Question-and-Answer Session
Operator
[Operator Instructions].
Your first question comes from May-Kin Ho of Goldman Sachs.
May-Kin Ho - Goldman Sachs
Hi. I guess, I wanted to ask question about really how your payment from Bristol would be recognized and how we should going forward project out the recognition fraction?
Peter R.Borzilleri - Interim Vice President of Finance
May-Kin, this is Peter Borzilleri. So you are referring to the clinical and regulatory expense line?
May-Kin Ho - Goldman Sachs
Yes, as well as the license fee line?
Peter R.Borzilleri - Interim Vice President of Finance
Okay. On the license fee line, with the expanded and modified clinical production plan, this resulted in, in addition to an increase in clinical spend projections also an increase in the amount of dollars being spent in the later years. So with the way we recognize revenue this ended up effectively delaying or deferring the recognition of some of the license fee? license fees and milestone revenue.
May-Kin Ho - Goldman Sachs
But in the past, it somewhat depended on how much up we see to date and it's amortized et cetera. So going forward is that how? the way that it will be done as well or is it different?
Peter R.Borzilleri - Interim Vice President of Finance
No, the approach is the same, just the amounts used in the calculation have changed.
May-Kin Ho - Goldman Sachs
So for example, for the next year how we should we think about that?
Peter R.Borzilleri - Interim Vice President of Finance
I would say, at this point we are not really prepared to give guidance for next year.
May-Kin Ho - Goldman Sachs
Okay. And then for the actual spending then, it sounded like in the past it would depend on whether it was a Phase I, II, III trial, or it was a Phase IV trial, now has changed to a threshold. Is that the right way to think about that.?
Peter R.Borzilleri - Interim Vice President of Finance
I mean that is correct, but it encompasses essentially the same trials. But there is just a defined threshold value in place that until that threshold value is reached, the obligation falls entirely with BMS.
May-Kin Ho - Goldman Sachs
So, under the old agreement, the Phase IV studies were shared equally. And now it doesn’t matter what phase they are, BMS will pay for a certain amount and then above that, you will split about equal or what is the percentage of that ?
Peter R.Borzilleri - Interim Vice President of Finance
We are not at liberty to disclose the percentage. But what you said is correct that it includes the Phase IV studies.
May-Kin Ho - Goldman Sachs
And is the threshold a different one every year, the cumulative threshold
Peter R.Borzilleri - Interim Vice President of Finance
It’s a year-by-year threshold, but the amount we are not at liberty to disclose.
May-Kin Ho - Goldman Sachs
All right. I guess, maybe, Michael you can talk a little bit about the market dynamics at this point. You indicated that you have increased share for EGFR market?
Michael P. Bailey - Senior Vice President of Commercial Operations
May-Kin, thanks for the question. The share of EGFR market is now topped over 80%. Remember we have spoken in previous earnings calls about kind of what that 20% of panitubimab share of the EGFR market is, roughly half of that coming after ERBITUX, half of it coming probably at the expense of ERBITUX. But in the past year, we are below 80%, we are going down around 75%. Now we are above the 80%. So we were very pleased with that.
May-Kin Ho - Goldman Sachs
And have you seen any impact from some of the recent announcements or until we actually have data presented probably not dramatic.
Peter R.Borzilleri - Interim Vice President of Finance
Which specific announcements are you referring to?
May-Kin Ho - Goldman Sachs
For example, CRYSTAL.
Peter R.Borzilleri - Interim Vice President of Finance
Yes I mean, I think there's a general sentiment. We have not necessarily seen major share increases in the first line setting, if that’s what you're referring to.
May-Kin Ho - Goldman Sachs
Yes. And, at this point what is you penetration in the various lines of therapy?
Peter R.Borzilleri - Interim Vice President of Finance
Yes in the second line we have grown to roughly 15% share in second line colorectal cancer. Third line, third line plus is at around 30% share. In the head and neck market, I am a little less confident with these numbers just based on the various market audits that seem to conflict somewhat. But we have got a dominant share, as we mentioned in the refractory, the bottom refractory population up in the range of 45%. And then roughly about 20% in the local regional.
May-Kin Ho - Goldman Sachs
And what about duration of therapy in the various lines?
