DURECT Corp (DRRX) 2017 Q4 法說會逐字稿

Greetings, and welcome to the DURECT Corporation Fourth quarter 2017 Earnings Conference Call.

(Operator Instructions) As a reminder, this conference is being recorded.

I'd now like to turn the conference over to your host, Matt Hogan.

Thank you, you may begin.

Okay, good afternoon, and welcome to our fourth quarter earnings conference call.

This call will begin with a brief review of our financial results and then Jim Brown, our President and CEO, will provide an update on our business.

We'll then open up the call for a Q&A 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 are included in our SEC filings, including our 10-K under the heading, Risk Factors.

Now let me turn to our financials.

Total revenue was $19.5 million in the fourth quarter of 2017, compared to $3.5 million in the fourth quarter of 2016.

The Q4 2017 figure included $15.4 million in deferred revenue from the $20 million upfront fee associated with our Sandoz agreement.

This revenue in Q4 is a noncash item as the $20 million was received in Q2 2017.

If one excludes deferred revenue from upfront fees already received by the company, then revenue from our R&D collaborations was $0.8 million in the fourth quarter 2017 compared to $0.6 million in Q4 2016.

Product revenue, largely from the sale of ALZET pumps and LACTEL polymers, was $3.2 million in Q4 2017 as compared to $2.8 million in Q4 2016.

For the year as a whole, product revenues from ALZET and LACTEL were a record $13 million as compared to $11.5 million in 2016.

The gross margin for the combined ALZET and LACTEL product lines was 68% in the fourth quarter 2017, and these product lines continue to be strongly cash flow positive for us.

R&D expense was $6.6 million in the fourth quarter 2017 compared to $8 million in the fourth quarter 2016 due to lower R&D costs associated with POSIMIR, DUR-928 to a lesser extent, and other programs.

SG&A expenses were $3.3 million in the fourth quarter 2017 as compared to $2.8 million in the fourth quarter of 2016.

And at December 31, 2017, we had cash and investments of $36.9 million compared to $25.2 million at December 31, 2016.

And I should also mention that we just amended our debt agreement with Oxford Finance such that we've pushed back the start of principal payments by 3 quarters, so from March 1 of this year to December 1.

With that, thanks again for joining the call.

I will turn it over to Jim for an update on other matters

Thank you, Matt, and hello, everyone.

We made substantial progress in this last quarter.

With regard to DUR-928, we're dosing in one Phase II trial and the second Phase II trial have started site visits with a goal to have data from these trials later this year.

We completed the pre-IND interactions for the topical use of 928, selected the lead formulation and are completing activities that should allow initiation of this Phase II study in the third quarter.

With regard to our later-stage programs, the NDA for RBP-7000 was accepted by the FDA, and the PDUFA date has been set in July.

And today, Pain Therapeutics announced the NDA for REMOXY ER has been accepted for review and the PDUFA date is set for August.

The potential exists for these 2 NDAs to be approved between the end of July and the 1st week of August.

I will now update on these programs in greater detail beginning with DUR-928.

DUR-928 is a lead product candidate in our Epigenetic Regulator Program.

It is an endogenous small molecule and a new chemical entity.

We consider 928 a member of a new class of intracellular stress hormones.

It may have broad applicability in chronic metabolic diseases and chronic liver disease such as nonalcoholic steatohepatitis and Primary Sclerosing Cholangitis, in acute organ injury and in inflammatory skin disorders such as psoriasis and atopic dermatitis.

We're developing 928 for 3 different routes of administration: the oral route for chronic, metabolic or other liver disorders; by injection for acute organ injury; and topically for localized dermatologic conditions.

Earlier this week, we announced the initiation of patient dosing in the first Phase II trial for DUR-928.

This study is investigating 928 in Primary Sclerosing Cholangitis, or PSC.

PSC is a chronic liver disease characterized by a progression of cholestasis, that is the decrease of bile flow, with inflammation and fibrosis of the bile ducts.

Over time, PSC leads to liver failure, infections and tumors of the bile duct or the liver, ultimately requiring liver transplant.

At this time, there's no apparent treatment -- or no approved treatment, excuse me, for PSC.

