Arvinas, Inc. (ARVN) Q2 2026 Earnings Report, Transcript and Summary

Hello, and welcome to Arvinas Second Quarter 2026 Earnings Conference Call. [Operator Instructions] I would now like to hand the conference over to Jeff Boyle. Sir, you may begin.

Good morning, everyone, and thank you for joining us. Earlier today, we issued a press release with our second quarter 2026 financial results, which is available in the Investor and Media section of our website at arvinas.com. Joining us on the call today, we have Randy Teel, our President and Chief Executive Officer; Angela Cacace, our Chief Scientific Officer; and Andrew Saik our Chief Financial Officer. Before we begin, I'll remind you that today's discussions contain forward-looking statements that involve risks, uncertainties and assumptions. These risks and uncertainties are outlined in today's press release and in the company's recent filings with the Securities and Exchange Commission, which I urge you to read. Our actual results may differ materially from what is discussed on today's call. A replay of this call as well as today's press release and an updated corporate deck will be available on the Investor and Media section of our website. Now I'll turn the call over to Randy Teel. Randy?

Thanks, Jeff, and good morning, everyone. As a company, we've made significant progress over the past several months. Our focus has been on positioning Arvinas for our next phase of growth, guided by a clear strategic vision. Central to that vision is a relentless focus on advancing transformational improvements for patients. Through continued innovation and disciplined execution, we are focused on unlocking the full potential of our pipeline for patients and shareholders. We've reached 3 significant strategic milestones since the start of the year, beginning with the first-ever FDA approval of a PROTAC degrader, VEPPANU. Second, we completed an out-licensing of VEPPANU to Rigel Pharmaceuticals, who anticipate making VEPPANU available to patients in the very near future. And third, we made the strategic decision that our KRAS G12D program, ARV-806, will only move forward in the hands of a partner. While we believe 806 has the potential to become a meaningful treatment option for patients, it will require investment that is inconsistent with our current capital allocation strategy. Taken together, our progress and decisions in the first half of 2026 have positioned Arvinas to fully capitalize on the promise of our platform in oncology and neurology. We fully shifted our focus to our Phase I clinical programs, and we are confident about the opportunity ahead to create important therapies for patients. With that, I'll spend a few moments diving into our 3 assets with significant clinical data catalysts in the next 12 months. I'll review their differentiated profiles and compelling value propositions. I'll start with ARV-393, our BCL6 degrader. I'll explain why BCL6 is an attractive target, share where we are in the progress of the trial and let you know what to expect in our data release later in 2026. BCL6 is an exciting therapeutic target with initial clinical validation. BCL6 is a previously undrugged transcription factor and a master regulator of multiple cellular processes during B-cell development, including proliferation, survival and apoptosis. Altered BCL6 activity has been implicated as an oncogenic driver in several subtypes of non-Hodgkin lymphoma. We believe that ARV-393 has the potential to become a foundational treatment option and pave the way as the first all-oral chemotherapy-free approach for patients with B or T-cell lymphomas. When we initiated our BCL6 program, no company had successfully demonstrated BCL6 degradation or advanced a degrader to the clinic. Based on feedback from the FDA, our trial began with doses well below our predicted efficacious exposure levels, leading to challenges with enrollment and extended enrollment time lines. However, we've seen a clear acceleration in the enrollment of the trial as we've dosed closer to the expected efficacious range. At the same time, enrollment in the glofi combo portion of the trial has been strong since it began in the past few months. And as we reported late last year, even at the doses we would not have expected to be efficacious, we've seen early responses in difficult-to-treat T-cell lymphomas like AITL as well as in patients with B-cell lymphomas. When it comes to upcoming data for ARV-393, we are on track to share initial Phase I data by the end of the year. Our safety profile has supported continued dose escalation, though the majority of the data in 2026 will be from the early cohorts dosed below the expected efficacious range. These early cohorts when compared with the overall lymphoma population include a higher-than-predicted proportion of patients with T-cell lymphomas, likely reflecting the limited treatment options for these patients. But as I mentioned, as we've approached the predicted efficacious range, enrollment of patients, including those with B-cell lymphomas has increased. In 2027, we will plan a subsequent disclosure that will include more mature monotherapy data, including patients with DLBCL treated with ARV-393, both as monotherapy and in combination with glofi. We are optimistic about the potential of