DURECT Corp (DRRX) 2021 Q1 法說會逐字稿

Greetings, and welcome to Durect Corporation's First Quarter 2021 Earnings Call. (Operator Instructions) It is now my pleasure to introduce your host, Mike Arenberg, Chief Financial Officer. Thank you. You may begin.

Good afternoon, and welcome to our first quarter 2021 earnings conference call. This is Mike Arenberg, Chief Financial Officer of Durect Corporation. I will provide a brief review of our financial results; and then Jim Brown, our President and CEO, will provide an update on our programs. We will then open up the call for a question-and-answer session.

Before beginning, I would like to remind you of our safe harbor statement. During the course of this call, we may make forward-looking statements regarding DURECT's products and development, expected product benefits, our development plans, future clinical trials or projected financial results. These forward-looking statements involve risks and uncertainties that can cause actual results to differ materially from those in such forward-looking statements. Further information regarding these and other risks can be found in our SEC filings, including our 10-K and 10-Qs under the heading Risk Factors.

Let me now turn to our financials. Total revenue in Q1 2021 was $2.2 million compared to $1.6 million in Q1 2020. This year-over-year increase of approximately $600,000 was driven by the combination of an increase in collaborative R&D revenue and the reversal of deferred revenue related to the now terminated Gilead agreement that occurred in Q1 2020. Excluding deferred revenue, the year-over-year increase in collaborative R&D revenue for Q1 was about $140,000.

Product revenue, which is primarily from the sale of ALZET pumps, was $1.6 million in both Q1 2021 and Q1 2020. Our gross margin from product revenue was 79% in Q1 2021 as compared to 76% in Q1 2020. Product revenue continues to be strongly cash flow positive. R&D expense was $8 million in Q1 2021 as compared to $7.6 million in Q1 2020. The slight increase was primarily due to higher expenses for DUR-928. The SG&A expenses were $3.5 million in Q1 2021 as compared to $3.4 million in Q1 2020. Our underlying burn rate during the quarter, excluding net proceeds from the equity financing was $7.4 million. In Q1 2021, we strengthened our financial position by raising net proceeds of $47.8 million from an underwritten public offering and sales under our ATM program. At March 31, 2021, we had cash and investments of $97.2 million as compared to $56.9 million at December 31, 2020.

With that, thanks again for joining our call, and I will now turn the call over to Jim for an update on certain of our programs.

Thank you, Mike, and hello, everyone. Thank you for joining us today. We made tremendous progress in the first quarter of 2021. We initiated patient dosing in AHFIRM, our Phase IIb study of DUR-928 in patients with severe alcohol associated hepatitis. We are pleased with the progress made in opening clinical sites in the U.S. and with early enrollment in the AHFIRM trial.

The mechanism of action for DUR-928 was published in the Journal of Lipid Research. This publication connected the proposed mechanism of action for DUR-928 of DNMT inhibition with the elevated DNMT levels and hypermethylation of the epigenome reported in liver samples of AH patients. This helps to explain the efficacy signals, including survival of patients in our Phase IIa AH trial.

The FDA-approved POSIMIR for postsurgical pain reduction for up to 72 hours after arthroscopic subacromial decompression. We are now in discussions with multiple potential POSIMIR partners with a goal of enabling the partner to launch the product this year. In February, we further strengthened our financial position by raising $47.8 million in equity, and we ended the quarter with over $97 million in cash and investments. We also appointed 2 highly successful and experienced pharmaceutical executives to our Board.

Now let's move to our programs. I'll begin with the mechanism of action for DUR-928 and how it facilitates the remarkable results we saw in the treatment of alcohol associated hepatitis or AH. Because of the novel nature of how DUR-928 works, I thought it would be helpful to describe some of the science in more detail. First, I want to offer some perspective on the regulation of the epigenome. Investors in biotechnology are familiar with CRISPR technology. CRISPR/Cas9 is a DNA editing tool used in gene therapy to insert a single new gene into the DNA of a cell or an organism. By comparison, at Durect, we have the first naturally occurring epigenetic regulator in development, DUR-928, which regulates the expression or the turning on and off of more than 1,000 genes. To help you understand how exciting this is, consider that DNA makes up only a small portion of the nucleus. The vast majority of nuclear material are proteins that determine what the cell does and are known as the epigenome. DUR-928 acts not by changing the genetic makeup of the patient but by repairing the epigenome, which controls the operation of ourselves, allowing them to operate in a manner as they did prior to the disease.