DURECT has received orphan drug designation for DUR-928 to treat patients with PSC, and DURECT believes the data generated from this trial will be relevant to other chronic liver diseases involving inflammation, fibrosis and cholestasis, including NASH.

This past Monday, we held a key opinion leader webcast on the topic of PSC with Dr. Keith Lindor as our featured speaker.

Dr. Lindor is a senior adviser to the provost at Arizona State University and a professor of medicine at Mayo Clinic.

Prior to joining ASU, he served as the dean of the Mayo Medical School and was chair in the division of gastroenterology and hepatology.

He also has served as the editor-in-chief of hepatology.

And in 2016, he was the President of the American Association for the Study of Liver Diseases, or AASLD.

Dr. Lindor was a key person in gaining approval of ursodiol to treat primary biliary cirrhosis.

The primary focus of his research is on clinical trials and means of optimizing the medical management of people with these disorders.

Key messages from the webcast highlighted the unmet medical need in PSC, the fact that PSC may be under-diagnosed and the key efficacy endpoints, which are liver stiffness and alkaline phosphatase.

A recording of this call can be found in the DURECT website.

This PSC Phase IIa trial is a randomized, open-label study involving approximately 30 to 40 patients evenly divided into 2 cohorts, a low-dose cohort receiving 10 milligrams and a high-dose cohort receiving 50 milligrams, and may include up to 15 clinical sites.

The patients in the trial will receive oral dosing of DUR-928 for 4 weeks.

After dosing, they will be followed up for an additional 4 weeks.

The objectives of this study are safety, pharmacokinetic and pharmacodynamic markers will be evaluated including the percent change from baseline of serum alkaline phosphatase, or ALP.

Other biomarkers will be evaluated as secondary endpoints.

As this is an open-label study, we expect to generate data during the course of 2018.

Additional information on the trial design, the eligibility criteria and site locations can be found on clinicaltrials.gov using the NCT Identifier NCT03394781.

We are pursuing PSC as our first chronic oral study for 928 because results from our nonclinical pharmacology studies in several animal species support the use, in particular, the rat bile duct ligation model, where 928 treatments significantly reduced total direct and indirect bilirubin levels.

These studies have shown that DUR-928 significantly reduced serum biomarkers, including ALP, inflammation, fibrosis, cell death, minimized hepatic nodule formation and improved survival.

Some of these study results are presented in a poster at the -- or were presented at a poster at the AASLD meeting in March of last year.

And all of these nonclinical data support the move into the clinical development for PSC.

The transition into clinical development for PSC is also supported by our data from our NASH and our chronic kidney disease Phase Ib studies that were conducted with DUR-928.

The first of these studies was a single-dose study in NASH patients.

Data from this study were presented at a poster last spring at the EASL meeting in Amsterdam reporting on changes in biomarkers following a single dose of 928 in both cirrhotic and non-cirrhotic NASH patients.

These biomarker changes included a reduction in bilirubin of approximately 30%; a reduction in inflammatory biomarkers and reductions in both CK-18s, these are markers of cell death and apoptosis, by up to as much as 47%.

These results were statistically significant and were demonstrated within 24 hours of dosing.

The second of these Phase Ib studies was a single-dose PK study in chronic kidney disease patients.

Similar biomarker signals were seen in this study with treatment-related reductions in bilirubin, full-length CK-18 and cleaved CK-18 within 24 hours after intramuscular injection maybe at a 30 or 120 milligrams of DUR-928.

These changes occurred in patients or matched control subjects, who had elevated baseline levels of these biomarkers.

In both of these studies, the higher the baseline levels of these biomarkers, the larger the reduction.

Inflammation and fibrosis of the liver can result from many causes and PSC is a disease in which we may be able to non-invasively obtain a signal of the potential effects of DUR-928 in other liver diseases.

This PSC study may allow us to see a signal on patients after just 1 month of dosing using well-accepted biomarkers such as reduction of ALP to allow us to more readily advance into the next step of development.

We are working with the PSC patient organizations to help create awareness for the study.

There's a lot of interest from the patient community about the possibility of using an endogenous compound, which to date has shown good -- a good safety profile to help treat this disease of great unmet medical needs.

I will now move on to the DUR-928 injectable program.

Here, we're pursuing alcoholic hepatitis.

