Curis Inc (CRIS) 2010 Q1 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Curis First Quarter 2010 Earnings Conference Call. My name is Regina, and I will be your operator for today. At this time, all participants are in a listen-only mode. Later, we will be conducting a question and answer session.

(Operator Instructions)

As a reminder, today's conference is being recorded for replay purposes. I would now like to turn the conference over to your host for today, Mr. Mike Gray, Chief Operating Office and Chief Financial Officer for Curis. Sir, you may begin.

Okay, thank you. Good morning, and thanks, everyone, for joining us. Today we'll provide as usual a corporate update and we'll also discuss our first quarter 2010 financial results. Before we begin, I'd like to advise you this conference call contains forward-looking statements regarding our future expectations, plans and prospects within the meaning of the private securities litigation reform act of 1995, including statements related to the following.

The expected progress of our Phase I clinical development candidate CUDC-101 and our time table for selecting an additional development candidate from our targeted cancer programs; statements regarding our and our collaborator's expectations concerning the further development of our Hedgehog Pathway Inhibitor program under collaboration with Genentech; as well as our Hsp90 technologies that are licensed to Debiopharm, including the timetable for regulatory filings and other clinical development milestones under those programs, as well as our expected 2010 administrative expenses.

Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors including risks relating to our ability to successfully advance the research and clinical development of our clinic -- of our targeted cancer programs including CUDC-101; Genentech's ability to successfully advance clinical trials of GDC-0449; and Debiopharm's ability to progress Debio 0932 through Phase I clinical testing.

Competitive pressures, our need to maintain our proprietary rights, our ability to successfully continue our collaborations with Genentech, Debiopharm as well as to enter into new collaborations on favorable terms, if at all; unplanned operating expenses, our need to raise additional funds to finance our operations and other risk factors described in our annual report on Form 10-K for the year ended December 31, 2009 any other reports that we periodically file with the SEC.

We caution you that we're making these forward looking statements as of today and that we may not update any of these statements, even if events and development subsequent to the date of this call cause these estimates and expectations to change.

I'd like to now introduce Dan Passeri, Curis' President and CEO, who will discuss our corporate highlights and provide an update on our pipeline. Following Dan's remarks, I will return to review our financial results for the first quarter of 2010, and then we'll open the call to any questions. Dan?

Yes, thanks, Mike. Good morning, and thank you for joining us today. The beginning of 2010 has been a highly active period for Curis with our collaborators and our internal team making significant progress in advancing all of our key development programs. I'll first provide a general overview of sort of central highlights and then elaborate upon further details of the specific programs.

Our collaborators Genentech and Debiopharm continued the clinical progress of their respective drug candidates in development. And I'll start with an overview of the Hedgehog program, which is under collaboration with Genentech. Roche as 100% owner of Genentech recently provided a clinical development update of GDC-0449, which is first in class Hedgehog pathway inhibitor.

During that update Roche indicated that it expects data from the ongoing Phase II first-line metastatic colorectal cancer study to be available in mid-2010, and that it intends to initiate a Phase II trial of GDC-0449 inoperable basal cell carcinoma or BCC, patients in the second half of 2010. So, we're very excited about that update. I'll give you some more details in a moment.

Roche also indicated that it expects results from the ongoing Phase II clinical trial in advanced ovarian cancer patients during the second half of 2010, as well as results in the pivotal Phase II clinical trial in advanced BCC in 2011. We look forward to these important results in 2010 and 2011, as well as the initiation of the Phase II clinical trial in operable BCC patients during the second half of 2010. So obviously, we're approaching a very important timeframe for the Company.

Our licensee Debiopharm has also continued to advance Debio 0932, which is a single molecule heat shock protein 90 or Hsp90 inhibitor that was discovered by Curis scientists and licensed to Debiopharm in August of 2009.

In February, Debiopharm notified Curis that the French regulatory authorities had formally accepted Debiopharm's clinical trial application, which is the French equivalent of a US IND application filing to allow Phase I clinical testing to begin. Most importantly, this event -- under this event Curis earned an $8 million milestone payment from Debiopharm under the party's license agreement upon the achievement of the development objective which we received during the first quarter of 2010.

In April, Debiopharm treated the first patient in the Phase I clinical trial of Debio 0932. We continue to be very pleased with the quality and efficiency at which Debiopharm has advanced this asset. In addition to the efforts of our collaborators, the team at Curis has made important progress with our internal programs highlighted by the successful completion of our Phase I clinical trial of CUDC-101, in which we observed several signs of biological activity in patients, including a confirmed partial response in gastric cancer in a gastric cancer patient.

The drug demonstrated a favorable safety profile and we determined the maximum tolerated dose or MTD, that we believe will provide us with an attractive therapeutic window for future clinical testing of this first in class multi target inhibitor which targets HDAC, EGFR and Her2.