this program to benefit patients who have historically experienced poor clinical outcomes, especially given the positive feedback we've received from investigators over the past few months. I'll turn now to ARV-027, our degrader targeting polyglutamine repeat androgen receptor or polyQ-AR. What's immediately interesting about this program is that the polyQ-AR protein is well understood to be the driver of pathology for patients with spinal and bulbar muscular atrophy or SBMA, also known as Kennedy's disease. SBMA is a rare neuromuscular disorder with between 10,000 and 13,000 diagnosed patients in major markets. Genomic studies suggest that SBMA remains substantially underdiagnosed and ARV-027 has the potential to become the first therapy to target the primary driver of disease. SBMA is an X-linked disease caused by the toxic buildup of the polyQ-AR protein in skeletal muscle. This accumulation disrupts normal muscle function, drives muscular atrophy and over time, leaves patients with long-term physical disabilities and often unable to accomplish daily activities. As an oral therapy, ARV-027 could be uniquely suited as a convenient treatment option to degrade the protein known to cause the disease. In February, we presented preclinical data supporting the potential of ARV-027 in SBMA. Guided by published preclinical evidence, we had established a target of achieving greater than 50% polyQ-AR degradation in skeletal muscle, a level we believed would provide functional benefit. In an aggressive mouse model of SBMA, 027 showed meaningful improvements in grip strength, endurance and survival. Importantly, while we don't believe complete elimination of PolyQ is required to achieve therapeutic benefit, our preclinical studies did demonstrate that 027 could achieve AR degradation far exceeding the levels required for functional improvement. Today, I'm pleased to announce that in our ongoing Phase I trial in healthy volunteers, we completed the single ascending dose cohorts and have now initiated the multiple dose portion of the trial. 027 is our first degrader aimed at a target in muscle. With that in mind, our Phase I trial must demonstrate 2 measures that we've never demonstrated before in human muscle tissue. The first step is achieving adequate exposure and the second is to demonstrate AR degradation in muscle. Taken together, these healthy volunteer data would provide proof of mechanism for ARV-027 and meaningfully derisk the program. In the first half of next year, we intend to show data for both of these measures as well as initial safety data from the trial. Following the dosing in healthy volunteers, our plan is next to dose patients with SBMA. The Phase I trial design already includes a multiple dose cohort in patients with SBMA. We believe this design will accelerate our development plan with the potential to move to a registrational study following the conclusion of the Phase I trial. Finally, I'll move to ARV-102, our third program with upcoming clinical data and discuss plans for upcoming disclosures and provide a brief update on our regulatory interactions as we plan the next trials for our LR2 (sic) [ LRRK2 ]degrader. As a reminder, there are no approved disease-modifying treatment options available for patients with either PSP or PD, and we believe 102 has the potential to become a paradigm-shifting treatment for these patients. This is supported by biomarker data that we presented in March at AD/PD. These data were the first to show modulation of key biomarkers implicated in both PSP and PD, an outcome that has not been demonstrated by LRRK2 inhibitors. This reinforces the potential for 102 to provide a unique approach in neurodegenerative diseases. We will share additional biomarker data from the Phase I trial, including ocular motor measures and CSF proteomics at the MDS conference in October. When it comes to our regulatory interactions for 102, as you'll recall, we are currently working to initiate clinical trials for 102 in patients with PSP, both in the U.S. and globally. After successfully completing our Phase I trial in the Netherlands earlier this year, we submitted an IND to the FDA to support the initiation of the Phase Ib trial in the first half of the year. As previously communicated, prior to authorizing initiation of the trial, the FDA requested additional information as well as final data from our chronic tox studies, which we've now completed. During the quarter, we've also had productive engagement with both European and Japanese health authorities. Interactions with the agencies are ongoing, and we look forward to updating you on our timing for initiating our next clinical trials, which we now expect to begin in 2027. Stepping back, our accomplishments and decisive actions during the first half of 2026 demonstrate our ability to embrace change, capitalize on new opportunities and execute efficiently. I'm proud of the entire team at Arvinas and how we've assertively concentrated our resources on the most promising opportunities for Arvinas. With disciplined capital allocation, we are prioritizing programs that address high unmet need and have strong commercial potential. Our pipeline is designed to maximize both clinical impact and long-term shareholder value. With that, I'll turn the call over to Angela. Angela?

