Earnings Transcript for EQRX - Q4 Fiscal Year 2021

Operator: Good morning and welcome to EQRx Fourth Quarter and Full Year 2021 Financial Results Conference Call. At this time all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Please be advised that this conference call is being recorded. I want to turn the call over to Neil Swami, Head of Investor Relations.

Neil Swami: Thank you, operator. And good morning, everyone. Earlier today, we issued a press release providing an overview of our fourth quarter and full year 2021 financial results ended December 31, 2021, as well as recent corporate progress. A copy of this release and a slide deck to accompany this call are available on the Investor Relations section of our website at investors.eqx.com. Joining me on the call this morning are Melanie Nallicheri, President and Chief Executive Officer; Jami Rubin, Chief Financial Officer; and Dr. Eric Hedrick, Chief Physician Executive. Before we get started, I would like to remind everyone that some of the statements that we make on this call and information presented in the slide deck include forward-looking statements as outlined on Slide 2. Actual events and results could differ materially from those expressed or implied by any forward-looking statements as a result of various risks, uncertainties, and other factors, including those set forth in our most recent filings with the SEC and other future filings that we may make with the SEC. You are cautioned not to place any undue reliance on these forward-looking statements and EQRx disclaims any obligation to update such statements. I will now turn the call over to Melanie.

Melanie Nallicheri: Thank you, Neil. Good morning, everyone. And thank you for joining us for our first quarterly investor conference call. For those of you following along with the slide deck, I am now on Slide 3. As many of you are aware, we launched EQRx a little over two years ago with a bold mission to improve health for all, with great, innovative, affordable medicines. At EQRx, we are building a platform to create true access to innovative medicines where payer and health system partners, what we, at EQRx, call our Global Buyers Club drive adoption and ensure broad population access to a large selection of high quality, innovative branded medicines what we at EQRx, call our catalog of medicines and development at radically lower prices. I'm proud of our team's performance in 2021 as we met key business objectives, including announcing promising Phase 3 data for our lead oncology programs, advancing relationships with payers and health systems that cover approximately $180 million lives around the world, expanding our management team and Board of Directors, including new directors, Dr. Amy Abernethy and Kathy Giusti, establishing our mission advisory board with world renowned healthcare leaders who share in our mission and transitioning into a public company. As we look to the remainder of 2022 and beyond there are three major points, we would like you to take away from today's call, which are on Slide 4. Let me first acknowledge the recent ODAC meeting for sintilimab, which has led to questions about the path forward for our lead assets aumolertinib and sugemalimab in the U.S. We have full confidence in our programs. They are promising clinical evidence and our ability to advance them through global regulatory approvals so we can make them available to patients at more affordable prices. Outside the U.S. we expect our first regulatory submissions for aumolertinib and sugemalimab during the second and half of this year. We are continuing to engage with the FDA, and we will provide an update on expected regulatory approach and timelines when available. Second, we continue advancing our Global Buyers Club, the demand for high quality patented medicines at radically lower prices remains strong in the U.S. and around the world. We have not seen any slowdown in our discussions with payers and health systems towards this effort. Our goal remains throughout the MoUs or memoranda of understanding with payers and providers that cover approximately 350 million lives by the end of 2022. Third, and importantly, we are in a very strong financial position with no current financing needs or plans. We ended 2021 with $1.7 billion of cash and cash equivalents. We will manage our spend such that we anticipate having cash runway into 2025, and we will be selective and disciplined in how we add to and advance our pipeline. We will maintain our strong focus on execution across the organization in 2022. I believe progress in these three key areas, I outlined, will enable us to start delivering proof of our model, where our partners drive adoption and enable population level access to innovative medicines, and we deliver meaningful savings to them while creating value for shareholders. With that introduction, I will now turn the call over to Eric, who will discuss aumolertinib and sugemalimab in greater detail. Eric?

