Theratechnologies Inc. (NASDAQ:THTX) Q3 2022 Earnings Conference Call October 13, 2022 8:30 AM ET
Company Participants
Elif McDonald – Head of Investor Relations
Paul Levesque – President and Chief Executive Officer
Philippe Dubuc – Chief Financial Officer
Christian Marsolais – Chief Medical Officer
John Leasure – Global Commercial Officer
Conference Call Participants
Andre Uddin – Research Capital
Endri Leno – National Bank
Doug Loe – Leede Jones Gable
Operator
Good morning ladies and gentlemen and thank you for standing by. Welcome to Theratechnologies’ Third Quarter Fiscal Year 2022 Earnings Call. At this time, all participants are in a listen-only mode. [Operator Instructions] I would like to remind everyone that this conference call is being recorded today, October 13, 2022 at 8:30 A.M. Eastern Time.
I will now turn the call over to Ms. Elif McDonald, Head of Investor Relations. Please go ahead, ma’am.
Elif McDonald
Thank you, operator and good morning, everyone. On the call today will be our President and Chief Executive Officer, Mr. Paul Levesque; Chief Financial Officer, Mr. Philippe Dubuc. During the Q&A session, we will be joined by Dr. Christian Marsolais, Chief Medical Officer; and Mr. John Leasure, our Global Commercial Officer.
Before we begin, I’d like to remind everyone that Theratechnologies’ remarks today contains forward-looking statements regarding its current and future plan, expectations and intentions with respect to future events. Forward-looking statements are based on assumptions and there are risks that results obtained by the company will differ materially from those assumptions.
As such, the company cannot guarantee that any forward-looking statements will materialize and you are cautioned not to place undue reliance on them. We refer current and potential investors to the forward-looking information section of our management’s discussion and analysis issued this morning and available on SEDAR at www.sedar.com and on EDGAR at www.sec.gov. Forward-looking statements represent Theratechnologies’ expectations as of October 13, 2022.
With that, it is my pleasure to turn the conference over to Theratechnologies’ President and CEO, Paul Levesque. Paul?
Paul Levesque
Thanks, Elif. Hello, everyone. Thank you for joining us today. Before we start our review of the current reporting period, I’m proud to say that thus far fiscal 2022 has been an overwhelming success. Quantitatively, our performance to date stands at testimony to the company’s hard work in transforming the business for both immediate and future growth. We have witnessed the organization come together as a team over the course of the last year, which is reflected in our numbers.
We’ve put great consideration into Theratechnologies forward operating plan, which has been designed to unlock value in the legacy business. This will be especially impactful now that we have built our own sales teams and have focused activities in the United States. This includes investing in areas such as our medical affairs programs to facilitate the diagnosis of patients with lipodystrophy and the identification of patients with uncontrolled HIV viral load.
We are also enhancing the patient experiences through improved methods of administration and new formulations. In speaking of the patient experience, we wanted to highlight the recent FDA approval of Trogarzo for administration by 30 second IV push for heavily treated patients. This new method of administration reduces maintenance dose time from 15 minutes to 30 seconds.
Not only is the safety and PK profile of Trogarzo IV push similar to that of IV infusion, but the new method of administration is designed to make maintenance dosing easier on patients and healthcare providers. Thus, we firmly believe that we will be able to further expand Trogarzo into more clinics and increase patient adherence at the same time.
Additionally, a new intramuscular study for Trogarzo is now fully enrolled and the last patient visit is scheduled for next month. We believe that IM could provide an even more convenient method of administration, including access to patient treatment outside of the clinic such as in the pharmacy settings. We are delighted in the fact that we can demonstrate a strong commitment to fostering superior patient experiences.
The simple fact of matter is that the market is ramping up quickly towards non-oral regimens. So, the approval of Trogarzo for IV push could not have come at a better time. Incidentally, Theratechnologies announced data from two poster presentation, at the AIDS 2022 Conference showing the potential for improved treatment regimens.
The first presentation demonstrated pharmacokinetic modeling data supporting proof-of-concept that additional methods of administration could be viable. This is a big endorsement for IM formulation administration for which the study will shortly be completed.
Furthermore, the second presentations demonstrated how Trogarzo in combination with another fully active agent could lead to simpler dosing regiments in heavily treated experienced populations. This abstracts was selected as a Top 300 abstract by the conference.
