BioCryst Pharmaceuticals Inc (BCRX) 2014 Q2 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the BioCryst Second Quarter 2014 Conference Call. (Operator Instructions) As a reminder, this conference is being recorded. I will now turn the call over to your host, Robert Bennett. Please go ahead.

Yes, good morning, and welcome to BioCryst's Second Quarter 2014 Corporate Update and Financial Results Call. Today's press release and accompanying slides for this call are available on our website at www.BioCryst.com. At this time, everyone is in a listen-only mode and later we'll open up the call for your questions, and instructions for queuing up will be provided at that time.

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

Before we begin, I'll read a formal statement as shown on slide 2 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 risks 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 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. During the second quarter, the BioCryst team continued the momentum we established approximately a year ago towards building BioCryst into the small molecule rare disease company.

We have reached two very important milestones since our last quarterly update. First, we reported positive results for the BCX4161 Opus 1 trial in patients with hereditary angioedema, or HAE. This trial met its primary endpoint, reduction in weekly HAE attack rate with a p value of less than 0.001 resulting in the first proof-of-concept for an oral kallikrein inhibitor for the prevention of HAE attacks.

Second, we close an over-subscribed $115 million capital raise in early June following the OpuS 1 data. This provides us with capital to support the advancement of BCX4161 and our second-generation HAE program to meaningful milestones through 2015. This progress and capital puts BioCryst on very solid footing.

Our primary focus remains on the advancement of our oral small molecule kallikrein inhibitors for the prevention of HAE attacks. With multiple unique BioCryst-discovered kallikrein inhibitors our goal is to bring normalcy to the lives of HAE patients and transform the HAE marketplace.

We expect to start the OpuS 2 trial of 4161 before the end of this year. We also expect to initiate Phase 1 trials of our most advanced second-generation kallikrein inhibitors in the first half of 2015. Bill will provide some additional color regarding our HAE program shortly.

We are advancing our antivirals for flu and hemorrhagic fever viruses as well. As a reminder, the strategic value of both of these programs is they could lead to stockpiling orders that provide nondilutive capital to the Company.

As the December 23rd PDUFA date for Peramivir approaches, we are continuing to prepare for the approval of Peramivir and to make Peramivir available in the US during the upcoming influenza season. Since our last quarterly call, we've had further discussions with both the FDA and our Peramivir contract manufacturer, or CMO, regarding resolution of the issues associated with the warning letter and subsequent 483 received by the CMO.

The two most important outstanding items regarding our CMO that impact Peramivir are the FDA's pre-approval inspection and the manufacture of our validation batches that are intended to fulfill demand for Peramivir in the upcoming season. We remain optimistic that Peramivir will be approved; however, until we have the pre-approval inspection and the validated inventory for commercial use, we cannot provide further clarity or certainty.

We continue to make steady progress in advancing our BCX4430 program and have received additional funding from our $22 million NIAID contract as we successfully achieve important milestones. We have been closely following the Ebola outbreak in West Africa. Our hearts go out to those impacted. These events serve as a sobering reminder of the importance of government preparedness for these dangerous infectious disease threats and outbreaks.

Timely and adequate government funding for potential life-saving therapies for these deadly viruses is essential to develop, gain approval, and ultimately get important drugs stockpiled. Waiting until an emergency is too late, so we will continue to work closely with our NIAID and DOD colleagues to advanced this program as quickly as possible through the completion of preclinical development and Phase 1 clinical testing and, in parallel, we will seek additional advanced development funding to get this program to the finish line.

Now I'll turn it over to Bill who will discuss our HAE programs.

Good morning. As Jon indicated, we are completing preparations to start the OpuS 2 trial of 4161. We have finished our 13-week animal toxicology studies, and we are awaiting feedback from the FDA regarding our proposed study protocol.

In addition, we are finalizing the transition from the hard gel capsule drug product used in the OpuS 1 trial to a soft gel drug product formulation that we plan to use in OpuS 2. To complete that transition, we are wrapping up a relative bioavailability study that compares the drug exposure achieved with soft gel versus hard gel products. The results will help us determine the dose of soft gel capsules needed in OpuS 2 to provide similar exposure to that achieved with the previous hard gel formulation in OpuS 1.

Soft gel capsules represent a commercially acceptable dosage form. We plan to do additional formulation development work focused on increasing the amount of active drug in a soft gel capsule with the goal of reducing the number of capsules required for patient dosing at commercial launch.