Another way to visualize the importance of the epigenome is to compare it to the software of the computer. You have the same DNA or hardware in every cell in your body. The same hardware in every cell, think about all the different tissue types and cell types that make up your body. The reason for this is that the epigenome, which in this example, would be the software, controls, which genes are expressed and which are not. It is effectively the brain to the operation. DUR-928 acts to repair malfunctioning software without changing the hardware.

Many diseases negatively impact the epigenome. DUR-928 is the first molecule in development that repairs the epigenome, restoring its functionality, and it has done so to this date without significant side effects. This is a novel, seemingly safer approach to medicine. Durect with DUR-928 is at the cutting-edge of this new field.

The proposed mechanism of action for DUR-928 was published in the Journal of Lipid Research. This article represents substantial work from Dr. Ren's laboratory, defining the activity of DUR-928 in every genomic regulation of stressed hepatocytes. DUR-928 is an endogenous sulfated oxysterol that acts as an epigenetic regulator through the inhibition of DNA methyltransferase, DNMTs. 928 regulates expression of genes that are associated with many important cell signaling pathways, including cell death or survival, stress or inflammatory responses as well as lipid biosynthesis or energy metabolism.

The publication showed that DUR-928 bound to and inhibited the activity of DNMT 1, 3a and 3b. DNMTs are epigenetic regulating enzymes that add methyl groups to the DNA in a process called DNA methylation. Hypomethylation at the regulatory or promoter regions of genes represses gene expression, while the decrease in DNA methylation upregulates gene expression.

Treatment with DUR-928 on stressed hepatocytes led to decreased DNA methylation and up-regulated expression of more than 1,000 genes that are associated with multiple crucial cellular signaling pathways. These modulations can lead to improved organ function and survival. Reduced lipid accumulation and inflammation as we have observed in various in vivo animal models and the promising results from our completed clinical trial in AH and NASH.

Let's focus for a moment on the connection between DUR-928's mechanism of action and AH. In July of 2019, Argemi et. al., published a study in Nature Communications. In this study, liver samples from 80 patients with liver disease, including 27 AH patients plus samples from 10 subjects with normal livers were examined. For clarity, a transcriptome is the full range of messenger RNA expressed by an organ. In this study, they found that the transcriptome, that is the gene transcription patterns of AH patients were distinctly different from the control subjects and the patients with other liver diseases. Importantly, in AH patients in methanome or DNA analysis showed hypermethylation and marked inhibition of the activity of liver enriched transcription factors or less, which are master regulators of the podocyte gene regulation, including those that govern mature hepatocellular function.

The expression of DNA methyltransferase DNMT 1 and DNMT 3a were found to be profoundly increased in AH patients, but not in the control subjects or patients with other liver diseases.

In conclusion, the liver transcriptome of AH patients is characterized by decreased activity [of less] along with hypermethylation of regulatory regions of their target genes. The results of this study suggest that modulation of DNA methylation could be a novel therapeutic approach for AH.

In 2017, Hardy, T., et al published in Gut, a study that evaluated 26 patients with biopsy-proven nonalcoholic fatty liver disease. They found hypermethylation at the PPAR gamma promoter of hepatocellular DNA, which can be detected in the pool of cell-free DNA of human plasma.

Summarize why our understanding of DUR 928 mechanism of action fits so well with AH, NASH and other diseases we are investigating. Epigenetic dysregulation, such as the Barret DNA methylation can lead to transcriptomic reprogramming and subsequent cellular dysfunction and has been associated with many acute diseases such as AH and chronic diseases such as NASH. The literature I just described shows that both AH and NASH patients had significant hypermethylation at important DNA promoter regions in liver cells. DNA methyltransferase are epigenetic regulating enzymes that add methyl groups to DNA in a process called DNA methylation. Elevated levels of these DNMTs are associated with elevated levels of methylation, and this is known as hypermethylation.

For example, the Argemi paper shows that AH patients have elevated DNMTs compared to normal livers and compared to patients with other liver diseases. And this hypermethylation impacted expression of genes that are master regulators of hepatocyte genes, including those that govern mature hepatocellular function.