Also, we published two papers related to CUDC-101, and presented what we believe to be important preclinical data at the 2010 AACR Annual Meeting related to CUR-906 which is a molecule from our novel class of compounds targeting HDAC, PI3, kinase and mTOR, and we believe too we will continue to anticipate that we'll select the development candidate for this compound class in 2010.

Also in the first quarter, we also took further steps to solidify our balance sheet by completing a registered direct offering of common stock and warrants in January of 2010 that brought us net proceeds of $15 million.

In addition, during the first quarter we received and $8 million cash payment from Debiopharm and this was a non-dilutive infusion of capital, and we received an additional $4 million under a settlement agreement with a pharma collaborator. We believe that we now have adequate capital to fund our business into the first half of 2012.

Importantly, this cash life estimate does not include additional development milestones, payments that we could receive from existing collaborators Genentech and Debiopharm, nor does it include any new corporate development partnerships that we may enter during this timeframe.

We expect that we could receive additional milestone payments before the first half of 2012 from Genentech and Debiopharm, if the results of the ongoing clinical trials are successful. Any such additional amounts would further strengthen our financial position and extend the runway further.

Let me now move on to a more thorough and detailed review of our pipeline, and I'll first begin with a discussion of our programs under collaboration with Genentech and Debiopharm, and then I'll turn to CUDC-101 and our other proprietary cancer programs.

As I mentioned earlier, our collaboration with Genentech is nearing some very important clinical data in 2010 and 2011. Genentech is currently conducting three core clinical trials with GDC-0449, including a pivotal Phase II trial in advanced BCC that was initiated in February of 2009 and two additional Phase II clinical trials, one in metastatic colorectal cancer and another in advanced ovarian cancer that began in 2008.

First, in the pivotal Phase II clinical trial of GDC-0449, approximately 100 patients with locally advanced and metastatic BCC are being evaluated in a single arm, two cohort global clinical trials. One cohort includes all patients with histological-confirmed RECIST measurable metastatic BCC.

The second cohort includes histologically-confirmed locally advanced BCC that's considered to be inoperable by the treating physician. All patients receive a daily oral dose of GDC-0449 at the dose of 150 milligrams per day. The primary endpoint of this study is to measure patient response with GDC-0449 therapy. Roche has projected that results from this ongoing pivotal study will be available in the first half of 2011 and pending a successful outcome, Roche has further stated that regulatory submissions for GDC-0449 and advanced BCC could occur in 2011.

I want to underscore that there's currently no standard of care for patients with these types of BCC, and we would be extremely proud to be part of a therapeutic alternative that may provide benefits to these patients. As I mentioned earlier, Roche also recently indicated that it intends to initiate a Phase II clinical trial of GDC-0449 in operable basal cell carcinoma patients in the second half of 2010.

We believe that the expansion into operable BCC patients could greatly expand the commercial potential of the compound for mutation drive cancers. Genentech's currently working to define the trail design, and we expect that we'll provide further updates in this trial once it's been initiated.

Roche also updated its expected timing of Phase II clinical trial results of GDC-0449 in colorectal and advanced ovarian cancer. Noting that it expects results for the colorectal cancer study in mid-2010 and for ovarian cancer trial during the second half of 2010. We certainly look forward to providing our shareholders with additional information as these important results become available.

As a reminder, Genentech initiated a Phase II clinical trial of GDC-0449 in metastatic colorectal cancer in May of 2008, and completed enrollment the second quarter of 2009. GDC-0449 is being evaluated in this study in approximately 200 patients with metastatic colorectal cancer, in combination with the current standard of care in a randomized placebo controlled double-blind Phase II trial.

Patients receive either FOLFOX or FOLFIRI chemotherapy regimen, in combination with Avastin and are randomized to receive 150 milligrams daily dose of GDC-0449 or a placebo. The primary objective of the trial is to measure the period of progression free survival from randomization to disease progression or death. Secondary outcome measures include the measurement of Hedgehog protein expression in archival tissue and tracking of adverse events.

The advanced ovarian cancer trial was initiated by Genentech in December of 2008 as a single agent maintenance therapy, in which GDC-0449 is being evaluated in approximately 100 patients with ovarian cancer and second or third complete remission in a randomized placebo controlled double-blind multi-center Phase II clinical trial.

Patients are randomized in a one to one ratio to receive either 150 milligrams daily dose of 0449 or placebo, and are stratified based on whether their cancer is in a second or third complete remission. The primary endpoint of the trial is progression free survival. Secondary outcome measures include overall survival, measurement of Hedgehog ligand expression in archival tissue and number and attribution of adverse events.

Genentech designed this Phase II clinical trial to investigate whether GDC-0449 may help to delay or attenuate tumor regrowth in a maintenance setting, following clinical remission of cancer after second-line chemotherapy treatment for recurrent disease. Further details of all GDC-0449 clinical trials are posted to clinicaltrials.gov.

In addition to the clinical trial progress, in February we also announced that Chugai Pharmaceutical, which is a majority -- which is majority owned by Roche, had exercised his right of first refusal for the development and commercialization with in Japan of GDC-0449 under an existing agreement with Roche.

