BioCryst Pharmaceuticals Inc (BCRX) 2015 Q1 法說會逐字稿

Good day, ladies and gentlemen. And welcome to the BioCryst 2015 conference call. (Operator Instructions) As a reminder this conference call is being recorded. I would now like to introduce your host for today's conference, Mr. Rob Bennett, Vice President, Investor Relations and Operations. Sir, please go ahead.

Thank you. Good morning and welcome to BioCryst Pharmaceuticals first quarter 2015 corporate update and financial results conference call. Today's press release and accompanying slides for this call are available on our website, www.BioCryst.com. At this time all participants are in a listen-only mode. Later we will open up the call for your questions and instructions for queueing will be provided at time. Joining me on the call today are CEO Jon Stonehouse, CFO, Tom Staab, and Bill Sheridan, our Chief Medical Officer. Before we begin, I will read a formal statement 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 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, performance expressed or implied in this presentation. You should not place undue reliance on the forward looking statement. 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. We continue to make steady progress building our rare disease oral drug Company off the foundation of our structure-based drug design discovery research platform. Our primary focus is on the development of oral kallikrein inhibitors for the prevention of hereditary angioedema attacks, or HAE. Our goal is to bring normalcy to the lives of HAE patients and transform the treatment of HAE.

Our oral kallikrein inhibitor programs are moving forward according to plan. The ongoing OPuS 2 trial for 4161 continues to enroll HAE patients, and it remains on track to reach completion and report out results by year-end. We currently have over 30 sites up and screening in the U.S. and Europe. In addition we continue to work on improving the 4161 formulation to reduce the capsule count. New formulations to reduce the count to three or two capsules per dose are currently on stability.

If all goes according to plan, we will use one of these formulations in our next 4161 trial. Our second generation kallikrein inhibitor program also continues to progress as planned. As a reminder, the goal of the program is to wipe out attacks by getting adequate kallikrein inhibition to replicate the normal phenotype with one pill once a day. BCX7353 is the most advanced molecule and will be entering a phase 1 trial this quarter. And we look forward to reporting safety PK and PD results during the third quarter

In addition, our discovery team generated a dozen structurally diverse compounds that will serve as back ups to 7353 and provide broader protection of our intellectual property. Our goal is to have a small number selected for pre clinical development later this year. On March 31st, we announced HHS BARDA awarded our Company a new contract for the continued development of BCX4430 for diseases caused by RNA viruses including filovirus.

The award included a base contract of $12.1 million to support 4430 drug manufacturing, as well as $22.9 million in additional development options that can be exercised by the government, bringing the potential value of the contract to $35 million. As I stated in the past since the government is likely the only customer for medical counter measure anti-viral treatments, continued government funding is a good sign of continued interest.

Now I would like to turn the call over to our CMO, Bill Sheridan. We received several questions regarding the interpretations of HAE clinical study results and how baseline attack frequency may impact results. Bill will review some of the published literature on attack frequency to help address this topic. Bill?

Thanks, Jon. My remarks today (inaudible) variation in phenotype in patients with hereditary angioedema, and how this variation might impact studies of prophylactic treatment in this disease. The frequency of angioedema attacks in HAE is well known to cover a very broad spectrum. Some patients have had infrequent attacks, some have had moderately frequent attacks, some have extremely frequent attacks. Dr. Bruce Zuraw noted in his review in the New England Journal of Medicine in 2008, untreated patients have attacks every 7 to 14 days on average, with a frequency ranging from virtually never to every three days.

A lot of work by many investigators has been directed at understanding the biological basis underlying this natural variation in frequency of attacks. Or, more broadly, the [variety] of illness. And recently studies by leading groups have provided the important insights into this question. One case study from Dr. Henriette Farkas' group, and published by Dr. Suzanna Kellerman and colleagues in Clinical Immunology in 2010, looked into the levels of the primary natural kallikrein inhibitor at diagnosis in 115 patients. At this center each patient's [plasma] sample was assayed with the level of functional C1-inhibitor. In each case the clinical severity of the illness was also graded according to a scale published by Doctor Agostoni and colleagues in the Journal of Allergy and Clinical Immunology in 2004 as part of the report from a collaborative workshop in hereditary angioedema.

