BioCryst Pharmaceuticals Inc (BCRX) 2015 Q2 法說會逐字稿

Good day ladies and gentlemen.

Welcome to the BioCryst second quarter 2015 conference call.

At this time all participants are in a listen-only mode.

Later we will conduct a question and answer session, and instructions will follow at that time.

(Operator Instructions).

As a reminder, today's conference is being recorded.

I would now like to introduce the host, Rob Bennett, Vice President of Investor Relations.

Sir, you may now begin.

Thank you.

Good morning, and welcome to BioCryst's second 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 that time.

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

Before we begin, I will 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 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 statement.

For additional information including important risk factors, please refer to BioCryst's documents filed with the SEC, which can be found on our corporate 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 we continued to build our Company by diligently executing our plan.

While we have set aggressive time lines, steady progress has been made in advancing both our clinical and discovery stage programs.

In addition we secured a commercial partner for approved influenza treatment RAPIVAB, through a collaboration with CSL, a well established global leader in the treatment of the flu.

The upfront cash we received from the partnership extends our runway into 2017.

All-in-all, it was a very productive quarter.

I would like to start by reminding everyone of our strategy of how we plan to be the leader in the oral kallikrein space, and ultimately bring normalcy to the lives of HAE patients.

We start with our most advanced program, Avoralstat, previously known as BCX4161.

OPuS-2 is a clinical study of approximately 100 patients, evaluating two doses of avoralstat versus placebo for 12 weeks, and we expect to complete this study by year end.

If we are successful, our current plan of filing an NDA in 2017 would make avoralstat the first oral kallikrein inhibitor to market.

Avoralstat will be an important new choice for physicians and patients, who want an oral prophylaxis treatment option.

In parallel, we are investing in the development of more concentrated dosage forms of avoralstat, with the goal at launch of having three or two capsules or tablets per dose.

In addition, we are conducting exploratory formulation research, with the goal of achieving higher exposure, and twice daily dosing of avoralstat.

The next part of our strategy is to further improve the effectiveness and convenience of oral kallikrein inhibitors, with our second generation research program.

Our target profile is one pill, once a day, wipe out attacks.

This profile would dramatically transform the lives of HAE patients.

The most advanced of our second generation molecules is BCX7353, currently under evaluation in a Phase I healthy volunteer study.

The study is well advanced, and we are not able to answer specific questions about it today.

We will share the details and provide a complete view when the study is finished.

We had originally projected completing this study by the end of the third quarter, however, as we had previously mentioned, as a possibility we now know that in order to properly characterize the steady state pharmacokinetics of 7353, we need to add a 14-day treatment cohort to this study.

This will cause the study to extend into the fourth quarter.

As a matter of prudent drug development, our discovery team has been working on second generation backups using structure-based drug design, and has succeeded in inventing several uniquely different plasma kallikrein inhibitor molecules from distinct structural classes.

Today we selected additional drug candidates that have suitable pharmacologic properties to advance into preclinical development.

Development of these candidates is approximately two years behind 7353.

So in summary, we have a portfolio of oral kallikrein inhibitors, avoralstat, potentially improved formulations of avoralstat, 7353, and backups to 7353.

Pursuing this portfolio is a comprehensive strategy to achieve our goal, and one that we will execute with the knowledge that patients are waiting for an oral drug that has the potential to dramatically change their lives.

Switching gears now to RAPIVAB, we are excited to have CSL as our commercial partner.

CSL is a leading influenza company, and following the recent completion of its merger with the Novartis influenza vaccine business, CSL is the second largest influenza company in the world.

Having an antiviral to treat influenza is a perfect compliment to their vaccine business.

Here are the highlights of the deal.

CSL has the exclusive commercial rights to RAPIVAB in the US, and all other territories that we had not previously licensed.

BioCryst received a $33.7 million upfront payment, and will receive royalties from CSL on commercial sales of RAPIVAB in the US, and from other territories when it is approved in those regions.