We believe that the combined development efforts of Genentech, Roche and now Chugai will provide important opportunities for the development of 0449 in the majority of the significant global pharmaceutical markets. And, we believe that Chugai's development and marketing expertise in Japan will further enhance Genentech's and Roche's ongoing development efforts in this first-in-class molecule.

Lastly, we're also very pleased with the continued progress of the collaboration between Genentech and the National Cancer Institute or NCI, as a means of gaining additional clinical insight into GDC-0449, Genentech and the NCI entered into a collaborative relationship in 2009, allowing the NCI to explore 0449 in additional cancer indications that are not presently being evaluated by Genentech or Roche, and there are now several additional clinical studies ongoing under this agreement with NCI.

We look forward to providing further 0449 updates as results are available or as additional clinical trials are initiated, as well as when Genentech or Roche communicates other important scientific observations. And obviously, we're eagerly awaiting the readout of the colorectal and look forward to keeping you posted on those updates.

I'd like to now turn to our other partnered program, which is a synthetic small molecule Hsp90 inhibitor, development candidate designated Debio 0932. This candidate is being developed by our licensee Debiopharm under our August 2009 agreement. Under this agreement, we granted Debiopharm a worldwide exclusive royalty bearing license to all of our Hsp90 inhibitor technologies, including Debio 0932 which was formally called CUDC-305.

As I mentioned earlier in February, Debiopharm notified us that the French regulatory authorities had formally accepted Debiopharm's clinical trial application and as a result, we earned a $9 million, non-dilutive milestone payment from Debiopharm.

In April, Debiopharm treated the first patient in the Phase I clinical trial of Debio 0932, and we're eligible to receive an additional $3 million payment should this molecule be used in the treatment of the fifth patient of this Phase I clinical trial.

The Phase I clinical trial is designed to evaluate the maximum tolerated dose or MTD and safety profile of Debio 0932. The first part of the study, or Phase IA, is an open label multi-centered dose escalation trial evaluating the safety and tolerability of escalating multiple dose levels of Debio 0932 as a single agent given orally in patient suffering from advanced solid tumors or lymphoma.

The dose limiting toxicities or DLTs maximum tolerated dose in pharmacokinetic parameters will be determined using both everyday and daily -- every other day and daily administration regimens to guide the recommended Phase IB dose and schedule.

Secondary objectives will be to access whether changes in pharmacodynamic biomarkers are indicative of Hsp90 inhibition by 0932, and whether or not they can be reliably measured in patient samples as a perspective biomarker.

The objective of the Phase IB study and expansion cohort of certain solid tumor and/or lymphoma patients will be to further assess the safety profile, pharmacokinetics and pharmacodynamics of Debio 0932 at a potential Phase II dose level, and to make a preliminary assessment of antitumor activity in patients with advanced solid tumors.

We've been extremely impressed and very pleased with Debiopharm as a partner, including its efforts to create a clinical development plan and advance Debio 0932 efficiently into Phase I clinical testing, and we look forward to providing you with further updates regarding Debio 0932 as they become available.

I'd like to now provide you with a brief update of CUDC-101, which is our wholly owned and retained first in class HDAC, EGFR and Her2 inhibitor product candidate, which we've designed to seek to disrupt cancer networks and we believe that this is an emerging paradigm in cancer therapy and our expectation is that this drug by hitting networks can combat resistance by simultaneously inhibiting multiple cancer targets, therefore enhancing the robustness of the blockage.

CUDC-101 is the lead drug candidate from our multi-targeted cancer programs and is exemplary of this approach, and it's recently completed a Phase I clinical trial dose escalation in patients with advanced refractory solid tumors.

As our first multi-target inhibitor in clinical development, we believe that CUDC-101 is exemplary of our approach, which aims to enhance the therapeutic effect and durability of clinical response by attacking cancer cells at multiple points of intervention.

CUDC-101 is designed to simultaneously inhibit both EGFR and Her2 at the cell surface receptor level while also blocking intracellular histone deacetylase or HDAC activity. We believe that this novel combination of targets enables a synergistic attack on multiple nodes or points of intervention in the overall pathway network used by tumors to survive grow and invade surrounding tissue.

We believe that our approach represents a potential breakthrough in cancer therapy, as it may provide for a more durable response by blocking tumor's access to compensatory bypass mechanisms.

We believe that efforts to utilize the same targeted network inhibition strategy with other currently available drugs would require combining two or three separate agents, which his complicated by the fact that you often have mismatched pharmacokinetics, variable metabolic degradation rates, dosing schedules that are complicated and may display additive, even synergistic toxicities.

In fact, that has been seen in a clinical trial attempt using SAHA and erlotinib where the toxicities were exacerbated and they could not achieve efficacious doses. So we believe that this approach has significant competitive advantages. Furthermore, with multiple drugs in combination there's no certainty that the drugs will penetrate the same cancer cells for the intended combination effect.