Thank you, Randy. The Arvinas approach to breakthrough medicines begins with choosing the right biology. The most important decision is selecting targets where targeted protein degradation can fundamentally change the course of disease. We started with 2 highly validated targets, androgen and estrogen receptor to establish the clinical power of our degrader platform. Today, we're applying those same principles to build the next generation of differentiated disease-modifying medicines across oncology and neurology. Randy highlighted the progress of our clinical portfolio I'd like to spend a few minutes on 2 oncology research programs that illustrate where we believe protein degradation can deliver unique advantages. I'll begin with ARV-6723, our oral HPK1 degrader and our first immuno-oncology PROTAC. HPK1 acts as a natural break on the immune system. It limits T cell activation and suppresses antitumor immunity. What's particularly challenging is that HPK1 biology extends beyond its kinase activity. HPK1 also functions as a signaling scaffold. As a result, inhibitors of the kinase activity leave part of the biology intact. Instead, degradation eliminates both kinase and scaffolding functions. We believe that's why ARV-6723 has produced a differentiated preclinical profile compared with inhibitors. Across multiple tumor models, including tumors with both high and low immunogenicity, ARV-6723 produced robust antitumor activity. In these studies, degradation consistently outperformed both an HPK1 inhibitor and anti-PD-1 therapy alone. Perhaps most exciting is what we've observed in checkpoint-resistant tumors. In 7 preclinical models, ARV-6723 demonstrated meaningful single-agent activity where neither an HPK1 inhibitor nor anti-PD-1 therapy showed benefit. We also demonstrated preclinically that the biology extends well beyond T cell activation. HPK1 degradation may remodel the tumor microenvironment through enhanced interferon signaling and activation of the myeloid compartment. We believe this broader immune remodeling may be due to elimination of the scaffolding activity that contributes to the differentiated profile we've observed. And if it translates clinically, could support broader combination opportunities and activity in tumors that have historically responded poorly to immunotherapy. We're excited to begin translating these findings into the clinic. We remain on track to initiate enrollment in our Phase I study in the coming weeks. We look forward to sharing updates as the program advances. Finally, I'd like to highlight our first-in-class oral pan-KRAS degrader program. We recently presented preclinical data demonstrating the potential to overcome key limitations of current pan-RAS inhibitors. Our lead oral degrader showed potent activity across a broad spectrum of KRAS mutations. Importantly, our lead oral pan-KRAS degrader targets KRAS mutations found in more than 90% of patients with KRAS-altered cancers, including difficult-to-treat mutations such as G12R and Q61. It also demonstrated activity against KRAS amplification, a major mechanism of resistance. We also demonstrated superior antitumor activity in combination with immune checkpoint blockade, highlighting the potential to favorably remodel the tumor microenvironment in a way that inhibitors do not. Together, these findings support the potential for broad activity across KRAS-driven cancers, a differentiated therapeutic index and extensive combination opportunities. We will present these exciting combination data at an upcoming scientific conference. The team continues to make outstanding progress, and we look forward to sharing additional updates in the coming months. With that, I'll turn the call over to Andrew to review our quarterly financial results. Andrew?

