EQRx, Inc. (NASDAQ:EQRX) Q3 2022 Earnings Conference Call November 10, 2022 8:00 AM ET
Company Participants
Neil Swami – Head, Investor Relations
Melanie Nallicheri – President and Chief Executive Officer
Jami Rubin – Chief Financial Officer
Eric Hedrick – Chief Physician Executive
Conference Call Participants
Steve Scala – Cowen
Chris Schott – JPMorgan
Operator
Good morning and welcome to the EQRx Third Quarter 2022 Financial Results Conference Call. [Operator Instructions] Please be advised that this conference call is being recorded. I would now like 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 third quarter 2022 financial results and our recent corporate progress. A copy of this release and presentation to accompany this call are available on the Investor Relations section of our website at investors.eqrx.com.
Joining me on the call this morning are Melanie Nallicheri, President and Chief Executive Officer; Jamie 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 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 any 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 for taking the time today to join our third quarter call as we share significant updates about our late stage pipeline, our go-forward strategy in light of regulatory guidance, and our robust capital positioning and deployment now and in the coming quarters and years ahead.
To begin on Slide 4, over the last several weeks, we have had multiple discussions and written communications with the FDA around possible paths to approval for our most advanced medicines, aumolertinib and sugemalimab. We now have the feedback and clarity on the agency’s position to make decisions for both programs. For aumolertinib, we have a clear understanding of the FDA’s position on a path for potential U.S. approval. This incorporates advice from the FDA into the trial design to bring this potentially best-in-class compound to patients and provides commercial revenue in the U.S. as early as 2027, following our first expected UK and EU approvals and commercialization in the 2024 timeframe. Positive data for our recently initiated Phase 3b 3-arm study could support the use of aumolertinib in combination with chemotherapy as potential future standard of care, and possibly also as monotherapy in the U.S. population.
We have been hopeful that an interim comparison of the two monotherapy arms would support a nearer-term filing, thereby getting aumolertinib to U.S. patients as expeditiously as possible, but do not expect filing in the U.S. for aumolertinib before 2027. For sugemalimab with chemotherapy on its own, there is no commercially viable path for Stage 4 non-small cell lung cancer in the U.S. The evolution of the FDA’s position on applicability involves the requirement for a second trial with an overall survival based non-inferiority study versus currently approved checkpoint inhibitors. This study would require a significant percentage of diverse American patients, and no interim readouts would be acceptable. While we do not agree that this is in the best interest of American patients, it is clear that the time, cost and fundamental feasibility of such a study makes this indication not commercially viable in the U.S.
We do believe approval in ENKTL is still possible in the U.S. and would bring tremendous benefit to patients. However, it is not a significant commercial opportunity. Sugemalimab has obtained breakthrough therapy designation in this indication. And we are in ongoing discussions with the agency. We continue to have confidence in this program and based on its strong Phase 3 data, including robust overall survival benefit expected to play a commercial role outside the U.S. The reality is that this clear pathway and commercial opportunity for aumolertinib in the U.S. as directed by FDA feedback requires us to adapt and shift to a market-based pricing strategy for both of our lead assets, aumolertinib and Lerociclib in the U.S.
For supporters of a new disruptive model and for the U.S. portion of our Global Buyers’ Club partners, this was not what we were planning for together. Instead of having sugemalimab and aulomeritinib be the first approved products to deliver to our partners in the U.S. in the 2023, ‘24 timeframe, as was our original goal, they’re not able to serve the role of near-term catalysts for our U.S. Buyers’ Club,
We will continue to look for additional options to bring value to our partnerships. For our investors, this leaves a revenue gap for us in the near-term. Given the additional time now required to bring aumolertinib to market in U.S., given the potential effects on then current pricing due to the Inflation Reduction Act, it will make more sense to take a market-based pricing aumolertinib and Lerociclib. While this shift in our pricing strategy for these two programs is different from our original intent, we believe it will allow us to focus more resources on our development and regulatory efforts for aumolertinib and Lerociclib and to bring these therapies to patients while maximizing economic value for our shareholders.
As you see in Slide 5, the existing data and underlying clinical characteristics support what are now our two lead programs, aumolertinib and Lerociclib. They both have advantageous toxicity profiles that may separate them from other drugs in their respective classes, thereby potentially making them more combinable and potentially important backbone therapies. We believe that the future of standard of care in EGFR positive non-small cell lung cancer will be combinations. Given the strong Phase 3 efficacy data we have in hand, compelling CNS activity, and its favorable tolerability, we believe on aumolertinib continues to have significant potential as a best in combination EGFR inhibitor.