This categorizes the illness from asymptomatic which is coded at five, through progressively more severe illness coded at minimal four, mild three, moderate two, and severe, coded as one. The parameters evaluated include the impact on daily activities, need for energy treatment, and need for long-term prophylaxis in the disease. And the scores are summed over the course of one year. In essence the resulting category for an individual patient is a product of the average attack score times the attack frequency, plus components for medical intervention. And this score is heavily influenced by attack frequency as we have confirmed in discussion with the investigators.

The laboratory evaluation clearly showed that patients with more severe categories of illness had lower levels of functional C1-inhibitor, a finding that was highly statistically significant with an over all P-value of 0.0003. The second key study came from Dr. Marco Cicardi's group and published by Dr. Chiara Suffritti in Clinical and Experimental Allergy in 2014. This study evaluated markers of activity as the contact activation pathway including the levels of the large and long lasting fragments of high molecular kininogen, or HK, produced when plasma kallikrein digest kininogen and releases bradykinin. This measurement is termed cleaved HK and is reported as a percent of the total HK content.

Investigators studied plasma samples from 162 patients during routine clinic visits and 81 healthy controls, and reported the values for the HAE patients categorized by frequency of attacks of angioedema. Patients with more frequent attacks were found to have higher levels of cleaved HK indicating a greater degree of activation of the contact pathway in patients with more frequent attacks. It is important to note that within each category of HAE patients, whether one uses an overall disease severity score or simply counts attack frequency, there is a substantial variation in each of the measures we have discussed today, actual C1-inhibitor and cleaved HK.

Biological as say and to see the reported relationships between so we should expect a large dynamic range or attack frequency would be necessary in the analysis. We put these two studies together and a reasonable assessment is expression in patients with HAE and proven by biological differences in the amount of natural inhibitor of plasma kallikrein, and that his shows up also in the degree of activation of the contact pathway. (inaudible) biology also suggests that pharmacologic plasma kallikrein inhibitor therapy is likely to be more successful in categories of patients with less frequent attacks or less severe disease scores.

It is therefore important to consider the known frequency angioedema attacks in the population under study in designing and interpreting studies of investigational prophylactic drugs in this indication. In OPuS 1, we studied patients who had an average of about five adjudicated attacks in four weeks during the placebo period on study a rate of 1.27 [attacks] per week, and we show that BCX4161 reduced the attack rates over four weeks by an average of about 1.8 attack. The OPuS 2 study which has a duration of 12 weeks, we don't yet know what the final attack rate will turn out to be in placebo group, but we have liberalized the inclusion criteria in OPuS 2 compared to OPuS 1, so we expect it to be lower than in OPuS 1. The OPuS 2 study will help to expand our understanding of the potential of BCX4161 as a prophylactic treatment for HAE patients, and we very much look forward to finishing the study and reporting the results. Tom will now review the financial results.

Thank you, Bill and good morning, everyone. Today I would like to summarize the key elements of our first quarter 2015 financial results and to reiterate our 2015 financial guidance. As previously mentioned in our results calls, we vigilantly follow a guiding principal for our operations. That principal is to focus our cash resources on the advancement of our programs to value-creating milestones, and to prudently manage expenses. Adhering to this principal has led to a number of significant value inflection points in the last two years.

Today I am pleased to report the details of our first quarter 2015 results which reflect the efficient progression of our programs in the anticipation of additional value creating milestones before the end of 2015. On slide six, you see revenue for the first quarter of 2015 increased to $6.8 million compared to $3.5 million recorded in the first quarter of 2014. This increase was primarily associated with higher BCX4430 collaborative revenue under our two development contracts with NAIAD and BARDA.

In addition we recorded net product sales of $537,000 of RAPIVAB under the sell-through revenue recognition methodology. As a reminder this methodology represents recording revenue when RAPIVAB is sold by our distributors to hospitals and physicians' offices. First quarter 2015 R&D expense increased 86% to $17.1 million compared to $9.2 million in the first quarter of 2014. This increase was associated with increased development activity with our HAE portfolio, including the advancement of a multitude of second generation compounds following BCX4161, as well as a higher level of development expenses for BCX4430.

