Ladies and gentlemen, thank you for standing by, and welcome to the Innate Pharma Half Year 2020 Results Conference Call. [Operator Instructions] After the speaker presentation, there will be a question-and-answer session. [Operator Instructions] I must advise you that this conference is being recorded today.

I would now like to hand the conference over to your first speaker today, Mondher Mahjoubi. Thank you. Please go ahead.

Mondher Mahjoubi - Chairman of the Executive Board and Chief Executive Officer

Thank you and welcome, everyone. This morning, Innate issued a press release reporting our financial results for the first half of 2020 and the business update. The press release and today's presentation are available on the IR section of the company website.

Let's move to Slide 2. And before we start, I would like to remind you that we will make forward-looking statements regarding the financial outlook in addition to regulatory and product development plans. These statements are subject to risks and uncertainties that may cause actual results to differ from those forecasted.

Let's move to Slide number 3, please. I will begin today's call with an executive summary of our progress to-date and Laure-Helene Mercier, our Executive VP, Chief Financial Officer and Member of the Executive Board, will provide an overview on the financials. Mr. Joyson Karakunnel, EVP and Chief Medical Officer, as well as Jennifer Butler, EVP and US General Manager, will also be available during the Q&A.

Move to Slide 4, please. Since our foundation more than 20 years ago, we have generated a lot of effort and time to work on how to harness the potential of DNA immune system and to discover and develop differentiated medicines in immuno-oncology. In 20 years, we've built a broad and balanced portfolio of innovative assets with the vision of becoming a fully integrated pharmaceutical company. This is illustrated through the three pillars of our strategy; Science, Commercial and Finance.

And let me move to Slide 5 to provide you an update on where we are with those three pillars. We are now on the verge of realizing this vision as we prepare to assume full US commercial responsibility for Lumoxiti, our first marketed product in the US and lay the foundation to support a rare hem-onc franchise. And then back to our pipeline, as our company has matured, we have remained committed to pioneering novel science and advancing potential new therapies to late-stage development with the goal of reaching patient. We had made meaningful progress against this strategy in the first half of this year.

And this includes, first, we quickly resumed enrollment in our Phase II lacutamab study in key cell lymphoma, Sezary syndrome and Mycosis Fungoides. So we supported the late-stage development of monalizumab in combination with cetuximab for IO-pretreated patient with recurrence on metastatic head and neck squamous cell cancer as AstraZeneca prepares to initiate the first Phase III study of a program that was developed by Innate Pharma. And last, but not least, with external expertise, we advanced avdoralimab in inflammatory disease, including and beyond COVID-19 infection.

Actually, we are fortunate that these research and development efforts have enabled us to build a robust portfolio of product candidate, some of which have effective - affected, I'm sorry, non-diluted financial support from pharma partner, French government, as well as from investors. And indeed this is a key aspect on how to make sure we remain in a position of financial strength in order to fuel the growth of our portfolio. And, as a result, we have been able to focus our internal efforts and resources primarily on advancing our wholly-owned programs. I will touch on these - on each of these molecules in more depth as we go through our program.

On today's call, we would like to focus on updates from clinical candidates beginning with our lead wholly-owned candidate lacutamab, which is on Slide number 6. As you know, lacutamab is a first-in-class humanized cytotoxicity inducing antibody that targets KIR3DL2, a tumor antigen that is specifically expressed in T-cell lymphoma. TELLOMAK, our Phase II clinical trial, is an international open-label, multi-cohort study, evaluating the efficacy and safety of lacutamab as a single agent in patients with different sub-types of T-cell lymphoma. Initially, this study has been in Sezary Syndrome, Mycosis Fungoides and peripheral t-cell lymphoma or PTCL.

And if you will recall, this trial has been interrupted end of last year due to GMP deficiency at our manufacturing subcontractor side, which managed the fill and finish operation of the lacutamab clinical vials. Importantly, there were no safety issue related to the trial medication. We were very pleased to resolve these GMP issues and get the TELLOMAK study back on track in Sezary Syndrome and Mycosis Fungoides.

These two indications faced high unmet medical need and lack currently available standard of care, whereas since there are options available to patients with PTCL we have decided not to enroll for the patients for this indication until a new GMP certified batch is available and took the opportunity actually to review the development strategy and plan covering different pattern [Phonetic] of the disease. We will update you in the future on this program in PTCL.