In contrast, we believe the CUDC-101 as a single small molecule has aligned pharmacokinetics, has metabolized as a single agent and blocks the respective targets and the same cancer cells at the same time with potentially fewer toxic side effects, and thus we believe may represent an important advancement in targeted cancer therapy.

CUDC-101 has recently completed a dose escalation Phase I study, in which it was determined that 275 milligrams per meter squared represents the maximum tolerated dose, or MTD, of the drug. The Phase I trial was designed as an open label dose escalation study of CUDC-101 in patients with advanced refractory solid tumors. The primary objectives of the Phase I trial were to evaluate the safety and tolerability of escalating doses of CUDC-101 and to establish the MTD and dose limiting toxicities.

Secondary objectives were to assess the pharmacokinetics to evaluate the pharmacodynamic biomarkers and to assess perspective efficacy and the ability of CUDC-101 to effectively inhibit the respective targets of HDAC EGFR and Her2 in the patient population. The study was conducted at two clinical sites within the United States and enrolled 25 patients across several dose escalating cohorts.

We have to state that we're extremely pleased with the clinical results to-date which demonstrated that the drug has the potential for a favorable safety profile and can disrupt the intended cancer targets, as evidenced by the clinical biomarker data. We've demonstrated promising evidence of antitumor activity at doses ranging from 150 milligrams per meter squared, through 275 milligrams per meter squared.

We believe that this represents potentially an attractive therapeutic window and the response we saw included a mixed response in head and neck cancer patient at -- it was at 150 milligrams per metered squared as well as a stable disease in breast cancer, both of which were at 150 milligrams per metered squared, as well as a confirmed partial response and an advanced gastric cancer patient, where we saw approximately a 55% regression in the primary lesion.

In addition, we saw a tumor reduction of over 20% that was observed in a second head and neck cancer patient, and that was at the 275 milligram per meter squared dosing level after just four weeks or two cycles of study drug. So, this clinical data provides us with what we believe is an attractive therapeutic dosing range, and we look forward to advancing the drug to the next stage of its development.

We're continuing to audit study data from the dose escalation, while also working to compete the pharmacokinetic and biomarker analysis and we anticipate that the study's principal investigator, Dr. Anthony Tolcher of South Texas Accelerated Research Therapeutics, also called START, will present final trial data at the 22nd EORTC-NCI-AACR Symposium on molecular targets and cancer therapeutics, which is being held this November -- November 16th through 19th in Berlin, Germany.

Looking ahead, we plan to initiate a Phase IB clinical study with CUDC-101, with the intent of enrolling additional patients at the established MTD of 275 milligrams per metered squared in tumor types including gastric, head and neck, breast and liver cancers to assess different dosing regimens, and to seek additional signals of activity and to help guide future clinical studies. We're also anticipating the initiation of a Phase I/II clinical trial of CUDC101 in non-small cell lung cancer patients in the second half of 2010.

In addition to the completion of our Phase I clinical trail, I'm also pleased to report that our scientists have published two papers resulted to CUDC-101 during the first quarter including a medicinal chemistry paper related to the discovery of CUDC-101 and, again, that's our HDAC, EGFR and Her2 inhibitor which was published in the journal of medicinal chemistry.

This paper descried the structure based rational drug design synthesis and structure activity relationship, or SAR, of a class of novel compounds that includes CUDC-101 and the identification of CUDC-101 as a clinical candidate.

Also just want to underscore that 101 in the class of compounds have been the subject of an issued US patent. So, we're very pleased with the fact that we've been able to protect this compound, as well as the class with an issued US patent and continually to expand our IP protection for the multi-target platform.

A second paper was also published in the journal Cancer Research that describes the potent anticancer activity of CUDC-101. And we're proud that our scientists have published a preclinical CUDC-101 data in prestigious scientific journals, and we believe that this reflects the high quality of science being conducted at Curis.

So as I mentioned earlier, we're also diligently advancing our preclinical pipeline and we presented data at the recent AACR 2010 Annual Meeting that highlights data from our novel research compound CU-906, which is designed to inhibit HDAC as well as Class I PI3 kinase and mTOR kinases. The combination being confirmed by Curis scientists for potential synergistic interaction. It's the same basic concept as 101 in terms of a network disruption as opposed to a single note of intervention.

The activity of PI3 kinase, mTOR and related Akt phosphorylation signaling pathways play a crucial role in cancer development and progression, and inhibition of these pathways have recently been investigated extensively as a prospective cancer therapy.

However, the efficacy of PI3 kinase pathway inhibition has been limited by the activation of compensatory pathways, that is alternative mechanisms such as RAF, MEK and ERK pathways. This is a very similar concept to what we've seen with EGFR inhibition, blocking that one node results in compensatory alternative mechanisms being unregulated. So the same basic concept with this PI3 kinase HDAC inhibitor is meant to knock out the bypass mechanism.

