DURECT Corp (DRRX) 2020 Q1 法說會逐字稿

Greetings and welcome to the DURECT Corporation First Quarter 2020 Results Conference Call. (Operator Instructions) As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Mr. Mike Arenberg, Chief Financial Officer. Thank you. Mr. Arenberg, you may begin.

Thank you. Good afternoon, and welcome to our First Quarter 2020 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 in 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 2020 was $2.8 million compared to $4.1 million in Q1 2019. The net revenue associated with our Gilead agreement in Q1 2020 was negative $268,000, which primarily relates to the way that one has to account for the recognition of deferred revenue associated with the $35 million of upfront license fee plus milestone payments we received in 2019. This is a technical accounting matter that has no impact on cash. And for a more complete explanation on how this works according to GAAP, please see our 10-Q.

Excluding the recognition of deferred revenue, collaborative revenue for Q1 2020 was down about $1.1 million or 71% compared to Q1 2019 due to reduced development work on the Gilead project and on a paid feasibility project with another company.

Product revenue, largely from the sale of ALZET pumps and LACTEL polymers, was $2.8 million in Q1 2020 as compared to $2.6 million in Q1 2019. I should note that late in the quarter and continuing into the second quarter, we saw a drop in ALZET revenue compared to historic levels as many of our customers using ALZET mini pumps saw their operations affected by the coronavirus.

The gross margin for these combined product lines was 56% in Q1 2020. These product lines continue to be strongly cash flow positive.

R&D expense was $7.7 million in Q1 2020 as compared to $6.3 million in Q1 2019, primarily due to higher clinical trial expenses for DUR-928 as well as higher costs associated with POSIMIR to prepare for the Advisory Committee meeting.

SG&A expenses were $3.4 million in Q1 2020 as compared to $3.5 million in Q1 2019. Our underlying burn rate during the quarter was $12.3 million. This was an unusually high quarter as there were a number of cash outlays that fell during the quarter, including upfront payments associated with the upcoming AH trial, payment of 2019 employee cash bonuses, a loan modification fee that extended the interest-only period for our loan with Oxford by 18 months, consultant fees related to the POSIMIR AdCom in January and payments related to manufacturing DUR-928 that happened to fall during the quarter. These items accounted for over $5 million of nonroutine payments to -- that happened to fall during the quarter.

At March 31, 2020, we had cash and investments of $52.5 million compared to $64.8 million at December 31, 2019.

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. Hello, everyone. Thank you for joining us today. I hope that you and your families are all doing well during this unprecedented time.

At DURECT, we're very fortunate to have an amazing and dedicated group of employees. Because DURECT is an essential business, we've been able to keep our laboratories, manufacturing and accounting offices open. A large portion of our employees began working from home 2 months ago, and during this time, we've been functioning at the highest level.

We announced today that we began working -- excuse me, that we have been working with the FDA on the design of a proof-of-concept Phase II trial in hospitalized COVID-19 patients with acute liver or kidney injury. We also continued making progress on preparations for our planned Phase IIb alcoholic hepatitis trial, completed enrollment in our NASHFit trial and we responded to several information of requests from the FDA as they continue their review of the POSIMIR NDA.

I'll begin with the DUR-928 trial in hospitalized COVID-19 patients. This protocol was developed with feedback from consultants who work for or collaborate with groups that are at the forefront of fighting this pandemic. We are fortunate to be also working with the same division of the FDA that is working on our AH indication.

First, let's review the rationale for investigating the potential of DUR-928 to aid in the treatment of hospitalized COVID-19 patients. The Phase IIa clinical evidence in patients who have acute alcoholic hepatitis and preclinical evidence in acute multi-organ injury models suggests that DUR-928 may be beneficial in COVID-19 patients with acute liver or kidney injury. Organ injury resulting from immune overreaction to coronavirus infection or other complications may contribute to poor outcomes in patients with COVID-19. Acute liver or kidney injury, in addition to lung injury, is an additional factor for poor outcomes in COVID-19 patients. Many of these patients are often excluded from ongoing antiviral COVID-19 clinical trials.