CSL is responsible for ex-US stockpiling, and pays BioCryst royalties on those sales.

BioCryst is responsible and retains the full rights to US government stockpiling.

BioCryst is responsible and will pay for the post-approval commitments agreed upon with the FDA, this includes a plan to obtain a pediatric indication.

BioCryst is also responsible for filing marketing applications in Europe and Canada, based largely on the US application, and we have the potential for a total of up to $12 million in milestones for successful pediatric approval in the US, and for EU and Canadian approvals.

All-in-all, this is an excellent deal for us, as it puts the commercialization of RAPIVAB in the hands of a flu expert, and allows BioCryst to focus its development and commercialization efforts on HAE and other rare diseases.

It provides important non dilutive capital to us, and thereby extends our cash runway in a meaningful way, and it comes in advance of the North American flu season, allowing CSL to prepare to launch the product, and reach more influenza patients with RAPIVAB than we could otherwise do on our own.

Finally, we have competed the single ascending dose portion of the Phase I study using the IM formulation of BCX4430, our broad spectrum antiviral.

The independent data monitoring and safety committee for the study has concurred with our recommendation, to move forward with the multiple ascending dose phase of this study.

We expect to complete this study in the fourth quarter.

That completes our second quarter program update, and I will now turn it over to Tom to review the financials.

Thank you Jon.

Good morning everyone.

Today I'm pleased to report the details of our second quarter 2015 results, which reflect the continued progression of our programs, and the anticipation of significant value creating milestones in the next six months.

On slide five you see revenue for the second quarter of 2015 increase to $25.8 million, compared to $1.5 million recorded in the second quarter of 2014.

This significant increase was due to partial recognition of an upfront payment resulting from our recent outlicensing of RAPIVAB to CSL, as well as a significant increase in collaboration revenue associated with BCX4430 development under government-sponsored contracts.

Second quarter 2015 R&D expense increased to $16.5 million, as compared to $11.1 million in the second quarter of 2014.

This increase was associated with more extensive development activity within our HAE portfolio of product candidates, including avoralstat, BCX7353, and additional second generation kallikrein inhibitors in preclinical development, as well as a higher level of development expenses for BCX4430.

The successful advancement of our HAE molecules continues to be the primary focus of our drug development efforts.

General and administrative expenses for the second quarter of 2015 increased to $3.5 million, compared to $2 million for the second quarter of 2014.

The increase is due to expenses associated with the CSL transaction, as well as medical affairs and commercial expenses associated with the approval of RAPIVAB, and the Company preparing for commercialization of its HAE product candidates.

Moving below the operating line, we incurred $1.3 million of interest expense in the second quarter of 2015, and $1.2 million in the second quarter of 2014.

We also recorded a mark to market hedge loss of $796,000 in the second quarter of 2015, as compared to a loss of $1.8 million in 2014.

During the second quarter of 2015 we also realized a currency gain of $1.5 million, from the exercise of a US dollar/Japanese yen currency option within our hedge arrangement.

Both interest expense and hedge mark to market adjustments relate to our nonrecourse notes and related hedge arrangement in active connection with the RAPIACTA royalty monetization.

Our net income in the second quarter of 2015 was $4.9 million, or $0.07 per basic share, and $0.06 per share on a fully diluted basis, as compared to a $14.6 million net loss, or a $0.23 loss per share in the second quarter of 2014.

Slide six summarizes our six month financial results.

Revenue for the first half of 2015 was $32.7 million, an increase from $4.9 million recorded in 2014.

The increase in 2015 was primarily due to recognizing revenue on a portion of the upfront payment from CSL, and increased government collaboration revenue associated with BCX4430 development.

First half 2015 R&D expense increased to $33.6 million from $20.3 million in the first half of 2014, primarily due to increased spending associated with our HAE and BCX4430 programs.

General and administrative expenses for the first half of 2015 increased to $7.6 million, compared to $3.6 million in 2014.