Hereto, I will refer to it just as AH as the first acute indication for DUR-928.

The Phase IIa protocol focuses -- this Phase II protocol focuses on the safety and pharmacokinetics of 928 in moderate and severe AH patients and has been submitted to the FDA.

The IND is open and we are actively setting up clinical sites with the intention of dosing in the near future.

AH is a significant public health care burden and is responsible for more than 320,000 hospitalizations per year in the United States.

And globally, there are 3.3 million deaths every year resulting from harmful use of alcohol.

Given the lack of approved effective products for alcoholic hepatitis and a relatively high short-term mortality rate, which exceeds, in many cases 30%, in severe cases, that is.

A new drug that improves outcome for patients could be transformational.

The use of 928 to treat AH is supported by the activity the compound has demonstrated in multiple animal models.

Several of which are published in the literature, including the acetaminophen and alcohol injury mouse model, the endotoxin injury mouse model, the STAM NASH model, the bile duct ligation rat model, ischemic renal injury model and others.

DUR-928's ability to reduce mortality, improve organ morphology and function and reduce inflammation in animal models of acute organ injury all support the transition into clinical development in AH.

In addition, these previously mentioned studies resulted -- the results -- we recently have compiled our -- associated with a recently completed ADNI Study that evaluates tissue distribution and elimination of 928 in rats following an IV bolus dose.

This confirmed the preferential uptake of DUR-928 in selected target organs, including the liver and the kidney.

Results of the ADNI Study were accepted as a late-breaking poster presentation at the upcoming Society of Toxicology Conference, which is going to be held between March 11th and the 15th of this year in San Antonio, Texas.

Transition to development for AH is further supported by human data from our Phase Ib studies in NASH and our chronic kidney disease patients, evaluating the effects of a single dose of 928, which I talked about earlier.

The FDA is recognizing, both the public health importance of alcohol-associated liver diseases as well as the need to establish surrogate markers to inform the design to definitive clinical trials for alcoholic hepatitis.

To this end, the FDA, the National Institute of Alcoholic Abuse and Alcoholism (sic) [National Institute on Alcohol Abuse and Alcoholism], or NIAAA and AASLD have organized a 2-day workshop on clinical trial design endpoints for alcoholic hepatitis and other alcohol-associated liver diseases that will be between March the 26th to 27th of this year at the FDA Silver Spring, Maryland facility.

One of our key consultants, Dr. Craig MacLean, will be driving the agenda at the workshop on potential biomarkers that can be used to assess the mechanisms of disease, the disease severity, prognosis and response to therapy through the course of alcoholic liver disease with a focus on the importance of CK-18s in alcoholic hepatitis.

Several of our other clinical advisers will also be speakers at this workshop.

Our initial Phase II study, which was codesigned by our advisers, will be an open-label ascending dose study that compares 3 doses of 928 in patients with AH, and it will focus on pharmacokinetics and safety outcomes.

In addition, we will be assessing the pharmacodynamic outcomes as part of the safety evaluation by observing changes to the patient's MELD score.

The Model for End-Stage Liver Disease, or MELD score, is an important scoring system for assessing the severity of end-stage liver disease.

The MELD score is calculated using serum bilirubin, serum creatinine and prothrombin time.

DUR-928 has demonstrated the ability to reduce bilirubin and creatinine in animal model, and it has reduced bilirubin in 2 single-dose Phase Ib clinical studies.

This has a particular importance in AH patients as they have high MELD scores.

This study will be conducted in 2 parts, their name, Part A and Part B. The trial will be -- have a total of 24 patients in 6 dose groups.

Part A will involve 12 patients with moderate alcoholic hepatitis.

That is patients with MELD scores of between 11 and 20.

They'll be divided into 3 dose groups of 4 patients each.

The doses that will be given will be 30, 90 and 150 milligrams of 928 given by IV infusion.

Sequential dose escalation is planned following the review of safety of pharmacokinetic results of the prior dose level.

Part B will involve 12 patients with severe alcoholic hepatitis.

That is patients with MELD scores between 21 and 30.

They will also be divided into 3 dose groups of 4 patients each.

The doses given in Part B will be determined based on the results from Part A. The trial will evaluate dose -- the dose effect on safety, pharmacokinetics and pharmacodynamic responses in these patients.