But let's focus on cutaneous T-cell lymphoma and as we engaged with each national regulatory agencies; Spain, Germany, France, the UK and the US, they have all agreed to resume enrollment. We are on track to report data from the Mycosis Fungoides cohorts in 2021 and Sezary Syndrome cohort in 2022. And we are particularly excited about this program for several reasons. First of all, the commercial opportunity is very synergistic with the rare hem-onc franchise that we are building around Lumoxiti.

Second, data to-date have shown promise, also an immense potential in rare and underserved indication. In particular, Sezary Syndrome, which offers potential fast to market opportunity at this Phase II study could serve as a pivotal trial. While in the Mycosis Fungoides, which is the largest subset of cutaneous T-cell lymphoma as it represents to grow the market in which lacutamab will be evaluated as a single agent activity - as a single agent therapy. We further believe data here will serve as a proof-of-concept beyond just this indication, including for peripheral T-cell lymphoma, which is an even larger opportunity.

Let's turn now on Slide number 7. Moving to monalizumab and in the beginning a few updates from our Phase II program. In May of this year, as part of the ASCO 2020 Virtual Scientific Program, we presented efficacy data from the Expansion Cohort 2 of our Phase II trial investigating the combination of monalizumab and cetuximab in IO-pretreated patients with recurrent or metastatic head and neck cancer.

Those data showed an overall response rate in line with previously reported data and a very manageable safety profile. In addition, we expanded Cohort number 3 of this study exploring the triplet of monalizumab, cetuximab and durvalumab in IO-naive patients with head and neck cancer from 40 to 20 patients. We have completed enrollment for this cohort and expect to publish related data in 2021. This is the update on the Phase II program.

Now, the great news that we shared this morning and we are very excited that AstraZeneca will be advancing monalizumab into Phase III wheelchair [Phonetic], as we previously announced. Similar to Cohort 2, AZ study will be evaluated with monalizumab and cetuximab in IO-pretreated patients with recurrent or metastatic head and neck cancer. Importantly, the advancement of monalizumab into Phase III represents a significant clinical and financial milestone for Innate as with the dosing of the first patient in the Phase III we will be progressed in Innate first ever Phase III assets.

You may recall Innate was eligible to receive $100 million from AstraZeneca upon dosing of the first patient in the Phase III trial. And following the review of the maturation of the data and discussion with AstraZeneca, the company has agreed to amend the agreement and it will now receive a $50 million payment up in AstraZeneca dosing of the first patient in the Phase III and a $50 million payment after the interim analysis demonstrates that the combination meets the pre-defined threshold of clinical activity.

All other potential development and commercial milestones related to the agreement remains unchanged, including our participation to the financing of the Phase III under the terms we all know. Together with AstraZeneca, we are very excited by the opportunity for monalizumab and believe the novel combination of pair [Phonetic] in mona, an anti-NKG2A monoclonal antibody, with cetuximab has the potential to provide the new therapeutic option for patients who fail immunotherapy.

In addition, we continue to believe this is promising potentially first-in-class treatment for IO-pretreated patient with this second and these type of malignancy. As you know, it has a poor prognosis and novel and effective tolerable therapy continue to be needed. In fact, to believe this, we will be the first ever program to advance into a Phase III study for the patient with head and neck cancer previously treated by PD1 or PD-L1 inhibitors. And we look forward to learning more about this novel combination from AstraZeneca's Phase III and plan to share updated and longer data from Cohort 2 of our Phase II study at future scientific meetings.

Let's move now to Avdoralimab in Slide 8, please. Based on data from the non-small cell lung cancer and IO-naive hepato carcinoma cohorts of our STELLAR study, we have decided to stop enrollment in this Phase I/II study. We continue to advance our FORCE for COVID-19 and in July, we published translational data supporting our trial in - the data were published in Nature. The study found that patients who progress towards severe COVID-19 disease including those with severe pneumonia and Acute Respiratory Distress Syndrome exhibit an activation of the C5a-C5aR1 pathway.

Specifically, our researchers actually observed that high level of successes [Phonetic] in C5aR and an overactivation of the C5a-dependent myeloid cell pathway, which is delivered to contribute to the inflammation in the lungs. The analysis supported avdoralimab mechanism of action. The C5a-C5aR axis blockade as the means to limit myeloid cell infiltration at inflammatory sites and prevent the excessive lung inflammation that is associated with the Acute Respiratory Distress Syndrome in these patients. It's a potential therapeutic approach for patients with severe COVID pneumonia.