Eric Hedrick: Thank you, Melanie. Let me begin with aumolertinib on Slide 5. Aumolertinib is a third-generation EGFR inhibitor intended for the treatment of patients with advanced EGFR-mutated non-small cell lung cancer. As many of you are aware, third-generation EGFR inhibitors are currently standard of care for advanced EGFR mutated non-small cell lung cancer. And to date only one such medicine, osimertinib is approved. Aumolertinib represents not only a potential second medicine in this important treatment class, but also one with a distinct metabolic profile that may provide advantages over currently available EGFR inhibitors with respect to toxicity such as diarrhea and rash. Aumolertinib has been shown in a Phase 3 trial in the initial treatment setting of EGFR mutated non-small cell lung cancer to provide a clinically and statistically significant improvement and progression-free survival. This trial was conducted in China and is comparable in design to the study that led to the approval of osimertinib in this treatment setting. Of note, regulatory precedent for approval in this treatment setting is progression free survival. The results from this study, the AENEAS trial, were presented at last year's ASCO meeting. We believe that the results establish the efficacy and safety of aumolertinib and represent a key component of the comprehensive data package that we intend to use for regulatory submissions. In addition, we have conducted a PK study in an ethnically diverse population demonstrating the insensitivity of aumolertinib’s ethnicity. In the second half of this year, we plan on initiating a randomized, multiregional U.S.-led clinical trial evaluating the clinical comparability between aumolertinib and osimertinib with a third study arm, assessing the potential clinical benefit of the addition of chemotherapy to aumolertinib in the first-line metastatic treatment setting. This study designed to enroll a diverse and inclusive patient population will address the applicability of the results of the pivotal Phase 3 study to current medical practice will assess potential tolerability and safety differences between these two third-generation EGFR inhibitors and will provide an important – or evaluate an important question regarding the optimal use of EGFR inhibitors in the treatment of this disease. Based on this package of data, as well as our commitment to ongoing development, we're continuing to engage with various regulatory authorities around the world regarding potential filing for approval. In the UK, we have received Innovation Passport designation for aumolertinib from the MHRA. This provides us an opportunity for a coordinated review amongst agencies and an expedited review process. Of note, in the UK, approximately 45,000 cases of non-small cell lung cancer are diagnosed each year. The Innovation Passport designation recognizes the degree to which non-small cell lung cancer represents a significant public health issue in the UK and the need for new cost-effective medicines in the treatment armamentarium. Based on the nature of discussions with regulators outside of the U.S., we anticipate our first submissions in the second half of this year. In the U.S., we are continuing to engage with the FDA regarding potential filing for aumolertinib. Our goal is to address areas of emphasis for the agency with respect to the use of ex-U.S. single country data for approval in the U.S. and as Melanie noted, we will provide an update on a regulatory approach and timelines when available. I'll turn to sugemalimab our other lead program on Slide 6. Sugemalimab is a monoclonal antibody inhibiting PD-L1, the key component in the immune checkpoint pathway. As most are aware this class of medicines has had a profound impact on the treatment of a number of malignancies and has transformed the management of non-small cell lung cancer. Along with this, unfortunately, there has been a significant economic impact on healthcare systems and patients around the globe. The ex-China rights to sugemalimab were obtained from our partner, CStone Pharmaceuticals, in 2020. And an important factor in our decision was not only the parent quality of this antibody, but also the breadth of development that had been pursued by CStone. We believe that CStone has conducted in some ways the most inclusive non-small cell lung cancer development program within the therapeutic class. Two Phase 3 studies exemplify the breadth of development. In Stage IV disease the Phase 3 GEMSTONE-302 trial demonstrated both progression free and overall survival advantage for sugemalimab in a population that was not restricted by histology for PD-L1 expression status. In January, we announced that sugemalimab in combination with chemotherapy had demonstrated a statistically and clinically significant overall survival improvement in this patient population, including patients with both squamous and non-squamous histology. But note, the overall survival finding was based on a pre-specified alpha controlled analysis, which is an important regulatory consideration. In the Stage III disease maintenance setting, the Phase 3 GEMSTONE-301 trial demonstrated a clinically and statistically significant progression-free survival benefit. The primary endpoint of study in a population and included patients treated with either concurrent or sequential modes of chemoradiotherapy. An event driven pre-specified analysis of overall survival is expected in the first half of next year. The inclusion of patients who had receive sequential chemoradiotherapy is of particular importance because there is no currently FDA approved maintenance option for these patients, estimated to be approximately 40% of Stage III patients currently treated in the U.S. As with aumolertinib the majority of development of sugemalimab thus far, including both Phase 3 trials in non-small cell lung cancer has been conducted in China, while it is our belief that these trials established the efficacy and safety of sugemalimab in non-small cell lung cancer we recognize that additional data may be required to address the applicability of these results to a population representing the diversity of the U.S. and current practice standard includes an immune checkpoint inhibitor. To this end, we intend to initiate a U.S.-led randomized clinical trial that is tended to provide comparative data for sugemalimab with other immune checkpoint inhibitors in a diverse and inclusive population of non-small cell lung cancer patients. We expect to initiate the study in the second half of this year. Based on this extra data, as well as our commitment ongoing development, we're continuing to engage with various regulatory authorities across the globe around potential filings for approval in both Stage IV and Stage III non-small cell lung cancer. In the U.K. again sugemalimab has received the Innovation Passport designation from the MHRA, signifying the need for additional cost effective for non-small cell lung cancer in the U.K. Based on the nature of the discussions with the MHRA and other regulators outside of the U.S., we anticipate filing our first submissions for sugemalimab in the second half of this year. In the U.S. we are continuing to engage with the FDA regarding potential filings for sugemalimab for both Stage IV and Stage III disease. As with aumolertinib our goal is to address areas of emphasis for the agency with respect to the use of ex-U.S. single country data for approval. And as previously noted we'll provide an update on our regulatory approach and timelines when available. Additionally, sugemalimab has received breakthrough designation from the FDA for extranodal NK T-Cell lymphoma, a non-hodgkin lymphoma subtype with significant unmet medical need. We expect submission in the U.S. for ENKTL in 2023. And with that, I will turn the call back to Melanie. Melanie?