DUR-928 is a naturally occurring agent with tremendous potential to treat acute organ injury, including injury to the kidneys, the liver and the lungs, caused by the -- by infection with COVID-19.

From a safety perspective, DUR-928 has been well tolerated in more than 280 subjects, both healthy volunteers and patients in multiple Phase I and II studies, and no serious events have been associated with the drug. Most relevant to COVID-19 are the results from our recently completed Phase IIa study in acute alcoholic hepatitis patients. All of the 19 patients dosed with DUR-928 survived the 28-day study while the 1-month mortality in AH patients is, on average, 26%. The main causes of death in these AH patients, similar to patients with COVID-19, are septic shock, acute kidney injury and, eventually, multi-organ failure.

DUR-928 is not an antiviral agent. It is a master gene regulator that has the potential to treat acute organ failure and inflammation, including a cytokine storm, which is the body's immune overreaction to infection that can lead to septic shock and multi-organ failure. This is one of the major causes of death in COVID-19 patients.

DUR-928 is an endogenous sulfated oxysterol. It's highly conserved and present in all 7 species of mammals that we have tested to date, including humans, suggesting its importance in regulation of cellular functions. DUR-928 has demonstrated both in-vitro and in-vivo its ability to stabilize mitochondria, to modulate the inflammatory responses and promote cell survival and tissue regeneration, which may render it to be effective in preventing or treating acute organ injury from multiple insults.

DUR-928 demonstrated protection of the lung, livers and kidneys in models with multi-organ failure, as reported by Dr. Ren in 2017 in the Journal of Metabolism and in the 2018 American Association Facility of Liver Disease Poster.

In an injected acetaminophen-induced acute organ injury modeled in mice, 1 or 2 injections of DUR-928 reduced the absolute rate of mortality by 80% in the 10-day study period. Histological examination showed that DUR-928 minimized tissue damage and inflammation in the lungs, the kidneys and the liver. In an acute endotoxin shock model in mice, one injection of DUR-928 reduced the absolute mortality rate by 80% in the 5-day study period. As in the previous study, histological examination showed that DUR-928 minimized tissue damage and inflammation in the lungs, the kidneys and the liver.

In an ischemia-induced acute kidney injury model, treatment of DUR-928 significantly reduced the serum creatinine and the blood urea nitrogen levels and accelerated the recovery of kidney function. In other acute organ injury models, which included a stroke model, a cecum ligation, puncture-induced septic shock model, a pancreatitis model and a bile duct ligation model that induced cholestatic liver injury, DUR-928 was effective in reducing mortality, preventing and treating acute organ injury.

Patients with severe COVID-19 can develop, in addition to lung injury, an acute respiratory distress syndrome, or ARDS, multi-organ injury, including acute kidney, liver and/or cardiac injury.

COVID-19 is an infectious disease caused by severe acute respiratory syndrome coronavirus. The rapid spread of this disease has resulted in a pandemic with more than 3.5 million confirmed cases and over 250,000 deaths worldwide. As of this report, over 79,500 deaths have occurred in the United States. And just to put that in perspective, when we started putting this together a week ago, that was 70,000. While most cases result in mild symptoms, including fever, cough and shortness of breath, some progress into severe pneumonia and multi-organ failure, potentially as a result of severe immune overreaction or a cytokine storm or as a result of ischemic injury or other complications.

Several studies have reported that after half the hospitalized patients with COVID-19 have elevated liver enzymes that signals liver injury, and more than 1/3 of these hospitalized patients had kidney damage. In multiple publications since the spread of this disease, those who die from it developed not only ARDS but other complications, including septic shock, cardiac injury, acute kinder injury or other acute organ injury. Therefore, if acute organ injury could be effectively treated or prevented in hospitalized patients with COVID-19, lives could potentially be saved.

