Chimerix Inc (CMRX) 2015 Q3 法說會逐字稿

Good morning and welcome to Chimerix third quarter financial results conference call. (Operator Instructions) At this time, I would like to turn the conference over to the company's Executive Director of Investor Relations and Corporate Communications, Joe Schepers. Please go ahead, sir.

Thank you and welcome to Chimerix Third Quarter 2015 Financial Results Conference Call. On the call today are Michelle Berrey, President and CEO; Garrett Nichols, Chief Medical Officer; Tim Trost, Chief Financial Officer; Linda Richardson, Chief Commercial Officer and Peter Payne, Senior Vice President, Business Development and Corporate Strategy. Before we begin, allow me to read Chimerix Safe Harbor regarding forward-looking statements. During the course of this conference call, the company will be making certain forward-looking statements such as statements relating to certain R&D programs, including our SUPPRESS, AdVise, SUSTAIN and SURPASS trials and future clinical trials of brincidofovir, also known as brinci and related matters. These statements involve risk and uncertainties that may cause actual results to differ materially from those projected in the forward-looking statements.

These risks and uncertainties are discussed more fully in Chimerix filings with the Securities and Exchange Commission, including without limitation its most recent quarterly report on Form 10-Q filed earlier today, its most recently filed reports on Form 8-K and other documents subsequently filed with or furnished to the Securities and Exchange Commission.

All forward-looking statements made on this call speak only as of the time they are made and Chimerix undertakes no obligation to update these statements to reflect subsequent events or circumstances. We issued a press release this morning containing financial results and other updates for the third quarter 2015. The press release is available on the company's website at www.chimerix.com. Dr. Michelle Berrey will begin with an overview of our recent key events; Dr. Garrett Nichols will discuss the progress of our clinical development programs; Linda Richardson will highlight some of the commercial initiatives and Tim Trost will review our third quarter financial results. Dr. Berrey will have brief closing remarks before we take questions. At this time, I would like to turn the call over to Michelle Berrey.

Thank you, Joe, and welcome to our call today. This morning I will provide a brief overview of our most important recent events at Chimerix, many of which we highlighted at our [30th] Annual Investor Meeting in New York just two weeks ago. First as most of you know, we completed the target environment in our brincidofovir Phase 3 SUPPRESS trail to prevent cytomegalovirus or CMV infection in stem cell transplant recipients. As previously stated, we plan to provide top line data in early 2016. In August, we also completed enrollment of our targeted 200 patients in our AdVise trials for the treatment of serious adenovirus infection. Since the close of enrollment in AdVise, we've seen a significant increase in the number of requests for access to brinci from physicians in the US and in Europe. We are enthusiastic about the significant progress that's been made in our smallpox development program. This summer, we announced that brincidofovir demonstrated a clinically and statistically significant survival benefit in a pivotal study in a lethal animal model of smallpox infection. 100% survival was observed in the rabbits that received brinci immediately following the confirmation of infection. Importantly, animals that received brinci 24 or 48 hours after confirmed infection also showed statistically significant improvements in survival when compared to placebo. In September, we received a continued vote of confidence from BARDA, the Biomedical Advanced Research and Development Authority in the form of a $13 million contract extension to progress the final steps of our smallpox development program. If approved, brincidofovir will be the first FDA approved antiviral for the treatment of smallpox, an important addition to our country's potential defense strategy in the event of a bio-terror effect.

In parallel, we have continued in active discussions with BARDA regarding the potential procurement of brinci to the CDC's Strategic National Stockpile. In July, BARDA issued a Request For Proposal or RFP for the procurement of brincidofovir as the second antiviral for our stockpile. In August, we submitted a proposal to supply brincidofovir that we believe satisfy the requirements of the RFP. We understand that BARDA had intended to make a contract award prior to the end of the US government's fiscal year which is towards September 30. We have continued to communicate with our colleagues at BARDA and are optimistic that we will be able to reach agreement on final terms to supply brinci to the stockpile once BARDA is able to secure the requisite budgetary funding.

In October, we initiated dosing in our kidney transplant program, a patient population with significant unmet medical need both for the prevention of CMV, the most common infection in kidney transplant recipients, and also the need for improved renal function and long-term graft survival. Each year, over 5000 kidney transplant recipients in the US return to dialysis because of a failed graft often caused by viral infections. If brincidofovir can mitigate the negative impacts of viral infections on the new kidney, we may be able to keep a greater number of kidney transplant patients off dialysis. The Phase 3 SUSTAIN and SURPASS trials of brincidofovir in kidney transplant recipients are now enrolling in the US and (inaudible) enrollment in Europe. Garrett will discuss these trials later in the call. As the key part of our Chimerix 2020 initiative, we are continuing to explore potential indications for brincidofovir with in-vitro activity across all five families of DNA viruses. There are many additional opportunities for brinci in stem cell transplant recipients and solid organ transplants and in other patient populations who are imminent to (inaudible). We will be exploring additional therapeutic areas that we may want to peruse including as an adjunct therapy in oncology inpatients. At this point, I'd like to turn the call over to Garrett Nichols to provide an update on our clinical development programs.