Melanie Nallicheri: Thanks, Eric. Turning to Slide 7 we believe our portfolio in total will address around 20% of the $500 billion in specialty drug spend for oncology and immune inflammatory diseases. We currently have more than 10 ongoing programs, five of which are in the clinic. These other clinical stage programs include nofazinlimab, a PD-1 also known as EQ176 for solid tumors currently being studied in a Phase 3 multiregional clinical trial for liver cancer. Lerociclib, a CDK4/6 inhibitor for hormone receptor positive HER2 negative breast cancer studied in a Phase 2 multiregional clinical trial for metastatic breast cancer. EQ121, a highly selective JAK-1 inhibitor for immune-inflammatory diseases being studied in a multiregional Phase 1 study in rheumatoid arthritis and in multiple Phase 2 studies in China, in atopic dermatitis, ankylosing spondylitis and rheumatoid arthritis. We also continue to enter into early-stage R&D collaboration with leading drug engineering companies. Last year, we entered into drug engineering collaborations with five of the leading drug discovery platform companies, including Exscientia, AbCellera, Relay Therapeutics, Absci and Evotec. We are leveraging the different computational platform approaches for small molecule protein antibody-based drug discovery to create new molecules from scratch. We believe these collaborations provide a capital efficient way to build our pipeline and will provide sources of revenue in the future. Now on Slide 8, as we grow and evolve our portfolio, we continue to evaluate our programs against a strict set of criteria. In an effort to maintain cash runway into 2025 we will selectively add/or advance a pipeline program if it addresses a direct class of high-cost burden to patients and society and delivers meaningful value to the members of the Global Buyers Club. It takes aim at disease areas where there are known clear and causal mechanisms of action and we are therefore convinced that we will have the potential to demonstrate equal or superior clinical data to existing therapies. It is patent protected with sufficient patent runway in the class, and we have the opportunity to capture a significant share of the market. Slide 9 highlights the progress we have made in assembling our Global Buyers Club. We have already entered into MOU or Memoranda of Understanding with leading payers and health systems around the world that provides some form of health insurance coverage to more than 180 million people including CVS Health, the National Health Service in England, Geisinger and a number of U.S. based health plans including several Blue Shield plants. As I mentioned, the demand for high quality patented medicines at radically lower prices remains strong among payers and health systems in U.S. and around the world. We aim to provide a market-based solution to address the rising cost of drugs. Our goal remains to have partnerships or MOU with payers and health systems that provide coverage to approximately 350 million lives by the end of 2022. We have started to convert our existing MOU into pre-commercial contracts and expect to continue to make progress throughout the rest of the year. In 2021, we entered into a strategic collaboration agreement with Abdul Latif Jameel Health to commercialize aumolertinib and sugemalimab if approved in the Middle East, Africa and Turkey to potentially provide millions of people across these geographies with access to affordable new cancer treatments. ALJ Health brings extensive regulatory and commercial expertise in these regions. We look forward to keeping you updated on our progress assembling our Global Buyers Club. I will now turn the call over to Jami.

Jami Rubin: Thanks Melanie. I am now on Slide 10. A summary of our fourth quarter and full year 2021 financial results can be found in the press release that we issue this morning. More detail is included in our 10-K filing, which we will file later today. We ended 2021 with $1.7 billion in cash and cash equivalent, which as Melanie has mentioned puts us in a very strong position. We plan to take a disciplined approach with respect to our use of capital and manage our cash such that we have cash runway into 2025. For this year, we expect our cash outlays to be $400 million or less, a change from our previously announced range of $350 million to $500 million in operating expenses. We anticipate that our financial position will enable us to grow and thoughtfully shape our portfolio and allow us to get through significant development and commercial milestones. Moving to Slide 11, I would like to reiterate today's key takeaways and summarize the multiple milestones we are expecting in 2022. As you heard during the call today, these include our first regulatory submissions outside the U.S. for aumolertinib and sugemalimab, the initiation of our first comparative studies and growing our Global Buyers Club where we expect to have MOUs in place, with payers covering approximately 350 million lives. We will also provide an update on our regulatory approach and timelines in the U.S. when available. Let me now turn the call back over to Melanie.