Peter R.Borzilleri - Interim Vice President of Finance
The duration of therapy has been relatively stable from quarter to quarter.
John H. Johnson – Chief Executive Officer
So May-Kin, if you don’t mind, we could move on to next questioner.
May-Kin Ho - Goldman Sachs
Thank you very much
John H. Johnson – Chief Executive Officer
All right, thank you, May-Kin.
Operator
Thank you. Your next question comes from Gene Mack of HSBC Securities.
Gene Mack - HSBC Securities
Hi, thanks for taking the question. I guess, first is, when do you think that? I guess, it's kind of hard to predict some of the expenses or some kind of meaningful guidance on your total. When do you think you might be in a position to do that with the agreement that you have in place with Bristol-Myers, or at least give us some comfort on what will be delivered on a net income basis going into 2008?
Peter R.Borzilleri - Interim Vice President of Finance
Gene, you were coming in a little bit lower down in the volume. But your question was about guidance for 2008?
Gene Mack - HSBC Securities
Yes.
Peter R.Borzilleri - Interim Vice President of Finance
Yes, at this point we are not in a position to provide any guidance. I would say in our end of the year call in the first quarter 2008, we will be able to do that.
Gene Mack - HSBC Securities
And I'm sorry, if I missed this, but did you talk about what might be presented or is there any update on when that might be presented?
Eric K. Rowinsky - Senior Vice President of Clinical Development and Chief Medical Officer
Gene, hi, this is Eric, good morning.
Gene Mack - HSBC Securities
Hi
Eric K. Rowinsky - Senior Vice President of Clinical Development and Chief Medical Officer
At this time, we have not made that decision and it will be a decision made in the near future.
Gene Mack - HSBC Securities
Okay, and has there been any operable use of this drug since the announcement?
Eric K. Rowinsky - Senior Vice President of Clinical Development and Chief Medical Officer
In lung cancer.
Gene Mack - HSBC Securities
Yes.
Eric K. Rowinsky - Senior Vice President of Clinical Development and Chief Medical Officer
We have not seen an appreciable change in that share.
Gene Mack - HSBC Securities
Okay, thank you
Operator
Thank you. Your next question Yaron Werber of Citigroup.
Yaron Werber - Citigroup
Yes, hi good morning. Eric, I wanted to ask a question FLEX. The study was designed to increase survival from eight months to ten months. Can you give us a sense, is that the absolute? should we think of this as a two months difference as to what you had to show to reach your end point? Or if the curves are pretty consistent throughout, does that mean that you can actually make your endpoint successfully without showing too much difference? And then I had a follow-up as well.
Eric K. Rowinsky - Senior Vice President of Clinical Development and Chief Medical Officer
I think, Yaron, we have discussed this in the past. Those eight to ten months are relative assumptions for patient number projections that would be necessary in the study. Obviously, how the curves will basically turn out will depend on many factors, depend upon the coefficient of variability, around the numbers and as well as on the numbers themselves. And I think at this time, we would really like to present all the FLEX data in its entirety both the primary endpoint, the secondary endpoint and the subset analysis and hopefully that will be presented real soon.
Yaron Werber - Citigroup
What about, what can we? one of the things we hear from docs is it's going to be important to try to handicap or translate the differences in the chemo regimen to the US type regimen where the US regimen, now you can typically see nine or 10 months just fro the chemo arm alone.
What would you expect? or what should we expect in this data in terms of how competitive this regimen would be, just chemo alone, relative to the US regimen?
Eric K. Rowinsky - Senior Vice President of Clinical Development and Chief Medical Officer
Well, Yaron, I will just start out and I think I'll let Michael to join in. But I think the cisplatin and vinorelbine regimen has been performed very well in clinical trials. And the range of its performance encompasses the range of performances of other regimens, other modern day platinum-based regimen. And I think that you will just have to look at how this particular regimen performs. But as far as the relevance of the regimen, Michael, do you want to--?
Michael P. Bailey - Senior Vice President of Commercial Operations
Yes, I mean, I think that we got to remind ourselves of a couple of key points. One is, this data represents the first time an EGFR antibody has shown a survival benefit in this setting, in combination with the chemotherapy doublet. In addition, as John had pointed out, it's the only antibody to show overall survival in a patient population that’s not restricted by histology. So, I think that’s going to be one of the most important points, going forward.