The recently published manuscript on DUR-928's mechanism of action demonstrated that as a DNMT inhibitor, DUR-928 reduced the level of methylation in stressed hepatocytes, which resulted in up-regulation of gene expression in important pathways that had been down regulated in the hypermethylated state. This is why we believe the mechanism of action of DUR-928 provides strong scientific rationale for evaluating 928 as a therapeutic agent for AH and for NASH. It also helps to explain the patient survival and other efficacy signals demonstrated in our Phase IIa AH study as well as the encouraging results from our Phase Ib NASH trial.

Now to our alcohol associated program for DUR-928. There are 132,000 hospitalizations per year in the United States for AH. While the majority of AH patients are between 40 and 60 years old and also have liver cirrhosis, approximately 20% of the age population are in their 20s and 30s and may not have cirrhosis. 89% of hospitalized AH patients have insurance. Unfortunately, even prior to the COVID pandemic the incidence of AH was increasing in younger patients. And during the pandemic, alcohol consumption in the United States has increased. There is no approved treatment for AH. What physicians have available to them today primarily involves abstinence and supportive care, which includes nutrition and hydration. The overall mortality for AH is 26% at 28 days, 29% at 90 days and 44% at 180 days. The high 1 month mortality rate from the time of diagnosis is similar to some ferocious cancers, such as AML and advanced breast or pancreatic cancers.

Hospitalization costs for AH are more than $50,000 per patient in the first year. Alcoholic liver disease is becoming a leading cause of liver transplants in the United States, and the cost of a liver transplant exceeds $875,000. We estimate the annual cost of AH to the U.S. health care system to be as high as $6 billion. The average hospital stay for an AH patient is approximately 7 days with many staying significantly longer. In our DUR-928 Phase IIa AH trial, 14 of the 19 patients were discharged in less than 4 days after receiving only one IV infusion of DUR-928.

If you consider my software analogy, this is now easier to understand. All of the 19 patients in our Phase IIa trial survived through the 28-day follow-up period of the trial. 12 of these 19 patients were classified as severe based on MELD scores. And 15 of the 19 were classified as severe based on a scoring system that is specific to AH called Madreys Discriminate Function Score. Prognostic scores, including Lille, MELD, as well as bilirubin and other biomarkers were improved compared to baseline in the Phase IIa trial. DUR-928 was well tolerated by all of the patients and at all doses evaluated in the Phase IIa trial, including an all severe AH patients. There were no serious drug-related adverse events reported in this trial.

Now to update on AHFIRM. AHFIRM is our ongoing Phase IIb efficacy and safety study. It is a placebo-controlled double-blind, multinational study targeting 300 patients. Of primary endpoint is 90-day survival. The FDA granted fast track designation for DUR-928 in the treatment of AH. We are making great strides with the study. We have approximately 20 U.S. sites up and running, and we are pleased with the early enrollment. We remain on track to expand the AHFIRM trial to the U.K., EU and Australia later this year. Our team is executing at the highest level, especially considering they are working with hospitals that continue to deal with the pandemic. Our plan is to have 30 to 40 U.S. sites and 15 to 20 sites across the U.K., Europe and Australia, for a total of between 50 to 60 sites. The results from the Phase IIa AH trial, the fact that survival is the primary endpoint for the AHFIRM trial. The correlation of our understanding of the mechanism of action of DUR-928 and the epigenomic hypermethylation seen in AH patients, all make us optimistic that we are able to demonstrate a robust survival benefit in AHFIRM this trial may support an NDA filing.

Approval based on a single trial is not uncommon. In fact, 37% of new drug approvals between 2005 and 2012 were based on a single pivotal trial and 42% of new drugs launched in the United States in 2018 were approved based on a single trial. To summarize the DUR-928 AH program. The AHFIRM trial is well underway for patients with severe AH. The AHFIRM trial is a double-blind, randomized, placebo-controlled multinational trial, targeting 300 patients. There are 3 treatment arms: 30 milligrams and 90 milligrams of DUR-928 and a placebo arm. As with the Phase IIa trial, patients in the AHFIRM trial received an infusion of DUR-928 or placebo on day 1, and if they are still in the hospital on day 4, they receive a second infusion. The primary endpoint for the AHFIRM trial is 90-day survival. We have approximately 20 clinical sites actively recruiting patients and are pleased with early patient enrollment. We expect to have approximately 30 to 40 clinical sites in the United States and 15 to 20 sites across the U.K., Europe and Australia.

We were granted fast track designation by the FDA for our AH program. And we expect that if we achieve a robust survival benefit, this study may support an NDA filing.