Once we have FDA feedback and are ready to initiate enrollment in OpuS 2, we will provide further details regarding the final trial design and other aspects of the 4161 program.

As Jon mentioned, the animal safety work needed for initial clinical studies of the two lead second-generation kallikrein inhibitors is progressing, and we look forward to those compounds being ready to enter the clinic in the first half of next year.

Since plasma kallikrein is a validated target, which also has an innately favorable on-target safety profile, most of the remaining R&D risks to think about for our HAE portfolio fall into the category of potential off-targeted fix.

Consistent with prudent R&D practices, we are continuing to work up several other of our novel kallikrein inhibitors focusing on further increasing the structural diversity of our portfolio of potential drugs or maintaining suitable PK profiles compatible with once-a-day dosing. This strategy maximizes our chance of successfully developing a once-a-day compound.

In recent months we had the opportunity to attend the International Hereditary Angioedema Association meeting in Washington, D.C. and heard moving presentations from patients from many countries around the world. At present, there is no evidence of ethnic variation in incidents of this disease. So, as indicated on slide 4, the medical need here is likely much larger than has commonly been perceived.

Even if we only look at the US, Europe, and other developed countries, there are more than 33,000 addressable patients who need access to safe oral preventative therapies.

In late May we presented the results of the first study to test an oral plasma kallikrein inhibitor in HAE, the OpuS 1 study. One of the important features of this trial was the treatment duration of four weeks. That meant that we had to recruit patients who had very frequent attacks in order to determine if there was a drug effect.

In interpreting the results of this study, it is important to take into account the pathology in this patient group. Slide 5 shows important results from two publications that help us to understand what is different about patients with more frequent attacks.

The top figure is like percent of high molecular-like kininogen that is broken down and indicates that the contact activation system that drives attacks is much more activated in patients with more frequent attacks.

The bottom figure indicates that the reason for this is that there is less natural kallikrein inhibitor in the blood in patients with more severe illness, i.e., more frequent attacks.

Outpatients in OpuS 1 had a historical attack frequency equivalent to more than 70 attacks per year, way more than the average of the worst category in each of these publications.

So if we put these important lab findings together with the type of patient we recruited, then it is very likely that our study subjects had the highest need for additional kallikrein inhibitor to fill up the tank. So with that context, the positive results of OpuS 1 are quite impressive.

We are very excited about our portfolio in hereditary angioedema. We have our lead compound, 4161, moving to a 12-week study this year; two second-generation compounds that are moving to clinical testing in the first half of next year; and additional novel kallikrein inhibitors at initial preclinical testing stage. We are determined to revolutionize the treatment of this highly disruptive illness with our targeted oral drugs. And with a validated target such as plasma kallikrein having so many compounds means that the chance that at least one will make it through development into the market is much higher than average.

With that, I will now turn it over to our CFO, Tom Staab, who will discuss our financial results.

Thank you, Bill, and good morning, everyone. Today I'd like to summarize the key elements of our second quarter and first half 2014 financial results.

As mentioned in previous quarters, BioCryst continues to abide by a single guiding financial principle of focusing cash resources on the advancement of our core development programs to value-creating milestones and prudently managing expenses.

We are pleased to have recently completed a successful public offering, in which we brought in approximately $107 million of net proceeds. This significant capital raise fortifies our balance sheet and puts the Company in a much stronger financial position. We will remain vigilant to the continued implementation of our guiding principle.

On slide 7, revenue for the second quarter of 2014 was $1.5 million, an increase from $821,000 recorded in the second quarter of 2013. This increase is associated with collaborative revenue derived from our BCX4430 development contract with NIAID, which we executed in September of last year. The relatively new NIAID contract and related collaborative revenue more than offset the decreased level of collaborative revenue under the parameter development contract as compared to 2013.

Second quarter 2014 R&D expense was $11.1 million, down slightly from $11.5 million in the second quarter of 2013. A one-time $5 million asset writeoff was recognized in the second quarter of 2013 and contributed to the decrease. The relative decrease in 2014 R&D expenses was largely offset by increased expenses associated with the Company's HAE programs and the achievement of a vesting criterion of previously issued performance-based stock options.

The Company recorded a $2.2 million noncash compensation charge in the second quarter of 2014 as a result of the stock option vesting associated with achieving positive OpuS 1 results. Approximately $1.9 million of this compensation charge was recorded as an R&D expense.