Melanie Nallicheri: Thanks Jami. In closing, I would like to thank all of the passionate employees at EQRx for your hard work in getting us to this point and preparing us for the year ahead. I would also like to thank all of our partners and shareholders for your support. We can now go ahead and turn the call back over to the operator so we can take questions. Operator?

Operator: Thank you. [Operator Instructions] Our first question comes from Akash Tewarii with Jefferies. Your line is open.

Akash Tewarii: Hey guys. So, I may ask a few if I may. So, what's been your recent interactions with the FDA on aumo and suge's regulatory submissions? Should we assume, the FDA will require you to run head-to-head studies in order to file? And if so, for both assets what's the design length and cost of those studies that your team's envisioning? Additionally, given a major theme in the Lilly adcom with a lack of unmet need or in a crowd drug space. Can you give us some more color on why your team is confident on regulatory approval in Europe? And then maybe one just kind of stepping back, you've previously talked about how EQRx's model could get drugs on the market for substantially less than traditional drug development, maybe at a cost of $300 million to $400 million per product. Given the FDA's recent pushback on the use of Chinese data and the cost of in-licensing later stage assets, what would be some other routes by which EQRx could still get on the market at a lower cost than traditional drug development? Thanks so much.

Melanie Nallicheri: Thank you, Akash. I'll ask Eric to answer the first two of your questions.

Eric Hedrick: Okay. Yes, thanks Akash for the questions. Regarding the FDA discussion, your question around the necessity to do head-to-head or directly comparative studies. As we've stated, it's our plan to do these types of studies. I think, the genesis of this plan though, maybe is a little bit different than just responding to an FDA quite, part of our model if we're going to be developing new drugs and established therapeutic classes it's on us to ensure that the drugs are as good or better than the other medicines in those classes currently. So, part of our model for adoption certainly always been to do directly comparative studies. And I think that's what we've spoken about. In applying these studies for a regulatory purpose, that's the intent as well. Now you asked about design, life, cost of these trials. I think it's difficult to give you precise answers on those until we've engaged with the FDA around the specific design of those studies. And that's certainly our intent and when we've accomplished that, we'll provide some updates. And I'll answer your second question as well, which is around our confidence outside of the U.S. I think it's important to understand that the opinions have been expressed by the FDA don't necessarily reflect opinions or policy decisions for regulators outside the U.S. We've had continuing discussions with regulators outside of the U.S. and our confidence is really based on how those conversations are proceeding.

Melanie Nallicheri: Thank you, Eric. Akash, with regards to your third question on the cost to develop an EQRx molecule, we are assuming that on average, and of course there are slight variations depending on the indication and where exactly we are studying and what the exact design is of a drug, but in general we are assuming a range of $250 million to $350 million. So, a little bit lower than the range that you have provided or assumed. The important thing here is that, as I said earlier, we are focusing in areas where we believe we have a good understanding of the mechanism of action. We have a really focused and efficient path to development, leveraging our modern development organization, and so we are very much focused on staying within this envelope. Now, the studies that, Eric, just described have always been assumed to be part of our approach. And Jami can give you a sense for what's already baked into our assumptions for expenses for this year and the coming years.

Jami Rubin: Yes. I would just add, thanks Melanie, that that Akash, we had announced back in January the two comparative trials, one for aumo and suge and we already incorporated the cost of those additional trials into our guidance. So, with respect to our guidance today, $400 million in cash outflow that already incorporates what we believe the cost will be to generating these additional comparative trials.

Akash Tewarii: That's helpful. If I just may follow-up on one question. Given Lilly said it might take them eight years, which I think they were just being kind of flippant. Would it be fair to say that any theoretical study would be kind of two years long?

Eric Hedrick: Yes. Sorry, guys, this is Eric, thanks. I think that's an important question. Unfortunately, in the ODAC discussion we sort of didn't get to the discussion of about what type of trial would address FDA concerns. And I think the concern that the FDA has same, that we have it's the same that physicians have. If a new medicine is entering the fray in the established therapeutic class, how do we assure everyone that the clinical outcomes have been established in that class are going to be sacrificed, right? So, I think that's the discussion that we need to have. What type of trial design will provide that assurance, not only to regulators, but to patient and providers? And I think if you think of a study in that context, the design features become a matter of discussion. It's not a simple sort of default to a huge non-inferiority type of study design. But again, these are the issues that we'll have to cash out with regulators in our discussion.