Last year, we completed a Phase IIa clinical trial and intravenously infused DUR-928 in patients with moderate and severe alcoholic hepatitis, or AH. AH is a discrete acute syndrome in -- of inflammatory liver injury. The mortality of these patients with severe AH is, on average, 26% at 28 days. Currently, there are no approved therapies for this serious life-threatening condition. Out of the 19 patients enrolled in the study, 12 are classified as severe based on their MELD scores, or model for end-stage liver disease. And 15 of the 19 were classified as severe based on a scoring system that is specific to AH, or Maddrey's discriminatory function (sic) [Maddrey discriminant function].

DUR-928 at all doses evaluated has been well tolerated by all patients in the study, including severe AH patients. There were no serious drug-related adverse events reported. And all 19 patients treated with DUR-928 survived through the 28-day follow-up period.

Among all the patients who received DUR-928, 14 of the 19 patients were discharged in less than 4 days after receiving only a single IV infusion of DUR-928. This is impressive when you consider the average hospital stay of an AH patient is 7 days. AH patients generally have elevated serum bilirubin levels. And following the dosing of DUR-928, we saw a significant early reduction to bilirubin levels from baseline. They were both -- observed in both moderate and severe AH patients. We also saw multiple prognostic scores as well as serum creatinine levels that were improved. Serum creatinine is a marker of kidney function.

In summary, we believe DUR-928, although not an antiviral agent, is likely to be effective -- an effective treatment for hospitalized patients with COVID-19, who will likely develop, are developing or have developed acute organ injury. And in March, we began working with the FDA on the potential of conducting a trial in COVID-19 patients with acute liver or kidney injury. The FDA has been highly responsive and collaborative in the process of developing this protocol. This Phase II trial will be a double-blind, placebo-controlled multicenter proof-of-concept trial to evaluate the safety and efficacy of 928 in COVID-19 patients with acute liver or kidney injury.

Acute liver or kidney injury is an additional risk factor for poor outcomes in COVID-19 patients, and many of these patients are being excluded from ongoing antiviral COVID-19 trial, and -- but they are still in need of therapy. The trial will be conducted at multiple centers in the United States. It will likely include approximately 80 patients. We will communicate more details on the study design when the protocol is finalized.

It is our hope that DUR-928 in combination with the standard of care would be able to help COVID-19 patients with acute liver or kidney injury, which if successful, ultimately could save the lives of some of these patients. We continue to work with the FDA to finalize the trial design and plan to initiate the trial as soon as we can.

Next, I'll update on the alcoholic hepatitis indication for DUR-928. AH is an acute form of alcoholic liver disease, or ALD. It's associated with long-term heavy alcohol intake and often occurs after a recent period of increased alcohol consumption. AH is typically characterized by recent onset of jaundice and liver failure.

An analysis of 77 studies that have been published between 1971 and 2016, which included data from more than 8,000 patients, showed the overall mortality for AH was 26% at 28 days. According to the most recent data provided by the Agency for Healthcare Research and Quality, a part of the U.S. Department of Health and Human Services, there were over 117,000 hospitalizations for patients with AH in 2016. And from a recent publication analyzing the mortality and cost associated with alcoholic hepatitis, the cost of patient is estimated to be at over $50,000 in the first year alone.

ALD is one of the leading causes of liver transplant in the United States, costing over $800,000 per patient. Based on our successful Phase IIa trial, where we saw 100% survival of 19 moderate and severe AH patients despite the high historic mortality rate, we are advancing towards what we hope will be a pivotal trial in severe AH patients.

We are working with the FDA and our advisers to finalize the design of a multiple center international, randomized, double-blind, placebo-controlled Phase IIb clinical trial of DUR-928 in severe AH patients. Patients in the trial will be randomized to receive 30 milligrams and 90 milligrams of DUR-928 or placebo. The primary goal of the trial will be to demonstrate an improved survival rate for patients treated with DUR-928 compared to those treated with placebo. Further details of the trial design, including the size of the trial and details on the endpoints, will be provided at a future date. Due to the COVID-19 pandemic, we are updating our guidance for initiation of this trial through the second half of this year.

