Chimerix Inc (CMRX) 2016 Q2 法說會逐字稿

Good morning and welcome to the Chimerix conference call discussing the financial results of the second quarter for 2016.

Please be advised that today's call is being recorded at Chimerix's request.

I would now like to turn the call over to Michelle LaSpaluto from the Chimerix team. You may begin.

Thank you and welcome to the Chimerix second-quarter 2016 financial results conference call. This morning at 7:30 AM Eastern time we issued a press release containing financial results and other updates for the second quarter of 2016. The press release is available on the Company's website, at www.chimerix.com.

You may also access today's call via webcast on the Investor section of Chimerix's website. An archive of the webcast will be available approximately two hours after the conclusion of the event. On the call with me today are Michelle Berrey, President and CEO; Garrett Nichols, Chief Medical Officer; Linda Richardson, Chief Commercial Officer; and Tim Trost, Chief Financial Officer.

Before we begin, I'd like to remind you that the statements made on today's call include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and are subject to risk, uncertainties and other factors, including the possibility that there may not be a viable continued development path for brincidofovir without the FDA, and other regulatory authorities may not approve brincidofovir-based regimens, and that marketing approval, if granted, may have significant limitations on their use. As a result brincidofovir may never be successful and commercialized. In addition, Chimerix may be unable to file for regulatory approval of brincidofovir with other regulatory authorities.

These risks, uncertainties and other factors could cause actual results to differ materially from those refer to in the forward-looking statements. You are cautioned not to rely on these forward-looking statements. Risks and uncertainties are described in Chimerix's filings with the Securities Exchange Commission, including its Form 10-Q filed today, its recently filed reports on Form 8-K, and other documents subsequently filed with the Securities Exchange Commission.

All forward-looking statements are based on information currently available to Chimerix and Chimerix assumes no obligation to update any such forward-looking statement. At this time, I'd like to turn the call over to our President and CEO, Michelle Berrey.

Good morning, everyone, and thank you for joining us. The last several months have been an important time for us at Chimerix, as we work to design a comparative study of brincidofovir in patients with life-threatening adenovirus infections.

We are also advancing our intravenous formulation of brinci toward the clinic to enable the continuation of our programs addressing CMV and BK virus within the stem cell and solid organ transplant populations. We continue to be encouraged by the expanding clinical data showing brinci's antiviral activity against smallpox, CMV and adenovirus; and are focusing on maximizing the clinical utility of our candidate for these patients who have limited treatment options.

Starting first with our adenovirus program. We have continue to analyze data from our recently completed AdVise trial to inform our next development steps in this indication. As Garrett will walk through in more detail, data from this study demonstrated the potent activity of brincidofovir in pediatric patients with life-threatening adenovirus infection, showing a strong antiviral effect which correlated with overall survival.

Based on these results and available data from our expanded access program, we continue to believe that brinci may provide a much-needed antiviral option to treat serious adenovirus infection. In addition, we've been compiling data from the historical literature to identify the risk factors that best predict poor outcomes from adenovirus infections when brinci is not available, which include unrelated or mismatched donors, T-cell depleted grafts, and early detection of adeno in the post transplant period. These same predictors in patients who received brinci through expanded access or through AdVise often did not lead to fatal outcomes, even when the immune system was not yet regenerated.

As Garrett will walk through, these critical insights gained over the last five years can now inform the design of a comparative trial to most effectively demonstrate the potential benefit of brinci in this too often fatal infection. The key goal of our ongoing discussions with the FDA and with European regulators is to design a trial that will target those adenovirus patients who are most likely to benefit from treatment with brinci. We will provide further guidance at an appropriate public venue following agreement on this trial design.

At the same time, we're also working to optimize the delivery of brinci to address the GI side effects which impacted this press trial. We are planning to initiate our first in human trial for the IV formulation of brinci in the second half of 2016 to establish target exposures, safety and tolerability. We believe data from the single dose escalation study will put us in a strong near-term position to advance our programs in CMV and BK virus in both the stem cell and kidney transplant populations.

We are also evaluating options for the oral formulation which may enable longer term use of brinci as a prevention in the solid organ transplant setting. With the patent life for brinci extending into 2034, it's crucial that we continue to plan for the long term in order to maximize the value of brincidofovir. We continue to efficiently invest in our early discovery work and look forward to expanding our pipeline later this year with our promising norovirus candidate, CMX521.