General and administrative expense for the second quarter of 2014 increased to $2 million compared to $1.4 million in 2013. The increase was due primarily to additional costs associated with providing financial assistance through unrestricted grants to the US and international HAE patient advocacy groups.

Moving below the operating line, we incurred $1.2 million of noncash interest expense in the second quarter of 2014 and 2013. We also recorded a mark-to-market hedge loss of $1.8 million in the second quarter of 2014 as compared to a hedge gain of $1.1 million in 2013. Both interest expense and the hedge mark-to-market adjustments relate to our non-recourse notes and hedge arrangement and acted in conjunction with our RAPIACTA royalty monetization.

Our net loss per share in both the second quarter of 2014 and 2013 was $0.23.

Slide 8 summarizes our six-month financial results for 2014 and 2013. Revenue for the first half of 2014 was $4.9 million, an increase from $4.4 million recorded in 2013. The increase was due to higher collaborative revenue associated with BCX4430 development activities under our NIAID contract.

First half 2014 R&D expense increased modestly to $20.3 million from $18.7 million in the second half of 2013. The increase in 2014 expenses was primarily due to increased spending associated with our HAE programs as well as the compensation charge associated with achieving positive OpuS 1 results with both increases offset by a one-time asset writeoff that occurred in 2013.

General and administrative expenses for the first half of 2014 increased to $3.6 million compared to $3 million in 2013. The increase was due primarily to unrestricted grants provided to the US and international HAE patient advocacy groups.

Moving below the operating line, in the first half of 2014 and 2013, we incurred $2.5 million and $2.4 million of noncash interest expense. We also recorded a hedge loss of $3.4 million in the first half of 2014 as compared to a hedge gain of $3.1 million in 2013. Accordingly, changes in the yen/US dollar exchange rate drove a $6.4 million unfavorable swing in our 2014 first half results as compared to 2013.

Now I'd like to explain the future of our non-recourse pharma notes. As mentioned in our press release issued earlier this morning, we expect the RAPIACTA royalty stream to be insufficient to pay the interest in arrears on the pharma notes due September 1, 2014. If our expectations are correct, the inability to satisfy this obligation will result in the non-recourse notes going into default. An event of default would enable noteholders to accelerate the underlying debt and pursue foreclosure of the assets which collateralized the notes. These assets are future royalties and payments under our licensing agreement with Shionogi.

Accordingly, the primary impact to BioCryst of a note default would be the loss of future payments under the Shionogi agreement as well as legal costs associated with retiring the notes. Upon foreclosure, the Company would no longer be required to hedge the RAPIACTA royalty stream and therefore may incur some costs associated with liquidating the existing hedge arrangement. We currently marked the hedge arrangement to a market valuation on a quarterly basis so any future cost or benefit should not be significant.

From a holistic viewpoint, we do not expect an event of default on the pharma notes to have a significant impact on the Company's future results of operations or cash flows due to the notes are non-recourse in nature, all payments from the Shionogi go directly to pay the note obligations of JPR royalty sub currently, and the fair value of the hedge arrangement is mark-to-market on a quarterly basis.

Moving on to slide 9, I'd like to discuss our cash balance and cash usage. We ended the quarter with cash and investments of $132.9 million following a very successful public equity raise. Based upon current plans and expectations, we expect our existing cash to provide us liquidity beyond fiscal 2015.

In addition, we are pleased with our operating cash usage through the first half of 2014, which was $11.8 million and decreased from the $13 million utilized in the first half of 2013. As a reminder, operating cash use excludes any impact of our royalty monetization, hedge collateral posted or returned, and any other non-routine cash flows.

In regards to our financial guidance, our operating outlook for 2014 remains unchanged. As such, we continue to forecast operating cash usage to be in the $35 million to $43 million range and operating expenses to be in the $48 million to $59 million range.

Importantly, as we mentioned in February, we have specifically excluded equity-based compensation expense from our operating expense guidance.

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

Thanks, Tom. What you should take away from today's call is BioCryst is in a very strong position based upon our recent accomplishments, specifically proof-of-concept with our oral kallikrein inhibitors, and raising additional capital to continue advancing our programs.