Thanks, Angela, and good morning, everyone. I'm pleased to provide financial highlights for the second quarter 2026. As a reminder, detailed financial results for the second quarter are included in the press release we issued this morning. Reiterating the team's sentiment, we have much to look forward to later this year and are pleased with our strong financial position that will allow us to continue to advance our pipeline into the second half of 2028. At the end of the second quarter, we had $567.9 million in cash, cash equivalents and marketable securities on the balance sheet compared with $685.4 million at the end of 2025. With our healthy balance sheet and focus on our early pipeline, we are well positioned to continue developing our promising oncology and neurology programs. Q2 is a very busy period for us as during the quarter, we received FDA approval of the first ever PROTAC degrader VEPPANU and regulatory approval for the Rigel license agreement. These events had a significant impact to our financial statements, which I will summarize now. First, as a result of the license agreement with Rigel, we recorded license revenue of $62.5 million, of which $35 million was received within the quarter. We have also concluded that the method by which we were recognizing revenue under the original Pfizer agreement is no longer applicable under ASC 606 as a result of the Rigel agreement. We, therefore, moved all deferred revenue to the P&L, which resulted in a net revenue of $126.4 million, and we recorded a liability of $52.7 million to cover our remaining obligation to complete ongoing development activities. Additionally, we recorded a $50 million milestone from Pfizer triggered by the VEPPANU approval. Separately, we recorded $3.5 million in revenue under a Pfizer research collaboration agreement where the research term has been completed. Total revenue for the quarter was $249.7 million. Turning to expenses. During the quarter, we introduced a new cost of license revenue line, which represents royalties and other amounts payable to third parties that are directly attributable to revenue under our licensing agreements. Cost of license revenue was $9 million in the second quarter. The $9 million is comprised of payments to Yale under the amended Yale agreement and were triggered by the FDA's approval of VEPPANU and the entry into the Rigel license agreement. General and administrative expenses were $24 million for the second quarter compared to $25.3 million for the same period of 2025. The decrease of $1.3 million was primarily due to decreases in personnel and infrastructure-related costs of $3.9 million and costs related to developing our commercial operations of $1.4 million, partially offset by an increase in professional fees of $4.2 million, primarily due to the Rigel license agreement. Research and development expenses were $52.6 million in the second quarter compared to $68.6 million for the same period of 2025. The decrease of $16 million was primarily driven by a decrease in compensation and related personnel expenses of $11 million, which are not allocated by program and a decrease in program-specific expenses of $0.6 million and non-program-specific expenses of $2.6 million. Our cost reduction programs initiated last year were completed during the second quarter. Non-GAAP R&D was down $8.1 million compared to the same period last year, representing a reduction of 14%. Non-GAAP G&A increased by $0.3 million or 2% compared to the prior year. During the quarter, we recognized all remaining deferred revenue from the Pfizer collaboration agreement. So going forward, there will be no revenue recognition related to the original Pfizer collaboration. Additionally, we booked a liability of $52.7 million to cover estimated remaining liabilities related to the VEPPANU runout costs. So our future obligations under the collaboration agreement will be booked against the accrual and will not impact our P&L. We continue to maintain our cash runway guidance into the second half of 2028. And in doing so, we will be able to fund operations through key data milestones over the coming months and continue to support our highly differentiated pipeline programs that have the potential to meaningfully improve patients' lives. With that, I'll turn the call over to Randy for closing remarks.

Randy? Thanks, Andrew. We've entered the second half of 2026 with multiple opportunities to advance our mission of developing pioneering transformational therapies for patients. We have important catalysts in the coming months and a healthy balance sheet to reach critical milestones. I'll simply close by thanking the patients, investigators and the entire Arvinas team for their continued support and commitment to helping us achieve our mission.

Thanks, Randy. Operator, can you please open the queue?

[Operator Instructions] Our first question comes from the line of Nick Lorusso with TD Cowen.

So on 393, can you discuss a little bit more what you're thinking about the development path, especially considering the data coming mid next year with the glofi combo. Could this catalyze like a potentially pivotal trial in an earlier line setting with bispecifics? Any insight there would be great. Yes.

The short answer is yes. The long answer is the NHL space has a lot of opportunities to pursue, right? And so as we've talked about over the years, we think that while there's a lot of therapies across the lines of therapy, across the different diseases now, there's plenty of chemo. There's plenty of CAR-T, there's plenty of bispecifics. What there's not a lot of is orally bioavailable, tolerable small molecules. And so we think that a BCL6 degrader could slot into multiple areas within the disease landscape. So at this point, as we're in the Phase I dose escalation, a bit early to talk about exactly where we plan to go, but definitely can talk about the options, right? So I think as early options, looking at later line monotherapy makes sense, think about fourth-line LBCL, maybe third-line LBCL, think about later line AITL T cell disease that we've been enrolling patients with already in our Phase I trial. As we move forward with combinations, that could open up further access to the third-line LBCL space, second-line LBCL and perhaps moving ahead in T cell disease as well. So there's a lot of different places that we could go. And I think that the common thread is that to get to any of them, we've got to get through the monotherapy dose escalation, show some efficacy, show some signals there. We've got to show we're combinable with other therapies, most immediately a bispecific like glofi. And once we've done that, I think it becomes a lot easier to talk about where we'll go next, especially as the landscape continues to evolve around us.