The recruitment for our first study had declined due to improving conditions in France, but enrollment has now resumed due to the recent increase in COVID-19 cases in France. And as we have opened new centers in the country, we continue to monitor the situation, also assessing the feasibility to expand into other geographies. It is important to note that our efforts in France are covered by a non-dilutive financing from the French Government that we received in August of this year.

In addition, based on this strong scientific rationale for C5AR pathway and also informed by the competitive environment, including external clinical data, which validates our mechanism of C5aR complement inhibition for inflammation. We have also elected to explore this program for chronic inflammatory diseases beyond COVID-19. Actually, we are excited by the interest in our avdoralimab program to advance our efforts forward and we will collaborate with leading experts and key opinion leader, who will sponsor and launch two respective study in chronic spontaneous urticaria and bullous pemphigoid later this year.

While our expertise in inflammation goes back to the original Innate and we have the scientific acumen to understand the opportunities in inflammation, we recognize that much of our work has been in producing and believe external insights will enhance our effort and ensure we are making smart early clinical decision to build value in the program. That's why we decided to work with external investigators as this will allow us to accelerate this effort in inflammation more quickly than we would have been able to do, if we did it on our own, and without distracting internal hospices from ongoing efforts with lacutamab and our earlier stage pipeline. So this is the science part of the presentation today.

Now, let's move to the commercial section. And on Slide 9, we'll provide an update on our commercial operation with Lumoxiti. And as you will remember, in 2018, we in-licensed Lumoxiti from AstraZeneca. It's a unique asset, because, first of all, it has been approved in hairy cell leukemia, who failed prior therapy, so relapsed and refractory hairy cell leukemia addressing then an unmet clinical since nothing was approved for more than 20 years, but because also we believe it would be - it would lay the foundation for our long-term objectives. And in fact over the past 18 months, we have established our US and global commercial orders.

Late last year, for example, all sales and medical affairs activity for Lumoxiti has transitioned from AZ making Innate the sole commercial entity promoting these products in 2020. Throughout 2019, we further transitioned additional activity: BLA transfer, marketing and digital activity as well as patient support activity. All of this infrastructural capabilities are now with Innate, which is a testament to the vision and hard work of our teams in both the US and France.

Now, as we prepare to assume the final transition fees from AstraZeneca, which includes setting up the Innate trade and distribution channel by the end of the year, we want to provide some further context around this program as well and our progress for this year. So it's on Slide 10. Hairy cell leukemia - sorry, okay. Slide 10, please. Just to provide some context on the market opportunity, even those hairy cell leukemia is a rare disease and we estimate just less than 400 patients would fall within our labeled indication.

Since the launch, we have seen that the third line hairy cell leukemia patients are more dispersed throughout the US and therefore our ratio to patient and physician beyond centers of excellence is a critical component of our commercial model and strategy. It is also important to remember that there has been no new treatment for hairy cell leukemia over the past 20 years, as I said. Therefore, we need time to convert physician behavior and increase brand awareness.

Unfortunately, COVID-19 has compounded this effect, impacting Lumoxiti performance so far in 2020. Physicians have reported in market research that they are delaying infusion and/or prescribing existing oral agents, which has meant slower uptake for Lumoxiti. However, we remain confident that the Fit to Purpose commercial strategy we are executing will drive adoption and change the treatment paradigm over time, but we also remain diligent in our flexibility to adjust to the change in market dynamic and we look forward to updating you as we begin booking sales in the fourth quarter of this year.

In Europe, we continue to work closely with the EMA to advance our Marketing Authorization Filing. We continue to look at Lumoxiti as strategic opportunity to build out the commercial infrastructure that can support our broader rare hem-onc franchise and believe we are on our way to achieving that vision.

With that, I will now introduce Laure-Helene, our CFO, to provide our financial overview. Laure-Helene, to you.

Laure-Helene Mercier - Executive Vice President, Chief Financial Officer and member of the Executive Board

Yeah. Thank you, Mondher and good day, everyone. So moving to the finance. I will start with one of our key metrics, as usual, our cash position. Our cash and cash equivalents amounted to EUR184.6 million as of June 30 of this year from EUR256 million at the end of 2019. Together with the anticipated $50 million milestone payment upon dosing of the first patient in AstraZeneca's Phase III study for monalizumab. We are in a strong financial position with cash to fund planned operations through 2022.

