BioCryst Pharmaceuticals Inc (BCRX) 2011 Q3 法說會逐字稿

Good day and welcome to today's BioCryst third quarter 2011 conference call. Today's call is being recorded. At this time for opening remarks and introductions, I'll the call over to Mr. Robert Bennet. Please go ahead sir.

Thank you and welcome everybody to BioCryst third quarter 2011 financial results conference call. Today's press release and accompanying slides for this call are available on our website at www.biocryst.com.

At this time all participants are in a listen-only mode. Later we'll open the call for your questions and instructions for queuing up will be provided at that time.

Joining me today on the call are Jon Stonehouse, our Chief Executive Officer, Dr. Bill Sheridan, our Chief Medical Officer and Tom Staab, our Chief Financial Officer.

Before I begin, before we begin, I'll read a formal statement as shown on slide two regarding risk factors associated with today's call. Today's conference call will contain forward-looking statements including statements regarding future results, unaudited and forward-looking financial information and Company performance or achievements.

These statements are subject to known and unknown risk factors and uncertainties which may cause our actual results, performance or achievements to be materially different from any future results or performance expressed or implied in this presentation. You should not place undue reliance on the forward-looking statements.

For additional information, including important risk factors, please refer to BioCryst's documents filed with the SEC, which can be found on our Company website. With that, I will turn the call over to Jon.

Thank you Rob. Good morning and thanks to everyone for joining us today. Since our last quarterly earnings call we continue to make great progress advancing our clinical and preclinical assets as illustrated on our pipeline chart on slide three. Most recently we reported positive top line efficacy and safety results from our 12-week BCX4208 phase 2b study, our high quality, proof-of-concept program, which enrolled 279 gout patients who were not adequately responding to allopurinol alone.

On November 8 we will present in more detail the study results at the American College of Rheumatology Scientific Meeting in Chicago. Having this data accepted at as late-breaker oral presentation at this prestigious medical meeting is an endorsement of the quality of our program. That evening we are planning to host a conference call and webcast for investors to discuss the results of our plans to advance the program.

We are now in the final stretch of completing the remaining work necessary to get BCX4208 ready for phase 3. In addition, we are having discussions with potential partners to find the right company that will maximize the value of BCX4208 from the initiation of the phase 3 through successful commercialization.

Moving to slide four, we believe BCX4208 is an attractive, worldwide in-license candidate for the following reasons. It's a late-stage, phase 3 ready molecule for a very large and unmet medical need.

We have demonstrated that low doses of BCX4208 added to the standard dose of allopurinol are efficacious and generally safe and well tolerated. In fact, in this refractory population of allopurinol failures, we have seen a doubling in the proportion of patients that get to goal with BCX4208.

And finally, BCX4208 has important differentiating characteristics from other treatments in a wide range of gout patients such as safe and effective use in gout patients with kidney stones and in patients on other medications for chronic diseases such as hypertension. The latter is because BCX4208 is not metabolized and does not interfere with transporters or metabolizing enzymes.

Now I'd like to switch gears to our most advanced clinical program, the phase 3 IV Peramivir program for hospitalized flu. The remaining step in this program is completion of the ongoing phase 3 study, and assuming average flu seasons, we are confident that we can have phase 3 data and file with the FDA no later than the end of 2013.

In recent months our clinica team has worked tirelessly to activate clinical sites around the globe. We believe we are in a good position to enroll the patient numbers we need to bring this study to completion.

Lastly, we are very excited about the high quality innovative assets coming out of our discovery research labs. As you may recall, our goal is to have two new innovative molecules in the clinic in the second half of next year. The most advanced of these have the potential to be major steps forward in the treatment of hereditary angioedema and hepatitis C.

Our structure-based drug design discovery research is world-class. We are able to discover high quality, innovative, new molecules at a much faster pace and more cost effectively than the industry standard. This research engine will be the source for creating value for years to come.

With that, I'll turn it over to Bill to review our development programs.

Thanks Jon and good morning. Today I will limit my comments regarding the positive BCX4208 12-week phase 2b study to the key takeaways. More details are available through the replay of the October the 5th webcast and accompanying slides available on our website. And of course, we will share additional results at ACR.