Additional information on this trial design including eligibility criteria and site locations can be found on clinicaltrials.gov using the NCT identifier NCT03432260.

The first site visit was held this week.

We look forward to initiating dosing in the near term and hope to report patient data later this year.

We will also be announcing a KOL Conference Call for this indication in the near future.

Finally, I'll turn my attention to the DUR-928 topical administration programs.

We have developed topical formulations for 928 because of promising results we achieved in an exploratory Phase Ib trial in psoriasis patients utilizing intralesional injections of 928.

We are working with expert advisers to finalize our study protocol for a Phase II proof-of-concept study with topically applied 928.

We have had pre-IND interactions with the FDA and are completing the final nonclinical study requested by the FDA prior to submitting the IND.

We expect to initiate the study in the third quarter of this year.

We believe there is a large market opportunity for new topical drugs in inflammatory skin diseases such as psoriasis and atopic dermatitis, and we will update further on this Phase II study design during our next quarterly call.

I will now move on to POSIMIR.

We continue to work with our partner, Sandoz, regarding potential next steps for the POSIMIR program.

We will update with further information when a decision on the future of the program has been made.

Now to RBP-7000.

RBP-7000 is a nice opportunity for DURECT shareholders and it's the closest to market.

The RBP-7000 product opportunity for DURECT is the result of a patent deal with Indivior.

As a reminder, Indivior PLC was spun out of Reckitt Benckiser in December of 2014 and they are traded on the London Stock Exchange.

RBP-7000 is Indivior's investigational once-monthly injectable risperidone product candidate for the treatment of schizophrenia.

Indivior announced the NDA for RBP-7000 was accepted for review this past December, and the PDUFA date is now set for July 28th of this year.

A summary of the Phase III and long-term safety study data for RBP-7000 include once-a-month dosing, a rapid onset of action, no loading dose with the initiation of treatment, no supplemental dosing during treatment and demonstration of clinical efficacy and safety in schizophrenic patients.

Last year, DURECT received an upfront, nonrefundable payment of $12.5 million, and we have a potential $5 million milestone payment upon NDA approval.

Indivior will also make quarterly earn-out payments based on single-digit percentage of U.S. product sales.

These payments extend until the expiration date of the patents covered by this agreement, which is until 2026.

In March of 2017, Indivior stated that they are raising their guidance for the potential peak net revenues of RBP-7000.

And if approved, they expect to be in a range of $200 million to $300 million per year with an assumption of no material change in the U.S. market circumstances.

The final product I'll update today is REMOXY ER.

It's based -- this is -- REMOXY ER is based on our ORADUR technology.

The investigational drug is a unique long-acting formulation of oxycodone designed to be dosed twice a day and to discourage common methods of tampering associated with opioid misuse and abuse.

In February, Pain Therapeutics announced that they had resubmitted their REMOXY ER NDA.

Today, they announced the NDA has been accepted for review and the PDUFA date has been set for August the 7th.

The epidemic of opioid abuse is a national crisis that we hear about regularly in the media, from Congress and from the White House.

Some companies are pulling back on their promotional and selling efforts, including Purdue.

Yet the need for these agents to treat a patient's pain remains and the market for Purdue's OxyContin remains approximately in the range of around $2 billion a year.

REMOXY ER has the potential to provide multiple means of tamper resistance, plus true twice-a-day dosing and the only 5-milligram dosage strength to this market.

As a reminder, DURECT would receive a small milestone on approval and a royalty on sales that range from 6% to 11.5%.

In summary, with RBP-7000 and REMOXY ER, we have the potential to have 2 NDAs approved within the next 5 to 6 months.

Each of these products could offer differentiating features that may benefit patients and the health care system in large and important markets.

Most importantly, we have DUR-928, an endogenous intracellular stress hormone, that has demonstrated profound effects in various animal models and in single-dose studies in human patients with what appears to be a wide safety margin.

We're dosing in 1 Phase II trial, beginning site visits in a second, with a third trial lined up for initiation in the third quarter.

During 2018, we could have 2 NDAs approved and data from 2 different Phase II trials with DUR-928.

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

(Operator Instructions) Our first question is from Adam Walsh.

It's actually Neil Carnahan on the call for Adam.