Our next question comes from the line of Derek Archila with Wells Fargo.

This is Jacob on for Derek. I was just wondering if you could comment on the path forward for ARV-102 in PSP. And what does the time line and registration path look like for it in light of some of your more recent regulatory interactions?

Yes. So just to rehash a little bit where we are, right? So we began the year with a couple of Phase I trials, one in healthy volunteers, one in patients with PD. And what we plan to do over the course of the year was to start 2 other trials, a Phase Ib in the U.S. and a registrational-oriented study globally. So what we announced a couple of months ago is that after submitting the IND to the FDA, they asked us to wait before starting that study. So that's technically a clinical hold before starting the studies in the U.S. And then this morning, we announced that with a number of ongoing regulatory interactions that we're currently pursuing and going back and forth on, we think it will take into 2027 to start those studies. So overall, the registrational path in PSP we would think about the 2-part study there, the Phase Ib and a registrational study, that continues to be where we aim. A registrational path for PSP where we haven't even dosed patients yet would more likely be a longer period study. The studies we've done so far are only 28 days. So dosing more like 6 months or a year in patients with PSP would be what we'd be aiming to start with a registrational study. Definitely worth saying that as we go back and forth with the different regulatory authorities, which actually is quite beneficial to be getting feedback from the 3 major agencies all right now, we'll be taking that to finalize the path that we will then set out on, as we've said in 2027.

Our next question comes from the line of Li Watsek with Cantor Fitzgerald.

Maybe a follow-up on ARV-393. What will be a good outcome from the Phase I monotherapy cohorts that you're going to present later this year. It sounds like these are going to be at the subtherapeutic levels. And as we think about combination with glofi, would you be able to share where you are with the dose levels right now? Did you start at the subtherapeutic levels as well and early trends on combinability?

Yes. The short answer on that second one is yes. And just as a recap, we've talked about this in other venues. We were the first company to start working on BCL6, at least to bring it into the clinic to our knowledge. And based on that and some other factors, we got some feedback to start with a very low starting dose for BCL6 as monotherapy. And as we talked about with some operational questions that enrollment has been certainly slower than we would have liked. On the flip side, as we've gotten closer now to the predicted efficacious exposures, we've seen a clear uptick in. And in the combination study, which started a couple of months ago, that enrollment there has been quite strong ever since the start. So when it comes to the data that we will have at the end of the year, you were right to highlight we will be still very much in the -- below the efficacious range for most of the patients. In the doses that we're at now, we're starting to get to the exposure that we would expect the efficacious. So we'll start to see some of that. We also mentioned that we have been enrolling a greater proportion of patients with T-cell lymphomas than we would have anticipated based on the overall population. So we think it will make sense to focus on that population and the disclosure that's coming up. And then also, as we talked about heading into next year, focusing on LBCL patients as both monotherapy and combo. The data at the end of this year will certainly be focused on mono. We do not anticipate sharing combo data. We didn't start quite as low for the combo as we did for the mono, but it certainly is starting -- it certainly did start at levels that in monotherapy were not predicted to be efficacious in patients with B-cell lymphomas.

Our next question comes from the line of Edward Tinhoff with Piper Sandler.

Looking forward to more data this year, and congrats on all the progress. So I'll ask about SBMA and 227, really interesting mechanism here. Just to confirm the IND cleared there and what are we waiting for to -- I'm sorry, the -- where are you in multiple ascending dosing? And can you kind of characterize -- you mentioned exposure and degradation. What are the clinical endpoints that we would ultimately be modeling or expecting in SBMA?