In addition though, we've got clinical studies and significant clinical experience in combination with the predominant chemotherapy regimens such as carbo-tax and gem-sys [ph] but not restricted to those. What the regulatory agencies are going to say at the end of the day is anybody's guess, but our goal is to ensure maximum access to all patients for this regimen, for this therapy.
Yaron Werber - Citigroup
I mean, in your view, is there a certain number of absolute weeks of overall survival difference that you have to show for this to be considered clinically meaningful? I mean what’s the magic number here? Is it two weeks, it is four weeks?
Eric K. Rowinsky - Senior Vice President of Clinical Development and Chief Medical Officer
Well, I think, Yaron, I don’t really have the answer to that. And obviously there is a point in which a difference is not going to be clinically relevant. think that is something that we all know. Obviously, we are going to see the data, you are going to have to see it yourself and you're going to have to look at what? currently bevacizumab is not indicated for approximately half the patients with this disease. And another significant proportion of patients, it’s really not prescribed for, it's felt, these patients are not felt to be good candidates for it. I think you are really going to have to take really the whole data sets, take a look at it, take a look at subset analysis, but I am not going to? obviously there is a cut point at which any significance, statistical significance is not clinically relevant. I really can’t answer this question to this particular trial, but again, you also can't look at medians, you have to look at all the data and we intend to show you all the data.
Yaron Werber - Citigroup
Okay, fair enough, I'm just going to ask, pricing wise?
Unidentified Company Representative
Actually if you don’t mind?
Yaron Werber - Citigroup
I will hope back in the queue.
Unidentified Company Representative
That will be great. Thanks so much, Yaron.
Operator
Thank you. You next question comes from Geoffrey Meacham of JP Morgan
Unidentified Analyst
Hi guys, this is actually Terry calling in for Geoff today. Just real quickly, now that you guys have the first data in-house, do you think that this trial alone could be enough to file on and also is there potential that you could file before presenting the data?
Eric K. Rowinsky - Senior Vice President of Clinical Development and Chief Medical Officer
This is Eric, hi. This study is by all means defined as a pivotal trial. And it's our intention obviously I will hope to be able to clarify precisely our filing strategy, but FLEX study can be filed as a pivotal, single study to support this indication. And particularly because the endpoint is the best endpoint you can get in terms of clinical benefit, and that’s overall survival.
In addition, we feel the same way about EXTREME, single study filing, and we intend to do that. Now obviously in the lung cancer filing, we will be filing several other studies as well, including BMS 99 and 100 in the package. But FLEX as a single study we view as a supportive study to support the indication.
Geoffrey Meacham - -J.P Morgan
Okay and just a quick follow-up. The percentage of the long population that are EGFR expressing patients do you guys have an idea there?
Eric K. Rowinsky - Senior Vice President of Clinical Development and Chief Medical Officer
It's been quite difficult in the past. Then obviously you will also have to see the data, but I will say that in the past, when you look in the history, in the literature, if you look in the textbook, per se, often you will see a range. That range is anywhere from 40% up to 90%. And I think that really is a function of the various methodologies that have been used over the years. If you look at the recent JCO test what actually defines EGFR positivity, is any positive staining and we're seeing currently at the present time in long and call-in [ph], the majority of, the overwhelming majority of patients staying positive. As far as the specifics in the FLEX study, I would love to be able to give you those data. Now we're compiling all the data and we will present it in full in the near future .
Geoffrey Meacham - JP Morgan
So do you think that it will be limiting to EGFR expressing patients, based on the FLEX study or that might not be the case?
Eric K. Rowinsky - Senior Vice President of Clinical Development and Chief Medical Officer
I think, our... we haven't really completed our discussions with the FDA. Obviously it may depend upon the predominance or the number of the EGFR positive patients in the study, I mean the proportion. But we have not completed our due diligence with the Agency at this point.
Geoffrey Meacham - JP Morgan
Okay, thanks a lot.
Operator
Your next question comes from Michael King of Rodman & Renshaw.