In initial studies, CMX521 has been confirmed as a polymerase inhibitor, an important milestone, as the mechanism of action at this conserved region may translate to activity of CMX521 across the many different strains of norovirus that have been identified in recent outbreaks. Annually, norovirus causes over 200,000 deaths in the US alone, many of which are in patients who have undergone solid organ or stem cell transplantation. The global economic burden has been estimated at more than $60 billion annually.

Clearly, this is an area of unmet medical need. Finally, as Tim will touch on, we have remain committed throughout 2016 to continued cost reductions in the near term and efficient, timely clinical execution. This has enabled us to retain our robust financial position, and you can expect continued capital prudence from Chimerix as we move into the final months of 2016.

We also plan to provide additional financial guidance, once we have clarity on the required next steps to progress the adenovirus indication and the resources needed for that effort. I'd now turn the call over to Garrett Nichols, our Chief Medical Officer, who will provide an update on our clinical programs.

Thank you, Michelle. This morning, I'll start with an update on our activities on the adenovirus program.

As many of you know, adenovirus infections are deadly complications in the immunocompromised patient. Severe manifestations may occur even in the healthy individuals, however, as was seen recently during a reported outbreak of a Chinese adenovirus B7 strain in Oregon, in which almost 200 otherwise healthy adults and children were affected and over two-thirds of which were hospitalized. Of those, approximately one-third were admitted to the intensive care unit, 18% required mechanical ventilation, and five patients died.

Mortality rates from common adenovirus strains are extremely high in transplant recipients, as high as 50% in pediatric liver transplant patients and 60% to 80% in allogeneic stem cell transplant recipients that develop disseminated disease. Patients early after transplant, particularly those who have received medications that deplete their T-cells to prevent rejection in graft-versus-host disease, are at particularly high risk for poor outcomes, because they cannot mount an immune response to the virus. The only currently available treatment option is IV cidofovir, which not only is associated with significant risk for acute kidney failure, but also has low potency and often fails to clear the virus.

We believe that the recent top line results we released from May from the week 24 interim analysis of the AdVise trial provide a significant contrast to the current standard of care. Pediatric stem cell transplant patients who were treated with brinci for serious adenovirus infections in AdVise showed impressive reductions in adenovirus viral loads, with more than 80% able to suppress virus at detectable levels.

Even patients with no detectable CD4 cells, in other words, those in whom the immune system had not yet recovered, had rapid virologic responses, which were defined as a 99% reduction in the viral load or clearance of the virus from the blood at week four. Patients who had such a rapid virologic response had significantly lower mortality, which overall was less than 45% at week 24 in the pediatric stem cell transplant patients with disseminated disease. In AdVise, we also noted an improvement in the survival rate as accrual proceeded in the study, with the final quartile of enrolled patients having a mortality rate close to 20%.

Finally, the pediatric patient population in AdVise appeared to tolerate brinci better than the adults in either AdVise or SUPPRESS, which may in part be attributable to the use of the suspension formulation in kids and in part attributable to differences in gut biology. So in summary, the AdVise trial met our expectations for demonstrating brinci's benefit for the treatment of adenovirus in stem cell transplant patients and we look forward to presenting this data in detail at the upcoming premier infectious disease conference, IDWeek, in New Orleans in October.

As we discussed in May, our analysis of the AdVise data and our work with the historical literature on adenovirus and data from our EIND program has highlighted a number of significant risk factors within this pediatric patient population that we have been working to understand as we collaborate with FDA on our next comparative study.

First among these factors is transplant from unrelated or mismatched donors. These patients are more likely to develop graft-versus-host disease, which can reactivate viruses, such as adenovirus, from lymphoid tissue in the lungs or gut. The treatment of graft-versus-host disease with steroids is a risk factor for high viral loads and dissemination of the virus throughout the body.

The second key factor is T-cell depleted grafts, or T-cell depleting antibodies, such as campath. These are important medications that prevent graft-versus-host disease, but are associated with delays and functional lymphocyte recovery to day 100 after transplant and beyond. Patients who receive T-cell depleted grafts and develop adenovirus infections typically have high viral loads that do not respond well to IV cidofovir.

And finally, early reactivation of adenovirus post transplant is an important factor associated with poor outcomes. Patients who reactivate early after transplant are at particularly high risk for bad outcomes with the current standard of care, because they frequently need months of nephrotoxic IV cidofovir before their immune system can handle the virus on its own.

