BioCryst Pharmaceuticals Inc (BCRX) 2016 Q1 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the BioCryst first-quarter 2016 conference call.

(Operator Instructions) As a reminder, this call is being recorded.

I would now like to introduce your host for today's conference, Rob Bennett, Vice President of Investor Relations.

Please go ahead.

Good morning and welcome to BioCryst's first-quarter 2016 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.

We will open up the call later for your questions and instructions for queuing will be provided at that time.

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

Before we begin, I will 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 than any future results or performance expressed or implied in this presentation.

You should not place undue reliance on the forward-looking statements.

For additional information, including important risk factors, please refer to BioCryst's documents filed with the SEC which can be found on our company website.

With that, I will turn the call over to Jon.

Thank you, Rob.

Good morning and thanks for joining us today.

Since our last earnings call, we've been focused on incorporating the learnings from OPuS-2 and then advancing our HAE programs in order to have results from trials of both our second-generation molecule, BCX7353, and the solid dosage form of avoralstat later this year.

Let me start with 7353.

Last year in a Phase 1 healthy volunteer trial, 7353 achieved drug levels at steady-state above the target range for a full 24-hour dosing period after a single dose.

With this kind of profile, we believe we have a real shot at reaching our goal of bringing forward a conveniently-dosed, highly-effective oral drug for HAE patients.

The next important step in the program is to study 7353 in HAE patients in a study we refer to as APeX-1.

The study protocol has been submitted to regulators and we are working on the other startup activities for the initiation of this trial.

Our plan is to disclose the APeX-1 trial design the summer, when we have dosed the first subject.

We remain on track to report trial results at the end of 2016.

After evaluating the results of OPuS-2, the bar for the solid dosage form of avoralstat has been raised.

The goal is now to achieve exposures in most HAE patients that support both twice-daily dosing and meaningfully higher exposures.

This is a challenge for a drug with low bioavailability, but for this program to continue we must meet this goal.

We are currently conducting a Phase 1 clinical pharmacology study in healthy volunteers evaluating multiple formulations of avoralstat and expect to report results from this study during the summer.

Lastly, we continue to advance our broad spectrum antiviral, BCX4430.

We have completed the Phase 1 healthy volunteer study of the intramuscular route of administration of 4430 and expect to report out these results and initiate a Phase 1 study of the intravenous route of administration of 4430 later this year.

We continue to get data that supports the broad-spectrum activity of 4430 as well.

In recent months, through a collaboration with NAIAD and Utah State University, 4430 was evaluated in animal model experiments against the Zika virus.

Bill will share some of the details, but the results from this early research are encouraging.

So that's it for my introduction.

I will now turn it over to our Chief Medical Officer, Bill Sheridan.

Bill?

Thanks, Jon.

It's a pleasure to share some information from non-clinical research with our broad spectrum antiviral agent BCX4430.

These data are represented in slide 4, 5, and 6 in webcast.

Just to set some context, I'm sure everybody is aware of the evolving public health issues around the spreading Zika virus infection through the Americas and the tragedy in Brazil that is unfolding with microcephaly in babies born to mothers who had Zika virus infection during pregnancy.

There is a lot of attention being paid to this at the CDC and other public health agencies.

We had the opportunity to collaborate with Dr. Julander at Utah State University in NAIAD-funded research with BCX4430 in an animal model that has been developed to study Zika virus infection.

This model is in mice and wild type mice can't be used here because they are resistant to infection and don't become ill.

So the type of mice that are used lack critical elements of the immune system, in particular the interferon alpha, beta, and gamma receptors, and they then become susceptible to Zika virus and develop severe illness.

This is a very brittle model.

And as you can see in slide 4, the controls develop illness and then succumb and die in a relatively rapid timeframe.

So the first experiment was simply to address whether administering BCX4430 would improve survival and that is indeed the case.

A couple of different dose regimens were tested and, as is obvious from the curves, there is a statistically significant and meaningful improvement in survival with seven out of eight at the top dose surviving through 28 days and a dramatic prolongation of median survival in the low dose group as well.

Along with that, there was dose-ordered reduction in viral load, as indicated in the right-hand panel, which is exactly what you would expect to see with a direct-acting antiviral agent that also is associated with the improved survival in this type of animal model.

This experiment was extended and on slide 5 an important question to ask is doo the survivors develop immunity to the virus and when you challenge them again with another inoculation what happens?