So, in an effort to enhance the antitumor activity and overcome the limitations of single highly specific PI3 kinase inhibitors, we've developed a series of small molecule compounds that are able to simultaneously inhibit both PI3 kinase mTOR and HDAC. We've identified compounds that exhibit anti-proliferation activity against a broad range of cancer cell types in invitro studies including cell lines that are insensitive to PI3 kinase inhibitors.

Efficacy studies in various tumor xenograft models indicate that these compounds have more potent antitumor activity than leading PI3 kinase inhibitors which are currently in clinical development at doses causing no obvious side effects to the tumor-bearing models.

Importantly, we have identified a compound that displays high exposure and long half life in tumor tissue after IV administration in mouse models and early data supports; the potential of compound being orally bioavailable.

This compound has a half life of more than ten hours in (inaudible) model tumor models inducing apoptosis and inhibits cell proliferation up to 48 hours following a single dose of the compound being exposed to tumor-bearing animals. We expect to select a new development candidate from a series of molecules targeting HDAC PI3 kinase and mTOR in early second half or mid 2010.

I would like to now turn the call back over to Mike for financial discussions, and then after Mike's remarks we'll open the call up for questions. Mike?

Okay, thanks, Dan. Just go briefly through our first quarter 2010 financial results. We reported net income of $4.8 million or $0.07 per basic share outstanding, $0.06 per fully diluted share outstanding for the first quarter of 2010, as compared to net income of $1.1 million or $0.02 per share on both the basic and fully diluted basis for shares outstanding for the same period in 2009.

Our revenues for the first quarter of 2010 were $12.6 million, as compared to $6 million for the same period in 2009. The increase in revenues from 2009 was primarily due to the recognition of $8 million in license fee revenue that Dan mentioned during the first quarter of 2010, upon the achievement of a development objective under our license agreement with Debiopharm.

We also received settlement proceeds of $4 million from Micromed a former collaborator, upon settlement of an arbitration claim relating to a 2001 agreement between the parties that's included in revenue as well. During the first quarter of 2009 we received and recognized $6 million in license revenue, as a result of Genentech's initiation of a pivotal Phase II basal cell carcinoma trial.

Operating expenses for the first quarter of 2010 were $6.9 million, as compared to $5 million for the same period in 2009. Research and development spending was $2.5 million for the first quarter of 2010, versus $2.9 million in the same period in '09.

The decrease was primarily attributable to lower spending on Debio 0932, the Hsp90 program. And as a result of licensing this program to Debiopharm in August 2009, Debiopharm has paid all its subsequent development costs since that license date. Offsetting this decrease we increased our spending on our other targeted cancer programs.

G&A spending was $4.4 million for the first quarter of 2010, as compared to $2.1 million for the same period in 2009. The increase in G&A was primarily driven by $1.5 million in nonrecurring, legal and other costs associated with the Micromed arbitration proceeding.

In addition, we recorded a $300,000 increase in personnel costs, primarily as a result of changes to executive compensation including $200,000 in discretionary bonuses to our executive officers and a $400,000 increase in stock based compensation expense. This increase was primarily the result of $300,000 in expense associated with vesting of stock options that had continued a performance condition that was achieved during the first quarter of 2010.

Ongoing forward basis, I expect that G&A will return to normalized levels -- it's a usually high quarter, I realize that of somewhere around $2 million give or take per quarter going forward.

Other net expense of $900,000 for the first quarter of 2010 represent the change in the fair value of a warrant liability that we established in connection with our January 2010 registered direct offering, as a result of an increase in our stock price from January 27, 2010 offering date through March 31, 2010.

As of March 31, 2010 our cash, cash equivalents and marketable securities totaled $48.7 million, and we have 75.6 million shares of common stock outstanding. As a result of increased expenses associated with settlement with Micromed, we expect their G&A expenses will increase annually -- $9 million to $11 million would be the total for 2010. We had previously guided that these expenses would be between $8 and $10 million.

So that concludes the brief financial remarks, and like to open up the call for questions. Gina?

(Operator Instructions)

Your first -- excuse me, your first question for today comes from the line of Brian Skorney with ThinkEquity

Hey, guys. Congratulations, on a really productive quarter -- just a couple of quick questions here. Starting with 0449, can we take anything away from Genentech's initiation of the new BCC trial as far as what the safety profile looks like in the Phase II trials? I assume they're getting safety data from those studies, and it would seem that go to into a more benign cancer setting would -- they'd need to see a really clean profile. Any comment on that?

Yes, thanks for the question, Brian. What we have seen to-date is the drug appears to be very well tolerated, despite daily chronic exposure, no dose limiting toxicity has been observed. There are some AEs that have emerged, but the -- I think that all of them are transient and that if you take the drug away temporarily the AEs resolve.

So, I think this is indicative of the act that Hedgehog is a typically developmental embryonic pathway where it's abundantly expressed, and it is expressed at very low base levels in tissue maintenance, though I think that's the reason it's so well tolerated where the tumors are expressing high levels of the pathway.

So, we agree with these sentiments. The fact that they're going into a more benign setting, the fact -- this could dramatically expand the market potential of the drug as well, but I think that is indicative of the safety profile that's been observed in the advanced metastatic study.