The increase was due primarily to unrestricted grants award to the US and international HAE patient advocacy groups, as well as medical affairs and commercial expenses associated with the approval of RAPIVAB, and the Company preparing for commercialization of its HAE product candidates.

Moving below the operating line, in the first half of 2015 and 2014, we incurred $2.6 million and $2.5 million of noncash interest expense.

We also recorded a mark to market hedge loss of $332,000 in the first half of 2015, as compared to a loss of $3.4 million in 2014.

Once again, we also realized a currency gain of $1.5 million in 2015 from the exercise of a US dollar/Japanese yen currency option within our hedge arrangement.

Moving on to slide seven.

I would like to discuss our cash balance and cash usage.

We ended the second quarter with cash and investments of $132 million, an increase from $114 million at the end of 2014, due to the receipt of $33.7 million from CSL.

Based upon current plans and expectations, we expect our existing cash to provide us liquidity into 2017.

Our operating cash usage through first half of 2015 was $15.8 million.

When including the $33.7 million payment from CSL, the Company had cash generation of $17.9 million for the six months ended June 30, 2015.

In regards to financial guidance for 2015, we are now forecasting operating cash usage to be in the $18 million to $28 million range, upon adjusting our previously guided range for our 6 month results, including the $33.7 million payment from CSL.

In addition, we continue to expect our 2015 operating expenses to be in the $75 million to $95 million range.

As a reminder, equity-based compensation expense is excluded from our operating expense guidance.

Now I would like to turn the call back over to Jon for his closing remarks.

Thank you Tom.

In closing, we made great progress in the second quarter.

Looking ahead, here are the important events for the rest of the year.

Complete the 7353 Phase I, and report out results in the fourth quarter.

Finish the Phase 1 for 4430 in healthy volunteers in the fourth quarter.

Complete and report results for the OPuS-2 trial by year end.

Initiate a 7353 HAE proof of concept Phase 2 before year end.

And obtain US government RAPIVAB procurement contract by year end.

This concludes our prepared remarks, and we will now open it up to your questions.

(Operator Instructions).

Our first question comes from the line of Jessica Fye from JPMorgan.

Please proceed.

Hi guys.

Thanks for taking my questions.

I realize you can't give specifics, but I think the update on 7353, and when we might get that Phase I data is sort of the focus this morning.

I guess there are two ways of interpreting that update.

One is you aren't seeing anything out to seven days on the toxicity side, and thus you feel comfortable dosing longer, and then the flipside is, maybe you aren't seeing enough indications of potential efficacy over seven days, and you want to dose longer to see if you will find something.

Maybe just elaborate on the rationale for adding that 14-day cohort?

Thanks.

This is Bill.

It is all about PK.

In the monkeys, we saw that the drug had a slow clearance and a long half life.

We didn't know what we would see in humans, or when we might reach steady state.

So to get to steady state and to fully characterize the PK characteristics of the molecule, we need a 14-day cohort.

That is what it is all about.

Is there anything you can say about toxicity thus far, is it fair to interpret dosing longer as a sign that you are not seeing anything concerning over the first seven days, or initial dose cohorts?

In all clinical studies, the way I would interpret being able to dose longer is it is a good thing, because it means that you are anticipating that will be safe and well tolerated.

And so the way that this program will evolve is we will complete the study, we will be able to share with you the details on safety and tolerability, drug exposure, and the effect on the target enzyme, and what we are looking to see there, is what is the pattern of that over a 24-hour period.

So we will be using exactly the same PDS assay that we have used throughout the program for avoralstat, and you will be able to make head to head comparisons with the Phase I data that we put out for avoralstat in healthy subjects too.

The next step there is to choose a dose or doses to take into a proof of concept study, as Jon mentioned, our intention is to start that by the end of the year.