Moving to EGRIFTA SV now, which is a current formulation on the market. As previously announced, the FDA requested that the company carry out the human factor study with the ultimate goal to fine tuning patient instruction for use. The study is ongoing and progressing well, and it is ultimately our hope that this will improve patient adherence to treatment.
As the FDA has asked us to do a human factor study for EGRIFTA SV, we have proactively decided to do one for the FA formulation as well. This study has been initiated and is running in near parallel to the SV study. Given the uncertainty regarding the supply of a bacterial static water for injection, we have decided to take control of this situation and take matters into our own hands and I have signed an agreement with a contract manufacturer to source the water ourselves.
We believe this will firm up our timeline to launch the FA’s formulation for lipodystrophy and ensure continuous supply of bacteriostatic water upon launch. In settling this go forward strategy, we are currently on track to deliver the filing of this new FA formulation in the fourth quarter of 2023 with a targeted launch date in the first quarter of 2024.
Now, as a high level overview of the reporting period, and with one more quarter to go, momentum in our business continues and the sales force that we have put in place is in full swing. As such, we are confident that we will deliver on revenue guidance of between 79 million and 82 million, while achieving new heights in the new fiscal year.
To be more specific on product performance, we’re happy to report that year to date U.S. revenue growth is a blended 18% in-line with our objectives. Trogarzo revenues are up 17% year to date, while EGRIFTA SV sales are up 18%. This financial performance is being driven by our strategy to facilitate both diagnosis for lipodystrophy patients and patient identification for Trogarzo.
Philippe as usual will provide more insights into the reporting periods consolidated numbers on today’s call, which does include Europe. As noted on the second quarter call, we separately announced the signing of 100 million non-dilutive credit agreement with Marathon Asset Management, a major institutional healthcare investor.
Not only was this a vote of confidence for Thera, the financing also lifts the financial burden of having to repay a convertible debenture due in June 2023, which in turn further allows us to execute our commercial and pipeline development plans unencumbered. And while the new growth associated to our commercial activities is very exciting, the future of our technologies remain with the advancement of our powerful SORT1+ oncology platform.
As such, we remain laser focused on recruiting patients and advancing the current basket trial. Earlier in the quarter, we provided an update on the dose escalation or of TH1902 Phase 1 study and announced signs of efficacy that were observed in three heavily pretreated patients.
The preclinical work that we are performing with our SORT1+ technology is getting noticed by many in the industry and was featured in the [recognized journal pharmaceutics] [ph]. The data was published as part of the publications special issue targeting drug resistance and metastatic pathways for cancer therapy.
The publication highlighted the in vitro and in vivo efficacy of TH1902 in inhibiting ovarian and triple-negative breast cancer stem like cells. It also served to demonstrate potential mechanisms by which TH1902 can bypass underlying causes of resistance to docetaxel contributing to treatment failure and disease recurrence.
In prior studies, we have shown inhibition of vasculogenic mimicry in vitro, further adding to the body of evidence that SORT1 receptor in our peptide drug conjugate announced for enhanced benefits versus docetaxel alone. This is really the first evidence of TH1902 targeting of human breast and ovarian cancer stem like cells both in vitro and in vivo preclinical models.
Our excitement comes from the fact that the potential therapeutic benefits include sustained efficacy as cancer stem cells can act as hidden cancer cell [indiscernible] often associated with recurring cancers. Just yesterday, we announced that we have been selected to present new data showing high expression of SORT1 receptor in several cancer types. The data will be presented in a poster session at the 34th joint symposium of ENA, a highly recognized oncology conference that will take place at the end of the month in Barcelona, Spain.
We continue to believe that our program’s unique mechanism of action gives it an exceptional chance of succeeding where others have not been able to progress. On the TH1902 China outline sensing and partnership front, discussions are moving forward as enrollment of the basket trial continues.
Finally, as per previous communications, the NASH program remains on pause until we have identified a partner with the capabilities and resources to carry this program forward. By making partnering a condition to advancing the program, we are acting responsibly vis-à-vis our investors as this is a costly endeavor.
Recent positive news in the field of NASH has rejuvenated interest from many investors. As one of the only late phase NASH companies in, with a mechanism of action that targets the dis-regulation of fat accumulation in the [indiscernible] compartments, including the [liver] [ph], we feel more optimistic than ever in finding a partner and seeing this program move forward.