Maybe I'll pass to Angela in a moment on some of the path forward questions. To reiterate where we are on that question, right? So we have been dosing healthy volunteers with 027. We've now completed the single ascending dose portion of the study and have just begun the multiple dose portion of the study. That will continue. We're expecting to share some data at the beginning or in the first half rather of next year. We do anticipate including some patients with SBMA in the latter stages of that Phase I study. And just to reiterate for everyone, this program, well, SBMA is certainly a rare disease. We're talking 10,000, 13,000 patients in major markets or so. The great thing about this target is that we are hitting the actual driver of disease. So polyglutamine AR is what drives disease. That's what we're degrading. We're not degrading an upstream transcription factor or some other factor, we're degrading the actual cause of disease. When it comes to the next phases, we've talked about being able to move into registrational intended studies even after Phase I. But Angela I invite you to speak a bit more about plans there and endpoints and so on.

Sure. As we move forward, the goal is to really demonstrate that we can target 50% reduction of the polyglutamine repeat androgen receptor. In our preclinical studies and in other preclinical studies, 50% reduction is the target that we aim to achieve in muscle. So that's our goal from a biomarker perspective, and we'll also look at some other endpoints as well. Those will be the early endpoints. We will not be able to demonstrate functional change until we go into those registrational studies that Randy mentioned. And there, we'll be looking at meaningful scales like the SBMA functional rating scale and those endpoints as well.

Our next question comes from the line of Jonathan Miller with Evercore ISI.

Congrats on the progress this quarter, guys. I'd like to follow up first on the polyQ-AR. There'll be a couple of patients you said next year. Am I right to assume that we shouldn't expect to see good translation of degradation rates from healthy volunteers to patients that have different levels of protein at baseline? And if that's the case, are there particular measures from healthy volunteers that you think will translate well to eventual degradation efficiency in patients and thereby efficacy and functional endpoints? And then similarly, on the other data sets where we'll get early data from, I'm thinking of HPK1 where you're going to dose in healthy volunteers to start. Are there particular endpoints that we should be paying attention to when we eventually see that data that you think will translate well?

All right. So on 027, the short answer on translating the degradation of 027 in polyglutamine AR, which the patients may have versus wild-type AR, which healthy volunteers will have, is that it's the same. We effectively degrade wild-type AR and polyQ-AR the same. So that will be really helpful to see, as I mentioned, that as we share the healthy volunteer data in the first half of next year, just to reiterate, there's a couple of pieces there that we have not done before, and we're looking forward to see if we can do. One is getting an orally available PROTAC in muscle. So that alone we haven't been looking for before. And second of all, getting degradation there. And we think that if we can see degradation of the wild-type AR in healthy volunteers, that will bode very well for our ability to degrade the disease-causing polyQ-AR in patients. So I think the translatability there will be quite good. I can move on to HPK1 question, but Angela, anything to add on the polyQ question?

Just to add, John, that we did look at iPSC-derived skeletal muscle from both healthy volunteers and SBMA patients and the pharmacology was exactly intact, which is exactly what Randy was saying we would translate. And so that's our goal, and that's our reason to believe.

And on the HPK1 program, 6723. So again, as we said this morning, that's going to start dosing patients here in the quite near future. The thinking there is that this is our first IO therapy. So the first couple of trials will look very similar to other oncology trials, right? These will be in patients, not healthy volunteers, just to clarify that. It's an escalation design. We'll be looking at monotherapy. The Phase I also includes combination setting as well. And we think it's really important there to show some initial signs of efficacy and, of course, safety, tolerability and combinability as well. The HPK1 program is interesting, right? So the first IO therapy, it's got quite a large opportunity. We've certainly got to show, as we're very aware, something that the HPK1 inhibitors have not shown, which is good response rates and so on in patients, but we are really confident that we'll be able to do that based on the preclinical data we have which really goes a long way to show, including some recent preclinical data this year that we can have differential effects in getting responses, get inhibition and affect the tumor microenvironment in ways that HPK1 inhibitors have been unable to do, PD-1 therapies have been unable to do. And so for that reason, we have some good confidence moving into Phase I, but look forward to sharing those data.

Our next question comes from the line of Yigal Nochomovitz with Citigroup.