Thanks. And then when we look at the extension of the 101 trial you mentioned that you'll be looking at gastric, head and neck, breast and liver cancer. Are you guys planning to stratify enrollment in those or is it -- or you going to look to do a quarter a quarter a quarter or is it just whoever comes into the trial that you can get you'll take?

Yes, so there'll be those four indications and they're going to be -- what we're estimating is ten patients per indication, and we're also going to be surveying a two different dosing schedules.

So the objective is to get a more robust repetition. So, we're very intrigued and pleased with the fact that in the dose escalation all comers trial, we did see response in some tumor types that reflected the preclinical data. So, we were anticipating response in head and neck and gastric based on preclinical data. So, we were very pleased with those results in the stable disease and the breast cancer patient also correlates with what we were expecting from our preclinical data.

We didn't treat any liver cancer patients as far as I know in the dose escalation, but we've had very impressive xenograft data with liver cancer, so that's why that's included as well.

Great. Thanks. And, Mike, just a quick housekeeping question, I might have missed this in your comments at the end. So for -- I think you previously said G&A guidance is $8 million to $9 million, should be include the legal costs on the $0.5 million in performance based compensation?

Yes, I did bump that up to $9 million to $11 million.

Okay, great. Thanks.

Okay.

Your next question comes from the line of Joe Pantginis with Roth Capital Partners.

Hi guys, good morning. Thanks for taking the question. Quick question on 101 and then a follow up on 0449 please. Can you give a quick review again with regard to what the prominent DLTs that you did see and secondly, I might have missed this, you were giving the doses for the different responses, but what was the dose of the patient that saw the PR in advanced gastric patient?

Yes, so the dose that the patient had the confirmed PR was at 275 milligrams per metered squared.

Okay.

Okay?

Yes, yes.

And in terms of the DLT, the DLT that emerged at 300 milligrams per metered squared was a grade two, which is not normally considered a DLT, so I'll explain that in a moment. It was a grade two creatinine level. The key here was it was seen after one infusion, so one dose resulted in going from baseline to a grade two.

So, the definition of a DLT is that the patient does not receive the drug for each consecutive day during the dosing cycle. So the fact that the creatinine level went up to grade two, the patient did not receive drug the following day that defined it as a DLT.

What's encouraging is that this observation is manageable. What we learned through surveying additional patients at that dose level is we could actually keep them on 300, if they were hydrated and the creatinine levels would come down, or we could keep them on drug but at a lower dosing level. If you went below 300 the creatinine levels come down. So, what's encouraging is this is a manageable toxicity.

I'd also underscore that this is a similar profile of what you see in other HDAC inhibitors, you have creatinine level increase, for instance, in SAHA it's on the label. So, we're encouraged that it's a toxicity that can be identified and managed and the patient can remain on drug.

We're also encouraged by the therapeutic window that we believe we have between 150 and 275, which gives the physicians some flexibility.

Sure that's great. So, we're looking forward to the expanded Phase Is etc. Just a quick follow up on 0449. There is a -- I guess you might call it a placeholder for ASCO, the title of the study is safety of the colorectal study, could we sort of interpret that as a placeholder and that's where we might get the data?

Yes, the full -- I think that will be -- I think the intention is that will be a safety presentation only as planned interim safety (inaudible).

Okay, great. Thanks a lot. Yes.

Okay.

Your next question comes from the line of (inaudible).

Can you hear me? That was kind of faint there?

We can hear you.

We can hear you, we couldn't hear the moderator.

Okay, great. So yes, so I mean are we going to get -- is it going to be unblinded safety data from -- and patient demographic data that we're going to get at ASCO?

I think we'll there will be data presented on two arms. I think we'll wait, we'll allow Genentech to present that data in a month -- I don't think we can comment further on that right now.

Okay, and then you mentioned a milestone or payment from Genentech, remind me what that was for and when that came in?

Oh that was just in a - if you're talking about my financial review Jason, it was just a year to year comparison. So that was for the initiation of the advanced BCC trial which is ongoing. But that was a Q1 '09 event.

Oh, that was last year. Okay, yes.

Yes, yes, yes. Last year.

Okay, and then in terms of anything else from your pipeline that may go into the clinic? What's your next clinical candidate and what's the timeline on that?

Yes, so the next clinical candidate will be most likely selected from the PI3 kinase HDAC class of compounds and the timing of that Jason is likely to be midyear to early second half and then obviously the toxicity studies and the IND prep we would forecast filing the IND within 12 months of that section.

So -- second half 2011?

Yes, mid-2011 to second half.

Okay, great. And then you mentioned some possible milestones from Genentech, what are the next set of milestones from Genentech?

Yes, so we'll receive milestones for each of the Phase I initiation -- I'm sorry the Phase III initiation with 0449. So if colorectal goes into phase three that will trigger a $6 million payment and likewise, with the ovarian. And then with the IND -- I'm sorry the NDA submission for the BCC trial, that will be an additional milestone that's north of that.