Following all of our analysis, we believe that we have the data to design an additional comparative trial against a standard of care control in pediatric patients with serious adenovirus infection in order to support a potential regulatory application. We are applying our learnings that I just highlight from the AdVise Study and from a systematic review of the individual patient data from the historical literature in order to identify the patients who will derive the most benefit from brincidofovir-based therapy. By selecting patients who do not respond as well to the current standard of care, we believe that we will maximize our probability of success.

As Michelle mentioned, we are continuing discussions with the FDA and European regulators and will provide further guidance regarding trial initiation upon completion of these discussions. In the meantime, we continue to see firsthand the clear, unmet medical need in this disease, as approximately one patient per day applies for brincidofovir through our expanded access trial and named patient program in the US and EU.

Finally, we're very pleased to announce that the European Commission has granted orphan drug designation for brincidofovir for the treatment of adenovirus. Companies that obtain orphan designation benefit from a number of incentives in the European Union, including scientific advice specific for designated orphan medicines and market exclusivity for 10 years, with an additional two years for medicines that have complied with an agreed pediatric investigation plan. This again shows the extreme unmet medical need in this patient population.

Next I'll provide an update on our progress with new brincidofovir formulations. To start, our intravenous formulation of brinci is currently being readied for a first time in human study later this year. The first in human study will establish target exposure levels and the tolerability of the formulation.

In preclinical studies, the IV formulation has been very well tolerated, achieving exposures far in excess of those achievable with oral delivery and without the gastrointestinal side effects that have been dose limiting for the oral formulation. This will give us the flexibility to examine the same exposures that have been effective for CMV prevention in stem cell transplant patients, while also allowing us to explore higher doses that could potentially be even more effective for the treatment of certain DNA viral infections, such as BK virus in kidney transplant recipients.

In closing, I'll update the status of our work in the smallpox program. The development of brinci for smallpox continues in partnership with BARDA. Once we complete the second animal efficacy study of brinci in a smallpox model, the Company plans to meet with the FDA to discuss any additional required data for a regulatory decision for brinci for the smallpox indication in 2017.

We have also provided regulators with information supporting the safety and tolerability of a short course of brinci oral tablets as intended for use as a medical countermeasure in the event of a smallpox bio terror attack. So in summary, we have quite a few milestones remaining for the rest of 2016 that will help us work towards both near- and longer-term clinical goals. First, we are discussing our next study for the treatment of adenovirus disease after stem cell transplantation in the US and EU.

Second, IV brinci will be moving into the clinic before the end of the year. Third, we'll be continuing development for the smallpox indication. And finally, we are kicking off IND-enabling studies for CMX521 for norovirus.

With that, I'd like to now hand the call over to our Chief Commercial Officer, Linda Richardson.

Thank you, Garrett, and good morning, everyone. As our clinical team continues to advance discussions on the next adenovirus study for brinci, commercially we are focused on three areas.

First, we continue to increase understanding and awareness regarding the clinical and economic impact of viral infections in the transplant population. Second, we're strengthening our understanding of the adenovirus commercial opportunity by delving into patient populations that may be at risk for the infections and where brinci could potentially provide much-needed antiviral benefit. And lastly, we're beginning our norovirus market sizing and opportunity assessments.

Regarding the first point, generating publications from our trials in EIND data is a priority. During the [ITAC] meeting this past June, investigators described prospective data collected from our AdVise, study 304, and expanded access trial, study 350. They provide [they show] data on 26 adult and pediatric solid organ transplant patients who had received brinci to treat adenovirus infections. In addition to substantiating the life-threatening adenovirus infections that exist outside of the high risk stem cell transplant population, the data showed that following administration of oral brinci, rapid and sustained reduction in adenoviral levels were achieved.

Chimerix also will be sharing new 24-week data from our AdVise trials during the upcoming IDSA meeting in October, information that will provide greater detail on the results we saw in cohorts A and B patients. We believe learnings here are important to advancing the understanding of adenovirus and the impact of brinci on improving patient outcomes.

Meanwhile, the body of evidence around DNA viruses continues to advance. For example, again at IDSA, researchers from the Fred Hutchinson Cancer Research Center in Seattle will present their findings around kinetics of DNA viruses and the correlation of these viruses with mortality during the first year post [HDT]. Essentially, this work is linking viral detection, viral quantity and risk factors, such as the timing of infections to outcomes, all of which are important in our development plans and for demonstrating the clinical value of brinci.

In advance of the 2017 [VMT] and European VMT meetings, we are developing disease awareness materials to help educate clinicians on the prevalence and impact of viral infections in immunocompromised transplant patients. We plan to support educational seminars and symposia at relevant congresses throughout 2017 to help highlight the clinical and economic impact of a variety of DNA viral infections.