Melanie Nallicheri: Perhaps just one thing to add, Akash. If we want these studies to add to our understanding of how the results that have already been generated can apply to U.S. medical practice, this then of course, they need to fit into a certain envelope in terms of time. Second, I would say, and I know Dr. Forrester has previously commented on this. We also need to be thoughtful about how we're using the most valuable "resource" that we have, and that resource as patients, so conducting an eight year-long study with a thousand or more patients, I don't really think that that achieves that goal. So, we're hoping of course that we're going to be at the lower end of that spectrum.

Operator: Thank you. Our next question comes from Kashish Bhutani with Goldman Sachs. Your line is open.

Kashish Bhutani: Good morning. Thank you. A question about really just understanding how this dynamic on costs and your plans may pressure test the fundamental business model here? And to invoke some of your own vocabulary you talk about the rising cost of drugs and offering radically lower prices. And what we're seeing is that the demands of developing drugs are probably in a prostatic or becoming more burdensome and just the cost of developing drugs are greater. So, can you frame for us how you're thinking about – how when you finally get to that point of offering these drugs and that journey to expense all of these developments, will that impact the fundamental delivery of the business model you're envisioning? And then I've a more specific question to follow.

Melanie Nallicheri: Yes. Hey, Kashish, thank you for the question. So first of all, I want to just frame that in the context of what's often talked about, the large cost and depending on who you ask or whether you use the tough numbers or other numbers, people quote numbers that are, it takes $1 billion to bring a drug to market. It takes $3 billion, $3.5 billion, the numbers are of course large, but if you know, they are burden by the cost of failure. So, one of the key and fundamental pieces in our business model is to make sure that we choose well from the get-go. And so, as you know, we are really proud of the team that we've built here at EQRx in particular, the people that we lovingly call our drug hunters. So, the people who can really assess when we in license a new molecule, or when we work with our drug engineering partners that what a new molecule needs to look like? That is fundamentally important because we believe that we therefore have a greater chance of success more often than not meaning we believe our success rates are in the 50 plus – 50% to 70% range that is fundamentally important because that means we don't need to burden the cost of our programs and then therefore ultimately the prices cost of these failures. Secondarily, as I mentioned a moment ago, we are looking to develop including if we have unlicensed programs and pay in a milestone payments, et cetera. We are looking to be in that envelope of $250 million to $350 million, and if that works and we are launching into multi-billion-dollar markets, even at a reasonable assumption of share that means that over a number of years, and that's why it's so important that we say we have enough patent runway left in the class. We have the potential to make several billion dollars of revenue. So, if you take that cost relative to the revenue potential, that return profile is incredibly attractive, and that's how we go about, that's how the business model works from an economic point of view.

Jami Rubin: And Kashish, I would just add in terms of how you think about our model and how you think about building our model. We expect that as Melanie said, our R&D expenses should conceivably be lower because conceivably we should have much lower failure rates, but the other big component to our cost structure is that we are not planning to build a conventional sales force. We're not going to have a lot of feet on the ground. We are relying on our payer partners to drive, adoption of our drugs a – what we call a pull through model, which is novel, and that should lead to a much more streamlined cost-efficient structure. So again, we are not burdened by a legacy cost structure and over time as we get to steady state, we expect that we will have operating margins that are in the 30% or higher range comparable to other large cap farm companies.

Kashish Bhutani: Got it. Thank you. And then a more specific question. Post ODAC, some – if you scrutinize maybe the takeaways from that meeting, something really foundational continues to resonate and that is addressing unmet needs. And so, a question on sugemalimab, the pursuit of patients and studying in Stage III disease appears to be quite critical in terms of aiming for that to address unmet needs. Can you be specific about how the design of your clinical study will be able to meet that objective?

Eric Hedrick: Yes. Kashish, this is Eric. Thanks for the question. I think the importance of the Stage III study, the Phase 3 study that was already designed, conducted has met its primary endpoint. Is that patients this is a disease maintenance study. So, patients have to have at least stable disease after receiving chemoradiotherapy. There's two ways to give chemoradiotherapy. One is concurrently to give everything together. The other is sequentially. You give one after the other. It's important to remember that the only approved maintenance therapy right now in the U.S. in the Stage III maintenance setting is when patients get concurrent chemoradiotherapy. If you look at what actually happens in U.S. practice about 40% of patients, don't get that mode, they get the sequential mode. And so, if unmet need is defined by the availability of approved therapies, that's certainly a significant population that currently doesn't have an approved therapy. And if you look at the results of the study, the PFS the benefit applies to both populations, and so I think that is what's important to consider in terms of meeting an unmet need with the design of the study.

Kashish Bhutani: Great. Thank you so much.

Eric Hedrick: Sure.