I would like to now pass the call to Philippe, our Chief Financial Officer.
Philippe Dubuc
So, I’ll go over the financials before I turn the call over to the operator to start the Q&A. The consolidated revenue for the three-month period ended August 30, 2022 was 20.8 million, compared to 17.9 million for the same year ago period, representing an increase of 16.6% year-over-year. For the third quarter of fiscal 2022, net sales of EGRIFTA SV reached 12.9 million, compared to 11.2 million in Q3 of the prior year, representing an increase of close to 50%, due to the combined effect of a higher number of units sold and a higher net selling price.
In the third quarter of fiscal 2022, Trogarzo net sales amounted to 7.9 million compared to 6.6 million for the same quarter of 2021, representing an increase of approximately 20%. Higher sales of Trogarzo were the result of a stronger performance in the United States, where we recorded 26% growth, compared to the same quarter of last year, but these were also hampered by lower sales in Europe as a result of a weaker overall pricing environment.
In the period, cost of goods sold was 5.3 million compared to [4.3 million] [ph] for the same quarter last year. The increase in cost of goods sold was mainly due to higher sales of both EGRIFTA SV and Trogarzo and were generally in-line on a percentage basis with prior periods costs.
R&D expenses amounted to 8.4 million in the three-month period ended August 31, 2022, generally in-line with expenses of 8.3 million for the same year ago period. R&D spending for 2022 relates mostly to our medical affairs programs and studies our oncology Phase 1 study and other research, as well as spending on the intramuscular method of administration for Trogarzo, which should be completed in the fourth quarter of 2022.
R&D expenses also include some severance costs related to our realignment in Europe. Selling expenses amounted to 8.4 million for the second quarter of 2022, compared to 7.7 million for the same three-month period last year. The increase in selling expenses also reflects one-time costs relating to the setting up of our internal field force in the U.S., as well as spending on new initiatives implemented in 2022 to increase awareness of our products in the North American market. The increase is also explained by severance costs related to our decision to exit the European market for Trogarzo.
G&A expenses in Q3 amounted to 4.2 million, compared to 3.6 million reported in Q3 of last year. The increase in G&A expenses is largely due to increased overall business activities in 2022, as well as key hires in North America to support the implementation and management of our internal field force in the U. S. G&A expenses also included severance costs associated to our realignment in Europe.
Net finance costs for the three-month ended August 31, 2022, were 1.9 million, compared to 2.3 million for the comparable period of 2021. Net finance costs in the third quarter of 2022 included interest of $990,000 on the senior convertible notes and the new term loan announced in July of 2022 versus interest of 847,000 on the convertible debenture in the third quarter of last year.
Net finance costs also included accretion expense of 500,000 in the third quarter, compared to 612,000 in the comparable period in 2021. The remainder of the difference can be explained by a gain on the repurchase of the convertible debentures in July, as well as a smaller foreign currency loss than in the same period last year. So, given the increase in revenue and the relative lower increase in expenses, net loss for the third quarter of 2022 amounted to 7.5 million, compared to 9.5 million for the same period last year.
The loss in 2022 is also impacted by non-recurring severance costs and fees related to the decision to exit the European market for Trogarzo of $900,000. We ended the third quarter of fiscal 2022 with $36.5 million in cash bonds and money market funds. The company believes that its cash position and future operating cash flows will be sufficient to finance operations and capital needs for at least the next 12 months from the consolidated statement of financial position date.
As previously discussed, the company secured a new non-dilutive $100 million term loan facility with Marathon Asset Management significantly strengthening our balance sheet. The first tranche of $40 million was drawn during the third quarter, which enabled us to buy back $3 million principal amount of convertible debentures. For the three-month period ended August 30, 2022, cash flows used by operating activities were 4.4 million compared to 4.6 million for the same period of fiscal 2021.
During the quarter, changes in operating assets and liabilities had a positive impact on cash flow of 3.2 million, whereas in 2021, fees had a positive impact of 1.5 million. These changes were mostly attributable to positive impacts from lower accounts receivables, lower inventories, and lower prepaid expenses, and this was offset by lower accounts payable.
As Paul mentioned, we are confirming our fiscal 2022 revenue guidance to be in the range of 79 million to 82 million [or growth] [ph] of the commercial portfolio to be in the range of 13% to 17% as compared to the 2021 fiscal year.