So Jason, if you recall, there're about 115 million -- $115 million associated with small molecule 449 in milestones. We've received $18 million. So we still have roughly $100 million left on this drug.

Okay, thanks.

Thank you.

Your next question comes from the line of Ted Tenthoff with Piper Jaffray.

Great. Thank you very much, and congrats, on all the exciting updates in progress. Lots of things to discuss. I'm thinking about think a little bit more at the kind of 30,000 foot view here. You've done some nice partnerships here and have some additional assets progressing. How are you gush looking to sort of strategically fund and/or partner the pipeline in particular some of the earlier stage assets going into proof-of-concept and things along those lines?

Yes, very important question, Ted. What we've attempted to achieve a balanced approach where we've got a deep pipeline where we have no intention of raising additional money until we make significant progress in a number of strategic areas. So the Genentech program is obviously important from a momentum standpoint, and we're looking forward to that read out midyear.

101, our objective there is to demonstrate a robust body of data showing that this multi-target inhibitor approach, i.e. network disruption which we do believe is the shifting paradigm in cancer therapy when you look at all the combination trials. Our objective there is to compile a data package that demonstrates that the drug is knocking out a network for a more robust response and we believe we should be able to achieve that within the next 12 to 18 months.

Our preclinical pipeline we have -- that's budgeted right now so we have enough cash to get well into the first half of 2012. We will look strategically at a number of alternatives and pursue in parallel a number of options and then at that time, determine which one is the most attractive to represent our shareholder interests.

So we can pull a non-dilutive capital without giving up too much upside. That would be preferable so we're looking at for instance territory carve out possibilities or shared risk strategies.

The other thing I would add to that, Ted, is that Genentech data in particular will proceed fairly significant milestones. So within this basically more or less two year cash life that we have right now, we have the opportunity to extend that significantly.

Yes, extend that significantly with these milestones.

Right, excellent. Thank you very much.

Your next question comes from the line of Ling Wang with Brean Murray.

Good morning. Thank you for taking my question. It seems to me for the Phase II BCC trial, the timeline for data reporting is slightly pushed out to 2011. Can you give us some indication for that? Is this matter of enrollment completion later than expected or the kind of data -- the initial data set is somewhat different from what we expect.

I think we were generally trying to project sort of straddling the end of 2011 so having this -- or sorry, the end of 2010 into 2011 for --

Consistent.

For Genentech data, I don't think it's necessarily slipped all that much, Ling. I think it will probably be earlier 2011 than later 2011 since Genentech or actually Roche in its last update did say, as I think Dan mentioned, that they're still planning on NDA submission in 2011 or that they could file and NDA submission if the data is positive. So, that would hint that it has to be in the earlier side of 2011.

I see, and also -- for that trial there are some secondary endpoint with like a PFS or survival that'll need longer follow up. I was wondering what data set what is sufficient for the NDA filing? Would you having -- would you have to wait for those -- is that going to endpoint to mature or --?

I don't think so. No, I mean that wouldn't be -- as you've mentioned, that would take a longer time. I think Genentech hasn't really provided guidance on what the response rate is a primary endpoint, they haven't provided guidance on what they think would be suitable to file an NDA.

So I think we probably won't comment further, but the response rate that was observed in the 33 patients that were reported in last fall in the New England Journal of Medicine was about 56%, 55%, 56%. So the early clinical data is definitely very encouraging.

Yes, and when you could that with the fact that this is a patient population that has no therapeutic alternative, I think its boding well.

Okay, and then just lastly, from your understanding -- because in this Phase II trial there are two different patient populations, were they -- would they be revealed separately or as a whole?

We don't have clarity on that right now.

Okay, thank you very much. Congratulations, on a good quarter.

Thank you.

Thank you.

Your next question comes from the line of Reni Benjamin with Rodman.

Hi, good morning, guys, and thanks for taking the questions and congratulations on the quarter.

Hey, Ren.

Thanks, Ren.

Just a couple of questions, primarily having to do with timing, the Phase IB cohort, can you just talk to us a little bit about when exactly this is going to start, has it already started, do you plan on initiating some new sites so that enrollment can be quite robust? And how long do you think this planned cohort expansion could take?

So -- Reni, we're getting resistance here. Okay. So let me start with the last part of that, in terms of how long we're expecting we should be able to complete it in a 12 month period, maybe a little bit longer -- apologize for the interference, we've got some interference on this end of the phone.

In terms of the initiation Ren, we're in the process now of launching so we're hopeful that a month, month and a half we should be starting to treat patients. We have several clinical sites identified and the investigators are optimistic about the ability to rapidly enroll patients. So, we're hopeful we'll be able to complete that expansion cohort in a 12 month period.

Hey Ren, just to add on that, in the Phase I as you're aware, we had two sites, but really the majority of that patients, I think, I'd say 22 out of 25, 21 out of 25 came from one of the centers so we're definitely trying, we're aware of that, trying to balance this out among more sites.