Regarding our second area of focus, sizing the antivirus market, we are looking at several sources of data. First, we have received the updated 2014 [CIVFTR] data regarding numbers of allogeneic stem cell transplants performed. In 2014, there were nearly 23,000 total HDT transplants, with about one-third being allogeneic. Pediatric transplants, where we've historically seen a 12% to 15% incidence of adeno infections, represented approximately one in five allogeneic stem cell transplants in 2014.

We're also examining government sources, such as the hospital cost and utilization database, to better characterize the types of patients who were discharged with a diagnostic code of adenovirus infections. Understanding these patient types may help us assess other patient populations where serious adeno infections exist and help identify new areas for studying brincidofovir.

An early look at this source indicates that there are over 4,000 hospitalizations annually that involve a diagnostic code for an adenovirus infection. More than 20% of these adenovirus-related hospitalizations were associated with an immune compromised condition and four of five adenovirus associated hospitalizations were for pediatric patients. We plan to share other data, including longer length of stays associated with adeno, pneumonia and enteritis, at an upcoming scientific conference.

Sizing the European adenovirus market is also under way. We've initiated work in Europe that will help provide more granularity on the current practices related to the identification and treatment of adenovirus infections.

Finally, Michelle mentioned the work our discovery team has done advancing our norovirus candidate. The commercial team has begun to frame the opportunity in this area. There are an estimated 700 million cases of norovirus each year and no vaccines or antivirals currently approved.

While self-limiting in the general population, in the immunocompromised patient, norovirus infections can become chronic, debilitating and even life-threatening. One report cited nearly one in five allogeneic stem cell patients contracted norovirus in the first year post transplant and 17% of renal transplant patients became chronically infected with the norovirus infection. We look forward to providing more information on this opportunity in the future.

Now I'd like turn the call over to Tim Trost to review the financials.

Thank you, Linda, and good morning. As Michelle LaSpaluto mentioned in her earlier introductory remarks, earlier today we issued a press release containing our financial results for the second quarter of 2016.

Starting with our balance sheet, on June 30, 2016, we had approximately $301 million in capital available to fund operations and had approximately 46.2 million outstanding shares of common stock.

Turning to our statement of operations, Chimerix reported a net loss, $18.1 million, or $0.39 per basic and diluted share for the second quarter of 2016. During the same period in 2015, the Company reported a net loss of $24.8 million, or $0.59 per basic and diluted share.

Contract revenue for the quarter was $1.8 million, as compared to $2.6 million for the same period in 2015, due to a decrease in the second quarter of 2016 in reimbursable expenses associated with the Company's ongoing development contract with BARDA. Collaboration and licensing revenue for the quarter decreased $1.5 million, due to the nonrecurring recognition of revenue in the second quarter of 2015 related to our license for brincidofovir.

Research and development expenses decreased $13.8 million for second quarter of 2016, compared to $21.9 million for the same period of 2015. This decrease was due primarily to completion of the SUPPRESS and AdVise trials and closeout of our two solid organ trials, SUSTAIN and SURPASS.

General and administrative expenses decreased to $6.6 million from the second quarter of 2016, compared to $7.2 million for the same period in 2015. The decrease results from a $1.8 million decrease in commercial consulting costs, partially offset by an increase in compensation costs, primarily stock-based compensation. Loss from operations was $18.5 million in the second quarter of 2016, compared to a loss from operations of $25 million for the same period in 2015, due primarily to the decreased research and development expenses, as previously discussed.

Looking forward to the remainder of 2016, we currently expect both R&D expenses and G&A expenses, particularly R&D expenses, for the full-year 2016 to be significantly lower compared to full-year 2015, although there may be some unevenness from quarter to quarter. While as Michelle and Garrett noted earlier, we are continuing to develop the new clinical development plan for brinci, we have also continued to aggressively work to streamline our cost structure and conserve our capital on hand.

Specifically, we reduced R&D expenses in 2Q 2016 a further $7.2 million, or 34% compared to 1Q 2016, and $17.8 million, or 56% compared to 4Q 2015. We reduced G&AA expense a further $0.3 million, or 5% compared to 1Q 2016, and $3.1 million, or 32% compared to 4Q 2015. We have thus now effected a reduction of quarterly total operating expenses compared to 1Q 2016 of $7.5 million, or 27%, and compared to 4Q 2015 of $21 million, or 51%.