Similar to aumolertinib, our next-in-line oncology drug candidate, Lerociclib also has the potential to be a best-in-class backbone therapy. Based on data generated to date in over 300 patients, Lerociclib, our CDK4/6 inhibitor in-licensed from G1 therapeutics in North Carolina has the potential to be clearly differentiated from other CDK4/6 inhibitors due to its favorable tolerability, and the ability to continuously dose. In our early stage portfolio, we are developing a number of new molecules in collaboration with our drug engineering partners for potential best-in-class molecules. We anticipate that some of these will be beneficial combination partners for the above mentioned backbone therapies.
As mentioned earlier, outside of the U.S., we continue to make great progress towards regulatory filings with both aumolertinib and sugemalimab in Europe and the UK and in our conversations with payers and health systems to help create broad access to these innovative therapies once approved. As a reminder, we submitted our filing for marketing authorization in June of this year. And aumolertinib is currently under review by the MHRA. We expect to file with EMA in 2023. We’re anticipating our first sugemalimab submission to be accepted in the UK by the end of this year, with an additional filing with EMA expected in 2023.
We recognize the significance of maintaining our cash position and are tightening our expenses with the plan that our runway will extend into 2028. We expect to end this year with more than $1.4 billion in cash and we plan to provide a more comprehensive update on our pipeline expenditures in business in Q1.
I will now turn the call over to Eric who will discuss our aumolertinib and Lerociclib in more detail. Eric?
Eric Hedrick
Thanks, Melanie. I’d like to provide some additional detail on the development and regulatory paths for aumolertinib and Lerociclib, expanding upon Melanie’s comments in her introduction and the potential for both of these agents to be best in combination drugs in their respective treatment areas, as these areas evolve towards novel combination therapies.
With regard to aumolertinib, our third generation EGFR inhibitor, now let me outline the current path towards monotherapy approval in various territories around the world. Outside of the U.S., we have made considerable progress in advancing applications for monotherapy approval. The filing in these territories is based on a compelling clinical benefit demonstrated in the pivotal Phase 3 EMEA study of aumolertinib versus gefitinib in the first-line treatment of metastatic EGFR-mutated, non-small cell lung cancer conducted by our partner Hansoh. Our filing in the UK is currently under review. And we anticipate acceptance of our filing in the European Union by early 2023.
As Melanie noted, it’s become apparent that initial approval in the U.S. could be predicated on the final results of our ongoing Phase 3b EQ143-301 study, which is evaluating the combination of chemotherapy and aumolertinib compared to osimertinib and aumolertinib reference arms. We believe that the results of this study could support both combination and monotherapy indications in the U.S. However, we no longer believe that an interim comparison of the monotherapy arms will address applicability concerns and thus support a monotherapy filing in the U.S. based on the Phase 3 MES data. It is important to note that the treatment of patients with advanced EGFR-mutated non-small cell lung cancer is likely evolving towards combination therapy. The combination of chemotherapy with aumolertinib, which is being evaluated in the Phase 3b study I just mentioned, represents part of that possible evolution.
However, with the elucidation of mechanisms of resistance to third generation EGFR inhibitors, and the development of targeted agents addressing the main drivers of resistance, including EGFR met by specific antibodies, and fourth generation small molecule inhibitors targeting EGFR C797s, novel combinations with third generation EGFR inhibitors may also have a significant place in the treatment landscape for this disease going forward. In this light, we believe that aumolertinib with the safety and tolerability profile differentiated from all other EGFR inhibitors, based on the lack of wild-type EGFR inhibitory activity of both the parent drug and major metabolites has thus in-combination potential.
Additionally, as CNS activity and protective effect is likely to be of paramount importance in combination, the definitive CNS protective effect demonstrated in the pivotal Phase 3 MES trial potentially lends well to the effectiveness of aumolertinib-based combinations. We plan to fully explore a combination development strategy with aumolertinib as the armamentarium for EGFR mutated non-small cell lung cancer evolves.