The aggressive advancement of our HAE molecules continues to be a primary focus of our drug development efforts, with over 70% of our development spend devoted to HAE. In addition to BCX4161 and BCX7353, we also are evaluating a dozen additional second generation molecules as candidates for pre clinical development. General and Administrative expenses for the first quarter of 2015 increased to $4.1 million compared to $1.6 million for the first quarter of 2014.

This increase resulted primarily from higher administrative, distribution, and marketing expenses associated with the approval of RAPIVAB as well as unrestricted grants awarded to the U.S. and international HAE patient advocacy groups. Moving below the operating line we incurred $1.3 million of non cash interest expense in the first quarter of 2015 and $1.2 million in the first quarter of 2014. We also recorded a mark to market hedge game of $464,000 in the first quarter of 2015 as compared to a loss of $1.5 million in 2014.

Both interest expense and the hedge mark to market adjustments relate to our non recourse notes and related hedge arrangement enacted in conjunction with the RAPIVAB

royalty monetization. Our net loss was $15.2 million or $0.21 cents per share in the first quarter of 2015 compared to a $10.1 million net loss or $0.17 cents per share in the first quarter of 2014. Moving on to slide seven, I would like to discuss our cash balance and cash usage.

We ended the quarter with cash and investments of $111.3 million, a strong financial foundation. Our cash utilization in the first quarter of 2015 was uncharacteristically low due to the collection of $7.4 million of RAPIVAB receivables from our distributors associated with launch stocking of the RAPIVAB pipeline. Looking forward to the remainder of the year we expect our quarterly cash utilization to increase as compared to the cash use in the first quarter.

Considering our current plans and expectations we expect our operating outlook for 2015 to be unchanged from guidance we issued in February. As such we continue to forecast operating cash usage to be in the $65 million to $80 million and operating expenses to be in the $75 million to $95 million range. Our operating expense guidance excludes equity based compensation due to the difficulty in reasonably forecasting this expense.

Based upon these expectations we forecast our existing cash and investments to provide us liquidity beyond the middle of 2016. Now I would like to turn the presentation back over to Jon for his closing remarks.

Thanks, Tom. So in closing the first quarter has been focused on getting things set up which we believe gives us the opportunity to create meaningful value later in the year. Looking ahead here are the most important events for the rest of the year. Initiation of the BCX7353 phase 1 trial this quarter and completion of that study reporting out results in the third. Completion of the OPuS 2 trial by the end of the year, initiation of a proof of concept study with 7353 by year-end, and obtain the U. S. government contract RAPIVAB by year-end. We look forward to providing you further updates as we reach these important milestones. This concludes our prepared remarks and we will now open it up for your questions.

Thank you. (Operator Instructions) Our first question comes from Jessica Fye from JPMorgan. Your line is now open.

Hey, guys, thanks for taking the questions. On 7353, it sounds like phase 1 is starting soon. What are the remaining gating factors to that study starting if any? And as we think about that phase 1 data, I think we are focused on the safety, it seems like efficacy is somewhat [theorist] with the anti-kallikrine approach. What, if any, side effects should we thinking about or what are you watching out for in that study? Thanks.

I will take the first part and maybe Bill can handle the second. The gating factors in gearing up for a phase1 trial are getting the site ready, having the drug supply, making sure you have the regulatory approvals, the IRB, and patients. And so we are in the final stages of that and believe that we remain on track to get that study up and running in the second quarter. With regard to what are we looking for, I think -- it is important to confirm or find out in humans what the PK and the PD looks like. We know what it looks like in rats and we know what it looks like in monkeys, but it is important to know what it looks like in humans and healthy volunteers. And then the risk we've always said with the program is the off target toxicity that's just unknown with an early stage small molecule. But I will let Bill elaborate.

You can partition the (inaudible) risk into on target and off target, (inaudible) And we know quite a lot about the safety of inhibiting kallikrein. Everybody we've talked to and have reviewed the literature indicates that inhibiting kallikrein is a safe thing to do. And it makes sense because what we are trying to do here is simply restore the normal phenotype of kallikrein inhibition anyway. We are not worried about on target issues. We -- with the enough exposure, with a small molecule medicine you would expect to generate some type of off target effects. Sometimes that will result in toxicity. At the end of the day it is all about the safety[biogenesis] needed to hit the therapeutic target. And our assessment of the non-clinical evidence is that we've got those safety margins, and we'll have a substantially increased body of knowledge once we have the phase 1 results in front of us.