This is a straightforward experiment.

The seven survivors were challenged again with an injection of Zika virus on day 28.

These mice remained well with no sign of illness and continued well through the end of study.

In comparison, animals that had never previously been exposed to the virus at the start of the experiment, but instead had sham injections and either received vehicle placebo or a study drug for eight days and then subsequently were challenged on day 28, of course, developed the infection and succumbed in the way discussed on the previous slide.

This tells us that administration of the drug does not interfere with the development of permanent immunity against Zika virus, and that is an important filing.

An additional experiment has since been conducted, illustrated on slide 6, that starts to ask the question can the drug intervene and produce a useful outcome after the illness has had time to develop.

The experiments I have described so far started administration of drug before virus challenge a few hours later.

In contrast, the experiment on slide 6 starts drug administration one day after or three or five or seven days after administration of the virus.

And as you can see from the survival curves and indicated in the asterisks, there are meaningful and important improvements in survival when the study drug is delayed all the way through seven days.

So these experiments should be viewed as interesting and preliminary screening experiments in the very first animal model of Zika virus infection.

We're encouraged by these findings and we will continue to collaborate with external experts around Zika virus to see whether or not BCX4435 has a role to play in the public health response to this important emerging infection.

A couple of comments on the completed Phase 1 study that Jon mentioned.

The study went through all of the planned cohorts of single doses and multiple doses and the top-line findings are that BcX4430 up to 10 milligrams per kilogram once a day for seven days in healthy subjects was safe and well tolerated when given by intramuscular injection.

And we saw dose-proportional pharmacokinetics that are straightforward.

We look forward to sharing more detailed results later in the year.

In the meantime, the program is moving forward as planned with completion of nonclinical work to support filing an intravenous route IND so that we can study the drug using that route.

So now I'll turn the call over to Tom, who will address the financial update.

Thank you, Bill, and good morning, everyone.

I am pleased to report the details of our first-quarter 2016 financial results.

We closed the quarter with approximately $79 million in cash and investments and have focused our first-quarter efforts on achieving two near-term decision points in our HAE programs.

First, we are striving to reformulate avoralstat to achieve twice-daily oral dosing with meaningfully higher plasma concentrations than those observed in the soft gel formulation used in OPuS-2.

And second, we are working to initiate the APeX-1 clinical trial, which will be the first clinical trial of BCX7353 in HAE patients.

On slide 7, our revenue for the first quarter of 2016 decreased to $4.8 million from $6.8 million reported in the first quarter of 2015.

The decrease was primarily due to lower collaborative revenue associated with BCX4430 under our advanced development contract with BARDA and, to a more limited extent, recognition of no Rapivab product sales in 2016.

With the completion of the Seqirus outlicensing, all Rapivab commercialization activities and the recognition of product sales is the responsibility of Seqirus.

Thus, we will not have any Rapivab commercialization expenses, nor record product revenue in the future.

We will simply collect the royalty on a quarterly basis.

First-quarter 2016 R&D expenses increased to $20.6 million from $17.1 million incurred in the first quarter of 2015.

This increase resulted primarily from higher development costs associated with the Company's HAE programs, as well as ongoing Rapivab post-approval clinical trials in pediatric and elderly high-risk influenza patients.

Enrollment in these trials has occurred much quicker than we originally anticipated and, consequently, we have incurred slightly higher expense due to exceeding forecasted enrollment targets.

As a reminder, BioCryst is solely responsible for the completion and funding of these post-approval Rapivab trials.

General and administrative expenses for the first quarter of 2016 decreased to $3.2 million as compared to $4.1 million for the first quarter of 2015.

The decrease was due to a reduction in unrestricted HAE grants and the elimination of Rapivab marketing and commercial consulting expense in 2016 as Rapivab is now being commercialized by Seqirus.

Moving below the operating line, we incurred $1.5 million of interest expense in the first quarter of 2016 compared to $1.3 million in the first quarter of 2015.

We also recorded a mark-to-market foreign-currency loss of $2.8 million on the Company's foreign currency hedge in the first quarter of 2016 as compared to a foreign currency gain of $464,000 in the first quarter of 2015.

Accordingly, the devaluation of the dollar to the yen had a $3.2 million negative impact in our first-quarter 2016 results as compared to the first quarter of 2015.

The mark-to-market loss and gain result from periodic changes in the relative US dollar/Japanese yen exchange rates and the related valuation of our hedge arrangement.