Regarding Lerociclib, we are encouraged by continuing clinical trials experienced with the CDK4/6 inhibitor. We believe that Lerociclib is likely to be differentiated from other currently approved CDK4/6 inhibitors on the basis of tolerability and the ability to dose continuously without planned treatment interruptions or unplanned dose reductions due to toxicity. In the previously presented results from the dose ranging Phase 1/2 trial sponsored by G1 Therapeutics, in which 150 milligram BID dose was tolerated without the need for planned dose interruption due to neutropenia, thus differentiating from palbociclib and ribociclib and the relative absence of dose limiting GI toxicity, which accounts for the frequent dose reductions required with abemaciclib. The early experience with Lerociclib in the ongoing EQRx-sponsored multiregional Phase 2 trial in either first or second line ER-positive metastatic breast cancer appears to confirm the ability to dose continuously without the need for dose interruption or reduction.
Going forward, we plan to further the development of Lerociclib in the treatment of advanced ER-positive breast cancer, mindful that the management of this disease in the future is likely to evolve with the emergence of a number of novel hormonal agents in development. Additionally, we plan on developing Lerociclib with other estrogen – in other estrogen dependent disease settings, such as the Phase 3 study of Lerociclib plus anti-estrogen therapy in metastatic endometrial cancer, which we anticipate will begin in 2023. In addition, our preclinical pipeline and drug discovery focus continues to be on medicines that are potentially complementary to an evolving combination treatment landscape in these diseases with programs focused on ER PROTAC, selective PARP1 inhibitor and EGFR met by specific antibodies.
I will now turn the call over to Jami for financial update. Jami?
Jami Rubin
Thank you, Eric. Moving to Slide 8, a summary of our third quarter 2022 financial results can be found in the press release that we issued this morning. More details will be included in our 10Q filing. We ended the third quarter of 2022 with $1.5 billion in cash, cash equivalents, and short-term investments. Total operating expenses were $90 million versus $40 million for the same period last year.
For the first nine months of the year, our total operating expenses were $255 million up from $101.5 million a year ago. R&D accounted for 62% of our operating expenses this quarter, as we continue to advance our portfolio and ramp up clinical trials across all stages of development.
Of note, our cash burn was $181 million for the first nine months of this year. Based on our current trend, including the clinical activities to support our pipeline, and our decision not to pursue the large head-to-head sugemalimab of trial in the U.S. this quarter, we expect our total cash burn to be well under $300 million for the year, which will bring our expected total yearend cash balance to more than $1.4 billion.
As we look to 2023, our shift in U.S. strategy for our two lead assets necessitates the adjustment to our annual expenses to a level that is more appropriate for our pipeline and new U.S. timelines. We expect to hold our annual cash burn to be flat over the next several years, a significant reduction from our previous plans, with the caveat that additional assets brought in through in licensing or product acquisition efforts would potentially change our forecasts. This will allow us to extend our cash runway into 2028 compared to our previous guidance of 2025.
Specifically, the key drivers are principally that we will no longer pursue sugemalimab plus chemo for Stage 4 non-small cell lung cancer in the U.S., including the large head-to-head study we had planned, which will lead to cost avoidance of approximately $200 million. In addition, we will postpone plans for commercial activities in the U.S. for the next several years. We are also focusing our early stage R&D investments on the most promising drug candidates that we believe will provide a differentiated profile. Importantly, we expect that our extended cash runway will allow us to get through key clinical and regulatory milestones in the U.S.
I will now turn the call back over to Melanie.
Melanie Nallicheri
Thank you, Jami. We will conclude on Slide 9. In a short period of time, we have been able to assemble an excellent portfolio of innovative therapies in development for some of the most prevalent cancer and immune inflammatory indications. These assets were in licensed because of their compelling clinical profiles validated clinical data and ability to kick-start our Global Buyers’ Club. Of course, it would have been preferable if sugemalimab and aumolertinib could have activated the Buyers’ Club in the U.S. along the same timing as what we’re expecting for our launches in the UK and Europe. However, with aumolertinib and Lerociclib, we have two drug candidates that have strong efficacy data and due to their specific design and associated favorable tolerability can separate themselves from other options in their respective classes as backbone therapies with best in combination potential.
Our development and commercial approach outlined today represents a compelling investment opportunity and the best path to bringing these drugs to patients. That, along with our intriguing early stage pipeline, one of the largest untapped cash positions among early to mid-stage biotech companies, and a team of talented drug developers, industry leaders and investors, puts us in a strong position as we adapt our go-forward strategy in the U.S. We have just given you a high level vision for what our company will look like in the future, but there is a lot more to come.