Got it. Thanks. Maybe one more just on OPuS 2. So one question we get is what could the potential percent reduction in attack rate be? It sounds like the baseline will be very relevant there. Can you talk about just in broad strokes what your expectation is for the baseline to be enough study?

Well, we've been conservative in the way we designed it. And you know the data we have to hand is OPuS1. So that's the way we thought about what we would like to see in OPuS 2. I think it is quite possible we will have a better result in OPuS 1. I don't want to predict that, but it is certainly possible. And for a normal medicine to emulate the efficacy, say in the same (inaudible) typical study published in the New England Journal would be pretty nice, pretty close to that already in terms of absolute reduction in attack rate. This is all about thresholds. I think it -- this is not a case where in people with milder disease, if you like, you have higher baseline kallikrein inhibition levels in the first place, that they would be harder to treat. They're going to be easier to treat. So I think that -- whether or not the placebo attack rate is a lot lower, in OPuS 2 than in OPuS 1 we can't say yet. Obviously the study is ongoing. I think it is a reasonable hypothesis to think about getting a better outcome in people who have close to the normal range C1-inhibitor levels in the first place, but we have to do the experiment.

Got it. Thank you.

Thank you. Our next question comes from Charles Duncan from Piper Jaffray. Your line is now open.

Hey, good morning, guys. Thanks for taking the question, and congrats on good cash control and the clinical progress in the quarter. My first question is kind of related to the last one that was just asked regarding OPuS 2. I'm wondering if you could give us an update on any of the patients that are enrolled, the patients that are enrolled, any of their characteristics? Do you have any blinded read information that you can share with us at this point?

Hi, Charles. Thanks for your question. I am sort of allergic to blinded combined analyses because they can be very misleading. I've had that experience before. I think what we can say, to give you some reassurance, is we're recruiting into the study, we got sites up and running in the U.S. and Europe. There is always competition for patients in clinical studies, but we've got -- what we do have is an insight into adherence with filling out the electronic diary and adherence with (inaudible) medication, because that sort of information is like operational tracking if you like. We use an electronic diary to try to facilitate that. That's going quite well. That's a good sign in terms of getting what we need to have an interpretable study. Obviously if people don't take their medicine it can't work. So they seem to be taking their medicine. I think we did liberalize the inclusion criteria in terms of attack rate required for the study. In other respects it's quite similar to the criteria for OPuS 1. But I think it would be pretty much impossible to get a hundred patients like the OPuS 1 patients in any reasonable time frame. My expectation is that the placebo attack rate will be somewhat less.

It sounds like compliance is not an issue at least thus far.

Thus far. That's a fair thing to say.

And then regarding the recent data that has been talked about by a [Mindshare] competitor's candidate, any thoughts regarding the unmet need and in future, market dynamics ?Have you updated your views on that at all?

Not really. I think Bill and I were consistent in saying if you can get to the threshold in this disease in kallikrein inhibition you can do a good job of eliminating attacks. And so that's what gets us so excited about 7353. The way we see this playing out at least from the vantage point we have today is if all we get with 4161 is CYNRYZE-like numbers and share, that's a huge success for a company our size. And it also gives us ample opportunity to get experience in the marketplace and launching an HAE drug. If we are successful with the second gen, 7353 with one pill once a day wipe out attacks, I can't imagine -- and I said this repeatedly -- how that is not the market leader.

So it sounds, Jon, it sounds like to me that still the strategy is you have a clinical benefit target in mind for 4161 and if you are within striking distance of that, That's going to be the go to market strategy with 7353 being a killer app follow on approach.

That's a great analogy. Yes.

Final question is regarding potential for kallikrein inhibition in general. We have been looking into this and that potentially being a platform. What other indications might you consider? And could some of these be ocular?

We are always evaluating things like that, but to be honest, the focus is all about HAE right now. So we want to make sure that our resources, our attention, everything is going to executing our plan as flawlessly as possible. We have a dozen back ups to 7353. If there is application, maybe we will explore that. But remember we are also working on two other targets. I would much rather bring forward the next generation of rare disease oral drugs on different targets and have multiple successes like we think we are going to have in HAE.