Consequently, with continued vigilance toward controlling our costs, we remain well capitalized to fund our development path forward, with approximately $301 million of cash and investments at June 30. Now I'd like turn the call back to Michelle for final remarks.

Thank you, Tim. We hope that this morning's updates have provided you with a better understanding of our continued work in adenovirus and the goals of our ongoing discussions with the FDA and with European regulators. We plan to provide details regarding the next study in adenovirus infection around the end of 2016.

We're looking forward to clinical data on the IV formulation of brinci and planned rapid progression of the IV formulation into patients with CMV or BK virus infection. Our smallpox program continues to move forward, with the second efficacy study in an animal model. The importance of smallpox as a potential bio weapon has been recognized by our Congressional representatives, and we remain hopeful that brincidofovir will be added to our strategic national stockpile.

This time next year, we hope to have CMX521 advancing toward the clinic as they first potential antiviral for norovirus infections. Our capital is sufficient to achieve these important next milestones for brinci and to advance our early discovery pipeline.

We will now open the lines for any questions.

Thank you.

(Operator instructions)

Katherine Xu, William Blair.

Hello. Good morning. I'm wondering, for solid organ transplants, a lot of times the CMV prophylaxis could last a year to two. So could you comment on, would there be any problem with an IV agent in this setting?

Thanks, Catherine. This is Garrett. The issue as far as prophylaxis for kidney transplant patients, for example, in zero-positive kidney transplant patients, prophylaxis is generally applied for 100 days, and for the D-plus-R-minus population, it's about a six-month period of prophylaxis. But as you indicated, there are subgroups of patients that receive even longer periods of prophylaxis, such as lung transplant patients.

The IV formulation is probably not optimal for long-term prophylaxis. This is the reason why we are pursuing alternative formulations of brincidofovir that may be more optimized for longer term use in solid organ transplantation. That is not to say that IV does not fulfill significant unmet medical needs in the solid organ transplant patients where treatment of CMV and BK virus are still a significant unmet medical need.

And we have a competitor basically read out in the near term those would be, oral drugs be CMV only in the prevention setting, as well. So assuming that it is successful, can you comment on your strategy on developing the IV brinci to differentiate from that kind of medication and how you would grab market share down the road?

As we work with our physicians, we remain focused on the broad spectrum activity that the drug brings. That really is the differentiating factor, because these patients, unfortunately, are susceptible to a broad number of DNA viral infections after their stem cell transplant. Those include BK. Those include adenovirus, CMV, HHV-6. All of those infections are serious problems and could potentially be addressable by the IV formulation of brinci. And in the stem cell transplant setting, where the patients are associated with their hospitals for the first 100 days after transplant and are frequently seen 2 or 3 times a week, getting an IV infusion is not an issue for those patients. So certainly, we believe that the IV brinci formulation provides a potential solution, whereas other agents that are under investigations don't have that broad spectrum of activity.

Thank you.

Geoff Meacham, Barclays.

Good morning, guys. Thank you for taking the question.

Good morning. How are you?

Good. Good. Just a couple for you, Michelle, or maybe Garrett. How important are precise historical controls for AdVise, and can one look at baseline disease maybe as a better starting point for comparisons? I'm trying to think about the regulatory view now and maybe what the puts and takes are for additional studies?

We were disappointed in the matched historical controls. It proved to be very difficult for us to collect these, for a number of reasons. First of all, in the US, many of the key stem cell transplant sensors that were participants in the AdVise trial had, had access to brinci since 2009. And so we had to go back pretty far, back to 2004, in order to get matched controls from some of these centers. Other centers, we were not able to collect match controls from the centers, because the IRBs insisted that we, and getting consent from all patients or family members in order for their inclusion.

And we were obviously concerned that, that would potentially bias the collection of information of patients who had survived and with a mortality endpoint that would not have worked out in our favor. So we didn't end up pursuing those particular centers. And at the end of the day, when we ended up getting the matches, the fact that they were older patients, in other words, patients from 2004 to 2009, meant that some of the key factors that we would try to match these patients on were not well matched.

One of the key things that we've learned is that when you go back that far, matching patients on viral load, for example, wasn't possible, because quantitative PCR wasn't available back then. And so what we were able to look at was patients that were characterized by their types of transplant and their risk but were unmatched on other characteristics, such as site recovery, such as graft-versus-host disease, such as organ type of involvement, where we have a lot more proven or probable pneumonia in the patients that were treated with AdVise when compared to others.