Question-and-Answer Session
Operator
[Operator Instructions] Our first question comes from the line of Steve Scala with Cowen. Your line is now open.
Steve Scala
Thank you. I have a very basic question. But since EQRx has always embraced a volume-focused strategy, I guess I am not clear on why you are abandoning the overall strategy in the U.S. at this point. I appreciate there have been setbacks, but some had to have been expected. And given that the company sought to have 10, 20, 50 drugs, why does a setback in one or two lead to abandoning the strategy entirely? I am completely sympathetic to the fact that the first two drugs were those that had the setbacks. But that doesn’t really, in my opinion, justify abandoning the entire strategy. The limited degree to which the pipeline has been built over the past 12 months, I think is the biggest disappointment, not the inevitable product setbacks. So, any thoughts on that basic question would be helpful.
Melanie Nallicheri
Yes. Good morning, Steve. This is Melanie. I will take both of your questions. First of all, I want to be really clear that we are not abandoning the strategy in its entirety and so just to be really clear, because of the feedback that we have just received and the extended timelines. We are using a market-based pricing approach for aumolertinib and Lerociclib in the U.S. only. We have not made any determination around our pricing strategy for other assets in the U.S. and I want to be clear, outside of the United States, our conversations the payers and health systems continue to progress really well and therefore we maintain that the ability to get significantly greater volume and greater share in exchange for lower prices is still what we are pursuing. And so, I want to just make sure, Steve, we are still of the opinion that we can achieve an important goal, which is to get our medicines to as many patients as possible, but we also have to be realistic, Steve, that we now have a revenue gap for a number of years where we had counted on that revenue to come in. Now, with regards to the portfolio, I want to be providing a little bit of additional detail. We have, as you know, in-licensed the first set of clinical assets because of the strong clinical data we saw a couple of years ago when we brought them in because of their potential to activate the Global Buyer’s Club. As you know, the notion of then really ramping up the pipeline is based on our efforts in what we call our Rx creation portfolio. Those are new molecules that we are designing from scratch against targets that we have selected because we believe that they can be best in class and quite frankly, very much on an earlier timeline than some of the in-licensed assets that we have just talked about. And that portfolio of earlier stage assets, as you know, is very significant. We have seven different partners and with every partner, we have at least one molecule, of course, that we are pursuing. So, you can imagine that this becomes quite large very quickly. The first filings from that portfolio are expected by 2024.
Steve Scala
Thank you.
Operator
Thank you. Our next question comes from the line of Akash Tewari with Jefferies. Your line is now open.
Unidentified Analyst
Hi. This is Amy on for Akash. Thanks so much for taking our questions. Just a couple on, I guess starting off, can you clarify what you mean market-based pricing strategy? And then another one, can you kind of reiterate your confidence in FQS [ph] filings and how discussions are going given that we have seen some instances like with Hutchmed.eu, decisions are seemingly following suit with U.S. when it comes to generalizability and applicability? And then another one on cash burn, what are the major changes leading to the extension of cash runway from 2025 to 2028? And then can you go over your updated average cost per program now? Thanks so much.
Melanie Nallicheri
Thank you, Amy, so much for the questions this morning. This is Melanie. I am going to start off with your first question on what do we mean by market-based pricing? First of all, let me just put one really important piece up there which is what we are now talking about especially when you think about a timing for aumolertinib in the U.S. That’s several years from now and I just want to make sure that we all remind ourselves that we could know entirely what pricing in that category of EGFR inhibitors is going to look like 3 years, 4 years, 5 years from now especially given the IRA and potential changes there. Having said that, the way I think of market pricing is, and in fact, I will go back to something Steve asked just earlier, we continued to maintain that ultimately what we want is to get our medicines to as many patients as possible. And so, market-based pricing for us means that we are going to be competitive in the class and going to make sure that we are going to take major share. That’s ultimately the goal. And so, we are going to make sure that our pricing is set up in such a way to achieve that. What it doesn’t mean is 60% or 70% reduction. Just to be really clear, it doesn’t mean that. With regards to ex-U.S. filings, we continue to make really good progress there and I will hand it over to Eric in a moment and we are encouraged by the conversations that we have been having with regulators outside of U.S. Eric, do you want to provide some more detail?