Thank you, Michelle. Let me provide you with a quick recap of our brinci clinical development program, including the SUPPRESS and AdVise trials and our recently initiated SUSTAIN and SURPASS trials for the prevention of CMV in patients who have received kidney transplant. First a few comments on SUPPRESS, the SUPPRESS study has been designed on the basis of a successful Phase 2B study, in which the selected dose of brincidofovir achieved statistical significance over placebo on the primary endpoint of prevention of CMV reactivation with fewer than 60 patients in each arm, [we are doing] earlier in SUPPRESS than we did in the Phase 2 study, as we now have evidence that brinci does not negatively impact stem cell engraftment. This provides a greater opportunity for brinci to prevent early CMV reactivation and further separate from placebo, but it also provide opportunities for brinci to prevent infection with other DNA viruses that tend to reactivate early after transplant as well such as BK virus, HHV-6 or EBV.

The prevention of clinical complications with these other viruses such as BK virus associated bladder infection or HHV-6 infection of the brain also known as encephalitis, are important secondary endpoints that will be captured in SUPPRESS. BK virus related disease occurs in approximately 15% of stem cell transplant recipients and can be severe in one of three of these patients with disease. And HHV-6 infections of the brain are associated with mortality or permanent neurologic dysfunction in over half of the patients who develop these infections. As we've discussed previously, any reactivation of CMV is associated with a two-fold increase in the hazard of non-relapse related mortality after stem cell transplantation.

Thus the prevention of CMV reactivation avoiding the bone marrow suppression that's associated with the current standard of care for treatment and the prevention of disease is caused by other double stranded DNA viruses has the potential to improve survival over the current preemptive approach. Gut entry and cleaning [continue to pay] and we look forward to sharing these data with you early 2016. I know that many of you on the call today attended or listened to our webcast at a recent Investor Meeting in New York where we were happy to announce that we have initiated our Phase 3 brinci, SUSTAIN and SURPASS trials in kidney transplant recipients.

SUSTAIN is designed to demonstrate the safety and efficacy of brinci for the prevention of CMV disease and kidney transplant recipients at high risk of CMV disease. It is a blinded head to head study of brinci versus valganciclovir in kidney transplant recipients who have not previously been infected with CMV.

These CMV seronegative patients who receive a kidney from a CMV seropositive donor are at high risk of CMV infection and disease. The primary endpoint of the study is CMV disease with secondary end points related to renal function at one year, which is closely correlated with long-term kidney graft survival. The trial is expected to enroll approximately 750 patients with one to one randomization to brinci or valganciclovir for 200 days following the transplant.

SUSTAIN is an important as it will determine the safety and efficacy of brinci in a population that is at highest risk for CMV disease. However, it's important to note that this is a small subset of the total population receiving kidney transplants annually, as less than 20% of transplants are in the donor positive recipient negatives settings.

A majority of kidney transplant recipients in the US and Europe are actually CMV seropositive. These patients are at increased risk of CMV reactivation and disease due to the immunosuppressive medicines that they receive to decrease the risk of rejecting the new kidney. The SURPASS trial will enroll these CMV seropositive transplant recipients at the same clinical sites as the SUSTAIN trial.

SURPASS is a blinded head to head study of brincidofovir versus valganciclovir in CMV seropositive kidney transplant recipients. The primary endpoint is CMV disease with secondary end points related to renal function at six months, which is also closely correlated with long-term kidney graft survival. The trial is expected to enroll approximately 520 patients with one to one randomization to brinci or valganciclovir for 100 days following the transplant.

The same dose of brinci that was studied in the SURPASS trial in stem cell transplant recipients, 100 milligram twice-weekly will be studied in both the SUSTAIN and the SURPASS trials.

At our Investor Meeting in New York, Dr. Atul Humar, Director of The Multi-organ Transplant Program at The University of Toronto emphasized the high unmet medical need in kidney transplant patients. I want to underscore a few of the key points that he made during his presentation.