This randomized controlled trial enrolled gout patients who had tested for their response to allopurinol 300 mg per day and found to be treatment failures. A total of 279 patients were randomized and administered study drug only after [concerning] failure of response to allopurinol.

Top line results are from the planned day 85 analyses including the primary efficacy endpoint, a proportion of subjects which showed uric acid of less than 6 mg per deciliter at day 85. I refer to slide five and six summarizing the top line efficacy and safety outcomes for study 203.

With regards to efficacy, BCX4208 added to allopurinol showed response rates ranging from 33% to 49%, approximately doubling the proportion of patients reaching goal of placebo plus allopurinol which was 18%.

BCX4208 was generally safe and well tolerated in this study. There were similar rates and severities of adverse events in the BCX4208 and placebo groups with no drug or dose relationships. We did not observe a safety signal for infections and saw no unusual or opportunistic infections. There was a dose-related effect on the various lymphocyte classes with these effects appearing to plateau within 12 weeks.

These analyses indicate that immune function was preserved and knowledge of immune function in patients administered with BCX4208 will soon be augmented with our vaccine challenge substudy results.

Looking ahead, we anticipate reporting six-month data from the extension phase of this study together with vaccine challenge results and the results of our ADME study. We expect the latter to concern the lack of metabolism and the lower risk of drug-drug interactions for BCX4208.

We have open enrollment in our phase 2 study of patients with moderate renal impairment to understand the proper dosing and safety of BCX4208 in this subset of patients.

Turning to Peramivir, our phase 3 study sites in Europe, North America and India are well prepared to enroll patients during the upcoming northern hemisphere flu season. This phase 3 study includes an interim analysis that will be inducted no later than the second quarter of 2012.

This interim analysis was added to the statistical plan last year at the time the primary efficacy population was redefined. Its purpose is to understand that the study's enrollment target for the primary efficacy population, which is set at 160, should be revised. A futility analysis will not be conducted.

Also after this upcoming season we plan to provide an update on expected timing to study completion. Our lean preclinical assets, BCX4161, a potentially oral prophylactic drug for hereditary angioedema, and BCX5191, are potentially best in class nucleoside analog [uronate] polymerase inhibitor to treat hepatitis C, remain on track for IND filings during the second half of 2012.

Now our CFO, Tom Staab, will summarize our financial results.

Thank you Bill and good morning everyone. As I outlined during the last quarter, our guiding principle continues to be dedicating our cash resources to advancing our key programs and minimizing non-critical spending to hopefully create near-term stockholder value. We hope that you see evidence of this initiative in the third quarter of 2011 and will continue to see its impact in future quarters.

Our third quarter 2011 financial results are summarized on slide seven. I'd like to begin my discussion of the third quarter 2011 results with revenue. Third quarter 2011 revenues decreased to $5.2 million as compared to $12 million for the third quarter of 2010. This decrease was due to lower Peramivir collaborative revenue associated with reimbursement of expenses from HHS/BARDA following the completion of various Peramivir studies in 2010 as well as the clinical trial timing and related revenue recognition associated with our current ongoing phase 3 study.

Total revenues for the first nine months were $14.4 million as collaborative revenue associated with Peramivir decreased by approximately $16 million compared to the same period last year.

Last year our nine month revenues were $45.7 million and included two significant items totaling $13.4 million, both of which were unrelated to the Peramivir collaborative revenue reimbursement from HHS/BARDA.

These two 2010 items were a $7 million milestone payment from our partner, Shionogi, associated with the approval of RAPIACTA in Japan as well as the sale of $6.4 million of Peramivir bulk drug to both Shionogi and Green Cross, our collaborative partners on Peramivir in Japan and Korea. There have been no corresponding revenue of this nature in 2011.

Third quarter 2011 R&D expenses were $14.8 million, down from $19.2 million in last year's quarter. The mix in the overall decrease of R&D spend when comparing the third quarter of 2011 to 2011 were related to the completion of various Peramivir and Forodesine clinical trials in 2010 as well as an increased investment in the BCX4208 gout program and our other preclinical programs in 2011.

R&D expenses for the first nine months of 2011 decreased $17.2 million from 2010 for a total of $41.7 million in 2011. A portion of this decrease is associated with $6.3 million of expense associated with Peramivir bulk drug manufacture for Shionogi and Green Cross in the first quarter of 2010.