Eric Hedrick
Sure. Yes. This is Eric. Hi. I would put it this way, we are filing in multiple territories for two drugs on the basis of Phase 3 data that’s definitively shown efficacy and safety of these drugs. And so, the proceedings thus far with regulators outside of the U.S. have been very typical. Typically, when you have drugs that are safe and effective and that’s been established in well run randomized Phase 3 trials, you file that data and you discuss the conditions with the regulators. So, the proceedings outside the U.S., in my view, have gone in a very typical fashion, right, and that’s in contrast to the U.S. But I would say that there is nothing unusual given the drugs we have and the data we have that’s occurred in our regulatory proceedings outside the U.S.
Melanie Nallicheri
Amy, so just to quickly jump back, remember in the UK, MHRA has given us innovation passport designation which comes with a faster review for both aumolertinib and sugemalimab. And what we wanted to provide you with today is A, when we are expecting the first acceptance of the platform with sugemalimab with MHRA by the end of this year and then we wanted to make sure that you were aware of the fact that EMA filings aren’t anticipated in 2023.
Jami Rubin
And Amy, thank you for your question on our extended cash runway. I am happy to answer that. First point I want to make is that there aren’t that many companies with a cash runway that lasts out to 2028 and we are doing everything we can to make it last, but also balancing the needs to invest in our most important programs. So, how do we get there, we have ample opportunity to adjust our spend with some of the key following factors being number one, our decision to prioritize aumo and lero. Number two, our decision to discontinue suge plus chemo in frontline lung. I had mentioned in my script that that will remove 200 million in what would have been potential cost. We also don’t need to scale the pipeline to fit the needs of the Global Buyer’s Club and nor do we need to fund pre-commercial activities in the U.S. We will provide more specific guidance around our spend early next year. We are still refining our budget and need Board approval.
Unidentified Analyst
Great. Thank you so much.
Operator
Thank you. Our next question comes from the line of Chris Schott with JPMorgan. Your line is now open.
Chris Schott
Great. Thank you so much for the questions. I just was trying to follow-up on the shift to market-based pricing. So, as we look out to, I guess 2027, what does EQRx going to have to build from a sales and marketing standpoint versus what was originally envisioned through the Global Buyer’s Club as we think about this kind of pivot in model? And then just following up an earlier question that Steve had posed, I appreciate that the model has changed here, but I guess why would a market-based pricing strategy make sense for these lead assets, but I guess the lower price model that you had originally envisioned might make sense for future assets? I am just trying to kind of understand like why we do have this kind of hybrid model potentially in the U.S. as you think about development versus just moving to a completely market-based model going forward? Thanks so much.
Melanie Nallicheri
Yes. Chris, good morning. This is Melanie. Let me start out and then Jami can add to my remarks. So, the development path that we have just outlined for both aumolertinib and Lerociclib is really to focus on these in a much more comprehensive way than what we have previously described. As you recall, what we were trying to do is we were trying to get aumolertinib as monotherapy in the U.S. to patients as quickly as possible, and as you rightly mentioned via the pull-through model and our agreement with the U.S. payers and health systems that we have agreements with. And by the way, just a short pause here, as a reminder, we currently have a set of partnerships that cover over 210 million lives and are still making great progress on adding to the number of lives. And as you recall, we had a pretty high goal for the end of this year. And so, that was the original goal, to get aumolertinib as monotherapy in the first line to patients as quickly as possible. What we have just outlined essentially is a program where we want to do that and move very quickly to where the standard of care evolves, and what Eric laid out very nicely is that we believe that that doesn’t just include the combination with chemotherapy, it will include the combination with other first generation EGFR inhibitors, potentially a MET inhibitor, MET bispecifics could be in there. So, we are seeing this as a more comprehensive go-to where the standard of care goes. Lerociclib is very similar situation and part of the reason we wanted to outline not just the fact that we have data in hand that makes us feel really strongly about this program, but also talk about endometrial cancer for instance. That is an area where we still have a really high unmet need. Again, it’s a different way of thinking about the development of best-in-class, best-in-combination, and that’s the reason, Chris, why we are saying we are going to adjust to a market-based pricing. We do not believe that that means lower volumes just to be really clear.
Jami Rubin
And just let me add to that, Chris. Again, the way I would think about it, market-based pricing essentially means pricing in line with market leaders and just so that you understand this applies to lero and aumo. And in terms of how we are thinking about selling these assets, just like any conventional biotech model, we are going to build a sales force when the time comes. We are going to be efficient about it, small, focused oncology sales force to generate share avoid, but essentially what that means is pricing in line with market leaders, with a conventional sales force at the time that will be focused.