Immunosuppressive regimens have improved greatly over the past few decades resulting in very low rates of acute kidney rejection. Over the last 20 years however, we have not seen a corresponding improvement in the rates of long term graft survival. Less than 50% of kidney transplants are still functioning 10 years after the transplant. Patients lose their kidneys for a variety of reasons, but most often because of chronic injuries that occurs within the kidney. And the leading viral causes of such injury are DNA viruses including CMV and BK virus both of which have become more problematic with more potent immunosuppressive regimens. With activity against these DNA viruses, brinci has the potential to improve long term kidney function with corresponding benefits to both the patient and the healthcare system.

Turning now to our AdVise study for the treatment of adenovirus infection. In August, we announced that we had completed enrollment of our targeted 200 patients in the AdVise study. As we complete the treatment and follow-up of patients in AdVise, we are now identifying patients in the matched historical control study that will serve as our comparator. These historic controls will come from the same medical centers who treated patients in AdVise but from a time point when brincidofovir was not available. Survival is the primary endpoint with key secondary end points, including reduction of viral load and adenovirus related mortality. As our initial NDA submission will now be CMV only, we now plan to conduct the adenovirus analysis at study conclusion when all subjects have completed 24 weeks of follow-up following dosing with brinci.

Release of the final result of the AdVise trials with matching control is planned for the second half of 2016. In October at IDWeek, we presented preliminary data on patients from AdVise's Cohort C and compassionate use recipients of liver transplantation, who received brinci for adenovirus infection. 12 pediatric patients and one adult patient who were infected with adenovirus following receipt of a liver transplant were identified from the AdVise trial and the brinci expanded access program. Eight of the 13 patients had disseminated adenovirus disease with high levels of adenovirus in the blood and/or adenovirus recovered from multiple organ systems. In 10 of these 11 patients for whom viral blood data were available, adenovirus levels in the blood were either below quantifiable levels or were undetectable by the end of treatment with median time to minimum viral load of 15 days. 11 of the 12 pediatric liver transplant patients with adenovirus infection who received brinci survived, which compared favorably to the reported mortality rates of up to 50% in this population in the literature.

Only two of these subjects had serious treatment-related AEs, Grade 3 diarrhea in one patient and Grade 2 increased stool volume in one patient; both of these are advanced results. This is a really exciting time for the company and we continue to achieve important milestones for brinci. With the completion of SUPPRESS enrollment, we are closer to the evidence needed to support our lead indication as potentially the first and only product for the prevention of CMV in stem cell transplantation. And excitingly, we are now enrolling kidney transplant patients in our Phase 3 SUSTAIN and SURPASS trials, where we hope to make a difference in allograft survival. Now I'd like to turn the call over to Linda Richardson for a commercial update.

Thanks, Garrett and good morning, everyone. Today I'll provide a commercial update following on from our recent Investor Day presentation. The global market for stem cell and organ transplants continues to grow with approximately 8,300 allogeneic bone marrow transplants in the US in 2013 and 18,000 kidney transplants in 2014. On average, we are seeing compounded annual growth of about 6% to 7% in the adult stem cell segment and 3% or 4% in pediatrics. Clearly, there is a sizable market opportunity as many of these patients are at risk to CMV and other DNA viral infections. We've been reporting this type of information in our recent abstract at ICAAC and IDSA and will be continuing to raise awareness of the clinical and economic impact of DNA viral infections in stem cell transplants at upcoming conferences, including ASH in December and at BMT in February 2016. Educating the transplant community on this information is a key component of our market development platform.

The commercial team has done a great deal of work profiling transplant centers and we have identified 84 that are performing approximately 85% of the stem cell transplants and over half of the kidney transplants in the US. Through our existing trials in EINDs, we already have relationships with approximately two-thirds of these centers and this number will increase as we progress with our two kidney trials SURPASS and SUSTAIN. Furthermore, as the medical liaison team expands under Garrett's direction, we'll be establishing a ground level presence for Chimerix in these institutions, it's important that we understand not just the volume of procedures but the dynamics at each center.

And as I shared two weeks ago, we are profiling these transplant centers to gain detailed insights into the decision makers and the processes used for obtaining formulary and protocol inclusion. We are also evaluating the influence level of certain centers on other centers. So that we can (inaudible) market access and sales professionals to ensure rapid uptake of brinci at launch. We don't believe that we're going to need a large sales force given the focused nature of hospital initiated prescribing in this market. Our current estimate is approximately 40 sales professionals, and we are awaiting results of our sales force strategy instructor assessment to further refine this projection. We want to ensure that we have enough critical mass to get off to a strong start. As the current formulary [conclusions] are mission critical to update.

In terms of market reaction to brinci, we have interacted with over 1,200 global physicians, pharmacists and payers in our market research programs. And are really seeing excitement regarding the potential to prevent CMV infections with an antiviral that can be used prophylactically without bone marrow suppression or the risk of kidney toxicity.