So, with that, Paul will be back for final comments, but first, we will now open the call to take your questions.
Question-and-Answer Session
Operator
Thank you. [Operator Instructions] Today’s first question comes from Andre Uddin with Research Capital. Please go ahead.
Andre Uddin
Hi, Paul, Philippe, and Christian, just had a couple of questions here. Just looking at this quarter, at, in terms of SG&A, is that a good run rate going forward?
Philippe Dubuc
Yes, it should be generally in-line for the next couple of quarters. Yes.
Andre Uddin
Okay, great. And then also just looking at the intramuscular formulation of Trogarzo, if this current study continues and it actually – the data looks good, would that study be sufficient to file a supplementary BLA? And when would you expect to file for FDA approval?
Paul Levesque
Yes, Andre, thank you for the question. I will ask Christian to tell you more about the timelines and the filing strategy, but obviously you picked up that this can be significant for Trogarzo. We have indications that the IV push will be well received. And as I said, we see a significant trend developing for non-oral regimens. And I think that what we have coming up can be very significant. Christian, do you want to add a few things?
Christian Marsolais
Yeah. So, the study that we are doing with the IM is a copycat, exactly the same as the study that was done for the IV push. Therefore, we know that it’s been approved based on that once study with the IV push. And the endpoint is really the [Ctrough] [ph], the [trough level] [ph] of the drug just before the following infusion. And the [indiscernible] model or the PK model that was shown during AIDS Conference showed great confidence that that study could be positive. And that will be [Technical Difficulty]
Andre Uddin
When can we see that data then, Christian, around?
Paul Levesque
When can we see the data?
Andre Uddin
Yes.
Christian Marsolais
Well, the last patient that has visited or the last dose will be in November, shortly after that we will have an idea about the results. We need to do the PK analysis. It takes a few weeks. Then beginning of next year, we’ll have the data and we’ll be ready to submit the file to the FDA.
Andre Uddin
In the fall?
Christian Marsolais
No, no. At the beginning of next year. The last patient that has visit is in November and the time to do the analysis, then the first quarter of next year, we will have the data and we’ll be able to submit to the FDA.
Andre Uddin
Okay. That’s great. And also, just can I ask one other question here. So, in terms of the annual [locked] [ph] for both EGRIFTA, could I maybe get the annual locked price for EGRIFTA and Trogarzo? That would be great if you have that handy.
Philippe Dubuc
Well, I can give those to you. I don’t have them handy, but it’s – for EGRIFTA it’s 6,500 or so per month. And for Trogarzo, it’s about 2,700 per two-week cycle. So, it’s [2,600 times 26] [ph].
Andre Uddin
Okay. Perfect. Thank you.
Paul Levesque
Thank you, Andre.
Operator
Thank you. And our next question today comes from Endri Leno with National Bank. Please go ahead.
Endri Leno
Yeah, good morning and thanks for taking my questions. I have a few. I just wanted to start first with TH1902. So, first question I had there, I was wondering if you can share with us on the patient recruitment, what is the target for that and where are we now?
Philippe Dubuc
The target enrollment you mean for the Phase 1b?
Endri Leno
Yes.
Paul Levesque
Okay. Well, as you know, we have a basket trial now composed of 70 patients. We have targeted very specific tumors for which we know the, SORT1 expression is high. Now, we have a Fast Track designation, which allows us to have ongoing discussion with the FDA. So, we could modify this basket trial along the way we can. There are companies that are modifying their Phase 1b trials in many, many different ways, but Christian, we don’t want to be releasing any specific numbers on recruitment at this time, but the target is to have 70 patients, correct?
Christian Marsolais
Absolutely. Then the recruitment is going well for the study and we’re on target to complete the recruitment of the study by the end of the first quarter of next year and the recruitment is going well.
Endri Leno
That’s great color. Thank you. And the other question I had on 1902, I mean you mentioned the partnership discussions in China and how they’re, kind of tied to recruitment. I just wanted to, kind of elucidate that a little bit. I mean is it specifically patient recruitment level or is it more efficacy in results, right? Like, just trying to gauge when you could potentially have some news on that [out license discretion there] [ph]?
Christian Marsolais
Well, if I understood your question well, you’re talking about TH1902 partnership?
Endri Leno
Yes. That’s correct.