Next, I will update on the DUR-928 NASH program. In 2020, we reported positive results from our Phase Ib trial of DUR-928 in NASH patients with stage 1 to 3 fibrosis. This was a randomized, open-label and multicenter study of DUR-928 in NASH patients conducted in the United States. DUR-928 was dosed orally for 28 consecutive days and the patients were followed up for an additional 28 days. A total of 65 patients completed the study, and there were at least 20 patients per dose group. DUR-928 treatment in this trial resulted in a reduction from baseline of liver enzymes, liver fat, liver stiffness as measured by imaging and serum lipids. Many of these reductions were statistically significant.

A statistically significant 24% reduction of plasma triglycerides was seen in the 16 patients who had baseline triglyceride levels above 200 milligrams per deciliter. 43% of the patients in this trial had at least a 10% reduction in liver fat as measured by MRI-PDFF. In this group of patients, liver fat, liver stiffness, liver enzymes and serum lipids were statistically significantly reduced from baseline. DUR-928 was well tolerated at all 3 doses evaluated. There were no serious adverse events reported during the study.

Additional data from this trial were as presented in a poster at the AASLD meeting. These data demonstrated a reduction in numerous biomarkers from baseline. These biomarkers move in concert with the reduction of liver enzymes, liver stiffness and serum lipids. These results, together with the continued safety profile for DUR-928 supports further evaluation of 928's potential in NASH. We will be presenting additional data from this trial at an upcoming medical conference and are planning our next steps for NASH.

Next to our POSIMIR program. This quarter also marked the FDA approval of POSIMIR. POSIMIR is a novel, non-opioid, sustained release local anesthetic that is approved to produce postsurgical analgesia for up to 72 hours following arthroscopic subacromial decompression. This approval provides an important new option to orthopedic surgeons in their efforts to minimize opioid use, while managing acute paid for up to 72 hours after this painful surgery. POSIMIR is the only approved sustained release bupivacaine product indicated for up to 72 hours of postsurgical analgesia from a single administration.

POSIMIR contains more bupivacaine than any other approved single dose sustained release bupivacaine product. We believe this may be an important differentiator in the market. Another potential differentiator for POSIMIR is the ease of application. POSIMIR is applied directly into the surgical wound, the primary source of postsurgical pain. At the end of surgery, POSIMIR is administered into the subacromial space under direct arthroscopic visualization, where it continuously releases bupivacaine for 72 hours or more. FDA approval is based on the pivotal trial in arthroscopic subacromial decompression surgery with an intact locator cut. The primary outcome measures were mean pain intensity and total opioid rescue analgesia administered, both evaluated over the first 72 hours after surgery versus placebo.

POSIMIR demonstrated a statistically significant improvement in both primary outcome measures. A 1.3 point reduction in mean pain intensity on a 0 to 10 point pain scale. This represents a 20% reduction in pain and is physically significant. This trial also demonstrated a 67% reduction in IV morphine equivalent rescue opioid use from a median of 12 milligrams in the placebo group to 4 milligrams in the POSIMIR group. This is also statistically significant. The opioid epidemic in our country is responsible for approximately 200 deaths every day. The objective of the POSIMIR program is to give health care providers and in turn their patients a non-opioid alternative for post operative pain control or at a minimum, or to reduce the amount of opioids required to reduce postsurgical pain.

Subacromial decompression is a shoulder surgery used to treat impingement syndrome, a common repetitive use injury that causes pain when the arm is raised over the head. There are over 600,000 surgeries involving arthroscopic subacromial decompression performed each year in the United States. We've used subacromial decompression as a beachhead to get POSIMIR out in the market, and we believe the opportunity to expand the label to cover a broader group of surgical procedures represents significant upside.

To summarize, we believe there are a number of product features that have a potential to differentiate POSIMIR in the market. POSIMIR is the only approved sustained release bupivacaine product indicated for up to 72 hours of postsurgical analgesia from a single application. And in the pivotal trial demonstrated a statistically significant reduction in both the level of pain and the use of opioids. POSIMIR contains more bupivacaine than any approved single dose administration controlled release bupivacaine product. And according to the investigators in our clinical studies, POSIMIR ease of application will be a welcome benefit.

In addition to these attractive features, we believe there are a number of potential avenues available to expand the label to include more surgical indications. We are in discussions with potential commercial partners for POSIMIR. Our plan is to use the proceeds from a partnership to help fund our epigenetic program and our flagship product, DUR-928 for the treatment of alcohol associated hepatitis. We are working to put a deal in place in time for our partner to launch this year and expect that the deal will include an upfront license fee and royalties.