In addition, as you can see, we are efficiently managing our resources and sizing opportunity to accelerate our impact by nimbly following data, leveraging, become a partner and investigators to explore strategic and opportunistic indication, and a building out of commercial infrastructure that is synergistic with our internal development focus. We believe this approach ensures that we remain in position to strategically invest in our vision for Innate.

Now, going into the P&L and again, as usual, I will only comment the main and most significant lines and you have very detailed comments in the appendix of the press release that you can refer to for more information. I'll start with our revenue from collaboration. So our revenue and other income amounted to EUR36.7 million and they mainly resulted from revenues from collaboration and licensing agreement and to a lesser extent from government funding. This revenue mainly results from the spreading of the upfront and opt-in payments received from AstraZeneca for monalizumab and IPH5201, which I remind you are recognized on the basis of the percentage of completion of the work performed by the company. I also remind you, obviously, that this has no impact on cash.

Now, operating expenses, so for the first half of 2020 they amounted to EUR46 million, essentially flat compared to the first half of 2019. R&D expenses increased by EUR5.1 million to EUR35 million - EUR31.5 million, representing close to 70% of our operating expenses. They primarily relate to external costs related to our programs in clinical development, staff costs and depreciation and amortization for monalizumab, IPH5201 and Lumoxiti intangible assets.

The main reason for the decrease is the completion of some regulatory work for certain pipeline programs, such as Lumoxiti for the European filing or IPH5201, which transitioned to Phase I under the responsibility and financing of AstraZeneca, or the IND filing for IPH5201. All of these were only partially offset by the increasing cost of some other programs such as lacutamab.

Turning to selling, general and administrative expenses, they increased by EUR5.2 million to EUR14.5 million for the period and primarily relate to staff costs and consulting. The increases done in the staff cost is notably in the context of the recruitment completed during the second half of 2019 and the first half of 2020 by our US subsidiary, including the staff allocated to the commercialization of Lumoxiti.

As of June 30, this year, we had 74 employees in SG&A compared to 43 employees last year at the same period to give you a magnitude. This include mainly a result from the recruitments in the United States. Consulting expenses mostly consist of fees related to audit, accounting and legal fees.

Now, one word on the net income from distribution agreements. We have this line under the operating expenses and it sums the Lumoxiti net global inflows and outflows received from Phase II AstraZeneca for the commercialization of Lumoxiti. As a reminder, in the current context of the transition of the responsibilities with respect to Lumoxiti from AstraZeneca to Innate, AstraZeneca is still considered as principal and as Mondher said, Innate will become the principal and start booking sales in the fourth quarter.

So under the Lumoxiti agreement, we recognized a net profit of EUR0.9 million during the period as a result of the transfer of the commercial activities from AZ to the company. It also include a one-time positive true-up relating to the rebates applied to the gross sales generated over the whole period of commercialization.

So, I think this concludes the remarks on the financial part of the release, and I'll turn back the call to Mondher.

Mondher Mahjoubi - Chairman of the Executive Board and Chief Executive Officer

Thank you, Laure-Helene. So, in summary, on Slide 13, as you can see, we've made significant progress across our portfolio in the first half of this year and we remain committed to executing on a more long-term growth strategy. Our internal efforts are focused on advancing lacutamab for the treatment of T-cell lymphoma, as we build commercial infrastructure to support the launch of Lumoxiti in the US.

In parallel, our partner, AstraZeneca is advancing monalizumab for recurrent or metastatic head and neck cancer, as well as IPH5201 for advanced solid tumors, and we are collaborating with external experts to initiate studies of avdoralimab in complement driven inflammatory diseases. We believe this strategy allows us to best maximize our internal resources, while accelerating development because of our broad portfolio. Lastly, we have a strong cash position to fund our development program and are eligible for potential substantial program milestone payment in the future.

On Slide 14, I also want to take a moment to introduce you all to Dr. Joyson Karakunnel, who joined us in July as EVP and Chief Medical Officer following the retirement of Pierre Dodion. We are very excited to welcome Joyson, who most recently served as CMO at Tizona and earlier he held positions at Arcus, AstraZeneca and MedImmune. He has practiced in the medical oncology and he brings in-depth immunology, oncology and hematology experience and a proven track record in clinical development. Joyson will be available with us during the Q&A as well.