I would add one thought, which is HAE is a disease that had the luxury of having a 100% elevated simple pathway all about kallikrein and bradykinin. There is certainly lots of literature in other entities that implicates bradykinin as playing a role. From what I can tell none of those other entities are as simple as hereditary angioedema. The [pETHA] physiology is probably quite multi factorial and none of them have the depth of research with regard to the role of bradykinin in playing a very important role in those diseases. That doesn't mean to say a kallikrein inhibitor wouldn't be an -- I am completely aligned with Jon that the [NHE] for our kallikrein inhibitor program is all about HAE, and the research target discovery and indications that beyond that are -- we are developing to really make a huge difference in being an unmet need in similar types of diseases that have very, very, very well validated targets.

That's helpful. Bill, Jon, thanks for the added color.

You're welcome.

Thank you. Our next question comes from Mario Corso from Mizuho. Your line is now open.

Good morning slash afternoon. I just wanted to ask a couple of things. So on HAE development overall, and as we think about 4161, you complete OPuS 2 and you go to the FDA. What are your thoughts on development programs, yours, DiaXis, whoever's. Is it standard at this point? Is it going to vary from molecule to molecule? What is required? If you test one population versus another and have greater success, I mean does that shorten your pathway? Obviously that's important competitively but also it informs your decision on how you would bring 7353 forward. Just interested in your thoughts there. Thank you.

I think That's a complex question. At the end of the day the regulatory agencies in the U.S. and in other countries are tasked with evaluating the efficacy/safety balance and the quality of manufacturing and consistency of manufacturing of new drugs that get proposed for marketing. A couple of those factors come into play over time in a disease space, if things evolve in terms of standard of care. You could expect that there may be a change -- changes in attitude in the regulatory agency about what is required to demonstrate efficacy.

I doubt any of that is would change. What's required to demonstrate safety on an individual basis, or quality. But there are -- there is a spectrum of medical need in one sense because some patients are doing fine obviously on intravenous therapy, but it is IV. It's lifelong IV. Other patients are not doing so fine. They get thrombosis in their veins or get ports put in that get infected or other complications happen. People still die of hereditary angioedema even in the United States despite the availability of multi therapies.

It is hard to predict, and I think I've learnt over the years not to predict regulatory discussion outcomes. You just have to go through the -- just got to put your best food forward with your development plan and have conversations with the agency. They are also tasked with creating a level playing field, so they cannot play favorites. I think our plan that we've stated before hasn't changed.

We'll complete OPuS 2. If the results are great we will have a discussion with the agency of the states and the regulators in other regions, too, and propose if it is really great then the question that will arise is why do we have to do another efficacy study at this stage? We get it that we have to show long-term safety. Even if we do have to do another efficacy study that shouldn't be a rate-limiting step because the long-term safety would be a longer duration study than an efficacy study. In terms of (inaudible) patient population, That's a discussion point with the regulators. It is a bit hard to predict. Like every other sponsor we have to show the safety, efficacy, and quality of our product in order to get approved.

Thank you. Our next question comes from Serge Belanger from Needham and Company. Your line is open.

Hi, good morning.

Good morning.

First a couple questions on the HAE programs. First on OPuS 2. I think you began enrollment back in December of last year. I guess trying to get an update on enrollment. Would you say you are past the halfway point at this time? And on 7353 you mentioned a small number of back ups for that molecule. Just wanting to know whether you plan on advancing these back ups to early clinical development or not?

I will take a shot at this. I think a lesson I learned over the years is never give updates on enrollment. It is constantly changing. All I can say is we have over 30 sites up and screening and enrolling patients in both the U.S. and Europe. From where we sit today our expectation and what we know we will complete this study and report our results by the end of the year. That's all I can say on that front.

With regard to the back ups, I think I mentioned in my prepared remarks that at some point this year we are e going to make a decision on which of these would be candidates for pre-clinical development. Remember what the strategy is here. This is another reason to bring 4161 forward.

The back ups are an insurance policy, number one, for 7353 because we believe that one pill once a day to wipe out attacks is something the market needs. As far as we can tell we are one of the only ones that are able to do that. And so these molecules, these 12 that our chemists have come up with are structurally diverse from 7353 and each other.