Congratulations on the progress.

Obviously, things are moving forward with the 928 program.

Can you just walk me through how you guys are thinking about your comfort level as far as funding to get through the 3 Phase II programs?

Well, I guess, one comment I'd make is, as you noticed, these are not large Phase II studies.

The number of subjects that are in each study are not that large.

They're open label, they don't last that long in duration.

So actually, they're not that expensive to run.

So we will very carefully watch what we spend around here.

But we think we have the sufficient resources to get through most of this year's objectives.

And of course, we'll be helped if we get some product approvals as Jim outlined.

That's right.

And I think they are substantially less if you add those 3 up as compared to what POSIMIR was last year with the large Phase III.

Okay, great.

And then as far as the 928 in -- the 928 Phase II trial in PSC.

Do you guys had any discussions with the FDA as far -- or do you want to elaborate on the endpoints or things specifically that you're going to be looking for in the data?

I know the Phase I data was impressive what you saw early on.

Just would you guys mind elaborating on anything specific that you guys are looking for?

Well, I think what we'd be looking at, we'll be looking -- it's one of those -- it's a Phase IIa trial.

So the first thing we're looking at is safety and the dose effect, but we will also be looking at alkaline phosphatase.

And so we'll look for a drop in that.

We have seen that in animal models, so we certainly hope to see that.

We've seen it in the NASH patients and the chronic kidney disease patients since that had high CK-18s.

We saw those dropping, both the cleaved and the full length.

And if we see that as well, which I would hope -- we expect we would see that, that should track because alkaline phosphatase is an intracellular enzyme.

Those are markers of cell death that come from cells that have died and so one would expect those things should move together.

Our next question is from François Brisebois.

Just a couple quick ones here.

The fact that it's open label and there'll be -- you'll get a chance to see the data.

How often is that?

And is this something that you'll share?

Or what's the -- what should we be looking for here?

Yes.

I think we will be sharing, but once we get enough information.

We're not going to go after -- when one patient is done, run and get the labs done.

So we're going to -- we'll batch them together and get some critical mass of patients and at that point, run some data and have a look.

So it'll be something.

That's what we're kind of just are talking about end of the year, kind of later in the year rather than every 2 months or something coming out with something.

And that would be the final data, not an interim [look], pretty much?

No, it'll be -- it depends.

It depends on the enrollment rate, right?

So...

Okay.

And then in terms of the transition from PSC to whether it's [AH] or NASH or what -- any other indication, is it mostly -- I know you mentioned alkaline phosphatase.

Is it mostly ALP that you'll be looking at?

Is there any other readthrough?

Obviously, this is a noninvasive way to diagnose this.

But anything else?

Yes, I think it's important to separate these 2. They're 2 different Phase II programs, and it's confusing because we're talking about 1 drug.

But I would really consider that Drug A, oral 928; and Drug B, the injectable 928.

So let's talk about Drug A, oral 928.

That's being studied in PSC, and in that case, we're looking at alkaline phosphatase as a key.

We will also be looking at cytokeratin-18s and some of the other markers there.

But the big one there is alkaline phosphatase that has been understood, and the FDA is, I think, looking at that and we have the thought leaders who are working with the agency to help that guidance, including the guy who got Urso approved.

So now let's talk about the second drug, that is 928 via injection for acute organ disease.

And in this case, the first acute organ damage we're looking at is alcoholic hepatitis.

In this case, we're looking at cell death markers for immediate circumstances.

We're looking at the CK-18s.

The FDA, in fact, is having a meeting later on this month to evaluate.

And one of our thought leaders, Craig -- Dr. Craig MacLean, is going to be leading this charge to look at and he's got some really good data he's done showing mortality associated with CK-18 changes and elevation.

So there's a nice relationship that one can see between the rise in CK-18s in an acute organ damage circumstance and death and mortality potential outcomes and we can evaluate that as well.

We will also be looking at bilirubin and other things vis-a-vis the MELD score, which is the way these patients are going to be tracked for safety, but we'll also get a pharmacodynamic input there.

So similar markers, but different circumstances.

Okay, great.

And then lastly on safety being endogenous.

How many times -- can you remind us how many times you've dosed this in humans and animals?

How many times -- multiple times in heavy doses?