Finally on Slide 15, the news flow and just to recap the upcoming milestone across our portfolio, what do you - we would expect. For lacutamab, we expect to share data from the TELLOMAK trial next year in Mycosis Fungoides and in 2022 for the Sezary Syndrome growth. And reminding you, the Sezary Syndrome growth is the one that is potentially pivotal for which, of course, it's important not only to have the breadth constraints data, but also the longer-term data in terms of PFS and duration of response and that's why we elected to disclose those data in 2022 once we have interacted with the health authorities and the FDA in particular.

For monalizumab, we expect AstraZeneca to enroll the first patient in their Phase III in the second half of this year, which will trigger a $50 million payment to Innate and we expect to report as well early data from Cohort 3 of our Phase II trial in 2021. Finally for avdoralimab, we expect the IST trials in CSU and BP to initiate in the second half of this year. And Lumoxiti, as I said, we are transitioning and will assume full US commercial operation in the fourth quarter of 2020, while we continue to work closely with the European Agency to advance our EMA filing for the approval in Europe. And in parallel, of course, we are progressing the avdoralimab FORCE study in COVID-19 and the rest of our broad and balanced pipeline.

So it's the end of this short presentation. It's been a rich first half of the year and I'm sure you have plenty of questions that I'm happy to take with Laure-Helene and with Joyson as well. So, operator, you may now open up the line to Q&A.

Question & Answers

Operator

Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] And first question comes from the line of Graig Suvannavejh from Goldman Sachs. Your line is now open. Please ask your question.

Graig Suvannavejh - Goldman Sachs - Analyst

Great. Thank you for taking my questions. Good day to you all and thanks for the update, and congrats on the progress. I have got some questions related to monalizumab and then also Lumoxiti, maybe first on monalizumab. Can you just walk us through the rationale for the restructuring of the financial milestone from $100 million to now being split up into two. I'm wondering if this is something that AstraZeneca initiated and wanted - obviously having $100 million for the first patient dose in the Phase III is better than $50 million. So if you could just walk us through kind of what drove that?

So the follow-up on monalizumab is, on the receipt of the second half of that payment or the $50 million, A, when do you expect and I'm looking at the timelines, is it a post 2022 event, where you would think you'd get this interim data that will then trigger that? And then the follow-up on that would be, can you share with us some of those criteria that would allow you to receive that $50 million? And then I've got a follow-up on Lumoxiti. Thanks.

Mondher Mahjoubi - Chairman of the Executive Board and Chief Executive Officer

Thanks, Graig. And just - I forgot to mention that we have also Jen Butler on the phone, so she will also contribute to this Q&A session and address any specific question you have on Lumoxiti. Let me first say that, with monalizumab, we are really very excited and very proud with the achievement that we've got today. I mean, I remember this is the first assets in 20 years for Innate Pharma to get so far into it, this Phase III and to be so close to the market. So this is a major, major achievement that we are extremely proud, not only because it is, of course, a key milestone from clinical development, but also I think an opportunity for patients with this type of disease, because, as I said, this is an emerging unmet medical need and nothing has been at this step in Phase III so far to address this emerging unmet medical need for patient who are progressing on PD1/PD-L1 inhibitors. As you know, when it comes to clinical development, then in Phase III you have two options or two rules. The classic rule is do a randomized Phase II to establish with enough granularity the contribution of components of your combination to get additional confidence and then to move into Phase III. That's what most of the people do.

The second approach, of course, is to go right way from a single-arm Phase II to randomized Phase III. Usually this happens when you have outstanding activity in Phase II and then outstanding activity means a higher response rate, a high complete response rate and the other classic endpoints in oncology. We elected with AstraZeneca to go with the first approval in order to - with the support in order to maintain the pace and expedite the development instead of going through a randomized Phase II/III trial, it is more attractive to build the Phase III based on the data we have at hand. And in order to give you a little bit more sense of what we have gone through and answer your second question about the interim analysis, I'm going to hand over to Joyson to explain the rationale behind this restructuring as well as the elements about the interim analysis.

Joyson Karakunnel - Executive Vice President and Chief Medical Officer

Yeah. So I think when we look at, as you know, just a kind of add-on to what Mondher was just saying, the Phase III, the interim and then the final, of course as everyone is aware on the call, an interim analysis is to help to sort of give us the confidence of what the final analysis would be. So in this restructuring, basically the way it was kind of - it was approached to us is that, the interim analysis would help to guide that final analysis.