I think that this is just to say that we were trying to achieve a regulatory approval strategy with this match control population, did not appear to be successful. We weren't able to get a good comparative population. And we now know that moving forward, that getting a comparative clinical trial is going to be important for us to be able to move forward for adenovirus. But we've learned a lot in this process. We're the first Company that really is investigating antivirals for the treatment of adenovirus, and we've learned a lot to be able to design that next pivotal clinical study and design it for success.

And Garrett, just as a follow-up to that, what's been the discussion on more novel endpoints. Do you have to do a mortality study to tackle the adenovirus population?

We've made our proposals and we're getting feedback from the FDA. We're in active dialogue with regards to a number of different things for the study, including the comparator, including the population, including the endpoints and the timing of those endpoints. And we've got parallel conversations ongoing with the European regulators, as well. So we're trying to pull all of this together to agree, hopefully, to a global trial that can enroll patients both in the US and EU. But this is the reason why it's going to be an iterative process that will continue throughout the fall, and we hope to have a final design by the end of this year.

Okay. That's helpful. Thank you.

Thank you.

Thank you. David Lebowitz, Morgan Stanley.

Thank you very much for taking my question. Would you be able to speak to the upcoming IV trial, what that is going to look like? And then following that study, what would be the next steps? Is it something that would go directly into a Phase 3, into a pivotal trial, or would there be more exploratory trials after that?

The first time in human study is a single ascending dose study which will establish the pharmacokinetics of the IV formulation. We obviously anticipate that by delivering IV that you need less drug, because the oral formulation is not necessarily 100% bio available. So we need to establish the pharmacokinetics of the drug and also importantly, the tolerability of the drug in healthy volunteers.

Once we have that data in hand, we would then be able to move directly into infected patients to do multiple ascending doses and treat patients for two to four weeks, for example, either patients that have cytomegalovirus infections, for example, or BK virus infections, would be the way to go for that particular study.

And then from there, we will be heading into Phase 3 studies pretty quickly. These studies are smaller studies. They can be completed rather quickly. And we would be back into Phase 3 in the stem cell transplant setting. And ideally, the purpose of these two studies is really to establish the tolerability of the IV formulation, demonstrating that we don't have the GI side effect profile that has been the issue in the stem cell transplant population with the current oral formulation. We are very hopeful to be able to go into the stem cell transplant, deliver the same type exposures that have been effective antiviral exposures with brinci, but without the GI side effects profile, so really bringing all the benefits without the side effects.

Would this be something that we could see making the transition back to a pivotal in the latter part of 2017, or would it be something more 2018 timeframe?

We're hopeful. I think it's just going to be depending on how quickly we can get these studies enrolled. But that's our hope.

Okay. And quickly jumping over to adeno, would you be able to speak to the dynamics between pediatric and grown-up populations and how that might affect your study designs going forward?

It's really interesting. We've learned a lot about adenovirus in the conduct of AdVise and by looking at the patient outcomes on an individual basis in the historical literature. It really does appear that adults have a different course when compared to kids. This is an interesting virus that doesn't really cause latency, but it sticks around. It persist in patients. It takes a while for patients to clear the infection once they've had it.

So a pediatric patient who contracts adenovirus when they are, say, two years old might have it sitting dormant in the gut until they're three before they clear it. So the probability is higher for pediatric patients to be carrying adenovirus into the transplant. And for that reason, pediatric patients more likely reactivate the virus from latency or dormancy once they get their immune system beaten up.

Adults, primarily, may be getting infected via exposure from the community. So they may have a different type of a manifestation. They're not reactivating it in the gut, but they're basically getting exposed to a respiratory infection, for example, and thus have higher incidences of pneumonia, and we know that pneumonia is associated with a higher mortality in these patients. So really, much more of an opportunistic infection in adults than in kids.

And because it occurs less frequently in adults than kids, it's not looked for as often. So they're not using surveillance techniques. They're not using PCRs to screen patients; and so therefore, they're catching it much, much later in adults when compared to peds, as well.

So there's a number of interacting factors here that may influence the different outcomes that we see in pediatrics versus adults. But it is primarily a pediatric disease. In AdVise, it was over two-thirds the patients were pediatric patients. And thus, we're looking at potentially doing a first study in pediatric patients to remove that heterogeneity from the study and allow us to achieve our goals faster.

Thank you for taking my questions.

Yigal Nochomovitz, Citigroup.