Operator: Our next question comes from [indiscernible] with JP Morgan. Your line is open.

Unidentified Analyst: Great. Thanks so much. Just I'll ask all the questions up front here. Maybe coming back to that that Stage III versus Stage IV dynamic, would you pursue, I guess a Stage III approval alone if there were a cleaner pathway there, and let's just say the FDA requirements for the larger population required a data set that's going to take significant time to complete, or does the model kind of really require a broad lung label to, to make the most sense? Then my second question was on the head-to-head studies you have planned for later this year, and the answer might be that you don't have clarity – full clarity from the FDA, but are you envisioning these predominantly as U.S. studies? Or do you think you'll be able to enroll at least a portion of these studies ex-U.S.? I'm just trying to get my hands around, I guess, your thoughts around the difficulty of enrolling kind of a U.S.-centric study, just given the number of approved agents out there. So maybe I'll stop at those two, I just have one financial one after that?

Melanie Nallicheri: Yes, Chris thank you. Eric, and I will tag team this. Eric?

Eric Hedrick: Yes. So, I think the tag team part on the Stage III questions. So, I think it's premature at this point, our discussions with FDA and other regulators about specific indications or labeling, right. Certainly, there is a population within the Stage III program, a population – sub-population of that study that might fit an unmet need definition. But that study is done as a whole study inclusive – in an inclusive population and if what we're really interested in is reflecting the use of these medicines in an inclusive or representative population, you could argue that our Stage III study represents that, right. So, I think at this point, it's almost too early to answer your question. We believe that these Stage III or these Phase 3 studies including Stage III and Stage IV are well conducted, well designed studies that have met their primary endpoint and thus established safety and efficacy. And so, the primary point of discussion with the regulators is the approval of safe and effective medicines, right? If there are other conditions, other data that need to be brought forth to support those approvals, that's what we need clarification on. But to answer your question a little bit more specifically, I don't think that we're going in with an intent of approval only in the subpopulation. I think that we will discuss the entirety of our lung program in terms of the establishment of safety of efficacy and whatever data that might be required to support that.

Melanie Nallicheri: Yes. And Chris, with regards to the question of what does the model require? As you know, the larger the spend in the current drug class, the larger the potential impact we can have when our partners create and support the adoption of those medicines. So that's one of the reasons why it was important for us to have this breadth in lung cancer. Having said that, as you also know that's about 50% of the PD1, PDL1 market. So even if we weren't going to get approval at the same time for each of these stages, there is a lot of value that we are bringing to our partners. And then lastly, as we add to it, not just aumolertinib, but other medicines that we have in development, that we're bringing onto the platform to our partners to generate savings for them and allow them to create broader access for cancer patients to these medicines, that all adds up and that's how we think about the model.

Unidentified Analyst: Okay, great. And, and just my follow-up, just to – okay go ahead.

Eric Hedrick: Sorry, Chris. If it's okay, I was going to get to your second question unless you…

Unidentified Analyst: Perfect yes.

Eric Hedrick: Yes, you asked about the head-to-head studies and ability to accrue those in the U.S. versus other parts of the world. We're designing these and thinking of these as U.S.-led studies. I think it's possible that other parts of the world could contribute to these studies. In terms of the ability to accrue these studies in the U.S. we are confident that we can do that. And I just wanted to make the point again, that these studies are really intended to show that our medicines right, can be adopted at a minimum with no sacrifice in patient outcomes. And possibly, if you address a component of financial toxicity, you can improve certain in clinical outcomes. And so, I think that’s important to remember. There's one way to think of these studies in sort of a blinders on scientific way and think that they might not be accruable. But I think these issues we're trying to address, including the issues of financial toxicity are real issues in clinical practice. And therefore, investigators are interested in addressing in that and participating in these types of studies.

Melanie Nallicheri: And Chris, as you know, this is the kind of data that we rarely see. And so, we've heard from a lot of people that they are really excited that we want to go out there and create that evidence or that reference to another currently used product or products. And so, we believe that there are many in our industry, many different stakeholders, both the clinicians that Eric just mentioned, but also all of our partners that gives them a lot of additional confidence to use an EQRx medicine instead of what they might be using today.

Unidentified Analyst: Great. Thanks so much. And then my next question is just a quick clarification on the cash burn. I guess the update largely tied to, I guess, milestones and maybe pre-commercial spend on these lead two assets or are there other reprioritizations in the portfolio as well as, I guess, we think about where you were in January versus today?

Melanie Nallicheri: Yes.

Unidentified Analyst: And just maybe just to clarify in general, on cash burn, your cash burn is it largely tied to the existing portfolio or is it also envision, I guess, additional in licensing or clinical assets that could be added to the portfolio? So, it's just a two-part right there. Thanks.