Yes, we've dosed -- in animals, we've gone out for quite a while and some very -- quite amazing.

We are talking about this earlier.

We've actually done -- in some of the repro tox, we've done a study in rabbits as an example.

It's -- where you look at teratogenicity or whether or not a drug will have effect on birth defects or be a causative factor there.

And we did not see anything.

And these rabbits received blood levels -- or had blood levels that were about 45,000x their normal levels, which I can't even -- it's hard to get your head around.

So amazingly high doses of this drug seem to have no effect in normals, not even in the growth of pups, and yet just 10 milligrams might have a dramatic difference in patients.

So it is quite fascinating.

The discrepancy there, we believe, it's because it is a stress hormone and the receptor or the availability of the drug to get to the site of action is being dictated by virtue of whether or not that cell is damaged or not.

Our next question is from Ed Arce.

So a few questions.

First one, thinking through your PSC program for oral 928.

ALP is clearly an important marker there.

And I'm wondering if you could tell us what [effect sides] you've seen in reducing ALP in your preclinical models and how closely does that translate to human efficacy?

And perhaps with looking at the BLD -- or BDL model results from Ocaliva or seladelpar shed some light on the potential effect side there?

Yes.

I mean, it's impossible to speculate from an animal model to human especially because they're different disease circumstances.

We create a circumstance in these animals where we've got damaged organs and are able to look at that.

And so we do see drops in ALP.

I personally think that the more relevant information is from the human patients, be they the chronic kidney disease patients or NASH patients that had elevated CK-18s because there you've got organs that are damaged and cell death going on, and 928 appears to be able to arrest that to some degree.

And so to the extent that, that is occurring, which we believe it is and literature would tell us that it is in PSC patients and that we can alter that, then we should see an outcome and reduced ALP.

But we have to see that and we have to see it in the patients.

So it's -- we think we've lined up everything the best we can.

But at the end of the day, it's just like in sports, you got to play the game.

Here, we've got to run the trial.

So -- but I think we've got a great chance -- a good chance.

But still, it remains to be done.

Okay, Jim.

And just to clarify, you had said earlier the BDL model data that you ran was presented at EASL last year, right, not AASLD?

Right.

The bile duct ligation model was -- actually, those data were not -- those have not been presented yet.

The STAM data were presented at AASLD.

The EASL study we presented -- there, we presented the NASH data from humans where we showed bilirubin down.

I used that just as a correlative between the fact that we had been able to take rats and do this bile duct ligation study.

And that study involved cutting the bile ducts, ligating them and we show -- even though that occurred, showed a statistically significant drop in the bilirubin in those rats.

And now, we have this correlative where we went to NASH patients and we dosed them.

And those that had a high bilirubin, we saw a reduction in their bilirubin, a statistically significant reduction in their bilirubin.

And then we did this chronic kidney disease patient with much fewer patients and normal subjects, so it was just a handful of people.

But in the ones that had high bilirubin, we saw, once again, dramatic reduction in their numbers and in that case actually even lasted longer.

So we've seen it in an animal model.

We've seen it in 2 different patient groupings as well.

Okay.

So just getting back to that BDL model then.

Do you expect to present those results at some point?

Maybe.

We have a lot of animal models data that we could present.

We're going to present some data at the Society of Toxicology Anatomy coming up this month.

We do -- we are going to become more aggressive in the publication of things in general, so it'll be easier for people to get references.

So that will occur.

We have a number of models that we haven't disclosed publicly at all.

They're really interesting data, but it just hasn't had the opportunity yet.

So as time allows and people aren't too busy, then we will -- not -- everyone's always too busy, but we'll find the time to get somebody on an airplane out someplace and show the data.

Okay.

And I would expect -- I would imagine that you would have some degree of presence at EASL in April?

We will be there.

I don't think we're going to be having any data at this point in time, no, because we don't have any studies that will be having data come out that soon.

But obviously, we were there last year with that poster.

That was pretty groundbreaking.

And then it showed the CK-18 that was down within 12 hours, the bilirubin down.

I don't think anybody has shown those kind of data with bilirubin.

So...

And then one last question if I could.