Chris Schott
Great. Thanks for that clarification. And can I just ask one quick follow-up? Your partners in the U.S., I don’t know if you had a chance to articulate this initial model and obviously there has been some change in the regulatory pathway, but how are you expecting your partners to react at least on these initial assets to the strategy?
Melanie Nallicheri
Yes. Chris, I will take this. This is Melanie. First of all, I do want to remind us of a couple of important things here. Our partnerships, of course, are centered around the commercial arrangement, but there is so much more. I will just give you a few examples. One of our largest partners we have laid out an entire development program where they help us identify patients and we anticipate that that will very favorably impact our enrollment speed in one of our largest studies that we have planned to initiate. And so, that’s an example where it just goes beyond just the commercial arrangement. As you know, we also have partnerships where we have direct access to EHR data and we are using that real-world data both to identify patients for our clinical trial, but also to ensure that we fine-tune what our clinical development strategy is. Again, this is our partners being invested in how we can advance a model like EQRx. I want to be clear this is not where we wanted to be. We wanted to bring our partners our first two drugs in the ‘23, ‘24 timeframe along with our partners outside of the U.S. But we have to face the reality we need approved drugs to do that and right now, the guidance that we have received. As I said earlier that we do not believe is in the best interest of patients because these drugs, aumolertinib and sugemalimab have strong Phase 3 efficacy and safety data that absolutely supports their use, but ultimately we do need an approval from the FDA to use them in the U.S.
Operator
Thank you. Our next question comes from the line of Chris Shibutani with Goldman Sachs. Your line is now open.
Unidentified Analyst
Good morning. This is Stephen [ph] on for Chris. Thanks for taking our questions. I have two if I may. So, first on suge, what’s your kind of thinking on stage three disease, are you still planning to file for this indication in the U.S., and what is exactly the timeline? And second, given all of the updates on the pipeline this morning, so can you help us think through the key assumptions in the model, like some key items in the [indiscernible] help us understand the variation? Thanks.
Eric Hedrick
Yes. Thanks. Yes, this is Eric. Thanks for the question. You asked about stage three disease for sugemalimab I believe. And so, the situation is that we are anticipating a survival analysis of that C-stem-sponsored Phase 3 trial in 2023. Be mindful that that trial design differs a bit from other drugs in this category and then includes a population of patients treated with chemo radiotherapy in a sequential model, right. We believe that that’s an area of unmet need. And so that trial has some unique design and population features to it in contrast to other checkpoint inhibitors that are currently approved in that indication. And so, the bottom line is we will await the survival results, when those results come in we will evaluate that data with respect to our filing possibilities in the U.S. and in other territories.
Jami Rubin
If I heard your question correctly, I will just try to answer that, I think the question was just given all the puts and takes in the news this morning, how would you think about the model and valuation. And if I were in your stage here is how I would think about it. If you take a step back and you look at our average share price for the last six months or so, it’s been roughly $5 a share. $3 of that represents cash, $2 represent enterprise value of aumo and suge. Using that as a framework, I would think about it in the following way. Number one, take out U.S. sugemalimab. Number two, I would push out U.S. aumo by 2 years to 3 years. Number three, I would add Lerociclib which we view as one of our core leading assets and are excited about it and see it as equally valuably as aumo. Number four and perhaps most importantly to your model, we would take the 60% discount and assume market-based pricing for each drug. And lastly and also importantly, just given our cash runway update this morning, we would take – I would take your operating expenses down. We will let the market decide what that’s worth, but that’s sort of a framework in terms of how I would think about it.
Unidentified Analyst
Thanks.
Operator
Thank you. This concludes the question-and-answer session. I would now like to hand the conference back over to Melanie Nallicheri for closing remarks.
Melanie Nallicheri
Thank you, operator. To summarize, with the FDA clarity on aumolertinib and sugemalimab now in hand, we are confident in our adaptive strategy and promising portfolio of late and early-stage assets led by aumolertinib and Lerociclib, both of which have the potential to be best in combination and backbone therapies. With the support of our strong balance sheet, we believe this path forward will create value for all stakeholders over time. I just want to thank our partners and health systems that have come forward and are poised and ready to act to ensure that more innovative therapies can get to patients all over the world.
Thank you for listening and have a great weekend.
Operator
This concludes today’s conference call. Thank you for participating. You may now disconnect.
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