Michael King - Rodman & Renshaw
Thanks for taking my question. A commercial question about KRAS [ph]. Your competitors at Amgen, yesterday on their call were making a fair bit of noise about how KRAS mutants are going to be excluded and that’s going to help Vectibix. And you guys had at ECCO regarding KRAS, response in KRAS mutants as well. So I was just wondering, how you see that playing out commercially and also what available kits there are to test for KRAS mutations?
Michael P. Bailey - Senior Vice President of Commercial Operations
Hey, Mike, it's Michael Bailey. Good question. Obviously the data that was presented at ECCO for panitubimab was pretty convincing, especially for the European authorities. But I do want to make sure that people understand that that’s for monotherapy. So what that may answer is that KRAS is predictive of therapeutic intervention, but it doesn’t necessarily apply to a chemo combination or any kind of combination.
So I think we've got a hold on our assessment of this ultimately until we get that data, that compares in ERBITUX and chemotherapy versus a chemotherapy looking at KRAS. And obviously we've got an interest in looking that from a CRYSTAL, and EPIC and all of those other combination there.
So it's enticing data, but I think it's a little early days to be applying that to combination therapy. And I think we learned that lesson with PACE.
Eric K. Rowinsky - Senior Vice President of Clinical Development and Chief Medical Officer
Michael, this is Eric and I just want to add another facet of the story. KRAS, until? I agree with what Michael said that KRAS looks pretty nicely predictive from monotherapy and refractory setting in the panitubimab study. But KRAS has always been a prognostic factor. It’s a factor that really marks bad disease. And I think we have to really be careful particularly in the combination setting in the upfront patients because now we start to select patients out on the basis of KRAS, certainly patients with good prognostic disease always do better with any therapy generically. But then you are going to say, you patients who have bad disease who could also benefit but yet left would not actually be selected for these therapies. So we are really looking at KRAS but we are also looking at other biomarkers that may be more predictive. And I think we have to be careful about KRAS and prognostic markers. We don’t want to exclude the patients who still would benefit from therapy, but would not as much.
Michael King - Rodman & Renshaw
So we shouldn’t expect any prospectively designed trials looking at response of PSS in a KRAS positive population?
Eric K. Rowinsky - Senior Vice President of Clinical Development and Chief Medical Officer
No, I think that that is? we are really going to, before doing that, we want to make certain that based upon the data that we have, and the study data that we have, we are actually looking in our early stage studies. Is KRAS really predictive and we'll have patients that did not get ERBITUX and who did get ERBITUX, for benefit. Because it may just predict for chemotherapy benefit as well, and we want to look at other markers and we're doing that now.
Michael King - Rodman & Renshaw
Okay, right. And is there a commercially viable test as far as you know?
Eric K. Rowinsky - Senior Vice President of Clinical Development and Chief Medical Officer
I believe that? I don’t know have the answer to that one, but I believe that you can run KRAS in many labs including Genzyme.
Michael King - Rodman & Renshaw
And then, if I may, just one more. And on the commercial front again, Michael can you help us understand what your target inventory level is going to be for ERBITUX going forward? Is the $9 million still going to be adequate or should we see subsequent quarters with some kind of inventory accumulation?
Michael P. Bailey - Senior Vice President of Commercial Operations
We've moved to open distribution model for about 50% of our sales. So there might be some additional inventory, if you will, build up over the course of the next year as we go more fully to this open distribution model. But we will try to keep you as informed as possible with regard to that.
Michael King - Rodman & Renshaw
Any other goals to how much inventory you'd want to have in the channel or is it going to be a function of weaker sales?
Michael P. Bailey - Senior Vice President of Commercial Operations
Yes, that is a good question. Generally speaking, we're shooting, and it seems like the wholesalers are leaning towards keeping an inventory at about 0.3 months.
Michael King - Rodman & Renshaw
Thank you
Michael P. Bailey - Senior Vice President of Commercial Operations
About a week, a little below a week and a half.
Michael King - Rodman & Renshaw
Perfect, thanks a lot.
Operator
Thank you. Your next question comes from Han Li from Stanford Group Company.
Han Li - Stanford Group Company
Yes, just quick questions on the regulatory pathways for ERBITUX. Merck KgA mentioned yesterday because it filed for a first line colorectal last quarter and they may have to wait till '08 to file for lung cancer and head and neck. What’s the? because there is no high level regulatory pathways in Europe. What’s the situation here in the States and what should we expect regarding the SPOA filing of the three additional indications?