Jami Rubin: Yes, sure, Chris, all excellent questions. So first of all, we are almost done with our first quarter, we're towards the end of March. So, we have a really good sense for our spend. Secondly, we have mapped out our activities for the year and we feel really comfortable with $400 million or less. And some of the items that you mentioned, of course, are part of all of that as we think about our portfolio and potential for reprioritization and potentially pushing some launch costs out, et cetera. But that all is part of our thinking. I think the most important message we're trying to lead today is that we have control of our spend and we have a ton of flexibility. And with respect to business developments and building our portfolio, again, we are in a very fortunate position to have a lot of cash. And we intend to continue to build out our portfolio. At the same time, we are going to be disciplined in the way that we do that. And we will be thoughtful about the decisions that we make around our portfolio might that mean, reprioritizing some early-stage assets or accelerating some upgrading our portfolio? We see an asset that really makes sense and with our Global Buyers Club we will do that. But that is essentially the difference is that we really understand what our spend is and we have control.

Melanie Nallicheri: Chris, let me just be really clear the majority of was in our assumed spend is on development and on bringing in additional assets, but we are going to be really selective. We already have a large portfolio today. And so, it's not about the numbers. We're going to be really selective. We're going to pick and choose where it makes sense and where we believe that we can bring in something that can bring that you to the Global Buyers Club and do so in areas of high spend, where we believe that we have a potentially winning molecule as in the equally good or better sort of definition that we always use.

Unidentified Analyst: Great. Thanks so much.

Operator: Our next question comes from Eric Percher with Nephron Research. Your line is open.

Eric Percher: Thank you. A couple of questions on the commercial side of the model. Melanie, you made a comment on no slowdown in Buyers Club interest in obviously targeting 350 million lives. I know you are looking at long-term alignment in the MoUs and partnerships, but what do you think is the key proof point for the Buyers Club, is it visibility into approval on launch, is it expansion of the portfolio that helps you drive that Buyers Club, having more relevance for the payers or ultimately does it come down to pricing on launch and making good on your promise?

Melanie Nallicheri: Yes, Eric, thank you. It's a number of things. So first of all, it is of course the commercial impact that we can have or the economic impact that we can have. So, from a pure savings point of view, we are aligning incentives with them and us, and that, as you know, is not typical for our industry. Typically, those two forces sort of push against each other. By offering radically lower prices we are essentially allowing our partners to take the breaks off and rather than trying to control, spend to say, okay, well now we can create much broader access. So, from that point of view, we are both sides and ultimately, and most importantly, the patient is benefiting from greater pull through from greater adoption. So that's a core part and pieces of the model. Having said that it is more than that in these partnerships that we've created, we're really working as a team. And what our partners have understood is that they play a key role in enabling our model. For instance, those partners that provide us access to claims data or to EHR data that's data that we can use directly in the development of our drugs. It makes us a lot more focused that allows us to be a lot more, clear on how to set up a development program, or as Jami just described a moment ago when they are helping us with the pull through, and we do not need to put as much spend into sales and promotion as is typical today in the big sort of biopharma model. And so, it's the ability also to be more in control that many of these payer partners and health system partners like.

Eric Percher: And maybe following-up on the comment on the pull model, – and this may be a question for Jami, can you provide any commentary that links the target lives with the Buyers Club with your expectations of market penetration and share? And do you ultimately expect that this alignment around pull provides more value or more share relative to simply having coverage?

Melanie Nallicheri: Yes, I absolutely. And the way we believe this works is as follows, when you have the push model, right and essentially the way it works is you need lots of people to push on lots of physicians. And then you get a proportion of uptake there. And it's sort of scattered if you will. This is much more of a focused way of going about it, where we think about this as a partner who is truly motivated because they have, they win by essentially replacing every high unit cost with a lower unit cost. They have an incentive to pull that through. So, we expect that we're going to get a lot more adoption than therefore higher market share from those partners that we have true partnerships with. Of course, our medicines will be available once they are approved to anybody who wants to use or buy them. But we believe that the pull through in the market share is going to be relatively higher. And so, if you assume that that's mechanistically how it's going to work, then if you put some numbers around that, there are about 4.4 billion people who are insured in the world. That's the entire world. There are about 1.2 billion of those in the OECD countries. That is our initial, call it addressable market. That's our target market, where we know health systems and payers are looking for a solution and that's where we're having conversations.

Eric Percher: And I get that beg of the question of the 350 million you are targeting for the end of the year do you have a view on U.S. versus ex-U.S.? And it sounds, what you're saying is the U.S. – or the ex-U.S. opportunity is going to be significant. I guess we're going to see a much lower pricing differential relative to other models. So how do you think about the global piece here?