So moving forward with longer dosing is a good thing, and we want to make sure that we take our opportunity in our Phase I healthy subject pharmacology study, to thoroughly and completely characterize the PK of the drug.

Jess, this is Jon.

I would just add that remember that the goal of the second gen program is to get to one pill once a day, and typically a long half-life is a good thing if that is the profile you are shooting for.

Got it.

And just going back to that assay when you provide the Phase I top line results, are you going to hold that up next to the 4161 data, so that we can get some indication of potential efficacy?

We will be able to provide a head-to-head, absolutely.

I think that is an important thing for people to remember, is the predictive value that we have here, right.

We have an assay, we then interpreted what doses we needed to use based on the Phase I PK with avoralstat, and then we had clinical results in OPuS-1.

You now take that comparison with 7353 and the PK that we see there and the effect on the enzyme, and it should give you really good predictive value of what kind of efficacy you are going to see with 7353.

Got it.

And is it possible to just maybe refine a little bit when in the fourth quarter we could hear the update?

I'm never come comfortable giving months as a specific time frame, so I would like to stick to the fourth quarter.

Got it.

Thank you.

Yes.

Our next question comes from the line of Charles Duncan from Piper Jaffray.

Please proceed with your question.

Hi guys.

Thanks for taking my question.

And congratulations on the RAPIVAB monetization and partnership.

Thanks Charles.

So my first question is like the last caller on 7353, I understand you are not going to give a lot of details today, but could you help us understand a little bit more about how you operationalize that additional cohort?

Seems like it shouldn't be a big deal, it seems like you had pointed to that previously.

As well perhaps it seems like with 14 days you are getting perhaps a little bit longer duration, and therefore how does that read through on the potential for once a day or even twice a day dosing, seems like it should increase the probability of success there?

I'm really pleased with the progress we are making on all of our clinical programs.

On the Phase I for 7353, we have the opportunity to complete the job, and to look at a 14-day cohort, and to use that information to help make the best informed choices about doses for the proof of concept study is a good thing.

And the way we operationalize it, as you say is totally straightforward.

The protocol was always built flexibly enough, so that we don't have to have a protocol amendment in order to do that.

You try to anticipate what might happen, and give yourself room, so that you don't have to go through a bunch of hoops in order to do something as simple as this.

This is a completely simple straightforward and typical thing to do in a Phase I study.

There is nothing magical about it.

Give the drug 14 days and measure the things we need to measure, and that is the end of it, and then we will be able to wrap up the study and analyze the results and report them.

I'm really looking forward to being able to go into all of the details on the safety tolerability, PK and PD of the drug.

I think it is very, very important to us that we are shooting for a goal of one pill once a day, that we can then test in patients with HAE.

That is our goal here.

And that, Charles, I would add that the purpose of a Phase I is to really understand the characteristics of the drug, the PK, and being able to understand what doses you want to take into the next study, and if you rush and you don't understand the steady state, you cannot have the full picture, and then your next study could be at risk.

So we are being prudent here, and we are encouraged by what we see thus far, and looking forward to giving you the results in the fourth quarter.

Okay.

That is helpful.

And then as you move into the other second gen compounds, or maybe even third gen compounds would you see these as backups, or fundamentally different, opportunities relative to avoralstat, 4161, and 7353?

Could those actually open up new indications beyond HAE?

Let me start, and then I will pass it over to Bill.

The thing I was trying to stress in the prepared remarks is we have one hell of a comprehensive strategy, to be the leader with an oral kallikrein inhibitor, to have an oral prophylactic for HAE.

We have got avoralstat, we are working on improved formulations.

I mentioned that we are looking at higher exposure and twice daily dosing with avoralstat, and some formulation research, we have got 7353, and then we have got backups to that.

That doesn't mean that we see some signal with 7353 that worries us.

It is just prudent drug development, to make sure that you have got a comprehensive strategy so you can reach your goal.

So that is what we are doing here.

And I will let Bill add to that.

Your question on the backups is very interesting.