Hello, guys. Thank you for taking the questions. I wanted to dig in a little bit more into the adenovirus trial design. It sounds like you're saying that you're only going to enroll only cidofovir refractory patients. Could you perhaps define that more specifically? And then what percent of adenovirus infections would that constitute overall? And then with regard the design of the trial, would the plan be to only enroll the cidofovir refractory or have some sort of run-in period to see whether the patients don't respond to cidofovir? Thank you.

It's an interesting question. It's one of the things that we've really tried to look at is, who are the patients that do poorly? And it's more about viral loads than it is about prior treatment with cidofovir. As we look in the study that we conducted, the AdVise study, the initial cohorts of patients were pre treated with cidofovir at much higher rates than the latter enrollees. So at the very beginning of the trials, there were patients that were treated with cidofovir were not responding very well and then were treated with brinci. And unfortunately, those patients that were often in multi-organ failure, we weren't able to save those individuals.

As the study progressed and as we enrolled subsequent cohorts of patients, mortality went down and down such that by the time we got to the end of the study, mortality was on the order of 20% in the final quartile of pediatric patients that were enrolled. So really, striking difference. And that's due to the use of brinci upfront rather than after extensive cidofovir experience and salvage treatment.

So the study will enroll patients, certainly, that have established disease. We're looking at patients with proven or probable adenovirus disease in an organ system and patients that have at least 1,000 copies of virus in the blood. And that's a number that we're looking at, whether we tweak that a little bit to a little bit higher in order to ensure that these are patients that are not going to do well with cidofovir therapy. That's the kind of patient population that we're looking at, and we're looking at randomizing patients to either brinci or a standard-of-care regimen, which is either cidofovir or decreasing immuno-suppression or both.

We'll be looking at controlling specific inclusion and exclusion criteria in order to really select for those patients that aren't going to do well with cidofovir, but also are not going to die quickly. And that's really going to be important that we enroll patients and treat them before they get to that multi-organ failure stage that really is something that an antiviral can't necessarily rescue the patient from.

As far as endpoints, we're looking at endpoints of non-relapse related mortality and potentially combining with measures of kidney function. But these are all things that are under discussion with the regulators.

Thank you, Garrett. That's helpful clarification. One other question. We noticed very recently there were two articles in transplant infectious disease, two case studies on brinci, one in acyclovir-resistant HSV-1, another one in patients with disseminated acyclovir- and cidofovir-resistant DZV infection. You spoke earlier about the broad spectrum activity of brinci. Could you comment a bit on these studies and whether you would eventually pursue these other indications?

So these are very important studies. These are individual cases that have been described where brinci has shown clinical activity that matches its invitro activity against all of the double-stranded DNA viruses that affect these patients. So those include herpes simplex and varicella zoster.

These are infections that are typically prevented using acyclovir in these patients. But there was a recent study that was presented at [Tandem VMT] where investigators asked the Sloan-Kettering Cancer Research Center, who were treating patients with brincidofovir, removed acyclovir prophylaxis and saw a very, very low rate of breakthrough herpes simplex or varicella zoster infection. Indeed, it was zero while the patients were on brincidofovir. So really accounting for the activity and the promise for patients that have those rare resistant infections, where brinci really offers an oral available therapy for these infections that really have no other options at the moment.

Great. Thank you very much.

Jessica Fye, JPMorgan.

This is Ryan on for Jess. Thank you for taking our questions. Maybe a couple questions for Tim. Can you help us think about the potential cost for a Phase 3 program for adenovirus. And second, I know you talked about 2016 expenses coming in lower than last year, but as we think about, can we think about R&D staying at this run rate for the rest of the year? Thank you.

So, yes. Thank you, Ryan. As for the first question, the cost of an adenovirus trial, the first thing we need to understand is to get clarity on what is that trial. So we're not yet in a position to provide any guidance on that. But as Michelle said early on today's call, once we have some clarity on what that trial looks like, we do anticipate being able to give some financial guidance there.

As to R&D run rates, we've said what we're going to say, namely that we expect full-year expenses for 2016 for both R&D expenses and G&A expenses. But to your question, particularly R&D expenses will be significantly lower than they were in 2015. One of the key toggles here is if you go back to our year-end call, we did say that we expect expenses to temporarily trend lower; however, we also said that once the new plan is clarified, we expect expenses to trend back upward again. So again, back to my initial comment, once we have clarity on the next generation clinical plan, we anticipate (inaudible).