Looking ahead, important milestones include the initiation of the OpuS 2 trial in HAE patients by the end of this year. The PDUFA date for Peramivir in December, and the initiation of clinical trials for both BCX4430 and second-generation HAE compounds in Phase 1 safety studies during the first half of next year. We look forward to providing you further updates as we reach these important milestones.

This concludes our prepared remarks, and we'd now like to open it up for your questions.

Thank you. (Operator Instructions) Brian Abrahams, Wells Fargo Securities.

Hey, guys, thanks for taking my questions and congratulations on all the continued progress. A question on the second-generation kallikrein inhibitors -- just curious, what are some of the things that you guys are going to be looking for in determining which of the two lead candidates to advance first? And then as you continue to do preclinical studies, I know you've talked about some of the parameters that you've learned about and the profiles of these drugs in terms of bioavailability, potency specificity -- is there anything more that you've learned about the candidates since, sort of, the last update there as they continue to progress?

Thanks for the question. And I think that the sorts of things that we're looking at as we go through the remainder of the non-clinical development required for INDs is, obviously, first and foremost, a safe DSAR, assuming both compounds get through toxicology and into the clinic. Then the clinic will PK profile, and the clinical safety profile will determine which one we advance.

Remember the goal here, the goal is to have once-a-day dosing, so whichever PK profile makes it easiest to have once-a-day dosing would be the choice assuming that there's nothing to differentiate them on safety.

I think that with regard to the whole portfolio of second-generation compounds, any compounds that don't have great-looking PK we're not even working on. So we're working on compounds that have PK characteristics in animals that would be compatible with once-a-day dosing in people, and we're looking to improve and continue to increase their structural diversity in the set. They all have great potency, they all have good bioavailability.

So I think they have a minimum criteria to get started on a compound, but we want to, as I mentioned in my remarks, we just want to be prudent and make sure that we have lots of structural diversity in our choices.

Got it, great. Thanks, Bill, that's helpful. And then you mentioned that the 13-week tox work for 4161 has been completed. Just wondering to what extent the data has been worked up at this point and any surprises or anything unexpected that you're seeing there?

The point of the toxicology program is to get through development is that at each stage you want to have support from your animal safety to administer the drug safely in humans for the appropriate duration. So at conclusion from the tox studies is that we have support to administer 4161 safely in people for 12 weeks, and we're quite comfortable with that conclusion.

Liisa Bayko, JMP Securities.

Just to sort of complete the thought on tox, what are your plans for longer toxicology studies just to support chronic dosing?

We'll follow the regulations and it's a highly regulated paradigm here, so there are sub-chronic toxicology studies that we have to do. There's a set of reproductive toxicology studies that we have to do, and with oral compounds that are intended to be administered chronically, we'll also need to complete carcinogenicity studies. So all of that is planned and, for example, six- to nine-month types of studies would be the next step in terms of duration of administration.

Can you remind us what off-target effects you are particularly watching for?

For 4161, the off-target effect that we have investigated quite a lot even before getting into toxicology was the effect on the coagulation system. So we do know that that drug at very high concentrations on the lab bench will effect tissue effect for Factor 7A and prolong the prothrombin time.

In animals, we have to have 20 micromoles, 40 micromoles of the drug circulating in the blood before it does anything to the bleeding time, and we have not seen any effect in humans or any significant adverse effect in our animal safety studies with regard to blood coagulation. But that's really the thing that we would have predicted in terms of an off-target effect.

Okay, fair enough. And then any -- can you just walk us through what the process is for getting a contract for Peramivir and have you had any outreach yet and, sort of, what kind of range, kind of, dollars we could think about or any benchmarks you can point to? Thanks, that's my last question.

Yes, Liisa, this is Jon. So in terms of the process, at least the process we've been through in the past, is a procurement contracting process. We've been told very clearly from BARDA that those discussions won't occur until we've ultimately gotten to the goal of the advanced development contract, which is licensure of Peramivir -- so approval.

So -- we haven't had any conversations with them about that yet, but once we have approval, we will reach out to them and try to initiate those conversations.

In terms of the amount, it's really difficult to predict because they haven't shared with us specifically what the need is. So we know we're the only IV neuraminidase for any viral for influenza that, if approved, would be approved for use. And so we think there's absolutely a spot for it to be held in the stockpile, but it's really, really difficult for us to predict. I mean, the only other numbers I can give you are they spent about $200 million on advanced development, and so that's a pretty big chunk of money to see this drug get approved, and I would hope that stockpiling would be the result of all of that.