In general when you have got a suite of compounds that are designed with structure-based drug design to be high potency inhibitors of a target enzyme, and you have chosen one from a particular chemical class moving forward into the clinic, the point of the backup program is to create an insurance policy, as Jon mentioned in the call.

So the best way to do that is to maintain potency, because that is the number one characteristic that limits the drug dose, and limits the opportunity for unwanted effects.

The second is to match at least the qualities that you saw in your first compound, because there is no point in putting a second compound into the clinic that has worse characteristics than the first compound.

So you want to match or exceed the PK profile of 7353.

And finally, we want to have chemical diversity, because that is the second way that we can improve our chances of having the best possible safety and tolerability profile is an insurance policy.

So all of that being said, I think your other question was around other indications.

I think I would reiterate two things.

One is right now the clinical program is focused on HAE, and it is focus, focus, focus.

However, we are not ostriches with our head in the sand, and once we have these tools that could be used in laboratory research to probe other diseases that might have significant contributions from the contact activation system, and kallikrein and bradykinin pathway.

They will be very good tools to use to interrogate those diseases, so we will have those tools.

I think that the beauty of having multiple molecules is you don't make it a messysituation where you have got one drug that is for a bunch of different indications, and there could be pricing issues, and all of this other stuff.

We have distinctly different molecules, which makes that a little bit easier.

That is helpful.

And no ostriches.

One last one for Tom regarding the cash, having cash into 2017.

Could you help us understand, Tom, what that assumes in terms of any kind of cash flows from the RAPIVAB partnership, as well as do you think that cash will be sufficient to at least complete pivotal trials for 4161 or avoralstat?

Yes, so Charles, we out-licensed the drug, and generally I take a very, very conservative view about our cash runway.

And so it is short, and so there is very little assumed from the CSL transaction about revenues coming in, other than the $33.7 million this we have already received.

So the cash runway and going into 2017, we had previously disclosed with avoralstat that we plan to file the NDA in 2017.

We haven't given month guidance on either the cash runway or the NDA, but I think you can tell from my comments that we are in a very financially sound position, and very comfortable with our current balance sheet.

That's helpful.

Thanks for the added color.

Our next question comes from the line of Tazeen Ahmad with Bank of America.

Please proceed.

Good morning, and thanks for taking my questions.

Just to follow up on 7353.

You have said a few times already on the call that your goal is to be a one pill per day regimen, and I'm just wondering if after you get to the end of this study, if for whatever reason it looks like 7353 might work better let's say as a BID, would that be a nonstarter for you to move forward with this molecule?

No, because it is an improvement over avoralstat, right.

So if it has got the efficacy that we are expecting, which would be to mimic the normal phenotype and wipe out attacks, I think twice a day would be fine.

Our goal, and the way we chose 7353, and the way we chose the backups was for one pill once a day, but if we ended up with twice a day, I think that is still a highly attractive drug.

Okay.

Have you started recruiting patients into this additional cohort, or is that something that is going to happen later?

Later.

Okay.

And I guess just shifting back to 4161 for a second.

Where are you in being able to feel confident that you will be able to reduce the pill burden for the drug by the time you launch presumably in 2018?

We have been working a while on a more concentrated liquid, and I would say that Bill and I are relatively confident that would be able to launch with either three or two capsules or tablets per dose.

And so right now we are at five, so that is a pretty big shift.

But beyond that I said in the prepared remarks that we are also doing formulation research that could actually get higher exposures of avoralstat, and potentially make it a BID drug instead of three times a day.

And so that is earlier stage, but certainly that is a much better profile than we currently have, and so certainly worth investing in.

So for the BID dosing, would this come onboard after you launch as like a follow-on, or would you potentially be able to launch as BID?

I like it is unlikely that we would launch with BID.

Obviously we want to get to market as quickly as possible, but we are working through the plan, and we are working to see how quickly we could get this kind of formulation improvement into trials as quickly as possible.