Paul Levesque
So, the TH1902 partnership is for Greater China only. And we’ve had discussions with many, many good companies. And obviously, as we get closer to lining up the signs of efficacy, some companies want to see more before obviously finalizing the deals, but we still have companies interested and impressed with what we have published so far. So, we are in good shape for finding a partner for Greater China. This is a good short-term way for us to create value for the enterprise, but at the same time, the way it goes is that the more data we’ll publish, the higher will be the price for partnership.
So, we can’t lose by producing good data. We can only win. Christian, I mean, that’s the bottom line, right?
Christian Marsolais
Absolutely, and the discussions are going well with the different potential partners.
Paul Levesque
Philippe, anything to add on this?
Philippe Dubuc
No.
Paul Levesque
Thanks for your question.
Endri Leno
Great. Thank you. Yes. Couple of more on – so moving on to the NASH, and the NASH discussions that you’re having. I mean, any kind of color you can give in there in terms of what is being discussed with potential partners, is it potentially more work that needs to be done by [Thera] [ph] or a combination of Thera and a partner or is it more regarding the FA formulation? And once it gets more resolved, we could see some development there?
Paul Levesque
Well, the national program, as I said, we’ve said for a couple of quarters now that we wanted to find a partner that would come with capabilities and resources. I said it in my speech, I think that this is the right way to act. We’re acting in a very responsible way because the cost of running this trial is very significant, but what is very, very good is that you might have seen additional interest in that NASH space developing in the last couple of months, which is great. This is what we anticipated, but a year ago that was not the same context.
And as such, we feel that there was more interest now for a discussion in this NASH space, which is a high unmet medical need, one of the big market left. And I think that any companies that will want to actually lean forward and identify late stage compounds that are ready to go into the clinic, will actually get to us. And that’s where we come in, that’s where we’re having more meetings with potential partners. And I’m not sure I understood the last part your question, but we’ve got all kinds of companies interested.
Sometimes it’s big pharma, sometimes it’s small sized firms. The point is that by having a more favorable context regarding, is it possible to tip this over to an approval and it actually creates a positive environment for us to identify a partner. And there has been, as you know, some competitors and biotechs that have published some favorable data recently in that space. And I think that the context is way more favorable.
So, for us, there’s all kinds of possibilities. You talked about the Bacteriostatic Water, that’s very important because we need that. At one point, we need continuous sourcing of that and you saw the key decisions that we made to be able to go ahead. And for now, we are going to actually file with our FA formulation as soon as we have completed the human factor study, but at the same time if we were to find a partner now we could actually start to see on the trial a [indiscernible], right?
Christian Marsolais
Absolutely. Then we – in terms of the trial, we already have identified a CRO that can work with us, and as soon as we make the announcement shortly thereafter a few months, six months thereafter we can start a trial.
Paul Levesque
So, the point related to NASH that I want everyone to understand is that we are asking ourselves how can we create value with this program. There’s got to be a way, we could create value without having to actually spend a lot of dollars, and I think that partnership is the way to go. How are we going to actually split the work? How are we going to actually address territories remains to be finalized. But I think that having a context now where the mission is possible is creating a favorable environment [for our mission] [ph].
Endri Leno
Okay. No, that’s great color. Thank you. And one last for me. From this regard to IV push, and a two part question there. The first one, can the patients switch quickly or is there a transition with the current formulation? And the second part of that question is, when do you think we can expect to see a contribution or a larger contribution from the IV portion to the result? That’s it. Thank you.
Paul Levesque
Yes. Thank you for your question because we’re very excited about this. The PDUFA date was October 3. We delivered on time. It’s well done. And John, can you answer the question? So, switch is, how do you foresee the transition? And the second is that, the overall contribution from the IV push?
John Leasure
Yes. Thanks, Paul. So, it’s the method of administration that’s different. The product itself, there’s not a different SKU. So, physicians and patients have access to it right now and they can begin immediately. We have actually a POA plan next week. The sales force has been trained and so they’re going to be out there communicating this information that positions right away. Does that answer your question?
Endri Leno
That’s now the first part. I mean, are you able to share any kind of target where you expected to be the majority of the contribution or is that still in the works?
John Leasure
Yes, I mean, our research indicates that there will be increased utilization. Physicians and patients will have greater access to this, which will greatly increase the market share, we believe. And again, it can happen almost immediately because its product is out there now.
Endri Leno
That’s good. Thank you.