Charles Duncan, Piper Jaffray.

Hi, guys, thanks for taking the question and congratulations on a good quarter of progress.

Thanks, Charles.

So first question is on OpuS 2 timelines and design. I know you are waiting for feedback from the FDA, but can you provide us any color on the design that you intend to pursue? And I'm wondering if the frequency of attacks is something that is top-of-mind when you're designing this next study?

Sure, I mean, I think that the precedent in the field is crystal clear. So the Lev Cinryze pivotal study was a crossover placebo-controlled design. Beyond going CSL Behring subcutaneous Berinert study is a crossover placebo-controlled design. We just completed OpuS 1, which was a crossover placebo-controlled design, so that's pretty clear to us that that should be the path forward with OpuS 2, and we're planning a 12-week duration. As we were just discussing a few minutes ago, the 13-week toxicology program supports safe administration for 12 weeks in humans. And the dosing, as we discussed in our last quarterly call, I think, we are very happy with the results of OpuS 1, and we want to have the same type of exposure in OpuS 2.

So I think we're not trying to invent the wheel here. We are trying to follow the plot and do a high-quality study powered at the -- as you would a pivotal study.

He also had a question about the attack frequency. You might want to comment on that.

Sure. So I think that in the OpuS 1 study of only four weeks duration, our entry criterion was a minimum of one attack per week. Clearly, with 12 weeks duration, we can afford to relax that. Right now I don't want to go into more details about it, but, clearly, we don't have to be that strict in a 12-week duration study. But we certainly need enough attacks that we're confident of hitting a difference comparing the placebo period to the 4161 period.

And do you have a rough order of magnitude in terms of the number of patients that you're targeting?

Yes, absolutely, and we're planning our resources with a little bit of flexibility here pending agency feedback. And we're planning to be able to support a study between 80 and 120 subjects. That's a pretty big study in hereditary angioedema orphan disease.

Yes, but it should result in pretty clear observations.

Yes, that's what it's designed to do, absolutely.

Okay, and let's see, is there -- with regard to that FDA feedback are there a set of questions that are being asked, or is this just kind of standard procedure? And do you anticipate being able to provide some clarity on that feedback at the next quarterly update?

With Elliot Berger in charge of Regulatory at BioCryst we always have a set of questions when we send something to the FDA. So I think that what we're planning to do is wait until it's all resolved and stop the study and post the details on clinicaltrials.gov, and we'll give color and detail about what we're doing at that point. That may or may not be at the next quarterly call.

Okay, that makes sense. And then if we could go to 4430, I just wanted to clarify -- is Ebola actually part of the current contract? And, if not, what your plans to include it or change the contract?

So the contract, I think, is best viewed as having flexibility. I think the focus of their original work in terms of what's most advanced is Marburg virus because that's where we have non-human primate data that we talked about a while back that was published in Nature.

Clearly, the next step for Ebola virus with that drug would be to do a similar type of study in non-human primates with 4430, and, absolutely, we're in active discussion with the folks at NIH and NIAID. I mean, they've been incredibly responsive and helpful throughout the contract. So we look forward to, hopefully, doing that.

And then the final question was I'm not sure I understood, really, the -- I'll call it the "order of operations" for Peramivir. You are, first of all, looking for regulatory action, and then you're looking for manufacturing. Can you do the manufacturing before the regulatory action?

When you manufacture your validated batches, it's always wise to do it with the FDA understanding that the quality is to their standards. So I would say that the order is you want to be really confident that the FDA believes the quality is to their standards before you run those batches.

All right, good. That's helpful. Thanks for the added color, guys. Congrats on a good quarter of progress.

Thanks, Charles.

Mario Corso, Mizuho USA.

So just for clarity on OpuS 2, is there any reason for you to believe at this point that the trial design won't largely resemble your own plan that you're talking about? Or is it just a matter of finalizing things?

On the debt, I don't know, maybe the word "default" scares some people, but it sounds to me like the only thing changing is you won't be receiving those small royalties from Japanese sales. And then, thirdly, on Peramivir, is the issue that the pre-approval inspection and the batch runs have not yet taken place? Or have those taken place, and you're waiting to hear feedback on those? Thank you.

So Bill will take the first one, Tom will take the second one, I'll take the third one.