Our net loss in the first quarter of 2016 was $22.8 million, or $0.31 per share, as compared to a net loss of $15.2 million, or $0.21 per share, in the first quarter of 2015.

Moving on to slide 8, our cash balance was $78.9 million at March 31, 2016, and we utilized $22.4 million of cash in the first quarter of 2016.

We have sufficient cash resources to allow us to reach our two HAE decision points and we forecast our cash and investment balance to provide liquidity through mid-2017.

Typically, the first quarter represents a heavy utilization of cash as compared to the following three quarters in a fiscal year.

This phenomenon is certainly the case in 2016 and results from the completion of OPuS-2 in the first quarter.

Furthermore, when comparing the quarters, the first-quarter cash utilization in 2015 was unusually low due to approximately $7.4 million of receivables collected from our distributors associated with the launch stocking of Rapivab.

In regards to our 2016 forecasted results, we expect to remain within our previous expectations with our cash utilization in the range of $55 million to $75 million and our operating expense in the range of $78 million to $98 million.

Both ranges were provided previously in February in conjunction with the reporting of our fiscal 2015 results.

As a reminder, our operating expense guidance excludes equity-based compensation and our cash utilization cash forecast excludes any impact of foreign currency fluctuations or other royalty monetization cash flow.

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

Thanks, Tom.

That completes our review of the first quarter.

Looking ahead we are focused on advancing our HAE programs to get closer to our goal of bringing forward a conveniently-dosed, highly-effective oral drug for HAE patients.

You can see on slide 9 that the two important milestones are: results from the solid dose PK study of avoralstat this summer and APeX-1 results by the end of the year.

With that we will now open it up for your questions.

Brian Abrams, Jefferies.

Thanks for taking my questions.

I'm just curious if you guys have learned as the months have gone on with your additional analyses anything more about the OPuS-2 data and how you might apply your learnings to the APeX-1 design.

In particular, I'm curious if there may be signals of what the best way to offset the high placebo effects you saw in the OPuS-2 trial might be.

Whether a modification of the endpoints, looking at additional endpoints, changing things like trial size might help overcome that for APeX-1.

Sure.

Thanks for the question, Brian.

This is Bill.

The additional analyses concerned what we already said, which is the main reason for the outcome we saw in OPuS-2, was the exposure profile that we shared at the time we looked at that data.

So that is a problem that BCX7353 already fixes, given its exposure profile in healthy subjects.

There's no reason to believe that it would be substantially different in HAE patients, and from that perspective, we would expect no change in what we talked about before in terms of dose selection for 7353 in the APeX-1 study.

We have previously guided that the dose range we're looking at is in the general ballpark of 100 milligrams a day to 350 milligrams a day, so that hasn't changed.

The second learning was to do with the placebo effect, as you mentioned.

And that is not by itself a reason not to detect a drug effect.

That needs to be taken into account, especially with power calculations and sample size calculations and we have done that.

The short answer is that that is a typical way of dealing with placebo effect is to increase sample size.

Another related aspect of that in making sure that you have the opportunity to measure a drug affect is care in the inclusion and exclusion criteria around the types of patients we are recruiting so that they're well-established patients with known attack rates in an appropriate range for the duration of the study so that we can actually see a drug effect.

That wasn't a problem in OPuS-2 that the same sort of care and attention that is needed for getting the right patients on the study is, of course, required for APeX-1.

Those are the three main things.

Brian, I would add that for the solid dosage form of avoralstat, it's clear to us from the OPuS-2 results that three-times-a-day dosing is not going to cut it and having a drug that falls for some portion of the dosing interval below the target range doesn't cut it either.

And so we raised the bar on what we're expecting to get in order to move forward with a solid dosage form of avoralstat.

So it has got to not only be twice a day, but it has got to have a meaningfully higher exposure during the dosing interval.

Got it.

Then just one more related question.

I'm wondering if there might be ways to more fully flesh out some of the [inter-attack] benefits that you saw or the hints of [inter-attack] benefits you saw in OPuS-2 in the upcoming APeX-1 study and what that might mean for the future development of 7353.

If you are able to replicate or even augment some of those benefits beyond just attack reduction.

Thanks for the question.

What you are referring to are quality-of-life benefits and the data from both in fact, OPuS-1 and OPuS-2, is in the same direction and is of clinically-significant magnitude.