These costs, as well as additional clinical expenses for several studies that completed in 2010 did not reoccur in 2011.

Third quarter G&A costs decreased 13% to $3.3 million from $3.8 million last year, primarily due to lower third-party professional expenses as well as we have scrutinized our G&A activities and were able to reduce non-essential G&A spending in an effort to dedicate our resources directly to the advancement of our programs to the largest extent possible.

Nine month 2011 G&A expenses increased to $11.3 million from $1.8 million in 2010, reflecting one-time headquarter relocation costs and higher third-party professional expenses incurred earlier in 2011.

In regards to other income and expenses for the third quarter of 2011, the royalty monetization transaction, which added approximately $23 million of non-dilutive cash to our balance sheet in the first quarter of 2011 resulted in $1.2 million of non-cash interest expense and a mark-to-market loss of $600,000 associated with our currency hedge derivative designed to hedge foreign currency risks on our Peramivir royalty payments in yen. This hedge loss was generated by the continued strength of the yen as compared to the dollar.

For the first nine months of 2011 we incurred non-cash interest expense totaling $2.6 million. This interest obligation was funded through the establishment of an interest reserve account at the completion of the monetization transaction and was designed to fund future interest payments.

In addition, aggregate mark-to-market losses for our currency hedge totaled $2.9 million at September 30, 2011, and once again resulted from the continued strength of the Japanese yen against the dollar. This situation has required the Company to post cash collateral against this potential obligation.

Moving on to slide eight, we closed the quarter with $61 million of cash and investments at September 30, 2011, as compared to $66.3 million at December 31, 2010. Operating cash utilization, which excludes any impact of the monetization, was $10.4 million for the third quarter of 2011 and was $25.3 million for the nine months ended September 2011.

Our cash usage for 2011 through September is approximately $3 million higher than the same period in 2010 due to careful management of our expenses and focus on improving working capital parameters.

In conclusion, we are pleased with our ability to prudently manage our cash, expenses and related liquidity to maintain our existing 2011 outlook for operating cash usage of approximately $35 million.

Now, I'd like to turn the call over to Jon for some closing remarks.

Thank you, Tom. So let me wrap up by going through the upcoming milestones and refer you to slide nine. So the first one, we mentioned will be the oral presentation of study 203 presented at ACR next week and an investor call that will occur that evening.

Completion of our human ADME study before the end of the year, and this is important because we think it further demonstrates the lack of drug-drug interactions with BCX4208, an important differentiator for BCX4208.

Then BCX4208 six-month data and the vaccine challenge results in early 2012. We'll continue to enroll patients in the moderate renal impairment study with completion expected in mid-2012. End of phase 2 discussions with the regulators on BCX4208, we expect to conduct in the first half of next year.

Interim analysis that Bill referred to for Peramivir, the phase 3 study in the second quarter of next year, and last but not least, the IND filings for BCX4161 for hereditary angioedema and BCX5191 for hepatitis C infections targeted for the second half of 2012.

So that concludes our prepared remarks on the third quarter and we will open it up to your questions.

(Operator Instructions) Charles Duncan from JMP Securities.

Hi guys, thanks for taking my question and congratulations on a good quarter of progress. My first question is 4208 and specifically the upcoming ACR meeting. It's nice to see that the abstracts were accepted for late-breaker, but I'm kind of wondering, Bill, if you could let us know why you think they were accepted for late-breaker.

Not to suggest that we're disappointed at all in the data because we are not, but what do you think, really, that the committee was looking at and what would you, as a physician/scientist, like to see out of that data?

Hi Charles. Thanks for the question. I think the number one reason in my mind is that this is the first novel mechanism of action therapeutic as uric lowering therapy in 50 years in gout. And this is a high quality placebo plus allopurinol controlled trial of BCX4208 plus allopurinol done to rigorous standards and I'm thrilled that ACR saw fit to accept our late-breaker abstract and put it into an oral session. That's a vote of confidence in the quality of this study.

So its novelty and quality are the two drivers I would think if I was sitting on an academic abstract review committee for a meeting like that. And the importance of the data to us is that it frames up the phase 3 program because we're able to select dosage from a range of doses that have shown adequate efficacy and safety balance. So I think that's really the head one from my perspective.

Perhaps also a quality metric or a consideration might have been the breadth of the patient enrollment criteria as well?