Eric K. Rowinsky - Senior Vice President of Clinical Development and Chief Medical Officer
Hi Han, this is Eric again. You can imagine with all the data that’s come into our labs recently from these pivotal trials there’s lot of dynamics going on. Dynamics in terms of data flowing from our partner Merck KgA to us, three sets of data from three major clinical trials. Certainly the data needs that we have are very different from what Merck KgA faces with EMEA and Europe meaning that when you are file in the United States, it's a bottom of filing, the FDA sees all data, all alrorithms and actually outs them together and does the analysis. It’s very different in Europe.
In addition we have three parallel of discussions going on with the FDA that will go one with regard to lung, head and neck and colorectal carcinoma. And then there is the filing. Now obviously, as I stated I think in reference to Michael’s question, or prior question that we have two files based upon very robust survival data, and I think that those will obviously be somewhat clear cut. That's the EXTEME study for head and neck, and the lung cancer, FLEX. And we will, when we complete our negotiations with FDA and discussions with FDA and determine precisely what needs to be in the filing, I envision that those will be rather easy filings and will go in relatively soon.
With regard to colorectal carcinoma, we have actually taken a different route. And let me say that CRYSTAL made its primary endpoint of progression free survival solidly, with an IRC and we are quite proud of those data. Be feel that we want to really pursue a very sensible, comprehensive strategy in view of what we have observed at the FDA over the last couple of years. And we feel that there is tremendous evolution that’s occurring. And this is an opportune time for us. But we have elected certainly with all the other business going on with lung and with head and neck cancer that we will prepare those files first and we will wait for survival data, mature survival data which will occur in mid 2008. Can we file before in colorectal cancer? Certainly we can do that. But we think that it is wise to get our other files out of the way and send in a comprehensive package to the FDA. And in view what’s going on with progression free survival now at the Agency, we think that that’s the best strategy to pursue.
Han Li - Stanford Group Company
And also along that line, the follow-up is, what's the time line for the survival data for CRYSTAL in colorectal cancer and also the survival data for the lung cancer study, BMS-099?
Eric K. Rowinsky - Senior Vice President of Clinical Development and Chief Medical Officer
Well, we anticipate that CRYSTAL will have survival data by mid 2008. That will allow us to put the package together. Certainly we will be working on that package in the interim. With regard to BMS-099 it would be in the first half of 2008. However remember with regard to survival on the BMS-099 study that was not the primary endpoint.
Han Li - Stanford Group Company
I understand. Thank you.
Eric K. Rowinsky - Senior Vice President of Clinical Development and Chief Medical Officer
You are welcome.
Operator
Thank you. Your next question comes from Eric Schmidt of Cowen And Company
Eric Schmidt - Cowen and Company
Thank you for taking my question. Most of them are answered. Maybe a bookkeeping question on Japanese revenue, how that might flow through your P&L once you get approval in Japan, and maybe you can update us on your thoughts on timing for approval.
Michael P. Bailey - Senior Vice President of Commercial Operations
Yes, this is Michael Bailey. I can comment our estimates for timing of approval. As was stated in the press release back in January, we are looking at the end of '07; the beginning of '08 is our hope. As far as booking sales, I can defer to Peter on how those sales will be booked in Japan.
Peter R.Borzilleri - Interim Vice President of Finance
Right, as and when we announce the execution of the agreement, there is a 50% share of profit and loss with Merck getting 50% and BMS sharing the remaining 50%, or 25% each. And then we will also be getting a 4.75% royalty from Merck from the sales to Japan.
The sharing of profit and loss reflects that coast wasn’t right to ERBITUX in Japan that was previously granted by ImClone to Merck.
Daniel J. O'Connor - General Counsel, Secretary
And Eric, this is Dan O'Connor, I'll kind of fo9llow up just a little bit. So the Merck Japan entity is going to actually be booking the sales in Japan. And as Peter just said there will be a profit-loss split 50-50 between the Merck Japan entity, and the Bristol Japanese entity. And then thereafter this 50% that goes to the Bristol's Japanese entity, BMKK will be further split between ImClone and Bristol. And also, as we noted in our press release, ImClone we see 4.75 net sales royalty paid by Merck. And that is on the Japanese sales.