The reaction to our early open label endovirus treatment data is pretty much universally positive given that as few as one in five immunocompromised patients with adenovirus infection survive. A tragic situation often seen in pediatric patients. Brincidofovir's high barrier to resistance is also potentially a strong selling point as is the benefit of multi-viral protection.

That said, it's important to establish just how prevalent these other DNA viral infections are in both allogeneic and kidney transplant patients. Representing Chimerix generated data on this, but also working with top notch transplant centers in the US and EU to have them analyze their existing serum banks and current patients and then publish to present the findings. This is all part of our commitment to education, not only on the escalated mortality risk of allowing CMV reactivate in allogeneic stem cell patients, but in understanding the real threat of concomitant DNA viral infections in patients and the real risk of allowing CMV to reactivate in immunecompromised patients.

Transplants are very expensive and the figure that the independent Milliman Group generated on average total build charges per patient undergoing an allogeneic stem cell transplant in the US in 2014 was approaching $1 million. As we build the value proposition for brinci with payers, it's critical that we look to combine potentially clinical benefits of proactive protection with brinci and the chance to perhaps offset some of the costs related to treating other infections and reducing hospital stays and re-admission rates.

Following the availability of our SUPPRESS data, we hope to demonstrate the cost of not using brinci both clinically and economically.

Now, I'll turn it over to Tim Trost.

Thanks, Linda, and good morning. Starting with our balance sheet at the end of the quarter, we had approximately $378 million in capital available to fund operations, $0.4 million in debt and approx only 46.1 million outstanding shares of common stock.

Turning to our statement of operations, Chimerix reported a net loss of $32.4 million or $0.70 per basic and diluted share for the third quarter of 2015. During the same period in 2014, the company recorded a net loss of $17 million or $0.47 per basic and diluted share. Revenues for the third quarter of 2015 increased $2.3 million compared to $1.2 million for the same period in 2014 due to an increase in the third quarter of 2015 in reimbursable expenses associated with the company's ongoing development contract with BARDA.

Research and development expenses increased to $26.4 million for the third quarter of 2015 compared to $13.3 million for the same period in 2014. This increase was primarily due to the effect of costs related to the ongoing SUPPRESS and AdVise trials, costs of the Phase III SUSTAIN and SURPASS trials and growth of the company's clinical, regulatory development, and manufacturing groups.

We have consistently stated that we expect a significant increase in R&D expenses for the full year 2015 compared to full year 2014 due to the cost related to our ongoing SUPPRESS and AdVise trials, the two kidney transplant trials SUSTAIN and SURPASS, continued development on our manufacturing process and preparing for the anticipated NDA filings in 2016.

We've now incurred $65.6 million in R&D expenses for the first three quarters of 2015 versus $45.4 million for the full year 2014. R&D expenses may continue to be uneven from quarter to quarter.

General and administrative expenses increased to $8.6 million for the third quarter of 2015 compared to $4.7 million for the same period in 2014. The increase was primarily due to growth in the company's infrastructure and areas supporting commercial pre-launch activities. For the full year 2015, we expect an increase in G&A expenses compared to full year 2014 based on these same factors.

Loss from operations was $32.7 million for the third quarter of 2015 compared to a loss from operations of $16.9 million for the same period in 2014, the variance was due primarily to the increased research and development and general administrative expenses as previously discussed.

As Joe mentioned in his introductory remarks, earlier today we issued a press release containing our financial results for the third quarter of 2015.

Now I'd like to turn the call back to Michelle.

Thank you, Tim. With only eight weeks remaining in 2015, we're preparing to deliver top line data from the pivotal SUPPRESS trial in early 2016 preparing for our first NDA and MAA and continuing our brinci commercial pre-launch initiatives. If approved, brinci will be the first and only therapy for the prevention of CMV in patients following a stem cell transplant. As Garrett highlighted, we're identifying matching historic controls for the AdVise trial and anticipate full data in the second half of 2016.

We've initiated enrollment in our two kidney transplant trials, SUSTAIN and SURPASS which will expand our development footprint into Europe.

For our small pox programs, we anticipate meeting with the FDA in the first half of 2016 to discuss the data from the pivotal RabbitPox study and data from the [mice] study which will read out in early 2016. At that time, we will determine if any additional studies will be necessary to support an approval for brinci as a treatment for smallpox.

As Tim mentioned, we remain in a solid financial position with approximately $378 million in available capital. Looking ahead, we will be presenting pharmacoeconomic and outcomes data at upcoming conferences in Europe and in the US as well as some new data on the incidence and (inaudible) of DNA viral infections including multiple DNA viral infections.