Christian Marsolais
Sorry, just one further explanation. At the moment, [the drug] [ph] when you infuse it, it has to be diluted then it’s not all clinic that gives you that step. And now it will be the drug that will be just taken into a syringe and injected directly in the vein of the patient. And there are many additional clinics than before have to send their patients to infusion center that will now be able to do the administration of the drug. I think that that will be a significant advantage both for the clinic and the patients.
Paul Levesque
Yes. Thank you, Christian. This is key. Access to potentially new clinics for the administration of where Trogarzo is key and we’re counting on this and we’re looking forward to reporting back to you. Next question?
Endri Leno
That’s it. Thank you.
Paul Levesque
Thank you.
Operator
Thank you. And our next question today comes from [indiscernible] at Canaccord Genuity. Please go ahead.
Unidentified Analyst
Hi, team. Good morning, and thank you for taking my questions. I’m on for Edward Nash. I’d like to ask about the TH1902 program based on your recent publication and prior dose escalation study results, is it fair to believe that breast cancer and or ovarian cancer will be the first indication for the drug?
Paul Levesque
Yes. Well, thank you for your question and interest in our TH1902 program. So, obviously, having different arms to our basket trial was done on purpose, but Christian, what do you think? It’s hard to say, I guess, what cancer is going to give us the first goal.
Christian Marsolais
It is hard to say. And as you – we announced yesterday morning, there will be a publication, a poster publication at an upcoming meeting showing that the sourcing receptor is highly expressed in a number of cancer. And at the moment, the five cancer that we’re targeting in the basket trial are all High Expression, which is in the area of about 80%, 85% or more, which is very significant to many other cancer targets. And in the basket, we’re also our recruited small cell lung cancer, target cancer that are expressing the receptor of more than 60% then. At the moment, we’re just waiting to see one or two good response and one of those cancer type, it’s difficult to say, which one it will be at the beginning, but it’s going well.
Paul Levesque
Thank you, Christian. That’s very significant. The paper that will be presented at the end of the month in Barcelona will tell a lot about the SORT1 expression. We’ve been saying that this is receptor that is very significant, that is highly expressed when the patient or the cancer is advanced.
So, that’s going to be significant, but I’d like to remind people that we had, as part of the basket trial two signs of efficacy coming out of cases of prostate and that was not necessarily expected as this one doesn’t seem to be the one that is expressing the SORT1 receptor at the highest level, yet we had early signs of efficacy. So, the point is that, as long as the receptor is playing the role that we think it’s playing, I think the potential is enormous.
Christian Marsolais
Just as a clarification, Paul you said, in the basket trial in the dose escalation.
Paul Levesque
And the dose escalation. I’m sorry.
Unidentified Analyst
Okay. That makes perfect sense. Thank you for the answer. So, as a follow-on, can we assume that for, like assuming positive data from the basket trial that in the Phase 2, the indication will be within the cancer types that are currently being evaluated in the basket trial? Is that like fair [Multiple Speakers]?
Christian Marsolais
I do believe that based on all of the [indiscernible] data that we have done and based on the patients selected, which is based on the high expression of the sortilin receptor that we should see sign of efficacy in some of those tumor types. And as we’ve discussed or mentioned before, Paul mentioned that at the beginning, once we see signs of efficacy that could be two responses or more in one tumor type, we would be ready to do an amendment and discuss with the FDA to increase the number of patients and to initiate assignment design Phase II assignment design with an additional 25 patient as an example and after that to move into the pivotal trial.
Unidentified Analyst
Okay. Thank you. And when should we start to expect more data from the basket trial, please?
Christian Marsolais
Well, as we mentioned before, it will depend in terms of the efficacy, but the end of the quarter or next year, within the next six months we should be and we’re expecting to have more signs of efficacy that we’ll be able to announce.
Unidentified Analyst
Okay. Thank you. Looking forward to that and both the presentation at the end of the month. Thank you.
Paul Levesque
Thank you.
Operator
Thank you. And our next question today comes from [William Hatcher] [ph] with Bank of America. Please go ahead.
Unidentified Analyst
I think the last question actually followed up on the things I was interested in. One thing I might ask is, although enrollment is going well overall for the basket trial, are there any particular cancer types which you are ahead or behind on enrollment or where it’s particularly difficult to get the patients you need?
Paul Levesque
Christian?