This quarter, we also appointed 2 new members to our Board of Directors. Gail Maderis, MBA; and Mohammad Azab, MD, Master of Science and MBA. These 2 senior industry veterans bring extensive drug development, clinical research and medical affairs experience to our Board.

In summary, this was an impressive quarter. With the initiation of dosing in AHFIRM with robust clinical site startup and patient enrollment, additionally, AHFIRM remains on track to initiate dosing in the U.K., Europe and Australia later this year. With approval of POSIMIR and the commercial partnership process underway, with the strengthening of our balance sheet and ending the quarter with over $97 million in cash and investments, with the addition of 2 highly experienced board members. But most importantly, with the publication of the mechanism of action for DUR-928, which helps explain the efficacy signals, including survival of patients in our Phase IIa AH trial as well as the encouraging results from our Phase Ib NASH trial and provides further scientific rationale for developing DUR-928 for the treatment of multiple other acute organ injury and chronic disease.

Many diseases negatively impact the epigenome. DUR-928 is the first molecule in development that repairs the epigenome, restoring its functionality, and it has done this to date without significant side effects. This is a novel seemingly safer approach to medicine and DURECT at the cutting-edge of this new field.

With that, we'd now like to take any questions that you may have. Thank you.

(Operator Instructions) Our first question comes from the line of Francois Brisebois with Oppenheimer.

I just wanted to hit on the AHFIRM trial here. I think -- can you just remind us in terms of duration, maybe the comparison to Gilead's previous effort and how similar or different it is so we can kind of gauge when to expect data here.

Yes, I think we can -- first of all, Francois, it's good to hear from you. But I think we'll have -- I know we'll have a much better sense of all this as we get into the summer, a couple of months into the summer as we hopefully, it is the last wave of the pandemic in the United States and as we get into Europe as well. And we hit the hospitals, they have a couple of months of normal functioning to get a sense of what the enrollment rates will look like, when beds become free and that type of thing. But if one looks at the Gilead study, they did a trial where they dosed 100 patients. It was different from ours in a couple of fronts. First off, they followed the patients for 6 months, and we're following for 3 months. They also required biopsy, which limits the number of patients, and we are not, and they also required steroids of all of their patients, and we are not. We're leading it to the individual physicians who are treating. And so all of those things should make our enrollment go faster.

If you look at a comparison of, if they had a 3-month duration versus ours, they would have completed their 100 patients in about 13 months. But with all those things I just described, it should be much faster. And also, unfortunately, we're seeing a lot more of this during pandemic, we're seeing more AH out there, and AH was actually increasing even prior to that. But I think we'll give -- we'll be able to give a better sense of it all, probably in the summertime when we've got a little more normality under our belt.

And having said that, though, we're really happy with what's going on right now. We've got about 20 sites up and running. The patient enrollment is going really well. So I'm really happy with where we are now, quite happy.

And just to switch to POSIMMIR quickly. You talked about a partnership here. In terms of the potential for label expansion, that could be very important. Is this something that you would like to figure out before the partnership and then potentially a launch this year? Or is this something that maybe the partner would actually deal with working on the label expansion afterwards? Because I assume it'd be hard to get a label expansion before partnership and then even launch this year? What - just what are your thoughts there?

Right, yes. Yes. I think right now, one should look and expect that the launch this year would be on the current label, as it exists. But the expansion efforts can take many fronts, and there is an opportunity for gaining expansions in an easier path, which could be quicker, but still wouldn't occur this -- I wouldn't think this year. I think it would be longer. And to that end, we're starting in these processes now. At the same time, we are, in parallel, working on the partnerships. And so at some point, as a partnership is established, then we would hand off to the partner, the interactions with the agencies.

And just I'll sneak in one last one here. Congrats on getting the manuscript published. I think that's -- a lot of people have been waiting for it.

Sure. Yes.

Obviously, the epigenome is complex. The science behind it is still probably in early stages.

Sure.

Can you just give us an idea of the reception of the MOA when you've spoken to, whether it's the medical community, the scientific committee or the investment community?