Next, I'll update on the DUR-928 NASH program. We have completed enrollment in our 28-day repeated dosing NASH trial. 62 patients completed dosing in their final visits and the clinical data on the last few patients are being collected. Only a few patients were unable to complete the final visits due to COVID-19-related office closings and travel restrictions. We were fortunate to exceed our enrollment target of 60 patients before the pandemic really started impacting our clinical site.

The trial is a Phase Ib randomized, open-label clinical study that was conducted in the United States to evaluate the safety, pharmacokinetics and signals of biological activity of DUR-928 in NASH patients with stage 1 to 3 fibrosis. These signals of biological activity include clinical chemistry and biomarkers as well as liver fat content and liver stiffness by imaging. DUR-928 was dosed orally at 50 or 150 milligram once a day or 300 milligrams twice a day. The patients in this trial were dosed for 28 consecutive days and followed up for an additional 28 days.

Nonalcoholic fatty liver disease is the most common form of chronic liver disease in both children and adults. It is estimated that NAFLD affects approximately 30% to 40% of adults and 10% of children in the United States. NASH, which is a more severe and progressive form of NAFLD, is one of the most common chronic liver diseases worldwide, with an estimated prevalence of 3% to 5% globally. No drug is currently approved for either NAFLD or NASH. We remain on track to announce top line data from this study in the middle of this year.

Next, to our POSIMIR program. POSIMIR is our investigational post-operative pain relief depot that uses our patented SABER technology and is designed to deliver bupivacaine to provide up to 3 days of pain relief after surgery. The strategy for filing the response to the complete response letter and preparation of the response was under the direction of Dr. Lee Simon, who was formerly the FDA's Division Director of the Analgesic Anti-inflammatory and Ophthalmologic Drug Products. Dr. Simon also led our preparation efforts for the Advisory Committee.

Since the Anesthetic and Analgesic Drug Products Advisory Committee meeting in January of this year, we have continued to interact with the FDA as they continue their review of the POSIMIR NDA. If approved, we plan to license POSIMIR to a partner for commercialization in the United States. We expect this deal will include a meaningful upfront license fee and royalties based on product sales. Of course, POSIMIR has not been approved by the FDA for marketing in the United States or anywhere else for any indication, and there can be no assurance that the FDA will approve the submission.

In summary, the company is functioning well in this new environment. We are working with the FDA to initiate a Phase II trial to evaluate the potential of DUR-928 to treat COVID-19 patients with acute liver or kidney injury. Data from the DUR-928 AH Phase II trial are compelling. In comparison to historical control, data suggests the drug may be life-saving for patients who have no good therapeutic option in a condition with a high mortality rate.

We continue to work with our consultants and the FDA on planning the Phase IIb DUR-928 trial in AH patients, which we expect to start dosing in the second half of this year. We were fortunate to complete enrollment of our DUR-928 NASH trial during this period of shelter-in-place and restricted patient movement, and we maintain our guidance to report our -- the data from this trial in the middle of this year. During the quarter, we continue to answer the FDA's information request regarding the POSIMIR NDA. We look forward to the potential approval of POSIMIR and a potential commercial partnership.

Most of all, we're looking forward to what DUR-928 may be able to do to help patients with devastating conditions like COVID-19 and alcoholic hepatitis. We sincerely hope that DUR-928 will prove to be part of the solution to help us get past this pandemic that has influenced so much -- excuse me, has inflicted so much harm to the patients and their families and so much economic harm to the country -- our country and to the world.

With that, we'd now like to take any questions you might have.(Operator Instructions) First question is from Ellie Merle, Cantor Fitzgerald.

This is Alberto on for Ellie. First of all, congratulations on the quarter. So some particulars that we were wondering about is, if you could give us more color on the information request from the FDA during their review of POSIMIR. Like what info did you give the FDA in response to these questions? And what are you thinking lately about the potential time frame for a decision?

I'm sorry, I couldn't hear the latter part of that question. I understand you were looking for what the IR questions were about. What was the statement right after that?

What are you thinking as far as a time frame for a potential decision?