So the improvement in quality of life I think is extremely important in patients with chronic illnesses.

The basic research in this field has been important in creating instruments that we can use that have been developed that are more specific for patients with hereditary angioedema compared to general QOL instruments, so we are using those in our studies.

They will be in APeX-1 and we look forward to understanding the impact on how people live their lives of having the contact activation system and kallikrein controlled adequately around the clock.

Our expectation is that there is a very profound benefit in controlling illness and we are very encouraged by the results of the quality-of-life metrics in OPuS-1 and OPuS-2; that they could also be a chronic element [to this disease] (technical difficulty) independent of acute attacks.

So I think that that research is important to do and we will be absolutely certain to collect those metrics and report them.

Thanks, Bill, and thanks, Jon.

Jessica Fye, JPMorgan.

Good morning.

Thanks for taking my questions.

As we think about Zika, given that people I think often don't know that they have it or aren't always symptomatic, are you presumably thinking about your drug being used in more serious cases?

And it also seems like the greatest implications are in pregnancies.

So do you have preclinical tox data supporting a lack of teratogenicity?

And for Rapivab, I think there is new leadership at BARDA with Richard Hatchett as acting director.

Can you talk about your latest thinking on a potential stockpiling order for Rapivab?

It seems like that could be a nice means to improve the Company's cash position.

I'll take the Zika virus question.

Thanks, Jessica.

So I think if you put yourself in the shoes of a public health physician who needs to respond to emerging viral threats, and especially one that is transmitted by an insect vector like a mosquito, the number one thing you worry about is vector control.

The number two thing you worry about is vaccines and the number three thing you worry about and would like to have in your pocket is an antiviral drug to treat people who need an antiviral drug.

So I think your question is a very good one, good ones.

They can't be answered right now because we don't understand enough about the natural history of the infection.

Recently there was a death reported in the US of an elderly person who got acute Zika virus infection, for example.

The questions about use of an anti -- of any drugs in pregnancy you always have to approach with a lot of caution.

With regard to what we currently know, this drug is negative in in vitro genotoxicity testing and we have not yet performed reproductive safety testing in nonclinical species.

That will be done and that is -- clearly we would have to have that resolved before even considering using a drug like this in a pregnant woman.

So I think there is a lot of work to do.

The main point that I would draw from the research we presented today is that it is yet more evidence of the broad-spectrum potential utility of BCX4430.

And having a drug in a national stockpile for use in emerging infections is way more attractive if it has broad-spectrum utility rather than being specific to just one virus.

With regard to stockpiling of Rapivab, yes, there has been a change in leadership at BARDA.

With approved drugs, though, the stockpiling is controlled by the CDC, not BARDA and we have been in conversations with CDC.

We will continue to have conversations with CDC about the potential stockpiling of Rapivab.

In an election year I'm not super confident that the money will be available, and that's always an element of this, but I'm also confident that at some point they have got to replenish the existing stockpile that they have.

And so, like you said, that capital could be meaningful to us.

We are continuing to work on it, but we are working with the government and the money has got to be available.

Okay, thank you.

Maybe I missed this, but what is the next step in Japan for 7353?

The next step in Japan is to get APeX-1 done, and that study is being done in Europe, and get the results because that will frame up the necessary discussion with the Japanese regulators about the remaining steps required for development and licensure of 7353 in Japan.

Okay, got it.

Thank you.

Charles Duncan, Piper Jaffray.

Good morning.

Thanks for taking the question.

Wanted to ask a question on 7353 and APeX-1.

I know that Brian was kind of asking this question as well, but I guess I'd like to hear more about the trial design.

It seems like perhaps in the summer we will get more information, but I'm wondering if you could give us a little bit more color on it so we can gauge the probability of getting to results by year-end.

Are you confident in patient size or patient numbers or is it being conducted, etc.?

Sure, we can -- I'll frame it up in general terms and once the study actually starts then we can go into much more detail.

If you look at the history of the field, we now have examples of studies of different general designs.

They are all placebo-controlled.

And prophylaxis studies in the past, before there were any effective therapies, used a crossover design; that was the design of OPuS-1.

OPuS-2 was a parallel cohort design and, in fact, we were encouraged by regulators to pursue that type of design.

The change from crossover to placebo you need to adjust by having a proportional increase in sample size because you are now looking at variances in populations rather than within patient variances as part of the statistics behind the power calculations.