Hi, Mario. Thanks for your questions. I feel very comfortable with this study design. I don't have a reason to believe that it will turn out substantially different from what we've proposed. I think the fact that the CSL Behring studies currently ongoing in the US and other countries establishes a very solid precedent that, in 2014, that study design is completely -- that type of design is completely acceptable. And every HAE expert and the patient association contacts that we've made, who we've talked to about the study design, fully support what we're doing. So, no, I don't have any real reason to believe that it will be substantially different.

Hi, Mario, it's Tom. So in regards to the debt question, in March 2011 when we -- our cost of capital was high, we entered into this structured arrangement and, effectively, the arrangement was a high-risk, high-return type of arrangement for the debtholders, which is because of the aspect of a new product launch in the seasonality with flu, there was a high risk about what the future royalty would be. And, accordingly, it was structured with a high interest rate to negate or pay for that high-risk environment.

It was also structured to be non-recourse. So when people get very upset about default, they should also look to the other side, which is non-recourse, which is, effectively, they negate things out and, ultimately, if that happens, it falls away from the BioCryst corporate balance sheet if the notes are foreclosed. And so, you're right. The impact would be that it just wouldn't appear on our financial statements and all the assets and the associated $30 million liability goes to the noteholders. It doesn't really have an impact on BioCryst, the remaining corporation.

However, we wouldn't have any residual value associated with that royalty stream. So it just -- everything kind of just falls away upon foreclosure.

And then your last question about the pre-approval inspection and the run of the validated batches, the short answer is no, they haven't been conducted yet. And, again, it goes back to what I had said earlier to another question, which is you want to make sure that the manufacturing facility meets the standards of the FDA for quality. And so we want to make sure that that's in place, at a minimum, for the lines that we're going to run the Peramivir batch is on.

So we still have time for that to happen in advance of the PDUFA date, and so we're hopeful and optimistic that that will all be resolved.

Serge Belanger, Needham & Company.

First a question on 4161 and the upcoming OpuS 2 trial. Now that you've completed the long-term talk study, it sounds like the last piece before getting FDA feedback is the bioavailability study data on the new soft gel formulation. Can you just confirm this is the last piece before FDA feedback? Or do you need to do anything else on your part?

So what we need for starting a study is a final protocol. Contracts [aside], file the approval, drug supply, and everything else is done. And I think that it's important that we look at the results of relative bioavailability study and make the right choices there.

So just to put it into context, this is part 2 of a three-part drug formulation program. Part 1 is get the drug into people in whatever formulation is most convenient to do early phase studies. We've done that, and we're finished with that part.

Part 2 is start moving towards a commercially acceptable formulation, which means put the -- this is a liquid-formulated drug, so that means put a liquid-formulated drug into soft gel capsules and make sure that you run your definitive experiments and that you're confident that you will get the exposure that you need to show efficacy.

Part 3 is make whatever other improvements you can. In our case, that means try to increase the dose in the capsule for commercial launch. And that won't be done for OpuS 2. That will be done later, and so we will -- if we are successful there -- then we will need to do a bioavailability study comparing the final commercial capsule to the OpuS 2 capsule just to make sure that they are equivalent.

So I think that it's a standard -- it's a pretty standard type of program to do, and we'll make those decisions in the upcoming couple of months, and we look forward to starting the study.

Okay, thanks. And then one more on Peramivir. It sounds like your CMO is still under a warning letter. Do you know if a reinspection by the FDA has been scheduled at this point? And any contingency plans if this facility remains on your warning letter?

Yes, I think what's important here is to remember that this is an issue for the facility, in general, not specific to Peramivir. So it's the best interests of the CMO, from a business perspective, to get this stuff resolved as quickly as possible because that's how they make their money.

It's our understanding that they are still under the warning letter. They haven't had a reinspection. They're in conversations with FDA and are working to get those issues resolved. They've made corrections, and they're continuing to make corrections, and so, as I said before, based on the conversations we've had with them, we're optimistic that we'll be able to get through this.

In terms of contingency, I think it's a matter of timing. At some point the warning letter will be removed, and they'll be able to manufacture, we'll be able to have the inspection, and we'll be able to make the validated batches. Right now we believe that that could be in advance of the PDUFA date, but the contingency is that would come later, and then we'd do it later.

Rahul Jasuja, Noble Capital Market.