Okay. Yes, so the content, I mean they kind of vary all over the place. They ask specific questions as they always do for an NDA. As far as timing, it's impossible to say, really. They have not given us a new PDUFA date. The original one was December, and then they obviously missed that because of establishing the AdCom that they wanted to have in January. And since that time, they had not given us the new one. So we're simply just answering questions that they have and waiting. So we don't have any -- I can't give any more perspective than that.

Got it. And then if you could accommodate one more, just for the COVID-19 study. How should we think about the time frame where we could start to see some data?

Well, that's an interesting one. The agency has been amazingly forthright in coming back to us so quickly and with really good guidance and help. I really have to tell you, the consultants and the sites we work within the agency have all worked together in a very collaborative way. So my sense is the trial will start sooner rather than later. I can't give an exact date, but we are getting close.

And then your question as to when will we have data, it will depend how rapidly we enroll. Right now, we're seeing -- we might be moving soon towards 2,000 deaths a day. So there certainly are a lot of patients who are still very ill. We're looking at centers in some of the cities that are the hardest hit and others that might be coming on to that. As the company -- the country opens up more, we might see other pockets start to be created in the South and other places, but it kind of remains to be seen.

So my guess is as good as yours as to when. I think we'll have a better sense once the trial has started. We're in good shape to be able to start the trial as quickly as possible. So everything is teed up well, and it will just depend how rapidly do the patients enroll. I would expect that we should complete it this year, but I wouldn't want to say anything more than that.

Great, and congratulations again.

Sure. Thank you.

The next question is from Ed Arce, H.C. Wainwright.

Congratulations on starting this new work on COVID-19. Seems like you guys have been busy and very collaborative with a number of partners as well as the agency. So first question for me is, and I know you just went over sort of the -- your best guess as to this trial start and when data could come and all that. But I wanted to ask about -- I know you went into some depth already in your prepared remarks around the rationale. But as I see the data to date with 928, in particular, the Phase IIa in AH and some of the preclinical organ injury study data that you have across kidney, lung and liver, and I know that there's just multiple areas where the drug is effective, including inflammation and cell injury and death. My question is, as you have consulted with the agency, what areas, in particular, are they indicating they would like to see? Perhaps areas where they might be particularly interested in elucidating the mechanism and effect of 928, in particular, in COVID-19 patients.

It's a great question. That really hasn't been so much of their focus. I mean their -- they've got 2 categories of drugs. They got drugs their looking at which are antiviral, right, and they've got drugs that are somehow looking to modulate the immune system response. And we've seen the anti-arthritic monoclonal antibodies go out there, which kind of hit one prong of a -- if I use an analogy, I don't know if it's a good one, if you consider an 8-legged spider and if you've got a monoclonal antibody gets one interleukin system, then you're taking off one leg of the spider. But if you've ever chased a 7-legged spider around your house, they're not easy to catch, right?

And with 928, we have an opportunity to be able to approach the whole thing in a different way. I can tell you we've had -- from the very beginning of this. In early March, we've had a huge number of thought leaders who have worked with us on 928, and these guys are experts, men and women of kidney and liver and other organ systems of the body who have exposure and understand 928 mechanisms and the way it has worked in animals and in humans, have come forward and said, "You need to test this. This really needs to be tested in these patients." And so it's been something that we've been looking on here.

I think it has -- it's a very complex disease. The more -- we're just learning, really, how this virus works. Originally, it was thought it's primarily a pulmonary thing that we're seeing much of more endothelial activity of it in general. And so the disease is shifting as our understanding is shifting, I think, more than anything else that goes forward. So -- but it's definitely -- so the FDA, I don't think is parsing it more closely than antiviral or to try and help the body's overall responses. What I think gives us a great chance and us -- the promise of being able to help is protecting against multi-organ damage, regardless of the cause. It could be from ischemia, which you get. It could be from an inflammatory component, which you get it. It could be from a regenerative process that we can support, which you get with 928, a lot of those kind of things. I don't know, WeiQi, would you just want to add anything to that?

Not really. I think that was pretty good.