So the studies can be done either way and I note that one of our competitors is also doing a parallel cohort study.

So there are pluses and minuses for both of those.

There's no reason to discount either one and you can -- provided you do these correctly and get the exposure you need and are measuring the right outcomes in the right patient population, then they are both fine.

So I think the next question is with regard to dose ranging.

Dose ranging is necessary here because although we have very good assay and a very good handle on how much BCX7353 would need to be in the plasma to replicate the normal range of C1 inhibitor.

Nevertheless, you have to measure the outcomes to fully correlate the PK with the pharmacodynamic effect that you really want.

So dose ranging is important and will be an element of the study.

Typically that's done within, say, three doses, at this stage of drug development and out of that you would like to select one, or at most two, doses to go into a pivotal program.

The duration is dictated by practical considerations and how much toxicology experience you have.

There's also an element of expense in drug supply and, as you recall, we did a perfectly successful experiment with a four-week duration study in OPuS-1, so you can do short experiments here and get the information you need.

Actually that's much better to do dose ranging as a short experiment than in a long experiment.

So I think they are the sort of general things.

There are interesting ways of getting information from ongoing studies that have to do with interim analyses, of course.

It is a well-described and well-used tactic in conducting clinical trials and that is certainly on the table.

So I think all of these things are part of the discussion around the design of APeX-1.

With regard to sample size, you don't want to be in a position of having to recruit hundreds of patients to answer a question in a disease like this and we certainly don't need that, so it will be a reasonable sample size.

And you can expect that to be the case, even taking into account placebo effect.

Yes, so if you add all that stuff together, Charles, if the basis of your question is what is our confidence level in finishing the study by the end of the year, from we can see today our confidence level is pretty high.

But we will have greater degree of confidence when we get the first patient dosed and have the protocol agreed upon and all of that.

And the study will be conducted where?

Here?

Europe.

In several countries in Europe for the same reasons that we conducted our first study with avoralstat in HAE patients in Europe: there's a concentration of patients in centers of excellence and that just makes this a whole lot easier to manage, especially in smaller studies.

Productivity per site is a lot better.

That makes sense.

And so it sounds like complete the study this year and data, top-line data early next?

We are saying report out data by the end of the year.

The (inaudible) is reporting the data so we want to report the data by the end of the year.

Okay, awesome.

That's cool.

Then just moving on to 4430 in Zika.

I know that this is way in the realm of speculation still, but could you help us understand that mouse model in terms of how it may correlate with the time course of the human disease infection, etc., clinical (technical difficulty)?

I'm just wondering about the dose response and the time to rescue, if it makes --.

It's a great question.

I think the natural history of this disease is still being explored, so there's a lot still to be learned by the medical community about Zika virus infection.

I think it's fair to say that at the moment there can be subclinical infection where people feel perfectly fine and you only know that they've been infected with Zika virus when you do antibody studies.

We know that's the case from the studies in French Polynesia, for example, with serology surveys of the population.

And we also know that if mosquitoes aren't controlled, vast majority of the population gets infected with Zika virus.

It spreads through the community.

So there can be subclinical infection, and if you are not getting ill with the infection and you are not a pregnant woman, then it's probable that you don't need any intervention.

Then there are people who get ill with the infection and I'm sure that can vary from a mild flu-like illness with a rash all the way up to a more severe illness with arthritis and high fevers and so on.

So I think that is where the information is starting to be a bit thinner.

We do know that a typical case of Zika virus infection that is clinically evident will have symptoms of acute arthritis and a rash, in addition to a fever, and it is a self-limiting illness.

And I don't know whether an antiviral would be useful for those patients yet or not.

In animals -- so the general course of the disease is pretty quick.

In animals, the general course of the disease is pretty quick.

And so the duration of viremia that Dr. Julander shared at some of these public presentations and is modeled is only a few days long, but at very high titers of virus, so there's lots of virus proliferation.

In normal animals, the immune system kicks in and then clears the virus and creates immunity.

So the biggest medical need -- there are two medical needs that sort of standout.

One is the issue to do with microcephaly and teratogenicity of virus infection in the fetus.

That is going to be definitely worth thinking about and after we've got the nonclinical safety studies done and the reproductive safety studies done.

The other thing that is pretty interesting here is just the severity of the Guillain-Barre syndrome that is a neurological complication that is an immune complication of recovery in these virus infections.