Christian Marsolais
It would be difficult to comment. At the moment, it’s like recruiting. We’re trying to ensure that the pace of recruitment is similar in all cancer types. We’re doing different activities with the sites and we’re also working on activation of additional sites in Europe, in Canada, in other in the U.S. So, everything is moving in the right direction. And again, we’re trying to recruit as many patients from the different tumor types that we have in the protocol.
Unidentified Analyst
Okay. Thank you.
Operator
And our next question today comes from Doug Loe at Leede Jones Gable. Please go ahead.
Doug Loe
Thanks, operator, and good morning all. While we’re talking about the oncology program, gentlemen, just one thing if you have any update on status of development [Technical Difficulty] 1904, presumably it will be [indiscernible] data that we get from 1902 and then how you want to stratify the market with the two conjugates? But, anyway, just wondered if you have any thoughts and how you might want to push that asset forward?
Paul Levesque
Christian?
Christian Marsolais
In terms of the 1904, what happened in the earlier, just before we initiated the study or the Phase 1 with TH1902, we did an efficacy study in the animal model with 1902 in ovarian cancer, and you know 1904 is more for ovarian cancer. And the results that we have obtained when 1902 was as good if not better than 1904. This is why we took TH1902 as a lead compound because it showed very good efficacy in all tumor types tested so far and there has been a number of those.
In terms of follow-up compound, you were talking about 1904, but as we mentioned before, we’re looking also at other type of conjugate. As an example, it is known that docetaxel does not work in colorectal cancer. Then we decided to start working on PDCs with SN-38 and [indiscernible] see if that could work better in colorectal cancer, it’s in preclinical at the moment, it’s moving well. And we’re also working on potentially attaching other anti-cancer agents to our PDC.
Paul Levesque
So, it’s important to know that, thanks for your question, but TH1902 gave us stunning results as part of the preclinical work that we’ve done. And that’s the reason why we decided to concentrate our activities on this one. And that doesn’t mean that we don’t have the capabilities for conjugating other payloads as per what Christian has just said, but step wise, when it comes to this, for now, we want to be laser focused on accelerating the recruitment of patients as part of the basket trial.
Doug Loe
Yes, good feedback. Thank you. The second question, you spent quite a bit of time with other questions on the NASH indication, but as you know, you had abundant published data on fatty liver disease in HIV infected individuals. And I was just wondering if specifically targeting on the HIV market and liver pathologies might be a subset indication that you might still be interested in pursuing independently or is that now definitively off the table?
Paul Levesque
Well, thanks for the question. Where we are now is that we have support from the community of KOL in the NASH space, including also the agency in the U.S. We have good support for going into the general population. And I’d like to remind you that HIV patients, if anything, are more difficult to treat. So, that’s the way that our protocol has evolved and our protocol now is ready to go. So, it could go. And what we have decided to do, which we’ve said is that we have embedded an interim analysis in our protocol, which would allow us to actually have interim data after the first 400 patients are treated.
Christian do you want to add any details?
Christian Marsolais
Yes. Well, the only thing is that in our [Phase 3] [ph] protocol, we will enroll also HIV patients, contrarily to most of the other programs are ongoing at the moment where there are some time exclusion criteria for the HIV patient population. That’s where we’ll go at this stage.
Doug Loe
Perfect, great. And then actually the question for which I dialed it originally was with regard to the multi-drug resistant HIV-1 infection market, and so, your Trogarzo sales are certainly trending nicely and your main competitor is Rukobia, also trending nicely, but strikes me is both drugs are probably trending a little bit below what all of our original expectations would have been for market penetration into that space. So, it’s a just general comment on how you’re seeing the macro environment for that indication? Is disease incidents prevalence as high as you originally thought that it was? Are there any competitive next generation protease inhibitors or antivirals that are still, sort of being used to treat that indication? Any additional commentary on price points? Just, whatever commentary you have just on market size and it’s – and invest the ability for Trogarzo to grow beyond existing [quasi stable] [ph] levels? And I’ll leave it there. Thanks very much.
Paul Levesque
Well, thank you for your question. As you know, Rukobia and also Trogarzo are indicated for multidrug resistance. There is a significant unmet medical need for that. No question. What is the untapped population? Is it 2,000? Is it 3,000 patients? We’re not entirely sure. What we know is that Trogarzo is much needed for patients facing resistance and we’re very excited, as I said, a few times, with all what is developing in that space. What is developing in that space is a trend towards non-oral regimens and we can be part of that.