Okay, thanks.

And then the last question is on the preclinical compounds that you are planning on starting studies for.

Is it for the intention of looking at them for HAE, or for other indications?

It is primarily for HAE, and as Bill described, we are looking at structural diversity from 7353.

Same profile, one pill once a day, wipe out attacks, but structurally different from 7353, as a backup to 7353.

But as we just mentioned in Charles' question, if we don't need them, for HAE, then we can look at them for other indications, and other areas.

Okay.

Thank you for your time.

You are welcome.

Our next question comes from the line of Serge Belanger from Needham & Company.

Please proceed.

Good morning.

I guess my first question will also be on the topic du jour here.

You mentioned you are adding a cohort to the Phase 1 study for 7353, are you looking at different doses, or this is just one dose for 14 days?

The way that Phase 1 studies typically go, is you through a progression of escalating doses both when you study single doses in cohorts of healthy subjects, and also when you are studying repeated doses over whatever duration that you choose.

I think by the time we get to doing a 14-day cohort, what is typically done in this circumstance is that you would have your dose ranging done, and your 14-day cohort is an opportunity to be clever about dose selection, and look at all of the PK safety tolerability and pharmacokinetic data from your dose escalations, and pick a dose that you would like to study in people with the disease, and measure its PK and PD profile.

There is nothing unique about that.

We are not inventing anything new here.

IT is just straightforward Phase I drug development principles, and so you would, each cohort is a single dose for whatever duration it is.

But we already have the experience from the 7-day cohorts before we do that.

And how many 7-day cohorts was there?

We haven't disclosed all of the finer points of the details, but you can typically assume for an average Phase I study that you would have three or four cohorts of dose escalation in your multiple ascending dose part of the study.

And each of them consists of 10 patients?

This is again not rocket science here, so I think that a good sized study would be either between 6 to 10 actives, and two placebos per cohort, and you make individual choices about how to do that, and we want to thoroughly characterize this drug, so we are not skimping.

Okay.

And a question for Jon.

On slide four where you described the terms and structure of the CSL agreement, you mentioned that the BioCryst is on the hoof for funding and executing the post-approval commitments.

I know there is a pediatric study on ClinicalTrials.gov.

Beyond that, are there any additional commitments?

Yes.

There is some work around the elderly and high risk patients, and then some virology work that we have committed to with the FDA.

These will get underway this year?

In a lot of cases they are already started.

In the case of the virology, I think we are even almost completed.

And then for seeking approval in Europe and Canada, can you do that with the existing data?

Yes, there is no plan to do additional studies for that.

Okay.

All right.

That is all I had.

Thank you.

Thanks, Serge.

Our next question comes from the line of Christopher James from FBR Capital Markets.

Proceed with your question.

Hi, good morning, and thanks for taking my questions.

So just based on what you said in light of the Dyax drug, how competitive would 7353 be, if it is a BID or twice daily drug.

How do you expect the market dynamics to play out?

I think an oral drug with perfect or near perfect efficacy is a highly attractive drug.

And once a day is always better than twice a day.

But to get an oral drug with that kind of efficacy at twice a day, I think is still very, very, very competitive.

But that is not what we are shooting for.

We are shooting for once a day.

And we are trying that with 7353, and with the backups, and so that is goal we are pursuing, and we won't veer from that unless we need to.

Great.

That is helpful.

And then on the proof of concept study.

How should we think about that in terms of attack rates?

Do you think this will look more like an OPuS-1, or more like an OPuS-2 study?

That is a great question.

I think the first thing is what is the duration of the study.

And as is typically the case at this stage in the drug development program, the duration of the animal safety that you have limits you to a 28-day study, which is perfectly fine, because that is way we did OPuS-1, and it was a highly successful experiment.

The attack rate criterion that we had for OPuS-1 was a minimum attack rate of one per week.