Turning to your IV formulation and this indication in AH, this is from prior experiences in dealing with alcoholic patients and with moderate to severe MELD scores, this is a rather difficult patient population to control for studies -- in a controlled environment like this.

Is there -- have you thought through how to supplement standard compliance procedures to offset that?

Yes.

One of the things is we're not doing long-term follow-up on these.

They're only going to be going out as long as 28 days.

And they'll be dosed while they're in the hospital, which will be kind of a 7-day circumstance.

And beyond that, it will just be a 28-day follow-up.

So we're looking at this because we think we can save lives, quite frankly, if this drug does in humans what it has done in these animals.

And so if that's the case, and we know that humans have the same drug coursing through our veins, the same molecule.

That if it does that, then we'll be in a different circumstance.

If we show what I'm hoping we can show we could possibly get a breakthrough designation and then we'll be in a different circumstance, but we'll see.

It's all to be demonstrated, but it's a good point.

And to that end, we're going to be dosing in the hospital and just a 28-day follow-up.

Actually, one last quick question on this then.

Is your expectation to have some degree of data from this AH study this year?

Yes.

(Operator Instructions) Our next question is from Len Yaffe.

Had a couple questions for you.

Okay, I find it very interesting that at a time when you may be looking at the hepatology and other markets longer term, you've got this potential significant revenue stream coming from your legacy products.

And I was wondering, first, if you could review for us on REMOXY and on Indivior, what the -- both the royalty rates are and how many years those drugs are likely to have patent protection in the United States?

Sure.

Thanks, Len.

I appreciate the question.

But first, let's start with the closest even though maybe it's only by a week, it's still the closest and that's RBP-7000.

That, we get a single digit.

It's called a patent earn-out rather than a royalty, but it's functionally the same, and that's in the U.S. The patent is going out to at least 2026.

I think there's some possible extensions on that, but at least until 2026.

And that would also involve a $5 million approval milestone.

And they have projected last year between $200 million -- no -- yes, $200 million to $300 million in sales.

For REMOXY, the royalty rates are higher, the upfront is lower.

It's less than $2 million on approval for milestone.

The royalty rates start at 6% and go to 11.5%, but that 11.5% is around $1 billion.

So you can think of the lower end there.

Then it depends on what the sales might be.

Purdue is still selling close to $2 billion worth of OxyContin.

We think we have advantages over -- certainly over OxyContin and some of the other things out there, in that, ours is this REMOXY ER, it's a true twice-a-day.

It is -- got potential to have resistance against many mechanisms.

And then lastly, to my knowledge, it would be the only 5-milligram dose out there.

And people are looking to use less, right, of narcotics as much as possible, but these patients still need it.

And your question on the duration, I think the longest of the patents there goes out to 2032, something like that, in that range.

It's pretty long.

Okay.

And then other question is on alcoholic hepatitis.

I believe that Dr. MacLean recently was one of the lead authors on an expert review of medical management in pharmacotherapy for severe alcoholic hepatitis that came out I think in January.

And I was wondering if that article could possibly be something you can get posted to your website with his permission or be made available.

I believe it was a very thorough review of the fact that there's really nothing other than cessation of drinking and corticosteroids, which are highly contraindicated for the treatment of alcoholic hepatitis.

Yes, you're absolutely right.

There was a large study that was funded that looked at corticosteroids and pentoxifylline.

It was in over 1,000 patients -- 1,100-and-something patients.

And in that study, they basically showed that pentoxifylline doesn't work, and they showed that there wasn't a statistically significant improvement in mortality or survival with the corticosteroids.

So if you're a physician at that circumstance, it is difficult.

There isn't much out there.

And certainly Dr. MacLean, we will -- we'll put that piece out there.

We'll look to put it up.

But he's also going to be leading this effort with the FDA to look at these.

He's a big supporter of -- his research has shown some pretty interesting information on the CK-18s, full and cleaved, and the ratios and the like and mortality and survival on these patients.

And I think he'll be presenting those data and I'm hoping publishing those data pretty soon.

And that will also serve to help move the field forward.

This concludes the question-and-answer session.

I'd like to turn the floor back over to management for any closing comments.

Okay.

Well, thank you all for participating.

If you do have additional questions, we're always available to chat.

Thank you very much.

This concludes today's teleconference.

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Thank you for your participation.