Just a couple of questions. Let me start with the HAE program. I am looking at slide number 5 where Bill talked about the spectrum of disease of phenotypes and then the (inaudible) of kallikrein inhibitions. Now, on the bottom figure, you've talked about -- and this is from my, sort of, understanding, so tell me if I'm thinking about this wrong, all right? Patients with more severe disease have less endogenous kallikrein inhibitor. So in the OpuS 1 study, obviously, you had patients that had frequent attacks, they had less of the kallikrein inhibitor. And given the fact the bioavailability was far less with 4161, the expectation is that in a larger study you'll have patients that have a broader spectrum of frequency. So the level of endogenous kallikrein inhibitor may not be as low, you could potentially have a more positive efficacious result. Is that generally correct?

You got it. You start at with an empty tank, you need more drug, and whether that's Cinryze or [Add Drug] or the Dyax antibody or any kallikrein inhibitor, you're going to need more administered kallikrein inhibitor to fill up the tank. As you move from right to left on this chart, then, on average, the endogenous level of kallikrein inhibitor is getting higher and higher, and you end up with a half-full tank, and you only need to use less exogenous administered kallikrein inhibitor to fill up the tank.

So seeing as we're going to have a standard dosage paradigm here, if you're starting off with a situation where you have more of the endogenous kallikrein inhibitor with a standard dose, more of those patients are going to get into the normal range. That's the plot, and I think that our principal investigator and the other leading experts we've talked to about this all commented to us that their expectation is that because of this phenomenon, then as we go into patient populations that less frequent disease, we should get better results.

Now, I don't know, we've got OpuS 2 versus OpuS 1, whether the difference in eligibility will be big enough to be meaningful in that regard. So I think that -- I don't want to make any predictions about the treatment affects size, you know, if it's two, where I can be very, very confident about is that we've got a robust effect in OpuS 1, and we fully expect to see a treatment effect in OpuS 2.

And we're powering it like a pivotal study, which also takes that risk down.

I think it is very important in thinking about routine prescription use of an oral kallikrein inhibitor once it hits the market, because your average patient out there is certainly not in the category of OpuS 1 or OpuS 2 eligibility. Their less severely affected in terms of frequency of attacks.

All right, so the next question really is kind of like curiosity on the 4430 program, BCX 4430. Now, I do recall that the synthetic adenosine analog that you've developed for Marburg, and I think that's the contract with the government, that has the ability to inhibit the RNA polymerase that is for all that whole class of filoviruses should be applicable to Ebola and are the animal studies, the preclinical studies you've done that shows that the efficacy of that adenosine analog inhibitor is good across the board?

I think your question is a great one, and you're absolutely right that 4430 is a broad spectrum adenosine analog nucleoside, and it gets converted into the nucleotide triphosphate form inside cells fools the viral enzyme into thinking it's ATP and the monophosphate form get incorporated into the growing RNA strain and disrupts viral RNA synthethsis. Sorry for the molecular biology details, but all of that we published in the Nature paper, and we also had a figure in there, which was extended Figure 3C that had mouse Ebola experiment described with us in [proved] survival in mice infected experimentally with Ebola virus, which is one of the standard type of screening models.

The next important step there is to do a monkey experiment. Given that it's a direct-acting antiviral with that mechanism of action and given the similarity in the data in the mouse models with Marburg virus and Ebola virus, we fully expect that the drug would show activity in a monkey model. It's important to do that step because the monkey model is done with wild-type viruses. The mouse models are done with mouse-adapted viruses. So they do have that difference. So it's important to do the next step.

I think the other part that's important here is, at least from my perspective, more of these nasty viruses are popping up around the world in places we've never seen them before. And so it's really hard to predict what's the next virus and where is it going to show up and when?

And so the most efficient bioterrorism preparedness approach is to have a broad spectrum antiviral in the stockpile, and that's what we're working towards, that's the conversations we're having with the government. And the faster we can get there and have the funding to get to the finish line, the quicker we'll have that available.

Steve Byrne, Bank of America.

In the OpuS 1 study, Bill, did you have enough patients and enough variability in the baseline attack frequency to observe any relationship between the reduction in that attack frequency versus the baseline level?

With only 24 subjects, I think that limits the ability to do those sorts of analyses. However, what I can say is that at least in that study there is no clear impact of baseline. On the other hand, they all had high baselines, right?

So I think that to properly answer the question we're going to have to progress through subsequent studies like we were talking about before and ultimately into a broader patient population that has less frequent attacks.