Now, I want to step back and say that doesn't change the confidence in the program. So, in fact, between AstraZeneca and us, we're still confident. But to what Mondher was saying, when we look at the data, we look at the totality of the data and that totality of the data to help from a business perspective to basically help to spread out that - the payments.

Mondher Mahjoubi - Chairman of the Executive Board and Chief Executive Officer

And the question about the when, I mean…

Joyson Karakunnel - Executive Vice President and Chief Medical Officer

Yes. And…

Mondher Mahjoubi - Chairman of the Executive Board and Chief Executive Officer

And whether we can disclose the pre-defined criteria of [Indecipherable]?

Joyson Karakunnel - Executive Vice President and Chief Medical Officer

So looking at the pre-defined criteria, I think as many people know on the call, usually on our interim analysis, we don't really get into the nitty-gritty details. But from what AstraZeneca has told us is, there I'm expecting this interim to occur within - between 18 months to 24 months and I want to emphasize they are the ones who are executing the trial at this point.

Mondher Mahjoubi - Chairman of the Executive Board and Chief Executive Officer

Good. And, Graig, just to recap on this question that I'm sure many people on the call have. The initial data that were used for AstraZeneca to take decision to move in basically came from the Phase I trial that we conducted in 2018. That's when they first showed interest, they opted into the oncology program in combination with cetuximab and decided to go into Phase III. But in the meantime actually we developed this Phase II program. We designed the Phase II in the classical way, so with the response rate to the primary endpoint. The primary endpoint of the study was met. We presented the data at ASCO few months ago and we actually built with AstraZeneca the evidence to go into Phase III.

So the data you look at when you do a Phase III is not just our responses, you look at the other criteria, in particular the duration of response, the progression-free survival, the overall survival, the land-mark [Phonetic] analysis, the safety profile and all that actually help you decide whether you go or you don't go [Phonetic]. I think from a science and a clinical viewpoint, there was a sort of alignment that we have to go into Phase III, because as there is an opportunity there is an unmet clinical need if the data are good enough to go into Phase III.

Now from a business perspective, AstraZeneca the proposal that we split this payment in two and we are so personally confident with AstraZeneca that we will hit that interim analysis. So we agreed to get a $50 million now for the first patient in and then $50 million in, I think, in 24 months when we have the interim analysis. I hope we covered your questions and we get back to you on the Lumoxiti.

Graig Suvannavejh - Goldman Sachs - Analyst

Yeah. No, thank you for that. That was very good clarity. Thank you. And just maybe I'll switch to Lumoxiti, are you able to disclose what sales were in the first half? And then my follow up there would be, given that you - the arrangement with AstraZeneca, it - should we be expecting that contribution will potentially being negative in the second half. I know you had plus EUR900,000 in the first half, but just given kind of how that commercialization agreement works and that you'll be assuming full responsibility, is it fair to assume that that may turn negative in the second half? Thanks.

Mondher Mahjoubi - Chairman of the Executive Board and Chief Executive Officer

So maybe I'll hand over to Jen for the first part of the question about the commercial performance. I mean the straight answer in terms of, can we give a little bit more granularity that AstraZeneca has booked in sales. So we'll start booking the sales in the fourth quarter of this year. So - but we can give you a hint on the overall performance in the COVID context, that's what Jen will do. And then Laure-Helene will try to address your second question about the financial - I think we'll ask the question - you have a question to - ask the question again to Laure-Helene, but let's start with Jen first on the commercial side.

Jennifer Butler - Executive Vice President and General Manager of Innate Pharma US Inc.

Thanks, Mondher. So, Graig, we would expect to have obviously more transparency as it relates to sales lines as we book sales in the future. So there will be a little more transparency to that. Yeah, I stated in the prepared remarks, I think, for us taking over in Q1 starting, kind of - not in Q1, but really that being our first quarter, we definitely call the impact for COVID-19 and just to provide a little additional color commentary as Mondher had mentioned.

For us, in particularly with the hairy cell leukemia patients, I think, there was a desire to kind of reduce the risk of exposure in some of the healthcare facilities and, therefore, there was a bit of a delay in wanting to start infusion. We're not alone. I think you saw that in a lot of other disease case in which there was a delay to start therapy and then uncertainties as to where there was an oral option for folks we did see, so potentially start there.