It could well have been and we've taken a very liberal approach and that shows up in the analysis of the number of comorbid illnesses and the number of concomitant [mids] and we do not restrict patients as to whether or not they've had a past history of kidney stones otherwise.

So I think it is important that as the program advances, we continue to think about how to make our clinical studies reflect more and more real lives so that when the drug gets approved, we have the [bits] available in evidence for physicians to prescribe the drug.

Charles, I'd add one thing too is we've got a couple of posters as well, in addition to the oral late-breaker presentation and one of them I want to draw analysts and investors to and that is there's a poster, preclinical data, around the metabolism and effects on transporters and metabolizing enzymes. And we've talked about that before but we'll have data in a poster at ACR.

And again, I want to stress that this is an area we find of great differentiation for BCX4208 and it's a large population in terms of patients that are on other chronic medication.

Jon, perhaps as a great segue to my second question then I'll hop back in the queue, and that is you mentioned partnering and you said that you're looking for the right partner. It would seem to me that you must be getting some incoming phone calls based on this emerging differentiation in terms of mechanism, but also in terms of the phase 2 program.

But could you further help us understand what a right partner would be in terms of type and kind of terms that you would look at? How do you see someone as being strategic?

So I think the first and foremost characteristic of a partner is someone that we believe has the capability and the resource to really maximize value.

So what do I mean by that? They're capable of conducting a high quality phase 3 program, working with the regulators to get it approved and probably most importantly are able to launch it.

And what's interesting about this market, and I think allows us to be flexible in terms, I can't go into specifics obviously because we're not advanced enough, but I think what gives us a lot of flexibility with partners on a licensing deal is that there's this base case of a population of patients that's close to two million patients that are the allopurinol failures, which we think is a good chunk of opportunity.

But on top of that, when you look at the projections out to 2015, there's a group of people that don't even get diagnosed and don't get treated -- get diagnosed but don't get treated, and that, in 2015, that's projected to be six million people.

So somebody that could move some of those people that aren't getting diagnosed and aren't getting treated into the allopurinol failure population, making that even bigger, I think is a huge upside opportunity. And we'll be flexible in our terms to allow a partner to invest and then share in their success.

Would you look for regional partnerships, x-US or would that include US? And would you value upfronts more than downstream participation or the reverse?

So let me take the first one first. The preference from an ease of working with a partner would always be to deal with one, but I think what trumps it is high quality. And if we find that regionally somebody's got better access to markets, better capability, we are very open to regional partnerships.

So -- if --

Go ahead.

Sorry to interrupt. In your view though, you've talked about the number of patients. The lack of partnering that's occurred in this space is not a result of some structural problem with the market opportunity.

No. My sense, and I can't speak for the other companies, but my sense is that BioCryst is in this to find a licensing partner that can maximize the value and this gets to the second part of your question, on the back end, right? And so that allows for a lot more flexibility from the company that's going to in-license.

When you're -- in the other cases of other companies, my understanding is they were considering the sale of the whole company and the stock ran up and that makes it much more difficult for a partner to put down that kind of capital when they still have a meaningful investment in the phase 3 and the commercialization of the product.

So I think we provide, in our situation doing a straight licensing deal provides a lot more flexibility.

Just to be clear, you think you could do that before the commencement of phase 3?

That's our plan. So let's just talk through what's left. So what we have left is the six month data in the vaccine challenge, the ADME study and the renal study, and then we also have regulatory meetings with the agencies in the first half of this year.

And something we haven't talked much about but is also an important piece is we're making drug for the NDA labs so that a partner has the final drug product available for the phase 3. So we're doing all that and our goal is that in the second half of next year that we'd be in a position to start the phase 3 with a partner. A partner will take it from that point forward.

And then we're also going to continue keeping patients on drug. We've already started rolling over, or getting people consented to roll over to a time period beyond six months and I think that's important because the partner will then have data that goes well beyond six months and in a chronic disease I think that's very important.

Thanks for the added color Jon.

You're welcome. Thanks Charles.

Steve Byrne from Bank of America.

You made a comment, Bill, about the lymphocyte counts plateauing by the end of the 12 weeks. Will you have data next week that supports that, specifically the variability in lymphocyte counts and in the temporal patterns that you had in your 12-week study?

it certainly will show those analyses next week.