Okay.

Great. Thanks, Jim. That's quite helpful. And then perhaps this is more for Mike. Just given that all of this is pretty new over the last couple of months or so, I wasn't sure if this was mentioned at all in the prepared remarks. But given that you're doing significant work now on this and ramping up towards a Phase II study in multiple sites, can you, at least in broad terms, quantify what this could mean to your cost structure this year? And perhaps any impact to the cash runway?

Sure. With regards to the COVID trial, we think the total cost is going to be around $3 million in outside costs as a ballpark. Of course, that depends on how long it ends up taking and the final details of everything, but that's just to give you a ballpark. So it's not a huge impact to the cost structure for the company. And in addition -- I'd just add that there's a lot of potential government funding for this area, obviously, that we're exploring as well. So it could be that we are able to get a grant to pay for the trial, for example. That obviously would be helpful as well.

I would assume that's something that you're actively pursuing then?

Yes.

Okay. Great. And then just one last one for me, if I may. Clearly, we've been waiting for some word on POSIMIR for a number of months now. And clearly, the FDA has a higher priority at the moment, with a lot of things being put a little bit on the back burner for now. Perhaps you could give us a bit more detail on the kinds of interactions that you're having most recently with the agency, in particular, if they are the kinds of things, like labeling discussions and so forth, that would lead you to believe that you're getting close to the finish line.

I don't want to predict. It's a good question, but I don't want to project. And we've had questions from a variety of different areas, and we've answered them as quickly as we can. But I think, to start to get speculation on this, I don't think helps. I think it's just -- we'll have to wait and see. I think it's best to do that.

Great, and congrats on your discussions.

Sure. Thanks, Ed.

We have a question from François Brisebois, Laidlaw (sic) [Craig-Hallum].

Just quickly, I was just wondering, with the COVID situation right now, you guys have gone from mid to second half to start on the alcoholic hepatitis trial. So not much there in terms of delay. Is there any -- can you help us understand what it was about the COVID situation that's the hardest? Is it, in your case, the fact that patients, when they kind of have this issue, this is an acute -- very severe issue with a high mortality rate within the first month? Is it going to be -- like is the difficulty here to enroll people because hospitals are overwhelmed right now? And how hard is it to just get the patients in time to make sure that you can have the right patients for the trial?

That's a great question. Now I think with regard to the alcoholic hepatitis trial, that type of trial will continue, as I think almost not be impacted hardly at all by the COVID pandemic, other than possibly accelerating the number of patients because the alcohol consumptions per capita is up in the United States during the shelter-in-place times. So there's more alcohol being consumed. If one develops alcoholic hepatitis, you have to got to be treated very soon. If you don't, you're going to die. So you have no options. You're so severely ill that, that's your only option. And so we can be there to be able to help these patients when this trial is ready to go. Very different from a metabolic study of something where it's more the patient's discretion. Is it, am I going to go in for this dermatologic condition or this metabolic condition or something. It's a very different trial to try and conduct during a time like this. But an emergency room circumstance, like we have with AH patients, that is one that's not going to be denied, unfortunately.

So -- and as we look at getting this trial underway, it's really more a time of -- about just being able to visit the sites and get things going in a much more virtual circumstance. But we'll get there on that. And I think once when it's up and running -- it's going to be up and running, I think. I don't know, I don't want to project the clip, but I should -- there'll be patients out there to help.

(Operator Instructions) We have a question from Len Yaffe, Stoc*Doc Partners.

Jim, I was curious if you could talk a little bit more about the COVID-19 trial design and that it's placebo-controlled with standard of care. If any of the patients, which is becoming I think increasingly common, happen to be on remdesivir. The issue with remdesivir is it, by itself, has been shown to cause increased liver enzymes, liver injury, possibly kidney injury. So would patients be allowed to be on remdesivir in your trial? And therefore looking at it, then could you be able to show not only benefit versus non-pharmacotherapy standard of care, but also being able to reverse some of the potentially harmful effects of what looks like it's becoming the first drug adopted treating critically ill, or not critically, moderately to severely ill patients, which would be a major advance in having the dual regimen?