We would expect that some of the patients or parameters or people kind of circle back around, one-third disease progresses. So that's kind of been our experience kind of through 2020 as it relates to Lumoxiti in the marketplace. But I think just as we've seen in the US more broadly, we are seeing [Indecipherable], we're going to be able to kind of improve that face-to-face interaction that we're seeing our team able to do and obviously that will put us and I think in a more respective situation from the scientific exchange and that promotional exchange.

Mondher Mahjoubi - Chairman of the Executive Board and Chief Executive Officer

And Laure-Helene, you want to add something on the financial part?

Laure-Helene Mercier - Executive Vice President, Chief Financial Officer and member of the Executive Board

Yes, Graig. I'm not sure I'll really get the second question, but just to give you some more flavor on the financial part of Lumoxiti. So it's true that it's not easy to read inside this line item of the income from the agreement. So I just want to repeat what I said during the introductory remark and maybe that didn't went through is that, the change between last semester and this first half of the year is really driven by the transition of the commercial expenses from AstraZeneca to Innate.

So here we already see expenses going from this line item to our SG&A, so that explains also why SG&A is getting up and a one-time true-up, really that is an exceptional. So you should consider that 2020 in terms of the sales of Lumoxiti is really going to be very much impacted by the COVID-19 health crisis as we already alluded to and, again, the next time that we will report, you will also have more clarity since we will start looking the sales from the fourth quarter on. So does that answer also your questions?

Graig Suvannavejh - Goldman Sachs - Analyst

Yeah. That's very good. I'll just jump back in the queue. Thank you so much. Thanks, team.

Laure-Helene Mercier - Executive Vice President, Chief Financial Officer and member of the Executive Board

Thank you.

Mondher Mahjoubi - Chairman of the Executive Board and Chief Executive Officer

Thank you, Graig. Operator?

Operator

Thank you, Graig. [Operator Instructions] And we have still one more question in the line, that comes from the line of Yigal Nochomovitz from Citi. Please ask your question.

Yigal Nochomovitz - Citi - Analyst

Yeah. Hi. Good morning. Thanks for taking the questions. I had a question on the FORCE trial for COVID-19. Could you provide a few more details on that study in terms of its design, specifically how many patients you're enrolling, what do you - how are you defining the standard of care or the control arm, and what endpoints are you using? For example, is it something like the percent of patients that no longer need mechanical ventilation or something different? And when might we see the initial top line data from this study?

Mondher Mahjoubi - Chairman of the Executive Board and Chief Executive Officer

Okay. Thank you, Yigal. I'm going to hand over to Joyson to give you an update and remind that this is an investigator sponsored trial that we are conducting with the public hospital here in Marseille and other pipeline cost. And actually details about the design and even the sample size as well as the interim analysis is out public, but we are happy to provide an update again and answer your question. Joyson?

Joyson Karakunnel - Executive Vice President and Chief Medical Officer

Yeah. So I just want to emphasize once again that this is an investigator-sponsored trial. So I will definitely provide the information that is available to us. So once again the FORCE is on multi-center, randomized, double-blind, placebo-controlled Phase III trial, which is looking at avdoralimab on COVID-19 patients with severe pneumonia. It's expected to enroll a total of about 108 patients between two cohorts.

So one of the cohorts - to your question of what are the different patient populations, one is a cohort consisting of patients who have Acute Respiratory Distress Syndrome, or ARDS, at baseline and one cohort is those with rfaDs. So I think the simplest way we can kind of define this is, those who were hospitalized and not in the ICU and those who were hospitalized in the ICU. And I think that kind of gives you an overview of the sort of the trial design.

When it comes to standard of care, now the FORCE study was initiated and I think when the initial French trials were kind of starting to - are starting to - when the initial COVID trials - initial COVID incidents was starting to decrease and prior to that the standard of care was supportive care. So, right now, the FORCE protocol is based on the placebo being supportive care.

Mondher Mahjoubi - Chairman of the Executive Board and Chief Executive Officer

And just to answer your question about the endpoint, it's a very classic 28-day mortality, where we will see whether the addition to [Indecipherable] of avdoralimab will reduce the mortality rate and will reduce the number of days in hospital.