Okay. And continuing the discussion on the partnership, did the extension study begin as soon as the 12-month study -- the 12-week study, conclude so that you could have those six-months data in January?

Let me take the first crack at that. So this is all in one single study that's been amended a couple of times. So we enrolled the number of patients I mentioned on the call and we also further participation in an extension from three to six months, and a proportion of those, a good proportion of those patients signed up for that.

And we've also offered a further extension from six months to 12 months. And so we're starting to see people agree to continue to study with blinded study drug during that period.

So I think that when we get to the partnering, we'll have the six-month analysis obviously early next year and a choice that the partner can make is whether or not to offer to continue those subjects on longer term therapy through the phase 3 program and the preparation of the NDA, and so build year after year a small cohort of people, nonetheless it's still valuable information.

Steve, having been on the other side of the table when I was at Merck, the more robust the program, the more you can reduce risk, the more attractive the asset becomes. And so I think we said earlier this year that we had gotten some feedback from potential partners and we modified then amended the program to reflect that. And so we're real confident that we've got a very robust, high quality, proof of concept program here.

And how many patients out of that 275 or so that completed 12 weeks, how many continued into the three to six month extension?

That's well north of 50%.

And what's your target number of patients to receive the vaccine challenge?

As many as qualify and agree, so we don't have a specific target number but this is clearly not the primary endpoint of the study, but more data is better than less data so we offered it to everybody who had not had a vaccine in -- within a couple of years or something.

So clearly, we need to be able to measure the antibody response so provided they qualified, we offered to them and if they agreed then they got the vaccine.

And then lastly on this topic, given the cash burn and the cash balance right now and a potential need for a capital raise, Jon, would you say that an upfront payment is a priority for you to obviate the requirement for a capital raise?

So let's think about what we have going forward. We have -- we've said very clearly that we want a partner to take the phase 3 program and the associated expense and so we'll be flexible on an upfront payment based on the fact that there's -- it's a 2,000-plus patient program that they'll have to invest in.

So what programs will we have? We've got the Peramivir program funded by the government. We've got 5191 that will be going into tox this year and an IND ready next year. And 4161, same thing, but that one we'll be driving forward and taking forward and the cost on that will accelerate pretty quickly because it goes right from phase 1 into a pivotal program.

So we need -- we've got roughly two years or a little bit less than two years of cash now. An upfront payment will cover some of that and there are other levers that we can pull to bring in other cash to keep the Company moving and being in a strong financial position.

But I guess what I don't want to say is that we're solely dependent on an upfront payment for our capital. There are other levers we can pull. Clearly an upfront payment would be an important one and we're managing our costs and moving other programs that are not as advanced as 4208.

Okay. And so the -- so a partner covering phase 3 will give you a little more extension on your cash runway.

Yes. We look at it as that is an expense on the BioCryst cash, right? But I guess you could look at it as, if you thought it was, that would shorten the runway pretty quickly, right? So yes, that is not included and we fully intend to have a partner on board to move the phase 3 program forward.

All right. Thank you.

You're welcome.

Yigal Nochomovitz from Rodman & Renshaw.

Good morning everyone and congratulations on getting the ACR late-breaker and posters accepted. If I could just start with looking ahead towards the phase 3 program, I'm sort of trying to put the pieces of the puzzle together. As we know, the renally impaired study is looking at the lower doses of 5 and 10 mg and then the other counterpart to that is that in the recently completed phase 2b, you saw some stopping at the higher doses.

So could you just provide some perspectives there with respect to how you're thinking about phase 3 dosing and if the lower doses are where you're headed?

Hi Yigal. Thanks for the question. So I think the general answer to the question is from the phase 2 program we have a good range of doses to select from and our thinking is aligned with regulatory guidance, which is it's always good to consider taking more than one dose into phase 3. So you could look at the dose range as 5 mg to 20 mg as being an acceptable dose range to consider.

And the process at this stage, as all companies would want to do, is to meet with gout experts, regulatory experts and frame out our thinking for a random phase 2 interactions with the FDA and our other interactions with other regional regulatory agencies. And through the interactions with the regulatory agencies and our partners, we will come to a final conclusion about the phase 3 programs.

So that's basically the approach.

Okay, so it sounds like it would be premature to focus only on the 5 and the 10 given that that's what you're looking at in the renally impaired study.