Sure. Yes, I think when we look at this trial, we're seeking to have it such that we can test 928 in patients if they are on an antiviral like remdesivir or not. So if they were, that would be okay. I had heard early on, and I don't know if this is continuous or not, but some of the patients who had pre-existing renal issues, for example, were able to go onto remdesivir. That may have changed now. I don't know lately. I haven't heard them in the last couple of weeks. But anyway, we would -- we'd be looking forward to helping any patients that we can, including those on the antivirals.

We have a question from Mayank Mamtani, B. Riley FBR.

Congrats on the progress. And I apologize if this question was asked before, but I just wanted to sort of ask about the NASH data coming up and new ideas that you're guiding towards. Can you just remind us on the animal model. I think STAM model was definitely something you've worked on. But just curious if you could lay out other models that you may have had and sort of not just liver enzymes and the bilirubin. What other work that you may have done that could inform some of the metabolic parameters that you may see in the NASH readout?

Yes. I think the most compelling data that are out there -- I think the best model out there, from my personal perspective, is the STAM model, that's -- that patented model from Japan. Those people who don't -- aren't familiar with that model, it's a model of young mice are treated, basically converted to being diabetic and then they're fed a high-fat diet. And they go through a process that we humans go through over many, many years in a very short time, and they unfortunately develop NAFLD, NASH, and then eventually hepatocellular carcinoma and they die very young. With 928, we were able to demonstrate a reversal of hepatocyte ballooning, fibrosis. And I think most impressively in this model was a reduction in -- a substantial reduction in the number of precancerous lesions, the hyperplasia that occurs prior to the hepatocellular carcinoma. So I think that's -- from my perspective, that's the one that really speaks so clearly as to that there might be an opportunity for this drug in this disease.

We've done a number of other fatty liver models here and there, and we've shown improved glucose tolerance and various other things and reduction of circulating lipids or lipids in the livers and things like that. But at the end of the day, it will be the data in humans. So that's why we're really looking forward to getting whatever data we can get from this one. It's going to be a 28-day study, so we can't do biopsies or anything like that. But we'll get a sense of what study to go on. We'll look at liver enzymes. We'll look at imaging. Not much imaging has been shown at anything at a month. I think most people are looking at 12 weeks or more. But we'll see what we can get at a month that will give us a hint, really. And remember, we were doing the study to get a sense of what kind of doses make sense going forward. We tested quite a broad range of dosage, from 50 milligrams a day to 300 milligrams twice, which is 600 mg a day. So there's a 10-fold difference, 12-fold difference there.

Great. That's super helpful. And then just on the basis of your discussions with the agency, I believe the cardiorenal group, could you just kind of remind me where you are with some of the discussions, obviously, around AH? But also I think the chronic toxicity data that you may have to date. And sort of any level of confidence you may have to be able to get any kind of breakthrough designation, if at all possible?

Well, a couple of things. The chronic toxicity data would be for the chronic indication, like a NASH kind of thing. And we finished that last year. So that's done. And we now can dose for as long a duration as we want. So that's a separate piece. The breakthrough indication or some kind of Fast Track or accelerated review would be for a life-threatening kind of circumstance, like for AH. And so that's something that one can explore in that regard. And the same thing would be true if we showed something in COVID, because I think it would be a life-saving -- hopefully, a life-saving aid in that circumstance as well. So both of those, I would put together, one could look at basically viral-induced pneumonias and acute organ injury. And AH would be kind of 2 different camps, similar kind of circumstances though. And they're both being run through the...

Great. That's all I -- sorry, go ahead. Sorry, go ahead.

They're both being run through the Hepatic Division within the FDA.

There are no further questions at this time. I'd like to turn the floor back over to management for closing comments.

Okay. Mike?

Thank you. Thanks, everyone, for joining our call. Appreciate the good participation and good questions. So as always, Jim and I are available to talk if you need further discussion. Thanks.

Thanks a lot. Bye.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.