace of enrollment overtime and the like. But we'll provide that update when we get to completion of target enrollment here by the end of the year.

Eun Yang -- Jefferies -- Analyst

Thank you.

Operator

And we don't have any further questions over the phone. Let me turn call over back to Steve.

Steven L. Hoerter -- President & Chief Executive Officer

Great. Thanks Michelle and thanks to everybody for joining us on the call today and thank you for your continued support. We look forward to keeping all of you updated on our continued progress with our first commercial launch of QINLOCK as well as the balance of our development programs. Hope you all have a great evening. Thank you. Take care.

Operator

[Operator Closing Remarks]

Duration: 61 minutes

Call participants:

Jen Robinson -- Vice President, Investor Relations

Steven L. Hoerter -- President & Chief Executive Officer

Daniel C. Martin -- Chief Commercial Officer

Matthew L. Sherman -- Executive Vice President, Chief Medical Officer

Tucker Kelly -- Executive Vice President, Chief Financial Officer and Treasurer

Chris Raymond -- Piper Sandler -- Analyst

Eun Yang -- Jefferies -- Analyst

Peter Lawson -- Barclays -- Analyst

Michael Schmidt -- Guggenheim -- Analyst

Nicole -- SunTrust Robinson Humphrey -- Analyst

Reni Benjamin -- JMP Securities -- Analyst

Andrew Berens -- SVB Leerink -- Analyst

Ben Chan -- Cannacord Genuity -- Analyst

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