We are continuing to educate physicians, payers and hospital administrators about the substantial risk to patients and the cost associated with these DNA viral infections. We believe that brinci is not simply an improved means of delivery for an potent antiviral but an innovative solution to address the significant negative impact of DNA viruses in these immunosuppressed patients.

Before we take questions, I want to let you know why all of us at Chimerix are passionate about what we do and what drives our employees everyday to advance the development and potential commercialization of brinci. Many of our patients suffer from leukemia, lymphoma and myeloma and receive chemotherapy, radiation and other medications that leaves them vulnerable to life threatening infections.

During the first three months after transplant, patients are at highest risk to viral infections including CMV, BK and other DNA viruses. Many patients who were offered a potentially curative stem cell transplant decide not to undergo the transplant because of the high-risk of infections that can require prolonged hospitalizations and can lead to death. Nearly one in five patients die from infection or other non-cancer complications in the first year after transplant.

In spite of the significant advances in transplant medicine, we still do not have an antiviral that is safe and effective enough to prevent CMV infections as we can prevent so many other infections in these patients. Brincidofovir has the potential to make a meaningful difference in the life of these vulnerable patients and their families.

With that., I would like to personally thank you for dialing into our final earnings and update call for 2015, the last call prior to our topline SUPPRESS data, enjoy the last few weeks of 2015.

At this point, I'll turn the call over to the operator for any questions.

(Operator Instructions) Geoff Meacham, Barclays.

So you guys covered a lot (inaudible) so I wanted to ask you outside of brinci, maybe with regard to priorities for 669 or [biz dev] activities like how would you guys beyond brinci prioritize what you're looking for as kind of backups and to expand the pipeline, I have one more follow up.

Outside of brinci, other things that we are moving forward but from our discovery program and from within our chemical library, you mentioned 669 which we are continuing to move forward and anticipate some important conversations with the FDA about our intended development program, we'll certainly be updating you once we have those conversations and are moving forward.

Also want to highlight norovirus, we have previously stated that we identified a lead and we are continuing to move that forward and we'll have some more update. Norovirus is increasingly recognized as one of the key causes of chronic diarrhea in the transplant population. It's certainly prevalent among immunocompetent patients as well as immunocompetent individuals as well. But in the transplant patients can quickly convert to a chronic viral infection with long [seeming] diarrhea up to hundreds of days. So we will be giving some updates later in 2016 on both of those program.

And then just on brinci and smallpox. I know you have some data ongoing right now or some studies ongoing in animal models. But I wanted to kind of ask you Michelle, what if we are going to hear about along the way any progress with discussions on the stockpile or is that dependent on maybe getting more color from FDA and next steps?

That's a great question and an opportunity for us to re-emphasize that those two programs are completely independent. So yes, we are continuing to progress with our animal model data and anticipate having a conversation with the FDA in the first half of 2016 once we get the mouse model data in hand. So that would obviously then lead toward a potential approval for brinci as the first approved antiviral for smallpox in the event of a serious attack or (inaudible) relief. Your second question about the stockpile, so BARDA has the ability to stockpile compound, vaccines etcetera that are felt to be in the interest of our US national security independent of whether they are approved for a specific indication, those conversations with BARDA are ongoing in parallel to that approval, as are some earlier conversations with other allied governments outside the US that could present an additional possibility for stockpiling in the future.

We had anticipated the ability to finalize that contract by end of fiscal year 2015, which was September 30, as you're aware we did not have a federal budget until just last week or earlier this week actually when it finally was inked and hope that with the availability of fiscal year 2016 funds we can reinitiate this final negotiations on the contract.

Phil Nadeau, Cowen & Co.

Thanks for taking my questions and congratulation on the progress; first, on the AdVise timelines. You're saying that the data is now in H2. I am trying to understand what's going to happen from the end of dosing on the patients presumably in Q1. Suppose the data out to H2, is it that you need the time to identify the historical controls after the patients are done dosing and what's going to take those through to six months?

So I can take that question. Thanks. The planned analysis is now for the second half of 2016 because we want to conduct the analysis when the trial is complete and that is 12 weeks of dosing in the study followed by 24 weeks follow-up, which as we talked about before is what the FDA prefers to the final analysis for that study, because we are no longer planning to include adenovirus in our initial NDA, an interim analysis was not necessary and so we'll do the final analysis when the final data is available and have that data available for discussion with the FDA in the second half of the year.

Okay. (inaudible) given that the patients were enrolled in August, 12 weeks of dosing probably takes you to somewhere right around now and then 24 weeks of follow up would get through call it May, is that fair and then it will just take couple months to analyze the data. Is that..?

Yes, that's exactly right.