Eric Schmidt - Cowen and Company
So you book royalties on Japanese sales, I assume on your royalty line, and then book a separate line for your interest in that Bristol-ImClone Japanese JV? estimated so much you keep an eye when you put a separate line for your
Daniel J. O'Connor - General Counsel, Secretary
Correct
Eric Schmidt - Cowen and Company
Okay, and one follow-up on the FLEX data for Eric. I think the comment was made that Merck KgA is sort of validating some of the secondary endpoints of analysis. Can you speak at least to in the first brush whether there is some consistency to this data set or is that being questioned by these analyses? I didn’t know how to interpret that statement.
Eric K. Rowinsky - Senior Vice President of Clinical Development and Chief Medical Officer
No, Eric we, Merck-KgA worked primarily to get out that primary endpoint and when the last event occurred that triggered the analysis and you can imagine progression-free survival on response rates are much more difficult. And Merck has a very solid validation process and they are working on those endpoints. There is really nothing to knock here and which is basically waiting for there validation processes to come to and end.
Eric Schmidt - Cowen and Company
Eric, do you think you need consistent response rate in PFS data from this trial to file?
Eric K. Rowinsky - Senior Vice President of Clinical Development and Chief Medical Officer
That’s a good question. I think that you will have?. survival really trumps all, it's always nice to have consistency.
Eric Schmidt - Cowen and Company
Thanks.
Operator
Thank you. You next question comes from William Sargent of Banc of America
William Sargent - Banc of America
Thanks for taking my question. Eric, I guess, the first part of the question, based on waiting until, especially mid '08 to get the CRYSTAL overall survival data and filing, could you talk about what next steps would be, once the CAIRO-2 is available and if it’s positive if you would wait to make that more of a comprehensive packages, package or make potentially two filings?
Eric K. Rowinsky - Senior Vice President of Clinical Development and Chief Medical Officer
Well, at this point, our intention is not to make a two filing, so that can always change, but we feel we are confident about CRYSTAL PFS data and its supported data from EPIC. We are not going to wait for CAIRO-2. CAIRO-2 is the Northern European cooperative group trial. Data was actually, will be assessed, will be quite different from our routines in company sponsored trials that were really aimed at filing. So that is not our intention at this time. Could we file a supplement based on CAIRO-2. You bet you, we can do that.
William Sargent - Banc of America
Just to clarify real quickly. Is CAIRO-2, is it a centralized review?
Eric K. Rowinsky - Senior Vice President of Clinical Development and Chief Medical Officer
At this point I do not have the, those information, the centralized review is basically going somewhat delayed. The data that will initially be reported will not be a centralized review. That can always be kicked into gear.
William Sargent - Banc of America
Sure. And then I guess looking toward the future with FLEX and with the CRYSTAL filing going in the first line, I guess more of a question from Michael. What are your thoughts about pricing changes moving forward in earlier lines of therapy?
Michael P. Bailey - Senior Vice President of Commercial Operations
Hi, Will. I think as we've said in the past, we're revaluating all that. certainly the FLEX data rolls in, that’s another piece of information that is going to be critical in that decision. But again, our aim is to ensure maximum access to patients and we will define a price that will do that.
William Sargent - Banc of America
Would you expect this before inclusion, no, or around any pricing or essential more?
Unidentified Company representative
My personal opinion would probably be pretty closely linked to an indication, any new indications.
William Sargent - Banc of America
Thanks a lot. Congratulations on the quarter. Thanks.
Michael P. Bailey - Senior Vice President of Commercial Operations
Thanks Will.
Operator
Thank you, your next question comes from Steve Harr of Morgan Stanley.
Unidentified Analyst
Hi guys, it Marshall here in for Steve. So I have two questions. The first one is, are you guys committed to also presenting the long data from the BMS study to help us put the chemotherapy differences in some perspective?
Unidentified Company representative
That’s a great question. And we are intending to look at all their trials and to analyze all the data and potentially look at subset analyses across the studies, particularly in the underserved patient populations or also to look if there are any general themes that are emerging. But at the present time FLEX is our major trial. There are some interesting subset analyses that will be conducted, obviously we are going to be focusing on histology and some strategic subsets across all studies.