We've sent the protocol to (inaudible) and we've already heard back from a couple indication of interest and we're working on contracts with the first of those. So, I think we will initiate and then we will have a larger number of sites help us enroll this quicker.

And so I'm sorry, I may have -- you may have said this and I missed it in the translation but how many sites total would you like to have?

Five.

Five.

Five, got it. Okay. And then regarding the responses that you have seen, I think in the end of the year call you had mentioned the SD -- the stable disease that had greater than 20% reduction in tumor load, probably on their way to a PR after two cycles.

Can you -- but some time has passed since that last that update, correct me if I'm wrong. Is the person still on drug? Have they gone to maybe three or four cycles yet, and is their response increasing? Or, have they come off study?

Yes, so the short answer to that is they've come off study, and I'll give you the details now. The patient was the very last patient enrolled. We saw a greater than 20% reduction after two cycles, which was very encouraging.

This patient unfortunately was a very advanced head and neck cancer patient with a very large tumor in the oral cavity. They were actually on a feeding tube. They had to come off study for other complications that had nothing to do with the drug. So unfortunately, we were not able to continue dosing.

Okay, switching gears quickly to the Hsp90 program and I apologize if you've already answered these questions, but I got dropped off the call -- and, again, having more to do with timing. The trial was initiated -- I'm assuming that the first five patients haven't been enrolled yet since we haven't seen a press release for the milestone -- the final milestone payment. Is that correct?

That's right.

Yes, it will be a standard dose escalation. So, the first three patients will have to get through safety and then this will basically be the second patient and the second cohort.

Got it. And has Debiopharm provided any additional clarity as to just how long this trial could last and when we might see some data from this trial?

It's kind of standard 12 to 18 month timeframe. They're actually going to be doing a very deep robust survey. You -- total number of patients up to 80. I mean, they're basically testing in every other day which is I think more of the traditional HSP --

Right.

-- schedule for oral HP90s and daily.

Right.

Based on the safety -- the preclinical safety profile.

So, that's an important attribute of the trial design. They're going to be surveying two dosing schedules, Ren, to look at the safety profile every other day, and that's very much supported by preclinical data, where the PK and the plasma is substantially different from the tumor where the -- in the tumor the drug is degraded at a much lower rate. So that is in favor of an every other day dosing schedule, where you would have it cleared in the plasma and retailed in the tumor.

However, the drug did have a very attractive safety profile, so they're also trying every day dosing and as Mike stated, it's up to 80 patients.

So every other day and every day.

Yes.

To 80 patients. And I apologize, can you just remind me of the entire schedule? Is it three weeks on? One week off, how's that working?

I would rather actually clarify that and make sure I'm accurate and get back to you on that. I don't want to say something that's inaccurate, I don't recall the specifics of it.

No worries. Just one final question in the preclinical pipeline, there was a lot of interest at ACR this year and there were probably rows of posters having to do with companies developing combination drugs or all in one drugs and knocking out multiple pathways. So your network disruption, I think, hypothesis has caught on fire.

Have you gotten any inbound calls? Are there any discussions right now with potential pharma partners? Even at a preliminary stage? Or, is this one of the assets given your cash position? Is this one of those assets that you'd rather see develop a little bit further along, let's say into the clinical Phase I or Phase II before entertaining partnering discussions.

so it's certainly in that category. We want to hold onto this as long as we can. We do believe that this represents a potential break through approach. We do not want to just license this out to a pharma company at this point.

But to qualify the first part of your question, we are getting a significant amount of interest and inquiries as to the drug's activity and I do believe that this approach is really starting to take root in the field.

I think when you look at the clinical observations of a number of these highly specific inhibitors, the data clearly suggests that a specific note of intervention is albeit attractive in that its targeted -- it's not enough, you need to hit the network and I think it going to follow suit much like what we saw with HIV therapy where they used cocktails.

So, there is a growing interest in this concept. The fact that our preclinical data shows a very robust suppression of the network is starting to raise some eyebrows and I think a number of pharma companies are watching the clinical -- watching the clinical trial data carefully.

Perfect, guys, thanks very much and good luck.

Thank you, Ren.

Your next question comes from the line of Jason Kantor with RBC Capital Markets.

Great. Thanks for taking my follow up. Just wanted to make sure I understood on the P&L so are you showing the full $4 million from Micromed on the top line?

Yes, it's flowing through revenue.

Okay, so when we look at the $4 million plus the $8 million, that was pretty much all - most of your revenue then?

Yes.

Okay, thank you.

Okay, thanks.

Thank you.

Ladies and gentlemen, this concludes the question and answer portion of the call, I'd like to turn the call back over to Mr. Passeri for closing remarks.

Well, again, thank you very much for your attention. This is a very exciting and important period for the Company, and we look forward to giving you updates as they become available. So thank you, again.

Ladies and gentlemen, thank you for your participation in today's conference. This concludes the presentation, and you may now disconnect. Have a wonderful day.