Okay. Then on SUPPRESS, I think in the past you've given us some idea of how the diarrhea management plan is reducing the rates of dropouts in the trial. Can you remind me what those figures were and what [quantitative] data you have on diarrhea and SUPPRESS.

So we haven't discussed any specific numbers but the rate of diarrhea leading to discontinuation is lower than what we saw in Phase 2 at the 100 milligram twice-weekly dose. This is obviously been a area of focus for the Data Safety Monitoring Board for both the AdVise and SUPPRESS trials and as we discussed for the AdVise preliminary analysis, and we only had three patients of the initial 85 who were treated who discontinued due to GI events that were related to brincidofovir.

Are you using the exact same diarrhea management plan in SUSTAIN and SURPASS as you did in SUPPRESS or did you make any changes to it?

Nope, it's the same plan.

Katherine Xu, William Blair.

Great, thank you. Good morning. I also want to ask on the timeline of AdVise, previously somehow it felt like the data come out of soon after SUPPRESS and now it's second half 2016. I understand the timeline on that, but from the timing of the analysis perspective, what exactly have changed?

As I have just discussed, I think that the biggest difference was they intend to conduct an interim analysis of the AdVise data in order to have that data available for the initial NDA filing as the initial NDA filing is now intended to include CMV, but not the AdVise data, we're simply going to conduct the analysis when the trials complete.

Right, I understand that, but I thought even with this study to be complete, never mind, I got it now.

Just as clarification, Katherine. So we had talked about having data that we will be discussing publicly and with the FDA in the first half of 2016, you're correct there. But now where's the clarity that we are filing our initial NDA with CMV only. We are pushing that release of the topline data and the discussions with the FDA to the second half of 2016 when we'll have that final 36-week follow up.

Okay. And then just another question on the side effect side, can you just give us a kind of brief summary on how the diarrhea is distinguished from GvHD and how so far in this study, previous studies and also the ongoing studies on the GvHd side arising in the studies?

Sure. Some of our most experienced clinicians have developed in conjunction with our internal team the algorithm to manage the patients that develop GI side effects in the studies. In essence that involves holding a dose of the study drug. So if the study drug was scheduled to be given on the Thursday, then you're observing whether the holding of the dose in the following days after that Thursday is associated with improvement in the symptoms .

(inaudible) you're exploring for other causes of diarrhea, which could include intercurrent infection things like Clostridium difficile infections or other infections that could be resulting because graft-versus-host-disease generally the holding of a dose is not improved. The side effects can show investigation for graft-versus-host-disease that occurs. But if subjects basically improve after holding of that dose and consolidation is what is recommended, consolidation to 200 milligrams once weekly and this is a dose that has also proven to be effective in the Phase 2 study.

It is important to reflect that nearly all our allogeneic stem cell transplant patients have diarrhea and so this is a very common side effect of the algorithm that I've just discussed. It is helping patients basically stay on drug via the safety monitoring and management plan.

Is that helpful Katherine ?

Yes, thank you.

I think as we previously stated, we anticipate that the discontinuation rate within SUPPRESS following the SMMP vary somewhat to what we saw in our AdVise data that Garrett mentioned from earlier this year where we had only three permanent discontinuations. We believe that discontinuation rate within SUPPRESS to be less than 10%. And the real world rates may be even lower as obviously though they won't be blinded to whether or not patients are on brinci or on placebo . So we don't do see this as a problem moving forward.

Any other questions?

No, thank you.

Jessica Fye, JP Morgan.

Hey guys, good morning. Thanks for taking my questions, I have a couple, first one is for Garrett. I think you noted the potential for brinci to improve survival given any CMV reactivation is associated with a substantial increase in mortality, and I've seen that data over 12 months But I'm trying to think about six months and what you could show in your study. So can you talk about how we should think about the mortality rate over six months for the patient population that you're studying in SUPPRESS, we're just trying to understand what that background rate could be for the control arm, what you could show for brinci and then if you want to talk about your expectations around the potential to demonstrate a statistically significant mortality benefit and then I've got one more, but maybe we will start with that.

Sure the data we presented probably most frequently is looking at the [high risk] for mortality that we've demonstrated in the sixth year cohort study that was conducted at the Fred Hutchinson Cancer Research Center that show that two-fold increase in the hazard mortality for any reactivation of CMV and once you got to a [thousand copies] per mil the hazard for mortality was increased fourfold,. The underlying mortality rate in that patient population, the non-relapse related mortality rate at one year was 18% and the majority of that mortality really occurs in the first six months after transplant.