I think it's been very positive. I'll let -- maybe WeiQi and Norman also can speak to this as well. But yes, it's -- you have different levels of scientific background with investors. You have some investors who have a certain perspective and then you'll have others that have more and more depending on their backgrounds, right? And I think the ones that are MD, PhD based in their backgrounds are quite impressed with. And it also, as I tried to allude to in our conversation today, it really helps to explain the remarkable results we saw, to have the results we see that there's a reason for it. And so that does help as well. But I don't know, WeiQi, you want to, or Norman, speak to the reactions you get when you talk to people.

I will let WeiQi go first.

Go ahead, Norman. No, no, go ahead, Norman.

Okay. WeiQi (inaudible) me to speak first so that she can correct me afterwards. But I think what was really -- as an empiric observation, the 2a study really stood on -- it was truly remarkable. But it's interesting how this epigenetic change has been percolating through the literature, and it's still for clinicians very new. It's less so for scientists. They've been aware of this, and there's a lot more work. But the 2 papers that Jim mentioned are really a very important. 1 in NASH and the other one, the Argemi paper on -- in alcohol associated hepatitis. And so this really forms the foundation. So as I'm speaking to colleagues and saying, are you aware of this paper? And are you aware that this is the mechanism of action? I'm getting a lot of very positive feedback because people like to understand not just that it works, but why it worked.

Yes. I probably will address that as the fact -- when we talk to the scientific community or the medical community about our mechanism of action. Many people, they would say, now we know how to categorize your compound. So for example, we -- many times, we saw people actually have the landscape of NASH, not so much for AH, as we know, there's not much -- companies are developing AH products, but in NASH it's a very crowded field, you would commonly see those competitive field or the diagram to categorize different compounds in development and then based on their mechanism of action. Frequently, no one knows how to place 928 -- DUR-928. So now, with the publication of the manuscript about the proposed mechanism of action, I hope that eventually that would help people to place DUR-928. That's one. And the second, after it's published, just in the short month, we were told that this paper is 1 of the 3 most read publications in the journal. So that tells a lot about the interest about this mechanism of action as an epigenetic regulator.

Our next question comes from the line of Kristen Kluska with Cantor Fitzgerald.

The first one, so the president of AASLD recently discussed that his institution and others are citing 30% to 50% increases in hospitalizations and deaths related to some form of alcohol related liver disease over the past year. So I wanted to ask if this is consistent with what you've been hearing from your colleagues across the space? And also, how are you thinking about this trend moving forward in light of bars and restaurants and social gathering starting to open and expand across the country.

A great question. And I think Norman is the best person since he was most recently in practice to address it. And it's so involved in setting up this trial.

Thanks, Kristen. Let's say -- so as I think you know, I was practicing until November of last year. And we had seen a rising incidence of alcohol associated liver disease, both the chronic form where you see cirrhosis and the acute form, where you see this alcohol associated hepatitis this acute inflammatory condition. It definitely seemed to spike up from -- during the COVID, during the pandemic. And a couple of papers have addressed that. There was a paper in JAMA and one very -- in a very similar timeframe in the Lancet last year. It affected different people differently. And so people with alcohol use disorders, some of them drank less and others drink a lot more. And the ones who drank less, we don't see, of course. But the -- I noticed and in speaking to my colleagues as we are setting up this trial. There is just a flood of people with acute alcohol. Every patient, every hospital we are speaking to is saying the same thing, that our hospital is filled these people frequently, a much younger group. So as Jim mentioned, there's an old -- sort of an older group of long-standing drinkers. And then a group of young people that have started drinking fairly recently but drink very heavily. And what you said is exactly true. We are just seeing this massive number of people with this acute illness. That, as you know, is frequently fatal.

And then trends about moving forward in light of the country opening up a little bit more?

So that's purely conjecture. I don't think we know. I think people, we can expect that some people will say, thank goodness I can see my friends and we will sort of become moderate drinkers. But one of the dangers is people at home get bored, and have a lot of alcohol lying around the house. So sometimes social interaction increases the amount of drinking, sometimes it decreases. I think we will continue to see something very similar, but this is -- honestly, it's purely conjecture. I don't think we know how it's going to affect people.

Let me just add one thing, and that is even before the pandemic, we were just seeing our hospital, my inpatient service was more than 50% acute alcohol. It was just this unbelievable thing. We had never seen anything like it.

And then has there been any work, or will you consider evaluating the specific elevation of DNMT 1 and 3a across the AH, excuse me, patients and whether there's any correlation with the disease severity, MELD score, bilirubin or any other of the key measures you look at?

That's a great question. Probably WeiQi, you might be the best to speak to that one.