I think this is the exciting part and being relevant is always first whenever you actually market pharmaceuticals that we are. And second, I think that if you take a look at sales despite the great growth number that we have now, for the quarter now, we reported 26% Trogarzo year-to-date 17, that’s quite a jump. And we’re excited about what we see. The IV push is going to help. John, do you want to provide additional color on market size for Trogarzo in its entire entity?
John Leasure
Well, we understand the market size, I think fairly well, it’s around 2,000 patients a year. Remember, in a highly [indiscernible] experienced patient population these patients are on three drugs. So, drugs like Rukobia and other newer agents coming to market will typically be used in combination with Trogarzo. So, it’s not a single sum game here. And there’s increasing need in this space. And as Trogarzo fits a [indiscernible]. Christian?
Christian Marsolais
And maybe one additional thing. It’s a good thing that now you have two drugs in this market because before [ibalizumab] [ph], there hasn’t been any new mechanism of action to treat or to take care of that patient population. Patients were a four or five drugs as an average. And now that you have two new mechanism of action, I think that the switch is starting to go from those five to probably two drugs or two drugs plus another one, but there’s more action and there’s more voice of chair to start talking about this patient population, which is a good thing.
Doug Loe
Great. Thanks very much, guys.
Operator
Thank you. We have a follow-up from Endri Leno from National Bank.
Endri Leno
Hey, good morning. Thanks for the follow-up. Just a quick clarification, I wanted to go over. So, when we’re talking about NASH, I mean, Paul and Christian, you said that you can go right away or quick enough after a partnership to start a trial, but I was just going over the MD&A in the meantime, and [essentially] [ph], FDA has asked some questions on the modified protocol and they have not been approved yet. I just wanted to clarify that when you say that you can go quickly, would this be on the modified protocol or the original one? And the second part, when would you expect the FDA to respond once you answer their questions?
Paul Levesque
Philippe, do you want to take this one? I think that we are in discussions with, as I said, several companies for NASH. The protocol that we have received the study and we proceed later. So, we could go with the original Phase 3. And what we have done is that, we have embedded an interim analysis in the study. So, we think that this is the best way to go step wise to actually confirm that after 400 patients, we have already good signs that we can have an impact on the [NES score] [ph] in fibrosis and or fibrosis. But today from a partnership point of view, anything else to add?
Philippe Dubuc
I think we did get some questions from the FDA on the protocol. They’re not deal breaking questions. They’re just questions to adapt the protocol, but we’re not finalizing the protocol because if we do have a partner, we will want to have their input, their final input on the protocol before launching the study. So, again, we got questions from the FDA. We can’t answer them and we’re in agreement with everything that they’ve submitted, but we’re not finalizing until we have a partner and until we can agree with the partner on a final protocol.
Endri Leno
That’s great color. Thank you.
Operator
Thank you. Ladies and gentlemen, this concludes the audio Q&A session. I’d like to turn it back over to the management team for any closing remarks and/or webcast questions. Please proceed.
Philippe Dubuc
Yes. So, on the webcast questions, there are quite a few, but they’re all related to the enrollment on the basket trial, and so, I think we’ve gone in details on that. So, on that, I will turn it back over to Paul for closing remarks.
Paul Levesque
Well, thank you, Philippe. I hope that everyone can see the transformation of Theratechnologies over the last two years. These strategic changes that we have carefully implemented are now firmly rooted in bearing fruit. We have in Spirit and Practice rebooted the growth potential of our two drugs, while continuing to invest in the line extensions of these products.
Additionally, while we continue to deliver solid performance in the commercial business, we’ve been given a strong vote of confidence and have [fortified] [ph] our balance sheet even further through an exceptional transaction with a major investor in healthcare. We believe that we will have a solid fourth quarter to finish the year strongly and are optimistic for the new year, and I’m happy to remind everyone that we remain focused on executing the basket trial and we believe we are only months away from the next catalyst.
I look forward to our discussions where we will begin rolling out the next steps from where management is taking Theratechnologies. Thank you everyone for being on this journey. I hope you’ve all had a wonderful start to the fall season and cooler temperature. Thank you again.
Operator
Thank you. Ladies and gentlemen, this concludes today’s conference call. We thank you all for attending today’s presentation. You may now disconnect your lines and have a wonderful day.
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