The goal then is to do a certain number of tests with these molecules to get a sense of which ones seem to be most different and -- but yet have the same selectivity and potency we see with 7353 and then move those into pre clinical development. As I also said in the prepared remarks, all of this continues to build a fortress of IP which we think is very important as well.

Okay. And I guess moving on to 4430 and the new contracts funding, just wanted to know what kind of activities should we expect with this new contract and I guess also how will this flow through the P&L this year?

We will take the what can you expect from this contract, and Tom can take the financial side of it. What is really important about this contract is manufacturing drug. The focus is making drug and [tox], but the critical path is making drug. And so that will be the focus of this contract and would be the importance of this contract. All the way to enough drug to file an NDA which I think is important.

And the other thing I would say is -- I said one of the ways to sift through the imposters and the real companies in this space claiming they have something for nasty viruses like Ebola is who is getting money from the government? I think this just reinforces that there is real interest in 4430 as a medical counter measure.

Okay, and does this funding allow additional clinical development or additional animal studies? How far can you fund development with this additional contract?

So we've got the phase 1 funded through by NAIAD and the manufacturing and [tox] to NDA from BARDA. What we still need is additional animal studies for the animal rule approval, and then human safety large scale human safety beyond phase 1. Once we know the dose, the human equivalent dose. That's still money we don't have in the contract, but we now have the manufacturing capabilities, so that has continued the continuity from phase 1. We'll need to -- after we complete phase 1 sometime in the third quarter we will need to have additional funding for the rest of it.

Hey, Serge, In response to your how do these contracts flip through, or how do they correlate to revenue this year, I would answer with two general questions -- or two general statements. One is for the development of 4430 remember it is under two contracts now. A NAIAD contract and a BARDA contract. When you look at those, each contract has effectively a base and then has options on top of it. So in regards to the P&L it depends how quickly we advance through the aggregate contract amount and each option is based on a stage [gate] process that's reviewed by the government.

So it is hard to predict the volume of expenses and revenues that are going through the contract, so we don't give that guidance. Because the other thing you have to remember, and this is my second statement, is if the development was under BioCryst jurisdiction we would make a decision go forward and execute that very quickly. However, the government is funding these programs and so they need to review to their satisfaction the results and go through the appropriate approval process to exercise the next option. The end result of that is it goes a little slower than if we had it at our -- totally under our entire discretion. So it is very hard to predict not only how the program will advance, at least when you are looking at quarterly data, as well as to how many options and when those options and executed as far as a pure volume perspective.

Thank you.

Thank you. Our next question comes from Bank of America. Your line is now open.

Hi, thanks for taking my questions. Bill, just to go back to a comment you maid few minutes ago about 4161, what were those when you considered to be really great that you think would justify needing to do another efficacy trial? Would it be simply be better than CYNRYZE or would you need to show a meaningful improvement over that?

That's a great question. I don't think there is a simple answer. What we showed in OPuS 1 with only 24 patients in a very short study, was that we got a very robust effect. So there is no doubt that the drug works. I think in a 12-week study with a bigger sample size, we're testing two different doses versus placebo. That's the first question. Let's say both doses worked, is the higher dose substantially better than the lower dose? That's the important question.

And for a lot of medicines some people respond extremely well to a lower dose, so that's also rather important to know for the commercialization of the drug. I think that ultimately we are not in the decision making seat here in terms of answering your question. It's going to be a regulatory interpretation of how good is the data. I will be thrilled if we have a robust P-value coming out of this study.

I think that's the entry going back to the FDA, right?

And the treatment effects size, and the secondary end points, and safety profile all come into play. The fact that it is an oral medicine, first in class oral medicine. BioCryst is the first company that has tested an oral kallikrein inhibitor in any disease whatsoever. I think we are cutting new ground here, but I -- provided that subjects take the medicine and they have HAE then we have a pretty good shot at having a successful study.

And then to follow on with what you just said about getting to market and preference. How long do you think it would realistically take to institute a shift from CYNRYZE to 4161 because even though this would be a first in class drug you would also be in the bit of an unusual situation of being a rare disease drug that is launching into a market where options already exist.