I think that given the biology, which is very, very straightforward, there is every reason to believe that once you get into the more average patient population with much less frequent attacks, and I should hasten to add those people still have very disruptive lives and are still at risk of dying of laryngeal attacks from the disease, so it's not like they have a trivial disease at all. But because they have higher kallikrein inhibitor levels to start with, the degree of benefit we're expecting here based on those principles actually should go up not down. Because what we're trying to do here is restore the normal phenotype of how much kallikrein inhibitor you have in your blood.

Okay, and the new soft gel formulation -- does that have any effect on the bioavailability or the PK profile?

We're roughing that study up and we'll determine that once we have thoroughly looked at the results, if necessary, or make a dosage adjustment to match the exposure that we need. This is not an advanced development bioequivalence formulation issue, this is a mid-stage development just making sure that you hit the right exposure issue.

And kind of a long-term question for you, Jon, is as you think about 4161, if it were broadly approved, would you view this indication as being one where you would expect similar pricing for this product worldwide? Or could you envision a lower price point in the ex-US markets to drive penetration?

So it's too early to predict pricing. It's a small molecule so what I will say is we have flexibility, which is nice compared to the biologics that are either on the market or being studied. And then I think there's really good precedent in small molecules in rare diseases where they have a high price point in these rare diseases. So it all comes down to is there real benefit and need? And I think with oral kallikrein inhibitors that's absolutely the case.

(Operator Instructions) Liisa Bayko, JMP Securities.

Hi, I just had a quick follow-up. Can you just walk us through the, sort of, the plan from here to approval, sort of, after OpuS 2 what your next thoughts are for a study design, et cetera?

Sure, hi, Liisa. So given that this is an orphan disease indication and historically these studies have been tough to enroll. I mean, we are very pleased we were able to enroll 24 high-frequency-attack patients for OpuS 1. And we are confident that we'll be able to enroll OpuS 2 but, nevertheless, it's always a challenge. We are hopeful that the overall size of an NDA database here would be quite modest. That's the first point.

The second point is the unequivocal results of OpuS 1, I think, put that study in an interesting light. I mean, that's the randomized placebo-controlled study with a very strong result. So, obviously, we need the longer-term administration safety, and we need to replicate those findings in an adequate, well-controlled study, and so we're planning OpuS 2 as an adequate and well-controlled study. I think at the end of the day it will be up to the regulatory agency to determine whether or not we need an additional adequate and well-controlled study beyond OpuS 2, and we certainly will need some longer-term safety data beyond 12 weeks. This is a lifelong disease and you want to administer the drug continuously.

But those things are achievable, so the full scope of the complete development program, I think I can't be certain of right now, but I'm pretty sure that after OpuS 2 we'll have much better clarity on that.

Are you planning to have an extension phase of OpuS 2 to gather that safety data?

I think that's the -- it would be fantastic if we could do that. At the moment, our animal safety program is limited to the 13-week studies we discussed before. Typically, in drug development, you need to have animal safety studies completed that cover the duration of exposure that you plan to give.

So, for example, if we were going to give drug for longer than 12 weeks, you would, typical regulatory attitude would be that you would need to have chronic tox already completed. We don't have that completed right now so, at the moment, I don't have an expectation that we'll be able to roll people over from OpuS 2.

And when will you have chronic talks completed?

That won't be for some time. Those studies take quite a while to do.

So would it be, in time, to be able to expand OpuS 2 since you already have those patients or not in time for that?

I think if the issue is chronic safety, it's more efficient to do an open label chronic safety study rather than keep enrolling people into a randomized crossover. So I think I'd prefer to do that.

Rahul Jasuja, Noble Capital Markets.

I just had one follow-up. Plans for presentation of OpuS 1 -- was that supposed to be at [Qual AI] in Feb next year?

We're working with the principal investigator and the other investigators to submit abstracts to scientific meetings. I think that rather than give you specific details, what we'll do is we'll make it known when we hear that our abstracts are accepted at whatever scientific meetings. So I'm sure Rob will do that for you.

That concludes the Q&A session. I will now turn the call back over to Jon Stonehouse for a final comment.

Yes, as always, we really appreciate your interest in the Company and have a great day. Thank you.

Thank you, ladies and gentlemen. That does conclude today's conference. You may all disconnect, and everyone have a great day.