Of course, if you don't get the virus infection in the first place, then you are not at risk.

I don't know whether an antiviral would be useful in preventing that.

If it was administered during the virus infection, it might be.

But mosquito control and vaccines, as I said before, are going to be top of the agenda for the public health agencies.

There may be a role for antiviral drugs and that needs to be determined.

I think another important point in all of this is that when governments react to a specific crisis you are always playing catch-up, whether it is a vaccine development, vector control, whatever.

What encourages me in the discussions we've had with the US government bodies is that the idea of having a broad spectrum antiviral that works on multiple viruses seems to be pretty important and we are continuing to get the funding.

So what application we will have with Zika, Bill and I can't predict at this point in time.

We will continue to work with the government to do the studies we need to do, but the need for a broad-spectrum antiviral is just so important.

We've shown in the Ebola, Marburg, yellow fever, Zika animal models survival benefit and so this looks like a good candidate to us.

The other thing I forgot to mention is there are three ways of using an antiviral for these things and one is to treat established infection.

The second is to treat somebody who is not yet ill but is known to be exposed, so that's post-exposure prophylaxis.

The third is pre-exposure Prophylaxis.

So I would say that the mouse experiments that I shared today, especially the first one, indicates that this is likely to be highly effective if administered very early after viral infection as post-exposure prophylaxis.

It's early days, both in the medical understanding of this disease and how antivirals might be used.

I think that we are encouraged by the fact that the drug has activity.

We will continue to work with the experts to figure out whether it's going to have clinical utility or not.

That's helpful.

It sounds like that broad spectrum component or feature of 4430 is really what is intriguing, not only for this infection, but others that could come along.

That's right.

The development pathway hasn't changed, so we are continuing down the animal rule pathway for a development of this drug in Ebola virus infection, which is a lethal disease and huge unmet medical need.

There has been Ebola outbreak of one sort or another in Africa every year for the last 10 years.

Everybody knows the big one, but the virus is never going to go away.

There's always going to be a risk and it's a disaster, obviously, when there's an outbreak of Ebola virus.

We have something like $75 million worth of funding in total contract value from NAIAD and BARDA.

And as I mentioned previously on the call, we are continuing to step through the necessary research to develop that drug for Ebola virus infection.

That's helpful, Bill.

I was going to ask another question regarding Guillain-Barre, but I think I'll take that offline.

I wanted ask one final question, quick one of Tom and that is regarding the assumptions behind cash burn, both revenue anticipated beyond this year either from Rapivab or other milestone payments whatever.

And also avoralstat expenses, what are you assuming in the second half of the year?

Sure, Charles.

I will preface my comments by saying, generally, when we are forecasting our expenses and our cash burn, we take a very conservative tact, which is we assume sort of a maximum outflow and a very limited inflow.

And so what I can tell you is we've forecasted and what's in our ranges is that we continue the avoralstat development through the -- and the 7353 development through the pivotal points, which effectively go through the summer and the end of the year, and assume success in taking the next step and continuing with those on.

So I think what you see in our expectations is not only are we continuing those programs, but we are also continuing to fund our other programs, our earlier development stuff as well.

And so we have taken our history over the last five years and said we have enough cash to take all of our programs to the next stage gate, flip that card, see if it's good, and if it is, be prepared to move forward with each program.

That mentality has not changed for 2016.

In regards to cash coming in, we've once again taken a very conservative view on that.

The only cash coming in is associated with our existing government contracts and the options within those contracts.

So my final comment would be, in the last five years I think we have only adjusted our annual guidance once and that was last year.

And it was adjusted multiple times downward.

So I think that when you look at our cash projections based on our history, I would think that they would be considered conservative.

And as soon as we seem to deviate from that, we will let you know, but I think it's unlikely that we will.

Just to clarify, that guidance was adjusted downward in terms of burn last year and that could happen this year it sounds like if avoralstat didn't move forward?

Certainly as soon as we have information that would cause us to increase or decrease activities -- and it's mainly probably decreasing activities -- or we bring cash in, then we will adjust our results.

Certainly by the -- in the next quarterly update or our forecast.

Helpful, thanks for the added color, guys.

Have a good day.

Liisa Bayko, JMP Securities.

Thanks for taking my question.

Can you perhaps talk about what your expectations are for this upcoming next data point midyear?