That would not be a fair conclusion, no.

Okay. Got it. And looking ahead towards the design of a phase 3 study, is this something that would look at lot like the phase 2b or would you be more interested in an active comparator with a newly approved drug such as Febuxostat?

The principles that we're following in designing a proposed phase 3 program to discuss with the regulators, first of all its' a good idea to take forward what you already know and repeat what you've done in a large phase 2 program. So that's generally a good principle to follow. That's number one.

Number two, what is it that we need in the label for the drug and instructions to physicians and the indication, dosing guidelines, etcetera? And that has to inform what phase 3 study to consider.

And the third principle here is actually very interesting. Because of the size of the safety database required for a chronic, non-life threatening disease therapy, so in the gout population we need a big safety database, that gives us actually a lot of room to consider various other drivers of phase 3 studies.

So no decisions have been made yet, obviously but there's -- this is not a situation where we're limited like in a rare disease to a very small patient population and limited in the ideas that you can contemplate for phase 3, so it's a good position to be in.

And your specific example of doing a combination with Uloric is really appealing to use, right, so it's a xanthine oxidase inhibitor works similar to allopurinol so there's no reason to believe that we wouldn't get the same kind of an effect as we do with allopurinol, so that's something that we'd definitely like to test. And as Bill says, we have the flexibility to do that in phase 3.

Okay. Thanks. And just one more clinical question and maybe a commercial question. Bill, you saw about a 50% rollover rate for the six-month study or the six-month extension I should say. Do you expect something similar for the going from six to 12 months or will there be more of an attrition?

So it was north of 50% and I think that the longer you ask people to stay on a clinical trial, the harder it is to keep them on a clinical trial. They have other things, other priorities in their lives, obviously. So if we get 50% of whatever the number, the final number is in the six-month cohort rolling over into the 12-month cohort, that will be great.

Okay. And then Jon, this is maybe a question that hasn't been asked recently. Looking far ahead, even beyond phase 3 and to something like pricing, allopurinol is pennies a day and Uloric is something on the order of a few thousand dollars a year. Have you given any early thoughts or done any early market research studies to look at how pricing could work for 4208?

We have done some work. It's premature to give you that at this point in time and obviously the partner will be the ultimate driver in that. But it's not going to be pennies a day for sure. And I think one of the things I think that's really important is we went after a market segment that we felt would make sense to people, the payers, and people who reimburse this drug. And so we went after allopurinol failures.

And so we think your ability to get a premium price well north of a generic price is reasonable and acceptable to payers, given the fact that you're in a population that has really no other option.

Okay. Thanks. And Bill, just one final question on the Peramivir program. Since you mentioned there's no futility analysis at the interim, I'm assuming the alternative outcomes are either you don't change the sample size or you adjust upward. Is that correct or could anything else happen at the interim?

What you said is absolutely correct.

Okay. Thank you very much. Good luck with the continued progress.

Thanks Yigal.

Bret Holley. (Operator Instructions)

Hi, thanks for taking the question. I'm a little bit curious about the timing of the partnership relative to the end of the phase 2 meeting with the FDA. In my experience, it seems like partners really have a high level of interest in participating in that meeting and really hearing from the FDA directly what their thoughts are regarding the design of a pivotal program. Can you just I guess give me some further thoughts on the timing relative to that event?

Yes, it'd be great if we could line up the partnership with the regulatory meeting but we don't want to slow the regulatory meeting down. And as I said, we're targeting all the meetings in the first half of the year in the FDA's likely to be the first on the docket.

So I just don't think it's going to line up that way but what I can say is a partner typically, and it's been my experience when I was at Merck, if you go through the regulatory correspondence and there will be, because it's a formal meeting, there will be formal minutes. And so the partner will get a very good view of what was discussed with the FDA at these meetings.

Okay. But I guess that a concurrent question would be do you have some kind of informal, like I guess accord with people that are interested and what you're thinking about for phase 3 and might -- your thoughts differ from a potential partner such that it excludes certain parties from participating.

So I guess I'd describe it this way. We're in discussions with folks as we speak and as we get more data, as we make more progress with the regulators, those will be more interesting discussions because we'll have more to share with them. But again, from a timing perspective, we wouldn't expect that we would be in a position to have a partner locked up until the second half of the year.