It's definitely front loaded, most of that non-relapse related mortality is infection based. So we're definitely hopeful that by avoiding CMV reactivation, by avoiding the model toxicity of valganciclovir, valganciclovir decreases neutrophil counts and immune reconstitution which can predispose patients to invasive bacterial and fungal infections, but by avoiding that toxicity that we could benefit patients with regard to mortality.

The Fred Hutch, obviously, is a specialized cancer center, we have a variety of different transplant regimens that are occurring in this study and so extrapolating the Fred Hutch data to the entire SUPPRESS population is not necessary something that we can do and that's why it's really difficult for us to comment on specific estimates of what mortality was planned to be.

So we did not power the study based on a mortality endpoint. But we're looking very forward to the SUPPRESS data being available in just a short couple of months, when we will be able to discuss the data with you.

Can I follow-up on that? So, you said 18% over one year and the majority of that's probably in the first six months. Does that mean like two-thirds so we can think about 12% and then I recognize there's probably differences between the population you are enrolling and that Hutch data, but should we think of their data, their mortality rate is being like better or worse, just directionally relative to the patients generally in SUPPRESS.

As the Hutch transmits high-risk populations of patients, that would probably be considered at the median or at the high-end, so that's probably the reason why we were not able to estimate, given that we've enrolled patients from upward to 40 transplant centers with varying rates of mortality at their individual centers. And then as far as what proportion of mortality occurs in the first six months, it's hard for me to that to say precisely but it's greater than 50%.

Okay got it. And my next one is a commercial one for Linda . I think at the Analyst Meeting you mentioned a substantial percentage of stem cell transplants are actually paid for in a fee for service basis [and is posted] under a DRG, I just want to make sure I'm understanding that correctly and what that means for you guys, did that mean that you were I guess the hospital might not be subject to that payment cap for those procedures that would allow more capacity to pay for things like brinci and specifically was there a difference in that sort of reimbursement mix for older versus younger patients and how do you think about that in the context of the demographics you're expecting for your brinci patient population.

Great question. And yes you nailed it on the head with the fee for service versus DRG, in one of our large projects where we were able to track patients and their journey through centers obviously blinded, we could see all of the billings and how that was paid for and two-thirds or more were in the fee for service and to your point, then the drug cost does not come under the DRG type payment. So it allows for more flexibility and they're getting paid a percentage on all of the charges only billable. So that is good news I think for us and we were happy to see that, of course, we're doing additional work to see if this study is validated by others. And then in terms of the mix - and what we really looked at is, what's the difference in stem cell versus SOT. So in stem cell, we have a younger patients, I think the average age was around 40, 42 or 45, we see 54% of the business in the commercial segment in [HCT] and then 25% Medicare, 15% Medicaid and when you flip that for kidney, it's two-thirds Medicare and then a quarter commercial, and we follow up from there. So in our initial going in strategy will be in fee for service and other commercial payers primarily. So I think that's a great way for us to start.

Okay And did you say that data was coming from the centers that you have experience with, I am curious about what the mix of DRG versus fee for service procedures in those centers or you surpass these existing relationships?

Well, this was done as part of our profiling work. So that would be obviously we have relationships with a lot of those who look at the key centers. But I honestly haven't matched it up in the way you described.

Yigal Nochomovitz, Citigroup.

Just on BK virus, obviously that's important from a value proposition perspective not only for stem cell transplant, but potentially more importantly for kidney transplant. So I just wondered what you know about the details on the mechanism of action there. As far as I understand, it's still not clear whether brinci is hitting the polymerase or different target despite what's evidently very good in-vitro activity in cell killing. So let's get your thoughts there. Thanks.

Sure. So as might know the BK virus does not encode its own DNA polymerase, and so that's part of the reason of that question of mechanism of action, what is part of the moment is that it's possibly due to one of the proteins called T-antigen, which is encoded by BK virus, which unwinds the DNA and against which brinci and cidofovir appeared to have activity. This has been demonstrated in another polyomavirus called Sv40 and we have ongoing work with a number of polyomaviruses with collaborators in order to verify that.

You mentioned the in-vitro data and Garrett went through some of the mechanism of the action work that they were doing, but also want to highlight that we have clinical data from a post-hoc analysis of that 201 stem cell transplant Phase II study, where we showed improving GFR that was statistically significant across the populations even though that was a smaller study. During the 100 milligram twice-weekly, the same dose that we're taking into SUPPRESS, a statistically significant improvement in GFR and it was more significant in those patients who were positive for BK at baseline. So although that was a post hoc analysis, it was our first confirmation of clinical activity in addition to that in-vitro data and some of the (inaudible) through our expanded access and the emergency IND. We do obviously have a keen interest in seeing what that readout is for SUPPRESS, not just for the multi-viral protection that we know are most important for the stem cell transplant patients but as a potential read-through for the kidney transplant studies that we've just initiated.