What level of sort of exposure and what does the PK look like for you to really feel like this has got a good shot?

I'm just trying to understand how to interpret the data when it comes out, relative to what we've seen so far.

Thank you.

Thanks, Liisa.

If you remember the slides that we showed PK for either 7353 or avoralstat, there is a target range and it's a blue bar, a horizontal bar, that represents 4 to 8 times the EC50.

The reason we chose those is it's what it takes to get HAE patients to the lower limit of normal, where we believe they could be attack-free or near attack-free.

And so the bottom edge is the average HAE patient, because some patients have some residual C1 inhibitor, and the top edge is a patient that has nothing, so zero gas in the tank.

Given what we learned from OPuS-2, where a three-times-a-day dose actually dropped below that lower edge of the bar, the 4 times the EC50, towards the tail end of the dosing interval, and you had to give three doses and you had to give them in a timely manner, that just doesn't fly.

So at twice-a-day with that dropping below would be problematic, too.

What we really shooting for is a 12-hour curve where the drug levels at steady-state state in the blue bar range or above for the dosing interval.

And we think that by dropping a dose, so making it twice a day, which is just easier to remember -- take it when you get up, take it before you go to bed -- and then having that coverage will give us a much better shot at this conveniently-dosed -- the highly-effective part is the most important part here.

Okay.

[Kumar Raja], Noble Life Science Partners.

Thank you for taking my question.

Earlier you had mentioned that for filing you will need six to 12 months dosing.

Can you guys dose the APeX-1 patients long term and can that be used for this requirement?

Also, this requirement is it just from FDA or is this a requirement from other regulators like EMA and the Japanese authorities also?

Thanks for the question.

The question in short is: is there a requirement for long-term safety for a drug to treat -- for prophylaxis of hereditary angioedema?

And because you anticipate that if it's a safe and well-tolerated drug that you are going to take it lifelong or at least for very long periods of time, yes, there's a requirement for long-term safety.

The details might vary a little bit between one regulatory region and another in terms of exactly how many subjects through how many months of observation, but the general theme is the same.

You would want the majority of subjects in a long-term safety study to be at least through six months and to have some experience of 12 months administration.

I think that the other aspect of this that will play into guidance from regulators is what is the safety profile of the drug in that particular case that you have already developed in the studies that you have under your belt at the time you had that conversation.

So a drug that has a clean safety profile in the clinic and nothing coming out of long-term nonclinical safety that is of concern, you would expect to have a reasonably standard type of requirement.

If there are specific issues, then the regulators would want you to address that in a long-term safety study.

Okay.

Also Shire's Phase 3 study is ongoing.

How do you think that's going to impact the enrollment in the APeX-1 trial?

Whether it's Shire or some other company, there's always competition for clinical trial subjects, especially in rare diseases, but even in the common diseases.

That is a reflection of what is the medical need and how many things are in development at the particular time.

Our attitude is it's always difficult to recruit subjects to studies and we always go after sites that do a great job, who are enthusiastic about our programs.

So we certainly had no lack of enthusiasm, but we try to anticipate competition from other sponsors working in the same field.

And at the end of the day, we will get the study done.

I will just add probably one of the nicest surprises coming out after those two results was the outpouring from the patient community and the physicians who treat HAE just with words of encouragement.

There's a huge, huge desire for an oral therapy here; we see it every time we go to the patient meetings.

We're going to one in Europe, the international meeting later this month and we expect that we will get a bunch of enthusiasm for our programs.

If your question was around will Shire have to do long-term safety, the answer is yes.

I'm pretty sure they have even said publicly that they will need to do a rollover from theirs.

So I think anybody, as Bill said, that is going to be treating chronically for prophylaxis is going to need to demonstrate long-term safety and do the six- to 12-month dosing.

That's really helpful, thank you so much.

Thank you, I am showing no further questions at this time.

I would like to turn the call back over to Jon Stonehouse, CEO, for any closing remarks.

Thank you.

As we said in the prepared remarks, really our focus has been on learning as much as we can from the previous studies we've done so that we give the studies that are coming their best shot at success of reaching our goal of getting to a conveniently-dosed, highly-effective oral drug.

We're in that position now; we are either in a study or hopefully about to initiate a study.

We will have results later in the year and we will keep you updated.

So as always, we appreciate your interest in our company and have a great day, thank you.

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

This does conclude today's program.

You may all disconnect.

Everyone, have a great day.