Okay. Thank you very much.

You're welcome.

(Operator Instructions) Michael Murray;New World Investors.

Jon, how would you characterize the recent southern hemisphere flu season?

Our understanding is it's on the lighter to average side, so not a blockbuster season by any stretch of the imagination. But the one thing we've learned over the years, and you know this Michael from following us for a while is we've followed flu through our studies for the last five years and the hard thing is to predict what the southern season will do in terms of predicting the north, and we just can't do that.

So the important thing is to be ready and be ready with sites in a number of different parts of the world, and we are. We are. We have well over 200 sites to capture patients and when flu hits, we'll be ready.

And I think the other piece, Michael, is that the assumptions that went in to saying we'd be done at the end of the northern hemisphere flu season in 2013 was a relatively conservative view recognizing that there would be some very light seasons along the way.

So we remain very confident that we'll be able to work from where we stand today and the number of seasons we have ahead of us to complete that program at the end of the northern hemisphere flu season a year from now.

Okay, that's helpful. And I wondered about when will the data safety monitoring board review the southern hemisphere flu season data?

The safety monitoring is an ongoing process and throughout the program we've never had any worries about the safety of Peramivir so obviously the drug is now launched in Japan. Post-marketing safety experience has been very satisfactory. So I have no worries about the safety profile of the drug at phase 3 level nor in a post-marketing sense. It's a very well tolerated compound.

With regard to the interim analysis, the independent data monitoring committee will receive an independent analysis after the end of the upcoming northern hemisphere season. So we needed to put a time limit on when to do that interim analysis so that we had adequate time to make a change, if one was required, to increase the sample size and implement that within the timeline of the contract with HHS/BARDA.

Thank you.

You're welcome.

Rahul Jasuja;Noble Financial.

Hi guys. I'm in an airplane just about to take off but I had a little moment to ask a question. I hope you can hear me okay. I'll get off very quickly. One quick question, I was wondering if there's a differentiating factor between approved or experimental drugs in the number of flares during treatment. Thanks guys.

Thanks for the question. So I think that to get a full understanding of flares you have to follow people for quite a long time, but we will present the data on our gout flares that we enumerated in the 203 study next week at ACR.

I don't know that I can answer the question directly as to whether there's a difference between experimental and approved treatments, but it is an interesting thing that we should follow and I think that from the patient's perspective, this is a lifelong disease. Once you've had a couple of attacks of gout, your risk of getting more attacks and the last thing you really need is to have a whole bunch of attacks when you start you uric lowering therapy.

So a careful, when we speak to gout experts, they advise a very careful approach to the introduction of uric lowering therapy and gentle lowering of the uric level to get to goal is probably a good strategy.

And Rahul, we're constantly looking for other ways to differentiate BCX4208 from either established drugs on the market or ones that are in development. And this is an area that we're definitely looking at.

Thanks guys and congratulations at ACR.

Thank you Rahul.

Yigal Nochomovitz from Rodman & Renshaw.

Thanks for taking the followup. Bill, if I could just ask a question on one of the earlier stage programs, the kallikrein inhibitor, I'm just curious at the present time, what is the level of evidence that you have for that drug? Is it principally biochemical related to target inhibition of the protein or if there is an animal model for HAE, have you seen efficacy in such an animal model?

Thanks for the question. So ideally we would like an animal model at this stage of the program. We don't have -- some knockout testing might, but we don't have access to those knockouts. However, we're in the fortunate position of this being a plasma enzyme and (inaudible) as a pro-enzyme and it gets activated. And you can activate it using a variety of contact activation methods.

And there are some published papers, for instance there's a staphylococcus aureus line that activates other plasma kallikrein systems and you can measure them for any kind of production in human plasma on (inaudible).

So of course we've done all of those types of experiments, so it's -- we're certainly beyond just having biochemical evidence. We've got human plasma studies to support the other mechanisms of action of the drug.

Great. Thank you.

And with no further questions in queue, I would like to turn the conference back over to Mr. Jon Stonehouse for any closing remarks.

Thank you. So as always, we really appreciate your interest in BioCryst and we have the good fortune of speaking to you again next week at ACR so we look forward to connecting with you again from Chicago. Take care.

Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the program and you may all disconnect. Have a great rest of the day.