I had 2, one on BCL6. I think you mentioned, Randy, that the enrollment was a bit slow at the subtherapeutic doses, but you also mentioned that you saw some effective responses at the lower doses. So I was just trying to square those 2 things. I guess I would have thought that if you saw responses below therapeutic doses that would catalyze the enrollment curve. And then secondly, on LRK (sic) [LRRK2 ], could you just comment on the -- obviously, since the last earnings, Biogen and Denali had the Phase IIb for their inhibitor, which, as you know, didn't work, but I'd just love to get your thoughts on that and why the degrader may be a more promising approach?

Yes. So on BCL6, what you said is correct, and you did point out a bit of a contradiction, which we're certainly aware of. So yes, we started pretty far below the predicted efficacious range. And the other feedback that we gotten was around the design and the escalation of it. So not only do we start low -- sorry, not only do we start low, we've also escalated pretty slowly. Seeing the responses that we have has certainly helped. But I think especially where we're doing the trial in the U.S., especially in LBCL patients, there are quite a number of other options that patients can take before they get on to a clinical trial. And I think there's quite some natural hesitance by physicians to put patients on a dose that they might not expect to be efficacious when there are other options out there. So I do recognize that it has certainly picked up as we've gotten closer. The responses have helped. And it's another reason that we're excited to get some of these data out by the end of the year and especially with respect to T cell patients where we think we'll be the first to share data for BCL6 degrader looking at that patient population. When it comes to the LRRK2 program in LUMA, I think that -- and Angela, try to chime in here as well. As we've gotten asked about that over the past couple of months, the questions have largely followed the same path, which is, look, LUMA Trial didn't work. We didn't expect it to work. Is there anything to learn? And I think that for us, what we've been really focused on since the beginning of this program really was the fact that we don't think that inhibiting the kinase function of LRRK2 is enough. We think there are other aspects of LRRK2. There's GTPase function, there's [ scaff ] function that we know drive activity, inflammation and the lysosomal capabilities by the cells. And we think that those are critical. So we didn't -- we weren't terribly surprised to see that a program that by their reporting gets something like 30% kinase inhibition, we weren't surprised to see it fail. It doesn't deter us in what we're doing. A LRRK2 degrader, we think can hit all 3 different factors and features of LRRK2. We think that matters. We think that degrading it will even clearly affect the kinase function even more. And it doesn't deter from where we're going, which as we've talked about is first in PSP, where there's really substantial unmet need in a very rapidly progressing neurodegenerative disorder versus PD anyway and then ultimately, PD as well.

Just briefly to add, Yigal, Biologically, we understand why the inhibitors aren't ineffective, right? We saw greater than 50-fold enhanced target engagement and phosphoRab pathway engagement in the brain. And then we'll be talking about some exciting synaptic markers at MDS that will, in our minds, really prove that the degrader is different in Parkinson's disease patients with looking at eye tracking as well as CSF synaptic markers that are unprecedented changes in markers that are prognostic of progression in Parkinson's disease.

Our next question comes from the line of Etzer Darout with Barclays.

Just a couple, one on pipeline and maybe one for Andrew. First, on the pipeline, you would expect to enroll tumor types in the HPK1 degrader program similar to what we've seen from the HPK1 inhibitors like gastric, lung, anything there would be helpful. And is PD-1 the most likely initial combination partner initially? And then for Andrew, maybe if you could help us out on how we should think about maybe the modeling of the cost of licensing moving forward? And anything there would be helpful as well.

All right. Yes. So on the -- maybe I'll answer the easiest ones first. PD-1, yes, that is the likely combination partner first. I haven't said specifically which one, but we will certainly get into that as the months go by. Tumor types, not far off either. Things like lung is the right place to be thinking about. That trial will enroll patients that have had prior immunotherapy. And think of it as a traditional sort of escalation trial that we'll get into data. I haven't talked about when, but as that gets going, it gets easier to talk about data coming. Andrew, questions on modeling?