Melanie Nallicheri: Yes, so to answer the first question, there are about 300 million insured lives in the U.S. where this connects to the second part of your question typically, what we see is there is a much, much higher price in the U.S. And therefore, there is a proportionately larger amount of revenues that comes from the U.S. In our model where the pricing corridor, if you want to call that is much narrower. In other words, the pricing differential may not be as large. It's not the same price, but it may not be as large. The relative importance of other regions of the world increases. And so that's one of the reasons why we are so excited about our NHS population health partnership MoU, because that's 65 million people right there. If you look at Europe geographically defined, that's close to 500 million lives in Europe alone. And so, these are very large markets. And so, for us, they are very attractive. What the exact proportion is, is it going to be fifty-fifty, sixty-forty, forty-sixty, I don't think we know that yet. But we are equally focusing on these different parts of the OECD countries.

Eric Percher: Very helpful. Thank you.

Operator: Our next question comes from Steve Scala with Cowen. Your line is open.

Steve Scala: Thank you. And congratulations on all the progress that the company has made over the last couple years. I have three questions. First, you reiterated the filings for the two lead assets in the second half of this year, but with the second half only a quarter away, I'm wondering if you could narrow the filings to a quarter and what the expected filing depends on? So that's the first question. Second question is just to be clear and apologies if it already has been made clear and I didn't catch it. But have you had conversations with FDA post [indiscernible] adcom? The release says that you are continuing to engage with FDA, but it's unclear whether you've engaged since the adcom. And then the last question is that you suggested the momentum of enrolling further members into the Global Buyers Club continues. Can you share with us what sorts of questions they have asked about the two lead programs? And what is their reaction to the past forward? And have any lives been lost or not one because of the situation in the U.S.? Thank you.

Melanie Nallicheri: Thank you. And we are going to start Steve with Eric, and then I'm going answer your third question.

Steve Scala: Okay.

Eric Hedrick: Yes. Thanks, Steve. In terms of the filings the reason we're saying second half is that we're still in the process of actually preparing the filings and getting clarifications on the specific conditions. And so, at this point we can't further narrow it down. But at the point where we can, we will. Sorry, hopefully that was semi-satisfying. Yes, in terms of the FDA, we don't really think about our discussions and the continuation of those discussions relative to the ODAC. So, I would say that we are in a sequence of meetings and requests for meetings that hasn't been affected by the ODAC. So, we're going more by our discussions between the FDA and us, less reactive to the ODAC, and we're in a fairly typical sequence of meetings that will continue.

Melanie Nallicheri: Actually, Steve I'm going to add one more thing to the answer to the second question, and then go to the third. I do want to stress one thing. And I do think that came out very clearly in the ODAC, which is the message by the agency to seek the dialogue. And as you can imagine, especially for a company like ours, that's new, that's trying very different things, we are still a young company, but as early as we had something in our portfolio that we could speak to the agency about, we sought that dialogue because we thought it was really important. And that's what Eric is alluding to. It's been really a continuation of a dialogue that has started quite a while ago. With regards to the third question, yes, thank you for asking for that very clear question. We have actually added to our Global Buyers Club since we announced $180 million. As you know, we've said, we're not going to announce every single one of the partners’ debts. We are adding, so you are not going to see us say, well, now we are at $183 million, $187 million. We're going to give you sort of the big moves when we have added multiple additional payers and health systems to it. But we have added to the Global Buyers Club. The nature of the discussion, in particular, you asked about aumolertinib and sugemalimab is of course they wanted to understand how we interpret that meeting. And what we have shared with them, and I think, this hopefully became clear today. Number one, it was in even Lily's ODAC for sintilimab, and there are important differences that are technical differences between sintilimab and sugemalimab both in terms of the breadth of the indications that we are covering, both in terms of the breadth of the pathologic subtype that were covering with sugemalimab, as well as the breadth of expression status that sugemalimab covers. And then importantly, as Eric mentioned, we already have achieved one overall survival endpoint, and we are expecting the second in the Stage 3 indication. And then again, I just want to be really clear. There are clearly things that we agree with, and we haven't started to agree with them on February 11, the day after the ODAC, but we've built the company around it. The company's name, EQ alludes to equal access, equitable access. It's really about access for all. And that's why the mission is to improve health for all. So, the diversity and inclusivity piece is something that we built the entire company around, and it's something that's really near and dear to our hearts and something that we will deliver on.

Steve Scala: Thank you.

Jami Rubin: Thanks.

Operator: Thank you. And I'm showing no further questions at this time. This concludes today's conference call. Thank you for participating. You may now disconnect.