At that stage we had less experience in the field, and we based that on the average attack rate on the placebo in the CINRYZE Phase 3 published in the New England Journal of Medicine.

What we actually got on study is an adjudicated attack rate in the placebo arm of 1.27, and a more apples-to-apples comparison would be a patient reported attack rate of 1.43.

So if you set a minimum, of course, the average on the study is going to be higher than that.

We now have substantial experience with this, and I don't want to go too much into the finer details, but the evidence published in the literature, suggests that the benefit from avoralstat might be even better with a lower attack rate.

I think that I'm not really worried about attack rate as a parameter for 7353.

The main thing is to make sure that we in a short study, that you avoid the risk of having a lot of placebo patients that have no attacks because you set it too low, right.

You can be assured that we have taken extreme pains to understand all of the statistics around that, and that we will make a choice that we believe balances the appropriate need to recruit patients, and doesn't take undue risk on that front.

Great.

That is helpful.

Look forward to the data in the fourth quarter.

Thanks.

Thanks Chris.

(Operator Instructions).

Our next question comes from the line of Rahul Jusuia from Noble Life Finance Partners.

Please proceed with your questions.

A couple of questions on 4161 first.

Really a clarification.

So Jon, you talked about lowering the pill burden.

Just want to clarify, so there is an approach wherein you can actually concentrate the current formulation, and in that case you do not need any additional studies, I assume.

But if there is a change in formulation if there is a BID dose and a change in formulation, I guess that will mean additional trials.

Is that the right way to think about the options with compacting with the same formulation, and then getting a normal formulation?

Hi, Rahul, this is Bill.

I think that is generally a reasonable way of thinking about it.

And I think that so the other aspect of that is relative bioavailability.

So if you cast your mind back to how we move from the first in human, a hand filled hard gel capsule type of formulation, to the liquid formulations and the soft gels for that program, we did a relative bioavailability study, and picked a dose that matched the exposure at the 500-milligram dose, compared to the previous 400-milligram dose.

At this stage of the program the formulation refinements that Jon is talking about for increasing the concentration, the goal here is to match the exposure, and under those circumstances using the similar types of excipients and matching the exposure.

What we would like to do there is substitute that formulation into the ongoing clinical program, and file that into the NDA.

That would be the ideal outcome.

I think you are right, if you go to a brand new formulation that is radically different, which has more exposure, that then that could demand new studies, and that was the reasoning behind Jon's previous comment, that it would be unlikely that would be in the first NDA.

Got it.

That makes sense.

The other question I have pertains to 7353.

And just trying to get a better understanding of the clinical trials there.

So I'm assuming, and you may have discussed this, that it is a different chemical class to 4161, and the presumed improved pharmacokinetics really relate to the difference in the chemical class, and not really a formulation.

Can you comment on that?

Absolutely.

You are absolutely right.

It has nothing to do with formulation at all.

And it is all to do with the unique characteristics of the molecule, and a common statement that you will hear in the drug development world, is once the scientist has invented the molecule its characteristics are set forever, and the rest the of program is simply the discovery process of finding out what they are.

It is a totally different molecule to avoralstat.

It has no structural relationship.

It is a different chemical class, but beyond that it is just a unique molecule.

In the monkeys and the rats we saw a really great bioavailability with this compound.

It was simple to formulate, and we saw excellent PK profile.

So we were very happy about advancing that into the clinic.

And as I said before, we are very pleased with the progress we are making there, and look forward to wrapping up the study, and sharing the results.

It is all about the molecule.

Great.

Thanks for the explanation and clarification.

I look forward to the fourth quarter.

Thanks Rahul.

And this concludes today's question and answer session.

I would now like to turn the call back over to today's speakers for closing remarks.

As always we appreciate your interest in our Company, and we look forward to continuing to update you on our progress over the course of the rest of year.

Have a great day.

Ladies and gentlemen, thank you for attending today's conference.

This does conclude today's program.

You may now disconnect.

Everyone have a great weekend.