Yes, I will take a shot at it, Tazeen. I mean, we're still -- I told you we have Lynne Powell on board and she is doing market research now to put a finer point on that question for us. I can tell you one, I don't think you should assume that CYNRYZE is the market leader in prophylaxis when we come to market. That could change. And so we are keenly aware of that. Two, anything that is injected multiple times a week I think could be problematic from a convenience perspective versus capsules three times a day. That's clear from some of the early market research we've received . There is just a preference for people that want oral, period, and don't want to inject even if it is less frequent than twice a week.

And then there is androgen patients as well. Bill and I have told the story of when we've been at patient meetings and people have come up to us that are on androgens, but don't like the side effects they encounter and can't wait to either get into our trial or have the drug come to market. I think there are multiple places where we can pick up market share. My point that I stressed earlier is it doesn't take a lot to have meaningful value for BioCryst with this first generation compound. That's the point That's most important here.

Okay, and one last one. Given what you have seen with the 7353 compound so far and what you have hypothesized about its potential potency, do you think that for a drug of this caliber that the baseline attack frequency will matter as much as it does for the trial that involves 4161?

That's an interesting question. I think what we are trying to do here with a drug like 7353 is take a population of patients with HAE that might have quite a broad range of C1-inhibitor levels. In other words, kallikrein inhibitor levels. The other -- by the way the other protein in the blood that inhibits kallikrein is alpha 2 macro globulin, so that's not affected by HAE. But it can (inaudible) only a minority but it is part of the noise in the data I guess that there is something that's not being measured that also contributes to kallikrein inhibitory total activity in the blood.

We are going to take a population of patients with some distribution from low to some sub normal range, but a lot higher than 0 of total kallikrein inhibitory activity in the blood and what we want to do is get them into the normal range, a trough, about once a day drug or twice a day if it turns that it needs to be given twice a day, which would still be fine in my mind. With a standard dose -- a technical way of addressing your question would be, with a standard dose of a drug can you shift the entire population reliably into the normal range at trough level before the next dose of the drug at steady state? So we'll have a lot more insight into that with the human PK, obviously. I am extremely pleased looking at the non human primate PK profile because we've got lots of coverage of the enzyme and the variability in exposure is pretty tight. I think the variability in the baseline of total kallikrein inhibitory content of the blood and the variability in exposure, you combine those two variabilities that is what is going determine the probability of the patient getting into the normal range of the trough. On top of that there is the dose. So I think the way I am looking at that drug is provided it is safe it has an excellent chance of being a highly effective therapy.

Okay. Thank you.

Thank you. Our next question comes from Christopher James from FBR and Company. Your line is now open.

Hi, thank you for taking my questions and congrats on a really good quarter. Most of mine have been asked, but a quick one on 7353. Maybe can you review the development pathway after phase 1, just trying to get a sense of how quickly this could go into a phase 3 pivotal study?

That's an interesting question. When you look across the landscape development, if you have a safe compound then the bigger the treatment effect and the higher the medical need then the greater the opportunity to make the development time as fast as you can make it go. In addition to the clinical program there is a bunch of other things that have to be done including -- and this is true no matter what the molecular platform is you have to do [a lot of] process development, you have to understand the impurities and control them.

You have to complete the animal non clinical safety program. You have to get your manufacturing to commercial scale and do validation lots, and all of that takes time as well. I think that being said though I think there would be from our perspective every reason to go as fast as possible if the phase 1 is extremely encouraging with pharmaco-kinetic safety, tolerability, and pharmaco-dynamics we get out of it. As Jon said we intend to start a proof-of-concepts study in HEA patients before the end of the year.

I think if the PKPD looks great and we get superior exposure and superior kallikrein inhibition of trough compared to what we saw with 4161, that would encourage us to design the appropriate proof-of-concept study and get that done as fast as possible. I think every program has to have an element of dose ranging at some point in the program. Every program has to have definitive efficacy studies and every program has to generate sufficient safety data for long enough to give both the Company and the patients and physicians let alone the regulators sufficient confidence in the drug. All of those things have to be done. I think that they are -- there might be room for some very interesting studies if there is a very big treatment effect.

Great. That's helpful. Thanks a lot.

Thank you. (Operator Instructions) And our next question comes from Rahul Jasuja with Noble Life Science. Your line is now open.