Okay, thanks. And then just going back to the reimbursement questions on DRG and fee for service. As mentioned, you've done some work in the stem cell population looking at that mix. But regarding the kidney transplant population, what work have you done to look at how much of that is going through DRG versus fee for service and the overall cost on a per patient basis. How does that compare to the $1 million you cited for stem cell transplant.

Yeah, it's a great question. I think we've really been focused because our initial pricing will have to be based on what data we have from SUPPRESS and that would be in the allogeneic stem cell patient population. We've really been looking and focusing on those charges, because that's where your value-based pricing is going to be evaluated vis-a-vis other agents that are available there. So I want to make sure that we nail that correctly. And then we'll spend either to your point the same amount of time doing the due diligence in the kidney section. But since we won't be on the market for that with an official indication for several years, hopefully, we'll get it sooner but that's going to be our focus seems to be on getting traction in the allogeneic stem cell population..

Stephen Willey, Stifel.

I think Michelle you mentioned that the federal budget is put in place. Just wondering if within that budget you know what the amount of dollars that are actually allocated to defense stockpiling are flat or up and also along the same line just wondering if the price that would be implied by any stockpiling order would have it influence in terms of pricing discussions or pricing decisions at launch. Then I just ask the question that there are some parts of CMS I guess that work on a better price model.

Good questions, the Federal Budget was approved, we do not yet have clarity on the specific for BARDA and even more relevant obviously how much of that would be able to support our contract as we have been negotiating with BARDA, but hope to have some clarity on that very soon. The price, which is obviously an important component is something that we are obviously actively discussing with BARDA as part of our proposal that was submitted this summer. Remember that BARDA has funded much of the development work for brinci for smallpox, the price that is negotiated with the government for stockpiling is completely independent of our potential commercial pricing which as Linda has gone through will be based on the value that we are able to see in the SUPPRESS, AdVise and in the future obviously, on our kidney treatment populations, those are independent and I would also add to that the price negotiated with the US government is also independent any price that maybe agreed with external governments, obviously preferentially [alright] there but that is because of the US government's funding brinci's development for smallpox, they do get potential preferential prices there.

Okay and then just that you made a comment in your closing remarks with respect to there being a fairly significant percentage of patients who choose not to undergo stem cell transplant and just wondering if you happen to know what that may look like. And if you have any inclination as to what percentage of those patients are choosing not for reasons related to infection-related mortality?

The data that we've seen is up to half of patients who are offered a potentially lifesaving curative stem cell transplantation, as to half of those patients are walking away from the opportunity. We've also recently seen some data that 70% of patients who are looking toward a - again potentially curative stem cell transplant don't have a family match. So they're increasingly going toward non-related matters as Garrett talked about those are the base higher risk patients and so as we increase the number of patients who are receiving unrelated transplants those patients are obviously at higher risks. I think that's one of the reasons why we are so intent on looking closely at the impact of brinci not just on CMV but on these other viruses and that potential to see improved mortality when half those patients are walking away from a transplant because of the 1 in 5 risk of mortality in the first year. If we can have an impact on that even as at positive trend, that is one additional factor that they may want to consider after deciding whether or not to go forward with the transplant and that's why we're hopeful that we can at least have a trend toward improved mortality within the SUPPRESS study.

Thank you. I'd now like to turn the call back over to Ms. Michelle Berrey for any closing remarks.

Thank you, Howard. So I just want to recap. So we have eight weeks left in 2015, that all has sneaked up on us. We anticipate our topline SUPPRESS data in early 2016, and presentation of the full data from SUPPRESS in February at BMT Tandem in Honolulu by the way. We are continuing to go forward with presentations and publications regarding the incidence and the impact of multiple viral infection, which we had previously appreciated in our pediatric population but increasing data showing the impact of multiple viral infections even in adults transplant recipients, the stem cell and potentially solid organ patients. The AdVise study as Garrett has highlighted for us, our historic controls matching is ongoing and we anticipate topline data and clarity on a filing strategy in the second half of 2016.

Enrollment in our kidney transplant programs SUSTAIN and SURPASS has begun. Smallpox, we will be sitting with the FDA in the first half of 2016 and independent of that, hope to have some progress with a potential stockpiling agreement with BARDA.

Lastly, just again want to thank you all for participating in today's call, our last call prior to topline data readout in early 2016, enjoy the last few weeks of 2015 and we'll speak with you all in the New Year. Thank you.

Ladies and gentlemen, thank you for participating in today's conference, this concludes the program. You may now disconnect. Everyone have a wonderful day.