Sure. As you know, this is AHFIRM trial, we are not requiring patients to -- we are not requiring the biopsy. So in order to determine DNMT 1 and 3a as a paper has reported, in the AH patients, we will need to do the liver biopsy to determine that. And then in order to correlate whether MELD score or the responses to the treatment such as Lille score. That's 1 step further, and then you'll have to do a large group of patients. And then because this, publish the paper, they only did a small number of patient subjects. So to correlate with disease scores, then you have to validate the elevation of the DNMTs and with the disease scores, there will be a huge undertaken. So the AHFIRM trial is not designed for doing that, in order to run the trial, which basically do not require input about (inaudible).

But we'll learn something from it. There might be a few patients at a biopsy. As you said, they were only 27 in that 1 study, but still, it was interesting to learn and very important. And I do think eventually, someone will do a study in maybe retrospective in 1,000-plus patients, and that's what you'll need to really start to draw correlations.

Yes. That's actually a good point that I hope with the publication of the mechanism of action and then with the endogenous sulfated oxysterol as the epigenetic regulator, it would inspire a lot of other labs around the country or around the world to get involved into the study of AH or not just AH or even just sulfated oxysterol with epigenetics and then with associated with human disease other diseases. So that was -- basically, we'll generate more data from multiple labs, and then many, many people will be interested into the study of this mechanism.

I think you're right, WeiQi. And I think that you made a point that just, it's worth emphasizing again that this paper has been extreme. There's a lot of interest in this paper, and it's been highly read and almost at record amounts. And so to that, that we are at the cutting edge. And so hopefully, others will start to join and we see an expansion of this field. Of understanding the epigenome so much better.

And then the last question that I have is, well, I know you're focused on your current pipeline and programs. But since you've done a lot of work here around the mechanism of action, and you've seen some data to validate that in the clinic. How are you starting to think about future opportunities around DUR-928 in light of these findings?

Yes, that's a great question. And the team is actually spending a lot of time looking at the next steps for not only DUR-928, but we also have an SAR, what they call Structure Activity Relationship program ongoing, as well looking at analogs and the like. So we've got a lot of research going on. And my expectation is that in the future, we will be able to communicate that what -- where we're going next with our epigenetic program. But 928 is a great place to start, but not the only place, and there certainly are multiple themes that can be played with this 928 instrument.

Our next question comes from the line of Ed Arce with H.C. Wainwright.

Congrats on the important milestones reached in this first quarter. A few questions for me. First, on your AH study. You mentioned very early days, of course, but already half or more than half of the sites in the U.S. that you plan to have opened, are now open. So wondering how your early enrollment, I know you mentioned there are some patients already enrolled as well. How does that fit with the target at this time with your internal projections? And related to that is, as you think about the challenges and the successes that you're seeing early on in enrolling patients in the U.S. hospitals, what do you think is going to translate as you expand into sites ex-U.S.

Well, we're certainly learning a lot. Maybe I'll take the second one first, and I'll let Norman -- let me just say -- first, I guess, I'll start with the first one. As far as patient enrollment goes, it's going very well, actually faster than I had thought we would. And so I'm really pleased with where we are with patient enrollment. And as far as sites in the U.S. kind of comparing and getting started here versus starting in Europe. I know there's a lot of planning going on in Norman's group. So maybe I'll let you address that one moment.

Yes. So we're -- first of all, as Jim says, we're -- I'm very pleased with the rate of enrollment. One of the big mistakes people frequently make is thinking enrollment will be easy; it's always harder than you expect. I think in our case, we're more or less on track as anticipated. The centers in the U.S. are truly the top set, as nearly all of the best-known investigators and the best centers are in the trial. So I'm very pleased with the group of investigators. The -- Europe will be very interesting because some areas are still facing some COVID problems, but I think we're hoping that by the time the -- we start to work there. So that in the -- a little later this year, that we'll start to see that tailing off with more vaccinations. And then, we're targeting potentially Australia as well, where that should be -- it's a little further, but distance is no longer an issue with -- not resume with everything, and we have very good investigators. So we're excited about the potential to expand into these different areas. And I think the diverse data will make the study that much better.

And then turning to POSIMIR. I know you mentioned that you're still comfortable with the time line of reaching a collaboration agreement sometime later this year. I'm wondering what areas of label expansion are under consideration either and/or by you and your potential partners?