I think one thing just to add, Ryan, on that, the study that we are currently discussing with the FDA and the European regulators is in the likely range of around 200 patients. Again, with the ability, if we can have monitoring throughout that trial and reach that delta along the way, then we can cut that trial short, potentially. But again, we're not talking about a SUPPRESS-like 450 patient type of trial. So these are not -- we're not anticipating a large trial in the range of the SUPPRESS trial. But again, once we get that nailed down, we'll give you that guidance later this year.

Okay. And is there any more you could elaborate on for the newer, longer term use brinci formulation?

On the IV or on the oral that we're moving toward?

Sorry, on the IV. To an earlier question, just trying to think about the enrollment timelines for getting data. Can you maybe remind us the number sites that you have for the IV study?

Since this is for the first time in human study, this is a healthy volunteer study that we are anticipating starting in the coming months. Those studies typically just enroll cohorts of ascending dosage as a single-dose study. These are healthy volunteers and we will screen those patients and get them enrolled by cohort pretty quickly. So we're anticipating getting that study started before the end of the year, and we should have data out shortly thereafter.

Great. Thank you for taking the questions.

Stephen Willey, Stifel.

Good morning. Thank you for taking my question. This is [Prakhar Ramon] on for Steve today. I wanted to ask you on the EAP emergency IND patients, have you been able to extract any information from these patients that will help you shape your Phase 3 design, any color you can provide on that?

So we have treated hundreds of patients with brinci via emergency IND or compassionate use mechanisms in the US and the rest of the world. Unfortunately, because of the regulations we're not permitted to directly get data from those patients. But we have encouraged the physicians to publish their experience with the compound and really have encouraged the physicians to pull together and pool their data, as we're doing in both the US and Europe at the moment. So we look forward to having increasing publications that will increase the number of patients that have been treated with brinci with adenovirus, and some of these have been very, very dramatic responses. And so we'll look forward to that in the coming months.

Okay. And can you also talk about what initial proof of concept study for 521 might look like? Is this likely to be [stanley] study in healthy volunteers, and then what might a larger, potentially pivotal study look like, given the episodic nature of the infection?

Well, to address the second point, it is self-limited in the immuno-competent host, where it can give you a bad weekend. But in the immuno-compromised host, unfortunately these patients can be chronically infected for hundreds of days. A study from Northwestern indicated that the solid organ transplant population infected with norovirus had a median of 230-some days of diarrhea, which is just horrendous. So in those patients, clearly, an antiviral that could knock down norovirus and knock down symptoms would be rather straightforward for a Phase 2 or a Phase 3 study to document the drug's efficacy.

In terms of earlier studies, the situation is that you can do, and there have been designed, human challenge studies that can quickly, basically, get you into not just pharmacokinetic and tolerability studies, but quickly into proof of concept studies. So we're looking at our options as far as that's concerned, as we move the candidate forward.

Okay. Thank you for taking my questions.

Hugo, Citigroup.

Thank you. I just had one follow-up. Correct me if I'm wrong, but I thought there was a natural history study for adenovirus going on in Europe. And if so, could you just comment on whether any of the learnings from that study may be helpful in structuring the new AdVise trial? Thank you.

So we're just kicking off that study now. I think that our review of the literature includes both European and US experience with both brinci and with the current standard of care. This is going to provide important context for us as we end up looking at the opportunities and potentially could provide us opportunities for alternative filing strategies.

But I think that as we look at this study, it's really going to be important for us to document the current standard of care and the outcomes that are associated with that current standard of care. Because our feedback from European physicians has been that they are just desperately in need for an antiviral that can control adenovirus in these highly immuno-suppressed stem cell transplant patients, but also one that's not associated with the severe nephrotoxicity with the current standard of care.

And Garrett, when would we get some initial data from that natural history study?

So we're kicking this study off now. We're going through the submission process in order for us to collect the data, and hopefully, we'll be coming out with data early next year.

Great. Thanks a lot.

Okay. Thank you all very much. One last item before we close this morning's call, just a save the date. We are planning an investor event in New York. Over the last few years, we have held that in October. But with IDWeek occurring in the last weekend, Halloween weekend in New Orleans, which you may choose to join us for, we wanted to wait until after we had been able to present the final AdVise data at IDWeek. So our annual investor update will be taking place on December 1 in New York. So please pencil us in for close of market on that date, and we will be providing formal invitations and the details around that in the next few weeks.

I wanted to thank you all for your time and support this morning, and we look forward to bringing you continued updates over the next few months. Thank you, all.

Thank you. Ladies and gentlemen, this concludes today's conference. You may now disconnect. Good day.