Yigal Nochomovitz - Citi - Analyst

Okay. Thank you. And then I just had a question on lacutamab. Could you just provide an enrollment update for the TELLOMAK study as it currently stands, now that you've begun resuming recruitment? And in terms of the data that you're going to share for Mycosis Fungoides and Sezary Syndrome, can you provide any more details on the types of data that you're going to be disclosing in 2021, 2022?

Mondher Mahjoubi - Chairman of the Executive Board and Chief Executive Officer

Joyson, up to you?

Joyson Karakunnel - Executive Vice President and Chief Medical Officer

So, let me answer the first one, enrollment and then subsequently the types of data. So in regards to the enrollment, right now, we are - we've had sites brought back up, so lot of the sites that were on clinical hold initially have been activated again. And then second is, I want to kind of reference the fact that this is a post monalizumab [Phonetic] trial and monalizumab is currently approved in the US. So as many of us are aware, a lot of the US sites are just starting to come up right now, but we are starting to pick up enrollment again, so that's where we're at least with the enrollment.

Mondher Mahjoubi - Chairman of the Executive Board and Chief Executive Officer

Yeah. Yigal, we do not disclose that, as you know, the number of patients that have been accrued so far, number one. So we will stick to our commitment to share data in 2021 for the Mycosis Fungoides. And remember it's two-stage design. We have the Simon Stage 1 and then based on the signal we see in both KIR3DL2 expressing and non-expressing, we'll move each of these cohorts to the Stage 2. So we will present the data next year.

When it comes to Sezary Syndrome and, as you know, we had a fast-track designation. So we are in consultation with the US FDA, but in the same time it's really a matter of quality of the data than just to response rate. So it will be a little bit longer and we plan to have those data shared with - for the scientific community and with you in 2022. Thank you.

Yigal Nochomovitz - Citi - Analyst

Great, guys. Thank you very much.

Operator

Thank you. [Operator Instructions] And we have one more question and that comes from the line of Graig Suvannavejh from Goldman Sachs. Please ask your question.

Graig Suvannavejh - Goldman Sachs - Analyst

Thank you, and thanks for the follow-up. Just quickly, I know we didn't spend much time on STELLAR-001, but could you just walk us through the rationale, the discontinued enrollment there, was there just zero signal or not a compelling enough reason to move forward due to - maybe competitive landscape developments, just some color there would be great? Thank you.

Mondher Mahjoubi - Chairman of the Executive Board and Chief Executive Officer

Thanks, Graig. Before I hand over to Joyson to answer your question, a quick reminder that this is a clinical trial collaboration agreement that we had signed with AstraZeneca in 2018 in order to design a Phase I/II trial to evaluate the safety and efficacy of the combination of durvalumab in combination with avdoralimab in selected tumor types and certain other disease selected based on scientific rationale but also based on emerging data that AstraZeneca had at the time.

So it's very, I would say, focused development in very specific in certain of the disease, i.e., the IO-pretreated, for instance, on non-small cell lung cancer or in very specific tumor types that were for - of interest for AstraZeneca, like ACC. But, again, this is about STELLAR, not about oncology. So I'll handover to Joyson to tell you a little bit more.

Joyson Karakunnel - Executive Vice President and Chief Medical Officer

Yeah. So just as a reminder, the STELLAR study had an HCC IO-naive cohort and non-small cell lung IO-pretreated cohort and then in HCC IO-pretreated cohort. And I think what we did is, when the group kind of looked at all of the data together and this is, of course, new data versus the initial decisions that were made when we looked at this few data, we thought that going forward we'd not have a high probability of responses.

But with that being said, I think one of the key points to remember here is that we are, as all data sets are, we are looking deeper into the data to see if there are any other subtle signals that we can kind of see there. But for now at least, it was just based on those treatment.

Graig Suvannavejh - Goldman Sachs - Analyst

Okay. Thank you very much.

Operator

Thank you. There are no further questions at this time. Please continue.

Mondher Mahjoubi - Chairman of the Executive Board and Chief Executive Officer

Okay. I think we get into the end of this call. Thank you all for your participation into this call. I hope we provided you with some more highlight and insight into the press release of this morning. And I remain with my team Laure-Helene, Joyson, Jen, the entire our IR team, of course, at your disposal for additional clarification and follow up. With that, I wish you a good day. Thank you very much. Bye-bye.

Operator

AI Assistant

INNATE PHARMA SA

Q2 2020

Earnings Transcript

Find Answers

Ask about any part of the document to get insights, explanations, or key details.