I think if you look at what we have done with the drug, right, we did work in both soft tissue and hard tissue. The soft tissue trial being hernia and the hard tissue being subacromial decompression and we got approval for subacromial decompression. So -- and so one would hope then to look to expand into other surgical sites. The Holy Grail would be to have general surgical use and a step back in that would be some areas of soft tissue balance surgery, those kind of things. So we'll have to see how it all unfolds.

A final question just on your recent raise now with the cash level that you have, what do you project is your runway?

Sure. I'll let Mike, you want to speak to that?

Sure. Ed, we don't provide cash burn forecasts, going forward. But this most recent quarter, the burn was about $7.4 million and last year, about $35 million for the year. So certainly, have well over 2 years of cash going forward, comfortable to say that. But like I said, we don't provide specific cash burn forecasts.

Yes. And that would be without a POSIMIR deal or without any revenue coming from POSIMIR.

Our next question comes from the line of Michael Morabito with Chardan Capital Markets.

I wanted to go a little bit deeper into the AHFIRM and the potential for a survival benefit. I just wanted to know what -- can you remind us what specifically FDA has communicated to you about the potential ability to file for an NDA if a survival benefit is reached? Does that change with the fast track designation that you've had and that does that impact the timing of when you see that? And just generally, how often are you evaluating survival? Is it just the DSMB meetings or more frequently, if you could just give us a little bit more color there about how often you're looking at that?

Sure. I'll let Norman and -- and also WeiQi comment. I would just say that we do have a DSMB evaluating this, and survival is the benefit. And I -- the approach that we're taking right now is that if we see a robust enough survival benefit, given the unfortunate circumstance, where we're looking at 26% mortality at 28 days and 29% at 90 days. So we're talking a very high rate of danger for these patients and many of them are younger. And so to be able to make a difference there. If one could, then I think there's a potential. There would be -- if the data are, as I hope they will be, that we would be able to submit an NDA based on this trial. It would be more -- and I think the best analogy that one can consider for this is more like an oncology product, where you're looking at survival benefit. But Norman, I don’t know, if you want to speak to how often the DSMB meets? Or how does that work? Go ahead.

All right. So Michael, it's very unlikely, FDA will not say, go ahead and do the trial and we'll give the approval, it will depend on the results. But speaking to a very sophisticated adviser in looking at the statistical package; he made the point that, if it is as good as the 2a data. And if you're saving patients' lives, FDA is under a lot of pressure, not to give you approval if you have a life saving technology. So we can't promise that we could file after a single trial. But we're -- based on -- if it looks like the 2a study then, I think it would be a very reasonable, very reasonable decision on our part to do that.

Just 1 follow-up. You had mentioned going back and looking at the NASH program. Is it possible that we could see initiation of a new NASH trial sometime in the next 12 months? And for the data from the earlier trial that you mentioned that you'll be presenting; do you have any idea when and where you might be presenting that data?

Yes. I believe it was in the press release. Was it not, Mike?

All we said is a future medical conference. Because as you know, they don’t want you to kind of discuss what's going to be in the poster or for the presentation prior to the abstracts getting published. So we're just saying future medical documents.

Right. Okay. So that's where we sit today. And as far as the next steps in -- we're working on the next step right now in NASH, it's really helpful to have this mechanism, these mechanism of action, data and the information out there -- on the mechanism of action, sorry, because it fits not only very well for AH, but also it fits well for NASH. And so now we kind of can put 928 into a circumstance for how it might help. We -- when we see the data coming up in the new -- when some of these -- this information is released, you'll see that we've done some work in more severely ill patients looking at pharmacokinetics and the like, and we've learned a lot of interesting information from that. So right now, we're working with thought leaders in this space with NASH, understanding how we want to approach NASH. There have been so many trials out there and so many, unfortunately, so many failed circumstances out there that I think you need to -- you know there's is an carpenter saying, measure twice. We're definitely measuring multiple times and evaluating where would be the best place knowing a mechanism of action for 928 and knowing the variabilities that are out there to pick the right patient population and the right study to conduct the different [host] information. And that's what we're doing now. So, once we have a good sense of that, then we'll talk about it more.

Okay. There are no further questions in the queue. I'd like to hand the call back to management for closing remarks.

Okay. Well, I want to thank you all for your time today. And as always, if you have any further questions, please feel free to give us a call. And thank you all, and take care. Goodbye.

Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation. You may disconnect your lines at this time, and have a wonderful day.