Unidentified Analyst
So just to be clear, at this point you guys have no plans to present the BMS data?
Unidentified Company representative
We did present the BMS data at the ISLAC [ph] meeting just a few months ago.
Unidentified Analyst
All right. And then on Yeda, can you guys give us some kind of update on where that is and when we are going to expect to get some visibility?
Daniel J. O'Connor - General Counsel, Secretary
Sure. This is Dan, Marshall. So we have got basically two court actions occurring in parallel. One is the appeal from the district courts decision to the federal circuit. That appeal has been fully brief and is now moving on to the oral argument phase. The second is the declare to a judgment action, that action that is in discovery. And as said, they are both continuing in parallel.
Unidentified Analyst
All right, thanks.
Daniel J. O'Connor - General Counsel, Secretary
Sure.
Operator
Thank you, your next question comes from Eric Ende of Merrill Lynch
Eric Ende - Merrill Lynch
Thanks. I am still trying to understand with respect to the FLEX study what the label might look like. Would the label specifically mentioned the chemo regimen used in FLEX or might it be all cisplatin based chemo regimens. How might that look?
Michael P. Bailey - Senior Vice President of Commercial Operations
Eric. This is Michael Bailey. I’m asking the same question and looking forward to the regulatory authorities giving us some guidance on that.
Eric Ende - Merrill Lynch
Okay. Thanks.
Operator
Your final question. The question comes from Jim Reddoch of FBR.
James Reddoch - Friedman, Billings, Ramsey & Co
Good morning guys. I think all my questions have been answered, except for two modeling kind of things. One is, gross royalty expense is jumping around a little bit over the past three quarters, and it was 10%, 12% and 10%. Is 10% what we should use going forward?
And secondly is it fair to think on May-Kin's question on the licensee as just previously the collaboration with Bristol had in earlier ending date? Sp all the amortized, the balance of the amortized revenue had to fit within that date and now that’s just stretched out. So, we're just stretching out the and are now begin to amortize each year. Thanks.
Peter R.Borzilleri - Interim Vice President of Finance
Jim, this is Peter. That’s not entirely correct. With the amendment the spend has been effectively increased. The period is not necessarily extended but just larger dollars being spent in later years than the original program.
James Reddoch - Friedman, Billings, Ramsey & Co
I see. Okay. And then the royalty fees.
Peter R.Borzilleri - Interim Vice President of Finance
Well, repeat that question, I’m sorry, on the royalties.
James Reddoch - Friedman, Billings, Ramsey & Co
Which one should we use for the fourth quarter? 10%, or 12% or something else? I think I calculated that it was 10% in 3Q but it was 12% in 2Q. If I calculated that right? Is there any particular reason why that gross royalty expense would move around?
Peter R.Borzilleri - Interim Vice President of Finance
We had a? let's see.
Daniel J. O'Connor - Senior Vice President and General Counsel
This is Dan. Sorry, are you referring to the third party royalty that the company is paying out to the royalty camp in ERBITUX ?
James Reddoch - Friedman, Billings, Ramsey & Co
Yes. Maybe you don’t call it gross royalty expense.
Daniel J. O'Connor - Senior Vice President and General Counsel
I was sure in my models. Suggest this and you guys look at my model. Just kidding. So it’s the royalty expense.
James Reddoch - Friedman, Billings, Ramsey & Co
So the gross royalty expense.
Daniel J. O'Connor - Senior Vice President and General Counsel
Historically it's been a 9.75% royalty sack for ERBITUX and that’s recently gone down a bit and I think Peter can follow up and give you the exact number on that.
James Reddoch - Friedman, Billings, Ramsey & Co
Okay. Fair enough. Thanks.
John H. Johnson – Chief Executive Officer
Okay. Now, thank you.
Well upfront, we had a little bit of technical problems, which I’d like to thank you for your patience in holding on. And as I mentioned at the end of the prepared remarks, we have an upcoming R&D day. We're excited about sharing the progress of our pipeline with you, both preclinical as well as clinical. And on a personal note I look forward to meeting many of you at that time. Thanks for your patience and I look forward to seeing you there.
Operator
Thank you. This concludes today’s ImClone Systems 2007 third quarter earnings release conference call. You may now disconnect.
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