Yes, sure. So yes, a lot of changes to the accounting at a high level, and I'm happy to take a follow-up if this doesn't clear up your question. At a high level, we've been deferring revenue from the original Pfizer collaboration agreement over the life of the collaboration. Due to the Rigel out-license, we deemed that our contributions to that collaboration are complete. And therefore, we took all of the residual collaboration revenue through the P&L. So going forward, you'll see no additional revenue recognition. We do have tail liabilities on the closeout costs of the VEPPANU development plan. We booked a liability on the balance sheet for that. When the Q comes out, you're going to see a current portion of that of $28.4 million, a long-term portion of $24.3 million for a total of $52.7 million. So additional payments that we make for that collaboration cost will go against that liability. So essentially, our P&L going forward is somewhat cleansed from the previous VEPPANU collaboration agreement. We will be booking milestones and royalties going forward, but those will be sort of traditional and that there'll be real royalties that we'll receive from Rigel on a go-forward basis. We then additionally, we added that cost of sales line. That was really just to segregate Yale payments from our normal G&A. So you'll see that cost of sales line. For the time being, that's going to be 100% payments to Yale. We have a small royalty that we paid to Yale on any royalties in, and they get a small portion also of milestones going forward. So you'll see those picked up on that collaboration -- cost of revenue line. Please let me know if that answered your question. I know that's a lot.

Our next question comes from the line of Paul Choi with Goldman Sachs.

My first question is on LRRK2, and you indicated you'll present additional biomarker data in October. Can you maybe frame for us what the sort of cadence over 2027 will be in terms of additional updates for that program and any additional clinical measures or potential advancements to the next stage? And then my second question on BCL6 is after you present the glofi combination data in mid-2027, as you think about clinical development, can you maybe outline for us how you're thinking about potential comparator arms versus the monotherapy trial and just how you think about that down the road?

All right. Yes. So on LRRK2, I'll reiterate what I said before on where we are with 102, which is really focused on the regulatory approach, right? So what we're focused on right now is incorporating feedback and developing that plan for how we move forward with the trials that we've talked about before while incorporating that feedback. So when it comes to the cadence of trials, really the cadence will be we'd like to start. That's the case. When it comes to providing a bit more clarity on where we're going, as we begin those trials, as we get close or even before, we'll certainly talk about how those are shaping up. But the cadence following the biomarker data that we plan to show at MDS will really be dictated on those trial starts. When it comes to for BCL6, look, as we move, as I said, all roads lead through the monotherapy and the combination right now with glofi, and we'll talk a bit more about where we go after that. There's a lot of options, right? The bispecifics, there's more than one. Those are potential combinations. There's chemo, there's other things as well. I think that we will really have to watch the landscape evolve to see a bit of where the puck is going to see where it makes most sense for us to combine. I'll reiterate what I said around the opportunity to move earlier and faster with monotherapy approaches and then the ability to follow up with combination approaches that have the opportunity to reach bigger patient populations in earlier lines of therapy. So beyond that, a bit hard to specify what the details will be. But as we've started talking about this program, as we've shared the progress that we've made, certainly, lots of companies that are interested in the space, including strategic that clearly are following the traditional path in the NHL space, which is to identify ways to build out the treatment combinations that we're able to get to patients to extend responses and get responses to more patients.

Our next question comes from the line of Jit [ Mukerjee ] with U.S. Bancorp BTIG.

It's Blake on for Jit. A quick question on ARV-102. Do you still have an intended PSP population that you're targeting? Or is it going to be an all-comers trial, thinking more on the lines of Richardson syndrome patients or specific LRRK2 variants?

And maybe I'll have Angela give some more color here. The shortest answer is you're not -- you're thinking about it right, right, which is that we could look at all the PSP. Richardson is the largest subtype. When it comes to narrowing more than that, I think it's less likely. But maybe Angela, a little bit more detail on how we think about the population there.

Right. I think that we would not restrict further. Richardson syndrome is really a very uniform progressing population, which is why we like it. and we like the focus there, but this does not restrict us from expanding to all PSP. I hope that helps.

Ladies and gentlemen, I'm showing no further questions in the queue. I would now like to turn the call back over to Randy for closing remarks.

Thanks, operator, and thanks, everybody, for joining this morning. We look forward to providing further updates as we move forward, and thanks again.

This concludes today's conference call. Thank you for your participation. You may now disconnect.