Thank you, good morning guys. Most of my questions have been answered, but I have a few at the bottom of my list here. Talking about androgens, Jon mentioned the androgen population, I think it is a given that those androgen users that needed to get on to CYNRYZE have already got on to it. It has been several years. But there is probably a bunch of androgen users that have a high baseline -- sorry, a low baseline attack rate. Is it possible that 4161 at a lower dose, a lower pill burden, could potentially work in that population? Have you thought about that at all or is that not a consideration?

Given the fact we are testing a lower dose with the 300 milligrams three times a day, we should get an answer on that and see if there is efficacy in any population that is treated with that dose. And then how does it differ, as Bill said before, from the 500 milligram three times a day? That's an important part of this study that I certainly want to know the answer to. I think your question though is an interesting one. Where would a drug like 4161 get used? I think it would be in the milder patient population, right? People that it is less likely they would have breakthrough attacks and want to be on the convenient oral administration. I think that makes a lot of sense, and that's, by the way, the larger part of the population too. That's what gives us quite a bit of confidence that if we are shooting for CYNRYZE-like numbers that it appears to us to be very achievable.

Got it. And then one remaining question I have and it has been discussed in different ways on this call. Clearly the fact that given the [diox] data it is really obvious that differences in HAE patient population, mainly the baseline attack directly impacts clinical benefits. And then potentially is there any thinking behind designing clinical trials that are based on this differential population or having perspectively defining these populations so there is a market advantage? Or are the regulators not ready for that at this time?

That is an interesting question. I think we will be in a better position to understand it once we've got the OPuS 2 results in hand. We are working with a leading laboratory in terms measuring functional C1-inhibitor level at study entry. So we obviously want to see whether that baseline variable is a co-variant in the clinical outcomes that we are measuring. But it is an interesting question. Where the (inaudible) stands today I am not sure I would have the confidence to design a study along those lines. As we accumulate more data if it is crystal clear that people are falling into different groups that's a strong co-variant that will help us design other studies for sure.

And we are already thinking about different studies we could run because remember we have to do the safety study next year, and so we have the opportunity to explore certain populations and having Lynne on board and what is most competitive and what makes most sense. We are having those conversations as we speak.

The key thing here is this is a threshold disease. So there is a threshold at the normal range of total kallikrein inhibitory content. That's what we are trying to achieve. If you are closer to that already it just makes intuitive sense that it is easier to get there, right? So as Jon said a few minutes ago, in relation to the question about androgen use, people who were dissatisfied with their androgen therapy because of side effects or whatever other reason might be an attractive population. The vast majority, and this includes the U.S., the vast majority of patients with HAE are not taking prophylactic C1-inhibitor intravenously. They're not, right? There is definitely room for an oral kallikrein inhibitor like 4161.

I think the practical side of all this, the likelihood that there's a biomarker, and then you couple that with their attack frequency, that identifies patients, is really low by the time these drugs get to market.

Predictive, and that's the issue. The predictive value of an individual test just might not be there.

Yes.

So a trial of therapy on the other hand

That's how (inaudible -- multiple speakers) That's how it's going to be used. And so doctor's going to say "Hey, this is a patient that I think is an appropriate candidate for this drug. I'm going to try him on it. If they don't have break through attacks, I'm going to keep him on it." That's how these will be use.

So, potentially you're looking at use without any formal clinical trials for these populations that clinicians will be happy to test in low (inaudible - multiple speakers)

Right, because I think that an important thing in the development program, and we've already started to do this, is to make sure that we don't restrict our clinical trial just to one group of patients. You run the risk of having a restricted label if you do that. So we don't have a study just with people very low attack frequencies, or very high attack frequencies. By the time we file, we'd like to have experience across the board. And that's exactly what we'll do.

Great, thank you. That's very helpful, and I'm looking forward to the second half.

We are too.

Thank you. I'm showing no further questions at this time. I'd now like to turn the call over to Jon Stonehouse for any closing remarks.

Great, thank you. As Rahul said, the second half of the year is going to be really interesting for BioCryst, so we look forward to giving you updates and as always we appreciate your interest in our Company. Have a great day. Thanks.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program, and you may all now disconnect. Everyone have a wonderful day.